LiveRamp’s AI Push and Pricing Shifts Drive 9% Revenue Growth

Date of Call: Feb 5, 2026

Financials Results

• Revenue: $212 million, up 9% YOY
• Gross Margin: 74%, a few ticks higher than expected
• Operating Margin: 29% (non-GAAP), up 6 points YOY; 19% (GAAP), up 11 points YOY

Guidance:

• FY 2026 revenue expected between $810 million and $814 million, equating to roughly 9% growth.
• FY 2026 non-GAAP operating income expected ~$180 million, up 33% YOY, with margin expanding 4 points to 22%.
• FY 2026 gross margin expected 72% to 73%, down 1-2 points YOY.
• Q4 revenue expected between $203 million and $207 million.
• Q4 non-GAAP operating income expected ~$38 million with margin ~18%.
• Q4 gross margin expected ~72%.
• Target to achieve Rule of 40 (revenue growth 10-15% and non-GAAP operating margin 25-30%) by FY 2028.

Business Commentary:

Revenue and Operating Income Growth:

• LiveRamp reported revenue of $212 million, up 9% year-on-year, with operating income increasing by 36%.
• The growth was driven by strong execution, expansion in data marketplace, and increased customer count.

Customer and ARR Growth:

• The company saw a 15 increase in total customers and a 7% year-on-year increase in ARR.
• This was due to successful expansion in use cases for Commerce Media, CTV, and cross-platform measurement.

AI as a Tailwind:

• LiveRamp highlighted AI as a tailwind, with AI partnerships enhancing data utilization and network scalability.
• The integration of AI-driven personalization and targeting is foundational for their platform.

Usage-Based Pricing Model:

• The company is piloting a usage-based pricing model with brand direct customers, which is expected to unlock incremental revenue growth.
• The model enhances customer accessibility and flexibility, particularly for midsized brands.

Sentiment Analysis:

Overall Tone: Positive

• CEO stated: "our business continues to demonstrate durability, predictability and scalability as evidenced by our solid performance in Q3." Mentioned "record quarterly operating margins," "record quarterly free cash flow," "strong momentum in ARR," and "AI is a tailwind for our business." CFO noted: "we delivered strong results, exceeding our expectations on the top and bottom line."

Q&A:

• Question from Jason Kreyer (Craig-Hallum Capital Group LLC): Can you talk about what key features or functionality that LiveRamp brings to the table that was kind of the reason why they selected to work with you guys (referring to Publicis)?
  Response: LiveRamp's modernized platform and new usage-based pricing model allow resellers like Publicis to innovate on top of its modular, composable platform without cannibalizing LiveRamp, similar to an 'Intel Inside' approach.

• Question from Jason Kreyer (Craig-Hallum Capital Group LLC): What kind of upsell, cross-sell conversations progress and what capabilities customers are looking for?
  Response: Strong double-digit bookings growth in Q3, mostly from expansion with existing customers, driven by cross-selling clean room Insights for cross-media intelligence and commerce media use cases.

• Question from Shyam Patil (Susquehanna Financial Group): Can you talk about your approach to prioritizing AI partnership opportunities?
  Response: Adopts a portfolio approach, prioritizing both legacy companies (like Google) where clients are already investing and native AI startups, betting on all to align with eventual winners.

• Question from Lucas Cerisola (Morgan Stanley): As you expand Commerce Media with new partners, in which other verticals are you seeing the most growth and the revenue opportunity from non-retail commerce networks?
  Response: Fast growth in travel (airlines), food delivery (like Uber), and finance; these sectors bring new SMB-type clients, and LiveRamp's new pricing/reseller model positions it to serve them effectively.

• Question from Lucas Cerisola (Morgan Stanley): Could you talk about CTV, how many brands are leveraging the integration, typical spend levels, and how it compares to other CTV platforms?
  Response: CTV is a strong growth component; about 70% of LiveRamp's 50 largest integrations are pure-play CTV or ad tech platforms enabled for CTV, and it's a catalyst for clean room adoption.

• Question from Timothy Nollen (SSR LLC): Could you give assurance that AI won't disrupt software subscription spending and any acceleration seen?
  Response: CEO asserts AI is a tailwind, essential for safe, effective AI requires LiveRamp's data infrastructure; CFO notes no impact on demand yet, with strong sales metrics and ~10% of activations going to AI/AI-enabled partners.

• Question from Timothy Nollen (SSR LLC): What is the progress on commercialization of agentic AI and the Universal Context Protocol (UCP)?
  Response: Standards like UCP and ACP are emerging for data organization to feed AI models; LiveRamp is engaged but neutral on which standard prevails, as long as one emerges.

• Question from Mark Zgutowicz (The Benchmark Company): What are the challenges in the pricing tests and go-to-market, and what is the expected ARR incrementality from SMB next year?
  Response: New usage-based pricing lowers upfront commitment, helping land new logos and improve churn; expects modest upside in back half of FY 2027 from this initiative, with more details on May call.

• Question from Mark Zgutowicz (The Benchmark Company): What is driving the sequential OpEx increase in Q4 and the S&R rate normalized for churned clients?
  Response: Sequential OpEx increase driven by seasonality (events/conferences) and project spend shifts; S&R would be closer to high end of 100-105% range normalizing for early-year large contractions.

• Question from Alec Brondolo (Wells Fargo Securities): What does Trade Desk's new data pricing model and industry trend shifting to AI-appended campaigns mean for the data marketplace business?
  Response: Trade Desk's changes are not a factor yet; if scaled, could represent incremental volume but not a material change to LiveRamp's take rate.

• Question from Peter Burkly (Evercore ISI): Any change in thinking about being the 'plumbing' for AI versus an AI company?
  Response: Strategy remains enabling partners to build AI applications using LiveRamp's data infrastructure; internally, AI is used to improve core capabilities like automation, not to out-compete AI natives.

• Question from Peter Burkly (Evercore ISI): Why did CRPO growth decelerate, considering ARR growth?
  Response: CRPO impacted by runoff of large multiyear deals in final year ahead of renewal, but total RPO up 23% reflecting recent sales momentum.

Contradiction Point 1

Impact and Timing of New Pricing Model on Revenue

Contradiction on whether new pricing model benefits are included in the current year's guidance.

1) Can you summarize the go-to-market strategy for the new usage-based pricing tests and client acquisition challenges? 2) What ARR growth is expected from SMBs next year? 3) What's driving the sequential OpEx guidance, and what would S&R show after normalizing for churned clients? - Mark Zgutowicz (The Benchmark Company, LLC)

2026Q3: The rollout will be methodical, expanding to existing clients at renewal. Modest upside from this pricing initiative is expected in the back half of FY27, with more details on the May call. - Scott Howe(CEO), Lauren Dillard(CFO)

Can you provide an update on the macro conservatism in the revenue guide, potential incrementality from pricing pilots/AI labs, and the mix of retail/CPG versus non-retail in incremental ARR for the second half acceleration? - Unknown Analyst (Benchmark Company, on for Mark Zgutowicz)

20251106-2026 Q2: No upside from the new pricing model is baked into this year's guide. The model is in a customer pilot (through March 2027), with learning ongoing to fine-tune before a thoughtful rollout next year, with benefits accruing over several quarters. - Lauren Dillard(CFO)

Contradiction Point 2

Impact of The Trade Desk's Pricing Shift on LiveRamp's Business

Contradiction on whether the partner's pricing change is a current factor or a future potential upside.

How will The Trade Desk's shift from à la carte data pricing to AI-driven appending affect the data marketplace business? - Alec Brondolo (Wells Fargo Securities, LLC)

2026Q3: The Trade Desk's changes, implemented in December, are not a Q3 factor and will take time to scale. If they scale successfully, they would represent incremental transaction volume for LiveRamp, not a change to the take rate—potential upside but not currently reflected in numbers. - Lauren Dillard(CFO)

How could AI search and reviews reducing open web click-through rates affect your business? - Unknown Analyst (Susquehanna, on for Shyam Patil)

20251106-2026 Q2: LiveRamp's exposure to the Open Web is low... The upside from AI is high because first and second-party data—which LiveRamp powers—enhances AI model effectiveness. - Scott Howe(CEO)

Contradiction Point 3

AI's Impact on Demand and Business Model

Contradiction on whether AI is a tailwind or disrupts near-term demand.

1) Is customer spending stable amid AI's impact on the subscription model, and is AI a growth driver? 2) What progress has been made in commercializing the Universal Context Protocol (UCP) for agentic AI? - Timothy Nollen (SSR LLC)

2026Q3: LiveRamp's track record of durable growth and AI being essential... positions the company as an enabler, not a disruptee... AI is a tailwind, not a headwind. - Scott Howe(CEO)

How do you assess the impact of AI search and overviews on open web click-through rates for your business? - Unknown Analyst (Susquehanna, on for Shyam Patil)

2026Q2: LiveRamp's exposure to the open web is low... AI presents a high upside... Investments in modernizing the stack, AI readiness, and usage-based pricing lay the foundation for success. - Scott Howe(CEO)

Contradiction Point 4

Timeline for Investment Abatement

Contradiction on when major growth investments will taper off.

1) What is the go-to-market strategy for the new usage-based pricing tests and the challenges in client acquisition? 2) What is the expected ARR incrementality from SMBs next year? 3) What's driving the sequential OpEx guide and how would S&R look when normalized for churned clients? - Mark Zgutowicz (The Benchmark Company, LLC)

2026Q3: The rollout [of new pricing model] will be methodical... Over time, this should improve churn. - Scott Howe(CEO)

Will the increased platform investments this year extend into fiscal 2027? - Clark Wright (D.A. Davidson & Co.)

2026Q2: The investment period is expected to abate by the end of FY26, positioning the company for strong growth and margin expansion in FY27. - Lauren Dillard(CFO)

Contradiction Point 5

Impact of The Trade Desk's Pricing Model Shift on LiveRamp's Data Marketplace

Contradiction on whether The Trade Desk's move represents incremental volume or a competitive threat.

How will The Trade Desk's shift from à la carte data pricing to AI-driven automatic appending impact the data marketplace business? - Alec Brondolo (Wells Fargo Securities, LLC)

2026Q3: If they scale successfully, they would represent incremental transaction volume for LiveRamp, not a change to the take rate—potential upside but not currently reflected in numbers. - Lauren Dillard(CFO)

How are growing upfronts and budget shifts toward CTV and programmatic execution affecting publisher integration and advertiser adoption of clean rooms? - Cal Bartyzal (Craig-Hallum Capital Group LLC)

2026Q1: The shift from linear to CTV is expected to continue... Combining CTV viewing data... enables powerful audience segmentation and measurement. Netflix integration is a strong start, with dozens of clients already live, and the opportunity is expected to grow significantly. - Scott Howe(CEO)