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LiveRamp Announces Fourth Quarter and Fiscal Year Results

Q4 Revenue Up 5% and Full Year Revenue Up 13%

Q4 GAAP Gross Margin of 71% and Non-GAAP Gross Margin of 75%

Full Year Operating Cash Flow of $34 Million

$150 Million in Shares Repurchased in Full Year

LiveRamp® (NYSE: RAMP), the leading data collaboration platform, today announced its financial results for the quarter and fiscal year ended March 31, 2023.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230524005702/en/

Fourth Quarter Financial Highlights

All metrics compared to the prior year fourth quarter.

  • Total revenue was $149 million, up 5%.
  • Subscription revenue was $121 million, up 5%, and contributed 81% of total revenue.
  • Marketplace & Other revenue was $28 million, up 6%.
  • GAAP gross profit was $105 million, up 3%, and GAAP gross margin of 71% declined by 1 percentage point. Non-GAAP gross profit was $111 million, up 3%, and non-GAAP gross margin of 75% declined by 2 percentage points.
  • GAAP operating loss was $47 million compared to $28 million in the prior year period. Non-GAAP operating income was $14 million compared to $3 million in the prior year period.
  • The Company accelerated the vesting of certain time-vesting restricted stock units that would have otherwise vested over the next six months to take advantage of cash tax savings opportunities. In the fourth quarter, the Company recognized $23 million of stock-based compensation expense and $2 million of payroll tax expense related to the accelerated vesting. The accelerated vesting was not contemplated in the Company’s financial outlook for the fourth quarter and fiscal 2023. The payroll tax expense impacted both GAAP and non-GAAP operating income, while the stock-based compensation expense only impacted GAAP operating income.
  • GAAP diluted loss per share was $0.48, and non-GAAP diluted earnings per share was $0.32.
  • Net cash provided by operating activities was $31 million compared to $59 million in the prior year period.

Fiscal Year Financial Highlights

All metrics compared to the prior fiscal year.

  • Total revenue was $597 million, up 13%.
  • Subscription revenue was $483 million, up 13%, and contributed 81% of total revenue.
  • Marketplace & Other revenue was $114 million, up 14%.
  • GAAP gross profit was $426 million, up 12%, and GAAP gross margin of 71% declined by 1 percentage point. Non-GAAP gross profit was $450 million, up 11%, and non-GAAP gross margin of 75% declined by 1 percentage point.
  • GAAP operating loss was $126 million compared to $66 million in the prior year. Non-GAAP operating income was $61 million compared to $42 million in the prior year.
  • GAAP diluted loss per share was $1.79, and non-GAAP diluted earnings per share was $0.86.
  • Net cash provided by operating activities was $34 million compared to $78 million in the prior year.
  • In FY23, LiveRamp repurchased 6.1 million shares for $150 million. Since inception of the share repurchase program in August 2011, the Company has returned approximately $1.4 billion in capital to shareholders. To date in FY24, the Company has repurchased 0.5 million shares for $12 million. There is $206 million currently available under the share repurchase authorization that expires on December 31, 2024.

A reconciliation between GAAP and non-GAAP results is provided in the schedules to this press release.

LiveRamp CEO Scott Howe said, “We delivered an in-line quarter, hitting our key financial targets. We enter fiscal 2024 as a more efficient company, with a leaner cost structure and encouraging sales momentum, particularly upselling customers to our data collaboration platform. We expect this momentum to build in FY24 as our recently announced integrations and partnerships – such as with Google PAIR, Snowflake and Twilio – gain traction in the market.”

GAAP and Non-GAAP Results

The following table summarizes the Company’s financial results for its fourth quarter and fiscal year ($ in millions):

 

Q4 Fiscal 2023

 

Full Year Fiscal 2023

 

Results

 

Results

 

GAAP

Non-GAAP

 

GAAP

Non-GAAP

Subscription revenue

$121

 

$483

YoY change %

5%

 

 

13%

 

Marketplace & other revenue

$28

 

$114

YoY change %

6%

 

 

14%

 

Total revenue

$149

 

$597

YoY change %

5%

 

 

13%

 

 

 

 

 

 

 

Gross profit

$105

$111

 

$426

$450

% Gross margin

71%

75%

 

71%

75%

YoY change, pts

(1 pt)

(2 pt)

 

(1 pt)

(1 pt)

 

 

 

 

 

 

Operating income (loss)

($47)

$14

 

($126)

$61

% Operating margin

(32%)

10%

 

(21%)

10%

YoY change, pts

(12 pts)

8 pts

 

(9 pts)

2 pts

 

 

 

 

 

 

Net earnings (loss)

($31)

$21

 

($119)

$58

Diluted earnings (loss) per share

($0.48)

$0.32

 

($1.79)

$0.86

 

 

 

 

 

 

Shares to calculate diluted EPS

65.1

66.3

 

66.4

67.1

YoY change %

(5%)

(3%)

 

(3%)

(4%)

 

 

 

 

 

 

Net operating cash flow

$31

 

$34

Free cash flow to equity

$31

 

$30

 

 

 

 

 

 

Totals may not sum due to rounding.

A detailed discussion of our non-GAAP financial measures and a reconciliation between GAAP and non-GAAP results is provided in the schedules to this press release

Additional Business Highlights & Metrics

  • The Company’s Authenticated Traffic Solution (ATS) has reached global scale. There are currently more than 165 supply-side platforms (SSPs) and demand-side platforms (DSPs) live or committed to bid on RampID™ and ATS, including The Trade Desk, Xander, Amobee, Criteo, Roku Oneview, and MediaMath.
  • To date, over 14,000 publisher domains, including 70% of the comScore 100 largest publishers, have integrated ATS worldwide, including Amazon Publisher Services, Microsoft, Hearst, CafeMedia, Leaf Group, Prisma Media and Burda. Through these integrations, LiveRamp is now connected to over 90% of consumer time spent online in the US.
  • In February 2023, LiveRamp announced enhanced product capabilities natively built on Snowflake, a leading data cloud warehouse. Last year, LiveRamp’s identity solutions were natively integrated into Snowflake. Now LiveRamp’s data activation solutions will be natively built into Snowflake, along with an easy-to-use, marketer-friendly user interface, allowing customers to easily activate hundreds of marketing and media destinations directly from Snowflake.
  • In March 2023, LiveRamp announced that its activation network now extends to mar-tech capabilities through a new partnership with Twilio. This integration will enable marketers to seamlessly activate their LiveRamp audiences in SMS and Email on Twilio, enabling new audience activation channels, as well as the centralization of measurement across advertising and marketing channels.
  • In March 2023, LiveRamp announced a new partnership with Adobe Real-Time Customer Data Platform to natively offer LiveRamp’s people-based identifier, RampID. Through a new LiveRamp app available in Adobe Exchange, marketers will be able to activate their customer data on RampID via downstream activation partners including DSPs, SSPs, CTV destinations, and other premium publishers.
  • LiveRamp added 10 net new direct subscription customers in the fourth quarter. Customer count at quarter end was 920, up from 905 a year ago.
  • At the end of the fourth quarter, LiveRamp had 95 customers whose subscription contracts exceed $1 million in annual revenue, up from 87 in the prior year period.
  • During the fourth quarter, subscription net retention was 97%, and platform net retention was 99%.
  • Current remaining performance obligations (CRPO), which is contracted and committed revenue expected to be recognized over the next 12 months, at the end of the fourth quarter was $338 million, up 9% compared to the prior year period.

Financial Outlook

LiveRamp’s non-GAAP guidance excludes the impact of non-cash stock compensation, purchased intangible asset amortization, and restructuring charges.

For the first quarter of fiscal 2024, LiveRamp expects to report:

  • Revenue of approximately $147 million, an increase of 3% year-over-year
  • GAAP operating loss of approximately $8 million
  • Non-GAAP operating income of approximately $15 million

For fiscal 2024, LiveRamp expects to report:

  • Revenue of between $610 million and $620 million, an increase of between 2% and 4% year-over-year
  • GAAP operating income of between $3 million and $6 million
  • Non-GAAP operating income of between $90 million and $93 million.

Conference Call

LiveRamp will hold a conference call at 1:30 p.m. PT today to further discuss this information. Interested parties are invited to listen to the call which will be broadcast via the Internet and can be found on LiveRamp’s investor site. A slide presentation will be referenced during the call and can be accessed here.

About LiveRamp

LiveRamp is the data collaboration platform of choice for the world’s most innovative companies. A groundbreaking leader in consumer privacy, data ethics, and foundational identity, LiveRamp is setting the new standard for building a connected customer view with unmatched clarity and context while protecting precious brand and consumer trust. LiveRamp offers complete flexibility to collaborate wherever data lives to support the widest range of data collaboration use cases—within organizations, between brands, and across its premier global network of top-quality partners. Hundreds of global innovators, from iconic consumer brands and tech giants to banks, retailers, and healthcare leaders, turn to LiveRamp to build enduring brand and business value by deepening customer engagement and loyalty, activating new partnerships, and maximizing the value of their first-party data while staying on the forefront of rapidly evolving compliance and privacy requirements. LiveRamp is based in San Francisco, California with offices worldwide. Learn more at LiveRamp.com.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended (the “PSLRA”). These statements, which are not statements of historical fact, may contain estimates, assumptions, projections and/or expectations regarding the Company’s financial position, results of operations for fiscal 2024 and beyond, market position, product development, growth opportunities, economic conditions, and other similar forecasts and statements of expectation. Forward-looking statements are often identified by words or phrases such as “anticipate,” “estimate,” “plan,” “expect,” “believe,” “intend,” “foresee,” or the negative of these terms or other similar variations thereof.

These forward-looking statements are not guarantees of future performance and are subject to a number of factors and uncertainties that could cause the Company’s actual results and experiences to differ materially from the anticipated results and expectations expressed in the forward-looking statements.

Among the factors that may cause actual results and expectations to differ from anticipated results and expectations expressed in forward-looking statements are uncertainties related to rising interest rates, cost increases, the possibility of a recession, general inflationary pressure, and the associated impacts of these potential events on our suppliers, customers and partners; the Company’s dependence upon customer renewals; new customer additions and upsell within our subscription business; our reliance upon partners, including data suppliers; competition; and attracting and retaining talent. Additional risks include maintaining our culture and our ability to innovate and evolve while operating in a hybrid work environment, with some employees working remotely at least some of the time within a rapidly changing industry, while also avoiding disruption from reductions in our current workforce as well as disruptions resulting from acquisition, divestiture and other activities affecting our workforce. Our international operations are also subject to risks, including the performance of third parties as well as impacts from war and civil unrest, that may harm the Company’s business. The risk of a significant breach of the confidentiality of the information or the security of our or our customers’, suppliers’, or other partners’ data and/or computer systems, or the risk that our current insurance coverage may not be adequate for such a breach, that an insurer might deny coverage for a claim or that such insurance will continue to be available to us on commercially reasonable terms, or at all, could be detrimental to our business, reputation and results of operations. Other business risks include unfavorable publicity and negative public perception about our industry; interruptions or delays in service from data center or cloud hosting vendors we rely upon; and our dependence on the continued availability of third-party data hosting and transmission services. Our clients’ ability to use data on our platform could be restricted if the industry’s use of third-party cookies and tracking technology declines due to technology platform changes, regulation or increased user controls. Changes in regulations relating to information collection and use represents a risk, as well as changes in tax laws and regulations that are applied to our customers which could cause enterprise software budget tightening. In addition, third parties may claim that we are infringing their intellectual property or may infringe our intellectual property which could result in competitive injury and / or the incurrence of significant costs and draining of our resources.

For a discussion of these and other risks and uncertainties, please refer to LiveRamp’s Annual Report on Form 10-K for our fiscal year 2022 ended March 31, 2022, and LiveRamp's Quarterly Reports on Form 10-Q issued in fiscal year 2023.

The financial information set forth in this press release reflects estimates based on information available at this time.

LiveRamp assumes no obligation and does not currently intend to update these forward-looking statements.

To automatically receive LiveRamp financial news by email, please visit www.LiveRamp.com and subscribe to email alerts.

ERAMP

LiveRampand RampIDTM and all other LiveRamp marks contained herein are trademarks or service marks of LiveRamp, Inc. All other marks are the property of their respective owners.

 
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
 
For the Three Months Ended
March 31,
$ %

2023

 

2022

 

Variance Variance
 
Revenues

148,626

 

141,725

 

6,901

 

4.9

%

 
Cost of revenue

43,472

 

39,476

 

3,996

 

10.1

%

Gross profit

105,154

 

102,249

 

2,905

 

2.8

%

% Gross margin

70.8

%

72.1

%

 
Operating expenses:
Research and development

52,220

 

45,501

 

6,719

 

14.8

%

Sales and marketing

57,506

 

54,951

 

2,555

 

4.6

%

General and administrative

32,832

 

29,583

 

3,249

 

11.0

%

Gains, losses and other items, net

9,723

 

183

 

9,540

 

5213.1

%

Total operating expenses

152,281

 

130,218

 

22,063

 

16.9

%

 
Loss from operations

(47,127

)

(27,969

)

(19,158

)

(68.5

%)

% Margin

-31.7

%

-19.7

%

 
Total other income (expense), net

4,735

 

(47

)

4,782

 

10174.5

%

 
Loss from continuing operations before income taxes

(42,392

)

(28,016

)

(14,376

)

(51.3

%)

 
Income tax expense (benefit)

(6,460

)

1,376

 

(7,836

)

(569.5

%)

 
Net loss from continuing operations

(35,932

)

(29,392

)

(6,540

)

(22.3

%)

 
Earnings from discontinued operations, net of tax

4,568

 

-

 

4,568

 

n/a

 

 
Net loss

(31,364

)

(29,392

)

(1,972

)

(6.7

%)

 
Basic earnings (loss) per share:
Continuing operations

(0.55

)

(0.43

)

(0.12

)

(28.2

%)

Discontinued operations

0.07

 

-

 

0.07

 

n/a

 

Basic loss per share

(0.48

)

(0.43

)

(0.05

)

(11.9

%)

 
Diluted earnings (loss) per share:
Continuing operations

(0.55

)

(0.43

)

(0.12

)

(28.2

%)

Discontinued operations

0.07

 

-

 

0.07

 

n/a

 

Diluted loss per share:

(0.48

)

(0.43

)

(0.05

)

(11.9

%)

 
Basic weighted average shares

65,126

 

68,283

 

Diluted weighted average shares

65,126

 

68,283

 

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
 
For the Twelve Months Ended
March 31,
$ %

2023

 

2022

 

Variance Variance
 
Revenues

596,583

 

528,657

 

67,926

 

12.8

%

 
Cost of revenue

170,084

 

147,427

 

22,657

 

15.4

%

Gross profit

426,499

 

381,230

 

45,269

 

11.9

%

% Gross margin

71.5

%

72.1

%

 
Operating expenses:
Research and development

189,195

 

157,935

 

31,260

 

19.8

%

Sales and marketing

202,437

 

182,763

 

19,674

 

10.8

%

General and administrative

125,351

 

104,591

 

20,760

 

19.8

%

Gains, losses and other items, net

35,316

 

1,479

 

33,837

 

2287.8

%

Total operating expenses

552,299

 

446,768

 

105,531

 

23.6

%

 
Loss from operations

(125,800

)

(65,538

)

(60,262

)

(91.9

%)

% Margin

-21.1

%

-12.4

%

 
Total other income, net

6,946

 

30,463

 

(23,517

)

(77.2

%)

 
Loss from continuing operations before income taxes

(118,854

)

(35,075

)

(83,779

)

(238.9

%)

 
Income tax expense (benefit)

5,252

 

(1,242

)

6,494

 

522.9

%

 
Net loss from continuing operations

(124,106

)

(33,833

)

(90,273

)

(266.8

%)

 
Earnings from discontinued operations, net of tax

5,404

 

-

 

5,404

 

n/a

 

 
Net loss

(118,702

)

(33,833

)

(84,869

)

(250.8

%)

 
Basic earnings (loss) per share:
Continuing operations

(1.87

)

(0.50

)

(1.37

)

(277.1

%)

Discontinued operations

0.08

 

-

 

0.08

 

n/a

 

Basic earnings (loss) per share

(1.79

)

(0.50

)

(1.29

)

(260.7

%)

 
Diluted earnings (loss) per share:
Continuing operations

(1.87

)

(0.50

)

(1.37

)

(277.1

%)

Discontinued operations

0.08

 

-

 

0.08

 

n/a

 

Diluted earnings (loss) per share:

(1.79

)

(0.50

)

(1.29

)

(260.7

%)

 
Basic weighted average shares

66,352

 

68,211

 

Diluted weighted average shares

66,352

 

68,211

 

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP EPS (1)
(Unaudited)
(Dollars in thousands, except per share amounts)
 
For the Three Months Ended For the Twelve Months Ended
March 31, March 31,

2023

 

2022

 

2023

 

2022

 

 
Loss from continuing operations before income taxes

(42,392

)

(28,016

)

(118,854

)

(35,075

)

 
Income tax expense (benefit)

(6,460

)

1,376

 

5,252

 

(1,242

)

 
Net loss from continuing operations

(35,932

)

(29,392

)

(124,106

)

(33,833

)

 
Earnings from discontinued operations, net of tax

4,568

 

-

 

5,404

 

-

 

 
Net loss

(31,364

)

(29,392

)

(118,702

)

(33,833

)

 
Loss per share:
Basic

(0.48

)

(0.43

)

(1.79

)

(0.50

)

Diluted

(0.48

)

(0.43

)

(1.79

)

(0.50

)

 
Excluded items:
Purchased intangible asset amortization (cost of revenue)

3,336

 

4,807

 

16,825

 

18,711

 

Non-cash stock compensation (cost of revenue and operating expenses)

44,658

 

25,782

 

125,800

 

87,257

 

Transformation costs (general and administrative)

3,663

 

-

 

9,025

 

-

 

Restructuring and merger charges (gains, losses, and other)

9,723

 

183

 

35,316

 

1,479

 

Gain on retained profits interest (other income)

-

 

-

 

-

 

(30,235

)

 
Total excluded items, continuing operations

61,380

 

30,772

 

186,966

 

77,212

 

 
Income from continuing operations before income taxes and excluding items

18,988

 

2,756

 

68,112

 

42,137

 

 
Income tax expense (benefit) (2)

(2,141

)

3,391

 

10,121

 

8,515

 

 
Non-GAAP net earnings (loss) from continuing operations

21,129

 

(635

)

57,991

 

33,622

 

 
Non-GAAP earnings (loss) per share from continuing operations:
Basic

0.32

 

(0.01

)

0.87

 

0.49

 

Diluted

0.32

 

(0.01

)

0.86

 

0.48

 

 
Basic weighted average shares

65,126

 

68,283

 

66,352

 

68,211

 

Diluted weighted average shares

66,268

 

68,283

 

67,097

 

69,560

 

(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures and the material limitations on the usefulness of these measures, please see Appendix A.

(2) Income taxes were calculated by applying the estimated annual effective tax rate to year-to-date pretax income or loss and adjusting for discrete tax items in the period. The differences between our GAAP and non-GAAP effective tax rates were primarily due to the net tax effects of the excluded items, coupled with larger pre-tax losses for GAAP purposes versus smaller pre-tax losses or income for non-GAAP purposes.

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP INCOME (LOSS) FROM OPERATIONS (1)
(Unaudited)
(Dollars in thousands)
 
For the Three Months Ended For the Twelve Months Ended
March 31, March 31,

2023

 

2022

 

2023

 

2022

 

 
Loss from continuing operations

(47,127

)

(27,969

)

(125,800

)

(65,538

)

 
Excluded items:
Purchased intangible asset amortization (cost of revenue)

3,336

 

4,807

 

16,825

 

18,711

 

Non-cash stock compensation (cost of revenue and operating expenses)

44,658

 

25,782

 

125,800

 

87,257

 

Transformation costs (general and administrative)

3,663

 

-

 

9,025

 

-

 

Restructuring and merger charges (gains, losses, and other)

9,723

 

183

 

35,316

 

1,479

 

 
Total excluded items

61,380

 

30,772

 

186,966

 

107,447

 

 
Income from continuing operations before excluded items

14,253

 

2,803

 

61,166

 

41,909

 

(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures and the material limitations on the usefulness of these measures, please see Appendix A.

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA (1)
(Unaudited)
(Dollars in thousands)
 

For the Three Months Ended

 

For the Twelve Months Ended

March 31,

 

March 31,

2023

 

 

2022

 

 

2023

 

 

2022

 

 
Net loss from continuing operations

(35,932

)

(29,392

)

(124,106

)

(33,833

)

 
Income tax expense (benefit)

(6,460

)

1,376

 

5,252

 

(1,242

)

 
Other expense (income)

(4,735

)

47

 

(6,946

)

(30,463

)

 
Loss from operations

(47,127

)

(27,969

)

(125,800

)

(65,538

)

 
Depreciation and amortization

4,226

 

6,017

 

20,787

 

24,248

 

 
EBITDA

(42,901

)

(21,952

)

(105,013

)

(41,290

)

 
Other adjustments:
Non-cash stock compensation (cost of revenue and operating expenses)

44,658

 

25,782

 

125,800

 

87,257

 

Transformation costs (general and administrative)

3,663

 

-

 

9,025

 

-

 

Restructuring and merger charges (gains, losses, and other)

9,723

 

183

 

35,316

 

1,479

 

 
Other adjustments

58,044

 

25,965

 

170,141

 

88,736

 

 
Adjusted EBITDA

15,143

 

4,013

 

65,128

 

47,446

 

(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A.

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
 
March 31, March 31, $ %

2023

 

2022

 

Variance Variance
 
Assets
Current assets:
Cash and cash equivalents

464,448

 

600,162

 

(135,714

)

(22.6

%)

Short-term investments

32,807

 

7,500

 

25,307

 

337.4

%

Trade accounts receivable, net

157,379

 

148,343

 

9,036

 

6.1

%

Refundable income taxes, net

28,897

 

30,354

 

(1,457

)

(4.8

%)

Other current assets

31,028

 

29,475

 

1,553

 

5.3

%

 
Total current assets

714,559

 

815,834

 

(101,275

)

(12.4

%)

 
Property and equipment

39,393

 

45,001

 

(5,608

)

(12.5

%)

Less - accumulated depreciation and amortization

32,308

 

33,470

 

(1,162

)

(3.5

%)

 
Property and equipment, net

7,085

 

11,531

 

(4,446

)

(38.6

%)

 
Intangible assets, net

9,868

 

26,718

 

(16,850

)

(63.1

%)

Goodwill

363,116

 

363,845

 

(729

)

(0.2

%)

Deferred commissions, net

37,030

 

30,594

 

6,436

 

21.0

%

Other assets, net

41,045

 

85,214

 

(44,169

)

(51.8

%)

 

1,172,703

 

1,333,736

 

(161,033

)

(12.1

%)

 
Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable

86,568

 

83,197

 

3,371

 

4.1

%

Accrued payroll and related expenses

33,434

 

39,188

 

(5,754

)

(14.7

%)

Other accrued expenses

35,736

 

46,067

 

(10,331

)

(22.4

%)

Deferred revenue

19,091

 

16,114

 

2,977

 

18.5

%

 
Total current liabilities

174,829

 

184,566

 

(9,737

)

(5.3

%)

 
Other liabilities

71,798

 

86,110

 

(14,312

)

(16.6

%)

 
Stockholders' equity:
Preferred stock

-

 

-

 

-

 

n/a

 

Common stock

15,399

 

14,984

 

415

 

2.8

%

Additional paid-in capital

1,855,916

 

1,721,118

 

134,798

 

7.8

%

Retained earnings

1,302,291

 

1,420,993

 

(118,702

)

(8.4

%)

Accumulated other comprehensive income

4,504

 

5,730

 

(1,226

)

(21.4

%)

Treasury stock, at cost

(2,252,034

)

(2,099,765

)

(152,269

)

(7.3

%)

Total stockholders' equity

926,076

 

1,063,060

 

(136,984

)

(12.9

%)

 

1,172,703

 

1,333,736

 

(161,033

)

(12.1

%)

 
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
 
For the Three Months Ended
March 31,

2023

 

2022

 

 
Cash flows from operating activities:
Net loss

(31,364

)

(29,392

)

Earnings from discontinued operations, net of tax

(4,568

)

-

 

Non-cash operating activities:
Depreciation and amortization

4,226

 

6,017

 

Loss on disposal or impairment of assets

16

 

41

 

Lease impairments

9,380

 

-

 

Provision for doubtful accounts

48

 

1,090

 

Deferred income taxes

(89

)

(1,084

)

Non-cash stock compensation expense

44,658

 

25,782

 

Changes in operating assets and liabilities:
Accounts receivable

15,048

 

7,265

 

Deferred commissions

(4,313

)

(1,111

)

Other assets

6,117

 

4,786

 

Accounts payable and other liabilities

(6,060

)

11,321

 

Income taxes

(6,371

)

32,971

 

Deferred revenue

3,937

 

1,258

 

Net cash provided by operating activities

30,665

 

58,944

 

Cash flows from investing activities:
Capital expenditures

(103

)

(1,880

)

Purchases of investments

(25,197

)

-

 

Proceeds from sales of strategic investments

994

 

-

 

Cash paid in acquisition, net of cash received

-

 

(8,731

)

Net cash used in investing activities

(24,306

)

(10,611

)

Cash flows from financing activities:
Proceeds related to the issuance of common stock under stock and employee benefit plans

4

 

83

 

Shares repurchased for tax withholdings upon vesting of stock-based awards

(218

)

(410

)

Acquisition of treasury stock

-

 

(9,397

)

Net cash used in financing activities

(214

)

(9,724

)

Cash flows from discontinued operations:
From operating activities

4,568

 

-

 

Net cash provided by discontinued operations

4,568

 

-

 

Effect of exchange rate changes on cash

219

 

(137

)

 
Net change in cash and cash equivalents

10,932

 

38,472

 

Cash and cash equivalents at beginning of period

453,516

 

561,690

 

Cash and cash equivalents at end of period

464,448

 

600,162

 

 
Supplemental cash flow information:
Cash paid (received) during the period for:
Income taxes related to continuing operations

1,076

 

(30,101

)

Income taxes related to discontinued operations

(7,025

)

-

 

Operating lease liabilities

2,510

 

2,591

 

Operating lease assets obtained in exchange for operating lease liabilities

-

 

3,280

 

Purchases of property, plant, & equipment, net remaining unpaid at end of period

47

 

696

 

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
 
For the Twelve Months Ended
March 31,

2023

 

2022

 

 
Cash flows from operating activities:
Net loss

(118,702

)

(33,833

)

Earnings from discontinued operations, net of tax

(5,404

)

-

 

Non-cash operating activities:
Depreciation and amortization

20,787

 

24,248

 

Loss on disposal or impairment of assets

4,137

 

183

 

Lease impairments

27,545

 

-

 

Gain on sale of strategic investments

(194

)

-

 

Gain on distribution from retained profits interest

-

 

(30,235

)

Provision for doubtful accounts

1,776

 

4,217

 

Deferred income taxes

115

 

(1,540

)

Non-cash stock compensation expense

125,800

 

87,257

 

Changes in operating assets and liabilities:
Accounts receivable

(12,123

)

(38,611

)

Deferred commissions

(6,436

)

(7,975

)

Other assets

7,705

 

26,863

 

Accounts payable and other liabilities

(15,369

)

8,850

 

Income taxes

596

 

33,969

 

Deferred revenue

4,208

 

4,684

 

Net cash provided by operating activities

34,441

 

78,077

 

Cash flows from investing activities:
Capital expenditures

(4,696

)

(4,499

)

Purchases of investments

(28,197

)

-

 

Proceeds from sales of investments

3,000

 

-

 

Purchases of strategic investments

(500

)

-

 

Proceeds from sales of strategic investments

1,394

 

-

 

Distribution from retained profits interest

-

 

31,184

 

Cash paid in acquisition, net of cash received

-

 

(19,107

)

Net cash provided by (used in) investing activities

(28,999

)

7,578

 

Cash flows from financing activities:
Proceeds related to the issuance of common stock under stock and employee benefit plans

6,259

 

6,266

 

Shares repurchased for tax withholdings upon vesting of stock-based awards

(2,272

)

(14,626

)

Acquisition of treasury stock

(149,997

)

(58,621

)

Net cash used in financing activities

(146,010

)

(66,981

)

Cash flows from discontinued operations:
From operating activities

5,404

 

-

 

Net cash provided by discontinued operations

5,404

 

-

 

Effect of exchange rate changes on cash

(550

)

(199

)

 
Net change in cash and cash equivalents

(135,714

)

18,475

 

Cash and cash equivalents at beginning of period

600,162

 

581,687

 

Cash and cash equivalents at end of period

464,448

 

600,162

 

 
Supplemental cash flow information:
Cash paid (received) during the period for:
Income taxes related to continuing operations

5,801

 

(32,916

)

Income taxes related to discontinued operations

(8,332

)

-

 

Operating lease liabilities

8,243

 

10,108

 

Operating lease assets obtained in exchange for operating lease liabilities

69

 

56,182

 

Operating lease assets relinquished in exchange for operating lease liabilities

(6,781

)

-

 

Purchases of property, plant, & equipment, net remaining unpaid at end of period

47

 

696

 

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

CALCULATION OF FREE CASH FLOW TO EQUITY (1)

(Unaudited)

(Dollars in thousands)

 
06/30/21 09/30/21 12/31/21 03/31/22 FY2022 06/30/22 09/30/22 12/31/22 03/31/23 FY2023
 
Net Cash Provided by (Used in) Operating Activities-Continuing Operations

(17,241

)

10,901

 

25,473

 

58,944

 

78,077

 

(33,369

)

21,375

 

15,770

 

30,665

 

34,441

 

 
Less:
Capital expenditures

(427

)

(876

)

(1,316

)

(1,880

)

(4,499

)

(1,741

)

(2,673

)

(179

)

(103

)

(4,696

)

 
Free Cash Flow to Equity

(17,668

)

10,025

 

24,157

 

57,064

 

73,578

 

(35,110

)

18,702

 

15,591

 

30,562

 

29,745

 

(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures and the material limitations on the usefulness of these measures, please see Appendix A.

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
 
FY23 to FY22
06/30/21 09/30/21 12/31/21 03/31/22 FY2022 06/30/22 09/30/22 12/31/22 03/31/23 FY2023 % $
Revenues

119,038

 

127,290

 

140,604

 

141,725

 

528,657

 

142,243

 

147,099

 

158,615

 

148,626

 

596,583

 

12.8

%

67,926

 

 
Cost of revenue

34,315

 

35,079

 

38,557

 

39,476

 

147,427

 

41,021

 

42,304

 

43,287

 

43,472

 

170,084

 

15.4

%

22,657

 

Gross profit

84,723

 

92,211

 

102,047

 

102,249

 

381,230

 

101,222

 

104,795

 

115,328

 

105,154

 

426,499

 

11.9

%

45,269

 

% Gross margin

71.2

%

72.4

%

72.6

%

72.1

%

72.1

%

71.2

%

71.2

%

72.7

%

70.8

%

71.5

%

 
Operating expenses
Research and development

34,776

 

35,788

 

41,870

 

45,501

 

157,935

 

47,661

 

46,139

 

43,175

 

52,220

 

189,195

 

19.8

%

31,260

 

Sales and marketing

41,979

 

39,509

 

46,324

 

54,951

 

182,763

 

51,280

 

45,949

 

47,702

 

57,506

 

202,437

 

10.8

%

19,674

 

General and administrative

24,291

 

23,078

 

27,639

 

29,583

 

104,591

 

27,144

 

28,718

 

36,657

 

32,832

 

125,351

 

19.8

%

20,760

 

Gains, losses and other items, net

1,278

 

18

 

-

 

183

 

1,479

 

739

 

13,111

 

11,743

 

9,723

 

35,316

 

2287.8

%

33,837

 

Total operating expenses

102,324

 

98,393

 

115,833

 

130,218

 

446,768

 

126,824

 

133,917

 

139,277

 

152,281

 

552,299

 

23.6

%

105,531

 

 
Loss from operations

(17,601

)

(6,182

)

(13,786

)

(27,969

)

(65,538

)

(25,602

)

(29,122

)

(23,949

)

(47,127

)

(125,800

)

(91.9

%)

(60,262

)

% Margin

-14.8

%

-4.9

%

-9.8

%

-19.7

%

-12.4

%

-18.0

%

-19.8

%

-15.1

%

-31.7

%

-21.1

%

 
Total other income (expense), net

30,601

 

150

 

(241

)

(47

)

30,463

 

699

 

2,248

 

(736

)

4,735

 

6,946

 

(77.2

%)

(23,517

)

 
Income (loss) from continuing operations before income taxes

13,000

 

(6,032

)

(14,027

)

(28,016

)

(35,075

)

(24,903

)

(26,874

)

(24,685

)

(42,392

)

(118,854

)

(238.9

%)

(83,779

)

 
Income taxes expense (benefit)

(4,365

)

399

 

1,348

 

1,376

 

(1,242

)

2,315

 

3,562

 

5,835

 

(6,460

)

5,252

 

522.9

%

6,494

 

 
Net earnings (loss) from continuing operations

17,365

 

(6,431

)

(15,375

)

(29,392

)

(33,833

)

(27,218

)

(30,436

)

(30,520

)

(35,932

)

(124,106

)

(266.8

%)

(90,273

)

 
Earnings from discontinued operations, net of tax

-

 

-

 

-

 

-

 

-

 

-

 

-

 

836

 

4,568

 

5,404

 

n/a

 

5,404

 

 
Net earnings (loss)

17,365

 

(6,431

)

(15,375

)

(29,392

)

(33,833

)

(27,218

)

(30,436

)

(29,684

)

(31,364

)

(118,702

)

(250.8

%)

(84,869

)

 
Diluted earnings (loss) per share

0.25

 

(0.09

)

(0.23

)

(0.43

)

(0.50

)

(0.40

)

(0.45

)

(0.46

)

(0.48

)

(1.79

)

(260.7

%)

(1.29

)

 
Some earnings (loss) per share amounts may not add due to rounding.
 
Basic shares

68,328

 

68,042

 

68,190

 

68,283

 

68,211

 

68,403

 

67,096

 

64,784

 

65,126

 

66,352

 

Diluted shares

69,605

 

69,333

 

69,938

 

69,354

 

69,560

 

69,195

 

67,568

 

65,356

 

66,268

 

67,097

 

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP EXPENSES (1)
(Unaudited)
(Dollars in thousands)
 
06/30/21 09/30/21 12/31/21 03/31/22 FY2022 06/30/22 09/30/22 12/31/22 03/31/23 FY2023
 
Expenses, continuing operations:
Cost of revenue

34,315

 

35,079

 

38,557

 

39,476

 

147,427

 

41,021

 

42,304

 

43,287

 

43,472

 

170,084

 

Research and development

34,776

 

35,788

 

41,870

 

45,501

 

157,935

 

47,661

 

46,139

 

43,175

 

52,220

 

189,195

 

Sales and marketing

41,979

 

39,509

 

46,324

 

54,951

 

182,763

 

51,280

 

45,949

 

47,702

 

57,506

 

202,437

 

General and administrative

24,291

 

23,078

 

27,639

 

29,583

 

104,591

 

27,144

 

28,718

 

36,657

 

32,832

 

125,351

 

Gains, losses and other items, net

1,278

 

18

 

-

 

183

 

1,479

 

739

 

13,111

 

11,743

 

9,723

 

35,316

 

 
Gross profit, continuing operations:

84,723

 

92,211

 

102,047

 

102,249

 

381,230

 

101,222

 

104,795

 

115,328

 

105,154

 

426,499

 

% Gross margin

71.2

%

72.4

%

72.6

%

72.1

%

72.1

%

71.2

%

71.2

%

72.7

%

70.8

%

71.5

%

 
Excluded items:
Purchased intangible asset amortization (cost of revenue)

4,645

 

4,612

 

4,647

 

4,807

 

18,711

 

4,643

 

4,637

 

4,209

 

3,336

 

16,825

 

Non-cash stock compensation (cost of revenue)

790

 

948

 

1,168

 

1,205

 

4,111

 

1,163

 

1,293

 

1,208

 

2,653

 

6,317

 

Non-cash stock compensation (research and development)

5,348

 

7,184

 

9,264

 

10,316

 

32,112

 

11,656

 

12,360

 

10,654

 

20,737

 

55,407

 

Non-cash stock compensation (sales and marketing)

6,793

 

6,749

 

7,329

 

7,715

 

28,586

 

5,884

 

6,116

 

5,871

 

11,558

 

29,429

 

Non-cash stock compensation (general and administrative)

5,565

 

4,340

 

5,997

 

6,546

 

22,448

 

5,522

 

7,524

 

11,891

 

9,710

 

34,647

 

Restructuring and merger charges (gains, losses, and other)

1,278

 

18

 

-

 

183

 

1,479

 

739

 

13,111

 

11,743

 

9,723

 

35,316

 

Transformation costs (general and administrative)

-

 

-

 

-

 

-

 

-

 

-

 

1,250

 

4,112

 

3,663

 

9,025

 

Gain on retained profits interest (other income)

(30,052

)

-

 

(183

)

-

 

(30,235

)

-

 

-

 

-

 

-

 

-

 

Total excluded items

(5,633

)

23,851

 

28,222

 

30,772

 

77,212

 

29,607

 

46,291

 

49,688

 

61,380

 

186,966

 

 
Expenses, continued operations excluding items:
Cost of revenue

28,880

 

29,519

 

32,742

 

33,464

 

124,605

 

35,215

 

36,374

 

37,870

 

37,483

 

146,942

 

Research and development

29,428

 

28,604

 

32,606

 

35,185

 

125,823

 

36,005

 

33,779

 

32,521

 

31,483

 

133,788

 

Sales and marketing

35,186

 

32,760

 

38,995

 

47,236

 

154,177

 

45,396

 

39,833

 

41,831

 

45,948

 

173,008

 

General and administrative

18,726

 

18,738

 

21,642

 

23,037

 

82,143

 

21,622

 

19,944

 

20,654

 

19,459

 

81,679

 

Gains, losses and other items, net

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

 
Gross profit, continued operations excluding items:

90,158

 

97,771

 

107,862

 

108,261

 

404,052

 

107,028

 

110,725

 

120,745

 

111,143

 

449,641

 

% Gross margin

75.7

%

76.8

%

76.7

%

76.4

%

76.4

%

75.2

%

75.3

%

76.1

%

74.8

%

75.4

%

(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A.

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP EPS (1)
(Unaudited)
(Dollars in thousands, except per share amounts)
 
 
 
06/30/21 09/30/21 12/31/21 03/31/22 FY2022 06/30/22 09/30/22 12/31/22 03/31/23 FY 2023
 
Income (loss) from continuing operations before income taxes

13,000

 

(6,032

)

(14,027

)

(28,016

)

(35,075

)

(24,903

)

(26,874

)

(24,685

)

(42,392

)

(118,854

)

Income taxes (benefit)

(4,365

)

399

 

1,348

 

1,376

 

(1,242

)

2,315

 

3,562

 

5,835

 

(6,460

)

5,252

 

Net earnings (loss) from continuing operations

17,365

 

(6,431

)

(15,375

)

(29,392

)

(33,833

)

(27,218

)

(30,436

)

(30,520

)

(35,932

)

(124,106

)

 
Earnings from discontinued operations, net of tax

-

 

-

 

-

 

-

 

-

 

-

 

-

 

836

 

4,568

 

5,404

 

 
Net earnings (loss)

17,365

 

(6,431

)

(15,375

)

(29,392

)

(33,833

)

(27,218

)

(30,436

)

(29,684

)

(31,364

)

(118,702

)

 
Earnings (loss) per share:
Basic

0.25

 

(0.09

)

(0.23

)

(0.43

)

(0.50

)

(0.40

)

(0.45

)

(0.46

)

(0.48

)

(1.79

)

Diluted

0.25

 

(0.09

)

(0.23

)

(0.43

)

(0.50

)

(0.40

)

(0.45

)

(0.46

)

(0.48

)

(1.79

)

 
Excluded items:
Purchased intangible asset amortization (cost of revenue)

4,645

 

4,612

 

4,647

 

4,807

 

18,711

 

4,643

 

4,637

 

4,209

 

3,336

 

16,825

 

Non-cash stock compensation (cost of revenue and operating expenses)

18,496

 

19,221

 

23,758

 

25,782

 

87,257

 

24,225

 

27,293

 

29,624

 

44,658

 

125,800

 

Restructuring and merger charges (gains, losses, and other)

1,278

 

18

 

-

 

183

 

1,479

 

739

 

13,111

 

11,743

 

9,723

 

35,316

 

Transformation costs (general and administrative)

-

 

-

 

-

 

-

 

-

 

-

 

1,250

 

4,112

 

3,663

 

9,025

 

Gain on retained profits interest (other income)

(30,052

)

-

 

(183

)

-

 

(30,235

)

-

 

-

 

-

 

-

 

-

 

Total excluded items from continuing operations

(5,633

)

23,851

 

28,222

 

30,772

 

77,212

 

29,607

 

46,291

 

49,688

 

61,380

 

186,966

 

 
Income from continuing operations before income taxes and excluding items

7,367

 

17,819

 

14,195

 

2,756

 

42,137

 

4,704

 

19,417

 

25,003

 

18,988

 

68,112

 

Income taxes expense (benefit)

865

 

(12

)

4,271

 

3,391

 

8,515

 

1,237

 

4,557

 

6,468

 

(2,141

)

10,121

 

Non-GAAP net earnings (loss) from continuing operations

6,502

 

17,831

 

9,924

 

(635

)

33,622

 

3,467

 

14,860

 

18,535

 

21,129

 

57,991

 

 
Non-GAAP earnings (loss) per share from continuing operations:
Basic

0.10

 

0.26

 

0.15

 

(0.01

)

0.49

 

0.05

 

0.22

 

0.29

 

0.32

 

0.87

 

Diluted

0.09

 

0.26

 

0.14

 

(0.01

)

0.48

 

0.05

 

0.22

 

0.28

 

0.32

 

0.86

 

 
Basic weighted average shares

68,328

 

68,042

 

68,190

 

68,283

 

68,211

 

68,403

 

67,096

 

64,784

 

65,126

 

66,352

 

Diluted weighted average shares

69,605

 

69,333

 

69,938

 

68,283

 

69,560

 

69,195

 

67,568

 

65,356

 

66,268

 

67,097

 

(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures and the material limitations on the usefulness of these measures, please see Appendix A.

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP OPERATING INCOME (LOSS) GUIDANCE (1)
(Unaudited)
(Dollars in thousands)
For the quarter ending For the year ending
June 30, 2023 March 31, 2024
 
Low High
GAAP income (loss) from operations

 

(8,000

)

 

3,000

 

6,000

 
Excluded items:
Purchased intangible asset amortization

 

3,000

 

 

7,000

 

7,000

Non-cash stock compensation

 

18,000

 

 

78,000

 

78,000

Transformation costs

 

2,000

 

 

2,000

 

2,000

Total excluded items

 

23,000

 

 

87,000

 

87,000

 
Non-GAAP income from operations

$

15,000

 

$

90,000

$

93,000

(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A.

APPENDIX A

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

Q4 FISCAL 2023 FINANCIAL RESULTS

EXPLANATION OF NON-GAAP MEASURES AND OTHER KEY METRICS

To supplement our financial results, we use non-GAAP measures which exclude certain acquisition related expenses, non-cash stock compensation and restructuring charges. We believe these measures are helpful in understanding our past performance and our future results. Our non-GAAP financial measures and schedules are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated GAAP financial statements. Our management regularly uses these non-GAAP financial measures internally to understand, manage and evaluate our business and to make operating decisions. These measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is also based in part on the performance of our business based on these non-GAAP measures.

Our non-GAAP financial measures, including non-GAAP earnings (loss) per share, income (loss) from operations and adjusted EBITDA reflect adjustments based on the following items, as well as the related income tax effects when applicable:

Purchased intangible asset amortization: We incur amortization of purchased intangibles in connection with our acquisitions. Purchased intangibles include (i) developed technology, (ii) customer and publisher relationships, and (iii) trade names. We expect to amortize for accounting purposes the fair value of the purchased intangibles based on the pattern in which the economic benefits of the intangible assets will be consumed as revenue is generated. Although the intangible assets generate revenue for us, we exclude this item because this expense is non-cash in nature and because we believe the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding our operational performance.

Non-cash stock compensation: Non-cash stock compensation consists of charges for associate restricted stock units, performance shares and stock options in accordance with current GAAP related to stock-based compensation including expense associated with stock-based compensation related to unvested options assumed in connection with our acquisitions. As we apply stock-based compensation standards, we believe that it is useful to investors to understand the impact of the application of these standards to our operational performance. Although stock-based compensation expense is calculated in accordance with current GAAP and constitutes an ongoing and recurring expense, such expense is excluded from non-GAAP results because it is not an expense that typically requires or will require cash settlement by us and because such expense is not used by us to assess the core profitability of our business operations.

Restructuring charges: During the past several years, we have initiated certain restructuring activities in order to align our costs in connection with both our operating plans and our business strategies based on then-current economic conditions. As a result, we recognized costs related to termination benefits for employees whose positions were eliminated, lease and other contract termination charges, and leasehold improvement write offs. These items, reported as gains, losses, and other items, net, are excluded from non-GAAP results because such amounts are not used by us to assess the core profitability of our business operations.

Transformation costs: In previous years, we incurred significant expenses to separate the financial statements of our operating segments, with particular focus on segment-level balance sheets, and to evaluate portfolio priorities. Our criteria for excluding transformation expenses from our non-GAAP measures is as follows: 1) projects are discrete in nature; 2) excluded expenses consist only of third-party consulting fees that we would not incur otherwise; and 3) we do not exclude employee related expenses or other costs associated with the ongoing operations of our business. We substantially completed those projects during the third quarter of fiscal year 2018. Beginning in the fourth quarter of fiscal 2018, and through most of fiscal 2019, we incurred transaction support expenses and system separation costs related to the Company's announced evaluation of strategic options for its Marketing Solutions (AMS) business. In the first and second quarters of fiscal 2021 in response to the potential COVID-19 pandemic impact on our business and again during fiscal 2023 in response to macroeconomic conditions, we incurred significant costs associated with the assessment of strategic and operating plans, including our long-term location strategy, and assistance in implementing the restructuring activities as a result of this assessment. Our criteria for excluding these costs are the same. We believe excluding these items from our non-GAAP financial measures is useful for investors and provides meaningful supplemental information.

Our non-GAAP financial schedules are:

Non-GAAP EPS, Non-GAAP Income from Operations, and Non-GAAP expenses: Our Non-GAAP earnings per share, Non-GAAP income from operations, and Non-GAAP expenses reflect adjustments as described above, as well as the related tax effects where applicable.

Adjusted EBITDA: Adjusted EBITDA is defined as net income from continuing operations before income taxes, other expenses, depreciation and amortization, and including adjustments as described above. We use Adjusted EBITDA to measure our performance from period to period both at the consolidated level as well as within our operating segments and to compare our results to those of our competitors. We believe that the inclusion of Adjusted EBITDA provides useful supplementary information to and facilitates analysis by investors in evaluating the Company's performance and trends. The presentation of Adjusted EBITDA is not meant to be considered in isolation or as an alternative to net earnings as an indicator of our performance.

Free Cash Flow to Equity: To supplement our statement of cash flows, we use a non-GAAP measure of cash flow to analyze cash flows generated from operations. Free cash flow to equity is defined as operating cash flow less cash used by investing activities (excluding the impact of cash paid in acquisitions), less required payments of debt, and excluding the impact of discontinued operations. Management believes that this measure of cash flow is meaningful since it represents the amount of money available from continuing operations for the Company's discretionary spending after funding all required obligations including scheduled debt payments. The presentation of non-GAAP free cash flow to equity is not meant to be considered in isolation or as an alternative to cash flows from operating activities as a measure of liquidity.

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