CORRECTING and REPLACING LiveRamp Delivers Record Second Quarter Results

Total Revenue up 20% – Subscription Revenue up 30%

Maintains Full-Year Revenue Guidance

CORRECTION...by LiveRamp

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

The corrected release reads: 

LIVERAMP DELIVERS RECORD SECOND QUARTER RESULTS

Total Revenue up 20% – Subscription Revenue up 30%

Maintains Full-Year Revenue Guidance

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

Second Quarter Financial Highlights:

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

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

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

Second Quarter GAAP and Non-GAAP Results:

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

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

$ millions

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

Marketplace & other revenue

$10

(15%)

$10

(15%)

Total revenue $65 20% $65 20%
 
 

$ millions or
% of revenue

  YoY

$ millions or
% of revenue

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

$ millions

 

Loss per
share

$ millions

 

Loss per
share

Net loss from cont. operations

($41) ($0.53) ($11) ($0.14)
 

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

Key Metrics and Business Highlights

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

Financial Outlook

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

For fiscal 2019, LiveRamp expects to report:

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

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

Analyst and Investor Day

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

About LiveRamp

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

Forward-Looking Statements

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

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

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

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

LiveRamp, LiveRamp, IdentityLink, Abilitec and all other LiveRamp marks contained herein are trademarks or service marks of LiveRamp, Inc. All other marks are the property of their respective owners.

 
LIVERAMP HOLDINGS, INC. AND SUBDISIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
 
 
     

For the Three Months Ended
September 30,

2018   2017  

$
Variance

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

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

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

Loss from continuing operations before income taxes and excluding items

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

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

 

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

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

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

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

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

 
 
LIVERAMP HOLDINGS, INC. AND SUBDISIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
 
      September 30,
2018
  March 31,
2018
  $
Variance
  %
Variance
 

Assets

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

Liabilities and Stockholders' Equity

Current liabilities:
Current installments of long-term debt - 1,583 (1,583 ) (100.0 %)
Trade accounts payable 15,854 18,759 (2,905 ) (15.5 %)
Accrued payroll and related expenses 14,329 13,774 555 4.0 %
Other accrued expenses 44,434 39,624 4,810 12.1 %
Deferred revenue 2,982 4,506 (1,524 ) (33.8 %)
Liabilities held for sale 97,163   100,353   (3,190 ) (3.2 %)
 
Total current liabilities 174,762   178,599   (3,837 ) (2.1 %)
 
Long-term debt 226,307 227,837 (1,530 ) (0.7 %)
 
Deferred income taxes 15,952 40,243 (24,291 ) (60.4 %)
 
Other liabilities 10,093 10,016 77 0.8 %
 
Other liabilities held for sale - 3,707 - (100.0 %)
 
Stockholders' equity:
Common stock 13,836 13,609 227 1.7 %
Additional paid-in capital 1,277,614 1,235,679 41,935 3.4 %
Retained earnings 658,666 628,331 30,335 4.8 %
Accumulated other comprehensive income 10,192 10,767 (575 ) (5.3 %)
Treasury stock, at cost (1,199,630 ) (1,139,291 ) (60,339 ) (5.3 %)
Total stockholders' equity 760,678   749,095   11,583 1.5 %
 
1,187,792   1,209,497   (21,705 ) (1.8 %)
 
 
LIVERAMP HOLDINGS, INC. AND SUBDISIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
 
      For the Three Months Ended
September 30,
2018   2017
 
Cash flows from operating activities:
Net earnings (loss) 20,623 (3,336 )
Earnings from discontinued operations, net of tax (61,803 ) (22,665 )
Non-cash operating activities:
Depreciation and amortization 7,010 9,732
Loss on disposal or impairment of assets 490 2,132
Provision for doubtful accounts 1,095 304
Deferred income taxes 14,136 (5,480 )
Non-cash stock compensation expense 17,667 13,073
Changes in operating assets and liabilities:
Accounts receivable (1,797 ) (8,301 )
Deferred commissions (1,049 ) -
Other assets (9,967 ) 6,438
Accounts payable and other liabilities (11,593 ) 25
Deferred revenue (1,942 ) 49  
Net cash used in operating activities (27,130 ) (8,029 )
Cash flows from investing activities:
Capitalized software (423 ) (638 )
Capital expenditures (1,323 ) (330 )
Net cash received in disposition -   4,000  
Net cash provided by (used in) investing activities (1,746 ) 3,032  
Cash flows from financing activities:
Payments of debt (2,701 ) (578 )
Sale of common stock, net of stock acquired for withholding taxes (575 ) 6,234
Acquisition of treasury stock -   (19,776 )
Net cash used in financing activities (3,276 ) (14,120 )
Cash flows from discontinued operations:
From operating activities 34,135 35,657
From investing activities (7,929 ) (10,651 )
Effect of exchange rate changes on cash (5 ) 12  
Net cash provided by discontinued operations 26,201   25,018  
Effect of exchange rate changes on cash (557 ) 278  
 
Net change in cash and cash equivalents (6,508 ) 6,179
Cash and cash equivalents at beginning of period 93,555   162,173  
Cash and cash equivalents at end of period 87,047   168,352  
 
Supplemental cash flow information:
Cash paid (received) during the period for:
Income taxes (741 ) 301
 
 
LIVERAMP HOLDINGS, INC. AND SUBDISIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
 
      For the Six Months Ended
September 30,
2018   2017
 
Cash flows from operating activities:
Net earnings (loss) 17,608 (4,636 )
Earnings from discontinued operations (86,606 ) (48,444 )
Non-cash operating activities:
Depreciation and amortization 16,540 18,931
Loss on disposal or impairment of assets 475 2,125
Provision for doubtful accounts 631 262
Accelerated deferred debt costs - 720
Deferred income taxes 12,444 (2,632 )
Non-cash stock compensation expense 35,465 25,666
Changes in operating assets and liabilities:
Accounts receivable (2,649 ) (4,675 )
Deferred commissions (2,047 ) -
Other assets (12,480 ) (1,136 )
Accounts payable and other liabilities (7,276 ) (3,804 )
Deferred revenue (1,515 ) (1,228 )
Net cash used in operating activities (29,410 ) (18,851 )
Cash flows from investing activities:
Capitalized software (1,322 ) (1,213 )
Capital expenditures (2,035 ) (2,687 )
Net cash received in disposition - 4,000
Payments for investments (2,500 ) -  
Net cash provided by (used in) investing activities (5,857 ) 100  
Cash flows from financing activities:
Proceeds from debt - 230,000
Payments of debt (3,293 ) (226,150 )
Fees from debt refinancing (300 ) (4,001 )
Sale of common stock, net of stock acquired for withholding taxes (6,503 ) 3,695
Acquisition of treasury stock (45,766 ) (19,776 )
Net cash used in financing activities (55,862 ) (16,232 )
Cash flows from discontinued operations:
From operating activities 54,316 52,120
From investing activities (14,502 ) (18,185 )
From financing activities - -
Effect of exchange rate changes on cash (172 ) 111  
Net cash provided by discontinued operations 39,642   34,046  
Effect of exchange rate changes on cash (1,484 ) 609  
 
Net change in cash and cash equivalents (52,971 ) (328 )
Cash and cash equivalents at beginning of period 140,018   168,680  
Cash and cash equivalents at end of period 87,047   168,352  
 
Supplemental cash flow information:
Cash paid during the period for:
Income taxes 115 229
 
 
LIVERAMP HOLDINGS, INC. AND SUBDISIARIES
CALCULATION OF FREE CASH FLOW TO EQUITY (1)
(Unaudited)
(Dollars in thousands)
 
                                   
06/30/17   09/30/17   12/31/17   03/31/18   FY2018 06/30/18   09/30/18   YTD FY2019
           
Net Cash Provided by (Used in) Operating Activities-Continuing Operations (10,822 ) (8,029 ) 14,096 (9,335 ) (14,090 ) (2,280 ) (27,130 ) (29,410 )
 
Less (plus):
Capitalized software (575 ) (638 ) (507 ) (1,546 ) (3,266 ) (899 ) (423 ) (1,322 )
Capital expenditures (2,357 ) (330 ) (2,562 ) (4,126 ) (9,375 ) (712 ) (1,323 ) (2,035 )
Required debt payments (572 ) (578 ) (582 ) (588 ) (2,320 ) (592 ) (2,701 ) (3,293 )
Net cash received in disposition -     4,000     -     -     4,000   -     -     -  
 
Free Cash Flow to Equity (14,326 )   (5,575 )   10,445     (15,595 )   (25,051 ) (4,483 )   (31,577 )   (36,060 )
 

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

 
 
LIVERAMP HOLDINGS, INC. AND SUBDISIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
 
                                      Q2 FY19 to Q2 FY18
06/30/17   09/30/17   12/31/17   03/31/18   FY2018 06/30/18   09/30/18   YTD FY2019 %   $
Revenues 46,757   54,013   59,121   60,210   220,101 62,471   64,812   127,283 20.0%   10,799
 
Cost of revenue 24,061   24,009   24,526   23,800   96,396 23,654   24,466   48,120 1.9% 457
Gross profit 22,696 30,004 34,595 36,410 123,705 38,817 40,346 79,163 34.5% 10,342
% Gross margin 48.5% 55.5% 58.5% 60.5% 56.2% 62.1% 62.3% 62.2%
 
Operating expenses
Research and development 14,840 15,599 14,311 15,963 60,713 16,970 16,940 33,910 8.6% 1,341
Sales and marketing 24,091 25,981 27,832 30,735 108,639 33,323 35,940 69,263 38.3% 9,959
General and administrative 23,587 23,724 20,929 16,914 85,154 18,124 25,176 43,300 6.1% 1,452
Gains, losses and other items, net (3)   2,833   (788)   681   2,723 2   489   491 -82.7% (2,344)
Total operating expenses 62,515 68,137 62,284 64,293 257,229 68,419 78,545 146,964 15.3% 10,408
 
Loss from operations (39,819) (38,133) (27,689) (27,883) (133,524) (29,602) (38,199) (67,801) -0.2% (66)
% Margin -85.2% -70.6% -46.8% -46.3% -60.7% -47.4% -58.9% -53.3%
 
Total other income (expense) (580) 263 432 387 502 356 (281) 75 -206.8% (544)
 
Loss from continuing operations before income taxes (40,399) (37,870) (27,257) (27,496) (133,022) (29,246) (38,480) (67,726) -1.6% (610)
Income taxes (benefit) (13,320)   (11,869)   (29,791)   (7,898)   (62,878) (1,428)   2,700   1,272 122.7% 14,569
 
Net earnings (loss) from continuing operations (27,079) (26,001) 2,534 (19,598) (70,144) (27,818) (41,180) (68,998) -58.4% (15,179)
 
Earnings from discontinued operations, net of tax 25,779   22,665   20,407   24,773   93,624 24,803   61,803   86,606 172.7% 39,138
 
Net earnings (loss) (1,300) (3,336) 22,941 5,175 23,480 (3,015) 20,623 17,608 718.2% 23,959
 
Diluted earnings (loss) per share (0.02)   (0.04)   0.28   0.07   0.30 (0.04)   0.27   0.23 732.5% 0.31
 
Diluted earnings (loss) per share continuing operations (0.34)   (0.33)   0.03   (0.25)   (0.89) (0.36)   (0.53)   (0.89) -62.0% (0.20)
 
Some earnings (loss) per share amounts may not add due to rounding.
 
 
LIVERAMP HOLDINGS, INC. AND SUBDISIARIES
RECONCILIATION OF GAAP TO NON-GAAP EPS (1)
(Unaudited)
(Dollars in thousands, except per share amounts)
 
                                   
06/30/17   09/30/17   12/31/17   03/31/18   FY2018 06/30/18   09/30/18   YTD FY2019
           
Loss from continuing operations before income taxes (40,399 ) (37,870 ) (27,257 ) (27,496 ) (133,022 ) (29,246 ) (38,480 ) (67,726 )
 
Income taxes (benefit) (13,320 )   (11,869 )   (29,791 )   (7,898 )   (62,878 ) (1,428 )   2,700     1,272  
 
Net earnings (loss) from continuing operations (27,079 ) (26,001 ) 2,534 (19,598 ) (70,144 ) (27,818 ) (41,180 ) (68,998 )
 
Earnings from discontinued operations, net of tax 25,779 22,665 20,407 24,773 93,624 24,803 61,803 86,606
                           
Net earnings (loss) (1,300 )   (3,336 )   22,941     5,175     23,480   (3,015 )   20,623     17,608  
 
Earnings (loss) per share:
Basic (0.02 )   (0.04 )   0.29     0.07     0.30   (0.04 )   0.27     0.23  
Diluted (0.02 )   (0.04 )   0.29     0.07     0.30   (0.04 )   0.27     0.23  
 
Excluded items:
Purchased intangible asset amortization (cost of revenue) 5,959 6,015 5,965 5,956 23,895 5,970 3,548 9,518
Non-cash stock compensation (cost of revenue and operating expenses) 12,400 13,154 13,290 14,022 52,866 17,798 17,667 35,465
Restructuring and merger charges (gains, losses, and other) (3 ) 2,833 (788 ) 682 2,724 1 489 490
Separation and transformation costs (general and administrative) 7,119     5,453     5,214     -     17,786   -     2,122     2,122  
 
Total excluded items, continuing operations 25,475     27,455     23,681     20,660     97,271   23,769     23,826     47,595  
 

Loss from continuing operations before income taxes and excluding items

(14,924 ) (10,415 ) (3,576 ) (6,836 ) (35,751 ) (5,477 ) (14,654 ) (20,131 )
 
Income taxes (benefit) (4,556 )   (3,164 )   (2,514 )   (2,352 )   (12,586 ) (1,078 )   (3,790 )   (4,868 )
 
Non-GAAP net loss from continuing operations (10,368 )   (7,251 )   (1,062 )   (4,484 )   (23,165 ) (4,399 )   (10,864 )   (15,263 )
 
Non-GAAP loss per share:
Basic (0.13 )   (0.09 )   (0.01 )   (0.06 )   (0.29 ) (0.06 )   (0.14 )   (0.20 )
 
Diluted (0.13 )   (0.09 )   (0.01 )   (0.06 )   (0.29 ) (0.06 )   (0.14 )   (0.20 )
 
Basic weighted average shares 78,672     79,235     79,043     78,614     78,891   76,935     77,448     77,192  
 
Diluted weighted average shares 78,672     79,235     79,043     78,614     78,891   76,935     77,448     77,192  
 
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 SUBDISIARIES
RECONCILIATION OF GAAP TO NON-GAAP EXPENSES (1)
(Unaudited)
(Dollars in thousands)
 
                                   
06/30/17   09/30/17   12/31/17   03/31/18   FY2018 06/30/18   09/30/18   YTD FY2019
           
Expenses, continuing operations:
Cost of revenue 24,061 24,009 24,526 23,800 96,396 23,654 24,466 48,120
Research and development 14,840 15,599 14,311 15,963 60,713 16,970 16,940 33,910
Sales and marketing 24,091 25,981 27,832 30,735 108,639 33,323 35,940 69,263
General and administrative 23,587 23,724 20,929 16,914 85,154 18,124 25,176 43,300
Gains, losses and other items, net (3 ) 2,833 (788 ) 681 2,723 2 489 491
 
Excluded items:
Purchased intangible asset amortization (cost of revenue) 5,959 6,015 5,965 5,956 23,895 5,970 3,548 9,518
Non-cash stock compensation (cost of revenue) 637 654 673 687 2,652 711 782 1,493
Non-cash stock compensation (research and development) 3,693 3,636 3,177 5,138 15,643 4,342 3,745 8,087
Non-cash stock compensation (sales and marketing) 5,454 5,730 6,251 5,946 23,381 9,920 9,854 19,774
Non-cash stock compensation (general and administrative) 2,616 3,134 3,190 2,252 11,191 2,823 3,286 6,110
Restructuring and merger charges (gains, losses, and other) (3 ) 2,833 (788 ) 681 2,723 2 489 491
Separation and transformation costs (general and administrative) 7,119     5,453   5,214     -   17,786 -   2,122   2,122
Total excluded items 25,475 27,455 23,682 20,660 97,271 23,769 23,826 47,595
 
Expenses, continued operations excluding items:
Cost of revenue 17,465 17,340 17,888 17,157 69,849 16,973 20,136 37,109
Research and development 11,147 11,963 11,134 10,825 45,070 12,628 13,195 25,823
Sales and marketing 18,637 20,251 21,581 24,789 85,258 23,403 26,086 49,489
General and administrative 13,852 15,137 12,525 14,662 56,177 15,301 19,768 35,068
Gains, losses and other items, net - - - - - - - -
 

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

 
 

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

 
      For the year ending
March 31, 2019
 
Low Range High Range
 
Revenues $ 275,000 $

285,000

 
GAAP loss from operations   (169,600 )   (157,600 )
-62 % -57 %
 
Excluded items:
Purchased intangible asset amortization 16,600 16,600
Accelerated depreciation 3,500 3,500
Non-cash stock compensation 78,000 78,000
Gains, losses and other items, net 4,100 4,100
Separation and related costs   3,400     3,400  
 
Total excluded items   105,600     105,600  
 
Non-GAAP loss from operations (64,000 ) (52,000 )
-23 % -19 %
 

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

 

APPENDIX A

LIVERAMP HOLDINGS, INC. AND SUBDISIARIES
Q2 FISCAL 2019 FINANCIAL RESULTS
EXPLANATION OF NON-GAAP MEASURES

To supplement our financial results, we use non-GAAP measures which exclude certain acquisition related expenses, non-cash stock compensation and restructuring charges. We believe these measures are helpful in understanding our past performance and our future results. Our non-GAAP financial measures and schedules are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated GAAP financial statements. Our management regularly uses these non-GAAP financial measures internally to understand, manage and evaluate our business and to make operating decisions. These measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is also based in part on the performance of our business based on these non-GAAP measures.

Our non-GAAP financial measures, including non-GAAP earnings per share, income from operations and adjusted EBITDA reflect adjustments based on the following items, as well as the related income tax effects when applicable:

Purchased intangible asset amortization: We incur amortization of purchased intangibles in connection with our acquisitions. Purchased intangibles include (i) developed technology, (ii) customer and publisher relationships, and (iii) trade names. We expect to amortize for accounting purposes the fair value of the purchased intangibles based on the pattern in which the economic benefits of the intangible assets will be consumed as revenue is generated. Although the intangible assets generate revenue for us, we exclude this item because this expense is non-cash in nature and because we believe the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding our operational performance.

Non-cash stock compensation: Non-cash stock compensation consists of charges for associate restricted stock units, performance shares and stock options in accordance with current GAAP related to stock-based compensation including expense associated with stock-based compensation related to unvested options assumed in connection with our acquisitions. As we apply stock-based compensation standards, we believe that it is useful to investors to understand the impact of the application of these standards to our operational performance. Although stock-based compensation expense is calculated in accordance with current GAAP and constitutes an ongoing and recurring expense, such expense is excluded from non-GAAP results because it is not an expense that typically requires or will require cash settlement by us and because such expense is not used by us to assess the core profitability of our business operations.

Restructuring charges: During the past several years, we have initiated certain restructuring activities in order to align our costs in connection with both our operating plans and our business strategies based on then-current economic conditions. As a result, we recognized costs related to termination benefits for associates whose positions were eliminated, lease termination charges, and leasehold improvement write offs. These items, reported as gains, losses, and other items, net, are excluded from non-GAAP results because such amounts are not used by us to assess the core profitability of our business operations.

Separation and transformation costs: In previous years, we incurred significant expenses in connection with the separation of our IT Infrastructure Management ("ITO") and the subsequent transformation of our remaining operating segments. This work enabled us to transform our external reporting and provide investors with enhanced transparency and more granular segment-level disclosures in addition to facilitating the ITO disposition. In the prior year, we also incurred expenses to further separate the financial statements of our three operating segments, with particular focus on segment-level balance sheets, and to evaluate portfolio priorities. 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 substantially completed those projects during the third quarter of fiscal year 2018. Beginning in the fourth quarter of fiscal 2018, we incurred transaction support expenses and system separation costs related to the Company's announced evaluation of strategic options for its Marketing Solutions business. Our criteria for excluding these transaction and system separation related costs are the same. We believe excluding these items from our non-GAAP financial measures is useful for investors and provides meaningful supplemental information.

Our non-GAAP financial schedules are:

Non-GAAP EPS and Non-GAAP Income from Operations: Our non-GAAP earnings per share and Non-GAAP income from operations 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.

Contacts

LiveRamp Investor Relations
Lauren Dillard, (650) 372-2242
Investor.Relations@LiveRamp.com
ERAMP

Contacts

LiveRamp Investor Relations
Lauren Dillard, (650) 372-2242
Investor.Relations@LiveRamp.com
ERAMP