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Zeta Global (ZETA), an AI-powered cloud platform offering consumer intelligence and marketing automation software, has had a rocky start to 2025. While its stock is down over 10% year-to-date and trading under $20, Wall Street predicts a significant rebound over the next 12 months. Analysts’ average price target of $24.77 implies about 40% upside potential for Zeta stock. Its Street-high price target of $44 implies shares could gain as much as 160%.
Zeta’s fundamentals remain healthy. Moreover, strong demand, its growing customer base, and management’s focus on lowering share dilution augur well for growth, suggesting that this under-$20 stock could witness a solid recovery.
The momentum in Zeta’s business has sustained despite macro uncertainty. The company kicked off 2025 with impressive revenue of $264 million, up 36% year-over-year. Moreover, its adjusted EBITDA jumped 53% year-over-year to $47 million. Its Q1 marked the 15th consecutive quarter where Zeta exceeded management’s guidance and raised its outlook. This shows the growing demand for its services and solid execution.
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Zeta’s well-diversified customer mix is a key strength. It serves large enterprises, which tend to have more stable marketing budgets than small businesses. These enterprise clients are sticky, with over 90% of Zeta’s annual revenue coming from customers who have been with the company for more than a year. And the numbers continue to grow.
At the end of the first quarter, Zeta had 548 “scaled customers”—those generating at least $100,000 in annual revenue for Zeta — an increase of 19% year-over-year. The company also reported 159 “super scaled” customers, who each bring in more than $1 million annually. That’s up 10% year-over-year. These customers are spending more and staying longer on its platform, driving solid recurring revenue.
Average revenue per scaled customer reached $467,000, up 12% year-over-year, while super scaled customers brought in $1.4 million on average, a 23% increase. These trends indicate that Zeta is acquiring new clients and increasing its wallet share within existing accounts.
Zeta recently launched AI Agent Studio, a new suite of generative AI tools, reflecting the company’s focus on innovation to accelerate growth. By providing marketers with tools that enhance productivity and effectiveness, Zeta strengthens its value proposition and deepens customer engagement.
Zeta’s focus on significantly reducing dilution and enhancing its cash flow is positive. In 2024, Zeta’s total dilution stood at 15%. For 2025, the company expects dilution to decrease to 4%–6% and, in 2026, to further improve to 3%–4%. This significant reduction should bolster investor confidence and support the recovery of Zeta stock.
Additionally, Zeta is putting more emphasis on free cash flow generation, with Q1 results showing substantial improvements in both free cash flow growth and conversion rates. This shift toward cash efficiency adds an extra layer of financial stability as the company continues to scale.
Zeta is not immune to macro headwinds. However, its value proposition adds resilience. Most of the marketing spend Zeta supports is tied to lower-funnel, performance-based key performance indicators (KPIs). This type of spending is typically less discretionary, even during economic slowdowns, because it directly impacts sales and return on investment (ROI). Furthermore, Zeta’s limited exposure to China and the federal government helps insulate it from unpredictable policy shocks.
Given a strong Q1 performance and a healthy pipeline, Zeta now expects 2025 revenue in the range of $1.237 billion to $1.247 billion, up from its earlier guidance of $1.235 billion to $1.245 billion. Moreover, Zeta expects its revenue to increase at an organic CAGR of 20% through 2028 and reach at least $2.1 billion.
Despite a challenging start to 2025, Zeta Global’s fundamentals and long-term outlook remain highly compelling. With consistent revenue growth, a sticky and expanding enterprise customer base, strong free cash flow trends, and significant progress in reducing share dilution, Zeta is positioning itself for a robust rebound.
Furthermore, its continued innovation, as reflected in the launch of AI Agent Studio and resilience to macroeconomic pressures, further support Wall Street’s projection of 160% upside potential.
While Wall Street has a “Moderate Buy” consensus rating on Zeta stock, this AI-driven under-$20 stock has solid fundamentals and significant growth potential, making it an attractive long-term pick.
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On the date of publication, Amit Singh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
