Zeta Global Raises 2026 Profit Targets as Top-Tier Growth Cools
Zeta Global's free cash flow jumped 73% in the second quarter even as growth in its highest-spending customer tier slowed to its weakest pace in more than a year.
Zeta Global Holdings (ZETA), the marketing-technology company that sells data-driven customer-acquisition software, reported second-quarter revenue of $443 million, up 44% from a year earlier and $23 million above the midpoint of its own guidance. The company posted GAAP net income of $8 million, or $0.03 a share, its second consecutive profitable quarter following $6.5 million of net income in the fourth quarter of 2024 and a $12.8 million loss a year earlier.
The headline growth rate masked a shift in what is driving it. Super-Scaled Customers, Zeta's cohort of highest-spending accounts, grew to 197 in the quarter, up 17% from a year earlier but down from 19% growth in the first quarter and 25% growth in the third quarter of 2024. Average revenue per Super-Scaled customer also decelerated, rising 17% to $1.8 million after 21% growth in the prior quarter. Both volume and price are slowing together, a change from the pattern of the past year, though Zeta said the current customer count and ARPU levels remain ahead of the trajectory implied by its 2028 targets.
Profitability metrics moved in the opposite direction. Adjusted EBITDA margin expanded 170 basis points from a year earlier to 20.7%, continuing a run of margin gains that included a 174-basis-point expansion in the fourth quarter of 2024. Free cash flow grew 73% to $58 million, a 13.1% margin, building on 78% growth for full-year 2024. Operating cash flow grew 65% to $69 million, a slightly slower pace than the 68% growth posted in the third quarter of 2024, even as the free-cash-flow growth rate held up.
Zeta raised its full-year 2026 guidance across every major line. Revenue guidance moved to a $1,818 million midpoint, up $33 million from the prior guide and a larger dollar increase than the $30 million and $25 million raises issued in the two quarters before it. GAAP earnings-per-share guidance rose to a range of $0.09 to $0.11, up $0.07 at the midpoint from the prior $0.02-to-$0.04 range, a more than threefold increase and the largest percentage guidance raise in the release. Free cash flow guidance climbed to a $254.8 million-to-$255.8 million range, a $20.3 million increase that outpaced the $3.8 million and $7 million raises delivered in the prior two quarters. Adjusted EBITDA guidance rose to a $404.1 million-to-$406.3 million range, though the implied margin of 22.1% to 22.4% held at the same level guided in both the first quarter and the fourth quarter of 2024, meaning the dollar increase reflects the higher revenue base rather than fresh margin expansion.
For the third quarter, Zeta guided to revenue of $469 million to $472 million, representing 39% to 40% growth from a year earlier. Stripped of acquisitions and political-candidate spending, that growth rate falls to 23% to 24%. The release marked the first quarter in which Zeta excluded acquisition revenue alongside political spending from its organic growth calculation, a change from the prior two quarters, when the company excluded political revenue and Marigold's enterprise business specifically. The shift reflects Marigold, acquired in November 2024, moving into Zeta's ongoing base while other acquisitions now get carved out separately.
Zeta also introduced a new disclosure describing an initial framework for measuring adoption and monetization of its AI platform, Athena, language absent from the prior four quarterly releases. The company did not update the longer-range 2028 targets it raised in February to at least $2.3 billion in revenue, $573 million in adjusted EBITDA and $371 million in free cash flow, referencing those figures only in forward-looking-statement language this quarter.
Beneath the results, Zeta's balance sheet showed the aftermath of settling Marigold acquisition consideration. Acquisition-related current liabilities fell to $24.8 million as of June 30 from $149.0 million at the end of 2024, reflecting payoff of seller notes tied to the deal's close. Cash and equivalents declined to $309.95 million from $319.76 million over the same period, pressured by $55.6 million of share repurchases in the first half of the year, up from $57.9 million a year earlier, and $8.4 million of acquisition-liability paydowns. Restructuring expenses more than doubled to $6.75 million for the six months ended June 30, from $3.15 million a year earlier, with $1.67 million of acquisition-related expense also appearing on the income statement for the first time in the comparable period.