LiveRamp Holdings Inc.
11/05/2025 | Press release | Distributed by Public on 11/05/2025 16:06
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
Introduction and Overview
LiveRamp Holdings, Inc. ("LiveRamp", "we", "us", or the "Company") is a leading data collaboration technology company, empowering marketers and media owners to deliver and measure marketing performance everywhere it matters. LiveRamp's data collaboration network seamlessly unites data across advertisers, platforms, publishers, data providers, and commerce media networks - unlocking deep insights, delivering transformational consumer experiences, and driving measurable growth. Built on a foundation of strict neutrality, interoperability, and global scale, LiveRamp enables organizations to maximize the value of their data while accelerating innovation. Trusted by many of the world's leading brands, retailers, financial services providers, and healthcare innovators, LiveRamp is helping shape the future of responsible data collaboration in an AI-driven, outcomes-focused world where advertisers reach intended audiences and consumers receive more relevant advertising messages.
LiveRamp is a Delaware corporation headquartered in San Francisco, California. Our common stock is listed on the New York Stock Exchange under the symbol "RAMP." We serve a global customer base from locations in the United States, Europe, and the Asia-Pacific ("APAC") region. Our direct customer list includes many of the world's best-known and most innovative brands across most major industry verticals, including but not limited to financial, insurance and investment services, information service, direct marketing, retail, automotive, telecommunications, technology, consumer packaged goods, media, healthcare, travel and hospitality, entertainment and non-profit. Through our expansive partner ecosystem we serve thousands of additional companies, unlocking access to unique customer moments and creating powerful network effects.
Operating Segment
The Company provides a data collaboration platform, essentially acting as a hub where businesses can securely share and manage first-party consumer data with trusted partners while prioritizing data privacy and ethics. The Company has one primary business activity, its data collaboration platform, as described in the business description section of Note 1, "Organization and Summary of Significant Accounting Policies." The Company generates revenue from subscription fees from clients accessing our platform, revenue-sharing fees generated from data transactions through our LiveRamp Data Marketplace, transactional usage-based fees from arrangements with certain publishers and addressable TV providers, and professional services fees. The platform is used by customers globally in a similar manner across geographies, channels and verticals.
The Company's chief operating decision maker ("CODM"), the Chief Executive Officer, manages the Company's business activities as a single operating and reportable segment at the consolidated level. Under ASC 280 Segment Reporting, operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by our CODM. Our CODM uses net income (loss), among other measures, for budgeting and resource allocation purposes on a consolidated basis. Consolidated net income (loss) on the consolidated statements of operations is the measure of financial profit and loss most closely aligned with GAAP that is used by the CODM to assess performance against the Company's annual financial plans as well as to allocate resources, such as decisions regarding headcount goals, significant contracts, internal investments and other items. The measure of segment assets is reported on the condensed consolidated balance sheets as total consolidated assets.
Sources of Revenues
LiveRamp recognizes revenue from the following sources: (i) Subscription revenue, which consists primarily of subscription fees from customers accessing our platform; and (ii) Marketplace and Other revenue, which primarily consists of revenue-sharing fees generated from data transactions through our LiveRamp Data Marketplace, transactional usage-based revenue from arrangements with certain publishers and addressable TV providers, and professional services fees.
/LiveRamp Data Collaboration Platform
As depicted in the graphic below, we power the industry's leading enterprise platform for data collaboration. We enable organizations to access and leverage data more effectively across the applications they use to interact with their customers. At the core of our platform is an omnichannel, deterministic identity resolution technology that offers unparalleled accuracy, breadth, and depth. Leveraging deep expertise in data collaboration, the /LiveRamp Data Collaboration Platform enables an organization to unify customer and prospect data (first-, second-, or third-party) to build a single view of the customer in a way that protects consumer privacy. First-party data is data collected firsthand through a company's controlled channels. Second-party data is data that a company shares directly with a trusted business partner. Third-party data is data collected and sold by a company through an online data marketplace to companies with which it does not have a direct relationship. This single customer view can then be connected across any of the 500 partners in our ecosystem in order to support a variety of people-based marketing solutions.
The /LiveRamp Data Collaboration Platform provides customers with four core capabilities:
•Live/Identity. We provide enterprise identity infrastructure that resolves disparate consumer identities across different internal and external systems to create an accurate, connected view of the customer. Our approach to identity is built from two complementary graphs, combining offline data and online data and providing accuracy with a focus on privacy. LiveRamp's technology for directly identifiable information (or "DII") gives brands and platforms the ability to connect and update what they know about consumers, resolving DII across enterprise databases and systems to deliver better customer experiences. Our digital identity graph, powered by our Authenticated Traffic Solution (or "ATS"), associates pseudonymous device IDs, TV IDs and other online customer IDs from premium publishers, platforms or data providers, around a RampIDTM, a durable and privacy-centric connector to the digital ecosystem. This provides marketers with a consistent view of the consumer that is necessary for audience segmentation, targeting, and measurement.
•Live/Access. Our Data Marketplace provides customers with simplified access to industry-leading third-party data providers globally. The /LiveRamp Data Collaboration Platform allows for the search, discovery and distribution of data provided by third-party data providers to improve targeting, measurement, and customer intelligence. Data accessed through the LiveRamp Data Marketplace is connected via RampID and is utilized to enrich our customers' first-party data and then can be leveraged across technology and media platforms, agencies, analytics environments, and TV partners. Our platform also provides tools for data providers to manage the organization, distribution, and operation of their data and services across our network of customers and partners. Today we work with more than 225 data providers across all verticals and data types.
•Live/Connectivity. We enable organizations to leverage their customer and prospect data in the digital and TV ecosystems and across the customer experience applications they use through a safe and secure data matching process called data onboarding. Our technology ingests a customer's first-party data, removes all DII, and replaces it with a pseudonymized RampID. RampID can then be distributed through direct integrations to the top platforms our customers work with, including leading marketing cloud providers, publishers and social networks, personalization tools, and connected TV services. We connect data across an ecosystem of more than 500 partners, representing one of the largest networks of connections in the digital marketplace.
•Live/Insights. Data Collaboration using clean room technology enables advanced measurement and analytics that helps produce insight-driven innovation. We enable data collaboration between organizations and their trusted partners in a neutral, manageable environment. Our platform provides customers with collaborative opportunities to safely and securely build a more accurate, dynamic view of their customers by leveraging partner data. We power more accurate, more complete measurement with the measurement vendors and partners our customers use. Our platform allows customers to combine disparate data files, typically advertising exposure and customer sales transactions, securely by replacing customer identifiers with RampID. Customers then can use that aggregated view of each customer to measure reach and frequency, sales lift, closed loop offline-to-online conversion and cross-channel attribution.
Subscription
We primarily charge for our platform services on an annual basis. Our subscription pricing is based primarily on data volume, which is a function of data input records and connection points.
Our solutions are sold to enterprise marketers and the companies they partner with to execute their marketing, including agencies, marketing technology providers, publishers and data providers. Today, we work with 834 direct customers worldwide and serve thousands of additional customers indirectly through our reseller partnership arrangements.
•Brands and Agencies.We work with over 500 of the largest brands and agencies in the world, helping them execute people-based marketing by creating an omni-channel understanding of the consumer, activating that understanding across their choice of digital marketing platforms and measuring the results to help optimize future marketing campaigns.
•Advertising and Marketing Technology Providers.We provide advertising and marketing technology providers with the identity foundation required to offer people-based targeting, measurement and personalization within their platforms. This adds value for brands by increasing reach, as well as the speed at which they can activate their marketing data.
•Publishers.We enable publishers of any size to offer people-based marketing on their properties. This adds value for brands by providing direct access to their customers and prospects in the publisher's premium inventory.
•Data Sellers.Leveraging our vast network of integrations, we allow data sellers to easily connect to the digital ecosystem and monetize their own data. Data can be distributed to customers or made available through the LiveRamp Data Marketplace. This adds value for brands as it allows them to augment their understanding of consumers and increase their understanding of customers and prospects.
Marketplace and Other
As we have scaled the LiveRamp network and technology, we have found additional ways to leverage our platform, deliver more value to customers and create incremental revenue streams. Leveraging our common identity system and broad integration network, the LiveRamp Data Marketplace seamlessly connects data sellers' audience data across the marketing ecosystem. The LiveRamp Data Marketplace enables data sellers to easily monetize their data across hundreds of marketing platforms and publishers. At the same time, it provides a single platform where data buyers, including platforms and publishers, in addition to brands and their agencies, access third-party data from data sellers supporting all industries and encompassing all types of data. Data providers include sources and brands exclusive to LiveRamp, emerging platforms with access to previously unavailable deterministic data, and data partnerships enabled by our platform.
We generate revenue from the Data Marketplace primarily through revenue-sharing arrangements with data sellers that are monetizing their data assets via our marketplace platform service. We also generate Marketplace and Other revenue through transactional usage-based arrangements with certain publishers and addressable TV providers. Data Marketplace revenue is recognized net of the share of revenue earned by the data seller.
To complement our product offering, we provide professional services and enhanced support entitlements to help customers leverage our platform and drive business outcomes. Our services offering includes product implementation, data science analytics, audience measurement and general advisory. We generate revenue from services primarily from project fees paid by subscribers to our platform. Service projects are sold on an ad hoc basis as well as bundled with platform subscriptions. Professional services revenue is less than 5% of total Company revenue.
Summary Results and Notable Events
A financial summary of the three months ended September 30, 2025 compared to the three months ended September 30, 2024 is presented below:
•Revenues were $199.8 million, a 7.7% increase from $185.5 million.
•Cost of revenue was $59.6 million, a 16.3% increase from $51.2 million.
•Gross margin decreased to 70.2% from 72.4%.
•Total operating expenses were $118.8 million, a 6.3% decrease from $126.8 million.
•Cost of revenue and operating expenses for three months ended September 30, 2025 and 2024 included the following items:
◦Non-cash stock compensation of $20.5 million and $29.1 million, respectively (cost of revenue of $1.5 million and $1.5 million, respectively, and operating expenses of $19.1 million and $27.6 million, respectively)
◦Purchased intangible asset amortization of $2.8 million and $3.7 million, respectively (cost of revenue)
◦Restructuring and other charges of $0.0 million and $0.4 million, respectively (operating expenses)
•Total other income, net was $3.5 million, a decrease of $0.7 million from $4.2 million.
•Net earnings were $27.4 million, or $0.42 per diluted share, compared to net earnings of $1.7 million, or $0.03 per diluted share.
•Net cash provided by operating activities was $57.4 million compared to $55.6 million.
•The Company repurchased 1.8 million shares of its common stock for $49.8 million compared to 1.9 million shares for $49.9 million under the Company's common stock repurchase program.
This summary and the following discussion and analysis highlight financial results as well as other significant events and transactions of the Company during the three months ended September 30, 2025 compared to the three months ended September 30, 2024, unless otherwise stated. However, this summary is not intended to be a full discussion of the Company's results. This summary should be read in conjunction with the following discussion of Results of Operations and Capital Resources and Liquidity and with the Company's condensed consolidated financial statements and footnotes accompanying this Quarterly Report on Form 10-Q.
Key Performance Metrics
In addition to measures of financial performance presented in our condensed consolidated financial statements, we monitor the key metrics set forth below to help us evaluate revenue growth trends, establish budgets and measure the effectiveness of our sales and marketing efforts. The below data is presented in millions, except for percentages.
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% Change
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| September 30, 2025 | September 30, 2024 | September 30, 2025 from September 30, 2024 | September 30, 2024 from September 30, 2023 | |||||||||||||||||||||||
| Subscription net retention | 102 | % | 107 | % | (5) | % | 6 | % | ||||||||||||||||||
| Annualized recurring revenue | $ | 516 | $ | 483 | 7 | % | 13 | % | ||||||||||||||||||
| Remaining performance obligation | $ | 652 | $ | 504 | 29 | % | 3 | % | ||||||||||||||||||
| Current remaining performance obligation | $ | 430 | $ | 374 | 15 | % | 10 | % | ||||||||||||||||||
Subscription Net Retention
Subscription net retention ("SNR") is defined as the current quarter subscription revenue (net) from customers who have been on our platform for one year or more, divided by the prior year quarter subscription revenue (net), inclusive of upsell, churn (lost contract), downsell (contract reduction), and variable revenue changes. SNR excludes revenue from new customers that have not been on our platform for one year or more. We believe our SNR is an important metric that provides insight into the long-term value of our subscription agreements and our ability to retain and grow revenue from our subscription customer base. SNR rate is an operational metric, and there is no comparable GAAP financial measure to which we can reconcile this particular key metric.
SNR was 102% primarily reflecting both modest fixed and variable revenue increases. The acquisition of Habu contributed approximately two percentage points to the prior period growth. Additionally, growth compared to the prior year decreased as a result of lower net upsell revenue.
Annualized Recurring Revenue
Annualized Recurring Revenue ("ARR") is defined as the last month of quarter fixed subscription revenue annualized and does not include any variable or non-recurring revenue amounts. We believe ARR provides important information about our future revenue potential, our ability to acquire new customers, and our ability to maintain and expand our relationship with existing customers. ARR is not a forecast of future revenue, which can be impacted by contract start and end dates and renewal rates. ARR should be viewed independently of revenue and deferred revenue, as ARR is an operating metric and is not intended to be combined with or replace these items. Our use of ARR has limitations as an analytical tool, and investors should not consider it in isolation. Other companies in our industry may calculate ARR differently, which reduces its usefulness as a comparative measure.
Our ARR growth of 7% was primarily attributable to new customer revenue. The deceleration in ARR growth was primarily attributable to lower contribution from net growth (upsell revenue less downsell and churn) in existing customer revenue. In addition, the acquisition of Habu contributed approximately three percentage points to the prior period growth.
Remaining Performance Obligations and Current Remaining Performance Obligations
Remaining performance obligations ("RPO") is defined as all future revenue under contract that has not yet been recognized as revenue. Future invoicing is determined to be certain when we have an executed non-cancellable contract or a significant penalty that is due upon cancellation, and invoicing is not dependent on a future event such as the delivery of a specific new product or feature, or the achievement of contractual contingencies. Current RPO ("CRPO") represents RPO to be recognized over the next twelve months.
While the Company believes RPO and CRPO are leading indicators of revenue as they represent sales activity not yet recognized in revenue, they are not necessarily indicative of future revenue growth as they are influenced by several factors, including seasonality of contract renewal timing and average contract terms. The Company monitors RPO and CRPO to manage the business and evaluate performance. RPO and CRPO increased due to several large, multi-year renewals. The relative change in RPO growth (in terms of % change) is primarily due to the size and timing of multi-year renewals.
Results of Operations
A summary of selected financial information for each of the periods reported is presented below (dollars in thousands, except per share amounts):
| For the three months ended | For the six months ended | |||||||||||||||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||||||||||||||
| % | % | |||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| Revenues | $ | 199,829 | $ | 185,483 | 8 | $ | 394,651 | $ | 361,444 | 9 | ||||||||||||||||||||||||||||
| Cost of revenue | 59,594 | 51,234 | 16 | 117,913 | 102,983 | 14 | ||||||||||||||||||||||||||||||||
| Gross profit | 140,235 | 134,249 | 4 | 276,738 | 258,461 | 7 | ||||||||||||||||||||||||||||||||
| Total operating expenses | 118,807 | 126,762 | (6) | 248,089 | 256,222 | (3) | ||||||||||||||||||||||||||||||||
| Income from operations | 21,428 | 7,487 | 186 | 28,649 | 2,239 | 1180 | ||||||||||||||||||||||||||||||||
| Total other income, net | 3,544 | 4,197 | (16) | 7,253 | 8,641 | (16) | ||||||||||||||||||||||||||||||||
| Income tax expense (benefit) | (2,448) | 9,952 | (125) | 735 | 16,637 | (96) | ||||||||||||||||||||||||||||||||
| Net earnings (loss) from continuing operations | $ | 27,420 | $ | 1,732 | 1483 | $ | 35,167 | $ | (5,757) | 711 | ||||||||||||||||||||||||||||
| Diluted earnings (loss) per share from continuing operations | $ | 0.42 | $ | 0.03 | 1520 | $ | 0.53 | $ | (0.09) | 713 | ||||||||||||||||||||||||||||
Revenues
The Company's revenues for each of the periods reported is presented below (dollars in thousands):
| For the three months ended | For the six months ended | |||||||||||||||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||||||||||||||
| % | % | |||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||
| Subscription | $ | 150,041 | $ | 143,289 | 5 | $ | 298,416 | $ | 278,082 | 7 | ||||||||||||||||||||||||||||
| Marketplace and Other | 49,788 | 42,194 | 18 | 96,235 | 83,362 | 15 | ||||||||||||||||||||||||||||||||
| Total revenues | $ | 199,829 | $ | 185,483 | 8 | $ | 394,651 | $ | 361,444 | 9 | ||||||||||||||||||||||||||||
Total revenues were $199.8 million for the three months ended September 30, 2025, a $14.3 million, or 7.7%, increase from the same period a year ago. The increase was due to revenue growth in both Subscription and Marketplace and Other. The Subscription revenue growth was $6.8 million, or 4.7%, primarily due to upsell to existing customers. The Marketplace and Other revenue growth was $7.6 million, or 18.0%, primarily due to Data Marketplace growth. On a geographic basis, U.S. revenue increased $13.5 million, or 7.7%. International revenue increased $0.8 million, or 8.1%.
Total revenues were $394.7 million for the six months ended September 30, 2025, a $33.2 million, or 9.2%, increase compared to the same period a year ago. The increase was due to revenue growth in both Subscription and Marketplace and Other. The Subscription revenue growth was $20.3 million, or 7.3%, primarily due to upsell to existing customers and higher variable revenue. The Marketplace and Other revenue growth was $12.9 million, or 15.4%, primarily due to Data Marketplace and Services growth. On a geographic basis, U.S. revenue increased $31.5 million, or 9.2%. International revenue increased $1.7 million, or 8.7%.
Cost of Revenue and Gross Profit
The Company's cost of revenue and gross profit for each of the periods reported is presented below (dollars in thousands):
| For the three months ended | For the six months ended | |||||||||||||||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||||||||||||||
| % | % | |||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| Cost of revenue | $ | 59,594 | $ | 51,234 | 16 | $ | 117,913 | $ | 102,983 | 14 | ||||||||||||||||||||||||||||
| Gross profit | $ | 140,235 | $ | 134,249 | 4 | $ | 276,738 | $ | 258,461 | 7 | ||||||||||||||||||||||||||||
| Gross margin (%) | 70.2 | % | 72.4 | % | (3) | 70.1 | % | 71.5 | % | (2) | ||||||||||||||||||||||||||||
Cost of revenue includes third-party direct costs including identity graph data, other data and cloud-based hosting costs, as well as costs of IT, security, product operations and professional services functions. Cost of revenue also includes amortization of acquisition-related intangibles.
Cost of revenue was $59.6 million for the three months ended September 30, 2025, a $8.4 million, or 16.3%, increase from the same period a year ago. Gross profit increased to $140.2 million (70.2% gross margin) from $134.2 million (72.4% gross margin) in the prior year period due to the revenue increase of $14.3 million and a decrease in purchased intangible asset amortization of $1.0 million (roll-off of amortization from previous acquisitions in the prior year), offset partially by an increase in cloud infrastructure costs (increased $8.8 million) driven by increased customer usage and platform migration costs. U.S. gross margins decreased to 70.7% from 73.3% while International gross margins increased to 61.9% from 57.3%.
Cost of revenue was $117.9 million for the six months ended September 30, 2025, a $14.9 million, or 14.5%, increase from the same period a year ago. Gross profit increased to $276.7 million (70.1% gross margin) from $258.5 million (71.5% gross margin) in the prior period due to the revenue increase of $33.2 million and a decrease in purchased intangible asset amortization of $2.1 million (roll-off of amortization from previous acquisitions in the prior year), offset partially by an increase in cloud infrastructure costs (increased $15.6 million) driven by increased customer usage and platform migration costs. U.S. gross margins decreased to 70.6% from 72.4%, and International gross margins increased to 61.2% from 56.4%.
Operating Expenses
The Company's operating expenses for each of the periods reported is presented below (dollars in thousands):
| For the three months ended | For the six months ended | |||||||||||||||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||||||||||||||
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| 2025 | 2024 | Change | 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||||||||||||||
| Research and development | $ | 36,952 | $ | 43,889 | (16) | $ | 76,560 | $ | 88,007 | (13) | ||||||||||||||||||||||||||||
| Sales and marketing | 48,685 | 51,107 | (5) | 100,591 | 105,282 | (4) | ||||||||||||||||||||||||||||||||
| General and administrative | 33,170 | 31,369 | 6 | 70,515 | 62,330 | 13 | ||||||||||||||||||||||||||||||||
| Gains, losses and other items, net | - | 397 | (100) | 423 | 603 | (30) | ||||||||||||||||||||||||||||||||
| Total operating expenses | $ | 118,807 | $ | 126,762 | (6) | $ | 248,089 | $ | 256,222 | (3) | ||||||||||||||||||||||||||||
Research and development ("R&D") expense includes operating expenses for the Company's engineering and product/project management functions supporting research, new development, and related product enhancement.
R&D expenses were $37.0 million for the three months ended September 30, 2025, a decrease of $6.9 million, or 15.8%, compared to the same period a year ago, and are 18.5% of total revenues compared to 23.7% in the prior year. The decrease is primarily due to stock-based compensation expense (decreased $4.4 million), headcount-related expenses (decreased $2.5 million) and professional services (decreased $0.5 million), offset partially by cloud R&D hosting expenses (increased $1.1 million).
R&D expenses were $76.6 million for the six months ended September 30, 2025, a decrease of $11.4 million, or 13.0%, compared to the same period a year ago, and are 19.4% of total revenues compared to 24.3% in the prior year. The decrease is primarily due to stock-based compensation expense (decreased $6.3 million) and headcount-related expenses (decreased $4.9 million).
Sales and marketing ("S&M") expense includes operating expenses for the Company's sales, marketing, and product marketing functions. S&M expense also includes provisions for credit losses.
S&M expenses were $48.7 million for the three months ended September 30, 2025, a decrease of $2.4 million, or 4.7%, compared to the same period a year ago, and are 24.4% of total revenues compared to 27.6% in the prior year. The decrease is primarily due to stock-based compensation expense (decreased $1.9 million) and headcount-related expenses (decreased $0.3 million).
S&M expenses were $100.6 million for the six months ended September 30, 2025, a decrease of $4.7 million, or 4.5%, compared to the same period a year ago, and are 25.5% of total revenues compared to 29.1% in the prior year. The decrease is primarily due to stock-based compensation expense (decreased $3.0 million), headcount-related expenses (decreased $1.2 million), and third-party marketing and event expenses (decreased $0.6 million).
General and administrative ("G&A") expense represents operating expenses for the Company's finance, human resources, legal, corporate IT, and other corporate administrative functions.
G&A expenses were $33.2 million for the three months ended September 30, 2025, an increase of $1.8 million, or 5.7%, compared to the same period a year ago, and are 16.6% of total revenues compared to 16.9% in the prior year. The increase is primarily due to professional services (increased $2.7 million) largely related to litigation costs, including those associated with the class action lawsuit, and fees in support of strategic corporate initiatives, and incentive compensation (increased $1.4 million) offset partially by stock-based compensation expense (decreased $2.2 million).
G&A expenses were $70.5 million for the six months ended September 30, 2025, an increase of $8.2 million, or 13.1%, compared to the same period a year ago, and are 17.9% of total revenues compared to 17.2% in the prior year. The increase is primarily due to professional services expenses (increased $7.1 million) largely related to litigation costs, including those associated with the class action lawsuit, and fees in support of strategic corporate initiatives, headcount-related expenses (increased $1.9 million, primarily incentive compensation), offset partially by stock-based compensation expense (decreased $1.9 million).
Gains, losses, and other items, net represents restructuring costs and other adjustments.
Gains, losses and other items, net was $0.0 million for the three months ended September 30, 2025, a decrease of $0.4 million compared to the same period a year ago. The prior year was all related to employee termination benefits.
Gains, losses and other items, net was $0.4 million for the six months ended September 30, 2025, a decrease of $0.2 million compared to the same period a year ago. The current year relates primarily to adjustments to previous lease restructuring reserves while the prior year costs are primarily related to termination benefits for employees whose positions were eliminated.
Income from Operations and Operating Margin
Income from operations was $21.4 million for the three months ended September 30, 2025 compared to income from operations of $7.5 million in the same period a year ago. Operating margin was 10.7% compared to 4.0% in the same period a year ago. Margins in the current year were positively impacted by the decrease in stock-based compensation.
Income from operations was $28.6 million for the six months ended September 30, 2025 compared to income from operations of $2.2 million in the same period a year ago. Operating margin was 7.3% compared to 0.6% in the same period a year ago. Margins in the current year were positively impacted by the decrease in stock-based compensation.
Total Other Income and Income Taxes
Total other income, net was $3.5 million for the three months ended September 30, 2025 compared to total other income, net of $4.2 million in the same period a year ago. Total other income, net was $7.3 million for the six months ended September 30, 2025 compared to $8.6 million in the same period a year ago. The decrease is primarily attributable to lower invested cash balances and lower interest rates in the current year.
Income tax benefit was $2.4 million on income from continuing operations before income taxes of $25.0 million for the three months ended September 30, 2025, resulting in a negative 9.8% effective tax rate. This compares to income tax expense of $10.0 million on income from continuing operations before income taxes of $11.7 million, or an 85.2% effective tax rate in the same period a year ago. The current year period benefited from the enactment of new tax laws, as described below. The prior year tax rate reflects the impact of the capitalization of research and development expenditures in accordance with Internal Revenue Code ("IRC") Section 174, as modified by the Tax Cuts and Jobs Act of 2017, without a corresponding deferred tax benefit. Income tax expense was $0.7 million on income from continuing operations before income taxes of $35.9 million for the six months ended September 30, 2025, resulting in a 2.0% effective tax rate. This compares to income tax expense of $16.6 million on income from continuing operations before income taxes of $10.9 million, or a 152.9% effective tax rate in the same period a year ago. Income tax expense (benefit) for all periods reflects the impact of the valuation allowance and nondeductible stock-based compensation.
On July 4, 2025, H.R. 1, also known as "The One Big Beautiful Bill" Act (the "2025 Tax Act"), was signed into law in the U.S. The 2025 Tax Act includes provisions that allow for the immediate expensing of domestic research and development expenditures, immediate expensing of certain capital expenditures, and other changes to the U.S. taxation of profits derived from foreign operations. Under the 2025 Tax Act's transition rules, IRC Section 174A allows certain unamortized domestic research and development expenditures to be deducted over one or two years, at the taxpayer's election. In accordance with IRC Section 174, foreign research and development expenditures are still required to be capitalized and amortized over 15 years. Due to the valuation allowance, the Company has not recorded a deferred tax benefit for future amortization deductions.
Given the Company's recent history of profitability, it is reasonably possible that within the next 12 months sufficient positive evidence may become available to support a conclusion that a substantial portion of the valuation allowance is no longer needed. The exact timing and amount of the valuation allowance release are subject to significant judgment and continued analysis of the positive and negative evidence. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded.
The newly enacted 2025 Tax Act has multiple effective dates, with certain changes taking effect during our fiscal year ending March 31, 2026. The estimated impact of provisions taking effect during fiscal 2026 has been reflected in the provision for income taxes for the quarter ended September 30, 2025. The 2025 Tax Act caused a material decrease in the Company's effective tax rate for the three and six months ended September 30, 2025. We also expect a material decrease in cash tax payments for fiscal 2026 due to the new law. Given the complexity and various upcoming effective dates of the 2025 Tax Act, we are still in the process of assessing its impact on our consolidated financial statements. The final impact may differ from our current estimates based on further analysis, regulatory guidance, and any legislative changes.
Capital Resources and Liquidity
The Company's cash and cash equivalents are primarily located in the United States. At September 30, 2025, approximately $25.6 million of the total cash balance of $369.4 million, or approximately 6.9%, was located outside of the United States.
Trade accounts receivable, net balances were $216.8 million at September 30, 2025, an increase of $30.6 million, compared to $186.2 million at March 31, 2025. Days sales outstanding ("DSO"), a measurement of the time it takes to collect receivables, was 100 days at September 30, 2025, compared to 89 days at March 31, 2025. DSO can fluctuate due to the timing and nature of contracts that lead to up-front billings related to deferred revenue on services not yet performed, and Data Marketplace contracts, which are billed on a gross basis, recognized on a net basis, but for which the amount that is due to data sellers is not reflected as an offset to accounts receivable. Compared to March 31, 2025, DSO at September 30, 2025 was negatively impacted by approximately eight days due to the increased impact of Data Marketplace gross accounts receivable. All customer accounts are actively managed, and no losses in excess of amounts reserved are currently expected.
Working capital at September 30, 2025 totaled $409.7 million, a $1.0 million increase when compared to $408.7 million at March 31, 2025.
Management believes that the Company's existing available cash will be sufficient to meet the Company's working capital and capital expenditure requirements for the short term (the next 12 months) and separately in the long term (beyond the next 12 months). However, in light of the recent tariffs and other trade restrictions, risk of recession, the military conflicts in Europe and the Middle East, cost increases, high interest rates, capital markets volatility and general inflationary pressures, our liquidity position may change due to the inability to collect from our customers, inability to raise new capital via issuance of equity or debt, and disruption in completing repayments or disbursements to our creditors. These impacts have caused significant disruptions to the global financial markets, which could increase the cost of capital and adversely impact our ability to raise additional capital, which could negatively affect our liquidity in the future. We have historically taken and may continue to take advantage of opportunities to generate additional liquidity through capital market transactions. The amount, nature, and timing of any capital market transactions will depend on our operating performance and other circumstances; our then-current commitments and obligations; the amount, nature, and timing of our capital requirements; and overall market conditions. If we are unable to raise funds as and when we need them, we may be forced to curtail our operations.
Cash Flows
The following table summarizes our cash flows for the periods reported (dollars in thousands):
| For the six months ended | ||||||||||||||
| September 30, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Net cash provided by operating activities | $ | 41,587 | $ | 46,268 | ||||||||||
| Net cash provided by (used in) investing activities | $ | (2,017) | $ | 22,161 | ||||||||||
| Net cash used in financing activities | $ | (85,146) | $ | (67,066) | ||||||||||
Operating Activities
Cash flows from operating activities are primarily influenced by growth in our operations, increases or decreases in collections from our customers, and related payments to our suppliers and employees. The timing of cash receipts from customers and payments to suppliers and employees can significantly impact our cash flows from operating activities. Our collection and payment cycles can vary from period to period.
Net cash provided by operating activities for the six months ended September 30, 2025 was $41.6 million and resulted primarily from operating results adjusted for non-cash items of $90.3 million offset by unfavorable changes in operating assets and liabilities of $48.7 million. Net cash used by changes in operating assets and liabilities was primarily related to an increase in accounts receivable of $31.9 million and a decrease in accounts payable and other liabilities of $24.1 million. The change in accounts receivable is primarily due to revenue growth and the timing of cash receipts from customers. The change in accounts payable and other liabilities is primarily due to the payment of annual incentive compensation awards for fiscal year 2025 and the timing of payments to suppliers.
Net cash provided by operating activities for the six months ended September 30, 2024 was $46.3 million and resulted primarily from operating results adjusted for non-cash items of $61.6 million offset by unfavorable changes in operating assets and liabilities of $15.3 million. Net cash provided by changes in operating assets and liabilities was primarily related to a decrease in accounts payable and other liabilities of $32.0 million primarily due to the payment of annual incentive compensation awards for fiscal year 2024 and the timing of payments to suppliers.
Investing Activities
Our investing activities have primarily consisted of business acquisitions, capital expenditures, purchases and sales of investments and strategic investments. Capital expenditures may vary from period to period due to the timing of the expansion of our operations, the addition of new headcount, new facilities, and acquisitions. Investing activities also include purchases and sales of short-term investments using available cash reserves.
Net cash used in investing activities for the six months ended September 30, 2025 was $2.0 million and consisted of capital expenditures of $0.9 million, net cash paid in acquisitions of $0.6 million related primarily to the Habu escrow release, and purchases of strategic investments for $0.5 million.
Net cash provided by investing activities for the six months ended September 30, 2024 was $22.2 million and consisted of the proceeds from the sales of short-term investments of $25.0 million, partially offset by purchases of short-term investments of $2.0 million, capital expenditures of $0.5 million and the purchases of strategic investments of $0.4 million.
Financing Activities
Our financing activities have consisted of acquisition of treasury stock, proceeds from our equity compensation plans, and shares repurchased for tax withholdings upon vesting of stock-based awards.
Net cash used in financing activities for the six months ended September 30, 2025 was $85.1 million and consisted of the acquisition of treasury shares pursuant to the board of directors' approved stock repurchase plan, and related excise tax payments, of $79.8 million (2.9 million shares), and $11.7 million for shares repurchased for tax withholdings upon vesting of stock-based awards. These uses of cash were partially offset by $6.3 million of proceeds from the sale of common stock from our equity compensation plans.
Net cash used in financing activities for the six months ended September 30, 2024 was $67.1 million and consisted of the acquisition of treasury shares pursuant to the board of directors' approved stock repurchase plan of $65.7 million (2.4 million shares), and $7.7 million for shares repurchased for tax withholdings upon vesting of stock-based awards. These uses of cash were partially offset by $6.3 million of proceeds from the sale of common stock from our equity compensation plans.
Common Stock Repurchase Program
On August 14, 2024, the Company's board of directors approved an amendment to the existing common stock repurchase program, which was initially adopted in 2011. The amendment authorized an additional $200.0 million in share repurchases, increasing the total amount authorized for repurchase under the common stock repurchase program to $1.3 billion. In addition, it extended the common stock repurchase program duration through December 31, 2026.
During the six months ended September 30, 2025, the Company repurchased 2.9 million shares of its common stock for $79.6 million under the modified common stock repurchase program. The repurchase amounts included in the fiscal 2026 condensed consolidated statements of stockholders equity and the condensed consolidated statements of cash flows included amounts related to the 1% excise tax on share repurchases, net of share issuances, as a result of the Inflation Reduction Act of 2022. Through September 30, 2025, the Company had repurchased a total of 44.4 million shares of its common stock for $1.1 billion under the program, leaving remaining capacity of $176.6 million.
Contractual Commitments
The following tables present the Company's contractual cash obligations and purchase commitments at September 30, 2025 (dollars in thousands). Operating leases primarily consist of our various office facilities. Purchase commitments primarily include contractual commitments for the purchase of data, hosting services, software-as-a-service arrangements, and leasehold improvements. The tables do not include the future payment of liabilities related to uncertain tax positions of $31.5 million as the Company is not able to predict the periods in which the payments will be made. The amount for 2026 represents the remaining six months ending March 31, 2026. All other periods represent fiscal years ending March 31.
| For the years ending March 31, | ||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2027 | 2028 | 2029 | 2030 | Thereafter | Total | ||||||||||||||||||||||||||||||||||||||
| Operating leases | $ | 4,991 | $ | 9,458 | $ | 9,472 | $ | 9,044 | $ | 2,591 | $ | 1,708 | $ | 37,264 | ||||||||||||||||||||||||||||||
Future minimum payments as of September 30, 2025 related to restructuring plans as a result of the Company's exit from certain leased office facilities are (dollars in thousands): Fiscal 2026: $450.
| For the years ending March 31, | ||||||||||||||||||||||||||
| 2026 | 2027 | 2028 | Total | |||||||||||||||||||||||
| Purchase commitments | $ | 12,706 | $ | 12,798 | $ | 3,988 | $ | 29,492 | ||||||||||||||||||
While the Company does not have any other material contractual commitments for capital expenditures, certain levels of investments in facilities and computer equipment continue to be necessary to support the growth of the business.
For a description of certain risks that could have an impact on results of operations or financial condition, including liquidity and capital resources, see "Risk Factors" contained in Part I, Item 1A, of the Company's 2025 Annual Report on Form 10-K as filed with the Securities and Exchange Commission ("SEC") on May 21, 2025 ("2025 Annual Report").
Non-U.S. Operations
The Company has a material presence in the United Kingdom, France, the Netherlands, India, Australia and China. Most of the Company's exposure to exchange rate fluctuation is due to translation gains and losses as there are no material transactions that cause exchange rate impact. In general, each of the foreign locations is expected to fund its own operations and cash flows, although funds may be loaned or invested from the U.S. to the foreign subsidiaries. These advances are considered long-term investments, and any gain or loss resulting from changes in exchange rates as well as gains or losses resulting from translating the foreign financial statements into U.S. dollars are included in accumulated other comprehensive income. Therefore, exchange rate movements of foreign currencies may have an impact on the Company's future costs or on future cash flows from foreign investments. The Company has not entered into any foreign currency forward exchange contracts or other derivative instruments to hedge the effects of adverse fluctuations in foreign currency exchange rates.
Critical Accounting Policies
We prepare our condensed consolidated financial statements in conformity with U.S. GAAP as set forth in the FASB ASC, and we consider the various staff accounting bulletins and other applicable guidance issued by the SEC.
These accounting principles require management to make certain judgments and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The consolidated financial statements in the 2025 Annual Report include a summary of significant accounting policies used in the preparation of the Company's consolidated financial statements. In addition, the Management's Discussion and Analysis of Financial Condition and Results of Operations filed as part of the 2025 Annual Report contains a discussion of the policies that management has identified as the most critical because they require management's use of complex and/or significant judgments. None of the Company's critical accounting policies have materially changed since the date of the 2025 Annual Report other than as described in the "Accounting Pronouncements Adopted During the Current Year" section of Note 1, "Organization and Summary of Significant Accounting Policies", of the Notes to Condensed Consolidated Financial Statements accompanying this Quarterly Report on Form 10-Q.
Recent Accounting Pronouncements
For information on recent accounting pronouncements, see "Accounting Pronouncements Adopted During the Current Year" and "Recent Accounting Pronouncements Not Yet Adopted" under Note 1, "Organization and Summary of Significant Accounting Policies", of the Notes to Condensed Consolidated Financial Statements accompanying this report.
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