Connectivity Revenue Up 45% Year-Over-Year –
Segment Margin Exceeds 10%
Repurchases 729,000 Shares in the
Quarter
Acxiom® (Nasdaq: ACXM), the data foundation for the world's
best marketers, today announced financial results for its third
quarter ended December 31, 2017.
This press release features multimedia. View
the full release here:
http://www.businesswire.com/news/home/20180206006192/en/
Financial Highlights
- Revenue: Total revenue was $235
million, up 5% compared to the third quarter of last year.
- Operating Income: GAAP operating
income was $11 million compared to operating income of $9 million
in the prior year. Non-GAAP operating income grew 14% to
approximately $38 million.
- Earnings per Share: GAAP diluted
earnings per share were $0.28 compared to earnings per share of
$0.01 in the prior year. Non-GAAP diluted earnings per share were
$0.31 compared to $0.24 a year ago. Current period results include
a $0.28 GAAP tax benefit and $0.04 non-GAAP tax benefit associated
with the recent tax reform legislation.
- Operating Cash Flow: Operating
cash flow was $44 million, down from $49 million in the prior
year.
- Free Cash Flow to Equity: Free
cash flow to equity was $27 million, roughly flat compared to the
prior year. For the trailing twelve-month period, free cash flow to
equity improved to $67 million, up from $53 million in the
comparable period.
Segment Results
$M
Connectivity
Q318
Q317
Y/Y Δ
Revenue
$ 56 $ 39 45%
Gross Profit
$ 38 $ 23 64% Gross Margin 68% 60% 810 bps
Segment Operating Income
$ 7 $ 2 263% Segment Margin 12% 5% 730 bps
Audience Solutions
Q318
Q317
Y/Y Δ
Revenue
$ 84 $ 83 1%
Gross Profit
$ 53 $ 53 (1%) Gross Margin 63% 64% (110 bps)
Segment Operating Income
$ 33 $ 35 (4%) Segment Margin 39% 41% (220 bps)
Marketing Services
Q318
Q317
Y/Y Δ
Revenue
$ 94 $ 101 (7%)
Gross Profit
$ 36 $ 37 (5%) Gross Margin 38% 37% 80 bps
Segment Operating Income
$ 22 $ 21 4% Segment Margin 23% 21% 250 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.
"We again delivered a solid quarter, led by the strong
performance of our Connectivity division," said Acxiom CEO Scott
Howe. "While revenue in Audience Solutions was softer than
expected, we continue to be pleased with our ongoing ability to
generate meaningful cash flows in both Marketing Services and
Audience Solutions. On a trailing-twelve month basis, these
businesses have generated over $200 million in segment income."
Recent Business Highlights
- LiveRamp® added over 50 new direct
clients during the quarter and added several new partner
integrations. Marketers can now onboard and activate their data
across a growing network of more than 550 publishers and marketing
technology providers.
- Audience Solutions announced the
launch of a new partnership with 4INFO to deliver
location-based audience segments, modeled by Acxiom. The
data-as-a-service solution combines 4INFO's Predictive Visitors™
audience segments with Acxiom data to create location-informed
targeting segments for digital campaigns.
- Marketing Services posted its second
largest bookings quarter since the Company divisionalized,
driven by several meaningful new logo and upsell wins.
- Acxiom received the 2018 Supplier of
the Year award from Walmart Services in recognition of its high
level of performance and service.
- Acxiom was recognized as a great
workplace by the independent analysts at Great Places to Work®.
For the second year in a row, Acxiom earned this credential based
on positive employee feedback in areas such as culture, rewards,
work-life balance, communication and leadership. In addition, Great
Places to Work and FORTUNE named Acxiom one of the 2018 Best
Workplaces in Technology.
- Acxiom repurchased 729,000 shares
for approximately $20 million during the quarter. Since the
inception of its share repurchase program in August 2011, Acxiom
has repurchased 18.4 million shares for $325 million, with $75
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 now expects to report:
- Revenue of between $910 million and
$915 million, an increase of approximately 6% year-over-year
after adjusting for the Acxiom Impact divestiture. This is reduced
from our previous guidance of between $920 million and $930 million
primarily as a result of lower expected revenue from Audience
Solutions.
- GAAP diluted earnings per share of
between $0.19 and $0.23. Included in this guidance is an
assumed tax reform benefit of approximately $0.28.
- Non-GAAP diluted earnings per share
of between $0.85 and $0.89, an increase of between 20% and 25%
year-over-year. Included in this guidance is an assumed tax reform
benefit of between $0.04 and $0.05. This guidance is unchanged on a
comparable basis.
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 SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in
thousands, except per share amounts) For the Three
Months Ended
December 31,
2017
2016
$Variance
%Variance
Revenues 234,871 223,312 11,559 5.2 % Cost of revenue
115,920 116,468 (548 ) (0.5 %) Gross profit 118,951
106,844 12,107 11.3 %
% Gross margin 50.6 %
47.8 % Operating expenses: Research and
development 23,318 20,950 2,368 11.3 % Sales and marketing 53,730
43,048 10,682 24.8 % General and administrative 30,886 31,620 (734
) (2.3 %) Gains, losses and other items, net (41 ) 2,111
(2,152 ) (101.9 %) Total operating expenses 107,893 97,729
10,164 10.4 % Income from operations 11,058 9,115
1,943 21.3 % %
Margin 4.7 % 4.1
% Other income (expense): Interest expense (2,566 ) (1,743 )
(823 ) (47.2 %) Other, net 419 35 384 1097.1 % Total
other expense (2,147 ) (1,708 ) (439 ) (25.7 %) Income
before income taxes 8,911 7,407 1,504 20.3 % Income taxes
(14,030 ) 6,334 (20,364 ) (321.5 %) Net earnings
22,941 1,073 21,868 2038.0 % Basic earnings
per share 0.29 0.01 0.28 2800.0 % Diluted
earnings per share 0.28 0.01 0.27 2700.0 %
Basic weighted average shares 79,043 77,507 Diluted weighted
average shares 81,869 79,851
ACXIOM CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited) (Dollars in thousands, except per share
amounts)
For the Nine Months EndedDecember 31,
2017 2016
$Variance
%Variance
Revenues 672,625 655,380 17,245 2.6 % Cost of revenue
344,952 359,392 (14,440 ) (4.0 %) Gross profit
327,673 295,988 31,685 10.7 %
% Gross margin 48.7
% 45.2 % Operating expenses: Research
and development 70,894 58,631 12,263 20.9 % Sales and marketing
152,288 118,243 34,045 28.8 % General and administrative 95,166
91,993 3,173 3.4 % Gains, losses and other items, net 3,521
2,724 797 29.3 % Total operating expenses 321,869
271,591 50,278 18.5 % Income from operations 5,804
24,397 (18,593 ) (76.2 %) %
Margin 0.9 %
3.7 % Other income (expense): Interest expense (7,432
) (5,244 ) (2,188 ) (41.7 %) Other, net (61 ) 135 (196 )
(145.5 %) Total other expense (7,493 ) (5,109 ) (2,384 ) (46.7 %)
Income (loss) before income taxes (1,689 ) 19,288 (20,977 )
(108.8 %) Income taxes (19,994 ) 7,099 (27,093 )
(381.6 %) Net earnings 18,305 12,189 6,116
50.2 % Basic earnings per share 0.23 0.16 0.07
43.8 % Diluted earnings per share 0.22 0.15
0.07 46.7 % Basic weighted average shares 78,983 77,475
Diluted weighted average shares 81,594 79,494
ACXIOM CORPORATION AND SUBSIDIARIES
RECONCILIATION OF
GAAP TO NON-GAAP EPS (1)
(Unaudited) (Dollars in thousands, except per share amounts)
For the Three Months EndedDecember 31,
For the Nine Months EndedDecember 31,
2017 2016 2017 2016 Earnings (loss) before income
taxes 8,911 7,407 (1,689 ) 19,288 Income taxes (14,030 )
6,334 (19,994 ) 7,099 Net earnings 22,941 1,073
18,305 12,189 Earnings per share: Basic 0.29
0.01 0.23 0.16 Diluted 0.28 0.01 0.22
0.15 Excluded items: Purchased intangible asset
amortization (cost of revenue) 5,971 4,621 17,958 12,588 Non-cash
stock compensation (cost of revenue and operating expenses) 15,919
13,427 46,707 33,955 Restructuring and merger charges (gains,
losses, and other) (41 ) 2,111 3,521 2,725 Separation and
transformation costs (general and administrative) 5,214
4,118 17,775 5,573 Total excluded items 27,063
24,277 85,961 54,841
Income before income taxes and excluding
items
35,974 31,684 84,272 74,129 Income taxes (2) 10,704
12,751 29,713 29,513 Non-GAAP net earnings 25,270
18,933 54,559 44,616 Non-GAAP earnings per
share: Basic 0.32 0.24 0.69 0.58
Diluted 0.31 0.24 0.67 0.56 Basic weighted
average shares 79,043 77,507 78,983 77,475
Diluted weighted average shares 81,869 79,851 81,594
79,494
(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 29.8% and 40.2% in the third quarter of fiscal 2018 and
2017, respectively, and 35.3% and 39.8% for the nine months ended
December 31, 2017 and 2016, respectively. The difference between
our GAAP and non-GAAP tax rates were primarily due to the Tax Cuts
and Jobs Act and net tax effects of the excluded items.
ACXIOM CORPORATION AND SUBSIDIARIES
RECONCILIATION OF
GAAP TO NON-GAAP INCOME FROM OPERATIONS (1)
(Unaudited) (Dollars in thousands)
For the Three Months EndedDecember 31,
For the Nine Months EndedDecember 31,
2017
2016 2017 2016 Income from operations 11,058
9,115 5,804 24,397 Excluded items: Purchased intangible
asset amortization (cost of revenue) 5,971 4,621 17,958 12,588
Non-cash stock compensation (cost of revenue and operating
expenses) 15,919 13,427 46,707 33,955 Restructuring and merger
charges (gains, losses, and other) (41 ) 2,111 3,521 2,725
Separation and transformation costs (general and administrative)
5,214 4,118 17,775 5,573 Total excluded items 27,063
24,277 85,961 54,841 Income from operations before
excluded items 38,121 33,392 91,765 79,238
(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 EndedDecember 31,
2017 2016
$Variance
%Variance
Revenues Marketing Services 94,457 101,177 (6,720 ) (6.6 %)
Audience Solutions 84,436 83,399 1,037 1.2 % Connectivity 55,978
38,736 17,242 44.5 %
Total operating segment revenues
234,871 223,312 11,559 5.2 % Gross profit Marketing Services
35,798 37,494 (1,696 ) (4.5 %) Audience Solutions 52,821 53,120
(299 ) (0.6 %) Connectivity 37,914 23,091 14,823 64.2
% Total operating segment gross profit 126,533 113,705 12,828 11.3
% Gross margin % Marketing Services 37.9 % 37.1 % Audience
Solutions 62.6 % 63.7 % Connectivity 67.7 % 59.6 % Total operating
segment gross margin 53.9 % 50.9 % Income from operations
Marketing Services 22,063 21,127 936 4.4 % Audience Solutions
33,112 34,572 (1,460 ) (4.2 %) Connectivity 6,808 1,877
4,931 262.7 % Total operating segment income from operations
61,983 57,576 4,407 7.7 % Operating income margin %
Marketing Services 23.4 % 20.9 % Audience Solutions 39.2 % 41.5 %
Connectivity 12.2 % 4.8 % Total operating segment operating margin
26.4 % 25.8 % Some totals may not add due to
rounding. ACXIOM CORPORATION AND
SUBSIDIARIES RESULTS BY SEGMENT (Unaudited) (Dollars in thousands)
For the Nine Months EndedDecember 31,
2017 2016
$Variance
%Variance
Revenues Marketing Services 280,093 316,571 (36,478 ) (11.5
%) Audience Solutions 238,984 235,669 3,315 1.4 % Connectivity
153,548 103,140 50,408 48.9 % Total operating segment
revenues 672,625 655,380 17,245 2.6 % Gross profit Marketing
Services 101,476 109,440 (7,964 ) (7.3 %) Audience Solutions
148,352 143,030 5,322 3.7 % Connectivity 100,730 60,509
40,221 66.5 % Total operating segment gross profit 350,558
312,979 37,579 12.0 % Gross margin % Marketing Services 36.2
% 34.6 % Audience Solutions 62.1 % 60.7 % Connectivity 65.6 % 58.7
% Total operating segment gross margin 52.1 % 47.8 % Income
from operations Marketing Services 63,721 61,109 2,612 4.3 %
Audience Solutions 91,151 89,640 1,511 1.7 % Connectivity 12,475
3,831 8,644 225.6 % Total operating segment income
from operations 167,347 154,580 12,767 8.3 % Operating
income margin % Marketing Services 22.7 % 19.3 % Audience Solutions
38.1 % 38.0 % Connectivity 8.1 % 3.7 % Total operating segment
operating margin 24.9 % 23.6 % Some totals may not
add due to rounding. ACXIOM CORPORATION
AND SUBSIDIARIES RECONCILIATION OF SEGMENT RESULTS (Unaudited)
(Dollars in thousands)
For the Three Months EndedDecember 31,
For the Nine Months EndedDecember 31,
2017 2016 2017 2016 Total operating segment
gross profit 126,533 113,705 350,558 312,979 Less: Purchased
intangible asset amortization 5,971 4,621 17,958 12,588 Non-cash
stock compensation 1,612 2,240 4,927 4,404 Gross
profit 118,951 106,844 327,673 295,988 Total
operating segment income from operations 61,983 57,576 167,347
154,580 Less: Corporate expenses 23,862 24,184 75,582 75,342
Purchased intangible asset amortization 5,971 4,621 17,958 12,588
Non-cash stock compensation 15,919 13,427 46,707 33,955
Restructuring charges (41 ) 2,111 3,521 2,725 Separation and
transformation costs 5,214 4,118 17,775 5,573 Income
from operations 11,058 9,115 5,804 24,397 Some
totals may not add due to rounding.
ACXIOM CORPORATION AND SUBSIDIARIES RECONCILIATION OF
ADJUSTED EBITDA (1) (Unaudited) (Dollars in thousands)
For the Three Months EndedDecember 31,
For the Nine Months EndedDecember 31,
2017 2016 2017 2016 Net earnings 22,941 1,073
18,305 12,189 Income taxes (14,030 ) 6,334 (19,994 ) 7,099
Other expense (2,147 ) (1,708 ) (7,493 ) (5,109 )
Income from operations 11,058 9,115 5,804 24,397
Depreciation and amortization 21,200 19,947 63,719
61,097 EBITDA 32,258 29,062
69,523 85,494 Other adjustments:
Non-cash stock compensation (cost of revenue and operating
expenses) 15,919 13,427 46,707 33,955 Gains, losses, and other
items, net (41 ) 2,111 3,521 2,725 Separation and transformation
costs (general and administrative) 5,214 4,118 17,775
5,573 Other adjustments 21,092 19,656
68,003 42,253 Adjusted EBITDA 53,350
48,718 137,526 127,747
(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 SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
December 31,2017
March 31,2017
$Variance
%Variance
(unaudited)
Assets
Current assets: Cash and cash equivalents 177,807 170,343 7,464 4.4
% Trade accounts receivable, net 155,634 142,768 12,866 9.0 %
Refundable income taxes 6,365 7,098 (733 ) (10.3 %) Other current
assets 42,357 48,310 (5,953 ) (12.3 %) Total
current assets 382,163 368,519 13,644 3.7 %
Property and equipment 483,355 476,281 7,074 1.5 % Less -
accumulated depreciation and amortization 330,316 320,307
10,009 3.1 % Property and equipment, net 153,039
155,974 (2,935 ) (1.9 %) Software, net of
accumulated amortization 37,489 47,638 (10,149 ) (21.3 %) Goodwill
592,827 592,731 96 0.0 % Purchased software licenses, net of
accumulated amortization 7,775 7,972 (197 ) (2.5 %) Deferred income
taxes 9,621 10,261 (640 ) (6.2 %) Other assets, net 43,576
51,443 (7,867 ) (15.3 %) 1,226,490 1,234,538
(8,048 ) (0.7 %)
Liabilities and
Stockholders' Equity
Current liabilities: Current installments of long-term debt 1,837
39,819 (37,982 ) (95.4 %) Trade accounts payable 46,211 40,208
6,003 14.9 % Accrued payroll and related expenses 36,592 53,238
(16,646 ) (31.3 %) Other accrued expenses 53,999 59,861 (5,862 )
(9.8 %) Deferred revenue 34,169 37,087 (2,918 ) (7.9
%) Total current liabilities 172,808 230,213
(57,405 ) (24.9 %) Long-term debt 227,943 189,241 38,702
20.5 % Deferred income taxes 34,300 58,374 (24,074 ) (41.2
%) Other liabilities 17,328 17,730 (402 ) (2.3 %)
Stockholders' equity: Common stock 13,552 13,288 264 2.0 %
Additional paid-in capital 1,216,565 1,154,429 62,136 5.4 %
Retained earnings 623,156 602,609 20,547 3.4 % Accumulated other
comprehensive income 9,826 7,999 1,827 22.8 % Treasury stock, at
cost (1,088,988 ) (1,039,345 ) (49,643 ) (4.8 %) Total
stockholders' equity 774,111 738,980 35,131 4.8 %
1,226,490 1,234,538 (8,048 ) (0.7 %)
ACXIOM CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands)
For the Three Months EndedDecember 31,
2017 2016 Cash flows from operating activities: Net earnings
22,941 1,073 Non-cash operating activities: Depreciation and
amortization 21,200 19,947 Loss (gain) on disposal or impairment of
assets 235 (78 ) Deferred income taxes (17,213 ) 4,557 Non-cash
stock compensation expense 15,911 13,427 Changes in operating
assets and liabilities: Accounts receivable (14,048 ) (4,597 )
Other assets 2,271 4,974 Accounts payable and other liabilities
8,610 10,172 Deferred revenue 3,723 (542 ) Net cash provided
by operating activities 43,630 48,933 Cash flows from
investing activities: Capitalized software (3,188 ) (3,296 )
Capital expenditures (12,432 ) (9,557 ) Data acquisition costs (198
) (196 ) Equity investments (1,000 ) - Net cash paid in acquisition
- (137,383 ) Net cash used in investing activities (16,818 )
(150,432 ) Cash flows from financing activities: Proceeds from debt
- 70,000 Payments of debt (582 ) (8,062 ) Sale of common stock, net
of stock acquired for withholding taxes 1,412 2,370 Excess tax
benefits from share-based compensation - 370 Acquisition of
treasury stock (19,665 ) - Net cash provided by (used in)
financing activities (18,835 ) 64,678 Effect of exchange
rate changes on cash 323 (738 ) Net change in cash
and cash equivalents 8,300 (37,559 ) Cash and cash equivalents at
beginning of period 169,507 175,409 Cash and cash
equivalents at end of period 177,807 137,850
Supplemental cash flow information: Cash paid during the
period for: Interest 1,950 1,339 Income taxes 328 4,599
Noncash investing and financing activities: Leasehold improvements
paid directly by lessor 978 - ACXIOM CORPORATION AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands)
For the Nine Months EndedDecember 31,
2017 2016 Cash flows from operating activities: Net earnings
18,305 12,189 Non-cash operating activities: Depreciation and
amortization 63,719 61,097 Loss (gain) on disposal or impairment of
assets 2,646 (520) Accelerated deferred debt costs 720 - Deferred
income taxes (20,451) (1,982) Non-cash stock compensation expense
46,707 33,955 Changes in operating assets and liabilities: Accounts
receivable (11,432) (6,161) Other assets (1,277) 8,653 Accounts
payable and other liabilities (18,232) (11,819) Deferred revenue
(4,314) (10,247) Net cash provided by operating activities 76,391
85,165 Cash flows from investing activities: Capitalized software
(10,332) (11,171) Capital expenditures (26,950) (30,096) Data
acquisition costs (621) (463) Equity investments (1,000) - Net cash
received in disposition 4,000 16,988 Net cash paid in acquisitions
- (137,383) Net cash used in investing activities (34,903)
(162,125) Cash flows from financing activities: Proceeds from debt
230,000 70,000 Payments of debt (226,732) (24,173) Fees for debt
refinancing (4,001) - Sale of common stock, net of stock acquired
for withholding taxes 5,107 9,670 Excess tax benefits from
share-based compensation - 1,785 Acquisition of treasury stock
(39,441) (30,542) Net cash provided by (used in) financing
activities (35,067) 26,740 Effect of exchange rate changes on cash
1,043 (1,559) Net change in cash and cash equivalents 7,464
(51,779) Cash and cash equivalents at beginning of period 170,343
189,629 Cash and cash equivalents at end of period 177,807 137,850
Supplemental cash flow information: Cash paid during
the period for: Interest 6,712 5,301 Income taxes 1,152 4,796
Noncash investing and financing activities: Leasehold
improvements paid directly by lessor 978 - ACXIOM
CORPORATION AND SUBSIDIARIES CALCULATION 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 12/31/17
YTD FY2018 Net Cash Provided by Operating Activities
750 35,482 48,933 30,665 115,830 4,951 27,810 43,630 76,391
Less (plus): Capitalized software (3,982 ) (3,893 ) (3,296 ) (3,306
) (14,477 ) (3,388 ) (3,756 ) (3,188 ) (10,332 ) Capital
expenditures (10,694 ) (9,845 ) (9,557 ) (17,897 ) (47,993 ) (6,888
) (7,630 ) (12,432 ) (26,950 ) Data acquisition costs (20 ) (247 )
(196 ) (418 ) (881 ) (190 ) (233 ) (198 ) (621 ) Required debt
payments (8,053 ) (8,058 ) (8,062 ) (8,070 ) (32,243 ) (572 ) (578
) (582 ) (1,732 ) 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 27,230 40,756
(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 SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited) (Dollars in thousands, except per share
amounts)
Q3 FY18 to Q3 FY17
06/30/16 09/30/16 12/31/16 03/31/17
FY2017 06/30/17 09/30/17 12/31/17 YTD FY2018
%
$ Revenues 214,801 217,267 223,312 224,867 880,247
212,514 225,240 234,871 672,625 5.2 % 11,559 Cost of revenue
122,819 120,105 116,468
118,294 477,686 113,960 115,072
115,920 344,952 -0.5 % (548 )
Gross profit 91,982 97,162 106,844 106,573 402,561 98,554 110,168
118,951 327,673 11.3 % 12,107
% Gross margin 42.8
% 44.7 % 47.8 % 47.4
% 45.7 % 46.4 % 48.9
% 50.6 % 48.7 % Operating
expenses Research and development 18,652 19,029 20,950 23,478
82,109 23,563 24,013 23,318 70,894 11.3 % 2,368 Sales and marketing
37,348 37,847 43,048 48,433 166,676 48,440 50,118 53,730 152,288
24.8 % 10,682 General and administrative 27,506 32,866 31,620
37,721 129,714 32,356 31,924 30,886 95,166 -2.3 % (734 ) Gains,
losses and other items, net 314 300
2,111 5,650 8,373 (98 )
3,660 (41 ) 3,521 -101.9 % (2,152 )
Total operating expenses 83,820 90,042 97,729 115,282 386,872
104,261 109,715 107,893 321,869 10.4 % 10,164 Income (loss)
from operations 8,162 7,120 9,115 (8,709 ) 15,689 (5,707 ) 453
11,058 5,804 21.3 % 1,943
% Margin 3.8 %
3.3 % 4.1 % -3.9 %
1.8 % -2.7 % 0.2 %
4.7 % 0.9 % Other income (expense)
Interest expense (1,812 ) (1,689 ) (1,743 ) (2,137 ) (7,381 )
(2,342 ) (2,524 ) (2,566 ) (7,432 ) -47.2 % (823 ) Other, net 307
(207 ) 35 199 334
(672 ) 192 419 (61 )
1096.6 % 384 Total other expense (1,505 ) (1,896 ) (1,708 ) (1,937
) (7,047 ) (3,014 ) (2,332 ) (2,147 ) (7,493 ) -25.7 % (439 )
Income (loss) before income taxes 6,657 5,224 7,407 (10,646
) 8,642 (8,721 ) (1,879 ) 8,911 (1,689 ) 20.3 % 1,504 Income taxes
2,681 (1,916 ) 6,334 (2,565 )
4,534 (7,421 ) 1,457 (14,030 )
(19,994 ) -321.5 % (20,364 ) Net earnings (loss)
3,976 7,140 1,073 (8,081 ) 4,108 (1,300 ) (3,336 ) 22,941 18,305
2038.2 % 21,868 Diluted earnings (loss) per share 0.05
0.09 0.01 (0.10 )
0.05 (0.02 ) (0.04 ) 0.28 0.22
1985.5 % 0.27 Some earnings (loss) per share amounts
may not add due to rounding. ACXIOM CORPORATION AND
SUBSIDIARIES RECONCILIATION 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 12/31/17 YTD FY2018
Earnings (loss) before income taxes 6,657 5,224 7,407
(10,646 ) 8,642 (8,721 ) (1,879 ) 8,911 (1,689 ) Income
taxes 2,681 (1,916 ) 6,334 (2,565 )
4,534 (7,421 ) 1,457 (14,030 )
(19,994 ) Net earnings (loss) 3,976 7,140
1,073 (8,081 ) 4,108 (1,300 )
(3,336 ) 22,941 18,305 Earnings
(loss) per share: Basic 0.05 0.09 0.01
(0.10 ) 0.05 (0.02 ) (0.04 )
0.29 0.23 Diluted 0.05 0.09
0.01 (0.10 ) 0.05 (0.02 )
(0.04 ) 0.28 0.22 Excluded
items: Purchased intangible asset amortization (cost of revenue)
4,077 3,890 4,621 6,056 18,644 5,966 6,021 5,971 17,958 Non-cash
stock compensation (cost of revenue and operating expenses) 8,590
11,938 13,427 15,190 49,145 15,031 15,757 15,919 46,707
Restructuring and merger charges (gains, losses, and other) 314 300
2,111 7,321 10,045 (98 ) 3,660 (41 ) 3,521 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 5,214
17,775 Total excluded items 12,981 17,583
24,277 29,962 84,803
28,018 30,880 27,063
85,961
Income before income taxes and excluding
items
19,638 22,807 31,684 19,315 93,444 19,297 29,001 35,974 84,272
Income taxes 7,852 8,910 12,751
7,139 36,652 7,720 11,289
10,704 29,713 Non-GAAP net
earnings 11,786 13,897 18,933 12,177
56,792 11,577 17,712
25,270 54,559 Non-GAAP earnings
per share: Basic 0.15 0.18 0.24
0.16 0.73 0.15 0.22
0.32 0.69 Diluted 0.15
0.18 0.24 0.15 0.71 0.14
0.22 0.31 0.67
Basic weighted average shares 77,471 77,446
77,507 78,012 77,609 78,672
79,235 79,043 78,983
Diluted weighted average shares 79,353 79,277
79,851 80,912 79,848
81,440 81,472 81,869
81,594 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 SUBSIDIARIES RESULTS BY SEGMENT
(Unaudited) (Dollars in thousands)
Q3 FY18 to Q3 FY17 06/30/16 09/30/16
12/31/16 03/31/17 FY2017 06/30/17
09/30/17 12/31/17 YTD FY2018 % $
Revenues: Marketing Services 109,715 105,679 101,177 94,269
410,840 91,594 94,042 94,457 280,093 (6.6 %) (6,720 ) Audience
Solutions 73,744 78,526 83,399 86,396 322,065 75,734 78,814 84,436
238,984 1.2 % 1,037 Connectivity 31,342 33,062
38,736 44,203 147,342
45,186 52,384 55,978
153,548 44.5 % 17,242 Total operating segment
revenues 214,801 217,267 223,312
224,867 880,247 212,514
225,240 234,871 672,625 5.2 %
11,559 Gross profit: Marketing Services 37,466 34,480
37,494 31,207 140,647 31,358 34,320 35,798 101,476 (4.5 %) (1,696 )
Audience Solutions 41,912 47,998 53,120 55,154 198,185 47,210
48,321 52,821 148,352 (0.6 %) (299 ) Connectivity 17,575
19,843 23,091 27,742
88,251 27,525 35,291
37,914 100,730 64.2 % 14,823 Total
operating segment gross profit 96,953 102,321
113,705 114,104 427,084
106,093 117,932 126,533
350,558 11.3 % 12,828 Gross margin %:
Marketing Services 34.1 % 32.6 % 37.1 % 33.1 % 34.2 % 34.2 % 36.5 %
37.9 % 36.2 % Audience Solutions 56.8 % 61.1 % 63.7 % 63.8 % 61.5 %
62.3 % 61.3 % 62.6 % 62.1 % Connectivity 56.1 % 60.0 % 59.6 % 62.8
% 59.9 % 60.9 % 67.4 % 67.7 % 65.6 % Total operating segment
gross margin 45.1 % 47.1 % 50.9 % 50.7 % 48.5 % 49.9 % 52.4 % 53.9
% 52.1 % Income (loss) from operations: Marketing
Services 20,145 19,837 21,127 19,513 80,622 19,784 21,874 22,063
63,721 4.4 % 936 Audience Solutions 25,096 29,972 34,572 33,598
123,238 28,542 29,497 33,112 91,151 (4.2 %) (1,460 ) Connectivity
291 1,663 1,877 1,502
5,333 (48 ) 5,715 6,808
12,475 262.8 % 4,932 Total operating
segment income from operations 45,532 51,472
57,576 54,613 209,193
48,277 57,086 61,983
167,347 7.7 % 4,407 Operating income (loss) margin %:
Marketing Services 18.4 % 18.8 % 20.9 % 20.7 % 19.6 % 21.6 %
23.3 % 23.4 % 22.7 % Audience Solutions 34.0 % 38.2 % 41.5 % 38.9 %
38.3 % 37.7 % 37.4 % 39.2 % 38.1 % Connectivity 0.9 % 5.0 % 4.8 %
3.4 % 3.6 % -0.1 % 10.9 % 12.2 % 8.1 % Total operating
segment operating margin 21.2 % 23.7 % 25.8 % 24.3 % 23.8 % 22.7 %
25.3 % 26.4 % 24.9 % Some totals may not add due to
rounding. ACXIOM CORPORATION AND SUBSIDIARIES
RECONCILIATION 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 Income (loss) before income
taxes (3,000 ) 2,500 Income taxes (benefit) (18,500 )
(16,500 ) Net earnings 15,500
19,000 Diluted earnings per share $ 0.19 $
0.23 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 related costs 20,000 20,000
Total excluded items 113,000 113,000
Income before income taxes and excluding items 110,000
115,500 Income taxes (2) 40,000 42,000
Non-GAAP net earnings 70,000
73,500 Non-GAAP diluted earnings per share $ 0.85
$ 0.89 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 approximately 36.5%. The difference between our GAAP and
Non-GAAP tax rates was due to the effect of excluded items and the
benefit of remeasuring net deferred tax liabilites due to enactment
of new legislation.
APPENDIX A ACXIOM CORPORATION Q3 FISCAL 2018 FINANCIAL
RESULTS EXPLANATION 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 substantially completed
these projects during the third quarter of fiscal year 2018.
Beginning in the fourth quarter of fiscal 2018, we will likely
incur transaction analysis and support expenses related to the
Company's announced evaluation of strategic options for its
Marketing Solutions business. Our criteria for excluding these
transaction related costs are the same. We believe excluding these
items from our non-GAAP financial measures is useful for investors
and provides meaningful supplemental information.
Our non-GAAP financial schedules are:
Non-GAAP EPS and Non-GAAP Income from
Operations: Our non-GAAP earnings per share and Non-GAAP income
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 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/20180206006192/en/
Acxiom Investor RelationsLauren Dillard,
650-372-2242investor.relations@acxiom.comEACXM
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