Good afternoon, ladies and gentlemen, and welcome to LiveRamp's Fiscal 2025 Third Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. As a reminder, this conference call is being recorded. I would now like to turn the call over to your host, Drew Borst, Vice President of Investor Relations.

Thank you, operator. Good afternoon, everyone, and thank you for joining our fiscal 2025 third quarter earnings call. With me today are Scott Howe, our CEO, and Lauren Dillard, our CFO. Today's press release and this call may contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. For a detailed description of these risks, please read the Risk Factors section of our public filings and the press release. A copy of our press release and financial schedules, including any reconciliation to non-GAAP financial measures, is available at investors.liveramp.com. Also, during the call today, we'll be referring to the slide deck that is also available on our Investor Relations website. With that, I'll turn the call over to Scott.

Thank you, Drew, and thanks to everyone for joining us today. With our Investor Day approaching on February 25, I'll keep today's remarks brief and focused on our strong third quarter results. During Investor Day, we'll provide a comprehensive update on our strategy, market position, product roadmap, go-to-market initiatives, and an updated financial outlook. We hope to see you there, either in person in San Francisco or via the live webcast. Three key takeaways from Q3. First, we exceeded expectations for revenue and operating income with double-digit revenue growth for the fourth consecutive quarter. Second, sales momentum rebounded as our pipeline converted into new clients and upsells, and data marketplace and usage revenue remains strong. And third, we continue making progress on our Rule of 40 journey and are prioritizing ongoing improvement, exceeding expectations. We posted strong third quarter results, exceeding our guidance and consensus on the top and bottom line. I'm particularly pleased with the improvement in our sales momentum, which validates our strategy and product offering. We believe our data collaboration platform is uniquely positioned to capitalize on the growing demand from advertisers and publishers for enhanced measurement of digital advertising using first-party data. Revenue increased by 12%, marking our fourth consecutive quarter of double-digit growth. Operating income increased by 24%, and operating margin expanded by over two points to reach a record quarterly high of 23%. Fiscal year-to-date, we have generated $91 million in free cash flow, which is a 20% increase year-over-year. Our sales momentum rebounded in the third quarter as the pipeline we've built year-to-date started to convert to new clients and upsells. Our pipeline conversion rate improved materially, swinging from below trend in the prior three quarters to well above trend in Q3. What drove the turnaround? We think several factors were at play. First, the IT spending environment improved as concerns about the economy and macroeconomic policy receded. Second, customers are increasingly recognizing that data collaboration is critical for measuring outcomes in the fastest-growing advertising channels such as CTV, commerce media, and social and for supporting data-fueled AI models. Finally, our strategic focus and optimizations are paying off. We've simplified our messaging and educated the market about the value of data collaboration. The tactical adjustments we made to our product and go-to-market strategy, starting last spring, are gaining traction with customers. As I outlined on the last earnings call, these adjustments made our platform faster and easier to use for the use cases that matter most to customers such as measuring marketing outcomes in CTV and retail media. LiveRamp operates as a classic network business, where scale creates a defensible advantage and a natural flywheel that further enhances the network's scale and the value received by all participants. There's been a lot of talk in our industry recently about marketing entering the outcomes era, a period in which all advertising is data-driven, accountable, and achieves measurable results. This trend benefits LiveRamp as our network enables a personalized customer experience at scale across all touchpoints with the ability to measure and optimize outcomes for better performance. The brand and business value our customers build increases exponentially with the LiveRamp data collaboration network. The scale of our data collaboration network is unparalleled; consider some of these metrics. Over 350 brand customers, including 20 of the 25 largest US advertisers and 30% from the Fortune 500. More than 200 ad tech platforms such as DSPs, SSPs, marketing clouds, and customer data platforms, 200-plus third-party data providers, 70-plus ad agencies, including all six of the largest agency holding companies, 10 of the 11 largest streaming platforms, and over 30 retail and commerce media networks, including 14 of the 15 largest. Even at this scale, we're not done growing. The current leg of growth is being driven by the need to deliver measurable marketing outcomes, a dawning recognition that few companies have enough data to go alone, and the desire to collaborate in a secure clean room environment. Every marketer, media owner, and marketing partner is judged on their ability to deliver measurable marketing outcomes, and you simply cannot deliver, measure, and optimize these outcomes without collaboration. Both the data owners and data consumers in our network, and most companies now fit into both categories, recognize that collaboration improves virtually every measurable outcome. Publishers and Commerce Media Networks use our clean room solution to enhance the value and effectiveness of their advertising inventory through improved targeting and measurement capabilities. Advertisers are able to seamlessly connect to a broad network of premium publishers to achieve greater reach, richer consumer insights, execute more sophisticated campaign strategies, and measure their marketing outcomes such as return on ad spend. The customer upsells and new logo wins we had this quarter exemplified the growth across our network. We secured a high six-figure upsell on a multimillion-dollar two-year contract with a leading mass market retailer in the US. The upsell spanned our identity connectivity and clean room solutions, bringing their retail media network into our network as a data owner. We also signed a seven-figure upsell in a multimillion three-year contract with a large quick-service restaurant that will be utilizing our clean room solution as a data consumer. Our collaboration network is also helping with new logos. This quarter, we signed a top five retail media network to our clean room as a data owner for a high six-figure ACV. Finally, we signed a seven-figure new logo contract with a two-year term with a global hotel and resort operator. This contract included our clean room solution as a data consumer, in addition to our identity and connectivity products. As I mentioned, many of our clients are now serving as both data consumers and data owners. For example, the aforementioned hotel operator came into our clean room network as a data consumer to support their advertising efforts, but we are already discussing how to expand this relationship to include their commerce media network as a data owner node in our collaboration network. This improved sales momentum is partially, although not fully, reflected in several key operational metrics. ARR grew by 10% year-on-year, marking the fourth consecutive quarter of double-digit growth. Net new ARR in the quarter was $8 million. This only partially reflects Q3 signings due to the normal one to two-month lag between contract signing and the first invoice that triggers revenue recognition for ARR. The third quarter CRPO also rebounded with a 16% increase quarter-over-quarter. While we typically see an acceleration in CRPO quarterly growth in Q3 due to seasonality in our contract renewals, 16% growth was significantly above the normal seasonal trend. Of course, we know that a single quarter doesn't guarantee continued success. We're focused on maintaining this momentum and improving the consistency of our execution. To support that goal, we're hosting our annual customer and partner conference, RampUp, in San Francisco at the end of February. This event is a cornerstone of our commercial strategy, and we anticipate engaging with over 3,000 attendees, including hundreds of customers and partners. We will hold more than 350 customer meetings and announce platform enhancements focused on speed, ease of use, and expanded functionality. We're also excited to share new use cases, partnerships, and innovations. Given the current momentum within our data collaboration network, we’re more enthusiastic than ever about this year's RampUp. Rule of 40 progress. We continue to make progress on our Rule of 40 journey, prioritizing ongoing improvement, which we believe will unlock greater returns for shareholders. Based on our updated FY 2025 guidance, we expect to reach or surpass Rule of 30 with 12% to 13% revenue growth and an 18% operating margin. This represents a 200 to 400 basis point improvement compared to FY 2024. Our medium-term objective remains 10% to 15% annual revenue growth, and FY 2025 will be the seventh consecutive year we grew above 10% since the Acxiom divestiture. While our revenue growth isn't always linear, Q3 sales momentum reinforces that we have the right strategy and product to meet substantial market demand for data collaboration. This positions us for strong growth over the medium to long term. Additionally, we see an opportunity to evolve our pricing model to better align our revenue growth with our customers' increasing data use for digital advertising, delivery, and measurement. We'll elaborate on this at our Investor Day. Margin. We have a track record of steady margin expansion, delivering 200 basis points of improvement this year to reach 18%. We remain on track to deliver a 20% to 25% operating margin in FY 2026, driven by cost discipline, savings from our offshoring initiative, and the inherent drop-down rate on incremental revenue in our SaaS model. We're confident that we're striking the right balance between investing for future revenue growth and delivering improved profitability. In closing, let me reiterate the key themes from the quarter. First, we delivered strong Q3 financial results with revenue and operating income exceeding expectations. We achieved double-digit growth in both revenue and ARR, above normal seasonality in CRPO growth, and record-high operating margin. Second, our sales momentum accelerated during the quarter, driven by an improving IT spending environment and growing recognition amongst customers that data collaboration is essential for both measuring outcomes in key advertising channels—CTV, commerce media, social—and supporting data-driven AI models. Our focus on simplifying onboarding, educating the market, and enhancing our products also contributed to this success. Third, we continue making steady progress towards Rule of 40 and expect 300 to 400 basis point improvement to reach or surpass Rule of 30 this fiscal year. We remain committed to delivering a 20% to 25% operating margin in FY 2026, up from 18% in FY 2025, driven by cost discipline, offshoring savings, and the high drop-down rate on incremental revenue. We hope you can join us on February 25 for our Investor Day. Registration information can be found on our Investor Relations website, and please reach out to Drew with any questions. Thank you again for joining us today. I also want to thank our exceptional customers, partners, and all LiveRampers for their ongoing hard work and support. We look forward to updating you on our continued progress in the coming quarters. And with that, I'll turn the call over to Lauren.

Thanks, Scott, and thank you all for joining us. Today, I will cover two topics. First, a review of our Q3 financial results; and second, provide our outlook for FY 2025 and Q4. Unless otherwise indicated, my remarks pertain to non-GAAP results, and growth is relative to the year-ago period. I will be referring to the earnings slide deck that is available on our IR website. Starting with Q3. In summary, we delivered strong results above our expectations, highlighting another quarter of solid performance. Revenue came in at $195 million, $4 million above our guidance, and operating income was $45 million, $6 million above our guidance. Operating margin expanded by 2 points to a record quarterly high of 23%. Subscription net retention improved by 1 point sequentially to a 10-quarter high of 108%. The ARR grew 10%, the fourth consecutive quarter of double-digit growth. Let me provide some additional details. Please turn to Slide 5. Total revenue was $195 million, up 12%, with both subscription and marketplace above our expectations. Subscription revenue was $146 million, up 10%. Fixed subscription revenue was also up 10%, in line with our low double-digit expectations. Subscription usage was up 9%, ahead of our expectation of flat. As a percentage of total subscription revenue, usage was 16%, slightly above the 10% to 15% historic range. ARR was $491 million, up 10% year-on-year, and quarter-on-quarter grew by $8 million, driven primarily by upsell. Subscription net retention was 108%, ahead of our 100% to 105% expectation, driven by stronger usage. Total RPO or contracted backlog was up 6% to $579 million. Current RPO was up 13% to $434 million. As Scott mentioned, the sequential increase in CRPO was above normal seasonality, reflecting the improved sales momentum in the quarter and a larger volume of successful renewals. The selling environment improved notably in Q3 compared to the prior three quarters. Our conversion rates swung from below trend in the prior quarters to above in Q3. We think the improvement was driven by a combination of an improved IT spending environment, reduced concerns about macroeconomic growth, and the tactical adjustments we made to our product and go-to-market motion. Demand signals and our sales pipeline remain robust, so we're optimistic we can sustain the recent momentum. Marketplace and other revenue increased 20% to $50 million. Data marketplace, which accounted for 78% of marketplace and other revenue, grew by 18%, reflecting continued strength in digital advertising markets and, in particular, CTV, which now accounts for roughly 20% of data marketplace revenue. Moving beyond revenue. Gross margin was approximately 74%, down 0.5 point year-on-year. Operating expenses were $100 million, up 6% and lower than we expected due primarily to the timing of certain investment projects. Operating income was $45 million, up from $36 million a year ago, and our operating margin expanded by 2 points to a record quarterly high of 23%. The GAAP operating income was $15 million, reflecting the impact of stock-based compensation and purchased intangible asset amortization. Stock comp was $27 million, up from $17 million a year ago. The increase reflects a benefit in the prior year from accelerated vesting for tax planning purposes. The current year also includes the impact of the Habu acquisition. Operating cash flow was $45 million, up from $17 million a year ago, reflecting growth in adjusted EBITDA and improved impact of working capital changes. We repurchased $10 million in stock in the fiscal third quarter, bringing the fiscal year-to-date total to $76 million. There is approximately $282 million remaining under the current authorization that will expire at the end of calendar 2026. In summary, we posted strong results in Q3. We saw a nice improvement in the selling environment and in our own sales execution. Our marketplace growth continued to outpace market growth, and we remain disciplined with respect to costs. Let me now turn to our financial outlook for FY 2025 and Q4. Please turn to Slide 12. Please keep in mind our non-GAAP guidance excludes intangible amortization, stock compensation, and restructuring-related charges. Starting with the full year, we are increasing our revenue guidance to be between $741 million and $743 million, up 12% to 13% year-on-year. Relative to our prior guidance, this is $4 million higher at the midpoint, passing through the Q3 beat. We still expect fixed subscription revenue to be up low-double digits, but we now expect subscription usage to increase high-single digits, up from mid-single digits previously. Our outlook for subscription revenue assumes net retention remains within a range of 100% to 105%. This is a few ticks below Q3, which benefited from above trend subscription usage as well as the acquisition of Habu, which starts impacting in Q4. With Marketplace and Other, we now expect growth to be approximately 20%, up from high-teens previously. We expect gross margin to be at the low end of our 74% to 75% range, reflecting short-term investments to improve platform reliability and data processing speed. We expect non-GAAP operating income to be $135 million, up 28% and representing a margin of 18%, up approximately two points year-on-year. On the Rule of 40 framework, we expect to reach or surpass Rule of 30 for the first time, given our guidance of an 18% operating margin plus 12% to 13% revenue growth. We expect GAAP operating income to be $10 million. Lastly, we're on track to use a substantial portion of this year's free cash flow for share repurchases, and we will be opportunistic in fiscal Q4 depending on market conditions. Now, moving on to Q4, we expect total revenue of between $184 million and $186 million, non-GAAP operating income of $22 million, and an operating margin of 12%, up three points year-on-year. As a reminder, Q4 is seasonally our highest expense quarter due to ramp-up and payroll taxes. A few other call-outs for Q4: we expect subscription revenue to be up high-single digits across both fixed and usage. Marketplace and other revenue is expected to be up approximately 10%. Note that the Q4 data marketplace comparison is the most difficult of the year, and our guidance assumes the two-year stack growth rate remains stable sequentially in Q4. The expected deceleration in revenue growth in Q4 to high-single digits reflects both the lapping of the Habu acquisition and the challenging sales environment we experienced in the prior three quarters. Gross margin is expected to be 73%, and we expect stock-based compensation to be approximately $26 million. Before opening the call to questions, I'll conclude with a few final thoughts. We had a strong Q3 ahead of our expectations on the top and bottom lines, reflecting strength with existing customers and healthy digital ad markets. Operating margin expanded by 2 points to a record quarterly high of 23%. We increased our FY 2025 guidance for both revenue and operating income. And finally, our sales momentum rebounded in Q3, and we are making significant progress in scaling our data collaboration network. Our sales pipeline remains robust, and we're focused on sustaining the current momentum. On the bottom line, we continue to carefully and smartly manage costs. We're executing well against our offshoring initiatives and continue to aggressively manage costs. We remain on track to deliver a 20% to 25% operating margin in FY 2026. On behalf of all LiveRampers, thanks again for joining us today, and thank you to our amazing customers and partners.

We will now open the call to questions.

Hey, guys. Congrats on strong results. I just had a question for you. You talked a little bit about improved sales momentum in the quarter. I just wondered if you could provide some additional color on the drivers of the turnaround there. Thank you.

Yes. Thanks for the question, Shyam. Improved sales momentum starts first and foremost with great salespeople. I want to give a shout-out to our team there because internally, I'm always hard on them, and I always say, 'Hey, it's never good enough.' But we have a lot of experienced sellers. I was with one of them yesterday in the Midwest. Every time I see them in action and see how knowledgeable they are about our clients' businesses, what great stewards they are of client results, I'm always so impressed. So it starts there. But it's complemented by the fact that we are the scale leader. In this business, network scale means everything. Product is important, and we always need to strive to improve our product. But part of our product efficacy is the network effect we generate. When you're talking about data clean rooms or data collaboration, part of the value that each participant gets is due to their ability to connect and collaborate with everyone else. That's part of the network, and we have a nice flywheel going. In fact, in the Midwest retailer I visited yesterday, they told us, 'We chose you because when we talked to everyone in the ecosystem and everyone we wanted to partner with—our publishers, our merchant partners—they all said they worked with LiveRamp.' When you hear that kind of thing, the flywheel starts moving, and scale breeds more scale. The third thing is just our pipeline. It's been frustrating in the last couple of quarters to be on these calls and discuss how nice our pipeline was, yet our frustration around converting that pipeline into closed contracts. I feel like in the wake of the election, budgets were unstuck, and we saw a real infusion. We saw our conversion rate increase materially from real low points in previous quarters. We had a nice rebound, especially in connectivity and clean rooms, where both our additions to clean rooms doubled in terms of new nodes, and our usage also doubled. When you see both new nodes and increased usage, that fuels more data consumption. Overall, we really saw everything hitting on all cylinders. Again, I would reinforce what I said in my prepared remarks—one quarter is a data point. Now we need to string together trend lines. Based on what I'm seeing in the marketplace, I'm pretty encouraged.

And Shyam, I might just add some additional numbers to what Scott said. Sales were up nicely across all elements of our product suite, most notably in our connectivity and clean room solutions. Conversion rates nearly doubled from where they were in the preceding three quarters. Our sales cycle for new logos improved meaningfully. Our average deal size ticked up nicely—up over 25% versus recent quarters. Finally, our renewal rates in the quarter were at a 10-quarter high. So just really strong, to Scott's point—really strong sales execution across the board.

Thanks very much. Scott, Lauren, really nice improving metrics, RPO, ARR retention. I’m curious about a couple of fronts on Data Marketplace, which was also very strong. Just curious if there was much Oracle impact there in the quarter and if you expect to see any impact in the fiscal fourth quarter? And then as it relates to RPO, I’m wondering how contract renewals and the pace you saw in the quarter influenced your RPO number and what pace you think you'll see in terms of contract renewals again in the fourth quarter relative to the third quarter? Thanks.

I'm happy to take both, Mark. So first on Oracle, given the scale and breadth of our data marketplace business, it's hard to perfectly tease out the benefit from Oracle versus other factors, including seasonality. Oracle had about 45 data providers in its marketplace, and we were already working with the majority of them. We currently have about 200 active data providers in our marketplace. That said, our best estimate is that Oracle added a few points of growth to data marketplace in Q3, and we would expect that to continue moving forward. With respect to RPO, seasonally, we always see strong quarter-on-quarter growth in RPO in Q3, and this reflects the seasonality in our contract renewals. Of the increase in total RPO, about 80% was associated with CRPO, really reflecting the strong sales momentum both Scott and I discussed in our prepared remarks. The non-current portion also increased nicely, and we think this reflects the continued traction we're having signing our customers to multiyear deals upon renewal. Q4 is also a seasonally high renewal quarter for the business, and we feel good about our ability to maintain renewal rates this quarter.

Great. Thank you, guys. I just wanted to stay on the topic of sales momentum. If these sales improvements continue, do you think that can drive better momentum exiting Q4 and give us a better indication of growth as we get into FY 2026? Or do you think it's still too early to look at it that way?

Well, let’s start, Jason, with your second question. Anytime we win new clients and secure upsells, that de-risks us moving forward. But it's the curse and benefit of SaaS, right? You see it kind of six months in the future instead of immediately. The things we do this quarter will really show up in a stronger back half of next year. In terms of what gives me confidence, I do think it's durable. The reason I say that is because we're in such early stages with all of the data collaboration, commerce media, and CTV opportunities in front of us. In CTV, for instance, with almost all of our providers, we work with all but one of the top 10, so we're really strong there. But what you typically see is companies start by activating their own data sets, their own CRM targeting schemes on CTV providers. It is not yet the case that many of our advertisers think about the combination of their data plus the CTV providers' deep, rich audience data to create new segments. It's a huge measurement opportunity with all those CTV providers. In the data collaboration space, it's the case that most of our clients are only activating a single-digit number of edges or a few use cases. We would expect that to continue over time. As those use cases grow, our usage grows significantly. All the things we've done up to this point are seeds that will blossom over time. We found that the more use cases any client activates, whether it’s destinations or collaboration partners, the stickier business is for us. We noticed this in our declining churn rates. We had a really nice quarter. Scale breeds scale and should breed more growth over time. We like where we're at, but now we need to deliver on it.

Great. Thank you so much. I wanted to follow up on the comment around some of the sales tactical changes that are benefiting execution. Just as it relates to sales efficiency, where are you now versus your targets? Are we getting back to historical norms? Or how should we think about the further runway to improve that?

Yes, Elizabeth, we're never going to be where we want to be in terms of our selling efficiency. Relative to where we were a year ago, we're not where we'd like to be. Now quarter-on-quarter, we took a nice step forward. You're going to see this in our business going forward. We have disproportionately high fall-through rates, and that’s true kind of across the board. It's also true in sales. We expect to maintain the seasoned sellers that we have and watch them build their books. You'll see that drive progress in Rule of 40 going forward for us.

If your question is whether we've rebounded from some of the sales capacity challenges we faced a couple of years ago, the answer is unequivocally yes. We like our sales capacity at this point, and we'll continue to add to it as appropriate to support revenue growth, but we've built back from the deficit we faced a handful of years ago. We're seeing nice progress with our channel partnership strategy as well. We think about channel partners across a few dimensions. There are traditional systems integrators. Over the past few years, we’ve discussed closer partnerships with the cloud. Finally, to Scott's point about the network and the flywheel of our network, we increasingly think about the big commerce media network nodes as channel partners we leverage for both new logo acquisition and growing usage of existing customers. We think there’s a continued opportunity to tap into channel partners moving forward.

Hey, thanks so much for the question. One of the positive factors you cited on the better bookings in Q3 were the optimizations you made to the product in October. Can you give us insight into those next iterations you're thinking about as you continue the journey of making the product easier to use?

Yes, Alec. Hopefully, you’ll join us for RampUp at the end of February because you'll see more product demos than you have in the past. If I think about three areas of enhancements that I would prioritize in the coming year. Number one, and it will probably always be number one, is consistent improvements in usability. I told our internal team that while it's significantly better than anything that's ever been used in the industry before, it has to be so simple and intuitive that someone who's not a data analyst or data scientist can just pick up the tool and start to create. You'll see us incorporate more AI into our queries and standardize more and more of our reports because we realized that this is the preverbal 80-20 rule, where if you standardize reporting, you give 80% of the functionality, and then you can build more bespoke reporting later on. The second enhancement you'll see is really around measurement. As more clients connect with more CTV destinations, they need to understand how all those complicated pieces fit together to drive a holistic result. We’re putting emphasis on our cross-media insights to make that easier to scale and easier to interpret. The third area will likely not require a visible change in product, but it is a product lift—more integrations. You’ll see even more use cases from us in the future. AI plays an important role here. Most AI models have been trained on all the public data in the world. Much of the most valuable data is owned by the enterprises we work with. We’re configuring that data set to be easily ingested while allowing our partners to maintain control of that data. We’ve talked about Perplexity as one of our AI partners and I expect, a year from now, we will have a variety of options for every major use case.

Thanks, Scott, and congrats on the quarter. Could you talk a little bit about anything you're seeing in your discussions as it relates to AI and the need for these new models to transact on top of data? Is that helping you get pulled into more discussions?

I love the question, Kirk. I think over time, investors will view us as one of the potential investment vehicles in AI, as AI only works if fed with valuable data, which is with our clients. We see three manifestations of this. First, more useful data drives better model efficacy. Data collaboration customers can access better collective data that's authentication and permissioned for use in their models. Secondly, we're helping them transform their existing data into synthetic data, which is important when testing different AI models. They don't always want to use their actual data, so testing with synthetic data provides a secure indication of whether the model will work. Third, regarding more use cases, there’s been a lot of AI application innovation in discussions at recent events. Our customers are deciding who the winners and losers in AI will be. To this end, we view our role as securing partnerships with all the contenders to provide our clients a variety of options.

Thanks so much, and I’ll finish with just a few final thoughts. First, our third quarter was again a strong quarter with both the top and bottom line ahead of expectations. Our network continues to expand, and momentum for our clean room solution continues to build. Finally, we hope to see you at our upcoming Investor Day and at RampUp at the end of this month. With that, thanks again for joining. We look forward to speaking with you over the coming few days and weeks.

Ladies and gentlemen, that concludes today's call. Thank you for joining. You may now disconnect.