Good afternoon, ladies and gentlemen, and welcome to LiveRamp's Fiscal 2025 Fourth 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. 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 fourth 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 IR website. With that, I'll turn the call over to Scott.

Thanks, Drew, and thank you to everyone joining us today. We had a strong financial performance in Q4. We beat on the top and bottom line. For the fifth consecutive quarter, revenue increased by a double-digit rate. The operating margin expanded by three points, driving 43% growth in operating income, and we had a record free cash flow quarter. These, in my view, are the standout achievements in the quarter. Lauren will provide an in-depth look at the numbers shortly. I'll be focusing my comments on the key takeaways from the fiscal year just completed and then diving into the exciting opportunities that lie ahead in FY'26. FY'25 was a year of strong progress and achievement. First, we delivered 13% revenue growth, marking the third consecutive year that we hit our 10% to 15% revenue growth target. This was propelled by double-digit growth in both Subscription revenue, which grew 11% and Marketplace & Other, which surged 21%. This growth was driven by our ongoing ability to win with the largest customers. We added 13 $1 million plus subscription customers during the year, including three in Q4. This crucial customer cohort saw aggregate revenue increase 13% in FY'25, exceeding our overall Subscription revenue growth rate. Notably, in the fourth quarter, we signed two new $1 million plus customers from the financial services sector to support their emerging commerce media networks. These additions include a leading global digital payments platform and the nation's largest bank and credit card issuer. Furthermore, we continue to successfully upsell existing clients into the $1 million plus cohort. For example, a leading global security software provider signed on to leverage our Clean Room solution for enhanced collaboration with its PC partners, achieving a more comprehensive understanding of its customer base across its indirect and direct sales channels.…

Thanks, Scott, and thank you all for joining us. Today, I'll review our Q4 financial results and then provide our outlook for FY'26 and Q1. 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 Q4. In summary, we delivered strong results above our expectations, highlighting another quarter of solid performance and rounding out another year of forward progress. Revenue came in at $189 million, $4 million above our guide and operating income was $23 million, $1 million above our guide. Operating margin expanded by three points to 12%. ARR increased by $12 million quarter-on-quarter, the second highest increase in the past 12 quarters on a like-for-like basis. And finally, free cash flow more than doubled to a record quarterly high. Let me provide some additional details. Please turn to Slide 5. Total revenue was $189 million up 10% with both Subscription and Marketplace above our expectations. Subscription revenue was $145 million up 9%. Fixed subscription revenue was up 8%, in line with our high-single-digit expectation. Subscription usage was up 10%. Usage revenue as a percentage of total Subscription revenue was 15%, in line with the mid-teens trend. ARR was $504 million up 8% year-on-year. And as I mentioned, quarter-on-quarter grew by $12 million driven by net upsell and new logo. Subscription net retention was 104%, in line with our 100% to 105% expectation. The decrease quarter-on-quarter was driven primarily by lower usage revenue associated with political advertising in Q3 and to a lesser extent, the lapping of the Habu acquisition. Total RPO or contracted backlog was up 25% to $710 million and current RPO was up 14% to $471 million. Total RPO reflects…

[Operator Instructions] Your first question comes from the line of Shyam Patil with Susquehanna. Please go ahead.

Hey, guys. Congrats on the solid quarter and the outlook. I had a couple of questions. First one for Scott. Scott, on Cross-Media Intelligence, I know you mentioned that a little bit in the prepared remarks, new product, I think you announced it a few months ago. Can you talk about how customer reaction has been so far and what gives you confidence that it can accelerate growth? And then I have a follow-up.

Hey, this is Drew. Just before we get Scott gets going on that question, I just wanted to clarify, earlier when we posted the earnings press release, there was a mistake with respect to the outlook particularly with operating income. The current PR that's up on the website has since been corrected, but I just wanted to make sure everybody understood that. The guidance that we gave on the call just now is accurate. But I just want to clarify that for everybody. I'll pass it back to Scott to answer the question on Cross-Media Intelligence.

All right. You gave me more time to prepare. So, Shyam, thanks for the question. First off, I would tell you, I'm really optimistic about our Cross-Media Intelligence solution. To me, it feels like the holy grail that I've been chasing for most of my adult life in advertising. Short-term, just to dive into what it is, it allows advertisers to see kind of their holistic media performance and they really want that. And what I would also say is marquee publishers also want it as they feel they aren't getting enough credit for the results that they're driving, particularly when it comes to in-store sales things that happen off platform. It was designed with the input of both major advertisers and with feedback from key publishers. And we had participation from the walled gardens and all the major CTV providers. If you recall at Analyst Day, we talked about how well we are aligned with the secular trends, in particular, social, commerce media and CTV. And those are the publishers that have really leaned into this effort. And so while we demoed the capability, you saw it at RampUp, and we received really strong feedback. We actually formally launched it at our sales kickoff just a couple of weeks ago. Early reaction is good, but it's early. We've already had over 30 customer conversations. Our insights and measurement pipeline has more than doubled. And more broadly, I would tell you that, again, it's early. So let me caveat that. Our bookings for the quarter a month plus in are up nicely relative to the same period last year. So it suggests we're getting some traction. And then importantly, I think what gives me the most optimism isn't short-term at all, but kind of the longer-term realization that we know that as clients extend into Clean Room and Insights, their spend with us increases and their churn falls dramatically. So if we can get traction here, it really bodes well for the second half of the year and our ability to accelerate our top line.

Thank you, Scott. That's very helpful. Lauren, I had a question for you as well, just on the guidance, on the revenue guidance range. I know you talked about the macro really being one of the main factors impacting the low-end versus the high-end. But I was just wondering, can you maybe just talk a little bit more about just what the key factors are? I mean key swing factors between the low and high-end of the revenue range for the year? Thank you.

Yes, sure, happy to. And you called it out. I mean, in short, the biggest swing factor between the low and the high-end is the macro environment. At the high-end of our range, we're assuming a stable macro throughout the fiscal year. However, on the other hand, the low-end assumes that US macro growth decelerates meaningfully in the back half, which would pull down the growth rates of our variable revenue streams, specifically Data Marketplace and Subscription usage in the second half of the year. So as an example, in the low case, we've assumed that Subscription usage growth is flat to down in the second half and Marketplace growth would moderate to mid-single-digits in the second half. And then the delta between the mid and the high-end or even how we get above the high-end really comes down to execution and specifically sales execution against our Clean Room strategy in the early part of this fiscal year, just given the in-year revenue contribution from deals that we closed in Q1 and Q2. Scott just talked about our Cross-Media Intelligence opportunity. We believe this is a very compelling use case for our Clean Room. In addition, we continue to add new connectivity partners. AI start-ups like Perplexity and Chalice as well as more established platforms like Netflix, which should drive upsell activity in the early part of the year.

Excellent. Thank you, Lauren. Thank you, Scott.

Thanks, Shyam.

Your next question comes from the line of Elizabeth Porter with Morgan Stanley. Please go ahead.

Great. Thank you very much. It's really good to see the strength of the existing customers. And when it comes to the new side of the equation, you guys have done a lot, whether it's Habu or strategic decisions like pricing, give you the opportunity to go after that new customer, particularly in the mid-market. So I just wanted to get a better sense for where you are on this opportunity. What steps have you taken that you feel confident on and what might need a little bit more time? And then just kind of related, if you could sneak in a comment on the logos in Q4. Is that just a shift from direct channel relationships or anything else to be aware of? Thank you.

Yes, I'm happy to. And specifically for the quarter, the trends were very similar to past quarters. So the decline in customer count was, again, largely driven by smaller customers with relatively low ACVs. However, at the same time, our $1 million plus customer count continued to grow very nicely. Specifically, in the quarter, international was the big driver of the pressure on customer count. It contributed to just over half the decline. And here and we discussed this on the last call and at Investor Day, we're migrating customers from a direct to reseller arrangement with one of our large international partners. So keeping the revenue, but pressuring customer count. The good news is we're nearing the end of that migration. Looking ahead, to your point, we're focused on improving this metric. We would expect it to stabilize and then would expect improvement as we move through the year and we think this will be driven by a couple of factors. First, new Clean Room use cases like the Cross-Media Intelligence use case that Scott and I discussed as well as new connectivity use cases. I just mentioned Perplexity, Chalice, Netflix, among others. And then second, and this is going to be more medium term to your question, Elizabeth. We believe our new pricing model should help here, as it lowers the cost of entry for mid-market customers. I wouldn't expect FY'26 to see a lot of benefit from that. We intend to pilot our pricing model this summer and roll it out more broadly at the beginning of next fiscal year. But over the medium term, we certainly believe this will be a driver of improving customer count. And then just a final note on FY'26, we would continue to expect $1 million plus customer count to grow as it has in the past handful of years.

Great. And then just as a follow-up, I was hoping to get some comments on the Google announcement in April about the third-party cookies remaining its current opt-out functionality. You guys had a really helpful blog post, but just hoping you could expand a little bit more on what you're hearing from customers, any sort of reaction to the news?

Well, I'd tell you, Elizabeth, I think, what's almost out exception from our customers, it was a non-event. Very quietly, but methodically, the world has moved away from cookies since Google first made their announcement, what, four, five years ago. It is now the case that more, we have greater reach through non-cookies than we do through cookies. And that's a function of the fact that so many of our publishers on Netflix, on Meta, Google itself, they require direct authentication. And that direct authentication, which is now the case at virtually all 20 of the 20 largest publishers worldwide, it's just going to unlock better reach and more granularity. And so a little bit of a yawn. I think that said, it's good news for the industry because they can take their time with anybody who's not prepared. And they also get the benefit of additional reach through cookies, which we continue to support. And those are going to be valuable at times when someone is doing more of a broadcast broad reach campaign. So our message to our publishers and advertisers alike are don't worry. Regardless of what happens, you're going to be well supported.

Good to hear. Thank you very much.

Your next question comes from the line of Jason Kreyer with Craig-Hallum Capital Group. Please go ahead.

Thank you, guys. Good job again. Lauren, I wanted to go back to your comments on the sales pipeline. So you said you've seen some hesitation from clients late in Q4. Curious if that continued kind of into the first half of Q1? And then kind of that theme of hesitation or longer sales cycles, should we assume if that continues, is that more midpoint of the guide or would that take us somewhere else in that guidance range?

Jason, maybe I'll start, and I'll let Lauren speak to the guide. But I would tell you, overall, clients like certainty. And the past 12 months, we've had anything but certainty, whether it be the election, whether it be tariffs, whether it be more recently the deficit or fears about the impact of AI. But it is always the case that in recessions, great companies take share. And the message here really matters. ROI is always important to our clients and partners. But in times of uncertainty, it is absolutely a necessity. So we have really sharpened our ROI models, our value calculators and we're doing a lot of economic analysis for our clients. Lauren mentioned the elongation in the sales cycle. The good news is we swept all that up in the first few weeks of April. So, yes, flipped into the next quarter, but we were still able to drive it across the line. And I think by paying good attention to our pipeline and the things that clients care about, which are ROI, Cross-Media Insights, preparing for the future and winning, we have a really nice story to tell.

And Jason just with respect to what's embedded in the mid-kind of point of our guidance range. We've assumed similar conversion rates to what we saw in Q4, maybe with a touch of conservatism applied in the mid-case. That said, the low-case assumes a pretty material tick down in conversion rates as we move through the year. And again that is the low-case assumes a much worse macro environment than we're experiencing sitting here today.

Very helpful commentary. Thank you. I also just wanted to ask, we saw one of your competitors acquired by an agency over the past quarter. Just curious if you think there's opportunity there or any risk there that we wouldn't be thinking about?

Well, we certainly don't think there's necessarily any heightened risk. You know, listen, all the agencies are our partners. And when we talk to clients, they're always nervous about concentrating their technology spend or their data with folks who directly control their media, whether it be a media provider or a media buyer. So net-net, I think, it's an opportunity. We love competition, but it makes us better. And relative to others in the industry, I kind of joked the other day to our sales team that we're all about AI, always innovating. And if we do that, we're going to stay ahead of the rest of the industry. I really like the idea, the innovations that are coming down our pipeline.

All right. Great. Thank you.

Thanks, Jason.

Your next question comes from the line of Peter Burkly with Evercore ISI. Please go ahead.

Yes. Thanks. This is Pete Burkly on for Kirk Materne. Appreciate you guys taking the questions. Scott, maybe for you. I'm curious, the Clean Room Solution, you discussed the 4x ARR from customers with that solution, but only 25% of customers currently using it. So I'm curious, is there anything from a customer segmentation standpoint that would limit the ability for some portion of those customers to adopt that solution or is it more just a function of time and execution on your part?

Well, I think it is time and execution. For the past couple of years, the real driver to Clean Room adoption has just been the need for collaboration. You have major retailers, for instance, wanting to collaborate with their packaged goods partners. In that situation, everybody wins. But it's been the case that the adoption has proceeded most rapidly with the biggest companies, the largest retailers and the largest packaged goods manufacturers. Over time, I think you'll see a greater adoption with everyone. And the obstacle that we've seen in terms of pushing that down, part of it is our own doing. It's about standardization and scalability and education. We talk a lot internally about shortening the time to value, just making things easy to set up and see immediate value. And so we've simplified our product. We've standardized our queries. We talked about that a little bit on Investor Day. AI will make things even more intuitive and easy to use. But we think long-term, Clean Rooms are going to be the de facto standard for not just the large, but anyone. And the reason I say that is because public models for AI will only go so far. If you train on the world's public information, eventually, you get an asymptote on the results that you'll achieve. To break through that and generate better performance, you need to use proprietary data. And that proprietary data is the CRM data that every major company holds. And they want to collaborate with a lot of other companies, and they're only going to do that if they know that their data is secure. And the only way they can ensure the security is to use a Clean Room. So when we talk about AI, we're increasingly talking about how do we standardize the methodology by which AI models can ingest our clients' data safely and securely and ensure that advertisers and publishers maintain control over it. So I think secular trends here are at our back.

Very helpful. Thank you. And Lauren maybe just a quick follow-up for you. Just thinking about NRR even directionally, I think you mentioned that a large part of the sequential decline was related to the usage portion of subscription, and then the lower factor being Habu. So I'm just curious mechanically going forward and specifically related to your color with the low-end of the guide sort of factoring in that lower use of Subscription revenue. So is there a scenario where the NRR could continue to move lower from here or do you think we're at the low watermark? Just trying to understand directionally how that trends. Thanks.

Yes. Thanks for the question, Pete. So embedded in our guidance and guidance range is an assumption that Subscription net retention is between 100% and 105% at least over the near-term. So SNR in the first half of this year will be impacted by the selling pressure we experienced in the early part of fiscal '25. But we would expect improvement in the second half as we execute against the strategies that Scott laid out. Medium term, we continue to target 105% to 110% net retention, the biggest lever being the cross-sale of our Clean Room offering. In addition and Scott highlighted this in his prepared remarks. We made very meaningful progress in improving gross retention or bringing down contraction in FY'25. And we think there's still a little bit more juice to squeeze here. So in the near-term, assume 100% to 105%. However, we feel confident in our ability to get back above 105% towards the end of this year or into next year.

Very helpful. Thanks so much.

Thanks, Pete.

Your next question comes from the line of Mark Zgutowicz with Benchmark. Please go ahead.

Thank you. Good evening, Scott and Lauren. Nice to see the acceleration, both on ARR and RPO. The total RPO, it looks like, as far as I can tell, was the strongest sequential you posted since reporting the metrics. So I'm just curious if there were -- if you can maybe provide some color on what's unique about this renewal cycle and then how we might think about these large contract renewals converting to current RPO over time? Thanks.

Yes, it's a great question. And I think our headline would be we're really pleased with our progress here. We had a very successful quarter renewing large multiyear deals, which drove a 57% growth in the noncurrent portion of RPO. I think Scott mentioned in his prepared remarks, we renewed 20 deals with $1 million plus ACVs and more than half of those were on multiyear terms. So kind of the multiyear nature of the deal signings were really the biggest driver of the step-up. As we've mentioned, 30% of our Subscription revenue is now on a multiyear contract, which we believe is very positive. It's a strong signal of the criticality of what we do for our customers.

Got it. And the Data Marketplace business another -- it looks like a strong quarter. I'm curious if you think about Oracle contribution there as well as CTV contribution. Was it incremental this quarter versus past? And just on CTV itself and sort of emerging CTV partnerships, are you perhaps starting to see some opportunities there sort of a tailwind off of Netflix and Disney if you will? Thanks, Lauren. Appreciate it and Scott.

Yes. Happy to take both great questions. With respect to Oracle, I think we mentioned this on the last call, just given the scale and breadth of our Marketplace business, it's hard to perfectly tease out the benefit from Oracle versus other factors. As an example, Oracle had about 45 data providers in its Marketplace and we were working with virtually all of them. Today, our Marketplace supports just north of 200 data providers. That said, our best estimate is that Oracle added a couple few points of growth over the past two quarters and we would expect a similar contribution over the next two quarters. With respect to CTV, I mean, it was a real bright spot in our Data Marketplace in FY'25. For the year, data bought off our Marketplace to support CTV advertising was up nearly 50%. And as I mentioned in my prepared remarks, we have a handful of big new CTV Data Marketplace partnerships that are coming live this quarter or next quarter, which we would expect to support continued strong growth here in FY'26.

Sounds great. Thank you.

Your next question comes from the line of Alec Brondolo with Wells Fargo. Please go ahead.

Hey, thanks so much for the question. So look two good quarters of RPO acceleration after the October product refresh. I think the lesson has to be that making the product easier to use or more intuitive drives bookings. So I think the natural question, what are the next -- what are the next two or three things you could do to continue making the product simpler for advertisers? That's the first question. And the second question is on the Cross-Media measurement product. There is a group of kind of nascent deterministic multi-touch attribution platforms. I think Triple Whale is one Northbeam is one. And so the question is, what's differentiated about LiveRamp's offering there in the market? Thank you.

Yes. So first off, in terms of product priorities, I'll answer it detailed and then I'll bring it up and just talk about it in summary. Depending on which aspect of our portfolio you're talking about, remember, we have four pillars. And the priorities for each are a little bit different. On the identity pillar, it's really about expanding cloud interoperability and powering first-party data infrastructure such that our partners can achieve greater accuracy and scale. That just makes us more ubiquitous. On the access front, which is about access to data, it's increasingly about expanding the different providers in our Marketplace, but then also allowing them not just to provide data, but really to provide models. I think over time, five years from now, we're not going to be talking about data elements. We're going to be talking about models. And so over time I think our Marketplace evolves to much more of a model AI-driven set of capabilities. And so we're thinking hard about that journey. On the connectivity side, which is activating all the destinations where data can be utilized, well, really there, it's just about accelerating our efforts, expanding to new partners and use cases. Perplexity, for instance, or all the different CTV providers that are now going live, those are great examples. But also international, where our effective reach has been lower in many international markets than the US and we're closing that gap in a way that our clients really are pushing us to do. And then finally, on the insights front, that's about interoperability, AI-driven usability, scalability, getting more partners involved. If there are some mega themes that go across all those things, I would say we are always driving for more usability. We want our products to be extremely usable and intuitive…

And Alec maybe just to put a fine point on that because you asked specifically what differentiates our Cross-Media Intelligence offering to that of the companies you just mentioned. And I think to summarize what Scott said, it's really our network and the scale of our network. If you are trying to measure across multiple partners and on and offline, you need a network as big as LiveRamp. And today no one else comes close.

Thanks so much.

Seeing as there are no further questions, I will now turn the call back over to Lauren Dillard for closing remarks.

Thanks so much. Let me just finish with a few final thoughts. Again, we had a strong Q4, ahead of our expectations on the top and bottom line. We like our position and momentum entering fiscal '26 and believe in our long-term opportunity. That said given the macro environment, we've built a heavy dose of conservatism into our guidance range and specifically, the low-end of that range. And finally we continue to strategically manage expenses and expect our operating margin to expand by approximately four points, driving more than 30% growth in operating income in fiscal '26. With that said, thank you again for joining. We look forward to updating you on our progress in the quarters ahead.

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