IPOs 2021: Analysis of Zeta Global’s Acquisitions

According to recent research, the media owners’ advertising global revenues grew by 22% in 2021 to reach a record $710 billion and is expected to grow by another 12% this year. Digital advertising sales that include search, social, video, banners, and digital audio increased by 31% to reach $442 billion. Zeta Global (NYSE:ZETA) is a leading player in the advertising market that is continuing to expand its market share through acquisitions.

Zeta Global’s Financials

Recently, Zeta announced its fourth-quarter results. Revenues grew 18% to $133.5 million and loss was $0.46 per share.

For the full fiscal year, Zeta’s revenues grew 25% to $458 million and loss was $2.95 per share.

Zeta forecast revenues of $118-$121 million for the first quarter and revenues of $540-$550 million for the fiscal year. Zeta also announced a longer-term plan that estimates that it will be able to cross $1 billion in revenue with over 20% EBITDA growth by 2025.

Zeta Global’s Acquisitions

Recently, Zeta announced its acquisition of Virginia-based ArcaMax, a leader in the development and distribution of interest-based newsletters. ArcaMax has been operating for over 20 years. It reaches millions of daily subscribers and partners with leading content producers, such as Tribune Content Agency, to power email newsletters and syndicate feature stories from multiple categories.

The acquisition will allow Zeta to leverage ArcaMax’s permissioned data, strengthening the Data Cloud’s foundational identity graph and accelerating the development of its robust permissioned data ecosystem. It will also extend capabilities within the Zeta Marketing Platform by expanding premium touchpoints with ArcaMax’s technology and newsletter enhancements. Through ArcaMax’s technology and newsletter enhancements, marketers on Zeta’s platform will be able to engage with over 235 million permissioned US identities within the Zeta Data Cloud.

The recent acquisition builds on an earlier acquisition of Apptness that Zeta had announced last year. Founded in 2015, Apptness was a digital technology company with proprietary audience engagement technology. It operated a digital survey platform that provided comprehensive capabilities to engage consumers on sites across the open web, deliver proprietary insights and audiences to marketers, and provide publishers with new monetization opportunities. Apttness had added over 45 million monthly incremental high fidelity consumer signals to Zeta’s cloud platform. Together, these two acquisitions have helped add permissioned consumer data, grow the number of behavioral signals, and create more targeted opportunities for marketers for Zeta.

Zeta Global went public in June 2021 at a valuation of $1.9 billion at a list price of $10. Prior to going public, it had raised $602.5 million in 6 rounds of funding led by Morgan Stanley, BofA Securities, Barclays, Credit Suisse, GPI Capital, Blackstone Credit, Franklin Square Capital Partners, Cerberus Capital Management, and FS Investments. It is currently trading at a share price of $10.55 and a market capitalization of $2.275 billion.

Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article.

Photo Credit: Perzonseo Webbyra/Flickr.com

This segment is a part in the series : IPOs 2021