Zeta Global (NYSE: ZETA) is an AI Scam

Zeta Global’s AI story and revenue growth are intertwined with AI charlatan Snowflake. Zeta Global has managed their peak stock price to…

Zeta Global (NYSE: ZETA) is an AI Scam
Zeta representatives pose with the Snowflake Polar Bear mascot as Zeta was named Snowflake’s ‘Powered by Snowflake’ Partner of the Year in 2023. Photo via Zeta’s website.

Zeta Global’s AI story and revenue growth are intertwined with AI charlatan Snowflake. Zeta Global has managed their peak stock price to coincide with the 2024 election — a narrative that has now been exposed. Opinion: ZETA is a Strong Sell.

Background

  1. On October 11, I discussed how Zeta Global uses low-quality political blogs and election prediction market PredictIt for comments section data collection through the Disqus product and why Zeta Global’s ‘Zeta 2025 Plan’ aligns Zeta equity value to coincide with the 2024 US election cycle.
  2. On October 15, I discussed how Zeta Global leaked the data of ~15,000 Zeta customers and prospects by failing to secure customer data and leaving it exposed on the open, public internet. We went over how we can use Zeta’s leaked data to proxy which customers are among Zeta’s largest.
  3. On October 18, Barclays downgraded ZETA, moving the stock rating from Overweight to Equal weight with a price target of $28.00.
  4. Today, we will dive deeper into Zeta Global’s smoke-and-mirrors game.

I remain steadfast that ZETA is a Strong Sell.

Aptroid Technologies/Aptroid Consulting Revenue Seems to Make Up a Larger-Than-Disclosed Part of Zeta Global’s Business

Zeta Global, a $7B+ market cap company until last week, has not disclosed to investors the nature of how much revenue is originated through Zeta Global’s subsidiaries Aptroid Technologies/Aptroid Consulting.

From Aptroid Technologies’ LinkedIn Page, captured October 20, 2024. https://in.linkedin.com/company/aptroid-technologies

Although Zeta Global has recently redirected www.aptroid.com to Zeta Global’s website, through 2023 the subsidiary was branded as its own comically absurd marketing agency for years.

Using the Wayback Machine, we can see that Aptroid at the end of 2023 made a number of claims, including:

  • 3,574 clients
  • Customers including Sprint, Dish, ADT, Lyft, First Premier Bank, Everquote, Publishers Clearing House, and Progressive, among others
https://web.archive.org/web/20231219173435/http://www.aptroid.com/

The client testimonials on Zeta’s subsidiary website are clearly fake. Aptroid is referred to not as an organization but as a person (“he” and “his”) and the testimonials are clearly cut and pasted from the website of some individual person with their name changed to “Aptroid” on Aptroid’s website.

https://web.archive.org/web/20231219173435/http://www.aptroid.com/

Zeta Global’s relationship with both Aptroid organizations has existed for a long time as well. This is not a recent development.

On publicly available data from the Indian Ministry of Corporate Affairs it shows that for years directors and contacts of both organizations are Zeta Global employees.

The contact email address for Aptroid Consulting on record with India’s MCA is KVaranasi@zetaglobal.com, which is the email of Zeta Global Senior Manager, Finance and former employee of the former Aptroid Technologies Kiran Varanasi.

The LinkedIn work history of Aptroid Consulting point-of-contact Kiran Varanasi, Zeta employee then Aptroid Technologies employee, now Aptroid Consulting representative on file with India’s MCA and current Zeta Global employee. Photo via Kiran Varanasi’s LinkedIn, October 20, 2024.

Zeta subsidiary Aptroid’s claim of 3,574 lifetime customers seems dubious.

As of the last Zeta 10-K reflecting data through year-end 2023, Zeta had 1,242 total customers at the end of 2023.

From Zeta Global’s annual report 10-K, from February 28, 2024.

Zeta Global’s Aptroid has also held this claim of 3,574 customers for years.

Web archive of aptroid.com from February, 2020. https://web.archive.org/web/20200218201229/http://aptroid.com/

Aptroid is clearly a long-term fraud run by Zeta Global out of Hyderabad, India. These are embarrassingly simple data checks Zeta Global does not pass and there are fraudulent marketing claims about capabilities and customer counts from a publicly traded company on the New York Stock Exchange.

Further, this Hyderabad-based operation of Zeta Global is clearly a large part of Zeta Global’s history.

In 2016, CEO David Steinberg claimed in a Financial Times piece that at the time Hyderabad was actually Zeta Global’s largest office.

“David Steinberg: the Zeta Global CEO shares his reading list” via FT. https://www.ft.com/content/166ba138-a512-11e6-8b69-02899e8bd9d1

Zeta Global’s Critical Audit Matter: Acting as a Customer and Vendor of a Third-Party from 2023

Zeta’s Critical Audit Matter on their last 10-K for 2023, which was not present on their prior 10-K for 2022 is clearly related to Snowflake, which is an AI charlatan with no AI capabilities whatsoever.

https://d18rn0p25nwr6d.cloudfront.net/CIK-0001851003/f5c999ff-1c75-4a6d-ab61-8d73a8730afd.pdf

In 2023, one key theme emerged at Zeta Global: they transitioned from being a customer of Snowflake (which they use to power their ZMP product as a white-label of Snowflake) to additionally reselling Snowflake as well — essentially “double dipping” on customers.

I do not believe this is a great long-term revenue opportunity for Zeta Global; rather, it’s a short-term revenue grab done through a parlor trick to double charge some of Zeta Global’s existing, largest customers in the short term.

This video, from January 2023, shows how Zeta Global uses Snowflake as their backend on which Zeta white-labels their ZMP offering to Zeta customers. Zeta is a customer of Snowflake in this instance.

In addition to white-labeling Snowflake in Zeta’s own ZMP platform, Zeta acts as a reseller of Snowflake for its various apps, which are really just ways to share the outcomes of what happens in Zeta in order to overbill customers.

From August 2023. https://investors.zetaglobal.com/news/news-details/2023/Zeta-Launches-Customer-Growth-Intelligence-a-Snowflake-Native-App-in-the-Data-Cloud/default.aspx

In fact, Zeta Global is one of the larger contributors to the Snowflake Marketplace, which is really just a way to offload the export of data by making customers purchase a Snowflake account.

Currently, Zeta Global has a seven different products available on the Snowflake Marketplace, requiring Zeta Global customers to onboard a Snowflake account in order to receive the outputs of Zeta Global through Snowflake.

https://app.snowflake.com/marketplace/providers/GZSOZ1BDK1/Zeta?search=zeta%20global

None of this is especially sustainable revenue growth. Although this methodology breaks up revenue between white label and reseller services in addition to moving revenue to both static contracts and usage-based consumption, this is merely an accounting trick meant to squeeze as much revenue as possible out of current Zeta customers.

Snowflake is also not an AI play at all, which has been made clear in the markets this year as their “AI CEO” Sridhar Ramaswamy has failed to deliver much of anything related to AI.

Conclusion

Zeta Global is merely a roll-up of poor-performing marketing agencies and outdated early-to-mid 2010s AdTech and MarTech platforms. Zeta relies on election cycles to collect incremental data through its Disqus product when internet commenters are most active and sharing the most data.

There is absolutely no reason to believe that Zeta has any plan at all for 2025 and beyond given that they’ve guided investors to a “Zeta 2025 Plan” to coincide with the 2024 election cycle.

Investors on the stock have seen their positions grow 2.5x or more YTD on this fake AI story. It’s time for many, from Granahan — which consistently gets bagged on Smallcap/Midcap tech companies — to retail investors to take profits and bail before the story collapses, because there is no story coming out of this year.

Zeta is the underbelly of the internet — Indian sweatshop spam emails, political blog comment sections used as cookies, and false AI stories, and this is before we get to the fact that Zeta’s CEO divorced his wife, impregnated an adult entertainer, and then married the adult entertainer.

Mrs. David Steinberg, 8.82 on Babepedia, AKA Miss May 2013, wife of Zeta Global CEO David Steinberg. Image via Babepedia.

ZETA is a Strong Sell. This is a disaster.

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This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. Lauren Balik does not represent the interests of any fund or of any investor other than herself. Past performance is not indicative of future results. This content speaks only as of the date published. Any projections, estimates, forecasts, targets, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.