RAMP — LiveRamp Holdings, Inc.

Summary of LiveRamp Holdings, Inc. Q3 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: $212 million, up 9% year-over-year, exceeding guidance by $1 million.
• Subscription Revenue: $158 million, also up 9%, with fixed subscriptions growing 8% and usage-based subscriptions increasing 13%.
• Annual Recurring Revenue (ARR): Increased by $11 million quarter-over-quarter and 7% year-over-year.
• Customer Growth: Total customer count rose by 15, marking the best performance in the past 12 quarters; million-dollar-plus customers increased by 8 to a total of 140.
• Operating Income: Non-GAAP operating income rose 36% to $62 million, with a record operating margin of 29%.
• Free Cash Flow: Reached a record $67 million, with $39 million used for share repurchases.
• Gross Margin: 74%, slightly above expectations.

2. Strategic Updates and Business Highlights

• AI Integration: LiveRamp is positioning itself as a foundational infrastructure provider for AI in marketing, enhancing its data marketplace to include AI models and applications.
• Usage-Based Pricing Model: The company is transitioning to a usage-based pricing model, which is expected to enhance customer acquisition and retention, particularly among smaller brands.
• Partnerships: Expanded partnerships with major players like Publicis and Uber, focusing on integrating AI capabilities and enhancing service offerings.
• Market Demand: Continued strong demand across various channels, particularly in clean room insights and commerce media.

3. Forward Guidance and Outlook

• FY 2026 Revenue Guidance: Increased to a range of $810 million to $814 million, maintaining a growth expectation of approximately 9%.
• Q4 Revenue Guidance: Expected to be between $203 million and $207 million, with non-GAAP operating income around $38 million and an operating margin of approximately 18%.
• Long-term Goals: Targeting to achieve a "Rule of 40" (10-15% revenue growth and 25-30% operating margin) by FY 2028, with expectations of returning to double-digit growth in the near future.

4. Bad News, Challenges, or Points of Concern

• Marketplace Revenue: Marketplace and other revenue increased by only 8%, slightly below expectations due to timing-related dynamics.
• Customer Churn: While customer churn remains low, the company noted that some large multi-year contracts are nearing their end, which could impact future revenue if not renewed.
• Competitive Pressures: The evolving landscape of AI and data pricing models could pose challenges, as competitors like Trade Desk implement new pricing strategies.

5. Notable Q&A Insights

• AI Partnerships: The company is focusing on client-led innovation, prioritizing partnerships based on customer needs and existing spending patterns.
• Customer Sentiment: Management emphasized that they are not seeing a decline in demand due to AI disruptions; rather, AI is viewed as a tailwind for growth.
• Incrementality from SMBs: The new pricing model is expected to gradually improve revenue from small to medium-sized businesses, with more visibility anticipated in future quarters.
• Operational Efficiency: The company is maintaining a disciplined approach to operating expenses, with a focus on investing in growth initiatives while driving margin expansion.

Overall, LiveRamp reported a strong Q3 performance with positive momentum in customer growth and financial metrics, while strategically positioning itself to leverage AI and a new pricing model for future growth. However, challenges remain in marketplace revenue growth and potential customer churn from expiring contracts.