Basis of Presentation and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2021

(a)	Principles of Consolidation

The accompanying condensed unaudited consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and as required by

Rule 10-01

Regulation S-X.

Accordingly, the condensed unaudited consolidated financial statements may not include all of the information and notes required by GAAP for audited financial statements. The

year-end

December 31, 2020 consolidated financial statements data included herein was derived from audited financial statements but does not include all disclosures required by GAAP for complete financial statements. In the opinion of the Company’s management, the accompanying condensed unaudited consolidated financial statements contain all adjustments, consisting of items of a normal and recurring nature, necessary to present fairly the Company’s financial position as of September 30, 2021, the results of operations, comprehensive income/(loss), stockholders’ equity, and cash flows for the three-month and nine-month periods ended September 30, 2021 and 2020. The results of operations for the three-month and nine-month periods ended September 30, 2021 and 2020 are not necessarily indicative of the results to be expected for the full year. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities, and related disclosures, as of the date of the financial statements, and the amounts of revenues and expenses reported during the period. Actual results could differ from estimates. The accompanying condensed unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the accompanying notes for the year ended December 31, 2020, which are included in Zeta Global Holdings’ final prospectus dated June 9, 2021 and filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act on June 14, 2021 (the “Prospectus”).

The accompanying unaudited consolidated financial statements include the accounts of Zeta and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

The Company’s management considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated through the date of issuance of these financial statements (see Note 16 to the condensed unaudited consolidated financial statements below).

Revenue Recognition

(b)	Revenue Recognition

Revenue arises primarily from the Company’s technology platform via subscription fees, volume-based utilization fees and fees for professional services designed to maximize the customer usage of technology.

Revenues are recognized when control of these services is transferred to the customers, in an amount that reflects the consideration that is expected to be entitled to an exchange for the services. Sales and other taxes collected by the Company in concurrence with the revenue-producing activities are excluded from revenues.

Contract assets and liabilities

Contract assets represent revenue recognized for contracts that have not been invoiced to customers and also certain sales commissions that are deferred and to be recognized over the expected term of contracts for which such commissions are paid. Total contract assets were $2,507 and $1,748 as of September 30, 2021 and December 31, 2020, respectively, and are included in the account receivables, net, in the condensed unaudited consolidated balance sheets.

Contract liabilities consists of deferred revenues that represent amounts billed to the customers in excess of the revenue recognized. Deferred revenues are subsequently recorded as revenues when earned in accordance with the Company’s revenue recognition policies. During the nine months ended September 30, 2021 and 2020, the Company billed and collected $34,175 and $20,760 in advance, respectively and recognized $35,489 and $20,576, respectively as revenues. As of September 30, 2021 and December 31, 2020, the deferred revenues are $2,739 and $4,053, respectively.

Remaining Performance Obligations

Transaction price allocated to the remaining performance obligations represents contracted revenues that have not yet been recognized, which includes unearned revenues and unbilled amounts that will be recognized as revenues in future periods. Transaction price allocated to the remaining performance obligations is influenced by several factors, including seasonality, the timing of renewals, average contract terms and foreign currency exchange rates. Unbilled portions of the remaining performance obligations are subject to future economic risks including bankruptcies, regulatory changes and other market factors.

The Company excludes amounts related to performance obligations that are billed and recognized as the services are provided. This primarily consists of professional services contracts that are on a

time-and-materials

basis.

Disaggregation of revenues from contract with customers

The Company reports disaggregation of revenues based on primary geographical markets and delivery channels / platforms. Revenues by delivery channels / platforms are based on whether the customer requirements necessitate integration with platforms or delivery channels not owned by the Company. When the Company generates revenues entirely through the Company platform, the Company considers it to be direct platform revenues. When the Company generates revenue by leveraging its platform’s integration with third parties, it is considered integrated platform revenues.

The following table summarizes disaggregation for the three and nine months ended September 30, 2021, and September 30, 2020.


	Three months ended September 30				Nine months ended September 30
	2021		2020		2021		2020
Direct platform revenues	$	84,663	$	63,346	$	242,219	$	180,589
Integrated platform revenues		30,470		31,938		81,273		73,085

Total revenues	$	115,133	$	95,284	$	323,492	$	253,674

Refer to the Company’s accounting policy on “Segments” below for more information about disaggregation based on primary geographical markets.

Stock-based compensation and other stock-based payments:

(c)	Stock-based compensation and other stock-based payments:

The measurement of share-based compensation expense for all stock-based payment awards, including restricted shares and stock options granted to the employee, consultants or advisors and

non-employee

directors, is based on the estimated fair value of the awards on the date of grant or date of modification of such grants.

The Company accounts for all stock options and restricted shares granted prior to the IPO using a fair value-based method. The fair value of each stock option granted to employees is estimated on the date of the grant using the Black-Scholes-Merton option pricing model, and the related stock-based compensation expense is recognized over the expected life of the option. The fair value of the restricted shares granted

post-IPO

is based on the Company’s closing stock price as of the day prior to the date of the grants. The Company accounts for the forfeitures, as they occur.

Since the Company’s restricted stock and restricted stock units had both a performance condition (i.e. initial public offering) and a service condition, the Company uses the graded vesting attribution method to amortize the stock-based compensation.

Segments

(d)

Segments

The Company operates as one operating segment. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company’s CODM is the Chief Executive Officer. Since it operates as one operating segment, all required financial segment information can be found in the condensed unaudited consolidated financial statements. Revenues and long-lived assets by geographic region are based on the physical location of the customers being served or the assets and are as follows:

Revenues by geographical region consisted of the following;


	Three months ended September 30				Nine months ended September 30
	2021		2020		2021		2020

US	$	108,034	$	88,014	$	301,548	$	234,565
International		7,099		7,270		21,944		19,109

Total revenues	$	115,133	$	95,284	$	323,492	$	253,674

Total long-lived assets by geographical region consisted of the following;


	As of
	September 30, 2021		December 31, 2020

US	$	43,734	$	38,413
International		612		595

Total long-lived assets	$	44,346	$	39,008

Concentration of Credit Risk

(e)	Concentration of Credit Risk

No customer accounted for more than 10% of the Company’s total revenues during the period ended September 30, 2021 and year ended December 31, 2020.

Financial instruments that potentially subject the Company to concentration risk consist primarily of accounts receivable from customers. As of September 30, 2021

, there was no customer that represented more than 10% of accounts receivables balance as of that date. As of

December 31, 2020, the Company had receivables from one of its customers

which

represented

14% of the total account receivables balance as of that date. The Company continuously monitors whether there is an expected credit loss arising from this customer, and as of the year ended December 31, 2020, no provision was warranted or recorded.