Zeta Global Holdings Corp

Previous wording

Scaled customers increased 12%, to 460 as of March 31, 2024 compared to 411 as of March 31, 2023, primarily due to higher usage of platform among our customers and addition to our new scaled customer base. Of our scaled customers, 144 and 110 were super-scaled customers as of March 31, 2024 and March 31, 2023, respectively.

Current wording

Scaled customers increased 10% to 468 as of June 30, 2024 compared to 425 as of June 30, 2023, primarily due to higher usage of platform among our customers and addition to our new scaled customer base. Of our scaled customers, 144 and 118 were super-scaled customers as of June 30, 2024 and June 30, 2023, respectively.

Previous wording

Scaled customer ARPU increased 11%, to $415,743 for the three months ended March 31, 2024 compared to $374,052 for the three months ended March 31, 2023, primarily due to higher usage of our platform among scaled customers. ARPU for our super-scaled customers was $1.1 million (across 144 customers) and $1.2 million (across 110 customers) for the three months ended March 31, 2024 and 2023, respectively.

Current wording

Scaled customer ARPU increased 22% to $479,015 for the three months ended June 30, 2024 compared to $391,740 for the three months ended June 30, 2023, primarily due to higher usage of our platform among scaled customers. ARPU for our super-scaled customers increased 18% to $1.3 million (across 144 customers) for the three months ended June 30, 2024 compared to $1.1 million (across 118 customers) for the three months ended June 30, 2023.

Previous wording

Our revenue primarily arises from use of our technology platform via subscription fees, volume-based utilization fees and fees for professional services. Our platform revenue is comprised of a mix of direct platform revenue and integrated platform revenue, which leverages API integrations with third parties. For the three months ended March 31, 2024 and 2023, we derived 67% and 71% of our revenues from direct platforms, respectively, and 33% and 29% of our revenues from integrated platforms, respectively. Revenues are recognized when control of these services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. Sales and other taxes collected by us are excluded from revenue. Our revenue recognition policies are discussed in more detail below under “Critical Accounting Policies and Estimates.”

Current wording

Our revenue primarily arises from use of our technology platform via subscription fees, volume-based utilization fees and fees for professional services. Our platform revenue is comprised of a mix of direct platform revenue and integrated platform revenue, which leverages API integrations with third parties. For the six months ended June 30, 2024 and 2023, we derived 67% and 73% of our revenues from direct platforms, respectively, and 33% and 27% of our revenues from integrated platforms, respectively. Revenues are recognized when control of these services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. Sales and other taxes collected by us are excluded from revenue. Our revenue recognition policies are discussed in more detail below under “Critical Accounting Policies and Estimates.”

Previous wording

Cost of revenue excludes depreciation and amortization and consists primarily of media and marketing costs and certain employee-related costs. Media and marketing costs consist primarily of fees paid to third-party publishers, media owners or managers, and strategic partners that are directly related to a revenue-generating events. We pay these third-party publishers, media owners or managers and strategic partners on revenue-share, a cost-per-lead, cost-per-click, or cost-per-thousand-impressions basis. Expenses related to “internet traffic” associated with the viewing of available impressions or queries per second and costs of providing support to our customers are also included in the cost of revenues (excluding depreciation and amortization). Employee-related costs included in cost of revenues (excluding depreciation and amortization) include salaries, bonuses, commissions, stock-based compensation and employee benefit costs primarily related to individuals directly associated with providing services to our customers. Our cost of revenues (excluding depreciation and amortization) are dependent on the revenue mix and therefore can slightly increase or decrease in the future as a percentage of revenue over the long term.

Current wording

Cost of revenue excludes depreciation and amortization and consists primarily of media and marketing costs and certain employee-related costs. Media and marketing costs consist primarily of fees paid to third-party publishers, media owners or managers, and strategic partners that are directly related to revenue-generating events. We pay these third-party publishers, media owners or managers and strategic partners on revenue-share, a cost-per-lead, cost-per-click, or cost-per-thousand-impressions basis. Expenses related to “internet traffic” associated with the viewing of available impressions or queries per second and costs of providing support to our customers are also included in the cost of revenues (excluding depreciation and amortization). Employee-related costs included in cost of revenues (excluding depreciation and amortization) include salaries, bonuses, commissions, stock-based compensation and employee benefit costs primarily related to individuals directly associated with providing services to our customers. Our cost of revenues (excluding depreciation and amortization) are dependent on the revenue mix and therefore can slightly increase or decrease in the future as a percentage of revenue over the long term.

Previous wording

Other expenses primarily consists of changes in fair value of acquisition-related liabilities, gains and losses on sale of assets and foreign exchange gains and losses. We expect that the magnitude of other income and expenses will depend on external factors such as foreign exchange rate and the remeasurement impact of acquisition-related liabilities, which depends on the performance of our acquisitions and could be greater than or less than our historic levels.

Current wording

Other expenses primarily consist of changes in fair value of acquisition-related liabilities, gains and losses on sale of assets and foreign exchange gains and losses. We expect that the magnitude of other income and expenses will depend on external factors such as foreign exchange rate and the remeasurement impact of acquisition-related liabilities, which depends on the performance of our acquisitions and could be greater than or less than our historic levels.

Previous wording

Revenues increased by $37.3 million, or 23.7%, for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The increase in revenues is attributable to incremental revenues of $8.8 million from existing customers and $28.5 million from new customers.

Current wording

Revenues increased by $56.0 million, or 32.6%, for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. The increase in revenues is attributable to incremental revenues of $18.4 million from existing customers and $37.6 million from new customers.

Previous wording

Cost of revenues (excluding depreciation and amortization) increased by $22.5 million, or 41.4%, for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. This increase was primarily driven by $22.5 million in incremental media costs and other employee related costs of $0.4 million, which was partially offset by lower stock-based compensation of $0.6 million.

Current wording

Cost of revenues (excluding depreciation and amortization) increased by $29.0 million, or 46.8% for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. This increase was primarily driven by $29.0 million in incremental media costs.

Previous wording

General and administrative expenses decreased by $3.8 million, or 7.2%, for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. This decrease was primarily driven by lower stock-based compensation of $5.3 million and professional services fees of $2.8 million, which was partially offset by higher computer and telecom related expenses of $3.0 million, employee related costs of $0.6 million and an incremental provision for doubtful debt of $0.4 million.

Current wording

General and administrative expenses increased by $0.4 million, or 0.9%, for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. This increase was primarily driven by higher computer and telecom related expenses of $3.8 million and employee related costs of $0.9 million, which was partially offset by lower stock-based compensation of $4.1 million.

Previous wording

Selling and marketing expenses decreased by $1.1 million, or 1.6%, for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. This decrease was primarily driven by lower stock-based compensation of $6.5 million, which was partially offset by higher employee-related costs of $4.9 million and other sales and marketing-related expenses of $0.5 million.

Current wording

Selling and marketing expenses increased by $3.1 million, or 4.3%, for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. This increase was primarily driven by higher employee-related costs of $4.7 million, other sales and marketing-related expenses of $2.1 million, which was partially offset by lower stock-based compensation of $3.7 million.

Previous wording

Research and development expenses increased by $1.5 million, or 7.9%, for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. This increase was primarily driven by an increase in employee related costs of $0.6 million, stock-based compensation of $0.5 million and consulting fee of $0.2 million.

Current wording

Research and development expenses increased by $6.3 million, or 36.2%, for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. This increase was primarily driven by an increase in employee related costs of $3.2 million, higher stock-based compensation of $2.5 million and consulting fees of $0.5 million.

Previous wording

Depreciation and amortization increased by $1.9 million, or 16.2%, for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. This increase was driven by higher amortization expense of $1.9 million related to intangible assets.

Current wording

Depreciation and amortization increased by $0.4 million, or 2.9%, for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. This increase was primarily driven by higher amortization expense related to intangible assets.

Previous wording

Other expenses decreased by $1.2 million, or 64%, for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. This decrease was primarily driven by lower changes in fair value of acquisition-related liabilities recorded during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

Current wording

Other (income) / expenses decreased by $4.4 million, or 155.1%, for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. This decrease was primarily driven by a decrease in the fair value of acquisition-related liabilities recorded during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

Previous wording

For the three months ended March 31, 2024 and 2023, the Company recorded an income tax provision of $0.4 million and $0.2 million, respectively, yielding an effective tax rate of negative 1.0% and 0.3%, respectively. The effective tax rate for both interim periods was different than the U.S. statutory rate primarily related to limited tax benefit being recorded for U.S. operating losses as the Company maintains a full valuation allowance against its U.S. deferred tax assets.

Current wording

For the three months ended June 30, 2024 and 2023, the Company recorded an income tax provision of $0.5 million and $0.3 million, respectively, yielding an effective tax rate of negative 1.8% and 0.6%, respectively. The effective tax rate for both interim periods was different than the U.S. statutory rate primarily related to limited tax benefit being recorded for U.S. operating losses as the Company maintains a full valuation allowance against its U.S. deferred tax assets.

Previous wording

We did not have any acquisition-related expenses during the three months ended March 31, 2024, however we had recorded acquisition-related expenses of $0.2 million for the three months ended March 31, 2023 related to legal and professional fees incurred for our business combinations.

Current wording

We did not have any acquisition-related expenses during the six months ended June 30, 2024, however we had recorded acquisition-related expenses of $0.2 million for the six months ended June 30, 2023 related to legal and professional fees incurred for our business combinations.

Previous wording

We have financed our operations and capital expenditures primarily through utilization of cash generated from operations, as well as borrowings under our credit facilities. As of March 31, 2024, we had cash and cash equivalents of $141.6 million and net working capital, consisting of current assets less current liabilities of $146.5 million. As of March 31, 2024, we had an accumulated deficit of $998.1 million.

Current wording

We have financed our operations and capital expenditures primarily through utilization of cash generated from operations, as well as borrowings under our credit facilities. As of June 30, 2024, we had cash and cash equivalents of $154.7 million and net working capital, consisting of current assets less current liabilities of $171.6 million. As of June 30, 2024, we had an accumulated deficit of $1,026.2 million.

Previous wording

For the three months ended March 31, 2024, net cash provided by operating activities of $24.7 million resulted primarily from adjusted non-cash items of $66.8 million, more than offsetting our net loss of $39.6 million. Non-cash items include stock-based compensation of $52.6 million, depreciation and amortization of $13.7 million and a change in fair value of acquisition related liabilities of $0.5 million. Changes in working capital were primarily driven by decreases in accounts payable of $10.7 million, accrued expenses and other current liabilities of $1.5 million and an increase in prepaid expenses of $1.3 million, partially offset by decrease in accounts receivable of $9.6 million and an increase in deferred revenue of $1.0 million.

Current wording

For the six months ended June 30, 2024, net cash provided by operating activities of $55.8 million resulted primarily from adjusted non-cash items of $130.6 million, more than offsetting our net loss of $67.6 million. Non-cash items include stock-based compensation of $104.8 million, depreciation and amortization of $26.7 million and a change in fair value of acquisition related liabilities of $1.3 million. Changes in working capital were primarily driven by decreases in accounts payable of $15.4 million, increases in accounts receivable of $13.1 million and prepaid expenses of $2.4 million, partially offset by a decrease in accrued expenses and other current liabilities of $24.3 million.

Previous wording

For the three months ended March 31, 2023, net cash provided by operating activities of $20.1 million resulted primarily from adjusted non-cash items of $77.9 million, more than offsetting our net loss of $57.0 million. Non-cash items include stock-based compensation of $64.5 million, depreciation and amortization of $11.8 million, and a change in fair value of acquisition-related liabilities of $1.7 million. Changes in working capital were primarily driven by an increase in accounts receivable of $2.0 million, other current assets of $0.4 million and a decrease in accrued expenses and other current liabilities of $5.5 million, partially offset by an increase in accounts payable of $5.2 million, deferred revenue of $1.4 million and a decrease in prepaid expenses of $0.5 million.

Current wording

For the six months ended June 30, 2023, net cash provided by operating activities of $40.7 million resulted primarily from adjusted non-cash items of $151.7 million, an amount in excess of our net loss of $109.1 million. Non-cash items include stock-based compensation of $122.1 million, depreciation and amortization of $24.4 million, and a change in fair value of acquisition-related liabilities of $4.3 million. Changes in working capital were primarily driven by an increase in accounts receivable of $15.2 million, other assets of $0.7 million and a decrease in accrued expenses and other current liabilities of $8.9 million, partially offset by an increase in accounts payable of $20.1 million, deferred revenue of $1.0 million and a decrease in prepaid expenses of $1.9 million.

Previous wording

For the three months ended March 31, 2024, we used $9.5 million of cash in investing activities, primarily consisting of capital expenditures of $5.8 million (including a $4.7 million investment in data and partnership agreements) and website and software development costs of $3.6 million.

Current wording

For the six months ended June 30, 2024, we used $20.8 million of cash in investing activities, primarily consisting of capital expenditures of $12.6 million (including a $10.6 million investment in data and partnership agreements) and website and software development costs of $8.2 million.

Previous wording

For the three months ended March 31, 2023, we used $25.9 million of cash in investing activities, primarily consisting of capital expenditures of $5.2 million (including a $4.3 million investment in data and partnership agreements), business and asset acquisitions of $15.9 million and website and software development costs of $4.9 million.

Current wording

For the six months ended June 30, 2023, we used $36.1 million of cash in investing activities, primarily consisting of capital expenditures of $9.0 million (including a $7.4 million investment in data and partnership agreements), acquisitions and other investments, net of cash acquired of $18.2 million and website and software development costs of $8.9 million.

Previous wording

For the three months ended March 31, 2024, we used $5.2 million of cash in financing activities, primarily due to the repurchase of $3.4 million of common stock repurchased under our share repurchase and withholding program and payment of acquisition related liabilities of $2.2 million.

Current wording

For the six months ended June 30, 2024, we used $11.9 million of cash in financing activities, primarily due to the repurchase of $8.4 million of common stock under our share repurchase and withholding program and payment of acquisition related liabilities of $7.0 million, partially offset by receipt from the ESPP and exercise of options of $3.4 million.

Previous wording

For the three months ended March 31, 2023, we used $7.5 million of cash in financing activities, primarily due to the repurchase of $6.5 million of common stock under our share repurchase and withholding program and payment of acquisition-related liabilities of $1.0 million.

Current wording

For the six months ended June 30, 2023, we used $8.8 million of cash in financing activities, primarily due to the repurchase of $7.9 million of our common stock under our share repurchase and withholdings program.

Previous wording

As of March 31, 2024, we have $184.2 million (net of $0.8 million of unamortized debt acquisition costs) of outstanding long-term borrowings.

Current wording

As of June 30, 2024, we have $185.0 million (net of $0.6 million of unamortized debt acquisition costs) of outstanding long-term borrowings.

Previous wording

During the three months ended March 31, 2024, we borrowed $11.3 million against the revolver facility and repaid the same amount against the term loan under the credit facility.

Current wording

During the six months ended June 30, 2024, we borrowed $11.3 million against the revolver facility and repaid the same amount against the term loan under the credit facility.