Press Release Details

LiveRamp Announces Second Quarter Results

Nov 09, 2020

Subscription Revenue Up 19%

Operating Cash Flow Positive – Free Cash Flow Positive

Global ATS Momentum Continues to Build

SAN FRANCISCO--(BUSINESS WIRE)-- LiveRamp® (NYSE: RAMP), the leading global data connectivity platform, today announced its financial results for the quarter ended September 30, 2020.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20201109006019/en/

Second Quarter Financial Highlights

  • Total revenue was $105 million, up 16% compared to the prior year period.
  • Subscription revenue was $86 million, up 19% compared to the prior year period and contributed 82% of total revenue.
  • Marketplace & Other revenue was $19 million, up 4% compared to the prior year period.
  • GAAP gross profit was $70 million, up 43% compared to the prior year period. GAAP gross margin of 67% expanded 13 percentage points. Non-GAAP gross profit was $75 million, up 33% compared to the prior year period. Non-GAAP gross margin of 72% expanded 9 percentage points.
  • GAAP operating loss was $27 million compared to a GAAP operating loss of $50 million in the prior year period. Non-GAAP operating income was $1 million compared to a non-GAAP operating loss of $20 million in the prior year period.
  • GAAP loss per share was $0.36, and non-GAAP earnings per share was $0.03.
  • Net cash generated from operating activities was $6 million compared to net cash used by operating activities of $29 million in the prior year period.
  • Cash and cash equivalents totaled $651 million with no debt at quarter end.

A reconciliation between GAAP and non-GAAP results is provided in the schedules to this press release.

“We are playing a critical role in enabling the digital transformations and data-driven strategies of our customers and partners,” said LiveRamp CEO Scott Howe. “The pandemic has put a spotlight on the importance of addressability and measurement, and global brands are increasingly turning to LiveRamp to drive greater media efficiency and higher ROI on their marketing spend. Our recent global success with the Authenticated Traffic Solution (or ATS) reflects this trend. More than 215 publishers worldwide are now committed to ATS, including 60% of the US comScore 50.”

“Our strong, durable and recurring business model was once again on display in the second quarter,” added LiveRamp President and CFO Warren Jenson. “Subscription revenue was up 19%, our gross margin was a record 72%, and we delivered another quarter of non-GAAP operating profit. Looking ahead, we now expect to be profitable on a non-GAAP basis for the full year.”

GAAP and Non-GAAP Results

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

 

Q2 Fiscal 2021

 

Q2 Fiscal 2020

 

Results

 

Results

 

GAAP

Non-GAAP

 

GAAP

Non-GAAP

Subscription revenue

$86

 

$72

YoY change %

19%

 

 

31%

 

Marketplace & other revenue

$19

 

$18

YoY change %

4%

 

 

83%

 

Total revenue

$105

 

$90

YoY change %

16%

 

 

39%

 

 

 

 

 

 

 

Gross profit

$70

$75

 

$49

$56

% Gross margin

67%

72%

 

54%

63%

YoY change, pts

13 pts

9 pts

 

(8 pts)

(6 pts)

 

 

 

 

 

 

Operating income (loss)

($27)

$1

 

($50)

($20)

% Operating margin

(26%)

1%

 

(56%)

(22%)

YoY change, pts

30 pts

23 pts

 

3 pts

0 pts

 

 

 

 

 

 

Net income (loss)

($24)

$2

 

($40)

($15)

YoY change %

nm

nm

 

nm

nm

Earnings (loss) per share

($0.36)

$0.03

 

($0.59)

($0.23)

YoY change %

nm

nm

 

nm

nm

 

 

 

 

 

 

Shares to Calculate EPS

66.0

68.8

 

67.7

67.7

YoY change %

(2%)

2%

 

(13%)

(13%)

Net operating cash flow

$6

 

($29)

YoY change %

nm

 

nm

 

Free cash flow to equity

$6

 

($31)

YoY change %

nm

 

nm

 

 

 

 

 

 

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 to this press release.

Additional Business Highlights & Metrics

  • The Authenticated Traffic Solution (ATS), continues to experience strong global adoption. There are currently more than 25 supply-side platforms (SSPs) live or committed to implementing ATS. In addition, there are over 45 demand-side platforms (DSPs) live or committed to bid on the LiveRamp identifier, including The Trade Desk, Amobee, Criteo, dataxu, and MediaMath. Lastly, to date, 215 publishers globally have adopted ATS, including 60% of the US comScore 50.
  • LiveRamp recently announced that the Unified ID 2.0, created by The Trade Desk, will be made available to publishers via LiveRamp’s Authenticated Identity Infrastructure. As part of the expanded partnership, marketers who work with both LiveRamp and The Trade Desk can now also bid on LiveRamp's identifier within The Trade Desk's platform to optimize media buying across channels.
  • During the second quarter, subscription net retention was approximately 111% and platform net retention was 109%.
  • Current remaining performance obligations (RPO), which is contracted and committed revenue expected to be recognized over the next 12 months, was $216 million, up 13% compared to the second quarter of last year.
  • LiveRamp has 62 clients whose subscription contracts exceed $1 million in annual revenue, up from 44 in the prior year period.
  • LiveRamp’s direct subscription customer count at quarter end was 795, an increase of 10% year over year.

Share Repurchase Program Extension

LiveRamp also announced today that its board of directors authorized the extension of its share repurchase program through December 31, 2022. The Company had approximately $326 million of remaining capacity available under the program as of September 30, 2020.

Since the inception of the share repurchase program in August 2011, the Company has returned approximately $1.17 billion to shareholders.

Under the program, LiveRamp is authorized to repurchase outstanding shares in open market or privately negotiated transactions depending on prevailing market conditions and other factors. The repurchase program may be suspended or discontinued at any time.

Financial Outlook

Given macro economic uncertainties, LiveRamp is providing third quarter guidance only.

LiveRamp’s non-GAAP guidance excludes the impact of non-cash stock compensation, purchased intangible asset amortization, business transformation costs and restructuring charges.

For the third quarter of fiscal 2021, LiveRamp expects to report:

  • Revenue of approximately $113 million, an increase of approximately 11% year-over-year
  • GAAP operating loss of approximately $25 million
  • Non-GAAP operating income of up to $4 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, share repurchase program, 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 COVID-19 and the associated impact 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 relate to maintaining our culture and our ability to innovate and evolve while working remotely and within a rapidly changing industry, while also avoiding disruption from acquisition and divestiture activities. Our international operations are also subject to risks 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 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 2020 ended March 31, 2020, and LiveRamp's Quarterly Reports on Form 10-Q issued in fiscal year 2021.

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, IdentityLinkTM, 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,

$

%

2020

2019

Variance

Variance

 
Revenues

104,661

 

90,143

 

14,518

 

16.1

%

 
Cost of revenue

34,897

 

41,460

 

(6,563

)

(15.8

%)

Gross profit

69,764

 

48,683

 

21,081

 

43.3

%

% Gross margin

66.7

%

54.0

%

 
Operating expenses:
Research and development

31,035

 

26,445

 

4,590

 

17.4

%

Sales and marketing

41,705

 

45,204

 

(3,499

)

(7.7

%)

General and administrative

24,495

 

27,262

 

(2,767

)

(10.1

%)

Gains, losses and other items, net

(619

)

45

 

(664

)

(1475.6

%)

Total operating expenses

96,616

 

98,956

 

(2,340

)

(2.4

%)

 
Loss from operations

(26,852

)

(50,273

)

23,421

 

46.6

%

% Margin

-25.7

%

-55.8

%

 
Total other income (expense)

(225

)

4,780

 

(5,005

)

(104.7

%)

 
Loss from operations before income taxes

(27,077

)

(45,493

)

18,416

 

40.5

%

 
Income taxes (benefit)

(3,109

)

(5,291

)

2,182

 

41.2

%

 
Net loss

(23,968

)

(40,202

)

16,234

 

40.4

%

 
Basic loss per share

(0.36

)

(0.59

)

0.23

 

38.9

%

 
Diluted loss per share:

(0.36

)

(0.59

)

0.23

 

38.9

%

 
Basic weighted average shares

66,010

 

67,684

 

 
Diluted weighted average shares

66,010

 

67,684

 

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,

$

%

2020

2019

Variance

Variance

 
Revenues

204,098

 

172,654

 

31,444

 

18.2

%

 
Cost of revenue

69,362

 

77,886

 

(8,524

)

(10.9

%)

Gross profit

134,736

 

94,768

 

39,968

 

42.2

%

% Gross margin

66.0

%

54.9

%

 
Operating expenses:
Research and development

58,024

 

50,167

 

7,857

 

15.7

%

Sales and marketing

80,332

 

88,348

 

(8,016

)

(9.1

%)

General and administrative

47,863

 

52,580

 

(4,717

)

(9.0

%)

Gains, losses and other items, net

1,376

 

2,321

 

(945

)

(40.7

%)

Total operating expenses

187,595

 

193,416

 

(5,821

)

(3.0

%)

 
Loss from operations

(52,859

)

(98,648

)

45,789

 

46.4

%

% Margin

-25.9

%

-57.1

%

 
Total other income

238

 

10,662

 

(10,424

)

(97.8

%)

 
Loss from operations before income taxes

(52,621

)

(87,986

)

35,365

 

40.2

%

 
Income taxes (benefit)

(6,925

)

(5,644

)

(1,281

)

(22.7

%)

 
Net loss

(45,696

)

(82,342

)

36,646

 

44.5

%

 
Basic loss per share

(0.69

)

(1.21

)

0.51

 

42.4

%

 
Diluted loss per share:

(0.69

)

(1.21

)

0.51

 

42.4

%

 
Basic weighted average shares

65,790

 

68,295

 

 
Diluted weighted average shares

65,790

 

68,295

 

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,

2020

2019

2020

2019

 
 
Loss from operations before income taxes

(27,077

)

(45,493

)

(52,621

)

(87,986

)

 
Income taxes (benefit)

(3,109

)

(5,291

)

(6,925

)

(5,644

)

 
Net loss

(23,968

)

(40,202

)

(45,696

)

(82,342

)

 
Loss per share:
Basic

(0.36

)

(0.59

)

(0.69

)

(1.21

)

 
Diluted

(0.36

)

(0.59

)

(0.69

)

(1.21

)

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

4,350

 

5,369

 

9,656

 

8,492

 

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

24,204

 

23,354

 

40,689

 

41,984

 

Accelerated depreciation (cost of revenue and operating expenses)

-

 

1,663

 

-

 

3,569

 

Transformation costs (general and administrative)

258

 

-

 

3,863

 

-

 

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

(619

)

45

 

1,376

 

2,321

 

 
Total excluded items

28,193

 

30,431

 

55,584

 

56,366

 

 
Income (loss) from operations before income taxes and excluding items

1,116

 

(15,062

)

2,963

 

(31,620

)

 
Income taxes (benefit) (2)

(1,291

)

190

 

(357

)

(26

)

 
Non-GAAP net earnings (loss)

2,407

 

(15,252

)

3,320

 

(31,594

)

 
Non-GAAP earnings (loss) per share:
Basic

0.04

 

(0.23

)

0.05

 

(0.46

)

 
Diluted

0.03

 

(0.23

)

0.05

 

(0.46

)

 
Basic weighted average shares

66,010

 

67,684

 

65,790

 

68,295

 

 
Diluted weighted average shares

68,804

 

67,684

 

68,071

 

68,295

 

(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,

2020

2019

2020

2019

 
 
Loss from operations

(26,852

)

(50,273

)

(52,859

)

(98,648

)

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

4,350

 

5,369

 

9,656

 

8,492

 

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

24,204

 

23,354

 

40,689

 

41,984

 

Accelerated depreciation (cost of revenue and operating expenses)

-

 

1,663

 

-

 

3,569

 

Transformation costs (general and administrative)

258

 

-

 

3,863

 

-

 

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

(619

)

45.00

 

1,376

 

2,321

 

 
Total excluded items

28,193

 

30,431

 

55,584

 

56,366

 

 
Income (loss) from operations before excluded items

1,341

 

(19,842

)

2,725

 

(42,282

)

(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,

2020

2019

2020

2019

 
 
Net loss

(23,968

)

(40,202

)

(45,696

)

(82,342

)

 
Income taxes (benefit)

(3,109

)

(5,291

)

(6,925

)

(5,644

)

 
Other expense (income)

225

 

(4,780

)

(238

)

(10,662

)

 
Loss from operations

(26,852

)

(50,273

)

(52,859

)

(98,648

)

 
Depreciation and amortization

6,901

 

10,977

 

14,955

 

19,854

 

 
EBITDA

(19,951

)

(39,296

)

(37,904

)

(78,794

)

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

24,204

 

23,354

 

40,689

 

41,984

 

Transformation costs (general and administrative)

258

 

-

 

3,863

 

0

 

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

(619

)

45

 

1,376

 

2,321

 

 
Other adjustments

23,843

 

23,399

 

45,928

 

44,305

 

 
Adjusted EBITDA

3,892

 

(15,897

)

8,024

 

(34,489

)

(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,

$

%

2020

2020

Variance

Variance

 
Assets
Current assets:
Cash and cash equivalents

650,691

 

717,811

 

(67,120

)

(9.4

%)

Restricted cash

14,815

 

14,815

 

-

 

n/a

 

Trade accounts receivable, net

99,362

 

92,761

 

6,601

 

7.1

%

Refundable income taxes

42,578

 

38,340

 

4,238

 

11.1

%

Other current assets

24,560

 

32,666

 

(8,106

)

(24.8

%)

 
Total current assets

832,006

 

896,393

 

(64,387

)

(7.2

%)

 
Property and equipment

43,604

 

44,786

 

(1,182

)

(2.6

%)

Less - accumulated depreciation and amortization

28,382

 

25,465

 

2,917

 

11.5

%

 
Property and equipment, net

15,222

 

19,321

 

(4,099

)

(21.2

%)

 
Intangible assets, net

36,709

 

45,200

 

(8,491

)

(18.8

%)

Goodwill

300,741

 

297,796

 

2,945

 

1.0

%

Deferred commissions, net

19,459

 

16,014

 

3,445

 

21.5

%

Other assets, net

34,500

 

27,165

 

7,335

 

27.0

%

 

1,238,637

 

1,301,889

 

(63,252

)

(4.9

%)

 
Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable

38,102

 

42,204

 

(4,102

)

(9.7

%)

Accrued payroll and related expenses

23,172

 

28,791

 

(5,619

)

(19.5

%)

Other accrued expenses

58,532

 

68,991

 

(10,459

)

(15.2

%)

Acquisition escrow payable

14,815

 

14,815

 

-

 

n/a

 

Deferred revenue

6,546

 

6,581

 

(35

)

(0.5

%)

 
Total current liabilities

141,167

 

161,382

 

(20,215

)

(12.5

%)

 
Other liabilities

46,608

 

52,995

 

(6,387

)

(12.1

%)

 
Stockholders' equity:
Preferred stock

-

 

-

 

-

 

n/a

 

Common stock

14,570

 

14,394

 

176

 

1.2

%

Additional paid-in capital

1,552,303

 

1,496,565

 

55,738

 

3.7

%

Retained earnings

1,499,398

 

1,545,094

 

(45,696

)

(3.0

%)

Accumulated other comprehensive income

6,944

 

5,745

 

1,199

 

20.9

%

Treasury stock, at cost

(2,022,353

)

(1,974,286

)

(48,067

)

(2.4

%)

Total stockholders' equity

1,050,862

 

1,087,512

 

(36,650

)

(3.4

%)

 

1,238,637

 

1,301,889

 

(63,252

)

(4.9

%)

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
 

For the Three Months Ended

 

September 30,

 

2020

2019

 
Cash flows from operating activities:
Net loss

(23,968

)

(40,202

)

Non-cash operating activities:
Depreciation and amortization

6,901

 

10,977

 

Loss (gain) on disposal or impairment of assets

331

 

(225

)

Provision for doubtful accounts

1,192

 

1,468

 

Deferred income taxes

187

 

(5,090

)

Non-cash stock compensation expense

24,204

 

23,354

 

Changes in operating assets and liabilities:
Accounts receivable

(3,724

)

(7,807

)

Deferred commissions

(1,764

)

(780

)

Other assets

2,799

 

(7,497

)

Accounts payable and other liabilities

2,013

 

3,009

 

Income taxes

(2,478

)

(6,926

)

Deferred revenue

556

 

968

 

Net cash provided by (used in) operating activities

6,249

 

(28,751

)

Cash flows from investing activities:
Capital expenditures

(296

)

(2,641

)

Proceeds from sales of property and equipment

-

 

517

 

Payments for investments

(1,206

)

-

 

Cash paid in acquisition, net of cash received

(2,933

)

(100,886

)

Net cash used in investing activities

(4,435

)

(103,010

)

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

2,424

 

1,032

 

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

(3,928

)

(1,814

)

Acquisition of treasury stock

-

 

(80,374

)

Net cash used in financing activities

(1,504

)

(81,156

)

Effect of exchange rate changes on cash

486

 

(302

)

 
Net change in cash and cash equivalents

796

 

(213,219

)

Cash and cash equivalents at beginning of period

664,710

 

1,005,477

 

Cash and cash equivalents at end of period

665,506

 

792,258

 

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

(822

)

6,042

 

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
 

For the Six Months Ended

 

September 30,

 

2020

2019

 
Cash flows from operating activities:
Net loss

(45,696

)

(82,342

)

Non-cash operating activities:
Depreciation and amortization

14,955

 

19,854

 

Loss (gain) on disposal or impairment of assets

333

 

(140

)

Provision for doubtful accounts

2,522

 

2,430

 

Deferred income taxes

(485

)

(5,083

)

Non-cash stock compensation expense

40,689

 

41,984

 

Changes in operating assets and liabilities:
Accounts receivable

(9,584

)

(11,258

)

Deferred commissions

(3,445

)

(606

)

Other assets

7,703

 

(3,897

)

Accounts payable and other liabilities

(20,671

)

2,821

 

Income taxes

(3,583

)

(7,789

)

Deferred revenue

(101

)

(133

)

Net cash used in operating activities

(17,363

)

(44,159

)

Cash flows from investing activities:
Capital expenditures

(1,128

)

(7,529

)

Proceeds from sales of property and equipment

-

 

517

 

Payments for investments

(1,873

)

-

 

Cash paid in acquisition, net of cash received

(2,933

)

(105,365

)

Net cash used in investing activities

(5,934

)

(112,377

)

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

3,561

 

2,092

 

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

(5,755

)

(13,907

)

Acquisition of treasury stock

(42,312

)

(100,473

)

Net cash used in financing activities

(44,506

)

(112,288

)

Effect of exchange rate changes on cash

683

 

(391

)

 
Net change in cash and cash equivalents

(67,120

)

(269,215

)

Cash and cash equivalents at beginning of period

732,626

 

1,061,473

 

Cash and cash equivalents at end of period

665,506

 

792,258

 

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

(2,863

)

6,152

 

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CALCULATION OF FREE CASH FLOW TO EQUITY (1)
(Unaudited)
(Dollars in thousands)
 
 
06/30/19 09/30/19 12/31/19 03/31/20 FY2020 06/30/20 09/30/20 FY2021
 
Net Cash Provided by (Used in) Operating Activities

(15,408

)

(28,751

)

15,804

 

(220

)

(28,575

)

(23,612

)

6,249

 

(17,363

)

 
Less:
Capital expenditures

(4,888

)

(2,641

)

(2,773

)

(1,409

)

(11,711

)

(832

)

(296

)

(1,128

)

 
Free Cash Flow to Equity

(20,296

)

(31,392

)

13,031

 

(1,629

)

(40,286

)

(24,444

)

5,953

 

(18,491

)

(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)
 
Q2 FY21 to Q2 FY20
06/30/19 09/30/19 12/31/19 03/31/20 FY2020 06/30/20 09/30/20 FY2021 % $
Revenues

82,511

 

90,143

 

102,217

 

105,701

 

380,572

 

99,437

 

104,661

 

204,098

 

17.6

%

14,518

 

 
Cost of revenue

36,426

 

41,460

 

37,966

 

36,852

 

152,704

 

34,465

 

34,897

 

69,362

 

(18.0

%)

(6,563

)

Gross profit

46,085

 

48,683

 

64,251

 

68,849

 

227,868

 

64,972

 

69,764

 

134,736

 

45.7

%

21,081

 

% Gross margin

55.9

%

54.0

%

62.9

%

65.1

%

59.9

%

65.3

%

66.7

%

66.0

%

 
Operating expenses
Research and development

23,722

 

26,445

 

27,403

 

28,411

 

105,981

 

26,989

 

31,035

 

58,024

 

19.3

%

4,590

 

Sales and marketing

43,144

 

45,204

 

51,993

 

48,564

 

188,905

 

38,627

 

41,705

 

80,332

 

(8.1

%)

(3,499

)

General and administrative

25,318

 

27,262

 

26,107

 

30,216

 

108,903

 

23,368

 

24,495

 

47,863

 

(10.9

%)

(2,767

)

Gains, losses and other items, net

2,276

 

45

 

233

 

2,447

 

5,001

 

1,995

 

(619

)

1,376

 

(29.2

%)

(664

)

Total operating expenses

94,460

 

98,956

 

105,736

 

109,638

 

408,790

 

90,979

 

96,616

 

187,595

 

(2.5

%)

(2,340

)

 
Loss from operations

(48,375

)

(50,273

)

(41,485

)

(40,789

)

(180,922

)

(26,007

)

(26,852

)

(52,859

)

48.4

%

23,421

 

% Margin

-58.6

%

-55.8

%

-40.6

%

-38.6

%

-47.5

%

-26.2

%

-25.7

%

-25.9

%

 
Total other income (expense)

5,882

 

4,780

 

3,158

 

1,565

 

15,385

 

463

 

(225

)

238

 

(85.1

%)

(5,005

)

 
Loss from continuing operations before income taxes

(42,493

)

(45,493

)

(38,327

)

(39,224

)

(165,537

)

(25,544

)

(27,077

)

(52,621

)

43.3

%

18,416

 

 
Income taxes (benefit)

(353

)

(5,291

)

(287

)

(34,345

)

(40,276

)

(3,816

)

(3,109

)

(6,925

)

618.1

%

2,182

 

 
Net loss from continuing operations

(42,140

)

(40,202

)

(38,040

)

(4,879

)

(125,261

)

(21,728

)

(23,968

)

(45,696

)

38.5

%

16,234

 

 
Earnings from discontinued operations, net of tax

-

 

-

 

-

 

750

 

750

 

-

 

-

 

-

 

n/a

 

-

 

 
Net loss

(42,140

)

(40,202

)

(38,040

)

(4,129

)

(124,511

)

(21,728

)

(23,968

)

(45,696

)

38.5

%

16,234

 

 
Diluted loss per share

(0.61

)

(0.59

)

(0.56

)

(0.06

)

(1.84

)

(0.33

)

(0.36

)

(0.69

)

37.8

%

0.23

 

 
Diluted loss per share continuing operations

(0.61

)

(0.59

)

(0.56

)

(0.07

)

(1.85

)

(0.33

)

(0.36

)

(0.69

)

37.8

%

0.23

 

 
Some loss per share amounts may not add due to rounding.
 
Basic shares

68,906

 

67,684

 

67,473

 

66,977

 

67,760

 

65,570

 

66,010

 

65,790

 

Diluted shares

68,906

 

67,684

 

67,473

 

66,977

 

67,760

 

65,570

 

66,010

 

65,790

 

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP EPS (1)
(Unaudited)
(Dollars in thousands, except per share amounts)
 
 
 
06/30/19 09/30/19 12/31/19 03/31/20 FY2020 06/30/20 09/30/20 FY2021
 
 
Loss from continuing operations before income taxes

(42,493

)

(45,493

)

(38,327

)

(39,224

)

(165,537

)

(25,544

)

(27,077

)

(52,621

)

Income taxes (benefit)

(353

)

(5,291

)

(287

)

(34,345

)

(40,276

)

(3,816

)

(3,109

)

(6,925

)

Net loss from continuing operations

(42,140

)

(40,202

)

(38,040

)

(4,879

)

(125,261

)

(21,728

)

(23,968

)

(45,696

)

 
Earnings from discontinued operations, net of tax

-

 

-

 

-

 

750

 

750

 

-

 

-

 

-

 

 
Net loss

(42,140

)

(40,202

)

(38,040

)

(4,129

)

(124,511

)

(21,728

)

(23,968

)

(45,696

)

 
Loss per share:
Basic

(0.61

)

(0.59

)

(0.56

)

(0.06

)

(1.84

)

(0.33

)

(0.36

)

(0.69

)

Diluted

(0.61

)

(0.59

)

(0.56

)

(0.06

)

(1.84

)

(0.33

)

(0.36

)

(0.69

)

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

3,123

 

5,369

 

5,369

 

5,181

 

19,042

 

5,306

 

4,350

 

9,656

 

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

18,630

 

23,354

 

30,295

 

17,168

 

89,447

 

16,485

 

24,204

 

40,689

 

Accelerated depreciation (cost of revenue and operating expenses)

1,906

 

1,663

 

-

 

-

 

3,569

 

-

 

-

 

-

 

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

2,276

 

45

 

233

 

2,447

 

5,001

 

1,995

 

(619

)

1,376

 

Transformation costs (general and administrative)

-

 

-

 

-

 

-

 

-

 

3,605

 

258

 

3,863

 

Total excluded items, continuing operations

25,935

 

30,431

 

35,897

 

24,796

 

117,059

 

27,391

 

28,193

 

55,584

 

 
 
Income (loss) from continuing operations before income taxes and excluding items

(16,558

)

(15,062

)

(2,430

)

(14,428

)

(48,478

)

1,847

 

1,116

 

2,963

 

Income taxes (benefit)

(216

)

190

 

(227

)

(11,199

)

(11,452

)

934

 

(1,291

)

(357

)

Non-GAAP net earnings (loss) from continuing operations

(16,342

)

(15,252

)

(2,203

)

(3,229

)

(37,026

)

913

 

2,407

 

3,320

 

 
Non-GAAP earnings (loss) per share from continuing operations:
Basic

(0.24

)

(0.23

)

(0.03

)

(0.05

)

(0.55

)

0.01

 

0.04

 

0.05

 

Diluted

(0.24

)

(0.23

)

(0.03

)

(0.05

)

(0.55

)

0.01

 

0.03

 

0.05

 

 
Basic weighted average shares

68,906

 

67,684

 

67,473

 

66,977

 

67,760

 

65,570

 

66,010

 

65,790

 

Diluted weighted average shares

68,906

 

67,684

 

67,473

 

66,977

 

67,760

 

67,337

 

68,804

 

68,071

 

 
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)
 
 
06/30/19 09/30/19 12/31/19 03/31/20 FY2020 06/30/20 09/30/20 FY2021
 
Expenses:
Cost of revenue

36,426

 

41,460

 

37,966

 

36,852

 

152,704

 

34,465

 

34,897

 

69,362

 

Research and development

23,722

 

26,445

 

27,403

 

28,411

 

105,981

 

26,989

 

31,035

 

58,024

 

Sales and marketing

43,144

 

45,204

 

51,993

 

48,564

 

188,905

 

38,627

 

41,705

 

80,332

 

General and administrative

25,318

 

27,262

 

26,107

 

30,216

 

108,903

 

23,368

 

24,495

 

47,863

 

Gains, losses and other items, net

2,276

 

45

 

233

 

2,447

 

5,001

 

1,995

 

(619

)

1,376

 

 
Gross profit:

46,085

 

48,683

 

64,251

 

68,849

 

227,868

 

64,972

 

69,764

 

134,736

 

% Gross margin

55.9

%

54.0

%

62.9

%

65.1

%

59.9

%

65.3

%

66.7

%

66.0

%

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

3,123

 

5,369

 

5,369

 

5,181

 

19,042

 

5,306

 

4,350

 

9,656

 

Non-cash stock compensation (cost of revenue)

755

 

1,060

 

1,028

 

926

 

3,769

 

775

 

913

 

1,688

 

Non-cash stock compensation (research and development)

4,451

 

6,346

 

6,462

 

6,001

 

23,260

 

5,886

 

7,713

 

13,599

 

Non-cash stock compensation (sales and marketing)

8,920

 

9,758

 

15,670

 

3,678

 

38,026

 

7,123

 

9,233

 

16,356

 

Non-cash stock compensation (general and administrative)

4,504

 

6,190

 

7,135

 

6,563

 

24,392

 

2,701

 

6,345

 

9,046

 

Accelerated depreciation (cost of revenue)

1,487

 

1,245

 

-

 

-

 

2,732

 

-

 

-

 

-

 

Accelerated depreciation (general and administrative)

419

 

418

 

-

 

-

 

837

 

-

 

-

 

-

 

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

2,276

 

45

 

233

 

2,447

 

5,001

 

1,995

 

(619

)

1,376

 

Transformation costs (general and administrative)

-

 

-

 

-

 

-

 

-

 

3,605

 

258

 

3,863

 

Total excluded items

25,935

 

30,431

 

35,897

 

24,796

 

117,059

 

27,391

 

28,193

 

55,584

 

 
Expenses, excluding items:
Cost of revenue

31,061

 

33,786

 

31,569

 

30,745

 

127,161

 

28,384

 

29,634

 

58,018

 

Research and development

19,271

 

20,099

 

20,941

 

22,410

 

82,721

 

21,103

 

23,322

 

44,425

 

Sales and marketing

34,224

 

35,446

 

36,323

 

44,886

 

150,879

 

31,504

 

32,472

 

63,976

 

General and administrative

20,395

 

20,654

 

18,972

 

23,653

 

83,674

 

17,062

 

17,892

 

34,954

 

Gains, losses and other items, net

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

 
Gross profit, excluding items:

51,450

 

56,357

 

70,648

 

74,956

 

253,411

 

71,053

 

75,027

 

146,080

 

% Gross margin

62.4

%

62.5

%

69.1

%

70.9

%

66.6

%

71.5

%

71.7

%

71.6

%

(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
December 31, 2020
 
 
GAAP loss from operations

(25,000

)

 
Excluded items:
Purchased intangible asset amortization

4,000

 

Non-cash stock compensation

25,000

 

Total excluded items

29,000

 

 
Non-GAAP income from operations

$ 4,000

 

(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 2021 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 associates 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. Beginning in the first quarter of fiscal 2021 in response to the potential COVID-19 pandemic impact on our business, 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.

Accelerated depreciation: In the prior year we excluded depreciation costs associated with the reduced useful life of certain IT equipment in connection with the Company's migration to a cloud-based data center solution. This migration was part of our AMS separation strategy. These costs are excluded from our non-GAAP results because of the short-term nature of the incremental expenses and such amounts are not used by us to assess the core profitability of our business operations.

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.

LiveRamp Investor Relations
Lauren Dillard
Investor.Relations@LiveRamp.com
ERAMP

Source: LiveRamp

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