Q3 2024 LiveRamp Holdings Inc Earnings Call

Operator: Good afternoon and welcome. Thank you for joining our fiscal 2024 third quarter earnings call. With me today are Scott Howe, our CEO, and Lauren Dillard, our CFO. Today's press release and this call may contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. For a detailed description of these risks, please read the risk factors section of our public filings and the press release.

Good afternoon and welcome.

Thank you for joining our fiscal 2024 third quarter earnings call with me today are Scott Howe, our CEO and Lauren Dillard our CFO.

Today's press release and this call may contain forward looking statements that are subject to risks and uncertainties that could cause actual results to differ materially.

For a detailed description of these risks please read the risk factors section of our public filings and the press release.

Operator: A copy of our press release and financial schedules, including any reconciliations to non-GAAP financial measures, is available at LiveRamp.com. Also, during the call today, we'll be referring to the slide deck posted on our website. And with that, I will turn the call over to Scott.

Copy of our press release and financial schedules, including any reconciliation to non-GAAP financial measures is available at live ramp Dot Com also during the call today, we will be referring to the slide deck posted on our website and with that let me turn the call over to Scott.

Scott E. Howe: Thank you, Drew, and thanks to everyone joining our call today. Q3 represented another quarter of improved momentum for LiveRamp. So my initial remarks today will focus on our recent accomplishments in greater detail. As we look forward, however, we see a watershed year for the digital marketing industry and a significant opportunity for LiveRamp. So I'll also spend some time talking about our goals for FY25 so that we can revisit our progress against these ambitions in the coming quarters. Q3 revenue growth exceeded our expectations across the board, with total revenue up 10%, subscription revenue up 5%, and marketplace up 29%. Non-GAAP operating income was up 40% year-on-year and was $7 million, or 25% ahead of our guidance. A year ago, you may recall, we had a non-recurring contract settlement.

Thank you drew and thanks to everyone joining our call today Q3 represented another quarter of improved momentum for library and so my initial remarks today will focus on our recent accomplishments in greater detail.

As we look forward. However, we see a watershed year for the digital marketing industry and a significant opportunity for library and.

So I'll also spend some time talking about our goals for FY 'twenty five so that we can revisit our progress against these ambitions in the coming quarters.

Q3 revenue growth exceeded our expectations across the board with total revenue up 10% subscription revenue up 5% and marketplace up 29%.

non-GAAP operating income was up 40% year on year and was $7 million or 25% ahead of our guidance.

A year ago.

Recall, we had a nonrecurring contract settlement.

Scott E. Howe: Adjusting for this, our underlying subscription growth was 8%, which is a notable acceleration from the 5% rate we posted in the trailing three quarters. This acceleration reflects the turnaround in sales productivity that has been building over the past several quarters. As they often say, the gift and curse of a SaaS model is that reported revenue growth is slow to decelerate and also slow to accelerate. The quarter seemingly demonstrates that we are now on the upswing, and, encouragingly, the leading indicators of our revenue growth give us increased confidence about the fiscal year ahead. Our ARR, or Annual Recurring Revenue, in Q3 was $447 million, increasing by $19 million quarter-on-quarter, which is the largest dollar increase in the last nine quarters. Building on the new logo booking strength of Q2, Q3 represented our best new logo quarter in over two years. We signed a major health insurance company to a seven-figure annual contract with a three-year term for our identity and cleanroom product. A U.S. supermarket chain signed a two-year contract with a seven-figure ACV for identity and data onboarding.

Adjusting for this our underlying subscription growth was 8%, which is a notable acceleration from the 5% rate we posted in the trailing three quarters.

This acceleration reflects the turnaround in sales productivity that has been building over the past several quarters.

As I, often say the gift and curse of SaaS model is reported revenue growth has slowed or decelerate.

And also slow to accelerate.

The quarter seemingly demonstrates that we are now on the upswing and encouragingly, the leading indicators of our revenue growth give us increased confidence about the fiscal year ahead.

Our <unk> or annual recurring revenue in Q3 was 447 million, increasing by 19 million quarter on quarter, which is the largest dollar increase in the last nine quarters.

Building on the new logo bookings strength of Q2 Q3 represented our best new logo quarter in over two years.

We signed a major health insurance company to a seven figure annual contract with a three year term for our identity and clean room products.

Our U S supermarket chain signed a two year contract with a seven figure ACB for identity and data Onboarding.

Scott E. Howe: Finally, we signed a new financial services customer to a two-year, seven-figure annual contract for our Identity Activation and Measurement product. We also continue to perform well by upselling existing clients, particularly large enterprise customers. In Q3, we upsold 42 Fortune 500 customers, spanning a wide range of sector verticals. We had a seven-figure ACV upsell with a premium credit card company for data onboarding and activation. We upsold a major CPG company to an incremental 7-figure annual contract for multiple products, including our data cleanroom, activation, and measurement. Finally, we had another seven-figure upsell with the Global Beauty and Cosmetics Company for our Identity and Clean Room product.

Finally, we signed a new financial services customer to a two year seven figure annual contract for our identity activation and measurement products.

We also continue to perform well upselling to existing clients, particularly large enterprise customers. In Q3, we up sold 42 fortune 500 customers spanning a wide range of sector verticals.

We had a seven figure ACB upsell with a premium credit card company for data Onboarding and activation.

We up sold a major.

C. P G company to an incremental seven figure annual contract for multiple products, including our data clean room activation and measurement.

Finally, we had another seven figure upsell with a global beauty and cosmetics company for our identity and clean room products.

Scott E. Howe: I am extremely proud of our recent sales performance and the turnaround our sales team has orchestrated over the past year plus. Our sales capacity and productivity have turned a corner, setting us up for continued gain.

I am extremely proud of our recent sales performance and the turnaround our sales team has orchestrated over the past year plus.

Our sales capacity and productivity have turned to corner setting us up for continued gains.

Capacity.

Scott E. Howe: Sales attrition this year, after spiking in FY23, has normalized back to FY22 levels, and our direct seller headcount is approximately 10% higher than it was in FY22. Our sales capacity is in a healthy position, and that means we can proactively optimize for sales performance. Sales productivity. Not only is our capacity at a level sufficient for faster revenue growth, but we are also seeing improving productivity. Average bookings per rep were up over 20 percent year-on-year in both Q3 as well as fiscal year-to-date.

Sales attrition this year after spiking in FY 'twenty, three as normalized back to FY 'twenty two levels and our direct seller head count is approximately 10% higher than it was in FY 'twenty two.

Our sales capacity is in a healthy position and that means we can proactively optimized for sales performance.

Sales productivity.

Not only is our capacity at a level sufficient for faster revenue growth. We are also seeing improving productivity.

Average bookings per rep were up over 20% year on year in both Q3 as well as fiscal year to date.

Scott E. Howe: Our conversion of sales pipeline to contract signings has improved for four consecutive quarters now, and in Q3, it was a ten-quarter high. Much of this improvement is coming from sellers we onboarded last year. This is testament to both our revised hiring strategy that focuses on experienced enterprise sellers with vertical expertise, as well as our revamped onboarding and enablement process that has accelerated the ramp time for our new rep, the cloud partnership. We also continue to make progress with our cloud channel partnerships, and bookings from this channel will double this fiscal year. In Q3, we were selected as a 2023 Amazon Web Services Global Industry Partner of the Year for playing a key role helping customers drive innovation and build solutions on AWS. This accolade should sound familiar.

Our conversion of sales pipeline to contract signings has improved for four consecutive quarters now and in Q3 was at 10 quarter high.

Much of this improvement is coming from sellers, we on boarded last year.

Testament to both our revised hiring strategy that focuses on experienced enterprise sellers with vertical expertise.

As well as our revamped onboarding and enablement process that has accelerated the ramp time for our new reps.

Cloud partnerships.

We also continue to make progress with our cloud channel partnerships and bookings from this channel will double this fiscal year.

In Q3, we were selected as a 2023 Amazon Web services.

Global industry partner of the year for playing a key role helping customers drive innovation and build solutions on AWS.

This accolade should sound familiar.

Scott E. Howe: Last August, Google Cloud also selected us as Partner of the Year. We also continue to gain traction with our Snowflake Sales Partnership and our Embedded Identity and Activation products. As for Azure and Databricks, we expect these partnerships to scale more meaningfully in the coming year, thanks in part to Habu's strong relationship. Now, let me turn to our major areas of focus for the year ahead, starting with Habu. We announced the acquisition of Habu on January 18th and closed on January 31st.

Because last August Google Cloud also selected us as partner of the year.

We also continue to gain traction with our snowflake sales partnership and our embedded identity and activation products.

As for Azure and data breaks we expect these partnerships to scale more meaningfully in the coming year. Thanks in part to Habu strong relationship.

Let me turn to our major areas of focus for the year ahead, starting with hobby.

We announced the acquisition of hobby, one January 18th and closed on January 31.

Scott E. Howe: We have had many conversations with customers, partners, employees, and shareholders. I'm pleased to share that the feedback has been overwhelmingly positive across the board. Our stakeholders and partners recognize the importance of first-party data collaboration for personalized marketing in a world of diminishing third-party signals. They appreciate that no single company has enough data on its own to have a complete and comprehensive view of the customer journey, making data collaboration imperative. The combination of LiveRamp and HABU creates a software platform that makes this type of data sharing safe, simple, scalable, and smart.

We have had many conversations with customers partners employees and shareholders I'm pleased to share that the feedback has been overwhelmingly positive across the board.

Our stakeholders and partners recognize the importance of first party data collaboration.

For personalized marketing and a world of diminishing third party signals.

They appreciate that no single company has enough data on their own do you have a complete and comprehensive view of the customer journey.

Making data collaboration imperative.

The combination of Lai ramp in Habu create the software platform that makes this type of data sharing safe simple scalable and smart.

Scott E. Howe: The LiveRamp Data Collaboration Platform has long been a leader in the cleanroom space. In fact, we launched the first commercially scaled cleanroom more than four years ago. The acquisition of Habu helps us take our cleanroom offering to the next level by adding three critical capabilities, streamlined and simplified cross-cloud collaboration that will allow customers to seamlessly connect data across clouds, warehouses, and cleanrooms, while reducing complexity and IT infrastructure constraints. At this point, it is important to understand that Habu's cleanroom architecture is complementary to LiveRamp's legacy cleanroom offering. Hadoop brings its software to the client's cloud environment, whereas our clean room is a fully managed and hosted environment.

The live ramp data collaboration platform has long been a leader in the clean room space. In fact, we launched the first commercially scaled clean room more than 40 years ago.

The acquisition of Habu helps us take our clean room offering to the next level by adding three critical capabilities.

First.

Streamlined and simplified cross cloud collaboration that will allow customers to seamlessly connect data across clouds warehouses in clean rooms, while reducing complexity.

Infrastructure constraints.

On this point it is important to understand that hobby was clean room architecture is complementary to live ramps legacy clean room offering.

<unk> brings its software to the clients cloud environment, whereas our clean room.

As a fully managed and hosted environment.

Scott E. Howe: In effect, the customer sends their data to our environment and sits on our cloud. Some customers prefer a hosted environment because it requires no internal IT resources and because their data is not yet in the cloud. We have a significant number of current clients using our cleanroom, and we continue to add new customers every quarter, including Q3. Looking forward, as more data moves to the cloud, we expect the embedded cloud architecture to become more prominent, and our cleanroom product roadmap, prior to the HABU acquisition, included the conversion of our cleanroom to the cloud-based embedded architecture. But with this acquisition, this conversion is no longer necessary.

And in fact, the customer sends their data to our environment and sits on our cloud.

Some customers prefer a hosted environment because it requires no internal it resources and or their data is not yet in the cloud.

We have a significant number of current clients using our clean room, and we continue to add new customers every quarter, including Q3.

Looking forward as more data moves to the cloud we expect the embedded cloud architecture become more prominent in our clean room product roadmap.

Prior to the Habu acquisition included the conversion of our clean room to the cloud embed architecture.

But with this acquisition.

This conversion is no longer necessary.

Scott E. Howe: We are saving time and R&D dollars that can be redeployed to other product enhancers. And in the meantime, our combined clean room offering can meet any customer's technical requirements, whether it's cloud-embedded or hosted. Second, a first-of-its-kind single view of measurement across any walled garden, programmatic channel, or media partner, including media networks and all major CTV and TV platforms. HABU enhances our ability to measure walled gardens, which is critical given that walled gardens account for nearly three-quarters of non-search digital advertising. This single view of measurement is incredibly powerful for brands looking to compare audience measurement and return on ad spend across platforms. Third, and perhaps most importantly, HABU provides an exceptional user experience with an easy-to-use, self-service interface. Habu's unique architecture allows customers to create a clean room with a click of a button, accelerating the time to value.

We are saving time, and R&D dollars that will be redeployed to other product enhancements.

And in the meantime, our combined clean room offering can meet any customer's technical requirements.

Whether it's cloud embedded or host it.

Second a first of its kind single view of measurement across any walled garden programmatic channel or media partner, including media networks in all major CTV and TV platforms.

<unk> enhances our ability to measured walled gardens, which is critical given that walled gardens account for nearly three quarters of non search digital advertising.

This single view of measurement is incredibly powerful for brands looking to compare audience measurement and return on AD spend across platforms.

Third and perhaps most importantly, habu provides an exceptional user experience with an easy to use.

Self service interface.

These unique architecture allows customers to create a clean room with a click of the button accelerating the time to value.

Scott E. Howe: This benefits all customers, but especially non-technical customers, SMBs, and international customers that often have less internal technology resources. Our customers care about scale and simplicity, and this combination delivers more of both to everyone in the ecosystem, allowing us to accelerate the scaling of our collaboration network for all customers. Early feedback from customers supports our belief in the power of this combination. Last week, I attended the Internet Advertising Bureau's annual leadership meeting, where I received first-hand feedback. Our customers are especially excited to have a cloud-native identity, plus clean rooms, plus activation on a single unified platform, and the opportunity for a more scaled collaboration partner network. They're also excited about the improved ease of use. In fact, we had a large publisher re-engage with us about a clean room solution after initial discussions went dormant over the implementation time.

This benefits all customers, but especially non technical customers Smbs and international customers that often have less internal technology resources.

Our customers care about scale and simplicity and this combination delivers more of both to everyone in the ecosystem, allowing us to accelerate the scaling of our collaboration network for all customers.

The early feedback from customers supports our belief in the power of this combination.

Last week I attended the Internet advertising bureaus annual leadership meeting, where I received firsthand feedback.

Our customers are especially excited to have a cloud native identity, plus clean rooms, plus activation in a single unified platform and the opportunity for a more scaled collaboration partner network.

We're also excited about the improved ease of use.

In fact, we had a large publisher reengage with us about our clean room solution after.

After initial discussions went dormant over the implementation time.

Scott E. Howe: Retail media network customers with managed service platforms are excited to have a platform that makes data collaboration more self-serve to collaborate with a wider set of partners. Our sales team has hit the ground running. We have already completed a full training on Habu's product and have been actively engaging with customers. In just the first two weeks since announcing the acquisition of Habu, our sales team has conducted well over 100 customer calls and meetings to discuss the combination, and our sales pipeline has expanded already by several million dollars. Last week, as an example, at the IAB meeting, Habu's CEO Matt Kilmartin told me he felt like a rock star given the dozens of meeting requests that he fielded from clients and prospects. He was absolutely the most popular man at the meeting.

Retail media network customers with managed service platforms are excited to have a platform that makes data collaboration more self serve to collaborate with a wider set of partners.

Our sales team has hit the ground running.

We have already completed a full training on the <unk> product and have been actively engaging with customers.

And just the first two weeks since announcing the <unk> acquisition. Our sales team has conducted well over 100 customer calls and meetings to discuss the combination and.

And our sales pipeline has expanded already by several million dollars.

Last week as an example at the Iab meeting Habu CEO, Matt Kill Martin told me it felt like a rockstar given the dozens of meeting request steady fielded from clients and prospects.

He was absolutely the most popular man at the Iab.

Scott E. Howe: It's a tremendous start, and the momentum is building. We are thrilled to welcome Habu to the LiveRamp team and are very optimistic about what we will accomplish for our existing and new customers in the coming years. 2024 will also be a tremendous year.

It's a tremendous start and the momentum is building.

We are thrilled to welcome Habu to the live ramp team and are very optimistic about what we will accomplish for our existing and new customers in the coming years.

2024 will also be the year.

Scott E. Howe: The advertising industry embraces true people-based marketing that leverages authenticated identity as the third-party cookie is retired. Consequently, this will be a second major focus area for us in the coming year. We view cookie deprecation as a significant opportunity for LiveRamp because we believe first-party data collaboration will be one of the primary solutions for marketers to sustain personalized advertising in the absence of third-party signals. On January 4th, Google deprecated third-party cookies for 1% of Chrome users globally.

The advertising industry embraces true people based marketing that Leverages authenticated identity as the third party Cookie is retired.

Consequently, this will be a second major focus area for us in the coming year.

We view cookie deprecation as a significant opportunity for Libre now because we believe first party data collaboration will be one of the primary solutions for marketers to sustain personalized advertising in the absence of third party signals.

On January 4th Google Deprecated third party cookies for 1% of Chrome users globally. The next milestone in Googles announced plan to phase out third party cookies for all chrome users globally in the second half of 2024.

Scott E. Howe: The next milestone in Google's announced plan to phase out third-party cookies for all Chrome users globally in the second half of 2024, given Chrome's 60%-plus browser market share globally, and given past delays with its cookie deprecation timeline, this 1% deprecation of third-party cookies was a notable step forward in the industry's transition to people-based marketing, leveraging authenticated identities. We have been preparing for this signal-less And we are excited to continue helping our partners, customers, and stakeholders on the journey to a more privacy-friendly approach. Authenticated Traffic Solution, or ATS, has been more than four years in the making and was purpose-built for the signal-less marketing environment we are about to enter. APS safely and securely connects first-party data from marketers and publishers to personalize and measure advertising on authenticated inventory.

Given crohns, 60% plus browser market share globally, and given past delays with its cookie deprecation timeline. This 1% deprecation of third party cookies was a notable step forward in the industry's transition to people based marketing leveraging authenticated identity.

We have been preparing for this signal less future for some time now.

And we are excited to continue helping our partners customers and stakeholders on the journey to a more privacy friendly approach.

Our authenticated traffic solution.

For Ats is more than four years in the making and was purpose built for this signal less marketing environment, we are about to enter.

Ats safely and securely connects the first party data for marketers and publishers.

To personalize and measure advertising on authenticated inventory.

Scott E. Howe: Additionally, we have partnered with Google's Display and Video 360, DV360, on its PAIR initiative. DB360 is Google's demand-side platform and is the market share leader. DV360 gives advertisers programmatic access to display and video ad inventory from Google's owned and operated sites, such as YouTube, as well as third-party publishers. PAIR, which stands for Publisher Advertiser Identity Reconciliation, is DV360's answer to third-party cookie deprecation and allows advertisers and publishers to securely and privately reconcile their first-party data to enable personalized advertising. LiveRamp's role in PAIR is twofold.

Additionally, we are partner with Googles display and video <unk> 60, <unk> 60 on its pair initiatives.

DB $3 60 is google's demand side platform and.

And then as the market share leader.

DB 360 gives advertisers programmatic access to display and video AD inventory from Google's owned and operated sites.

As Youtube as well as third party publishers.

Pear, which stands for publisher Advertiser identity reconciliation.

Is DB three <unk> answer the third party cookie deprecation and allows advertisers and publishers to securely and privately reconcile their first party data to enable personalized advertising.

<unk> role in payer is twofold.

Scott E. Howe: First, Google mandated the use of an independent clean room partner for Pair and announced three launch partners. LiveRamp and Haboo, now the same company, were two of those three partners, and our combined scale and readiness vastly exceeds the third party. Second, PayerFuel's adoption of LiveRamp's authenticated traffic solution, since both advertiser and publisher audience must now be consented to. For more than six months now, we have been testing PAIR with our publisher and advertiser partners. Last week, we published our first pair case study with Omni Hotels and Resorts.

Google has mandated the use of an independent clean room partner for pair and announced three launch partners.

Live ramping Habu now the same company, where two of those three partners and our combined scale and readiness.

Lastly exceeds the third partner.

Second payer fuels adoption of live ramps authenticated traffic solution since both advertiser and publisher audience must now be consented.

For more than six months now.

We have been testing pair with our publisher and Advertiser partners.

Last week, we published our first payer case study with omni hotels and resorts.

Scott E. Howe: The results are truly outstanding. PAIR campaigns showed a 4x increase in conversion rate over traditional, cookie-based, first-party audience targeting in DV360, indicating PAIR delivered better-performing impressions by 4x. This is a big deal. LiveRamp has long championed the idea that personalization and privacy are not an either/or proposition.

The results are truly out standing.

Payer campaign showed a forex increase in conversion rate over traditional cookie based first party audience targeting and DB $3 60, indicating pair delivered better performing impressions Forex. This is a big deal.

<unk> has long championed the idea that personalization and privacy is not an either or proposition. The results of this case study demonstrate that campaigns based on our authenticated first party data are not just more effective than third party cookie campaigns there.

Scott E. Howe: The results of this case study demonstrate that campaigns based on authenticated first-party data are not just more effective than third-party cookie campaigns; they are significantly more effective. We are excited to move into the post-cookie world, and based on these results, advertisers should be also. Before turning the call over to Lauren, let me touch on our bottom line results. Rule of 40, including bottom line performance, is a third major focus area for us in the coming year. We certainly have not lost sight of the bottom line while we've been delivering better top-line performance. We started this fiscal year expecting to deliver margin expansion of 500 basis points, and now, based on our updated guidance, we expect to deliver 600 basis points.

Because lean more effective.

We are excited to move into the post cookie World and based on these results.

Advertisers should be also.

Before turning the call over to Loren, Let me touch on our bottom line results.

The rule of 40, including Bottomline performance as a third major focus area for us in the coming year.

We have certainly not lost sight of the bottom line, while we have been delivering better top line performance.

We started this fiscal year expecting to deliver margin expansion of 500 basis points and now based on our updated guidance, we expect to deliver 600 basis points.

Scott E. Howe: Candidly, we could have delivered even more margin upside this year, but we chose to reinvest some of this upside into our product and people, so we can return to sustainable double-digit growth. We're also now steadily producing a meaningful amount of operating cash flow. Q3 was our 6th consecutive quarter of positive operating cash flow, and in the trailing four quarters, we produced nearly $110 million in operating cash flow. As proud as I am of them, there is more work to be done.

Candidly, we could have delivered even more margin upside this year, but we chose to reinvest some of this upside into our product and people. So we can return to sustainable double digit top line growth.

We are all also now steadily producing a meaningful amount of operating cash flow.

Q3 was our sixth consecutive quarter of positive operating cash flow and in the trailing four quarters, we produced nearly $110 million in operating cash flow.

As proud as I am of this.

There's more work to be done.

Scott E. Howe: As you know, our medium-term goal is to be a Rule of 40 company with sustainable 10-15% revenue growth and a 25-30% non-GAAP operating margin. Given our guidance, we will end FY24 as a rule of 24. But our current momentum and ongoing operational focus gives me confidence that in FY25, we will continue to make progress toward our medium-term goal and in almost every area of our business. We see opportunities to further improve our efficiency and effectiveness. We'll continue to make pipeline and bookings a top priority, knowing these are the drivers of future SAS revenue. Across our organization, we will continue to push for productivity gains through scale, automation, and improved performance, will continue to re-architect to improve product scalability, and will push to make our technology even more simple, intuitive, and increasingly self-serve to broaden our available market and improve our cost to serve. And finally, we'll continue to make client satisfaction a top priority.

As you know our medium term goal is to be a rule of 40 company with sustainable 10% to 15% revenue growth and a 25% to 30% non-GAAP operating margin.

Given our guidance, we will end FY 'twenty four as a rule of 24 company.

But our current momentum and ongoing operational focus gives me confidence that in FY 'twenty five we will continue to make progress.

<unk> our medium term goal.

And almost every area of our business.

We see opportunities to further improve our efficiency and effectiveness.

We will continue to make pipeline and bookings a top priority.

Knowing these are the drivers of future SaaS revenue.

Across our organization, we will continue to push for productivity gains through scale automation and improved performance.

We will continue to re architect to improve product scalability.

We will push to make our technology, even more simple intuitive and increasingly self serve.

To broaden our available market and improve our cost to serve.

And finally, we will continue to make client satisfaction at top priority always trying to reduce churn and create even more reference clients.

Scott E. Howe: We are always trying to reduce churn and create even more reference clients. In closing, let me reiterate what I believe to be the key themes from the quarter. First,

In closing, let me reiterate what I believe to be the key themes from the quarter.

First.

Scott E. Howe: I am really pleased with the organic momentum in our business, particularly with subscription revenue growth turning towards high single-digits. As a result, we have again raised our FY24 guidance.

I am really pleased with the organic momentum in our business, particularly with subscription revenue growth turning towards high single digits.

As a result, we have again raised our FY 'twenty for guidance.

Second.

Scott E. Howe: The acquisition of Habu will further accelerate this organic momentum by establishing the industry-leading interoperable platform for data collaboration across all clouds and all walled gardens globally, strategically expanding our collaboration network, and driving further adoption of our core identity and connectivity solutions. Industry trends? Well, they're a wind at our backs over the long term. This includes the deprecation of third-party cookies, as well as the shift to cloud computing, retail and commerce media networks, and CTV. We are well positioned to benefit from all of these megatrends in the years ahead. Thank you again for joining us today, and a special thanks to our exceptional customers, partners, and all LiveRampers, including our new Haboo colleague, for their ongoing hard work and support. We look forward to updating you on our progress in the coming quarter. I will now turn the call over to Lauren.

The acquisition of Habu will further accelerate this organic momentum by establishing the industry, leading interoperable platform for data collaboration across all clouds, all walled gardens globally.

Strategically expanding our collaboration network and driving further adoption of our core identity and connectivity solutions.

Third.

Industry trends well, they're a wind at our back over the long term.

This includes the deprecation of third party cookies as well as the shift to cloud computing retail and Commerce media networks and CTV.

We are well positioned to benefit from all of these mega trends in the years ahead.

Thank you again for joining us today and a special thanks to our exceptional customers partners and all live ramp.

Including our new Habu 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.

Lauren Dillard: Thanks, Scott, and thank you all for joining us. Today, I will cover two topics. First, a review of our Q3 financial results, and second, our updated outlook for FY24 and Q4. Unless otherwise indicated, my remarks pertain to non-GAAP results, and growth is relative to the year-ago period, starting with Q3. Revenue and operating income were consistent with the preliminary results we reported on January 18.

Thanks, Scott and thank you all for joining US today I will cover two topics first a review of our Q3 financial results and Jack.

Second our updated outlook for FY 'twenty for Q4.

Unless otherwise indicated my remarks pertain to non-GAAP results and growth is relative to the year ago period.

Starting with Q3 results.

Revenue and operating income were consistent with the preliminary results reported on January 18th.

Lauren Dillard: Revenue came in at $174 million, $9 million above our guidance, and Operating Income was $36 million, $7,000,000 above our guidance. Operating margin expanded by 5 percentage points to a record high of 21%, and we generated $17 million in operating cash flow, our sixth consecutive quarter of positive OCF. Let me now provide some additional details. Please turn to slide 5.

Revenue came in at $174 million 9 million above our guidance.

Operating income was 36 million 7 million above our guidance.

Operating margin expanded by five percentage points to a record high of 21%.

And we generated $17 million in operating cash flow, our sixth consecutive quarter of positive Lcs.

Let me now provide some additional details.

Turning to slide five.

Lauren Dillard: Total revenue was $174 million, up 10%. Subscription revenue and Marketplace & Other were significantly ahead of expectations, driven primarily by continued sales execution and a stronger than expected digital advertising market. Subscription revenue was $132 million, up 5%.

Total revenue was 174 million up 10%.

With subscription revenue and marketplace. Another significantly ahead of expectations, driven primarily by continued sales execution and a stronger than expected digital advertising market.

Subscription revenue was $132 million up 5%.

Lauren Dillard: Recall that the year-ago quarter benefited from a $4 million non-recurring contract settlement with a large customer. Six subscription growth accelerated from our most recent quarter by approximately 150 basis points to 5%. Usage as a percentage of total subscription revenue was 16%, a tick above our historical 10% to 15% range.

Recall that the year ago quarter benefited from a $4 million nonrecurring contract settlement with a large customer.

Fixed subscription growth accelerated from our most recent quarter by approximately 150 basis points to 5%.

<unk> as a percentage of total subscription revenue with 16%.

Above our historical 10% to 15% range.

Lauren Dillard: ARR was $447 million, up 6%. ARR improved quarter-on-quarter by 5%, or $19 million. This sequential dollar increase was the largest increase in the last nine quarters. The improvement was primarily driven by continued good growth in customer upsell and new logo, as well as lower customer churn and downsell. Subscription net retention was 101%, stable sequentially and in line with our expectations.

<unk> was $447 million at 6%.

<unk> improved quarter on quarter by 5% or $19 million.

Mr. Quentin dollar increase with the largest increase in the last nine quarters. The improvement was primarily driven.

<unk> had good growth in customer upsell, and new logo as well as lower customer churn and downtown.

Subscription net retention was 101%.

Stable sequentially and in line with our expectation.

Lauren Dillard: Current RPO, or our next 12-month contracted backlog, was $382 million, up 18%. Total RPO, including contracted backlog beyond the next 12 months, was up 35% to $500 million.

Current RPI or next 12 months contracted backlog was $382 million up 18%.

Total RPM, including contracted backlog beyond the next 12 months was up 35% to $546 million.

Lauren Dillard: Like with recent quarters, there is a large difference between CRPO and ARR growth. As we've discussed previously, RPO is very sensitive to the timing of renewals and to contract duration. And given our enterprise focus and shift to more multi-year deals, both of these factors again benefited CRPO growth in the quarter. Overall, the Q3 selling environment was fairly healthy. We continued to see an improvement in the conversion of pipeline to signed deals, and our U.S. conversion rate was a 10-quarter high. On a dollar basis, our new logo signings were also a 10-quarter high, as our strategy of prioritizing larger customers continues to bear fruit. Also, our quarterly contraction, or the combination of downsell and customer churn, was a two-year low.

Mike with recent quarters, there is a large difference between CRP L and air or browse.

As we've discussed previously <unk>.

It's very sensitive to the timing of renewals and to contract duration and given our enterprise focus.

And shifting to more multiyear deals.

These factors again benefited CRP aircrafts in the corner.

Overall, the Q3 selling environment was fairly healthy.

Can you just see an improvement in the conversion of pipeline to sign deals and our U S conversion rate with a 10 quarter high.

On a dollar basis, our new logo signings were also at 10 quarter high as our strategy of prioritizing larger customers continues generic France.

Also our quarterly contraction or the combination of down sell and customer churn was engineered loud.

Lauren Dillard: Our average deal cycle continued to run at 8-9 months, consistent with the trailing 5 quarters. One area of continued softness to call out is with small, low ACV customers, both brands as well as tech platforms, including ad tech, which is experiencing structural change. Marketplace and Other Revenue, of $42 million, increased 29%, driven by Data Marketplace, which grew 24% and accounted for 79% of Marketplace and Other Revenue. Data marketplace growth was fueled by the strong digital advertising environment and, in particular, CTV as well as enhancements we've made to our data marketplace to make the buying and selling of data more seamless. We also continue to see strong growth in professional services, which accounted for nearly one-third of the revenue growth in Marketplace and others. Moving Beyond Revenue Gross margin was 75%, down one point year on year and 100 basis points higher than our guidance, driven primarily by the timing of planned investments and services growth. Operating expenses were flat at $95 million, with savings from last year's restructuring offset by the normalization of sales commissions and incentive comps.

Our average deal cycle continued to run at each nine months.

With the trailing five quarters.

One area of continued softness to call out is with small low ACB customers, both brands as well as tech platforms, including AD Tech that is experiencing structural change.

Marketplace and other revenue of $42 million increased 29% driven by data marketplace, which grew 24% and accounted for 79% of marketplace and other revenue.

Data marketplace growth was fueled by the strong digital advertising environment and in particular CTV as well as enhancements, we've made to our data marketplace to make the buying and selling of data more seamless.

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% down one point year on year, and 100 basis points higher than our guidance driven primarily by the timing of planned investments and services.

Operating expenses were flat at $95 million with savings from last year's restructuring offset by the normalization of sales commissions and incentive comp.

Lauren Dillard: Operating income was $36 million, up from $26 million a year ago, and our operating margin expanded by 500 basis points to a record high of 21%. Gap operating income was $15 million, representing a gap operating margin of 9%. We incurred $3 million in restructuring charges, primarily due to our APAC restructuring and HABU acquisition-related expenses. Stock-based compensation was $17 million, down from $30 million a year ago due to the accelerated vesting of certain non-NEO RSUs in Q4 of FY23 for tax planning purposes. Operating cash flow was $17 million, up from $16 million a year ago. However, the year-on-year comparison was negatively impacted by the timing of current year tax payments.

Operating income was 36 million up.

Up from $26 million, a year ago, and our operating margin expanded by 500 basis points to a record high of 21%.

GAAP operating income was $15 million, representing our GAAP operating margin of 9%.

We incurred $3 million in restructuring charges, primarily due to our APAC restructuring and acquisition related expenses.

Stock based compensation was $17 million down from $30 million a year ago due to the accelerated vesting of certain non <unk> in Q4 of FY2023 for tax planning purposes.

Operating cash flow was $17 million.

From $16 million a year ago.

The year on year comparison was negatively impacted by the timing of current year tax payments.

Lauren Dillard: Fiscal year to date, operating cash flow is $78 million, up from $4 million last year. We repurchased 347,000 shares for $10 million in Q3, bringing the year-to-date total to $45 million. We have approximately $173 million remaining under the current authorization that expires on December 31, 2024.

Fiscal year to date operating cash flow of $78 million up from $4 million last year.

We repurchased 347000 shares for $10 million in Q3, bringing the year to date total to $45 million.

We have approximately $173 million remaining under the current authorization that expires on December 31 2024.

Lauren Dillard: In summary, Q3 was a strong quarter. Revenue growth improved to 10%, with both subscription and marketplace exceeding our expectations. ARR grew by 19 million quarter-on-quarter, the largest quarterly increase in over two years. Our non-GAAP operating margin expanded by approximately 500 basis points. We generated $17 million in operating cash flow in the quarter and $109 million in the trailing four quarters.

In summary, Q3 was a strong quarter.

Revenue growth improved to 10% with both subscription and marketplace exceeding our expectations.

<unk> grew by 19 million quarter on quarter, the largest quarterly increase in over two years.

Our non-GAAP operating margin expanded by approximately 500 basis points, we generated $17 million in operating cash flow in the quarter and $109 million in the trailing four corners.

Lauren Dillard: Finally, fiscal year to date, we have returned $45 million to shareholders through our share repurchase program. Next, let me now turn to our financial outlook for FY24 and for Q4. Please turn to slides 12 and 13. Please keep in mind our non-GAAP guidance excludes intangibles, amortization, stock-based compensation, and restructuring and related charges, starting with Q4.

Finally fiscal year to date, we have returned $45 million to shareholders through our share repurchase program.

Next let me now turn to our financial outlook for FY 'twenty four and for Q4.

Turn to slide 12 and 13.

Please keep in mind, our non-GAAP guidance excludes intangible amortization.

<unk> based compensation and restructuring and related charges.

Turning with Q4.

Lauren Dillard: We expect total revenue of between $158 and $162 million, up 6% to 9% year-on-year, non-GAAP operating income of $13-14 million, and an operating margin of 8-9%. A few other callouts for Q4, we expect subscription net retention in Q4 to be 100% or roughly stable quarter-on-quarter. We expect customer count to be flat to down, reflecting ongoing changes and consolidation in the digital advertising market that may impact smaller tech platform customers, including ad tech. While this would impact customer count. We don't expect the revenue impact to be material.

We expect total revenue of between 158, and 162 million up six 9% year on year.

non-GAAP operating income of $13 million to $14 million and an operating margin of 8% to 9%.

A few other call outs for Q4, we expect subscription net retention in Q4 to be 100% or roughly stable quarter on quarter.

We expect customer count to be flat to down reflecting ongoing changes and consolidation in the digital advertising market that may impact smaller tech platform customers, including AD Tech.

While this would impact customer count we.

We don't expect the revenue impact to be material.

Lauren Dillard: We expect subscription revenue to be up mid-single digits, with fixed also up mid-single digits, similar to Q3, and usage flat in the name of conservatism. We expect Marketplace and other to be up mid to high teens based on current trends quarter to date and assuming the current digital advertising market remains stable throughout the course of the quarter. We expect gross margin to be approximately 75%. We expect operating expenses to be up roughly 10% year-on-year. Let me spend a moment here.

We expect subscription revenue to be up mid single digits with fixed also up mid single digits similar to Q3 and.

And usage flat and the name of conservatism.

We expect marketplace and other to be up mid to high teens based on current trends quarter to date and assuming the current digital advertising market remains stable throughout the course of the corner.

We expect gross margin to be approximately 75%.

We expect operating expenses to be up roughly 10% year on year.

Let me spend a moment here.

Lauren Dillard: First, Habu is going to add roughly three points of OPEX in the quarter. Next, in Q4, we will start lapping the savings from last year's cost restructuring, which provided a meaningful benefit to our expense growth this fiscal year-to-date. And finally, with respect to the sequential dollar increase, recall that Q4 is seasonally our highest operating expense quarter of the year due to our ramp-up conference, payroll taxes, and incentive comp. The quarter-over-quarter increase in Q4 is consistent with historical seasonality, excluding the impact of one-time cost restructurings like we had last year. We expect GAAP operating loss to be between $18 million and $17 million, inclusive of $5 to $6 million of additional expense associated with taboo stock-based compensation, intangible amortization, and acquisition-related expenses.

First <unk> was going to add roughly three points of opex in the quarter.

Next in Q4, we will start lapping the savings from last year's cost restructuring, which provided a meaningful benefit to our expense growth fiscal year to date.

And finally with respect to the sequential dollar increase recall that Q4 is seasonally our highest operating expense quarter of the year due to our ramp up conference payroll taxes and incentive comp.

The quarter over quarter increase in Q4.

This debt with historical seasonality, excluding the impact of one time cost restructurings like we had last year.

We expect GAAP operating loss to be between 18 and $17 million.

<unk> of $5 million to $6 million of additional expense associated with stock based compensation intangible amortization and acquisition related expenses.

Lauren Dillard: Now, for the full year, we are increasing our total revenue guidance by approximately $13.5 million at the midpoint, compared to our $9 million beat in the quarter. We now expect revenue to be between $646 and $650 million, up 8% to 9% year-on-year. Non-GAAP Operating Income is expected to be between 103 and 104 million. At the midpoint of our guidance range, the operating margin is approximately 16%, up 600 basis points year-on-year. We expect stock-based compensation to be approximately $71 million, which benefits from the $23 million in accelerated vesting in FY23. We expect $12 million in restructuring charges, $1 million higher than our prior guide due to acquisition-related expenses.

Now for the full year.

We are increasing our total revenue guidance by approximately $13 5 million at the midpoint.

<unk> to a $9 million beat in the corner.

We now expect revenue to be between 646 and $650 million up eight 9% year on year.

non-GAAP operating income.

Is increased by $4 million at the midpoint and is expected to be between <unk> hundred three and $104 million.

At the midpoint of our guidance range. The operating margin is approximately 16% up 600 basis points year on year.

We expect stock based compensation to be approximately $71 million, which benefits from the $23 million and accelerated vesting in FY2023.

We expect $12 million in restructuring charges $1 million higher than our prior guide due to acquisition related expenses.

Lauren Dillard: We expect GAAP operating income to be between $8 and $9 million. Before opening the call to questions, I'll conclude with a few final thoughts. First, Q3 was strong on both the top and bottom line. Our growth in subscription revenue in ARR is trending higher, and we are positioned for further acceleration through this year. Next, as we look ahead, there are a couple of initiatives that we believe will help our top and bottom lines both next year and beyond. First and foremost, is efficiently and effectively integrating HABU. Additionally, we will make incremental progress with our India offshoring initiative, and we intend to roll out back-end product improvements that will allow us to more efficiently process our customers' data. And finally, our financial North Star remains Rulo 40.

We expect GAAP operating income to be between eight and $9 million.

Before opening the call to questions I'll conclude with a few final thoughts.

Q3 was strong on both the top and bottom lines.

Our growth in subscription revenue and <unk>.

<unk> is trending higher and we are positioned for further acceleration exiting this year.

Next as we look ahead there are a couple of initiatives that we believe will help our top and bottom line, both next year and beyond.

First and foremost as efficiently and effectively integrating <unk>.

Additionally, we will make incremental progress with our India offshoring initiatives.

And we intend to rollout backend product improvements that will allow us to more efficiently process our customers' data.

And finally, our financial North Star remains rule of 40.

Operator: On the top line, we're encouraged by the positive trends in sales productivity and the HABU opportunity and ultimately what that implies for subscription growth next year. On the margin front, the leverage in our model, combined with the expansion of our new India office, gives us a path for steady margin expansion in the coming years while continuing to appropriately invest to support healthy top line growth. With that, on behalf of all LiveRampers, thank you for joining us today. Operator, we will now open the call to questions. If you would like to ask a question, please press star followed by the number one on your telephone keypad. We also ask that you limit yourself to one question and one follow-up.

On the top line, we are encouraged by the positive trends in sales productivity and the habu opportunity and ultimately what that implies for subscription growth next year.

On the margin front the leverage in our model.

Combined with the expansion of our new India office.

That's a path for steady margin expansion in the coming years, while continuing to appropriately invest to support healthy topline growth.

With that on behalf of all labor numbers. Thank you for joining.

Us today.

Operator, we will now open the call to questions.

If you would like to ask a question. Please press star followed by the number one on your telephone keypad. We also ask that you limit yourself to one question and one follow up. Your first question comes from the line of Shyam Patel from Susquehanna International Group. Please go ahead.

Operator: Your first question comes from the line of Shyam Patel from Susquehanna International Group. Please go ahead. Hi Scott. Hi Lauren. This is Aaron Samuels on Gershom.

Hi, Scott Hi, Lauren This is Aaron Samuels under Sean Thank you for taking our question.

Maybe starting off Scott. Thank you for the details on the per case study could you just elaborate on your expectations for how the <unk> hundred 60 partnerships into Paris could impact the business moving forward and then we've got a follow up as well.

Scott E. Howe: Thank you for taking our question. Perhaps starting off, Scott, thank you for the details on the Pair case study. Could you just elaborate on your expectations for how the DV360 partnership and Pair could impact the business moving forward? And then we've got a follow-up as well. Sure. And thanks for asking that, Aaron. I was actually kind of hoping someone would ask about Pear because this is such a fun story.

Sure and thanks.

Thanks for asking that Eric.

It was kind of hoping someone would ask about pear because this is such a fun story.

At live ramp, we always try to balance kind of a relentless operating focus month over month quarter over quarter and balance that with a long term view.

Scott E. Howe: You know, at LiveRamp, we always try to balance kind of a relentless operating focus, you know, month over month, quarter over quarter, and balance that with a long-term view. And when I look back, I mean, we started working on ATS as a response to PAIR over four years ago. And so that journey can really be divided into three phases, and we're hitting the really fun part right now. So it started with preparing for the future and building the tech during COVID, connecting to all the DSPs and SSPs, brands, publishers, and agencies. And we've shared the market share stats there. We're in really good shape in terms of connecting all the different nodes of the industry. The second piece is proving that it works, and that's exactly what we're doing right now.

When I look back I mean, we started working.

Ats as a response to pair over four years ago.

And so that journey.

Can really be divided into three phases, and where we're hitting the really fun part right now so it started with preparing for the future and building the tact during COVID-19 connecting.

All the DSP and SSP <unk> brand.

Brands publishers and agencies and we've shared the market share stats there we're in a really good shape in terms of connecting all of the different.

Nodes of the industry.

The second piece is proving that it works.

And Thats squarely.

What we're doing right now.

So we released the omni case study.

That's the first of many.

Scott E. Howe: So, we released the Omni case study, that was the first of many, and that was phenomenal. I mean, results that almost defy logic, 4X improvement for consented users versus targeting the same users on cookies, uh... so really nice lift there. Remember, we also published a publisher case study last year, you can see that in my blog. I did a blog yesterday, I have a link to it. That showed that publishers also get a nice lift, so they generate higher yield when they use authenticated solutioning. And soon, we'll show that reach also increases. You know, right now, even without cookies fully deprecated, we have effective reach that generates meaningful volume, and you know, at scale, we think we're going to, once everyone's fully implemented, we think the reach to authenticated traffic will exceed the targeted reach to those same users on cookies. It's just more persistent. So this is one where, like, it's better for consumers, it's better for advertisers, and it's better for publishers. A really nice story.

And that was phenomenal I mean results.

Results that almost defied logic.

Forex improvement for consented users versus targeting the same users on cookies.

So really nice lift there remember we also published a publisher case study Oh going back a year you can see that in my blog.

It's been a blog yesterday I have a link to it.

That showed that publishers also get a nice lift so they generate higher yield when they use dedicated solutions.

Soon to come as we will show that reach also increases.

Right now even without.

Cookies fully deprecated.

We have effective reach that generates.

<unk> meaningful volume and.

At scale, we think we're going to once everyone's fully implemented we think the reach to authenticated traffic will exceed the targeted reach to that those same users on cookies. It's just more persistent. So this is one where like is bad.

For consumers its better for advertisers it is better for publishers really nice story. So now what we reached the third part of the journey and this is where the real fun to happened.

Scott E. Howe: So now, what? We had reached the third part of the journey, and this is where the real fun happened. It's evangelization time; it's about telling the industry that we're ready when they are. And, by the way, for those in the industry, they need to be ready a little bit sooner than they think. So Google talked about, you know, 1% starting in January, scaling to uh... full deprecation of cookies by fall if that's a radical uh... uh... uh... deprecation, which it will be by summer. Cookies won't work, uh... not effectively because already Safari is out, edges out firefox, and then when fifty percent or more of google cookies are out, cookies are done. So, we need to educate clients on how to get started, uh... and how to get going quickly. Now, this is also fueling demand for Hubble, so potential access to new clients, but it also fuels demand for clean rooms, because the only way you can do It also makes sense for companies that don't have that, and hence the growth of things like retail media networks, because since the retailer themselves can identify the customer, a company like P&G or Kraft or Coca-Cola can benefit from that through data collaboration.

Evangelization time.

It is about telling the industry that we're ready when they are and Oh by the way for those in the industry they need to be ready a little bit sooner than they think.

So Google talked about 1% starting in January scaling too.

Full deprecation of cookies by fall well.

That's a ratable.

Deprecation, which will be.

By summer Cookie.

Cookies won't work.

Not effectively because already safari zelle edges out Firefox is out and then 50% or more of Google cookies are out cookies are done.

So we need to educate clients on how to get started.

And how to get going quickly now this is also fueling demand for hubbell.

So it gives us potential access to new clients, but it also fuels demand for clean rooms, because the only way you can do this kind of targeting.

Is by having a clean room.

And anonymize and securing the data.

Which is what we do.

And.

While this makes so much sense for clients in retail and travel and financial services, who have deep loyalty databases.

It also makes sense for companies that don't have that.

And so hence the growth of things like retail media networks, because since the retailer themselves can identify the customer.

As.

A company like P&G or craft or Coca Cola can benefit from that.

Through data collaboration and so this really is something that's good for everyone. We're going to hear a lot of noise over the next couple of months about companies, saying, they're not ready.

Scott E. Howe: And so this really is something that's good for everyone. We're going to hear a lot of noise over the next couple of months about companies saying they're not ready and that we should delay. And I would say there's no stopping this train because it works better. The tech is ready, and I don't think Google is stopping either. So this is going to be a really fun time for us. Really interesting, Scott. And then Lauren, just a quick one for you.

And that we should delay and I would say there is no stop in this train.

Because it works better.

The tech is ready.

And.

I don't think google's stopping either.

So there's going to be a really fun time for us.

Really interesting thanks, Scott and then Loren just a quick one for you you talked about an opex step up from <unk> to <unk> as being seasonally typical just wanted to double click on this is there any color you can share on sizing the typical seasonal step up thanks again.

Lauren Dillard: You talked about an OPEX step up from 3Q to 4Q as being seasonally typical. Just wanted to double check on this. Is there any color you can share on sizing the typical seasonal step up?

Lauren Dillard: Thanks again. Sure. Thanks, Erin. I'm happy to.

Sure. Thanks, Aaron I'm happy to so at the midpoint of our guidance, we are expecting opex to increase by roughly $12 million quarter on quarter of which you can assume five to 6 million is related to seasonal items, such as ramp up payroll taxes and incentive comp adjustments.

Lauren Dillard: So at the midpoint of our guidance, we are expecting OPEX to increase by roughly $12 million quarter on quarter, of which you can assume $5 to $6 million is related to seasonal items, such as ramp-up, payroll taxes, and incentive comp adjustments. So I wouldn't expect that to carry forward into our Q1 run rate. The remaining portion is being driven by the addition of HABU, which is adding about $3 million of OPEX in the quarter, and just underlying expense increases, reflecting some of the investments we're making now to support future top-lengths. So, as an example, we are choosing to pull forward some sales hiring as well as services hiring to ensure we have really strong capacity entering FY25. Great, thank you again. Your next question comes from the line of Elizabeth Porter from Morgan Family. Please go ahead.

So I wouldn't expect that to carry forward into our Q Q1 run rate.

The remaining portion is being driven by the addition of <unk>, which is adding about $3 million of opex in the quarter and just underlying expense increases reflecting some of the investments, we're making now to support future top line growth. So as an example, we are choosing to pull forward some.

Hum.

Some sales hiring as well as services hiring to ensure we have really strong capacity entering FY 'twenty five.

Great. Thank you again.

Your next question is from the line of Elizabeth quarter from Morgan Stanley. Please go ahead.

Scott E. Howe: Great, thank you so much. My first question was on the large customer count. The 1 million plus customers increased really nicely, and I think it's one of the highest net ads we've seen in about a year and a half. And you also referenced a lot of upsells in the quarter. So I was wondering what is driving some of the loosening of spend now after being in a tight environment.

Great. Thank you. So much my first question was on the large customer count the 1 million plus customers increasingly isolated because we're the highest net adds we've seen about a year and a half.

You also referenced a lot of upsells in the quarter. So I was wondering what is driving some of the loosening of spend now after being in a tightened diamant does it customers feeling better about macro kind of a cookie deadline coming up sales execution.

Scott E. Howe: Is it customers feeling better about macro, kind of the cookie deadline coming up, or sales execution? I appreciate there's probably a lot of factors in there, but if you could just help us unpack what's driving a greater uptick now, that'd be really helpful. So the answer is yes, all of those things certainly do play a factor, but I think two things in particular are really driving the interest in clean rooms and connectivity.

I appreciate it's probably a lot of factors in there, but if you could just help us unpack, what's driving greater uptick now that would be really helpful. Thank you.

So the answer is yes, all of those things certainly do play a factor.

But I think to two things in particular.

Are really driving the interest in clean rooms.

And connectivity.

Scott E. Howe: Number one is an increasing recognition among sophisticated advertisers that they are all competing around data. And when they look across the landscape, I mean, we can name the, we could point to the walled garden, companies that collect information from us as consumers across multiple touchpoints, and they are really well positioned to compete effectively. So everyone else in the industry is saying, how do I catch up? And they can't.

Number one is an increasing recognition amongst sophisticated advertisers.

That they are all competing around data.

And when they look across the landscape, but when we can name the.

We could point to the walled gardens.

Companies that collect information from us as consumers across multiple touch points.

And they are really well positioned to compete effectively.

So everyone else in an industry is saying, how do I catch up and they can't not everybody can out Amazon Amazon.

Scott E. Howe: Not everybody can out-compete Amazon unless they collaborate. And when they start to pool their data together in a privacy-compliant way, they can actually extract insights that are far more interesting than that of any data giant. And then the second thing is around measurability and loss of signal. As media plans expand, there are more and more line items on those media plans. Just take linear television, friends.

Unless they collaborate.

And when they start to pool their data together in a privacy compliant way.

They can actually extract insights that are far more interesting than that of any any data giant.

And then the second thing is is around measure ability.

And loss of signal.

As media plans expand there are more and more line items on media and those media plans just take linear television for instance, it's all but tipped towards CTV and there are so many different choices.

Scott E. Howe: It's all but tipped towards CTV, and there are so many different choices for placing your ads for different viewership than they previously existed with linear. With that explosion of choices comes the need for personalization, not necessarily just message personalization, but the kind of technology that also allows companies to add suppression. So just simple frequency capping, for instance, is so important on CTV and programmatic, and you can't do that unless you have a measurement standard, a measurement technology such as LiveRamp has that facilitates the data going out but also the measurement data coming back.

Sure.

Placing your ads on different viewership than they previously existed with linear.

With that explosion of choices.

Comes the need for personalization not necessarily just message personalization, but the kind of technology that I'll also allows companies to do add suppression.

Just simple frequency capping for instance is so important on CTV in programmatic and you can't do that unless you have a measurement standard of measurement technologies, such as library up has that facilitates the data going out but also the measurement data coming back.

Scott E. Howe: And then I'll throw one other thing into the mix. That is that we work in a copycat industry. And so every company is looking out there and saying, who's doing it better than me? Uh... and Elizabeth, you've been to a ramp-up before. We don't talk ourselves. We put our clients and partners on stage, And right now, our clients and partners are all talking about the successes that they're having, and that's going viral and attracting other clients. There's a network effect that just takes off when our retailers bring us packaged goods partners, and those packaged goods partners bring us more retailers.

And then I will throw one other thing.

Into the mix.

That is that we work in a copycat industry.

And so every company is looking out there and saying who's doing it better than me.

And Elizabeth you've been to ramp up before you know what we do we don't talk ourselves, we put our clients and partners on stage.

And right now our clients and partners.

Talking about the successes that theyre, having and thats cleaning viral.

<unk> other clients.

There's a network effect that just takes off.

When our retailers bring us packaged goods partners and those packaged goods partners bring us more retailers. So were starting to benefit from that rightfully as you pointed out with our Upselling efforts, but also with our new logo efforts.

Scott E. Howe: So we're starting to benefit from that rightfully, as you point out, with our upselling efforts, but also with our new logo effort. So, you know, since the pandemic, really, this has been our biggest percentage of new logo business. About a third of our bookings this quarter were new logos. And that's the network effect and the cloud partnerships starting to bear some fruit. Great. Thank you so much.

So since the pandemic really this has been our biggest percentage of new logo business about a third of our bookings this quarter was new logo.

And that's the network effect and the cloud partnerships starting to bear some fruit.

Lauren Dillard: And just as a follow-up, I wanted to ask on the expense side. I appreciate the extra color on Q4. Is it fair for us to look at that $3 million from HABU in the quarter and extrapolate that into next year? I know you have additional offshoring and ongoing savings initiatives, so just how should we think about the net of those two things going into Fiscal 25? Yeah, and Elizabeth, I'll just start by saying we're going to give a lot more color on both the top and bottom line for FY25 on our May call, so perhaps stay tuned for precise detail. But with respect to HABU in particular, it's going to contribute $3 million of expense in Q4. That's a partial quarter impact given we closed that deal on January 31st. So you can assume it should add anywhere from, call it $16 to $18 million in expenses in FY25. Great, thank you so much. Your next question comes from the line of Brian Fitzgerald from Wells Fargo. Please go ahead. Hi Scott, this is actually Rob on the call.

Great. Thank you so much and just as a follow up I wanted to ask on the expense side I. Appreciate the extra color on Q4 is it fair for us to look at that $3 million from <unk> in the quarter and extrapolate that into next year.

You have additional offshoring and ongoing savings initiatives. So just how should we think about the net of those two things going into fiscal 'twenty five.

Yeah, and Elizabeth I'll, just start by saying, we're going to give a lot more color on both the top and bottom line for.

Roughly <unk> 25 on our May call. So so perhaps stay tuned for for precise detail, but with respect to habu in particular, it's going to contribute.

$3 million of expense in Q4, that's a partial quarter impact given we closed that deal January 31, So you can assume it.

It should add anywhere from call it $16 million to $18 million in expense in FY 'twenty five.

Great. Thank you so much.

Your next question comes from the line of Brian Fitzgerald from Wells Fargo. Please go ahead.

Hi, Scott this is actually Rob on the call.

Scott E. Howe: I wanted to ask, as your customers are absorbing the 1% Chrome cookie deprecation impact but also at least attempting to start evaluating Privacy Sandbox, what are you hearing from them? We've heard some of the frustrations there early on, but is that enhancing your conviction and confidence in the future of consent and ID-based advertising? And I know you talked about a little bit of evangelization, but I wanted to ask a little bit more about your go-to-market right now. You've done a ton of groundwork, obviously, over the past four years, but how are you reinforcing that right now during this critical transition phase? Thanks.

I wanted to ask you.

Absorbing the 1% chrome cookie deprecation impact, but also.

At least attempting to start evaluating privacy sandbox.

What are you what are you hearing from them.

You've heard some of the frustration there early on but is that enhancing your sort of conviction and confidence.

And for the future consent based advertising and I know you talked about a little bit of that.

<unk>, but wanted to ask a little bit more about your go to market right now you've got a ton of data work, obviously over the past four years, but how do you sort of reinforcing this.

We're reinforcing that right now during this sort of a critical transition base. Thanks.

Yes.

Scott E. Howe: Yeah, Rob, first off, in terms of going to market, I would say. While we're developing really nice case studies, the frustration that we hear from clients has been fairly consistent. They just don't know how to get started.

Rob first off in terms of the go to market.

You know.

I would say.

While we're developing really nice case studies.

The frustration that we hear from clients has been fairly consistent.

I just don't know how to get started.

Scott E. Howe: And it's different. I mean, cookies have been embedded in their workflow for over 20 years. And so this represents a change to how media is bought and sold. But we think it's a change for the better, and we don't think that this is going to be slowed down materially. If it is, you know, we'll be fine, but we think that that better future is just within our grasp as an industry. But to get there, we have to make it simple.

And it's different.

Cookies have been embedded in their workflow for over 20 years and.

And so this represents a change to how media is bought and sold.

But we think it's a change for the better.

And we don't think that.

This is going to be slowed down materially if it is we'll be fine.

But we think that that better future is just within our grasp as an industry.

But to get there we have to make it simple.

Scott E. Howe: And we'll do that through evangelization, and sharing case studies. We have a bunch of webinars coming up. Some of our big partners, including Google, will start to evangelize this in the market, saying that this is no longer a product initiative. This is becoming a commercial initiative for them. And we'll certainly make this a priority at Ramp Up. We'll have entire tracks devoted to this to teach people what to do. But, you know, ultimately, our efforts to evangelize and make it simple to get up and start, that will go so far. What will ultimately carry the day? It is just more companies having success because it will go viral. All that said, I would end by saying, I feel like I've seen this movie before. I lived through Y2K in 1999.

And we'll do that through evangelization sharing case studies, we have a bunch of webinars upcoming some of our big partners, including Google will start to evangelize this themselves.

In the market that this is no longer you know a product initiative. This becomes a commercial initiative for them.

And we will certainly make this a priority.

At ramp up will have entire tracts devoted to this day.

To teach people what to do.

But ultimately.

Our efforts to evangelize and make it simple to get up and started that will go so far what will ultimately carry the day.

Is just more companies having success.

Because it will go viral.

All that said I would end by saying I feel like I've seen this movie before.

I lived through Y two K and 1999.

Scott E. Howe: I lived through GDPR a few years ago. And in both cases, there were people that just didn't want to recognize what was coming. And they said, hey, this isn't real, I'm not going to be concerned about it, it will all work itself out. And then on the eve of both those events, there was panic. There was pandemonium.

I lived through GDP or a few years ago.

And in both cases, there are people that just didn't want to recognize what was coming and they said hey, this isn't real I'm not going to be concerned about it will all work itself out and then on the eve of both those events it was panic.

Was pandemonium.

Scott E. Howe: And what I would tell you is if, as history follows. True to that, we're ready for it, and we will have our entire selling capacity geared towards fielding those requests, answering the questions, and getting clients and publishers who wait to implement up and running quickly. And Lauren, just to follow up on Habu, is there any purchase counting impact or anything else to call out there on the cost side or in terms of the profit impact? Yeah, absolutely. So we talked about HABU adding roughly $6 to $18 million in non-GAAP expense next year. We also expect it to impact GAAP expense by about $25 million, with about $15 million of that being driven by incremental stock-based comps and the balance being driven by purchased intangible asset areas. Thank you very much. Your next question comes from the line of Jason Kreyer from Craig Hallam. Please go ahead.

And what I would tell you is this.

History follows.

True to that we're ready for it.

And we will have.

Our entire selling capacity.

Geared towards building those requests.

During the questions and getting clients and publishers, who wait to implement.

But running quickly.

And Laura just to follow up on.

Is there any question scouting impact or anything else to call out there.

Cost sides or in terms of the.

The profit impact.

Yeah, absolutely. So we talked about habu, adding roughly call it $6 million to $18 million and a non-GAAP expense next year.

We also expected impact GAAP expense by about $25 million.

With about $15 million of that being driven by incremental stock based comp and the balance being driven by purchased intangible asset amortization.

Okay. Thank you very much.

Your next question comes from the line of Jason <unk> from Craig Hallum. Please go ahead.

Lauren Dillard: Perfect, thank you. Lauren, maybe I just wanted to spend a second dissecting the guide, specifically the subscription revenue guide. We've seen nice improvement in the key metrics like ARR and net retention, and RPO, but if we contrast that with the Q4 guide, which kind of consistent or maybe a little bit of a slowdown in subscription revenue from the December quarter, just trying to see if we can reconcile that slowdown a little bit. Yeah, and we would expect subscription growth to improve slightly quarter-on-quarter, with fixed subscriptions being stable to slightly up Usage has been one of the areas of our business where we've chosen, rather, to just model pretty conservatively in our outlook, given the variability and sometimes historical quarterly variability in particular. So that's the piece of the business that, if we do much better on subscription revenue, it will be because we outperformed. Okay, I appreciate that.

Perfect. Thank you Loren, maybe just wanted to spend the second dissecting the guide specifically the subscription revenue guide.

Seeing nice improvement in the key metrics like <unk> and net retention RP O but.

If we contrast that with the Q4 guide kind of consistent or maybe a little bit of a slowdown in subscription revenue from from the December quarter, just just trying to see if we can reconcile that slow down a little bit.

Yeah.

We would expect subscription growth to improve slightly quarter on quarter with fixed.

Scripture end being stable to slightly up in Q4 and usage being roughly flat and.

And usage has been one of the areas of our business, where we choose and we've chosen rather to just model pretty conservatively in our outlook given given the variability and sometimes kind of historical quarterly variability in particular.

So that's the piece of the business that is if we do much better on subscription revenue it will be because we outperform there.

Okay I appreciate that one follow up for me just on on the offshoring initiatives that you've had in place over the last year. Just wondering if there's any changes to the expectation there now as you're integrating habu.

Lauren Dillard: One follow-up question for me just on the offshoring initiatives that you've had in place over the last year. Just wondering if there are any changes to the expectation there now as you're integrating HABU. Thanks for the question. No, no, you know, the headline is no major changes.

Thanks for the question no no you know the headline is no major changes I'd want to acknowledge that this is a multiyear process and we're in the very early phases of implementation.

Lauren Dillard: I'd want to acknowledge that this is a multi-year process, and we're in the very early phases of implementation. We're pleased with our progress to date, but, of course, with any project of this magnitude, there are early learnings and moving pieces, and we're just really focused on making sure we get it right for the business, for the long term. To date, we have just north of 100 roles offshore and continue to take a very measured and thoughtful approach to how we transition future roles.

We're pleased with our progress to date, but of course with any project of this magnitude there early learnings and moving pieces and we're just really focused on making sure we get it right for the business for the long term.

To date, we have just north of 100 roles offshore and continue to take a very measured and thoughtful approach to how we transition future roles. So we are still expecting cost savings in FY 'twenty, five, but they're really meaningful savings, we expect to accrue in FY 'twenty and beyond.

Lauren Dillard: So we are still expecting cost savings in FY25, but the really meaningful savings we expect to accrue in FY26 and beyond. Thank you. Your next question comes from the line of Mark Zutowicz from The Benchmark Company. Please go ahead.

Thank you.

Your next question comes from the line of Mark <unk> from the Benchmark Company. Please go ahead.

Lauren Dillard: Thank you. And my apologies if you address this in your opening. I got on the call a little bit late, but I was just hoping you could flesh out a bit the acceleration that you saw in the total RPO relative to the current one and maybe what's sort of driving that and whether that gives you confidence in accelerating revenues. Celebrating revenue over the next 12 months, and then I have a follow-up. Thank you. Yeah, I'm happy to.

Yes.

Thank you.

Apologies if you addressed this in your opening got it on the call little bit late but I was just hoping you could flesh out.

A bit.

Celebration that you saw.

The total ARPA.

Relative to current.

And maybe what's what's sort of driving that and whether that gives you confidence in accelerating revenues.

Celebrated revenue over the next.

12 months, and then I have a follow up thanks.

Yeah happy to so total ARPA.

Lauren Dillard: So total RPO in the quarter was up 35%, CRPO, or the current portion, up 18%. And the delta there, Mark, is being driven by multi-year deals, which, as we've mentioned now for a few quarters, we've seen really nice success landing larger enterprise accounts on multi-year terms, which is a really positive thing for the business, long term. And to answer your question directly, yes, this does give us... Thank you for joining us. Okay, that's super.

In the quarter was up 35% CRP or the current portion up 18% and the Delta there market is entirely being driven by multiyear deals, which as you've mentioned now for a few quarters. We've seen really nice success landing larger enterprise accounts on multi year.

Terms, which is a really positive thing for the business over the medium to long term I mean to answer your question directly. Yes. This does give us increased confidence in our outlook for next year and we'll of course share a lot more there during our may call.

Scott E. Howe: And then, as it relates to Habu, not to get ahead of you guys because it was just recently closed, but just trying to get a sense of when the revenue synergies sort of materialize, and possibly more near term, just looking at your services line, which you had some really nice growth this year. Given Habu's SMB focus, if that could perhaps add a little bit of momentum to your services line, I'd appreciate it. Yeah, I can start, and I think I talked about it a little bit in my prepared remarks. We don't expect to wait to get synergy.

Okay Super and then.

As it relates to hub or not to get too.

In front of you guys because it was just recently closed but just trying to get a sense of.

When the revenue synergies materialize.

And possibly more near term just looking at.

Your services line.

You had some really nice growth this year.

Given how those SMB focus if that could perhaps.

Add a little bit of momentum on your services line.

If you could comment on that I appreciate it thanks.

Yes.

I can start.

I think I talked about it a little bit in my prepared remarks.

We don't expect to wait to get synergies.

Scott E. Howe: Synergies start with pipeline and commercial conversations, and those are already well underway. So, over the last two weeks, we have had over 200 face-to-face meetings. Last week was the IAB annual leadership meeting, and the Habu team was very busy meeting with clients and prospects with their LiveRamp counterpart.

Synergies start with pipeline and commercial conversations and those are already well underway.

So over the last two weeks, we have had over 200 face to face meetings.

Last week was the.

The Iab annual leadership meeting.

Ben the Habu team was very busy.

With clients and prospects with their library counterparts.

Scott E. Howe: We have a Ramp-Up coming up at the end of this month, where we'll invite several thousand clients and prospects to San Francisco. Once again, that's going to be a great opportunity to get in front of clients. We're already seeing that in our pipeline, so several million dollars increase already. And then the question is, how long does it take for those to convert into revenue?

We have ramp up coming up at the end of this month, where we'll invite several thousand climb.

Clients and prospects to San Francisco, once again, thats going to be a great opportunity.

In front of clients.

We're already seeing that.

And our pipeline.

So.

Several million dollars increase already and then the question is how long does it take for those to convert into revenue.

Scott E. Howe: But we feel pretty optimistic about it. We've hit the ground running. One of the things that we do, as a matter of course, when we are having conversations with companies, from a CorpDev perspective as we co-author a Google document with them, and it gives us a chance to see how they think because what we do is map out a shared vision and our implementation strategy together. So all of that was written, revised, iterated, discussed well before we ever agreed on a final purchase price.

But we feel pretty optimistic about it we've hit the ground running one of the things that we do.

As a matter of course, when we are having conversations with companies.

From a corp, Dev perspective, as we co author of Google document.

With them and it gives us a chance to see how they think because what we do is map out shared vision and our implementation strategy together. So all of that was written revised iterate it discussed.

Well before we ever agreed on a final purchase price.

Lauren Dillard: And as a result, we have hit the ground running. And hey, Mark, for everyone's benefit, maybe I could just put a couple of numbers against Scott's comment. So, in Q4, we expect HABU to contribute roughly $2 million in revenue.

And as a result, we.

We have hit the ground running.

Hey, Mark for everyone's benefit maybe I could just put a couple of numbers again Scotts comment. So in Q4, we expect hobby to contribute roughly $2 million in revenue.

Lauren Dillard: Consistent with what we mentioned when we announced the deal, we expect it to contribute roughly $18 million in FY25, and a lot of that assumption is predicated on HABU's standalone momentum. The synergies, at least the revenue synergies, begin to show up in the back half of fiscal 25, but we think it really interests HABU. Oh, that's too bright.

Consistent with what we mentioned when we announced the deal we expect it to contribute roughly $18 million in FY 'twenty, five and a lot of that.

<unk> is predicated on hobbies standalone momentum.

The synergies at least the revenue synergies.

I'll begin to show up in the back half of 'twenty five, but we think get really interesting as we look ahead to FY 'twenty six.

Thank you Brian.

Operator, we are now.

Operator: Operator, we have time for one more question, please. Certainly. Your next question comes from the line of Kirk Maturne from Evercore ISI. Please go ahead.

Sorry, operator, we have time for one more question. Please.

Certainly your next question comes from the line of Kirk <unk> from Evercore ISI. Please go ahead.

Scott E. Howe: Yeah, thanks very much. Scott, I guess just to start, can you give a little bit more color on the cloud partnerships, maybe where each of those are, you know? You said they're doubling. Can you just remind us sort of sequentially, you know, maybe which ones are contributing perhaps a little bit more now and what your expectations are for the calendar year? Yeah, Kirk, and I think there's kind of a pre-Habu answer and a pro forma answer.

Yes, thanks very much.

Got it I guess just to start could you give a little bit more color on the cloud partnerships, maybe where each of those are I know you said that there are doubling can you just remind us or sequentially, maybe which ones are contributing perhaps a little bit more now and what your expectations are for the calendar year.

Yes, Kirk and I think.

There's kind of a pre habu answer.

Got it.

Pro forma answer.

Scott E. Howe: And that was one of the drivers of that acquisition. So, if you look back in time, uh... LiveRamp made the decision to standardize initially on GCP as our cloud partner for our own tech. And so that was naturally an easy way to get started.

And that was one of the drivers of that acquisition.

So if you look back in time.

<unk> made the decision to standardize initially on DCP is our.

<unk> partner for our own tech and so that was that truly.

An easy way to get started.

Scott E. Howe: And Google has always, throughout the 10-year history of LiveRamp, been one of the biggest, if not single biggest, sources of new client origination, uh... so that will continue, but uh... more recently, we had made some nice inroads with AWS, as I mentioned in my prepared remarks being named one of their partners of the year, And then also Snowflake, which I think last quarter I talked about how effective they've You know, in each of those cases, when they bring us in, we drive more storage and compute. So it really is a nice collaboration. Admittedly, we haven't made as much progress with some of the other partners, like Databricks or Azure. And in those cases, the good news is that Habu has great relationships pretty much across the board.

And Google has always throughout the 10 year history of live ramp been one of the biggest if not single biggest sources of new client originations.

Originations.

So that will continue but more recently, we had made some nice inroads with AWS and I mentioned in my prepared remarks being named one of their partners in the year.

And then also snowflake.

I think last quarter I talked about.

How.

<unk> they've been at walking us in to their clients need.

Each of those cases, when they bring us in we drive more storage or compute so it really is a nice collaboration.

Admittedly, we haven't made as much progress.

With some of the other partners like data breaks or Azure.

And in those cases.

Good news is <unk> has great relationships pretty much across the board.

Scott E. Howe: Now this is really important, because at one of our client advisory boards last year, we asked the question, "How many of you are using the cloud?", and every single hand in the room went up. And then we asked... "How many of you are using multiple clouds?", and every single hand in the room went up.

Now this is really important because if I go back to one of our client advisory boards from last year, we asked the question.

How many of you are using the cloud.

Every single hand in the room went up.

And then we asked.

How many of you were using multiple clouds.

Every single hand in the room went up.

Scott E. Howe: So you need to have a relationship with every different cloud provider because not only do individual companies utilize multiple clouds, but when they start to collaborate, it is absolutely the case that you have a Snowflake cloud talking to an Amazon cloud talking to an Azure cloud. And if you can't service, if you can't be interoperable across all of them, then your growth is gonna be inhibited. So I think, you know, this goes back to why we were so excited about Habu. One of the big reasons is that we think it accelerates our traction with the cloud. We're already pleased, you know, we talked about the doubling, uh... but we think this is going to be an area of the business in the coming years that should grow faster than the rest of the business. Thanks, guys; super helpful.

So you'd need to have a relationship with every different cloud provider because not only do individual companies utilize multiple clouds, but when they start to collaborate.

It is absolutely the case.

Have a snowflake cloud talk into an Amazon cloud talking to an Azure cloud and if you can't service if you can't be interoperable interoperable across all of them.

Then your growth is going to be inhibited.

So I think this goes back to why why are we so excited about habu one of the big reasons as we think it accelerates our traction with cloud we're already pleased we've talked about the doubling.

But we think this is going to be an area of the business in the coming years that should grow faster.

Then the rest of the business.

Thanks, Scott that's Super helpful. And then just a quick one for Lauren Lauren on your guide I was a little surprised subscription net revenue is going back down towards 100, and I know that probably some conservatism in there, but given the trends in IRR I guess is that related to the lower I guess, the lower <unk> business that you were talking about our smaller customers.

Scott E. Howe: And then just a quick one for Lauren. Lauren, on your guide, I was a little surprised that subscription net revenue is going back down towards 100. And I know that there is probably some conservatism in there, but given the trends in ARR, I guess, is that related to the lower, I guess, the lower ARR business that you're talking about, or smaller customers that might still be either might still be some churn going on in that part of the customer base? Is that the reason for that?

That might still be still might be some churn going on in that part of the customer base is that the reason for that or is there something else that would push it back down after sort of stabilizing last couple of quarters.

Lauren Dillard: Or is there something else that would push it back down after sort of stabilizing the last couple quarters? Yeah, so two things I would call out. First, what you just mentioned, Kirk. And then also, we are assuming a lower contribution from variable revenue in Q4, consistent with the seasonal trends there. Okay, that's super helpful.

Yeah. So two things I would call out its first what you just mentioned Kirk and then also we are assuming a lower contribution from variable revenue in Q4, consistent with the seasonal trends there.

Okay. That's super helpful. Thank you all.

Lauren Dillard: Thank you all. Thank you. I will now turn the call over to Lauren Dillard for closing remarks. Thanks so much, and first, thank you again, everyone, for joining us today. Q3 was strong on both the top and bottom lines.

Thank you I will now turn the call over to Lauren Dillard for closing remarks.

Thanks, So much and first thing you again, everyone for joining US today Q3 was strong on both the top and bottom lines our growth in subscription revenue and <unk> is trending higher and we are positioned for further acceleration exiting this year and as we look ahead. We believe we have several growth levers to drive continued.

Lauren Dillard: Our growth and subscription revenue and ARR are trending higher, and we are positioned for further acceleration through this year. And as we look ahead, we believe we have several growth levers to drive continued strong top-line growth and margin expansion. And finally, as Scott referenced during the call, we have our annual Ramp-Up conference coming up at the end of February in San Francisco. We invite all of you to join us; we'd love to have you there. If you have any questions or need help registering, please reach out to me, Drew, or Cassandra, and hopefully, we'll see you at the end of the month. With that, thanks again for joining us today. We look forward to updating everyone on our progress in the quarter. This concludes today's conference call. Thank you for your participation, and you may now disconnect. Please wait; the conference will begin shortly. Please wait; the conference will begin shortly.

Strong top line growth and margin expansion and finally as Scott referenced during the call. We have our annual ramp up conference coming up at the end of February in San Francisco, We invite all of you to join we'd love to have you. There. If you have any questions or need help registering please reach out to me or Cassandra.

And hopefully we see you at at the end of the month with that thanks again for joining US today, we look forward to updating everyone on our progress in the quarters ahead.

This concludes today's conference call. Thank you for your participation and you may now disconnect.

Please wait the conference will begin shortly.

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