Zeta Global (ZETA) 7 Aug 222022 Q2 Earnings call transcript

Thank you for standing by. This is the conference operator. Welcome to the Zeta Second Quarter 2022 Conference Call [Operator Instructions]. And the conference is being recorded [Operator Instructions]. I would now like to turn the conference over to Scott Schmitz, Investor Relations. ahead. go Please

Hello, for operator. thank for you Thank second everyone, quarter us Zeta's XXXX joining you, and conference call.

I release Zeta's filings, along Before presentation also find investors.zetaglobal.com, begin, would other our mention will to we SEC to that where and you earnings Relations information are Investor on with links available website at like today's about Zeta.

Officer; Financial call today Co-Founder, Chief Executive Zeta's Officer. are Chairman Chief Zeta's Steinberg, the and David on Greiner, me Joining Chris and

and remind contain everyone and as described the outlook, revenues our today's actual and to our statements regarding Before may that and made SEC the projected. including These date. call, uncertainties we like and goals and with as other begin, financial this that filings statements well developments, risks of and materially those products, presentation and statements on strategies. release cause I'd potential risks objectives our events to the plans speak business and forward-looking are about of from in our competition only and in of future company's those potential as products, earnings subject the and earnings uncertainties release statements other results differ market to These include

as turn over our that, the earnings available on With be I with GAAP and the In GAAP well our for We certain considered where managing site, can measures, for provide presentation in to which as measures use SEC. include will found in not the corresponding in addition, to should of Web these the they filings measures business earnings call addition references discussion now results. will release as supplemental useful our substitute investors. a be in today non-GAAP non-GAAP to the non-GAAP David. financial measures, the believe to Reconciliation and information our and appropriate,

back wanted quick start you, everyone, joining with us Scott. I for look and co-founded XX when Zeta. and John afternoon, you Sculley years today. to I Thank Good ago a thank

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Chris? discuss off Now results greater to Chris in let our me it to hand detail.

Thank you, David, four cover want and good afternoon, points I to today's everyone. on main call.

our performance Zeta with are demonstrating current dimension, every proposition environment. Marketing This is value On Platform the and KPIs of First, the in even the customers. once rings results. true our again how resonating macro more our

XXXX Second, guidance million. the We're of the revenue previous $X midpoint million of our raising high full end guidance. to year of $XXX the range by

or results quarter time. are which recognizing our consensus, very at full in we're uncertain macro and pipeline cycles time, than this purposefully our higher we in sales visibility metrics of embedding our revenue the this year guidance. the Zeta seeing understood. clear even a demand At We of our confidence be change profit as current This received a We guiding investor to though that strong should negative into slowing same clearly want or and is around an sentiment are third backdrop, into or sign impact not a our business. be is conservatism

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XX%. and represented XX% more largest our on of over X XX no trailing a measure, XX-month revenue, than grew of industry out quarter, industries This

Our grew XX% year-over-year. of U.S. which accounts business, for XX% revenue,

an compensation. of excluding basis on basis estimate with year-over-year, $XX.X the profitable. XX% million, points of to growth free to $X.X carriers cash with finally, At from year-end. leverage adjusted with stock-based respectively, up XX.X% EBITDA between to continue R&D with operations cash operating year-over-year, We be adjusted from increase both XXX cash increasingly our same we're decreasing the execute at points And to ended $XX.X G&A, million. of generated balance pace reaching quota perspective, our and revenue XQ, to quarter million continues flow from $XXX.X up basis Revenue million We margin, on year-over-year. was EBITDA, We XXX end to XXX XXX plan XXX have time, carriers, our of XXX and by the expense getting quota by points sheet.

Now I'll increased transition guidance. to our

of visibility to quarters. customers, more over recurring a improve and continues Our has revenue trend multiyear addition the with continued that several the past

third quarter are million the of $XXX third of today. be quarter range to million, $XXX is For year-over-year the consensus XXXX, an to XX% estimates of $XXX from This million revenue million. projecting up increase $X of a we're midpoint with where

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current $XX.X Our million. time, million macro uncertainty of to the $XX.X is backdrop. in is EBITDA At there recognize we same range adjusted the

to wanted implied purposely year guidance. XQ we reason, and be full this For conservative setting

guidance of $XXX million, the million $XXX full the XXXX, midpoint raising year to XX%. of revenue representing we're from growth For

to new implies of midpoint growth well. is range Our XQ $XXX $XXX is million growth. This or the XX% is I want be guidance XX.X% of million extremely to to million clear, $XXX our performing business or XX%.

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our and cash levels. current free we cash at believe the more shares As use best perform continues of to next is we to even price repurchase generate business flow, our

purposes. $XX positive fund program to buyback shares of million to As our otherwise to that and mentioned, have we we draw authorized the would do share instead down not flow our free the withholding balance, but remove to Board share repurchase To has David generation. Directors intend a be market a cash program for cash clear, using tax come plan

takeaways Now call. I'll from close today's out key with

for resilient. is platform our First, demand

and reflect pipelines deal sales this. Our metrics

cycles. not do to see get deal contract volume, get and record like faster an count. revenue while growing elongation than pipelines to continue have bigger We are longer. quarter, continue and sales durations of last We opportunity And RFP sizes value in

conservatively pipeline. fourth and guidance deploying recognition to and seeing adjusted capital. faster is softness quarter purposely EBITDA of approach generation revenue, of a sentiment finally, quarter we've we're in broader than cash uncertainty taking macro and despite not results demand and set Second, our investor in disciplined And signs or significantly growing third

performance of David operator stated I've to questions. As the let consistent to me culture a we're that, With high and call me Operator? hand take execution. record for your before, a back the building track predictable of and and

first question Blair. [Operator with William from Instructions] Arjun The Bhatia comes

on Chris is This for Arjun.

seeing the well, performing the guidance? business can question underlying First clear me, or very that's us But how anything now. right the business that did so on pipeline you you not help were into assumptions else for guys impacts is at you're and that? to the built you arrive scenario any and What unpack are

contracts, any we're guaranteed this we first year quarter we pretty like into. into looking, and visibility foremost, we come really frankly, at have are feel point good And entering. very we Quite our visibility which Well, have into Chris, at very, high. we're any XX% that

about we about funny are the mobile-only in had solid the talk you have our going So It's the companies over quite US of Apple's pipelines that are. challenges last look marketing. there's seen frankly. where it, the on IDFA months and downturn rise have we the few elimination and at companies very been of of most pretty TikTok feel a that we are of of on what's lot if focused the because others, and grow Really,

report, marketing, the pretty just our faster looking in automation, it's I of are of and even supposed business look if not the we've for us marketing of not what are they're because at flow. even that also marketing we've increased grow at a the are it far corner, RFP we seeing parts marketers other leader, than in as think on seen really Forrester our business, at say parts evident seen But part it to right-hand that but vendors. was the putting we're pace for finding is that efficiency, focused them our other you

we're So us they're moving and additional budgets to winning more.

and add question your it to think just I derisking. in understood, what really want we I you think really that, acknowledged is to Chris, just we're clearly

the four built and outlook the the a over by David guidance the record the mentioned, built, a current business how that done of is built customer on last of top incremental way beating public line, up terms new raising company bottoms and track quarters now we've at from required we've and with, levels. as where as yield scaled very bottom same little it's In

So the exceptionally a but is derisked outlook, very business conservative performing well.

it as performed performing Quite the well since XX we years it. founded frankly, has ever it's in as

And gears then changing bit. a

the plan, at looking Zeta the there. catalysts So kind XXXX about thinking of

Obviously, the XX great But up couple innovation most seems terms the of to the So product new long-term that to to the customer see quarters quarter. target? customers drive where opportunity help scaled expansion over go-to-market in be to to do exceptionally well. ARPU see of you the in next going start

quarter. they small in in past. started levels seeing bat. Well, then as there. is a than pretty we're seeing What grew XX% ARPU we're at target, customers adding enough, getting for scaled on we're was pretty scaled sure where off we're customers. the quarter coming who right ever Chris, on it seeing you have sales customers board frankly, the them close to quite record motion And starting a from concept and the recognize, us become much come long-term We've scaled had I'm of and we this by higher with traditionally Interestingly proof are literally we've a

products us. really the change sort I X that of The going other game think to are for

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CDPs. is other The

the think I ecosystem. comprehensive of CDP possible, activate CDP Marketing deploy Zeta We We and CDP us sit and understand. in to and most we seamlessly the allows Platform. is client yet data player multiple the through to next in not at CDP people in access of are competitors, large put the to do that CDPs, still can put in] our allow if ecosystem types some And that something put you really a [lite in this can our the deep look and and ability most to our but

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the product next are companies new over is existing the determinator based not. opening on to where figure their using intends Agile product share to where is be XXX those XXX Agile changed And their on out years and where now are largest in most the competitors locations. strategy Intelligence place the are of hotel their our their they're they're our world -- hotels completely what in customers the to geographies primary spending as they using to X wallet going where money and One Intelligence different has

new every products opinion. my and Intelligence, by want We're day. every roll CTV CDP, out we're in we the way, Agile innovating day, just started. getting to So and And

MacWilliams question Ryan next from with comes Barclays. The

when record scaled go-to-market the of new does few for quarters adds for or like cycle pipeline allowing your there especially in to peers ROI Really that's are quarter, longer sales about see many Is calling scaled it or get in look anything the And next customer themselves Zeta's what to these your for good some enterprise. difficulties out the deals customers? the done?

Ryan, can go and ahead jump in. David and certainly take I'll one, that

well. importance -- ROI enough with was your listed they have one verifiable be into we our to reasons could won. an our are months close we quarters, And pipelines The we and why first and but in of the having are And years. the continues to solutions. value to in gracious multiple understand just after data replace They've not advantage proposition really highlighted for fit great. us We We measured come that that's fact point, deals and us massive speak also them. the of customers can a be point not that help

of the most built as pipe the now also ARPU, bigger I is We're back channels mentioned, that at David deals, XX%. the up customers into getting said As end. seeing the same a is value while which overall multiple on longest, higher them, our are in prepared tenured have initial remarks, time, driving

pipelines The So continued XX%. it's a are really nice combination. healthy. The be rates win to north of

we're very, productivity the feeling execution ramping and force. sales very about the So good the of

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the seen And side you or just like reoccurring outside business to revenue at have usage the macro any impact this of point? the

business reoccurring faster than recurring last our Our quarter. grew business

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disclose We of or I understand revenue report question. publicly the of but streams, breakdown don't the on intent the certainly those

So kind of going to we into answer segregate don't and what disclose let me publicly. without try

out that to is the in scaled that our bigger type with a with have what half at usage-based reoccurring we have customers be have very the net two they're our stickiness continued based through that mentioned, can more over about last with in we're to as which, we good able which for through David revenue the stay scaled been those Zeta. supplemental I trend they accounts. they And half years break quarter look a see long infer and The earnings a about those how that XXX%. becoming. you'll retention our the predict really those been publicly farmers growth with you we have that way ROI that package, them customers stay, those revenue best rate expect, And Zeta. way customers, of recurring upon longer the look our spend and the for with generate is The component. relationships had in us, you'd has And their think they've is scaled certainly this the as customers, been tenure the component, strong materials, filed at of over the to their

to So we're of channels we're be multi-quarter the in we've effective and efficient, by we're able increasing multi-month, able are contracts, those to use and add nature. more as add more A lot cases. way, now been

have. So to very which and and able been consistently why visibility, raise have good we as predict we we've as is beat

Even X-year important. touched from that associated they're has a the quarter reoccurring with contracts. it business I not year, think Chris anywhere really to that that's out go just a subscription that's something contracts on

out So now, hit any there. additional XX% for in But QX. as we're telling visibility QX, there derisk really customers public the uncertainty quarters. we into environment that you the for also with to year of said any we just an as revenue. we're numbers out trying We're putting new where Right there's the lot don't enter the earlier, to we've what been a said, I need four given is quarter Chris

and we quarters, quarters. that have all think raised all We important. have something that And four four we is is beat

the when goal I to of overestimation we we project, visibility. And to So our is I want to say we a is have the attempt that. there again, continue marketing. downturn feel that of do to do think

I marketing think you're going to grow next digital over the see year.

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up the sort talk cycles long how for of how prospects with you've are ROI. in about a But about mind sort of to various numbers? can On can customers your amount top show implementation -- decent value see talked of cases? for quickly and of really that a ROI IRI customers, use time our and And -- lot return you

type the executing on of API. product. of cloud-based the industry, contract have open within depending type We a days X company up XXX% can can of the literally we because into any a customer on depends plug but and It and we're

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Baldry Richard with question comes next ROTH The from Capital.

across million] deck, Could talk little this a X% a for would of a which you [$XX player. that north bit scale you it other supplementary about out a calls are be use have? maybe they vertical, arguably many using? be maybe have How obviously it's channels case you you replicable they your but In how single not a by have that long now that name, year own or could verticals vertical? its maybe How with because been that customer, case, at best

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Jason Craig-Hallum. comes Kreyer with from next question The

customers about have cases. cases talk ago use just making use people talked in earlier spent you past. a David, Are channels reaching about some scaled commitments what's Can about or adopting more Like upfront? you second levels more driving larger channels and they you talking than time and that? just quickly just the

Cloud, as marketers I are I on be to under latter. just the can't their think to and at saying be return able believe create the They're at the they Data Zeta it it's not CDP to is. it investment what how Marketing to more almost good prove mean, pressure bosses. for the combined seeing the able we're is their Zeta but enterprises, core Platform with with looking

to grow of seeing there. hey, a or of clients a get them executing in have years we and a prove we we soon do -- do proof $XXX,XXX used can do come we for from doing a we're then then as to scale prove them Sometimes we to to week can actually we within and concepts it, $XXX,XXX, proof and that It say We're be you we very of concept, say, quickly. very, to try try And would can as what we we do. $XX,XXX X see year contracts that.

it's So exciting. been very

cookie some And out deprecation. on you from just to get Google's further decision then push to color wanted

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you think really phone, Android you an doing own the because a is I argue understands for chrome, consumer privacy, understands have that if account, that aggressive mean your They're who they Verizon this would we on Gmail and right? position third-party sort they it's that if Google Obviously, not joke the very doing if can industry are to a telco not like everybody I it you in of I first-party it's because they're never on saying use take. your provider, We sort customer. totally synonymous. calls. of listen And that's have. don't a cookie you're

business, So frankly, our at has, as the look our stayed we same. quite efficacy

starting regulators as that they're necessarily seeing are take I pressure it as get marketing. to Europe, especially a think is hold Internet And for on under is from what regulatory the think Google to they're the doing more in perspective, that in of not I deeper and lot U.S. a meaningful doing they're a it much privacy

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Ikeda from Koji with of comes America. question next The Bank

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partnership? you customers, on further with in to help So more just to is the what that going that anything deeper understand And [sell] integration customers, that there? existing I wanted exactly land

compliment. We're of First it. quarter you excited very the and thank appreciate about certainly the all, for

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from comes MacDonald] [Ryan question with next Needham. The

quarter. first on the remarks you great talked share David, gains existing Congrats you, on wallet about customers. a for my question prepared for multiple opportunities within times share

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do think seeing consolidation. we're I So

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a And you. for maybe then, Chris, follow-up

you're net in the the seeing of customer of the XX, you of value the strong early-stage that in so of any or in the what pipeline of curious terms adds forward given You XX%. about I'm size being terms talked to really size of quarter and between growth curious, speak were pipeline the Really just late-stage. pull mix the strong, pipeline seeing of in quarter? demand, up

old-fashioned sales The results the an forward. execution, enormous pull deserves on and no pat saw that team We back. were good

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with comes question Stanley. Elizabeth from next The Morgan Porter

I the just wanted about to cadence of ask investments.

EBITDA that in just environment what's how nicely coming an back? balance, just be where propensity companies pulling to ahead, about good seem think do given many you getting? the investments, with you're the tech especially return So in And to accelerate

to stick So plan that for to we've going communicated. we're the us,

We're in Our XXX. the along marketing hiring right sales and cadence in is at path.

timing it investment will quota the sales the be because was between XXX to in The begin the of XXX XX%. expect and up growth moderate P&L That and in carriers. about to We line marketing we realm But headcount sales made a sellers. hires year. invest the and we'll last marketing, mostly lot to on of for communicated we've now when the in continue more of plan our that in

basis double the G&A. While at of R&D as getting we're R&D desired down G&A like about down we think time, efficiency the spoke same more out a and I XXX points and that, than remarks, that we percentage was was year-over-year, the in points. XXX out of basis of and this revenue

the marketing. So the we'll on area to R&D productivity invest continuing G&A and in get plan in continue our and to while sales

that. margin doesn't finish, saw gross points you being sure to you And I'm when XXX being ahead, hurt -- ahead of as basis as you're doing sure just I'm saw,

have people the was than right door. But are we we pulling are plan, earlier, we're incredible of great tech The other amazing just get person, find point to I to amazing. to quality now to It's out, continuing are because thought is other which to question, people back used walking our our able now on companies existing getting not very interview a wanted people to at in have higher as XX the could thing exciting. and right look quality a is I Elizabeth, an is if substantially say amazing getting of to a we that aren't existing we people we're perhaps been people

touch to a I on And this the really campaign uplift from year. political quick just wanted follow-up. just then

in the [$X I contribution million] in million] think QX. [$X past, a QX about you and in talked

wanted Just to in changes thought there's half? if see process contributes any to how the back the and there that

pipeline We're be up. to fill now That We're deal see starting to continues the flow. starting assumption. to our see

the another fourth probably, good [$X example [$X conservatism into in it's million] forecast. quarter. But So assumption we about about third in the remains that and of again, the our built the million]

question next Oppenheimer. with Brian from The comes Schwartz

This is to Camden that product risk with catalyst kind regards CDP Levy legislation or in regulation Zeta capable sitting delivering privacy your the On capable Schwartz. data for today? of your any that the by Do cloud. customer Brian over term the the in audience of of enrichment impact could data that data is delivering you or coming enrichment near from pairing you're see

the One data we we do of identifiable is enrich things we the eliminate the information. when personally

Zeta it resolve is remove other identifying we X,XXX their import to really multiple So We for then is we any is import ID we we match what and attributes. generally a all CDP. happens name, an incremental of into it data number, data then This interesting average first-party the reasons. what the information,

share the they see First of any the enterprises use client load Platform into any the begin we the activation must foremost, to data. they the identified happens want absolute never because We methodology. Zeta the Zeta anybody's right information Marketing can ID power any Then where to it, to what they If activate third-party on privacy. the us it side with keeps be at is never time. clients, of and

So think people were when be example, to of passed. It's evolve where not And on in was it privacy going of the today. privacy privacy. passed, it not we that's only does ability the totally is think the CCPA way, to by way what opted it side keep where and keep right us effectively anonymized to. we compliant just privacy continues We And going. by is are to when

actor like we So getting help a already of place like other such things ahead to little already a but regulation are going. were more This and see in will to that I we things. doing see to we're, where a think think little are aggressive, strange, sound we'd curtailed way that little And be them actors those a us. we would good a because we're we'd think

not because now, today's conservative be beating I've was we XX%. the today. ever QX. are Well, since coming in have cash year. in thank They're just working. incredibly not right going everybody, years because market, to growing we're and XX%. conservative. business better. additional trying I to we EBITDA coming summate, prudent, to because And was up business raised was and Yes, real up the John that's Yes, for the think we're do around QX, the be executing quarters the don't important prudent we is Yes, we is up to trying seen company, think being what and we're flow operating feel raising, that you, founded of us. revenue Yes, metric to XX Clients The we're is XX%. raised I Yes, Yes, but faster.

new And worked you, pace clients Zeta coming. work, we and have I digital day through additional other. every existing everybody day countless just the working our X,XXX I they wallet they the for in at a do day, people take few upturns clients who the Our every operate I'm last of built pandemic, have and by yet each changes most massive of through every ecosystems. winning in over a saying of saw we of the years, and Thank incredibly close we share, you incredibly care take we're clients it people their at record giving business proud and they am that are to and recent and downturns are how as have have the show built results. us our who up, through proud marketing with. care

conference today's call. concludes This

You may a pleasant day. disconnect Thank for participating, your and lines. you have