Zeta's Q1 Earnings: Can AI and Integration Drive a Strong Start to 2025?

Tomorrow’s Q1 2025 earnings report for Zeta Global (ZETA) will put the company’s ambitious growth narrative to the test. Analysts are watching closely as the AI-driven marketing platform provider aims to deliver 30% year-over-year revenue growth, a sharp acceleration from its 24% rise in Q1 2024. But with conflicting signals—from upbeat revenue guidance to a downgraded Zacks Rank—the results could reshape investor sentiment for months to come.

Earnings Preview: High Growth, High Stakes

The consensus calls for Q1 revenue between $253.49 million and $254.1 million, a figure that hinges on two key factors:
1. AI Adoption: Zeta’s GenAI-powered platforms, which now account for over half its revenue, are expected to boost consumption-based sales.
2. LiveIntent Synergy: The 2023 acquisition of LiveIntent (now Zeta Direct) is supposed to enhance publisher monetization and advertiser ROI.

On the earnings side, analysts project adjusted EPS of $0.11–$0.12, a staggering 1,100% increase from Q1 2024’s $0.01. However, the Zacks Earnings ESP model warns of a -13.04% expected surprise, meaning estimates have been cut recently—a red flag for bulls.

Historical Context: Outperforming Revenue, Mixed EPS Track Record

Zeta’s Q1 2024 revenue of $195 million (up 24% YoY from $158 million in Q1 2023) already beat expectations, leading to raised full-year guidance. But the EPS story is murkier: the company has only beaten EPS estimates once in the last four quarters, most recently missing by -13.04% in Q3 2023. This inconsistency has spooked investors, contributing to Zeta’s Zacks Rank #5 (Strong Sell).

The stock’s recent underperformance—down 4.6% over the past month—reflects this uncertainty. Shares trade at $13.39, far below the average analyst price target of $30.17, suggesting long-term optimism is outweighing short-term skepticism.

Catalysts to Watch: AI, Industry Penetration, and Margin Expansion

1. AI Execution: Will GenAI adoption drive a meaningful shift in revenue mix? Direct platform revenue fell to 67% of total in Q1 2024 (from 73% in Q4 2023), but Zeta claims AI tools are now core to its “Super-Scaled” enterprise contracts. Investors will scrutinize whether AI’s impact is materializing in ARPU and customer retention.
2. Key Verticals: Zeta’s focus on automotive, retail, and political advocacy (which saw strong Q4 2023 growth) must show sustained traction.
3. Margins: The 30% revenue target must not come at the cost of profitability. Q1 2024’s 15.6% Adjusted EBITDA margin (up from 15.3% in Q1 2023) suggests progress, but stock-based compensation and scaling costs remain headwinds.

Risks and Skepticism: Why the Street Is Holding Back

• Analyst Downgrades: EPS estimates have been slashed by 233% in 30 days, reflecting concerns about Zeta’s ability to hit lofty targets.
• Peer Comparison: While Zeta’s 30% growth would outpace peers like Freshworks (18.9%) and VeriSign (4.7%), its valuation premium requires proof of execution.
• Zacks ESP Warning: The -13% surprise expectation suggests a potential earnings miss could trigger a selloff.

The Bottom Line: Growth vs. Execution

Zeta’s Q1 results will be a litmus test for its Zeta 2025 plan, which aims for over $1 billion in revenue and 20%+ EBITDA margins. If the company can:
- Exceed revenue estimates while expanding margins,
- Demonstrate AI’s tangible impact on customer value, and
- Stabilize EPS guidance,

it could reclaim its narrative as a high-growth tech disruptor. Conversely, a miss or margin pressure could deepen the skepticism.

Investors should also watch for management’s full-year guidance. If Zeta raises its 2025 targets (current guidance is $895–$905 million in revenue), it could spark a rally. But with shares already down 20% year-to-date, patience will be key—unless the results deliver a clear victory for growth over doubt.

In the end, Zeta’s Q1 2025 earnings are a pivotal moment. The path forward depends on whether its AI-driven vision translates into consistent financial discipline—a balance that has eluded it so far.