Zeta Global Holdings Corp: Market-Trouncing Under-the-Radar Stock Has 70% Upside

Zeta Stock Rips Higher on Record Results

Not all growth stocks have been taking a beating from the rising interest rates. One great tech stock that’s been bucking the trend is Zeta Global Holdings Corp (NYSE:ZETA).

Zeta is a software company that helps its clients get the most out of their customer data. The company only went public in June 2021, which is probably why many investors aren’t familiar with Zeta stock—but Wall Street certainly is.

The company was co-founded by John Sculley, a former CEO of Apple Inc (NASDAQ:AAPL) and a former president and CEO of PepsiCo, Inc. (NASDAQ:PEP).

That’s one reason so many institutions and mutual funds have Zeta stock in their portfolios. And with Zeta Global Holdings Corp reporting record financial results, it can’t be long until more institutional and retail investors follow suit.

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As of this writing, Zeta stock is up by :

  • 23% over the last month
  • 50% over the last three months
  • 63% over the last six months
  • 54% year-to-date

Strong gains indeed, and Wall Street analysts remain bullish on Zeta stock. Of the analysts providing a 12-month share-price forecast for Zeta Global Holdings Corp, their average target is $14.33 and their high estimate is $20.00. That points to potential gains of 11% to 55%.

Chart courtesy of StockCharts.com

About Zeta Stock

Zeta is an omnichannel data-driven cloud company that helps businesses target, connect to, and engage with consumers through personalized marketing via mail, web sites, online chat, social media, connected TV, video, and other channels. (Source: “CDP Overview: April 2022,” Zeta Global Holdings Corp, last accessed April 19, 2022.)

A few of Zeta Global Holdings Corp’s customers are BMW Group, CNN, Hanesbrands Inc. (NYSE:HBI), Motel 6, Samsung Electronics Co Ltd (KRX:005930, OTCMKTS:SSNLF), and Toyota Motor Corp (NYSE:TM).

Zeta Global Holdings Corp capped off 2021 with results that included significant revenue growth; a lower cost of revenue; record cash flow; strong adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA); and a growing customer base.

This led David A. Steinberg, co-founder, chairman, and CEO, to say, “We are just beginning to scratch the surface of our rapidly growing, multi-billion-dollar addressable market.” (Source: “Zeta Announces Record Financial Results and Zeta 2025 Targets,” Zeta Global Holdings Corp, February 23, 2022.)

Zeta Global Holdings Corp’s financial results have helped management provide aggressive targets for 2022 and 2025. That includes 2022 revenue growth of 18% to 20%, adjusted EBITDA growth of 26% to 31%, and adjusted EBITDA margin of 14.5% to 15.4%.

Zeta Global Holdings Corp has also announced “Zeta 2025,” a long-term plan to become one of the largest marketing cloud companies. Management’s financial goals include annual revenue in excess of $1.0 billion, with adjusted EBITDA margins of at least 20% by 2025.

Zeta Global Holdings Corp Reports Another Quarter of Record Results

After posting record third-quarter results, Zeta capped off its incredible year with record results.

The company’s 2021 fourth-quarter revenue increased by 18% year-over-year to $135.0 million. (Source: “Zeta Announces Record Financial Results and Zeta 2025 Targets,” Zeta Global Holdings Corp, February 23, 2022.)

Zeta had a Q4 2021 operating loss of $61.2 million, compared to Q4 2020 operating income of $6.6 million. This was primarily due to $70.5 million in stock-based compensation during the fourth quarter of 2021, compared to $30,000 in the same period of the previous year.

Zeta Global Holdings Corp reported a fourth-quarter 2021 net loss of $61.1 million, compared to a fourth-quarter 2020 net loss of $8.8 million. Again, this was mainly due to the $70.5 million in stock-based compensation.

The company’s cash flow from operations in the fourth quarter of 2021 improved year-over-year from $18.9 million to $20.9 million. Its Q4 2021 adjusted EBITDA increased by 29% year-over-year to $22.9 million. Its adjusted EBITDA margin improved year-over-year from 15.5% to 17%.

Zeta Global Holdings Corp’s full-year 2021 revenue rallied by 25% year-over-year to $458.0 million. The company’s 2021 operating loss increased year-over-year from $8.1 to $248.4 million. This was primarily driven by $259.2 million worth of stock-based compensation during the year, compared to $100,000 in 2020.

Zeta Global Holdings Corp’s full-year 2021 net loss was $249.4 million, or $2.95 per share, compared to a full-year 2020 net loss of $53.2 million, or $2.23 per share. Again, this loss was fueled in large part by the $259.2 million worth of stock-based compensation in 2021.

Zeta Global Holdings Corp’s cash flow from operations in 2021 went up by nearly 25% year-over-year to $44.3 million. Its 2021 adjusted EBITDA increased by 60% year-over-year to $63.3 million and its 2021 adjusted EBITDA margin improved year-over-year from 10.8% to 13.8%.

Analyst Take

Zeta stock is an under-the-radar small-cap tech stock that’s been significantly outpacing the broader market.

And with businesses looking to tap into valuable data to predict future customer behavior, the demand for Zeta Global Holdings Corp’s artificial intelligence algorithms will only increase.