Connectivity Posts Record Revenue and
Double-Digit Segment Margin
Strengthens Full-Year EPS Guidance
Repurchases 860,000 Shares in the
Quarter
Acxiom® (Nasdaq: ACXM), the data foundation for the world's
best marketers, today announced financial results for its second
quarter ended September 30, 2017.
This press release features multimedia. View
the full release here:
http://www.businesswire.com/news/home/20171101006541/en/
Financial Highlights
- Revenue: Total revenue was $225
million, up 4% compared to the second quarter of last year.
Year-over-year revenue growth was negatively impacted by $8 million
associated with the fiscal year 2017 divestiture of Acxiom
Impact.
- Operating Income: GAAP operating
income was break-even compared to operating income of $7 million in
the prior year. Non-GAAP operating income grew 27% to approximately
$31 million.
- Earnings (Loss) per Share: GAAP
loss per share was $0.04 compared to earnings per share of $0.09 in
the prior year. Non-GAAP diluted earnings per share were $0.22
compared to $0.18 a year ago.
- Operating Cash Flow: Operating
cash flow was $28 million, down from $35 million in the prior
year.
- Free Cash Flow to Equity: Free
cash flow to equity was $20 million, down from $30 million in the
prior year. Prior year free cash flow to equity includes proceeds
of $17 million associated with the divestiture of Acxiom Impact
compared to $4 million in the current quarter. For the trailing
twelve-month period, free cash flow to equity improved to $68
million, up from $39 million in the comparable period.
Segment Results
$M
Connectivity
Q218
Q217
Y/Y Δ
Revenue
$ 52 $ 33 58%
Gross Profit
$ 35 $ 20 78% Gross Margin 67% 60% 740 bps
Segment Operating Income
$ 6 $ 2 244% Segment Margin 11% 5% 590 bps
Audience Solutions
Q218 Q217 Y/Y Δ
Revenue
$ 79 $ 79 0%
Gross Profit
$ 48 $ 48 1% Gross Margin 61% 61% 20 bps
Segment Operating Income
$ 29 $ 30 (2%) Segment Margin 37% 38% (80 bps)
Marketing Services
Q218 Q217 Y/Y Δ
Revenue
$ 94 $ 106 (11%)
Gross Profit
$ 34 $ 34 (0%) Gross Margin 36% 33% 390 bps
Segment Operating Income
$ 22 $ 20 10% Segment Margin 23% 19% 450 bps
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.
“In the second quarter, we strengthened our position as the
leader in omnichannel identity and data connectivity,” said Acxiom
CEO Scott Howe. “Our solid financial results are bolstered by
continued innovation and our commitment to clients. During the
quarter, we launched IdentityLink for Agencies, announced a
groundbreaking new partnership with American Express and were
recognized by Citibank for our high levels of service and
performance.”
Recent Business Highlights
- LiveRamp® added approximately 25 new
direct clients during the quarter and added over 25 new partner
integrations. Marketers can now onboard and activate their data
across a growing network of 550 publishers and marketing technology
providers.
- LiveRamp launched IdentityLink™ for
Agencies. This solution allows agencies to scale people-based
marketing capabilities across platforms and channels for their
clients. The launch also marks the completion of a multi-year
initiative to provide all key participants in the marketing
ecosystem – brands, technology platforms, data owners, publishers,
and now agencies – with a universal, people-based identifier.
- Acxiom and Amex Advance announced
the launch of a joint data-driven offering to predict purchase
intent across the broad U.S. consumer population. By combining
spending insights from American Express’ network with Acxiom’s
InfoBase® data and first-party customer data, marketers can more
effectively engage consumers with relevant offers when they are
most ready to buy.
- Acxiom was recognized by Citibank
with a Citi Supplier Award for its high level of performance
and service. Acxiom was the only supplier to earn a Citi Supplier
Award for two consecutive years.
- Acxiom repurchased 860,000 shares
for approximately $20 million during the quarter. Since the
inception of its share repurchase program in August 2011, Acxiom
has repurchased 17.7 million shares for $306 million, with $94
million remaining under authorization.
Financial Outlook
Acxiom’s non-GAAP guidance excludes the impact of non-cash stock
compensation, purchased intangible asset amortization,
restructuring charges and business separation costs.
For fiscal 2018, Acxiom expects to report:
- Revenue of between $920 million
and $930 million, an increase of between 7% and 8%
year-over-year after adjusting for the Acxiom Impact
divestiture
- GAAP diluted loss per share of
between $0.08 and $0.04
- Non-GAAP diluted earnings per share
of between $0.80 and $0.85, an increase of between 13% and 20%
year-over-year
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 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 more than 48 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 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 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, 2017, which was
filed with the Securities and Exchange Commission on May 26,
2017.
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 SUBSIDIARIESCONSOLIDATED STATEMENTS
OF OPERATIONS(Unaudited)(Dollars in thousands, except per share
amounts) For the Three Months
EndedSeptember 30, 2017 2016 $Variance %Variance Revenues
225,240 217,267 7,973 3.7 % Cost of revenue 115,072
120,105 (5,033 ) (4.2 %) Gross profit 110,168 97,162 13,006
13.4 %
% Gross margin 48.9 % 44.7
% Operating expenses: Research and development 24,013
19,029 4,984 26.2 % Sales and marketing 50,118 37,847 12,271 32.4 %
General and administrative 31,924 32,866 (942 ) (2.9 %) Gains,
losses and other items, net 3,660 300 3,360 1120.0 %
Total operating expenses 109,715 90,042 19,673 21.8 %
Income from operations 453 7,120 (6,667 ) (93.6 %) %
Margin 0.2 % 3.3 % Other income
(expense): Interest expense (2,524 ) (1,689 ) (835 ) (49.4 %)
Other, net 192 (207 ) 399 192.8 % Total other expense (2,332
) (1,896 ) (436 ) (23.0 %) Earnings (loss) before income
taxes (1,879 ) 5,224 (7,103 ) (136.0 %) Income taxes 1,457
(1,916 ) 3,373 176.0 % Net earnings (loss) (3,336 )
7,140 (10,476 ) (146.7 %) Basic earnings (loss) per
share (0.04 ) 0.09 (0.13 ) (145.7 %) Diluted earnings
(loss) per share (0.04 ) 0.09 (0.13 ) (146.7 %) Basic
weighted average shares 79,235 77,446 Diluted weighted
average shares 79,235 79,277 ACXIOM CORPORATION AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)(Dollars in thousands, except per share
amounts) For the Six Months
EndedSeptember 30, 2017 2016 $Variance %Variance Revenues
437,754 432,068 5,686 1.3 % Cost of revenue 229,032
242,924 (13,892 ) (5.7 %) Gross profit 208,722 189,144
19,578 10.4 %
% Gross margin 47.7 %
43.8 % Operating expenses: Research and
development 47,576 37,681 9,895 26.3 % Sales and marketing 98,558
75,195 23,363 31.1 % General and administrative 64,280 60,372 3,908
6.5 % Gains, losses and other items, net 3,562 614
2,948 480.1 % Total operating expenses 213,976 173,862
40,114 23.1 % Income (loss) from operations (5,254 )
15,282 (20,536 ) (134.4 %) %
Margin -1.2 %
3.5 % Other income (expense): Interest expense (4,866
) (3,501 ) (1,365 ) (39.0 %) Other, net (480 ) 100 (580 )
(580.0 %) Total other expense (5,346 ) (3,401 ) (1,945 ) (57.2 %)
Earnings (loss) before income taxes (10,600 ) 11,881 (22,481
) (189.2 %) Income taxes (5,964 ) 765 (6,729 ) (879.6
%) Net earnings (loss) (4,636 ) 11,116 (15,752 )
(141.7 %) Basic earnings (loss) per share (0.06 ) 0.14
(0.20 ) (140.9 %) Diluted earnings (loss) per share
(0.06 ) 0.14 (0.20 ) (141.9 %) Basic weighted average
shares 78,954 77,459 Diluted weighted average shares 78,954
79,317
ACXIOM CORPORATION AND
SUBSIDIARIESRECONCILIATION OF GAAP TO
NON-GAAP EPS (1)(Unaudited)(Dollars in thousands, except per
share amounts)
For the Three Months EndedSeptember 30,
For the Six Months EndedSeptember 30, 2017 2016 2017 2016
Earnings (loss) before income taxes (1,879 ) 5,224 (10,600 )
11,881 Income taxes 1,457 (1,916 ) (5,964 ) 765
Net earnings (loss) (3,336 ) 7,140 (4,636 ) 11,116
Earnings (loss) per share: Basic (0.04 ) 0.09
(0.06 ) 0.14 Diluted (0.04 ) 0.09 (0.06 ) 0.14
Excluded items: Purchased intangible asset amortization (cost of
revenue) 6,021 3,890 11,987 7,967 Non-cash stock compensation (cost
of revenue and operating expenses) 15,757 11,938 30,788 20,528
Restructuring and merger charges (gains, losses, and other) 3,660
300 3,562 614 Separation and transformation costs (general and
administrative) 5,442 1,455 12,561 1,455
Total excluded items 30,880 17,583 58,898
30,564
Earnings before income taxes and excluding
items
29,001 22,807 48,298 42,445 Income taxes (2) 11,289
8,910 19,009 16,762 Non-GAAP net earnings
17,712 13,897 29,289 25,683 Non-GAAP
earnings per share: Basic 0.22 0.18 0.37
0.33 Diluted 0.22 0.18 0.36 0.32
Basic weighted average shares 79,235 77,446
78,954 77,459 Diluted weighted average shares 81,472
79,277 81,456 79,317
(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 38.9% and 39.1% in the second
quarter of fiscal 2018 and 2017, respectively, and 39.4% and 39.5%
for the six months ended September 30, 2017 and 2016, respectively.
The difference between our GAAP and non-GAAP tax rates were
primarily due to the net tax effects of the excluded items.
ACXIOM CORPORATION AND
SUBSIDIARIESRECONCILIATION OF GAAP TO
NON-GAAP INCOME (LOSS) FROM OPERATIONS
(1)(Unaudited)(Dollars in thousands)
For the Three Months EndedSeptember 30,
For the Six Months EndedSeptember 30, 2017 2016 2017 2016
Income (loss) from operations 453 7,120 (5,254 ) 15,282
Excluded items: Purchased intangible asset amortization
(cost of revenue) 6,021 3,890 11,987 7,967 Non-cash stock
compensation (cost of revenue and operating expenses) 15,757 11,938
30,788 20,528 Restructuring and merger charges (gains, losses, and
other) 3,660 300 3,562 614 Separation and transformation costs
(general and administrative) 5,442 1,455 12,561 1,455
Total excluded items 30,880 17,583 58,898 30,564
Income from operations before excluded items 31,333 24,703 53,644
45,846
(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 SUBSIDIARIESRESULTS BY
SEGMENT(Unaudited)(Dollars in thousands)
For the Three Months EndedSeptember 30, 2017 2016 $Variance
%Variance Revenues Marketing Services 94,042 105,679
(11,637 ) (11.0 %) Audience Solutions 78,814 78,526 288 0.4 %
Connectivity 52,384 33,062 19,322 58.4 % Total
operating segment revenues 225,240 217,267 7,973 3.7 % Gross
profit Marketing Services 34,320 34,480 (160 ) (0.5 %) Audience
Solutions 48,321 47,998 323 0.7 % Connectivity 35,292 19,843
15,449 77.9 % Total operating segment gross profit 117,933
102,321 15,612 15.3 % Gross margin % Marketing Services 36.5
% 32.6 % Audience Solutions 61.3 % 61.1 % Connectivity 67.4 % 60.0
% Total operating segment gross margin 52.4 % 47.1 % Income
from operations Marketing Services 21,874 19,837 2,037 10.3 %
Audience Solutions 29,497 29,972 (475 ) (1.6 %) Connectivity 5,715
1,663 4,052 243.7 % Total operating segment income
from operations 57,086 51,472 5,614 10.9 % Operating income
margin % Marketing Services 23.3 % 18.8 % Audience Solutions 37.4 %
38.2 % Connectivity 10.9 % 5.0 % Total operating segment operating
margin 25.3 % 23.7 % Some totals may not add due to
rounding. ACXIOM CORPORATION AND SUBSIDIARIESRESULTS BY
SEGMENT(Unaudited)(Dollars in thousands)
For the Six Months EndedSeptember 30, 2017 2016 $Variance
%Variance Revenues Marketing Services 185,636 215,394
(29,758 ) (13.8 %) Audience Solutions 154,548 152,270 2,278 1.5 %
Connectivity 97,570 64,404 33,166 51.5 % Total
operating segment revenues 437,754 432,068 5,686 1.3 % Gross
profit Marketing Services 65,678 71,946 (6,268 ) (8.7 %) Audience
Solutions 95,531 89,910 5,621 6.3 % Connectivity 62,817
37,418 25,399 67.9 % Total operating segment gross profit
224,026 199,274 24,752 12.4 % Gross margin % Marketing
Services 35.4 % 33.4 % Audience Solutions 61.8 % 59.0 %
Connectivity 64.4 % 58.1 % Total operating segment gross margin
51.2 % 46.1 % Income from operations Marketing Services
41,658 39,982 1,676 4.2 % Audience Solutions 58,039 55,068 2,971
5.4 % Connectivity 5,667 1,954 3,713 190.0 % Total
operating segment income from operations 105,364 97,004 8,360 8.6 %
Operating income margin % Marketing Services 22.4 % 18.6 %
Audience Solutions 37.6 % 36.2 % Connectivity 5.8 % 3.0 % Total
operating segment operating margin 24.1 % 22.5 % Some totals
may not add due to rounding. ACXIOM CORPORATION AND
SUBSIDIARIESRECONCILIATION OF SEGMENT RESULTS(Unaudited)(Dollars in
thousands) For the Three Months
EndedSeptember 30, For the Six Months EndedSeptember 30,
2017 2016 2017 2016 Total operating segment gross profit
117,933 102,321 224,026 199,274 Less: Purchased intangible
asset amortization 6,021 3,890 11,987 7,967 Non-cash stock
compensation 1,744 1,269 3,317 2,163 Gross profit
110,168 97,162 208,722 189,144 Total operating
segment income from operations 57,086 51,472 105,364 97,004
Less: Corporate expenses 25,753 26,769 51,720 51,158 Purchased
intangible asset amortization 6,021 3,890 11,987 7,967 Non-cash
stock compensation 15,757 11,938 30,788 20,528 Restructuring
charges 3,660 300 3,562 614 Separation and transformation costs
5,442 1,455 12,561 1,455 Income (loss) from
operations 453 7,120 (5,254 ) 15,282 Some totals may not add
due to rounding. ACXIOM CORPORATION AND
SUBSIDIARIESRECONCILIATION OF ADJUSTED EBITDA
(1)(Unaudited)(Dollars in thousands)
For the Three Months EndedSeptember 30, For the Six Months
EndedSeptember 30, 2017 2016 2017 2016 Net earnings
(loss) (3,336 ) 7,140 (4,636 ) 11,116 Income taxes 1,457
(1,916 ) (5,964 ) 765 Other expense (2,332 ) (1,896 ) (5,346
) (3,401 ) Income (loss) from operations 453 7,120 (5,254 )
15,282 Depreciation and amortization 21,409 20,360
42,519 41,150 EBITDA 21,862
27,480 37,265 56,432 Other
adjustments: Non-cash stock compensation (cost of revenue and
operating expenses) 15,757 11,938 30,788 20,528 Gains, losses, and
other items, net 3,660 300 3,562 614 Separation and transformation
costs (general and administrative) 5,442 1,455 12,561
1,455 Other adjustments 24,859 13,693
46,911 22,597 Adjusted EBITDA 46,721
41,173 84,176 79,029
(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.
ACXIOM CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS(Unaudited)(Dollars in thousands)
September 30,2017 March 31,2017 $Variance %Variance
Assets
Current assets: Cash and cash equivalents 169,507 170,343 (836 )
(0.5 %) Trade accounts receivable, net 141,285 142,768 (1,483 )
(1.0 %) Refundable income taxes 9,718 7,098 2,620 36.9 % Other
current assets 47,394 48,310 (916 ) (1.9 %)
Total current assets 367,904 368,519 (615 ) (0.2 %)
Property and equipment 477,999 476,281 1,718 0.4 % Less -
accumulated depreciation and amortization 326,944 320,307
6,637 2.1 % Property and equipment, net 151,055
155,974 (4,919 ) (3.2 %) Software, net of
accumulated amortization 41,087 47,638 (6,551 ) (13.8 %) Goodwill
592,845 592,731 114 0.0 % Purchased software licenses, net of
accumulated amortization 6,765 7,972 (1,207 ) (15.1 %) Deferred
income taxes 12,309 10,261 2,048 20.0 % Other assets, net 44,807
51,443 (6,636 ) (12.9 %) 1,216,772
1,234,538 (17,766 ) (1.4 %)
Liabilities and
Stockholders' Equity
Current liabilities: Current installments of long-term debt 2,089
39,819 (37,730 ) (94.8 %) Trade accounts payable 46,966 40,208
6,758 16.8 % Accrued payroll and related expenses 28,455 53,238
(24,783 ) (46.6 %) Other accrued expenses 57,914 59,861 (1,947 )
(3.3 %) Deferred revenue 29,411 37,087 (7,676 ) (20.7
%) Total current liabilities 164,835 230,213
(65,378 ) (28.4 %) Long-term debt 228,045 189,241 38,804
20.5 % Deferred income taxes 54,256 58,374 (4,118 ) (7.1 %)
Other liabilities 16,540 17,730 (1,190 ) (6.7 %)
Stockholders' equity: Common stock 13,478 13,288 190 1.4 %
Additional paid-in capital 1,197,083 1,154,429 42,654 3.7 %
Retained earnings 600,215 602,609 (2,394 ) (0.4 %) Accumulated
other comprehensive income 9,410 7,999 1,411 17.6 % Treasury stock,
at cost (1,067,090 ) (1,039,345 ) (27,745 ) (2.7 %) Total
stockholders' equity 753,096 738,980 14,116 1.9 %
1,216,772 1,234,538 (17,766 ) (1.4 %)
ACXIOM CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH
FLOWS(Unaudited)(Dollars in thousands) For the Three
Months EndedSeptember 30, 2017 2016 Cash flows from
operating activities: Net earnings (loss) (3,336 ) 7,140 Non-cash
operating activities: Depreciation and amortization 21,409 20,360
Loss (gain) on disposal or impairment of assets 2,248 (629 )
Deferred income taxes (5,735 ) (5,861 ) Non-cash stock compensation
expense 15,758 11,914 Changes in operating assets and liabilities:
Accounts receivable (9,344 ) (11,051 ) Other assets (171 ) (1,704 )
Accounts payable and other liabilities 10,231 19,241 Deferred
revenue (3,250 ) (3,928 ) Net cash provided by operating activities
27,810 35,482 Cash flows from investing activities:
Capitalized software (3,756 ) (3,893 ) Capital expenditures (7,630
) (9,845 ) Data acquisition costs (233 ) (247 ) Net cash received
in disposition 4,000 16,988 Net cash provided by
(used in) investing activities (7,619 ) 3,003 Cash flows
from financing activities: Payments of debt (578 ) (8,058 ) Sale of
common stock, net of stock acquired for withholding taxes 6,234
4,326 Excess tax benefits from share-based compensation - 901
Acquisition of treasury stock (19,776 ) (10,335 ) Net cash used in
financing activities (14,120 ) (13,166 ) Effect of exchange rate
changes on cash 290 (70 ) Net change in cash and cash
equivalents 6,361 25,249 Cash and cash equivalents at beginning of
period 163,146 150,160 Cash and cash equivalents at
end of period 169,507 175,409
Supplemental
cash flow information: Cash paid during the period for:
Interest 2,387 1,704 Income taxes 470 273 ACXIOM CORPORATION
AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH
FLOWS(Unaudited)(Dollars in thousands) For the Six
Months EndedSeptember 30, 2017 2016 Cash flows from
operating activities: Net earnings (loss) (4,636 ) 11,116 Non-cash
operating activities: Depreciation and amortization 42,519 41,150
Loss (gain) on disposal or impairment of assets 2,411 (629 )
Accelerated deferred debt costs 720 - Deferred income taxes (3,238
) (6,539 ) Non-cash stock compensation expense 30,796 20,504
Changes in operating assets and liabilities: Accounts receivable
2,616 (1,564 ) Other assets (3,548 ) 3,679 Accounts payable and
other liabilities (26,842 ) (21,780 ) Deferred revenue (8,037 )
(9,705 ) Net cash provided by operating activities 32,761
36,232 Cash flows from investing activities: Capitalized
software (7,144 ) (7,875 ) Capital expenditures (14,518 ) (20,539 )
Data acquisition costs (423 ) (267 ) Net cash received in
disposition 4,000 16,988 Net cash used in investing
activities (18,085 ) (11,693 ) Cash flows from financing
activities: Proceeds from debt 230,000 - Payments of debt (226,150
) (16,111 ) Fees for debt refinancing (4,001 ) - Sale of common
stock, net of stock acquired for withholding taxes 3,695 7,300
Excess tax benefits from share-based compensation - 1,415
Acquisition of treasury stock (19,776 ) (30,542 ) Net cash used in
financing activities (16,232 ) (37,938 ) Effect of exchange rate
changes on cash 720 (821 ) Net change in cash and
cash equivalents (836 ) (14,220 ) Cash and cash equivalents at
beginning of period 170,343 189,629 Cash and cash
equivalents at end of period 169,507 175,409
Supplemental cash flow information: Cash paid during the
period for: Interest 4,762 3,962 Income taxes 824 197 ACXIOM
CORPORATION AND SUBSIDIARIESCALCULATION OF FREE CASH FLOW TO EQUITY
(1)(Unaudited)(Dollars in thousands)
06/30/16 09/30/16 12/31/16
03/31/17 FY2017 06/30/17 09/30/17 YTD
FY2018 Net Cash Provided
by Operating Activities 750 35,482 48,933 30,665 115,830 4,951
27,810 32,761 Less (plus): Capitalized software (3,982 )
(3,893 ) (3,296 ) (3,306 ) (14,477 ) (3,388 ) (3,756 ) (7,144 )
Capital expenditures (10,694 ) (9,845 ) (9,557 ) (17,897 ) (47,993
) (6,888 ) (7,630 ) (14,518 ) Data acquisition costs (20 ) (247 )
(196 ) (418 ) (881 ) (190 ) (233 ) (423 ) Required debt payments
(8,053 ) (8,058 ) (8,062 ) (8,070 ) (32,243 ) (572 ) (578 ) (1,150
) Net cash received in disposition - 16,988 - - 16,988 - 4,000
4,000 Proceeds from sales of assets - -
- 25,494 25,494 -
- - Free Cash Flow to Equity (21,999 )
30,427 27,822 26,468
62,718 (6,087 ) 19,613 13,526
(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.
ACXIOM CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS
OF OPERATIONS(Unaudited)(Dollars in thousands, except per share
amounts)
Q2
FY18 to Q2 FY17 06/30/16 09/30/16 12/31/16
03/31/17 FY2017 06/30/17 09/30/17 YTD FY2018 %
$ Revenues 214,801 217,267 223,312
224,867 880,247 212,514 225,240 437,754 3.7 %
7,973 Cost of revenue 122,819 120,105
116,468 118,294 477,686
113,960 115,072 229,032
(4.2 %) (5,033 ) Gross profit 91,982 97,162 106,844 106,573 402,561
98,554 110,168 208,722 13.4 % 13,006
% Gross margin
42.8 % 44.7 % 47.8 %
47.4 % 45.7 % 46.4 %
48.9 % 47.7 % Operating expenses
Research and development 18,652 19,029 20,950 23,478 82,109 23,563
24,013 47,576 26.2 % 4,984 Sales and marketing 37,348 37,847 43,048
48,433 166,676 48,440 50,118 98,558 32.4 % 12,271 General and
administrative 27,506 32,866 31,620 37,721 129,714 32,356 31,924
64,280 -2.9 % (942 ) Gains, losses and other items, net 314
300 2,111 5,650
8,373 (98 ) 3,660 3,562 1121.6 %
3,360 Total operating expenses 83,820 90,042 97,729 115,282 386,872
104,261 109,715 213,976 21.8 % 19,673 Income (loss) from
operations 8,162 7,120 9,115 (8,709 ) 15,689 (5,707 ) 453 (5,254 )
(93.6 %) (6,667 )
% Margin 3.8 % 3.3
% 4.1 % -3.9 % 1.8
% -2.7 % 0.2 % -1.2
% Other income (expense) Interest expense (1,812 ) (1,689 )
(1,743 ) (2,137 ) (7,381 ) (2,342 ) (2,524 ) (4,866 ) (49.4 %) (835
) Other, net 307 (207 ) 35 199
334 (672 ) 192 (480 )
192.8 % 399 Total other expense (1,505 ) (1,896 ) (1,708 ) (1,937 )
(7,047 ) (3,014 ) (2,332 ) (5,346 ) (23.0 %) (436 ) Earnings
(loss) before income taxes 6,657 5,224 7,407 (10,646 ) 8,642 (8,721
) (1,879 ) (10,600 ) (136.0 %) (7,103 ) Income taxes 2,681
(1,916 ) 6,334 (2,565 ) 4,534
(7,421 ) 1,457 (5,964 ) 176.0 % 3,373
Net earnings (loss) 3,976 7,140 1,073 (8,081 ) 4,108 (1,300
) (3,336 ) (4,636 ) (146.7 %) (10,476 ) Diluted earnings
(loss) per share 0.05 0.09 0.01
(0.10 ) 0.05 (0.02 ) (0.04 )
(0.06 ) (146.7 %) (0.13 ) Some earnings (loss) per share
amounts may not add due to rounding. ACXIOM CORPORATION AND
SUBSIDIARIESRECONCILIATION OF GAAP TO NON-GAAP EPS
(1)(Unaudited)(Dollars in thousands, except per share amounts)
06/30/16
09/30/16 12/31/16 03/31/17 FY2017 06/30/17
09/30/17 YTD FY2018
Earnings (loss) before income taxes 6,657
5,224 7,407 (10,646 ) 8,642 (8,721 ) (1,879 ) (10,600 )
Income taxes 2,681 (1,916 ) 6,334 (2,565 )
4,534 (7,421 ) 1,457 (5,964 )
Net earnings (loss) 3,976 7,140 1,073
(8,081 ) 4,108 (1,300 ) (3,336 )
(4,636 ) Earnings (loss) per share: Basic 0.05
0.09 0.01 (0.10 ) 0.05 (0.02 )
(0.04 ) (0.06 ) Diluted 0.05 0.09
0.01 (0.10 ) 0.05 (0.02 )
(0.04 ) (0.06 ) Excluded items: Purchased intangible
asset amortization (cost of revenue) 4,077 3,890 4,621 6,056 18,644
5,966 6,021 11,987 Non-cash stock compensation (cost of revenue and
operating expenses) 8,590 11,938 13,427 15,190 49,145 15,031 15,757
30,788 Restructuring and merger charges (gains, losses, and other)
314 300 2,111 7,321 10,045 (98 ) 3,660 3,562 Gain on sales of
assets (gains, losses and other) - - - (1,671 ) (1,671 ) - - -
Separation and transformation costs (general and administrative) -
1,455 4,118 3,066 8,639
7,119 5,442 12,561
Total excluded items 12,981 17,583 24,277
29,962 84,803 28,018
30,880 58,898
Earnings before income taxes and excluding
items
19,638 22,807 31,684 19,315 93,444 19,297 29,001 48,298
Income taxes 7,852 8,910 12,751 7,139
36,652 7,720 11,289
19,009 Non-GAAP net earnings 11,786
13,897 18,933 12,177 56,792
11,577 17,712 29,289
Non-GAAP earnings per share: Basic 0.15 0.18
0.24 0.16 0.73 0.15
0.22 0.37 Diluted 0.15
0.18 0.24 0.15 0.71
0.14 0.22 0.36
Basic weighted average shares 77,471 77,446
77,507 78,012 77,609 78,672
79,235 78,954 Diluted weighted
average shares 79,353 79,277 79,851
80,912 79,848 81,440 81,472
81,456 Some totals may not add due to
rounding
(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 SUBSIDIARIESRESULTS BY
SEGMENT(Unaudited)(Dollars in thousands)
Q2 FY18 to Q2 FY17 06/30/16
09/30/16 12/31/16 03/31/17 FY2017
06/30/17 09/30/17 YTD FY2018 % $
Revenues: Marketing
Services 109,715 105,679 101,177 94,269 410,840 91,594 94,042
185,636 (11.0 %) (11,637 ) Audience Solutions 73,744 78,526 83,399
86,396 322,065 75,734 78,814 154,548 0.4 % 288 Connectivity 31,342
33,062 38,736 44,203
147,342 45,186 52,384
97,570 58.4 % 19,322 Total operating segment
revenues 214,801 217,267 223,312
224,867 880,247 212,514
225,240 437,754 3.7 % 7,973 Gross
profit: Marketing Services 37,466 34,480 37,494 31,207
140,647 31,358 34,320 65,678 (0.5 %) (160 ) Audience Solutions
41,912 47,998 53,120 55,154 198,185 47,210 48,321 95,531 0.7 % 323
Connectivity 17,575 19,843 23,091
27,742 88,251 27,525
35,292 62,817 77.9 % 15,449
Total operating segment gross profit 96,953 102,321
113,705 114,104 427,084
106,093 117,933 224,026
15.3 % 15,612 Gross margin %: Marketing Services 34.1
% 32.6 % 37.1 % 33.1 % 34.2 % 34.2 % 36.5 % 35.4 % Audience
Solutions 56.8 % 61.1 % 63.7 % 63.8 % 61.5 % 62.3 % 61.3 % 61.8 %
Connectivity 56.1 % 60.0 % 59.6 % 62.8 % 59.9 % 60.9 % 67.4 % 64.4
% Total operating segment gross margin 45.1 % 47.1 % 50.9 %
50.7 % 48.5 % 49.9 % 52.4 % 51.2 % Income (loss) from
operations: Marketing Services 20,145 19,837 21,127 19,513
80,622 19,784 21,874 41,657 10.3 % 2,037 Audience Solutions 25,096
29,972 34,572 33,598 123,238 28,542 29,497 58,039 (1.6 %) (475 )
Connectivity 291 1,663 1,877
1,502 5,333 (48 ) 5,715
5,667 243.7 % 4,052 Total operating segment
income from operations 45,532 51,472
57,576 54,613 209,193 48,277
57,086 105,364 10.9 % 5,614
Operating income (loss) margin %: Marketing Services
18.4 % 18.8 % 20.9 % 20.7 % 19.6 % 21.6 % 23.3 % 22.4 % Audience
Solutions 34.0 % 38.2 % 41.5 % 38.9 % 38.3 % 37.7 % 37.4 % 37.6 %
Connectivity 0.9 % 5.0 % 4.8 % 3.4 % 3.6 % -0.1 % 10.9 % 5.8 %
Total operating segment operating margin 21.2 % 23.7 % 25.8
% 24.3 % 23.8 % 22.7 % 25.3 % 24.1 % Some totals may not add
due to rounding.
ACXIOM CORPORATION AND
SUBSIDIARIESRECONCILIATION OF GAAP TO
NON-GAAP EPS GUIDANCE (1)(Unaudited)(Dollars in thousands,
except per share amounts)
For the year endingMarch 31, 2018 Low Range
High Range Earnings (loss) before income taxes (500 ) 5,000
Income taxes 6,000 8,500
Net loss (6,500 ) (3,500 ) Diluted loss per
share $ (0.08 ) $ (0.04 ) Excluded items: Purchased
intangible asset amortization 24,000 24,000 Non-cash stock
compensation 65,000 65,000 Gains, losses and other items, net 4,000
4,000 Separation and transformation costs 17,500
17,500 Total excluded items 110,500
110,500 Earnings before income taxes
and excluding items 110,000 115,500 Income taxes (2)
44,000 45,600 Non-GAAP net earnings
66,000 69,900 Non-GAAP diluted
earnings per share $ 0.80 $ 0.85 Basic
weighted average shares 79,500 79,500 Diluted weighted
average shares 82,500 82,500
(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.
(2)
Income taxes were calculated using an
effective non-GAAP tax rate of 39.5% to 40.0%. The difference
between our GAAP and Non-GAAP tax rates was due to the effect of
excluded items.
APPENDIX A
ACXIOM CORPORATIONQ2 FISCAL 2018 FINANCIAL
RESULTSEXPLANATION OF NON-GAAP MEASURES
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 per share, income 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 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.
Separation and
transformation costs: In previous years, we incurred
significant expenses in connection with the separation of our IT
Infrastructure Management ("ITO") and the subsequent transformation
of our remaining operating segments. This work enabled us to
transform our external reporting and provide investors with
enhanced transparency and more granular segment-level disclosures
in addition to facilitating the ITO disposition. In the prior and
current year, we are incurring expenses to further separate the
financial statements of our three operating segments, with
particular focus on segment-level balance sheets, and to evaluate
portfolio priorities. Our criteria for excluding separation and
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 expect to complete these current projects in this fiscal year.
We believe excluding these items from our non-GAAP financials
measures is useful for investors and provides meaningful
supplemental information.
Our non-GAAP financial schedules are:
Non-GAAP EPS and
Non-GAAP Income (loss) from Operations: Our non-GAAP
earnings per share and Non- GAAP income (loss) from operations
reflect adjustments as described above, as well as the related tax
effects where applicable.
Adjusted
EBITDA: Adjusted EBITDA is defined as net income (loss) 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171101006541/en/
Acxiom Investor RelationsLauren Dillard,
650-372-2242investor.relations@acxiom.comEACXM
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