What Happened?
Shares of advertising and marketing company Zeta Global (NYSE: ZETA) fell 13.8% in the pre-market session after the company reported weak fourth quarter 2024 results as its revenue guidance for next year suggests a significant slowdown in demand, and its revenue guidance for next quarter fell slightly short of Wall Street's estimates. On the other hand, Zeta reported optimistic EBITDA guidance for the next quarter, which blew past analysts' expectations, and its full-year EBITDA guidance trumped Wall Street's estimates. Overall, we think this was still a decent quarter, with some key metrics above expectations. The areas below expectations seem to be driving the move.
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What The Market Is Telling Us
Zeta’s shares are extremely volatile and have had 42 moves greater than 5% over the last year. But moves this big are rare even for Zeta and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 10 months ago when the stock gained 21.8% on the news that the company reported strong first-quarter 2024 results that blew past analysts' billings, adjusted EBITDA, and free cash flow expectations. Notably, the company highlighted strengths in the number of scaled-up customers (from the $100,000 to $1 million cohort), leading to strong ARPU (average revenue per user) growth.
Looking ahead, next quarter's revenue guidance came in higher than Wall Street's estimates. On the other hand, its new large contract wins slowed. Overall, we think this was a strong quarter that should satisfy shareholders.
Zeta is down 0.1% since the beginning of the year, and at $18.72 per share, it is trading 49% below its 52-week high of $36.74 from November 2024. Investors who bought $1,000 worth of Zeta’s shares at the IPO in June 2021 would now be looking at an investment worth $2,106.
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