NYSE:RAMP LiveRamp Q2 2024 Earnings Report $27.02 +0.42 (+1.58%) Closing price 03:59 PM EasternExtended Trading$27.02 0.00 (0.00%) As of 04:20 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast LiveRamp EPS ResultsActual EPS$0.21Consensus EPS $0.09Beat/MissBeat by +$0.12One Year Ago EPSN/ALiveRamp Revenue ResultsActual Revenue$159.87 millionExpected Revenue$152.33 millionBeat/MissBeat by +$7.54 millionYoY Revenue GrowthN/ALiveRamp Announcement DetailsQuarterQ2 2024Date11/8/2023TimeN/AConference Call DateWednesday, November 8, 2023Conference Call Time4:30PM ETUpcoming EarningsLiveRamp's Q4 2025 earnings is scheduled for Tuesday, May 20, 2025, with a conference call scheduled on Wednesday, May 21, 2025 at 4:00 PM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by LiveRamp Q2 2024 Earnings Call TranscriptProvided by QuartrNovember 8, 2023 ShareLink copied to clipboard.There are 8 speakers on the call. Operator00:00:00Afternoon, ladies and gentlemen, and welcome to LiveRamp's Fiscal 20 24 Second Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. As a reminder, this conference call is being recorded. I would now like to turn the call over to your host, Drew Borst, Vice President of Investor Relations. Speaker 100:00:34Thank you, operator. Good afternoon, and welcome. Thank you for joining our fiscal 2024 Second Quarter Earnings Call. With me today are Scott Howe, our CEO and Lauren Dillard, Interim CFO. Today's press release and this call may contain forward looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. Speaker 100:00:56For a detailed description of these risks, Please read the Risk Factors section of our public filings and the press release. A copy of our press release and financial schedules, including any reconciliations to non GAAP financial measures, is available at liveramp.com. Also, during the call today, we will be referring to the slide deck posted on our website. At this time, I'll turn the call over to Scott. Speaker 200:01:23Thank you, Drew, and thanks to everyone joining our call today. As I reflect back upon our recent quarter, 3 key themes emerge. First, I'm really pleased with the progress we're making in our business. We posted strong second quarter results. Revenue and operating income exceeded our expectations, and we have good momentum with many of our leading indicators of growth. Speaker 200:01:49Operating margins reached a record high and we generated positive operating cash flow for a 5th consecutive quarter. And we continue to make progress against our rule of 40 ambitions. 2nd, while it was a really nice quarter for us, our entire team We now have an opportunity to build off our momentum. Throughout the business, there are areas that we can continue to improve, which keeps us humble, yet also fuels our optimism for the future. 3rd and finally, I continue to believe that our future is even brighter. Speaker 200:02:28Our business is aligned with some key megatrends: Cloud Computing, consented 1st party data collaboration and growth in retail media networks and CTV. Let me talk about each one of these key themes in turn. 1st, strong business resilience and momentum. I'm pleased with our progress and our business is demonstrating strong resilience and momentum. Q2 revenue and operating income Exceeded our guidance and consensus estimates. Speaker 200:03:02Our operating margin expanded for the 4th consecutive quarter and by 800 basis points year on year to 20%. We produced $36,000,000 in operating cash flow in the quarter, bringing the trailing 4 quarter total to $108,000,000 Our trailing top line indicators showed improved momentum. Total revenue grew by 9%, with subscription revenue up 5% and marketplace and other up 25%. Subscription growth was in line with our expectation, while marketplace and other outperformed significantly, driven by healthy digital advertising markets and growth in professional services. Q2 subscription net retention Was 101%, a 3 point improvement from last quarter and surpassing 100% 2 quarters earlier than we had initially expected. Speaker 200:04:03The sequential improvement was driven mostly by higher upsell, but also lower contraction. Returning to 100% was an important milestone, but by no means will we stop here. Our leading top line indicators were even more encouraging. Q2 was our highest new logo bookings Quarter in dollar terms in 2 years, and we added 6 new Fortune 500 customers. We signed multimillion dollar annual contract with a leading global financial services company for our data collaboration platform. Speaker 200:04:40We signed a high 6 figure annual contract with the world's leading farm machinery brand. We also Signed a high 6 figure annual contract with an iconic athletic footwear and apparel company, a brand which we've been pursuing for many quarters. We also signed or upsold opportunities with 2 of the largest global airlines. Additionally, we also successfully upsold our existing customers. We had an upsell with a major pharmaceutical company representing a 7 figure annual contract and a multiyear term. Speaker 200:05:19We also signed a 7 figure upsell With a major social media platform to allow marketers to use their first party data for targeted marketing using our Ramp ID. Over the last several quarters, we've talked about several near term tactical growth levers to reestablish double digit revenue growth, With the sales force being one of the major ones, this was a big driver of our bookings momentum. Our sales force attrition has fully normalized and sales force capacity remains well above fiscal 2022 levels. Sales force productivity also continues to improve and our newest sellers are also contributing, with 1st year reps Posting comparable bookings to their more seasoned counterparts. I view this as a strong indication we are hiring talented sellers supporting them effectively with better training and collateral. Speaker 200:06:18While we are pleased with where we are with our sales force, We will continue to invest in quota carrying headcount to ensure we are set up for next year, as well as continue to Expand our professional services function. This group is really doing a fantastic job on pace to double revenue this year to 20,000,000 and driving improvements in customer satisfaction and upsell rates. 2nd, we aren't satisfied and see room for improvement. As I've often told our organization, when great companies look in the mirror, they never love what they see. Even in a quarter of accelerating momentum, we see opportunities for improvement. Speaker 200:07:02Let me talk about a few areas on which we're focusing. 1, we're not yet where we want to be on rule of 40. We have always aspired to be a rule of 40 company, and I'm very encouraged By ongoing progress, we are making on both the top and bottom lines. For us, we expect Rule of 40 to look like 10% to 15% revenue growth And 25% to 30% operating margins. But of course, today on a trailing 4 quarter basis, we are Essentially a rule of 25 company. Speaker 200:07:36And so that obviously falls short of our long term aspirations. So how do we get there? On the revenue side, continued sales execution is essential, and I'm encouraged by the trends of recent quarters. I also believe that a handful of existential market trends embedding our products within cloud computing partners, The continued growth of retail media networks and CTV and the market evolution from cookies to true consumer authentication Can further fuel our top line success in coming years. On the margin side, we just posted the highest quarterly operating margin in our company's history, And we're raising our operating income guidance for the year. Speaker 200:08:22The bridge from here to 25% to 30% Will be driven by several factors. First, our SaaS business model has a high incremental margin and we expect our revenue growth to accelerate. 2nd, we expect improving cost efficiency As we expand our incremental hiring and backfill efforts to our new office in Hyderabad, India. As we've said before, This initiative will result in several 100 basis points of margin expansion as it gets phased in over the next 2 fiscal years. And finally, there is no area of our business where we're not constantly evaluating opportunities to improve our process efficiency and our system architecture. Speaker 200:09:112, customer counts. Our $1,000,000 plus customer count increased by 3 And our $500,000 to $1,000,000 customers also increased by 3. That's really indicative of the success we're having with the more direct customers that comprise our ideal customer profile. As I've discussed previously, We made a conscious decision last year to focus on high long term value brand customers. These customers have large digital ad budgets that are being deployed over dozens of digital destinations And helping these customers measure and optimize their spending using their first party data is among our most compelling use cases. Speaker 200:09:59These customers typically have an annual contract value greater than $1,000,000 with a multi year term and above average renewal and up sell rates. With that said, overall, our Q2 customer count of 895 was down 20 from the prior quarter, Driven by declines with low ACV non brand customers such as adtech platforms. I don't think this is cause for concern, but I do think it's an area in which we can and must improve as winning even more high quality new logos We'll accelerate our upsell efforts in the coming years. The go to market partnerships that we have with the major cloud providers Should help us on this front, and we continue to see growth in our pipelines as a result of this initiative. In addition, We see that data collaboration is a flywheel that seems to be introducing us to new quality opportunities. Speaker 200:10:58Our success serving retail media networks across the globe, for example, ensures that both retailers and their myriad of packaged goods Partners must work with LiveRamp to unlock the benefits of data collaboration. 3, international. We are well positioned in major international markets given the fact that we work with so many marquee global brands who want us to support them across the markets in which they operate. That said, international revenue growth in the quarter of 3% on a constant currency basis Was lighter than we would have liked and China was a main driver of this disappointing performance. Earlier this summer, I spent a couple of weeks meeting clients and prospects in Europe. Speaker 200:11:46I think we're uniquely positioned with companies that really matter. And we also have a strong, strong team in place. Likewise, I was in Australia just last week and met with many of the top retailers and brands in that market, Where we have a number of interesting data collaboration activities that we power. Like many companies, however, We are rethinking our expectations for China. The combination of COVID impacts, changing political philosophies And an uncertain economy in China are negatively impacting top line international growth. Speaker 200:12:21In response, We are restructuring our China business, reducing our operations to a minimally viable footprint in case things change in that market. Overall, we don't expect this international restructuring to have a material impact on total revenue or operating income. But I wanted to mention this, so that investors understand that we remain committed to working with our major clients across the markets that they prioritize. 3rd, longer term, our business is aligned with some key megatrends. Let me spend a few minutes on our longer term prospects. Speaker 200:13:01Our product innovation and go to market partnerships seemingly have us well positioned To capitalize on some existential industry trends, the continued growth of cloud computing in marketing and advertising. In September, LiveRamp convened a group of marquee clients, each a leader in their respective industry, to walk through our product roadmap and gather feedback On our direction, every client in attendance was operating in the cloud and many attendees talked about their challenges navigating Multiple cloud providers, both internally and as they seek to collaborate with other partners externally. We see the seismic shift to cloud computing as a big opportunity for LiveRamp. Our cloud strategy is to operate where our clients' data lives and securely connect their data from the cloud across the entire digital marketing ecosystem. Bringing our products So the customers' cloud environment provides tangible benefits to our customers in the form of greater operating and cost efficiency, increased data security, and a quicker time to value on their LiveRamp subscription. Speaker 200:14:14The cloud providers also get the benefit of more storage and compute volume, which drives their revenue models. As more application workloads move to the cloud in the coming years, this will be a wind at our back and will drive the return on the cloud investments we are making today. Our cloud strategy is already succeeding in the market There is no better external validation of this than receiving the Partner of the Year award from Google Cloud. We were recognized as a Global Industry Technology Partner of the Year for delivering embedded solutions that help customers Enrich, their Google Cloud environment. Our cloud partnership is not limited to GCP. Speaker 200:14:57We are executing the same strategy with all the clouds and we are making significant progress with AWS and Snowflake as well as Azure and Databricks. During the quarter, we announced that our identity capabilities are now natively available within AWS entity resolution. With this integration, marketers, publishers, tech platforms and agencies can extend the interoperability of data in the cloud to marketing and advertising destinations using RampID. With Snowflake, our complete identity capabilities are now embedded And the very early customer feedback has been very positive. While these efforts are still nascent, we're starting to reap the rewards of our efforts. Speaker 200:15:42Overall, we remain on track to double our total cloud bookings in FY 2024 to approximately $20,000,000 Signal loss and a march toward customer authentication. Last month, I participated in the New York Advertising Week Conference, A week long event that brings together leaders from across the world of advertising and marketing. It was a productive week of meetings with customers, both existing and prospective. And I left the conference energized about LiveRamp's market position and the opportunity we have to help advertisers and publishers With some of their most pressing identity and data challenges, my many conversations highlighted an important truth. Consented 1st party customer data and the ability to securely share it across the ecosystem is only becoming more important as we get closer to mid-twenty 24 when Google begins phasing out third party cookies on the Chrome browser. Speaker 200:16:44Large brand marketers need to securely use their authenticated first party customer data for addressable advertising Across the vast and fragmented digital marketing ecosystem and increasingly they need to collaborate with trusted business partners For enhanced insights about the customer journey, they need to do all this in order to drive sales, customer satisfaction and return on ad spend. Our identity infrastructure and data collaboration platform provides a solution to signal loss and cookie deprecation by connecting our customers' 1st party identity to all manner of digital publishers, ranging from the largest walled gardens to the smallest DSPs and everything in between. Using identity infrastructure across all of these different publishers and platforms Enables more accurate cross screen and cross platform measurement that is critical to optimizing return on ad spend. We continue to expand our identity infrastructure to give brands greater access to data driven premium advertising inventory. Over the past few months, we announced a handful of major platform integrations with RampID. Speaker 200:17:59We integrated RampID on FreeWheel, A leading supply side platform for CTV publishers. As a result, brands can now leverage their first party data in conjunction with LiveRamp's Ramp ID and activate on FreeWheel's premium video supply. We also made RampID interoperable with Yahoo! DSP and its ConnectID, as well as Epsilon's Core ID. In addition to giving brands access to more data driven premium inventory, These platforms can transact with brands on a durable, consistent identifier, giving them increased scale even through signal loss. Speaker 200:18:42Finally, but importantly, we continue to support Google's migration away from cookies to true consumer authentication. During the quarter, we continued our beta testing of Google Payer. Payer, which stands for Publisher and Advertiser Identity Reconciliation, Allows brands to safely and securely use their 1st party customer data to connect to open web publishers on DV360. To make this happen, marketers use the cleanroom tech in LiveRamp's data collaboration platform to securely reconcile identity with publishers and purchase inventory via DV360. Once third party cookies are eliminated, Pear will be the only way for brands to target on DV360. Speaker 200:19:31We are the largest and most Scale partner with Google on the Pear launch. We now have over 6,500 publisher domains Live on Google Pay across North America, Europe and APAC, and we continue to scale advertising campaigns and are seeing marketer match rates continue to increase. Our key objective here is to continue to evangelize how this works to major advertisers Through webinars, workshops and published case studies, knowing that the education we do on this front will benefit Clean room collaborations between any advertiser and any publisher who want to partner with one another. The rise of retail media networks. Retail media networks increasingly just commerce media networks were another key topic at Adweek. Speaker 200:20:20These advertising channels continue to grow, Taking an increasing share of advertising budgets and they are becoming ubiquitous. Brand marketers are trying to manage Consumer data and identity across a growing number of different retail media networks. According to a recent Association of National Advertisers survey, Over half of marketers are using 5 or more different retail media networks, including 16% that are using 10 or more different networks. This continues to be LiveRamp's opportunity, first by helping brand marketer Safely and securely use first party data on these platforms and second, by enabling omnichannel measurement among various retail media networks as well as to other advertising platforms. A shift to CTV and data collaboration. Speaker 200:21:13As the pandemic shifted consumer viewing habits, CTV has witnessed explosive growth. While this growth offers LiveRamp customers yet another set of platforms on which to activate their data, we believe the opportunity is far greater. While granular audience targeting and frequency capping unlock a 1st wave of advertiser benefits, there is an increasing opportunity for additional services. For example, Given the fragmentation in CTV, measurement becomes an increasing need. Advertisers need it to demonstrate their ROI And publishers require measurement to justify their pricing and validate their inventory efficacy. Speaker 200:21:55In addition, many CTV providers Have rich collection of authenticated user data related to demographics and viewing behavior, and these increasingly offer a data collaboration opportunity not unlike what is driving the explosive growth in Retail Media Networks. In closing, Let me reiterate what I believe to be the key themes from the quarter. First, I really like the resilience and momentum our business is showing, particularly with respect to the top line progress we are making. As a result, we're raising our guidance for the year, But we're not satisfied, not even close. We think continuing to win new clients, accelerating our progress in the international markets And continued focus on all aspects of Rule of 40 are going to unlock even greater value for our shareholders as we progress in our efforts. Speaker 200:22:51Above all, however, I'm excited about LiveRamp's positioning against a number of key existential trends: Cloud Computing, Retail Media Networks, 1st party data collaboration, CTV and the slow march toward Authenticated addressability can all be tailwinds for our business in the coming years. Thank you Again, for joining us today and a special thanks to our exceptional customers, partners and to all of my LiveRamp colleagues for their ongoing hard work and support. We look forward to updating you on our progress in the coming quarters. I will now turn the call over to Lauren. Speaker 300:23:32Thanks, Scott, and thank you all for joining us. Today, I will cover 2 topics. First, a review of our Q2 financial results and second, our updated outlook for FY 'twenty four and for Q3. Unless otherwise indicated, my remarks pertain to non GAAP results and growth is relative to the year ago period. Staying with Q2 results. Speaker 300:23:55In summary, results were above our expectations. Revenue came in at $160,000,000 which was $8,000,000 above our guidance And operating income was $32,000,000 or $13,000,000 above our guide. Operating margin expanded by 8 percentage points to a record high of 20%, And we generated $36,000,000 in operating cash flow, our 5th consecutive quarter of positive OCF. Let me provide some additional details. Please turn to Slide 5. Speaker 300:24:25Total revenue was $160,000,000 up 9%. The subscription revenue is slightly ahead of our expectations, while marketplace and other was significantly ahead, driven primarily by a stronger than expected digital advertising market. Subscription revenue was $126,000,000 up 5%, And growth was driven by broad product and sector strength. Fixed subscription revenue grew mid single digits And usage as a percentage of total subscription revenue was 15%, within the historical 10% to 15% range. ARR was $428,000,000 up 2%. Speaker 300:25:06We believe this growth represents a low watermark as the recent improvement in bookings and contraction will start to more fully impact this metric moving forward. In addition, Q2 growth was hurt by the timing of bookings being recognized in ARR, reflecting our move up market to larger, more complex deals. Subscription net retention was 101%. The sequential improvement was mostly due to improved upsell and to a lesser extent, reductions in contraction. While our longer term aspiration is obviously much higher, We are pleased to get our SNR back above 100% 2 quarters earlier than we initially expected. Speaker 300:25:48Current RPO or our next 12 month contracted backlog was $339,000,000 up 16%. Total RPO, including contracted backlog beyond the next 12 months, was up 26% to 490,000,000 Like last quarter, there is an unusually large difference between CRPO and ARR growth. As we've discussed previously, CRPO is very sensitive to the timing of renewals and to contract durations, and both of these factors again benefited CRPO growth in the quarter. Overall, the Q2 selling environment remains stable. On the positive side, we saw an improvement in our pipeline conversion Back to FY 2022 levels and on a dollar basis had the strongest new logo quarter in the past 2 years. Speaker 300:26:40Also, our contraction, where the combination of down sell and customer churn improved both quarter on quarter and year on year, and budget constraints were cited less frequently. On the other hand, our average deal cycle continues to run about 1 quarter longer Then FY 'twenty two. This has been the case now 4 consecutive quarters and is at least partially due to our shift upmarket to larger high LTV enterprise customers with more complex data collaboration use cases. You can see this shift show up in some of our key growth metrics, like our $1,000,000 customer count. Marketplace and other revenue of 34,000,000 Increased 25%, driven by data marketplace, which grew 19% and accounted for 78% of marketplace and other revenue. Speaker 300:27:32Data marketplace growth was fueled by a healthy digital advertising market, including strength in CTV. We also continue to see strong growth in professional services, which accounted for nearly 1 third of the revenue growth in Marketplace and Other. Moving beyond revenue. Gross margin was 75%, flat year on year and 200 basis points higher than our guidance, driven primarily by the timing of planned investments. Operating expenses decreased 5% to $89,000,000 driven by last year's cost restructuring and benefited from the shift of certain expenses to the fiscal second half. Speaker 300:28:11Operating income was $32,000,000 up from $17,000,000 a year ago and our operating margin expanded by 800 basis points to a record high of 20%. GAAP operating income was positive for a 2nd consecutive quarter at $8,000,000 representing a GAAP operating margin of 5%. We incurred $7,000,000 in restructuring charges, primarily related to a goodwill impairment associated with the restructuring of our China operations and a lease impairment. Stock based compensation was $16,000,000 down from $27,000,000 a year ago due to the accelerated vesting of certain non NEO RSUs in Q4 of FY2023. Operating cash flow was $36,000,000 up from $21,000,000 a year ago due primarily to higher earnings. Speaker 300:29:03We repurchased 490,000 shares for $15,000,000 in Q2, bringing the fiscal first half total to $35,000,000 We have approximately $183,000,000 remaining under the current authorization that expires on December 31, 2024. In summary, Q2 was a strong quarter. Revenue growth improved to 9% with both subscription and marketplace exceeding our expectations. Our non GAAP operating margin expanded by 800 basis points. GAAP operating income was positive for a 2nd straight quarter. Speaker 300:29:39We generated $36,000,000 in operating cash flow in the quarter and $108,000,000 in the trailing 4 quarters. And finally, we repurchased $35,000,000 of stock through Q2. Next, let me now turn to our financial outlook for FY 'twenty four and for Q3. Please turn to slides 1213. Please keep in mind, our non GAAP guidance excludes intangible amortization, Stock based compensation and restructuring and related charges. Speaker 300:30:09Starting with the full year. We are increasing our total revenue guidance By approximately $10,000,000 at the midpoint and now expect revenue to be between $632,000,000 $637,000,000 up 6% to 7% year on year. Our outlook for subscription revenue is unchanged. We continue to expect subscription revenue to grow in the mid single digits, with usage as a percentage of total subscription near the midpoint of the historic 10% to 15% range. We expect subscription net retention to hover around 100% for the next two quarters. Speaker 300:30:46We now expect marketplace and other revenue growth to be in the low double digits for the full year, up from our prior expectation of mid to high single digits. We continue to expect gross margin to be approximately 74% despite the outperformance in Q2, which was mostly a timing issue. In the second half, we are making incremental investments in our platform architecture and in professional services to support future revenue growth. We expect our operating expenses to decline this year by approximately 4%, but are still making additional investments in our sales force and cloud strategy as well as some upfront investment to ensure our offshoring initiative is successful. Despite these added investments, We are increasing our operating income guidance to be between $97,000,000 $100,000,000 $7,000,000 higher than our prior guide at the midpoint. Speaker 300:31:44At the midpoint of our guidance range, the operating margin is approximately 15%, up 500 basis points year on year. We expect stock based compensation to be approximately $69,000,000 which benefits from the $23,000,000 in accelerated vesting in FY2023 And is slightly lower than our prior guide. We now expect $11,000,000 in restructuring charges given the lease and goodwill impairments recognized in Q2. We expect GAAP operating income to be between $8,000,000 $11,000,000 Lastly, we continue to expect share repurchases of between $15,000,000 $20,000,000 per quarter in the fiscal second half. Now moving on to Q3. Speaker 300:32:28We expect total revenue of approximately 165,000,000 Operating income of roughly $29,000,000 and an operating margin of approximately 18%. A few other callouts for Q3. Recall that in the year ago quarter, our subscription revenue included a nonrecurring contract settlement of $4,000,000 resulting in a 3 percentage point growth headwind for subscription revenue this Q3. Excluding this headwind, We expect underlying subscription growth to be mid single digits. We expect subscription net retention in Q3 to be approximately 100%. Speaker 300:33:07We expect marketplace and other revenue to grow by low double digits. This growth rate is slower sequentially because we are taking a measured view on digital ad market growth in light of the current macro and geopolitical environment, and we expect gross margin to be approximately 74%. Before opening the call to questions, I'll conclude with a few final thoughts. First, Q2 was strong on the top line and especially the bottom line. Importantly, we think our revenue growth metrics are turning a corner. Speaker 300:33:41Next, given the uncertain macro environment, We remain appropriately cautious with our revenue guidance for the balance of the fiscal year. We have good visibility on our subscription business and with Marketplace, we are striking a balance between our strong execution and the risk of a slowdown driven by forces outside of our control. To be clear, we would expect to see upside in Marketplace, particularly in Q4, if the advertising markets hold at the current level. And finally, as Scott mentioned, our financial North Star is Rule of 40, with mid teens top line growth And a 25% plus operating margin. On the top line, we are encouraged by the positive trends in forward bookings and contraction. Speaker 300:34:27On the margin front, the high incremental margin inherent in our model, combined with the expansion of our new India office, Gives us a path for sustained margin expansion in the coming years, while we continue to appropriately invest to support top line growth. With that, on behalf of all LiveRampers, thank you for joining us today. Operator, we will now open the call to questions. Operator00:34:53Thank you. Your first question comes from the line of Shyam Patil of SIG. Your line is open. Speaker 400:35:17Hey, guys. This is Jared on for Sean. Thanks for taking the question and congratulations on the impressive quarter. Speaker 200:35:24Thanks, Jared. Speaker 400:35:26Of course. I've got a couple, if you don't mind. I guess, for starters, focusing in on the higher LTV customer strategy, Can you elaborate a bit further upon that and how you're thinking that this plays out through the rest of the year, as well as maybe unpacking a bit More of the decline that we saw in the current quarter. And then for the second question, you continue to highlight CTV as a driver of the strength in the business. Anywhere in particular that we should be looking in your results as we're looking both in this quarter and then for further CTV strength down the road? Speaker 400:36:00And just how are you thinking that, that CTV strength continues to materialize? Speaker 300:36:04Great. Thanks, Jared. I'm happy to take the first and I'll pass it to Scott for the second. With respect to customer count, I'll start maybe by just highlighting something Scott mentioned in his prepared remarks, which is that this It's a direct reflection of a decision that we made as a business several quarters ago to really focus our selling efforts on large Hi, ACV Enterprise customers, where we believe our value proposition today is the greatest. So in the quarter, we did See continued pressure on customer count. Speaker 300:36:36This was almost entirely driven by small customers In the ad tech sector that are being impacted by the macro as well as other market dynamics. That said, I think it's important to note that our dollar based metrics are improving and reflect this quality versus quantity dynamic that Scott had mentioned. As an example, in the quarter, we closed one of our strongest new logo bookings quarters in recent history, and we saw a pretty nice uptick in both $1,000,000 customers as well as customers who fall in the $500,000 to $1,000,000 range. So in terms of our outlook for the balance of the year, We do expect this dynamic to continue for at least the next couple of quarters, which means total customer count could continue to decline, but we would expect other metrics like $1,000,000 plus customer count to continue to increase. Speaker 200:37:34And Jared, on your second question, I would tell you I'm really bullish about CTV and you probably heard that in my prepared remarks. In terms of where you're going to see it, I would say it's hard to tease out, but you can broadly look at 3 major areas. The first is subscriptions. If you look at the CTV providers, for the most part, they're 100% authenticated. So they could be a big winner As third party cookies go away, because that spend is addressable and it works. Speaker 200:38:06And so where you see that in our business is in our subscriptions. And so as the market tips to CTV, I think you'll see our subscriptions become even stickier. And you might see that in terms of a usage increase as well. What's kind of startling, I was looking at the stats earlier today. If you look at our distributions, the destinations that advertisers send Data too. Speaker 200:38:36If you look at the top 50 by volume, nearly half of them, 22 of them Our pure CTV providers or CTV platforms. So it suggests that Very quietly over the last couple of years, advertisers are already making a shift. The second place that you're going to see this Is in our marketplace business. I mean, again, it's kind of beneath the surface line. TV data sales as a part of marketplace were actually up a staggering 50% year over year. Speaker 200:39:18And that data comprises, I think, roughly 10% The total demand within data marketplace. So nice story there as well. And then the 3rd place that you'll see it, not surprisingly, because they're getting more demand and because they also Have really deep pockets of authenticated data is we think there's an opportunity for data collaboration. Very similar to what we've Seeing in the retail media network space, the various CTV providers have something really interesting to share. And so there's an opportunity that all of them are interested in, in partnering more deeply with the major advertisers of the world, Collaborating on data such that advertisers can find their target audiences and also Understand kind of end to end measurement across everything that happens once an ad is seen. Speaker 200:40:20So Three really interesting places and just come full circle. We've hit the tipping point for CTV. It's here. We're seeing it in our numbers And we think that's going to be a really nice tailwind for us, really for the next few years. Speaker 400:40:38Great. Thank you both. Operator00:40:42Your next question comes from the line of Elizabeth Porter of Morgan Stanley. Your line is open. Speaker 500:40:48Hey, this is Chris Quindaro on for Elizabeth. Congrats again on another solid quarter here. Maybe to start, out of all the top line initiatives that you all have been focused on over the past year or so, whether that's the sales force improvement or the growing industry partnerships. I'm curious to hear what areas have maybe surprised you the most to the upside than maybe you initially expected so far? Speaker 200:41:15Yes. Chris, I would tell you that to me sales success is a function of 2 ingredients. First, you have to have demand. And there, I think we've probably been pleasantly surprised based on our initial forecast In terms of market softness and I think the markets just developed better than we thought. But from a demand side, there are so many levers that we're pulling, cloud partnerships, CTV, Collaboration Networks, likewise, really pleased with Some of the traction we're getting with major European clients and Australian clients. Speaker 200:42:03And What's interesting is the opportunities that we're seeing, if you looked at our pipeline and you looked both at The named clients and the conversation that's underway, it is really encouraging Because they're all companies that you would have heard of and they're doing really fascinating things with data. So I like the demand side and that's firmed up, I think, even better than I would have thought. But To meet the demand, you also have to execute. You have to be able to respond. And there, I'm equally pleased. Speaker 200:42:45We've really done a revamp of our marketing collateral. Our team has done a nice job of onboarding and training and arming Sellers with the tools that they need to succeed, and we're seeing that in our numbers. More specifically, best new logo quarter in a couple of years, Strength kind of across the board, auto, financial services, healthcare, retail, and our pipeline conversion Was the highest we've had in 7 quarters and even stronger with $1,000,000 deals. So when I look at the numbers, everything is kind of tipping in the right direction. Now the one thing I'd say to our entire organization, many of whom are listening On the call today is success has to be stacked. Speaker 200:43:40We can't let up. We have a lot of momentum, But a couple of good quarters doesn't make the trend line we're looking for. So we need to keep it going through the back half of the year. Speaker 500:43:53Got it. That's very helpful. I also wanted to ask around the impressive The 6 Fortune 500 customer additions in the quarter that I think you mentioned. Just curious how those kind of came about? Did they come through The improved sales force or maybe through some of your industry partnerships and what do you think worked well in the process to ultimately win those large customers? Speaker 200:44:17Yes. Hold on. I'm just going to pull a stat, which is kind of mind blowing actually. What I would tell you is, what I'm really pleased with is our channel partnerships. And I think we're seeing a lot of traction there. Speaker 200:44:35One of the things that I realized when I worked at Microsoft, I thought that years ago all of Microsoft sales were direct. And when my company got acquired, I realized, no, that's not the case. They have a really big partner sales force. And in fact, Most SaaS companies use partner channels, to their benefit, with the exception of LiveRamp. Now a couple of years ago, we really started, to push on channel partnerships. Speaker 200:45:11And our focus for this past year has really been with the clouds and cloud data warehouses. We've done direct partnerships With all the major cloud providers, we've also forged strategic partnerships with system integrators for cloud opportunities. And we are partnering closely with the ecosystem, educating them about how our products work in the cloud and Use cases, go to market education. As an example, If I think about just last quarter alone, we did over 215 Joint planning calls just with Snowflake. But ultimately, we're going to be judged by our results. Speaker 200:46:00And on this, 60% and this is the stat I was looking for. 60% of our commercial leads closed cloud business year to date, which is an amazing stat relative to a year or 2 ago. And if you look at cloud Attached business as part of our revenue, we'll double it this year, to $20,000,000 for the year. So Really, really encouraged and I think we're still in the early stages of getting those partnerships up and running. Speaker 500:46:35Excellent. Thank you so much. Operator00:46:40Your next question comes from the line of Mark Zutowicz of The Benchmark Company. Your line is open. Speaker 600:46:47Thank you and good evening, Scott and Lauren. Just two questions. I was curious what dynamics drove the usage As a percent of subscription revenue above expectations to 15%. I think the 15% is sort of at the higher end of your historical range. And what might that suggest in terms of 2024? Speaker 600:47:10And then separately, curious what kind of demand You may be seeing outside of your core CPG and retail verticals. Excuse me, you've talked in the past about healthcare and FinTech being sort of limited with data privacy laws. Just maybe some color there would be helpful. Thanks. Speaker 300:47:32Sure. I'm happy to take the first, Mark, and I'll let Scott jump in on the second. With respect to usage as a percentage of subscription revenue, you're right, it landed right around 15% in the quarter, which is at the high end of our historic 10% to 15% range. The only notable thing I would call out is just it benefited Certainly from a better macro environment and better overall trends in digital advertising than we assumed in Our outlook going into the quarter. Again, in the back half, and this is consistent with how we've been guiding those subscription usage in marketplace, We are attempting to be both balanced and conservative. Speaker 300:48:13And so would guide you to the midpoint Of that 10% to 15% range in Q3 and Q4 versus what we saw in Q2. Speaker 200:48:25And then Mark, your second question is really about which verticals. In my prepared remarks today, I talked about My time at Adweek a few weeks ago in New York and one of the things that was all over Adweek, Literally every conversation was the growth of retail BD Networks. It's the fastest growing part of most media plans. And as a result, other advertisers, marketers and data providers have really taken notice. And the whole driver of retail media networks is collaboration that's happening between retailers and their merchant partners. Speaker 200:49:08I think we're starting to see that evolve in a really healthy way to other verticals. I think it was in Q4 last year, I talked about the automotive space as an example and I shared new client win that we had. And fascinating case study where they're using us and doing data collaboration, Not yet with the rest of the world, but between the OEM, the regional advertising groups And the actual dealers where cars are sold. And when all of them are collaborating, All of a sudden you can make the connection between a car that's manufactured, where an ad is served regionally And whether it actually drove a purchase at the dealer. That is a great case study that I look Forward to sharing with you someday at an Analyst Day because it's also indicative of a company we brought on. Speaker 200:50:18When I came on, they were just an onboarding client, dollars 500,000 a year. And within 3 years, they're doing some of the most Sophisticated things that any of our clients are doing, their spend is over 10 times as much as it was when they started, And they just keep layering more sophistication on what they're doing. Another more recent example As I talked about some airline wins that we had and really excited about Where one of them is going to take their partnership with LiveRamp because certainly they'll start and they'll Use LiveRamp to better direct their own spend from a marketing perspective, but the partner collaboration that they're going to turn on over time, They have a network of both codeshare partners and hundreds of different travel partners, where they can be Sharing data for the collective good and to drive a better customer experience as well. In addition, Most airlines, including this one, probably more than most, have a lot of untapped assets. In particular, the screens that are in your seat back and the apps that you might be watching to watch Movies when you're on the plane. Speaker 200:51:46So some just amazing things that you're going to see out of the travel space. And A third vertical, and I'm just giving these 3 as examples, would be the publisher space. Earlier, Jared asked me about CTV. And there we're seeing such interesting innovation from those CTV providers. They can build unique segments from their data. Speaker 200:52:12They can create multi screen packages and they can collaborate with advertisers To really deliver full purchase funnel measurement, from the moment an ad is seen to how much engagement To an actual purchase in store at a dealership or online. So I think the whole concept of retail media networks, That term is yesterday, collaborative networks or collaborative data partnerships. I think the world is wide open every sector, and the good news is we sit right in the middle of that. Speaker 600:52:53Interesting stuff. Thanks, Scott. Very helpful. Operator00:52:58Your next question comes from the line of Jason Kreyer of Craig Hallum Capital Group. Your line is open. Speaker 700:53:06Great. Thank you. This is Cal Bardasol on for Jason. So I guess first just to start, we've seen some Some good improvements in the results in the last couple of quarters. So, just wanted to get some color on the bookings trajectory. Speaker 700:53:18If you go back to Some of the issues that started back in 2022, I mean, do you think that all those have kind of been put behind you now and this is the start of a migration higher? And I guess how is that kind of Manifested in the strength for 1st year salaries. Speaker 300:53:33Yes, I'm happy to take the first part and Scott can weigh in on The strength of our 1st year reps. So with respect to our bookings momentum, as we mentioned in our prepared remarks, I think we're very encouraged By our recent sales momentum, and I said this in my prepared remarks, I believe our growth metrics are turning a quarter. I use the word turning rather than turned because we do need to see continued strong execution In the second half, both with respect to bookings as well as contraction, really to begin to see our key growth metrics accelerate So feel pretty good about the few strong quarters of bookings we've posted. But as we both mentioned now, we need to see that trend continue in the back half. Speaker 200:54:24Yes. And in terms of Our selling efficacy, in the prepared remarks, I talked a little bit about the bookings efficacy of our new reps Relative to our seasoned reps and they're roughly the same. And it's interesting. If I think back to LiveRamp's early days, we invented a category. And so we had a lot of young sellers who Knew more about technology and our products than anybody else on the planet. Speaker 200:54:57So they were the unquestioned experts And all areas of data onboarding. Now many of them are still with us and they've grown and they've become spectacular Sales representatives. But more recently, the clients that we're serving tend to be larger, Bigger contracts, brands that are very recognizable, and our profile of the new people that we're hiring has probably shifted a little bit, More towards industry vertical experts. And I think one of the reasons that our new hires have been so effective is they can go in And they can talk the language of retail, the language of automotive, the language of travel. And they're very effective in a slightly different way Then perhaps our original sellers, what they brought. Speaker 200:55:53The combination of all those people together And the sharing of best practices, I'm really happy with, because I think we have great technical knowledge, coupled with great industry knowledge. So when A situation arises, there's always multiple people across the organization that you can say you can tap into and say, what would you do here? So I feel like we're showing up with really smart ideas to clients and those clients are receptive to it. Speaker 700:56:24Perfect. And then just quickly just circling back to the comments on Marketplace. That conservative the conservatism in the guide, I mean, Did you guys see anything around that October timeframe that you would call out? Or is Speaker 200:56:37this just more just general uncertainty? Thanks. Speaker 300:56:40Yes. Great question, Cal. So we did see a bit of a pullback in early October, which we would at least partially attribute to the conflict in the Middle East. Since then, growth has been healthy, but we are taking a conservative view for the balance of the quarter just Given the macro uncertainty as well as our lack of visibility into this area of the business. As a reminder, it was this quarter last year where we saw growth Swing from positive to negative year on year in a matter of a month. Speaker 300:57:12So we just think it's prudent to be conservative with our guide. And To kind of put some numbers against that, we're assuming marketplace growth in Q3 is low single digits and Roughly flat in Q4. Speaker 700:57:29Thank you. Speaker 100:57:31Operator, we have time for one more question, please. Operator00:57:35Understood. Your last question comes from the line of Brian Fitzgerald of Wells Fargo. Your line is open. Speaker 200:57:41Thanks. Scott, don't know if you I have a role here, but we wanted to ask about an announcement at Amazon Unboxed of the Amazon Publisher Cloud. It sounds to us like Even when publishers are doing premium direct deals going forward there, there's going to be significant utilization of clean rooms and presumably Some underlying identity resolution technology. Just wondering if you could give us some thoughts on trends there and what you're seeing and how you think LiveRamp factors into that? Yes. Speaker 200:58:12It's so interesting. If I go back 5 years ago, one of the questions that I often got from shareholders or potential shareholders Were things like, hey, will Amazon, Google and Facebook eventually put you out of business? And I used to say no, absolutely not. They're competing with one another. We are complementing them. Speaker 200:58:37We are partnering with them. Well, you see it today, because it's not just Amazon, but it's the fact that we are the beta launch partner for Google Pair. And you see it with the relationship that we have with Meta. You see it with the relationships that we have with virtually every CTV provider. It is just the case that in the world we live in, People are rightfully very protective of their data. Speaker 200:59:10And so the world needs someone like LiveRamp To ensure that collaboration can happen, but either side is protected. And if one side says trust us, give us all your data, you should naturally be suspicious. And so I think it is a really good sign that on both the advertiser side and the publisher side, Big companies are recommending that LiveRamp be utilized to facilitate the collaboration. The other thing that I would say that's a little bit part and parcel of this is, I get a lot of questions about the ID space, because it seems like every week someone's unveiling a new identifier. Well, we work with 100 of them now. Speaker 201:00:09And again, it goes back to our positioning as neutral and interoperable. We're the Rosetta So whether it's Acxiom's new identifier, Facebook's identifier, Fabrics identifier, Google's identifier doesn't matter to us. UID, there needs to be that Rosetta Stone that can tie it all together. And that's the role that LiveRamp plays. Awesome. Speaker 201:00:38Really appreciate it. Thanks, Scott. Speaker 501:00:42There are Operator01:00:42no further questions at this time. I will now turn the call over to Lauren Dillard. Speaker 301:00:47Thanks very much, and let me just close with a few final thoughts. First, Q2 was strong. We're pleased with our execution in the quarter. And importantly, we think our revenue growth metrics are turning the corner. Next, given the uncertain macro environment, we remain appropriately cautious with our revenue guidance for the balance of this fiscal year. Speaker 301:01:08And finally, we continue to make nice progress against our Rule of 40 aspirations and believe we still have several levers to pull to improve both our growth rate and margin profile moving forward. So with that, thanks again everyone for joining us. We look forward to speaking with many of you in the days weeks ahead. Operator01:01:28This concludes today's conference call. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallLiveRamp Q2 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) LiveRamp Earnings HeadlinesLiveRamp, AdOmni partn to bring new targeting to CTV, OLV, DOOHApril 25 at 10:40 AM | markets.businessinsider.comThe Winners and Losers of Google's Big Cookie ReversalApril 24 at 7:28 PM | msn.comTrump to unlock 15-figure fortune for America (May 3rd) ?We were shown this map by former Presidential Advisor, Jim Rickards, one of the most politically connected men in America. Rickards has spent his fifty-year career in the innermost circles of the U.S. government and banking. And he believes Trump could soon release this frozen asset to the public. April 25, 2025 | Paradigm Press (Ad)AdOmni And LiveRamp Bring New Targeting & Attribution To CTV, OLV And DOOHApril 24 at 7:28 PM | msn.comPerformance Unlocked: AdOmni and LiveRamp Bring New Targeting and Attribution to CTV, OLV, and DOOHApril 24 at 8:00 AM | globenewswire.comLiveRamp (NYSE:RAMP) Stock Rating Upgraded by StockNews.comApril 23 at 3:29 AM | americanbankingnews.comSee More LiveRamp Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like LiveRamp? Sign up for Earnings360's daily newsletter to receive timely earnings updates on LiveRamp and other key companies, straight to your email. Email Address About LiveRampLiveRamp (NYSE:RAMP), a technology company, operates a data collaboration platform in the United States, Europe, the Asia-Pacific, and internationally. The company operates LiveRamp Data Collaboration platform enables an organization to unify customer and prospect data to build a single view of the customer in a way that protects consumer privacy. Its platform supports various people-based marketing solutions, including data collaboration, activation, measurement and analytics, identity, and data marketplace. The company sells its solutions to enterprise marketers, agencies, marketing technology providers, publishers, and data providers in various industry verticals, such as financial, insurance and investment services, retail, automotive, telecommunications, high tech, consumer packaged goods, healthcare, travel, entertainment, and non-profit. The company was formerly known as Acxiom Holdings, Inc. and changed its name to LiveRamp Holdings, Inc. in October 2018. 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There are 8 speakers on the call. Operator00:00:00Afternoon, ladies and gentlemen, and welcome to LiveRamp's Fiscal 20 24 Second Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. As a reminder, this conference call is being recorded. I would now like to turn the call over to your host, Drew Borst, Vice President of Investor Relations. Speaker 100:00:34Thank you, operator. Good afternoon, and welcome. Thank you for joining our fiscal 2024 Second Quarter Earnings Call. With me today are Scott Howe, our CEO and Lauren Dillard, Interim CFO. Today's press release and this call may contain forward looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. Speaker 100:00:56For a detailed description of these risks, Please read the Risk Factors section of our public filings and the press release. A copy of our press release and financial schedules, including any reconciliations to non GAAP financial measures, is available at liveramp.com. Also, during the call today, we will be referring to the slide deck posted on our website. At this time, I'll turn the call over to Scott. Speaker 200:01:23Thank you, Drew, and thanks to everyone joining our call today. As I reflect back upon our recent quarter, 3 key themes emerge. First, I'm really pleased with the progress we're making in our business. We posted strong second quarter results. Revenue and operating income exceeded our expectations, and we have good momentum with many of our leading indicators of growth. Speaker 200:01:49Operating margins reached a record high and we generated positive operating cash flow for a 5th consecutive quarter. And we continue to make progress against our rule of 40 ambitions. 2nd, while it was a really nice quarter for us, our entire team We now have an opportunity to build off our momentum. Throughout the business, there are areas that we can continue to improve, which keeps us humble, yet also fuels our optimism for the future. 3rd and finally, I continue to believe that our future is even brighter. Speaker 200:02:28Our business is aligned with some key megatrends: Cloud Computing, consented 1st party data collaboration and growth in retail media networks and CTV. Let me talk about each one of these key themes in turn. 1st, strong business resilience and momentum. I'm pleased with our progress and our business is demonstrating strong resilience and momentum. Q2 revenue and operating income Exceeded our guidance and consensus estimates. Speaker 200:03:02Our operating margin expanded for the 4th consecutive quarter and by 800 basis points year on year to 20%. We produced $36,000,000 in operating cash flow in the quarter, bringing the trailing 4 quarter total to $108,000,000 Our trailing top line indicators showed improved momentum. Total revenue grew by 9%, with subscription revenue up 5% and marketplace and other up 25%. Subscription growth was in line with our expectation, while marketplace and other outperformed significantly, driven by healthy digital advertising markets and growth in professional services. Q2 subscription net retention Was 101%, a 3 point improvement from last quarter and surpassing 100% 2 quarters earlier than we had initially expected. Speaker 200:04:03The sequential improvement was driven mostly by higher upsell, but also lower contraction. Returning to 100% was an important milestone, but by no means will we stop here. Our leading top line indicators were even more encouraging. Q2 was our highest new logo bookings Quarter in dollar terms in 2 years, and we added 6 new Fortune 500 customers. We signed multimillion dollar annual contract with a leading global financial services company for our data collaboration platform. Speaker 200:04:40We signed a high 6 figure annual contract with the world's leading farm machinery brand. We also Signed a high 6 figure annual contract with an iconic athletic footwear and apparel company, a brand which we've been pursuing for many quarters. We also signed or upsold opportunities with 2 of the largest global airlines. Additionally, we also successfully upsold our existing customers. We had an upsell with a major pharmaceutical company representing a 7 figure annual contract and a multiyear term. Speaker 200:05:19We also signed a 7 figure upsell With a major social media platform to allow marketers to use their first party data for targeted marketing using our Ramp ID. Over the last several quarters, we've talked about several near term tactical growth levers to reestablish double digit revenue growth, With the sales force being one of the major ones, this was a big driver of our bookings momentum. Our sales force attrition has fully normalized and sales force capacity remains well above fiscal 2022 levels. Sales force productivity also continues to improve and our newest sellers are also contributing, with 1st year reps Posting comparable bookings to their more seasoned counterparts. I view this as a strong indication we are hiring talented sellers supporting them effectively with better training and collateral. Speaker 200:06:18While we are pleased with where we are with our sales force, We will continue to invest in quota carrying headcount to ensure we are set up for next year, as well as continue to Expand our professional services function. This group is really doing a fantastic job on pace to double revenue this year to 20,000,000 and driving improvements in customer satisfaction and upsell rates. 2nd, we aren't satisfied and see room for improvement. As I've often told our organization, when great companies look in the mirror, they never love what they see. Even in a quarter of accelerating momentum, we see opportunities for improvement. Speaker 200:07:02Let me talk about a few areas on which we're focusing. 1, we're not yet where we want to be on rule of 40. We have always aspired to be a rule of 40 company, and I'm very encouraged By ongoing progress, we are making on both the top and bottom lines. For us, we expect Rule of 40 to look like 10% to 15% revenue growth And 25% to 30% operating margins. But of course, today on a trailing 4 quarter basis, we are Essentially a rule of 25 company. Speaker 200:07:36And so that obviously falls short of our long term aspirations. So how do we get there? On the revenue side, continued sales execution is essential, and I'm encouraged by the trends of recent quarters. I also believe that a handful of existential market trends embedding our products within cloud computing partners, The continued growth of retail media networks and CTV and the market evolution from cookies to true consumer authentication Can further fuel our top line success in coming years. On the margin side, we just posted the highest quarterly operating margin in our company's history, And we're raising our operating income guidance for the year. Speaker 200:08:22The bridge from here to 25% to 30% Will be driven by several factors. First, our SaaS business model has a high incremental margin and we expect our revenue growth to accelerate. 2nd, we expect improving cost efficiency As we expand our incremental hiring and backfill efforts to our new office in Hyderabad, India. As we've said before, This initiative will result in several 100 basis points of margin expansion as it gets phased in over the next 2 fiscal years. And finally, there is no area of our business where we're not constantly evaluating opportunities to improve our process efficiency and our system architecture. Speaker 200:09:112, customer counts. Our $1,000,000 plus customer count increased by 3 And our $500,000 to $1,000,000 customers also increased by 3. That's really indicative of the success we're having with the more direct customers that comprise our ideal customer profile. As I've discussed previously, We made a conscious decision last year to focus on high long term value brand customers. These customers have large digital ad budgets that are being deployed over dozens of digital destinations And helping these customers measure and optimize their spending using their first party data is among our most compelling use cases. Speaker 200:09:59These customers typically have an annual contract value greater than $1,000,000 with a multi year term and above average renewal and up sell rates. With that said, overall, our Q2 customer count of 895 was down 20 from the prior quarter, Driven by declines with low ACV non brand customers such as adtech platforms. I don't think this is cause for concern, but I do think it's an area in which we can and must improve as winning even more high quality new logos We'll accelerate our upsell efforts in the coming years. The go to market partnerships that we have with the major cloud providers Should help us on this front, and we continue to see growth in our pipelines as a result of this initiative. In addition, We see that data collaboration is a flywheel that seems to be introducing us to new quality opportunities. Speaker 200:10:58Our success serving retail media networks across the globe, for example, ensures that both retailers and their myriad of packaged goods Partners must work with LiveRamp to unlock the benefits of data collaboration. 3, international. We are well positioned in major international markets given the fact that we work with so many marquee global brands who want us to support them across the markets in which they operate. That said, international revenue growth in the quarter of 3% on a constant currency basis Was lighter than we would have liked and China was a main driver of this disappointing performance. Earlier this summer, I spent a couple of weeks meeting clients and prospects in Europe. Speaker 200:11:46I think we're uniquely positioned with companies that really matter. And we also have a strong, strong team in place. Likewise, I was in Australia just last week and met with many of the top retailers and brands in that market, Where we have a number of interesting data collaboration activities that we power. Like many companies, however, We are rethinking our expectations for China. The combination of COVID impacts, changing political philosophies And an uncertain economy in China are negatively impacting top line international growth. Speaker 200:12:21In response, We are restructuring our China business, reducing our operations to a minimally viable footprint in case things change in that market. Overall, we don't expect this international restructuring to have a material impact on total revenue or operating income. But I wanted to mention this, so that investors understand that we remain committed to working with our major clients across the markets that they prioritize. 3rd, longer term, our business is aligned with some key megatrends. Let me spend a few minutes on our longer term prospects. Speaker 200:13:01Our product innovation and go to market partnerships seemingly have us well positioned To capitalize on some existential industry trends, the continued growth of cloud computing in marketing and advertising. In September, LiveRamp convened a group of marquee clients, each a leader in their respective industry, to walk through our product roadmap and gather feedback On our direction, every client in attendance was operating in the cloud and many attendees talked about their challenges navigating Multiple cloud providers, both internally and as they seek to collaborate with other partners externally. We see the seismic shift to cloud computing as a big opportunity for LiveRamp. Our cloud strategy is to operate where our clients' data lives and securely connect their data from the cloud across the entire digital marketing ecosystem. Bringing our products So the customers' cloud environment provides tangible benefits to our customers in the form of greater operating and cost efficiency, increased data security, and a quicker time to value on their LiveRamp subscription. Speaker 200:14:14The cloud providers also get the benefit of more storage and compute volume, which drives their revenue models. As more application workloads move to the cloud in the coming years, this will be a wind at our back and will drive the return on the cloud investments we are making today. Our cloud strategy is already succeeding in the market There is no better external validation of this than receiving the Partner of the Year award from Google Cloud. We were recognized as a Global Industry Technology Partner of the Year for delivering embedded solutions that help customers Enrich, their Google Cloud environment. Our cloud partnership is not limited to GCP. Speaker 200:14:57We are executing the same strategy with all the clouds and we are making significant progress with AWS and Snowflake as well as Azure and Databricks. During the quarter, we announced that our identity capabilities are now natively available within AWS entity resolution. With this integration, marketers, publishers, tech platforms and agencies can extend the interoperability of data in the cloud to marketing and advertising destinations using RampID. With Snowflake, our complete identity capabilities are now embedded And the very early customer feedback has been very positive. While these efforts are still nascent, we're starting to reap the rewards of our efforts. Speaker 200:15:42Overall, we remain on track to double our total cloud bookings in FY 2024 to approximately $20,000,000 Signal loss and a march toward customer authentication. Last month, I participated in the New York Advertising Week Conference, A week long event that brings together leaders from across the world of advertising and marketing. It was a productive week of meetings with customers, both existing and prospective. And I left the conference energized about LiveRamp's market position and the opportunity we have to help advertisers and publishers With some of their most pressing identity and data challenges, my many conversations highlighted an important truth. Consented 1st party customer data and the ability to securely share it across the ecosystem is only becoming more important as we get closer to mid-twenty 24 when Google begins phasing out third party cookies on the Chrome browser. Speaker 200:16:44Large brand marketers need to securely use their authenticated first party customer data for addressable advertising Across the vast and fragmented digital marketing ecosystem and increasingly they need to collaborate with trusted business partners For enhanced insights about the customer journey, they need to do all this in order to drive sales, customer satisfaction and return on ad spend. Our identity infrastructure and data collaboration platform provides a solution to signal loss and cookie deprecation by connecting our customers' 1st party identity to all manner of digital publishers, ranging from the largest walled gardens to the smallest DSPs and everything in between. Using identity infrastructure across all of these different publishers and platforms Enables more accurate cross screen and cross platform measurement that is critical to optimizing return on ad spend. We continue to expand our identity infrastructure to give brands greater access to data driven premium advertising inventory. Over the past few months, we announced a handful of major platform integrations with RampID. Speaker 200:17:59We integrated RampID on FreeWheel, A leading supply side platform for CTV publishers. As a result, brands can now leverage their first party data in conjunction with LiveRamp's Ramp ID and activate on FreeWheel's premium video supply. We also made RampID interoperable with Yahoo! DSP and its ConnectID, as well as Epsilon's Core ID. In addition to giving brands access to more data driven premium inventory, These platforms can transact with brands on a durable, consistent identifier, giving them increased scale even through signal loss. Speaker 200:18:42Finally, but importantly, we continue to support Google's migration away from cookies to true consumer authentication. During the quarter, we continued our beta testing of Google Payer. Payer, which stands for Publisher and Advertiser Identity Reconciliation, Allows brands to safely and securely use their 1st party customer data to connect to open web publishers on DV360. To make this happen, marketers use the cleanroom tech in LiveRamp's data collaboration platform to securely reconcile identity with publishers and purchase inventory via DV360. Once third party cookies are eliminated, Pear will be the only way for brands to target on DV360. Speaker 200:19:31We are the largest and most Scale partner with Google on the Pear launch. We now have over 6,500 publisher domains Live on Google Pay across North America, Europe and APAC, and we continue to scale advertising campaigns and are seeing marketer match rates continue to increase. Our key objective here is to continue to evangelize how this works to major advertisers Through webinars, workshops and published case studies, knowing that the education we do on this front will benefit Clean room collaborations between any advertiser and any publisher who want to partner with one another. The rise of retail media networks. Retail media networks increasingly just commerce media networks were another key topic at Adweek. Speaker 200:20:20These advertising channels continue to grow, Taking an increasing share of advertising budgets and they are becoming ubiquitous. Brand marketers are trying to manage Consumer data and identity across a growing number of different retail media networks. According to a recent Association of National Advertisers survey, Over half of marketers are using 5 or more different retail media networks, including 16% that are using 10 or more different networks. This continues to be LiveRamp's opportunity, first by helping brand marketer Safely and securely use first party data on these platforms and second, by enabling omnichannel measurement among various retail media networks as well as to other advertising platforms. A shift to CTV and data collaboration. Speaker 200:21:13As the pandemic shifted consumer viewing habits, CTV has witnessed explosive growth. While this growth offers LiveRamp customers yet another set of platforms on which to activate their data, we believe the opportunity is far greater. While granular audience targeting and frequency capping unlock a 1st wave of advertiser benefits, there is an increasing opportunity for additional services. For example, Given the fragmentation in CTV, measurement becomes an increasing need. Advertisers need it to demonstrate their ROI And publishers require measurement to justify their pricing and validate their inventory efficacy. Speaker 200:21:55In addition, many CTV providers Have rich collection of authenticated user data related to demographics and viewing behavior, and these increasingly offer a data collaboration opportunity not unlike what is driving the explosive growth in Retail Media Networks. In closing, Let me reiterate what I believe to be the key themes from the quarter. First, I really like the resilience and momentum our business is showing, particularly with respect to the top line progress we are making. As a result, we're raising our guidance for the year, But we're not satisfied, not even close. We think continuing to win new clients, accelerating our progress in the international markets And continued focus on all aspects of Rule of 40 are going to unlock even greater value for our shareholders as we progress in our efforts. Speaker 200:22:51Above all, however, I'm excited about LiveRamp's positioning against a number of key existential trends: Cloud Computing, Retail Media Networks, 1st party data collaboration, CTV and the slow march toward Authenticated addressability can all be tailwinds for our business in the coming years. Thank you Again, for joining us today and a special thanks to our exceptional customers, partners and to all of my LiveRamp colleagues for their ongoing hard work and support. We look forward to updating you on our progress in the coming quarters. I will now turn the call over to Lauren. Speaker 300:23:32Thanks, Scott, and thank you all for joining us. Today, I will cover 2 topics. First, a review of our Q2 financial results and second, our updated outlook for FY 'twenty four and for Q3. Unless otherwise indicated, my remarks pertain to non GAAP results and growth is relative to the year ago period. Staying with Q2 results. Speaker 300:23:55In summary, results were above our expectations. Revenue came in at $160,000,000 which was $8,000,000 above our guidance And operating income was $32,000,000 or $13,000,000 above our guide. Operating margin expanded by 8 percentage points to a record high of 20%, And we generated $36,000,000 in operating cash flow, our 5th consecutive quarter of positive OCF. Let me provide some additional details. Please turn to Slide 5. Speaker 300:24:25Total revenue was $160,000,000 up 9%. The subscription revenue is slightly ahead of our expectations, while marketplace and other was significantly ahead, driven primarily by a stronger than expected digital advertising market. Subscription revenue was $126,000,000 up 5%, And growth was driven by broad product and sector strength. Fixed subscription revenue grew mid single digits And usage as a percentage of total subscription revenue was 15%, within the historical 10% to 15% range. ARR was $428,000,000 up 2%. Speaker 300:25:06We believe this growth represents a low watermark as the recent improvement in bookings and contraction will start to more fully impact this metric moving forward. In addition, Q2 growth was hurt by the timing of bookings being recognized in ARR, reflecting our move up market to larger, more complex deals. Subscription net retention was 101%. The sequential improvement was mostly due to improved upsell and to a lesser extent, reductions in contraction. While our longer term aspiration is obviously much higher, We are pleased to get our SNR back above 100% 2 quarters earlier than we initially expected. Speaker 300:25:48Current RPO or our next 12 month contracted backlog was $339,000,000 up 16%. Total RPO, including contracted backlog beyond the next 12 months, was up 26% to 490,000,000 Like last quarter, there is an unusually large difference between CRPO and ARR growth. As we've discussed previously, CRPO is very sensitive to the timing of renewals and to contract durations, and both of these factors again benefited CRPO growth in the quarter. Overall, the Q2 selling environment remains stable. On the positive side, we saw an improvement in our pipeline conversion Back to FY 2022 levels and on a dollar basis had the strongest new logo quarter in the past 2 years. Speaker 300:26:40Also, our contraction, where the combination of down sell and customer churn improved both quarter on quarter and year on year, and budget constraints were cited less frequently. On the other hand, our average deal cycle continues to run about 1 quarter longer Then FY 'twenty two. This has been the case now 4 consecutive quarters and is at least partially due to our shift upmarket to larger high LTV enterprise customers with more complex data collaboration use cases. You can see this shift show up in some of our key growth metrics, like our $1,000,000 customer count. Marketplace and other revenue of 34,000,000 Increased 25%, driven by data marketplace, which grew 19% and accounted for 78% of marketplace and other revenue. Speaker 300:27:32Data marketplace growth was fueled by a healthy digital advertising market, including strength in CTV. We also continue to see strong growth in professional services, which accounted for nearly 1 third of the revenue growth in Marketplace and Other. Moving beyond revenue. Gross margin was 75%, flat year on year and 200 basis points higher than our guidance, driven primarily by the timing of planned investments. Operating expenses decreased 5% to $89,000,000 driven by last year's cost restructuring and benefited from the shift of certain expenses to the fiscal second half. Speaker 300:28:11Operating income was $32,000,000 up from $17,000,000 a year ago and our operating margin expanded by 800 basis points to a record high of 20%. GAAP operating income was positive for a 2nd consecutive quarter at $8,000,000 representing a GAAP operating margin of 5%. We incurred $7,000,000 in restructuring charges, primarily related to a goodwill impairment associated with the restructuring of our China operations and a lease impairment. Stock based compensation was $16,000,000 down from $27,000,000 a year ago due to the accelerated vesting of certain non NEO RSUs in Q4 of FY2023. Operating cash flow was $36,000,000 up from $21,000,000 a year ago due primarily to higher earnings. Speaker 300:29:03We repurchased 490,000 shares for $15,000,000 in Q2, bringing the fiscal first half total to $35,000,000 We have approximately $183,000,000 remaining under the current authorization that expires on December 31, 2024. In summary, Q2 was a strong quarter. Revenue growth improved to 9% with both subscription and marketplace exceeding our expectations. Our non GAAP operating margin expanded by 800 basis points. GAAP operating income was positive for a 2nd straight quarter. Speaker 300:29:39We generated $36,000,000 in operating cash flow in the quarter and $108,000,000 in the trailing 4 quarters. And finally, we repurchased $35,000,000 of stock through Q2. Next, let me now turn to our financial outlook for FY 'twenty four and for Q3. Please turn to slides 1213. Please keep in mind, our non GAAP guidance excludes intangible amortization, Stock based compensation and restructuring and related charges. Speaker 300:30:09Starting with the full year. We are increasing our total revenue guidance By approximately $10,000,000 at the midpoint and now expect revenue to be between $632,000,000 $637,000,000 up 6% to 7% year on year. Our outlook for subscription revenue is unchanged. We continue to expect subscription revenue to grow in the mid single digits, with usage as a percentage of total subscription near the midpoint of the historic 10% to 15% range. We expect subscription net retention to hover around 100% for the next two quarters. Speaker 300:30:46We now expect marketplace and other revenue growth to be in the low double digits for the full year, up from our prior expectation of mid to high single digits. We continue to expect gross margin to be approximately 74% despite the outperformance in Q2, which was mostly a timing issue. In the second half, we are making incremental investments in our platform architecture and in professional services to support future revenue growth. We expect our operating expenses to decline this year by approximately 4%, but are still making additional investments in our sales force and cloud strategy as well as some upfront investment to ensure our offshoring initiative is successful. Despite these added investments, We are increasing our operating income guidance to be between $97,000,000 $100,000,000 $7,000,000 higher than our prior guide at the midpoint. Speaker 300:31:44At the midpoint of our guidance range, the operating margin is approximately 15%, up 500 basis points year on year. We expect stock based compensation to be approximately $69,000,000 which benefits from the $23,000,000 in accelerated vesting in FY2023 And is slightly lower than our prior guide. We now expect $11,000,000 in restructuring charges given the lease and goodwill impairments recognized in Q2. We expect GAAP operating income to be between $8,000,000 $11,000,000 Lastly, we continue to expect share repurchases of between $15,000,000 $20,000,000 per quarter in the fiscal second half. Now moving on to Q3. Speaker 300:32:28We expect total revenue of approximately 165,000,000 Operating income of roughly $29,000,000 and an operating margin of approximately 18%. A few other callouts for Q3. Recall that in the year ago quarter, our subscription revenue included a nonrecurring contract settlement of $4,000,000 resulting in a 3 percentage point growth headwind for subscription revenue this Q3. Excluding this headwind, We expect underlying subscription growth to be mid single digits. We expect subscription net retention in Q3 to be approximately 100%. Speaker 300:33:07We expect marketplace and other revenue to grow by low double digits. This growth rate is slower sequentially because we are taking a measured view on digital ad market growth in light of the current macro and geopolitical environment, and we expect gross margin to be approximately 74%. Before opening the call to questions, I'll conclude with a few final thoughts. First, Q2 was strong on the top line and especially the bottom line. Importantly, we think our revenue growth metrics are turning a corner. Speaker 300:33:41Next, given the uncertain macro environment, We remain appropriately cautious with our revenue guidance for the balance of the fiscal year. We have good visibility on our subscription business and with Marketplace, we are striking a balance between our strong execution and the risk of a slowdown driven by forces outside of our control. To be clear, we would expect to see upside in Marketplace, particularly in Q4, if the advertising markets hold at the current level. And finally, as Scott mentioned, our financial North Star is Rule of 40, with mid teens top line growth And a 25% plus operating margin. On the top line, we are encouraged by the positive trends in forward bookings and contraction. Speaker 300:34:27On the margin front, the high incremental margin inherent in our model, combined with the expansion of our new India office, Gives us a path for sustained margin expansion in the coming years, while we continue to appropriately invest to support top line growth. With that, on behalf of all LiveRampers, thank you for joining us today. Operator, we will now open the call to questions. Operator00:34:53Thank you. Your first question comes from the line of Shyam Patil of SIG. Your line is open. Speaker 400:35:17Hey, guys. This is Jared on for Sean. Thanks for taking the question and congratulations on the impressive quarter. Speaker 200:35:24Thanks, Jared. Speaker 400:35:26Of course. I've got a couple, if you don't mind. I guess, for starters, focusing in on the higher LTV customer strategy, Can you elaborate a bit further upon that and how you're thinking that this plays out through the rest of the year, as well as maybe unpacking a bit More of the decline that we saw in the current quarter. And then for the second question, you continue to highlight CTV as a driver of the strength in the business. Anywhere in particular that we should be looking in your results as we're looking both in this quarter and then for further CTV strength down the road? Speaker 400:36:00And just how are you thinking that, that CTV strength continues to materialize? Speaker 300:36:04Great. Thanks, Jared. I'm happy to take the first and I'll pass it to Scott for the second. With respect to customer count, I'll start maybe by just highlighting something Scott mentioned in his prepared remarks, which is that this It's a direct reflection of a decision that we made as a business several quarters ago to really focus our selling efforts on large Hi, ACV Enterprise customers, where we believe our value proposition today is the greatest. So in the quarter, we did See continued pressure on customer count. Speaker 300:36:36This was almost entirely driven by small customers In the ad tech sector that are being impacted by the macro as well as other market dynamics. That said, I think it's important to note that our dollar based metrics are improving and reflect this quality versus quantity dynamic that Scott had mentioned. As an example, in the quarter, we closed one of our strongest new logo bookings quarters in recent history, and we saw a pretty nice uptick in both $1,000,000 customers as well as customers who fall in the $500,000 to $1,000,000 range. So in terms of our outlook for the balance of the year, We do expect this dynamic to continue for at least the next couple of quarters, which means total customer count could continue to decline, but we would expect other metrics like $1,000,000 plus customer count to continue to increase. Speaker 200:37:34And Jared, on your second question, I would tell you I'm really bullish about CTV and you probably heard that in my prepared remarks. In terms of where you're going to see it, I would say it's hard to tease out, but you can broadly look at 3 major areas. The first is subscriptions. If you look at the CTV providers, for the most part, they're 100% authenticated. So they could be a big winner As third party cookies go away, because that spend is addressable and it works. Speaker 200:38:06And so where you see that in our business is in our subscriptions. And so as the market tips to CTV, I think you'll see our subscriptions become even stickier. And you might see that in terms of a usage increase as well. What's kind of startling, I was looking at the stats earlier today. If you look at our distributions, the destinations that advertisers send Data too. Speaker 200:38:36If you look at the top 50 by volume, nearly half of them, 22 of them Our pure CTV providers or CTV platforms. So it suggests that Very quietly over the last couple of years, advertisers are already making a shift. The second place that you're going to see this Is in our marketplace business. I mean, again, it's kind of beneath the surface line. TV data sales as a part of marketplace were actually up a staggering 50% year over year. Speaker 200:39:18And that data comprises, I think, roughly 10% The total demand within data marketplace. So nice story there as well. And then the 3rd place that you'll see it, not surprisingly, because they're getting more demand and because they also Have really deep pockets of authenticated data is we think there's an opportunity for data collaboration. Very similar to what we've Seeing in the retail media network space, the various CTV providers have something really interesting to share. And so there's an opportunity that all of them are interested in, in partnering more deeply with the major advertisers of the world, Collaborating on data such that advertisers can find their target audiences and also Understand kind of end to end measurement across everything that happens once an ad is seen. Speaker 200:40:20So Three really interesting places and just come full circle. We've hit the tipping point for CTV. It's here. We're seeing it in our numbers And we think that's going to be a really nice tailwind for us, really for the next few years. Speaker 400:40:38Great. Thank you both. Operator00:40:42Your next question comes from the line of Elizabeth Porter of Morgan Stanley. Your line is open. Speaker 500:40:48Hey, this is Chris Quindaro on for Elizabeth. Congrats again on another solid quarter here. Maybe to start, out of all the top line initiatives that you all have been focused on over the past year or so, whether that's the sales force improvement or the growing industry partnerships. I'm curious to hear what areas have maybe surprised you the most to the upside than maybe you initially expected so far? Speaker 200:41:15Yes. Chris, I would tell you that to me sales success is a function of 2 ingredients. First, you have to have demand. And there, I think we've probably been pleasantly surprised based on our initial forecast In terms of market softness and I think the markets just developed better than we thought. But from a demand side, there are so many levers that we're pulling, cloud partnerships, CTV, Collaboration Networks, likewise, really pleased with Some of the traction we're getting with major European clients and Australian clients. Speaker 200:42:03And What's interesting is the opportunities that we're seeing, if you looked at our pipeline and you looked both at The named clients and the conversation that's underway, it is really encouraging Because they're all companies that you would have heard of and they're doing really fascinating things with data. So I like the demand side and that's firmed up, I think, even better than I would have thought. But To meet the demand, you also have to execute. You have to be able to respond. And there, I'm equally pleased. Speaker 200:42:45We've really done a revamp of our marketing collateral. Our team has done a nice job of onboarding and training and arming Sellers with the tools that they need to succeed, and we're seeing that in our numbers. More specifically, best new logo quarter in a couple of years, Strength kind of across the board, auto, financial services, healthcare, retail, and our pipeline conversion Was the highest we've had in 7 quarters and even stronger with $1,000,000 deals. So when I look at the numbers, everything is kind of tipping in the right direction. Now the one thing I'd say to our entire organization, many of whom are listening On the call today is success has to be stacked. Speaker 200:43:40We can't let up. We have a lot of momentum, But a couple of good quarters doesn't make the trend line we're looking for. So we need to keep it going through the back half of the year. Speaker 500:43:53Got it. That's very helpful. I also wanted to ask around the impressive The 6 Fortune 500 customer additions in the quarter that I think you mentioned. Just curious how those kind of came about? Did they come through The improved sales force or maybe through some of your industry partnerships and what do you think worked well in the process to ultimately win those large customers? Speaker 200:44:17Yes. Hold on. I'm just going to pull a stat, which is kind of mind blowing actually. What I would tell you is, what I'm really pleased with is our channel partnerships. And I think we're seeing a lot of traction there. Speaker 200:44:35One of the things that I realized when I worked at Microsoft, I thought that years ago all of Microsoft sales were direct. And when my company got acquired, I realized, no, that's not the case. They have a really big partner sales force. And in fact, Most SaaS companies use partner channels, to their benefit, with the exception of LiveRamp. Now a couple of years ago, we really started, to push on channel partnerships. Speaker 200:45:11And our focus for this past year has really been with the clouds and cloud data warehouses. We've done direct partnerships With all the major cloud providers, we've also forged strategic partnerships with system integrators for cloud opportunities. And we are partnering closely with the ecosystem, educating them about how our products work in the cloud and Use cases, go to market education. As an example, If I think about just last quarter alone, we did over 215 Joint planning calls just with Snowflake. But ultimately, we're going to be judged by our results. Speaker 200:46:00And on this, 60% and this is the stat I was looking for. 60% of our commercial leads closed cloud business year to date, which is an amazing stat relative to a year or 2 ago. And if you look at cloud Attached business as part of our revenue, we'll double it this year, to $20,000,000 for the year. So Really, really encouraged and I think we're still in the early stages of getting those partnerships up and running. Speaker 500:46:35Excellent. Thank you so much. Operator00:46:40Your next question comes from the line of Mark Zutowicz of The Benchmark Company. Your line is open. Speaker 600:46:47Thank you and good evening, Scott and Lauren. Just two questions. I was curious what dynamics drove the usage As a percent of subscription revenue above expectations to 15%. I think the 15% is sort of at the higher end of your historical range. And what might that suggest in terms of 2024? Speaker 600:47:10And then separately, curious what kind of demand You may be seeing outside of your core CPG and retail verticals. Excuse me, you've talked in the past about healthcare and FinTech being sort of limited with data privacy laws. Just maybe some color there would be helpful. Thanks. Speaker 300:47:32Sure. I'm happy to take the first, Mark, and I'll let Scott jump in on the second. With respect to usage as a percentage of subscription revenue, you're right, it landed right around 15% in the quarter, which is at the high end of our historic 10% to 15% range. The only notable thing I would call out is just it benefited Certainly from a better macro environment and better overall trends in digital advertising than we assumed in Our outlook going into the quarter. Again, in the back half, and this is consistent with how we've been guiding those subscription usage in marketplace, We are attempting to be both balanced and conservative. Speaker 300:48:13And so would guide you to the midpoint Of that 10% to 15% range in Q3 and Q4 versus what we saw in Q2. Speaker 200:48:25And then Mark, your second question is really about which verticals. In my prepared remarks today, I talked about My time at Adweek a few weeks ago in New York and one of the things that was all over Adweek, Literally every conversation was the growth of retail BD Networks. It's the fastest growing part of most media plans. And as a result, other advertisers, marketers and data providers have really taken notice. And the whole driver of retail media networks is collaboration that's happening between retailers and their merchant partners. Speaker 200:49:08I think we're starting to see that evolve in a really healthy way to other verticals. I think it was in Q4 last year, I talked about the automotive space as an example and I shared new client win that we had. And fascinating case study where they're using us and doing data collaboration, Not yet with the rest of the world, but between the OEM, the regional advertising groups And the actual dealers where cars are sold. And when all of them are collaborating, All of a sudden you can make the connection between a car that's manufactured, where an ad is served regionally And whether it actually drove a purchase at the dealer. That is a great case study that I look Forward to sharing with you someday at an Analyst Day because it's also indicative of a company we brought on. Speaker 200:50:18When I came on, they were just an onboarding client, dollars 500,000 a year. And within 3 years, they're doing some of the most Sophisticated things that any of our clients are doing, their spend is over 10 times as much as it was when they started, And they just keep layering more sophistication on what they're doing. Another more recent example As I talked about some airline wins that we had and really excited about Where one of them is going to take their partnership with LiveRamp because certainly they'll start and they'll Use LiveRamp to better direct their own spend from a marketing perspective, but the partner collaboration that they're going to turn on over time, They have a network of both codeshare partners and hundreds of different travel partners, where they can be Sharing data for the collective good and to drive a better customer experience as well. In addition, Most airlines, including this one, probably more than most, have a lot of untapped assets. In particular, the screens that are in your seat back and the apps that you might be watching to watch Movies when you're on the plane. Speaker 200:51:46So some just amazing things that you're going to see out of the travel space. And A third vertical, and I'm just giving these 3 as examples, would be the publisher space. Earlier, Jared asked me about CTV. And there we're seeing such interesting innovation from those CTV providers. They can build unique segments from their data. Speaker 200:52:12They can create multi screen packages and they can collaborate with advertisers To really deliver full purchase funnel measurement, from the moment an ad is seen to how much engagement To an actual purchase in store at a dealership or online. So I think the whole concept of retail media networks, That term is yesterday, collaborative networks or collaborative data partnerships. I think the world is wide open every sector, and the good news is we sit right in the middle of that. Speaker 600:52:53Interesting stuff. Thanks, Scott. Very helpful. Operator00:52:58Your next question comes from the line of Jason Kreyer of Craig Hallum Capital Group. Your line is open. Speaker 700:53:06Great. Thank you. This is Cal Bardasol on for Jason. So I guess first just to start, we've seen some Some good improvements in the results in the last couple of quarters. So, just wanted to get some color on the bookings trajectory. Speaker 700:53:18If you go back to Some of the issues that started back in 2022, I mean, do you think that all those have kind of been put behind you now and this is the start of a migration higher? And I guess how is that kind of Manifested in the strength for 1st year salaries. Speaker 300:53:33Yes, I'm happy to take the first part and Scott can weigh in on The strength of our 1st year reps. So with respect to our bookings momentum, as we mentioned in our prepared remarks, I think we're very encouraged By our recent sales momentum, and I said this in my prepared remarks, I believe our growth metrics are turning a quarter. I use the word turning rather than turned because we do need to see continued strong execution In the second half, both with respect to bookings as well as contraction, really to begin to see our key growth metrics accelerate So feel pretty good about the few strong quarters of bookings we've posted. But as we both mentioned now, we need to see that trend continue in the back half. Speaker 200:54:24Yes. And in terms of Our selling efficacy, in the prepared remarks, I talked a little bit about the bookings efficacy of our new reps Relative to our seasoned reps and they're roughly the same. And it's interesting. If I think back to LiveRamp's early days, we invented a category. And so we had a lot of young sellers who Knew more about technology and our products than anybody else on the planet. Speaker 200:54:57So they were the unquestioned experts And all areas of data onboarding. Now many of them are still with us and they've grown and they've become spectacular Sales representatives. But more recently, the clients that we're serving tend to be larger, Bigger contracts, brands that are very recognizable, and our profile of the new people that we're hiring has probably shifted a little bit, More towards industry vertical experts. And I think one of the reasons that our new hires have been so effective is they can go in And they can talk the language of retail, the language of automotive, the language of travel. And they're very effective in a slightly different way Then perhaps our original sellers, what they brought. Speaker 200:55:53The combination of all those people together And the sharing of best practices, I'm really happy with, because I think we have great technical knowledge, coupled with great industry knowledge. So when A situation arises, there's always multiple people across the organization that you can say you can tap into and say, what would you do here? So I feel like we're showing up with really smart ideas to clients and those clients are receptive to it. Speaker 700:56:24Perfect. And then just quickly just circling back to the comments on Marketplace. That conservative the conservatism in the guide, I mean, Did you guys see anything around that October timeframe that you would call out? Or is Speaker 200:56:37this just more just general uncertainty? Thanks. Speaker 300:56:40Yes. Great question, Cal. So we did see a bit of a pullback in early October, which we would at least partially attribute to the conflict in the Middle East. Since then, growth has been healthy, but we are taking a conservative view for the balance of the quarter just Given the macro uncertainty as well as our lack of visibility into this area of the business. As a reminder, it was this quarter last year where we saw growth Swing from positive to negative year on year in a matter of a month. Speaker 300:57:12So we just think it's prudent to be conservative with our guide. And To kind of put some numbers against that, we're assuming marketplace growth in Q3 is low single digits and Roughly flat in Q4. Speaker 700:57:29Thank you. Speaker 100:57:31Operator, we have time for one more question, please. Operator00:57:35Understood. Your last question comes from the line of Brian Fitzgerald of Wells Fargo. Your line is open. Speaker 200:57:41Thanks. Scott, don't know if you I have a role here, but we wanted to ask about an announcement at Amazon Unboxed of the Amazon Publisher Cloud. It sounds to us like Even when publishers are doing premium direct deals going forward there, there's going to be significant utilization of clean rooms and presumably Some underlying identity resolution technology. Just wondering if you could give us some thoughts on trends there and what you're seeing and how you think LiveRamp factors into that? Yes. Speaker 200:58:12It's so interesting. If I go back 5 years ago, one of the questions that I often got from shareholders or potential shareholders Were things like, hey, will Amazon, Google and Facebook eventually put you out of business? And I used to say no, absolutely not. They're competing with one another. We are complementing them. Speaker 200:58:37We are partnering with them. Well, you see it today, because it's not just Amazon, but it's the fact that we are the beta launch partner for Google Pair. And you see it with the relationship that we have with Meta. You see it with the relationships that we have with virtually every CTV provider. It is just the case that in the world we live in, People are rightfully very protective of their data. Speaker 200:59:10And so the world needs someone like LiveRamp To ensure that collaboration can happen, but either side is protected. And if one side says trust us, give us all your data, you should naturally be suspicious. And so I think it is a really good sign that on both the advertiser side and the publisher side, Big companies are recommending that LiveRamp be utilized to facilitate the collaboration. The other thing that I would say that's a little bit part and parcel of this is, I get a lot of questions about the ID space, because it seems like every week someone's unveiling a new identifier. Well, we work with 100 of them now. Speaker 201:00:09And again, it goes back to our positioning as neutral and interoperable. We're the Rosetta So whether it's Acxiom's new identifier, Facebook's identifier, Fabrics identifier, Google's identifier doesn't matter to us. UID, there needs to be that Rosetta Stone that can tie it all together. And that's the role that LiveRamp plays. Awesome. Speaker 201:00:38Really appreciate it. Thanks, Scott. Speaker 501:00:42There are Operator01:00:42no further questions at this time. I will now turn the call over to Lauren Dillard. Speaker 301:00:47Thanks very much, and let me just close with a few final thoughts. First, Q2 was strong. We're pleased with our execution in the quarter. And importantly, we think our revenue growth metrics are turning the corner. Next, given the uncertain macro environment, we remain appropriately cautious with our revenue guidance for the balance of this fiscal year. Speaker 301:01:08And finally, we continue to make nice progress against our Rule of 40 aspirations and believe we still have several levers to pull to improve both our growth rate and margin profile moving forward. So with that, thanks again everyone for joining us. We look forward to speaking with many of you in the days weeks ahead. Operator01:01:28This concludes today's conference call. You may now disconnect.Read morePowered by