LiveRamp Holdings, Inc. ((RAMP)) has held its Q2 earnings call. Read on for the main highlights of the call.
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LiveRamp Holdings, Inc. recently held its earnings call, revealing a strong financial performance that exceeded expectations. The company reported impressive revenue and operating income figures, driven by strategic investments in AI and innovative pricing models. Despite facing challenges with gross margin and platform migration, the overall sentiment remains positive, with a focus on achieving long-term financial goals.
Revenue and Operating Income Surpass Guidance
In the second quarter, LiveRamp’s revenue increased by 8%, surpassing their guidance. This growth was notably driven by a significant acceleration in Marketplace and other segments, which saw an 18% increase. Additionally, the non-GAAP operating income rose by 10%, reflecting the company’s robust financial health.
Record ARR Growth
LiveRamp achieved a record net new Annual Recurring Revenue (ARR) of $14 million in Q2, marking the largest organic increase in the past seven quarters. This equates to a year-on-year growth of 7%, showcasing the company’s ability to expand its recurring revenue base.
Successful New Logo Contracts
The company secured a multimillion-dollar new logo contract with a global auto manufacturer and a significant upsell with a leading social media platform. These contracts highlight LiveRamp’s success in attracting high-profile clients and expanding its market presence.
Positive Impact of New Pricing Model
LiveRamp’s new usage-based pricing model has been well-received, attracting new customers and expanding existing contracts. This model has been a key driver in the company’s recent growth and customer satisfaction.
Strategic Investments in AI and Commerce Media
Investments in AI product enhancements and partnerships with companies like Netflix and Meta are propelling growth and innovation. These strategic moves are positioning LiveRamp at the forefront of technological advancements in the industry.
Commitment to Rule of 40
LiveRamp is on track to achieve the Rule of 31 this fiscal year, with 9% revenue growth and a 22% operating margin. The company aims to reach the Rule of 40 by FY ’28, demonstrating its commitment to long-term financial targets.
Gross Margin Challenges
The gross margin was reported at 72%, down 3 points year-on-year due to increased cloud hosting expenses. This presents a challenge that the company is actively addressing.
Platform Migration Delays
Cost optimization from platform migration is taking longer than expected, impacting improvements in gross margin. LiveRamp is working to overcome these delays to enhance operational efficiency.
Forward-Looking Guidance
Looking ahead, LiveRamp remains optimistic about its growth trajectory. The company expects to maintain its momentum with a focus on achieving the Rule of 31 this fiscal year and the Rule of 40 by FY ’28. Strategic investments in AI, Commerce Media, and CTV are anticipated to drive future growth, alongside the successful implementation of the new pricing model.
In summary, LiveRamp Holdings, Inc. has demonstrated a strong financial performance in its recent earnings call, with revenue and operating income surpassing expectations. While challenges with gross margin and platform migration persist, the company’s strategic investments and innovative pricing models are paving the way for sustained growth and success.