Q4 2022 Liveramp Holdings Inc Earnings Call
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 the.
A copy of our press release and financial schedules, including any reconciliation to non-GAAP financial measures is available at <unk> 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.
Thank you Lauren and thanks to all of you for joining us today.
Hoping that my prepared remarks today, we will highlight three fundamental takeaways about log room.
First as the economy enters a period of market uncertainty, we believe lie ramp is well insulated from macro economic headwinds relative to most companies.
We're resilient.
80%.
Subscription based and embedded into the very fabric of the data economy.
Second in.
In the recently completed Q4, we posted another.
Quarter of growth with a number of notable client wins.
And third.
We're by no means satisfied with where we are and have clear line of sight to areas that we think can improve our top line growth.
Profitability and return on shareholder capital.
First why ramps resilience.
Let me start by just addressing the swirling macro economic headwinds.
I always enjoy talking with wall Street at our fiscal year end as it provides a chance for both reflection on the path, we traveled as well as an opportunity to share our perspective on the next leg of the journey.
This year feels really different however, given the absolute chaos of the financial markets in recent weeks.
With the devastating war in Ukraine supply chain challenges rising inflation rates and volatility in the financial markets.
As well as lingering impacts of the global pandemic. This year has brought a significant amount of uncertainty.
As we have seen in the past broader market uncertainty can serve as a strong catalyst for library amps business.
As companies shift their dollars towards resources that more directly enable them to address and measure their marketing performance.
This not only plays into our strengths, but is the very reason we exist.
Since our founding over a decade ago live ramp has been recognized as a leader in the customer experience economy.
We've grown through multiple industry cycles, and ecosystem changes delivered category, creating innovation to our customers and future proofed our product for the next generation of data driven experiences.
Despite recent macroeconomic uncertainty we are entering FY 'twenty three from a position of strength with.
With conviction and our ability to deliver a balance of solid topline growth and enhanced operating profit.
All while continuing to transform customer experiences and generate more valuable business outcomes.
Moreover, our success in identity address ability and data collaboration have embedded us into the very fabric of the data ecosystem.
Case in point today more than 1500 publishers, representing more than 11000 domains are leveraging leibrand's authenticated address ability technology.
Including roughly 80% of the Comscore 50, and the major walled gardens.
These include both display publishers and mobile App inventory.
And there are a handful of great case studies on our website that prove how well our solutions are working.
In part due to these integrations live ramp is now connected to over 85% of consumer time spent online in the U S and continues to scale internationally as well.
For example earlier this year, we announced an expanded partnership with the trade desk to power their EU IV in Europe .
Taken together these successes secure our destination network.
And of course on the origination side, 80% of our revenue is comprised of predictable SaaS subscriptions.
Which help insulate us from large economic fluctuations.
Yeah.
Second.
<unk> continued to grow and win with clients in Q4.
In Q4, we exceeded our guidance across all metrics for the eighth consecutive quarter.
Total revenue grew 19% and subscription revenue was up 22%.
Normalizing for the wholesale contracts and total revenue grew 26% and subscription revenue was up 31%.
We exited the quarter and year with approximately $400 million in <unk>.
<unk>.
19% as reported and up 28% normalized for wholesale.
We're pleased with these top line results, which continued to be driven by the momentum in our land and expand selling motion.
In the quarter, we added 15 net new logos.
And continue to see particular strength in our large enterprise customer segment as a result of increased adoption of our enterprise product suite Safe Haven.
Our 500000 to 1 million customer count was up 30%.
And our 1 million plus customer count grew to 87.
An increase of 24% compared to the prior year.
In the quarter, we signed a new safe Haven deal with Colgate and the EU for projects in both the UK and France.
In a TV measurement deal with a major north American insurance provider.
Safe Haven also continues to be a big driver of account expansion.
For example, last quarter, we talked about a new safe Haven deal with J D Dot com.
In the quarter. We expanded this relationship to include an emerging new use case, enabling collaborative personalization on J D Dot coms owned and operated properties.
This is a great example of next generation retail media network use cases powered.
By our capabilities.
Another safe Haven expansion example from the quarter was with a major global agency holding company.
As part of this multi year strategic partnership live ramp will power the identity and collaboration suite.
For top clients in the retail CPG and financial services verticals.
Given the breadth of use cases enabled by the platform.
Safe Haven customers have higher acb's and upgrade at higher price points.
As we continue to upgrade our customer base to safe Haven, we expect the average length and size of our contracts to continue to increase.
And the average churn and contraction to remain lower than what we have typically seen on average.
Our subscription net retention in the quarter was 111% or 119% normalized for wholesale.
Turning to our bottom line, our gross margin expanded to 76% ahead of our long term target of 75% and.
And we delivered sustained profitability.
For the full year operating margin was roughly 8% up 400 basis points.
This performance reflects the leverage in our model and our ability to generate strong free cash flow across the business.
Which is perhaps a great segue to the final topic I would like to discuss.
Our focus on and commitment to value creation.
Third.
We are not remotely satisfied.
And have implemented plans designed for faster growth improved profitability and greater return for our shareholders.
Yeah.
As I, often remind our employees great companies have an ability to look in the mirror and never.
Never like what they see.
They recognize that there are always ways to better serve clients.
Grow even faster.
Prove efficiencies and build better market traction.
Live ramp aspires to be not just great.
But an exceptional an exceptional company.
And we recognize that we have many improvement levers, which can accelerate our success in the coming quarters.
Let me walk through a few areas of the business, where I don't think were hitting on all cylinders and we're I think there is untapped potential for us to pursue.
While some of these may explain our recent performance and near term outlook.
All of them represent opportunities to further improve on our operating plan for the coming year.
Opportunity number one.
Accelerate our topline growth.
Although we grew subscription revenue by roughly 20% over the past year.
I think we can do better.
We intend to accomplish this through four discrete initiatives.
One expanding our sales and marketing capacity.
Two.
Improving our product efficacy.
Sorry.
Expanding to new geographies and four.
Accelerating our partner channel efforts.
In FY 'twenty, two we came out of the blocks fast fast in bookings the early indicator of future revenue, but we slowed in the back half of the year.
Now let me be clear.
We're not we're not seeing material competitive headwinds.
Adverse economic conditions.
Or changing client demands.
The biggest driver is a product of the hot labor market of the past 12 months, we simply did not hire enough sales reps.
In the U S. For example year over year revenue increased by roughly 20% compared to sales and marketing head count growth of approximately 8%.
When you further refine this number to just experienced commercial salespeople, we were roughly flat.
We are already responding to this challenge with.
We've hired 18, new commercial leads over the past three months.
An increase of about 25% to our sales capacity.
With the influx of talent. We've also introduced new training and development programs to ensure sales reps are more persuasive well trained and enterprise selling and more effectively achieve their quotas.
We also hired a CMO and are in the process of building a more robust lead Gen program to provide qualified leads to our sellers.
And while we know that not every person we hire.
He will succeed we strongly believe that successful SaaS sales at scale is a math equation.
<unk> requires growing pipeline strong sellers and predictable conversion rates.
We believe that continued investments in selling capacity will fuel stronger long term growth.
Now in SaaS Theres, an old axiom that great product sells itself.
To this end we also think our recent refinement of our safe Havens suite will continue to pay dividends for us.
Some investors asked whether safe Haven is just another clean room.
The answer the answer is an emphatic no.
So we can work with almost any clean room or any cloud.
Safe Haven represents a holistic integrated suite of all of live ramps capabilities that can be easily purchased and used through a common user interface.
And as interoperable with all kinds of complementary technologies.
Major data destinations.
C D PS.
Storage and compute the clouds.
We work with everyone.
And there isn't a true competitor that has our breadth and scale.
All data is accessible.
Can be powered with identity can be activated anywhere.
And can be centrally managed with appropriate permissions and security.
This bundled suite is exactly how clients have expressed how.
Desire to work.
A simple buying process and user experience.
Seamless across hundreds of valuable use cases, and increasingly cloud agnostic so that clients can plug us into any partner.
Clients can explore new functionality and upgrade as their needs expand.
Today, we have over 40 brands on the Safe Haven suite.
These clients have higher annual ACB and a net dollar retention in excess of 120%.
Within the next year, our goal is to double the number of clients leveraging the safe Haven suite.
We think the migration will be relatively painless as existing onboarding or TV clients.
<unk> experienced disruption, but rather we will simply start to use a cleaner more intuitive UI with access to capabilities to which they may not have been previously exposed.
A third strategic initiative this year is to accelerate our international expansion.
The combination of Ats and Safe Haven has been a game changer for our international business and has allowed us to scale to new markets more quickly and much more efficiently.
Today, we serve over 40 markets up from 12, only a few years ago and.
In FY 'twenty, two our international bookings outpaced the U S and revenue for the quarter was up 33%.
We increasingly serve global multinational companies and believe we have a long runway for growth here.
A final key initiative in FY 'twenty three is to expand our partner channel strategy the initiatives that James <unk> has been leading for us.
This includes ecosystem partners systems integrators, and increasingly importantly cloud providers.
We help our customers unlock value from their data wherever it lives and is more customer data migrates to the cloud.
Key live ramp technologies.
Identity for example.
Can be deployed natively in these environments.
This enables these customers to achieve faster returns on their cloud investments reduce data fragmentation.
It allows for greater flexibility and simplicity with using identity in the cloud.
A year ago, we announced a strategic partnership with GCB.
Which has been a nice source of lead Gen for us and since then we announced similar partnerships with AWS and more recently snowflake to power identity natively within their cloud.
Environment and data warehouses.
In the coming year, we expect to launch additional live ramp technologies like advanced segmentation.
And activation natively in the cloud as well.
This will unlock many additional use cases and deliver even greater value to our cloud customers.
Now we haven't built significant revenue from these efforts into our near term forecast.
But over time, we think that this could be a catalyst for us.
Opportunity number two.
Prove operating profit.
<unk> SaaS model exhibits strong economies of scale.
On des our track record speaks for itself.
Operating cash flow over the past 12 months was $78 million an improvement of over 100 million from just two years ago.
Again.
We are not satisfied.
As the travel restrictions of Covid ease, we will absorb additional TNT.
But we will continue to improve profitability in the coming year.
While we will increase sales capacity and invest internationally. Most other areas of our business will benefit from increasing returns to scale.
And opportunity number three.
Improve shareholder return on capital.
We are not remotely satisfied with live ramps recent share price performance.
We don't believe that our stock price currently appropriately reflects our potential.
And we're committed to continue exploring all opportunities to maximize shareholder value.
Of course.
The best thing, we can do is simply continue to grow revenues profits and satisfied clients and as I just discussed.
Our intent.
But in this erratic market as we have done historically, we will also explore returning capital to shareholders.
For example, we have a strong track record of Opportunistically and aggressively buying back shares based on market conditions.
As a result over the course of the last decade, we have returned over $1 $2 billion to.
To shareholders in the form of share repurchases, including more than $800 million since the live ramp axiom separation in late 2018.
Given the current market, we today announced our intention to repurchase up to an additional $150 million of live ramps common stock before December 31.
Warren will discuss this in more detail during his portion of the call.
In summary, let me revisit the three key themes with which I started the call.
First in a period of market uncertainty, we believe live ramp is a safe choice.
We'll continue to grow and improve profitability and were embedded into the very fabric of the data ecosystem we serve.
Second Q4 represented another quarter of growth and we anticipate more of the same in the coming year.
And third.
But perhaps most importantly.
No that we arent, even remotely satisfied with our current trajectory.
In the coming months, we will seek to grow bookings and revenue even faster by increasing our sales and marketing capacity.
Proving our products, expanding geographically and broadening our cloud and partner channels.
We will continue to focus on our path of cash flow improvement.
And we will explore creative ways to unlock shareholder value included including an accelerated buyback program.
There is much work to do but our market opportunity is significant and continues to grow.
A critical component of our customers' data infrastructure and continue to deliver category, creating innovation to the market.
Finally, and importantly.
We have a strong team in place.
Execute against our goals and we enter FY 'twenty, three focused and energized to deliver on the year ahead.
With that thank you again for joining us today and a special thanks to our exceptional customers partners and all of our lives <unk> across the globe for their ongoing hard work and support.
We look forward to updating you on our progress in the coming quarters.
I will now turn the call over to Warren.
Thanks Scott.
And good afternoon, everyone and thanks for joining us today.
Q4 was a solid quarter and while there is always room for improvement. The one thing. We can say is that amidst the sea of change and uncertainty we continued to deliver.
Today I would like to focus my remarks on three areas first share a few highlights for the year in Q4 next provide guidance for Q1 and FY 'twenty three and finally discuss our approach to capital allocation.
Provide an update on our buyback program.
For the year Library had a solid year.
We grew total revenue was $529 million up 19%.
We exceeded our long term gross margin target our gross margin was 76% up 400 basis points.
We again demonstrated considerable operating leverage we were profitable not only for the full year, but in every quarter or two.
Our fall through ratio was approximately 30%.
We generated cash operating cash flow was $78 million, our capital spending for the year with a modest $4 million and finally, we return capital to shareowners.
In fiscal 'twenty, two we repurchased one 3 million shares for $59 million. Please.
Please turn to slide six.
In the fourth quarter total revenue was up 19% and subscription revenue increased 22.
Overall marketplace and other revenue was up 6% data marketplace, which represents roughly 80% of ongoing marketplace and other revenue was up 15%.
Customer accounts, where it counts were again up in.
In the quarter, we added 15 net new subscription customers.
We're into our Po or our next 12 month contracted backlog was $309 million up 21%.
As a reminder, the timing of renewals can and will cause volatility in this metric.
<unk> ended the quarter at $399 million up 19% and net retention was 111, while platform net retention was 110.
As expected our results were negatively impacted by wholesale contraction as shown on slide 18.
This impact was $30 million for the year and approximately $6 million for the quarter.
Excluding this total revenue increased 26% and international up 45.
Subscription revenue was up 31% and they are up 28.
And net retention would have been 119 and platform net retention 116.
Beneath the top line our business model is working for.
For the quarter gross margin improved 200 basis points to 76%.
Productivity here was driven by continued identity graph optimizations.
We were profitable and operating cash flow was approximately $60 million driven in part by a tax refund of roughly $30 million related to a carry back of losses.
Before moving onto guidance. Please consider our trend our trended results since ramp became public. Please turn to slide five the performance is pretty clear.
<unk> on it.
<unk>, a trended CAGR of 23% since FY 19.
non-GAAP gross margin improvement of 200 basis points, non-GAAP EBIT improvement of $104 million.
And $812 million of cash returned to shareowners.
In summary.
2022 is a mirror of the past growth and gross margin expansion.
Operating leverage and capital stewardship.
Now onto guidance for Q1, and FY 'twenty three.
Before jumping into the numbers I'd like to talk about our priorities and considerations for FY 'twenty three.
First while our foundations and product market fit remains strong we're being appropriately cautious in our outlook given macro economic uncertainties.
Also as Scott mentioned, our overall growth bookings slowed in Q4, and we expect relative softness for the first half of the year.
That said, we believe this slowing will correct as our reps ramp and as we build our enterprise sales motion.
Next we are committed to continuing to deliver bottom line leverage please.
Please turn to slide 15.
We expect our operating profit to increase despite the post COVID-19 rebound in expenses continued R&D investment and costs associated with our global expansion.
We are currently available in 40 countries by year end, we expect to be up and running in 60.
Now onto guidance.
Turning to slides 13 and 14.
For the first quarter, we expect revenue of approximately 139 million and.
And non-GAAP operating income of approximately $1 million.
For the full year, we expect revenue of between 608, and 625 million and non-GAAP operating profit of approximately $49 million or a margin of roughly 8% at our midpoint.
Please keep in mind this guidance excludes intangible amortization stock.
<unk> based comp and restructuring and related charges.
A few other call outs for Q1 and the full year.
For Q1.
We expect subscription net retention to be roughly 112% and platform net retention to be approximately 114 the.
The sequential decline from the adjusted net retention of 119% is driven by an expected lower relative contribution from usage and to a lesser extent anticipated contraction.
In Q1, we expect our gross margin to be roughly 75%.
And we expect Q1 operating income to be the low watermark for the year.
For the full year.
In order to help you think about our topline guidance, let me provide a high level bridge from our FY 'twenty two performance.
Subscription revenue.
We expect expect subscription revenue to grow in the mid teens.
The factors impact packaging our year over year performance are.
Lower relative contribution from both bookings and usage.
The previously disclosed incremental $15 million with wholesale contraction and to a lesser extent our assumptions for FX.
Usage in FY 'twenty, two usage was approximately 14% of revenue.
Given the macro uncertainties, we expect usage in FY 'twenty three to be approximately 11%.
Marketplace given.
Given the strength of data marketplace, our plans for FY, 'twenty, three and our outlook and our outlook for our service business, we expect marketplace to grow in excess of 25% for the year.
We expect gross margin to be roughly 75% for the full year investment in services and continued international expansion our.
Our driving the slight year over year gross margin decline.
We are anticipating a modest negative revenue impact from FX and FY 'twenty three.
We would remind everyone that we do not have any exposure to either Ukraine or Russia.
Finally, we have included other assumptions for the year on slide 14.
I'd like to now conclude by talking about our capital allocation philosophy.
Over the course of the last decade, our approach to capital allocation has been consistent and focused on three priorities.
We want a strong balance sheet that allows us to invest in the business to extend our market leadership and global opportunity.
Strategically take advantage of acquisition opportunities and as appropriate return capital to shareholders through our repurchase program.
With that as a backdrop, we exited FY 'twenty two with a business that has a strong balance sheet has financial flexibility and one that is profitable and generating meaningful cash flows.
Given that strength, we intend to repurchase an additional $150 million of stock by the end of Q3 FY 'twenty three.
Repurchases will be made under our existing share repurchase program that extends through December 31 2022.
Under the program, we are authorized to repurchase outstanding shares in the open market.
Or privately negotiated transactions.
Before opening the call to questions I will now close with a few final thoughts.
Through the challenges of this past year live ramp again delivered on its commitments.
Our foundations are strong we have consistently demonstrated an ability to navigate change to ensure our customers are competitive and can use data to create lasting and personal relationships with their customers.
Our model works growth strong gross margins and demonstrated profitability.
And finally, we are confident that over time, our model will generate significant returns on invested capital.
On behalf of all of US here at live ramp. Thank you for joining US today, operator, we will now open the call to questions.
Thank you Sir we will now begin the question and answer session. If you would like to ask a question. Please press star one on your telephone keypad again its star one on your telephone keypad. Please standby, while we compile the Q&A round.
Yeah.
Your first question is from Kurt <unk> with <unk>.
Evercore ISI. Please go ahead.
Hi, guys. This is actually Peter Berkeley unprepared.
And I thought how you doing.
I thought maybe I'd start with you on it.
Great.
It sounds like you know you are baking in the usage being down a bit for fiscal 'twenty three and it seems like that has.
The factors that the biggest impact on guidance, but I, just kind of what did clarify.
What extent the current macro environment is sort of baked into that the complaint that you got.
I'd say, that's a really great question to start off with I would say when you think about our guidance I would use maybe three words I'd start number one with balance and then number two given the macro set of uncertainties I would say an appropriate level of conservatism.
And I think usage is a great example.
Was 14% at FY 'twenty, two our planning assumption is 11.
Obviously that could prove to be too conservative, but given everything that's going on we felt it prudent to be again appropriately conservative I'd also highlight that we've taken into account the recent bookings trends and our guidance we've taken into account the incremental wholesale contraction.
We've talked about for the last several quarters and as I mentioned in our prepared remarks or in my prepared remarks also a small impact for FX.
And then finally I would tell you.
While our guidance reflects the appropriate level of conservatism.
Our our direction and ask of our team is exactly on the other side of that trade is we're asking them to go blow away. These results, but again to your question given the macroeconomic.
Backdrop, we think that we have given the appropriate guidance.
That's helpful color I appreciate that one.
Maybe for you.
You mentioned Youre planning on picking up hiring here in fiscal 'twenty three.
I'm just curious.
<unk> been hearing some software companies that are sort of pulling back on hiring a little bit.
And granted you guys have a lot of growth in front of you. So you know it doesn't make sense to just curious.
Given the environment, I guess, how youre thinking about that balance between growth and profitability going forward.
Yes, I always think back to a quote from Warren Buffett, probably said many many years ago.
In <unk>.
Hard markets winners win.
No.
And we think now is the time to actually win share.
We we certainly hear from our clients.
They love our products.
Our pipeline is growing.
And we think that.
There's a big prize in front of us.
I hate myself for allowing ourselves over the last.
A quarter or so to get behind in hiring.
Because when we recruit people, we have a pretty good message to tell him too.
They get to work on something that really changes the world and there is not a company on the planet that isn't trying to figure out how to use their data more effectively to power better customer experiences.
Better ROI better decisions.
And.
They get to work with some of the best companies in the World I always tell people when they're talking to us.
Judging by the company we keep.
And.
<unk>.
Companies that we've talked about even here on this earnings call.
Over the last couple of quarters, we've talked about Amazon, we've talked about Walmart, we've talked about target we've talked about car for.
We work with some of the best companies and so.
People want to come work here.
We just need to hire more of them in sales. So it doesn't mean, we're going to hire across the board.
But we think that this is the bottleneck.
That could really accelerate our top line hey.
Hey, Peter if I could add just a couple of things in there I would ask everybody.
And you probably took a look at this slide is we were going through our prepared remarks, I think it's slide 15.
Just as Scott mentioned that we our priority is hiring coders and callers. There is also a lot of discipline that we're forecasting into our operating performance for FY 'twenty three as well.
If you think about the fact that we're absorbing about $20 million of incremental Covid costs. We're also expanding internationally, which is an investment of roughly $6 million, we're projecting to generate an increase in operating income.
So yes, we are prioritizing hiring to drive growth, but at the same time, we're being very disciplined in our approach to cost and also disciplined in our approach to delivering higher operating profit in FY 'twenty three.
That's super helpful color. Thank you guys.
Your next question is from Brian Fitzgerald with Wells Fargo. Please go ahead.
Thanks, guys. A couple of questions International showed really nice acceleration in you called out some incremental investment in international expansion.
Working with trade desk.
And then you called out some stuff in the operating income bridge can you talk a bit more about what's driving that strength and your expansion plans for 'twenty. Three are you going deeper in existing markets opening up new territories anything anything further there.
I'd be happy to start and Scott you may want to weigh in on this too we're forecasting to add about 20 geographies. During the course of the year. So today. We're in about 40 would expect to be in 60.
One of the terrific things about what's going on internationally I'd say two things first of all.
We've said it before on multiple occasions, and Scott mentioned it earlier today the combination of Safe Haven, an Ats is a winning combination.
Ats is allowing our customers to go global with a consistent approach in every market in which they operate so one we have great product market fit.
The second thing that I would highlight which is a little bit tied to the law.
Last thing I mentioned is that our customers are pulling us into these global markets. So as we move to another 20 countries. Its global advertisers that want to be in those markets and they're asking us to be there.
It's our customers, taking us to Brazil to Italy to Spain, and so on so.
Highlight a couple of things one our model works Ats and Safe Haven are a winning combination and third it's our customers that are driving our expansion.
Okay.
And Scott did you want to Scott do you want to add or.
That's a great I think that was a mic drop.
Good grief.
That's what I thought maybe maybe one the only.
Follow up I had was on.
The phasing guidance it looks to imply.
A deceleration in September quarter, you rebound in the back half you talked a little bit about this.
Could you talk about the trends, though impacting your view is it is it the macro baked in if it is it comp issues is it the sales force hiring and you noted them ramping the productivity.
Backlog drawdown any anything or maybe it's all of those.
Don't know that I would add anything beyond that which we've already said, it's really a combination of all of those things.
Obviously, the holiday quarter is a bit seasonal for us too.
Yes, okay.
The one thing I would layer in them and this speaks to the fact that we hired 20, new sales reps in the last quarter.
Our experience has been that people don't start.
Immediately.
Be as productive as theirs someday will be on day, one it takes six months for them to really find their stride and so.
So that's built into our numbers here.
But again, we kind of believe that sales is a math equation.
If we get talented sales reps and you know you have a good pipeline.
You have a good product for us check check and check.
Then if we hire the right number of people and deliver against our product builds then the revenue is going to happen.
Thank you I appreciate it guys.
Thank you.
Your next question is from Schein Patil with Susquehanna Financial Please go ahead.
Hey, guys Hey, guys.
I had a couple of questions.
First one on safe Haven.
Can you just talk about.
How we should think about the contribution.
To revenue and growth.
This upcoming fiscal year.
And then second question.
Can you just maybe update us on how <unk> and.
Walmart those relationships are progressing.
Sure. This is Warren why don't I kick us off and Scott you.
You can weigh in here too.
I'd start off with what Scott mentioned in his prepared remarks, and even go back to some of our earlier calls where we think our platform is applicable to every single life ramp customer.
So we're very optimistic about the prospects and remember that our net retention is in excess of 120 on <unk>.
Safe Haven and related customers.
Here's a couple of stats that.
One step that Ive mentioned, I think last quarter, we talked about.
For Safe Haven related revenue to be about $76 million. That's now even one quarter later pushing 100.
So we think there is a lot of.
<unk> potential.
Two other things that I would highlight.
And again, I'm really stealing Thunder from Scott.
Mentioned in his prepared remarks is what's really interesting is just how.
How how important it is that our products be integrated into the platform and actually its exactly what our customers are asking for.
A couple of things for you to be thinking about in the upcoming fiscal year as we intend to integrate integrate data marketplace into safe Haven again. This is something that all of our customers are asking for.
When you think about the potential for TV well integrating television into the platform is exactly what every.
Large advertiser light advertiser wants so for US we think the potential is 100% there there is a tremendous product market fit and we see ourselves really just at the beginning of what this platform can be I don't know before I talk on.
Yes client Scott, maybe maybe I'll add one thing Sean which is if you think back over the last few years I mean, we were certainly we've always been SaaS.
But in some respects, we were SaaS and our pricing model, but not necessarily a SaaS in every aspect of the product.
And more specifically what I mean by that is.
Is the best SaaS products truly do sell themselves.
Historically as we created new features.
New offerings, our clients were forced into.
A weird world where.
We would sell them a variety of kind of disjointed.
Unbundled products you once a TV with that or do you want to do Onboarding, hey, let's plug into data marketplace.
And our salespeople were forced to learn.
10 different products to sell at.
And our clients were forced.
Work with us in 10 different ways.
The greatest SaaS products don't work that way.
Their work the way that safe Haven works and more specifically our clients can now log in.
And regardless of what they choose to start with us for.
Maybe they are in Onboarding client well, they're a safe Haven client now.
Because they buy the subscription to safe Haven, and maybe they are only using the onboarding, but in the UI.
<unk> other thing that they could possibly want to use is right there and.
And so it encourages clients to self explore to.
To ask questions to upgrade over time, and that's why we're already seeing.
The net retention of safe Haven to be so much higher than the average because our clients find these things for themselves and so great SaaS products over time improve your selling efficiencies as well because it puts more of the onus of discovery on the clients now you may remember.
Gary that up with professional services and some evangelization there and we'll do that just as other big SaaS companies have done before us.
But this transition to a bundled discoverable SaaS offering it really does change how we go to market in a very positive way both for ourselves, but more importantly for our clients.
And then I'll take the second part of the question on both Walmart and also on car floor, Let me start with Wal Mart and just simply say that we're just at the beginning of that relationship. So I'd say stay tuned on that front, but obviously, we are thrilled to be a partner of wall Martin we're thrilled with the opportunity to really build.
This business along alongside them.
Next talking about car for a couple of key words that I would say I think we're in the expand and accelerate phase.
Let me just kind of tell you again, a few things that I find incredibly interesting right. Now is we're now up and running in France. We are now up and running in Brazil. We are now up and running in Belgium, We are now up and running in Italy, We're now up and running in Spain.
So this is really an exciting time to as a result of the work that we've been doing globally with Ats. We also were building incredible ats publisher relationships in each of those markets.
For example, this quarter in Brazil, global when Youre Uol, so some wonderful publisher relationships in Spain.
<unk> and <unk>.
So a lot of really really positive things going on that are helping us now to accelerate that partnership.
A couple of other things to think about two other words would be expertise as a result of our overall relationships not only with car floor, but other cpg's and retailers. We are building up a tremendous level of expertise in CPG retail media and retail that is extremely valuable in this.
Market in particular, where retail media networks are exploding.
Two our product is just continues to get better.
We're incredibly excited about our analytics library, and what that can mean for assortment management in pricing and category management and also more effective media and activation and then finally I think we're starting again I'd still put it very early innings to see what network effects can be creep.
<unk>.
I think it was last quarter, we talked about partner tenants being roughly 110.
<unk> overall, we're now over at 180.
So again.
At the beginning a lot more work to do but I think some exciting progress.
Great. Thank you guys.
Your next question is from Jason <unk> with Craig Hallum. Please go ahead.
Great. Thank you guys. So I appreciate all the color on just the objectives for growth and profitability you did give the guide for the year that I think indicates kind of 15% to 18% top line growth, 8% non-GAAP operating margin as you go forward Scott you had talked about how youre not happy with those rates.
As we look across 23, so curious what kind of figures would you be happy with what are you expecting to accelerate that to and then when should we start to see traction against that plan.
Yeah.
Great question, and what I'm not going to do is give guidance that trumps the.
I think appropriate guidance, we just gave.
These are the conversations that we have internally.
But yes pretty simple philosophy, which is.
Our plan is a stake in the ground.
Our challenge is to.
Run past it.
So judge.
Judges by our track record.
If you look back at our history, we don't have a.
History of missing our guidance.
And we don't intend to this year either.
Okay fair enough.
The marketplace revenue came in slower at a slower growth rate than it's been the last few quarters, but one I think you indicated a reacceleration there in FY 'twenty three so curious if you can talk about maybe what happened in Q4 and how that Reaccelerate.
I would I would separate the data marketplace performance in Q4 into what we've been calling TV transactional and data marketplace. So overall up 6% with data marketplace was up 15%.
As I mentioned, we're pretty excited about what's ahead for data marketplace next year.
I would tell you three things that.
On our roadmap number one.
It's really tighter safe Haven integration.
Again as I mentioned, just a little bit earlier. This is one of the number one things. We are hearing from clients is they want data marketplace integrated into safe Haven. So they can directly access third party data.
Number two is we think we have a pretty good plan for building higher brand attach rates.
And also for really enhancing the discover ability of data sources inside of the platform.
And then finally think about more destinations.
So having.
Marketplace integrated into say mini walled gardens, which we also think is an opportunities. So those are three things that we're pretty excited about for the year ahead and then finally.
Something we really haven't talked about today, but as equally exciting is what's going on in our service business.
We really kicked us off this past year.
And we're expecting to double this business in FY 'twenty three so the combination of.
What's going on in data marketplace, coupled with.
The exciting momentum that we have instead of our service business.
Give us a lot of optimism for the year ahead.
Thank you.
Once again, ladies and gentlemen, if you have a question. Please press star one now again, that's star one on your telephone keypad.
Your next question is from Tim Nolan with Macquarie. Please go ahead.
Hi, good evening, thanks for taking the question.
There's obviously so much news about privacy regulation and moves by the big walled gardens and so forth.
And I think one.
Topic, that's come up that's been.
<unk> wrinkle to it is.
Non based forms of targeting Google moving to its topics system from flock.
And then I think prepaid has something.
Under under the works I was just wondering if you could talk a little bit about what.
Such non IV based moves would mean for live ramp if they gain traction just not clear what the distinction is between what you do and how that would pan out.
Well first off I would tell you that I think there are a couple of big.
Regulatory trends.
On both fronts, we are way out in front.
I really like our position and it's funny I mean, some of the companies that you mentioned.
Whether it's the walled gardens or I think there is now a case study of how we performed on.
Mobile apps.
On Safari inventory live on our on our website.
All of these companies work with us.
And it's because we build everything around consumer transparency and choice.
If you have.
The consumer's consent.
And they have visibility into what's being done.
Then you generate much better marketing returns.
If you don't.
Then you have to.
Fallback to an alternative form of targeting.
Oftentimes contextual.
And they just don't perform nearly as effectively.
What's interesting is if you look at the best contextual targeting and then you layer in address ability on the top of it.
It becomes significantly better yet again.
So there is a real place for address ability.
As new forms of targeting start to emerge.
Also say.
That there has been.
Real.
Some negative news.
Recently about some forms of targeting.
Theyre all forms that we don't do.
Because again everything we do realize on consumer consent.
But anything that.
As a device ids or relies on fingerprinting or some.
Some kind of.
Technology that allows you to.
Build and identity without necessarily knowing the identity and obtaining consent. We think those are losers and those are there is no place in the industry for that.
The other big Mega trend that we're seeing Tim.
Which has gotten some news recently is we've long been out front of the market and talked about the fact that we're neutral.
We'll work with anyone and everyone who's ethical including companies that have called themselves are competitors.
We are interoperable.
I think youre seeing a trend now in regulation towards mandating the very kind of interoperability that we've long preached.
And again, that's going to help us a lot.
Whether it be with the cloud providers, where we're increasingly working with.
With many of them not necessarily in our forecast, but we think it's some nice upside as we scale that.
Whether it's with.
Thousands of publishers that we work with whether it's the walled gardens, whether it's the cdp's, whether it's the marketing cloud.
We'll continue to be interoperable, because what we bring is so unique what we bring isn't a clean room isn't as CDP. What we bring is data access identity data activation at all the permission controls and those capabilities are things that are best done.
At scale neutrally.
Interoperability for the entire industry, which is exactly our strategy.
That's great. Thanks, a lot Scott.
And your last question is from Nicholas <unk> with Stephens. Please go ahead.
Yes, Hey, guys.
In the past you've talked about connected TV related revenues being the fastest growth driver within my ramp.
Hoping just to get an update on connected TV related growth in exposure and your thoughts maybe on the outlook within this segment, particularly as some of the social media companies are seeing some added related weakness.
Yes, I'll tell you.
Connected TV continues to be something we're bullish on it grew faster than our overall business.
Increasingly hard to kind of parse that apart because so many of our clients are just buying it on a subscription basis. So it just becomes another use case, but.
I think it was probably up 30%, maybe a little bit more for.
For the year.
Overall, we're very optimistic about the opportunity.
This is also an area, though where if there are any clients on the phone listening to this.
We've heard you.
You want us to make it even simpler to buy.
More integrated into the rest of our offering.
And so that's what we're doing as we integrated into our safe Haven product suite, it's going to become drop dead simple to plan and buy connected television right alongside everything else that any client is doing.
And.
Timidly.
We think that this is a secular trend that's going to continue to benefit us and others in the industry.
Linear television Hasnt tempt, we've been talking about the tipping point for the last couple of years CTV is growing explosively, but it's still the case that it's probably only 15% maybe a little bit more of overall TV spend the vast majority of the prize is still waiting.
<unk> for us and others like us to capture so we think it's going to be a real nice tailwind for us for the next few years.
No no that makes sense.
And then just one on safe Haven.
Walmart was obviously just such a huge win for.
For the Safe Haven product.
Want to make sure I'm thinking about this correctly, but has that relationship.
In of itself been a driver for incremental wins within safety, even like does that naturally bring other CPG into the fall to utilized.
And does it make other retailers feel the need to utilize safe Haven just to remain competitive.
And keep up with.
I won't comment on that one in particular, but I would tell you overall, 100%.
100% true.
And we're seeing it on two fronts.
Number one.
Is the quality of our retail relationships.
<unk>, the flywheel with packaged goods partners and.
I think Warren shared a stat earlier that we essentially nearly doubled the number of.
Safe Haven partner tenants.
That's that's being driven not necessarily by.
Our selling effectiveness I mean, we're good.
But oftentimes the door has been opened by one of the retailers.
We're setting up the meetings, they're telling their partners Hey, we want you to work with live ramp and if you do.
Here's the data that's going to be accessible to you and here's the value that together, we'll be able to unlock so that's a great message.
And then I think Youre also right on the second thing which is.
Marketing as a whole is like a lot of industries. It's a me too industry, you look and you say who is doing it better than me.
When the companies that are the most respected in the world.
Our all partnering with live ramp.
Good trend, that's a good trend and so.
The success of some of the Giants in the case studies that are coming out of companies like <unk> make a company that might not be quite as big as car for want to work with us and a great example of this that we talked about last quarter with J D Dot com.
So one of China's biggest retailers.
They heard a lot about the car for example from.
From our team, including beyond beyond Sharma, who.
Helped spearhead the car for when it now is.
Responsible for our entire selling effort worldwide.
So getting those kinds of client success stories out.
Just just helps us in the retail category and we're not even getting started because retail leads to financial services leads to travel there.
There is a lot of different indoor.
Industries that we intend to go pursue over the next few years.
Just one one thing is Scott.
Indirectly talked about it but it's also global.
Awareness around the safe Haven platform extends to new markets, where we haven't even begun to penetrate.
It happened to be.
In Germany here, a few weeks back.
And we had a great representative.
Representation of CPG retail of others have publishers, all of whom are very familiar with the work that we're doing with safe Haven.
So almost regardless of geography around the world, whether it's Latin America, whether it's Asia or whether it's Europe or even the middle East say payment has become again a lot more to do but it's becoming a known brand.
Great.
I got one more.
I think I know the answer to this but just love to hear your thoughts.
In the past.
You guys have talked about advertisers, just becoming more ROI driven.
Within uncertain times, which I think benefits live ramp through the use of Ats.
Obviously, providing the ability for user targeting relevant AD delivery insightful feedback for these advertisers to justify their spend so.
I mean, obviously.
Does this thinking hold up in the current environment and then do you think this is just an accelerant.
To the shift to utilize targeted advertising by advertisers.
<unk>.
Yes, well I'm. So glad you asked this question because it's something that we talk about internally quite a bit and first off I'd just tell you I know that.
There is a lot.
Handwringing in the market around economic softness, we're not seeing that right now.
And the good news I'd, just reiterate the fact that.
<unk> SaaS, where subscription so we have pretty good line of sight into our forward numbers and we found that it has insulated us in the past I mean, you can see that in the early part of Covid for instance, when media take rate businesses were falling off the cliff.
We weren't because we tend to be just a staple.
And have a lot of persist persistency or consistency.
With respect to our revenue model now the downside of that is when.
Times get great and all of a sudden there is a huge boom in media spend we don't necessarily.
Get the roller coaster ride up that some others have seen so we're very predictable and stable.
But in 2001 I live tests.
Lived through and again in 2007.
Solid again in the first six months of Covid.
Every time there has been in recession, the last three U S recessions.
There has been a flight away from branded what I would call <unk> spray advertising.
Two accountable addressable advertising.
Marketers would say, it's a flight from above the line to below the line advertising for brand to direct response advertising.
The first thing to see Oh does when the market get soft as they turned to their CMO. They turned to everybody and they say where where can we tightened the belt and so theres CMO has given instruction of we need to make sure that every dollar you spend is accountable and it hasnt ROI against it.
The only way as CMO can do that is by working with a company like live ramp.
I think back to a quote from one of the big travel marketers in the early part of Covid and they said Hey live ramp is going to be the last thing I turn off.
And it's going to be the first thing I would turn back on.
Because it sits underneath everything I do and sure enough that travel marketer.
Was back online after a brief kind of 60 day pause at the early part of Covid.
And.
We sat underneath everything they did so I expect that this trend could really help us.
Great. Thanks, so much guys. Good luck.
<unk>.
Okay.
And that ends our question and answer session I will now turn the call back to Warren Jenson for final comments.
Well, thank you operator, and most importantly, thanks to all of you on the call.
I'd leave you with I guess three final thoughts today.
One.
We believe our foundations remained very strong at live ramp.
And while we 100% take nothing for granted and would be the first to say that we still have a lot to do we're also very confident in our guide today.
And then finally.
Want to invite everybody if you happen to Miss ramp up in San Francisco here, a couple of months ago, and you happen to be headed to Europe , we're having ramped up Paris on June 14th we would love to have love to have you join us.
So with that thanks to all of you for joining us on behalf of all my colleagues here at <unk>.
We really appreciate your support.
Ladies and gentlemen, this concludes today's conference call. Thank you for joining you may now disconnect.
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