LiveRamp Holdings, Inc.

A summary of selected financial information for each of the periods reported is presented below (dollars in thousands, except per share amounts):

Revenues

The Company's revenues for each of the periods reported is presented below (dollars in thousands):

Total revenues were $214.0 million for the three months ended June 30, 2026, a $19.2 million, or 9.8%, increase compared to the same period a year ago. The increase was due to revenue growth in both Subscription and Marketplace and Other. The Subscription revenue growth was $12.0 million, or 8.1%, primarily due to upsell to existing customers and higher variable revenue. The Marketplace and Other revenue growth was $7.2 million, or 15.4%, primarily due to Data Marketplace and other transactional growth. On a geographic basis, U.S. revenue increased $16.7 million, or 9.1%. International revenue increased $2.5 million, or 23.2%. The differences in exchange rates in the current year compared to those in the prior year favorably impacted international revenue growth by approximately 2 percentage points.

Cost of Revenue and Gross Profit

The Company’s cost of revenue and gross profit for each of the periods reported is presented below (dollars in thousands):

Cost of revenue includes third-party direct costs including identity graph data, other data and cloud-based hosting costs, as well as costs of IT, security, product operations and professional services functions. Cost of revenue also includes amortization of acquisition-related intangibles.

Cost of revenue was $63.0 million for the three months ended June 30, 2026, a $4.7 million, or 8.1%, increase from the same period a year ago. Gross profit increased to $150.9 million (70.5% gross margin) from $136.5 million (70.1% gross margin) in the prior period due to the revenue increase of $19.2 million, offset partially by an increase in cloud infrastructure costs (increased $6.0 million) driven by increased customer usage and platform migration costs. U.S. gross margins decreased to 70.1% from 70.6%, and International gross margins increased to 77.5% from 60.5%.

Operating Expenses

The Company’s operating expenses for each of the periods reported is presented below (dollars in thousands):

Research and development (“R&D”) expense includes operating expenses for the Company’s engineering and product/project management functions supporting research, new development, and related product enhancement.

R&D expenses were $37.1 million for the three months ended June 30, 2026, a decrease of $2.5 million, or 6.2%, compared to the same period a year ago, and are 17.4% of total revenues compared to 20.3% in the prior year. The decrease is primarily due to stock-based compensation expense (decreased $2.5 million).

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.

S&M expenses were $51.9 million for the three months ended June 30, 2026, staying flat compared to the same period a year ago, and are 24.3% of total revenues compared to 26.6% in the prior year. Changes within S&M expenses compared to the prior year were primarily in third-party marketing and event expenses (increased $1.5 million) and headcount-related expenses (increased $1.1 million), and professional services (increased $0.4 million), offset by stock-based compensation expense (decreased $2.0 million) and bad debt expenses (decreased $1.0 million).

General and administrative ("G&A") expense represents operating expenses for the Company's finance, human resources, legal, corporate IT, and other corporate administrative functions.

G&A expenses were $35.1 million for the three months ended June 30, 2026, a decrease of $2.2 million, or 5.9%, compared to the same period a year ago, and are 16.4% of total revenues compared to 19.2% in the prior year. The decrease is primarily due to professional services expenses (decreased $3.3 million) largely related to a decrease in litigation costs associated with the class action lawsuit and fees in support of strategic corporate initiatives, offset partially by stock-based compensation expense (increased $0.5 million).

Gains, losses, and other items, net represents restructuring costs and other adjustments.

Gains, losses and other items, net was $6.6 million for the three months ended June 30, 2026, an increase of $6.1 million compared to the same period a year ago. The current year relates primarily to acquisition-related costs associated with the Merger. The prior year relates primarily to adjustments to previous lease restructuring reserves.

Income from Operations and Operating Margin

Income from operations was $20.2 million for the three months ended June 30, 2026 compared to income from operations of $7.2 million in the same period a year ago. Operating margin was 9.4% compared to 3.7% in the same period a year ago. Margins in the current year were positively impacted by the increase in gross profit.

Total Other Income

Total other income, net was $3.1 million for the three months ended June 30, 2026 compared to $3.7 million in the same period a year ago. The decrease is primarily attributable to lower interest rates.

Income Taxes

Income tax expense was $5.7 million on income from continuing operations before income taxes of $23.3 million for the three months ended June 30, 2026, resulting in a 24.7% effective tax rate. This compares to income tax expense of $3.2 million on income from continuing operations before income taxes of $10.9 million, or a 29.1% effective tax rate in the same period a year ago. The decrease in the effective tax rate was primarily driven by changes in valuation allowance and unrecognized tax benefits, partially offset by nondeductible stock-based compensation.

Capital Resources and Liquidity

The Company’s cash and cash equivalents are primarily located in the United States. At June 30, 2026, approximately $24.1 million of the total cash balance of $363.5 million, or approximately 6.6%, was located outside of the United States.

Trade accounts receivable, net balances were $216.7 million at June 30, 2026, an increase of $3.7 million, compared to $213.0 million at March 31, 2026. Days sales outstanding ("DSO"), a measurement of the time it takes to collect receivables, was 92 days at June 30, 2026, compared to 93 days at March 31, 2026. 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 as revenue 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, 2026, DSO at June 30, 2026 was not impacted due to Data Marketplace gross accounts receivable. All customer accounts are actively managed, and no losses in excess of amounts reserved are currently expected.

Working capital at June 30, 2026 totaled $396.4 million, a $8.1 million increase when compared to $388.4 million at March 31, 2026.

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 short term (the next 12 months) and separately in the long term (beyond the next 12 months). However, in light of the uncertainty regarding tariffs and other trade restrictions, risk of recession, the military conflicts in Europe and the Middle East, cost increases, capital markets volatility 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. 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. We have historically taken and may continue to take advantage of opportunities to generate additional liquidity through capital market transactions. 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.

Under the terms of the Merger Agreement, we have agreed to various covenants and agreements, including, among others, agreements to conduct our business in the ordinary course during the period between the execution of the Merger Agreement and the Effective Time. We have agreed that we may not take, commit or agree to do certain actions without Parent’s consent, including, but not limited to, entering into material transactions other than in the ordinary course of business, disposing of material assets, making capital expenditures in excess of the amounts specified in the Merger Agreement, issuing additional capital stock or other equity securities, repurchasing capital stock except in satisfaction of tax withholding on vesting of restricted awards or for exercise price of stock options, or incurring indebtedness. We do not believe these restrictions will prevent us from meeting our ongoing operating and working capital needs or capital expenditure requirements.

Cash Flows

The following table summarizes our cash flows for the periods reported (dollars in thousands):

Operating Activities

Cash flows from operating activities are primarily influenced by growth in our operations, increases or decreases in collections from our customers, and related payments to our suppliers and employees. The timing of cash receipts from customers and payments to suppliers and employees can significantly impact our cash flows from operating activities. Our collection and payment cycles can vary from period to period.

Net cash provided by operating activities for the three months ended June 30, 2026 was $17.0 million and resulted primarily from operating results adjusted for non-cash items of $42.0 million offset by changes in operating assets and liabilities of $25.0 million. Net cash used due to changes in operating assets and liabilities was primarily related to decrease in accounts payable and other liabilities of $37.3 million, partially offset by an increase in deferred revenue of $5.7 million and income taxes payable of $4.5 million. The change in accounts payable and other liabilities is primarily due to the payment of annual incentive compensation awards for fiscal 2026 and the timing of payments to suppliers.

Net cash used in operating activities for the three months ended June 30, 2025 was $15.8 million and resulted primarily from operating results adjusted for non-cash items of $38.2 million offset by changes in operating assets and liabilities of $54.0 million. Net cash used by changes in operating assets and liabilities was primarily related to a decrease in accounts payable and other liabilities of $35.9 million and an increase in accounts receivable of $34.3 million, partially offset by an increase in deferred revenue of $5.7 million and income taxes payable of $4.5 million. The change in accounts payable and other liabilities is primarily due to the payment of annual incentive compensation awards for fiscal year 2025 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.

Investing Activities

Our investing activities have primarily consisted of business acquisitions, capital expenditures, purchases and sales of investments and strategic 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. Investing activities also include purchases and sales of short-term investments using available cash reserves.

Net cash used in investing activities for the three months ended June 30, 2026 was $0.7 million and consisted of capital expenditures.

Net cash used in investing activities for the three months ended June 30, 2025 was $0.9 million and consisted of net cash paid in acquisitions of $0.6 million related to the Habu escrow and capital expenditures of $0.3 million.

Financing Activities

Our financing activities have consisted of acquisition of treasury stock, proceeds from our equity compensation plans, and shares repurchased for tax withholdings upon vesting of stock-based awards.

Net cash used in financing activities for the three months ended June 30, 2026 was $32.3 million and consisted of the acquisition of treasury shares pursuant to the board of directors' approved stock repurchase plan, and related excise tax payments, of $17.6 million (0.6 million shares), and $17.3 million for shares repurchased for tax withholdings upon vesting of stock-based awards. These uses of cash were partially offset by $2.6 million of proceeds from the sale of common stock from our equity compensation plans.

Net cash used in financing activities for the three months ended June 30, 2025 was $34.8 million and consisted of the acquisition of treasury shares pursuant to the board of directors' approved stock repurchase plan, and related excise tax payments, of $29.9 million (1.1 million shares), and $10.8 million for shares repurchased for tax withholdings upon vesting of stock-based awards. These uses of cash were partially offset by $5.9 million of proceeds from the sale of common stock from our equity compensation plans.

Common Stock Repurchase Program

On February 12, 2026, the Company's board of directors approved an amendment to the existing common stock repurchase program, which was initially adopted in 2011. The amendment authorized an additional $200.0 million in share repurchases, increasing the total amount authorized for repurchase under the common stock repurchase program to $1.5 billion. In addition, it extended the common stock repurchase program duration through December 31, 2027.

During the three months ended June 30, 2026, the Company repurchased 0.6 million shares of its common stock for $17.6 million under the modified common stock repurchase program. Through June 30, 2026, the Company had repurchased a total of 49.2 million shares of its common stock for $1.3 billion under the program, leaving remaining capacity of $244.2 million. In accordance with the Merger Agreement, the Company has paused repurchases under its stock repurchase program through the completion of the Merger. The repurchase amounts included in the condensed consolidated statements of stockholders' equity and the condensed consolidated statements of cash flows included amounts related to the 1% excise tax on share repurchases, net of share issuances, as a result of the Inflation Reduction Act of 2022.

Contractual Commitments

The following tables present the Company’s contractual cash obligations and purchase commitments at June 30, 2026 (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 $38.4 million as the Company is not able to predict the periods in which the payments will be made. The amount for 2027 represents the remaining nine months ending March 31, 2027. All other periods represent fiscal years ending March 31.

While the Company does not have any other material contractual commitments for capital expenditures, certain levels of investments in facilities and computer equipment continue to be necessary to support the growth of the business.

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 2026 Annual Report on Form 10-K as filed with the SEC on May 21, 2026 ("2026 Annual Report").

Non-U.S. Operations

The Company has a material presence in the United Kingdom, France, Spain, the Netherlands, India, Brazil, Australia and China. Most of the Company’s exposure to exchange rate fluctuation is due to translation gains and losses as there are no material transactions that cause exchange rate impact. In general, each of the foreign locations is expected to fund its own operations and cash flows, although funds may be loaned or invested from the U.S. to the foreign subsidiaries. These advances are considered long-term investments, and any gain or loss resulting from changes in exchange rates as well as gains or losses resulting from translating the foreign financial statements into U.S. dollars are included in accumulated other comprehensive income. Therefore, exchange rate movements of foreign currencies may have an impact on the Company’s future costs or on future cash flows from foreign investments. The Company has not entered into any foreign currency forward exchange contracts or other derivative instruments to hedge the effects of adverse fluctuations in foreign currency exchange rates.

Critical Accounting Policies

We prepare our condensed consolidated financial statements in conformity with U.S. GAAP as set forth in the FASB ASC, and we consider the various staff accounting bulletins and other applicable guidance issued by the SEC. These accounting principles require management to make certain judgments and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The consolidated financial statements in the 2026 Annual Report include a summary of significant accounting policies used in the preparation of the Company’s consolidated financial statements. In addition, the Management’s Discussion and Analysis of Financial Condition and Results of Operations filed as part of the 2026 Annual Report contains a discussion of the policies that management has identified as the most critical because they require management’s use of complex and/or significant judgments. None of the Company’s critical accounting policies have materially changed since the date of the 2026 Annual Report other than as described in the "Accounting Pronouncements Adopted During the Current Year" section of Note 1, "Organization and Summary of Significant Accounting Policies”, of the Notes to Condensed Consolidated Financial Statements accompanying this Quarterly Report on Form 10-Q.

Recent Accounting Pronouncements

For information on recent accounting pronouncements, see “Accounting Pronouncements Adopted During the Current Year" and “Recent Accounting Pronouncements Not Yet Adopted” under Note 1, “Organization and Summary of Significant Accounting Policies”, of the Notes to Condensed Consolidated Financial Statements accompanying this report.