LiveRamp Holdings, Inc. Q3 FY2026 earnings call

• Business demonstrates durability, predictability, and scalability, with solid Q3 performance. - AI is a tailwind as LiveRamp provides critical infrastructure for partners to use AI effectively. - Focus on rule of 40 is unwavering, aiming for FY 28 membership. - Q3 highlights: 9% revenue growth, ARR increase, record operating margins and free cash flow, key growth initiatives like expanding data marketplace and usage-based pricing model. - AI creates new nodes in the network, drives more data across the network, and benefits the business through increased data activity and revenue scaling. - Progress in AI partnerships, with over 20 partners signed, and expansion of data marketplace to support AI models, agents, and applications. - Pivot to usage-based pricing model for brand direct and reseller customers, with positive customer feedback from the pilot.

Q3 revenue growth was 9%. Subscription revenue also grew 9%, with ARR increasing $11 million quarter over quarter and 7% year over year. Total customer count increased by the largest amount in over three and a half years, and million-dollar-plus customers increased by eight to 140. Marketplace and other revenue increased 8% to $54 million. Gross margin was 74%, operating expenses were $95 million, down 6% year on year, operating income was $62 million, up 36%, and operating margin expanded by six points year over year to a record 29%. Free cash flow was a record $67 million.

• Target to achieve rule of 40 in FY 28 with 10%-15% revenue growth and 25%-30% non-GAAP operating margin. - FY 26 revenue guidance increased to between $810 million and $814 million, gross margin expected to be in the 72-73% range, non-GAAP operating income $180 million, GAAP operating income expected to be ~$84 million with a record margin of 10%. - Q4 expected total revenue between $203 and $207 million, non-GAAP operating income ~$38 million, operating margin ~18%, subscription revenue up high single digits, marketplace and other revenue up low double digits, gross margin ~72%.

Q: Jason Kreyer from Craig Hallum asked about what key features or functionality LiveRamp brings to the table that led Publicis to work with them.

A: Scott Howe said it's been a few years in the making, related to modernizing the platform and rolling out changes to the pricing model, with a philosophy like Intel Inside to have major platforms and agencies use the modular composable platform and innovate on top.

Q: Jason Kreyer from Craig Hallum asked about upsell cross-sell conversations and what capabilities customers are looking for.

A: Lauren Dillard said Q3 was a very strong sales quarter, bookings up double digits mostly driven by expansion with existing customers, with cross-sell of clean room to support cross-media intelligence, commerce media, and measurement use cases.

Q: Shyam Patil from Susquehanna asked about prioritizing AI partnerships.

A: Scott Howe said they prioritize based on client and partner-led innovation, asking clients what use cases are most important, with majority being legacy companies with built AI and a third being native use cases, taking a portfolio approach.

Q: Lucas from Morgan Stanley asked about verticals seeing the most growth in commerce media and revenue opportunity from non-retail vs traditional.

A: Scott Howe said travel, food delivery, and finance are areas with growth, exposing to different clients and important for the pricing model.

Q: Lucas from Morgan Stanley asked about CTV integration.

A: Lauren Dillard said CTV is a strong growing component, with data marketplace CTV data purchase outpacing growth, 70% of largest integrations being CTV providers or enabled to buy CTV, and a catalyst for clean room adoption.

Q: Timothy Nolan from SSR asked about assurance on customer spending with AI and progress on UCP.

A: Scott Howe said AI is a tailwind as data is essential for AI, and they have 10% of activations already going to AI; on UCP, they gave it to the IAB which is commercializing it, and there are other standards with no preference. Lauren Dillard added Q3 sales were strong with consistent conversion rates, etc.

Q: Mark Zgutowicz from Benchmark Company asked about go-to-market for pricing tests and SMB ARR incrementality.

A: Scott Howe said they took a methodical approach, prioritizing new logo opportunities, with new pricing helping land new logos and lower upfront commitment; Lauren Dillard said more to share on May call about SMB ARR incrementality.

Q: Alec Brondolo from Wells Fargo asked about Trade Desk's data pricing model trend.

A: Lauren Dillard said it's aligned to stimulate incremental demand, potential upside but not seen in current numbers.

Q: Peter Burkly from Evercore ISI asked about AI thinking and CRVO growth.

A: Scott Howe said they are the pipe enabling customers' AI success, working on internal AI projects; Lauren Dillard said CRPO impacted by timing of renewals and length of contracts, but total RPO up 23% reflecting sales momentum.