Zeta keeps surprising. It raised its profit outlook by more than 600%.
The company reported its Q3 2026 results yesterday and once again confirmed that its growth is nowhere near over. Shares are up about 8% today despite market sell-offs. For the 21st consecutive quarter, it beat expectations and raised its outlook. The new information about Athena and its partnership with Palantir from the earnings call is attracting the most attention.
Key results:
Revenue: $493 million (+46% YoY) - $22 million above the outlook.
Adjusted EBITDA: $121 million (+55%) - margin rose to 24.6%.
Free Cash Flow: $82 million (+73%) - FCF margin reached 16.5%.
GAAP EPS: $0.14 - net income of $38 million, compared with a loss last year.
Organic growth: 30% - excluding the Marigold acquisition and political campaigns.
EPS outlook up more than 600%
At the start of the year, the company expected full-year GAAP EPS of just $0.03. It later raised that to $0.10, and after yesterday's results it now expects $0.23. That's an incredible 667% increase from the original outlook. And it didn't just raise EPS...it now expects full-year revenue of $1.855 billion (+42%), adjusted EBITDA of $415 million (+49%) and FCF of $271 million.
It's worth noting, however, that part of this sharp EPS increase is also related to the very low original estimate. But what interests us is that Zeta is also increasing revenue, profitability and cash generation. And management is traditionally conservative with its outlooks.
In Q1, it expected organic growth of around 22.5%, but achieved 29%. In Q2, it expected 20.5%, but achieved 28%. And in Q3, it achieved 30% instead of the expected 23.5%. It currently expects growth of around 23% in Q4. We'll see if it surprises again.
Athena is starting to deliver real results
This is one of the most important parts of the entire report for me. The number of large customers bringing Zeta at least $1 million a year increased 18% to 212. Average revenue per such customer rose by another 22% to $2 million. And Athena is significantly supporting this growth.
More than half of its large customers are already actively using it every month. Customers using Athena account for more than 70% of total revenue, and the 25 largest Athena users saw revenue growth of more than 70%.
Then there's retention. Zeta had an NRR of 120% for 2025, meaning existing customers paid it an average of 20% more year over year. According to CFO Chris Greiner, customers using Athena have retention this year that is more than 5 percentage points higher than the company's overall rate.
That's exactly what we want to see. AI isn't just a feature the company added to a presentation. Customers are actually using it and gradually spending more money through the platform. Greiner also mentioned a specific example of one of the largest telecommunications operators in North America. Its annual revenue for Zeta grew from less than $1 million to more than $10 million over 12 months after it began using more of the platform's channels and features.
Partnership with Palantir is starting to deliver its first results
CEO David Steinberg confirmed on the earnings call that they have already received 8 positive responses from joint prospective clients with Palantir. Two are already actively using the services, while others are going through the contracting process. According to Steinberg, they have yet to leave a joint business meeting with Palantir without a positive response.
And these opportunities aren't even included in the regularly reported growth of the sales pipeline, which itself grew by more than 100% year over year.
Management still expects the partnership with Palantir could bring in more than $100 million in additional annual revenue in the coming years. For now, that's potential, not guaranteed revenue. But given Zeta's size today, that amount would already make an interesting contribution to growth.
Expansion beyond marketing
Another very interesting piece of information came up on the earnings call. Steinberg confirmed that a large, unnamed financial company is already using Zeta's data to detect fraud and cyber threats. (Mastercard?)
So Zeta is starting to use its data infrastructure to address problems that aren't directly related to marketing. It sees similar applications in inventory management and supply chains. This is a direction I wrote about in my previous analysis. Zeta doesn't want to remain just a marketing platform, but wants to offer its data and AI across the entire enterprise.
My verdict
The company is sustaining high growth, gradually improving margins, generating more and more cash, and Athena is starting to deliver measurable results. If it can successfully get its partnership with Palantir off the ground and bring its products into additional areas of the enterprise, its long-term growth opportunity could expand even further.
Still, it's important to keep an eye on organic growth, SBC (stock-based employee compensation), and whether the new partnerships really translate into revenue. For now, though, this company is delivering exactly what I expect from it as an investor.
Do you have this company in your portfolio/are you following it?