Q2 2021 Liveramp Holdings Inc Earnings Call
[music].
Good afternoon, ladies and gentlemen, and welcome to slide ramps Fiscals Twentytwenty, one second quarter earnings call.
At this time, all participants are in listen only mode.
After the speaker's presentation, there will be a question and answer session to ask a question. During the session you want your press star one on your telephone.
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I would like to turn the call over to your host <unk> Chief Communications Officer. Please go ahead.
Thank you operator, good afternoon and welcome. Thank you for joining us to discuss our fiscal 2021 second quarter results.
With me today are Scott, how our CEO and Warren Jenson, President and CFO.
Today's press release and this call may contain forward looking statements that are subject to risks and uncertainties that could cause actual results to differ materially.
For a detailed description of these risks please read the risk factors section of our public filings and the press release.
Copy of our press release and financial schedules, including any reconciliation to non-GAAP financial measures is available at life ramp Dot com.
Also during the call today, we will be referring to the slide deck posted on our website at this time I will turn the call over to Scott.
Thank you Lauren good afternoon, and thanks for joining us today.
We hope you and your loved ones are managing to stay safe and healthy during this extraordinary year.
We delivered another strong quarter in Q2, with total revenue up 16% and subscription revenue up 19%.
Our continued growth amid a tough environment demonstrates our critical role in enabling the digital transformations and data driven strategies of our customers and partners.
Particularly in times of macro uncertainty when performance marketing take center stage global brands or leaning into our technology to consistently deliver better customer experiences and the business outcomes.
But the top line the strength of our model was again on display gross margin improved to 72% and we delivered our second profitable quarter in a row. Despite continued investments in our key growth areas.
This performance is a reflection of our strong network effects marginal economics, and the incredible leverage in our model.
Warren will walk you through the quarter in more detail. So for this call I thought it might be useful to frame my remarks by addressing three of the most common questions investors have asked over the past several months one.
What gives you optimism for the future.
Two.
How will identity evolve overtime.
And three what.
What does the future shape of Leibrand's business look like.
So what.
What gives me optimism for the future.
Library up is sitting at the intersection of several powerful secular trends that will fuel strong medium and long term growth.
As the world becomes more multi channel consumer behavior is shifting and organizations are increasingly realizing that a true competitive advantage lies and adding meaningful customer experiences.
Experiences that are personalized relevant and cohesive across all channels and all interactions.
Data is at the center of this and data driven experiences are the key to true customer engagement.
Brand differentiation and competitiveness.
At the same time, the global pandemic has forced organizations to think bigger innovate and transform to drive customer value.
As enterprise marketers look to gain any competitive advantage with data.
Existing strategies are being disrupted.
And use data strategies are forming.
Simply stated the breadth and depth of the brands data driven relationships must exceed that of their nearest competitor or by definition. They are added this advantage.
Nowhere is this more evident than the shift away from linear to connected television and the emergence of strategic data partnerships with which we are powering safe Haven.
These represent two mega trends from which lybrand is perfectly positioned to benefit.
We are winning in market, because we make it safe and easy for marketers to use data to deliver better customer experiences and gain competitive advantage.
We are uniquely positioned to help our customers build an end to end view of their customers by enabling data connectivity and collaboration within and across enterprises.
Like other SaaS technology companies are high level go to market strategy.
Centers on a land and expand model.
We focus our efforts on engaging the right set of enterprise prospects, our target universe has the global 2000 largest advertisers.
Enabling them.
With our platform and ultimately growing our committed revenue with them by activating more and more high value use cases overtime.
However, given the platform nature of our business, we have an incremental lever in our ability to extend by layering marketplace revenue streams on top of our core business.
Our land expand and extend model is working.
At our new growth initiatives like Safe Haven, and advanced television are generating considerable global momentum.
Lands.
We closed another solid bookings quarter and in particular saw nice rebound the new logo wins.
We added 15 net new direct subscription customers in Q2, and our HCV for brand deals expanded to over 50%.
Compared to the prior year as we continue to have success selling more advanced use cases to both our new and existing customer base.
In the quarter, we signed a new contract with a major global gaming company to enable first party data activation for customer acquisition and personalization across display social and see TV channels in seven different markets, where they do business.
We also had a nice new logo win with Australia's largest supermarket chain the power people based addressability and audience activation.
This is particularly notable given the entire contract is predicated on Ats or cookie less workflows.
In addition, we landed a number of new Safe Haven customers Q2, which is notable given the fact these relationships are typically longer term.
At a higher HCV and often give us an opportunity to further grow our Tam.
More specifically businesses like safe Haven in television not only represent big expansion opportunities for us, but are also opening up entirely new markets and verticals that we have not historically served.
Consumer package goods.
In the quarter, we won a new activation in television measurement deal with a major package goods holding company as well as adding another global CPG partner and another top 10 us retailer and supermarket chain to our safe Haven roster.
Notably this progress has all all been made in the past 12 months and we are now live at three top 10 us retailers.
The expanded component of our strategy was also at work in Q2, and new product adoption from existing brand customers has become an increasingly material contributor to subscription growth rates.
Our subscription net retention rate was a healthy 100 million per se and we now have 62 1 million dollar plus customers.
Along with Safe Haven television has and continues to be a big driver of Upsells Rctv business was again up over 70% in the quarter.
As eyeballs and dollar shift the CTV Cross channel measurement and in particular outcome based measurement has become critical to marketers looking to demonstrate ROI on their TV media investments.
For example, we recently expanded our relationship with Honda to.
Help scale their measurement footprint across all of their television investments, including the linear addressable and CPV.
Well, a promising trend line is emerging around multi product adoption white space with existing brand customers continues to be a significant opportunity for us.
This is perhaps most significant with television measurement and safe Haven.
All of which serve important and emerging customer needs.
And finally extend.
As I mentioned Leibrand's unique position gives us an additional lever for growth.
The ability to extend our marketplace business, while leveraging our core platform.
Marketplace, another performed better than expected in Q2.
While linear television transactional revenue remained pressured.
In line with industry trends, our data marketplace was up 27% driven by the stronger than expected recovery of digital advertising.
And expanded relationships with our big marketplace partners.
The flight to quality trend continues to benefit our data marketplace and early indicators suggest Q3 will benefit from the seasonally strong holiday quarter.
While linear television will remain a headwind throughout this fiscal year. We are encouraged by the slope of recovery for our core data marketplace business.
To summarize live ramp is sitting at the intersection of several powerful secular shifts our land expand and extend model is working and our new products are winning.
While our growth will never be exactly linear we are building a strong foundation for growth over the next decade and beyond.
Next as the industry continues to transition away from third party cookies and other device level identifiers to more stable consumer friendly technologies. Another common question. We've received this how is identity going to evolve over time.
The short answer.
We see our role as capitalizing the wide spread industry collaboration.
That way, we think everyone in the industry will win as a result of our efforts.
Seismic shifts have afforded our industry the opportunity to come together and create an ecosystem that is better and stronger than what existed before.
Valving privacy regulations and policy changes from browsers and device makers make industry collaboration imperative to ensuring the success of a fair competitive an open internet centered on a value exchange between content providers and consumers were.
With Ats, we're creating an infrastructure that allows publishers to build direct consented relationships with their consumers through authentication.
In effect Ats enables a direct connection between publisher CRM data and barcode or data to power people based advertising and measurement on the web display in App and connected television without being reliant on third party cookies or device identifiers.
Ats is gaining strong industry support because it is neutral open and interoperable.
It is consumer first privacy centric and secure.
It is people based and Omnichannel, which is a big selling point for our customers, who do a lot more than just programmatic and need a solution that works across all the different media and customer experiences.
And finally.
EPS is a global scale and it is available in the top markets, where our customers do business.
Today, either live or committed we are working with more than 25, SSP fees or supply side platforms, including four of the five largest platforms.
More than 45, dsps or demand side platforms and more than 215 global publishers.
Including 60% of the US Comscore top 50, representing over 14000 distinct web properties, and reaching well over 90% of the U.S. addressable population.
We also recently announced that moving forward the trade desk will leverage our infrastructure.
This announcement cement live ramps role as critical neutral technology for the entire ecosystem.
While we are thrilled with our continued progress scaling ats.
Perhaps most encouraging are the early results Ats is delivering for our customers and partners.
Has become very clear that we are building a solution that is significantly better than what it will replace and all all of our constituents stand to gain.
HTS is delivering better marketing results than cookies accrue.
Across nearly three decades of digital marketing the kinds of results that EPS is delivering and the early brand campaigns and the only previously been observed with the launch of search and later the initial results of behavioral targeting campaigns.
On the last call I shared the results of a case study with Fitbit, where fit that saw a two X increase in return on AD spend when leveraging hps versus the control group of bidding on cookies through a major DSP.
They also saw meaningful improvements in cost per page view and average order value.
We recently completed another case study, which will be published soon with a major technology company and saw very similar results up to 190% improvement in ROI.
EPS is helping publishers make more money.
Publishers are also seeing significant lift with EPS. For example, recent analysis showed that EPS garnered significantly higher cpms across all major browsers translating to higher revenue for publishers.
Uncrowned yields increased by 50% what alive ramp I'd was present and not surprisingly on browsers that currently block cookies the impact was even greater.
On Safari traffic publishers are realizing a staggering 375% yield improvement.
And finally.
EPS delivers a far better consumer experience.
Consumers are able to participate in the value exchange of the internet and receive more personalized experiences and offers while maintaining choice and control over their data.
So let me summarize.
Ats works actually better than what it will replace.
It helps publishers make more money.
An ats has reached critical global mass.
Finally.
The third question I'd like to address before turning the call over to Warren.
What is the future shape of our business look like.
Let me start by saying I am so proud so proud of how our team has risen to the challenges of the pandemic.
I could not be more pleased with our execution during this uncertain time.
The power of our software as a service model is playing out as we continue to scale well beyond our existing run rate.
Our land expand and extend model is working.
We are proving we can layer incremental revenue onto our existing infrastructure with very manageable incremental investment.
We recorded a second consecutive quarter of profitability and generated positive operating cash flow and free cash flow.
And I am pleased to report that we now expect to be profitable for the full year.
But keep in mind.
Our opportunities are enormous and we're playing for the long the long term.
As we think about investment priorities and capital deployment our approach remains consistent.
Our first priority is to fund internal growth.
Here, we continue to expand our investment in R&D.
Second we continue to look at strategic M&A and partnership opportunities that deliver immediate value to customers and extend our reach further into the enterprise.
Finally, as circumstances warrant, we will opportunistically return capital to shareholders.
To summarize live ramp is capitalizing on several key secular trends our land expanded extend model is working.
And our customers and partners are leveraging our technology to enable their digital transformations and customer data strategies.
Ats is working and has reached critical global adoption.
And finally, our recent results reflect the power and potential of our business model. The long term shape of our business is forming and my optimism for the future has never been greater.
With that.
Thanks, again for joining us today and a huge thank you to our exceptional customers partners and employees for their ongoing support and hard work I will now turn the call over to Warren Thanks, Scott and good afternoon, everyone.
And thanks for joining us today.
I also hope that you and your families have remained safe and healthy since the last time, we spoke.
We delivered another strong quarter and missed it tough macroeconomic backdrop and a challenging time for many of our customers we.
We increasingly find leibrand's technology to be core to our customers. Most important long term strategies and initiatives, we are fast becoming critical infrastructure.
Today I'd like to focus my remarks in three areas first.
First given update on Q2, and recent business trends highlighting the continued strength and durability of our model.
Next provide Q3 guidance and finally, a few high level observations for up by 21.
Q2 results, please turn to slide four.
We are durable hsas and our position of neutrality continues to pay dividends.
Despite the global environment, we had another strong growth quarter total.
Total revenue was up 16% and subscription revenue increased 19%.
The usage portion of subscription revenue with approximately 9%.
Overall marketplace was up 4%.
As Scott mentioned, our data marketplace, which represents roughly 75% of ongoing marketplace and other revenue was up 27%.
As expected, where we felt pressure within the transactional portion of our linear TV business.
Customer accounts were up in the quarter, we added 15 net new subscription customers.
Current RPL or our next 12 months backlog was up 13%.
As a reminder, the timing and contract length of renewals can and will cause volatility in this metric.
Our our ended the quarter up 18%.
Net retention was 111, while platform net retention was 109.
Next.
Our long term growth levers are in place and thriving.
Specifically I'd like to talk about Ats CTV Safe Haven.
As you think about these important products and capabilities all share some common characteristics.
Each leverages our existing platform. So they are very cost efficient each.
Each is global and each has a distinct but more importantly, a collective flywheel or network effect.
EPS.
As Scott mentioned, we now have reached critical mass globally we.
We see this as a foundational capability, which along with safe Haven will have a profound impact on our global opportunity and size of our business.
Connected TV.
We're in a unique position.
We bring together the strategic combination of identity neutrality and extensive global integrations. This.
This combination is foundational for cross screen and full funnel measurement.
As a result as advanced TV continues to take share our revenues naturally expand.
In the quarter, our CTV business was again up more than 75%.
And in addition, our TV value prop is resonating internationally.
In the quarter, we launched a TV measurement partnership with weak Telecom Francis third largest telecom provider.
In short no matter the screen, we enable every single TV ad to be addressable counted measured and valued properly.
Safe Haven.
Please turn to slide 17.
Life ramp Safe Haven is a platform, which enables permission based data collaboration at scale.
This capability is critical for brands long term competitiveness.
For example, the platform allows the retailer to safely collaborate with its entire CPG ecosystem to create a single view of the customer expand their reach and drive real measurement.
Further given the global nature of both Ats and Safe Haven, what is exciting is that a multinational CPG can leverage the safe Haven platform in every market and country. They serve using ats as the common connector.
While you will hear more about this in the coming quarters. This powerful global flywheel is already taking shape.
Safe Haven is also on a global role than opening up an entirely new Tam.
As you can see we have the beginnings of an incredible installed base.
We are already working with three of the top 10 us retailers and four of Europe's top retailers.
We are already working with seven of the top 50 largest global CPG brands.
We estimate the Tam for safe Haven to be approximately 6 billion, having now opened up the entire CPG ecosystem.
And finally, we are just getting started as we look to the future we.
We expect safe Haven to expand to many additional billion dollar verticals.
We've included a summary of the fly wheel illustrating why we are so long term bullish on the opportunity.
Ats connected TV and Safe Haven calls a long term winning global had.
And finally, our model is working and all trend lines point to the validity of our long term performance objectives.
Gross margin improved 90 basis points to 72% a record for Standalone library.
Productivity was driven by identity graph optimizations and the elimination of transmission spend.
We were profitable again in Q2, marking our second consecutive quarter of profitability.
We are also seeing tremendous leverage as approximately 70% of each additional revenue dollar fell through to the bottom line.
Even after normalizing for transmission spend and covered related savings.
In the quarter, we estimate coded related savings to a bend roughly 7 million.
In the us our operating margin was 4%.
Adjusted EBITDA was positive 4 million and both operating cash flow and free cash flow were positive 6 million another big milestone for ramp.
Finally, our balance sheet continues to be in great shape.
Our cash balance to 651 million a slight increase from the end of June.
Absent further repurchase or acquisition activity this balance should be a low watermark for the year.
And finally, we extended our repurchase program for another two years.
This will enable us to be opportunistic should circumstances warrant.
We have approximately 325 million remaining under authorization.
In summary, we are hsas and our revenue performance is demonstrating the durability of our business model.
We have products and capabilities in place that are leveraging the powerful secular trend toward transparency and addressability real measurement and permission based data collaboration.
Together, we believe these capabilities position us for strong long term growth.
We have a strong balance sheet and a demonstrated record of capital stewardship and finally, the strength of our business performance is a reflection of who we are as a company.
We are Switzerland, and we are agnostic provider of critical technology.
Now onto guidance for Q3 please.
Please turn to slide 12.
For Q3, we expect revenue of up to 113 million and non-GAAP operating income of up to 4 million.
Please keep in mind this guidance excludes intangible amortization stock based comp and restructuring and related charges.
A few other call EPS for Q3.
In Q3, we expect marketplace to seasonally benefit from the holidays that tempered by continued pressure from transactional linear TV.
We expect net retention to be roughly a 105%.
The sequential decline is being driven by an expected lower contribution from usage and to a lesser extent a slower rate of up sell bookings.
And we expect gross margin to be roughly 70% in Q3.
The slight sequential decline is being driven by incremental security related investment.
While we do not intend to provide full year guidance, a few high level thoughts.
Let's start off by stating the obvious the macro global pressures and uncertainties are real and we are not immune full stop.
That said.
We continue to expect halfway 21 to be a growth year in both subscription and marketplace. In fact, we now expect total revenues for the year to be up low double digits.
Based on demand and the scale of global customer requests, we see a significant opportunity for our safe Haven technology in TV capabilities.
As a result, we are electing to step up the pace of our feature development and geographic expansion.
Therefore, you should expect to see an increase in R&D in both Q3, and then again in Q4.
While this will dampen near term profitability, we're playing for the long term and the big price.
Despite these investments we expect to be profitable on a non-GAAP basis for the full year are.
Our projected expense spacing is highlighted on slide 14.
Other full year guidance items have been included on slide 15.
Finally, and most importantly, we ask that you be conservative in your expectations and in particular your Q4 top line estimates. This is a time to be cautious.
Before opening the call to questions I'll close with a few final thoughts.
First thank you to all of our customers and employees, It's you who make this company great.
Next we are Hsas and our model is demonstrating its durability and leverage and finally, it's a fabulous time to be applied ramp we are Switzerland neutral and agnostic.
Our products and innovation sit at the center of a strong secular growth trend and our global role has never been more important.
Operator, we will now open the call to questions.
Thank you and as a reminder to ask a question on each press star one on your telephone keypad to withdraw your question press. The pound key the first question will come from the line of Dan Daniel Salmon of BMO. Please go ahead.
Great. Thanks, good afternoon, everyone.
Scott Thanks for looking into the most popular questions yet.
It will put most popular we get is about the competitive environment and.
He's asking unified I'd 2.0, that's a big part of what we've heard lots about that from all parties, including you that's been great.
In the past you've also talked about how the digital economy, we'll we'll always have multiple ideas versus old advertising, which often only at one main form of measurement. So just high level can you talk about within all this competitive noise and there's much more beyond just unified I'd 2.0 to be sure.
He how do you think about library emptying the I guess largest most importance.
Largest revenue generator, how do you think the important what do you think the important things are tip positioning companies the company to be that and then just one just a quick one for you I guess that we sell them to share buyback. We use here. Just curious is that something you have a great appetite for at these levels. Thanks.
Thanks, and good luck.
Hey, Dan in terms of the number of identifiers, whom there are literally as you know does anything one thousands of different identifiers that exist in the marketplace many of them proprietary at clients or or publishers our goal from the get go.
Embedded in the design of a Ts was to be the Rosetta stone the translation layer that would tie all of these different identifiers together and allow anyone and everyone who's ethical in the industry to operate seamlessly and efficiently across all of those identifiers.
Again Ats from its inception was designed to be neutral and interoperable we.
We think that trade desk deal is no it's not a surprise to us we always knew from the get go that they were important partner an important destination for our clients and so of course, we would be interoperable with them. We love. The fact that different folks are out there talking about identity in the industry.
Because it's raising awareness of the need for the entire industry to move away from third party cookies and quite frankly as I think about how do we knit ourselves into the permanent fabric of the ecosystem and really take advantage of the opportunity before us.
It's no longer about simply the product the product works and you know I'm an old crusty guys, who grew up in the the Abi and industry.
I mentioned in my prepared remarks role is seen as a couple of times before the kind of lifts that were seeing both for advertisers and publishers it's phenomenal.
What we now need to do is raise awareness of everyone in the industry that it's time to shift to something better.
And some people may still mistakenly believed that Google isn't going to follow through on Deprecating third party cookies, we don't believe that to be true and even if that did happen. We know from the results I shared today that our solution is better for the industry and all who embrace ats.
We think we're at critical scale.
And Thats important I talked about 90%.
Alignment to kind of the addressable us market Thats really important.
To advertisers I talked about the yield improvements publishers are getting.
That's critical this simply works better and it's time for the industry to make the switch.
And then Dan I'll comment just briefly on the share repurchase announcement.
Just to remind everyone. We front end loaded our repurchases this year earlier in the calendar year when in a period of this significant market dislocation.
The reasons for extending was ready to give the company flexibility so in the event.
And in the events circumstances warrant we have the flexibility to be opportunistic and again the share repurchase was extended for two years, we have roughly 325 million on the authorization remaining.
Okay, great. Thank you both.
Thank you thanks, Tim.
Your next question comes from the line of Kyle Evans of Stephens. Please go ahead.
Thanks for taking my questions I persons pretty short and simple what is the competitive set for safe Haven could replicate that product then I've got a follow up thanks.
What's really pretty interesting Kyle is.
When you think about data collaboration data collaboration has existed for decades. Many of you have heard me talk about my experiences as CFO at Delta and Codeshare Codeshare was a great thing for the airlines and it was a great things from the concern for the consumer and represented collaboration amongst the airline.
What makes the safe Haven platform very unique.
It's really a few things that we can do either uniquely or better than anybody else.
The first thing is it's grounded in global privacy. So one of the things that we've done at lybrand bittersweet embraced privacy, we don't fight it in any way, it's really part of the fabric and everything that we do and we have a really comprehensive understanding of global privacy too.
The second thing I mean, a highlight is really identity in single view of the customer. So as you think about combining multiple data sets, whether youre a retailer as CPG, a healthcare company doesn't matter the industry. What we can uniquely do across all those data sets is create a single view of the customer and identity.
And Thats very very powerful and then the third thing is that increasingly as as something that's very very important in technology driven world is we are a scalable global platform, we're not a one off service structure.
But rather where scalable platform and when you think about the combination of Ats and safe Haven as I mentioned in the prepared remarks. This allows us to work with the CPG and literally every market in which they operate.
And Thats, just a big deal and something that makes us very very unique.
Great.
Your long term gross margin go up 75%.
It looks like Youre going straight add that this quarter.
Impressive margin expansion, there and now you're talking a little bit about future development international expansion.
And maybe some gross margin compression can you help us think about how that will kind of plays out over the next couple of quarters.
When you think if you care to <unk>.
Share.
We get to that.
Thank you.
I want.
Ill jump in on this one we won't talk about specific timeframe for reaching 75% I would call out obviously, our progression has been really excellent.
And you're seeing a lot of things I think benefit us when it comes to gross margin first of all just operational excellence. When we think about how were managing our identity graph. We just made some really terrific moves in terms of this sophistication with which is to how we manage our different sources and thats create.
Seeing productivity to in our infrastructure, we would expect long term to continue to drive scale.
The third thing is many of our new revenue sources really just leverage this infrastructure. So.
We have a fixed interest infrastructure in place and as we layer revenues on top of that.
That infrastructure, obviously, it scales and benefits on our gross margin and then for a while.
We're not we don't know the exact timeframe for the deprecation of cookies and Thats, a good thing and not only as Scott as Scott mentioned this is a great thing for the ecosystem and for our customers, but it also promise.
Promises good things for our overall gross margin so.
We're on the right track Q4, there is always going to be ups and downs will have quarters, where it goes up and maybe quarters of slight pull back.
In the third quarter were anticipating making some incremental security related investment.
Enhance our 70% guidance.
Thank you.
Thank you Klaus Christian.
Our next question will come from line of Stan Zlotsky of Morgan Stanley. Please go ahead.
Hi, guys. This is Mike said, Dan Humphrey Dan. Thank you for taking the question.
The first one I had was on your.
Turning to our IPO number as Alan noted that day declined.
Quite ever clear if you could just give us little color I know why that would happen.
Lets I'd be I'd be happy to and great question.
Just as a backdrop for everybody on the call, let me remind everyone that the timing and amount of renewals directly impacts our PEO and recurrent RPL or the next 12 months. So for life ramp in the next several quarters as is always the case, we of course have renewals and in some cases.
As renewals that are multi year.
So therefore in particularly as we think about RPL again end current RPL.
That puts a little bit of pressure on our numbers. So thats, what you are seeing in our numbers today.
The good news is we are used to renewals our value prop remain solid.
Okay, Thats very helpful and then.
And then the guidance there.
Getting five.
Thank God I can't sorry, and just to clarify that for Q3 crack and then also if you could just taken care, let out that line detail on why.
Hi that decline there I know you mentioned a couple of things there by Atlanta, Mark Hi, Anthony add any helpful. Thank you.
I'd be I'd be happy to it's really pretty straightforward as the change in variable. So when we look at where we are.
Sequentially from where we are going from 111 down to 105, it's literally almost entirely being driven by a change in variable. There is some impact let me just remind everybody. We are in the middle of the global pandemic and would be the first ones to say that were being impacted so too.
Some degree a lower contribution from from bookings as well, but mostly driven by variable.
Okay. Thank you Dave.
Next question comes from the line of Kurt return of Evercore ISI. Please go ahead.
Hi, Thanks, very much and congrats on the results Lauren maybe next year double clicking on your on your last comment laterals. We've added ancillary may rise is fairly global pandemic right now, but I'm. Just wondering if you can help us bridge kind of year end stays yasmin round, the long term versus wide.
It is challenging you near term, whether it's you have the ability to get new deals in that pipeline the visibility and pipeline closure because it sounds like you guys feel very good about the early reception to send these newer products you're investing behind inside when you're doing that because you feel good about the demand coming but obviously we.
I have a little bit of that bridge over the next six months so as far as he just give us an idea is it getting deals into the pipeline because the budget to date.
Inability to really forecast when they're going to close yeah. We talk yet your sales team, what's what's sort of the thing that that you guys are struggling with maybe from a visibility perspective.
Hey, Kirk its Scott so I'll jump in on this one I think we're all excited to put covert behind us.
But it's real and it's unpredictable and you know how we create our guidance we guide to things that we can see and.
Now more than ever it's time to be conservative because we don't know if there's going to be a double digit double dip recession here, we don't know how pervasive the recent uptick and co that will be and we certainly saw back in March.
A.
The impact in our variable usage. Moreover.
We know from experience over the last six months.
Yes, one of the most encouraging thing that we saw last quarter as we saw.
Net new wins, new logo wins, that's just harder to do though when we don't have face to face interaction with clients that don't have a great working relationship with us. So those are reasons for kind of near term conservatism.
I will tell you.
Incredibly optimistic about the long term.
[music] tour of our business and again I would point to three things Ats, where I also I already talked about why I am so optimistic in my prepared remarks, and again to Dan we think that.
The results don't lie there.
What we're doing is working.
And we think we're hitting a tipping point.
For identity to tip to HTS as kind of an embedded infrastructure for the industry connect.
Connected television were surfing, a secular trend thats, where were actually being aided by the pandemic more people than ever are connecting from devices at home and is chewing.
Linear television for connected TV I mean, the the stats that we're seeing there, albeit off a low base are pretty impressive bookings up over 100% Aer are up over 100% and revenue up over 70%.
And our Comscore deal that we talked about last quarter, well, a big chunk of that Didnt go live until October Onest. So we think we have some tailwinds there, but again off a lower base and longer term and then finally safe Haven Warren just talked about some of the reasons he's optimistic about safe Haven again.
Ken.
They are are up over 100% revenue up nearly 90% I talked about working with three of the 10 largest retailers in the US another four in the EU and by virtue of those relationships. They are introducing us to their partners, which over time.
Despite a pandemic gives us more confidence that we can reel in new logos.
So long term a lot of things that we really like short term, we're just really nervous about this pandemic and.
What could happen over the next three months.
If the disease trend lines follow what we've been seeing in the last few weeks.
That's helpful. And then one if I could just double click on safe Haven for a second can you give us an idea of sort of the magnitude of those relationships with the larger retailers are these clients that are already within Thats 62 that are paying you a million dollars, a year and and what sort of the timeframe for these days.
Yes, I would imagine they might be a little bit longer assumptions. The sales cycle perspective can you just sort of give us some dumb dimensionality around the opportunity there at least what you've seen thus far.
The great news is they're both existing customers and brand new customers.
For example, the large retailer that Scott spoke about top 10 retailer in the US that we signed this past quarter brand new customer.
So it's it's really across the board and the reason why we're able to penetrate an account like that is I think just given really the uniqueness of our value proposition.
And uniqueness of our platform.
A couple of additional points of color that I might add is even on average our average.
ACB is more than double that of a typical brand. So these are typically big ticket sales.
And there.
Sometimes a lot larger than that too and then finally I just want to reemphasize. The this is a global opportunity are safe Haven pipeline in Europe, and even APAC is.
Murden.
Multiples larger than where it was a year ago and again with some of the most sophisticated brands in the world.
And with those brands are doing is and we've just seen this happen in the market.
There are several engagements that were working on right now that.
Look to dramatically expand our global presence and the beauty of it is.
Our brand customers are leading us there, which is exactly what we want to have so we see unique opportunity great. ASP is a product that is very unique in the marketplace and third proud.
Product, which is opening up really a global Tam.
Thank you thank.
Thank you.
Your next question will come from line of time Fitzgerald with Wells Fargo. Please go ahead.
Thanks, guys, you mentioned really the strong hand, you have and safe Haven and Ats in CTV in late EPS.
I think in the example is being the connective tissue.
Thats extending.
That global Cpgs.
The ability to drive multi regional campaign I guess my question is how would you assess the current level of cross sell or up sell.
And then how much potential do we.
Have there.
Yes, I would tell you I think it's significant in terms of potential.
One of the things that we tried to emphasize with our sales force this year and particularly the back half is the importance of attach rates. We believe that for instance, one talked about safe Haven every time, we land one of those opportunities will that has a chance to pull in to.
That enrich Matt.
Yes, our core subscription.
Measurement capabilities and so.
There are all kinds of up sell opportunities.
I would say for our most penetrated upsell.
That would be probably data marketplace, we're still up so if you look at our attach rates of less than 20%.
Measurement would be less than 20%.
So.
Active television less than 20%, so just tremendous opportunity as we educate our clients and those that's great.
Great new bookings for us because it's a lot easier to upselling existing client.
A lot less expensive than going out and winning a brand new logo.
Yes, Thanks Scott.
And your next question comes from the line as Tim Nolan with Macquarie. Please go ahead.
Great. Thanks, I'd like to come back on a subjective measurement and attribution again.
Kind of a two part question I guess on on one topic could you give us a bit more color on the role of Ats and its participation in unified I'd 2.0 in terms of helping create aiming measurement system.
For understanding consumer behavior in response to advertising.
And the second part is regarding the data plus mass and Comscore.
Deal, which you just referenced only went live on October 1st I, just was going to ask if there is anything more you could you could discuss regarding that relationship and what is going on there. Thanks.
Yes, so for HTS, let me start there.
The the design principle behind HTS and indeed, all of our products at live ramp as we want to be neutral and interoperable. Our goal is to capitalize on our clients many of whom are direct brands.
Many of whom are other technology companies are marketing cloud providers.
And so with Ats, our goal is to be the Rosetta stone and.
Hello, everybody.
Reach addressable audiences.
That's going to entail that there will be other companies.
That will build their own measurement solutions on top of what we're doing.
And certainly trade desk, we'll do that.
They have their own algorithms and old own measurement capabilities built into their unified I'd built in to how they deliver choose which adds code to which users.
That's invisible to us, but we capitalize it were an important piece of that.
And going forward when we think about measurement, what we hear from many of our clients as the need for an end to end holistic measurement solution that includes television include programmatic display includes E mail and direct mail and other direct.
Directly addressable mechanisms.
We're building that but importantly, we're building that with CPI is such that existing measurement providers can embed our technology into what they're offering that explains some of the R&D increase.
The investments that we've made over the last quarter.
To make sure that our technology has the right size is modularized and is scalable so others can build on top of it.
Your second question remind me what that was about.
About data plus mark in Comscore, and how that relationship is going.
Yes, so so far so good we're really pleased to have them as a partner it's.
Significantly improve the number of connected devices that we could reach in the us.
US alone for instance by.
By adding in Comscores connected devices, we now reach over 80 million connect.
Connected devices.
So.
That is full steam ahead.
And when I last looked at the pipeline.
It is absolutely exploding.
As Weve educated our team and Comscores educated there's about what the collective partnership can do.
So I think we're.
We struck the deal at the right time to take advantage of a real secular trend going on in the industry.
Hence, hence my optimism for CPV.
Okay. Thanks, a lot.
Our next question will come from Richard Palmer Susquehanna. Please go ahead.
Hey, guys its John.
I had a couple of question.
First of all congrats on the on the continued strong performance.
Thank you.
The EPS adoption in partnership.
I was just wondering if guys you talked a lot about ats talked a lot about the partnership.
We had questions a lot about the economics and I was wondering can you talk about just how you're thinking about the economics.
Our EPS that's alive ran.
Is that does that evolve over time and then Lauren.
You got asked this question a bunch of different ways, but I was wondering if you can maybe talk about you know October November trends for subscription in marketplace revenue Theres.
Is there something you saw.
That's informing the the outlook or is this just kind of the same level of conservatism that you're taking over the past couple of quarters. Thank you.
Sean Let me start with the economics of HTS and if I make no. Other point, let me make this one really strong right, which is we design this to be good for anyone and everyone in the industry and so while I know your question is around our economics, let me start by.
By saying the economics are better for everyone publishers are generating higher yields advertisers are generating higher ROI.
And we think our importance in the ecosystem to catalyze.
That kind of performance becomes even even greater now how do we monetize that.
It's historically been through our licenses are core subscription right now that core subscription is really around personalization and measurement of a cookie enabled graph.
Over time that will transition to an ats enabled graph.
From a revenue perspective, it's slots in nicely I would think over time, our Tam increases because historically weve been aimed at kind of larger enterprise direct clients. We think Ats is a product that everyone and anyone in the industry.
Who's doing anything.
With addressable marketing they auto with embrace.
So we think thats going to expand its going to over time be a nice mechanism to win new clients and introduce them to our subscription model.
In addition, the other impact that you'll see on our economics is the cost structure with Ats is very different than the cost structure with cookies.
See that over time manifest itself in our gross margin one of our single most expensive expenses every year is maintenance of the cookie graph.
As cookies or deprecated that expense melts away and in some respect the earlier question about how quickly can we get to our 75% target margins is really in large part linked to how quickly our cookies deprecated if that happened sooner then we'll get to those margins will make.
Asked or progress.
The longer that takes time and you have to maintain the cookie graph, along with Ats will that would slow our pace.
And then Sean let me, let me just chat briefly about the guidance in short no change to our guidance methodology or level of conservatism as we tried to play it consistently throughout the year and that continues and.
And then finally I'd just repeat what.
We said in the prepared remarks, which this is a time to what ask you all to be conservative in your expectations.
Thanks, guys.
Thank you.
That's all the time, we have for questions today, I will now turn the call back over to Mr., Jeff for closing remarks.
Great. Thank you operator, and thanks, Thanks to all of you for joining US today and also again, thank you to our employees and also our customers most importantly I'd.
I'd leave you with a cup Vargas three quick slots to close.
First of all.
There will always be ups and downs, but I think one thing that we can say definitively as slight ramps Tam is expanding dramatically and it's expanding globally.
Ats is that critical mass, which is a big big deal.
Secondly.
I would leave you with the thought that our growth initiatives are working globally, whether its ats, whether it's connected TV are safe Haven. They all have a tremendous amount of momentum and then finally with the thought that our model is working.
If you were to go back over the last couple of years and look at our quarterly progression and year over year progression you can see that our model is scaling and you can see where the trend lines are taking us over the long term with that thank you all for joining us today and we look forward to the follow up calls.
This concludes today's conference call. Thank you for joining you may now disconnect.
And.
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