Zeta Global joins the tracked set today, four weeks after it reported the June quarter on 4 August. The release led with a claim: "Achieves the Rule of 64." That is a real number, computed the way most software companies compute it — revenue growth plus adjusted EBITDA margin, 44% plus 20.7%. This site does not use adjusted EBITDA. On free cash flow, the measure the Rule of 40 card here is built on, the same quarter scores 58.1.
Six points is not a scandal. It is the distance between a margin that adds back $53.0 million of stock-based compensation in a single quarter and one that does not.
The record, quarter by quarter
| Quarter | Revenue | YoY | FCF | FCF margin | R40 |
|---|---|---|---|---|---|
| 2024 Q1 | $194.9M | +23.7% | $18.9M | +9.7% | 33.4 |
| 2024 Q2 | $227.8M | +32.6% | $24.4M | +10.7% | 43.3 |
| 2024 Q3 | $268.3M | +42.0% | $29.5M | +11.0% | 53.0 |
| 2024 Q4 | $314.7M | +49.6% | $35.4M | +11.3% | 60.9 |
| 2025 Q1 | $264.4M | +35.6% | $32.1M | +12.1% | 47.8 |
| 2025 Q2 | $308.4M | +35.4% | $39.7M | +12.9% | 48.2 |
| 2025 Q3 | $337.2M | +25.7% | $52.4M | +15.6% | 41.2 |
| 2025 Q4 | $394.6M | +25.4% | $60.9M | +15.4% | 40.8 |
| 2026 Q1 | $396.3M | +49.9% | $46.7M | +11.8% | 61.7 |
| 2026 Q2 | $442.8M | +43.5% | $64.4M | +14.5% | 58.1 |
Ten quarters, every one above 33, seven of them above 40. On the cash measure Zeta has never had a bad quarter in the window we hold. That is the case for the company, and it is stronger than the headline argument, because free cash flow has risen every year without exception: $70.0 million in 2023, $108.1 million in 2024, $185.1 million in 2025.
Two notes on how those figures were built. Free cash flow here is operating cash flow less
property capital expenditure — the PaymentsToAcquirePropertyPlantAndEquipment line, which is
what every other company on this site is measured on. Zeta's own free-cash-flow definition also
subtracts website and software development costs, which is why the company reported
$58 million for the June quarter where we carry $64.4 million. Neither number is wrong;
they answer different questions, and ours is the one that lets you put Zeta next to
Datadog without adjusting anything.
The number that moves between the quarters
Look at the YoY column again. It falls to 25.4% in the December 2025 quarter and jumps to 49.9% three months later. Nothing in the underlying business turned that fast. What happened in between is that Marigold's Enterprise Business closed on 24 November 2025, and LiveIntent closed on 7 October 2024 before it. The acquired entities alone represented 28.7% of Zeta's total assets at the end of 2025 while contributing 1.4% of that year's revenue — a business bought late in the year and consolidated for the whole of the next one.
Zeta does not hide this. Its own 2026 guidance carries both numbers: full-year revenue of $1,811-1,824 million, growth of 39-40%, and 24-25% excluding M&A and political candidate revenue. For the third quarter the split is 39-40% against 23-24%.
That gap is the whole investment question. Put a 24% organic growth rate next to the 14.5% free-cash-flow margin and the score is 38 — under the line. Put the reported 43.5% next to it and the score is 58. The company is either a compounder that happens to buy things or an acquirer whose organic engine runs at half the headline. Both readings survive the June quarter.
What arrived with the quarter
The June print was Zeta's first profitable second quarter: $8.2 million of GAAP net income and $0.03 of diluted EPS, against a $12.8 million loss a year earlier. It was also the twentieth consecutive quarter in which the company beat its own guidance and raised the year — a streak management leads with, and which is worth reading as a statement about how guidance is set as much as about how the business performs.
Full-year GAAP EPS guidance went from $0.02-0.04 to $0.09-0.11. On 251.0 million shares outstanding that is roughly $25 million of expected net income against $404-406 million of guided adjusted EBITDA. The distance between those two figures is the same distance as between 64 and 58: stock-based compensation, which ran at $177.8 million in 2025 on $1,304.7 million of revenue.
Gross margin is the line that has not moved in the right direction. It was 65.5% in the March 2023 quarter and 59.1% in the June 2026 quarter, drifting down through every acquisition. Revenue has nearly tripled across those fourteen quarters; the margin on it has lost six points.
Where the shares sit
Zeta trades at $30.69, against an average 12-month analyst target of $31.36 across 15 analysts — effectively no implied upside, in a range that runs $25 to $44. Citi went to $35 on 11 August and Bank of America to $34 on 19 August, both holding Buy. Freedom Capital Markets went the other way on 6 August, cutting to Hold while leaving its $29 target untouched, which is what a valuation call rather than an estimate cut looks like.
There is no price-to-earnings figure on the stock page, and that is not an omission. Trailing twelve-month GAAP diluted EPS is about -$0.02: two positive quarters and two negative ones. Zeta has been GAAP-profitable in single quarters since December 2024 and has never been GAAP-profitable across a full year.
One structural fact to carry into any of this. Zeta is a controlled company. David Steinberg holds all 23,638,426 shares of Class B stock, ten votes each, roughly 51% of the total vote against about 0.5% of the Class A economics. What he has said in public over the last year is collected on his CEO page.
Figures are from Zeta's SEC filings: the Q2 2026 Form 10-Q filed 5 August 2026, the Exhibit 99.1 earnings releases behind each quarter, the FY2025 Form 10-K filed 25 February 2026, and the 2026 proxy statement. Quarterly cash-flow and cost figures are differenced from the cumulative year-to-date columns those filings print. Analyst targets are as published on 31 August 2026.
