LiveRamp Holdings, Inc. (RAMP) - Q3 2026 10-Q Summary
Business Context and Reporting Period
This summary covers the quarterly period ended December 31, 2025 (Fiscal Q3 2026) for LiveRamp Holdings, Inc. LiveRamp operates a data collaboration platform that enables marketers and media owners to securely share and manage first-party consumer data. The company operates as a single reportable segment and is headquartered in San Francisco, California.
Key Financial Metrics
| Metric | Q3 2025 (Current) | Q3 2024 (Prior Year) | 9 Months 2025 (YTD) | 9 Months 2024 (YTD) |
|---|---|---|---|---|
| Revenue | $212.2 million | $195.4 million | $606.8 million | $556.9 million |
| Gross Profit | $152.5 million | $140.4 million | $429.3 million | $398.9 million |
| Gross Margin | 71.9% | 71.9% | 70.7% | 71.6% |
| Operating Income | $39.5 million | $14.7 million | $68.2 million | $16.9 million |
| Operating Margin | 18.6% | 7.5% | 11.2% | 3.0% |
| Net Earnings | $39.9 million | $11.2 million | $75.0 million | $5.5 million |
| Diluted EPS | $0.62 | $0.17 | $1.14 | $0.08 |
| Cash & Equivalents | $395.9 million (as of Dec 31, 2025) | |||
| Operating Cash Flow (9mo) | $108.9 million |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 8.6% quarter-over-quarter and 9.0% year-to-date, driven by growth in both Subscription (8.8% Q3 growth) and Marketplace/Other (8.0% Q3 growth) segments.
- Profitability Expansion: Operating income surged 169% in Q3 and 303% YTD. This was primarily driven by a significant reduction in operating expenses, particularly stock-based compensation (SBC), which decreased by $8.7 million in Q3 compared to the prior year.
- Expense Management: Total operating expenses decreased 10.1% in Q3. Research & Development expenses dropped 21% due to lower SBC and headcount-related costs. Sales & Marketing expenses declined 4%.
- Tax Impact: The effective tax rate dropped significantly to 7.1% in Q3 (from 49.1% in Q3 2024) due to the enactment of the "2025 Tax Act" (H.R. 1), which allows for immediate expensing of domestic R&D expenditures.
- Key Metrics: Annualized Recurring Revenue (ARR) grew 7% to $527 million. Subscription Net Retention (SNR) was 101%.
Guidance, Outlook, and Risks
- Outlook: Management expects the 2025 Tax Act to materially decrease the estimated annual effective tax rate and cash tax payments for fiscal 2026. The company anticipates a potential release of a substantial portion of its valuation allowance on deferred tax assets within the next 12 months due to recent profitability.
- Capital Allocation: The company continues an aggressive share repurchase program. In the nine months ended Dec 31, 2025, it repurchased 4.3 million shares for $118.8 million. Remaining capacity under the program is approximately $137.4 million.
- Restructuring: The company recorded $1.7 million in restructuring and other charges for the nine months ended Dec 31, 2025, related to employee termination benefits and real estate adjustments.
- Risks:
- Legal: A class action lawsuit (Riganian et al v. LiveRamp) was filed in January 2025 alleging privacy violations. The company intends to defend vigorously, but the outcome is uncertain.
- Regulatory: Ongoing changes in data privacy laws and the deprecation of third-party cookies pose risks to the business model.
- Macro: Risks include potential recession, high interest rates, and geopolitical conflicts impacting global operations.
Investor Verification Checklist
- Tax Rate Sustainability: Verify the long-term impact of the 2025 Tax Act and the timing of the valuation allowance release on future earnings.
- Stock-Based Compensation Trends: Confirm if the significant reduction in SBC expenses is a one-time benefit or a sustained trend, as this heavily influenced the margin expansion.
- Legal Exposure: Monitor the status of the Riganian class action lawsuit for potential financial impact or settlement costs.
- Share Repurchase Pace: Assess the remaining $137.4 million repurchase authorization and the company's commitment to returning capital amidst potential market volatility.
- Cloud Cost Inflation: Review the $5.8 million increase in cloud infrastructure costs in Q3 to ensure scalability does not erode gross margins as usage grows.