Customer Experience, Service & Success

Zeta Announces Record Fourth Quarter 2022 Financial Results

Zeta
  • Delivered revenue of $175M, up 30% Y/Y in 4Q’22, and $591M, up 29% Y/Y in 2022
  • Expanded Scaled Customer count 14% Y/Y adding 14 in 4Q’22 and 48 in 2022
  • Grew Scaled Customer ARPU 15% Y/Y to $1.43M in 2022
  • Achieved Net Revenue Retention of 112% in 2022
  • Generated cash flow from operating activities of $23M in 4Q’22, and $78M in 2022

Zeta Global (NYSE: ZETA), the AI-Powered Marketing Cloud, today announced financial results for the fourth quarter and full year ended December 31, 2022.

“Our execution and competitive position have never been stronger, evidenced by our record fourth quarter results,” said David A. Steinberg, Co-Founder, Chairman, and CEO of Zeta. “The market continues to move in our direction as data and Artificial Intelligence (‘AI’), which are foundational elements of the Zeta Marketing Platform, are now mission critical Boardroom topics. By delivering identity-based data and AI to improve consumer experiences and drive a higher return on marketing investments, we are well positioned to capitalize on the ongoing changes in the marketing cloud ecosystem as enterprises place a premium on marketing efficiency and effectiveness.”

“We continue to be a business delivering beyond its commitments, with fourth quarter results once again exceeding expectations, with top- and bottom-line growth rates ahead of the Zeta 2025 model,” said Chris Greiner, Zeta’s CFO. “This quarterly pattern is forming a multi-year trend of accelerating revenue growth and operating leverage. Our performance is driven by years of headcount discipline, operational excellence and investment rigor, which creates a sustainable basis for continued growth and expanding profitability.”

Fourth Quarter 2022 Highlights

  • Total revenue of $175 million, an increase of 30% Y/Y and 15% Q/Q.
  • Scaled Customer count of 403 compared to 389 in 3Q’22 and 355 in 4Q’21.
  • Super Scaled Customer count of 103 compared to 106 in 3Q’22 and 97 in 4Q’21.
  • Quarterly Scaled Customer ARPU of $424,000, an increase of 15% Y/Y.
  • Quarterly Super Scaled Customer ARPU of $1.33 million, an increase of 26% Y/Y.
  • Direct platform revenue mix of 75% of total revenue, compared to 77% in 4Q’21.
  • Connected TV (“CTV”) is our fastest growing channel, up more than 300% Y/Y.
  • Cost of revenue percentage increased by 130 basis points Y/Y to 37.7%.
  • GAAP net loss of $52 million, or 30% of revenue, was driven primarily by $68 million of stock-based compensation. The net loss in 4Q’21 was $61 million, or 45% of revenue.
  • GAAP loss per share of $0.36, compared to a loss per share of $0.46 in 4Q’21.
  • Cash flow from operating activities of $23.1 million, compared to $20.9 million in 4Q’21.
  • Free Cash Flow1 of $13.8 million, compared to $14.6 million in 4Q’21.
  • Repurchased $5.3 million worth of shares through our share repurchase program.
  • Adjusted EBITDA1 of $32.4 million, an increase of 42% compared to $22.9 million in 4Q’21.
  • Adjusted EBITDA margin1 of 18.5%, compared to 17.0% in 4Q’21.

Full Year 2022 Highlights

  • Total revenue of $591 million, an increase of 29% Y/Y.
  • Scaled Customer ARPU of $1.43 million, an increase of 15% Y/Y.
  • Super Scaled Customer ARPU of $4.52 million, an increase of 25% Y/Y.
  • Direct platform revenue mix of 77% of total revenue, compared to 76% in 2021.
  • Net Revenue Retention of 112%, compared to 113% in 2021.
  • Cost of revenue percentage decreased by 170 basis points Y/Y to 36.5%.
  • GAAP net loss of $279 million, or 47% of revenue, was driven primarily by $299 million of stock-based compensation. The net loss in 2021 was $250 million, or 54% of revenue.
  • GAAP loss per share of $2.01, compared to a loss per share of $2.95 in 2021.
  • Cash flow from operating activities of $78.5 million, compared to $44.3 million in 2021.
  • Free Cash Flow of $39.1 million, compared to $17.5 million in 2021.
  • Adjusted EBITDA of $92.2 million, an increase of 46% compared to $63.3 million in 2021.
  • Adjusted EBITDA margin of 15.6%, compared to 13.8% in 2021.

1 Free Cash Flow, Adjusted EBITDA, and Adjusted EBITDA margin are not measures of financial performance prepared in accordance with GAAP. See “Non-GAAP Measures” for more information and, where applicable, reconciliations to the most directly comparable GAAP financial measures at the end of this release.

Guidance

Zeta anticipates revenue and Adjusted EBITDA as follows:

First Quarter 2023

  • Revenue of $149 million to $151 million, representing a year-over-year increase of 18% to 20%.
  • Adjusted EBITDA of $22.4 million to $22.7 million, representing a year-over-year increase of 19% to 21% and an Adjusted EBITDA margin of 14.8% to 15.2%.

Full Year 2023

  • Revenue of $686 million to $696 million, representing a year-over-year increase of 16% to 18%.
  • Adjusted EBITDA of $116.5 million to $118.3 million, representing a year-over-year increase of 26% to 28% and an Adjusted EBITDA margin of 16.7% to 17.3%.

Zeta 2025

Zeta 2025 is a long-term plan introduced by the Company in 2022, intended to drive the Company’s vision to become one of the largest marketing clouds in the industry, with targets for business, product, and industry leadership. The financial targets of this plan are to generate in excess of $1 billion in annual revenue with at least 20% Adjusted EBITDA margins by 2025. We are adding an additional financial target to the plan of Free Cash Flow with a target of at least $110 million by 2025.

Investor Conference Call and Webcast

Zeta will host a conference call today, Thursday, February 23, 2023, at 5:00 p.m. Eastern Time to discuss financial results for the fourth quarter and full year 2022. A supplemental earnings presentation and a live webcast of the conference call can be accessed from the Company’s investor relations website (https://investors.zetaglobal.com/) where they will remain available for one year.

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