LiveRamp Earnings Show It Has The Runway (And Cash) To Weather This Crisis

The recent string of relatively strong Q1 ad tech performances continued on Thursday, when LiveRamp announced revenue grew 35% year over year to $106 million.

The toughest quarter is still to come. LiveRamp CEO Scott Howe cautioned investors that Q2 could show a sequential decline in revenue and potentially be net-zero or negative in terms of direct subscription client additions, since few companies are adding vendors and about a fifth of LiveRamp’s business comes from categories like travel and hospitality or restaurants where marketing is sometimes going to zero.

Still, LiveRamp is securely positioned to weather this global crisis, Howe said.

For one thing, the highest churn in Q1 came at the low end of LiveRamp’s customer base, from clients that spend $50,000 or less per year, said President and Chief Commercial Officer James Arra. The number of clients with subscription packages worth more than $1 million per year grew from 46 to 53 last quarter, despite the global headwinds.

LiveRamp’s balance sheet is also “the envy of the industry,” said CFO Warren Jenson.

LiveRamp still operates at a loss – which it cut in half in Q1 from $82 million in 2019 to $41 million this year. But the company has $700 million cash on hand, more than enough to run the business for the year without making a cent.

LiveRamp has that arsenal of cash since it re-listed on the public market after selling Acxiom Marketing Services to IPG for $2.3 billion.

“We have a really strong balance sheet and that allows us to be very strategic in commercial deals,” Howe said. For instance, he said LiveRamp recently announced a major licensing deal with Comscore to add 80 million households with set-top box or connected TV devices to its identity graph.

And while other companies talk about belt-tightening measures, LiveRamp can still repurchase shares – a popular tactic for companies with huge cash positions because they can boost their stock value without adding revenue. The company “aggressively front-loaded” its share repurchases in Q1, Howe said.

LiveRamp spent $103 million so far this year to repurchase 3.1 million shares. That’s an average share price of $33.22. The only time this year when LiveRamp’s stock price dipped below that number was about a four-week stretch from early March to early April, when markets crashed and economies went into lockdown. LiveRamp had already been actively buying back shares since last year and in 2020 before the coronavirus crisis, which means the company must have very actively bought up shared during the March financial trough.

There are no other small-cap companies, especially not in ad tech, that could afford to spend their way through a financial crisis like LiveRamp.

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