10-Q: Zeta Global Reports Strong Revenue Growth, Reduced Loss

Zeta Global Holdings Corp. announced significant revenue growth and a substantial reduction in net loss for the second quarter and first half of 2025, driven by new customer acquisition and increased platform usage.

Summary

• Revenues for the three months ended June 30, 2025, increased by 35.4% to $308.4 million, up from $227.8 million in the same period last year.
• Net loss for the three months ended June 30, 2025, significantly improved to $(12.8) million, compared to $(28.1) million for the prior year period.
• For the six months ended June 30, 2025, revenues grew by 35.5% to $572.9 million, up from $422.8 million in the first half of 2024.
• Net loss for the six months ended June 30, 2025, improved to $(34.4) million, a substantial reduction from $(67.6) million in the first half of 2024.
• Adjusted EBITDA for the six months ended June 30, 2025, increased by 52.8% to $105.5 million, with the Adjusted EBITDA margin expanding to 18.4% from 16.3%.
• Scaled customers increased by 21% to 567 as of June 30, 2025, compared to 468 as of June 30, 2024.
• Average Revenue Per User (ARPU) for scaled customers increased by 11% to $532 thousand for the three months ended June 30, 2025.
• Super-scaled customer ARPU increased by 19% to $1.6 million for the three months ended June 30, 2025.
• Cash and cash equivalents stood at $365.3 million as of June 30, 2025.
• Net cash provided by operating activities for the six months ended June 30, 2025, was $76.8 million, up from $55.8 million in the prior year period.
• The company repurchased 4,290,076 shares of Class A Common Stock for $57.1 million during the six months ended June 30, 2025, under its 2024 Share Repurchase Program.

Sentiment

Score: 8

Explanation: The company demonstrated strong financial performance with significant revenue growth, a substantial reduction in net loss, and improved Adjusted EBITDA. Customer growth and increased ARPU are positive indicators. The authorization of a new share repurchase program further signals confidence. While some risks and increased expenses exist, the overall trajectory and strategic positioning in AI-powered marketing are highly favorable.

Positives

• Strong revenue growth of 35.4% for the quarter and 35.5% for the six months, indicating robust business expansion.
• Significant reduction in net loss, improving from $(28.1) million to $(12.8) million for the quarter and from $(67.6) million to $(34.4) million for the six months.
• Adjusted EBITDA increased by 52.8% for the six-month period, demonstrating improved operational profitability.
• Adjusted EBITDA margin expanded by 2.1 percentage points to 18.4%, reflecting enhanced efficiency.
• Scaled customer base grew by 21% to 567, indicating successful customer acquisition and retention strategies.
• Average Revenue Per User (ARPU) for scaled customers increased by 11%, and for super-scaled customers by 19%, showing higher engagement and monetization from existing clients.
• Increased direct platform revenue to 74% of total revenues for the six months, suggesting greater reliance on proprietary technology.
• Net cash provided by operating activities increased to $76.8 million, indicating healthy cash generation from core operations.
• The company is in compliance with all financial covenants under its Senior Secured Credit Facility.
• A new share repurchase program of up to $200 million was authorized, signaling management's confidence and commitment to returning value to shareholders.

Negatives

• The company continues to report a net loss, although it has significantly narrowed.
• Other expenses increased by $7.9 million for the quarter and $10.8 million for the six months, primarily due to changes in the fair value of acquisition-related liabilities.
• Restructuring expenses of $3.2 million were incurred during the six months ended June 30, 2025, related to employee termination costs.
• Cash and cash equivalents saw a slight decrease from December 31, 2024, to June 30, 2025.
• Increased usage of cash for financing activities, primarily due to share repurchases, which reduced overall cash balance.

Risks

• Success and revenue growth depend on the ability to add and retain scaled customers and convert them into super-scaled customers.
• Long sales cycles can make it difficult to project revenue generation from potential customers.
• Operating results may fluctuate, including generally higher revenues during presidential election years, making future results difficult to compare and predict.
• Failure to manage growth effectively could negatively impact platform quality, business, operating results, and financial condition.
• Intense industry competition and failure to innovate or make the right investment decisions could harm the business.
• Acquisitions or strategic investments could be difficult to identify and integrate, divert management attention, disrupt business, dilute stockholder value, and adversely affect financial condition.
• The technology industry is subject to increasing scrutiny, potentially leading to U.S. federal or state government actions that could negatively affect the business.
• Ability to collect and use data online is threatened by new consumer tools, regulatory restrictions, and potential changes to web browsers and mobile operating systems, which could harm operating results and demand for products.
• Actual or perceived failures to comply with applicable data protection, privacy, and security laws, regulations, standards, and other requirements could adversely affect the business.
• Unfavorable publicity or negative public perception of current data collection practices could result in additional regulations impacting data cloud and platform effectiveness.
• Significant inadvertent disclosure or breach of confidential/personal information or security breaches of IT systems could be detrimental to business, reputation, and financial performance.
• Dependence 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 on the platform could lead to loss of publisher confidence, legal claims, and regulatory investigations.
• Standards adopted by private entities and inbox service providers for email use and delivery may interfere with platform effectiveness.
• Actual or perceived failure to comply with evolving regulatory frameworks around AI development and use could adversely affect the business.
• General economic and market conditions, including changes in U.S. trade policies (tariffs), could negatively impact the company or its customers.
• Incurring additional debt or issuing new debt or equity securities could impact the business and financial condition.
• Catastrophic events such as pandemics, natural disasters, war, conflicts, and acts of terrorism could cause business and operational interruption.
• Reliance on technology and development resources in India and other non-U.S. locations exposes the company to risks like difficulty hiring/retaining talent, wage inflation, geopolitical instability, intellectual property protection issues, health crises, and currency fluctuations.
• Subject to payment-related risks if customers dispute, do not pay invoices, or decrease spend, especially during economic downturns, and sequential liability contracts with marketing agencies may increase credit risk.

Future Outlook

The company anticipates interest expense to be impacted by changes in variable interest rates. It expects general and administrative expenses to increase in absolute dollars but decrease as a percentage of revenue over the long term. Selling and marketing expenses and research and development expenses are expected to increase in absolute dollars as the company continues to invest in marketing initiatives and technology platform development. The company believes its existing cash and anticipated net cash from operating activities, along with available borrowings, will be sufficient to meet working capital requirements for at least the next 12 months and the foreseeable future. The company will account for the tax effects of changes in tax law from the 'One Big Beautiful Bill Act' in the third quarter of 2025.

Management Comments

• We empower our customers to target, connect and engage consumers through software that delivers personalized marketing across all addressable channels, including email, social media, web, chat, Connected TV (CTV) and video, among others.
• 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.
• The ZMP enhances our customers ability to personalize consumer experiences at scale across multiple touchpoints. With AI-driven automation, brands can orchestrate highly effective programs through intuitive workflows and real-time intelligence.
• Our Consumer Data Platform (CDP+) now integrates LiveIntents identity graph, improving identity resolution while maintaining compliance with evolving privacy standards.
• We believe our existing cash and anticipated net cash provided by operating activities, together with available borrowings under our Revolving Facility, will be sufficient to meet our working capital requirements for at least the next 12 months and thereafter for the foreseeable future.
• We are currently in compliance with our financial covenants under the Senior Secured Credit Facility, and, based upon our current expectations, believe that we will continue to comply with our financial maintenance covenants for the next 12 months.

Industry Context

Zeta Global operates in the dynamic marketing technology (MarTech) sector, which is increasingly driven by data and artificial intelligence. The company's emphasis on its AI-powered Zeta Marketing Platform (ZMP) and the integration of LiveIntent's identity graph positions it to capitalize on the growing demand for personalized, data-driven marketing solutions. The focus on Generative AI (GenAI) aligns with a major industry trend towards advanced automation and optimization in marketing. The company acknowledges broader macroeconomic trends like inflation and global trade policies, which are common concerns across industries impacting consumer spending and business operations.

Legal Proceedings

• The company is a party to various litigations and administrative proceedings arising from the normal course of business activities.
• Management believes the resolution of these matters will not have a material impact on the company's business, results of operations, financial condition, or cash flows.
• There have been no material changes from previously disclosed legal proceedings.

Stakeholder Impact

• **Shareholders**: Positive impact due to strong revenue growth, reduced net loss, increased Adjusted EBITDA, and the authorization of a new share repurchase program, which could enhance shareholder value. Ongoing stock-based compensation may lead to some dilution.
• **Customers**: Positive impact as the company's growth and investments in AI-powered platforms (ZMP, CDP+) and LiveIntent integration aim to provide enhanced, personalized marketing solutions and improved ROI.
• **Employees**: Mixed impact; increased employee-related costs across various departments suggest continued investment in human capital, but restructuring expenses indicate some employee terminations.
• **Creditors**: Positive impact as the company is in compliance with its financial covenants under the Senior Secured Credit Facility, indicating financial stability and ability to meet debt obligations.

Next Steps

• Evaluate the tax impacts of the 'One Big Beautiful Bill Act' enacted on July 4, 2025, in the third quarter of 2025.
• Continue to invest in marketing initiatives to drive future growth.
• Continue to invest in research and development to enhance the technology platform and drive incremental value.
• Execute on the newly authorized 2025 Share Repurchase Program of up to $200 million through December 31, 2027.
• Repay the principal balance and any unpaid accrued interest on the Senior Secured Credit Facility by August 30, 2029.
• Issue approximately 232,560 shares of Class A Common Stock under the 2021 Employee Stock Purchase Plan offering ending November 30, 2025.

Key Dates

Recommendation

The company demonstrated robust financial performance with significant revenue growth, a substantial reduction in net loss, and strong Adjusted EBITDA expansion. The increase in scaled customers and ARPU indicates effective customer acquisition and monetization strategies. Strategic integration of LiveIntent's identity graph and continued investment in AI-powered solutions position the company well in the evolving MarTech landscape. The new $200 million share repurchase program signals management's confidence and commitment to shareholder value. While the company still reports a net loss and faces industry-standard risks, the positive operational momentum and strategic initiatives make it an attractive investment.

Keywords

Marketing Technology, AI, Omnichannel, Data-driven Marketing, Customer Relationship Management, Zeta Marketing Platform, ZMP, Consumer Data Platform, CDP+, LiveIntent, Identity Graph, Digital Marketing, AdTech, MarTech, Generative AI, Customer Acquisition, Customer Retention, SEC Filing, 10-Q