Q2 2023 Liveramp Holdings Inc Earnings Call
Turning to our call today my comments today will focus on two areas first I will discuss our second quarter performance, providing additional insight into what is going well.
And where we see opportunities to improve.
Second I want to spend some time on what for many of US has been an ongoing source of frustration.
Our current share price valuation and what we are doing to unlock greater shareholder returns.
While I am pleased with the team's determination and resilience in the face of difficult macroeconomic conditions that are impacting our customers and by extension us.
We aren't satisfied with our top line subscription trends and obviously our valuation.
Let's start with the quarter, which was good on many dimensions, but fell short on others Q.
Q2 exceeded our guidance across all financial metrics and particularly so on operating profit.
Total revenue in the quarter grew 16% year on year.
<unk> revenue grew by 14% and marketplace and other grew by 25% driven by our data marketplace business.
We ended the quarter with $420 million in <unk> up 15% compared to the year ago quarter.
Our non-GAAP operating profit declined 3% year on year as we return to a more normal post COVID-19 operating model.
But was ahead of plan.
Importantly in recent months, we have closely examined and implemented programs to drive greater efficiency across every single element of our cost structure.
As a result of the initiatives, we have already pursued tightening discretionary spend optimizing head count and rethinking our real estate footprint, we are increasing our FY 'twenty three bottomline guidance considerably.
And we're not done yet we have a comprehensive plan underway to meaningfully improve our long term cost structure.
Our Q2 operating cash flow nearly doubled to $21 million.
During the quarter, we added 10, new customers, which is an improvement from Q1, but still below our historic trend and where we expect to be in the long run.
We have a number of initiatives in place to improve customer growth such as building our early stage pipeline accelerating the productivity of new sales reps and developing channel partnerships.
We have made progress with several of these initiatives, which I will discuss in a moment.
Our $5 million to $1 million customer count was up 18% year on year, and our win 1 million plus customer count grew to 92, an increase of 15%.
We had a notable seven figure new client win with a TV technology company to support improved television audience measurement and advertising targeting.
This client is using our identity products to help advertisers create consistent audience segments for targeted advertising campaigns that can be deployed in measured across platforms.
Turning from new clients to expanded business with existing clients, we continue to see good growth subscription.
Subscription usage as a percentage of total subscription business was roughly 14%.
And subscription net retention was 106% two percentage points ahead of our guidance platform net retention was 108%.
We continue to support new use cases, and retail media networks, helping retailers unlock new revenue streams.
In Q2, we had multiple upsells in this category, including a six figure expansion with a U S membership warehouse club.
And a six figure expansion with one of the largest U S pharmacy chains.
This enables the measurement of advertising campaign effectiveness and return on AD spend and it is a use case that library is uniquely positioned to support given our focus on privacy and the ability to anonymously link datasets.
While there were many positives in Q2. There are also some areas. We continue to work on in order to create even greater financial momentum.
I've talked already about our ongoing efforts to drive faster improvement in operating margins the.
The other major area of focus for us as bookings, which for our SaaS subscriptions helped to lock in predictable future growth.
As expected and discussed on our last call our bookings softness continued in Q2.
It continues to be concentrated in the U S. But we also saw deals push out in international markets. This past quarter.
The pressure is seen in both small and large customer segments. However in Q2, the weakness was primarily driven by our SMB segment.
Our customer discussions confirm the economy is clearly, having an impact causing reductions to it budgets and delaying commitments to new long term service contracts.
As a result, despite a stronger pipeline, we continue to see elongated deal cycles, and a lower than normal conversion of our sales pipeline into bookings.
Some investors have questioned whether our recent bookings weakness is driven by a secular shift in the marketplace or product market misalignment, rather than cyclical factors and a temporary lull in sales productivity.
It's a fair question.
So let me address it for everyone.
In recent months I have closely scrutinized, our own internal data, including trends one loss reports and client satisfaction surveys.
I've also met with dozens of major clients one on one and participated in an even more account reviews.
We're never going to be satisfied with the efficacy of our products because our clients needs constantly evolve.
And it's also clear we need to constantly educate both clients and investors on our unique positioning in the data ecosystem.
But let me share a few important data points.
First do we face competition of course, we always have and we'll continue to do so.
But we have direct feedback from our largest customers telling us that our value proposition remains compelling and our solutions are vital to their customer and marketing initiatives.
Our customers are dealing with more than just the economy right now.
Our largest customers are reevaluating their marketing tech stack, starting with cloud providers and the migration from data marketing platforms or DNP.
The customer data platforms or cdp's.
This transition is akin to the move a decade ago from CRM databases to <unk>. So it is a phenomenon we have experiencing managing through.
As customers upgrade their technology stack theyre focused quickly shifts to how to justify that investment.
Live ramps foundational identity makes data more useful.
Our turnkey activations deliver insights to the destinations that matter.
And our measurement capabilities enable ongoing insights and optimization.
I've used the power grid analogy before it.
If companies are buying the metaphorical equivalent of appliances as they reevaluate their marketing stacks.
Then lybrand library amp as the neutral power grid that enables all of these appliances to work effectively.
Second the bookings for our top tier U S salespeople, which are the most tenured continue to grow at a healthy rate.
This group has a deep understanding of our product suite and their clients evolving needs can sell at the enterprise level.
It is more experienced at managing through obstacles to close business.
Among our ramp U S sales reps average bookings per rep or more than 10% above the FY 'twenty two average.
This demonstrates that our products still resonate in the market and even in this economic environment. There is business to be won.
Third our international bookings, which did not have the same sales force disruptions as the U S continue to post strong growth throughout the first half of the year.
Now to be fair in Q2, we saw incremental softness in international bookings, but is significantly less pronounced than in the U S. But remember the U K and European economic conditions deteriorated more significantly than in the U S.
All that said, let me be clear.
We are rebuilding our U S sales force in the face of unpredictable market conditions and we're also as we always will do continuing to improve our product offerings based on customer feedback.
But based on what we hear and see in the market from our clients. We are confident that <unk> is woven into the very fabric of the data industry and our long term opportunity remains significant.
Now this last point offers a good transition to what is on everyone's mind right now.
The stock market and live ramps valuation.
All of US at live ramp are disappointed by our current valuation and are committed to demonstrating to investors that we can be a predictable and dependable rule of 40 company.
Going forward I want to make sure we give you a strong visibility into our efforts to accelerate topline growth improve operating margins, even faster and address any exogenous risk concerns.
Top line growth.
As I just discussed accelerating bookings in order to drive longer term revenue growth is a top priority.
80% of our top line continues to be recurring SaaS subscription with good forward visibility.
Amidst near term economic uncertainty there are several initiatives, we are pursuing that should improve our bookings and topline growth over the long term.
First we're strengthening our U S sales team as discussed previously in the second half of the fiscal 2022.
We experienced above normal attrition in our sales force driven in part by exogenous factors such as the great resignation.
Our sales capacity is back to normal levels as of Q1.
And we remain squarely focused on unlocking our new sales capacity and driving higher productivity among our new sales reps.
The challenge with our U S sales force is a larger than normal proportion are new to ly brand.
And they are still building their knowledge about our solutions and developing their client relationships.
Just to put some numbers on this in Q2, the proportion of our U S sales reps that we're still ramping whereas approximately 10 percentage points higher than in FY 'twenty two.
We've implemented a number of programs to accelerate the ramp time for our new sales reps. For example, we enhanced our sales training program to focus on building skills to manage more complex enterprise deal cycles.
Needless to say the macroeconomic environment has made this task more difficult.
Still we are seeing some positive signs for example, we have reduced the amount of time. It takes our new sales reps to close their first deal by 25% on average this fiscal year.
Additionally, the number of sales reps that have signed deals in their first quarter of Libra is the highest we've seen in the last three years.
We believe we're on the right path and expect an improvement in the coming quarters.
Our second major sales initiatives to deepen our channel partnerships across the data industry companies are evaluating their marketing stack.
It's often the case that this involves an evaluation of public cloud providers and first party customer data platforms also known as CDP.
Just as we have previously partnered with <unk> DSP and.
And S. Espies, so too will we expand our efforts to new channel partners.
For example in September we continued our collaboration with Salesforce partnering with them on the launch of their new real time CDP called Jeanie.
Genie customers will have access to live ramp tools to build more accurate audiences.
Powered by ramp up.
Are people based identifier and access to direct integrations with a network of over 125, DSP and SSP is on the ramp of <unk>.
Another example earlier in the quarter, we announced our identity resolution capabilities built on snowflakes native applications framework.
Giving enterprises the <unk>.
<unk> to plan and measure business outcomes at the person in the household level.
We have deployed similar partnerships with the major cloud platforms, including AWS and GCB.
We're partnering with the most reputable companies in the world.
And believe these partnership channels will drive additional growth for us as they begin to scale.
And our third our third major top line initiative is to continue to expand our network of destinations web.
Website, CTV providers and other channels, where customer data can be utilized.
By offering the most turn key destinations library amp establishes itself as the indispensable scale leader and also fosters greater usage and international expansion.
We continue to lead the way on use case expansion for example, last month, Google announced publisher Advertiser identity reconciliation.
<unk>, a new offering that enables publishers and advertisers to reconcile their first party data for marketing news and Google's DSP.
Display and video 360, <unk> hundred 60.
There's been a lot of noise in the industry around post cookie solutions with Google's announcement of Payor why ramp is simply the best choice because we are interoperable with payer and all other privacy centric solutions.
Google's DB 360 will now be another destination live ramp marketers can seamlessly activate and measure on a cookie less basis on top of the addressable reach we have across over 125, other DSP and SSP more than 11000 publishers and disc.
Play mobile CTV and across nearly every continent.
In addition, we also announced an expanded partnership with meta.
Enabling marketers to privately and securely use their first party data on Facebook and Instagram.
Live ramp allows marketers to connect the Facebooks conversions API, a tool that creates measures and optimizes advertising campaigns in flight.
Whether marketers activate on DB $3 60 meta CTV.
And as of other destinations.
Or whether they use <unk> to point out payer or hundreds of other identifiers live ramps supports all of them.
To enable brands to reach their customers where ever they are weak.
We connect with over 10000 unique publisher domains.
And sit underneath nearly 400 different identifiers.
This can sometimes create industry confusion as some of these destinations and identifiers are growing rapidly.
But as these methodologies gained traction.
Ramps importance in our ubiquity continues to grow.
In summary, well.
We certainly face continued competition as we always have.
We have also knit ourselves into the very fabric of the data ecosystem.
We're rebuilding our U S sales team implementing channel partnerships with some of the world's largest companies and innovating with many of the most important media destinations on the planet.
We're also constantly upgrading their products.
The pay off from these efforts won't be immediate but we do believe they should give investors confidence about our long term growth trajectory.
Operating profitability improvement.
Of course, we can't just focus on topline growth with.
We place equal importance on operating profit improvement and have redoubled, our focus on efficiency as the economic environment around us grows more uncertain.
We have now posted a year on year improvement in operating cash flow in five of the last six quarters and Q2 operating cash flow was strong with 21 million nearly double the year ago period.
And know that we're not even remotely satisfied.
We see opportunities to improve our profitability into that end, we recently announced an organization restructuring, including a 10% reduction in our current workforce.
We also reevaluated our facilities footprint and are optimizing all areas of discretionary spend.
And we're also evaluating other cost levers to fuel future margin expansion.
Great companies never stop evaluating opportunities to improve profitability.
And regardless of whether we find ourselves in a recession in the coming months, we intend to continue to improve our margins and cash flow.
Yeah.
<unk> risk of <unk>.
Of course, while generating predictable top line growth and continued margin expansion is top of mind for most investors. We are also always evaluating exogenous risks and ensuring we are not only protected but position ourselves to benefit from industry change I think I've addressed many of the.
Questions I hear most frequently earlier, but to repeat.
Recessionary concerns.
Recessions are not good for anyone.
But we are confident and live ramps position.
We are increasingly mid ourselves into the very fabric of the data ecosystem and we have also observed that past recessions have placed greater marketing emphasis unaddressed ability and ROI, the very things that lie ramp helps our clients achieve.
In addition, regardless of the economic environment around US live ramp will continue to pursue ongoing operating margin improvements.
Cookie deprecation with its pair announcement, Google has seemingly embraced a similar approach to what <unk> has been pursuing for the past several years.
All of our largest live ramp Activations, Google meta trade desk, Microsoft CTV.
All of them can now be done using non cookie technologies and all of our largest publishers are enabled with ramp I D.
Taken together this positions <unk> as the leader in the post Cookie World.
Regulation.
Data regulation continues to evolve, but we believe regulatory complexity fuels greater utilization of wide ramp.
It is difficult for our clients and partners to stay abreast of the confusing array of state and global regulations, and we find that they look to us to keep them educated secure and consumer friendly in a world where consumer consent and transparency is front and center.
<unk>.
Competition.
<unk>.
Finally, the ecosystem in which we operate is changing.
<unk> are giving way to cdp's.
Client servers are making way for public clouds.
A wave of new identifiers is emerging.
<unk> intends to capitalize on these trends as we always have.
Partnering with everyone.
Constantly improving our products and capabilities.
From the feedback of our clients and partners.
And continuing our position as the ubiquitous provider of foundational identity data collaboration and connectivity.
In closing I am pleased with the team's focus and resilience in a challenging environment.
In Q2, we delivered 16% revenue growth nearly doubled our free cash flow and raised our operating profit outlook for FY 'twenty three.
We expanded our partnership with many of the largest players in the ecosystem, Google with pear snowflake with deeper integrations, salesforce with Jeannie and meta through the Facebook and Instagram conversion Apis.
All of this will help support our future growth.
At the same time, we have clear line of sight to areas that we believe will improve our top line growth profitability and return on shareholder equity.
We are seeing initial signs of improving sales productivity.
But we have more work to do.
We continue to make strides on improving the operating margin.
Lastly, we remain as always relentlessly focused on optimizing shareholder value.
With that thank you again for joining us today and a special thanks to our exceptional customers partners and to all library for us 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.
Q2 was another solid quarter and in line with our expectations.
Today I would like to focus my remarks on three areas first share a few highlights from the quarter next spend a minute and talk about trends in our business and our long term drive to increase profitability and finally provide updated guidance for Q3 and the full year.
For the quarter, please turn to slides five and six.
Total revenue was $147 million up 16% and subscription revenue was up 14%.
International was up approximately 26% and adjusted for FX was up 39.
Marketplace and other increased 25% data marketplace, which represents roughly 80% of ongoing marketplace and other revenue was up 23.
Subscription net retention was 106 and platform net retention went away.
Usage was 14% of subscription revenue driven by data providers and our platform partners.
Subscription customer accounts increased by <unk> 10, this quarter, while our $1 million customer account was <unk> 92 up 15% versus the prior year.
Current to our Po for our next 12 month contracted backlog was $293 million up 10% year over year.
<unk> ended the quarter at $420 million of 15%.
Bookings as anticipated were soft in Q2.
Beneath the top line our business model continues to deliver.
Gross margin was 75% non-GAAP operating income was $17 million, our 10th consecutive quarter of profitability and operating cash flow was $21 million.
And finally, we continue to return capital to our shareowners.
In the quarter, we repurchased one 7 million shares for $40 million.
In fiscal year to date, we have repurchased three 8 million shares for $100 million.
Trends in profitability.
Before moving on to our guidance I thought it might spend a few minutes and talk about two things.
What we're seeing in our business and next our plans for driving higher levels of profitability in the back half of the year and into FY 'twenty four.
What we are seeing in our business.
As is always the case there are both positives and some challenges some positive highlights.
Our enterprise platform continues to perform well a few stats.
Safe Haven influenced <unk> is now about $120 million or approximately 29% of IRR.
This quarter, we were fortunate to add a whole del highs to our strong list of retail customers today.
Today, we have over 275 tenants collaborating and more than 13 pilots underway across TV, social brands and data.
Marketplace.
While we're cautiously watching the broader trends in advertising the strength of our marketplace performance is not accidental specifically.
Specifically.
We are now embedded in more platforms and this year alone. We have added 11 organizations, who embed our data marketplace within their platforms for easier buying access.
We have simplified the buying process by improving automation to power more real time buying decisions.
Several safe Haven customers have now integrated data marketplace into their platform, bringing third party data closer to their own data for measurement.
Data used to power measurement and connected TV grew 26%.
We've signed 20, new customers to direct buying agreements for use in social platforms and walled gardens.
Cloud, we continue to get closer to our cloud partners, while still early a few highlights overall, we are seeing a significant uptick in deals being procured through cloud marketplaces. In addition, we have worked with our cloud partners in several instances to generate pipeline and closed subscriptions.
Why ramp identity services are now available in AWS marketplace. This complements our ats relationship with Amazon publisher services.
Our products are now available in the Google cloud marketplace.
And we now have an alpha version of embedded activation and snowflake.
But we also have challenges too.
We are facing pressures, which are impacting our bookings and most notably our subscription business.
Pacifically, we're feeling the most pressure in the SMB segment and in particular with new logo acquisition.
There is no question that our customers are tightening their belts and new budgets are tough to come by.
This is impacting our ability to attract new logos and extending the sales conversion cycle.
From a product perspective, our bookings pressure is mostly impacting our activation and measurement related products.
We are not seeing however is the sustained fall off in our up sell related bookings and our large customers.
In summary, several positives, but we are also feeling the pressures of a tightening economy.
And while we do face competition and can always do more we believe our core competencies are important durable and remain valuable to our customers.
A more profitable life ramp.
As the macroeconomic environment began to slow we met as a management team and committed to using this time to building a stronger more profitable lybrand spin.
Specifically, we laid out two objectives first tightened our focus to ensure that our resources are focused on the biggest growth opportunities, where we have core competencies and where we have a clear right to win.
And second to simplify and drive efficiency into our business processes in other words build a more profitable life ramp.
With these objectives in mind, we have several initiatives underway, let me share a few highlights.
First we have tightened our product focus on three areas, which have significant growth potential and where we play with competitive advantage identity, providing our customer with the tools to have a true 360 degree view of their customers across marketing advertising customer service and beyond.
Next data collaboration St payment is the future of data collaboration our platform brings together first second and third party data in a privacy safe and permission way.
And marketplace.
Finally on this point, we see our products being made available wherever data resides.
Public cloud cloud data warehouse CDP or clean room.
These initiatives are all focused on reigniting, our long term growth rate.
Next we starting to what will be an accelerated journey to build a more streamlined focused and profitable life ramp.
Several steps are already underway first our product leadership scrutinized, our products and skus and eliminated non product productive efforts.
We rationalized our product hierarchy, which resulted in reducing our number of skus from $240 to 45.
Next we have taken a head count action to better align our resources with our priorities. This action impacted approximately 10% of our workforce.
We have taken steps to rationalize our real estate footprint.
To provide some context by March 31, we will have reduced our footprint by approximately 60% from 220000 square feet to less than 100.
Cogs, our engineering team as we are protecting our workflows to better optimize data ingestion, and thereby deliver a better customer experience and at the same time improve our gross margin.
And our customer solutions group, we've taken several steps to ensure a top notch customer experience.
Implemented scorecards across all customer touch points. So we're able to quickly identify and address areas of concern.
And finally, we've implemented an early warning system and automated triggers to help our CSM identify and solve problems problems before they result in negative customer outcomes.
And sales and marketing we're focused on three opportunities to drive productivity and better outcomes. We are verticalizing, our organization and hiring industry expertise. This supports a more focused approach to both land and develop customers.
In addition, we are expanding our channel sales efforts working with the cloud providers Gsi's and marketing clouds.
We've streamlined span of control to create a more efficient organization.
And finally, we're investing in our people and their selling skills to increase our team's productivity and in particular that of our new sellers.
I am pleased to say that our new sellers hired in Q1 are already generate generating a meaningful pipeline and closed nine accounts in Q2.
And our business enablement functions, we are standardizing our customer contracting processes.
Simplifying pricing and usage tracking and automating billing activities.
These are a few examples of our commitment to build a more efficient way of ramp and thereby drive both top and bottom line performance.
The combination of our actions taken to date, including our head count and real estate savings should produce an annualized benefit of approximately 30% to $35 million.
Further to assist you in your modeling, we expect Q4 opex to be approximately $93 million or less include.
Included in this number is approximately $2 million of seasonal spend.
In summary, we are committed to long term efficient growth and accelerated margin expansion.
Rest assured, though we are not done yet these initiatives and others will continue well into FY 'twenty four and beyond.
We believe our ongoing efforts will accelerate our path to our long term margin targets.
Now onto guidance for Q3, and FY 'twenty three.
Please turn to slides 12, and 13 keep in mind, our guidance excludes intangible amortization stock based compensation and restructuring and related charges.
For the third quarter, we expect revenue of approximately 158 million and non-GAAP operating income of approximately $22 million.
For the full year, we now expect revenue of between 595 and $600 million and non-GAAP operating profit of approximately $60 million.
And as always and in particular, given the macro uncertainties would ask that you would be conservative in setting your revised models.
A few other callouts for Q3 and the full year for Q3 included in our guidance is a one time $4 million positive revenue impact stemming from a contractual settlement.
We expect subscription net retention to be roughly 100 and platform net retention to be approximately 105.
The sequential decline from 106 is being driven by an expectation of a softening economy impacting both utilization and contraction.
In Q3, we expect our gross margin to be roughly 75%.
We also expect to incur approximately $19 million of restructuring charges.
These charges are primarily associated with the right sizing of our real estate footprint.
Severance and other restructuring initiatives and finally, we expect to repurchase an additional $50 million of stock in Q3, completing our $150 million commitment.
For the full year, we continue to expect subscription growth to be in the low double digits and marketplace and other to increase approximately 20% for the year.
Gross margin to be roughly 75%.
<unk> of modest negative revenue impact from FX.
Before opening the call to questions I will now close with a few final thoughts.
First we want to thank our colleagues that were impacted by our recent workforce reductions.
Everyone here is grateful for your contributions and is here to support you in this transition.
Next while we are operating in a challenging environment. We are using this time as an opportunity to tighten our focus go after costs and at the same time do the things necessary to create sustained efficient growth and margin expansion.
We have a history of delivering profit expansion FY 'twenty three will be no different and we expect to do the same in FY 'twenty four.
And finally, we are going after big opportunities, where we have a right to win identity data collaboration and marketplace and doing so wherever data may reside.
On behalf of everyone here at lybrand, Thanks for joining us today and thanks to our terrific customers operator, we will now take questions.
Well now open for your questions and I wanted to ask a question. Please press star one on your telephone keypad.
The point, you would like to withdraw yourself from the queue.
Star one again.
Our first question from Elizabeth <unk> of Morgan Stanley .
Hi, Thank you so much for the question and really great to see the improvement in operating costs and controlling what you can and.
Just the given environment I wanted to ask on IBM pivoting net customer adds.
Maybe some color on just the improvement youre seeing better retention, where the ability to get deals through.
How do you balance because I believe last quarter you referenced.
The smaller customer segment I wanted to get.
Color on the second curated and yet if that has remained relatively isolated to that customer segment as well. Thank you.
Yes.
I wish I had better news for you on this front, but I would tell you that.
Last quarter, we were probably out a little bit early in front of other companies.
<unk> about the possibility of a looming recession.
We started.
To see a slowdown in our deal cycles, I think we forecast higher churn.
Although this past quarter those things didn't necessarily materialize I don't think our outlook for the risk ahead.
<unk> has changed what has changed is what we're doing about it.
In terms of really getting close to our enterprise customers, where we are.
Larger customers, where we've always had.
More success building channel partnerships, because we think that's going to be in future.
Very attractive economically.
Beneficial way to to win clients.
And increasingly talking to all of our clients and prospects about what to do.
In light of a recession.
Ben their spend to be even more accountable and addressable.
But all that said Elizabeth I think it's a little bit too early to.
Put a flag in the ground and proclaim victory.
I would be cautious continue to be cautious about the economic environment in front of us.
Got it and then.
Okay.
<unk> percentage of revenue increased thermal coronary and also ahead of guidance and I'm glad you mentioned that platform partner.
A benefit there just wanted to get a sense of how sustainable that.
Could be.
You're getting for it.
Thank you Rob.
Sure.
Thanks, Elizabeth let me jump in on this one and I'll probably start off with exactly what Scott said is that we're taking a cautious approach as we go into the next couple of quarters and I would say in particular going into the fourth quarter, given nobody knows what's really going to happen post holiday period, and everything else that's going on now with that said.
We have seen consistent strength in two areas, which make up the bulk of utilization one with our data partners and then secondly, with our platform providers Q3, or excuse me Q2 is no exception to that the only place where I would say we saw a little bit of weakness is in utilization.
From our brand customers, which is exactly what you would you would expect to see.
But overall continued strong would encourage everybody to be cautious also looking at Q3, but.
That said, we continue to expect a relatively strong performance in the quarter ahead.
Great. Thank you so much thank you.
Okay.
Your next question comes from <unk> Shah of Wells Fargo.
Yeah.
Please standby.
And if you could please press star one again.
Yeah.
We know we will Nathan.
Keith Mark Mcmahon of Evercore ISI.
Okay.
Yeah. Thanks, Thanks, very much and appreciate the additional color on the cost and margin measures I guess, Scott when you look at the pipeline for you all right now it seems that a lot of the other software enterprise companies.
Expanding with customers is a little easier than landing net new customers to understand your technology can you just talk about the interplay on that with you all right now and where you are seeing.
Work in terms of expansion, where you might be having some.
Talking about that first.
Thanks.
Yes, Kirk I'll, even go back in time, when I think about the very start of the pandemic and how we built our budget.
That time, we had model kind of 50 50, new logo versus upsell to existing customers and what we found is over the past two and a half years, we got that completely wrong.
Now.
We got it wrong in the right way.
And so much as we've really taken care of our existing customers.
Look at our bookings from the last quarter.
Just a hair under 80% of those were too.
Existing customers. So we feel really good about that Ben Lin.
Literally.
Dozens of clients meetings over the last quarter of southern and in all of our account planning sessions.
Just a lot of conversations a lot of insight into how our largest customers are thinking about us.
And they really view us.
As mid into the fabric of what Theyre doing.
And as.
As an investor that gives me confidence I would think that we're pretty durable.
That said I don't want to gloss over anything I mean.
We got to improve our new logos, we got to expand the number of customers that are working with us and so how do we intend to do that well, it's really going to be reliant.
Expanding our channel partnerships.
For the past decade, we've had a lot of success.
With DNP.
Well those <unk> are giving way to CDP.
And public clouds, and we got a Forbes the same kind of partnerships with those providers educate them on why utilizing libre app makes their products, even more effective also with system integrators and increasingly with agencies, where we've always had good relationships, but we feel like that could be.
Much stronger.
And much larger for us. So we think that Theres a lot of Tam expansion to be done there and then the other thing that I talked about in my prepared remarks.
Just.
Expanding to these new clients, but it's also ensuring that our sales force, particularly in the U S.
Is operating on all cylinders.
And they're like I feel like we're back to the head count we want.
But we have a different mix.
Whereas a couple of years ago with really experienced sellers, we can kind of sell through objections, we can evangelize and educate.
Now, we got a really focus on training.
That we've hired subset.
Good even more quickly.
Than would otherwise be the norm. So a lot of things going on there, but I would tell you where I sit today.
Probably a little bit more optimistic than it was a quarter ago about.
Where we're going but.
<unk> got to get the new logo engine moving.
To really feel good about.
Our long term growth.
Hey, Curt I might just add a couple of things on an up sell.
If you look at the numbers what you'd see is any weakness was really being driven by smbs and in fact on a relative basis looking at our larger customers again relatively where were much stronger.
That's helpful. Thanks. Thank you Beth and then just a quick follow up Scott you talked about the relationship with Snowflake and constructing a couple of other partnerships with Google.
No.
Could the snowflake partnership actually start to generate real revenue for you all in the next six months or is there anything on the partnership front I guess more of a fiscal 'twenty for the opportunity at this point in time.
I don't know if we've disclosed this award will hate that im going to probably but this year. We expect those channel partnerships that cloud partnerships to do almost $10 million in revenue.
So it's starting to become real money.
And we would expect that going into next year that that would be one of the more rapidly growing parts of our business.
So we're pretty optimistic on it and it's not just.
Snowflake and DCP, but I would say AWS Azure and.
It's also the CDP use like the Salesforce Genie opportunity that I talked about.
The system integrators.
So we think theres a lot there and quite frankly, historically, that's not an area that we've been particularly great at.
But it is a capability that other SaaS companies.
<unk> been good at.
<unk>.
Comprise a bigger mix of their revenue than for us. So we see that as a nice opportunity for us.
Okay. Thank you.
Your next question will return to prior or rehab Shah of Wells Fargo.
Okay.
Hello, do you hear me okay.
Thank you this is Brian Fitzgerald from Wells Fargo.
Hey, guys I just wanted to ask about the enhanced Facebook relationship could you talk about what's new there and specifically about the advantage of using Etfs versus some other method of server to server communication a reconciliation.
Is that more a secure privacy preserving way for marketers to tie into the Facebook copy or does that perhaps.
Kind of future proof Kathy in relation to anything Apple may choose to do in the future in relation to limiting access to IP addresses.
Well I'll tell you I'm really glad you asked that question because we feel really strongly about this every chance we have to educate clients and investors on this we're going to take it.
We think that the world is moving towards dual concert bifurcated consent that is the law of the land and GDP are.
And that is where the U S is moving as well. It is what <unk> has been built on we want to ensure that we have consent on the business side, the marketer side and also consent on the destination side.
And so.
Everything that we've done is predicated on that bifurcated concern now there are other ways that some companies have chosen to go after this summer.
Some of them have talked about fingerprinting.
And we just don't think that's an enduring technology, we think long term, it's not going to be a legal technology.
<unk> talked about things like hashed emails.
And quite frankly, we don't think that those are necessarily secure nor do we think they're very robust I think the average American has something like seven different E. Mails. So if you just do.
<unk> E mailed the hashed email authentication, it's probably not a very good match, a very robust batch.
We use everything doing ramp up we have the most robust.
Identity graph.
And then we're matching those two really the largest network of partners.
It's pretty amazing.
So.
If you want to work with Facebook right.
Then then we can help you do that.
If you also want to work with Google and <unk> 360, we're pretty unique because Portland only ones work with both.
Then you throw the trade desk into the mix and you have the two biggest walled gardens plus the open web and then you throw the Comscore 100 publishers, many of whom have adopted <unk>.
Yes, her library amp as their exclusive technology provider.
Our network of destinations and the unparalleled so for an advertiser.
You could do hashed email unique one offs with hundreds of different destinations, which would be operationally a nightmare or it can work with live ramp because we have all of those turnkey destinations already pre wired.
With the appropriate security and the right consents in place. We just think that we're a better partner for the future that we're selling into.
Thanks, Scott and really appreciate it.
Your next question comes from Shyam Patil with Susquehanna.
Yeah.
Great business Jared on for Sean Thanks for taking the question sure got a couple if you don't mind.
Starting off I know you touched on Google pair and the rollout there in your prepared remarks do you mind just digging in a bit further on that how do you think that impacts the trajectory of other alternative Ids and any impact that you would be on the industry more broadly.
And then also just on the Carrefour relationship was wondering if there was anything that you could call out along how that's been progressing and maybe any of your other flagship deals in this type of macro environment.
Sure maybe Warren I'll talk about payer and then you can jump in on car for.
But the paradigm spent what did that happen three weeks ago and boy Im really pleased that Google has eliminated a lot of uncertainty about their direction.
Because for the first.
They announced how they were going to handle a post cookie world.
And quite frankly, it's very similar to what <unk> been espousing for the past few years.
In a nutshell in.
In the future if you want to.
To use addressable advertising on DB $3 60, and you got to set up a clean room.
Between the advertiser.
And the publisher.
Do a secure anonymised.
Connection.
That's exactly.
How we have been working for the last few years and so we were pleased that they announced us as one of their launch partners.
I've talked to a lot of both advertisers and publishers about it and their system a recognition in the industry that DB 360 is such a large entity that you have no choice, but to embrace the clean room approach that they are espousing now as soon as.
To do that.
Then.
The opportunities to expand that with other live ramp destinations.
Our pretty significant because the same kind of clean room that you can set up for pair you can use.
Two traffic to trade desk, you can use for Facebook you could use for any of our CTV providers or you could use for any of our 100.
10000 <unk>.
Publisher Urls.
And so.
It really.
Kind of looking for the tipping point that will drive us to the post cookie world.
Now it'll take some time I mean, it doesn't launch until Q2.
Calendar Q2 of next year.
But we're out there talking to clients and publishers about it now.
And encouraging them to embrace clean rooms, well before that per launch.
And then I'd be happy to jump in and talk about car floor and then and then also just some other things that we're seeing.
Our relationship with <unk> remains very very strong, we're making progress across all the European territories, whether thats, France, whether it's Belgium.
Spain or even beyond and then also making progress in terms of our progression.
In Brazil, one of the great things here is really the address the ability map that we're building and when Scott talks about really where Ats is in our overall reach I think it's important to note that it's not just about.
Facebooks conversion API or Google pairs, it's also about our global reach whether Thats in Europe , whether it's in Latin America and door <unk> Asia.
Other progress it's really interesting.
Incredibly pleased this quarter that our whole Delhi has signed up as our latest retail customer using safe Haven. So I think you can see that.
<unk> ramp I think we're working now with eight of the top 10 largest retailers in the U S. And this is also expanding internationally as well.
Further ISTAT that I talked about in the prepared remarks is when you think about collaboration and brands sharing.
Now have over 275 partner tenants set up across this network. So while still early days the network effect is beginning.
We see this as a major trend not only in retail media, but also in other industries and then finally it's.
Really interesting.
In my prepared remarks, I talked about pilots underway.
And probably the most interesting thing about that statement was the modifier and it was 13 pilots underway across television.
Across social across brands and data. So that is a direct expansion I would say of our Tam and the applicability of safe Haven, so more to come but we feel great about the progress we've made.
Great. Thank you and then just one more if I may obviously, it's still a couple of quarters away and there is a lot of macro uncertainty at the moment, but how are you thinking about top line momentum as we roll into fiscal 'twenty four do you think that.
Roughly mid teens top line growth could still be a base case or might we see a bit more weakness there.
Why don't I jump in and we're not going to give long term guidance today, but as Scott and I approached this call. We really wanted to leave you all with three very clear message messages.
The first is that we understand the drivers we understand our issues and we understand our challenges whether it's looking at macro whether it's looking at the sales force maturity or any market related pressures, we may be be feeling or market confusion.
Two we want to be absolutely clear that when you think about durability library on place with real competitive advantage in fact, no. One can do what we can do.
Either it's our approach to foundational identity that we are integrated across the AD and Mark Martech ecosystem.
The brand can use data in every customer interaction through live Rab.
Scott talked about our reach and the scale of our partnerships. It is truly unparalleled and then finally I would add a third it's our approach to privacy and security, which is obviously paramount not only to <unk>, but every single one of our customers those are competitive advantages of life ramp and really stressing pointed out our durability.
And then finally, what we want to highlight for everybody is theres a lot that we can't control, but there are some things that we can control and we are doing things to take action, whether it's training and ramping our sales force, whether it's building out our channel partners and partnerships and cloud relationships the investments, we're making in <unk>.
Customer support to drive higher satisfaction and lower churn and then finally I'd point out that we're also investing again, where we have competitive competitive advantage and identity and collaboration in marketplace. We're advancing our geographical footprint and also the number of destinations so again.
Too early to.
Give guidance for next year, but.
But we want to be Super clear, we understand our challenges in the short term, but overall, we believe in the durability and long term opportunity for life ramp.
Sounds great I appreciate you taking the questions now. Thank you is it was a really good question.
We have time for one more question. Your final question comes from Mark Mccollum of the benchmark company.
Thank you good evening, Scott Good morning, Scott.
Maybe taking a couple.
Once you made the first one earlier about.
Disconnect with your stock price and then we sort of talk about the scalability of your network of destinations you mentioned that Google with meta.
Comscore 100 trade desk I think.
What youre doing with E.
And.
Europe right now, it's pretty interesting right.
I guess you connect those two in terms of where the disconnect is is there a limitation to scaling those partnerships today still a predominantly cookie.
Based world and does that scalability.
Really come in you shine.
It's been a post cookie.
Well that were heading to.
Well.
If I.
Let me, let me kind of circle around that before I answer.
I think a lot about.
<unk> talked to a lot of investors I hear three things.
Number one we view ourselves as a rule of 40 company.
So what our rule of 40 companies get valued on number one.
Revenue growth.
Number two margin expansion and number three.
Predictability, so the removal of risk.
And so I think we've talked a lot in this call about margin expansion, that's not a new story.
Look at the numbers on the board in front of me if I go back a few years ago to FY 'twenty two to what we expect this year.
Have generated an additional 120 milligram.
Operating profit.
We're not done.
I mean, we're not nearly done.
Look at the things that we did this past quarter.
As just another step in our journey, because we think that theres a lot of cost levers.
We can manage our technology better to lower our cost of goods sold.
There are things that are.
Element of our cost structure, we intend to continue to scrutinize.
All kinds of things that we can do to.
Good.
Improve our operating profit.
Revenue.
We recognize that's where we've had some softness in bookings over the last couple of quarters, but as Warren just said, we think we understand what's going on there.
We like the things that we've been doing and as I look at our pipeline right now we have.
Double digit number of million dollar.
Deals sitting right at the finish line, but we got to get them through the finish line before.
Before we claim victory, but I like the direction of our pipelines going I like the things that we've done with.
With our sales force and then the third thing, which is really what youre getting at is.
Establishing the fact that were durable that we're predictable and this is where I feel like we've really.
Run into some headwinds that of our own doing because there was COVID-19.
There is a recession there was a fear of cookie deprecation.
First it was slight ramp too dependent on cookies, and then when Google delayed everyone said, well if Google doesn't deprecating cookies is that bad for a lot of ramp.
It can't be both ways.
But I feel like we're getting some certainty on those questions now.
We're seeing.
What the recession could be we're talking to clients.
And we're hearing from them that are really important.
Finally have an answer from Google.
When theyre going to deprecate cookies in this long term care in Q2 of next year and that removes uncertainty from the industry and I think really serves as an important tipping point.
And.
We're seeing regulatory.
How that regulations are evolving whether it be GDP or there's a wave of new regulations five new states.
In the U S implementing regulation.
And we don't view that as a headwind we viewed it as a tailwind in again.
Looking to our clients, who are saying, Hey, Leibrand help us through this why don't we do all these things we believe increase our importance for the future.
And.
In some respects that future can't come soon enough to take those exogenous risks off the table for investors once and for all.
But again to summarize we think the exogenous risks are going away, we're working hard.
To accelerate our revenue and we will always continue to work on improving our operating profits until we're best in class SaaS.
In that respect.
Sure. Thanks, Scott appreciate it.
This concludes the question and answer portion of today's conference I will now turn the call back over to Warren Jenson for any additional or closing remarks.
Terrific well. Thank you operator before before concluding I probably have the most important announcement of our call and that is on September 28th Laura and her husband and beautiful family welcomed Emily leaves a beautiful little girl into the world. So I know you like all of US here at live ramp or.
<unk> happy for Lauren and her family so.
Welcome Emily Louise.
In concluding I guess I would wrap up with really three summary thoughts from today first of all we want to be clear to all of you that we understand our issues and challenges. The second is that we are taking action today to improve both our top line performance and materially increase our <unk>.
<unk> performance and just as Scott said the announced actions are just the beginning this is part of a much larger initiative at live ramp and then finally walk away today understanding that our business is in fact durable and that we do play with considerable competitive advantage. Thanks.
Thanks to all of you for joining us today, and we look forward to speaking with you on the follow ups.
Thank you. This concludes today's call you may now disconnect.
Okay.
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