LiveRamp Holdings, Inc.

Good afternoon, ladies and gentlemen, and welcome to LiveRamp's fiscal 2024 fourth quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. 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.

Thank you, operator. Good afternoon and welcome. Thank you for joining our fiscal 2024 fourth quarter earnings call. With me today are Scott Howe, our CEO, and Lauren Dillard, our 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. For 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'll be referring to the slide deck posted on our website. And with that, I'll turn the call over to Scott.

Thank you, Drew, and thanks to everyone joining our call today. As I've done in past year-ending earnings calls, Today, I'll strike a balance between talking about the quarter and year that just ended, and perhaps more importantly, provide a bit of color around what we intend to accomplish across the coming year. We ended fiscal 2024 on a high note, with Q4 revenue and operating income exceeding our expectations and a positive inflection in several key performance indicators. As we look ahead to FY25, we like our strategic position. Our data collaboration platform seems well-positioned to capitalize on the growing need for secure first-party data collaboration and to sustain addressable digital advertising in a world of third-party signal loss. Operationally, we also feel as if there are still a lot of ways we can run the business even more effectively and efficiently. Before turning to our FY25 priorities, however, let me spend some time on Q4 and FY24. Q4 revenue growth exceeded our expectations across the board, with total revenue up 16%, subscription up 11%, and marketplace up 38%. Revenue was ahead of our guidance by $12 million, or 7%. and non-GAAP operating income was ahead by $3 million, or 20%. Revenue growth came a long way in FY24. You might recall that our initial guide 12 months ago was for revenue growth of 2% to 4%. Over the past year, we actually grew our top line at 11%, or 10% on a like-for-like basis, excluding HABU. The majority of the upside was driven by our marketplace business, but subscription also overperformed in the fiscal second half. Subscription revenue growth, after positively inflecting in Q3, accelerated again in Q4 by 1.9% on a like-for-like basis. This growth acceleration demonstrates the progress we made throughout FY24 and improving our sales productivity and customer retention. The best leading indicator of subscription revenue is ARR, or annual recurring revenue, and in Q4, growth accelerated for a second consecutive quarter. On a like-for-like basis, ARR grew by 7%, a one-point acceleration sequentially, and the fastest quarterly growth since Q3 FY23. We continued to see positive momentum in new logo bookings in Q4. Last quarter, I highlighted that Q3 was our highest quarter for new logo dollar bookings in over two years. Well, Q4 was the second highest, and just 1% below Q3. We signed a new three-year contract with a seven-figure annual value with a major home improvement retailer. for a bundle of our solutions across identity, connectivity, and data collaboration. We signed another seven-figure annual contract with a multi-year term with a major pharmacy retailer for identity and connectivity. We also continue to successfully upsell our existing customers. Our subscription net retention was better than we expected at 103%. This is still below the levels we aspire to achieve, but I'm pleased with the progress we made in FY24, improving retention by six percentage points. We had a notable seven-figure upsell with a multi-year term with a major pharmaceutical manufacturer for our identity onboarding solutions. We had a high six-figure upsell with a two-year term with a major cosmetics and beauty retailer. for our clean room and data collaboration solutions. These customer wins speak to the broader success we're having with the largest, most innovative brand customers. In Q4, our $1 million-plus customer cohort count increased by 10 quarter-on-quarter to 115, equaling our highest net ad quarter on record. and FY24 was our best fiscal year on record, with 20 net million-dollar-plus customer ads. While I am pleased with our progress in FY24, there remains room for improvement. The entire LiveRamp team is focused not just on sustaining our current momentum, but hopefully improving upon it. I am energized about the opportunity in front of us, with our data collaboration platform and the industry megatrends that should continue to be a wind at our back. From the transition from third-party signals to authenticated addressability to accelerating growth in major CTV and commerce media providers to cloud computing and artificial intelligence, all of these market trends are seemingly poised to drive incremental demand for our solutions, And it's our responsibility to seize this opportunity. We have four overarching corporate priorities for FY25. First, enhance both our products and customer experience to help improve customer retention while positioning us for greater upsell success. Second, extend our leadership position in data collaboration. Third, scale our partner and connectivity ecosystem. And fourth, simplify LiveRamp for our customers and employees. I will elaborate on each of these in a minute. But the common thread is that if we successfully execute on these priorities, then we will continue to make progress with our primary financial objective of becoming a Rule of 40 company. starting with upgrading our products and customer experience to improve customer retention. This is and will always be an ongoing effort, as great customers always expect constant progress. But let me share a few examples. First, we have better aligned our pre- and post-sales teams to more efficiently and effectively onboard new customers and reduced the amount of time between contract signing and go live. Second, we continue to modernize our technology to facilitate greater scale and faster turnaround time. Third, we've upgraded all customers from cookie-based workflows to our Ramp ID, which readies them for payer and other non-cookie integrations, where the advertising performance typically is significantly better. Finally, We deploy dedicated resources to help our activation customers expand the number of destinations where their first-party data is being used. Our internal data tells us that both customer retention and profitability are positively correlated to the number of publisher destinations to which our customers activate their first-party data. We made significant progress with customer retention in FY24. But we think these initiatives and others will help us continue improving in FY25. Our second priority is extending our leadership in data collaboration. Data collaboration helps companies manage and optimize data that is siloed across a growing number of cloud computing environments. Data collaboration is also an antidote to third-party cookie deprecation and other signal loss. In a recent eMarketer survey, advertisers and publishers were asked which solutions held the greatest promise of replacing cookie dependent solutions. The number one response from approximately half of the advertiser and publisher respondents was first party data activation. We believe this is particularly true for the largest, most sophisticated companies. After all, First party data is not equally distributed across the ecosystem. Some companies are rich in first party data, like retailers and major publishers, and others are first party data poor. Our data collaboration platform provides a solution for this data inequality by enabling the secure sharing of first party data with trusted business partners for mutual benefit. In a manner similar, to the mutual benefits retailers and CPG companies get through data sharing in retail media networks. Habu is an important component of our data collaboration strategy. We're now four months into the Habu acquisition, and I'm convinced the influx of both talented people and elegantly simple yet sophisticated technology make us a better company and position us for greater long-term success. We have already integrated Habu's cleanroom technology into our data collaboration platform. The onboarding of our new colleagues was fairly easy, given our shared excitement about the future. And the talented Habu leadership team has been given expanded responsibilities and access to even more resources. Customers are responding positively, to Habu's product, particularly its key differentiators of seamless cross-cloud interoperability, customizable analytics and walled gardens, and a simple user-friendly UX. As a result, our sales pipeline continues to scale. One month after the deal closed, our incremental data collaboration pipeline was 30 million, and now, four months in, it's over 40 million. While Habu's capabilities are a key component of our data collaboration strategy, together they are only one part of a much broader, holistic offering. At RampUp in February, we officially launched the next generation of the LiveRamp data collaboration platform, modernizing and unifying our identity, connectivity, data access, and data collaboration capabilities onto a single, composable platform. The modernized platform introduces new capabilities such as a simplified user interface, new ingestion pipes that reduce processing time and accelerate speed to value, composable technology for cross-cloud interoperability to unlock data collaboration partnerships, and an expanded partner marketplace where third-party developers can build custom applications. By bringing all of our capabilities into a single seamless user interface with simplified orchestration, customers are able to more easily connect audiences across partners and unlock greater value across all of their data collaboration needs. In addition, we will continue to invest this year in unifying our back-end systems to modernize our platform architecture to drive improved speed, stability, and scalability. This matters to our clients, many of whom have scaled their usage of our platform in ways we never imagined even a few short years ago. The combination of technology scalability and network density help extend our leadership position in data collaboration, as well as help with our first corporate priority of improving customer retention. Our third priority, is to continue scaling our partner and connectivity ecosystem. This has long been a key competitive advantage, as the efficacy of our product is in part a function of where and how our technology can be used. Network scale matters, and we have the world's leading ecosystem across publishers, technology platforms, and data providers, all either powered by or being upgraded to post-signal solutions. Our authenticated traffic solution, or ATS, has been in the making for five-plus years in anticipation of third-party signal loss. Today, ATS is a fully scaled solution that connects publisher and marketer data to better personalize and measure advertising across channels and across geographies. ATS has been adopted by over 21,000 publisher domains, including 75% of the Comscore 100 publishers, and it connects to over 92% of U.S. consumer time spent online. Irrespective of Chrome's deprecation timeline, the digital advertising market has largely moved beyond third-party cookies. Marketers look to reach their consumers not just on Chrome browsers, but across the compelling channels of Safari, mobile in-app, retail media, and CTV. ATS is omnichannel. We've partnered with Disney+, Tubi, NBCU, Paramount+, and many more pubs, and these partnerships are not limited by the cookie. ATS is available wherever a consumer is today and will be in the future. And we envision a future where today's connections with major platforms, publishers, and CTV providers increasingly are complemented by AI applications and new consumer touchpoints. Additionally, we have partnered with Google's DSP, Display and Video 360, on its PAIR initiative. PAIR, which stands for Publisher Advertiser Identity Reconciliation, is DV360's answer to third-party cookie deprecation and allows advertisers and publishers to securely and privately reconcile their first-party data to enable personalized advertising. Our role is providing the clean room infrastructure that allows advertisers and publishers to securely activate their first-party data on DV360. PAIR continues to scale adoption with large publishers, including CTV publishers like NBC Universal. The early results from PAIR are highly encouraging. Our case study with Omni Hotels and Resorts showed PAIR campaigns delivered a 4x increase in conversion rate over traditional cookie-based targeting in DV360. And we've seen similar results in as-of-yet unpublished case studies. A recent analysis of our brands who use PAIR showed that they were able to increase their match rates by 27%. This is meaningful incremental reach that is available today because PAIR is not limited to Chrome, but is available across Safari, Firefox, Edge, and CTV inventory. Results like this convince us that the industry should just embrace cookie-less alternatives like Pear and ATS and stop fretting about deprecation timelines. But we'll make use of the extra time afforded to all by Google's recent announcement to delay full implementation until after the holiday shopping season. In the coming months, in partnership with Google and others, we will continue to publish case studies and educate the ecosystem so they are ready for full cookie deprecation when it occurs in early calendar year 2025. As pair scales, the benefit to LiveRAMP should show up in the form of first, incremental activation from our existing subscription customers, and second, new logo opportunities that are doing first-party data targeting exclusively off third-party cookies today. Of course, Third-party cookie deprecation is certainly a catalyst for the adoption of PAIR. So Google's decision to delay Chrome third-party cookie deprecation until early 2025 will have an impact on our PAIR opportunities. We think we've appropriately reflected this in the FY25 guidance Lauren will provide today. However, in the medium to long term, we remain well-positioned, and we think improved advertising performance customers can achieve with PAIR will ultimately win out. Finally, our fourth priority for FY25 is simplifying live ramp for our customers and employees. There's a plethora of coordinated activities that will ultimately simplify our technology and ease of use. We're always working to improve our UIs, simplify and streamline our contract processes, re-examine our pricing policies, and modernize our technology. One of the emerging initiatives is leveraging artificial intelligence, both internally to improve our own productivity and make our products better, and externally to help our customers organize and accumulate the data that is the fuel for their own AI models and initiatives. Internally, we are using AI in a number of ways, from helping our software developers write code more quickly, to helping all LiveRampers find useful information more quickly through an AI-powered assistant tool with Enterprise Search. More specifically, approximately 15% of our developers are now regularly using AI tools to assist with coding. And on average, these tools have generated an estimated double-digit percentage improvement in productivity. We are also incorporating AI into our data collaboration platform and data marketplace that will provide ease of use and accelerated time to value benefits. For example, Our Habu technology offers JetAI-powered data queries that can produce reports without requiring SQL coding skills, which makes the platform more usable for less technical business users. In our data marketplace, we are training a proprietary AI model to accelerate our review of the data labels and descriptions provided by data sellers, which is critical to ensuring favorable by your experience. Finally, we are using AI with our IV graph to drive increased accuracy and stability through a more sophisticated understanding of data fragment relationships. Beyond our internal use of AI, the LiveRamp data collaboration platform has a much larger and critical role to play in helping customers use data to propel their own AI initiatives. Our data collaboration and enrichment products and connected partner ecosystem help brand marketers improve the quality, quantity, and diversity of customer data used. This customer data is the foundation for training generalized AI models and transforming them into the kind of proprietary models that produce brand-specific predictive customer insights. such as optimized segmentation, interests, propensities, and affinities. Ultimately, these AI-powered insights help brand marketers deliver personalized marketing experiences more effectively and efficiently. In closing, let me reiterate what I believe to be the key themes from the quarter. First, Q4 was a strong finish to FY24. with revenue and operating income exceeding our expectations and a positive inflection in several key performance indicators. Notably, the growth in ARR, which is the best leading indicator of our fixed subscription, accelerated for a second consecutive quarter to double digits on a reported basis. Second, we're not satisfied. As we look ahead to FY25, we have an ambitious set of corporate goals and priorities that will, if we successfully execute, help us advance toward our goal of being a Rule of 40 company. Finally, we believe we're well positioned against the trends that matter. Our data collaboration platform is well positioned to capitalize on the growing need for secure first-party data collaboration, to sustain addressable digital advertising. Our platform provides the right capabilities, and there are multiple industry megatrends working in our favor, including the shift to cloud computing, the proliferation of AI tools and marketing, growth in new walled gardens and CTV and commerce media, and of course, the rise of authenticated addressability over third-party signals. Thank you again for joining us today, and a special thanks to our exceptional, exceptional customers, partners, and to all LiveRampers 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.