Zeta Global Holdings Corp., the AI-Powered Marketing Cloud, issued the following statement in response to claims made in a report by Culper Research, a short-seller, published recently.
U.S.-listed shares of the company rose 9% in premarket trading. Zeta Global has dropped 50% in the previous two trading days.
Culper Research announced a short position in Zeta Global on November 12, saying it believes the company has formed “two-way” contracts with third party consent farms wherein it simultaneously acts as both a supplier and a buyer of consumer data. In addition, Zeta has “quietly spun up its own network of consent farms i.e., sham websites that hoodwink millions of consumers each month into handing their data over to Zeta under false pretenses,” Culper wrote in a short report published on its website. It believes these consent farms have driven almost the entirety of Zeta’s growth over the past two years and now represent 56% of reported adjusted EBITDA. Culper believes Zeta “faces potentially devastating regulatory action.”
On November 13, Zeta Global has issued a response to a short-seller report published by Culper Research, strongly refuting its claims as misleading and false. The company emphasizes that its independent auditor is Deloitte, not E&Y as incorrectly stated in the report, and confirms its confidence in internal accounting processes and controls. Zeta clarifies that revenue from customers who are also vendors is insignificant, and the combined revenue contribution from Apptness and ArcaMax is less than 3% year-to-date through Q3 2024. The company denies operating 'consent farms' and affirms its commitment to data protection and privacy compliance.
The company also announced a new $100 million stock repurchase program for its Class A common stock on November 13, extending through December 31, 2026. This supplements their existing program from August 2022, which has $14.7 million remaining and expires December 31, 2024. The company plans to use various methods for repurchases, including open market purchases and privately negotiated transactions. Management expects to generate significant free cash flow over the next two years and believes the current stock valuation presents a unique opportunity for share repurchases.
About Zeta
Zeta Global is the AI-Powered Marketing Cloud that leverages advanced artificial intelligence (AI) and trillions of consumer signals to make it easier for marketers to acquire, grow, and retain customers more efficiently.
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