LiveRamp Holdings, Inc.

and welcome to the LiveRamp Fiscal 2020 Third Quarter Earnings Call. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Lauren Dillard, Chief Communications Officer.

Thank you, Operator. Good afternoon and welcome. Thank you for joining us to discuss our Fiscal 2020 Third Quarter results. With me today are Scott Howe, our CEO, and Warren Jensen, President and CFO. Today's press release in this call may contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. For a detailed description of these risks, please read the Risk Factor section of our public filings and the press release. A copy of our press release and financial schedules, including any reconciliation to non-GAAP financial measures, is available at LiveRamp.com. Also during the call today, we'll be referring to the slide deck posted on our website. At this time, I'll turn the call over to Scott.

Thank you, Lauren. Good afternoon and thanks for joining us today. I always enjoy our time together as it serves as an inflection point for us to share more detail about our operating performance and then summarize what we believe to be the key overarching trends in our business. In my remarks today, I'll first briefly highlight what was, on almost any measure, another strong quarter. And then I'll share with you, in turn, Four overarching themes I believe to be true about LiveRamp. The short summary. We delivered another strong quarter, highlighted by solid top line execution, significantly improving profitability trends, growing industry leadership, and continued business momentum across each of our key growth areas. We reported our first ever 100 million dollar plus quarter and total revenue was up 28% year over year. Our subscription business grew 25% driven by both our enterprise and agency channel and an acceleration in our platform and publisher vertical. In addition, Data Plus Math continues to build momentum and benefited our subscription growth rate in the quarter. Marketplace and other revenue was up over 40% Fueled by the strength of our data marketplace and advanced television business. Beneath the top line, we remained relentlessly focused on operational execution and generated meaningful margin improvement in the quarter. Gross margins improved to 69% and operating loss as a percentage of revenue improved to negative 5.5%, demonstrating significant leverage. Finally, We continue to support our shareholders through our buyback. During the quarter, we bought back more than $20 million of stock, and fiscal year to date have repurchased just over $120 million. Across LiveRamp, our attention is already fixed, not on the performance of the past quarter, but rather on our path forward. To this end, let me share four key themes that are increasingly emerging and give us continued confidence and optimism. One, our role in the ecosystem has never been more important, which is fueling our continued success. Two, our growth model is working, as evidenced by many proof points. Three, our platform is now viewed as essential infrastructure for our clients and at the same time creates strong network effects which in turn are driving sustained profitability improvements. And four, finally, we continue to be incredibly optimistic about our future as we're seeing a myriad of future growth levers and recognize there are opportunities for us to manage the business even more effectively. Let me next address each of these key themes in turn. First, our role in the ecosystem has never been more important. which is fueling our continued success. The past year has witnessed two potentially seismic changes to the marketing ecosystem. The initiation of new regulations such as CCPA and the more recent announcement that Google intends to phase out their support for third-party cookies in Chrome over the next two years. Neither of these changes is a surprise to LibRamp and we have, in fact, have been working with our clients and partners for many months to ensure they will be well positioned for future success. CCPA went into effect on January 1st, and the headline is, We Were Prepared. LiveRamp has always been a vocal champion of consumer transparency and choice, and we embraced CCPA's as an opportunity to demonstrate our thought leadership and guide our customers and partners through their compliance framework. We kicked off an extensive process well over a year ago and also made significant investments over this period to expand both our product and data ethics teams to ensure we were appropriately resourced. To date, CCPA has had no material impact on our business. with respect to both our graph and data marketplace. Consumer requests have been very manageable and well in line with our expectations. In short, CCPA further hardens our position as the neutral, safe choice. In addition, last month, Google announced plans to phase out support for third-party cookies in Chrome within the next two years. Google also indicated It plans to work with its ecosystem partners to enable a healthy ad-supported web while providing users with greater transparency and control over their data. We fully support this initiative and Google's transition runway, and we've been readying for a more effective and secure technology for several years. There are three key facts we think our partners should consider in light of Google's announcement. Number one, LiveRamp is much bigger than programmatic. Let me remind you of how LiveRamp technology actually works. IdentityLink is a people-based identifier and is anchored on our core offline Abilitech asset rather than cookies or device IDs, providing greater privacy, security, portability, and durability than other identifiers. We are also omnichannel. and built out our distribution network to support all types of marketing use cases, including advanced TV, social, mobile app, search and offline channels. In fact, as new identifiers continue to emerge, creating even greater ecosystem complexity across channels and partners, our ability to integrate with any of these emerging technologies has increased our relevance. Chrome cookies are not utilized in our advanced television, mobile, or offline relationships. They are also not utilized in our Google Search or Microsoft Bing integrations. Furthermore, in the digital display world, Chrome cookies are not utilized in our direct integrations with platforms like Facebook, Twitter, Pinterest, or Spotify, where consumers spend close to 50% of their time. Cookies have historically been utilized in the display integrations we have with programmatic platforms like DSPs and SSPs, though this too is now changing. Second, importantly, we are prepared for industry evolution. In 2017, LiveRamp launched the Advertising ID Consortium, paving the way for people-based identity in the programmatic bid streams. In 2018, IdentityLink became the first ever people-based ID available for marketers to buy on the open Internet. Last year, we introduced the Authenticated Traffic Solution, or ATS, which allows publishers to match consented user data with a live ramp IdentityLink, enabling people-based advertising on authenticated, cookie-less inventory across the open Internet. ATS is live and can be leveraged by brands, agencies, and publishers today to buy inventory without the need for a third-party cookie. We are experiencing strong industry adoption as the ecosystem welcomes a simple standard and unbiased solution. We have 12 SSPs live or committed to implementing IdentityLink in the bid stream, including Index Exchange, Pubmatic, Rubicon Projects, TripleLift, and Beachfront. We also have multiple publishers with code deployed on page. On the buy side, we have 30 DSPs live or committed to bid on IdentityLink, including Amobi, Criteo, DataZoo, and MediaMath. On the brand side, we're seeing brands innovating with IdentityLink and starting to send data directly to platforms without any cookie sync using just the IDL, creating a faster workflow and better match rates. Finally, data-driven marketing is table stakes, and our technology simply works better. Marketers and publishers are not going to back off tactics that have worked so well for them over the past decade. and our clients are actively seeking to expand their usage of data into more and more of their marketing activities. As data-driven marketing evolves, LiveRamp is uniquely positioned to enable the future of addressability in this new world. Further, we think LiveRamp offers a better technological solution than cookies for several reasons. Because we utilize a persistent identifier The sync deprecation typical when multiple partners utilize cookies does not exist. So addressable reach is vastly increased. In addition, because we rely on consent-based identity, new pools of inventory can be accessed that are not available today when third-party cookies are blocked, which vastly improves publisher yield and advertiser ROI. As it scales, ATS will provide a more consumer-friendly solution. And finally, buying on IDL just works better. For example, in 2019, we saw a continued marketer adoption and some initial results of the benefits of buying on a people-based ID. 23% increase in measurable impressions. Almost three times higher unique audience reach. 24% higher click-through rates and 20% higher publisher yields. In summary, we've been preparing for CCPA and third-party cookie changes for some time and believe we are well positioned to help our clients and partners navigate these changes. We also know that the ecosystem in which we operate will continue to evolve and new technologies and regulation will continue to emerge. Even this morning, I read that the DOJ is launching an antitrust investigation into one of the large walled gardens. Again, we're agnostic. So rest assured, if cookies don't go away, we will be prepared and plan to continue to support all forms of identity. Regardless of how the ecosystem evolves, We intend to use industry change to deliver even greater insight and product efficacy to our clients and partners. And we believe industry change is a euphemism for live ramp opportunity. It makes our role even more important to anyone and everyone using people-based data. A second key theme I want to highlight is that our growth model is working. as evidenced by many proof points. Companies of all sizes are turning to LiveRamp because we are the trusted and neutral choice to enable their omnichannel data strategies, and our ongoing commitment to innovation and customer success is fueling our recent market momentum. Our land expand and extend growth model continues to deliver. Bookings in the period were again at near record levels, and up more than 50% compared to prior year. We made broad additions across our enterprise customer base, adding approximately 50 new customers and bringing our direct subscription customer count to 770. One example of a recent client win is Cineos Health, a leading end-to-end clinical and commercial solution for biopharmaceutical development. While this still represents marketing-related work, it's a validation of the progress we are making with completely new types of customers as we, over time, work to expand our purview. Cineos works with biopharma companies to improve and accelerate the delivery of therapies that impact worldwide health. They are leveraging LiveRamp on behalf of their customers to identify and reach doctors and healthcare professionals for clinical trial recruitment and to market new therapies through their DSP. Cineos selected LiveRamp because of our commitment to data privacy, experience handling sensitive data, and breadth of expansion opportunities. On our last call, James Ara discussed some of the initiatives in place to improve our core subscription Net Retention, Churn, and Sales Effectiveness. These efforts are having an impact, and we remain very optimistic about the expand component of our growth equation. Upsell bookings were again strong in the quarter, representing approximately 70% of total bookings, and we continue to have good success upselling more sophisticated use cases like Advanced Television, Measurement, and analytics and second-party data sharing. Subscription net retention was 112% in Q3, slightly higher than our previous guidance, given strong holiday usage trends in the quarter. We currently have $50 million customers, up from 44 last quarter. And finally, Our platform net retention came in at 119% in the quarter. Our data marketplace attach rate was approximately 17%. We expect this to trend higher over time as more and more brands streamline their data strategies with LiveRamp and our consumer social offering continues to gain scale. My third key theme, Our platform is now viewed as essential infrastructure for our clients, and at the same time creates strong network effects, which in turn are driving sustained profitability improvements. In the quarter, gross margin grew to 69%, and operating profit improved $14 million sequentially, demonstrating the power of our model. As we've scaled our network and technology, we have found additional ways to leverage our platform, and create incremental revenue streams. Data Marketplace, which leverages the same core infrastructure as our subscription business, is a great example of this. Further, as efforts like ATS and our identity co-op continue to scale, we expect them to generate additional gross margin leverage. In addition, the network characteristics of our model also create significant sales efficiencies. Beyond our reseller relationships, products like Advanced TV and our Safe Haven platform for data sharing also have strong flywheel effects that can drive our sales productivity up over time. Finally, we continue to be incredibly optimistic about our future as we're seeing a handful of future growth levers and recognize there are opportunities for us to manage the business Thank you for joining us. A notable recent upsell win was a global retailer to power their second-party data environment. Leveraging LiveRamp, this partner is bringing together its first-party transaction data and data from its brand partners to power better customer experiences and unlock more complete insights and measurement. There is an emerging global trend, especially in retail and packaged goods, where brands are leveraging their data in new and innovative ways to network their vendor partners and make more intelligent trade decisions. For example, a retailer sharing its transaction data with a CPG to power use cases such as portfolio strategy and performance and promotion effectiveness by enabling data An audience collaboration in a neutral, permission-controlled, safe haven environment, LiveRamp can ensure the data remains safe and secure while delivering the highest possible matches between partners. We are generating a substantial pipeline across industries, including QSR, CPG, retail, telecom, and entertainment. A second important growth area for Librant continues to be advanced television, where we are seeing strong traction with data plus math. Our TV business was up over 50%, and we landed some nice upsells in the quarter. For example, we recently started working with a leading quick-serve restaurant to match linear television impressions to store visits. On the sell side, We continue to expand existing network relationships as more brands push for secondary guarantees using data plus math metrics. According to eMarketer, last year data enabled TV ad spend represented roughly 15% of the $70 to $80 billion spent overall on television in the U.S. This number is expected to grow to over 20% this calendar year, as brands allocate more of their TV budget to below-the-line activities like addressable or OTT where the tactics and returns of digital advertising can be mimicked. Recent market trends like the rise of network and cable provider consortiums, acceptance of outcome-based guarantees, and explosive growth of streaming platforms suggest Thank you for joining us. and a third major reason for optimism resides in our continued ability to simply operate our business more effectively. With transition spend and our GCP migration behind us, we've established a solid foundation for durable long-term growth and scalability. We also continue to improve key processes that allow us to operate more effectively, streamlining our ticketing process, to reduce service costs while increasing customer satisfaction, investing in platformization and system reliability for greater operational stability, and standardizing our implementations that enable us to serve the client needs without customization costs. So let me end where I began. Thanks for joining us today. and allowing me to share what we believe to be four emerging truths about our business. As the ecosystem around us continues to evolve, our importance as the essential neutral platform for anyone and everyone in the industry only continues to increase. You can see this in our growth, which is underpinned by a powerful and proven model Thank you for joining us. I will now turn the call over to Warren.