Zeta Global (ZETA) investor relations material

Industry disruption and AI adoption

• AI is seen as a disruptive force, but robust software platforms with deep integration and proprietary data are positioned to benefit, while thin, workflow-only applications face existential threats.

• Adoption of AI is expected to be gradual, especially for complex, mission-critical systems like ERP, with a transition period of 10–15 years.

• Companies that embrace AI and leverage proprietary data are achieving high returns and strong client retention, creating significant business moats.

• The market is experiencing volatility and overreaction, with many organizations unsure how to implement AI effectively and facing challenges in cost modeling and governance.

• Security and data privacy remain top concerns, especially for large enterprises and government clients.

Business models, partnerships, and internal transformation

• Strategic partnerships, such as with OpenAI and ServiceNow, are enabling the development of agentic AI solutions and voice-enabled platforms, enhancing user experience and operational efficiency.

• Modular architectures and multi-layered platforms are being designed to allow flexibility in swapping AI engines as the market matures and winners emerge.

• AI is foundational to some business models, driving measurable ROI, productivity gains, and enabling companies to grow revenue with flat or reduced headcount.

• Internal adoption strategies include innovation teams, cross-functional collaboration, and a culture that encourages experimentation and learning from failure.

• Metrics such as Rule of 40/50, retention rates, and free cash flow remain critical, with AI adoption expected to shift performance benchmarks higher.

Market outlook and competitive landscape

• The software industry is expected to consolidate around a few major AI and platform providers, with most companies using multiple AI components tailored to their needs.

• Thin, non-integrated applications are likely to be commoditized or acquired at lower valuations, while complex, mission-critical platforms will remain resilient.

• Open source adoption is growing, but integration and security concerns slow its pace in large enterprises.

• The current environment is marked by uncertainty, rapid change, and a need for disciplined, informed decision-making to capture long-term value.

• AI is not expected to fully replace enterprise software in the foreseeable future, but will be a key driver of efficiency, innovation, and competitive differentiation.