Stock Story -
What Happened: Shares of advertising and marketing company Zeta Global (NYSE:ZETA) jumped 16.2% in the morning session after the company reported a "beat and raise" quarter. Zeta blew past analysts' revenue and billings expectations. Management considered the results "the fastest growth rate we've seen since going public 3 years ago." The outperformance was attributed to 1. Growth in insurance and automotive verticals accelerating at a faster pace than expected. 2. Strengths in the agency business, which powered ARPU. Moving on, it raised its full-year revenue guidance. Zooming out, we think this was an impressive quarter that should delight shareholders.
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What is the market telling us: Zeta's shares are quite volatile and over the last year have had 25 moves greater than 5%. But moves this big are very rare even for Zeta and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 3 months ago, when the stock gained 21.8% on the news that the company reported first-quarter results that blew past analysts' billings, adjusted EBITDA, and free cash flow expectations. Notably, the company highlighted strengths in the number of scaled-up customers (from the $100,000 to $1 million cohort), leading to strong ARPU (average revenue per user) growth. Looking ahead, next quarter's revenue guidance came in higher than Wall Street's estimates. On the other hand, its new large contract wins slowed. Overall, we think this was a strong quarter that should satisfy shareholders.
Zeta is up 183% since the beginning of the year, and at $23.77 per share, has set a new 52-week high. Investors who bought $1,000 worth of Zeta's shares at the IPO in June 2021 would now be looking at an investment worth $2,670.
