Financial Data and Key Metrics Changes - Q2 revenue increased by 8% to $200 million, surpassing guidance by $3 million [17] - Non-GAAP operating income rose by 10% to $45 million, exceeding guidance by $6 million [17] - GAAP operating income more than doubled, with a margin expansion of seven percentage points to a record high [3][21] - Net new ARR was $14 million, marking the largest organic increase in the past seven quarters, with year-on-year growth of 7% [3][18] Business Line Data and Key Metrics Changes - Subscription revenue grew by 5% to $150 million, with fixed subscription revenue up 6% [17][21] - Marketplace and other revenue increased by 18% to $50 million, driven by a stable ad spending environment and new CTV integrations [20] - Million-dollar-plus subscription customers rose by five to a new high of 132 [4][18] Market Data and Key Metrics Changes - Total RPO (contracted backlog) increased by 29% to $652 million, while current RPO was up 15% to $430 million [18] - Subscription net retention was 102%, aligning with the near-term expectation of 100-105% [18] Company Strategy and Development Direction - The company is focusing on AI product enhancements and a new usage-based pricing model to drive growth [3][11] - Investments are being made in platform upgrades, AI capabilities, and the new pricing model to capture emerging opportunities [40][42] - The long-term goal is to achieve Rule of 40 by FY2028, with a current projection of Rule of 31 for this fiscal year [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue growth of over 10% in the future, driven by AI and ongoing cost efficiencies [15][25] - The company is optimistic about the upcoming renewal periods in Q3 and Q4, with a robust pipeline and sustained sales momentum [27][46] Other Important Information - Free cash flow for the quarter was $57 million, with $50 million allocated for share repurchases [21] - The balance sheet remains strong with $377 million in cash and short-term investments and zero debt [21] Q&A Session Summary Question: Drivers of improvement in ARR - Key drivers included strong gross new ARR from cross-sell and upsell of Clean Room solutions, new logo activity, and lower customer churn [29][30] Question: Upsell opportunities in the second half - Management feels optimistic about upsell opportunities due to various growth levers, including Cross Media Intelligence and commerce media networks [31] Question: Implications of AI on business - The company has low exposure to the open web and sees high upside from AI, leveraging first and second-party data to enhance model effectiveness [33][34] Question: Macro-conservatism in revenue guidance - The guidance includes conservatism, particularly in variable revenue sources, with expectations of consistent macro conditions [35][36] Question: Mix of retail and CPG versus non-retail in incremental ARR - Growth is being seen in both retail and commerce media, with a focus on expanding partnerships beyond traditional retail [37][38]

Financial Performance - The company reported strong financial performance in Q4, beating expectations on both revenue and operating income, with a 10% increase in total revenue to $189 million and a 43% growth in operating income [4][27] - For FY 2025, the company achieved a 13% revenue growth, marking the third consecutive year of hitting the 10% to 15% growth target, driven by an 11% increase in subscription revenue and a 21% surge in marketplace and other revenue [5][6] - The operating margin expanded by three percentage points to 12% in Q4 and by two percentage points to 18% for the full year, marking the sixth consecutive year of margin expansion [9][36] Business Lines Performance - Subscription revenue for Q4 was $145 million, up 9%, while marketplace and other revenue increased by 14% to $44 million, with data marketplace growth at 13% [28][32] - The company added 13,100 subscription customers during FY 2025, including two new $1 million plus customers in Q4 from the financial services sector [6][7] - The annual recurring revenue (ARR) increased by $12 million quarter on quarter, with a net retention rate of 104% [29][30] Market Data - The data marketplace, which accounted for 77% of marketplace and other revenue, showed continued strength in U.S. digital ad spending, with no detected change in customer behavior due to macroeconomic conditions [32] - The company noted a significant increase in CTV advertising data bought from its marketplace, up nearly 50% for FY 2025 [101] Company Strategy and Industry Competition - The company aims to achieve the "Rule of 40" by FY 2028, targeting 10% to 15% revenue growth and 25% to 30% operating margin, with a focus on expanding its data collaboration network and enhancing media measurement capabilities [10][24] - The launch of the cross media intelligence solution is expected to drive growth by enabling marketers to measure and optimize advertising campaigns across platforms [24][49] - The company is strategically managing expenses while investing in key growth areas, including the rollout of its cross media intelligence offering and integrating AI functionality into its platform [41][42] Management Commentary on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the sales pipeline, noting strong demand signals but acknowledging some customer hesitancy tied to macroeconomic uncertainty [31][38] - The company anticipates revenue for FY 2026 to be between $787 million and $817 million, reflecting a growth rate of 6% to 10%, with the macro environment being a significant swing factor [38][39] - Management highlighted the importance of ROI for clients, especially in uncertain times, and emphasized the need for effective measurement solutions [74] Other Important Information - The company achieved a record free cash flow of $153 million for FY 2025, a 51% year-over-year increase, and returned $101 million to shareholders through a share repurchase program [9][35] - The company concluded FY 2025 with $421 million in cash and short-term investments, equating to over $6 per diluted share [9] Q&A Session Summary Question: Customer reaction to cross media intelligence and growth acceleration confidence - Management expressed optimism about the cross media intelligence solution, noting strong early feedback and increased customer conversations, which suggest traction [49][52] Question: Key factors impacting revenue guidance range - The primary swing factor between the low and high ends of the revenue guidance is the macro environment, with execution on sales momentum being crucial [56][58] Question: New customer acquisition and mid-market opportunities - The company is focused on improving customer count, particularly in the mid-market, with new clean room use cases and a new pricing model expected to drive growth [63][65] Question: Impact of Google’s cookie announcement on customer sentiment - Management indicated that the announcement was largely a non-event for customers, as the industry has been moving away from cookies for years [68] Question: Sales pipeline and client hesitation - Management noted that client hesitation was observed late in Q4 but indicated that strong ROI models and value propositions helped close deals early in Q1 [75][77] Question: Clean Room solution adoption and customer segmentation - Management believes that clean room adoption is primarily a function of time and execution, with larger companies leading the way, but expects broader adoption over time [85][88] Question: Subscription net retention rate outlook - The company expects subscription net retention to stabilize between 100% and 105% in the near term, with potential for improvement as new strategies are executed [92][93] Question: RPO growth and renewal cycle - The company reported strong growth in RPO driven by successful multi-year deal renewals, indicating a positive renewal cycle [98][99] Question: Contribution from Oracle and CTV partnerships - Management noted that Oracle contributed a few points of growth, while CTV partnerships are expected to support continued strong growth in FY 2026 [101]