Acxiom Announces Second Quarter Results

Acxiom® (Nasdaq: ACXM), the data foundation for the world’s best marketers, today announced financial results for its second quarter ended September 30, 2016.

This Smart News Release features multimedia. View the full release here: http://www.businesswire.com/news/home/20161107006514/en/

Financial Highlights

• Revenue: Total revenue was $217 million, up 5% compared to the second quarter of last year, driven by growth in Connectivity and Audience Solutions.
• Operating Income (Loss): GAAP operating income from continuing operations was $7 million compared to a loss of $2 million in the prior year. Non-GAAP operating income from continuing operations improved 34% to approximately $25 million.
• Earnings (Loss) per Share: GAAP diluted earnings per share from continuing operations were $0.09 compared to a loss per share of $0.02 in the prior year. Non-GAAP diluted earnings per share from continuing operations were $0.18, up from $0.14 a year ago.
• Operating Cash Flow: Operating cash flow from continuing operations improved to $35 million, up from $21 million in the prior year. For the trailing twelve-month period, operating cash flow from continuing operations was $117 million, up from $96 million in the comparable period.
• Free Cash Flow to Equity: Free cash flow to equity improved to $30 million, up from negative $1 million in the prior year. For the trailing twelve-month period, free cash flow to equity was $39 million, up from negative $2 million in the comparable period.

Segment Results

Marketing Services

• Revenue was $106 million, down 6% compared to the second quarter of last year. Marketing Database and Strategy & Analytics revenue grew 1% year-over-year, but was more than offset by the sale of Acxiom Impact.
• Gross margin remained roughly flat at 33%.
• Segment income was $20 million, up 11% compared to the prior year.

Audience Solutions

• Revenue was $79 million, up 9% compared to the prior year.
• Gross margin improved from 54% to 61%.
• Segment income was $30 million, up 19% compared to the prior year.

Connectivity

• Revenue was $33 million, up 49% compared to the second quarter of last year. Connectivity exited the quarter with a $135 million annualized revenue run rate.
• Gross margin declined slightly to 60%.
• Segment income was $2 million compared to a loss of $1 million in the prior year.

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.

"Solid second quarter performance was driven by continued strong global execution across each of our businesses,” said Acxiom CEO Scott Howe. “In addition, we are very excited by the launch of LiveRampTM IdentityLinkTM to power people-based marketing for the open ecosystem. Identity resolution is key to understanding the customer journey and delivering superior customer experiences. LiveRamp is creating the foundation which will enable true omnichannel marketing.”

Recent Business Highlights

• Acxiom completed the sale of its Impact email business to Zeta Interactive on August 31, 2016 and plans to use the sale proceeds to help fund its recently expanded share repurchase program.
• LiveRamp launched IdentityLink, its new omnichannel resolution service. IdentityLink builds on the Company’s existing identity resolution capabilities to help brands create a unified view of the consumer and activate that understanding across the marketing ecosystem.
• Connectivity added more than 40 new direct customers during the quarter and added over 50 new partner integrations. Marketers can now onboard and activate their data across a growing network of more than 400 marketing platforms and data providers.
• Audience Solutions entered into a Premier Partnership with Adobe, enabling Acxiom and Adobe Marketing Cloud clients to access Acxiom data via Adobe’s Audience Marketplace with even greater ease to drive more accurate marketing campaigns.
• Acxiom repurchased 390,000 shares for approximately $10 million during the quarter. Since the inception of its share repurchase program in August 2011, Acxiom has repurchased 16.8 million shares for $286 million.

Financial Outlook

Acxiom’s non-GAAP guidance excludes the impact of non-cash compensation, purchased intangible asset amortization, restructuring charges and separation and transformation costs.

For fiscal 2017, Acxiom expects to report:

• Revenue in the range of $860 million to $870 million
• GAAP diluted earnings per share of approximately $0.12
• Non-GAAP diluted earnings per share of approximately $0.60

Included in the Company’s revenue guidance is approximately $20 million of revenue from its disposed Acxiom Impact business.

Conference Call

Acxiom will hold a conference call at 4:00 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 at investors.acxiom.com. A slide presentation will be referenced during the call and can be accessed here.

About Acxiom

Acxiom is a technology and services company that 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 the ethical use of data for more than 45 years, Acxiom helps thousands of clients and partners around the globe work together to create a world where all marketing is relevant. For more information about Acxiom, visit Acxiom.com.

Forward-Looking Statements

This release and today’s conference call contains 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 expected revenue from the divisions may not be realized within the expected timeframe; 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 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 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 other risks and uncertainties, 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, 2016, which was filed with the Securities and Exchange Commission on May 27, 2016.

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.

Acxiom is a registered trademark of Acxiom Corporation.

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

(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 39.1% and 31.2% in the second quarter of fiscal 2017 and 2016, respectively, and 39.5% and 36.4% for the six months ended September 30, 2016 and 2015, respectively. The differences between our GAAP and non-GAAP tax rates were primarily due to the net tax effects of the excluded items, including the federal and state income tax benefit related to the sale of Impact.

(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.

(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.

(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.