The long-term vision is to build a $10 billion a year business with a 30% operating margin and, you know, 75% of that converting to free cash flow. But as you know, Sam, today we represent about 1 to 1.3% of our clients' wallet share. If we continue on our current trajectory, if we can get to 6 to 7%, we're going to get to that $10 billion number.
Welcome everyone to an exclusive interview with the founder and CEO of Zeta, David A. Steinberg. I'm here, I'm your host Sam Badawi, and we are going to get right started. David, how are you today?
Sam, I'm great. How are you today?
I'm doing good. Doing good. I just told you earlier before that I'm in California, so I had to wake up quite early this morning. I'm sorry.
Yeah, that's okay. That's okay. The market opens. I got to be ready for it. I got to be ready to kick it out of the park. So, you know, the good news about being on the West Coast is you finish early.
That's true. That's true. I do have the whole day left with the market close and everything. And still a lot to conquer, but not during season, of course.
My problem is when I'm on the West Coast, I finish my East Coast work at a particular hour, then I have to start talking to Asia, and then when I wake up, Europe's been operating for like hours. So, it's true. It's hard for me to get that sort of break.
That is true. That is true. Well, thank you so much for being here, David. Really appreciate your time. I know things are certainly busy during the earnings season. Just wanted to start off, maybe give a little bit of an introduction of yourself. I mean, clearly everyone already knows about Zeta at this point, but just to give some a little bit of insight what you guys are working on, maybe like a brief overview of some announcements you had made during earnings, and then we can get started with the questions.
Yeah, I mean, listen, I think our earnings speak for themselves in many ways. You know, it was our third year of 30-plus% compounded growth. Top line greater than 50% EVA growth, greater than 75% free cash flow growth. We raised projections for this year. Our initial guide for the year is 35%, you know, which is pretty good considering we've been public for 18 quarters and 18 quarters in a row we've beat our guidance and raised guidance. So when you do that, Sam, as you know, that compounds throughout the year. So last year we finished materially above where we started the year from a guide perspective, and our goal is to stay on a cadence where we can continue to beat and raise as a company. We had our first net income positive quarter in the fourth quarter of 2025, and we've guided to being net income positive for calendar 2026.
You know, I think that the business is working. What I always say, though, which is interesting, is numbers are outputs. The input is: is your business working? Are you solving your client's biggest problems? And you know, when you look at our business, you can really boil it down to today: for every dollar a client spends on the Zeta marketing platform, we return an average of 600 to 700%. And we're just seeing sort of the floodgates open with clients moving larger and larger percentage of their marketing budget to Zeta. I really think that's a trend that's going to continue. Our goal with Athena, which we announced at Zeta Live and really sort of announced a major partnership with OpenAI and Athena at the Consumer Electronics Show, I think Athena is going to be the next step function in our business. You're going to see Athena, I hope our real goal, and we're seeing preliminary results that reflect this, is going to help us get the return on investment up even higher. Our goal is to get to an order of magnitude return on investment, a thousand percent. And I believe when we can do that, that's how we're going to build, you know, the long-term vision is to build a $10 billion a year business with a 30% operating margin and, you know, 75% of that converting to free cash flow. We're not going to do that in a few years. That'll take us time. But as you know, Sam, today we represent about one to 1.3% of our clients' wallet share. If we continue on our current trajectory, if we can get to 6 to 7%, we're going to get to that $10 billion number.
Yeah. And there's definitely a lot of runway as far as more Fortune 500, especially Fortune 100 companies that you guys can enroll. I especially do like the fact that you guys are really enrolling a lot of the enterprise and focusing a lot more on that with the bigger contracts, bigger ACV, and maybe still focusing on it too, but like most of the focus is really on the enterprise to just get those longer and larger.
Yeah, that's, I mean, that's all we're focused on right now. I mean, we're, I, you know, I wouldn't limit us to the Fortune 500. I think the Fortune 2000 is sort of how we think about it. But we're really at this point, I would say, investing the vast majority of our business development, corporate development, sales on companies that spend at least a hundred million a year on marketing. And there's a lot of companies who do. It's not just the Fortune 500. Now, the good news is we're at only 24% of the Fortune 100. I'm sorry, Fortune 500. We're at 51% of the Fortune 100. But we also have very small wallet share with these organizations and a lot of room to ramp.
Awesome. Awesome. I wanted to go into the first question since we were already talking about advertising platforms and able to ramp up. But as we were discussing, many ad platforms use AI to optimize bidding, specifically TTD or The Trade Desk or AppLovin. But then there's a lot more associated with that that a lot of people probably aren't aware of with targeting, creating delivery, and one of the things that's been pretty popular for the last few decades. And it's starting to make its transitions, which you guys are talking about a lot. Used to be search engine optimization for Google search and all that, and now it's mostly or should be focused on generative engine optimization. And that's something that's very interesting because I don't think I've ever heard a company really mention it as much as Zeta. And that's really good because that I believe is going to be the future considering how many times people query chatbots and everything to find out answers, do research, whatever it is, especially companies when they integrate it into their own workflow. But should advertisers view GEO as a way to rebalance spend away from existing AI-driven ad tech channels? You know, like...
No, I think it's, I think, listen, I think it's going to start with a reallocation of search engine optimization expense, which, you know, anybody who doesn't understand that billions and billions of dollars are spent annually on search engine optimization. It doesn't just happen. Companies don't just show up in those results. So I think you're going to see a shifting of that from SEO to GEO. And I think GEO is going to be an important component of a marketer's value chain as it relates to their brand and how they build it. And then that will create a halo effect that I believe will allow for a higher conversion rate of traffic to sales across the internet and connected TV.
Awesome. Yeah. And the thing is that I still remember how important it was to have advertising on linear TV. And now that everything's switched to streaming, and now you have YouTube, and then obviously now you have generative AI with chatbot queries and everything. How important, how quickly everything is transitioning. And I do appreciate the fact that, you know, Zeta is already accommodating for that. They're already ready for it, and you're already building ahead of that, which puts you already ahead of the curve. So I really do, you know, round of applause for that effort and seeing that vision very much early before now it's apparent that this is the direction we have to go in.
I mean, I think people, first of all, thank you, Sam. That's really nice of you to say. What I would say, though, is I think people forget that we started programming an artificial intelligence in 2017. Like, we've been where the puck is going. I'll use a hockey analogy after both the men's and women's teams from the US won the gold. But we've been seeing where the puck is going for quite some time now. And I don't want to sound presumptuous because you've always got to continue that. You've always got to focus on it. But when you think of our business today, you've got this massive data cloud, which is, you know, a massive moat around our business. You've got, you know, 552 million active opted-in people. We've got trillions of signals and data points on people at this point that is solely training our algorithms. We never share that data back to any large language model, which gives us a massive moat and competitive advantage in an AI-driven world. But when you use that data around GEO, it makes it even more valuable because we're able to plug into the APIs of these very large language models, and we're able to match not just to what somebody's querying, but we're able to put their demographic and psychographic and transactional information into a GEO strategy that I don't think anybody else focusing on that will be able to do. But it's an example of how the data cloud is just a moat around the business. It's the reason we drive 600-plus percent return on investment. It's the reason our net retention rate last year was 120%.
Like these are outputs, right? The input is the data cloud plus the AI equals what do individuals intend to do next? And then another series of algorithms know exactly how to target them. The other thing I think that confuses people, Sam, is people ask me all the time, are you a marketing technology company? Are you an advertising technology company? Are you a data company? Are you an AI company? Are you an activation company? And the answer is yes. So what's happened is our entire vision when we founded the company was to build everything that a marketer needed. Everything, customer acquisition, customer retention, customer monetization in one user interface with one setup tool and one reporting infrastructure that could be sort of the reporting infrastructure of truth across the entire journey of a consumer. And literally what has made us so successful as a business, I think sometimes creates confusion with Wall Street, right? They just can't put us in a box because, you know, in our CRM business, we compete with companies like Salesforce and Adobe and Oracle. In our activation business, we compete head-to-head with The Trade Desk and others. And in our data business, it's totally differentiated because you've built one of the world's most valuable data repositories, but we never sell the data to anybody at any price. We use the data as the electricity to fuel our software platform. And we started doing that in 2017. And people were like, "What are you doing?" We're like, "Well, we're using this to exclusively train our own algorithms." And they were like, "What?" I was like, "We think this is where the market's going." So, you know, it turns out that the bets we made in 2017 and quite frankly the bets we made during COVID, those are sort of, we had two big crisis points from 2017 to today. One was we woke up in 2017 and we had sort of rolled up a bunch of email service provisioning businesses and it just wasn't working. It wasn't where the market was going, and we made the decision to architect an entirely new platform and put data and artificial intelligence as foundational to the application layer. And then when we went into COVID, we went into hardcore crisis mode. We completely rearchitected our business. We came out of COVID, not only did we grow in that calendar year, we've grown on a compounded growth rate of 30-plus% since then. And we've also, by the way, as you've acknowledged, given 30-plus% initial guide for this year. So, you know, this could be our fourth year of compounded 30% organic growth. And I think that we're in a really unique position because we're solving marketers' biggest needs, and you're sitting in a market that has a total addressable value of a trillion dollars a year.
Yeah, that's amazing. I think that's very unique to have a company that's reaccelerating revenue, especially at this stage of adtech growth. Usually there's like that balance.
We don't go by adtech. We go by martech, just so we're on the same page. In fact, a greater percentage of our revenue is around marketing technology than advertising technology, just to put it out there. We do both. I mean, we have both in the stack, but we tend to overindex on marketing technology because almost 60% of our revenue sits inside of that bucket.
Okay. Cool. I wanted to ask you because you did mention the guidance earlier. So you've raised 2026 guidance, and as you mentioned earlier, it excludes growth specifically to Athena since right now that's a free product. How much of that...
It's not even a free product. It's not out yet. So we haven't, it's in beta. We have a number of clients using it. The results have been incredible. We will move to generally available by the end of this quarter. We're on track for that. We believe that Athena is going to be a major driver for our company in the years to come. We didn't bake it into this year because, you know, you just don't know how people are going to react to it. How much training is it going to take? Now, if it really gets traction quickly, you know, we'll, you know, we'll see the numbers we've already projected will look low, but we just don't know that yet. What I do believe, Sam, is that based on the preliminary results and the way Athena is working, we're going to be a 20-plus% organic growth company for many, many years to come. And I believe Athena is going to be at the heart of that going into 27, 28, and on.
Yeah. I mean, it's only expected that things are going to continue accelerating as they really are right now in the broad market, especially with just, I mean, all of a sudden, like a couple weeks ago, Open Claw or Clawbot comes out and then they rename it everything and all of a sudden it's this big thing with the Jet AI. And it's interesting to see like you kind of pinpoint which companies are actually doing it versus which companies are like, "Oh, we got to do this right now" sort of thing, you know? But it's good to see you guys have been talking about this for almost a year now. Maybe even more than a year actually.
No, for years. Listen, here's what I will tell you, Sam. We are the disruptor in the AI marketing world, not the disruptee. And I equate it to like, you know, remember I joke, you know, I'm 56 now, so I've been around the block for quite some time. I remember when the internet came out and that was going to destroy all software companies. I remember when cloud computing came out that was going to destroy all software companies. And in every case, technology companies that have embraced the new technology and adapted it into their business model, it's been a renaissance for companies, and it's going to be a renaissance for Zeta. We announced the OpenAI partnership. We put that as foundational to Athena. We're incredibly excited about it. We're working on a bunch of other stuff with OpenAI right now, which is also very exciting. But what I want to tell you is we use Claude every moment of every day. Our engineering team has already gone to a net incremental productivity level of 125% of where we were just a year ago. The reason I say net, and it's not something people think about, is you could say we got 150% productivity gains, which we did, but they've got to spend about 25% of that time on QA and making sure everything's clean. You know, we're an enterprise software company. You can't just spew this stuff out.
