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STOCK-BASED COMPENSATION | 9 Months Ended
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Dec. 31, 2022
Equity [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 43.6 million shares of the Company’s common stock have been reserved for issuance since the inception of the plans. At December 31, 2022, there were a total of 4.1 million shares available for future grants under the plans. During the quarter ended June 30, 2022, the Board voted to amend the Amended and Restated 2005 Equity Compensation Plan (the "2005 Plan") to increase the number of shares available under the plan by 4.5 million shares. The amendment received shareholder approval at the August 9, 2022 annual shareholders' meeting (the "2022 Annual Meeting") bringing the plan shares from 37.9 million shares at June 30, 2022 to 42.4 million shares beginning in the quarter ended September 30, 2022. This brings the total number of shares reserved for issuance since inception of all plans from 39.1 million shares at June 30, 2022 to 43.6 million shares beginning in the quarter ended September 30, 2022. During the quarter ended December 31, 2022, the Board voted to further amend the Company's 2005 Plan. The 2005 Plan was amended to provide that, in the event of a participant’s retirement on or after age 65 with at least five years of service, awards held by the participant at retirement will continue to vest in accordance with their terms. This amendment to the 2005 Plan impacted current quarter stock-based compensation expense by accelerating $7.0 million of expense recognition into the current reporting period that would have otherwise been recognized over future reporting periods through the quarter ending December 31, 2025. Stock-based Compensation Expense The Company's stock-based compensation activity for the nine months ended December 31, 2022 and 2021, by award type, was (dollars in thousands):
|  | For the nine months ended
|  | December 31,
|  | 2022 |  | 2021
Stock options |  | $ | 776 |  |  | $ | 1,541 |
Restricted stock units |  | 70,612 |  |  | 37,810 |
Diablo restricted stock awards |  | — |  |  | 660 |
Data Plus Math ("DPM") acquisition consideration holdback |  | 2,031 |  |  | 6,092 |
Pacific Data Partners assumed performance plan |  | — |  |  | 6,826 |
Acuity performance plan |  | 673 |  |  | 1,558 |
DataFleets acquisition consideration holdback |  | 4,532 |  |  | 4,529 |
Employee stock purchase plan |  | 1,527 |  |  | 1,282 |
Directors stock-based compensation |  | 991 |  |  | 1,177 |
Total non-cash stock-based compensation included in the condensed consolidated statements of operations |  | 81,142 |  |  | 61,475 |
Less expense related to liability-based equity awards |  | (7,237) |  |  | (18,237) |
Total non-cash stock-based compensation included in the condensed consolidated statements of equity |  | $ | 73,905 |  |  | $ | 43,238 |
The effect of stock-based compensation expense on income, by financial statement line item, was (dollars in thousands):
|  | For the nine months ended
|  | December 31,
|  | 2022 |  | 2021 |  |
Cost of revenue |  | $ | 3,664 |  |  | $ | 2,906 |  |  |
Research and development |  | 34,670 |  |  | 21,796 |  |  |
Sales and marketing |  | 17,871 |  |  | 20,871 |  |  |
General and administrative |  | 24,937 |  |  | 15,902 |  |  |
Total non-cash stock-based compensation included in the condensed consolidated statements of operations |  | $ | 81,142 |  |  | $ | 61,475 |  |  |
The following table provides the expected future expense for all of the Company's outstanding equity awards at December 31, 2022, by award type. The amount for 2023 represents the remaining three months ending March 31, 2023. All other periods represent fiscal years ending March 31 (dollars in thousands).
|  | For the years ending March 31,
|  | 2023 |  | 2024 |  | 2025 |  | 2026 |  |  |  | Total
Stock options |  | $ | 203 |  |  | $ | 668 |  |  | $ | 157 |  |  | $ | — |  |  |  |  | $ | 1,028 |
Restricted stock units |  | 20,108 |  |  | 73,695 |  |  | 61,170 |  |  | 15,526 |  |  |  |  | 170,499 |
Acuity performance plan |  | 142 |  |  | 165 |  |  | — |  |  | — |  |  |  |  | 307 |
DataFleets acquisition consideration holdback |  | 1,078 |  |  | 2,266 |  |  | — |  |  | — |  |  |  |  | 3,344 |
Employee stock purchase plan |  | 554 |  |  | 375 |  |  | — |  |  | — |  |  |  |  | 929 |
Expected future expense |  | $ | 22,085 |  |  | $ | 77,169 |  |  | $ | 61,327 |  |  | $ | 15,526 |  |  |  |  | $ | 176,107 |
Stock Options Activity Stock option activity for the nine months ended December 31, 2022 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, 2022 |  | 730,004 |  |  | $ | 16.28 |  |  |  |  |
Exercised |  | (198,563) |  |  | $ | 11.16 |  |  |  |  | $ | 3,634 |
Forfeited or canceled |  | (2,690) |  |  | $ | 3.39 |  |  |  |  |
Outstanding at December 31, 2022 |  | 528,751 |  |  | $ | 18.26 |  |  | 1.9 |  | $ | 2,736 |
Exercisable at December 31, 2022 |  | 513,991 |  |  | $ | 18.76 |  |  | 1.8 |  | $ | 2,403 |
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 December 31, 2022. 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 December 31, 2022 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
$ | — |  |  | — |  | $ | 9.99 |  |  | 44,813 |  |  | 6.1 years |  | $ | 0.97 |  |  | 30,053 |  |  | $ | 1.02 |
$ | 10.00 |  |  | — |  | $ | 19.99 |  |  | 182,603 |  |  | 2.4 years |  | $ | 17.49 |  |  | 182,603 |  |  | $ | 17.49 |
$ | 20.00 |  |  | — |  | $ | 24.99 |  |  | 301,335 |  |  | 1.0 years |  | $ | 21.31 |  |  | 301,335 |  |  | $ | 21.31 |
|  |  |  |  |  | 528,751 |  |  | 1.9 years |  | $ | 18.26 |  |  | 513,991 |  |  | $ | 18.76 |
Diablo Restricted Stock Awards During the nine months ended December 31, 2022, in connection with the acquisition of Diablo.ai, Inc. ("Diablo"), the Company replaced the unvested outstanding restricted stock shares held by a Diablo employee immediately prior to the acquisition with restricted shares of LiveRamp common stock having substantially the same terms and conditions as were applicable under the original restricted stock agreement. Changes in the Company's restricted stock awards for the nine months ended December 31, 2022 was:
|  |  |  | Weighted-average |  |
|  |  |  | fair value per |  | Weighted-average
|  | Number |  | share at grant |  | remaining contractual
|  | of shares |  | date |  | term (in years)
Unvested restricted stock awards at March 31, 2022 |  | 24,766 |  |  | $ | 47.29 |  |  | 2.17
Vested |  | (8,120) |  |  | $ | 47.29 |  |  |
Unvested restricted stock awards at December 31, 2022 |  | 16,646 |  |  | $ | 47.29 |  |  | 1.42
The total fair value of restricted stock awards vested during the nine months ended December 31, 2022 was $0.2 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. Restricted Stock Unit Activity Time-vesting restricted stock units ("RSUs") - During the nine months ended December 31, 2022, the Company granted time-vesting RSUs covering 4,277,207 shares of common stock and having a fair value at the date of grant of $105.5 million. The RSUs granted in the current year primarily vest over three years. Grant date fair value of these units is equal to the quoted market price for the shares on the date of grant. RSU activity for the nine months ended December 31, 2022 was:
|  |  |  | Weighted-average |  |
|  |  |  | fair value per |  | Weighted-average
|  | Number |  | share at grant |  | remaining contractual
|  | of shares |  | date |  | term (in years)
Outstanding at March 31, 2022 |  | 4,176,682 |  |  | $ | 47.00 |  |  | 2.85
Granted |  | 4,277,207 |  |  | $ | 24.62 |  |  |
Vested |  | (1,287,052) |  |  | $ | 46.78 |  |  |
Forfeited or canceled |  | (1,237,106) |  |  | $ | 37.18 |  |  |
Outstanding at December 31, 2022 |  | 5,929,731 |  |  | $ | 32.95 |  |  | 2.39
The total fair value of RSUs vested during the nine months ended December 31, 2022 was $29.9 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. Performance-based restricted stock units ("PSUs") - Fiscal 2023 plan: During the nine months ended December 31, 2022, the Company granted PSUs covering 406,501 shares of common stock having a fair value at the date of grant of $10.0 million. The grants were made under two separate performance plans. Under the total shareholder return ("TSR") performance plan, units covering 121,951 shares of common stock were granted having a fair value at the date of grant of $3.7 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 units may vest in a number of shares from 0% to 200% of the award, based on the TSR of LiveRamp common stock compared to the TSR of the Russell 2000 market index for the period from April 1, 2022 to March 31, 2025. Under the operating metrics performance plan, units covering 284,550 shares of common stock were granted having a fair value at the date of grant of $6.3 million, which was 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 and continuous employment through the vesting date. The units may vest in a number of shares from 0% to 200% of the award, at the end of the performance period, based on the average attainment of annual revenue growth and EBITDA margin targets for fiscal years 2023, 2024, and 2025. To the extent that shares are earned, 50% vest immediately and 50% vest on the one-year anniversary of attainment approval. Fiscal 2022 plans: Units under the Company's fiscal 2022 special incentive performance plan covering 36,425 shares of common stock will be measured and vesting evaluated on a quarterly basis beginning with the period ending March 31, 2023 and continuing through the end of the performance period. The units may vest in a number of shares from 0% to 100% of the award, based on the attainment of key productivity metrics for the period from January 1, 2023 to December 31, 2023. Units under the Company's fiscal 2022 TSR performance plan covering 49,977 shares of common stock will reach maturity of their relevant performance period at March 31, 2024. The units may vest in a number of shares from 0% to 200% of the award, based on the TSR of LiveRamp common stock compared to the TSR of the Russell 2000 market index for the period from April 1, 2021 to March 31, 2024. The initial measurement date for the fiscal 2022 operating metrics performance plan was June 30, 2022. Through December 31, 2022, performance metrics have resulted in an accumulated 50% achievement, or 58,312 total earned units under this plan. Of the earned amount, one-half vested immediately, while the remaining one-half will vest one year later. As of December 31, 2022, there remains a maximum potential of 174,930 additional units eligible for attainment under the plan. Quarterly measurements of attainment will continue through March 31, 2024. Fiscal 2021 plans: Units under the Company's fiscal 2021 TSR PSU plan covering 59,634 shares of common stock will reach maturity of their relevant performance period at March 31, 2023. The units may vest in a number of shares from 0% to 200% of the award, based on the TSR of LiveRamp common stock compared to TSR of the Russell 2000 market index for the period from April 1, 2020 to March 31, 2023. The initial measurement date for the fiscal 2021 operating metrics performance plan was June 30, 2021. Through December 31, 2022, performance measurements have resulted in an accumulated 50% achievement, or 71,666 total earned units under this plan. Of the earned amount, one-half vested immediately, while the remaining one-half vests one year later. As of December 31, 2022, there remains a maximum potential of 208,746 additional units eligible for attainment under the plan. Quarterly measurements of attainment will continue through March 31, 2023. Fiscal 2019 plans: The fiscal 2019 operating metrics performance plan reached maturity at September 30, 2020. Through the end of the performance period, performance measurements resulted in an accumulated 96% achievement, or 243,378 total earned units under this plan. PSU activity for the nine months ended December 31, 2022 was:
|  |  |  | Weighted-average |  |
|  |  |  | fair value per |  | Weighted-average
|  | Number |  | share at grant |  | remaining contractual
|  | of shares |  | date |  | term (in years)
Outstanding at March 31, 2022 |  | 584,468 |  |  | $ | 51.26 |  |  | 1.01
Granted |  | 406,501 |  |  | $ | 24.65 |  |  |
Vested |  | (134,671) |  |  | $ | 45.96 |  |  |
Forfeited or canceled |  | (146,709) |  |  | $ | 61.20 |  |  |
Outstanding at December 31, 2022 |  | 709,589 |  |  | $ | 34.97 |  |  | 1.62
The total fair value of PSUs vested in the nine months ended December 31, 2022 was $3.0 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. Contingent Equity Awards - During the quarter ended June 30, 2022, the Company granted contingent time-based RSUs ("contingent RSUs") covering 338,101 shares of common stock and contingent PSUs ("contingent PSUs") covering 284,550 shares of common stock (collectively, the "contingent awards") to certain Company executives. The contingent awards were issued subject to shareholder approval of an amendment to increase the shares available for issuance under the 2005 Plan (the "2005 Plan Share Increase Amendment") at the 2022 Annual Meeting, and would be automatically forfeited if shareholder approval was not obtained. In light of the nature of the contingent awards, the Company concurrently awarded the contingent award recipients long-term cash awards subject to similar terms and conditions as the contingent awards that would only remain effective in the event that the shareholders did not approve the 2005 Plan Share Increase Amendment (the “contingent cash awards”). Shareholders approved the 2005 Plan Share Increase Amendment at the 2022 Annual Meeting. At that time, the contingent cash awards were automatically cancelled and, for accounting purposes, the contingent RSUs and contingent PSUs were modified and treated as non-contingent RSU and PSU grants effective as of August 9, 2022. The grants are included and reported above in the "Restricted Stock Unit Activity" section of this footnote under the time-vesting restricted stock units and performance-based restricted stock units sections, respectively. Other Stock Compensation Activity Acquisition-related Performance Plan Through December 31, 2022, the Company has recognized a total of $4.8 million as stock-based compensation expense related to the Acuity performance earnout plan. At December 31, 2022, the recognized, but unpaid, balance in other accrued expense in the condensed consolidated balance sheet was $1.4 million. The next and final annual settlement of $1.7 million is expected to occur in the second quarter of fiscal 2024. Acquisition-related Consideration Holdback Through December 31, 2022, the Company has recognized a total of $11.3 million as stock-based compensation expense related to the DataFleets consideration holdback. At December 31, 2022, the recognized, but unpaid, balance related to the DataFleets consideration holdback in other accrued expenses in the condensed consolidated balance sheet was $5.3 million. The next annual settlement of $6.0 million is expected to occur in the fourth quarter of this fiscal year. Through December 31, 2022, the Company has recognized a total of $24.4 million as stock-based compensation expense related to the DPM acquisition consideration holdback. The final annual settlement occurred in the quarter ended June 30, 2022. Qualified Employee Stock Purchase Plan ("ESPP") During the nine months ended December 31, 2022, 197,255 shares of common stock were purchased under the ESPP at a weighted-average price of $20.38 per share, resulting in cash proceeds of $4.0 million over the relevant offering periods. Stock-based compensation expense associated with the ESPP was $1.5 million for the nine months ended December 31, 2022. At December 31, 2022, there was approximately $0.9 million of total unrecognized stock-based compensation expense related to the ESPP, which is expected to be recognized on a straight-line basis over the remaining term of the current offering period.

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- Definition The entire disclosure for shareholders' equity and share-based payment arrangement. Includes, but is not limited to, disclosure of policy and terms of share-based payment arrangement, deferred compensation arrangement, and employee stock purchase plan (ESPP). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI https://asc.fasb.org/topic&trid=2208762 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI https://asc.fasb.org/topic&trid=2228938 + Details
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