LiveRamp Holdings, Inc. Price & Performance (RAMP)

Afternoon, everyone, and thank you for joining our fiscal twenty twenty five third 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 Investor Relations website. With that, I'll turn the call over to Scott.

Thank you, Drew, and thanks to everyone for joining us today. With our Investor Day approaching on February 25, I'll keep today's remarks brief and focused on our strong third quarter results. During Investor Day, we'll provide a comprehensive update on our product roadmap go to market initiatives and multi year financial outlook. We hope to see you there. Either in person in San Francisco or via the live webcast. Three key takeaways. From Q3.

First, we exceeded expectations for revenue and operating income with double digit revenue growth for the fourth consecutive quarter. Second, sales momentum rebounded as our pipeline converted into new clients and upsells and data marketplace and usage revenue remained strong. And third, we continue making progress on our Rule of 40 journey and are prioritizing ongoing improvement. Exceeding expectations, We posted strong third quarter results exceeding our guidance and consensus on the top and bottom line. I'm particularly pleased with the improvement in our sales momentum which validates our strategy and product offering. We believe our data collaboration platform is uniquely positioned to capitalize on the growing demand from advertisers and publishers for enhanced measurement of digital advertising using first party data. Revenue increased by 12% marking our fourth consecutive quarter of double digit growth.

Operating income increased by 24% and operating margin expanded by over two points to reach a record quarterly high of 23%. Fiscal year to date we have generated $91,000,000 in free cash flow which is a 20% increase year over year. Sales momentum. Our sales momentum rebounded in the third quarter as the pipeline we've built year to date started to convert to new clients and upsells. Our pipeline conversion rate improved materially swinging from below trend in the prior March to well above trend in Q3. We think several factors were at play. First, the IT spending environment improved as concerns about the economy and macroeconomic policy receded. Second, customers are increasingly recognizing that data collaboration is critical for measuring outcomes in the fastest growing advertising channels. Such as CTV, commerce media and social. And for supporting data fueled AI models. Finally, our strategic focus and optimizations are paying off We've simplified our messaging and educated the market about the value of data [indiscernible] The tactical adjustments we made to our product and go to market strategy starting last spring are gaining traction with customers. As I outlined in the last earnings call, these adjustments made our platform faster, and easier to use for the use cases that matter most to customers, such as measuring marketing outcomes in CTV and retail media.

LiveRamp operates as a classic network business where scale creates a defensible advantage and a natural flywheel that further enhances the network scale and the value received by all participants There's been a lot of talk in our industry recently about marketing entering the outcomes era. A period in which all advertising is data driven, accountable and achieves measurable results. This trend benefits LiveRamp as our network enables a personalized customer experience at scale across all touch points with the ability to measure and optimize The scale of our data collaboration network is unparalleled. Consider some of these metrics. Over three fifty brand customers including 20 of the 25 largest U. S. Advertisers and 30% of the Fortune five hundred. More than 200 ad tech platforms such as DSPs, SSPs, marketing clouds and customer data platform 200 plus third party data providers. 70 plus ad agencies, including all six of the largest 10 of the 11 largest streaming platforms and over 30 retail and commerce media networks, including of the 15 largest. Even at this scale, we're not done growing. The current leg of growth is being driven by the need to deliver measurable outcomes a dawning recognition that few companies have enough data to go to loan and the desire to collaborate in a secure clean room environment.

Every marketer, media owner and marketing partner is judged on their ability to deliver measurable marketing outcomes. And you simply cannot LiveRamp, measure and optimize these outcomes without Calab Both the data owners and data consumers in our network and most companies now fit into both categories recognize that collaboration improves virtually every measurable outcome. Publishers and Commerce Media Networks use our Clean Room solution to enhance the value and effectiveness of their advertising inventory through improved targeting and measurement capabilities. Advertisers are able to seamlessly connect to a broad network of the premium publishers to achieve greater reach richer consumer insights, execute more sophisticated campaign strategies and measure their marketing outcomes. Such as return on ad spend, The customer upsells and new logo wins we had this quarter exemplify the growth across our network. We secured a high 6 figure upsell on a multimillion dollar two year contract with a leading mass market retailer in The U. S. The upsell spanned our identity, connectivity and clean rooms solutions, bringing their retail media network into our network as a data owner. We also signed a 7 figure upsell on a multimillion three year contract with a large quick service restaurant.

Who will be utilizing our cleanroom solution as a data consumer.

Our collaboration network is also helping with new logos, This quarter, we signed a top five retail media network to our Clingroom as a down owner for a high 6 figure ACV. Finally, we signed a 7 figure new logo contract with a two year term with a global hotel and resort operator. This contract included our cleanroom solution as a data consumer in addition to our identity and connectivity products.

As I mentioned, many of our clients are now serving as both data consumers and data owners. For example, the aforementioned hotel operator came into our cleanroom network as a data consumer to support their advertising efforts we are already discussing how to expand this relationship to include their commerce media network as a data owner node in our collaboration network. This improves sales momentum is partially, although not fully, reflected in several key operational metrics. ARR grew by 10% year on year, marking the fourth consecutive quarter of double digit growth. Net new ARR in the quarter was $8,000,000 This only partially reflects Q3 signings due to the normal one to two month lag between contract signing in the first invoice that triggers revenue recognition for ARR. Third quarter 16% increase quarter over quarter. While we typically see an acceleration in CRP quarterly growth in Q3 due to seasonality in our contract renewals 16% growth was significantly above the normal seasonal Of course, we know that a single quarter doesn't guarantee continued success. We're focused on maintaining this momentum and improving consistency of our execution. To support that goal, we're hosting our annual and partner conference ramp up in San Francisco at the February This event is a cornerstone of our commercial strategy and we anticipate engaging with over 3,000 attendees including hundreds of customers and partners, We'll hold more than three fifty customer meetings and announce platform enhancements focused on speed, ease of use and expanded functionality.

We're also excited to share new use cases, partnerships and innovations. Given the current momentum within our data collaboration network, we're more enthusiastic than ever about this year's ramp up. Rule of 40 progress. We continue to make progress on our Rule of 40 journey. Prioritizing ongoing improvement which we believe will unlock greater returns for shareholders. Based on our updated FY 2025 guidance, we expect to reach or surpass Rule of 30 with 12% to 13% revenue growth and an 18% operating margin. This represents hundred to 400 basis point improvement compared to FY 'twenty four. [indiscernible] Our medium term objective remains 10% to 15% annual revenue growth and FY 'twenty five will be the seventh consecutive year We grew above 10% since the Acxiom divestiture. While our revenue growth isn't always linear, Q3 sales momentum reinforces that we have the right strategy and product to meet substantial market demand for data collaboration. This positions us for strong growth over the Additionally, we see an opportunity to evolve our pricing model to better align our revenue growth with our customers' increasing data use for digital advertising LiveRamp and measurement. We'll elaborate on this at our Investor Day. Margin, We have a track record of steady margin expansion delivering 200 basis points of improvement this year to reach 18%.

We remain on track to deliver a 20% to 25% operating margin in FY 2026. Driven by cost discipline, savings from our offshoring initiative and the inherent drop down rate on incremental revenue in our SaaS model. We're confident that we're striking the right balance between investing for future revenue growth and delivering improved profitability. In closing, let me reiterate the key themes from the quarter. First, we delivered strong Q3 financial results with revenue and operating income exceeding expectations. We achieved double digit growth in both revenue and ARR above normal seasonality in CRPO growth and record high operating margin. Second, our sales momentum accelerated during the quarter driven by an improving IT spending environment and growing recognition amongst customers that data collaboration is essential for both measuring outcomes in key advertising channels CTV, commerce media, social and supporting data driven AI models. Our focus on simplifying onboarding educating the market and enhancing our products also contributed to this success. Third, we continue making steady progress towards Rule of 40. And expect 300 to 400 basis point improvement to reach or surpass Rule of 30 this fiscal year. We remain committed to delivering a 20% to 25% operating margin up from 18% in FY 'twenty five driven by cost discipline, offshoring savings and the high drop down rate on incremental revenue.

We hope you can join us on February 25 for our Investor Day. Registration information can be found on our Investor and please reach out to Drew with any questions.

Thank you again for joining us today. I also want to thank our exceptional exceptional customers, partners and all LiveRamp rampers 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.

Today, I will cover two topics. First, a review of our Q3 financial results and second, provide our outlook for FY 2025 and Q4. 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 site deck that is available on our IR website Starting with Q3, In summary, we delivered strong results above our expectations. Highlighting another quarter of solid performance. Revenue came in at $199,000,000 above our guide. And operating income was $51,000,000 above our guide. Operating margin expanded by two points to a record quarterly high of 23%. Subscription net retention improved by one point sequentially ARR grew 10% the fourth consecutive quarter of double digit growth. Let me provide some additional details. Please turn to Slide five. Total revenue was $195,000,000 up 12% with both subscription and marketplace above our expectations. Subscription revenue was 146,000,000 up 10%. Fixed subscription revenue was also up 10%. In line with our low double digit expectation. Subscription usage was up 9%, ahead of our expectation of flat. As a percentage of total subscription revenue, usage was 16%.

Slightly above the 10% to 15% historic range. ARR was $491,000,000 up 10% year on year.

And quarter on quarter grew by $8,000,000 driven primarily by upsell. [indiscernible] Subscription net retention was 108% ahead of our 100% to 105% expectation driven by stronger usage. Total RPO or contracted backlog was up 6% to $579,000,000 Current RPO was up 13% to $434,000,000 As Scott mentioned, the sequential increase in CRPO was above normal seasonality reflecting the improved sales momentum in the quarter and a larger volume of successful renewals. The selling environment improved notably in Q3 compared to the prior March. Our conversion rates swung from below trend in the prior quarters to above trend in Q3. We think the improvement was driven by a combination of an improved IT spending environment, reduced concerns about macroeconomic growth, and the tactical adjustments we made to our product and go to market motion. Demand signals and our sales pipeline remain robust. So we're optimistic we can sustain the recent momentum. Marketplace and other revenue increased 20% to $50,000,000 Data Marketplace, which accounted for 78% of Marketplace and Other revenue, grew by 18% reflecting continued strength in digital advertising markets and in particular CTV which now accounts for roughly 20% of data marketplace revenue. Moving beyond revenue, gross margin was down 0.5 year on year.

Operating expenses were 100,000,000 up 6% and lower than we expected due primarily to the timing of certain investment projects. Operating income was 45,000,000 up from $36,000,000 a year ago. And our operating margin expanded by two points to a record quarterly high of 23%. GAAP operating income was $15,000,000 reflecting the impact of stock based comp and purchased intangible asset amortization. Stock comp was $27,000,000 up from $17,000,000 a year ago. The increase reflects a benefit in the prior year from accelerated vesting for tax planning purposes. The current year also includes the impact of the Haboo acquisition. Operating cash flow was $45,000,000 up from $17,000,000 a year ago. Reflecting growth in adjusted EBITDA and improved impact of working capital changes. We repurchased 10,000,000 in stock in the fiscal third quarter bringing the fiscal year to date total to $76,000,000 There is approximately $282,000,000 remaining under the current authorization that will expire at the end of calendar twenty twenty six. In summary, we posted strong results in Q3 We saw a nice improvement in the selling environment, and in our own sales execution. Our marketplace growth continued to outpace market growth and we remain disciplined with respect to costs.

Let me now turn to our financial outlook for FY 2025 and Q4. Please 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 revenue guidance to be to between $741,000,000 and $743,000,000 up 12% to 13% year on year. Relative to our prior guide, this is $4,000,000 higher at the midpoint. Passing through the Q3 B. We still expect fixed subscription revenue to be up low double digits but we now expect subscription usage to increase high single digits. Up from mid single digits Our outlook for subscription revenue assumes net retention Our This is a few ticks below Q3 which benefited from above trend subscription usage as well as the acquisition of Habu, which gets lapsed starting in Q4. [indiscernible] With MarketPlace and Other, we now expect growth to be approximately 20%.

Up from high teens previously. We expect gross margin to be at the low end of our 74% to 75% range.

Reflecting short term investments to improve platform reliability and data processing We expect non GAAP operating income to be 135,000,000 up 28% and representing a margin of 18%. Up approximately two points year on year.

On the Rule of 40 framework, we expect to reach or surpass Rule of 30 for the first time. Given our guide of an 18% operating margin plus 12% to 13% revenue growth. We expect GAAP operating income to be $10,000,000 Lastly, we're on track to use this substantial portion of this year's free cash flow for share repurchases. And we will be opportunistic in fiscal Q4 depending on market conditions. Now moving on to Q4. We expect total revenue of between $184,000,000 and $186,000,000 dollars non GAAP operating income of $22,000,000 and an operating margin of 12%. Up three points year on year. As a reminder, Q4 is seasonally our highest expense quarter. Due to ramp up and payroll taxes. A few other callouts for Q4. We expect subscription revenue to be up high single digits across both fixed and usage. Marketplace and other revenue is expected to be up approximately 10%. Note that the Q4 data marketplace comp and our guide assumes the two year STACK growth rate remains stable sequentially in Q4. The expected deceleration in revenue growth in Q4 to reflects both the lapping of the Haboo acquisition as well as the challenging sales environment we experienced in the prior March.

Gross margin is expected to be 73% and we expect stock based compensation to be approximately $26,000,000 Before opening the call to questions, I'll conclude with a few final thoughts. We had a strong Q3 ahead of our expectations on the reflecting strength with existing customers and healthy digital ad markets. Operating margin expanded by two points to a record quarterly of 23%. We increased our FY 2025 guide for both revenue and operating income.

And finally, our sales momentum rebounded in Q3 we are making significant progress in scaling our data collaboration network. Our sales pipeline remains robust and we're focused on sustaining the current momentum. On the bottom line, we continue to carefully and smartly manage costs.

We're executing well against our offshore initiatives and continue to aggressively manage costs. We remain on track to deliver 20% to 25% operating margin in FY '20 On behalf of all LiveRampers, thanks again for joining us today and thank you to our amazing customers and partners. Operator, we'll now open the call to questions.

Your first question comes from the line of Sean Patil from Susquehanna. Please go ahead.

Hey, guys. Congrats on the strong results. Shattar, I just had a question for you. You talked a little bit about improved sales momentum in the quarter and I know this has been a topic that we've talked about for a while, but that was great to see. I was just wondering if you can maybe provide some additional color on the drivers of the turnaround there? Thank you. Yes. Thanks for the question, Shrom.

Improved sales momentum always starts first and foremost. With great salespeople. And I just want to give a call out to our team there because internally, I'm always hard on them and I always say, hey, it's never good enough. But we have a lot of experienced sellers. I was with one of them yesterday in the Midwest. And every time I see him in action and how knowledgeable they are about our clients' businesses, what great stewards they are of client results, I'm always so impressed. And so it starts there. But it's complemented by the fact that we are the scale leader. And in this business, network scale means everything. Product is important. And we always need to strive to improve our product. But part of our product efficacy is the network effect that we generate. And so when you're talking about data clean rooms or data collaboration, a lot of the value that each participant gets is caused by their ability to connect and collaborate with everyone else that's part of the network. And so we have a nice flywheel going. In fact, in the Midwestern retailer I was at yesterday, they told us, they said, hey, we chose you because [indiscernible] When we talked to everyone in the ecosystem and everyone we wanted to partner with, our publishers, our merchant partners, they all said that they worked with LiveRamp.

And so when you hear that kind of thing, the flywheel gets moving and scale breeds more scale. The third thing that I'd point to is just our pipeline. And it's been frustrating the last couple of quarters to be on these calls and talk about how nice our pipeline was But yes, our frustration around converting that pipeline into into closed contracts. I feel like perhaps in the wake of the budgets were unstuck. And we saw a real infusion. We saw our conversion rate increased pretty materially off of what were real low points in the previous quarters we had just a nice rebound. And that was particularly true in connectivity and clean rooms. Where our both our additions to clean rooms for instance, doubled in terms of new nodes and our usage [indiscernible] And when you see both new nodes and increased usage, that also fuels more data consumption. And so you saw that in our marketplace. So we really saw started to see everything hitting on all cylinders.

Again, I'd reinforce what I said in my prepared remarks. One quarter is a data point.

Now we need to string together trend lines. But based on what I'm seeing in the marketplace, I'm pretty encouraged.

Yes. And Shyam, I might just put some additional numbers against what's Scott said. So as Scott mentioned, sales were up nicely across all elements of our product suite, but most notably in our connectivity and clean room solutions. Conversion rates nearly doubled from where they were in the preceding three quarters.

Our sales cycle for new logos improved meaningfully Our average deal size ticked up nicely. It was up over 25% versus recent quarters. And finally, our renewal rates in the quarter were at a ten quarter high. So just really strong to Scott's point, really strong sales execution across the board.

Your next question comes from the line of Mark Zutowicz with The Benchmark Company.

Thanks very much. Hi, Scott and Lauren. It's really nice improving metrics, RPO, ARR retention.

Curious on a couple of fronts on data marketplace, which was also very strong. Just curious if there was much Oracle impact there. In the quarter and if you expect the CNE impact in the fiscal fourth quarter And then as it relates RPO, just curious if you think about contract renewals, and the pace that you saw in the quarter, how that influenced your RPO number and sort of what pace you think you'll see in terms of contract renewals again in in fourth quarter relative to the third quarter? Thanks. Yes. I'm happy to take both, Mark. So first on Oracle, just given the scale and breadth of our data marketplace business, it's hard to perfectly tease out the benefit from Oracle versus other factors including seasonality. Oracle had about 45 data providers in its marketplace And we were already working with the majority of them. And just for context, we've got about 200 active data providers in our marketplace. That said, our best estimate is that Oracle added a few points of growth to data marketplace in Q3 and we we would expect that to continue moving forward. And then with respect to RPO, first, seasonally, we always see strong quarter on quarter growth in RPO in Q3 and this reflects seasonality in our contract renewals.

Second, of the increase in total RPO, about 80% of it was associated with CRPO and that really reflects the strong sales momentum both Scott and I discussed in our prepared remarks.

And then finally, the non current portion also increased nicely and we think this is a reflection of the continued traction we're having signing our customers to multiyear deals upon renewal. Q4 is also a seasonally high renewal quarter for the business and we feel good about our ability to maintain renewal rates [indiscernible] Thanks. That's helpful. And if I could maybe squeeze one last one in, just around the EBITDA, just EBITDA guide. I know you talked about seasonality you typically have. Is there a bit more seasonality this year versus the last couple of years that you're expecting? Are there any other one time potential items in the quarter? Just curious on that point. That's it for me. [indiscernible] Great question. The sequential increase in OpEx this year between Q3 and Q4 is roughly in line with what we seen in prior years. Of the $12,000,000 increase, about half of it relates to seasonal items and events like payroll, taxes and ramp up as I mentioned in my prepared remarks. And the remainder is due to some one time project spend. So spend that shifted from Q3 into Q4. So those would be the two drivers I'd call out for the increase in OpEx in Q4.

Super helpful. Thanks, Lauren.

Your next question comes from the line of Jason Kreger Craig Hallum. Please go ahead.

Great.

Thank you, guys. I just wanted to stay on the top of just the sales momentum and ask that just in terms of what you're seeing that would give you indication of the durability of that? And then kind of to contrast that with the Q4 guide, like the trajectory of growth that we're seeing, if these sales improvements continue, do you think that can drive better momentum exiting Q4 and give us a better indication Well, let's start Jason with your second question. Anytime we win new clients and secure upsells, that derisks us going forward. But it's the curse and benefit of SaaS, right? You see it kind of six months in the future, as opposed to immediately. And so the things we do this quarter will really show up in a stronger back half of next year. So in terms of what gives me confidence, I do think it's durable. And the reason I say that is because we're in such early stages with all of the data collaboration, commerce, media, and CTV opportunities in front of us. In CTV, for instance, with almost all of our providers and we work with all but one of the top 10, I think.

So we're really strong there. But what you typically see is companies start by activating their own datasets, their own CRM targeting schemes, on CTV providers. It is not yet the case that many of our advertisers have started to think about the combination of their data plus the CTV providers deep rich audience data to combine new segments. It's a huge measurement opportunity with all of those CTV providers. In the data collaboration space, it's the case that most of our clients are only activating single digit number of edges or number of use cases. We would expect that to continue over time and as it does our usage grows fairly significantly. And so so all the things that we've done up to this point are really seeds that will blossom over time. And what we found is that the more use cases that any client activates, whether it's destinations or [indiscernible] So we think we see that, for instance, in our declining churn. We had a really nice renewal quarter. So again, scale breeds scale. And scale should breed more growth over time. We like where we're at, but now we need to deliver on it.

Appreciate that Scott. Thank you.

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

Great. Thank you so much. I wanted to follow-up on the comment around some of the sales tactical changes that are benefiting execution. Just as it relates to sales efficiency, where are you now versus your targets Are we getting back to those historical norms? Or how should we think about the further runway to go on improving that?

Yes, Elizabeth, listen, we're never going to be where we want to be in terms of our selling efficiency. And relative to say where we were a year ago, we're not where we'd like to be. Now quarter on quarter, we took a nice step forward. And so I think we you're going to see this in our business going forward. We have disproportionately high fall through rates And that's true kind of across the board. It's also true in sales. So we would expect that our focus is going to be maintaining the seasoned sellers that we have and watching them build their books that they already have.

And I think you'll see that drive progress in Rule of 40 going forward for us.

Yes. Elizabeth, if the question if your question is whether we've kind of rebounded from some of the sales capacity challenges we faced a couple of years ago. The answer is unequivocally yes. We really like our sales capacity at this point and we'll continue to add to it as appropriate to support revenue growth. But built back from the deficit we faced a handful of years ago. I would also just add, we're seeing nice progress with our channel partnership strategy as well.

And I think for our business, we think about channel partners across a few dimensions. There are the traditional kind of systems integrators, I think over the past few years, we've talked about closer partnerships with the cloud. And then finally, to Scott's point on network, and the flywheel of our network, we increasingly think about the big commerce media network nodes as channel partners that we leverage for new logo both new logo acquisition as well as kind of growing the usage of existing customers. And I think that's played out really nicely for us. We think there is a continued opportunity to tap into channel partners moving forward. Great. And just as a follow-up, I wanted to ask on the customer side. The total customer count looks like it had a little bit of pressure. And then the greater than $1,000,000 was about the same as last quarter. Just given some of the comments around sales cycles improving, retention improving, Habu likely giving more access to that mid market segment, there any other incremental pressures kind of going on in the customer side when should we start to think about that needle moving forward? Yes. I'm happy to take this one and I'll address total customer count and then $1,000,000 plus customer count separately.

So with respect to total customer count, I would say the trends here have been pretty consistent. [indiscernible] [indiscernible] smaller lower ACV customers and in part due to broader market consolidation. In addition and to your point, over the past couple of quarters, we've also shifted several small international customers from a direct to a reseller arrangement and this is pressured the metric. Moving forward, we do believe this metric is stabilizing, especially as we work through this international transition I just mentioned. So we think that's positive. On the $1,000,000 customer count side, as we talked about, we had a very strong sales quarter, including adding several million dollars plus ACB deals. However, not not very many of these deals showed up our $1,000,000 plus metric this quarter just due to the lag between when deals close and when they show up in revenue and customer count, we would expect this metric to show more strength next quarter. That said, if you just take a big step back, I mean, the trend here is is pretty clear and pretty positive. Year to date, million dollar customers are up 20% on top of being up 20% last year. And I think this really highlights our ability to upsell to more use cases as well as attach newer solutions like [indiscernible] we feel good about our ability to drive growth from this cohort moving forward.

Great. Thank you so much for the additional color. Again, Your next question comes from the line of Alek Randolo with Wells Fargo. Please go ahead.

Hey, thanks so much for the question. So I think one of the one of the positive factors you cited on the better bookings in the third quarter were the optimizations you made to the product in October I think the lesson is kind of like the easier you make the product to use, the better the funnel conversion is. And so can you maybe give us some insight into those next couple of iterations you're thinking about as you kind of move along the journey making the product easier to use? Thank you.

Yes, Alec, and hopefully you're going to join us for ramp up at the February, because you'll actually see in a way that you haven't before at both our Analyst Day on I think it's the twenty fifth and then also the next day when I do my my keynote to kick off the conference, you'll see kind of more product demos than you have in the past. I would tell you that if I were to think about kind of three areas of enhancements that I would will just be consistent improvements in usability And I'll tell you exactly what I told our internal team I was sitting through a demo the other day and it's kind of like V2 of our clean rooms. And no one else even has a V1 yet. But it's still not good relative to what you'd expect it to be. It's significantly better than anything that's ever been used in the industry before. But it has to be so simple and intuitive that someone who's not a data analyst not a data scientist can just pick up the tool and start to create.

And so you'll see us incorporate more AI into our queries. You'll see us standardize more and more of our reports because what we've realized is that this is the proverbial eightytwenty rule. Where if you standardize reporting, you 80% of the functionality and then you can build, more bespoke bespoke reporting later on.

The second big improvement that you'll see in emphasis is really around measurement. Measurement becomes so important as more and more of our clients are connecting with more and more CTV destinations, social destinations, AI destinations, and ingesting more data. They need to understand how all those comp complicated pieces fit together to drive a holistic result And so we've really put a lot of emphasis on our cross media insights to make that easier to use and scale and also the reports easier to interpret [indiscernible] at ramp up as well.

And then the third area really doesn't speak to something that's visible in product. But it is a product lift and that's more integrations. You'll see even more use cases from us in future and a great area for expansion, an area that we really want to push on is the use of AI in all of our partner capabilities. AI regardless of who's talking about it, most AI models to this point in time have been trained on all the world's public data. Well, a lot of the most valuable data in the world is owned by the enterprises we work with.

And so, we've tried really hard to configure that data sets that it can be ingested very easily. And our partners maintain control of that data. The data doesn't necessarily activate a variety of different applications. We've already talked about Perplexity. As one of our AI partners. We've talked about Chalice. And I would imagine a year from now, we will have a menu offering that kind of goes row by row. What is the use case that you want to identify? And I would like to have at least three partners for every major use case such that all of our clients and partners have a variety of choices when they're thinking about the AI applications that they can use to generate better results. Again, that's an important piece of our product that doesn't necessarily require a change in the UI or the architecture, but it is kind of a heavy integration lift to ensure that we're integrating with all of these new AI applications that improves the efficacy of how people experience LiveRamp.

More to come. Hopefully, we'll see Alec on the 20 I will I will. Thank you for the public call. I will be there.

Awesome. Your next question comes from the line of Kirk Materne with Evercore ISI.

Yes. Thanks, Scott, and congrats on the quarter.

Thank you, Kurt. Could you just talk a little bit about anything you're seeing in your discussions as it relates to just AI and the need for a lot of these new models to transact on top of data? And that I guess having any kind of halo effect for you all or is it helping you get pulled into more discussions? I'm just trying to get a sense on you guys obviously play in the world of data and AI sort of requires it. So I'm just kind of curious how you all are filtering into some of this discussions enterprises might be having right now.

Yes. I love the question, Kirk. Thanks for asking it. And I would tell you, I think over time investors are going to start to view us as one of the the potential investment vehicles in AI because AI only works if you can feed it with valuable data, And the valuable data is sitting with our clients And we see kind of three manifestations of this. First, we know that more useful data drives better model efficacy. And so so throughout our client base, data collaboration customers by partnering with one another and collaborating on data can access better collective data that is authenticated, I. E, permissioned for use in their models. The second thing that we're doing across our clients and early on this, is we're helping them transform their existing data into synthetic data. Which is so important when they start to test different AI models They don't always want to use their actual data. And if they train their models, they test their models, on synthetic It's far more secure and gives you a really good indication as to whether the model will work or not. So early stages on that. And then the third, which is what I was just talking about with Alec is more use cases.

Anybody who's been to CES, the consumer [indiscernible] the IAB Annual Meeting I mean, it's crazy. You walk around with your name badge and like literally thousand people want to grab you and talk about their latest AI Apple There are so many innovative companies being spun up around AI And we view our role as much the same as we did ten years ago in the ad tech space. Why do we have 65 DSP partnerships? Well, it's because ten years ago, we didn't know who was going to win.

So we secured partnerships with everyone. And then over time, DV360 and Amazon and Trade Desk emerged as the industry leaders. Ten years ago, no one knew that. And likewise, today, no one knows who's going to win in AI. And so we view our role as securing partnerships with all of the contenders and then our clients will decide over time who the winners and losers in the AI space will be. And they'll probably be a similar wave of consolidation in AI in a few years that we're now seeing in the ad tech space. So early stages is where I'd end on this. I don't want to over hype this. I mean, we are very early on in AI development as an industry. But I think a lot of potential here.

Okay. That's helpful. And I think I'll leave it there. Thanks very 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. And I'll finish with just a few final thoughts. First, our third quarter was again a strong quarter with both the top and bottom line ahead of expectations. Our network continues to expand and momentum for our clean room solution continues to build. Finally, we hope to see you at our upcoming Investor Day and LiveRamp up the end of this month. With that, thanks again for joining. We look forward to speaking with you over the the coming few days and weeks.

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