Press release

LiveRamp Announces Fourth Quarter and Fiscal Year Results

0
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LiveRamp® (NYSE: RAMP), the leading global data connectivity platform, today announced its financial results for the quarter and fiscal year ended March 31, 2021.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20210525005938/en/

Fourth Quarter Financial Highlights

All metrics compared to the prior year period

  • Total revenue was $119 million, up 13%.
  • Subscription revenue was $94 million, up 13% and contributed 79% of total revenue.
  • Marketplace & Other revenue was $25 million, up 13%.
  • GAAP gross profit was $82 million, up 19%, and GAAP gross margin of 68% expanded 3 percentage points. Non-GAAP gross profit was $88 million, up 18%, and non-GAAP gross margin of 74% expanded 3 percentage points.
  • GAAP operating loss was $52 million compared to a GAAP operating loss of $41 million in the prior year period. Non-GAAP operating income was $1 million compared to a non-GAAP operating loss of $16 million in the prior year period.
  • GAAP loss per share was $0.49, and non-GAAP earnings per share was $0.04.
  • Net cash used in operating activities was $18 million compared to net cash used in operating activities of $0 million in the prior year period.

Fiscal Year Financial Highlights

All metrics compared to the prior fiscal year

  • Total revenue was $443 million, up 16%.
  • Subscription revenue was $357 million, up 17% and contributed 80% of total revenue.
  • Marketplace & Other revenue was $86 million, up 15%.
  • GAAP gross profit was $299 million, up 31%, and GAAP gross margin of 67% expanded 8 percentage points. Non-GAAP gross profit was $322 million, up 27%, and Non-GAAP gross margin of 73% expanded 6 percentage points.
  • GAAP operating loss was $121 million compared to a GAAP operating loss of $181 million in the prior fiscal year. Non-GAAP operating income was $16 million compared to a non-GAAP operating loss of $64 million in the prior fiscal year.
  • GAAP loss per share was $1.36, and non-GAAP earnings per share were $0.23.
  • Net cash used from operating activities was $21 million compared to net cash used from operating activities of $29 million in the prior fiscal year.
  • In fiscal 2021, LiveRamp repurchased 1.3 million shares for $42 million. Since March 31, 2021, the Company has repurchased an additional 275 thousand shares for $13.3 million. In total, since the inception of the share repurchase program in August 2011, the Company has returned over $1.19 billion in capital to shareholders.

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

“LiveRamp had an exceptional year amidst an unprecedented macro environment. I am proud of how our team showed up for our customers and each other in FY21,” said LiveRamp CEO Scott Howe. “LiveRamp’s Authenticated Traffic Solution has become the industry standard for identity in a post cookie world, and Safe Haven® is game changing for the future of data-driven customer experience.”

“LiveRamp again delivered on its commitments in FY21,” said LiveRamp President and CFO Warren Jenson. “Not only did we meaningfully grow our top-line, we delivered a record bottom-line performance, as well. We were profitable on a non-GAAP operating income basis in each quarter of FY21. Further, our record bookings performance positions us well for another strong year in FY22.”

GAAP and Non-GAAP Results

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

 

Q4 Fiscal 2021

 

Full Year Fiscal 2021

 

Results

 

Results

 

GAAP

Non-GAAP

 

GAAP

Non-GAAP

Subscription revenue

$94

 

$357

YoY change %

13%

 

 

17%

 

Marketplace & other revenue

$25

 

$86

YoY change %

13%

 

 

15%

 

Total revenue

$119

 

$443

YoY change %

13%

 

 

16%

 

 

 

 

 

 

 

Gross profit

$82

$88

 

$299

$322

% Gross margin

68%

74%

 

67%

73%

YoY change, pts

3pts

3pts

 

8pts

6pts

 

 

 

 

 

 

Operating income (loss)

($52)

$1

 

($121)

$16

% Operating margin

(44%)

1%

 

(27%)

4%

YoY change, pts

(5pts)

16pts

 

20pts

20pts

 

 

 

 

 

 

Net income (loss)

($33)

$3

 

($90)

$16

Earnings (loss) per share

($0.49)

$0.04

 

($1.36)

$0.23

 

 

 

 

 

 

Shares to Calculate EPS

67.1

69.9

 

66.3

69.0

YoY change %

0%

4%

 

(2%)

2%

Net operating cash flow

($18)

 

($21)

Free cash flow to equity

($18)

 

($23)

 

 

 

 

 

 

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 to this press release.

Additional Business Highlights & Metrics

  • ATS continues to experience strong global adoption, solidifying its role as the leading post-cookie solution. To date, more than 400 publishers have adopted ATS, including 70% of the U.S Comscore 20 and 65% of the U.S. Comscore 50. In addition, ATS has been adopted by more than 70 leading supply-side and demand-side platforms. Importantly, it is generating results:

    • Brand advertisers are generating better returns. A new Forrester Consulting Total Economic Impact™ (TEI) study, commissioned by LiveRamp, found advertisers who use LiveRamp’s ATS can achieve 343% ROI over three years with payback within only six months of initial investment.
    • Publishers are making more money. Recent case studies with top publishers suggest potential to increase CPM (cost per thousand impression) by over 40% using ATS compared to legacy third-party cookie methods.
  • During the fourth quarter, subscription net retention was 101% and platform net retention was 104%.
  • Current remaining performance obligations (CRPO), which is contracted and committed revenue expected to be recognized over the next 12 months, was $256 million, up 14% compared to the fourth quarter of last year. Sequentially, CRPO was up 11%.
  • LiveRamp has 70 clients whose subscription contracts exceed $1 million in annual revenue, up 32% compared to the prior year.
  • LiveRamp’s direct subscription customer count at quarter end was 825, up from 780 a year ago.

Financial Outlook

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

For the first quarter of fiscal 2022, LiveRamp expects to report:

  • Revenue of up to $112 million, an increase of up to 13% year-over-year
  • GAAP operating loss of approximately $30 million
  • Non-GAAP operating loss of up to $2 million

For fiscal 2022, LiveRamp expects to report:

  • Revenue of up to $509 million, an increase of up to 15% year-over-year
  • GAAP operating loss of between $119 million and $114 million
  • Non-GAAP operating income of between $0 million and $5 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 leading data connectivity platform for the safe and effective use of data. Powered by core identity capabilities and an unparalleled network, LiveRamp enables companies and their partners to better connect, control, and activate data to transform customer experiences and generate more valuable business outcomes. LiveRamp’s fully interoperable and neutral infrastructure delivers end-to-end addressability for the world’s top brands, agencies, and publishers. 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, 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 COVID-19 and the associated impact 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 relate to maintaining our culture and our ability to innovate and evolve while working remotely and within a rapidly changing industry, while also avoiding disruption from acquisition and divestiture activities. Our international operations are also subject to risks 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 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 2020 ended March 31, 2020, and LiveRamp’s Quarterly Reports on Form 10-Q issued in fiscal year 2021.

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.

LiveRamp, IdentityLinkTM, 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
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
 
For the Three Months Ended
March 31

 

 

 

 

$

 

%

2021

 

2020

 

Variance

 

Variance

 
Revenues

119,175

 

105,701

 

13,474

 

12.7

%

 
Cost of revenue

37,557

 

36,852

 

705

 

1.9

%

Gross profit

81,618

 

68,849

 

12,769

 

18.5

%

% Gross margin

68.5

%

65.1

%

 
Operating expenses:
Research and development

46,479

 

28,411

 

18,068

 

63.6

%

Sales and marketing

53,307

 

48,564

 

4,743

 

9.8

%

General and administrative

32,395

 

30,216

 

2,179

 

7.2

%

Gains, losses and other items, net

1,345

 

2,447

 

(1,102

)

(45.0

%)

Total operating expenses

133,526

 

109,638

 

23,888

 

21.8

%

 
Loss from operations

(51,908

)

(40,789

)

(11,119

)

(27.3

%)

% Margin

-43.6

%

-38.6

%

 
Total other income (expense)

(404

)

1,565

 

(1,969

)

(125.8

%)

 
Loss from continuing operations before income taxes

(52,312

)

(39,224

)

(13,088

)

(33.4

%)

 
Income taxes (benefit)

(19,465

)

(34,345

)

14,880

 

43.3

%

 
Net loss from continuing operations

(32,847

)

(4,879

)

(27,968

)

(573.2

%)

 
Earnings from discontinued operations, net of tax

 

750

 

(750

)

(100.0

%)

 
Net loss

(32,847

)

(4,129

)

(28,718

)

(695.5

%)

 
Basic earnings (loss) per share:
Continuing operations

(0.49

)

(0.07

)

(0.42

)

(571.9

%)

Discontinued operations

 

0.01

 

(0.01

)

(100.0

%)

Basic loss per share

(0.49

)

(0.06

)

(0.43

)

(688.7

%)

 
Diluted earnings (loss) per share:
Continuing operations

(0.49

)

(0.07

)

(0.42

)

(571.9

%)

Discontinued operations

 

0.01

 

(0.01

)

(100.0

%)

Diluted loss per share

(0.49

)

(0.06

)

(0.43

)

(688.7

%)

 
Basic weighted average shares

67,111

 

66,977

 

Diluted weighted average shares

67,111

 

66,977

 

 
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
 
For the Twelve Months Ended

March 31

 

 

 

 

$

 

%

2021

 

2020

 

Variance

 

Variance

 
Revenues

443,026

 

380,572

 

62,454

 

16.4

%

 
Cost of revenue

144,004

 

152,704

 

(8,700

)

(5.7

%)

Gross profit

299,022

 

227,868

 

71,154

 

31.2

%

% Gross margin

67.5

%

59.9

%

 
Operating expenses:
Research and development

135,111

 

105,981

 

29,130

 

27.5

%

Sales and marketing

177,543

 

188,905

 

(11,362

)

(6.0

%)

General and administrative

104,201

 

108,903

 

(4,702

)

(4.3

%)

Gains, losses and other items, net

2,715

 

5,001

 

(2,286

)

(45.7

%)

Total operating expenses

419,570

 

408,790

 

10,780

 

2.6

%

 
Loss from operations

(120,548

)

(180,922

)

60,374

 

33.4

%

% Margin

-27.2

%

-47.5

%

 
Total other income (expense)

(252

)

15,385

 

(15,637

)

(101.6

%)

 
Loss from continuing operations before income taxes

(120,800

)

(165,537

)

44,737

 

27.0

%

 
Income taxes (benefit)

(30,532

)

(40,276

)

9,744

 

24.2

%

 
Net loss from continuing operations

(90,268

)

(125,261

)

34,993

 

27.9

%

 
Earnings from discontinued operations, net of tax

 

750

 

(750

)

(100.0

%)

 
Net loss

(90,268

)

(124,511

)

34,243

 

27.5

%

 
Basic earnings (loss) per share:
Continuing operations

(1.36

)

(1.85

)

0.49

 

26.4

%

Discontinued operations

 

0.01

 

(0.01

)

(100.0

%)

Basic loss per share

(1.36

)

(1.84

)

0.48

 

26.0

%

 
Diluted earnings (loss) per share:
Continuing operations

(1.36

)

(1.85

)

0.49

 

26.4

%

Discontinued operations

 

0.01

 

(0.01

)

(100.0

%)

Diluted loss per share

(1.36

)

(1.84

)

0.48

 

26.0

%

 
Basic weighted average shares

66,304

 

67,760

 

Diluted weighted average shares

66,304

 

67,760

 

 
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 Twelve Months Ended

March 31,

 

March 31,

2021

 

2020

 

2021

 

2020

 
 
Loss from continuing operations before income taxes

(52,312

)

(39,224

)

(120,800

)

(165,537

)

 
Income taxes (benefit)

(19,465

)

(34,345

)

(30,532

)

(40,276

)

 
Net loss from continuing operations

(32,847

)

(4,879

)

(90,268

)

(125,261

)

 
Earnings from discontinued operations, net of tax

 

750

 

 

750

 

 
Net loss

(32,847

)

(4,129

)

(90,268

)

(124,511

)

 
Loss per share:
Basic

(0.49

)

(0.06

)

(1.36

)

(1.84

)

Diluted

(0.49

)

(0.06

)

(1.36

)

(1.84

)

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

4,177

 

5,181

 

18,046

 

19,042

 

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

47,124

 

17,168

 

111,707

 

89,447

 

Accelerated depreciation (cost of revenue and operating expenses)

 

 

 

3,569

 

Transformation costs (general and administrative)

 

 

3,863

 

 

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

1,345

 

2,447

 

2,715

 

5,001

 

 
Total excluded items

52,646

 

24,796

 

136,331

 

117,059

 

 
Income (loss) from operations before income taxes and excluding items

334

 

(14,428

)

15,531

 

(48,478

)

 
Income taxes (benefit) (2)

(2,628

)

(11,199

)

(638

)

(11,452

)

 
Non-GAAP net earnings (loss)

2,962

 

(3,229

)

16,169

 

(37,026

)

 
Non-GAAP earnings (loss) per share:
Basic

0.04

 

(0.05

)

0.24

 

(0.55

)

Diluted

0.04

 

(0.05

)

0.23

 

(0.55

)

 
Basic weighted average shares

67,111

 

66,977

 

66,304

 

67,760

 

Diluted weighted average shares

69,935

 

66,977

 

68,963

 

67,760

 

(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 Twelve Months Ended

March 31,

 

March 31,

2021

 

2020

 

2021

 

2020

 
Loss from continuing operations

(51,908

)

(40,789

)

(120,548

)

(180,922

)

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

4,177

 

5,181

 

18,046

 

19,042

 

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

47,124

 

17,168

 

111,707

 

89,447

 

Accelerated depreciation (cost of revenue and operating expenses)

 

 

 

3,569

 

Transformation costs (general and administrative)

 

 

3,863

 

 

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

1,345

 

2,447

 

2,715

 

5,001

 

 
Total excluded items

52,646

 

24,796

 

136,331

 

117,059

 

 
Income (loss) from continuing operations before excluded items

738

 

(15,993

)

15,783

 

(63,863

)

(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 Twelve Months Ended

March 31,

 

March 31,

2021

 

2020

 

2021

 

2020

 
 
Net loss from continuing operations

(32,847

)

(4,879

)

(90,268

)

(125,261

)

 
Income taxes (benefit)

(19,465

)

(34,345

)

(30,532

)

(40,276

)

 
Other expense (income)

404

 

(1,565

)

252

 

(15,385

)

 
Loss from operations

(51,908

)

(40,789

)

(120,548

)

(180,922

)

 
Depreciation and amortization

6,277

 

7,943

 

27,741

 

35,901

 

 
EBITDA

(45,631

)

(32,846

)

(92,807

)

(145,021

)

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

47,124

 

17,168

 

111,707

 

89,447

 

Transformation costs (general and administrative)

 

 

3,863

 

 

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

1,345

 

2,447

 

2,715

 

5,001

 

 
Other adjustments

48,469

 

19,615

 

118,285

 

94,448

 

 
Adjusted EBITDA

2,838

 

(13,231

)

25,478

 

(50,573

)

(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
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
 

March 31,

 

March 31,

 

$

 

%

2021

 

2020

 

Variance

 

Variance

 
Assets
Current assets:
Cash and cash equivalents

572,787

 

717,811

 

(145,024

)

(20.2

%)

Restricted cash

8,900

 

14,815

 

(5,915

)

(39.9

%)

Trade accounts receivable, net

114,284

 

92,761

 

21,523

 

23.2

%

Refundable income taxes

65,692

 

38,340

 

27,352

 

71.3

%

Other current assets

64,052

 

32,666

 

31,386

 

96.1

%

 
Total current assets

825,715

 

896,393

 

(70,678

)

(7.9

%)

 
Property and equipment

44,284

 

44,786

 

(502

)

(1.1

%)

Less – accumulated depreciation and amortization

32,327

 

25,465

 

6,862

 

26.9

%

 
Property and equipment, net

11,957

 

19,321

 

(7,364

)

(38.1

%)

 
Intangible assets, net

39,730

 

45,200

 

(5,470

)

(12.1

%)

Goodwill

357,446

 

297,796

 

59,650

 

20.0

%

Deferred commissions, net

22,619

 

16,014

 

6,605

 

41.2

%

Other assets, net

30,854

 

27,165

 

3,689

 

13.6

%

 

1,288,321

 

1,301,889

 

(13,568

)

(1.0

%)

 
Liabilities and Stockholders’ Equity
Current liabilities:
Trade accounts payable

39,955

 

42,204

 

(2,249

)

(5.3

%)

Accrued payroll and related expenses

46,438

 

28,791

 

17,647

 

61.3

%

Other accrued expenses

58,353

 

68,991

 

(10,638

)

(15.4

%)

Acquisition escrow payable

8,900

 

14,815

 

(5,915

)

(39.9

%)

Deferred revenue

11,603

 

6,581

 

5,022

 

76.3

%

 
Total current liabilities

165,249

 

161,382

 

3,867

 

2.4

%

 
Other liabilities

42,389

 

52,995

 

(10,606

)

(20.0

%)

 
Stockholders’ equity:
Preferred stock

 

 

 

n/a

 

Common stock

14,781

 

14,394

 

387

 

2.7

%

Additional paid-in capital

1,630,072

 

1,496,565

 

133,507

 

8.9

%

Retained earnings

1,454,826

 

1,545,094

 

(90,268

)

(5.8

%)

Accumulated other comprehensive income

7,522

 

5,745

 

1,777

 

30.9

%

Treasury stock, at cost

(2,026,518

)

(1,974,286

)

(52,232

)

(2.6

%)

Total stockholders’ equity

1,080,683

 

1,087,512

 

(6,829

)

(0.6

%)

 

1,288,321

 

1,301,889

 

(13,568

)

(1.0

%)

 

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
 
For the Three Months Ended
March 31,

2021

2020

 
Cash flows from operating activities:
Net loss

(32,847

)

(4,129

)

Earnings from discontinued operations, net of tax

 

(750

)

Non-cash operating activities:
Depreciation and amortization

6,277

 

7,943

 

Loss on disposal or impairment of assets

54

 

1,865

 

Provision for doubtful accounts

(431

)

3,450

 

Deferred income taxes

(1,418

)

(8,343

)

Non-cash stock compensation expense

47,124

 

17,168

 

Changes in operating assets and liabilities:
Accounts receivable

1,818

 

(8,667

)

Deferred commissions

(1,523

)

(2,563

)

Other assets

(26,283

)

(8,548

)

Accounts payable and other liabilities

6,731

 

12,326

 

Income taxes

(17,233

)

(12,030

)

Deferred revenue

(156

)

2,058

 

Net cash used in operating activities

(17,887

)

(220

)

Cash flows from investing activities:
Capital expenditures

(376

)

(1,409

)

Proceeds from sales of property and equipment

 

356

 

Purchases of investments

(4,500

)

 

Cash paid in acquisition, net of cash received

(58,264

)

 

Net cash used in investing activities

(63,140

)

(1,053

)

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

61

 

1,331

 

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

(538

)

(6,465

)

Acquisition of treasury stock

 

(61,002

)

Net cash used in financing activities

(477

)

(66,136

)

Cash flows from discontinued operations:
From operating activities

 

(207

)

From investing activities

 

18,582

 

Net cash provided by discontinued operations

 

18,375

 

Effect of exchange rate changes on cash

(210

)

(355

)

 
Net change in cash, cash equivalents, and restricted cash

(81,714

)

(49,389

)

Cash, cash equivalents, and restricted cash at beginning of period

663,401

 

782,015

 

Cash, cash equivalents, and restricted cash at end of period

581,687

 

732,626

 

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

(819

)

(13,515

)

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

2021

 

2020

 
Cash flows from operating activities:
Net loss

(90,268

)

(124,511

)

Earnings from discontinued operations, net of tax

 

(750

)

Non-cash operating activities:
Depreciation and amortization

27,741

 

35,901

 

Loss on disposal or impairment of assets

388

 

1,725

 

Provision for doubtful accounts

2,915

 

7,133

 

Deferred income taxes

(1,418

)

(6,878

)

Non-cash stock compensation expense

111,707

 

89,447

 

Changes in operating assets and liabilities:
Accounts receivable

(24,828

)

(20,518

)

Deferred commissions

(6,605

)

(5,273

)

Other assets

(18,772

)

(6,144

)

Accounts payable and other liabilities

(116

)

24,923

 

Income taxes

(26,215

)

(25,453

)

Deferred revenue

4,911

 

1,823

 

Net cash used in operating activities

(20,560

)

(28,575

)

Cash flows from investing activities:
Capital expenditures

(2,182

)

(11,711

)

Proceeds from sales of property and equipment

 

873

 

Purchases of investments

(7,500

)

 

Purchases of strategic investments

(2,200

)

 

Cash paid in acquisition, net of cash received

(76,012

)

(105,365

)

Net cash used in investing activities

(87,894

)

(116,203

)

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

8,737

 

4,736

 

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

(9,920

)

(24,522

)

Acquisition of treasury stock

(42,312

)

(182,190

)

Net cash used in financing activities

(43,495

)

(201,976

)

Cash flows from discontinued operations:
From operating activities

 

(207

)

From investing activities

 

18,582

 

Net cash provided by discontinued operations

 

18,375

 

Effect of exchange rate changes on cash

1,010

 

(468

)

 
Net change in cash, cash equivalents, and restricted cash

(150,939

)

(328,847

)

Cash, cash equivalents, and restricted cash at beginning of period

732,626

 

1,061,473

 

Cash, cash equivalents, and restricted cash at end of period

581,687

 

732,626

 

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

(2,911

)

(7,344

)

 
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
CALCULATION OF FREE CASH FLOW TO EQUITY (1)
(Unaudited)
(Dollars in thousands)
 
 
06/30/19 09/30/19 12/31/19 03/31/20 FY2020 06/30/20 09/30/20 12/31/20 03/31/21 FY2021
 
Net Cash Provided by (Used in) Operating Activities

(15,408

)

(28,751

)

15,804

 

(220

)

(28,575

)

(23,612

)

6,249

 

14,690

 

(17,887

)

(20,560

)

 
Less:
Capital expenditures

(4,888

)

(2,641

)

(2,773

)

(1,409

)

(11,711

)

(832

)

(296

)

(678

)

(376

)

(2,182

)

 
Free Cash Flow to Equity

(20,296

)

(31,392

)

13,031

 

(1,629

)

(40,286

)

(24,444

)

5,953

 

14,012

 

(18,263

)

(22,742

)

(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)
 
FY21 to FY20
06/30/19 09/30/19 12/31/19 03/31/20 FY2020 06/30/20 09/30/20 12/31/20 03/31/21 FY2021 % $
Revenues

82,511

 

90,143

 

102,217

 

105,701

 

380,572

 

99,437

 

104,661

 

119,753

 

119,175

 

443,026

 

16.4

%

62,454

 

 
Cost of revenue

36,426

 

41,460

 

37,966

 

36,852

 

152,704

 

34,465

 

34,897

 

37,085

 

37,557

 

144,004

 

(5.7

%)

(8,700

)

Gross profit

46,085

 

48,683

 

64,251

 

68,849

 

227,868

 

64,972

 

69,764

 

82,668

 

81,618

 

299,022

 

31.2

%

71,154

 

% Gross margin

55.9

%

54.0

%

62.9

%

65.1

%

59.9

%

65.3

%

66.7

%

69.0

%

68.5

%

67.5

%

 
Operating expenses
Research and development

23,722

 

26,445

 

27,403

 

28,411

 

105,981

 

26,989

 

31,035

 

30,608

 

46,479

 

135,111

 

27.5

%

29,130

 

Sales and marketing

43,144

 

45,204

 

51,993

 

48,564

 

188,905

 

38,627

 

41,705

 

43,904

 

53,307

 

177,543

 

(6.0

%)

(11,362

)

General and administrative

25,318

 

27,262

 

26,107

 

30,216

 

108,903

 

23,368

 

24,495

 

23,943

 

32,395

 

104,201

 

(4.3

%)

(4,702

)

Gains, losses and other items, net

2,276

 

45

 

233

 

2,447

 

5,001

 

1,995

 

(619

)

(6

)

1,345

 

2,715

 

(45.7

%)

(2,286

)

Total operating expenses

94,460

 

98,956

 

105,736

 

109,638

 

408,790

 

90,979

 

96,616

 

98,449

 

133,526

 

419,570

 

2.6

%

10,780

 

 
Loss from operations

(48,375

)

(50,273

)

(41,485

)

(40,789

)

(180,922

)

(26,007

)

(26,852

)

(15,781

)

(51,908

)

(120,548

)

33.4

%

60,374

 

% Margin

-58.6

%

-55.8

%

-40.6

%

-38.6

%

-47.5

%

-26.2

%

-25.7

%

-13.2

%

-43.6

%

-27.2

%

 
Total other income (expense)

5,882

 

4,780

 

3,158

 

1,565

 

15,385

 

463

 

(225

)

(86

)

(404

)

(252

)

(101.6

%)

(15,637

)

 
Loss from continuing operations before income taxes

(42,493

)

(45,493

)

(38,327

)

(39,224

)

(165,537

)

(25,544

)

(27,077

)

(15,867

)

(52,312

)

(120,800

)

27.0

%

44,737

 

 
Income taxes (benefit)

(353

)

(5,291

)

(287

)

(34,345

)

(40,276

)

(3,816

)

(3,109

)

(4,142

)

(19,465

)

(30,532

)

24.2

%

9,744

 

 
Net loss from continuing operations

(42,140

)

(40,202

)

(38,040

)

(4,879

)

(125,261

)

(21,728

)

(23,968

)

(11,725

)

(32,847

)

(90,268

)

27.9

%

34,993

 

 
Earnings from discontinued operations, net of tax

 

 

 

750

 

750

 

 

 

 

 

 

(100.0

%)

(750

)

 
Net loss

(42,140

)

(40,202

)

(38,040

)

(4,129

)

(124,511

)

(21,728

)

(23,968

)

(11,725

)

(32,847

)

(90,268

)

27.5

%

34,243

 

 
Diluted loss per share

(0.61

)

(0.59

)

(0.56

)

(0.06

)

(1.84

)

(0.33

)

(0.36

)

(0.18

)

(0.49

)

(1.36

)

25.9

%

0.48

 

 
Diluted loss per share continuing operations

(0.61

)

(0.59

)

(0.56

)

(0.07

)

(1.85

)

(0.33

)

(0.36

)

(0.18

)

(0.49

)

(1.36

)

26.4

%

0.49

 

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

68,906

 

67,684

 

67,473

 

66,977

 

67,760

 

65,570

 

66,010

 

66,523

 

67,111

 

66,304

 

Diluted shares

68,906

 

67,684

 

67,473

 

66,977

 

67,760

 

65,570

 

66,010

 

66,523

 

67,111

 

66,304

 

 
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP EPS (1)
(Unaudited)
(Dollars in thousands, except per share amounts)
 
 
 
06/30/19 09/30/19 12/31/19 03/31/20 FY2020 06/30/20 09/30/20 12/31/20 03/31/21 FY2021
 
 
Loss from continuing operations before income taxes

(42,493

)

(45,493

)

(38,327

)

(39,224

)

(165,537

)

(25,544

)

(27,077

)

(15,867

)

(52,312

)

(120,800

)

Income taxes (benefit)

(353

)

(5,291

)

(287

)

(34,345

)

(40,276

)

(3,816

)

(3,109

)

(4,142

)

(19,465

)

(30,532

)

Net loss from continuing operations

(42,140

)

(40,202

)

(38,040

)

(4,879

)

(125,261

)

(21,728

)

(23,968

)

(11,725

)

(32,847

)

(90,268

)

 
Earnings from discontinued operations, net of tax

 

 

 

750

 

750

 

 

 

 

 

 

 
Net loss

(42,140

)

(40,202

)

(38,040

)

(4,129

)

(124,511

)

(21,728

)

(23,968

)

(11,725

)

(32,847

)

(90,268

)

 
Loss per share:
Basic

(0.61

)

(0.59

)

(0.56

)

(0.06

)

(1.84

)

(0.33

)

(0.36

)

(0.18

)

(0.49

)

(1.36

)

Diluted

(0.61

)

(0.59

)

(0.56

)

(0.06

)

(1.84

)

(0.33

)

(0.36

)

(0.18

)

(0.49

)

(1.36

)

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

3,123

 

5,369

 

5,369

 

5,181

 

19,042

 

5,306

 

4,350

 

4,213

 

4,177

 

18,046

 

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

18,630

 

23,354

 

30,295

 

17,168

 

89,447

 

16,485

 

24,204

 

23,894

 

47,124

 

111,707

 

Accelerated depreciation (cost of revenue and operating expenses)

1,906

 

1,663

 

 

 

3,569

 

 

 

 

 

 

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

2,276

 

45

 

233

 

2,447

 

5,001

 

1,995

 

(619

)

(6

)

1,345

 

2,715

 

Transformation costs (general and administrative)

 

 

 

 

 

3,605

 

258

 

 

 

3,863

 

Total excluded items, continuing operations

25,935

 

30,431

 

35,897

 

24,796

 

117,059

 

27,391

 

28,193

 

28,101

 

52,646

 

136,331

 

 
Income (loss) from continuing operations before income taxes and excluding items

(16,558

)

(15,062

)

(2,430

)

(14,428

)

(48,478

)

1,847

 

1,116

 

12,234

 

334

 

15,531

 

Income taxes (benefit)

(216

)

190

 

(227

)

(11,199

)

(11,452

)

934

 

(1,291

)

2,347

 

(2,628

)

(638

)

Non-GAAP net earnings (loss) from continuing operations

(16,342

)

(15,252

)

(2,203

)

(3,229

)

(37,026

)

913

 

2,407

 

9,887

 

2,962

 

16,169

 

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

(0.24

)

(0.23

)

(0.03

)

(0.05

)

(0.55

)

0.01

 

0.04

 

0.15

 

0.04

 

0.24

 

Diluted

(0.24

)

(0.23

)

(0.03

)

(0.05

)

(0.55

)

0.01

 

0.03

 

0.14

 

0.04

 

0.23

 

 
Basic weighted average shares

68,906

 

67,684

 

67,473

 

66,977

 

67,760

 

65,570

 

66,010

 

66,523

 

67,111

 

66,304

 

Diluted weighted average shares

68,906

 

67,684

 

67,473

 

66,977

 

67,760

 

67,337

 

68,804

 

69,775

 

69,935

 

68,963

 

 
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)
 
 
06/30/19 09/30/19 12/31/19 03/31/20 FY2020 06/30/20 09/30/20 12/31/20 03/31/21 FY2021
 
Expenses:
Cost of revenue

36,426

 

41,460

 

37,966

 

36,852

 

152,704

 

34,465

 

34,897

 

37,085

 

37,557

 

144,004

 

Research and development

23,722

 

26,445

 

27,403

 

28,411

 

105,981

 

26,989

 

31,035

 

30,608

 

46,479

 

135,111

 

Sales and marketing

43,144

 

45,204

 

51,993

 

48,564

 

188,905

 

38,627

 

41,705

 

43,904

 

53,307

 

177,543

 

General and administrative

25,318

 

27,262

 

26,107

 

30,216

 

108,903

 

23,368

 

24,495

 

23,943

 

32,395

 

104,201

 

Gains, losses and other items, net

2,276

 

45

 

233

 

2,447

 

5,001

 

1,995

 

(619

)

(6

)

1,345

 

2,715

 

 
Gross profit:

46,085

 

48,683

 

64,251

 

68,849

 

227,868

 

64,972

 

69,764

 

82,668

 

81,618

 

299,022

 

% Gross margin

55.9

%

54.0

%

62.9

%

65.1

%

59.9

%

65.3

%

66.7

%

69.0

%

68.5

%

67.5

%

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

3,123

 

5,369

 

5,369

 

5,181

 

19,042

 

5,306

 

4,350

 

4,213

 

4,177

 

18,046

 

Non-cash stock compensation (cost of revenue)

755

 

1,060

 

1,028

 

926

 

3,769

 

775

 

913

 

988

 

2,624

 

5,300

 

Non-cash stock compensation (research and development)

4,451

 

6,346

 

6,462

 

6,001

 

23,260

 

5,886

 

7,713

 

7,376

 

17,985

 

38,960

 

Non-cash stock compensation (sales and marketing)

8,920

 

9,758

 

15,670

 

3,678

 

38,026

 

7,123

 

9,233

 

9,212

 

14,833

 

40,401

 

Non-cash stock compensation (general and administrative)

4,504

 

6,190

 

7,135

 

6,563

 

24,392

 

2,701

 

6,345

 

6,318

 

11,682

 

27,046

 

Accelerated depreciation (cost of revenue)

1,487

 

1,245

 

 

 

2,732

 

 

 

 

 

 

Accelerated depreciation (general and administrative)

419

 

418

 

 

 

837

 

 

 

 

 

 

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

2,276

 

45

 

233

 

2,447

 

5,001

 

1,995

 

(619

)

(6

)

1,345

 

2,715

 

Transformation costs (general and administrative)

 

 

 

 

 

3,605

 

258

 

 

 

3,863

 

Total excluded items

25,935

 

30,431

 

35,897

 

24,796

 

117,059

 

27,391

 

28,193

 

28,101

 

52,646

 

136,331

 

 
Expenses, excluding items:
Cost of revenue

31,061

 

33,786

 

31,569

 

30,745

 

127,161

 

28,384

 

29,634

 

31,884

 

30,756

 

120,658

 

Research and development

19,271

 

20,099

 

20,941

 

22,410

 

82,721

 

21,103

 

23,322

 

23,232

 

28,494

 

96,151

 

Sales and marketing

34,224

 

35,446

 

36,323

 

44,886

 

150,879

 

31,504

 

32,472

 

34,692

 

38,474

 

137,142

 

General and administrative

20,395

 

20,654

 

18,972

 

23,653

 

83,674

 

17,062

 

17,892

 

17,625

 

20,713

 

73,292

 

Gains, losses and other items, net

 

 

 

 

 

 

 

 

 

 

 
Gross profit, excluding items:

51,450

 

56,357

 

70,648

 

74,956

 

253,411

 

71,053

 

75,027

 

87,869

 

88,419

 

322,368

 

% Gross margin

62.4

%

62.5

%

69.1

%

70.9

%

66.6

%

71.5

%

71.7

%

73.4

%

74.2

%

72.8

%

(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
June 30, 2021 March 31, 2022
 
 
GAAP loss from operations

 

(30,000

)

 

(116,500

)

 
Excluded items:
Purchased intangible asset amortization

 

5,000

 

 

18,000

 

Non-cash stock compensation

 

21,000

 

 

99,000

 

Restructuring and merger charges

 

2,000

 

 

2,000

 

Total excluded items

 

28,000

 

 

119,000

 

 
Non-GAAP income (loss) from operations

$

(2,000

)

$

2,500

 

(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

FISCAL 2021 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 associates 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. Beginning in the first quarter of fiscal 2021 in response to the potential COVID-19 pandemic impact on our business, 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.

Accelerated depreciation: In the prior year we excluded depreciation costs associated with the reduced useful life of certain IT equipment in connection with the Company’s migration to a cloud-based data center solution. This migration was part of our AMS separation strategy. These costs are excluded from our non-GAAP results because of the short-term nature of the incremental expenses and such amounts are not used by us to assess the core profitability of our business operations.

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.