Please ensure Javascript is enabled for purposes of website accessibility

Why LiveRamp Holdings Stock Was Up on Friday

By John Ballard – Updated Aug 6, 2021 at 11:58AM

Key Points

  • Investors had low expectations going into the fiscal Q1 earnings report, but the company posted a surprisingly strong quarter.

Motley Fool Issues Rare “All In” Buy Alert

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Business is ramping back up.

What happened

Shares of LiveRamp Holdings (RAMP -0.75%) rocketed higher after the company released better-than-expected earnings results. The stock price was up 17.7% as of 10:46 a.m. EDT on Friday.

The shares had been down in recent weeks, so investors were pleasantly surprised that LiveRamp posted accelerating revenue growth in the fiscal first quarter, along with adjusted profits that were higher than analysts had expected.

It's been a bumpy ride, but the stock is currently up 86% over the last five years. The strong earnings results could change investor sentiment in the near term.

RAMP Chart

RAMP data by YCharts.

So what

"Global companies are increasingly turning to LiveRamp to power their customer data strategies, and momentum across our key expansion levers continues to build," CEO Scott Howe said. These demand trends fueled a 20% rise in revenue for the fiscal first quarter, up from 13% growth in the fourth quarter. Investors are seeing the acceleration as a sign of a potentially lucrative run for the company.

LiveRamp helps companies use data to improve the customer experience. In the previous year, it worked with 825 customers, but the company sees the potential clients at 2,000 of the world's top marketers. Management believes there is still tremendous opportunity for growth over the long term.

Two business people shake hands in a conference room.

Image source: Getty Images.

Now what

CFO Warren Jenson suggested that growth should continue. He issued a statement saying, "Our Q1 results were strong, and our trendlines are building." LiveRamp added 30 net new customers in the quarter and now works with 40% of the largest consumer packaged-goods companies worldwide. 

Guidance now calls for fiscal second-quarter revenue to increase by 18% year over year to $124 million, with adjusted operating income expected to land at $4 million. Full-year revenue is expected to also increase by 18% over the previous fiscal year. 

LiveRamp's earnings per share are still relatively minuscule at just $0.09 on an adjusted basis in the first quarter. This explains the stock's high forward price-to-earnings ratio, which implies that investors are betting on higher margins down the road to grow earnings and bring the high valuation back down.

The key to improving profitability ultimately depends on revenue growth, and that's why the recent acceleration is so important. LiveRamp is expanding its relationships with major clients, and that bodes well for the company's future.

John Ballard has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

LiveRamp Stock Quote
LiveRamp
RAMP
$21.07 (-0.75%) $0.16

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
356%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.