Good afternoon, ladies and gentlemen, and welcome to the LiveRamp Fiscal 2020 Third Quarter Earnings Call. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Lauren Dillard, Chief Communication Officer.

Thank you, Operator. Good afternoon, and welcome. Thank you for joining us to discuss our fiscal 2020 third quarter results. With me today are Scott Howe, our CEO; and Warren Jenson, President and 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 in the press release. A copy of our press release and financial schedules, including any reconciliation to non-GAAP measures is available at liveramp.com. Also during the call today, we'll be referring to the 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. I always enjoy our time together as it serves as an inflection point for us to share more detail about our operating performance and then summarize what we believe to be the key overarching trends in our business. In my remarks today I'll first briefly highlight what was on almost any measure another strong quarter and then I'll share with you in turn four overarching themes I believe to be true about Liveramp. The short summary we’ve delivered another strong quarter highlighted by solid top-line execution significantly improving profitability trends, growing industry leadership and continued business momentum across each of our key growth areas. We’ve reported our first ever $100 million dollar-plus quarter and total revenue was up 28% year-over-year. Our subscription business grew 25% driven by both our enterprise and agency channel and an acceleration in our platform and publisher vertical. In addition data plus math continues to build momentum and benefited our subscription growth rate in the quarter. Marketplace and other revenue was up over 40% fueled by the strength of our data marketplace and advanced television business. Beneath the top line we’ve remained relentlessly focused on operational execution and generated meaningful margin improvement in the quarter. Gross margins improved to 69% and operating loss as a percentage of revenue improved to negative 5.5% demonstrating significant leverage. Finally, we continue to support our shareholders through our buyback. During the quarter we bought back more than $20 million of stock and fiscal year today have repurchased just over $120 million. Across Liveramp our attention is already fixed not on the performance of the past quarter but rather on our path forward. To this end let me share four key themes that are increasingly emerging and give us continued…

Thanks Scott and good afternoon everyone. Today, I'd like to cover three things. First walk you through a few highlights from the quarter. Next update our full-year guidance and finally spend a few minutes sharing some preliminary thoughts about fiscal ‘21. Q3 highlights. We're pleased to report another solid quarter highlighted by a strong top-line performance and rapidly improving bottom line. Our business model is working and scaling. A few call-outs. Our business is strong and continues to post best-in-class SaaS metrics. We reported our first-ever $100 million quarter. Revenue was $102 million up 28%. Subscription revenue of $80 million was up 25% and represented 80% of total revenue. Marketplace had another strong quarter and was up 38% driven by the strength of our TV business and continued data marketplace momentum. In the wake of change our place in the global ecosystem continues to grow in importance whether it’s global ATS adoption, the strength of our growing TV business or the importance of our safe haven platform. Our growth metrics are solid and more importantly the trend lines stand toe-to-toe with best-in-class SaaS. Net retention was a 112%, platform net retention was a 119%, ARR grew 28% and our trailing 12 month growth in marketplace was 65%. Next, our business model is working and our path to profitability is taking shape. Gross margins were 69%, up 500 basis points year-over-year. Our operating loss declined from $19 million in Q2 to approximately $5.5 million in the quarter; a $14 million sequential improvement. And I'm very pleased to report operating cash flow was positive $16 million and free cash flow was positive $13 million. And finally, we continue to support our shareholders. Year-to-date, we have repurchased approximately 2.6 million shares for a $121 million. In summary, another best-in-class quarter has set a…

[Operator Instructions] And your first question comes from the line of Dan Salmon from BMO Capital Markets.

Good afternoon, everyone. Thanks for taking the questions. Scott, your opening comments there about the sort of momentum that you feel in the business and we also took note of the update that you published on the IR site after the Chrome cookie announcement noting that you felt that that announcement would drive acceleration of ATS. And yet, then this isn’t nuanced obviously but it does feel like your sort of revenue growth view here whether for the current year you're looking and the next year's fairly consistent with what we've heard previously. So, is that a matter you also said you are fairly expecting of this sort of news that that largely it was baked in. And so, that comment in acceleration that was in the IR update was kind of baked into that. We'd just love to circle that up on the topline view. And then more in just your comment a moment ago about feeling that you'll lean into share buybacks a little bit more at these levels. I think in the past you've sort of phrased that as sort of opportunistic. Does the sort of incremental comments here suggests that you are looking at sort of baking in sort of base amounts that you want to execute in a given quarter or you still sort of looking at it flexibly?

So Dan, thanks for the question. On the first one, I guess I would go back to we've been preparing for these changes for well over a year. And so, what may have been used to the industry wasn’t necessarily a surprise other than the timing of it with respect to our planning. In some respects, the certainty of Google's timing, we think can be a real catalyst for the ecosystem to move even faster and adopt the technology even faster. I’ve talked in the prepared remarks about the strong adoption trends that we're already seeing. But at our upcoming ramp-up conference in March and I think you'll attend that. We intent to have an entire track for instance to help our clients and publish our partners titled navigating a post cookie world; anecdotally, we've already heard that there's going to be pretty strong demand for attendance to that. So, I think we're well positioned and I think that's really puts the wind at our back but in terms of what this means for the future, we have only issued very preliminary guidance today and it's just not the time for it.

And the Dan, to the second question. We will continue to be opportunistic. I think what we want to communicate today is one we like many of you absolutely see the disconnect between our share price and our performance trends. And in that regard, this past quarter we spent, or I guess year-to-date we spent over [$120 million, $20 million] of which was last quarter. If we were to put a number on it, for Q3 -- excuse me -- going into Q4, I'd probably put it around 30. And again, overall what we're trying to do is balance our needs for a long-term liquidity and financial flexibility with the fact that we believe there is a significant disconnect between our share price today and our performance trends.

Great, thank you both.

Thank you.

And your next question comes from the line of Shyam Patil from Susquehanna.

Hey guys, good afternoon.

Hey Shyam, good afternoon.

The net adds were quite impresses in the quarter. Just wondering if you could talk about the drivers there and kind of how you're thinking about net adds going forward and then Warren just when you talk about conservatism in the macro, are you referring to CCPA in Chrome or are there other factors that you also considering there. And then Scott, you mentioned the potential DOJ investigation into Google's asset business in your remarks. I was just curious just to get your take on that and if we will does indeed have to divest or have less collaboration among its asset units. How do you think about that as an opportunity for 1) for Liveramp and then 2) for the industry more broadly.

Yes, so I'll start with the last question. And let me first be completely transparent that the Wall Street Journal article this morning wasn’t probably the top thing on my mind this morning. So, I have yet to really fully process it. Now, I've got 20-years of experience in the advertising technology in marketing space. And at times I've competed with Google when I was running Atlas. And more recently that been a major partner to me. So, I still probably have to just process my own personal views about how the industry evolves depending on how that proceeds. However, what I would tell you I’m absolutely knowledgeable and convinced about how Liveramp's will, will evolve. And it really goes back to the company that we built; we are neutral; we are agnostic; we don’t care what the identifiers will be and new identifiers; new technology; new regulation is emerging all the time. Our duty to the industry in those we serve is to ensure that whatever technologies arise that we are first to integrate with them. And we make that capability available for anyone and everyone in the industry such that they can connect anywhere and look at things on an apples-to-apples basis. So, regardless of how things play out with Google. Near-term we're going to continue to integrate with them as they change their technology. We will change how we work with them and that's how we're going to work with everyone else in the industry as well.

And then on the second question we like all of you are just looking at everything happening in the world. There's industry change of foot which we think we're benefitting from. It's giving us incredible opportunities with our customers, incredible opportunity to roll out ATS but it still we're in an environment of change. From a macro perspective there's obviously a lot going on things like the corona virus, all kinds of political things too. We think in that sort of environment it's just appropriate to be conservative.

Great. Thank you.

Thank you.

And your next question comes from a line of Stan Zlotsky from Morgan Stanley.

Perfect. Thank you so much guys. Two questions for me. One for Scott. One for Warren. Scott maybe for you so with third-party cookies the opportunities that would be on the horizon for Liveramp as changes are around third-party cookies continue to evolve how would they manifest more specifically within your business? What would be the benefits that you would be seeing beyond just the financials but what would be some of the metrics or some of the commentary that we should be listening for as far as the benefits that Liveramp would be receiving? And one maybe for Warren when we look at the results in Q3 and kind of comparing with Q2, Q2 was a very strong quarter, a very big beaten raise and we didn't quite see the same in Q3 maybe you kind of walk us through what you saw in Q3 and how do they that compared versus your plan and expectations. That's it. Thank you from me.

Yes Stan, on the first question perhaps the good news is it's not going to change our business too much and I say that because remember 80% of our revenue comes from subscriptions. It's clients purchasing a license for our IdentityLink technology such that they can push their consented data out to different destinations. Right now some of those destinations are connected to via cookies but to the extent that cookie mechanism is replaced by other identifiers or perhaps other channels like television start to become a greater channel for addressable data you won't necessarily see it in our revenue but you'll see it in terms of how clients, what our most popular used cases may be. The important thing with our Authenticated Traffic Solution is it also we think it is just a better technology and I talked about this a little bit in my prepared remarks. So to the extent that we see rapid adoption it could actually generate greater match rates for programmatic inventory which you would see over time manifest themselves in potential increases in the variable component in the overages of our subscription. So not much change in terms of how our clients think about things that will still be subscription. However, longer-term an opportunity for subscription overages if we get a lot of traction.

And then Stan let me comment a little bit on again I think as you rightly called out the differences between Q2 and Q3 is in many respects they were different but in many respects they were very, very similar but maybe in different places on our income statement. First thing I want to call out is our top line results are right in line with our expectations where we think we had a real beat and we're very incredibly pleased with our performance is everything that's underneath that. And let me mention a few things that are both related to growth and then its operations. On the growth side if you look at ARR, [indiscernible] IPG it was up 30% last quarter. It's up 30% this quarter and I think just as a reminder for everybody we're lapping the IPG deal now in Q3 and so our subscription growth rates lowered naturally as a result of that but if you were to go back and strip out IPG out of less several quarters actually we had an acceleration in subscription revenue growth in Q3 which we think is a real positive and then again ARR has increased 30% in each of the last two quarters. Our retention metrics are headed in the right direction. Something that we hope will manifest itself in terms of our future results we're incredibly bullish about our pipeline as evidenced by the fact we've had two real record bookings quarters in both Q2 and Q3. So very, very close and similar and then when we think about our pipeline for our growth initiatives as Scott mentioned Liveramp today is more relevant than it's ever been. We have a lot of momentum with ATS, a ton of momentum with B2B, our advanced TV business and as Scott appropriately mentioned our data sharing platform. So we think we're flourished with new opportunities and that's an incredibly positive and then finally and this is a view toward the long term potential of our model. It's not lost on anyone I'm sure that we added $12 million sequential increase in revenue Q2 to Q3 and [ton] of that drop to the bottom line. Now while we're taking a little bit of an expense step backward in Q4 that tells you a lot about the potential of our models. So a real positive that our [top loss] was five and a half million and as I mentioned in my prepared remarks operating cash flow and free cash flow positive.

Got it. All right. Thank you.

Thank you.

And your next question comes from Brian Fitzgerald from Wells Fargo.

Thanks guys. I had a couple questions on ATS maybe a little bit and thanks for kind of the color you gave us previously but I want to ask about what ATS can do in terms of replacing the functionality offered by third-party cookies? Is it possible to use ATS for classic retargeting or remarketing in the case where user is not logged into an advertiser website in the e-commerce used case and maybe drawing down a bit more advertisers have had some problems around third party cookies in Safari over the last kind of several quarters in years. So would ATS make Safari a targetable and trackable environment? Thanks.

Yes. A couple thoughts. First off I believe there's a Powerpoint in our Investor Relations section of our website that goes into ATS in a little bit more detail, has some case studies explains how it works. So that's something that's worthy read if you haven't had a chance to look at it. Taking a step back the fundamental premise of ATS is it starts with consent and so on one hand our advertisers for the last decade have generated consents in building their own CRM data systems. In the absence of third-party cookies publishers need to build those consents as well. They can't rely on an intermediary to provide that mechanism for them and so if either side is generating those consents and the right permissions then we can sit in between and that's the role we serve to sit in between two parties and allow them to trade data. So to your specific question if the consents exist on either side absolutely this can be a great mechanism for retargeting. If the consents aren't collected on either side then no, retargeting is not possible and I think that's one of the real nice side benefits of our ATS solution. It is infinitely more consumer friendly and this is also more friendly to the parties on either side because it forces them to examine whether they've collected the right consents and it forces them to establish the permissions that one another will have over the data. So the Wild West days of cookies are over and we just think this is a safer better technology for the future.

Got it. Thanks Scott.

And your question comes from a line of Kirk Materne from Evercore ISI.

Hey Kirk.

Hi guys, this is actually Peter [indiscernible] on for Kirk. First question just in terms of [ARR] increase from second quarter. Just hoping you could discuss the dynamics in terms of customer expansion versus retention in the customer base?

Sure I'd be happy to. If you look at Q3 in terms of new logo about 30% came from new logo and about 70% from upsell. For FY 20 we still project that to be new 40% and 60% from upsell.

Okay. Great. Thank you. That's very helpful. And then just one more quick one if I could. I'm just hoping you could discuss what feedback if any you've been getting from customers so far just since Google's announcement that they'll be moving away from third-party cookies in a few years?

I'm not sure it's been feedback as much as it has been the phone's ringing both marketers and publishers just asking for our advice on what to do. Google I think did the industry a solid by providing such a long transition time and certainty but smart clients are right and thinking they don't have the luxury of waiting two years they need to get prepared now. So a lot of conversations about how this might change, what they want to do, how they need to capture permissions, how they want to think about data collaboration with their biggest partners and certainly a lot of demand for more education. Hence, why we decided to offer a track on this at our client summit in early March.

Awesome. Okay. Great. Thanks so much Scott. Thanks Warren.

Thank you.

Thank you.

And your next question comes from Jack Andrews from Needham.

Hi, good afternoon. Thanks for taking the question. Hi, I was wondering if you could comment a little bit more on the 50 clients whose subscription contracts are exceeding a million dollars? Are there just lessons learned from that subset of customers that can be applied to your broader customer base and how do we think about how many customers can actually reach that spending threshold over time?

Yes. I would tell you there are absolutely some lessons learnt. It really goes back to what James Arra and his team have done really over the last four quarters. They've done a couple things that I think are really smart. One is implementing white space planning across all of our customer base. So the discipline of sitting down and looking at what are the unique challenges that each of our customers have and as a result what’s the used case is should we be bringing to them such that they are most successful. Going back a few years you've heard me say before one of the criticisms that goes back a few years is clients feel like we have a lot of sophistication but they don't necessarily always recognize how to use our technology because after all it's a new category. Well, through the white space planning we are a lot smarter about what recommendations should we take the clients. The second thing that we've done is implement a real process of discipline around red flags and trigger events that suggest clients may not be utilizing the technology effectively. We look at our operations reports as a management team. Literally every day when I go home it's the last thing I look at before I leave. So we log all kinds of red events or questions that come into our operations and by cataloging those and ensuring that we're responding quickly we can solve problems before they ever have a chance to grow. And if you have problems with clients they're not ready to hear you talk about the white space. So it's the combination of solving the problems quickly and then always knowing what's next for a client, what we should be talking to them about that we thinks been pretty effective. Longer term, yes I would say we would hope that most of our clients can at least certainly enterprise clients top 3,000 marketers in the world can be million dollar spenders. We got a long way to go from where we are to that point but that's one of the things that gives us optimism for the next five to ten years of our journey.

Great. Well, I appreciate the detail around that. There is a follow up question can I just ask how you're thinking about M&A these days and whether there's sort of an active pipeline of opportunities that you are keeping an eye on right now?

Well, yes I judges by our past on this I think in the last seven or eight years Warren and I have probably looked at hundreds of things and we've been very conservative on what we've actually pursued. So no change in that approach. For something to be interesting for us above all it needs to offer real material value to our clients and oftentimes our clients are the ultimate judges in terms of what we want to do because they're very vocal around whether they need a different capability or a new use case activated. That in turn gives us a lot of confidence around whether something can be accretive overtime. Typically the things we've looked at that we've done haven't been immediately accretive but within a few years wildly accretive. So we've spent a lot of time building our financial model and then I think it's true without exception where we've done things we've really known the management team very well. Oftentimes we've worked with them in a commercial fashion for months if not in some cases years. So we've known that there was a real cultural fit as well. So we're always looking at things. We are incredibly conservative and cautious in terms of what we actually choose to pursue and that will continue to be how we approach it.

Great. Thank you for taking my questions.

Thank you.

Thank you.

And your last question comes from the line of Brett Huff from Stephens Incorporated.

Good afternoon Scott, Warren and Lauren.

Hey Brett.

Hey Brett.

Three quick questions I know we're kind of nearing our end time here. On the 50 million incremental net ads that was a nice acceleration I think was referred to before. I'm wondering can we bucket the drivers of those a little bit and are the buckets to think about evangelism just generally? Are there trigger events that you're seeing happen more? Is it the sales effectiveness improvement Scott that you just mentioned? Is there some pricing and [of course the right] buckets but is there a way to kind of give us a rough, is there a driver of that acceleration that we can put our finger on?

Yes. It's going to be hard for me to bucket it on the fly. What I would tell you is there's a few things going on. One is James and his team have just built a much stronger pipeline over the last 12 to 18 months and we're seeing the benefit from that. Second we're also seeing the benefit from some killer used cases like Data Plus Math that the interest in driving addressable data into television which is for many clients the largest single line item on their media plan. That's real. And we haven't reached a tipping point for that yet but it's certainly causing a lot of clients to ask us about those capabilities as well and then a third area is just platform clients. Most of our platform partners are building capabilities where by which the ingestion of data can make them better and so as we get more creative and our technology becomes more flexible there are more opportunities for us in the platform space. So it's a combination of all three of those and what we'll do Brett is I'm taking your feedback and that's something that we'll think about in the future. It's a really good question.

Great. Thank you and then second question is the CCPA in so far it's analogous to GDPR. If I recall there was a little pause on the part of advertisers in Europe causing their ads [indiscernible] a little bit as they kind of looked inward to make sure they were compliant. It was a small hiccup it [helped me lasted] a quarter and it was pretty manageable. Is that how we should contemplate CCPA and I imagine it's not as big but I'm just curious is that kind of the right way to think about it?

I don't think so Brett and the reason I say that is because we work with global clients and it's as they think across our portfolio almost all of our U.S. advertisers already experienced with us the effort of becoming compliant with GDPR and as a result because there are similarities between GDPR and CCPA in terms of providing consumers more visibility and choice and how their data is utilized on the things that they did to remediate GDPR made CCPA remediation I think in many cases much easier. So I just haven't seen the amount of anxiety around CCPA that we witnessed a couple of years ago for GDPR.

Great. Thanks. And last question quickly the 70% upsell mix was really nice and I'm just curious can you remind us of kind of the two or three most popular used cases and then what is that fourth or fifth one that is most driving the 70% expand in the land and expand strategy? Thanks.

Well, in terms of popular used cases things that may be triggering that I would tell you a point to that Amazon work we do. We help power their DSP and I want to say we have nearly 90 clients live on that. It's always been things like Facebook and Google, people based search things like that. As we continue to innovate with our large partners oftentimes it’s really interesting new used cases. The whole concept of second party data collaboration, the data safe haven work that we've been talking about boy that's super exciting because one of the things that increased regulation is causing all advertisers, marketers to look at is how do they share their data and with who. And so increasingly they're thinking about how can they establish strategic partnerships with other great companies for their mutual benefit and to power better customer experiences and then finally television which I mentioned before. Data Plus Math has been a real point of interest across most of our clients that are doing anything in television. They want to learn more about Data Plus Math.

Great. Thank you.

Thanks Brett.

That's all the time we have for questions. I will now turn the call over to Warren Jenson for closing remarks.

Terrific. Thank you operator and thanks everyone for joining us today. Let me just conclude with a few quick thoughts. First Liveramp is flourishing in this environment of change. If there's one thing that's become clear to us over the last several months is that our moat has widened and it's just gotten deeper. We are helping our clients navigate all of these changes in a very positive way. As I said earlier in the prepared remarks while some may see risk we see opportunity. Financially, we believe we're delivering a best-in-class SaaS performance and our trend lines are unmistakable. And lastly as we think ahead to our prospects and FY 21 we expect that year to be another great year. And I guess one more finally we can't wait to see all of you at ramp up in San Francisco. Remember the dates are March 2 and 3. If you need any information or any help with your registration please feel free to reach out. Thank you all again for joining us and look forward to the follow-up calls.

This does conclude today's conference call. Thank you for your participation. You may now disconnect.