UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 10, 2020
| (Exact Name of Registrant as Specified in Its Charter) | ||||||||
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||
(Address of Principal Executive Offices) | (Zip Code) | |||||||
( (Registrant's Telephone Number, Including Area Code) | ||||||||
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
| Securities registered pursuant to Section 12(b) of the Act: | ||||||||||||||
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
| Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | ||||||||
| Emerging growth company | ||||||||
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the | ||||||||
| Exchange Act. | ☐ | |||||||
Section 2—Financial Information
Item 2.02 Results of Operations and Financial Condition
On August 10, 2020, LiveRamp Holdings, Inc. (the “Company”) issued a press release announcing the results of its financial performance for its first quarter ended June 30, 2020. The Company will hold a conference call at 1:30 PM PST today to further discuss this information. Interested parties are invited to listen to the webcast, which will be broadcast via the Internet at www.liveramp.com. The press release is furnished herewith as Exhibit 99.1 and incorporated by reference herein.
Section 9—Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
| Exhibit Number | Description | |||||||
| 99.1 | ||||||||
| 101.sch | XBRL Taxonomy Extension Schema Document | |||||||
| 101.cal | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.def | XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 101.lab | XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101.pre | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: August 10, 2020
| LiveRamp Holdings, Inc. | |||||
| By: | /s/ Jerry C. Jones | ||||
| Name: | Jerry C. Jones | ||||
| Title: | Chief Ethics and Legal Officer & Executive Vice President | ||||
LIVERAMP ANNOUNCES FIRST QUARTER RESULTS
Total Q1 Revenue Up 21% — Subscription Revenue Up 21%
GAAP Operating Loss Improves - First Quarterly Non-GAAP Operating Profit
SAN FRANCISCO, Calif., August 10, 2020—LiveRamp® (NYSE: RAMP), the leading global data connectivity platform, today announced its financial results for the first quarter ended June 30, 2020.
First Quarter Financial Highlights
•Total revenue was $99 million, up 21% compared to the prior year period.
•Subscription revenue was $83 million, up 21% compared to the prior year period and contributed 83% of total revenue.
•Marketplace & Other revenue was $17 million, up16% compared to the prior year period.
•GAAP gross profit was $65 million, up 41% compared to the prior year period. GAAP gross margin of 65% expanded 9 percentage points. Non-GAAP gross profit was $71 million, up 38% compared to the prior year period. Non-GAAP gross margin of 71% expanded 9 percentage points.
•GAAP operating loss was $26 million compared to a GAAP operating loss of $48 million in the prior year period. Non-GAAP operating income was $1 million compared to a non-GAAP operating loss of $22 million in the prior year period.
•GAAP loss per share was $0.33, and non-GAAP earnings per share was $0.01.
•Net cash used in operating activities was $24 million compared to net cash used by operating activities of $15 million in the prior year period.
•During the quarter, LiveRamp repurchased 1.3 million shares for $42 million under the current stock repurchase program. Since inception of the share repurchase program in August 2011, the Company has returned approximately $1.17 billion in capital to shareholders.
A reconciliation between GAAP and non-GAAP results is provided in the schedules to this press release.
“As COVID-19 forces companies to innovate and transform to drive customer value, data matters more than ever,” said LiveRamp CEO Scott Howe. “Global brands and their partners are turning to LiveRamp to enable their data-driven marketing strategies, and our strong Q1 results reflect this. The Authenticated Traffic Solution (or ATS) is gaining widespread global adoption. During the quarter, we more than tripled our ATS publisher adoption and now work with over 125 publishers worldwide, including 60% of the US Comscore 20 and 50% of the US Comscore 50.”
“Our value proposition is strong and our business durable and recurring,” added LiveRamp President and CFO Warren Jenson. “In Q1, our top-line grew by 21%, and we delivered our first quarterly non-GAAP operating profit. In addition, our Advanced TV business and Safe HavenⓇ are winning globally. TV revenue was up over 50% in the quarter, and Safe Haven bookings, ARR and revenue were all up over 100%.”
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GAAP and Non-GAAP Results
The following table summarizes the Company’s financial results for its first fiscal quarter ($ in millions):
| Q1 Fiscal 2021 | Q1 Fiscal 2020 | ||||||||||||||||
| Results | Results | ||||||||||||||||
| GAAP | Non-GAAP | GAAP | Non-GAAP | ||||||||||||||
| Subscription revenue | $ | 83 | — | $ | 68 | — | |||||||||||
| YoY change % | 21 | % | 33 | % | |||||||||||||
| Marketplace & other revenue | $ | 17 | — | $ | 14 | — | |||||||||||
| YoY change % | 16 | % | 27 | % | |||||||||||||
| Total revenue | $ | 99 | — | $ | 83 | — | |||||||||||
| YoY change % | 21 | % | 32 | % | |||||||||||||
| Gross profit | $ | 65 | $ | 71 | $ | 46 | $ | 51 | |||||||||
| % Gross margin | 65 | % | 71 | % | 56 | % | 62 | % | |||||||||
| YoY change, pts | 9pts | 9pts | (6)pts | (10)pts | |||||||||||||
| Operating income (loss) | $ | (26) | $ | 1 | $ | (48) | $ | (22) | |||||||||
| % Operating margin | (26) | % | 1 | % | (59) | % | (27) | % | |||||||||
| YoY change, pts | 32pts | 29pts | (11)pts | (18)pts | |||||||||||||
| Net income (loss) | $ | (22) | $ | 1 | $ | (42) | $ | (16) | |||||||||
| YoY change % | nm | nm | nm | nm | |||||||||||||
| Earnings (loss) per share | $ | (0.33) | $ | 0.01 | $ | (0.61) | $ | (0.24) | |||||||||
| YoY change % | nm | nm | nm | nm | |||||||||||||
| Shares to Calculate EPS | 65.6 | 67.3 | 68.9 | 68.9 | |||||||||||||
| YoY change % | (5) | % | (5) | % | (10) | % | (10) | % | |||||||||
| Net operating cash flow | $ | (24) | — | $ | (15) | — | |||||||||||
| YoY change % | nm | — | nm | — | |||||||||||||
| Free cash flow to equity | — | $ | (24) | — | $ | (20) | |||||||||||
| 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.
P 2
Additional Business Metrics & Highlights
•LiveRamp addressability solutions, including ATS, continue to experience strong global adoption. There are currently 20 supply-side platforms (SSPs) live or committed to implementing IdentityLink™ in the bidstream, including OpenX, Index Exchange, Pubmatic, Rubicon Project and TripleLift. In addition, there are 40 demand-side platforms (DSPs) live or committed to bid on IdentityLink, including Amobee, Criteo, dataxu, and MediaMath. Lastly, to date, LiveRamp has signed on more than 125 publishers globally for ATS, spanning four continents.
•LiveRamp completed the acquisition of Acuity Data, a team of global retail and consumer packaged goods (CPG) experts, in early July to strengthen the retail analytics capabilities of its Safe Haven platform. These capabilities will enable better reporting, insights, and collaboration for retailers and CPG companies, bridging the gap between trade and media by bringing consumers’ digital signals and retail transaction data together in a privacy-conscious manner. Total purchase consideration was immaterial.
•During the first quarter, subscription net retention was approximately 109% and platform net retention was 111%.
•Current remaining performance obligations (RPO), which is contracted and committed revenue expected to be recognized over the next 12 months, was $223 million, up 33% compared to the first quarter of last year.
•LiveRamp has 60 clients whose subscription contracts exceed $1 million in annual revenue, up from 45 in the prior year period.
•LiveRamp’s direct subscription customer count at quarter end was 780, an increase of 13% year over year. It now serves 22% of the Fortune 500 compared to 20% in the prior year period.
Financial Outlook
Given macro economic uncertainties, LiveRamp is providing second 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 second quarter of fiscal 2021, LiveRamp expects to report:
•Revenue of approximately $100 million, an increase of approximately 11% year-over-year
•GAAP operating loss of up to $39 million
•Non-GAAP operating loss of up to $7 million
P 3
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, 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.
P 4
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.
For more information, contact:
LiveRamp Investor Relations
Investor.Relations@LiveRamp.com
ERAMP
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.
P 5
| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | |||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| (Dollars in thousands, except per share amounts) | |||||||||||||||||||||||
| For the three months ended June 30, | |||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
| 2020 | 2019 | Variance | Variance | ||||||||||||||||||||
| Revenues | 99,437 | 82,511 | 16,926 | 20.5 | % | ||||||||||||||||||
| Cost of revenue | 34,465 | 36,426 | (1,961) | (5.4) | % | ||||||||||||||||||
| Gross profit | 64,972 | 46,085 | 18,887 | 41.0 | % | ||||||||||||||||||
| % Gross margin | 65.3 | % | 55.9 | % | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | 26,989 | 23,722 | 3,267 | 13.8 | % | ||||||||||||||||||
| Sales and marketing | 38,627 | 43,144 | (4,517) | (10.5) | % | ||||||||||||||||||
| General and administrative | 23,368 | 25,318 | (1,950) | (7.7) | % | ||||||||||||||||||
| Gains, losses and other items, net | 1,995 | 2,276 | (281) | (12.3) | % | ||||||||||||||||||
| Total operating expenses | 90,979 | 94,460 | (3,481) | (3.7) | % | ||||||||||||||||||
| Loss from operations | (26,007) | (48,375) | 22,368 | 46.2 | % | ||||||||||||||||||
| % Margin | (26.2) | % | (58.6) | % | |||||||||||||||||||
| Total other income | 463 | 5,882 | (5,419) | (92.1) | % | ||||||||||||||||||
| Loss from operations before income taxes | (25,544) | (42,493) | 16,949 | 39.9 | % | ||||||||||||||||||
| Income tax benefit | (3,816) | (353) | (3,463) | (981.0) | % | ||||||||||||||||||
| Net loss | (21,728) | (42,140) | 20,412 | 48.4 | % | ||||||||||||||||||
| Basic loss per share | (0.33) | (0.61) | 0.28 | 45.8 | % | ||||||||||||||||||
| Diluted loss per share | (0.33) | (0.61) | 0.28 | 45.8 | % | ||||||||||||||||||
| Basic weighted average shares | 65,570 | 68,906 | |||||||||||||||||||||
| Diluted weighted average shares | 65,570 | 68,906 | |||||||||||||||||||||
P 6
| 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 June 30, | ||||||||||||||
| 2020 | 2019 | |||||||||||||
| Loss from operations before income taxes | (25,544) | (42,493) | ||||||||||||
| Income taxes (benefit) | (3,816) | (353) | ||||||||||||
| Net loss | (21,728) | (42,140) | ||||||||||||
| Loss per share: | ||||||||||||||
| Basic | (0.33) | (0.61) | ||||||||||||
| Diluted | (0.33) | (0.61) | ||||||||||||
| Excluded items: | ||||||||||||||
| Purchased intangible asset amortization (cost of revenue) | 5,306 | 3,123 | ||||||||||||
| Non-cash stock compensation (cost of revenue and operating expenses) | 16,485 | 18,630 | ||||||||||||
| Accelerated depreciation (cost of revenue and operating expenses | 0 | 1,906 | ||||||||||||
| Restructuring and merger charges (gains, losses, and other) | 1,995 | 2,276 | ||||||||||||
| Transformation costs (general and administrative) | 3,605 | 0 | ||||||||||||
| Total excluded items | 27,391 | 25,935 | ||||||||||||
| Income (loss) from operations before income taxes and excluding items | 1,847 | (16,558) | ||||||||||||
| Income taxes (benefit) (2) | 934 | (216) | ||||||||||||
| Non-GAAP net earning (loss) | 913 | (16,342) | ||||||||||||
| Non-GAAP loss per share: | ||||||||||||||
| Basic | 0.01 | (0.24) | ||||||||||||
| Diluted | 0.01 | (0.24) | ||||||||||||
| Basic weighted average shares | 65,570 | 68,906 | ||||||||||||
| Diluted weighted average shares | 67,337 | 68,906 | ||||||||||||
(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 using an effective non-GAAP tax rate of 50.5% and 1.3% in the first quarter of fiscal 2021 and 2020. The difference between our GAAP and non-GAAP tax rates were primarily due to the net tax effects of the excluded items.
P 7
| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP LOSS FROM OPERATIONS (1) | ||||||||||||||
| (Unaudited) | ||||||||||||||
| (Dollars in thousands) | ||||||||||||||
| For the three months ended June 30, | ||||||||||||||
| 2020 | 2019 | |||||||||||||
| Loss from operations | (26,007) | (48,375) | ||||||||||||
| Excluded items: | ||||||||||||||
| Purchased intangible asset amortization (cost of revenue) | 5,306 | 3,123 | ||||||||||||
| Non-cash stock compensation (cost of revenue and operating expenses) | 16,485 | 18,630 | ||||||||||||
| Accelerated depreciation (cost of revenue and operating expenses | — | 1,906 | ||||||||||||
| Restructuring and merger charges (gains, losses, and other) | 1,995 | 2,276 | ||||||||||||
| Transformation costs (general and administrative) | 3,605 | — | ||||||||||||
| Total excluded items | 27,391 | 25,935 | ||||||||||||
| Income (loss) from operations before excluded items | 1,384 | (22,440) | ||||||||||||
(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.
P 8
| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||
| RECONCILIATION OF ADJUSTED EBITDA (1) | ||||||||||||||
| (Unaudited) | ||||||||||||||
| (Dollars in thousands) | ||||||||||||||
| For the three months ended June 30, | ||||||||||||||
| 2020 | 2019 | |||||||||||||
| Net loss from operations | (21,728) | (42,140) | ||||||||||||
| Income taxes (benefit) | (3,816) | (353) | ||||||||||||
| Other income | (463) | (5,882) | ||||||||||||
| Loss from operations | (26,007) | (48,375) | ||||||||||||
| Depreciation and amortization | 8,054 | 8,877 | ||||||||||||
| EBITDA | (17,953) | (39,498) | ||||||||||||
| Other adjustments: | ||||||||||||||
| Non-cash stock compensation (cost of revenue and operating expenses) | 16,485 | 18,630 | ||||||||||||
| Restructuring and merger charges (gains, losses, and other) | 1,995 | 2,276 | ||||||||||||
| Transformation costs (general and administrative) | 3,605 | — | ||||||||||||
| Other adjustments | 22,085 | 20,906 | ||||||||||||
| Adjusted EBITDA | 4,132 | (18,592) | ||||||||||||
(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.
P 9
| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | |||||||||||||||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| June 30, | March 31, | $ | % | ||||||||||||||||||||
| 2020 | 2020 | Variance | Variance | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Current assets: | |||||||||||||||||||||||
| Cash and cash equivalents | 649,895 | 717,811 | (67,916) | (9.5) | % | ||||||||||||||||||
| Restricted cash | 14,815 | 14,815 | — | — | % | ||||||||||||||||||
| Trade accounts receivable, net | 96,472 | 92,761 | 3,711 | 4.0 | % | ||||||||||||||||||
| Refundable income taxes | 39,776 | 38,340 | 1,436 | 3.7 | % | ||||||||||||||||||
| Other current assets | 24,314 | 32,666 | (8,352) | (25.6) | % | ||||||||||||||||||
| Total current assets | 825,272 | 896,393 | (71,121) | (7.9) | % | ||||||||||||||||||
| Property and equipment | 45,077 | 44,786 | 291 | 0.6 | % | ||||||||||||||||||
| Less - accumulated depreciation and amortization | 27,969 | 25,465 | 2,504 | 9.8 | % | ||||||||||||||||||
| Property and equipment, net | 17,108 | 19,321 | (2,213) | (11.5) | % | ||||||||||||||||||
| Intangible assets, net | 39,915 | 45,200 | (5,285) | (11.7) | % | ||||||||||||||||||
| Goodwill | 298,389 | 297,796 | 593 | 0.2 | % | ||||||||||||||||||
| Deferred commissions, net | 17,695 | 16,014 | 1,681 | 10.5 | % | ||||||||||||||||||
| Other assets, net | 35,552 | 27,165 | 8,387 | 30.9 | % | ||||||||||||||||||
| 1,233,931 | 1,301,889 | (67,958) | (5.2) | % | |||||||||||||||||||
| Liabilities and Stockholders' Equity | |||||||||||||||||||||||
| Current liabilities: | |||||||||||||||||||||||
| Trade accounts payable | 38,380 | 42,204 | (3,824) | (9.1) | % | ||||||||||||||||||
| Accrued payroll and related expenses | 16,727 | 28,791 | (12,064) | (41.9) | % | ||||||||||||||||||
| Other accrued expenses | 50,024 | 68,991 | (18,967) | (27.5) | % | ||||||||||||||||||
| Acquisition escrow payable | 14,815 | 14,815 | — | — | % | ||||||||||||||||||
| Deferred revenue | 5,938 | 6,581 | (643) | (9.8) | % | ||||||||||||||||||
| Total current liabilities | 125,884 | 161,382 | (35,498) | (22.0) | % | ||||||||||||||||||
| Other liabilities | 49,758 | 52,995 | (3,237) | (6.1) | % | ||||||||||||||||||
| Stockholders' equity: | |||||||||||||||||||||||
| Preferred stock | — | — | — | — | % | ||||||||||||||||||
| Common stock | 14,525 | 14,394 | 131 | 0.9 | % | ||||||||||||||||||
| Additional paid-in capital | 1,532,481 | 1,496,565 | 35,916 | 2.4 | % | ||||||||||||||||||
| Retained earnings | 1,523,366 | 1,545,094 | (21,728) | (1.4) | % | ||||||||||||||||||
| Accumulated other comprehensive income | 6,342 | 5,745 | 597 | 10.4 | % | ||||||||||||||||||
| Treasury stock, at cost | (2,018,425) | (1,974,286) | (44,139) | 2.2 | % | ||||||||||||||||||
| Total stockholders' equity | 1,058,289 | 1,087,512 | (29,223) | (2.7) | % | ||||||||||||||||||
| 1,233,931 | 1,301,889 | (67,958) | (5.2) | % | |||||||||||||||||||
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| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||
| (Unaudited) | ||||||||||||||
| (Dollars in thousands) | ||||||||||||||
| For the three months ended June 30, | ||||||||||||||
| 2020 | 2019 | |||||||||||||
| Cash flows from operating activities: | ||||||||||||||
| Net loss | (21,728) | (42,140) | ||||||||||||
| Non-cash operating activities: | ||||||||||||||
| Depreciation and amortization | 8,054 | 8,877 | ||||||||||||
| Loss on disposal or impairment of assets | 2 | 85 | ||||||||||||
| Provision for doubtful accounts | 1,330 | 962 | ||||||||||||
| Deferred income taxes | (672) | 7 | ||||||||||||
| Non-cash stock compensation expense | 16,485 | 18,630 | ||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||
| Accounts receivable, net | (5,860) | (3,451) | ||||||||||||
| Deferred commissions | (1,681) | 174 | ||||||||||||
| Other assets | 4,904 | 3,600 | ||||||||||||
| Accounts payable and other liabilities | (22,684) | (188) | ||||||||||||
| Income taxes, net | (1,105) | (863) | ||||||||||||
| Deferred revenue | (657) | (1,101) | ||||||||||||
| Net cash used in operating activities | (23,612) | (15,408) | ||||||||||||
| Cash flows from investing activities: | ||||||||||||||
| Capital expenditures | (832) | (4,888) | ||||||||||||
| Cash paid in acquisitions, net of cash received | — | (4,479) | ||||||||||||
| Payments for investments | (667) | — | ||||||||||||
| Net cash used in investing activities | (1,499) | (9,367) | ||||||||||||
| Cash flows from financing activities: | ||||||||||||||
| Proceeds related to the issuance of common stock under stock and employee benefit plans | 1,137 | 1,060 | ||||||||||||
| Shares repurchased for tax withholdings upon vesting of stock-based awards | (1,827) | (12,093) | ||||||||||||
| Acquisition of treasury stock | (42,312) | (20,099) | ||||||||||||
| Net cash used in financing activities | (43,002) | (31,132) | ||||||||||||
| Effect of exchange rate changes on cash | 197 | (89) | ||||||||||||
| Net change in cash, cash equivalents and restricted cash | (67,916) | (55,996) | ||||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 732,626 | 1,061,473 | ||||||||||||
| Cash, cash equivalents and restricted cash at end of period | 664,710 | 1,005,477 | ||||||||||||
| Supplemental cash flow information: | ||||||||||||||
| Cash paid (received) for income taxes | (2,041) | 110 | ||||||||||||
P 11
| LIVERAMP HOLDINGS, INC AND SUBSIDIARIES | ||||||||||||||||||||||||||
| CALCULATION OF FREE CASH FLOW TO EQUITY (1) | ||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||
| 6/30/2019 | 9/30/2019 | 12/31/2019 | 3/31/2020 | FY2020 | 6/30/2020 | |||||||||||||||||||||
| Net Cash Provided by (Used in) Operating Activities | $ | (15,408) | $ | (28,751) | $ | 15,804 | $ | (220) | $ | (28,575) | $ | (23,612) | ||||||||||||||
| Less: | ||||||||||||||||||||||||||
| Capital expenditures | (4,888) | (2,641) | (2,773) | (1,409) | (11,711) | (832) | ||||||||||||||||||||
| Free Cash Flow to Equity | $ | (20,296) | $ | (31,392) | $ | 13,031 | $ | (1,629) | $ | (40,286) | $ | (24,444) | ||||||||||||||
(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.
P 12
| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||
| (Dollars in thousands, except per share amounts) | ||||||||||||||||||||||||||||||||
| Q1 FY21 to Q1 FY20 | ||||||||||||||||||||||||||||||||
| 6/30/2019 | 9/30/2019 | 12/31/2019 | 3/31/2020 | FY2020 | 6/30/2020 | % | $ | |||||||||||||||||||||||||
| Revenues | 82,511 | 90,143 | 102,217 | 105,701 | 380,572 | 99,437 | 20.5 | % | 16,926 | |||||||||||||||||||||||
| Cost of revenue | 36,426 | 41,460 | 37,966 | 36,852 | 152,704 | 34,465 | (5.4) | % | (1,961) | |||||||||||||||||||||||
| Gross profit | 46,085 | 48,683 | 64,251 | 68,849 | 227,868 | 64,972 | 41.0 | % | 18,887 | |||||||||||||||||||||||
| % Gross margin | 55.9 | % | 54.0 | % | 62.9 | % | 65.1 | % | 59.9 | % | 65.3 | % | ||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||||||||
| Research and development | 23,722 | 26,445 | 27,403 | 28,411 | 105,981 | 26,989 | 13.8 | % | 3,267 | |||||||||||||||||||||||
| Sales and marketing | 43,144 | 45,204 | 51,993 | 48,564 | 188,905 | 38,627 | (10.5) | % | (4,517) | |||||||||||||||||||||||
| General and administrative | 25,318 | 27,262 | 26,107 | 30,216 | 108,903 | 23,368 | (7.7) | % | (1,950) | |||||||||||||||||||||||
| Gains, losses and other items, net | 2,276 | 45 | 233 | 2,447 | 5,001 | 1,995 | (12.3) | % | (281) | |||||||||||||||||||||||
| Total operating expenses | 94,460 | 98,956 | 105,736 | 109,638 | 408,790 | 90,979 | (3.7) | % | (3,481) | |||||||||||||||||||||||
| Loss from operations | (48,375) | (50,273) | (41,485) | (40,789) | (180,922) | (26,007) | 46.2 | % | 22,368 | |||||||||||||||||||||||
| Total other income | 5,882 | 4,780 | 3,158 | 1,565 | 15,385 | 463 | (92.1) | % | (5,419) | |||||||||||||||||||||||
| Loss from continuing operations before income taxes | (42,493) | (45,493) | (38,327) | (39,224) | (165,537) | (25,544) | 39.9 | % | 16,949 | |||||||||||||||||||||||
| Income taxes (benefit) | (353) | (5,291) | (287) | (34,345) | (40,276) | (3,816) | (981.0) | % | (3,463) | |||||||||||||||||||||||
| Net loss from continuing operations | (42,140) | (40,202) | (38,040) | (4,879) | (125,261) | (21,728) | 48.4 | % | 20,412 | |||||||||||||||||||||||
P 13
| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (Continued) | ||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||
| (Dollars in thousands, except per share amounts) | ||||||||||||||||||||||||||||||||
| Q1 FY21 to Q1 FY20 | ||||||||||||||||||||||||||||||||
| 6/30/2019 | 9/30/2019 | 12/31/2019 | 3/31/2020 | FY2020 | 6/30/2020 | % | $ | |||||||||||||||||||||||||
| Earnings from discontinued operations, net of tax | — | — | — | 750 | 750 | — | — | % | — | |||||||||||||||||||||||
| Net loss | $ | (42,140) | $ | (40,202) | $ | (38,040) | $ | (4,129) | $ | (124,511) | $ | (21,728) | 48.4 | % | 20,412 | |||||||||||||||||
| Diluted loss per share | (0.61) | (0.59) | (0.56) | (0.06) | (1.84) | (0.33) | 45.8 | % | 0.28 | |||||||||||||||||||||||
| Diluted loss per share from continuing operations | (0.61) | (0.59) | (0.56) | (0.07) | (1.85) | (0.33) | 45.8 | % | 0.28 | |||||||||||||||||||||||
| Some earnings (loss) per share amounts may not add due to rounding. | ||||||||||||||||||||||||||||||||
P 14
| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP EPS (1) | ||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||
| (Dollars in thousands, except per share amounts) | ||||||||||||||||||||||||||
| 6/30/2019 | 9/30/2019 | 12/31/2019 | 3/31/2020 | FY2020 | 6/30/2020 | |||||||||||||||||||||
| Loss from continuing operations before income taxes | $ | (42,493) | $ | (45,493) | $ | (38,327) | $ | (39,224) | $ | (165,537) | $ | (25,544) | ||||||||||||||
| Income taxes (benefit) | (353) | (5,291) | (287) | (34,345) | (40,276) | (3,816) | ||||||||||||||||||||
| Net loss from continuing operations | (42,140) | (40,202) | (38,040) | (4,879) | (125,261) | (21,728) | ||||||||||||||||||||
| Earnings from discontinued operations, net of tax | — | — | — | 750 | 750 | — | ||||||||||||||||||||
| Net loss | $ | (42,140) | $ | (40,202) | $ | (38,040) | $ | (4,129) | $ | (124,511) | $ | (21,728) | ||||||||||||||
| Loss per share: | ||||||||||||||||||||||||||
| Basic | $ | (0.61) | $ | (0.59) | $ | (0.56) | $ | (0.06) | $ | (1.84) | $ | (0.33) | ||||||||||||||
| Diluted | $ | (0.61) | $ | (0.59) | $ | (0.56) | $ | (0.06) | $ | (1.84) | $ | (0.33) | ||||||||||||||
| Excluded items: | ||||||||||||||||||||||||||
| Purchased intangible asset amortization (cost of revenue) | $ | 3,123 | $ | 5,369 | $ | 5,369 | $ | 5,181 | $ | 19,042 | $ | 5,306 | ||||||||||||||
| Non-cash stock compensation (cost of revenue and operating expenses) | 18,630 | 23,354 | 30,295 | 17,168 | 89,447 | 16,485 | ||||||||||||||||||||
| Accelerated amortization (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 | ||||||||||||||||||||
| Transformation costs (general and administrative) | — | — | — | — | — | 3,605 | ||||||||||||||||||||
| Total excluded items, continuing operations | 25,935 | 30,431 | 35,897 | 24,796 | 117,059 | 27,391 | ||||||||||||||||||||
P 15
| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP EPS (1) (Continued) | ||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||
| (Dollars in thousands, except per share amounts) | ||||||||||||||||||||||||||
| 6/30/2019 | 9/30/2019 | 12/31/2019 | 3/31/2020 | FY2020 | 6/30/2020 | |||||||||||||||||||||
| Income (Loss) from continuing operations before income taxes and excluding items | $ | (16,558) | $ | (15,062) | $ | (2,430) | $ | (14,428) | $ | (48,478) | $ | 1,847 | ||||||||||||||
| Income taxes (benefit) | (216) | 190 | (227) | (11,199) | (11,452) | 934 | ||||||||||||||||||||
| Non-GAAP net earnings (loss) from continuing operations | $ | (16,342) | $ | (15,252) | $ | (2,203) | $ | (3,229) | $ | (37,026) | $ | 913 | ||||||||||||||
| Non-GAAP earnings (loss) per share from continuing operations: | ||||||||||||||||||||||||||
| Basic | $ | (0.24) | $ | (0.23) | $ | (0.03) | $ | (0.05) | $ | (0.55) | $ | 0.01 | ||||||||||||||
| Diluted | $ | (0.24) | $ | (0.23) | $ | (0.03) | $ | (0.05) | $ | (0.55) | $ | 0.01 | ||||||||||||||
| Basic weighted average shares | 68,906 | 67,684 | 67,473 | 66,977 | 67,760 | 65,570 | ||||||||||||||||||||
| Diluted weighted average shares | 68,906 | 67,684 | 67,473 | 66,977 | 67,760 | 67,337 | ||||||||||||||||||||
| 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.
P 16
| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | |||||||||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP EXPENSES (1) | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| 6/30/2019 | 9/30/2019 | 12/31/2019 | 3/31/2020 | FY2020 | 6/30/2020 | ||||||||||||||||||
| Expenses, continuing operations: | |||||||||||||||||||||||
| Cost of revenue | $ | 36,426 | $ | 41,460 | $ | 37,966 | $ | 36,852 | $ | 152,704 | $ | 34,465 | |||||||||||
| Research and development | 23,722 | 26,445 | 27,403 | 28,411 | 105,981 | 26,989 | |||||||||||||||||
| Sales and marketing | 43,144 | 45,204 | 51,993 | 48,564 | 188,905 | 38,627 | |||||||||||||||||
| General and administrative | 25,318 | 27,262 | 26,107 | 30,216 | 108,903 | 23,368 | |||||||||||||||||
| Gains, losses and other items, net | 2,276 | 45 | 233 | 2,447 | 5,001 | 1,995 | |||||||||||||||||
| Gross profit, continuing operations: | 46,085 | 48,683 | 64,251 | 68,849 | 227,868 | 64,972 | |||||||||||||||||
| % Gross margin | 55.9 | % | 54.0 | % | 62.9 | % | 65.1 | % | 59.9 | % | 65.3 | % | |||||||||||
| Excluded items: | |||||||||||||||||||||||
| Purchased intangible asset amortization (cost of revenue) | 3,123 | 5,369 | 5,369 | 5,181 | 19,042 | 5,306 | |||||||||||||||||
| Non-cash stock compensation (cost of revenue) | 755 | 1,060 | 1,028 | 926 | 3,769 | 775 | |||||||||||||||||
| Non-cash stock compensation (research and development) | 4,451 | 6,346 | 6,462 | 6,001 | 23,260 | 5,886 | |||||||||||||||||
| Non-cash stock compensation (sales and marketing) | 8,920 | 9,758 | 15,670 | 3,678 | 38,026 | 7,123 | |||||||||||||||||
| Non-cash stock compensation (general and administrative) | 4,504 | 6,190 | 7,135 | 6,563 | 24,392 | 2,701 | |||||||||||||||||
| 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 | |||||||||||||||||
| Transformation costs (general and administrative) | — | — | — | — | — | 3,605 | |||||||||||||||||
| Total excluded items | $ | 25,935 | $ | 30,431 | $ | 35,897 | $ | 24,796 | $ | 117,059 | $ | 27,391 | |||||||||||
P 17
| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | |||||||||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP EXPENSES (1) (Continued) | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| 6/30/2019 | 9/30/2019 | 12/31/2019 | 3/31/2020 | FY2020 | 6/30/2020 | ||||||||||||||||||
| Expenses, continued operations excluding items: | |||||||||||||||||||||||
| Cost of revenue | $ | 31,061 | $ | 33,786 | $ | 31,569 | $ | 30,745 | $ | 127,161 | $ | 28,384 | |||||||||||
| Research and development | 19,271 | 20,099 | 20,941 | 22,410 | 82,721 | 21,103 | |||||||||||||||||
| Sales and marketing | 34,224 | 35,446 | 36,323 | 44,886 | 150,879 | 31,504 | |||||||||||||||||
| General and administrative | 20,395 | 20,654 | 18,972 | 23,653 | 83,674 | 17,062 | |||||||||||||||||
| Gains, losses and other items, net | — | — | — | — | — | — | |||||||||||||||||
| Gross profit, continuing operations excluding items: | 51,450 | 56,357 | 70,648 | 74,956 | 253,411 | 71,053 | |||||||||||||||||
| % Gross margin | 62.4 | % | 62.5 | % | 69.1 | % | 70.9 | % | 66.6 | % | 71.5 | % | |||||||||||
(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.
P 18
| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | |||||
| RECONCILIATION OF GAAP TO NON-GAAP OPERATING LOSS GUIDANCE (1) | |||||
| (Unaudited) | |||||
| (Dollars in thousands) | |||||
| For the quarter ending | |||||
| September 30, 2020 | |||||
| GAAP loss from operations | (39,000) | ||||
| Excluded items: | |||||
| Purchased intangible asset amortization | 5,000 | ||||
| Non-cash stock compensation | 25,000 | ||||
| Restructuring and transformation costs | 2,000 | ||||
| Total excluded items | 32,000 | ||||
| Non-GAAP loss from operations | (7,000) | ||||
(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.
P 19
APPENDIX A
| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | ||
| Q1 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 per share, income 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. | ||
P 20
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 informationingful 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. | ||
P 21