NEW YORK - Zeta Global (NYSE: ZETA), an AI-powered marketing technology company, has secured a $550 million loan facility to refinance its current debt and reduce credit spreads, enhancing its financial structure and flexibility. The new loan consists of a $200 million Term Loan A and a $350 million Revolving Credit Facility, which remains unutilized at the closing.
David A. Steinberg, Co-Founder, Chairman, and CEO of Zeta, emphasized that the refinancing aligns with the company's core value proposition of leveraging data and AI for organic growth. He outlined the criteria for potential tuck-in acquisitions, including full integration within a year, immediate accretiveness, synergy with customer bases, and the ability to accelerate the acquired business's growth beyond Zeta's organic rate.
Chris Greiner, CFO of Zeta, highlighted that the financing strengthens the company's balance sheet and supports its long-term vision. The favorable terms secured are expected to improve Zeta's free cash flow and support its business strategy, with an operating leverage ratio currently below 0.5x.
BofA Securities, Inc. acted as the Lead Arranger and Bookrunner for the transaction. Other participants in the facility include MUFG, Key Bank, RBC, Truist, Citi, and Morgan Stanley (NYSE:MS).
Zeta Global, founded in 2007 by David A. Steinberg and John Sculley, provides a marketing platform that combines identity, intelligence, and omnichannel activation powered by AI and a proprietary database. The company serves enterprise customers across various industries, enabling personalized consumer experiences at an individual level across all channels.
This financial move is based on a press release statement and comes amid Zeta's ongoing efforts to position itself for future growth within the competitive AI marketing cloud sector.
In other recent news, Zeta Global reported a significant increase in its second-quarter financial results for 2024, with revenue and adjusted EBITDA rising by 33% and 44% respectively. The company's achievement of the "rule of 50" marks a balance between growth and profitability. This success is largely attributed to the accelerated replacement cycle of marketing technology, spurred by advancements in artificial intelligence.
Zeta Global has also revised its full-year revenue outlook, raising it by $25 million to a total of $925 million. This adjustment indicates an expected year-over-year growth of 27%. Despite reporting a net loss of $28 million for the quarter, the company's integrated revenue grew by 71% year-over-year, and cash from operating activities increased by 51%.
These recent developments demonstrate Zeta Global's strategic focus on AI-driven marketing technology. The company's partnerships, such as with Amazon (NASDAQ:AMZN)'s Bedrock platform, and the launch of the Zeta Economic Index (ZEI) have significantly enhanced its AI capabilities. The firm is open to opportunistic mergers and acquisitions to further accelerate growth.
InvestingPro Insights
Zeta Global's strategic refinancing move comes at a time when the company's financial metrics and market performance are drawing attention. According to InvestingPro data, Zeta Global boasts a market capitalization of approximately $5.81 billion. This valuation reflects the market's confidence in the company's growth prospects, particularly in light of its 25.16% revenue growth over the last twelve months as of Q2 2024. Moreover, the firm's gross profit margin stands strong at 60.34%, underscoring its ability to generate substantial earnings relative to its revenue.
InvestingPro Tips suggest that Zeta Global's recent performance supports its strategic financial decisions. The company has seen a significant return over the last year, with a one-year total price return of 246.59%. Additionally, analysts have revised their earnings upwards for the upcoming period, indicating optimism about Zeta's future profitability. It is noteworthy that while Zeta is currently not profitable, analysts predict the company will turn a profit this year.
For readers seeking a deeper analysis, InvestingPro offers additional tips on Zeta Global, which can be found at InvestingPro Zeta Global. Among these, two key insights stand out: Zeta's liquid assets exceed its short-term obligations, providing financial stability, and the company operates with a moderate level of debt, which is a positive sign for investors concerned about financial risk.
In light of these insights, Zeta Global's decision to refinance its debt appears to be a calculated step towards enhancing its financial structure, providing the company with the flexibility to pursue growth opportunities and acquisitions that align with its AI-powered marketing strategy.
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