Zeta Global Holdings Corp Q4 2024 Earnings Call Transcript

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

Question: Matthew Swanson - RBC Capital Markets - Analyst : Yeah, thank you guys so much for taking my question. Congratulations on the quarter. Chris, you covered a lot of ground there going through those three sets of guidance but maybe pulling in the zoom lens a little bit, can you talk a little bit about what you're kind of thinking through from a macro environment, maybe a more like demand-centric spending environment for both Q1 for 2025?

Question: Matthew Swanson - RBC Capital Markets - Analyst : I appreciate that and then David, great to hear that you already have LiveIntent integrated as quickly as January. Can you just talk a little bit more about kind of what you're hearing from customers in terms of their initial use cases, initial adoption, and then to broaden it out in the 2028 plan? We have some new verticals and new products, there are some of those other up drivers. What do you see when you launch new products that gives you confidence in that long term ARPU expansion? Just in customers' desire, I guess to take more from Zeta.

Question: DJ Hynes - Canaccord Genuity - Analyst : Hey, good evening guys. Nice set of results. If maybe, I can have you expound on that last point, which is the agency business. Clearly the ARPU gains suggest there's lots of momentum there. Maybe just talk about what you're hearing from those folks, what kind of visibility you have into the lines that they have for pulling in new brands? How are you thinking about the growth opportunity with the agencies for 25 and beyond? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 25, 2025 / 9:30PM, ZETA.N - Q4 2024 Zeta Global Holdings Corp Earnings Call

Question: DJ Hynes - Canaccord Genuity - Analyst : Yeah, makes sense. Maybe a follow up to that. It was interesting. One of the agents you called out was kind of a push into creative, and I'm curious, like how deep does data want to go into creative? Does that create any channel conflict with these agency customers? Are they asking you to do that? Just talk about the opportunity there and whether that's meaningful to Zeta.

Question: Jason Kreyer - Craig-Hallum Capital Group - Analyst : Hey, thanks guys, and congrats on another strong quarter. So look, you guys are working with some of the largest marketing companies, you talked about 44% of the Fortune 500, you're just running at a scale customer ARPU of $2 million today. So what are the key elements of the strategy that help you increase wallet shares? So it's not $2 million but $20 million or $40 million or $80 million over time.

Question: Jason Kreyer - Craig-Hallum Capital Group - Analyst : Perfect, thank you. And then just to follow up to kind of something we talked about in December, but you know you spent a lot of time with your biggest customers over the last handful of months here. Just wondering how those conversations continued to progress and what is it about those conversations that drive them to want to do more with Zeta?

Question: Ryan MacDonald - Needham & Company - Analyst : Alright, thanks for taking my question and congrats on a great close to 2024. David, you talked about this concept of OneZeta where you're consolidating all of your use cases into one sale. Can you just talk about the challenges of sort of that concept, given that you've now integrating sales forces on new products that you've recently acquired, adding in generative AI to that? And then are you seeing early signs of the benefits of that on, say like the RFP flow in terms of just larger or more comprehensive RFPs as you mature in that motion? Thanks.

Question: Ryan MacDonald - Needham & Company - Analyst : Appreciate all the color on that. And then obviously, given all the success that the company has had, it's obviously going to, I think, bring in new competition into the market. We've recently seen sort of reports about Meta trying to go to the agencies to do more on AI-based advertising. Can you just talk about what you're seeing maybe in terms of newer movement or any changes competitively and you know whether or not, some of this moves from the walled gardens, creates any concern in the near term? Thanks.

Question: Terry Tillman - Truist Securities - Analyst : Yeah, congratulations for me as well. Hi David, Chris, and Matt. First question might be a multi-parter and then I had a follow up. But you all provided some interesting stats in terms of the pipeline and the value of the pipeline kind of ending the year. What I'm curious about is how do we think about timing of that converting into like meaningful or material revenue and if some of these are kind of OneZeta deals, does it take a little bit longer before we start seeing that in the model in 25? And then I had a follow up.

Question: Terry Tillman - Truist Securities - Analyst : Yeah, that's definitely clear, David. I guess, it seems like forever ago, but it really wasn't that long ago with Zeta Live. So much has happened since then, but there was a lot on the mobile side. So just maybe a quick update on that and potentially, could this start becoming meaningful in 25 in terms of a key revenue channel? Thank you.

Question: Arjun Bhatia - William Blair & Company - Analyst : Perfect, thank you, guys. Congrats on the strong close of the year here. Maybe I can switch back to agencies for a second. Chris, I'm curious what role you see agencies contemplating in that 2028 model? We know they're kind of on the upward part of that curve in terms of growth right now, but kind of how are you anticipating that growth might shape out over the next couple of years and then the other piece? And just in terms of mix like where are you thinking the agencies are in the pace of adopting digital channel or -- sorry, direct channels is that, are you starting to see that pick up in 24, early 25 here? And just how do you think that might trend over the coming years? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 25, 2025 / 9:30PM, ZETA.N - Q4 2024 Zeta Global Holdings Corp Earnings Call

Question: Arjun Bhatia - William Blair & Company - Analyst : Okay, understood. And then, just a quick one to put a finer point on it. I know we talked about this a little bit late in 2024, but kind of the fallout from or the customer conversations that you've had following up with some of your customers post the short report, has there been any impact or any change in those conversations since that's happened? How are your customers reacting and what are you seeing, from them, post some of the events late last year?

Question: Kelly Valentini - Goldman Sachs - Analyst : Hi, thank you for taking my question. And congrats on the quarter. Want to walk through the comments you made on getting those budget penetration to 5% to 15%. Curious, like, in the typical customers you see that expansion, how much of that would you expect to be taking share from Walled Gardens versus taking share from other technology providers?

Question: Kelly Valentini - Goldman Sachs - Analyst : That makes sense, thank you. And then as a follow up, just curious, anything you can give on what assumptions you're making on AI revenue growth and kind of the 2025 and 2028 targets?

Question: Kelly Valentini - Goldman Sachs - Analyst : Okay, thank you.

Question: Koji Ikeda - BofA Global Research - Analyst : Yeah, hey guys, thanks so much for taking the questions. Maybe this one's for Chris. And so Chris, when I look at the third quarter transcripts, I recall that you said you were very comfortable with 2025 consensus revenue growth of 17%. And so I know that was supposed to be without LiveIntent, and that got us to a number that is a couple of millions below the $1.144 million or billion that you're guiding to today without LiveIntent. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 25, 2025 / 9:30PM, ZETA.N - Q4 2024 Zeta Global Holdings Corp Earnings Call But if I use that $1.144 million number and then compare it to where you ended up at 2024, that implies 14% organic growth versus the third quarter when you said 17%. And I know in the slide 24, it says 21% growth. And so I just want to make sure I'm comparing apples-to-apples here with that original 17% comment from the third quarter call.

Question: Koji Ikeda - BofA Global Research - Analyst : Got it. No, thank you for that. And maybe just a quick follow up. I did want to ask if the conservatism and the guidance or any sort of consideration in the guide this year, just thinking about all the macro and regulatory and tariff noise that's out there, is there any additional conservatism that you pulled with the guidance this year? Thank you.

Question: Koji Ikeda - BofA Global Research - Analyst : Thanks, guys.

Question: Brian Schwartz - Oppenheimer - Analyst : I'm on mute. Sorry about that. Sorry about that.

Question: Brian Schwartz - Oppenheimer - Analyst : Thank you. A couple of questions from me, Chris. I just wanted to ask you on the D cell in the 1Q guide. I know the comp is, a few points harder here and there's political spending headwinds on the comparable, but is there anything else that you are contemplating in that guide to see that type of organic deceleration beyond those items, did having one last day, is that also an impact in terms of the 1Q guide? And then I have a follow up. Thanks.

Question: Brian Schwartz - Oppenheimer - Analyst : Okay, and then the follow up question I had on the 2028 guide. I know there was some discussion earlier about the agency business which is doing really well for you. Is it your expectation, Chris that, that business could double in terms of its percentage of the revenue mix, as we fast forward to 2028? Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 25, 2025 / 9:30PM, ZETA.N - Q4 2024 Zeta Global Holdings Corp Earnings Call

Question: Zach Cummins - B. Riley Securities - Analyst : Yeah, hi. Good afternoon. And just adding on my congratulations for the quarter, just double clicking a little bit more on the agency opportunity, I mean, David, can you speak to just the growth opportunity that you have with the top five global holding companies versus maybe your aspirations to expand into the mid-market on the agency side?

Question: Zach Cummins - B. Riley Securities - Analyst : Understood. And just by one follow up, geared towards Chris. Can you talk about your plans for quota carrying hiring for 2028? Obviously, much larger sales force than three years ago, but just curious of any sales efficiency gains that you're baking into that versus necessary capacity to execute on those targets?

Question: Richard Baldry - Roth Capital Partners - Analyst : Thanks. Maybe, switching gears, I wanted to look at the balance sheet. You repurchased $31 million worth of shares in the quarter. That's 3x what you've done the rest of the year combined and almost matched your free cash flow. So curious, your thought process around the buyback on a go-forward, do you think you'll run it at a higher percent of the free cash flow? Do you think you'd be opportunistic in it ever like look at taking the actual cash balances down to pursue it more aggressively just to give us a backdrop for the year ahead? Thanks.

Question: Richard Baldry - Roth Capital Partners - Analyst : Then the follow up that for me would be, it looks like we probably have a better M&A environment with an administration that might let more things go through. So how are you thinking about growth, the inorganic growth, opportunities now and as you look ahead to sort of broaden offerings, get into new markets, etc.?