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What changed in Zeta Global Holdings Corp.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Zeta Global Holdings Corp.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+382 added−327 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-28)

Top changes in Zeta Global Holdings Corp.'s 2024 10-K

382 paragraphs added · 327 removed · 272 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

50 edited+25 added−20 removed12 unchanged
Biggest changeAs of December 31, 2023, we had 1,783 employees, including 955 employees located outside of the U.S. None of our U.S. employees are represented by a labor union with respect to their employment. We consider our relations with our employees to be good and have not experienced interruptions of operations or work stoppages due to labor disagreements.
Biggest changeWe pride ourselves in hiring the best global talent with employees across the U.S. (including New York and Silicon Valley), the EU, the UK and India. As of December 31, 2024, we had 2,191 employees, including 1,130 employees located outside of the U.S. None of our U.S. employees are represented by a labor union with respect to their employment.
Our built-in artificial intelligence not only selects audiences and automates campaigns, but it can also optimize content and recommendations dynamically, based on our intelligence-driven understanding of customer needs, interests, and forecasted behavior. As a component of the ZMP, Zeta Messaging offers integrated data management, enterprise-scale delivery and support, and sophisticated omnichannel orchestration.
Our built-in 2 artificial intelligence not only selects audiences and automates campaigns, but it can also optimize content and recommendations dynamically, based on our intelligence-driven understanding of customer needs, interests, and forecasted behavior. As a component of the ZMP, Zeta Messaging offers integrated data management, enterprise-scale delivery and support, and sophisticated omnichannel orchestration.
We have customers spanning a wide spectrum of industry verticals and we believe we can achieve significant organic growth by cross-selling our existing solutions, making full use of our data capabilities and insights and by capturing an increased share of our scaled customers’ marketing spend by introducing new features and functionalities within the ZMP. 3 Acquire new scaled customers .
We have customers spanning a wide spectrum of industry verticals, and we believe we can achieve significant organic growth by cross-selling our existing solutions, making full use of our data capabilities and insights and by capturing an increased share of our scaled customers’ marketing spend by introducing new features and functionalities within the ZMP. Acquire new scaled customers .
From segmentation to automation of campaigns, we deliver rich, individualized experiences that drive engagement through email, mobile, social and other channels. Using access to our intelligence tools, our ESP customers can expand their knowledge of their customers with past purchase behavior, channel preferences, real-time interests, and predictive intent.
From segmentation to automation of campaigns, we deliver rich, individualized experiences that drive engagement through email, mobile, social and other digital channels. Using access to our intelligence tools, our ESP customers can expand their knowledge of their customers with past purchase behavior, channel preferences, real-time interests, and predictive intent.
Since we view data as one of our key competitive advantages, we will also continue to invest resources to expand our data offerings, both from third-party providers, as well as our proprietary data sources. Continue to strengthen our partnership ecosystem and expand sales capacity .
Since we view data as one of our key competitive advantages, we also continue to invest resources to expand our data offerings, both from third-party providers, as well as our proprietary data sources. Continue to strengthen our partnership ecosystem and expand sales capacity .
We have also registered numerous internet domain names related to our business. We also rely on copyright laws to protect creative aspects of our website and computer programs related to our platform and our proprietary technologies.
We have also registered numerous internet domain names related to our business. We also rely on copyright laws to protect creative aspects of 7 our website and computer programs related to our platform and our proprietary technologies.
We intend to aggressively pursue new scaled customers by investing in our sales and customer service teams while driving increased efficiencies in our go-to-market approach. We also intend to focus on converting our scaled customers into new super-scaled customers. The Agile Intelligence suite also serves as a sales accelerator to help acquire and grow new customers.
We continue to aggressively pursue new scaled customers by investing in our sales and customer service teams while driving increased efficiencies in our go-to-market approach. We also continue to focus on converting our scaled customers into new super-scaled customers. The Agile Intelligence suite also serves as a sales accelerator to help acquire and grow new customers.
In addition, in 2023, we were named as a Leader in IDC’s MarketScape for Worldwide Omni-Channel Marketing Platforms for B2C Enterprises. Secure, Scalable and Reliable Platform The ZMP has been designed to provide our customers with high levels of reliability, data integrity, performance and security.
In addition, in 2023, we were named as a “Leader” in IDC’s MarketScape for Worldwide Omni-Channel Marketing Platforms for B2C Enterprises. 4 Secure, Scalable and Reliable Platform The ZMP has been designed to provide our customers with high levels of reliability, data integrity, performance and security.
Our AI engineers continuously update the machine learning algorithms to improve the overall ROI for our customers. Our Platform and Products The ZMP is a single platform designed to enable enterprises to acquire, grow and retain consumer relationships more efficiently and effectively than alternative solutions available in the market.
Our AI engineers continuously update the predictive AI models and machine learning algorithms to improve the ROI for our customers. Our Platform and Products The ZMP is a single platform designed to enable enterprises to acquire, grow and retain consumer relationships more efficiently and effectively than alternative solutions available in the market.
This enables our customers to improve how they identify and engage the modern consumer who is using multiple devices and platforms (e.g., mobile, website, applications, social media, CTV and email). 4. Performance Optimization Zeta’s platform provides real-time results to our customers through a graphical dashboard and makes recommendations for improvement through the same graphical interface.
This enables our customers to improve how they identify and engage the modern consumer who is using multiple devices and platforms (e.g., mobile, website, applications, social media, CTV and email). 4. Performance Optimization Zeta’s platform provides AI-powered real-time analytics to our customers through a graphical dashboard and makes recommendations for improvement through the same graphical interface.
Our AI patents focus on integrating predictive personalization, outcome forecasting, and generative AI holistically throughout our products to increase efficiency, enhance user experience, and deliver better customer outcomes. Other aspects of our patent portfolio cover data governance, security, and management technology.
Our AI patents focus on integrating predictive personalization, outcome forecasting, and GenAI holistically throughout our products to increase efficiency, enhance user experience, and deliver better customer outcomes. Other aspects of our patent portfolio cover data governance, security, and identity management technology.
We believe no single company has offerings that match the comprehensive capabilities of the ZMP and CDP+, but we face collective competition from a variety of companies. Our competitive market is highly fragmented with most competitors focused on specific use cases, end markets and/or types of data sets and point solutions.
We believe no single company has offerings that match the AI-powered capabilities of the ZMP, but we face collective competition from a variety of companies. Our competitive market is highly fragmented with most competitors focused on specific use cases, end markets and/or types of data sets and point solutions.
Item 1. Business. Overview Zeta is a leading omnichannel data-driven cloud platform that provides enterprises with consumer intelligence and marketing automation software. We empower our customers to target, connect and engage consumers through software that delivers personalized marketing across all addressable channels, including email, social media, web, chat, Connected TV (“CTV”) and video, among others.
Item 1. Bus iness. Overview Zeta is a leading AI-powered omnichannel data-driven cloud platform that provides enterprises with consumer intelligence and marketing automation software. We empower our customers to target, connect and engage consumers through software that delivers personalized marketing across all addressable channels, including email, social media, web, chat, Connected TV (“CTV”) and video, among others.
The ZMP’s data-driven algorithms and processes learn and optimize each customer’s marketing program in real time, producing a ‘flywheel effect’ that enables our customers to test, learn and improve their marketing programs in real time. The ZMP empowers our customers to personalize consumer experiences at scale across multiple touchpoints.
The ZMP’s data-driven algorithms and processes learn and optimize each customer’s marketing program in real time, producing a ‘flywheel effect’ that enables our customers to test, learn and improve their marketing programs in real time. The ZMP enhances our customers’ ability to personalize consumer experiences at scale across multiple touchpoints.
Zeta CDP has extensive technical flexibility and can adjust to custom data schemas with limited or no pre-configuration required. If necessary, we can also engineer a deeper level of data integration between Zeta CDP and a customer’s unique marketing infrastructure.
Zeta CDP+ maintains extensive technical flexibility, adapting to custom data schemas with limited or no pre-configuration required. If necessary, we can also engineer a deeper level of data integration between Zeta CDP+ and a customer’s unique marketing infrastructure.
We believe the principal factors that drive competition between vendors in our market include: • Quality of insights and analytics; • Omnichannel automation; • Real-time scoring and decisioning of data sets; • Utility of data management tools; • Comprehensive systems integration; • Ease and speed of data ingestion and data onboarding; and • Scale and scope of identity and audience data.
We believe the principal factors that drive competition between vendors in our market include: • Quality of insights and analytics; • Omnichannel automation; • Real-time scoring and decisioning of data sets; • Utility of data management tools; • Comprehensive systems integration; • Ease and speed of data ingestion and data onboarding; and • Scale and scope of identity and audience data. 5 We believe we compete favorably across these factors.
Furthermore, we provide the following programs, which vary by country/region: generous paid time off, family leave, flexible work schedules, and 401(k) matching. Intellectual Property We have a patent portfolio of more than 125 U.S. and international patents and applications which include 21 granted patents and 33 pending patent applications covering machine learning and artificial intelligence (AI).
Furthermore, we provide the following programs, which vary by country/region: generous paid time off, family leave, flexible work schedules, and 401(k) matching. Intellectual Property We have a patent portfolio of more than 130 U.S. and international patents and applications which include 29 granted patents and 34 pending patent applications covering machine learning and artificial intelligence (AI).
With a focus on growing our sales capacity, we are building a sophisticated sales operation to focus on opportunity creation and progression. We believe these new capabilities will allow us to further strengthen our relationships with our existing customers and gain global market share. Expand into international markets .
With a continued focus on growing our sales capacity, we are continuing to build upon a sophisticated sales operation to focus on opportunity creation and progression. We believe these capabilities will allow us to further strengthen our relationships with our existing customers and gain global market share. Expand into international markets .
Our customers can use all five of the modules or choose any individual module to obtain data-cloud based insights on their existing consumers and prospects. We offer Agile Intelligence suite for a licensing fee and/or an incremental fee based on customers’ utilization of the ZMP. The terms of our subscription agreements are typically quarterly or annual.
Our customers can use all five of the modules or choose any individual module to obtain data-cloud based insights on their existing consumers and prospects. We offer Agile Intelligence suite for a licensing fee and/or an incremental fee based on customers’ utilization of the ZMP.
As we expand relationships with our existing customers in the U.S., we are also investing in select regions in Europe. Our Key Strengths Zeta’s competitive strengths historically have included the following: Omnichannel Engagement Through the ZMP, our customers are able to identify and target consumers across a wide range of digital channels.
As we expand relationships with our existing customers in the U.S., we are also continuing to invest in select regions in Europe. Our Key Strengths Zeta’s competitive strengths historically have included the following: Omnichannel Engagement Through the ZMP, our customers can identify and engage consumers across a wide range of digital channels.
The Agile Intelligence suite is woven into the fabric of the ZMP and is accessible through five product modules: MarketPulse, CustomerPulse, DMAPulse, AudiencePulse and CompetitorPulse. • MarketPulse provides marketers with real-time notifications and longitudinal visualizations representing changes in consumer sentiment and interest. • CustomerPulse provides marketers with real-time, actionable insights across acquisition, retention and growth opportunities derived by enriching a customer’s data with Zeta data. • DMAPulse provides marketers with real-time, actionable insights on designated market areas that should receive increased or decreased investments to optimize market share and customer acquisition efficiency. • AudiencePulse provides marketers with real-time, actionable insights on more than 900 Zeta audiences predicting consumer intent and interest. • CompetitorPulse providers marketers with actionable insights on the business’s competitive set and opportunities to capture market share and prevent customer attrition.
Examples of the intelligence tools that our product modules provide include: • MarketPulse provides marketers with real-time notifications and longitudinal visualizations representing changes in consumer sentiment and interest. • CustomerPulse provides marketers with real-time, actionable insights across acquisition, retention and growth opportunities derived by enriching a customer’s data with Zeta data. • DMAPulse provides marketers with real-time, actionable insights on designated market areas that should receive increased or decreased investments to optimize market share and customer acquisition efficiency. • AudiencePulse provides marketers with real-time, actionable insights on more than 900 Zeta audiences predicting consumer intent and interest. • CompetitorPulse providers marketers with actionable insights on the business’s competitive set and opportunities to capture market share and prevent customer attrition.
As a subset of scaled customers, we define super-scaled customers as customers from which we have generated trailing-12-month revenue of at least $1,000,000. We had 1,242 and 1,155 total customers, and 452 and 403 scaled customers, including 131 and 103 super-scaled customers, as of December 31, 2023 and 2022, respectively.
As a subset of scaled customers, we define super-scaled customers as customers from which we have generated trailing-12-month revenue of at least $1,000,000. We had 1,793 and 1,242 total customers, and 527 and 452 scaled customers, including 148 and 131 super-scaled customers, as of December 31, 2024 and 2023, respectively.
For additional information, see the section titled “Risk Factors—Risks Related to Our Business and Industry—Our industry is intensely competitive, and if we do not effectively compete against current and future competitors, our business, results of operations and financial condition could be harmed” and “Risk Factors— Risks Related to Data Collection and Security, Intellectual Property and Technology Industry Regulations— Our intellectual property rights may be difficult to enforce and protect, which could enable others to copy or use aspects of our technology without compensating us, thereby eroding our competitive advantages and having an adverse effect on our business, results of operations and financial condition.” 5 Seasonality In general, the marketing industry experiences seasonal trends that affect the vast majority of participants in the digital marketing ecosystem.
For additional information, see the section titled “Risk Factors—Risks Related to Our Business and Industry—Our industry is intensely competitive, and if we do not effectively compete against current and future competitors, our business, results of operations and financial condition could be harmed” and “Risk Factors— Risks Related to Data Collection and Security, Intellectual Property and Technology Industry Regulations— Our intellectual property rights may be difficult to enforce and protect, which could enable others to copy or use aspects of our technology without compensating us, thereby eroding our competitive advantages and having an adverse effect on our business, results of operations and financial condition.” Seasonality and Cyclicality Our business is affected by seasonal fluctuations in marketing activity, as well as cyclicality in political activity and economic conditions.
We leverage our AI technologies and data within the ZMP to: • Seamlessly collect and ingest structured and unstructured data into the ZMP; • Detect PII and apply data governance in accordance with business, state, and federal rules and regulations; • Quickly and reliably analyze key consumer attributes and signals; • Identify consumer intent by running sophisticated algorithms to analyze data; • Cluster related concepts and prioritize actionable insights to create intent-based graphs; • Create audiences comprised of individuals or affinity-driven clusters scored based on intent; • Forecast experience-based outcomes at an individual and audience level; • Personalize content to make experiences more relevant for the consumer and profitable for the enterprises; and • Create channel and content recommendations to optimize marketing performance. 3.
We leverage our AI technologies and proprietary data within the ZMP to: • Seamlessly collect and ingest structured and unstructured data into the ZMP; • Detect PII and apply data governance in accordance with business, state, and federal rules and regulations; • Quickly and reliably analyze key consumer attributes and signals; • Identify consumer intent by running sophisticated algorithms to analyze data; • Cluster related concepts and prioritize actionable insights to create intent-based graphs; • Create audiences comprised of individuals or affinity-driven clusters scored based on intent; • Forecast experience-based outcomes at an individual and audience level; • Personalize content to make experiences more relevant for the consumer and profitable for the enterprises; • Create channel and content recommendations to optimize marketing performance; • Enable ZMP users to create GenAI agents and workflows, which chain discrete tasks together for automations; • Determine intent of a ZMP user using GenAI and recommend next actions; and • Leverage GenAI for the creation of campaigns, creative, audiences, experiences, data onboarding processes, and analysis of analytics. 3.
We designed the ZMP using a flexible, service-oriented architecture in order to facilitate rapid development of new solutions, to meet evolving industry demands and to support new use cases and marketing requirements.
We designed the ZMP using a flexible, service-oriented architecture to support evolving AI-powered marketing use cases, facilitate rapid development of new solutions, and meet the growing complexity of marketing requirements.
Our architecture also enables us to segment access privileges across our user base. 4 Our Customers We work with some of the largest and most well-known enterprises across a wide spectrum of industry verticals including consumer & retail, telecommunications, financial services, business services and insurance, which contributed 17%, 15%, 10%, 10% and 6% of our revenues for the year ended December 31, 2023 and 12%, 12%, 13%, 11% and 8% of our revenues for the year ended December 31, 2022, respectively. 97% of our revenue for the year ended December 31, 2023 was derived from scaled customers, which we define as customers from which we have generated trailing-12-month revenue of at least $100,000.
Our Customers We work with some of the largest and most well-known enterprises across a wide spectrum of industry verticals including consumer & retail, insurance, telecommunications, financial services, and business services, which contributed 22%, 10%, 9%, 8% and 7% of our revenues for the year ended December 31, 2024 and 17%, 6%, 15%, 10%, and 10% of our revenues for the year ended December 31, 2023, respectively. 98% of our revenue for the year ended December 31, 2024 was derived from scaled customers, which we define as customers from which we have generated trailing-12-month revenue of at least $100,000.
Our customers benefit from an account team committed to their success and backed by experts in strategy, content creation, data and analytics. Data Management – CDP 2 Our customers can use Zeta CDP as their system of record for all consumer information. Zeta CDP delivers a single, actionable view of customers and prospects that include real-time identifiers and attributes.
Our customers benefit from an account team committed to their success and backed by experts in strategy, content creation, data and analytics. Data Management – CDP+ Our customers can use Zeta CDP+ as their system of record for all consumer information.
A closed-loop cycle from insight to activation enables our AI engine to quickly learn from the available data, identify the best data signals and create accurate and up-to-date Zeta Identity Graphs™.
A closed-loop cycle from insight to activation enables our AI engine to quickly learn from available data, identify the most impactful signals and continuously refine the Zeta Identity Graphs™.
The ZMP is hosted in the Zeta Hybrid Cloud, which is a unique pairing of a public cloud (AWS/Google/Azure) deployment and self-hosted private cloud (VMware/Docker/Kubernetes) resources designed to facilitate workload management in a cost-effective, performant and efficient manner.
The ZMP is hosted in the Zeta Hybrid Cloud, which is a unique pairing of a public cloud (AWS/Google/Azure) deployment and self-hosted private cloud (VMware/Docker/Kubernetes) resources designed to facilitate workload management in a cost-effective, performant and efficient manner. We have dedicated significant resources to building customer trust by strengthening data privacy, security, and AI governance within our platform.
Outside the U.S., the General Data Protection Regulation (“GDPR”) (and the UK equivalent, the United Kingdom GDPR (“UK GDPR”)) remain in force in Europe, and, overlaid with country-level laws implementing the ePrivacy Directive, continues to raise questions about the application of these laws to third-party marketing technology companies such as Zeta.
Zeta believes that a continued emphasis on an opt-out regime in the U.S. will mean a continued ability to collect and use non-sensitive personal data at scale for marketing purposes. 6 Outside the U.S., the General Data Protection Regulation (“GDPR”) (and the UK equivalent, the United Kingdom GDPR (“UK GDPR”)) remain in force in Europe, and, overlaid with country-level laws implementing the ePrivacy Directive, continues to raise questions about the application of these laws to third-party marketing technology companies such as Zeta.
We also offer various technical upgrades, consulting services, additional integrations, and access to ad-hoc data sources, services, and channels. As a result, our customers are incentivized to allocate an increasing percentage of their marketing budgets to our platform and to enter long-term contractual commitments. Messaging – ESP Zeta Messaging, our ESP offering, provides our customers with end-to-end omnichannel messaging capabilities.
As a result, our customers are incentivized to allocate an increasing percentage of their marketing budgets to our platform and to enter long-term contractual commitments. Messaging – ESP Zeta Messaging, our ESP offering, provides our customers with end-to-end AI-powered omnichannel messaging capabilities.
We also have extensive relationships with many marketing agencies and enterprises and believe we can extend our platform to provide B2B marketing capabilities. Continue to innovate and develop new products . With over 500 data scientists and engineers, we believe we are well positioned to quickly develop new products and take full advantage of the shift to digital marketing.
With over 500 data scientists and engineers, we continue to believe we are well positioned to quickly develop new products and take full advantage of the shift to digital marketing.
Patented AI Engine We believe our proprietary data is key to our AI engine. We analyze this data through extensive application of AI technologies, including machine learning, natural language processing, and generative AI.
All this data is managed through a proprietary database structure that has patented flexibility, speed and scalability. 1 2. AI Engine We believe our proprietary data is key to our AI engine. We analyze this data through extensive application of AI technologies, including GenAI, machine learning, natural language processing, and predictive AI.
Our Growth Strategies Our data and AI-powered platform enables our customers to transform their digital marketing strategy, accelerate their revenue growth and enhance business returns. In turn, our customers’ success motivates them to increase their use of our platform, thereby accelerating our revenue and growth. Key elements of our long-term growth strategy include: Further penetrate our existing customer base .
The terms of our subscription agreements are typically quarterly or annual. 3 Our Growth Strategies Our data and AI-powered platform enables our customers to transform their digital marketing strategy, accelerate their revenue growth and enhance business returns. In turn, our customers’ success motivates them to increase their use of our platform, thereby accelerating our revenue and growth.
To recruit and retain the best talent in a highly competitive marketplace, we routinely examine and refresh our compensation packages that may include salary, bonuses, sales commissions and equity.
These groups are open to all employees, including allies. Compensation, Benefits, and Employee Wellness We aim to provide market-competitive compensation and benefit programs for our employees. To recruit and retain the best talent in a highly competitive marketplace, we routinely examine and refresh our compensation packages that may include salary, bonuses, sales commissions and equity.
It operates on one of the industry’s most durable and persistent identity graphs, anchored by people-based identifiers with minimal reliance on third-party cookies. In turn, Zeta Activation provides more precise analytics and attribution, with zero-to-minimal data loss across channels, and can be used to intelligently optimize media spend.
It operates on one of the industry’s most durable and persistent identity graphs, anchored by people-based identifiers with minimal reliance on third-party cookies. In turn, Zeta’s DSP provides enhanced AI-driven attribution and real-time media optimization, reducing data loss across channels, while intelligently adjusting media spend for better ROI.
Through our single-platform approach, we can integrate paid media and multichannel campaigns to deliver true cross-channel marketing across desktop, mobile, display and video, CTV, search, email, and web, among other channels. We offer one of the largest proprietary data sets in the U.S., informing the campaigns that our customers launch with rich, actionable insights.
Through our single-platform approach, we can integrate paid media and multichannel campaigns to deliver true cross-channel marketing across desktop, mobile, display and video, CTV, search, email, and web, among other channels. With the addition of LiveIntent’s first-party data, our proprietary data has become even more powerful, providing customers with richer, real-time insights to drive campaign performance.
On average, we ingest more than one trillion content consumption signals per month on a global basis and synthesize this information into hundreds of intent-based audiences, which can then be used to create marketing programs. All this data is managed through a proprietary database structure that has patented flexibility, speed and scalability. 1 2.
This data set includes an average of more than 2,500 attributes per individual, which may be demographic, behavioral, psychographic, transactional, or indicative of preference. On average, we ingest more than one trillion content consumption signals per month on a global basis and synthesize this information into hundreds of intent-based audiences, which can then be used to create marketing programs.
We anticipate that, as with the CCPA/CPRA, new laws in the U.S. at either the state or federal level will generally allow personal information collection by businesses as the default, so long as data use practices are made transparent to consumers and consumer rights are honored when requested (opt-out model), with the exception of select classes of “sensitive data.” To date, despite significant legislative activity around privacy in the states and at the federal level, there have been no significant or credible efforts at legislation that would require prior consent before data is used (opt-in model), apart from sensitive data.
We anticipate that, as with the CCPA, new laws in the U.S. will generally allow personal information collection by businesses as the default, so long as data use practices are made transparent to consumers and consumer rights are honored when requested (i.e., opt-out model), with the exception of select classes of sensitive data.
Our superior integrated data management capabilities can update individual profiles with new data instantaneously. Intelligence - Agile Actionable intelligence is the foundation of the ZMP and our products. We showcase our differentiated capability to synthesize trillions of behavioral signals into intent-based scores tied to a unique individual through our Agile Intelligence product suite.
Intelligence – Agile Actionable intelligence is the foundation of the ZMP and our products. Powered by AI and strengthened by LiveIntent’s first-party data, our Agile Intelligence suite synthesizes trillions of behavioral signals into intent-based scores tied to a unique individual through our Agile Intelligence product suite.
We believe we compete favorably across these factors. In particular, we believe the ZMP’s competitive advantages include: • Intuitiveness and ease of use; • Comprehensive feature set; • Present workflows and automation; • Rapid deployment; • Flexibility and scalability; • Seamless integration with a customer’s existing technologies; and • Favorable customer ROI and total cost of ownership.
We believe the ZMP’s competitive advantages include: • AI-powered workflows and automation that optimize engagement and efficiency; • Deterministic identity resolution, enhanced through LiveIntent’s first-party data assets, improving targeting accuracy and privacy compliance; • Intuitiveness and ease of use; • Comprehensive feature set; • Rapid deployment; • Flexibility and scalability; • Seamless integration with a customer’s existing technologies; and • Favorable customer ROI and total cost of ownership.
We built and maintain a multi-tenant application architecture that has been designed to enable our service to scale securely, reliably and cost-effectively to tens of thousands of customers and millions of users. Our multi-tenant application architecture maintains the integrity and separation of customer data while still permitting all customers to use the same application functionality simultaneously.
Our hybrid cloud infrastructure is designed to ensure enterprise-grade security, real-time data integrity, and high-performance marketing execution. We built and maintain a multi-tenant application architecture that has been designed to enable our service to scale securely, reliably and cost-effectively to tens of thousands of customers and millions of users.
We generally expect these seasonality trends to continue and our ability to effectively manage our resources in anticipation of these trends may affect our operating results. Data Privacy & Security Laws Contemporary consumers use multiple platforms to learn about and purchase products, and have come to expect a seamless experience across all channels.
Our political and advocacy customers are impacted by political cycles, leading us to generally experience higher revenues in presidential election years. This cyclicality may affect comparability of results between non-election years. Data Privacy & Security Laws Contemporary consumers use multiple platforms to learn about and purchase products, and have come to expect a seamless experience across all channels.
Based on our proprietary data and uniquely modeled intender scores, our Agile Intelligence suite can present immediate and actionable opportunities within the ZMP that our customers can then use to generate growth.
By incorporating LiveIntent’s deterministic identity resolution, our intelligence offerings further enhance audience insights, improving targeting precision across channels. Based on our proprietary data and uniquely modeled intender scores, Agile Intelligence presents immediate and actionable opportunities within the ZMP that our customers can leverage to drive growth.
Historically, marketing activity is higher in the fourth quarter of the calendar year to coincide with the holiday shopping season as compared to the first quarter. As a result, the subsequent first quarter tends to reflect lower activity levels and lower performance.
Seasonality . In general, the marketing industry experiences seasonal trends that affect the vast majority of participants in the digital marketing ecosystem. Historically, marketing activity is higher in the fourth quarter of the calendar year to coincide with the holiday shopping season as compared to the first quarter.
Our future success will depend on our ability to enhance and better integrate our existing products, introduce new products on a timely and cost-effective basis, meet changing customer needs, provide best-in-class data security to maintain customer confidence and combat cyber-attacks, extend our core technology into new applications and anticipate emerging standards, business models, software delivery methods and other technological changes.
In addition, our competitive position can be strengthened by introducing new products on a timely and cost-effective basis, meeting evolving customer needs, providing best-in-class data security, extending our core technology into new applications and anticipating emerging standards, business models, software delivery methods and other technological changes.
California has enacted broad-based privacy legislation, the California Consumer Privacy Act (“CCPA”), as supplemented by the subsequent California Privacy Rights Act (“CPRA”), which came into force in 2023.
For example, California enacted broad-based privacy legislation, the California Consumer Privacy Act of 2018, as supplemented by the California Privacy Rights Act, which came into force in 2023 (the “CCPA”); similar laws are now in effect in other states. Additionally, laws in California and other states impose further obligations on data brokers.
Activation - DSP Zeta Activation aims to help our customers to maximize the power of paid media to engage the right audiences where and how they want to be reached, with personalized messages determined by billions of real-time signals and predictive insights. Zeta Activation delivers highly personalized, targeted experiences via desktop, mobile, CTV and social, among other channels.
Activation – DSP Zeta’s DSP helps our customers to maximize the power of paid media to engage the right audiences with precision and efficiency. Now incorporating LiveIntent’s publisher network as a source of curated audiences, Zeta’s DSP delivers highly personalized, targeted experiences via desktop, inbox, mobile, CTV and social, among other addressable channels.
The platform consists of three core products (CDP, ESP, DSP) with modules that can be “turned on” to meet our customers’ specific business needs. Artificial intelligence is native to the ZMP, unlocking new capabilities for creativity, automation, optimization, forecasting, planning, and onboarding. Our customers can purchase our products individually or in combination based on their evolving needs.
Artificial intelligence is native to the ZMP, unlocking new capabilities for identity-based personalization, automated optimization, and AI-powered forecasting. Our customers can purchase our products individually or in combination based on their evolving needs. We also offer various technical upgrades, consulting services, additional integrations, and access to ad-hoc data sources, services, and channels.
We have been recognized by various third-party research reports as a leader in the marketing automation sector such as in 2022, when we were recognized as a “Leader” in The Forrester Wave™: Email Marketing Service Providers, Q1 2022 and received the highest possible scores across eight criteria including innovation roadmap, market approach, content management, dynamic content, and measuring engagement.
In 2024, we were recognized, for the third time in a row, as a “Leader” in The Forrester Wave™: Email Marketing Service Providers, Q3 2024 and received the highest Current Offering score and the highest possible scores across 13 criteria including vision, roadmap, artificial intelligence, organizational improvement, and privacy.
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We believe our actionable insights derived from consumer intent enable our customers to acquire, grow and retain consumer relationships more efficiently and effectively than the alternative solutions available in the market. Our Zeta Marketing Platform, or ZMP, is the largest omnichannel marketing platform with identity data at its core.
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Our Generative AI (GenAI)-driven marketing solutions enable brands to personalize experiences at scale, measure impact with precision and optimize marketing spend to increase return on investment (“ROI”). With the integration of LiveIntent’s identity graph and publisher network, we have strengthened our Data Cloud assets and our ability to deliver authenticated, people-based marketing across addressable channels.
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The ZMP can analyze billions of structured and unstructured data points to predict consumer intent by leveraging sophisticated machine learning algorithms and the industry’s largest opted-in data set for omnichannel marketing. The ZMP acts on these insights by connecting with consumers through native integration of marketing channels and API integration with third parties.
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Our Zeta Marketing Platform, or ZMP, is an AI-powered marketing platform with identity data at its core. Leveraging GenAI and machine learning, the ZMP processes billions of structured and unstructured data signals to predict consumer intent, optimize messaging and drive personalized messaging across all channels.
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Marketing programs are created and orchestrated by our customers through automated workflows and sophisticated dashboards. Our Consumer Data Platform (“CDP+”) ingests, analyzes and distills disparate data points to generate a single view of a consumer, encompassing identity, profile characteristics, behaviors and purchase intent, which is then made accessible through a single console.
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The integration of LiveIntent’s identity graph expands Zeta’s first-party data foundation, strengthening authenticated identity resolution and deterministic targeting. The ZMP enables brands to connect with consumers through native integration of marketing channels and API integration with third parties.
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We have also dedicated significant resources to the goal of building customer trust by developing and implementing programs designed to protect data privacy and to promote a secure technical environment.
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With AI-driven automation, brands can orchestrate highly effective programs through intuitive workflows and real-time intelligence. Our Consumer Data Platform (“CDP+”) now integrates LiveIntent’s identity graph, improving identity resolution while maintaining compliance with evolving privacy standards.
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The resources we dedicated to this goal include engineers, analysts, lawyers, policy experts and operations specialists, as well as hardware and software from leading vendors and solutions we have designed and built. In particular, we have implemented a number of technical innovations, process enhancements and industry solutions in response to our increased obligations with respect to our data.
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Our investments include enhanced identity security protocols, AI-driven compliance monitoring, and expanded data protection capabilities. These initiatives are supported by engineers, analysts, lawyers, policy experts and security specialists, leveraging hardware and software from leading vendors. Our platform provides advanced consent management capabilities, enabling precise application of opt-in and opt-out preferences across data sources, products, and customer engagements.
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For example, we can identify and implement user consent parameters and opt-in or opt-out as applicable and can evaluate whether such consents apply to our various data sources, products or customers. The ZMP is built on the following four pillars: 1.
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The ZMP is built on the following four pillars: 1. Zeta’s Data Set Our data set, which contains more than 245 million individuals in the U.S. and more than 535 million individuals globally, is a comprehensive mix of proprietary, partner, and publicly available data, now strengthened by LiveIntent’s authenticated identity graph, providing enhanced first-party resolution.
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Opted-in Data Set Our data set is an amalgamation of our private proprietary data, publicly available data and data provided by our partner ecosystem.
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The platform consists of three core products (ESP, CDP+, and DSP) with modules that can be activated to meet our customers’ specific business needs. The integration of LiveIntent strengthens our CDP+ offering by improving identity resolution technology, expanding the size and scope of the Data Cloud and enhancing first-party data activation.
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Our data set contains more than 240 million opted-in individuals in the U.S. and more than 535 million opted-in individuals globally with an average of more than 2,500 attributes per individual, which may be demographic, behavioral, psychographic, transactional, or indicative of preference.
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Now enhanced with LiveIntent’s identity graph, Zeta CDP+ delivers a single, actionable view of customers and prospects that includes real-time identifiers and signals as well as other key attributes. Customers can consolidate multiple databases and internal and external data feeds, and organize their data based on their unique needs and performance metrics.
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Customers can consolidate multiple databases and internal and external data feeds, and organize their data based on their unique needs and performance metrics. Enriched with intent-based scoring from our proprietary data, Zeta CDP makes it possible to identify anonymous website visitors and engage them across multiple channels with meaningful, individualized experiences.
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By leveraging AI-driven identity resolution, Zeta CDP+ enables customers to better recognize and engage anonymous website visitors, activating individualized experiences across multiple channels. The integration of LiveIntent expands our ability to unify deterministic and probabilistic identity matching, improving accuracy in audience creation, targeting and measurement.
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These channels can work independently, in parallel or in concert depending on the marketing strategies and tactics of our customers. Many of these channels, such as email and programmatic, are native to the ZMP, while others, such as social media, are accessed through API integrations with companies, such as Facebook and Snap.
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The Agile Intelligence suite is seamlessly integrated into the fabric of the ZMP and is accessible through five product modules, providing market intelligence, customer intelligence, prospect intelligence, competitor intelligence, and location intelligence.
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Actionable Insights Our customers can use the Agile Intelligence suite module in the ZMP to obtain and take action on high-value consumer insights in real-time. The ZMP monitors, aggregates and synthesizes the behaviors of individuals globally across multiple points of interactions to predict interest and intent.
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Key elements of our long-term growth strategy include: Further penetrate our existing customer base .
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Recognized Leader in Marketing Automation We believe our customers choose our platform over others because of its powerful, integrated and easy to use applications, rapid integration with various channels and technologies, and seamless onboarding of our customers’ and third-party data.
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We also have extensive relationships with many marketing agencies and enterprises and believe we can continue to extend our platform to provide B2B marketing capabilities. Continue to innovate and develop new products .
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State legislatures outside of California have proposed dozens of data privacy bills similar to, but distinct from, the CCPA/CPRA, and new laws have been adopted in Colorado and Virginia which also came into force in 2023.
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These channels can work independently, in parallel or in concert depending on marketing strategies and consumer behaviors. With the integration of LiveIntent’s premium publisher inventory, our reach has expanded across authenticated environments, particularly in email-based marketing. Actionable Insights Our AI-powered Agile Intelligence suite provides customers with real-time, intent-driven insights.
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Zeta believes that a continued emphasis on an opt-out regime in the U.S. will mean a continued ability to collect and use non-sensitive personal data at scale for marketing purposes.
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By continuously learning from trillions of behavioral signals, our platform enables brands to make data-driven decisions with even greater precision, now enhanced by LiveIntent’s first-party identity resolution. Recognized Leader in Marketing Automation The ZMP has been recognized as an industry leader in the marketing automation sector for its ability to automate complex marketing workflows.
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Human Capital We believe that our employees love working at Zeta because they believe that they are working towards a larger mission. We pride ourselves in hiring the best global talent with employees across the U.S. (including New York and Silicon Valley), the EU, the UK and India.
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With embedded GenAI, customers can now scale personalization, optimize performance, and improve efficiency with minimal manual intervention.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAs laws and regulations, including FTC enforcement, rapidly evolve to govern the use of these communications and marketing platforms, the failure by us, our employees or third parties acting at our direction to abide by applicable laws and regulations could adversely impact our business, financial condition and results of operations or subject us to fines or other penalties. 16 New requirements relating to automated, browser-based, or one-stop opt-out mechanisms (OOMs) such as the Global Privacy Control, the forthcoming opt-out mechanism for data brokers established under the California Delete Act, or other OOMs that will be established in the future may result in significantly larger numbers of consumers opting out of having their data used for marketing purposes versus historical averages.
Biggest changeNew requirements relating to automated, browser-based, or one-stop opt-out mechanisms (“OOMs”) such as the Global Privacy Control, the forthcoming opt-out mechanism for data brokers established under the California Delete Act, or other OOMs that will be established in the future may result in significantly larger numbers of consumers opting out of having their data used for marketing purposes versus historical averages.
Implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, and we cannot yet determine the impact future laws, regulations, standards, or perception of their requirements may have on our business.
Implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, and we cannot yet determine the impact future laws, regulations, standards, or perception of their requirements may have on our business.
These provisions do the following: • permit our board of directors to issue up to 200,000,000 shares of preferred stock, with any rights, preferences and privileges as they may designate; • provide that the authorized number of directors may be changed only by resolution of our board of directors; • provide that our board of directors will be classified into three classes of directors; • limit the ability of stockholders to remove directors to permit removals only “for cause” once Class B common stock ceases to hold more than 50% of all our outstanding common stock; • provide that all vacancies, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum; • prohibit stockholder action by written consent, subject to the terms of any series of preferred stock, if the holders of shares of Class B common stock no longer hold at least a majority of the voting power of the outstanding shares of our common stock; • require advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings; • provide certain limitations on convening special stockholder meetings; • so long as any shares of Class B common stock remain outstanding, require the prior affirmative vote of the holders of a majority of the outstanding shares of Class B common stock, voting as a separate class to consummate a Change of Control Transaction (as defined in our amended and restated certificate of incorporation); • provide that the restrictions set forth in Section 203 of the Delaware General Corporation Law (“DGCL”) shall be applicable to us in the event that no holder of Class B common stock owns shares of our capital stock representing at least fifteen percent of the voting power of all the then outstanding shares of our capital stock; and • not provide for cumulative voting rights in election of directors.
These provisions do the following: • permit our board of directors to issue up to 200,000,000 shares of preferred stock, with any rights, preferences and privileges as they may designate; • provide that the authorized number of directors may be changed only by resolution of our board of directors; • provide that our board of directors will be classified into three classes of directors; 30 • limit the ability of stockholders to remove directors to permit removals only “for cause” once Class B Common Stock ceases to hold more than 50% of all our outstanding common stock; • provide that all vacancies, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum; • prohibit stockholder action by written consent, subject to the terms of any series of preferred stock, if the holders of shares of Class B Common Stock no longer hold at least a majority of the voting power of the outstanding shares of our common stock; • require advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings; • provide certain limitations on convening special stockholder meetings; • so long as any shares of Class B Common Stock remain outstanding, require the prior affirmative vote of the holders of a majority of the outstanding shares of Class B Common Stock, voting as a separate class to consummate a Change of Control Transaction (as defined in our amended and restated certificate of incorporation); • provide that the restrictions set forth in Section 203 of the Delaware General Corporation Law (“DGCL”) shall be applicable to us in the event that no holder of Class B Common Stock owns shares of our capital stock representing at least fifteen percent of the voting power of all the then outstanding shares of our capital stock; and • not provide for cumulative voting rights in election of directors.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is, to the fullest extent permitted by law, the sole and exclusive forum for: • any derivative action or proceeding brought on our behalf; • any action asserting a claim of breach of a fiduciary duty owed by, or other wrongdoing by, any of our current or former directors, officers, employees or our stockholders; 28 • any action asserting a claim against us arising under the DGCL, our amended and restated certificate of incorporation, or our amended and restated bylaws (as either may be amended from time to time) or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; and • any action asserting a claim against us that is governed by the internal-affairs doctrine.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is, to the fullest extent permitted by law, the sole and exclusive forum for: • any derivative action or proceeding brought on our behalf; • any action asserting a claim of breach of a fiduciary duty owed by, or other wrongdoing by, any of our current or former directors, officers, employees or our stockholders; • any action asserting a claim against us arising under the DGCL, our amended and restated certificate of incorporation, or our amended and restated bylaws (as either may be amended from time to time) or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; and • any action asserting a claim against us that is governed by the internal-affairs doctrine.
Under the rules of Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), if a corporation undergoes an “ownership change,” generally defined as a greater than 50 percentage point change (by value) in its equity ownership over a rolling three-year period, the corporation’s ability to use its pre-change NOLs and other pre-change tax attributes to offset its post-change taxable income may be limited.
Under the rules of Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change,” generally defined as a greater than 50 percentage point change (by value) in its equity ownership over a rolling three-year period, the corporation’s ability to use its pre-change NOLs and other pre-change tax attributes to offset its post-change taxable income may be limited.
Other private entities often advocate standards of conduct or practices that significantly exceed current legal requirements and classify certain solicitations that comply with current legal requirements as impermissible “spam.” Some of these entities maintain “blacklists” of companies and individuals, and the websites, inbox service providers and IP addresses associated with those entities or individuals that do not adhere to those standards of conduct or practices for commercial solicitations that the blacklisting entity believes are appropriate.
Other private entities often advocate standards of conduct or practices that significantly exceed current legal requirements and classify certain solicitations that comply with current legal requirements as impermissible “spam.” Some of these entities maintain “blacklists” of companies and individuals, and the websites, inbox service providers and IP addresses associated with those entities or individuals that 21 do not adhere to those standards of conduct or practices for commercial solicitations that the blacklisting entity believes are appropriate.
Additionally, improving our platform’s infrastructure and expanding its capacity in anticipation of growth in new channels and formats, as well as implementing technological enhancements to our platform to improve its efficiency and 19 cost-effectiveness are key components of our business strategy, and if our third-party data centers are unable to keep up with our growing needs for capacity, this could have an adverse effect on our business.
Additionally, improving our platform’s infrastructure and expanding its capacity in anticipation of growth in new channels and formats, as well as implementing technological enhancements to our platform to improve its efficiency and cost-effectiveness are key components of our business strategy, and if our third-party data centers are unable to keep up with our growing needs for capacity, this could have an adverse effect on our business.
Changes proposed by providers of major browsers to eliminate or restrict the usage of third-party cookies to track user behaviors, and to allow users to limit the collection of certain data generally or from specified websites, could impair our ability to collect user information, 17 including personal data and usage information, that helps us provide more targeted advertising to our current and prospective consumers.
Changes proposed by providers of major browsers to eliminate or restrict the usage of third-party cookies to track user behaviors, and to allow users to limit the collection of certain data generally or from specified websites, could impair our ability to collect user information, including personal data and usage information, that helps us provide more targeted advertising to our current and prospective consumers.
As a result, the introduction of new entrants or technology that are superior to or that achieve greater market acceptance than our products and solutions could negatively impact our revenue. In such an event, we may experience a reduction in market share and may have to respond by reducing our prices, resulting in lower profit margins for us.
As a result, the introduction of new entrants or technology that are superior to or that achieve greater market acceptance than our products and 11 solutions could negatively impact our revenue. In such an event, we may experience a reduction in market share and may have to respond by reducing our prices, resulting in lower profit margins for us.
Because we fulfill email delivery on behalf of our customers, blacklisting of this type could undermine the effectiveness of our customers’ transactional email, email marketing programs and other email communications, all of which could have a material negative impact on our business, financial condition and results of operations. 20 Inbox service providers can also block emails from reaching their users.
Because we fulfill email delivery on behalf of our customers, blacklisting of this type could undermine the effectiveness of our customers’ transactional email, email marketing programs and other email communications, all of which could have a material negative impact on our business, financial condition and results of operations. Inbox service providers can also block emails from reaching their users.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our company will have been detected. We may experience material weaknesses in our internal controls over financial reporting in the future.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our company will have been detected. 29 We may experience material weaknesses in our internal control over financial reporting in the future.
In particular, the nature of our business may expose us to claims related to defamation, dissemination of misinformation or news hoaxes, discrimination, harassment, intellectual property right infringement, rights of publicity and privacy, personal injury torts, laws regulating hate speech or other types of content, and breach of contract, among others.
In particular, the nature of our business may expose us to claims related to defamation, dissemination of misinformation or news hoaxes, discrimination, 15 harassment, intellectual property right infringement, rights of publicity and privacy, personal injury torts, laws regulating hate speech or other types of content, and breach of contract, among others.
This concentration of ownership may have the effect of delaying, preventing or deterring a change of control or other liquidity event of our company, could deprive our stockholders of an opportunity to receive a premium for their shares of common stock as part of a sale or other liquidity event and might ultimately affect the market price of our common stock.
This concentration of ownership may have the effect of delaying, preventing or deterring a change of control or other liquidity event of our company, could deprive our stockholders of an opportunity to receive a premium for their shares of Class A Common Stock as part of a sale or other liquidity event and might ultimately affect the market price of our Class A Common Stock.
The enforcement of intellectual property rights and confidentiality protections in India may not be as effective as in the U.S. or other countries. Policing unauthorized use of proprietary technology is difficult and expensive and we might need to resort to 11 litigation to protect our trade secrets and confidential information.
The enforcement of intellectual property rights and confidentiality protections in India may not be as effective as in the U.S. or other countries. Policing unauthorized use of proprietary technology is difficult and expensive, and we might need to resort to litigation to protect our trade secrets and confidential information.
The historical rate of wage inflation has been higher in India than in the U.S. In addition, if the Rupee strengthens against the U.S. Dollar, our costs would increase. If the cost of technology and development work in India significantly increases or the labor environment in India changes unfavorably, our cost savings may be diminished.
The historical rate of wage inflation has been higher in India than in the U.S. In addition, if the Rupee strengthens against the U.S. Dollar, our costs would increase. If the cost of technology and development work in India significantly increases or the labor environment in 12 India changes unfavorably, our cost savings may be diminished.
The rapid growth of our operations in recent years and our initial public offering in 2021 have created a need for additional resources within the accounting and finance functions due to the increasing need to produce timely financial information and to ensure the level of segregation of duties customary for a U.S. public company.
The rapid growth of our operations in recent years and our initial public offering in 2021 created a need for additional resources within the accounting and finance functions due to the increasing need to produce timely financial information and to ensure the level of segregation of duties customary for a U.S. public company.
We base our estimates on historical experience and on various other assumptions that we believe to 26 be reasonable under the circumstances. Such estimates and assumptions are, by their nature, subject to substantial risks and uncertainties and factors may arise over time that lead us to change our methods, estimates, and judgments.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Such estimates and assumptions are, by their nature, subject to substantial risks and uncertainties and factors may arise over time that lead us to change our methods, estimates, and judgments.
Office of Foreign Assets Control; 13 • compliance with foreign data privacy laws, such as the EU ePrivacy Directive, GDPR, UK data protection laws, and Brazil’s General Data Protection Law (“LGPD”), which could materially diminish our ability to collect data and/or the effectiveness of our platform; • restrictions on the transfers of funds; • currency exchange rate fluctuations and foreign exchange controls; • economic and political instability in some countries; • compliance with the laws of numerous taxing jurisdictions where we conduct business, potential double taxation of our international earnings, and potentially adverse tax consequences due to changes in applicable U.S. and foreign tax laws; and • the complexity and potential adverse consequences of U.S. tax laws as they relate to our international operations.
Office of Foreign Assets Control; • compliance with foreign data privacy laws, such as the EU ePrivacy Directive, GDPR, UK data protection laws, and Brazil’s General Data Protection Law (“LGPD”), which could materially diminish our ability to collect data and/or the effectiveness of our platform; • restrictions on the transfers of funds; • currency exchange rate fluctuations and foreign exchange controls; • economic and political instability in some countries; 14 • compliance with the laws of numerous taxing jurisdictions where we conduct business, potential double taxation of our international earnings, and potentially adverse tax consequences due to changes in applicable U.S. and foreign tax laws; and • the complexity and potential adverse consequences of U.S. tax laws as they relate to our international operations.
In the United States and internationally, AI is the subject of evolving review by various governmental and regulatory agencies, including the SEC and the FTC, and changes in laws, rules, directives and regulations governing the use of AI may adversely affect the ability of our business to use or rely on AI.
In the United States and internationally, AI is the subject of evolving review by various governmental and regulatory agencies, including the SEC and the FTC and amongst the states, and changes in laws, rules, directives and regulations governing the use of AI may adversely affect the ability of our business to use or rely on AI.
As a result, we face numerous and evolving cybersecurity risks that threaten the confidentiality, integrity and availability of our IT Systems, and 18 personal and confidential information. Such risks include the misappropriation of data by malicious insiders or unauthorized third parties, or other data breaches.
As a result, we face numerous and evolving cybersecurity risks that threaten the confidentiality, integrity and availability of our IT Systems, and personal and confidential information. Such risks include the misappropriation of data by malicious insiders or unauthorized third parties, or other data breaches.
If we 23 combine, link or distribute our proprietary software with open source software in a specific manner, we could, under some open source licenses, be required to release the source code of our proprietary software to the public. This could also preclude us from charging license fees.
If we combine, link or distribute our proprietary software with open source software in a specific manner, we could, under some open source licenses, be required to release the source code of our proprietary software to the public. This could also preclude us from charging license fees.
Further the European Commission published revised standard contractual clauses for data transfers from the EEA (mandatory for new transfers since September 27, 2021, and for existing transfers since December 27, 2022) and the UK Information Commissioner’s Office published its own new data transfer standard contracts for data transfers from the UK (mandatory for new transfers since September 21, 2022 and for existing transfers by March 21, 2024).
Further the European Commission published revised standard contractual clauses for data transfers from the EEA (mandatory for new transfers since September 27, 2021, and for existing transfers since December 27, 2022) and the UK Information Commissioner’s Office published its own new data transfer standard contracts for data transfers from the UK (mandatory for new transfers since September 21, 2022 and for existing transfers since March 21, 2024).
Evolving regulatory standards could place restrictions on the collection, management, aggregation and use of the types of data we collect, which could result in a material increase in the cost of collecting or otherwise obtaining certain kinds of data and could limit the ways in which we may use or disclose data.
Evolving regulatory standards could place restrictions on the collection, management, aggregation and use of the types of data we collect, which 19 could result in a material increase in the cost of collecting or otherwise obtaining certain kinds of data and could limit the ways in which we may use or disclose data.
The global data protection landscape is rapidly evolving, and we are or may become subject to numerous state, federal and foreign laws, requirements and regulations governing the collection, use, disclosure, retention, and security of personal 15 information.
The global data protection landscape is rapidly evolving, and we are or may become subject to numerous state, federal and foreign laws, requirements and regulations governing the collection, use, disclosure, retention, and security of personal information.
Lawmakers also have proposed new laws and regulations, and modifications to existing laws and regulations, that affect the activities of technology 14 companies such as the recent efforts to eliminate or modify Section 230 of the Communications Decency Act.
Lawmakers also have proposed new laws and regulations, and modifications to existing laws and regulations, that affect the activities of technology companies such as the recent efforts to eliminate or modify Section 230 of the Communications Decency Act.
If not 24 waived, future defaults could cause all of the outstanding indebtedness under the Senior Secured Credit Facility to become immediately due and payable and our access to further credit under the Senior Secured Credit Facility may terminate.
If not waived, future defaults could cause all of the outstanding indebtedness under the Senior Secured Credit Facility to become immediately due and payable, and our access to further credit under the Senior Secured Credit Facility may terminate.
We may experience ownership changes in the future as a result of future changes in our stock ownership, some of which changes may be outside our control. Similar provisions of state tax law may also apply to our state NOLs.
We may 27 experience ownership changes in the future as a result of future changes in our stock ownership, some of which changes may be outside our control. Similar provisions of state tax law may also apply to our state NOLs.
The CAN-SPAM Act and the Telemarketing Sales Rule and analogous state laws also impose various restrictions on marketing conducted using email, telephone, fax or text message.
The CAN-SPAM Act and the Telemarketing Sales Rule 17 and analogous state laws also impose various restrictions on marketing conducted using email, telephone, fax or text message.
We are a “controlled company” within the meaning of the NYSE rules and, as a result, expect to qualify for, and may rely on, exemptions from certain corporate governance requirements. As of December 31, 2023, our Co-Founder and Chief Executive Officer, David Steinberg, beneficially owns a majority of the combined voting power of all classes of our outstanding voting stock.
We are a “controlled company” within the meaning of the NYSE rules and, as a result, expect to qualify for, and may rely on, exemptions from certain corporate governance requirements. As of December 31, 2024, our Co-Founder and Chief Executive Officer, David Steinberg, beneficially owns a majority of the combined voting power of all classes of our outstanding voting stock.
If we are not able to effectively compete with these consolidated companies, we may not be able to maintain our market share and may experience a reduction in our revenue. Our industry is subject to rapid and frequent changes in technology, evolving customer needs and the frequent introduction of new and enhanced offering by our competitors, making it intensely competitive.
If we are not able to effectively compete with these consolidated companies, we may not be able to maintain our market share and may experience a reduction in our revenue. Our industry is subject to rapid and frequent changes in technology, evolving customer needs and the frequent introduction of new and enhanced offerings by our competitors, making it intensely competitive.
The anticipated benefits of any acquisition or investment may not be realized, and we may be exposed to unknown risks, any of which could adversely affect our business, operating results and financial condition, including risks arising from: • difficulties in integrating the operations, technologies, product or service offerings, administrative systems and personnel of acquired businesses, especially if those businesses operate outside of our core competency or geographies in which we currently operate; 12 • ineffectiveness or incompatibility of acquired technologies or solutions; • potential loss of key employees of the acquired businesses; • inability to maintain key business relationships and reputations of the acquired businesses; • diversion of management attention from other business concerns; • litigation arising from the acquisition or the activities of the acquired businesses, including claims from terminated employees, customers, former stockholders or other third parties and intellectual property disputes; • assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights, or increase our risk of liability; • complications in the integration of acquired businesses or diminished prospects; • failure to generate the expected financial results related to an acquisition on a timely manner or at all; • weak, ineffective, or incomplete data privacy compliance strategies by the acquired company resulting in our inability to use acquired data assets; • failure to accurately forecast the financial or other business impacts of an acquisition; and • implementation or remediation of effective controls, procedures and policies for acquired businesses.
The anticipated benefits of any acquisition (including our recent acquisition of LiveIntent) or investment may not be realized, and we may be exposed to unknown risks, any of which could adversely affect our business, operating results and financial condition, including risks arising from: • difficulties in integrating the operations, technologies, product or service offerings, administrative systems and personnel of LiveIntent or any other acquired businesses, especially if those businesses operate outside of our core competency or geographies in which we currently operate; • ineffectiveness or incompatibility of acquired technologies or solutions; • potential loss of key employees of the acquired businesses; • inability to maintain key business relationships and reputations of the acquired businesses; • diversion of management attention from other business concerns; 13 • litigation arising from the acquisition or the activities of the acquired businesses, including claims from terminated employees, customers, former stockholders or other third parties and intellectual property disputes; • assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights, or increase our risk of liability; • complications in the integration of LiveIntent or any other acquired businesses or diminished prospects; • failure to generate the expected financial results related to the LiveIntent acquisition or other future acquisitions on a timely manner or at all; • weak, ineffective, or incomplete data privacy compliance strategies by the acquired company resulting in our inability to use acquired data assets; • failure to accurately forecast the financial or other business impacts of an acquisition; and • implementation or remediation of effective controls, procedures and policies for acquired businesses.
We cannot guarantee that our share repurchase program will be fully consummated or that it will enhance long-term stockholder value. Share repurchases could also increase the volatility of the trading price of our common stock and could diminish our cash reserves.
We cannot guarantee that our share repurchase program will be fully consummated or that it will enhance long-term stockholder value. Share repurchases could also increase the volatility of the trading price of our Class A Common Stock and could diminish our cash reserves.
Inflation has the potential to adversely affect our liquidity, business, operating results and financial condition of operations by increasing our overall cost structure, particularly if we are unable to achieve commensurate increases in the prices we charge our customers.
Inflation has the potential to adversely affect our liquidity, business, operating results and financial condition by increasing our overall cost structure, particularly if we are unable to achieve commensurate increases in the prices we charge our customers.
The principal way that we collect individual opted-in data is directly from the consumers when they register or interact with our platform (such as the DISQUS commenting system), or with partners’ services.
The principal way that we collect individual data is directly from the consumers when they register or interact with our platform (such as the DISQUS commenting system), or with partners’ services.
Item 1A. Risk Factors. In addition to the other information set forth in this Annual Report on Form 10-K, you should carefully consider the risks and uncertainties described below, which could materially adversely affect our business, operating results, financial condition, and cash flow.
Item 1A. Risk F actors. In addition to the other information set forth in this Annual Report on Form 10-K, you should carefully consider the risks and uncertainties described below, which could materially adversely affect our business, operating results, financial condition, and cash flow.
As part of our growth strategy, we may acquire or invest in other businesses, assets or technologies that are complementary to and fit within our strategic goals. Acquisitions are inherently risky and if they fail, they can result in costly remediating steps such as litigation and divesture.
As part of our growth strategy, we have acquired and may continue to acquire or invest in other businesses, assets or technologies that are complementary to and fit within our strategic goals. Acquisitions are inherently risky and if they fail, they can result in costly remediating steps such as litigation and divesture.
In addition, some of our key employees may receive significant proceeds from sales of our Class A common stock, which may reduce their motivation to continue to work for us.
In addition, some of our key employees may receive significant proceeds from sales of our Class A Common Stock, which may reduce their incentive to continue to work for us.
To the extent that our platform depends upon the successful operation of the open source software we use, any undetected errors or defects in this open source software could prevent the deployment or impair the functionality of our platform, delay new solution introductions, result in a failure of our platform and injure our reputation.
To the extent that our platform depends upon the successful operation of the open 25 source software we use, any undetected errors or defects in this open source software could prevent the deployment or impair the functionality of our platform, delay new solution introductions, result in a failure of our platform and harm our reputation.
Once fully applicable, the EU AI Act will have a material impact on the way artificial intelligence is regulated in the EU, and together with developing guidance and/or decisions in this area, likely to affect our use of artificial intelligence and our ability to provide and to improve our services, require additional compliance measures and changes to our operations and processes, result in increased 21 compliance costs and potential increases in civil claims against us, and could adversely affect our business, operations and financial condition.
Once fully applicable, the EU AI Act and the EU Product Liability Directive will have a material impact on the way artificial intelligence is regulated in the EU, and together with developing guidance and/or decisions in this area, likely to affect our use of artificial intelligence and our ability to provide and to improve our services, require additional compliance measures and changes to 23 our operations and processes, result in increased compliance costs and potential increases in civil claims against us, and could adversely affect our business, operations and financial condition.
New consumer tools, regulatory restrictions and potential changes to web browsers and mobile operating systems all threaten our ability to collect such data, which could harm our operating results and financial condition and adversely affect the demand for our products and solutions. • Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could adversely affect our business, results of operations and financial condition. • Any unfavorable publicity or negative public perception of current data collection practices could result in additional regulations which may impact the effectiveness of our data cloud and platform. • A significant inadvertent disclosure or breach of confidential and/or personal information we process, or a security breach of our or our customers’, suppliers’ or other partners’ IT Systems could be detrimental to our business, reputation, financial performance and results of operations. • We depend on third-party data centers, systems and technologies to operate our business, the disruption of which could adversely affect our business, operating results and financial condition. • If we fail to detect or prevent fraud or malware intrusion on our platform, devices, or systems, or into the systems or devices of our customers and their consumers, publishers could lose confidence in our platform, and we could face legal claims and regulatory investigations, any of which could adversely affect our business, operating results and financial condition. • The standards that private entities and inbox service providers adopt in the future to regulate the use and delivery of email may interfere with the effectiveness of our platform and our ability to conduct business. • Any actual or perceived failure to comply with evolving regulatory frameworks around the development and use of artificial intelligence could adversely affect our business, results of operations, and financial condition. • Catastrophic events such as pandemics, earthquakes, flooding, droughts, fire and power outages, and business and operational interruption by man-made problems such as war, conflicts and acts of terrorism.
New consumer tools, regulatory restrictions and potential changes to web browsers and mobile operating systems all threaten our ability to collect such data, which could harm our operating results and financial condition and adversely affect the demand for our products and solutions. • Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could adversely affect our business, results of operations and financial condition. • Any unfavorable publicity or negative public perception of current data collection practices could result in additional regulations which may impact the effectiveness of our data cloud and platform. • A significant inadvertent disclosure or breach of confidential and/or personal information we process, or a security breach of our or our customers’, suppliers’ or other partners’ IT Systems could be detrimental to our business, reputation, financial performance and results of operations. • We depend on third-party data centers, systems and technologies to operate our business, the disruption of which could adversely affect our business, operating results and financial condition. • If we fail to detect or prevent fraud or malware intrusion on our platform, devices, or systems, or into the systems or devices of our customers and their consumers, publishers could lose confidence in our platform, and we could 8 face legal claims and regulatory investigations, any of which could adversely affect our business, operating results and financial condition. • The standards that private entities and inbox service providers adopt in the future to regulate the use and delivery of email may interfere with the effectiveness of our platform and our ability to conduct business. • Any actual or perceived failure to comply with evolving regulatory frameworks around the development and use of artificial intelligence could adversely affect our business, results of operations, and financial condition. • The impact of our business and financial condition of incurring additional debt or issuing new debt or equity securities. • Catastrophic events such as pandemics, hurricanes, wildfires, tornadoes, earthquakes, flooding, droughts and power outages, and business and operational interruption by man-made problems such as war, conflicts and acts of terrorism. • We may issue additional equity or debt securities in the future in order to raise capital.
The experience and capabilities of Indian courts in handling intellectual property litigation vary, and outcomes are unpredictable. Further, such litigation may require significant expenditure of cash and management efforts and could harm our business, operating results and financial condition.
The experience and capabilities of Indian courts in handling intellectual property litigation vary, and outcomes are unpredictable. Further, such litigation may require significant management efforts and result in significant cash expenditures and could harm our business, operating results and financial condition.
Our DEI team is focused on driving inclusiveness, innovation and stronger business results by attracting a more diverse talent pool and creating a more inclusive work environment for all our employees around the world.
Our team is focused on driving inclusiveness, innovation and stronger business results by attracting a broader talent pool and creating a more inclusive work environment for all our employees around the world.
These risks and uncertainties include, but are not limited to, the following: • Our success and revenue growth depends on our ability to add and retain scaled customers and convert our scaled customers into super-scaled customers. • We often have long sales cycles, which can result in significant time between initial contact with a potential customer and execution of a customer agreement, making it difficult to project when, if at all, we will generate revenue from those customers. • We may experience fluctuations in our operating results, which could make our future operating results difficult to predict. 7 • If we do not manage our growth effectively, the quality of our platform and solutions may suffer, and our business, operating results and financial condition may be adversely affected. • Our industry is intensely competitive, and if we do not effectively compete against current and future competitors or fail to innovate and make the right investment decisions in our product offerings and platform, our business, operating results and financial condition could be harmed. • Future acquisitions or strategic investments could be difficult to identify and integrate, divert the attention of management and disrupt our business, dilute stockholder value and adversely affect our business, operating results and financial condition. • The technology industry is subject to increasing scrutiny that could result in U.S. federal or state government actions that could negatively affect our business. • Our business and the effectiveness of our platform depends on our ability to collect and use data online.
These risks and uncertainties include, but are not limited to, the following: • Our success and revenue growth depends on our ability to add and retain scaled customers and convert our scaled customers into super-scaled customers. • We often have long sales cycles, which can result in significant time between initial contact with a potential customer and execution of a customer agreement, making it difficult to project when, if at all, we will generate revenue from those customers. • We may experience fluctuations in our operating results, including during presidential elections years where we generally generate higher revenues, which could make our future operating results difficult to compare and predict. • If we do not manage our growth effectively, the quality of our platform and solutions may suffer, and our business, operating results and financial condition may be adversely affected. • Our industry is intensely competitive, and if we do not effectively compete against current and future competitors or fail to innovate and make the right investment decisions in our product offerings and platform, our business, operating results and financial condition could be harmed. • Acquisitions or strategic investments could be difficult to identify and integrate (including the integration of our recent acquisition of LiveIntent, Inc.), divert the attention of management and disrupt our business, dilute stockholder value and adversely affect our business, operating results and financial condition. • The technology industry is subject to increasing scrutiny that could result in U.S. federal or state government actions that could negatively affect our business. • Our business and the effectiveness of our platform depends on our ability to collect and use data online.
Our business is vulnerable to damage or interruption from pandemics, earthquakes, extreme weather events, flooding, droughts, fire, power outages, telecommunications failures, terrorist attacks, acts of war, human errors, break-ins and similar events.
Our business is vulnerable to damage or interruption from pandemics, hurricanes, wildfires, tornadoes, earthquakes, extreme weather events, flooding, droughts, power outages, telecommunications failures, terrorist attacks, acts of war, human errors, break-ins and similar events.
To fund future acquisitions, we may pay cash, which would diminish our cash reserves, or issue additional shares of our Class A common stock, which could dilute current stockholders’ holdings in our company.
To fund acquisitions, we have in the past and may in the future pay cash, which would diminish our cash reserves, or issue additional shares of our Class A Common Stock, which could dilute current stockholders’ holdings in our company.
The EU AI Act will apply to companies that develop, use and/or provide artificial intelligence in the EU and includes requirements around transparency, conformity assessments and monitoring, risk assessments, human oversight, security, accuracy, general purpose artificial intelligence and foundation models, and proposes fines for breach of up to 7% of worldwide annual turnover.
The EU AI Act applies to companies that develop, use and/or provide artificial intelligence in the EU and – dependent on the AI use case – includes requirements around transparency, conformity assessments and monitoring, risk assessments, human oversight, security, accuracy, general purpose artificial intelligence and foundation models, and proposes fines for breach of up to 7% of worldwide annual turnover.
Any one of the factors referred to above or herein or the cumulative effect of any combination of factors referred to above or herein may result in our operating results being below our expectations and the expectations of securities analysts and investors, or may result in significant fluctuations in our quarterly and annual operating results, including fluctuations in our key performance indicators ("KPIs").
Any one of the factors referred to above or herein or the cumulative effect of any combination of factors referred to above or herein may result in our operating results that are below our expectations and the expectations of securities analysts and investors, or may result in significant fluctuations in our quarterly and annual operating results, including fluctuations in our key performance indicators (“KPIs”).
In addition, our Senior Secured Credit Facility contains customary minimum quarterly financial maintenance covenants. The operating and financial restrictions and covenants in the Senior Secured Credit Facility, as well as any future financing arrangements that we may enter into, may restrict our ability to finance our operations, engage in, expand, or otherwise pursue our business activities and strategies.
The operating and financial restrictions and covenants in the Senior Secured Credit Facility, as well as any future financing arrangements that we may enter into, may restrict our ability to finance our operations, engage in, expand, or otherwise pursue our business activities and strategies.
This Senior Secured Credit Facility also restricts our ability, without the lender’s written consent, to, among other things: • dispose of or sell our assets; • make material changes in our business or management; • consolidate or merge with other entities; • incur additional indebtedness; • create liens on our assets; • pay dividends; • make investments; • enter into transactions with affiliates; and • pay off or redeem subordinated indebtedness.
This Senior Secured Credit Facility also restricts our ability, without the lender’s written consent, to, among other things: • dispose of or sell our assets; • make material changes in our business or management; • consolidate or merge with other entities; • incur additional indebtedness; • create liens on our assets; • pay dividends; • make investments; • enter into transactions with affiliates; and • pay off or redeem subordinated indebtedness. 26 In addition, our Senior Secured Credit Facility contains customary minimum quarterly financial maintenance covenants.
Our loan agreement contains operating and financial covenants that may restrict our business and financing activities. As of the date hereof, we have $185.0 million outstanding under our loan and security agreement (“Senior Secured Credit Facility”) with Bank of America, N.A., dated February 3, 2021. Borrowings under this agreement are secured by substantially all of our assets.
Our loan agreement contains operating and financial covenants that may restrict our business and financing activities. As of the date hereof, we have $200.0 million outstanding under our loan and security agreement (“Senior Secured Credit Facility”) with Bank of America, N.A., dated August 30, 2024. Borrowings under this agreement are secured by substantially all of our assets.
Future acquisitions or strategic investments could be difficult to identify and integrate, divert the attention of management and disrupt our business, dilute stockholder value and adversely affect our business, operating results and financial condition.
Acquisitions or strategic investments could be difficult to identify and integrate (including the integration of our recent acquisition of LiveIntent), divert the attention of management and disrupt our business, dilute stockholder value and adversely affect our business, operating results and financial condition.
Our business is subject to the risk of catastrophic events such as pandemics, earthquakes, flooding, droughts, fire and power outages, and to business and operational interruption by man-made problems such as war, conflicts and terrorism.
Our business is subject to the risk of catastrophic events such as pandemics, hurricanes, wildfires, tornadoes, earthquakes, extreme weather events, flooding, droughts and power outages, and to business and operational interruption by man-made problems such as war, conflicts and terrorism.
Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could adversely affect our business, results of operations, and financial condition.
Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could adversely affect our business, results of operations, and financial condition and the price of our Class A Common Stock.
We operate in an industry with an extensive history of intellectual property litigation. There is a risk that our business, platform and solutions may infringe or be alleged to infringe the trademarks, copyrights, patents and other intellectual property rights of third parties, including patents held by our competitors or by non-practicing entities.
There is a risk that our business, platform and solutions may infringe or be alleged to infringe the trademarks, copyrights, patents and other intellectual property rights of third parties, including patents held by our competitors or by non-practicing entities.
We cannot provide assurance that we will be successful in maintaining our relationships with these external data source providers or that we will be able to continue to obtain data from them on acceptable terms or at all. Furthermore, we cannot provide assurance that we will be able to obtain data from alternative sources if our current sources become unavailable.
We cannot provide assurance that we will be successful in maintaining our relationships with these external data source providers or that we will be able to continue to 16 obtain data from them on acceptable terms or at all.
In addition, the following factors may cause our operating results to fluctuate: • Our usage-based pricing model makes it difficult to forecast revenues from our current customers and future prospects; • changes in our pricing policies, the pricing policies of our competitors and the pricing or availability of data or other third-party services; • the seasonal budgeting cycles and internal marketing budgeting and strategic purchasing priorities of our customers; • our ability to retain and attract top talent; • our ability to anticipate or respond to changes in the competitive landscape, or improvements in the functionality of competing solutions that reduce or eliminate one or more of our competitive advantages; • our ability to maintain and expand our relationships with data centers and strategic third-party technology vendors, who provide floor space, bandwidth, cooling and physical security services on which our platform operates; • our ability to successfully expand our business internationally; • the emergence of significant privacy, data protection, security or other threats, regulations or requirements applicable to our business and shifting views and behaviors of consumers concerning use of data and data privacy; • extraordinary expenses, such as litigation or other dispute-related settlement payments; and • future accounting pronouncements or changes in our accounting policies.
In addition, the following factors may cause our operating results to fluctuate: • our usage-based pricing model makes it difficult to forecast revenues from our current customers and future prospects; • changes in our pricing policies, the pricing policies of our competitors and the pricing or availability of data or other third-party services; • the seasonal budgeting cycles and internal marketing budgeting and strategic purchasing priorities of our customers; • the U.S. presidential election cycles potentially leading to higher revenue generation compared to non-election years; 10 • our ability to retain and attract top talent; • our ability to anticipate or respond to changes in the competitive landscape, or improvements in the functionality of competing solutions that reduce or eliminate one or more of our competitive advantages; • our ability to maintain and expand our relationships with data centers and strategic third-party technology vendors, who provide floor space, bandwidth, cooling and physical security services on which our platform operates; • our ability to successfully expand our business internationally; • the emergence of significant privacy, data protection, security or other threats, regulations or requirements applicable to our business and shifting views and behaviors of consumers concerning use of data and data privacy; • general economic and market conditions, including as a result of changes in U.S. trade policies, such as new or increased tariffs and retaliatory responses from other countries, and the resulting impact on our customers’ businesses; • extraordinary expenses, such as litigation or other dispute-related settlement payments; and • future accounting pronouncements or changes in our accounting policies.
Further, we could be forced to expend significant resources in response to a security breach, including those expended in notifying individuals and providing mitigating solutions, repairing system damage, increasing cyber security protection costs by deploying additional personnel and protection technologies, and litigating and resolving legal claims or governmental inquiries and investigations, all of which could divert the attention of our management and key personnel away from our business operations.
Further, we could be forced to expend significant resources in response to a security breach, including those expended in notifying individuals and providing mitigating solutions, repairing system damage, increasing cyber security protection costs by deploying additional personnel and protection technologies, and litigating and resolving legal claims or governmental inquiries and investigations, all of which could divert the attention of our management and key personnel away from our business operations. 20 We depend on third-party data centers, systems and technologies to operate our business, the disruption of which could adversely affect our business, operating results and financial condition.
Even if we are not paid by our customers on time or at all, we may still be obligated to pay for the inventory we have purchased for our customers’ marketing campaigns, and consequently, our results of operations and financial condition would be adversely impacted. 9 We may experience fluctuations in our operating results, which could make our future operating results difficult to predict.
Even if we are not paid by our customers on time or at all, we may still be obligated to pay for the inventory we have purchased for our customers’ marketing campaigns, and consequently, our results of operations and financial condition would be adversely impacted.
Failure to comply with industry self-regulation could adversely affect our business, operating results and financial condition. In addition to complying with government regulations, we participate in trade associations and industry self-regulatory groups that promote best practices or codes of conduct addressing data privacy. We also have agreed to follow certain practices as contractual obligations to customers (e.g. marketing agencies).
In addition to complying with government regulations, we participate in trade associations and industry self-regulatory groups that promote best practices or codes of conduct addressing data privacy. We also have agreed to follow certain practices as contractual obligations to customers (e.g. marketing agencies).
For example, the Inflation Reduction Act, passed on August 16, 2022, included a 15 percent corporate minimum tax applicable to tax years beginning after December 31, 2022. We do not believe the corporate minimum tax will materially impact our effective tax rate or tax liability.
For example, the Inflation Reduction Act, passed on August 16, 2022, included a 15% corporate minimum tax applicable to tax years beginning after December 31, 2022 and a 1% excise tax on certain stock repurchases by U.S. corporations. We do not believe the corporate minimum tax will materially impact our effective tax rate or tax liability.
The dual class structure of our common stock has the effect of concentrating voting control with our Co-Founder and Chief Executive Officer and his affiliates, which will limit your ability to influence the outcome of matters submitted to our stockholders for approval, including the election of our directors and the approval of any change in control transaction. 27 As of December 31, 2023, our current founder and chief executive officer and his affiliates held, in aggregate 65.4% of the voting power of our outstanding capital stock.
The dual class structure of our common stock has the effect of concentrating voting control with our Co-Founder and Chief Executive Officer and his affiliates, which will limit your ability to influence the outcome of matters submitted to our stockholders for approval, including the election of our directors and the approval of any change in control transaction.
In addition, theft or misuse of our proprietary information could still occur by employees or contractors who have access to our technology despite the agreements we have in place with such employees and contractors that restrict the use and disclosure of our information and technology and although we enter into non-disclosure agreements with our customers, consultants, suppliers and other parties with whom we have strategic relationships and business alliances and enter into intellectual property assignment agreements with our consultants and suppliers, no assurance can be given that these agreements will not be breached.
In addition, theft or misuse of our proprietary information could still occur by employees or contractors who have access to our technology despite the agreements we have in place with such employees and contractors that restrict the use and disclosure of our information and technology and although we enter into non-disclosure agreements with our customers, consultants, suppliers and other parties with whom we have strategic relationships and business alliances and enter into intellectual property assignment agreements with our consultants and suppliers, no assurance can be given that these agreements will not be breached. 24 While we have issued patents and have patent applications pending, we may be unable to obtain patent protection for the technology covered in our patent applications or such patent protection may not be obtained quickly enough to meet our business needs.
Although we have adopted policies to promote compliance with laws and regulations as well as to foster a respectful workplace for all employees, our employees may fail to abide by these policies.
Although we have adopted policies to promote compliance with laws and regulations as well as to foster a respectful workplace for all employees, our employees may fail to abide by these policies, relevant laws and regulations, or any new laws or regulations or interpretations of existing legal requirements.
Sales of a substantial number of shares of our Class A common stock, particularly sales by our directors, executive officers and significant stockholders, or the perception that these sales might occur, could depress the market price of our Class A common stock.
Further, sales of a substantial number of shares of our Class A Common Stock, particularly sales by our directors, executive officers and significant stockholders, or the perception that these sales might occur, could depress the market price of our Class A Common Stock and impair our ability to raise additional capital through the sale of equity.
We believe our corporate culture has been critical to our success and we plan to continue to invest time and resources to continue building it. In particular, Diversity, Equity and Inclusion (“DEI”) is a strategic imperative at Zeta.
We believe our corporate culture has been critical to our success, and we plan to continue to invest time and resources to continue building it. In particular, our human capital initiatives are a strategic imperative at Zeta.
Among other things, this will require us at various times to: • strategically invest in the development and enhancement of our platform and data center infrastructure; • improve coordination among our engineering, product, operations and other support organizations; • manage multiple relationships with various partners, customers and other third parties; • manage international operations; • develop our operating, administrative, legal, financial and accounting systems and controls; and • recruit, hire, train and retain personnel, especially those possessing extensive engineering skills and experience in complex technologies and data sciences, of which there is limited supply and increasing demand. 10 If we do not manage our growth well, the efficacy and performance of our platform may suffer, which could harm our reputation, reduce demand for our platform and solutions and have an adverse effect on our business, operating results and financial condition.
Among other things, this will require us at various times to: • strategically invest in the development and enhancement of our platform and data center infrastructure; • improve coordination among our engineering, product, operations and other support organizations; • manage multiple relationships with various partners, customers and other third parties; • manage international operations; • develop our operating, administrative, legal, financial and accounting systems and controls; and • recruit, hire, train and retain personnel, especially those possessing extensive engineering skills and experience in complex technologies and data sciences, of which there is limited supply and increasing demand.
We also continually work on converting our non-scaled customers into scaled customers. Many of our contracts and relationships with customers do not include automatic renewal or exclusive obligations requiring them to use our platform or maintain or increase their use of our platform.
Many of our contracts and relationships with customers do not include automatic renewal or exclusive obligations requiring them to use our platform or maintain or increase their use of our platform.
In July 2021, we received a notice from Norwegian authorities of an intent to impose a fine for our alleged failure to adhere to the GDPR with respect to the collection of personal data via cookies in their country. We have challenged this allegation on a number of grounds and currently await a response from the Norwegian DPA.
In July 2021, we received a notice from Norwegian authorities of an intent to impose a fine for our alleged failure to adhere to the GDPR with respect to the collection of personal data via cookies in their country.
Risks Related to Public Reporting Matters and An Investment in Our Class A Common Stock 25 Substantial future sales of shares of our Class A common stock could cause the market price of our Class A common stock to decline and we may also expend substantial funds to satisfy a portion of our tax withholding and remittance obligations that arise upon the vesting and/or settlement of certain of our restricted stock awards, which may have an adverse effect on our financial condition and results of operations.
Additional issuances of equity securities would dilute the investment of our current stockholders and could cause the market price of our Class A Common Stock to decline, and we may also expend substantial funds to satisfy a portion of our tax withholding and remittance obligations that arise upon the vesting and/or settlement of certain of our restricted stock awards, which may have an adverse effect on our financial condition and results of operations.
In particular, the TCPA and related state laws impose significant restrictions on the ability to make telephone calls or send text messages to mobile telephone numbers without the prior consent of the person being contacted.
Any future such litigation against us could be costly and time-consuming to defend. In particular, the TCPA and related state laws impose significant restrictions on the ability to make telephone calls or send text messages to mobile telephone numbers without the prior consent of the person being contacted.
Further, the CPRA, effective January 1, 2023, significantly amended the CCPA and imposes additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data.
Further, as amended by the California Privacy Rights Act, the CCPA imposes additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, audit requirements for higher risk data, and opt outs for certain uses of sensitive data.
We have entered into several international markets and expect to enter into additional markets in the future. We expect to continue to expand our international operations, which may require significant management attention and financial resources and may place burdens on our management, administrative, operational, legal and financial infrastructure.
We expect to continue to expand our international operations, which may require significant management attention and financial resources and may place burdens on our management, administrative, operational, legal and financial infrastructure.
Any resurgences or variants of the virus or other epidemics, pandemics or health crises could have a material negative impact on economic and market conditions around the world, which could have a significant negative impact on our and our customers, suppliers’ or other partners’ business, operating results, and financial condition.
Pandemics, such as the COVID-19 pandemic, which negatively impacted our business, operating results and financial condition, or other health crises could have a material negative impact on economic and market conditions around the world, which could have a significant negative impact on our and our customers, suppliers’ or other partners’ business, operating results, and financial condition.
Actual or threatened war, terrorist activity, political unrest, civil strife, and other geopolitical uncertainty could have a similar effect on our and our customers, suppliers’ or other partners’ business, financial condition or growth strategy.
Further, actual or threatened war, terrorist activity, political unrest, civil strife, and other geopolitical uncertainty could have a similar effect on our and our customers, suppliers’ or other partners’ business, financial condition or growth strategy. We are subject to various risks associated with environmental, social, and governance matters.
Increased scrutiny regarding the use of such technologies and the use of personal data for online advertising practices, together with adverse rulings on these issues, even if not directly against us, may have a direct impact on our ability to continue to collect and process personal data for the services that we provide and could adversely impact our business activities.
We challenged the Norwegian Data Protection Authority’s (“DPA”) decision, and in October 2024, the DPA issued a final order in the case citing a breach of the GDPR, but reducing the fine to zero. 18 Increased scrutiny regarding the use of such technologies and the use of personal data for online advertising practices, together with adverse rulings on these issues, even if not directly against us, may have a direct impact on our ability to continue to collect and process personal data for the services that we provide and could adversely impact our business activities.
Accordingly, we must continually work to win new scaled customers and educate and retain existing scaled customers, increase their usage of our platform and capture a larger share of their marketing spend, which may lead to an increase in our super-scaled customers. 8 In 2023, our top ten customers accounted for approximately one-third of our total revenue and no customer accounted for more than 10% of our total revenue.
Accordingly, we must continually work to win new scaled customers and educate and retain existing scaled customers, increase their usage of our platform and capture a larger share of their marketing spend, which may lead to an increase in our super-scaled customers.
We prepare our consolidated financial statements to conform to United States Generally Accepted Accounting Principles (“GAAP”). These accounting principles are subject to interpretation by the SEC, Financial Accounting Standards Board (“FASB”), and various bodies formed to interpret and create accounting rules and regulations.
These accounting principles are subject to interpretation by the SEC, Financial Accounting Standards Board (“FASB”), and various bodies formed to interpret and create accounting rules and regulations.
The FTC has recently conducted enforcement actions against other companies that created new precedents that may require us to adjust our business practices, although these changes have not produced material costs or loss of revenue for us. Future FTC enforcement actions against marketing companies could result in more material impacts to us.
The FTC has in recent years conducted enforcement actions against other companies that created new precedents that may require us to adjust our business practices. Future FTC enforcement actions against marketing companies could result in more material impacts to us.
The share repurchase program may be modified, suspended, or terminated at any time, and we cannot guarantee that the program will be fully consummated or that it will enhance long-term stockholder value.
In addition, the terms of our Senior Secured Credit Facility impose limitations on our ability to repurchase shares. The share repurchase program may be modified, suspended, or terminated at any time, and we cannot guarantee that the program will be fully consummated or that it will enhance long-term stockholder value.
We collect data on ad specifications (such as placement, size and format), pricing and auction activity (such as price floors, bid response behavior and clearing prices).
As we process transactions through our platform, we collect large amounts of data about consumers and advertisements that we place. We collect data on ad specifications (such as placement, size and format), pricing and auction activity (such as price floors, bid response behavior and clearing prices).

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur cybersecurity risk management program includes: • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise IT environment; 29 • a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls; • cybersecurity awareness training of our employees, incident response personnel, and senior management; • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and • a third-party risk management process for service providers, suppliers, and vendors.
Biggest changeOur cybersecurity risk management program includes: • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise IT environment; • a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls; • the use of external service providers, where appropriate, to monitor our cybersecurity posture on a 24/7 basis in a co-managed Security Operations Center (SOC); • the design and deployment of a Defense-In-Depth layered technical security implementation leveraging best-of-breed components; • cybersecurity awareness training of our employees, incident response personnel, and senior management; • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and • a third-party risk management process for service providers, suppliers, and vendors.
Board members receive presentations on cybersecurity topics from our Chief Information Officer (CIO), internal security staff or external experts as part of the Board’s continuing education on topics that impact public companies. Our management team, including our CIO, Chief Information Security Office (CISO) and General Counsel, is responsible for assessing and managing our material risks from cybersecurity threats.
Board members receive presentations on 32 cybersecurity topics from our Chief Information Officer (CIO), internal security staff or external experts as part of the Board’s continuing education on topics that impact public companies. Our management team, including our CIO, Chief Information Security Office (CISO) and General Counsel, is responsible for assessing and managing our material risks from cybersecurity threats.
Item 1C. Cyber security. Cybersecurity Risk Management and Strategy We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information. Our cybersecurity risk management program includes a cybersecurity incident response plan.
Item 1C. Cybersecurity. Cybersecurity Risk Management and Strategy We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information. Our cybersecurity risk management program includes a cybersecurity incident response plan.
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Our program is assessed by third-party security auditors on a yearly basis through our SOC II Type 2 and SOX audit processes.
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Kurt Baumgarten, CISO, has a long history of successfully leading Information Security Programs across a diverse array of organizations such as Linedata SA, Indigo Ag, and Matterport. Kurt has multiple security certifications, such as CISA, CRISC, CDPSE, CGEIT, and has earned a master’s degree in information security from Norwich University as well as an MBA with a concentration in e-commerce.
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Dr. Jeffry Nimeroff, CIO, has a 25-year history of building technology groups and integrating Information Security programs at organizations ranging from startups like Hotsocket and Pet360 to established companies at various points in their lifecycle like CDnow, and Bertelsmann Music Group. Dr. Nimeroff has a PhD in Computer Science from the University of Pennsylvania.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe amount of business that we conducted with Kubient was quantitively insignificant to Zeta and we have not worked with Kubient since 2020. We are cooperating with the investigation. For a description of our legal proceedings, see Note 8 to our audited consolidated financial statements in the “Financial Statements and Supplementary Data” section of this Annual Report on Form 10-K.
Biggest changeThis matter is at the very early stages of the legal process, and as a result, the Company is not able to estimate a range of possible loss. For a description of our legal proceedings, see Note 12 to our audited consolidated financial statements in the “Financial Statements and Supplementary Data” section of this Annual Report on Form 10-K.
We are not currently a party to any litigation the outcome of which, we believe, if determined adversely to us, would individually or 30 taken together have a material adverse effect on our business, operating results, cash flows, or financial condition. Defending any such proceedings is costly and can impose a significant burden on management and employees.
We are not currently a party to any litigation the outcome of which, we believe, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, cash flows, or financial condition. Defending any such proceedings is costly and can impose a significant burden on management and employees.
Item 4. Mine Safety Disclosures. Not Applicable. 31 Part II
Item 4. Mine Safety Disclosures. Not Applicable. 34 Part II
Added
The amount of business that we conducted with Kubient was quantitively insignificant to Zeta, and we have not worked with Kubient since 2020. We are cooperating with the investigation. On November 22, 2024, a purported stockholder of the Company filed putative class action lawsuit in the U.S.
Added
District Court for the Southern District of New York against the Company and the Company’s Chief Executive Officer, David A. Steinberg, and the Company’s Chief Financial Officer, Christopher Greiner, entitled Davoodi v. Zeta Global Holdings Corp. Lead Plaintiff motions are due on January 21, 2025.
Added
The Complaint alleges, based in part on the report from Culper Research, that the defendants made false and misleading statements and omissions about the Company’s business, operations, and prospects between February 27, 2024 and November 13, 2024. We are vigorously defending ourselves against this lawsuit, and we believe the claims made in the report are without merit.
Added
The lawsuit seeks, among other things, damages in connection with the Company’s allegedly artificially inflated stock price between February 27, 2024 and November 13, 2024 as a result of those allegedly false and misleading statements 33 and omissions, as well as interest, attorneys’ fees, and costs.
Added
This matter is at the very early stages of the legal process, and as a result, the Company is not able to estimate a range of possible loss. On December 11, 2024 and December 23, 2024, purported stockholders of the Company filed shareholder derivative complaints in the U.S.
Added
District Court for the Southern District of New York purportedly on the Company’s behalf against members of the Company’s board of directors and the Company as a nominal defendant, which have been consolidated into a single lawsuit captioned In re Zeta Global Holdings Corp.
Added
Stockholder Derivative Litigation , based on the same underlying allegations as in the Davoodi case (described above).
Added
The complaints allege (i) violations of Section 14(a) of the Securities Exchange Act of 1934, (ii) breach of fiduciary duty, (iii) unjust enrichment, (iv) abuse of control, (v) gross mismanagement, (vi) waste of corporate assets, (vii) contribution under Section 10(b) and 21D of the Securities Exchange Act of 1934, and (viii) aiding and abetting.
Added
We are vigorously defending ourselves against this lawsuit, and we believe the claims made in the report are without merit. The Company’s board members are each party to an indemnification agreement with the Company that may require the Company to reimburse the board members for certain expenses and other costs related to this lawsuit.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−2 removed3 unchanged
Biggest changePurchases of Equity Securities by the Issuer or Affiliated Purchaser Common stock repurchases during the quarter ended December 31, 2023 were as follows . : Period (a) Total Number of Shares (or Units) Purchased (b) Average Price Paid per Share (or Unit) (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (1) (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (in millions) (1) October 1, 2023 – October 31, 2023 — — — $ 28.9 November 1, 2023 – November 30, 2023 50,000 $ 8.66 50,000 $ 28.5 December 1, 2023 – December 31, 2023 399,033 $ 8.76 399,033 $ 25.0 Total 449,033 449,033 (1) On August 3, 2022, the Company’s Board of Directors authorized a stock repurchase and withholding program of up to $50 million in the aggregate for (i) repurchases of the Company’s outstanding Class A common stock through December 31, 2024 and (ii) the withholding of shares as an alternative to market sales by certain executives to satisfy tax withholding requirements upon vesting of restricted stock awards.
Biggest changePurchases of Equity Securities by the Issuer or Affiliated Purchaser Common stock repurchases during the quarter ended December 31, 2024 were as follows: Period (a) Total Number of Shares Purchased (b) Average Price Paid per Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) (d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) (1) October 1, 2024 – October 31, 2024 — — — $ 14.7 November 1, 2024 – November 30, 2024 1,205,480 $ 19.54 1,205,480 $ 91.2 December 1, 2024 – December 31, 2024 380,990 $ 18.95 380,990 $ 83.9 Total 1,586,470 1,586,470 (1) On August 3, 2022, the Company’s Board of Directors authorized a stock repurchase and withholding program of up to $50 million in the aggregate for (i) repurchases of the Company’s outstanding Class A Common Stock through December 31, 2024 and (ii) the withholding of shares as an alternative to market sales by certain executives to satisfy tax withholding requirements upon vesting of restricted stock awards.
The graph assumes an initial investment of $100.00 at the close of trading on June 10, 2021 and that all dividends paid by companies included in these indices have been reinvested. The performance shown in the graph below is not intended to forecast or be indicative of future stock price performance. Item 6. Reserved. 33
The graph assumes an initial investment of $100.00 at the close of trading on June 10, 2021 and that all dividends paid by companies included in these indices have been reinvested. The performance shown in the graph below is not intended to forecast or be indicative of future stock price performance. Item 6. Reserved. 36
The following graph depicts the total cumulative stockholder return of our Class A common stock from June 10, 2021, the first day of trading of our Class A common stock on the NYSE, through December 31, 2023, relative to the performance of the Nasdaq Composite and the Russell 2000 indices.
The following graph depicts the total cumulative stockholder return of our Class A Common Stock from June 10, 2021, the first day of trading of our Class A Common Stock on the NYSE, through December 31, 2024, relative to the performance of the Nasdaq Composite, Nasdaq Computer and Russell 2000 indices.
There is no established public trading market for our Class B common stock. Stockholders As of February 16, 2024, there were 108 holders of record of our Class A common stock and 10 holders of record of our Class B common stock.
There is no established public trading market for our Class B Common Stock. Stockholders As of February 14, 2025, there were 196 holders of record of our Class A Common Stock and 10 holders of record of our Class B Common Stock.
Each acquirer of our securities in such transactions confirmed that it was an accredited investor and acknowledged that the securities must be acquired and held for investment. 32 Performance Graph The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing, or otherwise subject to the liabilities under the Securities Act or Exchange Act, except to the extent that we specifically incorporate it by reference into such filing.
The 2024 SRP supplements the 2022 SRP. 35 Performance Graph The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing, or otherwise subject to the liabilities under the Securities Act or Exchange Act, except to the extent that we specifically incorporate it by reference into such filing.
Removed
Recent Sales of Unregistered Securities On October 11, 2023, the Company issued 40,274 shares of Class A common stock valued at $8.07 per share, for an aggregate value of $0.3 million, to certain individuals who provided services to the Company or their designated charitable organizations. We did not receive any proceeds from such issuance.
Added
On November 13, 2024, the Company's Board of Directors authorized a new stock repurchase program for up to $100 million of Company’s Class A Common Stock through December 31, 2026 (the “2024 SRP”).
Removed
The securities described above were issued in reliance on the exemption from registration provided in Section 4(a)(2) of the Securities Act for transactions by an issuer not involving a public offering.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

100 edited+21 added−13 removed60 unchanged
Biggest changeNet cash used in investing activities During the year ended December 31, 2023, we used $54.2 million of cash in investing activities, primarily consisting of capital expenditures of $20.5 million (including a $16.2 million investment in data and partnership agreements), website and software development costs of $15.5 million and business and asset acquisitions and other investments of $18.2 million (net of cash acquired).
Biggest changeDuring the year ended December 31, 2023, we used $54.2 million of cash in investing activities, primarily consisting of capital expenditures of $20.5 million (including a $16.2 million investment in data and partnership agreements), website and software development costs of $15.5 million and business and asset acquisitions and other investments of $18.2 million (net of cash acquired). 46 Net cash provided by / (used for) financing activities During the year ended December 31, 2024, net cash provided by financing activities of $198.0 million resulted primarily from the equity capital raise of $229.0 million, net proceeds from the credit facility refinancing of $11.6 million, $3.4 million paid by certain employees under the Company's employee stock purchase plan and exercise of options of $3.2 million, partially offset by payment of acquisition-related liabilities of $7.0 million, and repurchases of $42.2 million of our common stock under our share repurchase and RSA withholdings program.
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 a revenue-share, a cost-per-lead, cost-per-click, or cost-per-thousand-impressions basis.
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.
We expect that restructuring expenses will be correlated with future restructuring activities (if any), which could be greater than or less than our historic levels. Interest expense Interest expense primarily consists of interest payable on our long-term borrowings, net of interest earned on our short term investments in money market accounts and other short term deposits.
We expect that restructuring expenses will be correlated with future restructuring activities (if any), which could be greater than or less than our historic levels. Interest expense, net Interest expense, net primarily consists of interest payable on our long-term borrowings, net of interest earned on our short-term investments in money market accounts and other short-term deposits.
We are currently in compliance with our financial maintenance covenants under the Senior Secured Credit Facility and, based upon our current expectations, believe that we will continue to comply with our financial maintenance covenants for the next 12 months.
We are currently in compliance with our financial covenants under the Senior Secured Credit Facility, and, based upon our current expectations, believe that we will continue to comply with our financial maintenance covenants for the next 12 months.
Treasury rates at the time of grant that approximate the expected term of the option. • Expected dividend yield: We have never declared or paid any dividends and do not expect to pay any dividends in the foreseeable future. • Expected term: We estimate the expected term using the “simplified method” as we do not have sufficient historical exercise data. • Current value of the underlying asset: This is based on the VWAP (volume weighted average price) of our stock as of the date of issuance of PSUs. • Expected volatility: Expected volatility is estimated by considering the historical volatility of similar publicly-traded companies for which share price information is available.
Treasury rates at the time of grant that approximate the expected term of the option. • Expected dividend yield: We have never declared or paid any dividends and do not expect to pay any dividends in the foreseeable future. • Expected term: We estimate the expected term using the “simplified method” as we do not have sufficient historical exercise data. • Current value of the underlying asset: This is based on the VWAP (volume weighted average price) of our stock as of the date of issuance of PSUs. 50 • Expected volatility: Expected volatility is estimated by considering the historical volatility of similar publicly-traded companies for which share price information is available.
Share Repurchase and RSA Withholding Program In August 2022, the Company's Board of Directors authorized a share repurchase and withholding program (the “2022 SRP”) authorizing the repurchase of up to $50.0 million of our outstanding Class A common stock through December 31, 2024 and authorizing withholding as an alternative to market sales by executives to satisfy tax withholding requirements upon vesting of restricted stock awards (“RSAs”).
Share Repurchase and RSA Withholding Program In August 2022, the Company's Board of Directors authorized a share repurchase and withholding program (the “2022 SRP”) authorizing the repurchase of up to $50.0 million of our outstanding Class A Common Stock through December 31, 2024 and 47 authorizing withholding as an alternative to market sales by executives to satisfy tax withholding requirements upon vesting of restricted stock awards (“RSAs”).
A significant change in the time spent on each project could have a material impact on the amount capitalized and the related amortization expense in subsequent periods. 46 Intangible assets, net We record intangible assets at cost less accumulated amortization. Cost of intangible assets acquired through business combinations represents their fair market value at the date of acquisition.
A significant change in the time spent on each project could have a material impact on the amount capitalized and the related amortization expense in subsequent periods. Intangible assets, net We record intangible assets at cost less accumulated amortization. Cost of intangible assets acquired through business combinations represents their fair market value at the date of acquisition.
We plan to incur additional general and administrative expenses to support our growth. Even as cost of revenues (excluding depreciation and amortization) and other expenses fluctuate over time and may be negatively impacted by factors beyond our control, we plan to remain focused on making necessary investments to drive long-term growth.
We plan to incur additional general and administrative expenses to support our growth. Even as cost of revenues (excluding depreciation and amortization) and other operating expenses fluctuate over time and may be negatively impacted by factors beyond our control, we plan to remain focused on making necessary investments to drive long-term growth.
When we enter into transactions that include certain features that qualify to be embedded derivatives in accordance with ASC Topic 815, that requires to bifurcate such features from their host instruments and account for them as free-standing derivative financial instruments if certain criteria are met.
When we enter into transactions that include certain features that qualify to be embedded derivatives in accordance with ASC Topic 815, Derivatives and Hedging , that requires to bifurcate such features from their host instruments and account for them as free-standing derivative financial instruments if certain criteria are met.
Because of these and other limitations, you should consider our non-GAAP measures only as supplemental to other GAAP-based financial performance measures, including revenues and net loss. The following table reconciles adjusted EBITDA and adjusted EBITDA margin to net loss and net loss margin, the most directly comparable financial measure calculated and presented in accordance with GAAP.
Because of these and other limitations, you should consider our non-GAAP measures only as supplemental to other GAAP-based financial performance measures, including revenues and net income / (loss). The following table reconciles adjusted EBITDA and adjusted EBITDA margin to net loss and net loss margin, the most directly comparable financial measure calculated and presented in accordance with GAAP.
Our scaled customer ARPU growth resulted primarily from the initial effects of transitioning our sales team model to focus a dedicated team on new business development and a separate team on training and educating new and existing users on our platform capabilities.
Our scaled customer ARPU growth resulted primarily from the effects of transitioning our sales team model to focus a dedicated team on new business development and a separate team on training and educating new and existing users on our platform capabilities.
While it is difficult to predict adoption rates and future product demand, we are focused on continuing to innovate and create marketing automation products that address the business requirements of our customers better than alternative solutions. 35 Investment in Innovation We intend to invest in our business in order to drive long-term growth in an expanding market and capture economies of scale derived from a larger business base.
While it is difficult to predict adoption rates and future product demand, we are focused on continuing to innovate and create marketing automation products that address the business requirements of our customers better than alternative solutions. 38 Investment in Innovation We intend to invest in our business in order to drive long-term growth in an expanding market and capture economies of scale derived from a larger business base.
Overview Zeta is a leading omnichannel data-driven cloud platform that provides enterprises with consumer intelligence and marketing automation software. We empower our customers to target, connect and engage consumers through software that delivers personalized marketing across all addressable channels, including email, social media, web, chat, Connected TV (“CTV”) and video, among others.
Overview Zeta is a leading AI-powered omnichannel data-driven cloud platform that provides enterprises with consumer intelligence and marketing automation software. We empower our customers to target, connect and engage consumers through software that delivers personalized marketing across all addressable channels, including email, social media, web, chat, Connected TV (“CTV”) and video, among others.
Repurchases and withholdings during any given fiscal period under the 2022 SRP will reduce the number of weighted-average common shares outstanding for the period.
Repurchases and withholdings during any given fiscal period under the 2022 SRP and 2024 SRP will reduce the number of weighted-average common shares outstanding for the period.
Stock-based compensation The measurement of stock-based compensation for all stock-based payment awards, including restricted stock, performance stock units (“PSUs”) and stock options granted to employees, consultants or advisors and non-employee directors, and shares purchased under the Company’s employee stock purchase plan (“ESPP”), is based on the estimated fair value of the awards on the date of grant or date of modification of such grants.
Stock-based compensation The measurement of stock-based compensation for all stock-based payment awards, including restricted stock, restricted stock units (“RSU”), performance-based stock units (“PSUs”) and stock options granted to employees, consultants or advisors and non-employee directors, and shares purchased under the Company’s employee stock purchase plan (“ESPP”), is based on the 41 estimated fair value of the awards on the date of grant or date of modification of such grants.
Adjusted EBITDA and adjusted EBITDA margin Adjusted EBITDA is a non-GAAP financial measure defined as net loss adjusted for interest expense, depreciation and amortization, stock-based compensation, income tax (benefit) / provision, acquisition-related expenses, restructuring expenses, change in fair value of warrants and derivative liabilities, certain dispute settlement expenses, gain on extinguishment of debt, certain non-recurring IPO related expenses, including the payroll taxes related to vesting of restricted stock and restricted stock units upon the completion of our IPO, and other (income) / expenses.
Adjusted EBITDA and adjusted EBITDA margin Adjusted EBITDA is a non-GAAP financial measure defined as net income / (loss) adjusted for interest expense, net, depreciation and amortization, stock-based compensation, income tax (benefit) / provision, acquisition-related expenses, restructuring expenses, change in fair value of warrants and derivative liabilities, certain dispute settlement expenses, gain on extinguishment of debt, certain non-recurring capital raise related (including IPO) expenses, including the payroll taxes related to vesting of restricted stock and restricted stock units upon the completion of the IPO, and other expenses.
Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future. Our management’s discussion and analysis of financial condition and results of operations included in this document generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future. Our management’s discussion and analysis of financial condition and results of operations included in this document generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
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.
We expect that the magnitude of other income and expenses will depend on external factors such as foreign exchange rates 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.
For the years ended December 31, 2023 and 2022, annual goodwill impairment test, we elected to bypass the qualitative assessment for the four reporting units and proceeded directly to the quantitative impairment test using a discounted cash flow method to estimate the fair value of the reporting units.
For the years ended December 31, 2024 and 2023, annual goodwill impairment test, we elected to bypass the qualitative assessment for the four reporting units and proceeded directly to the quantitative impairment test using a discounted cash flow method to estimate the fair value of the reporting units.
We expect that acquisition-related expenses will be correlated with future acquisitions (if any), which could be greater than or less than our historic levels. Restructuring expenses Restructuring expenses consists primarily of employee termination costs due to internal restructuring.
We expect that acquisition-related expenses will be correlated with future acquisitions (if any), which could be greater than or less than our historic levels. Restructuring expenses Restructuring expenses primarily consist of employee termination costs due to internal restructuring.
Research and development expenses Research and development expenses primarily consists of employee-related costs, including salaries, bonuses and employee benefit costs, stock-based compensation associated with engineering and IT services associated with the ongoing research and maintenance of internal use software.
Research and development expenses Research and development expenses primarily consist of employee-related costs, including salaries, bonuses and employee benefit costs, stock-based compensation associated with engineering and IT services associated with the ongoing research and maintenance of internal use software.
For both 2023 and 2022, our effective tax rates differ from the U.S. federal statutory rate of 21% primarily related to changes in our U.S valuation allowance as we maintain a full valuation allowance against our U.S. net deferred tax assets based upon the weight of objective evidence. 41 Non-GAAP Financial Measures We use the following non-GAAP financial information, collectively, to evaluate our ongoing operations and for internal planning and forecasting purposes.
For both 2024 and 2023, our effective tax rates differ from the U.S. federal statutory rate of 21% primarily related to changes in our U.S. valuation allowance as we maintain a full valuation allowance against our U.S. net deferred tax assets based upon the weight of objective evidence. 44 Non-GAAP Financial Measures We use the following non-GAAP financial information, collectively, to evaluate our ongoing operations and for internal planning and forecasting purposes.
We perform an annual goodwill impairment test on October 1 every year based on financial statements as of September 30. Goodwill impairment is assessed based on a comparison of the fair value of our reporting units to the underlying carrying value of 47 the reporting unit’s net assets, including goodwill. As of December 31, 2023, we have four reporting units.
We perform an annual goodwill impairment test on October 1 every year based on financial statements as of September 30. Goodwill impairment is assessed based on a comparison of the fair value of our reporting units to the underlying carrying value of the reporting unit’s net assets, including goodwill. As of December 31, 2024, we have four reporting units.
In particular, we believe that the exclusion of stock-based compensation, certain dispute settlement expenses and non-recurring IPO related expenses that are not related to our core operations provides measures for period-to-period comparisons of our business and provides additional insight into our core controllable costs.
In particular, we believe that the exclusion of stock-based compensation, certain dispute settlement expenses and non-recurring capital raise related (including IPO) expenses that are not related to our core operations provides measures for period-to-period comparisons of our business and provides additional insight into our core controllable costs.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this document can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 24, 2023.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this document can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 28, 2024.
Agile Intelligence suite has been a proven way to land scaled customers, with minimal cost of implementation and high value adoption. 34 Drive Increase to Average Revenue Per User During the year ended December 31, 2023, we experienced an increase in our scaled customer Average Revenue Per User (“ARPU”), which resulted in our revenues increasing for the year compared to the prior-year period.
Agile Intelligence suite has been a proven way to land scaled customers, with minimal cost of implementation and high value adoption. 37 Drive Increase to Average Revenue Per User During the year ended December 31, 2024, we experienced an increase in our scaled customer Average Revenue Per User (“ARPU”), which resulted in our revenues increasing for the year compared to the prior-year period.
Contingent consideration estimates may change based on actual results and may differ from management’s current expectations. For more information refer to Note 7 and Note 8 to our consolidated financial statements and notes thereto included in the “Financial Statements and Supplementary Data” section of this Annual Report on Form 10-K.
Contingent consideration estimates may change based on actual results and may differ from management’s current expectations. For more information refer to Note 7 Acquisitions and Note 8 Acquisition-Related Liabilities to our consolidated financial statements and notes thereto included in the “Financial Statements and Supplementary Data” section of this Annual Report on Form 10-K.
We may also act as principal when contracting for third-party services on behalf of our customers, because we control the specified goods or services before they are transferred to the customer and we are responsible for providing the specified goods or services, or we are responsible for directing and integrating third-party vendors to fulfill our performance obligation at the agreed upon contractual price.
In certain contracts, we may act as principal when contracting for third-party services on behalf of our customers, because we control the specified goods or services before they are transferred to the customer and we are responsible for providing the specified goods or services, or we are responsible for directing and integrating third-party vendors to fulfill our performance obligation at the agreed upon contractual price.
Key assumptions used to determine the fair value of stock options, shares purchase under our ESPP and PSUs were as follows: • Risk-free interest rate: The risk-free interest rate is based on the U.S.
Key assumptions used to determine the fair value of stock options, shares purchase under our ESPP and PSUs subject to market conditions were as follows: • Risk-free interest rate: The risk-free interest rate is based on the U.S.
Factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the intangible assets are used, and the effects of obsolescence, demand, competition and other economic factors. Fair value We grant stock-based payment awards including restricted stock, Performance Stock Units (“PSU”) and stock options to employees, contractors or advisors and non-employee directors.
Factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the intangible assets are used, and the effects of obsolescence, demand, competition and other economic factors. Fair value We grant stock-based payment awards including restricted stock, RSUs, PSUs, and stock options to employees, contractors or advisors and non-employee directors.
The ZMP’s data-driven algorithms and processes learn and optimize each customer’s marketing program in real time, producing a ‘flywheel effect’ that enables our customers to test, learn and improve their marketing programs in real time. The ZMP empowers our customers to personalize consumer experiences at scale across multiple touchpoints.
The ZMP’s data-driven algorithms and processes learn and optimize each customer’s marketing program in real time, producing a ‘flywheel effect’ that enables our customers to test, learn and improve their marketing programs in real time. The ZMP enhances our customers' ability to personalize consumer experiences at scale across multiple touchpoints.
Estimates are based on management judgment and the best available information, and as such actual results could differ from those estimates.
Estimates are based on management's judgment and the best available information, and as such actual results could differ from those estimates.
We exclude political and advocacy customers, which represented 1.8% and 6.3% of revenue for 2023 and 2022, respectively, from our calculation of annual NRR rate because of the biennial nature of these customers. Our customer loyalty is also reflected in the table below, which breaks down the tenure of our scaled customers for the year ended December 31, 2023.
We exclude political and advocacy customers, which represented 8.0% and 1.8% of revenue for 2024 and 2023, respectively, from our calculation of annual NRR rate because of the biennial nature of these customers. Our customer loyalty is also reflected in the table below, which breaks down the tenure of our scaled customers for the year ended December 31, 2024.
Between January 1, 2023 and December 31, 2023, our sales team increased by approximately 13 sales employees, and we expect to continue to invest in our go-to-market efforts in 2024. We have significantly enhanced our sales techniques in order to build a collaborative environment that encourages cross-selling and implemented a new learning and development program for our sales team.
Between January 1, 2024 and December 31, 2024, our sales team increased by 16 sales employees, and we expect to continue to invest in our go-to-market efforts in 2025. We have significantly enhanced our sales techniques in order to build a collaborative environment that encourages cross-selling and implemented a new learning and development program for our sales team.
Change in fair value of warrants and derivative liabilities Change in fair value of warrants and derivative liabilities primarily relates to warrants to purchase shares of our common stock that we issued in connection with previous financing rounds, these warrants were converted into our Class A Common Stock upon IPO and as such there is no revaluation impact of warrant liabilities during the year ended on December 31, 2023.
Change in fair value of warrants and derivative liabilities Change in fair value of warrants and derivative liabilities primarily relates to warrants to purchase shares of our common stock that we issued in connection with previous financing rounds, these warrants were converted into Class A Common Stock upon our initial public offering ("IPO"), and as such there is no revaluation impact of warrant liabilities during the years ended on December 31, 2024 and 2023.
Recently Issued Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial condition and results of operations is disclosed in Note 2 to our consolidated financial statements and notes thereto included in the “Financial Statements and Supplementary Data” section of this Annual Report on Form 10-K.
Recently Issued Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial condition and results of operations is disclosed in Note 2 Basis of Presentation and Significant Accounting Policies to our audited consolidated financial statements and notes thereto included in the “Financial Statements and Supplementary Data” section of this Annual Report on Form 10-K.
Our Agile Intelligence suite synthesizes Zeta’s proprietary data and data generated by our customers to uncover consumer insights that are translated into marketing programs designed for highly targeted audiences across digital channels, including email, SMS, websites, applications, social media, CTV and chat.
Our Agile Intelligence ® suite (formerly known as Opportunity Explorer) synthesizes Zeta’s proprietary data and data generated by our customers to uncover consumer insights that are translated into marketing programs designed for highly targeted audiences across digital channels, including email, SMS, websites, applications, social media, CTV and chat.
As part of this strategy, we expect to drive expansion in the number of channels per scaled customer. During the year ended December 31, 2023 and 2022, our channels per scaled customer were 2.1 and 2.0, respectively.
As part of this strategy, we expect to drive expansion in the number of channels per scaled customer. During the year ended December 31, 2024 and 2023, our channels per scaled customer were 2.3 and 2.1, respectively.
Net cash provided by financing activities During the year ended December 31, 2023, we used $25.7 million of cash in financing activities, primarily due to the repurchase of $13.4 million of common stock repurchased under our repurchase and RSA withholdings program and payment of acquisition related liabilities of $15.5 million, partially offset by $3.1 million paid by certain employees under the Company's employee stock purchase plan.
During the year ended December 31, 2023, we used $25.7 million of cash in financing activities, primarily due to the repurchase of $13.4 million of our common stock repurchased under our share repurchase and RSA withholdings program and payment of acquisition-related liabilities of $15.5 million, partially offset by $3.1 million paid by certain employees under the ESPP.
For the year ended December 31, 2022, we recorded an income tax benefit of $1,491, which primarily related to the partial release of our U.S. valuation allowance as a business combination consummated during 2022, which created a source of future taxable income, partially offset by an income tax provision for foreign taxes.
For the year ended December 31, 2024, we recorded an income tax benefit of $5.2 million, which primarily related to the partial release of our U.S. valuation allowance as a business combination consummated during 2024, created a source of future taxable income, partially offset by an income tax provision for foreign taxes.
Seasonality In general, the marketing industry experiences seasonal trends that affect the vast majority of participants in the digital marketing ecosystem. Historically, marketing activity is higher in the fourth quarter of the calendar year to coincide with the holiday shopping season as compared to the first quarter.
Seasonality and Cyclicality In general, the marketing industry experiences seasonal trends that affect the vast majority of participants in the digital marketing ecosystem, as well as cyclicality in political activity in economic conditions. Historically, marketing activity is higher in the fourth quarter of the calendar year to coincide with the holiday shopping season as compared to the first quarter.
We calculate our annual NRR rate by dividing current year revenue earned from customers from which we also earned revenue in the prior year, by the prior year revenues. Our annual NRR rate was 110.9% and 111.5% for the years ended December 31, 2023 and 2022, respectively.
We calculate our annual NRR rate by dividing current year revenue earned from customers from which we also earned revenue in the prior year, by the prior year revenues. Our annual NRR rate was 113.6% and 110.9% for the years ended December 31, 2024 and 2023, respectively.
The estimated useful life of our website and software development costs is three years. We determine the amount of internal software costs to be capitalized based on the amount of time spent by our developers on projects in the application stage of development. There is judgment involved in estimating the time allocated to a particular project in the application stage.
We determine the amount of internal software costs to be capitalized based on the amount of time spent by our developers on projects in the application stage of development. There is judgment involved in estimating the time allocated to a particular project in the application stage.
We calculate the number of scaled and super-scaled customers at the end of each reporting period as the number of customers billed during each applicable period. In 2023, we had 452 scaled customers that representing 97% of total revenue, compared to 403 scaled customers representing 98% of total revenue in 2022.
We calculate the number of scaled and super-scaled customers at the end of each reporting period as the number of customers billed during each applicable period. As of December 31, 2024, we had 527 scaled customers representing 98% of total revenue in 2024, compared to 452 scaled customers as of December 31, 2023, representing 97% of total revenue in 2023.
As of December 31, 2023, we had an accumulated deficit of $958.5 million. 42 We believe our existing cash and anticipated net cash provided by operating activities, together with available borrowings under our credit facility, will be sufficient to meet our working capital requirements for at least the next 12 months and thereafter for the foreseeable future.
As of December 31, 2024, we had an accumulated deficit of $1,028.3 million. We believe our existing cash and anticipated net cash provided by operating activities, together with available borrowings under our Revolving Facility (as defined below), will be sufficient to meet our working capital requirements for at least the next 12 months and thereafter for the foreseeable future.
The fair value of shares purchased under our ESPP was determined using the Black-Sholes-Merton model and PSU was determined using the Monte-Carlo Simulation Method, and the related stock-based compensation is recognized over the expected vesting term.
The fair value of shares purchased under our ESPP was determined using the Black-Scholes-Merton model and PSUs subject to market conditions was determined using the Monte-Carlo Simulation Method, and the related stock-based compensation is recognized over the expected vesting term.
During the year ended December 31, 2023, we borrowed $11.3 million against the revolver facility and repaid the same amount against the term loan under the credit facility. We do not engage in off-balance sheet financing arrangements.
During the year ended December 31, 2024, we borrowed $1.3 million against the Revolving Facility and repaid the same amount against the Term Loan under the Senior Secured Credit Facility. We do not engage in off-balance sheet financing arrangements.
Our revenue recognition policies are discussed in more detail under “Critical Accounting Estimates.” Cost of revenues (excluding depreciation and amortization) Cost of revenue excludes depreciation and amortization and consists primarily of media and marketing costs and certain employee-related costs.
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.” Cost of revenues (excluding depreciation and amortization) Cost of revenues excludes depreciation and amortization and consists primarily of media and marketing costs and certain employee-related costs.
On March 22, 2023, we entered into a $25.0 million incremental revolving facility commitment (the “2023 Incremental Revolving Commitment”) pursuant to an amendment to the Senior Secured Credit Facility, thereby increasing our total credit facility to $247.5 million.
On March 22, 2023, the Company entered into a $25.0 million incremental revolving facility commitment pursuant to an amendment to the Existing Credit Agreement, thereby increasing the Existing Senior Secured Credit Facility to $247.5 million.
This decrease was primarily driven by lower changes in fair value of acquisition-related liabilities recorded during the year ended December 31, 2023 as compared to the year ended December 31, 2022.
This decrease in other expenses was primarily driven by a decrease in the fair value change of acquisition-related liabilities recorded during the year ended December 31, 2024 as compared to the year ended December 31, 2023.
We assess whether an enhancement creates additional functionality to the software, and qualifies the costs incurred for capitalization. Once a project is available for general release, capitalization ceases and we estimate the useful life of the asset and begin amortization using the straight-line method. We annually assess whether triggering events are present to review internal-use software for impairment.
Once a project is available for general release, capitalization ceases and we estimate the useful life of the asset and begin amortization using the straight-line method. We annually assess whether triggering events are present to review internal-use software for impairment. The estimated useful life of our website and software development costs is three years.
Year ended December 31, 2023 2022 Scaled customer ARPU (in thousands) $ 1,572 $ 1,431 Scaled customer ARPU increased 10% for the year ended December 31, 2023, as compared to 2022, primarily due to higher usage of our platform among scaled customers.
Year ended December 31, 2024 2023 Scaled customer ARPU (in thousands) $ 1,868 $ 1,572 39 Scaled customer ARPU increased 19% to $1,868 thousand for the year ended December 31, 2024, compared to $1,572 thousand for the year ended December 31, 2023, primarily due to higher usage of our platform among scaled customers.
We also maintain an ESPP pursuant to which participants may purchase shares of our Class A common stock through payroll contributions. We account for all stock-based payment awards using a fair value-based method. The fair value of restricted stock is based on the Company's closing stock price as of the day prior to the date of the grants.
We also maintain an ESPP pursuant to which participants may purchase shares of our Class A Common Stock through payroll contributions. We account for all stock-based payment awards using a fair value-based method.
This increase was primarily driven by an increase in employee related costs of $3.0 million, consulting fees of $0.8 million and stock-based compensation of $0.6 million.
This increase was primarily driven by an increase in employee related costs of $13.2 million, higher consulting fees of $2.0 million and higher stock-based compensation of $1.4 million.
During the year ended December 31, 2022, we used $48.4 million of cash in investing activities, primarily consisting of capital expenditures of $22.2 million (including a $18.6 million investment in data and partnership agreements), website and software development costs of $17.0 million and business and asset acquisitions and other investments of $9.2 million (net of cash acquired).
Net cash used for investing activities During the year ended December 31, 2024, we used $97.6 million of cash in investing activities, primarily consisting of capital expenditures of $25.7 million (including a $19.8 million investment in data and partnership agreements), website and software development costs of $16.0 million and business and asset acquisitions and other investments of $55.8 million (net of cash acquired).
Income tax Provision / (benefit) Year Ended December 31, Change 2023 2022 Amount % Income tax provision/(benefit) $ 1,037 $ (1,491 ) $ 2,528 169.6 % Income tax provision increased by $2.5 million, or 169.6%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022.
Income tax (benefit) / provision Year Ended December 31, Change 2024 2023 Amount % Income tax (benefit) / provision $ (5,176 ) $ 1,037 $ (6,213 ) NM* *Not Meaningful Income tax benefit increased by $6.2 million for the year ended December 31, 2024 as compared to the year ended December 31, 2023.
We believe that scaled customer ARPU is useful for investors because it is an indicator of our ability to increase revenue and scale our business.
We calculate the scaled customer ARPU as revenue for the corresponding period divided by the number of scaled customers at the end of that period. We believe that scaled customer ARPU is useful for investors because it is an indicator of our ability to increase revenue and scale our business.
This decrease was primarily driven by lower stock-based compensation of $27.6 million and other sales and marketing-related expenses of $0.6 million, which was partially offset by higher employee-related costs of $17.4 million.
This increase was primarily driven by higher employee-related costs of $38.8 million and other sales and marketing-related expenses of $12.4 million, which were partially offset by lower stock-based compensation of $25.2 million.
Depreciation and amortization Year Ended December 31, Change 2023 2022 Amount % Depreciation and amortization $ 51,149 $ 51,878 $ (729 ) (1.4 )% Depreciation and amortization expense decreased by $0.7 million, or 1.4%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022.
Depreciation and amortization Year Ended December 31, Change 2024 2023 Amount % Depreciation and amortization $ 56,100 $ 51,149 $ 4,951 9.7 % Depreciation and amortization expense increased by $5.0 million, or 9.7%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023.
Adjusted EBITDA margin is a non-GAAP metric defined as adjusted EBITDA divided by the total revenues for the same period. Adjusted EBITDA and adjusted EBITDA margin provide us with a useful measure for period-to-period comparisons of our business as well as comparison to our peers.
Adjusted EBITDA and adjusted EBITDA margin provide us with a useful measure for period-to period comparisons of our business as well as comparison to our peers.
While our significant accounting policies are described in more detail in Note 2 in our consolidated financial statements included in the “Financial Statements and Supplementary Data” section of this this Annual Report on Form 10-K, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements. 45 Revenue recognition Revenue arises primarily from our technology platform via subscription fees, volume-based utilization fees and fees for professional services designed to increase our customers’ usage of our technology platform.
While our significant accounting policies are described in more detail in Note 2 Basis of Presentation and Significant Accounting Policies in our consolidated financial statements included in the “Financial Statements and Supplementary Data” section of this Annual Report on Form 10-K, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements.
Cash flows The following table summarizes our cash flows for the periods presented: For year ended December 31, 2023 2022 Net cash provided by / (used for): Cash provided by operating activities $ 90,523 $ 78,486 Cash used for investing activities (54,215 ) (48,445 ) Cash used for financing activities (25,652 ) (12,625 ) Effect of exchange rate changes on cash and cash equivalents (34 ) (165 ) Net increase in cash and cash equivalents, including restricted cash $ 10,622 $ 17,251 Net cash provided by operating activities During the year ended December 31, 2023, net cash provided by operating activities of $90.5 million resulted primarily from adjusted non-cash items of $303.3 million, more than offsetting our net loss of $187.5 million.
Cash flows The following table summarizes our cash flows for the periods presented: For year ended December 31, 2024 2023 Net cash provided by / (used for): Cash provided by operating activities $ 133,861 $ 90,523 Cash used for investing activities (97,586 ) (54,215 ) Cash provided by / (used for) financing activities 197,923 (25,652 ) Effect of exchange rate changes on cash and cash equivalents 227 (34 ) Net increase in cash and cash equivalents $ 234,425 $ 10,622 Net cash provided by operating activities During the year ended December 31, 2024, net cash provided by operating activities of $133.9 million resulted primarily from adjusted non-cash items of $242.8 million, more than offsetting our net loss of $69.8 million.
The increase in revenues is attributable to incremental revenues of $35.6 million from existing customers and $102.2 million from new customers (including approximately $5.5 million from the acquisitions made during the year ended December 31, 2023).
The increase in revenues is attributable to incremental revenues of $158.2 million from new customers (including approximately $16.9 million from the acquisition of LiveIntent made during the year ended December 31, 2024) and $118.8 million from existing customers.
Change in fair value of warrants and derivative liabilities is a non-cash expense related to periodically recording “mark-to-market” changes in the valuation of derivatives and warrants. Other (income) / expenses consists of non-cash expenses such as changes in fair value of acquisition-related liabilities, gains and losses on sales of assets and foreign exchange gains and losses.
Change in fair value of warrants and derivative liabilities is a non-cash expense related to periodically recording “mark-to-market” changes in the valuation of derivatives and warrants.
Research and development expenses Year Ended December 31, Change 2023 2022 Amount % Research and development expenses $ 73,869 $ 69,454 $ 4,415 6.4 % Research and development expenses increased by $4.4 million, or 6.4%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022.
Research and development expenses Year Ended December 31, Change 2024 2023 Amount % Research and development expenses $ 90,679 $ 73,869 $ 16,810 22.8 % Research and development expenses increased by $16.8 million, or 22.8%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023.
Restructuring expenses Year Ended December 31, Change 2023 2022 Amount % Restructuring expenses $ 2,845 $ — $ 2,845 100.0 % 40 We recorded restructuring expenses of $2.8 million during the year ended December 31, 2023 related to employee termination costs due to internal restructuring. We did not have any such restructuring expenses for the year ended December 31, 2022.
We recorded restructuring expenses of $2.8 million during the year ended December 31, 2023 related to employee termination costs due to internal restructuring.
Year ended December 31, 2023 2022 Net loss $ (187,481 ) $ (279,239 ) Net loss margin (25.7 )% (47.3 )% Add back: Depreciation and amortization 51,149 51,878 Restructuring expenses 2,845 — Acquisition-related expenses 203 344 Stock-based compensation 242,881 298,992 Other expenses 7,820 13,983 Change in fair value of warrants and derivative liabilities — 410 Interest expense 10,939 7,303 Income tax provision/(benefit) 1,037 (1,491 ) Adjusted EBITDA $ 129,393 $ 92,180 Adjusted EBITDA margin% 17.8 % 15.6 % Liquidity and Capital Resources We have financed our operations and capital expenditures primarily through utilization of cash generated from operations, as well as borrowings under our credit facilities.
Year ended December 31, 2024 2023 Net loss $ (69,771 ) $ (187,481 ) Net loss margin (6.9 )% (25.7 )% Add back: Depreciation and amortization 56,100 51,149 Restructuring expenses — 2,845 Acquisition-related expenses 8,229 203 Capital raise related expenses 1,624 — Stock-based compensation 194,984 242,881 Other (income) / expenses (115 ) 7,820 Interest expense, net 7,147 10,939 Income tax (benefit) / provision (5,176 ) 1,037 Adjusted EBITDA $ 193,022 $ 129,393 Adjusted EBITDA margin 19.2 % 17.8 % 45 Liquidity and Capital Resources We have financed our operations and capital expenditures primarily through utilization of cash generated from operations, as well as borrowings under our credit facilities.
This decrease was primarily driven by lower stock-based compensation of $24.9 million, which was partially offset by higher professional services fees of $5.3 million, computer and telecom related expenses of $8.8 million, employee related costs of $0.9 million and an incremental provision for doubtful debt of $1.6 million.
This decrease was primarily driven by lower stock-based compensation of $23.1 million and professional services fees of $5.4 million, which were partially offset by higher computer and telecom related expenses of $16.0 million, employee related costs of $7.0 million and other general and administrative expenses of $4.8 million.
Key Performance Metrics We review key performance metrics, discussed below, to evaluate our business, track performance, identify trends, formulate plans and make strategic decisions. We believe that the presentation of such metrics provides investors with effective ways to measure and model the performance of companies such as ours, with recurring revenue streams.
We believe that the presentation of such metrics provides investors with effective ways to measure and model the performance of companies such as ours, with recurring revenue streams.
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.
For 2024 and 2023, we derived 70% and 72% of our revenues from direct platforms, respectively, and 30% and 28% 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.
Tenure for All Scaled Customers for Year Ended December 31, 2023 Customer Tenure Number of Scaled Customers % of Scaled Customers % of Scaled Customer Revenue 3+ Years 236 52.2 % 68.9 % 1-3 Years 124 27.4 % 23.5 % Under 1 Year 92 20.4 % 7.6 % Total 452 100.0 % 100.0 % Additionally, of our 131 super-scaled customers who generate at least $1.0 million in revenue in the trailing twelve months, 87 have a tenure of 3+ years.
Tenure for All Scaled Customers for Year Ended December 31, 2024 Customer Tenure Number of Scaled Customers % of Scaled Customers % of Scaled Customer Revenue 3+ Years 283 53.7 % 73.6 % 1-3 Years 138 26.2 % 17.1 % Under 1 Year 106 20.1 % 9.3 % Total 527 100.0 % 100.0 % Additionally, of our 148 super-scaled customers who generated at least $1.0 million in revenue in the trailing twelve months, 95 have a tenure of 3+ years.
Cost of revenues (excluding depreciation and amortization) Year Ended December 31, Change 2023 2022 Amount % Cost of revenues (excluding depreciation and amortization) $ 274,482 $ 215,466 $ 59,016 27.4 % Cost of revenues (excluding depreciation and amortization) increased by $59.0 million, or 27.4%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022.
Cost of revenues (excluding depreciation and amortization) Year Ended December 31, Change 2024 2023 Amount % Cost of revenues (excluding depreciation and amortization) $ 399,552 $ 274,482 $ 125,070 45.6 % 42 Cost of revenues (excluding depreciation and amortization) increased by $125.1 million, or 45.6%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023.
Sales and other taxes collected by us concurrent with revenue-producing activities are excluded from revenues. We may incur third-party costs on behalf of customers, including direct costs and incidental costs.
Revenue recognition Revenue arises primarily from our technology platform via subscription fees, volume-based utilization fees and fees for professional services designed to increase our customers’ usage of our technology platform. Sales and other taxes collected by us concurrent with revenue-producing activities are excluded from revenues. We may incur third-party costs on behalf of customers, including direct costs and incidental costs.
For the year ended December 31, 2023, we recorded an income tax provision of $1,037, which primarily relates to an income tax provision for foreign taxes.
For the year ended December 31, 2023, we recorded an income tax provision of $1.0 million, which primarily related to an income tax provision for foreign taxes. The effective tax rate for the year ended December 31, 2024 was 6.9% and for the year ended December 31, 2023 was negative 0.5%.
See Note 13 to our consolidated financial statements for further details. 38 We estimate the recognition of unrecognized stock-based compensation (in thousands) as follows, subject to future forfeitures: Year ended December 31, 2024 2025 2026 2027 2028 Total $ 151,931 $ 66,024 $ 25,252 $ 7,556 $ — $ 250,763 Results of Operations We operate as a single reportable segment to reflect the way our Chief Operating Decision Maker (“CODM”) reviews and assesses the performance of the business.
We estimate the recognition of unrecognized stock-based compensation as follows, subject to future forfeitures: Year ended December 31, 2025 2026 2027 2028 Total $ 119,916 $ 56,570 $ 31,277 $ 11,848 $ 219,611 Results of Operations We operate as a single reportable segment to reflect the way our Chief Operating Decision Maker (“CODM”) reviews and assesses the performance of the business.
Changes in working capital were primarily driven by an increase in accounts receivable of $19.8 million and a decrease in deferred revenue of $4.6 million, partially offset by increases in accounts payable of $13.5 million and accrued expenses and other current liabilities of $8.0 million.
Changes in working capital were primarily driven by increases in accounts receivable of $41.8 million, prepaid expenses of $6.3 million, other assets of $2.1 million and decreases in the accounts payable of $28.6 million, partially offset by increases in accrued expenses and other current liabilities of $32.6 million and deferred revenue of $6.3 million.
Website and software development costs We capitalize the cost of internally developed software that has a useful life in excess of one year. These costs consist of the salaries and benefits of employees working on such software development to customize it to our needs. Capitalization begins during the application development stage, once the preliminary project stage has been completed.
These costs consist of the salaries and benefits of employees working on such software development to customize it to our needs. Capitalization begins during the application development stage, once the preliminary project stage has been completed. We assess whether an enhancement creates additional functionality to the software, and qualifies the costs incurred for capitalization.
We expect to continue to invest in research and development in order to develop our technology platform to drive incremental value and growth and as a result we expect that research and development expenses may fluctuate from period to period as a percentage of revenue over the long term.
We expect to continue to invest in research and development in order to develop our technology platform to drive incremental value and growth, and as a result we expect research and development expenses to increase in absolute dollars in future periods.
The inclusion of billings related to third-party direct costs in revenues depends on whether we act as a principal or as an agent in the customer arrangement. In certain contracts, we contract with customers to provide access to our software platform available through different pricing options to tailor to multiple customer types and customer needs.
The inclusion of billings related to third-party direct costs in revenues depends on whether we act as a principal or as an agent in the customer arrangement.
Year ended December 31, 2023 2022 Revenues $ 728,723 $ 590,961 Operating expenses: Cost of revenues (excluding depreciation and amortization) 274,482 215,466 General and administrative expenses 205,419 213,615 Selling and marketing expenses 288,441 299,238 Research and development expenses 73,869 69,454 Depreciation and amortization 51,149 51,878 Acquisition- related expenses 203 344 Restructuring expenses 2,845 — Total operating expenses $ 896,408 $ 849,995 Loss from operations (167,685 ) (259,034 ) Interest expense 10,939 7,303 Other expenses 7,820 13,983 Change in fair value of warrants and derivative liabilities — 410 Total other expenses $ 18,759 $ 21,696 Loss before income taxes (186,444 ) (280,730 ) Income tax provision/(benefit) 1,037 $ (1,491 ) Net loss $ (187,481 ) $ (279,239 ) Comparison of the Years Ended December 31, 2023 and 2022 Revenues Year Ended December 31, Change 2023 2022 Amount % Revenues $ 728,723 $ 590,961 $ 137,762 23.3 % Revenues increased by $137.8 million, or 23.3%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022.
Year ended December 31, 2024 2023 Revenues $ 1,005,754 $ 728,723 Operating expenses: Cost of revenues (excluding depreciation and amortization) 399,552 274,482 General and administrative expenses 204,595 205,419 Selling and marketing expenses 314,514 288,441 Research and development expenses 90,679 73,869 Depreciation and amortization 56,100 51,149 Acquisition- related expenses 8,229 203 Restructuring expenses — 2,845 Total operating expenses $ 1,073,669 $ 896,408 Loss from operations (67,915 ) (167,685 ) Interest expense, net 7,147 10,939 Other (income) / expenses (115 ) 7,820 Total other expenses $ 7,032 $ 18,759 Loss before income taxes (74,947 ) (186,444 ) Income tax (benefit) / provision (5,176 ) 1,037 Net loss $ (69,771 ) $ (187,481 ) Comparison of the Years Ended December 31, 2024 and 2023 Revenues Year Ended December 31, Change 2024 2023 Amount % Revenues $ 1,005,754 $ 728,723 $ 277,031 38.0 % Revenues increased by $277.0 million, or 38.0%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeBased upon the principal balance owed on our long-term borrowings as of December 31, 2023, a hypothetical one percentage point increase or decrease in the rate of interest would result in an increase or decrease in our annual interest expenses by $1.9 million. There were no material changes in market risk exposures as of December 31, 2023.
Biggest changeBased upon the principal balance owed on our long-term borrowings as of December 31, 2024, a hypothetical one percentage point increase or decrease in the interest rate would increase or decrease our annual interest expense by $2.0 million. There were no material changes in market risk exposures as of December 31, 2024.
For more information, see Note 11 to our audited consolidated financial statements and notes thereto included in the Financial Statements and Supplementary Data section of this Annual Report on Form 10-K. Foreign Currency Risk We have foreign currency risks related to a certain number of our foreign subsidiaries, in the UK, France, Belgium and India.
For more information, see Note 11 Credit Facilities to our audited consolidated financial statements and notes thereto included in the Financial Statements and Supplementary Data section of this Annual Report on Form 10-K. Foreign Currency Risk We have foreign currency risks related to a certain number of our foreign subsidiaries, in the UK, France, Belgium and India.
Our market risk exposure is primarily a result of fluctuations in interest rates and foreign currency exchange risks. We do not hold or issue financial instruments for speculative or trading purposes. Interest Rate Risk We are exposed to market risk from changes in interest rates on our long-term borrowings, which accrue interest at a variable rate.
Our market risk exposure is primarily a result of fluctuations in interest rates and foreign currency exchange risks. We do not hold or issue financial instruments for speculative or trading purposes. Interest Rate Risk We are exposed to market risk from changes in interest rates on our Term Loan borrowings, which accrue interest at a variable rate.
However, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset higher costs through price increases and our inability or failure to do so could potentially harm our business, financial condition, and results of operations. 48
However, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset higher costs through price increases and our inability or failure to do so could potentially harm our business, financial condition, and results of operations. 52
We do not believe that a 10% change in the relative value of the U.S. dollar to other foreign currencies would have a material effect on our cash flows and operating results in currencies other than the U.S. dollar. Inflation Risk In 2023, inflation increased significantly in the United States and overseas, resulting in rising wages and other costs.
We do not believe that a 10% change in the relative value of the U.S. dollar to other foreign currencies would have a material effect on our cash flows and operating results in currencies other than the U.S. dollar. 51 Inflation Risk In recent years, inflation increased significantly in the United States and overseas, resulting in rising wages and other costs.
As of December 31, 2023, we have not entered into any derivative financial instrument contracts to mitigate the interest rate risk on our $185.0 million debt, and as a result, we are subject to the potential impact of rising interest rates, which could negatively impact our profitability and cash flows.
As of December 31, 2024, we have not entered into any derivative financial instrument contracts to mitigate the interest rate risk on our $200.0 million Term Loan, and as a result, we are subject to the potential impact of rising interest rates, which could negatively impact our profitability and cash flows.

Other ZETA 10-K year-over-year comparisons