LiveRamp (RAMP) Q2 2026: Net New ARR Climbs 7%, Signaling Subscription Growth Inflection
LiveRamp’s Q2 delivered a decisive signal of subscription growth acceleration, as net new annual recurring revenue (ARR) hit its highest mark in seven quarters and marketplace revenue surged. Execution on AI, commerce media, and a new usage-based pricing model positions the business for improved land-and-expand velocity, while cost discipline and offshore leverage fuel operating margin gains. Management’s confidence in achieving Rule of 40 by FY28 is underpinned by early traction in AI monetization and a broadening customer base, setting a clear trajectory for sustainable margin and revenue expansion.
Summary
- Subscription Momentum Turns: Net new ARR reached a seven-quarter high, confirming renewed growth in core subscription.
- AI and Pricing Model Drive Expansion: AI product launches and usage-based pricing expand addressable market and upsell pathways.
- Margin Expansion Sustained: Cost efficiency and offshoring offset platform investments, supporting margin trajectory.
Business Overview
LiveRamp operates as a data collaboration platform, enabling brands and partners to connect, activate, and measure data-driven marketing across channels. Revenue is generated through subscription-based software and marketplace services, with major segments including Subscription (recurring platform access) and Marketplace & Other (data exchange and activation). The business specializes in identity resolution, clean rooms, and cross-media measurement, serving large brands, publishers, and commerce networks.
Performance Analysis
Q2 results outpaced guidance on both revenue and operating income, with total revenue up 8% and non-GAAP operating income rising 10%. Marketplace and other revenue accelerated to 18% growth, outpacing the digital ad market, while subscription revenue grew 5%—notably, management emphasized this as the expected trough, with ARR up 7% year-on-year and net new ARR at a seven-quarter high. The number of million-dollar-plus subscription customers increased sequentially, reflecting successful upsell and new logo wins in verticals such as automotive and social media.
Gross margin remained solid at 72%, though down year-on-year due to elevated cloud hosting costs from ongoing platform modernization. Cost discipline was evident, with operating expenses flat and efficiency gains from offshore operations in India. Share repurchases were robust, with $50M deployed in Q2 and $177M remaining under authorization, underscoring management’s confidence in long-term value creation.
- Marketplace Outperformance: Data marketplace revenue, about three-quarters of the segment, grew 14%, benefiting from ad spend stability and new CTV integrations.
- Subscription Upsell Strength: Clean room and measurement use cases, especially in commerce media and CTV, drove cross-sell and upsell momentum.
- Churn and Pipeline: Churn improved versus Q1, and pipeline conversion rates exceeded recent trends, supporting a strong outlook for renewal-heavy Q3 and Q4.
Platform investments and AI initiatives are being balanced with margin discipline, setting the stage for both near-term bottom-line gains and medium-term growth reacceleration.
Executive Commentary
"Net new ARR in Q2 was $14 million, the largest organic increase in the past seven quarters, and equating to year-on-year growth of 7%. We are seeing good momentum across a range of use cases, including commerce media, CTV, and cross-media measurement."
Scott Howe, Chief Executive Officer
"Our million-dollar-plus subscription customers increased by five quarter-on-quarter to a new high of 132. Subscription net retention was 102%, in line with our 100% to 105% near-term expectation. Total RPO, or contracted backlog, was up 29% to 652 million."
Lauren Dillard, Chief Financial Officer
Strategic Positioning
1. AI Integration and Monetization
AI is now a core pillar of LiveRamp’s growth strategy, with product launches like the AI-powered audience segment builder and agentic orchestration that enable marketers to build and activate segments using natural language. Integration with AI partners and platforms extends reach, and customer demand for AI-driven solutions is translating into tangible sales momentum, particularly in marketing measurement and campaign optimization.
2. Usage-Based Pricing Model Rollout
The new usage-based pricing model is designed to accelerate both land and expand sales motions, lowering entry barriers for midsize brands and enabling flexible, tokenized usage across platform capabilities. Early customer pilots are driving new logo wins and larger upsells, with notable examples in the beverage and airline verticals. Management expects this model to unlock incremental revenue growth over the coming quarters.
3. Commerce Media and CTV Network Expansion
Commerce media, the evolution of retail media networks, is a major growth lever, with LiveRamp powering new networks for blue-chip brands like Uber, PayPal, and General Motors. CTV (connected TV) integrations are deepening, including an expanded partnership with Netflix into new international markets, and new attribution insights for retail media networks. These integrations position LiveRamp as an essential measurement and activation partner for omnichannel marketing.
4. Margin and Cost Efficiency via Offshoring
Expanding offshore operations in India has improved cost efficiency, allowing LiveRamp to invest in product and platform upgrades while maintaining margin expansion. Stock-based compensation discipline is contributing to record GAAP margin improvement, and operational leverage is expected to increase as revenue growth returns to double digits.
5. Platform Modernization and Customer Experience
Ongoing platform upgrades are enhancing UI, stability, and processing speed, supporting customer satisfaction and readiness for AI and variable usage pricing. While dual-platform costs are temporarily depressing gross margin, the migration is on track for completion in Q4, after which cost savings are expected to materialize.
Key Considerations
LiveRamp’s Q2 marks a clear inflection in subscription growth momentum, with ARR acceleration and a robust pipeline for the seasonally strong renewal period. Strategic bets on AI, pricing innovation, and commerce media diversification are gaining customer traction, while disciplined cost management supports margin expansion and reinvestment capacity.
Key Considerations:
- ARR Acceleration: Net new ARR and subscription customer count both improved, supporting a stronger second-half revenue trajectory.
- AI Product Adoption: Early demand for AI-powered solutions is driving upsell and new logo activity, especially in measurement and cross-media use cases.
- Pricing Model Leverage: Usage-based pricing expands addressable market and supports higher customer lifetime value through flexible upsell.
- Platform Modernization Lag: Gross margin pressure from running dual platforms is expected to abate after Q4 as migration completes.
- Shareholder Returns: Active share repurchases and disciplined stock comp management are offsetting dilution and signaling confidence in long-term value.
Risks
Risks remain around macro-driven ad spend volatility, which could impact variable revenue streams such as data marketplace and subscription usage. Gross margin recovery depends on timely platform migration, and any delays could prolong cost headwinds. Competitive pressure in data collaboration and identity resolution is intensifying, especially as AI-driven entrants and large platforms seek to internalize data activation capabilities. Management’s guidance embeds conservatism, but execution on new pricing and AI monetization will be critical to sustaining growth.
Forward Outlook
For Q3, LiveRamp guided to:
- Total revenue of $209M to $213M
- Non-GAAP operating income of $55M to $57M (margin ~27%)
For full-year 2026, management raised revenue guidance to:
- $804M to $818M (8% to 10% growth)
- Non-GAAP operating income of $178M to $182M
Management highlighted:
- Subscription and marketplace revenue expected to accelerate in the second half, with usage growth driven by Q1 outperformance and flat trends in the back half.
- Gross margin to remain at 72% until platform migration completes, after which cost savings are expected.
Takeaways
LiveRamp’s Q2 sets the stage for a return to double-digit subscription growth, with ARR and customer wins confirming demand for new use cases and pricing innovation.
- Growth Inflection: Subscription ARR and customer count trends confirm a bottoming and set up for acceleration in FY27, supported by robust pipeline and new logo activity.
- AI and Pricing Upside: Early adoption of AI-powered products and usage-based pricing expands addressable market and increases land-and-expand efficiency.
- Margin Expansion Path: Cost discipline, offshoring, and stock comp management provide flexibility to invest in growth while expanding operating margins.
Conclusion
LiveRamp’s Q2 results and execution signal a clear shift toward accelerated subscription growth and sustainable margin gains, with AI, commerce media, and pricing innovation driving new customer wins. Investors should monitor the rollout of usage-based pricing and AI monetization as key levers for future upside.
Industry Read-Through
LiveRamp’s momentum in AI-driven marketing measurement and commerce media underscores the sector-wide shift toward data collaboration and omnichannel activation. Growth in CTV and clean room integrations reflects broader advertiser demand for cross-platform measurement and privacy-safe data usage, a trend likely to benefit other identity and data infrastructure providers. The success of usage-based pricing models points to evolving customer preferences for flexibility and value alignment, a theme that could reshape go-to-market strategies across SaaS and martech peers. Margin expansion via offshoring and disciplined stock comp management sets a template for balancing growth investment with shareholder returns in a competitive environment.