Zeta Global (NYSE: ZETA) delivered a strong second-quarter performance that topped analyst expectations, yet the market reacted negatively after the company's fourth-quarter revenue outlook came in essentially flat. The stock fell 8.1% to $22.30 in after-hours trading on Tuesday, erasing earlier gains from a 7.5% rise during the regular session to close at $24.26.
Q2 Results: Strong Growth Across the Board
For the quarter ended June 30, 2026, Zeta reported revenue of $442.8 million, a 44% increase from $308.4 million in the same period last year. This beat the midpoint of the company's guidance by $22.3 million. Adjusted EBITDA surged 56% to $91.7 million, with margins expanding to 20.7% from 19.1%. The company also swung to a GAAP net income of $8.2 million, compared to a loss of $12.8 million a year ago. Operating cash flow jumped 65% to $69.2 million, while free cash flow rose 73% to $58.0 million.
This marks the 20th consecutive quarter that Zeta has surpassed analyst forecasts and raised guidance. CEO David Steinberg stated that the company has reached an inflection point, while CFO Chris Greiner attributed the results to widespread AI adoption across the platform.
Guidance: Q4 Outlook Disappoints
Despite the strong quarter, investors focused on the company's fourth-quarter revenue guidance, which at the midpoint implies approximately $507.9 million—nearly unchanged from the previous forecast of $507.7 million. The increase of just $200,000 is negligible relative to the nearly $508 million quarterly run rate.
Analysis of the guidance bridge reveals that the full-year revenue outlook was raised by $32 million, but almost all of that increase came from the second quarter's beat ($22.3 million) and a higher third-quarter midpoint ($9.5 million). The implied fourth-quarter figure remained virtually flat, suggesting that the company's growth may be plateauing in the near term.
Customer Metrics and Acquisition Impact
Zeta continued to expand its customer base, with super-scaled customers (those generating over $1 million in annual revenue) increasing 17% year-over-year to 197. Revenue per super-scaled customer also grew 17% to $1.8 million.
However, the impact of recent acquisitions was notable. Excluding revenue from LiveIntent, Marigold, and political clients, revenue grew 15.8% sequentially to $395.0 million. Marigold revenue declined 13.5% quarter-over-quarter to $48.1 million, representing 10.9% of total revenue, down from 14.0% in Q1.
Palantir Partnership Remains a Key Narrative
The company's partnership with Palantir Technologies (NASDAQ: PLTR) continues to be central to its growth story. Zeta is transitioning its Data Cloud to Palantir's Foundry platform, and both companies have committed to collaborating on customer acquisition. CEO David Steinberg previously stated that the partnership could generate over $100 million in annual revenue in the coming years, though Tuesday's release did not provide a specific revenue figure tied to the deal.
Risks and Considerations
Despite the positive results, several risks remain. Stock-based compensation totaled $52.1 million, nearly 12% of quarterly revenue. The Palantir sales target is based on future projections, and Zeta has not provided a reconciliation of its forward guidance for adjusted profit and cash flow with GAAP metrics, citing unreliable estimates.
Looking ahead, the market will be watching Wednesday's regular session for further reaction, with updated analyst projections expected. Zeta's ability to sustain its growth trajectory and execute on its AI-driven strategy will be critical in the coming quarters.
