2441

LiveRamp (NYSE:RAMP) Beats Q4 Sales Targets But Full Year Guidance Underwhelms


Adam Hejl /
2022/05/24 4:14 pm EDT
Add to Watchlist

Advertising data platform LiveRamp (NYSE:RAMP) reported results ahead of analyst expectations in the Q4 FY2022 quarter, with revenue up 18.9% year on year to $141.7 million. However, guidance for the next quarter was less impressive, coming in at $139 million at the midpoint, being 2.58% below analyst estimates. LiveRamp made a GAAP loss of $29.3 million, improving on its loss of $32.8 million, in the same quarter last year.

Is now the time to buy LiveRamp? Access our full analysis of the earnings results here, it's free.

LiveRamp (RAMP) Q4 FY2022 Highlights:

  • Revenue: $141.7 million vs analyst estimates of $222.6 million (1.7% beat)
  • EPS (non-GAAP): -$0.01 vs analyst estimates of $0.02 (-$0.03 miss)
  • Revenue guidance for Q1 2023 is $139 million at the midpoint, below analyst estimates of $142.6 million
  • Management's revenue guidance for upcoming financial year 2023 is $616.5 million at the midpoint, missing analyst estimates by 2.64% and predicting 16.6% growth (vs 19.4% in FY2022)
  • Free cash flow of $57 million, up 136% from previous quarter
  • Net Revenue Retention Rate: 110%, in line with previous quarter
  • Customers: 905, up from 890 in previous quarter
  • Gross Margin (GAAP): 72.1%, up from 68.4% same quarter last year

“We delivered another solid quarter and our results underscore the critical value our Safe Haven® enterprise platform delivers to customers,” said LiveRamp CEO Scott Howe.

Started in 2011 as a spin-out of RapLeaf, LiveRamp (NYSE:RAMP) provides software as a service that helps companies better target their marketing by merging offline and online data about their customers.

The digital advertising market is large, growing and becoming more diverse, both in terms of audiences and media. This as a result drives a growing need for a software that enables advertisers to use data to automate and optimize ad placements.

Sales Growth

As you can see below, LiveRamp's revenue growth has been solid over the last year, growing from quarterly revenue of $119.1 million, to $141.7 million.

LiveRamp Total Revenue

This quarter, LiveRamp's quarterly revenue was once again up 18.9% year on year. But the growth did slow down compared to last quarter, as the revenue increased by just $1.12 million in Q4, compared to $13.3 million in Q3 2022. We'd like to see revenue increase by a greater amount each quarter, but a one-off fluctuation is usually not concerning.

Guidance for the next quarter indicates LiveRamp is expecting revenue to grow 16.7% year on year to $139 million, slowing down from the 19.7% year-over-year increase in revenue the company had recorded in the same quarter last year. For the upcoming financial year management expects revenue to be $616.5 million at the midpoint, growing 16.6% compared to 19.4% increase in FY2022.

In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. You can find it on our platform for free.

Product Success

One of the best things about software as a service businesses (and a reason why they trade at such high multiples) is that customers tend to spend more with the company over time.

LiveRamp Net Revenue Retention Rate

LiveRamp's net revenue retention rate, an important measure of how much customers from a year ago were spending at the end of the quarter, was at 110% in Q4. That means even if they didn't win any new customers, LiveRamp would have grown its revenue 10% year on year. Trending up over the last year, this is a decent retention rate and it shows us that not only LiveRamp's customers stick around but at least some of them get increasing value from its software over time.

Key Takeaways from LiveRamp's Q4 Results

With a market capitalization of $1.7 billion LiveRamp is among smaller companies, but its more than $600.1 million in cash and positive free cash flow over the last twelve months give us confidence that LiveRamp has the resources it needs to pursue a high growth business strategy.

LiveRamp topped analysts’ revenue expectations this quarter, even if just narrowly. On the other hand, it was unfortunate to see that LiveRamp's revenue guidance for the full year missed analysts' expectations. Overall, it seems to us that this was a complicated quarter for LiveRamp. The company is down 1.12% on the results and currently trades at $22.75 per share.

LiveRamp may have had a tough quarter, but does that actually create an opportunity to invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.