LiveRamp Announces Third Quarter Results

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LiveRamp(NYSE: RAMP), the identity platform powering exceptional experiences, today announced its financial results for the quarter ended December 31, 2018.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20190211005709/en/

Third Quarter Financial Highlights

  • Total revenue of $80 million, up 35% compared to the prior year period. Excluding the impact of Facebook, revenue increased 49%.
  • Subscription revenue of $65 million, up 42%.
  • Marketplace & Other revenue of $15 million grew 13%. Excluding the impact of Facebook, Marketplace & Other revenue increased 91%.
  • GAAP loss per share from continuing operations was ($0.20) and non-GAAP earnings per share from continuing operations was $0.03. Earnings benefited from interest income related to invested proceeds from the Acxiom Marketing Solutions (AMS) sale.
  • Cash flow used in operating activities improved sequentially to $11 million compared to $27 million during the second quarter of fiscal 2019. At quarter end, the Company had cash and cash equivalents totaling $1.5 billion and no debt. LiveRamp expects to pay taxes of roughly $450 million during its fiscal fourth quarter as a result of the gain on the sale of AMS.
  • The Company completed a $500 million tender for 11.2 million shares, reducing its share count by approximately 14%. Additionally, during the quarter, LiveRamp repurchased 0.4 million shares for $18 million under its $1 billion stock repurchase program. Since inception of its share repurchase program in 2011, the Company has repurchased 22.4 million shares for $439 million, leaving remaining capacity of $561 million.

“This was a landmark quarter for LiveRamp,” said LiveRamp CEO Scott Howe. “During our first official quarter as a stand-alone public company, we received $2.3 billion from the sale of AMS, completed a $500 million share repurchase, and at the same time, delivered a record top-line performance. We are excited about the value we bring to our customers and our role as the neutral and open platform for the safe and ethical use of data across the ecosystem.”

“Land, expand and extend is our way of life,” said LiveRamp President and CFO Warren Jenson. “This quarter, we added 30 new direct customers and meaningfully grew our existing customer relationships. As a result, subscription revenue was up 42%, and our dollar-based net retention rate exceeded 115% for the tenth consecutive quarter.”

Third Quarter GAAP and Non-GAAP Results

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

  Q3 Fiscal 2019   Q3 Fiscal 2019
GAAP Results Non-GAAP Results

 

  YoY       YoY
Subscription $65   42% $65   42%
Marketplace & other

$15

13%

$15

13%

Total Revenue $80 35% $80 35%
 
Gross profit $45 31% $51 24%
% Gross margin 56% (200 bps) 64% (590 bps)
 
Operating loss ($48) nm ($11) nm
% Operating margin (60%) (1,340 bps) (14%) (710 bps)
 
Net earnings (loss) from continuing operations ($15) nm $2 nm
Earnings (loss) per share ($0.20) nm $0.03 nm
Net cash used in operating activities ($11) nm ($11) nm
Free cash flow nm nm ($13) nm

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 30 new direct customers during the quarter, bringing its total direct customer count to 640, an increase of 23% year-over-year. We now serve 19% of the Fortune 500 compared to 15% in the prior year period.
  • LiveRamp has 42 clients whose subscription contracts exceed $1 million in annual revenue, up from 31 in the prior year period.
  • Dollar-based net retention was in excess of 115% for the tenth consecutive quarter.
  • During the quarter, TV related revenue grew 38% year-over-year and addressable campaign volumes more than doubled. Recent LiveRamp TV wins included Cox, Turner and iSpot.

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 now expects to report:

  • Revenue of up to $284 million, an increase of 29% year-over-year as compared to the Company’s previous revenue growth guidance of 25% to 30%.
  • GAAP operating loss from continuing operations of approximately $181 million as compared to previous GAAP operating loss guidance of $170 million to $158 million. The increased GAAP operating loss is associated with incremental restructuring charges and higher stock compensation.
  • Non-GAAP operating loss from continuing operations of approximately $55 million as compared to previous operating loss guidance of $64 million to $52 million.

The Company’s GAAP and non-GAAP operating loss guidance includes approximately $21 million of transition-related spend associated with establishing standalone operations at LiveRamp. The $21 million is broken out as follows: approximately $4 million in the second quarter, $9 million in the third quarter and $8 million in the fourth quarter. Transition-related spending is expected to be largely complete by mid-FY20.

Conference Call

LiveRamp will hold a conference call at 2:00 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 our investor site. A slide presentation will be referenced during the call and can be accessed here.

Upcoming Conference Attendance

LiveRamp management will be presenting at the 2019 Morgan Stanley TMT Conference on February 27th at 3:50 p.m. PT in San Francisco, California.

RampUp™ 2019

LiveRamp will be hosting RampUp 2019, the premiere conference for leaders in MarTech, on February 25th and 26th in San Francisco, California. This year’s event will include speakers from Cars.com, Dun & Bradstreet, Macy’s, Spark Foundry, Unity Technologies, and many more.

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 third-party cookies will be restricted by regulators and or platform partners, which could impact the accuracy of our Identity Graph; 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 September 30, 2018, which was filed with the Securities and Exchange Commission on November 1, 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, 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 SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
 
 
For the Three Months Ended
December 31,
$ %
2018 2017 Variance   Variance
 
Revenues 80,021 59,121 20,900 35.4 %
 
Cost of revenue 34,838   24,526   10,312 42.0 %
Gross profit 45,183 34,595 10,588 30.6 %
% Gross margin 56.5 % 58.5 %
 
Operating expenses:
Research and development 20,469 14,311 6,158 43.0 %
Sales and marketing 40,054 27,832 12,222 43.9 %
General and administrative 27,828 20,929 6,899 33.0 %
Gains, losses and other items, net 5,043   (788 ) 5,831 740.0 %
Total operating expenses 93,394   62,284   31,110 49.9 %
 
Loss from operations (48,211 ) (27,689 ) (20,522 ) (74.1 %)
% Margin -60.2 % -46.8 %
 
Total other income 10,404   432   9,972 2308.3 %
 
Loss from continuing operations before income taxes (37,807 ) (27,257 ) (10,550 ) (38.7 %)
 
Income taxes (benefit) (22,546 ) (29,791 ) 7,245 24.3 %
 
Net earnings (loss) from continuing operations (15,261 ) 2,534 (17,795 ) (702.2 %)
 
Earnings from discontinued operations, net of tax 1,071,661   20,407   1,051,254 5151.4 %
 
Net earnings 1,056,400   22,941   1,033,459 4504.9 %
 
Basic earnings (loss) per share:
Continuing operations (0.20 ) 0.03 (0.23 ) (715.0 %)
Discontinued operations 13.85   0.26   13.59 5263.1 %
Net earnings 13.65   0.29   13.36 4602.7 %
 
Diluted earnings (loss) per share:
Continuing operations (0.20 ) 0.03 (0.23 ) (737.0 %)
Discontinued operations 13.85   0.25   13.60 5454.8 %
Net earnings 13.65   0.28   13.37 4770.9 %
 
Basic weighted average shares 77,398 79,043
Diluted weighted average shares 77,398 81,869
     

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
 
 
For the Nine Months Ended
December 31,
$ %
2018 2017 Variance   Variance
 
Revenues 207,304 159,891 47,413 29.7 %
 
Cost of revenue 82,958   72,596   10,362 14.3 %
Gross profit 124,346 87,295 37,051 42.4 %
% Gross margin 60.0 % 54.6 %
 
Operating expenses:
Research and development 54,379 44,750 9,629 21.5 %
Sales and marketing 109,317 77,904 31,413 40.3 %
General and administrative 71,129 68,240 2,889 4.2 %
Gains, losses and other items, net 5,533   2,042   3,491 171.0 %
Total operating expenses 240,358   192,936   47,422 24.6 %
 
Loss from operations (116,012 ) (105,641 ) (10,371 ) (9.8 %)
% Margin -56.0 % -66.1 %
 
Total other income 10,479   115   10,364 9012.2 %
 
Loss from continuing operations before income taxes (105,533 ) (105,526 ) (7 ) (0.0 %)
 
Income taxes (benefit) (21,274 ) (54,980 ) 33,706 61.3 %
 
Net loss from continuing operations (84,259 ) (50,546 ) (33,713 ) (66.7 %)
 
Earnings from discontinued operations, net of tax 1,158,267   68,851   1,089,416 1582.3 %
 
Net earnings 1,074,008   18,305   1,055,703 5767.3 %
 
Basic earnings (loss) per share:
Continuing operations (1.09 ) (0.64 ) (0.45 ) (70.4 %)
Discontinued operations 14.99   0.87   14.12 1619.8 %
Net earnings 13.90   0.23   13.67 5898.1 %
 
Diluted earnings (loss) per share:
Continuing operations (1.09 ) (0.64 ) (0.45 ) (70.4 %)
Discontinued operations 14.99   0.87   14.12 1619.8 %
Net earnings 13.90   0.23   13.67 5898.1 %
 
Basic weighted average shares 77,260 78,983
Diluted weighted average shares 77,260 78,983
     

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP EPS (1)

(Unaudited)
(Dollars in thousands, except per share amounts)
 
For the Three Months Ended For the Nine Months Ended
December 31, December 31,
2018 2017 2018 2017
 
 
Loss from continuing operations before income taxes (37,807 ) (27,257 ) (105,533 ) (105,526 )
 
Income taxes (benefit) (22,546 ) (29,791 ) (21,274 ) (54,980 )
 
Net earnings (loss) from continuing operations (15,261 ) 2,534 (84,259 ) (50,546 )
 
Earnings from discontinued operations, net of tax 1,071,661 20,407 1,158,267 68,851
       
Net earnings 1,056,400   22,941   1,074,008   18,305  
 
Earnings per share:
Basic 13.65   0.29   13.90   0.23  
Diluted 13.65   0.28   13.90   0.23  
 
Excluded items:
Purchased intangible asset amortization (cost of revenue) 3,359 5,965 12,877 17,939
Non-cash stock compensation (cost of revenue and operating expenses) 26,082 13,290 61,547 38,844
Accelerated depreciation (cost of revenue and operating expenses) 1,959 - 1,959 -
Restructuring and merger charges (gains, losses, and other) 5,043 (788 ) 5,533 2,042
Separation and transformation costs (general and administrative) 700   5,214   2,822   17,786  
 
Total excluded items, continuing operations 37,143   23,681   84,738   76,611  
 

Earnings (loss) from continuing operations before income taxes and excluding items

(664 ) (3,576 ) (20,795 ) (28,915 )
 
Income taxes (benefit) (2) (2,941 ) (2,514 ) (7,809 ) (10,234 )
 
Non-GAAP net earnings (loss) from continuing operations 2,277   (1,062 ) (12,986 ) (18,681 )
 
Non-GAAP earnings (loss) per share from continuing operations:
 
Basic 0.03   (0.01 ) (0.17 ) (0.24 )
 
Diluted 0.03   (0.01 ) (0.17 ) (0.24 )
 
Basic weighted average shares 77,398   79,043   77,260   78,983  
Diluted weighted average shares 80,674   79,043   77,260   78,983  

(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 442.9% and 70.3% in the third quarter of fiscal 2019 and 2018, respectively, and 37.5% and 35.4% for the nine months ended December 31, 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 nine months ended December 31, 2018 reflect the impact of the Tax Acts and Jobs Act.

         

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

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

(Unaudited)
(Dollars in thousands)
 
For the Three Months Ended For the Nine Months Ended
December 31, December 31,
2018   2017   2018   2017  
 
 
Loss from continuing operations (48,211 ) (27,689 ) (116,012 ) (105,641 )
 
Excluded items:
Purchased intangible asset amortization (cost of revenue) 3,359 5,965 12,877 17,939
Non-cash stock compensation (cost of revenue and operating expenses) 26,082 13,290 61,547 38,844
Accelerated depreciation (cost of revenue and operating expenses) 1,959 - 1,959 -
Restructuring and merger charges (gains, losses, and other) 5,043 (788 ) 5,533 2,042
Separation and transformation costs (general and administrative) 700   5,214   2,822   17,786  
 
Total excluded items 37,143   23,681   84,738   76,611  
 
Loss from continuing operations before excluded items (11,068 ) (4,008 ) (31,274 ) (29,030 )

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

         

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

RECONCILIATION OF ADJUSTED EBITDA (1)
(Unaudited)
(Dollars in thousands)
 
For the Three Months Ended For the Nine Months Ended
December 31, December 31,
2018 2017 2018 2017
 
 
Net loss from continuing operations (15,261 ) 2,534 (84,259 ) (50,546 )
 
Income taxes (benefit) (22,546 ) (29,791 ) (21,274 ) (54,980 )
 
Other income (expense) 10,404   432   10,479   115  
 
Loss from operations (48,211 ) (27,689 ) (116,012 ) (105,641 )
 
Depreciation and amortization 8,853   9,297   25,274   28,255  
 
EBITDA (39,358 ) (18,392 ) (90,738 ) (77,386 )
 
Other adjustments:
Non-cash stock compensation (cost of revenue and operating expenses) 26,082 13,290 61,547 38,844
Restructuring and merger charges (gains, losses, and other) 5,043 (788 ) 5,533 2,042
Separation and transformation costs (general and administrative) 700   5,214   2,822   17,786  
 
Other adjustments 31,825   17,716   69,902   58,672  
 
Adjusted EBITDA (7,533 ) (676 ) (20,836 ) (18,714 )

(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 BALANCE SHEETS
(Dollars in thousands)
 
December 31, March 31, $ %
2018 2018 Variance   Variance
 

Assets

Current assets:
Cash and cash equivalents 1,546,774 140,018 1,406,756 1004.7 %
Trade accounts receivable, net 71,906 52,047 19,859 38.2 %
Refundable income taxes - 9,977 (9,977 ) (100.0 %)
Other current assets 27,366 20,173 7,193 35.7 %
Assets held for sale -   138,374   (138,374 ) (100.0 %)
 
Total current assets 1,646,046   360,589   1,285,457 356.5 %
 
Property and equipment 58,782 62,353 (3,571 ) (5.7 %)
Less - accumulated depreciation and amortization 34,195   30,013   4,182 13.9 %
 
Property and equipment, net 24,587   32,340   (7,753 ) (24.0 %)
 
Software, net of accumulated amortization 8,027 13,970 (5,943 ) (42.5 %)
Goodwill 204,671 203,639 1,032 0.5 %
Deferred income taxes 149 10,703 (10,554 ) (98.6 %)
Deferred commissions, net 9,478 - 9,478 -
Other assets, net 34,560 37,854 (3,294 ) (8.7 %)
Assets held for sale -   550,402   (550,402 ) (100.0 %)
 
1,927,518   1,209,497   718,021 59.4 %
 

Liabilities and Stockholders' Equity

Current liabilities:
Current installments of long-term debt - 1,583 (1,583 ) (100.0 %)
Trade accounts payable 25,125 18,759 6,366 33.9 %
Accrued payroll and related expenses 13,960 13,774 186 1.4 %
Other accrued expenses 55,135 39,624 15,511 39.1 %
Deferred revenue 2,929 4,506 (1,577 ) (35.0 %)
Income taxes payable 443,590 - 443,590 -
Liabilities held for sale -   100,353   (100,353 ) (100.0 %)
 
Total current liabilities 540,739   178,599   362,140 202.8 %
 
Long-term debt - 227,837 (227,837 ) (100.0 %)
 
Deferred income taxes 178 40,243 (40,065 ) (99.6 %)
 
Other liabilities 26,985 10,016 16,969 169.4 %
 
Other liabilities held for sale - 3,707 - (100.0 %)
 
Stockholders' equity:
Common stock 14,084 13,609 475 3.5 %
Additional paid-in capital 1,366,221 1,235,679 130,542 10.6 %
Retained earnings 1,715,066 628,331 1,086,735 173.0 %
Accumulated other comprehensive income 7,891 10,767 (2,876 ) (26.7 %)
Treasury stock, at cost (1,743,646 ) (1,139,291 ) (604,355 ) (53.0 %)
Total stockholders' equity 1,359,616   749,095   610,521 81.5 %
 
1,927,518   1,209,497   718,021 59.4 %
   

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
 
For the Three Months Ended
December 31,
2018 2017
 
Cash flows from operating activities:
Net earnings 1,056,400 22,941
Earnings from discontinued operations, net of tax (1,071,661 ) (20,407 )
Non-cash operating activities:
Depreciation and amortization 8,853 9,297
Loss on disposal or impairment of assets 2,870 178
Provision for doubtful accounts 628 60
Deferred income taxes 8,279 (16,793 )
Non-cash stock compensation expense 26,082 13,290
Changes in operating assets and liabilities:
Accounts receivable (32,362 ) (5,143 )
Deferred commissions (988 ) -
Other assets 13,134 3,501
Accounts payable and other liabilities (22,117 ) 5,505
Deferred revenue (40 ) 1,667  
Net cash provided by (used in) operating activities (10,922 ) 14,096  
Cash flows from investing activities:
Capitalized software - (507 )
Capital expenditures (1,938 ) (2,562 )
Payments for investments -   (1,000 )
Net cash used in investing activities (1,938 ) (4,069 )
Cash flows from financing activities:
Payments of debt (230,000 ) (582 )
Sale of common stock 9,234 3,645
Shares repurchased for tax withholdings upon vesting of stock-based awards (22,282 ) (2,233 )
Acquisition of treasury stock (18,341 ) (19,665 )
Acquisition of treasury stock from tender offer (503,393 ) -  
Net cash used in financing activities (764,782 ) (18,835 )
Cash flows from discontinued operations:
From operating activities (13,336 ) 29,249
From investing activities - (12,749 )
From investing activities - proceeds from sale of AMS 2,251,032 -
Effect of exchange rate changes on cash -   64  
Net cash provided by discontinued operations 2,237,696   16,564  
Effect of exchange rate changes on cash (327 ) 259  
 
Net change in cash and cash equivalents 1,459,727 8,015
Cash and cash equivalents at beginning of period 87,047   168,352  
Cash and cash equivalents at end of period 1,546,774   176,367  
 
Supplemental cash flow information:
Cash (received) during the period for:
Income taxes (124 ) (133 )
 
Noncash investing and financing activities:
Leasehold improvements paid directly by lessor - 978
   

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
 
For the Nine Months Ended
December 31,
2018 2017
 
Cash flows from operating activities:
Net earnings 1,074,008 18,305
Earnings from discontinued operations (1,158,267 ) (68,851 )
Non-cash operating activities:
Depreciation and amortization 25,274 28,255
Loss on disposal or impairment of assets 3,345 2,303
Provision for doubtful accounts 1,259 322
Accelerated deferred debt costs - 720
Deferred income taxes 20,723 (19,425 )
Non-cash stock compensation expense 61,547 38,844
Changes in operating assets and liabilities:
Accounts receivable (35,011 ) (9,818 )
Deferred commissions (3,035 ) -
Other assets 654 2,365
Accounts payable and other liabilities (29,274 ) 1,786
Deferred revenue (1,555 ) 439  
Net cash used in operating activities (40,332 ) (4,755 )
Cash flows from investing activities:
Capitalized software (1,322 ) (1,720 )
Capital expenditures (3,973 ) (5,249 )
Net cash received in disposition - 4,000
Payments for investments (2,500 ) (1,000 )
Net cash used in investing activities (7,795 ) (3,969 )
Cash flows from financing activities:
Proceeds from debt - 230,000
Payments of debt (233,293 ) (226,732 )
Fees from debt refinancing (300 ) (4,001 )
Sale of common stock 17,355 15,309
Shares repurchased for tax withholdings upon vesting of stock-based awards (36,906 ) (10,202 )
Acquisition of treasury stock (64,107 ) (39,441 )
Acquisition of treasury stock from tender offer (503,393 ) -  
Net cash used in financing activities (820,644 ) (35,067 )
Cash flows from discontinued operations:
From operating activities 40,980 81,369
From investing activities (14,502 ) (30,934 )
From investing activities - proceeds from sale of AMS 2,251,032 -
Effect of exchange rate changes on cash (172 ) 175  
Net cash provided by discontinued operations 2,277,338   50,610  
Effect of exchange rate changes on cash (1,811 ) 868  
 
Net change in cash and cash equivalents 1,406,756 7,687
Cash and cash equivalents at beginning of period 140,018   168,680  
Cash and cash equivalents at end of period 1,546,774   176,367  
 
Supplemental cash flow information:
Cash (received) during the period for:
Income taxes (239 ) (362 )
 
Noncash investing and financing activities:
Leasehold improvements paid directly by lessor - 978
                   

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

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   12/31/18   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 ) (10,922 ) (40,332 )
 
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 ) (1,938 ) (3,973 )
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 )   (12,860 )   (48,920 )

(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)
 
                                Q3 FY19 to Q3 FY18
06/30/17   09/30/17   12/31/17   03/31/18   FY2018 06/30/18   09/30/18   12/31/18   YTD FY2019 % $
Revenues 46,757 54,013 59,121 60,210 220,101 62,471 64,812 80,021 207,304 35.4 % 20,900
 
Cost of revenue 24,061     24,009     24,526     23,800     96,396   23,654     24,466     34,838     82,958   42.0 % 10,312
Gross profit 22,696 30,004 34,595 36,410 123,705 38,817 40,346 45,183 124,346 30.6 % 10,588
% Gross margin 48.5 % 55.5 % 58.5 % 60.5 % 56.2 % 62.1 % 62.3 % 56.5 % 60.0 %
 
Operating expenses
Research and development 14,840 15,599 14,311 15,963 60,713 16,970 16,940 20,469 54,379 43.0 % 6,158
Sales and marketing 24,091 25,981 27,832 30,735 108,639 33,323 35,940 40,054 109,317 43.9 % 12,222
General and administrative 23,587 23,724 20,929 16,914 85,154 18,125 25,176 27,828 71,129 33.0 % 6,899
Gains, losses and other items, net (3 )   2,833     (788 )   681     2,723   1     489     5,043     5,533   740.0 % 5,831
Total operating expenses 62,515 68,137 62,284 64,293 257,229 68,419 78,545 93,394 240,358 49.9 % 31,110
 
Loss from operations (39,819 ) (38,133 ) (27,689 ) (27,883 ) (133,524 ) (29,602 ) (38,199 ) (48,211 ) (116,012 ) (74.1 %) (20,522 )
% Margin -85.2 % -70.6 % -46.8 % -46.3 % -60.7 % -47.4 % -58.9 % -60.2 % -56.0 %
 
Total other income (expense) (580 ) 263 432 387 502 356 (281 ) 10,404 10,479 2308.3 % 9,972
 
Loss from continuing operations before income taxes (40,399 ) (37,870 ) (27,257 ) (27,496 ) (133,022 ) (29,246 ) (38,480 ) (37,807 ) (105,533 ) (38.7 %) (10,550 )
 
Income taxes (benefit) (13,320 )   (11,869 )   (29,791 )   (7,898 )   (62,878 ) (1,428 )   2,700     (22,546 )   (21,274 ) 24.3 % 7,245
 
Net earnings (loss) from continuing operations (27,079 ) (26,001 ) 2,534 (19,598 ) (70,144 ) (27,818 ) (41,180 ) (15,261 ) (84,259 ) (702.2 %) (17,795 )
 
Earnings from discontinued operations, net of tax 25,779     22,665     20,407     24,773     93,624   24,803     61,803     1,071,661     1,158,267   5151.4 % 1,051,254
 
Net earnings (loss) (1,300 ) (3,336 ) 22,941 5,175 23,480 (3,015 ) 20,623 1,056,400 1,074,008 4504.9 % 1,033,459
 
Diluted earnings (loss) per share (0.02 )   (0.04 )   0.28     0.07     0.30   (0.04 )   0.27     13.65     13.90   4770.9 % 13.37
 
Diluted earnings (loss) per share continuing operations (0.34 )   (0.33 )   0.03     (0.25 )   (0.89 ) (0.36 )   (0.53 )   (0.20 )   (1.09 ) (737.0 %) (0.23 )
 
Some earnings (loss) per share amounts may not add due to rounding.
               

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP EPS (1)
(Unaudited)
(Dollars in thousands, except per share amounts)
 
 
                               
06/30/17     09/30/17     12/31/17     03/31/18     FY2018 06/30/18     09/30/18     12/31/18     YTD FY2019
 
 
Loss from continuing operations before income taxes (40,399 ) (37,870 ) (27,257 ) (27,496 ) (133,022 ) (29,246 ) (38,480 ) (37,807 ) (105,533 )
 
Income taxes (benefit) (13,320 )   (11,869 )   (29,791 )   (7,898 )   (62,878 ) (1,428 )   2,700     (22,546 )   (21,274 )
 
Net earnings (loss) from continuing operations (27,079 ) (26,001 ) 2,534 (19,598 ) (70,144 ) (27,818 ) (41,180 ) (15,261 ) (84,259 )
 
Earnings from discontinued operations, net of tax 25,779 22,665 20,407 24,773 93,624 24,803 61,803 1,071,661 1,158,267
                               
Net earnings (loss) (1,300 )   (3,336 )   22,941     5,175     23,480   (3,015 )   20,623     1,056,400     1,074,008  
 
Earnings (loss) per share:
Basic (0.02 )   (0.04 )   0.29     0.07     0.30   (0.04 )   0.27     13.65     13.90  
Diluted (0.02 )   (0.04 )   0.29     0.07     0.30   (0.04 )   0.27     13.09     13.90  
 
Excluded items:
Purchased intangible asset amortization (cost of revenue) 5,959 6,015 5,965 5,956 23,895 5,970 3,548 3,359 12,877
Non-cash stock compensation (cost of revenue and operating expenses) 12,400 13,154 13,290 14,022 52,866 17,798 17,667 26,082 61,547
Accelerated depreciation (cost of revenue and operating expenses) - - - - - - - 1,959 1,959
Restructuring and merger charges (gains, losses, and other) (3 ) 2,833 (788 ) 682 2,724 1 489 5,043 5,533
Separation and transformation costs (general and administrative) 7,119     5,453     5,214     -     17,786   -     2,122     700     2,822  
 
Total excluded items, continuing operations 25,475     27,455     23,681     20,660     97,271   23,769     23,826     37,143     84,738  
 

Loss from continuing operations before income taxes and excluding items

(14,924 ) (10,415 ) (3,576 ) (6,836 ) (35,751 ) (5,477 ) (14,654 ) (664 ) (20,795 )
 
Income taxes (benefit) (4,556 )   (3,164 )   (2,514 )   (2,352 )   (12,586 ) (1,078 )   (3,790 )   (2,941 )   (7,809 )
 
Non-GAAP net earnings (loss) from continuing operations (10,368 )   (7,251 )   (1,062 )   (4,484 )   (23,165 ) (4,399 )   (10,864 )   2,277     (12,986 )
 
Non-GAAP earnings (loss) per share from continuing operations:
Basic (0.13 )   (0.09 )   (0.01 )   (0.06 )   (0.29 ) (0.06 )   (0.14 )   0.03     (0.17 )
 
Diluted (0.13 )   (0.09 )   (0.01 )   (0.06 )   (0.29 ) (0.06 )   (0.14 )   0.03     (0.17 )
 
Basic weighted average shares 78,672     79,235     79,043     78,614     78,891   76,935     77,448     77,398     77,260  
 
Diluted weighted average shares 78,672     79,235     79,043     78,614     78,891   76,935     77,448     80,674     77,260  
 
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)
 

 

                             
06/30/17   09/30/17   12/31/17   03/31/18   FY2018 06/30/18   09/30/18   12/31/18   YTD FY2019
 
Expenses, continuing operations:

Cost of revenue

24,061 24,009 24,526 23,800 96,396 23,654 24,466 34,838 82,958
Research and development 14,840 15,599 14,311 15,963 60,713 16,970 16,940 20,469 54,379
Sales and marketing 24,091 25,981 27,832 30,735 108,639 33,323 35,940 40,054 109,317
General and administrative 23,587 23,724 20,929 16,914 85,154 18,125 25,176 27,828 71,129
Gains, losses and other items, net (3 ) 2,833 (788 ) 681 2,723 1 489 5,043 5,533
 
Excluded items:
Purchased intangible asset amortization (cost of revenue) 5,959 6,015 5,965 5,956 23,895 5,970 3,548 3,359 12,877
Non-cash stock compensation (cost of revenue) 637 654 673 687 2,652 711 782 1,052 2,545
Non-cash stock compensation (research and development) 3,693 3,636 3,177 5,138 15,643 4,342 3,745 5,945 14,032
Non-cash stock compensation (sales and marketing) 5,454 5,730 6,251 5,946 23,381 9,920 9,854 9,460 29,234
Non-cash stock compensation (general and administrative) 2,616 3,134 3,190 2,252 11,191 2,824 3,286 9,625 15,735
Accelerated depreciation (cost of revenue) - - - - - - - 1,527 1,527
Accelerated depreciation (general and administrative) - - - - - - - 432 432
Restructuring and merger charges (gains, losses, and other) (3 ) 2,833 (788 ) 681 2,723 1 489 5,043 5,533
Separation and transformation costs (general and administrative) 7,119     5,453   5,214     -   17,786 -   2,122   700   2,822
Total excluded items 25,475 27,455 23,682 20,660 97,271 23,769 23,826 37,143 84,738
 
Expenses, continued operations excluding items:
Cost of revenue 17,465 17,340 17,888 17,157 69,849 16,972 20,136 28,900 66,009
Research and development 11,147 11,963 11,134 10,825 45,070 12,628 13,195 14,524 40,347
Sales and marketing 18,637 20,251 21,581 24,789 85,258 23,403 26,086 30,594 80,083
General and administrative 13,852 15,137 12,525 14,662 56,177 15,301 19,768 17,071 52,140
Gains, losses and other items, net - - - - - - - - -

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

 

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP OPERATING LOSS GUIDANCE (1)
(Unaudited)
(Dollars in thousands, except per share amounts)
 
For the year ending
March 31, 2019
 
 
Revenues $ 284,000
 
GAAP loss from operations   (181,000 )
-64 %
 
Excluded items:
Purchased intangible asset amortization 16,000
Accelerated depreciation 4,000
Non-cash stock compensation 83,000
Gains, losses and other items, net 20,000
Separation and related costs   3,000  
 
Total excluded items   126,000  
 
Non-GAAP loss from operations (55,000 )
-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 SUBSIDIARIES
Q3 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 (AMS) 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.

Accelerated depreciation: In the current year we are excluding depreciation costs associated with the reduced useful life of certain IT equipment in connection with the Company's migration to a cloud-based data center solution. This migration is part of our AMS separation strategy. These costs are excluded from our non-GAAP results because of the short-term nature of the incremental expenses and such amounts are not used by us to assess the core profitability of our business operations.

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.

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Business Wire: 21:05 GMT Monday 11th February 2019

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