Form 8-K Zeta Global Holdings For: Aug 10
Exhibit 99.1
August 10, 2021
Zeta Announces Second Quarter 2021 Financial Results
| Revenue increased 39% year over year to $106.9 million |
| Balanced revenue growth contribution between new customers and existing customers |
| Direct platform revenue mix improved to 77% of revenue compared to 74% in the previous quarter |
| Scaled customer count increased to 343 from 333 in the previous quarter |
| Scaled customer average revenue per user (ARPU) increased to $299K from $289K in the previous quarter |
NEW YORK Zeta (NYSE: ZETA), a cloud-based marketing technology company that empowers enterprises to acquire, grow, and retain customers, today announced financial results for the quarter ended June 30, 2021.
Zetas results show its growth rate accelerating during the second quarter, adding over 30 new customers, a 39% increase in revenues, and 106% growth in adjusted EBITDA year over year, said David A. Steinberg, Co-founder, Chairman & CEO of Zeta. We are well positioned to benefit from the disruptive pace of digital transformation, with brands seeking solutions that combine scale with precision to extract more value from their first party data. Our software, encompassing patented AI, proprietary data assets, and real-time omnichannel capabilities, was purpose built to empower brands to acquire, grow and retain customer relationships at a higher ROI. A recent study we commissioned from Forrester Consulting showed that brands using the ZMP achieve 50% higher effectiveness on their marketing investments over a period of 3 years.
Our strong second-quarter performance reflects our solid execution and continued focus on our core growth drivers, said Chris Greiner, Zetas CFO. Scaled customers, which we define as customers with at least $100,000 of revenue over the last twelve months, are an important cohort for Zeta and represent most of our revenue. On a sequential basis, we increased scaled customer count and scaled customer ARPU. We saw sales productivity continue to ramp in the quarter. With these tailwinds and our improving revenue visibility in mind, our outlook for revenue and adjusted EBITDA for the third quarter and full year 2021 has improved.
Second Quarter 2021 Financial Highlights
(Unless otherwise noted, all comparisons are to the second quarter of 2020)
| Total revenue of $106.9 million, an increase of 39%. |
| Balanced revenue growth contribution between new customers and existing customers. |
| Direct platform revenue mix improved to 77% of total revenue compared to 74% in the previous quarter. |
| Broad-based double-digit growth in 12 out of 15 verticals. |
| Strong growth in both US and international markets, at 39% and 33% respectively. |
| Significant omnichannel growth highlighted by nearly 500% revenue growth in connected TV (CTV). |
| Scaled customer count of 343 compared to 333 in the previous quarter. |
| Scaled customer ARPU over $299,000 compared to $289,000 in the previous quarter. |
| Operating loss of $122.3 million, compared to an operating loss of $6.6 million, driven primarily by $119.3 million of stock-based compensation expense compared to $0.03 million. |
| Net loss of $94.9 million, compared to a net loss of $15.1 million. |
| Adjusted EBITDA of $11.4 million, compared to $5.5 million. |
| Diluted loss per share of $1.92, compared to a diluted loss per share of $0.58. |
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Second Quarter 2021 Business Highlights
| Announced a partnership with Dun & Bradstreet (D&B) to bring Zetas core solution to the B2B market. As part of the agreement, D&B will become an important multi-year scaled customer. D&B noted that they chose Zeta because of the breadth of its online data, its ability to combine data inflows seamlessly, its omnichannel platform capabilities, and its ability to deliver measurable results. |
| Grew the scale of Zetas identity graph to over 515 million individuals globally (from 500 million in the previous quarter) and over 225 million individuals in the US (from 220 million in the previous quarter). |
| Increased sophistication of Zetas CTV offering with CTV Genre and Content Targeting, which allows marketers to reach their target audiences in specific context within specific shows. Also developed a CTV Content Consumption Household Index to provide clients with deep insights into what content their target households are watching to inform their go forward media plans and creative strategy. |
| Created a new way for brands to rapidly onboard their first party data and a faster, more automated path to campaign activation through low code onboarding which eliminates the implementation dependency on enterprise IT resources and reduces the ramp time for Zeta from weeks or months to days. |
| Released a Total Economic Impact (TEI) study with Forrester Consulting that revealed 50% higher customer acquisition effectiveness on marketing investments and accelerated revenue over a period of three years among interviewed Zeta Marketing Platform (ZMP) customers that activate the companys proprietary data. |
| Announced the appointment of Crystal Eastman as Zetas first ever Chief Marketing Officer (CMO). Ms. Eastman who previously served in senior leadership roles with The Trade Desk, American Express, and BlackRock will lead Zetas global marketing and communications organizations. |
Third Quarter and Full Year 2021 Guidance
Zeta anticipates revenue and adjusted EBITDA to be in the following ranges:
Third quarter 2021
| Revenue of $108 million to $111 million, a year-over-year increase of 13% to 16%. Excluding $3 million of non-recurring revenue associated with the U.S. presidential election cycle in the third quarter of 2020, the guidance represents a year-over-year increase of 17% to 20%. |
| Adjusted EBITDA in the range of $13.0 million to $13.5 million, a year-over-year increase of 6% to 10% and an adjusted EBITDA margin of 11.7% to 12.5%. |
Full year 2021
| Revenue of $432 million to $436 million, a year-over-year increase of 17% to 19%. Excluding $15 million of non-recurring revenue associated with the U.S. presidential election cycle in the second half of 2020 (with $3 million in the third quarter of 2020 and $12 million in the fourth quarter of 2020), the guidance represents a year-over-year increase of 22% to 24%. |
| Adjusted EBITDA in the range of $55.5 million to $57.5 million, a year-over-year increase of 40% to 45% and an adjusted EBITDA margin of 12.7% to 13.3%. |
Investor Conference Call and Webcast
Zeta will host a conference call today, Tuesday, August 10, 2021, at 5pm Eastern Time to discuss financial results for the second quarter of 2021. The live webcast of the conference call can be accessed from the Companys investor relations website, https://investors.zetaglobal.com/ where it will remain available for one year.
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About Zeta
Zeta Global Holdings Corp. is a leading data-driven, cloud-based marketing technology company that empowers enterprises to acquire, grow and retain customers for a lower cost than they can achieve without us. The Companys Zeta Marketing Platform (the ZMP) is the largest omnichannel marketing platform with identity data at its core. The ZMP analyzes billions of structured and unstructured data points to predict consumer intent by leveraging sophisticated artificial intelligence to personalize experiences at scale. Founded in 2007 by David A. Steinberg and John Sculley, the Company is headquartered in New York City. For more information, please go to www.zetaglobal.com.
Forward-Looking Statements
This press release, 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 Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Any statements made in this press release or during the earnings call that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan and strategies. These statements often include words such as anticipate, expect, suggests, plan, believe, intend, estimates, targets, projects, should, could, would, may, will, forecast and other similar expressions. We base these forward-looking statements on our current expectations, plans and assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances at such time. Although we believe that these forward-looking statements are based on reasonable assumptions at the time they are made, you should be aware that many factors could affect our business, results of operations and financial condition and could cause actual results to differ materially from those expressed in the forward-looking statements. These statements are not guarantees of future performance or results. The forward-looking statements are subject to and involve risks, uncertainties and assumptions, and you should not place undue reliance on these forward-looking statements. Factors that may materially affect such forward-looking statements include, but are not limited to: the impact of COVID-19 on the global economy, our customers, employees and business; potential fluctuations in our operating results, which could make our future operating results difficult to predict; our ability to innovate and make the right investment decisions in our product offerings and platform; our ability to attract and retain customers, including our scaled customers; our ability to manage our growth effectively; our ability to collect and use data online; the standards that private entities and inbox service providers adopt in the future to regulate the use and delivery of email may interfere with the effectiveness of our platform and our ability to conduct business; a significant inadvertent disclosure or breach of confidential and/or personal information we process, or a security breach of our or our customers, suppliers or other partners computer systems; and any disruption to our third-party data centers, systems and technologies. These cautionary statements should not be construed by you to be exhaustive and are made only as of the date of this press release. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
The third quarter and full year 2021 guidance items provided herein are based on Zetas current estimates and are not a guarantee of future performance. This guidance is subject to significant risks and uncertainties that could cause actual results to differ materially, including the risk factors discussed in the Companys reports on file with the Securities and Exchange Commission. Zeta undertakes no duty to update any forward-looking statements or estimates.
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The Following Definitions Apply to the Terms Used Throughout This Release
| Scaled Customers: We define scaled customers as customers from which we generated more than $100,000 in revenue per year. We calculate the number of scaled customers at the end of each quarter and on an annual basis as the number of customers billed during each applicable period. We believe the scaled customers measure is both an important contributor to our revenue growth and an indicator to investors of our measurable success. |
| Scaled Customer ARPU: We calculate the scaled customer ARPU as revenue for the corresponding period divided by the average number of scaled customers during that period. We believe that scaled customer ARPU is useful for investors because it is an indicator of our ability to increase revenue and scale our business |
| Direct Platform and Integrated Platform: When the Company generates revenues entirely through the Company platform, the Company considers it Direct Platform Revenue. When the Company generates revenue by leveraging its platforms integration with third parties, it is considered Integrated Platform Revenue. |
Non-GAAP Measures
In order to assist readers of our condensed unaudited consolidated financial statements in understanding the core operating results that our management uses to evaluate the business and for financial planning purposes, we describe our non-GAAP measures below. We believe these non-GAAP measures are useful to investors in evaluating our performance by providing an additional tool for investors to use in comparing our financial performance over multiple periods.
Adjusted EBITDA is a non-GAAP financial measure defined as net loss adjusted for interest expense, depreciation and amortization, stock-based compensation, income tax (benefit)/provision, acquisition related expenses, restructuring expenses, change in fair value of warrants and derivative liabilities, certain non-recurring IPO related expenses and other (income)/expense. Acquisition related expenses and restructuring expenses are acquisition related expenses and primarily consist of severance and other personnel-related costs which we do not expect to incur in the future as acquisitions of businesses may distort the comparability of the results of operations. Change in fair value of warrants and derivative liabilities is a non-cash expense related to periodically recording mark-to-market changes in the valuation of derivatives and warrants. Other (income)/expense consist of non-cash expenses such as changes in fair value of acquisition related liabilities, gains and losses on extinguishment of acquisition related liabilities, gains and losses on sales of assets and foreign exchange gains and losses. In particular, we believe that the exclusion of stock-based compensation and non-recurring IPO related expenses that are not related to our core operations provides measures for period-to-period comparisons of our business and provides additional insight into our core controllable costs. We exclude these charges because these expenses are not reflective of ongoing business and operating results.
Adjusted EBITDA margin is a non-GAAP metric defined as adjusted EBITDA divided by the total revenues for the same period. Adjusted EBITDA and adjusted EBITDA margin provide us with a useful measure for period-to-period comparisons of our business as well as comparison to our peers. We believe that these non-GAAP financial measures are useful to investors in analyzing our financial and operational performance. Our use of adjusted EBITDA and adjusted EBITDA margin has limitations as an analytical tool, and you should not consider these measures in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Because of these and other limitations, you should consider our non-GAAP measures only as supplemental to other GAAP-based financial performance measures, including revenues and net loss.
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We calculate forward-looking non-GAAP Adjusted EBITDA and Adjusted EBITDA margin based on internal forecasts that omit certain amounts that would be included in forward-looking GAAP net income (loss). We do not attempt to provide a reconciliation of forward-looking non-GAAP Adjusted EBITDA and Adjusted EBITDA margin guidance to forward looking GAAP net income (loss) because forecasting the timing or amount of items that have not yet occurred and are out of our control is inherently uncertain and unavailable without unreasonable efforts. Further, we believe that such reconciliations would imply a degree of precision and certainty that could be confusing to investors. Such items could have a substantial impact on GAAP measures of financial performance.
Contacts:
Investor Relations
Idalia Rodriguez
Press
Megan Rose
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PART I - FINANCIAL INFORMATION
Item 1. | Financial Statements |
Condensed Unaudited Consolidated Balance Sheets
(In thousands, except shares, per share and par values)
As of June 30, 2021 | As of December 31, 2020 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 113,568 | $ | 50,725 | ||||
Accounts receivable, net of allowance of $2,066 and $2,207 as of June 30, 2021 and December 31, 2020, respectively |
72,044 | 79,366 | ||||||
Prepaid expenses |
2,662 | 3,903 | ||||||
Other current assets |
6,122 | 7,374 | ||||||
|
|
|
|
|||||
Total current assets |
194,396 | 141,368 | ||||||
|
|
|
|
|||||
Property and equipment, net |
5,738 | 6,117 | ||||||
Website and software development costs, net |
38,615 | 32,891 | ||||||
Intangible assets, net |
32,734 | 28,591 | ||||||
Goodwill |
81,924 | 76,432 | ||||||
Deferred tax assets, |
199 | 366 | ||||||
Other non-current assets |
905 | 521 | ||||||
|
|
|
|
|||||
Total non-current assets |
160,115 | 144,918 | ||||||
|
|
|
|
|||||
Total assets |
$ | 354,511 | $ | 286,286 | ||||
|
|
|
|
|||||
LIABILITIES AND STOCKHOLDERS EQUITY / (DEFICIT) |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 30,869 | $ | 40,976 | ||||
Accrued expenses |
48,867 | 44,622 | ||||||
Acquisition related liabilities |
6,275 | 6,018 | ||||||
Deferred revenue |
3,612 | 4,053 | ||||||
Other current liabilities |
7,356 | 8,310 | ||||||
|
|
|
|
|||||
Total current liabilities |
96,979 | 103,979 | ||||||
|
|
|
|
|||||
Non-current liabilities: |
||||||||
Long term borrowings |
183,443 | 189,693 | ||||||
Acquisition related liabilities |
18,446 | 17,137 | ||||||
Warrants and derivative liabilities |
| 58,100 | ||||||
Other non-current liabilities |
2,585 | 2,387 | ||||||
|
|
|
|
|||||
Total non-current liabilities |
204,474 | 267,317 | ||||||
|
|
|
|
|||||
Total liabilities |
301,453 | 371,296 | ||||||
|
|
|
|
|||||
Commitments and contingencies |
||||||||
Mezzanine equity: |
||||||||
Redeemable convertible preferred stock $0.001 per share par value, up to 60,137,979 shares authorized and 39,223,194 shares issued and outstanding as of December 31, 2020 |
| 154,210 | ||||||
Stockholders equity / (deficit): |
||||||||
Series A common stock $0.001 per share value, up to 204,220,800 shares authorized, 112,012,693 shares issued and outstanding as of December 31, 2020 |
| 112 | ||||||
Treasury common stock, 8,195,464 shares repurchased at a weighted average price of $2.86 per share |
(23,469) | (23,469) | ||||||
Series B common stock $0.001 per share par value, up to 3,400,000 shares authorized, 3,054,318 shares issued and outstanding as of December 31, 2020 |
| 3 | ||||||
Class A common stock, par value $0.001 per share par value, up to 3,750,000,000 shares authorized and 152,270,401 shares issued and outstanding as of June 30, 2021 |
152 | | ||||||
Class B common stock, par value $0.001, up to 50,000,000 shares authorized and 37,856,095 shares issued and outstanding as of June 30, 2021 |
38 | | ||||||
Additional paid-in capital |
439,999 | 28,425 | ||||||
Accumulated deficit |
(361,550) | (242,254) | ||||||
Accumulated other comprehensive loss |
(2,112) | (2,037) | ||||||
|
|
|
|
|||||
Total stockholders equity / (deficit) |
53,058 | (239,220) | ||||||
|
|
|
|
|||||
Total liabilities and stockholders equity / (deficit) |
$ | 354,511 | $ | 286,286 | ||||
|
|
|
|
6
Condensed Unaudited Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except share and per share amounts)
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Revenues |
$ | 106,896 | $ | 77,130 | $ | 208,359 | $ | 158,390 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating expenses: |
||||||||||||||||
Cost of revenues (excluding depreciation and amortization)(1) |
42,212 | 29,296 | 81,184 | 59,825 | ||||||||||||
General and administrative expenses(1) |
65,907 | 17,327 | 85,039 | 36,120 | ||||||||||||
Selling and marketing expenses(1) |
82,845 | 16,842 | 103,415 | 36,090 | ||||||||||||
Research and development expenses(1) |
26,503 | 8,161 | 36,287 | 16,884 | ||||||||||||
Depreciation and amortization |
11,235 | 10,497 | 21,352 | 20,038 | ||||||||||||
Acquisition related expenses |
329 | 1,156 | 1,036 | 3,091 | ||||||||||||
Restructuring expenses |
150 | 498 | 437 | 1,691 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
229,181 | 83,777 | 328,750 | 173,739 | ||||||||||||
|
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|
|
|
|
|||||||||
Loss from operations |
(122,285) | (6,647) | (120,391) | (15,349) | ||||||||||||
Interest expense |
1,402 | 4,382 | 4,363 | 8,725 | ||||||||||||
Other (incomes) / expenses, net |
(749) | (471) | 535 | (358) | ||||||||||||
Gain on extinguishment of debt |
(10,000) | | (10,000) | | ||||||||||||
Change in fair value of warrants and derivative liabilities |
(18,600) | 4,100 | 5,000 | 6,700 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total other (incomes) / expenses |
(27,947) | 8,011 | (102) | 15,067 | ||||||||||||
|
|
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|
|
|
|
|
|||||||||
Loss before income taxes |
(94,338) | (14,658) | (120,289) | (30,416) | ||||||||||||
Income tax provision / (benefit) |
584 | 396 | (993) | 1,018 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss |
$ | (94,922) | $ | (15,054) | $ | (119,296) | $ | (31,434) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Other comprehensive loss: |
||||||||||||||||
Foreign currency translation adjustment |
(129) | (47) | (75) | (788) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total comprehensive loss |
(95,051) | (15,101) | (119,371) | (32,222) | ||||||||||||
|
|
|
|
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|
|
|
|||||||||
Net loss per share |
||||||||||||||||
Net loss |
(94,922) | $ | (15,054) | $ | (119,296) | $ | (31,434) | |||||||||
Cumulative redeemable convertible preferred stock dividends |
3,166 | 3,716 | 7,060 | 7,376 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss available to common stockholders |
$ | (98,088) | $ | (18,770) | $ | (126,356) | $ | (38,810) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Basic loss per share |
$ | (1.92) | $ | (0.58) | $ | (3.01) | $ | (1.19) | ||||||||
Diluted loss per share |
$ | (1.92) | $ | (0.58) | $ | (3.01) | $ | (1.19) | ||||||||
Weighted average number of shares used to compute net loss per share |
||||||||||||||||
Basic |
51,202,335 | 32,362,610 | 41,973,595 | 32,607,382 | ||||||||||||
Diluted |
51,202,335 | 32,362,610 | 41,973,595 | 32,607,382 |
(1) | The Company recorded the total stock-based compensation expense as follows: |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Cost of revenues (excluding depreciation and amortization) |
266 | | 266 | | ||||||||||||
General and administrative expenses |
42,625 | 27 | 42,625 | 53 | ||||||||||||
Selling and marketing expenses |
59,512 | | 59,512 | | ||||||||||||
Research and development expenses |
16,867 | | 16,867 | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
119,270 | 27 | 119,270 | 53 | ||||||||||||
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|
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Condensed Unaudited Consolidated Statements of Cash Flows
(In thousands)
Six months ended June 30, | ||||||||
2021 | 2020 | |||||||
Cash flows from operating activities: |
||||||||
Net loss |
$ | (119,296) | $ | (31,434) | ||||
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
21,352 | 20,038 | ||||||
Stock-based compensation |
119,270 | 53 | ||||||
Deferred income taxes |
(1,641) | 290 | ||||||
Change in fair value of warrant and derivative liabilities |
5,000 | 6,700 | ||||||
Gain on extinguishment of debt |
(10,000) | | ||||||
Others, net |
1,067 | 1,843 | ||||||
Changes in non-cash working capital (net of acquisitions): |
||||||||
Account receivable |
8,165 | 32,478 | ||||||
Prepaid expenses |
1,241 | 641 | ||||||
Other current assets |
1,252 | 1,025 | ||||||
Other non-current assets |
(384) | 266 | ||||||
Deferred revenue |
(440) | 446 | ||||||
Accounts payable |
(14,083) | 8,324 | ||||||
Accrued expenses and other current liabilities |
1,502 | (31,503) | ||||||
Other non-current liabilities |
198 | 504 | ||||||
|
|
|
|
|||||
Net cash provided by operating activities |
13,203 | 9,671 | ||||||
|
|
|
|
|||||
Cash flows from investing activities: |
||||||||
Capital expenditures |
(4,381) | (1,024) | ||||||
Website and software development costs |
(9,529) | (11,738) | ||||||
Business and asset acquisitions, net of cash acquired |
(2,159) | | ||||||
|
|
|
|
|||||
Net cash used for investing activities |
(16,069) | (12,762) | ||||||
|
|
|
|
|||||
Cash flows from financing activities: |
||||||||
Proceeds from initial public offering, net of issuance costs |
127,363 | | ||||||
Cash paid for acquisition related liabilities |
(64) | (496) | ||||||
Proceeds from term loan, net of issuance cost |
183,311 | | ||||||
Proceeds from paycheck protection program loan |
| 10,000 | ||||||
Repurchase of restricted stock |
(64,130) | | ||||||
Exercise of warrants |
41 | | ||||||
Repayments against the credit facilities |
|
(180,745) |
|
(3,500) | ||||
|
|
|
|
|||||
Net cash provided by financing activities |
65,776 | 6,004 | ||||||
|
|
|
|
|||||
Effect of exchange rate changes on cash and cash equivalents |
(67) | (49) | ||||||
|
|
|
|
|||||
Net increase in cash and cash equivalents and restricted cash |
62,843 | 2,864 | ||||||
|
|
|
|
|||||
Cash and cash equivalents and restricted cash, beginning of period |
50,725 | 37,818 | ||||||
|
|
|
|
|||||
Cash and cash equivalents and restricted cash, end of period |
$ | 113,568 | $ | 40,682 | ||||
|
|
|
|
|||||
Supplemental cash flow disclosures including non-cash activities: |
||||||||
Cash paid for interest |
$ | 4,377 | 6,990 | |||||
Cash paid for income taxes, net |
$ | 941 | $ | 672 | ||||
Contingent consideration liability established in connection with acquisitions |
$ | 1,630 | $ | | ||||
Shares issued in connection with acquisitions and other agreements |
$ | 5,454 | $ | 423 | ||||
Dividends on redeemable convertible preferred stock settled in Companys equity |
$ | 60,082 | $ | | ||||
Non-cash settlement of warrants and derivative liabilities |
$ | 63,100 | $ | | ||||
Capitalized stock-based compensation expense as website and software development costs |
$ | 7,505 | $ | |
8
ZETA GLOBAL HOLDINGS CORP.
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Net loss |
$ | (94,922) | $ | (15,054) | $ | (119,296) | $ | (31,434) | ||||||||
Net income (loss) margin |
(88.9)% | (19.5)% | (57.3)% | (19.9)% | ||||||||||||
Add back: |
||||||||||||||||
Interest expense |
1,402 | 4,382 | 4,363 | 8,725 | ||||||||||||
Depreciation and amortization |
11,235 | 10,497 | 21,352 | 20,038 | ||||||||||||
Stock-based compensation |
119,270 | 27 | 119,270 | 53 | ||||||||||||
IPO related expenses |
2,705 | | 2,705 | | ||||||||||||
Gain on extinguishment of debt |
(10,000) | | (10,000) | | ||||||||||||
Income tax provision / (benefit) |
584 | 396 | (993) | 1,018 | ||||||||||||
Acquisition related expenses |
329 | 1,156 | 1,036 | 3,091 | ||||||||||||
Restructuring expenses |
150 | 498 | 437 | 1,691 | ||||||||||||
Change in fair value of warrants and derivative liabilities |
(18,600) | 4,100 | 5,000 | 6,700 | ||||||||||||
Other income / (expense) |
(749) | (471) | 535 | (358) | ||||||||||||
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Adjusted EBITDA |
$ | 11,404 | $ | 5,531 | $ | 24,409 | $ | 9,524 | ||||||||
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Adjusted EBITDA margin |
10.7% | 7.2% | 11.7% | 6.0% |
9
Supplemental 2Q21 Earnings Presentation AUGUST 10, 2021 Exhibit 99.2
Safe Harbor This presentation has been prepared by Zeta Global Holdings Corp. and its subsidiaries (together, the “Company”, “Zeta”, or “we”) and is made for informational purposes only. The information set forth herein does not purport to be complete or to contain all of the information you may desire. You must evaluate, and bear all risks associated with, the use of any information provided hereunder, including any reliance on the accuracy, completeness, safety or usefulness of such information. This information is not intended to be used as the primary basis of investment decisions. It should not be construed as advice designed to meet the particular investment needs of any investor. Statements contained herein are made as of the date of this presentation unless stated otherwise, and this presentation shall not under any circumstances create an implication that the information contained herein is correct as of any time after such date or that information will be updated or revised to reflect information that subsequently becomes available or changes occurring after the date hereof. You should read the prospectus in the Registration Statement (No. 333-255499) and the other documents that the Company has filed with the SEC for more complete information about the Company. You can obtain these documents for free by visiting EDGAR on the SEC website at www.sec.gov. This presentation shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction. This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Any statements made in this presentation that are not statements of historical fact, including statements about the Company’s beliefs and expectations, are forward-looking statements and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan and strategies. These statements often include words such as “anticipate,” “expect,” “suggests,” “plan,” “believe,” “intend,” “estimates,” “targets,” “projects,” “should,” “could,” “would,” “may,” “will,” “forecast” and other similar expressions. The Company bases these forward-looking statements on its current expectations, plans and assumptions that the Company has made in light of its experience in the industry, as well as its perceptions of historical trends, current conditions, expected future developments and other factors the Company believes are appropriate under the circumstances at such time. As you read and consider this presentation, you should understand that these statements are not guarantees of future performance or results. The forward-looking statements are subject to and involve risks, uncertainties and assumptions, and you should not place undue reliance on these forward-looking statements. Although the Company believes that these forward-looking statements are based on reasonable assumptions at the time they are made, you should be aware that many factors could affect the Company’s actual results or results of operations and could cause actual results to differ materially from those expressed in the forward- looking statements. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. All future written and oral forward-looking statements made in connection with this presentation attributable to the Company or persons acting on the Company’s behalf are expressly qualified in their entirety by this paragraph. This presentation contains non-GAAP financial measures such as adjusted EBITDA and adjusted EBITDA margin. These measures are not prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and have important limitations as analytical tools. Non-GAAP financial measures are supplemental, should only be used in conjunction with results presented in accordance with GAAP and should not be considered in isolation or as a substitute for such GAAP results. Refer to the Appendix of this presentation for a reconciliation of the non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP. Any third-party trademarks, including names, logos and brands, referenced by the Company in this presentation are property of their respective owners. All references to third-party trademarks are for identification purposes only and shall be considered nominative fair use under trademark law. The contents and appearance of this report is copyrighted and the trademarks and service marks are owned by Zeta Global Corp. All rights reserved.
Zeta’s Marketing Platform Empowers Enterprises to Deliver Better Experiences for Consumers and Higher ROI for Marketers. Patented Software & AI Proprietary Data Cloud WHAT WE DO: Omnichannel Marketing
Blue chip customer base across multiple industries With leading technology recognized by the experts VISIONARY in Magic Quadrant3 Digital Marketing Hubs LEADER Email Service1 Platforms RECOGNIZED Enterprise Marketing2 Software Providers Cross-Channel2 Management 1. Awarded in 2020 2. Awarded in 2019 3. Awarded in 2017 4 of the 6 largest auto insurance companies in the US 3 of the 5 largest paid TV companies in the US 8 out of the 10 largest automotive manufacturers in the world 7 of the 10 largest credit card issuers in the US 4 of the 10 largest hospitality companies in the world 3 of the 6 largest QSR companies in the US 2 of the 4 largest meal delivery gig economy companies in the US 4 of the 5 largest banks in the US The 3 largest drug store chains in the US Who Chooses Us Zeta is a Leader in Marketing Technology That Powers the Transition to Data-Driven Marketing for the World’s Leading Brands
How We Do It Zeta’s Marketing Platform (ZMP) Enables Enterprises to Identify, Reach and Engage Consumers Individually Across All Channels 360˚ VIEW OF CONSUMER Large Identity-based Data Omnichannel Engagement
Why We Are Different Zeta’s Proprietary Database is Combined With A Customer’s 1st Party Data to Sharpen Targeting & Personalize Experiences at Scale 225M+ Comment/Sentiment/ Survey Signals (Monthly) Profile Signals Per User 5.4B+ Transaction Signals (Annually) Interest and Intent Audiences Content Consumption Signals per Month Visits to Real-World Locations per Month Unique Global Digital Identifiers (1.5B Emails) People in US (Monthly) 515M+ Globally 3.4B 2,500 1T+ 850+ 150M+ 10B+ Note: Data as of 06/30/21 515M+ People Globally (Monthly)
More Data Better Outcomes Better Insights Better Experiences Resolve to Identity AI MARKETING PLATFORM Why We Win Zeta’s Marketing Platform, Powered By Proprietary AI + Data, Creates Omnichannel Experiences And A Flywheel For Our Customers
THE ZETA MARKETING PLATFORM ALSO SERVES MIDSIZE U.S. COMPANIES INTERNATIONAL EXPANSION ALSO A LARGE OPPORTUNITY Zeta Is Well-Positioned To Capitalize On A Large, Growing, And Attractive Market Opportunity Derived from U.S. Census Bureau data and which we define as firms with over 1,500 employees Industries from US Census Bureau include Retail Trade, Transportation and Warehousing, Information, Finance and Insurance, Real Estate and Rental and Leasing, Professional, Scientific and Technical Services, Educational Services, Health Care and Social Assistance, Arts, Entertainment, and Recreation, Accommodation and Food Services 3.Derived from Company data for the year ended December 31, 2020 Number of large U.S. enterprises1 in industry verticals where Zeta maintains most relevance2 Average Revenue Per User (within $1M+ cohort)3 $3.8M ARPU X = ~$36B US TAM TOTAL ADDRESSABLE MARKET 9,558 COMPANIES
Introduce New Products Increase win rate for ‘Land’ and increase revenue from ‘Expand’ & “Extend’ Expand Sales Capacity and Partnership Ecosystem Capitalize on market opening with more resources selling Zeta solutions Accelerate International Growth Grow in-market and increase penetration of markets for global customers Increase Penetration of Opportunity Explorer Leverage Freemium offering to expand platform implementation ARPU Expansion A 10x opportunity to expand ARPU for 100K+ scaled customers Multiple Drivers To Accelerate Growth GROWTH DRIVERS FLYWHEEL EFFECT SCALE & REACH SALES ACCELERATOR INNOVATION ENGINE PROVEN PLAYBOOK GROWTH CATALYSTS
2Q’21 Performance
David Steinberg Chief Executive Officer Co-Founder, Chairman Chris Greiner Chief Financial Officer 2Q21 FINANCIAL RESULTS 2Q21 BROAD BASED STRENGTH FULL YEAR 2021 GUIDANCE We continued our strong momentum, increasing revenue growth rates from 25% in the first quarter to 39% in the second quarter. Revenue growth translated to powerful operating leverage, with Adj. EBITDA growing 106% YTY and 350 bps YTY in Adj. EBITDA margin1. We saw strong double-digit growth across a diverse spectrum of the business. In total, we added >30 new logos in 2Q21 with scaled customers (>$100K TTM Rev) increasing from 333 in 1Q21 to 343 in 2Q21. Scaled customer ARPU was up 44% YTY. Revenue generated Direct on the ZMP increased from 74% to 77% in 2Q21, highlighted by strong Omnichannel growth with CTV up ~500%. Total 2Q21 revenue growth of 39% was contributed evenly by new (20.3pts) and existing (18.3pts) customers, with record Zeta NRR. With the first half off to such a strong start and strong revenue predictability, we improved our outlook in revenue and Adj. EBITDA. We are guiding revenue of $432M to $436M, up 22% to 24% YTY excluding last year’s one-time Presidential Cycle revenue. We are guiding Adj. EBITDA to $55.5M to $57.5M, up 43% YTY at the midpoint. 2Q21 Financial Results Overview 1. Adjusted EBITDA, Adjusted EBITDA Margin are non-GAAP metrics, see reconciliation in Appendix.
POISED TO ACCELERATE Double Digit YTY revenue growth in 12 out of 15 industry verticals DIVERSE INDUSTRY GROWTH Adj. EBITDA Margin1 and expansion YTY Net Revenue Retention Rate3 122% $299K, +44% 2Q‘21 Scaled Customer2 ARPU and YTY Growth Over $100K 1. Adjusted EBITDA, Adjusted EBITDA Margin are non-GAAP metrics, see reconciliation in Appendix. 2. We define scaled customers as customers from which we generate more than $100,000 of revenue on a trailing twelve-month (TTM) basis. 3. NRR as of Year End 2020. We calculate our NRR rate by dividing current year revenue earned from customers from which we also earned revenue in the prior year, by the prior year revenue from those same customers. 4. FY21 Revenue growth as projected is 18% based on midpoint guidance SALES FACTORIES YTY pipeline growth Strong sales velocity Increasing seller tenure 11%, +350 BPS SCALABLE BUSINESS MODEL… 2Q’21 Adj. EBITDA1 growth of 106% YTY $107M in 2Q’21 Revenue vs. $77M in 2Q’20 Scaled Customers2 who generate >$100K Revenue on a TTM basis in 2Q’21 Visibility from recurring and re-occurring revenue 39% $11M HIGHLY PREDICTABLE 343 Double Digit YTY Growth in Messaging, CTV, Display/Video and Other Digital Channels OMNICHANNEL GROWTH WITH SIGNIFICANT MOMENTUM… 2Q’21 % of Revenue generated directly on the ZMP, up from 74% in 1Q’21 and 68% FY’20 +43% YTY; FY’21 Adj. EBITDA1 guidance at the midpoint, 13% Adj. EBITDA Margin1 up 225 BPS YTY FY’21 Revenue growth guidance excl. FY20 Presidential Cycle Revenue4 23% 77% % of Scaled Customers using only 1 of 3 use cases in 2Q’21 Number of channels used per Scaled Customer in 2Q TTM (2019: 1.2, 2020: 1.4) Of the 39% YTY Growth in 2Q’21 20.3 Pts New Customer Growth 18.3 Pts Existing Customer Growth $56.5M = BALANCED GROWTH 95%, 1.5 A Combination Of Unique Data Assets And A Scalable Business Model Has Resulted In Significant Business Momentum +
Scaled Customers With Greater Than $1M In Annual Revenue Have An ARPU Of $3.8M And Reflect The Opportunity To Rapidly Grow Revenue ($ in ’000s, unless otherwise noted) Cohort assigned based on annual revenue achieved in 2020. Revenue per Customer (Existing Clients + 2020 Cohorts) 68 Customers 268 Customers 2020 2020 >10x OPPORTUNITY TO EXPAND ARPU $100K to $1M Greater than $1M INCREASED UTILIZATION MORE USE CASES CHANNEL EXPANSION
The Longer Our Customers Stay With Us, The Bigger They Become 41 Customers 93 Customers 59 Customers 143 Customers Note: Cohort as of 12/31/20 We can increase ARPU in several ways: Our platform can personalize more experiences Our customers can expand use cases Our customers can add more channels Scaled Customer Count and ARPU
Increased Direct Platform Revenue Mix Leads to Improved Operating Leverage Revenue generated from 3rd party partner platforms integrated into the ZMP via indirect channels (e.g. Facebook, Google). Revenue Model1 Revenue generated by the ZMP comprised of subscription software and utilization fees generated by channels owned and operated by Zeta, resulting in stronger operating leverage. 1. Revenue as of 6/30/21. FY’20 Mix was 68% Direct Platform, 32% Integrated Platform. Professional fees are not material. ~2% of total Revenue. DIRECT PLATFORM INTEGRATED PLATFORM FY’20 1Q’21 2Q’21 Continued Increase in Direct Platform Revenue Mix
DNB contracts with Zeta for multi-year licensing of the ZMP. This launch is the industry’s first combined consumer and business data cloud for “Business to Person” marketing, opening up B2B and SMB opportunities. ANNOUNCED STRATEGIC ALLIANCE WITH DUN & BRADSTREET Expanded from 500M to 515M+ individuals globally and from 220M to 225M+ individuals in the U.S. GREW SCALE OF ZETA’S IDENTITY GRAPH Increased sophistication of CTV offering with CTV Genre and Content Targeting; created a faster, more automated path to campaign activation through “low code onboarding”. CONTINUED STRONG PRODUCT INNOVATION Report revealed 50% higher customer acquisition effectiveness and accelerated revenue among interviewed ZMP customers that activate the company’s proprietary data. RELEASED TOTAL ECONOMIC IMPACT STUDY WITH FORRESTER Key customer wins include displacing a major competitor at a top retailer and standing up a world-class CDP in a matter of days for a leading travel and hospitality company. DELIVERED NOTABLE CUSTOMER WINS AND INCREASED SCALED CUSTOMER COUNT BY 3% QTQ Added Crystal Eastman, previously with The Trade Desk and American Express, to scale up and drive more growth efforts. HIRED COMPANY’S FIRST EVER CHIEF MARKETING OFFICER 2Q’21 Business Highlights
2021 Guidance
3Q’21 Revenue Guidance FY’21 Revenue Guidance 3Q’20 Revenue 3Q’20 Presidential Cycle Revenue 3Q’20 Normalized Revenue 3Q’21 Revenue Guidance FY’20 Revenue FY’20 Presidential Cycle Revenue FY’20 Normalized Revenue FY’21 Revenue Guidance 17% to 20% Growth 22% to 24% Growth Accelerating Toward Long-Term Target of 25%+ YTY Growth $108M-$111M $432M-$436M Work performed by Zeta specific to the 2020 US Presidential election that does not repeat in 2021 3Q20: $3M 4Q20: $12M
2021 Guidance Reflects Increased Revenue Visibility and Momentum On Growth Driver Execution Adj. EBITDA Margin3 BPS Change Long-Term Targets1 At least 20% Adj. EBITDA Margins These are not projections; they are goals/targets and are forward-looking, subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management and are based upon assumptions with respect to future decisions, which are subject to change. Actual results will vary, and those variations may be material.. Nothing in this presentation should be regarded as a representation by any person that these goals/targets will be achieved, and the Company undertakes no duty to update its goals. Revenue Growth compared to equivalent prior period. We calculate forward-looking non-GAAP Adjusted EBITDA and Adjusted EBITDA margin based on internal forecasts that omit certain amounts that would be included in forward-looking GAAP net income (loss). We do not attempt to provide a reconciliation of forward-looking non-GAAP Adjusted EBITDA and Adjusted EBITDA margin guidance to forward looking GAAP net income (loss) because forecasting the timing or amount of items that have not yet occurred and are out of our control is inherently uncertain and unavailable without unreasonable efforts. Further, we believe that such reconciliations would imply a degree of precision and certainty that could be confusing to investors. Such items could have a substantial impact on GAAP measures of financial performance. Revenue % Growth YTY2 Greater than 25% YTY Revenue Growth 11.7% - 12.5% (118 BPS) – (39 BPS) $108M - $111M 13% - 16% 3Q’21 Guidance $432M - $436M 17% - 19% FY’21 Guidance Excl. Presidential Cycle % Growth YTY 17% - 20% 22% - 24% Adj. EBITDA3 % Growth YTY $13M - $13.5M 6% - 10% $55.5M - $57.5M 40% - 45% 12.7% - 13.3% 197 BPS – 255 BPS
Large and growing addressable market of $36Bn 1 Omnichannel activation technology enables leading marketers across all industries to deliver high-quality consumer experiences across all digital channels 2 360-degree customer insight powered by industry’s largest opted in consumer database predicts intent 3 1H FY21 performance and increased FY21 guidance demonstrate sustained momentum toward long-term financial targets 4 Multiple drivers of long-term organic growth 5 6 Comprehensive fully-integrated, purpose-built, AI-driven platform supplants multiple point solutions Investment Highlights
Appendix
Bridge To Adjusted EBITDA And Adjusted EBITDA Margin 2Q’2021 2Q’2020 Net loss ($94,922) ($15,054) Interest expense 1,402 4,382 Depreciation and amortization 11,235 10,497 Stock based compensation 119,270 27 IPO related expense 2,705 - Gain on extinguishment of debt (10,000) - Income tax provision / (benefit) 584 396 Acquisition related expenses 329 1,156 Restructuring expenses 150 498 Change in fair value of derivatives (18,600) 4,100 Other (income) / expense (749) (471) Adjusted EBITDA $11,404 $5,531 Adjusted EBITDA Margin % 11% 7%
Bridge To Adjusted EBITDA And Adjusted EBITDA Margin H1’2021 H1’2020 Net loss ($119,296) ($31,434) Interest expense 4,363 8,725 Depreciation and amortization 21,352 20,038 Stock based compensation 119,270 53 IPO related expense 2,705 - Gain on extinguishment of debt (10,000) - Income tax provision / (benefit) (993) 1,018 Acquisition related expenses 1,036 3,091 Restructuring expenses 437 1,691 Change in fair value of derivatives 5,000 6,700 Other (income) / expense 535 (358) Adjusted EBITDA $24,409 $9,524 Adjusted EBITDA Margin % 12% 6%
2Q 2021 and 2020 P&L Bridge For the three months ended June 30, 2021 For the three months ended June 30, 2020 As Reported Stock Based Comp. One-time IPO Expenses One-time Other Items Depr. & Amort. As Adjusted As Reported Stock Based Comp. One-time IPO Expenses One-time Other Items Depr. & Amort. As Adjusted Revenues $106,896 $- $- $- $- $106,896 $77,130 $- $- $- $- $77,130 Operating expenses: Cost of revenues (excluding depreciation and amortization) 42,212 (266) - - - 41,946 29,296 - - - - 29,296 General and administrative expenses 65,907 (42,625) (1,461) - - 21,820 17,327 (27) - - - 17,300 Selling and marketing expenses 82,845 (59,512) (845) - - 22,488 16,842 - - - - 16,842 Research and development expenses 26,503 (16,867) (399) - - 9,237 8,161 - - - - 8,161 Depreciation and amortization 11,235 - - - (11,235) - 10,497 - - - (10,497) - Acquisition related expenses 329 - - (329) - - 1,156 - - (1,156) - - Restructuring expenses 150 - - (150) - - 498 - - (498) - - Total operating expenses $229,181 ($119,270) ($2,705) ($479) ($11,235) $95,492 $83,777 ($27) $- ($1,654) ($10,497) $71,599 Operating loss ($122,285) $119,270 $2,705 $479 $11,235 $11,404 ($6,647) $27 $- $1,654 $10,497 $5,531 Interest expense 1,402 - - - - 1,402 4,382 - - - - 4,382 Other (incomes) / expenses (749) - - - - (749) (471) - - - - (471) Gain on extinguishment of debt (10,000) - - - - (10,000) - - - - - - Change in fair value of warrants and derivative liabilities (18,600) - - - - (18,600) 4,100 - - - - 4,100 Stock based compensation - 119,270 - - - 119,270 - 27 - - - 27 One-Time IPO Expenses - - 2,705 479 - 3,184 - - - 1,654 - 1,654 Depreciation and amortization - - - - 11,235 11,235 - - - - 10,497 10,497 Total other expenses ($27,947) $119,270 $2,705 $479 $11,235 ($27,947) $8,011 $27 $- $1,654 $10,497 $8,011 Loss before income taxes (94,338) - - - - (94,338) (14,658) - - - - (14,658) Income tax provision 584 - - - - 584 396 - - - - 396 Net loss ($94,922) $- $- $- $- ($94,922) ($15,054) $- $- $- $- ($15,054)
2Q 2021 and 2020 Cash Flow 2Q’2021 2Q’2020 Incr./(Decr.) Cash flows from operating activities: Net loss ($94,922) ($15,054) ($79,868) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 11,235 10,497 738 Stock-based compensation 119,270 27 119,243 Gain on debt extinguishment (10,000) - (10,000) Change in fair value of warrant and derivative liabilities (18,600) 4,100 (22,700) Deferred income taxes & others, net (443) 1,309 (1,752) Change in non-cash working capital (net of effect of acquisitions): - Accounts receivable (2,915) (78) (2,837) Prepaid expenses & other current/non-current assets 3,563 479 3,084 Accounts payable (4,287) 3,299 (7,586) Accrued expenses and other current liabilities 5,161 727 4,434 Deferred revenue & other non-current liabilities (471) 993 (1,464) Net cash provided by operating activities $7,591 $6,299 $1,292 Cash flows from investing activities: Purchases of property and equipment (4,177) (104) (4,073) Website and software development costs (5,088) (5,524) 436 Net cash used for investing activities ($9,265) ($5,628) ($3,637) Cash flows from financing activities: Cash paid for acquisition related liabilities - (368) 368 Proceeds from Paycheck Protection Program Loan - 10,000 (10,000) Proceeds from IPO, net of issuance cost 127,363 - 127,363 Repurchase of RSAs and RSUs (64,130) - (64,130) Exercise of warrants 41 - 41 Net cash (used for) / provided by financing activities $63,274 $9,632 $53,642 Effect of exchange rate changes on cash and cash equivalents (135) (29) (106) Net increase / (decrease) in cash and cash equivalents, including restricted cash 61,465 10,274 51,191 Cash and cash equivalents and restricted cash, beginning of period 52,103 30,408 21,695 Cash and cash equivalents and restricted cash, end of period $113,568 $40,682 $72,886