Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Potential Upside* |
|---|---|---|---|---|---|---|---|
| 18 Feb, 25 | ZETA | Buy | USD 23.49 | USD 26.0 | USD 27.5 | Same day | 17.1% |
*Potential Upside (%) indicates the expected percentage increase from the Entry Price to the Target 2 Price.
Data Powered by EOD Historical Data (“EODHD”).
Zeta Global Holdings Corp. operates an omnichannel data-driven cloud platform that provides enterprises with consumer intelligence and marketing automation software in the United States and internationally. The company's Zeta Marketing Platform analyzes billions of structured and unstructured data points to predict consumer intent by leveraging sophisticated machine learning algorithms and the industry's opted-in data set for omnichannel marketing; and Consumer Data platform ingests, analyzes, and distills disparate data points to generate a single view of a consumer, encompassing identity, profile characteristics, behaviors, and purchase intent. It also offers various types of product suites, such as opportunity explorer, and CDP+, which helps in consolidating multiple databases and internal and external data feeds and organize data based on needs and performance metrics. Zeta Global Holdings Corp. was incorporated in 2007 and is headquartered in New York, New York.
Significant Free Cash Flow Improvement – The company reported $25.7 million in Free Cash Flow, marking a 93% Y/Y increase. This indicates enhanced financial efficiency and stronger cash generation.
Record Revenue Growth – Zeta Global achieved $268 million in revenue for Q3 2024, reflecting a 42% year-over-year (Y/Y) increase. This demonstrates strong demand for its AI-powered marketing solutions.
Limited Scaled Customer Growth – The number of Scaled Customers grew marginally from 468 in Q2 2024 to 475 in Q3 2024, an increase of only 1.5% quarter-over-quarter (Q/Q). This slow growth could indicate challenges in acquiring large-scale enterprise clients at a faster rate.
GAAP Net Loss – Despite revenue growth, Zeta Global reported a GAAP net loss of $17.4 million, largely due to $47.2 million in stock-based compensation. Although improved from Q3 2023, it remains a financial concern.
Key investment risks for Zeta Global include its continued GAAP net losses driven by high stock-based compensation, potential slowdown in Scaled Customer growth, reliance on political ad revenue fluctuations, and execution risks associated with its AI-driven marketing platform in an evolving competitive landscape.
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 23.49 | 20.9 | 26.0 | 27.5 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Strong Revenue Growth and Performance Metrics: Zeta Global (NYSE: ZETA), a leading AI-powered marketing cloud, announced its financial results for the third quarter of 2024, showcasing record revenue of $268 million. This marks a 42% year-over-year (Y/Y) increase, with direct revenue growing 41% Y/Y and comprising 70% of total revenue, an improvement of 300 basis points quarter-over-quarter (Q/Q). Additionally, the company reported a significant rise in Scaled Customer Average Revenue Per User (ARPU) to $557,231, a 33% Y/Y increase, underscoring strong client engagement and adoption of Zeta’s marketing solutions.
Acceleration in Customer Growth and Profitability: Zeta Global’s customer base continued to expand, with Scaled Customers increasing to 475, compared to 468 in Q2 2024 and 440 in Q3 2023. The number of Super-Scaled Customers remained at 144 Q/Q but demonstrated significant growth from 124 in Q3 2023. Furthermore, Super-Scaled Customer ARPU reached $1.6 million, reflecting a 30% Y/Y increase. The company's focus on high-value customer acquisition and retention contributed to this sustained upward trajectory in key customer-related metrics.
Improvement in Operational Efficiency and Cash Flow: Zeta Global demonstrated improved operational efficiency, with its GAAP cost of revenue decreasing by 60 basis points Q/Q to 39%. Additionally, the company reported a significant reduction in GAAP net loss to $17.4 million, compared to a net loss of $43.1 million in Q3 2023, largely attributed to stock-based compensation expenses of $47.2 million. The company also achieved strong cash flow performance, generating $34.4 million from operating activities, marking a 51% Y/Y increase. Free Cash Flow surged 93% Y/Y to $25.7 million, reinforcing Zeta’s ability to efficiently manage its resources.
Enhanced Profitability and Shareholder Value: Zeta Global delivered robust profitability, with Adjusted EBITDA reaching $53.6 million, reflecting a 59% Y/Y increase. The Adjusted EBITDA margin improved to 20.0%, up from 17.9% in Q3 2023. The company also executed a share repurchase program, acquiring $3.9 million worth of shares, highlighting its commitment to enhancing shareholder value. GAAP loss per share significantly improved to $0.09, compared to a loss per share of $0.27 in the same quarter last year.
Upward Revision of Q4 and Full-Year 2024 Guidance: As a result of its strong performance, Zeta Global raised its Q4 2024 revenue guidance to a range of $293 million to $297 million, representing a 39% to 41% Y/Y increase. Adjusted EBITDA guidance for the quarter was also increased to a range of $64.9 million to $66.9 million, reflecting a 45% to 49% Y/Y improvement. The company’s outlook for full-year 2024 was similarly revised upward, with expected revenue now ranging from $984.1 million to $988.1 million, representing an annual growth rate of 35% to 36%. Adjusted EBITDA guidance was also raised to $187.5 million to $189.5 million, reflecting a 45% to 46% Y/Y increase.
Strategic Vision and Future Outlook: Zeta Global attributes its success to strategic investments in AI-driven marketing technology, a commitment to customer success, and a differentiated platform that is increasingly gaining traction in the market. Co-Founder, Chairman, and CEO David A. Steinberg emphasized that the company’s long-term investments in AI and marketing automation are driving sustained momentum. CFO Chris Greiner highlighted that Zeta remains well-positioned for continued growth in 2025 and looks forward to unveiling its next long-term strategic model, Zeta 2028, in February 2025.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Zeta Global Holdings Corp (NYSE: ZETA) at the closing price of USD 23.49, as on February 17, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Technology Industry: Software - Application
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| ZETA Zeta Global Holdings Corp |
0.29 2.18% | 13.86 | - | 23.58 | 2.67 | 12.85 | 2.76 | -13.4243 |
| CRM Salesforce.com Inc |
1.19 0.44% | 269.55 | 100.89 | 27.47 | 7.42 | 4.34 | 7.44 | 26.81 |
| SAPGF SAP SE |
-0.47 0.17% | 270.00 | 76.28 | 22.88 | 5.61 | 3.84 | 5.59 | 26.18 |
| SAP SAP SE ADR |
0.58 0.22% | 269.02 | 75.80 | 22.37 | 5.62 | 3.75 | 5.51 | 25.79 |
| INTU Intuit Inc |
0.73 0.12% | 614.72 | 55.56 | 32.68 | 11.28 | 10.07 | 11.62 | 40.11 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is February 17,2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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