Zeta Global (ZETA) Q2 Revenue Jumps 35% | The Motley Fool

Zeta Global (ZETA 0.44%), a provider of artificial intelligence (AI)-driven marketing technology, announced its Q2 2025 earnings results on August 5, 2025. The quarter was headlined by GAAP revenue of $308.4 million, which beat analyst forecasts of $296.7 million (GAAP) and exceeded the company’s own guidance. Free cash flow (non-GAAP) was $33.6 million, up 69% year-over-year, while management raised its full-year 2025 financial outlook. The period marked another “beat and raise” quarter, with strong growth across all key metrics, and continued momentum in AI-powered products and customer expansion.

Source: Analyst estimates provided by FactSet. Management expectations based on management’s guidance, as provided in Q1 2025 earnings report.

Zeta Global’s Business and Strategic Focus

Zeta Global operates in the digital marketing sector, offering AI-based platforms to help businesses personalize and optimize their marketing across channels. Its main product, the Zeta Marketing Platform, uses machine learning and generative AI (a type of artificial intelligence that creates new content or predictions) to process billions of data signals and deliver targeted advertising and messaging.

The company’s recent strategic focus areas include expanding its AI-powered personalization tools, investing in data privacy and security, integrating the LiveIntent identity graph (a tool for matching consumer identity across digital properties), and growing its customer base. Success for Zeta hinges on winning more enterprise and agency customers, scaling up existing client relationships, and maintaining compliance with data privacy rules such as the California Consumer Privacy Act (CCPA) and Europe’s General Data Protection Regulation (GDPR).

Quarter Highlights: Results, Products, and Operations

During Q2 2025, Zeta booked GAAP revenue of $308.4 million, up 35% year-over-year, and topped the midpoint of its own revenue guidance by $11.0 million. Adjusted EBITDA, a non-GAAP metric that removes one-time or non-cash expenses to show operating profitability, rose 53% year-over-year in Q2 2025, reflecting both sales growth and margin expansion.

Management attributed these gains to robust demand for its AI-driven products. The period saw strong adoption of Zeta’s generative AI agents and tools, including the Zeta Answers product and an expanded Zeta Marketing Platform. Customers who have adopted new AI features are growing consumption revenue by more than 40% year-over-year. These AI and workflow launches are reported to accelerate customer spending, as businesses aim to use automation for more efficient, personalized marketing campaigns.

The completion of LiveIntent’s identity graph integration boosted Zeta’s data capabilities. This enhancement improves identity resolution — the ability to match digital users with real identities — and supports more targeted, privacy-compliant marketing. While the LiveIntent acquisition drew in a wider mix of customers (including some with smaller average spend), it expanded Zeta’s reach and improved the base of direct customer relationships. LiveIntent’s business contributed about $19.5 million in Q1 2025, in line with internal targets.

The company emphasized its commitment to data privacy and security as continued regulatory pressure grows. Though Zeta did not announce new privacy initiatives this period, it highlighted compliance as a selling point in global markets.

Customer expansion continued on several fronts. The company reported 548 scaled customers and 159 ‘super-scaled’ customers at the end of Q1 2025, with average revenue per scaled customer (ARPU) up 12% year-over-year in Q1 2025. Management said that scaled customer growth and increased multi-channel usage remain key drivers. Zeta also saw notable momentum in its agency channel, with activity among independent agencies doubling in Q1 2025 over Q4 2024. However, management noted that direct enterprise business also remains strong, and that the mix of revenue between agency and enterprise clients is unlikely to skew substantially further toward agencies in the near term.

On capital allocation, Zeta completed its initial $100 million share repurchase program authorized in November 2024, with $15 million remaining as of July 25, 2025, buying back $85 million worth of stock as of July 25, 2025, and approved a new $200 million stock repurchase authorization on July 23, 2025. Stock-based compensation, which rewards employees and executives with company shares, dropped 11% compared to last year (GAAP basis), but remains a sizable expense at $46.5 million for Q2 2025. Management plans to further reduce this cost by foregoing annual equity grants in 2025 and tying leadership’s compensation to longer-term goals. Dilution from stock-based compensation is an ongoing issue the company continues to address via these repurchase programs and stricter share grant limits.

Outlook and What to Watch

For the third quarter of fiscal 2025, management forecasts revenue of $327 million to $329 million for Q3 2025, representing an increase of 22–23%. Adjusted EBITDA is guided to $70.3 million to $71.0 million, which would represent year-over-year growth of 31–32%, and an expected Adjusted EBITDA margin of 21.4–21.7%.

The company also raised its full-year 2025 outlook, increasing revenue, adjusted EBITDA, and free cash flow guidance. Leadership now projects revenue between $1,258 million and $1,268 million (up 25–26%) for full-year 2025, adjusted EBITDA (non-GAAP) between $263.6 million and $265.6 million (up 37–38%) for full-year 2025, and free cash flow (non-GAAP) for full-year 2025 is expected to be in the $140 million to $144 million range, an increase of 52% to 56% compared to the previous year. All forward projections (revenue, adjusted EBITDA, and free cash flow guidance) were increased by more than the amount by which Zeta beat its own Q2 2025 guidance. Leadership described this outlook as intentionally cautious but noted no evidence of slowdowns in customer demand or spending at this stage.

Investors should keep an eye on several persistent issues in coming quarters. Zeta remains unprofitable on a generally accepted accounting principles (GAAP) basis as of Q2 2025, with a net loss (GAAP) of $12.8 million for Q2 2025, though this improved from the prior year. As stock-based compensation continues to make up a significant proportion of expenses, ongoing buybacks and compensation changes are meant to limit shareholder dilution. The company did not provide full quarterly figures for certain customer and vertical metrics this period. Lastly, while Zeta expressed confidence in its current pipeline and demand trends, management acknowledged continued macroeconomic volatility and has kept guidance conservative to account for possible shifts.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.