Privacy, Cookieless And AI Trends Will Boost Identity Platforms

Key Takeaways

• Cross-Media Intelligence platform and publisher partnerships uniquely position LiveRamp for industry leadership and accelerated growth amid shifting privacy and ad tech landscapes.
  
• AI automation, cost optimization, and expansion into new sectors and markets are set to fuel margin expansion, higher client retention, and increased multi-year contract wins.
  
• Reliance on open data ecosystems and large clients exposes LiveRamp to regulatory, technological, and competitive risks that threaten growth, margins, and revenue predictability.

Catalysts

A technology company, operates a data collaboration platform in the United States, Europe, the Asia-Pacific, and internationally.

• Analyst consensus sees network effects and client onboarding as driving future growth, but these catalysts are likely understated-LiveRamp's Cross-Media Intelligence platform, supported by commitments from the largest social and CTV publishers, positions LiveRamp as the default cross-channel measurement layer for the industry, which could vastly accelerate both client wins and average revenue per user and push revenue and gross margin ahead of current projections.
  
• While analysts expect steady margin expansion from operating leverage and cost savings, LiveRamp's record free cash flow and aggressive cost optimization, combined with increasing use of AI to automate onboarding and data collaboration, imply operating income growth and margin expansion that could reach or exceed the upper end of their guidance, materially boosting earnings in the near and mid term.
  
• Structural tailwinds from global data privacy regulations and the rapid shift away from third-party cookies are making compliant, neutral identity platforms essential, and LiveRamp-with its deep publisher integrations, privacy-preserving Clean Room technology, and first-party authentication base-is best positioned to capture budget reallocation from legacy, non-compliant solutions, creating upward pressure on revenue and client retention.
  
• The accelerating demand for proprietary AI in marketing, fueled by explosive cloud infrastructure investment and the need for safe, high-quality first-party data, gives LiveRamp a critical enabling role in powering AI-driven personalization and closed-loop analytics, which will drive sustained cross-sell, higher data usage rates, and long-term multi-year contract wins, directly impacting both subscription revenue growth and contracted revenue visibility.
  
• LiveRamp's expansion into new commerce media verticals (airlines, casinos, real estate) and international markets, plus its move to lower the cost of entry for mid-market customers through pricing innovation, sets the stage for a step-change in addressable market growth and a meaningful uplift in large customer contracts and average contract value, with corresponding positive effects on revenue, RPO, and future free cash flow.

LiveRamp Holdings Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on LiveRamp Holdings compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming LiveRamp Holdings's revenue will grow by 9.2% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -0.3% today to 14.5% in 3 years time.
• The bullish analysts expect earnings to reach $140.5 million (and earnings per share of $2.22) by about July 2028, up from $-2.5 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 27.3x on those 2028 earnings, up from -868.7x today. This future PE is lower than the current PE for the US Software industry at 42.7x.
• Analysts expect the number of shares outstanding to decline by 2.43% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.92%, as per the Simply Wall St company report.

LiveRamp Holdings Future Earnings Per Share Growth

Risks

• Continued tightening of global data privacy regulations and consumer pushback against data-sharing could erode LiveRamp's core value proposition as a neutral identity and data collaboration platform, risking future revenue and net retention rates as data access and interoperability become more restricted.
  
• Major tech companies' increasing moves toward closed ecosystems and restricting third-party integrations could limit LiveRamp's ability to connect data across key platforms, reducing its total addressable market and putting downward pressure on long-term revenue growth.
  
• Heavy reliance on a relatively small number of large enterprise customers-evidenced by concentration in $1 million-plus contracts and multi-year renewals-heightens exposure to contract losses, price renegotiations, or strategic shifts by those clients, creating material risk to future revenue stability and earnings predictability.
  
• The continued deprecation of third-party identifiers like cookies and device IDs, combined with the rise of first-party data strategies by publishers and brands, threatens the relevancy of LiveRamp's linkage and marketplace products, which could undermine both revenue and gross margin as industry-wide data flows fragment.
  
• Rising competition from both alternative identity resolution and data collaboration providers, including in-house solutions and AI-driven direct matching models, may force LiveRamp to increase R&D and compliance investments, putting persistent upward pressure on operating expenses and constraining margin expansion in the pursuit of innovation and client retention.

Valuation

• The assumed bullish price target for LiveRamp Holdings is $50.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of LiveRamp Holdings's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $50.0, and the most bearish reporting a price target of just $28.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $970.8 million, earnings will come to $140.5 million, and it would be trading on a PE ratio of 27.3x, assuming you use a discount rate of 7.9%.
• Given the current share price of $32.96, the bullish analyst price target of $50.0 is 34.1% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.