Zeta Global Holdings Corp

NYSE:ZETA

Earnings Call Analysis

Zeta's Q3 2024: Record Growth and Strong AI Momentum

In Q3 2024, Zeta reported a revenue of $268 million, marking a 42% year-over-year increase, and raised its full-year revenue outlook to $986 million, reflecting a 35% growth target. Adjusted EBITDA reached $54 million with a 20% margin, up 210 basis points. The firm acquired LiveIntent, enhancing its data capabilities, while strategic partnerships with Yahoo! and Snowflake were expanded. Strong demand for AI-driven solutions propelled a 60% increase in the RFP pipeline. Looking ahead, Zeta expects fourth-quarter revenue to rise to $295 million and full-year free cash flow to reach $90 million, further solidifying its market position.

Exceptional Revenue Growth

In Zeta's third quarter of 2024, the company reported impressive revenue of $268 million, a 42% increase from the previous year. Notably, even excluding political candidate revenue, growth was still an impressive 31%. The adjusted EBITDA reached $54 million, which is a remarkable 59% year-over-year rise, resulting in a 20% adjusted EBITDA margin—an increase of 210 basis points year-over-year. This performance demonstrates Zeta's ability to not only meet but exceed its guidance, with revenue expectations for 2024 now increased to approximately $986 million, reflecting an overall growth forecast of 35% year-over-year.

Strengthening Market Position

Zeta has established a solid foothold in the market with a customer growth strategy that emphasizes high-value, scalable clients. Companies are increasingly shifting to Zeta's direct marketing capabilities, with a direct revenue mix now at 70%, up from 67% just six months ago. This shift is driven by the company's expanded offerings and a growing recognition among agencies and enterprises to leverage Zeta's unique marketing platform.

Expansion and Strategic Partnerships

A significant factor contributing to Zeta’s success has been its strategic partnerships. Notably, the expanded collaboration with Yahoo! and Snowflake not only enhances Zeta's marketing capabilities but also positions the company to capitalize on expansive data-driven insights. This collaboration allows Zeta to deliver tailored marketing solutions to clients, ultimately enhancing ROI and market share. With over $900 million raised in capital during Q3, Zeta is well positioned to pursue further growth and acquisition opportunities, including the recent acquisition of LiveIntent, aimed at enriching Zeta's data cloud capabilities.

Guidance and Future Outlook

Looking ahead, Zeta has revised its guidance significantly due to robust Q3 performance. For Q4 of 2024, revenue guidance was raised to a midpoint of $295 million, which includes $14 million from LiveIntent and $10 million from political revenues. Adjusted EBITDA for the full year is now expected to be approximately $188.5 million, representing a 46% increase year-over-year. This sets up Zeta for a strong 2025, with expectations of continued growth momentum, projecting organic revenue growth around 20% when excluding political candidate contributions.

Key Success Metrics

Zeta's performance in Q3 has set several impressive benchmarks. The company has maintained a net revenue retention rate at the high end of its targeted range of 110%-115%. Moreover, the number of scaled customers rose to 475, marking an 8% year-over-year increase. The scaled customer Average Revenue Per User (ARPU) also saw a remarkable 33% growth, achieving a record of $557,000, firmly positioning Zeta as a leader in delivering value to its client base.

Innovation Driving Demand

Zeta is heavily investing in innovation, particularly in the realm of AI and the newly launched intelligent mobile product. The company has rolled out a third iteration of its AI agents designed to empower clients in executing data-driven marketing strategies. This innovative approach is crucial as clients increasingly demand personalization and efficiency in their marketing efforts, responding to the broader trend towards data-centric marketing solutions.

Financial Health

Despite recording a GAAP net loss of $17.4 million in Q3, largely attributed to stock-based compensation, Zeta remains financially healthy. Cash from operating activities amounted to $34 million, a 51% increase year-over-year, and free cash flow was up 93%, reaching $26 million. These metrics reflect a solid cash conversion percentage of 48%, bolstered by operational efficiencies and prudent financial management amid longer payment cycles from agency clients.

Earnings Call Transcript 2024-Q3

[Operator]

Greetings and welcome to the Zeta 3Q '24 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce you to your host, Madison Serras, Investor Relations. Thank you, Madison. You may begin.

[Unknown Executive]

Thank you, operator. Hello, everyone, and thank you for joining us for Zeta's Third Quarter 2024 Conference Call. Today's presentation and earnings release are available on Zeta's Investor Relations website at investors.zetaglobal.com, where you'll also find links to our SEC filings, along with other information about data.

Joining me on the call today are David Steinberg, Zeta's Co-Founder, Chairman and Chief Executive Officer; and Chris Greiner, Zeta's Chief Financial Officer.

Before we begin, I'd like to remind everyone that statements made on this call as well as in the presentation and earnings release contain forward-looking statements regarding our financial outlook, business plans and objectives and other future events and developments, including statements about the market potential of our products, potential competition, revenues of our products and our goals and strategies. 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 other filings with the SEC.

With that, I will now turn the call over to David.

[David Steinberg, executive]

Thank you, Madison. Good afternoon, everyone, and thank you for joining us today. The bets we made 7 years ago on artificial intelligence, the investment in a one-of-one marketing platform, and our commitment to our customer success has resulted in record-setting third quarter financial results above our previously raised guidance.

In this quarter, we generated revenue of $268 million, up 42% year-over-year with adjusted EBITDA of $54 million, up 59% year-over-year. This translated into an adjusted EBITDA margin of 20%, up 210 basis points year-over-year. Once again, we are raising our full year 2024 revenue outlook by $61 million to $986 million at the midpoint, representing 35% year-over-year growth. Not only did we break the rule of 60 for the first time as a company, but we were above the rule of 50, excluding political candidate revenue.

In addition to our financial achievements, we also strengthened our foundation. In Q3, we raised over $900 million in capital, including the undrawn loan facility. We had record in-person attendance for our annual Zeta live event. We announced our new intelligent mobile product and our next generation of generative AI in addition to expanding our partnership with Snowflake and onboarding Yahoo! as a major new customer. And on the heels of the third quarter, we announced and closed the acquisition of LiveIntent with the integration already underway and synergy realization ahead of schedule. Our momentum can be directly linked to the acceleration of the AI revolution where marketing is at the forefront. This is creating unprecedented opportunity for disruptive technology like the Zeta marketing platform, which is winning in the marketplace and winning big. Here is a snapshot of 3 transformative 7- and 8-figure deals we closed in the third quarter. First, for an iconic global retail brand, Zeta was awarded an 8-figure deal over 5 years, beating out a legacy marketing cloud to create a true 360-degree view of their customers and to deliver better experiences at every touch point, while lowering their total cost of ownership. This requires powerful AI agents across productivity, personalization and predictability, which only Zeta can do. Second, Zeta expanded its footprint in sports and entertainment by securing another major professional sports league, one of the fastest-growing properties globally in a multiyear 7-figure deal. This organization had outgrown its previous vendors capabilities and needed sharper identity resolution for a 360-degree customer view. Deeper insights into purchase intent and more sophisticated attribution. Among the enterprise-grade platforms they evaluated, only Zeta delivered all of this in a single platform and met their stringent time-to-value requirements. Third, Zeta showcased the strength of its one data model by securing an all-in-one platform agreement with a leading e-commerce company. This agreement integrates acquisition, growth and retention into a single platform powered by proprietary data and AI, reducing complexity, boosting productivity and driving higher ROI. All core to Zeta's value proposition. Only data can meet all of these needs in one platform.

During the third quarter, Zeta deepened its relationship with its 5 agency holdco customers to bring multiple new brands, including a global automotive brand into our direct channels. Platform engagement like these are representative of customers utilizing the full breadth of Zeta's data, AI and direct channels for activation. In addition to key wins, data is also building upon its existing assets through the acquisition of LiveIntent, which expands publisher monetization elevates Zeta's newly released mobile and retail solutions and enhances Zeta's Data Cloud. Our increasing capabilities are being recognized by industry analysts in the marketplace. We were named a leader in marketing automation software by Forrester and a strong performer in the CDP wave also by Forrester, the only enterprise-grade platform to be cited at these levels for each category. We also created an expanded partnerships this quarter with Yahoo! and Snowflake. The younger partnership announcement had multiple facets. First, we announced that Yahoo! selected Zeta to deliver intelligent powered marketing. This means they will migrate their e-mail marketing, which includes hundreds of millions of people to the AI-powered data marketing platform. Second, the Zeta marketing platform will be integrated with the Yahoo! Connect ID, which will allow data to enhance the Yahoo! DSP with Zeta's advanced audience targeting capabilities. As a result, the new integration will position both of our companies to expand market share, streamline benefits and drive higher return on investment for joint clients. And last, we announced the Zeta Data Cloud will be interoperable with the Yahoo! Connect ID, which unlocks comprehensive insights and allows for the creation of unique intent-based audiences. The second announcement was our joint efforts with Snowflake. We unveiled a new solution the Zeta media engine powered by Snowflake. The Zeta media engine brings the power of the Zeta marketing platform to where Snowflake's customers' data resides enabling marketers to enrich, expand and activate their first-party data and deliver richer personalization across all paid media. This represents a significant milestone in our collaboration with Snowflake as we join efforts to bring an enhanced solution to marketers seeking to improve precision of their marketing programs without sacrificing scale. The momentum we've had in 2024 was a catalyst for our most successful annual Zeta live conference yet. More than 1,100 visionaries, business leaders and practitioners from more than 400 enterprises attended in person, doubling attendance year-over-year. most notably on display were Zeta's launch of our AI-powered intelligent mobile solution and the expansion of the AI agent lineup. With Zeta's new intelligent mobile solution, marketers will be able to leverage AI to better activate and coordinate personalized cross-channel campaigns that deliver enhanced customer experiences and persistent identity across all touch points, resulting in better consumer interactions and better business outcomes.

In addition, building on our earlier launch of intelligent agents this year. Zeta launched an expanded lineup of generative AI agents on the Zeta marketing platform, unleashing powerful first of its kind capabilities for marketers. While others are trying to roll out their first version of their AI agents, we are already on version 3. This game-changing event further bolstered our business momentum as already evidenced by record pipeline demand and commitments from customers, a testament to Zeta's road map and strategic vision resonating. And we are succeeding in our evolution from Zeta who to why Zeta to ultimately must have Zeta.

In closing, I'm excited about what the Zeta team has achieved and the opportunities ahead of us and our ability to execute in the marketplace so consistently. As always, I would like to sincerely thank our customers our partners, Team data and all of our shareholders for the ongoing support of our vision.

Now let me turn the call over to Chris to discuss our results in greater detail. Chris?

[Christopher Greiner, executive]

Thank you, David, and good afternoon, everyone. The third quarter can be best summed up by the momentum that began in the first quarter and accelerated in the second quarter, continued into the third quarter with even some notable improvements.

Revenue growth accelerated to 42% and excluding the benefit from political candidate, once again topped 30% year-to-year. We set another scaled customer ARPU record with 33% year-over-year growth. Direct revenue was up 41% year-to-year, reflecting agency adoption of direct channels. On the back of this positive mix shift, operating leverage flowed solidly to the bottom line. with adjusted EBITDA and free cash flow margins up 210 and 250 basis points, respectively, year-to-year. All told, it was our 13th consecutive beat and raise quarter. I'll focus today on 3 topics: I'll dive into the KPIs driving third quarter performance, I'll dig further into the agency opportunity by discussing how early we are in ramping with large and independent agencies and sharing examples of the positive direct mix shift we're starting to see. Finally, I'll close with our increased fourth quarter and full year guidance, comment on 2025 consensus estimates and preview the duration of our next long-term model.

Let's start with the drivers of the third quarter's results. Revenue of $268 million grew 42% year-over-year or 31% excluding $21 million of political candidate revenue. On both dimensions, our results exceeded recently updated guidance of at least $255 million or $245 million, excluding political Canada revenue. Strength was broad-based. On a year-to-date basis, net revenue retention is at the high end of our 110% to 115% model. We had another productive quarter of sales hiring, we're up to 155 quota carriers, a 20% increase from last year. Reaccelerating sales head count comes at an opportune time with the RFP pipeline up 60% from just 90 days ago, which is attributable to Zeta Live and multiple industry analyst reports naming Zeta as a leader. Total scaled customer count grew to 475, up 8% year-to-year and 7% quarter-to-quarter with scaled brand count up 25% versus 2Q. Superscale customers of 144 was up 16% year-to-year and flat quarter-to-quarter, with superscale brand count up 9 quarter-to-quarter and 29% year-to-year. Scaled customer ARPU of $557,000 was a standout, growing 33% year-to-year, which compares to the previous high watermark of 22% growth achieved last quarter. The force is continuing to drive strong ARPU growth, our channel adoption, use case expansion, scaling with agencies and political candidate contribution.

From an industry perspective, 5 of our top 10 industries grew faster than 35% year-over-year with insurance, technology and media and consumer retail leading the way. On the back of 41% year-to-year growth, direct mix climbed to 70%, up from 67% in the first 6 months of 2024 and on par with 3Q last year, reflecting positive mix shift from our agency customers. The improved mix resulted in lower GAAP cost of revenue quarter-to-quarter, coming in at 39.4% or 60 basis points better than 2Q and 50 basis points higher year-to-year. Strong leverage and operating expense resulted in our 15th straight quarter of expanding adjusted EBITDA margins year-over-year. We generated $53.6 million of adjusted EBITDA at a 20% margin 210 basis points higher year-over-year and $3.4 million better than the midpoint of our recently updated guidance of $50.2 million. Our third quarter GAAP net loss was $17.4 million which includes $47 million of stock-based compensation. Excluding the accelerated expense recognition related to our IPO, stock-based compensation would have been $31 million.

Finally, cash from operating activities was $34 million, up 51% year-to-year with free cash flow of $26 million, up 93%. This translated to a free cash flow to adjusted EBITDA ratio of 48%. It's worth noting this includes a $10 million working capital headwind from our growth with agencies and the industry's longer payment cycles. Absent this, cash flow conversion would have been 67%. We which is a good segue to the broader agency opportunity ahead of us. The same forces driving Zeta's growth with enterprises are propelling Zeta's growth with agencies, those being a shift to addressable marketing and this is the importance of people-based marketing and the ROI our customers realize from working with data; second, the emergence of first-party data as an enterprise or brand asset, this is the rise of customer data platforms as foundational to personalization, only through Zeta's Data Cloud and CDP can a brand see its existing customers and prospects in one platform. And third, the replacement cycle. Zeta is enabling CMOs and CTOs to achieve their strategy of modernizing their tech stack and eliminating features and numerous point solutions. This is creating significant opportunity for Zeta with large agency holdcos and a newer segment of independent agencies.

I'll start with the 5 largest holdcos. Today, Zeta is working with just shy of 100 scaled brands compared to the thousands in their combined portfolios. And this only considers the volume of brands as an opportunity set. On the value or wallet share side of the equation, the total spend Zeta is capturing with the 5 large agency holdcos today barely registered with the tens of billions each holdco deploys in digital media, the bulk of which is addressable by the Zeta marketing platform. Last year, we began prospecting a new segment of independent agencies, featuring one such customer at our Investor Day in September. Since then, we've expanded our agency sales team to go after more of the independent agency market encompassing well over 1,000 stand-alone agencies who deploy billions in digital spend annually. We're growing our footprint within the agency ecosystem and shifting mix to direct channels. Here's a few examples just from the third quarter alone. In first quarter, a large agency holdco awarded Zeta 1 of the largest automotive service centers with 2,000 locations nationwide. The engagement began with one integrated channel and scaled quickly to over 500,000 by 2Q. In the third quarter, we upsold 2 additional direct channels, increasing direct mix from 0 to 30%, while growing revenue by 6x to a superscale brand in just 9 months. In the second example, an agency awarded Zeta 1 of the most recognizable office supply retailers in the U.S. This brand started omnichannel and has maintained a 70-30 direct versus integrated mix. while growing spend with data more than 3x in 6 months, also recently becoming a superscale brand. And lastly, Zeta was awarded a national pizza chain in the middle of 2023. For the first 12 months on the ZMP, this brand focused on social as their primary channel.

During the third quarter, we added a direct channel, which increased revenues by 3x and increased direct mix to almost 50%. The punch lines are straightforward. First, the same structural forces driving demand from enterprises are also influencing agencies to expand with Zeta. Second, we're very, very early in penetrating this opportunity, both in terms of brand count and wallet share. And third, we have a repeatable and scalable model to land new brands and expand with higher ROI direct channels.

I'll wrap up with guidance. Covering details for the remainder of 2024, while also touching upon 2025 in our next long-term model. Starting with 2024, we're raising 4Q and full year revenue, adjusted EBITDA and free cash flow guidance. Details can be found on Slide 16 in our earnings supplemental. For the full year 2024, we're increasing the midpoint of our revenue guidance issued on July 31, by $61 million to $986 million, representing 35% growth year-over-year. We've outlined our increased guidance into 3 steps, given the moving parts associated with live intent political candidate revenue and our equity raise.

You can refer to Slides 18 and 19 in our earnings supplemental for ease of tracking. Step 1 is LiveIntent. $14 million of the $61 million raise is related to approximately 2 months of fourth quarter stub period revenue. Step 2 is political. $26 million of the $61 million raise is related to higher political candidate revenue. Our prior full year guidance of $15 million included $1.5 million in 2Q, $5 million in 3Q and $8 million in 4Q. Our updated full year guidance now has a total of $41 million with $1.5 million in 2Q, $21 million in 3Q and $18 million in 4Q. Step 3 is the rest of data. The remaining $21 million of the $61 million raise is related to flowing through Zeta's third quarter overachievement of $13 million versus our original guidance of $239 million, plus our $8 million raise to fourth quarter guidance. You'll recall, we were not able to flow through our increased third quarter revenue guidance through to the full year during our equity raise in September.

From a full year growth rate perspective, excluding the contribution from LiveIntent, and removing the benefit from political candidate spending, we expect revenue to be up 28% better than our prior full year guide of 25%. The increase in fourth quarter revenue guidance of $32 million to $295 million at the midpoint is driven by $14 million from LiveIntent, $10 million in additional political candidate revenue and $8 million from the rest of data. Fourth quarter year-over-year revenue growth, excluding LiveIntent and removing the benefit from political candidate revenue is expected to be 25%.

In terms of full year 2024 adjusted EBITDA, we're raising the midpoint of 2024 guidance by $13 million to $188.5 million, representing a year-over-year increase of 46% or 19.1% margin, an increase of 140 basis points year-to-year. In a similar vein is revenue, half of the raise stems from flowing through third quarter upside versus our original guidance, while the other half is in connection with our fourth quarter rates. We're increasing the midpoint of fourth quarter adjusted EBITDA by $6.5 million to $65.9 million or 22.3% margin, up 105 basis points year-over-year. We're also raising the midpoint of full year 2024 free cash flow guidance to $90 million from $85 million in our prior outlook. This represents a cash conversion percentage of 48% versus 42% in 2023. 2 items worth noting on this point. First, in connection with the third quarter's equity raise and acquisition of LiveIntent, we incurred $6.2 million in onetime charges, the bulk of which is related to acquisition-related expenses, which will be paid in the fourth quarter. Savings being realized in higher free cash flow in 2025. And second, we continue to be conservative in our assumptions for net working capital related to longer payment cycles agency customers adhere to. Selection risk with these customers remains extremely low.

Before we take your questions, I'll close by previewing our thoughts on 2025 and our next long-term model. We'll provide full details on each during the fourth quarter conference call in February. As we sit here today, we're very comfortable with 2025 consensus revenue growth, adjusted EBITDA margin and free cash flow estimates as it relates to consensus revenue growth of 17%, this excludes the contribution from LiveIntent but includes what is likely a 4- to 5-point growth headwind from 2024 political candidate revenue. So on a pro forma basis, 2025 consensus revenue growth is effectively 21% to 22% next year. Once again, we're very comfortable at these levels. Second, we're looking forward to sharing our 2025 guidance and the details of our next long-term model, Zeta 2028 in February. Along those lines, we plan to outline new growth opportunities in verticals, new products, new partnerships and new geographies in addition to conveying drivers of continued operating leverage.

Now let me hand the call back over to the operator for David and me to take your questions. Operator?

[Operator]

[Operator Instructions] Our first question comes from the line of DJ Hynes with Canaccord Genuity.

[David Hynes, analyst]

Thanks for all the color on the guidance. I appreciate you breaking all that stuff out and obviously, the agency color as well, super helpful. David, I want to ask about a completely separate topic, which is published or cloud, right? It's newer to the business. Just can you talk a little bit about your vision there, how to think about sizing the potential for that opportunity? I just don't have a good feel for how material that effort might be?

[David Steinberg, executive]

Well, thank you, DJ. I'd start by saying we see the publisher cloud as sort of our next really meaningful growth opportunity. We've got, obviously, CTV, which is growing very, very rapidly at scale. And then we've added mobile, which we're very excited about mobile, we expect to scale very, very quickly over the next few years. As you think about the publisher cloud today, the vast majority of publishers are not able to build deterministic marketing capabilities to an individual that's visiting their portal because you've got a third-party the third-party SSP has to connect to a third-party DSP and the third-party DSP has to come up with a deterministic data set, most of the DSPs do not have that. Our vision is to put everything into one set. Just like when we launched the ZMP, we put AI and data as native to the application layer. It eliminated latency and allowed us to disintermediate and continue to grow against legacy tech clouds. We believe by putting our SSP fully integrated into the DSP fully integrated into the data cloud, fully integrated into the publisher will allow us to massively drive up the yield of marketing dollars to the publisher that will flow to them through the publisher cloud, which will allow us to take a sizable exhaust rate off the top. So I think it's a big opportunity on platform with high gross margin that will scale quickly in the years to come.

[David Hynes, analyst]

Yes. Super helpful color. Chris, maybe a follow-up for you. Can you just help us think about scaled customer ARPU growth? If we were to exclude the political candidate revenue, if we're excluding the agency customers are maybe looking at them at like a brand level, I mean, obviously, the agencies skew that metric a bit, which is a good problem to have. But just trying to think about kind of underlying trends in customer spend on a cleaner basis if that makes sense.

[Christopher Greiner, executive]

It does make sense, DJ. Thanks for the question. If you take the 33% ARPU growth and you were to exclude political candidate revenue contribution the growth rate would still -- would have been higher than the growth rate we saw in the second quarter, which was 22% ARPU growth in total. So if you take a growth rate that's in the mid-20s ex political candidate revenue contribution and you then break that down between channel adoption use case adoption and agency customer mix, it's actually very similar to what we saw in the second quarter where about 1/3 of the growth is attributable to each one of those drivers. So over 30% of our total skilled customers are now still using over Three or more channels. Use case growth was again consistent across the acquired grown retain level. And as we mentioned and highlighted, brand adoption within the agencies continue to scale rapidly even at that superscale level, so brands that meet that greater than $1 million-plus threshold, that was up 29% year-over-year.

[Operator]

Our next question comes from the line of Arjun Bhatia with William Blair.

[Arjun Bhatia, analyst]

And congrats on a very strong quarter here. Maybe if I can start with the agencies. Again, it sounded like the mix shift in terms of the channels the agencies are using is starting to move a little bit more towards direct, which certainly is a big benefit. Can you just talk a little bit about which channels on the digital side that you're seeing early adoption from? And where kind of we are in that overall journey of agencies moving more and more of their spend on to the Zeta platform? And then for Chris, maybe you can talk a little bit about where we should think about gross margins going just from that impact?

[David Steinberg, executive]

So thank you, Arjun. I appreciate the congratulations. What I would say is, as our favorite tagline of we are just getting started, it is perfectly encapsulated in the migration of our agency clients from integrated platform to direct. What I would say is the 3 biggest wins we're seeing right now are connected television online video and mobile. We're seeing the mobile adoption rate happen perhaps a little bit faster than we originally expected. But it's been exciting because not only have we been migrating some of the existing customers over. But as new brands have come on, as I think Chris did a really good job of outlining in his prepared remarks, we're seeing them start on direct. And I think that's a trend that will continue. If you look at our most mature agency client, who, by the way, is still growing nicely. But our most mature, I'll remind you, the first year they worked with us, they were approximately 93% integrated and an direct. In their third year, that was over 50-50 for direct versus indirect. So we don't need to move from 10% to 90% to continue to move the mean up which continues to move on platform versus integrated, which continues to drive gross margins, which I'll let Chris talk about.

[Christopher Greiner, executive]

Yes. So I think starting Arjun with the 41% direct revenue mix, if you were to break down which channels drove that and then why we saw a benefit of mix. You had e-mail growing almost 30% at 29%, display video growing 46% and CTV growing north of 150% year-over-year. And by the way, that still has social growing over [ 50 ]. So when you have that type of positive mix shift like we saw quarter-over-quarter, we effectively moved the gross -- the implied gross margin of the business up around 100 bps. As I think about what it could look like going forward, obviously, direct mix shift, as David mentioned, is now beginning to happen more consistently across our enterprise brands. which should begin to chip away. It's not going to be moving 200 to 300 basis points at a time, quarter-to-quarter, but we should be able to continue to, in a very moderated way move the cost of revenues of the company down to the gross margins up.

[Arjun Bhatia, analyst]

Wonderful. That's great to hear. And Chris, if I can follow up on one for you. I saw the guidance for political contribution in Q4 had implied that it might be down from where Q3 shook out. Can you just maybe give a little color on what we should expect in political in the fourth quarter? And is that just -- is that conservatism? Or is there kind of anything else that we should be aware of given the last few election cycles that playing out for revenue.

[Christopher Greiner, executive]

Yes. Thanks, Arjun. Look, I think it's nothing really more than you've got 3 full months of political candidate revenue contribution across the duration of the third quarter and effectively one month in a week in the fourth quarter. I do think that there's upside to the '18. I don't think it's going to be as significant as what we saw when we updated the third quarter. But I do think we've left some room as there's still some political and advocacy spending trickling in.

[Operator]

Our next question comes from the line of Richard Baldry with ROTH.

[Richard Baldry, analyst]

Can you talk about any early feedback you've gotten sort of an open market post the LiveIntent acquisition? And then maybe with that as a backdrop, your cash stepped up significantly even once you pay the cash component of LiveIntent. So how's your appetite looking forward for acquisitions or how does that play into your back now history of doing sort of buybacks on an ongoing basis?

[David Steinberg, executive]

Well, so let me start with your first question first, Rich. We are seeing a faster-than-expected synergy recognition between the 2 organizations. Now a lot of that was Steve Gerber and his team really had been working on what we call quick wins, and we're seeing a number of them really flow through. And quite frankly, we're also seeing, in addition to cost savings, we have executed already a number of cross-selling relationships between the organization. So we're very excited about that. And we should have it fully integrated by the end of this month into the data cloud from a signal recognition perspective. So really puts a belt and suspenders and suspenders on the data cloud by adding all of those signals and all of that data. What was the second question?

[Christopher Greiner, executive]

Acquisition has a...

[David Steinberg, executive]

Yes, we were even surprised. We're generating meaningful free cash flow as a company. Yes, we will be up even after paying the cash portion of live intent. And we will continue to look for very opportunistic acquisitions with great teams, great technology, great data where we believe that we can implement our 4 main pillars of M&A. We're going to stay disciplined to that. But what I would tell you, in the current environment, I believe we'll be able to continue to add great companies to Zeta in the coming months and quarters.

[Operator]

Our next question comes from the line of Ryan MacDonald with Needham.

[Ryan MacDonald, analyst]

Congrats on a great quarter. Maybe to start on the independent agency channel opportunity that you talked about, obviously, going after about 1,000 of these opportunities and have expanded the sales force. Can you just talk about -- one is, have you won any of these independent agencies thus far? And if so, what do the size potentially or revenue mix of those customers look like when you initially land them? And then just anything you could comment on sort of sort of sales cycles of these types of opportunities relative to, say, the direct business or maybe the top 5 agency holdcos?

[David Steinberg, executive]

So thank you, Ryan. Let me start by saying we have a number of executed contracts in the independent agency space and have more than one customer generating meaningful revenue. The beauty of these relationships is they are all, for the most part, I would say the vast majority are on platform. It's a platformization of the ZMP to the independent agency that allows them to be hands on keyboard for their customers. So they are very high gross margin. They are on platform and they can scale very quickly.

From a sales cycle perspective, I would say it's sort of in the middle if we can generally close an enterprise client in a faster period of time than a very large agency holdco. These are sort of in the middle, but I would tell you, in particular, coming out of Zeta Live, the pipeline for these independent agencies is up multiples. And I expect we will have very good news on more than one of these to grow that this quarter.

[Ryan MacDonald, analyst]

Super helpful. Maybe just then on a second question on the Live intent business as you start to get that integrated and go to market there. Is there any difference in sort of the -- how is the go-to-market motion or the seasonality of that business operates in? Or is that more of a ratable revenue stream that we should expect as we move forward? And then any differences on the margin profile relative to core data?

[David Steinberg, executive]

Yes. So to answer your last part first, yes, it's an exhaust rate business where you're taking a percentage on both sides of the transaction. So you take a percentage the advertiser and you then take a percentage of that net from the publisher. So it's a very high gross margin business, all of which is on platform. So I think that, that should be additive as we're able to really scale that business in the years to come. As it relates to at cycle, it will have a slightly higher Q4 only because ad dollars tend to come in at a slightly higher growth rate in the fourth quarter, just across the ecosystem. But I expect it to continue to be a very solid, very steady channel for us in the years to come. And quite frankly, one of the things I love about the business is they have a bunch of blue chip clients that don't buy our products, and we have a bunch of blue chip clients that don't buy their products. The ability to cross-sell here is very unique. And I will tell you, we've already executed a number of contracts to cross-sell and are generating revenue from their customers in. So it's -- it's an exciting, exciting deal for us.

[Christopher Greiner, executive]

Ryan, they also have a consistent go-to-market sales model like Zeta does, meaning a Hunter farmer. So it really kind of folds in very nicely.

[Operator]

Our next question comes from the line of Terry Tillman with Truist Securities.

[Terrell Tillman, analyst]

Yes. I'll echo congratulations as well. David, Chris Madison. Some of my questions have been answered. But one of the statistics that I think, David, you had discussed was 60% plus RFP or RFP pipeline growth. I hope I got that right, but from 90 days ago, that seems pretty dramatic. I'm curious if you could kind of double-click on that in terms of is this is the replacement cycle that's accelerating? Or was it some of the sales reps that Chris was talking about that you added and they just have an effect and becoming productive. Maybe the timing is Zeta Live. I just love to unpack that a little bit more because it sounds like that was a standout and then I had a follow-up for Chris.

[David Steinberg, executive]

Well, thank you, Terry. Actually, Chris said it, but I'll take the question. Yes, the pipeline is up the pipeline is up 60% that we're very excited. It's probably the biggest pipeline increase we've ever seen, and we're already at scale. I think it was a combination of all of the above, right? What is the goal? The goal for Zeta is to go from Zeta who to why Zeta to must-have Zeta. And as we bring in substantially more senior sales reps than we ever had before, they bring books of business that help us evolve with that process. Zeta Live was a 100% grand slam this year. Even I was happy with our performance, and I joke I generally tend to be our biggest critic. And that was a massive growth to pipeline. As we publicly disclosed over 400 enterprises came and were represented at Zeta Live this year. That was a big part of it. In fact, we've already executed a multiple of the cost of Zeta Live in contracts from a lifetime value perspective. So really excited about that. And of course, we're continuing to evolve the brand. with Forrester and IDC and others rating us a leader or one of the leaders in categories across the board, that drives incremental pipeline.

[Terrell Tillman, analyst]

That's great to hear. And I guess, sorry for my confusion earlier. I guess it's been a long earnings...

[David Steinberg, executive]

I was just [indiscernible] it.

[Terrell Tillman, analyst]

Well, on the sales reps, one of the questions I think people are going to ask you a lot, it seems like you're at an inflection point here. What about maybe stepping on the gas more in hiring. And I know you're looking for the best of the best. But I think Chris had said about 150 or 155 reps and like up 20% or up 25%. I'm just curious how you're thinking about as you go into the new year kind of steady growth, potentially if you can find it, pick up the pace of growth. And this long-winded question I'll end it with, does that include the 25 to 30 folks from LiveIntent?

[Christopher Greiner, executive]

Terry, no, it does not. That's still core Zeta. We'll add probably around 25 to 30 LiveIntent reps when we reproduce the results next quarter and we blend the 2 businesses together. Look, it continues to be, as you said, really measured by quality over quantity. We continue to be very nicely diversified. In fact, half of our top 10 verticals grew over 35%. That's the first that we've had that type of balance at that growth rate. And we do try to hire on a vertical expertise. We still try to maintain the right ratio of hunters versus farmers, the hiring approvals are in full form. I mean there's no holding back in that area with our sales leaders, but it is very much a focus on quality over quantity.

[David Steinberg, executive]

And Terry, those 25 LiveIntent salespeople are going to be selling core data. So this is -- it's going to be a meaningful step-up in salespeople right there. And as Chris said, we will hire every good salesperson we can get our hands on.

[Operator]

Our next question comes from the line of Jackson Ader with KeyBanc.

[Jackson Ader, analyst]

Can we actually follow up really quickly, David, on what you just said about the live intent sales reps. Would the expectation be -- or I guess, has it been your experience that when you make an acquisition, bring on some salespeople, do they ramp as quickly or as consistently as net new hires that come from other competitors or other areas of software? Or does it take them a little bit longer to get used to selling core data?

[David Steinberg, executive]

So the answer is it depends on the business. It depends on the product line they're used to selling. In this case, Jackson, there are tremendous similarities between the products they're selling and many of the products we sell at data. So their products that are on platform, high gross margin that I would expect them to hit the ground really running. And then there'll be products that it might take them a little longer to scale up on, but we're very excited and very bullish on this group of salespeople because there's so many similarities between their current products and what we sell.

[Jackson Ader, analyst]

Okay. All right. Great. Got it. And then a quick follow-up on the agencies. I guess I totally understand the leverage and the benefit from like those top 5 agency holdcos. But I am curious what kind of multiplier effect to the independent agencies have? And is there -- like does that multiplier effect in terms of brands that you can attack per agency, does that dwindle as you go out to the long tail of like the 1,000 that you're trying to target?

[David Steinberg, executive]

Yes. I mean, yes, if you get out from #1 in scale to number 1,000 in scale, it will dwindle just statistically. But what I would tell you is there are hundreds of independent agencies that represent billions of dollars in spend per year each. This is a meaningful opportunity, and we would expect each one of these independent agencies to be on platform, and we expect each one of them to be a super scaled customer at launch.

[Operator]

Our next question comes from the line of Matt Swanson with RBC.

[Matthew Swanson, analyst]

And I'll have my congratulations on the quarter. In rule 6 quarter, it feels weird to be asking about a potential headwind. But across a lot of the advertising ecosystem, we've heard about kind of this political crowding effect for nonpolitical spend, just brands kind of pulling back because the CPMs got higher on political. Do you think there was any headwinds, I guess, to any of the holdcos or your nonpolitical spend from the ramp-up of political?

[David Steinberg, executive]

If there is, we are not seeing it, Matt.

[Matthew Swanson, analyst]

All right. And then second was just on the Data Cloud and really kind of that 360 view of the customer that you talked about specifically with LiveIntent. Can you just talk about kind of the compounding value of bringing differentiated data sets and how that kind of brings a more holistic view, kind of that 1 plus 1 equals 3 dynamic?

[David Steinberg, executive]

Yes. So one of the great things about LiveIntent is the number of e-mail hashed e-mails they see every month. You're talking over 240 million deterministic individuals that they're seeing across the entire Internet. We're able to see that across a very large number of publishers, they're able to see it across the 2,000 top and most premium publishers in the country. So by adding those incremental data sets, it's going to be a very, very additive signal to the data cloud. What I would also say is I do expect us to increase the number of individuals we see in the data cloud from, call it, around 240 million to as many as 245 million, might not sound like a human as jump, but it is when you look at the additional signals and the additional people who are added into the data cloud. As I earlier said, too, it also puts a belt and suspenders and suspenders on the data cloud. It's another massive importation of opted in first-party data in addition to the other data sets we're already ingesting. In some cases, it's duplicative, but it's nice to know you have a belt and suspenders on that.

[Operator]

Our next question comes from the line of Jason Kreyer with Craig-Hallum.

[Jason Kreyer, analyst]

Great. Congrats again, I'll -- great quarter. just the success you saw in political this season, wondering if you think you can translate that into other verticals or maybe like the broader advocacy spend over time?

[David Steinberg, executive]

There's always a halo effect, Jason. First of all, thank you. you interact with these campaigns. When campaigns win, those individuals go into government and they join other packs and they join other ecosystems. And when those campaigns we work with lose, they go to other enterprises and agencies where we can work with them. So there is a nice halo effect that comes out of that component of the business.

[Jason Kreyer, analyst]

Okay. And then maybe just a follow-up for Chris. Appreciate the color on agencies and how that has impacted that EBITDA to free cash flow conversion. Do you think we're primarily -- like do you think that's trough by now do you think we're through kind of the majority of the headwind there? Because it sounds like you've penetrated the big 5 agencies reasonably well. And as you go after that mid-market or independent agencies, probably less of that free cash flow conversion or less of that gets trapped in that conversion there?

[Christopher Greiner, executive]

Jason, it was a 20-point headwind annualized all of last year, and that translated to like a $25 million deficit between working capital, so cash taken in versus cash paid out. It was about the same percentage point headwind in the third quarter, right? We reported 48% conversion from EBITDA, but it would have been 67%, if not for a $10 million working capital headwind. The growth would be large agencies, as we said in the script, is still in its very, very early days. And then when you add on top of it, the new opportunity we see with an even bigger count independent agency marketplace. I still expect us to have those headwinds, again, based purely on our growth rates and the industry's payment cycles. These are -- we have no bad debt with any of these accounts, not even in the fringe of having to explore such a scenario. So it's just pure timing of when we get paid.

[Operator]

Our next question comes from the line of Elizabeth Porter with Morgan Stanley.

[Elizabeth Elliott, analyst]

I first wanted to ask about the mobile product, where you highlighted some faster-than-expected traction. And I believe LiveIntent also has a mobile product. So I'd just love to better understand the capability of Zeta's mobile product versus live intent what the go-to-market strategy is between the 2 products and how we could think about mobile adoption scaling into next year?

[David Steinberg, executive]

Thank you, Elizabeth. Yes. No, we are seeing mobile scale faster than expected. We have multiple enterprise clients and agency clients already on it. The real breakthrough for us was the ability to put AI at the heart of the mobile product as well, which allows us to target deterministic individuals wherever they are. That's a big differentiator from others who are not able to see the deterministic level inside of that mobile environment. LiveIntent has a number of identifiers into that mobile environment, including mobile ID number on millions and millions of people. So the ability to put their capabilities together with our best-of-breed AI intelligent mobile product is scaling faster than expected. I think it will be our next meaningful product line after connected television.

[Elizabeth Elliott, analyst]

Great. And then just as a follow-up, I wanted to ask about the collective contribution between political and advocacy. I believe last quarter it was referenced that it was less than $10 million collectively between political and advocacy. So is there an update that you could provide for Q3? And then looking ahead, the color on the halo effect was super helpful. And I just wanted to know if there's any cyclicality to keep in mind for the advocacy group as we think about next year.

[Christopher Greiner, executive]

Yes. It's interesting. If you compare the -- let's kind of take them in piece parts, to compare what we're seeing in 2024 to the 2022 cycle. The growth in political Canada revenue is substantial. And it was about back in -- looking at the notes here back in 2022, we're up over 440% in political candidate revenue. It represents 56% of the total back in 2022, like 90% of the combined revenue is advocacy. In fact, advocacy on a third quarter basis versus the 2022 cycle is only up 3%. So it just so happened that this cycle, again, working across both sides of the aisle. -- political name political candidate contribution was much higher I think advocacy not only will it be a good contributor this year, but we're building a practice around it, so it can sustain itself in 2025 as well building people in addition to building capabilities into that ecosystem. But overall, political candidate contribution was a heavier part of our overall total advocacy in political Canada revenue this year. But as a mix, advocacy was actually down pretty substantially.

[Operator]

Our next question comes from the line of Koji Ikeda with Bank of America.

[Koji Ikeda, analyst]

Two for me. And the first one, it's about the 2025 commentary, Chris. I totally understand this year is going to be great from a growth perspective. Exit rate, 40%. But then excluding political and inorganic contributions more like 25%. And when we look at the organic side of the performance over the past 2 quarters, 30% plus. But when I think about the commentary that you have for 2025 on the organic standpoint, it looks like it's low 20s. And so just is there anything we should be aware of in the business or the way you're thinking about the business in 2025 where organic growth wouldn't reach a similar type of performance that we have been seeing here? .

[Christopher Greiner, executive]

Koji, I think what you're hearing from us directly is just Zeta wanting to continue to be conservative. And we have a cadence where we provide a significant amount of detail on the February call, which we'll do again, talk about not only the updated model for next year, but what's included in the new long-term model we continue to see ourselves as being a 20%-plus organic grower. My commentary would obviously imply that would be the case next year when you normalize for political candidate revenue, but we believe we have a great sales pipeline. We're building the sales force, many new products to bring to the market, which, again, 2025 is about setting a understanding of what we're comfortable with, but continuing to be conservative, and we plan to update that in February.

[David Steinberg, executive]

And remember, Koji, we came into this year below 20%, and here we are, right? So we're not suggesting we're going to continue to do it in that way. But there's nothing we're seeing in the business that's problematic. We're just trying to level set expectations. At the same time, a lot of people have said, "Oh, are they going to hit next year." So we want to make it clear, we see next year as a starting point, and we have beat and raised quarters in a row. Our goal is to be sitting here a year from now and saying it's 17 quarters in or, I guess, that would be 16 statistically, but you understand my point.

[Koji Ikeda, analyst]

Yes. Totally get it. And just one follow-up here on LiveIntent. When I look at the acquisition deck, it did mention pro forma revenue around $76 million for this 2024. Any sort of update into the growth rates or growth rates you're seeing there post close? And any sort of purchasing accounting assumptions that we should be thinking about with this acquisition?

[Christopher Greiner, executive]

Just in terms of growth rates, what we said back when we acquired it is a similar growth rate as Zeta has historically had, so call it right around 20% a bit over that. And it's -- we're still in that kind of integration phase. We're excited about the synergies we're seeing. We'll give very specific guidance on the February call and what we're presuming for that business, but it's got a very healthy growth rate out of the gate.

[Operator]

Our next question comes from the line of Zach Cummins with B. Riley Securities.

[Zach Cummins, analyst]

David and Chris, congrats on another strong quarter. David, I just wanted to ask about your expanded lineup of Gen AI agents that you rolled out at Zeta Live. I mean can you give us a sense of the interest you've been seeing from both agencies and enterprise clients? And any sort of update adoption trends as you think about expanding out that lineup?

[David Steinberg, executive]

Yes. So when we rolled out -- I don't know if you were there, Zach, but when we rolled out the new AI agent studios, we did it on the innovation stage, which was the smaller stage. It was opposite like a rock star panel on the main stage. And the innovation stage with standing remotely, we couldn't get people to go back to the main stage from the innovation stage because people were so excited about the rollout of the AI agent. So what I would tell you is the adoption rate of our AI agents is bigger than anything I've seen us do as a company yet. Clients are in the studio. They are building their own agents. They are using the collective agents that are available there. I think it's one of the reasons you heard Chris say that we are now at the top of our $110 million to $115 million net retention rate as a company and could conceivably continue to go higher. We're seeing clients use these agents at an unparalleled pace, both agencies and enterprises.

[Zach Cummins, analyst]

Understood. And my one follow-up is really around partnership channel. Great to see expanded relationships with Snowflake also a new relationship with Yahoo! But any update you can give us on the system in a greater channel? I know you had plans of building out a practice on that side. So I'm just curious of how you're thinking about that as a lever for growth moving forward.

[David Steinberg, executive]

Yes. I mean, interestingly enough, we've already got 2 up and running. So we're just we're just trying to make sure that we really crack the code before we start really talking about it again. it was always meant to be a growth channel, and we've been pretty clear. It's not even in the numbers for 2025. But at the same time, it's working. So it's interesting to see the adoption rate. It's something that it's a very long sales cycle to get these guys up. So we're happy to have 2. Our goal is to get 2 or 3 more in the coming quarters, and that's when I think it will become a meaningful driver to the business.

[Operator]

Our next question comes from the line of Clark Wright with D.A. Davidson.

[Clark Wright, analyst]

Can you talk about the LiveIntent deal and how this will impact some of the KPIs, like the skilled customer account? And then additionally, do you believe that the 17x uplift in ARPU from scaled customers to super scaled to be applied to the customers who started with live intent and adopted other Zeta offerings?

[Christopher Greiner, executive]

Clark, we're still -- we'll give the live intent figures, obviously, having acquired it post the end of third quarter, we'll do all the inclusion of their metrics at the end of this year, so in the February call. But broadly speaking, from an ARPU perspective, their combined ARPU as a company is closer to what ours is for the $100,000 to $1 million category. Their 1 million plus customers are closer to like 1.5 million compared to ours, that's almost 5 million. So we've got some early reads into it, but we'll give the rest of the details in February. But it will obviously result in a substantial number of incremental scale customers.

[David Steinberg, executive]

Yes. And I do want to point out, Clark, I think this is important to note. We did close that deal in Q4. So none of that deal none of the KPIs. None of the revenue is in the numbers we just reported for Q3.

[Operator]

Our next question comes from the line of Brian Schwartz with Oppenheimer. .

[Brian Schwartz, analyst]

I'll just ask one for the sake of time. David, I wanted to ask you where the spending is coming for your new agent studio product that you released. I know you talked to a lot of C-level executives. So as we think about the spending for these type of products and these agent products next year, is it coming out of IT budgets or our customers building a second budget for these AI products and then talk to us how you can make sure that you can continue to gain share in that one. What is that dynamic? What are you seeing in terms of conversation in regards to the budgeting process for these new Asian products?

[David Steinberg, executive]

Thank you, Brian. So what I would say is, like any new product, you're seeing it come out of multiple buckets, right? It's coming out of the IT budget. It's coming out of the software budget and some of it, it's coming out of the marketing budget. But truthfully, I do believe going into next year enterprises we're talking to because yes, we talk to a lot of CEOs are setting up standalone AI budgets around innovation. And we believe with our proprietary data because as we've said multiple times, AI is only as good as the data you feed into it. So when you put the CDP in place, you take their data, all of our data, that's where the magic happens. You've got all of their first-party proprietary data, all of our first-party proprietary data, and you begin to look at how the algorithms get smarter and smarter. The beauty and the thing I love most about this component of the enterprise budget, Brian, is it's cost savings to the enterprise. So we're able to put out an AI agent that can eliminate $10,000, $250,000 a year data science jobs to put it in perspective. And in exchange for that $2.5 million in savings, they might be spending $200,000 or $300,000 with us. So it's a really, really good return on investment. And then from a growth perspective, what we find is our enterprise clients who use our CDPs, use our AI agents are substantially stickier. They scale faster.

[Operator]

Our last question comes from the line of Ryan MacWilliams with Barclays.

[Ryan MacWilliams, analyst]

Love to hear just how the macro impacted Zeta in the quarter. And I know it's early, but have you noticed any changes from customers post the election in terms of unlocking marketing spend? And any thoughts into your customers' plans for holiday season messaging at this point for the fourth quarter?

[David Steinberg, executive]

Yes, Ryan. So -- yes, we're -- the certainty of the election with a winner without a long drawn out process has led not just the markets to react positively, but we're also seeing advertisers unlock dollars that we might not have expected.

[Ryan MacWilliams, analyst]

Appreciate that. And anything on the holiday season at this point?

[David Steinberg, executive]

We put out our guidance. We obviously feel good about it. We raised the year's guidance by $61 million, which is quite a bit against our current budget. And listen, our goal is to be sitting with you in February talking about 2025 guidance, talking about our new 2028 long-term plan and announcing our 14th consecutive quarter of beating and raising guidance. So right now, we're feeling very, very good about the business. We're firing on 10 of 12 cylinders, and we really feel like the engine is doing well, and we're very bullish on Q4.

[Ryan MacWilliams, analyst]

Appreciate that. And just on guidance for next year. Have the top 5 agency holdco customers talked about their plans for Zeta next year? And would you expect your agency business to be a stronger contributor to your revenue growth next year compared to this year?

[David Steinberg, executive]

I don't know about the last part. I think we'll have to see about that. The agencies have scaled very nicely, and we're very pleased, as I'm sure you heard in our prepared remarks, at what how fast some of our new agency clients are migrating to direct, which showed a step-up in our direct versus integrated platform revenue. I think that's a trend that will continue as we move forward. What I would say is that our largest agency client just renewed for another 2, 3 years. We're seeing very bullish signs out of them, and we're working on the plan for next year. But there are minimum agreements already in most of our plans. And as I said, we're feeling very solid at having next year be, I forget if it's our fifth or sixth year in a row of -- sixth year in a row. Thank you, Chris, up 20-plus percent growth -- organic.

[Operator]

Thank you. There are no further questions at this time. I would like to pass the call back over to David for closing comments.

[David Steinberg, executive]

Thank you, operator. I will end on, I have never been more proud or more excited to be running this business. We are executing exceptionally well. We're working in lockstep with our clients and our strategic partners. And I think that has been evidenced by the organic growth in this business that we expect to continue for many years to come. So thank you for attending the call, and we look forward to interacting with many of you again soon. Bye.

[Operator]

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.