LiveRamp Holdings, Inc. (RAMP) Earnings

Management highlights

- **Acquisition Overview**: Publicis has entered into an all-cash agreement to acquire global data collaboration platform LiveRamp for an enterprise value of $2.167 billion, with an equity value of $2.546 billion. The transaction implies a 12.3x forward adjusted EBITDA multiple based on 2026 consensus non-GAAP EBITDA of ~$126 million. Closing is expected by the end of 2026, subject to regulatory approval and LiveRamp shareholder approval. Post-closing, LiveRamp will remain an independent business led by current CEO Scott Howe, reporting directly to Publicis Chairman/CEO Arthur Sadoun, and will be reported within Publicis' technology reporting pillar. The acquisition is expected to be accretive to headline EPS from the first full year post-consolidation. - **Strategic Rationale**: The acquisition positions Publicis as a leader in the high-growth data co-creation segment, a critical foundation for building intelligent enterprise AI agents. Publicis addresses the 'AI paradox' where 93% of companies lack the fragmented, secure cross-partner data required to build high-value AI agents, resulting in only 5% of global AI investment delivering meaningful returns. LiveRamp's interoperable data collaboration, clean room and connectivity capabilities are fully complementary to Publicis' existing AI/tech stack: Epsilon provides proprietary identity resolution for marketing activation, Publicis Sapient modernizes client enterprise infrastructure to be AI-ready, and Marcel activates co-created data across client enterprise functions. Epsilon and LiveRamp are not duplicative: Epsilon focuses on proprietary consumer data for marketing activation, while LiveRamp enables multi-party enterprise data collaboration across the broader ecosystem, with distinct go-to-market models. - **Neutrality Commitment**: Publicis is fully committed to preserving LiveRamp's longstanding neutrality and interoperability. No changes will be made to LiveRamp's operations, governance, or access policies; it will continue to serve all current clients and partners, including competing holding companies, and will not use client/partner data outside the scope of existing agreements. This follows Publicis' track record with past acquisitions like Influential and Captivate, where over 50% of growth comes from non-Publicis clients and competitors. Publicis has sent formal commitment letters to all competing holding company clients of LiveRamp. - **Synergy Targets**: Management targets a minimum of $50 million in run-rate cost savings, realized mostly by 2027. Savings come from four sources: continuation of LiveRamp's existing standalone margin improvement plan (targeting 25-30% non-GAAP operating margin by 2028), elimination of standalone public company costs, integration of LiveRamp's back office into Publicis' shared service centers, and procurement synergies for IT, hosting, and real estate. Post-synergy, LiveRamp's operating margin is expected to match Publicis Group's margin by the end of the first full year post-closing. Revenue synergies are expected from cross-selling to Publicis' global client base and enabling new end-to-end AI transformation offerings, consistent with Publicis' track record of acquisition growth outperformance. - **Financing Plan**: The all-cash transaction will be funded via existing cash on hand and new financial debt. Publicis plans to issue new bonds in H2 2026, and expects to maintain its current BBB+ and Baa1 credit ratings post-transaction, with maximum net leverage reaching ~1.2x by 2027. The priority for capital allocation will be balance sheet deleveraging until early 2028, while maintaining the existing dividend policy (45-50% of free cash flow payout with a €3.75 per share floor) and continuing share buybacks to offset dilution.

Guidance

- Publicis reaffirms its full-year 2026 guidance for all key performance indicators, excluding one-off transaction-related costs from the LiveRamp acquisition. - Publicis has upwardly revised its constant currency net revenue and headline EPS growth targets for 2027 and 2028. The new net revenue growth target is 7-8% per year, up from the prior 6-7% range. The new headline EPS growth target is 8-10% per year, up from the prior 7-9% range. - The revised guidance assumes closing of the LiveRamp acquisition by the end of 2026, with the full revenue impact reflected in 2027 reported growth, and LiveRamp's organic growth included in 2028 targets. The guidance range represents an average for the 2027-2028 period, and Publicis' standalone growth assumptions remain unchanged.

Segment performance

The only segment performance provided is for LiveRamp, the target acquisition: In fiscal 2026, LiveRamp reported total revenue of $813 million, with a 13% 5-year compound annual revenue growth rate. Recurring SaaS subscriptions represent 76% of LiveRamp's total revenue. LiveRamp's non-GAAP EBIT margin reached 22% in 2026, up significantly from 4% in 2021. Revenue from other Publicis competitor holding companies accounts for approximately 5% of LiveRamp's total revenue. Currently, ~95% of LiveRamp's revenue is generated in the U.S. For existing Publicis segments, no updated quarterly/period financial performance was provided in this special transaction call.

Risks & headwinds

- The acquisition is subject to pending regulatory and LiveRamp shareholder approval, which creates uncertainty around the timing and completion of the transaction. - There is market concern that Publicis ownership could erode LiveRamp's neutrality and lead competitor partners to exit the platform, which could negatively impact LiveRamp's revenue base. While Publicis has made formal commitments to neutrality, there is no guarantee that partner clients will remain. - LiveRamp is currently heavily concentrated in the U.S. market, and international expansion carries inherent execution and market adoption risk. - The expected revenue synergies from the combination are unproven at this stage, and there is risk that projected synergies and growth accretion will not materialize at the expected pace or magnitude.

Analyst Q&A

• Q: What governance changes will be made to preserve LiveRamp's network neutrality, is there a plan to consolidate the three separate ID systems (Epsilon, Lotame, RampID), and what revenue synergy magnitude and timeline can be expected? /

  A: No changes to LiveRamp's current leadership, operations or governance are planned; Scott Howe and his existing team will remain in place, and Publicis' track record with past acquisitions demonstrates its ability to preserve neutrality for independent platform businesses. There is no plan to consolidate the three ID systems, as each serves distinct purposes and can be connected to deliver greater client value. While it is too early to provide a specific revenue synergy number, management expects significant revenue growth opportunities from integrating LiveRamp into Publicis' Power of One model, consistent with past acquisitions that have outperformed initial growth expectations. LiveRamp is already a high-growth standalone business with a 13% 5-year CAGR, and is expected to sustain double-digit growth post-acquisition.

• Q: What new addressable market does this acquisition unlock, and why did LiveRamp agree to be acquired by Publicis now? /

  A: The acquisition unlocks the large and fast-growing addressable market for enterprise agentic AI transformation, which is expected to reach $1 trillion in client spending by 2029, far larger than the core advertising market. Publicis already has a strong position in marketing with its existing assets, but the addition of LiveRamp enables Publicis to capture a share of this broader enterprise AI spending by delivering end-to-end solutions for agent development. LiveRamp chose to sell now because clients increasingly need combined end-to-end solutions to solve their AI data challenges, which LiveRamp could not deliver as effectively as a standalone company; the complementary fit with Publicis' existing assets, shared cultural fit, and Publicis' commitment to neutrality made it the ideal partner.

• Q: Why does ownership of LiveRamp enable new capabilities that a commercial partnership could not, and why can't other holding companies replicate this data co-creation strategy? /

  A: Ownership allows Publicis to jointly develop new end-to-end agentic AI products and services that combine Publicis' existing infrastructure, identity, and activation capabilities with LiveRamp's data collaboration technology, which cannot be done at the same speed or scale through a third-party partnership. The unique advantage is the full combination of Publicis Sapient (enterprise modernization), Epsilon (identity), LiveRamp (data co-creation), and Marcel (activation), which no other holding company has assembled. This positions Publicis to capture share of the $1 trillion enterprise agentic transformation market, not just compete in the core marketing space where Publicis already has a strong position.

• Q: What is the starting operating margin for LiveRamp under Publicis' accounting policies, and what integration model will be used for LiveRamp? /

  A: After adjusting LiveRamp's 2026 calendarized consensus results to align with Publicis' share-based compensation accounting policies, LiveRamp's 2026 operating margin is approximately 14.2%. With planned cost savings mostly realized in 2027 and ongoing standalone margin improvement, LiveRamp's margin will reach or slightly exceed Publicis Group's overall margin by 2027. LiveRamp will operate as a fully autonomous standalone business, similar to Publicis' approach to other independent platform acquisitions, not a tightly integrated model like Epsilon. It will be reported within Publicis' technology pillar for external financial reporting.