Zeta Global Holdings Corp. (NYSE:ZETA) posted a strong third-quarter performance, surpassing expectations on revenue and earnings driven by continued customer expansion and robust demand, particularly from telecom clients.
Analyst Views and Growth Drivers
Needham analysts, led by Scott Berg, reiterated their Buy rating and maintained a $25 price forecast, highlighting another quarter of accelerating organic revenue growth.
The growth rate improved to 28% in the third quarter from 27% in the second, supported by a pickup in telecom demand and meaningful customer additions.
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Zeta added its highest number of net new scaled customers since the first quarter of 2024. Total scaled customers reached 572, with five added during the period. Average revenue per user rose 4% overall and 13% excluding political revenue.
Management also issued initial fiscal 2026 guidance calling for 21% organic growth, above Street expectations of 19%–20%.
Quarterly Results
Third-quarter revenue rose 25.7% year over year to $337.2 million, exceeding Needham’s $328.5 million estimate.
Adjusted EBITDA came in at $78.1 million versus the firm’s $68.7 million forecast.
The EBITDA margin expanded to 23.2%. Gross margin was 60.6%, slightly below target. The company ended the quarter with $385 million in cash.
Updated Outlook
Zeta raised its full-year fiscal 2025 revenue outlook to $1.273 billion–$1.276 billion, up from $1.258 billion–$1.268 billion. Adjusted EBITDA guidance increased to $273.2 million–$274.1 million, representing 42% year-over-year growth.
For the fourth quarter of 2025, the company projected revenue of $363 million–$366 million and an EBITDA margin of 24.7%.
For fiscal 2026, Zeta guided revenue to $1.54 billion, up 21% year over year, including $15 million in political revenue. The company expects an adjusted EBITDA margin of 23%. First-quarter 2026 revenue is forecast at $314.5 million, with an EBITDA margin of 17.8%.
Additional Analyst Commentary
Separately, D.A. Davidson’s Clark Wright reiterated his Buy rating and $27 price forecast, citing continued strength in Zeta’s third-quarter performance.
The firm now expects Zeta to generate $1.28 billion in revenue in 2025, slightly above its prior $1.26 billion estimate, and $1.54 billion in 2026, up from $1.49 billion previously.
Adjusted EPS forecasts also rose, increasing to 68 cents for 2025 from 64 cents, and to 99 cents for 2026 from 88 cents.
According to Wright, Zeta currently trades at 19x the revised 2026 free cash flow estimate, implying a discount to SaaS peers growing 20% or more, which trade at roughly 42x.
Wright noted Zeta repurchased 1.7 million shares for $28 million during the quarter, and said the company would have bought more if not for restrictions related to the Marigold acquisition.
Management is expected to fully utilize the remaining $199 million under its repurchase authorization by year-end 2026, equal to about 76% of the 2026 free cash flow estimate.
Price Action: ZETA shares were trading higher by 18.68% to $19.82 at last check Wednesday.
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