EPS of $0.12 increased by 247.2% from previous year
Gross margin of 70.1%
Net income of 7.75M
"We are not an AI company, all right? We're just not. We are utilizing AI in a lot of the things that we do and building in to make our products better. And we'll be the only company in the world that can allow a client to combine first‑party, second‑party and third‑party data to make really amazing AI segments." - Scott E. Howe
LiveRamp Holdings Inc (RAMP) QQ1 2026 Results Analysis: Double‑Digit Revenue Growth, Margin Expansion, and AI‑Driven Growth Prospects in a Dynamic Ad Tech Environment
Executive Summary
LiveRamp delivered a solid start to FY2026 with QQ1 results that exceeded internal expectations on both revenue and profitability. Revenue was about $195 million, up in double digits year over year, accompanied by meaningful margin expansion. Non-GAAP operating income rose 34% to roughly $36 million, driving a non-GAAP operating margin near 18% for the quarter, while GAAP operating income also reached a quarterly high versus prior periods. Management highlighted robust early traction across the data collaboration network, led by Cross‑Media Intelligence, Commerce Media Networks and CTV, and indicated ongoing benefits from cost discipline and offshore/offshoring initiatives that supported the margin expansion. The company raised FY26 revenue guidance and free cash flow expectations, signaling confidence in a stronger back half of the year as new pricing and AI‑driven capabilities scale.
Looking ahead, LiveRamp’s growth is being underpinned by three strategic pillars: (1) a rapidly expanding data collaboration network with high ROI signals validated by external research, (2) a pricing pilot designed to simplify usage-based economics and improve deal velocity, and (3) an explicit AI narrative that positions LiveRamp as an AI activation enabler, not an AI platform competitor. While near‑term free cash flow was negative on a basis of typical seasonality and working capital movements, management expects FCF outperformance relative to the prior year due to tax legislation benefits and operating leverage from the back‑end migration. The combination of a strong top line, improving margins, a disciplined balance sheet (net cash position with no debt), and a clear AI‑driven growth trajectory supports a constructive long‑term investment thesis, albeit with sensitivity to ad market dynamics and customer churn events observed in selective large accounts.
Key Performance Indicators
Revenue
194.82M
QoQ: -0.30% | YoY:13.37%
Gross Profit
136.50M
70.07% margin
QoQ: -2.79% | YoY:9.97%
Operating Income
7.22M
QoQ: -50.79% | YoY:150.58%
Net Income
7.75M
QoQ: -30.89% | YoY:244.18%
EPS
0.12
QoQ: -29.41% | YoY:247.24%
Revenue Trend
Margin Analysis
Key Insights
to high single digits with usage-based revenue contributing meaningfully (subscription usage up ~40% in Q1, guidance for flat YoY in Q2 usage); (ii) Marketplace and other revenue up 13% to $46 million; (iii) RPO up 29% to $690 million, with current RPO up 14% to $451 million, though RPO/cRPO declined sequentially due to seasonality; (iv) ARR up 5% YoY; (v) Gross margin stable around the low-to-mid 70s in H1 and improving toward the mid-70s in H2 as migrations complete; (vi) Cash flow remains pressured by seasonality but expects improved FCF in FY26 aided by tax legislation and operating leverage.
Financial Highlights
Revenue: $194.822 million (QQ1 2026), up 11% from the year-ago period according to management commentary; Gross margin: 70.07% (gross profit $136.503 million); Operating income: $7.221 million (GAAP) vs prior-year loss; Non-GAAP operating income: $36.0 million, up 34% YoY; Non-GAAP operating margin: ~18%; Net income: $7.747 million; EPS: $0.12; Weighted average diluted shares: 66.7309 million; Free cash flow: -$16.158 million (seasonality and working capital); Cash and cash equivalents: $363.612 million; Total assets: $1.232 billion; Total liabilities: $284.283 million; Total stockholders’ equity: $947.812 million; Net debt: -$328.505 million (net cash position).
Key operating trends highlighted by management include: (i) Subscription revenue up mid- to high single digits with usage-based revenue contributing meaningfully (subscription usage up ~40% in Q1, guidance for flat YoY in Q2 usage); (ii) Marketplace and other revenue up 13% to $46 million; (iii) RPO up 29% to $690 million, with current RPO up 14% to $451 million, though RPO/cRPO declined sequentially due to seasonality; (iv) ARR up 5% YoY; (v) Gross margin stable around the low-to-mid 70s in H1 and improving toward the mid-70s in H2 as migrations complete; (vi) Cash flow remains pressured by seasonality but expects improved FCF in FY26 aided by tax legislation and operating leverage.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
194.82M
13.37%
-0.30%
Gross Profit
136.50M
9.97%
-2.79%
Operating Income
7.22M
150.58%
-50.79%
Net Income
7.75M
244.18%
-30.89%
EPS
0.12
247.24%
-29.41%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Themes from the earnings call and management commentary:
- Strategy and product momentum: Cross‑Media Intelligence is the new growth engine, with remarks that the solution is exceeding expectations and attracting high-profile customers; Commerce Media Networks continue to scale beyond retail into airlines, automotive, real estate, and other verticals; CTV momentum remains a key driver as brands connect first‑party data to growing streaming destinations; Netflix integration cited as a quality node that supports a broad ad inventory network.
- AI and data activation: Scott Howe emphasized that LiveRamp is not an AI company but an AI enabler, with a focus on fueling AI models with proprietary LiveRamp data and partner signals via its clean room-enabled data collaboration platform. The company highlighted the unfolding AI ecosystem and potential partnerships (e.g., Perplexity, Chalice) as levers for growth.
- Pricing strategy and monetization: A six-month pilot of a new usage-based pricing model has begun with up to 40 customers, including the world’s largest quick-serve restaurant, aiming to simplify pricing and improve deal velocity while reducing upfront friction and enabling a fungible token system across products. Lauren Dillard noted the pilot’s early positive responses and anticipated benefits in 2H FY26 and FY27.
- Financial discipline and capital allocation: Management reiterated ongoing cost control through offshore/offshoring initiatives and a disciplined approach to stock-based compensation; the company plans to deploy higher free cash flow towards opportunistic share repurchases, maintaining a strong balance sheet with no debt.
- Outlook and guidance: Q2 revenue guidance of $197 million with ~20% operating margin (non-GAAP) and subscription growth in the mid‑single digits; FY26 revenue guidance raised to $798–$818 million (up mid‑single digits on fixed subscriptions and higher usage), with non-GAAP operating income of $178–$182 million and free cash flow improvement expected from tax legislation and normalization of working capital.
We are not an AI company, all right? We're just not. We are utilizing AI in a lot of the things that we do and building in to make our products better. And we'll be the only company in the world that can allow a client to combine first‑party, second‑party and third‑party data to make really amazing AI segments.
— Scott E. Howe
Revenue increased by 11% and was $4 million above our guide. We increased our FY '26 revenue guidance by $6 million at the midpoint by increasing the low end of the range.
— Lauren R. Dillard
Forward Guidance
Management raised full-year FY26 guidance: revenue to $798–$818 million, representing 7–10% growth; non-GAAP operating income $178–$182 million; GAAP operating income $81–$85 million; gross margins expected to be roughly flat versus FY25 in H1, improving to the mid-70s in H2 as the backend migration completes; free cash flow is expected to increase year over year aided by tax legislation and higher operating income, with a substantial portion of incremental cash flow allocated to share repurchases. Q2 guidance implies revenue of $197 million and non-GAAP operating income around $39 million with ~20% operating margin; subscription revenue growth mid-single digits and marketplace/other in the low-to-mid teens.
Assessment of achievability:
- The growth trajectory is plausible given the ongoing momentum in Cross‑Media Intelligence, Commerce Media Networks, and CTV, plus early adoption of the new pricing model which should enhance deal velocity and ARR expansion. The company also cited a strong pipeline and several multi‑million deals in progress for Q2 and beyond. The 6‑month pilot with up to 40 customers suggests potential variability as the program scales, but the early enthusiasm and ROI data from Forrester/IDC provide a supportive backdrop.
- Risks to achieving the higher end of guidance include macro ad-market softness, execution risk around the pricing transition (internal systems and renewals for existing clients), potential operational costs from the backend migration, and execution risk in scaling new products across multiple verticals.
- Key monitoring factors for investors include: trajectory of usage-based revenue, net retention and ARR progression, the pace of cRPO/RPO renewal, the speed of migration to the new backend, the monetization impact of Cross‑Media Intelligence and Netflix/CTV integrations, and the evolution of free cash flow as tax benefits normalize working capital.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
RAMP Focus
70.07%
N/A
N/A
N/A
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
Positive longer-term view supported by revenue growth momentum and expanding margins. QQ1 2026 results show continued double-digit top-line growth and a multi‑year growth runway aided by a scalable data collaboration network and AI-enabled capabilities. The pricing pilot could improve deal velocity and customer acquisition, while offshoring and cost discipline bolster profitability. The AI narrative positions LiveRamp as an essential data activation backbone for AI-driven advertising, potentially differentiating it from peers who may focus more on AI platform development. The main near-term caveat is ad-market sensitivity and execution risk during backend migrations and pricing transition. If LiveRamp sustains its current trajectory—particularly through sustained ARR growth, healthy RPO progression, and the successful rollout of the new pricing model—the stock could benefit from higher confidence in the back half of FY26 and into FY27, supported by stronger free cash flow and incremental buybacks.
Key Investment Factors
Growth Potential
Large addressable opportunities exist in AI-driven advertising and data activation through Cross‑Media Intelligence, Commerce Media Networks, and CTV. External validation (Forrester ROI study showing ~313% ROI over 3 years; IDC leadership in data clean room) supports a sustainable demand pull. Pricing modernization and offshoring create a favorable foundation for higher spend per customer and improved gross margins as the migration completes.
Profitability Risk
Key exposures include dependence on advertising market cycles, potential churn from large enterprise customers (Oracle exit contributed to a one‑time impact), execution risk in scaling the new pricing model, back-end migration costs, and regulatory/privacy developments that could affect data connectivity and trust networks. Competitive intensity in data clean rooms and AI-enabled advertising ecosystems adds further structural risk.
Financial Position
Healthy balance sheet with no debt and a net cash position (~$328.5 million). Cash at period-end of ~$363.6 million; strong liquidity supports ongoing buybacks. Margin expansion is achievable through offshore/offshoring, cost discipline, and operational leverage from higher ARR/story anchors; 2025 tax legislation is expected to boost EBITDA conversion and free cash flow.
SWOT Analysis
Strengths
Leading data collaboration platform with robust data connectivity and privacy-preserving clean room capabilities
Growing momentum in Cross‑Media Intelligence, Commerce Media Networks, and CTV
Algorithmic and governance advantages (shared identity frameworks, interoperability across clouds) supporting AI-era data utilization
Strong balance sheet: net cash position, no debt, significant liquidity for buybacks
External validation: Forrester ROI study and IDC leadership in data clean room technology
Weaknesses
Near-term negative free cash flow due to seasonality and working capital, despite improving profitability
Churn risk from large customers (e.g., Oracle exit) impacting $1M+ revenue cohort in a single quarter
Significant upfront migration costs and integration work as backend upgrade progresses
Opportunities
Expanded adoption of pricing model to accelerate growth and improve unit economics
AI-enabled data activation partnerships and integrations with leading AI platforms and agents
Industry diversification via Commerce Media into travel, payments, real estate, and SMB segments (SMB momentum via new pricing and tokenized usage)
Netflix integration and broader CTV monetization driving addressable scale
Threats
Macro ad market volatility affecting demand for data connectivity and measurement services
Competition in data clean rooms and AI-enabled marketing solutions
Regulatory/privacy developments and data-sharing constraints that could impede cross‑partner data collaboration