LiveRamp Holdings Inc
For the period ended Jun 30, 2024. Filed Aug 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 7, 2024
RAMP$38.50+0.7%Stored close · as of Oct 30, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-12-31; filed 2024-02-08.
0000733269-24-000007
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0000733269-24-000027
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 125 previous paragraphs and 110 current paragraphs.
54 unchanged; 43 reworded; 13 added; 24 removed; 4 previous and 0 current paragraphs rearranged.
Tables are not compared: 8 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
The /LiveRamp Data Collaboration Platform provides customers with four core capabilities:
Current report
•Revenues were $176.0 million, a 14.2% increase from $154.1 million.
Current report
•Cost of revenue was $51.7 million, a 13.4% increase from $45.6 million.
Current report
•Total operating expenses were $129.5 million, a 21.9% increase from $106.2 million.
Current report
•Total other income, net was $4.4 million, a decrease of $0.4 million from $4.8 million.
Current report
•Net cash used in operating activities was $9.3 million compared to net cash provided by operating activities of $25.7 million.
Current report
SNR at June 30, 2024 compared to June 30, 2023 increased 7%. Lower contraction levels and increasing usage revenue were the primary contributors to the improvement. The acquisition of Habu contributed approximately three percentage points to the current period growth.
Current report
Our ARR growth of 12% was attributable to both new customer revenue and net growth (upsell revenue less downsell and churn) in existing customer revenue. The increasing growth rate compared to the 4% growth in the previous year is due to improvement in net growth in existing customer revenue. The acquisition of Habu contributed approximately two percentage points to the current period growth.
Current report
R&D expenses were $44.1 million for the quarter ended June 30, 2024, an increase of $9.6 million, or 27.8%, compared to the same quarter a year ago, and are 25.1% of total revenues compared to 22.4% in the same quarter a year ago. The increase is primarily due to stock-based compensation expense (increased $5.1 million), headcount related expenses (increased $4.0 million) and professional services expenses (increased $0.5 million). Stock-based compensation expense in the prior year quarter was favorably impacted due to the acceleration of stock-based compensation expense in the fourth quarter of fiscal 2023.
Current report
S&M expenses were $54.2 million for the quarter ended June 30, 2024, an increase of $9.3 million, or 20.7%, compared to the same quarter a year ago, and are 30.8% of total revenues compared to 29.1% in the same quarter a year ago. The increase is primarily due to stock-based compensation expense (increased $3.4 million), headcount related expenses (increased $3.1 million), marketing expenses (increased $1.1 million) and professional services expenses (increased $1.0 million). Stock-based compensation expense in the prior year quarter was favorably impacted due to the acceleration of stock-based compensation expense in the fourth quarter of fiscal 2023.
Current report
G&A expenses were $31.0 million for the quarter ended June 30, 2024, an increase of $4.3 million, or 16.1%, compared to the same quarter a year ago, and are 17.6% of total revenues compared to 17.3% in the same quarter a year ago. The increase is primarily due to stock-based compensation expense (increased $5.2 million) and professional services expenses (increased $0.8 million), offset partially by a decrease in transformation costs (decreased $1.9 million). Stock-based compensation expense in the prior year quarter was favorably impacted due to the acceleration of stock-based compensation expense in the fourth quarter of fiscal 2023.
Current report
Total Other Income and Income Taxes
Current report
Total other income was $4.4 million for the quarter ended June 30, 2024 compared to total other income of $4.8 million in the same quarter a year ago. Other income is primarily interest income related to invested cash balances.
Removed paragraphs (24)
Previous report
•Revenues were $173.9 million, a 9.6% increase from $158.6 million.
Previous report
•Cost of revenue was $44.9 million, a 3.8% increase from $43.3 million.
Previous report
•Total operating expenses were $113.7 million, an 18.3% decrease from $139.3 million.
Previous report
•Total other income, net was $6.6 million, an increase of $7.3 million from total other expense, net of $0.7 million.
Previous report
•Net cash provided by operating activities was $16.6 million compared to $15.8 million.
Previous report
Recent Development
Previous report
On January 31, 2024, the Company completed the acquisition of Habu, Inc. ("Habu"), a data clean room software provider that works with global brands and companies to securely share first-party customer data with business partners and publishers to enable more effective and personalized marketing, for approximately $174 million in cash. The aggregate value of merger consideration with respect to assumed unvested stock options and consideration holdback amounts under holdback agreements with certain key employees is expected to equal approximately $26 million and will be reported as non-cash stock compensation over the applicable vesting periods. In connection with the acquisition, the Company assumed approximately $16 million of unvested restricted stock units to induce certain employees of Habu to accept employment with the Company.
Previous report
SNR at December 31, 2023 compared to December 31, 2022 was flat. Increasing levels of downsell and churn activity continue to substantially offset customer upsell revenue. The levels of downsell and churn activity were driven in part by budget and economic pressures on our customers.
Previous report
Our ARR growth of 6.0% was primarily attributable to new customer revenue. The lower growth rate compared to the 10.6% growth in the previous year is due to similar reasons as those impacting SNR results, namely downsell and churn from customers, due in part to budget pressures, offsetting existing customer upsell activity in the current period as well as lower contribution from new customer activity.
Previous report
Total revenues for the nine months ended December 31, 2023 were $487.8 million, a $39.9 million or 8.9% increase compared to the same period a year ago. The increase was due to revenue growth in both Subscription and Marketplace and Other. Subscription revenue growth was $18.1 million, or 5.0%, primarily due to upsell to existing customers, new logo deals and higher variable revenue. Subscription revenue in the prior year also included a one-time $4.0 million positive revenue impact stemming from a customer contract settlement. Marketplace and Other revenue growth was $21.8 million, or 25.3%, primarily due to Data Marketplace and Services volume growth. On a geographic basis, U.S. revenue increased $39.3 million, or 9.4%. International revenue increased $0.6 million, or 1.9%. The differences in exchange rates in the current year compared to those in the prior year favorably impacted international revenue growth by approximately 3 percentage points.
Previous report
Cost of revenue was $131.8 million for the nine months ended December 31, 2023, a $5.2 million, or 4.1%, increase from the same period a year ago. Gross margins increased to 73.0% from 71.7% in the prior year due to revenue increases and a $7.8 million decrease in intangible amortization offset partially by an increase in cost of revenue primarily from services support costs. U.S. gross margins increased to 75.0% from 73.1%, and International gross margins decreased to 43.1% from 53.2%.
Previous report
R&D expenses were $37.8 million for the quarter ended December 31, 2023, a decrease of $5.4 million, or 12.5%, compared to the same quarter a year ago, and are 21.7% of total revenues compared to 27.2% in the same quarter a year ago. The decrease is primarily due to stock-based compensation expense (decreased $3.7 million), hosting and software expenses (decreased $0.7 million) and professional services (decreased $0.4 million). Headcount related expenses were approximately flat.
Previous report
R&D expenses were $106.0 million for the nine months ended December 31, 2023, a decrease of $30.9 million, or 22.6%, compared to the same period a year ago, and are 21.7% of total revenues compared to 30.6% in the prior year. The decrease is primarily due to stock-based compensation expense (decreased $17.3 million), headcount related costs (employee-related expenses decreased $8.0 million primarily as a result of the headcount reduction that occurred in the quarter ended December 31, 2022) and professional services (decreased $1.3 million). The decrease in stock-based compensation is primarily due to the prior year-end accelerated vesting of awards that would have otherwise vested over the first six months of fiscal 2024 to take advantage of cash tax savings opportunities.
Previous report
S&M expenses were $46.2 million for the quarter ended December 31, 2023, a decrease of $1.5 million, or 3.1%, compared to the same quarter a year ago, and are 26.6% of total revenues compared to 30.1% in the same quarter a year ago. The decrease is primarily due to stock-based compensation expense (decreased $1.8 million) and professional services (decreased $0.4 million), offset partially by an increase in headcount related costs due to incentive compensation.
Previous report
S&M expenses were $135.2 million for the nine months ended December 31, 2023, a decrease of $9.7 million, or 6.7%, compared to the same period a year ago, and are 27.7% of total revenues compared to 32.4% in the prior year. The decrease is primarily due to stock-based compensation expense (decreased $5.3 million), professional services (decreased $1.8 million), and administrative expenses (decreased $1.5 million from lower bad debt expense). The decrease in stock-based compensation is primarily due to the prior year-end accelerated vesting of awards that would have otherwise vested over the first six months of fiscal 2024 to take advantage of cash tax savings opportunities.
Previous report
G&A expenses were $27.2 million for the quarter ended December 31, 2023, a decrease of $9.4 million, or 25.7%, compared to the same quarter a year ago, and are 15.7% of total revenues compared to 23.1% in the same quarter a year ago. The decrease is primarily due to decreases in stock-based compensation expense (decreased $6.3 million) and transformation costs (decreased $4.1 million), offset partially by an increase in headcount related costs due to incentive compensation.
Previous report
G&A expenses were $79.9 million for the nine months ended December 31, 2023, a decrease of $12.6 million, or 13.6%, compared to the same period a year ago, and are 16.4% of total revenues compared to 20.7% in the prior year. The decrease is primarily due to decreases in stock-based compensation expense (decreased $10.4 million) and transformation costs (decreased $3.5 million), offset partially by higher employee-related expenses due to increased incentive compensation costs. The decrease in stock-based compensation is primarily due to the prior year-end accelerated vesting of awards that would have otherwise vested over the first six months of fiscal 2024 to take advantage of cash tax savings opportunities and current period forfeitures.
Previous report
Gains, losses and other items, net was $9.2 million for the nine months ended December 31, 2023, a decrease of $16.4 million compared to the same period a year ago. The current year amount includes $2.8 million related to the impairment of APAC goodwill, $2.3 million in lease impairments and restructuring, $2.8 million related to termination benefits for employees whose positions were or will be eliminated, and $1.2 million of third party merger costs associated with the Habu acquisition. The prior year amount included $15.5 million in lease impairments and restructuring, and $7.4 million related to termination benefits for employees whose positions were eliminated.
Previous report
Income from operations was $25.7 million for the nine months ended December 31, 2023 compared to a loss from operations of $78.7 million in the same period a year ago. Operating margin was positive 5.3% compared to negative 17.6% in the prior year. Margins were positively impacted by revenue growth, and operating expense reductions related to the prior year headcount reduction, reduced stock-based compensation due to prior year accelerated vesting of awards, and lower gains, losses and other items.
Previous report
Total Other Income (Expense) and Income Taxes
Previous report
Total other income was $6.6 million for the quarter ended December 31, 2023 compared to total other expense of $0.7 million in the same quarter a year ago. Total other income was $17.9 million for the nine months ended December 31, 2023 compared to $2.2 million in the same period a year ago. The quarter and year-to-date increases are primarily attributable to higher interest rates on invested cash and short-term investments, and a $4.1 million impairment of a strategic investment in the prior year.
Previous report
Discontinued Operations
Previous report
Earnings from discontinued operations, net of tax, was $0.6 million for the three months ended December 31, 2023 compared to $0.8 million in the same quarter a year ago. Earnings from discontinued operations, net of tax, was $1.0 million for the nine months ended December 31, 2023 compared to $0.8 million in the same period a year ago. During fiscal 2019, the Company completed the sale of its Acxiom Marketing Solutions ("AMS") business, and the business qualified for treatment as discontinued operations. Significant income taxes were incurred and paid on the gain from the sale of AMS. During fiscal 2024 and fiscal 2023, the Company recovered certain previously paid state income taxes arising from the sale of AMS.
Previous report
Pursuant to the Inflation Reduction Act of 2022 (the "Act"), share repurchases made after December 31, 2022 are subject to a 1% excise tax. In determining the total taxable value of shares repurchased, a deduction is allowed for the fair market value of any newly issued shares during the fiscal year. The excise tax and other corporate income tax changes included in the Act did not have, and are not expected to have, a material impact on our condensed consolidated financial statements.
Reworded paragraphs (43)
Previous wording
LiveRamp Holdings, Inc. ("LiveRamp", "we", "us", or the "Company") is a global technology company that helps companies build enduring brand and business value by collaborating responsibly with data. A groundbreaking leader in consumer privacy, data ethics and foundational identity, LiveRamp offers a connected customer view with unmatched clarity and context while protecting brand and consumer trust. Our best-in-class enterprise platform enables data collaboration, where companies can share first-party consumer data with trusted business partners securely and in a privacy conscious manner. We offer flexibility to collaborate wherever data lives to support a wide range of data collaboration use cases—within organizations, between brands, and across our global network of premier partners. Global innovators, from iconic consumer brands and tech platforms to retailers, financial services, and healthcare leaders, turn to LiveRamp to deepen customer engagement and loyalty, activate new partnerships, and maximize the value of their first-party data while staying on the forefront of rapidly evolving compliance and privacy requirements.
Current wording
LiveRamp Holdings, Inc. ("LiveRamp", "we", "us", or the "Company") is a global technology company that helps companies build enduring brand and business value by collaborating responsibly with data. A groundbreaking leader in consumer privacy, data ethics and foundational identity, LiveRamp offers a connected customer view with clarity and context while protecting brand and consumer trust. Our best-in-class enterprise platform enables data collaboration, where companies can share first-party consumer data with trusted business partners securely and in a privacy conscious manner. We offer flexibility to collaborate wherever data lives to support a wide range of data collaboration use cases—within organizations, between brands, and across our global network of premier partners. Global innovators, from iconic consumer brands and tech platforms to retailers, financial services, and healthcare leaders, turn to LiveRamp to deepen customer engagement and loyalty, activate new partnerships, and maximize the value of their first-party data while staying on the forefront of rapidly evolving compliance and privacy requirements.
Previous wording
LiveRamp recognizes revenue from the following sources: (i) Subscription revenue, which consists primarily of subscription fees from customers accessing our platform; and (ii) Marketplace and Other revenue, which primarily consists of revenue-sharing fees generated from data transactions through our LiveRamp Data Marketplace, transactional usage-based revenue from arrangements with certain publishers and addressable TV providers, and professional services.
Current wording
LiveRamp recognizes revenue from the following sources: (i) Subscription revenue, which consists primarily of subscription fees from customers accessing our platform; and (ii) Marketplace and Other revenue, which primarily consists of revenue-sharing fees generated from data transactions through our LiveRamp Data Marketplace, transactional usage-based revenue from arrangements with certain publishers and addressable TV providers, and professional services fees.
Previous wording
As depicted in the graphic below, we power the industry’s leading enterprise platform for data collaboration. We enable organizations to access and leverage data more effectively across the applications they use to interact with their customers. At the core of our platform is an omnichannel, deterministic identity resolution technology that offers unparalleled accuracy, breadth, and depth. Leveraging deep expertise in data collaboration, the LiveRamp Data Collaboration platform (formerly branded as Safe Haven) enables an organization to unify customer and prospect data (first-, second-, or third-party) to build a single view of the customer in a way that protects consumer privacy. This single customer view can then be enhanced and activated across any of the over 500 partners in our ecosystem in order to support a variety of people-based marketing solutions, including:
Current wording
As depicted in the graphic below, we power the industry’s leading enterprise platform for data collaboration. We enable organizations to access and leverage data more effectively across the applications they use to interact with their customers. At the core of our platform is an omnichannel, deterministic identity resolution technology that offers unparalleled accuracy, breadth, and depth. Leveraging deep expertise in data collaboration, the /LiveRamp Data Collaboration Platform enables an organization to unify customer and prospect data (first-, second-, or third-party) to build a single view of the customer in a way that protects consumer privacy. First-party data is data collected firsthand through a company's controlled channels. Second-party data is data that a company shares directly with a trusted business partner. Third-party data is data collected and sold by a company through an online data marketplace to companies with which it does not have a direct relationship. This single customer view can then be connected across any of the 500 partners in our ecosystem in order to support a variety of people-based marketing solutions.
Previous wording
•Identity. We provide enterprise-level identity solutions that enable organizations to: 1) resolve and connect disparate identities, 2) enrich data sets with hygiene capabilities and additional audience data from the LiveRamp Data Marketplace providers, and 3) translate data between different systems. Our approach to identity is built from two complementary graphs, combining offline data and online data and providing accuracy with a focus on privacy. LiveRamp technology for DII gives brands and platforms the ability to connect and update what they know about consumers, resolving DII across enterprise databases and systems to deliver better customer experiences. Our digital identity graph powered by our Authenticated Traffic Solution (or "ATS") associates pseudonymous device IDs, TV IDs and other online customer IDs from premium publishers, platforms or data providers, around a RampID. This allows marketers to perform personalized segmentation, targeting, and measurement in use cases that require a consistent view of the user. There are currently more than 165 supply-side platforms and demand-side platforms live or committed to bid on RampID or ATS. In addition, to date more than 18,000 publisher domains, and 70% of the comScore 100 largest digital publishers, have adopted ATS.
Current wording
•Live/Identity. We provide enterprise identity infrastructure that resolves disparate consumer identities across different internal and external systems to create an accurate, connected view of the customer. Our approach to identity is built from two complementary graphs, combining offline data and online data and providing accuracy with a focus on privacy. LiveRamp technology for directly identifiable information (or "DII") gives brands and platforms the ability to connect and update what they know about consumers, resolving DII across enterprise databases and systems to deliver better customer experiences. Our digital identity graph, powered by our Authenticated Traffic Solution (or "ATS"), associates pseudonymous device IDs, TV IDs and other online customer IDs from premium publishers, platforms or data providers, around a RampIDTM, a durable and privacy-centric connector to the digital ecosystem. This provides marketers with a consistent view of the consumer that is necessary for personalized segmentation, targeting, and measurement.
Previous wording
•Data Marketplace. Our Data Marketplace provides customers with simplified access to industry-leading third-party data providers globally. The LiveRamp Data Collaboration Platform allows for the search, discovery and distribution of data from data providers to improve targeting, measurement, and customer intelligence. Our customers may license data through the LiveRamp Data Marketplace and connect via RampID to enrich their first-party data, leveraging across technology and media platforms, agencies, analytics environments, and TV partners. Our platform provides tools for data providers to manage the organization, distribution, and operation of their data and services across our network of customers and partners. Today we work with approximately 200 data providers across all verticals and many data types (see below for discussion on Marketplace and Other).
Current wording
•Live/Access. Our Data Marketplace provides customers with simplified access to industry-leading third-party data providers globally. The /LiveRamp Data Collaboration Platform allows for the search, discovery and distribution of data provided by third-party data providers to improve targeting, measurement, and customer intelligence. Data accessed through the LiveRamp Data Marketplace is connected via RampID and is utilized to enrich our customers’ first-party data and can be leveraged across technology and media platforms, agencies, analytics environments, and TV partners. Our platform also provides tools for data providers to manage the organization, distribution, and operation of their data and services across our network of customers and partners. Today we work with more than 200 data providers across all verticals and data types.
Previous wording
•Activation. We enable organizations to leverage their customer and prospect data in the digital and TV ecosystems and across the customer experience applications they use through a safe and secure data matching process called data onboarding. Our technology ingests a customer’s first-party data, removes all offline data (directly identifiable information or "DII"), and replaces them with pseudonymized IDs called RampID™, a durable identifier for connecting to the digital ecosystem. RampID can then be distributed through direct integrations to the top platforms our customers work with, including leading marketing cloud providers, publishers and social networks, personalization tools, and connected TV services.
Current wording
•Live/Connectivity. We enable organizations to leverage their customer and prospect data in the digital and TV ecosystems and across the customer experience applications they use through a safe and secure data matching process called data onboarding. Our technology ingests a customer’s first-party data, removes all DII, and replaces it with a pseudonymized RampID. RampID can then be distributed through direct integrations to the top platforms our customers work with, including leading marketing cloud providers, publishers and social networks, personalization tools, and connected TV services. We connect data across an ecosystem of more than 500 partners, representing one of the largest networks of connections in the digital marketplace.
Previous wording
•Measurement & Analytics. We power more accurate, more complete measurement with the measurement vendors and partners our customers use. Our platform allows our customers to combine disparate data files (typically ad exposure and customer events, such as transactions), replacing customer identifiers with RampID. Our customers then can use that aggregated view of each customer for measurement of reach and frequency, sales lift, closed loop offline to online conversion and cross-channel attribution.
Current wording
•Live/Insights. Data Collaboration enables advanced measurement and analytics that helps produce insight-driven innovation. We enable trusted data collaboration between organizations and their trusted partners in a neutral, manageable environment. Our platform provides customers with collaborative opportunities to safely and securely build a more accurate, dynamic view of their customers by leveraging partner data. We power more accurate, more complete measurement with the measurement vendors and partners our customers use. Our platform allows customers to combine disparate data files, typically advertising exposure and customer sales transactions, replacing customer identifiers with RampID. Customers then can use that aggregated view of each customer to measure reach and frequency, sales lift, closed loop offline-to-online conversion and cross-channel attribution.
Previous wording
Our solutions are sold to enterprise marketers and the companies they partner with to execute their marketing, including agencies, marketing technology providers, publishers and data providers. Today, we work with 895 direct customers world-wide and serve thousands of additional customers indirectly through our reseller partnership arrangements.
Current wording
Our solutions are sold to enterprise marketers and the companies they partner with to execute their marketing, including agencies, marketing technology providers, publishers and data providers. Today, we work with 900 direct customers world-wide and serve thousands of additional customers indirectly through our reseller partnership arrangements.
Previous wording
We generate revenue from the Data Marketplace primarily through revenue-sharing arrangements with data sellers that are monetizing their data assets via our marketplace platform service. We also generate Marketplace and Other revenue through transactional usage-based arrangements with certain publishers and addressable TV providers.
Current wording
We generate revenue from the Data Marketplace primarily through revenue-sharing arrangements with data sellers that are monetizing their data assets via our marketplace platform service. We also generate Marketplace and Other revenue through transactional usage-based arrangements with certain publishers and addressable TV providers. Data Marketplace revenue is recognized net of the share of revenue earned by the data seller.
Previous wording
To complement our product offering, we provide professional services and enhanced support entitlements to help customers leverage our platform and drive business outcomes. Our services offering includes product implementation, data science analytics, audience measurement and general advisory. We generate revenue from services primarily from project fees paid by subscribers to our platform. Service projects are sold on an ad hoc basis as well as bundled with platform subscriptions. Services revenue is less than 5% of total Company revenue.
Current wording
To complement our product offering, we provide professional services and enhanced support entitlements to help customers leverage our platform and drive business outcomes. Our services offering includes product implementation, data science analytics, audience measurement and general advisory. We generate revenue from services primarily from project fees paid by subscribers to our platform. Service projects are sold on an ad hoc basis as well as bundled with platform subscriptions. Professional services revenue is approximately 4% of total Company revenue.
Previous wording
•Gross margin increased to 74.2% from 72.7%.
Current wording
•Gross margin increased to 70.6% from 70.4%.
Previous wording
◦Non-cash stock compensation of $17.5 million and $29.6 million, respectively (cost of revenue of $0.8 million and $1.2 million, respectively, and operating expenses of $16.7 million and $28.4 million, respectively)
Current wording
◦Non-cash stock compensation of $28.0 million and $13.3 million, respectively (cost of revenue of $1.6 million and $0.6 million, respectively, and operating expenses of $26.4 million and $12.7 million, respectively)
Previous wording
◦Purchased intangible asset amortization of $1.2 million and $4.2 million, respectively (cost of revenue)
Current wording
◦Purchased intangible asset amortization of $3.8 million and $3.3 million, respectively (cost of revenue)
Previous wording
◦Restructuring charges of $2.5 million and $11.7 million, respectively (gains, losses, and other items, net)
Current wording
◦Restructuring and other charges of $0.2 million and $0.1 million, respectively (gains, losses, and other items, net)
Previous wording
•Net earnings were $14.0 million, or $0.21 per diluted share compared to net loss of $29.7 million, or $0.46 per diluted share.
Current wording
•Net loss was $7.5 million, or $0.11 per diluted share, compared to net loss of $1.6 million, or $0.02 per diluted share.
Previous wording
•The Company repurchased 0.3 million shares of its common stock for $10.0 million compared to 2.3 million shares for $49.9 million under the Company's common stock repurchase program.
Current wording
•The Company repurchased 0.5 million shares of its common stock for $15.8 million compared to 0.8 million shares for $20.2 million under the Company's common stock repurchase program.
Previous wording
This summary and the following discussion and analysis highlight financial results as well as other significant events and transactions of the Company during the fiscal quarter ended December 31, 2023 compared to the same period in fiscal 2023, unless otherwise stated. However, this summary is not intended to be a full discussion of the Company's results. This summary should be read in conjunction with the following discussion of Results of Operations and Capital Resources and Liquidity and with the Company's condensed consolidated financial statements and footnotes accompanying this report.
Current wording
This summary and the following discussion and analysis highlight financial results as well as other significant events and transactions of the Company during the quarter ended June 30, 2024 compared to the same period in fiscal 2024, unless otherwise stated. However, this summary is not intended to be a full discussion of the Company's results. This summary should be read in conjunction with the following discussion of Results of Operations and Capital Resources and Liquidity and with the Company's condensed consolidated financial statements and footnotes accompanying this Quarterly Report on Form 10-Q.
Previous wording
Remaining performance obligations (“RPO”) is defined as all future revenue under contract that has not yet been recognized as revenue. Future invoicing is determined to be certain when we have an executed non-cancellable contract or a significant penalty that is due upon cancellation, and invoicing is not dependent on a future event such as the delivery of a specific new product or feature, or the achievement of contractual contingencies. Current RPO
Current wording
Remaining performance obligations (“RPO”) is defined as all future revenue under contract that has not yet been recognized as revenue. Future invoicing is determined to be certain when we have an executed non-cancellable contract or a significant penalty that is due upon cancellation, and invoicing is not dependent on a future event such as the delivery of a specific new product or feature, or the achievement of contractual contingencies. Current RPO ("CRPO") represents RPO to be recognized over the next twelve months.
Previous wording
While the Company believes RPO, CRPO, and Subscription CRPO are leading indicators of revenue as they represent sales activity not yet recognized in revenue, they are not necessarily indicative of future revenue growth as they are influenced by several factors, including seasonality of contract renewal timing and average contract terms. The Company monitors RPO, CRPO, and Subscription CRPO to manage the business and evaluate performance. RPO increased due to several large, multi-year renewals. CRPO and Subscription CRPO growth was due to new customer additions, as well as the multi-year renewals.
Current wording
While the Company believes RPO and CRPO are leading indicators of revenue as they represent sales activity not yet recognized in revenue, they are not necessarily indicative of future revenue growth as they are influenced by several factors, including seasonality of contract renewal timing and average contract terms. The Company monitors RPO and CRPO to manage the business and evaluate performance. RPO increased due to several large, multi-year renewals. CRPO increased due to new customer additions, as well as the multi-year renewals. The relative decline in RPO and CRPO growth (in terms of % change) is primarily due to revenue run-off from large multi-year arrangements subject to future renewal.
Previous wording
Total revenues for the quarter ended December 31, 2023 were $173.9 million, a $15.3 million or 9.6% increase from the same quarter a year ago. The increase was due to revenue growth in both Subscription and Marketplace and Other. Subscription revenue growth was $5.9 million, or 4.7%, primarily due to upsell to existing customers, new logo deals and higher variable revenue. Subscription revenue in the prior year quarter also included a one-time $4.0 million positive revenue impact stemming from a customer contract settlement. Marketplace and Other revenue growth was $9.3 million, or 29.0%, primarily due to Data Marketplace and Services volume growth. On a geographic basis, U.S. revenue increased $15.2 million, or 10.3%. International revenue increased $0.1 million, or 0.5%. The differences in exchange rates in the current year quarter compared to those in the prior year quarter favorably impacted international revenue growth by approximately 3 percentage points.
Current wording
Total revenues for the quarter ended June 30, 2024 were $176.0 million, a $21.9 million or 14.2% increase from the same quarter a year ago. The increase was due to revenue growth in both Subscription and Marketplace and Other. Subscription revenue growth was $12.9 million, or 10.6%, primarily due to upsell to existing customers, new logo deals and higher variable revenue. Subscription revenue also included approximately $3.2 million of revenue associated with the fiscal 2024 acquisition of Habu. Marketplace and Other revenue growth was $9.0 million, or 27.9%, primarily due to Data Marketplace and Services volume growth. On a geographic basis, U.S. revenue increased $22.2 million, or 15.4%. International revenue decreased $0.3 million, or 2.6%.
Previous wording
Cost of revenue was $44.9 million for the quarter ended December 31, 2023, a $1.6 million, or 3.8%, increase from the same quarter a year ago. Gross margins increased to 74.2% from 72.7% in the prior year quarter due to revenue increases and a $3.0 million decrease in intangible asset amortization offset partially by an increase in cost of revenue primarily from services support costs. U.S. gross margins increased to 76.4% from 74.2% while International gross margins decreased to 39.6% from 51.6%.
Current wording
Cost of revenue was $51.7 million for the quarter ended June 30, 2024, a $6.1 million, or 13.4%, increase from the same quarter a year ago. Gross profit increased to $124.2 million (70.6% gross margin) from $108.4 million (70.4% gross margin) in the prior year quarter due to revenue increases offset partially by an increase in services costs (increased $2.1 million) due to higher services revenue, cloud infrastructure costs (increased $2.0 million), and stock-based compensation expense (increased $1.0 million). U.S. gross margins decreased to 71.5% from 72.2% while International gross margins increased to 55.5% from 43.3%.
Previous wording
Sales and marketing (“S&M”) expense includes operating expenses for the Company’s sales, marketing, and product marketing functions.
Current wording
Sales and marketing (“S&M”) expense includes operating expenses for the Company’s sales, marketing, and product marketing functions. S&M expense also includes provisions for credit losses.
Previous wording
Gains, losses and other items, net was $2.5 million for the quarter ended December 31, 2023, a decrease of $9.2 million compared to the same quarter a year ago. The current quarter amount includes $1.3 million related to termination benefits for employees whose positions were or will be eliminated and $1.2 million of third party merger costs associated with the Habu acquisition. The prior year quarter amount included $5.9 million in lease impairments and restructuring and $5.8 million related to termination benefits for employees whose positions were eliminated.
Current wording
Gains, losses and other items, net was $0.2 million for the quarter ended June 30, 2024, an increase of $0.1 million compared to the same quarter a year ago. The current and prior year quarter costs primarily related to termination benefits for employees whose positions were eliminated.
Previous wording
Income from operations was $15.2 million for the quarter ended December 31, 2023 compared to a loss from operations of $23.9 million in the same quarter a year ago. Operating margin was positive 8.7% compared to negative 15.1%. Margins were positively impacted by revenue growth, and operating expense reductions related to the prior year headcount reduction, reduced stock-based compensation due to prior year accelerated vesting of awards, and lower gains, losses and other items.
Current wording
Loss from operations was $5.2 million for the quarter ended June 30, 2024 compared to income from operations of $2.3 million in the same quarter a year ago. Operating margin for the quarter ended June 30, 2024 was negative 3.0% compared to positive 1.5% in the same quarter a year ago. Margins in the prior year quarter were positively impacted by the acceleration of stock-based compensation previously discussed.
Previous wording
Income tax expense was $8.4 million on pretax income of $21.8 million for the quarter ended December 31, 2023, resulting in a 39% effective tax rate. This compares to a prior year income tax expense of $5.8 million on pretax loss of $24.7 million, or a negative 24% effective tax rate. Tax expense for both periods reflects the impact of the capitalization of research and development expenditures in accordance with Internal Revenue Code ("IRC") Section 174, as modified by the Tax Cuts and Jobs Act of 2017, the valuation allowance, and nondeductible stock-based compensation.
Current wording
Income tax expense was $6.7 million on pretax loss of $0.8 million for the quarter ended June 30, 2024, resulting in an 831.5% effective tax rate. This compares to a prior year income tax expense of $8.7 million on pretax income of $7.1 million, or a 122.3% effective tax rate. Tax expense for both periods reflects the impact of the capitalization of research and development expenditures in accordance with Internal Revenue Code ("IRC") Section 174, as modified by the Tax Cuts and Jobs Act of 2017, the valuation allowance, and nondeductible stock-based compensation.
Previous wording
The Company’s cash and cash equivalents are primarily located in the United States. At December 31, 2023, approximately $18.0 million of the total cash balance of $498.9 million, or approximately 3.6%, was located outside of the United States. The Company has no current plans to repatriate this cash to the United States.
Current wording
The Company’s cash and cash equivalents are primarily located in the United States. At June 30, 2024, approximately $18.3 million of the total cash balance of $310.4 million, or approximately 5.9%, was located outside of the United States. The Company has no current plans to repatriate this cash to the United States.
Previous wording
Net accounts receivable balances were $199.4 million at December 31, 2023, an increase of $42.0 million, compared to $157.4 million at March 31, 2023. Days sales outstanding ("DSO"), a measurement of the time it takes to collect receivables, was 106 days at December 31, 2023, compared to 95 days at March 31, 2023. DSO can fluctuate due to the timing and nature of contracts that lead to up-front billings related to deferred revenue on services not yet performed, and Marketplace and Other contracts, which are billed on a gross basis, recognized on a net basis, but for which the amount that is due to data sellers is not reflected as an offset to accounts receivable. Compared to March 31, 2023, DSO at December 31, 2023 was negatively impacted by approximately 8 days by the increased impact of Data Marketplace gross accounts receivable. All customer accounts are actively managed, and no losses in excess of amounts reserved are currently expected.
Current wording
Net accounts receivable balances were $206.3 million at June 30, 2024, an increase of $16.0 million, compared to $190.3 million at March 31, 2024. Days sales outstanding ("DSO"), a measurement of the time it takes to collect receivables, was 107 days at June 30, 2024, compared to 101 days at March 31, 2024. DSO can fluctuate due to the timing and nature of contracts that lead to up-front billings related to deferred revenue on services not yet performed, and Data Marketplace contracts, which are billed on a gross basis, recognized on a net basis, but for which the amount that is due to data sellers is not reflected as an offset to accounts receivable. Compared to March 31, 2024, DSO at June 30, 2024 was negatively impacted by approximately two days by the increased impact of Data Marketplace gross accounts receivable. All customer accounts are actively managed, and no losses in excess of amounts reserved are currently expected.
Previous wording
Subsequent to December 31, 2023, the Company closed its acquisition of Habu, which included the payment of approximately $174 million in cash at closing.
Current wording
Working capital at June 30, 2024 totaled $395.4 million, a $9.9 million increase when compared to $385.5 million at March 31, 2024. On January 31, 2024, the Company closed its acquisition of Habu, which included the payment of approximately $170.3 million in cash at closing.
Previous wording
Management believes that the Company's existing available cash will be sufficient to meet the Company's working capital and capital expenditure requirements for the foreseeable future. However, in light of the risk of recession, the military conflicts in Europe and the Middle East, cost increases, rising interest rates, capital markets volatility, bank failures and general inflationary pressures, our liquidity position may change due to the inability to collect from our customers, inability to raise new capital via issuance of equity or debt, and disruption in completing repayments or disbursements to our creditors. We have historically taken and may continue to take advantage of opportunities to generate additional liquidity through capital market transactions. These impacts have caused significant disruptions to the global financial markets, which could increase the cost of capital and adversely impact our ability to raise additional capital, which could negatively affect our liquidity in the future. The amount, nature, and timing of any capital market transactions will depend on our operating performance and other circumstances; our then-current commitments and obligations; the amount, nature, and timing of our capital requirements; and overall market conditions. If we are unable to raise funds as and when we need them, we may be forced to curtail our operations.
Current wording
Management believes that the Company's existing available cash will be sufficient to meet the Company's working capital and capital expenditure requirements for the foreseeable future. However, in light of the risk of recession, the military conflicts in Europe and the Middle East, cost increases, high interest rates, capital markets volatility, bank failures and general inflationary pressures, our liquidity position may change due to the inability to collect from our customers, inability to raise new capital via issuance of equity or debt, and disruption in completing repayments or disbursements to our creditors. We have historically taken and may continue to take advantage of opportunities to generate additional liquidity through capital market transactions. These impacts have caused significant disruptions to the global financial markets, which could increase the cost of capital and adversely impact our ability to raise additional capital, which could negatively affect our liquidity in the future. The amount, nature, and timing of any capital market transactions will depend on our operating performance and other circumstances; our then-current commitments and obligations; the amount, nature, and timing of our capital requirements; and overall market conditions. If we are unable to raise funds as and when we need them, we may be forced to curtail our operations.
Previous wording
In the nine months ended December 31, 2022, net cash provided by operating activities of $3.8 million resulted primarily from net loss adjusted for non-cash items of $33.6 million offset by changes in operating assets and liabilities of $29.8 million. Net cash used by changes in operating assets and liabilities was primarily related to an increase in accounts receivable of $27.2 million and a decrease in accounts payable and other liabilities of $9.3 million, offset partially by a decrease in income taxes of $7.0 million. The change in accounts receivable is primarily due to revenue growth and the timing of cash receipts from customers. The change in accounts payable and other liabilities is primarily due to the payment of annual incentive compensation and the timing of payments to suppliers.
Current wording
In the three months ended June 30, 2024, net cash used in operating activities of $9.3 million resulted primarily from operating results adjusted for non-cash items of $25.6 million offset by changes in operating assets and liabilities of $34.9 million. Net cash used by changes in operating assets and liabilities was primarily related to a decrease in accounts payable and other liabilities of $39.0 million and an increase in accounts receivable of $16.6 million, partially offset by an increase in deferred revenue of $7.5 million. The change in accounts payable and other liabilities is primarily due to the payment of annual incentive compensation and the timing of payments to suppliers. The change in accounts receivable is primarily due to revenue growth and the timing of cash receipts from customers.
Previous wording
In the nine months ended December 31, 2023, net cash provided by operating activities of $78.0 million resulted primarily from net earnings adjusted for non-cash items of $77.2 million and changes in operating assets and liabilities of $0.8 million. Net cash provided by changes in operating assets and liabilities was primarily related to a $29.2 million Internal Revenue Service refund related to fiscal 2021, an increase in deferred revenue of $9.7 million, and an increase in other assets of $8.8 million, offset partially by an increase in accounts receivable of $41.0 million. The change in accounts receivable is primarily due to revenue growth and the timing of cash receipts from customers.
Current wording
In the three months ended June 30, 2023, net cash provided by operating activities of $25.7 million resulted primarily from operating results adjusted for non-cash items of $15.9 million offset by changes in operating assets and liabilities of $9.8 million. Net cash provided by operating assets and liabilities was primarily related to a $29.2 million Internal Revenue Service refund related to fiscal 2021, an increase in income taxes payable of $8.0 million, an increase in deferred revenue of $7.1 million and an increase in other assets of $5.0 million, offset partially by an increase in accounts payable and other liabilities of $25.2 million and accounts receivable of $14.4 million. The change in accounts payable and other liabilities is primarily due to the payment of annual incentive compensation and the timing of payments to suppliers. The change in accounts receivable is primarily due to revenue growth and the timing of cash receipts from customers.
Previous wording
Our primary investing activities have historically consisted of capital expenditures. Capital expenditures may vary from period to period due to the timing of the expansion of our operations, the addition of new headcount, new facilities, and acquisitions.
Current wording
Our primary investing activities have primarily consisted of business acquisitions, capital expenditures and purchases and sales of investments. Capital expenditures may vary from period to period due to the timing of the expansion of our operations, the addition of new headcount, new facilities, and acquisitions.
Previous wording
In the nine months ended December 31, 2022, net cash used in investing activities consisted of capital expenditures of $4.6 million and purchases of investments of $3.5 million, offset partially by proceeds from the sale of investments of $3.0 million and the sale of a strategic investment of $0.4 million.
Current wording
In the three months ended June 30, 2024, net cash used in investing activities consisted of capital expenditures of $0.2 million and the purchase of a strategic investment of $0.4 million.
Previous wording
In the nine months ended December 31, 2023, net cash used in investing activities consisted of capital expenditures of $2.5 million, purchases of strategic investments of $1.0 million, and purchases of investments of $24.4 million partially offset by the proceeds from the sale of investments of $25.8 million.
Current wording
In the three months ended June 30, 2023, net cash used in investing activities consisted of capital expenditures of $0.1 million and the purchase of a strategic investment of $0.5 million.
Previous wording
In the nine months ended December 31, 2023, net cash used in financing activities was $43.2 million, consisting of the acquisition of treasury shares pursuant to the board of directors' approved stock repurchase plan of $45.3 million (1.7 million shares) and $5.1 million for shares repurchased for tax withholdings upon vesting of stock-based awards. These uses of cash were partially offset by proceeds of $7.2 million from the sale of common stock from our equity compensation plans.
Current wording
In the three months ended June 30, 2024, net cash used in financing activities was $16.5 million, consisting of the acquisition of treasury shares pursuant to the board of directors' approved stock repurchase plan of $15.8 million (0.5 million shares) and $6.8 million for shares repurchased for tax withholdings upon vesting of stock-based awards. These uses of cash were partially offset by proceeds of $6.2 million from the sale of common stock from our equity compensation plans.
Previous wording
In the nine months ended December 31, 2022, net cash used in financing activities was $145.8 million, consisting of the acquisition of treasury shares pursuant to the board of directors' approved stock repurchase plan of $150.0 million (6.1 million shares), and $2.1 million for shares repurchased for tax withholdings upon vesting of stock-based awards. These uses of cash were partially offset by proceeds of $6.3 million from the sale of common stock from our equity compensation plans.
Current wording
In the three months ended June 30, 2023, net cash used in financing activities was $18.5 million, consisting of the acquisition of treasury shares pursuant to the board of directors' approved stock repurchase plan of $20.2 million (0.8 million shares), and $3.9 million for shares repurchased for tax withholdings upon vesting of stock-based awards. These uses of cash were partially offset by proceeds of $5.6 million from the sale of common stock from our equity compensation plans.
Previous wording
During the nine months ended December 31, 2023, the Company repurchased 1.7 million shares of its common stock for $45.3 million under the modified common stock repurchase program. Through December 31, 2023, the Company had repurchased a total of 37.3 million shares of its common stock for $927.5 million under the program, leaving remaining capacity of $172.5 million.
Current wording
During the three months ended June 30, 2024, the Company repurchased 0.5 million shares of its common stock for $15.8 million under the modified common stock repurchase program. Through June 30, 2024, the Company had repurchased a total of 38.2 million shares of its common stock for $958.5 million under the program, leaving remaining capacity of $141.5 million.
Previous wording
The following tables present the Company’s contractual cash obligations and purchase commitments at December 31, 2023 (dollars in thousands). Operating leases primarily consist of our various office facilities. Purchase commitments primarily include contractual commitments for the purchase of data, hosting services, software-as-a-service arrangements, and leasehold improvements. The tables do not include the future payment of liabilities related to uncertain tax positions of $25.5 million as the Company is not able to predict the periods in which the payments will be made. The amounts for 2024 represent the remaining three months ending March 31, 2024. All other periods represent fiscal years ending March 31 (dollars in thousands):
Current wording
The following tables present the Company’s contractual cash obligations and purchase commitments at June 30, 2024 (dollars in thousands). Operating leases primarily consist of our various office facilities. Purchase commitments primarily include contractual commitments for the purchase of data, hosting services, software-as-a-service arrangements, and leasehold improvements. The tables do not include the future payment of liabilities related to uncertain tax positions of $26.1 million as the Company is not able to predict the periods in which the payments will be made. The amount for 2025 represents the remaining nine months ending March 31, 2025. All other periods represent fiscal years ending March 31 (dollars in thousands):
Previous wording
Future minimum payments as of December 31, 2023 related to restructuring plans as a result of the Company's exit from certain leased office facilities are (dollars in thousands): Fiscal 2024: $675; Fiscal 2025: $2,698; and Fiscal 2026: $1,799.
Current wording
Future minimum payments as of June 30, 2024 related to restructuring plans as a result of the Company's exit from certain leased office facilities are (dollars in thousands): Fiscal 2025: $2,024; and Fiscal 2026: $1,799.
Previous wording
For a description of certain risks that could have an impact on results of operations or financial condition, including liquidity and capital resources, see “Risk Factors” contained in Part I, Item 1A, of the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2023 ("2023 Annual Report"), as filed with the SEC on May 24, 2023.
Current wording
For a description of certain risks that could have an impact on results of operations or financial condition, including liquidity and capital resources, see “Risk Factors” contained in Part I, Item 1A, of the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2024 ("2024 Annual Report") as filed with the Securities and Exchange Commission ("SEC") on May 22, 2024.
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Previous report — wording carried elsewhere
•Data Collaboration. We enable second-party data collaboration between organizations and their trusted partners in a neutral, manageable environment. Our platform provides customers with collaborative opportunities to safely and securely build a more accurate, dynamic view of their customers leveraging partner data. Advanced measurement and analytics use cases can be performed on this shared data without either party giving up control or compromising privacy.
Previous report — wording carried elsewhere
("CRPO") represents RPO to be recognized over the next twelve months. Subscription CRPO represents CRPO associated with subscription-only RPO to be recognized over the next twelve months.
Previous report — wording carried elsewhere
Income tax expense was $27.3 million on pretax income of $43.6 million for the nine months ended December 31, 2023, resulting in an 63% effective tax rate. This compares to a prior year income tax expense of $11.7 million on pretax loss of $76.5 million, or a negative 15% effective tax rate. Tax expense for both periods reflects the impact of the capitalization of research and development expenditures in accordance with IRC Section 174, as modified by the Tax Cuts and Jobs Act of 2017, the valuation allowance, and nondeductible stock-based compensation.
Previous report — wording carried elsewhere
Working capital at December 31, 2023 totaled $560.9 million, a $21.2 million increase when compared to $539.7 million at March 31, 2023.