LiveRamp's Scowtt AI Partnership Aligns with Strategic Focus but Fails to Address Slowing Growth Concerns

What happened

LiveRamp has announced a partnership with Scowtt to integrate AI-powered predictive models into its data collaboration platform, aiming to enhance optimization for marketers. This move aligns with the company's existing strategy to drive AI-enabled workflows and increase usage intensity, as noted in recent filings and the DeepValue report. However, the report highlights that LiveRamp's ARR growth has decelerated to 7% with subscription net retention at 102%, reflecting underlying demand challenges despite improving profitability and cash flow. While the partnership could support future bookings by enhancing platform capabilities, it does not immediately mitigate issues like gross-margin compression, regulatory risks, or heavy equity dilution. Investors should view this as a tactical, non-transformative step that requires concrete evidence of accelerated growth or improved retention metrics to justify a re-rating.

Implication

For investors, the Scowtt partnership underscores LiveRamp's focus on AI as a growth lever, potentially boosting platform stickiness and upsell opportunities over the medium term. However, given the current ARR growth of only 7% and net retention at 102%, the immediate financial impact is likely limited, as such collaborations often take time to translate into revenue. The DeepValue report's base case assumes steady data-collaboration adoption, and this AI initiative fits within that framework without accelerating the growth timeline. Critical investors should monitor upcoming earnings for signs of increased CRPO growth or ARR re-acceleration, as per the report's 90-day checkpoints. Ultimately, while strategically aligned, this news does not alleviate core risks like competitive pressures or margin erosion that could cap valuation upside.

Thesis delta

The investment thesis remains unchanged: LiveRamp is rated 'WAIT' due to slowing growth and margin pressures, with upside contingent on ARR re-acceleration to ≥10% or a pullback to ~$20. This partnership supports the bull case by advancing AI capabilities, but it lacks evidence to shift the base or bear scenarios. Investors should continue to await clearer signals from financial metrics, such as sustained subscription net retention at ≥105%, before considering a more bullish stance.