Zeta Q4 2025 Earnings Call Summary

1Key Financial Results and Metrics

Q4 Revenue: $395 million, up 28% year-over-year (YoY), exceeding guidance by $14 million.

Adjusted EBITDA: $95.1 million, representing a 24.1% margin, up 35% YoY.

GAAP Net Income: $6.5 million, a significant improvement from a net loss of $3.6 million in the previous quarter.

Full Year Revenue: $1.305 billion, up 30% YoY, with 27% growth excluding acquisitions.

Free Cash Flow: $55.8 million in Q4, up 76% YoY, with a margin of 14%. Full-year free cash flow was $165 million, a margin of 12.6%.

Net Revenue Retention: Reached a record high of 120%, up from 114% in 2024.

Customer Metrics: Total scaled customer count grew to 602, with super-scaled customers (spending over $1 million annually) increasing to 184.

2Strategic Updates and Business Highlights

Athena Launch: The AI-driven marketing platform, Athena, is set for general availability by the end of Q1 2026, with early users reporting significant ROI improvements.

Marigold Acquisition: Integration is progressing well, expected to be accretive to free cash flow and EBITDA in Year 1. The acquisition enhances data capabilities and use cases.

Partnership with OpenAI: This partnership is foundational for Athena, expected to enhance AI capabilities and drive efficiencies.

One Zeta Initiative: The number of customers using multiple use cases increased by 80% YoY, indicating strong adoption of the integrated platform approach.

3Forward Guidance and Outlook

2026 Revenue Guidance: Increased midpoint to $1.755 billion, representing a 35% growth rate.

Q1 2026 Revenue Guidance: Expected at $370 million, up 40% YoY.

Adjusted EBITDA Guidance for 2026: Increased to $391 million, with a margin of 22.3%.

Free Cash Flow Guidance for 2026: Increased to $231 million, representing a 40% growth rate.

4Bad News, Challenges, or Points of Concern

Political Candidate Revenue: Guidance remains conservative at $15 million for 2026, with potential upside depending on election cycles.

Competitive Pressures: Zeta faces competition from established players like Salesforce and Adobe, particularly in RFPs.

Market Conditions: The macroeconomic environment, including tariffs and inflation, could impact marketing budgets, although Zeta expects to benefit from companies seeking higher ROI on marketing spend.

5Notable Q&A Insights

Athena's Impact: Early adopters of Athena are seeing higher spending and improved workflow efficiencies, but its full impact on revenue is not yet included in guidance.

Customer Sentiment: Large enterprises are increasingly focused on maximizing ROI from marketing spend, which aligns with Zeta's value proposition.

RFP Trends: Zeta is winning over 50% of RFPs, indicating strong competitive positioning and increasing market share.

Stock Buybacks vs. M&A: Zeta is prioritizing stock buybacks in the current environment but remains open to strategic acquisitions if opportunities arise. Overall, Zeta's Q4 2025 results reflect strong growth, strategic advancements, and a positive outlook for 2026, despite facing competitive and macroeconomic challenges.