LiveRamp Holdings, Inc. Q3 FY2025 earnings

LiveRamp posted revenue of $195.4 million for the quarter ended December 31, 2024, up 12.4% from $173.9 million a year earlier. It is the fourth consecutive quarter of double-digit revenue growth. Both Subscription and Marketplace and Other revenue grew, with management pointing to the Data Collaboration Platform and its clean room solution as drivers of improved sales momentum. Nine-month revenue was $556.9 million, up 14.2%. Growth did not carry to the bottom line at the same rate. Gross profit rose 8.9% to $140.4 million, and gross margin fell to 71.9% from 74.2%. Cloud infrastructure costs, services costs, intangible asset amortization and stock-based compensation all pushed cost of revenue higher.

GAAP profitability declined in the quarter. Operating income was $14.7 million, down 3.5% from $15.2 million, and operating margin compressed to 7.5% from 8.7%. Net income fell 19.8% to $11.2 million, and diluted earnings per share were $0.17 against $0.21. The nine-month trends are steeper: operating income of $16.9 million, down 34.1%, net income of $5.5 million, down 68.4%, and diluted earnings per share of $0.08 against $0.25. Non-GAAP operating income was $45 million, up 24%, and non-GAAP diluted earnings per share were $0.55. The distance between the two sets of results comes from excluded items: purchased intangible asset amortization, non-cash stock compensation and restructuring charges.

Cash generation was the bright spot. Net cash provided by operating activities was $45.1 million, up 172.5% from $16.6 million a year ago. Nine-month operating cash flow reached $91.4 million, up 17.1%. Capital expenditures fell 87.2% to $0.3 million in the quarter and 69.6% to $0.75 million year to date. Free cash flow, a non-GAAP measure the company defines as operating cash flow less capital expenditures, was $45 million in the quarter, up from $14 million, and $90.6 million for the nine months. Buybacks continued at a steady clip: roughly 368,000 shares for $10 million in the quarter, and about 2.8 million shares for $76 million fiscal year to date.

Customer metrics show a mix shift worth watching. LiveRamp ended the quarter with 125 customers generating more than $1 million in annualized subscription revenue, up from 105 a year earlier, while direct subscription customers slipped to 865 from 895. Subscription net retention was 108% and platform net retention 111%. Annual recurring revenue was $491 million, up 10%. Current remaining performance obligations were $434 million, up 13%, and total remaining performance obligations of $579.1 million rose 6.0% from $546.2 million. Deferred revenue, current portion only, climbed 49.5% to $44.8 million.

Guidance points to a slower fourth quarter and a solid full year. For the quarter ending March 31, 2025, LiveRamp expects revenue of $184 million to $186 million, an increase of 7% to 8%, and non-GAAP operating income of $22 million. For the full fiscal year, the company raised its outlook and expects non-GAAP operating income of $135 million. Both sets of non-GAAP guidance figures exclude non-cash stock compensation, purchased intangible asset amortization, and restructuring and related charges. The listed risks are mostly macro and structural: high interest rates, cost increases, the possibility of a recession, general inflationary pressure and geopolitical uncertainty. The company also cites dependence on customer renewals and new customer additions, reliance on partners and data suppliers, competition, integration of acquired businesses such as Habu, and the risk that clients lose access to third-party data if cookies and tracking technology decline or regulation tightens.