Investment Thesis
LiveRamp demonstrates a fortress balance sheet with no debt, strong cash position, and solid 13% revenue growth, but profitability deteriorated significantly with net income down 106.9% YoY despite growing top-line. Poor cash conversion (6.7% FCF margin vs 12.4% net margin) and low ROE/ROA raise questions about operational efficiency and capital deployment quality.
Strengths
- Fortress balance sheet: zero debt, $396M cash, 2.72x current ratio provides substantial downside protection
- Strong gross margins of 70.7% indicate pricing power and efficient cost structure in data services
- Consistent revenue growth at 13% YoY demonstrates market demand and business resilience
- Positive free cash flow generation of $40.5M with minimal capex requirements
Risks
- Dramatic net income decline of 106.9% YoY despite revenue growth signals operational deterioration or one-time charges requiring investigation
- Significant disconnect between net income ($75M) and operating cash flow ($41.6M) suggests working capital issues or poor cash conversion quality
- Low ROE (7.8%) and ROA (5.9%) indicate inefficient capital deployment despite strong gross margins, suggesting bloated operating expenses
- Operating margin of only 11.2% from 70.7% gross margin is concerning and points to structural cost control issues
Key Metrics to Watch
- Quarterly operating income trend and margin trajectory
- Cash conversion rate - reconciliation of net income to operating cash flow variance
- Operating expense ratio relative to revenue to assess cost structure improvements
Financial Metrics
Revenue
606.8M
Net Income
75.0M
EPS (Diluted)
$1.14
Free Cash Flow
40.5M
Total Assets
1.3B
Cash
395.9M
Profitability Ratios
Gross Margin
70.7%
Operating Margin
11.2%
Net Margin
12.4%
ROE
7.8%
ROA
5.9%
FCF Margin
6.7%
Balance Sheet & Liquidity
Current Ratio
2.72x
Quick Ratio
2.72x
Debt/Equity
0.00x
Debt/Assets
11.2%
Interest Coverage
24.02x
Long-term Debt
0.0
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-04-15T00:09:26.324317 |
Data as of: 2025-12-31 |
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