LiveRamp Holdings, Inc. Q4 FY2024 earnings

LiveRamp closed fiscal 2024 with fourth quarter revenue of $171.9 million, up 15.6% from the prior-year quarter. GAAP gross profit of $124.1 million rose 18.0%, and gross margin of 72.2% expanded by 1.5 percentage points. The GAAP operating loss narrowed to $14.3 million from a loss of $47.1 million a year earlier. Operating margin of negative 8.3% improved by 23.4 points, and the net loss narrowed to $5.4 million. The mix shifted toward the smaller marketplace line, which grew faster than subscription revenue during the quarter. Management framed the period as a strong finish to the fiscal year.

The full fiscal year swung to profitability at the operating line. Revenue of $659.7 million rose 10.6%, and gross profit of $480.2 million rose 12.6%, for a gross margin of 72.8%. Operating income of $11.4 million compared with an operating loss in the prior year. Net income of $11.9 million also compared with a prior-year net loss, and diluted earnings per share were $0.17. Operating cash flow of $105.7 million rose 206.8%, while capital expenditures of $4.3 million were down 9.4%. On a non-GAAP basis, fourth quarter operating income was $16 million and full-year operating income was $105 million. Non-GAAP diluted earnings per share were $0.25 in the quarter and $1.45 for the year.

Leading indicators pointed the same way. Annual recurring revenue was $467 million, up 10%. Current remaining performance obligations, the contracted and committed revenue expected to be recognized over the next 12 months, reached $414 million, up 23%. Remaining performance obligations of $566.1 million rose 20.2%, and current deferred revenue of $30.9 million rose 62.1%. The company finished the quarter with 115 customers whose annualized subscription revenue tops $1 million, up from 95 a year earlier, while direct subscription customers slipped to 900 from 920. Subscription net retention was 103% and platform net retention 108%. LiveRamp's Authenticated Traffic Solution connects to more than 21,000 publisher domains and 75% of the comScore 100 publishers, and the company said its integrations reach over 92% of US consumer time spent online.

Guidance covers the June quarter and the full fiscal year. For the first quarter of fiscal 2025, management expects an increase of 12% in revenue and non-GAAP operating income of $25 million. For fiscal 2025, it guided to revenue growth of between 8% and 11% and non-GAAP operating income of between $125 million and $129 million. The non-GAAP outlook excludes stock compensation, purchased intangible amortization, and restructuring charges. Share repurchases totaled roughly 405,000 shares for $15 million in the quarter and 2.1 million shares for $61 million in fiscal 2024, leaving $157 million of remaining capacity under an authorization that expires December 31, 2024.

Cash generation was the softer part of the quarter. Operating cash flow of $27.6 million was down 9.9%, and capital expenditures of $1.8 million rose from a small base. Non-GAAP free cash flow to equity, a different measure from operating cash flow, was $25.9 million for the quarter and $101.4 million for the fiscal year. The strategic story still hinges on cookie deprecation. Google pushed the full removal of third-party cookies in Chrome from the second half of 2024 to early 2025, a delay LiveRamp said does not change its strategy or market approach. The company lists a long set of risks: dependence on customer renewals, new customer additions and upsell, reliance on partners and data suppliers, competition, rapid technology change, privacy and tax regulation, integration of the Habu acquisition, and pressure from inflation and higher interest rates.