Good afternoon, ladies and gentlemen, and welcome to LiveRamp's Fiscal 2020 First Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer-session. [Operator Instructions] Thank you. As a reminder, this conference call is being recorded. And I would now like to turn the call over to your host, Lauren Dillard, Head of Investor Relations.

Thank you, operator. Good afternoon and welcome. Thank you for joining us to discuss our fiscal 2020 first quarter results. With me today are Scott Howe, our CEO; Warren Jenson, President and CFO; and Anneka Gupta, President and Head of Products. 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 in the press release. LiveRamp undertakes no obligation to release publicly any revision to any of our forward-looking statements. A copy of our press release and financial schedule including any reconciliation to non-GAAP financial measures is available at liveramp.com. Also during the call today, we will be referring to slide deck posted on our website. At this time, I'll turn the call over to Scott.

Thank you, Lauren. Good afternoon and thanks for joining us today. We delivered another solid growth quarter in Q1, building on last year's strong momentum. For the quarter, revenue was up 32%, and excluding the lost revenue from Facebook up 39%. Our subscription business grew 33%, driven by our enterprise and agency channels. And Marketplace & Other was up over 70% due to the continued strength of our data marketplace. Beneath the top line, we made continued investments to drive operational excellence and innovation, fueled durable growth and further solidify our competitive position. We launched Authenticated Traffic Solution or ATS to power a safe and transparent way to connect advertisers with publishers; and closed our acquisition of Data Plus Math to provide the TV ecosystem with a more effective way to buy sell and measure data-driven television. And finally, we doubled down on our commitment to you, our shareholders buying back nearly 70 million of stock as part of our ongoing share buyback program since March 31. During the course of our prepared remarks in today's call, you will hear the following four themes: number one, our business is strong and the macro trends continue to move in our direction; number two, our platform is highly defensible and our competitive moats are widening; number three, our strategic initiatives remain on track and we have a lot of conviction on our path to $1 billion; and number four, while we are pleased with our progress, we see a lot of areas in which we can do even better and are plotting a course to do just that. The market trends propelling our business remained strong. Data is the key to great customer experiences and our platform plays a critical role in helping customers break down data silos and navigate the growing…

Thanks, Scott, and good afternoon, everyone. I'm excited to join today's call. As Scott mentioned, our focus inside product is to establish LiveRamp as a trusted industry standard for connected data. To do this, we have built a defensible and extensible identity and data connectivity platform towards the enterprise, one that anyone and everyone in the industry can use as an integral part of their own independent technology. In everything we do, we are an agnostic neutral and trusted partner for the industry. We are essential to a competitive ecosystem and to enabling our customers to deliver great experiences to their customers. We help our customers and partners navigate the growing industry and regulatory complexity impacting their businesses. And we believe our unique positioning enables us to help the entire industry in three important areas that I'll discuss today: identity, data stewardship and innovation. Identity, maybe one of the most misunderstood concepts in our industry, because the term means many different things to different people. Today, there is a proliferation in unique and proprietary identifiers including names, addresses, e-mails, third-party cookies -- third-party cookies, mobile ad IDs, subscriber and user IDs, device IDs, and many, many more. Within the complex landscape of fragmented identity one thing is clear, no one company has a complete view of their own customers' preferences and every company needs a trusted and neutral translation layer that enables identity and data to be accessed and connected across an ecosystem of participants. This concept of connected identity is the essential role that LiveRamp fulfills for the industry. We are too often asked if we compete in identity with the very partners we actually connect. Our goal isn't to own all identity, but rather to power every owner of identity to get greater value from their data. As…

Thanks, Anneka, and good afternoon, everyone. We are pleased to report another strong quarter highlighted by our growth initiatives and continued execution against our opportunity set. A few callouts. Our business is strong, predictable and is benefiting from multiple growth levers. Total revenue increased 32% and on a normalized basis increased 39%. Subscription revenue increased 33% and our total company run rate is now $332 million. ARR is approximately $240 million up more than 30% year-over-year. While we always have more to do our growth levers are working. Land, expand and extend is fast becoming a way of life. In the quarter, marketplace revenue was up over 70%. LiveRamp TV grew approximately 30% and the Data Plus Math integration is going extremely well. Our B2B business was up over 50%. Dollar-based net retention was 108%. The sequential decline was driven by lower upsell the bulk of which was driven by the lapping of a few large customer upsells and to a lesser extent non-regrettable churn. We are enterprise SaaS and serve the enterprise needs of the MarTech ecosystem. We serve many of the best brands in the world. During the quarter, we added more than 25 net new subscription customers and currently have over 200 brands and platforms using our Data Store. Subscription revenue was 83% of total revenue and has contributed more than 80% of total revenue since Q1 of 2017, the period in which we began reporting our standalone results. Our product is differentiated and defensible. We are not a media platform and do not operate an arbitrage model. We are middleware for the customer experience economy. We provide infrastructure from which the ecosystem delivers personalized and innovative products and services. Operationally, we continue to tighten. In products and operations, our migration to the Google Cloud is on…

Thank you. [Operator Instructions] Your first question comes from Dan Salmon from BMO Capital Markets. Please go ahead.

Thanks for taking the question. Good afternoon everyone. For Scott and Anneka and maybe Warren as well, just because I know you spent a lot of time on this as well I just wanted to ask a little bit more about the International side of the business. We've continued to see the U.S. really power the results with the growth rate higher than the company overall. I know the International story is still an early one, but what are the sort of key checkpoints we should be looking for on that to see it accelerate? And then Warren, a bit more specific for you, we see that you picked up the buyback, particularly in July. Obviously, you got past some milestones with some acquisitions and got visibility on it. Just curious if that contributed to the timing of picking up the pace in July, or it's more you were saying something about the stock after a bit of a pullback, but lastly would love to just to hear your updated thoughts on where you expect the pace of trends of the buyback to be in light of that elevation here lately? Thanks everyone.

Thanks, Dan, this is Warren. I'm going to jump in on both the International and then the buyback. It's really been quite fascinating as we've gone through GDPR and then as we think about CCPA, because I would say number one, having gone through GDPR the way we did over the past years has been incredibly beneficial. It's also been incredibly beneficial as we've even further hardened our routines internationally. So number one, this has been a big benefit to us we believe in how we're approaching regulation in the U.S. The second thing that I wanted to point out internationally is because of GDPR I think we've also been incredibly innovative and this will get to the pace of where are we focused and what -- where is International leading. And by the way where we're leading internationally can also benefit the entirety of the company. I'd highlight three or four things that we are working on today that we think ultimately will cause us to hit the inflection point that you talked about Dan. Number one, what we are doing with transactional data. We have incredible partnerships with retailers, with grocers and others in both France and the U.K. that we are connecting with advertisers to where we can complete the whole entire measurement loop. This is working extremely well and will be something that we will continue to roll out across the company, so basically, connecting advertisers with actual transaction data. The second thing which you've heard a lot about is what we are doing on data sharing. The Carrefour platform is incredibly innovative. It has global attention. We have multiple tenants now up and running I believe on four -- over four continents. Next, what's going on with Data Store? Obviously, overall and in terms of…

Great. Thank you, Warren.

Thank you.

Our next question is from Kirk Materne from Evercore ISI. Please go ahead.

Thanks very much, and congrats on a good quarter. I was wondering maybe if…

Thank you, Kirk.

Maybe if Anneka could ran or Scott could ran just on -- when you look at to the back half of the year given some of the changes -- Google is going through and CCPA, are the types of conversations you're having with customers getting -- are they longer? Meaning are these things creating longer sales cycles, or are customers kind of beyond that at this point in time? I just wanted to get some color around that just as we had in the back half of the year?

Yes. I would tell you two things. Number one is we've had the benefit as Warren just mentioned of living through GDPR and all of that experience is helping us prepare clients for CCPA and a flurry of other state, -- international and hopefully someday federal legislation. Most of the companies that we work with enterprise companies tend to have global businesses. So they too have been through this before. And as a result a lot of the remediation that they perhaps had to do in Europe is going to parallel what they now have to do in the U.S.. And so, we look at this as a tailwind for us in so much, as it's really hard for all of our clients and partners even the most sophisticated to stay up to speed on all of the changing regulations. That's the entirety of our business. And so, now more than ever we're being asked for our perspective on what we think, where we think, things are going and importantly what our clients and partners need to do to prepare for that future.

Okay. That's helpful. And maybe one for Warren, I guess are dovetailed through together. Dollar-base retention you mentioned is right in line with your guidance of last quarter. What has to happen in the back half of the year you know that sort of deal with it better than that 105% target? And I was just -- and actually, I just have one other follow-up, so why can't we just start there?

Okay. You know what I'd like to do is, I think it might be helpful for everyone for me just to reconcile from call it last quarter we were at 114% down to the 108% because what you will find Kirk is, that the same drivers that drove it from 114% to 108% are the same drivers that are leading us to and get you to 105%.

Once you talk about reconciliation and I'll jump in about what's next.

Okay. Good. So within the concept of reconciliation what we've done is – I’d ask you to put up on top of your page 115 and then we've divided sort of the reconciliation into three buckets. The first one is large deals, the second one is non-regrettable churn and then third is kind of all other. So let me start with large deals. In the year ago quarter, and remember for everybody on the phone dollar based net retention is about a revenue cohort from a year ago. So what clients did you have a year ago generating what subscription revenue and how did that then translate to what we did in the current quarter. So in the year ago quarter, we had three large yields that materially contributed to upside. We were unable to repeat that performance with those large clients. That resulted in about 4 points of the decline. The second piece was non-regrettable churn which we've also talked about, that was 1 point and everything else amounted -- everything else was single point. So 4, 1 and 1 114% to 108%. When we talk about the back half of the year, it's really more of the same just as I mentioned in the prepared remarks. Again, I'm reconciling from 115% to 105% about six points of that is large deals about 2 points is non-regrettable churn and another 2 points is all other. Scott?

Yes. In terms Kirk of what we need to do to now increase it? The good news is there is no silver bullet here. It's all about execution. That's what sales is always about. And so, it starts with the whole concept of just up-selling which is having conversations with all of our enterprise clients about what they are trying to accomplish, bringing them ideas. And those ideas and conversations then turn into product tweaks or new configurations which then manifest themselves into our pipeline and then ultimately into bookings. It's Sales 101. Now as we generate those bookings some of them you'll see in our net dollar retention. And that's going to be increases to our core subscription business that upsell. Some of it quite frankly you won't see in our net dollar retention because it's going to go sit somewhere else in our P&L. And so the things that we're doing, the things that drove for instance marketplace are many times with the existing book of business, but those aren't factored into net dollar retention. So things like television or Data Store which are a result of those upsell conversations, won't actually show up in that dollar retention. The second thing that we're doing which isn't a problem per se, but it's just an opportunity is really trying to manage churn or downsell from clients more effectively. So putting in place early indicators of winning a client, isn't having as much success and then getting back in front of those clients and evangelizing, educating them, how to use our products and technologies such that they cannot not only avoid churn, but actually fall into the upsell bucket. Again not a problem for us, but definitely an opportunity as long as churn is above 0, we're never going to be happy with it. And then the final thing that we're doing, and I referenced a lot of this in my prepared remarks are really like, just core accountability and sales management basics. Things like, as we've scaled our sales force training, ensuring that we surround our core sellers with subject-matter experts that can go in and help get a client across the line when they have questions. Or just ensuring -- and Anneka gave a couple of examples of this, the whole concept of partner alignments such that we're understanding what they are trying to do and tweaking our products such that the partners' products are more effective. And that's really the translation from sales to product. So, the good news is all those things are underway. And I think they're all quite manageable.

That’s super. Thanks for all the color. Congrats.

Thank you.

Our next question comes from Shyam Patil from Susquehanna. Please go ahead.

Hey, guys, great quarter. I had a couple of questions. First one on CTV, can you talk a little bit more about how that business is ramping for you guys here in the U.S. as well as internationally? And then, just how you're thinking about Amazon opening up Fire TV, the third-party demand and just how LiveRamp fits into that? And then second question for you Warren is, when you look at the subscription revenue can you talk about just how the direct revenue portion of that has been trending and just kind of how you're thinking about that growth going forward?

Yes. So this is a Scott and I'll start. In terms of television like our core television business that's pre-Data Plus Math grew around 30% for the quarter. And remember, not all of the television efforts we do show up in television, but it also draws a lot from Data Store, so some of it actually will sit there. But with the Data Plus Math acquisition, I will tell you that our expectations here really have skyrocketed. Our TAM has increased. And I really have to go back to our acquisition of LiveRamp to see clients as excited about a new offering on our portfolio as they're excited about Data Plus Math. Virtually, all of our enterprise clients are doing some kind of television advertising and we think that with Data Plus Math, it just makes them more effective as that television advertising. It extends what they might already be doing in search or display or e-mail what have you. So, we would expect that our television business for the remainder of the year is going to grow significantly, significantly faster than our baseline. With respect to Amazon, two thoughts. Number one -- and both of them are good. Number one is, remember that, we're one of the early partners of Amazon powering their DSP. We already have dozens of advertisers live with that. At our API will -- goes live at the end of Q2 should make it even easier for advertisers to get on board there. So, we have a really good relationship with Amazon. Moreover, we think that anything that drives awareness of advanced television of any sort is good for our business. Because remember, one of the things that LiveRamp does is we play across all of the elements of advanced television, whether it be connected television, OTT, data-driven linear, the full gamut. And so awareness in the industry means inquiries and opportunities for us.

And then let me comment on the second part. And I'm going to answer the question really two ways. One, I'm going to talk about both our subscription revenue and then the variable part of subscription revenue and then the second way is I'll talk about direct versus reseller. So, in terms of the variable piece of subscription, it's trending right where we thought it would be, right around 10%, 12%, so kind of 11% and we see that holding in strong. When it comes to direct versus reseller, both are up nicely. And in fact we were hopeful again over the long term to increase our reseller relationships because we increasingly see a number of the consulting firms or others, very interested in partnering with us as they do their strategic work with their global clients.

Great. Thank you, guys.

Thank you.

Our next question comes from Stan Zlotsky from Morgan Stanley. Please go ahead.

Hi, perfect. Thank you so much for taking my questions. Maybe just to start. So, very strong Q1 results which is great, but then, when we look through the deck, it looks like your revenue phasing for the rest of the year shifted more towards Q4 versus Q2. And also the full year revenue guidance didn't move up despite a very strong beat in Q1. How should we think about the -- your outlook for the rest of the year? What you baked into your forward guidance and given the phasing that you are now seeing more towards Q4? And then I have a quick follow-up.

Yes. I guess what I would say first of all, obviously we didn't change the full year. And let me come to that point firsthand. We just think it's too early to change our full year outlook. If things change throughout the back part of the year, warrants that we raised, we would of course do that. From our own internal perspective, yes, we had a solid beat, materially things have not really moved around in our own internal expectation, relative to Q2, Q3 and/or Q4. Our outlook, we continue to expect a very strong outlook for marketplace. I want to remind everybody that we are expecting a material step-up in revenue in Q3. That step-up is based about 50% on what's going on in marketplace, which we think is solid, based on our current run rates and also what we expect to have happen in Q3. Our increasing subscription revenue Q2 to Q3 is right in line with historical averages. And when we think about what we have actually committed today and in the books, well in line with historical standards. Where we are feeling some pressure is on our subscription growth rates. And that has directly to do with the strength that we saw from these large clients in the back part of the year. That said, just as Scott did, we have a lot of growth levers, we're very optimistic about our long-term growth, but we are seeing some pressure in our subscription growth rates in the back part of the year.

Got it. And if I could just start, maybe go back to the discussion around the sales changes, not substantial but the adjustments that you're making as far as focusing your sales organization on net revenue retention rate. Could you maybe dive into that a little bit more specifically around like the strategy functions that you're adding about the up-sell of analytics measurement, data lakes? And that's it for me. Thank you.

Yes. I'd really talk about two changes and let me just say, this train has left the station and it has been rolling down the tracks for several years. So don't think that there's any huge strategic shifts here. This is just normal course of business. You've heard us talk before about the importance of education and evangelization. It is very difficult as a category creator going out and talking to large clients. We have to educate them around what we do, how to utilize our capabilities effectively. And so, one of the things that we realized over time is that, we have to surround our kind of account quarterbacks with subject-matter experts. And that's increasingly true, as we add more products into our portfolio. So we have television subject-matter experts who can accompany the account owner to a meeting and help get those conversations across the line. Likewise, we spun up a group that's really focused more on measurement, because the whole concept of measurement the creation of data lakes, that's a deep subject matter expertise that not everyone in our organization has. And so, there we have kind of a one to many selling relationships, those subject matter experts work across much smaller group, works across our entire client portfolio. The other thing that we talked about in my prepared remarks was the construct of sales excellence team. One of the things that we did and this isn't just in sales, but really throughout our business. When we with -- when we've sold the legacy Acxiom business, we stood up LiveRamp as a public company. We really had to focus on how do we get a spotlight on everything that matters at our business. And so, relative to a year or two ago, we have so much granularity in how we look at all the key levers in our business the things we're measuring and tracking, the dashboards with which we can arm our teams. And so, the sales excellence group was stood up really to help manage those dashboards and work across all of the sales teams to help them interpret their results, determine what to do about it and long term just manage their book of businesses more effectively.

Got it. Thank you.

Thank you.

Our next question comes from Vasily Karasyov from Cannonball Research. Please go ahead.

Thank you. Good afternoon. I wanted to go back to Data Plus Math and had a question about that and maybe Anneka can step in here too. So my question was trying to understand exactly the service and the TAM that the company has here. It would seem -- and correct me if I'm wrong and I want to understand where I'm wrong. It seems like the service that they provide has to do more with direct response advertising, TV advertising and which would imply that it's not necessarily applicable to all of the television advertising market. And so, I'm assuming, I'm not understanding entirely the suite of services they provide. So if you could correct me and tell me how it works with brand advertising on television, I would really appreciate that.

Yes. I would say a couple of things on this and Anneka can jump in here. Number one is, it's not just for direct response advertising. It's really beneficial for accountable advertising. And in some cases, that could be someone saw that and subsequently purchased. But in other cases, it's about they see an ad and visit a website. So there are opportunities to measure things that have historically been bought on as, building awareness, but doing it with accountability. The second thing that our television business allows us to do is, historically traditional television has been bought on TRPs and GRPs, broad reach measures. But, what we can now do is bring, all of the more granular data. The more interesting data is someone in the market to purchase on the automobile, in Northeast, that tells us something far more interesting than just simply age and gender. And so, even for brand advertisers to buy with those dials, it allows them to buy with much more precision, than historically has been accessible to them.

Okay. Thank you very much.

My apologies, I'd like to turn the call back over to, Warren Jenson for closing remarks.

Let me simply conclude, again, by thanking everyone for joining us today. And I'll close with just a few final thoughts. Again, thank you. We just finished a great quarter. Our business is strong. It's predictable. It's recurring. We are enterprise SaaS and we are Switzerland. We're pleased to have this call today with multiple growth levers in place. Our products are -- and services are in the sweet spot of Martech. And they're helping to create billions of dollars in value for our customers. The great news is we have a clear path to profitability, ample liquidity to see us through our progression. And again, thank you. Our transformation at LiveRamp has only just begun.

This concludes today's conference call. You may now disconnect.