Q2 2024 LiveRamp Holdings Inc Earnings Call
Please wait the conference will begin shortly.
Good afternoon, ladies and gentlemen, and welcome to life ramps fiscal 'twenty 'twenty four second quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star one on your telephone keypad. If you would like to withdraw your question again press Star one.
As a reminder, this conference call is being recorded I would now like to turn the call over to your host drew broker sourced Vice president of Investor Relations.
Thank you operator, good afternoon and welcome. Thank you for joining our fiscal 2024 second quarter earnings call.
With me today are Scott Howe, our CEO and Lauren Dillard interim CFO.
Today's press release and this call may contain forward looking statements that are subject to risks and uncertainties that could cause actual results to differ materially.
For a detailed description of these risks please read the risk factors section of our public filings and the press release.
A copy of our press release and financial schedules, including any reconciliation to non-GAAP financial measures is available at <unk> Dot com.
So during the call today, we will be referring to the slide deck posted on our website at this time I'll turn the call over to Scott.
Thank you drew and thanks to everyone joining our call today.
As I reflect back upon our recent quarter three key themes emerge.
First I'm really pleased with the progress we're making in our business, we posted strong second quarter results.
Revenue and operating income exceeded our expectations and we have good momentum with many of our leading indicators of growth.
Operating margins reached a record high and we generated positive operating cash flow for a fifth consecutive quarter.
And we continue to make progress against our rule of 40 ambitions.
Second while it was a really nice quarter for us our entire team recognizes we now have an opportunity to build off our momentum.
Throughout the business there are areas that we can continue to improve which keeps us humble and it also fuels our optimism for the future third and finally I continue to believe that our future is even brighter.
Our business is aligned with some key mega trends.
Cloud computing can.
Scented first party data collaboration.
And growth in retail media networks in CTV.
Let me talk about each one of these key themes in turn.
Strong business resilience and momentum.
I am pleased with our progress on our business is demonstrating strong resilience and momentum Q.
Q2 revenue and operating income exceeded our guidance and consensus estimates.
Our operating margin expanded for the fourth consecutive quarter and by 800 basis points year on year to 20%.
We produced 36 million in operating cash flow in the quarter, bringing the trailing four quarter total to $108 million.
Our trailing topline indicators showed improved momentum.
Total revenue grew by 9% with subscription revenue up 5% and marketplace another up 25%.
Subscription growth was in line with our expectation while marketplace and other outperformed significantly driven by healthy digital advertising markets and growth in professional services.
Q2 subscription net retention was 101%.
<unk> three point improvement from last quarter, and surpassing 100% two quarters earlier than we had initially expected.
The sequential improvement was driven mostly by higher up sell but also lower contraction.
Returning to 100% was an important milestone, but by no means will we stop here.
Our leading topline indicators were even more encouraging.
Q2 was our highest new logo bookings quarter in dollar terms in two years and we added six new Fortune 500 customers, we signed a multimillion dollar annual contract with a leading global financial services company for our data collaboration platform.
We signed a high six figure annual contract with the world's leading farm machinery brand. We also signed a high six figure annual contract with an iconic athletic footwear and apparel company, a brand, which we've been pursuing for many quarters.
We also signed her up sold opportunities with two of the largest global airlines and.
Additionally, we also successfully up sold our existing customers.
We had an up sell with a major pharmaceutical company, representing a seven figure annual contract and a multiyear term.
We also signed a seven figure upsell with a major social media platform to allow marketers to use their first party data for targeted marketing using our ramp I D.
Over the last several quarters, we've talked about several near term tactical growth levers to reestablish double digit revenue growth with the sales force being one of the major ones.
This was the big driver of our bookings momentum.
Our sales force attrition has fully normalized and salesforce capacity remains well above fiscal 2022 levels sales.
Sales force productivity also continues to improve and our newest sellers are also contributing with first year reps posting comparable bookings so they're more seasoned counterparts.
I view this as a strong indication we are hiring talented sellers.
Onboarding them effectively with better training and collateral while we're pleased with where we are with our sales force. We will continue to invest in quota carrying head count to ensure we are set up for next year as well as continue to expand our professional services function. This group. This group is really doing.
Fantastic job on pace to double revenue this year to $20 million and driving improvements in customer satisfaction and upsell rates.
Second, we arent satisfied and see room for improvement.
As I've, often told our organization with great companies look in the mirror they never love, what they see even in a quarter of accelerating momentum we see opportunities for improvement.
Let me talk about a few areas on which we're focusing one we're not yet where we want to be on rule of 40, we have always aspired to be a rule of 40 company and I am very encouraged by ongoing progress we are making on both the top and bottom lines for US we expect rule of 40 to looked like 10% to.
15% revenue growth and 25% to 30% operating margins, but of course today on a trailing four quarter basis. We are essentially a rule of 25 company and so that obviously fall short of our long term aspirations. So how do we get there.
On the revenue side continued sales execution is essential.
Encouraged by the trends of recent quarters I also believe that a handful of existential market trends embedding our products within cloud computing partners. The continued growth of retail media networks in CTV.
And the market evolution from cookies to true consumer authentication can further fuel our top line success in coming years on the margin side, we just posted the highest quarterly operating margin in our company's history.
And we are raising our operating income guidance for the year. The bridge from here to 25% to 30% will be driven by several factors first our SaaS business model as a high incremental margin and we expect our revenue growth to accelerate.
We expect improving cost efficiency as we expand our incremental hiring and backfill efforts to our new office in Hyderabad, India.
As we've said before this initiative will result in several hundred basis points of margin expansion as it gets phased in over the next two fiscal years.
And finally, there is no area of our business, where we're not constantly evaluating opportunities to improve our process efficiency and our system architecture.
Customer counts.
Our million plus customer count increased by three and our 5 million 2 million customers.
Also increased by three that's really indicative of the success, we're having with the more sophisticated direct customers that comprise our ideal customer profile.
As I've discussed previously we made a conscious decision last year to focus on high long term value brand customers.
These customers have large digital AD budgets that are being deployed over dozens of digital destinations and helping these customers measure and optimize their spending using their first party data is among our most compelling news cases. These customers typically have an annual contract.
<unk> value greater than $1 million with a multiyear term at above average renewal and upsell rates with that said overall, our Q2 customer count of 895 was down 20% from the prior quarter driven by declines with low ACB non brand customers.
Such as AD Tech platforms I don't think this is cause for concern, but I do think it's an area in which we can and must improve as winning even more high quality, new logos will accelerate our upsell efforts in the coming years. The go to market partnerships that we have with the major cloud providers.
Should help us on this front and we continue to see growth in our pipelines as a result of this initiative.
In addition, we see that data collaboration as a flywheel that seems to be introducing us to new quality opportunities. Our success, serving retail media networks across the globe for example, insurers that both retailers and their myriad of packaged goods partners must work with <unk>.
Brand to unlock the benefits of data collaboration.
<unk> International we are well positioned in major international markets, given the fact that we work with so many marquee global brands, who want us to support them across the markets in which they operate that said international revenue growth in the quarter of 3% on a constant currency basis was lighter.
Then we would have liked and China was the main driver of this disappointing performance earlier. This summer I spent a couple of weeks meeting clients and prospects in Europe.
I think we are uniquely positioned with companies that really matter and we also have a strong strong team in place. Likewise I was in Australia, just last week and met with many of the top retailers and brands in that market, where we have a number of interesting data collaboration activities that we power like many companies house.
Over we are rethinking our expectations for China, the combination of Covid impacts changing political philosophies and an uncertain economy in China are negatively impacting topline international growth in response, we are restructuring, our China business, reducing our operation.
<unk> to a minimally viable footprint in case things change in that market. Overall, we don't expect this international restructuring to have a material impact on total revenue our operating income, but I want to dimension. This so that investors understand that we remain committed to working with our major clue.
<unk> across the markets that they prioritize.
Third.
Longer term our business is aligned with some key mega trends, let me spend a few minutes on our longer term prospects, our product innovation and go to market partnership seemingly have us well positioned to capitalize on some existential industry trends the continued growth of cloud computing and marketing in that.
<unk> and September <unk> convened a group of marquee clients each a leader in their respective industry to walk through our product roadmap and gather feedback on our direction every client and attendance was operating in the cloud and many attendees talked about their challenges navigating mulch.
<unk> cloud providers, both internally and as they seek to collaborate with other partners externally, we see the seismic shift to cloud computing as a big opportunity for live ramp our cloud strategy is to operate where our clients data lives and securely connect their data from the cloud.
Across the entire digital marketing ecosystem, bringing our products to the customers cloud environment provides tangible benefits to our customers in the form of greater operating and cost efficiency increased data security and a quicker time to value on their <unk> subscription the cloud provide.
<unk> also get the benefit of more storage and compute volume, which drives their revenue models.
As more application workloads move to the cloud in the coming years. This will be a wind at our back and we will drive the return on the cloud investments we are making today, our cloud strategy is already succeeding in the market and there is no better external validation of this than receiving the partner of the year Award from Google Cloud.
We were recognized as a global industry technology partner of the year for delivering the embedded solutions that help customers enrich their Google cloud environment.
Our cloud partnership is not limited to <unk>, we are executing the same strategy with all of the clouds, and we're making significant progress with AWS and snowflake as well as Azure and data breaks during the quarter, we announced that our identity capabilities are now natively available within AWS entity.
Resolution with this integration marketers publishers tech platforms and agencies can extend the interoperability of data in the cloud to marketing and advertising destinations using ramp.
With Snowflake are complete identity capabilities are now embedded in the very early customer feedback has been very positive. While these efforts are still nascent we're starting to reap the rewards of our efforts overall, we remain on track to double our total cloud bookings in FY 'twenty four to approximate.
$20 million.
Signal loss in our March toward customer authentication.
Last month I participated in the New York advertising Week Conference a week long event that brings together leaders from across the world of advertising and marketing. It was a productive week of meetings with customers, both existing and perspective and I left the conference energized about live ramps market position and the opportunity we have to help.
Advertisers and publishers with some of their most pressing identity and data challenges my many conversations highlighted an important truth consented to first party customer data and the ability to securely share it across the ecosystem is only becoming more important as we get closer to me.
Mid 2024, when Google begins phasing out third party cookies on the chrome browser large brand marketers need to securely use there are <unk> first party customer data for addressable advertising across the vast and fragmented digital marketing ecosystem and increasing.
They need to collaborate with trusted business partners for enhanced insights about the customer journey they need to do all this in order to drive sales customer satisfaction and return on AD spend our identity infrastructure and data collaboration platform provides a solution to signal loss and cookie deprecation.
By connecting our customers first party identity to all manner of digital publishers, ranging from the largest walled gardens to the smallest dsp's and everything in between using the identity infrastructure across all of these different publishers and platforms enables more.
That cross screen and cross platform measurement that is critical to optimizing return on AD spend we continue to expand our identity infrastructure to give brands greater access to data driven premium advertising inventory over the past few months, we announced a handful of major platform integrations with ramp up.
We integrated <unk> and freewheel, a leading supply side platform for CTV publishers as a result brands can now leverage their first party data in conjunction with live ramps ramp inactivate unfree wheels premium video supply.
We also made ramp <unk> interoperable with yahoos, DSP and <unk> connect Ied as well as Epsilon core IV. In addition to giving brands access to more data driven premium inventory. These platforms can transact with brands on a durable consistent identifier, giving.
Them increase scale, even through signal loss.
Finally, but importantly, we continue to support Google's migration away from cookies to true consumer authentication during the quarter. We continued our beta testing of Google per pair, which stands for publisher and advertiser identity reconciliation allows brands to safely and securely use.
Use their first party customer data to connect to open web publishers on DB 360.
To make this happen marketers use the clean room Tac in live ramps data collaboration platform to securely reconcile identity with publishers and purchase inventory via DB 361 third party cookies are eliminated pair will be the only way for brands to.
Target <unk> hundred 60, we are the largest and most scaled partner with Google on the payer launch we now have over 6500 publisher domains live on Google pair across North America, Europe, and APAC and we continue to scale advertising campaigns and are seeing market or match.
Rates continue to increase our key objective here is to continue to evangelize. How this works the major advertisers through Webinars workshops, and published case studies, knowing that the education. We do on this front will benefit clean the room collaborations between any advertiser and any publisher who want a partner.
With one another.
The rise of retail media networks retail media networks increasingly just commerce media networks, where another key topic at AD week. These advertising channels continue to grow taking an increasing share of advertising budgets and they are becoming ubiquitous.
Brand marketers are trying to manage customer data and identity across a growing number of different retail media networks. According to a recent association of National advertisers survey over half of marketers are using five or more different retail media networks, including 16% that are using tenor.
More different networks. This continues to be live ramps opportunity.
First by helping brand marketers safely and securely use first party data on these platforms.
Second by enabling Omnichannel measurement, among various retail media networks as well as to other advertising platforms.
A shift to CTV and data collaboration as the pandemic shifted consumer viewing habits CTV has witnessed explosive growth. While this growth offers <unk> customers yet another set of platforms on which to activate their data. We believe the opportunity is far greater while granular.
Audience targeting and frequency capping unlock a first wave of advertiser benefits. There is an increasing the opportunity for additional services. For example, given the fragmentation in CTV measurement becomes an increasing need advertisers need to demonstrate their ROI and publishers require mezz.
<unk> to justify their pricing and validate their inventory efficacy. In addition, many CTV providers have rich collection of authenticated user data related to demographics and viewing behavior and these increasingly offer a data collaboration opportunity not unlike what is driving the explosive growth.
Rose and retail media networks.
In closing, let me reiterate what I believe to be the key themes from the quarter first I read it.
Like the resilience and momentum of our business is showing particularly with respect to the topline progress we are making.
As a result, we're raising our guidance for the year, but we're not satisfied not even close we think continuing to win new clients accelerated our progress in the international markets and continued focus on all aspects of rule of 40 are going to unlock even greater value for our shareholders as we.
Regress and our efforts.
Above all however, I'm excited about live ramps positioning against a number of key existential trends.
Computing retail media Networks' first party data collaboration.
<unk> and the slow March toward authenticated addressed ability can all be tailwind for our business in the coming years.
Thank you again for joining us today and a special thanks to our exceptional customers partners and to all of my live ramp colleagues 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 Lauren Thanks, Scott and thank you all for joining US today I will cover two topics.
First a review of our Q2 financial results and second our updated outlook for FY 'twenty four and for Q3.
Unless otherwise indicated my remarks pertain to non-GAAP results and growth is relative to the year ago period.
Starting with Q2 results.
In summary results were above our expectation revenue came in at $160 million, which was $8 million above our guidance and operating income was $32 million or $13 million above our guidance.
Operating margin expanded by eight percentage points to a record high of 20%.
And we generated $36 million in operating cash flow, our fifth consecutive quarter of positive ocs.
Let me provide some additional details please turn to slide five total revenue was $160 million up 9%. This.
Subscription revenues slightly ahead of our expectations while marketplace. In other was significantly ahead, driven primarily by a stronger than expected digital advertising market.
Subscription revenue was $126 million up 5% and growth was driven by broad product and sector strength.
Fixed subscription revenue grew mid single digits and usage as a percentage of total subscription revenue was 15% within the historical 10% to 15% range.
<unk> was $428 million up 2%.
We believe this growth represents a low watermark as the recent improvement in bookings and contraction will start to more fully impact this metric moving forward.
Addition, Q2 growth was hurt by the timing of bookings being recognized in error.
Selecting our move up market to larger more complex deals.
Subscription net retention was 101% this sequential improvement was mostly due to improved upsell and to a lesser extent reductions in contraction.
While our longer term aspiration is obviously much higher we are pleased to get our SNR back above 100% two quarters earlier than we initially expected.
Current RPI or <unk>.
Next 12 month contracted backlog was $339 million up 16%.
Total IPL, including contracted backlog beyond the next 12 months was up 26% to $490 million.
Like last quarter, there is an unusually large difference between <unk> and <unk> growth as.
As we've discussed previously <unk> is very sensitive to the timing of renewals and to contract durations and both of these factors again benefited <unk> growth in the corner.
Overall, the Q2 selling environment remains stable on the positive side, we saw an improvement in our pipeline conversion back to FY 'twenty two levels.
And on a dollar basis had the strongest new logo quarter in the past two years.
Also our contraction or the combination of down sell and customer churn.
Improved both quarter on quarter and year on year.
And budget constraints were cited less frequently on.
On the other hand, our average deal cycle continues to run about one quarter longer than FY 'twenty two.
This has been the case now four consecutive quarters and is at least partially due to our shift upmarket to larger high LTV enterprise customers with more complex data collaboration use cases, you can see this shift show up in some of our key growth metrics like our million dollar customer account.
Marketplace and other revenue of $34 million increased 25% driven by data marketplace, which grew 19% and accounted for 78% of marketplace and other revenue data marketplace growth was fueled by a healthy digital advertising market, including strength in CTV.
We also continue to see strong growth in professional services, which accounted for nearly one third of the revenue growth and market place to another.
Moving beyond revenue gross margin was 75% flat year on year, and 200 basis points higher than our guidance driven primarily by the timing of planned investments.
Operating expenses decreased 5% to $89 million driven by last year's cost restructuring and benefited from the shift of certain expenses to the fiscal second half opt.
Operating income was $32 million up from $17 million, a year ago, and our operating margin expanded by 800 basis points to a record high of 20%.
GAAP operating income was positive for a second consecutive quarter at $8 million, representing a GAAP operating margin of 5%.
We incurred $7 million in restructuring charges, primarily related to a goodwill impairment associated with the restructuring of our China operations and a lease impairment.
Stock based compensation was $16 million down from $27 million a year ago due to the accelerated vesting of certain non any O <unk>.
In Q4 of FY2023.
Operating cash flow was $36 million up from $21 million a year ago due primarily to higher earnings.
We repurchased 490000 shares for $15 million in Q2, bringing the fiscal first half total to $35 million.
Approximately $183 million remaining under the current authorization that expires on December 31 2024.
In summary, Q2 was a strong quarter revenue growth improved to 9% with both subscription and marketplace exceeding our expectations. Our non-GAAP operating margin expanded by 800 basis points GAAP operating income was positive for a second straight quarter, we generated $36 million in operating cash flow in the <unk>.
<unk> and $108 million in the trailing four quarters, and finally, we repurchased $35 million of stock through Q2.
Next let me now turn to our financial outlook for FY 'twenty four and for Q3, Please turn to slides 12 and 13. Please.
Please keep in mind, our non-GAAP guidance excludes intangible amortization stock based compensation and restructuring and related charges.
With the full year, we are increasing our total revenue guidance by approximately $10 million at the midpoint.
We now expect revenue to be between 632, and $637 million up 6% to 7% year on year.
Our outlook for subscription revenue is unchanged, we continue to expect subscription revenue to grow in the mid single digits with usage as a percentage of total subscription near the midpoint of the historic 10% to 15% range, we expect subscription net retention to hover around 100% for the next two quarters.
We now expect marketplace and other revenue growth to be in the low double digits for the full year.
Up from our prior expectation of mid to high single digit.
We continue to expect gross margin to be approximately 74%. Despite the outperformance in Q2, which was mostly a timing issue.
In the second half, we are making incremental investments in our platform architecture.
And in professional services to support future revenue growth.
We expect our operating expenses to decline this year by approximately 4%, but are still making additional investments in our sales force and cloud strategy as well as some upfront investment to ensure our offshoring initiatives are successful.
Despite these added investments we are increasing our operating income guidance to be between 97, and $100 million 7 million higher than our prior guide at the midpoint.
At the midpoint of our guidance range. The operating margin is approximately 15% up 500 basis points year on year.
We expect stock based compensation to be approximately $69 million, which benefits from the $23 million and accelerated vesting in FY2023.
And is slightly lower than our prior guide.
Now expect $11 million in restructuring charges, given the lease and goodwill impairments recognized in Q2.
We expect GAAP operating income to be between eight and $11 million.
Lastly, we continue to expect share repurchases of between 15 and $20 million per quarter in the fiscal second half.
Now moving on to Q3, we expect total revenue of approximately $165 million.
Operating income of roughly $29 million and an operating margin of approximately 18% a few other call outs for Q3 recall that in the year ago quarter. Our subscription revenue included a nonrecurring contract settlement of $4 million, resulting in a three percentage point growth headwind for subscription.
Revenue this Q3 <unk>.
Excluding this headwind, we expect underlying subscription growth to be mid single digits. We expect subscription net retention in Q3 to be approximately a 100%.
We expect marketplace and other revenue to grow by low double digits.
This growth rate is slower sequentially, because we are taking a measured view on digital AD market growth in light of the current macro and geopolitical environment.
And we expect gross margin to be approximately 74%.
Before opening the call to questions I'll conclude with a few final thoughts.
Q2 was strong on the top line and especially the bottom line importantly.
Importantly, we think our revenue growth metrics are turning a corner.
Next given the uncertain macro environment, we remain appropriately cautious with our revenue guidance for the balance of the fiscal year, we have good visibility on our subscription business and with marketplace. We're striking a balance between our strong execution and the risk of a slowdown driven by forces outside of our control.
To be clear, we would expect to see upside in marketplace, particularly in Q4, if the advertising market is hold at the current level.
And finally, as Scott mentioned, our financial North Star is rule of 40.
With mid teens top line growth and a 25% plus operating margin on the top line. We are encouraged by the positive trends in forward bookings and contraction on the margin front the high incremental margin inherent in our model combined with the expansion of our new India Office gives us a path for.
<unk> margin expansion in the coming years, while we continue to appropriately invest to support topline growth.
With that on behalf of all <unk>. Thank you for joining us today.
Operator, we will now open the call to questions.
Thank you if you ask a question. Please press star one on your telephone keypad, if you wish to remove yourself from the queue simply press Star One again one moment. Please for your first question.
Your first question comes from the line of Shyam Patil.
Your line is open.
Hey, guys. This is Jared on for Sean Thanks for taking the question and congratulations on the impressive quarter.
Thanks Sharon.
Of course, I've got a couple if you don't mind I guess for starters focusing in on the higher LTV customers strategy.
Can you elaborate a bit further upon that and how youre thinking that this plays out through the rest of the year.
Well as maybe unpacking a bit more of the decline that we saw in the current quarter.
And then the second question you continue to highlight CTV as a driver of strength in the business anywhere in particular that we should be looking in your results as we're looking both in this quarter and then further ctv's trend down the road and just how are you thinking that that CTV strength continues to materialize.
Great. Thanks, Jared I'm happy to take the first and I'll pass it to Scott for the second with respect to customer count I'll start maybe by just highlighting something Scott mentioned in his prepared remarks, which is that this is a direct reflection of a decision that we made as a business several quarters ago to really focus our selling efforts.
On large high ACB enterprise customers, where we believe our value proposition today is the greatest during the quarter. We did see continued pressure on customer counts. This was almost entirely driven by small customers in the AD tech sector that are being impacted by the macro.
As well as other market dynamics.
That said.
I think it's important to note that our dollar based metrics are improving and reflect this quality versus quantity dynamic that Scott had mentioned as an example in the quarter. We closed one of our strongest new logo bookings quarters in recent history, and we saw a pretty nice uptick in those million dollar customer.
<unk> as well as customers, who fall into 500, K $10 million range. So in terms of our outlook for the balance of the year. We do expect this dynamic to continue for at least the next couple of quarters, which means total customer count could continue to decline, but we would expect other metrics like million dollar.
Plus customer count to continue to increase.
And then your second question I would tell you I'm really bullish about CTV and you've probably heard that in my prepared remarks in terms of where youre going to see it I would say, it's hard to tease out, but you can broadly look.
Three major areas. The first is subscriptions.
If you look at the CTV providers for the most part they're 100% authenticated so there could be a big winner.
As third party cookies go away because that spend is addressable and it works.
And so where do you see that in our business is in our subscriptions.
And so as the market tips to CTV I think youll see our subscriptions become even stickier.
You see that in terms of usage increase as well.
What's kind of startling.
Looking at the stats earlier today, if you look at our distributions.
The destinations that advertisers send data to us.
If you look at the top 50 by volume.
Nearly half of them two of them are pure CTV.
Providers or see TV platforms.
So it suggests that very quietly over the last couple of years advertisers are already making a shift.
The second place that Youre going to see this is in our marketplace business.
And again.
It's kind of beneath the surface one.
TV data sales as is.
A part of marketplace were actually up a staggering 50%.
Year over year.
And that data comprises I think roughly 10%.
Of the total demand within data marketplace.
So nice story, there as well.
And then the third place that Youll see it not surprisingly.
Because theyre getting more demand and because they also have really deep pockets of authenticated data is we think theres an opportunity for data collaboration.
Similar to what we've seen in the retail media network space.
The various CTV providers have something really interesting to share and so there's an opportunity.
Opportunity that all of them are interested in.
And partnering more deeply with the major advertisers of the world collaborated non data such that advertisers can find their targeted audiences.
Also.
Understand kind of end to end measurement.
Cross everything that happens once an AD is seen.
So three really interesting places.
Just come full circle.
We've hit the tipping point for CTV. It's here, we're seeing it in our numbers and we think thats going to be a really nice tailwind for us.
For the next few years.
Great. Thank you both.
Your next question comes from the line of Elizabeth <unk> of Morgan Stanley. Your line is open.
Hey, this is Chris <unk> on for Elizabeth.
Congrats again on another solid quarter here.
Maybe to start out.
Out of all the kind of like top line initiatives that you all have been focused on over the past year or so whether that's the sales force improvement or the growing industry partnerships I'm curious to hear what areas that maybe surprised you. The most of the upside than maybe you initially expected so far.
Yes, Chris I would tell you that to me sales success as a function of two ingredients.
First you have to have demand.
And there I think we've probably been pleasantly surprised based on our initial forecasts.
In terms of market softness in.
I think the market has just developed better than we thought but from a demand side. There are so many levers that we're pulling cloud partnerships CTV.
Collaboration networks, Likewise, really really pleased with some of the traction we're getting with major European clients and Australian clients.
Whats interesting is the opportunities that we're seeing if you looked at our pipeline and you look to both that the the named clients and the conversation that's underway.
It is really encouraging.
Because they are all companies that you would've heard of and Theyre doing really fascinating things with data.
So I like the demand side, and Thats firmed up I think even better than I.
Who would have thought.
But to meet the demands you also have to execute you have to be able to respond and there I'm equally pleased.
We've really done a revamp of our marketing collateral our team has done a nice job of.
Onboarding and training and arming sellers with.
The tool.
Tools that they need to succeed.
And we're seeing that in our numbers.
More specifically.
Best New logo quarter, and a couple of years.
Strength kind of across the board auto financial services healthcare retail.
And our pipeline conversion was the highest we've had in seven quarters.
And even stronger with the $1 million deals. So when I look at the numbers everything is kind of tip. It in the right direction now the one thing I would say to our entire organization. Many of whom are listing on the call. Today is success has to be stacked we can't let up we have a lot of momentum.
But a couple of good quarters doesn't make the trend line, we're looking for.
So we need to keep it going through the back half of the year.
Got it that's very helpful.
Also wanted to ask around the.
Impressive six fortune 500 customer additions in the quarter. Then I think you mentioned just curious how those came about did they come through that.
<unk> salesforce or maybe through some of your.
Industry partnerships and what do you think worked well in the process to ultimately windows those large customers.
Yeah hold on I'm, just kind of core stat, which is kind of a mind blowing actually what I would tell you is what I'm really pleased with is our channel partnerships and I think we're seeing a lot of traction there.
One of the things that.
I realized when I worked at Microsoft I thought that.
Years ago, all the Microsoft sales were direct.
And when my company got acquired I realized that's not the case they have a really big partner Salesforce.
And in fact most.
Most SaaS companies use partner channels to.
To their benefit.
With the exception of live ramp now a couple of years ago, We really started.
To push on.
Channel partnerships and our focus for this past year has really been with the clouds and cloud data warehouses, we've done direct partnerships with all the major cloud providers. We've also forged strategic partnerships with system integrators for cloud opportunities.
And we are partnering closely with the ecosystem educating them about how our products work in the cloud and.
Use cases.
Go to market education.
As an example.
If I think about.
Just last quarter alone.
We did over 215 joint planning calls just with Snowflake.
But ultimately we're going to be judged by our results and on this 60% and this is the stat I was looking for 60% of our commercial leads closed cloud business year to date, which is an amazing stat relative to a year or two ago.
And if you look at cloud.
Attached business as part of our revenue.
Double it this year.
$20 million for the year, so really really encouraged and I think we're still in the early stages of getting those partnerships up and running.
Excellent. Thank you so much.
Your next question comes from the line of Mike Judah, which of the benchmark company. Your line is open.
Thank you and good evening Scott arent.
Just two questions.
I was curious what dynamics drove the usage as a percent of subscription revenue.
Above expectations, 215% I think 15 is sort of at the higher end of your historical range.
And what might that suggest in terms of 24.
And then separately curious what kind of demand you may be seeing outside of your core CPG and retail verticals.
No.
Excuse me, we've talked you've talked in the past about health care and Fintech being sort of limited with with data privacy laws.
Maybe some color there would be helpful. Thanks.
Sure I'm happy to take the first American I'll, let Scott jump in on the second with respect to usage as a percentage of subscription revenue youre right. It landed right around 15% in the quarter, which.
Is at the high end of our historic 10% to 15% range.
The only notable thing I would call out is just benefiting certainly from a better macro environment and better overall trends in digital advertising than than we assumed in our outlook going into the quarter.
And again in the back half and this is consistent with with how we've been guiding those subscription usage in marketplace.
We are attempting to be both balanced and conservative in.
So would guide you to the midpoint of that 10% to 15% range in Q3, and Q4 versus what we saw in Q2.
And then Mark your second question is really about which verticals.
In my prepared remarks today I talked about.
My time at Adweek, a few weeks ago in New York and.
And one of the things that was all over at week literally every conversation was the growth of retail <unk> networks.
It's the fastest growing part of most media plans and as a result.
Other advertisers marketers and data providers have really taken notice.
And the whole driver of retail media networks is collaboration that's happening between retailers and their merchant partners I think we're starting to see that evolve in a really healthy way to other verticals.
I think it was in Q4 of last year I talked about the automotive space as an example in a shared.
New client win that we had.
And a fascinating case study, where they're using us and doing data collaboration.
Not yet with the rest of the world, but between the OEM.
The regional advertising groups.
And the actual dealers where cars are sold.
And when all of them are collaborating all of a sudden you can make the connection between a car that's manufactured.
We're an AD is served regionally and whether it actually drove a purchase at the dealer.
Okay that is a great case study that I look forward to sharing with you someday at an analyst day, because it's also indicative of <unk>.
The company, we brought on and when they came on they were just in Onboarding clients.
Half a million dollars a year and within three years Theyre doing some of the most sophisticated things that any of our clients are doing their spend is over 10 times as much as it was when they started.
And they just keep layering more sophistication on what Theyre doing.
Another more recent example.
As I talked about some airline wins that we had.
And really excited about where one of them is going to take their partnership with live ramp because certainly they will start mill use live ramp to better direct their own spend from a marketing perspective, but the partnered collaboration that theyre going to turn on over time, they have a network.
Both Codeshare partners in hundreds of different travel partners.
Where they can be sharing data for the collective good and to drive a better customer experience as well in.
In addition, our.
Most airlines, including this one probably more than most.
Have a lot of.
Untapped assets in particular.
The the screens that are in your seat back.
And the apps that you might be watching to watch.
Movies, when you're on the plane.
So some amazing things that youre going to see.
The travel space.
A third vertical and I am just given these three as examples would be the publisher space.
Earlier.
Jared asked me about CTV.
And there we're seeing such interesting innovation from those CTV providers.
They can build unique segments from their data they can create multi screen packages and they can collaborate with advertisers.
To really deliver full purchase funnel measurement.
From the moment and that has seemed to how much engagement to an actual purchase in store at a dealership or online.
So I think the whole concept of retail media networks.
That term as yesterday.
Elaborative networks or clatter collaborative data partnerships.
I think the world is wide open every sector.
The good news as we sit right in the middle of that.
Interesting stuff, thanks, Scott very helpful.
Your next question comes from the line of Jason <unk> of Craig Hallum Capital Group. Your line is open.
Great. Thank you. This is <unk> on for Jason So I guess first just to start.
You've seen some some good improvements in our results in the last couple of quarters. So I just wanted to get some color on the bookings trajectory. If you go back to some of the issues that started back in 2022, I mean do you think that all of those are kind of been put behind you now and the start of a migration higher and I guess, how is that kind of manifested in the strength for <unk>.
Yourself.
Yeah, I'm happy to take the first part and Scott can weigh in on the strength of our first year reps.
With respect to our bookings momentum as we mentioned in our prepared remarks, I think we're very encouraged by our recent sales momentum and I said. This in my prepared remarks, I believe our growth metrics are turning a corner and I use the word turning rather than turned because we do need to see continued strong execution and.
Second half both with respect to two bookings as well as contraction really to begin to see our key growth metrics accelerate in Q4 and exiting this year.
We feel pretty good about the few strong quarters of bookings, we've posted them, but as you. Both mentioned now we need to see that trend continue in the back half.
And in terms of our selling efficacy.
Prepared remarks, I talked a little bit about.
The bookings efficacy of our new reps relative to our seasoned reps in.
Roughly the same and it's interesting if I think back to live ramps early days, we invented the category.
And so we had a lot of young sellers, who.
New more about technology and our.
<unk> than anybody else on the planet.
So they were the unquestioned experts in all areas of that Onboarding.
Now many of them are still with us and they've grown and they've become spectacular.
Sales sales representatives.
But more recently the clients that we're serving.
Tend to be larger.
Bigger contracts.
<unk> that are very recognizable.
And our profile of the new people that we're hiring has probably shifted a little bit more towards industry vertical experts.
And I think one of the reasons that our new hires have been so effective as they can go in and they can talk the language of retail.
Language of automotive the language of travel.
And they're very effective in a slightly different way than perhaps our original sellers.
They brought the combination of all those people together.
The sharing of best practices, I'm really happy with.
Because I think we have great technical knowledge, coupled with great industry knowledge. So when a situation arises there's always multiple people across the organization that you can say you can tap into and say what would you do here.
So I feel like we're showing up with a really smart ideas to clients and those clients are receptive to it.
Perfect and then just quickly just circling back to the comments on marketplace.
That conservative conservatism in the guide I mean did you guys see anything around that October timeframe that you would call out or is this just more just general uncertainty.
Yeah, Great question. So we did see a bit of a pull back in early October which we would at least partially attribute to the conflict in the middle East.
Since then growth has been healthy, but we are taking a conservative view for the balance of the quarter, just given given the macro uncertainty as well as our lack of visibility into this area of the business. As a reminder, it was this quarter last year, where we saw growth swing from positive to negative.
Year on year in a matter of a month. So we just think it's prudent to be conservative with our guidance kind of put some numbers against that we're assuming marketplace rose in Q3 is a low single digits and roughly roughly flat in Q4.
Thank you.
Operator, we have time for one more question. Please.
Understood. Your last question comes from the line of Brian Fitzgerald of Wells Fargo. Your line is open.
Thanks, Scott I don't know if you have a role here, but we wanted to ask about.
Announcement at Amazon Unbox of the Amazon publisher cloud it sounds to us like even when publishers are doing premium direct deals going forward there.
Going to be significant utilization of clean rooms, and presumably some underlying identity resolution technology. Just wondering if you could give us some thoughts on trends there.
And what Youre seeing and how you think <unk> factors into that.
So interested if I go back five years ago, one of the questions that I, often got from shareholders or potential shareholders.
Things like Hey.
Will will Amazon, Google and Facebook eventually put you out of business.
Now you say no.
Absolutely not they're competing with one another.
We are complementing them, we are partnering with them will you see it today, because it's not just Amazon, but it's the fact that we are the beta launch partner for Google pair.
And you see it with the relationship that we have with meta you see it with the relationships that we have with virtually every CTV CTV provider.
It is just the case that in the World. We live in people are rightfully very protective of their data.
And so the world needs someone like live ramp to ensure that.
Collaboration can happen.
Either side is protected.
And if one side says trust us give us all your data.
You should naturally be suspicious.
And so I think it is a really good sign that on both the advertiser side and the publisher side.
Big companies are recommending.
That live ramp be utilized to facilitate the collaboration.
The other thing that I would say, that's a little bit part and parcel of this.
Okay.
I get a lot of questions about the I'd space.
Because it seems like every week someone's unveiling a new identifier.
We work with hundreds of them now.
And again.
It goes back to our positioning as neutral and interoperable, where the Rosetta stone.
So whether its axioms new identifier facebooks identifier fabrics identifier google's identifier doesn't matter to us.
<unk>.
There needs to be that Rosetta stone that can tie it all together and that's the role that lie ramp place.
Really appreciate it thanks Scott.
There are no further questions at this time I will now turn the call over to Lauren Dillard.
Thanks, very much and let me just close with a few final thoughts first Q2 is strong we're pleased with our execution in the quarter and.
And importantly, we think our revenue growth metrics are turning the corner next given the uncertain macro environment.
Main appropriately cautious with our revenue guidance for the balance of this fiscal year and finally, we continue to make nice progress against our rule of 40 aspirations and believe we still have several levers to pull to improve both our growth rate and margin profile moving forward. So with that thanks again, everyone for joining us.
Look forward to speaking with many of you in the days and weeks ahead.
This concludes today's conference call you may now disconnect.
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Okay.
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