Advertising and marketing company Zeta Global (NYSE: ZETA) reported Q1 CY2025 results exceeding the market’s revenue expectations, with sales up 35.6% year on year to $264.4 million. Guidance for next quarter’s revenue was better than expected at $296.5 million at the midpoint, 1.7% above analysts’ estimates. Its GAAP loss of $0.10 per share was in line with analysts’ consensus estimates.
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Zeta (ZETA) Q1 CY2025 Highlights:
- Revenue: $264.4 million vs analyst estimates of $254.1 million (35.6% year-on-year growth, 4.1% beat)
- EPS (GAAP): -$0.10 vs analyst estimates of -$0.09 (in line)
- Adjusted EBITDA: $46.71 million vs analyst estimates of $44.42 million (17.7% margin, 5.2% beat)
- The company slightly lifted its revenue guidance for the full year to $1.24 billion at the midpoint from $1.24 billion
- EBITDA guidance for the full year is $258.5 million at the midpoint, above analyst estimates of $256.1 million
- Operating Margin: -6.1%, up from -18.4% in the same quarter last year
- Free Cash Flow Margin: 10.7%, similar to the previous quarter
- Market Capitalization: $3.10 billion
Company Overview
Co-founded by former Apple CEO John Sculley, Zeta Global (NYSE: ZETA) provides software and data analytics tools that help companies market their products to billions of customers.
Sales Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Thankfully, Zeta’s 30.6% annualized revenue growth over the last three years was impressive. Its growth beat the average software company and shows its offerings resonate with customers.
This quarter, Zeta reported wonderful year-on-year revenue growth of 35.6%, and its $264.4 million of revenue exceeded Wall Street’s estimates by 4.1%. Company management is currently guiding for a 30.1% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 19.1% over the next 12 months, a deceleration versus the last three years. Despite the slowdown, this projection is noteworthy and implies the market sees success for its products and services.
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Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.
Zeta is extremely efficient at acquiring new customers, and its CAC payback period checked in at 5.3 months this quarter. The company’s rapid recovery of its customer acquisition costs indicates it has a highly differentiated product offering and a strong brand reputation. These dynamics give Zeta more resources to pursue new product initiatives while maintaining the flexibility to increase its sales and marketing investments.
Key Takeaways from Zeta’s Q1 Results
We enjoyed seeing Zeta beat analysts’ EBITDA expectations this quarter. We were also happy its revenue outperformed Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. The market seemed to be hoping for more, and the stock traded down 4.8% to $12.89 immediately after reporting.
Is Zeta an attractive investment opportunity at the current price? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
