LiveRamp (NYSE:RAMP) Q2 Sales Beat Estimates, Stock Soars

Adam Hejl /
2021/11/02 5:21 pm EDT

Advertising data platform LiveRamp (NYSE:RAMP) beat analyst expectations in Q2 FY2022 quarter, with revenue up 21.6% year on year to $127.2 million. On the other hand, guidance for the next quarter slightly missed analyst expectations with revenues guided to $139 million, or 0.72% below analyst estimates. LiveRamp made a GAAP loss of $6.43 million, improving on its loss of $23.9 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) Q2 FY2022 Highlights:

  • Revenue: $127.2 million vs analyst estimates of $124.1 million (2.56% beat)
  • EPS (non-GAAP): $0.26 vs analyst estimates of $0.05 ($0.21 beat)
  • Revenue guidance for Q3 2022 is $139 million at the midpoint, below analyst estimates of $140 million
  • The company reconfirmed revenue guidance for the full year, at $525 million at the midpoint
  • Free cash flow of $10 million, up from negative free cash flow of -$17.67 million in previous quarter
  • Net Revenue Retention Rate: 108%, in line with previous quarter
  • Customers: 870, up from 855 in previous quarter
  • Gross Margin (GAAP): 72.4%, up from 66.6% same quarter last year

“LiveRamp is making it safe and easy for companies to use their data, and many of the world’s most successful companies are embracing LiveRamp,” 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 advertising market is massive, growing and becoming more diverse, both in terms of audiences and media. This as a result drives a growing need to automate and optimize ad placements, which requires reliable data, and that is where platforms like LiveRamp come into play.

Sales Growth

As you can see below, LiveRamp's revenue growth has been decent over the last year, growing from quarterly revenue of $104.6 million, to $127.2 million.

LiveRamp Total Revenue

This quarter, LiveRamp's quarterly revenue was once again up a very solid 21.6% year on year. On top of that, revenue increased $8.25 million quarter on quarter, a strong improvement on the $137 thousand decrease in Q1 2022, and a sign of re-acceleration of growth, which is very nice to see indeed.

Analysts covering the company are expecting the revenues to grow 17.7% over the next twelve months, although estimates are likely to change post earnings.

There are others doing even better than LiveRamp. Founded by ex-Google engineers, a small company making software for banks has been growing revenue 90% year on year and is already up more than 400% since the IPO in December. 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. That 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 Q2 Results

With a market capitalization of $3.73 billion LiveRamp is among smaller companies, but its more than $535.5 million in cash and the fact it is operating close to free cash flow break-even put it in a robust financial position to invest in growth.

It was good to see LiveRamp outperform Wall St’s revenue expectations this quarter. And we were also glad to see the improvement in gross margin. On the other hand, it was unfortunate to see the slowdown in customer growth and revenue guidance for the next quarter missed analysts' expectations. Overall, this quarter's results could have been better but investors seem to receive the news positively as the company is up 5.05% on the results and currently trades at $56.1 per share. The company is up 5.05% on the results and currently trades at $56.1 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.

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