Liveramp announces first quarter results
San francisco--(business wire)--liveramp® (nyse: ramp), the leading global data connectivity platform, today announced its financial results for the quarter ended june 30, 2020. first quarter financial highlights total revenue was $99 million, up 21% compared to the prior year period. subscription revenue was $83 million, up 21% compared to the prior year period and contributed 83% of total revenue. marketplace & other revenue was $17 million, up 16% compared to the prior year period. gaap gross profit was $65 million, up 41% compared to the prior year period. gaap gross margin of 65% expanded 9 percentage points. non-gaap gross profit was $71 million, up 38% compared to the prior year period. non-gaap gross margin of 71% also expanded 9 percentage points. gaap operating loss was $26 million compared to a gaap operating loss of $48 million in the prior year period. non-gaap operating income was $1 million compared to a non-gaap operating loss of $22 million in the prior year period. gaap loss per share was $0.33, and non-gaap earnings per share was $0.01. net cash used in operating activities was $24 million compared to net cash used by operating activities of $15 million in the prior year period. during the quarter, liveramp repurchased 1.3 million shares for $42 million under the current share repurchase program. since inception of the share repurchase program in august 2011, the company has returned approximately $1.17 billion in capital to shareholders. a reconciliation between gaap and non-gaap results is provided in the schedules to this press release. “as covid-19 forces companies to innovate and transform to drive customer value, data matters more than ever,” said liveramp ceo scott howe. “global brands and their partners are turning to liveramp to enable their data-driven marketing strategies, and our strong q1 results reflect this. the authenticated traffic solution (or ats) is gaining widespread global adoption. during the quarter, we more than tripled our ats publisher adoption and now work with over 125 publishers worldwide, including 60% of the us comscore 20 and 50% of the us comscore 50.” “our value proposition is strong and our business durable and recurring,” added liveramp president and cfo warren jenson. “in q1, our top-line grew by 21%, and we delivered our first quarterly non-gaap operating profit. in addition, our advanced tv business and safe haven® are winning globally. tv revenue was up over 50% in the quarter, and safe haven bookings, arr and revenue were all up over 100%.” gaap and non-gaap results the following table summarizes the company’s financial results for its first fiscal quarter ($ in millions): q1 fiscal 2021 q1 fiscal 2020 results results gaap non-gaap gaap non-gaap subscription revenue $83 — $68 — yoy change % 21% 33% marketplace & other revenue $17 — $14 — yoy change % 16% 27% total revenue $99 — $83 — yoy change % 21% 32% gross profit $65 $71 $46 $51 % gross margin 65% 71% 56% 62% yoy change, pts 9pts 9pts (6pts) (10pts) operating income (loss) ($26) $1 ($48) ($22) % operating margin (26%) 1% (59%) (27%) yoy change, pts 32pts 29pts (11pts) (18pts) net income (loss) ($22) $1 ($42) ($16) yoy change % nm nm nm nm earnings (loss) per share ($0.33) $0.01 ($0.61) ($0.24) yoy change % nm nm nm nm shares to calculate eps 65.6 67.3 68.9 68.9 yoy change % (5%) (5%) (10%) (10%) net operating cash flow ($24) — ($15) — yoy change % nm — nm free cash flow to equity — ($24) — ($20) yoy change % — nm — nm totals may not sum due to rounding. a detailed discussion of our non-gaap financial measures and a reconciliation between gaap and non-gaap results is provided in the schedules to this press release. additional business highlights & metrics liveramp addressability solutions, including ats, continue to experience strong global adoption. there are currently 20 supply-side platforms (ssps) live or committed to implementing identitylink™ in the bidstream, including openx, index exchange, pubmatic, rubicon project and triplelift. in addition, there are 40 demand-side platforms (dsps) live or committed to bid on identitylink, including amobee, criteo, dataxu, and mediamath. lastly, to date, liveramp has signed on more than 125 publishers globally for ats, spanning four continents. liveramp completed the acquisition of acuity data, a team of global retail and consumer packaged goods (cpg) experts, in early july to strengthen the retail analytics capabilities of its safe haven platform. these capabilities will enable better reporting, insights, and collaboration for retailers and cpg companies, bridging the gap between trade and media by bringing consumers’ digital signals and retail transaction data together in a privacy-conscious manner. total purchase consideration was immaterial. during the first quarter, subscription net retention was approximately 109% and platform net retention was 111%. current remaining performance obligations (rpo), which is contracted and committed revenue expected to be recognized over the next 12 months, was $223 million, up 33% compared to the first quarter of last year. liveramp has 60 clients whose subscription contracts exceed $1 million in annual revenue, up from 45 in the prior year period. liveramp’s direct subscription customer count at quarter end was 780, an increase of 13% year over year. it now serves 22% of the fortune 500 compared to 20% in the prior year period. financial outlook given macro economic uncertainties, liveramp is providing second quarter guidance only. liveramp’s non-gaap guidance excludes the impact of non-cash stock compensation, purchased intangible asset amortization, business transformation costs and restructuring charges. for the second quarter of fiscal 2021, liveramp expects to report: revenue of approximately $100 million, an increase of approximately 11% year-over-year gaap operating loss of up to $39 million non-gaap operating loss of up to $7 million conference call liveramp will hold a conference call at 1:30 p.m. pt today to further discuss this information. interested parties are invited to listen to the call which will be broadcast via the internet and can be found on liveramp’s investor site. a slide presentation will be referenced during the call and can be accessed here. about liveramp liveramp is the leading data connectivity platform for the safe and effective use of data. powered by core identity capabilities and an unparalleled network, liveramp enables companies and their partners to better connect, control, and activate data to transform customer experiences and generate more valuable business outcomes. liveramp’s fully interoperable and neutral infrastructure delivers end-to-end addressability for the world’s top brands, agencies, and publishers. for more information, visit www.liveramp.com. forward-looking statements this press release contains “forward-looking statements” within the meaning of the private securities litigation reform act of 1995, as amended (the “pslra”). these statements, which are not statements of historical fact, may contain estimates, assumptions, projections and/or expectations regarding the company’s financial position, results of operations, market position, product development, growth opportunities, economic conditions, and other similar forecasts and statements of expectation. forward-looking statements are often identified by words or phrases such as “anticipate,” “estimate,” “plan,” “expect,” “believe,” “intend,” “foresee,” or the negative of these terms or other similar variations thereof. these forward-looking statements are not guarantees of future performance and are subject to a number of factors and uncertainties that could cause the company’s actual results and experiences to differ materially from the anticipated results and expectations expressed in the forward-looking statements. among the factors that may cause actual results and expectations to differ from anticipated results and expectations expressed in forward-looking statements are uncertainties related to covid-19 and the associated impact on our suppliers, customers and partners; the company’s dependence upon customer renewals; new customer additions and upsell within our subscription business; our reliance upon partners, including data suppliers; competition; and attracting and retaining talent. additional risks relate to maintaining our culture and our ability to innovate and evolve while working remotely and within a rapidly changing industry, while also avoiding disruption from acquisition and divestiture activities. our international operations are also subject to risks that may harm the company’s business. the risk of a significant breach of the confidentiality of the information or the security of our or our customers’, suppliers’, or other partners’ computer systems could be detrimental to our business, reputation and results of operations. other business risks include unfavorable publicity and negative public perception about our industry; interruptions or delays in service from data center hosting vendors we rely upon; and our dependence on the continued availability of third-party data hosting and transmission services. our clients’ ability to use data on our platform could be restricted if the industry’s use of third-party cookies and tracking technology declines due to technology platform changes, regulation or increased user controls. changes in regulations relating to information collection and use represents a risk, as well as changes in tax laws and regulations that are applied to our customers which could cause enterprise software budget tightening. in addition, third parties may claim that we are infringing their intellectual property or may infringe our intellectual property which could result in competitive injury and / or the incurrence of significant costs and draining of our resources. for a discussion of these and other risks and uncertainties, please refer to liveramp’s annual report on form 10-k for our fiscal year 2020 ended march 31, 2020, and liveramp's quarterly reports on form 10-q issued in fiscal year 2021. the financial information set forth in this press release reflects estimates based on information available at this time. liveramp assumes no obligation and does not currently intend to update these forward-looking statements. to automatically receive liveramp financial news by email, please visit www.liveramp.com and subscribe to email alerts. liveramp®, identitylink™, abilitec®, safe haven® and all other liveramp marks contained herein are trademarks or service marks of liveramp, inc. all other marks are the property of their respective owners. 2020 2019 variance variance 99,437 82,511 16,926 20.5 % 34,465 36,426 (1,961 ) (5.4 %) 64,972 46,085 18,887 41.0 % 65.3 % 55.9 % 26,989 23,722 3,267 13.8 % 38,627 43,144 (4,517 ) (10.5 %) 23,368 25,318 (1,950 ) (7.7 %) 1,995 2,276 (281 ) (12.3 %) 90,979 94,460 (3,481 ) (3.7 %) (26,007 ) (48,375 ) 22,368 46.2 % -26.2 % -58.6 % 463 5,882 (5,419 ) (92.1 %) (25,544 ) (42,493 ) 16,949 39.9 % (3,816 ) (353 ) (3,463 ) (981.0 %) (21,728 ) (42,140 ) 20,412 48.4 % (0.33 ) (0.61 ) 0.28 45.8 % (0.33 ) (0.61 ) 0.28 45.8 % 65,570 68,906 65,570 68,906 2020 2019 (25,544) (42,493) (3,816) (353) (21,728) (42,140) (0.33) (0.61) (0.33) (0.61) 5,306 3,123 16,485 18,630 - 1,906 3,605 - 1,995 2,276 27,391 25,935 1,847 (16,558) 934 (216) 913 (16,342) 0.01 (0.24) 0.01 (0.24) 65,570 68,906 67,337 68,906 (1) this presentation includes non-gaap measures. our non-gaap measures are not meant to be considered in isolation or as a substitute for comparable gaap measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with gaap. for a detailed explanation of the adjustments made to comparable gaap measures, the reasons why management uses these measures and the material limitations on the usefulness of these measures, please see appendix a. (2) income taxes were calculated using an effective non-gaap tax rate of 50.5% and 1.3% in the first quarter of fiscal 2021 and 2020, respectively. the difference between our gaap and non-gaap tax rates were primarily due to the net tax effects of the excluded items. 2020 2019 (26,007 ) (48,375 ) 5,306 3,123 16,485 18,630 - 1,906 3,605 - 1,995 2,276 27,391 25,935 1,384 (22,440 ) (1) this presentation includes non-gaap measures. our non-gaap measures are not meant to be considered in isolation or as a substitute for comparable gaap measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with gaap. for a detailed explanation of the adjustments made to comparable gaap measures, the reasons why management uses these measures and the material limitations on the usefulness of these measures, please see appendix a. 2020 2019 (21,728 ) (42,140 ) (3,816 ) (353 ) (463 ) (5,882 ) (26,007 ) (48,375 ) 8,054 8,877 (17,953 ) (39,498 ) 16,485 18,630 3,605 - 1,995 2,276 22,085 20,906 4,132 (18,592 ) (1) this presentation includes non-gaap measures. our non-gaap measures are not meant to be considered in isolation or as a substitute for comparable gaap measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with gaap. for a detailed explanation of the adjustments made to comparable gaap measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see appendix a. 2020 2020 variance variance 649,895 717,811 (67,916 ) (9.5 %) 14,815 14,815 - n/a 96,472 92,761 3,711 4.0 % 39,776 38,340 1,436 3.7 % 24,314 32,666 (8,352 ) (25.6 %) 825,272 896,393 (71,121 ) (7.9 %) 45,077 44,786 291 0.6 % 27,969 25,465 2,504 9.8 % 17,108 19,321 (2,213 ) (11.5 %) 39,915 45,200 (5,285 ) (11.7 %) 298,389 297,796 593 0.2 % 17,695 16,014 1,681 10.5 % 35,552 27,165 8,387 30.9 % 1,233,931 1,301,889 (67,958 ) (5.2 %) 38,380 42,204 (3,824 ) (9.1 %) 16,727 28,791 (12,064 ) (41.9 %) 50,024 68,991 (18,967 ) (27.5 %) 14,815 14,815 - n/a 5,938 6,581 (643 ) (9.8 %) 125,884 161,382 (35,498 ) (22.0 %) 49,758 52,995 (3,237 ) (6.1 %) - - - n/a 14,525 14,394 131 0.9 % 1,532,481 1,496,565 35,916 2.4 % 1,523,366 1,545,094 (21,728 ) (1.4 %) 6,342 5,745 597 10.4 % (2,018,425 ) (1,974,286 ) (44,139 ) (2.2 %) 1,058,289 1,087,512 (29,223 ) (2.7 %) 1,233,931 1,301,889 (67,958 ) (5.2 %) 2020 2019 (21,728 ) (42,140 ) 8,054 8,877 2 85 1,330 962 (672 ) 7 16,485 18,630 (5,860 ) (3,451 ) (1,681 ) 174 4,904 3,600 (22,684 ) (188 ) (1,105 ) (863 ) (657 ) (1,101 ) (23,612 ) (15,408 ) (832 ) (4,888 ) (667 ) - - (4,479 ) (1,499 ) (9,367 ) 1,137 1,060 (1,827 ) (12,093 ) (42,312 ) (20,099 ) (43,002 ) (31,132 ) 197 (89 ) (67,916 ) (55,996 ) 732,626 1,061,473 664,710 1,005,477 (2,041 ) 110 (15,408 ) (28,751 ) 15,804 (220 ) (28,575 ) (23,612 ) (4,888 ) (2,641 ) (2,773 ) (1,409 ) (11,711 ) (832 ) (20,296 ) (31,392 ) 13,031 (1,629 ) (40,286 ) (24,444 ) (1) this presentation includes non-gaap measures. our non-gaap measures are not meant to be considered in isolation or as a substitute for comparable gaap measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with gaap. for a detailed explanation of the adjustments made to comparable gaap measures, the reasons why management uses these measures and the material limitations on the usefulness of these measures, please see appendix a. 06/30/19 09/30/19 12/31/19 03/31/20 fy2020 06/30/20 % $ 82,511 90,143 102,217 105,701 380,572 99,437 20.5 % 16,926 36,426 41,460 37,966 36,852 152,704 34,465 (5.4 %) (1,961 ) 46,085 48,683 64,251 68,849 227,868 64,972 41.0 % 18,887 55.9 % 54.0 % 62.9 % 65.1 % 59.9 % 65.3 % 23,722 26,445 27,403 28,411 105,981 26,989 13.8 % 3,267 43,144 45,204 51,993 48,564 188,905 38,627 (10.5 %) (4,517 ) 25,318 27,262 26,107 30,216 108,903 23,368 (7.7 %) (1,950 ) 2,276 45 233 2,447 5,001 1,995 (12.3 %) (281 ) 94,460 98,956 105,736 109,638 408,790 90,979 (3.7 %) (3,481 ) (48,375 ) (50,273 ) (41,485 ) (40,789 ) (180,922 ) (26,007 ) 46.2 % 22,368 -58.6 % -55.8 % -40.6 % -38.6 % -47.5 % -26.2 % 5,882 4,780 3,158 1,565 15,385 463 (92.1 %) (5,419 ) (42,493 ) (45,493 ) (38,327 ) (39,224 ) (165,537 ) (25,544 ) 39.9 % 16,949 (353 ) (5,291 ) (287 ) (34,345 ) (40,276 ) (3,816 ) (981.0 %) (3,463 ) (42,140 ) (40,202 ) (38,040 ) (4,879 ) (125,261 ) (21,728 ) 48.4 % 20,412 - - - 750 750 - n/a - (42,140 ) (40,202 ) (38,040 ) (4,129 ) (124,511 ) (21,728 ) 48.4 % 20,412 (0.61 ) (0.59 ) (0.56 ) (0.06 ) (1.84 ) (0.33 ) 45.8 % 0.28 (0.61 ) (0.59 ) (0.56 ) (0.07 ) (1.85 ) (0.33 ) 45.8 % 0.28 68,906 67,684 67,473 66,977 67,760 65,570 68,906 67,684 67,473 66,977 67,760 65,570 06/30/19 09/30/19 12/31/19 03/31/20 fy2020 06/30/20 (42,493 ) (45,493 ) (38,327 ) (39,224 ) (165,537 ) (25,544 ) (353 ) (5,291 ) (287 ) (34,345 ) (40,276 ) (3,816 ) (42,140 ) (40,202 ) (38,040 ) (4,879 ) (125,261 ) (21,728 ) - - - 750 750 - (42,140 ) (40,202 ) (38,040 ) (4,129 ) (124,511 ) (21,728 ) (0.61 ) (0.59 ) (0.56 ) (0.06 ) (1.84 ) (0.33 ) (0.61 ) (0.59 ) (0.56 ) (0.06 ) (1.84 ) (0.33 ) 3,123 5,369 5,369 5,181 19,042 5,306 18,630 23,354 30,295 17,168 89,447 16,485 1,906 1,663 - - 3,569 - 2,276 45 233 2,447 5,001 1,995 - - - - - 3,605 25,935 30,431 35,897 24,796 117,059 27,391 (16,558 ) (15,062 ) (2,430 ) (14,428 ) (48,478 ) 1,847 (216 ) 190 (227 ) (11,199 ) (11,452 ) 934 (16,342 ) (15,252 ) (2,203 ) (3,229 ) (37,026 ) 913 (0.24 ) (0.23 ) (0.03 ) (0.05 ) (0.55 ) 0.01 (0.24 ) (0.23 ) (0.03 ) (0.05 ) (0.55 ) 0.01 68,906 67,684 67,473 66,977 67,760 65,570 68,906 67,684 67,473 66,977 67,760 67,337 (1) this presentation includes non-gaap measures. our non-gaap measures are not meant to be considered in isolation or as a substitute for comparable gaap measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with gaap. for a detailed explanation of the adjustments made to comparable gaap measures, the reasons why management uses these measures and the material limitations on the usefulness of these measures, please see appendix a. 06/30/19 09/30/19 12/31/19 03/31/20 fy2020 06/30/20 36,426 41,460 37,966 36,852 152,704 34,465 23,722 26,445 27,403 28,411 105,981 26,989 43,144 45,204 51,993 48,564 188,905 38,627 25,318 27,262 26,107 30,216 108,903 23,368 2,276 45 233 2,447 5,001 1,995 46,085 48,683 64,251 68,849 227,868 64,972 55.9 % 54.0 % 62.9 % 65.1 % 59.9 % 65.3 % 3,123 5,369 5,369 5,181 19,042 5,306 755 1,060 1,028 926 3,769 775 4,451 6,346 6,462 6,001 23,260 5,886 8,920 9,758 15,670 3,678 38,026 7,123 4,504 6,190 7,135 6,563 24,392 2,701 1,487 1,245 - - 2,732 - 419 418 - - 837 - 2,276 45 233 2,447 5,001 1,995 - - - - - 3,605 25,935 30,431 35,897 24,796 117,059 27,391 31,061 33,786 31,569 30,745 127,161 28,384 19,271 20,099 20,941 22,410 82,721 21,103 34,224 35,446 36,323 44,886 150,879 31,504 20,395 20,654 18,972 23,653 83,674 17,062 - - - - - - 51,450 56,357 70,648 74,956 253,411 71,053 62.4 % 62.5 % 69.1 % 70.9 % 66.6 % 71.5 % (1) this presentation includes non-gaap measures. our non-gaap measures are not meant to be considered in isolation or as a substitute for comparable gaap measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with gaap. for a detailed explanation of the adjustments made to comparable gaap measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see appendix a. (39,000 ) 5,000 25,000 2,000 32,000 $ (7,000 ) (1) this presentation includes non-gaap measures. our non-gaap measures are not meant to be considered in isolation or as a substitute for comparable gaap measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with gaap. for a detailed explanation of the adjustments made to comparable gaap measures, the reasons why management uses these measures, the usefulness of these easures and the material limitations on the usefulness of these measures, please see appendix a. appendix a liveramp holdings, inc. and subsidiaries q1 fiscal 2021 financial results explanation of non-gaap measures and other key metrics to supplement our financial results, we use non-gaap measures which exclude certain acquisition related expenses, non-cash stock compensation and restructuring charges. we believe these measures are helpful in understanding our past performance and our future results. our non-gaap financial measures and schedules are not meant to be considered in isolation or as a substitute for comparable gaap measures and should be read only in conjunction with our consolidated gaap financial statements. our management regularly uses these non-gaap financial measures internally to understand, manage and evaluate our business and to make operating decisions. these measures are among the primary factors management uses in planning for and forecasting future periods. compensation of our executives is also based in part on the performance of our business based on these non-gaap measures. our non-gaap financial measures, including non-gaap earnings (loss) per share, income (loss) from operations and adjusted ebitda reflect adjustments based on the following items, as well as the related income tax effects when applicable: purchased intangible asset amortization: we incur amortization of purchased intangibles in connection with our acquisitions. purchased intangibles include (i) developed technology, (ii) customer and publisher relationships, and (iii) trade names. we expect to amortize for accounting purposes the fair value of the purchased intangibles based on the pattern in which the economic benefits of the intangible assets will be consumed as revenue is generated. although the intangible assets generate revenue for us, we exclude this item because this expense is non-cash in nature and because we believe the non-gaap financial measures excluding this item provide meaningful supplemental information regarding our operational performance. non-cash stock compensation: non-cash stock compensation consists of charges for associate restricted stock units, performance shares and stock options in accordance with current gaap related to stock-based compensation including expense associated with stock-based compensation related to unvested options assumed in connection with our acquisitions. as we apply stock-based compensation standards, we believe that it is useful to investors to understand the impact of the application of these standards to our operational performance. although stock-based compensation expense is calculated in accordance with current gaap and constitutes an ongoing and recurring expense, such expense is excluded from non-gaap results because it is not an expense that typically requires or will require cash settlement by us and because such expense is not used by us to assess the core profitability of our business operations. restructuring charges: during the past several years, we have initiated certain restructuring activities in order to align our costs in connection with both our operating plans and our business strategies based on then-current economic conditions. as a result, we recognized costs related to termination benefits for associates whose positions were eliminated, lease and other contract termination charges, and leasehold improvement write offs. these items, reported as gains, losses, and other items, net, are excluded from non-gaap results because such amounts are not used by us to assess the core profitability of our business operations. transformation costs: in previous years, we incurred significant expenses to separate the financial statements of our operating segments, with particular focus on segment-level balance sheets, and to evaluate portfolio priorities. our criteria for excluding transformation expenses from our non-gaap measures is as follows: 1) projects are discrete in nature; 2) excluded expenses consist only of third-party consulting fees that we would not incur otherwise; and 3) we do not exclude employee related expenses or other costs associated with the ongoing operations of our business. we substantially completed those projects during the third quarter of fiscal year 2018. beginning in the fourth quarter of fiscal 2018, and through most of fiscal 2019, we incurred transaction support expenses and system separation costs related to the company's announced evaluation of strategic options for its marketing solutions (ams) business. beginning in the first quarter of fiscal 2021 in response to the potential covid-19 pandemic impact on our business, we incurred significant costs associated with the assessment of strategic and operating plans, including our long-term location strategy, and assistance in implementing the restructuring activities as a result of this assessment. our criteria for excluding these costs are the same. we believe excluding these items from our non-gaap financial measures is useful for investors and provides meaningful supplemental information. accelerated depreciation: in the prior year we excluded depreciation costs associated with the reduced useful life of certain it equipment in connection with the company's migration to a cloud-based data center solution. this migration was part of our ams separation strategy. these costs are excluded from our non-gaap results because of the short-term nature of the incremental expenses and such amounts are not used by us to assess the core profitability of our business operations. our non-gaap financial schedules are: non-gaap eps, non-gaap income from operations, and non-gaap expenses: our non-gaap earnings per share, non-gaap income from operations, and non-gaap expenses reflect adjustments as described above, as well as the related tax effects where applicable. adjusted ebitda: adjusted ebitda is defined as net income from continuing operations before income taxes, other expenses, depreciation and amortization, and including adjustments as described above. we use adjusted ebitda to measure our performance from period to period both at the consolidated level as well as within our operating segments and to compare our results to those of our competitors. we believe that the inclusion of adjusted ebitda provides useful supplementary information to and facilitates analysis by investors in evaluating the company's performance and trends. the presentation of adjusted ebitda is not meant to be considered in isolation or as an alternative to net earnings as an indicator of our performance. free cash flow to equity: to supplement our statement of cash flows, we use a non-gaap measure of cash flow to analyze cash flows generated from operations. free cash flow to equity is defined as operating cash flow less cash used by investing activities (excluding the impact of cash paid in acquisitions), less required payments of debt, and excluding the impact of discontinued operations. management believes that this measure of cash flow is meaningful since it represents the amount of money available from continuing operations for the company's discretionary spending after funding all required obligations including scheduled debt payments. the presentation of non-gaap free cash flow to equity is not meant to be considered in isolation or as an alternative to cash flows from operating activities as a measure of liquidity
