EPS of $0.03 decreased by 64.4% from previous year
Gross margin of 72.4%
Net income of 1.73M
"We are a network company with scale leadership in the evolving data collaboration market." - Scott Howe
LiveRamp Holdings Inc (RAMP) QQ2 2025 Earnings Analysis: 12% Revenue Growth, 75% Gross Margin, and Momentum in the Clean Room Network to Drive Rule of 40 Progress
Executive Summary
LiveRamp reported a solid QQ2 2025 with double-digit top-line growth driven by strength in subscription revenue and a robust data marketplace. Total revenue reached $185.5 million, up 16% year over year, with non-GAAP operating income of $41.0 million and a record non-GAAP operating margin of 22% (GAAP operating income of $7.5 million due to stock-based compensation and intangible amortization). Gross margin held at roughly 75%, underscoring the company’s high-velocity SaaS model and data-centric platform economics. ARR stood at $483 million, up 13% YoY, supported by a 107% subscription net retention and a record 125 million-dollar-plus customers. Marketplace and other revenue accelerated to a 23% growth pace, with data marketplace accounting for about 78% of that segment and contributing to continued strength in CTV channels.
Management framed QQ2 as a productive period in which LiveRamp accelerated network expansion and platform simplification, while prudently navigating a softer near-term IT-spend environment. The company raised full-year guidance for FY25 to $737-739 million in revenue and $133-135 million in non-GAAP operating income, implying ~18% operating margin at the midpoint and signaling progress toward Rule of 40. Management highlighted ongoing leverage from offshoring, product modernization, and higher efficiency as catalysts for margin expansion into FY26 (target 20-25% operating margin) alongside continued 12% revenue growth. The near-term catalyst mix includes Oracle-related marketplace opportunities and strong, multi-year ACV upsells (e.g., a large global ad agency and financial services client), plus notable new logos (including Disney/Netflix-related initiatives in the data collaboration space) that could extend LiveRamp’s addressable market beyond traditional digital advertising.
Key takeaway for investors: LiveRamp’s two-sided clean room network and data collaboration platform offer a scalable growth engine centered on first-party data, privacy-compliant measurement, and AI-enabled use cases. The company’s strong cash generation and active buyback program provide a durable capital base to fund growth initiatives, while the margin trajectory remains a core focus as it integrates Habu and accelerates cost efficiencies to reach a higher Rule of 40 tier in FY26 and beyond.
Key Performance Indicators
Revenue
185.48M
QoQ: 5.41% | YoY:16.02%
Gross Profit
134.25M
72.38% margin
QoQ: 8.08% | YoY:13.14%
Operating Income
7.49M
QoQ: 248.49% | YoY:-8.78%
Net Income
1.73M
QoQ: 123.13% | YoY:-64.38%
EPS
0.03
QoQ: 123.73% | YoY:-64.44%
Revenue Trend
Margin Analysis
Key Insights
Subscription revenue: $143.0M (+14% YoY).
Marketplace and other: $42.0M (+23% YoY).
Data marketplace concentration: ~78% of marketplace revenue; contribution supported by CTV strength.
Gross margin: 75% (flat YoY).
Operating income (GAAP): $7.5M; non-GAAP operating income: $41.0M (record quarterly high).
Operating margin: 22.0% (non-GAAP, record); GAAP margin notably lower due to stock-based comp and amortization.
Net income: $1.73M; diluted EPS: $0.0257-$0.0261 range reported in the quarter.
Cash flow: Operating cash flow $55.6M; free cash flow $55.3M; cash at end of period $341.6M; net cash position of approximately -$300M debtless (net cash).
ARR: $483.0M, +13% YoY; quarterly ARR increase of $5M driven by product attach and churn improvements.
RPO: Total contracted backlog $504.0M, current RPO up 10% YoY to $374.0M.
Customer metrics: 125 “million-dollar-plus†customers, up 10 QoQ; subscription net retention 107% (up 2 pps QoQ).
Share repurchase: $50M in Q2; YTD ~$71M; remaining authorization ~$287M.
Guidance (FY25): Revenue $737–$739M; non-GAAP OI $133–$135M; gross margin 74–75%; Q3 revenue guidance $191M; non-GAAP OI $39M; OPM ~20%.
Outlook: Midpoint FY25 implies Rule of 30; FY26 margin target 20–25% driven by offshore savings, cost efficiencies, and SaaS leverage.
Financial Highlights
Revenue: $185.5M (+16% YoY).
- Subscription revenue: $143.0M (+14% YoY).
- Marketplace and other: $42.0M (+23% YoY).
- Data marketplace concentration: ~78% of marketplace revenue; contribution supported by CTV strength.
Gross margin: 75% (flat YoY).
Operating income (GAAP): $7.5M; non-GAAP operating income: $41.0M (record quarterly high).
Operating margin: 22.0% (non-GAAP, record); GAAP margin notably lower due to stock-based comp and amortization.
Net income: $1.73M; diluted EPS: $0.0257-$0.0261 range reported in the quarter.
Cash flow: Operating cash flow $55.6M; free cash flow $55.3M; cash at end of period $341.6M; net cash position of approximately -$300M debtless (net cash).
ARR: $483.0M, +13% YoY; quarterly ARR increase of $5M driven by product attach and churn improvements.
RPO: Total contracted backlog $504.0M, current RPO up 10% YoY to $374.0M.
Customer metrics: 125 “million-dollar-plus†customers, up 10 QoQ; subscription net retention 107% (up 2 pps QoQ).
Share repurchase: $50M in Q2; YTD ~$71M; remaining authorization ~$287M.
Guidance (FY25): Revenue $737–$739M; non-GAAP OI $133–$135M; gross margin 74–75%; Q3 revenue guidance $191M; non-GAAP OI $39M; OPM ~20%.
Outlook: Midpoint FY25 implies Rule of 30; FY26 margin target 20–25% driven by offshore savings, cost efficiencies, and SaaS leverage.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
185.48M
16.02%
5.41%
Gross Profit
134.25M
13.14%
8.08%
Operating Income
7.49M
-8.78%
248.49%
Net Income
1.73M
-64.38%
123.13%
EPS
0.03
-64.44%
123.73%
Key Financial Ratios
currentRatio
2.92
grossProfitMargin
72.4%
operatingProfitMargin
4.04%
netProfitMargin
0.93%
returnOnAssets
0.16%
returnOnEquity
0.19%
debtEquityRatio
0.04
operatingCashFlowPerShare
$0.84
freeCashFlowPerShare
$0.84
priceToBookRatio
1.76
priceEarningsRatio
237.12
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Themes from management calls and Q&A:
- Growth and network strategy: Scott Howe emphasized LiveRamp’s “network company with scale leadership†in data collaboration, highlighting the 92% share of US consumer online time captured by the network and the over 200 active data providers in the Data Marketplace. He described a multi-year flywheel in which expanding publisher/data-owner nodes and higher collaboration use cases accelerate growth. He noted the 35-publisher target list for Clean Room network, with over half already joined and 45 additional targets added, signaling that the network effect is unfolding (quote excerpt: “we are a network company with scale leadership in the evolving data collaboration market.†– Scott Howe).
- Product and standardization: Lauren Dillard discussed “acceleration through standardization†and the rollout of a new LiveRamp data collaboration platform with first‑party identity graphs and self-service capabilities, designed to shorten time-to-value and speed activation. She also highlighted that offshoring remains a meaningful margin lever and that LiveRamp is carefully aligning investments to growth priorities (quote excerpt: “Offshoring remains a big lever for the business, over the medium term… about 250 roles offshore.†– Lauren Dillard).
- Near-term demand environment and AI use cases: Scott noted near-term headwinds in IT budgets and cookie deprecation timing, but expressed optimism about the long-term opportunity from identity-based data collaboration. He highlighted AI-driven destinations (Perplexity, Chalice) as signs of expanding use cases and the plan to build a broader suite of AI partnerships in the ecosystem.
- Notable customer wins and monetization: The transcript emphasized new logos and upsells (including a multiyear/multimillion ACV deal with a leading global ad agency and a seven-figure ACV upsell with a major financial services company), as well as early adoption in Commerce Media Networks and privacy-first measurement with TF1 and REA.
Quoted takeaways: Scott Howe on the network-driven growth and the importance of CTV/Publisher partnerships; Lauren Dillard on cost-efficiency levers and the Habu integration; and management commentary on Oracle-related marketplace upside and Netflix/Disney collaborations that could unlock additional value in 2025-2026.
We are a network company with scale leadership in the evolving data collaboration market.
— Scott Howe
Offshoring remains a big lever for the business, over the medium term... today we have about 250 roles offshore.
— Lauren Dillard
Forward Guidance
Trajectory and rationale:
- FY25 guidance: Revenue raised to $737–$739M (+12% YoY at the midpoint) with non-GAAP operating income of $133–$135M and gross margin of 74–75%. The company projects an 18% operating margin at the guidance midpoint, noting that this is a few basis points below Q2’s run-rate but still represents meaningful margin expansion vs. prior periods. The outlook assumes subscription net retention remains around 100–105% and marketplace/other growth in the high-teens, supported by data marketplace strength and modest services growth normalization in H2. Q3 guidance implies revenue of $191M and non-GAAP operating income of $39M (OPM ~20%). Management framed this as a “Rule of 30†outcome at the midpoint (12% revenue growth + 18% margin).
- FY26 outlook: Management articulated a potential pathway to 20–25% operating margin, underpinned by: (i) continued offshore/hybrid operating model improvements, (ii) cost efficiencies across SG&A and product engineering, (iii) higher revenue leverage from the SaaS model and “high drop-down†economics on incremental revenue, and (iv) ongoing expansion of the Clean Room network that creates higher-value use cases and pricing power.
- Key catalysts and monitoring factors: (1) adoption and monetization of Netflix/Disney partnerships and broader CTV publisher participation in the Clean Room network; (2) cadence of Oracle-related marketplace opportunities in Q3 and beyond; (3) realization of Habu synergies and integration progress; (4) progression of offshoring efficiency gains and expense discipline; (5) renewal rate stability and ARR growth momentum; (6) macro ad-market trajectory and IT spend cycle in 2H23–24 context returning to more normalized levels.
Bottom-line assessment: The combination of a disciplined margin expansion path, sustained top-line growth driven by an expanding data collaboration ecosystem, and a clear plan to scale the Clean Room network supports a constructive long-term outlook. Investors should monitor the pace of subscriber churn/downsell reductions, the rate of publisher/data-owner node onboarding, and the execution of offshoring and platform modernization initiatives as the primary drivers of the Rule of 40 trajectory.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
RAMP Focus
72.38%
4.04%
0.19%
237.12%
PAGS
47.30%
31.80%
3.52%
10.40%
DAVA
23.00%
0.86%
1.05%
53.60%
NTNX
87.00%
9.99%
-6.99%
81.39%
SPLK
76.70%
-7.52%
1.62%
-71.28%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
View: Positive medium-term with a clear path to stronger profitability and higher operating margins, supported by a growing data collaboration network and AI-enabled use cases. LiveRamp’s differentiated two-sided Clean Room platform positions the company to monetize premium data ecosystems as third-party signals fade and first-party data becomes increasingly valuable. The FY25 guidance reflects a resilient top-line trajectory and a meaningful margin expansion plan, while FY26 targets imply a more pronounced margin uplift (20–25%) driven by ongoing offshoring, cost efficiencies, and revenue mix improvements. The key risks to monitor include the pace of advertiser demand normalization, the integration of Habu, and the monetization timelines around Oracle-related marketplace opportunities and Netflix/Disney deals. Given the strong cash flow generation, sizable share repurchase program, and a comprehensive strategy to scale the network and its use cases, the stock presents an attractive long-duration exposure to the evolving privacy-first advertising stack, albeit with exposure to ad-market cycles and execution risk inherent in a high-growth software platform.
Key Investment Factors
Growth Potential
Two-sided revenue model anchored in publishers and brand advertisers, a growing data marketplace with 200+ providers, and a rapidly expanding Clean Room network targeted at key data owner nodes (retail/Commerce Media, CTV, premium Open Web). Management notes a flywheel effect as more publishers and data owners join, enabling more use cases (e.g., AI integrations with Perplexity and Chalice) and deeper activation across advertising ecosystems. The company indicated a midpoint FY26 margin path to 20–25% with 12%+ revenue growth in the near term, implying a Rule of 40 trajectory in the 32–37% band at midpoint assumptions.
Profitability Risk
Macro advertising cycles and IT budgets remain a near-term headwind; longer sales cycles persist in enterprise deals; dependence on key data publisher partnerships and privacy regulations; integration risks related to Habu and platform modernization; Oracle/Netflix/Disney partnerships have strategic upside but near-term monetization may be uneven; competition from other identity solutions and data marketplaces could compress pricing power over time.
Financial Position
Strong liquidity with a net cash position (net debt approximately -$300M); solid operating cash flow generation ($55.6M in Q2; free cash flow ~$55.3M) supports ongoing buybacks (YTD ~$71M; $287M remaining under authorization) and continued investment in growth initiatives. A robust ARR base ($483M) and improving subscription net retention (107%) provide visibility into durable recurring revenue, while a disciplined capital allocation approach (offshoring, SG&A efficiency) supports margin expansion into FY26 and beyond.
SWOT Analysis
Strengths
Large, scalable data collaboration network with 500+ advertisers/ad agencies and 500+ publishers; network reach covers a substantial majority of U.S. consumer online time (over 92%).
Data Marketplace with 200+ providers and growing first-party data collaborations through Clean Rooms; dual-sided revenue model (publishers and brands) that incentivizes ecosystem participation.
High-velocity subscription economics with 107% net retention and escalating ARR (+13% YoY).
Recent wins and upsells (e.g., multiyear/multimillion ACV with a global ad agency, seven-figure ACV upsell with a financial services firm) demonstrate monetization strength and cross-sell opportunities.
Weaknesses
Near-term macro headwinds and tepid IT budgets affecting pipeline-to-sales conversion.
GAAP profits are modest (GAAP OI $7.5M in QQ2) due to amortization and stock-based compensation; reliance on non-GAAP metrics for profitability signaling.
Complex integration and execution risk from Habu acquisition and large-scale platform modernization programs.
Opportunities
CTV/Streaming data collaboration expansion (Disney, Netflix partnerships) and broader publisher participation to strengthen measurement and activation capabilities.
AI-enabled use cases and partnerships (Perplexity, Chalice) to widen addressable market and drive incremental revenue.
Continued offshore/offshoring efficiencies to lift FY26 margins toward 20–25%.
Expansion of data collaboration to Commerce Media and premium open web publishers, expanding the network flywheel and pricing power.
Threats
Ad market cyclicality and uncertain macro environment impacting near-term demand.
Regulatory/privacy developments and dependency on first-party data ecosystems could affect data availability and monetization.
Competition from other identity solutions and data marketplaces; potential delays in large-scale publisher onboarding or advertiser adoption.