LiveRamp (RAMP) - 2024 Q1 - Quarterly Report

Part I. Financial Information This section presents the company's unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures Forward-looking Statements This section outlines the nature of forward-looking statements within the report, emphasizing that they are not historical facts but estimates and expectations subject to various factors and uncertainties that could cause actual results to differ materially - Forward-looking statements are not guarantees of future performance and are subject to factors and uncertainties that could cause actual results to differ materially from anticipated results[6] - Key factors influencing actual results include macroeconomic conditions, competitive position, data privacy regulations, tax legislation, cost savings expectations, liquidity needs, and various operational and market risks[7][8][9][12] Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including the balance sheets, statements of operations, comprehensive loss, equity, and cash flows, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial line items Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity at specific reporting dates Condensed Consolidated Balance Sheets (Dollars in thousands) | Item | June 30, 2023 | March 31, 2023 | | :------------------------------------------ | :------------ | :------------- | | ASSETS | | | | Cash and cash equivalents | $470,773 | $464,448 | | Total current assets | $706,046 | $714,559 | | Total assets | $1,163,931 | $1,172,703 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Total current liabilities | $172,377 | $174,829 | | Total stockholders' equity | $918,531 | $926,076 | | Total liabilities and stockholders' equity | $1,163,931 | $1,172,703 | - Total assets decreased by $8.772 million from March 31, 2023, to June 30, 2023, primarily driven by a decrease in total current assets[14] - Total stockholders' equity decreased by $7.545 million, from $926.076 million to $918.531 million[14] Condensed Consolidated Statements of Operations This section details the company's financial performance over specific periods, presenting revenues, expenses, and net income or loss Condensed Consolidated Statements of Operations (Dollars in thousands, except per share amounts) | Item | Three months ended June 30, 2023 | Three months ended June 30, 2022 | | :--------------------------------- | :------------------------------- | :------------------------------- | | Revenues | $154,069 | $142,243 | | Cost of revenue | $45,621 | $41,021 | | Gross profit | $108,448 | $101,222 | | Total operating expenses | $106,178 | $126,824 | | Income (loss) from operations | $2,270 | $(25,602) | | Total other income, net | $4,849 | $699 | | Income (loss) from operations before income taxes | $7,119 | $(24,903) | | Income tax expense | $8,705 | $2,315 | | Net loss | $(1,586) | $(27,218) | | Basic loss per share | $(0.02) | $(0.40) | | Diluted loss per share | $(0.02) | $(0.40) | - Revenues increased by 8.3% year-over-year, from $142.243 million in Q2 2022 to $154.069 million in Q2 2023[17] - The company significantly reduced its net loss from $(27.218) million in Q2 2022 to $(1.586) million in Q2 2023, and improved from an operating loss to an operating income[17] Condensed Consolidated Statements of Comprehensive Loss This section presents the company's net loss and other comprehensive income or loss items, reflecting the total change in equity from non-owner sources Condensed Consolidated Statements of Comprehensive Loss (Dollars in thousands) | Item | Three months ended June 30, 2023 | Three months ended June 30, 2022 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Net loss | $(1,586) | $(27,218) | | Change in foreign currency translation adjustment | $61 | $(1,929) | | Comprehensive loss | $(1,525) | $(29,147) | - Comprehensive loss significantly improved from $(29.147) million in Q2 2022 to $(1.525) million in Q2 2023, primarily due to a reduced net loss and a positive foreign currency translation adjustment[20] Condensed Consolidated Statements of Equity This section outlines changes in the company's equity accounts over a period, including common stock, additional paid-in capital, retained earnings, and treasury stock Condensed Consolidated Statements of Equity (Dollars in thousands) | Item | March 31, 2023 Balance | June 30, 2023 Balance | | :------------------------------------ | :--------------------- | :-------------------- | | Common Stock (Amount) | $15,399 | $15,455 | | Additional paid-in capital | $1,855,916 | $1,873,935 | | Retained earnings | $1,302,291 | $1,300,705 | | Accumulated other comprehensive income | $4,504 | $4,565 | | Treasury Stock (Amount) | $(2,252,034) | $(2,276,129) | | Total Equity | $926,076 | $918,531 | - Total equity decreased by $7.545 million during the three months ended June 30, 2023, primarily due to treasury stock acquisitions and net loss, partially offset by additional paid-in capital from stock awards[23] - Treasury stock increased by $24.095 million due to the acquisition of 834,600 shares[23] Condensed Consolidated Statements of Cash Flows This section reports the cash generated and used by the company across its operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows (Dollars in thousands) | Activity | Three months ended June 30, 2023 | Three months ended June 30, 2022 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Net cash provided by (used in) operating activities | $25,693 | $(33,369) | | Net cash used in investing activities | $(553) | $(1,741) | | Net cash used in financing activities | $(18,522) | $(56,046) | | Net change in cash and cash equivalents | $6,325 | $(91,908) | | Cash and cash equivalents at end of period | $470,773 | $508,254 | - Operating activities generated $25.693 million in cash in Q2 2023, a significant improvement from using $33.369 million in Q2 2022, largely due to a $29.2 million IRS refund[29][113][146] - Net cash used in financing activities decreased from $56.046 million in Q2 2022 to $18.522 million in Q2 2023, primarily due to reduced treasury stock acquisitions[29][151][152] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and additional information supporting the figures presented in the condensed consolidated financial statements 1. Basis of Presentation and Summary of Significant Accounting Policies This section describes the accounting principles and policies used in preparing the financial statements, including the basis of consolidation and key estimates - The condensed consolidated financial statements are unaudited and prepared in conformity with U.S. GAAP, with management making estimates and assumptions[35][36] - No material accounting pronouncements applicable to the Company were adopted or are yet to be adopted during the current year[37][38] 2. Loss Per Share and Stockholders' Equity This section details the calculation of earnings or loss per share and provides further information on changes and components of stockholders' equity Loss Per Share (in thousands, except per share amounts) | Item | Three months ended June 30, 2023 | Three months ended June 30, 2022 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Net loss | $(1,586) | $(27,218) | | Basic weighted-average shares outstanding | 66,497 | 68,403 | | Basic loss per share | $(0.02) | $(0.40) | | Diluted weighted-average shares outstanding | 66,497 | 68,403 | | Diluted loss per share | $(0.02) | $(0.40) | - The Board of Directors approved an additional $100.0 million for the common stock repurchase program, extending it through December 31, 2024, bringing the total authorized to $1.1 billion[41] - During Q2 2023, the Company repurchased 0.8 million shares for $20.2 million, with $197.6 million remaining capacity under the program as of June 30, 2023[42] 3. Revenue from Contracts with Customers This section provides disaggregated revenue information and details on remaining performance obligations, explaining how and when revenue is recognized Disaggregation of Revenue (dollars in thousands) | Category | Three months ended June 30, 2023 | Three months ended June 30, 2022 | | :-------------------------- | :------------------------------- | :------------------------------- | | Primary Geographical Markets | | | | United States | $144,166 | $132,069 | | Europe | $8,137 | $8,289 | | Asia-Pacific ("APAC") | $1,555 | $1,885 | | Other | $211 | $0 | | Major Offerings/Services | | | | Subscription | $121,882 | $115,733 | | Marketplace and Other | $32,187 | $26,510 | | Total Revenue | $154,069 | $142,243 | - Total revenue increased by 8.3% year-over-year, with Subscription revenue growing 5.3% and Marketplace and Other revenue growing 21.4%[44][125] - Remaining performance obligations (RPO) totaled $497.2 million as of June 30, 2023, with $350.7 million expected to be recognized over the next twelve months[45] 4. Leases This section outlines the company's lease arrangements, including right-of-use assets, lease liabilities, and future minimum lease payments Lease Balances (dollars in thousands) | Item | June 30, 2023 | March 31, 2023 | | :------------------------------------------ | :------------ | :------------- | | Right-of-use assets (net) | $29,155 | $24,604 | | Short-term lease liabilities | $9,356 | $9,929 | | Long-term lease liabilities | $37,712 | $37,243 | | Weighted average remaining lease term | 5.9 years | 5.6 years | | Weighted average discount rate | 5.0 % | 3.5 % | Future Minimum Operating Lease Payments (dollars in thousands) | Fiscal Year | Amount | | :---------- | :----- | | 2024 | $7,349 | | 2025 | $9,371 | | 2026 | $8,563 | | 2027 | $8,265 | | 2028 | $8,454 | | Thereafter | $12,828 | | Total undiscounted lease commitments | $54,830 | | Total discounted operating lease liabilities | $47,068 | - Operating lease costs decreased from $3.1 million in Q2 2022 to $2.1 million in Q2 2023[47] 5. Stock-Based Compensation This section details the company's stock-based compensation plans, including expense recognition and the impact on equity - The Company's Board voted to amend the 2005 Equity Compensation Plan to increase available shares by 4.0 million, subject to shareholder approval[51] Total Non-Cash Stock-Based Compensation Expense (dollars in thousands) | Item | Three months ended June 30, 2023 | Three months ended June 30, 2022 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Stock options | $173 | $309 | | Restricted stock units | $11,567 | $19,062 | | Other awards/plans | $1,552 | $4,854 | | Total non-cash stock-based compensation | $13,292 | $24,225 | - Total non-cash stock-based compensation decreased by $10.933 million, or 45.1%, year-over-year[52] Expected Future Stock-Based Compensation Expense (dollars in thousands) | Fiscal Year | Amount | | :---------- | :----- | | 2024 | $53,607 | | 2025 | $74,593 | | 2026 | $25,169 | | 2027 | $633 | | Total | $154,002 | 6. Other Current and Noncurrent Assets This section provides a breakdown of various current and noncurrent assets not categorized elsewhere, such as prepaid expenses and strategic investments Other Current Assets (dollars in thousands) | Item | June 30, 2023 | March 31, 2023 | | :------------------------------------ | :------------ | :------------- | | Prepaid expenses and other | $16,283 | $18,918 | | Assets of non-qualified retirement plan | $12,808 | $12,110 | | Total other current assets | $29,091 | $31,028 | Other Noncurrent Assets (dollars in thousands) | Item | June 30, 2023 | March 31, 2023 | | :------------------------------------ | :------------ | :------------- | | Long-term prepaid revenue share | $8,859 | $9,659 | | Right-of-use assets | $29,155 | $24,604 | | Strategic investments | $2,100 | $1,600 | | Total other assets, net | $45,130 | $41,045 | 7. Property and Equipment This section details the company's tangible assets, including leasehold improvements, data processing equipment, and accumulated depreciation Property and Equipment, Net (dollars in thousands) | Item | June 30, 2023 | March 31, 2023 | | :------------------------------------ | :------------ | :------------- | | Leasehold improvements | $25,247 | $25,262 | | Data processing equipment | $5,400 | $6,537 | | Office furniture and other equipment | $7,280 | $7,594 | | Less accumulated depreciation and amortization | $(31,872) | $(32,308) | | Property and equipment, net | $6,055 | $7,085 | - Property and equipment, net, decreased by $1.030 million from March 31, 2023, to June 30, 2023[72] - Depreciation expense on property and equipment was $0.8 million for Q2 2023, down from $1.1 million in Q2 2022[72] 8. Goodwill This section provides information on the company's goodwill, including its carrying amount and any changes due to foreign currency translation adjustments Goodwill (dollars in thousands) | Item | Amount | | :------------------------------------ | :----- | | Balance at March 31, 2023 | $363,116 | | Change in foreign currency translation adjustment | $62 | | Balance at June 30, 2023 | $363,178 | - Goodwill increased slightly by $62 thousand due to foreign currency translation adjustments[73] - Goodwill is primarily located in the U.S. ($360.158 million) with a smaller portion in APAC ($3.020 million)[73] 9. Intangible Assets This section details the company's identifiable intangible assets, such as developed technology and customer relationships, along with their amortization Intangible Assets, Net (dollars in thousands) | Item | June 30, 2023 | March 31, 2023 | | :------------------------------------ | :------------ | :------------- | | Net developed technology | $6,534 | $8,437 | | Net customer relationship/trade name | $44 | $431 | | Net publisher/data supply relationships | $0 | $1,000 | | Total intangible assets, net | $6,578 | $9,868 | - Total intangible assets, net, decreased by $3.290 million from March 31, 2023, to June 30, 2023[74] - Total amortization expense for intangible assets was $3.3 million for Q2 2023, down from $4.6 million in Q2 2022[74] Estimated Future Amortization Expenses (dollars in thousands) | Fiscal Year | Amount | | :---------- | :----- | | 2024 | $3,557 | | 2025 | $3,021 | | Total | $6,578 | 10. Other Accrued Expenses This section provides a breakdown of various short-term liabilities, including non-qualified retirement plan liabilities and lease liabilities Other Accrued Expenses (dollars in thousands) | Item | June 30, 2023 | March 31, 2023 | | :------------------------------------ | :------------ | :------------- | | Liabilities of non-qualified retirement plan | $12,808 | $12,110 | | Short-term lease liabilities | $9,356 | $9,929 | | Acuity performance earnout liability | $1,676 | $1,535 | | DataFleets consideration holdback | $972 | $324 | | Other miscellaneous accrued expenses | $14,510 | $11,615 | | Total other accrued expenses | $39,322 | $35,736 | - Total other accrued expenses increased by $3.586 million from March 31, 2023, to June 30, 2023[77] 11. Other Liabilities This section details various long-term liabilities, including uncertain tax positions, long-term lease liabilities, and lease restructuring accruals Other Liabilities (dollars in thousands) | Item | June 30, 2023 | March 31, 2023 | | :------------------------------------ | :------------ | :------------- | | Uncertain tax positions | $24,046 | $23,427 | | Long-term lease liabilities | $37,712 | $37,243 | | Lease restructuring accruals | $4,548 | $5,713 | | Other | $6,378 | $5,117 | | Total other liabilities | $73,023 | $71,798 | - Total other liabilities increased by $1.225 million from March 31, 2023, to June 30, 2023[78] 12. Allowance for Credit Losses This section outlines the changes in the allowance for credit losses, reflecting management's estimate of uncollectible accounts receivable Allowance for Credit Losses Activity (dollars in thousands) | Item | Balance at March 31, 2023 | Additions (reductions) | Bad debts written off, net | Other changes | Balance at June 30, 2023 | | :------------------------------------ | :------------------------ | :--------------------- | :------------------------- | :------------ | :----------------------- | | Allowance for credit losses | $9,344 | $(219) | $(770) | $53 | $8,408 | - The allowance for credit losses decreased by $0.936 million during the three months ended June 30, 2023[80] 13. Restructuring, Impairment and Other Charges This section details charges related to restructuring activities, asset impairments, and other significant non-recurring items Restructuring Liabilities (dollars in thousands) | Item | Balances at March 31, 2023 | Restructuring charges and adjustments | Payments | Balances at June 30, 2023 | | :------------------------------------ | :-------------------------- | :---------------------------------- | :------- | :------------------------ | | Employee-related reserves | $759 | $88 | $(686) | $161 | | Lease accruals | $4,873 | $0 | $(917) | $3,956 | | Total | $5,632 | $88 | $(1,603) | $4,117 | - The Company recorded $0.1 million in employee-related restructuring charges in Q2 2023, primarily adjustments to prior fiscal year plans[84] - In fiscal 2023, the Company initiated a restructuring plan to reduce its global real estate footprint, resulting in $24.6 million in impairment charges for ROU assets and associated property, and $2.9 million in lease-related restructuring charges[87][88] 14. Commitments and Contingencies This section describes the company's contractual obligations and potential liabilities arising from legal claims or other business activities - The Company is involved in various legal claims and proceedings in the ordinary course of business, for which management believes appropriate accruals have been made[91] Purchase Commitments (dollars in thousands) | Fiscal Year | Amount | | :---------- | :----- | | 2024 | $72,606 | | 2025 | $79,025 | | 2026 | $10,754 | | 2027 | $4,081 | | 2028 | $3,375 | | Total | $169,841 | - Purchase commitments primarily include contractual commitments for data, hosting services, software-as-a-service, and leasehold improvements[92] 15. Income Tax This section provides details on the company's income tax expense, effective tax rate, and factors influencing tax positions - The estimated annual effective income tax rate is primarily driven by nondeductible stock-based compensation, capitalization of R&D expenditures (IRC Section 174), and a valuation allowance on net deferred tax assets[93] - The Inflation Reduction Act of 2022, including the 1% excise tax on share repurchases, is not expected to have a material impact on the Company's financial statements[94] 16. Fair Value of Financial Instruments and Fair Value Measurements This section describes the fair value hierarchy and measurements for the company's financial instruments - The Company classifies fair value measurements into a three-level hierarchy based on the observability of inputs: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[95][97] Fair Value Measurements (dollars in thousands) at June 30, 2023 | Item | Cash and Cash Equivalents | Short-Term Investments | Other Current Assets | Total | | :------------------------------------ | :------------------------ | :--------------------- | :------------------- | :------ | | Cash | $28,113 | — | — | $28,113 | | Money market funds (Level 1) | $442,660 | — | — | $442,660 | | Assets of non-qualified retirement plan (Level 1) | — | — | $12,808 | $12,808 | | U.S. Treasury securities (Level 1) | — | $25,599 | — | $25,599 | | Certificates of deposit (Level 1) | — | $7,500 | — | $7,500 | | Total | $470,773 | $33,099 | $12,808 | $516,680 | - The Company held $2.1 million in strategic investments without readily determinable fair values at June 30, 2023, accounted for under the cost method[97] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition and results of operations for the three months ended June 30, 2023, discussing revenue sources, key performance metrics, detailed financial results, capital resources, and liquidity Introduction and Overview - LiveRamp Holdings, Inc. is a global technology company specializing in data collaboration, identity resolution, and privacy-conscious data sharing to help companies build brand and business value[98] - The Company operates as one operating segment, serving a global customer base including Fortune 500 companies across various industries from locations in the United States, Europe, and Asia-Pacific[99][100] Sources of Revenues LiveRamp generates revenue primarily from Subscription fees for platform access and Marketplace and Other revenue from data transactions and usage-based arrangements LiveRamp Data Collaboration Platform - The LiveRamp Data Collaboration Platform enables secure second-party data collaboration, activation of customer data using pseudonymized RampID™, accurate measurement and analytics, and enterprise-level identity solutions[102][103] - The platform's identity solutions combine offline and online data, with over 165 supply-side and demand-side platforms and more than 14,000 publisher domains adopting its Authenticated Traffic Solution (ATS)[103] - The Data Marketplace provides simplified access to over 200 third-party data providers globally, enabling data sellers to monetize their assets and data buyers to enrich first-party data[103] Subscription - Subscription revenue is primarily charged annually, based on data volume (input records and connection points)[104] - The Company serves 915 direct customers worldwide, including approximately 25% of the Fortune 500, and thousands more indirectly through reseller partnerships[105] - Customers include brands, agencies, marketing technology providers, publishers, and data sellers, leveraging the platform for people-based marketing, identity foundation, and data monetization[106][107] Marketplace and Other - Marketplace and Other revenue is generated primarily through revenue-sharing arrangements with data sellers in the LiveRamp Data Marketplace and transactional usage-based arrangements with publishers and addressable TV providers[108][109] - Professional services, including product implementation, data science analytics, and advisory, complement the product offering and account for less than 5% of total Company revenue[110] Summary Results and Notable Events Financial Summary (Dollars in millions) | Item | Q2 2023 | Q2 2022 | Change (%) | | :------------------------------------ | :------ | :------ | :--------- | | Revenues | $154.1 | $142.2 | 8.3% | | Cost of revenue | $45.6 | $41.0 | 11.2% | | Gross margin | 70.4% | 71.2% | (0.8) pp | | Total operating expenses | $106.2 | $126.8 | (16.3)% | | Total other income, net | $4.8 | $0.7 | 585.7% | | Net loss | $(1.6) | $(27.2) | 94.2% | | Diluted loss per share | $(0.02) | $(0.40) | 95.0% | | Net cash provided by (used in) operating activities | $25.7 | $(33.4) | N/A | | Shares repurchased | 0.8M | 2.1M | (61.9)% | | Value of shares repurchased | $20.2 | $60.1 | (66.4)% | - The Company achieved an 8.3% increase in revenues and significantly reduced its net loss by 94.2% year-over-year[113] - Operating expenses decreased by 16.3%, contributing to the improved financial performance, while operating cash flow turned positive[113] Key Performance Metrics Key Performance Metrics (Dollars in millions, except percentages) | Metric | June 30, 2023 | June 30, 2022 | % Change (YoY) | | :------------------------------------ | :------------ | :------------ | :------------- | | Subscription net retention (SNR) | 98% | 113% | (13.3)% | | Annualized recurring revenue (ARR) | $426.1 | $409.4 | 4.1% | | Remaining performance obligation (RPO) | $497.2 | $398.0 | 24.9% | | Current remaining performance obligation (CRPO) | $350.7 | $295.5 | 18.7% | | Subscription CRPO | $309.1 | $266.4 | 16.0% | - Subscription net retention (SNR) decreased to 98% from 113% year-over-year, primarily due to increased downsell and churn activity, and lower variable usage, influenced by budget and economic pressures[116][117] - Annualized Recurring Revenue (ARR) grew 4.1%, a decline from the prior year's 19.9% growth, attributed to similar factors affecting SNR, as well as lower new customer and existing customer upsell activity[118][119] - Remaining Performance Obligations (RPO) increased by 24.9%, driven by large, multi-year renewals, indicating future revenue potential despite slower recurring revenue growth[120][122] Results of Operations Revenues Revenues (Dollars in thousands) | Category | Three months ended June 30, 2023 | Three months ended June 30, 2022 | % Change | | :-------------------------- | :------------------------------- | :------------------------------- | :------- | | Subscription | $121,882 | $115,733 | 5.3% | | Marketplace and Other | $32,187 | $26,510 | 21.4% | | Total revenues | $154,069 | $142,243 | 8.3% | | U.S. revenue | $144,166 | $132,069 | 9.2% | | International revenue | $9,903 | $10,174 | (2.7)% | - Total revenues increased by $11.8 million, or 8.3%, driven by Subscription revenue growth of 5.3% (new deals, upsells, variable revenue) and Marketplace and Other revenue growth of 21.4% (Data Marketplace)[125] - U.S. revenue increased by 9.2%, while International revenue decreased by 2.7%[125] Cost of Revenue and Gross Profit Cost of Revenue and Gross Profit (Dollars in thousands) | Item | Three months ended June 30, 2023 | Three months ended June 30, 2022 | % Change | | :-------------------------- | :------------------------------- | :------------------------------- | :------- | | Cost of revenue | $45,621 | $41,021 | 11.2% | | Gross profit | $108,448 | $101,222 | 7.1% | | Gross margin (%) | 70.4% | 71.2% | (1.1)% | | U.S. gross margins | 72.2% | 72.4% | (0.2) pp | | International gross margins | 43.3% | 54.8% | (11.5) pp | - Cost of revenue increased by $4.6 million, or 11.2%, primarily due to a $4.1 million increase in cloud infrastructure costs[127] - Gross margin decreased slightly to 70.4% from 71.2% in the prior year, with a notable decrease in International gross margins[127] Operating Expenses Operating Expenses (Dollars in thousands) | Item | Three months ended June 30, 2023 | Three months ended June 30, 2022 | % Change | | :-------------------------- | :------------------------------- | :------------------------------- | :------- | | Research and development | $34,519 | $47,661 | (27.6)% | | Sales and marketing | $44,879 | $51,280 | (12.5)% | | General and administrative | $26,664 | $27,144 | (1.8)% | | Gains, losses and other items, net | $116 | $739 | (84.3)% | | Total operating expenses | $106,178 | $126,824 | (16.3)% | - R&D expenses decreased by $13.1 million (27.6%), mainly due to lower stock-based compensation ($6.6 million decrease) and headcount-related costs ($4.4 million decrease)[129] - S&M expenses decreased by $6.4 million (12.5%), driven by lower stock-based compensation ($2.1 million decrease), marketing expenses ($1.4 million decrease), and administrative expenses ($1.3 million decrease)[131] - G&A expenses decreased by $0.5 million (1.8%), primarily due to reduced stock-based compensation ($1.7 million decrease) and professional services ($0.7 million decrease), partially offset by $1.9 million in transformation costs[134] Income (Loss) from Operations and Operating Margin - The Company reported income from operations of $2.3 million in Q2 2023, a significant improvement from a loss of $25.6 million in Q2 2022[136] - Operating margin turned positive at 1.5% in Q2 2023, compared to negative 18.0% in the prior year, benefiting from revenue growth and operating expense reductions[136] Other Income and Income Taxes - Total other income, net, increased significantly to $4.8 million in Q2 2023 from $0.7 million in Q2 2022, primarily due to higher interest rates on invested cash[137] - Income tax expense was $8.7 million on pretax income of $7.1 million, resulting in a 122% effective tax rate, driven by nondeductible R&D capitalization and valuation allowance[138] Capital Resources and Liquidity Overview - Cash and cash equivalents totaled $470.8 million at June 30, 2023, with approximately 4.9% located outside the United States[140] - Net accounts receivable increased to $173.1 million, and Days Sales Outstanding (DSO) increased to 102 days, negatively impacted by Data Marketplace gross accounts receivable[141] - Working capital decreased slightly to $533.7 million. Management believes existing cash is sufficient for foreseeable needs but acknowledges macroeconomic risks to liquidity[142][143] Cash Flows Summary of Cash Flows (Dollars in thousands) | Activity | Three months ended June 30, 2023 | Three months ended June 30, 2022 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Net cash provided by (used in) operating activities | $25,693 | $(33,369) | | Net cash used in investing activities | $(553) | $(1,741) | | Net cash used in financing activities | $(18,522) | $(56,046) | - Operating activities provided $25.7 million in cash, primarily due to net earnings adjusted for non-cash items and a $29.2 million IRS refund[146] - Investing activities used $0.6 million, mainly for a strategic investment and capital expenditures. Financing activities used $18.5 million, primarily for treasury stock acquisitions and tax withholdings on stock awards[148][151] Common Stock Repurchase Program - The common stock repurchase program was amended to authorize an additional $100.0 million, increasing the total to $1.1 billion and extending it through December 31, 2024[154] - During Q2 2023, the Company repurchased 0.8 million shares for $20.2 million, with $197.6 million remaining capacity as of June 30, 2023[155] - The 1% excise tax on share repurchases under the Inflation Reduction Act of 2022 is not expected to have a material impact[156] Contractual Commitments Contractual Cash Obligations (Dollars in thousands) | Item | 2024 | 2025 | 2026 | 2027 | 2028 | Thereafter | Total | | :-------------------------- | :----- | :----- | :----- | :----- | :----- | :--------- | :------ | | Operating leases | $7,349 | $9,371 | $8,563 | $8,265 | $8,454 | $12,828 | $54,830 | | Purchase commitments | $72,606 | $79,025 | $10,754 | $4,081 | $3,375 | — | $169,841 | - Operating lease commitments total $54.830 million, with $7.349 million due in the remaining nine months of fiscal 2024[157] - Purchase commitments, primarily for data, hosting, and software, total $169.841 million, with the largest portion ($72.606 million) due in the remaining nine months of fiscal 2024[158] Non-U.S. Operations - The Company has operations in multiple countries, including the UK, France, Netherlands, Italy, Spain, Brazil, India, Australia, China, Singapore, and Japan[160] - Most foreign exchange exposure is due to translation gains and losses, with no material transactions causing exchange rate impact, and no foreign currency hedging instruments are currently used[160] Critical Accounting Policies - No material changes to the Company's critical accounting policies have occurred since the 2023 Annual Report, other than those described in Note 1[161] Recent Accounting Pronouncements - Information on recent accounting pronouncements is provided in Note 1, 'Basis of Presentation and Summary of Significant Accounting Policies,' of the Notes to Condensed Consolidated Financial Statements[162] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there have been no material changes in the Company's market risk exposures for the three months ended June 30, 2023, compared to those discussed in the 2023 Annual Report - No material changes in market risk exposures were identified for the three months ended June 30, 2023, compared to the Company's 2023 Annual Report[164] Item 4. Controls and Procedures Management, including the CEO and Interim CFO, concluded that the Company's disclosure controls and procedures were effective as of June 30, 2023, and reported no material changes in internal control over financial reporting during the quarter - Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2023[165] - There were no material changes in internal control over financial reporting during the fiscal quarter ended June 30, 2023[165] Part II. Other Information This section includes disclosures on legal proceedings, risk factors, equity security sales, defaults, mine safety, and exhibits Item 1. Legal Proceedings This section refers to Note 14, 'Commitments and Contingencies,' in the unaudited condensed consolidated financial statements for information regarding legal proceedings - Information on legal proceedings is incorporated by reference from Note 14, 'Commitments and Contingencies,' in the financial statements[166] Item 1A. Risk Factors This section states that the risk factors described in the Company's 2023 Annual Report remain current in all material respects and cautions that the identified risks are not exhaustive, with potential for other unknown or immaterial factors to adversely affect the business - The risk factors detailed in the Company's 2023 Annual Report on Form 10-K remain current in all material respects[167] - The list of risk factors is not exhaustive, and other unknown or currently immaterial factors could adversely affect the Company's business, financial condition, or results of operations[167] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section provides details on the Company's common stock repurchase activities during the quarter ended June 30, 2023, under its modified repurchase program, including the number of shares purchased and the remaining authorized capacity Common Stock Repurchases (Q2 2023) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs | | :------------------------------------ | :------------------------------- | :--------------------------- | :---------------------------------------------------------------------------------------------------------------- | | April 1, 2023 - April 30, 2023 | 258,600 | $22.94 | $211,894,320 | | May 1, 2023 - May 31, 2023 | 281,000 | $24.45 | $205,023,229 | | June 1, 2023 - June 30, 2023 | 295,000 | $25.08 | $197,624,391 | | Total | 834,600 | — | — | - The Company repurchased 834,600 shares of common stock during the three months ended June 30, 2023[168] - As of June 30, 2023, $197.6 million remained authorized for repurchase under the common stock repurchase program, which extends through December 31, 2024[168] Item 3. Defaults Upon Senior Securities This item states that there are no applicable defaults upon senior securities - This item is not applicable to the Company[170] Item 4. Mine Safety Disclosures This item states that there are no applicable mine safety disclosures - This item is not applicable to the Company[171] Item 5. Other Information This section confirms that no directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the three months ended June 30, 2023 - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2023[172] Item 6. Exhibits This section lists the exhibits filed with the quarterly report, including certifications from the Chief Executive Officer and Interim Chief Financial Officer, and the financial information formatted in inline XBRL - Exhibits include certifications (31.1, 31.2, 32.1, 32.2) from the CEO and Interim CFO, and financial information formatted in inline XBRL (101, 104)[174] Signature This section contains the formal signature block, indicating that the report was duly signed on behalf of LiveRamp Holdings, Inc. by Lauren Dillard, Interim Chief Financial Officer, on August 9, 2023 - The report was signed by Lauren Dillard, Interim Chief Financial Officer, on August 9, 2023[178]