Good day and welcome to the Zeta Global Third Quarter 2026 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Matt Fowle. Please go ahead, sir.

Thank you, operator. Hello, everyone, and thank you for joining us for Zeta's Third Quarter 2026 Earnings Conference Call. Today's presentation and earnings release are available on Zeta's investor relations website at investors.zetaglobal.com where you will also find links to our SEC filings along with other information about Zeta. Joining me on the call today are David Steinberg, Zeta's co-founder, chairman, and chief executive officer, and Chris Greiner, Zeta's chief financial officer. Before we begin, I'd like to remind everyone that statements made on this call as well as in the presentation and earnings release contain forward-looking statements regarding our financial outlook, business plans and objectives, and other future events and developments, including statements about the market potential of our products, potential competition, revenues of our products, and our goals and strategies. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected. These risks and uncertainties include those described in the company's earnings release and other filings with the SEC and speak only as of today's date. In addition, our discussion today will include references to certain supplemental non-GAAP financial measures which should be considered in addition to and not as a substitute for our gap results. We use these non-gap measures in managing our business and believe they provide useful information for our investors. Reconciliations of the non-gap measures to the corresponding gap measures where appropriate can be found in the earnings presentation available on our website as well as our earnings release and our other filings with the SEC. With that, I will now turn the call over to David.

Thank you, Matt. Good afternoon, everyone, and thank you for joining us today. For the third quarter of 2026, we delivered our 21st consecutive beat and raise quarter, hitting the rule of 71 in total. Revenue was $493 million, representing year-over-year growth of 46%, and 30% excluding marigold and political candidate revenue. Adjusted EBITDA was $121 million, up 55% year over year, with our margin expanding by 140 basis points to 24.6%. And free cash flow was $82 million, up 73% year over year, as we continue to translate growth into cash generation. Third quarter diluted GAAP EPS was 14 cents, up from a loss of 2 cents in the year-ago period. Non-GAAP EPS was 38 cents, up 58% year-over-year, and year-to-date diluted GAAP EPS is now positive at 13 cents. Based upon this strength, We are once again raising the midpoint of our 2026 revenue guidance by $37 million to $1,855,000,000, which is up 42% from the year before. Our core business is generating the growth and cash flow necessary to fund expansion into larger enterprise-wide opportunities. We are increasingly becoming the foundation our customers can build on, one that turns what their business knows into what their business can achieve. That is intelligent AI infrastructure. At Zeta Live, we showed you the next chapter of Zeta, Today, I want to talk about how those innovations position us to continue to take share in marketing software and address a much larger enterprise intelligence opportunity. Let me start with what's driving our growth today, return on investment for our customers. AI is only as powerful as the data that fuels it, and we have built one of the world's largest proprietary data assets. This is what gives us our competitive advantage and positions us to lead in the AI era. Some of the world's largest enterprises trust data with their data and rely on us to turn it into intelligence they can act on. When we help customers make better decisions with those assets, We drive a higher return on their marketing and technology spend. That is what earns us more of their business and has been driving our share gains. More use cases and more activity on the platform create opportunities for more revenue. Consider a leading automotive services company with more than 4,000 locations by combining its customer relationships with Zeta's proprietary intelligence, We are helping it to identify and win high-value customers more efficiently. The result, a 20% lower cost per incremental acquisition and a 450% uplift in conversions across multiple channels. Those results have helped expand our relationship into additional channels and use cases. Zeta's financial foundation matters. Our existing business is generating the growth and cash flow to support our next chapter. While we continue to expand margin and invest in our platform, to be totally clear, the numbers we have delivered today already include considerable R&D investments that are necessary for the future business and Athena OS. At the same time, code automation is helping our engineers to innovate faster. It has reduced the time from idea to shipment by 27% and made time to first review 300% faster. As a result, our engineers are shipping roughly twice as much code each week, and customers are getting improvements substantially sooner. As we deliver more value for customers, the role we play in their businesses continues to expand. The shift to AI is reshaping how enterprises engage with customers, raising important questions. Who owns the customer relationships? who controls proprietary data and how can businesses generate measurable returns. This shift creates an opportunity for Zeta to help enterprises control their customer relationships and first party intelligence, maintain their data sovereignty, and engage customers across channels to drive measurable outcome, to continue to own their alpha. With Athena OS, We are turning that opportunity into tangible commercial results and cash flow with clear proof points demonstrating the value we deliver. For decades, enterprise software has been organized around applications and functions. Athena OS changes that equation. We start with what the business is trying to achieve and organize intelligence, applications, and actions around that objective. Marketing is where we started. With Zeta Business Intelligence or the ZDI, we expand to additional business use cases. And we're already seeing how customers are building towards this future. A leading rural lifestyle retailer and Fortune 500 company began by consolidating its marketing technology onto Zeta. delivering significant improvements in efficiency and cost. The consolidation replaced three separate vendors, generating $1.5 million in annual technology savings and delivering a 75% faster campaign execution. Those results helped expand our relationship into customer acquisition with the goal of attracting new high-value customers. The next planned phase brings Athena OS into the relationship, connecting customer intelligence, personalization, and automation across online and in-store experiences. What began as a marketing technology decision is now becoming a broader enterprise intelligence opportunity. Athena OS is already in alpha and we expect select customers to begin using Athena OS beta this year with general availability expected in the first quarter of 2027. The response from customers has been exceptional with significant interest in joining the beta. Athena MCP will extend our intelligence into the applications and workflows where our customers already work, including environments such as ChatGPT, Claude, and Gemini. It will give customers more ways to use data intelligence. The opportunity is to make our intelligence part of more workflows, increasing the value we can deliver within an existing relationship. At Zeta Live, we also introduced the Athena Inference Model, or AIM, a collection of specialized models being developed with fireworks and using NVIDIA Nematron alongside our existing predictive models. Athena's AIM achieved a 95% accuracy, exceeding Frontier models at a 40% lower cost per request and six times AIM is designed to apply enterprise context and specialized skills to deliver more relevant intelligence and faster decisions. Our recent acquisitions of CENSO and Digital Audience strengthen that foundation. CENSO adds deeper connectivity to frontier models. helping enterprises connect trusted information to the AI platforms, shaping customer discovery, including the new wave of personal agents. Digital audience extends our identity and activation capabilities, helping customers put that intelligence to work across channels and measure its impact. Both are also highly accretive to our data cloud signals. Together, these capabilities create a continuous loop. Learn, know, decide, act, and back to learn. We are extending Zeta's intelligence into more decisions, more workflows, and more functions across the enterprise. And as our role expands, so does the economic opportunity within each customer relationships. Salesforce's announced acquisition of Braze reinforces our opportunity to accelerate the replacement cycle already underway and continue to gain share. At a time when enterprises are transforming business around AI, the last thing they need is uncertainty about product roadmaps, integration, and execution. Neither Salesforce nor Braze has AI native to its architecture. We believe Zeta's proprietary data and native AI give us a differentiated foundation and a strong right to win. Our partnership with Palantir is a foundational pillar of Zeta's next chapter, accelerating our expansion from marketing into enterprise intelligence. Palantir has transformed how enterprises operate. Together, we are connecting what enterprises know inside their four walls with what Zeta Intelligence knows about demand outside those four walls. The result is a powerful new opportunity, extending enterprise intelligence beyond operational efficiency to drive revenue growth. Data sovereignty is central to our joint approach. Enterprises should be able to apply AI on their own terms and retain control over their data, expertise, and decisions. Together, Zeta and Palantir help customers turn the knowledge unique to their businesses into better decisions and actions while preserving the intelligence that gives them a competitive advantage. keeping their alpha. Last quarter, we reported our data cloud was fully integrated with Foundry and that we had received initial joint customer agreements. One of those customers is amongst the fastest scaling customers we've had in our corporate history. We expect and continue to believe the partnership can add greater than $100 million in incremental annual revenue in the years to come. Our strategic partnership with OpenAI continues to expand across product innovation, enterprise AI, and commercial opportunities. With AthenaOS and our acquisition of Senso, we are strengthening how enterprises connect their intelligence to frontier AI models and how brands engage customers as discovery increasingly moves into AI-powered environments. We are also working with OpenAI on new opportunities to accelerate innovation and growth, including its emerging advertising business where we are already actively serving ads on the platform. Zeta Live gave us an opportunity to bring customers, prospects, and partners into the same room and show them the future we are building. We had more than 3,000 people attend, including decision makers representing over $200 billion in marketing and technology spent. And demand for our product roadmap session exceeded capacity. Conversations at Zeta Live centered on how Zeta's platform seamlessly integrates into business workflows to drive better outcomes, not only in marketing, but across the enterprise. This year, we delivered nearly 100 demonstrations and have already generated greater than $100 million in newly created pipeline in just the last several weeks. Our job now is to convert those conversations into customer outcomes and broader relationships over time. To be clear, we've already signed 23 new deals coming out of Zeta Live. Before I close, I want to recognize Team Zeta. I'm especially proud that Zeta has once again been named one of Fortune's best workplaces in technology and rising 10 spots in 2026. Marketing was our starting point, not the limit of our ambition. We have built one of the world's largest proprietary data assets. established deep and meaningful relationships with the world's largest enterprises and demonstrated our ability to turn intelligence into measurable growth. Now with Athena OS and our strategic partnerships, we are extending that advantage across the entire enterprise. We have the financial strength, the technology, and most importantly the people to lead this next chapter. And I believe the opportunity ahead of Zeta is greater than at any point in our corporate history. As always, Thank you to our customers, partners, and shareholders for your continued support. And to Team Zeta, thank you for your hard work, commitment, and belief in what we are building together. Now let me turn it over to Chris to discuss our results in greater detail.

Chris? Thank you, David. Investors are increasingly distinguishing fast growth from durable, defensible growth. The kind that translates into stronger earnings and cash flow. Our third quarter results demonstrate why Zeta stands out across each of these dimensions. First, Zeta's growth is durable and defensible. Q3 revenue growth, excluding marigold and political candidate revenue, hit 30%, accelerating from 28% last quarter, driven by Athena adoption, which translated into more superscaled customer additions and faster consumption-based ARPU growth. That's our 22nd straight quarter of greater than 20% growth on that same basis, which means these are sustained share gains, not a one-off. RFPs were up more than 100% year-over-year, clear proof the legacy Martech replacement cycle is accelerating and Zeta is capturing share. And second, the quality of our earnings keeps improving. Adjusted EBITDA grew faster than revenue, and free cash flow grew even faster than adjusted EBITDA. We achieved record adjusted EBITDA margins and free cash flow margin while delivering record GAAP earnings per share in Q3 of 14 cents. Now let's get into the details behind these themes, our pipeline, sales productivity, AI scorecard, and what's driving our raised fourth quarter and full year outlook. Starting with the top line, Q3 revenue came in at $493 million. with total growth accelerating to 46%, consistent with a 30% growth excluding marigold and political candidate revenue that I mentioned a moment ago. That's $22 million above the midpoint of guidance, exceeding it by 5%, driven by higher ethene adoption and usage versus Q2. Superscaled customers grew to 212, up 18% year-over-year, ahead of 17% growth last quarter and well above our long-term model of 4% Our gains were strongest in automotive, advertising and marketing, and telecom on a trailing 12-month basis. Growth stayed balanced across the business. Seven of our top 10 industries grew more than 20% year-over-year on a TTM basis. And in those consumer discretionary verticals, areas like consumer and retail, travel and hospitality, and automotive, growth collectively was over 40% on a trailing 12-month basis. and these are businesses operating on the leanest margins, needing to be the most data-driven and they're choosing Zeta. Super-scaled quarterly ARPU expanded to 2 million, up 22% year-over-year, accelerating five points from 17% growth last quarter, which is a logical segue to our AI scorecard, which shows how rising Athena usage is driving ARPU acceleration as customers move from AI experimentation to AI deployment on the platform. Here's how our Athena metrics progressed in Q3, first on revenue, then on platform engagement and consumption. On revenue, over 50% of super-scaled customers were monthly active Athena users, up from just over 40% last quarter. Across our total customer base, Athena adopters accounted for over 70% of revenue. The top 25 Athena users grew revenue more than 70% in Q3 versus the company's overall growth of 46%. and lastly, for Athena adopters, year-to-date net revenue retention runs over 500 basis points higher than overall Zeta, which is itself already above the top end of our 110 to 115% long-term model. On platform engagement, we measure Athena usage by activity, specifically planning, analysis and campaign development. We view campaign development as a top of funnel indicator since campaigns drive activation across Zeta and partner channels. Client campaign development more than doubled quarter over quarter, and hours spent on the platform were up over 50% sequentially. This outcome is intentional, since Athena was designed for customers to benefit from using more of the platform, and we've now extended its enterprise intelligence capabilities with the release of the Athena operating system. As Athena adoption has grown, that usage has directly contributed to the year-over-year and sequential acceleration in super-scaled ARPU. Meanwhile, the one-zeta sales motion is resulting in customers extending into new use cases and new channels. Super-scaled customers using all three marketing use cases grew over 60% year-over-year, with double-digit growth across each of the three marketing use cases acquire, grow, and retain. Super-scaled customers using five or more channels grew over 60%, and cross-sell and up-sell deals one in the quarter grew 38% year-over-year. Let me bring a couple of examples to life. We've taken one of North America's largest telecom providers from scaled to super-scaled, ramping to more than 10 million with Zeta in the span of 12 months. The customer deepened usage across the platform and expanded from one channel to four channels while also adding an additional use case. In another instance, a leading beauty retailer with over 1,500 locations also expanded their relationship with Zeta, driving more than 85% growth in revenue by going from two channels to three channels over the last year. And importantly, expansions like these and others are coming with greater operating leverage. Cost of revenue, excluding depreciation and amortization, came in at 39.7%, down 120 basis points quarter over quarter, though up 20 basis points year-over-year, reflecting continued strength in social channel adoption by agencies. That discipline carries through to expenses. R&D, G&A, and sales and marketing excluding stock-based compensation came in at 6.1%, 12.3%, and 17.3% of revenue, respectively, improving 5, 20, and 140 basis points year-over-year. Automatically generated code as a percentage of our total code output continues to hover around 90%, reflecting the efficiency that automation is driving within our engineering team, enabling us to innovate faster. Sales and marketing remained the biggest source of leverage, driven by continued gains in sales productivity. More on that later alongside our pipeline update. That leverage in OPEX allowed us to generate 121 million of adjusted EBITDA, a 55% year-over-year. at a 24.6% margin, up 140 basis points versus last year. That's 5.5 million above the midpoint of guidance, with margin 10 basis points higher as well. Cash grew even faster, operating cash flow was 91 million, up 58% year-over-year, and free cash flow was 82 million, up 73%. Free cash flow margin reached 16.5%, up 260 basis points year-to-year, with conversion at 67.3%, a 700 basis point improvement year-over-year. Gap net income, an area we committed to reaching positive earlier this year, came in at $38 million, or $0.14 diluted EPS, compared to a $0.02 loss a year ago. Non-gap diluted EPS was $0.38 versus $0.24 last year. Our GAAP EPS guidance started the year at $0.03. We're now at $0.13 year-to-date and projecting $0.23 for the full year 2026, up over 600% from our initial guidance. And we continue to deploy capital through buybacks. In the quarter, we deployed $29.9 million to repurchase 1.3 million shares. Year-to-date through November 9th, repurchases totaled $101.4 million and many more. At our September 2023 Investor Day, we responded to investor feedback by issuing long-term dilution targets and revising equity incentives to drive a sustained, improving SBC to revenue ratio on a path to positive gap earnings. And we're delivering on that. Since 2023, we've reduced SBC as a percentage of revenue from 33% to 19%. to 14% to 12% year-to-date through September 2026. And we expect that trend to continue. That discipline shows up on the bottom line. Gap net income improved by 185 million in the first nine months of 2026 versus 2023. Turning to the pipeline, demand was especially evident in our RFP activity. We hit a new quarterly record for RFPs, up over 100% year-over-year, and that does not reflect new opportunities emerging from Zeta Live, Palantir, or other demand we expect from Salesforce's acquisition of Braze. Seller productivity was also a standout this quarter. Pipeline creation per seller was up 32% year-over-year, and average pipeline per seller was up 19% year-over-year, all while total quota carrier headcount grew just 11% year-over-year to 203. That gap The pipeline growing nearly three times faster than headcount is a clear signal of rising sales productivity. With that, let me turn to our increased fourth quarter and full year guidance. We're raising guidance for revenue, adjusted EBITDA, free cash flow, and GAAP EPS for the remainder of the year. Details can be found starting on slide 15 of our earnings supplemental. For the full year, we expect revenue of $1,855,000,000 at the midpoint, up $37 million from our prior guidance representing growth of 42% or 27% excluding marigold and political candidate revenue. As a reminder, our initial full year 2026 guidance for revenue growth excluding marigold and political candidate revenue was 21% versus the projection of 27% representing a collective increase to revenue guidance excluding marigold and political candidate over the course of 2026 of $85 million. For the fourth quarter, we expect revenue of $523 million at the midpoint, up $15 million from our prior guidance, representing growth of 33% or 23% excluding marigold and political candidate revenue. The 23% growth excluding marigold and political candidate revenue is consistent with where we guided third quarter growth. As it relates to political candidate revenue, Despite the political cycle starting later due to the timing of the Republican convention, we still exceeded our third quarter political guidance and are raising our fourth quarter guidance. In 4Q, we expect political candidate revenue to be $13 million, an increase of $5 million compared to the previous guidance. I want to reiterate, our raised revenue outlook assumes minimal contributions from partnerships. More specifically, it includes just signed pilots. and includes a 2% to 5% cushion consistent with our typical conservatism. For adjusted EBITDA, we're increasing the midpoint of our full-year 2026 guidance to $414.6 million, up $9.4 million from prior guidance, representing growth of 49% and a margin of 22.4%. 2026 guidance represents the seventh year in a row where adjusted EBITDA margins will have expanded. For the fourth quarter, adjusted EBITDA is expected to be $136 million at the midpoint, up $4 million from prior guidance, at a margin of 25.9%. For the full year, we expect free cash flow of $271 million at the midpoint, up $16 million from prior guidance, with a margin of 14.6% and conversion of 65%. At 65% conversion, we are already at Zeta 2028 cash conversion target levels. and we're raising full-year 2026 GAAP EPS guidance to 23 cents at the midpoint, up from prior guidance of 10 cents and initial 2026 guidance of 3 cents. Like last quarter, this guidance increase excludes the impact of a potential one-time tax benefit from the release of a valuation allowance that is a reasonable possibility of occurring within the next 12 months, which could represent additional material one-time upside. To close, Thank you for joining us. I'll hand the call back to the operator so David and I can take your questions. Operator?

Thank you. And if you dialed in and would like to ask a question, please signal by pressing a star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. A voice, again, If you would like to ask a question, you can press star one on your telephone keypad. We'll now go to your first question coming from the line of DJ Hines with Ken Accord.

Hey, thank you guys. Congrats on the excellent quarter. Really nice set of numbers. David, look, the core marketing business is arguably performing better than ever, but Athena OS opens an even broader enterprise opportunity. I'm curious how you're balancing those investments and ensuring that the broader ambitions don't distract from what's already working. And I'm curious, how much of this next chapter challenge in your view is technology versus getting customers to change how they do business and move over to Athena?

So, DJ, first of all, thank you. I appreciate it. The truth of the matter is we are so far ahead that we've had more than enough incremental profit behind the scenes even with these numbers to invest properly into both. We continue to invest as heavily as ever into our core marketing platform and we're seeing those results. 30 plus percent organic growth last quarter, we were pretty proud of that and Athena is driving a massive amount of that growth. We saw the highest ARPU per super scaled customer that we've ever seen as a company and that was driven by the 50% of those customers that had adopted Athena. They're even much higher than that to be frank. As it relates to Mindshare, we see Athena OS as the evolution of the existing business, not a massive pivot from it. So when you think about this, and I know this sounds a little crazy, but we've always thought of ourselves as an enterprise intelligence platform. We started in marketing because the TAM was so incredibly large. We've always felt that expanding into new use cases was going to be a big part of where we were going and it is. And Athena OS brings everything together in one place. Now, as it relates to Technology or clients, we came out of Zeta Live with so many clients who wanted to join the beta program, we could never keep up with that. So I think that we're going to see, we've got to get the technology right. We are ahead of schedule in development. As Chris pointed out, we continue to generate approximately 90% of our new code on an automated basis. Excuse me. That gives us a meaningful advantage over competitors who are at 20% or 30%, if lucky. And I think we're going to be out with Athena OS early. We've said by the end of Q1. But we're seeing very, very good progress there. And the clients want it. We've now got to be able to deliver it from a technological perspective. It's in alpha now and working really well. So I'm feeling good about the tech. and I'm feeling good about the demand, if that makes sense, DJ.

It does. It does. And maybe a follow up for you, Chris. I mean, look, the core business is accelerating. You hit 30 percent organic growth. The stock's working. I'm getting questions more and more from investors around next year. So maybe I'll just turn that to you. Like any preliminary thoughts on kind of expectations for 2027 and how you steer folks?

I get it, DJ. So we'll give our official guide in February, but I do think it's important to acknowledge we've got a lot of growth drivers at our back. What I'll say is that we're creatures of habit, and that habit comes out in the consistency of how we typically guide. So I'll give you a sense for exactly, as you put it, where our heads are at. First off, we will go into next year with that same 2% to 5% cushion. We will continue to break out M&A and political candidate revenues, so there's a clear organic base. and if you go back to our very first full year guide back in February of 2022, all the way up to the guide of this year as we started the year, we've been at 20 to 21%. And we've said that organically our model is to grow at least 20. So we'll continue to leave ourselves cushioned. What I will say is we're gonna make sure we also do a good job with investors of wherever that base starts out, again, back where we've been historically 20 to 21%, We will also be able to break out of all of our growth drivers what's embedded and what's the upside we think we can get from each of them.

Yeah, I think that's a very prudent and logical view. Thank you, guys.

Thanks, DJ. We'll now go to your next question, coming from the line of Callie Valenti with Goldman Sachs.

Hey team, thank you for taking the question. First one for me, you highlighted the top 25 Athena users growing revenue more than 70% and adopters running at that higher NRR level as well. Curious, what's actually changing in that customer behavior once they adopt Athena that drives this higher level of spend? And is there anything specific from a channel, use cases, activity levels, or any other metric that you're seeing that's driving that inflection?

Well, first of all, thank you, Callie. We appreciate your joining. What I would say is, first of all, we have built, like almost all enterprise software companies, a fighter jet, which is an incredibly complex piece of equipment to fly, and most of our clients know how to fly a Cessna. Now, with that Cessna, we're delivering in the marketing ecosystem a 600% to 700% return on marketing spend, and in the technology ecosystem, were returning approximately 300% return on investment for every dollar spent on our technology when they know how to fly the Cessna. Athena, which as you know is our voice-enabled super agent, allows the client to fly the entire plane with her as their co-pilot. So what we're seeing is new audience types at levels we've never seen before. new channel activations like we've never seen before. We're seeing clients expand and move budget faster than at any point in our corporate history because Athena helps them drive an even superior return on spend than what the existing platform that they know how to use is driving. So as they see that superior return on investment, they're moving budget faster and that's why I think you're seeing those 25 clients growing at 70% plus.

It's interesting, Callie. It's part of the AI Scorecard. In addition to tracking what you referenced as the revenue metrics, we also wanted to be able to share with investors the underlying consumption on the platform that ultimately translates to the revenue growth. And one of the points I think you're making around activities is we're seeing client campaign development more than doubled quarter over quarter and the time spent on the platform by those monthly active users was up 50%. So even the underlying activity is really starting to translate to the strong acceleration of revenue as well.

And the really interesting thing is, if you think about that, we're making it easier for them to navigate it and yet they're spending 50% longer on it. Because it's so incredibly cool, they're enjoying using it instead of being frustrated having to navigate through lots of different parts of the platform. and they're then activating substantially more than they had in the past. So, you know, I think that growth rate along with the materially higher net retention rate of those customers is a trend that we're going to see continuing, Callie.

Yeah, that makes sense. Thank you. And then just a second from me, we're seeing the Athena adoption continue, good ARPU expansion, more scaled customers. Additional partnerships that I think should layer in over time. How are you kind of rank ordering the importance and relative confidence you have in each of those drivers as you do that kind of initial 2027 planning? Thank you.

You know, it's hard to really answer that question. It's a great question. But the answer is because different individuals in the organization are responsible for different components of it, it's top of mind share for each of the individuals who's focused on it and their teams. It's not like you've got to say, we're going to take Palantir and make that number one, and we're going to take Athena OS and make it number three. We've got Chris Monberg, Nish Gore, and their team are really focused on making Athena OS move from alpha to beta to generally available. I don't think it's a secret that I'm spending a disproportionate percentage of my time with the Palantir guys. In fact, I was with them all day today. you know we're really really focused on that so I would tell you that the partnerships that we announced this year even with the numbers that we're driving have not been a material component of the growth that we're already seeing and should add materially to growth next year which is why I think Chris feels comfortable talking about you know a two-handle on the start of our guidance for next year and I know that Chris Monberg, Nish Gore, Steve Gerber, everybody is focused on their initiatives and for each part of the organization, it's number one for them. Does that make sense?

Yeah, that makes sense. Thank you so much.

Thank you, Kelly.

And again, if anyone would like to ask a question, it would be star one on your telephone keypad. We'll now go to your next question. coming from Matt Swanson with RBC Capital Markets.

Great. Thank you, guys. And I'll just add my congratulations on the quarter. When we're looking at that pipeline that's up over 100%, you obviously have some expanded product offerings, more capabilities, but also Athena, which drastically increases the usability of the platform. Could you just talk a little bit about If anything's changed in terms of either initial lands or how fast you're seeing those new customers ramp up on the platform.

We have seen very consistent time to deal close. You know, I'll remind the broader community. I know, Matt, you know this, but with so many of the deals that are closed initially being pilots, you know, they can close in two to four months. So we've got good visibility.

Hard to accelerate that.

Yeah. But that's been consistent. RFPs are a bit of a life of their own, but even those when there's the right buyer incentive behind it can move really quickly. But pipeline is very consistent. We are seeing pilots scale faster. I was going to say that. And you can see that in how quickly some of these newer customers are ramping. And I think that goes back to these with which Athena is enabling them to get access to the platform and start to learn on it.

Also, Matt, I would tell you the last few pilots that I worked on personally The pilot itself starts there. And we're seeing, as I think Chris said, clients are scaling faster than at any point I've seen. The other thing that I think is really changing in the ecosystem that a lot of people are not really talking about how much of a benefit it is for us is what's changing at Google and search. As Google continues to answer more and more of the queries on their platform through Gemini on their own platform, the cost per click has gotten to the point of diminishing marginal return for a lot of advertisers. This is not to say that Google is not an amazing company, but for the first time that we've been doing this, and we've been doing this a long time, We're starting to see meaningful budget move to Zeta from what was in search originally. So it used to be we would go to a client and say, we know this is your search budget, you should and choose us. It's now for the first time becoming an or. Once again, we partner with Google and we love Google, but they've made a strategic decision that they're going to start answering a disproportionate percentage of their questions. My understanding is up to 68% of all queries on Google are now being answered by Gemini. 90 plus percent of queries used to result in a click to a brand and e-commerce platform or a publisher. That's now down to 32% and those brands, publishers, and e-commerce platforms are very rapidly turning to us to help them accelerate their sales.

That's really helpful. And we've always talked about the differentiation of your data asset. When we think about maybe some of the depreciation of third party identifiers like what we've seen with Apple recently, does that further kind of enhance your market position or create new opportunities?

Massively. I mean, I sort of go back to when Apple took away the original identifiers inside of iOS and how our business accelerated growth from that. To remind you, we don't use those identifiers, and we have. Now, to be clear, Matt, them eliminating it does not make Zeta's platform better, but as other platforms deteriorate, it doesn't make our platform worse. So as the tide rolls out for them, it does not roll out for us, which creates a greater differentiation in the efficacy and efficiency in our platform versus platforms that are heavily dependent on that iOS and other identifiers that are dissipating.

Thank you.

Your next question will come from the line of Jack Nichols with KeyBank Capital Markets.

Hey guys, thank you for taking the question. I wanted to start with the Palantir opportunity. Could you help us understand how to think about the joint partnership contributing to pipeline and how many joint opportunities have moved into production?

So we're not giving guidance to what's moved into production. What I'll tell you is we're up to eight yeses. We are really focused on that. One will be a superscaled client, I would guess by the end of this month. Two others are already actively operating and there and then the others were moving through the contract process and we continue to try to drive that up meaningfully. What I would tell you is I've been I mean, I've been running companies. I'm now an old CEO at 57 years old. I started my first company when I was 16 and my first real company when I was 21. So I've been doing this a long time. In all of the years I've done this, I've interacted with some of the greatest companies in the history of mankind. Much to my kids' disbelief, that does not include the Dutch East India Company, but many of the ones that are around and have been around over the last 30 years. I have never in my life experienced a company that its clients loved them and trusted them more than Palantir's 800 plus global enterprise clients. We go into a meeting and it is like you spend the first 45 minutes catching up, 15 minutes discussing how we can drive a six to 700% return on marketing spend and a 300% return on technology spend. how we're already fully integrated. We're not building, we're fully integrated our data cloud on top of Foundry and using their ontology and they just need to flip one button to turn the pilot on and we have not left without a yes yet. So it's I think game changing for us. We don't include that in the pipeline. So the 100% increment in pipeline does not include Palantir It might include some component of the people who are already active because that automatically feeds into the platform. But what I would tell you is the opportunity is substantially larger than I originally thought, and I continue to spend a disproportionate percentage of my personal time on it, Jack.

That's very helpful. Thank you, David. And then maybe as a quick follow-up for Chris, When you think about kind of the dual driver of Athena adoption and usage, is that expected to continue to deliver this ARPU upside within the superscale cohort and do these Athena users help deliver better insight to the minimum commitments on usage?

Yeah, that's where it ultimately translates, Jack. And whether it takes, you know, 90 days or 120 days, you know, what we did see is an acceleration from 2Q to 3Q across those usage metrics. Obviously, the ARPU followed that. but the top of funnel positive indicator, again, going back to Callie's question, was around the client campaign development and it's the top of the funnel. The more campaigns we put out into the ether, one stands to reason that we're gonna capture the vast majority of those activation opportunities downstream and that obviously also shows up in ARPU. Thank you. Thank you.

Your next question will come from the line of Matt Bullock with Bank of America.

Great, hi, thanks for taking the question. Maybe just one on the competitive environment. It sounds like the Braze and the Salesforce news could be an interesting opportunity to accelerate some share. I was hoping you could just speak a little bit to what you're hearing from customers after that news broke. That'd be super helpful, thanks.

Yeah, I mean, listen, I put out a statement on X about it the day it happened because it's, to me, It's an incredible advantage for Zeta. You've got two platforms, neither of which is AI native. I mean, of course, Salesforce is a great company. They have one of the best core products ever built, but we don't compete with their core product. We compete with their marketing cloud, which has been consistently shrinking. And they started with their own AI platform, Einstein, then they outsourced it to IBM. I think they're on number four or five outsourcing partner this week. They chose Anthropic. They don't have AI as native to the application layer, nor does Braze. Braze is a mobile-focused, I'm not sure they do anything but mobile, but they're a primarily mobile platform that you're going to put a mobile platform together with a shrinking marketing cloud. It's by their own words going to take up to two years to integrate it. and we're knee deep in one of the biggest replacement cycles for marketing clouds in history. So we've been clear about the fact we already win greater than 50% of the RFPs and pilots we get asked to participate in. I think we could see that percentage go up because of this. If I'm a client and I look at my CRM and I look at my marketing and that's the lifeblood of my company, do I want to trust it? to a company that's going to spend the next two years integrating a platform that doesn't even have AI as native to it. Once again, this is not to say they're not both good companies with great leaders. I'm not trying to get personal here. But just from a business perspective, we see this as a major opportunity and advantage to Zeta to continue to accelerate our current win rate and continue to take market share in the market.

That's really helpful. And if I could just sneak one more in for Chris, could you just unpack maybe what's driving the better free cash flow conversion? It would be helpful for us just to better understand some of the underlying drivers there. Yeah.

I mean, look, we're getting – we talked – you could just go to the OpEx lines, right, whether it was G&A or R&D or sales and marketing. you know each are at their lowest levels we've seen in a while all obviously improving year-over-year together and then look we've been very disciplined on capex very disciplined on amortization and continue to run a really healthy receivables and payables process so all those combined got us to you know one of our highest levels of cash conversion at 67% you know and even at the full year's guide We're already at the long-term model for Zeta 2028 at 65%. So we've been seeing these now for the last few quarters and I would expect it to sustain itself. Great.

Thanks, Chris. Thank you, Matt.

Your next question will come from the line of Ron Josie with Citi.

Great. Thanks for taking the question here. I have two, please. David, I want to ask a little bit more just with Athena Adopters accounting for greater than 70% of revenue. We'd love to hear more just about the process and the drivers of getting to that 70% and sort of how does that impact overall visibility, I guess, going forward, particularly as we think about 27 and beyond. And then, David, I wanted to follow up on your comments on Google before where Zeta was originally an and, now we're an or. I wanted to hear more of your thoughts on how the ROAS is from that spend as More marketers are having a tougher time generating their return from search just given the adoption of AIO reviews and AI mode in Gemini. Thank you.

Yeah, I mean, let me answer your second question first. I mean, for the first time ever, we are delivering a substantially higher return on marketing spend than search is today. And I think that's because Cost per click has skyrocketed as they have continued to answer more questions on their platform. Now listen, I continue to think Google is one of the greatest companies in history. We partner with them. This is not meant to be sort of a disparagement of them, but it is a statistical fact. And what I would say is that it's probably strategic on their part to take market share in what's going to be the next generation of querying. You've got OpenAI, you've got Anthropic, you've got Gronk, you've now got Muse, you've got DOTS, you've got Instinct. You've got a lot of different things going on there, which is why we're building out GEO, why we bought SensoAI, and why we're doing all of those things. But what I would tell you is that the contraction of those clicks to 33% of what they used to be approximately is skyrocketing the price and driving to the point of diminishing marginal return on return on marketing spend, whereas we're expanding our return on marketing spend, which answers your first question. Why are we seeing the highest growth rate from clients who have adopted Athena? Because they're seeing the highest return on marketing spend our company has probably ever generated. It's allowing them to drive substantially higher return on investment, which is causing them to move dollars and many more. and it's not an accident when Chris talks about how many campaigns are being set up, how many audiences are being built. Those are actually forecast capabilities to revenue and we're using that to build models to do that going forward and we feel like that's gonna be a really good indicator of sort of growth, profit and net retention rate.

Thank you, David. Thanks, Rob.

Your next question will come from the line of Arjan Bhatia with William Blair.

Perfect. Thank you. Congrats, guys. Great quarter here. David, can I ask about some of the acquisitions that you've made? Particularly, I was more interested to learn about CENSO and, you know, I'm curious what sort of additional functionality it adds on the GEO side. to what they already have and then how you're planning to sort of commercialize it. Does it sort of fit into the core platform or is there another motion for GEO here?

First of all, thank you, Arjun. I appreciate it and I'll say your name properly. The reality is that a lot of people are looking at GEO as a new strategy. We see GEO as a new channel. It's part of the existing platform. Senso will fully integrate into the Zeta platform. So I see that as a core capability. The interesting thing is not just GEO, but as you see search clicks begin to dissipate and hit the point of diminishing marginal return on spend, this is another platform that helps us move clients from certain search methodologies into frontier models. The other thing that I'm really interested in is the future of agentic shopping. For me, like I think a lot of us, I've got Instinct, I've got Muse, I've actually created my own dot and I almost live on it at this point. I've named him Alfred, maybe because I secretly wanted to be Batman as a kid, but Alfred is helping me do everything, including e-commerce, including managing my calendar and other things. Senso sits at the core of that. It allows us to help our clients get those shopping agents focused on their products versus their competitors. And I think that's going to be a very, very big thing going forward.

Got it. That's very interesting. And then on the Palantir front, I know it's early and you're kind of just still working through some of the pilots, but I'm curious as you think about the pilots that you have right now, do you have a sense of how long those might last relative to other Zeta pilots, just given size, complexity, other factors that you're seeing thus far?

Well, the first pilot we launched will be a superscaled client this month and has already converted out to a customer from a pilot. So I actually think that because of the sophistication of the Palantir customers and the Palantir platform integration, we're able to show faster return on investment than we might otherwise be able to do in a normal pilot. So I think we'll see those clients scale faster than other clients that are not integrated on both Palantir and Zeta. Okay, got it.

Thank you. Your next question will come from the line of Terry Tillman with Truist Securities.

Hey guys, can you hear me okay?

We can, Terry, yes.

It's great to know on Alfred. That's an interesting data point. But yeah, just I'll keep it to one question. With intelligent AI infrastructure and kind of this key strategy going forward, maybe just an update on some of the use cases as you've had 90 more days to kind of have your customers and prospects and kind of marinate with this. I think y'all mentioned some use cases last quarter, but just are there some kind of use cases that seem like are resonating more often? And will you also see this potentially The infrastructure you can put on top of even legacy MarTech stacks or other types of apps before they move to your whole platform. And sorry for the fire alarm in the background.

No, that's okay. So the answer to your second question is absolutely yes. Like Athena OS is going to be an operating system that can sit alongside of a legacy marketing technology platform, a legacy marketing cloud, or Another type of platform. So we see that and because we're rolling it out on an MCP basis, it'll be able to integrate into anything that they're using as a normal workflow management tool. So we're very excited about that. What I would tell you is today, the three things that I'm seeing the most usage are inventory management, supply chain management, and fraud detection and cybersecurity. We've got one large financial services company that is using us for fraud detection and cyber and it's been really interesting to see how our data cloud can inform on things that otherwise we might not have been able to inform on. But we're going to continue to have more use cases. The fact that we didn't put them in our prepared remarks is not that there weren't more of them and not that it wasn't important. just that there's so much to talk about this quarter that we talked about that in the last quarter. And of course, we gave it a lot of airtime at Zeta Live.

Thanks, David.

Thanks, Terry.

Your next question will come from the line of Scott Berg with Needham and Company.

Hi, everyone. Super nice quarter here. I'll stick to the one question theme given the time. Another product you all rolled out at the conference, Zeta Live, was on the headless strategy, new MCP server. Not surprised. We're seeing a lot of those in our space from a general perspective. But how do you think about that interacting with Athena, or at least customers' use with Athena? I guess you would think it's probably a positive, but it's a different surface. It's not within your platform. Just help us understand how that's ultimately going to be a tailwind for Athena use over time.

Well, first of all, thank you, Scott. What I would say is, yes, this is a pivot for us. I have always been, we need to control everything. And now I'm saying the UI can actually exist in a third party platform. And I sort of say that I am always 100% confident in anything I believe until I see it's wrong. And I would tell you that the way the world is moving is effectively Enterprises are going to work with a number of different user interfaces. This, to me, as it relates to Athena, is actually going to help us accelerate her growth rate and her sales rate. Because if a client is putting in enterprise-grade GPT or enterprise-grade Claude or enterprise-grade Gemini, any of those, They're going to want to start using that and we're totally okay with Athena plugging in to those platforms and allowing them to be the front end. Now, I want to be clear. No third party will ever have access to our data cloud. They will never have access to our data. We keep that for our own models and our own algorithms. All of the activation will continue to exclusively go through our platform. You're only talking about a new type of UI interface. The middle layer and the execution layer will continue to live inside of the Zeta platform.

Very helpful. Thank you for taking my questions.

The next question will come from Jason Cryer with Craig Hallam.

Hey guys, it's Thomas on for Jason. Thanks for taking my question. I'll just stick with one. With the ZBI extending into the data cloud and areas like real estate intelligence, and you just mentioned cybersecurity, how are those customer conversations different from your traditional marketing engagements?

And how are you approaching commercialization of that additional use case? You know, it's a really good question. What I would tell you is it all starts with, can you help us with this? So we're executing on marketing. We're doing a really good job. In many cases, it starts that the demand for marketing is outstripping supply chain. It's outstripping inventory management. So they're running out of product in places that they need it. How do we then take that a layer back and help them begin to forecast where products should be based on demand instead of waiting to run out of it and having to scramble to move it? As it relates to the fraud detection in cyber, we're actually able to look inside of a customer and understand based on their data if it's really them or not. And it's been very interesting as we've put that sort of taken what used to be a personalization layer and turned it into a security layer. So it actually today is still starting. I'll remind you, I know everybody says, oh, our clients are the CMO. How do you expand out? We have no customer engagement that I know of where we don't directly interact with the CMO, CTO, and CIO today. We might start with the CMO, but if we don't get the CIO and CTO to approve our platform, they're not going to implement it. They're not going to turn over a mission-critical functionality to us. So I think you're seeing the evolution of the business. I think the next big leap will be Athena OS. Appreciate it, David. Thanks. Thank you.

And the next question will come from the line of Clark Wright with DA Davidson.

Hi there. Thank you. It was great to hear from some of the agencies at Zeta Live and the increasing global reach of Zeta. Can you talk about your investment strategy to expand your international presence and the role agencies and partnerships play in that motion?

Thank you. It's a great, great question. So what I would tell you is we've been investing heavily in international now for a number of quarters. And as I said on the call, we're generating so much profit right now internally. We've been able to deliver the numbers we're delivering while simultaneously making, I mean, I think last quarter was the largest cash investment amount we've ever made as a company. and we still turned out 73% free cash flow growth and 55% EBITDA growth. That would have been substantially higher if we had not made those investments but once again we are looking at how do we deliver a 20 plus percent organic growth business for many years to come and that takes investment. What I would tell you is our agency clients are all global. were able to take the relationship we have in one country and then expand it to other countries. And that's something that I think we're doing really, really well. Our hub in London, which is now running Europe, is really, really winning in the marketplace. We've started in Canada. We've been winning bigger in Canada than I think we originally expected to. We continue to operate in many, many different countries. I don't know how many it is, but I know we have a big operation in Japan, Brazil, and all over the world.

Awesome. Thank you.

And it appears there are no additional questions at this time. I'll turn it back to you for your closing remarks.

Let me just say, I feel like this quarter was an incredible... sort of execution and really, really showed how the team came together, has taken advantage of partnerships and a number of changes in the ecosystem to accelerate our growth as a business. And I think that's something that we're gonna see that's gonna continue. I'm very proud of what we did at Zeta Live. I'm very proud that even though we made a massive investment in Zeta Live, We still delivered the numbers that we delivered today. The pipeline coming out of Zeta Live is now well over $100 million and I think we're going to see over $100 million in booked business come out of Zeta Live, which last year we had a 10 to 1 for every dollar we spent in Zeta. This year I think it'll be even higher than that. That is a credit to the team. Zeta people are at the core of everything we do. and I cannot begin to tell everybody how proud I am of the team and how it's come together. Thank you for joining the call and we look forward to seeing you next quarter. Bye.

This concludes today's call. Thank you for your participation. You may now disconnect.