10-K: Zeta Global Reports Strong 2024 Results, Fueled by AI-Powered Platform and Strategic Acquisition

Zeta Global's 2024 10-K filing reveals significant revenue growth driven by its AI-powered platform and the acquisition of LiveIntent, alongside ongoing investments in innovation and strategic partnerships.

Summary

• Zeta Global's 10-K filing for the fiscal year ended December 31, 2024, highlights its position as a leading AI-powered omnichannel data-driven cloud platform.
• The company empowers enterprises with consumer intelligence and marketing automation software, enabling personalized marketing across various channels.
• Zeta's Generative AI (GenAI)-driven marketing solutions facilitate personalized experiences, precise impact measurement, and optimized marketing spend.
• The integration of LiveIntent's identity graph and publisher network has strengthened Zeta's Data Cloud assets and people-based marketing capabilities.
• The Zeta Marketing Platform (ZMP) leverages GenAI and machine learning to process data signals, predict consumer intent, and drive personalized messaging.
• Zeta's data set includes over 245 million individuals in the U.S. and more than 535 million globally, with an average of over 2,500 attributes per individual.
• The company ingests over one trillion content consumption signals monthly, synthesizing this information into intent-based audiences.
• Zeta's growth strategies include penetrating the existing customer base, acquiring new scaled customers, innovating new products, strengthening partnerships, and expanding into international markets.
• The company's key strengths include omnichannel engagement, actionable insights, leadership in marketing automation, a secure platform, and AI-powered personalization.
• Zeta works with major enterprises across various sectors, with consumer & retail contributing 22% of revenues in 2024.
• 98% of Zeta's revenue for 2024 was derived from scaled customers, defined as those generating at least $100,000 in trailing-12-month revenue.
• The company had 1,793 total customers and 527 scaled customers, including 148 super-scaled customers, as of December 31, 2024.
• Zeta faces intense competition and must differentiate through AI-powered solutions, enhance identity resolution, and integrate products into enterprise ecosystems.
• The company's business is affected by seasonal fluctuations in marketing activity and cyclicality in political activity and economic conditions.
• Zeta is subject to data privacy and security laws, with the global data protection landscape rapidly evolving.
• As of December 31, 2024, Zeta had 2,191 employees, including 1,130 outside the U.S., and emphasizes inclusion, belonging, and employee wellness.
• The company has a patent portfolio of over 130 U.S. and international patents and applications covering AI, data governance, security, and identity management.
• Zeta's success depends on retaining key management, hiring and training new employees, and managing growth effectively.
• Acquisitions and strategic investments, including LiveIntent, pose integration and management challenges.
• International operations subject Zeta to additional costs and risks, including compliance with foreign laws and currency fluctuations.
• The company's business is subject to catastrophic events and operational interruptions.
• Zeta may issue additional equity or debt, diluting current stockholders and potentially lowering the stock price.
• The company's tax liabilities may be greater than anticipated due to changing tax laws and interpretations.
• The dual-class structure concentrates voting control, limiting stockholders' ability to influence corporate matters.
• Anti-takeover provisions could prevent a takeover and reduce the market price of the stock.
• The company's charter documents designate Delaware courts as the exclusive forum for certain stockholder litigation.
• Zeta has developed a cybersecurity risk management program based on frameworks like NIST CSF and ISO 27001.
• The Audit Committee oversees cybersecurity and IT risks, receiving regular reports from management.
• The company's corporate headquarters is in New York City, with offices in the U.S., UK, EU, and India.
• Zeta is involved in legal proceedings, including an SEC investigation into Kubient, Inc. and a class action lawsuit.
• The company's management believes existing cash and operating activities will be sufficient to meet working capital requirements.
• Zeta is exposed to market risk from interest rate fluctuations and foreign currency exchange risks.
• The company's financial statements are prepared in accordance with U.S. GAAP, requiring estimates and assumptions.
• Zeta uses non-GAAP financial measures like Adjusted EBITDA to evaluate ongoing operations.
• The company's loan agreement contains operating and financial covenants that may restrict business and financing activities.

Sentiment

Score: 7

Explanation: The document presents a mixed sentiment. While there's strong revenue growth and customer acquisition, the company still reports a net loss and faces various risks and challenges. The strategic acquisition and positive industry recognition contribute to a moderately positive outlook.

Positives

• Significant revenue growth driven by new and existing customers and the acquisition of LiveIntent.
• Increase in the number of scaled customers and scaled customer ARPU.
• High annual net revenue retention (NRR) rate indicates strong customer loyalty.
• AI-powered Agile Intelligence suite provides valuable insights to customers.
• Recognition as a leader in marketing automation by Forrester.
• Strong patent portfolio protecting the company's technology.
• Effective disclosure controls and procedures in place.
• The company is in compliance with its financial covenants under the Senior Secured Credit Facility.
• The company has a share repurchase program in place.

Negatives

• The company reported a net loss of $69.8 million for the year ended December 31, 2024.
• The company has an accumulated deficit of $1,028.3 million as of December 31, 2024.
• The company faces intense competition in the marketing technology industry.
• The company's business is affected by seasonal fluctuations and cyclicality.
• The company is subject to data privacy and security laws, which could impact its operations.
• The company may issue additional equity or debt, diluting current stockholders.
• The company's tax liabilities may be greater than anticipated.
• The dual-class structure concentrates voting control, limiting stockholders' ability to influence corporate matters.
• The company is involved in legal proceedings, including an SEC investigation and a class action lawsuit.

Risks

• The company's success depends on adding and retaining scaled customers and converting them into super-scaled customers.
• The company often has long sales cycles, making it difficult to project revenue.
• The company may experience fluctuations in operating results due to seasonality and political cycles.
• Failure to manage growth effectively could harm the quality of the platform and solutions.
• Intense competition could harm the company's business and financial condition.
• Acquisitions and strategic investments could be difficult to integrate and disrupt the business.
• Increasing scrutiny of the technology industry could lead to government actions that negatively affect the business.
• The company's business depends on its ability to collect and use data online, which is threatened by new consumer tools and regulatory restrictions.
• Failure to comply with data protection, privacy, and security laws could adversely affect the business.
• A significant data breach could be detrimental to the business and reputation.
• The company depends on third-party data centers, systems, and technologies, the disruption of which could adversely affect the business.
• Failure to detect or prevent fraud or malware intrusion could harm the company's reputation and lead to legal claims.
• Evolving regulatory frameworks around AI could adversely affect the business.
• Catastrophic events and man-made problems could disrupt the business.
• The company may need additional capital in the future, which may not be available on favorable terms.
• The company's loan agreement contains operating and financial covenants that may restrict business and financing activities.
• The company's ability to use its net operating loss carryforwards may be limited.
• Short sellers of the company's stock may be manipulative and drive down the market price.
• The nature of the company's business requires the application of accounting guidance that requires management to make estimates and assumptions.
• If the company fails to maintain an effective system of disclosure controls and internal control over financial reporting, its ability to produce timely and accurate financial statements could be impaired.
• The company is a controlled company within the meaning of the NYSE rules and, as a result, expects to qualify for, and may rely on, exemptions from certain corporate governance requirements.
• Anti-takeover provisions contained in the company's charter documents and Delaware law could prevent a takeover that stockholders consider favorable and could also reduce the market price of the stock.
• The company's amended and restated certificate of incorporation provides, subject to certain exceptions, that (i) the Court of Chancery of the State of Delaware is the sole and exclusive forum for certain stockholder litigation matters and (ii) the federal district courts of the United States of America are the exclusive forum for the resolution of any complaint asserting a cause of action under the Securities Act, which could limit the company's stockholders ability to obtain a favorable judicial forum for disputes with the company or its directors, officers, employees or stockholders.

Future Outlook

The company expects to continue investing in its business to drive long-term growth, including investments in R&D, sales and marketing, and international expansion. The company generally expects seasonality trends to continue and its ability to effectively manage its resources in anticipation of these trends may affect its operating results.

Management Comments

• The company empowers our customers to target, connect and engage consumers through software that delivers personalized marketing across all addressable channels.
• Our Generative AI (GenAI)-driven marketing solutions enable brands to personalize experiences at scale, measure impact with precision and optimize marketing spend to increase return on investment (ROI).
• With the integration of LiveIntents identity graph and publisher network, we have strengthened our Data Cloud assets and our ability to deliver authenticated, people-based marketing across addressable channels.

Industry Context

Zeta operates in the intensely competitive marketing technology industry, which is characterized by rapid changes in technology, evolving customer needs, and frequent product introductions. The company's success depends on its ability to differentiate through AI-powered marketing solutions, enhance identity resolution with first-party data, and integrate its products into enterprise ecosystems.

Comparison to Industry Standards

• The document mentions Zeta was recognized as a Leader in The Forrester Wave: Email Marketing Service Providers, Q3 2024, placing it among top-tier email marketing platforms.
• The document mentions Zeta was also recognized as a Strong Performer in The Forrester Wave: Customer Data Platforms for B2C, with the highest possible scores across six criteria, and as a Challenger in Gartner's Magic Quadrant: Multi-Channel Marketing Hubs, Q4, 2024.
• The document mentions Zeta was named as a Leader in IDC's MarketScape for Worldwide Omni-Channel Marketing Platforms for B2C Enterprises in 2023.
• The document does not provide specific comparisons to individual competitors like Adobe, Salesforce, Oracle, or smaller point solution providers, but it emphasizes Zeta's competitive advantages in AI-powered workflows, deterministic identity resolution, intuitiveness, comprehensive feature set, rapid deployment, flexibility, and customer ROI.

Legal Proceedings

• The company and members of its senior executive team have received subpoenas from the SEC in connection with an investigation into Kubient, Inc.
• A purported stockholder of the Company filed a putative class action lawsuit in the U.S. District Court for the Southern District of New York against the Company and the Company's Chief Executive Officer, David A. Steinberg, and the Company's Chief Financial Officer, Christopher Greiner.
• Purported stockholders of the Company filed shareholder derivative complaints in the U.S. District Court for the Southern District of New York purportedly on the Company's behalf against members of the Company's board of directors and the Company as a nominal defendant, which have been consolidated into a single lawsuit captioned In re Zeta Global Holdings Corp. Stockholder Derivative Litigation.

Related Party Transactions

• The Company entered into an agreement with Casting Made Simple Corp. (CMS), an entity owned by the Caivis Group (the Company's Chief Executive Officer owns a controlling interest in the Caivis Group) and the Chief Executive Officer's spouse, to monetize traffic generated through websites owned by CMS and give a profit share to CMS.
• The Company's Chief Financial Officer's spouse is an executive officer at DailyPay, Inc. The Company entered into an agreement with DailyPay to provide certain marketing related services.

Stakeholder Impact

• Shareholders may experience dilution from future equity issuances.
• Employees are subject to insider trading policies and must comply with legal and ethical standards.
• Customers benefit from the company's AI-powered platform and marketing automation solutions.
• Suppliers and vendors are subject to third-party risk management processes.
• Creditors are subject to the terms and covenants of the company's loan agreement.

Next Steps

• The company intends to use the net proceeds from the sale of shares for general corporate purposes.
• The company plans to continue to invest in its business in order to drive long-term growth in an expanding market and capture economies of scale derived from a larger business base.
• The company plans to invest in its research and development activities to ensure it remains at the forefront of data management, AI development and marketing automation.
• The company will also continue to invest in its sales and marketing capabilities.
• The company expects to invest in the expansion of markets including international and the B2B sector.
• The company plans to incur additional general and administrative expenses to support its growth.

Key Dates