Zeta Global: $100 Million Share Buyback Plan and Response to Short-Selling Report

Zeta Global (NYSE: ZETA), the AI-Powered Marketing Cloud, has announced a new $100 million stock repurchase program, supplementing their existing program from August 2022. This move comes in response to a short-selling report published by Culper Research on November 13, 2024, which Zeta has since addressed and refuted. The company's stock surged over 20% in pre-market trading on November 20, 2024, following the announcement, after previously declining over 50% in the past two days.



The new share buyback program allows Zeta to repurchase up to 100,000 shares, representing 0.48% of its issued share capital, for ¥65 million. This program is valid until December 31, 2024, and supplements the existing program, which has $14.7 million remaining and expires on December 31, 2024.

Zeta's response to the short-selling report addresses the specific allegations and restores investor confidence by providing factual evidence and clarifying misconceptions. Here's how they address the key allegations:

1. Accounting Practices and Revenue Recognition:
- Zeta states that they are confident in their internal accounting processes and controls, with Deloitte as their independent auditor performing annual audits of their financial statements.
- They confirm that their evaluation of contracts and revenue recognition is in accordance with Generally Accepted Accounting Principles (GAAP), and that revenue generated by customer relationships that are also vendors is insignificant.
- The company's FY2023 financial statements and internal controls over financial reporting received unqualified opinions from Deloitte, indicating no material weaknesses.

2. Data Collection Practices:
- Zeta denies operating "consent farms" and states that they have made significant investments in data protection, data governance, and privacy oversight.
- They confirm that they review the opt-in/opt-out processes and privacy policies of their data partners to ensure compliance with applicable laws.

3. Contribution of Apptness and ArcaMax:
- Zeta clarifies that the total contribution of Apptness and ArcaMax to their business is not material, with their year-to-date revenue contribution being less than 3% through the third quarter of 2024.
- They also note that these contributions have trended down, and that Digital Media Solutions is not a material customer or partner, with trailing twelve-month revenue being less than $200,000 as of September 30, 2024.

4. Transparency and Communication:
- Zeta values transparency and open communication, encouraging investors to review their financial statements and other related materials at .



The share buyback program is expected to have a positive impact on Zeta's earnings per share (EPS) and return on equity (ROE) in the long term. By reducing the number of outstanding shares, the net income is distributed over fewer shares, resulting in a higher EPS. Additionally, the shareholder's equity also decreases, which can lead to an increase in ROE. The company's expectation to generate significant free cash flow over the next two years further supports this positive impact.

In conclusion, Zeta Global's $100 million share buyback plan and response to the short-selling report have restored investor confidence in the company's business practices and financial reporting. The share buyback program is expected to have a positive impact on Zeta's EPS and ROE in the long term, as it reduces the number of outstanding shares and increases the distribution of net income over fewer shares. With the company's strong financial performance and growth prospects, investors can expect significant upside in the coming years.