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| 8-K - 8-K - LiveRamp Holdings, Inc. | ramp-20201109.htm |
LIVERAMP ANNOUNCES SECOND QUARTER RESULTS
Subscription Revenue Up 19%
Operating Cash Flow Positive - Free Cash Flow Positive
Global ATS Momentum Continues to Build
SAN FRANCISCO, Calif., November 9, 2020—LiveRamp® (NYSE: RAMP), the leading global data connectivity platform, today announced its financial results for the quarter ended September 30, 2020.
Second Quarter Financial Highlights
•Total revenue was $105 million, up 16% compared to the prior year period.
•Subscription revenue was $86 million, up 19% compared to the prior year period and contributed 82% of total revenue.
•Marketplace & Other revenue was $19 million, up 4% compared to the prior year period.
•GAAP gross profit was $70 million, up 43% compared to the prior year period. GAAP gross margin of 67% expanded 13 percentage points. Non-GAAP gross profit was $75 million, up 33% compared to the prior year period. Non-GAAP gross margin of 72% expanded 9 percentage points.
•GAAP operating loss was $27 million compared to a GAAP operating loss of $50 million in the prior year period. Non-GAAP operating income was $1 million compared to a non-GAAP operating loss of $20 million in the prior year period.
•GAAP loss per share was $0.36, and non-GAAP earnings per share was $0.03.
•Net cash generated from operating activities was $6 million compared to net cash used by operating activities of $29 million in the prior year period.
•Cash and cash equivalents totaled $651 million with no debt at quarter end.
A reconciliation between GAAP and non-GAAP results is provided in the schedules to this press release.
“We are playing a critical role in enabling the digital transformations and data-driven strategies of our customers and partners,” said LiveRamp CEO Scott Howe. “The pandemic has put a spotlight on the importance of addressability and measurement, and global brands are increasingly turning to LiveRamp to drive greater media efficiency and higher ROI on their marketing spend. Our recent global success with the Authenticated Traffic Solution (or ATS) reflects this trend. More than 215 publishers worldwide are now committed to ATS, including 60% of the US comScore 50.”
“Our strong, durable and recurring business model was once again on display in the second quarter,” added LiveRamp President and CFO Warren Jenson. “Subscription revenue was up 19%, our gross margin was a record 72%, and we delivered another quarter of non-GAAP operating profit. Looking ahead, we now expect to be slightly profitable on a non-GAAP basis for the full year.”
P 1
GAAP and Non-GAAP Results
The following table summarizes the Company’s financial results for its second fiscal quarter ($ in millions):
| Q2 Fiscal 2021 | Q2 Fiscal 2020 | ||||||||||||||||
| Results | Results | ||||||||||||||||
| GAAP | Non-GAAP | GAAP | Non-GAAP | ||||||||||||||
| Subscription revenue | $ | 86 | — | $ | 72 | — | |||||||||||
| YoY change % | 19 | % | 31 | % | |||||||||||||
| Marketplace & other revenue | $ | 19 | — | $ | 18 | — | |||||||||||
| YoY change % | 4 | % | 83 | % | |||||||||||||
| Total revenue | $ | 105 | — | $ | 90 | — | |||||||||||
| YoY change % | 16 | % | 39 | % | |||||||||||||
| Gross profit | $ | 70 | $ | 75 | $ | 49 | $ | 56 | |||||||||
| % Gross margin | 67 | % | 72 | % | 54 | % | 63 | % | |||||||||
| YoY change, pts | 13pts | 9pts | (8)pts | (6)pts | |||||||||||||
| Operating income (loss) | $ | (27) | $ | 1 | $ | (50) | $ | (20) | |||||||||
| % Operating margin | (26) | % | 1 | % | (56) | % | (22) | % | |||||||||
| YoY change, pts | 30pts | 23pts | 3pts | 0pts | |||||||||||||
| Net income (loss) | $ | (24) | $ | 2 | $ | (40) | $ | (15) | |||||||||
| YoY change % | nm | nm | nm | nm | |||||||||||||
| Earnings (loss) per share | $ | (0.36) | $ | 0.03 | $ | (0.59) | $ | (0.23) | |||||||||
| YoY change % | nm | nm | nm | nm | |||||||||||||
| Shares to Calculate EPS | 66.0 | 68.8 | 67.7 | 67.7 | |||||||||||||
| YoY change % | (2) | % | 2 | % | (13) | % | (13) | % | |||||||||
| Net operating cash flow | $ | 6 | — | $ | (29) | — | |||||||||||
| YoY change % | nm | — | nm | — | |||||||||||||
| Free cash flow to equity | — | $ | 6 | — | $ | (31) | |||||||||||
| YoY change % | — | nm | — | nm | |||||||||||||
| Totals may not sum due to rounding. | |||||||||||||||||
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.
P 2
Additional Business Metrics & Highlights
•The Authenticated Traffic Solution (ATS), continues to experience strong global adoption. There are currently more than 25 supply-side platforms (SSPs) live or committed to implementing ATS. In addition, there are over 45 demand-side platforms (DSPs) live or committed to bid on the LiveRamp identifier, including The Trade Desk, Amobee, Criteo, dataxu, and MediaMath. Lastly, to date, 215 publishers globally have adopted ATS, including 60% of the US comScore 50.
•LiveRamp recently announced that the Unified ID 2.0, created by The Trade Desk, will be made available to publishers via LiveRamp’s Authenticated Identity Infrastructure. As part of the expanded partnership, marketers who work with both LiveRamp and The Trade Desk can now also bid on LiveRamp's identifier within The Trade Desk's platform to optimize media buying across channels.
•During the second quarter, subscription net retention was approximately 111% and platform net retention was 109%.
•Current remaining performance obligations (RPO), which is contracted and committed revenue expected to be recognized over the next 12 months, was $216 million, up 13% compared to the second quarter of last year.
•LiveRamp has 62 clients whose subscription contracts exceed $1 million in annual revenue, up from 44 in the prior year period.
•LiveRamp’s direct subscription customer count at quarter end was 795, an increase of 10% year over year.
Share Repurchase Program Extension
LiveRamp also announced today that its board of directors authorized the extension of its share repurchase program through December 31, 2022. The Company had approximately $326 million of remaining capacity available under the program as of September 30, 2020.
Since the inception of the share repurchase program in August 2011, the Company has returned approximately $1.17 billion to shareholders.
Under the program, LiveRamp is authorized to repurchase outstanding shares in open market or privately negotiated transactions depending on prevailing market conditions and other factors. The repurchase program may be suspended or discontinued at any time.
P 3
Financial Outlook
Given macro economic uncertainties, LiveRamp is providing third quarter guidance only.
LiveRamp’s non-GAAP guidance excludes the impact of non-cash stock compensation, purchased intangible asset amortization, business transformation costs and restructuring charges.
For the third quarter of fiscal 2021, LiveRamp expects to report:
•Revenue of approximately $113 million, an increase of approximately 11% year-over-year
•GAAP operating loss of up to $25 million
•Non-GAAP operating income of up to $4 million
P 4
Conference Call
LiveRamp will hold a conference call at 1:30 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 LiveRamp’s investor site. A slide presentation will be referenced during the call and can be accessed here.
About LiveRamp
LiveRamp is the leading data connectivity platform for the safe and effective use of data. Powered by core identity capabilities and an unparalleled network, LiveRamp enables companies and their partners to better connect, control, and activate data to transform customer experiences and generate more valuable business outcomes. LiveRamp’s fully interoperable and neutral infrastructure delivers end-to-end addressability for the world’s top brands, agencies, and publishers. For more information, visit www.LiveRamp.com.
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended (the “PSLRA”). These statements, which are not statements of historical fact, may contain estimates, assumptions, projections and/or expectations regarding the Company’s financial position, results of operations, share repurchase program, market position, product development, growth opportunities, economic conditions, and other similar forecasts and statements of expectation. Forward-looking statements are often identified by words or phrases such as “anticipate,” “estimate,” “plan,” “expect,” “believe,” “intend,” “foresee,” or the negative of these terms or other similar variations thereof.
These forward-looking statements are not guarantees of future performance and are subject to a number of factors and uncertainties that could cause the Company’s actual results and experiences to differ materially from the anticipated results and expectations expressed in the forward-looking statements.
Among the factors that may cause actual results and expectations to differ from anticipated results and expectations expressed in forward-looking statements are uncertainties related to COVID-19 and the associated impact on our suppliers, customers and partners; the Company’s dependence upon customer renewals; new customer additions and upsell within our subscription business; our reliance upon partners, including data suppliers; competition; and attracting and retaining talent. Additional risks relate to maintaining our culture and our ability to innovate and evolve while working remotely and within a rapidly changing industry, while also avoiding disruption from acquisition and divestiture activities. Our international operations are also subject to risks that may harm the Company’s business. The risk of a significant breach of the confidentiality of the information or the security of our or our customers’, suppliers’, or other partners’ computer systems could be detrimental to our business, reputation and results of operations. Other business risks include unfavorable publicity and negative public perception about our industry; interruptions or delays in service from data center hosting vendors we rely upon; and our dependence on the continued availability of third-party data hosting and transmission services. Our clients’ ability to use data on our platform could be restricted if the industry’s use of third-party cookies and tracking technology declines due to technology platform changes, regulation or increased user controls. Changes in regulations relating to information collection and use represents a risk, as well as changes in tax laws and regulations that are applied to our customers which could cause enterprise software budget tightening. In addition, third parties may claim that we are infringing their intellectual property or may infringe our intellectual property which could result in competitive injury and / or the incurrence of significant costs and draining of our resources.
For a discussion of these and other risks and uncertainties, please refer to LiveRamp’s Annual Report on Form 10-K for our fiscal year 2020 ended March 31, 2020, and LiveRamp's Quarterly Reports on Form 10-Q issued in fiscal year 2021.
The financial information set forth in this press release reflects estimates based on information available at this time.
P 5
LiveRamp assumes no obligation and does not currently intend to update these forward-looking statements.
To automatically receive LiveRamp financial news by email, please visit www.LiveRamp.com and subscribe to email alerts.
For more information, contact:
LiveRamp Investor Relations
Investor.Relations@LiveRamp.com
ERAMP
LiveRampⓇ, IdentityLinkTM, AbilitecⓇ, Safe HavenⓇ 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.
P 6
| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | |||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| (Dollars in thousands, except per share amounts) | |||||||||||||||||||||||
| For the three months ended September 30, | |||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
| 2020 | 2019 | Variance | Variance | ||||||||||||||||||||
| Revenues | 104,661 | 90,143 | 14,518 | 16.1 | % | ||||||||||||||||||
| Cost of revenue | 34,897 | 41,460 | (6,563) | (15.8) | % | ||||||||||||||||||
| Gross profit | 69,764 | 48,683 | 21,081 | 43.3 | % | ||||||||||||||||||
| % Gross margin | 66.7 | % | 54.0 | % | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | 31,035 | 26,445 | 4,590 | 17.4 | % | ||||||||||||||||||
| Sales and marketing | 41,705 | 45,204 | (3,499) | (7.7) | % | ||||||||||||||||||
| General and administrative | 24,495 | 27,262 | (2,767) | (10.1) | % | ||||||||||||||||||
| Gains, losses and other items, net | (619) | 45 | (664) | (1,475.6) | % | ||||||||||||||||||
| Total operating expenses | 96,616 | 98,956 | (2,340) | (2.4) | % | ||||||||||||||||||
| Loss from operations | (26,852) | (50,273) | 23,421 | 46.6 | % | ||||||||||||||||||
| % Margin | (25.7) | % | (55.8) | % | |||||||||||||||||||
| Total other income (expense) | (225) | 4,780 | (5,005) | (104.7) | % | ||||||||||||||||||
| Loss from operations before income taxes | (27,077) | (45,493) | 18,416 | 40.5 | % | ||||||||||||||||||
| Income tax benefit | (3,109) | (5,291) | 2,182 | 41.2 | % | ||||||||||||||||||
| Net loss | (23,968) | (40,202) | 16,234 | 40.4 | % | ||||||||||||||||||
| Basic loss per share | (0.36) | (0.59) | 0.23 | 38.9 | % | ||||||||||||||||||
| Diluted loss per share | (0.36) | (0.59) | 0.23 | 38.9 | % | ||||||||||||||||||
| Basic weighted average shares | 66,010 | 67,684 | |||||||||||||||||||||
| Diluted weighted average shares | 66,010 | 67,684 | |||||||||||||||||||||
P 7
| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | |||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| (Dollars in thousands, except per share amounts) | |||||||||||||||||||||||
| For the six months ended September 30, | |||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
| 2020 | 2019 | Variance | Variance | ||||||||||||||||||||
| Revenues | 204,098 | 172,654 | 31,444 | 18.2 | % | ||||||||||||||||||
| Cost of revenue | 69,362 | 77,886 | (8,524) | (10.9) | % | ||||||||||||||||||
| Gross profit | 134,736 | 94,768 | 39,968 | 42.2 | % | ||||||||||||||||||
| % Gross margin | 66.0 | % | 54.9 | % | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | 58,024 | 50,167 | 7,857 | 15.7 | % | ||||||||||||||||||
| Sales and marketing | 80,332 | 88,348 | (8,016) | (9.1) | % | ||||||||||||||||||
| General and administrative | 47,863 | 52,580 | (4,717) | (9.0) | % | ||||||||||||||||||
| Gains, losses and other items, net | 1,376 | 2,321 | (945) | (40.7) | % | ||||||||||||||||||
| Total operating expenses | 187,595 | 193,416 | (5,821) | (3.0) | % | ||||||||||||||||||
| Loss from operations | (52,859) | (98,648) | 45,789 | 46.4 | % | ||||||||||||||||||
| % Margin | (25.9) | % | (57.1) | % | |||||||||||||||||||
| Total other income | 238 | 10,662 | (10,424) | (97.8) | % | ||||||||||||||||||
| Loss from continuing operations before income taxes | (52,621) | (87,986) | 35,365 | 40.2 | % | ||||||||||||||||||
| Income tax benefit | (6,925) | (5,644) | (1,281) | (22.7) | % | ||||||||||||||||||
| Net loss | (45,696) | (82,342) | 36,646 | 44.5 | % | ||||||||||||||||||
| Basic loss per share | (0.69) | (1.21) | 0.51 | 42.4 | % | ||||||||||||||||||
| Diluted loss per share | (0.69) | (1.21) | 0.51 | 42.4 | % | ||||||||||||||||||
| Basic weighted average shares | 65,790 | 68,295 | |||||||||||||||||||||
| Diluted weighted average shares | 65,790 | 68,295 | |||||||||||||||||||||
P 8
| 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 September 30, | For the six months ended September 30, | |||||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
| Loss from operations before income taxes | (27,077) | (45,493) | (52,621) | (87,986) | ||||||||||||||||||||||
| Income taxes (benefit) | (3,109) | (5,291) | (6,925) | (5,644) | ||||||||||||||||||||||
| Net loss | (23,968) | (40,202) | (45,696) | (82,342) | ||||||||||||||||||||||
| Loss per share: | ||||||||||||||||||||||||||
| Basic | (0.36) | (0.59) | (0.69) | (1.21) | ||||||||||||||||||||||
| Diluted | (0.36) | (0.59) | (0.69) | (1.21) | ||||||||||||||||||||||
| Excluded items: | ||||||||||||||||||||||||||
| Purchased intangible asset amortization (cost of revenue) | 4,350 | 5,369 | 9,656 | 8,492 | ||||||||||||||||||||||
| Non-cash stock compensation (cost of revenue and operating expenses) | 24,204 | 23,354 | 40,689 | 41,984 | ||||||||||||||||||||||
| Accelerated depreciation (cost of revenue and operating expenses | — | 1,663 | — | 3,569 | ||||||||||||||||||||||
| Restructuring and merger charges (gains, losses, and other) | (619) | 45 | 1,376 | 2,321 | ||||||||||||||||||||||
| Transformation costs (general and administrative) | 258 | — | 3,863 | — | ||||||||||||||||||||||
| Total excluded items | 28,193 | 30,431 | 55,584 | 56,366 | ||||||||||||||||||||||
| Income (loss) from operations before income taxes and excluding items | 1,116 | (15,062) | 2,963 | (31,620) | ||||||||||||||||||||||
| Income taxes (benefit) (2) | (1,291) | 190 | (357) | (26) | ||||||||||||||||||||||
| Non-GAAP net earnings (loss) | 2,407 | (15,252) | 3,320 | (31,594) | ||||||||||||||||||||||
| Non-GAAP loss per share: | ||||||||||||||||||||||||||
| Basic | 0.04 | (0.23) | 0.05 | (0.46) | ||||||||||||||||||||||
| Diluted | 0.03 | (0.23) | 0.05 | (0.46) | ||||||||||||||||||||||
| Basic weighted average shares | 66,010 | 67,684 | 65,790 | 68,295 | ||||||||||||||||||||||
| Diluted weighted average shares | 68,804 | 67,684 | 68,071 | 68,295 | ||||||||||||||||||||||
(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 by applying the estimated annual effective tax rate to year-to-date pretax income or loss and adjusting for discrete tax items in the period. The differences between our GAAP and non-GAAP effective tax rates were primarily due to the net tax effects of the excluded items, coupled with larger pre-tax losses for GAAP purposes versus smaller pre-tax losses or income for non-GAAP purposes.
P 9
| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP LOSS FROM OPERATIONS (1) | ||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||
| For the three months ended September 30, | For the six months ended September 30, | |||||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
| Loss from operations | (26,852) | (50,273) | (52,859) | (98,648) | ||||||||||||||||||||||
| Excluded items: | ||||||||||||||||||||||||||
| Purchased intangible asset amortization (cost of revenue) | 4,350 | 5,369 | 9,656 | 8,492 | ||||||||||||||||||||||
| Non-cash stock compensation (cost of revenue and operating expenses) | 24,204 | 23,354 | 40,689 | 41,984 | ||||||||||||||||||||||
| Accelerated depreciation (cost of revenue and operating expenses | — | 1,663 | — | 3,569 | ||||||||||||||||||||||
| Restructuring and merger charges (gains, losses, and other) | (619) | 45 | 1,376 | 2,321 | ||||||||||||||||||||||
| Transformation costs (general and administrative) | 258 | — | 3,863 | — | ||||||||||||||||||||||
| Total excluded items | 28,193 | 30,431 | 55,584 | 56,366 | ||||||||||||||||||||||
| Income (loss) from operations before excluded items | 1,341 | (19,842) | 2,725 | (42,282) | ||||||||||||||||||||||
(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.
P 10
| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||
| RECONCILIATION OF ADJUSTED EBITDA (1) | ||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||
| For the three months ended September 30, | For the six months ended September 30, | |||||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
| Net loss from operations | (23,968) | (40,202) | (45,696) | (82,342) | ||||||||||||||||||||||
| Income taxes (benefit) | (3,109) | (5,291) | (6,925) | (5,644) | ||||||||||||||||||||||
| Other income (expense) | 225 | (4,780) | (238) | (10,662) | ||||||||||||||||||||||
| Loss from operations | (26,852) | (50,273) | (52,859) | (98,648) | ||||||||||||||||||||||
| Depreciation and amortization | 6,901 | 10,977 | 14,955 | 19,854 | ||||||||||||||||||||||
| EBITDA | (19,951) | (39,296) | (37,904) | (78,794) | ||||||||||||||||||||||
| Other adjustments: | ||||||||||||||||||||||||||
| Non-cash stock compensation (cost of revenue and operating expenses) | 24,204 | 23,354 | 40,689 | 41,984 | ||||||||||||||||||||||
| Restructuring and merger charges (gains, losses, and other) | (619) | 45 | 1,376 | 2,321 | ||||||||||||||||||||||
| Transformation costs (general and administrative) | 258 | — | 3,863 | — | ||||||||||||||||||||||
| Other adjustments | 23,843 | 23,399 | 45,928 | 44,305 | ||||||||||||||||||||||
| Adjusted EBITDA | 3,892 | (15,897) | 8,024 | (34,489) | ||||||||||||||||||||||
(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.
P 11
| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | |||||||||||||||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| September 30, | March 31, | $ | % | ||||||||||||||||||||
| 2020 | 2020 | Variance | Variance | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Current assets: | |||||||||||||||||||||||
| Cash and cash equivalents | 650,691 | 717,811 | (67,120) | (9.4) | % | ||||||||||||||||||
| Restricted cash | 14,815 | 14,815 | — | — | % | ||||||||||||||||||
| Trade accounts receivable, net | 99,362 | 92,761 | 6,601 | 7.1 | % | ||||||||||||||||||
| Refundable income taxes | 42,578 | 38,340 | 4,238 | 11.1 | % | ||||||||||||||||||
| Other current assets | 24,560 | 32,666 | (8,106) | (24.8) | % | ||||||||||||||||||
| Total current assets | 832,006 | 896,393 | (64,387) | (7.2) | % | ||||||||||||||||||
| Property and equipment | 43,604 | 44,786 | (1,182) | (2.6) | % | ||||||||||||||||||
| Less - accumulated depreciation and amortization | 28,382 | 25,465 | 2,917 | 11.5 | % | ||||||||||||||||||
| Property and equipment, net | 15,222 | 19,321 | (4,099) | (21.2) | % | ||||||||||||||||||
| Intangible assets, net | 36,709 | 45,200 | (8,491) | (18.8) | % | ||||||||||||||||||
| Goodwill | 300,741 | 297,796 | 2,945 | 1.0 | % | ||||||||||||||||||
| Deferred commissions, net | 19,459 | 16,014 | 3,445 | 21.5 | % | ||||||||||||||||||
| Other assets, net | 34,500 | 27,165 | 7,335 | 27.0 | % | ||||||||||||||||||
| 1,238,637 | 1,301,889 | (63,252) | (4.9) | % | |||||||||||||||||||
| Liabilities and Stockholders' Equity | |||||||||||||||||||||||
| Current liabilities: | |||||||||||||||||||||||
| Trade accounts payable | 38,102 | 42,204 | (4,102) | (9.7) | % | ||||||||||||||||||
| Accrued payroll and related expenses | 23,172 | 28,791 | (5,619) | (19.5) | % | ||||||||||||||||||
| Other accrued expenses | 58,532 | 68,991 | (10,459) | (15.2) | % | ||||||||||||||||||
| Acquisition escrow payable | 14,815 | 14,815 | — | — | % | ||||||||||||||||||
| Deferred revenue | 6,546 | 6,581 | (35) | (0.5) | % | ||||||||||||||||||
| Total current liabilities | 141,167 | 161,382 | (20,215) | (12.5) | % | ||||||||||||||||||
| Other liabilities | 46,608 | 52,995 | (6,387) | (12.1) | % | ||||||||||||||||||
| Stockholders' equity: | |||||||||||||||||||||||
| Preferred stock | — | — | — | — | % | ||||||||||||||||||
| Common stock | 14,570 | 14,394 | 176 | 1.2 | % | ||||||||||||||||||
| Additional paid-in capital | 1,552,303 | 1,496,565 | 55,738 | 3.7 | % | ||||||||||||||||||
| Retained earnings | 1,499,398 | 1,545,094 | (45,696) | (3.0) | % | ||||||||||||||||||
| Accumulated other comprehensive income | 6,944 | 5,745 | 1,199 | 20.9 | % | ||||||||||||||||||
| Treasury stock, at cost | (2,022,353) | (1,974,286) | (48,067) | 2.4 | % | ||||||||||||||||||
| Total stockholders' equity | 1,050,862 | 1,087,512 | (36,650) | (3.4) | % | ||||||||||||||||||
| 1,238,637 | 1,301,889 | (63,252) | (4.9) | % | |||||||||||||||||||
P 12
| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||
| (Unaudited) | ||||||||||||||
| (Dollars in thousands) | ||||||||||||||
| For the three months ended September 30, | ||||||||||||||
| 2020 | 2019 | |||||||||||||
| Cash flows from operating activities: | ||||||||||||||
| Net loss | (23,968) | (40,202) | ||||||||||||
| Non-cash operating activities: | ||||||||||||||
| Depreciation and amortization | 6,901 | 10,977 | ||||||||||||
| Loss (gain) on disposal or impairment of assets | 331 | (225) | ||||||||||||
| Provision for doubtful accounts | 1,192 | 1,468 | ||||||||||||
| Deferred income taxes | 187 | (5,090) | ||||||||||||
| Non-cash stock compensation expense | 24,204 | 23,354 | ||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||
| Accounts receivable, net | (3,724) | (7,807) | ||||||||||||
| Deferred commissions | (1,764) | (780) | ||||||||||||
| Other assets | 2,799 | (7,497) | ||||||||||||
| Accounts payable and other liabilities | 2,013 | 3,009 | ||||||||||||
| Income taxes, net | (2,478) | (6,926) | ||||||||||||
| Deferred revenue | 556 | 968 | ||||||||||||
| Net cash used in operating activities | 6,249 | (28,751) | ||||||||||||
| Cash flows from investing activities: | ||||||||||||||
| Capital expenditures | (296) | (2,641) | ||||||||||||
| Proceeds from sales of assets | — | 517 | ||||||||||||
| Cash paid in acquisitions, net of cash received | (2,933) | (100,886) | ||||||||||||
| Payments for investments | (1,206) | — | ||||||||||||
| Net cash used in investing activities | (4,435) | (103,010) | ||||||||||||
| Cash flows from financing activities: | ||||||||||||||
| Proceeds related to the issuance of common stock under stock and employee benefit plans | 2,424 | 1,032 | ||||||||||||
| Shares repurchased for tax withholdings upon vesting of stock-based awards | (3,928) | (1,814) | ||||||||||||
| Acquisition of treasury stock | — | (80,374) | ||||||||||||
| Net cash used in financing activities | (1,504) | (81,156) | ||||||||||||
| Effect of exchange rate changes on cash | 486 | (302) | ||||||||||||
| Net change in cash, cash equivalents and restricted cash | 796 | (213,219) | ||||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 664,710 | 1,005,477 | ||||||||||||
| Cash, cash equivalents and restricted cash at end of period | 665,506 | 792,258 | ||||||||||||
| Supplemental cash flow information: | ||||||||||||||
| Cash paid (received) for income taxes, net | (822) | 6,042 | ||||||||||||
P 13
| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||
| (Unaudited) | ||||||||||||||
| (Dollars in thousands) | ||||||||||||||
| For the six months ended September 30, | ||||||||||||||
| 2020 | 2019 | |||||||||||||
| Cash flows from operating activities: | ||||||||||||||
| Net loss | (45,696) | (82,342) | ||||||||||||
| Non-cash operating activities: | ||||||||||||||
| Depreciation and amortization | 14,955 | 19,854 | ||||||||||||
| Loss (gain) on disposal or impairment of assets | 333 | (140) | ||||||||||||
| Provision for doubtful accounts | 2,522 | 2,430 | ||||||||||||
| Deferred income taxes | (485) | (5,083) | ||||||||||||
| Non-cash stock compensation expense | 40,689 | 41,984 | ||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||
| Accounts receivable, net | (9,584) | (11,258) | ||||||||||||
| Deferred commissions | (3,445) | (606) | ||||||||||||
| Other assets | 7,703 | (3,897) | ||||||||||||
| Accounts payable and other liabilities | (20,671) | 2,821 | ||||||||||||
| Income taxes, net | (3,583) | (7,789) | ||||||||||||
| Deferred revenue | (101) | (133) | ||||||||||||
| Net cash used in operating activities | (17,363) | (44,159) | ||||||||||||
| Cash flows from investing activities: | ||||||||||||||
| Capitalized software | — | — | ||||||||||||
| Capital expenditures | (1,128) | (7,529) | ||||||||||||
| Proceeds from sales of assets | — | 517 | ||||||||||||
| Cash paid in acquisitions, net of cash received | (2,933) | (105,365) | ||||||||||||
| Payments for investments | (1,873) | — | ||||||||||||
| Net cash used in investing activities | (5,934) | (112,377) | ||||||||||||
| Cash flows from financing activities: | ||||||||||||||
| Payments of debt | — | — | ||||||||||||
| Fees from debt refinancing | — | — | ||||||||||||
| Proceeds related to the issuance of common stock under stock and employee benefit plans | 3,561 | 2,092 | ||||||||||||
| Shares repurchased for tax withholdings upon vesting of stock-based awards | (5,755) | (13,907) | ||||||||||||
| Acquisition of treasury stock from tender offer | — | — | ||||||||||||
| Acquisition of treasury stock | (42,312) | (100,473) | ||||||||||||
| Net cash used in financing activities | (44,506) | (112,288) | ||||||||||||
P 14
| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||
| (Unaudited) | ||||||||||||||
| (Dollars in thousands) | ||||||||||||||
| For the six months ended September 30, | ||||||||||||||
| 2020 | 2019 | |||||||||||||
| Effect of exchange rate changes on cash | 683 | (391) | ||||||||||||
| Net change in cash, cash equivalents and restricted cash | (67,120) | (269,215) | ||||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 732,626 | 1,061,473 | ||||||||||||
| Cash, cash equivalents and restricted cash at end of period | 665,506 | 792,258 | ||||||||||||
| Supplemental cash flow information: | ||||||||||||||
| Cash paid (received) for income taxes, net | (2,863) | 6,152 | ||||||||||||
P 15
| LIVERAMP HOLDINGS, INC AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||
| CALCULATION OF FREE CASH FLOW TO EQUITY (1) | ||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||
| 6/30/2019 | 9/30/2019 | 12/31/2019 | 3/31/2020 | FY2020 | 6/30/2020 | 9/30/2020 | FY2021 | |||||||||||||||||||||||||
| Net Cash Provided by (Used in) Operating Activities | $ | (15,408) | $ | (28,751) | $ | 15,804 | $ | (220) | $ | (28,575) | $ | (23,612) | $ | 6,249 | $ | (17,363) | ||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||
| Capital expenditures | (4,888) | (2,641) | (2,773) | (1,409) | (11,711) | (832) | (296) | (1,128) | ||||||||||||||||||||||||
| Free Cash Flow to Equity | $ | (20,296) | $ | (31,392) | $ | 13,031 | $ | (1,629) | $ | (40,286) | $ | (24,444) | $ | 5,953 | $ | (18,491) | ||||||||||||||||
(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.
P 16
| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands, except per share amounts) | ||||||||||||||||||||||||||||||||||||||
| Q2 FY21 to Q2 FY20 | ||||||||||||||||||||||||||||||||||||||
| 6/30/2019 | 9/30/2019 | 12/31/2019 | 3/31/2020 | FY2020 | 6/30/2020 | 9/30/2020 | FY2021 | % | $ | |||||||||||||||||||||||||||||
| Revenues | 82,511 | 90,143 | 102,217 | 105,701 | 380,572 | 99,437 | 104,661 | 204,098 | 17.6 | % | 14,518 | |||||||||||||||||||||||||||
| Cost of revenue | 36,426 | 41,460 | 37,966 | 36,852 | 152,704 | 34,465 | 34,897 | 69,362 | (18.0) | % | (6,563) | |||||||||||||||||||||||||||
| Gross profit | 46,085 | 48,683 | 64,251 | 68,849 | 227,868 | 64,972 | 69,764 | 134,736 | 45.7 | % | 21,081 | |||||||||||||||||||||||||||
| % Gross margin | 55.9 | % | 54.0 | % | 62.9 | % | 65.1 | % | 59.9 | % | 65.3 | % | 66.7 | % | 66.0 | % | ||||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||||||||||||||
| Research and development | 23,722 | 26,445 | 27,403 | 28,411 | 105,981 | 26,989 | 31,035 | 58,024 | 19.3 | % | 4,590 | |||||||||||||||||||||||||||
| Sales and marketing | 43,144 | 45,204 | 51,993 | 48,564 | 188,905 | 38,627 | 41,705 | 80,332 | (8.1) | % | (3,499) | |||||||||||||||||||||||||||
| General and administrative | 25,318 | 27,262 | 26,107 | 30,216 | 108,903 | 23,368 | 24,495 | 47,863 | (10.9) | % | (2,767) | |||||||||||||||||||||||||||
| Gains, losses and other items, net | 2,276 | 45 | 233 | 2,447 | 5,001 | 1,995 | (619) | 1,376 | (29.2) | % | (664) | |||||||||||||||||||||||||||
| Total operating expenses | 94,460 | 98,956 | 105,736 | 109,638 | 408,790 | 90,979 | 96,616 | 187,595 | (2.5) | % | (2,340) | |||||||||||||||||||||||||||
| Loss from operations | (48,375) | (50,273) | (41,485) | (40,789) | (180,922) | (26,007) | (26,852) | (52,859) | 48.4 | % | 23,421 | |||||||||||||||||||||||||||
| Total other income/(expense) | 5,882 | 4,780 | 3,158 | 1,565 | 15,385 | 463 | (225) | 238 | (85.1) | % | (5,005) | |||||||||||||||||||||||||||
| Loss from continuing operations before income taxes | (42,493) | (45,493) | (38,327) | (39,224) | (165,537) | (25,544) | (27,077) | (52,621) | 43.3 | % | 18,416 | |||||||||||||||||||||||||||
| Income taxes (benefit) | (353) | (5,291) | (287) | (34,345) | (40,276) | (3,816) | (3,109) | (6,925) | 618.1 | % | 2,182 | |||||||||||||||||||||||||||
| Net loss from continuing operations | (42,140) | (40,202) | (38,040) | (4,879) | (125,261) | (21,728) | (23,968) | (45,696) | 38.5 | % | 16,234 | |||||||||||||||||||||||||||
P 17
| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (Continued) | ||||||||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands, except per share amounts) | ||||||||||||||||||||||||||||||||||||||
| Q2 FY21 to Q2 FY20 | ||||||||||||||||||||||||||||||||||||||
| 6/30/2019 | 9/30/2019 | 12/31/2019 | 3/31/2020 | FY2020 | 6/30/2020 | 9/30/2020 | FY2021 | % | $ | |||||||||||||||||||||||||||||
| Earnings from discontinued operations, net of tax | — | — | — | 750 | 750 | — | — | — | — | % | — | |||||||||||||||||||||||||||
| Net loss | $ | (42,140) | $ | (40,202) | $ | (38,040) | $ | (4,129) | $ | (124,511) | $ | (21,728) | $ | (23,968) | $ | (45,696) | 38.5 | % | 16,234 | |||||||||||||||||||
| Diluted loss per share | (0.61) | (0.59) | (0.56) | (0.06) | (1.84) | (0.33) | (0.36) | (0.69) | 37.8 | % | 0.23 | |||||||||||||||||||||||||||
| Diluted loss per share from continuing operations | (0.61) | (0.59) | (0.56) | (0.07) | (1.85) | (0.33) | (0.36) | (0.69) | 37.8 | % | 0.23 | |||||||||||||||||||||||||||
| Some earnings (loss) per share amounts may not add due to rounding. | ||||||||||||||||||||||||||||||||||||||
P 18
| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP EPS (1) | ||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||
| (Dollars in thousands, except per share amounts) | ||||||||||||||||||||||||||||||||
| 6/30/2019 | 9/30/2019 | 12/31/2019 | 3/31/2020 | FY2020 | 6/30/2020 | 9/30/2020 | FY2021 | |||||||||||||||||||||||||
| Loss from continuing operations before income taxes | $ | (42,493) | $ | (45,493) | $ | (38,327) | $ | (39,224) | $ | (165,537) | $ | (25,544) | $ | (27,077) | $ | (52,621) | ||||||||||||||||
| Income taxes (benefit) | (353) | (5,291) | (287) | (34,345) | (40,276) | (3,816) | (3,109) | (6,925) | ||||||||||||||||||||||||
| Net loss from continuing operations | (42,140) | (40,202) | (38,040) | (4,879) | (125,261) | (21,728) | (23,968) | (45,696) | ||||||||||||||||||||||||
| Earnings from discontinued operations, net of tax | — | — | — | 750 | 750 | — | — | — | ||||||||||||||||||||||||
| — | ||||||||||||||||||||||||||||||||
| Net loss | $ | (42,140) | $ | (40,202) | $ | (38,040) | $ | (4,129) | $ | (124,511) | $ | (21,728) | $ | (23,968) | $ | (45,696) | ||||||||||||||||
| Loss per share: | ||||||||||||||||||||||||||||||||
| Basic | $ | (0.61) | $ | (0.59) | $ | (0.56) | $ | (0.06) | $ | (1.84) | $ | (0.33) | $ | (0.36) | $ | (0.69) | ||||||||||||||||
| Diluted | $ | (0.61) | $ | (0.59) | $ | (0.56) | $ | (0.06) | $ | (1.84) | $ | (0.33) | $ | (0.36) | $ | (0.69) | ||||||||||||||||
| Excluded items: | ||||||||||||||||||||||||||||||||
| Purchased intangible asset amortization (cost of revenue) | $ | 3,123 | $ | 5,369 | $ | 5,369 | $ | 5,181 | $ | 19,042 | $ | 5,306 | $ | 4,350 | $ | 9,656 | ||||||||||||||||
| Non-cash stock compensation (cost of revenue and operating expenses) | 18,630 | 23,354 | 30,295 | 17,168 | 89,447 | 16,485 | 24,204 | 40,689 | ||||||||||||||||||||||||
| Accelerated amortization (cost of revenue and operating expenses) | 1,906 | 1,663 | — | — | 3,569 | — | — | — | ||||||||||||||||||||||||
| Restructuring and merger charges (gains, losses, and other) | 2,276 | 45 | 233 | 2,447 | 5,001 | 1,995 | (619) | 1,376 | ||||||||||||||||||||||||
| Transformation costs (general and administrative) | — | — | — | — | — | 3,605 | 258 | 3,863 | ||||||||||||||||||||||||
| Total excluded items, continuing operations | 25,935 | 30,431 | 35,897 | 24,796 | 117,059 | 27,391 | 28,193 | 55,584 | ||||||||||||||||||||||||
P 19
| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP EPS (1) (Continued) | ||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||
| (Dollars in thousands, except per share amounts) | ||||||||||||||||||||||||||||||||
| 6/30/2019 | 9/30/2019 | 12/31/2019 | 3/31/2020 | FY2020 | 6/30/2020 | 9/30/2020 | FY2021 | |||||||||||||||||||||||||
| Income (loss) from continuing operations before income taxes and excluding items | $ | (16,558) | $ | (15,062) | $ | (2,430) | $ | (14,428) | $ | (48,478) | $ | 1,847 | $ | 1,116 | $ | 2,963 | ||||||||||||||||
| Income taxes (benefit) | (216) | 190 | (227) | (11,199) | (11,452) | 934 | (1,291) | (357) | ||||||||||||||||||||||||
| Non-GAAP net earnings (loss) | $ | (16,342) | $ | (15,252) | $ | (2,203) | $ | (3,229) | $ | (37,026) | $ | 913 | $ | 2,407 | $ | 3,320 | ||||||||||||||||
| Non-GAAP earnings (loss) per share: | ||||||||||||||||||||||||||||||||
| Basic | $ | (0.24) | $ | (0.23) | $ | (0.03) | $ | (0.05) | $ | (0.55) | $ | 0.01 | $ | 0.04 | $ | 0.05 | ||||||||||||||||
| Diluted | $ | (0.24) | $ | (0.23) | $ | (0.03) | $ | (0.05) | $ | (0.55) | $ | 0.01 | $ | 0.03 | $ | 0.05 | ||||||||||||||||
| Basic weighted average shares | 68,906 | 67,684 | 67,473 | 66,977 | 67,760 | 65,570 | 66,010 | 65,790 | ||||||||||||||||||||||||
| Diluted weighted average shares | 68,906 | 67,684 | 67,473 | 66,977 | 67,760 | 67,337 | 68,804 | 68,071 | ||||||||||||||||||||||||
| Some totals may not add due to rounding | ||||||||||||||||||||||||||||||||
###
P 20
| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP EXPENSES (1) | |||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||
| 6/30/2019 | 9/30/2019 | 12/31/2019 | 3/31/2020 | FY2020 | 6/30/2020 | 9/30/2020 | FY2021 | ||||||||||||||||||||||
| Expenses, continuing operations: | |||||||||||||||||||||||||||||
| Cost of revenue | $ | 36,426 | $ | 41,460 | $ | 37,966 | $ | 36,852 | $ | 152,704 | $ | 34,465 | $ | 34,897 | $ | 69,362 | |||||||||||||
| Research and development | 23,722 | 26,445 | 27,403 | 28,411 | 105,981 | 26,989 | 31,035 | 58,024 | |||||||||||||||||||||
| Sales and marketing | 43,144 | 45,204 | 51,993 | 48,564 | 188,905 | 38,627 | 41,705 | 80,332 | |||||||||||||||||||||
| General and administrative | 25,318 | 27,262 | 26,107 | 30,216 | 108,903 | 23,368 | 24,495 | 47,863 | |||||||||||||||||||||
| Gains, losses and other items, net | 2,276 | 45 | 233 | 2,447 | 5,001 | 1,995 | (619) | 1,376 | |||||||||||||||||||||
| Gross profit, continuing operations: | 46,085 | 48,683 | 64,251 | 68,849 | 227,868 | 64,972 | 69,764 | 134,736 | |||||||||||||||||||||
| % Gross margin | 55.9 | % | 54.0 | % | 62.9 | % | 65.1 | % | 59.9 | % | 65.3 | % | 66.7 | % | 66.0 | % | |||||||||||||
| Excluded items: | |||||||||||||||||||||||||||||
| Purchased intangible asset amortization (cost of revenue) | 3,123 | 5,369 | 5,369 | 5,181 | 19,042 | 5,306 | 4,350 | 9,656 | |||||||||||||||||||||
| Non-cash stock compensation (cost of revenue) | 755 | 1,060 | 1,028 | 926 | 3,769 | 775 | 913 | 1,688 | |||||||||||||||||||||
| Non-cash stock compensation (research and development) | 4,451 | 6,346 | 6,462 | 6,001 | 23,260 | 5,886 | 7,713 | 13,599 | |||||||||||||||||||||
| Non-cash stock compensation (sales and marketing) | 8,920 | 9,758 | 15,670 | 3,678 | 38,026 | 7,123 | 9,233 | 16,356 | |||||||||||||||||||||
| Non-cash stock compensation (general and administrative) | 4,504 | 6,190 | 7,135 | 6,563 | 24,392 | 2,701 | 6,345 | 9,046 | |||||||||||||||||||||
| Accelerated depreciation (cost of revenue) | 1,487 | 1,245 | — | — | 2,732 | — | — | — | |||||||||||||||||||||
| Accelerated depreciation (general and administrative) | 419 | 418 | — | — | 837 | — | — | — | |||||||||||||||||||||
| Restructuring and merger charges (gains, losses, and other) | 2,276 | 45 | 233 | 2,447 | 5,001 | 1,995 | (619) | 1,376 | |||||||||||||||||||||
| Transformation costs (general and administrative) | — | — | — | — | — | 3,605 | 258 | 3,863 | |||||||||||||||||||||
| Total excluded items | $ | 25,935 | $ | 30,431 | $ | 35,897 | $ | 24,796 | $ | 117,059 | $ | 27,391 | $ | 28,193 | $ | 55,584 | |||||||||||||
P 21
| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP EXPENSES (1) (Continued) | |||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||
| 6/30/2019 | 9/30/2019 | 12/31/2019 | 3/31/2020 | FY2020 | 6/30/2020 | 9/30/2020 | FY2021 | ||||||||||||||||||||||
| Expenses, continued operations excluding items: | |||||||||||||||||||||||||||||
| Cost of revenue | $ | 31,061 | $ | 33,786 | $ | 31,569 | $ | 30,745 | $ | 127,161 | $ | 28,384 | $ | 29,634 | $ | 58,018 | |||||||||||||
| Research and development | 19,271 | 20,099 | 20,941 | 22,410 | 82,721 | 21,103 | 23,322 | 44,425 | |||||||||||||||||||||
| Sales and marketing | 34,224 | 35,446 | 36,323 | 44,886 | 150,879 | 31,504 | 32,472 | 63,976 | |||||||||||||||||||||
| General and administrative | 20,395 | 20,654 | 18,972 | 23,653 | 83,674 | 17,062 | 17,892 | 34,954 | |||||||||||||||||||||
| Gains, losses and other items, net | — | — | — | — | — | — | — | — | |||||||||||||||||||||
| Gross profit, continuing operations excluding items: | 51,450 | 56,357 | 70,648 | 74,956 | 253,411 | 71,053 | 75,027 | 146,080 | |||||||||||||||||||||
| % Gross margin | 62.4 | % | 62.5 | % | 69.1 | % | 70.9 | % | 66.6 | % | 71.5 | % | 71.7 | % | 71.6 | % | |||||||||||||
(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.
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| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | |||||
| RECONCILIATION OF GAAP TO NON-GAAP OPERATING INCOME(LOSS) GUIDANCE (1) | |||||
| (Unaudited) | |||||
| (Dollars in thousands) | |||||
| For the quarter ending | |||||
| December 31, 2020 | |||||
| GAAP loss from operations | (25,000) | ||||
| Excluded items: | |||||
| Purchased intangible asset amortization | 4,000 | ||||
| Non-cash stock compensation | 25,000 | ||||
| Restructuring and transformation costs | — | ||||
| Total excluded items | 29,000 | ||||
| Non-GAAP income from operations | 4,000 | ||||
(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.
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APPENDIX A
| LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES | ||
| Q2 FISCAL 2021 FINANCIAL RESULTS | ||
| EXPLANATION OF NON-GAAP MEASURES AND OTHER KEY METRICS | ||
| 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 (loss) per share, income (loss) 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 and other contract 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. | ||
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Transformation costs: In previous years, we incurred significant expenses to separate the financial statements of our operating segments, with particular focus on segment-level balance sheets, and to evaluate portfolio priorities. Our criteria for excluding 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, and through most of fiscal 2019, 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. Beginning in the first quarter of fiscal 2021 in response to the potential COVID-19 pandemic impact on our business, we incurred significant costs associated with the assessment of strategic and operating plans, including our long-term location strategy, and assistance in implementing the restructuring activities as a result of this assessment. Our criteria for excluding these 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 prior year we excluded 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 was 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, Non-GAAP Income from Operations, and Non-GAAP expenses: Our Non-GAAP earnings per share, Non-GAAP income from operations, and Non-GAAP expenses 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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