LiveRamp (RAMP) - 2025 Q3 - Quarterly Results

Executive Summary Q3 FY25 Financial Highlights LiveRamp reported strong Q3 FY25 results, achieving double-digit revenue growth, a significant increase in non-GAAP operating income, and improved operating cash flow year-to-date Q3 FY25 Financial Highlights (in millions, except EPS) | Metric | Q3 FY25 (GAAP) | YoY Change | Q3 FY25 (Non-GAAP) | YoY Change | | :----------------------- | :------------- | :--------- | :----------------- | :--------- | | Total Revenue | $195 million | +12% | - | - | | Subscription Revenue | $146 million | +10% | - | - | | Marketplace & Other Revenue | $50 million | +20% | - | - | | Gross Profit | $140 million | +9% | $146 million | +11% | | Gross Margin | 72% | -2 pts | 74% | -1 pt | | Operating Income | $15 million | In-line | $45 million | +24% | | Operating Margin | 8% | -1 pt | 23% | +2 pts | | Diluted EPS | $0.17 | - | $0.55 | - | | Net Cash from Operations | $45 million | Up from $17M | - | - | - CEO Scott Howe highlighted improved sales momentum, attributing it to the resonance of their Data Collaboration Platform and clean room solution with customers, confirming substantial market demand for efficient first-party data utilization in digital advertising[4] Financial Performance (GAAP & Non-GAAP) Q3 FY25 Consolidated Financial Results LiveRamp's Q3 FY25 results show robust revenue growth across all segments, with total revenue up 12% YoY, while non-GAAP operating income significantly outperformed GAAP, demonstrating strong operational efficiency Q3 FY25 Consolidated Financial Results (in millions, except EPS) | Metric | Q3 FY25 (GAAP) | Q3 FY24 (GAAP) | YoY Change % | Q3 FY25 (Non-GAAP) | Q3 FY24 (Non-GAAP) | YoY Change % | | :----------------------- | :------------- | :------------- | :----------- | :----------------- | :----------------- | :----------- | | Subscription revenue | $146 | $132 | 10% | — | — | — | | Marketplace & Other revenue | $50 | $42 | 20% | — | — | — | | Total revenue | $195 | $174 | 12% | — | — | — | | Gross profit | $140 | $129 | 9% | $146 | $131 | 11% | | % Gross margin | 72% | 74% | -2 pts | 74% | 75% | -1 pt | | Operating income | $15 | $15 | 0% | $45 | $36 | 24% | | % Operating margin | 8% | 9% | -1 pt | 23% | 21% | 2 pts | | Net earnings | $11 | $14 | -21.4% | $37 | $32 | 15.6% | | Diluted earnings per share | $0.17 | $0.21 | -19.0% | $0.55 | $0.47 | 17.0% | | Operating cash flow | $45 | $17 | 164.7% | — | — | — | | Free cash flow | — | — | — | $45 | $14 | 221.4% | GAAP and Non-GAAP Reconciliation Overview The report highlights the use of non-GAAP measures to provide a clearer view of the company's operational performance by excluding certain non-cash and non-recurring items - A reconciliation between GAAP and non-GAAP results is provided in the schedules within the press release to offer a comprehensive financial picture[3][6] Business Highlights & Metrics Product & Partnership Developments LiveRamp expanded its data collaboration platform with new Quick Start Insights for media intelligence and launched the industry's first casino media network in partnership with Mohegan - Expanded Quick Start Insights on the data collaboration platform to offer media intelligence across premium publishers, providing customers with faster access to media performance metrics like audience overlaps, optimal frequency, and last-touch attribution[9] - Partnered with Mohegan to launch the industry's first casino media network, allowing brands to access Mohegan's first-party insights to reach guests and players and measure campaigns across digital and on-premise experiences[9] Customer & Subscription Metrics LiveRamp demonstrated growth in high-value customers and key subscription metrics, with a notable increase in customers generating over $1 million in annualized subscription revenue Customer & Subscription Metrics | Metric | Q3 FY25 | Q3 FY24 | YoY Change | | :------------------------------------------------ | :------ | :------ | :--------- | | Customers with >$1M Annualized Subscription Revenue | 125 | 105 | +19.0% | | Direct Subscription Customers | 865 | 895 | -3.4% | | Subscription Net Retention | 108% | - | - | | Platform Net Retention | 111% | - | - | | Annual Recurring Revenue (ARR) | $491M | - | +10% | | Current Remaining Performance Obligations (CRPO) | $434M | - | +13% | Financial Outlook Q4 FY25 Guidance For the fourth quarter of fiscal 2025, LiveRamp anticipates continued revenue growth and expects to achieve non-GAAP operating income, while projecting a GAAP operating loss Q4 FY25 Guidance (in millions) | Metric | Q4 FY25 Guidance | | :---------------------- | :--------------- | | Revenue | $184M - $186M | | Revenue Growth | 7% - 8% | | GAAP Operating Loss | $8M | | Non-GAAP Operating Income | $22M | Full Fiscal Year 2025 Guidance LiveRamp has increased its full fiscal year 2025 guidance, projecting strong double-digit revenue growth and substantial non-GAAP operating income, alongside a positive GAAP operating income Full Fiscal Year 2025 Guidance (in millions) | Metric | FY25 Guidance (Increased) | | :---------------------- | :------------------------ | | Revenue | $741M - $743M | | Revenue Growth | 12% - 13% | | GAAP Operating Income | $10M | | Non-GAAP Operating Income | $135M | Company Information & Disclosures About LiveRamp LiveRamp is a global technology company specializing in data collaboration platforms, helping companies build brand and business value by responsibly connecting customer data while maintaining trust and privacy - LiveRamp is a global technology company focused on data collaboration, enabling businesses to build brand value and deepen customer engagement through responsible data use[12] - The company provides foundational identity solutions for a connected customer view, supporting diverse data collaboration use cases across organizations and with partners, while adhering to evolving compliance and privacy requirements[12] Forward-Looking Statements & Risk Factors This section outlines that the press release contains forward-looking statements subject to various factors and uncertainties that could cause actual results to differ materially from expectations - Forward-looking statements are subject to risks including high interest rates, inflation, geopolitical circumstances, dependence on customer renewals and partners, competition, rapidly changing technology, integration of acquired businesses, and talent retention[16] - Additional risks encompass maintaining company culture in a hybrid work environment, international operational challenges, data security breaches, unfavorable publicity, service interruptions from vendors, restrictions on data usage due to cookie/tracking technology changes, and evolving judicial, legislative, regulatory, and tax environments[16] Investor Relations Information for investors to receive financial news and contact investor relations is provided, along with trademark acknowledgments - Investors can subscribe to email alerts for financial news at LiveRamp.com and contact Investor Relations via Investor.Relations@LiveRamp.com[21] Condensed Consolidated Financial Statements (GAAP) Statements of Operations Three Months Ended December 31, 2024 For the three months ended December 31, 2024, LiveRamp reported a 12.4% increase in revenues to $195.4 million, with gross profit growing by 8.9%, despite a slight decrease in operating income Statements of Operations (in thousands) | Metric | 2024 | 2023 | Variance | % Variance | | :-------------------- | :-------- | :-------- | :-------- | :--------- | | Revenues | $195,412 | $173,869 | $21,543 | 12.4% | | Cost of revenue | $54,998 | $44,934 | $10,064 | 22.4% | | Gross profit | $140,414 | $128,935 | $11,479 | 8.9% | | % Gross margin | 71.9% | 74.2% | | | | Income from operations | $14,673 | $15,201 | $(528) | (3.5)% | | Net earnings | $11,210 | $13,977 | $(2,767) | (19.8)% | | Diluted EPS | $0.17 | $0.21 | $(0.04) | (18.4)% | Nine Months Ended December 31, 2024 For the nine months ended December 31, 2024, revenues increased by 14.2% to $556.9 million, with gross profit rising by 12.0%, but income from operations decreased by 34.1% Statements of Operations (in thousands) | Metric | 2024 | 2023 | Variance | % Variance | | :-------------------- | :-------- | :-------- | :-------- | :--------- | | Revenues | $556,856 | $487,809 | $69,047 | 14.2% | | Cost of revenue | $157,981 | $131,767 | $26,214 | 19.9% | | Gross profit | $398,875 | $356,042 | $42,833 | 12.0% | | % Gross margin | 71.6% | 73.0% | | | | Income from operations | $16,912 | $25,679 | $(8,767) | (34.1)% | | Net earnings | $5,453 | $17,254 | $(11,801) | (68.4)% | | Diluted EPS | $0.08 | $0.25 | $(0.17) | (68.3)% | Balance Sheets As of December 31, 2024, LiveRamp's total assets increased by 1.8% compared to March 31, 2024, driven by higher cash and cash equivalents and trade accounts receivable, while total liabilities also increased Balance Sheets (in thousands) | Metric | Dec 31, 2024 | Mar 31, 2024 | Variance | % Variance | | :-------------------- | :----------- | :----------- | :-------- | :--------- | | Cash and cash equivalents | $376,772 | $336,867 | $39,905 | 11.8% | | Total current assets | $643,807 | $602,032 | $41,775 | 6.9% | | Total assets | $1,253,213 | $1,231,443 | $21,770 | 1.8% | | Trade accounts payable | $105,334 | $81,202 | $24,132 | 29.7% | | Deferred revenue | $44,795 | $30,942 | $13,853 | 44.8% | | Total current liabilities | $231,624 | $216,576 | $15,048 | 6.9% | | Total stockholders' equity | $957,707 | $949,135 | $8,572 | 0.9% | Statements of Cash Flows Three Months Ended December 31, 2024 For the three months ended December 31, 2024, net cash provided by operating activities significantly increased to $45.1 million, driven by higher net earnings and non-cash stock compensation Cash Flow Activities (in thousands) | Cash Flow Activity | 2024 | 2023 | | :-------------------------------- | :-------- | :-------- | | Net cash provided by operating activities | $45,117 | $16,556 | | Net cash used in investing activities | $(1,239) | $(2,211) | | Net cash used in financing activities | $(9,359) | $(8,901) | | Net change in cash, cash equivalents and restricted cash | $35,788 | $6,777 | Nine Months Ended December 31, 2024 For the nine months ended December 31, 2024, net cash provided by operating activities increased to $91.4 million, with investing activities generating a net cash inflow of $20.9 million, a significant improvement from the prior year Cash Flow Activities (in thousands) | Cash Flow Activity | 2024 | 2023 | | :-------------------------------- | :-------- | :-------- | | Net cash provided by operating activities | $91,385 | $78,013 | | Net cash provided by (used in) investing activities | $20,922 | $(2,099) | | Net cash used in financing activities | $(76,425) | $(43,220) |\n| Net change in cash, cash equivalents and restricted cash | $37,894 | $34,498 | Reconciliation of GAAP to Non-GAAP Measures Non-GAAP EPS Reconciliation Non-GAAP diluted EPS for Q3 FY25 was $0.55, significantly higher than GAAP diluted EPS of $0.17, primarily due to the exclusion of non-cash stock compensation and purchased intangible asset amortization Non-GAAP EPS Reconciliation (in thousands, except EPS) | Metric | Q3 FY25 | Q3 FY24 | YTD FY25 | YTD FY24 | | :------------------------------------ | :------ | :------ | :------- | :------- | | GAAP Diluted EPS | $0.17 | $0.21 | $0.08 | $0.25 | | Excluded items (in thousands): | | | | | | Purchased intangible asset amortization | $3,686 | $1,181 | $11,280 | $5,688 | | Non-cash stock compensation | $26,760 | $17,497 | $83,813 | $46,524 | | Restructuring and merger charges | $149 | $2,502 | $752 | $9,192 | | Non-GAAP Diluted EPS | $0.55 | $0.47 | $1.41 | $1.19 | Non-GAAP Operating Income Reconciliation Non-GAAP operating income for Q3 FY25 was $45.3 million, a 24.4% increase from the prior year, significantly higher than the GAAP operating income of $14.7 million Non-GAAP Operating Income Reconciliation (in thousands) | Metric | Q3 FY25 | Q3 FY24 | YTD FY25 | YTD FY24 | | :-------------------- | :-------- | :-------- | :---------- | :---------- | | GAAP Income from operations | $14,673 | $15,201 | $16,912 | $25,679 | | Excluded items: | | | | |\n| Purchased intangible asset amortization | $3,686 | $1,181 | $11,280 | $5,688 | | Non-cash stock compensation | $26,760 | $17,497 | $83,813 | $46,524 | | Restructuring and merger charges | $149 | $2,502 | $752 | $9,192 | | Non-GAAP Income from operations | $45,268 | $36,381 | $112,757 | $88,958 | Adjusted EBITDA Reconciliation Adjusted EBITDA for Q3 FY25 increased by 24.3% to $46.0 million, reflecting stronger operational performance when excluding non-cash items like stock compensation and depreciation/amortization Adjusted EBITDA Reconciliation (in thousands) | Metric | Q3 FY25 | Q3 FY24 | YTD FY25 | YTD FY24 | | :-------------------- | :-------- | :-------- | :---------- | :---------- | | Net earnings from continuing operations | $9,522 | $13,379 | $3,765 | $16,269 | | Income from operations | $14,673 | $15,201 | $16,912 | $25,679 | | Depreciation and amortization | $4,400 | $1,782 | $13,404 | $7,685 | | Non-cash stock compensation | $26,760 | $17,497 | $83,813 | $46,524 | | Restructuring and merger charges | $149 | $2,502 | $752 | $9,192 | | Adjusted EBITDA | $45,982 | $36,982 | $114,881 | $90,955 | Free Cash Flow Calculation LiveRamp's free cash flow for Q3 FY25 was $44.8 million, a substantial increase from $14.3 million in the prior year, demonstrating improved cash generation from operations after accounting for capital expenditures Free Cash Flow Calculation (in thousands) | Metric | Q3 FY25 | Q3 FY24 | FY25 YTD | FY24 YTD | | :-------------------- | :-------- | :-------- | :---------- | :---------- | | Net cash provided by (used in) operating activities | $45,117 | $16,556 | $91,385 | $105,656 | | Less: Capital expenditures | $(282) | $(2,211) | $(749) | $(4,255) | | Free Cash Flow | $44,835 | $14,345 | $90,636 | $101,401 | Non-GAAP Operating Income Guidance Reconciliation LiveRamp provides a reconciliation for its non-GAAP operating income guidance for Q4 FY25 and the full fiscal year 2025, projecting a conversion from GAAP operating loss to non-GAAP operating income Non-GAAP Operating Income Guidance Reconciliation (in thousands) | Metric | Q4 FY25 Guidance | FY25 Guidance | | :-------------------- | :--------------- | :------------ | | GAAP income (loss) from operations | $(8,000) | $10,000 | | Excluded items: | | |\n| Purchased intangible asset amortization | $3,000 | $14,000 | | Non-cash stock compensation | $26,000 | $110,000 | | Restructuring costs | $1,000 | $1,000 | | Non-GAAP income from operations | $22,000 | $135,000 | Explanation of Non-GAAP Measures Purpose and Adjustments LiveRamp uses non-GAAP measures to provide investors with a clearer understanding of its core operational performance by excluding specific non-cash and non-recurring expenses - Non-GAAP measures exclude acquisition-related expenses, non-cash stock compensation, and restructuring charges to offer a clearer view of past performance and future results[72] - Management uses these non-GAAP measures for internal business understanding, evaluation, operating decisions, planning, forecasting, and as a basis for executive compensation[72] Specific Non-GAAP Metrics Definitions This section defines the specific adjustments made for non-GAAP financial measures, including purchased intangible asset amortization, non-cash stock compensation, restructuring charges, and transformation costs - Purchased intangible asset amortization is excluded as it is non-cash and provides supplemental information on operational performance[73] - Non-cash stock compensation is excluded because it does not typically require cash settlement and is not used to assess core profitability[74] - Restructuring charges and transformation costs are excluded as they are not indicative of core business operations and are discrete in nature, often involving third-party consulting fees[75][76] - Adjusted EBITDA is defined as net income from continuing operations before income taxes, other expenses, depreciation, and amortization, with other adjustments, used to measure performance and compare to competitors[80] - Free Cash Flow is defined as operating cash flow less capital expenditures, representing discretionary spending from continuing operations[81]