Stock Story -
Advertising data platform LiveRamp (NYSE:RAMP) reported Q1 CY2024 results beating Wall Street analysts' expectations, with revenue up 15.6% year on year to $171.9 million. On top of that, next quarter's revenue guidance ($172 million at the midpoint) was surprisingly good and 3.1% above what analysts were expecting. It made a non-GAAP profit of $0.25 per share, improving from its loss of $0.48 per share in the same quarter last year.
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LiveRamp (RAMP) Q1 CY2024 Highlights:
- Revenue: $171.9 million vs analyst estimates of $160.6 million (7% beat)
- EPS (non-GAAP): $0.25 vs analyst estimates of $0.21 (20.5% beat)
- Revenue Guidance for Q2 CY2024 is $172 million at the midpoint, above analyst estimates of $166.9 million
- Management's revenue guidance for the upcoming financial year 2025 is $720 million at the midpoint, beating analyst estimates by 2% and implying 9.1% growth (vs 10.6% in FY2024)
- Gross Margin (GAAP): 72.2%, up from 70.8% in the same quarter last year
- Free Cash Flow of $25.85 million, up 80.2% from the previous quarter
- Net Revenue Retention Rate: 103%, in line with the previous quarter
- Customers: 900, up from 895 in the previous quarter
- Market Capitalization: $2.16 billion
Advertising SoftwareThe digital advertising market is large, growing, and becoming more diverse, both in terms of audiences and media. As a result, there is a growing need for software that enables advertisers to use data to automate and optimize ad placements.
Sales GrowthAs you can see below, LiveRamp's revenue growth has been mediocre over the last three years, growing from $119.2 million in Q4 2021 to $171.9 million this quarter.
This quarter, LiveRamp's quarterly revenue was once again up 15.6% year on year. However, the company's revenue actually decreased by $2.02 million in Q1 compared to the $14 million increase in Q4 CY2023. Sales also dropped by a similar amount a year ago and management is guiding for revenue to rebound in the coming quarter, which might hint at an emerging seasonal pattern.
Next quarter's guidance suggests that LiveRamp is expecting revenue to grow 11.6% year on year to $172 million, improving on the 8.3% year-on-year increase it recorded in the same quarter last year. For the upcoming financial year, management expects revenue to be $720 million at the midpoint, growing 9.1% year on year compared to the 10.6% increase in FY2024.
Customer Growth LiveRamp reported 900 customers at the end of the quarter, an increase of 5 from the previous quarter. That's a little better customer growth than last quarter and quite a bit above the typical growth we've seen in past quarters, demonstrating that the business has strong sales momentum. We've no doubt shareholders will take this as an indication that LiveRamp's go-to-market strategy is working very well.
Key Takeaways from LiveRamp's Q1 ResultsWe enjoyed seeing LiveRamp exceed analysts' revenue expectations this quarter. We were also glad next quarter's revenue guidance came in higher than Wall Street's estimates. On the other hand, its gross margin declined. Overall, we think this was a strong quarter that should satisfy shareholders. The stock is up 9.4% after reporting and currently trades at $35.37 per share.
