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CORRECTING and REPLACING LiveRamp Delivers Record Second Quarter Results

SAN FRANCISCO--(BUSINESS WIRE)--

Total Revenue up 20% – Subscription Revenue up 30%

Maintains Full-Year Revenue Guidance

Within the table "RECONCILIATION OF GAAP TO NON-GAAP OPERATING LOSS GUIDANCE" in the "High Range" column for "Revenues" the number should read $285,000 (instead of $275,000).

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20181029005311/en/

The corrected release reads:

LIVERAMP DELIVERS RECORD SECOND QUARTER RESULTS

Total Revenue up 20% – Subscription Revenue up 30%

Maintains Full-Year Revenue Guidance

LiveRamp® (NYSE: RAMP), the identity platform powering exceptional experiences, today announced its financial results for the quarter ended September 30, 2018.

Second Quarter Financial Highlights:

  • Total revenue of $65 million, up 20% compared to the second quarter of last year.
  • Subscription revenue of $55 million, up 30% year-over-year.
  • GAAP gross margin improved 670 basis points to 62%. Non-GAAP gross margin improved 100 basis points to 69%.
  • The Company received approximately $2 billion in cash, after debt retirement and fees, from the sale of its Acxiom Marketing Solutions (AMS) business. LiveRamp anticipates paying taxes of approximately $500 million in its fourth fiscal quarter. The Company intends to initiate a $500 million cash tender for its common stock during its third fiscal quarter. In addition, LiveRamp’s Board of Directors has voted to increase the ongoing share repurchase authorization by $500 million and extend the duration of the program through December 31, 2020. The Company now has approximately $580 million remaining capacity for future ongoing purchases of common stock under the authorization.

“LiveRamp is the world’s largest open provider of identity for the customer experience economy,” said LiveRamp CEO Scott Howe. “Looking ahead, we are focused on further extending and strengthening our network and delivering innovative solutions to our global customers.”

“Today, LiveRamp will be hosting its first analyst and investor day at the New York Stock Exchange,” said LiveRamp CFO Warren Jenson. “Now that the sale of AMS is behind us, the collective energy of our team is one hundred percent focused on LiveRamp and our opportunity.”

Second Quarter GAAP and Non-GAAP Results:

The following table summarizes the Company’s financial results for its second fiscal quarter:

Q2 Fiscal 2019
GAAP Results
Q2 Fiscal 2019
Non-GAAP Results

$ millions

YoY $ millions YoY
Subscription revenue $55 30% $55 30%

Marketplace & other revenue

$10

(15%)

$10

(15%)

Total revenue $65 20% $65 20%

$ millions or
% of revenue

YoY

$ millions or
% of revenue

YoY
Gross profit $40 34% $45 22%
Gross margin 62% 670 bps 69% 100 bps
Operating loss from cont. operations ($38) nm ($14) nm
Operating margin (59%) 1,170 bps (22%) (250 bps)
Net cash used in operating activities $27 nm
Free cash flow ($32) nm

$ millions

Loss per
share

$ millions

Loss per
share

Net loss from cont. operations

($41) ($0.53) ($11) ($0.14)

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.

Key Metrics and Business Highlights

  • LiveRamp added over 25 new direct customers during the quarter, bringing its total direct customer count to approximately 650, an increase of more than 30% year-over-year.
  • Dollar-based net retention grew to approximately 115% driven by strong upsell activity.
  • LiveRamp expanded the availability of its AbiliTec® offline identity resolution platform to its ecosystem partners. LiveRamp customers using AbiliTec can expect greater reach, higher accuracy, increased interoperability and advanced insights.
  • The Company launched Data Store in the Asia Pacific region during the quarter. Australia and Japan are the first two markets to go live with the new feature, fueling LiveRamp’s regional expansion strategy.

Financial Outlook

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

For fiscal 2019, LiveRamp expects to report:

  • Revenue of between $275 million and $285 million, an increase of between 25% and 30% year-over-year.
  • GAAP operating loss from continuing operations of between $170 million and $158 million.
  • Non-GAAP operating loss from continuing operations of between $64 million and $52 million.

The Company’s GAAP and non-GAAP operating loss guidance includes approximately $20 million of transition-related spend associated with establishing standalone operations at LiveRamp . The $20 million is broken out as follows: approximately $3.5 million in the second quarter, $9 million in the third quarter and $7.5 million in the fourth quarter. Transition-related spending is expected to be largely complete by the Company’s fiscal year end.

Analyst and Investor Day

LiveRamp will host its first ever Analyst and Investor Day beginning at 10:00AM PT / 1:00PM ET today to further discuss this information. Interested parties are invited to listen to the webcast which can be accessed on our investor site . A slide presentation accompanying the earnings results can be found here .

About LiveRamp

LiveRamp provides the identity platform leveraged by brands and their partners to deliver innovative products and exceptional experiences. LiveRamp IdentityLink™ connects people, data, and devices across the digital and physical world, powering the people-based marketing revolution and allowing consumers to safely connect with the brands and products they love. For more information, visit www.LiveRamp.com .

Forward-Looking Statements

This release and today’s conference call contain forward-looking statements including, without limitation, statements regarding expected levels of revenue and earnings per share. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially. The following are factors, among others, that could cause actual results to differ materially from these forward-looking statements: the possibility that expected revenue may not be realized within the expected timeframe; the possibility that the integration of acquired businesses may not be successful as planned; the possibility that certain contracts may not generate the anticipated revenue or profitability or may not be closed within the anticipated time frames; the possibility that significant customers may experience extreme, severe economic difficulty or otherwise reduce or cancel the amount of business they do with us; the possibility that we will not successfully complete customer contract requirements on time or meet the service levels specified in the contracts, which may result in contract penalties or lost revenue; the possibility that data purchasers will reduce their reliance on us by developing and using their own, or alternative, sources of data generally or with respect to certain data elements or categories; the possibility that data suppliers might withdraw data from us, leading to our inability to provide certain products and services to our clients; the possibility that we may not be able to attract, retain or motivate qualified technical, sales and leadership associates, or that we may lose key associates; the possibility that we may not be able to adequately adapt to rapidly changing computing environments, technologies and marketing practices; the possibility that negative changes in economic conditions in general or other conditions might lead to a reduction in demand for our products and services; the possibility that there will be changes in consumer or business information industries and markets that negatively impact the company; the possibility that the historical seasonality of our business may change; the possibility that we will not be able to achieve anticipated cost reductions and avoid unanticipated costs; the possibility that the fair value of certain of our assets may not be equal to the carrying value of those assets now or in future time periods; the possibility that unusual charges may be incurred; the possibility that changes in accounting pronouncements may occur and may impact these forward-looking statements; the possibility that we may encounter difficulties when entering new markets or industries; the possibility that we could experience loss of data center capacity or interruption of telecommunication links; the possibility the European General Data Protection Regulation, which became effective May 25, 2018, will make it more difficult and/or costly for us to do business in the EU; the possibility the California Consumer Privacy Act of 2018, which becomes effective January 1, 2020, will make it more difficult and/or costly for us to do business in California and other states within the U.S.; the possibility that new laws may be enacted which limit our ability to provide services to our clients and/or which limit the use of data; and the possibility that other risks and uncertainties may emerge, including those detailed from time to time in our current and periodic reports filed with the Securities and Exchange Commission, including our current reports on Form 8-K, quarterly reports on Form 10-Q and annual reports on Form 10-K, particularly the discussion under the caption “Item 1A. RISK FACTORS” in our Annual Report on Form 10-K for the year ended March 31, 2018, which was filed with the Securities and Exchange Commission on May 25, 2018 and the discussion under the caption “Item 1A. RISK FACTORS” in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, which was filed with the Securities and Exchange Commission on August 9, 2018.

With respect to the provision of products or services outside our primary base of operations in the United States, all the above factors apply, along with the difficulty of doing business in numerous sovereign jurisdictions due to differences in scale, competition, culture, laws and regulations.

We undertake no obligation to update the information contained in this press release or any other forward-looking statement.

To automatically receive LiveRamp financial news by email, please visit www.LiveRamp.com and subscribe to email alerts.

LiveRamp, LiveRamp, IdentityLink, Abilitec 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 SUBDISIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)

For the Three Months Ended
September 30,

2018 2017

$
Variance

%
Variance
Revenues 64,812 54,013 10,799 20.0 %
Cost of revenue 24,466 24,009 457 1.9 %
Gross profit 40,346 30,004 10,342 34.5 %
% Gross margin 62.3 % 55.5 %
Operating expenses:
Research and development 16,940 15,599 1,341 8.6 %
Sales and marketing 35,940 25,981 9,959 38.3 %
General and administrative 25,176 23,724 1,452 6.1 %
Gains, losses and other items, net 489 2,833 (2,344 ) (82.7 %)
Total operating expenses 78,545 68,137 10,408 15.3 %
Loss from operations (38,199 ) (38,133 ) (66 ) (0.2 %)
% Margin -58.9 % -70.6 %
Total other income (expense) (281 ) 263 (544 ) (206.8 %)
Loss from continuing operations before income taxes (38,480 ) (37,870 ) (610 ) (1.6 %)
Income taxes (benefit) 2,700 (11,869 ) 14,569 122.7 %
Net loss from continuing operations (41,180 ) (26,001 ) (15,179 ) (58.4 %)
Earnings from discontinued operations, net of tax 61,803 22,665 39,138 172.7 %
Net earnings (loss) 20,623 (3,336 ) 23,959 718.2 %
Basic earnings (loss) per share:
Continuing operations (0.53 ) (0.33 ) (0.20 ) (62.0 %)
Discontinued operations 0.80 0.29 0.51 179.0 %
Net earnings (loss) 0.27 (0.04 ) 0.31 732.5 %
Diluted earnings (loss) per share:
Continuing operations (0.53 ) (0.33 ) (0.20 ) (62.0 %)
Discontinued operations 0.80 0.29 0.51 179.0 %
Net earnings (loss) 0.27 (0.04 ) 0.31 732.5 %
Basic weighted average shares 77,448 79,235
Diluted weighted average shares 77,448 79,235
LIVERAMP HOLDINGS, INC. AND SUBDISIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
For the Six Months Ended
September 30,
2018 2017 $
Variance
%
Variance
Revenues 127,283 100,770 26,513 26.3 %
Cost of revenue 48,120 48,070 50 0.1 %
Gross profit 79,163 52,700 26,463 50.2 %
% Gross margin 62.2 % 52.3 %
Operating expenses:
Research and development 33,910 30,439 3,471 11.4 %
Sales and marketing 69,263 50,072 19,191 38.3 %
General and administrative 43,300 47,311 (4,011 ) (8.5 %)
Gains, losses and other items, net 491 2,830 (2,339 ) (82.7 %)
Total operating expenses 146,964 130,652 16,312 12.5 %
Loss from operations (67,801 ) (77,952 ) 10,151 13.0 %
% Margin -53.3 % -77.4 %
Total other income (expense) 75 (317 ) 392 123.7 %
Loss from continuing operations before income taxes (67,726 ) (78,269 ) 10,543 13.5 %
Income taxes (benefit) 1,272 (25,189 ) 26,461 105.0 %
Net loss from continuing operations (68,998 ) (53,080 ) (15,918 ) (30.0 %)
Earnings from discontinued operations, net of tax 86,606 48,444 38,162 78.8 %
Net earnings (loss) 17,608 (4,636 ) 22,244 479.8 %
Basic earnings (loss) per share:
Continuing operations (0.89 ) (0.67 ) (0.22 ) (33.0 %)
Discontinued operations 1.12 0.61 0.51 82.9 %
Net earnings (loss) 0.23 (0.06 ) 0.29 488.5 %
Diluted earnings (loss) per share:
Continuing operations (0.89 ) (0.67 ) (0.22 ) (33.0 %)
Discontinued operations 1.12 0.61 0.51 82.9 %
Net earnings (loss) 0.23 (0.06 ) 0.29 488.5 %
Basic weighted average shares 77,192 78,954
Diluted weighted average shares 77,192 78,954

LIVERAMP HOLDINGS, INC. AND SUBDISIARIES
RECONCILIATION OF GAAP TO NON-GAAP EPS (1)
(Unaudited)
(Dollars in thousands, except per share amounts)

For the Three Months Ended
September 30,
For the Six Months Ended
September 30,
2018 2017 2018 2017
Loss from continuing operations before income taxes (38,480 ) (37,870 ) (67,726 ) (78,269 )
Income taxes (benefit) 2,700 (11,869 ) 1,272 (25,189 )
Net loss from continuing operations (41,180 ) (26,001 ) (68,998 ) (53,080 )
Earnings from discontinued operations, net of tax 61,803 22,665 86,606 48,444
Net earnings (loss) 20,623 (3,336 ) 17,608 (4,636 )
Earnings (loss) per share:
Basic 0.27 (0.04 ) 0.23 (0.06 )
Diluted 0.27 (0.04 ) 0.23 (0.06 )
Excluded items:
Purchased intangible asset amortization (cost of revenue) 3,548 6,015 9,518 11,974
Non-cash stock compensation (cost of revenue and operating expenses) 17,667 13,154 35,465 25,554
Restructuring and merger charges (gains, losses, and other) 489 2,833 490 2,830
Separation and transformation costs (general and administrative) 2,122 5,453 2,122 12,572
Total excluded items, continuing operations 23,826 27,455 47,595 52,930

Loss from continuing operations before income taxes and excluding items

(14,654 ) (10,415 ) (20,131 ) (25,339 )
Income taxes (benefit) (2) (3,790 ) (3,164 ) (4,868 ) (7,720 )
Non-GAAP net loss from continuing operations (10,864 ) (7,251 ) (15,263 ) (17,619 )
Non-GAAP loss per share:
Basic (0.14 ) (0.09 ) (0.20 ) (0.22 )
Diluted (0.14 ) (0.09 ) (0.20 ) (0.22 )
Basic weighted average shares 77,448 79,235 77,192 78,954
Diluted weighted average shares 77,448 79,235 77,192 78,954

(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 25.9% and 30.4% in the second quarter of fiscal 2019 and 2018, respectively, and 24.2% and 30.5% for the six months ended September 30, 2018 and 2017, respectively. The difference between our GAAP and non-GAAP tax rates were primarily due to the net tax effects of the excluded items. The rates for the three months and six months ended September 30, 2018 reflect the impact of the Tax Acts and Jobs Act.

LIVERAMP HOLDINGS, INC. AND SUBDISIARIES
RECONCILIATION OF GAAP TO NON-GAAP LOSS FROM OPERATIONS (1)
(Unaudited)
(Dollars in thousands)
For the Three Months Ended
September 30,
For the Six Months Ended
September 30,
2018 2017 2018 2017
Loss from continuing operations (38,199 ) (38,133 ) (67,801 ) (77,952 )
Excluded items:
Purchased intangible asset amortization (cost of revenue) 3,548 6,015 9,518 11,974
Non-cash stock compensation (cost of revenue and operating expenses) 17,667 13,154 35,465 25,554
Restructuring and merger charges (gains, losses, and other) 489 2,833 490 2,830
Separation and transformation costs (general and administrative) 2,122 5,453 2,122 12,572
Total excluded items 23,826 27,455 47,595 52,930
Loss from continuing operations before excluded items (14,373 ) (10,678 ) (20,206 ) (25,022 )

(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 SUBDISIARIES
RECONCILIATION OF ADJUSTED EBITDA (1)
(Unaudited)
(Dollars in thousands)
For the Three Months Ended
September 30,
For the Six Months Ended
September 30,
2018 2017 2018 2017
Net loss from continuing operations (41,180 ) (26,001 ) (68,998 ) (53,080 )
Income taxes (benefit) 2,700 (11,869 ) 1,272 (25,189 )
Other income (expense) (281 ) 263 75 (317 )
Loss from operations (38,199 ) (38,133 ) (67,801 ) (77,952 )
Depreciation and amortization 7,010 9,732 16,540 18,931
EBITDA (31,189 ) (28,401 ) (51,261 ) (59,021 )
Other adjustments:
Non-cash stock compensation (cost of revenue and operating expenses) 17,667 13,154 35,465 25,554
Restructuring and merger charges (gains, losses, and other) 489 2,833 490 2,830
Separation and transformation costs (general and administrative) 2,122 5,453 2,122 12,572
Other adjustments 20,278 21,440 38,077 40,956
Adjusted EBITDA (10,911 ) (6,961 ) (13,184 ) (18,065 )

(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 SUBDISIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
September 30,
2018
March 31,
2018
$
Variance
%
Variance

Assets

Current assets:
Cash and cash equivalents 87,047 140,018 (52,971 ) (37.8 %)
Trade accounts receivable, net 41,110 52,047 (10,937 ) (21.0 %)
Refundable income taxes 19,285 9,977 9,308 93.3 %
Other current assets 23,196 20,173 3,023 15.0 %
Assets held for sale 703,004 138,374 564,630 408.0 %
Total current assets 873,642 360,589 513,053 142.3 %
Property and equipment 58,451 62,353 (3,902 ) (6.3 %)
Less - accumulated depreciation and amortization 29,966 30,013 (47 ) (0.2 %)
Property and equipment, net 28,485 32,340 (3,855 ) (11.9 %)
Software, net of accumulated amortization 9,513 13,970 (4,457 ) (31.9 %)
Goodwill 204,869 203,639 1,230 0.6 %
Deferred income taxes 26,312 10,703 15,609 145.8 %
Deferred commissions, net 8,490 - 8,490 -
Other assets, net 36,481 37,854 (1,373 ) (3.6 %)
Assets held for sale - 550,402 (550,402 ) (100.0 %)
1,187,792 1,209,497 (21,705 ) (1.8 %)

Liabilities and Stockholders' Equity

Current liabilities:
Current installments of long-term debt - 1,583 (1,583 ) (100.0 %)
Trade accounts payable 15,854 18,759 (2,905 ) (15.5 %)
Accrued payroll and related expenses 14,329 13,774 555 4.0 %
Other accrued expenses 44,434 39,624 4,810 12.1 %
Deferred revenue 2,982 4,506 (1,524 ) (33.8 %)
Liabilities held for sale 97,163 100,353 (3,190 ) (3.2 %)
Total current liabilities 174,762 178,599 (3,837 ) (2.1 %)
Long-term debt 226,307 227,837 (1,530 ) (0.7 %)
Deferred income taxes 15,952 40,243 (24,291 ) (60.4 %)
Other liabilities 10,093 10,016 77 0.8 %
Other liabilities held for sale - 3,707 - (100.0 %)
Stockholders' equity:
Common stock 13,836 13,609 227 1.7 %
Additional paid-in capital 1,277,614 1,235,679 41,935 3.4 %
Retained earnings 658,666 628,331 30,335 4.8 %
Accumulated other comprehensive income 10,192 10,767 (575 ) (5.3 %)
Treasury stock, at cost (1,199,630 ) (1,139,291 ) (60,339 ) (5.3 %)
Total stockholders' equity 760,678 749,095 11,583 1.5 %
1,187,792 1,209,497 (21,705 ) (1.8 %)
LIVERAMP HOLDINGS, INC. AND SUBDISIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the Three Months Ended
September 30,
2018 2017
Cash flows from operating activities:
Net earnings (loss) 20,623 (3,336 )
Earnings from discontinued operations, net of tax (61,803 ) (22,665 )
Non-cash operating activities:
Depreciation and amortization 7,010 9,732
Loss on disposal or impairment of assets 490 2,132
Provision for doubtful accounts 1,095 304
Deferred income taxes 14,136 (5,480 )
Non-cash stock compensation expense 17,667 13,073
Changes in operating assets and liabilities:
Accounts receivable (1,797 ) (8,301 )
Deferred commissions (1,049 ) -
Other assets (9,967 ) 6,438
Accounts payable and other liabilities (11,593 ) 25
Deferred revenue (1,942 ) 49
Net cash used in operating activities (27,130 ) (8,029 )
Cash flows from investing activities:
Capitalized software (423 ) (638 )
Capital expenditures (1,323 ) (330 null