Q4 2024 Zeta Global Holdings Corp Earnings Call

February 26, 2025

Anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

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Speaker Change: It is now my pleasure to introduce your host Matt Pauls Senior Vice President of Investor Relations. Thank you Sir you may begin.

Speaker Change: Thank you operator, Hello, everyone and thank you for joining us for <unk> fourth quarter and full year 2024 conference call.

David Steinberg: Now let's talk about AI and agentic AI adoption across our platform.

David Steinberg: As a reminder, our Gen AI products empower customers in three ways.

Speaker Change: Today's presentation and earnings release are available on <unk> Investor Relations website at investors <unk> Zeta Global Dot Com, where you will also find links to our SEC filings along with other information about <unk>.

David Steinberg: Productivity, automating marketing tasks with intelligent AI agents. Personalization, enhancing customer experiences with AI-driven audience insights.

Speaker Change: Joining me today on the call are David Steinberg latest co founder Chairman and Chief Executive Officer, and Chris Greiner Data's, Chief Financial Officer.

David Steinberg: and Precision, enabling marketers to interact conversationally with Zeta's marketing platform for faster, more complete answers.

Speaker Change: Before we begin I'd like to remind everyone that statements made on this call as well as in the presentation and earnings release contain forward looking statements regarding our financial outlook business plans and objectives and other future events and developments, including statements about the market potential of our.

David Steinberg: But AI isn't just a tool. It's an extension of the marketing team. Our agentic AI performs specialized roles within an enterprise, seamlessly integrating into workflows to drive efficiency and superior performance.

Speaker Change: <unk>.

For example, Operations Specialist Agents.

Speaker Change: Central competition revenues of our products and our goals and strategies.

David Steinberg: These AI-driven QA agents replace a manual 10-step process, integrating with QA systems of record to track completion, agent ownership, and results, ensuring compliance and improving efficiency. Your own virtual data scientist agents. Clients can bring their own predictive models into our platform, but aligning those models with ingested events and data structures can be complex. Our agents automate the data mapping process, ensuring seamless integration by intelligently matching fields, normalizing formats, and resolving discrepancies. This removes manual effort and accelerates time to value for clients. Creative agents. Our Visual Composer acts like a world-class creative director, helping marketers to go from a blank slate to a fully designed campaign in minutes. It leverages existing templates and uses AI to generate images, body content, subject lines, and content blocks, reducing iteration cycles and accelerating campaign deployment.

David Steinberg: We are working with multiple financial institutions to automate their quality assurance processes for marketing campaigns. These AI-driven QA agents replace a manual 10-step process.

Speaker Change: These statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected.

Speaker Change: These risks and uncertainties include those described in the company's earnings release, and other filings with the SEC and speak only as of today's date.

David Steinberg: Integrating with QA systems of record to track completion, agent ownership, and results, ensuring compliance and improving efficiency.

Speaker Change: In addition, our discussion today will include references to certain supplemental non-GAAP financial measures, which should be considered in addition to and not as a substitute for our GAAP results. We use these non-GAAP measures and managing our business and believe they provide useful information for our investors.

Your own virtual data scientist agents.

David Steinberg: Clients can bring their own predictive models into our platform but aligning those models with ingested events and data structures can be complex.

Speaker Change: Yeah.

Speaker Change: Reconciliations of the non-GAAP measures to the corresponding GAAP measures, where appropriate can be found in the earnings presentation available on our website as well as our earnings release and our other filings with the SEC.

David Steinberg: Our agents automate the data mapping process, ensuring seamless integration by intelligently matching fields, normalizing formats, and resolving discrepancies. This removes manual effort and accelerates time to value for clients.

David: With that I will now turn the call over to David.

David: Thank you Matt Good afternoon, everyone and thank you for joining US today 2024 was a record year for say that capped by a strong fourth quarter, where we once again exceeded expectations marketing is at the front lines of the AI Revolution driver.

Creative agents.

Our visual composer acts like a world-class creative director.

David Steinberg: helping marketers to go from a blank slate to a fully designed campaign in minutes.

David Steinberg: It leverages existing templates and uses AI to generate images, body content, subject lines, and content blocks, reducing iteration cycles, and accelerating campaign deployment.

David: An unprecedented replacement cycle across the marketing technology ecosystem.

David Steinberg: While for some companies, AI is just a press release or an add-on, for Zeta it is foundational to our platform. We have been investing in AI for more than seven years, not seven months, and we have the results to prove it. In 2024, AI adoption across our platform surged. 126 brands adopted our Data Cloud AI within its first year of launch. AI agent usage grew nearly 200% sequentially in Q4 as more enterprises embedded automation. Over 1,000 behavioral taxonomies were created using AI alone, doubling the number of taxonomies in our platform. We are truly shaping the future of AI-powered marketing. Rather than charging separate fees, we monetize our AI products through increased consumption, accelerating adoption across our customer base.

David: At the data, we've consistently skating to where the puck is going or.

David: Our early investments in AI and first party data are resonating with customers and prospects.

David Steinberg: We have been investing in AI for more than 7 years, not 7 months, and we have the results to prove it.

David: Our record fourth quarter results and contributing to our market share gains.

David: We believe these investments will propel us to over $2 billion in annual revenue by 2028 as outlined in our Zeta 2028 plan.

David Steinberg: In 2024, AI adoption across our platform surged. 126 brands adopted our Data Cloud AI within its first year of launch.

David: In the fourth quarter of 2024, we generated record revenue of $315 million up 50% year over year with record adjusted EBITDA of $70 million up 50.

David Steinberg: AI agent usage grew nearly 200% sequentially in Q4 as more enterprises embedded automation.

David Steinberg: Over a thousand behavioral taxonomies were created using AI alone, doubling the number of taxonomies in our platform.

57% year over year, both well ahead of our guidance.

David: For 2025, we are guiding to our sixth consecutive year of 20 plus percent growth alongside another year of free cash flow margin expansion.

David Steinberg: We are truly shaping the future of AI powered marketing. Rather than charging separate fees, we monetize our AI products through increased consumption, accelerating adoption across our customer base.

David Steinberg: Although we are still early in AI adoption across our platform, we saw a meaningful impact to our consumption revenue, which increased over 40% in 2024, a significant acceleration from 2023. Unlike other software companies, we do not need to pivot our business model to monetize our AI innovations. We are already doing so, as evidenced by our 2024 results. Zeta's leadership in AI continues to attract top-tier talent. Pam Lord recently joined us as President of CRM from Oracle, where she ran their B2B and B2C marketing cloud businesses. Ed See, our new Chief Growth Officer, was previously a partner at McKinsey & Company's marketing and sales practice. We also continue to enhance both our team and our platform. We are happy to report that we completed the LiveIntent integration in early January, well ahead of our schedule, and it's already delivering incremental value to our customers.

Our <unk> 'twenty 'twenty eight planned forecast ace and alert trajectory, 20% organic revenue CAGR between 2024, and 2028 adjusted EBITDA margin improvement of 580 basis points to at least a 20.

David: 5% margin and free cash flow margin expansion of 700 basis points to at least 16% over this time frame.

David Steinberg: And unlike other software companies, we do not need to pivot our business model to monetize our AI innovations. We are already doing so as evidenced by our 2024 results.

David: 2024 was an exceptional year for <unk> and as we enter 2025, our momentum is accelerating the business has never been stronger and the opportunity has never been bigger.

David Steinberg: Zeta's leadership in AI continues to attract top-tier talent. Pam Lord recently joined us as president of CRM from Oracle where she ran their B2B and B2C marketing cloud businesses.

David: Our vision of an all in one marketing platform with AI and data at its core is resonating more than ever while most AI products either drive efficiency or drive revenue gains, we believe veda as AI does.

David Steinberg: Ed See, our new Chief Growth Officer, was previously a partner at McKinsey & Company's marketing and sales practice.

David: Creating a powerful competitive advantage and delivering measurable impact.

David Steinberg: We have already launched our first synergistic product from the acquisition, Zeta Direct. This solution combines LiveIntent's premium publisher network with the Zeta Data Cloud, enabling marketers to deliver personalized ads directly within newsletter emails. This innovation enhances publisher monetization while driving a higher ROI for marketers and Zeta, a true win-win-win. As I reflect on nearly four years as a public company, Zeta's trajectory has never been clearer. We have beat and raised guidance for 14 consecutive quarters, outperformed our Zeta 2025 plan a year ahead of schedule, and strengthened our AI data leadership. We remain confident in our ability to be a Rule of 40 business for many years to come. We are truly building a one-of-a-kind company. As always, I would sincerely like to thank our customers, our partners, Team Zeta, and all of our shareholders for their ongoing support of our vision.

David: In Q4, the dollar value of our Rfps reached a record high.

David Steinberg: We have already launched our first synergistic product from the acquisition, ZetaDirect.

David: The 40% year over year with the total pipeline growth of almost 60%.

David Steinberg: This solution combines live intense premium publisher network with the Zeta Data Cloud.

David: Our U S. NPS score increased eight points year over year to 55, we.

enabling marketers to deliver personalized ads directly within newsletter emails.

David: We saw significant traction with our one <unk> initiative, which focuses on expanding customer use cases, extending our solutions to become more indispensable.

David Steinberg: This innovation enhances publisher monetization while driving a higher ROI for marketers and Zeta a true win-win-win

David: A prime example is a fortune 500 retailer who was an existing retention based CDP client that added a customer acquisition use case, which should more than double their investment with us.

David Steinberg: As I reflect on nearly four years as a public company, Zeta's trajectory has never been clearer. We have beat and raised guidance for 14 consecutive quarters.

David Steinberg: outperformed our Zeta 2025 plan a year ahead of schedule and strengthened our AI data leadership.

David: Now, let's talk about AI, and a gentex AI adoption across our platform.

David: As a reminder, our gen AI products and power customers in three ways.

David Steinberg: We remain confident in our ability to be a rule of 40 business for many years to come. We are truly building a one-of-a-kind company.

David: Productivity.

David: Automating marketing tasked with intelligent AI agents personalization enhancing customer experiences with AI driven audience insights.

David Steinberg: As always, I would sincerely like to thank our customers, our partners, Team Zeta, and all of our shareholders for their ongoing support of our vision. Now, let me turn it over to Chris to discuss our results in greater detail. Chris?

David Steinberg: Now let me turn it over to Chris to discuss our results in greater detail. Chris?

David: And precision, enabling marketers to indirect conversationally with Vedas marketing platform for faster more complete answers.

Chris Greiner: Thank you, David, and good afternoon, everyone. We have a lot of exciting information to share on our 2024 results and Zeta 2028 plan. Before I get into the details, I want to lead with three main themes. First, consistency. Zeta has been incredibly consistent, beating and raising guidance for 14 consecutive quarters and increasing revenue 20% or greater while also expanding our free cash flow margin for 4 straight years as a public company. Second, momentum. Our investment in an all-in-one marketing platform with AI and data at its core is creating accelerating momentum in our business, driving our Q4 record results and positioning us to target continuing to increase revenue at a 20% organic compound annual growth rate over the next 4 years. Third, rarity. There are over 500 public US technology companies.

Chris: Thank you, David. And good afternoon, everyone. We have a lot of exciting information to share on our 2024 results and Zeta 2028 plan. But before I get into the details, I want to lead with three main themes.

David: But AI isn't just a tool it's an extension of the marketing team are a gentex AI perform specialized roles within an enterprise.

David: Seamlessly integrating into workflows to drive efficiency and superior performance. For example, operation specialist agents, we are working with multiple financial institutions to automate their quality assurance processes for marketing campaigns.

Chris: Second, momentum. Our investment in an all-in-one marketing platform with AI and data at its core is creating accelerating momentum in our business.

David: These AI driven QA agents replace a manual 10 step process.

David: Integrating with QA systems of record to track completion agent ownership and results, ensuring compliance and improving efficiency.

Chris: driving our fourth quarter record results and positioning us to target continuing to increase revenue at a 20% organic compound annual growth rate over the next four years.

Chris Greiner: Of those, only 23 are expected to increase revenue 20% or greater annually from 2021 to 2025. Of those 23, only eight are expected to also expand their free cash flow margin annually from 2021 to 2025. Zeta is one of those eight, next to other great companies like Cloudflare, GitLab, and Samsara included in this list. As you will see with our Zeta 2028 plan, we expect to continue to do this for the next four years. Let's get into the Q4 and full-year results. In Q4, we delivered revenue of $315 million, up 50% year-over-year, or 31% excluding LiveIntent and political candidate revenue. The full-year's revenue was just above $1 billion, up 38% year-over-year, or 30% excluding LiveIntent and political candidate revenue.

David: Your own virtual data scientist agents clients can bring their own predictive models into our platform, but aligning those models with ingested events and data structures can be complex our agents automate the data mapping process, ensuring seamless integration buy in.

And third, rarity.

There are over 500 public U.S. technology companies.

Chris: Of those, only 23 are expected to increase revenue 20% or greater annually from 2021 to 2025.

Chris: Of those 23, only 8 are expected to also expand their free cash flow margin annually from 2021 to 2025. Zeta is one of those 8. Next to other great companies like CloudFlare, GitLab, and Samsara included in this list.

David: Telegent lean matching fields normalizing formats, and resolving discrepancies this removes manual effort and accelerates time to value for clients.

David: Creative agents.

Chris: And as you will see with our Zeta 2028 plan, we expect to continue to do this for the next four years.

David: Our visual composer acts like a world class creative director, helping marketers to go from a blank slate to a fully designed campaign in minutes. It leverages existing templates and uses AI to generate images.

Chris: Let's get into the fourth quarter and full year results. In 4Q, we delivered revenue of $315 million, up 50% year-to-year, or 31% excluding live intent and political candidate revenue.

David: Body content subject lines and content blocks, reducing iteration cycles and accelerating campaign deployment.

Chris Greiner: This exceeded our initial 2024 guide of $875 million by $131 million, or 15%. Total scaled customer count grew to 527 as of 31 December 2024, up 17% year-over-year and 52 sequentially. LiveIntent added 34 customers to our scaled customer count. Excluding this contribution, our scaled customer count increased 9% year-over-year. Super scaled customers of 148 as of year-end were up 13% year-over-year and up 4 sequentially. LiveIntent added 3 customers to our super scaled customer count. As a reminder, we count each customer spending at least $1 million with us over the trailing twelve months as one super scaled customer, regardless of how many brands they are using us for.

Chris: The full year's revenue was just above $1 billion, up 38% year-over-year, or 30% excluding live intent and political candidate revenue. This exceeded our initial 2024 guide of $875 million by 131 million, or 15%.

Speaker Change: Walt for some companies AI is just a press release or an add on for Zeta. It is foundational to our platform we have been investing in AI for more than seven years.

Chris: Total scaled customer count grew to 527 as of December 31st, 2024, up 17% year-over-year and 52 sequentially. Live intent added 34 customers to our scaled customer count, and excluding this contribution, our scaled customer count increased 9% year-over-year.

Speaker Change: Seven months and we have the results to prove it.

Speaker Change: In 2020 for AI adoption across our platform surged.

Speaker Change: <unk> hundred 26 brands adopted our data cloud AI within its first year of launch.

Chris: Superscaled customers of 148 as of year-end were up 13% year-over-year and up 4% sequentially.

Speaker Change: I agent usage grew nearly 200% sequentially in Q4 as more enterprises embedded automation.

Chris Greiner: The number of brands spending at least $1 million with us over the trailing twelve months increased 28% year-over-year. Although customers using us for multiple brands does not benefit customer count, it does have a positive impact on ARPU. Scaled customer quarterly ARPU of $577,000 increased 27% year-over-year, as reported, and 32% when removing the impact of LiveIntent. Net revenue retention for the year was 114%, at the high end of our 110% to 115% range, an increase from 111% in 2023, and our highest level as a public company.

Speaker Change: <unk> thousand behavioral taxonomies were created using AI alone doubling the number of taxonomies in our platform.

Speaker Change: We are truly shaping the future of AI powered marketing.

Speaker Change: Rather than charging separate fees, we monetize our AI products through increased consumption accelerating adoption across our customer base.

Speaker Change: Although we are still early in AI adoption across our platform, we saw a meaningful impact to our consumption revenue, which increased over 40% in 2020 for a significant acceleration from 2023 and.

Chris: Net revenue retention for the year was 114%, at the high end of our 110 to 115% range, an increase from 111% in 2023, and our highest level as a public company.

Chris Greiner: From an industry perspective in 2024, seven of our top ten industries grew faster than 20% year-over-year, with automotive, consumer and retail, insurance, political and advocacy, and technology and media growing the fastest. We ended the year with 180 quota carriers, an increase of 32% year-over-year, partly driven by our LiveIntent acquisition. Excluding LiveIntent, quota-carrying reps increased 20% year-over-year. Our direct mix in Q4 climbed to 74%, up from 70% in Q3 and slightly higher than 73% in Q4 of 2023. For the full year, our direct revenue mix was 70%.

Speaker Change: And unlike other software companies, we do not need to pivot our business model to monetize our AI innovations we are already doing so as evidenced by our 2024 results.

Chris: From an industry perspective in 2024, 7 of our top 10 industries grew faster than 20% year over year with automotive, consumer and retail, insurance, political and advocacy, and technology and media growing the fastest.

Pam Lord: Vedas leadership in AI continues to attract top tier talent Pam Lord recently joined US as president of CRM from Oracle, where she ran their <unk> and DTC marketing cloud businesses and see our new Chief growth Officer was previously a partner it.

Chris: We ended the year with 180 quota carriers, an increase of 32% year over year, partly driven by our live intent acquisition. Excluding live intent, quota carrying reps increased 20% year over year.

Chris: Our direct mix in the fourth quarter climbed to 74%, up from 70% in the third quarter and slightly higher than 73% in the fourth quarter of 2023.

Pam Lord: Mckinsey in companies' marketing and sales practice.

Chris Greiner: Our GAAP cost of revenue in the quarter was 40%, a 20 basis points improvement from Q4 2023 and up 60 basis points from Q3 2024. For the full year, GAAP cost of revenue was 39.7%, up 210 basis points from 2023, mostly driven by a higher mix of integrated revenue due to our agencies initially adopting the social channel prior to increasing spend to direct channels over time. Leverage in other areas of our operating expenses resulted in our 16th straight quarter of expanding adjusted EBITDA margins year-over-year. In Q4, we generated $70.4 million of adjusted EBITDA at a margin of 22.4%, 110 basis points higher year-over-year, and $4.5 million better than the midpoint of our guidance.

Pam Lord: We also continued to enhance both our team and our platform. We are happy to report that we completed the live intent integration in early January well ahead of our schedule and it's already delivering incremental value to our customers.

Chris: For the full year, our direct revenue mix was 70 percent.

Chris: Our gap cost of revenue in the quarter was 40%, a 20 basis point improvement from the fourth quarter of 2023 and up 60 basis points from the third quarter of 2024.

Chris: For the full year, GAAP cost of revenue was 39.7%, up 210 basis points from 2023, mostly driven by a higher mix of integrated revenue due to our agencies initially adopting the social channel prior to increasing spend to direct channels over time.

Pam Lord: We have already launched our first synergistic product from the acquisition Veda direct this solution combines live intense premium publisher network with the Veda data cloud, enabling marketers to deliver personalized ads directly within newsletter emails.

Chris: Leverage in other areas of our operating expenses resulted in our 16th straight quarter of expanding adjusted EBITDA margins year-over-year.

Pam Lord: This innovation enhances publisher monetization, while driving a higher ROI for marketers and data a true win win win.

Chris Greiner: We exceeded our adjusted EBITDA guidance despite incurring $2 million of additional expenses related to defending against a short seller report. To this point, our audit committee oversaw a review of the allegations, which involved engaging an independent forensic accounting firm to evaluate our shared customer, and vendor accounting practices and internal controls. Additionally, we hired a leading data and privacy firm to assess our data and privacy practices. The reviews corroborated that our accounting practices were consistent with US GAAP and that the data and privacy allegations in the short seller report were without merit. Additionally, the findings reinforced the strengths of Zeta's internal controls and data privacy practices. For 2024, adjusted EBITDA was $193 million, representing a margin of 19.2% and a 49% increase year-over-year.

Pam Lord: As I reflect on nearly four years as a public company <unk> trajectory has never been clearer, we have beat and raised guidance for 14 consecutive quarters.

Chris: We exceeded our adjusted EBITDA guidance despite incurring $2 million of additional expenses related to defending against a short seller report.

Pam Lord: Outperformed our Zeta 2025 plan a year ahead of schedule and strengthened our AI data leadership, we remain confident in our ability to be a rule of 40 business for many years to come we are truly building a one of a kind company.

Chris: To this point, our audit committee oversaw a review of the allegations, which involved engaging an independent forensic accounting firm to evaluate our shared customer and vendor accounting practices and internal controls.

Chris: Additionally, we hired a leading data and privacy firm to assess our data and privacy practices.

Pam Lord: As always I would sincerely like to thank our customers our partners teams data and all of our shareholders for their ongoing support of our vision now let me turn it over to Chris to discuss our results in greater detail Chris.

Chris: The reviews corroborated that our accounting practices were consistent with US GAAP and that the data and privacy allegations in the short seller report were without merit.

Chris: Thank you David and good afternoon, everyone.

Chris Greiner: In the Q4, we achieved positive GAAP net income for the first time as a public company. Our Q4 GAAP net income was $15.2 million, which translated to earnings per diluted share of $0.06 in the quarter and a loss of $0.38 per share for the full year. Finally, Q4 cash from operating activities was $44 million, up 62% year-over-year, with free cash flow of $32 million, up 74% and representing a margin of 10%. This translated to a free cash flow to adjusted EBITDA ratio of 45%. It's worth noting this includes a $22 million dollar working capital headwind driven by growth with agencies and the industry's longer payment cycles. Absent this, cash flow conversion would have been 76%. This dynamic can be seen on slide 26 in our earnings supplemental.

Chris: We have a lot of exciting information to share on our 2024 results and data 2028 plan.

Chris: Before I get into the details I want to lead with three main themes.

Chris: First consistency.

Chris: Data has been incredibly consistent beating and raising guidance for 14 consecutive quarters, and increasing revenue, 20% or greater while also expanding our free cash flow margin for four straight years as a public company.

Chris: Finally, fourth quarter cash from operating activities was $44 million, up 62% year-to-year, with free cash flow of $32 million, up 74%, and representing a margin of 10%.

Chris: Second momentum our investment and an all in one marketing platform with AI and data at its core is creating accelerating momentum in our business driving our fourth quarter record results and positioning us to target continuing to increase revenue at a 20% organic compound annual.

Chris: Growth rate over the next four years.

Chris: And third rarity.

Chris Greiner: For 2024, our free cash flow was $92 million at a margin of 9.2% and up 69% year-over-year. Now let's get into the details of our Zeta 2028 plan and 2025 guidance. I'll start with the Zeta 2028 plan. As many of the growth drivers and margin levers we will discuss for our medium-term plan are also applicable to 2025. Slides 15 through 20 in our earnings supplemental provide additional details. For revenue, we're targeting over $2.1 billion, which equates to at least a 20% organic revenue CAGR over the next four years. To put this in perspective, our revenue CAGR between 2021 and 2024 was 30%.

Chris: There are over 500 public U S technology companies.

Chris: This dynamic can be seen on slide 26 in our earnings supplemental. For 2024, our free cash flow was $92 million at a margin of 9.2% and up 69% year-over-year.

Chris: Of those only 23 are expected to increase revenue, 20% or greater annually from 2021 to 2025.

Chris: Of those 23 only eight are expected to also expand their free cash flow margin annually from 2021 to 2025.

Chris: Now let's get into the details of our Zeta 2028 plan and 2025 guidance.

Chris: Data is one of those eight.

Chris: I'll start with the Zeta 2028 plan. As many of the growth drivers and margin levers we will discuss for our medium-term plan are also applicable to 2025. Slides 15 through 20 in our earnings supplemental provide additional details.

Chris: Two other great companies like cloud player.

Chris: Lap and Samsara included in this list.

Chris: As you will see with our date of 2028 plan, we expect to continue to do this for the next four years.

Chris: Let's get into the fourth quarter and full year results.

Chris: For revenue, we're targeting over $2.1 billion, which equates to at least a 20% organic revenue CAGR over the next four years. To put this in perspective, our revenue CAGR between 2021 and 2024 was 30%.

In <unk>, we delivered revenue of $315 million up 50% year to year or 31%, excluding live in Kent and political revenue.

Chris Greiner: Importantly, there's more than enough runway in our core business to achieve this target, as we estimate we only have about 1% of our existing customers' marketing and advertising spend. There's room to increase this penetration to 5% to 15% or more over time. We also have multiple new growth levers, some of which include creating new GenAI capabilities. More GenAI features should drive additional usage of our platform, which we monetize through our consumption revenue, as highlighted by David earlier. Leveraging the Publisher Cloud. This provides us with an opportunity to better monetize our extensive publisher relationships. Introducing new channels. We're still very early in mobile and plan to continue to enhance the product while also introducing new channels. Extending our vertical expertise. Through vertical-specific functionality, we can better penetrate verticals we're underrepresented today, such as CPG, healthcare, commerce, and travel. Expanding our partnership ecosystem.

Chris: The full year's revenue was just above 1 billion up 38% year over year or 30%, excluding live intent and political candidate revenue <unk>.

Chris: Importantly, there's more than enough runway in our core business to achieve this target. As we estimate, we only have about 1% of our existing customers' marketing and advertising spend. And there's room to increase this penetration to 5 to 15% or more over time.

Chris: This exceeded our initial 2024 guide up $875 million by $131 million or 15%.

Chris: We also have multiple new growth levers, some of which include creating new Gen AI capabilities. More Gen AI features should drive additional usage of our platform, which we monetize through our consumption revenue, as highlighted by David earlier.

Chris: Total scaled customer count grew to 527 as of December 31, 2024 up 17% year over year and 52 sequentially light intent added 34 customers to our scale of customer count and excluding this contribution our scaled customer count increased 9% year over year.

Chris: Leveraging the Publisher Cloud. This provides us with an opportunity to better monetize our extensive publisher relationships.

Super scaled customers of 148 as of year end were up 13% year over year and up four sequentially.

Chris: Introducing new channels. We're still very early in mobile and plan to continue to enhance the product while also introducing new channels.

Chris: <unk> added three customers to our super scaled customer count and as a reminder, we count each customer spending at least $1 million with us over the trailing 12 months is one super scaled customer regardless of how many brands they are using us for the.

Extending our vertical expertise.

Chris: Through vertical-specific functionality, we can better penetrate verticals we're underrepresented today, such as CPG, healthcare, commerce, and travel.

Chris Greiner: We believe this will drive pipeline growth and be beneficial for margins. The KPIs to achieve our 2028 plan look very similar to our previous midterm plan. We're targeting scaled customer count growth of 4% to 8% versus our three-year CAGR of 14%. The biggest factor influencing this metric is our agency business, where we expect agencies to continue to add brands to our platform. However, regardless of how many brands an agency is leveraging Zeta for, it's only counted as one customer. From a brand count perspective, our growth will likely be around our historical scaled count trend. For scaled customer ARPU, we're expecting growth of 12% to 16%, in line with our three-year CAGR of 15%. Our One Zeta initiative should positively impact channel and use case expansion, aiding ARPU growth.

Chris: The number of brands spending at least $1 million with us over the trailing 12 months increased 28% year over year.

Chris: and expanding our partnership ecosystem. We believe this will drive pipeline growth and be beneficial for margins.

Chris: Although customers using us for multiple brands does not benefit customer count. It does have a positive impact on our two.

Chris: The KPIs to achieve our 2028 plan looked very similar to our previous midterm plan.

Chris: We're targeting scaled customer count growth of 4% to 8% versus our 3-year CAGR of 14%.

Chris: Scale customer quarterly or two of 577000 increased 27% year over year as reported and 32% when removing the impact of <unk>.

Chris: The biggest factor influencing this metric is our agency business, where we expect agencies to continue to add brands to our platform. However, regardless of how many brands an agency is leveraging Zeta 4, it's only counted as one customer.

Chris: Net revenue retention for the year was 114% at the high end of our 110% to 115% range, an increase from 111% in 2023, and our highest level as a public company.

Chris: And industry perspective in 2020 for seven of our top 10 industries grew faster than 20% year over year with automotive consumer and retail insurance political and advocacy and technology and media growing the fastest.

Chris: For scaled customer ARPU, we're expecting growth of 12% to 16% in line with our three-year CAGR of 15%.

Chris Greiner: Further, the aforementioned agency dynamic will also have a positive impact on ARPU. We continue to expect net revenue retention to be in the range of 110 to 115%, in line with the 111 to 114% range that we achieved since 2021. We expect our direct revenue mix to be 70 to 75%, roughly in line with the 70 to 77% annual range we've been in since 2021. Much like our initial medium-term plan, we're targeting significant margin improvement with our Zeta 2028 plan. Our 2028 adjusted EBITDA target of at least $525 million implies a 25% margin, an increase of 580 basis points or an average of 145 basis points per year.

Chris: Our OneZeta initiative should positively impact channel and use case expansion aiding our food growth.

Chris: We ended the year with 180 quota carriers, an increase of 32% year over year, partly driven by our live intent acquisition <unk>.

Excluding live intent quota carrying reps increased 20% year over year.

Chris: We continue to expect net revenue retention to be in the range of 110 to 115 percent, in line with the 111 to 114 percent range that we achieved since 2021.

Chris: Our direct mix in the fourth quarter climbed to 74% up from 70% in the third quarter and slightly higher than 73% in the fourth quarter of 2023.

Chris: And we expect our direct revenue mix to be 70 to 75% roughly in line with the 70 to 77% annual range we've been in since 2021.

Chris: For the full year, our direct revenue mix was 70%.

Chris: Our GAAP cost of revenue in the quarter was 40% a 20 basis point improvement from the fourth quarter of 2023, and up 60 basis points from the third quarter of 2024.

Chris: Much like our initial medium-term plan, we're targeting significant margin improvement with our Zeta 2028 plan. Our 2028 adjusted EBITDA target of at least $525 million implies a 25% margin, an increase of 580 basis points or an average of 145 basis points per year.

Chris: For the full year GAAP cost of revenue was 39, 7% up 210 basis points from 2023, mostly driven by a higher mix of integrated revenue due to our agencies initially adopting the social channels tired and increasing spend to direct channels over time.

Chris Greiner: We expect to leverage across all areas of our business. Cost of revenue should improve by 100 to 300 basis points. We believe this will mostly be driven by a higher mix of direct revenue, which carries a lower cost of revenue as compared to integrated revenue. This should be driven by agencies ramping usage of direct channels, our One Zeta initiative driving more adoption of direct channels, and higher margins from GenAI products and consumption scaling faster over time. Across our other operating expense lines, we anticipate 280 to 480 basis points of margin improvement. One key point of leverage for Zeta has been growing headcount significantly slower than revenue and adding a higher percentage of headcount outside of the US.

We expect the leverage across all areas of our business.

Chris: Leveraging other areas of our operating expenses resulted in our 16th straight quarter of expanding adjusted EBIT margins year over year.

Chris: Cost of revenue should improve by 100 to 300 basis points. We believe this will mostly be driven by a higher mix of direct revenue, which carries a lower cost of revenue as compared to integrated revenue.

Chris: In the fourth quarter, we generated $74 million of adjusted EBITDA at a margin of 22, 4% 110 basis points higher year over year, and $4 5 million better than the midpoint of our guidance.

Chris: This should be driven by agencies ramping usage of direct channels, our OneZeta initiative driving more adoption of direct channels, and higher margins from Gen-AI products and consumption scaling faster over time.

Chris: We exceeded our adjusted EBIT guidance, despite incurring 2 million of additional expenses related to defending against the short seller report.

Chris: Across our other operating expense lines, we anticipate 280 to 480 basis points of margin improvement.

Chris Greiner: Over the past 3 years, our revenue has increased at a CAGR of 30%, while total headcount has only grown at a CAGR of 15%, with US headcount growth even slower. Implementing AI internally should enable us to gain further headcount efficiencies. Expanding our partnership ecosystem will also create a margin tailwind. We expect future partners to take on some of the professional services we provide customers today, taking additional costs out of our business. From a free cash flow perspective, we're targeting $340 million-plus in 2028, which equates to a CAGR of 39% from 2024. This represents a margin of 16%, an improvement of 700 basis points from 2024. In addition to the aforementioned margin levers, there are two additional factors driving our free cash flow margin improvement. First, we expect CapEx to grow materially slower than revenue.

Chris: One key point of leverage for Zeta has been growing headcount significantly slower than revenue and adding a higher percentage of headcount outside of the U.S.

Chris: Additionally, we hired a leading data and privacy firm to assess our data and privacy practices to.

Chris: Over the past three years, our revenue has increased at a CAGR of 30%, while total headcount has only grown at a CAGR of 15%, with U.S. headcount growth even slower. Implementing AI internally should enable us to gain further headcount efficiency.

Chris: The reviews corroborated that our accounting practices were consistent with U S GAAP and that the data and privacy allegations in the short seller report were without merit.

Chris: Additionally, the findings reinforced the strength of <unk> internal controls and data privacy practices for 2024, adjusted EBITDA was $193 million, representing a margin of 19, 2% and a 49% increase year over year.

Chris: From a free cash flow perspective, we're targeting 340 million plus in 2028, which equates to a CAGR of 39% from 2024. This represents a margin of 16%, an improvement of 700 basis points from 2024.

Chris: In the fourth quarter, we achieved positive GAAP net income for the first time as a public company.

Chris: Our fourth quarter GAAP net income was $15 2 million, which translated to earnings per diluted share of <unk> <unk> in the quarter and a loss of 38 per share for the full year.

Chris Greiner: Our capital expenditures and capitalized software development was 4.2% of revenue in 2024, a significant improvement from 5.8% in 2021. Second, the impact of agencies on free cash flow should lessen over time as that business's growth comes more in line with Zeta's overall growth. Moving on to 2025 guidance. We're guiding to the midpoint of full year 2025 revenue to be $1.24 billion or growth of 23%. This includes LiveIntent revenue of $96 million. Adjusting for the impact of LiveIntent and political candidate revenue in the year-to-year comps, our excluding LiveIntent and political growth rate is 21%. A bridge is provided on slide 25 in the earnings supplemental. As expected, our 2025 revenue guidance assumes there is no political candidate revenue.

Chris: Finally fourth quarter cash from operating activities was $44 million up 62% year to year with free cash flow of $32 million up 74% and representing a margin of 10%. This translated to a free cash flow to adjusted EBITDA ratio of 45%.

Chris: Second, the impact of agencies on free cash flow should lessen over time as that business's growth comes more in line with Zeta's overall growth.

Chris: Worth, noting this includes a $22 million working capital headwind driven by growth with agencies and the industry's longer payment cycles absent. This cash flow conversion would have been 76%.

Moving on to 2025 guidance.

Chris: We're diving to the midpoint of full year 2025 revenue to be 1.24 billion or growth of 23%. This includes live intent revenue of 96 million. Adjusting for the impact of live intent and political candidate revenue in the year-to-year comps, our excluding live intent and political growth rate is 21%.

Chris: This dynamic can be seen on slide 26 in our earnings supplemental.

Chris: For 2024, our free cash flow was $92 million and a margin of nine 2% and up 69% year over year.

Chris: Now, let's get into the details of our <unk> 2028 plan in 2025 guidance.

Chris Greiner: However, we are modeling for advocacy revenue to be between $20 and 25 million as compared to $36 million in 2024 and $13 million in 2023. We're guiding to adjusted EBITDA at the midpoint of full year 2025 to be $256.5 million or a margin of 20.7%, a 150 basis point expansion year over year. We're guiding full year free cash flow to be $129.5 million at the midpoint, representing a margin of 10.4%, a 120 basis point improvement year over year and growth of 40%. Finally, on Slide 24 in the earnings supplemental, we've included quarterly 2025 guidance for revenue and adjusted EBITDA, a practice consistent with prior years. I'd like to conclude with this reflection.

Chris: A bridge is provided on slide 25 in the Earning Supplemental.

Chris: I'll start with the data 2028 plan as many of the growth drivers and margin levers, we will discuss for a medium term plan are also applicable to 2025.

Chris: As expected, our 2025 Revenue Guidance assumes there is no political candidate revenue. However, we are modeling for advocacy revenue to be between $20 and $25 million, as compared to $36 million in 2024 and $13 million in 2023.

Chris: Slides 15 through 'twenty and our earnings supplemental provide additional details.

Chris: Our revenue, we're targeting over $2 1 billion, which equates to at least a 20% organic revenue CAGR over the next four years.

Chris: To put this in perspective, our revenue CAGR between 2021, and 2024 was 30%.

Chris: Importantly, there was more than enough runway in our core business to achieve this target as we estimate we only have about 1% of our existing customers marketing and advertising spend and there's room to increase this penetration to 5% to 15% or more over time.

Chris: We're guiding full year free cash flow to be $129.5 million at the midpoint, representing a margin of 10.4%, a 120 basis point improvement year-over-year and growth of 40%.

Chris: Finally, on slide 24 in the earnings supplemental, we've included quarterly 2025 guidance for revenue and adjusted EBITDA, a practice consistent with prior years.

Chris: We also have multiple new growth levers some of which include creating new Gen. AI capabilities more Gen. AI features should drive additional usage of our platform, which we monetize through our consumption revenue as highlighted by David earlier.

Chris Greiner: Anyone can issue a multi-year plan, but executing against it is another story. At Zeta, not only are we set to materially surpass our original Zeta 2025 plan, but we exceeded one of the key targets, revenue, an entire year ahead of schedule. For our Zeta 2028 plan, we kept the same KPIs and fine-tuned them to the most realistic path to achieve our goals. Just like with our original 2025 plan, we put extensive thought and diligence into our Zeta 2028 plan, which the entire company is focused on executing against and accountable for. With that, let me hand the call back over to the operator for David and me to take your questions. Operator?

I'd like to conclude with this reflection.

Chris: Anyone can issue a multi-year plan, but executing against it is another story. At Zeta, not only are we set to materially surpass our original Zeta 2025 plan, but we exceeded one of the key targets, revenue, an entire year ahead of schedule.

Chris: Leveraging the publisher cloud disperse this was an opportunity to better monetize our extensive publisher relationships.

Chris: Producing new channels, we're still very early in mobile and plan to continue to enhance the product while also introducing new channels.

Chris: Extending our vertical expertise to vertical specific functionality, we can better penetrate verticals were underrepresented today, such as CPG healthcare commerce and travel.

Chris: Just like with our original 2025 plan, we put extensive thought and diligence into our Zeta 2028 plan, which the entire company is focused on executing against and accountable for.

Chris: And expanding our partnership ecosystem, we believe this will drive pipeline growth and be beneficial for margins.

Operator: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. We ask that analysts limit themselves to one question and a follow-up so that others may have an opportunity to ask questions. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question is from Matt Swanson with RBC. Please proceed with your question.

Chris: With that, let me hand the call back over to the operator for David and me to take your questions. Operator?

Chris: The kpis to achieve our 2020 plan looked very similar to our previous midterm plan.

Speaker Change: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue.

Chris: We're targeting to scaled customer count growth of 4% to 8% versus our three year CAGR of 14%.

Chris: The biggest factor influencing this metric as our agency business, where we expect agencies to continue to add brands to our platform. However, regardless of how many brands and agencies leveraging data for its only counted as one customer.

Chris: Our branch count perspective, our growth will likely be around our historical scaled count trend.

Chris: Our scaled customer <unk>, we're expecting growth of 12% to 16% in line with our three year CAGR of 15%.

Matt Swanson: 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. Maybe pulling in the zoom lens a little bit, can you just 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 and for 2025?

Speaker Change: Our first question is from Matt Sonson with RBC. Please proceed with your question.

Chris: One veda initiatives should positively impact channel and use case expansion eating ARPA growth.

Matt Sonson: 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.

Further the aforementioned agency dynamic will also have a positive impact on <unk>.

Chris: We continue to expect net revenue retention to be in the range of 110% to 115% in line with the 111% to 114% range to be achieved since 2021.

Matt Sonson: 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 and for 2025?

Chris Greiner: Yeah. Look, our approach and the simplest way to put it is, we've followed how we've done it historically, which means that, you know, it requires the low end of each of our KPIs to get to our guide, which gives us the same level of flexibility we've gone into future years in terms of our guide as well as future long-term models. You know, given where we are in the, you know, first two months of the quarter, we've got very good visibility into obviously Q1. We've leveraged our Zeta Economic Index data to be able to anticipate macro trends. As I think about the verticals that have contributed to the strong growth we saw in 2024, I would expect those to be on the higher end of performers as well into 2025.

Chris: And we expect our direct revenue mix to be 70% to 75% roughly in line with the 70% to 77% annual range, we've been in since 2021.

Matt Sonson: Yeah, look, our approach and simplest way to put it is we've we've followed how we've done it historically, which means that, you know, requires the low end of each of our KPIs to get to our guide, which gives us

Chris: Much like our initial medium term plan, we're targeting significant margin improvement with our date of 2028 plan. Our 2028 adjusted EBITDA target of at least $525 million implies a 25% margin an increase of 580 basis points or an average of 145 basis points.

Matt Sonson: The same level of flexibility we've gone into future years in terms of our guide as well as future long term models.

Speaker Change: Unknown Speaker Given where we are in the first two months of the quarter, we've got very good visibility into obviously Q1. We've leveraged our Zeta Economic Insight data to be able to anticipate macro trends.

Chris: Per year.

Chris: We expect to leverage across all areas of our business.

Chris Greiner: We're obviously very aware of the macro. We're aware of the inflationary backdrop, we're aware of tariffs, we're aware of other items, but we feel like we've put appropriate conservatism into our guide to account for that. David, anything to add?

Speaker Change: As I think about the verticals that have contributed to the strong growth we saw in 2024, I would expect those to be on the higher end of performers as well into 2025. And we're obviously very aware of the macro, we're aware of the inflationary backdrop, we're aware of tariffs, we're aware of other items, but we feel like we've put appropriate conservatism

David Steinberg: Yeah. Matt, let me just say that we're not seeing any challenges from any clients at this point. We're feeling very good about where we are versus the macro environment as it exists today.

Chris: This should be driven by agencies ramping usage of direct channels are one Zeta initiative driving more adoption of direct channels and higher margins from Gen AI products and consumption scaling faster over time.

David Steinberg: into our guide to account for that. David, anything you'd add? Yeah, and Matt, let me just say that we're not seeing any challenges from any clients at this point. So we're feeling very good about where we are versus the macro environment as it exists today.

Chris: Across our other operating expense lines, we anticipate 280 to 480 basis points of margin improvement one key point of leverage for Dana has been growing head count significantly slower than revenue and adding a higher percentage of head count outside of the U S. Over the past three years, our revenue has increased at a CAGR of 30%.

Matt Swanson: I appreciate that. 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, you know, new verticals and new products that are some of those other upside drivers. You know, what do you see from 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?

I appreciate that and then.

David Steinberg: David, great to hear that you already have live intent integrated as quickly as January. Can you 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.

Chris: While total head count has only grown at a CAGR of 15% with U S head count growth even slower.

Chris: Implementing AI internally should enable us to gain further head count efficiencies.

Speaker Change: New verticals, new products that are some of those other up drivers, you know, what do you see from when you launch new products that gives you confidence in that long term ARPU expansion, just in customer's desire, I guess, to take more from Zeta.

Chris: <unk> our partnership ecosystem will also create a margin tailwind we expect future partners to take on some of the professional services, we provide customers today, taking additional costs out of our business.

David Steinberg: Yeah. To be clear, we've been experiencing that type of ARPU growth, so we don't need to grow our ARPU growth as a percentage to hit this plan. We can just continue to do what we're doing as we did to get to the 2025 plan from a revenue perspective by the end of 2024. Zeta Direct is a really cool product, Matt. What we did was we took their inventory, which embeds into newsletters, which was traditionally served based on the content the consumer was consuming. So you're getting this newsletter from this publisher, might be a daily update from The New York Times. It might be an automotive update from The Washington Post or so on and so forth.

Speaker Change: Yeah. And to be clear, we've been experiencing that type of ARPU growth. So we don't need to grow our ARPU growth as a percentage to hit this plan. We can just continue to do what we're doing as we did.

Chris: From a free cash flow perspective, we're targeting 340 million plus in 2028, which equates to <unk>, 39% from 2024.

Chris: This represents a margin of 16% an improvement of 700 basis points from 2024.

Speaker Change: to get to the 2025 plan from a revenue perspective by the end of 2024. But ZetaDirect.

Chris: In addition to the aforementioned margin levers there are two additional factors driving our free cash flow margin improvement.

is a really cool product, Matt. What we did...

Chris: We expect capex to grow materially slower than revenue, our capital expenditures and capitalized software development was four 2% of revenue in 2020 for a significant improvement from five 8% in 2021.

Speaker Change: The content the consumer was consuming, so you're getting this newsletter from this publisher might be a daily update from the New York Times. It might be a automotive update from the Washington Post or so on and so forth.

David Steinberg: We've added our data cloud on top of that, and we can now directly target to a deterministic individual in addition to the content they're consuming. That has already shown an increased return on investment for the marketer and higher revenue to the publisher with us sitting in the middle of the transaction, so we garner higher revenue as a percentage of that. It really is a win-win-win, and I think it's a perfect example of taking one plus one and equaling four. We once again, Matt, feel very good about where we are with our existing customers. If you look at the agency business, which has been, you know, amongst our fastest-growing, their ARPUs are going up dramatically because they keep adding more brands, and it just counts as one super scaled customer.

Chris: Second the impact of agencies on free cash flow should lessen over time as that businesses growth comes more in line with Veda as overall growth.

Speaker Change: We added our data cloud on top of that and we can now directly target to a deterministic individual

Chris: Moving onto 2025 guidance.

Chris: We're guiding to the midpoint of full year 2025 revenue to be 124 billion or growth of 23%. This includes live and <unk> revenue of $96 million adjust.

for the marketer.

Speaker Change: and higher revenue to the publisher with us sitting in the middle of the transaction. So we garner higher revenue as a percentage of that. So it really is a win-win-win.

Chris: Adjusting for the impact of live intent and political candidate revenue in the year to year comps are excluding live intent and political growth rate is 21%.

Chris: The bridge is provided on slide 25 in the earnings supplemental.

Speaker Change: and I think it's a perfect example of taking one plus one and equaling four.

Chris: As expected our 2025 revenue guidance assumes there is no political Canada revenue. However, we are modeling for advocacy revenue to be between 20 and $25 million as compared to $36 million in 2024 and $13 million in 2023.

Speaker Change: We, we once again, Matt, feel very good about where we are with our existing customers. And if you look at the agency business, which has been, you know, amongst our fastest growing, their ARPUs are going up dramatically because they keep adding more brands. And it just counts as one super scaled customer.

Operator: Our next question comes from DJ Hynes with Canaccord Genuity. Please proceed with your question.

Chris: We're guiding to adjusted EBITDA at the midpoint of full year 2025 to $256 5 million or margin of 27%, a 150 basis point expansion year over year.

DJ Hynes: Hey, good evening, guys. Nice set of results. Maybe I could 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, you know, the pipelines that they have for pulling in new brands. How are you thinking about the growth opportunity with the agencies for 25 and beyond?

Unknown Speaker.

Speaker Change: Our next question comes from D.J. Hines with Canaccord Genuity. Please proceed with your question.

Speaker Change: David, maybe I can have you expound on that last point, which is the agency business side. Clearly, the ARPU gains suggest there's lots of momentum there.

Chris: We're guiding full year free cash flow to be $129 5 million at the midpoint, representing a margin of 10, 4%, a 120 basis point improvement year over year and growth of 40%.

Speaker Change: Maybe just talk about what you're hearing from those folks. What kind of visibility you have into, you know, 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?

Chris: Finally on slide 24 in the earnings supplemental we've included quarterly 2025 guidance for revenue and adjusted EBITDA, our practice consistent with prior years.

David Steinberg: Thank you so much, DJ. I appreciate the compliment. What I would tell you is that right now, one of the reasons I think we are drinking out of the fire hose in our agency business is because something that most people don't, I think, understand is we are the most profitable partner on average that the agencies work with, bar none. Because most of our competitors who have had some challenges over the last, you know, number of months, they're charging a meaningful upcharge to data expense. We bundle the data in as a part of the activation and are generally lowering the cost to the agency or increasing their profit, depending on how they book it, by 25%. What we're seeing is the agencies are moving more and more brands and more and more volume to us.

Chris: I'd like to conclude with this reflection.

Speaker Change: Thank you so much, DJ. I appreciate the compliment. What I would tell you is that right now, one of the reasons I think we are drinking out of the firehose in our agency business is because

Chris: Anyone can issue a multi year plan, but executing against it is another story.

Chris: Data not only are we set to materially surpassed our original date of 2025 plants, but we exceeded one of the key targets revenue an entire year ahead of schedule.

Something that most people don't, I think, understand.

Speaker Change: is we are the most profitable partner on average that the agencies work with.

Chris: Whereas Ada 2028 plan, we kept the same kpis and fine tune them to the most realistic path to achieve our goals.

Speaker Change: Bar none, because most of our competitors who have had some challenges over the last, you know, number of months, they're charging a meaningful upcharge to data expense.

Just like with our original 2025 plan, we put extensive thought and diligence into our data 2028 plan, which the entire company is focused on executing against an accountable for.

Speaker Change: We bundle the data in as a part of the activation and are generally lowering the cost to the agency or increasing their profit depending on how they book it by 25%.

Speaker Change: With that let me hand, the call back over to the operator for David and me to take your questions operator.

David Steinberg: What we're seeing out of agreements that have already been executed as minimum amounts for this year gives us a tremendous amount of comfort in the projections that we're putting out there.

Speaker Change: Thank you at this time, we'll be conducting a question and answer session.

Speaker Change: So what we're seeing is the agencies are moving more and more brands and more and more volume to us what we're seeing out of

Speaker Change: To ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that your line is in the question queue.

Speaker Change: Agreements that have already been executed as minimum amounts for this year gives us a tremendous amount of comfort in the projections that we're putting out there.

Speaker Change: You May press star two if he would like to remove your question from the queue.

DJ Hynes: 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. I'm curious, like how deep does Zeta wanna 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.

Speaker Change: We ask that analysts limit themselves to one question and a follow up for the others may have an opportunity to ask questions.

Speaker Change: 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 creatives. And I'm curious,

Speaker Change: Just minutes using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment. Please I'll we poll for questions.

Speaker Change: How deep does Zeta 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.

Speaker Change: Our first question is from Matt Swanson with RBC. Please proceed with your question.

David Steinberg: Yeah. Let me be clear. We do not wanna compete with the agencies as it relates to creative. That is not in our roadmap. What we're doing is taking their creative and optimizing it for any screen size, would be a perfect example. You're opening it on an iPhone, an Android device, an iPad, a laptop, a TV commercial. The dynamic agent is able to optimize that creative for that. Now, we have some enterprise clients that are using very basic creative tools versus they might not have an agency.

Matt Swanson: Yes. Thank you guys. So much for taking my question and congratulations on the quarter.

Speaker Change: Yeah, so let me be clear, we do not want to compete with the agencies as it relates to creative. That is not in our roadmap. What we're doing is taking their creative and optimizing it for any screen size would be a perfect example. So you're opening it on an iPhone, an Android device, an iPad, a laptop, a TV commercial.

Speaker Change: Chris you covered a lot of ground there going through those three sets of guidance maybe pulling a.

Speaker Change: Boeing and the zoom lens, a little bit can you just talk a little bit about what youre kind of thinking through from a macro environment, maybe a more like demand centric spending environment for both Q1 and for 2025.

Speaker Change: The dynamic agent is able to optimize that creative for that now.

Speaker Change: Yeah look our approach and the simplest way to put it is we followed how we've done it historically, which means that requires the low end of each of our kpis to get to our guide which gives us the same level of flexibility we've gone into future years in terms of our guide as well as future long term models.

David Steinberg: Any time we're working with an agency and we are not putting out as a standalone product, a creative product, we very much wanna support the creative assets of the agencies, and we wanna utilize our tools to help optimize that creative, look at what has the highest conversion rates by creative and the best return on investment for the client.

Speaker Change: We have some enterprise clients that are using very basic creative tools versus they might not have an agency. But anytime we're working with an agency and we are not putting out as a standalone product, a creative product, we very much want to support the creative assets of the agencies and we want to utilize our tools to help optimize that creative.

Speaker Change: Given where we are in the first two months of the quarter. We've got very good visibility into obviously Q1, we've leveraged our zeta economic insight data to be able to anticipate macro trends.

Speaker Change: Look at what has the highest conversion rates by creative and the best return on investment for the client.

Operator: Our next question comes from Jason Kreyer, with Craig-Hallum. Please proceed with your question.

As I think about the verticals that it contributed to the strong growth. We saw in 2024 I would expect those to be on the higher end of performers as well into 2025, and we're obviously very aware of the macro we're aware of the inflationary backdrop. We're aware of tariffs we're aware of other items, but we feel like we've put appropriate conservatism into.

Jason Kreyer: Hey, thanks, guys, and congrats on another strong quarter. Look, you guys are working with some of the largest marketing companies. You know, you talked about 44% of the Fortune 500. You know, you're just running at a scaled customer ARPU of $2 million today. What are the key elements of the strategy that help you increase wallet share? It's not $2 million, but $20 or 40 or 80 million over time.

Unknown Speaker 0

Speaker Change: Our next question comes from Jason Crayer with Craig Hallam. Please proceed with your question.

Hey, thanks guys and congrats on another strong quarter.

Jason Crayer: So look, you guys are working with some of the largest marketing companies, you know, you talked about 44% of the fortune 500, you know, you're just running at a scale of customer ARPU of 2 million today. So what are the key elements of the strategy that help you increase wallet share? So it's not 2 million, but 20 or 40 or 80 million over time.

Speaker Change: Our guide to account for that David anything you'd add yes, Matt Let me just say that we're not seeing any challenges for many clients at this point so we're.

Speaker Change: We're feeling very good about where we are versus the macro environment as it exists today.

David Steinberg: Great question, Jason. I mean, first, let's start with One Zeta, which is consolidating all of our use cases into one sale, and we're starting to see more and more One Zeta customers. It's interesting because today the scaled customers we have spend over $100 billion a year in marketing. In the last year, we captured 1% of that spend. As we look forward to the next few years, our goal is to get to 2% of that spend. It's not. We don't have to get to 5% or 10%. What I would tell you is we have a number of enterprise clients where we are above 5% of their wallet share, which gives us a roadmap for how to move other clients up.

Speaker Change: Yes.

Speaker Change: I appreciate that and then.

Jason Crayer: So great question, Jason. Well, I mean, first, let's start with one zeta, which is consolidating all of our use cases into one sale. And we're starting to see more and more zeta one customers. It's interesting because

Speaker Change: David Great to hear that you already have live in time integrated.

Speaker Change: As January.

Speaker Change: Can you just talk a little bit more about kind of what you're hearing from customers in terms of their initial use cases at initial adoption and then broaden it out in the 2028 plan, we have some new verticals and new products that are some of those other up drivers what do you see from when you launch new products that gives you confidence in that long term <unk> expansion just in customers does.

Jason Crayer: Today, the scaled customers we have spend over a hundred billion dollars a year in marketing and

Jason Crayer: In the last year, we captured 1% of that spend. As we look forward to the next few years, our goal is to get to 2% of that spend. It's not

Speaker Change: XI or I guess, the take morphine data.

Speaker Change: Yeah and to be clear, we've been experiencing that type of <unk> growth. So we don't need to grow our <unk> growth as a percentage to hit. This plan. We can just continue to do what we're doing as we did to get to the 2025 planned from a revenue perspective by the end of 2024, but Zeta direct is a.

We don't have to get to 5 or 10 percent.

Jason Crayer: But what I would tell you is we have a number of enterprise clients where we are.

David Steinberg: As you move the top of the range up, you bring the mean up. As you bring that mean up, you can move from 1% last year to a 1.25 or 1.3 this year, and then go up from there to 200 basis points by 2028.

Jason Crayer: Above 5% of their wallet share, which gives us a road map

Jason Crayer: and as you move the top of the range up, you bring the mean up and as you bring that mean up, you can move from 1% last year to 1.25 or 1.3 this year and then go up from there to 200 basis points by 2028.

Matt: Really cool product, Matt what we did was we took their inventory, which embeds into newsletters, which was traditionally served based on the content. The consumer was consuming so you're getting this newsletter from this publisher.

Chris Greiner: Jason, you can see this really clearly in the earnings supplemental on slide 10, where if you look at our greater than 1 million scaled customers, which on a brand basis grew 28% year-over-year. On an ARPU basis, to your question, those greater than 1 million customers on average are already spending almost $7 million. Now if you compare that to our 100,000 to 1 million customers, the amount of leverage we have, they're call it, you know, just shy of $500,000 per. We see a substantial growth in ramping as they spend more time on the platform.

Jason Crayer: You can, Jason, you can see this really clearly in the earnings supplemental on slide 10.

Matt: B a daily update from the New York times, it might be a automotive update from the Washington post or so on and so forth.

Jason Crayer: where if you look at our greater than one million scaled customers, which on a brand basis grew 28% year over year, but on an ARPU basis to your question, those greater than one million customers on average are already spending almost $7 million. Now, if you compare that...

Matt: Added our data cloud on top of that and we can now directly target to a deterministic individual in addition to the content. They are consuming that has already shown an increased return on investment for the marketer and higher revenue to the publisher with us sitting in the middle of the track.

Chris Greiner: If you reference slide 11, which is a slide that we produce annually, you'll see we continue to make significant inroads within scaling those customers within the first year, almost now at $1 million per, compared to around $600,000 to $700,000 in the last couple of years in that first year.

Jason Crayer: We see a substantial growth and ramping as they spend more time on the platform. And then if you reference slide 11, which is a slide that we produce annually, you'll see we continue to make significant inroads within scaling those customers within the first year, almost now at a million per compared to around 6, 700K in the last couple of years in that first year.

Matt: So we garner higher revenue as a percentage of that so.

Matt: It really is a win win win and I think it is a perfect example of taking one plus one equaling four.

Ryan MacDonald: Perfect. Thank you. 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 wanna do more with Zeta?

Jason Kreyer: Perfect. Thank you. 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 wanna do more with Zeta?

Matt: Once again, Matt feel very good about where we are with our existing customers and if you look at the agency business, which has been amongst our fastest growing their rfps are going up dramatically because they keep adding more brands and it just counts as one super scaled customer.

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

David Steinberg: You know what? I think a lot of it goes back to efficiency, effectiveness, and superior revenue growth, right? When you think about artificial intelligence, the vast majority of enterprises that are out there are using it for efficiency and automation, which of course we're doing as well. The ability to drive meaningful revenue growth per dollar invested into the Zeta Marketing Platform is causing them to move budget from other partners to us. We're seeing that in the results, right? You know, we grew the business 50% in Q4, 40% excluding political. You know, we're really seeing the AI's implementations. You know, we also talked about 200% sequential growth in AI adoption from Q3 into Q4. That's also flowing through the results.

Matt: Okay.

Jason Crayer: You know, I think a lot of it goes back to efficiency and effectiveness and superior revenue growth, right? So when you think about artificial intelligence, the vast majority of enterprises that are out there are using it for efficiency and automation, which of course we're doing as well.

Speaker Change: Our next question comes from DJ Hynes with Canaccord Genuity. Please proceed with your question.

DJ Hynes: Hey, good evening, guys nice set of results.

DJ Hynes: Maybe if I could have you expand on that last point, which the agency business side clearly the ARPA gains suggest theres lots of momentum there.

Jason Crayer: but the ability to drive meaningful revenue growth per dollar invested into this data marketing platform is causing them to move.

DJ Hynes: Maybe just talk about what youre hearing from those folks what kind of visibility you have into the plan.

DJ Hynes: That's it.

budget from other partners to us.

DJ Hynes: Pulling in new brands, how are you thinking about the growth opportunity with the agencies for 25 and beyond.

Jason Crayer: And we're seeing that in the results, right? You know, we we grew the business 50% in the fourth quarter 40% excluding political and it you know, we're we're really seeing the AI's implementations

DJ Hynes: Thank you so much DJ I appreciate the compliment what I would tell you is that right now one of the reasons I think we are drinking out of the fire hose and our agency business is because something that most people don't I think understand is we are the most profitable partner on average that the agencies work with.

Jason Crayer: You know, we also talked about a 200% sequential growth in AI adoption from Q3 into Q4. That's also flowing through the results. It's driving more efficiency and it's driving superior revenue growth to our competitors.

David Steinberg: It's driving more efficiency, and it's driving superior revenue growth to our competitors.

DJ Hynes: Bar not because most of our competitors who have had some challenges over the last number of months, they're charging a meaningful upcharge to data expense, we bundle the data in as a part of the activation and are generally lowering the cost to the agency.

Operator: Our next question comes from Ryan MacDonald with Needham & Company. Please proceed with your question.

Ryan MacDonald: Thanks for taking my question, and congrats on a great close to 2024. David, you talked about this concept of One Zeta, 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're now integrating sales forces on new products that you've recently acquired, adding in generative AI to that? 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.

Speaker Change: Our next question comes from Ryan McDonald with Needham & Co. Please proceed with your question.

Ryan McDonald: Thanks for taking my question and congrats on a great close to 2024. David, you talked about this concept of one Zeta where you're consolidating all of your use cases into one sale.

DJ Hynes: Or increasing their profit depending on how they book it.

DJ Hynes: By 25%. So what we're seeing is the agencies are moving more and more brands and more and more volume to us.

Ryan McDonald: Can you talk about the challenges of sort of that concept, given that you're 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.

DJ Hynes: What we're seeing out of <unk>.

DJ Hynes: Green instead have already been executed as a minimum amounts for this year gives us a tremendous amount of comfort in the projections that we're putting out there.

David Steinberg: First of all, thank you, Ryan. We're super proud of the quarter and the year. The answer is absolutely yes. We're starting for the first time to see meaningful RFPs coming in as One Zeta. I will tell you, the addition of Pam and the addition of Ed are gonna be really game changing for our ability to do that with the relationships they both have and the ability to cross-sell across the entire company with one group. Excuse me. Whereas in the past, as I think you know, Excuse me, I'm sorry. We had been siloed, where you would have to create a sale, then you would come in, you'd try to upsell, you'd have the, you know, the hunter would close the deal, and then the farmers would try to, you know, spawn out.

Yes makes sense, maybe a follow up to that I was interesting one of the agents you called out was kind of a push into creative.

Ryan McDonald: First of all, thank you, Ryan. We're super proud of the quarter and the year. The answer is

Speaker Change: I am curious.

Speaker Change: How deep the data we want to go into creative does that does that create any channel conflict with these agency customers are they asking you to do that just to talk about the opportunity there and whether that's meaningful to zero.

David Steinberg: Absolutely yes. So we're starting for the first time to see meaningful RFPs coming in as one Zeta and I will tell you the addition of PAM

Speaker Change: Yes, So let me be clear, we do not want to compete with the agencies as it relates to creative that is not in our roadmap.

David Steinberg: and the addition of Ed are going to be really game changing for our ability to do that with the relationships they both have and the ability to cross sell across the entire company with one

Speaker Change: We are doing is taking their creative and optimizing it for any screen size would be a perfect example, so youre opening it on an iPhone and Android device on iPad or laptop a TV commercial.

David Steinberg: group, excuse me, whereas in the past, as I think you know, we had been

David Steinberg: We had been siloed where you would have to create a sale, then you would come in, you

Speaker Change: <unk> agent is able to optimize that creative for that now we have some enterprise clients that are using very basic creative tools versus they might not have an agency, but anytime we're working with an agency and we are not putting out as a standalone product of creative product with <unk>.

David Steinberg: What we're doing now is we're leading with the One Zeta, and it's been very, very exciting to break through those silos.

David Steinberg: Hunter would close the deal and then the farmers would try to, you know, spawn out. What we're doing now is we're leading with the one zeta and it's been very, very exciting to break through those silos.

Chris Greiner: If you look inside the sales pipeline, Ryan, just as a point of evidence, what we're seeing is that the average deal size is up 35% year-over-year. Your point of bringing all three of those use cases together.

David Steinberg: If you look inside the sales pipeline, Ryan, just as a point of evidence, what we're seeing is that the average deal size is up 35% year-to-year, so your point of bringing all three of those use cases together.

Speaker Change: Very much want to support the creative assets of the agencies and we want to utilize our tools to help optimize that creative look at what has the highest conversion rates by creative and the best return on investment for the client.

Ryan MacDonald: Appreciate all the color on that. Obviously, given all the success that the company has had, it's obviously gonna, 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, you know, some of this moves from the walled gardens, creates any concern in the near term? Thanks.

Speaker Change: I 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, you know, some of this moves from the walled gardens creates any concern in the near term?

Yeah.

Speaker Change: Our next question comes from Jason <unk> with Craig Hallum. Please proceed with your question.

Jason: Hey, Thanks, guys and congrats on another strong quarter.

Jason: So look you guys are working with some of the largest marketing companies you're talking about 44% of the fortune 500.

David Steinberg: Yeah. Thank you, Ryan. No, we're not seeing any competition from guys like that. In fact, we continue to grow our business with Meta pretty materially and have a very deep and meaningful relationship with them. You know, they tend to focus on you know, very few, very large partners. You know, you are seeing Google and Meta going at it a little bit against each other, but that has in no way, shape or form affected us. Quite frankly, I think that it's in some ways benefited us because we're such good partners with Meta, we've been able to drive more business and build a deeper and more meaningful relationship. I would also comment on the fact that we haven't seen any small up-and-comers either.

Jason: Youre just running it at scale customer argue of $2 million today. So what are the key elements of the strategy that helped you increase wallet share. So it's not $2 million by 20, or 40 or $80 million over time.

Speaker Change: Yeah, thank you, Ryan. No, we're not seeing any competition from guys like that. In fact, we continue to grow our business with meta pretty materially and have a very deep and meaningful relationship with them. You know, they tend to focus on, you know,

Speaker Change: So great question, Jason I mean first let's start with one data, which is consolidating all of our use cases into one sale and we're starting to see more and more <unk> customers. So it's interesting because.

Today.

Speaker Change: <unk> scaled customers, we have spend over $100 billion a year in marketing and in the last year, we captured 1% of that spend.

Speaker Change: quite frankly I think that it's in some ways benefited us.

because

Speaker Change: We're such good partners with Metta. We've been able to drive more business and build a deeper and more meaningful relationship I would also comment on the fact that

Speaker Change: As we look forward to the next few years, our goal is to get to 2% of that spend it's not.

David Steinberg: I think a lot of that has been the inability for, you know, startups outside of pure AI to get financing over the last three to four years. In a normal world, you would get to our scale and our growth rate and our size, you would have some new startups coming after you. We have not seen that either. It's been a really unique opportunity as we've brought everything together, where you would traditionally need upwards of 17 different vendors to put together what the Zeta Marketing Platform can deliver. We're not seeing any one organization trying to replicate that at this point.

We haven't seen any.

Speaker Change: Have to get to five or 10%, but what I would tell you is we have a number of enterprise clients, where we are above 5% of their wallet share, which gives us a roadmap for how to move other clients up and as you move the top of the range up you bring the Mena and as you bring that mean up you can move from 1% last year.

Small up and comers either.

Speaker Change: and I think a lot of that has been the inability for startups outside of pure AI to get financing over the last three to four years. So in a normal world, you would get to our scale and our growth rate and our size. You would have some new startups coming after you. We have not seen that either.

Speaker Change: Year to a one five or one three this year and then go up from there to 200 basis points by 2028, you can Jason you can see this really clearly in the earnings supplemental on slide 10, where if you look at our greater than 1 million scaled customers, which on a brand basis grew 28% year over year, but on an <unk> basis to you.

Speaker Change: So, it's been a really unique opportunity as we've brought everything together where you would traditionally need upwards of 17 different vendors to put together what the Zeta Marketing Platform can deliver. We're not seeing any one organization trying to replicate that at this point.

Operator: Our next question comes from Terry Tillman with Truist Securities. Please proceed with your question.

Speaker Change: Question, those greater than 1 million customers on average are already spending almost $7 million now if you compare that to our 100 K two 1 million customers. The amount of leverage we have there call. It just shy of 500 K per we see a substantial growth in ramping as they spend more time on the platform and then if you reference slide 11.

Ryan MacDonald: Yeah. Congratulations from me as well. Hi, David, Chris, and Matt. First question might be a multi-parter and then add a follow-up. You all provided some interesting stats in terms of the pipeline and the value of the pipeline kind of ending the year.

Speaker Change: Our next question comes from Terry Tillman with Truist Security. Please proceed with your question.

Terry Tillman: Yeah, congratulations for me as well. Hi, David, Chris and Matt. First question might be a multi-parter and then add a follow-up, but

Terry Tillman: What I'm curious about is how do we think about timing of that converting into like meaningful or material revenue? If some of these are kind of One Zeta deals, does it take a little bit longer before we start seeing that in the model in 2025? I had a follow-up.

Terry Tillman: 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 one data deal, does it take a little bit longer before we start seeing that in the model in twenty five? And then I had a follow up.

Speaker Change: With this slide that we produce annual Youll see we continue to make significant inroads within scaling those customers within the first year almost now at a million per compared to around six seven hurricane last couple of years in that first year.

Chris Greiner: Yeah, we're not seeing any change in our deal cycles, and that's been something that we've you know been saying now for frankly years. Without a doubt, some of the bigger deals that come in through the RFP process you know will be, call it, 7 to 12 months in that range, and they can move much faster than that, by the way. Still the vast majority of the deals we're closing, and it doesn't mean it has to take a long amount of time, are still pilots and proof of concepts that can be on all three use cases. It doesn't necessarily stop us from having deals in the pipeline you know take longer, if you will.

Speaker Change: Perfect. Thank you and then just a follow up to something we talked about in December but 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 data.

Terry Tillman: Yeah, we're not seeing any change in our deal cycles. And that's been something that we've, you know, we've been saying now for, for frankly, years. So, you know, without a doubt, some of the bigger deals that come in through the RFP process.

You know, we'll be call it.

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Speaker Change: I think a lot of it goes back to efficiency and effectiveness and superior revenue growth right. So when you think about artificial intelligence. The vast majority of enterprises that are out there are using it for efficiency and automation, which of course, we're doing as well, but the ability to drive meaningful revenue growth per.

Terry Tillman: And it doesn't mean it has to take a long amount of time or are still pilots and proof of concepts that can be on all three use cases. So it doesn't necessarily stop us from having deals in the pipeline, you know, take longer, if you will. I don't expect the conversion of the pipeline to be any different in twenty five than we've seen in twenty four or twenty twenty three. And remember, Terry, that seven or eight months, many of those guys entered our pipeline seven or eight months ago. So you're you're actually seeing a consistent movement.

Chris Greiner: I don't expect the conversion of the pipeline to be any different in 2025 than we've seen in 2024 or 2023.

David Steinberg: Remember, Terry, that 7 or 8 months, many of those guys entered our pipeline 7 or 8 months ago. You're actually seeing a consistent movement from what I would say is the pipeline to RFPs and pilots, to converted to clients, to the ability to scale, to scaled clients, and then ultimately super scaled clients. You know, I think that if you look at our confidence in our business, putting forth, you know, a 2028 plan that continues to show a minimum of a 20% organic CAGR, we're feeling very bullish about where the business is right now.

Speaker Change: Dollar invested into this Ada marketing platform is causing them to move budget from other partners to us and we're seeing that in the results right. We grew the business 50%.

Terry Tillman: from what I would say is the pipeline to RFPs and pilots to converted to clients to the ability to scale to scaled clients and then ultimately super scaled clients. So, you know, I think that if you look at our confidence in our business,

Speaker Change: In the fourth quarter, 40%, excluding political and.

Speaker Change: We're really seeing the eyes implementations, we also talked about a 200% sequential growth in AI adoption from Q3 into Q4. That's also flowing through the results, it's driving more efficiency and its driving superior revenue.

Terry Tillman: putting forth, you know, a 2028 plan that continues to show a minimum of a 20% organic kegger. We're feeling very bullish about where the business is right now.

Terry Tillman: Yeah, that's definitely clear, David. I guess it seems like forever ago, but it really wasn't that long ago with Zeta Live. Much has happened since then, but there was a lot on the mobile side. Just maybe a quick update on that and potentially, you know, could this start becoming meaningful in 2025 in terms of a key revenue channel? Thank you.

Speaker Change: <unk> growth to our competitors.

Terry Tillman: Yeah, that's definitely clear, David. I guess it seems like forever ago, but it really wasn't that long ago with data live.

Speaker Change: Yeah.

Speaker Change: Our next question comes from Ryan Macdonald with Needham <unk> Co. Please proceed with your question.

Terry Tillman: So much has happened since then, but there was a lot on the mobile side.

Ryan Macdonald: Alright, Thanks for taking my questions and congrats on a great close to 2020 for David you talked about this concept of one data where you're consolidating all of your use cases into one sale.

David Steinberg: You know, we've always said we thought mobile would be a big driver into 2026 and beyond, and you know, it could happen in 2025. We have a number of clients who have adopted it and, you know, we're very, very proud of the product we've built, and it's doing quite well. I mean, it's growing at a massive rate, but off a zero base, right? The one challenge about getting bigger and bigger is it's harder for new products to really drive the needle. If you look at, you know, products like connected television, they're still growing above 100% a year. You know, now that that's a meaningful revenue, it's starting to really impact what we're seeing as a business. I expect mobile to do that in the years to come.

Terry Tillman: So just maybe a quick update on that and potentially, you know, could this start becoming meaningful in 25 in terms of a key revenue channel? Thank you.

Terry Tillman: You know, we've always said we thought mobile would be a big driver into 2026 and beyond. And you know, it could happen in 2025. We have a number of clients who have adopted it. And you know, we're very, very proud of the product we've built, and it's doing quite well. I mean, it's it's growing at a at a massive rate, but also zero base, right? So the one challenge about getting bigger and bigger is it's harder for new products

Ryan Macdonald: Can you just talk about the challenges of sort of that concept.

Ryan Macdonald: 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.

Speaker Change: First of all thank you Ryan we're super proud of the quarter and the year.

Ryan Macdonald: The answer is.

Ryan Macdonald: Absolutely, yes, so we're starting for the first time to see meaningful rfps coming in as one data and I will tell you. The addition of Pam and the addition of Ed are going to be really game changing for our ability to do that with the relationships. They both have and the ability.

Terry Tillman: they're still growing above 100% a year. So, you know, now that that's a meaningful revenue.

Chris Greiner: It's a very natural selling motion for our sellers, right? It's not as though they have to learn a new capability. It's really an extension of how they're selling today as a new channel.

Operator: Our next question comes from Arjun Bhatia with William Blair. Please proceed with your question.

Ryan Macdonald: <unk> to cross sell across the entire company with one <unk>.

Arjun Bhatia: Perfect. Thank you, guys. Congrats on the strong close to the year here. Maybe if 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 the S-curve in terms of growth right now, but kind of how are you anticipating their growth might shape out over the next couple of years? The other piece in terms of mix, like where are you thinking the agencies are in the pace of adopting digital channels or, sorry, direct channels? Are you starting to see that pick up in late 2024 or early 2025 here? Just how do you think that might trend over the coming years?

Speaker Change: Our next question comes from Arshan Bekia with William Blair. Please proceed with your question.

Ryan Macdonald: Group excuse me, whereas in the past as I think you know we had been.

Ryan Macdonald: Excuse me I'm, sorry, we had been Siloed, where you would have to create a sale. Then you would come in you try to upsell you have that.

Ryan Macdonald: Hunter would close the deal and then the farmers would try to spun out what we're doing now is we're leading with the one data and it's been very very exciting to break through those silos. If you look inside the sales pipeline Ryan just as a point of evidence what we're seeing is that the average deal size is up 35%.

Arshan Bekia: Chris, I'm curious what role you see agencies contemplating in that 2028 model, you 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 the growth might shape out over the next couple years and then

Arshan Bekia: The other piece, in terms of mix, where are you thinking the agencies are in the pace of adopting direct channels?

Ryan Macdonald: Year to year. So your point of bringing all three of those use cases together.

Speaker Change: I appreciate all the color on that and then obviously given all the success that the company has had its obviously going to I think bring in new competition into the market. We've recently seen sort of reports about meta.

Chris Greiner: Yeah. So we think of the agency first off, which reached call it right around 20% of revenue this year, which was obviously, you know, expected and substantial growth to be an even bigger part of the pie as we go deeper into 2028. We see it as part of the core being able to get to that growth plan by itself, just by accessing more and more wallet share. The brand strategy and the brand go-to-market is one of the fastest ways that we can do that. Obviously, we highlighted a number of other growth drivers incremental to the core that frankly could drive us, you know, north of the $2.1 billion, which is why we said it's an at least. In terms of where we are on getting direct mix, we made really exciting improvements this year.

Arshan Bekia: is that are you starting to see that pick up and in late 24 early 25 here and just how do you think that might

friend over the coming years.

Speaker Change: Trying to go to the agencies to do more on AI based advertising can you just talk about what youre seeing maybe in terms of newer moat movement or any changes competitively whether or not.

Arshan Bekia: Yeah, so we we think of the agency first off, which reached call it right around 20% of revenue this year, which was obviously, you know, expected and substantial growth.

to be an even bigger part of the pie.

Speaker Change: Some of this moves from the walled gardens.

Speaker Change: Any concern in the near term thanks.

Ryan Macdonald: Yes. Thank you Ryan no we're not seeing any competition from guys like that in fact, we continue to grow our business with met up pretty materially and have a very deep and meaningful relationship with them.

Arshan Bekia: and the brand strategy and the brand go-to-market is one of the fastest ways that we can do that. Obviously, we highlighted a number of other growth drivers incremental to the core that frankly could drive us, you know, north of the 2.1 billion, which is why we said it's an at least.

Ryan Macdonald: They tend to focus on.

Chris Greiner: We're still not quite at like a 50/50, you know, roughly, you know, 50% direct to 50% integrated, so there's still upside there. I think as those agencies continue to grow in brands, grow in their channel adoption towards direct mix, that's also going to be accretive to our gross margins in addition to the work we're doing on One Zeta. Obviously, as more and more of our consumption-based revenues generated by our generative AI, that also brings with it higher margin profile business as well.

Ryan Macdonald: Very few very large partners.

Arshan Bekia: In terms of where we are on getting direct mix, we made really exciting improvements this year. We're still not quite at like a half per, you know, roughly, you know, 50% direct to 50% integrated. So they're still upside there. And I think as those agencies continue to grow in brands,

Ryan Macdonald: Sure.

Ryan Macdonald: We're seeing Google in meta going added a little bit against each other but that has in no way shape or form affected us.

Ryan Macdonald: Quite frankly, I think that it's in some ways benefited us because we're such good partners with meta we have been able to drive more business and build a deeper and more meaningful relationship I would also comment on the fact that we haven't seen any small up and comers, either and I think a lot of them.

Arshan Bekia: Grow in their channel adoption towards direct mix that that's also going to be created to our gross margins in addition to the work We're doing on one zeta and obviously is more and more of our consumption based revenues generated by our generative AI That also brings with it higher margin profile business as well

Arjun Bhatia: Okay. Understood. Then, just a quick one to put a finer point on it. You know, 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?

Ryan Macdonald: That has been the inability for startups outside of pure AI to get financing over the last three to four years. So in a normal world you would get to our scale and our growth rate in our size you would have some new startups coming after you we have not seen that either so it's been it's been a.

Speaker Change: Okay, understood. And then just a quick one to put a finer point on it. And, you know, I know we talked about this a little bit late in 2024, but kind of the fallout from.

Speaker Change: 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?

Ryan Macdonald: A really unique opportunity as we brought everything together, where you would traditionally need upwards of 17 different vendors to put together what does Ada marketing platform can deliver.

David Steinberg: Well, I think if we had seen material, you know, changes, Arjun, we wouldn't have grown by 50%. What I would tell you is no, we have seen no material changes from the last update we gave, which was we have not lost any client directly over this, and we continue to see that. I was super excited that we were able to announce that our audit committee had done a full review. They brought in a full forensic accounting firm that went through every single one of the transactions that could be deemed a client and a vendor, and found no issues whatsoever in there. Then we brought in a law firm that is one of the top data experts in the country.

Ryan Macdonald: We're not seeing any one organization trying to replicate that at this point.

from them post some of the events late last year.

Speaker Change: Well, I think if we had seen material, you know, changes, Arjun, we wouldn't have grown by 50%. What I would tell you is no, we have seen no material changes from the last update we gave, which was we have not lost any client directly over this.

Speaker Change: Our next question comes from Terry Tillman with <unk> Securities. Please proceed with your question.

Terry Tillman: Yes, congratulations from me as well, Hi, David Chris and Matt.

Terry Tillman: First question it might be a multi partner 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 one data deals does it take a little bit longer before we start seeing that in the modeling.

and we continue.

Speaker Change: One of the transactions that could be deemed a client and a vendor and found no issues whatsoever in there. And then we brought in a law firm that is one of the top data experts in the country.

David Steinberg: They vetted everything that was in the report, and they found no merit whatsoever in it, and they reported that to our audit committee, which was very happy to put this issue behind us.

Terry Tillman: 25, and then I had a follow up.

Speaker Change: Yes, we're not seeing any change in our deal cycles, and that's been something that we've been saying now for frankly years, so without a doubt some of the bigger deals that come in through the RFP process.

Speaker Change: They vetted everything that was in the report, and they found no merit whatsoever in it, and they reported that to our audit committee, which was very happy to put this issue behind us.

Speaker Change: We will be call it <unk>.

Operator: Our next question comes from Kelly Valentini with Goldman Sachs. Please proceed with your question.

Speaker Change: <unk> 12 months in that range and they can move much faster than that by the way.

Speaker Change: But there is still the vast majority of the deals we're closing and it doesn't mean I have to take a long amount of time or still pilots and proof of concepts that can be on all three use cases, so it doesn't necessarily stop us from.

Kelly Valentini: Hi, thank you for taking my question, and congrats on the quarter. Wanted to walk through the comments you made on in getting those budget penetration to 5 to 15%. Curious, like in the typical customer, as 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?

Speaker Change: Our next question comes from Kelly Valentini with Goldman Sachs. Please proceed with your question.

Speaker Change: Deals in the pipeline.

Kelly Valentini: Hi, thank you for taking my question and congrats on the quarter. I wanted to walk through the comments you made on getting those budget penetration to 5 to 15%. I'm 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?

Terry Tillman: Take longer if you will and I don't expect the conversion of the pipeline to be any different than 25% and we've seen it in 24 of 2023 and remember Terry that seven or eight months. Many of those guys entered our pipeline seven or eight months ago. So sure Youre actually seeing a consistent movement from what I would say is the pipeline too.

David Steinberg: Thank you, Kelly. I appreciate the compliment, and it's a great question. We don't traditionally take business from the walled gardens. We traditionally partner with them. What we're able to do by using our data, we're able to build an attribution model that can go into a walled garden or it can go outside of a walled garden. We see the walled gardens more as our partner than our competitor. Now, there are a number of companies out there that obviously we're taking meaningful market share from. You know, hard to grow the business at these rates if we weren't. They're traditionally, I would say, last generation marketing clouds or last generation DSPs, where they haven't fully integrated data and AI as native to the application layer.

Terry Tillman: Rfps and pilots to converted to clients to the ability to scale to scaled clients and then ultimately super scaled clients. So.

Kelly Valentini: So, what we're able to do by using our data, we're able to build an attribution model that can go into a walled garden or it can go outside of a walled garden. So, we see the walled gardens more as our partner than our competitor. Now, there are a number of companies out there that obviously we're taking meaningful market share from, you know, hard to grow the business at these rates if we weren't.

Terry Tillman: I think that if you look at our confidence in our business putting forth. A 2028 plan that continues to show a minimum of a 20% organic CAGR.

Terry Tillman: We're feeling very bullish about where the businesses right now.

Speaker Change: Yeah, that's definitely clear David I guess, it seems like forever ago, but it really wasn't that long ago with data lives.

Speaker Change: 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 'twenty five in terms of our key revenue channel. Thank you.

David Steinberg: Because of their tech debt, they're not able to get to the type of speed to intelligence that our platform can, which allows for substantially superior return on investment. You know, if the market itself is growing, you know, 10, 15% and we grew thirty- 40%, not including political, that would infer everything above that would have been taking market share from competitors.

Kelly Valentini: marketing clouds or last generation DSPs, where they haven't fully integrated data and AI as native to the application layer. So, because of their tech debt,

Speaker Change: We've always said, we thought mobile would be a big driver into 2026 and beyond and it could happen in 2025, we have a number of clients who have adopted it and we're very very proud of the product, we built and it's doing quite well I mean, it's growing.

Kelly Valentini: They're not able to get to the type of speed to intelligence that our platform can, which allows for substantially superior return on investment. So, you know, if, if the market itself is growing, you know, 10, 15 percent, and we grew third, 40 percent, not including political, that would infer everything above that would have been taking market share from competitors.

Speaker Change: At a massive rate, but also a zero base right. So.

Speaker Change: The one challenge about getting bigger and bigger as it's harder for new products to really drive the needle, but but if you look at products like connected TV. They are still growing above 100% of year. So now that that's a meaningful revenue, it's starting to really impact.

Kelly Valentini: That makes sense. Thank you. 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?

Speaker Change: 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?

Chris Greiner: Yeah, we didn't. You know, we haven't broken it out in the 2028 just, you know, in a line item fashion. We did say it will be one of the five new levers we feel like we have in addition to the core growth business. I think if you look towards 2024 and our consumption-based revenue, which accelerated by north of 40% year-over-year, and that's, call it, roughly half of Zeta's revenue, and that was, you know, an acceleration from 2023. Certainly, a portion of that is driven by our early-stage generative AI products, which are intended to drive higher outcomes, which then drive more usage, which then drive more spend with the brand, annually over time.

Speaker Change: <unk>, what we're seeing is a business I expect mobile to do that in the years to come and it's a very natural selling selling motion for our sellers right. It's not as though they have to learn a new.

Speaker Change: Yeah, we didn't, we didn't, you know, we haven't broken it out in the 2028 this, you know, in a line item fashion, we did say it will be one of the

Speaker Change: A new capability, it's really an extension of how theyre selling today as a new channel.

Speaker Change: Our next question comes from Arjun Bhatia with William Blair. Please proceed with your question.

Arjun Bhatia: Alright. Thank you guys congrats on a strong close to the year here.

David Steinberg: What we're seeing, Kelly, is the ability to meaningfully drive consumption is a substantially better return on investment for us as a company than charging an all you can eat or putting sort of a small price on the AI. Although we will be rolling out AI products in the near term that will have to be paid for as it relates to sitting on top of the Zeta Marketing Platform.

Arjun Bhatia: Maybe if I can switch back to agencies for a second.

Speaker Change: Chris I'm curious what role you see agencies contemplating in that 2028 model, we know theyre kind of on those.

and others.

Speaker Change: Upward part of that curve in terms of growth right now, but kind of how are you anticipating the growth might shape out over the next couple of years on them.

Speaker Change: The other piece.

Speaker Change: There's a mix.

Speaker Change: Or are you thinking the agencies are on the peso adopting digital channel our direct channels.

Kelly Valentini: Great. Thank you.

Speaker Change: in the near term that will be, have to be paid for as it relates to sitting on top of the Zeta marketing platform.

Operator: Our next question comes from Elizabeth Porter with Morgan Stanley. Please proceed with your question.

Speaker Change: Is that are you starting to see that pick up in late 'twenty early 'twenty Pfizer and just how do you think that might trend over the coming years.

[Analyst] (Morgan Stanley): Great. Thank you so much. This is Katie on for Elizabeth Porter this afternoon. Wanted to hit on the verticalization piece here. Zeta has had a lot of success given kind of diversification of the business across industries. Some of those key verticals you called out in commerce and CPG do have some kind of vertical-specific competitors in there. What gives Zeta the right to win in these verticals where you're more kind of under-penetrated today? When can we expect that vertical expansion contribution to layer into the model? Thank you.

Katie Herr: Great. Thank you so much. This is Katie on for Elizabeth Porter this afternoon. Wanted to hit on the verticalization piece here. Zeta has had a lot of success given kind of diversification of the business across industries. Some of those key verticals you called out in commerce and CPG do have some kind of vertical-specific competitors in there. What gives Zeta the right to win in these verticals where you're more kind of under-penetrated today? When can we expect that vertical expansion contribution to layer into the model? Thank you.

Great, thank you.

Speaker Change: Yes, So we think of the agency first off which reached call. It right around 20% of revenue this year, which was obviously expected and substantial growth.

Speaker Change: Our next question comes from Elizabeth Porter with Morgan Stanley. Please proceed with your question.

Speaker Change: To be an even bigger part of the pie as we go into deeper into 2020, but we see it as part of the core being able to get to that growth plan by itself just by accessing more and more wallet share and the brand strategy and the brand go to market as one of the fastest ways that we can do that obviously, we highlighted a number of other growth drivers incur.

Chris Greiner: Yeah, no problem, Katie. Thanks for the question. We've already started to build. In fact, you know, in a lot of our virtual demos that we'll do with investors, we showcase a CPG real-world demo today, where we're actually using customers and being able to show them what their customers are spending on with their brand as well as with their competitors. It comes down to, in each one of those verticals where we think we're underrepresented today, where there's a massive TAM and amount of marketing and advertising spend, all comes down to the type of data that we can put in front of the marketer and how actionable we can make it for them in a totally different way than what our competitors can do.

Speaker Change: Metal to the core that frankly could drive us north of the $2 1 billion, which is why we said it's in at least in terms of where we are on getting direct mix. We made really exciting improvements. This year, we're still not quite at like a half.

Speaker Change: Roughly 50% direct to 50% integrated so there's still upside there and I think as those agencies continued to grow in brands grow in their channel adoption towards direct mix that that's also going to be accretive to our gross margins. In addition to the work we're doing on one's data and obviously as more and more of our consumption based revenues generated by our degenerative.

Speaker Change: Where we're actually using customers and being able to show them what their customers are spending on with their brand as well as with our competitors. So it comes down to in each one of those verticals, where we think we're underrepresented today, where there is a massive tam in the amount of marketing and advertising spend all comes down to the type of data that we can put in front of the marketer and how actionable we can make it for them.

Chris Greiner: It all starts with the data and then the software and the analysis that we put on top of it and the recommendations that they can then perform on the platform coming out of it.

Speaker Change: AI that also brings with it higher margin profile business as well.

Speaker Change: Totally different way than what our competitors can do so it all starts with the data and then the software and the analysis that we put on top of it and the recommendations that they can then perform of the platform coming out of it and by the way a lot of the quote unquote vertical competitors really are more vertically focused from a sales perspective than they are from a platform perspective. So.

David Steinberg: By the way, a lot of the quote-unquote vertical competitors really are more vertically focused from a sales perspective than they are from a platform perspective. You know, we've invested over the last year pretty heavily in our sales force, as you've seen, growing to 180 quota carriers. Easy for me to say. We're expanding out into new verticals with salespeople that we think will really benefit us this year and the years to come.

Speaker Change: Okay understood and then.

Speaker Change: Just a quick wanted to put a finer point on it I know, we've talked about that sort of that way.

Speaker Change: In 2024, but kind of the fallout from <unk>.

Speaker Change: Or the customer conversations that you've had fallen off with some of your customers post the short report.

Speaker Change: <unk> invested over the last year pretty heavily in our sales force as <unk> seen grow into a 180 quota calix.

Speaker Change: Has there been any impact or any change in those conversations since that's happened.

Speaker Change: Carriers easy for me to say.

Speaker Change: <unk> reacting.

Speaker Change: And we're expanding out into new verticals with salespeople that we think will really benefit us this year and the years to come.

[Analyst] (Morgan Stanley): Helpful. Then just one quick follow-up on the NRR. You know, in the long-term model, not looking to inflect too materially from the 114% today. Obviously, that's a pretty impressive stat already, but maybe just expand on the different drivers there. Is there any limitation on the upper bound to NRR around expansion activity as you kind of land with these higher ARPU customers? Thank you.

Katie Herr: Helpful. Then just one quick follow-up on the NRR. You know, in the long-term model, not looking to inflect too materially from the 114% today. Obviously, that's a pretty impressive stat already, but maybe just expand on the different drivers there. Is there any limitation on the upper bound to NRR around expansion activity as you kind of land with these higher ARPU customers? Thank you.

What are you seeing.

From them.

Speaker Change: For some of the events late last year.

Speaker Change: Well I think if we had seen material changes origin, we wouldn't have grown by 50%, but what I would tell you is no. We've seen no material changes from the last update we gave which was we have not lost any client directly over this.

Speaker Change: Helpful. And then just one quick follow up on the <unk> you know in the long term model not looking to inflect to materially from the 114 today, obviously, that's a pretty impressive stat already but maybe just expand on the different drivers. There is there any limitation on the upper bound to NRM around expansion activity as you kind of land with these higher <unk> customers. Thank you.

David Steinberg: Well, there's no limitation on where it can go, although we continue to guide to 110 to 115%, which has been where we have. We've been sort of between 111 and 114. What I would say is, first, you've got the agency holdcos, which as their ARPU grows dramatically, that's a big benefit to NRR. We just don't lose a lot of customers, which is also a very good thing, right? I think we can continue to keep it in that range. Then in the years to come, I think we can begin to look at getting it above that range. In the short run, we feel very comfortable with 110 to 115.

Speaker Change: And we continue to see that I was super excited that we were able to announce that our audit committee had done a full review they brought in a full forensic accounting firm that went through every single one of the transactions that could be deemed a client and a vendor and found no.

Speaker Change: Well there is no there is no limitation on where it can go although we continue to guide to 110% to 115%, which which has been where we have we've been sort of between $1 11 and 102014.

Speaker Change: I would say is first you've got the agency holdco, which as their ARPA grows dramatically that's a big benefit to NR and we just don't lose a lot of customers, which is also a very good thing right. So.

Speaker Change: <unk> issues whatsoever in there and then we brought in a law firm that is one of the top data experts in the country.

Speaker Change: They vetted everything that was in the report and they found no merit whatsoever in it and they reported that to our audit Committee, which was very happy to put this.

Speaker Change: I think we can continue to keep it in that range and then in the years to come I think we can begin to look at getting it above that range, but in the short run we feel very comfortable with 110 to $1 15, and I think that there's a really good Katy on slide 11 of the earnings supplemental we show the life of the cohort of our customer set and if you look at those that are spin.

Chris Greiner: Yeah, I think that there's a really good, Katie, on slide 11 in the earnings supplemental, we show the life of the cohorting of a customer set. If you look at those that are spending, you know, that have been on the platform less than a year, they're spending an average of $900,000, which is up from, you know, $600,000 last year. That 1-to-3 year cohort continues to accelerate to $1.2 million. Then those customers that are with us 3 or more years, they're continuing to grow. They're now at an average of $2.6 million compared to $2.1 million last year.

Speaker Change: Put this issue behind us.

Speaker Change: Okay.

Speaker Change: Our next question comes from Kelly Valentini with Goldman Sachs. Please proceed with your question.

Kelly Valentini: Hi, Thank you for taking my question and congrats on the quarter I wanted to walk through the comments you made on getting those budget penetration to 5% to 15% curious like in the typical customer as 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.

Speaker Change: <unk>.

Speaker Change: And on the platform less than a year. They are spending an average of 900, K, which is up from 600 K last year at one to three year cohort continues to accelerate to $1 2 million and then those customers that are with us three or more years theyre continuing to grow there now at an average of $2 6 million compared to $2 1 million last year. So we feel like that 110 to $1 15 is rooted in.

Chris Greiner: We feel like that 110 to 115 is rooted in deep analysis by cohort, and it's also consistent with our growth algorithm, which has historically been about half of our growth coming from our existing customers and half from new.

Speaker Change: Thank you Kelly I appreciate the compliment and that's a great question, we don't traditionally take business from the walled gardens, we traditionally partner with them. So what we're able to do by using our data we're able to build an attribution model that can go into a walled garden or it can go out.

Speaker Change: Deep analysis by cohort and it's also consistent with our growth algorithm, which has historically been about half of our growth coming from our existing customers and half from new.

Operator: Our next question comes from Jackson Ader with KeyBanc Capital Markets. Please proceed with your question.

[Analyst] (KeyBanc Capital Markets): Hey, guys. This is Jack on for Jackson Ader. Wanted to ask what your political revenue assumptions are implied in your outlooks, and do you expect to gain market share with political campaigns?

Speaker Change: Our next question comes from Jackson Ader with Keybanc capital markets. Please proceed with your question.

Speaker Change: Side of the walled garden, so we see the walled gardens Moore as our partner than our competitor now there were a number of companies out there that obviously, we're taking meaningful market share from.

Speaker Change: Hey, guys. This is Jack on for Jackson Ader.

Speaker Change: I wanted to ask on what your political revenue assumptions are implied in your outlooks and do you expect to gain market share with political campaigns.

Chris Greiner: There's two pieces, thanks, Jack. Two pieces of the answer there. There's political candidate revenue, which was, you know, called $44 million in 2024. The reason why we broke that out throughout the year in our guide and in our reported results was it's always been our expectation that in 2025 there shouldn't be any political candidate revenue of any materiality, certainly. There's the advocacy portion, which is where Zeta is working with political action groups as well as NGOs. In 2024, that was in line with our expectations. It was $36 million. For that piece of our business, which we're putting more quota carriers into, building new capabilities, leveraging relationships that come out of the political cycle, our expectation is that business goes to $20 to 25 million in 2025.

Speaker Change: Hard to grow the business at these rates if we werent there traditionally I would say last generation marketing clouds or last generation Dsp's, where they havent fully integrated data and AI as native to the application layer, so because of their tech debt.

Speaker Change: So theres two pieces. Thanks, Jack two pieces of the answer there. If there is political candidate revenue which was called.

Speaker Change: $44 million in 2024, and the reason why we broke that out throughout the year and our guidance in our reported results was it's always been our expectation that in 2025, there shouldnt be any political candidate revenue of any materiality certainly than theirs. The advocacy portion, which is where <unk> is working with political action groups as well as Ngos in 2024 that was in <unk>.

Speaker Change: Theyre not able to get to the type of speed to intelligence that our platform can which allows for substantially superior return on investment. So if the market itself is growing 10% or 15% and we grew third 40% not including political that would infer everything.

Speaker Change: With our expectations it was $36 million for that piece of our business, which we're putting more quota carriers into building new capabilities leveraging relationships that come out of the political cycle. Our expectation is that business goes to 20% to $25 million in 2025 now if you compare the how that wasn't an off political year back in 2023.

Chris Greiner: Now, if you compare how that was in an off political year back in 2023, that's up considerably from around $13 million. That's how we think about the contribution of political candidate and advocacy in 2025.

Speaker Change: Above that would have been taking market share from competitors.

Speaker Change: That makes sense. Thank you and then as a follow up just curious.

Speaker Change: Anything you can give on what assumptions, you're making on AI revenue growth and kind of the 2025 and 2028 targets.

Speaker Change: Thats up considerably from round $13 million. So that's how we think about the contribution of political candidates and advocacy in 2025.

[Analyst] (KeyBanc Capital Markets): Got it. Very helpful. As a follow-up, how much revenue today is coming from the marketing cloud, and how much do you expect that to be in 2028 as it progresses?

Speaker Change: Yes, we didn't we didn't we haven't broken it out in the 2028.

Speaker Change: Got it very helpful and as a follow up how much revenue today is coming from the marketing cloud and how much do you expect that to be in 2028 as it progresses.

Speaker Change: Line item fashion, we did say it will be one of the five new levers we feel like we have in addition to the core growth business, but I think if you look towards 2024, and our consumption based revenue, which accelerated by north of 40% year over year and that's call. It roughly half of <unk> revenue and that was an acceleration from 2023, certainly a portion of.

Chris Greiner: I mean, all of it. You know, all our revenue goes through the marketing cloud. You know, it's. I don't. Maybe you could fine-tune that question.

Speaker Change: I mean all of it.

Speaker Change: All our revenue goes through the marketing flat so.

[Analyst] (KeyBanc Capital Markets): Just, I'll follow up with you guys offline on that.

Speaker Change: It's I don't.

[Analyst] (KeyBanc Capital Markets): Just, I'll follow up with you guys offline on that.

Speaker Change: Maybe you can fine tune that question.

Kelly Valentini: That is driven by our early stage generative AI products, which are intended to drive higher outcomes, which then drive more usage, which then drive more spend with the brand annually overtime and what we're seeing Kelly has the ability to meaningfully drive consumption is a substantially better return on investment for us as a company then charging an all you can eat.

Chris Greiner: Yeah. Well, I mean, we're gonna talk in a bit. literally-

Speaker Change: Okay.

[Analyst] (KeyBanc Capital Markets): Cool.

Chris Greiner: Jack, all of our revenue goes through the marketing cloud at this point. When we consolidated that a few years ago, everything now goes through one user interface with one reporting infrastructure, and everything is totally integrated.

Speaker Change: Yes.

Speaker Change: I'll follow up with you guys offline on that yes, I mean, we're going to talk in a bit but literally Jack all of our revenue goes through the marketing cloud at this point. So when we consolidated that a few years ago everything now goes through one user interface with one reporting infrastructure and everything is totally integrated.

Kelly Valentini: We're putting sort of a small price on the AI, although we will be rolling out AI products in the near term that will be.

Operator: Our next question comes from Koji Ikeda with Bank of America. Please proceed with your question.

Koji Ikeda: Yeah. Hey, guys. Thanks so much for taking the questions. Maybe this one's for Chris. And so, Chris, when I look at the Q3 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. If I use that $1.144 number and then compare it to where you ended up at 2024, that implies 14% organic growth versus the Q3 when you said 17%. I know on the slide 24, it says 21% growth.

Speaker Change: Our next question comes from Koji Ikeda with Bank of America. Please proceed with your question.

Kelly Valentini: Have to be paid for as it relates to sitting on top of the <unk> marketing platform.

Koji Ikeda: 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 transcript I recall that you said you were very comfortable with 2025 consensus revenue growth of 17%.

Kelly Valentini: Great. Thank you.

Our next question comes from Elizabeth partner with Morgan Stanley. Please proceed with your question.

Kelly Valentini: Great. Thank you. So much this is katie on for the quarter. This afternoon I wanted to hit on the verticals Asian piece here. They have had a lot of success given kind of diversification of the business across industry and some of those key verticals you called out in commerce in CPG you do have some kind of vertical specific competitors in there so what gives data.

Koji Ikeda: And so I know that was supposed to be without live intent and that got us to a number that is a couple of millions below the the 114 4 million or billion that you're guiding to today without light intent.

Speaker Change: To the right to win in these verticals, where you're more kind of underpenetrated today and when can we expect that vertical expansion contribute contribution to layer into the model. Thank you, yes, yes, no problem.

Koji Ikeda: But if I use that 1144 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.

Speaker Change: Katy Thanks for the question, we've already started to build in fact.

Koji Ikeda: I just wanna make sure, you know, I'm comparing apples to apples here with that original 17% comment from the Q3 call.

Speaker Change: Lot of our virtual demos that will do with investors, we showcase a CPG real world demo today.

Koji Ikeda: And I know on the slide 24 is 21% growth. So I just want to make sure I'm comparing apples to apples here with that original 17% comment from the third quarter call.

Chris Greiner: Yeah. That 17% comment, when we very carefully walked through what we were presuming, that should have gotten most analysts in the street to around call, you know, $1.2 billion, you know, in revenue compared to the $1.24 billion that we're at today. You know, obviously you back out $17 million of LiveIntent from the $1.6 billion in revenue we did in 2024, and you back out $44 million of political candidate revenue. You get to a normalized base of $944 million. If you then do the same on 2025, you remove $96 million from LiveIntent for LiveIntent, which is what we'd expect that business, and that's a 20% growth rate consistent with what we talked about, when we made the acquisition.

Speaker Change: We're actually using customers and being able to show them what their customers are spending on with their brand as well as with the competitor. So it comes down to in each one of those verticals, where we think we're underrepresented today, where there is a massive tam in the amount of marketing and advertising spend all comes down to the type of data that we can put in front of the marketer and how actionable we can make it for them.

Koji Ikeda: And that that 17% comment when we very carefully walked through what we are presuming that should've gotten most analyst in the street to around call. It $1 2 billion.

Koji Ikeda: In revenue compared to the $1 two 4 billion that we're at today so.

Koji Ikeda: Obviously, you back out $17 million of alive intent from the $1 billion six in revenue. We did in 2024 and you back out $44 million of political candidate revenue you get to normalized base of 944 million.

Koji Ikeda: You then do the same on 2025 year moved $96 million from live intact for live intent, which is what wed expect that business and thats, a 20% growth rate consensus consistent with what we talked about.

Chris Greiner: You get to, you know, call it $1.044 billion. So it's a, you know, 21% growth rate. So roughly 4 points higher than that 17 that we had talked about earlier. We went through the task also on slide 24 to kind of clearly break out this in steps by quarter. What you'll find is that for each quarter of 2025, growth is effectively between 20% and 22% when you exclude LiveIntent and exclude political candidate revenue itself. I think, Koji, it's important because we've got to exclude those two things to get to the 21%, but you really have to exclude the revenue we picked up from LiveIntent in Q4, right? Even if you just wanted to do apples to apples, you would pull that inorganic revenue out.

Speaker Change: We've invested over the last year pretty heavily in our sales force as you have seen grow into a 180 quota kalac.

Koji Ikeda: When we made the acquisition you get to call 1 billion 44, so it's a 21% growth rate so roughly four points higher than that 17 that we had talked about earlier, we went through the task also on slide 24 to kind of clearly break out this in steps by quarter and what Youll find is that for each quarter of <unk>.

Speaker Change: Carriers easy for me to say.

Speaker Change: And we're expanding out into new verticals with salespeople that we think will really benefit us this year and the years to come.

Speaker Change: Helpful. And then just one quick follow up on the IRR given the long term model not looking to inflect to materially from the 114 today, obviously, that's a pretty impressive start already but maybe just expand on the different drivers. There is there any limitation on the upper bound to NRO around expansion activity as you kind of land with these higher RP customers. Thank you.

Koji Ikeda: 25% growth is effectively between 2022% when you exclude live intent and exclude political candidate revenue itself and I think Koji, it's important because we've got to exclude those two things to get to the 21%, but you really have to exclude the revenue we picked up from live intent in the fourth quarter.

David Steinberg: I think, Koji, it's important because we've got to exclude those two things to get to the 21%, but you really have to exclude the revenue we picked up from LiveIntent in Q4, right? Even if you just wanted to do apples to apples, you would pull that inorganic revenue out. If you can't pull it out of 2025 without pulling it out of 2024.

Chris Greiner: If you can't pull it out of 2025 without pulling it out of 2024.

Koji Ikeda: Right. So even if you just wanted to do apples to apples you would pull that inorganic revenue out.

Speaker Change: What I would say is first you've got the agency Holdco, which as there are <unk> grows dramatically that's a big benefit to NR and we just don't lose a lot of customers, which is also a very good day right. So.

Koji Ikeda: Got it. No, thank you for that. Maybe just a quick follow-up. I did wanna ask if the conservatism in 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.

Koji Ikeda: Can't pull it out of 2025 without pulling it out of 2024.

Speaker Change: Got it no. Thank you for that and maybe just a quick follow up I did want to ask if the conservatism in 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've pulled with the guidance. This year. Thank you.

Speaker Change: I think we can continue to keep it in that range and then in the years to come I think we can begin to look at getting it above that range, but in the short run we feel very comfortable with 110 to $1 15, and I think there's a really good Katy on slide 11 of the earnings supplemental we show the life of the cohort of our customer set and if you look at those that are spent.

Chris Greiner: We tried to be consistent with our historical approach, which is to build in ample conservatism so that we don't need the midpoint or even the high end of our metrics to get to our guidance. As I said, kind of earlier in the Q&A, we can get to guidance at the low end of each one of our whatever our metrics call for. We obviously made that call based upon, you know, our awareness of what's going on in the macro backdrop. David, anything to add? Yeah, I would say, Koji, just we've known each other for a while now. We've beat and raised 14 quarters in a row. Our goal is to be here the same time next year and saying we've now beat and raised 18 times in a row, and we feel we've put the right guidance out to do that.

Speaker Change: We tried to be consistent with our historical approach, which is to build an ample conservatism. So that we don't need the midpoint or even the high end of our metrics to get to our guidance as I said kind of earlier in the Q&A, we can get to guidance at the low end of each one of our one of our metrics call for.

Speaker Change: <unk> that had been on the platform less than a year. They are spending an average of 900, K, which is up from 600 K last year at one to three year cohort continues to accelerate to $1 2 million and then those customers that are with us three or more years, they're continuing to grow there now at an average of $2 6 million compared to $2 1 million last year. So we feel like that 110 to 100.

David Steinberg: Yeah, I would say, Koji, just we've known each other for a while now. We've beat and raised 14 quarters in a row. Our goal is to be here the same time next year and saying we've now beat and raised 18 times in a row, and we feel we've put the right guidance out to do that.

Speaker Change: And we obviously made that call based upon our awareness of what's going on in the macro backdrop, David anything you'd add yes, I would say code you just we've known each other for a while now we've beat and raised 14 quarters in a row. Our goal is to be here. This same time next year and saying, we've now beat and raised 18 times in a row.

Speaker Change: <unk> is rooted in deep analysis by cohort and it is also consistent with our growth algorithm, which has historically been about half of our growth coming from our existing customers and half from new.

Koji Ikeda: Thanks, guys.

Chris Greiner: Thanks, Koji.

Speaker Change: And we feel we've put the right guidance out to do that.

Operator: Our next question comes from Brian Schwartz with Oppenheimer. Please proceed with your question.

Speaker Change: Our next question comes from Jackson Ader with Keybanc capital markets. Please proceed with your question.

Speaker Change: Thanks, guys.

Speaker Change: Thanks Eddie.

Speaker Change: Our next question comes from Brian Schwartz with Oppenheimer. Please proceed with your question.

Speaker Change: Hey, guys. This is Jack on projects made or.

Speaker 15: Brian, you out there?

Chris Greiner: Brian, you out there?

David Steinberg: Brian, are you on mute?

Speaker Change: I wanted to ask on what your political revenue assumptions are implied in your outlook and do you expect to gain market share with political campaigns.

Speaker 16: I'm on mute. Sorry about that, everyone.

Brian Schwartz: I'm on mute. Sorry about that, everyone.

Speaker Change: Brian you're out there Brian are you on mute.

David Steinberg: No, you're good.

Speaker 16: Thank you. A couple questions from me. Chris, just wanted to ask you on the decel in the Q1 guide. I know the comp is, you know, a few points harder here, and there's political spending headwinds on the comparable. Is there anything else that you are contemplating in that guide, you know, to see that type of organic deceleration beyond those items? Having one less day, is that also an impact in terms of the Q1 guide? And then I have a follow-up. Thanks.

Brian Schwartz: Thank you. A couple questions from me. Chris, just wanted to ask you on the decel in the Q1 guide. I know the comp is, you know, a few points harder here, and there's political spending headwinds on the comparable. Is there anything else that you are contemplating in that guide, you know, to see that type of organic deceleration beyond those items? Having one less day, is that also an impact in terms of the Q1 guide? And then I have a follow-up. Thanks.

Speaker Change: On mute sorry about that.

Chad: So theres two pieces. Thanks, Chad two pieces of the answer there. If there is political candidate revenue which was.

Speaker Change: Okay.

Speaker Change: Got that.

Speaker Change: Good. Thank you a couple of questions from me, Chris just wanted to ask you on the T cell in the <unk> Guide I know the comp is.

Chad: $44 million in 2024, and the reason why we broke that out throughout the year and our guidance in our reported results was it's always been our expectation that in 2025, there shouldnt be any political candidate revenue of any materiality certainly than theirs. The advocacy portion, which is where <unk> is working with political action groups as well as Ngos in 2024 that was in la.

Speaker Change: A few points harder here.

Speaker Change: And there is political spending headwinds on the comparable but is there anything else that you are contemplating in that guide to.

Speaker Change: To see that type of organic deceleration beyond those items.

Chris Greiner: No, that wouldn't, you know, be any kind of material impact. It's, you know, as you said, it's 30% all in. The guide is 20% if you adjust for effectively LiveIntent, 'cause there really wasn't any political candidate revenue in Q1. You know, it's our conservatism. We're trying to be consistent with what we've done in the past and, you know, just build multiple ways to get to the number and feel like if we do that, we'll be in the same place we've been in the past in terms of what our traditional beats are.

Chad: With our expectations it was $36 million for that piece of our business, which we're putting more quota carriers into building new capabilities leveraging relationships that come out of the political cycle. Our expectation is that business goes to 20% to $25 million in 2025 now if you compare the how that wasn't an off political year back in 2023.

Speaker Change: We're having one last day is that also an impact in terms of the <unk> Guide and then I have a follow up thanks.

Speaker Change: No that wouldn't that wouldn't be any kind of material impact. It's as you said, it's 30% all in.

Speaker Change: The guide is 20% if you adjust for effectively live in 10, because it really wasn't a political revenue in the first quarter.

Chad: That's up considerably from around $13 million. So that's how we think about the contribution of political candidates and advocacy in 2025.

Speaker Change: It's our conservatism, we're trying to be consistent with what we've done in the past.

Speaker Change: And just build multiple ways to get to the number and feel like if we do that will be in the same place we have been in the past in terms of what our traditional beats are.

Speaker 16: Okay. 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, you know, as we fast-forward to 2028? Thanks.

Brian Schwartz: Okay. 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, you know, as we fast-forward to 2028? Thanks.

Speaker Change: Got it very helpful and as a follow up how much revenue today is coming from the marketing cloud and how much do you expect that to be in 2028 as it progresses.

Speaker Change: Okay and then the follow up question I had on the 2028 guide I know there was some discussion earlier about the agency does announced which is doing really well for you.

Chad: I mean all of it.

Chad: All our revenue goes through the marketing plan so.

Chad: It's I don't.

Speaker Change: Is it your expectation, Chris that that business could double in terms of its <unk>.

Chad: Maybe you can fine tune that question.

Chad: Okay.

Speaker Change: Percentage of the revenue mix.

Chris Greiner: The base will keep growing, right? I think doubling in size, I mean, it's not outside the realm of possibility. I think it will be a bigger and bigger piece of the pie. Like I said, today it's about 20% of revenue. I think doubling, you know, there's certainly cases for that, but I wouldn't, you know, count on it as we sit here today.

Chad: Yes.

Speaker Change: I'll follow up with you guys offline on that yes, I mean, we're going to talk in a bit but literally Jack all of our revenue goes through the marketing cloud at this point so when when we consolidated that a few years ago everything now goes through one user interface with one reporting infrastructure and everything is totally integrated.

Speaker Change: As we fast forward to 2028.

Speaker Change: Thanks.

Speaker Change: So the base will keep growing right. So I think doubling in size I mean, it's not without its not outside the realm of possibility I think it will be a bigger and bigger piece of the pie and like I said today its about 20% of revenue I think doubling it there are certainly cases for that but I wouldn't count on it as we sit here today, yes, nor would I, Brian I think it is going to double as a business I don't think it is.

David Steinberg: Yeah. Nor would I, Brian. I think it's gonna double as a business. I don't think it's gonna double as a percentage.

Operator: Our next question comes from Zach Cummins with B. Riley Securities. Please proceed with your question.

Speaker Change: Our next question comes from Koji Ikeda with Bank of America. Please proceed with your question.

Speaker Change: Going to double as a percentage.

Speaker Change: Our next question comes from Zach.

Speaker 15: Yep. Hi. 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?

Zach Cummins: Yep. Hi. 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?

Cummins: Cummins with B Riley Securities. Please proceed with your question.

Zach Cummins: Yes, hi, good afternoon, and just adding on congratulations for the quarter.

Speaker Change: Just double clicking a little bit more on the agency opportunity.

Speaker Change: 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.

David Steinberg: Yeah. I mean, we are adding mid-market agencies faster than I think we could have even expected. You know, they are all on platform, so that's a really nice thing for margin in the long term. What I would say, Zach, is that the opportunity with the five large agency holdcos we work with, you know, is very, very large. You know, we continue to be their most profitable partner. We tend to be more flexible than our competitors, and we have built deep and meaningful relationships with them. I would expect us to continue to meaningfully grow those businesses and continue to meaningfully grow brands.

Nancy: Nancy side.

Nancy: Yes, I mean, we are adding mid market agencies faster than I think we could have even expected and they are all on platform. So that's that's a really nice thing for margin in the long term, but what I would say zac is that the opportunity with the five large agency <unk>.

Koji Ikeda: But if I use that 1144 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.

Koji Ikeda: And I know on the slide 24 is at 21% growth. So I just want to make sure.

Nancy: Because we work with.

Nancy: <unk> is very very large we continue to be their most profitable partner, we tend to be more flexible than our competitors and we have built deep and meaningful relationships with them I would expect us to continue to meaningfully grow those businesses and.

Koji Ikeda: Comparing apples to apples here with that original 17% comments from the third quarter call.

Koji Ikeda: And Thats, 17% comment when we very carefully walked through what we are presuming that should've gotten most analyst in the street to around call. It $1 2 billion.

David Steinberg: If you look at our sort of projections out through 2028, you know, as Chris, I think, has said a few times, we can be at the low end of our metrics and still beat those numbers.

Koji Ikeda: In revenue compared to the $1 two 4 billion that we're at today so.

Nancy: To meaningfully grow brands and.

Nancy: And if you look at our sort of projections out through 2028.

Koji Ikeda: Obviously, you back out $17 million of live intent from the 1 billion six in revenue. We did in 2024 and you back out $44 million of political candidate revenue you get to normalized base of 944 million.

Speaker Change: As Chris I think I said, a few times, we can be at the low end of our metrics and still beat those beat those numbers.

Speaker 15: Understood. Just my one follow-up geared towards Chris. Can you talk about your plans for quota carrying hiring for Zeta 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.

Zach Cummins: Understood. Just my one follow-up geared towards Chris. Can you talk about your plans for quota carrying hiring for Zeta 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.

Speaker Change: Understood and just my one follow up towards Chris could you talk about your plans for quota carrying hiring for Thursday, that's what I generate obviously, a much larger sales force than three years ago, but just curious of any sale of efficiency gains that you are baking into that versus necessary capacity to execute on those.

Koji Ikeda: You then do the same on 2025 year moved $96 million from live intact for <unk>, which is what wed expect that business and thats, a 20% growth rate consensus consistent with what we talked about.

Chris Greiner: Yeah. You know, slide 17 in the supplemental lays out, you know, what our compound growth rates have been through the first long-term plan. The quota carrier compounding growth rate was 22% from 2021 to 2024. We are baking in some efficiency that we frankly have been seeing as of late to where, you know, it's our expectation that we can grow the quota carrier base between 10 and 15%. What we found, though, is we don't want a growth number to force us down the path of just quantity. What we've continued to do well, and this allows for us to focus on that quality element over just, you know, throwing bodies at sales.

Speaker Change: Targets.

Speaker Change: Yes, slide 17 in the supplemental lays out what our compound growth rates have been through the first if you will the first.

Speaker Change: Long term plan.

Speaker Change: The quota carrier compound annual growth rate was 22% from 2021 to 2024, we are baking in some.

Koji Ikeda: 25% growth is effectively between 2022% when you exclude live intent and exclude political candidate revenue itself and I think Koji. It's important because we've got exclude those two things to get to the 21%, but you really have to exclude the revenue we picked up from live intent in the fourth quarter.

Speaker Change: <unk> that we frankly had been seeing as of late to where it is our expectation that we can grow the quota carrier base between 10 and 15%.

Speaker Change: What we found though is we don't want a growth number to for us down the path of just quantity. What we've continued to do well and this allows for us to focus on that quality element over just throwing bodies at sales.

Koji Ikeda: Right. So even if you just wanted to do apples to apples you would pull that inorganic revenue out.

Operator: Our next question comes from Richard Baldry with Roth Capital Partners. Please proceed with your question.

Koji Ikeda: Can't pull it out of 2025 without pulling it out of 2024.

Speaker Change: Yes.

Speaker 15: Thanks. Maybe switching gears. 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. Curious your thought process around the buyback on a go forward. You know, do you think you'll run it at a higher % 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.

Richard Baldry: Thanks. Maybe switching gears. 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. Curious your thought process around the buyback on a go forward. You know, do you think you'll run it at a higher % 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.

Speaker Change: Our next question comes from Richard Baldry with Roth Capital Partners. Please proceed with your question.

Koji Ikeda: Got it no. Thank you for that and maybe just a quick follow up I did want to ask if the conservatism in 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've pulled with the guidance. This year. Thank you.

Speaker Change: Thanks.

Speaker Change: Switching gears looked at the balance sheet.

Speaker Change: We repurchased $31 million worth of shares in the quarter, that's three X, which had done the rest of the year combined and almost matched your free cash flow. So I'm curious your thought process around the buyback on a go forward.

Koji Ikeda: We tried to be consistent with our historical approach, which is to build an ample conservatism. So that we don't need the midpoint or even the high end of our metrics to get to our guidance as I said kind of earlier in the Q&A, we can get to guidance at the low end of each one of our one of our metrics call for.

Speaker Change: Do you think Youll run it at a higher percent of the free cash flow do you think you'd be opportunistic and it ever like look at taking actual cash balances down to pursue it more aggressively.

David Steinberg: I think, listen, Rich, the stock we thought dropped to a stupid place, so we massively accelerated buying the stock. We still think it's very low, and we'll continue to buy it at, you know, an accelerated pace. I don't see any better use for our cash right now than buying our shares back. Yeah, we used about 100% of free cash flow. We expect to drive meaningful free cash flow this year. You could see us do, you know, I would say at least half and potentially, you know, much higher as a percentage of free cash flow as we look at buying the stock back. Because once again, it right now is the best investment for us for our cash in the current environment.

Speaker Change: Give us a backdrop for the year ahead.

Speaker Change: And we obviously made that call based upon our awareness of what's going on in the macro backdrop, David anything you'd add yes, I would say could you just we've known each other for a while now we've beat and raised 14 quarters in a row. Our goal is to be here. This same time next year and saying, we've now beat and raised 18 times in a row.

Speaker Change: I think listen rich the stock we thought dropped to a stupid place. So we massively accelerated buying the stock we still think it's very low and we will continue to buy it at an accelerated pace.

Speaker Change: I don't see any better use for our cash right now than buying our shares back and yeah. We used about 100% of free cash flow, we expect to drive meaningful free cash flow this year.

Speaker Change: And we feel we've put the right guidance out to do that.

Speaker Change: Thanks, guys.

Speaker Change: Thanks Eddie.

Speaker Change: You could see us do.

Speaker Change: Our next question comes from Brian Schwartz with Oppenheimer. Please proceed with your question.

Speaker Change: I would say at least half and potentially much higher as a percentage of free cash flow as we look at buying the stock back because once again, it's at right now is the best investment for us for our cash in the current environment.

Speaker Change: Brian you're out there Brian are you on mute.

Speaker 15: The follow-up to that for me would be, you know, it looks like we probably have a better M&A environment with an administration that might let more things go through. 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, et cetera?

Richard Baldry: The follow-up to that for me would be, you know, it looks like we probably have a better M&A environment with an administration that might let more things go through. 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, et cetera?

Brian Schwartz: On mute sorry about that.

Speaker Change: Okay.

Speaker Change: Got that.

Speaker Change: And the follow up for me would be.

Speaker Change: Good. Thank you a couple of questions from me, Chris just wanted to ask you on the T cell in the <unk> Guide I know the comp is.

Speaker Change: It looks like we probably have a better M&A environment with an administration that might let more things go through how are you thinking about growth of the inorganic growth.

Speaker Change: A few points harder here.

Speaker Change: And there is political spending headwinds on the comparable but is there anything else that you are contemplating in that guide.

David Steinberg: Yeah, we are seeing more deals now than we have in many years. What I would say, it's still gonna be hard to find deals that match our four M&A pillars. If we can find deals that match our four M&A pillars, we will act on them. You know, we have meaningful cash, we have meaningful capacity, and you know, we're in a very unique position with the type of free cash flow we expect to generate to be able to do very opportunistic deals. I will say what I say to you whenever we're together, I believe transformative deals transform both companies for the worse. We won't be doing anything that, quote-unquote, "is transformative," but we will continue to be very, very opportunistic and look at opportunities where we can take one plus one and equal four.

Speaker Change: Opportunities now and as you look ahead to broaden offerings get into new markets.

Speaker Change: To see that type of organic deceleration beyond those items.

Speaker Change: Yes, we are seeing more deals now than we have in many years, what I would say, it's still going to be hard to find deals that match, our four M&A pillars.

Speaker Change: We're having one last day is that also an impact in terms of the <unk> Guide and then I have a follow up thanks.

Speaker Change: If we can find deals that match, our four M&A pillars, we will act on them, we have meaningful cash we have meaningful capacity and we're in a very unique position with the type of free cash flow, we expect to generate.

Speaker Change: No no that wouldn't that wouldn't be any kind of material impact. It's as you said, it's 30% all in.

Speaker Change: The guide is 20% if you adjust for effectively live in 10, because it really wasn't a political candidate revenue in the first quarter.

Speaker Change: To be able to do very opportunistic deals I will say, what I say to you whenever we're together I believe transformative deals transform both companies for the worse.

It's our conservatism, we're trying to be consistent with what we've done in the past.

Speaker Change: And just build multiple ways to get to the number and feel like if we do that will be in the same place we've been in the past in terms of what our traditional pizza.

Speaker Change: So we won't be doing anything that quote unquote as transformative.

Speaker Change: Okay and then the follow up question I had on the 2028 guide I know there was some discussion earlier about the agency does now switch is doing really well for you.

Speaker Change: But we will continue to be very very opportunistic and look at opportunities, where we can take one plus one equal four.

Operator: Our next question comes from Ryan MacWilliams with Barclays. Please proceed with your question.

Speaker 17: Hey, David and Chris, this is Eamon. This is Ryan. Thanks for the question, and appreciate all the details today. Can you help us understand the key levers for the free cash flow and EBITDA margin expansion highlighted by your 2028 guide?

[Analyst] (Barclays): Hey, David and Chris, this is Eamon. This is Ryan. Thanks for the question, and appreciate all the details today. Can you help us understand the key levers for the free cash flow and EBITDA margin expansion highlighted by your 2028 guide?

Speaker Change: Okay.

Speaker Change: Is it your expectation Chris at that business.

Speaker Change: Our next question comes from Ryan Macwilliams with Barclays. Please proceed with your question.

Speaker Change: <unk> doubled in terms of it.

Speaker Change: Hey, David and Chris <unk> on for Brian. Thanks for the question and appreciate all the detail today can you help us understand the key levers for the free cash flow and EBITDA margin expansion highlighted by your 2028.

Percentage of the revenue mix.

Speaker Change: As we path forward to 2028.

Chris Greiner: Yeah, certainly. We talked about, you know, getting, you know, anywhere from 100 to 300 basis points, we think from cost of revenue, and that really being driven by three different initiatives. The first being our One Zeta, where we're being more and more successful at bringing all three use cases together, which gives us good synergies and higher margin profile. Continuing to drive more and more direct channel usage across the platform, in particular with agencies. As our generative AI and our consumption-based revenue, which tends to have also a higher margin to it scales, that should be a lever towards the COGS line.

Speaker Change: Thanks.

Speaker Change: So the base will keep growing right. So I think doubling in size I mean, its not without.

Speaker Change: Yes, certainly so we talked about getting anywhere from 100 to 300 basis points, we think from cost of revenue and that really being driven by three different initiatives. The first being our one data, where we're being more and more successful at bringing all three use cases, together, which gives us good synergies and higher margin profile.

Speaker Change: Not outside the realm of possibility I think it will be a bigger and bigger piece of the pie like I said today its about 20% of revenue I think doubling it there are certainly cases for that but I wouldn't count on it as we sit here today, yes, nor would I, Brian I think it's going to double as a business I don't think its going to double as a percentage.

Continuing to drive more and more direct channel usage across the platform in particular with agencies and then as our generative AI in our consumption based revenue, which tends to have also a higher margin to it scales that should be a levered towards the Cogs line. We think we can continue to get great leverage out of the Opex line and that I think is really well represented in the supplemental deck, where we show that we've had.

Speaker Change: Our next question comes from Zach Cummins.

Chris Greiner: We think we can continue to get great leverage out of the OpEx line, and that I think is really well represented in the supplemental deck, where we show that we've had a 30% compound annual growth rate on revenue over the last several years as compared to only 15% compound growth rate in headcount, US headcount even being at a rate well below that. In addition to those levers, you see, you know, we'll eventually start to make up that working capital deficit that we have with the agency as that growth starts to catch up. That's a significant lever. I mean, this year's, just Q4's, for example, if we had a neutral working capital position, which we didn't, it was a $22 million gap, would have been a 76% free cash flow conversion.

Zach Cummins: Cummins with B Riley Securities. Please proceed with your question.

Zach Cummins: Yes, hi, good afternoon, and just adding on congratulations for the quarter.

Zach Cummins: Just double clicking a little bit more on the agency opportunity 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.

Speaker Change: A 30% compound annual growth rate on revenue over the last several years as compared to only 15% compound growth rate in head count in U S head count even being at a rate well below that.

David: Yes, I mean, we are adding mid market agencies faster than I think we could have even expected and they are all on platform. So that's that's a really nice thing for margin in the long term, but what I would say zac is that the opportunity with the five large agents.

Speaker Change: In addition to those levers you see will eventually start to make up that working capital deficit that we have with the agency is that growth starts to catch up that's a significant lever I mean this year's just the fourth quarters. For example, we had a neutral working capital position, which we didn't it was a $22 million GAAP would have been 76% free cash flow conversion, so I think that.

Chris Greiner: I think that's a key driver. Then over time, this year's results evidenced it, less and less as a percentage of revenue of CapEx will be in the business. I think we'll get efficiencies from there as well, which puts that 65% conversion out in 2028, you know, really nicely within reach of us. In fact, already there really on a normalized basis.

Zach Cummins: The holdco as we work with.

Zach Cummins: Is very very large we continue to be their most.

Speaker Change: A key driver and then over time and again this year's results evidenced it less and less as a percentage of revenue of Capex will be in the business. So I think we will get efficiencies from there as well, which puts that 65% conversion out in 2028 really nicely within reach of us back already or they're really on a normalized basis.

<unk> partner.

Zach Cummins: We tend to be more flexible than our competitors and we have built deep and meaningful relationships with them I would expect us to continue to meaningfully grow those businesses and continue to meaningfully grow brands.

Speaker 17: Perfect. Thanks, Chris. As a follow-up, have you seen any changes in the environment post-US election as it relates to customers' willingness to spend?

[Analyst] (Barclays): Perfect. Thanks, Chris. As a follow-up, have you seen any changes in the environment post-US election as it relates to customers' willingness to spend?

Speaker Change: Perfect. Thanks, Chris and then as a follow up have you seen any changes in the environment Post U S election, as it relates to customers' willingness to spend.

David Steinberg: You know, we really haven't, Eamon. You know, we've been working with our customers, and as you know, we're very, very close to our customers. I think people always discount what a large percentage of our business we have done when we enter the year. We already have incredible visibility into what we put out, and as Chris has said a couple times, we've tried to be incredibly conservative in the projections that we put forth. We have not had any clients pull back, and, you know, thus far, we continue to be full speed ahead.

Zach Cummins: And if you look at our sort of projections out through 2028.

Zach Cummins: As Chris I think I said, a few times, we can be at the low end of our metrics and still beat those meet those numbers.

Speaker Change: We really haven't.

Speaker Change: We've been working with our customers and as you know, we're very very close to our customers.

Speaker Change: Understood and just my one follow up towards Chris could you talk about your plans for quota carrying hiring for Thursday generate obviously, a much larger sales force than three years ago, but just curious of any sale of efficiency gains that you are baking into that versus necessary capacity to execute on that.

Speaker Change: No.

Speaker Change: I think people always discount.

Speaker Change: What a large percentage of our business we have done when we enter the year, we already have incredible visibility into what we put out and as Chris has said a couple of times, we've tried to be incredibly conservative in the projections that we put forth. So.

Speaker Change: <unk> targets.

Speaker Change: Yes, slide 17 in the supplemental lays out what our compound growth rates have been to the first.

Speaker Change: We have not had any clients pullback.

Operator: There are no further questions at this time. I would now like to turn the floor back over to David Steinberg for closing comments.

Speaker Change: And thus far we continue to be full speed ahead.

Speaker Change: Will the first.

Speaker Change: Yes.

Speaker Change: Long term plan the quota carrier compound annual growth rate was 22% from 2021 to 2024, we are baking in some.

David Steinberg: You know, I could not be prouder of this team to have worked through the turbulence that we've seen over the last quarter and put up the type of results that we've put up as an organization. I think it really shows that our strategy of putting AI and data as foundational to our platform, bringing in the world's best people and letting them do their jobs, really can ultimately drive to financial results that show how strong our platform is in the marketplace. We believe we're gonna organically double this business again over the next four years. I could not be more proud of our Zeta people, and I am incredibly proud to be running this company. Thank you very much.

Speaker Change: There are no further questions at this time I would now like to turn the floor back over to David Steinberg for closing comments.

David Steinberg: I could not be prouder of this team to have worked through the turbulence that we've seen over the last quarter and put up the type of results that we've put up as an organization I think it really shows that our strategy of putting AI and data is foundational to our platform.

Speaker Change: Efficiency that we frankly had been seeing as of late to where it's our expectation that we can grow the quota carrier base between 10 and 15% what.

David Steinberg: I'm, bringing in the world's best people and letting them do their jobs really can ultimately drive to financial results that show how strong our platform is in the marketplace and we believe we're going to organically double this business again over the next four years.

Speaker Change: Yes.

Our next question comes from Richard Baldry with Roth Capital Partners. Please proceed with your question.

Speaker Change: Thanks.

Speaker Change: Switching gears looked at the balance sheet.

Speaker Change: We repurchased $31 million worth of shares in the quarter, that's three X what you've done the rest of the year combined and almost matched your free cash flow.

Speaker Change: I could not be more proud of RSA to people.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: I am incredibly proud to be running this company. Thank you very much.

Speaker Change: I'm curious your thought process around the buyback on a go forward.

Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: Give us a backdrop for the year ahead.

Speaker Change: I think listen rich the stock we thought dropped to a stupid place. So we massively accelerated buying the stock we still think it's very low and we'll continue to buy it at an accelerated pace.

Speaker Change: I don't see any better use for our cash right now than buying our shares back and yes, we used about 100% of free cash flow, we expect to drive meaningful free cash flow this year.

You could see us do.

Speaker Change: And the follow up 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 how are you thinking about growth of the inorganic growth.

Speaker Change: Opportunities now and as you look ahead to sort of broaden offerings get into new markets.

Speaker Change: Yes, we are seeing more deals now than we have in many years, what I would say, it's still going to be hard to find deals that match, our four M&A pillars.

Speaker Change: To be able to do very opportunistic deals I will say, what I say to you whenever we're together I believe transformative deals transform both companies for the worse.

Speaker Change: So we won't be doing anything that quote unquote as transformative.

Speaker Change: But we will continue to be very very opportunistic and look at opportunities, where we can take one plus one equal four.

Speaker Change: Okay.

Speaker Change: Our next question comes from Ryan Macwilliams with Barclays. Please proceed with your question.

Speaker Change: Continuing to drive more and more direct channel usage across the platform in particular with agencies and then as our generative AI in our consumption based revenue, which tends to have also a higher margin to its scales that should be a levered towards the Cogs line.

Speaker Change: We think we can continue to get great leverage out of the Opex line and that I think is really well represented in the supplemental deck, where we show that we have had a 30% compound annual growth rate on revenue over the last several years as compared to only 15% compound growth rate in head count in U S head count even being at a rate well below that.

Speaker Change: It's a key driver and then over time and again this year's results evidenced it less and less as a percentage of revenue of Capex will be in the business. So I think we will get efficiencies from there as well, which puts that 65% conversion out in 2028 really nicely within reach of us already or they're really on a normalized basis.

Speaker Change: Perfect. Thanks, Chris and then as a follow up have you seen any changes in the environment Post U S election, as it relates to customers' willingness to spend.

Speaker Change: We really haven't.

Speaker Change: We've been working with our customers and as you know, we're very very close to our customers.

Speaker Change: No.

Speaker Change: I think people always discount.

Speaker Change: We have not had any clients pullback.

Speaker Change: And thus far we continue to be full speed ahead.

Speaker Change: Okay.

Speaker Change: There are no further questions at this time I would now like to turn the floor back over to David Steinberg for closing comments.

David Steinberg: I could not be more proud of RSA to people.

David Steinberg: I am incredibly proud to be running this company. Thank you very much.

David Steinberg: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Q4 2024 Zeta Global Holdings Corp Earnings Call

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