LiveRamp Earnings: Adoption of LiveRamp’s Platform Increases as Digital Ad Spending Improves

We are raising our fair value estimate of LiveRamp RAMP to $32 from $29 as the no-moat firm posted a strong fiscal 2024 first quarter, headlined by growth acceleration and retention rate improvement in subscription. Plus, the firm is seeing some indications of recovery in digital advertising, in line with our assumption. With integrations with agencies, cloud providers, and walled-garden publishers like Meta, and more demand-side platform providers like Google, LiveRamp is expanding its presence and remains well positioned to be the leading independent standardized ID and overall data collaboration platform provider. With a recovery in digital advertising and continuing growth in CTV and retail media, we expect LiveRamp to return to double-digit revenue growth next year through 2027, accompanied by margin expansion as the firm generated GAAP operating profit for the first time.

Total fiscal first-quarter revenue came in at $154 million, up 8% year over year. The improvement was driven by growth in both subscription (up 5%) and marketplace (up 21%), indicating a recovery in digital ad spending. Despite the continued uncertainties about the economic environment, LiveRamp has managed to abate several negative trends that weighed on revenue and margin growth. The decline in subscription and platform retention rates that the firm experienced the past three quarters reversed with sequential increases in both of 90% and 102%, respectively.