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LiveRamp Announces Third Quarter Results

Total Revenue up 13% year over year and Subscription Revenue up 14%

$16 million in Operating Cash Flow

$150 million of Stock Repurchased Fiscal Year to Date

Share Repurchase Authorization Extended and Expanded

LiveRamp® (NYSE: RAMP), the leading data collaboration platform, today announced its financial results for the quarter ended December 31, 2022.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230207005323/en/

Q3 Financial Highlights1

  • Total revenue was $159 million, up 13%.
  • Subscription revenue was $126 million, up 14%, and accounted for 80% of total revenue.
  • Marketplace & Other revenue was $32 million, up 9%.
  • GAAP gross profit was $115 million, up 13%. GAAP gross margin of 73% was unchanged. Non-GAAP gross profit was $121 million, up 12%. Non-GAAP gross margin of 76% contracted by 1 percentage point.
  • GAAP operating loss was $24 million compared to $14 million. Non-GAAP operating income was $26 million compared to $15 million. Non-GAAP operating margin of 16% expanded by 6 percentage points.
  • GAAP loss per share was $0.46 and non-GAAP earnings per share were $0.28.
  • Net cash provided by operating activities was $16 million compared to $25 million.
  • In the quarter, the Company repurchased approximately 2.3 million shares for $50 million under its share repurchase program. Fiscal year to date, the Company has repurchased approximately 6.1 million shares for $150 million. Since inception of the program in August 2011, the Company has returned approximately $1.4 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. There is currently $218 million available under the authorization.

__________

1 Unless otherwise indicated, all comparisons are to the prior year period.

A reconciliation between GAAP and non-GAAP results is provided in the schedules to this press release.

"We continue winning with the world's largest brand marketers, reinforcing that we are essential infrastructure for the advertising ecosystem," said LiveRamp CEO Scott Howe. "Our identity and collaboration products, with connections to over 2,000 publishers, uniquely support all of their marketing activities."

“We delivered solid third quarter results, with top-line growth and strong free cash flow,” added President and CFO Warren Jenson. “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.”

GAAP and Non-GAAP Results

The following table summarizes the Company’s financial results for its third fiscal quarter ($ in millions):

 

Q3 Fiscal 2023

 

Q3 Fiscal 2022

 

Results

 

Results

 

GAAP

Non-GAAP

 

GAAP

Non-GAAP

Subscription revenue

$126

 

$111

YoY change %

14%

 

 

19%

 

Marketplace & Other revenue

$32

 

$29

YoY change %

9%

 

 

12%

 

Total revenue

$159

 

$141

YoY change %

13%

 

 

17%

 

 

 

 

 

 

 

Gross profit

$115

$121

 

$102

$108

% Gross margin

73%

76%

 

73%

77%

YoY change, pts

0 pts

(1) pts

 

4 pts

3 pts

 

 

 

 

 

 

Operating income (loss)

($24)

$26

 

($14)

$15

% Operating margin

(15%)

16%

 

(10%)

10%

YoY change, pts

(5) pts

6 pts

 

3 pts

0 pts

 

 

 

 

 

 

Net earnings (loss)

($30)

$19

 

($15)

$10

Earnings (loss) per share

($0.46)

$0.28

 

($0.23)

$0.14

 

 

 

 

 

 

Shares to calculate EPS

64.8

65.4

 

68.2

69.9

YoY change %

(5%)

(7%)

 

3%

0%

 

 

 

 

 

 

Net operating cash flow

$16

 

$25

Free cash flow to equity

$16

 

$24

 

 

 

 

 

 

Totals may not sum due to rounding.

A detailed discussion of our non-GAAP financial measures and a reconciliation between GAAP and non-GAAP results is provided in the schedules attached to this press release.

Additional Business Highlights & Metrics

  • The Company’s Authenticated Traffic Solution (ATS) has reached global scale. There are currently more than 160 supply-side platforms (SSPs) and demand-side platforms (DSPs) live or committed to bid on RampID™ and ATS, including The Trade Desk, Xandr, Amobee, Criteo, Roku Oneview, and MediaMath. Further, in March 2022, LiveRamp announced an expanded partnership with The Trade Desk to power European Unified ID (EUID) via its ATS infrastructure.
  • To date, over 2,000 publishers, representing more than 12,000 deployed domains, have integrated ATS worldwide, including Amazon Publisher Services, Microsoft, Hearst, CafeMedia, Leaf Group, Prisma Media and Burda.
  • At its November 2022 re:Invent conference, Amazon Web Services (AWS) named LiveRamp as a key industry partner for its new Marketing and Advertising Initiative and forthcoming AWS Clean Rooms service launch. LiveRamp published its new embedded identity resolution solutions in the AWS Marketplace in December 2022 ahead of the AWS Clean Rooms release in January 2023. Support for AWS Clean Rooms gives customers a collaborative approach to more effective media measurement and planning. As part of LiveRamp’s continued work with AWS, this latest integration reinforces our commitment to help clients improve their customer intelligence through accurate and secure data collaboration in cloud environments.
  • Recently, LiveRamp and Pinterest announced a new partnership to pilot clean rooms for select advertising partners using LiveRamp’s data collaboration technology, Safe Haven. Grocery retailer Albertsons will be the first advertiser to use the new solution to support its retail media network. LiveRamp’s Safe Haven platform provides a protected environment where brands can join select first-party data with Pinterest platform data without having to share or reveal customers’ personal identifiable information. This data sharing will enable enhanced measurement of advertising campaigns, such as closed-loop attribution, without compromising data protection.
  • LiveRamp has 910 direct subscription customers, up from 890 in the prior year period.
  • LiveRamp has 94 customers whose subscription contracts exceed $1 million in annual revenue, up from 86 in the prior year period.
  • During the third quarter, subscription net retention was 101% and platform net retention was 102%.
  • Current remaining performance obligations (CRPO), which is contracted and committed revenue expected to be recognized over the next 12 months, was $324 million, up 12% compared to the prior year period.

Financial Outlook

LiveRamp’s non-GAAP operating income guidance excludes the impact of non-cash stock compensation, purchased intangible asset amortization, and restructuring and related charges.

For the fourth quarter of fiscal 2023, LiveRamp expects to report:

  • Revenue of between $147 million and $152 million, an increase of between 4% and 7% year-over-year
  • GAAP operating loss of between $26 million and $23 million
  • Non-GAAP operating income of between $13 million and $16 million

For fiscal 2023, LiveRamp updates its guidance and expects to report:

  • Revenue of between $595 million and $600 million, an increase of approximately 13% year-over-year
  • GAAP operating loss of between $105 million and $102 million
  • Non-GAAP operating income of between $60 million and $63 million

Conference Call

LiveRamp will hold a conference call at 1:30 p.m. PT today to further discuss this information. Interested parties are invited to listen to the call which will be broadcast via the Internet and can be found on LiveRamp’s investor site. A slide presentation will be referenced during the call and can be accessed here.

About LiveRamp

LiveRamp is the data collaboration platform trusted by forward-looking global companies to connect customer data from anywhere to everywhere. The category-defining pioneer with decades of expertise in online-offline identity resolution, LiveRamp is setting the new standard for a 360° customer view in the modern data stack through secure, privacy-first collaboration within companies, across companies, and between companies and their media and marketing partners to personalize and improve the customer journey. For more information, visit www.liveramp.com.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended (the “PSLRA”). These statements, which are not statements of historical fact, may contain estimates, assumptions, projections and/or expectations regarding the Company’s financial position, results of operations for fiscal 2023, fiscal 2024 and beyond, market position, product development, growth opportunities, economic conditions, and other similar forecasts and statements of expectation. Forward-looking statements are often identified by words or phrases such as “anticipate,” “estimate,” “plan,” “expect,” “believe,” “intend,” “foresee,” or the negative of these terms or other similar variations thereof.

These forward-looking statements are not guarantees of future performance and are subject to a number of factors and uncertainties that could cause the Company’s actual results and experiences to differ materially from the anticipated results and expectations expressed in the forward-looking statements.

Among the factors that may cause actual results and expectations to differ from anticipated results and expectations expressed in forward-looking statements are uncertainties related to the ongoing COVID-19 pandemic, rising interest rates, cost increases and general inflationary pressure and the associated impacts on our suppliers, customers and partners; the Company’s dependence upon customer renewals; new customer additions and upsell within our subscription business; our reliance upon partners, including data suppliers; competition; and attracting and retaining talent. Additional risks include maintaining our culture and our ability to innovate and evolve while operating in a hybrid work environment, with some employees working remotely at least some of the time within a rapidly changing industry, while also avoiding disruption from reductions in our current workforce as well as disruptions resulting from acquisition and divestiture activities. Our international operations are also subject to risks, including war and civil unrest, that may harm the Company’s business. The risk of a significant breach of the confidentiality of the information or the security of our or our customers’, suppliers’, or other partners’ computer systems, or the risk that our current insurance coverage may not be adequate for such a breach, that an insurer might deny coverage for a claim or that such insurance will continue to be available to us on commercially reasonable terms, or at all, could be detrimental to our business, reputation and results of operations. Other business risks include unfavorable publicity and negative public perception about our industry; interruptions or delays in service from data center hosting vendors we rely upon; and our dependence on the continued availability of third-party data hosting and transmission services. Our clients’ ability to use data on our platform could be restricted if the industry’s use of third-party cookies and tracking technology declines due to technology platform changes, regulation or increased user controls. Changes in regulations relating to information collection and use represents a risk, as well as changes in tax laws and regulations that are applied to our customers which could cause enterprise software budget tightening. In addition, third parties may claim that we are infringing their intellectual property or may infringe our intellectual property which could result in competitive injury and / or the incurrence of significant costs and draining of our resources.

For a discussion of these and other risks and uncertainties, please refer to LiveRamp’s Annual Report on Form 10-K for our fiscal year 2022 ended March 31, 2022, and LiveRamp's Quarterly Reports on Form 10-Q issued in fiscal year 2023.

The financial information set forth in this press release reflects estimates based on information available at this time.

LiveRamp assumes no obligation and does not currently intend to update these forward-looking statements.

To automatically receive LiveRamp financial news by email, please visit www.LiveRamp.com and subscribe to email alerts.

ERAMP

LiveRamp, RampIDTM, Abilitec, Safe Haven and all other LiveRamp marks contained herein are trademarks or service marks of LiveRamp, Inc. All other marks are the property of their respective owners.

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
 
 
For the Three Months Ended
December 31,
$ %

2022

2021

Variance

Variance

 
Revenues

158,615

 

140,604

 

18,011

 

12.8

%

 
Cost of revenue

43,287

 

38,557

 

4,730

 

12.3

%

Gross profit

115,328

 

102,047

 

13,281

 

13.0

%

% Gross margin

72.7

%

72.6

%

 
Operating expenses:
Research and development

43,175

 

41,870

 

1,305

 

3.1

%

Sales and marketing

47,702

 

46,324

 

1,378

 

3.0

%

General and administrative

36,657

 

27,639

 

9,018

 

32.6

%

Gains, losses and other items, net

11,743

 

-

 

11,743

 

n/a

 

Total operating expenses

139,277

 

115,833

 

23,444

 

20.2

%

 
Loss from operations

(23,949

)

(13,786

)

(10,163

)

(73.7

%)

% Margin

-15.1

%

-9.8

%

 
Total other expense, net

(736

)

(241

)

(495

)

(205.4

%)

 
Loss from continuing operations before income taxes

(24,685

)

(14,027

)

(10,658

)

(76.0

%)

 
Income tax expense

5,835

 

1,348

 

4,487

 

332.9

%

 
Net loss from continuing operations

(30,520

)

(15,375

)

(15,145

)

(98.5

%)

 
Earnings from discontinued operations, net of tax

836

 

-

 

836

 

n/a

 

 
Net loss

(29,684

)

(15,375

)

(14,309

)

(93.1

%)

 
Basic earnings (loss) per share:
Continuing operations

(0.47

)

(0.23

)

(0.25

)

(108.9

%)

Discontinued operations

0.01

 

-

 

0.01

 

n/a

 

Basic loss per share

(0.46

)

(0.23

)

(0.23

)

(103.2

%)

 
Diluted earnings (loss) per share:
Continuing operations

(0.47

)

(0.23

)

(0.25

)

(108.9

%)

Discontinued operations

0.01

 

-

 

0.01

 

n/a

 

Diluted loss per share:

(0.46

)

(0.23

)

(0.23

)

(103.2

%)

 
Basic weighted average shares

64,784

 

68,190

 

Diluted weighted average shares

64,784

 

68,190

 

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
 
 
For the Nine Months Ended
December 31,
$ %

2022

2021

Variance

Variance

 
Revenues

447,957

 

386,932

 

61,025

 

15.8

%

 
Cost of revenue

126,612

 

107,951

 

18,661

 

17.3

%

Gross profit

321,345

 

278,981

 

42,364

 

15.2

%

% Gross margin

71.7

%

72.1

%

 
Operating expenses:
Research and development

136,975

 

112,434

 

24,541

 

21.8

%

Sales and marketing

144,931

 

127,812

 

17,119

 

13.4

%

General and administrative

92,519

 

75,008

 

17,511

 

23.3

%

Gains, losses and other items, net

25,593

 

1,296

 

24,297

 

1874.8

%

Total operating expenses

400,018

 

316,550

 

83,468

 

26.4

%

 
Loss from operations

(78,673

)

(37,569

)

(41,104

)

(109.4

%)

% Margin

-17.6

%

-9.7

%

 
Total other income, net

2,211

 

30,510

 

(28,299

)

(92.8

%)

 
Loss from continuing operations before income taxes

(76,462

)

(7,059

)

(69,403

)

(983.2

%)

 
Income tax expense (benefit)

11,712

 

(2,618

)

14,330

 

547.4

%

 
Net loss from continuing operations

(88,174

)

(4,441

)

(83,733

)

(1885.5

%)

 
Earnings from discontinued operations, net of tax

836

 

-

 

836

 

n/a

 

 
Net loss

(87,338

)

(4,441

)

(82,897

)

(1866.6

%)

 
Basic earnings (loss) per share:
Continuing operations

(1.32

)

(0.07

)

(1.26

)

(1927.9

%)

Discontinued operations

0.01

 

-

 

0.01

 

n/a

 

Basic earnings (loss) per share

(1.31

)

(0.07

)

(1.24

)

(1908.6

%)

 
Diluted earnings (loss) per share:
Continuing operations

(1.32

)

(0.07

)

(1.26

)

(1927.9

%)

Discontinued operations

0.01

 

-

 

0.01

 

n/a

 

Diluted earnings (loss) per share:

(1.31

)

(0.07

)

(1.24

)

(1908.6

%)

 
Basic weighted average shares

66,761

 

68,187

 

Diluted weighted average shares

66,761

 

68,187

 

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP EPS (1)
(Unaudited)
(Dollars in thousands, except per share amounts)
 
For the Three Months Ended For the Nine Months Ended
December 31, December 31,

2022

2021

2022

2021

 
 
Loss from continuing operations before income taxes

(24,685

)

(14,027

)

(76,462

)

(7,059

)

 
Income tax expense (benefit)

5,835

 

1,348

 

11,712

 

(2,618

)

 
Net loss from continuing operations

(30,520

)

(15,375

)

(88,174

)

(4,441

)

 
Earnings from discontinued operations, net of tax

836

 

-

 

836

 

-

 

 
Net loss

(29,684

)

(15,375

)

(87,338

)

(4,441

)

 
Loss per share:
Basic

(0.46

)

(0.23

)

(1.31

)

(0.07

)

Diluted

(0.46

)

(0.23

)

(1.31

)

(0.07

)

 
Excluded items:
Purchased intangible asset amortization (cost of revenue)

4,209

 

4,647

 

13,489

 

13,904

 

Non-cash stock compensation (cost of revenue and operating expenses)

29,624

 

23,758

 

81,142

 

61,475

 

Transformation costs (general and administrative)

4,112

 

-

 

5,362

 

-

 

Restructuring and merger charges (gains, losses, and other)

11,743

 

-

 

25,593

 

1,296

 

Gain on retained profits interest (other income)

-

 

(183

)

-

 

(30,235

)

 
Total excluded items, continuing operations

49,688

 

28,222

 

125,586

 

46,440

 

 
Income from continuing operations before income taxes and excluding items

25,003

 

14,195

 

49,124

 

39,381

 

 
Income tax expense (2)

6,468

 

4,271

 

12,262

 

5,124

 

 
Non-GAAP net earnings from continuing operations

18,535

 

9,924

 

36,862

 

34,257

 

 
Non-GAAP earnings per share from continuing operations:
Basic

0.29

 

0.15

 

0.55

 

0.50

 

Diluted

0.28

 

0.14

 

0.55

 

0.49

 

 
Basic weighted average shares

64,784

 

68,190

 

66,761

 

68,187

 

Diluted weighted average shares

65,356

 

69,938

 

67,373

 

69,626

 

 

(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures and the material limitations on the usefulness of these measures, please see Appendix A.

(2) Income taxes were calculated by applying the estimated annual effective tax rate to year-to-date pretax income or loss and adjusting for discrete tax items in the period. The differences between our GAAP and non-GAAP effective tax rates were primarily due to the net tax effects of the excluded items, coupled with larger pre-tax losses for GAAP purposes versus smaller pre-tax losses or income for non-GAAP purposes.
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP INCOME (LOSS) FROM OPERATIONS (1)
(Unaudited)
(Dollars in thousands)
 
For the Three Months Ended For the Nine Months Ended
December 31, December 31,

2022

2021

2022

2021

 
 
Loss from continuing operations

(23,949

)

(13,786

)

(78,673

)

(37,569

)

 
Excluded items:
Purchased intangible asset amortization (cost of revenue)

4,209

 

4,647

 

13,489

 

13,904

 

Non-cash stock compensation (cost of revenue and operating expenses)

29,624

 

23,758

 

81,142

 

61,475

 

Transformation costs (general and administrative)

4,112

 

-

 

5,362

 

-

 

Restructuring and merger charges (gains, losses, and other)

11,743

 

-

 

25,593

 

1,296

 

 
Total excluded items

49,688

 

28,405

 

125,586

 

76,675

 

 
Income from continuing operations before excluded items

25,739

 

14,619

 

46,913

 

39,106

 

(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures and the material limitations on the usefulness of these measures, please see Appendix A.

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA (1)
(Unaudited)
(Dollars in thousands)
 
For the Three Months Ended For the Nine Months Ended
December 31, December 31,

2022

2021

2022

2021

 
 
Net loss from continuing operations

(30,520

)

(15,375

)

(88,174

)

(4,441

)

 
Income tax expense (benefit)

5,835

 

1,348

 

11,712

 

(2,618

)

 
Other expense (income)

736

 

241

 

(2,211

)

(30,510

)

 
Loss from operations

(23,949

)

(13,786

)

(78,673

)

(37,569

)

 
Depreciation and amortization

5,131

 

5,827

 

16,561

 

18,231

 

 
EBITDA

(18,818

)

(7,959

)

(62,112

)

(19,338

)

 
Other adjustments:
Non-cash stock compensation (cost of revenue and operating expenses)

29,624

 

23,758

 

81,142

 

61,475

 

Transformation costs (general and administrative)

4,112

 

-

 

5,362

 

-

 

Restructuring and merger charges (gains, losses, and other)

11,743

 

-

 

25,593

 

1,296

 

 
Other adjustments

45,479

 

23,758

 

112,097

 

62,771

 

 
Adjusted EBITDA

26,661

 

15,799

 

49,985

 

43,433

 

(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A.

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
 
December 31, March 31, $ %

2022

2022

Variance Variance
 
Assets
Current assets:
Cash and cash equivalents

453,516

 

600,162

 

(146,646

)

(24.4

%)

Trade accounts receivable, net

173,409

 

148,343

 

25,066

 

16.9

%

Refundable income taxes, net

27,097

 

30,354

 

(3,257

)

(10.7

%)

Other current assets

42,172

 

36,975

 

5,197

 

14.1

%

 
Total current assets

696,194

 

815,834

 

(119,640

)

(14.7

%)

 
Property and equipment

42,954

 

45,001

 

(2,047

)

(4.5

%)

Less - accumulated depreciation and amortization

34,145

 

33,470

 

675

 

2.0

%

 
Property and equipment, net

8,809

 

11,531

 

(2,722

)

(23.6

%)

 
Intangible assets, net

13,203

 

26,718

 

(13,515

)

(50.6

%)

Goodwill

363,129

 

363,845

 

(716

)

(0.2

%)

Deferred commissions, net

32,717

 

30,594

 

2,123

 

6.9

%

Other assets, net

52,431

 

85,214

 

(32,783

)

(38.5

%)

 

1,166,483

 

1,333,736

 

(167,253

)

(12.5

%)

 
Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable

83,938

 

83,197

 

741

 

0.9

%

Accrued payroll and related expenses

33,250

 

39,188

 

(5,938

)

(15.2

%)

Other accrued expenses

42,394

 

46,067

 

(3,673

)

(8.0

%)

Deferred revenue

16,195

 

16,114

 

81

 

0.5

%

 
Total current liabilities

175,777

 

184,566

 

(8,789

)

(4.8

%)

 
Other liabilities

79,097

 

86,110

 

(7,013

)

(8.1

%)

 
Stockholders' equity:
Preferred stock

-

 

-

 

-

 

n/a

 

Common stock

15,205

 

14,984

 

221

 

1.5

%

Additional paid-in capital

1,810,383

 

1,721,118

 

89,265

 

5.2

%

Retained earnings

1,333,655

 

1,420,993

 

(87,338

)

(6.1

%)

Accumulated other comprehensive income

4,182

 

5,730

 

(1,548

)

(27.0

%)

Treasury stock, at cost

(2,251,816

)

(2,099,765

)

(152,051

)

(7.2

%)

Total stockholders' equity

911,609

 

1,063,060

 

(151,451

)

(14.2

%)

 

1,166,483

 

1,333,736

 

(167,253

)

(12.5

%)

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
 
For the Three Months Ended
 
December 31,
 

2022

2021

 
Cash flows from operating activities:
Net loss

(29,684

)

(15,375

)

Earnings from discontinued operations, net of tax

(836

)

-

 

Non-cash operating activities:
Depreciation and amortization

5,131

 

5,827

 

Loss on disposal or impairment of assets

4,124

 

-

 

Lease impairments

5,940

 

-

 

Gain on distribution from retained profits interest

-

 

(183

)

Provision for doubtful accounts

613

 

1,845

 

Deferred income taxes

(14

)

315

 

Non-cash stock compensation expense

29,624

 

23,758

 

Changes in operating assets and liabilities:
Accounts receivable

(15,722

)

(27,803

)

Deferred commissions

(1,203

)

(1,495

)

Other assets

(7,372

)

(1,331

)

Accounts payable and other liabilities

20,168

 

34,358

 

Income taxes

5,454

 

1,630

 

Deferred revenue

(453

)

3,927

 

Net cash provided by operating activities

15,770

 

25,473

 

Cash flows from investing activities:
Capital expenditures

(179

)

(1,316

)

Purchases of investments

(3,000

)

-

 

Proceeds from sales of investments

3,000

 

-

 

Purchases of strategic investments

(500

)

-

 

Distribution from retained profits interest

-

 

184

 

Cash paid in acquisition, net of cash received

-

 

(2,008

)

Net cash used in investing activities

(679

)

(3,140

)

Cash flows from financing activities:
Proceeds related to the issuance of common stock under stock and employee benefit plans

1,664

 

1,905

 

Shares repurchased for tax withholdings upon vesting of stock-based awards

(764

)

(1,674

)

Acquisition of treasury stock

(49,906

)

(5,147

)

Net cash used in financing activities

(49,006

)

(4,916

)

Cash flows from discontinued operations:
From operating activities

836

 

-

 

Net cash provided by discontinued operations

836

 

-

 

Effect of exchange rate changes on cash

993

 

(48

)

 
Net change in cash and cash equivalents

(32,086

)

17,369

 

Cash and cash equivalents at beginning of period

485,602

 

544,321

 

Cash and cash equivalents at end of period

453,516

 

561,690

 

 
Supplemental cash flow information:
Cash paid (received) during the period for:
Income taxes

(751

)

(246

)

Operating lease assets obtained in exchange for operating lease liabilities

-

 

17,211

 

Purchases of property, plant, & equipment, net remaining unpaid at end of period

77

 

353

 

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
 
For the Nine Months Ended
 
December 31,
 

2022

2021

 
Cash flows from operating activities:
Net loss

(87,338

)

(4,441

)

Earnings from discontinued operations, net of tax

(836

)

-

 

Non-cash operating activities:
Depreciation and amortization

16,561

 

18,231

 

Loss on disposal or impairment of assets

4,121

 

142

 

Lease impairments

18,165

 

-

 

Gain on sale of strategic investments

(194

)

-

 

Gain on distribution from retained profits interest

-

 

(30,235

)

Provision for doubtful accounts

1,728

 

3,127

 

Deferred income taxes

204

 

(456

)

Non-cash stock compensation expense

81,142

 

61,475

 

Changes in operating assets and liabilities:
Accounts receivable

(27,171

)

(45,876

)

Deferred commissions

(2,123

)

(6,864

)

Other assets

1,588

 

22,077

 

Accounts payable and other liabilities

(9,309

)

(2,471

)

Income taxes

6,967

 

998

 

Deferred revenue

271

 

3,426

 

Net cash provided by operating activities

3,776

 

19,133

 

Cash flows from investing activities:
Capital expenditures

(4,593

)

(2,619

)

Purchases of investments

(3,000

)

-

 

Proceeds from sales of investments

3,000

 

-

 

Purchases of strategic investments

(500

)

-

 

Proceeds from sales of strategic investments

400

 

-

 

Distribution from retained profits interest

-

 

31,184

 

Cash paid in acquisition, net of cash received

-

 

(10,376

)

Net cash provided by (used in) investing activities

(4,693

)

18,189

 

Cash flows from financing activities:
Proceeds related to the issuance of common stock under stock and employee benefit plans

6,255

 

6,183

 

Shares repurchased for tax withholdings upon vesting of stock-based awards

(2,054

)

(14,216

)

Acquisition of treasury stock

(149,997

)

(49,224

)

Net cash used in financing activities

(145,796

)

(57,257

)

Cash flows from discontinued operations:
From operating activities

836

 

-

 

Net cash provided by discontinued operations

836

 

-

 

Effect of exchange rate changes on cash

(769

)

(62

)

 
Net change in cash and cash equivalents

(146,646

)

(19,997

)

Cash and cash equivalents at beginning of period

600,162

 

581,687

 

Cash and cash equivalents at end of period

453,516

 

561,690

 

 
Supplemental cash flow information:
Cash paid (received) during the period for:
Income taxes

3,418

 

(2,815

)

Operating lease assets obtained in exchange for operating lease liabilities

-

 

52,902

 

Purchases of property, plant, & equipment, net remaining unpaid at end of period

77

 

353

 

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CALCULATION OF FREE CASH FLOW TO EQUITY (1)
(Unaudited)
(Dollars in thousands)
 
 
06/30/21 09/30/21 12/31/21 03/31/22 FY2022 06/30/22 09/30/22 12/31/22 FY2023
 
Net Cash Provided by (Used in) Operating Activities-Continuing Operations

(17,241

)

10,901

 

25,473

 

58,944

 

78,077

 

(33,369

)

21,375

 

15,770

 

3,776

 

 
Less:
Capital expenditures

(427

)

(876

)

(1,316

)

(1,880

)

(4,499

)

(1,741

)

(2,673

)

(179

)

(4,593

)

 
Free Cash Flow to Equity

(17,668

)

10,025

 

24,157

 

57,064

 

73,578

 

(35,110

)

18,702

 

15,591

 

(817

)

(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures and the material limitations on the usefulness of these measures, please see Appendix A.

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
 
FY23 to FY22
06/30/21 09/30/21 12/31/21 03/31/22 FY2022 06/30/22 09/30/22 12/31/22 FY2023 % $
Revenues

119,038

 

127,290

 

140,604

 

141,725

 

528,657

 

142,243

 

147,099

 

158,615

 

447,957

 

14.1

%

18,011

 

 
Cost of revenue

34,315

 

35,079

 

38,557

 

39,476

 

147,427

 

41,021

 

42,304

 

43,287

 

126,612

 

13.5

%

4,730

 

Gross profit

84,723

 

92,211

 

102,047

 

102,249

 

381,230

 

101,222

 

104,795

 

115,328

 

321,345

 

13.6

%

12,584

 

% Gross margin

71.2

%

72.4

%

72.6

%

72.1

%

72.1

%

71.2

%

71.2

%

72.7

%

71.7

%

 
Operating expenses
Research and development

34,776

 

35,788

 

41,870

 

45,501

 

157,935

 

47,661

 

46,139

 

43,175

 

136,975

 

3.6

%

1,305

 

Sales and marketing

41,979

 

39,509

 

46,324

 

54,951

 

182,763

 

51,280

 

45,949

 

47,702

 

144,931

 

3.5

%

1,378

 

General and administrative

24,291

 

23,078

 

27,639

 

29,583

 

104,591

 

27,144

 

28,718

 

36,657

 

92,519

 

39.1

%

9,018

 

Gains, losses and other items, net

1,278

 

18

 

-

 

183

 

1,479

 

739

 

13,111

 

11,743

 

25,593

 

n/a

 

11,743

 

Total operating expenses

102,324

 

98,393

 

115,833

 

130,218

 

446,768

 

126,824

 

133,917

 

139,277

 

400,018

 

23.8

%

23,444

 

 
Loss from operations

(17,601

)

(6,182

)

(13,786

)

(27,969

)

(65,538

)

(25,602

)

(29,122

)

(23,949

)

(78,673

)

(164.4

%)

(10,163

)

% Margin

-14.8

%

-4.9

%

-9.8

%

-19.7

%

-12.4

%

-18.0

%

-19.8

%

-15.1

%

-17.6

%

 
Total other income (expense), net

30,601

 

150

 

(241

)

(47

)

30,463

 

699

 

2,248

 

(736

)

2,211

 

(330.0

%)

(495

)

 
Loss from continuing operations before income taxes

13,000

 

(6,032

)

(14,027

)

(28,016

)

(35,075

)

(24,903

)

(26,874

)

(24,685

)

(76,462

)

(176.7

%)

(10,658

)

 
Income taxes expense (benefit)

(4,365

)

399

 

1,348

 

1,376

 

(1,242

)

2,315

 

3,562

 

5,835

 

11,712

 

1124.6

%

4,487

 

 
Net loss from continuing operations

17,365

 

(6,431

)

(15,375

)

(29,392

)

(33,833

)

(27,218

)

(30,436

)

(30,520

)

(88,174

)

(160.6

%)

(54,341

)

 
Earnings from discontinued operations, net of tax

-

 

-

 

-

 

-

 

-

 

-

 

-

 

836

 

836

 

n/a

 

836

 

 
Net earnings (loss)

17,365

 

(6,431

)

(15,375

)

(29,392

)

(33,833

)

(27,218

)

(30,436

)

(29,684

)

(87,338

)

(222.5

%)

(14,309

)

 
Diluted earnings (loss) per share

0.25

 

(0.09

)

(0.23

)

(0.43

)

(0.50

)

(0.40

)

(0.45

)

(0.46

)

(1.31

)

(246.2

%)

(0.23

)

 
Some earnings (loss) per share amounts may not add due to rounding.
 
Basic shares

68,328

 

68,042

 

68,190

 

68,283

 

68,211

 

68,403

 

67,096

 

64,784

 

66,761

 

Diluted shares

69,605

 

69,333

 

69,938

 

69,354

 

69,560

 

69,195

 

67,568

 

65,356

 

67,373

 

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP EPS (1)
(Unaudited)
(Dollars in thousands, except per share amounts)
 
 
 
06/30/21 09/30/21 12/31/21 03/31/22 FY2022 06/30/22 09/30/22 12/31/22 FY 2023
 
 
Loss from continuing operations before income taxes

13,000

 

(6,032

)

(14,027

)

(28,016

)

(35,075

)

(24,903

)

(26,874

)

(24,685

)

(76,462

)

Income taxes (benefit)

(4,365

)

399

 

1,348

 

1,376

 

(1,242

)

2,315

 

3,562

 

5,835

 

11,712

 

Net loss from continuing operations

17,365

 

(6,431

)

(15,375

)

(29,392

)

(33,833

)

(27,218

)

(30,436

)

(30,520

)

(88,174

)

 
Earnings from discontinued operations, net of tax

-

 

-

 

-

 

-

 

-

 

-

 

-

 

836

 

836

 

 
Net earnings (loss)

17,365

 

(6,431

)

(15,375

)

(29,392

)

(33,833

)

(27,218

)

(30,436

)

(29,684

)

(87,338

)

 
Earnings (loss) per share:
Basic

0.25

 

(0.09

)

(0.23

)

(0.43

)

(0.50

)

(0.40

)

(0.45

)

(0.46

)

(1.31

)

Diluted

0.25

 

(0.09

)

(0.23

)

(0.43

)

(0.50

)

(0.40

)

(0.45

)

(0.46

)

(1.30

)

 
Excluded items:
Purchased intangible asset amortization (cost of revenue)

4,645

 

4,612

 

4,647

 

4,807

 

18,711

 

4,643

 

4,637

 

4,209

 

13,489

 

Non-cash stock compensation (cost of revenue and operating expenses)

18,496

 

19,221

 

23,758

 

25,782

 

87,257

 

24,225

 

27,293

 

29,624

 

81,142

 

Restructuring and merger charges (gains, losses, and other)

1,278

 

18

 

-

 

183

 

1,479

 

739

 

13,111

 

11,743

 

25,593

 

Transformation costs (general and administrative)

-

 

-

 

-

 

-

 

-

 

-

 

1,250

 

4,112

 

5,362

 

Gain on retained profits interest (other income)

(30,052

)

-

 

(183

)

-

 

(30,235

)

-

 

-

 

-

 

-

 

Total excluded items from continuing operations

(5,633

)

23,851

 

28,222

 

30,772

 

77,212

 

29,607

 

46,291

 

49,688

 

125,586

 

 
Loss from continuing operations before income taxes and excluding items

7,367

 

17,819

 

14,195

 

2,756

 

42,137

 

4,704

 

19,417

 

25,003

 

49,124

 

Income taxes expense (benefit)

865

 

(12

)

4,271

 

3,391

 

8,515

 

1,237

 

4,557

 

6,468

 

12,262

 

Non-GAAP net earnings (loss) from continuing operations

6,502

 

17,831

 

9,924

 

(635

)

33,622

 

3,467

 

14,860

 

18,535

 

36,862

 

 
Non-GAAP earnings (loss) per share from continuing operations:
Basic

0.10

 

0.26

 

0.15

 

(0.01

)

0.49

 

0.05

 

0.22

 

0.29

 

0.55

 

Diluted

0.09

 

0.26

 

0.14

 

(0.01

)

0.48

 

0.05

 

0.22

 

0.28

 

0.55

 

 
Basic weighted average shares

68,328

 

68,042

 

68,190

 

68,283

 

68,211

 

68,403

 

67,096

 

64,784

 

66,761

 

Diluted weighted average shares

69,605

 

69,333

 

69,938

 

68,283

 

69,560

 

69,195

 

67,568

 

65,356

 

67,373

 

 
Some totals may not add due to rounding

(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures and the material limitations on the usefulness of these measures, please see Appendix A.

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP EXPENSES (1)
(Unaudited)
(Dollars in thousands)
 
 
06/30/21 09/30/21 12/31/21 03/31/22 FY2022 06/30/22 09/30/22 12/31/22 FY2023
 
Expenses, continuing operations:
Cost of revenue

34,315

 

35,079

 

38,557

 

39,476

 

147,427

 

41,021

 

42,304

 

43,287

 

126,612

 

Research and development

34,776

 

35,788

 

41,870

 

45,501

 

157,935

 

47,661

 

46,139

 

43,175

 

136,975

 

Sales and marketing

41,979

 

39,509

 

46,324

 

54,951

 

182,763

 

51,280

 

45,949

 

47,702

 

144,931

 

General and administrative

24,291

 

23,078

 

27,639

 

29,583

 

104,591

 

27,144

 

28,718

 

36,657

 

92,519

 

Gains, losses and other items, net

1,278

 

18

 

-

 

183

 

1,479

 

739

 

13,111

 

11,743

 

25,593

 

 
Gross profit, continuing operations:

84,723

 

92,211

 

102,047

 

102,249

 

381,230

 

101,222

 

104,795

 

115,328

 

321,345

 

% Gross margin

71.2

%

72.4

%

72.6

%

72.1

%

72.1

%

71.2

%

71.2

%

72.7

%

71.7

%

 
Excluded items:
Purchased intangible asset amortization (cost of revenue)

4,645

 

4,612

 

4,647

 

4,807

 

18,711

 

4,643

 

4,637

 

4,209

 

13,489

 

Non-cash stock compensation (cost of revenue)

790

 

948

 

1,168

 

1,205

 

4,111

 

1,163

 

1,293

 

1,208

 

3,664

 

Non-cash stock compensation (research and development)

5,348

 

7,184

 

9,264

 

10,316

 

32,112

 

11,656

 

12,360

 

10,654

 

34,670

 

Non-cash stock compensation (sales and marketing)

6,793

 

6,749

 

7,329

 

7,715

 

28,586

 

5,884

 

6,116

 

5,871

 

17,871

 

Non-cash stock compensation (general and administrative)

5,565

 

4,340

 

5,997

 

6,546

 

22,448

 

5,522

 

7,524

 

11,891

 

24,937

 

Restructuring and merger charges (gains, losses, and other)

1,278

 

18

 

-

 

183

 

1,479

 

739

 

13,111

 

11,743

 

25,593

 

Transformation costs (general and administrative)

-

 

-

 

-

 

-

 

-

 

-

 

1,250

 

4,112

 

5,362

 

Gain on retained profits interest (other income)

(30,052

)

-

 

(183

)

-

 

(30,235

)

-

 

-

 

-

 

-

 

Total excluded items

(5,633

)

23,851

 

28,222

 

30,772

 

77,212

 

29,607

 

46,291

 

49,688

 

125,586

 

 
Expenses, continued operations excluding items:
Cost of revenue

28,880

 

29,519

 

32,742

 

33,464

 

124,605

 

35,215

 

36,374

 

37,870

 

109,459

 

Research and development

29,428

 

28,604

 

32,606

 

35,185

 

125,823

 

36,005

 

33,779

 

32,521

 

102,305

 

Sales and marketing

35,186

 

32,760

 

38,995

 

47,236

 

154,177

 

45,396

 

39,833

 

41,831

 

127,060

 

General and administrative

18,726

 

18,738

 

21,642

 

23,037

 

82,143

 

21,622

 

19,944

 

20,654

 

62,220

 

Gains, losses and other items, net

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

 
Gross profit, continued operations excluding items:

90,158

 

97,771

 

107,862

 

108,261

 

404,052

 

107,028

 

110,725

 

120,745

 

338,498

 

% Gross margin

75.7

%

76.8

%

76.7

%

76.4

%

76.4

%

75.2

%

75.3

%

76.1

%

75.6

%

(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A.

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP OPERATING INCOME (LOSS) GUIDANCE (1)
(Unaudited)
(Dollars in thousands)
For the quarter ending For the year ending
March 31, 2023 March 31, 2023
 
Low High Low High
GAAP loss from operations

 

(26,000

)

 

(23,000

)

 

(105,000

)

 

(102,000

)

 
Excluded items:
Purchased intangible asset amortization

 

3,000

 

 

3,000

 

 

17,000

 

 

17,000

 

Non-cash stock compensation

 

22,000

 

 

22,000

 

 

103,000

 

 

103,000

 

Restructuring costs

 

10,000

 

 

10,000

 

 

36,000

 

 

36,000

 

Transformation costs

 

4,000

 

 

4,000

 

 

9,000

 

 

9,000

 

Total excluded items

 

39,000

 

 

39,000

 

 

165,000

 

 

165,000

 

 
Non-GAAP income from operations

$

13,000

 

$

16,000

 

$

60,000

 

$

63,000

 

(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A.

APPENDIX A

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

Q3 FISCAL 2023 FINANCIAL RESULTS

EXPLANATION OF NON-GAAP MEASURES AND OTHER KEY METRICS

To supplement our financial results, we use non-GAAP measures which exclude certain acquisition related expenses, non-cash stock compensation and restructuring charges. We believe these measures are helpful in understanding our past performance and our future results. Our non-GAAP financial measures and schedules are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated GAAP financial statements. Our management regularly uses these non-GAAP financial measures internally to understand, manage and evaluate our business and to make operating decisions. These measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is also based in part on the performance of our business based on these non-GAAP measures.

Our non-GAAP financial measures, including non-GAAP earnings (loss) per share, income (loss) from operations and adjusted EBITDA reflect adjustments based on the following items, as well as the related income tax effects when applicable:

Purchased intangible asset amortization: We incur amortization of purchased intangibles in connection with our acquisitions. Purchased intangibles include (i) developed technology, (ii) customer and publisher relationships, and (iii) trade names. We expect to amortize for accounting purposes the fair value of the purchased intangibles based on the pattern in which the economic benefits of the intangible assets will be consumed as revenue is generated. Although the intangible assets generate revenue for us, we exclude this item because this expense is non-cash in nature and because we believe the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding our operational performance.

Non-cash stock compensation: Non-cash stock compensation consists of charges for associate restricted stock units, performance shares and stock options in accordance with current GAAP related to stock-based compensation including expense associated with stock-based compensation related to unvested options assumed in connection with our acquisitions. As we apply stock-based compensation standards, we believe that it is useful to investors to understand the impact of the application of these standards to our operational performance. Although stock-based compensation expense is calculated in accordance with current GAAP and constitutes an ongoing and recurring expense, such expense is excluded from non-GAAP results because it is not an expense that typically requires or will require cash settlement by us and because such expense is not used by us to assess the core profitability of our business operations.

Restructuring charges: During the past several years, we have initiated certain restructuring activities in order to align our costs in connection with both our operating plans and our business strategies based on then-current economic conditions. As a result, we recognized costs related to termination benefits for employees whose positions were eliminated, lease and other contract termination charges, and leasehold improvement write offs. These items, reported as gains, losses, and other items, net, are excluded from non-GAAP results because such amounts are not used by us to assess the core profitability of our business operations.

Transformation costs: In previous years, we incurred significant expenses to separate the financial statements of our operating segments, with particular focus on segment-level balance sheets, and to evaluate portfolio priorities. Our criteria for excluding transformation expenses from our non-GAAP measures is as follows: 1) projects are discrete in nature; 2) excluded expenses consist only of third-party consulting fees that we would not incur otherwise; and 3) we do not exclude employee related expenses or other costs associated with the ongoing operations of our business. We substantially completed those projects during the third quarter of fiscal year 2018. Beginning in the fourth quarter of fiscal 2018, and through most of fiscal 2019, we incurred transaction support expenses and system separation costs related to the Company's announced evaluation of strategic options for its Marketing Solutions (AMS) business. In the first and second quarters of fiscal 2021 in response to the potential COVID-19 pandemic impact on our business and again during fiscal 2023 in response to macroeconomic conditions, we incurred significant costs associated with the assessment of strategic and operating plans, including our long-term location strategy, and assistance in implementing the restructuring activities as a result of this assessment. Our criteria for excluding these costs are the same. We believe excluding these items from our non-GAAP financial measures is useful for investors and provides meaningful supplemental information.

Our non-GAAP financial schedules are:

Non-GAAP EPS, Non-GAAP Income from Operations, and Non-GAAP expenses: Our Non-GAAP earnings per share, Non-GAAP income from operations, and Non-GAAP expenses reflect adjustments as described above, as well as the related tax effects where applicable.

Adjusted EBITDA: Adjusted EBITDA is defined as net income from continuing operations before income taxes, other expenses, depreciation and amortization, and including adjustments as described above. We use Adjusted EBITDA to measure our performance from period to period both at the consolidated level as well as within our operating segments and to compare our results to those of our competitors. We believe that the inclusion of Adjusted EBITDA provides useful supplementary information to and facilitates analysis by investors in evaluating the Company's performance and trends. The presentation of Adjusted EBITDA is not meant to be considered in isolation or as an alternative to net earnings as an indicator of our performance.

Free Cash Flow to Equity: To supplement our statement of cash flows, we use a non-GAAP measure of cash flow to analyze cash flows generated from operations. Free cash flow to equity is defined as operating cash flow less cash used by investing activities (excluding the impact of cash paid in acquisitions), less required payments of debt, and excluding the impact of discontinued operations. Management believes that this measure of cash flow is meaningful since it represents the amount of money available from continuing operations for the Company's discretionary spending after funding all required obligations including scheduled debt payments. The presentation of non-GAAP free cash flow to equity is not meant to be considered in isolation or as an alternative to cash flows from operating activities as a measure of liquidity.

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