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LiveRamp Earnings: Early Signs of Recovery in Online Advertising May Lead to Higher Client Retention

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While no-moat LiveRamp’s RAMP client retention rates were a bit disappointing during the fourth quarter of fiscal 2023, we were pleased with early signs of stabilization and a possible recovery in demand for digital advertising, indicated by the firm’s marketplace revenue. We expect the higher demand to reverse the client retention trend. We continue to believe that LiveRamp is well-positioned to benefit from Google’s deprecation of third-party cookies, which will fully take place in calendar 2024. Regarding the bottom line, the firm expects to generate GAAP operating income in fiscal 2024, which was a pleasant surprise, as its restructuring will lessen the impact of what still appears will be single-digit top-line growth in fiscal 2024, in line with our expectation. We maintain our $29 fair value estimate, and shares currently trade in 3-star territory.

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