LiveRamp Holdings, Inc.

Good afternoon, ladies and gentlemen, and welcome to LiveRamp's Fiscal 2026 Second Quarter Earnings Conference Call. All lines have been placed on you to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question at that time, please press star, then the number 1 on your telephone keypad. If you'd like to withdraw your question or your question has been answered, please press star 1 again. Thank you. I would now like to turn the call over to your host, Drew Boist, Vice President of Investor Relations. Please go ahead, sir.

Thank you, Operator. Good afternoon, everyone, and thank you for joining our fiscal 2026 second 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 investors.libramp.com. Also, during the call today, we'll be referring to a slide deck that is also available on our investor relations website. With that, I'll turn the call over to Scott.

Thank you, Drew, and thanks to everyone joining us today. We delivered solid Q2 results with revenue and operating income surpassing our guidance. This quarter showcased strong execution, fulfilling our near-term financial commitments while strategically investing in growth drivers like AI product enhancements and our new usage-based pricing model. Q2 revenue increased by 8%, led by a notable acceleration in marketplace and other to 18% growth. Subscription revenue grew by 5%, as expected based on bookings a year ago and what we foresee to be the low watermark. The good news, as we anticipated at the start of the year, a growth upturn appears to be on the horizon as evidenced by ARR, which is the best leading indicator of our subscription revenue. Net new ARR in Q2 was $14 million, the largest organic increase in the past seven quarters, and equating to year-on-year growth of 7%. We are seeing good momentum across a range of use cases, including commerce media, CTV, and cross-media measurement. Million-dollar-plus subscription customers increased by five sequentially to a new high of 132. In Q2, we signed a multimillion-dollar new logo contract, with one of the largest global auto manufacturers, and signed a multimillion-dollar upsell with a leading social media platform. Our non-GAAP operating income climbed 10%, a testament to improving cost efficiencies achieved through expanding offshore operations in India. GAAP operating income more than doubled, and the margin expanded by seven points to a record quarterly high, driven by sustainably lower stock-based comps. Overall, it was a strong second quarter, particularly in our revenue-leading indicators. Lauren will provide further details. We'll all focus on three key areas. First, our data collaboration platform's impact on commerce media, integration benefits with CTV and other major publishers, and catalyzing effect for AI. Second, an update on our new pricing model rollout. And third, our commitment to achieving our long-term Rule of 40 financial targets. commerce, media, CTV, and AI. I spent much of September and October on the road meeting with customers and prospects around the world at a variety of industry conferences and live ramp hosted events. In addition to dozens of one-on-one customer meetings, I participated in ad week in New York and Canada synchronies partner summit in Chicago ramp up on the road conferences in London and Sydney and our AI in marketing forum in New York city. and a handful of other industry events. Throughout my many conversations, a common theme emerged. Our customers recognize the immense value and expansive reach of our data collaboration network. By seamlessly integrating first, second, and third-party signals across diverse platforms and partners, we empower brands to execute and measure exceptional experiences throughout the entire customer journey. The tangible excitement and impactful potential of our network are evident in several key areas. Commerce media. LiveRamp has long been the pioneering industry leader in retail media networks. Over the past year, our success has evolved into what we call commerce media. We are powering new networks for industry giants like Uber, PayPal, General Motors, United Airlines, and many others. Each of these companies boasts vital commerce partners. from quick-serve restaurants and small business to local auto dealerships and travel partners, presenting unparalleled opportunities to revolutionize the customer experience through data-driven collaboration, robust measurement, innovative media channels, and expanded off-platform audience reach. CTV and deeper publisher integrations. Collaboration is thriving through deeper publisher integrations and CTV partnerships. For instance, we recently introduced new meta attribution insights for retail media networks, including Albertsons and Target Roundel. By connecting meta campaign results with their first-party sales data, RMNs and their partners can now clearly see how off-property sites, including meta, drive sales orders and return on ad spend. These insights help RMNs prove value to merchant partners and improving campaign performance visibility, and enabling data-driven budget allocation. CTV remains a key focus for our customers. Given the growing consumer engagement across various ad-supported CTV and streaming services, our network is fully integrated with all these services, providing brands with seamless connectivity and comprehensive measurement, including deduplicated comparative analysis across platforms. Through a clean room, unique publisher audience insights can be combined with unique advertiser insights to discover new prospects and drive superior performance. We are particularly excited about our expanding partnership with Netflix, which encompasses a range of integrations across our connectivity, data marketplace, and measurement solutions. This quarter, we extended our Netflix connectivity integrations beyond the U.S. to 10 new international markets. exemplifying the type of network expansion we are pursuing with all CTV and streaming platforms and serving as a steady source of growth for our business now and in the future. AI. AI is integral to every discussion as customers navigate its transformative opportunities and challenges. We are uniquely positioned to guide them through this evolving landscape. Our scaled data network, with its comprehensive links to all of the critical data signals, empowers customers to unlock AI's full potential for superior marketing outcomes. We are excited about our strategic positioning to help the entire ecosystem harness AI's power. By extending our collaboration network, we're seamlessly integrating with a wide array of AI partners. our efforts are categorized into six distinct areas, each featuring multiple AI application partners.