Zeta Global’s Earnings Call Highlights AI-Fueled Surge

Zeta Global Holdings Corp. Class A ((ZETA)) has held its Q1 earnings call. Read on for the main highlights of the call.

Zeta Global Holdings Corp. Class A’s latest earnings call struck an optimistic tone, as management highlighted powerful revenue momentum, improving cash generation, and accelerating customer adoption of its AI platform Athena. While a GAAP loss and higher costs tempered the near-term picture, executives argued that product differentiation and a surging pipeline position the company for sustained, profitable growth.

Beat-and-Raise Streak Extends Into 19th Quarter

Zeta posted its 19th straight beat-and-raise quarter, underscoring management’s confidence and execution consistency. The company lifted its full‑year 2026 revenue midpoint by $30 million to $1.785 billion and now expects Q2 revenue of about $420 million, pointing to mid‑30s growth even after stripping out acquisitions and political spending.

Top-Line Growth Accelerates on Core Business Strength

First‑quarter revenue surged to $396 million, up 50% year over year, or 29% when excluding the Marigold acquisition. Management emphasized this was the fourth consecutive quarter of accelerating growth on an organic basis, with a four‑year revenue CAGR of roughly 30% signaling durable demand for Zeta’s data‑driven marketing platform.

Profitability and Cash Flow Trend Higher

Adjusted EBITDA climbed 42% in Q1 to $66.1 million, translating to a 16.7% margin even as the company invests in growth. Operating cash flow rose 43% to $49.7 million and free cash flow increased 48% to $41.7 million, yielding a 10.5% margin and a 63% conversion rate, and Zeta nudged its 2026 EBITDA outlook higher as efficiencies take hold.

Customer Expansion Drives Higher Monetization

Zeta ended the quarter with 189 super‑scaled customers, up 19% versus last year and five higher than the prior quarter. Average revenue per super‑scaled customer reached $1.7 million, rising 21% year over year as more clients adopted multiple use cases and channels and net retention stayed above the 110% to 115% target range.

Athena AI Platform Shows Rapid Early Traction

The newly launched Athena AI product quickly became a centerpiece of the call, with management citing a sevenfold jump in agentic interactions in its first week of general availability. Athena accounted for about 60% of AI usage on the platform and helped Zeta win or expand marquee enterprise and agency deals, displacing incumbent vendors at large retailers.

Sales Pipeline Expands in Discretionary Verticals

The forward‑looking sales pipeline grew roughly 40% year over year, with especially strong momentum in discretionary sectors such as retail, travel, advertising, and restaurants. Deal sizes are increasing and agency contracts are lengthening in term, while remaining performance obligations rose by about $66 million sequentially, signaling stronger future revenue visibility.

Data and Platform Moat Deepens Competitive Edge

Management repeatedly pointed to the Zeta SuperGraph data and identity layer as a key differentiator in competitive bake‑offs. They highlighted wins like an e‑commerce pet retailer and a major telco expected to boost spending by 18 times in 2026, and noted independent recognition of the platform’s ability to deliver outsized returns on marketing spend.

Marigold Integration and Capital Returns Progress

The integration of Marigold is reportedly ahead of plan, with revenue tracking better than expected and cross‑selling plus data cloud integration advancing. Zeta also leaned into capital returns, repurchasing 1.5 million shares for $25.7 million during the quarter, while overall dilution excluding Marigold fell to a modest 0.1% in the first quarter.

Engineering Efficiency Gains Support Margins

Internally developed tools such as Spade, which automate code generation and model selection, are boosting engineering productivity by several hundred percent. With roughly three‑quarters of new code now generated automatically and most AI inference running on Zeta’s own infrastructure, management sees a structural tailwind to margins and scalability.

GAAP Loss Narrows but Remains a Drag

Despite stronger adjusted results, Zeta remained in the red on a GAAP basis with a $13.2 million net loss in Q1, an improvement from $21.6 million a year ago. GAAP loss per share was $0.06, and management reiterated that the path to a small positive GAAP EPS remains gradual, with the business still absorbing investment and non‑cash charges.

Higher Cost of Revenue from Social Mix

GAAP cost of revenue rose to 41% of sales, up 190 basis points year over year, as new agency wins brought a higher initial mix of social channels that carry steeper direct costs. While this mix pressured the adjusted EBITDA margin to 16.7%, down 100 basis points, management stressed that social campaigns remain accretive to both EBITDA and free cash flow over time.

Working Capital Headwind from Agency Terms

Free cash flow was held back by roughly a 13‑point working capital headwind tied to slower payment cycles typical of agency customers. Executives framed this as a timing issue rather than a structural deterioration, noting that the underlying cash generation profile is improving even as the business mix shifts toward larger agency relationships.

Early Athena Revenue, Conservative Modeling

Management cautioned that Athena’s financial contribution is still in its infancy, with most impact visible in engagement metrics, demos, and pipeline rather than recognized revenue. Guidance remains conservative, with minimal Athena revenue assumed and cautious treatment of Marigold and political advertising, leaving potential upside if adoption converts into bookings faster than modeled.

Guidance Signals Confidence in Multi-Year Upside

Zeta raised its 2026 outlook, now targeting midpoint revenue of $1.785 billion and Q2 revenue of about $420 million, implying low‑20s organic growth excluding Marigold and political. The company also lifted its adjusted EBITDA midpoint to $397 million and free cash flow guidance to $235 million, while maintaining a modest positive GAAP EPS target, framing Q1 strength as the base for further upside.

Zeta’s earnings call painted the picture of a company leaning into its AI and data advantages to drive faster growth while steadily improving profitability. Investors will need to weigh continued GAAP losses, higher near‑term costs, and working capital friction against a strengthening pipeline, rising customer monetization, and early signs that Athena could be a meaningful long‑term growth engine.