Summary
Zeta Global reported third-quarter revenue of $152.25 million, up 32.2% from the prior-year quarter and 11% sequentially. Year-to-date revenue reached $415.82 million, up 28.5%. Management credited $17.9 million of the quarterly gain to existing customers and $19.4 million to new customers. Direct platform revenue accounted for 74% of total revenue, unchanged from a year earlier, and Connected TV was the fastest growing channel, up more than 250% year over year.
Profitability is still the weak spot. The operating loss was $66.17 million for the quarter, compared with a loss of $66.86 million a year earlier, so the loss narrowed. Operating margin improved to negative 43.5% from negative 58.1%. Net loss was $69.44 million, essentially flat against $69.13 million in the prior-year quarter. Diluted loss per share was $0.49 versus $0.53. Stock-based compensation of $75.2 million accounted for the bulk of the red ink. Adjusted EBITDA, a non-GAAP measure, was $22.4 million, up 40% from $16.0 million, and adjusted EBITDA margin was 14.7% against 13.9%. The company also cut its cost of revenue percentage by 90 basis points to 37.8%, or 36.8% excluding stock-based compensation. Through the first nine months, the net loss widened to $227.49 million from $188.42 million, while the nine-month diluted loss per share narrowed to $1.66 from $2.60.
Customer counts kept climbing. Scaled customers reached 389 at September 30, 2022, up from 347 a year earlier, and super scaled customers rose to 106 from 86. Scaled customer ARPU increased 19% year over year to $382 thousand. The company added a record 16 new scaled customers in the quarter, six of them super scaled.
Cash generation improved sharply. Operating cash flow was $19.54 million in the quarter, up 92.3% from $10.16 million a year earlier, and $55.39 million for the nine months, up 137.0%. Capital expenditures rose 126.0% to $5.65 million in the quarter, and deferred revenue, current portion, was $6.10 million, up 122.9% from $2.74 million. Free cash flow, another non-GAAP figure, was $9.4 million versus $3.7 million a year ago.
Guidance went up for both the fourth quarter and the full year. For the fourth quarter of 2022, the range is $158 million to $162 million, a year-over-year increase of 17% to 20%, with adjusted EBITDA of $29.2 million to $29.7 million, up 28% to 30%, at a margin of 18.0% to 18.8%. For the full fiscal year 2022, the range is $574 million to $578 million, a year-over-year increase of 25% to 26%, with adjusted EBITDA of $89.0 million to $89.5 million, up 41%, at a margin of 15.4% to 15.6%.
The balance sheet shows $183.9 million of long-term borrowings under a $222.5 million senior secured credit facility priced at LIBOR plus 2.125% to 2.625% and maturing on February 3, 2026. Cash and cash equivalents were $114.8 million at September 30, 2022, and the accumulated deficit stood at $719.3 million. Unrecognized stock-based compensation of $396.4 million will run through future periods, with $68.4 million of it landing in the remainder of 2022. Risks flagged in the filing include inflation, rising interest rates, the war in Ukraine, global supply chain disruptions, and potential data breaches or outages at third-party data centers.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2022 | Q2 FY2022 | QoQ | Q3 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $152.3M | $137.3M | +10.9% | $115.1M | +32.2% |
| Gross profit | $94.7M | $87.1M | +8.8% | $70.6M | +34.2% |
| Gross margin | 62.2% | 63.4% | -1.2 pp | 61.3% | +0.9 pp |
| Research & development | $17.0M | $18.0M | -6.0% | $14.0M | +21.1% |
| Sales & marketing | $77.0M | $77.1M | -0.2% | $60.5M | +27.2% |
| General & administrative | $53.6M | $55.7M | -3.7% | $50.6M | +5.8% |
| Operating income (loss) | -$66.2M | -$77.1M | +14.2% | -$66.9M | +1.0% |
| Operating margin | -43.5% | -56.1% | +12.7 pp | -58.1% | +14.6 pp |
| Net income (loss) | -$69.4M | -$86.0M | +19.3% | -$69.1M | -0.4% |
| Net margin | -45.6% | -62.6% | +17.0 pp | -60.0% | +14.4 pp |
| Diluted EPS | -$0.49 | -$0.63 | +$0.14 | -$0.53 | +$0.04 |
Risks
The 10-Q adds an interest rate risk factor tied to Zeta's substantial variable-rate debt. The filing notes the Federal Reserve raised rates by more than 100 basis points in 2022 and signaled further increases, and MD&A states interest expense increased for the three months ended September 30, 2022 due to increases in interest rates.
The 10-Q updates the risk factors with inflation exposure: inflation may increase Zeta's overall cost structure, labor costs, interest rates, and capital costs, and the company states it has experienced and may continue to experience cost increases. If pricing actions do not keep pace, liquidity and results of operations could be materially adversely affected.
Zeta's Senior Secured Credit Facility contains restrictive covenants that limit its ability to incur additional debt and liens, purchase securities, pay dividends, or distribute excess cash flow. Although the company states it is in compliance and expects to remain compliant for the next 12 months, a breach or constrained financing flexibility could impair operations.
MD&A attributes significant volatility in other expenses to changes in the fair value of acquisition-related liabilities from prior acquisitions. This non-cash remeasurement can cause period-to-period swings in reported results and is outside the company's core operating control.
Net loss widened to $227.5 million for the nine months ended September 30, 2022 from $188.4 million in the prior-year period, and MD&A notes an accumulated deficit. The company may need additional capital, and any equity or debt financing could be on unfavorable terms or unavailable.
SaaS KPIs
All quarters →Adjusted EBITDA
Adjusted EBITDA margin
Free Cash Flow
Scaled Customer ARPU
Scaled Customers
Direct Platform Revenue Mix
Summary, forecast, risks and KPIs are extracted from Zeta Global Holdings Corp.'s SEC filings for Q3 FY2022 (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.