LiveRamp (US:RAMP)2021-02-09 05:15Financial Data and Key Metrics Changes - Total revenue increased by 17% and subscription revenue rose by 15% [9][41] - Annual Recurring Revenue (ARR) at the end of the quarter was up 17% [11][42] - Marketplace and other revenue grew by 27%, with data marketplace revenue up 60% [9][41] - The company achieved its first-ever double-digit operating margin, marking a significant milestone [11] Business Line Data and Key Metrics Changes - The average Annual Contract Value (ACV) of brand deals won in Q3 increased by nearly 30% [11] - The number of customers generating over $1 million in revenue increased by 30% year-over-year, totaling 65 [11] Market Data and Key Metrics Changes - More than 325 publishers have adopted the Authenticated Traffic Solution (ATS), up from 215 in the previous quarter [13] - ATS-enabled campaigns tripled in Q3 compared to the prior quarter, indicating strong market momentum [13] Company Strategy and Development Direction - The company is focusing on the adoption of ATS as a key strategy to replace third-party cookies, which is expected to drive growth [12][19] - LiveRamp is broadening its core subscription offerings with new features and use cases, particularly in connected television and Safe Haven [22][23] - The acquisition of DataFleets is aimed at enhancing privacy-preserving data collaboration capabilities, opening new markets such as healthcare and financial services [29][47] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning despite the uncertain macroeconomic environment, highlighting the importance of data for clients [8][38] - The transition away from third-party cookies is seen as a long-term positive for the company, although it may have short-term financial implications [18][60] - The company expects topline growth of up to 15% in FY 2022, factoring in a $30 million headwind from sunsetting cookie-based revenue [60] Other Important Information - The company reported a gross margin improvement of 400 basis points to 73% [49] - Operating cash flow was $15 million, and free cash flow was positive at $2 million [50] - The cash balance at the end of the quarter was $663 million, indicating a strong financial position [50] Q&A Session Summary Question: Can you discuss the DataFleets acquisition and its potential benefits? - Management highlighted that DataFleets technology will enhance Safe Haven by allowing complex analytics without moving data, expected to be integrated by mid FY 2022 [68][69] Question: What is the expected growth framework for subscription versus marketplace in FY 2022? - Management indicated strong growth in both areas, with underlying growth expected to exceed 20% when excluding the $30 million headwind [70] Question: Can you elaborate on the headwinds from platform relationships? - Management explained that the $30 million headwind is due to the sunsetting of cookie-based licensing relationships, which are expected to change in nature rather than disappear entirely [74][106] Question: What drove the recent increase in ATS adoption? - Management attributed the increase to a combination of improved results from ATS and a growing recognition among clients of the need for sophisticated data solutions [78][99] Question: How will the DataFleets acquisition be monetized? - The acquisition will be embedded into the Safe Haven solution and is expected to open new opportunities in low-penetration verticals like healthcare and financial services [101]