With a focus on data connectivity and customer identity resolution, tech company LiveRamp Holdings, Inc. (RAMP) has positioned itself as a key player in the marketing technology space. In this article, we will delve into RAMP's recent developments, its financial performance and discuss why investing in it might be ideal.
RAMP delivered solid fiscal third-quarter results, with top-line growth and strong free cash flow. Its Subscription revenue was $126 million, up 14% from the prior-year quarter, and accounted for 80% of total revenue. Marketplace & Other revenue was $32 million, up 9% year-over-year.
Moreover, in the fiscal third quarter, RAMP repurchased approximately 2.30 million shares for $50 million under its share repurchase program. Fiscal year to date, the company has repurchased approximately 6.10 million shares for $150 million. Since the program's inception in August 2011, it has returned approximately $1.40 billion in capital to shareholders.
On December 20, 2022, the company’s Board of Directors approved an extension of the share repurchase program by two years to December 31, 2024, and a $100 million increase in the authorization.
The company’s President and CFO, Warren Jenson, said, “Looking to FY24, we expect to deliver another year of strong operating profit growth and to return a substantial portion of free cash flow to shareowners through share repurchases.”
Additionally, RAMP updated its guidance for the fiscal year 2023 and predicted its revenues to be within the range of $595 million and $600 million, indicating a growth rate of approximately 13% year-over-year. Moreover, the company expects its to-be-announced fiscal fourth quarter’s revenue to rise between 4-7% year-over-year to a range between $147 million and $152 million.
Furthermore, the company’s shares have gained 11.3% over the past month and 32.2% over the past six months, closing the last trading session at $23.67. The stock is currently trading above its 50-day and 200-day moving averages of $23.18 and $22.42, indicating an uptrend.
Here’s what could shape RAMP’s performance in the near term:
Positive Recent Developments
On March 1, 2023, RAMP announced a new partnership with Adobe Real-Time Customer Data Platform (CDP), part of Adobe Experience Cloud, to provide marketers with a more streamlined process for activating customer data.
This partnership will allow marketers to utilize RAMP's RampID identifier through a new LiveRamp app available in Adobe Exchange. The partnership aims to provide a more seamless process for marketers using Adobe Real-Time CDP and RAMP from implementation through to activation.
On February 28, RAMP launched a new module on its Data Collaboration platform, enabling privacy-safe, multi-party collaboration for cross-screen measurement and more.
This solution aims to facilitate collaboration across channels for brands, publishers, retailers, platforms, and data providers, focusing on control, flexibility, and compliance.
On February 27, RAMP expanded its partnership with Snowflake Inc. (SNOW) to enhance its product capabilities built natively on SNOW and improve data connectivity for post-cookie marketing in the cloud.
The collaboration aims to offer a scalable data solution that supports evolving data privacy regulations and enables near real-time latency.
Robust Financials
During the fiscal third quarter that ended December 31, 2022, RAMP’s revenues rose 12.8% year-over-year to $158.62 million. Its gross profit grew 13% year-over-year to $115.33 million.
Also, its non-GAAP net earnings from continuing operations rose 86.8% year-over-year to $18.54 million, while its EPS rose 100% year-over-year to $0.28. Its adjusted EBITDA increased 68.8% from the prior-year quarter to $26.66 million.
Discounted Valuation
In terms of forward non-GAAP PEG, RAMP is currently trading at 0.56x, which is 66.5% lower than the 1.69x industry average. Its 1.82x forward EV/Sales is 33.6% lower than the 2.74x industry average.
The stock’s forward Price/Book multiple of 1.59 is 56.8% lower than the industry average of 3.68x, while its forward P/S multiple of 2.51 is 6.3% lower than the industry average of 2.68.
Favorable Analysts Estimates
Analysts expect RAMP’s revenue for the fiscal first quarter ending June 2023 to be $146.01 million, indicating a 2.7% year-over-year growth. The company’s EPS for the same quarter is expected to increase 191.1% from the prior-year quarter to $0.15.
Furthermore, RAMP’s EPS and revenue are expected to rise 52.8% and 13.1% year-over-year to $0.73 and $598.06 million in the fiscal year that ended March 2023. Also, the company has surpassed the consensus revenue estimates in all the trailing four quarters, which is impressive.
POWR Ratings Reflect Solid Prospects
RAMP has an overall B rating, equating to a Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. RAMP has a B grade for Value, in sync with its lower-than-industry valuation multiples.
Moreover, it has a B grade for Growth, justified by its solid financial performance in the latest reported quarter. RAMP’s B grade for Sentiment is consistent with favorable analysts’ expectations.
RAMP is ranked #12 among 80 stocks within the Technology - Services industry,
Click here to see the additional POWR Ratings for RAMP (Stability, Quality, and Momentum)
Bottom Line
RAMP has been actively repurchasing its shares under its share repurchase program. The BOD recently approved an extension of the share repurchase program by two years, highlighting its commitment to returning cash to its shareholders and boosting shareholder value.
Additionally, RAMP's recent collaborations suggest that the company is committed to providing innovative solutions that meet the evolving needs of marketers and other stakeholders, which should enhance its market position and unlock new revenue streams.
Also, Wall Street analysts expect the stock to hit $35 in the near term, indicating a potential upside of 47.9%. Hence, RAMP might be an ideal buy now.
How Does LiveRamp Holdings, Inc. (RAMP) Stack Up Against Its Peers?
RAMP has an overall POWR Rating of B. One could also check out these other stocks within the Technology – Servies industry with an A (Strong Buy) rating: Celestica, Inc. (CLS), Serco Group plc (SCGPY), and NetScout Systems, Inc. (NTCT).
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RAMP shares were unchanged in premarket trading Tuesday. Year-to-date, RAMP has gained 0.98%, versus a 8.65% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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