Zeta Global (ZETA) Q3 2026 earnings review
Zeta's large clients spend more, and standard profit jumps
Zeta Global, which sells marketing and data software, grew faster in its core business and turned solidly profitable under standard accounting. Sales from businesses it owned a year ago, excluding political campaigns, rose 30%, beating the company's own 23% to 24% target as large clients spent more. Standard net income reached $38 million, clearing in one quarter what the prior full-year plan implied for the entire second half, and finance chief Chris Greiner raised every full-year target.
| Sales from businesses owned a year ago (excl. political) | +30% +28% last quarter; 23–24% plan |
|---|---|
| Quarterly revenue per large customer ($1M+) | $2.0M +22% from a year ago |
| GAAP net income | $38.3M -$3.6M a year ago |
| Full-year revenue outlook | Raised $37M middle of the range: 42% growth |
⚖️ Verdict: 🟢 Bullish
The story got better because Zeta resolved two standing concerns at once: spending per large customer broke out to $2.0 million after seven quarters in a narrow range, and lower overhead costs turned standard earnings into a real support rather than a thin promise. One caution: the fourth-quarter outlook still points to underlying growth slowing to 22% to 24%, while the release gives no revenue numbers for the Athena AI tools management credits for the quarter.
The question now is whether third-quarter underlying growth of 30% is the true run rate or whether growth will step down into the low 20s as the fourth-quarter plan states. Either management is building in its usual 5% to 6% cushion, or the post-acquisition cross-selling boost is already peaking. Fourth-quarter results and the initial 2027 outlook will settle it.
🐂 Bull Case
Large Customers Broke Out of Their Spending Range
Zeta Global relies on what it calls Super-Scaled Customers, which are clients that spend at least $1 million a year on its marketing and data software. For seven straight quarters, average quarterly revenue from each of these large clients stayed between $1.6 million and $1.8 million, raising concern that spending per client had hit a ceiling.
In the third quarter, that average jumped 22% from a year ago to $2.0 million, while the number of these large clients rose 18% to 212. By our math, the New York software group added 15 such clients in three months, nearly double its recent quarterly pace. Sales from businesses Zeta owned a year ago, excluding political campaigns, sped up to 30% growth from 28% in the second quarter.
What to watch: fourth-quarter revenue per large client. Holding at or above $2.0 million during the holiday marketing season would show this higher spending level is permanent rather than a one-quarter jump.
Overhead Discipline Turned Zeta Profitable Ahead of Schedule
Zeta has long pointed to profit measures that leave out stock grants and acquisition costs, while its bottom-line profit under standard accounting stayed negative or thin. Entering the second half of 2026, by our math, the company's full-year plan required about $27 million to $32 million of standard net income across the final six months.
The company cleared that six-month bar in a single quarter, earning $38.3 million, or $0.14 per share. Operating profit rose because Zeta held down overhead as sales grew: selling and marketing costs fell 3.1 percentage points of revenue to 22.2%, and general and administrative costs fell 1.5 percentage points to 15.2%. Free cash flow rose 73% to $81.5 million.
What to watch: whether Zeta releases its tax valuation allowance in the fourth quarter. Management raised its full-year earnings plan to $0.22 to $0.24 per share even before counting a potential "one-time, non-cash tax benefit from the release of a portion of our valuation allowance".
Positives this quarter didn't test
Two standing drivers from earlier quarters could not be checked in the earnings release because their numbers live in call remarks or the quarterly filing.
- Sales force productivity: quota-carrying salesperson headcount and sales pipeline per seller were not in the release; the quarterly filing and call remarks will show whether Zeta kept growing without adding sellers.
- AI adopter retention and usage: management previously promised to expand its back-half reporting on how much more AI customers spend and renew; the release contained no adopter cohort numbers.
🐻 Bear Case
AI and Partnerships Still Lack Revenue Numbers
"With AthenaOS and our expanding partnership ecosystem, we are extending our proprietary data and native AI into a broader enterprise intelligence opportunity." Chief executive David A. Steinberg used those words to frame the quarter around Athena, Zeta's artificial intelligence assistant, and recent partnerships with OpenAI, Palantir and Snowflake. Finance chief Chris Greiner attributed the quarter's "accelerating revenue growth driven by increased Athena adoption and usage".
Yet the earnings release gives zero dollar figures, customer counts or pricing details for Athena, AthenaOS, Zeta Business Intelligence (its analytics tool for corporate decisions), or any of the three partnerships. The forward-looking disclaimer also notes that the AthenaOS beta and general availability are still ahead, and adds regulatory risks for autonomous AI software.
What to watch: the third-quarter filing and conference call remarks for the promised AI adoption and revenue framework. Without dollar figures, investors cannot tell whether AI tools bring in new fees or merely help retain existing marketing spend.
The Fourth-Quarter Plan Points to a Sharp Slowdown
Zeta's headline revenue growth of 46% in the third quarter includes $48.0 million from Marigold's enterprise software business, which Zeta bought in November 2025, and $7.4 million from political candidates. Because the Marigold deal closes its first full year in late November, that acquisition boost shrinks in the fourth quarter.
Management's fourth-quarter outlook calls for reported revenue growth to step down to 32% to 33%, and for underlying growth—excluding acquisitions and political campaigns—to slow to 22% to 24%, down from 30% in the third quarter. Zeta regularly sets cautious targets and beats them, so a 22% to 24% target does not prove demand is weakening, but the headline slowdown is now one quarter away.
What to watch: the initial 2027 revenue outlook next quarter. Once Marigold and midterm election money are fully in the comparison base, reported growth will have to run on underlying demand alone.
Gross Margin Stopped Improving Against the 2028 Plan
Zeta's long-term 2028 plan assumes the company will lower its cost of revenues—the fees it pays to outside publishers and media owners plus customer support costs—as more clients use Zeta's own platform directly instead of third-party channels. Over the prior two quarters, that direct share slipped as advertising agencies bought more social media campaigns.
In the third quarter, cost of revenues excluding depreciation and amortization took 39.7% of revenue, up 0.2 percentage points from 39.5% a year ago. While that is better than the 40.9% ratio in the second quarter, gross margin is still 0.2 percentage points lower than last year, and the release did not report the direct platform revenue share.
What to watch: direct platform revenue mix in the quarterly filing. A reading stuck at or below 72% would confirm that agency social media spending is keeping cost of revenues above the 2028 target path.
Stock Grants Still Outpace Buybacks and Raise Share Count
Zeta highlights its share buybacks and its "Rule of 71", a custom measure that adds reported revenue growth to an operating profit margin that excludes employee stock grants. In the third quarter, stock-based compensation was $50.0 million, or 10.1% of revenue, and reached $155.1 million over the first nine months of 2026.
During those same nine months, Zeta spent $85.5 million buying back stock—about $29.9 million in the third quarter alone by our math. Because stock grants and shares issued for acquisitions were much larger than the buybacks, the diluted share count used for standard earnings rose 19.0% from a year ago to 264.6 million, and the count excluding one-offs rose 5.3% to 269.9 million.
What to watch: full-year net share dilution at year-end. Management targeted 3% to 4% net dilution for 2026, and the third-quarter share count is still running above that band.
💲 Other KPIs
New cash outflow in investing activities. Zeta recorded $70.0 million of loan advances in the first nine months of 2026, compared with zero a year ago, while other non-current assets on the balance sheet jumped from $4.7 million at year-end to $91.8 million. Because these are classified as investing outflows, they do not reduce reported free cash flow.
Rebounded 18.3% from the second quarter by our math, after dipping from $37.4 million in the first quarter to $33.9 million in the second. Deferred revenue—cash customers have paid for software and campaigns not yet delivered—now confirms the growing sales pipeline management described last quarter.
Uncollected customer bills rose 36.0% from a year ago by our math, growing slower than the 46.1% increase in quarterly revenue. That improved collection pace helped operating cash flow rise 57.7% from a year ago to $91.3 million.
By our math, cash and cash equivalents of $340.1 million minus $243.9 million of long-term debt leaves $96.1 million of net cash, down from $122.7 million at the end of 2025. Zeta drew net credit facility borrowings to pay down $135.3 million of acquisition liabilities and fund $70.0 million of loan advances.
🔮 Guidance
Raised. The middle of the range moved up $15 million to $523 million, which means 32% to 33% reported growth and 22% to 24% growth excluding acquisitions and political campaigns. Both rates slow from the third quarter as the November 2025 Marigold purchase enters the year-ago base. Over the last four quarters Zeta beat its revenue midpoint by 6.4% on average; if the pattern holds, fourth-quarter revenue would reach $556 million by our math.
Raised. The middle of the range rose $3.9 million from what the prior full-year plan implied for the fourth quarter, pointing to 42% to 43% growth from a year ago. That equates to an operating cash profit margin, excluding stock grants and one-offs, of 25.7% to 26.2%, up from 24.6% in the third quarter on holiday marketing volume.
Raised. The middle of the range rose $37.5 million to $1,855 million, representing 42% total growth and 27% growth excluding acquisitions and political revenue. This is the third raise this year, and each move has been larger than the last: +$30.0 million, +$32.0 million, and +$37.5 million.
Raised. The middle of the range moved up $9.45 million to $414.65 million, or 49% growth from 2025 and a 22.3% to 22.4% margin. It is the third raise of the year, and the increases have grown each quarter: +$6.3 million, +$7.9 million, and +$9.45 million.
Raised. The middle of the range increased $15.8 million to $271.1 million, or 64% to 65% growth and a 14.6% to 14.7% margin. By our math, subtracting nine-month free cash flow of $181.2 million leaves $89.9 million for the fourth quarter, up 61% from a year ago and equal to a 17.2% margin. Third raise this year: +$3.8 million, +$20.3 million, and +$15.8 million.
Raised. The middle of the range more than doubled, rising $0.13 to $0.23 per share after starting the year at $0.03. Because nine-month earnings per share already stand at $0.13, by our math the plan implies $0.10 per share in the fourth quarter, down from $0.14 in the third quarter, and still excludes a potential one-time tax benefit.
❓ Key Questions
Who received the $70 million in nine-month loan advances?
The cash flow statement shows $70.0 million of "Loan advances" under investing activities and other non-current assets jumped from $4.7 million to $91.8 million. Management has not explained in the release whether this money went to a partner, customer, or acquisition target.
Where is the promised back-half AI revenue and usage disclosure?
Last quarter management promised to expand reporting in the second half on AI customer revenue share, retention and usage. The third-quarter release credits Athena for accelerating growth but provides no numbers.
What did Palantir, OpenAI and Snowflake contribute to the pipeline?
The release mentions an expanding partnership ecosystem and acquisitions of Senso Agentic Inc. and Social Audience B.V., but gives no contract counts, purchase prices, or revenue figures for any of them.
Did direct platform revenue mix recover from 72%?
Cost of revenues stayed 0.2 percentage points higher than a year ago at 39.7% of sales. Without the quarterly direct versus integrated revenue mix, investors cannot see if agency social media buying is still pressuring gross margins.