Summary
LiveRamp reported total revenue of $147.1 million for the fiscal 2023 second quarter, up 15.6% from $127.3 million a year earlier. Growth came from new logo deals and upsell to existing customers. On a year-to-date basis, revenue was $289.3 million, up 17.5% from $246.3 million. Gross profit for the quarter was $104.8 million, up 13.6%, and year-to-date gross profit was $206.0 million, up 16.4%.
Margins and the bottom line moved the other way. Gross margin for the quarter slipped to 71.2% from 72.4% a year ago as cost of revenue grew faster than revenue. GAAP operating loss widened to $29.1 million from $6.2 million, and operating margin fell to negative 19.8% from negative 4.9%. Net loss was $30.4 million, or $0.45 per diluted share, compared with $6.4 million, or $0.09 per diluted share, in the prior year quarter. For the six months, the net loss was $57.7 million, or $0.85 per diluted share, versus net income of $10.9 million, or $0.16 per diluted share, a year earlier. Non-GAAP operating income was $17 million, down from $18 million, and non-GAAP earnings per share were $0.22.
Customer metrics held up. LiveRamp added 10 net new direct subscription customers in the quarter and ended with 920, up from 870 a year ago. The company now has 92 customers whose subscription contracts exceed $1 million in annual revenue, up 15% from the prior year period. Subscription net retention was 106% and platform net retention was 108%. Current remaining performance obligations stood at $293 million, up 10%. Total remaining performance obligations were $388.8 million, up 4.7% from $371.5 million, and deferred revenue rose 48.3% to $16.4 million.
Cash flow from operations improved. Net cash provided by operating activities was $21.4 million in the quarter, up 96.1% from $10.9 million a year ago, and free cash flow to equity was $19 million compared with $10 million. For the six months, operating cash flow decreased to negative $12.0 million from negative $6.3 million a year earlier. Capital expenditures were $2.7 million in the quarter, up 205.1%, and $4.4 million year to date, up 238.8%. The company repurchased about 1.7 million shares for $40 million in the quarter and 3.8 million shares for $100 million fiscal year to date. Under the program, it has bought 33.4 million shares for $832.3 million, leaving $167.7 million of capacity.
The platform kept expanding. More than 125 supply-side and demand-side platforms are live or committed to bid on RampID and ATS, and more than 1,500 publishers representing over 11,500 domains have integrated ATS. LiveRamp announced an expanded partnership with Meta and an integration with Salesforce's Genie customer data platform in September 2022.
Guidance and cost actions frame the outlook. For the third quarter of fiscal 2023, LiveRamp expects revenue of approximately $158 million, up 12% year over year, and non-GAAP operating income of approximately $22 million. For the full fiscal year 2023, the company expects revenue of $595 million to $600 million, up 13% year over year, and non-GAAP operating income of approximately $60 million. During the quarter LiveRamp took restructuring charges tied to a real estate downsizing. After quarter end it announced a workforce reduction of about 10% and further real estate cuts, which are expected to deliver annualized operating expense savings of $30 million to $35 million. Management pointed to macroeconomic uncertainty, rising interest rates, and inflation as risks, and MD&A noted that Section 174 R&D capitalization will increase cash taxes and cut cash flow by roughly $9 million in fiscal 2023.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2023 | Q1 FY2023 | QoQ | Q2 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $147.1M | $142.2M | +3.4% | $127.3M | +15.6% |
| Gross profit | $104.8M | $101.2M | +3.5% | $92.2M | +13.6% |
| Gross margin | 71.2% | 71.2% | +0.1 pp | 72.4% | -1.2 pp |
| Research & development | $46.1M | $47.7M | -3.2% | $35.8M | +28.9% |
| Sales & marketing | $45.9M | $51.3M | -10.4% | $39.5M | +16.3% |
| General & administrative | $28.7M | $27.1M | +5.8% | $23.1M | +24.4% |
| Total operating expenses | $133.9M | $126.8M | +5.6% | $98.4M | +36.1% |
| Operating income (loss) | -$29.1M | -$25.6M | -13.7% | -$6.2M | -371.1% |
| Operating margin | -19.8% | -18.0% | -1.8 pp | -4.9% | -14.9 pp |
| Net income (loss) | -$30.4M | -$27.2M | -11.8% | -$6.4M | -373.3% |
| Net margin | -20.7% | -19.1% | -1.6 pp | -5.0% | -15.6 pp |
| Diluted EPS | -$0.45 | -$0.40 | -$0.05 | -$0.09 | -$0.36 |
| Customers | 92 | 90 | +2.2% | — | — |
| Net retention rate | 106.0% | 113.0% | -7.0 pp | 108.0% | -2.0 pp |
Risks
The MD&A liquidity discussion cites the risk of recession, the ongoing global COVID-19 pandemic, the Russia-Ukraine military conflict, cost increases, rising interest rates, capital markets volatility and general inflationary pressures as potential constraints on liquidity. It warns these could cause collection difficulties from customers, reduce the ability to raise new equity or debt capital, and increase the cost of capital, potentially forcing the company to curtail operations.
Operating loss widened to $29.1 million in the quarter ended September 30, 2022 from $6.2 million in the prior-year quarter, with operating margin falling to negative 19.8% from negative 4.9%, driven primarily by higher headcount-related operating expenses. Gross margin also decreased to 71.2% from 72.4% in the prior-year quarter due to increased cloud infrastructure and security costs.
The Tax Cuts and Jobs Act of 2017 requires capitalization and amortization of research and development expenditures under IRC Section 174 for tax years beginning on or after January 1, 2022. Management states that if this requirement is not repealed or modified it will increase cash taxes and reduce cash flows by approximately $9 million in fiscal 2023.
On November 3, 2022 the company announced a reduction in force of approximately 10% of full-time employees and a planned downsizing of its real estate footprint, on top of the footprint reduction already taken in the fiscal second quarter. The company expects approximately $5 million of severance and benefit charges plus $14 million to $17 million of real estate restructuring charges, substantially all in the third and fourth quarters of fiscal 2023, alongside targeted annualized operating expense savings of $30 million to $35 million.
Days sales outstanding rose to 99 days at September 30, 2022 from 94 days at March 31, 2022, and the MD&A attributes roughly 3 days of that increase to the growing impact of gross Data Marketplace accounts receivable, which are billed gross but recognized net. Net accounts receivable increased $9.4 million to $157.7 million over the same period.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Platform Net Retention
Subscription Net Retention
Current Remaining Performance Obligations (CRPO)
Customers > $1M ARR
Free Cash Flow to Equity
Non-GAAP Operating Income
Summary, forecast, risks and KPIs are extracted from LiveRamp Holdings, Inc.'s SEC filings for Q2 FY2023 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.