LiveRamp Announces Third Quarter Results
LiveRamp® (NYSE: RAMP), the leading data collaboration platform, today announced its financial results for the quarter ended December 31, 2022.
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230207005323/en/
Q3 Financial Highlights1
Total revenue was $159 million, up 13%. Subscription revenue was $126 million, up 14%, and accounted for 80% of total revenue. Marketplace & Other revenue was $32 million, up 9%. GAAP gross profit was $115 million, up 13%. GAAP gross margin of 73% was unchanged. Non-GAAP gross profit was $121 million, up 12%. Non-GAAP gross margin of 76% contracted by 1 percentage point. GAAP operating loss was $24 million compared to $14 million. Non-GAAP operating income was $26 million compared to $15 million. Non-GAAP operating margin of 16% expanded by 6 percentage points. GAAP loss per share was $0.46 and non-GAAP earnings per share were $0.28. Net cash provided by operating activities was $16 million compared to $25 million. In the quarter, the Company repurchased approximately 2.3 million shares for $50 million under its share repurchase program. Fiscal year to date, the Company has repurchased approximately 6.1 million shares for $150 million. Since inception of the program in August 2011, the Company has returned approximately $1.4 billion in capital to shareholders. On December 20, 2022 the Company’s Board of Directors approved an extension of the share repurchase program by two years to December 31, 2024 and a $100 million increase in the authorization. There is currently $218 million available under the authorization.
__________
1 Unless otherwise indicated, all comparisons are to the prior year period.
A reconciliation between GAAP and non-GAAP results is provided in the schedules to this press release.
"We continue winning with the world's largest brand marketers, reinforcing that we are essential infrastructure for the advertising ecosystem," said LiveRamp CEO Scott Howe. "Our identity and collaboration products, with connections to over 2,000 publishers, uniquely support all of their marketing activities."
“We delivered solid third quarter results, with top-line growth and strong free cash flow,” added President and CFO Warren Jenson. “Looking to FY24, we expect to deliver another year of strong operating profit growth and to return a substantial portion of free cash flow to shareowners through share repurchases.”
GAAP and Non-GAAP Results
The following table summarizes the Company’s financial results for its third fiscal quarter ($ in millions):
Q3 Fiscal 2023
Q3 Fiscal 2022
Results
Results
GAAP
Non-GAAP
GAAP
Non-GAAP
Subscription revenue
$126
—
$111
—
YoY change %
14%
19%
Marketplace & Other revenue
$32
—
$29
—
YoY change %
9%
12%
Total revenue
$159
—
$141
—
YoY change %
13%
17%
Gross profit
$115
$121
$102
$108
% Gross margin
73%
76%
73%
77%
YoY change, pts
0 pts
(1) pts
4 pts
3 pts
Operating income (loss)
($24)
$26
($14)
$15
% Operating margin
(15%)
16%
(10%)
10%
YoY change, pts
(5) pts
6 pts
3 pts
0 pts
Net earnings (loss)
($30)
$19
($15)
$10
Earnings (loss) per share
($0.46)
$0.28
($0.23)
$0.14
Shares to calculate EPS
64.8
65.4
68.2
69.9
YoY change %
(5%)
(7%)
3%
0%
Net operating cash flow
$16
—
$25
—
Free cash flow to equity
—
$16
—
$24
Totals may not sum due to rounding.
A detailed discussion of our non-GAAP financial measures and a reconciliation between GAAP and non-GAAP results is provided in the schedules attached to this press release.
Additional Business Highlights & Metrics
The Company’s Authenticated Traffic Solution (ATS) has reached global scale. There are currently more than 160 supply-side platforms (SSPs) and demand-side platforms (DSPs) live or committed to bid on RampID™ and ATS, including The Trade Desk, Xandr, Amobee, Criteo, Roku Oneview, and MediaMath. Further, in March 2022, LiveRamp announced an expanded partnership with The Trade Desk to power European Unified ID (EUID) via its ATS infrastructure. To date, over 2,000 publishers, representing more than 12,000 deployed domains, have integrated ATS worldwide, including Amazon Publisher Services, Microsoft, Hearst, CafeMedia, Leaf Group, Prisma Media and Burda. At its November 2022 re:Invent conference, Amazon Web Services (AWS) named LiveRamp as a key industry partner for its new Marketing and Advertising Initiative and forthcoming AWS Clean Rooms service launch. LiveRamp published its new embedded identity resolution solutions in the AWS Marketplace in December 2022 ahead of the AWS Clean Rooms release in January 2023. Support for AWS Clean Rooms gives customers a collaborative approach to more effective media measurement and planning. As part of LiveRamp’s continued work with AWS, this latest integration reinforces our commitment to help clients improve their customer intelligence through accurate and secure data collaboration in cloud environments. Recently, LiveRamp and Pinterest announced a new partnership to pilot clean rooms for select advertising partners using LiveRamp’s data collaboration technology, Safe Haven. Grocery retailer Albertsons will be the first advertiser to use the new solution to support its retail media network. LiveRamp’s Safe Haven platform provides a protected environment where brands can join select first-party data with Pinterest platform data without having to share or reveal customers’ personal identifiable information. This data sharing will enable enhanced measurement of advertising campaigns, such as closed-loop attribution, without compromising data protection. LiveRamp has 910 direct subscription customers, up from 890 in the prior year period. LiveRamp has 94 customers whose subscription contracts exceed $1 million in annual revenue, up from 86 in the prior year period. During the third quarter, subscription net retention was 101% and platform net retention was 102%. Current remaining performance obligations (CRPO), which is contracted and committed revenue expected to be recognized over the next 12 months, was $324 million, up 12% compared to the prior year period.Financial Outlook
LiveRamp’s non-GAAP operating income guidance excludes the impact of non-cash stock compensation, purchased intangible asset amortization, and restructuring and related charges.
For the fourth quarter of fiscal 2023, LiveRamp expects to report:
Revenue of between $147 million and $152 million, an increase of between 4% and 7% year-over-year GAAP operating loss of between $26 million and $23 million Non-GAAP operating income of between $13 million and $16 millionFor fiscal 2023, LiveRamp updates its guidance and expects to report:
Revenue of between $595 million and $600 million, an increase of approximately 13% year-over-year GAAP operating loss of between $105 million and $102 million Non-GAAP operating income of between $60 million and $63 millionConference Call
LiveRamp will hold a conference call at 1:30 p.m. PT today to further discuss this information. Interested parties are invited to listen to the call which will be broadcast via the Internet and can be found on LiveRamp’s investor site. A slide presentation will be referenced during the call and can be accessed here.
About LiveRamp
LiveRamp is the data collaboration platform trusted by forward-looking global companies to connect customer data from anywhere to everywhere. The category-defining pioneer with decades of expertise in online-offline identity resolution, LiveRamp is setting the new standard for a 360° customer view in the modern data stack through secure, privacy-first collaboration within companies, across companies, and between companies and their media and marketing partners to personalize and improve the customer journey. For more information, visit www.liveramp.com.
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended (the “PSLRA”). These statements, which are not statements of historical fact, may contain estimates, assumptions, projections and/or expectations regarding the Company’s financial position, results of operations for fiscal 2023, fiscal 2024 and beyond, market position, product development, growth opportunities, economic conditions, and other similar forecasts and statements of expectation. Forward-looking statements are often identified by words or phrases such as “anticipate,” “estimate,” “plan,” “expect,” “believe,” “intend,” “foresee,” or the negative of these terms or other similar variations thereof.
These forward-looking statements are not guarantees of future performance and are subject to a number of factors and uncertainties that could cause the Company’s actual results and experiences to differ materially from the anticipated results and expectations expressed in the forward-looking statements.
Among the factors that may cause actual results and expectations to differ from anticipated results and expectations expressed in forward-looking statements are uncertainties related to the ongoing COVID-19 pandemic, rising interest rates, cost increases and general inflationary pressure and the associated impacts on our suppliers, customers and partners; the Company’s dependence upon customer renewals; new customer additions and upsell within our subscription business; our reliance upon partners, including data suppliers; competition; and attracting and retaining talent. Additional risks include maintaining our culture and our ability to innovate and evolve while operating in a hybrid work environment, with some employees working remotely at least some of the time within a rapidly changing industry, while also avoiding disruption from reductions in our current workforce as well as disruptions resulting from acquisition and divestiture activities. Our international operations are also subject to risks, including war and civil unrest, that may harm the Company’s business. The risk of a significant breach of the confidentiality of the information or the security of our or our customers’, suppliers’, or other partners’ computer systems, or the risk that our current insurance coverage may not be adequate for such a breach, that an insurer might deny coverage for a claim or that such insurance will continue to be available to us on commercially reasonable terms, or at all, could be detrimental to our business, reputation and results of operations. Other business risks include unfavorable publicity and negative public perception about our industry; interruptions or delays in service from data center hosting vendors we rely upon; and our dependence on the continued availability of third-party data hosting and transmission services. Our clients’ ability to use data on our platform could be restricted if the industry’s use of third-party cookies and tracking technology declines due to technology platform changes, regulation or increased user controls. Changes in regulations relating to information collection and use represents a risk, as well as changes in tax laws and regulations that are applied to our customers which could cause enterprise software budget tightening. In addition, third parties may claim that we are infringing their intellectual property or may infringe our intellectual property which could result in competitive injury and / or the incurrence of significant costs and draining of our resources.
For a discussion of these and other risks and uncertainties, please refer to LiveRamp’s Annual Report on Form 10-K for our fiscal year 2022 ended March 31, 2022, and LiveRamp's Quarterly Reports on Form 10-Q issued in fiscal year 2023.
The financial information set forth in this press release reflects estimates based on information available at this time.
LiveRamp assumes no obligation and does not currently intend to update these forward-looking statements.
To automatically receive LiveRamp financial news by email, please visit www.LiveRamp.com and subscribe to email alerts.
ERAMP
LiveRampⓇ, RampIDTM, AbilitecⓇ, Safe HavenⓇ and all other LiveRamp marks contained herein are trademarks or service marks of LiveRamp, Inc. All other marks are the property of their respective owners.
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands, except per share amounts) For the Three Months Ended December 31, $ %2022
2021
Variance
Variance
Revenues158,615
140,604
18,011
12.8
%
Cost of revenue43,287
38,557
4,730
12.3
%
Gross profit115,328
102,047
13,281
13.0
%
% Gross margin72.7
%
72.6
%
Operating expenses: Research and development43,175
41,870
1,305
3.1
%
Sales and marketing47,702
46,324
1,378
3.0
%
General and administrative36,657
27,639
9,018
32.6
%
Gains, losses and other items, net11,743
-
11,743
n/a
Total operating expenses
139,277
115,833
23,444
20.2
%
Loss from operations(23,949
)
(13,786
)
(10,163
)
(73.7
%)
% Margin-15.1
%
-9.8
%
Total other expense, net(736
)
(241
)
(495
)
(205.4
%)
Loss from continuing operations before income taxes(24,685
)
(14,027
)
(10,658
)
(76.0
%)
Income tax expense5,835
1,348
4,487
332.9
%
Net loss from continuing operations(30,520
)
(15,375
)
(15,145
)
(98.5
%)
Earnings from discontinued operations, net of tax836
-
836
n/a
Net loss
(29,684
)
(15,375
)
(14,309
)
(93.1
%)
Basic earnings (loss) per share: Continuing operations(0.47
)
(0.23
)
(0.25
)
(108.9
%)
Discontinued operations0.01
-
0.01
n/a
Basic loss per share
(0.46
)
(0.23
)
(0.23
)
(103.2
%)
Diluted earnings (loss) per share: Continuing operations(0.47
)
(0.23
)
(0.25
)
(108.9
%)
Discontinued operations0.01
-
0.01
n/a
Diluted loss per share:
(0.46
)
(0.23
)
(0.23
)
(103.2
%)
Basic weighted average shares64,784
68,190
Diluted weighted average shares
64,784
68,190
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands, except per share amounts) For the Nine Months Ended December 31, $ %
2022
2021
Variance
Variance
Revenues447,957
386,932
61,025
15.8
%
Cost of revenue126,612
107,951
18,661
17.3
%
Gross profit321,345
278,981
42,364
15.2
%
% Gross margin71.7
%
72.1
%
Operating expenses: Research and development136,975
112,434
24,541
21.8
%
Sales and marketing144,931
127,812
17,119
13.4
%
General and administrative92,519
75,008
17,511
23.3
%
Gains, losses and other items, net25,593
1,296
24,297
1874.8
%
Total operating expenses400,018
316,550
83,468
26.4
%
Loss from operations(78,673
)
(37,569
)
(41,104
)
(109.4
%)
% Margin-17.6
%
-9.7
%
Total other income, net2,211
30,510
(28,299
)
(92.8
%)
Loss from continuing operations before income taxes(76,462
)
(7,059
)
(69,403
)
(983.2
%)
Income tax expense (benefit)11,712
(2,618
)
14,330
547.4
%
Net loss from continuing operations(88,174
)
(4,441
)
(83,733
)
(1885.5
%)
Earnings from discontinued operations, net of tax836
-
836
n/a
Net loss
(87,338
)
(4,441
)
(82,897
)
(1866.6
%)
Basic earnings (loss) per share: Continuing operations(1.32
)
(0.07
)
(1.26
)
(1927.9
%)
Discontinued operations0.01
-
0.01
n/a
Basic earnings (loss) per share
(1.31
)
(0.07
)
(1.24
)
(1908.6
%)
Diluted earnings (loss) per share: Continuing operations(1.32
)
(0.07
)
(1.26
)
(1927.9
%)
Discontinued operations0.01
-
0.01
n/a
Diluted earnings (loss) per share:
(1.31
)
(0.07
)
(1.24
)
(1908.6
%)
Basic weighted average shares66,761
68,187
Diluted weighted average shares
66,761
68,187
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP EPS (1) (Unaudited) (Dollars in thousands, except per share amounts) For the Three Months Ended For the Nine Months Ended December 31, December 31,
2022
2021
2022
2021
Loss from continuing operations before income taxes(24,685
)
(14,027
)
(76,462
)
(7,059
)
Income tax expense (benefit)5,835
1,348
11,712
(2,618
)
Net loss from continuing operations(30,520
)
(15,375
)
(88,174
)
(4,441
)
Earnings from discontinued operations, net of tax836
-
836
-
Net loss
(29,684
)
(15,375
)
(87,338
)
(4,441
)
Loss per share: Basic(0.46
)
(0.23
)
(1.31
)
(0.07
)
Diluted(0.46
)
(0.23
)
(1.31
)
(0.07
)
Excluded items: Purchased intangible asset amortization (cost of revenue)4,209
4,647
13,489
13,904
Non-cash stock compensation (cost of revenue and operating expenses)
29,624
23,758
81,142
61,475
Transformation costs (general and administrative)
4,112
-
5,362
-
Restructuring and merger charges (gains, losses, and other)
11,743
-
25,593
1,296
Gain on retained profits interest (other income)
-
(183
)
-
(30,235
)
Total excluded items, continuing operations49,688
28,222
125,586
46,440
Income from continuing operations before income taxes and excluding items
25,003
14,195
49,124
39,381
Income tax expense (2)
6,468
4,271
12,262
5,124
Non-GAAP net earnings from continuing operations
18,535
9,924
36,862
34,257
Non-GAAP earnings per share from continuing operations: Basic
0.29
0.15
0.55
0.50
Diluted
0.28
0.14
0.55
0.49
Basic weighted average shares
64,784
68,190
66,761
68,187
Diluted weighted average shares
65,356
69,938
67,373
69,626
(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures and the material limitations on the usefulness of these measures, please see Appendix A.
(2) Income taxes were calculated by applying the estimated annual effective tax rate to year-to-date pretax income or loss and adjusting for discrete tax items in the period. The differences between our GAAP and non-GAAP effective tax rates were primarily due to the net tax effects of the excluded items, coupled with larger pre-tax losses for GAAP purposes versus smaller pre-tax losses or income for non-GAAP purposes. LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP INCOME (LOSS) FROM OPERATIONS (1) (Unaudited) (Dollars in thousands) For the Three Months Ended For the Nine Months Ended December 31, December 31,2022
2021
2022
2021
Loss from continuing operations(23,949
)
(13,786
)
(78,673
)
(37,569
)
Excluded items: Purchased intangible asset amortization (cost of revenue)4,209
4,647
13,489
13,904
Non-cash stock compensation (cost of revenue and operating expenses)
29,624
23,758
81,142
61,475
Transformation costs (general and administrative)
4,112
-
5,362
-
Restructuring and merger charges (gains, losses, and other)
11,743
-
25,593
1,296
Total excluded items
49,688
28,405
125,586
76,675
Income from continuing operations before excluded items
25,739
14,619
46,913
39,106
(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures and the material limitations on the usefulness of these measures, please see Appendix A.
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES RECONCILIATION OF ADJUSTED EBITDA (1) (Unaudited) (Dollars in thousands) For the Three Months Ended For the Nine Months Ended December 31, December 31,2022
2021
2022
2021
Net loss from continuing operations(30,520
)
(15,375
)
(88,174
)
(4,441
)
Income tax expense (benefit)5,835
1,348
11,712
(2,618
)
Other expense (income)736
241
(2,211
)
(30,510
)
Loss from operations(23,949
)
(13,786
)
(78,673
)
(37,569
)
Depreciation and amortization5,131
5,827
16,561
18,231
EBITDA
(18,818
)
(7,959
)
(62,112
)
(19,338
)
Other adjustments: Non-cash stock compensation (cost of revenue and operating expenses)29,624
23,758
81,142
61,475
Transformation costs (general and administrative)
4,112
-
5,362
-
Restructuring and merger charges (gains, losses, and other)
11,743
-
25,593
1,296
Other adjustments
45,479
23,758
112,097
62,771
Adjusted EBITDA
26,661
15,799
49,985
43,433
(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A.
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands) December 31, March 31, $ %2022
2022
Variance Variance Assets Current assets: Cash and cash equivalents453,516
600,162
(146,646
)
(24.4
%)
Trade accounts receivable, net173,409
148,343
25,066
16.9
%
Refundable income taxes, net27,097
30,354
(3,257
)
(10.7
%)
Other current assets42,172
36,975
5,197
14.1
%
Total current assets696,194
815,834
(119,640
)
(14.7
%)
Property and equipment42,954
45,001
(2,047
)
(4.5
%)
Less - accumulated depreciation and amortization34,145
33,470
675
2.0
%
Property and equipment, net8,809
11,531
(2,722
)
(23.6
%)
Intangible assets, net13,203
26,718
(13,515
)
(50.6
%)
Goodwill363,129
363,845
(716
)
(0.2
%)
Deferred commissions, net32,717
30,594
2,123
6.9
%
Other assets, net52,431
85,214
(32,783
)
(38.5
%)
1,166,483
1,333,736
(167,253
)
(12.5
%)
Liabilities and Stockholders' Equity Current liabilities: Trade accounts payable83,938
83,197
741
0.9
%
Accrued payroll and related expenses33,250
39,188
(5,938
)
(15.2
%)
Other accrued expenses42,394
46,067
(3,673
)
(8.0
%)
Deferred revenue16,195
16,114
81
0.5
%
Total current liabilities175,777
184,566
(8,789
)
(4.8
%)
Other liabilities79,097
86,110
(7,013
)
(8.1
%)
Stockholders' equity: Preferred stock-
-
-
n/a
Common stock
15,205
14,984
221
1.5
%
Additional paid-in capital1,810,383
1,721,118
89,265
5.2
%
Retained earnings1,333,655
1,420,993
(87,338
)
(6.1
%)
Accumulated other comprehensive income4,182
5,730
(1,548
)
(27.0
%)
Treasury stock, at cost(2,251,816
)
(2,099,765
)
(152,051
)
(7.2
%)
Total stockholders' equity911,609
1,063,060
(151,451
)
(14.2
%)
1,166,483
1,333,736
(167,253
)
(12.5
%)
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) For the Three Months Ended December 31,2022
2021
Cash flows from operating activities: Net loss(29,684
)
(15,375
)
Earnings from discontinued operations, net of tax(836
)
-
Non-cash operating activities: Depreciation and amortization
5,131
5,827
Loss on disposal or impairment of assets
4,124
-
Lease impairments
5,940
-
Gain on distribution from retained profits interest
-
(183
)
Provision for doubtful accounts613
1,845
Deferred income taxes
(14
)
315
Non-cash stock compensation expense
29,624
23,758
Changes in operating assets and liabilities: Accounts receivable
(15,722
)
(27,803
)
Deferred commissions(1,203
)
(1,495
)
Other assets(7,372
)
(1,331
)
Accounts payable and other liabilities20,168
34,358
Income taxes
5,454
1,630
Deferred revenue
(453
)
3,927
Net cash provided by operating activities
15,770
25,473
Cash flows from investing activities: Capital expenditures
(179
)
(1,316
)
Purchases of investments(3,000
)
-
Proceeds from sales of investments
3,000
-
Purchases of strategic investments
(500
)
-
Distribution from retained profits interest
-
184
Cash paid in acquisition, net of cash received
-
(2,008
)
Net cash used in investing activities(679
)
(3,140
)
Cash flows from financing activities: Proceeds related to the issuance of common stock under stock and employee benefit plans1,664
1,905
Shares repurchased for tax withholdings upon vesting of stock-based awards
(764
)
(1,674
)
Acquisition of treasury stock(49,906
)
(5,147
)
Net cash used in financing activities(49,006
)
(4,916
)
Cash flows from discontinued operations: From operating activities836
-
Net cash provided by discontinued operations
836
-
Effect of exchange rate changes on cash
993
(48
)
Net change in cash and cash equivalents(32,086
)
17,369
Cash and cash equivalents at beginning of period
485,602
544,321
Cash and cash equivalents at end of period
453,516
561,690
Supplemental cash flow information: Cash paid (received) during the period for: Income taxes
(751
)
(246
)
Operating lease assets obtained in exchange for operating lease liabilities-
17,211
Purchases of property, plant, & equipment, net remaining unpaid at end of period
77
353
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) For the Nine Months Ended December 31,
2022
2021
Cash flows from operating activities: Net loss(87,338
)
(4,441
)
Earnings from discontinued operations, net of tax(836
)
-
Non-cash operating activities: Depreciation and amortization
16,561
18,231
Loss on disposal or impairment of assets
4,121
142
Lease impairments
18,165
-
Gain on sale of strategic investments
(194
)
-
Gain on distribution from retained profits interest
-
(30,235
)
Provision for doubtful accounts1,728
3,127
Deferred income taxes
204
(456
)
Non-cash stock compensation expense81,142
61,475
Changes in operating assets and liabilities: Accounts receivable
(27,171
)
(45,876
)
Deferred commissions(2,123
)
(6,864
)
Other assets1,588
22,077
Accounts payable and other liabilities
(9,309
)
(2,471
)
Income taxes6,967
998
Deferred revenue
271
3,426
Net cash provided by operating activities
3,776
19,133
Cash flows from investing activities: Capital expenditures
(4,593
)
(2,619
)
Purchases of investments(3,000
)
-
Proceeds from sales of investments
3,000
-
Purchases of strategic investments
(500
)
-
Proceeds from sales of strategic investments
400
-
Distribution from retained profits interest
-
31,184
Cash paid in acquisition, net of cash received
-
(10,376
)
Net cash provided by (used in) investing activities(4,693
)
18,189
Cash flows from financing activities: Proceeds related to the issuance of common stock under stock and employee benefit plans
6,255
6,183
Shares repurchased for tax withholdings upon vesting of stock-based awards
(2,054
)
(14,216
)
Acquisition of treasury stock(149,997
)
(49,224
)
Net cash used in financing activities(145,796
)
(57,257
)
Cash flows from discontinued operations: From operating activities836
-
Net cash provided by discontinued operations
836
-
Effect of exchange rate changes on cash
(769
)
(62
)
Net change in cash and cash equivalents(146,646
)
(19,997
)
Cash and cash equivalents at beginning of period600,162
581,687
Cash and cash equivalents at end of period
453,516
561,690
Supplemental cash flow information: Cash paid (received) during the period for: Income taxes
3,418
(2,815
)
Operating lease assets obtained in exchange for operating lease liabilities-
52,902
Purchases of property, plant, & equipment, net remaining unpaid at end of period
77
353
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES CALCULATION OF FREE CASH FLOW TO EQUITY (1) (Unaudited) (Dollars in thousands) 06/30/21 09/30/21 12/31/21 03/31/22 FY2022 06/30/22 09/30/22 12/31/22 FY2023 Net Cash Provided by (Used in) Operating Activities-Continuing Operations
(17,241
)
10,901
25,473
58,944
78,077
(33,369
)
21,375
15,770
3,776
Less: Capital expenditures
(427
)
(876
)
(1,316
)
(1,880
)
(4,499
)
(1,741
)
(2,673
)
(179
)
(4,593
)
Free Cash Flow to Equity(17,668
)
10,025
24,157
57,064
73,578
(35,110
)
18,702
15,591
(817
)
(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures and the material limitations on the usefulness of these measures, please see Appendix A.
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands, except per share amounts) FY23 to FY22 06/30/21 09/30/21 12/31/21 03/31/22 FY2022 06/30/22 09/30/22 12/31/22 FY2023 % $ Revenues119,038
127,290
140,604
141,725
528,657
142,243
147,099
158,615
447,957
14.1
%
18,011
Cost of revenue
34,315
35,079
38,557
39,476
147,427
41,021
42,304
43,287
126,612
13.5
%
4,730
Gross profit
84,723
92,211
102,047
102,249
381,230
101,222
104,795
115,328
321,345
13.6
%
12,584
% Gross margin
71.2
%
72.4
%
72.6
%
72.1
%
72.1
%
71.2
%
71.2
%
72.7
%
71.7
%
Operating expenses Research and development34,776
35,788
41,870
45,501
157,935
47,661
46,139
43,175
136,975
3.6
%
1,305
Sales and marketing
41,979
39,509
46,324
54,951
182,763
51,280
45,949
47,702
144,931
3.5
%
1,378
General and administrative
24,291
23,078
27,639
29,583
104,591
27,144
28,718
36,657
92,519
39.1
%
9,018
Gains, losses and other items, net
1,278
18
-
183
1,479
739
13,111
11,743
25,593
n/a
11,743
Total operating expenses
102,324
98,393
115,833
130,218
446,768
126,824
133,917
139,277
400,018
23.8
%
23,444
Loss from operations
(17,601
)
(6,182
)
(13,786
)
(27,969
)
(65,538
)
(25,602
)
(29,122
)
(23,949
)
(78,673
)
(164.4
%)
(10,163
)
% Margin-14.8
%
-4.9
%
-9.8
%
-19.7
%
-12.4
%
-18.0
%
-19.8
%
-15.1
%
-17.6
%
Total other income (expense), net30,601
150
(241
)
(47
)
30,463
699
2,248
(736
)
2,211
(330.0
%)
(495
)
Loss from continuing operations before income taxes13,000
(6,032
)
(14,027
)
(28,016
)
(35,075
)
(24,903
)
(26,874
)
(24,685
)
(76,462
)
(176.7
%)
(10,658
)
Income taxes expense (benefit)(4,365
)
399
1,348
1,376
(1,242
)
2,315
3,562
5,835
11,712
1124.6
%
4,487
Net loss from continuing operations
17,365
(6,431
)
(15,375
)
(29,392
)
(33,833
)
(27,218
)
(30,436
)
(30,520
)
(88,174
)
(160.6
%)
(54,341
)
Earnings from discontinued operations, net of tax-
-
-
-
-
-
-
836
836
n/a
836
Net earnings (loss)
17,365
(6,431
)
(15,375
)
(29,392
)
(33,833
)
(27,218
)
(30,436
)
(29,684
)
(87,338
)
(222.5
%)
(14,309
)
Diluted earnings (loss) per share0.25
(0.09
)
(0.23
)
(0.43
)
(0.50
)
(0.40
)
(0.45
)
(0.46
)
(1.31
)
(246.2
%)
(0.23
)
Some earnings (loss) per share amounts may not add due to rounding. Basic shares68,328
68,042
68,190
68,283
68,211
68,403
67,096
64,784
66,761
Diluted shares
69,605
69,333
69,938
69,354
69,560
69,195
67,568
65,356
67,373
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP EPS (1) (Unaudited) (Dollars in thousands, except per share amounts) 06/30/21 09/30/21 12/31/21 03/31/22 FY2022 06/30/22 09/30/22 12/31/22 FY 2023 Loss from continuing operations before income taxes
13,000
(6,032
)
(14,027
)
(28,016
)
(35,075
)
(24,903
)
(26,874
)
(24,685
)
(76,462
)
Income taxes (benefit)(4,365
)
399
1,348
1,376
(1,242
)
2,315
3,562
5,835
11,712
Net loss from continuing operations
17,365
(6,431
)
(15,375
)
(29,392
)
(33,833
)
(27,218
)
(30,436
)
(30,520
)
(88,174
)
Earnings from discontinued operations, net of tax-
-
-
-
-
-
-
836
836
Net earnings (loss)
17,365
(6,431
)
(15,375
)
(29,392
)
(33,833
)
(27,218
)
(30,436
)
(29,684
)
(87,338
)
Earnings (loss) per share: Basic0.25
(0.09
)
(0.23
)
(0.43
)
(0.50
)
(0.40
)
(0.45
)
(0.46
)
(1.31
)
Diluted0.25
(0.09
)
(0.23
)
(0.43
)
(0.50
)
(0.40
)
(0.45
)
(0.46
)
(1.30
)
Excluded items: Purchased intangible asset amortization (cost of revenue)4,645
4,612
4,647
4,807
18,711
4,643
4,637
4,209
13,489
Non-cash stock compensation (cost of revenue and operating expenses)
18,496
19,221
23,758
25,782
87,257
24,225
27,293
29,624
81,142
Restructuring and merger charges (gains, losses, and other)
1,278
18
-
183
1,479
739
13,111
11,743
25,593
Transformation costs (general and administrative)
-
-
-
-
-
-
1,250
4,112
5,362
Gain on retained profits interest (other income)
(30,052
)
-
(183
)
-
(30,235
)
-
-
-
-
Total excluded items from continuing operations
(5,633
)
23,851
28,222
30,772
77,212
29,607
46,291
49,688
125,586
Loss from continuing operations before income taxes and excluding items
7,367
17,819
14,195
2,756
42,137
4,704
19,417
25,003
49,124
Income taxes expense (benefit)
865
(12
)
4,271
3,391
8,515
1,237
4,557
6,468
12,262
Non-GAAP net earnings (loss) from continuing operations
6,502
17,831
9,924
(635
)
33,622
3,467
14,860
18,535
36,862
Non-GAAP earnings (loss) per share from continuing operations: Basic
0.10
0.26
0.15
(0.01
)
0.49
0.05
0.22
0.29
0.55
Diluted
0.09
0.26
0.14
(0.01
)
0.48
0.05
0.22
0.28
0.55
Basic weighted average shares
68,328
68,042
68,190
68,283
68,211
68,403
67,096
64,784
66,761
Diluted weighted average shares
69,605
69,333
69,938
68,283
69,560
69,195
67,568
65,356
67,373
Some totals may not add due to rounding
(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures and the material limitations on the usefulness of these measures, please see Appendix A.
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP EXPENSES (1) (Unaudited) (Dollars in thousands) 06/30/21 09/30/21 12/31/21 03/31/22 FY2022 06/30/22 09/30/22 12/31/22 FY2023 Expenses, continuing operations: Cost of revenue34,315
35,079
38,557
39,476
147,427
41,021
42,304
43,287
126,612
Research and development
34,776
35,788
41,870
45,501
157,935
47,661
46,139
43,175
136,975
Sales and marketing
41,979
39,509
46,324
54,951
182,763
51,280
45,949
47,702
144,931
General and administrative
24,291
23,078
27,639
29,583
104,591
27,144
28,718
36,657
92,519
Gains, losses and other items, net
1,278
18
-
183
1,479
739
13,111
11,743
25,593
Gross profit, continuing operations:
84,723
92,211
102,047
102,249
381,230
101,222
104,795
115,328
321,345
% Gross margin
71.2
%
72.4
%
72.6
%
72.1
%
72.1
%
71.2
%
71.2
%
72.7
%
71.7
%
Excluded items: Purchased intangible asset amortization (cost of revenue)4,645
4,612
4,647
4,807
18,711
4,643
4,637
4,209
13,489
Non-cash stock compensation (cost of revenue)
790
948
1,168
1,205
4,111
1,163
1,293
1,208
3,664
Non-cash stock compensation (research and development)
5,348
7,184
9,264
10,316
32,112
11,656
12,360
10,654
34,670
Non-cash stock compensation (sales and marketing)
6,793
6,749
7,329
7,715
28,586
5,884
6,116
5,871
17,871
Non-cash stock compensation (general and administrative)
5,565
4,340
5,997
6,546
22,448
5,522
7,524
11,891
24,937
Restructuring and merger charges (gains, losses, and other)
1,278
18
-
183
1,479
739
13,111
11,743
25,593
Transformation costs (general and administrative)
-
-
-
-
-
-
1,250
4,112
5,362
Gain on retained profits interest (other income)
(30,052
)
-
(183
)
-
(30,235
)
-
-
-
-
Total excluded items
(5,633
)
23,851
28,222
30,772
77,212
29,607
46,291
49,688
125,586
Expenses, continued operations excluding items: Cost of revenue
28,880
29,519
32,742
33,464
124,605
35,215
36,374
37,870
109,459
Research and development
29,428
28,604
32,606
35,185
125,823
36,005
33,779
32,521
102,305
Sales and marketing
35,186
32,760
38,995
47,236
154,177
45,396
39,833
41,831
127,060
General and administrative
18,726
18,738
21,642
23,037
82,143
21,622
19,944
20,654
62,220
Gains, losses and other items, net
-
-
-
-
-
-
-
-
-
Gross profit, continued operations excluding items:
90,158
97,771
107,862
108,261
404,052
107,028
110,725
120,745
338,498
% Gross margin
75.7
%
76.8
%
76.7
%
76.4
%
76.4
%
75.2
%
75.3
%
76.1
%
75.6
%
(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A.
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP OPERATING INCOME (LOSS) GUIDANCE (1) (Unaudited) (Dollars in thousands) For the quarter ending For the year ending March 31, 2023 March 31, 2023 Low High Low High GAAP loss from operations
(26,000
)
(23,000
)
(105,000
)
(102,000
)
Excluded items: Purchased intangible asset amortization
3,000
3,000
17,000
17,000
Non-cash stock compensation
22,000
22,000
103,000
103,000
Restructuring costs
10,000
10,000
36,000
36,000
Transformation costs
4,000
4,000
9,000
9,000
Total excluded items
39,000
39,000
165,000
165,000
Non-GAAP income from operations
$
13,000
$
16,000
$
60,000
$
63,000
(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A.
APPENDIX A
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
Q3 FISCAL 2023 FINANCIAL RESULTS
EXPLANATION OF NON-GAAP MEASURES AND OTHER KEY METRICS
To supplement our financial results, we use non-GAAP measures which exclude certain acquisition related expenses, non-cash stock compensation and restructuring charges. We believe these measures are helpful in understanding our past performance and our future results. Our non-GAAP financial measures and schedules are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated GAAP financial statements. Our management regularly uses these non-GAAP financial measures internally to understand, manage and evaluate our business and to make operating decisions. These measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is also based in part on the performance of our business based on these non-GAAP measures.
Our non-GAAP financial measures, including non-GAAP earnings (loss) per share, income (loss) from operations and adjusted EBITDA reflect adjustments based on the following items, as well as the related income tax effects when applicable:
Purchased intangible asset amortization: We incur amortization of purchased intangibles in connection with our acquisitions. Purchased intangibles include (i) developed technology, (ii) customer and publisher relationships, and (iii) trade names. We expect to amortize for accounting purposes the fair value of the purchased intangibles based on the pattern in which the economic benefits of the intangible assets will be consumed as revenue is generated. Although the intangible assets generate revenue for us, we exclude this item because this expense is non-cash in nature and because we believe the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding our operational performance.
Non-cash stock compensation: Non-cash stock compensation consists of charges for associate restricted stock units, performance shares and stock options in accordance with current GAAP related to stock-based compensation including expense associated with stock-based compensation related to unvested options assumed in connection with our acquisitions. As we apply stock-based compensation standards, we believe that it is useful to investors to understand the impact of the application of these standards to our operational performance. Although stock-based compensation expense is calculated in accordance with current GAAP and constitutes an ongoing and recurring expense, such expense is excluded from non-GAAP results because it is not an expense that typically requires or will require cash settlement by us and because such expense is not used by us to assess the core profitability of our business operations.
Restructuring charges: During the past several years, we have initiated certain restructuring activities in order to align our costs in connection with both our operating plans and our business strategies based on then-current economic conditions. As a result, we recognized costs related to termination benefits for employees whose positions were eliminated, lease and other contract termination charges, and leasehold improvement write offs. These items, reported as gains, losses, and other items, net, are excluded from non-GAAP results because such amounts are not used by us to assess the core profitability of our business operations.
Transformation costs: In previous years, we incurred significant expenses to separate the financial statements of our operating segments, with particular focus on segment-level balance sheets, and to evaluate portfolio priorities. Our criteria for excluding transformation expenses from our non-GAAP measures is as follows: 1) projects are discrete in nature; 2) excluded expenses consist only of third-party consulting fees that we would not incur otherwise; and 3) we do not exclude employee related expenses or other costs associated with the ongoing operations of our business. We substantially completed those projects during the third quarter of fiscal year 2018. Beginning in the fourth quarter of fiscal 2018, and through most of fiscal 2019, we incurred transaction support expenses and system separation costs related to the Company's announced evaluation of strategic options for its Marketing Solutions (AMS) business. In the first and second quarters of fiscal 2021 in response to the potential COVID-19 pandemic impact on our business and again during fiscal 2023 in response to macroeconomic conditions, we incurred significant costs associated with the assessment of strategic and operating plans, including our long-term location strategy, and assistance in implementing the restructuring activities as a result of this assessment. Our criteria for excluding these costs are the same. We believe excluding these items from our non-GAAP financial measures is useful for investors and provides meaningful supplemental information.
Our non-GAAP financial schedules are:
Non-GAAP EPS, Non-GAAP Income from Operations, and Non-GAAP expenses: Our Non-GAAP earnings per share, Non-GAAP income from operations, and Non-GAAP expenses reflect adjustments as described above, as well as the related tax effects where applicable.
Adjusted EBITDA: Adjusted EBITDA is defined as net income from continuing operations before income taxes, other expenses, depreciation and amortization, and including adjustments as described above. We use Adjusted EBITDA to measure our performance from period to period both at the consolidated level as well as within our operating segments and to compare our results to those of our competitors. We believe that the inclusion of Adjusted EBITDA provides useful supplementary information to and facilitates analysis by investors in evaluating the Company's performance and trends. The presentation of Adjusted EBITDA is not meant to be considered in isolation or as an alternative to net earnings as an indicator of our performance.
Free Cash Flow to Equity: To supplement our statement of cash flows, we use a non-GAAP measure of cash flow to analyze cash flows generated from operations. Free cash flow to equity is defined as operating cash flow less cash used by investing activities (excluding the impact of cash paid in acquisitions), less required payments of debt, and excluding the impact of discontinued operations. Management believes that this measure of cash flow is meaningful since it represents the amount of money available from continuing operations for the Company's discretionary spending after funding all required obligations including scheduled debt payments. The presentation of non-GAAP free cash flow to equity is not meant to be considered in isolation or as an alternative to cash flows from operating activities as a measure of liquidity.
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