LiveRamp (NYSE:RAMP) Surprises With Strong Q1, Stock Soars

Radek Strnad /
2021/08/05 4:21 pm EDT

Advertising data platform LiveRamp (NYSE:RAMP) reported strong growth in the Q1 FY2022 earnings announcement, with revenue up 19.7% year on year to $119 million. LiveRamp made a GAAP profit of $17.3 million, improving on its loss of $21.7 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) Q1 FY2022 Highlights:

  • Revenue: $119 million vs analyst estimates of $111.9 million (6.29% beat)
  • EPS (non-GAAP): $0.09 vs analyst estimates of -$0.02 ($0.11 beat)
  • Revenue guidance for Q2 2022 is $124 million at the midpoint, above analyst estimates of $121.6 million
  • The company lifted revenue guidance for the full year, from $509 million to $522 million at the midpoint, a 2.55% increase
  • Free cash flow was negative -$17.67 million, compared to negative free cash flow of -$18.27 million in previous quarter
  • Net Revenue Retention Rate: 108%, up from 104% previous quarter
  • Customers: 855, up from 825 in previous quarter
  • Gross Margin (GAAP): 71.1%, up from 68.4% previous quarter

“Global companies are increasingly turning to LiveRamp to power their customer data strategies and momentum across our key expansion levers continues to build,” said LiveRamp CEO Scott Howe.

Founded in 2011, LiveRamp 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 $99.4 million, to $119 million.

LiveRamp Total Revenue

This quarter, LiveRamp's quarterly revenue was once again up 19.7% year on year. We can see that the company decreased revenue by $137 thousand quarter on quarter. That's on top of the $578 thousand decrease in Q4 2021.

Analysts covering the company are expecting the revenues to grow 14.9% over the next twelve months, although we would expect them to review their estimates once they get to read these results.

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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 Q1. That means even if they didn't win any new customers, LiveRamp would have grown its revenue 8% year on year. Significantly up from the last quarter, this 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 Q1 Results

With market capitalisation of $2.64 billion LiveRamp is among smaller companies, but its more than $541 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.

We were very impressed by LiveRamp’s very strong acceleration in customer growth this quarter. And we were also excited to see it that it outperformed Wall St’s revenue expectations. Zooming out, we think this was a fantastic quarter that should have shareholders cheering. The company is up 7.69% on the results and currently trades at $41.85 per share.

LiveRamp may have had a good quarter, so should you 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 full report which you can read here, it's free.

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