Key Takeaways
- Zeta Global projects free cash flow of $430–$440 million annually by 2028, supported by a 39% compound annual growth rate.
- Full-year 2024 revenue reached $1.006 billion, up 38% year-over-year, with continued growth momentum into 2025.
- Valuation sits at roughly 10x projected 2028 free cash flow—below peers trading at 15–20x, suggesting underappreciated upside potential.
- The firm has achieved 16 consecutive quarters of exceeding guidance, while maintaining strong cash generation and zero net dilution.
- Zeta’s AI-driven martech offerings and high share of Fortune 100 clients bolster its competitive advantages, though macro risks remain.
Zeta Global Holdings Corp, a player in the AI-driven marketing technology space, presents an intriguing valuation case when viewed through the lens of its projected free cash flow growth. With ambitions to scale significantly by 2028, the company’s trajectory suggests it could generate substantial free cash flow, potentially trading at a multiple that underprices its growth potential relative to peers. This analysis explores the implications of a 39% compound annual growth rate in free cash flow, leading to an estimated $430 million to $440 million annually by year-end 2028, against an enterprise value hovering around $4.5 billion.
Understanding Zeta’s Growth Trajectory
Zeta Global has demonstrated robust momentum in recent quarters, underpinned by its focus on artificial intelligence and first-party data solutions. In its fourth quarter of 2024, the company reported revenue of $315 million, marking a 50% year-over-year increase, while full-year 2024 revenue reached $1.006 billion, up 38%. This performance aligns with Zeta’s “Zeta 2028” plan, which targets over $2 billion in annual revenue by 2028. Such guidance reflects confidence in sustained expansion, driven by increasing adoption among scaled customers and super-scaled clients, where average revenue per user grew 19% to $1.87 million in 2024.
Free cash flow has been a standout metric, with $134 million generated in 2024, including $44 million in the fourth quarter. Fast-forward to the second quarter of 2025, and Zeta continued this trend, posting $34 million in free cash flow, a 69% year-over-year rise. These figures support projections of a 39% CAGR in free cash flow, extrapolating from recent results and company targets. If realised, this would position Zeta to produce $430 million to $440 million in annual free cash flow by 2028, assuming consistent margin improvements and operational efficiencies.
Valuation Through a Free Cash Flow Lens
At a current market capitalisation of approximately $4.65 billion—as of the close on 24 August 2025, with shares at $19.55—this implies an enterprise value in the vicinity of $4.5 billion, adjusting for net cash positions. Applying the projected 2028 free cash flow yields a price-to-free cash flow multiple of around 10 times. For a business anticipated to maintain over 20% annual revenue growth beyond that horizon, this multiple appears conservative, especially when benchmarked against software peers trading at 15–20 times forward free cash flow amid similar growth profiles.
Analyst models, such as discounted cash flow frameworks, reinforce this view. Assuming a terminal growth rate of 5% post-2028 and a weighted average cost of capital of 10%, Zeta’s intrinsic value could exceed current levels by a significant margin. For instance, base-case scenarios from investor analyses project share prices climbing to $55 or higher by early 2028, driven by compounding free cash flow yields approaching 2.75% initially and accelerating thereafter.
Key Drivers of Free Cash Flow Expansion
Several factors bolster the feasibility of Zeta’s free cash flow projections:
- Revenue Momentum: Second-quarter 2025 revenue hit $308 million, up 35% year-over-year, beating guidance by $11 million. This consistency—marking the 16th consecutive “beat and raise” quarter—stems from AI integrations like Zeta Answers and Agent Studio, which enhance customer engagement and spending.
- Margin Improvements: Adjusted EBITDA in the second quarter of 2025 reached $59 million, up 52%, with expanding margins reflecting operational leverage. Zeta’s shift towards higher direct revenue mix, at 75%, further supports profitability.
- Capital Allocation: The company has authorised a $200 million share repurchase programme, following $85 million already deployed from a prior $100 million plan. This, combined with zero net dilution in recent quarters, signals disciplined management focused on enhancing shareholder value.
- Market Positioning: With 44% of Fortune 100 companies as customers and a massive data moat, Zeta is well-placed in the martech sector. Investments in AI agents and automation are expected to drive further ARPU growth, with scaled customers up 12% and super-scaled up 23% in recent periods.
These elements collectively underpin the 39% FCF CAGR forecast, aligning with Zeta’s historical performance. From 2021 to 2025, the company achieved consistent 20%+ revenue growth alongside free cash flow margin expansion, a feat shared by only a handful of public technology firms.
Risks and Considerations
While the outlook is promising, investors should weigh potential headwinds. The martech landscape is competitive, with reliance on AI adoption amid a cooling hype cycle. Macroeconomic factors, such as shifts in advertising spend, could impact growth. Moreover, achieving the upper end of free cash flow targets hinges on executing the Zeta 2028 plan without significant dilution or cost overruns.
Sentiment from credible sources remains positive. Canaccord Genuity, for instance, maintained a “Buy” rating on 6 August 2025, raising its price target based on strong Q2 results and expanding AI adoption. Similarly, analyst commentary highlights Zeta’s valuation at 3x 2026 sales as undervalued, given the compounding effects of its AI flywheel.
Implications for Investors
In a market where growth stocks often command premium multiples, Zeta’s projected 10x 2028 P/FCF stands out as an opportunity. If the company sustains its 20%+ growth post-2028, this could translate to substantial upside. For context, the stock’s 50-day moving average as of 24 August 2025 sits at $15.99, with a 22.25% rise over that period, indicating building momentum. The 200-day average of $17.19 further underscores a positive trend, up 13.73%.
Forward-looking metrics reinforce this: A forward P/E of 26.42 and current-year P/E of 29.75 suggest the market is pricing in earnings growth, with EPS expected at $0.66 for the current year and $0.74 forward. At a price-to-book of 6.89, Zeta trades above book value of $2.84 per share, reflecting intangible assets like its data and AI capabilities.
Ultimately, Zeta Global’s free cash flow story illustrates a classic growth-at-a-reasonable-price scenario. Investors eyeing long-term compounding may find the current setup compelling, provided execution matches ambition. As the company navigates towards its 2028 milestones, monitoring quarterly progress will be key to validating these projections.
| Metric | Value (as of 24 August 2025) |
|---|---|
| Share Price | $19.55 |
| Market Cap | $4.65 billion |
| 52-Week Range | $10.69 – $38.20 |
| Volume | 8,074,309 |
| Forward P/E | 26.42 |
| Projected 2028 FCF (Model Estimate) | $430M – $440M |
References
- https://investors.zetaglobal.com/news/news-details/2025/Zeta-Announces-Record-Financial-Results-and-Zeta-2028-Targets/default.aspx
- https://www.investing.com/news/company-news/zeta-global-q2-2025-slides-revenue-jumps-35-guidance-raised-on-strong-results-93CH-4171464
- https://www.businesswire.com/news/home/20250225432402/en/Zeta-Announces-Record-Financial-Results-and-Zeta-2028-Targets
- https://investors.zetaglobal.com/financials/quarterly-results/default.aspx
- https://www.gurufocus.com/term/total-free-cash-flow/ZETA
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- https://zetaglobal.com/news/zeta-global-reports-16th-straight-beat-and-raise-quarter/
- https://www.nasdaq.com/articles/zeta-global-zeta-q2-revenue-jumps-35
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