Health Check: How Prudently Does Zeta Global Holdings (NYSE:ZETA) Use Debt?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. Importantly, Zeta Global Holdings Corp. (NYSE:ZETA) does carry debt. But the more important question is: how much risk is that debt creating?

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When Is Debt A Problem?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. When we examine debt levels, we first consider both cash and debt levels, together.

What Is Zeta Global Holdings's Debt?

The image below, which you can click on for greater detail, shows that at March 2025 Zeta Global Holdings had debt of US$196.5m, up from US$184.2m in one year. However, its balance sheet shows it holds US$364.4m in cash, so it actually has US$167.9m net cash.

How Strong Is Zeta Global Holdings' Balance Sheet?

According to the last reported balance sheet, Zeta Global Holdings had liabilities of US$180.8m due within 12 months, and liabilities of US$230.2m due beyond 12 months. Offsetting this, it had US$364.4m in cash and US$223.8m in receivables that were due within 12 months. So it actually has US$177.2m more liquid assets than total liabilities.

This short term liquidity is a sign that Zeta Global Holdings could probably pay off its debt with ease, as its balance sheet is far from stretched. Simply put, the fact that Zeta Global Holdings has more cash than debt is arguably a good indication that it can manage its debt safely. There's no doubt that we learn most about debt from the balance sheet. But ultimately the future profitability of the business will decide if Zeta Global Holdings can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

See our latest analysis for Zeta Global Holdings

Over 12 months, Zeta Global Holdings reported revenue of US$1.1b, which is a gain of 40%, although it did not report any earnings before interest and tax. Shareholders probably have their fingers crossed that it can grow its way to profits.

So How Risky Is Zeta Global Holdings?

While Zeta Global Holdings lost money on an earnings before interest and tax (EBIT) level, it actually generated positive free cash flow US$105m. So taking that on face value, and considering the net cash situation, we don't think that the stock is too risky in the near term. We think its revenue growth of 40% is a good sign. We'd see further strong growth as an optimistic indication. When analysing debt levels, the balance sheet is the obvious place to start. However, not all investment risk resides within the balance sheet - far from it. For instance, we've identified 1 warning sign for Zeta Global Holdings that you should be aware of.

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.