Hook / Thesis (top)
Zeta Global is starting to look less like a speculative adtech story and more like a scale-ready, data-driven SaaS business. Recent quarterly prints show accelerating revenue, improving gross profit and a move to positive operating income in the latest quarter. Those trends, combined with strong operating cash flow, make the stock a compelling swing/position trade at current prices.
This is an upgrade: I believe the market is underpricing Zeta's transition from growth-with-losses to growth-with-profitability. The company is showing sequential improvement in unit economics while carrying a modest long-term debt load (~$197M). At about $16.75 per share (last trade) on 02/04/2026, implied market capitalization is roughly $3.7B using ~222.44M shares outstanding — roughly 2.7x on an annualized revenue basis using the latest quarter. That multiple is attractive for a data-first marketing platform if the company keeps improving margins and renews/expands enterprise relationships.
What Zeta does and why the market should care
Zeta Global operates an omnichannel, data-driven marketing platform that combines identity-level consumer data with machine learning to predict intent and execute marketing campaigns across channels. In plain terms: Zeta sells enterprise marketing software and data that helps banks, telcos, retailers and insurers find and convert customers more efficiently.
Why that matters now: enterprises are shifting spend into platforms that produce measurable ROI on advertising dollars. Zeta positions itself as both a dataset (identity backbone) and an execution layer (Zeta Marketing Platform). If the company continues to grow revenue while compressing operating losses into operating profit, the business starts to look more like a recurring-revenue SaaS with a defensible data moat rather than a high-burn growth experiment.
Support from the numbers
The most recent reported quarter (Q3 FY2025, period ended 09/30/2025; filed 11/05/2025) provides the clearest evidence of the turnaround:
- Revenue: $337.17M in Q3 FY2025. That is up from $308.44M in Q2 and $264.42M in Q1 — a clear sequential acceleration. Compared to Q3 FY2024 ($268.30M), Q3 FY2025 revenue is +~26% year-over-year.
- Operating profitability: Q3 operating income printed at a positive $8.75M versus an operating loss of $5.11M in Q2 and -$16.11M in Q1. That swing into positive operating income is the headline: the cost base is beginning to leverage revenue growth.
- Net income / EPS: Q3 net loss was a modest -$3.63M, with diluted EPS roughly -$0.02. That’s a material improvement from the -$0.06 in Q2 and -$0.10 in Q1.
- Cash flow: Operating cash flow in Q3 was $57.92M, up from $42.05M in Q2 and $34.80M in Q1. Growing free cash generation is the most durable proof of a business turning the corner.
- Balance sheet and leverage: Long-term debt sits around $196.9M while equity attributable to the parent was reported at $689.2M in Q3. Total assets were $1,150.8M. That balance-sheet profile gives Zeta runway to invest while maintaining leverage at a reasonable level for a mid-cap software/data company.
Together, those trends justify the “upgrade” thesis: revenue is growing at scale, operating losses are shrinking into profit, and cash flow is accelerating — the core prerequisites for re-rating multiples in a SaaS-like business.
Valuation framing
Using the Q3 run-rate, annualized revenue is approximately $1.35B (Q3 x4). At ~222.44M shares outstanding and a last trade price around $16.75 on 02/04/2026, implied market cap is roughly $3.7B. That puts a price-to-sales around ~2.7x on an annualized basis.
Context: a P/S in the mid-single digits is a reasonable starting valuation for a growth-stage software business if it is moving toward consistent positive operating margins and free cash flow. Zeta already shows improving operating income and meaningful operating cash flow, which supports a multiple expansion thesis if the trend continues. Peers are not included in the data here, so this is a standalone assessment: the multiple looks modest relative to what the market has historically awarded well-executing, data-moat SaaS names that have converted to sustainable profitability.
Trade idea (actionable)
Trade direction: Long (upgrade)
Time horizon: Swing / position (6-12 weeks target; re-evaluate on quarterly prints)
Risk level: High — volatility, legal/regulatory headlines and execution risk remain.
Setups:
- Preferred entry (lower-risk): Buy on weakness in the $15.50 - $16.50 zone. That captures a pullback from the 02/04/2026 price and improves risk/reward.
- Alternative entry (momentum): Buy up to $17.50 if the stock breaks above short-term resistance with volume; tighten stop-loss accordingly.
Stops and position sizing:
- Primary stop: $13.50 (approx. 18-20% below the preferred entry). A close below $13.50 would argue the recent positive operating-income print was noise or that demand is deteriorating.
- Size: Given the name’s volatility and execution risk, limit to a small-to-moderate position (5% or less of risk-capital for most retail portfolios). Trim on headline-driven rallies.
Targets:
- Target 1 (near-term): $22.00 — reachable if revenue and OCF continue to accelerate and the market re-rates the name toward higher SaaS-like multiples (this target sits below recent highs in the $23-26 range).
- Target 2 (upside / stretch): $30.00 — a multi-bag upside if Zeta sustains 20%+ revenue growth and converts to stable operating margins over the next several quarters.
Catalysts to watch (2-5)
- Continued sequential revenue growth and margin expansion on the next quarterly release (Q4 FY2025). If revenue continues to accelerate (Q4 > Q3) and operating margins expand, the stock should re-rate.
- Large enterprise renewals or multi-year contracts showing stickiness of the identity-data product and higher gross retention.
- Further improvements in operating cash flow and a path to consistent GAAP profitability — the market rewards durable cash generation.
- Resolution or favorable developments in any shareholder investigations or regulatory issues; clarity would remove a headline overhang.
Risks and counterarguments (balanced)
- Legal / governance risk: Public filings from mid-2025 show shareholder investigative interest. Any adverse findings, restatements or material findings could wipe out confidence and multiple expansion.
- Execution risk: The current improvement could be lumpy. If cost discipline reverses (higher R&D or sales spend) or customer churn rises, margins can compress again.
- Data / privacy/regulatory risk: Zeta’s core asset is opted-in identity data. Any change in regulation or material limits on data access could impair the moat and revenue model.
- Valuation complacency: While 2.7x revenue looks attractive, the market already prices in continued margin improvement. If top-line growth slows (sub-20% YoY), the multiple could compress sharply.
- Counterargument: The company still reports small GAAP losses and has historically shown large quarterly operating losses. Skeptics will argue the positive operating income print is transitory or timing-driven; further quarters are necessary to confirm a true structural shift.
What would change my mind
I would remove the upgrade or flip to neutral/negative if any of the following occur:
- Q4 FY2025 revenue growth decelerates materially or the company reports a sequential decline in operating cash flow (contrary to the Q1→Q3 trend).
- An adverse legal finding or financial restatement linked to the shareholder investigation appears in filings.
- Evidence that retention or gross margins are deteriorating (significant upward pressure on cost of revenue or meaningful customer churn in top accounts).
Conclusion
Zeta Global presents a high-conviction, asymmetric trade now that the story is shifting from ‘‘growth at all costs’’ to growth plus margin improvement. The company delivered $337M in Q3 revenue, moved to a small positive operating income (+$8.75M) and generated nearly $58M in operating cash flow. These are the ingredients for a multiple re-rating if sustained.
Keep position sizes sensible: this is a high-risk name (legal overhang and execution risk). Use the $15.50 - $16.50 range as a preferred entry, place a stop around $13.50, and look for $22 and $30 as the first two targets while monitoring the next couple of quarterly prints closely.
Finally, treat this as an event-driven upgrade: the thesis lives or dies by future quarters showing sustained revenue growth, expanding gross margins and continued cash-flow improvement. If those line items stop improving, the stock should be re-rated lower.
Disclosure: This is not financial advice. Position sizing and risk tolerance will vary by investor.