Shares of advertising technology (adtech) company LiveRamp (RAMP 2.03%) jumped to a new 52-week high on Thursday after announcing a major acquisition and providing preliminary financial results to investors. As of 3:10 p.m. ET, LiveRamp stock was up 10.5%.
Here's what LiveRamp's management shared
I'll start with the preliminary financial results: LiveRamp expects to report revenue of $174 million for the upcoming third quarter of its fiscal 2024. That would be good for 10% year-over-year growth, outpacing its 9% growth in the second quarter. Moreover, it expects to report operating income of $15 million, which is far more than its operating income of $8 million in Q2.
The preliminary financial results, therefore, were encouraging for LiveRamp. From here, the company is hoping to boost its business further by acquiring start-up Habu for $200 million.
For its part, LiveRamp provides middleware software so that companies can share first-party data in an anonymized way. This way, businesses can derive insights into their target customers without compromising privacy. Its acquisition of Habu will allow LiveRamp to do this with fewer constraints -- Habu works across a variety of ad publishers and cloud providers around the world.
What should investors watch from here?
LiveRamp's market capitalization is only $2.7 billion, so a $200 million acquisition is substantial. And on its own, Habu won't add much to the company's top line. Management says Habu will only add $18 million in revenue in fiscal 2025 when accounting for revenue synergies.
In other words, investors shouldn't expect revenue to jump right away. Rather, investors should think of this acquisition as an effort to make LiveRamp's product offerings more attractive. Therefore, investors will want to see greater customer growth and increased spending from existing customers in the very near future to show that the acquisition is paying off.
