8-K: Zeta Global Raises Third Quarter Guidance on Strong Growth

Zeta Global has increased its third quarter 2024 revenue and adjusted EBITDA guidance, citing strong growth and momentum.

Summary

• Zeta Global has increased its revenue guidance for the third quarter of 2024 to at least $255 million, up from the previous midpoint of $239.2 million.
• This revised revenue guidance represents a year-over-year growth of at least 35%.
• Revenue from political candidates is now expected to be at least $10 million, an increase of $5 million from prior guidance.
• Excluding political candidate revenue, the revised revenue guidance indicates year-over-year growth of at least 30%.
• Adjusted EBITDA guidance has been increased to at least $50.2 million, up from the previous midpoint of $47.1 million.
• This revised adjusted EBITDA guidance represents a year-over-year growth of at least 49%, with an implied adjusted EBITDA margin of 19.7%.
• The company is not updating its full-year 2024 guidance at this time and will discuss it with the third quarter earnings release.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment due to the increased revenue and adjusted EBITDA guidance, indicating strong growth and momentum. The management's comments are also optimistic, further supporting the positive outlook.

Positives

• The company is experiencing strong growth in the first two months of the third quarter.
• There is high visibility across the customer base.
• The increased guidance is not due to pulling forward revenue from the fourth quarter.
• The company is seeing an acceleration in the marketing cloud replacement cycle.
• There is increasing adoption of generative AI which is contributing to growth.

Risks

• Global supply chain disruptions could impact the company.
• Macroeconomic and industry trends could adversely affect the company.
• Increases in borrowing costs due to changes in interest rates could impact the company.
• Inflation could impact the company and its customers.
• Fluctuations in operating results could make future results difficult to predict.
• Future pandemics, epidemics, and other health crises could impact the company.
• Geopolitical tensions, such as the war in Ukraine and the conflict in Israel, could impact the company.
• The company's ability to innovate and make the right investment decisions in its product offerings and platform is a risk.
• The impact of new generative AI capabilities and the proliferation of AI on the business is a risk.
• The company's ability to attract and retain customers is a risk.
• The company's ability to manage its growth effectively is a risk.
• The company's ability to collect and use data online is a risk.
• Changes in standards for email regulation could impact the company.
• A security breach of the company's or its partners' computer systems is a risk.
• Disruptions to third-party data centers, systems, and technologies are a risk.

Future Outlook

The company is not updating its full-year 2024 guidance at this time and will discuss it with the third quarter earnings release, once actual results for the third quarter are finalized.

Management Comments

• David A. Steinberg, Co-Founder, Chairman, and CEO of Zeta, stated that the Zeta Marketing Platform with data and Artificial Intelligence is fueling their growth.
• David A. Steinberg also noted that they see an acceleration in the marketing cloud replacement cycle.
• Chris Greiner, Zeta's CFO, mentioned that the combination of accelerating growth and high visibility gives them confidence to increase their guidance.
• Chris Greiner also stated that the uplift they are seeing reflects new growth and is not the result of pull forward activity from the fourth quarter.

Industry Context

The announcement highlights the increasing importance of AI and data in marketing, as well as the ongoing shift towards cloud-based marketing solutions. The company's focus on generative AI adoption positions it well in the current market.

Comparison to Industry Standards

• Zeta's revised revenue growth of at least 35% year-over-year is strong compared to the broader marketing technology sector, which has seen growth rates ranging from 10% to 25% for established players.
• Companies like Adobe and Salesforce, while larger, have reported growth rates in their marketing cloud segments that are generally lower than Zeta's projected growth.
• Zeta's adjusted EBITDA margin of 19.7% is competitive with other SaaS companies in the marketing space, though some mature companies may have higher margins due to scale efficiencies.
• The increase in political candidate revenue is notable, as it indicates Zeta's ability to capitalize on specific market opportunities, which is not a common revenue stream for all marketing cloud providers.

Stakeholder Impact

• Shareholders will likely react positively to the increased guidance.
• Employees may feel more secure due to the company's positive performance.
• Customers may benefit from the company's continued investment in its platform.
• Suppliers may see increased business opportunities.
• Creditors may view the company as a lower risk due to its improved financial outlook.

Next Steps

• The company will discuss its fourth quarter and full-year guidance with its third quarter earnings release.

Key Dates

Keywords

AI-Powered Marketing Cloud, Marketing Cloud, Artificial Intelligence, Adjusted EBITDA, Revenue Guidance, Generative AI, Zeta Global, Marketing Platform