Summary
Zeta Global reported second-quarter fiscal 2023 revenue of $171.8 million, up 25.1% from the prior-year quarter. First-half revenue was $329.4 million, up 25.0%. The customer base continued to scale. Scaled customers reached 425 as of June 30, 2023, up from 411 at the end of the first quarter and 373 a year earlier. Super-scaled customers rose to 118, up from 110 in the first quarter and 100 in the prior-year quarter. Scaled customer ARPU was $392,000, up 10% year over year, which management called the 12th consecutive quarter of double-digit growth. Direct platform revenue made up 75% of total revenue, compared with 71% in the first quarter and 81% in the prior-year quarter. Total organic revenue was $170 million, up 24% year over year.
GAAP profitability improved. The operating loss was $46.2 million, compared with $77.1 million in the prior-year quarter. The net loss was $52.2 million, compared with $86.0 million. Diluted loss per share was $0.34, compared with $0.63. Operating margin was negative 26.9%, up from negative 56.1%. For the first six months, the operating loss was $98.7 million, compared with $145.2 million, and the net loss was $109.1 million, compared with $158.0 million. Diluted loss per share for the first half was $0.72, compared with $1.17. Operating margin for the first half was negative 29.9%, up from negative 55.1%.
Non-GAAP measures also improved. Adjusted EBITDA was $27 million, up 12% from $24 million in the first quarter and up 45% from $19 million in the prior-year quarter. Adjusted EBITDA margin was 15.6%, up from 15.3% in the first quarter and up from 13.5% in the prior-year quarter. Free Cash Flow was $13 million, compared with $6 million in the prior-year quarter, an increase of 110%. Operating cash flow was $20.6 million, up 40.6% from $14.7 million in the prior-year quarter. First-half operating cash flow was $40.7 million, up 13.6% from $35.9 million. Capital expenditures were $3.8 million in the quarter, down 20.6% from $4.8 million, and $9.0 million for the first half, down 22.2% from $11.5 million. Deferred revenue, current portion, fell to $3.4 million from $5.9 million a year earlier, down 42.3%.
Management raised guidance. For the third quarter of fiscal 2023, revenue guidance is $177 million to $181 million, up $3 million at the midpoint, including $1.5 million of M&A contribution, from prior guidance of $176 million. The revised range represents a year-over-year increase of 16% to 19%. Third-quarter Adjusted EBITDA guidance is $31.7 million to $32.2 million, up $2 million at the midpoint from prior guidance of $30 million, with a year-over-year increase of 41% to 44% and an Adjusted EBITDA margin of 17.5% to 18.2%. For the full fiscal year 2023, revenue guidance is $712 million to $718 million, up $14 million from the midpoint of prior guidance of $696 million to $706 million, including $5.6 million of M&A contribution. The revised full-year range represents a year-over-year increase of 20% to 21%. Full-year Adjusted EBITDA guidance is $124.2 million to $124.8 million, up $4.8 million from the midpoint of prior guidance of $118.8 million to $120.6 million, with a year-over-year increase of 35% and an Adjusted EBITDA margin of 17.3% to 17.5%. The Zeta 2025 plan targets at least $1 billion in revenue, at least 20% Adjusted EBITDA margins, and at least $110 million in Free Cash Flow.
Risks remain. The company cited macroeconomic and industry trends, adverse developments in debt, consumer credit and financial services markets, inflation, and increases in borrowing costs from higher interest rates. It also flagged the ability to attract and retain customers, including scaled and super-scaled customers, to manage growth effectively, to innovate and make the right investment decisions, and to handle the impact of new generative AI capabilities. Other risks include the ability to collect and use data online, future standards from private entities and inbox service providers that could interfere with email delivery, a significant inadvertent disclosure or security breach of confidential or personal information, and disruption to third-party data centers. The quarter included restructuring actions, and management said the company remains on track for its Zeta 2025 targets.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2023 | Q1 FY2023 | QoQ | Q2 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $171.8M | $157.6M | +9.0% | $137.3M | +25.1% |
| Gross profit | $109.8M | $103.3M | +6.3% | $87.1M | +26.1% |
| Gross margin | 63.9% | 65.5% | -1.6 pp | 63.4% | +0.5 pp |
| Research & development | $17.3M | $18.5M | -6.4% | $18.0M | -3.9% |
| Sales & marketing | $72.5M | $72.5M | -0.1% | $77.1M | -6.0% |
| General & administrative | $50.7M | $52.6M | -3.6% | $55.7M | -8.9% |
| Operating income (loss) | -$46.2M | -$52.4M | +11.9% | -$77.1M | +40.0% |
| Operating margin | -26.9% | -33.3% | +6.4 pp | -56.1% | +29.3 pp |
| Net income (loss) | -$52.2M | -$57.0M | +8.4% | -$86.0M | +39.4% |
| Net margin | -30.4% | -36.1% | +5.8 pp | -62.6% | +32.3 pp |
| Diluted EPS | -$0.34 | -$0.38 | +$0.04 | -$0.63 | +$0.29 |
| Customers | 118 | 110 | +7.3% | — | — |
Risks
MD&A states that if operating performance during the next 12 months is below expectations, liquidity and ability to operate the business could be adversely affected. As of June 30, 2023, accumulated deficit was $880.2 million and cash and cash equivalents were $117.1 million.
As of June 30, 2023, Zeta had $184.0 million of outstanding long-term borrowings, and the Senior Secured Credit Facility contains restrictive covenants that limit incurring additional debt and liens, purchasing securities, and other actions. The company was in compliance, but covenant limits could restrict strategic flexibility.
Interest expense increased by $1.1 million, or 67.9%, for the three months ended June 30, 2023 compared to 2022, primarily due to increases in interest rates. Continued elevated rates could further increase borrowing costs on variable-rate debt.
Zeta recorded $2.8 million of restructuring expenses during the three and six months ended June 30, 2023 from employee termination costs tied to internal restructuring. These actions may create execution risk or indicate cost pressure.
The company maintains a full valuation allowance against its U.S. deferred tax assets, resulting in limited tax benefit for U.S. operating losses and an effective tax rate of negative 0.6% for the three months ended June 30, 2023. This may limit future tax benefits.
SaaS KPIs
All quarters →Adjusted EBITDA
Adjusted EBITDA margin
Free Cash Flow
Scaled Customer ARPU
Scaled Customers
Super-Scaled Customers
Super-Scaled Customer ARPU
Direct Platform Revenue Mix
Summary, forecast, risks and KPIs are extracted from Zeta Global Holdings Corp.'s SEC filings for Q2 FY2023 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.