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 LiveRamp Announces Fourth Quarter and Fiscal Year Results
   Thursday, May 21, 2020 4:05:00 PM ET

Total Q4 Revenue Up 35% — Subscription Revenue Up 28%

Repurchases $103 Million of Stock Since December 31, 2019

Strong Balance Sheet

SAN FRANCISCO--(BUSINESS WIRE)--LiveRamp® (NYSE: RAMP), the leading global data connectivity platform, today announced its financial results for the fourth quarter and fiscal year ended March 31, 2020.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20200521005703/en/



Fourth Quarter Financial Highlights

  • Total revenue was $106 million, up 35% compared to the prior year period.
  • Subscription revenue was $84 million, up 28% and contributed 79% of total revenue.
  • Marketplace & Other revenue was $22 million, up 71%.
  • GAAP gross profit was $69 million, up 70% compared to the prior year period. GAAP gross margin of 65% expanded 13 percentage points. Non-GAAP gross profit was $75 million, up 59% compared to the prior year period. Non-GAAP gross margin of 71% expanded 11 percentage points.
  • GAAP operating loss was $41 million compared to a GAAP operating loss of $82 million in the prior year period. Non-GAAP operating loss was $16 million compared to a non-GAAP operating loss of $22 million in the prior year period.
  • GAAP loss per share from continuing operations was $0.07, and non-GAAP loss per share from continuing operations was $0.05.
  • GAAP and non-GAAP operating results include an incremental $3.5 million bad debt charge largely as a result of current economic conditions.
  • Net cash provided by operating activities was roughly break-even compared to net cash provided by operating activities of $38 million during the fourth quarter of fiscal 2019. Prior year cash flow from operating activities included a $55 million cash tax benefit associated with the sale of the Acxiom Marketing Solutions (AMS) business.
  • As of May 20, 2020, LiveRamp has repurchased 3.1 million shares for $103 million under the current stock repurchase program since December 31, 2019. Since August 2011, the Company has returned over $1.17 billion in capital to shareholders.

Fiscal Year Financial Highlights

  • Total revenue was $381 million, up 33% compared to the prior year.
  • Subscription revenue was $306 million, up 29% and contributed 80% of total revenue.
  • Marketplace & Other revenue was $75 million, up 53%.
  • GAAP gross profit was $228 million, up 38% compared to the prior year. GAAP gross margin of 60% expanded 2 percentage points. Non-GAAP gross profit was $253 million, up 34% compared to the prior year. Non-GAAP gross margin of 67% expanded 1 percentage point.
  • GAAP operating loss was $181 million compared to a GAAP operating loss of $198 million in the prior year. Non-GAAP operating loss was $64 million compared to a non-GAAP operating loss of $54 million in the prior year.
  • GAAP loss per share from continuing operations was $1.85, and non-GAAP loss per share from continuing operations was $0.55.
  • Net cash used in operating activities was $29 million compared to net cash used in operating activities of $2 million during the prior year. Prior year cash flow from operating activities included a $55 million cash tax benefit associated with the sale of the Acxiom Marketing Solutions (AMS) business.
  • Cash and cash equivalents totaled $718 million with no debt at quarter end as compared to $767 million at December 31, 2019.

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

“During this unprecedented time, we remain focused on the health and well-being of our employees and partners who continue to serve our global network of customers,” said LiveRamp CEO Scott Howe. “Now more than ever, it is important for brands to remain close to their customers and to demonstrate that their marketing investments are driving real results and returns. LiveRamp plays a critical role in enabling enterprise marketers to spend smarter. Our product suite, and in particular the Authenticated Traffic Solution® (or ATS), Safe Haven® and Advanced TV products, ensure every marketing dollar spent is addressable, accountable and measurable.”

“I would also like to take this opportunity to thank the entire LiveRamp team for the resiliency and exceptionalism they have demonstrated during this period,” added Howe. “In times of adversity, the true character of a team emerges, and I could not be more proud to lead this incredible group of people.”

COVID-19 Business Update

“LiveRamp, along with most companies, is being impacted by the COVID-19 crisis. That said, we are fortunate to be operating from a position of strength,” said LiveRamp President and CFO Warren Jenson. “In addition to our robust balance sheet, we have great customers, dedicated employees, a subscription business model and products that benefit from the secular wave toward outcome-based marketing and advertising. However, we are watching and monitoring our business closely, and in particular, usage trends and our Data Marketplace.”

LiveRamp has taken proactive steps to keep its employees safe and global customer base serviced during these unprecedented times:

  • In early March, LiveRamp, in coordination with local government guidance, began implementing its Pandemic Plan for staged movement to work from home in order to protect its workforce. The vast majority of LiveRamp’s global employees have seamlessly transitioned to working remotely.
  • Given the SaaS nature of its model, LiveRamp does not depend on any on-premise components or personnel for the products and services it provides. LiveRamp is, however, dependent on its cloud infrastructure and the ability for its workforce to work remotely. To date, service to customers and partners has continued uninterrupted.
  • LiveRamp’s balance sheet remains exceptionally strong, with over $700 million of cash and no debt at year-end. The company is carefully managing working capital, tightening its hiring practices and reducing costs where appropriate.
  • The company increased its reserves for bad debts during the fourth quarter by approximately $3.5 million in response to increased future collection risk associated with certain customer segments.

GAAP and Non-GAAP Results

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

 

Q4 Fiscal 2020

 

Full Year Fiscal 2020

 

Results

 

Results

 

GAAP

Non-GAAP

 

GAAP

Non-GAAP

Subscription revenue

$84

 

$306

YoY change %

28%

 

 

29%

 

Marketplace & other revenue

$22

 

$75

YoY change %

71%

 

 

53%

 

Total revenue

$106

 

$381

YoY change %

35%

 

 

33%

 

 

 

 

 

 

 

Gross profit

$69

$75

 

$228

$253

% Gross margin

65%

71%

 

60%

67%

YoY change, pts

13pts

11pts

 

2pts

1pts

 

 

 

 

 

 

Operating loss

($41)

($16)

 

($181)

($64)

% Operating margin

(39%)

(15%)

 

(48%)

(17%)

YoY change, pts

66pts

14pts

 

22pts

2pts

 

 

 

 

 

 

Net loss from continuing operations

($5)

($3)

 

($125)

($37)

YoY change %

nm

nm

 

nm

nm

Loss per share from continuing operations

($0.07)

($0.05)

 

($1.85)

($0.55)

YoY change %

nm

nm

 

nm

nm

 

 

 

 

 

 

Shares to Calculate EPS

67.0

67.0

 

67.8

67.8

YoY change %

(2%)

(2%)

 

(10%)

(10)%

Net operating cash flow

($0)

 

($29)

YoY change %

nm

 

nm

 

Free cash flow to equity

($2)

 

($40)

YoY change %

nm

 

nm

 

 

 

 

 

 

Totals may not sum due to rounding.

A detailed discussion of our non-GAAP financial measures and a reconciliation between GAAP and non-GAAP results is provided in the schedules to this press release.

Additional Business Metrics & Highlights

  • LiveRamp added 10 net new direct subscription customers during the quarter, bringing its total direct customer count to 780, an increase of 17% year over year. It now serves 22% of the Fortune 500 compared to 19% in the prior year period.
  • LiveRamp has 53 clients whose subscription contracts exceed $1 million in annual revenue, up from 46 in the prior year period.
  • During the fourth quarter, subscription net retention was approximately 110%. Platform net retention was 122% driven by strong Marketplace & Other trends.
  • Current remaining performance obligations (RPO), which is contracted and committed revenue expected to be recognized over the next 12 months, was $221 million, up 29% compared to the fourth quarter of last year.
  • The company recently launched LiveRamp Safe Haven, a new platform that enables secure, permission-enabled data collaboration for brands and their partners. Two of the top five largest U.S. retailers are implementing Safe Haven, and to date, more than 35 companies world-wide are using this technology in their workflows.
  • LiveRamp addressability solutions, including ATS, continue to experience strong global adoption. There are currently 18 supply-side platforms (SSPs) live or committed to implementing IdentityLink™ in the bidstream, including OpenX, Index Exchange, Pubmatic, Rubicon Project and TripleLift. In addition, there are 35 demand-side platforms (DSPs) live or committed to bid on IdentityLink, including Amobee, Criteo, dataxu, and MediaMath. Lastly, to date, LiveRamp has signed on more than 45 publishers globally for ATS, spanning the US, UK, France, Spain, Italy, and Japan.

Board of Directors Update

LiveRamp also announced today that William T. Dillard II is retiring from the LiveRamp Board of Directors when his current term ends at the next annual meeting of shareholders, expected to be held in August 2020. Mr. Dillard has been a trusted advisor during the company’s evolution.

“Bill’s guidance has been invaluable to LiveRamp, and I want to personally thank him for his decades of service to the company. Bill has brought a strong customer perspective plus a wealth of executive experience to LiveRamp. He was instrumental in transforming the company into a category-creating software business. Both the board and the leadership team are deeply appreciative of Bill’s long service to LiveRamp,” said Scott Howe.

Financial Outlook

Given uncertainties related to the rapidly changing global economic environment, LiveRamp is providing first quarter guidance only.

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

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

  • Revenue of approximately $88 million, an increase of approximately 7% year-over-year.
  • GAAP operating loss from continuing operations of up to $47 million.
  • Non-GAAP operating loss of up to $12 million.

Conference Call

LiveRamp will hold a conference call at 1:30 p.m. PT today to further discuss this information. Interested parties are invited to listen to the call which will be broadcast via the Internet and can be found on LiveRamp’s investor site . A slide presentation will be referenced during the call and can be accessed here .

About LiveRamp

LiveRamp is the leading data connectivity platform for the safe and effective use of data. Powered by core identity capabilities and an unparalleled network, LiveRamp enables companies and their partners to better connect, control, and activate data to transform customer experiences and generate more valuable business outcomes. LiveRamp’s fully interoperable and neutral infrastructure delivers end-to-end addressability for the world’s top brands, agencies, and publishers. For more information, visit www.LiveRamp.com .

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended (the “PSLRA”). These statements, which are not statements of historical fact, may contain estimates, assumptions, projections and/or expectations regarding the Company’s financial position, results of operations, 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 suppliers and customers; 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 2019 ended March 31, 2019, and LiveRamp's Quarterly Reports on Form 10-Q issued in fiscal year 2020.

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 Annual Report on Form 10-K for the period ended March 31, 2020, which LiveRamp expects to file by end of May 2020.

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
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
 
For the Three Months Ended
March 31,

 

 

 

 

$

%

2020

 

2019

 

Variance

Variance

 
Revenues

105,701

 

78,316

 

 

27,385

 

35.0

%

 
Cost of revenue

36,852

 

37,760

 

 

(908

)

(2.4

%)

Gross profit

68,849

 

40,556

 

 

28,293

 

69.8

%

% Gross margin

65.1

%

51.8

%

 
Operating expenses:
Research and development

28,411

 

31,318

 

 

(2,907

)

(9.3

%)

Sales and marketing

48,564

 

49,223

 

 

(659

)

(1.3

%)

General and administrative

30,216

 

27,749

 

 

2,467

 

8.9

%

Gains, losses and other items, net

2,447

 

14,400

 

 

(11,953

)

(83.0

%)

Total operating expenses

109,638

 

122,690

 

 

(13,052

)

(10.6

%)

 
Loss from operations

(40,789

)

(82,134

)

 

41,345

 

50.3

%

% Margin

-38.6

%

-104.9

%

 
Total other income

1,565

 

8,311

 

 

(6,746

)

(81.2

%)

 
Loss from continuing operations before income taxes

(39,224

)

(73,823

)

 

34,599

 

46.9

%

 
Income taxes (benefit)

(34,345

)

(24,135

)

 

(10,210

)

(42.3

%)

 
Net loss from continuing operations

(4,879

)

(49,688

)

 

44,809

 

90.2

%

 
Earnings from discontinued operations, net of tax

750

 

4,227

 

 

(3,477

)

(82.3

%)

 
Net loss

(4,129

)

(45,461

)

 

41,332

 

90.9

%

 
Basic earnings (loss) per share:
Continuing operations

(0.07

)

(0.73

)

 

0.66

 

90.0

%

Discontinued operations

0.01

 

0.06

 

 

(0.05

)

(82.3

%)

Net loss

(0.06

)

(0.67

)

 

0.60

 

90.7

%

 
Diluted earnings (loss) per share:
Continuing operations

(0.07

)

(0.73

)

 

0.66

 

90.0

%

Discontinued operations

0.01

 

0.06

 

 

(0.05

)

(82.3

%)

Net loss

(0.06

)

(0.67

)

 

0.60

 

90.7

%

 
Basic weighted average shares

66,977

 

68,299

 

Diluted weighted average shares

66,977

 

68,299

 

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
 
For the Twelve Months Ended
March 31,

 

 

 

 

$

%

2020

 

2019

 

Variance

Variance

 
Revenues

380,572

 

285,620

 

94,952

 

33.2

%

 
Cost of revenue

152,704

 

120,718

 

31,986

 

26.5

%

Gross profit

227,868

 

164,902

 

62,966

 

38.2

%

% Gross margin

59.9

%

57.7

%

 
Operating expenses:
Research and development

105,981

 

85,697

 

20,284

 

23.7

%

Sales and marketing

188,905

 

158,540

 

30,365

 

19.2

%

General and administrative

108,903

 

98,878

 

10,025

 

10.1

%

Gains, losses and other items, net

5,001

 

19,933

 

(14,932

)

(74.9

%)

Total operating expenses

408,790

 

363,048

 

45,742

 

12.6

%

 
Loss from operations

(180,922

)

(198,146

)

17,224

 

8.7

%

% Margin

-47.5

%

-69.4

%

 
Total other income

15,385

 

18,790

 

(3,405

)

(18.1

%)

 
Loss from continuing operations before income taxes

(165,537

)

(179,356

)

13,819

 

7.7

%

 
Income taxes (benefit)

(40,276

)

(45,409

)

5,133

 

11.3

%

 
Net loss from continuing operations

(125,261

)

(133,947

)

8,686

 

6.5

%

 
Earnings from discontinued operations, net of tax

750

 

1,162,494

 

(1,161,744

)

(99.9

%)

 
Net earnings (loss)

(124,511

)

1,028,547

 

(1,153,058

)

(112.1

%)

 
Basic earnings (loss) per share:
Continuing operations

(1.85

)

(1.79

)

(0.06

)

(3.6

%)

Discontinued operations

0.01

 

15.50

 

(15.49

)

(99.9

%)

Net earnings (loss)

(1.84

)

13.71

 

(15.55

)

(113.4

%)

 
Diluted earnings (loss) per share:
Continuing operations

(1.85

)

(1.79

)

(0.06

)

(3.6

%)

Discontinued operations

0.01

 

15.50

 

(15.49

)

(99.9

%)

Net earnings (loss)

(1.84

)

13.71

 

(15.55

)

(113.4

%)

 
Basic weighted average shares

67,760

 

75,020

 

Diluted weighted average shares

67,760

 

75,020

 

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
(Unaudited)
(Dollars in thousands, except per share amounts)
 

For the Three Months Ended

 

For the Twelve Months Ended

March 31,

 

March 31,

2020

 

2019

 

2020

 

2019

 
 
Loss from continuing operations before income taxes

(39,224

)

(73,823

)

(165,537

)

(179,356

)

 
Income taxes (benefit)

(34,345

)

(24,135

)

(40,276

)

(45,409

)

 
Net loss from continuing operations

(4,879

)

(49,688

)

(125,261

)

(133,947

)

 
Earnings from discontinued operations, net of tax

750

 

4,227

 

750

 

1,162,494

 

 
Net earnings (loss)

(4,129

)

(45,461

)

(124,511

)

1,028,547

 

 
Earnings (loss) per share:
Basic

(0.06

)

(0.67

)

(1.84

)

13.71

 

Diluted

(0.06

)

(0.67

)

(1.84

)

13.71

 

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

5,181

 

2,981

 

19,042

 

15,858

 

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

17,168

 

41,175

 

89,447

 

102,722

 

Accelerated depreciation (cost of revenue and operating expenses)

-

 

1,853

 

3,569

 

3,812

 

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

2,447

 

14,400

 

5,001

 

19,933

 

Separation and transformation costs (general and administrative)

-

 

(705

)

-

 

2,117

 

 
Total excluded items, continuing operations

24,796

 

59,704

 

117,059

 

144,442

 

 
Loss from continuing operations before income taxes and excluding items

(14,428

)

(14,119

)

(48,478

)

(34,914

)

 
Income taxes (benefit) (2)

(11,199

)

(5,155

)

(11,452

)

(12,964

)

 
Non-GAAP net loss from continuing operations

(3,229

)

(8,964

)

(37,026

)

(21,950

)

 
Non-GAAP loss per share from continuing operations:
Basic

(0.05

)

(0.13

)

(0.55

)

(0.29

)

Diluted

(0.05

)

(0.13

)

(0.55

)

(0.29

)

 
Basic weighted average shares

66,977

 

68,299

 

67,760

 

75,020

 

Diluted weighted average shares

66,977

 

68,299

 

67,760

 

75,020

 

(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 77.6% and 36.5% in the fourth quarter of fiscal 2020 and 2019, respectively, and 23.6% and 37.1% for the twelve months ended March 31, 2020 and 2019, 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
(Unaudited)
(Dollars in thousands)
 

For the Three Months Ended

 

For the Twelve Months Ended

March 31,

 

March 31,

2020

 

2019

 

2020

 

2019

 
 
Loss from continuing operations

(40,789

)

(82,134

)

(180,922

)

(198,146

)

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

5,181

 

2,981

 

19,042

 

15,858

 

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

17,168

 

41,175

 

89,447

 

102,722

 

Accelerated depreciation (cost of revenue and operating expenses)

-

 

1,853

 

3,569

 

3,812

 

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

2,447

 

14,400

 

5,001

 

19,933

 

Separation and transformation costs (general and administrative)

-

 

(705

)

-

 

2,117

 

 
Total excluded items

24,796

 

59,704

 

117,059

 

144,442

 

 
Loss from continuing operations before excluded items

(15,993

)

(22,430

)

(63,863

)

(53,704

)

(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 EndedFor the Twelve Months Ended
March 31,March 31,

2020

 

2019

 

2020

 

2019

 
 
Net loss from continuing operations

(4,879

)

(49,688

)

(125,261

)

(133,947

)

 
Income taxes (benefit)

(34,345

)

(24,135

)

(40,276

)

(45,409

)

 
Other income

(1,565

)

(8,311

)

(15,385

)

(18,790

)

 
Loss from operations

(40,789

)

(82,134

)

(180,922

)

(198,146

)

 
Depreciation and amortization

7,943

 

8,508

 

35,901

 

33,782

 

 
EBITDA

(32,846

)

(73,626

)

(145,021

)

(164,364

)

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

17,168

 

41,175

 

89,447

 

102,722

 

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

2,447

 

14,400

 

5,001

 

19,933

 

Separation and transformation costs (general and administrative)

-

 

(705

)

-

 

2,117

 

 
Other adjustments

19,615

 

54,870

 

94,448

 

124,772

 

 
Adjusted EBITDA

(13,231

)

(18,756

)

(50,573

)

(39,592

)

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

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
 

March 31,

 

March 31,

 

$

%

2020

 

2019

 

Variance

Variance

 
Current assets:
Cash and cash equivalents

717,811

 

1,061,473

 

 

(343,662

)

(32.4

%)

Restricted cash

14,815

 

-

 

 

14,815

 

n/a

 

Trade accounts receivable, net

92,761

 

78,563

 

 

14,198

 

18.1

%

Refundable income taxes

38,340

 

7,890

 

 

30,450

 

385.9

%

Other current assets

32,666

 

44,150

 

 

(11,484

)

(26.0

%)

 
Total current assets

896,393

 

1,192,076

 

 

(295,683

)

(24.8

%)

 
Property and equipment

44,786

 

64,852

 

 

(20,066

)

(30.9

%)

Less - accumulated depreciation and amortization

25,465

 

38,809

 

 

(13,344

)

(34.4

%)

 
Property and equipment, net

19,321

 

26,043

 

 

(6,722

)

(25.8

%)

 
Intangible assets, net

45,200

 

28,592

 

 

16,608

 

58.1

%

Goodwill

297,796

 

204,656

 

 

93,140

 

45.5

%

Deferred commissions, net

16,014

 

10,741

 

 

5,273

 

49.1

%

Other assets, net

27,165

 

10,803

 

 

16,362

 

151.5

%

 

1,301,889

 

1,472,911

 

 

(171,022

)

(11.6

%)

 
Current liabilities:
Trade accounts payable

42,204

 

31,203

 

 

11,001

 

35.3

%

Accrued payroll and related expenses

28,791

 

18,715

 

 

10,076

 

53.8

%

Other accrued expenses

68,991

 

40,916

 

 

28,075

 

68.6

%

Acquisition escrow payable

14,815

 

-

 

 

14,815

 

n/a

 

Deferred revenue

6,581

 

4,284

 

 

2,297

 

53.6

%

 
Total current liabilities

161,382

 

95,118

 

 

66,264

 

69.7

%

 
Other liabilities

52,995

 

46,961

 

 

6,034

 

12.8

%

 
Stockholders' equity:
Preferred stock

-

 

-

 

 

0

 

0.0

%

Common stock

14,394

 

14,187

 

 

207

 

1.5

%

Additional paid-in capital

1,496,565

 

1,406,813

 

 

89,752

 

6.4

%

Retained earnings

1,545,094

 

1,669,605

 

 

(124,511

)

(7.5

%)

Accumulated other comprehensive income

5,745

 

7,801

 

 

(2,056

)

(26.4

%)

Treasury stock, at cost

(1,974,286

)

(1,767,574

)

 

(206,712

)

(11.7

%)

Total stockholders' equity

1,087,512

 

1,330,832

 

 

(243,320

)

(18.3

%)

 

1,301,889

 

1,472,911

 

 

(171,022

)

(11.6

%)

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
 
For the Three Months Ended
March 31,

2020

2019

 
Cash flows from operating activities:
Net loss

(4,129

)

(45,461

)

Earnings from discontinued operations, net of tax

(750

)

(4,227

)

Non-cash operating activities:
Depreciation and amortization

7,943

 

8,508

 

Loss on disposal or impairment of assets

1,865

 

115

 

Provision for doubtful accounts

3,450

 

1,810

 

Deferred income taxes

(8,343

)

(18,639

)

Non-cash stock compensation expense

17,168

 

41,175

 

Changes in operating assets and liabilities:
Accounts receivable, net

(8,667

)

(9,400

)

Deferred commissions

(2,563

)

(1,263

)

Other assets

(8,548

)

1,781

 

Accounts payable and other liabilities

12,326

 

6,804

 

Income taxes, net

(12,030

)

55,134

 

Deferred revenue

2,058

 

2,017

 

Net cash provided by (used in) operating activities

(220

)

38,354

 

Cash flows from investing activities:
Capital expenditures

(1,409

)

(3,347

)

Proceeds from sales of assets

356

 

-

 

Cash paid in acquisition, net of cash received

-

 

-

 

Net cash used in investing activities

(1,053

)

(3,347

)

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

1,331

 

3,064

 

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

(6,465

)

(13,614

)

Acquisition of treasury stock

(61,002

)

(10,314

)

Net cash used in financing activities

(66,136

)

(20,864

)

Cash flows from discontinued operations:
From operating activities

(207

)

(499,505

)

From investing activities

18,582

 

-

 

Effect of exchange rate changes on cash

-

 

-

 

Net cash provided by (used in) discontinued operations

18,375

 

(499,505

)

Effect of exchange rate changes on cash

(355

)

61

 

 
Net change in cash, cash equivalents and restricted cash

(49,389

)

(485,301

)

Cash, cash equivalents and restricted cash at beginning of period

782,015

 

1,546,774

 

Cash, cash equivalents and restricted cash at end of period

732,626

 

1,061,473

 

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

(13,515

)

438,875

 

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
 
For the Twelve Months Ended
March 31,

2020

 

2019

 
Cash flows from operating activities:
Net earnings (loss)

(124,511

)

1,028,547

 

Earnings from discontinued operations, net of tax

(750

)

(1,162,494

)

Non-cash operating activities:
Depreciation and amortization

35,901

 

33,782

 

Loss on disposal or impairment of assets

1,725

 

3,460

 

Provision for doubtful accounts

7,133

 

3,069

 

Deferred income taxes

(6,878

)

9,894

 

Non-cash stock compensation expense

89,447

 

102,722

 

Changes in operating assets and liabilities:
Accounts receivable, net

(20,518

)

(44,411

)

Deferred commissions

(5,273

)

(4,298

)

Other assets

(6,144

)

(3,106

)

Accounts payable and other liabilities

24,923

 

25,308

 

Income taxes, net

(25,453

)

5,087

 

Deferred revenue

1,823

 

462

 

Net cash used in operating activities

(28,575

)

(1,978

)

Cash flows from investing activities:
Capitalized software

-

 

(1,322

)

Capital expenditures

(11,711

)

(7,320

)

Proceeds from sales of assets

873

 

-

 

Payments for investments

-

 

(2,500

)

Cash paid in acquisition, net of cash received

(105,365

)

-

 

Net cash used in investing activities

(116,203

)

(11,142

)

Cash flows from financing activities:
Payments of debt

-

 

(233,293

)

Fees from debt refinancing

-

 

(300

)

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

4,736

 

20,419

 

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

(24,522

)

(50,520

)

Acquisition of treasury stock

(182,190

)

(74,421

)

Acquisition of treasury stock from tender offer

-

 

(503,393

)

Net cash used in financing activities

(201,976

)

(841,508

)

Cash flows from discontinued operations:
From operating activities

(207

)

(458,525

)

From investing activities

18,582

 

2,236,530

 

Effect of exchange rate changes on cash

-

 

(172

)

Net cash provided by discontinued operations

18,375

 

1,777,833

 

Effect of exchange rate changes on cash

(468

)

(1,750

)

 
Net change in cash, cash equivalents and restricted cash

(328,847

)

921,455

 

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

732,626

 

1,061,473

 

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

(7,344

)

439,542

 

 
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CALCULATION OF FREE CASH FLOW TO EQUITY (1)
(Unaudited)
(Dollars in thousands)
 
 
06/30/1809/30/1812/31/1803/31/19FY201906/30/1909/30/1912/31/1903/31/20FY2020
 
Net Cash Provided by (Used in) Operating Activities of Continuing Operations

(2,280

)

(27,130

)

(10,922

)

38,354

 

(1,978

)

(15,408

)

(28,751

)

15,804

 

(220

)

(28,575

)

 
Less:
Capitalized software

(899

)

(423

)

-

 

-

 

(1,322

)

-

 

-

 

-

 

-

 

-

 

Capital expenditures

(712

)

(1,323

)

(1,938

)

(3,347

)

(7,320

)

(4,888

)

(2,641

)

(2,773

)

(1,409

)

(11,711

)

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

)

13,031

 

(1,629

)

(40,286

)

(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
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)

 

FY20 to FY19

06/30/1809/30/1812/31/1803/31/19FY201906/30/1909/30/1912/31/1903/31/20FY2020

%

$

Revenues

62,471

 

64,812

 

80,021

 

78,316

 

285,620

 

82,511

 

90,143

 

102,217

 

105,701

 

380,572

 

33.2

%

 

94,952

 

 
Cost of revenue

23,654

 

24,466

 

34,838

 

37,760

 

120,718

 

36,426

 

41,460

 

37,966

 

36,852

 

152,704

 

26.5

%

 

31,986

 

Gross profit

38,817

 

40,346

 

45,183

 

40,556

 

164,902

 

46,085

 

48,683

 

64,251

 

68,849

 

227,868

 

38.2

%

 

62,966

 

% Gross margin

62.1

%

62.3

%

56.5

%

51.8

%

57.7

%

55.9

%

54.0

%

62.9

%

65.1

%

59.9

%

 
Operating expenses
Research and development

16,970

 

16,940

 

20,469

 

31,318

 

85,697

 

23,722

 

26,445

 

27,403

 

28,411

 

105,981

 

23.7

%

 

20,284

 

Sales and marketing

33,323

 

35,940

 

40,054

 

49,223

 

158,540

 

43,144

 

45,204

 

51,993

 

48,564

 

188,905

 

19.2

%

 

30,365

 

General and administrative

18,125

 

25,176

 

27,828

 

27,749

 

98,878

 

25,318

 

27,262

 

26,107

 

30,216

 

108,903

 

10.1

%

 

10,025

 

Gains, losses and other items, net

1

 

489

 

5,043

 

14,400

 

19,933

 

2,276

 

45

 

233

 

2,447

 

5,001

 

(74.9

%)

 

(14,932

)

Total operating expenses

68,419

 

78,545

 

93,394

 

122,690

 

363,048

 

94,460

 

98,956

 

105,736

 

109,638

 

408,790

 

12.6

%

 

45,742

 

 
Loss from operations

(29,602

)

(38,199

)

(48,211

)

(82,134

)

(198,146

)

(48,375

)

(50,273

)

(41,485

)

(40,789

)

(180,922

)

8.7

%

 

17,224

 

% Margin

-47.4

%

-58.9

%

-60.2

%

-104.9

%

-69.4

%

-58.6

%

-55.8

%

-40.6

%

-38.6

%

-47.5

%

 
Total other income (expense)

356

 

(281

)

10,404

 

8,311

 

18,790

 

5,882

 

4,780

 

3,158

 

1,565

 

15,385

 

(18.1

%)

 

(3,405

)

 
Loss from continuing operations before income taxes

(29,246

)

(38,480

)

(37,807

)

(73,823

)

(179,356

)

(42,493

)

(45,493

)

(38,327

)

(39,224

)

(165,537

)

7.7

%

 

13,819

 

 
Income taxes (benefit)

(1,428

)

2,700

 

(22,546

)

(24,135

)

(45,409

)

(353

)

(5,291

)

(287

)

(34,345

)

(40,276

)

11.3

%

 

5,133

 

 
Net loss from continuing operations

(27,818

)

(41,180

)

(15,261

)

(49,688

)

(133,947

)

(42,140

)

(40,202

)

(38,040

)

(4,879

)

(125,261

)

6.5

%

 

8,686

 

 
Earnings from discontinued operations, net of tax

24,803

 

61,803

 

1,071,661

 

4,227

 

1,162,494

 

-

 

-

 

-

 

750

 

750

 

(99.9

%)

 

(1,161,744

)

 
Net earnings (loss)

(3,015

)

20,623

 

1,056,400

 

(45,461

)

1,028,547

 

(42,140

)

(40,202

)

(38,040

)

(4,129

)

(124,511

)

(112.1

%)

 

(1,153,058

)

 
Diluted earnings (loss) per share

(0.04

)

0.27

 

13.65

 

(0.67

)

13.71

 

(0.61

)

(0.59

)

(0.56

)

(0.06

)

(1.84

)

(113.4

%)

 

(15.55

)

 
Diluted loss per share continuing operations

(0.36

)

(0.53

)

(0.20

)

(0.73

)

(1.79

)

(0.61

)

(0.59

)

(0.56

)

(0.07

)

(1.85

)

(31.8

%)

 

(0.06

)

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

76,935

 

77,448

 

77,398

 

68,299

 

75,020

 

68,906

 

67,684

 

67,473

 

66,977

 

67,760

 

Diluted shares

76,935

 

77,448

 

77,398

 

68,299

 

75,020

 

68,906

 

67,684

 

67,473

 

66,977

 

67,760

 

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP EPS (1)
(Unaudited)
(Dollars in thousands, except per share amounts)
 
 
 
06/30/1809/30/1812/31/1803/31/19FY201906/30/1909/30/1912/31/1903/31/20FY2020
 
 
Loss from continuing operations before income taxes

(29,246

)

(38,480

)

(37,807

)

(73,823

)

(179,356

)

(42,493

)

(45,493

)

(38,327

)

(39,224

)

(165,537

)

Income taxes (benefit)

(1,428

)

2,700

 

(22,546

)

(24,135

)

(45,409

)

(353

)

(5,291

)

(287

)

(34,345

)

(40,276

)

Net loss from continuing operations

(27,818

)

(41,180

)

(15,261

)

(49,688

)

(133,947

)

(42,140

)

(40,202

)

(38,040

)

(4,879

)

(125,261

)

 
Earnings from discontinued operations, net of tax

24,803

 

61,803

 

1,071,661

 

4,227

 

1,162,494

 

-

 

-

 

-

 

750

 

750

 

 
Net earnings (loss)

(3,015

)

20,623

 

1,056,400

 

(45,461

)

1,028,547

 

(42,140

)

(40,202

)

(38,040

)

(4,129

)

(124,511

)

 
Earnings (loss) per share:
Basic

(0.04

)

0.27

 

13.65

 

(0.67

)

13.71

 

(0.61

)

(0.59

)

(0.56

)

(0.06

)

(1.84

)

Diluted

(0.04

)

0.27

 

13.65

 

(0.67

)

13.71

 

(0.61

)

(0.59

)

(0.56

)

(0.06

)

(1.84

)

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

5,970

 

3,548

 

3,359

 

2,981

 

15,858

 

3,123

 

5,369

 

5,369

 

5,181

 

19,042

 

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

17,798

 

17,667

 

26,082

 

41,175

 

102,722

 

18,630

 

23,354

 

30,295

 

17,168

 

89,447

 

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

 

233

 

2,447

 

5,001

 

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

 

35,897

 

24,796

 

117,059

 

 
Loss from continuing operations before income taxes and excluding items

(5,477

)

(14,654

)

(664

)

(14,119

)

(34,914

)

(16,558

)

(15,062

)

(2,430

)

(14,428

)

(48,478

)

Income taxes (benefit)

(1,078

)

(3,790

)

(2,941

)

(5,155

)

(12,964

)

(216

)

190

 

(227

)

(11,199

)

(11,452

)

Non-GAAP net earnings (loss) from continuing operations

(4,399

)

(10,864

)

2,277

 

(8,964

)

(21,950

)

(16,342

)

(15,252

)

(2,203

)

(3,229

)

(37,026

)

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

(0.06

)

(0.14

)

0.03

 

(0.13

)

(0.29

)

(0.24

)

(0.23

)

(0.03

)

(0.05

)

(0.55

)

Diluted

(0.06

)

(0.14

)

0.03

 

(0.13

)

(0.29

)

(0.24

)

(0.23

)

(0.03

)

(0.05

)

(0.55

)

 
Basic weighted average shares

76,935

 

77,448

 

77,398

 

68,299

 

75,020

 

68,906

 

67,684

 

67,473

 

66,977

 

67,760

 

Diluted weighted average shares

76,935

 

77,448

 

80,674

 

68,299

 

75,020

 

68,906

 

67,684

 

67,473

 

66,977

 

67,760

 

 
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)
 
 
06/30/1809/30/1812/31/1803/31/19FY201906/30/1909/30/1912/31/1903/31/20FY2020
 
Expenses, continuing operations:
Cost of revenue

23,654

 

24,466

 

34,838

 

37,760

 

120,718

 

36,426

 

41,460

 

37,966

 

36,852

 

152,704

 

Research and development

16,970

 

16,940

 

20,469

 

31,318

 

85,697

 

23,722

 

26,445

 

27,403

 

28,411

 

105,981

 

Sales and marketing

33,323

 

35,940

 

40,054

 

49,223

 

158,540

 

43,144

 

45,204

 

51,993

 

48,564

 

188,905

 

General and administrative

18,125

 

25,176

 

27,828

 

27,749

 

98,878

 

25,318

 

27,262

 

26,107

 

30,216

 

108,903

 

Gains, losses and other items, net

1

 

489

 

5,043

 

14,400

 

19,933

 

2,276

 

45

 

233

 

2,447

 

5,001

 

 
Gross profit, continuing operations:

38,817

 

40,346

 

45,183

 

40,556

 

164,902

 

46,085

 

48,683

 

64,251

 

68,849

 

227,868

 

% Gross margin

62.1

%

62.3

%

56.5

%

51.8

%

57.7

%

55.9

%

54.0

%

62.9

%

65.1

%

59.9

%

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

5,970

 

3,548

 

3,359

 

2,981

 

15,858

 

3,123

 

5,369

 

5,369

 

5,181

 

19,042

 

Non-cash stock compensation (cost of revenue)

711

 

782

 

1,052

 

2,163

 

4,708

 

755

 

1,060

 

1,028

 

926

 

3,769

 

Non-cash stock compensation (research and development)

4,342

 

3,745

 

5,945

 

14,193

 

28,225

 

4,451

 

6,346

 

6,462

 

6,001

 

23,260

 

Non-cash stock compensation (sales and marketing)

9,920

 

9,854

 

9,460

 

14,736

 

43,970

 

8,920

 

9,758

 

15,670

 

3,678

 

38,026

 

Non-cash stock compensation (general and administrative)

2,824

 

3,286

 

9,625

 

10,083

 

25,818

 

4,504

 

6,190

 

7,135

 

6,563

 

24,392

 

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

 

233

 

2,447

 

5,001

 

Separation and transformation costs (general and administrative)

-

 

2,122

 

700

 

(705

)

2,117

 

-

 

-

 

-

 

-

 

-

 

Total excluded items

23,769

 

23,826

 

37,143

 

59,704

 

144,442

 

25,935

 

30,431

 

35,897

 

24,796

 

117,059

 

 
Expenses, continued operations excluding items:
Cost of revenue

16,972

 

20,136

 

28,900

 

31,171

 

97,179

 

31,061

 

33,786

 

31,569

 

30,745

 

127,161

 

Research and development

12,628

 

13,195

 

14,524

 

17,125

 

57,472

 

19,271

 

20,099

 

20,941

 

22,410

 

82,721

 

Sales and marketing

23,403

 

26,086

 

30,594

 

34,487

 

114,570

 

34,224

 

35,446

 

36,323

 

44,886

 

150,879

 

General and administrative

15,301

 

19,768

 

17,071

 

17,963

 

70,103

 

20,395

 

20,654

 

18,972

 

23,653

 

83,674

 

Gains, losses and other items, net

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

 
Gross profit, continuing operations excluding items:

45,499

 

44,676

 

51,121

 

47,145

 

188,441

 

51,450

 

56,357

 

70,648

 

74,956

 

253,411

 

% Gross margin

72.8

%

68.9

%

63.9

%

60.2

%

66.0

%

62.4

%

62.5

%

69.1

%

70.9

%

66.6

%

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

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
(Unaudited)
(Dollars in thousands)
 
For the quarter ending
June 30, 2020
 
 
GAAP loss from operations

 

(47,000

)

 
Excluded items:
Purchased intangible asset amortization

 

5,000

 

Non-cash stock compensation

 

24,000

 

Restructuring and related costs

 

6,000

 

Total excluded items

 

35,000

 

 
Non-GAAP loss from operations

$

(12,000

)

(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 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
Q4 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:

: 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 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.

: 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.

: In prior years, 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.

: In the prior and 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:

The current quarter 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.

The current quarter 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.

The monthly recurring revenue (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:

: Our Non-GAAP earnings per share, Non-GAAP income from operations, and Non-GAAP expenses and Gross Profit reflect adjustments as described above, as well as the related tax effects where applicable.

: 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.

: To supplement our statement of cash flows, we use a non-GAAP measure of cash flow to analyze cash flows generated from operations. Free cash flow to equity is defined as operating cash flow less cash used by investing activities (excluding the impact of cash paid in acquisitions), less required payments of debt, and excluding the impact of discontinued operations. Management believes that this measure of cash flow is meaningful since it represents the amount of money available from continuing operations for the Company's discretionary spending after funding all required obligations including scheduled debt payments. The presentation of non-GAAP free cash flow to equity is not meant to be considered in isolation or as an alternative to cash flows from operating activities as a measure of liquidity.

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

Source: LiveRamp



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