Zeta Global Holdings Corp. · NYSE:ZETA
Zeta Global — Q3 2023 Earnings Presentation
38 slides from Zeta Global's earnings presentation, Nov 1, 2023
Slide 1: Supplemental 3Q'23 Earnings Presentation
Supplemental 3Q’23 Earnings Presentation November 1, 2023
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: 3Q'23 Zeta Earnings Summary
3Q’23 Zeta Earnings Summary 1 2 3 Consistent Accelerating Growing Execution Profitability Brand Awareness • 9th consecutive quarter • Leverage driven by top line • ZETA LIVE Audience up 50% ahead of guidance growth from new scaled Y/Y • 6 out of 10 industries customers combined with • Leader in IDC’
Slide 4: Consistent Execution with Strong Underlying Fundamentals
Consistent Execution with Strong Underlying Fundamentals Scaled Customer Count Scaled Customer ARPU Industry Verticals TOTAL SCALED4 SUPER-SCALED5 TOTAL SCALED6 SUPER-SCALED7 6 of the Top 10 440+13% Y/Y 124 +17% Y/Y $418K $1.2M Verticals Grew 2Q’23: 425 2Q’23: 118 2Q’23: $392K 2Q’23: $1.1M Greater T
Slide 5: Adj. EBITDA Continuing to Grow Even Faster than Revenue
Adj. EBITDA Continuing to Grow Even Faster than Revenue Revenue Growth Adjusted EBITDA1,2 Growth $189 $34 $152 17.9% $22 of Revenue 14.7% of Revenue 3Q’22 3Q’23 3Q’22 3Q’23 See slide 35 for footnote definitions | $ in millions unless otherwise noted See appendix for definitions of non-GAAP metrics u
Slide 6: Expected to Achieve our Zeta 2025 Targets Early
Expected to Achieve our Zeta 2025 Targets Early 2025 REVENUE TARGET 2025 ADJ. EBITDA TARGET1,2 FCF TARGET2 $1B+ $200M+ $110M+ $34M above initial $1B+ $9.2M above initial Operating Leverage $110M+60% Increasing Free $225.0 23% 120 2023 guidance9 2023 guidance9 $200M+ 55% 18% 20%+ Cash Flow 55%+ $725
Slide 7: Updating the Original Zeta 2025 Model
Updating the Original Zeta 2025 Model based upon the Last 6 Quarters of KPIs Original 2025 Model Updated 2025 (vintage Feb. ’22) TTM Model Scaled Customer Count4 6% 12% 8% – 12% Scaled Customer ARPU6 14% 12% 8% – 12% Direct Mix % of ~80% 74% 75% +/– Revenue8 NRR16 110% – 115% 112% 110% – 115% Sales
Slide 8: Scaled Customer Count is Tracking Ahead of the Zeta 2025 Target
Scaled Customer Count is Tracking Ahead of the Zeta 2025 Target 10 Consecutive Quarters of Sequential Scaled Customer Expansion 3Q’23 Y/Y 440 Growth: 13% 425 411 124 403 118 389 110 103 373 106 359 100 355 347 97 99 307 316 ZETA 2025 86 300 301 283 MODELED CAGR: 273 258 260 8-12% 261 Q3'21 Q4'21 Q1'
Slide 9: 13th Consecutive Quarter of Double-digit Scaled Customer ARPU Growth
13th Consecutive Quarter of Double-digit Scaled Customer ARPU Growth Y/Y ARPU Growth % 23% 10% 18% 19% 19% 15% 10% 10% 10% 2Q’23 Y/Y Growth: 10% $424 $418 $382 $392 $368 $374 $355 $341 $320 3Q’23 ARPU for $1M+ is ZETA 2025 13X MODELED CAGR: the $100K - $1M Cohort 8-12% Q3'21 Q4'21 Q1'22 Q2'22 Q3'22
Slide 10: 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 316 307 124 Scaled 283 118 Customer Count 106 Total Scaled Customers 3Q’22: 389 2Q’23: 425 3Q‘22 2Q‘23 3Q’23 3Q‘22 2Q‘23 3Q’23 3Q’23: 440 Quarterly ARPU $94 $109 $95 $1,149 $1,127 $1,241 1 3 X O P P. A
Slide 11: The Longer Our Customers Stay With Us, The Bigger They Become
The Longer Our Customers Stay With Us, The Bigger They Become FY’22 Scaled Customer ARPU ~90% Revenue driven by scaled customers who have been with Zeta >1 year $1.7M $1.7M Proven ability to scale pilots in year 1 $1.4M $1.4M $0.7M $0.7M $0.7M $0.9M $1.9M FY’21 FY’21 FY’21 <1 Year 1-3 Years 3+ Years
Slide 12: 4Q'23 & FY'23 Guidance
40'23 & FY'23 Guidance '
Slide 13: Guidance: Balanced Growth and Operating Leverage
Guidance: Balanced Growth and Operating Leverage 4Q’23 FY’23 4Q’23 FY’23 Guidance Guidance Guidance Guidance Range Range Midpoint Midpoint Prior Guidance - $712M - $718M $206.5M $715M Total Zeta Revenue $205M – $209M $723M – $727M $207M $725M Includes $1.3M of M&A Includes $5.2M of M&A Includes $1.3
Slide 14: Anticipating ~3 Point Growth Headwind in 4Q'23 from Political Revenue
Anticipating ~3 Point Growth Headwind in 4Q’23 from Prior Year Political Candidate Revenue Comparison ~3 pts 2.5 pts Related political Related political growth headwinds $4.5 growth headwinds $207 $3 $189 $171 $172 $149 Revenue $158 Excl. political Revenue Excl. political 3Q’22 4Q’22 1Q’23 2Q’23 3Q'
Slide 15: Estimated Stock-based Compensation Expense
Estimated Stock-based Compensation Expense Stock Compensation Expense FY’22 1Q’23 2Q’23 3Q’23 FY’23E FY’24E FY’25E FY’26E FY’27E ($M) 1 Pre-IPO $242.4 $43.0 $36.9 $32.5 $142.3 $74.6 $31.2 $4.5 $0.1 2 + Post-IPO Grants Issued to Date $56.5 $21.5 $20.7 $25.2 $90.2 $63.3 $34.0 $20.4 $7.3 3 + New Grants
Slide 16: Estimated Stock-based Compensation Expense
Estimated Stock-based Compensation Expense 51% $350,000,000 SBC % of Revenue Stock Based Compensation12 $300,000,000 $57M ~32% Post IPO SBC $250,000,000 SBC % of Revenue Pre-IPO SBC $90M $200,000,000 (SBC) $ SBC % of Revenue $150,000,000 $242M $100,000,000 $63M $142M $50,000,000 $75M $34M $20M $31M
Slide 17: The Market is Moving To Zeta
The Market is Moving To Zeta
Slide 18: Being a Sophisticated Marketer Is Harder Than Ever
What message will resonate? Being a Sophisticated Who should Marketer Is How can I improve I target? How do I know who’s Harder Than Ever my ROI? in market Which channels are more With fragmented tools, profitable? processes, and poorly integrated data, 55% of marketers cannot identify What are the
Slide 19: Zeta Consolidates the Fragmented Marketing Landscape
Zeta Consolidates the Fragmented Marketing Landscape Marketing Data Management Paid Media (CDPs) Automation (Programmatic, DSPs) (Marketing Clouds & ESPs) How brands create a unified How brands effectively reach How brands acquire new customer database that can and manage customers via customers thr
Slide 20: Zeta Consolidates the Fragmented Marketing Landscape
Zeta Consolidates the Fragmented Marketing Landscape The Zeta Marketing Platform (ZMP) consolidates all 3 Data Marketing Paid Media Management Automation (Programmatic, DSPs) (CDPs) (Marketing Clouds & ESPs) Note: This is not an exhaustive competitor set 20
Slide 21: Why does Consolidating a Fragmented Market Matter?
Why does Consolidating a Fragmented Market Matter? The Personalization Gap: “ “Despite massive investments in data and technology, Of consumers marketers still struggle to personalize more than 50% of their customer interactions, and that number is a lot 71% expect companies lower for personalizing
Slide 22: U.S. TAM and CAGR
U.S. TAM 13 CAGR 13 2023 ’23 – ‘25 See slide 35 for footnote definitions 22
Slide 23: ZMP Helps Customers Realize A Strong ROI
ZMP Helps Customers Realize A Strong ROI CASE STUDY: Zeta’s Revenue Scales With Platform Expansion ACQUIRE Insurance Customer LAND Recurring Platform Fees + • Started as $50k pilot Minimum Usage • Started with 1 channel & 1 use case Started as a spoke in the customer’s $2B+ Incremental 2022 • market
Slide 24: Our Data Is Durable
Our Data Is Durable In an Evolving Data Privacy Environment, Zeta’s Proprietary Identity Data Set has Consistently Grown 400 Unique Global 350 12.7B+ Digital Identifiers 600 500In US 300 400 250 235M+ People In US 300 200 200 150 100 100 0 2018 2019 2020 2021 2022 Data Privacy Regulation & Browser U
Slide 25: 3 Pillars of Zeta's Data Cloud
3 Pillars of Zeta’s Data Cloud IDENTITY SIGNALS CONNECTIVITY Create a real-time 360- Capture interest and intent Attach identity to an degree view of an individual through Artificial individual and activate to using durable identifiers Intelligence to enrich deliver personalized from multiple source
Slide 26: Selected Investor Day Slides
Selected Investor Day Slides As of September 27, 2023
Slide 27: We benefit from serving a diverse set of industry verticals
We benefit from serving a diverse set of industry verticals… 2Q‘23 TTM11 Revenue by Vertical Well Diversified Customer Set Telecom 14% Automotive 5% • Low concentration Advocacy 6% Consumer & • 15 different industry verticals served Retail 13% Education 6% • 6 of top 10 verticals growing greater tha
Slide 28: Our flywheel of better intelligence leading to better ROI increases spend & stickiness
Our flywheel of better intelligence leading to better ROI increases spend & stickiness Scaled Customer Cohort ARPU6 by Tenure % of Revenue from Customers > 1 Year % Revenue with from Customer >1 Year 2021 92% ARPU 2022 89% 2Q‘23 TTM 87% $M 28 See slide 35 for footnote definitions As of September 27,
Slide 29: There's more to our scaled customer count than meets the eye
As of September 27, 2023 There’s more to our scaled customer count than meets the eye… 2Q’23 Total Scaled Customers4: 425 352 55 18 of the 425 are of the 425 are with of the 425 are with single brands customers who work customers who work with 2-3 brands with 4+ brands See slide 35 for footnote defi
Slide 30: Strong growth in recurring and reoccurring revenue
Strong growth in recurring and reoccurring revenue, both well ahead of the market 1H’21 1H’21 1H’23 1H’23 2-year Annual Market Mix % Revenue Mix % Revenue Rev CAGR Growth Forecast13 Recurring14 46% $95 47% $155 28% 14% Reoccurring15 54% $113 53% $174 24% 12% Total Zeta 100% $208 100% $329 26% 30 See
Slide 31: High degree of revenue visibility from loyal customers
High degree of revenue visibility resulting from a track record of loyal customers 425 total 100% T4C clauses make the contracting scaled customers process faster and easier for our customers. However, it prevents the reporting of a higher RPO. or 74 of 425 scaled Two 15% customers have Remaining Pe
Slide 32: The path to higher FCF conversion has multiple drivers
The path to higher FCF conversion has 1,2 multiple drivers to LT target above 55% 1H‘23 FCF CONVERSION ZETA 2025 MODEL LONG-TERM TARGET 45% 55%+ 65%+ SHORT-TERM HEADWINDS MID TO LONG-TERM TAILWINDS • Interest rate environment uncertainty • Restructure or eliminate long term debt • As growth with new
Slide 33: We are on track to achieve our Zeta 2025 targets early
And have a lot to look forward to on We are on track to the horizon achieve our Zeta 2025 targets early 33
Slide 34: Appendix
Appendix
Slide 35: Footnotes
Footnotes 1 | 3Q’23 GAAP net loss of $43M, or 23% of revenue, includes $58M of stock-based compensation. See the graded vesting schedule on slide 15. 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 36: 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 37: Bridge To Adjusted EBITDA And Adjusted EBITDA Margin
Bridge To Adjusted EBITDA And Adjusted EBITDA Margin $ in ’000s, unless otherwise noted ` 3Q’23 3Q’22 YTD’23 YTD’22 Net loss $(43,086) $(69,440) $(152,200) $(227,486) Net loss margin 22.8% 45.6% 29.4% 54.7% Depreciation and amortization 13,233 13,367 37,654 39,448 Stock-based compensation 57,672 75,
Slide 38: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation $ in ’000s, unless otherwise noted 3Q’23 3Q’22 YTD’23 YTD’22 Cash Flows from Operating Activities $22,828 $19,539 $63,561 $55,389 Capital expenditures (5,936) (5,654) (14,886) (17,165) Website and software development costs (3,438) (4,234) (12,344) (12,820) Effect of ex