LiveRamp : Corrected Transcript LiveRamp Holdings Inc(RAMP US) Q4 2025 Earnings Call 21 May 2025 4 30 PM ET

Published: 2025-05-22 12:24:14 ET RAMP

Published on 05/22/2025 at 12:24

21-May-2025

LiveRamp Holdings, Inc. (RAMP)

Q4 2025 Earnings Call

Andrew M. Borst

Vice President-Investor Relations, LiveRamp Holdings, Inc.

Scott E. Howe

Chief Executive Officer & Director, LiveRamp Holdings, Inc.

Lauren Russi Dillard

Executive Vice President & Chief Financial Officer, LiveRamp Holdings, Inc.

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Shyam Patil

Analyst, Susquehanna Financial Group LLLP

Elizabeth Porter

Analyst, Morgan Stanley & Co. LLC

Jason Michael Kreyer

Analyst, Craig-Hallum Capital Group LLC

Peter Burkly

Analyst, Evercore ISI

Mark Zgutowicz

Analyst, The Benchmark Co. LLC

Alec Brondolo

Analyst, Wells Fargo Securities LLC

I would now like to turn the call over to your host, Drew Borst, Vice President of Investor Relations.

Andrew M. Borst

Vice President-Investor Relations, LiveRamp Holdings, Inc.

Thank you, operator. Good afternoon, everyone, and thank you for joining our fiscal 2025 fourth 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. A copy of our press release and financial schedules, including any reconciliations to non-GAAP financial measures, is available at investors.liveramp.com.

Also, during the call today, we'll be referring to the slide deck that is also available on our IR website. With that, I'll turn the call over to Scott.

Scott E. Howe

Chief Executive Officer & Director, LiveRamp Holdings, Inc.

Thanks, Drew, and thank you to everyone joining us today. We had a strong financial performance in Q4. We beat on the top and bottom line. For the fifth consecutive quarter, revenue increased by a double-digit rate. The operating margin expanded by 3 points, driving 43% growth in operating income. And we had a record free cash flow quarter. These, in my view, are the standout achievements in the quarter. Lauren will provide an in-depth look at the numbers shortly. I'll be focusing my comments on the key takeaways from the fiscal year just completed and then, diving into the exciting opportunities that lie ahead in FY 2026.

FY 2025 was a year of strong progress and achievement. First, we delivered 13% revenue growth, marking the third consecutive year that we hit our 10% to 15% revenue growth target. This was propelled by double-digit growth in both subscription revenue, which grew 11% and Marketplace & Other, which surged 21%. This growth was driven by our ongoing ability to win with the largest customers.

We added 13 $1-million-plus subscription customers during the year, including 3 in Q4. This crucial customer cohort saw aggregate revenue increased 13% in FY 2025, exceeding our overall subscription revenue growth rate. Notably, in the fourth quarter, we signed two new $1-million-plus customers from the financial services sector to support their emerging commerce media networks. These additions include a leading global digital payments platform and the nation's largest bank and credit card issuer. Furthermore, we continue to successfully upsell existing clients into the $1-million-plus cohort. For example, a leading global security software provider signed on to leverage our clean room solution for enhanced collaboration with its PC partners, achieving a more comprehensive understanding of its customer base across its indirect and direct sales channels.

We also celebrated a record setting quarter for renewals, securing 20 multi-million dollar ACV contracts, of which roughly half are multi-year contracts. Among these renewals is IPG, one of our largest customers. As a result of these signings, we had substantial growth in our remaining performance obligations, which helps secure future revenue generation.

Another driver of our revenue growth in FY 2025 was a reduction in our contraction rate, which includes both dollar churn and down-sell to the lowest level ever. This achievement is the culmination of a sustained effort to enhance our service capabilities and modernize our platform on both the front- and back-end. Key initiatives included two platform refreshes last year that significantly improved the UI and the ongoing migration to an upgraded back-end, which is yielding substantial improvements in stability and processing speed. With half of customer workflows already migrated and the remainder slated for this year, we are confident in sustaining these lowered contraction rates.

Given our scale and favorable pull-through rates, this top line growth translated into impressive bottom line gains. Our operating margin expanded by 2 percentage points to 18%, marking our sixth consecutive year of margin expansion. Additionally, we achieved a record $153 million in free cash flow, a 51% year-over-year increase, driven partly by tighter management of working capital. Demonstrating our commitment to shareholder value, we returned $101 million in cash to shareholders through our share repurchase program. We concluded the fiscal year with $421 million in cash and short-term investments, equating to over $6 per diluted share.

Finally, bringing this all together, we proudly joined the Rule of 30 club in FY 2025 or more accurately, Rule of 31, with 13% revenue growth and an 18% operating margin, a significant 4-point improvement from FY 2024's Rule of

27. And while this is a nice milestone, we remain focused on our ambition to achieve the Rule of 40 by FY 2028, targeting 10% to 15% revenue growth and 25% to 30% operating margin.

FY 2026 opportunities. While FY 2025 was an exceptional year, what excites me even more is the immense potential I see in FY 2026. In February, we hosted our annual user and partner conference, RampUp, in San Francisco. This event, without a doubt, is the highlight of my year. RampUp has evolved into the definitive collaboration catalyst for leaders at the intersection of marketing, technology and data science.

It's remarkable to reflect on how a decade ago, when this event first started, RampUp, only drew a few hundred attendees and almost exclusively from the adtech world. This year, we welcomed approximately 2,500 participants, including not only adtech leaders, but also representatives from hundreds of global brand powerhouses, companies like Disney, Procter & Gamble, Uber and Delta, amongst many others. RampUp serves as a critical catalyst for our sales engine and jumpstarts the fiscal year ahead.

At this year's conference, we spotlighted four transformative themes. First, LiveRamp's data collaboration network comprised of over 900 leading advertisers, data platforms, publishers, data providers and commerce media networks has unparalleled scale, neutrality, interoperability and connectivity necessary to deliver the outcomes marketers and media owners need. Our primary focus is to amplify the network's density by continuing to add more nodes and even more importantly, increasing the number of edges or connections between these nodes.

This will not only exponentially increase the value of the network for all participants, but also significantly bolsters our revenue generation.

Second, we are transforming media measurement with the industry's only scalable solution, enabling seamless marketing insights from a single platform. We announced the launch of Cross-Media Intelligence, a new capability that enables marketers to better measure and optimize advertising campaigns anywhere its customers are, with access to unified, de-duplicated reporting across screens and platforms. We see this measurement use case as a primary mechanism near term for increasing the density of our network, more nodes and more edges. We will dive deeper into this in a moment.

Third, commerce media networks are scaling the new industries beyond retail. More and more companies across a variety of sectors are realizing the benefits of data collaboration to more accurately measure business outcomes. LiveRamp can enhance the value and effectiveness of the ad inventory on commerce media networks through improved targeting and measurement capabilities. We have discussed this trend for some time now, but the proof points continue to accumulate.

Earlier, I highlighted the account wins with the digital payments platform and the leading US bank to build new commerce media networks. Over the past year, our platform has helped launch an airline media network with United, a casino media network with Mohegan, and a real estate media network with REMAX. We expect this trend to continue as companies look to better leverage their data assets to drive both efficiencies and incremental revenue.

Fourth and finally, data collaboration with strong governance is foundational for AI and agentic marketing solutions. Data collaboration helps partners safely leverage important datasets, audiences, impressions, transactions, to power agentic AI across all advertising channels, so they can deliver and optimize outcomes-based marketing. Importantly, the LiveRamp Data Collaboration Platform also provides governance tools that allow data owners to control how their data is accessed and used, ensuring control and transparency.

All of these trends are pivotal to our growth trajectory in FY 2026 and beyond. But what truly ignites my excitement is our groundbreaking Cross-Media Intelligence solution. The longstanding, multi-touch attribution and panel-based measurement methods are faltering in today's complex, multi-platform, digital ecosystem. Relying on outdated tools, flawed metrics and fragmented third-party data provides only a distorted view of consumer

behavior, leaving marketers to make critical decisions with incomplete and unreliable information. These antiquated approaches simply lack the precision and granularity demanded by effective cross-media advertising strategies. This often results in misallocated resources and skewed perceptions of campaign performance across platforms.

As our industry navigates increasingly stringent privacy regulations and the erosion of third-party cookies, the imperative for a robust, privacy-centric measurement solution has never been greater. Data collaboration powered by our state-of-the-art clean room technology is the definitive solution to this measurement challenge. It represents a fundamental paradigm shift, enabling marketers to revolutionize their measurement strategies. Our solution equips them with unparalleled capabilities, seamless connectivity to a vast and diverse network of partners, the agility and control to enforce their unique data sharing policies, and remarkable adaptability in the face of evolving regulations.

This data collaboration framework dramatically reduces risk and supercharges cross-media measurement, empowering marketers to confidently navigate the complexity of the digital landscape, without compromising privacy or data quality. LiveRamp is uniquely positioned to deliver this transformative measurement vision. We've established the industry's most extensive data collaboration network, seamlessly connecting all key players from advertisers and publishers to retail media networks, data providers and measurement partners. Our robust identity foundation enables privacy preserving data connectivity across this network. Finally, our network solutions ensure seamless interoperability across all major cloud environments.

We've already secured commitments from dozens of premier publishers for Cross-Media Intelligence, including the largest social walled gardens. Everyone wants to know that their efforts are generating impact. In good markets, it's a priority, but in uncertain macroeconomic markets, it's a necessity. In addition, there is a serendipitous and important additional benefit, collecting signals from a wider variety of partners feeds the proprietary AI models that we believe are foundational for long-term success. Increasingly, we're seeing the distance between measurement and optimization narrow with the rise of agentic optimization and curation. We're investing to power the emerging generation of data-driven optimization with agents.

Industry enthusiasm with both publishers and advertisers has been palpable, and Cross-Media Intelligence could be one of the key levers in driving more meaningful sales acceleration in FY 2026. While measurement is not the only use case for our clean room insights product, we think it is the most compelling one in the near term. As we discussed on Investor Day last February, today, only 25% of existing brand customers are utilizing a clean room from us today. But we think a significant majority of the remaining 75% will require one in the coming few years.

Furthermore, the ARR for customers with a clean room is approximately four times larger than customers without a clean room, demonstrating the sizable revenue opportunity from successfully upselling these customers. We also see this clean room measurement use case as a driver of new logo signings. Enhanced measurement helps marketers optimize ROI and maximize every advertising dollar. This is always important, but even more so in a more tepid macroeconomic environment when all expenses are under more scrutiny. We look forward to updating you on our progress in the quarters ahead.

In closing, let me reiterate my key points. First, we delivered strong financial results in Q4, beating on the top and bottom line, delivering double-digit revenue growth for the fifth consecutive quarter, 43% operating income growth, and a record free cash flow quarter.

Second, FY 2025 marked our entry into the Rule of 31 club with 13% revenue growth and 18% operating margin. The achievement was fueled by our continued success with our largest customers, coupled with a historic

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LiveRamp Holdings Inc. published this content on May 22, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 22, 2025 at 16:23 UTC.