LiveRamp (NYSE:RAMP) Exceeds Q2 Expectations, Stock Jumps 18.4%

Adam Hejl /
2022/11/08 4:19 pm EST

Advertising data platform LiveRamp (NYSE:RAMP) reported Q2 FY2023 results topping analyst expectations, with revenue up 15.5% year on year to $147 million. Guidance for next quarter's revenue was $158 million at the midpoint, 3.19% above the average of analyst estimates. LiveRamp made a GAAP loss of $30.4 million, down on its loss of $6.43 million, in the same quarter last year.

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LiveRamp (RAMP) Q2 FY2023 Highlights:

  • Revenue: $147 million vs analyst estimates of $143.3 million (2.6% beat)
  • EPS (non-GAAP): $0.22 vs analyst estimates of $0.09 ($0.13 beat)
  • Revenue guidance for Q3 2023 is $158 million at the midpoint, above analyst estimates of $153.1 million
  • The company reconfirmed revenue guidance for the full year, at $597.5 million at the midpoint
  • Free cash flow of $18.7 million, up from negative free cash flow of $35.1 million in previous quarter
  • Net Revenue Retention Rate: 108%, down from 113% previous quarter
  • Customers: 920, up from 910 in previous quarter
  • Gross Margin (GAAP): 71.2%, down from 72.4% same quarter last year

“Despite challenging macroeconomic conditions, we delivered healthy second quarter results, with 16% revenue growth and strong free cash flow,” 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 mediocre over the last two years, growing from quarterly revenue of $104.6 million in Q2 FY2021, to $147 million.

LiveRamp Total Revenue

This quarter, LiveRamp's quarterly revenue was once again up 15.5% year on year. We can see that the company increased revenue by $4.85 million quarter on quarter. That's a solid improvement on the $518 thousand increase in Q1 2023, so shareholders should appreciate the acceleration of growth.

Guidance for the next quarter indicates LiveRamp is expecting revenue to grow 12.3% year on year to $158 million, slowing down from the 17.4% year-over-year increase in revenue the company had recorded in the same quarter last year. Ahead of the earnings results the analysts covering the company were estimating sales to grow 10.1% over the next twelve months.

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 108% in Q2. That means even if they didn't win any new customers, LiveRamp would have grown its revenue 8% year on year. Despite the recent drop this is still a decent retention rate and it shows us that LiveRamp's customers stick around and at least some of them get increasing value from its software over time.

Key Takeaways from LiveRamp's Q2 Results

With a market capitalization of $1.07 billion LiveRamp is among smaller companies, but its more than $485.6 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.

We were very impressed by LiveRamp’s very strong acceleration in customer growth this quarter. And we were also glad that the revenue guidance for the next quarter exceeded analysts' expectations. On the other hand, it was less good to see the deterioration in revenue retention rate and revenue growth is slower these days. Overall, this quarter's results still seemed pretty positive and shareholders can feel optimistic. The company is up 18.4% on the results and currently trades at $18.48 per share.

Should you invest in LiveRamp 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.

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