ATS Adopted by Over 325 Publishers Worldwide, Including 65% of the US Comscore Top 50
GAAP Gross Margin of 69% and Non-GAAP Gross Margin of 73%
Record Operating Performance
SAN FRANCISCO, Calif., February 8, 2021—LiveRamp® (NYSE: RAMP), the leading global data connectivity platform, today announced its financial results for the quarter ended December 31, 2020.
Third Quarter Financial Highlights
•Total revenue was $120 million, up 17% compared to the prior year period.
•Subscription revenue was $93 million, up 15% compared to the prior year period and contributed 78% of total revenue.
•Marketplace & Other revenue was $26 million, up 27% compared to the prior year period.
•GAAP gross profit was $83 million, up 29% compared to the prior year period. GAAP gross margin of 69% expanded 6 percentage points. Non-GAAP gross profit was $88 million, up 24% compared to the prior year period. Non-GAAP gross margin of 73% expanded 4 percentage points.
•GAAP operating loss was $16 million compared to a GAAP operating loss of $41 million in the prior year period. Non-GAAP operating income was $12 million compared to a non-GAAP operating loss of $6 million in the prior year period.
•GAAP loss per share was $0.18, and non-GAAP earnings per share was $0.14.
•Net cash generated from operating activities was $15 million compared to net cash generated from operating activities of $16 million in the prior year period.
•Cash and cash equivalents totaled $663 million with no debt at quarter end.
A reconciliation between GAAP and non-GAAP results is provided in the schedules to this press release.
“With LiveRamp, brands don’t have to compromise data security and privacy for data utility – they can have both,” said LiveRamp CEO Scott Howe. “The past quarter has really validated the important role we play in helping our customers and partners safely and securely use data to deliver better customer experiences and ultimately drive growth across their enterprises. The explosive global adoption of our Authenticated Traffic Solution (or ATS) and new innovation like Safe Haven demonstrate the value we are creating for our customers.”
“Our record Q3 performance highlights the strength and leverage of our model,” added LiveRamp President and CFO Warren Jenson. “We delivered our first double-digit non-GAAP operating margin in the Company’s history, and we were again cash flow positive. We now expect to be profitable on a non-GAAP basis for the full year.”
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GAAP and Non-GAAP Results
The following table summarizes the Company’s financial results for its third fiscal quarter ($ in millions):
Q3 Fiscal 2021
Q3 Fiscal 2020
Results
Results
GAAP
Non-GAAP
GAAP
Non-GAAP
Subscription revenue
$
93
—
$
82
—
YoY change %
15
%
25
%
Marketplace & other revenue
$
26
—
$
21
—
YoY change %
27
%
38
%
Total revenue
$
120
—
$
102
—
YoY change %
17
%
28
%
Gross profit
$
83
$
88
$
64
$
71
% Gross margin
69
%
73
%
63
%
69
%
YoY change, pts
6pts
4pts
6pts
5pts
Operating income (loss)
$
(16)
$
12
$
(41)
$
(6)
% Operating margin
(13)
%
10
%
(41)
%
(5)
%
YoY change, pts
27pts
16pts
20pts
8pts
Net income (loss)
$
(12)
$
10
$
(38)
$
(2)
YoY change %
nm
nm
nm
nm
Earnings (loss) per share
$
(0.18)
$
0.14
$
(0.56)
$
(0.03)
YoY change %
nm
nm
nm
nm
Shares to Calculate EPS
66.5
69.8
67.5
67.5
YoY change %
(1)
%
3
%
(13)
%
(16)
%
Net operating cash flow
$
15
—
$
16
—
YoY change %
(7)%
—
nm
—
Free cash flow to equity
—
$
14
—
$
13
YoY change %
—
8
%
—
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.
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Additional Business Metrics & Highlights
•The Authenticated Traffic Solution (ATS), continues to experience strong global adoption. There are currently more than 25 supply-side platforms (SSPs) live or committed to implementing ATS. In addition, there are over 45 demand-side platforms (DSPs) live or committed to bid on the LiveRamp identifier, including The Trade Desk, Amobee, Criteo, dataxu, and MediaMath. Lastly, to date, more than 325 publishers globally have adopted ATS, including 65% of the U.S. comScore 50.
•During the third quarter, subscription net retention was 105% and platform net retention was 110%.
•Current remaining performance obligations (RPO), which is contracted and committed revenue expected to be recognized over the next 12 months, was $231 million, up 15% compared to the third quarter of last year.
•LiveRamp has 65 clients whose subscription contracts exceed $1 million in annual revenue, up 30% compared to the prior year period.
•LiveRamp’s direct subscription customer count at quarter end was 810, up from 770 a year ago.
•In a separate press release issued today, LiveRamp announced it has entered into a definitive agreement to acquire DataFleets, a cloud data platform that enables data silos to be unified without moving data or compromising privacy. To learn more about LiveRamp’s acquisition of DataFleets, please see the full blog post here.
Financial Outlook
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 fourth quarter of fiscal 2021, LiveRamp expects to report:
•Revenue of approximately $116 million, an increase of approximately 10% year-over-year
•GAAP operating loss of approximately $31 million
•Non-GAAP operating income of up to $1 million
For fiscal 2021, LiveRamp expects to report:
•Revenue of approximately $440 million, an increase of approximately 16% year-over-year
•GAAP operating loss of approximately $101 million
•Non-GAAP operating income of up to $16 million
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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.
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.
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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 December 31,
$
%
2020
2019
Variance
Variance
Revenues
119,753
102,217
17,536
17.2
%
Cost of revenue
37,085
37,966
(881)
(2.3)
%
Gross profit
82,668
64,251
18,417
28.7
%
% Gross margin
69.0
%
62.9
%
Operating expenses:
Research and development
30,608
27,403
3,205
11.7
%
Sales and marketing
43,904
51,993
(8,089)
(15.6)
%
General and administrative
23,943
26,107
(2,164)
(8.3)
%
Gains, losses and other items, net
(6)
233
(239)
(102.6)
%
Total operating expenses
98,449
105,736
(7,287)
(6.9)
%
Loss from operations
(15,781)
(41,485)
25,704
62.0
%
% Margin
(13.2)
%
(40.6)
%
Total other income (expense)
(86)
3,158
(3,244)
(102.7)
%
Loss from operations before income taxes
(15,867)
(38,327)
22,460
58.6
%
Income tax benefit
(4,142)
(287)
(3,855)
(1,343.2)
%
Net loss
(11,725)
(38,040)
26,315
69.2
%
Basic loss per share
(0.18)
(0.56)
0.39
68.7
%
Diluted loss per share
(0.18)
(0.56)
0.39
68.7
%
Basic weighted average shares
66,523
67,473
Diluted weighted average shares
66,523
67,473
P 6
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
For the nine months ended December 31,
$
%
2020
2019
Variance
Variance
Revenues
323,851
274,871
48,980
17.8
%
Cost of revenue
106,447
115,852
(9,405)
(8.1)
%
Gross profit
217,404
159,019
58,385
36.7
%
% Gross margin
67.1
%
57.9
%
Operating expenses:
Research and development
88,632
77,570
11,062
14.3
%
Sales and marketing
124,236
140,341
(16,105)
(11.5)
%
General and administrative
71,806
78,687
(6,881)
(8.7)
%
Gains, losses and other items, net
1,370
2,554
(1,184)
(46.4)
%
Total operating expenses
286,044
299,152
(13,108)
(4.4)
%
Loss from operations
(68,640)
(140,133)
71,493
51.0
%
% Margin
(21.2)
%
(51.0)
%
Total other income
152
13,820
(13,668)
(98.9)
%
Loss from continuing operations before income taxes
(68,488)
(126,313)
57,825
45.8
%
Income tax benefit
(11,067)
(5,931)
(5,136)
(86.6)
%
Net loss
(57,421)
(120,382)
62,961
52.3
%
Basic loss per share
(0.87)
(1.77)
0.90
50.9
%
Diluted loss per share
(0.87)
(1.77)
0.90
50.9
%
Basic weighted average shares
66,034
68,021
Diluted weighted average shares
66,034
68,021
P 7
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 December 31,
For the nine months ended December 31,
2020
2019
2020
2019
Loss from operations before income taxes
(15,867)
(38,327)
(68,488)
(126,313)
Income taxes (benefit)
(4,142)
(287)
(11,067)
(5,931)
Net loss
(11,725)
(38,040)
(57,421)
(120,382)
Loss per share:
Basic
(0.18)
(0.56)
(0.87)
(1.77)
Diluted
(0.18)
(0.56)
(0.87)
(1.77)
Excluded items:
Purchased intangible asset amortization (cost of revenue)
4,213
5,369
13,869
13,861
Non-cash stock compensation (cost of revenue and operating expenses)
23,894
30,295
64,583
72,279
Accelerated depreciation (cost of revenue and operating expenses
—
—
—
3,569
Restructuring and merger charges (gains, losses, and other)
(6)
233
1,370
2,554
Transformation costs (general and administrative)
—
—
3,863
—
Total excluded items
28,101
35,897
83,685
92,263
Income (loss) from operations before income taxes and excluding items
12,234
(2,430)
15,197
(34,050)
Income taxes (benefit) (2)
2,347
(227)
1,990
(253)
Non-GAAP net earnings (loss)
9,887
(2,203)
13,207
(33,797)
Non-GAAP loss per share:
Basic
0.15
(0.03)
0.20
(0.50)
Diluted
0.14
(0.03)
0.19
(0.50)
Basic weighted average shares
66,523
67,473
66,034
68,021
Diluted weighted average shares
69,775
67,473
68,639
68,021
(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures and the material limitations on the usefulness of these measures, please see Appendix A.
(2) Income taxes were calculated by applying the estimated annual effective tax rate to year-to-date pretax income or loss and adjusting for discrete tax items in the period. The differences between our GAAP and non-GAAP effective tax rates were primarily due to the net tax effects of the excluded items, coupled with larger pre-tax losses for GAAP purposes versus smaller pre-tax losses or income for non-GAAP purposes.
P 8
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP LOSS FROM OPERATIONS (1)
(Unaudited)
(Dollars in thousands)
For the three months ended December 31,
For the nine months ended December 31,
2020
2019
2020
2019
Loss from operations
(15,781)
(41,485)
(68,640)
(140,133)
Excluded items:
Purchased intangible asset amortization (cost of revenue)
4,213
5,369
13,869
13,861
Non-cash stock compensation (cost of revenue and operating expenses)
23,894
30,295
64,583
72,279
Accelerated depreciation (cost of revenue and operating expenses
—
—
—
3,569
Restructuring and merger charges (gains, losses, and other)
(6)
233
1,370
2,554
Transformation costs (general and administrative)
—
—
3,863
—
Total excluded items
28,101
35,897
83,685
92,263
Income (loss) from operations before excluded items
12,320
(5,588)
15,045
(47,870)
(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 9
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA (1)
(Unaudited)
(Dollars in thousands)
For the three months ended December 31,
For the nine months ended December 31,
2020
2019
2020
2019
Net loss
(11,725)
(38,040)
(57,421)
(120,382)
Income taxes (benefit)
(4,142)
(287)
(11,067)
(5,931)
Other expense (income)
86
(3,158)
(152)
(13,820)
Loss from operations
(15,781)
(41,485)
(68,640)
(140,133)
Depreciation and amortization
6,509
8,104
21,464
27,958
EBITDA
(9,272)
(33,381)
(47,176)
(112,175)
Other adjustments:
Non-cash stock compensation (cost of revenue and operating expenses)
23,894
30,295
64,583
72,279
Restructuring and merger charges (gains, losses, and other)
(6)
233
1,370
2,554
Transformation costs (general and administrative)
—
—
3,863
—
Other adjustments
23,888
30,528
69,816
74,833
Adjusted EBITDA
14,616
(2,853)
22,640
(37,342)
(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 10
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
December 31,
March 31,
$
%
2020
2020
Variance
Variance
Assets
Current assets:
Cash and cash equivalents
663,401
717,811
(54,410)
(7.6)
%
Restricted cash
—
14,815
(14,815)
—
%
Trade accounts receivable, net
115,858
92,761
23,097
24.9
%
Refundable income taxes
47,709
38,340
9,369
24.4
%
Other current assets
31,685
32,666
(981)
(3.0)
%
Total current assets
858,653
896,393
(37,740)
(4.2)
%
Property and equipment
44,076
44,786
(710)
(1.6)
%
Less - accumulated depreciation and amortization
30,555
25,465
5,090
20.0
%
Property and equipment, net
13,521
19,321
(5,800)
(30.0)
%
Intangible assets, net
32,577
45,200
(12,623)
(27.9)
%
Goodwill
301,321
297,796
3,525
1.2
%
Deferred commissions, net
21,096
16,014
5,082
31.7
%
Other assets, net
32,332
27,165
5,167
19.0
%
1,259,500
1,301,889
(42,389)
(3.3)
%
Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable
44,464
42,204
2,260
5.4
%
Accrued payroll and related expenses
28,599
28,791
(192)
(0.7)
%
Other accrued expenses
72,480
68,991
3,489
5.1
%
Acquisition escrow payable
—
14,815
(14,815)
—
%
Deferred revenue
11,789
6,581
5,208
79.1
%
Total current liabilities
157,332
161,382
(4,050)
(2.5)
%
Other liabilities
43,667
52,995
(9,328)
(17.6)
%
Stockholders' equity:
Preferred stock
—
—
—
—
%
Common stock
14,647
14,394
253
1.8
%
Additional paid-in capital
1,574,347
1,496,565
77,782
5.2
%
Retained earnings
1,487,673
1,545,094
(57,421)
(3.7)
%
Accumulated other comprehensive income
7,814
5,745
2,069
36.0
%
Treasury stock, at cost
(2,025,980)
(1,974,286)
(51,694)
2.6
%
Total stockholders' equity
1,058,501
1,087,512
(29,011)
(2.7)
%
1,259,500
1,301,889
(42,389)
(3.3)
%
P 11
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the three months ended December 31,
2020
2019
Cash flows from operating activities:
Net loss
(11,725)
(38,040)
Non-cash operating activities:
Depreciation and amortization
6,509
8,104
Loss (gain) on disposal or impairment of assets
1
—
Provision for doubtful accounts
824
1,253
Deferred income taxes
485
6,548
Non-cash stock compensation expense
23,894
30,295
Changes in operating assets and liabilities:
Accounts receivable, net
(17,062)
(593)
Deferred commissions
(1,637)
(2,104)
Other assets
(192)
6,301
Accounts payable and other liabilities
13,824
9,776
Income taxes, net
(5,399)
(5,634)
Deferred revenue
5,168
(102)
Net cash used in operating activities
14,690
15,804
Cash flows from investing activities:
Capital expenditures
(678)
(2,773)
Cash paid in acquisitions, net of cash received
(14,815)
—
Purchases of investments
(3,000)
—
Purchases of strategic investments
(327)
—
Net cash used in investing activities
(18,820)
(2,773)
Cash flows from financing activities:
Proceeds related to the issuance of common stock under stock and employee benefit plans
5,115
1,313
Shares repurchased for tax withholdings upon vesting of stock-based awards
(3,627)
(4,150)
Acquisition of treasury stock
—
(20,715)
Net cash used in financing activities
1,488
(23,552)
Effect of exchange rate changes on cash
537
278
Net change in cash, cash equivalents and restricted cash
(2,105)
(10,243)
Cash, cash equivalents and restricted cash at beginning of period
665,506
792,258
Cash, cash equivalents and restricted cash at end of period
663,401
782,015
Supplemental cash flow information:
Cash paid for income taxes, net
771
19
P 12
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the nine months ended December 31,
2020
2019
Cash flows from operating activities:
Net loss
(57,421)
(120,382)
Non-cash operating activities:
Depreciation and amortization
21,464
27,958
Loss (gain) on disposal or impairment of assets
334
(140)
Provision for doubtful accounts
3,346
3,683
Deferred income taxes
—
1,465
Non-cash stock compensation expense
64,583
72,279
Changes in operating assets and liabilities:
Accounts receivable, net
(26,646)
(11,851)
Deferred commissions
(5,082)
(2,710)
Other assets
7,511
2,404
Accounts payable and other liabilities
(6,847)
12,597
Income taxes, net
(8,982)
(13,423)
Deferred revenue
5,067
(235)
Net cash used in operating activities
(2,673)
(28,355)
Cash flows from investing activities:
Capital expenditures
(1,806)
(10,302)
Proceeds from sales of assets
—
517
Cash paid in acquisitions, net of cash received
(17,748)
(105,365)
Purchases of investments
(3,000)
—
Purchases of strategic investments
(2,200)
—
Net cash used in investing activities
(24,754)
(115,150)
Cash flows from financing activities:
Proceeds related to the issuance of common stock under stock and employee benefit plans
8,676
3,405
Shares repurchased for tax withholdings upon vesting of stock-based awards
(9,382)
(18,057)
Acquisition of treasury stock
(42,312)
(121,188)
Net cash used in financing activities
(43,018)
(135,840)
P 13
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the nine months ended December 31,
2020
2019
Effect of exchange rate changes on cash
1,220
(113)
Net change in cash, cash equivalents and restricted cash
(69,225)
(279,458)
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
663,401
782,015
Supplemental cash flow information:
Cash paid (received) for income taxes, net
(2,092)
6,171
P 14
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
9/30/2020
12/31/2020
FY2021
Net Cash Provided by (Used in) Operating Activities
$
(15,408)
$
(28,751)
$
15,804
$
(220)
$
(28,575)
$
(23,612)
$
6,249
$
14,690
$
(2,673)
Less:
Capital expenditures
(4,888)
(2,641)
(2,773)
(1,409)
(11,711)
(832)
(296)
(678)
(1,806)
Free Cash Flow to Equity
$
(20,296)
$
(31,392)
$
13,031
$
(1,629)
$
(40,286)
$
(24,444)
$
5,953
$
14,012
$
(4,479)
(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 15
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
Q3 FY21 to Q3 FY20
6/30/2019
9/30/2019
12/31/2019
3/31/2020
FY2020
6/30/2020
9/30/2020
12/31/2020
FY2021
%
$
Revenues
82,511
90,143
102,217
105,701
380,572
99,437
104,661
119,753
323,851
17.2
%
17,536
Cost of revenue
36,426
41,460
37,966
36,852
152,704
34,465
34,897
37,085
106,447
(2.3)
%
(881)
Gross profit
46,085
48,683
64,251
68,849
227,868
64,972
69,764
82,668
217,404
28.7
%
18,417
% Gross margin
55.9
%
54.0
%
62.9
%
65.1
%
59.9
%
65.3
%
66.7
%
69.0
%
67.1
%
Operating expenses
Research and development
23,722
26,445
27,403
28,411
105,981
26,989
31,035
30,608
88,632
11.7
%
3,205
Sales and marketing
43,144
45,204
51,993
48,564
188,905
38,627
41,705
43,904
124,236
(15.6)
%
(8,089)
General and administrative
25,318
27,262
26,107
30,216
108,903
23,368
24,495
23,943
71,806
(8.3)
%
(2,164)
Gains, losses and other items, net
2,276
45
233
2,447
5,001
1,995
(619)
(6)
1,370
(102.6)
%
(239)
Total operating expenses
94,460
98,956
105,736
109,638
408,790
90,979
96,616
98,449
286,044
(6.9)
%
(7,287)
Loss from operations
(48,375)
(50,273)
(41,485)
(40,789)
(180,922)
(26,007)
(26,852)
(15,781)
(68,640)
62.0
%
25,704
Total other income/(expense)
5,882
4,780
3,158
1,565
15,385
463
(225)
(86)
152
(102.7)
%
(3,244)
Loss from continuing operations before income taxes
(42,493)
(45,493)
(38,327)
(39,224)
(165,537)
(25,544)
(27,077)
(15,867)
(68,488)
58.6
%
22,460
Income taxes (benefit)
(353)
(5,291)
(287)
(34,345)
(40,276)
(3,816)
(3,109)
(4,142)
(11,067)
(1,343.2)
%
(3,855)
Net loss from continuing operations
(42,140)
(40,202)
(38,040)
(4,879)
(125,261)
(21,728)
(23,968)
(11,725)
(57,421)
69.2
%
26,315
P 16
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)
(Unaudited)
(Dollars in thousands, except per share amounts)
Q3 FY21 to Q3 FY20
6/30/2019
9/30/2019
12/31/2019
3/31/2020
FY2020
6/30/2020
9/30/2020
12/31/2020
FY2021
%
$
Earnings from discontinued operations, net of tax
—
—
—
750
750
—
—
—
—
—
%
—
Net loss
$
(42,140)
$
(40,202)
$
(38,040)
$
(4,129)
$
(124,511)
$
(21,728)
$
(23,968)
$
(11,725)
$
(57,421)
69.2
%
26,315
Diluted loss per share
(0.61)
(0.59)
(0.56)
(0.06)
(1.84)
(0.33)
(0.36)
(0.18)
(0.87)
68.7
%
0.39
Diluted loss per share from continuing operations
(0.61)
(0.59)
(0.56)
(0.07)
(1.85)
(0.33)
(0.36)
(0.18)
(0.87)
68.7
%
0.39
Some earnings (loss) per share amounts may not add due to rounding.
P 17
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
9/30/2020
12/31/2020
FY2021
Loss from continuing operations before income taxes
$
(42,493)
$
(45,493)
$
(38,327)
$
(39,224)
$
(165,537)
$
(25,544)
$
(27,077)
$
(15,867)
$
(68,488)
Income taxes (benefit)
(353)
(5,291)
(287)
(34,345)
(40,276)
(3,816)
(3,109)
(4,142)
(11,067)
Net loss from continuing operations
(42,140)
(40,202)
(38,040)
(4,879)
(125,261)
(21,728)
(23,968)
(11,725)
(57,421)
Earnings from discontinued operations, net of tax
—
—
—
750
750
—
—
—
—
—
Net loss
$
(42,140)
$
(40,202)
$
(38,040)
$
(4,129)
$
(124,511)
$
(21,728)
$
(23,968)
$
(11,725)
$
(57,421)
Loss per share:
Basic
$
(0.61)
$
(0.59)
$
(0.56)
$
(0.06)
$
(1.84)
$
(0.33)
$
(0.36)
$
(0.18)
$
(0.87)
Diluted
$
(0.61)
$
(0.59)
$
(0.56)
$
(0.06)
$
(1.84)
$
(0.33)
$
(0.36)
$
(0.18)
$
(0.87)
Excluded items:
Purchased intangible asset amortization (cost of revenue)
$
3,123
$
5,369
$
5,369
$
5,181
$
19,042
$
5,306
$
4,350
$
4,213
$
13,869
Non-cash stock compensation (cost of revenue and operating expenses)
18,630
23,354
30,295
17,168
89,447
16,485
24,204
23,894
64,583
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
(619)
(6)
1,370
Transformation costs (general and administrative)
—
—
—
—
—
3,605
258
—
3,863
Total excluded items, continuing operations
25,935
30,431
35,897
24,796
117,059
27,391
28,193
28,101
83,685
P 18
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
9/30/2020
12/31/2020
FY2021
Income (loss) from continuing operations before income taxes and excluding items
$
(16,558)
$
(15,062)
$
(2,430)
$
(14,428)
$
(48,478)
$
1,847
$
1,116
$
12,234
$
15,197
Income taxes (benefit)
(216)
190
(227)
(11,199)
(11,452)
934
(1,291)
2,347
1,990
Non-GAAP net earnings (loss)
$
(16,342)
$
(15,252)
$
(2,203)
$
(3,229)
$
(37,026)
$
913
$
2,407
$
9,887
$
13,207
Non-GAAP earnings (loss) per share:
Basic
$
(0.24)
$
(0.23)
$
(0.03)
$
(0.05)
$
(0.55)
$
0.01
$
0.04
$
0.15
$
0.20
Diluted
$
(0.24)
$
(0.23)
$
(0.03)
$
(0.05)
$
(0.55)
$
0.01
$
0.03
$
0.14
$
0.20
Basic weighted average shares
68,906
67,684
67,473
66,977
67,760
65,570
66,010
66,523
66,034
Diluted weighted average shares
68,906
67,684
67,473
66,977
67,760
67,337
68,804
69,775
68,639
Some totals may not add due to rounding
P 19
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
9/30/2020
12/31/2020
FY2021
Expenses, continuing operations:
Cost of revenue
$
36,426
$
41,460
$
37,966
$
36,852
$
152,704
$
34,465
$
34,897
$
37,085
$
106,447
Research and development
23,722
26,445
27,403
28,411
105,981
26,989
31,035
30,608
88,632
Sales and marketing
43,144
45,204
51,993
48,564
188,905
38,627
41,705
43,904
124,236
General and administrative
25,318
27,262
26,107
30,216
108,903
23,368
24,495
23,943
71,806
Gains, losses and other items, net
2,276
45
233
2,447
5,001
1,995
(619)
(6)
1,370
Gross profit, continuing operations:
46,085
48,683
64,251
68,849
227,868
64,972
69,764
82,668
217,404
% Gross margin
55.9
%
54.0
%
62.9
%
65.1
%
59.9
%
65.3
%
66.7
%
69.0
%
67.1
%
Excluded items:
Purchased intangible asset amortization (cost of revenue)
3,123
5,369
5,369
5,181
19,042
5,306
4,350
4,213
13,869
Non-cash stock compensation (cost of revenue)
755
1,060
1,028
926
3,769
775
913
988
2,676
Non-cash stock compensation (research and development)
4,451
6,346
6,462
6,001
23,260
5,886
7,713
7,376
20,975
Non-cash stock compensation (sales and marketing)
8,920
9,758
15,670
3,678
38,026
7,123
9,233
9,212
25,568
Non-cash stock compensation (general and administrative)
4,504
6,190
7,135
6,563
24,392
2,701
6,345
6,318
15,364
Accelerated depreciation (cost of revenue)
1,487
1,245
—
—
2,732
—
—
—
—
Accelerated depreciation (general and administrative)
419
418
—
—
837
—
—
—
—
Restructuring and merger charges (gains, losses, and other)
2,276
45
233
2,447
5,001
1,995
(619)
(6)
1,370
Transformation costs (general and administrative)
—
—
—
—
—
3,605
258
—
3,863
Total excluded items
$
25,935
$
30,431
$
35,897
$
24,796
$
117,059
$
27,391
$
28,193
$
28,101
$
83,685
P 20
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP EXPENSES (1) (Continued)
(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 21
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP OPERATING INCOME(LOSS) GUIDANCE (1)
(Unaudited)
(Dollars in thousands)
For the quarter ending
For the year ending
March 31, 2021
March 31, 2021
GAAP loss from operations
(31,000)
(101,000)
Excluded items:
Purchased intangible asset amortization
4,000
18,000
Non-cash stock compensation
24,000
89,000
Transformation costs
—
4,000
Restructuring and transformation costs
4,000
6,000
Total excluded items
32,000
117,000
Non-GAAP income from operations
1,000
16,000
(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 easures and the material limitations on the usefulness of these measures, please see Appendix A.
P 22
APPENDIX A
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
Q3 FISCAL 2021 FINANCIAL RESULTS
EXPLANATION OF NON-GAAP MEASURES AND OTHER KEY METRICS
To supplement our financial results, we use non-GAAP measures which exclude certain acquisition related expenses, non-cash stock compensation and restructuring charges. We believe these measures are helpful in understanding our past performance and our future results. Our non-GAAP financial measures and schedules are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated GAAP financial statements. Our management regularly uses these non-GAAP financial measures internally to understand, manage and evaluate our business and to make operating decisions. These measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is also based in part on the performance of our business based on these non-GAAP measures.
Our non-GAAP financial measures, including non-GAAP earnings (loss) per share, income (loss) from operations and adjusted EBITDA reflect adjustments based on the following items, as well as the related income tax effects when applicable:
Purchased intangible asset amortization: We incur amortization of purchased intangibles in connection with our acquisitions. Purchased intangibles include (i) developed technology, (ii) customer and publisher relationships, and (iii) trade names. We expect to amortize for accounting purposes the fair value of the purchased intangibles based on the pattern in which the economic benefits of the intangible assets will be consumed as revenue is generated. Although the intangible assets generate revenue for us, we exclude this item because this expense is non-cash in nature and because we believe the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding our operational performance.
Non-cash stock compensation: Non-cash stock compensation consists of charges for associate restricted stock units, performance shares and stock options in accordance with current GAAP related to stock-based compensation including expense associated with stock-based compensation related to unvested options assumed in connection with our acquisitions. As we apply stock-based compensation standards, we believe that it is useful to investors to understand the impact of the application of these standards to our operational performance. Although stock-based compensation expense is calculated in accordance with current GAAP and constitutes an ongoing and recurring expense, such expense is excluded from non-GAAP results because it is not an expense that typically requires or will require cash settlement by us and because such expense is not used by us to assess the core profitability of our business operations.
Restructuring charges: During the past several years, we have initiated certain restructuring activities in order to align our costs in connection with both our operating plans and our business strategies based on then-current economic conditions. As a result, we recognized costs related to termination benefits for associates whose positions were eliminated, lease and other contract termination charges, and leasehold improvement write offs. These items, reported as gains, losses, and other items, net, are excluded from non-GAAP results because such amounts are not used by us to assess the core profitability of our business operations.
Transformation costs: In previous years, we incurred significant expenses to separate the financial statements of our operating segments, with particular focus on segment-level balance sheets, and to evaluate portfolio priorities. Our criteria for excluding transformation expenses from our non-GAAP measures is as follows: 1) projects are discrete in nature; 2) excluded expenses consist only of third-party consulting fees that we would not incur otherwise; and 3) we do not exclude employee related expenses or other costs associated with the ongoing operations of our business. We substantially completed those projects during the third quarter of fiscal year 2018. Beginning in the fourth quarter of fiscal 2018, and through most of fiscal 2019, we incurred transaction support expenses and system separation costs related to the Company's announced evaluation of strategic options for its Marketing Solutions (AMS) business. Beginning in the first quarter of fiscal 2021 in response to the potential COVID-19 pandemic impact on our business, we incurred significant costs associated with the assessment of strategic and operating plans, including our long-term location strategy, and assistance in implementing the restructuring
P 23
activities as a result of this assessment. Our criteria for excluding these costs are the same. We believe excluding these items from our non-GAAP financial measures is useful for investors and provides meaningful supplemental information.
Accelerated depreciation: In the prior year we excluded depreciation costs associated with the reduced useful life of certain IT equipment in connection with the Company's migration to a cloud-based data center solution. This migration was part of our AMS separation strategy. These costs are excluded from our non-GAAP results because of the short-term nature of the incremental expenses and such amounts are not used by us to assess the core profitability of our business operations.
Our non-GAAP financial schedules are:
Non-GAAP EPS, Non-GAAP Income from Operations, and Non-GAAP expenses: Our Non-GAAP earnings per share, Non-GAAP income from operations, and Non-GAAP expenses reflect adjustments as described above, as well as the related tax effects where applicable.
Adjusted EBITDA: Adjusted EBITDA is defined as net income from continuing operations before income taxes, other expenses, depreciation and amortization, and including adjustments as described above. We use Adjusted EBITDA to measure our performance from period to period both at the consolidated level as well as within our operating segments and to compare our results to those of our competitors. We believe that the inclusion of Adjusted EBITDA provides useful supplementary information to and facilitates analysis by investors in evaluating the Company's performance and trends. The presentation of Adjusted EBITDA is not meant to be considered in isolation or as an alternative to net earnings as an indicator of our performance.
Free Cash Flow to Equity: To supplement our statement of cash flows, we use a non-GAAP measure of cash flow to analyze cash flows generated from operations. Free cash flow to equity is defined as operating cash flow less cash used by investing activities (excluding the impact of cash paid in acquisitions), less required payments of debt, and excluding the impact of discontinued operations. Management believes that this measure of cash flow is meaningful since it represents the amount of money available from continuing operations for the Company's discretionary spending after funding all required obligations including scheduled debt payments. The presentation of non-GAAP free cash flow to equity is not meant to be considered in isolation or as an alternative to cash flows from operating activities as a measure of liquidity.
