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LiveRamp Announces Second Quarter Results

Total Revenue Up 16% and Subscription Revenue Up 14%

Raising FY23 Operating Income Guidance

$100 Million of Stock Repurchased Fiscal Year to Date

LiveRamp® (NYSE: RAMP), the leading global data enablement platform, today announced its financial results for the quarter ended September 30, 2022.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20221108006127/en/

Q2 Financial Highlights1

  • Total revenue was $147 million, up 16%.
  • Subscription revenue was $120 million, up 14%, and accounted for 81% of total revenue.
  • Marketplace & Other revenue was $27 million, up 25%.
  • GAAP gross profit was $105 million, up 14%. GAAP gross margin of 71% contracted by 1 percentage point. Non-GAAP gross profit was $111 million, up 13%. Non-GAAP gross margin of 75% contracted by 2 percentage points.
  • GAAP operating loss was $29 million compared to $6 million in the prior year period. Non-GAAP operating income was $17 million compared to $18 million in the prior year period.
  • GAAP loss per share was $0.45, and non-GAAP earnings per share were $0.22.
  • Net cash provided by operating activities was $21 million compared to $11 million in the prior year period.
  • During the quarter, the Company repurchased approximately 1.7 million shares for $40 million under its current share repurchase program. Fiscal year to date the Company has repurchased approximately 3.8 million shares for $100 million. Since inception of the program in August 2011, the Company has returned approximately $1.3 billion in capital to shareholders.

__________

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.

“Despite challenging macroeconomic conditions, we delivered healthy second quarter results, with 16% revenue growth and strong free cash flow,” said LiveRamp CEO Scott Howe. “Our second quarter results demonstrate the vital role LiveRamp plays for our customers. We continue to lead the industry in identity resolution and data collaboration through our Safe Haven® platform.”

“In this period of uncertainty, we’ve tightened our belts,” added President and CFO Warren Jenson. “As a result, we’re increasing our FY23 non-GAAP operating income guidance to approximately $60 million, representing growth of more than 40% year-on-year.”

GAAP and Non-GAAP Results

The following table summarizes the Company’s financial results for its second fiscal quarter ($ in millions):

 

Q2 Fiscal 2023

 

Q2 Fiscal 2022

 

Results

 

Results

 

GAAP

Non-GAAP

 

GAAP

Non-GAAP

Subscription revenue

$120

 

$105

YoY change %

14%

 

 

23%

 

Marketplace & other revenue

$27

 

$22

YoY change %

25%

 

 

16%

 

Total revenue

$147

 

$127

YoY change %

16%

 

 

22%

 

 

 

 

 

 

 

Gross profit

$105

$111

 

$92

$98

% Gross margin

71%

75%

 

72%

77%

YoY change, pts

(1) pt

(2) pts

 

6 pts

5 pts

 

 

 

 

 

 

Operating income (loss)

($29)

$17

 

($6)

$18

% Operating margin

(20%)

12%

 

(5%)

14%

YoY change, pts

(15) pts

(2) pts

 

21 pts

13 pts

 

 

 

 

 

 

Net earnings (loss)

($30)

$15

 

($6)

$18

Earnings (loss) per share

($0.45)

$0.22

 

($0.09)

$0.26

 

 

 

 

 

 

Shares to Calculate EPS

67.1

67.6

 

68.0

69.3

YoY change %

(1%)

(3%)

 

3%

1%

Net operating cash flow

$21

 

$11

Free cash flow to equity

$19

 

$10

 

 

 

 

 

 

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 125 supply-side platforms (SSPs) and demand-side platforms (DSPs) live or committed to bid on RampID™ and ATS, including The Trade Desk, Amobee, Criteo, dataxu, 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 1,500 publishers, representing more than 11,500 deployed domains, have integrated ATS worldwide, including Amazon Publisher Services, Microsoft, Hearst, CafeMedia, Leaf Group, Prisma Media and Burda.
  • The Company recently announced an expanded partnership with Meta, enabling marketers to privately and securely use their first-party data to target, measure, and optimize campaigns to drive greater returns from their marketing investments -- all powered by LiveRamp's people-based, privacy-first identifier, RampID. LiveRamp's ATS is also now available for marketers to connect to Facebook's Conversions API (CAPI), a tool that creates, measures and optimizes advertising campaigns in flight.
  • In September 2022, the Company announced that its identity solutions will be directly integrated with Genie, Salesforce’s new real-time customer data platform (CDP). Genie customers will have access to LiveRamp tools to build more accurate audiences powered by RampID™, the Company’s people-based identifier that provides access to 125+ DSPs/SSPs and our network of publishers.
  • LiveRamp added 10 net new direct subscription customers in the second quarter. Customer count at quarter end was 920, up from 870 a year ago.
  • LiveRamp has 92 customers whose subscription contracts exceed $1 million in annual revenue, up 15% compared to the prior year period.
  • During the second quarter, subscription net retention was 106% and platform net retention was 108%.
  • Current remaining performance obligations (CRPO), which is contracted and committed revenue expected to be recognized over the next 12 months, was $293 million, up 10% compared to the prior year period.
  • During the second quarter, the Company announced it will reduce its real estate footprint resulting in restructuring charges of $12 million. Subsequent to the end of the second quarter, the Company announced it will reduce its current workforce by approximately 10% and further reduce its real estate footprint. Collectively, these actions are expected to result in annualized operating expense savings of $30 million to $35 million.

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 third quarter of fiscal 2023, LiveRamp expects to report:

  • Revenue of approximately $158 million, an increase of 12% year-over-year
  • GAAP operating loss of approximately $27 million
  • Non-GAAP operating income of approximately $22 million

For fiscal 2023, LiveRamp raises its guidance and now expects to report:

  • Revenue of between $595 million and $600 million, an increase of 13% year-over-year
  • GAAP operating loss of approximately $102 million
  • Non-GAAP operating income of approximately $60 million

Conference 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 leading data connectivity platform for the safe and effective use of data. Powered by core identity capabilities and an unparalleled network, LiveRamp enables companies and their partners to better connect, control, and activate data to transform customer experiences and generate more valuable business outcomes. LiveRamp’s fully interoperable and neutral infrastructure delivers end-to-end addressability for the world’s top brands, agencies, and publishers. 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 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.

LiveRamp, RampID, 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
September 30,
$ %

2022

 

2021

 

Variance Variance
 
Revenues

147,099

 

127,290

 

19,809

 

15.6

%

 
Cost of revenue

42,304

 

35,079

 

7,225

 

20.6

%

Gross profit

104,795

 

92,211

 

12,584

 

13.6

%

% Gross margin

71.2

%

72.4

%

 
Operating expenses:
Research and development

46,139

 

35,788

 

10,351

 

28.9

%

Sales and marketing

45,949

 

39,509

 

6,440

 

16.3

%

General and administrative

28,718

 

23,078

 

5,640

 

24.4

%

Gains, losses and other items, net

13,111

 

18

 

13,093

 

n/a

 

Total operating expenses

133,917

 

98,393

 

35,524

 

36.1

%

 
Loss from operations

(29,122

)

(6,182

)

(22,940

)

(371.1

%)

% Margin

-19.8

%

-4.9

%

 
Total other income, net

2,248

 

150

 

2,098

 

1398.7

%

 
Loss before income taxes

(26,874

)

(6,032

)

(20,842

)

(345.5

%)

 
Income tax expense

3,562

 

399

 

3,163

 

792.7

%

 
Net loss

(30,436

)

(6,431

)

(24,005

)

(373.3

%)

 
Basic loss per share

(0.45

)

(0.09

)

(0.36

)

(379.9

%)

 
Diluted loss per share:

(0.45

)

(0.09

)

(0.36

)

(379.9

%)

 
Basic weighted average shares

67,096

 

68,042

 

 
Diluted weighted average shares

67,096

 

68,042

 

 
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
 
 
For the Six Months Ended
September 30,

 

 

 

 

$

 

%

2022

 

 

2021

 

 

Variance

 

Variance

 
Revenues

289,342

 

246,328

 

43,014

 

17.5

%

 
Cost of revenue

83,325

 

69,394

 

13,931

 

20.1

%

Gross profit

206,017

 

176,934

 

29,083

 

16.4

%

% Gross margin

71.2

%

71.8

%

 
Operating expenses:
Research and development

93,800

 

70,564

 

23,236

 

32.9

%

Sales and marketing

97,229

 

81,488

 

15,741

 

19.3

%

General and administrative

55,862

 

47,369

 

8,493

 

17.9

%

Gains, losses and other items, net

13,850

 

1,296

 

12,554

 

968.7

%

Total operating expenses

260,741

 

200,717

 

60,024

 

29.9

%

 
Loss from operations

(54,724

)

(23,783

)

(30,941

)

(130.1

%)

% Margin

-18.9

%

-9.7

%

 
Total other income, net

2,947

 

30,751

 

(27,804

)

(90.4

%)

 
Income (loss) before income taxes

(51,777

)

6,968

 

(58,745

)

(843.1

%)

 
Income tax expense (benefit)

5,877

 

(3,966

)

9,843

 

248.2

%

 
Net earnings (loss)

(57,654

)

10,934

 

(68,588

)

(627.3

%)

 
Basic earnings (loss) per share

(0.85

)

0.16

 

(1.01

)

(630.7

%)

 
Diluted earnings (loss) per share:

(0.85

)

0.16

 

(1.01

)

(640.7

%)

 
Basic weighted average shares

67,750

 

68,185

 

 
Diluted weighted average shares

67,750

 

69,473

 

 
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 Six Months Ended
September 30, September 30,

2022

2021

2022

2021

 
 
Income (loss) before income taxes

(26,874

)

(6,032

)

(51,777

)

6,968

 

 
Income tax expense (benefit)

3,562

 

399

 

5,877

 

(3,966

)

 
Net earnings (loss)

(30,436

)

(6,431

)

(57,654

)

10,934

 

 
Earnings (loss per share):
Basic

(0.45

)

(0.09

)

(0.85

)

0.16

 

 
Diluted

(0.45

)

(0.09

)

(0.85

)

0.16

 

 
Excluded items:
Purchased intangible asset amortization (cost of revenue)

,637

 

4,612

 

9,280

 

9,257

 

Non-cash stock compensation (cost of revenue and operating expenses)

27,293

 

19,221

 

51,518

 

37,717

 

Transformation costs (general and administrative)

1,250

 

-

 

1,250

 

-

 

Restructuring and merger charges (gains, losses, and other)

13,111

 

18

 

13,850

 

1,296

 

Gain on retained profits interest (other income)

-

 

-

 

-

 

(30,052

)

 
Total excluded items

46,291

 

23,851

 

75,898

 

18,218

 

 
Income before income taxes and excluding items

19,417

 

17,819

 

24,121

 

25,186

 

 
Income tax expense (benefit) (2)

4,557

 

(12

)

5,794

 

853

 

 
Non-GAAP net earnings

14,860

 

17,831

 

18,327

 

24,333

 

 
Non-GAAP earnings per share:
Basic

0.22

 

0.26

 

0.27

 

0.36

 

 
Diluted

0.22

 

0.26

 

0.27

 

0.35

 

 
Basic weighted average shares

67,096

 

68,042

 

67,750

 

68,185

 

 
Diluted weighted average shares

67,568

 

69,333

 

68,384

 

69,473

 

 

(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 Six Months Ended
September 30, September 30,

2022

 

2021

 

2022

 

2021

 

 
 
Loss from operations

(29,122

)

(6,182

)

(54,724

)

(23,783

)

 
Excluded items:
Purchased intangible asset amortization (cost of revenue)

4,637

 

4,612

 

9,280

 

9,257

 

Non-cash stock compensation (cost of revenue and operating expenses)

27,293

 

19,221

 

51,518

 

37,717

 

Transformation costs (general and administrative)

1,250

 

-

 

1,250

 

-

 

Restructuring and merger charges (gains, losses, and other)

13,111

 

18

 

13,850

 

1,296

 

 
Total excluded items

46,291

 

23,851

 

75,898

 

48,270

 

 
Income from operations before excluded items

17,169

 

17,669

 

21,174

 

24,487

 

 

(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 Six Months Ended
September 30, September 30,

2022

 

2021

 

2022

 

2021

 

 
 
Net earnings (loss)

(30,436

)

(6,431

)

(57,654

)

10,934

 

 
Income tax expense (benefit)

3,562

 

399

 

5,877

 

(3,966

)

 
Other income

(2,248

)

(150

)

(2,947

)

(30,751

)

 
Income (loss) from operations

(29,122

)

(6,182

)

(54,724

)

(23,783

)

 
Depreciation and amortization

5,689

 

5,819

 

11,430

 

12,404

 

 
EBITDA

(23,433

)

(363

)

(43,294

)

(11,379

)

 
Other adjustments:
Non-cash stock compensation (cost of revenue and operating expenses)

27,293

 

19,221

 

51,518

 

37,717

 

Transformation costs (general and administrative)

1,250

 

-

 

1,250

 

-

 

Restructuring and merger charges (gains, losses, and other)

13,111

 

18

 

13,850

 

1,296

 

 
Other adjustments

41,654

 

19,239

 

66,618

 

39,013

 

 
Adjusted EBITDA

18,221

 

18,876

 

23,324

 

27,634

 

 

(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)
 
September 30, March 31, $ %

2022

 

2022

 

Variance Variance
 
Assets
Current assets:
Cash and cash equivalents

485,602

 

600,162

 

(114,560

)

(19.1

%)

Trade accounts receivable, net

157,711

 

148,343

 

9,368

 

6.3

%

Refundable income taxes

29,971

 

30,354

 

(383

)

(1.3

%)

Other current assets

31,512

 

36,975

 

(5,463

)

(14.8

%)

 
Total current assets

704,796

 

815,834

 

(111,038

)

(13.6

%)

 
Property and equipment

45,614

 

45,001

 

613

 

1.4

%

Less - accumulated depreciation and amortization

34,573

 

33,470

 

1,103

 

3.3

%

 
Property and equipment, net

11,041

 

11,531

 

(490

)

(4.2

%)

 
Intangible assets, net

17,394

 

26,718

 

(9,324

)

(34.9

%)

Goodwill

362,517

 

363,845

 

(1,328

)

(0.4

%)

Deferred commissions, net

31,514

 

30,594

 

920

 

3.0

%

Other assets, net

61,237

 

85,214

 

(23,977

)

(28.1

%)

 

1,188,499

 

1,333,736

 

(145,237

)

(10.9

%)

 
Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable

70,312

 

83,197

 

(12,885

)

(15.5

%)

Accrued payroll and related expenses

22,822

 

39,188

 

(16,366

)

(41.8

%)

Other accrued expenses

40,667

 

46,067

 

(5,400

)

(11.7

%)

Deferred revenue

16,397

 

16,114

 

283

 

1.8

%

 
Total current liabilities

150,198

 

184,566

 

(34,368

)

(18.6

%)

 
Other liabilities

78,232

 

86,110

 

(7,878

)

(9.1

%)

 
Stockholders' equity:
Preferred stock

-

 

-

 

-

 

n/a

 

Common stock

15,148

 

14,984

 

164

 

1.1

%

Additional paid-in capital

1,780,803

 

1,721,118

 

59,685

 

3.5

%

Retained earnings

1,363,339

 

1,420,993

 

(57,654

)

(4.1

%)

Accumulated other comprehensive income

1,925

 

5,730

 

(3,805

)

(66.4

%)

Treasury stock, at cost

(2,201,146

)

(2,099,765

)

(101,381

)

(4.8

%)

Total stockholders' equity

960,069

 

1,063,060

 

(102,991

)

(9.7

%)

 

1,188,499

 

1,333,736

 

(145,237

)

(10.9

%)

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
 
For the Three Months Ended

 

September 30,
 

2022

 

2021

 

 
Cash flows from operating activities:
Net loss

(30,436

)

(6,431

)

Non-cash operating activities:
Depreciation and amortization

5,689

 

5,819

 

Loss (gain) on disposal or impairment of assets

(192

)

29

 

Lease impairments

12,225

 

-

 

Provision for doubtful accounts

118

 

327

 

Deferred income taxes

31

 

141

 

Non-cash stock compensation expense

27,293

 

19,221

 

Changes in operating assets and liabilities:
Accounts receivable

(3,716

)

(11,024

)

Deferred commissions

(551

)

(1,986

)

Other assets

4,608

 

4,072

 

Accounts payable and other liabilities

5,080

 

447

 

Income taxes

(618

)

368

 

Deferred revenue

1,844

 

(82

)

Net cash provided by operating activities

21,375

 

10,901

 

Cash flows from investing activities:
Capital expenditures

(2,673

)

(876

)

Proceeds from sale of strategic investment

400

 

-

 

Net cash used in investing activities

(2,273

)

(876

)

Cash flows from financing activities:
Proceeds related to the issuance of common stock under stock and employee benefit plans

2

 

997

 

Shares repurchased for tax withholdings upon vesting of stock-based awards

(708

)

(1,181

)

Acquisition of treasury stock

(40,038

)

(15,000

)

Net cash used in financing activities

(40,744

)

(15,184

)

Effect of exchange rate changes on cash

(1,010

)

(275

)

 
Net change in cash and cash equivalents

(22,652

)

(5,434

)

Cash and cash equivalents at beginning of period

508,254

 

549,755

 

Cash and cash equivalents at end of period

485,602

 

544,321

 

 
Supplemental cash flow information:
Cash paid (received) during the period for:
Income taxes

4,165

 

(118

)

Operating lease assets obtained in exchange for operating lease liabilities

-

 

35,691

 

Purchases of property, plant, & equipment, net remaining unpaid at end of period

187

 

195

 

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
 
For the Six Months Ended
September 30,
 

2022

 

2021

 

 
Cash flows from operating activities:
Net earnings (loss)

(57,654

)

10,934

 

Non-cash operating activities:
Depreciation and amortization

11,430

 

12,404

 

Loss on disposal or impairment of assets

(197

)

142

 

Lease impairments

12,225

 

-

 

Gain on distribution from retained profits interest

-

 

(30,052

)

Provision for doubtful accounts

1,115

 

1,282

 

Deferred income taxes

218

 

(771

)

Non-cash stock compensation expense

51,518

 

37,717

 

Changes in operating assets and liabilities:
Accounts receivable

(11,449

)

(18,073

)

Deferred commissions

(920

)

(5,369

)

Other assets

8,960

 

23,408

 

Accounts payable and other liabilities

(29,477

)

(36,829

)

Income taxes

1,513

 

(632

)

Deferred revenue

724

 

(501

)

Net cash used in operating activities

(11,994

)

(6,340

)

Cash flows from investing activities:
Capital expenditures

(4,414

)

(1,303

)

Proceeds from sale of strategic investment

400

 

-

 

Distribution from retained profits interest

-

 

31,000

 

Cash paid in acquisition, net of cash received

-

 

(8,368

)

Net cash provided by (used in) investing activities

(4,014

)

21,329

 

Cash flows from financing activities:
Proceeds related to the issuance of common stock under stock and employee benefit plans

4,591

 

4,278

 

Shares repurchased for tax withholdings upon vesting of stock-based awards

(1,290

)

(12,542

)

Acquisition of treasury stock

(100,091

)

(44,077

)

Net cash used in financing activities

(96,790

)

(52,341

)

Effect of exchange rate changes on cash

(1,762

)

(14

)

 
Net change in cash and cash equivalents

(114,560

)

(37,366

)

Cash and cash equivalents at beginning of period

600,162

 

581,687

 

Cash and cash equivalents at end of period

485,602

 

544,321

 

 
Supplemental cash flow information:
Cash paid (received) during the period for:
Income taxes

4,169

 

(2,569

)

Operating lease assets obtained in exchange for operating lease liabilities

-

 

35,691

 

Purchases of property, plant, & equipment, net remaining unpaid at end of period

187

 

195

 

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 FY2023
 
Net Cash Provided by (Used in) Operating Activities

(17,241)

10,901

25,473

58,944

78,077

(33,369)

21,375

(11,994)

 
Less:
Capital expenditures

(427)

(876)

(1,316)

(1,880)

(4,499)

(1,741)

(2,673)

(4,414)

 
Free Cash Flow to Equity

(17,668)

10,025

24,157

57,064

73,578

(35,110)

18,702

(16,408)

 

(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 FY2023 % $
Revenues

119,038

 

127,290

 

140,604

 

141,725

 

528,657

 

142,243

 

147,099

 

289,342

 

15.6

%

19,809

 

 
Cost of revenue

34,315

 

35,079

 

38,557

 

39,476

 

147,427

 

41,021

 

42,304

 

83,325

 

20.6

%

7,225

 

Gross profit

84,723

 

92,211

 

102,047

 

102,249

 

381,230

 

101,222

 

104,795

 

206,017

 

13.6

%

12,584

 

% Gross margin

71.2

%

72.4

%

72.6

%

72.1

%

72.1

%

71.2

%

71.2

%

71.2

%

 
Operating expenses
Research and development

34,776

 

35,788

 

41,870

 

45,501

 

157,935

 

47,661

 

46,139

 

93,800

 

28.9

%

10,351

 

Sales and marketing

41,979

 

39,509

 

46,324

 

54,951

 

182,763

 

51,280

 

45,949

 

97,229

 

16.3

%

6,440

 

General and administrative

24,291

 

23,078

 

27,639

 

29,583

 

104,591

 

27,144

 

28,718

 

55,862

 

24.4

%

5,640

 

Gains, losses and other items, net

1,278

 

18

 

-

 

183

 

1,479

 

739

 

13,111

 

13,850

 

n/a

 

13,093

 

Total operating expenses

102,324

 

98,393

 

115,833

 

130,218

 

446,768

 

126,824

 

133,917

 

260,741

 

36.1

%

35,524

 

 
Loss from operations

(17,601

)

(6,182

)

(13,786

)

(27,969

)

(65,538

)

(25,602

)

(29,122

)

(54,724

)

(371.1

%)

(22,940

)

% Margin

-14.8

%

-4.9

%

-9.8

%

-19.7

%

-12.4

%

-18.0

%

-19.8

%

-18.9

%

 
Total other income (expense), net

30,601

 

150

 

(241

)

(47

)

30,463

 

699

 

2,248

 

2,947

 

1398.7

%

2,098

 

 
Loss before income taxes

13,000

 

(6,032

)

(14,027

)

(28,016

)

(35,075

)

(24,903

)

(26,874

)

(51,777

)

(345.5

%)

(20,842

)

 
Income taxes expense (benefit)

(4,365

)

399

 

1,348

 

1,376

 

(1,242

)

2,315

 

3,562

 

5,877

 

792.7

%

3,163

 

 
Net earnings (loss)

17,365

 

(6,431

)

(15,375

)

(29,392

)

(33,833

)

(27,218

)

(30,436

)

(57,654

)

(373.3

%)

(24,005

)

 
Diluted earnings (loss) per share

0.25

 

(0.09

)

(0.23

)

(0.43

)

(0.50

)

(0.40

)

(0.45

)

(0.85

)

(379.9

%)

(0.36

)

 
Some earnings (loss) per share amounts may not add due to rounding.
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 FY 2023
 
 
Income (loss) before income taxes

13,000

 

(6,032

)

(14,027

)

(28,016

)

(35,075

)

(24,903

)

(26,874

)

(51,777

)

Income taxes (benefit)

(4,365

)

399

 

1,348

 

1,376

 

(1,242

)

2,315

 

3,562

 

5,877

 

Net earnings (loss)

17,365

 

(6,431

)

(15,375

)

(29,392

)

(33,833

)

(27,218

)

(30,436

)

(57,654

)

 
Earnings (loss) per share:
Basic

0.25

 

(0.09

)

(0.23

)

(0.43

)

(0.50

)

(0.40

)

(0.45

)

(0.85

)

Diluted

0.25

 

(0.09

)

(0.23

)

(0.43

)

(0.50

)

(0.40

)

(0.45

)

(0.84

)

 
Excluded items:
Purchased intangible asset amortization (cost of revenue)

4,645

 

4,612

 

4,647

 

4,807

 

18,711

 

4,643

 

4,637

 

9,280

 

Non-cash stock compensation (cost of revenue and operating expenses)

18,496

 

19,221

 

23,758

 

25,782

 

87,257

 

24,225

 

27,293

 

51,518

 

Restructuring and merger charges (gains, losses, and other)

1,278

 

18

 

-

 

183

 

1,479

 

739

 

13,111

 

13,850

 

Transformation costs (general and administrative)

-

 

-

 

-

 

-

 

-

 

-

 

1,250

 

1,250

 

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

 

75,898

 

 
Income before income taxes and excluding items

7,367

 

17,819

 

14,195

 

2,756

 

42,137

 

4,704

 

19,417

 

24,121

 

Income taxes expense (benefit)

865

 

(12

)

4,271

 

3,391

 

8,515

 

1,237

 

4,557

 

5,794

 

Non-GAAP net earnings (loss)

6,502

 

17,831

 

9,924

 

(635

)

33,622

 

3,467

 

14,860

 

18,327

 

 
Non-GAAP earnings (loss) per share:
Basic

0.10

 

0.26

 

0.15

 

(0.01

)

0.49

 

0.05

 

0.22

 

0.27

 

Diluted

0.09

 

0.26

 

0.14

 

(0.01

)

0.48

 

0.05

 

0.22

 

0.27

 

 
Basic weighted average shares

68,328

 

68,042

 

68,190

 

68,283

 

68,211

 

68,403

 

67,096

 

67,750

 

Diluted weighted average shares

69,605

 

69,333

 

69,938

 

68,283

 

69,560

 

69,195

 

67,568

 

68,384

 

 
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 FY2023
 
Expenses:
Cost of revenue

34,315

 

35,079

 

38,557

 

39,476

 

147,427

 

41,021

 

42,304

 

83,325

 

Research and development

34,776

 

35,788

 

41,870

 

45,501

 

157,935

 

47,661

 

46,139

 

93,800

 

Sales and marketing

41,979

 

39,509

 

46,324

 

54,951

 

182,763

 

51,280

 

45,949

 

97,229

 

General and administrative

24,291

 

23,078

 

27,639

 

29,583

 

104,591

 

27,144

 

28,718

 

55,862

 

Gains, losses and other items, net

1,278

 

18

 

0

 

183

 

1,479

 

739

 

13,111

 

13,850

 

 
Gross profit:

84,723

 

92,211

 

102,047

 

102,249

 

381,230

 

101,222

 

104,795

 

206,017

 

% Gross margin

71.2

%

72.4

%

72.6

%

72.1

%

72.1

%

71.2

%

71.2

%

71.2

%

 
Excluded items:
Purchased intangible asset amortization (cost of revenue)

4,645

 

4,612

 

4,647

 

4,807

 

18,711

 

4,643

 

4,637

 

9,280

 

Non-cash stock compensation (cost of revenue)

790

 

948

 

1,168

 

1,205

 

4,111

 

1,163

 

1,293

 

2,456

 

Non-cash stock compensation (research and development)

5,348

 

7,184

 

9,264

 

10,316

 

32,112

 

11,656

 

12,360

 

24,016

 

Non-cash stock compensation (sales and marketing)

6,793

 

6,749

 

7,329

 

7,715

 

28,586

 

5,884

 

6,116

 

12,000

 

Non-cash stock compensation (general and administrative)

5,565

 

4,340

 

5,997

 

6,546

 

22,448

 

5,522

 

7,524

 

13,046

 

Restructuring and merger charges (gains, losses, and other)

1,278

 

18

 

-

 

183

 

1,479

 

739

 

13,111

 

13,850

 

Transformation costs (general and administrative)

-

 

-

 

-

 

-

 

-

 

-

 

1,250

 

1,250

 

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

 

75,898

 

 
Expenses, excluding items:
Cost of revenue

28,880

 

29,519

 

32,742

 

33,464

 

124,605

 

35,215

 

36,374

 

71,589

 

Research and development

29,428

 

28,604

 

32,606

 

35,185

 

125,823

 

36,005

 

33,779

 

69,784

 

Sales and marketing

35,186

 

32,760

 

38,995

 

47,236

 

154,177

 

45,396

 

39,833

 

85,229

 

General and administrative

18,726

 

18,738

 

21,642

 

23,037

 

82,143

 

21,622

 

19,944

 

41,566

 

Gains, losses and other items, net

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

 
Gross profit, excluding items:

90,158

 

97,771

 

107,862

 

108,261

 

404,052

 

107,028

 

110,725

 

217,753

 

% Gross margin

75.7

%

76.8

%

76.7

%

76.4

%

76.4

%

75.2

%

75.3

%

75.3

%

 

(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
December 31, 2022 March 31, 2023
 
 
GAAP loss from operations

 

(27,000

)

 

(102,000

)

 
Excluded items:
Purchased intangible asset amortization

 

4,000

 

 

17,000

 

Non-cash stock compensation

 

26,000

 

 

105,000

 

Restructuring costs

 

14,000

 

 

33,000

 

Transformation costs

 

5,000

 

 

7,000

 

Total excluded items

 

49,000

 

 

162,000

 

 
Non-GAAP income from operations

$

22,000

 

$

60,000

 

 

(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

Q2 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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