Good afternoon, ladies and gentlemen, and welcome to LiveRamp's fiscal Third Quarter 2022 Earnings Conference Call. Your attendee lines will be muted during today's conference. After the speaker's remarks, we will have a question-and-answer session. [Operator instructions]. As a reminder, today's call is being recorded. Now I would like to turn the call over to Senior Vice President of Finance and Investor Relations, Lauren Dillard, Lauren?

Thank you, operator. Good afternoon. Welcome. Thank you for joining us to discuss our fiscal 2022 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 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 liveramp.com. Also during the call today, we will be referring to the slide deck posted on our website. At this time, I'll turn the call over to Scott.

Thank you, Lauren. And thanks to all of you for joining us today. We delivered another great quarter highlighted by an acceleration in ARR growth, strong enterprise momentum and continued operating efficiency. The market trends we discussed last quarter, continue to play out and our results in Q3 are strong validation of the critical value we deliver to our customers. I'll begin today by sharing some highlights from the quarter and then discuss the strength of our position going forward. Third quarter performance, Q3 was another strong quarter and we again exceeded our guidance across all metrics. Total revenue grew 17% and subscription revenue was up 19%. Normalizing for the wholesale contraction, total revenue grew 26% and subscription revenue was up 30%. Exiting ARR was up 26% excluding wholesale. Our land and expand selling motion continues to underpin our top line progress. In the quarter, we added 20 net new logos and I remain impressed with the size and caliber of the customers we are adding to our roster. Notably, we are seeing particular strength in our large enterprise customer segment as a result of increased Safe Haven adoption. Our 500,000 to $1 million customer count was up more than 30% and our $1 million plus customer count grew to 86, an increase of 30% compared to prior year. Safe Haven also continues to be a big driver of account expand. Given the breadth of used cases enabled by the platform, Safe Haven customers have higher ACVs and upgrade at higher price points. They currently account for roughly 20% of ARR up from 12% a year ago. As we continue to upgrade our customer base to Safe Haven, our enterprise platform, we expect the average length and size of our contracts to continue to increase and churn and contraction to…

Thanks Scott and good afternoon, everyone. As you listen to my remarks, hopefully you will hear three themes emerge. First durability and consistency, amidst the sea of industry change, there is one constant and that's that we have delivered. Next, we are moving from application to enterprise and playing with competitive advantage. And finally, our enterprise platform Safe Haven is showing up in our numbers in a big way and is opening up entirely new markets for LiveRamp. Q3 highlights, please turn to Slide Four. First, perform, we posted another solid quarter. Revenue of $141 million was up 17%, subscription revenue up 19% while ARR increased 16%. Our net new customer count increased by 20% this quarter and our brand average ACV was up up 16%. Our $1 million customer count is now 86% up six sequentially and up 30% year over year. Net retention was 110 and platform net retention 109, driven by an acceleration in Safe Haven adoption. CRPO was up 25% and marketplace was up 12% in line with our expectations. As expected, our results continue to be negatively impacted by wholesale contraction as shown on Slide 22. We continue to expect this impact to be $30 million for the year and it was $8 million for the order. Excluding this, total revenue increased 26% and international of 29%. Subscription revenue was up 30% and ARR of 28% and net retention would've been 120% and platform net retention 117%. In short, while we don't discount the impact of wholesale contraction, our numbers remain solid. Operationally, we again demonstrated leverage. Gross margin was 77% up 330 basis points. This was our seventh consecutive quarter of profitability. Our operating margin was 10% and EBITDA 14% and most importantly, operating cashflow was $25 million and year to date positive $19…

[Operator instructions] And our first question is going to come from the line of Brian Fitzgerald with Wells Fargo.

Thanks guys. Congrats on good quarter. As some of the Wall Gardens have experienced declining addressability due to Apples, ATT, we'd imagine your customers are seeing a corresponding decline in match rates in those Wall Garden environments. Can you correct us super wrong at that point? And then assuming that's the case and assuming match rates are going down, are you seeing any customers showing sensitivity to that in terms of saying hey, we don't want to pay to light up this segment in Facebook or Instagram given what the match rates are or, hey, we continue to do some benefit from addressability that we still have, but we don't wanna pay the same amount given the decline in the match rates and maybe last point, is that forcing them into other environments outside of the Wall Garden where they can't match better. Thanks.

Yeah, there's a lot to unpack in that question Brian, and this is Scott. What I would tell you on your second question of, are we seeing anybody pull back, spend that, the answer to that is an emphatic, no. In fact, what we're seeing is that addressability matters now more than ever, and dollars will flow to destinations that facilitate addressability. Personalization with privacy at the core is the key to the future. We support, literally hundreds of destinations and if we really drilled into them, I'm sure we would see underlying mix shifts and be able to tell you who the winners and who the losers were, but that's not something we're going to do. Rather in aggregate, I would tell you, we're simply not seeing any notable aggregate trends other than a constant increase in volume as more and more media becomes addressable. And you can see that in our usage rates they've remained remarkably consistent over time, which coupled with the macro trend of, everything becoming addressable gives me a lot of confidence that despite industry winners or losers, our strategy of focusing on neutral addressability is a winner.

Got it. And, maybe I have one quick follow on if I could just on the 20% ARR from Safe Haven, that's an impressive number to us. Seem to happen pretty quickly as well. When you think of the array of growth opportunities in front of you, how big can Safe Haven be as a percentage of either ARR or total revenue, maybe within three year's time?

That's a great question again, Brian. This is Warren. We're not going to put a stake in the ground today, but we would tell you, there is no reason that that Safe Haven is applicable to our entire customer base. So it is not simply limited to retail and CPG and others. We're already starting to see penetration in other industries and again, looking at our entire customer base, it has a global applicability.

Got it. Yeah. Thanks Scott. Thanks Warren. Oh, sorry. Go ahead.

And our next question is going to come from the line of Shyam Patil with Susquehanna.

Hey guys congrats on the quarter and the outlook, I had a couple of questions. On Safe Haven, as you guys talked about the call, you guys are seeing, very impressive momentum. Can you talk a little bit more about the significance of some of the some of the deals you guys have won, JD, the Walmart relationship, 60% share in big box retail, in relation to kind of how you kind of called it, the explosion of retail media networks. And then second question, we've gotten this a lot from investors hoping you just address it on Google topics, can you just talk about how this change impacts you guys and, how you're seeing conversations evolve with clients as that was announced. Thank you.

Great. Well, thank you. Let, me go ahead and take the first part and I know Scott will weigh into the second. Let me start with the trend toward retail media and retail media networks. Obviously, this is explosive. This is what a $30 billion to $40 billion market today and growing. Well, if you ask yourself, well, what's at the center of this explosion? Well, it's retail data and who is the global gold standard for managing that retail data? It's LiveRamp the Safe Haven. So we would in short say that we are at the epicenter of a massive trend because it all starts with retail data. Now, if you extend that, the big deal is that's the center of the flywheel. So retail extends to CPG penetration, retail and CPG penetration extends to TV and then if you extend it further, retail plus CPG, plus ATS, means this is not a regional opportunity, but a global opportunity. So in short, you see that in our numbers, whether it's lunch, whether it's customers in China, whether it's customers in Europe, in Australia, the US 60% big box retail share in the US, this just puts us at this of a massive global trend.

And Shyam, to your second question about Google Topics, you might be surprised. we really haven't had a lot of client conversations. Rather what our clients absolutely know to be true and they've seen it in their numbers is that addressability is king. You've heard us through some of our ATS case studies show that, ATS adopters are getting 50% or more lift in their ROI vis-à-vis cookies, which are also addressable. relative to un-targetable un-addressable inventory, the lift is even far greater. So advertisers first and foremost if they are building their own first party CRM file, which most sophisticated advertisers are, are looking for ways to make their spend even more addressable. Publishers on the other hand, super interested in contextual advertising options, because they recognize not every member of their audience is ever going to be addressable. And so to the extent that new ways to target contextually emerge that can generate even incremental lift, that's gonna be interesting to them. But again, it's just not a conversation that we've feeled a lot of questions about on either the advertiser or the publisher's side yet.

Great. Thank you guys.

And our next question is going to come from the line of Stan Zlotsky with Morgan Stanley.

Perfect. Thank you so much guys. Hey and congratulations on really nice results here. Just staying with the Safe Haven discussion, with somebody the size of and heft of Walmart joining, what does that do as far as referenceability and kind of you're showing the opportunity for others from a product like Safe Haven, does it start up some kind of almost like an ecosystem flywheel effect to get other entities to join the platform and then have a quick follow up?

A short answer is yes, but I'd ask everybody to kind of back up a little bit is this is not our only reference client. We have 60% big box share in the US. So we have, major retailers, well beyond Walmart that are using our Safe Haven platform. The second thing that's important to note is that we're global. So it's not simply Walmart or another U.S retailer. It's also somebody like car four or JD.com in China or our launch customers in Australia as an example. So what that does is it gives us a global presence, which is exactly what every CPG wants. So all of the major CPGs probably operate in 80, 90, a hundred different countries in the world, and they want to do things the same way with every single retailer in every single market using a common standard in that ATS. So the short answer is we are well down the path to reference-ability with many customers. Two, it is absolutely a flywheel. And third I'll repeat something that I said in my prepared remarks is we are playing with competitive advantage. all the things that live amp has done over the last 10 years have prepared us for today; Neutrality, privacy, identity and Federation, future proof with ATS and global scale.

Got it, got it. And then I just wanted to go back to the comments about potential impact two Q4 from lower usage. May, can you, can you unpack that for me a little bit? What do you expect to cause that lower usage especially on, on the subscription side of the business that's it for me. Thank you.

Yeah And I'll, I'll take that one too Stan. I would just say it's actually our being a little bit conservative. We, this is just something we're not going to forecast because it's usage based. So when we're putting out our guidance, we felt it appropriate to just bring that down a little bit, make sure we weren't at risk of the usage coming in lower than say it did in, Q3. But overall we haven't seen anything in our business per se, which would cause this to be zero, but again, in setting our guidance, we felt that was the way to go.

Got it. Thank you.

And our next question is going to come from the line of Kirk Materne from Evercore ISI.

Yeah, thanks very much. And congrats on the quarter. Warren it seemed that the, the LiveRamp’s Safe Haven business should be a, a positive, or have a positive impact on, on sort of [indiscernible] over time. I mean, is that fair to assume? It, it seems like that's one of the like classic land and expand stories and I was also wondering if you could just talk about you, some of these new lands. I assume they're landing pretty small, but opportunities with Walmart, JD.com, can grow pretty well and should help that metric over time?

The answer is yes. So if you look at our, our net retention, for example, for the quarter upsell we, we had really, it, it was a great story terms of net retention in every respect this quarter upsell was up strong and that upsell was driven by Safe Haven to usage was up and we had lower contraction, so all of those many of those things are really facilitated by the strength of, of Safe Haven. So there's no reason as we look into the future that we shouldn't continue to see benefit. I would also say exactly to your point is we're really at the beginning of this whole world of, of retail, I'm going to call it retail based media, but it extends well beyond retail. So we're only really starting with the use cases. Most of the use cases today are honestly focused around the retail media portion of it, but really haven't gotten into collaboration in a big way. So we like you see a world, the use cases starting to open up in our slide deck. We highlighted a few of those things in retail. So if we were sitting here talking even a year ago, maybe 18 months ago, half of those use cases wouldn't have been on the page, but today it seems like every day we wake up, there's a new use case and a new application.

And one just more follow up I think you mentioned in your prepared remarks, sort of moving from application to enterprise. Can you talk a little bit about how that's maybe changing who you're talking to from a buyer perspective? Are you starting to land in the office the C-suite more often at this point in time with some of these low, larger opportunities clearly had shown up in the number of million dollar deals, but I was just wondering if you start to see that transition happen in terms of who you're talking to from a buyer perspective?

Sure. Kirk, it's Scott. I would tell you that is absolutely the case. Three specific levels. Number one, I would say yes, we are seeing a higher point of an entry, typically a member of the C-suite oftentimes the CMO, sometimes the COO and increasingly the CEO. Oftentimes the CMO, sometimes the COO and increasingly the CEO is aware of who LiveRamp is. Second thing we're seeing is a higher ACV, when we go in with the enterprise sale, it tends to be a much higher price point and also higher opportunity for upsell, so higher dollar based net retention. And we didn't talk a whole lot about our new logo wins over the quarter, but I think they bear that out. So you, I mentioned 20 net new ads in the quarter. Yes, there's a lot of retail in there, but there's also one of the largest logistics companies in the world. One of the largest financial services companies in the world, one of the largest QSRs in the United States, one of the largest hotel chains in the world and another one of the largest banks in the world. So if you looked at the client roster, the new ads, you would recognize them. They're some of the most sophisticated companies on the planet and we're on their radar screen now.

Great. Thanks guys.

[Operator Instructions] Our next question is going to come from the line of Jason Kreyer with Craig-Hallum

Great, thanks guys. So you've got roughly 10% of subscription customers are now $1 million customers, and you've really been increasing the penetration rate there. My expectation is Safe. Haven's probably a big part of that, but wondering if you could just talk about what component of that is usage based or what other specific services are layering into that figure?

There's always we could have some ins and outs depending upon usage, so that can affect the number of $1 million plus customers. But I would say you really highlighted, I think the answer to the question is that as Safe Haven becomes a bigger part of the installed base, our ACVs are going up and it's also opening up new use cases. So the short answer, that's the answer to the question Safe Haven is enabling -- enabling the trend that you're speaking of usage at the margin.

And then the success that you're seeing in Safe Haven, maybe talk about your ability to land new customers to live ramp with Safe Haven versus how much you're you're, you're, cross-selling into that existing base with success there?

Well it's Scott, you may want to jump in here. I would tell you it's both, so we're landing new logos, but we're also upselling a lot of existing customers too. So it it's really both. And I think this kind of comes back to the question of who are we talking to? Well if you -- if we were to go to the top 100 or 500 Companies in the world, we would probably find two words and virtually every one of those of their strategic three year strategic plans, and those would be the words, digital transformation. And when you think of the Safe Haven platform, again, neutrality, privacy, identity collaboration at scale, it's the platform that is helping companies really with their digital transformation. So not only are we at the center for the epicenter of the massive trends in retail media we're really at the epicenter of a much, even much larger trend and that's called digital transformation. So we see ourselves as being a core enabler of that transformation for our customers.

Thanks, Warren. Appreciate it. Thank you.

And our next question is going to come from the line of Dan Salmon with BMO Capital Markets.

Good afternoon, everyone. Hey, I have, Hey Warren. So I've got a few questions about the partnership with Google cloud that I think you expanded on this time last month and maybe first just firstly, how impactful can that be to revenue over the, the next fiscal year? Second how relevant is the integration with Google marketing platform to that partnership? And, and lastly, is that partnership something that can be an advantage for live amp as Chrome and Android of all their cookie and data policies. I'd love to hear about that as well?

Sure. Dan, I would tell you at the core of our strategy is ubiquity. What we found is that our sophist, our most sophisticated clients, they have a lot of different needs. They want to activate in a variety of different use cases, open web, DSPs, Ramp, Facebook, Microsoft, they want to extend across multiple geographies. And increasingly when we go in and talk to them, they are asking that we, some cases integrate with any number of CDPs and increasingly any number of different marketing cloud providers. And so it's been a real advantage or historical kind of neutrality being agnostic and being flexible because it's now serving us increasingly well. Yeah, I think it's a tremendous advantage that we have great integrations on the O&O side of Google, as well as the cloud side of Google. But the advantage is, is to our partners because it gives them two sides of what, what they're looking for and, and gives them flexibility. I would say we're in the early stages of kind of building out these, these partner channels and GCP, because they've been one of our historical technology partners was the easiest one to, to get up and running. But next up will be AWS. And over time we want to be able to say yes, regardless of who a client wants to use for storage and compute. That is going to be a big thing for us, over really, not just the next 12 months, but really the next 24 months in our product and engineering efforts.

Thank you.

Thank you. And with that, we will conclude the Q&A portion of today's call. I would like to turn the call over to Mr. Warren Jenson for his closing comments.

Well, great. Well thank you operator and thanks everybody as usual for, for joining us today. I'd like to conclude with maybe just three quick thoughts and then and then a final reminder about ramp up. First of all highlight number one is this was a solid performance again in the quarter, but you more importantly, this is one quarter in a trend revenue web 17% gross margin, 77 percent or seventh consecutive quarter of profitability. So again, as I said in the prepared remarks there's been a lot of change in this industry, but through all that change, there is one constant and, and that is we have delivered. Second meta-point is our enterprise platform Safe Haven is rolling, 20% of ARR greater than 120% net retention. Now, 60%, U.S big box retail share, global presence, Walmart, JD.com. And we are in the sweet spot and right at the epicenter of this massive trend in retail media. And then third, our global opportunity is really now starting to take shape. it's pretty interesting. We, we sat down ahead of this call and a year ago, we would've said through live a, you can reach consumers in 12 countries. Today you canned through LiveRamp, reach consumers in over 40 countries -- 40 countries. ATS is enabling that kind of opportunity. And we're pleased to have great participants and tens of thousands of publishers now enabled, but today, most notably calling out Microsoft and also out calling out Amazon. And then finally, I guess a reminder for everybody. We're thrilled to be hosting our Annual Event Ramp Up on February 28th and March 1st at the Fairmont. We intend for this to be an in person event, although we will be streaming. So we'll pretty much have a hybrid platform but we would love to have all of you join us. We're going to have a great lineup of thought leadership, fireside chats, probably talk about a lot of the stuff we've talked about today on the call from the best and the brightest in the industry and, and beyond. So please reach out to us. We would love to have you join us. It's going to be a great event and with that operator thanks to all of you for joining us today and, and spending a few minutes.

Thank you. Once again, I'd like to thank you for participating in today's live conference. You may now disconnect.