NYSE:RAMP LiveRamp Q1 2026 Earnings Report $32.56 +0.51 (+1.59%) Closing price 03:59 PM EasternExtended Trading$30.90 -1.66 (-5.10%) As of 07:37 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. ProfileEarnings HistoryForecast LiveRamp EPS ResultsActual EPSN/AConsensus EPS $0.43Beat/MissN/AOne Year Ago EPS$0.35LiveRamp Revenue ResultsActual RevenueN/AExpected Revenue$191.22 millionBeat/MissN/AYoY Revenue GrowthN/ALiveRamp Announcement DetailsQuarterQ1 2026Date8/6/2025TimeAfter Market ClosesConference Call DateWednesday, August 6, 2025Conference Call Time4:30PM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)SEC FilingEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by LiveRamp Q1 2026 Earnings Call TranscriptProvided by QuartrAugust 6, 2025 ShareLink copied to clipboard.Key Takeaways Positive Sentiment: Our Q1 results surpassed expectations with 11% revenue growth, 34% non-GAAP operating income increase, margin expansion to 18%, and an upward revision to FY26 revenue and free cash flow guidance. Positive Sentiment: We saw strong sales momentum across Cross Media Intelligence, Commerce Media Networks (expanding into airlines, automotive, and real estate) and CTV (e.g., Netflix integration), attracting high-profile clients. Positive Sentiment: A new usage-based pricing model pilot with ~40 customers, including the world’s largest QSR, aims to accelerate deal velocity, expand upsell opportunities, and streamline billing ahead of a broader FY27 rollout. Positive Sentiment: LiveRamp’s platform is positioned as critical infrastructure for AI-driven advertising, using clean rooms to connect proprietary first-party and partner data for enhanced AI model performance. Negative Sentiment: Q2 guidance assumes subscription usage flat year-on-year and lower first-half gross margins due to cloud migration costs, reflecting conservative assumptions on variable revenue and platform modernization. AI Generated. May Contain Errors.Conference Call Audio Live Call not available Earnings Conference CallLiveRamp Q1 202600:00 / 00:00Speed:1x1.25x1.5x2xThere are 7 speakers on the call. Operator00:00:00Good afternoon, ladies and gentlemen, and welcome to LiveRamp's Fiscal twenty twenty six First Quarter Earnings Call. Following our speakers' remarks, there will be a question and answer session. 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. Speaker 100:00:26Thank you, operator. Good afternoon, everyone, and thank you for joining our fiscal twenty twenty six first 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 detailed descriptions of these risks, please read the Risk Factors section of our public filings and the press release. Speaker 100:00:55A copy of our press release and financial schedules, including any reconciliations to non GAAP financial measures, is available at investors.liveramp.com. Also during the call today, we'll be referring to the slide deck that is also available on our Investor Relations website. With that, I'll turn the call over to Scott. Speaker 200:01:15Thank you, Drew, and thank you to everyone joining us today. Q1 was a good way to start the year, balancing both strong performance and optimism for the future. We had a very strong start to fiscal twenty twenty six with first quarter results exceeding our expectations on both the top and bottom lines. We can also see opportunities to improve our performance that could impact the back half of the year and the years to come. Total revenue increased at a double digit rate for the sixth consecutive quarter with double digit growth in both subscription revenue as well as marketplace and other. Speaker 200:01:53Looking ahead, we have robust new business pipeline and good sales momentum across several solutions on which I will elaborate in a minute. On the bottom line, non GAAP operating income increased by 34% driven by three points of margin expansion to a record first quarter high of 18%. Our organization continues to become more and more efficient, thanks to initiatives like our growing offshore presence in India and our forthcoming new pricing model. Q1 GAAP operating margin also reached a record high, expanding by seven points, driven in part by lower stock based compensation reflecting new grant policies to rationalize these costs and better align with performance. Finally, we increased our FY 2026 guidance for revenue and free cash flow. Speaker 200:02:48There's a lot to like in Q1, and Lauren will provide additional details later in the call. My remarks today will cover three main topics. First, an update on the products driving our current sales momentum, including cross media intelligence, commerce media networks, and CTV. Second, insights into our new pricing model and its potential to accelerate growth. And third, our perspective on how AI will transform digital advertising and its implications for LiveRamp's long term significance and prospects. Speaker 200:03:25Let's start with the drivers behind sales momentum. Our data collaboration network is experiencing strong sales momentum, evidenced by an above average conversion of pipeline into signings, a reduction in the average sales cycle length and an increase in average deal size during the first quarter. This momentum is primarily driven by our cross media intelligence, commerce media networks, and CTV solutions, which I will now discuss in detail. Our new cross media intelligence solution is surpassing initial expectations. Marketers often contend with outdated measurement tools that provide an incomplete and distorted view of effectiveness within today's fragmented digital ecosystem, leading to suboptimal decisions. Speaker 200:04:16Cross media intelligence, powered by state of the art cleanroom technology, addresses this by offering the most extensive collaboration network that seamlessly connects an array of ecosystem participants from advertisers and publishers to commerce media networks, data providers, and measurement partners. An identity foundation that enables privacy preserving data connectivity across the network. Governance tools to implement and enforce unique data sharing policies between various collaborators. And finally, seamless interoperability across all major cloud environments. Launched in the first quarter, Cross Media Intelligence has already attracted several high profile customers, including the largest social media platform, a leading CPG manufacturer, the largest consumer and enterprise software company, and a significant financial software provider. Speaker 200:05:21This strong start signals continued momentum in upcoming quarters. While cross media intelligence is our newest solution, commerce media networks remain a significant growth driver. This quarter, Walgreens leveraged our technology for their new clean room solution, enhancing ad personalization, scaling real time audience insights, and increasing transparency and control for brand advertisers. We also secured a multi year, multi million ACV upsell with a leading U. S. Speaker 200:05:56Department store. Our commerce media growth extends beyond retail with airlines, casinos, automotive and real estate brokers actively launching networks. We expanded our partnership with Western Union, connecting their media network audiences to those of others for enhanced on and off-site advertising personalization. A new case study, one of several client success stories we highlight in our earnings presentation, highlights our work with Lyft, connecting rider insights with advertiser first party data. We anticipate continued growth in commerce media as we establish more partnerships in new industries, leveraging our work with food delivery companies for QSRs, payment clients for smaller merchants and travel sector clients for broader partnerships. Speaker 200:06:52CTV is another key driver of recent sales strength. After a year of integrating major CTV and streaming platforms into our network, we're seeing strong momentum with brands leveraging these growing ad destinations by connecting their first party data to media exposures. For example, our Netflix integration has scaled the dozens of brands in just four months, offering the high quality inventory every TV advertiser desires. This flywheel effect from adding large CTV nodes is expected to fuel continued growth. To reinforce our product discussion, it's worth noting that two leading tech research firms, Forrester and IDC, recently published reports independently validating our data collaboration platform's effectiveness. Speaker 200:07:48Forrester's total economic impact study, which we commissioned, found that a representative LiveRamp customer achieved a 313% ROI and approximately $10,000,000 in business benefits over three years with a payback period under six months. Additionally, for the second consecutive year, IDC recognized LiveRamp as a leader in its market scape vendor assessment for data cleanroom technology. More information on both reports is available at liveramp.com. My second main topic is pricing. We're modernizing our pricing model to offer customers greater flexibility and align costs with usage. Speaker 200:08:35Last month, we launched a pilot program with up to 40 customers. In just the first few weeks, we signed several new customers to the new pricing model, including the world's largest quick serve restaurant. This six month pilot will gather feedback before a broader rollout in FY twenty seven. We have outgrown our existing pricing model, which has become overly complicated both for customers and for us internally. The existing model also did not facilitate customer usage flexibility across our different capabilities. Speaker 200:09:11And certain customer types, namely media platforms and data providers, have been asking for a more flexible usage based model. The new model addresses these issues by standardizing pricing with fungible tokens across all products, enhancing upsell opportunities, offering lower upfront costs to attract small and mid sized new customers, particularly media platforms and data providers, scaling pricing directly with customer usage and variable costs like cloud hosting, Reducing billing SKUs and metrics with automated reporting to improve operational efficiency and lower our own operating costs. We anticipate sharing more details as the pilot progresses and the full launch nears. Finally, let me spend a few minutes on where we think advertising is headed with AI, because this is going to fundamentally change how businesses connect with customers. We are not just seeing another advertising platform shift. Speaker 200:10:22We have been through these before. Desktop to mobile, linear TV to streaming, print to digital. This is different. AI agents will change how consumers discover products and make purchase decisions. Think about it this way. Speaker 200:10:40Instead of people browsing websites or searching across different platforms to find products, they're going to ask an AI agent to find what they need. The agent does the research, makes the recommendation, and maybe even completes the purchase. This is a very different customer journey, and businesses will need to adapt. First, brands must reach consumers with personalized messages across new destinations and new devices. New platforms are emerging, while existing platforms are evolving rapidly. Speaker 200:11:17Every major media company is embracing agents to enhance their consumer experiences and influence them across a growing array of devices. The myriad of screens we all use today, plus a future which may include watches, glasses, or voice assistance. Businesses need to influence consumers wherever they are spending time. Second, there's a whole new set of tools emerging. An array of specialized agents, some for media optimization, others for measurement, marketing analytics, creative optimization, even personalized product recommendations. Speaker 200:11:57Businesses need tools that can integrate and help them leverage all these different agents. Third, and this is where it gets truly interesting for LiveRamp and our clients, The future will be fueled by data. The companies that win are going to be the ones that can feed these AI systems the richest signals, not just public information, but rather their own proprietary customer data, as well as permission signals from across their partner ecosystem. Others see this also. For example, Salesforce recently announced an $8,000,000,000 acquisition of Informatica to bolster its data integration and management capabilities. Speaker 200:12:45And that's big, but I'm not sure there is a company that works across more fragmented, diverse, and valuable customer data than LiveRamp. The future will be modeled from a mixture of first party CRM data, transaction data from retail partners, behavioral signals from media platforms, contextual signals like prompts and environmental data, a myriad of second and third party data. It's fragmented, complex, and somewhat overwhelming for many companies. Compounding the challenge. The most valuable signals won't be freely shared between competitors. Speaker 200:13:27Brands need trusted infrastructure that gives data owners control over how their proprietary information gets used and also facilitates turnkey scalability for all the various AI use cases each of our clients desires to utilize. As we modernize LiveRamp's data collaboration platform, we've designed it for an AI future with the requisite capabilities and network to help marketers easily and effectively navigate this period of change. Data is fuel for AI models, agents, recommendations. And our data collaboration platform connects fragmented data across partners, creating a network effect where data scale compounds AI intelligence. Our platform also provides the governance and standardization necessary for the complex agendic era, offering shared identity frameworks, clean room interoperability, and trusted measurement secure and compliant connections. Speaker 200:14:35We will continue to enhance our network to be more programmable and real time, supporting the secure flow of data that powers AI advertising. This represents a significant long term growth opportunity for LiveRamp, and clients view us as a critical partner for their AI ambitions. In closing, let me reiterate my key points. First, we delivered strong financial results in Q1, beating on the top and bottom line, delivering double digit revenue growth for the sixth consecutive quarter, and even more robust 34% operating income growth. We also increased our revenue and free cash flow outlook for the year. Speaker 200:15:23Second, we're advancing key growth initiatives. We're seeing strong sales momentum across our collaboration network, driven by cross media intelligence, commerce media and CTV. We also launched a pilot program for our new pricing model, which we believe will attract new clients and boost efficiency, with benefits expected in the latter half of the fiscal year and beyond. Third, LiveRamp is well positioned for the AI driven future of advertising. In this new AI era, we believe data connectivity, interoperability, and strong partner networks will differentiate winners. Speaker 200:16:04We are well equipped to capitalize on this disruption, and we'll continue investing in our platform to be more programmable and real time, supporting the secure connection of data that will fuel AI advertising agents. Thank you again for joining us today. I also want to thank our exceptional, exceptional customers, partners, and all LiveRampers for their ongoing hard work and support. We look forward to updating you on our continued progress in the coming quarters. And with that, I'll turn the call over to Lauren. Speaker 300:16:40Thanks, Scott, and thank you all for joining us. Today, I'll review our Q1 financial results and then discuss our updated outlook for FY 'twenty six and Q2. 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 Q1. Speaker 300:17:06In summary, we delivered solid results, exceeding our expectations due to strong execution amidst a more favorable macro and selling environment. Revenue increased by 11% and was $4,000,000 above our guide. Non GAAP operating income increased by 34% and was $3,000,000 above our guide. Operating margin on both a GAAP and non GAAP basis were record first quarter highs, expanding by three and seven points, respectively. And finally, our free cash flow outlook for the year is materially better, driven by the recent tax legislation. Speaker 300:17:45Let me provide some additional details. Please turn to Slide five. Total revenue was $195,000,000 up 11%, exceeding our expectation and consensus. Subscription revenue was $148,000,000 up 10%. Fixed subscription revenue was up 6%, in line with our expectation. Speaker 300:18:07Subscription usage revenue was up approximately 40 percent, mostly driven by an easy year ago comp and a couple of onetime positive items that benefited the quarter. ARR was up 5% year on year. This was in line with our first half expectations due to the softer selling environment in the first half of last year and some unusual but known churn events, such as Oracle exiting their ad tech business. We expect net new ARR to pick back up starting in Q2. Subscription net retention was 104%, stable with the prior quarter and in line with our 100% to 105% near term expectation. Speaker 300:18:51Total RPO or contracted backlog was up 29% to $690,000,000 and current RPO was up 14% to $451,000,000 RPO and CRPO declined sequentially, consistent with the historical pattern, driven by seasonality in our contract renewals, which skew to our fiscal second half. Turning to the selling environment. I'd characterize the quarter as generally positive. We had a good quarter with new logo and upsell signings. Although as I mentioned earlier, our dollar churn was higher than we liked due to some unique customer events and not related to anything in the broader economy. Speaker 300:19:35Our average deal cycle ticked back down to nine months. Our conversion rate of pipeline into bookings was several points above the recent trend. And finally, our average deal size was also above trend. Looking ahead, quarter to date sales activity has been strong, including several million dollar plus deals. As Scott shared, our cross media intelligence solution got off to a strong start, and our cleanroom strategy is clearly resonating with customers, which gives us increased confidence in improving growth as we progress through this year. Speaker 300:20:12Marketplace and other revenue increased 13% to 46,000,000 Data Marketplace, which accounted for 76% of Marketplace and other revenue, grew by 9%. Data Marketplace growth was a few points below our expectation as we worked through an isolated issue with a new integration feature. This issue has been resolved. And as a result, data marketplace growth has rebounded strongly quarter to date in Q2. Moving beyond revenue. Speaker 300:20:44Gross margin was 72%, in line with our guide and down one point year on year due to temporarily higher cloud hosting expenses related to our platform modernization. Operating expenses were $105,000,000 up 2% year on year and in line with our expectations. Operating income was $36,000,000 up from $27,000,000 a year ago, and our operating margin expanded by three points to 18%. GAAP operating income was $7,000,000 up from a loss of $5,000,000 a year ago. Our GAAP operating margin expanded by seven points year on year, driven in part by our more disciplined approach to stock based compensation. Speaker 300:21:27Free cash flow was negative $16,000,000 reflecting typical seasonality and changes in working capital. We repurchased $30,000,000 in stock in the first quarter and have $226,000,000 remaining under the current authorization that expires at the end of calendar twenty twenty six. Our balance sheet remains very strong with approximately $370,000,000 in cash and short term investments and zero debt. In summary, Q1 was a strong start to the year, marked by double digit revenue growth, record first quarter margins and continued discipline in both execution and capital allocation. Now let me turn to our financial outlook for FY 2026 and Q2. Speaker 300:22:14Please turn to Slide 12. Please keep in mind our non GAAP guidance excludes intangible amortization, stock comp and restructuring and related charges. Starting with the full year, we are increasing our FY twenty twenty six revenue guidance by $6,000,000 at the midpoint by increasing the low end of the range. This increase reflects the $4,000,000 beat in Q1, plus a $2,000,000 increase over the remaining three quarters in subscription usage. Even with this increase, the guide continues to capture some conservatism in our variable revenue in the fiscal second half to account for the possibility of slower U. Speaker 300:22:55S. Macro growth. We now expect FY twenty twenty six revenue to be between $798,000,000 and $818,000,000 which is growth of 7% to 10%. Let me now provide some color on the revenue components, focusing on the midpoint of our guidance range. Subscription revenue is still expected to be up mid to high single digits. Speaker 300:23:19Fixed subscription is still expected to be up mid to high single digits with improving growth in the second half. Subscription usage growth is now expected to be up mid to high single digits in light of the strong Q1. We assume usage growth is flat year on year over the remaining three quarters. Marketplace and other revenue is expected to grow in the low to mid teens, outpacing digital ad market growth and benefiting from new marketplace integrations. We expect gross margin to be roughly consistent with FY 2025. Speaker 300:23:54We continue to expect first half gross margins to be in the low 70s and in the second half normalize to the mid-70s as we finish migrating customers to our new back end. We reiterate our guidance for non GAAP operating income to be between $178,000,000 and $182,000,000 Our operating income guide is unchanged despite an increase in revenue, reflecting slightly higher costs to support the back end migration as well as some incremental investments in our services function to support higher demand for our cross media intelligence solution. At the midpoint of the guide, operating income is growing 33% and margin is expanding four points to 22%. The combination of offshoring and general cost discipline, including leveraging the acquired Habu expense base, is affording us the ability to invest in key growth areas, while at the same time driving significant margin expansion. STOP comp is expected to decline 21% year on year to 85,000,000 again, reflecting a more disciplined approach to share based compensation over the last couple of years. Speaker 300:25:10We expect GAAP operating income to be between 81,000,000 and $85,000,000 equating to a margin of 10% to 11%, a significant increase over the roughly breakeven results of the last couple of years. Lastly, we now expect free cash flow to increase this year. As you may recall, we had very strong free cash flow in FY 2025, up over 50%, driven in part by favorable working capital movements in Q4. We expect working capital to normalize this year, but the benefits from the new tax legislation should more than offset that normalization, resulting in an EBITDA conversion rate well above our 75% target and driving cash flow higher year on year. We expect to deploy a substantial amount of this higher free cash flow towards share repurchases consistent with our recent policy. Speaker 300:26:06As always, we will be opportunistic depending on market conditions. Given the decline in stock based comp, combined with our repurchase activity, like last year, we're expecting to more than offset dilution. Now moving on to Q2. We expect total revenue of $197,000,000 non GAAP operating income of approximately $39,000,000 and an operating margin of approximately 20%. A few other call outs for Q2. Speaker 300:26:38We expect subscription revenue to be up mid single digits. Marketplace and other revenue is expected to be up low to mid teens. And finally, we expect gross margin to be similar to Q1 as we work through the final phases of our back end upgrade and migration effort. Before opening the call to questions, I'll conclude with a few final thoughts. First, we delivered a strong start to the year, exceeding our expectations on both the top and bottom line with double digit revenue growth and record Q1 operating margins. Speaker 300:27:15Recent sales activity has been encouraging, and we expect growth to accelerate beyond Q2. This momentum, particularly in cross media intelligence, is a strong validation of our cleanroom strategy and the value we're delivering to customers. Our teams are focused, our sales execution is sharp and our ambition is clear, to deliver progressively stronger performance as the year unfolds. And finally, we also expect another strong year of cash flow, driven by over 30% growth in operating income and benefits from the recently enacted tax legislation. We plan to deploy a substantial portion of this higher cash flow toward opportunistic share repurchases, reflecting both our confidence in the business and our commitment to driving long term shareholder value. Speaker 300:28:08Thanks again for joining us. We're excited for what's ahead and grateful to the customers and teammates who make it possible. Operator, we will now open the call to questions. Operator00:28:20Thank you. Your Your first question comes from the line of Shyam Patil with Susquehanna. Please go ahead. Hey, guys. Congrats on the strong first quarter and increase to the full year guide. Operator00:28:47I just had a quick question. Just when you look at the second quarter, can you elaborate on the assumptions behind the revenue growth? Thank you. Speaker 300:28:58Sure. Hi, Shyam. Lauren here. I'm happy to take that. So as you may remember, we always expected growth in the first half of this fiscal year to be lighter than the second half. Speaker 300:29:09And as it turns out, outperformed considerably in Q1 on subscription usage. It was up 40% year on year in the quarter. And again, some of this was simply timing related. We're not forecasting the same level of performance for usage in Q2. In fact, we're conservatively guiding it flat year on year. Speaker 300:29:29And this is really the delta or bridge or kind of key assumption you're probably looking for. All that said, we're happy to be able to raise our outlook for the full year. And given our recent sales momentum, we have even more confidence sitting here today than we did in May in our back half and in our ability to drive higher revenue growth as we move beyond the second quarter. Operator00:29:55Great. Thank you, Lauren. Thank you, guys. Your next question comes from the line of Jason Kreyer with Craig Hallum. Please go ahead. Speaker 400:30:05Great. Thank you. This is Cal on for Jason. So maybe first, great to hear about the ongoing momentum in Commerce Media Networks. Just wondering if you can expand on the outlook and what gives you confidence that the strength can continue? Speaker 200:30:21Yes, Cal. Thanks for the question. This is Scott. I hope everyone on the call has a chance to visit our website because on it you'll find a bunch of press releases. I referenced some of them today and case studies on commerce media. Speaker 200:30:37I think we're really seen as the leader in this space. And that started with kind of classic retail. This quarter continues. This quarter we talked about WAG, Walgreens Advertising Group. WAG has 101,000,000 loyalty members and that generates literally billions of useful signals about which all of which can fuel partner efforts. Speaker 200:31:05And it's not just retail and I think this is the big What started in retail is really spreading to commerce. So many of our companies, so many prospects have incredible audiences, customer interactions and even captive screen time. And so this quarter I talked about REMAX for instance. They have nearly 8,000,000 users per month going to the website. And so you can just the melange of other activities someone looking to buy a home might also pursue. Speaker 200:31:39But then there's just so much more. So like we work with the major food delivery companies and that should give us access to partner networks of all the local restaurants. We're working with the major payments platforms and that's going to give us access to SMBs and QSRs and other merchant partners that we haven't historically had relationships with. We're starting to work with the connected car companies, which gives us access to the regional and local dealers and all of their partners. And we're working with a variety of the big travel companies including some of the biggest airlines in the world and they all have just enormous partner networks. Speaker 200:32:25And so this network flywheel is just getting started. This gives me confidence along with the other thing I talked about the new pricing model that we can really accelerate our business flywheel. And as we we help all of the participants in the network make their signals easily and securely available, but with the appropriate security and controls. And that's the fuel if you will that will power all of the most useful AI models that are going to be developed. So it gives me confidence for the near term, back half of the year, but also far beyond it. Speaker 200:33:11And so I'll leave everyone with one last call, which is check out our website on the case studies. But while you're there also take a look at the other study I referenced, the Forrester Economic Impact Study. I really like what they did. We commissioned it, but they went and talked objectively to a handful of our clients to arrive at their findings and those included a bunch of the commerce media networks. Clients use us because above all we deliver great ROI and that is the takeaway from that report. Speaker 200:33:49And in an uncertain environment and we're still in it. I mean like this summer, so that every day when I read the newspapers, there are more tariffs, less tariffs, no one knows what's going on. And our clients see that. And the one thing that they can depend on is if it works, keep doing it. And so our ability to go in with a nice ROI story really matters to our clients and prospects right now. Speaker 400:34:17Great. Appreciate that. And then maybe secondly, you touched on this a little bit earlier, but particularly now that upfronts have largely ramped up. Just curious if there's any perspective on how more budgets moving into CTV and programmatic execution maybe resulting in things like deeper integration publishers or more advertiser adoption of clean rooms? Speaker 200:34:37Yes, sure. And going to the guidance, I mean, I think where you really can start to see it will be the back half of the year. We've had a lot of success doing the CTV integrations, but this is the slow quarter for television spending overall. That said, what we're going to continue to see is a lot of what we have seen, which is a flow from linear into accountable television, the kind that you get through CTV. And that also plays to our clean room capabilities and as much as you can combine audiences and develop new segments in concert, an advertiser and their publisher partner. Speaker 200:35:30A major CTV provider has rich viewing information, all of it permissioned and authenticated. And then when that can be combined with the rich CRM files of some of our clients really interesting things could happen. And then on the flip side, it's not just the segment, the precision targeting, but it's actually the measurement capabilities. And so the ability to actually understand who actually saw an app, what did they do, maybe even link that to downstream activities that occurred at the advertisers own dealership or cash register that becomes fascinating. And so again, it all plays to what our advertisers are looking for right now in a period of economic uncertainty. Speaker 200:36:21They want greater targeting. They want to reach their consumers wherever they are and they want to know what they're doing actually works. And so CTV relative to linear delivers against all those things. Speaker 400:36:36Great. Appreciate all the color. Operator00:36:48The next question comes from the line of Mark Zugatowicz with Benchmark. Please go ahead. Speaker 500:36:56Thank you. Hi, Scott and Lawrence. Just a qualification I was hoping for in terms of relative momentum that you're seeing across Clean Room, CMI and Commerce Media. It sounds like you're adding some nice scaled customers. However, also saw that you had a slight sequential downtick on 1,000,000 plus revenue customers in the quarter. Speaker 500:37:20So perhaps you can provide a little balance on those dynamics. Thanks. Speaker 300:37:25Yes. I'm happy to address the $1,000,000 plus customer question, and then maybe Scott can kind of tackle the relative contribution from the different initiatives he spoke about in his prepared remarks. With respect to million dollar plus customers, I called out in my prepared remarks a couple of large known churn events with what we would characterize as atypical circumstances that impacted the quarter. For example, one of the churn events was Oracle as a result of them exiting their ad tech business. We knew this was coming. Speaker 300:38:03It hit in Q1. It impacted our million dollar plus metric in the quarter. That said, I also spoke about our sales momentum quarter to date and the success we've had signing large multiyear deals so far multiyear, multimillion dollar deals so far in Q2, which should benefit our million dollar plus customer count in Q2 and beyond. So, in terms of the quarter, I wouldn't read too much into it. We feel confident that this metric will rebound next quarter and throughout the remaining quarters of this year. Speaker 200:38:37And then, Mark, in terms of your other question around relative size or contribution to growth of cross media, CTV and commerce media, we don't break it out that way because it's all just subscription growth largely for us. But what I really liked about the quarter is when I look ahead, all of these things are still in the early stages. So the cross media insights initiative is one that we just launched this past quarter, and it's off to a strong start. And so I'm hopeful that the case studies that emerge from that start to go viral. Because I think virtually all of our current customers should be availing themselves of cross media insights. Speaker 200:39:36And I think it could be a really good way to attract new prospects as the year progresses, because it just makes everything accountable. On the commerce media front, the way I view that is we're planning the tent poles, the major nodes and then you got to fill in the density around it and you get a flywheel effect going. And so the winds that we talked about, even this quarter or more broadly, what I was sharing just a second ago with Cal. Those are flywheels that over the back half of this year and in the coming years could really take off for us. And so even CTV, the flip is happening as linear increasingly flows to CTV. Speaker 200:40:32But you look at a company like Netflix, they are an amazing partner. I mean, just I can't say enough good things about Netflix and we worked really closely with them as we've scaled, as we've stood things up over the last quarter. We got dozens of clients live, but I would imagine a year from now that number should look more like hundreds. Because if you're doing any television advertising, a really good place to start is Netflix. And so I think there's a really nice opportunity there as well. Speaker 500:41:11Thank you. That's helpful. Several question just around where we're at with offshoring, the initiatives there, and perhaps even automation leverage. Perhaps Lauren, you might share sort of the leverage that we've seen there last twelve months and what you maybe expect this fiscal year. And also, if you're ready to start qualifying sort of the pricing incrementality that you expect later this year, if there's a plan to provide more tangibles on that? Speaker 500:41:46Thanks. Speaker 300:41:47Yeah, happy to. And with respect to offshoring and automation, our offshoring initiative continues to just go really well for us, Merck. And while it's hard to perfectly measure, we believe the combination of offshoring plus just general smart cost management in part driven by automation is driving low double digit millions of cost savings for us this year. This is really what's giving us the ability to decrease OpEx slightly year year, drive four points of margin expansion, at the same time continuing to invest in the areas that we believe will support our future growth. And then with respect to pricing, you know, first, we haven't included any upside to our revenue guidance this year associated with our new pricing model. Speaker 300:42:36As Scott mentioned, we're in the very early stages of our pilot, but the reaction from both sellers and customers has been very positive. In fact, it was a key selling point for the couple of customer wins Scott discussed in his prepared remarks. As we move through the pilot and round out this year, we expect to have more specifics to share. But at a very high level, we believe this model will unlock meaningful benefits for both our customers as well as for us internally. Just a few highlights I'd call out. Speaker 300:43:10With respect to our land and expand motion, this model should benefit deal velocity. It has a lower cost of entry and if customers so choose a more flexible usage based option. We believe it will also help our expand motion because the new model has usage tokens that can be seamlessly and fungibly used across the entirety of our platform and for different use cases. And then finally, and we've talked about this before, it should unlock some internal efficiencies as well, as it will enable us to streamline our deal desk and billing processes. So to summarize, pricing initiative is off to a great start and expect to share more specifics as we move through the year. Speaker 500:43:59Super helpful. Thank you both. Operator00:44:03Your next question comes from the line of Clark Wright with D. A. Davidson. Please go ahead. Speaker 600:44:09Hi, thanks for the question. Sticking to the pricing changes, I would love to understand how conversations around the actual pricing changes are impacting new deals or potentially reducing friction in the new business process? Then I have a follow-up. Speaker 200:44:25Yes, Mark. I would tell you, it's viewed as very favorable. Most SaaS companies have a usage based entry level product where clients can try and then you can scale together. We've been slow to offer that. This is a game changer for us. Speaker 200:44:53And a couple of clients, the new logos that we won and arguably the world's biggest QSR, we were doing a little bit of work with them. But this is a much bigger opportunity for us. I mean, they specifically called it out as one of the reasons they chose us. Because they didn't have to make that big upfront commitment. There was a way to grow into it together. Speaker 200:45:24And so that coupled with the opportunity that we see in terms of getting some of these network flywheels up and started, it solves the problem for us. There's kind of three things going on. One is the network flywheel. Two is the platform modernization that should make our products simpler and more accessible to anyone, lowering our cost to serve. And then three is the new pricing model. Speaker 200:45:54And so although it's early, we're pretty optimistic about this. That said, and I think this is an important thing. We are going to be very methodical about how we roll this out to our existing clients. And so we know when our renewals are scheduled, we'll start those conversations well in advance. And we're not going to do anything that impacts our financials or hurts our clients. Speaker 200:46:27So we're going to be really smart and very methodical step by step about this with existing clients and very opportunistic with new prospects. Speaker 600:46:39Got it. Appreciate that clarity. And then Scott, maybe another one for you here. You talked about the fact several technology providers are competing for a share of brands AI budgets to solve for data driven marketing and advertising use cases. What do you think LiveRamp's right to win is in this rapidly changing environment? Speaker 200:46:57I love this question because it allows me to say something definitively to the market and to all of our folks internally as well. We are not an AI company, all right. We're just not. We are utilizing AI in a lot of the things that we do and build it in to make our products better. And so for example, at ramp up this year, we had a demo of something that will go live next quarter. Speaker 200:47:31I'm really excited about it. Instead of creating segments using Boolean logic and SQL queries, you literally use AI. And we're going to be the only company in the world that can allow a client to combine first party, second party and third party data to make really amazing AI segments. That's an example of how we use AI to improve our current products. And we'll do that in our queries, we'll do that in our reporting, we'll do that in our QA, we'll do that to enable our engineers to code faster, whole host of things. Speaker 200:48:14But in terms of how we interact with all of the AI companies that are out there doing amazing things, we're an enabler. We're not an AI company, we're an AI enabler. Because the big challenge that all of our clients have is that they're looking at all the things they can do. And the common denominator is if you build AI using the world's public information, you hit an asymptote, the models aren't good enough. If you start to fuel it with your own proprietary information, then you can unlock significantly better performance, greater personalization, everything just performs better. Speaker 200:48:58But the threat there is the complexity of why are your data to all those different touch points and also the security. Well, enter us because our clean rooms can be configured to go right into AI. And so we can configure, I have a vision of like if someone's doing something interesting in AI that matters to our clients, we're going to have an integration partnership with them with the right controls in place such that our clients can very easily activate their data into those models. Now I have a view that there won't be a single company that wins on all these models and we already see that that it's hyper fragmentation. A couple of companies might buy all the companies that build these models over time over the next ten to twenty years. Speaker 200:49:57But there's hyper fragmentation and so that really plays to our advantage. That complexity is exactly the problem that we've always solved with data activation and now we're just extending data activation to AI activation. So I think it's a really interesting opportunity for us. You can see that we already announced like our partnership with Perplexity, we announced with Chalice. And I think you'll see a host of other partnerships because literally it's a big priority for our business development team. Speaker 600:50:35Appreciate that clarity. Thank you. Operator00:50:40And it seems that we have no further questions. I would now like to turn the conference back over to Lauren Dillard for closing remarks. Speaker 300:50:48Great. Well, thank you. First, to close, Q1 was a strong start to the year marked by double digit revenue growth, first quarter record first quarter margins and continued discipline in both execution and capital allocation. Second, real recent sales momentum has been strong and our clean room strategy is landing and we're on track to deliver progressively stronger top line performance as the year unfolds. And finally, we expect another year of strong cash flow and plan to deploy a substantial portion of this higher cash flow toward opportunistic share repurchases, reflecting both our confidence in the business and our continued commitment to driving long term shareholder value. Speaker 300:51:31With that, thanks again for joining us today. We look forward to speaking with many of you in the days and weeks ahead. Operator00:51:38This concludes the conference call. You may now disconnect your lines. Have a pleasant day, everyone.Read morePowered by Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) LiveRamp Earnings HeadlinesLiveRamp (NYSE:RAMP) Exceeds Q2 Expectations But Stock Drops2 hours ago | msn.comLiveRamp Announces Results for First Quarter FY26August 6 at 4:05 PM | globenewswire.comElon Set to Shock the World on July 1st?Tech legend Jeff Brown recently traveled to the industrial zone of South Memphis to investigate what he believes will be Elon’s greatest invention ever… Yes, even bigger than Tesla or SpaceX.August 6 at 2:00 AM | Brownstone Research (Ad)Stocks To Watch: LiveRamp Holdings Sees RS Rating Rise To 82July 31, 2025 | msn.comLiveRamp Holdings, Inc. (NYSE:RAMP) Receives $41.29 Consensus PT from BrokeragesJuly 29, 2025 | americanbankingnews.comLiveRamp to Discuss First Quarter FY26 Financial ResultsJuly 25, 2025 | finance.yahoo.comSee More LiveRamp Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like LiveRamp? Sign up for Earnings360's daily newsletter to receive timely earnings updates on LiveRamp and other key companies, straight to your email. Email Address About LiveRampLiveRamp (NYSE:RAMP), a technology company, operates a data collaboration platform in the United States, Europe, the Asia-Pacific, and internationally. The company operates LiveRamp Data Collaboration platform enables an organization to unify customer and prospect data to build a single view of the customer in a way that protects consumer privacy. Its platform supports various people-based marketing solutions, including data collaboration, activation, measurement and analytics, identity, and data marketplace. The company sells its solutions to enterprise marketers, agencies, marketing technology providers, publishers, and data providers in various industry verticals, such as financial, insurance and investment services, retail, automotive, telecommunications, high tech, consumer packaged goods, healthcare, travel, entertainment, and non-profit. The company was formerly known as Acxiom Holdings, Inc. and changed its name to LiveRamp Holdings, Inc. in October 2018. 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There are 7 speakers on the call. Operator00:00:00Good afternoon, ladies and gentlemen, and welcome to LiveRamp's Fiscal twenty twenty six First Quarter Earnings Call. Following our speakers' remarks, there will be a question and answer session. 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. Speaker 100:00:26Thank you, operator. Good afternoon, everyone, and thank you for joining our fiscal twenty twenty six first 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 detailed descriptions of these risks, please read the Risk Factors section of our public filings and the press release. Speaker 100:00:55A copy of our press release and financial schedules, including any reconciliations to non GAAP financial measures, is available at investors.liveramp.com. Also during the call today, we'll be referring to the slide deck that is also available on our Investor Relations website. With that, I'll turn the call over to Scott. Speaker 200:01:15Thank you, Drew, and thank you to everyone joining us today. Q1 was a good way to start the year, balancing both strong performance and optimism for the future. We had a very strong start to fiscal twenty twenty six with first quarter results exceeding our expectations on both the top and bottom lines. We can also see opportunities to improve our performance that could impact the back half of the year and the years to come. Total revenue increased at a double digit rate for the sixth consecutive quarter with double digit growth in both subscription revenue as well as marketplace and other. Speaker 200:01:53Looking ahead, we have robust new business pipeline and good sales momentum across several solutions on which I will elaborate in a minute. On the bottom line, non GAAP operating income increased by 34% driven by three points of margin expansion to a record first quarter high of 18%. Our organization continues to become more and more efficient, thanks to initiatives like our growing offshore presence in India and our forthcoming new pricing model. Q1 GAAP operating margin also reached a record high, expanding by seven points, driven in part by lower stock based compensation reflecting new grant policies to rationalize these costs and better align with performance. Finally, we increased our FY 2026 guidance for revenue and free cash flow. Speaker 200:02:48There's a lot to like in Q1, and Lauren will provide additional details later in the call. My remarks today will cover three main topics. First, an update on the products driving our current sales momentum, including cross media intelligence, commerce media networks, and CTV. Second, insights into our new pricing model and its potential to accelerate growth. And third, our perspective on how AI will transform digital advertising and its implications for LiveRamp's long term significance and prospects. Speaker 200:03:25Let's start with the drivers behind sales momentum. Our data collaboration network is experiencing strong sales momentum, evidenced by an above average conversion of pipeline into signings, a reduction in the average sales cycle length and an increase in average deal size during the first quarter. This momentum is primarily driven by our cross media intelligence, commerce media networks, and CTV solutions, which I will now discuss in detail. Our new cross media intelligence solution is surpassing initial expectations. Marketers often contend with outdated measurement tools that provide an incomplete and distorted view of effectiveness within today's fragmented digital ecosystem, leading to suboptimal decisions. Speaker 200:04:16Cross media intelligence, powered by state of the art cleanroom technology, addresses this by offering the most extensive collaboration network that seamlessly connects an array of ecosystem participants from advertisers and publishers to commerce media networks, data providers, and measurement partners. An identity foundation that enables privacy preserving data connectivity across the network. Governance tools to implement and enforce unique data sharing policies between various collaborators. And finally, seamless interoperability across all major cloud environments. Launched in the first quarter, Cross Media Intelligence has already attracted several high profile customers, including the largest social media platform, a leading CPG manufacturer, the largest consumer and enterprise software company, and a significant financial software provider. Speaker 200:05:21This strong start signals continued momentum in upcoming quarters. While cross media intelligence is our newest solution, commerce media networks remain a significant growth driver. This quarter, Walgreens leveraged our technology for their new clean room solution, enhancing ad personalization, scaling real time audience insights, and increasing transparency and control for brand advertisers. We also secured a multi year, multi million ACV upsell with a leading U. S. Speaker 200:05:56Department store. Our commerce media growth extends beyond retail with airlines, casinos, automotive and real estate brokers actively launching networks. We expanded our partnership with Western Union, connecting their media network audiences to those of others for enhanced on and off-site advertising personalization. A new case study, one of several client success stories we highlight in our earnings presentation, highlights our work with Lyft, connecting rider insights with advertiser first party data. We anticipate continued growth in commerce media as we establish more partnerships in new industries, leveraging our work with food delivery companies for QSRs, payment clients for smaller merchants and travel sector clients for broader partnerships. Speaker 200:06:52CTV is another key driver of recent sales strength. After a year of integrating major CTV and streaming platforms into our network, we're seeing strong momentum with brands leveraging these growing ad destinations by connecting their first party data to media exposures. For example, our Netflix integration has scaled the dozens of brands in just four months, offering the high quality inventory every TV advertiser desires. This flywheel effect from adding large CTV nodes is expected to fuel continued growth. To reinforce our product discussion, it's worth noting that two leading tech research firms, Forrester and IDC, recently published reports independently validating our data collaboration platform's effectiveness. Speaker 200:07:48Forrester's total economic impact study, which we commissioned, found that a representative LiveRamp customer achieved a 313% ROI and approximately $10,000,000 in business benefits over three years with a payback period under six months. Additionally, for the second consecutive year, IDC recognized LiveRamp as a leader in its market scape vendor assessment for data cleanroom technology. More information on both reports is available at liveramp.com. My second main topic is pricing. We're modernizing our pricing model to offer customers greater flexibility and align costs with usage. Speaker 200:08:35Last month, we launched a pilot program with up to 40 customers. In just the first few weeks, we signed several new customers to the new pricing model, including the world's largest quick serve restaurant. This six month pilot will gather feedback before a broader rollout in FY twenty seven. We have outgrown our existing pricing model, which has become overly complicated both for customers and for us internally. The existing model also did not facilitate customer usage flexibility across our different capabilities. Speaker 200:09:11And certain customer types, namely media platforms and data providers, have been asking for a more flexible usage based model. The new model addresses these issues by standardizing pricing with fungible tokens across all products, enhancing upsell opportunities, offering lower upfront costs to attract small and mid sized new customers, particularly media platforms and data providers, scaling pricing directly with customer usage and variable costs like cloud hosting, Reducing billing SKUs and metrics with automated reporting to improve operational efficiency and lower our own operating costs. We anticipate sharing more details as the pilot progresses and the full launch nears. Finally, let me spend a few minutes on where we think advertising is headed with AI, because this is going to fundamentally change how businesses connect with customers. We are not just seeing another advertising platform shift. Speaker 200:10:22We have been through these before. Desktop to mobile, linear TV to streaming, print to digital. This is different. AI agents will change how consumers discover products and make purchase decisions. Think about it this way. Speaker 200:10:40Instead of people browsing websites or searching across different platforms to find products, they're going to ask an AI agent to find what they need. The agent does the research, makes the recommendation, and maybe even completes the purchase. This is a very different customer journey, and businesses will need to adapt. First, brands must reach consumers with personalized messages across new destinations and new devices. New platforms are emerging, while existing platforms are evolving rapidly. Speaker 200:11:17Every major media company is embracing agents to enhance their consumer experiences and influence them across a growing array of devices. The myriad of screens we all use today, plus a future which may include watches, glasses, or voice assistance. Businesses need to influence consumers wherever they are spending time. Second, there's a whole new set of tools emerging. An array of specialized agents, some for media optimization, others for measurement, marketing analytics, creative optimization, even personalized product recommendations. Speaker 200:11:57Businesses need tools that can integrate and help them leverage all these different agents. Third, and this is where it gets truly interesting for LiveRamp and our clients, The future will be fueled by data. The companies that win are going to be the ones that can feed these AI systems the richest signals, not just public information, but rather their own proprietary customer data, as well as permission signals from across their partner ecosystem. Others see this also. For example, Salesforce recently announced an $8,000,000,000 acquisition of Informatica to bolster its data integration and management capabilities. Speaker 200:12:45And that's big, but I'm not sure there is a company that works across more fragmented, diverse, and valuable customer data than LiveRamp. The future will be modeled from a mixture of first party CRM data, transaction data from retail partners, behavioral signals from media platforms, contextual signals like prompts and environmental data, a myriad of second and third party data. It's fragmented, complex, and somewhat overwhelming for many companies. Compounding the challenge. The most valuable signals won't be freely shared between competitors. Speaker 200:13:27Brands need trusted infrastructure that gives data owners control over how their proprietary information gets used and also facilitates turnkey scalability for all the various AI use cases each of our clients desires to utilize. As we modernize LiveRamp's data collaboration platform, we've designed it for an AI future with the requisite capabilities and network to help marketers easily and effectively navigate this period of change. Data is fuel for AI models, agents, recommendations. And our data collaboration platform connects fragmented data across partners, creating a network effect where data scale compounds AI intelligence. Our platform also provides the governance and standardization necessary for the complex agendic era, offering shared identity frameworks, clean room interoperability, and trusted measurement secure and compliant connections. Speaker 200:14:35We will continue to enhance our network to be more programmable and real time, supporting the secure flow of data that powers AI advertising. This represents a significant long term growth opportunity for LiveRamp, and clients view us as a critical partner for their AI ambitions. In closing, let me reiterate my key points. First, we delivered strong financial results in Q1, beating on the top and bottom line, delivering double digit revenue growth for the sixth consecutive quarter, and even more robust 34% operating income growth. We also increased our revenue and free cash flow outlook for the year. Speaker 200:15:23Second, we're advancing key growth initiatives. We're seeing strong sales momentum across our collaboration network, driven by cross media intelligence, commerce media and CTV. We also launched a pilot program for our new pricing model, which we believe will attract new clients and boost efficiency, with benefits expected in the latter half of the fiscal year and beyond. Third, LiveRamp is well positioned for the AI driven future of advertising. In this new AI era, we believe data connectivity, interoperability, and strong partner networks will differentiate winners. Speaker 200:16:04We are well equipped to capitalize on this disruption, and we'll continue investing in our platform to be more programmable and real time, supporting the secure connection of data that will fuel AI advertising agents. Thank you again for joining us today. I also want to thank our exceptional, exceptional customers, partners, and all LiveRampers for their ongoing hard work and support. We look forward to updating you on our continued progress in the coming quarters. And with that, I'll turn the call over to Lauren. Speaker 300:16:40Thanks, Scott, and thank you all for joining us. Today, I'll review our Q1 financial results and then discuss our updated outlook for FY 'twenty six and Q2. 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 Q1. Speaker 300:17:06In summary, we delivered solid results, exceeding our expectations due to strong execution amidst a more favorable macro and selling environment. Revenue increased by 11% and was $4,000,000 above our guide. Non GAAP operating income increased by 34% and was $3,000,000 above our guide. Operating margin on both a GAAP and non GAAP basis were record first quarter highs, expanding by three and seven points, respectively. And finally, our free cash flow outlook for the year is materially better, driven by the recent tax legislation. Speaker 300:17:45Let me provide some additional details. Please turn to Slide five. Total revenue was $195,000,000 up 11%, exceeding our expectation and consensus. Subscription revenue was $148,000,000 up 10%. Fixed subscription revenue was up 6%, in line with our expectation. Speaker 300:18:07Subscription usage revenue was up approximately 40 percent, mostly driven by an easy year ago comp and a couple of onetime positive items that benefited the quarter. ARR was up 5% year on year. This was in line with our first half expectations due to the softer selling environment in the first half of last year and some unusual but known churn events, such as Oracle exiting their ad tech business. We expect net new ARR to pick back up starting in Q2. Subscription net retention was 104%, stable with the prior quarter and in line with our 100% to 105% near term expectation. Speaker 300:18:51Total RPO or contracted backlog was up 29% to $690,000,000 and current RPO was up 14% to $451,000,000 RPO and CRPO declined sequentially, consistent with the historical pattern, driven by seasonality in our contract renewals, which skew to our fiscal second half. Turning to the selling environment. I'd characterize the quarter as generally positive. We had a good quarter with new logo and upsell signings. Although as I mentioned earlier, our dollar churn was higher than we liked due to some unique customer events and not related to anything in the broader economy. Speaker 300:19:35Our average deal cycle ticked back down to nine months. Our conversion rate of pipeline into bookings was several points above the recent trend. And finally, our average deal size was also above trend. Looking ahead, quarter to date sales activity has been strong, including several million dollar plus deals. As Scott shared, our cross media intelligence solution got off to a strong start, and our cleanroom strategy is clearly resonating with customers, which gives us increased confidence in improving growth as we progress through this year. Speaker 300:20:12Marketplace and other revenue increased 13% to 46,000,000 Data Marketplace, which accounted for 76% of Marketplace and other revenue, grew by 9%. Data Marketplace growth was a few points below our expectation as we worked through an isolated issue with a new integration feature. This issue has been resolved. And as a result, data marketplace growth has rebounded strongly quarter to date in Q2. Moving beyond revenue. Speaker 300:20:44Gross margin was 72%, in line with our guide and down one point year on year due to temporarily higher cloud hosting expenses related to our platform modernization. Operating expenses were $105,000,000 up 2% year on year and in line with our expectations. Operating income was $36,000,000 up from $27,000,000 a year ago, and our operating margin expanded by three points to 18%. GAAP operating income was $7,000,000 up from a loss of $5,000,000 a year ago. Our GAAP operating margin expanded by seven points year on year, driven in part by our more disciplined approach to stock based compensation. Speaker 300:21:27Free cash flow was negative $16,000,000 reflecting typical seasonality and changes in working capital. We repurchased $30,000,000 in stock in the first quarter and have $226,000,000 remaining under the current authorization that expires at the end of calendar twenty twenty six. Our balance sheet remains very strong with approximately $370,000,000 in cash and short term investments and zero debt. In summary, Q1 was a strong start to the year, marked by double digit revenue growth, record first quarter margins and continued discipline in both execution and capital allocation. Now let me turn to our financial outlook for FY 2026 and Q2. Speaker 300:22:14Please turn to Slide 12. Please keep in mind our non GAAP guidance excludes intangible amortization, stock comp and restructuring and related charges. Starting with the full year, we are increasing our FY twenty twenty six revenue guidance by $6,000,000 at the midpoint by increasing the low end of the range. This increase reflects the $4,000,000 beat in Q1, plus a $2,000,000 increase over the remaining three quarters in subscription usage. Even with this increase, the guide continues to capture some conservatism in our variable revenue in the fiscal second half to account for the possibility of slower U. Speaker 300:22:55S. Macro growth. We now expect FY twenty twenty six revenue to be between $798,000,000 and $818,000,000 which is growth of 7% to 10%. Let me now provide some color on the revenue components, focusing on the midpoint of our guidance range. Subscription revenue is still expected to be up mid to high single digits. Speaker 300:23:19Fixed subscription is still expected to be up mid to high single digits with improving growth in the second half. Subscription usage growth is now expected to be up mid to high single digits in light of the strong Q1. We assume usage growth is flat year on year over the remaining three quarters. Marketplace and other revenue is expected to grow in the low to mid teens, outpacing digital ad market growth and benefiting from new marketplace integrations. We expect gross margin to be roughly consistent with FY 2025. Speaker 300:23:54We continue to expect first half gross margins to be in the low 70s and in the second half normalize to the mid-70s as we finish migrating customers to our new back end. We reiterate our guidance for non GAAP operating income to be between $178,000,000 and $182,000,000 Our operating income guide is unchanged despite an increase in revenue, reflecting slightly higher costs to support the back end migration as well as some incremental investments in our services function to support higher demand for our cross media intelligence solution. At the midpoint of the guide, operating income is growing 33% and margin is expanding four points to 22%. The combination of offshoring and general cost discipline, including leveraging the acquired Habu expense base, is affording us the ability to invest in key growth areas, while at the same time driving significant margin expansion. STOP comp is expected to decline 21% year on year to 85,000,000 again, reflecting a more disciplined approach to share based compensation over the last couple of years. Speaker 300:25:10We expect GAAP operating income to be between 81,000,000 and $85,000,000 equating to a margin of 10% to 11%, a significant increase over the roughly breakeven results of the last couple of years. Lastly, we now expect free cash flow to increase this year. As you may recall, we had very strong free cash flow in FY 2025, up over 50%, driven in part by favorable working capital movements in Q4. We expect working capital to normalize this year, but the benefits from the new tax legislation should more than offset that normalization, resulting in an EBITDA conversion rate well above our 75% target and driving cash flow higher year on year. We expect to deploy a substantial amount of this higher free cash flow towards share repurchases consistent with our recent policy. Speaker 300:26:06As always, we will be opportunistic depending on market conditions. Given the decline in stock based comp, combined with our repurchase activity, like last year, we're expecting to more than offset dilution. Now moving on to Q2. We expect total revenue of $197,000,000 non GAAP operating income of approximately $39,000,000 and an operating margin of approximately 20%. A few other call outs for Q2. Speaker 300:26:38We expect subscription revenue to be up mid single digits. Marketplace and other revenue is expected to be up low to mid teens. And finally, we expect gross margin to be similar to Q1 as we work through the final phases of our back end upgrade and migration effort. Before opening the call to questions, I'll conclude with a few final thoughts. First, we delivered a strong start to the year, exceeding our expectations on both the top and bottom line with double digit revenue growth and record Q1 operating margins. Speaker 300:27:15Recent sales activity has been encouraging, and we expect growth to accelerate beyond Q2. This momentum, particularly in cross media intelligence, is a strong validation of our cleanroom strategy and the value we're delivering to customers. Our teams are focused, our sales execution is sharp and our ambition is clear, to deliver progressively stronger performance as the year unfolds. And finally, we also expect another strong year of cash flow, driven by over 30% growth in operating income and benefits from the recently enacted tax legislation. We plan to deploy a substantial portion of this higher cash flow toward opportunistic share repurchases, reflecting both our confidence in the business and our commitment to driving long term shareholder value. Speaker 300:28:08Thanks again for joining us. We're excited for what's ahead and grateful to the customers and teammates who make it possible. Operator, we will now open the call to questions. Operator00:28:20Thank you. Your Your first question comes from the line of Shyam Patil with Susquehanna. Please go ahead. Hey, guys. Congrats on the strong first quarter and increase to the full year guide. Operator00:28:47I just had a quick question. Just when you look at the second quarter, can you elaborate on the assumptions behind the revenue growth? Thank you. Speaker 300:28:58Sure. Hi, Shyam. Lauren here. I'm happy to take that. So as you may remember, we always expected growth in the first half of this fiscal year to be lighter than the second half. Speaker 300:29:09And as it turns out, outperformed considerably in Q1 on subscription usage. It was up 40% year on year in the quarter. And again, some of this was simply timing related. We're not forecasting the same level of performance for usage in Q2. In fact, we're conservatively guiding it flat year on year. Speaker 300:29:29And this is really the delta or bridge or kind of key assumption you're probably looking for. All that said, we're happy to be able to raise our outlook for the full year. And given our recent sales momentum, we have even more confidence sitting here today than we did in May in our back half and in our ability to drive higher revenue growth as we move beyond the second quarter. Operator00:29:55Great. Thank you, Lauren. Thank you, guys. Your next question comes from the line of Jason Kreyer with Craig Hallum. Please go ahead. Speaker 400:30:05Great. Thank you. This is Cal on for Jason. So maybe first, great to hear about the ongoing momentum in Commerce Media Networks. Just wondering if you can expand on the outlook and what gives you confidence that the strength can continue? Speaker 200:30:21Yes, Cal. Thanks for the question. This is Scott. I hope everyone on the call has a chance to visit our website because on it you'll find a bunch of press releases. I referenced some of them today and case studies on commerce media. Speaker 200:30:37I think we're really seen as the leader in this space. And that started with kind of classic retail. This quarter continues. This quarter we talked about WAG, Walgreens Advertising Group. WAG has 101,000,000 loyalty members and that generates literally billions of useful signals about which all of which can fuel partner efforts. Speaker 200:31:05And it's not just retail and I think this is the big What started in retail is really spreading to commerce. So many of our companies, so many prospects have incredible audiences, customer interactions and even captive screen time. And so this quarter I talked about REMAX for instance. They have nearly 8,000,000 users per month going to the website. And so you can just the melange of other activities someone looking to buy a home might also pursue. Speaker 200:31:39But then there's just so much more. So like we work with the major food delivery companies and that should give us access to partner networks of all the local restaurants. We're working with the major payments platforms and that's going to give us access to SMBs and QSRs and other merchant partners that we haven't historically had relationships with. We're starting to work with the connected car companies, which gives us access to the regional and local dealers and all of their partners. And we're working with a variety of the big travel companies including some of the biggest airlines in the world and they all have just enormous partner networks. Speaker 200:32:25And so this network flywheel is just getting started. This gives me confidence along with the other thing I talked about the new pricing model that we can really accelerate our business flywheel. And as we we help all of the participants in the network make their signals easily and securely available, but with the appropriate security and controls. And that's the fuel if you will that will power all of the most useful AI models that are going to be developed. So it gives me confidence for the near term, back half of the year, but also far beyond it. Speaker 200:33:11And so I'll leave everyone with one last call, which is check out our website on the case studies. But while you're there also take a look at the other study I referenced, the Forrester Economic Impact Study. I really like what they did. We commissioned it, but they went and talked objectively to a handful of our clients to arrive at their findings and those included a bunch of the commerce media networks. Clients use us because above all we deliver great ROI and that is the takeaway from that report. Speaker 200:33:49And in an uncertain environment and we're still in it. I mean like this summer, so that every day when I read the newspapers, there are more tariffs, less tariffs, no one knows what's going on. And our clients see that. And the one thing that they can depend on is if it works, keep doing it. And so our ability to go in with a nice ROI story really matters to our clients and prospects right now. Speaker 400:34:17Great. Appreciate that. And then maybe secondly, you touched on this a little bit earlier, but particularly now that upfronts have largely ramped up. Just curious if there's any perspective on how more budgets moving into CTV and programmatic execution maybe resulting in things like deeper integration publishers or more advertiser adoption of clean rooms? Speaker 200:34:37Yes, sure. And going to the guidance, I mean, I think where you really can start to see it will be the back half of the year. We've had a lot of success doing the CTV integrations, but this is the slow quarter for television spending overall. That said, what we're going to continue to see is a lot of what we have seen, which is a flow from linear into accountable television, the kind that you get through CTV. And that also plays to our clean room capabilities and as much as you can combine audiences and develop new segments in concert, an advertiser and their publisher partner. Speaker 200:35:30A major CTV provider has rich viewing information, all of it permissioned and authenticated. And then when that can be combined with the rich CRM files of some of our clients really interesting things could happen. And then on the flip side, it's not just the segment, the precision targeting, but it's actually the measurement capabilities. And so the ability to actually understand who actually saw an app, what did they do, maybe even link that to downstream activities that occurred at the advertisers own dealership or cash register that becomes fascinating. And so again, it all plays to what our advertisers are looking for right now in a period of economic uncertainty. Speaker 200:36:21They want greater targeting. They want to reach their consumers wherever they are and they want to know what they're doing actually works. And so CTV relative to linear delivers against all those things. Speaker 400:36:36Great. Appreciate all the color. Operator00:36:48The next question comes from the line of Mark Zugatowicz with Benchmark. Please go ahead. Speaker 500:36:56Thank you. Hi, Scott and Lawrence. Just a qualification I was hoping for in terms of relative momentum that you're seeing across Clean Room, CMI and Commerce Media. It sounds like you're adding some nice scaled customers. However, also saw that you had a slight sequential downtick on 1,000,000 plus revenue customers in the quarter. Speaker 500:37:20So perhaps you can provide a little balance on those dynamics. Thanks. Speaker 300:37:25Yes. I'm happy to address the $1,000,000 plus customer question, and then maybe Scott can kind of tackle the relative contribution from the different initiatives he spoke about in his prepared remarks. With respect to million dollar plus customers, I called out in my prepared remarks a couple of large known churn events with what we would characterize as atypical circumstances that impacted the quarter. For example, one of the churn events was Oracle as a result of them exiting their ad tech business. We knew this was coming. Speaker 300:38:03It hit in Q1. It impacted our million dollar plus metric in the quarter. That said, I also spoke about our sales momentum quarter to date and the success we've had signing large multiyear deals so far multiyear, multimillion dollar deals so far in Q2, which should benefit our million dollar plus customer count in Q2 and beyond. So, in terms of the quarter, I wouldn't read too much into it. We feel confident that this metric will rebound next quarter and throughout the remaining quarters of this year. Speaker 200:38:37And then, Mark, in terms of your other question around relative size or contribution to growth of cross media, CTV and commerce media, we don't break it out that way because it's all just subscription growth largely for us. But what I really liked about the quarter is when I look ahead, all of these things are still in the early stages. So the cross media insights initiative is one that we just launched this past quarter, and it's off to a strong start. And so I'm hopeful that the case studies that emerge from that start to go viral. Because I think virtually all of our current customers should be availing themselves of cross media insights. Speaker 200:39:36And I think it could be a really good way to attract new prospects as the year progresses, because it just makes everything accountable. On the commerce media front, the way I view that is we're planning the tent poles, the major nodes and then you got to fill in the density around it and you get a flywheel effect going. And so the winds that we talked about, even this quarter or more broadly, what I was sharing just a second ago with Cal. Those are flywheels that over the back half of this year and in the coming years could really take off for us. And so even CTV, the flip is happening as linear increasingly flows to CTV. Speaker 200:40:32But you look at a company like Netflix, they are an amazing partner. I mean, just I can't say enough good things about Netflix and we worked really closely with them as we've scaled, as we've stood things up over the last quarter. We got dozens of clients live, but I would imagine a year from now that number should look more like hundreds. Because if you're doing any television advertising, a really good place to start is Netflix. And so I think there's a really nice opportunity there as well. Speaker 500:41:11Thank you. That's helpful. Several question just around where we're at with offshoring, the initiatives there, and perhaps even automation leverage. Perhaps Lauren, you might share sort of the leverage that we've seen there last twelve months and what you maybe expect this fiscal year. And also, if you're ready to start qualifying sort of the pricing incrementality that you expect later this year, if there's a plan to provide more tangibles on that? Speaker 500:41:46Thanks. Speaker 300:41:47Yeah, happy to. And with respect to offshoring and automation, our offshoring initiative continues to just go really well for us, Merck. And while it's hard to perfectly measure, we believe the combination of offshoring plus just general smart cost management in part driven by automation is driving low double digit millions of cost savings for us this year. This is really what's giving us the ability to decrease OpEx slightly year year, drive four points of margin expansion, at the same time continuing to invest in the areas that we believe will support our future growth. And then with respect to pricing, you know, first, we haven't included any upside to our revenue guidance this year associated with our new pricing model. Speaker 300:42:36As Scott mentioned, we're in the very early stages of our pilot, but the reaction from both sellers and customers has been very positive. In fact, it was a key selling point for the couple of customer wins Scott discussed in his prepared remarks. As we move through the pilot and round out this year, we expect to have more specifics to share. But at a very high level, we believe this model will unlock meaningful benefits for both our customers as well as for us internally. Just a few highlights I'd call out. Speaker 300:43:10With respect to our land and expand motion, this model should benefit deal velocity. It has a lower cost of entry and if customers so choose a more flexible usage based option. We believe it will also help our expand motion because the new model has usage tokens that can be seamlessly and fungibly used across the entirety of our platform and for different use cases. And then finally, and we've talked about this before, it should unlock some internal efficiencies as well, as it will enable us to streamline our deal desk and billing processes. So to summarize, pricing initiative is off to a great start and expect to share more specifics as we move through the year. Speaker 500:43:59Super helpful. Thank you both. Operator00:44:03Your next question comes from the line of Clark Wright with D. A. Davidson. Please go ahead. Speaker 600:44:09Hi, thanks for the question. Sticking to the pricing changes, I would love to understand how conversations around the actual pricing changes are impacting new deals or potentially reducing friction in the new business process? Then I have a follow-up. Speaker 200:44:25Yes, Mark. I would tell you, it's viewed as very favorable. Most SaaS companies have a usage based entry level product where clients can try and then you can scale together. We've been slow to offer that. This is a game changer for us. Speaker 200:44:53And a couple of clients, the new logos that we won and arguably the world's biggest QSR, we were doing a little bit of work with them. But this is a much bigger opportunity for us. I mean, they specifically called it out as one of the reasons they chose us. Because they didn't have to make that big upfront commitment. There was a way to grow into it together. Speaker 200:45:24And so that coupled with the opportunity that we see in terms of getting some of these network flywheels up and started, it solves the problem for us. There's kind of three things going on. One is the network flywheel. Two is the platform modernization that should make our products simpler and more accessible to anyone, lowering our cost to serve. And then three is the new pricing model. Speaker 200:45:54And so although it's early, we're pretty optimistic about this. That said, and I think this is an important thing. We are going to be very methodical about how we roll this out to our existing clients. And so we know when our renewals are scheduled, we'll start those conversations well in advance. And we're not going to do anything that impacts our financials or hurts our clients. Speaker 200:46:27So we're going to be really smart and very methodical step by step about this with existing clients and very opportunistic with new prospects. Speaker 600:46:39Got it. Appreciate that clarity. And then Scott, maybe another one for you here. You talked about the fact several technology providers are competing for a share of brands AI budgets to solve for data driven marketing and advertising use cases. What do you think LiveRamp's right to win is in this rapidly changing environment? Speaker 200:46:57I love this question because it allows me to say something definitively to the market and to all of our folks internally as well. We are not an AI company, all right. We're just not. We are utilizing AI in a lot of the things that we do and build it in to make our products better. And so for example, at ramp up this year, we had a demo of something that will go live next quarter. Speaker 200:47:31I'm really excited about it. Instead of creating segments using Boolean logic and SQL queries, you literally use AI. And we're going to be the only company in the world that can allow a client to combine first party, second party and third party data to make really amazing AI segments. That's an example of how we use AI to improve our current products. And we'll do that in our queries, we'll do that in our reporting, we'll do that in our QA, we'll do that to enable our engineers to code faster, whole host of things. Speaker 200:48:14But in terms of how we interact with all of the AI companies that are out there doing amazing things, we're an enabler. We're not an AI company, we're an AI enabler. Because the big challenge that all of our clients have is that they're looking at all the things they can do. And the common denominator is if you build AI using the world's public information, you hit an asymptote, the models aren't good enough. If you start to fuel it with your own proprietary information, then you can unlock significantly better performance, greater personalization, everything just performs better. Speaker 200:48:58But the threat there is the complexity of why are your data to all those different touch points and also the security. Well, enter us because our clean rooms can be configured to go right into AI. And so we can configure, I have a vision of like if someone's doing something interesting in AI that matters to our clients, we're going to have an integration partnership with them with the right controls in place such that our clients can very easily activate their data into those models. Now I have a view that there won't be a single company that wins on all these models and we already see that that it's hyper fragmentation. A couple of companies might buy all the companies that build these models over time over the next ten to twenty years. Speaker 200:49:57But there's hyper fragmentation and so that really plays to our advantage. That complexity is exactly the problem that we've always solved with data activation and now we're just extending data activation to AI activation. So I think it's a really interesting opportunity for us. You can see that we already announced like our partnership with Perplexity, we announced with Chalice. And I think you'll see a host of other partnerships because literally it's a big priority for our business development team. Speaker 600:50:35Appreciate that clarity. Thank you. Operator00:50:40And it seems that we have no further questions. I would now like to turn the conference back over to Lauren Dillard for closing remarks. Speaker 300:50:48Great. Well, thank you. First, to close, Q1 was a strong start to the year marked by double digit revenue growth, first quarter record first quarter margins and continued discipline in both execution and capital allocation. Second, real recent sales momentum has been strong and our clean room strategy is landing and we're on track to deliver progressively stronger top line performance as the year unfolds. And finally, we expect another year of strong cash flow and plan to deploy a substantial portion of this higher cash flow toward opportunistic share repurchases, reflecting both our confidence in the business and our continued commitment to driving long term shareholder value. Speaker 300:51:31With that, thanks again for joining us today. We look forward to speaking with many of you in the days and weeks ahead. Operator00:51:38This concludes the conference call. You may now disconnect your lines. Have a pleasant day, everyone.Read morePowered by