Camden Levy: Hi, this is Camden Levy sitting in for Brian Schwartz. Thank you for taking my question. In regards to the updated 2025 guidance for direct revenue mix, is most of the expansion on a forward basis going to be coming from channel expansion or is it more so brand adoption? And I was wondering could you like stack rank the drivers for that metric as it relates to 2024? And then additionally did the mix shift impact your ARPU growth expectations directly? Anything there that you could provide would be helpful? Thanks.
Chris Greiner: Sure, thanks. And good to meet you. Good to get the question. If I go back to the Investor Day, when we adjusted the direct revenue mix to 75%, we really pegged it to what we’ve seen over the last 12 months. And if you think about the growth of the overall business, not just the direct revenue, but the overall business and the ARPU, it’s driven principally by three different forces continuing to do more with existing customers through a single channel they’ve chosen. Although now it’s more driven by multi-channel adoption. So this quarter, for example, our scaled customers, and there’s about a third of them now that are using three or more channels as up over 40% year-over-year. And then expansion of use cases. And when we look at our use case growth rates, the grow and retain and the acquire use case both grew well into the double digits year-over-year in revenue in the third quarter.
David Steinberg: And by the way, we don’t expect our long-term direct versus indirect revenue to change. And we have not changed guidance for that for 2024 or 2025 at this point.
Camden Levy: Okay. Awesome. Thank you. And then just thinking about the gross margin, do you guys expect gross margins to have troughed here and improve? I know you guys said that they should be more similar sequentially. But anything that we should keep in mind in regards to modeling 2024 gross margin and the considerations there? Thank you.
Chris Greiner: Yes, yes, of course. No, it’s a good question. I think there was an earlier question in the same realm. And how we answered that was the first half of next year probably looks a lot like the second half of 2023. And then in the second half of 2024, you’d start to see a sequential improvement from there, as the mix and the business grows with the agencies we’re working with becomes more and more direct.
Camden Levy: Perfect. Thank you so much.
Chris Greiner: Thanks a lot.
Operator: Next question, Koji Ikeda with Bank of America Securities. Please go ahead.
Unidentified Analyst: Hey. This is George on for Koji. Thanks for taking my question. It’s great to hear encouraging about sales cycles improving and win rates kind of remaining strong. I was just going to ask, have you guys seen any notable changes in the competitive landscape? And kind of when did you notice the sales cycles kind of improving?
David Steinberg: Yes. So good question. Thank you. I think starting earlier this year, we started to see a number of the big legacy competitors not getting invited into the final stages of RFPs. And that was a really interesting sort of turning point because it used to be a few years ago we would get down to the final three and they would choose one of the big legacy providers because they were the big known brand. Now what we’re seeing is we’re not even seeing a lot of the big legacy providers make it to the final round, even when they are the incumbent. And that has allowed us to shine in a very unique way, and it’s allowed us to continue to close at this greater than 50% rate, even while we’re seeing more at-bats, which once again is why we delivered so many scaled customers and super scaled customers in the second and third quarter combined.
Unidentified Analyst: That makes sense. And I know you called out kind of greater brand awareness. This is kind of one of the reasons you’re getting more RFPs, is there anything else to kind of call out there and what’s kind of driving the strength there?
David Steinberg: Yes. We’re seeing a lot of analysts give us attention that we never would’ve gotten before. As I said in my prepared remarks, we were named one of the best CDPs in the world. I believe that was by IDC. Forrester continues to have us in the furthest rightest quadrant of the leader category in marketing automation, messaging, and a number of other categories. And I think that as they’ve evaluated our products, we’ve seen analysts which are very responsible for the RFPs, right? So a lot of these RFPs start with the analyst groups. We’re seeing analysts say, you have to talk to Zeta. We simplify complex marketing problems. And by putting data and AI as native to the application layer, not as step outs, we’re able to move at a substantially accelerated speed with substantially more intelligence behind the marketing decisions we’re making.
Unidentified Analyst: Thank you.
Operator: Thank you. I would like to turn the floor over to David Steinberg for closing remarks.
David Steinberg: Thank you everybody. Obviously, an incredible quarter for Zeta in a very choppy market. I could not be more proud of our Zeta people than I am today because to get to these types of outputs, we must have the inputs. And as we look at our business and we look at our innovation, and we look at our product development and we look at the evolution of our sales motion, we’re really firing on all cylinders. And as we continue to drive through what appears to be the beginning stages of a legacy replacement cycle for marketing clouds, CDPs and marketing technology. Zeta is at the forefront from a product, people and innovation perspective. We expect to continue to win in the marketplace. So we thank you very much for your time today. And we look forward to speaking to you again in the near future. Thank you.
Operator: This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.
