LiveRamp (RAMP) - 2023 Q1 - Quarterly Report

Part I. Financial Information Item 1. Financial Statements Unaudited Q1 FY23 financials report 19.5% revenue growth to $142.2 million, a shift to a $27.2 million net loss, and increased cash usage Condensed Consolidated Balance Sheet Summary (Unaudited) | Account | June 30, 2022 ($ in thousands) | March 31, 2022 ($ in thousands) | | :--- | :--- | :--- | | Total Current Assets | 724,854 | 815,834 | | Cash and cash equivalents | 508,254 | 600,162 | | Total Assets | 1,234,261 | 1,333,736 | | Total Current Liabilities | 143,045 | 184,566 | | Total Liabilities | 228,514 | 270,676 | | Total Stockholders' Equity | 1,005,747 | 1,063,060 | Condensed Consolidated Statement of Operations Summary (Unaudited) | Account | Three months ended June 30, 2022 ($ in thousands) | Three months ended June 30, 2021 ($ in thousands) | | :--- | :--- | :--- | | Revenues | 142,243 | 119,038 | | Gross Profit | 101,222 | 84,723 | | Loss from operations | (25,602) | (17,601) | | Net earnings (loss) | (27,218) | 17,365 | | Diluted earnings (loss) per share | (0.40) | 0.25 | Condensed Consolidated Statement of Cash Flows Summary (Unaudited) | Account | Three months ended June 30, 2022 ($ in thousands) | Three months ended June 30, 2021 ($ in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | (33,369) | (17,241) | | Net cash provided by (used in) investing activities | (1,741) | 22,205 | | Net cash used in financing activities | (56,046) | (37,157) | | Net change in cash and cash equivalents | (91,908) | (31,932) | Notes to Condensed Consolidated Financial Statements Detailed notes explain accounting policies, revenue disaggregation, stock repurchases, compensation expenses, and purchase commitments Disaggregation of Revenue (Three months ended June 30) | Category | 2022 ($ in thousands) | 2021 ($ in thousands) | | :--- | :--- | :--- | | By Geography | | | | United States | 132,069 | 111,670 | | Europe | 8,289 | 5,964 | | Asia-Pacific (APAC) | 1,885 | 1,404 | | By Offering | | | | Subscription | 115,733 | 96,510 | | Marketplace and Other | 26,510 | 22,528 | | Total Revenue | 142,243 | 119,038 | - The company repurchased 2.1 million shares of its common stock for $60.1 million during the three months ended June 30, 2022. This leaves a remaining capacity of $207.8 million under the current stock repurchase program, which runs through December 31, 2022[38] - Total non-cash stock-based compensation expense was $24.2 million for the quarter, a significant increase from $18.5 million in the prior-year period. The largest portion was allocated to Research and Development ($11.7 million)[50] - As of June 30, 2022, the company has total purchase commitments of $184.9 million, primarily for data, hosting services, and software. The company also has $66.6 million in undiscounted operating lease commitments[99][156] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 FY23 results, noting 19.5% revenue growth to $142.2 million, a $27.2 million net loss due to higher operating expenses, and continued share repurchases Business Overview LiveRamp's business overview details its global data enablement platform, revenue sources from subscriptions and Data Marketplace, and key customer base - LiveRamp's business is centered on its enterprise data connectivity platform, which uses a core omnichannel, deterministic identity asset (RampID™) to unify customer data for marketing and analytics[105][109] - Revenue is primarily generated from two sources: Subscription fees for platform access and Marketplace/Other revenue from data transactions and usage-based fees[108] - The company serves 910 direct customers worldwide, including over 475 major brands and agencies, and thousands more indirectly through reseller partnerships[112][113] Results of Operations Q1 FY23 results show 19.5% revenue growth to $142.2 million, but increased operating expenses from headcount led to a wider operating loss Quarterly Revenue Performance (YoY) | Revenue Source | Q1 FY23 ($ in thousands) | Q1 FY22 ($ in thousands) | % Change | | :--- | :--- | :--- | :--- | | Subscription | 115,733 | 96,510 | 19.9% | | Marketplace and Other | 26,510 | 22,528 | 17.7% | | Total Revenues | 142,243 | 119,038 | 19.5% | Quarterly Operating Expense Performance (YoY) | Expense Category | Q1 FY23 ($ in thousands) | Q1 FY22 ($ in thousands) | % Change | | :--- | :--- | :--- | :--- | | Research and development | 47,661 | 34,776 | 37.1% | | Sales and marketing | 51,280 | 41,979 | 22.2% | | General and administrative | 27,144 | 24,291 | 11.7% | | Total Operating Expenses | 126,824 | 102,324 | 23.9% | - The increase in R&D and S&M expenses was primarily driven by headcount investments, with employee-related costs rising by $6.3 million in R&D and $7.0 million in S&M[128][130] - The company reported a net loss of $27.2 million, compared to net earnings of $17.3 million in the prior year. The prior year's results included a $30.1 million gain from a cash distribution related to a previous disposition[122][136] Capital Resources and Liquidity As of June 30, 2022, cash and equivalents decreased by $91.9 million to $508.3 million, driven by operating and financing cash usage, including share repurchases - Cash and cash equivalents stood at $508.3 million at the end of the quarter[138] - Net cash used in operating activities was $33.4 million, an increase from $17.2 million in the prior-year quarter, mainly due to payments for annual incentive compensation and timing of supplier payments[144][146] - The company used $56.0 million in financing activities, primarily for the repurchase of 2.1 million shares of its common stock for $60.1 million[153] Item 3. Quantitative and Qualitative Disclosures about Market Risk No material changes in market risk exposures were reported for the quarter compared to the 2022 Annual Report on Form 10-K - There have been no material changes in market risk exposures during the quarter[164] Item 4. Controls and Procedures Management deemed disclosure controls effective as of June 30, 2022, with no material changes to internal controls over financial reporting during the quarter - Management concluded that as of June 30, 2022, the company's disclosure controls and procedures were effective[165] - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[165] Part II. Other Information Item 1. Legal Proceedings The company is involved in ordinary course legal proceedings, with management believing adequate accruals have been made and material loss is remote - Information regarding legal proceedings is detailed in Note 15 of the financial statements. Management believes adequate accruals have been made for any probable and estimable losses[98][166] Item 1A. Risk Factors Risk factors disclosed in the 2022 Annual Report on Form 10-K remain current in all material respects - There have been no material changes to the risk factors previously disclosed in the company's 2022 Annual Report[167] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the quarter, LiveRamp repurchased 2,071,095 shares for $60.1 million, with $207.8 million remaining available under the stock repurchase program Issuer Purchases of Equity Securities (Q1 FY23) | Period | Total Shares Purchased | Average Price Paid Per Share | Total Purchased as Part of Program | | :--- | :--- | :--- | :--- | | April 2022 | 486,689 | $36.11 | 486,689 | | May 2022 | 35,000 | $33.02 | 35,000 | | June 2022 | 1,549,406 | $26.67 | 1,549,406 | | Total | 2,071,095 | $29.00 | 2,071,095 | - The company has $207.8 million remaining under its stock repurchase program, which is authorized through December 31, 2022[168]