Advertising and marketing company Zeta Global (NYSE:ZETA) reported Q1 CY2025 results beating Wall Street’s revenue expectations, with sales up 35.6% year on year to $264.4 million. The company expects next quarter’s revenue to be around $296.5 million, close to analysts’ estimates. Its non-GAAP profit of $0.11 per share was in line with analysts’ consensus estimates.
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Zeta (ZETA) Q1 CY2025 Highlights:
- Revenue: $264.4 million vs analyst estimates of $254.1 million (35.6% year-on-year growth, 4.1% beat)
- Adjusted Operating Income: $29.03 million vs analyst estimates of $25.73 million (11% margin, 12.8% beat)
- The company slightly lifted its revenue guidance for the full year to $1.24 billion at the midpoint from $1.24 billion
- EBITDA guidance for the full year is $258.5 million at the midpoint, above analyst estimates of $256 million
- Operating Margin: -6.1%, up from -18.4% in the same quarter last year
- Free Cash Flow Margin: 10.7%, similar to the previous quarter
- Billings: $260.1 million at quarter end, up 32.6% year on year
- Market Capitalization: $3.29 billion
Company Overview
Co-founded by former Apple CEO John Sculley, Zeta Global (NYSE:ZETA) provides software and data analytics tools that help companies market their products to billions of customers.
Sales Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Thankfully, Zeta’s 30.6% annualized revenue growth over the last three years was impressive. Its growth beat the average software company and shows its offerings resonate with customers.
This quarter, Zeta reported wonderful year-on-year revenue growth of 35.6%, and its $264.4 million of revenue exceeded Wall Street’s estimates by 4.1%. Company management is currently guiding for a 30.1% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 19.9% over the next 12 months, a deceleration versus the last three years. Despite the slowdown, this projection is healthy and implies the market is baking in success for its products and services.
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Billings
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Zeta’s billings punched in at $260.1 million in Q1, and over the last four quarters, its growth was fantastic as it averaged 40% year-on-year increases. This performance aligned with its total sales growth, indicating robust customer demand. The high level of cash collected from customers also enhances liquidity and provides a solid foundation for future investments and growth. 
Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.
Zeta is extremely efficient at acquiring new customers, and its CAC payback period checked in at 5.3 months this quarter. The company’s rapid recovery of its customer acquisition costs indicates it has a highly differentiated product offering and a strong brand reputation. These dynamics give Zeta more resources to pursue new product initiatives while maintaining the flexibility to increase its sales and marketing investments.
Key Takeaways from Zeta’s Q1 Results
We enjoyed seeing Zeta beat analysts’ EBITDA expectations this quarter. We were also happy its billings outperformed Wall Street’s estimates. Overall, this print had some key positives. Investors were likely hoping for more, and shares traded down 3.3% to $13.49 immediately following the results.
So should you invest in Zeta right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.