EPS of $-0.11 decreased by 360.3% from previous year
Gross margin of 70.6%
Net income of -7.49M
"Q1 exceeded our expectations on both the top and bottom-line." - Scott Howe
LiveRamp Holdings Inc (RAMP) QQ1 2025 Earnings Analysis: ARR Acceleration, Data Collaboration Momentum, and a Path toward Rule of 40 Growth
Executive Summary
LiveRamp delivered a solid QQ1 2025 performance, underscoring the company’s ability to translate a growing data-collaboration market into tangible ARR expansion and operating leverage even as macro headwinds persist. Revenue came in at $176.0 million, up 14% year over year, with ARR advancing to $478 million (up 12% YoY and +$11 million QoQ). Subscription net retention stood at 105%, and data marketplace revenue grew north of 20%+, with data marketplace specifically up ~23% and CTV-driven demand contributing to a 28% rise in Marketplace revenue to $41 million. Management highlighted the continued strength of the network effects in data collaboration, the integration of Habu, and a multi-pronged strategy to simplify use and scale the collaboration network across cloud providers and system integrators (SIs). The Q1 results supported LiveRamp’s objective to become a Rule of 40 company, a framework that blends growth and profitability, as management reiterated a medium-term revenue growth trajectory of 10-15% and ongoing margin discipline.
Management commentary underscored the evolving cookie-deprecation landscape. While Google's Chrome adjustments introduce a period of near-term uncertainty, LiveRamp continues to emphasize authenticated addressability (RampID + ATS) as a superior, cookie-agnostic approach that improves advertising performance, particularly in high-growth channels like connected TV (CTV). The company sees the data-collaboration megatrend as a durable, multi-vertical opportunity beyond advertising, including customer journey mapping, activation, and AI model training. The FY25 guidance was reaffirmed and modestly updated to reflect the Q1 beat, with revenue guidance of $715–$735 million and non-GAAP operating income of $127–$131 million; Q2 revenue is expected near $176 million with an operating margin around 18%. These figures imply a continued, though not linear, expansion path supported by ARR growth, improved retention, and an expanding data marketplace footprint. investors should monitor ARR progression, balance-sheet health, Habu/collaboration-network pipeline, and the pace of SI-driven bookings as macro conditions evolve.
Key Performance Indicators
Revenue
175.96M
QoQ: 2.39% | YoY:14.21%
Gross Profit
124.21M
70.59% margin
QoQ: 0.07% | YoY:14.54%
Operating Income
-5.04M
QoQ: 64.68% | YoY:-322.11%
Net Income
-7.49M
QoQ: -39.38% | YoY:-372.19%
EPS
-0.11
QoQ: -34.97% | YoY:-360.25%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $176.0 million, up 14.0% YoY; QoQ growth notables due to Habu in the quarter.
Operating income: -$5.042 million; operating margin -2.87% (GAAP). Non-GAAP operating income guidance and adjusts for SBC and amortization in the outlook.
Net income: -$7.489 million; net income margin -4.25%.
Financial Highlights
Financial and operating snapshot (QQ1 2025):
- Revenue: $176.0 million, up 14.0% YoY; QoQ growth notables due to Habu in the quarter.
- Gross margin: 74% (gross profit $124.212 million). Gross margin expanded modestly YoY.
- Operating income: -$5.042 million; operating margin -2.87% (GAAP). Non-GAAP operating income guidance and adjusts for SBC and amortization in the outlook.
- EBITDA: -$0.488 million; EBITDA margin approximates -0.28%.
- Net income: -$7.489 million; net income margin -4.25%.
- EPS (diluted): -$0.11; weighted average shares outstanding ~66.6 million.
- ARR: $478.0 million, up 12% YoY; QoQ ARR increase of $11.0 million, marking the third straight quarter of double-digit ARR growth.
- Subscription net retention: 105%, up 2 percentage points QoQ, at the high end of guidance (100–105%).
- Marketplace revenue: $41.0 million, up 28% YoY; Data Marketplace grew 23%, with CTV roughly doubling.
- RPO: Total backlog $536 million; Current RPO $398 million (up 8% and 13% YoY/QoQ respectively).
- Operating cash flow: -$9.3 million; free cash flow: -$9.6 million; seasonal working capital impact noted.
- Cash position: $313.0 million at period end; cash and equivalents plus short-term investments totaled $345.3 million. Stock repurchases: $16.0 million in QQ1; approximately $142 million remaining under prior authorization.
- Balance sheet health: Total assets $1.206 billion; total liabilities $254.38 million; total equity $951.88 million; current ratio ~3.09x; leverage modest with low long-term debt ($30.49 million) and total debt ~$40.65 million; net debt negative by approximately $272.37 million, underscoring strong liquidity.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
175.96M
14.21%
2.39%
Gross Profit
124.21M
14.54%
0.07%
Operating Income
-5.04M
-322.11%
64.68%
Net Income
-7.49M
-372.19%
-39.38%
EPS
-0.11
-360.25%
-34.97%
Key Financial Ratios
currentRatio
3.09
grossProfitMargin
70.6%
operatingProfitMargin
-2.87%
netProfitMargin
-4.26%
returnOnAssets
-0.62%
returnOnEquity
-0.79%
debtEquityRatio
0.04
operatingCashFlowPerShare
$-0.14
freeCashFlowPerShare
$-0.14
priceToBookRatio
2.23
priceEarningsRatio
-70.99
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management themes from QQ1 2025 earnings call:
- Strategy and data-collaboration leadership: Scott Howe emphasized the data-collaboration opportunity as a megatrend and LiveRamp’s approach to simplify product use, expand the network, and sharpen messaging. Key quote: “we are approaching this from a few angles... making collaboration simple and easy from both a product and go-to-market standpoint†and “we are building the most scaled and ubiquitous collaboration network.â€
- Cookie deprecation dynamics and ATS: Scott outlined Chrome’s shift in cookie deprecation plans and LiveRamp’s continued commitment to RampID + ATS as a superior, cookie-agnostic solution, especially for fast-growing channels like CTV. Quote: “Third-party cookies will diminish in their importance to the ecosystem over time... authenticated addressability... will be central.â€
- Market momentum and use cases: Lauren highlighted the Data Marketplace strength and the growth in data collaboration use cases beyond advertising (audience measurement, activation, AI training). Quote: “Data Marketplace growth was north of 20%... roughly doubled in CTV†and Scott’s notes on standardizing use cases for faster scale.
- Habu integration and near-term vs long-term impact: Scott indicated smoother integration with Habu, robust pipeline, and the long-run “network flywheel†benefits as nodes join the collaboration network. Quote: “the pipeline very quickly grew and has continued to remain robust†and “we are playing for something far longer, a much bigger prize.â€
- Near-term macro and guidance: Lauren and Scott acknowledged a constrained selling environment, but reaffirmed FY25 guidance and the goal of Rule of 40 profitability; management stressed that macro conditions can elongate sales cycles but expect acceleration as data-collaboration ROI becomes evident.
Q1 exceeded our expectations on both the top and bottom-line.
— Scott Howe
Data Marketplace growth was north of 20%. A few call outs: data marketplace up 23%, and CTV roughly doubled year-on-year.
— Lauren Dillard
Forward Guidance
Overview and assessment (as of QQ1 2025): LiveRamp reaffirmed FY25 revenue guidance of $715–$735 million, representing roughly 10% annual growth at the midpoint, with non-GAAP operating income of $127–$131 million and gross margins around 75%. The company also provided Q2 expectations: revenue ~ $176 million, non-GAAP operating income ~ $31 million, and operating margin ~ 18%. The guidance assumes a continued tight selling environment and a conservative view on usage-based revenue, with fixed subscription revenue expanding in the high-single digits and usage remaining flat to down modestly YoY. Marketplace and other revenue is expected to grow in the mid-teens to high-teens, supported by data-marketplace strength in digital advertising and CTV tailwinds.
Key risk factors to watch include: (1) macro demand uncertainty and elongated sales cycles impacting bookings conversion and renewal timing; (2) potential variability in data marketplace adoption and cloud-hyperscaler/SI collaborations; (3) ongoing evolution of identity solutions and privacy frameworks (e.g., Chrome PAIR adoption, ATT dynamics) that could affect the pace of customer migration from cookie-based targeting; (4) potential regulatory and antitrust developments affecting large ecosystem players (e.g., Google’s PAIR ecosystem evolution).
Outlook and monitorables for investors:
- ARR trajectory and net retention: continued double-digit ARR growth and retention above 100% are critical to sustaining a Rule of 40 path.
- Data-collaboration network density: the pace at which nodes (publishers, retailers, and advertisers) join LiveRamp’s network and the rate of standardization for data queries will drive utilization and monetization of the Clean Room and collaboration platform.
- Habu-driven contributions: synergized revenue from Habu and Clean Room deals, including the break-even trajectory of Habu within the current year, remains a focal point for incremental growth.
- Macroeconomic second-order effects: spend mix shifts toward higher-margin, data-driven, subscription, and ARR-based revenue versus usage variability could influence quarterly volatility. Overall, the [management] view remains constructive given secular shifts toward authenticated addressability, privacy-centric marketing, and the expansion of first-party data collaboration.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
RAMP Focus
70.59%
-2.87%
-0.79%
-70.99%
PAGS
48.30%
32.40%
3.49%
11.59%
DAVA
24.90%
2.40%
0.36%
124.14%
NTNX
86.00%
4.61%
-4.37%
138.28%
SPLK
72.40%
-27.50%
1.26%
-17.84%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Long-term investment thesis centers on LiveRamp’s leadership in authenticated addressability and data collaboration networks. The QQ1 2025 results demonstrate meaningful ARR expansion, resilient retention, and a multi-year roadmap for network scaling via Habu and cloud/SI partnerships. The company’s strategy to de-emphasize near-term cookie deprecation and instead promote broader data-collaboration use cases aligns with secular trends toward first-party data, privacy controls, and multi-cloud interoperability. With a projected FY25 revenue range of $715–$735 million and guided non-GAAP operating income of $127–$131 million, LiveRamp remains positioned to improve profitability while expanding the network and range of data-use cases. Key catalysts include: accelerated SI-driven bookings, standardized data-use templates, growing Data Marketplace demand (CTV-led gains), and the continued ROI demonstration of RampID + ATS across digital and CTV channels. Investors should monitor ARR progression, Habu integration profitability, and the pace of data-collaboration adoption across verticals, while remaining mindful of macro volatility and regulatory developments that could influence adoption timelines.
Key Investment Factors
Growth Potential
The data-collaboration opportunity remains the central driver of long-term growth. LiveRamp is pursuing a network-based model with scalable collaboration nodes (social, CTV, retail media networks) and standardized data-use templates to accelerate breadth and depth of data sharing. ARR of $478m, +12% YoY, and ongoing double-digit ARR expansion support a multi-year growth runway; data marketplace growth of ~23% in QQ1 and continued CTV strength are key accelerants. Habu integration and the expansion of Clean Room partnerships across cloud hyperscalers and SIs provide multiple levers to broaden addressable markets and use cases (measurement, activation, AI-model training).
Profitability Risk
Macro execution risk persists with elongated sales cycles and a softer near-term buying environment. Dependence on digital ad markets and cookie-transition dynamics could compress near-term growth or marketing spend. Dependency on network expansion to unlock network effects means the business is sensitive to partner onboarding velocity and standardization progress. Regulatory and antitrust developments around Google and broader privacy initiatives may influence the pace of authenticated addressability adoption. Stock-based compensation costs and non-GAAP adjustments remain a source of earnings volatility relative to cash-based profitability metrics.
Financial Position
Financial health remains solid with a strong liquidity profile: cash and equivalents of $313m, total assets $1.207b, total liabilities $254.38m, and stockholders’ equity of $951.88m. The balance sheet shows modest leverage (long-term debt $30.49m; total debt $40.65m) and negative net debt (~$272.37m), supporting optionality for strategic investments and buybacks. Gross margin around 75% and an expanding operating margin (Q1 15% non-GAAP) indicate improving profitability as the revenue mix shifts toward higher-margin, subscription-driven ARR and data-collaboration value propositions. Nonetheless, near-term GAAP profitability remained negative due to stock-based compensation and intangible amortization, underscoring the importance of operating leverage in the model.
SWOT Analysis
Strengths
Robust ARR growth with $478 million at QQ1 2025, up 12% YoY and +$11 million QoQ.
Strong customer retention (subscription net retention 105%) and high renewal rates (highest Q1 renewal rate on record).
Integrated data-collaboration platform with Habu, contributing to revenue growth and pipeline expansion.
Scale advantages from a growing data marketplace and diversified revenue mix (Marketplace + Data Marketplace).
Healthy liquidity position, negative net debt, and room for strategic investments and buybacks.
Weaknesses
GAAP net income negative in QQ1 2025, with EPS at -$0.11 and negative operating cash flow in Q1 (-$9m).
Seasonal and macro-driven working capital effects causing near-term cash flow volatility and a volatile capex/stock-based comp mix.
Longer-than-typical sales cycles in a cautious macro environment may pressure near-term bookings and accelerate deal slippage risks.
Opportunities
Expansion beyond Retail/CPG into travel, financial services, and other verticals with Clean Room and data-collaboration use cases.
Deeper cloud-provider and SI partnerships to scale adoption and reduce time-to-value for customers.
Standardization of data-use terms and templates enabling broader, faster network growth and monetization across large data owners.
AI/ML model training and customer journey mapping use cases that extend beyondAds into enterprise applications.
Threats
Macro headwinds and uncertain cookie-deprecation timelines may delay bookings or impact usage revenue mix.
Regulatory or antitrust developments could influence the ecosystem dynamics and timing of PAIR adoption.
Competition from other data-collaboration platforms and identity solutions could erode market share if differentiation erodes.