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STOCK-BASED COMPENSATION: | 6 Months Ended
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Sep. 30, 2019
Share-based Payment Arrangement [Abstract] |
STOCK-BASED COMPENSATION: | STOCK-BASED COMPENSATION: Stock-based Compensation Plans The Company has stock option and equity compensation plans for which a total of 42.3 million shares of the Company’s common stock have been reserved for issuance since the inception of the plans. At September 30, 2019, there were a total of 10.4 million shares available for future grants under the plans. Stock-based Compensation Expense The Company's stock-based compensation activity for the six months ended September 30, 2019, by award type, was (dollars in millions):
|  | For the six months ended |  |
|  | September 30, |  |
|  | 2019 |  | 2018
Stock options |  | $ | 1.8 |  |  | $ | 1.7 |
Restricted stock units |  | 25.4 |  |  | 17.5 |
Arbor acquisition consideration holdback |  | 2.6 |  |  | 7.7 |
DPM acquisition consideration holdback |  | 2.1 |  |  |  | — |
PDP assumed performance plan |  | 9.5 |  |  | 7.9 |
Other non-employee stock-based compensation |  | 0.6 |  |  | 0.7 |
Total non-cash stock-based compensation included in the condensed consolidated statements of operations |  | 42.0 |  |  | 35.5 |
Less expense related to liability-based equity awards |  | (10.7) |  |  | (7.1) |
Stock-based compensation of discontinued operations |  | — |  |  | 5.7 |
Total non-cash stock-based compensation included in the condensed consolidated statements of equity |  | $ | 31.3 |  |  | $ | 34.1 |
The effect of stock-based compensation expense on income, by financial statement line item, was (dollars in millions):
|  | For the six months ended |  |
|  | September 30, |  |
|  | 2019 |  | 2018
Cost of revenue |  | $ | 1.8 |  |  | $ | 1.5 |
Research and development |  | 10.0 |  |  | 7.9 |
Sales and marketing |  | 18.7 |  |  | 19.8 |
General and administrative |  | 11.5 |  |  | 6.3 |
Total non-cash stock-based compensation included in the condensed consolidated statements of operations |  | $ | 42.0 |  |  | $ | 35.5 |
The following table provides the expected future expense for all of the Company's outstanding equity awards at September 30, 2019, by award type. The amount for 2020 represents the remaining six months ending March 31, 2020. All other periods represent fiscal years ending March 31 (dollars in millions).
|  | During the year ended: |  |  |  |  |  |  |  |  |  |
|  | 2020 |  | 2021 |  | 2022 |  | 2023 |  | 2024 |  | Total
Stock options |  | $ | 1.9 |  |  | $ | 2.4 |  |  | $ | 1.2 |  |  |  | $ | 0.3 |  |  | $ | — |  |  | $ | 5.8 |
Restricted stock units |  | 28.4 |  |  | 47.2 |  |  | 36.5 |  |  | 22.2 |  |  | 3.0 |  |  | 137.3 |
DPM acquisition consideration holdback |  | 4.1 |  |  |  | 8.3 |  |  |  | 8.2 |  |  |  | 2.1 |  |  |  | — |  |  |  | 22.7 |
PDP assumed performance plan |  | 7.6 |  |  | 15.1 |  |  | 15.1 |  |  | — |  |  | — |  |  | 37.8 |
|  | $ | 42.0 |  |  | $ | 73.0 |  |  | $ | 61.0 |  |  | $ | 24.6 |  |  | $ | 3.0 |  |  | $ | 203.6 |
Stock Option Activity In connection with the acquisition of DPM, the Company replaced all outstanding stock options held by DPM associates immediately prior to the acquisition with options to acquire shares of LiveRamp common stock having substantially the same terms and conditions as were applicable under the original options. In total, the Company issued 162,481 replacement options at a weighted-average exercise price of $1.64 per share. The acquisition-date fair value of the replacement stock options was $7.4 million and was determined using a binomial lattice model with the following assumptions: dividend yield of 0.0% since LiveRamp is currently not paying dividends and there are no plans to pay dividends; risk-free interest rates from 1.86% to 1.96%, based on the rate of U.S. Treasury securities with a term equal to the remaining term of each option; remaining terms of each option from 7.33 years to 9.55 years; expected volatility of 45.00% considering the implied volatility of publicly traded LiveRamp options and historical volatility of LiveRamp stock. Of the total replacement options issued, 48,619 were fully vested and required no post-combination employee service. The remaining replacement options had components of both pre-combination and post-combination service requirements. As a result, $2.3 million of the acquisition-date fair value of the replacement options was calculated and identified as consideration transferred in the DPM acquisition. The remaining $5.1 million acquisition-date fair value is considered future compensation costs and will be recognized as stock-based compensation cost over the remaining service period. Stock option activity for the six months ended September 30, 2019 was:
|  |  |  |  |  | Weighted-average |  |
|  |  |  | Weighted-average |  | remaining |  | Aggregate
|  | Number of |  | exercise price |  | contractual term |  | Intrinsic value
|  | shares |  | per share |  | (in years) |  | (in thousands)
Outstanding at March 31, 2019 |  | 1,374,430 |  |  | $ | 14.81 |  |  |  |  |
DPM replacement stock options issued |  | 162,481 |  |  | $ | 1.64 |  |  |  |  |
Exercised |  | (77,209) |  |  | $ | 3.55 |  |  |  |  | $ | 3,343 |
Forfeited or canceled |  | (4,354) |  |  | $ | 5.39 |  |  |  |  |
Outstanding at September 30, 2019 |  | 1,455,348 |  |  | $ | 13.97 |  |  | 4.3 |  | $ | 42,197 |
Exercisable at September 30, 2019 |  | 1,301,861 |  |  | $ | 15.41 |  |  | 3.9 |  | $ | 35,877 |
The aggregate intrinsic value at period end represents the total pre-tax intrinsic value (the difference between LiveRamp’s closing stock price on the last trading day of the period and the exercise price for each in-the-money option) that would have been received by the option holders had they exercised their options on September 30, 2019. This amount changes based upon changes in the fair market value of LiveRamp’s common stock. A summary of stock options outstanding and exercisable as of September 30, 2019 was:
|  |  |  |  |  | Options outstanding |  |  |  |  |  | Options exercisable |  |
Range of |  |  |  |  |  |  |  | Weighted-average |  | Weighted-average |  |  |  | Weighted-average
exercise price |  |  |  |  |  | Options |  | remaining |  | exercise price |  | Options |  | exercise price
per share |  |  |  |  |  | outstanding |  | contractual life |  | per share |  | exercisable |  | per share
$ | 0.61 |  |  | — |  |  | $ | 9.99 |  |  | 304,410 |  |  | 6.2 years |  | $ | 1.61 |  |  | 150,923 |  |  | $ | 1.51 |
$ | 10.00 |  |  | — |  |  | $ | 19.99 |  |  | 709,672 |  |  | 3.1 years |  | $ | 14.69 |  |  | 709,672 |  |  | $ | 14.69 |
$ | 20.00 |  |  | — |  |  | $ | 24.99 |  |  | 441,266 |  |  | 4.9 years |  | $ | 21.32 |  |  | 441,266 |  |  | $ | 21.32 |
|  |  |  |  |  | 1,455,348 |  |  | 4.3 years |  | $ | 13.97 |  |  | 1,301,861 |  |  | $ | 15.41 |
Performance Stock Option Unit Activity Performance stock option unit activity for the six months ended September 30, 2019 was:
|  |  |  |  |  | Weighted-average |  |
|  |  |  | Weighted-average |  | remaining |  | Aggregate
|  | Number |  | exercise price |  | contractual term |  | intrinsic value
|  | of shares |  | per share |  | (in years) |  | (in thousands)
Outstanding at March 31, 2019 |  | 130,154 |  |  | $ | 21.44 |  |  |  |  |
Forfeited or canceled |  | (130,154) |  |  | $ | 21.44 |  |  |  |  |
Outstanding at September 30, 2019 |  | — |  |  | $ | — |  |  |  |  | $ | — |
Exercisable at September 30, 2019 |  | — |  |  | $ | — |  |  | — |  |  | $ | — |
The performance stock option units outstanding at March 31, 2019 reached maturity of the relevant performance period at March 31, 2019. The units attained a 0% attainment level, resulting in cancellation of the units in the current fiscal year. Restricted Stock Unit Activity During the six months ended September 30, 2019, the Company granted time-vesting restricted stock units covering 1,273,119 shares of common stock and having a fair value at the date of grant of $67.5 million. All of the restricted stock units granted in the current period vest over four years. Grant date fair value of these units is equal to the quoted market price for the shares on the date of grant. Included in the restricted stock units granted in the current fiscal year were units related to the DPM acquisition. Following the closing of the DPM acquisition, the Company granted new awards of restricted stock units covering 155,346 shares of common stock to select employees to induce them to accept employment with the Company (the "DPM inducement awards"). The DPM inducement awards had a grant date fair value of $7.3 million. Time-vesting restricted stock unit activity for the six months ended September 30, 2019 was:
|  |  |  | Weighted-average |  |
|  |  |  | fair value per |  | Weighted-average
|  | Number |  | share at grant |  | remaining contractual
|  | of shares |  | date |  | term (in years)
Outstanding at March 31, 2019 |  | 3,054,750 |  |  | $ | 30.91 |  |  | 2.47
Granted |  | 1,273,119 |  |  | $ | 53.06 |  |  |
Vested |  | (237,220) |  |  | $ | 24.61 |  |  |
Forfeited or canceled |  | (220,733) |  |  | $ | 36.19 |  |  |
Outstanding at September 30, 2019 |  | 3,869,916 |  |  | $ | 38.28 |  |  | 2.55
The total fair value of time-vesting restricted stock units vested for the six months ended September 30, 2019 was $12.0 million and is measured as the quoted market price of the Company's common stock on the vesting date for the number of shares vested. During the six months ended September 30, 2019, the Company granted performance-based restricted stock units covering 202,818 shares of common stock having a fair value at the date of grant of $12.3 million. The grants were made under two separate performance plans. Under the first performance plan, units covering 60,844 shares of common stock were granted having a fair value at the date of grant of $4.4 million, determined using a Monte Carlo simulation model. The units vest subject to attainment of market conditions established by the compensation committee of the board of directors (“compensation committee”) and continuous employment through the vesting date. The 60,844 units may vest in a number of shares from 0% to 200% of the award, based on the total shareholder return of LiveRamp common stock compared to total shareholder return of the Russell 2000 market index for the period from April 1, 2019 to March 31, 2022. Under the second performance plan, units covering 141,974 shares of common stock were granted having a fair value at the date of grant of $7.9 million equal to the quoted market price for the shares on the date of grant. The units vest subject to attainment of performance criteria established by the compensation committee of the board of directors. The units may vest in three equal annual increments in a number of shares from 0% to 200% of the award, based on the attainment of year-over-year revenue growth targets for each annual period from April 1, 2019 to March 31, 2022. Non-vested performance-based restricted stock unit activity for the six months ended September 30, 2019 was:
|  |  |  | Weighted-average |  |
|  |  |  | fair value per |  | Weighted-average
|  | Number |  | share at grant |  | remaining contractual
|  | of shares |  | date |  | term (in years)
Outstanding at March 31, 2019 |  | 394,188 |  |  | $ | 43.88 |  |  | 3.23
Granted |  | 202,818 |  |  | $ | 60.65 |  |  |
Forfeited or canceled |  | (46,236) |  |  | $ | 34.61 |  |  |
Outstanding at September 30, 2019 |  | 550,770 |  |  | $ | 50.83 |  |  | 2.73
Consideration Holdback As part of the Company's acquisition of DPM in the current fiscal year, $24.7 million of the acquisition consideration otherwise payable with respect to shares of DPM common stock held by certain key employees was subject to holdback by the Company pursuant to agreements with those employees (each, a "Holdback Agreement"). The Holdback Agreement specifies that the consideration holdback will vest in three equal annual increments on the anniversary of the closing date. Vesting is subject to the DPM key employees' continued employment through each annual vesting date and will be settled in shares of Company common stock. Through September 30, 2019, the Company has recognized a total of $2.1 million related to the DPM consideration holdback. At September 30, 2019, the recognized, but unpaid, balance related to the DPM consideration holdback in other accrued expenses in the condensed consolidated balance sheet was $2.1 million. As part of the Company’s acquisition of Arbor in fiscal 2017, $38.3 million of the acquisition consideration otherwise payable with respect to shares of restricted Arbor common stock held by certain key employees was subject to holdback by the Company pursuant to agreements with those employees (each, a “Holdback Agreement”). The Holdback Agreement specifies the payment of the consideration in monthly installments using LiveRamp shares over a thirty month period, ending in the quarter ended June 30, 2019. As of June 30, 2019, the Company had met its full obligation for the consideration holdback due to the Arbor key employees. Through September 30, 2019, the Company had recognized a total of $38.3 million expense related to the Holdback Agreements. PDP Assumed Performance Plan In connection with the fiscal 2018 acquisition of PDP, the Company assumed the outstanding performance compensation plan under the PDP 2018 Equity Compensation Plan ("PDP PSU plan"). During the current fiscal year, the year-one performance payout under the plan was finalized resulting in a $19.7 million payout to the plan participants. On the settlement date, a total of 465,389 shares of Company common stock was delivered to the PDP PSU plan participants to settle the year-one performance payout obligation, of which 418,850 shares represented the liability-classified portion of the award. Through September 30, 2019, the Company has recognized a total of $27.2 million related to the PDP PSU plan. At September 30, 2019, the recognized, but unpaid, balance related to the PDP PSU plan in other accrued expenses in the condensed consolidated balance sheet was $6.8 million.

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