LiveRamp began trading as $RAMP on the New York Stock Exchange on Monday and hosted investors and analysts when the company reintroduced itself to the market following the sale of Acxiom Marketing Solutions to IPG for $2.3 billion in July.
LiveRamp is embracing its position as a subscription-based middleware technology, a category that comes with stronger multiples than it could achieve as part of the Acxiom consumer data brokerage. This belief explains why Acxiom could trade at $2.5 billion earlier this year, sell off the business driving five-sixths of its revenue and now see LiveRamp trading at more than $3.5 billion.
LiveRamp brought in $65 million this quarter, up 20% from the same period last year, and expects to earn between $275 million and $285 million during this fiscal year.
But LiveRamp is targeting a $1 billion run rate in the next five years.
“And that’s not just a general aspiration,” said President and CFO Warren Jenson. “These initiatives are in place and the levers exist for us to be a $1 billion revenue business.”
These are some of the key growth opportunities LiveRamp investors and executives say support its monster valuation and optimistic benchmarks.
Advanced TV
The chance to seize television ad dollars entering the data-driven realm excites LiveRamp.
LiveRamp’s top 100 brand customers represent $20 billion in TV ad spend alone, said Allison Metcalfe, general manager of the company’s advanced TV business. Some brands that spend hundreds of millions on TV commercials are running advanced TV tests in the low millions, she said, which could rapidly flip if and when those campaigns prove their value.
Take rates across advanced TV products “are all over the map,” said LiveRamp CEO Scott Howe. That means it may be harder to convince some advertisers to transition their TV budgets to digital-first vendors with relatively high margins or that LiveRamp may have to experiment with its margins in different channels, but he said the opportunity to win data-driven TV is worth the cost and any short-term squeeze.
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LiveRamp’s data marketplace is “one of the hidden jewels in our business model,” Jenson said.
The marketplace did $10 million in the past quarter, down $2 million from last year because Facebook has since removed third-party data providers from its ad platform.
But the marketplace has grown more than 50% year-to-date, compared to 25% growth of LiveRamp overall, and Jenson said the company expects that growth rate to continue for the next couple years at least.
Jenson added that as customers buy and match against marketplace data, which is uploaded by data partners or direct customers, LiveRamp improves its overall match rate and identity graph.
Non-ad tech opportunities
LiveRamp is trying to outgrow its reputation as an ad tech company because many Wall Street investors have soured on ad tech. But recent blockbuster deals like Salesforce’s $6.5 billion acquisition of MuleSoft and Red Hat selling to IBM for $34 billion on Monday shows the immense premium big tech companies place on marketing middleware, which connects brands, data and tech platforms without buying or selling media.
LiveRamp’s reseller program, companies that whitelabel its technology, consists primarily of ad tech companies and agencies, but the company is developing integrations to extend its IdentityLink IDs into other business categories, like customer service. For instance, a hotel company can connect its front desk to call center and booking data even if there is no advertising application.
Strengthening adoption of IdentityLink, LiveRamp’s identity graph, is a much bigger opportunity than audience targeting.
Most new LiveRamp customers join for audience targeting and the value of that account grows two and a half times on average if the company extends further into ad tech with measurement. But the value of that count multiplies by 10 when a customer adopts the IdentityLink token for their holistic business needs.
