Great. Great to be here with you, as always. Great to be here.
Yeah. We decided we would interview each other today, and I'm going to start by asking you the first question. So, Palantir just reported while we were in the back room getting ready. The CFO of Palantir called you. What were you guys talking about? I know without violating any privacy issues.
Look, I mean, to me, they had a robust quarter. I mean, if you look at their growth, it's just phenomenal. I think it's a good example of what's the validation for this AI revolution, right? All the CapEx spending. Palantir, I think, front and center. And I think they grew their US business 100%.
Exactly. Look, and I think what Palantir is doing speaks to, and obviously, it's a big focus of everything that you're doing when it comes to Athena. Look, I think this is just the beginning of the AI revolution. The software, the use cases, and I think what they're seeing is a lot of the stuff that you're seeing with Athena, right? I mean, I guess I'll go to you, okay? Like, we talk about Palantir, and I know I think also a lot of the stuff that I see with Palantir, it reminds me if I go back a few years ago, right? Where no one gave them the respect in terms of on Palantir, and look what Karp and have done. When it comes to Athena, it really feels like Athena is changing data.
She is. Yeah, it's funny, because if you look at our quarter, we grew the business by 50% top line year over year at scale. I mean, that's, you know, then you look at Palantir at 100, you know, you feel a little like you're sleeping there, but at 50% growth, I was super super proud of what we did. I think there was some confusion in the quarter, and you know, listen, we've projected $397 million in EBITDA for this year, and you know, we very much expect to be meaningfully net income positive this year, which I think is causing confusion.
It's good you hit on there because right there is, well, a lot of people are talking about that. And the truth of the matter is that you're projecting 397 million in EBITDA. We expect to be, you know, net income positive. And the restructuring from the Marigold acquisition, which by the way, we are just killing with that acquisition. I mean, if you look at the business, we grew 29% organically in the quarter and 50% total in the quarter. That's because Marigold was so far ahead of where we expected it to be. And you know, quite frankly, our organic business is growing because of Athena. In the first quarter, we saw our Agented volumes go up by 700%. 60% of which was Athena.
So, but also, I remember when we sat down and now is at CES, January, and now you think you're at Milken, I can't believe you're doing it. The outfits just get better though.
I know. No, you could wear the same outfit. I don't think I could pull that off. But if I go back to CES in January and here we are at Milken in May, I mean, to some extent like the strategy is really playing out exactly and even I think almost ahead of plan.
Yeah, Athena's way ahead of where we expected it to be. 100% of our enterprise clients have Athena now in their hands and everybody's using it. And quite frankly, if you look at Zeta's return on investment, according to Forrester, for every dollar that's spent on our platform, we return 600% return on investment. So, $1 equals $6 in business. Our clients using Athena are seeing a substantially higher return on investment than that. And that speaks like, look, just like Palantir.
Wait, we're supposed to be interviewing each other. But to some extent, but what I was saying is like just like Palantir, what we've seen there, it's really, it's my view that you're actually starting to see not just validation, the actual use cases play out. I mean, that's really what you guys are seeing in terms of when it comes to Athena.
Yeah. The use cases have been really surprising how many they are. And when you look at a 700% step up in Agented utilization in the quarter, and 60% of that being utilized by the platform that you put live in that quarter, right? And you know, we're going to be rolling out V2, V3, V4 of Athena, you know, almost every month or every other month over the next year.
Let's talk for a minute about SaaSageddon. Right? So, you're getting asked this question. You're on CNBC, you know, if not every day, almost every day. What do you think? How does a company like Palantir or us or others, how do we react to something that's so nonsensical?
Look, I think part of the, and I'll almost call it, it's like we call it the AI ghost train in terms of Anthropic, basically that they're going to, you know, structurally break every piece of software and they're going to ruin. I think you have to separate out are there going to be areas of software disintermediated relative to Anthropic, but of course, for sure. And I think those companies could clearly be exposed and those are the ones either cause M&A or structure those companies are on the loser category. But I think for software companies, and it's not just you, it's not just Palantir, it's a Salesforce, it's a ServiceNow, it's everyone. It's trying to figure out, okay, when does the monetization phase start? See, my whole point is if you think about data centers taking two or three years to build and GPUs and the infrastructure, we're only now just starting to get into the software phase.
Yeah, because all of these tech cycles start with infrastructure. Exactly. Right? And then the application layer that sits on top of it comes next, aka software. And that's why I think like what we see with Palantir, what you guys are seeing with Athena, this is actually just the start. Snowflake seeing and others. So my view is that they painted software all with the same brush and you see it structurally if any sort of thing happens it takes the stocks down significantly. The reality is that the software use case phases are just starting. I'm sure you see that when you talk to customers, like when you talk to customers today, how much different is it today than 6 months ago?
Oh, it's, I mean, and I remember we started working in AI in 2017. So for years and years nobody even cared. Like they would be like, 'What are you talking about?' Now we're getting pulled into use cases. We're, you know, I think Athena is going to solve far more problems for our clients than people expect that she will.
Totally. And then look, I think so to your question I would just say I think investors, to me, covering tech stocks in late '90s, it's the most incorrect narrative that I've actually ever seen in my career relative to software what's happening. It will take time to prove itself out, but the reality is AI native stocks are never going to unseat core install bases. If you look at the data, if you look at ultimate lab use cases where they're going to play on, LLMs will partner with software companies and over time LLMs will get commoditized and you're going to have hundreds or thousands around the world relative to models as they ultimately deploy. Software will be the hearts and lungs of AI.
Well, and data, right? I mean, if you look at it, proprietary data, I think it's going to be the biggest differentiator as you think about where these models are going, right? Because models are only as smart as the data you feed into them. Exactly. And if you look at, and I'll talk about data again. We have, if you think of the moat around our business, we have 555 million people who have opted into our data cloud that we have never fed that data into a large language model ever, nor would we. It simply trains our models, and then we take our clients' first-party data, which includes 51% of the Fortune 100, we're ingesting all of their data into a consumer data platform, we're matching the data together, and it's training the models just for that client. One of the really interesting things that I think people missed about our company was last year, our net retention rate as a company was 120%. And most software companies are happy at 100, we were at 120. That's because once we ingest our clients' data and we map it with our clients' data, it's almost impossible to fire us because you keep getting better return on investment for them, therefore they keep growing with you.
But that really goes to the broader theme here. And I think, well, you saw it in obviously in this quarter in terms of those numbers, but I think more and more we are now in the software phase. We are, and I think that's what companies are starting to see like, how do I deploy it? I've spent tens of millions or more on infrastructure. Where are the use cases? Use cases aren't coming from Nvidia, it's not coming from a lot of the infrastructure, it's coming from software.
When do you think the street gets that? Or how do we convince the street of that? Like, I just, that to me is confusing.
But I'd say David, I think like the issue that like from a communication, the street, and the SaaS apocalypse, or the AI ghost train, it's not, these are conversations that I see with so many of my, some of the best software companies in the world. I think it's going to start, look, it starts with the results. Just like you guys are showing in terms of the actual monetization. And then I think it really starts to, as you start to see these stacks and the infrastructure get built out, I think investors are going to realize it's the most disconnected narrative in the last 25 years relative to the end profits and others, the view that they're going to unseat software companies. And I think it's really, our view is the second half of '26 is where it really starts to play. Because that's where the use cases start to play. I mean, we've seen it, you know, you showed it, you saw it on Palantir, but it's really as we get into the second half of the year, that's where that starts to run. And that's our view like software, and we think software stocks are, you know, potentially they're up double what tech is in the second half of the year.
Interesting. You know, it's funny, at Zeta, this was our fifth consecutive quarter of accelerating organic growth. And it's all coming from Athena now. And it's one of the things I find interesting because we are a native AI company. We re-architected our entire platform to put AI as native and data as native, but foundational to the application layer. It's been so hard to explain the AI. When we go into a client now and talk about Athena, it's almost like we've been driving this Ferrari. The AI's in the engine, but you can't see it, and now Athena is the big hood ornament sitting right on top. We're going in with a full Athena pitch to all of our clients. That's really what we're doing.
It almost, Athena's really, it's changed the company in terms of like for sure the go-to-market strategy. And at a time where customers across verticals are looking at how they're going to monetize AI. What else are you seeing in the markets outside of this stuff right now? I mean, I think like right now, and I just got back from Asia for a few weeks. So like I could tell you.
I don't know how you do it. You like, I called you last week just to say hi and you're like I'm going to go to Korea.
I think part of it is like the only way you could understand what the demand looks like you have to see it globally. So I think it's very easy while the bears, they're negative on AI in the 35th floor in New York City office building. So you don't see AI when you're in Metro North. And I think the reality is that the demand that we see, it's 12:1 demand and supply. Wow. And obviously you're going to be at Milken, he'll be talking about the massive AI in about 20 minutes. But the reality is like the chip demand is unlike anything we've seen. It's a super cycle in terms of memory and overall chips. But guess what? In terms of that CapEx build out, it's all getting built out for what the use cases are going to be. And I think more and more you're seeing, I'm seeing from CIOs in so many companies they're now going into that next phase. And I think there's an arms race, right? Like which are the stack players that are going to benefit? Like who are some of the niche software companies where some of them might get acquired? Some of them might fall apart. And I think it's trying to, it's those that stay on the treadmill will get passed by.
Well, that's, I mean if you look at guys like Palantir, right? Didn't they go through something like this a few years ago? So I look, Palantir is a good example like, and obviously being such a supporter of them over the years, you know, so many times.
Wait, watching you talk to like the guys who run that company while we're in the other room. These are your boys, right? Like you get along really well with them.
Well, part of it is like I'm a huge believer in what Karp and Palantir have built. And but it's very easy to look at them today just like it's very easy to look at Nvidia today. You don't see a few years ago. You don't see where like they were building it all on government. They were building the infrastructure. No one believed in, no one gave them a multiple, and look where it is today.
No, so I'm saying like that's why like, like I said, like it's a lot of the stuff that you're going through that I think other software companies that are thriving are going to, it's very similar to what Palantir a few years ago where it took time for them to execute, show the vision, and then investors ultimately rewarded them. And that's why I just think right now we are going through this massive prove me phase for the rest of software. Because I think right now it's like, okay, there's Palantir, and they're maybe put up here. And everyone's trying to figure out who else is going to join them. Is it Snowflake? Is it MongoDB? You know, is it Zeta? So everyone's trying to figure out who those software, where does Oracle fit? Where does ServiceNow? Where does Salesforce? And I think that's why right now we're in that phase.
Interesting. So, we're sort of in the, we've got infrastructure and software in the same sort of concentric circle growing together right now.
Well, because like right now like every investor, they're focused on like hardware, chips. I don't care if it's HBM or you're up here. You own memory stocks. You own chip. Software is still do not enter zone. I think that's the wrong trade, but it's really because like you're not getting paid to own these stocks right now because the more, and I think that creates the massive opportunities.
Right. If you look at the reactions like ServiceNow and others, but if you look at how it plays out, okay, as companies go from like the prove it phase or maybe the skeptic phase from an investor to here, that's the huge multiple re-rating. And that's what's going to separate the companies where we'll be here a year from now. And there will be stocks that you look back on and be like, what? How did no one think because it was the prove it phase. And I think that's, we're going through that now, not in chips. In software.
Right. Because chips are already seen that. We've already seen that. And right now, but go back, I could go back in terms of like these periods of AI revolution. Go back a year ago. Or go back like 2 years ago. There was a video, it can only be a video. AMD can't be successful. Memory stocks, Intel can't win. Intel can't win. Micron can't benefit. SK Hynix, no, it's the memory stocks. They're, what about SanDisk? They're not, no one's going to pay a multiple like that. So, the point is like now it's consensus and that's where the crowd is. Software, it's still, no, it's the, I believe as an investor that so many of them are structurally troubled. But I disagree with that because ultimately the hearts and lungs of these use cases will be software. We're going through from May to let's say like December is the prove it phase for software companies.
Well, it's interesting because if you look at most of the infrastructure, and I mean, listen, they've built some insane companies. Like these are great, great, great companies. But they're effectively selling the infrastructure once. Yes. When we sell a client, it's a subscription for a very long time. And if you look at those use cases, you know, you would think software companies that win it. I want to go back to your original premise, right? Because I do agree they're going to be what I call workflow management companies that have built platforms that if they don't pivot, they're going to have some real problems. Sure. Because I think agents are going to disintermediate them. As well as seat-based models.
Yeah, of course. Well, the seat-based model people were beating the living crap out of us for charging a subscription fee and a utilization fee 5 years ago when we went public. And somebody was asking me the other day, well, it seems like you've done really well on the transition to subscription. I'm like, we didn't transition. Like we're doing, we've been, we're 60%.
It was a hurdle before everything. That was the whole thing. And they beat the living out of us at the IPO for that. Like nobody wants a utilization model. You got to have a seat-based model. You got to have a CPU model. And we just didn't think that model scaled.
But it looks like now everybody's trying to move to sort of your subscription fee plus your utilization fee. Because of the worries, too. And again, this also goes back to a lot of AI alarmist, job growth, jobs going to, everyone's going to lose their job. And I think a lot of that is more of a dystopian type narrative. I think a lot of that is going to be, I'm not saying there's not going to be areas around that, but the view, and I think you're starting to see changes now even in the job market and some of the ones, you know, that we've seen. I'm just saying I think that's also playing into this narrative about seats going down, job growth, pricing power's going.
Well, if you don't need the employees, why do you need seats?
