Advertising data platform LiveRamp (NYSE: RAMP) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 10.7% year on year to $194.8 million. Revenue guidance for the full year exceeded analysts’ estimates, but next quarter’s guidance of $197 million was less impressive, coming in 1.1% below expectations. Its non-GAAP profit of $0.44 per share was 4.8% above analysts’ consensus estimates.
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LiveRamp (RAMP) Q2 CY2025 Highlights:
- Revenue: $194.8 million vs analyst estimates of $191.2 million (10.7% year-on-year growth, 1.9% beat)
- Adjusted EPS: $0.44 vs analyst estimates of $0.42 (4.8% beat)
- Adjusted Operating Income: $36 million vs analyst estimates of $32.7 million (18.5% margin, 10.1% beat)
- The company slightly lifted its revenue guidance for the full year to $808 million at the midpoint from $802 million
- Operating Margin: 3.7%, up from -3% in the same quarter last year
- Free Cash Flow was -$16.16 million, down from $62 million in the previous quarter
- Net Revenue Retention Rate: 105%, up from 104% in the previous quarter
- Annual Recurring Revenue: $502 million at quarter end, up 5% year on year
- Market Capitalization: $2.15 billion
Company Overview
Started in 2011 as a spin-out of RapLeaf, LiveRamp (NYSE: RAMP) is a software-as-a-service provider that helps companies better target their marketing by merging offline and online data about their customers.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last three years, LiveRamp grew its sales at a 11.5% annual rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the software sector, which enjoys a number of secular tailwinds.
This quarter, LiveRamp reported year-on-year revenue growth of 10.7%, and its $194.8 million of revenue exceeded Wall Street’s estimates by 1.9%. Company management is currently guiding for a 6.2% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 7.5% over the next 12 months, a deceleration versus the last three years. This projection is underwhelming and suggests its products and services will see some demand headwinds.
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Annual Recurring Revenue
While reported revenue for a software company can include low-margin items like implementation fees, annual recurring revenue (ARR) is a sum of the next 12 months of contracted revenue purely from software subscriptions, or the high-margin, predictable revenue streams that make SaaS businesses so valuable.
LiveRamp’s ARR came in at $502 million in Q2, and over the last four quarters, its growth was underwhelming as it averaged 8.9% year-on-year increases. This alternate topline metric grew slower than total sales, which likely means that the recurring portions of the business are growing slower than less predictable, choppier ones such as implementation fees. If this continues, the quality of its revenue base could decline. 
Customer Retention
One of the best parts about the software-as-a-service business model (and a reason why they trade at high valuation multiples) is that customers typically spend more on a company’s products and services over time.
LiveRamp’s net revenue retention rate, a key performance metric measuring how much money existing customers from a year ago are spending today, was 106% in Q2. This means LiveRamp would’ve grown its revenue by 6% even if it didn’t win any new customers over the last 12 months.
LiveRamp has a decent net retention rate, showing us that its customers not only tend to stick around but also get increasing value from its software over time.
Key Takeaways from LiveRamp’s Q2 Results
We enjoyed seeing LiveRamp beat analysts’ EBITDA expectations this quarter. We were also happy its revenue outperformed Wall Street’s estimates. On the other hand, its revenue guidance for next quarter slightly missed and its annual recurring revenue fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 6.4% to $30.50 immediately after reporting.
So do we think LiveRamp is an attractive buy at the current price? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
