Financial Data and Key Metrics Changes - Total revenue for Q1 was $154 million, an increase of 8% year-over-year, exceeding guidance by $7 million [61] - Operating income reached $21 million, up from $4 million a year ago, with an operating margin expansion of 11 percentage points to 14% [35][61] - Subscription revenue was $122 million, up 5%, while Marketplace & Other revenue grew by 21% to $32 million, driven by a strong digital advertising environment [32][63] - The company generated $26 million in operating cash flow, a significant improvement from negative $33 million a year ago [65][66] Business Line Data and Key Metrics Changes - Subscription net retention improved slightly to 98%, while platform net retention increased to 102%, reflecting strength in marketplace growth [21][32] - The company signed a new 3-year 7-figure annual contract with a major retail and hotel operator in the Middle East, indicating strong demand for its data collaboration platform [5] - Professional services revenue is expected to double in FY '24, contributing to higher customer satisfaction and renewal rates [34] Market Data and Key Metrics Changes - The Retail Media Networks are projected to grow significantly, with a current global market size of $110 billion and a forecasted compound annual growth rate of 9% over the next five years [8] - The shift to cloud computing is expected to increase the proportion of workloads running on public clouds from 30% to 50% in three years, benefiting the company's business model [11] - The company is well-positioned to benefit from the cookie deprecation trend, with its authenticated traffic solution (ATS) already interoperable with over 14,000 domains [24][55] Company Strategy and Development Direction - The company aims to return to sustainable double-digit revenue growth by leveraging tactical initiatives and capitalizing on megatrends in digital advertising, including retail media, CTV, cloud computing, and generative AI [13][22] - The offshoring initiative is expected to improve cost structure and operational efficiency, with roles being transferred to Hyderabad, India [37] - The company is focused on larger enterprise clients, which typically have longer sales cycles but higher lifetime value [20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to double-digit revenue growth, citing improvements in sales productivity and customer retention [14][114] - The company remains cautious about the fiscal second half due to macroeconomic uncertainties, but sees potential for upside if advertising markets stabilize [68][106] - Management highlighted the importance of proving advertising effectiveness to attract more dollars in a competitive market [111] Other Important Information - The company repurchased $20 million in shares during the quarter, reflecting confidence in its valuation and business momentum [28][66] - Stock-based compensation for the year is expected to be $72 million, lower than previous guidance due to accelerated vesting [40] Q&A Session Summary Question: Update on automotive as a new use case for the data collaboration platform - Management indicated that there is still significant room for growth in Retail Media Networks and highlighted opportunities in CTV for data collaboration [75][76] Question: Impact from MediaMath's bankruptcy - Minimal impact is anticipated, as the company has accounted for any potential disruptions in its guidance [82] Question: Dynamics of international versus domestic performance - European numbers were slightly up, while APAC saw a significant decline, particularly in China, prompting a reevaluation of investment strategies in that market [84][85] Question: Quantifying the drag on subscription revenue from non-brand exposure - The drag from lower ACV customers represented a couple of points on subscription revenue, but initiatives are in place to reduce churn and improve retention [105] Question: Year-over-year growth in current RPO - Management feels better about visibility today compared to previous months, attributing this to recent bookings momentum [109]

Part I. Financial Information This section presents the company's unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures [Forward-looking Statements](index=3&type=section&id=Forward-looking%20Statements) This section outlines the nature of forward-looking statements within the report, emphasizing that they are not historical facts but estimates and expectations subject to various factors and uncertainties that could cause actual results to differ materially - Forward-looking statements are not guarantees of future performance and are subject to factors and uncertainties that could cause actual results to differ materially from anticipated results[6](index=6&type=chunk) - Key factors influencing actual results include macroeconomic conditions, competitive position, data privacy regulations, tax legislation, cost savings expectations, liquidity needs, and various operational and market risks[7](index=7&type=chunk)[8](index=8&type=chunk)[9](index=9&type=chunk)[12](index=12&type=chunk) [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including the balance sheets, statements of operations, comprehensive loss, equity, and cash flows, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial line items [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202023%20%28Unaudited%29%20and%20March%2031%2C%202023) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity at specific reporting dates Condensed Consolidated Balance Sheets (Dollars in thousands) | Item | June 30, 2023 | March 31, 2023 | | :------------------------------------------ | :------------ | :------------- | | **ASSETS** | | | | Cash and cash equivalents | $470,773 | $464,448 | | Total current assets | $706,046 | $714,559 | | Total assets | $1,163,931 | $1,172,703 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Total current liabilities | $172,377 | $174,829 | | Total stockholders' equity | $918,531 | $926,076 | | Total liabilities and stockholders' equity | $1,163,931 | $1,172,703 | - Total assets decreased by **$8.772 million** from March 31, 2023, to June 30, 2023, primarily driven by a decrease in total current assets[14](index=14&type=chunk) - Total stockholders' equity decreased by **$7.545 million**, from **$926.076 million** to **$918.531 million**[14](index=14&type=chunk) [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20three%20months%20ended%20June%2030%2C%202023%20and%202022%20%28Unaudited%29) This section details the company's financial performance over specific periods, presenting revenues, expenses, and net income or loss Condensed Consolidated Statements of Operations (Dollars in thousands, except per share amounts) | Item | Three months ended June 30, 2023 | Three months ended June 30, 2022 | | :--------------------------------- | :------------------------------- | :------------------------------- | | Revenues | $154,069 | $142,243 | | Cost of revenue | $45,621 | $41,021 | | Gross profit | $108,448 | $101,222 | | Total operating expenses | $106,178 | $126,824 | | Income (loss) from operations | $2,270 | $(25,602) | | Total other income, net | $4,849 | $699 | | Income (loss) from operations before income taxes | $7,119 | $(24,903) | | Income tax expense | $8,705 | $2,315 | | Net loss | $(1,586) | $(27,218) | | Basic loss per share | $(0.02) | $(0.40) | | Diluted loss per share | $(0.02) | $(0.40) | - Revenues increased by **8.3%** year-over-year, from **$142.243 million** in Q2 2022 to **$154.069 million** in Q2 2023[17](index=17&type=chunk) - The company significantly reduced its net loss from **$(27.218) million** in Q2 2022 to **$(1.586) million** in Q2 2023, and improved from an operating loss to an operating income[17](index=17&type=chunk) [Condensed Consolidated Statements of Comprehensive Loss](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss%20for%20the%20three%20months%20ended%20June%2030%2C%202023%20and%202022%20%28Unaudited%29) This section presents the company's net loss and other comprehensive income or loss items, reflecting the total change in equity from non-owner sources Condensed Consolidated Statements of Comprehensive Loss (Dollars in thousands) | Item | Three months ended June 30, 2023 | Three months ended June 30, 2022 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Net loss | $(1,586) | $(27,218) | | Change in foreign currency translation adjustment | $61 | $(1,929) | | Comprehensive loss | $(1,525) | $(29,147) | - Comprehensive loss significantly improved from **$(29.147) million** in Q2 2022 to **$(1.525) million** in Q2 2023, primarily due to a reduced net loss and a positive foreign currency translation adjustment[20](index=20&type=chunk) [Condensed Consolidated Statements of Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity%20for%20the%20three%20months%20ended%20June%2030%2C%202023%20%28Unaudited%29) This section outlines changes in the company's equity accounts over a period, including common stock, additional paid-in capital, retained earnings, and treasury stock Condensed Consolidated Statements of Equity (Dollars in thousands) | Item | March 31, 2023 Balance | June 30, 2023 Balance | | :------------------------------------ | :--------------------- | :-------------------- | | Common Stock (Amount) | $15,399 | $15,455 | | Additional paid-in capital | $1,855,916 | $1,873,935 | | Retained earnings | $1,302,291 | $1,300,705 | | Accumulated other comprehensive income | $4,504 | $4,565 | | Treasury Stock (Amount) | $(2,252,034) | $(2,276,129) | | Total Equity | $926,076 | $918,531 | - Total equity decreased by **$7.545 million** during the three months ended June 30, 2023, primarily due to treasury stock acquisitions and net loss, partially offset by additional paid-in capital from stock awards[23](index=23&type=chunk) - Treasury stock increased by **$24.095 million** due to the acquisition of **834,600 shares**[23](index=23&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20three%20months%20ended%20June%2030%2C%202023%20and%202022%20%28Unaudited%29) This section reports the cash generated and used by the company across its operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows (Dollars in thousands) | Activity | Three months ended June 30, 2023 | Three months ended June 30, 2022 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Net cash provided by (used in) operating activities | $25,693 | $(33,369) | | Net cash used in investing activities | $(553) | $(1,741) | | Net cash used in financing activities | $(18,522) | $(56,046) | | Net change in cash and cash equivalents | $6,325 | $(91,908) | | Cash and cash equivalents at end of period | $470,773 | $508,254 | - Operating activities generated **$25.693 million** in cash in Q2 2023, a significant improvement from using **$33.369 million** in Q2 2022, largely due to a **$29.2 million IRS refund**[29](index=29&type=chunk)[113](index=113&type=chunk)[146](index=146&type=chunk) - Net cash used in financing activities decreased from **$56.046 million** in Q2 2022 to **$18.522 million** in Q2 2023, primarily due to reduced treasury stock acquisitions[29](index=29&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the figures presented in the condensed consolidated financial statements [1. Basis of Presentation and Summary of Significant Accounting Policies](index=13&type=section&id=1.%20BASIS%20OF%20PRESENTATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES%3A) This section describes the accounting principles and policies used in preparing the financial statements, including the basis of consolidation and key estimates - The condensed consolidated financial statements are unaudited and prepared in conformity with U.S. GAAP, with management making estimates and assumptions[35](index=35&type=chunk)[36](index=36&type=chunk) - No material accounting pronouncements applicable to the Company were adopted or are yet to be adopted during the current year[37](index=37&type=chunk)[38](index=38&type=chunk) [2. Loss Per Share and Stockholders' Equity](index=14&type=section&id=2.%20LOSS%20PER%20SHARE%20AND%20STOCKHOLDERS%27%20EQUITY%3A) This section details the calculation of earnings or loss per share and provides further information on changes and components of stockholders' equity Loss Per Share (in thousands, except per share amounts) | Item | Three months ended June 30, 2023 | Three months ended June 30, 2022 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Net loss | $(1,586) | $(27,218) | | Basic weighted-average shares outstanding | 66,497 | 68,403 | | Basic loss per share | $(0.02) | $(0.40) | | Diluted weighted-average shares outstanding | 66,497 | 68,403 | | Diluted loss per share | $(0.02) | $(0.40) | - The Board of Directors approved an additional **$100.0 million** for the common stock repurchase program, extending it through December 31, 2024, bringing the total authorized to **$1.1 billion**[41](index=41&type=chunk) - During Q2 2023, the Company repurchased **0.8 million shares** for **$20.2 million**, with **$197.6 million** remaining capacity under the program as of June 30, 2023[42](index=42&type=chunk) [3. Revenue from Contracts with Customers](index=15&type=section&id=3.%20REVENUE%20FROM%20CONTRACTS%20WITH%20CUSTOMERS%3A) This section provides disaggregated revenue information and details on remaining performance obligations, explaining how and when revenue is recognized Disaggregation of Revenue (dollars in thousands) | Category | Three months ended June 30, 2023 | Three months ended June 30, 2022 | | :-------------------------- | :------------------------------- | :------------------------------- | | **Primary Geographical Markets** | | | | United States | $144,166 | $132,069 | | Europe | $8,137 | $8,289 | | Asia-Pacific ("APAC") | $1,555 | $1,885 | | Other | $211 | $0 | | **Major Offerings/Services** | | | | Subscription | $121,882 | $115,733 | | Marketplace and Other | $32,187 | $26,510 | | Total Revenue | $154,069 | $142,243 | - Total revenue increased by **8.3%** year-over-year, with Subscription revenue growing **5.3%** and Marketplace and Other revenue growing **21.4%**[44](index=44&type=chunk)[125](index=125&type=chunk) - Remaining performance obligations (RPO) totaled **$497.2 million** as of June 30, 2023, with **$350.7 million** expected to be recognized over the next twelve months[45](index=45&type=chunk) [4. Leases](index=16&type=section&id=4.%20LEASES%3A) This section outlines the company's lease arrangements, including right-of-use assets, lease liabilities, and future minimum lease payments Lease Balances (dollars in thousands) | Item | June 30, 2023 | March 31, 2023 | | :------------------------------------------ | :------------ | :------------- | | Right-of-use assets (net) | $29,155 | $24,604 | | Short-term lease liabilities | $9,356 | $9,929 | | Long-term lease liabilities | $37,712 | $37,243 | | Weighted average remaining lease term | 5.9 years | 5.6 years | | Weighted average discount rate | 5.0 % | 3.5 % | Future Minimum Operating Lease Payments (dollars in thousands) | Fiscal Year | Amount | | :---------- | :----- | | 2024 | $7,349 | | 2025 | $9,371 | | 2026 | $8,563 | | 2027 | $8,265 | | 2028 | $8,454 | | Thereafter | $12,828 | | Total undiscounted lease commitments | $54,830 | | Total discounted operating lease liabilities | $47,068 | - Operating lease costs decreased from **$3.1 million** in Q2 2022 to **$2.1 million** in Q2 2023[47](index=47&type=chunk) [5. Stock-Based Compensation](index=17&type=section&id=5.%20STOCK-BASED%20COMPENSATION%3A) This section details the company's stock-based compensation plans, including expense recognition and the impact on equity - The Company's Board voted to amend the 2005 Equity Compensation Plan to increase available shares by **4.0 million**, subject to shareholder approval[51](index=51&type=chunk) Total Non-Cash Stock-Based Compensation Expense (dollars in thousands) | Item | Three months ended June 30, 2023 | Three months ended June 30, 2022 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Stock options | $173 | $309 | | Restricted stock units | $11,567 | $19,062 | | Other awards/plans | $1,552 | $4,854 | | Total non-cash stock-based compensation | $13,292 | $24,225 | - Total non-cash stock-based compensation decreased by **$10.933 million**, or **45.1%**, year-over-year[52](index=52&type=chunk) Expected Future Stock-Based Compensation Expense (dollars in thousands) | Fiscal Year | Amount | | :---------- | :----- | | 2024 | $53,607 | | 2025 | $74,593 | | 2026 | $25,169 | | 2027 | $633 | | Total | $154,002 | [6. Other Current and Noncurrent Assets](index=21&type=section&id=6.%20OTHER%20CURRENT%20AND%20NONCURRENT%20ASSETS%3A) This section provides a breakdown of various current and noncurrent assets not categorized elsewhere, such as prepaid expenses and strategic investments Other Current Assets (dollars in thousands) | Item | June 30, 2023 | March 31, 2023 | | :------------------------------------ | :------------ | :------------- | | Prepaid expenses and other | $16,283 | $18,918 | | Assets of non-qualified retirement plan | $12,808 | $12,110 | | Total other current assets | $29,091 | $31,028 | Other Noncurrent Assets (dollars in thousands) | Item | June 30, 2023 | March 31, 2023 | | :------------------------------------ | :------------ | :------------- | | Long-term prepaid revenue share | $8,859 | $9,659 | | Right-of-use assets | $29,155 | $24,604 | | Strategic investments | $2,100 | $1,600 | | Total other assets, net | $45,130 | $41,045 | [7. Property and Equipment](index=22&type=section&id=7.%20PROPERTY%20AND%20EQUIPMENT%3A) This section details the company's tangible assets, including leasehold improvements, data processing equipment, and accumulated depreciation Property and Equipment, Net (dollars in thousands) | Item | June 30, 2023 | March 31, 2023 | | :------------------------------------ | :------------ | :------------- | | Leasehold improvements | $25,247 | $25,262 | | Data processing equipment | $5,400 | $6,537 | | Office furniture and other equipment | $7,280 | $7,594 | | Less accumulated depreciation and amortization | $(31,872) | $(32,308) | | Property and equipment, net | $6,055 | $7,085 | - Property and equipment, net, decreased by **$1.030 million** from March 31, 2023, to June 30, 2023[72](index=72&type=chunk) - Depreciation expense on property and equipment was **$0.8 million** for Q2 2023, down from **$1.1 million** in Q2 2022[72](index=72&type=chunk) [8. Goodwill](index=22&type=section&id=8.%20GOODWILL%3A) This section provides information on the company's goodwill, including its carrying amount and any changes due to foreign currency translation adjustments Goodwill (dollars in thousands) | Item | Amount | | :------------------------------------ | :----- | | Balance at March 31, 2023 | $363,116 | | Change in foreign currency translation adjustment | $62 | | Balance at June 30, 2023 | $363,178 | - Goodwill increased slightly by **$62 thousand** due to foreign currency translation adjustments[73](index=73&type=chunk) - Goodwill is primarily located in the U.S. (**$360.158 million**) with a smaller portion in APAC (**$3.020 million**)[73](index=73&type=chunk) [9. Intangible Assets](index=23&type=section&id=9.%20INTANGIBLE%20ASSETS%3A) This section details the company's identifiable intangible assets, such as developed technology and customer relationships, along with their amortization Intangible Assets, Net (dollars in thousands) | Item | June 30, 2023 | March 31, 2023 | | :------------------------------------ | :------------ | :------------- | | Net developed technology | $6,534 | $8,437 | | Net customer relationship/trade name | $44 | $431 | | Net publisher/data supply relationships | $0 | $1,000 | | Total intangible assets, net | $6,578 | $9,868 | - Total intangible assets, net, decreased by **$3.290 million** from March 31, 2023, to June 30, 2023[74](index=74&type=chunk) - Total amortization expense for intangible assets was **$3.3 million** for Q2 2023, down from **$4.6 million** in Q2 2022[74](index=74&type=chunk) Estimated Future Amortization Expenses (dollars in thousands) | Fiscal Year | Amount | | :---------- | :----- | | 2024 | $3,557 | | 2025 | $3,021 | | Total | $6,578 | [10. Other Accrued Expenses](index=23&type=section&id=10.%20OTHER%20ACCRUED%20EXPENSES%3A) This section provides a breakdown of various short-term liabilities, including non-qualified retirement plan liabilities and lease liabilities Other Accrued Expenses (dollars in thousands) | Item | June 30, 2023 | March 31, 2023 | | :------------------------------------ | :------------ | :------------- | | Liabilities of non-qualified retirement plan | $12,808 | $12,110 | | Short-term lease liabilities | $9,356 | $9,929 | | Acuity performance earnout liability | $1,676 | $1,535 | | DataFleets consideration holdback | $972 | $324 | | Other miscellaneous accrued expenses | $14,510 | $11,615 | | Total other accrued expenses | $39,322 | $35,736 | - Total other accrued expenses increased by **$3.586 million** from March 31, 2023, to June 30, 2023[77](index=77&type=chunk) [11. Other Liabilities](index=24&type=section&id=11.%20OTHER%20LIABILITIES%3A) This section details various long-term liabilities, including uncertain tax positions, long-term lease liabilities, and lease restructuring accruals Other Liabilities (dollars in thousands) | Item | June 30, 2023 | March 31, 2023 | | :------------------------------------ | :------------ | :------------- | | Uncertain tax positions | $24,046 | $23,427 | | Long-term lease liabilities | $37,712 | $37,243 | | Lease restructuring accruals | $4,548 | $5,713 | | Other | $6,378 | $5,117 | | Total other liabilities | $73,023 | $71,798 | - Total other liabilities increased by **$1.225 million** from March 31, 2023, to June 30, 2023[78](index=78&type=chunk) [12. Allowance for Credit Losses](index=24&type=section&id=12.%20ALLOWANCE%20FOR%20CREDIT%20LOSSES%3A) This section outlines the changes in the allowance for credit losses, reflecting management's estimate of uncollectible accounts receivable Allowance for Credit Losses Activity (dollars in thousands) | Item | Balance at March 31, 2023 | Additions (reductions) | Bad debts written off, net | Other changes | Balance at June 30, 2023 | | :------------------------------------ | :------------------------ | :--------------------- | :------------------------- | :------------ | :----------------------- | | Allowance for credit losses | $9,344 | $(219) | $(770) | $53 | $8,408 | - The allowance for credit losses decreased by **$0.936 million** during the three months ended June 30, 2023[80](index=80&type=chunk) [13. Restructuring, Impairment and Other Charges](index=24&type=section&id=13.%20RESTRUCTURING%2C%20IMPAIRMENT%20AND%20OTHER%20CHARGES%3A) This section details charges related to restructuring activities, asset impairments, and other significant non-recurring items Restructuring Liabilities (dollars in thousands) | Item | Balances at March 31, 2023 | Restructuring charges and adjustments | Payments | Balances at June 30, 2023 | | :------------------------------------ | :-------------------------- | :---------------------------------- | :------- | :------------------------ | | Employee-related reserves | $759 | $88 | $(686) | $161 | | Lease accruals | $4,873 | $0 | $(917) | $3,956 | | Total | $5,632 | $88 | $(1,603) | $4,117 | - The Company recorded **$0.1 million** in employee-related restructuring charges in Q2 2023, primarily adjustments to prior fiscal year plans[84](index=84&type=chunk) - In fiscal 2023, the Company initiated a restructuring plan to reduce its global real estate footprint, resulting in **$24.6 million** in impairment charges for ROU assets and associated property, and **$2.9 million** in lease-related restructuring charges[87](index=87&type=chunk)[88](index=88&type=chunk) [14. Commitments and Contingencies](index=26&type=section&id=14.%20COMMITMENTS%20AND%20CONTINGENCIES%3A) This section describes the company's contractual obligations and potential liabilities arising from legal claims or other business activities - The Company is involved in various legal claims and proceedings in the ordinary course of business, for which management believes appropriate accruals have been made[91](index=91&type=chunk) Purchase Commitments (dollars in thousands) | Fiscal Year | Amount | | :---------- | :----- | | 2024 | $72,606 | | 2025 | $79,025 | | 2026 | $10,754 | | 2027 | $4,081 | | 2028 | $3,375 | | Total | $169,841 | - Purchase commitments primarily include contractual commitments for data, hosting services, software-as-a-service, and leasehold improvements[92](index=92&type=chunk) [15. Income Tax](index=26&type=section&id=15.%20INCOME%20TAX%3A) This section provides details on the company's income tax expense, effective tax rate, and factors influencing tax positions - The estimated annual effective income tax rate is primarily driven by nondeductible stock-based compensation, capitalization of R&D expenditures (IRC Section 174), and a valuation allowance on net deferred tax assets[93](index=93&type=chunk) - The Inflation Reduction Act of 2022, including the **1% excise tax** on share repurchases, is not expected to have a material impact on the Company's financial statements[94](index=94&type=chunk) [16. Fair Value of Financial Instruments and Fair Value Measurements](index=27&type=section&id=16.%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS%20AND%20FAIR%20VALUE%20MEASUREMENTS%3A) This section describes the fair value hierarchy and measurements for the company's financial instruments - The Company classifies fair value measurements into a three-level hierarchy based on the observability of inputs: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[95](index=95&type=chunk)[97](index=97&type=chunk) Fair Value Measurements (dollars in thousands) at June 30, 2023 | Item | Cash and Cash Equivalents | Short-Term Investments | Other Current Assets | Total | | :------------------------------------ | :------------------------ | :--------------------- | :------------------- | :------ | | Cash | $28,113 | — | — | $28,113 | | Money market funds (Level 1) | $442,660 | — | — | $442,660 | | Assets of non-qualified retirement plan (Level 1) | — | — | $12,808 | $12,808 | | U.S. Treasury securities (Level 1) | — | $25,599 | — | $25,599 | | Certificates of deposit (Level 1) | — | $7,500 | — | $7,500 | | Total | $470,773 | $33,099 | $12,808 | $516,680 | - The Company held **$2.1 million** in strategic investments without readily determinable fair values at June 30, 2023, accounted for under the cost method[97](index=97&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations for the three months ended June 30, 2023, discussing revenue sources, key performance metrics, detailed financial results, capital resources, and liquidity [Introduction and Overview](index=28&type=section&id=Introduction%20and%20Overview) - LiveRamp Holdings, Inc. is a global technology company specializing in data collaboration, identity resolution, and privacy-conscious data sharing to help companies build brand and business value[98](index=98&type=chunk) - The Company operates as one operating segment, serving a global customer base including Fortune 500 companies across various industries from locations in the United States, Europe, and Asia-Pacific[99](index=99&type=chunk)[100](index=100&type=chunk) [Sources of Revenues](index=28&type=section&id=Sources%20of%20Revenues) LiveRamp generates revenue primarily from Subscription fees for platform access and Marketplace and Other revenue from data transactions and usage-based arrangements [LiveRamp Data Collaboration Platform](index=28&type=section&id=LiveRamp%20Data%20Collaboration%20Platform) - The LiveRamp Data Collaboration Platform enables secure second-party data collaboration, activation of customer data using pseudonymized RampID™, accurate measurement and analytics, and enterprise-level identity solutions[102](index=102&type=chunk)[103](index=103&type=chunk) - The platform's identity solutions combine offline and online data, with over **165 supply-side and demand-side platforms** and more than **14,000 publisher domains** adopting its Authenticated Traffic Solution (ATS)[103](index=103&type=chunk) - The Data Marketplace provides simplified access to over **200 third-party data providers** globally, enabling data sellers to monetize their assets and data buyers to enrich first-party data[103](index=103&type=chunk) [Subscription](index=30&type=section&id=Subscription) - Subscription revenue is primarily charged annually, based on data volume (input records and connection points)[104](index=104&type=chunk) - The Company serves **915 direct customers** worldwide, including approximately **25% of the Fortune 500**, and thousands more indirectly through reseller partnerships[105](index=105&type=chunk) - Customers include brands, agencies, marketing technology providers, publishers, and data sellers, leveraging the platform for people-based marketing, identity foundation, and data monetization[106](index=106&type=chunk)[107](index=107&type=chunk) [Marketplace and Other](index=31&type=section&id=Marketplace%20and%20Other) - Marketplace and Other revenue is generated primarily through revenue-sharing arrangements with data sellers in the LiveRamp Data Marketplace and transactional usage-based arrangements with publishers and addressable TV providers[108](index=108&type=chunk)[109](index=109&type=chunk) - Professional services, including product implementation, data science analytics, and advisory, complement the product offering and account for less than **5% of total Company revenue**[110](index=110&type=chunk) [Summary Results and Notable Events](index=32&type=section&id=Summary%20Results%20and%20Notable%20Events) Financial Summary (Dollars in millions) | Item | Q2 2023 | Q2 2022 | Change (%) | | :------------------------------------ | :------ | :------ | :--------- | | Revenues | $154.1 | $142.2 | 8.3% | | Cost of revenue | $45.6 | $41.0 | 11.2% | | Gross margin | 70.4% | 71.2% | (0.8) pp | | Total operating expenses | $106.2 | $126.8 | (16.3)% | | Total other income, net | $4.8 | $0.7 | 585.7% | | Net loss | $(1.6) | $(27.2) | 94.2% | | Diluted loss per share | $(0.02) | $(0.40) | 95.0% | | Net cash provided by (used in) operating activities | $25.7 | $(33.4) | N/A | | Shares repurchased | 0.8M | 2.1M | (61.9)% | | Value of shares repurchased | $20.2 | $60.1 | (66.4)% | - The Company achieved an **8.3% increase in revenues** and significantly reduced its net loss by **94.2%** year-over-year[113](index=113&type=chunk) - Operating expenses decreased by **16.3%**, contributing to the improved financial performance, while operating cash flow turned positive[113](index=113&type=chunk) [Key Performance Metrics](index=33&type=section&id=Key%20Performance%20Metrics) Key Performance Metrics (Dollars in millions, except percentages) | Metric | June 30, 2023 | June 30, 2022 | % Change (YoY) | | :------------------------------------ | :------------ | :------------ | :------------- | | Subscription net retention (SNR) | 98% | 113% | (13.3)% | | Annualized recurring revenue (ARR) | $426.1 | $409.4 | 4.1% | | Remaining performance obligation (RPO) | $497.2 | $398.0 | 24.9% | | Current remaining performance obligation (CRPO) | $350.7 | $295.5 | 18.7% | | Subscription CRPO | $309.1 | $266.4 | 16.0% | - Subscription net retention (SNR) decreased to **98%** from **113%** year-over-year, primarily due to increased downsell and churn activity, and lower variable usage, influenced by budget and economic pressures[116](index=116&type=chunk)[117](index=117&type=chunk) - Annualized Recurring Revenue (ARR) grew **4.1%**, a decline from the prior year's **19.9% growth**, attributed to similar factors affecting SNR, as well as lower new customer and existing customer upsell activity[118](index=118&type=chunk)[119](index=119&type=chunk) - Remaining Performance Obligations (RPO) increased by **24.9%**, driven by large, multi-year renewals, indicating future revenue potential despite slower recurring revenue growth[120](index=120&type=chunk)[122](index=122&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) [Revenues](index=35&type=section&id=Revenues) Revenues (Dollars in thousands) | Category | Three months ended June 30, 2023 | Three months ended June 30, 2022 | % Change | | :-------------------------- | :------------------------------- | :------------------------------- | :------- | | Subscription | $121,882 | $115,733 | 5.3% | | Marketplace and Other | $32,187 | $26,510 | 21.4% | | Total revenues | $154,069 | $142,243 | 8.3% | | U.S. revenue | $144,166 | $132,069 | 9.2% | | International revenue | $9,903 | $10,174 | (2.7)% | - Total revenues increased by **$11.8 million**, or **8.3%**, driven by Subscription revenue growth of **5.3%** (new deals, upsells, variable revenue) and Marketplace and Other revenue growth of **21.4%** (Data Marketplace)[125](index=125&type=chunk) - U.S. revenue increased by **9.2%**, while International revenue decreased by **2.7%**[125](index=125&type=chunk) [Cost of Revenue and Gross Profit](index=35&type=section&id=Cost%20of%20Revenue%20and%20Gross%20Profit) Cost of Revenue and Gross Profit (Dollars in thousands) | Item | Three months ended June 30, 2023 | Three months ended June 30, 2022 | % Change | | :-------------------------- | :------------------------------- | :------------------------------- | :------- | | Cost of revenue | $45,621 | $41,021 | 11.2% | | Gross profit | $108,448 | $101,222 | 7.1% | | Gross margin (%) | 70.4% | 71.2% | (1.1)% | | U.S. gross margins | 72.2% | 72.4% | (0.2) pp | | International gross margins | 43.3% | 54.8% | (11.5) pp | - Cost of revenue increased by **$4.6 million**, or **11.2%**, primarily due to a **$4.1 million increase** in cloud infrastructure costs[127](index=127&type=chunk) - Gross margin decreased slightly to **70.4%** from **71.2%** in the prior year, with a notable decrease in International gross margins[127](index=127&type=chunk) [Operating Expenses](index=36&type=section&id=Operating%20Expenses) Operating Expenses (Dollars in thousands) | Item | Three months ended June 30, 2023 | Three months ended June 30, 2022 | % Change | | :-------------------------- | :------------------------------- | :------------------------------- | :------- | | Research and development | $34,519 | $47,661 | (27.6)% | | Sales and marketing | $44,879 | $51,280 | (12.5)% | | General and administrative | $26,664 | $27,144 | (1.8)% | | Gains, losses and other items, net | $116 | $739 | (84.3)% | | Total operating expenses | $106,178 | $126,824 | (16.3)% | - R&D expenses decreased by **$13.1 million (27.6%)**, mainly due to lower stock-based compensation (**$6.6 million decrease**) and headcount-related costs (**$4.4 million decrease**)[129](index=129&type=chunk) - S&M expenses decreased by **$6.4 million (12.5%)**, driven by lower stock-based compensation (**$2.1 million decrease**), marketing expenses (**$1.4 million decrease**), and administrative expenses (**$1.3 million decrease**)[131](index=131&type=chunk) - G&A expenses decreased by **$0.5 million (1.8%)**, primarily due to reduced stock-based compensation (**$1.7 million decrease**) and professional services (**$0.7 million decrease**), partially offset by **$1.9 million** in transformation costs[134](index=134&type=chunk) [Income (Loss) from Operations and Operating Margin](index=37&type=section&id=Income%20%28Loss%29%20from%20Operations%20and%20Operating%20Margin) - The Company reported income from operations of **$2.3 million** in Q2 2023, a significant improvement from a loss of **$25.6 million** in Q2 2022[136](index=136&type=chunk) - Operating margin turned positive at **1.5%** in Q2 2023, compared to negative **18.0%** in the prior year, benefiting from revenue growth and operating expense reductions[136](index=136&type=chunk) [Other Income and Income Taxes](index=37&type=section&id=Other%20Income%20and%20Income%20Taxes) - Total other income, net, increased significantly to **$4.8 million** in Q2 2023 from **$0.7 million** in Q2 2022, primarily due to higher interest rates on invested cash[137](index=137&type=chunk) - Income tax expense was **$8.7 million** on pretax income of **$7.1 million**, resulting in a **122% effective tax rate**, driven by nondeductible R&D capitalization and valuation allowance[138](index=138&type=chunk) [Capital Resources and Liquidity](index=38&type=section&id=Capital%20Resources%20and%20Liquidity) [Overview](index=38&type=section&id=Overview) - Cash and cash equivalents totaled **$470.8 million** at June 30, 2023, with approximately **4.9%** located outside the United States[140](index=140&type=chunk) - Net accounts receivable increased to **$173.1 million**, and Days Sales Outstanding (DSO) increased to **102 days**, negatively impacted by Data Marketplace gross accounts receivable[141](index=141&type=chunk) - Working capital decreased slightly to **$533.7 million**. Management believes existing cash is sufficient for foreseeable needs but acknowledges macroeconomic risks to liquidity[142](index=142&type=chunk)[143](index=143&type=chunk) [Cash Flows](index=38&type=section&id=Cash%20Flows) Summary of Cash Flows (Dollars in thousands) | Activity | Three months ended June 30, 2023 | Three months ended June 30, 2022 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Net cash provided by (used in) operating activities | $25,693 | $(33,369) | | Net cash used in investing activities | $(553) | $(1,741) | | Net cash used in financing activities | $(18,522) | $(56,046) | - Operating activities provided **$25.7 million** in cash, primarily due to net earnings adjusted for non-cash items and a **$29.2 million IRS refund**[146](index=146&type=chunk) - Investing activities used **$0.6 million**, mainly for a strategic investment and capital expenditures. Financing activities used **$18.5 million**, primarily for treasury stock acquisitions and tax withholdings on stock awards[148](index=148&type=chunk)[151](index=151&type=chunk) [Common Stock Repurchase Program](index=40&type=section&id=Common%20Stock%20Repurchase%20Program) - The common stock repurchase program was amended to authorize an additional **$100.0 million**, increasing the total to **$1.1 billion** and extending it through December 31, 2024[154](index=154&type=chunk) - During Q2 2023, the Company repurchased **0.8 million shares** for **$20.2 million**, with **$197.6 million** remaining capacity as of June 30, 2023[155](index=155&type=chunk) - The **1% excise tax** on share repurchases under the Inflation Reduction Act of 2022 is not expected to have a material impact[156](index=156&type=chunk) [Contractual Commitments](index=40&type=section&id=Contractual%20Commitments) Contractual Cash Obligations (Dollars in thousands) | Item | 2024 | 2025 | 2026 | 2027 | 2028 | Thereafter | Total | | :-------------------------- | :----- | :----- | :----- | :----- | :----- | :--------- | :------ | | Operating leases | $7,349 | $9,371 | $8,563 | $8,265 | $8,454 | $12,828 | $54,830 | | Purchase commitments | $72,606 | $79,025 | $10,754 | $4,081 | $3,375 | — | $169,841 | - Operating lease commitments total **$54.830 million**, with **$7.349 million** due in the remaining nine months of fiscal 2024[157](index=157&type=chunk) - Purchase commitments, primarily for data, hosting, and software, total **$169.841 million**, with the largest portion (**$72.606 million**) due in the remaining nine months of fiscal 2024[158](index=158&type=chunk) [Non-U.S. Operations](index=41&type=section&id=Non-U.S.%20Operations) - The Company has operations in multiple countries, including the UK, France, Netherlands, Italy, Spain, Brazil, India, Australia, China, Singapore, and Japan[160](index=160&type=chunk) - Most foreign exchange exposure is due to translation gains and losses, with no material transactions causing exchange rate impact, and no foreign currency hedging instruments are currently used[160](index=160&type=chunk) [Critical Accounting Policies](index=41&type=section&id=Critical%20Accounting%20Policies) - No material changes to the Company's critical accounting policies have occurred since the 2023 Annual Report, other than those described in Note 1[161](index=161&type=chunk) [Recent Accounting Pronouncements](index=41&type=section&id=Recent%20Accounting%20Pronouncements) - Information on recent accounting pronouncements is provided in Note 1, 'Basis of Presentation and Summary of Significant Accounting Policies,' of the Notes to Condensed Consolidated Financial Statements[162](index=162&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no material changes in the Company's market risk exposures for the three months ended June 30, 2023, compared to those discussed in the 2023 Annual Report - No material changes in market risk exposures were identified for the three months ended June 30, 2023, compared to the Company's 2023 Annual Report[164](index=164&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and Interim CFO, concluded that the Company's disclosure controls and procedures were effective as of June 30, 2023, and reported no material changes in internal control over financial reporting during the quarter - Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2023[165](index=165&type=chunk) - There were no material changes in internal control over financial reporting during the fiscal quarter ended June 30, 2023[165](index=165&type=chunk) Part II. Other Information This section includes disclosures on legal proceedings, risk factors, equity security sales, defaults, mine safety, and exhibits [Item 1. Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 14, 'Commitments and Contingencies,' in the unaudited condensed consolidated financial statements for information regarding legal proceedings - Information on legal proceedings is incorporated by reference from Note 14, 'Commitments and Contingencies,' in the financial statements[166](index=166&type=chunk) [Item 1A. Risk Factors](index=43&type=page&id=Item%201A.%20Risk%20Factors) This section states that the risk factors described in the Company's 2023 Annual Report remain current in all material respects and cautions that the identified risks are not exhaustive, with potential for other unknown or immaterial factors to adversely affect the business - The risk factors detailed in the Company's 2023 Annual Report on Form 10-K remain current in all material respects[167](index=167&type=chunk) - The list of risk factors is not exhaustive, and other unknown or currently immaterial factors could adversely affect the Company's business, financial condition, or results of operations[167](index=167&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section provides details on the Company's common stock repurchase activities during the quarter ended June 30, 2023, under its modified repurchase program, including the number of shares purchased and the remaining authorized capacity Common Stock Repurchases (Q2 2023) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs | | :------------------------------------ | :------------------------------- | :--------------------------- | :---------------------------------------------------------------------------------------------------------------- | | April 1, 2023 - April 30, 2023 | 258,600 | $22.94 | $211,894,320 | | May 1, 2023 - May 31, 2023 | 281,000 | $24.45 | $205,023,229 | | June 1, 2023 - June 30, 2023 | 295,000 | $25.08 | $197,624,391 | | Total | 834,600 | — | — | - The Company repurchased **834,600 shares** of common stock during the three months ended June 30, 2023[168](index=168&type=chunk) - As of June 30, 2023, **$197.6 million** remained authorized for repurchase under the common stock repurchase program, which extends through December 31, 2024[168](index=168&type=chunk) [Item 3. Defaults Upon Senior Securities](index=44&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item states that there are no applicable defaults upon senior securities - This item is not applicable to the Company[170](index=170&type=chunk) [Item 4. Mine Safety Disclosures](index=44&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item states that there are no applicable mine safety disclosures - This item is not applicable to the Company[171](index=171&type=chunk) [Item 5. Other Information](index=44&type=section&id=Item%205.%20Other%20Information) This section confirms that no directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the three months ended June 30, 2023 - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2023[172](index=172&type=chunk) [Item 6. Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the quarterly report, including certifications from the Chief Executive Officer and Interim Chief Financial Officer, and the financial information formatted in inline XBRL - Exhibits include certifications (31.1, 31.2, 32.1, 32.2) from the CEO and Interim CFO, and financial information formatted in inline XBRL (101, 104)[174](index=174&type=chunk) [Signature](index=46&type=section&id=Signature) This section contains the formal signature block, indicating that the report was duly signed on behalf of LiveRamp Holdings, Inc. by Lauren Dillard, Interim Chief Financial Officer, on August 9, 2023 - The report was signed by Lauren Dillard, Interim Chief Financial Officer, on August 9, 2023[178](index=178&type=chunk)

Financial Performance - Total revenue for Q4 2023 was $149 million, a 5% year-over-year increase[17, 20] - Subscription revenue in Q4 2023 reached $121 million, also a 5% year-over-year increase[20] - Non-GAAP gross profit for Q4 2023 was $111 million, with a gross margin of 75%[17, 47] - Non-GAAP operating income for Q4 2023 was $14 million, resulting in a 10% operating margin[17, 47] - The company has 95 clients with over $1 million in revenue[14] Key Metrics - Subscription revenue accounted for 81% of total revenue[13] - The company has over 500 ecosystem partners[12] - The company has 920 direct clients[11] - Annualized Recurring Revenue (ARR) reached $424 million, a 6% year-over-year increase[27, 74] - Subscription Net Retention (SNR) was 97%[27, 111] Revenue Breakdown - US revenue in Q4 2023 was $139 million, a 5% year-over-year increase[20] - International revenue in Q4 2023 was $10 million, a 4% year-over-year increase, or approximately 9% adjusted for foreign currency exchange rates[20, 69]

LiveRamp Holdings, Inc. (NYSE:RAMP) Q4 2023 Earnings Conference Call May 24, 2023 4:30 PM ET Company Participants Drew Borst - Vice President, Investor Relations Scott Howe - Chief Executive Officer Lauren Dillard - Interim Chief Financial Officer Conference Call Participants Elizabeth Porter - Morgan Stanley Brian Fitzgerald - Wells Fargo Jason Kreyer - Craig-Hallum Tim Nollen - Macquarie Vasily Karasyov - Cannonball Research Nicholas Zangler - Stephens Mark Zgutowicz - The Benchmark Company Operator Good ...

Part I [Business](index=7&type=section&id=Item%201.%20Business) LiveRamp is a global technology company specializing in data collaboration, enabling secure and ethical first-party data utilization for businesses - LiveRamp is a global technology company focused on enabling data collaboration for brands to build customer value while prioritizing consumer privacy and data ethics[19](index=19&type=chunk) - The company serves **920 direct customers worldwide**, including approximately **25% of the Fortune 500**, and thousands more indirectly through partnerships[39](index=39&type=chunk) - The core offering is the LiveRamp Data Collaboration Platform, which unifies customer data to create a single customer view for people-based marketing solutions like activation, measurement, and analytics[35](index=35&type=chunk) [Industry and Our Approach](index=7&type=section&id=Industry%20and%20Our%20Approach) The company operates in a data-driven economy, providing a trusted middleware platform for consistent and portable customer data - Key industry trends shaping the market include the shift to data-driven customer experiences, the growth of commerce media through data collaboration, increasing complexity of the customer journey, and heightened privacy regulations like GDPR and CCPA[21](index=21&type=chunk)[26](index=26&type=chunk)[32](index=32&type=chunk) - LiveRamp acts as middleware for the customer experience economy, providing a trusted platform to make data consistent, consumable, and portable between customer data sources and applications[34](index=34&type=chunk) [LiveRamp Data Collaboration Platform](index=10&type=section&id=LiveRamp%20Data%20Collaboration%20Platform) The platform offers identity resolution, data activation, measurement, and analytics, leveraging a pseudonymized identifier called RampID™ - The platform enables data collaboration, activation, measurement, and identity resolution, leveraging a pseudonymized identifier called RampID™[36](index=36&type=chunk) - The Authenticated Traffic Solution (ATS) is a key part of its digital identity graph, with over **165 supply-side and demand-side platforms** committed to bidding on RampID or ATS, and integration across over **14,000 publisher domains**[36](index=36&type=chunk) - The Data Marketplace provides access to third-party data from over **200 providers** to enrich customers' first-party data[37](index=37&type=chunk) [Revenue Sources](index=11&type=section&id=Revenue%20Sources) Revenue is primarily derived from annual subscriptions based on data volume, supplemented by marketplace revenue-sharing and transactional fees - Subscription revenue is the primary source, charged annually based on data volume (input records and connection points)[38](index=38&type=chunk) - Marketplace and Other revenue comes from revenue-sharing with data sellers and transactional usage-based fees[41](index=41&type=chunk) - Professional services, including implementation and analytics, account for less than **5% of total company revenue**[42](index=42&type=chunk) [Growth Strategy and Competitive Strengths](index=12&type=section&id=Growth%20Strategy%20and%20Competitive%20Strengths) LiveRamp's growth strategy focuses on expanding its customer base and global footprint, leveraging its extensive partner ecosystem and advanced identity technology - Key competitive strengths include a large partner ecosystem (**>550 partners**), advanced identity recognition technology (AbiliTec®), platform neutrality, and strong customer relationships[45](index=45&type=chunk)[46](index=46&type=chunk) - Growth strategies include growing the customer base towards a target of the world's top **2,000 marketers**, expanding existing customer relationships, and forging new sales channel partnerships with cloud providers and system integrators[46](index=46&type=chunk) - The company plans to expand its addressable market beyond marketing into adjacent areas like risk and fraud, healthcare, and government[49](index=49&type=chunk) [Customers and R&D](index=15&type=section&id=Customers%20and%20R%26D) LiveRamp serves primarily Fortune 1000 companies, with significant R&D investment and revenue concentration among its top clients - The company had **920 direct subscription customers** at fiscal year-end 2023, an increase from **905** in the prior year[51](index=51&type=chunk) - The top ten clients accounted for **29% of revenue** in FY2023, with The Interpublic Group of Companies representing **12% of revenue**[53](index=53&type=chunk) Research and Development Expense Trend | Fiscal Year | R&D Expense (in millions) | | :--- | :--- | | 2023 | $189.2 | | 2022 | $157.9 | | 2021 | $135.1 | [Human Capital](index=16&type=section&id=Human%20Capital) LiveRamp employs approximately 1,370 people globally, emphasizing an inclusive culture and commitment to Diversity, Inclusion, and Belonging - The company employs approximately **1,370 employees** ("LiveRampers") worldwide[63](index=63&type=chunk) - LiveRamp has been recognized as a Best Place to Work and listed among Fortune's **100 Best Companies to Work For** annually since 2018[66](index=66&type=chunk) - The company has **six employee resource groups (BERGs)** and a Diversity, Inclusion & Belonging Charter focused on three pillars: Workforce, Product & Customers, and Community[67](index=67&type=chunk)[68](index=68&type=chunk)[70](index=70&type=chunk) [Risk Factors](index=20&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks related to its business operations, evolving regulatory environment, and intellectual property protection [Risks Related to Our Business and Strategy](index=20&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Strategy) Key business risks include customer retention, reliance on third-party data, intense competition, and the industry-wide shift away from third-party cookies - The company is dependent on customer renewals and new customer acquisition; the top ten clients represented **29% of revenue** in FY2023, with The Interpublic Group of Companies accounting for **12%**[83](index=83&type=chunk) - The business relies on data from third-party suppliers, who may withhold data due to legal, competitive, or other reasons, potentially impacting service delivery[85](index=85&type=chunk) - The phase-out of third-party cookies by major browsers like Google Chrome and Apple Safari could materially impact the business, as digital advertising has heavily relied on this technology[111](index=111&type=chunk)[113](index=113&type=chunk)[117](index=117&type=chunk) - A November 2022 reduction in force involving approximately **10% of full-time employees** was announced as part of a strategic reprioritization[90](index=90&type=chunk) [Risks Related to Government Regulation and Taxation](index=28&type=section&id=Risks%20Related%20to%20Government%20Regulation%20and%20Taxation) The company is subject to complex and evolving global data privacy laws, creating compliance costs and uncertainty for data transfers - The business is subject to evolving data privacy laws, including GDPR in Europe and state-level laws in the U.S. like the CCPA/CPRA in California and similar legislation in at least **ten other states**[125](index=125&type=chunk)[128](index=128&type=chunk) - The invalidation of the EU-U.S. Privacy Shield by the European Court of Justice creates uncertainty and risk for data transfers from the EU to the U.S., a critical part of operations[130](index=130&type=chunk) - Changes in tax laws, including the U.S. Inflation Reduction Act and proposals from the OECD, could adversely affect the company's business and financial performance[134](index=134&type=chunk) [Properties](index=33&type=section&id=Item%202.%20Properties) LiveRamp maintains its headquarters in San Francisco and leases principal office spaces across the U.S., Europe, and Asia-Pacific Principal Leased Properties | Location | Use | | :--- | :--- | | **United States** | | | San Francisco, CA | Office space | | New York, NY | Office space | | Little Rock, AR | Office space | | Seattle, WA | Office space | | **Europe** | | | London, England | Office space | | Paris, France | Office space | | **Asia-Pacific** | | | Shanghai, China | Office space | | Nantong, China | Office space | | Singapore, Singapore | Office space | | Tokyo, Japan | Office space | | Sydney, Australia | Office space | Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=34&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) LiveRamp's common stock trades on the NYSE, with no recent dividends paid and an active stock repurchase program - The company's common stock is traded on the New York Stock Exchange under the symbol 'RAMP'[147](index=147&type=chunk) - No dividends were paid in the last two fiscal years, and there are no short-term plans to pay them[149](index=149&type=chunk) - The common stock repurchase program was expanded to **$1.1 billion**, with **$217.8 million** remaining capacity as of March 31, 2023, running through December 31, 2024[157](index=157&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In fiscal 2023, LiveRamp's revenues grew to $596.6 million, but net loss widened significantly to $118.7 million due to increased operating expenses and restructuring charges [Summary Results and Notable Events](index=53&type=section&id=Summary%20Results%20and%20Notable%20Events) Fiscal 2023 saw revenue growth but a widened net loss, driven by higher operating expenses, restructuring, and increased stock compensation Fiscal 2023 Financial Summary vs. Fiscal 2022 | Metric | Fiscal 2023 | Fiscal 2022 | Change | | :--- | :--- | :--- | :--- | | Revenues | $596.6M | $528.7M | +12.8% | | Gross Margin | 71.5% | 72.1% | -0.6 p.p. | | Net Loss | ($118.7M) | ($33.8M) | +251% | | Diluted Loss per Share | ($1.79) | ($0.50) | +258% | | Cash from Operations | $34.4M | $78.1M | -55.9% | - In November 2022, the company announced a reduction in force of about **10% of its employees** and a downsizing of its real estate footprint, expecting annualized savings of approximately **$30 million**[230](index=230&type=chunk) - The share repurchase program was amended to authorize an additional **$100 million** and extend its duration to December 31, 2024[231](index=231&type=chunk) [Key Performance Metrics](index=59&type=section&id=Key%20Performance%20Metrics) Key performance metrics for fiscal 2023 indicate a slowdown in growth, with Subscription Net Retention declining and ARR growth slowing Key Performance Metrics (as of March 31) | Metric | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Subscription net retention | 97% | 111% | (12.6)% | | Annualized recurring revenue | $423.8M | $399.5M | 6.1% | | Remaining performance obligation | $470.9M | $394.2M | 19.5% | | Current RPO | $337.6M | $308.5M | 9.4% | - The decline in Subscription Net Retention to **97%** was attributed to down-sell and churn activity, partly driven by customer budget pressures, offsetting upsell revenue[252](index=252&type=chunk) - Based on the declining growth rates of these key metrics, the company expects subscription revenue growth in fiscal 2024 to be lower than in fiscal 2023[257](index=257&type=chunk) [Results of Operations Analysis](index=61&type=section&id=Results%20of%20Operations%20Analysis) Total revenues increased by 12.8% in FY2023, but operating expenses surged 24%, leading to a near doubling of the operating loss Revenue by Type (FY2023 vs FY2022) | Revenue Type | 2023 (in thousands) | 2022 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Subscription | $482,807 | $428,617 | 13% | | Marketplace and Other | $113,776 | $100,040 | 14% | | **Total revenues** | **$596,583** | **$528,657** | **13%** | Operating Expenses (FY2023 vs FY2022) | Expense Category | 2023 (in thousands) | 2022 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Research and development | $189,195 | $157,935 | 20% | | Sales and marketing | $202,437 | $182,763 | 11% | | General and administrative | $125,351 | $104,591 | 20% | | Gains, losses and other items, net | $35,316 | $1,479 | 2,288% | | **Total operating expenses** | **$552,299** | **$446,768** | **24%** | - Gains, losses and other items, net increased to **$35.3 million**, which included **$27.5 million** in lease impairments and **$7.8 million** in employee termination benefits related to restructuring[271](index=271&type=chunk) [Capital Resources and Liquidity](index=64&type=section&id=Capital%20Resources%20and%20Liquidity) Cash and cash equivalents decreased to $464.4 million, primarily due to $150.0 million in share repurchases, while operating cash flow declined Cash Flow Summary (FY2023 vs FY2022) | Cash Flow Activity | 2023 (in thousands) | 2022 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $34,441 | $78,077 | | Net cash provided by (used in) investing activities | $(28,999) | $7,578 | | Net cash used in financing activities | $(146,010) | $(66,981) | - Working capital decreased by **$91.5 million** to **$539.7 million**, primarily due to the **$150.0 million** use of cash for treasury share acquisitions[279](index=279&type=chunk) - During FY2023, the company repurchased **6.1 million shares** for **$150.0 million** under its stock repurchase program[292](index=292&type=chunk) [Controls and Procedures](index=37&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and the independent auditor concluded that the company's disclosure controls and internal control over financial reporting were effective as of March 31, 2023 - Management concluded that as of March 31, 2023, the company's disclosure controls and procedures were effective at the reasonable assurance level[165](index=165&type=chunk) - Based on the COSO framework, management determined that the company's internal control over financial reporting was effective as of March 31, 2023[170](index=170&type=chunk) - No material changes were made to the internal control over financial reporting during the fourth quarter of fiscal 2023[171](index=171&type=chunk) Part III [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=40&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) As of March 31, 2023, over 5.4 million securities remained available for future issuance under LiveRamp's equity compensation plans Equity Compensation Plan Information as of March 31, 2023 | Plan Category | Securities to be Issued (a) | Weighted-Average Exercise Price (b) | Securities Remaining for Future Issuance (c) | | :--- | :--- | :--- | :--- | | Approved by shareholders | 5,228,795 | $19.15 | 5,425,842 | | Not approved by shareholders | — | — | 41,983 | | **Total** | **5,228,795** | **$19.15** | **5,467,825** | - The weighted-average exercise price of outstanding options, warrants, and rights is **$19.15**[180](index=180&type=chunk) Financial Supplement [Report of Independent Registered Public Accounting Firm](index=67&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) KPMG LLP issued an unqualified opinion on LiveRamp's financial statements and internal controls, identifying revenue evaluation as a critical audit matter - The auditor, KPMG LLP, issued an unqualified (clean) opinion on both the consolidated financial statements and the effectiveness of internal control over financial reporting[301](index=301&type=chunk) - A Critical Audit Matter was identified concerning the evaluation of the sufficiency of audit evidence over revenue, due to the subjective judgment needed for the company's non-standard revenue contracts[308](index=308&type=chunk)[310](index=310&type=chunk) [Consolidated Financial Statements](index=69&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show total assets of $1.17 billion, a net loss of $118.7 million, and a net decrease in cash for FY2023 Consolidated Balance Sheet Highlights (March 31, 2023 vs 2022) | Account (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $464,448 | $600,162 | | Total current assets | $714,559 | $815,834 | | Goodwill | $363,116 | $363,845 | | Total Assets | $1,172,703 | $1,333,736 | | Total current liabilities | $174,829 | $184,566 | | Total Stockholders' Equity | $926,076 | $1,063,060 | Consolidated Statement of Operations Highlights (FY2023) | Account (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Revenues | $596,583 | $528,657 | | Gross profit | $426,499 | $381,230 | | Loss from operations | $(125,800) | $(65,538) | | Net loss | $(118,702) | $(33,833) | [Notes to Consolidated Financial Statements](index=76&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on revenue disaggregation, restructuring charges, stock-based compensation, and income tax provisions - In FY2023, U.S. revenue was **$556.2 million** (**93% of total**), while international revenue was **$40.4 million**[388](index=388&type=chunk) - Restructuring charges in FY2023 included **$24.6 million** of right-of-use asset impairment charges and **$7.8 million** in employee-related severance costs[391](index=391&type=chunk)[396](index=396&type=chunk) - Total stock-based compensation expense was **$125.8 million** in FY2023, a significant increase from **$87.3 million** in FY2022, including **$22.6 million** from an accelerated vesting of certain RSUs[438](index=438&type=chunk)[439](index=439&type=chunk) - The company maintains a significant valuation allowance (**$61.2 million**) against its deferred tax assets, indicating uncertainty about realizing these tax benefits in the future[475](index=475&type=chunk)[477](index=477&type=chunk)

/LiveRamp Investor Breakfast & Management Q&A Color Picture Scott Howe Chief Executive Officer 1 2 3 Flexible Collaboration Premier Global Ecosystem Expansive, data-rich network of top-quality partners, customers and publishers for incomparable scale and reach. Vihan Sharma EVP of Global Revenue and MD of International Data Eras… Clouds Cloud Data Warehouses Data Lakes RampUp 2023 March 1, 2023 RampUp 2023 LiveRamp: The Data Collaboration Platform of Choice for the World's Most Innovative Companies The Righ ...

LiveRamp Holdings, Inc. (NYSE:RAMP) Q3 2023 Results Conference Call February 7, 2023 4:30 PM ET Company Participants Drew Borst - VP of IR Scott Howe - CEO Warren Jenson - President and CFO Conference Call Participants Shyam Patil - Susquehanna Elizabeth Porter - Morgan Stanley Peter Burkly - Evercore Brian Fitzgerald - Wells Fargo Jason Kreyer - Craig-Hallum Mark Zgutowicz - Benchmark Company Dean Sublett - Stephens Operator Good afternoon, ladies and gentlemen. And welcome to LiveRamp's Fiscal 2023 Third ...

Financial Performance - Revenues for the three months ended December 31, 2022, were $158.6 million, a 12.8% increase from $140.6 million in the same period of 2021[20] - Gross profit for the three months ended December 31, 2022, was $115.3 million, compared to $102.0 million for the same period in 2021, reflecting a gross margin improvement[20] - The net loss for the three months ended December 31, 2022, was $29.7 million, compared to a net loss of $15.4 million in the same period of 2021, indicating increased operational challenges[20] - The company reported a basic loss per share of $0.46 for the three months ended December 31, 2022, compared to a loss of $0.23 in the same period of 2021[20] - For the nine months ended December 31, 2022, the net loss was $87.34 million, compared to a net loss of $4.44 million for the same period in 2021[34] - The company reported a net cash provided by operating activities of $3.78 million for the nine months ended December 31, 2022, compared to $19.13 million in 2021[34] - The company reported a loss on disposal or impairment of assets of $4.12 million for the nine months ended December 31, 2022[34] - The company reported a net loss of $29.684 million for the three months ended December 31, 2022, compared to a net loss of $15.375 million for the same period in 2021, reflecting an increase in losses of 93.5%[43] Expenses and Investments - Research and development expenses for the three months ended December 31, 2022, were $43.2 million, up from $41.9 million in the same period of 2021, highlighting ongoing investment in innovation[20] - Operating expenses for the three months ended December 31, 2022, totaled $139.3 million, compared to $115.8 million in the same period of 2021, indicating rising costs[20] - Non-cash stock compensation expense for the nine months ended December 31, 2022, was $81.14 million, an increase from $61.48 million in 2021[34] - Stock-based compensation expense for the nine months ended December 31, 2022, totaled $81.142 million, an increase of 32% from $61.475 million in the same period of 2021[58] - The company recognized $4.8 million in stock-based compensation expense related to the Acuity performance earnout plan as of December 31, 2022[79] - A total of $11.3 million was recognized as stock-based compensation expense related to the DataFleets consideration holdback[80] - Stock-based compensation expense associated with the ESPP was $1.5 million for the nine months ended December 31, 2022[83] Assets and Equity - Total current assets decreased to $696.2 million as of December 31, 2022, from $815.8 million as of March 31, 2022, indicating a reduction in liquidity[17] - Total stockholders' equity decreased to $911.6 million as of December 31, 2022, from $1,063.1 million as of March 31, 2022, reflecting a decline in overall financial health[17] - The company’s total equity at December 31, 2022, was $911.61 million, reflecting a decrease from the previous period[27] - Cash and cash equivalents at the end of the period were $453.52 million, down from $561.69 million at the end of the same period in 2021[36] - Other current assets increased to $42,172 thousand as of December 31, 2022, compared to $36,975 thousand on March 31, 2022, reflecting a growth of approximately 14%[84] - The net property and equipment decreased to $8,809 thousand as of December 31, 2022, down from $11,531 thousand on March 31, 2022, representing a decline of about 23.5%[86] - Goodwill decreased slightly to $363,129 thousand as of December 31, 2022, from $363,845 thousand on March 31, 2022, indicating a reduction of approximately 0.2%[87] - Total intangible assets, net, dropped to $13,203 thousand as of December 31, 2022, from $26,718 thousand on March 31, 2022, a decrease of about 50.6%[89] Shareholder Actions - The company acquired treasury stock amounting to $149.99 million during the nine months ended December 31, 2022[34] - The company repurchased 6.1 million shares of its common stock for $150 million during the nine months ended December 31, 2022, with a total of 35.6 million shares repurchased for $882.2 million under the program[48] - The total number of common shares outstanding increased from 149,840,925 at March 31, 2022, to 152,052,376 at December 31, 2022[27] - Employee stock awards and other issuances for the nine months ended December 31, 2022, totaled 396,093 shares[27] Future Outlook - The company anticipates continued challenges due to macroeconomic factors, including inflation and the ongoing impact of the COVID-19 pandemic[15] - Future performance may be influenced by the integration of acquired businesses and the ability to attract and retain qualified employees[11] - The company expects to recognize revenue on substantially all remaining performance obligations by March 31, 2026[51] Impairments and Restructuring - The company recorded a $4.0 million impairment related to a strategic investment during the three months ended December 31, 2022[84] - Restructuring charges and adjustments totaled $10,086 thousand for the nine months ended December 31, 2022, compared to no charges in the same period of the previous year[103] - The company recognized $15.5 million in impairment charges related to right-of-use asset groups due to lease exits during the quarter ended December 31, 2022[101] - The allowance for credit losses increased to $10,041 thousand at the end of the nine months ended December 31, 2022, up from $9,961 thousand at the beginning of the period[95] Tax and Valuation - The company maintains a full valuation allowance on its net deferred tax assets, except in certain foreign jurisdictions, reflecting a cautious approach to future taxable income generation[106] - The estimated annual effective income tax rate for the current fiscal year is primarily driven by nondeductible stock-based compensation and the valuation allowance[106] Market and Risk Factors - There have been no material changes in the company's market risk exposures for the nine months ended December 31, 2022, compared to the previous annual report[183] - The company does not expect the excise tax on share repurchases, effective after December 31, 2022, to have a material impact on its financial statements[107]

Financial Data and Key Metrics Changes - Total revenue for Q2 2023 was $147 million, representing a 16% year-on-year increase, with subscription revenue up 14% and Marketplace & Other revenue up 25% [57] - Annual Recurring Revenue (ARR) reached $420 million, up 15% compared to the previous year [8][58] - Non-GAAP operating profit was $17 million, marking the 10th consecutive quarter of profitability, while operating cash flow nearly doubled to $21 million [59][44] Business Line Data and Key Metrics Changes - Subscription net retention was 106%, and platform net retention was 108%, with subscription usage as a percentage of total subscription business at approximately 14% [14][58] - The customer count for $1 million-plus customers grew to 92%, an increase of 15% year-on-year [13][58] - Data Marketplace revenue, which constitutes about 80% of Marketplace & Other, increased by 23% [57] Market Data and Key Metrics Changes - International revenue grew approximately 26%, and when adjusted for foreign exchange, it increased by 39% [57] - The company added 10 new customers in Q2, which is an improvement from Q1 but still below historical trends [12] Company Strategy and Development Direction - The company is focused on strengthening its U.S. sales team and expanding channel partnerships to drive future growth [29][33] - LiveRamp is committed to improving its product offerings based on customer feedback and enhancing its operational efficiency [44][68] - The company aims to capitalize on the transition from Data Management Platforms (DMPs) to Customer Data Platforms (CDPs) and public clouds [51][102] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the economic environment, noting that while there are positive signs, challenges remain, particularly in the SMB segment [17][65] - The company is optimistic about its long-term growth trajectory, emphasizing its foundational identity solutions and partnerships with major players like Google and Salesforce [26][120] - Management highlighted the importance of adapting to changing market conditions and customer needs, particularly in light of the ongoing economic uncertainty [47][129] Other Important Information - The company announced a 10% reduction in workforce as part of its restructuring efforts to improve profitability [45][73] - LiveRamp repurchased 1.7 million shares for $40 million in Q2, with a total of 3.8 million shares repurchased for $100 million year-to-date [60] Q&A Session Summary Question: Improvement in net customer adds and retention - Management acknowledged that while there was some improvement, caution is warranted due to ongoing economic uncertainties [90][92] Question: Sustainability of usage as a percentage of revenue - Management noted consistent strength in utilization from data partners and platform providers, but cautioned about potential weaknesses from brand customers [94][96] Question: Pipeline for expansion and new logo acquisition - Management indicated that a significant portion of bookings came from existing customers, but emphasized the need to improve new logo acquisition through channel partnerships [100][102] Question: Revenue generation from partnerships with Snowflake and others - Management projected that channel partnerships could generate nearly $10 million in revenue this year, indicating a growing opportunity [107][108] Question: Progress on the Facebook relationship and advantages of using ATS - Management highlighted the importance of bifurcated consent and the robustness of their identity solutions compared to other methods [111][115] Question: Impact of Google PAIR on alternative IDs and industry - Management expressed optimism that the PAIR announcement aligns with their approach and could drive significant opportunities in the post-cookie world [119][120] Question: Progress with Carrefour and other flagship deals - Management confirmed strong progress with Carrefour across various regions and highlighted the growing network of partnerships [123][125]

LiveRamp Holdings, Inc. (NYSE:RAMP) Q1 2023 Earnings Conference Call August 4, 2022 4:30 PM ET Company Participants Lauren Dillard - Senior Vice President of Finance and Investor Relations Scott Howe - Chief Executive Officer Warren Jenson - President and Chief Financial Officer Conference Call Participants Christopher Quintero - Morgan Stanley Peter Burkly - Evercore Shyam Patil - Susquehanna Jason Kreyer - Craig Hallum Tim Nollen - Macquarie Nicholas Zangler - Stephens Robert Coolbrith - Wells Fargo Oper ...