Acxiom Announces First Quarter Results

CONWAY, Ark.–(BUSINESS WIRE)–Acxiom® (Nasdaq: ACXM), the data foundation for the world's best marketers, today announced financial results for its first quarter ended June 30, 2018.

First Quarter Financial Highlights

  • Revenue: Total revenue was $227 million, up 7% compared to the first quarter of last year.
  • Operating Income (Loss): GAAP operating loss was $6 million compared to an operating loss of $6 million in the prior year. Non-GAAP operating income improved 29% to $29 million.
  • Earnings (Loss) per Share: GAAP loss per share was $0.04 compared to a loss per share of $0.02 in the prior year. Non-GAAP diluted earnings per share were $0.24 compared to $0.14 a year ago. Current period results include a $0.02 GAAP and non-GAAP benefit associated with the adoption of ASC 606.
  • Operating Cash Flow: Operating cash flow was $17 million, up from $5 million in the prior year.
  • Free Cash Flow to Equity: Free cash flow to equity was $8 million, up from negative $6 million in the prior year.
 

Segment Results

$M

 

LiveRamp™

 

Q119

 

Q118

 

Y/Y Δ

Revenue

  $62   $47   34%

Gross Profit

$44 $28 57%
Gross Margin 71% 60% 1,040 bps

Segment Operating Income (Loss)

$9 ($0) NM
Segment Margin 15% (0%) 1,490 bps
 

Acxiom Marketing Solutions

  Q119   Q118   Y/Y Δ

Revenue

$165 $166 (1%)

Gross Profit

$73 $78 (6%)
Gross Margin 44% 47% (250 bps)

Segment Operating Income

$47 $48 (2%)
Segment Margin 29% 29% (40 bps)
 

A detailed discussion of our non-GAAP financial measures and a reconciliation between GAAP and non-GAAP results is provided in the schedules attached to this press release.

“This is an inflection point for our Company. The first quarter was another strong performance for both AMS and LiveRamp,” said Acxiom CEO Scott Howe. “We look forward to finalizing the IPG transaction and to the emergence of LiveRamp as a pure-play public SaaS platform.”

Recent Business Highlights

  • On July 2nd, Acxiom entered into a definitive agreement to sell Acxiom Marketing Solutions to Interpublic Group for $2.3 billion.
    • The combination of IPG and AMS creates an industry powerhouse for data-driven marketing.
    • The Company expects to realize approximately $1.7 billion in net cash proceeds, after taxes and fees, and intends to return up to $1 billion to shareholders.
    • The transaction is expected to close in the third fiscal quarter, subject to Acxiom shareholder approval and other customary closing conditions.
    • Following the transaction close, the Company will be renamed LiveRamp and, shortly thereafter, begin trading its common stock under the new ticker symbol “RAMP.”
  • LiveRamp added approximately 30 new direct clients during the quarter and added several new partner integrations. On a direct basis, LiveRamp now works with more than 600 clients worldwide and serves hundreds of additional brands through its expansive ecosystem of partners and resellers.
  • LiveRamp and Adobe are partnering to integrate LiveRamp’s IdentityLink™ for TV solution across Adobe Advertising Cloud and Adobe Audience Manager. The partnership enables advertisers to engage in addressable TV advertising using the same first- or third-party audiences they already deploy through Adobe, while unlocking household level insight.
  • Acxiom Marketing Solutions posted another strong bookings quarter, driven by six new logo wins and two key renewals.
  • Acxiom repurchased 1.9 million shares for approximately $46 million during the first quarter. Since the inception of its share repurchase program in August 2011, Acxiom has repurchased a total of 22 million shares for $420 million.

Financial Outlook

Non-GAAP guidance excludes the impact of non-cash stock compensation, purchased intangible asset amortization, restructuring charges and business separation costs.

The Company does not intend to update its existing guidance until the pending IPG AMS transaction is complete.

Therefore, for fiscal 2019, the Company reaffirms its previously issued guidance and continues to expect:

  • Total revenue of between $935 million and $955 million.
  • GAAP loss per share of between $0.23 and $0.18.
  • Non-GAAP diluted earnings per share of between $0.90 and $0.95.

Conference Call

Acxiom will hold a conference call at 3:30 p.m. CT 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 our investor site. A slide presentation will be referenced during the call and can be accessed here.

About Acxiom

Acxiom provides the data foundation for the world’s best marketers. We enable people-based marketing everywhere through a simple, open approach to connecting systems and data that drives seamless customer experiences and higher ROI. A leader in identity and ethical data use for nearly 50 years, Acxiom helps thousands of clients and partners around the globe work together to create a world where all marketing is relevant. Acxiom is a registered trademark of Acxiom Corporation. For more information, visit Acxiom.com.

Forward-Looking Statements

This release and today’s conference call contain forward-looking statements including, without limitation, statements regarding expected levels of revenue and earnings per share. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially. The following are factors, among others, that could cause actual results to differ materially from these forward-looking statements: the possibility that the proposed sale of Acxiom Marketing Solutions to Interpublic Group is not completed; the possibility of business disruption associated with the proposed sale; the possibility that the expected revenue from the divisions may not be realized within the expected timeframe; the possibility that the integration of acquired businesses may not be successful as planned; the possibility that certain contracts may not generate the anticipated revenue or profitability or may not be closed within the anticipated time frames; the possibility that significant customers may experience extreme, severe economic difficulty or otherwise reduce or cancel the amount of business they do with us; the possibility that we will not successfully complete customer contract requirements on time or meet the service levels specified in the contracts, which may result in contract penalties or lost revenue; the possibility that data purchasers will reduce their reliance on us by developing and using their own, or alternative, sources of data generally or with respect to certain data elements or categories; the possibility that data suppliers might withdraw data from us, leading to our inability to provide certain products and services to our clients; the possibility that we may not be able to attract, retain or motivate qualified technical, sales and leadership associates, or that we may lose key associates; the possibility that we may not be able to adequately adapt to rapidly changing computing environments, technologies and marketing practices; the possibility that we will not be able to continue to receive credit upon satisfactory terms and conditions; the possibility that negative changes in economic conditions in general or other conditions might lead to a reduction in demand for our products and services; the possibility that there will be changes in consumer or business information industries and markets that negatively impact the company; the possibility that the historical seasonality of our business may change; the possibility that we will not be able to achieve anticipated cost reductions and avoid unanticipated costs; the possibility that the fair value of certain of our assets may not be equal to the carrying value of those assets now or in future time periods; the possibility that unusual charges may be incurred; the possibility that changes in accounting pronouncements may occur and may impact these forward-looking statements; the possibility that we may encounter difficulties when entering new markets or industries; the possibility that we could experience loss of data center capacity or interruption of telecommunication links; the possibility the European General Data Protection Regulation, which became effective May 25, 2018, will make it more difficult and/or costly for us to do business in the EU; the possibility that new laws may be enacted which limit our ability to provide services to our clients and/or which limit the use of data; and the possibility that other risks and uncertainties may emerge, including those detailed from time to time in our current and periodic reports filed with the Securities and Exchange Commission, including our current reports on Form 8-K, quarterly reports on Form 10-Q and annual reports on Form 10-K, particularly the discussion under the caption “Item 1A. RISK FACTORS” in our Annual Report on Form 10-K for the year ended March 31, 2018, which was filed with the Securities and Exchange Commission on May 25, 2018 and the discussion under the caption “Item 1A. RISK FACTORS” in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, which was filed with the Securities and Exchange Commission today.

With respect to the provision of products or services outside our primary base of operations in the United States, all of the above factors apply, along with the difficulty of doing business in numerous sovereign jurisdictions due to differences in scale, competition, culture, laws and regulations.

We undertake no obligation to update the information contained in this press release or any other forward-looking statement.

To automatically receive Acxiom Corporation financial news by email, please visit www.acxiom.com and subscribe to email alerts.

Acxiom, LiveRamp, IdentityLink, InfoBase and all other Acxiom marks contained herein are trademarks or service marks of Acxiom Corporation. All other marks are the property of their respective owners.

 
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
 
 
  For the Three Months Ended
June 30,
      $   %
2018 2017 Variance   Variance
 
Revenues 226,960 212,514 14,446 6.8 %
 
Cost of revenue 117,271   113,960   3,311 2.9 %
Gross profit 109,689 98,554 11,135 11.3 %
% Gross margin 48.3 % 46.4 %
 
Operating expenses:
Research and development 24,536 23,563 973 4.1 %
Sales and marketing 54,850 48,440 6,410 13.2 %
General and administrative 34,718 32,356 2,362 7.3 %
Gains, losses and other items, net 1,286   (98 ) 1,384 1412.2 %
Total operating expenses 115,390   104,261   11,129 10.7 %
 
Loss from operations (5,701 ) (5,707 ) 6 0.1 %
% Margin -2.5 % -2.7 %
Other income (expense):
Interest expense (2,838 ) (2,342 ) (496 ) (21.2 %)
Other, net 524   (672 ) 1,196 178.0 %
Total other expense (2,314 ) (3,014 ) 700 23.2 %
 
Loss before income taxes (8,015 ) (8,721 ) 706 8.1 %
 
Income taxes (5,000 ) (7,421 ) 2,421 32.6 %
 
Net loss (3,015 ) (1,300 ) (1,715 ) (131.9 %)
 
Basic loss per share (0.04 ) (0.02 ) (0.02 ) (100.0 %)
 
Diluted loss per share (0.04 ) (0.02 ) (0.02 ) (100.0 %)
 
Basic weighted average shares 76,935 78,672
 
Diluted weighted average shares 76,935 78,672
 
ACXIOM CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP EPS (1)

(Unaudited)
(Dollars in thousands, except per share amounts)
 
 
  For the Three Months Ended
June 30,
2018   2017
 
 
Loss before income taxes (8,015 ) (8,721 )
 
Income taxes (5,000 ) (7,421 )
 
Net loss (3,015 ) (1,300 )
 
Loss per share:
 
Basic (0.04 ) (0.02 )
 
Diluted (0.04 ) (0.02 )
 
Excluded items:
Purchased intangible asset amortization (cost of revenue) 6,054 5,966
Non-cash stock compensation (cost of revenue and operating expenses) 20,360 15,031
Restructuring and merger charges (gains, losses, and other) 1,286 (98 )
Separation and transformation costs (general and administrative) 6,822   7,119  
 
Total excluded items 34,522   28,018  
 

 

Income before income taxes and excluding items

26,507 19,297
 
Income taxes (2) 7,467   7,720  
 
Non-GAAP earnings from continuing operations 19,040 11,577
 
Earnings from discontinued operations, net of tax    
 
Non-GAAP net earnings 19,040   11,577  
 
Non-GAAP earnings per share:
 
Basic 0.25   0.15  
 
Diluted 0.24   0.14  
 
Basic weighted average shares 76,935   78,672  
 
Diluted weighted average shares 79,311   81,440  
 
(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.
 
(2) Income taxes were calculated using an effective non-GAAP tax rate of 28.2% and 40.0% in the first quarter of fiscal 2019 and 2018, respectively. The difference between our GAAP and non-GAAP tax rates were primarily due to the net tax effects of the excluded items. The rates in the first quarter of fiscal 2019 reflect the impact of the Tax Acts and Jobs Act.
 
ACXIOM CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP INCOME (LOSS) FROM OPERATIONS (1)

(Unaudited)
(Dollars in thousands)
 
 
  For the Three Months Ended
June 30,
2018   2017
 
 
Loss from operations (5,701 ) (5,707 )
 
Excluded items:
Purchased intangible asset amortization (cost of revenue) 6,054 5,966
Non-cash stock compensation (cost of revenue and operating expenses) 20,360 15,031
Restructuring and merger charges (gains, losses, and other) 1,286 (98 )
Separation and transformation costs (general and administrative) 6,822   7,119  
 
Total excluded items 34,522   28,018  
 
Income from operations before excluded items 28,821   22,311  
 
(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.
 
ACXIOM CORPORATION AND SUBSIDIARIES
RESULTS BY SEGMENT
(Unaudited)
(Dollars in thousands)
 
 
  For the Three Months Ended
June 30,
      $   %
2018 2017 Variance   Variance
 
Revenues
LiveRamp 62,458 46,757 15,701 33.6 %
Acxiom Marketing Solutions 164,502   165,757   (1,255 ) (0.8 %)
Total operating segment revenues 226,960 212,514 14,446 6.8 %
 
Gross profit
LiveRamp 44,200 28,229 15,971 56.6 %
Acxiom Marketing Solutions 73,174   77,864   (4,690 ) (6.0 %)
Total operating segment gross profit 117,374 106,093 11,281 10.6 %
 
Gross margin %
LiveRamp 70.8 % 60.4 %
Acxiom Marketing Solutions 44.5 % 47.0 %
Total operating segment gross margin 51.7 % 49.9 %
 
Income (loss) from operations
LiveRamp 9,203 (97 ) 9,300 9587.6 %
Acxiom Marketing Solutions 47,458   48,374   (916 ) (1.9 %)
Total operating segment income from operations 56,661 48,277 8,384 17.4 %
 
Operating income (loss) margin %
LiveRamp 14.7 % (0.2 %)
Acxiom Marketing Solutions 28.8 % 29.2 %
Total operating segment operating margin 25.0 % 22.7 %
 
 
Some totals may not add due to rounding.
 
ACXIOM CORPORATION AND SUBSIDIARIES
RECONCILIATION OF SEGMENT RESULTS
(Unaudited)
(Dollars in thousands)
 
 
  For the Three Months Ended
June 30,
 
2018 2017
 
Total operating segment gross profit 117,374 106,093
 
Less:
Purchased intangible asset amortization 6,054 5,966
Non-cash stock compensation 1,631   1,573  
 
Gross profit 109,689   98,554  
 
 
Total operating segment income from operations 56,661 48,277
 
Less:
Corporate expenses 27,840 25,966
Purchased intangible asset amortization 6,054 5,966
Non-cash stock compensation 20,360 15,031
Restructuring charges 1,286 (98 )
Separation and transformation costs 6,822   7,119  
 
Loss from operations (5,701 ) (5,707 )
 
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About the Author: Stefan Kachakov

Stefan covers money and politics for Canadian Business Tribune. His work has appeared in the Toronto Star, Newsweek, Slate, The New York Observer, Money and The Huffington Post Canada. He is originally from Yellowknife.

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