Conference Transcript - ZETA 2026-08-12

DJ Hines, Analyst — Canaccord

I'm DJ Hines. I'm Canaccord Senior Software Analyst. You guys have heard me say it. This is the 46th year Canaccord has done this event. We couldn't do it without the help of the corporates that come and bring all the great content. So we're delighted to have Zeta here. We have CFO Chris Greiner. We're going to do this as a fireside chat. I have questions that will get us through the 25 minutes, but if there's anything in the audience, stuff you want to get addressed, feel free to raise your hand. We can work it into the conversation. With that, I think we can get right into it. Let's talk Q2. You guys had another excellent quarter. What are you most encouraged about that you're seeing in the business today? And how does that kind of feed into your view going into the second half?

Chris Greiner, CFO

I think from a CFO's perspective, the healthiest set of metrics across the company's quarter like we had is a lot of things going well and not necessarily being reliant upon a grand slam or a home run to get you there.

Speaker 3

And that's been the case now for several quarters.

Chris Greiner, CFO

So if you look at the building blocks of our growth and our ability to exceed guidance, starts with how many new customers are we adding and how fast are we growing those existing customers spend with us. Are relationships getting longer? Are relationships getting bigger? And we are executing at the high end and past the high end in many cases of a lot of our metrics that in our long-term model says we need to get to, that at least 20% again at growth. That's been going well industry-wise. We get a lot of questions from investors around what we're seeing on the macro. Our ability to serve 15-plus industry verticals, 10 of which are roughly 90% of revenue, and those continuing to grow at a north of 20% rate, 8 out of 10 last quarter, is just another good evidence point of a lot of little things working well. Yeah, yeah.

DJ Hines, Analyst — Canaccord

And to me, like, what I'm interested in, and I'm always thinking about what's coming next. You guys talked about 60% pipeline growth, right? So the strength we saw in the quarter wasn't, hey, a bunch of stuff just happened to fall in and we got it done. It seems like that demand is persisting. And I'm curious if you think that that's technology-driven pipeline, where it's like, hey, the platform's getting better and we have Athena now, or is it go-to-market driven? What do you think drives the pipeline strength? Two-fold.

Chris Greiner, CFO

Our sellers, our quota carriers, and the leadership they have on the sales side, the learning and development we give them, the ease with which the product is to sell with Athena, their productivity is ramping. And we talked a lot about the stats and not just the pipeline being up 60% year to year. To me, I think the more impressive number was the addition of 100 million of new pipe in just 90 days. That's a big number for us. Things can move around on a year-to-year basis. Sequential, that's a big statement. And I don't think it's accidental that athena was just launched in about the same period of time capabilities wise they're getting more broad not just organically within the company and in the advent of athena and its ease of use and what we're seeing from an early set of indicators which i'm sure we'll get to but also our partnership ecosystem and i think a lot of the excitement around that that is really yet to be even baked into that pipeline yeah um so investors who were here a year ago and sat and listened to the zeta story might not have even known what athena is right right i mean it's right that new yeah that's exactly right so let's talk a little bit about what athena does um kind of how customers are leveraging it and how that feeds into their business outcomes if you've had a chance to attend a demo before and especially pre-athena um i i don't i'd like to say you were impressed by what you saw but you were also probably intimidated by how much data is there how much there is to navigate, and holy cow, I've got to do all this on my own as keystrokes. And it's just as intimidating, frankly, for a lot of marketers. As skilled as they are, the expansiveness of what was in the platform and how much they could do, the feedback was it needs to be easier for us. That was Athena's need for innovation. That was what created this idea. And what we're seeing so far is Athena as this orchestration tool or a facilitation engine by the customers that are adopting it is having its intended outcome. So we talked about on the call, we have 40% of our super-skilled customers that are already monthly active users. So they haven't just kind of logged in once. They are daily in the platform. We get some really interesting data off of that. The first was that, and this was always our expectation, but it's happening faster than we expected, is that 83% of the time, as they're interacting with their platform, using it, they're doing it with their voice. And Athena is our conversational element. Prior to Athena, that was all keystrokes. And the downstream positive indicator of that is that through their voice, through this natural language conversation of asking for things and getting it back in a fully automated way, or not knowing where something is and being given to them in that instant, is they're creating more audiences and more campaigns. And as you know our company, that is the top of the revenue funnel because more campaigns and more audiences tends to lead to greater activation.

DJ Hines, Analyst — Canaccord

There's also a use case expansion element to it as well, right? And I think, you know, multi-use case customers were another highlight of the quarter and the growth that you're seeing there. So maybe just talk about how one feeds into the other and you think about that as a driver.

Chris Greiner, CFO

So we love, by the way, to do demos. We hold them virtually, so it's not as taxing on you as an investor, as an analyst. We have several upcoming, so just reach out if you'd like to attend one. But what you will see Athena does, and our intention is, how do you make available to the customer where Zeta can add more value? And prior to Athena, you were operating, let's say you were purchasing and using Zeta through the customer retention use case. Everything you were doing on the platform, the audiences you were building, were gauged towards how do I help you retain more customers that you were at risk of churning. Now, with Athena, in that same work stream, in that same orchestration, Athena's showing you not just who you need to save, but did you also know that these are prospects that are in market right now for your product or a product like yours? Would you also like to market to them? And the answer is usually yes, right? And to your point, multi-use case adoption year over year in the quarter was up 90%. Shockingly, still less than a quarter of our customers use more than one use case. So as exciting as that ramp is and that growth is, it's still a really big opportunity because from an ARPU perspective, when customers use more than one use case, they tend to spend three to five times more. Yeah, yeah, yeah.

DJ Hines, Analyst — Canaccord

I mean, adding a new activation channel is one thing, going to a whole new use case takes it to another level. So you have the three use cases, the core, acquire, grow, retain. We introduced a fourth use case this quarter with ZBI, which stands for Zeta Business Intelligence. Maybe just talk about what uniquely positions you guys to be able to do that and then what the vision for that product is over time.

Chris Greiner, CFO

In my experience, in our company's experience, the best way to go to market is when you're being pulled in that direction by customers. And in our supplemental materials that we included in our last earnings release, We gave actual, real-world examples of customers using Zeta's intelligence in our data asset for purposes beyond marketing. And I think we've increasingly started to have this aha moment of while our data cloud, our first set of use cases, were to help brands be far more efficient and effective using our data for marketing and sales purposes, we are now seeing customers proactively come to us, take us to different corners of their organization, whether it is, you know, we work with a hotel chain that if you drove down I-95, you'd see them left and right, going into our data cloud and looking to understand where are properties that I have today that are underperforming that my customers are going to or not going to, or where are they visiting where I don't have a property where they're going to a competitor? And how does that influence where I build and where I don't invest to cases on how do I enhance my customer service based upon what I see my customers are buying or what they're buying from my competitors. So it's opened our eyes up to a new TAM. What we have, what gives us the license to win in this environment is the same that helps us beat the legacy marketing clouds and legacy activation vendors, which is the unfair advantage of having a proprietary data asset with a set of algorithms and AI that allows customers to be predictive rather than just kind of look in the rearview mirror dashboard. bring to them data that they don't have inside their enterprise today that's being visualized for them right now so it's a same set of competitive advantages that make us really execute well in the marketing space should give us the permission to be just as successful in this BI space yeah look I'm on the view that we're gonna see increasing commoditization at the model layer and

DJ Hines, Analyst — Canaccord

and that companies with unique data assets are gonna be particularly well positioned so I'm gonna press you a little bit on the data asset and just kind of ask you to compare and contrast what you have relative to others in your space that are trying to do the same thing. How would you frame that for someone who may not have done a deep dive on your data?

Chris Greiner, CFO

Yeah, so we are a platform that brings together all marketing use cases. So if you look at the use cases of retain, grow, and acquire, you have the Salesforce, Oracle, Adobe, even the Brazes and others that are focused on customer retention marketing. How do I help you as a brand better manage and make decisions off of data that you own? And we compete and we are very successful in taking considerable share in that space. And then there are the cases around grow and acquire where you acquire and you know you activate media. From our data's perspective it is not any easier today to get proprietary identity based data than it was last year than it was 10 years ago and the pipes with which we get proprietary data is diversified it ranges from the open web it ranges from email it ranges from programmatic email and newsletters to other third-party sources that we're able to stitch back what I think is going to be even more important in the future beyond identity-based data and that is what makes our data unique is contextual data and that being harder and harder to come by and Zeta's ability to be able to help you build even better models using contextual-based data rather than just identity data.

DJ Hines, Analyst — Canaccord

Yeah, yeah, makes sense. I want to transition and talk a little bit about partnerships because it's another area where there's been a lot of change in the business. You guys are assembling kind of a who's who list of tech partners in this space. You know, Snowflake has been a good partner for a couple of years now, anyhow. But more recently, you know, we've talked about OpenAI and Palantir. What are those partnerships doing for Zeta? How are you leveraging those relationships as you think about product and go-to-market?

Chris Greiner, CFO

Yeah, as David says, for us to be a $10 billion company, we're going to have to do it on far more backs than just our own sellers, which to this point, the vast, vast majority of the revenue we generate is done on the back of our own quota carriers. We must unlock the partnership ecosystem and get 25, 30% of your sales done by others on your behalf. The best companies in the world have, you know, they figure this out and they master it. We are fortunate to have incredible partners in AWS and Snowflake and OpenAI and Palantir, and there's going to be more. All of them are complementary, right? So there's no stepping on each other's toes in those circumstances. We're starting to figure out with the newer partnerships we've struck how to make them even more successful out of the gate than the ones that were kind of first or second out. Snowflake, we share a lot of customers together. There are a lot of joint opportunity creations and pipeline handoffs that are being done. OpenAI is super early. They have big goals to monetize advertising inside chat, and we'll be there to help them. Palantir is unique in that we share very common views of the world around data, and the partnership is struck in a way where both of us have a chance to win substantially by going to market together. And if you think about Palantir and what makes them better than anybody else in the market is they create a digital twin of every single piece of data that sits inside that enterprise's four walls, whether it's processes, procedures, customer data, employee data, vendor-based data, in a hyper-machine-readable way that then you can make much better decisions and be far more efficient, and they are wildly successful. One could argue Zeta does that for what's happening outside your four walls with our data cloud. And when you bring those two together And now Zeta's data on Foundry, the same place where customer data, their customers' data sit, it makes for super fast implementations and some really interesting use cases even beyond marketing.

DJ Hines, Analyst — Canaccord

You talked about getting better at scaling these partnerships quickly. I think there's a couple proof points to that with Palantir. I know you had some successful wins, I think, in the weeks after the deal was announced, and David was particularly excited about them on our callback. So maybe you could talk about kind of early learnings from the Palantir partnership and kind of what made those early deals so successful.

Chris Greiner, CFO

I think, again, when we go into those customers that were already Palantir's customers and the value proposition of data aggregation, hyper machine learning off of internal data source, but now bring an outside data source, they were more than willing to begin discussions on pilots. And these are bigger pilots than what we would typically do. Our typical pilots, 50 to 150K, these are bigger. More importantly, there's another 20 opportunities that we've identified in concert with Palantir that are their US-based commercial customers that are spending a billion north in advertising that we could do the same with. Now it's early, and I don't want to get you too excited, because you almost did that last quarter. But look, we couldn't be more thrilled. Palantir has this incredible magnetism about them we work with a very large US bank that it we work with narrowly that we've been trying to get a much bigger forum with in terms of going beyond the CMO or getting more parts of their business and we received a call post the announcement of the partnership on you come in we want to talk to you about how much more we can do now that you have this relationship so there's there's a lot of interesting parts of this partnership that we could leverage in the future.

DJ Hines, Analyst — Canaccord

Yeah, that's great. I want to talk about wallet share a little bit. You alluded to some of these Palantir customers having over a billion in annual marketing spend or advertising spend. Where do you think you are as you look at your super scaled customers today? Where do you think you are in terms of their share of wallet with you? Where is that share coming from when you incrementally are taking it? and we could talk about where you think it could go over time, but I don't want to ask you too many questions at once.

Chris Greiner, CFO

No, I follow where you're going. It's an important topic. I mean, so ARPU expansion is one of the two elements of our long-term model that we not only share with investors as to what must we grow by to be on our path to hear a long-term model, but then how much every 90 days we're doing against that. And our model for ARPU expansion, which is effectively wall-share growth, is 12% to 16% year-over-year growth. the last two quarters we've grown 21 to 17 percent so kind of nicely north of that goal and that has been done through adding channels and adding use cases and we continue to do that you know very efficiently in terms of what that gives us as a percentage of wallet still a fraction of what we should have most of our customers are spending hundreds of millions to billions on marketing you can almost aggregate all our customers and saying they're spending a hundred billion on marketing at the midpoint of this year's guidance 1.8 billion we've got less than 2% wallet. We should have 10 plus percent in terms of what we can address far more than that. But what we're seeing is that when we prove our value, and the longer our customers are with us, the bigger they become. And our pilots, while they start at an average of 100k, by the time you've been with us five years, you're spending north of 4 million with us on average. Yeah.

DJ Hines, Analyst — Canaccord

And where do you think the share is coming from?

Chris Greiner, CFO

I think it's coming from two sides of the house. So the biggest enterprises in the world tend to have their organizations, by the way, and their technology structured in two different parts. Those that focus on existing customers, and there's people, and there's process, and there's technology, and there's infrastructure that they have against that. And then those that are acquiring new ones. And the same holds true. So Zeta comes in and says, you don't need to be running two totally disparate systems. Consolidate onto one. There's significant total cost of ownership savings out of the gate. The share we're taking on the existing customer front is from the legacy marketing clouds. The share we're taking on the customer acquisition front, namely through a lot of our expansion with agencies over the years, has been at the expense of some of the larger DSPs, some of which have reported earnings recently.

DJ Hines, Analyst — Canaccord

Yes, we all saw it. No free ads. Let's turn to Marigold. It was a recent acquisition, pretty bullish about the cross-sell opportunity there as you looked at kind of where their customer base was and the use cases they were using and then what you could do with a combined Zeta value prop. Where are we in terms of executing against that opportunity and kind of how should we think about it contributing over the next year or so?

Chris Greiner, CFO

Yeah, so I'll take, first I'll address the, this is the hard part before you get to the joint selling is to get the business integrated. And that's always been our approach. We have to be able to integrate assets we buy within 12 months And if you know David, he pushes us to do it half as fast time. And we did that with Marigold. We have an incredibly talented operations team and business unit that this was combined with. We completed the restructuring. We may have kind of some more onesies, twosies the rest of this year, but in large part, the restructuring was completed. You saw a lot of that bear fruit in the second quarter and especially flow through to our guide. Namely, we took the full year's revenue up by $33 million. We took free cash flow up by $20 million. That's the largest raise of both that we've had this year. It's certainly the best margin. We talked about 60% incremental margin on the raise. So a lot of that kind of really finding interesting synergies, even more than we thought we were going to get in the beginning. We purposely did not touch the asset during peak holiday season. So we acquired Marigold in the fourth quarter, early in the fourth quarter of 2025, but we did not want to mess with customers and peak holiday season. And so that we really got our hands on it in the first quarter, we've now begun to joint sell. And we're starting to see good attachment of Marigold's loyalty product, which is a product we did not have previously in our arsenal, that now we do. But even more importantly, Marigold's customers were only able to buy customer retention as a use case. We can now go into some very, very interesting large enterprise brands and sell activation. and we really grow and acquire. On something those brands are spending hundreds and billions on already, they're just not doing it with us. So that's now beginning to, you know, take flight.

DJ Hines, Analyst — Canaccord

Yeah, yeah, what's the appetite for M&A from here? I mean, you know, you just did the billion dollar credit facility, that's a natural follow-up question when anyone sees that, it's like, how are we gonna use this money?

Chris Greiner, CFO

Yeah, I'm about to move in kids into college and we're not letting them, I'm telling them, don't let money burn in your pocket. We are not gonna go run out and spend it. We are gonna be every bit as disciplined as we always are. We kick a lot of tires, we kiss a lot of toads. But the criteria that we have, David's talked about around our philosophy, and in my realm, obviously the CFO realm, it's how do you find assets growing 20% with attractive gross margins that aren't dilutive to ours, that are making money? And that becomes a narrower and narrower set of targets. But we're looking, we're looking hard. There's no gaps in our portfolio right now that we feel like we need to go fill, so we want to be opportunistic. And at the same time, we're not going to go run and do something that's transformative. As David says, and I think he's totally right, transformative deals transform both organizations for the worst. How do you find assets that fit culturally, that fit your business model, that enhance your product set that you can integrate quickly? And that's what we're kind of out of the look for.

DJ Hines, Analyst — Canaccord

I feel like we've talked about, I don't know, five or six different opportunities that you guys have that are all kind of coalescing at once. If you were to kind of narrow investors focus and say like, hey, these are probably the like two or three things that are going to be most important to us driving durable growth going forward. Where would you narrow that view?

Chris Greiner, CFO

Look, we've grown over 20% organic for 21 straight quarters. So that's durable. We've beaten and raised 20 straight quarters. That's predictable. And as we talked about, we've been doing it more and more profitably. For more of the same, what allows us to do that? I'll take it kind of in three parts. On the organic part of the business, on sales productivity, the selling of pilots of proof of concepts and getting them to scale. So on average, our pilots of proof of concepts start at 100K in the first 12 months, they get to between 700K and 900K in the next two years. Keep doing that, because what we find is that once you get past a million, you become really sticky, and as you've seen from our data over the years, It's kind of often, you know, often to the right from there and our ability to sell more channels, sell more use cases sustains that. Certainly to the rate that we the levels our model has us, you know, required to do partnerships is really interesting. How do we continue to get those partnerships to yield fruit? Both the ones that we've signed historically and the ones that are more recent and the ones we're about to go do. And then, you know, ZBI. I think this is an entirely new TAM. our right to win is again our proprietary models that allow us to be predictive in marketing we can be just as predictive in other use cases and our data brings us something totally different than what those buyers of today's rearview mirror dashboards have yeah yeah you guys have said publicly that you know you think this is a sustainable north of rule of 40 business for a while here which are obviously impressive and you're running well ahead of that now.

DJ Hines, Analyst — Canaccord

You also have kind of nearer term, near term being 2028 financial targets out there. Maybe just talk a little bit about what those are and kind of anchor investor expectations on the path to get there.

Chris Greiner, CFO

Yeah. We as a company believe in kind of jointly going on a journey together with investors. And if you can give them a multi-year target, it can't be unreasonable and be five to seven years out. I think three to four years is kind of a good magic number but then you give them the exact same building blocks that you use internally to build your own models that they can build the same and you give a high frequency update on each every quarter you get really good alignment there is no need to be dodgy around how to answer a question because you could just be fact based on the data we got to our first model effectively you're early on the top and bottom line our second model to your point was data 2028 that says we get to 2.3 billion in revenue at least 25% adjusted even margins and at 65% free cash flow we're executing at a pace you know exceeding those which is great and you know we also gave it our last investor day a bottom line target that goes to 2030 because we wanted to be able to show there's leverage that can continue to be had in this business to get to at least 30% of just even margins and effectively 20% free cash flow margins when you look at the new conversion and you know I think our execution is on pace if not ahead on those goals we see ourselves as a organic 20% plus grower whether we're growing 24 or 25 26 27 28 we are taking considerable share and and that is that is our focus yeah yeah I will give you credit you guys do give a ton of data on a quarterly basis and I know you and I have had conversations about whether that's always a good thing or a bad thing for you know the stock reaction that's a topic for another day yeah sorry so I'll repeat it cuz I'm not sure that the audience could hear so from from Palantir partnership perspective if if I'm understanding your question correctly, speed to implement, and are we leveraging their forward deployed engineers and helping to do that? Yes, but we're also deploying Zeta's forward deployed engineers, and we're doing that even organically within our current engagements. We are, I think it is absolutely the smartest thing in the world to put your product people where your customers are, not just where your sellers need to be, but put your product people next to their product people. I believe that the implementation of these opportunities as they begin to take hold. Not only will it be faster by virtue of us putting our data cloud on found tier, on their foundry, which is increased time and reduced latency, but it's the same place where our customers' data resides, so it should make the integration and implementations that much more seamless for our customers. Did that answer your question?

Speaker 3

So are you seeing these levels when they didn't see each other?

Chris Greiner, CFO

We just started, no, it's early. We'll give updates when we do.

DJ Hines, Analyst — Canaccord

All right, I see your time flashing zero at us. Maybe just a wrap-up question, like you have ambitious goals, kind of taking Zeta from where it is today to becoming this system of intelligence. What do you think that looks like in three to five years from now?

Chris Greiner, CFO

I think it's a business that could support our customers' needs far beyond the marketing use case and effectively be thought of just as their other infrastructure layers they have in the company that they do not pull out, that they embed and they get deeper in our average relationship with our customers this is from signature to renewals that have continued to go on has gone from 48 months to 56 months that is that paired with net revenue retention rates that exceed 115 percent last year was 120. those are financial and business and relationship characteristics that reflect infrastructure and i think this idea of system intelligence is part of that yeah perfect that's a great spot to leave it.

DJ Hines, Analyst — Canaccord

Chris, thank you very much. Thank you, DJ. Awesome. Thank you. Good job.