Zeta Global Holdings Corp. · NYSE:ZETA
Zeta Global — Q4 2023 Earnings Presentation
36 slides from Zeta Global's earnings presentation, Feb 27, 2024
Slide 1: Supplemental Q4'23 & FY'23 Earnings Presentation
Supplemental Q4’23 & FY’23 Earnings Presentation February 27, 2024
Slide 2: Forward-looking statements and non-GAAP measures
Forward-looking statements and non-GAAP measures This presentation, together with other statements and information publicly disseminated by the Company, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Sec
Slide 3: Zeta delivered another strong quarter and year
Zeta delivered another strong quarter and year KEY THEMES RESULTS 4Q’23 FY’23 Consistently • 4 consecutive years of 20%+ revenue growth RESULTS RESULTS Strong • 1,000 bps of Adj. EBITDA margin2 expansion to 17.8% over last 4 years1,2 Financial Execution • On track to achieve Zeta 20253 early Revenue
Slide 4: Full year 2023 KPIs demonstrate consistent execution with strong underlying fundamentals
Full year 2023 KPIs demonstrate consistent execution with strong underlying fundamentals Scaled Customer Count Scaled Customer ARPU Industry Verticals TOTAL SCALED4 SUPER-SCALED5 TOTAL SCALED6 SUPER-SCALED7 452 131 $1.6M $4.5M 6 of the Top 10 +12% Y/Y +27% Y/Y Verticals Grew FY’22: 403 FY’22: 103 FY
Slide 5: 7 straight quarters of exceeding the Rule of 40
7 straight quarters of exceeding the Rule of 4019 Revenue Growth Adjusted EBITDA1,2 Growth $210 $45 $175 $32 21.3% of Revenue 18.5% of Revenue 4Q’22 4Q’23 4Q’22 4Q’23 See slide 33 for footnote definitions See appendix for definitions of non-GAAP metrics used herein and reconciliations to the most di
Slide 6: 4 straight years of >20% revenue growth with adj. EBITDA margin expansion
4 straight years of >20% revenue growth with adj. EBITDA margin expansion Revenue Growth Adjusted EBITDA1,2 Growth $729 $129 $591 $92 17.8% $458 of Revenue $368 $63 15.6% $40 of Revenue 13.8% of Revenue 10.8% of Revenue FY’20 FY’21 $1.00 FY’22 FY’23 FY’20 FY’21 $1 FY’22 FY’23 See slide 33 for footno
Slide 7: Expecting to achieve our Zeta 2025 targets early
Expecting to achieve our Zeta 2025 targets early 2025 REVENUE TARGET 2025 ADJ. EBITDA1,2 TARGET FCF2 TARGET $1B+ $200M+ $110M+ $38M or 5% above $12M or 10% above Operating Leverage $110+ $1B+ $200+ Increasing Free $250 25% initial 2023 initial 2023 $120 55%+ 60% 20%+ Cash Flow2 guidance9 $875 guidan
Slide 8: KPIs powering the early achievement of Zeta 2025
KPIs powering the early achievement of Zeta 2025 SCALED SCALED DIRECT NET SALES CUSTOMER CUSTOMER PLATFORM REVENUE HEADCOUNT COUNT4 ARPU6 REVENUE MIX8 RETENTION14 MODEL MODEL MODEL MODEL MODEL ~185–200 8-12% Growth 8-12% Growth ~75% 110–115% 452 +12% YTY 2023 136 $1.57M +10% YTY 2022 123 403 $1.43M
Slide 9: Scaled customer count continues to track ahead of the Zeta 2025 target
Scaled customer count continues to track ahead of the Zeta 2025 target 11 Consecutive Quarters of Sequential 2023 Y/Y Scaled Customer Expansion Growth: 452 12% 180 160 440 425 131 140 120 403 411 124 389 118 373 103 110 100 355 359 106 80 100 99 316 321 ZETA 2025 60 97 301 307 40 283 300 MODELED CAG
Slide 10: Consistent Y/Y scaled customer ARPU expansion
Consistent Y/Y scaled customer ARPU expansion Y/Y ARPU Growth % 2023 Y/Y 10% 18% 19% 19% 15% 10% 10% 10% 7% Growth: $382 $424 $374 $392 $418 $454 10%2023: $1,572 $368 $355 2022: $1,431 $341 4Q’23 ARPU for $1M+ is ZETA 2025 13X MODELED CAGR: 8-12% the $100K - $1M Cohort Q4'21 Q1'22 Q2'22 Q3'22 Q4'22
Slide 11: Multi-channel adoption by scaled customers is driving ARPU expansion
Multi-channel adoption by scaled customers is driving ARPU expansion $100K to $1M Greater than $1M 316 321 300 131 Scaled 124 Customer Count 103 Total Scaled Customers 4Q’22: 403 3Q’23: 440 4Q‘22 3Q‘23 4Q’23 4Q‘22 3Q‘23 4Q’23 4Q’23: 452 Quarterly ARPU $113 $95 $104 $1,331 $1,241 $1,313 1 3X OP P . A
Slide 12: The longer our customers stay with us, the bigger they become
The longer our customers stay with us, the bigger they become FY’23 Scaled Customer ARPU $2.1M $1.7M $1.3M $1.4M $0.6M $0.7M $0.7M $1.4M $1.7M FY’22 FY’22 FY’22 Scaled Customer <1 Year 1-3 Years 3+ Years Count 92 124 236 Revenue $54M $167M $490M ~90% Revenue driven by scaled customers who have been
Slide 13: Agencies are key partners, with powerful scaling potential
Agencies are key partners, with powerful scaling potential LEGEND 1st Large 3 Unique Brands Revenue Year 1 Integrated Hold Co % Direct Mix % Integrated Mix # Unique Brands (vintage 2020) Started small in Year 2 Direct Integrated 5+ Unique Brands revenue and # of brands, and grew, while Year 3+ Direc
Slide 14: Zeta is well-diversified across a wide range of verticals
Zeta is well-diversified across a wide range of verticals FY 2023 Revenue by Vertical Well Diversified Customer Set Consumer & Retail, Automative, 4% 17% • Broad coverage across 15 Technology & Media, 4% different industry verticals Advertising & Marketing, 5% • 6 of top 10 verticals grew Insurance,
Slide 15: Serving over 40% of the Fortune 100
Serving over 40% of the Fortune 100 16 11 of the 17 largest 4 of the 10 largest 4 of the 10 largest Insurance Consumer & Retail Financial Services companies in the world companies companies 6 of the 11 largest 4 of the largest Agency 4 of the 4 largest Technology & Media Hold Cos Telecommunications
Slide 16: 1Q'24 & FY'24 Guidance
10'24 & FY'24 Guidance '
Slide 17: Guidance that is balanced between growth & operating leverage
Guidance that is balanced between growth & operating leverage… 1Q’24 FY’24 1Q’24 FY’24 Guidance Guidance Guidance Guidance Range Range Midpoint Midpoint Total Zeta Revenue $185M – $189M $870M – $880M $187M $875M % Growth Y/Y 17% – 20% 19% – 21% 19% 20% Adj. EBITDA1,2 $28.8M – $29.3M $165M – $167M $2
Slide 18: …and aligns with historical quarterly linearity
…and aligns with historical quarterly linearity 1Q’24 2Q’24 3Q’24 4Q’24 2024 Midpoint Midpoint 2024 Revenue Guidance $187M $204M $225M $259M $875M % Growth Y/Y 19% 19% 19% 23% 20% Adj. EBITDA1,2 $29.1M $34.2M $44.3M $58.5M $166M Adj. EBITDA Margin1,2 15.5% 16.8% 19.7% 22.6% 19.0% BPS Change Y/Y 30 B
Slide 19: Anticipating $15M of political candidate revenue in 2024
Anticipating $15M of political candidate revenue in 2024 1Q’24 2Q’24 3Q’24 4Q’24 FY’24 Midpoint Midpoint Zeta excluding Political Candidate $187 $202 $220 $251 $860 Revenue Estimated Political Candidate Revenue - $2 $5 $8 $15 Total Zeta Revenue $187 $204 $225 $259 $875 Note: Political Candidate Reve
Slide 20: Guiding to increase FCF conversion to 48% or $80M
Guiding to increase FCF conversion to 48% or $80M, on track to achieve Zeta 2025 target of $110M+ 55%+ $250 60% 48% $200+ 42% 42% 50% $200 $166 40% $150 $129 26% 28% $110+ 30% $92 $100 $80 $63 $55 20% $50 $40 $39 $10 $17 10% $- 0% 2020 2020 2021 2021 2022 2022 2023 2023 2024 2024 2025 2025 Midpoint
Slide 21: We are targeting to reduce SBC and dilution substantially
We are targeting to reduce SBC and dilution substantially 10 Incorporating the use of more PSUs and Options (vs. RSAs only) $300 Fully Diluted $250 Share Count 220 2024 Quarterly view Pre-IPO $200 Post-IPO $141 $24 $150 $20 $74 $100 $17 $14 $29 $50 $102 $21 $31 $16 $12 $78 $5 $35 $0 $0 $21 1Q'24e 2Q
Slide 22: Zeta makes sophisticated marketing SIMPLE
Zeta makes sophisticated marketing SIMPLE 22
Slide 23: Being a Sophisticated Marketer Is Harder Than Ever
What message will resonate? Being a Sophisticated Who should Marketer Is How can I make Gen AI I target? How do I know who’s Harder Than Ever actionable? in market Which channels With fragmented tools, are more profitable? processes, and poorly integrated data, 55% of marketers cannot identify What
Slide 24: Zeta helps marketers Acquire, Grow & Retain customers more efficiently and effectively
Zeta helps marketers Acquire, Grow & Retain customers more efficiently and effectively by… …enriching customer data …synthesizing data …and delivering real-time with Zeta data… into Intelligence… omnichannel engagement CRM EMAIL Zeta MOBILE AI Marketing Platform SOCIAL WEBSITE PERSONALIZATION DSP Ze
Slide 25: Zeta consolidates the fragmented marketing landscape
Zeta consolidates the fragmented marketing landscape The Zeta Marketing Platform (ZMP) consolidates all 3 Data Marketing Management Automation Engagement (Marketing Clouds (Programmatic) (CDPs) & ESPs) How brands create a unified How brands effectively reach and How brands acquire new customer datab
Slide 26: The Zeta Advantage
The Zeta Advantage Integrated Identity & Intelligence The ZMP is Makes Generative AI Actionable Built For Results Real time Only Zeta’s Purpose-Built Platform Can Replace Legacy Technology or Optimize Flexibility to Wrap Around Tech Stack Existing Tech Lower Total Cost of Ownership Generates Higher
Slide 27: Zeta's long-term partnership with global healthcare provider results in double-digit growth in spend
Zeta’s long-term partnership with global healthcare provider results in double-digit growth in spend Acquire Grow Retain USE CASE THEIR CHALLENGES WHY ZETA OUR PARTNERSHIP • Cultivating loyalty among members to • Our personalized solution • 10+ years; Zeta viewed as a trusted grow existing customer
Slide 28: Zeta's intelligence and activation drove 86% increase in sales
Zeta’s intelligence and activation drove 86% increase in sales at locations targeted versus prior period Acquire Grow Retain USE CASES THEIR CHALLENGES WHY ZETA OUR PARTNERSHIP • Lack ‘Single View of the Customer’ • Our identity resolution and ability to • Began as a pilot that quickly grew across t
Slide 29: Zeta's data management, identity resolution, and direct channel expansion drive increased sales
Zeta’s data management, identity resolution, and direct channel expansion drive increased sales Acquire Grow Retain USE CASES THEIR CHALLENGES WHY ZETA OUR PARTNERSHIP • Absence of unified identity with • Our CDP technology consolidated • Reduced audience & campaign siloed data across multiple platf
Slide 30: Our identity data graph is durable and growing
Our identity data graph is durable and growing In an Evolving Data Privacy Environment, Zeta’s Proprietary Identity Data Set has Consistently Grown Unique Global 0.26 15B+ 23 Digital Identifiers In US 0.255 18 0.25 242M+ People In US 0.245 13 0.24 8 0.235 0.23 3 0.225 0.22 -2 2021 2021 2022 2022 202
Slide 31: The intelligence powered era is breaking boundaries
The intelligence powered era is breaking boundaries U.S. TAM 11 CAGR 11 OMNICHANNEL 2023 ’23 – ‘25 ENGAGEMENT Data Media MarTech SIGNALS Intelligence Powered $19B 14% Marketing IPM Technology 12% Intelligence Powered Media $64B IDENTITY See slide 33 for footnote definitions 31
Slide 32: Appendix
Appendix
Slide 33: Footnotes
Footnotes 1 | 4Q’23 GAAP net loss of $35M, or 17% of revenue, includes $63M of stock-based compensation. See the graded vesting schedule on slide 21. 2 | Adjusted EBITDA, Adjusted EBITDA Margin, and Free Cash Flow are non-GAAP metrics, see reconciliations in the Appendix. 3 | The financial targets o
Slide 34: Non-GAAP measures
Non-GAAP measures In order to assist readers in understanding the core operating results that our management uses to evaluate the business, we describe our non-GAAP measures referenced in this presentation below. We believe these non-GAAP measures are useful to investors in evaluating our performanc
Slide 35: Bridge to Adj. EBITDA and Adj. EBITDA margin
Bridge to Adj. EBITDA $ in ’000s, unless otherwise noted and Adj. EBITDA margin ` 4Q’23 4Q’22 FY’23 FY’22 FY’21 FY’20 FY’19 Net loss $ (35,281) $ (51,753) $ (187,481) $ (279,239) $ (249,563) $ (53,225) $ (38,465) Net loss margin (16.8)% (29.5)% (25.7)% (47.3)% (54.4)% (14.5)% (12.6)% Depreciation an
Slide 36: Free Cash Flow reconciliation
Free Cash Flow reconciliation $ in ’000s, unless otherwise noted 4Q’23 4Q’22 FY’23 FY’22 FY’21 FY’20 FY’19 Cash Flows from Operating Activities $ 26,962 $ 23,097 $ 90,523 $ 78,486 $ 44,292 $ 35,539 $ 30,599 Capital expenditures (5,597) (5,067) (20,483) (22,232) (9,482) (2,249) (3,300) Website and so