Zeta Global Holdings Corp. Q1 FY2025 earnings

Zeta Global reported first-quarter 2025 revenue of $264.4 million, up 35.6% from the prior-year quarter. The company narrowed its GAAP operating loss to $16.1 million, a 55.1% improvement from the prior-year quarter. GAAP net loss narrowed 45.4% to $21.6 million. Diluted loss per share was $0.10, a 56.5% improvement from the prior-year quarter. Operating margin improved 12.3 percentage points to -6.1%. These are solid top-line and profitability trends, though the company remains unprofitable on a GAAP basis. The improvement in operating margin reflects better cost leverage even as the company continues to invest in growth.

Operational metrics showed progress with larger customers. Scaled Customer count rose to 548 from 460 a year earlier, and Super-Scaled Customer count reached 159 from 144. Quarterly Scaled Customer ARPU increased 12% to $467 thousand, while Super-Scaled ARPU increased 23% to $1.38 million. Direct platform revenue mix was 73% of total revenue, compared with 67% in the prior-year quarter and 74% in the fourth quarter of 2024. Management highlighted the launch of AI Agent Studio and continued adoption of the Zeta Marketing Platform. These KPIs suggest the company is growing with larger customers and increasing wallet share. The higher mix of direct platform revenue is a positive sign for margins and platform stickiness.

Cash generation improved. Operating cash flow was $34.8 million, up 41.1% from the prior-year quarter. Capital expenditures fell 52.9% to $2.7 million. Free Cash Flow, a non-GAAP measure, was $28 million, up 87% from the prior-year quarter. Adjusted EBITDA, also non-GAAP, rose 53% to $46.7 million, and Adjusted EBITDA margin expanded to 17.7% from 15.6%. Deferred revenue, current portion only, increased 35.0% to $6.0 million. The GAAP net loss still reflects a large non-cash stock-based compensation charge, which management called out in the release. The gap between GAAP losses and non-GAAP profitability remains wide, so investors will watch whether stock-based compensation moderates over time. The company ended the quarter with a large cash balance and no immediate liquidity concerns, according to management.

Guidance was raised for both the second quarter and the full year. For the second quarter of 2025, management guided revenue to $295 million to $298 million, representing 30% to 31% year-over-year growth. That is up $2 million at the midpoint from prior guidance. Second-quarter Adjusted EBITDA guidance is $54.6 million to $55.2 million, up 42% to 43% year over year, with an Adjusted EBITDA margin of 18.3% to 18.7%. That is up $500 thousand at the midpoint from prior guidance. For the full year 2025, revenue guidance is $1,237 million to $1,247 million, up 23% to 24% year over year. Full-year Adjusted EBITDA guidance is $257.5 million to $259.5 million, up 33% to 34%, with a margin of 20.6% to 21.0%. Free Cash Flow guidance for the full year is $129.5 million to $133.5 million. Management said the raise was disciplined and conservative given macro uncertainty. The company did not provide a reconciliation of forward-looking non-GAAP guidance to GAAP measures.

Risks remain. The company faces macroeconomic uncertainty, including tariffs and changes in global trade policies that could raise costs and hurt customers. Other risks include the ability to attract and retain scaled customers, data privacy and security concerns, reliance on third-party data centers, and integration of acquisitions such as LiveIntent. The company also faces risks from changes in interest rates, inflation, and global supply chain disruptions. The press release notes that stock-based compensation is expected to remain a significant expense, which will continue to weigh on GAAP profitability. Zeta's liquidity position and its share repurchase activity are also worth monitoring. The company must keep executing on its AI roadmap and customer expansion to justify its valuation. Management's decision to take a conservative approach to guidance may be prudent, but it also signals that visibility beyond the current quarter is not unlimited.