Zeta (ZETA) Q3 2025: Athena AI Launch Fuels 28% Organic Growth, Extends Platform Differentiation

November 4, 2025 | By EarningsIQ Research

Zeta’s Q3 results reinforced its AI-powered marketing leadership with the Athena launch and a record pipeline from Zeta Live, driving organic revenue acceleration and robust cash flow. Strategic execution across customer expansion, vertical wins, and operational leverage underpinned a guidance raise for 2025 and the first-ever 2026 outlook, signaling high confidence in sustained 20%+ growth. Investors now face a platform with deepening competitive moats, but must weigh integration risk as Marigold is set to enter the fold.

Summary

• AI Platform Momentum: Athena’s launch and seamless integration position Zeta as the next-gen marketing cloud.
• Customer Expansion Flywheel: Multi-use case adoption and vertical wins drive higher ARPU and stickiness.
• Visibility Extends: Early 2026 guidance and large enterprise contracts boost forward confidence.

Performance Analysis

Zeta delivered another “beat and raise” quarter, with organic revenue growth accelerating to 28% year-over-year (ex-political and LiveIntent), marking the 17th consecutive period of outperformance. Adjusted EBITDA rose at an even faster clip, reflecting ongoing operating leverage, while free cash flow margin reached a record 14%. The company’s scaled customer count grew 20% year-over-year to 572, with super-scaled customers (those spending over $1.6 million per quarter) up 25%—a clear signal of deepening wallet share among large enterprises.

Vertical diversification remains a strength, with seven of the top ten verticals growing faster than 20% year-over-year, led by telecom, retail, travel, and automotive. Direct revenue mix held steady at 75%, up from 70% last year, while agency channel expansion added 23 brands sequentially, reflecting Zeta’s ability to capture both enterprise and agency-driven spend. Gross margin saw slight pressure from heavier display and video channel usage, but management reaffirmed its long-term efficiency targets. Share repurchases continued, with $28 million deployed in Q3 and 6 million shares bought back year-to-date.

• AI-Driven Upsell: Customers adopting two or more use cases generated over 3x the revenue of single-use case clients, with multi-use case adoption up 100%+ YoY.
• Vertical Outperformance: Telecom entered the 20%+ YoY growth club, while consumer discretionary verticals sustained momentum despite macro headwinds.
• Cash Flow Acceleration: Free cash flow conversion reached 60%, up from 48% last year, even with agency working capital drag.

Operational discipline and mix optimization are supporting margin expansion, while Zeta’s “rule of 40” performance on a free cash flow basis highlights the business’s scalability. The company is tracking ahead of its 2030 targets for both margin and cash flow conversion, giving management room to invest in innovation and M&A.

Executive Commentary

Strategic Positioning

1. Athena: AI as the Core Differentiator

Athena, Zeta’s new AI-driven conversational agent, is positioned as the “intelligent operating system” for marketing, embedded natively into the Zeta Marketing Platform (ZMP). Unlike competitors relying on bolt-on AI, Zeta’s eight-year track record in AI and its proprietary data cloud create a defensible moat. Athena’s launch is designed to accelerate use case adoption, lower friction for marketers, and make the platform “harder to leave,” with beta rollout to clients by Q4 and full production in Q1 2026.

2. OneZeta Multi-Use Case Expansion

The OneZeta initiative, which encourages customers to consolidate multiple marketing functions (acquire, grow, retain) onto the ZMP, is driving substantial ARPU and retention gains. Customers with two or more use cases generate more than triple the revenue of single-use case clients, while recent acquisitions (LiveIntent, Marigold) provide a pipeline of large enterprises currently using only one use case—offering significant upsell opportunity.

3. Marigold Acquisition: Data and Upsell Synergy

The pending acquisition of Marigold’s enterprise software business is on track to close by year-end. Management expects the loyalty data and customer base (100+ enterprises, 20 of the top 100 advertisers, 40+ Fortune 500s) to be “game-changing” for training Zeta’s AI models and cross-selling additional use cases. Integration is expected to widen Zeta’s data cloud moat and accelerate the OneZeta flywheel in 2026 and beyond.

4. Vertical and Channel Diversification

Zeta’s growth is broad-based across verticals, with telecom becoming a new 20%+ growth engine and consumer discretionary sectors remaining resilient. The blend of direct enterprise and agency-driven business allows Zeta to capture a wide swath of marketing budgets, while ongoing investment in independent agency sales teams is driving incremental brand adoption.

5. Capital Allocation Discipline

Share repurchases remain a priority, with over half of free cash flow earmarked for buybacks. Management is also committed to reducing dilution, with net dilution at 1.6% YTD and on track for a 4-6% target in 2025. The company maintains “dry powder” for further buybacks, balancing M&A and shareholder returns.

Key Considerations

This quarter underscores Zeta’s evolution from challenger to must-have AI marketing platform, with visible momentum across new product launches, customer expansion, and vertical wins. The Athena launch and Marigold integration are pivotal for sustaining outsized growth, but execution risk remains as complexity increases.

Key Considerations:

• AI-Enabled Stickiness: Athena’s seamless, voice-activated interface could drive deeper customer embed and higher platform dependency, but adoption curve and competitive response warrant monitoring.
• Multi-Use Case Upsell: The OneZeta model is proving out in ARPU expansion and NPS, yet the pace of cross-sell into acquired customer bases (Marigold, LiveIntent) will be critical to hitting out-year targets.
• Vertical Resilience: Broad-based growth, especially in telecom and consumer discretionary, signals platform relevance across cycles, but sector mix shifts could impact margin profile.
• Operational Leverage Sustainability: Record free cash flow and margin expansion provide investment capacity, but gross margin is sensitive to channel mix and ongoing innovation spend.

Risks

Integration risk looms as Zeta absorbs Marigold’s enterprise base and seeks to cross-sell multiple use cases. Channel mix volatility, especially heavier display/video usage, could pressure gross margins. Competitive intensity from legacy clouds and emerging AI-native platforms remains high, while macro-driven marketing budget shifts could affect growth visibility. Political and advocacy revenue introduces forecasting noise for 2026.

Forward Outlook

For Q4 2025, Zeta guided to:

• Revenue of $364.5 million at the midpoint (16% YoY, or 23% ex-political/LiveIntent).
• Adjusted EBITDA of $90 million at the midpoint (24.7% margin).

For full-year 2025, management raised guidance:

• Revenue midpoint up by $11 million to $1.275 billion (26% YoY ex-political/LiveIntent).
• Adjusted EBITDA midpoint up $9 million to $273.7 million (21.5% margin).
• Free cash flow midpoint up $15 million to $157.4 million (57% of adjusted EBITDA).

2026 initial outlook (organic only, pre-Marigold):

• $1.54 billion revenue (21% growth), $354 million adjusted EBITDA (23% margin), $209 million free cash flow (14% margin).

Management cited record pipeline visibility, larger enterprise contracts, and historical customer spend expansion as drivers of forward confidence. Guidance excludes Marigold until close, with a clean organic baseline established for 2026.

Takeaways

Zeta’s Q3 2025 results highlight a business in strategic ascendancy, leveraging AI innovation, multi-use case expansion, and disciplined execution to extend its growth runway.

• Platform Differentiation Deepens: Athena’s launch and Zeta’s data advantage are raising barriers for legacy and new entrants alike, with customer feedback and pipeline momentum validating the approach.
• Execution Outpaces Guidance: Consistent beat-and-raise performance, robust cash flow, and operational leverage are supporting both organic investment and capital returns.
• Integration Watchpoint: The Marigold acquisition will test Zeta’s ability to scale cross-sell and maintain margin discipline as complexity grows; investors should track post-close revenue and synergy capture closely.

Conclusion

Zeta’s Q3 showcased a business firing on nearly all cylinders, with AI-powered product innovation, customer expansion, and financial outperformance converging to support an ambitious multi-year growth narrative. The coming quarters will test Zeta’s integration prowess and ability to execute on its AI vision at scale, but the company enters this phase with strong momentum and a deepening competitive moat.

Industry Read-Through

Zeta’s results and strategy reinforce the accelerating shift toward AI-native marketing platforms, as legacy clouds lose ground to more agile, data-rich competitors. The rapid adoption of conversational AI as a user interface (“AI is the new UI”) will likely become table stakes across martech, elevating expectations for both ease of use and ROI. Zeta’s success in driving multi-use case adoption and cross-vertical penetration signals a broader industry move toward platform consolidation and outcome-based measurement. Investors in the marketing technology sector should closely monitor execution on AI integration, customer stickiness, and the pace of legacy displacement as key drivers of future winners.

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