LiveRamp (a leading data collaboration platform) recently announced that it has entered into a definitive agreement to acquire Habu, a data clean room software provider, in a cash and stock transaction valued at approximately $200 million.
This acquisition will further accelerate LiveRamp’s ability to offer global data collaboration at scale and solve fundamental customer challenges while also unlocking powerful measurement and analytics use cases. And global brands and media companies use Habu’s technology to securely share first-party customer data with business partners and publishers, enabling more effective and personalized marketing.
Companies are overwhelmed with data, and even the most sophisticated companies find it challenging to realize the value of their data fully. Data still sits in operational silos, which makes it challenging to leverage internally and even more so with external partners. And the combination of LiveRamp and Habu solves these structural challenges by connecting data and making it interoperable across all clouds, walled gardens, and clean room environments while maintaining privacy and governance protocols.
The Habu acquisition will enable LiveRamp to deliver differentiated capabilities to customers to:
1.) Streamline and simplify cross-cloud collaboration by seamlessly connecting data across clouds, warehouses, and clean rooms while reducing complexity and IT infrastructure constraints.
2.) Achieve a first-of-its-kind, single view of measurement across any walled garden, programmatic channel, or media partner, including media networks and all major CTV and TV platforms.
3.) Access enhanced enterprise identity and connectivity solutions to break down data silos and navigate signal loss and evolving privacy regulation with confidence.
4.) Expand LiveRamp’s industry-leading data collaboration network, enabling global connectivity to the world’s most-scaled network of publishers, walled gardens, retailers, brands, and agencies.
5.) Advance AI initiatives through greater data access to train and optimize analytical models that inform marketing decisions and enable other enterprise use cases.
Habu’s team will help lead LiveRamp’s data collaboration strategy, reporting to LiveRamp’s Chief Revenue Officer Vihan Sharma.
Under the terms of the deal, LiveRamp will acquire Habu for approximately $200 million, subject to customary adjustments, consisting of approximately $170 million in cash to be paid at closing and the remaining consideration in the form of LiveRamp stock related to unvested stock awards and holdback agreements with certain key employees that will vest in future periods. Plus, about $16 million of restricted stock unit awards will be extended at closing to continuing employees for retention purposes.
The addition of Habu will expand on LiveRamp’s lead in data collaboration, driving accelerated growth and value for LiveRamp shareholders in the form of:
1.) Greater cross-sell and upsell – The combined capabilities will unlock several powerful and new cloud and walled garden clean room use cases for existing customers. In addition, it will provide the opportunity to extend LiveRamp’s core identity and connectivity products across a rapidly scaling collaboration network, driving additional usage of the LiveRamp platform.
2.) New customer acquisition – Offering a simple, cross-cloud user interface and enhanced self-service capabilities will enable LiveRamp to better address a broader set of customers, including non-technical mid-market organizations.
3.) Global expansion – Habu’s network of walled garden and premium publishers span 200+ markets globally, which will accelerate LiveRamp’s international expansion efforts.
4.) New use cases across the enterprise – Frictionless cross-cloud capabilities will enable new data collaboration use cases outside of marketing, such as supply chain optimization and inventory management.
LiveRamp expects the deal – inclusive of revenue synergies – to deliver about $18 million in revenue in FY25 and to help accelerate the company’s progress toward Rule of 40 achievement.
The deal is expected to be completed in LiveRamp’s fiscal fourth quarter. The transaction is not expected to have a material impact on LiveRamp’s fiscal 2024 revenue and non-GAAP operating income results. And the company expects the transaction to negatively impact GAAP operating income as a result of higher non-cash stock compensation, purchased intangible amortization and one-time transaction related expenses. LiveRamp will provide an updated outlook for the remainder of fiscal 2024 when it releases its complete third quarter results on February 8, 2024.
Evercore is acting as the exclusive financial advisor to LiveRamp and Baker McKenzie is acting as legal counsel to LiveRamp. Amd Goldman Sachs is acting as the exclusive financial advisor to Habu, and Gunderson Dettmer is acting as legal counsel to Habu.
Preliminary Results for Q3 2024
LiveRamp today also provided preliminary financial results for its fiscal 2024 third quarter ended December 31, 2023.
For the third quarter, the company expects to report:
— Revenue of approximately $174 million, an increase of 10% year-on-year and ahead of the prior expectation of $165 million. The upside relative to guidance was driven by both Subscription and Marketplace & Other revenue.
— Operating income of approximately $15 million, above the Company’s prior expectation of $8 million.
— Non-GAAP operating income of approximately $36 million, above the Company’s prior expectation of $29 million.
— The company will provide additional details about its third quarter results on its upcoming earnings call on February 8, 2024.
KEY QUOTES:
“LiveRamp enables next-generation data collaboration that delivers unmatched brand and business value. Through this acquisition, we will further empower our customers to unlock insights, use cases, and revenue streams by seamlessly connecting data and deepening measurement, across any platform or partner they prefer. Habu shares our vision, and together, we will help more global enterprises benefit from the transformative power of data collaboration.”
— Scott Howe, CEO of LiveRamp
“LiveRamp and Habu approached the data collaboration market with two complementary strategies that share the common goal of creating the largest data collaboration network rooted in privacy. As we look ahead to our next chapter as part of LiveRamp, we’re as committed as ever to our mission of paving the way for the next frontier of responsible data collaboration.”
— Matt Kilmartin, CEO of Habu
“We had a strong fiscal third quarter, with preliminary revenue and operating income results significantly exceeding our guidance. Additionally, our forward sales momentum continued, giving us increasing confidence as we look ahead to fiscal 2025.”
— CFO Lauren Dillard
