LiveRamp Holdings, Inc. (NYSE:RAMP) Q2 2024 Earnings Call Transcript

LiveRamp Holdings, Inc. (NYSE:RAMP) Q2 2024 Earnings Call Transcript November 8, 2023

Operator: Good afternoon, ladies and gentlemen, and welcome to LiveRamp’s Fiscal 2024 Second Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to your host Drew Borst, Vice President of Investor Relations.

Drew Borst : Thank you, operator. Good afternoon and welcome. Thank you for joining our fiscal 2024 second quarter earnings call. With me today are Scott Howe, our CEO; and Lauren Dillard, Interim 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 reconciliation to non-GAAP financial measures is available at liveramp.com. Also, during the call today we will be referring to the slide deck posted on our website. At this time, I’ll turn the call over to Scott.

Scott Howe : Thank you Drew, and thanks to everyone joining our call today. As I reflect back upon our recent quarter, three key themes emerge. First, I’m really pleased with the progress we’re making in our business. We posted strong second quarter results. Revenue and operating income exceeded our expectations, and we have good momentum with many of our leading indicators of growth. Operating margins reached a record high, and we generated positive operating cash flow for a fifth consecutive quarter. And we continue to make progress against our Rule of 40 ambitions. Second, while it was a really nice quarter for us our entire team recognizes we now have an opportunity to build off our momentum. Throughout the business, there are areas that we can continue to improve, which keeps us humble yet also fuels our optimism for the future.

Third and finally, I continue to believe that our future is even brighter. Our business is aligned with some key mega trends: cloud computing, consented first-party data collaboration and growth in retail media networks and CTV. Let me talk about each one of these key themes in turn. First, strong business resilience and momentum. I’m pleased with our progress and our business is demonstrating strong resilience and momentum. Q2 revenue and operating income exceeded our guidance and consensus estimates. Our operating margin expanded for the fourth consecutive quarter and by 800 basis points year-on-year to 20%. We produced $36 million in operating cash flow in the quarter bringing the trailing four-quarter total to $108 million. Our trailing top line indicators showed improved momentum.

Total revenue grew by 9% with Subscription revenue up 5% and Marketplace and Other up 25%. Subscription growth was in line with our expectation while Marketplace and Other outperformed significantly driven by healthy digital advertising markets and growth in professional services. Q2 Subscription net retention was 101% a three-point improvement from last quarter and surpassing 100% two quarters earlier than we had initially expected. The sequential improvement was driven mostly by higher upsell, but also lower contraction. Returning to 100% was an important milestone, but by no means will we stop here. Our leading top-line indicators were even more encouraging. Q2 was our highest new logo bookings quarter in dollar terms in two years and we added six new Fortune 500 customers.

We signed a multimillion-dollar annual contract with a leading global financial services company for our Data Collaboration platform. We signed a high six-figure annual contract with the world’s leading farm machinery brand. We also signed a high six-figure annual contract with an iconic athletic footwear and apparel company a brand which we’ve been pursuing for many quarters. We also signed or upsold opportunities with two of the largest global airlines. Additionally, we also successfully upsold our existing customers. We had an upsell with a major pharmaceutical company representing a seven-figure annual contract and a multiyear term. We also signed a seven-figure upsell with a major social media platform to allow marketers to use their first-party data for targeted marketing using our RampID.

Over the last several quarters, we’ve talked about several near-term tactical growth levers to reestablish double-digit revenue growth with the sales force being one of the major ones. This was a big driver of our bookings momentum. Our sales force attrition has fully normalized and sales force capacity remains well above fiscal 2022 levels. Sales force productivity also continues to improve and our newest sellers are also contributing with first-year reps posting comparable bookings to their more seasoned counterparts. I view this as a strong indication we are hiring talented sellers and supporting them effectively with better training and collateral. While we are pleased with where we are with our sales force we will continue to invest in quota-carrying headcount to ensure we are set up for next year as well as continue to expand our professional services function.

This group — this group is really doing a fantastic job on pace to double revenue this year to $20 million and driving improvements in customer satisfaction and upsell rates. Second, we aren’t satisfied and see room for improvement. As I’ve often told our organization when great companies look in the mirror they never love what they see. Even in a quarter of accelerating momentum, we see opportunities for improvement. Let me talk about a few areas on which we’re focusing. One, we’re not yet where we want to be on the Rule of 40. We have always aspired to be a Rule of 40 company and I am very encouraged by ongoing progress we are making on both the top and bottom lines. For us we expect Rule of 40 to look like 10% to 15% revenue growth and 25% to 30% operating margins.

But of course today on a trailing four-quarter basis we are essentially a Rule of 25 company. And so that obviously falls short of our long-term aspirations. So how do we get there? On the revenue side continued sales execution is essential and I’m encouraged by the trends of recent quarters. I also believe that a handful of existential market trends embedding our products within cloud computing partners the continued growth of retail media networks and CTV and the market evolution from cookies to true consumer authentication can further fuel our top line success in coming years. On the margin side, we just posted the highest quarterly operating margin in our company’s history and we’re raising our operating income guidance for the year. The bridge from here to 25% to 30% will be driven by several factors.

First our SaaS business model has a high incremental margin and we expect our revenue growth to accelerate. Second, we expect improving cost efficiency as we expand our incremental hiring and backfill efforts to our new office in Hyderabad India. As we’ve said before, this initiative will result in several hundred basis points of margin expansion as it gets phased in over the next two fiscal years. And finally, there is no area of our business where we’re not constantly evaluating opportunities to improve our process efficiency and our system architecture. Two, customer counts. Our $1 million-plus customer count increased by 3 and our $0.5 million to $1 million dollar customers also increased by 3. That’s really indicative of the success we’re having with the more sophisticated direct customers that comprise our ideal customer profile.

As I’ve discussed previously, we made a conscious decision last year to focus on high long-term value brand customers. These customers have large digital ad budgets that are being deployed over dozens of digital destinations. And helping these customers measure and optimize their spending using their first-party data is among our most compelling use cases. These customers typically have and annual contract value greater than $1 million with a multiyear term at above-average renewal and upsell rates. With that said, overall our Q2 customer count of 895 was down 20 from the prior quarter driven by declines with low ACV non-brand customers such as ad tech platforms. I don’t think this is cause for concern. But I do think it’s an area in which we can and must improve as winning even more high-quality new logos will accelerate our upsell efforts in the coming years.

The go-to-market partnerships that we have with the major cloud providers should help us on this front, and we continue to see growth in our pipeline as a result of this initiative. In addition, we see that data collaboration is a flywheel that seems to be introducing us to new quality opportunities. Our success serving retail media networks across the globe for example ensures that both retailers and their myriad of packaged goods partners must work with LiveRamp to unlock the benefits of data collaboration. Three international. We are well positioned in major international markets given the fact that we work with so many marquee global brands who want us to support them across the markets in which they operate. That said, international revenue growth in the quarter of 3% on a constant currency basis was lighter than we would have liked and China was a main driver of this disappointing performance.

Earlier this summer, I spent a couple of weeks meeting clients and prospects in Europe. I think we’re uniquely positioned with companies that really matter and we also have a strong, strong team in place. Likewise, I was in Australia just last week and met with many of the top retailers and brands in that market where we have a number of interesting data collaboration activities that we power. Like many companies, however, we are rethinking our expectations for China. The combination of COVID impacts, changing political philosophies and an uncertain economy in China, are negatively impacting top line international growth. In response, we are restructuring our China business, reducing our operations to a minimally viable footprint in case things change in that market.

Overall, we don’t expect this international restructuring to have a material impact on total revenue or operating income. But I wanted to mention this so that investors understand that we remain committed to working with our major clients, across the markets that they prioritize. Third, longer term our business is aligned with some key megatrends. Let me spend a few minutes on our longer-term prospects. Our product innovation and go-to-market partnership seemingly have us well positioned, to capitalize on some existential industry trends, the continued growth of cloud computing, in marketing and advertising. In September, LiveRamp convened a group of marquee clients, each a leader in their respective industry to walk through our product road map and gather feedback on our direction.

Every client, in attendance was operating in the cloud and many attendees talked about their challenges navigating multiple cloud providers both internally and as they seek to collaborate with other partners externally. We see the seismic shift to cloud computing, as a big opportunity for LiveRamp. Our cloud strategy is to operate where our clients’ data lives and securely connect their data from the cloud across the entire digital marketing ecosystem. Bringing our products to the customers’ cloud environment, provides tangible benefits to our customers in the form of greater operating and cost efficiency, increased data security and a quicker time-to-value on their LiveRamp subscription. The cloud providers also get the benefit of more storage and compute volume, which drives their revenue models.

As more application workloads move to the cloud in the coming years, this will be a wind at our back and will drive the return on the cloud investments we are making today. Our cloud strategy is already succeeding in the market. And there is no better external validation of this than receiving the Partner of the Year Award from Google Cloud. We were recognized as a Global Industry Technology Partner of The Year, for delivering embedded solutions that help customers enrich their Google Cloud environment. Our cloud partnership is not limited to GCP. We are executing the same strategy with all the clouds. And we are making significant progress with AWS and Snowflake as well as Azure and Databricks. During the quarter we announced that our identity capabilities are now natively available within AWS Entity Resolution, with this, integration marketers, publishers, tech platforms and agencies can extend the interoperability of data in the cloud to marketing and advertising destinations using RampID.

With Snowflake, our complete identity capabilities are now embedded and the very early customer feedback has been very positive. While these efforts are still nascent, we’re starting to reap the rewards of our efforts. Overall, we remain on track to double our total cloud bookings in FY 2024 to approximately $20 million. Signal loss and a march toward customer authentication. Last month I participated in the New York Advertising Week conference, a week-long event that brings together leaders from across the world of advertising and marketing. It was a productive week of meetings with customers both existing and prospective and I left the conference energized about LiveRamp’s market position and the opportunity we have to help advertisers and publishers with some of their most pressing identity and data challenges.

My many conversations highlighted an important truth: consented first-party customer data and the ability to securely share it across the ecosystem is only becoming more important as we get closer to mid-2024, when Google begins phasing out third-party cookies on the Chrome browser. Large brand marketers need to securely use their authenticated first-party customer data for addressable advertising across the vast and fragmented digital marketing ecosystem. And increasingly, they need to collaborate with trusted business partners for enhanced insights about the customer journey. They need to do all this in order to drive sales, customer satisfaction and return on ad spend. Our Identity Infrastructure and Data Collaboration platform provides a solution to signal loss and cookie deprecation by connecting our customers’ first-party identity to all manner of digital publishers ranging from the largest walled gardens to the smallest DSPs and everything in between.

Using identity infrastructure across all of these different publishers and platforms enables more accurate cross-screen and cross-platform measurement that is critical to optimizing return on ad spend. We continue to expand our identity infrastructure to give brands greater access to data-driven premium advertising inventory. Over the past few months we announced a handful of major platform integrations with RampID. We integrated RampID on FreeWheel, a leading supply side platform for CTV publishers. As a result, brands can now leverage their first-party data in conjunction with LiveRamp’s RampID and activate on FreeWheel’s premium video supply. We also made RampID interoperable with Yahoo’s DSP and its ConnectID as well as Epsilon’s core ID.

In addition to giving brands access to more data-driven premium inventory, these platforms can transact with brands on a durable, consistent identifier, giving them increased scale even through signal loss. Finally but importantly, we continue to support Google’s migration away from cookies to true consumer authentication. During the quarter we continued our beta testing of Google PAIR. PAIR, which stands for Publisher and Advertiser Identity Reconciliation, allows brands to safely and securely use their first-party customer data to connect to open web publishers on DV360. To make this happen, marketers use the Clean Room Tech in LiveRamp’s Data Collaboration platform to securely reconcile identity with publishers and purchase inventory via DV360.

Once third-party cookies are eliminated, PAIR will be the only way for brands to target on DV360. We’re the largest and most scaled partner with Google on the PAIR launch. We now have over 6,500 publisher domains live on Google PAIR across North America, Europe and APAC and we continue to scale advertising campaigns and are seeing marketer match rates continue to increase. Our key objective here is to continue to evangelize how this works to major advertisers through webinars, workshops and bullish case studies, knowing that the education we do on this front will benefit clean room collaborations between any advertiser and any publisher, who want to partner with one another. The rise of retail media networks. Retail media networks increasingly just commerce media networks, were another key topic at Adweek.

These advertising channels continue to grow, taking an increasing share of advertising budgets and they are becoming ubiquitous. Brand marketers are trying to manage customer data and identity across a growing number of different retail media networks. According to a recent Association of National Advertisers survey, over half of marketers are using five or more different retail media networks including, 16% that are using 10 or more different networks. This continues to be LiveRamp’s opportunity. First, by helping brand marketers safely and securely use first-party data on these platforms. And second, by enabling omnichannel measurement among various retail media networks as well as to other advertising platforms, a shift to CTV and data collaboration.

As the pandemic shifted consumer viewing habits, CTV has witnessed explosive growth. While this growth offers LiveRamp customers yet another set of platforms, on which to activate their data, we believe the opportunity is far greater. While granular audience targeting and frequency capping unlock, a first wave of advertiser benefits, there is an increasing opportunity for additional services. For example, given the fragmentation in CTV, measurement becomes an increasing need. Advertisers need it to demonstrate their ROI, and publishers require measurement to justify their pricing and validate their inventory efficacy. In addition, many CTV providers have rich collection of authenticated user data, related to demographics and viewing behavior and these increasingly offer data collaboration opportunity, not unlike what is driving the explosive growth in retail media networks.

In closing, let me reiterate what I believe to be the key themes from the quarter. First, I really like the resilience and momentum our business is showing, particularly with respect to the top line progress we are making. As a result, we’re raising our guidance for the year. But we’re not satisfied. Not even close. We think continuing to win new clients accelerating, our progress in international markets and continued focus on all aspects of Rule of 40, are going to unlock even greater value for our shareholders, as we progress in our efforts. Above all, however, I’m excited about LiveRamp’s positioning against a number of key existential trends: cloud computing, retail media networks, first-party data collaboration, CTV and the slow march toward authenticated addressability, can all be tailwinds for our business in the coming years.

Thank you again, for joining us today and a special thanks to our exceptional customers, partners and to all of my LiveRamp 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 Q2 financial results; and second, our updated outlook for FY 2024 and for Q3. Unless otherwise indicated, my remarks pertain to non-GAAP results and growth is relative to the year ago period. Starting with Q2 results. In summary, results were above our expectations. Revenue came in at $160 million, which was $8 million above our guidance. And operating income was $32 million or $13 million above our guidance. Operating margin expanded by eight percentage points to a record high of 20%, and we generated $36 million in operating cash flow our fifth consecutive quarter of positive OCF. Let me provide some additional details.

Please turn to slide 5. Total revenue was $160 million, up 9%. The subscription revenue is slightly ahead of our expectations, while marketplace and other was significantly ahead, driven primarily by a stronger than expected digital advertising market. Subscription revenue was $126 million, up 5% and growth was driven by broad product and sector strength. Fixed subscription revenue grew mid-single digits and usage as a percentage of total subscription revenue was 15% within the historical 10% to 15% range. ARR was $428 million, up 2%. We believe this growth represents a low watermark as the recent improvement in bookings and contraction will start to more fully impact this metric moving forward. In addition Q2 growth was hurt by the timing of bookings being recognized in ARR, reflecting our move up market to larger more complex deals.

Subscription net retention was 101%. The sequential improvement was mostly due to improved upsell and to a lesser extent reductions in contraction. While our longer term aspiration is, obviously, much higher we are pleased to get our S&R back above 100% two quarters earlier than we initially expected. Current RPO or our next 12-month contracted backlog was $339 million, up 16%. Total RPO including contracted backlog beyond the next 12 months was up 26% to $490 million. Like last quarter there is an unusually large difference between CRPO and ARR growth. As we’ve discussed previously, the RPO is very sensitive to the timing of renewals and to contract durations and both of these factors again benefited CRPO growth in the quarter. Overall, the Q2 selling environment remains stable.

On the positive side, we saw an improvement in our pipeline conversion back to FY 2022 levels. And on a dollar basis had the strongest new logo quarter in the past two years. Also our contraction or the combination of down-sell and customer churn improved both quarter-on-quarter and year-on-year. And budget constraints were cited less frequently. On the other hand, our average deal cycle continues to run about one quarter longer than FY 2022. This has been the case now for consecutive quarters and is at least partially due to our shift upmarket to larger high LTV enterprise customers with more complex data collaboration use cases. You can see this shift show up in some of our key growth metrics like our $1 million customer count. Marketplace and other revenue of $34 million increased 25% driven by data marketplace, which grew 19% and accounted for 78% of marketplace and other revenue.

Data marketplace growth was fueled by a healthy digital advertising market including strength in CTV. We also continue to see strong growth in professional services, which accounted for nearly one-third of the revenue growth in marketplace and other. Moving beyond revenue. Gross margin was 75% flat year-on-year and 200 basis points higher than our guidance, driven primarily by the timing of planned investments. Operating expenses decreased 5% to $89 million, driven by last year’s cost restructuring and benefited from the shift of certain expenses to the fiscal second half. Operating income was $32 million, up from $17 million a year ago and our operating margin expanded by 800 basis points to a record high of 20%. GAAP operating income was positive for a second consecutive quarter at $8 million representing a GAAP operating margin of 5%.

We incurred $7 million in restructuring charges, primarily related to a goodwill impairment associated with the restructuring of our China operations and a lease impairment. Stock-based compensation was $16 million, down from $27 million a year ago due to the accelerated vesting of certain non-NEO RSUs in Q4 of FY 2023. Operating cash flow was $36 million, up from $21 million a year ago due primarily to higher earnings. We repurchased 490,000 shares for $15 million in Q2, bringing the fiscal first half total to $35 million. We have approximately $183 million remaining under the current authorization that expires on December 31, 2024. In summary, Q2 was a strong quarter. Revenue growth improved to 9% with both Subscription and Marketplace exceeding our expectations.

Our non-GAAP operating margin, expanded by 800 basis points. GAAP operating income was positive for a second straight quarter. We generated $36 million in operating cash flow in the quarter and $108 million in the trailing four quarters. And finally, we repurchased $35 million of stock through Q2. Next, let me now turn to our financial outlook for FY 2024 and for Q3. Please turn to slides 12 and 13. Please keep in mind, our non-GAAP guidance excludes intangible amortization, stock-based compensation and restructuring and related charges. Starting with the full year. We are increasing our total revenue guidance by approximately $10 million at the midpoint and now expect revenue to be between $632 million and $637 million, up 6% to 7% year-on-year.

Our outlook for Subscription revenue is unchanged. We continue to expect Subscription revenue to grow in the mid-single-digits with usage as a percentage of total subscription near the midpoint of the historic 10% to 15% range. We expect Subscription net retention to hover around 100% for the next two quarters. We now expect Marketplace and Other revenue growth to be in the low-double-digits for the full year, up from our prior expectation of mid- to high-single digits. We continue to expect gross margin to be approximately 74% despite the outperformance in Q2, which was mostly a timing issue. In the second half, we are making incremental investments in our platform architecture and in professional services to support future revenue growth.

We expect our operating expenses to decline this year by approximately 4% but are still making additional investments in our sales force and cloud strategy as well as some upfront investment to ensure our offshoring initiative is successful. Despite these added investments, we are increasing our operating income guidance to be between $97 million and $100 million, $7 million higher than our prior guide at the midpoint. At the midpoint of our guidance range, the operating margin is approximately 15%, up 500 basis points year-on-year. We expect stock-based compensation to be approximately $69 million, which benefits from the $23 million in accelerated vesting in FY 2023 and is slightly lower than our prior guide. We now expect $11 million in restructuring charges given the lease and goodwill impairments recognized in Q2.

We expect GAAP operating income to be between $8 million and $11 million. Lastly, we continue to expect share repurchases of between $15 million and $20 million per quarter in the fiscal second half. Now, moving on to Q3. We expect total revenue of approximately $165 million, operating income of roughly $29 million, and an operating margin of approximately 18%. A few other call-outs for Q3. Recall that in the year ago quarter, our subscription revenue included a nonrecurring contract settlement of $4 million, resulting in a three percentage point growth headwind for subscription revenue this Q3. Excluding this headwind we expect underlying subscription growth to be mid-single-digits. We expect subscription net retention in Q3 to be approximately 100%.

We expect marketplace and other revenue to grow by low double-digits. This growth rate is slower sequentially because we are taking a measured view on digital ad market growth in light of the current macro and geopolitical environment. And we expect gross margin to be approximately 74%. Before opening the call to questions, I’ll conclude with a few final thoughts. First, Q2 was strong on the topline and especially the bottom-line. Importantly, we think our revenue growth metrics are turning a corner. Next, given the uncertain macro environment, we remain appropriately cautious with our revenue guidance for the balance of the fiscal year. We have good visibility on our subscription business. And with marketplace, we are striking a balance between our strong execution and the risk of a slowdown, driven by forces outside of our control.

To be clear, we would expect to see upside in marketplace particularly in Q4 if the advertising markets hold at the current level. And finally, as Scott mentioned, our financial North Star is Rule of 40 with mid-teens topline growth and a 25%-plus operating margin. On the topline we are encouraged by the positive trends in forward bookings and contraction. On the margin front, the high incremental margin inherent in our model, combined with the expansion of our new India office, gives us a path for sustained margin expansion in the coming years, while we continue to appropriately invest to support 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.

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Q&A Session

Operator: Thank you. [Operator Instructions] Your first question comes from the line of Shyam Patil of SIG.

Unidentified Analyst: Hey guys, this is Jared on for Shyam. Congratulations on the impressive quarter. Of course I’ve got a couple if you don’t mind. I guess for starters, focusing in on the higher LTV customer strategy. Can you elaborate a bit further upon that and how you’re thinking that this plays out through the rest of the year? As well as maybe unpacking a bit more of the decline that we saw in the current quarter? And then for the second question, you continue to highlight CTV as a driver of the strength in the business. Anywhere in particular that we should be looking in your results as we’re looking both in this quarter and then further CTV strength down the road? And just how are you thinking that that CTV strength continues to materialize?

Lauren Dillard: Thanks, Jared. I’m happy to take the first and I’ll pass it to Scott for the second. With respect to customer count, I’ll start maybe by just highlighting something Scott mentioned in his prepared remarks, which is that this is a direct reflection of a decision that we made as a business several quarters ago to really focus our selling efforts on large high ACV enterprise customers, where we believe our value proposition today is the greatest. So in the quarter, we did see continued pressure on customer count. This was almost entirely driven by small customers in the ad tech sector that are being impacted by the macro as well as other market dynamics. That said, I think it’s important to note that our dollar-based metrics are improving and reflect this quality versus quantity dynamic that Scott had mentioned.

As an example in the quarter, we closed one of our strongest new logo bookings quarters in recent history. And we saw a pretty nice uptick in both million-dollar customers as well as customers who fall in the $500,000 to $1 million range. So in terms of our outlook for the balance of the year, we do expect this dynamic to continue for at least the next couple of quarters which means total customer count could continue to decline but we would expect other metrics like million dollar-plus customer count to continue to increase.

Scott Howe: And Jared on your second question, I would tell you I’m really bullish about CTV and you probably heard that in my prepared remarks. In terms of where you’re going to see it, I would say it’s hard to tease out, but you can broadly look at three major areas. The first is subscriptions. If you look at the CTV providers for the most part they’re 100% authenticated. So they could be a big winner as third-party cookies go away because that spend is addressable and it works. And so where you see that in our business is in our subscriptions. And so as the market tips to CTV, I think you’ll see our subscriptions become even stickier. And you might see that in terms of a usage increase as well. What’s kind of startling. I was looking at the stats earlier today.

If you look at our distributions, the destinations that advertisers send data to, if you look at the top 50 by volume, nearly half of them 22 of them are pure CTV providers or CTV platforms. So it suggests that very quietly over the last couple of years advertisers are already making a shift. The second place that you’re going to see this is in our Marketplace business. And again, it’s kind of beneath the surface line. TV data sales as a part of Marketplace were actually up a staggering 50% year-over-year. And that data comprises I think roughly 10% of the total demand within data marketplace. So nice story there as well. And then the third place that you’ll see it not surprisingly because they’re getting more demand and because they also have really deep pockets of authenticated data is we think there’s an opportunity for data collaboration.

Very similar to what we’ve seen in the retail media network space. The various CTV providers have something really interesting to share. And so there’s an opportunity that all of them are interested in, in partnering more deeply with the major advertisers of the world, collaborate in on data, such that advertisers can find their target audiences and also understand kind of end-to-end measurement across everything that happens once an ad is seen. So three really interesting places and — just come full circle. We’ve hit the tipping point for CTV. It’s here. We’re seeing it in our numbers. And we think that’s going to be a really nice tailwind for us really for the next few years.

Unidentified Analyst: Great. Thank you, both.

Operator: Your next question comes from the line of Elizabeth Porter of Morgan Stanley. Your line is open.

Chris Quintero: Hi. This is Chris Quintero on for Elizabeth. Congrats again on another solid quarter here. Maybe to start out of all of your kind of like top line initiatives that you all have been focused on over the past year or so whether that’s the sales force improvement or the growing industry partnerships I’m curious to hear what areas have maybe surprised you the most of the upside than maybe you initially expected so far?

Scott Howe: Yes, Chris, I would tell you that to me sales success is a function of two ingredients. First you have to have demand. And there I think we’ve probably been pleasantly surprised based on our initial forecast in terms of market softness. And I think the market’s just developed better than we thought. But from a demand side there are so many levers that we’re pulling; Cloud Partnerships, CTV, collaboration networks. Likewise really, really pleased with some of the traction we’re getting with major European clients and Australian clients. And what’s interesting is the opportunities that we’re seeing if you looked at our pipeline and you looked both at the named clients and the conversation that’s underway it is really encouraging.

Because they’re all companies that you would have heard of and they’re doing really fascinating things with data. So I like the demand side and that’s firmed up I think even better than I would have thought. But to meet the demand you also have to execute. You have to be able to respond. And there I’m equally pleased. We’ve really done a revamp of our marketing collateral. Our team has done a nice job of onboarding and training and arming sellers with the tools that they need to succeed. And we’re seeing that in our numbers. More specifically best new logo quarter in a couple of years. Strength kind of across the board auto, financial services, healthcare, retail. And our pipeline conversion was the highest we’ve had in seven quarters and even stronger with $1 million deals.