Zeta Global Holdings Corp. (NYSE: ZETA) has signed an agreement to purchase Virginia-based ArcaMax. The financial value of the transaction has been kept under wraps by the parties involved.
Following the acquisition news, shares of this $2-billion company gained roughly 4% in the extended trading session on Monday to close at $10.50. The price uptick covered the 2.5% decline registered in the normal trading session.
Headquartered in New York, Zeta Global is an omnichannel cloud platform. It specializes in providing marketing automation and intelligence software to enterprises. It has exposure in multiple industries, including retail, insurance, travel, hospitality, and others.
Rationale Behind the Deal
ArcaMax is one of the leading developers and distributors of interest-based newsletters. The permissioned-data sourced from a large subscriber base adds to ArcaMax’s competitive edge.
The addition of ArcaMax to Zeta Global’s portfolio will enhance the latter’s strength in permissioned consumer data arena. Also, the acquisition will boost Zeta Global’s technological capabilities and add new vigor to its Zeta Marketing Platform.
Zeta Global also noted that the buyout will expand the permissioned US identities within its Zeta Data Cloud to 235 million from 225 million stated previously.
Impact on Zeta Global’s Financial Goals
Zeta Global mentioned that the ArcaMax buyout will not materially impact its results for the first quarter of 2022. As discussed in February, revenues for the quarter are forecast within the $118-$121 million range and adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) within the $16.5-$17 million range.
On the other hand, any synergistic gains from the buyout will get reflected in the 2022 projections. As provided in February, revenues and adjusted EBITDA for the year are forecast to be within the $540-$550 million and $80-$83 million range, respectively.
Interestingly, the company noted that the buyout will help it achieve its Zeta 2025 Plan announced in February. Per the plan, annual revenue generation is expected to exceed $1 billion by 2025 with an adjusted EBITDA margin greater than equal to 20%.
Official Comments
Zeta Global’s Co-Founder, Chairman, and CEO, David A. Steinberg, commented that the ArcaMax buyout will help it enrich consumer experiences as well as generate a high return on investment. He added that ArcaMax will prove “accretive to the top and bottom lines.”
Stock Rating
Recently, Ryan MacWilliams, an analyst at Barclays, reiterated a Buy rating on Zeta Global with a price target of $13, mirroring 28.71% upside potential from current levels.
The Street is cautiously optimistic on Zeta Global and has a Moderate Buy consensus rating based on four Buys and two Holds. The average Zeta Global price target of $13.20 suggests 30.69% upside potential from current levels. Over the past year, shares of Zeta Global have increased 13.6%.
News Sentiment
The TipRanks News Sentiment tool reveals that sentiments are currently Neutral for Zeta Global based on an average of 2.5 articles over the past seven days. 100% of the articles on ZETA have a Bullish sentiment, compared to a sector average of 65%.
Conclusion
The ArcaMax buyout is in sync with Zeta Global’s efforts to expand its data footprint and technology. With similar synergies, the acquisition of Apptness, a digital technology company, was concluded in last October.
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