Zeta Global Holdings Corp. (ZETA) Earnings Call Transcript

Good day, and welcome to the Zeta Global Third Quarter 2026 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Matt Fall. Please go ahead, sir.

Thank you, operator. Hello, everyone, and thank you for joining us for Zeta's Third Quarter 2026 Earnings Conference Call. Today's presentation and earnings release are available on Zeta's Investor Relations website at investors.zaglobal.com, where you will also find links to our SEC filings along with other information about Zeta. Joining me on the call today are David Steinberg, SADA's Co-Founder, Chairman and Chief Executive Officer; and Chris Greiner, Zeta's Chief Financial Officer. Before we begin, I'd like to remind everyone that statements made on this call as well as in the presentation and earnings release contain forward-looking statements regarding our financial outlook business plans and objectives and other future events and developments, including statements about the market potential of our products, potential competition, revenues of our products and our goals and strategies. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected. These risks and uncertainties include those described in the company's earnings release and other filings with the SEC and speak only as of today's date. In addition, our discussion today will include references to certain supplemental non-GAAP financial measures which should be considered in addition to and not as a substitute for our GAAP results. We use these non-GAAP measures in managing our business and believe they provide useful information for our investors. Reconciliations of the non-GAAP measures to the corresponding GAAP measures, where appropriate, can be found in the earnings presentation available on our website as well as our earnings release and our other filings with the SEC. With that, I will now turn the call over to David.

Thank you, Matt. Good afternoon, everyone, and thank you for joining us today. For the third quarter of 2026, we delivered our 21st consecutive beat and raise quarter, hitting the rule of 71 in total. Revenue was $493 million representing year-over-year growth of 46% and 30%, excluding Marigold and political candidate revenue. Adjusted EBITDA was $121 million up 55% year-over-year with our margin expanding by 140 basis points to 24.6%. And free cash flow was $82 million, up 73% year-over-year as we continue to translate growth into cash generation. . Third quarter diluted GAAP EPS was $0.14, up from a loss of $0.02 in the year ago period. Non-GAAP EPS was $0.38, up 58% year-over-year and year-to-date diluted GAAP EPS is now positive at $0.13. Based upon this strength, we are once again raising the midpoint of our 2026 revenue guidance by $37 million to $1.85 billion which is up 42% from the year before. Our core business is generating the growth and cash flow necessary to fund expansion into larger enterprise-wide opportunities. We are increasingly becoming the foundation our customers can build on, one that turns what their business knows into what their business can achieve, that is intelligent AI infrastructure. At ZataLive, we showed you the next chapter of Zeta. Today, I want to talk about how those innovations position us to continue to take share in marketing software and address a much larger enterprise intelligence opportunity. Let me start with what's driving our growth today. Return on investment for our customers. AI is only as powerful as the data that fuels it. And we have built one of the world's largest proprietary data assets. This is what gives us our competitive advantage and positions us to lead in the AI era. Some of the world's largest enterprises trust data with their data and rely on us to turn it into intelligence they can act on. When we help customers make better decisions with those assets, we drive a higher return on their marketing and technology spend. That is what earns us more of their business and has been driving our share gains. More use cases and more activity on the platform create opportunities for more revenue. Consider a leading automotive services company with more than 4,000 locations by combining its customer relationships with Zeta's proprietary intelligence, we are helping it to identify and win high-value customers more efficiently. The result a 20% lower cost per incremental acquisition and a 450% uplift in conversions across multiple channels. Those results have helped expand our relationship into additional channels and use cases. Zeta's financial foundation matters. Our existing business is generating the growth and cash flow to support our next chapter, while we continue to expand margin and invest in our platform to be totally clear the numbers we have delivered today already include considerable R&D investments that are necessary for the future business and Athena OS. At the same time, code automation is helping our engineers to innovate faster. It has reduced the time from idea to shipment by 27% and made time to first review 300% faster. As a result, our engineers are shipping roughly twice as much code each week, and customers are getting improvements substantially sooner. As we deliver more value for customers, the role we play in their businesses continues to expand. The shift to AI is reshaping how enterprises engage with customers raising important questions. Who owns the customer relationship? Who controls proprietary data? And how can businesses generate measurable returns. This shift creates an opportunity for Zeta to help enterprises control their customer relationships and first-party intelligence, maintain their data sovereignty and engage customers across channels to drive measurable outcome to continue to own their alpha. With Athena OS, we are turning that opportunity into tangible commercial results and cash flow with clear proof points demonstrating the value we deliver. For decades, enterprise software has been organized around applications and functions. Athena OS changes that equation. We start with what the business is trying to achieve and organize intelligence, applications and actions around that objective. Marketing is where we started. With Zeta business intelligence or the ZDI, we expand to additional business use cases. And we're already seeing how customers are building towards this future. A leading rural lifestyle retailer and Fortune 500 company began by consolidating its marketing technology on to Zeta, delivering significant improvements in efficiency and cost. The consolidation replaced 3 separate vendors, generating $1.5 million in annual technology savings and delivering a 75% faster campaign execution. Those results helped expand our relationship into customer acquisition with the goal of attracting new high-value customers. The next planned phase brings Athena OS into the relationship, connecting customer intelligence, personalization and automation across online and in-store experiences. What began as a marketing technology decision is now becoming a broader enterprise intelligence opportunity. Athena OS is already in alpha and we expect select customers to begin using athena OS beta this year with general availability expected in the first quarter of 2027. The response from customers has been exceptional with significant interest in joining the Zeta. Athena MCP will extend our intelligence into the applications and workflows where our customers already work, including environments such as Chase BT, Claude and Gemini. It will give customers more ways to use Zeta intelligence. The opportunity is to make our intelligence part of more workflows increasing the value we can deliver within an existing relationship. At ZETALive, we also introduced the Athena inference model or AIM a collection of specialized models being developed with fireworks and using NVIDIA Nematron, alongside our existing predictive models. Athena's aim achieved a 95% accuracy, exceeding frontier models at a 40% lower cost per request and 6x faster response time. As presented at the Fireworks conference just this past week, AIM is designed to apply enterprise context and specialized skills to deliver more relevant intelligence and faster decisions. Our recent acquisitions of Senso and Digital audience strengthen that foundation. Senso adds deeper connectivity to frontier models helping enterprises connect trusted information to the AI platforms, shaping customer discovery, including the new wave of personal agents. Digital audience extends our identity and activation capabilities, helping customers put that intelligence to work across channels and measure its impact both are also highly accretive to our data cloud signals. Together, these capabilities create a continuous loop learn, do, decide, act and back to learn. We are extending Zeta's intelligence into more decisions, more workflows and more functions across the enterprise. And as our role expands, so does the economic opportunity within each customer relationships. Salesforce's announced acquisition of Braves reinforces our opportunity to accelerate the replacement cycle already underway and continue to gain share. At a time when enterprises are transforming business around AI, the last thing they need is uncertainty about product road maps, integration and execution. Neither Salesforce or Brave has AI native to its architecture. We believe Zeta's proprietary data and native AI give us a differentiated foundation and a strong right to win. Our partnership with Palantir is a foundational pillar of Zeta's next chapter, accelerating our expansion from marketing into enterprise intelligence. Palantir has transformed how enterprises operate. Together, we are connecting what enterprises know inside their full wells with what Zeta intelligence knows about demand outside those 4 walls. The result is a powerful new opportunity. extending enterprise intelligence beyond operational efficiency to drive revenue growth. Zeta sovereignty is central to our joint approach enterprises should be able to apply AI on their own terms and retain control over their data, expertise and decisions. Together, Zeta and Palantir help customers turn the knowledge unique to their businesses into better decisions and actions while preserving the intelligence that gives them a competitive advantage keeping their alpha. Last quarter, we reported our data cloud was fully integrated with foundry and that we had received initial joint customer agreements. One of those customers is amongst the fastest scaling customers we've had in our corporate history. We expect and continue to believe the partnership can add greater than $100 million in incremental annual revenue in the years to come. Our strategic partnership with OpenAI continues to expand across product innovation, enterprise AI and commercial opportunities. With Athena OS and our acquisition of Senso, we are strengthening how enterprises connect their intelligence to frontier AI models and how brands engage customers as discovery increasingly moves into AI-powered environments. We are also working with open AI on new opportunities to accelerate innovation and growth, including its emerging advertising business, where we are already actively serving ads on the platform. ZetaLive gave us an opportunity to bring customers, prospects and partners into the same room and show them the future we are building. We had more than 3,000 people attempt, including decision-makers representing over $200 billion in marketing and technology spend and demand for our product road map session exceeded capacity. Conversations at data live centered on how Zeta's platform seamlessly integrates into business workflows to drive better outcomes, not only in marketing, but across the enterprise. This year, we delivered nearly 100 demonstrations and have already generated greater than $100 million in newly created pipeline in just the last several weeks. Our job now is to convert those conversations into customer outcomes and broader relationships over time. To be clear, we've already signed 23 new deals coming out of ZetaLive. Before I close, I want to recognize Team data. I'm especially proud that Veda has once again been named one of Fortune's Best Workplaces in technology and rising 10 spots in 2026. And Marketing was our starting point, not the limit of our ambition. We have built one of the world's largest proprietary data assets, established deep and meaningful relationships with the world's largest enterprises and demonstrated our ability to turn intelligence into measurable growth. Now with Athena OS and our strategic partnerships, we are extending that advantage across the entire enterprise. We have the financial strength, the technology and, most importantly, the people to lead this next chapter. And I believe the opportunity ahead of data is greater than at any point in our corporate history. As always, thank you to our customers, partners and shareholders for your continued support. And to Teams Zeta. Thank you for your hard work, commitment and belief in what we are building together. Now let me turn it over to Chris to discuss our results in greater detail. Chris?

Thank you, David. Investors are increasingly distinguishing fast growth from durable defensible growth, the time that translates into stronger earnings and cash flow. Our third quarter results demonstrate why Zeta stands out across each of these dimensions. First, Zeta's growth is durable and defensible. Q3 revenue growth, excluding Marigold and political candidate revenue hit 30% and accelerating from 28% last quarter, driven by Athena adoption, which translated into more superscale customer additions and faster consumption-based ARPU growth. That's our 22nd straight quarter of greater than 20% growth on that same basis, which means these are sustained share gains, not a one-off. RFPs were up more than 100% year-over-year. clear proof the legacy Martec replacement cycle is accelerating and Zeta is capturing share. And second, the quality of our earnings keeps improving. Adjusted EBITDA grew faster than revenue and free cash flow grew even faster than adjusted EBITDA. We achieved record adjusted EBITDA margins and free cash flow margin. while delivering record GAAP earnings per share in Q3 of $0.14. Now let's get into the details behind these themes, our pipeline, sales productivity, AI scorecard and what's driving our raised fourth quarter and full year outlook. Starting with the top line, Q3 revenue came in at $493 million, with total growth accelerating to 46%, consistent with the 30% growth excluding Marigold and political candidate revenue that I mentioned a moment ago. That's $22 million above the midpoint of guidance, exceeding it by 5%, and driven by higher ethane adoption and usage versus Q2. Superscaled customers grew to 212, up 18% year-over-year and up 17% growth last quarter and well above our long-term model of 4% and to 8%. Our gains were strongest in automotive, advertising and marketing and telecom on a trailing 12-month basis. Growth stayed balanced across the business, 7 of our top 10 industries grew more than 20% year-over-year on a TTM basis. And in those consumer discretionary verticals, areas like consumer and retail, travel and hospitality and automotive, growth collectively was over 40% on a trailing 12-month basis. And these are businesses operating on the leanest margins needing to be the most data-driven and they're choosing data. Super scaled quarterly ARPU expanded to $2 million, up 22% year-over-year, accelerating 5 points from 17% growth last quarter, which is a logical segue to our AI scorecard, which shows how rising athena usage is driving ARPU acceleration as customers move from AI experimentation to AI deployment on the platform. Here's how our Athena metrics progressed in Q3 and first on revenue than on platform engagement and consumption. On revenue, over 50% of superscale customers were monthly active athena users, up from just over 40% last quarter. Across our total customer base, athena adopters accounted for over 70% of revenue. The top 25 Athena users grew revenue more than 70% in Q3 versus the company's overall growth of 46%. And lastly, for Athena adopters year-to-date net revenue retention runs over 500 basis points higher than overall data, which is itself already above the top end of our 110% to 115% long-term model. On platform engagement, we measure Athena usage by activity, specifically planning analysis and campaign development. We view campaign development as a top-of-funnel indicator since campaigns drive activation across data and partner channels. Client campaign development more than doubled quarter-over-quarter and hours spent on the platform were up over 50% sequentially. This outcome is intentional since Athena was designed for customers to benefit from using more of the platform, and we've now extended its enterprise intelligence capabilities with the release of the Athena operating system. As Athena adoption has grown, that usage has directly contributed to the year-over-year and sequential acceleration in super-scaled ARPU. Meanwhile, the 1 data sales motion is resulting in customers extending into new use cases and new channels. Super scaled customers using all 3 marketing use cases grew over 60% year-over-year with double-digit growth across each of the 3 marketing use cases, acquire, grow and retain. Superscale customers using 5 or more channels grew over 60%. And and cross-sell and upsell deals won in the quarter grew 38% year-over-year. Let me bring a couple of examples to life. We've taken 1 of North America's largest telecom provider from scaled to superscale ramping to more than $10 million with data in the span of 12 months. The customer deepened usage across the platform and expanded from 1 channel to 4 channels while also adding an additional use case. In another instance, a leading beauty retailer with over 1,500 locations also expanded their relationship with Zeta, driving more than 85% growth in revenue by going from 2 channels to 3 channels over the last year. And importantly, expansions like these and others are coming with greater operating leverage. Cost of revenue, excluding depreciation and amortization, came in at 39.7% down 120 basis points quarter-over-quarter to up 20 basis points year-over-year, reflecting continued strength in social channel adoption by agencies. That discipline carries through to expenses. R&D, G&A and sales and marketing, excluding stock-based compensation, came in at 6.1%, 12.3% and 17.3% of revenue, respectively, improving 5, 20 and 140 basis points year-over-year. Automatically generated code as a percentage of our total code output continues to hover around 90%. And reflecting the efficiency that automation is driving within our engineering team, enabling us to innovate faster. Sales and marketing remained the biggest source of leverage, driven by continued gains in sales productivity. More on that later, alongside our pipeline update. That leverage and OpEx allowed us to generate $121 million of adjusted EBITDA, up 55% year-over-year at a 24.6% margin, up 140 basis points versus last year. That's $5.5 million above the midpoint of guidance with margin 10 basis points higher as well. Cash grew even faster. Operating cash flow was $91 million, up 58% year-over-year, and free cash flow was $82 million, up 73%. Free cash flow margin reached 16.5%, up 260 basis points year-to-year, with conversion at 67.3%, a 700 basis point improvement year-over-year. GAAP net income, an area we committed to reaching positive earlier this year came in at $38 million or $0.14 diluted EPS compared to a $0.02 loss a year ago. Non-GAAP diluted EPS was $0.38 versus $0.24 last year. Our GAAP EPS guidance started the year at $0.03. We're now at $0.13 year-to-date and projecting $0.23 for the full year 2026, up over 600% from our initial guidance. And we continue to deploy capital through buybacks. In the quarter, we deployed $29.9 million to repurchase 1.3 million shares. Year-to-date through November 9, repurchases totaled $101.4 million with $62.6 million remaining on this authorization and we would contemplate doing another 1 after this. Net dilution in the quarter was 1.1%, and we remain on track to our normal course net dilution target of 3% to 4% in 2026. Turning to stock-based compensation. At our September 2023 Investor Day, we responded to investor feedback by issuing long-term dilution targets and revising equity incentives to drive a sustained improving SBC to revenue ratio on a path to positive GAAP earnings, and we're delivering on that. Since 2023, we reduced SBC as a percentage of revenue from 33% and to 19% to 14% to 12% year-to-date through September 2026, and we expect that trend to continue. That discipline shows up on the bottom line GAAP net income improved by $185 million in the first 9 months of 2026 versus 2023. Turning to the pipeline. Demand was especially evident in our RFP activity. We hit a new quarterly record for RFPs, up over 100% year-over-year, and that does not reflect new opportunities emerging from ZetaLive, Palantir or other demand we expect from Salesforce's acquisition of BRACE. Seller productivity was also a standout this quarter. Pipeline creation per seller was up 32% year-over-year. An average pipeline per seller was up 19% year-over-year. All while total quota-carrier head count grew just 11% year-over-year to 203. That gap, the pipeline growing nearly 3x faster than head count is a clear signal of rising sales productivity. With that, let me turn to our increased fourth quarter and full year guidance. We're raising guidance for revenue, adjusted EBITDA, free cash flow and GAAP EPS for the remainder of the year. Details can be found starting on Slide 15 of our earnings supplemental. For the full year, we expect revenue of $1.855 billion at the midpoint up $37 million from our prior guidance, representing growth of 42% or 27% excluding Marigold and political candidate revenue. As a reminder, our initial full year 2026 guidance for revenue growth, excluding Marigold and political candidate revenue, was 21% versus the projection of 27%, representing a collective increase to revenue guidance, excluding Marigold and political candidate over the course of 2026 of $85 million. For the fourth quarter, we expect revenue of $523 million at the midpoint up $15 million from our prior guidance, representing growth of 33% or 23% excluding Marigold and political candidate revenue. The 23% growth excluding Marigold and political candidate revenue is consistent with where we guided third quarter growth. As it relates to political candidate revenue, despite the political cycle starting later due to the timing of the Republican convention, we still exceeded our third quarter political guidance and are raising our fourth quarter guidance. In 4Q, we expect political candidate revenue to be $13 million, an increase of $5 million compared to the previous guidance. I want to reiterate, our raised revenue outlook assumes minimal contributions from partnerships, more specifically, it includes just signed pilots and includes a 2% to 5% cushion consistent with our typical conservatism. For adjusted EBITDA, we're increasing the midpoint of our full year 2026 guidance to $414.6 million, up $9.4 million from prior guidance, representing growth of 49% and a margin of 22.4%. 2026 guidance represents the seventh year in a row where adjusted EBITDA margins will have expanded. For the fourth quarter, adjusted EBITDA is expected to be $136 million at the midpoint, up $4 million from prior guidance at a margin of 25.9%. For the full year, we expect free cash flow of $271 million at the midpoint, up $16 million from prior guidance with a margin of 14.6% and conversion of 65%. At 65% conversion, we are already at Zeta 2028 cash conversion target levels. And we're raising full year 2026 GAAP EPS guidance to $0.23 at the midpoint, up from prior guidance of $0.10 an initial 2026 guidance of $0.03. Like last quarter, this guidance increase excludes the impact of a potential onetime tax benefit from the release of a valuation allowance that is a reasonable possibility of occurring within the next 12 months, which could represent additional material onetime upside. To close, this quarter is proof of what we said at the outset. Zeta's growth is durable and our earnings quality keeps improving, and both are accelerating together, not trading off each other and is resulting in winning market share from our competitors and earning more wallet share with customers. With Athena OS and our partnerships expanding the addressable market, the opportunity in front of us is bigger than the results we just delivered. With that, I'll hand the call back to the operator, so David and I can take your questions. Operator?

[Operator Instructions] We'll now go to your first question. coming from the line of DJ Hynes with Canaccord.

Congrats on the excellent quarter. Really nice set of numbers. David, look, the core marketing business is arguably performing better than ever, but Athena OS often opens an even broader enterprise opportunity. I'm curious how you're balancing those investments and ensuring that the broader ambitions don't distract from what's already working. And I'm curious, how much of this next chapter challenge in your view is technology versus getting customers to change how they do business and move over to Athena?

So DJ, first of all, thank you. I appreciate it. The truth of the matter is we are so far ahead that we've had more than enough incremental profit behind the scenes even with these numbers to invest properly into both. We continue to invest as heavily as ever into our core marketing platform. And we're seeing those results 30 plus percent organic growth last quarter. We were pretty proud of that. And Athena is driving a massive amount of that growth. We saw the highest ARPU per superscale customer that we've ever seen as a company and that was driven by the 50% of those customers that had adopted Athena. They're even much higher than that, to be frank. As it relates to Mindshare, we see Athena OS as the evolution of the existing business, not a massive pivot from it. So when you think about this, and I know this sounds a little crazy, but we've always thought of ourselves as an enterprise intelligence platform. We started in marketing because the TAM was so incredibly large. We've always felt that expanding into new use cases was going to be a big part of where we were going, and it is. And Athena OS brings everything together in 1 place. Now as it relates to technology or clients, we came out as a live with so many clients who wanted to join the Zeta program, we could never keep up with that. So I think that we're going to see -- we've got to get the technology right. We are ahead of schedule in development. As Chris pointed out, we continue to generate approximately 90% of our new code on an automated basis that gives us a meaningful advantage over competitors who are at 20% or 30%, if lucky. And I think we're going to be out with Athena OS early. We've said by the end of Q1, but we're seeing very, very good progress there. And the clients want it. We've now got to be able to deliver it from a technological perspective. It's in Alpha now and working really well. So I'm feeling good about the tech, and I'm feeling good about the demand if that makes sense, DJ.

It does. It does. And maybe a follow-up for you, Chris. I mean, look, the core business is accelerating, you hit 30% organic growth. The stock's working. I'm getting questions more and more from investors around next year. So maybe I'll just turn that to you like any preliminary thoughts on kind of expectations for 2027 and how you steer folks?

I get it, DJ. So we'll give our official guidance in February. But I do think it's important to acknowledge we've got a lot of growth drivers at our back. What I'll say is that we're creatures of habit, and that habit comes out in the consistency of how we typically guide. So I'll give you a sense for exactly as you put it, where our heads are at. First off, we will go into next year with that same 2% to 5% cushion. We will continue to break out M&A and political candidate revenue, so there's a clear organic base. And if you go back to our very first full year guide back in February of 2022, all the way up to the guide of this year, as we started the year, we've been at 20% to 21%. And we've said that organically, our model is to grow at least 20%. So we'll continue to leave ourselves cushion. What I will say is we're going to make sure we also do a good job with investors of wherever that base starts out, again, back where we've been historically 20% to 21%. We will also be able to break out of all of our growth drivers, what's embedded and what's the upside we think we can get from each of them.

We'll now go to your next question coming from the line of Kelly Valenti with Goldman Sachs.

First 1 for me. You highlighted the top 25 Athena users growing revenue more than 70% and adopters running at that higher NRR level as well. curious what's actually changing in that customer behavior for once they adopt Athena that drives this higher level of spend? And is there anything specific from a channel use cases, activity levels or any other metric that you're seeing that's driving that inflection?

Well, first of all, thank you, Kelly. I appreciate you joining. What I would say is, first of all, we have built, like almost all enterprise software companies, a fighter jet, which is incredibly complex piece of equipment to fly. And most of our clients know how to fly assessment. Now with that assessment, we're delivering in the marketing ecosystem, a 600% to 700% return on marketing spend. And in the technology ecosystem, we're returning approximately 300% return on investment for every dollar spent on our technology when they know how to fly the assessment. Athena which, as you know, is our voice-enabled super agent allows the client to fly the entire plane with her as their copilot. So what we're seeing is new audience types at levels we've never seen before. new channel activations like we've never seen before. We're seeing clients expand and move budget faster than at any point in our corporate history because Athena helps them drive an even superior return on spend than what the existing platform that they know how to use is driving. So as they see that superior return on investment they're moving budget faster, and that's why I think you're seeing those 25 clients growing at 70% plus.

It's interesting, Kelly, it's part of the scorecard. In addition to tracking what you referenced is the revenue metrics, we also wanted to be able to share with investors the underlying consumption on the platform that ultimately translates to the revenue growth. And 1 of the points I think you're making around activities is we're seeing client campaign development more than doubled quarter-over-quarter and the time spent on the platform by those monthly active users was up 50%. So even the underlying activity is really starting to translate to the strong acceleration of revenue as well. . And the really interesting thing is, if you think about that, we're making it easier for them to navigate it and yet they're spending 50% longer on it because it's so incredibly cool, they're enjoying using it instead of being frustrated, having to navigate through lots of different parts of the platform and they're then activating substantially more than they had in the past. So I think that growth rate along with the materially higher net retention rate of those customers is a trend that we're going to see continue in Kelly.

Yes, that makes sense. And then just second 1 for me. We're seeing the athena adoption continue, good ARPU expansion, more scaled customers additional partnerships that I think should layer in over time. How are you kind of rank ordering the importance and relative confidence you have in each of those drivers as you do that kind of initial 2027 planning?

It's hard to really answer that question. It's a great question. But the answer is because different individuals in the organization are responsible for different components of it, it's top of mind share for each of the individuals who's focused on it and their teams. It's not like you've got to say, we're going to take Palantir and make that number 1, and we're going to take Athena OS and make it number 3. We've got Chris Moberg, Nis Gur and their team are really focused on making athena OS move from alpha to beta to generally available. And I don't think it's a secret that I'm spending a disproportionate percentage of my time with the Palantir guys. In fact, I was with them all day to day. And we're really, really focused on that. So I would tell you that the partnerships that we announced this year, even with the numbers that we're driving have not been a material component of the growth that we're already seeing and should add materially to growth next year, which is why I think Chris feels comfortable talking about a 2 handle on the start of our guidance for next year. And I know that Chris Moberg, is Gor, Steve Gerber, everybody is focused on their initiatives. And for each part of the organization, it's #1 for them. If that -- does that make sense?

Yes, that makes sense. Thank you so much.

[Operator Instructions] We'll now go to your next question coming from Matt Swanson with RBC Capital Markets.

Great I'll just add my congratulations on the quarter. When we're looking at that pipeline, that's up over 100%. You obviously have some expanded product offerings, more capabilities, but also athena, which drastically increases the usability of the platform. Could you just talk a little bit about if anything has changed in terms of either initial lands or how fast you're seeing those new customers ramp up on the platform?

We have seen very consistent time to deal close. I'll remind the broader committee, I know Matt, you know this, but with so many of the deals that are closed initially being pilots they can close in 2 to 4 months. So we've got good visibility in .

Hard to accelerate that. .

Yes. But that's been consistent. RFP is a bit of a life of their own, but even those when there's the right buyer incentive behind it can move really quickly. But pipeline is very consistent. We are seeing pilots scale faster. I was going to say that Yes. And you could see that in how quickly some of these newer customers are ramping I think that goes back to the ease with which Athena is enabling them to get access to the platform and start to learn on it.

We're also, Matt, I mean, I would tell you, the last few pilots that I worked on personally started superscale clients, like the pilot itself starts there. And we're seeing, as I think Chris said, clients are scaling faster than at any point I've seen. The other thing that I think is really changing in the ecosystem that a lot of people are not really talking about how much of a benefit it is for us is what's changing at Google and search. As Google continues to answer more and more of the queries on their platform through Gemini on their own platform. the cost per click has gotten to the point of diminishing marginal return for a lot of advertisers. This is not to say that Google is not an amazing company. But for the first time, that we've been doing this, and we've been doing this a long time. We're starting to see meaningful budget move to Zeta from what was in search originally. So it used to be we would go to a client and say, we know this is your search budget, you should and choose us. It's now for the first time becoming an ore. Once again, we partner with Google, and we love Google, but they've made a strategic decision that they're going to start answering a disproportionate percentage of their questions. My understanding is up to 68% of all queries on Google are now being answered by Gemini. 90-plus percent of queries used to result in a click to a brand and e-commerce platform or a publisher, that's now down to 32%. And those brands, publishers and e-commerce platforms are very rapidly turning to us to help them accelerate their sales.

That's really helpful. And then we've always talked about the differentiation of your data asset. When we think about maybe some of the depreciation of third-party identifiers like what we've seen with Apple recently, does that further kind of enhance your market position or create new opportunities?

Massively. I mean I sort of go back to when Apple took away the original identifiers inside of iOS and how our business accelerated growth from that. To remind you, we don't use those identifiers and we have. Now -- to be clear, Matt, them eliminating it does not make Zeta's platform better, but as other platforms deteriorate it doesn't make our platform worse. So as the tide rolls out for them, it does not roll out for us which creates a greater differentiation in the efficacy and efficiency in our platform versus platforms that are heavily dependent on that iOS and other identifiers that are dissipating. .

Your next question will come from the line of Jack Nichols with KeyBanc Capital Markets.

I wanted to start with the Palantir opportunity. Could you help us understand how to think about the joint partnership contributing to pipeline and how many joint opportunities have moved into production?

So we're not giving guidance to what's moved into production. What I'll tell you is we're up to 8 yeses. We are really focused on that. One will be a super scaled client, I would guess, by the end of this month. Two others are already actively operating and there. And then the others were moving through the contract process, and we continue to try to drive that up meaningfully. What I would tell you is I've been I mean I've been running companies. I'm now an old CEO at 57 years old. I started my first company when I was 16 and my first real company when I was 21. So I've been doing this a long time. In all of the years I've done this, I've interacted with some of the greatest companies in the history of mankind, much to my kids disbelief that does not include the Dutch East India company, but many of the ones that are around and have been around over the last 30 years. I have never in my life, experienced the company that its clients love them and trusted them more than Palantir's 800-plus global enterprise clients. We go into a meeting and it is like you spend the first 45 minutes catching up, 15 minutes discussing how we can drive a 600% to 700% return on marketing spend and a 300% return on technology spend, how we're already fully integrated. We're not building. We're fully integrated our data cloud on top of foundry and using their oncology and they just need to flip 1 button to turn the pilot on, and we have not left without a yes yet. So it's, I think, game-changing for us. We don't include that in the pipeline. So the 100% incremental pipeline does not include Palantir clients, it might include some component of the people who are already active because that automatically feeds into the platform. But what I would tell you is, the opportunity is substantially larger than I originally thought, and I continue to spend a disproportionate percentage of my personal time on it, Jack.

That's very helpful, David. And then maybe as a quick follow-up for Chris. . When you think about kind of the dual driver of athena adoption and usage, is that expected to continue to deliver this ARPU upside within the superscale cohort? And do these Athena users help deliver better insight to the minimum commitments on usage?

Yes, that's where it ultimately translates Jack. And whether it takes 90 days or 120 days, what we did see is an acceleration from 2Q to 3Q across those usage metrics. Obviously, the ARPU followed that, but the top of funnel positive indicator, again, going back to Kelly's question, was around the client campaign development. And it's the top of the funnel, the more campaigns we put out into the ether 1 stands the reason that we're going to capture the vast majority of those activation opportunities downstream, and that obviously also shows up in ARPU. .