Advertising data platform LiveRamp (NYSE:RAMP) reported Q1 CY2025 results beating Wall Street’s revenue expectations, with sales up 9.8% year on year to $188.7 million. Guidance for next quarter’s revenue was better than expected at $191 million at the midpoint, 0.9% above analysts’ estimates. Its non-GAAP profit of $0.30 per share was 7.1% above analysts’ consensus estimates.
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LiveRamp (RAMP) Q1 CY2025 Highlights:
- Revenue: $188.7 million vs analyst estimates of $186.2 million (9.8% year-on-year growth, 1.3% beat)
- Adjusted EPS: $0.30 vs analyst estimates of $0.28 (7.1% beat)
- Adjusted Operating Income: $23.03 million vs analyst estimates of $22 million (12.2% margin, 4.7% beat)
- Management’s revenue guidance for the upcoming financial year 2026 is $802 million at the midpoint, beating analyst estimates by 0.7% and implying 7.6% growth (vs 13.1% in FY2025)
- Operating Margin: -6.1%, up from -8.3% in the same quarter last year
- Free Cash Flow Margin: 33%, up from 22.9% in the previous quarter
- Customers: 840, down from 865 in the previous quarter
- Net Revenue Retention Rate: 104%, down from 108% in the previous quarter
- Annual Recurring Revenue: $504 million at quarter end, up 7.9% year on year
- Market Capitalization: $1.90 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.
Sales Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last three years, LiveRamp grew its sales at a 12.1% 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 9.8%, and its $188.7 million of revenue exceeded Wall Street’s estimates by 1.3%. Company management is currently guiding for a 8.5% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 6.9% over the next 12 months, a deceleration versus the last three years. This projection is underwhelming and indicates its products and services will face some demand challenges.
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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 punched in at $504 million in Q1, and over the last four quarters, its growth slightly outpaced the sector as it averaged 10.7% 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 Q1. 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 Q1 Results
It was encouraging to see LiveRamp beat analysts’ EBITDA expectations this quarter. We were also happy its annual recurring revenue narrowly outperformed Wall Street’s estimates. On the other hand, its revenue guidance for next year suggests a significant slowdown in demand and its net revenue retention shrunk. Zooming out, we think this was a mixed quarter. The stock remained flat at $27.80 immediately following the results.
Big picture, is LiveRamp a buy here and now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.