ACXM
$28.77
Acxiom Cp
$.41
1.45%
Earnings Details
3rd Quarter December 2017
Tuesday, February 06, 2018 4:05:01 PM
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Summary

Acxiom Lowers Revenue Guidance

Acxiom Cp (ACXM) reported 3rd Quarter December 2017 earnings of $0.17 per share on revenue of $234.9 million. The consensus earnings estimate was $0.11 per share on revenue of $238.7 million. Revenue grew 5.2% on a year-over-year basis.

The company said it expects fiscal 2018 non-GAAP earnings of $0.85 to $0.89 per share, including a tax benefit of $0.04 to $0.05 per share, and now expects revenue of $910.0 million to $915.0 million. The company's previous guidance was revenue of $920.0 million to $930.0 million and the current consensus earnings estimate is $0.84 per share on revenue of $924.2 million for the year ending March 31, 2018.

Acxiom Corp is an enterprise data, analytics and software-as-a-service company. It serves clients from locations in the United States, Europe, South America and the Asia-Pacific region.

Results
Reported Earnings
$0.17
Earnings Whisper
-
Consensus Estimate
$0.11
Reported Revenue
$234.9 Mil
Revenue Estimate
$238.7 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Acxiom Announces Third Quarter Results

Repurchases 729,000 Shares in the Quarter

Acxiom(R) (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 D
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 D
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 D
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(R) 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(TM) 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(R). 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 Ended
December 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 Ended
For the Nine Months Ended
December 31,
December 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
35,974
31,684
84,272
74,129
Income before income taxes and excluding items
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 Ended
For the Nine Months Ended
December 31,
December 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 Ended
December 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 %
234,871
223,312
11,559
5.2 %
Total operating segment revenues
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 Ended
December 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 Ended
For the Nine Months Ended
December 31,
December 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 Ended
For the Nine Months Ended
December 31,
December 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,
March 31,
$
%
2017
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 Ended
December 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 Ended
December 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
19,638
22,807
31,684
19,315
93,444
19,297
29,001
35,974
84,272
Income before income taxes and excluding items
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 ending
March 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.

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SOURCE: Acxiom Corporation

Acxiom Investor Relations
Lauren Dillard, 650-372-2242
investor.relations@acxiom.com
EACXM