LiveRamp Holdings, Inc. ((RAMP)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The recent earnings call for LiveRamp Holdings, Inc. painted a picture of robust financial health, underscored by record cash flow and consistent revenue growth. Despite facing challenges with new customer acquisitions and potential macroeconomic headwinds, the company expressed optimism about future growth prospects, buoyed by the launch of new products and strategic initiatives.
Record Free Cash Flow Quarter
LiveRamp achieved a record free cash flow of $153 million, marking a 51% increase year-over-year. This impressive growth was partly attributed to tighter management of working capital, showcasing the company’s efficient financial strategies.
Revenue and Operating Margin Growth
For the fifth consecutive quarter, LiveRamp reported double-digit revenue growth, with a notable 13% increase in FY’25. The operating margin also expanded by three percentage points, contributing to a 43% growth in operating income, highlighting the company’s strong financial performance.
Significant Customer Wins and Expansion
The company added 13 new $1 million-plus subscription customers during the year, with significant wins in the financial services sector. Additionally, LiveRamp secured 20 multimillion-dollar ACV contracts, demonstrating substantial growth in remaining performance obligations.
Successful Platform Modernization
LiveRamp completed two platform refreshes, which enhanced UI and backend stability. This modernization led to a reduction in the contraction rate to its lowest level ever, indicating improved customer retention and satisfaction.
Strong Marketplace Growth
Marketplace & Other revenue saw a 14% increase to $44 million, with the Data Marketplace growing by 13%. This growth reflects the continued strength in US digital ad spending, positioning LiveRamp well in the marketplace.
Challenges in New Logo Signings
The company faced challenges with new logo signings, experiencing a modest lengthening of average deal cycles. This was partly due to the need to educate the market on newer Clean Room solutions, highlighting an area for potential improvement.
International Customer Count Pressure
International markets contributed to a decline in customer count, driven by a shift from a direct to reseller arrangement with a large partner. This transition indicates a strategic pivot in the company’s international operations.
Potential Macroeconomic Impact
LiveRamp’s guidance for FY’26 reflects a wider revenue range due to elevated macroeconomic uncertainty. The company anticipates potential deceleration in Subscription usage and Data Marketplace growth if macro conditions worsen, indicating a cautious outlook.
Forward-Looking Guidance
Looking ahead, LiveRamp aims to leverage its Cross-Media Intelligence solution to enhance advertisers’ campaign measurement and optimization. The company plans to continue growing its data collaboration network and expand into new industries, with a target to achieve a Rule of 40 by FY’28.
In summary, LiveRamp Holdings, Inc. delivered a strong earnings call, marked by record cash flow and consistent revenue growth. While challenges in new customer signings and macroeconomic uncertainties persist, the company’s strategic initiatives and platform improvements position it well for future growth. Investors and stakeholders can remain optimistic about LiveRamp’s trajectory as it continues to innovate and expand its market presence.