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01/11 03:17
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary highlights strong financial performance with increased revenue, EBITDA, and cash flow guidance. Product development, particularly in AI, shows significant growth and customer adoption. Market strategy includes successful partnerships and expansion potential, while expenses are managed with reduced stock-based compensation. Shareholder return plans are not detailed, but overall, the positive guidance and strategic initiatives suggest a positive sentiment. Despite some unanswered questions, the focus on growth and profitability supports a positive outlook.
Revenue $308 million, up 35% year-over-year. The increase was driven by demand for Zeta's AI-powered marketing platform and higher direct revenue mix.
Adjusted EBITDA $59 million, up 52% year-over-year. The improvement was attributed to lower cost of sales as a percentage of revenue and efficiency gains in the sales organization.
Free Cash Flow $33.6 million, up 69% year-over-year. The growth was due to disciplined capital expenditure spending and improved free cash flow conversion.
Scaled Customer Count 567, up 21% year-over-year. Growth was driven by success in adding customers across various verticals, including technology, media, consumer retail, and advertising.
Super-Scaled Customer Count 168, up 17% year-over-year. The increase was attributed to higher ARPU and broader platform adoption.
Scaled Customer Quarterly ARPU $532,000, up 11% year-over-year. Growth was driven by increased agency expansion and channel and use case adoption.
Super-Scaled Customer Quarterly ARPU $1.6 million, up 19% year-over-year. The increase was due to higher usage of multiple channels and use cases.
Net Cash Provided by Operating Activities $42 million, up 35% year-over-year. The improvement was driven by higher free cash flow and disciplined capital expenditure spending.
GAAP Net Loss $12.8 million, an improvement from a loss of $28.1 million in the second quarter of 2024. The improvement was due to higher revenue and better cost management.
Zeta Answers: Launched as the first prescriptive AI framework, transforming raw data into automated outcome-driven actions in real time, producing superior ROI. Examples include a state government using it to target job seekers and a Fortune 100 technology company improving engagement by 10%.
Agency Business Expansion: Sustainable momentum in agency business with both holding companies and independent agencies. Expanded with large holding company clients and platformed three additional independent agencies since the last earnings call.
OneZeta Initiative: Accelerating multiuse case adoption across acquisition, growth, and retention. Examples include a national discount furniture chain consolidating marketing efforts and a leading hospitality brand expanding use cases.
Revenue Growth: Achieved $308 million in Q2 revenue, up 35% year-over-year, and raised full-year revenue guidance by $21 million.
Customer Growth: Scaled customer count grew to 567, up 21% year-over-year, with super-scaled customers increasing by 17%.
Free Cash Flow: Generated $33.6 million in free cash flow in Q2, up 69% year-over-year, and increased full-year free cash flow guidance to $142 million.
AI Innovation: Appointed Nate Yohannes as President of Zeta Data & AI Lab to drive AI innovation and R&D.
Share Repurchase: Repurchased $32 million in shares during Q2 and increased share repurchase authorization by $200 million.
Market Conditions: Customer behavior has remained consistent, but there is no explicit mention of adverse market conditions impacting the company.
Competitive Pressures: Zeta is gaining market share and expanding its customer base, but no specific challenges from competitors are mentioned.
Regulatory Hurdles: No regulatory challenges or hurdles are discussed in the transcript.
Supply Chain Disruptions: No mention of supply chain disruptions or related risks.
Economic Uncertainties: Brands continue to invest in growth, and there is no explicit mention of economic uncertainties affecting the company.
Strategic Execution Risks: The company is executing its growth strategies effectively, including AI innovation, agency expansion, and the OneZeta initiative. However, there is no mention of risks or challenges in strategic execution.
Full Year Revenue Guidance: The midpoint of the full year revenue guidance has been increased by $21 million, reflecting a $10 million increase beyond the second quarter outperformance. The updated 2025 revenue guidance is $1.263 billion at the midpoint, representing 26% reported growth and 24% growth when adjusted for LiveIntent and political candidate revenue.
Third Quarter Revenue Guidance: Revenue for the third quarter of 2025 is expected to be $328 million at the midpoint, which is $5 million higher than the previous guidance and represents 22% growth on both a reported basis and when adjusted for LiveIntent and political candidate revenue.
Adjusted EBITDA Guidance: The midpoint of the 2025 adjusted EBITDA guidance has been increased to $264.6 million, up $6 million from prior guidance, representing a 37% year-over-year increase at a margin of 21%. For the third quarter, adjusted EBITDA is expected to be $70.7 million at the midpoint, up from $69.7 million, representing 32% growth and a margin of 21.5%.
Free Cash Flow Guidance: The midpoint of the 2025 free cash flow guidance has been significantly increased to $142 million, up $10.5 million from the previous guidance midpoint, representing 54% year-over-year growth. Free cash flow conversion is expected to improve to 54%, up from the previous guidance of 51% and 48% in 2024.
Long-Term Targets (Zeta 2028 Plan): The company reaffirms its long-term targets, projecting over $2.1 billion in annual revenue, at least 25% adjusted EBITDA margin, and 16%+ free cash flow margin by 2028.
Share Repurchase Program: We also repurchased 2.7 million shares for $32 million, accounting for 96% of our free cash flow generated in the quarter. Year-to-date, as of July 25, we have repurchased $69 million of our shares. We've utilized $85 million of our $100 million share repurchase authorization that was approved in November. And our Board just approved an additional $200 million 2-year share repurchase authorization.
The earnings call highlights strong financial metrics, an optimistic guidance increase, and strategic advancements like Athena and AI integration. The Q&A section reveals positive analyst sentiment, with confidence in achieving ambitious targets and addressing past challenges. The company's proactive approach to sales and marketing, despite slight margin declines, and the potential for future acquisitions, further support a positive outlook. With a market cap of $3.78 billion, the anticipated stock price movement is expected to be positive, within the 2% to 8% range, driven by strong growth indicators and strategic initiatives.
The earnings call summary highlights strong financial performance with increased revenue, EBITDA, and cash flow guidance. Product development, particularly in AI, shows significant growth and customer adoption. Market strategy includes successful partnerships and expansion potential, while expenses are managed with reduced stock-based compensation. Shareholder return plans are not detailed, but overall, the positive guidance and strategic initiatives suggest a positive sentiment. Despite some unanswered questions, the focus on growth and profitability supports a positive outlook.
Zeta's earnings call presents a positive outlook with strong growth metrics, including a 48% increase in direct revenue and significant ARPU growth. The company shows effective cost management with improved EBITDA margins and reduced stock-based compensation. The Q&A session reveals no macro uncertainties and strong demand, further supporting a positive sentiment. However, some caution arises from management's conservative guidance for H2, yet overall, the market is likely to react positively to the robust performance and optimistic outlook, especially given the company's market cap of approximately $3.8 billion.
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