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Zeta Announces Second Quarter 2021 Financial Results

“…Results show its growth rate accelerating during the second quarter, adding over 30 new customers, a 39% increase in revenues, and 106% growth in adjusted EBITDA.”

  • Revenue increased 39% year over year to $106.9 million
  • Balanced revenue growth contribution between new customers and existing customers
  • Direct platform revenue mix improved to 77% of revenue compared to 74% in the previous quarter
  • Scaled customer count increased to 343 from 333 in the previous quarter
  • Scaled customer average revenue per user (ARPU) increased to $299K from $289K in the previous quarter

NEW YORK—Zeta (NYSE: ZETA), a cloud-based marketing technology company that empowers enterprises to acquire, grow, and retain customers, today announced financial results for the quarter ended June 30, 2021.

“Zeta’s results show its growth rate accelerating during the second quarter, adding over 30 new customers, a 39% increase in revenues, and 106% growth in adjusted EBITDA year over year,” said David A. Steinberg, Co-founder, Chairman & CEO of Zeta. “We are well positioned to benefit from the disruptive pace of digital transformation, with brands seeking solutions that combine scale with precision to extract more value from their first party data. Our software, encompassing patented AI, proprietary data assets, and real-time omnichannel capabilities, was purpose built to empower brands to acquire, grow and retain customer relationships at a higher ROI. A recent study we commissioned from Forrester Consulting showed that brands using the ZMP achieve 50% higher effectiveness on their marketing investments over a period of 3 years.”

“Our strong second-quarter performance reflects our solid execution and continued focus on our core growth drivers,” said Chris Greiner, Zeta’s CFO. “Scaled customers, which we define as customers with at least $100,000 of revenue over the last twelve months, are an important cohort for Zeta and represent most of our revenue. On a sequential basis, we increased scaled customer count and scaled customer ARPU. We saw sales productivity continue to ramp in the quarter. With these tailwinds and our improving revenue visibility in mind, our outlook for revenue and adjusted EBITDA for the third quarter and full year 2021 has improved.” 

Second Quarter 2021 Financial Highlights

(Unless otherwise noted, all comparisons are to the second quarter of 2020)

  • Total revenue of $106.9 million, an increase of 39%.
    • Balanced revenue growth contribution between new customers and existing customers.
    • Direct platform revenue mix improved to 77% of total revenue compared to 74% in the previous quarter.
    • Broad-based double-digit growth in 12 out of 15 verticals.
    • Strong growth in both US and international markets, at 39% and 33% respectively.
    • Significant omnichannel growth highlighted by nearly 500% revenue growth in connected TV (CTV).
  • Scaled customer count of 343 compared to 333 in the previous quarter.
  • Scaled customer ARPU over $299,000 compared to $289,000 in the previous quarter.
  • Operating loss of $122.3 million, compared to an operating loss of $6.6 million, driven primarily by $119.3 million of stock-based compensation expense compared to $0.03 million.
  • Net loss of $94.9 million, compared to a net loss of $15.1 million.
  • Adjusted EBITDA of $11.4 million, compared to $5.5 million.
  • Diluted loss per share of $1.92, compared to a diluted loss per share of $0.58.

Second Quarter 2021 Business Highlights

  • Announced a partnership with Dun & Bradstreet (D&B) to bring Zeta’s core solution to the B2B market. As part of the agreement, D&B will become an important multi-year scaled customer. D&B noted that they chose Zeta because of the breadth of its online data, its ability to combine data inflows seamlessly, its omnichannel platform capabilities, and its ability to deliver measurable results.
  • Grew the scale of Zeta’s identity graph to over 515 million individuals globally (from 500 million in the previous quarter) and over 225 million individuals in the US (from 220 million in the previous quarter).
  • Increased sophistication of Zeta’s CTV offering with CTV Genre and Content Targeting, which allows marketers to reach their target audiences in specific context within specific shows. Also developed a CTV Content Consumption Household Index to provide clients with deep insights into what content their target households are watching to inform their go forward media plans and creative strategy.
  • Created a new way for brands to rapidly onboard their first party data and a faster, more automated path to campaign activation through “low code onboarding” which eliminates the implementation dependency on enterprise IT resources and reduces the ramp time for Zeta from weeks or months to days.
  • Released a Total Economic Impact (TEI) study with Forrester Consulting that revealed 50% higher customer acquisition effectiveness on marketing investments and accelerated revenue over a period of three years among interviewed Zeta Marketing Platform (ZMP) customers that activate the company’s proprietary data.
  • Announced the appointment of Crystal Eastman as Zeta’s first ever Chief Marketing Officer (CMO). Ms. Eastman who previously served in senior leadership roles with The Trade Desk, American Express, and BlackRock will lead Zeta’s global marketing and communications organizations.

Third Quarter and Full Year 2021 Guidance

Zeta anticipates revenue and adjusted EBITDA to be in the following ranges:

Third quarter 2021

  • Revenue of $108 million to $111 million, a year-over-year increase of 13% to 16%. Excluding $3 million of non-recurring revenue associated with the U.S. presidential election cycle in the third quarter of 2020, the guidance represents a year-over-year increase of 17% to 20%.
  • Adjusted EBITDA in the range of $13.0 million to $13.5 million, a year-over-year increase of 6% to 10% and an adjusted EBITDA margin of 11.7% to 12.5%.

Full year 2021

  • Revenue of $432 million to $436 million, a year-over-year increase of 17% to 19%. Excluding $15 million of non-recurring revenue associated with the U.S. presidential election cycle in the second half of 2020 (with $3 million in the third quarter of 2020 and $12 million in the fourth quarter of 2020), the guidance represents a year-over-year increase of 22% to 24%.
  • Adjusted EBITDA in the range of $55.5 million to $57.5 million, a year-over-year increase of 40% to 45% and an adjusted EBITDA margin of 12.7% to 13.3%.

Investor Conference Call and Webcast

Zeta will host a conference call today, Tuesday, August 10, 2021, at 5pm Eastern Time to discuss financial results for the second quarter of 2021. The live webcast of the conference call can be accessed from the Company’s investor relations website, https://investors.zetaglobal.com/ where it will remain available for one year.

About Zeta

Zeta Global Holdings Corp. is a leading data-driven, cloud-based marketing technology company that empowers enterprises to acquire, grow and retain customers for a lower cost than they can achieve without us. The Company’s Zeta Marketing Platform (the “ZMP”) is the largest omnichannel marketing platform with identity data at its core. The ZMP analyzes billions of structured and unstructured data points to predict consumer intent by leveraging sophisticated artificial intelligence to personalize experiences at scale. Founded in 2007 by David A. Steinberg and John Sculley, the Company is headquartered in New York City. For more information, please go to www.zetaglobal.com.

Forward-Looking Statements

This press release, together with other statements and information publicly disseminated by the Company, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Any statements made in this press release or during the earnings call that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan and strategies. These statements often include words such as “anticipate,” “expect,” “suggests,” “plan,” “believe,” “intend,” “estimates,” “targets,” “projects,” “should,” “could,” “would,” “may,” “will,” “forecast” and other similar expressions. We base these forward-looking statements on our current expectations, plans and assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances at such time. Although we believe that these forward-looking statements are based on reasonable assumptions at the time they are made, you should be aware that many factors could affect our business, results of operations and financial condition and could cause actual results to differ materially from those expressed in the forward-looking statements. These statements are not guarantees of future performance or results. The forward-looking statements are subject to and involve risks, uncertainties and assumptions, and you should not place undue reliance on these forward-looking statements. Factors that may materially affect such forward-looking statements include, but are not limited to: the impact of COVID-19 on the global economy, our customers, employees and business; potential fluctuations in our operating results, which could make our future operating results difficult to predict; our ability to innovate and make the right investment decisions in our product offerings and platform; our ability to attract and retain customers, including our scaled customers; our ability to manage our growth effectively; our ability to collect and use data online; the standards that private entities and inbox service providers adopt in the future to regulate the use and delivery of email may interfere with the effectiveness of our platform and our ability to conduct business; a significant inadvertent disclosure or breach of confidential and/or personal information we process, or a security breach of our or our customers’, suppliers’ or other partners’ computer systems; and any disruption to our third-party data centers, systems and technologies. These cautionary statements should not be construed by you to be exhaustive and are made only as of the date of this press release. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

The third quarter and full year 2021 guidance items provided herein are based on Zeta’s current estimates and are not a guarantee of future performance. This guidance is subject to significant risks and uncertainties that could cause actual results to differ materially, including the risk factors discussed in the Company’s reports on file with the Securities and Exchange Commission. Zeta undertakes no duty to update any forward-looking statements or estimates.

The Following Definitions Apply to the Terms Used Throughout This Release

  • Scaled Customers: We define scaled customers as customers from which we generated more than $100,000 in revenue per year. We calculate the number of scaled customers at the end of each quarter and on an annual basis as the number of customers billed during each applicable period. We believe the scaled customers measure is both an important contributor to our revenue growth and an indicator to investors of our measurable success.
  • Scaled Customer ARPU: We calculate the scaled customer ARPU as revenue for the corresponding period divided by the average number of scaled customers during that period. We believe that scaled customer ARPU is useful for investors because it is an indicator of our ability to increase revenue and scale our business
  • Direct Platform and Integrated Platform: When the Company generates revenues entirely through the Company platform, the Company considers it Direct Platform Revenue. When the Company generates revenue by leveraging its platform’s integration with third parties, it is considered Integrated Platform Revenue. 

Non-GAAP Measures

In order to assist readers of our condensed unaudited consolidated financial statements in understanding the core operating results that our management uses to evaluate the business and for financial planning purposes, we describe our non-GAAP measures below. We believe these non-GAAP measures are useful to investors in evaluating our performance by providing an additional tool for investors to use in comparing our financial performance over multiple periods.

Adjusted EBITDA is a non-GAAP financial measure defined as net loss adjusted for interest expense, depreciation and amortization, stock-based compensation, income tax (benefit)/provision, acquisition related expenses, restructuring expenses, change in fair value of warrants and derivative liabilities, certain non-recurring IPO related expenses and other (income)/expense. Acquisition related expenses and restructuring expenses are acquisition related expenses and primarily consist of severance and other personnel-related costs which we do not expect to incur in the future as acquisitions of businesses may distort the comparability of the results of operations. Change in fair value of warrants and derivative liabilities is a non-cash expense related to periodically recording “mark-to-market” changes in the valuation of derivatives and warrants. Other (income)/expense consist of non-cash expenses such as changes in fair value of acquisition related liabilities, gains and losses on extinguishment of acquisition related liabilities, gains and losses on sales of assets and foreign exchange gains and losses. In particular, we believe that the exclusion of stock-based compensation and non-recurring IPO related expenses that are not related to our core operations provides measures for period-to-period comparisons of our business and provides additional insight into our core controllable costs. We exclude these charges because these expenses are not reflective of ongoing business and operating results.

Adjusted EBITDA margin is a non-GAAP metric defined as adjusted EBITDA divided by the total revenues for the same period. Adjusted EBITDA and adjusted EBITDA margin provide us with a useful measure for period-to-period comparisons of our business as well as comparison to our peers. We believe that these non-GAAP financial measures are useful to investors in analyzing our financial and operational performance. Our use of adjusted EBITDA and adjusted EBITDA margin has limitations as an analytical tool, and you should not consider these measures in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Because of these and other limitations, you should consider our non-GAAP measures only as supplemental to other GAAP-based financial performance measures, including revenues and net loss.

We calculate forward-looking non-GAAP Adjusted EBITDA and Adjusted EBITDA margin based on internal forecasts that omit certain amounts that would be included in forward-looking GAAP net income (loss). We do not attempt to provide a reconciliation of forward-looking non-GAAP Adjusted EBITDA and Adjusted EBITDA margin guidance to forward looking GAAP net income (loss) because forecasting the timing or amount of items that have not yet occurred and are out of our control is inherently uncertain and unavailable without unreasonable efforts. Further, we believe that such reconciliations would imply a degree of precision and certainty that could be confusing to investors. Such items could have a substantial impact on GAAP measures of financial performance.

Contacts

Investor Relations

Idalia Rodriguez

ir@zetaglobal.com

Press

Megan Rose

press@zetaglobal.com

10 Trends That Will Impact MarTech and The World in 2020

martech

For data-driven marketers, the 2010s were a decade filled with both promise and new advancements for both the marketer and the consumer.

The digital revolution brought enormous changes to the digital marketing industry, but in many instances, the long-term effects of those changes only began to be felt in 2019, as the decade drew to a close 

On one hand, this most recent year brought numerous examples of industry growth and technological maturation. Marketing channels such as social e-commerce, voice, podcasting, and private messaging apps all continued to rise in popularity and effectiveness. Marketers found innovative new ways to leverage big data, Artificial Intelligence, machine learning, and natural language processing technologies to create efficiencies, deliver personalized experiences for consumers, and boost sales. And many of the technologies that will enable the digital marketing of the future—learning how to leverage data and AI to predict consumer intent  and provide better experiences across new channels such as connected TV and IoT, to AR headsets and 5G-ready phones—will finally began to see more broad-based adoption.  

On the other hand, data-driven marketers also spent much of the year learning how to adopt new technologies to enhance consumer experiences; and the consumers themselves have become more difficult and more expensive to reach across disparate platforms, creating data silos for marketers. All signs seem to indicate that these trends will escalate in the 2020s, unless marketers take an approach of leveraging omnichannel solutions. Over the long term, they’ll open the door to a future that will be all but unrecognizable to the marketers of today. In the decade to come, however, data-driven marketers can expect to see the following:  

Zeta Global Predictions for the 2020s

 

Smart becomes ubiquitous. From smartphones to smart homes to smart cars, consumers will increasingly find themselves surrounded by connected devices. These devices will give marketers a new channel to engage consumers and create experiences, while also delivering an avalanche of new data on consumer habits and preferences.

Consumers in control. Consumers will finally be empowered to create marketing experiences for themselves that are more useful than annoying. Some of these increasingly informed consumers will begin to engage with marketing and advertisements for the purpose of “algorithm hacking,” getting more of what they want to see, as a means of taking back even more control of how, when and where advertisements are served to them.

Data gives marketers an edge. The proliferation of consumer data, and incredible scale and quality, will only continue to grow in 2020 as consumers fill their homes and lives with new devices. As marketers become more adept at leveraging this data, they’ll be able to act on predicting the consumers’ intent – shifting their attention away from ground-level marketing tactics and focusing more on the outcomes and audiences that matter.

All eyes on political marketing. The marketing industry is still reeling from the fallout of the data challenges surrounding the 2016 U.S. presidential election. Savvy marketers will be paying close attention to election marketing in 2020, and the methods used during the 2020campaign will have an enormous effect on how all other marketing is performed and regulated.

From data-driven companies to model-driven companies. In 2020, marketers will have to do more than simply look at Google Analytics and say “well, that did okay; I guess we’ll keep doing it.” As data becomes richer and the use of AI becomes more sophisticated, marketers will empowered and able to analyze their data in a way that helps them innovate and experiment with new ideas.

5G changes everything. The rollout of 5G network technology will change the world, and the marketing industry is no exception. Combined with the increasing pervasiveness of IoT devices, 5G networks will lead to an explosion in consumer data, providing marketers with more data on patterns of consumer behavior than ever before. This, along with the 5G network’s broadband speeds, will enable marketers to deliver richer, more personalized consumer experiences.

Augmented Reality/immersive content will become more important than ever. With 5G technology on its way and consumer adoption of AR technology accelerating, marketers can expect AR and immersive experiences to become more important in 2020 than ever before. Brands who jump on this trend early will have a tremendous edge over the competition, creating experiences that will be like nothing consumers have seen before.

Connected TV takes over. With cord-cutting trends showing no sign of abating, CTV will continue to gain traction as a key consumer engagement point. Marketers will need to leverage increasingly sophisticated tactics to stay relevant—bringing personalization to the small screen. Consumers will no longer be forced to sit through commercials that have nothing to do with their lives or needs. Instead, they’ll be empowered to opt in to advertising that’s actually relevant for them, making TV advertising much more welcome and appreciated than ever before.

AI shakes up market research. Artificial Intelligence will revolutionize marketing and market research in particular. Work related to data analysis and campaign performance will become heavily automated, with tasks like statistical analysis, brand awareness tracking, data cleaning, and even survey design all poised to be taken over by AI. By the end of the 2020s. AI will make most pure analysis and research support roles all but obsolete, although humans will continue to lead the charge in more strategic and qualitative roles.

Questions around “the death of the cookie.” Major browsers announced big changes to the way they handle consumer data this year, leading to renewed questions surrounding “the death of the cookie.” This, in turn, has rekindled the industry’s interest in first-party data and other approaches to tracking consumer behavior. Expect this to be a major topic of conversation in 2020. 

 

 

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