LiveRamp Holdings, Inc. ((RAMP)) has held its Q3 earnings call. Read on for the main highlights of the call.
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LiveRamp Holdings, Inc. has delivered a positive earnings call, emphasizing strong financial performance characterized by record operating margins, sustained revenue growth, and robust sales momentum. Despite facing some pressure on customer count and a minor decrease in gross margin, the company remains optimistic about its strategic initiatives and maintains a healthy pipeline.
Record-Breaking Operating Margin
LiveRamp achieved a record quarterly operating margin of 23%, marking an increase of over two percentage points. This significant improvement highlights the company’s operational efficiency and strategic focus on cost management.
Fourth Consecutive Quarter of Double-Digit Revenue Growth
The company reported a 12% increase in revenue, marking the fourth consecutive quarter of double-digit growth. This consistent growth underscores LiveRamp’s strong market position and ability to capitalize on favorable industry trends.
Strong Sales Momentum
Sales momentum has significantly rebounded, driven by improved IT spending and strategic focus. The pipeline conversion rates have materially improved, showcasing LiveRamp’s ability to adapt and thrive in a dynamic market environment.
Rule of 40 Progress
LiveRamp is on track to reach or surpass the Rule of 30 by FY 2025, with expectations of an 18% operating margin and 12% to 13% revenue growth. This progress indicates a balanced approach to growth and profitability.
Growth in Data Marketplace
Marketplace and other revenue grew by 20%, reaching $50 million, with Connected TV (CTV) revenue contributing roughly 20% of the data marketplace revenue. This growth highlights LiveRamp’s expanding footprint in the digital advertising space.
High Subscription Net Retention
Subscription net retention has improved to a 10-quarter high of 108%, reflecting strong customer loyalty and the effectiveness of LiveRamp’s subscription model.
Pressure on Total Customer Count
The company faced pressure on total customer count due to market consolidation and a shift from direct to reseller arrangements for small international customers. This change reflects evolving market dynamics and strategic adjustments.
Slight Decline in Gross Margin
Gross margin saw a slight decline to approximately 74%, down 0.5 points year-on-year. Despite this minor decrease, the overall financial health of the company remains robust.
Seasonal Increase in Operating Expenses
Operating expenses for the fourth quarter are expected to rise due to seasonal factors and a shift in project spending from the third quarter. This increase is anticipated and accounted for in the company’s strategic planning.
Forward-Looking Guidance
LiveRamp provided significant guidance during the earnings call, forecasting continued revenue growth and operational success. The company expects to achieve 10% to 15% annual revenue growth with an operating margin of 20% to 25% for FY 2026. This outlook is supported by ongoing cost discipline and strategic investments, positioning LiveRamp for sustained success in the coming years.
In summary, LiveRamp Holdings, Inc. has demonstrated a strong financial performance, marked by record operating margins and consistent revenue growth. While facing some challenges, the company’s strategic initiatives and positive outlook provide a solid foundation for future growth and profitability.
