Zeta Global Holdings Q3 2026 Earnings Call Transcript

Zeta Global Holdings (NYSE:ZETA) reported third-quarter financial results on Monday. The transcript from the company’s third-quarter earnings call has been provided below.

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Access the full call at https://event.webcasts.com/starthere.jsp?ei=1779523&tp_key=5977256e41

Summary

Zeta Global Holdings reported Q3 2026 revenue of $493 million, a 46% year-over-year increase, with adjusted EBITDA rising 55% to $121 million.

The company raised its 2026 revenue guidance by $37 million to $1.855 billion, reflecting a 42% increase from the previous year.

Zeta is heavily investing in AI and its Athena OS, aiming to transform enterprise intelligence and integrate more deeply with customer operations.

Strategic partnerships, particularly with Palantir and OpenAI, are expected to significantly enhance future growth opportunities.

The company has seen strong adoption of its Athena platform, contributing to increased revenue and customer retention.

Operational efficiencies have been achieved through automation, improving code delivery and enhancing cash flow metrics.

The company is actively expanding its international presence and leveraging agency relationships to drive global growth.

Full Transcript

OPERATOR

Hello everyone and thank you for joining us for Zeta Global Holdings’ third quarter 2026 earnings conference call. Today’s presentation and earnings release are available on Zeta Global Holdings’ investor relations website at investors.zetaglobal.com, where you will also find links to our SEC filings along with other information about Zeta Global Holdings. Joining me on the call today are David Steinberg, Zeta Global Holdings’ co-founder, Chairman and Chief Executive Officer, and Chris Greiner, Zeta Global Holdings’ Chief Financial Officer.

Before we begin, I’d like to remind everyone that statements made on this call, as well as in the presentation and earnings release, contain forward-looking statements regarding our financial outlook, business plans and objectives, and other future events and developments, including statements about the market potential of our products, potential competition, revenues of our products, and our goals and strategies. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected.

These risks and uncertainties include those described in the company’s earnings release and other filings with the SEC and speak only as of today’s date. In addition, our discussion today will include references to certain supplemental non-GAAP financial measures, which should be considered in addition to and not as a substitute for our GAAP results. We use these non-GAAP measures in managing our business and believe they provide useful information for our investors.

Reconciliations of the non-GAAP measures to the corresponding GAAP measures, where appropriate, can be found in the earnings presentation available on our website, as well as our earnings release and our other filings with the SEC. With that, I will now turn the call over to David.

David Steinberg (Co-founder, Chairman and Chief Executive Officer)

Thank you, Matt. Good afternoon everyone, and thank you for joining us today. For the third quarter of 2026, we delivered our 21st consecutive beat-and-raise quarter, hitting the rule of 71. Total revenue was $493 million, representing year-over-year growth of 46% and 30% excluding Marigold and Political Candidate. Adjusted EBITDA was $121 million, up 55% year over year, with our margin expanding by 140 basis points to 24.6%, and free cash flow was $82 million, up 73% year over year as we continue to translate growth into cash generation.

Third-quarter diluted GAAP EPS was $0.14, up from a loss of $0.02 in the year-ago period. Non-GAAP EPS was $0.38, up 58% year over year, and year to date, diluted GAAP EPS is now positive at $0.13. Based upon this strength, we are once again raising the midpoint of our 2026 revenue guidance by $37 million to $1,855,000,000, which is up 42% from the year before. Our core business is generating the growth and cash flow necessary to fund expansive enterprise-wide opportunities. We are increasingly becoming the foundation our customers can build on—one that turns what their business knows into what their business can achieve. That is intelligent AI infrastructure. At Zeta Live, we showed you the next chapter of Zeta. Today I want to talk about how those innovations position us to continue to take share in marketing software and address a much larger enterprise intelligence opportunity.

Let me start with what’s driving our growth today: return on investment for our customers. AI is only as powerful as the data that fuels it, and we have built one of the world’s largest proprietary data assets. This is what gives us our competitive advantage and positions us to lead in the AI era. Some of the world’s largest enterprises trust Zeta Global Holdings with their data and rely on us to turn it into intelligence they can act on. When we help customers make better decisions with those assets, we drive a higher return on their marketing and technology spend.

That is what earns us more of their business and has been driving our share gains. More use cases and more activity on the platform create opportunities for more revenue. Consider a leading automotive services company with more than 4,000 locations. By combining its customer relationships with Zeta’s proprietary intelligence, we are helping it to identify and win high-value customers more efficiently. The result is a 20% lower cost per incremental acquisition and a 450% uplift in conversions across multiple channels.

Those results have helped expand our relationship into additional channels and use cases. Zeta’s financial foundation matters. Our existing business is generating the growth and cash flow to support our next chapter while we continue to expand margin and invest in our platform. To be totally clear, the numbers we have delivered today already include considerable R&D investments that are necessary for the future business and Athena OS. At the same time, code automation is helping our engineers to innovate faster. It has reduced the time from idea to shipment by 27% and made time to first review 300% faster.

As a result, our engineers are shipping roughly twice as much code each week, and customers are getting improvements substantially sooner. As we deliver more value for customers, the role we play in their businesses continues to expand. The shift to AI is reshaping how enterprises engage with customers, raising important questions. Who owns the customer relationship? Who controls proprietary data? And how can businesses generate measurable returns? This shift creates an opportunity for Zeta to help enterprises control their customer relationships and first-party intelligence, maintain their data sovereignty, and engage customers across channels to drive measurable outcomes—to continue to own their alpha.

With Athena OS, we are turning that opportunity into tangible commercial results and cash flow, with clear proof points demonstrating the value we deliver. For decades, enterprise software has been organized around applications and functions. Athena OS changes that equation. We start with what the business is trying to achieve and organize intelligence, applications, and actions around that objective. Marketing is where we started. With Zeta Business Intelligence, or the ZBI, we expand to additional business use cases, and we’re already seeing how customers are building towards this future. A leading rural lifestyle retailer and Fortune 500 company began by consolidating its marketing technology onto Zeta, delivering significant improvements in efficiency and cost.

The consolidation replaced three separate vendors, generating $1.5 million in annual technology savings and delivering a 75% faster campaign execution. Those results helped expand our relationship into customer acquisition, with the goal of attracting new high-value customers. The next planned phase brings Athena OS into the relationship, connecting customer intelligence, personalization, and automation across online and in-store experiences. What began as a marketing technology decision is now becoming a broader enterprise intelligence opportunity.

Athena OS is already in alpha, and we expect select customers to begin using Athena OS beta this year, with general availability expected in the first quarter of 2027. The response from customers has been exceptional, with significant interest in joining the beta. Athena MCP will extend our intelligence into the applications and workflows where our customers already work, including environments such as ChatGPT, Claude, and Gemini. It will give customers more ways to use Zeta intelligence.

The opportunity is to make our intelligence part of more workflows, increasing the value we can deliver within an existing relationship. At Zeta Live, we also introduced the Athena Inference Model, or AIM, a collection of specialized models being developed with Fireworks and using Nvidia Nemotron alongside our existing predictive models. Athena’s AIM achieved a 95% accuracy, exceeding frontier models at a 40% lower cost per request and six times faster response time.

As presented at the Fireworks conference just this past week, AIM is designed to apply enterprise context and specialized skills to deliver more relevant intelligence and faster decisions. Our recent acquisitions of Senso and Digital Audience strengthen that foundation. Senso adds deeper connectivity to frontier models, helping enterprises connect trusted information to the AI platforms shaping customer discovery, including the new wave of personal agents. Digital Audience extends our identity and activation capabilities, helping customers put that intelligence to work across channels and measure its impact. Both are also highly accretive to our data cloud signals.

Together, these capabilities create a continuous loop: learn, do, decide, act, and back to learn. We are extending Zeta’s intelligence into more decisions, more workflows, and more functions across the enterprise. And as our role expands, so does the economic opportunity within each customer relationship. Salesforce’s announced acquisition of Braze reinforces our opportunity to accelerate the replacement cycle already underway and continue to gain share. At a time when enterprises are transforming business around AI, the last thing they need is uncertainty about product roadmaps, integration, and execution. Neither Salesforce nor Braze has AI native to its architecture. We believe Zeta’s proprietary data and native AI give us a differentiated foundation and a strong right to win.

Our partnership with Palantir is a foundational pillar of Zeta’s next chapter, accelerating our expansion from marketing into enterprise intelligence. Palantir has transformed how enterprises operate. Together, we are connecting what enterprises know inside their four walls with what Zeta intelligence knows about demand outside those four walls. The result is a powerful new opportunity, extending enterprise intelligence beyond operational efficiency to drive revenue growth.

Data sovereignty is central to our joint approach. Enterprises should be able to apply AI on their own terms and retain control over their data, expertise, and decisions. Together, Zeta and Palantir help customers turn the knowledge unique to their businesses into better decisions and actions while preserving the intelligence that gives them a competitive advantage—keeping their alpha. Last quarter we reported our data cloud was fully integrated with Foundry and that we had received initial joint customer agreements. One of those customers is amongst the fastest-scaling customers we’ve had in our corporate history. We expect and continue to believe the partnership can add greater than $100 million in incremental annual revenue in the years to come.

Our strategic partnership with OpenAI continues to expand across product innovation, enterprise AI, and commercial opportunities. With Athena OS and our acquisition of Senso, we are strengthening how enterprises connect their intelligence to frontier AI models and how brands engage customers as discovery increasingly moves into AI-powered environments. We are also working with OpenAI on new opportunities to accelerate innovation and growth, including its emerging advertising business, where we are already actively serving ads on the platform.

Zeta Live gave us an opportunity to bring customers, prospects, and partners into the same room and show them the future we are building. We had more than 3,000 people attend, including decision makers representing over $200 billion in marketing and technology spend, and demand for our product roadmap session exceeded capacity. Conversations at Zeta Live centered on how Zeta’s platform seamlessly integrates into business workflows to drive better outcomes, not only in marketing but across the enterprise.

This year we delivered nearly 100 demonstrations and have already generated greater than $100 million in newly created pipeline in just the last several weeks. Our job now is to convert those conversations into customer outcomes and broader relationships over time. To be clear, we’ve already signed 23 new deals coming out of Zeta Live. Before I close, I want to recognize Team Zeta. I’m especially proud that Zeta has once again been named one of Fortune’s Best Workplaces in Technology and rising 10 spots in 2026. Marketing was our starting point, not the limit of our ambition. We have built one of the world’s largest proprietary data assets, established deep and meaningful relationships with the world’s largest enterprises, and demonstrated our ability to turn intelligence into measurable growth.

Now, with Athena OS and our strategic partnerships, we are extending that advantage across the entire enterprise. We have the financial strength, the technology, and most importantly, the people to lead this next chapter. And I believe the opportunity ahead of Zeta is greater than at any point in our corporate history. As always, thank you to our customers, partners, and shareholders for your continued support, and to Team Zeta, thank you for your hard work, commitment, and belief in what we are building together. Now let me turn it over to Chris to discuss our results in greater detail. Chris,

Christopher Greiner (Chief Financial Officer)

Thank you, David. Investors are increasingly distinguishing fast growth from durable, defensible growth, the kind that translates into stronger earnings and cash flow. Our third quarter results demonstrate why Zeta Global Holdings stands out across each of these dimensions. First, Zeta Global Holdings’ growth is durable and defensible. Q3 revenue growth excluding Marigold and political candidate revenue hit 30%, accelerating from 28% last quarter, driven by Athena adoption, which translated into more super scaled customer additions and faster consumption-based ARPU growth.

That’s our 22nd straight quarter of greater than 20% growth on that same basis, which means these are sustained share gains, not a one-off. RFPs were up more than 100% year over year, clear proof the legacy martech replacement cycle is accelerating and Zeta Global Holdings is capturing share. And second, the quality of our earnings keeps improving. Adjusted EBITDA grew faster than revenue and free cash flow grew even faster than adjusted EBITDA. We achieved record adjusted EBITDA margins and free cash flow margin while delivering record GAAP earnings per share in Q3 of $0.14.

Now let’s get into the details behind these themes: our pipeline, sales productivity, AI scorecard, and what’s driving our raised fourth quarter and full year outlook. Starting with the top line, Q3 revenue came in at $493 million with total growth accelerating to 46%, consistent with the 30% growth excluding Marigold and political candidate revenue that I mentioned a moment ago. That’s $22 million above the midpoint of guidance, exceeding it by 5%, driven by higher Athena adoption and usage versus Q2. Super scaled customers grew to 212, up 18% year over year, ahead of 17% growth last quarter and well above our long-term model of 4% to 8%.

Our gains were strongest in automotive, advertising and marketing, and telecom. On a trailing twelve-month basis, growth stayed balanced across the business. Seven of our top ten industries grew more than 20% year over year on a TTM basis, and in those consumer discretionary verticals—areas like consumer and retail, travel and hospitality, and automotive—growth collectively was over 40% on a trailing 12-month basis. And these are businesses operating on the leanest margins, needing to be the most data-driven, and they’re choosing Zeta Global Holdings.

Super scaled quarterly ARPU expanded to $2 million, up 22% year over year, accelerating 5 points from 17% growth last quarter, which is a logical segue to our AI scorecard, which shows how rising Athena usage is driving ARPU acceleration as customers move from AI experimentation to AI deployment on the platform. Here’s how our Athena metrics progressed in Q3—first on revenue, then on platform engagement and consumption. On revenue, over 50% of super scaled customers were monthly active Athena users, up from just over 40% last quarter. Across our total customer base, Athena adopters accounted for over 70% of revenue. The top 25 Athena users grew revenue more than 70% in Q3 versus the company’s overall growth of 46%. And lastly, for Athena adopters year to date, net revenue retention runs over 500 basis points higher than overall Zeta Global Holdings, which is itself already above the top end of our 110% to 115% long-term model.

On platform engagement, we measure Athena usage by activity—specifically planning, analysis, and campaign development. We view campaign development as a top-of-funnel indicator since campaigns drive activation across Zeta Global Holdings and partner channels. Client campaign development more than doubled quarter over quarter and hours spent on the platform were up over 50% sequentially. This outcome is intentional since Athena was designed for customers to benefit from using more of the platform, and we’ve now extended its enterprise intelligence capabilities with the release of the Athena operating system.

As Athena adoption has grown, that usage has directly contributed to the year-over-year and sequential acceleration in super scaled ARPU. Meanwhile, the One Zeta sales motion is resulting in customers extending into new use cases and new channels. Super scaled customers using all three marketing use cases grew over 60% year over year, with double-digit growth across each of the three marketing use cases—acquire, grow, and retain. Super scaled customers using five or more channels grew over 60%, and cross-sell and upsell deals won in the quarter grew 38% year over year.

Let me bring a couple of examples to life. We’ve taken one of North America’s largest telecom providers from scaled to super scaled, ramping to more than $10 million with Zeta Global Holdings in the span of 12 months. The customer deepened usage across the platform and expanded from one channel to four channels, while also adding an additional use case. In another instance, a leading beauty retailer with over 1,500 locations also expanded their relationship with Zeta Global Holdings, driving more than 85% growth in revenue by going from two channels to three channels over the last year.

And importantly, expansions like these and others are coming with greater operating leverage. Cost of revenue, excluding depreciation and amortization, came in at 39.7%, down 120 basis points quarter over quarter, though up 20 basis points year over year, reflecting continued strength in social channel adoption by agencies. That discipline carries through to expenses. R&D, G&A, and sales and marketing, excluding stock-based compensation, came in at 6.1%, 12.3%, and 17.3% of revenue respectively, improving 5, 20, and 140 basis points year over year. Automatically generated code as a percentage of our total code output continues to hover around 90%, reflecting the efficiency that automation is driving within our engineering team, enabling us to innovate faster. Sales and marketing remained the biggest source of leverage, driven by continued gains in sales productivity—more on that later alongside our pipeline update.

That leverage in opex allowed us to generate $121 million of adjusted EBITDA, up 55% year over year at a 24.6% margin, up 140 basis points versus last year. That’s $5.5 million above the midpoint of guidance with margin 10 basis points higher as well. Cash grew even faster. Operating cash flow was $91 million, up 58% year over year, and free cash flow was $82 million, up 73%. Free cash flow margin reached 16.5%, up 260 basis points year to year, with conversion at 67.3%, a 700 basis point improvement year over year.

GAAP net income—an area we committed to reaching positive earlier this year—came in at $38 million, or $0.14 diluted EPS, compared to a $0.02 loss a year ago. Non-GAAP diluted EPS was $0.38 versus $0.24 last year. Our GAAP EPS guidance started the year at $0.03. We’re now at $0.13 year to date and projecting $0.23 for the full year 2026, up over 600% from our initial guidance, and we continue to deploy capital through buybacks. In the quarter, we deployed $29.9 million to repurchase 1.3 million shares.

Year to date through November 9th, repurchases totaled $101.4 million, with $62.6 million remaining on this authorization, and we would contemplate doing another one after this. Net dilution in the quarter was 1.1%, and we remain on track to hit our normal course net dilution target of 3% to 4% in 2026. Turning to stock-based compensation, at our September 2023 Investor Day, we responded to investor feedback by issuing long-term dilution targets and revising equity incentives to drive a sustained improving SBC-to-revenue ratio on a path to positive GAAP earnings. And we’re delivering that. Since 2023, we reduced SBC as a percentage of revenue from 33% to 19% to 14% to 12% year to date through September 2026, and we expect that trend to continue.

That discipline shows up on the bottom line. GAAP net income improved by $185 million in the first nine months of 2026 versus 2023. Turning to the pipeline, demand was especially evident in our RFP activity. We hit a new quarterly record for RFPs, up over 100% year over year, and that does not reflect new opportunities emerging from Zeta Live, Palantir, or other demand we expect from Salesforce’s acquisition of Braze. Seller productivity was also a standout this quarter. Pipeline creation per seller was up 32% year over year, and average pipeline per seller was up 19% year over year, all while total quota carrier headcount grew just 11% year over year to 203.

That gap—the pipeline growing nearly three times faster than headcount—is a clear signal of rising sales productivity. With that, let me turn to our increased fourth quarter and full year guidance. We’re raising guidance for revenue, adjusted EBITDA, free cash flow, and GAAP EPS for the remainder of the year. Details can be found starting on slide 15 of our earnings supplemental. For the full year, we expect revenue of $1,855,000,000 at the midpoint, up $37,000,000 from our prior guidance, representing growth of 42%, or 27% excluding Marigold and political candidate revenue.

As a reminder, our initial full year 2026 guidance for revenue growth excluding Marigold and political candidate revenue was 21% versus the projection of 27%, representing a collective increase to revenue guidance excluding Marigold and political candidate over the course of 2026 of $85 million. For the fourth quarter, we expect revenue of $523 million at the midpoint, up $15 million from our prior guidance, representing growth of 33%, or 23% excluding Marigold and political candidate revenue. The 23% growth excluding Marigold and political candidate revenue is consistent with where we guided third quarter growth. As it relates to political candidate revenue, despite the political cycle starting later due to the timing of the Republican Convention, we still exceeded our third quarter political guidance and are raising our fourth quarter guidance.

In 4Q, we expect political candidate revenue to be $13 million, an increase of $5 million compared to the previous guidance. I want to reiterate, our raised revenue outlook assumes minimal contributions from partnerships. More specifically, it includes just-signed pilots and includes a 2% to 5% cushion, consistent with our typical conservatism. For adjusted EBITDA, we’re increasing the midpoint of our full year 2026 guidance to $414.6 million, up $9.4 million from prior guidance, representing growth of 49% and a margin of 22.4%. 2026 guidance represents the seventh year in a row where adjusted EBITDA margins will have expanded. For the fourth quarter, adjusted EBITDA is expected to be $136 million at the midpoint and up $4 million from prior guidance at a margin of 25.9%.

For the full year, we expect free cash flow of $271 million at the midpoint, up $16 million from prior guidance, with a margin of 14.6% and conversion of 65%. At 65% conversion, we are already at Zeta Global Holdings’ 2028 cash conversion target levels, and we’re raising full year 2026 GAAP EPS guidance to $0.23 at the midpoint, up from prior guidance of $0.10 and initial 2026 guidance of $0.03. Like last quarter, this guidance increase excludes the impact of a potential one-time tax benefit from the release of a valuation allowance that is a reasonable possibility of occurring within the next 12 months, which could represent additional material one-time upside.

To close, this quarter is proof of what we said at the outset: Zeta Global Holdings’ growth is durable, and our earnings quality keeps improving—and both are accelerating together, not trading off each other—and it’s resulting in winning market share from our competitors and earning more wallet share with customers. With Athena OS and our partnerships expanding the addressable market, the opportunity in front of us is bigger than the results we just delivered.

With that, I’ll hand the call back to the operator so David and I can take your questions.

OPERATOR

Thank you. And if you dialed in and would like to ask a question, please signal by pressing star one on your telephone keypad. If you’re using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, if you would like to ask a question, you can press star one on your telephone keypad. We’ll now go to your first question coming from the line of DJ Hines with Canaccord Genuity.

DJ Hines (Analyst)

Hey, thank you, guys. Congrats on the excellent quarter. Really nice set of numbers. David. Look, the core marketing business is arguably performing better than ever, but Athena OS often opens an even broader enterprise opportunity. I’m curious how you’re balancing those investments and ensuring that the broader ambitions don’t distract from what’s already working. And I’m curious how much of this next chapter challenge in your view is technology versus getting customers to change how they do business and move over to Athena.

David Steinberg (Co-founder, Chairman and Chief Executive Officer)

So, DJ, first of all, thank you. I appreciate it. The truth of the matter is we are so far ahead that we’ve had more than enough incremental profit behind the scenes, even with these numbers, to invest properly into both. We continue to invest as heavily as ever into our core marketing platform, and we’re seeing those results. Thirty-plus percent organic growth. Last quarter we were pretty proud of that, and Athena is driving a massive amount of that growth.

We saw the highest ARPU per super scaled customer that we’ve ever seen as a company, and that was driven by the 50% of those customers that had adopted Athena. They’re even much higher than that, to be frank. As it relates to mindshare, we see Athena OS as the evolution of the existing business, not a massive pivot from it. So when you think about this, and I know this sounds a little crazy, but we’ve always thought of ourselves as an enterprise intelligence platform. We started in marketing because the TAM was so incredibly large. We’ve always felt that expanding into new use cases was going to be a big part of where we were going. And it is. And Athena OS brings everything together in one place.

Now, as it relates to technology or clients, we came out of Zeta Live with so many clients who wanted to join the beta program, we could never keep up with that. So I think that we’re going to see we’ve got to get the technology right. We are ahead of schedule in development. As Chris pointed out, we continue to generate approximately 90% of our new code on an automated basis. Excuse me. That gives us a meaningful advantage over competitors who are at 20% or 30%, if lucky.

And I think we’re going to be out with Athena OS early. We’ve said by the end of Q1, but we’re seeing very, very good progress there, and the clients want it. We’ve now got to be able to deliver it from a technological perspective. It’s in alpha now and working really well. So I’m feeling good about the tech and I’m feeling good about the demand, if that makes sense, DJ.

DJ Hines (Analyst)

It does, it does. And maybe a follow-up for you, Chris. I mean, look, the core business is accelerating. You hit 30% organic growth, the stock’s working. I’m getting questions more and more from investors around next year. So maybe I’ll just turn that to you. Like any preliminary thoughts on kind of expectations for 2027 and how you’d steer folks,

Christopher Greiner (Chief Financial Officer)

I get it, DJ. So we’ll give our official guidance in February. But I do think it’s important to acknowledge we’ve got a lot of growth drivers at our back. What I’ll say is that we’re creatures of habit, and that habit comes out in the consistency of how we typically guide. So I’ll give you a sense for, exactly as you put it, where our heads are at. First off, we will go into next year with that same 2% to 5% cushion. We will continue to break out MA and political candidate revenue so there’s a clear organic base. And if you go back to our very first full-year guide back in February of 2022, all the way up to the guide of this year as we started the year, we’ve been at 20% to 21%. And we’ve said that organically our model is to grow at least 20%. So we’ll continue to leave ourselves cushion.

What I will say is we’re going to make sure we also do a good job with investors of, wherever that base starts out—again, back where we’ve been historically, 20% to 21%—we will also be able to break out all of our growth drivers: what’s embedded and what’s the upside we think we can get from each of them.

DJ Hines (Analyst)

Yep, I think that’s a very prudent and logical view. Thank you, guys.

David Steinberg (Co-founder, Chairman and Chief Executive Officer)

Thanks, DJ.

OPERATOR

We’ll now go to your next question coming from the line of Callie Valenti with Goldman Sachs.

Callie Valenti (Analyst)

Hey, team, thank you for taking the question. First one for me. You highlighted the top 25 Athena users growing revenue more than 70%, and adopters running at that higher NRR level as well. Curious what’s actually changing in that customer behavior once they adopt Athena that drives this higher level of spend? And is there anything specific from a channel, use cases, activity levels, or any other metric that you’re seeing that’s driving that inflection?

David Steinberg (Co-founder, Chairman and Chief Executive Officer)

Well, first of all, thank you, Callie. We appreciate you joining. What I would say is, first of all, we have built, like almost all enterprise software companies, a fighter jet, which is an incredibly complex piece of equipment to fly. And most of our clients know how to fly a Cessna. Now, with that Cessna, we’re delivering in the marketing ecosystem a 600% to 700% return on marketing spend, and in the technology ecosystem, we’re returning approximately 300% return on investment for every dollar spent on our technology—when they know how to fly the Cessna.

Athena, which, as you know, is our voice-enabled super agent, allows the client to fly the entire plane with her as their copilot. So what we’re seeing is new audience types at levels we’ve never seen before, new channel activations like we’ve never seen before. We’re seeing clients expand and move budget faster than at any point in our corporate history because Athena helps them drive an even superior return on spend than what the existing platform that they know how to use is driving. So as they see that superior return on investment, they’re moving budget faster. And that’s why I think you’re seeing those 25 clients growing at 70%-plus.

Christopher Greiner (Chief Financial Officer)

It’s interesting, Callie. It’s part of the AI scorecard. In addition to tracking what you referenced as the revenue metrics, we also wanted to be able to share with investors the underlying consumption on the platform that ultimately translates to the revenue growth. And one of the points I think you’re making around activities is we’re seeing client campaign development more than double quarter over quarter, and the time spent on the platform by those monthly active users was up 50%.

So even the underlying activity is really starting to translate to the strong acceleration of revenue as well.

David Steinberg (Co-founder, Chairman and Chief Executive Officer)

And the really interesting thing is, if you think about that, we’re making it easier for them to navigate it, and yet they’re spending 50% longer on it because it’s so incredibly cool. They’re enjoying using it instead of being frustrated having to navigate through lots of different parts of the platform, and they’re then activating substantially more than they had in the past. So I think that growth rate, along with the materially higher net retention rate of those customers, is a trend that we’re going to see continue, Callie.

Callie Valenti (Analyst)

Yeah, that makes sense. Thank you. And then just second one from me. We’re seeing the Athena adoption continue, good ARPU expansion, more scaled customers, additional partnerships that I think should layer in over time. How are you kind of rank ordering the importance and relative confidence you have in each of those drivers as you do that kind of initial 2027 planning? Thank you.

David Steinberg (Co-founder, Chairman and Chief Executive Officer)

You know, it’s hard to really answer that question. It’s a great question. But the answer is because different individuals in the organization are responsible for different components of it, it’s top of mind share for each of the individuals who’s focused on it and their teams. It’s not like you’ve got to say we’re going to take Palantir and make that number one, and we’re going to take Athena OS and make it number three. We’ve got Chris Momberg, Nij Gore and their team are really focused on making Athena OS move from alpha to beta to generally available.

And I don’t think it’s a secret that I’m spending a disproportionate percentage of my time with the Palantir guys. In fact, I was with them all day today. And, you know, we’re really, really focused on that. So I would tell you that the partnerships that we announced this year, even with the numbers that we’re driving, have not been a material component of the growth that we’re already seeing and add materially to growth next year, which is why I think Chris feels comfortable talking about a two handle on the start of our guidance for next year. I know that Chris Momberg, Nij Gore, Steve Gerber, everybody is focused on their initiatives, and for each part of the organization, it’s number one for them.

Does that make sense?

Callie Valenti (Analyst)

Yeah, that makes sense. Thank you so much.

David Steinberg (Co-founder, Chairman and Chief Executive Officer)

Thank you, Callie.

OPERATOR

And again, if anyone would like to ask a question, it would be star one on your telephone keypad. We’ll now go to your next question coming from Matt Swanson with RBC Capital Markets.

Matt Swanson (Analyst)

Great. Thank you, guys. And I’ll just add my congratulations on the quarter. When we’re looking at that pipeline that’s up over 100%, you obviously have some expanded product offerings, more capabilities, but also Athena drastically increases the usability of the platform. Could you just talk a little bit about if anything’s changed in terms of either initial lands or how fast you’re seeing those new customers ramp up on the platform?

Christopher Greiner (Chief Financial Officer)

We have seen very consistent time to deal close. You know, I’ll remind the broader community—I know, Matt, you know this—but with so many of the deals that are closed initially being pilots, you know, they can close in two to four months. So we’ve got good visibility,

David Steinberg (Co-founder, Chairman and Chief Executive Officer)

Hard to accelerate that,

Christopher Greiner (Chief Financial Officer)

but that’s been consistent. RFPs have a bit of a life of their own, but even those, when there’s the right buyer incentive behind it, can move really quickly. But pipeline is very consistent. We are seeing pilots scale faster. I was

David Steinberg (Co-founder, Chairman and Chief Executive Officer)

going to say that.

Christopher Greiner (Chief Financial Officer)

Yeah. And you could see that in how quickly some of these newer customers are ramping. I think that goes back to the ease with which Athena is enabling them to get access to the platform and start to learn on it.

David Steinberg (Co-founder, Chairman and Chief Executive Officer)

Well, so Matt, I mean, I would tell you the last few pilots that I worked on personally start as super scaled clients. Like the pilot itself starts there. And we’re seeing, as I think Chris said, clients are scaling faster than at any point I’ve seen. The other thing that I think is really changing in the ecosystem that a lot of people are not really talking about how much of a benefit it is for us is what’s changing at Google in search. As Google continues to answer more and more of the queries on their platform through Gemini on their own platform, the cost per click has gotten to the point of diminishing marginal return for a lot of advertisers. This is not to say that Google is not an amazing company, but for the first time that we’ve been doing this, and we’ve been doing this a long time, we’re starting to see meaningful budget move to Zeta Global Holdings from what was in search originally.

So it used to be we would go to a client and say, we know this is your search budget, you should and choose us. It’s now for the first time becoming an or. Once again, we partner with Google and we love Google, but they’ve made a strategic decision that they’re going to start answering a disproportionate percentage of their questions. My understanding is up to 68% of all queries on Google are now being answered by Gemini. 90 plus percent of queries used to result in a click to a brand, an e-commerce platform or a publisher.

That’s now down to 32%. And those brands, publishers and e-commerce platforms are very rapidly turning to us to help them accelerate their sales.

Matt Swanson (Analyst)

That’s really helpful. And then we’ve always talked about the differentiation of your data asset. When we think about maybe some of the depreciation of third-party identifiers, like what we’ve seen with Apple recently. Does that further kind of enhance your market position or create new opportunities?

David Steinberg (Co-founder, Chairman and Chief Executive Officer)

Massively. I mean I sort of go back to when Apple took away the original identifiers inside of iOS and how our business accelerated growth from that. To remind you, we don’t use those identifiers and we have now to be clear, Matt, them eliminating it does not make Zeta Global Holdings’ platform better. But as other platforms deteriorate, it doesn’t make our platform worse. So as the tide rolls out for them, it does not roll out for us, which creates a greater differentiation in the efficacy and efficiency in our platform versus platforms that are heavily dependent on that iOS and other identifiers that are dissipating.

Matt Swanson (Analyst)

Thank you.

OPERATOR

Your next question will come from the line of Jack Nichols with KeyBanc Capital Markets.

Jack Nichols (Analyst)

Hey guys, thank you for taking the question. I wanted to start with the Palantir opportunity. Could you help us understand how to think about the joint partnership contributing to pipeline and how many joint opportunities have moved into production?

David Steinberg (Co-founder, Chairman and Chief Executive Officer)

So we’re not giving guidance to what’s moved into production. What I’ll tell you is we’re up to eight yeses. We are really focused on that. One will be a super scaled client I would guess by the end of this month. Two others are already actively operating and there and then the others we’re moving through the contract process and we continue to try to drive that up meaningfully. What I would tell you is I’ve been, I mean I’ve been running companies. I’m now an old CEO at 57 years old. I started my first company when I was 16 and my real company when I was 21. So I’ve been doing this a long time. In all of the years I’ve done this, I’ve interacted with some of the greatest companies in the history of mankind. Much to my kids’ disbelief that does not include the Dutch East India Company but many of the ones that are around and have been around over the last 30 years.

I have never in my life experienced a company that its clients loved them and trusted them more than Palantir’s 800 plus global enterprise clients. We go into a meeting and it is like you spend the first 45 minutes catching up, 15 minutes discussing how we can drive a 6 to 700% return on marketing spend and a 300% return on technology spend. How we’re already fully integrated, we’re not building, we’re fully integrated. Our data cloud on top of Foundry and using their ontology and they just need to flip one button to turn the pilot on.

And we have not left without a yes yet. So it’s, I think, game changing for us. We don’t include that in the pipeline. So the 100% increment in pipeline does not include Palantir client. It might include some component of the people who are already active because that automatically feeds into the platform. But what I would tell you is the opportunity is substantially larger than I originally thought and I continue to spend a disproportionate percentage of my personal time on it.

Jack Nichols (Analyst)

That’s very helpful. Thank you, David. And then maybe as a quick follow up for Chris, when you think about kind of the dual driver of Athena adoption and usage, is that expected to continue to deliver this ARPU upside within the super scale cohort? And do these Athena users help deliver better insight to the minimum commitments on usage?

Christopher Greiner (Chief Financial Officer)

Yeah, that’s where it ultimately translates, Jack. Now, whether it takes, you know, 90 days or 120 days, you know, what we did see is an acceleration from 2Q to 3Q across those usage metrics. Obviously the ARPU followed that. But, you know, the top of funnel positive indicator, again, going back to Callie’s question, was around the client campaign development and it’s the top of the funnel. The more campaigns we put out into the ether, you know, one stands to reason that we’re going to capture the vast majority of those activation opportunities downstream and that obviously also shows up in ARPU.

Jack Nichols (Analyst)

Thank you.

OPERATOR

Thank you. Your next question will come from the line of Matt Bullock with Bank of America.

Matt Bullock (Analyst)

Great. Hi, thanks for taking the question. Maybe just one on the competitive environment. It sounds like the Braze and the Salesforce news could be an interesting opportunity to accelerate some share. I was hoping you could just speak a little bit to what you’re hearing from customers after that news broke. That’d be super helpful, thanks.

David Steinberg (Co-founder, Chairman and Chief Executive Officer)

Yeah, I mean, listen, I put out a statement on X about it the day it happened because to me it’s an incredible advantage for Zeta Global Holdings. You’ve got two platforms, neither of which is AI native. I mean, of course Salesforce is a great company. They have one of the best core products ever built. But we don’t compete with their core product. We compete with their Marketing Cloud, which has been consistently shrinking. And they started with their own AI platform, Einstein, then they outsourced it to IBM.

I think they’re on number four or five outsourcing partner. This week they chose Anthropic. They don’t have AI as native to the application layer, nor does Braze. Braze is a mobile-focused. I’m not sure they do anything but mobile, but they’re a primarily mobile platform that you’re going to put a mobile platform together with a shrinking Marketing Cloud. It’s by their own words going to take up to two years to integrate it. And we’re knee deep in one of the biggest replacement cycles for marketing clouds in history.

So we’ve been clear about the fact we already win greater than 50% of the RFPs and pilots we get asked to participate in. I think we could see that percentage go up because of this. If I’m a client and I look at my CRM and I look at my marketing and that’s the lifeblood of my company, do I want to trust it to a company that’s going to spend the next two years integrating a platform that doesn’t even have AI as native to it? Once again, this is not to say they’re not both good companies with great leaders.

I’m not trying to get personal here, but just from a business perspective, we see this as a major opportunity and advantage to Zeta Global Holdings to continue to accelerate our current win rate and continue to take market share in the market.

Matt Bullock (Analyst)

That’s really helpful. And if I could just sneak one more in for Chris, could you just unpack maybe what’s driving the better free cash flow conversion? It would be helpful for us just to better understand some of the underlying drivers there.

Christopher Greiner (Chief Financial Officer)

Yeah, I mean, look, we’re getting, we talked through the OPEX lines, right? Whether it was G&A or R&D or sales and marketing, you know, each are at their lowest levels we’ve seen in a while, all obviously improving year over year together. And then look, we’ve been very disciplined on CapEx, very disciplined on amortization and continue to run a really healthy receivables and payables process. So all those combined got us to, you know, one of our highest levels of cash conversion at 67%.

And even at the full year’s guide, we’re already at the long-term model for Zeta Global Holdings 2020 to 65%. So we’ve been seeing these now for the last few quarters and I would expect it to sustain itself.

Matt Bullock (Analyst)

Great, thanks, Chris.

Christopher Greiner (Chief Financial Officer)

Thank you, Matt.

OPERATOR

Your next question will come from the line of Ron Jose with Citi.

Ron Jose (Analyst)

Great. Thanks for taking the question here. I have two, please. David, I want to ask a little bit more just with Athena adopters accounting for greater than 70% of revenue, would love to hear more just about the process and the drivers of getting to that 70% and sort of how does that impact overall visibility, I guess going forward, particularly as we think about 27 and beyond. And then David, I wanted to follow up on your comments on Google before where Zeta Global Holdings was originally an and now we’re an or.

Wanted to hear more of your thoughts on how the ROAS is from that spend as more marketers are having a tougher time generating their return from search just given the adoption of AI reviews and AI mode in Gemini. Thank you.

David Steinberg (Co-founder, Chairman and Chief Executive Officer)

Yeah, I mean, let me answer your second question first. I mean for the first time ever, we are delivering a substantially higher return on marketing spend than search is today. And I think that’s because cost per click has skyrocketed as they have continued to answer more questions on their platform. Now listen, I continue to think Google is one of the greatest companies in history. We partner with them. This is not meant to be sort of a disparagement of them, but it is a statistical fact.

And what I would say is that it’s probably strategic on their part to take market share in what’s going to be the next generation of querying. Right. You’ve got OpenAI, you’ve got Anthropic, you’ve got Grok, you’ve now got Muse, you’ve got Dots, you’ve got Instinct, you’ve got a lot of different things going on there, which is why we’re building out Geo, why we bought Senso AI and why we’re doing all of those things. But what I would tell you is that the contraction of those clicks to 33% of what they used to be approximately is skyrocketing the price and driving to the point of diminishing marginal return on return on marketing spend. Whereas we’re expanding our return on marketing spend. Which answers your first question. Why are we seeing the highest growth rate from clients who have adopted Athena? Because they’re seeing the highest return on marketing spend our company has probably ever generated.

It’s allowing them to drive substantially higher return on investment, which is causing them to move dollars faster to our platform as it relates to the long-term visibility of the business. I actually think it helps us and it’s one of the reasons we built the AI scorecard. If you look at the AI scorecard which started over the last couple of quarters, it wasn’t just meant to relay information publicly on the company. We’re using it internally as a forecasting tool for revenue as well.

And it’s not an accident when Chris talks about how many campaigns are being set up, how many audiences are being built, those are actually forecast capabilities to revenue and we’re using that to build models to do that going forward. And we feel like that’s going to be a really good indicator of sort of growth, profit and net retention rate.

Ron Jose (Analyst)

Thank you, David.

David Steinberg (Co-founder, Chairman and Chief Executive Officer)

Thanks, Rob.

OPERATOR

Your next question will come from the line of Arjan Bhatpia with William Blair.

Arjun Bhatia (Analyst)

Perfect, thank you. Congrats, guys. Great quarter here. David, can I ask about some of the acquisitions that you’ve made? Particularly I was more interested to learn about Senso and, you know, curious what sort of additional functionality it adds on the Geo side to what Zeta already had, and then how you’re planning to sort of commercialize it. Does it sort of fit into the core platform or is there another motion for Geo here?

David Steinberg (Co-founder, Chairman and Chief Executive Officer)

So first of all, thank you, Arjun, I appreciate it, and I’ll say your name properly. The reality is that a lot of people are looking at Geo as a new strategy. We see Geo as a new challenge. It’s part of the existing platform. Senso will fully integrate into the Zeta platform, so I see that as a core capability. The interesting thing is not just Geo, but as you see search clicks begin to dissipate and hit the point of diminishing marginal return on spend, this is another platform that helps us move clients from certain search methodologies into frontier models. The other thing that I’m really interested in is the future of agentic shopping. For me, like I think a lot of us, I’ve got Instinct, I’ve got Muse, I’ve actually created my own dot, and I almost live on it at this point.

I’ve named him Alfred—maybe because I secretly wanted to be Batman as a kid—but Alfred is helping me do everything, including e-commerce, including managing my calendar and other things. Senso sits at the core of that. It allows us to help our clients get those shopping agents focused on their products versus their competitors, and I think that’s going to be a very, very big thing going forward.

Arjun Bhatia (Analyst)

Okay, got it. That’s very interesting. And then on the Palantir front, I know it’s early and you’re kind of just still working through some of the pilots, but I’m curious, as you think about the pilots that you have right now, do you have a sense of how long those might last relative to other Zeta pilots, just given size, complexity, other factors that you’re seeing thus far?

David Steinberg (Co-founder, Chairman and Chief Executive Officer)

Well, the first pilot we launched will be a super scaled client this month and has already converted out to a customer from a pilot. So I actually think that because of the sophistication of the Palantir customers and the Palantir platform integration, we’re able to show faster return on investment than we might otherwise be able to do in a normal pilot. So I think we’ll see those clients scale faster than other clients that are not integrated on both Palantir and Zeta.

Arjun Bhatia (Analyst)

Okay, got it. Thank you.

OPERATOR

Your next question will come from the line of Terry Tillman with Truist Securities.

Terry Tillman (Analyst)

Yeah, hey, guys, can you hear me okay?

David Steinberg (Co-founder, Chairman and Chief Executive Officer)

We can, Terry. Yes.

Terry Tillman (Analyst)

It’s great to know on Alfred. That’s an interesting data point, but yeah, I’ll keep it to one question. With intelligent AI infrastructure and kind of this key strategy going forward, maybe just an update on some of the use cases as you’ve had 90 more days to kind of have your customers and prospects kind of marinate with this. I think you all mentioned some use cases last quarter, but just are there some kind of, you know, use cases that seem like are resonating more often?

And will you also see this potentially the infrastructure you can put on top of even legacy martech stacks or other types of apps before they move to your whole platform? And sorry for the fire alarm in the background.

David Steinberg (Co-founder, Chairman and Chief Executive Officer)

No, that’s okay. So the answer to your second question is absolutely yes. Athena OS is going to be an operating system that can sit alongside of a legacy marketing technology platform, a legacy marketing cloud, or another type of platform. So we see that, and because we’re rolling it out on an MCP basis, it’ll be able to integrate into anything that they’re using as their normal workflow management tool. So we’re very excited about that. What I would tell you is today, the three things that I’m seeing the most usage are inventory management, supply chain management, and fraud detection and cybersecurity. We’ve got one large financial services company that is using us for fraud detection and cyber, and it’s been really interesting to see how our data cloud can inform on things that otherwise we might not have been able to inform on. But, you know, we’re going to continue to have more use cases.

The fact that we didn’t put them in our prepared remarks is not that there weren’t more of them and not that it wasn’t important, just that there’s so much to talk about this quarter that we talked about that in the last quarter and, of course, we gave it a lot of airtime at Zeta Live.

Terry Tillman (Analyst)

Thanks, David.