Zeta Global Holdings Corp Q1 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Elizabeth Porter - Morgan Stanley & Co. LLC - Analyst : Thank you so much. I wanted to ask about the agency side of the business. Looking at your Slide 12, it looks like it took with the first relationship about three years to get to 10 brands, but now you're scaling with 10 plus brands already within the first year of some of the newer relationships. So I just wanted to ask what are some of the factors that you think are helping you now land larger with some of those up more brands just off the year one? And then second, any go-to-market motions that you're running in terms of helping shift that direct versus integrated mix faster than what you've seen previously. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 06, 2024 / 8:30PM, ZETA.N - Q1 2024 Zeta Global Holdings Corp Earnings Call

Question: Elizabeth Porter - Morgan Stanley & Co. LLC - Analyst : Great. Thank you so much. And just as a follow-up, I wanted to ask on some of the intelligent agent side. Really impressive to hear about the 300 agents. Just curious how you view some of the engagement there is a lot of this still kind of in testing and pilot phases or the building being adopted more widespread and what are some of the factors that you think your customers need to see in order to drive the more meaningful adoption?

Question: Elizabeth Porter - Morgan Stanley & Co. LLC - Analyst : Great. Thank you. So much. Congrats on the quarter.

Question: Clark Wright - D.A. Davidson & Company - Analyst : Another great quarter. I just wanted to maybe start off? And if you could possibly just quantify how growth in the agency business has impacted the direct revenue mix since it was down six points from 4Q and where you see it trending over the course of the year?

Question: Clark Wright - D.A. Davidson & Company - Analyst : Got it. Appreciate that color. And if I could here for the second one, could you also talk about the company's initiatives to drive increased channel usage and any trends you are seeing in terms of the way that brands are engaging with prospective and current customers?

Question: Clark Wright - D.A. Davidson & Company - Analyst : Appreciate it. Thank you.

Question: Richard Baldry - ROTH MKM - Analyst : Thanks, and congrats again on the quarter. Can you talk about under what acceleration scenario might you have to increase your rate of internal spending and make India a broader question about how much your automation and leverage you have sort of in your fixed versus variable as the top line is picking up beyond what we'd expected? Thank you.

Question: Richard Baldry - ROTH MKM - Analyst : And kind of for those who don't know, it's our live and the agency ad world, can you talk a little about sort of the scale of number of customers that those would represent and sort of contrast that with obviously your penetration rate or and then maybe think about the budget per customer? And how far along that that curve you think you are with maybe your most mature agency customer?

Question: Richard Baldry - ROTH MKM - Analyst : Thanks. Congrats on the momentum.

Question: Ryan MacDonald - Needham & Company Inc. - Analyst : Thanks for taking my questions and congrats on a great quarter and wanted to focus on the large seven-figure financial services win in sort of the interesting aspect of that being partner-driven deal and sort of quick time to close as you think about the pipeline where it stands today, maybe versus 6 to 12 months ago, what's the mix of pipeline versus that's coming sort of direct versus partner driven? And are the initiatives that you have to sort of build out relationships with SIs and sort of accelerating that mix shift at all?How should we think about that?

Question: Ryan MacDonald - Needham & Company Inc. - Analyst : Super helpful color there. Maybe as a follow-up. Great to see sort of the guidance increase for the full year being sort of fully driven by the core business and the strength there. But I did want to ask about political and expectations there. I think as we are getting closer and closer to the election, which you're hearing more conversations about perhaps funding going more towards legal fees from one party than the other, which is forcing sort of deal the Biden administration to maybe not spend as aggressively or maybe they don't need to how is this factoring in if at all into your expectations for political ad spend as we look into the second half of the year?

Question: Ryan MacDonald - Needham & Company Inc. - Analyst : Thanks again, and congrats on a great quarter.

Question: Jason Kreyer - Craig-Hallum Capital Group LLC - Analyst : Great. Thank you guys, and congrats from me as well. Great quarter. David, just wondering if you could maybe frame the importance of AI in your pipeline conversations like it seems like you've always won more than your fair share, but maybe now that you're winning even more than your fair share because of AI, but curious if you can kind of parse that out.

Question: Jason Kreyer - Craig-Hallum Capital Group LLC - Analyst : Thank you. And just one more. I wanted to pivot over to the build-out of this mobile platform. Just maybe if you can give us kind of an idea of the progression there because we've seen products like CTV that has kicked in and become a growth accelerant for data. And so I'm curious at what point mobile could have achieved that critical mass and contribute more of the results.

Question: Jason Kreyer - Craig-Hallum Capital Group LLC - Analyst : Great. Thank you.

Question: Koji Ikeda - BofA Global Research - Analyst : Yeah, hey, guys. Thanks for taking the questions here. On, I wanted to ask about the super scaled customer strength, the net new addition strength there. And thanks for all the color in the prepared remarks and to a couple of questions that were asked prior on, but I did want to focus again on the agency customer strength. So question is around how is data really gaining mindshare within these end into within the agencies, there's data need like an internal champion within these agencies for each client relationship. So really focused on targeting these relationship owners or is the adoption of the data within these agencies being more top-down driven?

Question: Koji Ikeda - BofA Global Research - Analyst : Got it. No, thank you for that. And just to follow up here, I wanted to ask a question on the guidance. I appreciate the raise in the revenue and also the raising the EBITDA. So when I look at the flow through from revenue to EBITDA, looks a little bit less on the EBITDA raise versus the revenue rates. So just wanted to understand some of the puts and takes there? And then also just on the free cash flow, looks like that wasn't raised at all on the guidance. Just wondering, can you help help us bridge from revenue to EBITDA and free cash flow? Thank you.

Question: Zach Cummins - B. Riley, Inc. - Analyst : Hi. Good afternoon. David and Chris, congrats on the strong results. So I'm not sure if somebody already asked, I apologize, head to head that off from another call, but can you give us a little more sense of the recovery and the insurance vertical specifically, I mean, we've seen many of the REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 06, 2024 / 8:30PM, ZETA.N - Q1 2024 Zeta Global Holdings Corp Earnings Call Legion players really see a big recovery in demand in the first half. This year. So just curious what you're seeing on that side and what's really being built into your guidance for the rest of the year of the year within that vertical?

Question: Zach Cummins - B. Riley, Inc. - Analyst : Understood. And I apologize if maybe you addressed it in the script, but any sort of update to how you're thinking about your 2025 targets? Or is that fair to think about that as a future date potentially?

Question: Ryan MacWilliams - Barclays Capital Inc. - Analyst : David, that would be great. But I totally get it. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 06, 2024 / 8:30PM, ZETA.N - Q1 2024 Zeta Global Holdings Corp Earnings Call

Question: Ryan MacWilliams - Barclays Capital Inc. - Analyst : Okay. You had a little hold to do that. No worries. So good to see the improvement in ARPU growth from scale customers in the quarter now that we're further along into the year, have your larger customers feel better about where they stand compared to where they started the year in terms of their marketing spend. I'm just on the macro side and are they just waiting to see the outcome of the election and interest rates are getting more involved here?

Question: Ryan MacWilliams - Barclays Capital Inc. - Analyst : Appreciate it. Sort of a two-part question, maybe one for David one for Chris. David, you guys have built credibility since IPO with the organic results split. Any updates here on your thoughts around M&A and maybe how they could provide additional sell into some years ago customers? And then for Chris, just like a quick housekeeping item. Any update on how we should think about modeling gross margins for this year?

Question: Dan Reagan - Canaccord Genuity LLC - Analyst : Hey, guys, this is Dan Reagan on for DJ Hynes. I just wanted to say congrats to another solid quarter of consistent execution. I love to see the guidance raise too. You guys touched on this a little bit, but revenue growth has been pretty materially outpacing sales headcount growth for several quarters. That productivity gain is great to see, but I want to play devil's advocate with two questions. First, you know, or do you think you could grow faster with more sales capacity? And then secondly, what signals would inform you, but it's time to step up the pace of hiring? Or is it more dependent on the availability of experience sellers that you're looking for?

Question: Dan Reagan - Canaccord Genuity LLC - Analyst : So and then many agencies have existing relationships with data and platform providers. And also this question is also for the holdcos, what makes it as you approach unique enough to incentivize these agencies to shift significant portions of their budgets over to you and by how how how is your approach different than what other guys in the space are doing well.

Question: Ari Friedman - Oppenheimer & Co., Inc. - Analyst : Hey, this is Ari Friedman sitting in for Brian Schwartz. Thanks for taking my questions. I wanted to double-click on like the marketing buying environment and I was wondering kind of has there been a reprioritization since last year like this time last year, what marketers want to buy in terms of like their marketing stack and marketing solutions and what they're prioritizing or is it kind of the same? And then same with like the scrutiny under budget because it's the same as last year? Or is it better?