LiveRamp (NYSE:RAMP) executives emphasized steady execution, expanding profitability, and what they described as growing tailwinds from artificial intelligence during the company’s fiscal 2026 third-quarter earnings call. Management said the quarter extended a multi-year pattern of results coming in ahead of guidance and highlighted progress on product, pricing, and partner initiatives intended to support a longer-term goal of reaching “Rule of 40” performance by fiscal 2028.
Third-quarter results exceeded guidance again
CEO Scott Howe said the company delivered “solid performance” in the fiscal third quarter, marking the 11th consecutive quarter in which revenue and operating income exceeded guidance. He pointed to an increase in customer count, growth in annual recurring revenue (ARR), and record profitability and free cash flow.
Customer metrics improved as well. Management said total customer count increased by 15 sequentially, which Howe called the largest quarterly increase in more than three and a half years. Million-dollar-plus subscription customers increased by eight to a record 140. Howe said the company signed several million-dollar-plus upsell deals during the quarter, including with what he described as the world’s largest e-commerce retailer, a major social media platform, and a leading quick-service restaurant, largely tied to expansions in connectivity and Clean Room Insights.
Margins and cash flow reached record levels
LiveRamp posted record quarterly operating margins on both a GAAP and non-GAAP basis, according to management. Dillard reported non-GAAP operating income of $62 million, up 36% year over year, with a record non-GAAP operating margin of 29%—a six-point expansion versus the prior year period. GAAP operating income was $40 million, up from $15 million a year ago, and GAAP operating margin expanded to 19%.
Gross margin was 74%, which Dillard attributed partly to the timing of customer migrations to the company’s upgraded back-end platform. Operating expenses were $95 million, down 6% year over year and below expectations due mostly to timing of project-related spending.
Free cash flow was a record $67 million. Dillard said $39 million was used for share repurchases in the quarter. Year-to-date, the company repurchased $119 million in stock compared with $108 million in free cash flow, and had $137 million remaining under its authorization, which expires December 31. LiveRamp ended the quarter with approximately $403 million in cash and short-term investments and no debt.
AI positioned as a “tailwind” and driver of network activity
Howe repeatedly framed AI as a net positive for LiveRamp, arguing that AI adoption in advertising depends on “trusted data networks” and privacy controls that allow systems to work across partners and platforms. He reiterated four strategic “moats” he said become more important in an AI-driven environment: identity, interoperability, data governance, and network scale.
Management said AI-driven workflows should increase “velocity, frequency, and value” of data moving across LiveRamp’s network and emphasized that the company’s revenue model scales with data activity rather than seat-based licensing. Howe said LiveRamp has signed more than 20 AI partners to date, including AI-native companies such as Scout and established providers such as Google, where LiveRamp is connecting brand loyalty data to support Google’s AI shopping mode. He said the company is taking a “portfolio approach” to partnerships because it is unclear which AI providers and use cases will ultimately lead the market.
In Q&A, Howe said the company is not trying to “out-AI companies that specialize in AI,” but is focused on enabling partners and customers with data connectivity and governance. At the same time, he said internal teams are using AI in product development, referencing a list of engineering “Hack Week” projects focused on improving core capabilities.
Dillard added that the company is not seeing AI-related demand disruption in current sales activity. She said the third quarter was a “remarkably strong sales quarter,” with sequentially consistent conversion rates and deal cycle length, and noted that average deal size and individual sales rep productivity were up double digits. Howe also said the company estimated—while acknowledging the figure was “squishy”—that roughly 10% of activations are already going to AI or AI-enabled partners.
Pricing strategy shifts toward usage-based models and resellers
A key initiative discussed throughout the call was LiveRamp’s move toward broader usage-based pricing. Howe said the company is in the final quarters of a year-long pilot with brand-direct customers and has seen benefits for both “land” and “expand” sales motions. He said the structure lowers the cost of entry for new customers and uses “fungible usage tokens” that can be applied across platform capabilities over a 12-month contract period.
Management also highlighted expansion of usage-based pricing to reseller customers such as agencies and ad tech platforms, pointing to an expanded partnership with Publicis. Howe said the new agreement is a significant expansion “functionally and financially,” covering all platform capabilities beyond connectivity. He said the structure makes LiveRamp “economically neutral” on whether a customer uses LiveRamp directly or indirectly and is designed to encourage partners to innovate on LiveRamp’s foundational technology.
In response to questions, Howe said the company has been methodical in rolling out the pilot, focusing first on new logo opportunities rather than re-trading existing customer contracts mid-term. He said the company expects to introduce the new model more broadly as customers come up for renewal in the coming year. Dillard said the company expects to provide more details on revenue incrementality in future updates, while Howe said he expects “some modest upside” in the back half of next year from the pricing initiative.
Outlook raised slightly and Rule of 40 goal reiterated
For fiscal 2026, LiveRamp raised revenue guidance by $1 million at the midpoint, reflecting the third-quarter beat. The company now expects full-year revenue between $810 million and $814 million, or roughly 9% growth. Dillard said gross margin is expected to be 72% to 73% for the year, down one to two points as the company completes final phases of its platform upgrade in the fourth quarter.
Non-GAAP operating income guidance remained approximately $180 million, with operating margin expected to expand four points to 22% and operating income expected to grow 33% year over year. Dillard also said stock-based compensation is expected to be approximately $81 million, down 25% year over year, which she attributed to a more disciplined approach. The company expects GAAP operating income of approximately $84 million, implying a record 10% GAAP operating margin.
For the fiscal fourth quarter, LiveRamp guided to revenue between $203 million and $207 million and non-GAAP operating income of approximately $38 million, implying an operating margin of about 18%. Dillard said fourth-quarter operating expenses typically step up seasonally due to events such as the company’s Ramp Up conference and compensation-related items, and noted that some project spend shifted from the third quarter into the fourth quarter.
Howe reiterated LiveRamp’s stated objective to reach Rule of 40 performance by fiscal 2028, targeting revenue growth of 10% to 15% and a non-GAAP operating margin of 25% to 30%. He said the company expects to achieve “Rule of 31” in fiscal 2026, based on expected 9% revenue growth and a 22% operating margin, and tied future progress to ARR momentum, AI-related tailwinds, usage-based pricing, and cost efficiencies including offshoring initiatives.
About LiveRamp (NYSE:RAMP)
LiveRamp Holdings, Inc is a leading provider of data connectivity and identity resolution services for marketers, publishers and platforms. The company’s core technology enables organizations to link disparate data sources—such as CRM systems, web engagements and offline transaction records—into a single, privacy-safe view of individual consumers. By standardizing and anonymizing identifiers, LiveRamp’s platform facilitates targeted media activation, measurement and analytics across digital, mobile, addressable TV and offline channels.
The company offers a suite of products designed to support every stage of the data lifecycle.
