LiveRamp (RAMP) - 2026 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Q3 revenue grew by 9%, reaching $212 million, with subscription revenue also increasing by 9% to $158 million [22][23] - Non-GAAP operating income rose by 36%, totaling $62 million, while GAAP operating income more than doubled to $40 million [22][26] - Annual Recurring Revenue (ARR) increased by $11 million quarter-over-quarter and 7% year-over-year [4][23] - Free cash flow reached a record $67 million, with $39 million allocated for share repurchases [26][29] Business Line Data and Key Metrics Changes - Subscription revenue growth included a fixed revenue increase of 8% and a usage revenue increase of 13% year-over-year [23] - Total customer count increased by 15, marking the largest growth in over three years, with million-dollar-plus customers rising to 140 [4][23] - Subscription net retention was stable at 101%, aligning with expectations [24] Market Data and Key Metrics Changes - Marketplace and other revenue grew by 8% to $54 million, although slightly below expectations due to timing-related dynamics [25] - Demand for data marketplace services re-accelerated in mid-November, returning to double-digit growth [25] Company Strategy and Development Direction - The company aims to achieve the "Rule of 40" by FY 2028, targeting revenue growth of 10%-15% and a non-GAAP operating margin of 25%-30% [16][17] - A shift towards a usage-based pricing model is being implemented to unlock incremental revenue growth, particularly appealing to mid-sized brands [14][19] - The company is expanding its data marketplace to include AI models and applications, positioning itself as a central hub for AI-powered marketing [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's durability and scalability, highlighting AI as a significant tailwind for future growth [3][5] - The company is focused on maintaining strong customer relationships and executing effectively, with expectations for continued revenue growth [18][31] - Management noted that AI adoption is expected to drive more data across the network, enhancing revenue without proportional cost increases [9][19] Other Important Information - The company has signed over 20 AI partners, including both startups and established firms like Google, to enhance its offerings [10][11] - The annual customer and partner conference, Ramp Up, is scheduled for March, providing an opportunity for investors to engage with the ecosystem [20] Q&A Session Summary Question: Insights on Publicis partnership - Management highlighted the readiness for expanding partnerships and the value added through their modular platform, allowing agencies to innovate on top of LiveRamp [34][36] Question: Upsell and cross-sell progress - Management reported strong sales momentum, particularly in expanding existing customer relationships through offerings like Clean Room [37][38] Question: AI partnerships and prioritization - Management emphasized a client-led approach to innovation, prioritizing partnerships based on client feedback and market dynamics [42][44] Question: Growth in commerce media networks - Management noted rapid growth in non-retail commerce networks, particularly in travel and food delivery sectors, which are expected to drive future revenue [48][51] Question: CTV integration and performance - Management confirmed that CTV continues to be a strong growth area, with significant integration and performance improvements [52][55] Question: AI's impact on subscription business model - Management reassured that AI is seen as a tailwind, enhancing the business rather than disrupting it, with strong sales performance observed [61][68]