Press release

LiveRamp Announces Second Quarter Results

0
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LiveRamp® (NYSE: RAMP), the trusted platform that makes data accessible and meaningful, today announced its financial results for the second quarter ended September 30, 2019.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20191106005973/en/

Financial Highlights

  • Total revenue was $90 million, up 39% compared to the prior year period.
  • Subscription revenue was $72 million, up 31% and contributed 80% of total revenue.
  • Marketplace & Other revenue was $18 million, up 83% compared to the prior year period.
  • GAAP operating loss was $50 million compared to a GAAP operating loss of $38 million in the prior year period. Non-GAAP operating loss was $20 million compared to a non-GAAP operating loss of $14 million in the prior year period.
  • GAAP loss per share from continuing operations was $0.59, and non-GAAP loss per share from continuing operations was $0.23.
  • Net cash used in operating activities was $29 million compared to net cash used in operating activities of $27 million during the second quarter of fiscal 2019.
  • LiveRamp has repurchased 2.1 million shares for $100.5 million under the current stock repurchase program since March 31, 2019. Since August 2011, the Company has returned over $1 billion in capital to shareholders.
  • Cash and cash equivalents totaled $777 million with no debt at quarter end.

“The quality of our quarter again demonstrates LiveRamp’s importance in the ecosystem,” said LiveRamp CEO Scott Howe. “Today, we work with 720 direct enterprise customers and serve thousands of additional companies through our partner network. We power more than 550 integrations and, with Data Plus Math, are providing a new way to buy, sell and measure advanced TV.”

“This was another outstanding quarter, fueled by record bookings and accelerating top-line growth,” said LiveRamp President and CFO Warren Jenson. “Our forward growth metrics remain strong: ARR exiting Q2 was up 40% year-over-year, and our Marketplace business grew by more than 80%. Added together, our business continues to demonstrate its strength and durability. In addition, the acquisition of Data Plus Math is already paying dividends. LiveRamp TV was up more than 70% year-over-year.”

GAAP and Non-GAAP Results

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

 

Q2 Fiscal 2020

Q2 Fiscal 2019

 

Results

Results

 

 

GAAP

Non-GAAP

GAAP

Non-GAAP

Subscription revenue

$72

$55

YoY change %

31%

 

30%

 

Marketplace & other revenue

$18

$10

YoY change %

83%

 

(15%)

 

Total revenue

$90

$65

YoY change %

39%

 

20%

 

 

 

 

 

 

Gross profit

$49

$56

$40

$45

% Gross margin

54%

63%

62%

69%

YoY change, pts

(8 pts)

(6 pts)

7 pts

1 pt

 

 

 

 

 

Operating loss

($50)

($20)

($38)

($14)

% Operating margin

(56%)

(22%)

(59%)

(22%)

YoY change, pts

3 pts

– pt

12 pts

(2) pts

 

 

 

 

 

Net loss1

($40)

($15)

($41)

($11)

YoY change %

nm

nm

nm

nm

Loss per share1

($0.59)

($0.23)

($0.53)

($0.14)

YoY change %

nm

nm

nm

nm

Shares to Calculate EPS

67.7

67.7

77.4

77.4

YoY change %

(13%)

 

 

 

Net operating cash flow

($29)

($27)

YoY change %

nm

nm

Free cash flow to equity

($31)

($32)

YoY change %

nm

nm

1 From continuing operations, does not include AMS results.

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 Metrics & Highlights

  • LiveRamp added 30 new direct subscription customers during the quarter, bringing its total direct customer count to 720, an increase of 18% year-over-year. We now serve 21% of the Fortune 500 compared to 18% in the prior year period.
  • LiveRamp has 44 clients whose subscription contracts exceed $1 million in annual revenue, up from 40 in the prior year period.
  • Subscription net retention1 was approximately 109% in the quarter. Platform net retention was 119% in Q2.
  • LiveRamp announced new partnerships with MediaMath and Rubicon Project to enable marketers to buy publisher inventory with LiveRamp’s IdentityLink™ graph as part of its Authenticated Traffic Solution (ATS) and IdentityLink in the bidstream efforts. These integrations allow people-based identity to be efficiently passed in real-time and enable marketers to connect with their customers using a consistent, omnichannel view of the consumer that is not reliant on third-party cookies.

Financial Outlook

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

For fiscal 2020, LiveRamp now expects to report:

  • Revenue of between $376 million and $381 million, an increase of 32% to 33% year-over-year as compared to the Company’s previous revenue growth guidance of 27% to 32%.
  • GAAP operating loss from continuing operations of between $180 million and $175 million as compared to previous GAAP operating loss guidance of $189 million to $169 million.
  • Non-GAAP operating loss of between $68 million and $63 million as compared to previous operating loss guidance of $76 million to $56 million.

The Company’s guidance includes the Data Plus Math acquisition. GAAP and non-GAAP operating loss guidance also includes $11 million of transition-related spend in the first half of the fiscal year associated with establishing standalone operations at LiveRamp.

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 provides the identity platform leveraged by brands and their partners to deliver innovative products and exceptional experiences. LiveRamp’s 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 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 relate to 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 within a rapidly changing industry including digital advertising, 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 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 2019 ended March 31, 2019.

The financial information set forth in this press release reflects estimates based on information available at this time. These amounts could differ from actual reported amounts stated in LiveRamp’s Quarterly Report on Form 10-Q for the period ended September 30, 2019, which LiveRamp expects to file on November 6, 2019.

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,

 

 

 

 

$

 

%

2019

 

2018

 

Variance

 

Variance

 
Revenues

90,143

 

64,812

 

 

25,331

 

39.1

%

 
Cost of revenue

41,460

 

24,466

 

 

16,994

 

69.5

%

Gross profit

48,683

 

40,346

 

 

8,337

 

20.7

%

% Gross margin

54.0

%

62.3

%

 
Operating expenses:
Research and development

26,445

 

16,940

 

 

9,505

 

56.1

%

Sales and marketing

45,204

 

35,940

 

 

9,264

 

25.8

%

General and administrative

27,262

 

25,176

 

 

2,086

 

8.3

%

Gains, losses and other items, net

45

 

489

 

 

(444

)

(90.8

%)

Total operating expenses

98,956

 

78,545

 

 

20,411

 

26.0

%

 
Loss from operations

(50,273

)

(38,199

)

 

(12,074

)

(31.6

%)

% Margin

-55.8

%

-58.9

%

 
Total other income (expense)

4,780

 

(281

)

 

5,061

 

1801.1

%

 
Loss from continuing operations before income taxes

(45,493

)

(38,480

)

 

(7,013

)

(18.2

%)

 
Income taxes (benefit)

(5,291

)

2,700

 

 

(7,991

)

(296.0

%)

 
Net loss from continuing operations

(40,202

)

(41,180

)

 

978

 

2.4

%

 
Earnings from discontinued operations, net of tax

 

61,803

 

 

(61,803

)

(100.0

%)

 
Net earnings (loss)

(40,202

)

20,623

 

 

(60,825

)

(294.9

%)

 
Basic earnings (loss) per share:
Continuing operations

(0.59

)

(0.53

)

 

(0.06

)

(11.7

%)

Discontinued operations

 

0.80

 

 

(0.80

)

(100.0

%)

Net earnings (loss)

(0.59

)

0.27

 

 

(0.86

)

(323.1

%)

 
Diluted earnings (loss) per share:
Continuing operations

(0.59

)

(0.53

)

 

(0.06

)

(11.7

%)

Discontinued operations

 

0.80

 

 

(0.80

)

(100.0

%)

Net earnings (loss)

(0.59

)

0.27

 

 

(0.86

)

(323.1

%)

 
Basic weighted average shares

67,684

 

77,448

 

Diluted weighted average shares

67,684

 

77,448

 

 

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,

 

 

 

 

 

 

 

 

 

$

 

%

 

 

 

 

 

2019

 

2018

 

Variance

 

Variance

 
Revenues

172,654

 

127,283

 

 

45,371

 

35.6

%

 
Cost of revenue

77,886

 

48,120

 

 

29,766

 

61.9

%

Gross profit

94,768

 

79,163

 

 

15,605

 

19.7

%

% Gross margin

54.9

%

62.2

%

 
Operating expenses:
Research and development

50,167

 

33,910

 

 

16,257

 

47.9

%

Sales and marketing

88,348

 

69,263

 

 

19,085

 

27.6

%

General and administrative

52,580

 

43,301

 

 

9,279

 

21.4

%

Gains, losses and other items, net

2,321

 

490

 

 

1,831

 

373.7

%

Total operating expenses

193,416

 

146,964

 

 

46,452

 

31.6

%

 
Loss from operations

(98,648

)

(67,801

)

 

(30,847

)

(45.5

%)

% Margin

-57.1

%

-53.3

%

 
Total other income

10,662

 

75

 

 

10,587

 

14116.0

%

 
Loss from continuing operations before income taxes

(87,986

)

(67,726

)

 

(20,260

)

(29.9

%)

 
Income taxes (benefit)

(5,644

)

1,272

 

 

(6,916

)

(543.7

%)

 
Net loss from continuing operations

(82,342

)

(68,998

)

 

(13,344

)

(19.3

%)

 
Earnings from discontinued operations, net of tax

 

86,606

 

 

(86,606

)

(100.0

%)

 
Net earnings (loss)

(82,342

)

17,608

 

 

(99,950

)

(567.6

%)

 
Basic earnings (loss) per share:
Continuing operations

(1.21

)

(0.89

)

 

(0.31

)

(34.9

%)

Discontinued operations

 

1.12

 

 

(1.12

)

(100.0

%)

Net earnings (loss)

(1.21

)

0.23

 

 

(1.43

)

(628.6

%)

 
Diluted earnings (loss) per share:
Continuing operations

(1.21

)

(0.89

)

 

(0.31

)

(34.9

%)

Discontinued operations

 

1.12

 

 

(1.12

)

(100.0

%)

Net earnings (loss)

(1.21

)

0.23

 

 

(1.43

)

(628.6

%)

 
Basic weighted average shares

68,295

 

77,192

 

Diluted weighted average shares

68,295

 

77,192

 

 

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,

 

 

 

2019

 

2018

 

2019

 

2018

 
 
Loss from continuing operations before income taxes

(45,493

)

(38,480

)

(87,986

)

(67,726

)

 
Income taxes (benefit)

(5,291

)

2,700

 

(5,644

)

1,272

 

 
Net loss from continuing operations

(40,202

)

(41,180

)

(82,342

)

(68,998

)

 
Earnings from discontinued operations, net of tax

 

61,803

 

 

86,606

 

 
Net earnings (loss)

(40,202

)

20,623

 

(82,342

)

17,608

 

 
Earnings (loss) per share:
Basic

(0.59

)

0.27

 

(1.21

)

0.23

 

Diluted

(0.59

)

0.27

 

(1.21

)

0.23

 

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

5,369

 

3,548

 

8,492

 

9,518

 

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

23,354

 

17,667

 

41,984

 

35,465

 

Accelerated depreciation (cost of revenue and operating expenses)

1,663

 

 

3,569

 

 

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

45

 

489

 

2,321

 

490

 

Separation and transformation costs (general and administrative)

 

2,122

 

 

2,122

 

 
Total excluded items, continuing operations

30,431

 

23,826

 

56,366

 

47,595

 

 
Loss from continuing operations before income taxes and excluding items

(15,062

)

(14,654

)

(31,620

)

(20,131

)

 
Income taxes (benefit) (2)

190

 

(3,790

)

(26

)

(4,868

)

 
Non-GAAP net loss from continuing operations

(15,252

)

(10,864

)

(31,594

)

(15,263

)

 
Non-GAAP loss per share from continuing operations:
Basic

(0.23

)

(0.14

)

(0.46

)

(0.20

)

Diluted

(0.23

)

(0.14

)

(0.46

)

(0.20

)

 
Basic weighted average shares

67,684

 

77,448

 

68,295

 

77,192

 

Diluted weighted average shares

67,684

 

77,448

 

68,295

 

77,192

 

 

(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 1.2% and 25.9% in the second quarter of fiscal 2020 and 2019, respectively, and 0.0% and 24.2% for the six months ended September 30, 2019 and 2018, respectively. The difference between our GAAP and non-GAAP tax rates were primarily due to the net tax effects of the excluded items.

 

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP LOSS FROM OPERATIONS (1)

(Unaudited)

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2019

 

2018

 

2019

 

2018

 
 
Loss from continuing operations

(50,273

)

(38,199

)

(98,648

)

(67,801

)

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

5,369

 

3,548

 

8,492

 

9,518

 

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

23,354

 

17,667

 

41,984

 

35,465

 

Accelerated depreciation (cost of revenue and operating expenses)

1,663

 

 

3,569

 

 

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

45

 

489

 

2,321

 

490

 

Separation and transformation costs (general and administrative)

 

2,122

 

 

2,122

 

 
Total excluded items

30,431

 

23,826

 

56,366

 

47,595

 

 
Loss from continuing operations before excluded items

(19,842

)

(14,373

)

(42,282

)

(20,206

)

(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,

 

 

 

2019

 

2018

 

2019

 

2018

 
 
Net loss from continuing operations

(40,202

)

(41,180

)

(82,342

)

(68,998

)

 
Income taxes (benefit)

(5,291

)

2,700

 

(5,644

)

1,272

 

 
Other income (expense)

(4,780

)

281

 

(10,662

)

(75

)

 
Loss from operations

(50,273

)

(38,199

)

(98,648

)

(67,801

)

 
Depreciation and amortization

10,977

 

7,010

 

19,854

 

16,540

 

 
EBITDA

(39,296

)

(31,189

)

(78,794

)

(51,261

)

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

23,354

 

17,667

 

41,984

 

35,465

 

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

45

 

489

 

2,321

 

490

 

Separation and transformation costs (general and administrative)

 

2,122

 

 

2,122

 

 
Other adjustments

23,399

 

20,278

 

44,305

 

38,077

 

 
Adjusted EBITDA

(15,897

)

(10,911

)

(34,489

)

(13,184

)

(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,

 

$

 

%

 

2019

 

2019

 

Variance

 

Variance

 
Assets
Current assets:
Cash and cash equivalents

777,443

 

1,061,473

 

 

(284,030

)

(26.8

%)

Restricted cash

14,815

 

 

 

14,815

 

n/a

 

Trade accounts receivable, net

88,150

 

78,563

 

 

9,587

 

12.2

%

Refundable income taxes

15,676

 

7,890

 

 

7,786

 

98.7

%

Other current assets

51,055

 

44,150

 

 

6,905

 

15.6

%

 
Total current assets

947,139

 

1,192,076

 

 

(244,937

)

(20.5

%)

 
Property and equipment

64,440

 

64,852

 

 

(412

)

(0.6

%)

Less – accumulated depreciation and amortization

43,278

 

38,809

 

 

4,469

 

11.5

%

 
Property and equipment, net

21,162

 

26,043

 

 

(4,881

)

(18.7

%)

 
Software, net of accumulated amortization

27,413

 

6,861

 

 

20,552

 

299.5

%

Goodwill

297,477

 

204,656

 

 

92,821

 

45.4

%

Deferred income taxes

35

 

35

 

 

 

0.0

%

Deferred commissions, net

11,347

 

10,741

 

 

606

 

5.6

%

Other assets, net

58,657

 

32,499

 

 

26,158

 

80.5

%

1,363,230

 

1,472,911

 

 

(109,681

)

(7.4

%)

 
Liabilities and Stockholders’ Equity
Current liabilities:
Trade accounts payable

31,721

 

31,203

 

 

518

 

1.7

%

Accrued payroll and related expenses

16,716

 

18,715

 

 

(1,999

)

(10.7

%)

Other accrued expenses

55,724

 

40,916

 

 

14,808

 

36.2

%

Acquisition escrow payable

14,815

 

 

 

14,815

 

n/a

 

Deferred revenue

4,447

 

4,284

 

 

163

 

3.8

%

 
Total current liabilities

123,423

 

95,118

 

 

28,305

 

29.8

%

 
Deferred income taxes

1,500

 

39

 

 

1,461

 

3746.2

%

 
Other liabilities

51,949

 

46,922

 

 

5,027

 

10.7

%

 
Stockholders’ equity:
Common stock

14,310

 

14,187

 

 

123

 

0.9

%

Additional paid-in capital

1,460,120

 

1,406,813

 

 

53,307

 

3.8

%

Retained earnings

1,587,263

 

1,669,605

 

 

(82,342

)

(4.9

%)

Accumulated other comprehensive income

6,619

 

7,801

 

 

(1,182

)

(15.2

%)

Treasury stock, at cost

(1,881,954

)

(1,767,574

)

 

(114,380

)

(6.5

%)

Total stockholders’ equity

1,186,358

 

1,330,832

 

 

(144,474

)

(10.9

%)

1,363,230

 

1,472,911

 

 

(109,681

)

(7.4

%)

 

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

 

 

 

 

 

For the Three Months Ended

 

September 30,

 

2019

 

2018

 
Cash flows from operating activities:
Net earnings (loss)

(40,202

)

20,623

 

Earnings from discontinued operations, net of tax

 

(61,803

)

Non-cash operating activities:
Depreciation and amortization

10,977

 

7,010

 

Loss (gain) on disposal or impairment of assets

(225

)

490

 

Provision for doubtful accounts

1,468

 

1,095

 

Deferred income taxes

(5,090

)

14,136

 

Non-cash stock compensation expense

23,354

 

17,667

 

Changes in operating assets and liabilities:
Accounts receivable

(7,807

)

(1,797

)

Deferred commissions

(780

)

(1,049

)

Other assets

(7,497

)

1,838

 

Accounts payable and other liabilities

3,009

 

(8,880

)

Income taxes

(6,926

)

(14,518

)

Deferred revenue

968

 

(1,942

)

Net cash used in operating activities

(28,751

)

(27,130

)

Cash flows from investing activities:
Capitalized software

 

(423

)

Capital expenditures

(2,641

)

(1,323

)

Proceeds from sales of property and equipment

517

 

 

Cash paid in acquisition, net of cash received

(100,886

)

 

Net cash used in investing activities

(103,010

)

(1,746

)

Cash flows from financing activities:
Payments of debt

 

(2,701

)

Proceeds related to the issuance of common stock under stock and employee benefit plans

1,032

 

4,005

 

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

(1,814

)

(4,580

)

Acquisition of treasury stock

(80,374

)

 

Net cash used in financing activities

(81,156

)

(3,276

)

Cash flows from discontinued operations:
From operating activities

 

34,135

 

From investing activities

 

(7,929

)

Effect of exchange rate changes on cash

 

(5

)

Net cash provided by discontinued operations

 

26,201

 

Effect of exchange rate changes on cash

(302

)

(557

)

 
Net change in cash, cash equivalents and restricted cash

(213,219

)

(6,508

)

Cash, cash equivalents and restricted cash at beginning of period

1,005,477

 

93,555

 

Cash, cash equivalents and restricted cash at end of period

792,258

 

87,047

 

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

6,042

 

(741

)

 

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

 

 

 

 

 

For the Six Months Ended

 

September 30,

 

2019

 

2018

 
Cash flows from operating activities:
Net earnings (loss)

(82,342

)

17,608

 

Earnings from discontinued operations, net of tax

 

(86,606

)

Non-cash operating activities:
Depreciation and amortization

19,854

 

16,540

 

Loss (gain) on disposal or impairment of assets

(140

)

475

 

Provision for doubtful accounts

2,430

 

631

 

Deferred income taxes

(5,083

)

12,444

 

Non-cash stock compensation expense

41,984

 

35,465

 

Changes in operating assets and liabilities:
Accounts receivable

(11,258

)

(2,649

)

Deferred commissions

(606

)

(2,047

)

Other assets

(3,897

)

1,264

 

Accounts payable and other liabilities

2,821

 

(4,604

)

Income taxes

(7,789

)

(16,416

)

Deferred revenue

(133

)

(1,515

)

Net cash used in operating activities

(44,159

)

(29,410

)

Cash flows from investing activities:
Capitalized software

 

(1,322

)

Capital expenditures

(7,529

)

(2,035

)

Proceeds from sales of property and equipment

517

 

 

Payments for investments

 

(2,500

)

Cash paid in acquisition, net of cash received

(105,365

)

 

Net cash used in investing activities

(112,377

)

(5,857

)

Cash flows from financing activities:
Payments of debt

 

(3,293

)

Fees from debt refinancing

 

(300

)

Proceeds related to the issuance of common stock under stock and employee benefit plans

2,092

 

8,121

 

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

(13,907

)

(14,624

)

Acquisition of treasury stock

(100,473

)

(45,766

)

Net cash used in financing activities

(112,288

)

(55,862

)

Cash flows from discontinued operations:
From operating activities

 

54,316

 

From investing activities

 

(14,502

)

Effect of exchange rate changes on cash

 

(172

)

Net cash provided by discontinued operations

 

39,642

 

Effect of exchange rate changes on cash

(391

)

(1,484

)

 
Net change in cash, cash equivalents and restricted cash

(269,215

)

(52,971

)

Cash, cash equivalents and restricted cash at beginning of period

1,061,473

 

140,018

 

Cash, cash equivalents and restricted cash at end of period

792,258

 

87,047

 

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

6,152

 

115

 

 

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

CALCULATION OF FREE CASH FLOW TO EQUITY (1)

(Unaudited)

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

06/30/18

09/30/18

12/31/18

03/31/19

FY2019

 

06/30/19

09/30/19

FY2020

 
Net Cash Provided by (Used in) Operating Activities-Continuing Operations

(2,280

)

(27,130

)

(10,922

)

38,354

 

(1,978

)

(15,408

)

(28,751

)

(44,159

)

 
Less (plus):
Capitalized software

(899

)

(423

)

 

 

(1,322

)

 

 

 

Capital expenditures

(712

)

(1,323

)

(1,938

)

(3,347

)

(7,320

)

(4,888

)

(2,641

)

(7,529

)

Required debt payments

(592

)

(2,701

)

 

 

(3,293

)

 

 

 

 
Free Cash Flow to Equity

(4,483

)

(31,577

)

(12,860

)

35,007

 

(13,913

)

(20,296

)

(31,392

)

(51,688

)

(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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2 FY20 to Q2 FY19

 

06/30/18

09/30/18

12/31/18

03/31/19

FY2019

06/30/19

09/30/19

FY2020

%

$

Revenues

62,471

 

64,812

 

80,021

 

78,316

 

285,620

 

82,511

 

90,143

 

172,654

 

40.5

%

 

25,331

 

 
Cost of revenue

23,654

 

24,466

 

34,838

 

37,760

 

120,718

 

36,426

 

41,460

 

77,886

 

71.8

%

 

16,994

 

Gross profit

38,817

 

40,346

 

45,183

 

40,556

 

164,902

 

46,085

 

48,683

 

94,768

 

21.5

%

 

8,337

 

% Gross margin

62.1

%

62.3

%

56.5

%

51.8

%

57.7

%

55.9

%

54.0

%

54.9

%

 
Operating expenses
Research and development

16,970

 

16,940

 

20,469

 

31,318

 

85,697

 

23,722

 

26,445

 

50,167

 

56.0

%

 

9,505

 

Sales and marketing

33,323

 

35,940

 

40,054

 

49,223

 

158,540

 

43,144

 

45,204

 

88,348

 

27.8

%

 

9,264

 

General and administrative

18,125

 

25,176

 

27,828

 

27,749

 

98,878

 

25,318

 

27,262

 

52,580

 

11.5

%

 

2,086

 

Gains, losses and other items, net

1

 

489

 

5,043

 

14,400

 

19,933

 

2,276

 

45

 

2,321

 

(44400.0

%)

 

(444

)

Total operating expenses

68,419

 

78,545

 

93,394

 

122,690

 

363,048

 

94,460

 

98,956

 

193,416

 

29.8

%

 

20,411

 

 
Loss from operations

(29,602

)

(38,199

)

(48,211

)

(82,134

)

(198,146

)

(48,375

)

(50,273

)

(98,648

)

(40.8

%)

 

(12,074

)

% Margin

-47.4

%

-58.9

%

-60.2

%

-104.9

%

-69.4

%

-58.6

%

-55.8

%

-57.1

%

 
Total other income (expense)

356

 

(281

)

10,404

 

8,311

 

18,790

 

5,882

 

4,780

 

10,662

 

1421.6

%

 

5,061

 

 
Loss from continuing operations before income taxes

(29,246

)

(38,480

)

(37,807

)

(73,823

)

(179,356

)

(42,493

)

(45,493

)

(87,986

)

(24.0

%)

 

(7,013

)

 
Income taxes (benefit)

(1,428

)

2,700

 

(22,546

)

(24,135

)

(45,409

)

(353

)

(5,291

)

(5,644

)

(559.6

%)

 

(7,991

)

 
Net loss from continuing operations

(27,818

)

(41,180

)

(15,261

)

(49,688

)

(133,947

)

(42,140

)

(40,202

)

(82,342

)

3.5

%

 

978

 

 
Earnings from discontinued operations, net of tax

24,803

 

61,803

 

1,071,661

 

4,227

 

1,162,494

 

 

 

 

(249.2

%)

 

(61,803

)

 
Net earnings (loss)

(3,015

)

20,623

 

1,056,400

 

(45,461

)

1,028,547

 

(42,140

)

(40,202

)

(82,342

)

(2017.4

%)

 

(60,825

)

 
Diluted earnings (loss) per share

(0.04

)

0.27

 

13.65

 

(0.67

)

13.71

 

(0.61

)

(0.59

)

(1.21

)

(2195.1

%)

 

(0.86

)

 
Diluted loss per share continuing operations

(0.36

)

(0.53

)

(0.20

)

(0.73

)

(1.79

)

(0.61

)

(0.59

)

(1.21

)

(17.2

%)

 

(0.06

)

 
Some earnings (loss) per share amounts may not add due to rounding.
 
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP EPS (1)
(Unaudited)
(Dollars in thousands, except per share amounts)
 
 
 
06/30/18 09/30/18 12/31/18 03/31/19 FY2019 06/30/19 09/30/19 FY2020
 
 
Loss from continuing operations before income taxes

(29,246

)

(38,480

)

(37,807

)

(73,823

)

(179,356

)

(42,493

)

(45,493

)

(87,986

)

Income taxes (benefit)

(1,428

)

2,700

 

(22,546

)

(24,135

)

(45,409

)

(353

)

(5,291

)

(5,644

)

Net loss from continuing operations

(27,818

)

(41,180

)

(15,261

)

(49,688

)

(133,947

)

(42,140

)

(40,202

)

(82,342

)

 
Earnings from discontinued operations, net of tax

24,803

 

61,803

 

1,071,661

 

4,227

 

1,162,494

 

 

 

 

 
Net earnings (loss)

(3,015

)

20,623

 

1,056,400

 

(45,461

)

1,028,547

 

(42,140

)

(40,202

)

(82,342

)

 
Earnings (loss) per share:
Basic

(0.04

)

0.27

 

13.65

 

(0.67

)

13.71

 

(0.61

)

(0.59

)

(1.21

)

Diluted

(0.04

)

0.27

 

13.65

 

(0.67

)

13.71

 

(0.61

)

(0.59

)

(1.21

)

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

5,970

 

3,548

 

3,359

 

2,981

 

15,858

 

3,123

 

5,369

 

8,492

 

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

17,798

 

17,667

 

26,082

 

41,175

 

102,722

 

18,630

 

23,354

 

41,984

 

Accelerated depreciation (cost of revenue and operating expenses)

 

 

1,959

 

1,853

 

3,812

 

1,906

 

1,663

 

3,569

 

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

1

 

489

 

5,043

 

14,400

 

19,933

 

2,276

 

45

 

2,321

 

Separation and transformation costs (general and administrative)

 

2,122

 

700

 

(705

)

2,117

 

 

 

 

Total excluded items, continuing operations

23,769

 

23,826

 

37,143

 

59,704

 

144,442

 

25,935

 

30,431

 

56,366

 

 
Loss from continuing operations before income taxes and excluding items

(5,477

)

(14,654

)

(664

)

(14,119

)

(34,914

)

(16,558

)

(15,062

)

(31,620

)

Income taxes (benefit)

(1,078

)

(3,790

)

(2,941

)

(5,155

)

(12,964

)

(216

)

190

 

(26

)

Non-GAAP net earnings (loss) from continuing operations

(4,399

)

(10,864

)

2,277

 

(8,964

)

(21,950

)

(16,342

)

(15,252

)

(31,594

)

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

(0.06

)

(0.14

)

0.03

 

(0.13

)

(0.29

)

(0.24

)

(0.23

)

(0.46

)

Diluted

(0.06

)

(0.14

)

0.03

 

(0.13

)

(0.29

)

(0.24

)

(0.23

)

(0.46

)

 
Basic weighted average shares

76,935

 

77,448

 

77,398

 

68,299

 

75,020

 

68,906

 

67,684

 

68,295

 

Diluted weighted average shares

76,935

 

77,448

 

77,398

 

68,299

 

75,020

 

68,906

 

67,684

 

68,295

 

 
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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

06/30/18

 

09/30/18

 

12/31/18

 

03/31/19

 

FY2019

 

06/30/19

 

09/30/19

 

FY2020

 
Expenses, continuing operations:
Cost of revenue

23,654

24,466

34,838

37,760

120,718

36,426

41,460

77,886

Research and development

16,970

16,940

20,469

31,318

85,697

23,722

26,445

50,167

Sales and marketing

33,323

35,940

40,054

49,223

158,540

43,144

45,204

88,348

General and administrative

18,125

25,176

27,828

27,749

98,878

25,318

27,262

52,580

Gains, losses and other items, net

1

489

5,043

14,400

19,933

2,276

45

2,321

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

5,970

3,548

3,359

2,981

15,858

3,123

5,369

8,492

Non-cash stock compensation (cost of revenue)

712

782

1,052

2,163

4,709

755

1,060

1,815

Non-cash stock compensation (research and development)

4,341

3,745

5,945

14,193

28,224

4,451

6,346

10,797

Non-cash stock compensation (sales and marketing)

9,920

9,854

9,460

14,736

43,970

8,920

9,758

18,678

Non-cash stock compensation (general and administrative)

2,824

3,286

9,625

10,083

25,818

4,504

6,190

10,694

Accelerated depreciation (cost of revenue)

1,527

1,445

2,972

1,487

1,245

2,732

Accelerated depreciation (general and administrative)

432

408

840

419

418

837

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

1

489

5,043

14,400

19,933

2,276

45

2,321

Separation and transformation costs (general and administrative)

2,122

700

(705)

2,117

Total excluded items

23,768

23,826

37,143

59,704

144,441

25,935

30,431

56,366

 
Expenses, continued operations excluding items:
Cost of revenue

16,972

20,136

28,900

31,171

97,179

31,061

33,786

64,847

Research and development

12,629

13,195

14,524

17,125

57,473

19,271

20,099

39,370

Sales and marketing

23,403

26,086

30,594

34,487

114,570

34,224

35,446

69,670

General and administrative

15,301

19,768

17,071

17,963

70,103

20,395

20,654

41,049

Gains, losses and other items, net

(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 LOSS GUIDANCE (1)

(Unaudited)

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

For the year ending

 

 

 

March 31, 2020

 

 

 

 

 

 

 

 

 

Low Range

 

High Range

 
Revenues

$

376,000

 

$

381,000

 

 
GAAP loss from operations

 

(180,000

)

 

(175,000

)

 
Excluded items:
Purchased intangible asset amortization

 

19,000

 

 

19,000

 

Accelerated depreciation

 

4,000

 

 

4,000

 

Non-cash stock compensation

 

87,000

 

 

87,000

 

Gains, losses and other items, net

 

2,000

 

 

2,000

 

Total excluded items

 

112,000

 

 

112,000

 

 
Non-GAAP loss from operations

$

(68,000

)

$

(63,000

)

(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A.

APPENDIX A

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

Q2 FISCAL 2020 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.

Separation and transformation costs: In the prior year, 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. Our criteria for excluding separation and 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 believe excluding these items from our non-GAAP financial measures is useful for investors and provides meaningful supplemental information.

Accelerated depreciation: In the current year we are excluding 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 is 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.

Other key metrics may be defined as:

Subscription net retention: The current period subscription revenue (net) from customers who have been on the platform for one year or more, divided by the prior year quarter subscription revenue (net), inclusive of upsell, churn and downsell.

Platform net retention: The current period subscription and marketplace revenue (net) from customers who have been on the platform for one year or more, divided by the prior year quarter subscription and marketplace revenue (net), inclusive of upsell, churn and downsell.

Annualized recurring revenue (ARR): The ending MRR (last month of quarter), annualized. Recurring revenue is fixed and contracted subscription revenue and does not include any variable or non-recurring revenue amounts.

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.