ZETA - NYSE
Zeta Global Holdings Corp.
ZETA·NYSE
$23.27
+0.56%TechnologySoftware - Application
Zeta Global Holdings Corp. operates an omnichannel data-driven cloud platform that provides enterprises with consumer intelligence and marketing automation software in the United States and internationally. Its Zeta Marketing Platform analyzes billions of structured and unstructured data points to predict consumer intent by leveraging sophisticated machine learning algorithms and the industry's opted-in data set for omnichannel marketing; and Consumer Data platform ingests, analyzes, and distills disparate data points to generate a single view of a consumer, encompassing identity, profile characteristics, behaviors, and purchase intent. It also offers various types of product suites, such as opportunity explorer, and CDP+, which helps in consolidating multiple databases and internal and external data feeds and organize data based on needs and performance metrics. The company was incorporated in 2007 and is headquartered in New York, New York.
At a Glance
Live SnapshotMarket Cap$5.82B
EPS-0.1400
P/E Ratio-166.21
Earnings Date08/04/2026
Earnings Call Transcript
ZETA • 2026 • Q1
Operator
Welcome to the
Matt Shunnarah
Thank you, operator. Hello, everyone, and thank you for joining us for
Matt Shunnarah
These statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected. These risks and uncertainties include those described in the company's earnings release and other filings with the SEC, and speak only as of today's date. In addition, our discussion today will include references to certain supplemental non-GAAP financial measures, which should be considered in addition to and not as a substitute for, our GAAP results. We use these non-GAAP measures in managing our business and believe they provide useful information for our investors. Reconciliations of the non-GAAP measures to the corresponding GAAP measures, where appropriate, can be found in the earnings presentation available on our website, as well as our earnings release and our other filings with the SEC. With that, I will now turn the call over to David.
David Steinberg
Thank you, Matt. Good afternoon, everyone, and thank you for joining us today. We delivered our 19th consecutive beat and raise quarter. This consistency is not driven by a single product cycle or a short-term tailwind. It is the result of a structural shift in the market. AI is no longer a feature. It is driving a replacement cycle where enterprises are demanding fewer systems, measurable results, and applied intelligence that works today. We are winning in this environment because of the system we have built. Proprietary data that improves with every interaction, intelligence that compounds with every decision, and a platform with AI at its core that allows customers to consolidate vendors into a single unified operating system.
David Steinberg
This differentiated approach has been recognized by Forrester, where
David Steinberg
First quarter revenue of $396 million, representing year-over-year growth of 50% and up 29% year-over-year ex Marigold. Our fourth straight quarter of revenue growth acceleration, excluding acquisitions and political candidate revenue. Adjusted EBITDA was $66 million, up 42% year-over-year. 19 consecutive beat and raise quarters, combined with a four-year revenue CAGR of 30% reflect more than just consistency. They are evidence of sustained demand in a market consolidating around platforms that can deliver measurable outcomes at scale, and that visibility is reflected in our outlook. After raising the midpoint of our range for 2026 revenue guidance last quarter by $25 million, we are again raising it by $30 million, representing growth of 37%.
David Steinberg
These market share gains are evidence of a shift in the competitive landscape, as AI moves from feature to a new way of doing business. Athena is designed to accelerate our share gains by bringing intelligence directly into workflows, turning answers into actions, and ultimately changing how marketing is planned, executed, and optimized. Athena is currently available to all of our enterprise customers, and its impact is already evident in sales pursuits and results. The number of Athena demos to potential new clients increased dramatically throughout the quarter. The promise of Athena is influencing decision-makers and helping
David Steinberg
Interacting with Athena made it clear that
David Steinberg
As adoption increases, Athena learns from more data, outcomes improve, and usage deepens, driving ARPU expansion and ultimately reinforcing the same flywheel that has powered our growth. That flywheel is powered by more than just
David Steinberg
For example, our SuperGraph was instrumental in a win with a leading online retailer of pet products in the U.S. that serves millions of active customers with a highly personalized e-commerce experience, a broad assortment of over 100,000 products, and a rapidly expanding ecosystem that includes auto-ship subscriptions, pharmacy services, and pet health offerings. In addition, our proprietary data and the intelligence it generates was a key component in the expansion of a Fortune 100 telco client, expected to drive an 18 times increase in spend with
David Steinberg
We are consistently seeing that the land, expand, extend model takes hold as customers begin with a single use case and scale across the platform over time. That expansion is driven by the modern CMO mandate, do more with fewer partners, improve ROI, and simplify execution across the organization. The result is larger commitments, deeper adoption, and a growing role for
David Steinberg
Consolidation drives adoption drives results, and results drive further expansion. This is the One
David Steinberg
This is a reflection of your hard work and collaboration. Now let me turn it over to Chris to discuss our results in greater detail. Chris?
Chris Greiner
Thank you, David. Good afternoon, everyone. Our results once again demonstrated the durability, predictability, and profitability of
Chris Greiner
As I analyzed the strength of our quarter, what stood out was how balanced the upside contribution was. It was not one or two isolated benefits. Instead, in baseball parlance, it was a lot of singles and doubles, which in my opinion, is healthier. Here are some examples. In terms of revenue growth, excluding Marigold's contribution, approximately 14 points of growth came from existing customers and 15 points from new customers. From an industry lens, nine out of our top 10 industries grew faster than 20%, with more discretionary industries continuing to be at the upper end, demonstrating why in tougher macro times, data-driven, lower marketing funnel, high ROI attributable marketing is paramount. Finally, as it relates to how customers use our platform, email, connected TV, mobile, and social all grew double digits, all while each use case acquire, grow, and retain also grew double digits.
Chris Greiner
Now let me dive deeper into our KPIs, income statement, and balance sheet. Total super-scaled customer count grew to 189, up 19% year-over-year and an addition of five customers sequentially. This exceeds our
Chris Greiner
Both are great examples of the One
Chris Greiner
This outsized sales pipeline growth in discretionary industries is consistent with what we've seen in previous periods of macro volatility and is another proof point that in times of uncertainty, customers consolidate onto fewer platforms that can drive measurable ROI with AI-driven efficiency. Now moving on to revenue mix. Direct revenue in the first quarter was 75%, above the 73% last year and in line with our target of 70%-75%. Our GAAP cost of revenue in the quarter was 41%, a 190 basis point increase year-over-year and 50 basis points sequentially. The increase in cost of revenue was driven by new agency wins, driving a higher initial mix of social as a channel. This is consistent with the pattern of business we've seen and spoken to previously when new agencies platform onto
Chris Greiner
This is because we offer a substantially more efficient and effective solution for social and has become the first of many channels adopted by new agencies as they migrate. As new agencies scale over time, not only does their aggregate spend increase, but they do so by adding
Chris Greiner
We took aggressive steps in the quarter to execute operating synergies, which should begin to benefit our adjusted EBITDA margin in Q2 and into the back half of the year. At the same time, Marigold's revenue came in better than we anticipated, and we're seeing encouraging traction from a One
Chris Greiner
GAAP loss per share was $0.06, coming in ahead of our expectations for the quarter, with forecasted costs related to the integration of Marigold being the primary driver and not seen as recurring over the rest of the year. First quarter net cash provided by operating activities was $49.7 million, up 43% year-over-year, with free cash flow of $41.7 million, up 48% year-over-year and representing a margin of 10.5%. This represents a free cash flow conversion of 63%, a 270 basis point improvement from the first quarter of 2025. This also includes a roughly 13 point working capital headwind driven by longer agency payment cycles standard for their industry.
Chris Greiner
During the first quarter, we repurchased 1.5 million shares for $25.7 million and have approximately $138 million remaining on our share repurchase authorization. We expect to remain active buyers of our stock, especially at these price levels, subject to market conditions and other priorities. We continue to make significant progress in reducing dilution and stock-based compensation expense. Excluding Marigold, our dilution in the first quarter was 0.1%, and we remain on track to achieve our normal course net dilution target of 3%-4% in 2026. Relatedly, with most of management's previously issued equity now fully vested post-IPO,
Chris Greiner
This performance-based plan secures continuity of
Chris Greiner
None of our guidance increase is related to political candidate revenue, which we continue to assume will be $15 million in 2026, with $7 million in the third quarter and $8 million in the fourth quarter. We continue to take a conservative view of Marigold, contributing $47.5 million per quarter to 2026 revenue for the remainder of the year. Our revenue guidance also includes minimal contribution from Athena, as shared earlier, we have taken into account our typical conservatism of 2%-5% in setting our outlook. For the second quarter, we now expect revenue of $420 million at the midpoint, $4 million higher than our previous guidance and representing year-over-year growth of 36% or 21% when excluding political candidate and Marigold revenue.
Chris Greiner
For adjusted EBITDA, we're increasing the midpoint of our 2026 guidance to $397 million, up $6 million from our prior guidance and representing a year-over-year increase of 43% at a margin of 22.3%, an improvement of 90 basis points over 2025. For the second quarter of 2026, we now expect adjusted EBITDA of $86.6 million at the midpoint, up from our previous expectation of $84.9 million and representing growth of 47% and a margin of 20.6%, up 155 basis points year-to-year. We are also increasing our 2026 free cash flow guidance to $235 million at the midpoint, up from $231 million, representing year-over-year growth of 43% and a conversion of 59% of adjusted EBITDA, which likely has upside.
Chris Greiner
Here's the broader point. A 19-quarter beat and raise track record is obviously something we're proud of and continues to demonstrate our consistency and strong execution. We also recognize the times we're in, specifically the need to underwrite investments in companies with strong free cash flow generation, durable revenue growth and share gains, and demonstrable moats. Q1 was an excellent jumping-off point for these emerging investor frameworks. Not only did free cash flow set a record in the first quarter, but we are also tracking to the high end of our 2026 GAAP EPS range of $0.02-$0.04 and long-term 2028 targets. As it relates to durable growth, this was the fourth quarter in a row we accelerated revenue growth, excluding acquisitions and political candidate revenue.
Chris Greiner
In terms of exhibiting our moats, our marquee wins with enterprises and agencies this quarter came at the expense of legacy marketing clouds and legacy DSPs. Where
Operator
Ladies and gentlemen, thank you for standing by. Hold on just one second, please. We will now be conducting the question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you'd like to remove a question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. The first question comes from the line of DJ Hynes with Canaccord Genuity. Please proceed with your question.
DJ Hynes
Hey, guys. Congrats on a fantastic quarter. Nice start to the year. David, I wanna ask you a competitive question. Obviously there's been more public backlash against The Trade Desk and the agency ecosystem, I think for those living in the marketing and ad tech world, like that's been going on for a while now, right? Two related questions here. Number one, like how much do you think
David Steinberg
I mean, first of all, DJ, thank you. We appreciate it. Could not be happier with this quarter, and I think it really speaks to kicking off the year right, and Athena really was a massive driver here. I want to separate the conversation about the agency and other technological platforms like The Trade Desk that are out there and struggling a bit because the agencies continue to thrive and they're not really having any issues as from our vantage point. I just got back from three days at the Possible conference, where I did 54 meetings in three days, hosted four dinners and three cocktail parties, which is why I'm losing my voice going into this. I think that.
David Steinberg
You know, I don't wanna speak to any particular platform, but I think the horse is out of the barn. I think that organizations that have built workflow management tools that do not have proprietary data, they do not have proprietary native artificial intelligence, are going to really struggle in this next evolution of where sort of marketing is going as it relates to intelligence. Because if you're not creating intelligence in today's world, you're not winning. I think that we are a direct reason that a number of our competitors are either growing slower or shrinking as we take meaningful market share. Chris, in his prepared remarks, was very clear about the fact we had a number of meaningful agency wins in the quarter that will continue to run out through the rest of this year and into future years that are starting with social.
David Steinberg
We're starting to see those move over to programmatic and connected TV as well. I think if you separate the agencies which are doing well and thriving from the technological platforms that have based their business on workflow management, I think they are gonna struggle, and we are gonna continue to beat them handedly in the marketplace.
DJ Hynes
Yeah. Perfect and helpful color. Chris, I wanna follow up with you. David gave a bunch of great anecdotal data points around Athena and the early success there. The product's not explicitly monetized, right? So what are the signs that we all as investors should be paying attention to from a financial perspective that will signal to us that Athena is moving the needle for
Chris Greiner
Great question, DJ. I'm glad you asked. There's a couple of leading indicator data points that I think you can already begin to look at. As part of the press release, one of the data points that was called out was a 7x increase, and this is just in the first week of Athena's general availability. We saw 7x increase in the amount of agentic interactions on the platform, coupled by 60% of the AI usage on our platform being driven by Athena. How that should ultimately translate through the usage part of a revenue can be seen through ARPU expansion, some of which you already started to see. If you look at ARPU in the quarter for super-scaled customers, it was $1.7 million. It was up 21% year-over-year.
Chris Greiner
If you look underneath that, what drove it are exactly the dynamics that Athena was engineered to be able to do, which is to make more of the platform available and visible for the customers to be able to exploit. If you look at multiple use case customers, it was up over 50% year-over-year. If you look at the customers that were using four or more channels, that's up over 40% year-over-year, which again, are not just great examples of Athena as an unlock, but also One
David Steinberg
By the way, she's just getting started, DJ.
DJ Hynes
Yeah, totally. Awesome. Congrats, guys. Thank you.
David Steinberg
Thanks, DJ.
Operator
The next question comes from the line of Gabriela Borges with Goldman Sachs. Please proceed with your question.
Gabriela Borges
Hi, good afternoon. Thank you. David, I wanna ask you about the people and process part of Athena, meaning the technology you've demoed, and it clearly is able to do a huge amount of knowledge work. My question for you is, how do you then change the end user behavior? What does the training and enablement look like? How do you encourage more people to use it once your customers have already decided to adopt it?
David Steinberg
First of all, Gabriela, what a great question. You know, first, let me say that we were incredibly proud that we were able to make the product not just generally available on time, but available to 100% of our enterprise clients, which was not a small task. At the same time, to your exact point, we have a learning and development group that is literally purpose-built to train our clients and get them up and running on this new product. They've already done. Our top 30 clients have been onboarded through that group, and we're gonna be adding all the other clients as we continue to expand out. The other thing that's really important is we're doing a weekly leadership.
David Steinberg
I'm sorry, a weekly learning and training program to all of our clients that's virtual, recorded, and they're able to then watch it at their convenience inside of the platform when they want to. We're doing sort of a ask Athena question of the week. Every week, a new question that you could ask Athena goes out to all of our customers so that they can begin the process of using her. I know, I'm sure you've seen the demo, you know how incredibly intuitive she is to use. What I would say is we're really focusing on it from a relationship management, learning, development, both in-person, virtually, and weekly follow-ups. The intuitive nature of her is, I think, one of the reasons you saw her so powerful.
David Steinberg
Just in the first week she was live, Athena drove 60% of all AI utilization across our platform. That is off the charts for a new product from an adoption perspective.
Gabriela Borges
Very good. Chris, the follow-up for you on inference cost. Athena has pieces of
David Steinberg
Gabriela, I'm gonna take that one. Sorry, Chris.
Gabriela Borges
Yeah, please.
David Steinberg
First and foremost, as the world moves from large language models to inference-based AI, our platform is purpose-built for that as the operating system and infrastructure for our clients. The vast majority of our queries, Gabriela, are done on our own platforms, on our own data. We are not buying tokens as we roll this out to our customers. It's fully embedded, which is one of the reasons I think you're seeing us project substantially higher growth to profits and cash flow than we are even to revenue. We have put ourselves as sort of the perfect spot as the market moves to inference-based AI. As it relates to our internal consumption, we have built a platform called Spade. Don't ask me what it stands for. It is an anagram.
David Steinberg
The reality is that Spade is a tool that we custom-built inside of
David Steinberg
It goes to a program called
David Steinberg
As you look at our growth, we will not experience some of the constriction of margin or additional CapEx. We've already allowed for everything in the projections that we've got, and we're very, very comfortable with where we are externally and from an engineering perspective.
Gabriela Borges
Helpful details. Thank you.
Operator
The next question comes from the line of Arjun Bhatia with William Blair. Please proceed with your question.
Arjun Bhatia
Perfect. Thank you so much, congrats guys on a very strong quarter here. David, I have two questions, I think maybe I'll just do them one at a time. The first on awareness. It seems like the customers that are using it are getting great value out of it. It's early, but for this to have a material impact for the company as a whole, you have a fairly large revenue base. How do you roll this out to all your large customers? Where is it right now in terms of customers having awareness and knowing, you know, what Athena can do, and how do you sort of plan to progress that?
David Steinberg
Great question, Arjun. First of all, from an awareness perspective, I would say that our marketing team today is doing the greatest job it's ever done in the history of our company. I just came back from the Possible conference where you couldn't walk five feet without seeing the brand Athena and without seeing By
David Steinberg
One of the things we're gonna be rolling out in the next few months, which I'm super excited about, is an Athena certification. We're gonna certify the individuals who work for our clients on Athena utilization. They'll get a full certification that they can put into their resume. We're very excited about how that's gonna be rolling out. But we're also doing sort of a hint of the week, tip of the week, question of the week. It's going out to all of our clients. I would tell you, in all of the years I've run this company, which is a long time now, I have never seen a faster uptake of a technological product that we've rolled out. It's really been exciting, Arjun.
Arjun Bhatia
Awesome. That's great to hear. Maybe switching gears from Athena for a second. Marigold, that also looked like it was off to a strong start. I think you beat your sort of Q1 target on that front. Where are we on the cross-sell there, and what's the early traction you're seeing on, I guess, the two-sided cross-sell, both into your base and into Marigold's base?
Chris Greiner
Arjun, I'll take that, and David will wrap it up also. A couple places where you can see where it's evident that the cross-selling is working. We talked about the number of multi-use cases. It's nicely contributing to the growth that we've seen across the base of super scaled customers. I think more broadly, if you look at the areas that we talked about being purposely conservative around Marigold, it was around the potential for their SMB and mid-market customers that were on the enterprise platform. We anticipated churn. We're not seeing as much as we thought, which is good. There were products that, and geographies that we thought we would, you know, have less growth on and would also see churn. That hasn't happened yet.
Chris Greiner
Just more broad normal churn at the enterprise level, it stayed healthy. By the way, a lot of that is being driven by, you know,
David Steinberg
It's been really interesting, Arjun. We've seen a meaningful uptick from existing Marigold clients with us integrating the Data Cloud into the platform. The first thing we did, and we had it done within 90 days, was a full Data Cloud integration into their platforms, which allowed clients to begin to access datasets that they've never had access to before. We've seen meaningful growth there. As it relates to cross-selling, we're really making progress, but not a lot of that is in the numbers yet. These products are complicated, and they're very big. I think you'll see more of that as the year progresses. I think I mean, to say we're very excited about how well we're performing with the asset would be an understatement. And a lot of that today is a result of the Data Cloud integration.
David Steinberg
Whether you wanna consider that a cross-sell because we're bundling the Data Cloud in to drive additional utilization or not, that's up to you. To us, as we're rolling out loyalty to all of our global clients, and we're starting to take sale through and roll it out to the LiveIntent clients and all of the different things we're doing, that's in the early stages, and I think will drive meaningful growth in the future.
Arjun Bhatia
Very helpful. Thank you both.
Operator
The next question comes from the line of Jack Nichols with KeyBanc Capital Markets. Please proceed with your question.
Jack Nichols
Hey, guys. Thank you for taking the question. Maybe pivoting back to Athena, I was wondering if you could walk us through the early adoption trends among the, you know, enterprise customer base, specifically around how they're deepening engagement with the platform and in existing use cases today. I've got a quick follow-up.
David Steinberg
First of all, welcome, Jack. It's great to have you on coverage. We really appreciate you. Second, we have been really blown away by the early adoption of Athena. You know, we made it generally available to 100% of our enterprise clients, and we saw a 7x increase in agentic interactions from our clients in the first week of Athena alone. You know, we think of that as pretty good. You know, 7x is always something we aspire to, you know, our long-term goal is for Athena to be the operating system of our clients' businesses, and we're just getting started on that. But early adoption has been very, very exciting.
Jack Nichols
That makes sense. Pivoting quickly to Marigold and thinking about the recurring revenue mix, as those customers, you know, adopt the
Chris Greiner
Hey, Jack, it's Chris. I'll take this. As David said, welcome. It should go up is the short answer. I think a really interesting proof point that you'll see in the queue tomorrow is just how substantially RPOs went up quarter-to-quarter. They went up $66 million just from fourth quarter to the first quarter. Obviously, part of that is Marigold, which then helps with visibility. I think an interesting thing for the audience here to understand is another large piece of that was not only these marquee wins that we talked about with the apparel retailer and the e-commerce pet retailer, but it was also agencies beginning to now also sign long-term committed contracts. That is an exciting proof point for us.
Chris Greiner
It adds to the recurring revenue, which then obviously adds to visibility, which both of those came into our confidence and be able to raise the guidance that we did on the top line by $30 million while continuing to keep to our 2%-5% conservatism.
Jack Nichols
Wonderful. Thank you, guys.
Operator
The next question comes from the line of Clark Wright with D.A. Davidson. Please proceed with your question.
Clark Wright
Awesome. Thank you. I wanted to maybe quickly touch on the consolidation story. You noted on one of the marquee wins this quarter that you consolidated four, and I recognize over the course of the last few quarters, you mentioned consolidation being a key piece. Can you talk about the use cases that
David Steinberg
Yeah. Thank you, Clark. You know, listen, when John and I founded this company, I don't know, 18, 19 years ago at this point, our vision was to put everything a marketer needed into one user interface with one reporting infrastructure. I would tell you that because of Athena, I think we are finally there. Our ability to consolidate anywhere from eight to 12 different vendors into one user interface and one reporting infrastructure has never been stronger. In the case of this global company, because it's a, it's a retailer and a manufacturer of their clothing, we displaced, you know, what I think many people think to be the certainly the longest serving of the marketing clouds. They made, I think, their acquisition first in the space as they built their marketing cloud.
David Steinberg
In fact, this particular client used that company for everything. They considered themselves a you know what shop, so to speak. Decoupling their marketing cloud from everything else they were doing, I think was a very difficult decision. We also displaced another competitor of ours who tends to be more focused on mobile. They tend to be a little easier to displace because they're so singularly focused on mobile. Neither of those companies brought any data or any activation capabilities to task. When you're working with one of the large marketing clouds and you displace them, you're almost always also displacing a professional service provider who they have to then spend millions of dollars on to customize their platform versus our platform is pretty much ready to go from a cloud perspective. That would be a really good example.
David Steinberg
We see this as one of the most important wins in our company's history. It goes back to not just our ability to consolidate other vendors, but to do everything that each one of those point solution does better than they do while simultaneously putting everything into one place.
Clark Wright
Got it. That's helpful. If I could just add one more. Over the long term, you talk about increasing wallet share with customers. Do you think AI accelerates the rate, of share capture, increases the total wallet share, or both?
David Steinberg
I think both. I mean, you know, remember, the single greatest way, Clark Wright, to get market share is drive meaningful return on investment to your clients. The Forrester study that came out that said we have a 600% return on marketing spend, we're seeing early adopters of Athena at a materially higher return on investment than even that. The higher we drive return on investment, the more wallet share we're naturally gonna get. As you know, our existing global super-scaled customers will spend well over $100 billion-$110 billion on marketing this year, and at the middle of our range, we'll have, you know, call it 150 to 170 basis points of wallet share.
David Steinberg
I believe we can get that to 700%-1,000% of their wallet share in the years to come. The key will be driving better return on investment, artificial intelligence, specifically Athena, plus our data as a moat into our business is gonna drive return on marketing spend up meaningfully, which we think will then drive wallet share.
Clark Wright
Got it. Thank you.
Operator
Our next question comes from Jason Kreyer with Craig-Hallum.
Jason Kreyer
Thanks, guys. Great job. I wanted to stick with the point on wallet share because you announced some major wins and you've announced some major wins over recent quarters. I'm curious, you know, when you look at the aggregate data representing somewhere less than 2% of wallet share, how big of deals are you winning today, and how big of deals do you think you can win over time just in terms of the wallet share of those customers?
David Steinberg
You know, it's interesting, Jason. I would say the last few wins we've had have been at a comparable wallet share to our current wallet share, but the clients are spending four or five times as much per year on marketing and CRM. They represent some of the largest deals we've ever done right out of the gate. Does that make sense just mathematically? At the same time, what we're starting to see is some of our clients who've been on the platform for two, three, four, five years are getting to that seven to 10% of wallet share and higher. We're using that as a roadmap for how do we take new clients there. The wins are much bigger than they've ever been, but I'm not sure they're much bigger wallet share only because the companies are so big that we're winning.
David Steinberg
That'll give us meaningful upside as they're on the platform, and Chris does a much better job than I do talking about how ARPU grows the longer a client is with us, and these clients are starting at probably the highest ARPU we've ever seen clients starting.
Chris Greiner
That also jives, Jason, with our sales pipelines. We talked about its growth, but if you look at deal sizes and particularly the annual contract value of deals are up pretty substantially year-over-year.
Jason Kreyer
Perfect. Maybe one quick follow-up, David. You know, you've been doing AI for a long time, but it seems like the release of Athena has certainly put you in a different conversation within the AI industry. I'm curious, how has that translated to conversations with customers? Like, do you feel like
David Steinberg
You know, it's interesting, Jason. In some ways, being a native AI company has been complex for us over the last few years because everybody's rolling out shiny new products, most of which are not real, but most of the people are rolling them out, and we've always been seen as sort of like AI is under the engine. Athena is the hood ornament to what we're doing as a company. She is now us announcing ourselves with authority that we are not just an AI company, we are the leader and the disruptor in the AI space. With the launch of Athena as a marquee product, it has changed the game for the way people are seeing us.
David Steinberg
I will tell you, the two client wins we talked about in the prepared remarks, there is zero chance we would have been in the room if we had not launched Athena or started talking about her at
David Steinberg
Spade has made that possible, and it's really been very interesting how we've done that in an environment where we're still using a very de minimis percentage of tokens versus what many of our competitors are doing, which is gonna allow us to continue expanding our operating margin as we've done over the years.
Jason Kreyer
Thank you, David.
Operator
Our next question is from Matt Swanson with RBC.
Matt Swanson
Yeah. Great. Thank you guys for taking my questions, and all my congratulations for the quarter. I think the metric that really jumped out to me was the increase in multi-use case, and I know that's something we had kinda talked about with Athena and its ability to kinda create this organic expansion motion. Given that that 50% increase was for the full quarter, like, is Athena a real part of that? Is there other parts of your go-to-market driving that? If you could just kinda touch a little more there.
David Steinberg
The great news is Athena's just getting started. We had a great trajectory going into her launch. Now, I will tell you, every client that was on the beta became multi-use case. You know, but that was not a lot of clients, right? As she rolled out to generally available, we saw an uptick there, but I think that's continued upside to growth in multi-use case. You know, the One
Chris Greiner
Matt, I think the reason why you picked up on it, but for others, empirically, what we know is that when customers use more than one use case, their ARPU is three to five times greater. I think you're right on that being an exciting data point.
Matt Swanson
Yeah, no, I appreciate that, and we'll make sure to take note that 100% of Athena users will become multi-use case. That's what I heard.
David Steinberg
I wouldn't go quite there. I mean, that's obviously the goal, Matt, but we certainly didn't say that just yet.
Matt Swanson
Yeah. The other one I wanted to talk about is the independent agencies. I know you called out advertising as a key vertical for you guys. I think your willingness to kind of share the credit with agencies and allow them to kind of white label some of your technology has been part of the reason you've been so successful there. I guess with Athena, how much more can that help you in those deal environments as a lot of these, you know, independent agencies are trying to compete with the big holdcos and so on?
Chris Greiner
You know, one of the key wins we had, Matt, in the quarter was with a large independent. If you look at, you know, business done a year ago with them was zero. Business done within this quarter was eight figures. With Athena being, you know, again, something that was visible to them as something they could also exploit for their benefit. The same was true with a very large new agency that began piloting
Chris Greiner
In fact, amongst the five large holdcos, the number of brands we're working with year-over-year grew by 50%.
David Steinberg
I just wanna say, Matt, we're actually big fans of the agencies. They provide incredible services to their clients, we've had clients approach us to go direct and, you know, we always try to bring the agency back into it because we think it's a very healthy relationship when it's the three of us. Listen, we're good if the agencies, you know, make their money because they're providing meaningful services. As it relates to our business, I'll remind you, none of the agencies really focus on the retain, which as of last quarter is about 60% of our business. We have real greenfield opportunity there as it relates to the activation, which, you know, sort of create customers, monetize customers.
David Steinberg
We're very happy to partner and give, you know, give the credit to the agencies because they've built incredible businesses, and we're very excited now to be working with pretty much all of the large holdcos. I think now it's all, well, certainly the biggest ones. Then to be partnering with a select number of independent agencies, there's a lot of them out there, but we wanna work with only the best.
Matt Swanson
Thank you.
Operator
Our next question comes from Naved Khan with B. Riley.
Ethan Waddell
Hi, this is Ethan Waddell calling in for Naved. Thanks for taking my questions. To start, can we talk about the ideal customer profile for Athena? I'd imagine there are two kind of distinct value propositions there. A, where Athena can drive efficiency gains for your larger enterprises that already have, you know, sophisticated marketing teams and whatnot. B, more small and mid-market players where Athena creates access capabilities that these customers don't necessarily have in-house. Like, which of these is management really seeing more of early traction wise? What's kind of the ideal customer size that you're leaning into with your early, you know, sales motion?
David Steinberg
It's, it's interesting you put it that way. I mean, today, to be honest, Ethan, we don't focus on mid-size. We're, we're really just focused on very large enterprise. Athena opens up the mid-size market to us at some point, 'cause you're very intuitive to understand that the cost of layering Athena out to mid-size companies is so de minimis to us that would allow us to move into those, that vertical, or I'm sorry, into that sort of category, without having to meaningfully hire people to do it. Today, we focus solely on very large enterprise. I would tell you the two things very large enterprises have really focused on is, A, and you're totally right, efficiency. What they're finding is it takes 70% less labor to manage the
David Steinberg
You're effectively able to take 70% of your marketing workforce and retask them into other functions where they can be more valuable to your organization. We're also seeing that this is something I talk about a lot, Ethan, but, you know, when you buy software, whether it's us or it's Bloomberg or somebody else, you're buying a stealth fighter, right? We're all spending to build a stealth fighter of a platform, and most of our clients know how to fly a Cessna. I mean, think about a Bloomberg terminal. The vast majority of their customers only use 5%-10% of the capabilities. As you look at our platform, being able to fly that Cessna, we're still delivering a 600% return on marketing spend.
David Steinberg
As clients are able to use Athena as their co-pilot, they can get right into the cockpit of that stealth fighter, and they can then fly the entire platform, which is driving meaningfully higher return on marketing spend than even that 600%.
Ethan Waddell
Got it. That makes a lot of sense. Thank you. You know, coming out of first quarter, I think you mentioned nine out of 10 top industries grew more than 20%. I know you spoke to some customer consolidation being a benefit there, are there any verticals that you see showing any signs of softening, particularly anything sensitive to the macro and geopolitical risk going on right now on the, you know, consumer discretion?
Chris Greiner
Yeah. Short answer, no, Ethan. The nine out of the 10 were effectively the same nine out of 10 that ended last year. The one out of 10 that wasn't growing over 20% is 4% of revenue. It really gives you a sense for the vast majority of revenues on all of the verticals we support are performing in a very healthy way.
Ethan Waddell
Got it. That's really helpful. Thank you.
Operator
Our next question is from Terry Tillman with Truist.
Terry Tillman
Yeah. Hey, thanks for fitting me in. Hi, David, Chris, Matt, and hi, Athena. I'll just keep it to one question 'cause I know we're running over time. Maybe I'm getting too far ahead of myself, but I like hearing about 40% plus increase in the sales pipeline, and I think you said your discretionary markets, where you have a lot of activity, is even higher. Is it too early to start to say because of the emphasis on agentic and AI in general that's in the market, plus you have Athena that's now credibly in the market and in production, could it start to tip the scales and move in some of this funnel activity faster and you actually close new deals quicker? Or is it just too early or just way too optimistic?
Chris Greiner
I don't think you're too optimistic. I do think it's, you know, from an expectation-setting perspective, and frankly, from a data-driven perspective, and this is a multi-quarter statement I'm about to make, our deal cycles in good times and in less good times have stayed consistent. What we're seeing is more opportunities in RFPs, many more at-bats than we were given a year ago and certainly two years ago. Those, by nature, take longer. Again, our strategy many times is to work around those processes through pilots and proof of concepts. Those deals are getting bigger, as David said. You know, yesterday's $100,000 pilot is today's $1 million. I wouldn't say right now it's an accelerant, but it's an addition to the pipeline.
David Steinberg
I would concur. You know, I do wanna be clear, Terry, we're getting at-bats that we would have never gotten a few years ago. It's sort of, it's working really, really well.
Terry Tillman
That's great to hear. Thank you.
Transcript from April 30, 2026
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