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Acxiom Announces Third Quarter Results

Posted: February 4, 2016 9:57 pm (UTC)


Revenue Grows 6% Year-over-Year

Connectivity Revenue Run-Rate Exceeds $100 Million

Company Raises Fiscal 2016 Full Year Guidance

Acxiom Announces Third Quarter Results

LITTLE ROCK, Ark. — (BUSINESS WIRE) —

Acxiom® (Nasdaq: ACXM), an enterprise data, analytics and software-as-a-service company, today announced financial results for its third quarter ended December 31, 2015.

This Smart News Release features multimedia. View the full release here: http://www.businesswire.com/news/home/20160204006464/en/

Financial Highlights

  • Revenue: Total revenue was $221 million, up approximately 6% compared to the third quarter of last year. Excluding an unfavorable currency impact of approximately $2 million, revenue was up 7%. US revenue of $199 million was up 8% year-over-year.
  • Operating Income (Loss): GAAP operating loss from continuing operations improved to nearly break-even compared to a loss of $2 million in the prior year. Non-GAAP operating income from continuing operations improved 7% to approximately $22 million.
  • Earnings (Loss) per Share: GAAP loss per share from continuing operations was $0.01 compared to earnings per share of $0.00 in the prior year. Non-GAAP diluted earnings per share from continuing operations were $0.18, up from $0.17 a year ago.
  • Operating Cash Flow: Operating cash flow from continuing operations was $37 million, up 13% from $33 million last year.
  • Free Cash Flow to Equity: Free cash flow to equity was $14 million, up 52% from $9 million in the prior year. This measure excludes cash flows related to the IT Infrastructure Management divestiture.

Segment Results

Marketing Services

  • Revenue was $116 million, up 1% compared to the third quarter of last year. US revenue of $106 million was up 3% year-over-year.
  • Gross margin decreased from 36% to 33%.
  • Operating income was $20 million, down 7% compared to the prior year.
  • The declines in gross margin and operating income were driven by infrastructure investments in the US.

Audience Solutions

  • Revenue was $77 million, up 1% compared to the prior year period. US revenue of $66 million was up 3% year-over-year.
  • Gross margin improved from 52% to 59%.
  • Operating income was $31 million, up 6% compared to the prior year.
  • The improvements in gross margin and operating income were driven by revenue growth and operational cost efficiencies, partially offset by investments in R&D and sales and marketing.

Connectivity

  • Revenue was $28 million, up approximately 59% compared to the third quarter of last year, driven by continued onboarding momentum. Connectivity exited the quarter with a $100 million annualized revenue run-rate.
  • Gross margin improved from 33% to 57%.
  • Operating loss improved by $7 million to a slight loss of roughly $1 million.
  • The improvements in gross margin and operating results were driven by growth in subscriptions and royalties, partially offset by on-going investments to support growth.

Non-GAAP results exclude items including non-cash compensation, purchased intangible asset amortization, restructuring charges and separation and transformation costs. A reconciliation between GAAP and non-GAAP results is attached to this release.

“We are pleased to report a solid quarter highlighted by new customer additions and revenue growth across all of our divisions,” said Acxiom CEO Scott Howe. “Our divisional structure is beginning to pay dividends, and the investments we are making against our long-term strategy continue to build the foundation for sustainable future growth.”

Business Highlights

  • Connectivity added over 20 new customers during the quarter and added 25 new partner integrations. Marketers can now onboard and distribute their data to a growing network of more than 275 marketing platforms and data providers.
  • Acxiom powered $122 million of gross media spend in the third quarter, up 66% year-over-year. On a trailing twelve-month basis, Acxiom powered $317 million of gross media spend, up 107% over the comparable period.
  • Acxiom expanded its addressable TV offering with the acquisition of the Audience Interconnect data platform from Allant Group. This capacity provides partners with the leading ability to reach targeted US households via data-driven ad campaigns. Ad sellers, agencies and brands can activate data across an expanded ecosystem that includes TV partners representing nearly 50 million addressable homes and over 100 million individuals.
  • Dennis Self was appointed President and General Manager of Marketing Services. Self has held several mission critical roles within Acxiom, including senior vice president of delivery for Marketing Services, where he led the transformation and modernization of the company’s client delivery function. Prior to that, he served as the company’s chief information officer and senior vice president of technical operations.
  • Acxiom repurchased 463,000 shares for approximately $10 million during the quarter. Since inception of the share repurchase program in August 2011, Acxiom has repurchased 14.8 million shares for $240 million.

Financial Outlook

Acxiom’s guidance excludes the impact of non-cash compensation, purchased intangible asset amortization, restructuring charges and separation and transformation costs. Estimates for fiscal 2016 have been raised as follows:

  • Revenue from continuing operations in the range of $835 million to $840 million as compared to Acxiom’s previous estimate of $815 million to $840 million
  • Non-GAAP diluted earnings per share from continuing operations to be as much as $0.54 as compared to the company’s previous estimate of between $0.45 and $0.50

Conference Call

Acxiom will hold a conference call at 4:00 p.m. CT today to further discuss this information. Interested parties are invited to listen to the call, which will be broadcast via the Internet at investors.acxiom.com. A slide presentation will be referenced during the call and can be accessed here.

About Acxiom

Acxiom is an enterprise data, analytics and software-as-a-service company that uniquely fuses trust, experience and scale to fuel data-driven results. For over 40 years, Acxiom has been an innovator in harnessing the most important sources and uses of data to strengthen connections between people, businesses and their partners. Utilizing a channel and media neutral approach, we leverage cutting-edge, data-oriented products and services to maximize customer value. Every week, Acxiom powers more than a trillion transactions that enable better living for people and better results for our 7,000+ global clients. For more information about Acxiom, visit Acxiom.com.

Forward-Looking Statements

This release and today’s conference call contains forward-looking statements including, without limitation, statements regarding expected levels of revenue and earnings per share. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially. The following are factors, among others, that could cause actual results to differ materially from these forward-looking statements: the possibility that the expected revenue from the divisions may not be realized within the expected timeframe; the possibility that certain contracts may not generate the anticipated revenue or profitability or may not be closed within the anticipated time frames; the possibility that significant customers may experience extreme, severe economic difficulty or otherwise reduce or cancel the amount of business they do with us; the possibility that we will not successfully complete customer contract requirements on time or meet the service levels specified in the contracts, which may result in contract penalties or lost revenue; the possibility that data suppliers might withdraw data from us, leading to our inability to provide certain products and services to our clients; the possibility that we may not be able to attract, retain or motivate qualified technical, sales and leadership associates, or that we may lose key associates; the possibility that we may not be able to adequately adapt to rapidly changing computing environments, technologies and marketing practices; the possibility that we will not be able to continue to receive credit upon satisfactory terms and conditions; the possibility that negative changes in economic conditions in general or other conditions might lead to a reduction in demand for our products and services; the possibility that there will be changes in consumer or business information industries and markets that negatively impact the company; the possibility that the historical seasonality of our business may change; the possibility that we will not be able to achieve anticipated cost reductions and avoid unanticipated costs; the possibility that the fair value of certain of our assets may not be equal to the carrying value of those assets now or in future time periods; the possibility that unusual charges may be incurred; the possibility that changes in accounting pronouncements may occur and may impact these forward-looking statements; the possibility that we may encounter difficulties when entering new markets or industries; the possibility that we could experience loss of data center capacity or interruption of telecommunication links; the possibility that new laws may be enacted which limit our ability to provide services to our clients and/or which limit the use of data; and other risks and uncertainties, including those detailed from time to time in our current and periodic reports filed with the Securities and Exchange Commission, including our current reports on Form 8-K, quarterly reports on Form 10-Q and annual reports on Form 10-K, particularly the discussion under the caption “Item 1A, RISK FACTORS” in our Annual Report on Form 10-K for the year ended March 31, 2015, which was filed with the Securities and Exchange Commission on May 27, 2015.

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

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

Acxiom is a registered trademark of Acxiom Corporation.

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

       
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings (loss) per share)
 
 
For the Three Months Ended
December 31,
$ %
2015 2014 Variance Variance
 
Revenues 221,193 208,246 12,947 6.2 %
 
Cost of revenue 125,735   125,807   (72 ) (0.1 %)
Gross profit 95,458 82,439 13,019 15.8 %
% Gross margin 43.2 % 39.6 %
 
Operating expenses:
Research and development 18,400 18,973 (573 ) (3.0 %)
Sales and marketing 36,581 30,554 6,027 19.7 %
General and administrative 36,793 31,821 4,972 15.6 %
Gains, losses and other items, net 4,058   3,381   677 20.0 %
Total operating expenses 95,832   84,729   11,103 13.1 %
 
Loss from operations (374 ) (2,290 ) 1,916 83.7 %
% Margin -0.2 % -1.1 %
Other income (expense):
Interest expense (1,948 ) (2,005 ) 57 2.8 %
Other, net 303   35   268 765.7 %
Total other expense (1,645 ) (1,970 ) 325 16.5 %
 
Loss from continuing operations before income taxes (2,019 ) (4,260 ) 2,241 52.6 %
 
Income taxes (1,580 ) (4,597 ) 3,017 65.6 %
 
Net earnings (loss) from continuing operations (439 ) 337 (776 ) (230.3 %)
 
Earnings (loss) from discontinued operations, net of tax (971 ) 3,819   (4,790 ) (125.4 %)
 
Net earnings (loss) (1,410 ) 4,156   (5,566 ) (133.9 %)
 
Basic earnings (loss) per share:
Net earnings (loss) from continuing operations (0.01 ) 0.00 (0.01 ) (228.9 %)
Net earnings (loss) from discontinued operations (0.01 ) 0.05   (0.06 ) (125.2 %)
Net earnings (loss) (0.02 ) 0.05   (0.07 ) (133.6 %)
 
 
Diluted earnings (loss) per share:
Net earnings (loss) from continuing operations (0.01 ) 0.00 (0.01 ) (231.1 %)
Net earnings (loss) from discontinued operations (0.01 ) 0.05   (0.06 ) (125.6 %)
Net earnings (loss) (0.02 ) 0.05   (0.07 ) (134.1 %)
 
Some earnings (loss) per share amounts may not add due to rounding
 
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings (loss) per share)
       
 
For the Nine Months Ended
December 31,
$ %
2015 2014 Variance Variance
 
Revenues 625,433 599,177 26,256 4.4 %
 
Cost of revenue 364,756   366,329   (1,573 ) (0.4 %)
Gross profit 260,677 232,848 27,829 12.0 %
% Gross margin 41.7 % 38.9 %
 
Operating expenses:
Research and development 57,489 55,121 2,368 4.3 %
Sales and marketing 100,334 85,410 14,924 17.5 %
General and administrative 100,055 102,794 (2,739 ) (2.7 %)
Gains, losses and other items, net 8,098   11,342   (3,244 ) (28.6 %)
Total operating expenses 265,976   254,667   11,309 4.4 %
 
Loss from operations (5,299 ) (21,819 ) 16,520 75.7 %
% Margin -0.8 % -3.6 %
Other income (expense):
Interest expense (5,789 ) (5,774 ) (15 ) (0.3 %)
Other, net 666   (234 ) 900 384.6 %
Total other expense (5,123 ) (6,008 ) 885 14.7 %
 
Loss from continuing operations before income taxes (10,422 ) (27,827 ) 17,405 62.5 %
 
Income taxes (3,456 ) (10,322 ) 6,866 66.5 %
 
Net loss from continuing operations (6,966 ) (17,505 ) 10,539 60.2 %
 
Earnings from discontinued operations, net of tax 15,240   12,513   2,727 21.8 %
 
Net earnings (loss) 8,274   (4,992 ) 13,266 265.7 %
 
Basic earnings (loss) per share:
Net loss from continuing operations (0.09 ) (0.23 ) 0.14 60.7 %
Net earnings from discontinued operations 0.20   0.16   0.03 20.4 %
Net earnings (loss) 0.11   (0.06 ) 0.17 263.8 %
 
 
Diluted earnings (loss) per share:
Net loss from continuing operations (0.09 ) (0.23 ) 0.14 60.7 %
Net earnings from discontinued operations 0.20   0.16   0.03 20.4 %
Net earnings (loss) 0.11   (0.06 ) 0.17 263.8 %
 
Some earnings (loss) per share amounts may not add due to rounding
 
ACXIOM CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP EPS
(Unaudited)
(Dollars in thousands, except earnings (loss) per share)
       
For the Three Months Ended For the Nine Months Ended
December 31, December 31,
2015 2014 2015 2014
 
 
Loss from continuing operations before income taxes (2,019 ) (4,260 ) (10,422 ) (27,827 )
 
Income taxes (1,580 ) (4,597 ) (3,456 ) (10,322 )
 
Net loss from continuing operations (439 ) 337 (6,966 ) (17,505 )
 
Earnings from discontinued operations, net of tax (971 ) 3,819   15,240   12,513  
 
Net earnings (loss) (1,410 ) 4,156   8,274   (4,992 )
 
Earnings (loss) per share:
 
Basic (0.02 ) 0.05   0.11   (0.06 )
 
Diluted (0.02 ) 0.05   0.11   (0.06 )
 
Excluded items:
Purchased intangible asset amortization (cost of revenue) 3,754 3,783 11,262 7,673
Non-cash stock compensation (cost of revenue and operating expenses) 8,046 8,450 23,529 20,100
Restructuring charges and other adjustments (gains, losses, and other) 4,058 3,381 8,098 11,342
Separation and transformation costs (general and administrative) 6,628 7,417 16,140 26,246
Accelerated amortization (cost of revenue) 78     1,598    
 
Total excluded items, continuing operations 22,564   23,031   60,627   65,361  
 
Earnings from continuing operations before income taxes
and excluding items 20,545 18,771 50,205 37,534
 
Income taxes 6,399   5,755   17,194   13,029  
 
Non-GAAP net earnings 14,146   13,016   33,011   24,505  
 
Non-GAAP earnings per share:
 
Basic 0.18   0.17   0.42   0.32  
 
Diluted 0.18   0.17   0.42   0.31  
 
Basic weighted average shares 77,831   77,039   77,903   76,998  
 
Diluted weighted average shares 79,346   78,302   79,336   78,317  
 
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF EARNINGS (LOSS) PER SHARE
(Unaudited)
(In thousands, except earnings (loss) per share)
   
 
For the Three Months Ended
 
December 31, December 31,
2015 2014
 
Basic earnings per share from continuing operations:
Numerator – net earnings (loss) (439 ) 337
 
Denominator – weighted-average shares outstanding 77,831   77,039
Basic earnings (loss) per share (0.01 ) 0.00
 
Diluted earnings per share from continuing operations:
Numerator – net earnings (loss) (439 ) 337
 
Denominator – weighted-average shares outstanding 77,831 77,039
Dilutive effect of common stock options, warrants and restricted stock   1,263
77,831   78,302
 
Diluted earnings (loss) per share (0.01 ) 0.00
 
Basic earnings (loss) per share from discontinued operations:
Numerator – net earnings (loss) (971 ) 3,819
 
Denominator – weighted-average shares outstanding 77,831   77,039
Basic earnings (loss) per share (0.01 ) 0.05
 
Diluted earnings (loss) per share from discontinued operations:
Numerator – net earnings (loss) (971 ) 3,819
 
Denominator – weighted-average shares outstanding 77,831 77,039
Dilutive effect of common stock options, warrants and restricted stock   1,263
77,831   78,302
 
Diluted earnings (loss) per share (0.01 ) 0.05
 
Basic earnings (loss) per share:
Numerator – net earnings (loss) (1,410 ) 4,156
 
Denominator – weighted-average shares outstanding 77,831   77,039
Basic earnings (loss) per share (0.02 ) 0.05
 
Diluted earnings (loss) per share:
Numerator – net earnings (loss) (1,410 ) 4,156
 
Denominator – weighted-average shares outstanding 77,831 77,039
Dilutive effect of common stock options, warrants, and restricted stock   1,263
77,831   78,302
 
Diluted earnings (loss) per share (0.02 ) 0.05
 
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF EARNINGS (LOSS) PER SHARE
(Unaudited)
(In thousands, except earnings (loss) per share)
   
 
For the Nine Months Ended
 
December 31, December 31,
2015 2014
 
Basic loss per share from continuing operations:
Numerator – net loss (6,966 ) (17,505 )
 
Denominator – weighted-average shares outstanding 77,903   76,998  
Basic loss per share (0.09 ) (0.23 )
 
Diluted loss per share from continuing operations:
Numerator – net loss (6,966 ) (17,505 )
 
Denominator – weighted-average shares outstanding 77,903   76,998  
Diluted loss per share (0.09 ) (0.23 )
 
Basic earnings per share from discontinued operations:
Numerator – net earnings 15,240 12,513
 
Denominator – weighted-average shares outstanding 77,903   76,998  
Basic earnings per share 0.20   0.16  
 
Diluted earnings per share from discontinued operations:
Numerator – net earnings 15,240 12,513
 
Denominator – weighted-average shares outstanding 77,903   76,998  
Diluted earnings per share 0.20   0.16  
 
Diluted loss per share:
Numerator – net earnings (loss) 8,274 (4,992 )
 
Denominator – weighted-average shares outstanding 77,903   76,998  
Diluted earnings (loss) per share 0.11   (0.06 )
 
ACXIOM CORPORATION AND SUBSIDIARIES
RESULTS BY SEGMENT
(Unaudited)
(Dollars in thousands)
       
 
For the Three Months Ended
December 31,
$ %
2015 2014 Variance Variance
 
Revenues
Marketing Services 115,725 114,403 1,322 1.2 %
Audience Solutions 77,046 75,933 1,113 1.5 %
Connectivity 28,422   17,910   10,512 58.7 %
Total operating segment revenues 221,193 208,246 12,947 6.2 %
 
Gross profit
Marketing Services 38,561 41,572 (3,011 ) (7.2 %)
Audience Solutions 45,265 39,215 6,050 15.4 %
Connectivity 16,130   5,858   10,272 175.3 %
Total operating segment gross profit 99,956 86,645 13,311 15.4 %
 
Gross profit margin %
Marketing Services 33.3 % 36.3 %
Audience Solutions 58.8 % 51.6 %
Connectivity 56.8 % 32.7 %
Total operating segment gross margin 45.2 % 41.6 %
 
Income (loss) from operations
Marketing Services 20,309 21,859 (1,550 ) (7.1 %)
Audience Solutions 30,723 28,919 1,804 6.2 %
Connectivity (1,015 ) (7,802 ) 6,787 87.0 %
Total operating segment income from operations 50,017 42,976 7,041 16.4 %
 
Operating income (loss) margin %
Marketing Services 17.5 % 19.1 %
Audience Solutions 39.9 % 38.1 %
Connectivity -3.6 % -43.6 %
Total operating segment operating margin 22.6 % 20.6 %
 
ACXIOM CORPORATION AND SUBSIDIARIES
RESULTS BY SEGMENT
(Unaudited)
(Dollars in thousands)
       
 
For the Nine Months Ended
December 31,
$ %
2015 2014 Variance Variance
 
Revenues
Marketing Services 336,430 336,441 (11 ) (0.0 %)
Audience Solutions 217,718 227,020 (9,302 ) (4.1 %)
Connectivity 71,285   35,716   35,569 99.6 %
Total operating segment revenues 625,433 599,177 26,256 4.4 %
 
Gross profit
Marketing Services 112,139 120,275 (8,136 ) (6.8 %)
Audience Solutions 121,258 116,245 5,013 4.3 %
Connectivity 41,582   5,088   36,494 717.3 %
Total operating segment gross profit 274,979 241,608 33,371 13.8 %
 
Gross profit margin %
Marketing Services 33.3 % 35.7 %
Audience Solutions 55.7 % 51.2 %
Connectivity 58.3 % 14.2 %
Total operating segment gross margin 44.0 % 40.3 %
 
Income (loss) from operations
Marketing Services 55,070 63,263 (8,193 ) (13.0 %)
Audience Solutions 80,000 84,484 (4,484 ) (5.3 %)
Connectivity (2,874 ) (34,043 ) 31,169 91.6 %
Total operating segment income from operations 132,196 113,704 18,492 16.3 %
 
Operating income (loss) margin %
Marketing Services 16.4 % 18.8 %
Audience Solutions 36.7 % 37.2 %
Connectivity -4.0 % -95.3 %
Total operating segment operating margin 21.1 % 19.0 %
 
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,
 
2015 2014 2015 2014
 
Total operating segment gross profit 99,956 86,645 274,979 241,608
 
Less:
Purchased intangible asset amortization 3,754 3,783 11,262 7,673
Non-cash stock compensation 666 423 1,442 1,087
Accelerated amortization 78     1,598    
 
Gross profit 95,458   82,439   260,677   232,848  
 
 
Total operating segment income from operations 50,017 42,976 132,196 113,704
 
Less:
Corporate expenses 27,827 22,235 76,868 70,162
Purchased intangible asset amortization 3,754 3,783 11,262 7,673
Non-cash stock compensation 8,046 8,450 23,529 20,100
Gains, losses and other items, net 4,058 3,381 8,098 11,342
Separation and transformation costs 6,628 7,417 16,140 26,246
Accelerated amortization 78     1,598    
 
Loss from operations (374 ) (2,290 ) (5,299 ) (21,819 )
 
       
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
 
December 31, March 31, $ %
2015 2015 Variance Variance

Assets

Current assets:
Cash and cash equivalents 186,390 141,010 45,380 32.2 %
Trade accounts receivable, net 140,821 126,896 13,925 11.0 %
Deferred income taxes 16,475 25,610 (9,135 ) (35.7 %)
Refundable income taxes 6,899 5,239 1,660 31.7 %
Restricted cash held in escrow 31,000 (31,000 ) (100.0 %)
Other current assets 35,918 34,975 943 2.7 %
Assets of discontinued operations   172,284   (172,284 ) (100.0 %)
 
Total current assets 386,503   537,014   (150,511 ) (28.0 %)
 
Property and equipment 520,262 505,721 14,541 2.9 %
Less – accumulated depreciation and amortization 341,868   329,467   12,401 3.8 %
 
Property and equipment, net 178,394   176,254   2,140 1.2 %
 
Software, net of accumulated amortization 58,947 68,962 (10,015 ) (14.5 %)
Goodwill 497,628 497,362 266 0.1 %
Purchased software licenses, net of accumulated amortization 10,043 9,551 492 5.2 %
Other assets, net 30,049   33,281   (3,232 ) (9.7 %)
 
1,161,564   1,322,424   (160,860 ) (12.2 %)
 

Liabilities and Stockholders’ Equity

Current liabilities:
Current installments of long-term debt 32,223 32,232 (9 ) (0.0 %)
Trade accounts payable 30,690 30,094 596 2.0 %
Accrued payroll and related expenses 46,662 36,659 10,003 27.3 %
Other accrued expenses 49,705 62,754 (13,049 ) (20.8 %)
Acquisition escrow payable 31,000 (31,000 ) (100.0 %)
Deferred revenue 42,681 33,620 9,061 27.0 %
Liabilities of discontinued operations 4,065   57,433   (53,368 ) (92.9 %)
 
Total current liabilities 206,026   283,792   (77,766 ) (27.4 %)
 
Long-term debt 168,681 247,855 (79,174 ) (31.9 %)
 
Deferred income taxes 66,709 80,675 (13,966 ) (17.3 %)
 
Other liabilities 15,705 6,845 8,860 129.4 %
 
Stockholders’ equity:
Common stock 12,988 12,794 194 1.5 %
Additional paid-in capital 1,071,145 1,034,526 36,619 3.5 %
Retained earnings 600,072 591,798 8,274 1.4 %
Accumulated other comprehensive income 8,141 9,413 (1,272 ) (13.5 %)
Treasury stock, at cost (987,903 ) (945,274 ) (42,629 ) (4.5 %)
Total stockholders’ equity 704,443   703,257   1,186 0.2 %
 
1,161,564   1,322,424   (160,860 ) (12.2 %)
 
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
   
For the Three Months Ended
December 31,
     
2015   2014
 
Cash flows from operating activities:
Net earnings (loss) (1,410 ) 4,156
Loss (earnings) from discontinued operations, net of tax 971 (3,819 )
Non-cash operating activities:
Depreciation and amortization 20,811 20,510
Loss (gain) on disposal or impairment of assets 48 (68 )
Deferred income taxes (5,140 ) 4,002
Non-cash stock compensation expense 8,046 8,450
Changes in operating assets and liabilities:
Accounts receivable (5,957 ) (978 )
Other assets (622 ) (4,064 )
Accounts payable and other liabilities 13,518 1,411
Deferred revenue 6,753   3,290  
Net cash provided by operating activities 37,018   32,890  
Cash flows from investing activities:
Capitalized software (3,627 ) (4,408 )
Capital expenditures (10,702 ) (10,212 )
Data acquisition costs (424 ) (394 )
Net cash paid in acquisitions (5,386 )  
Net cash used in investing activities (20,139 ) (15,014 )
Cash flows from financing activities:
Payments of debt (8,045 ) (8,498 )
Sale of common stock, net of stock acquired for withholding taxes 2,241 1,680
Excess tax benefits from stock-based compensation 2,574
Acquisition of treasury stock (10,274 )  
Net cash used in financing activities (13,504 ) (6,818 )
Cash flows from discontinued operations:
From operating activities 562 9,916
From investing activities 1,675 (2,920 )
From financing activities   (459 )
Net cash provided by discontinued operations 2,237   6,537  
Effect of exchange rate changes on cash (167 ) (512 )
 
Net change in cash and cash equivalents 5,445 17,083
Cash and cash equivalents at beginning of period 180,945   109,808  
Cash and cash equivalents at end of period 186,390   126,891  
 
Supplemental cash flow information:
Cash paid during the period for:
Interest 1,883 809
Income taxes 738 182
Payments on capital leases and installment payment arrangements 930
Other debt payments, excluding line of credit 8,045 8,027
 
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
   
For the Nine Months Ended
December 31,
     
2015   2014
 
Cash flows from operating activities:
Net earnings (loss) 8,274 (4,992 )
Earnings from discontinued operations, net of tax (15,240 ) (12,513 )
Non-cash operating activities:
Depreciation and amortization 63,221 54,687
Loss (gain) on disposal and impairment of goodwill and other assets 938 (275 )
Deferred income taxes (4,856 ) (2,020 )
Non-cash stock compensation expense 23,529 20,100
Changes in operating assets and liabilities:
Accounts receivable (15,238 ) 9,573
Other assets (1,820 ) 1,409
Deferred costs (823 ) (316 )
Accounts payable and other liabilities 3,182 (26,679 )
Deferred revenue 9,205   (7,215 )
Net cash provided by operating activities 70,372   31,759  
Cash flows from investing activities:
Capitalized software (10,360 ) (14,985 )
Capital expenditures (33,822 ) (42,352 )
Data acquisition costs (1,135 ) (1,497 )
Net cash paid in acquisitions (5,386 ) (265,672 )
Net cash used in investing activities (50,703 ) (324,506 )
Cash flows from financing activities:
Payments of debt (79,183 ) (18,254 )
Sale of common stock, net of stock acquired for withholding taxes 6,343 (807 )
Excess tax benefits from stock-based compensation 2,022
Acquisition of treasury stock (37,535 ) (9,868 )
Net cash used in financing activities (108,353 ) (28,929 )
Cash flows from discontinued operations:
From operating activities 10,277 38,773
From investing activities 124,506 (6,250 )
From financing activities (206 ) (1,561 )
Net cash provided by discontinued operations 134,577   30,962  
Effect of exchange rate changes on cash (513 ) (981 )
 
Net change in cash and cash equivalents 45,380 (291,695 )
Cash and cash equivalents at beginning of period 141,010   418,586  
Cash and cash equivalents at end of period 186,390   126,891  
 
Supplemental cash flow information:
Cash paid during the period for:
Interest 6,220 6,200
Income taxes 6,004 538
Payments on capital leases and installment payment arrangements 269 3,249
Other debt payments, excluding line of credit 24,120 16,566
Prepayment of debt 55,000
                     
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF FREE CASH FLOW AVAILABLE TO EQUITY
AND RECONCILIATION TO OPERATING CASH FLOW
(Unaudited)
(Dollars in thousands)
 
                               
06/30/14   09/30/14   12/31/14   03/31/15   YTD FY2015 06/30/15   09/30/15   12/31/15   YTD FY2016
 
Net cash provided by operating activities – continuing operations (15,456 ) 14,325 32,890 29,372 61,131 11,997 21,357 37,018 70,372
 
Less:
Capitalized software (4,969 ) (5,608 ) (4,408 ) (3,602 ) (18,587 ) (2,797 ) (3,936 ) (3,627 ) (10,360 )
Capital expenditures (16,778 ) (15,362 ) (10,212 ) (14,600 ) (56,952 ) (12,876 ) (10,244 ) (10,702 ) (33,822 )
Data acquisition costs (635 ) (468 ) (394 ) (374 ) (1,871 ) (430 ) (281 ) (424 ) (1,135 )
Payments on capital leases and installment payment arrangements (650 ) (567 ) (471 ) (315 ) (2,003 ) (63 ) (63 )
Other required debt payments (4,267 )   (4,272 )   (8,027 )   (8,032 )   (24,598 ) (8,036 )   (8,039 )   (8,045 )   (24,120 )
 
Total (42,755 )   (11,952 )   9,378     2,449     (42,880 ) (12,205 )   (1,143 )   14,220     872  
                         
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS-GAAP
(Unaudited)
(Dollars in thousands, except earnings per share)
 
                                Q3 FY16 to Q3 FY15
06/30/14   09/30/14   12/31/14   03/31/15   YTD FY2015 06/30/15   09/30/15   12/31/15   YTD FY2016 %   $
Revenues 186,683 204,248 208,246 205,734 804,911 196,895 207,345 221,193 625,433 6.2 % 12,947
 
Cost of revenue 115,564     124,958     125,807     127,708     494,037   117,709     121,312     125,735     364,756   -0.1 % (72 )
Gross profit 71,119 79,290 82,439 78,026 310,874 79,186 86,033 95,458 260,677 15.8 % 13,019
% Gross margin 38.1 % 38.8 % 39.6 % 37.9 % 38.6 % 40.2 % 41.5 % 43.2 % 41.7 %
 
Operating expenses
Research and development 16,350 19,798 18,973 19,080 74,201 20,011 19,078 18,400 57,489 -3.0 % (573 )
Sales and marketing 26,265 28,591 30,554 31,084 116,494 29,494 34,259 36,581 100,334 19.7 % 6,027
General and administrative 34,462 36,511 31,821 27,469 130,263 31,743 31,519 36,793 100,055 15.6 % 4,972
Gains, losses and other items, net 7,128     833     3,381     11,258     22,600   807     3,233     4,058     8,098   20.0 % 677
Total operating expenses 84,205 85,733 84,729 88,891 343,558 82,055 88,089 95,832 265,976 13.1 % 11,103
 
Loss from operations (13,086 ) (6,443 ) (2,290 ) (10,865 ) (32,684 ) (2,869 ) (2,056 ) (374 ) (5,299 ) 83.7 % 1,916
% Margin -7.0 % -3.2 % -1.1 % -5.3 % -4.1 % -1.5 % -1.0 % -0.2 % -0.8 %
Other income (expense)
Interest expense (1,948 ) (1,821 ) (2,005 ) (1,898 ) (7,672 ) (1,885 ) (1,956 ) (1,948 ) (5,789 ) 2.8 % 57
Other, net (106 )   (163 )   35     (757 )   (991 ) 304     59     303     666   765.7 % 268
Total other expense (2,054 ) (1,984 ) (1,970 ) (2,655 ) (8,663 ) (1,581 ) (1,897 ) (1,645 ) (5,123 ) 16.5 % 325
 
Loss from continuing operations before income taxes (15,140 ) (8,427 ) (4,260 ) (13,520 ) (41,347 ) (4,450 ) (3,953 ) (2,019 ) (10,422 ) 52.6 % 2,241
Income taxes (4,399 )   (1,326 )   (4,597 )   (4,483 )   (14,805 ) 732     (2,608 )   (1,580 )   (3,456 ) 65.6 % 3,017
 
Net earnings (loss) from continuing operations (10,741 ) (7,101 ) 337 (9,037 ) (26,542 ) (5,182 ) (1,345 ) (439 ) (6,966 ) -230.3 % (776 )
 
Earnings from discontinued operations, net of tax 3,137     5,557     3,819     2,998     15,511   4,143     12,068     (971 )   15,240   -125.4 % (4,790 )
 
Net earnings (loss) (7,604 ) (1,544 ) 4,156 (6,039 ) (11,031 ) (1,039 ) 10,723 (1,410 ) 8,274 -133.9 % (5,566 )
 
Diluted earnings (loss) per share (0.10 )   (0.02 )   0.05     (0.08 )   (0.14 ) (0.01 )   0.14     (0.02 )   0.11   -134.1 % (0.07 )
 
Diluted earnings (loss) per share continuing operations (0.14 )   (0.09 )   0.00     (0.12 )   (0.34 ) (0.07 )   (0.02 )   (0.01 )   (0.09 ) -231.1 % (0.01 )
                         
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS-NON GAAP
(Unaudited)
(Dollars in thousands, except earnings per share)
 
                                Q3 FY16 to Q3 FY15
06/30/14   09/30/14   12/31/14   03/31/15   YTD FY2015 06/30/15   09/30/15   12/31/15   YTD FY2016 %   $
Revenues 186,683 204,248 208,246 205,734 804,911 196,895 207,345 221,193 625,433 6.2 % 12,947
 
Cost of revenue 115,197     120,771     121,601     119,239     476,808   112,084     117,131     121,237     350,452   -0.3 % (364 )
Gross profit 71,486 83,477 86,645 86,495 328,103 84,811 90,214 99,956 274,981 15.4 % 13,311
% Gross margin 38.3 % 40.9 % 41.6 % 42.0 % 40.8 % 43.1 % 43.5 % 45.2 % 44.0 %
 
Operating expenses
Research and development 15,911 16,529 15,559 15,956 63,955 16,384 15,400 15,647 47,431 0.6 % 88
Sales and marketing 25,619 26,789 28,498 28,915 109,821 28,170 32,945 34,664 95,779 21.6 % 6,166
General and administrative 21,388 25,926 21,847 19,895 89,056 25,586 23,402 27,455 76,443 25.7 % 5,608
Gains, losses and other items, net                                
Total operating expenses 62,918 69,244 65,904 64,766 262,832 70,140 71,747 77,766 219,653 18.0 % 11,862
 
Income from operations 8,568 14,233 20,741 21,729 65,271 14,671 18,467 22,190 55,328 7.0 % 1,449
% Margin 4.6 % 7.0 % 10.0 % 10.6 % 8.1 % 7.5 % 8.9 % 10.0 % 8.8 %
Other income (expense)
Interest expense (1,948 ) (1,821 ) (2,005 ) (1,898 ) (7,672 ) (1,885 ) (1,956 ) (1,948 ) (5,789 ) 2.8 % 57
Other, net (106 )   (163 )   35     (757 )   (991 ) 304     59     303     666   765.7 % 268
Total other expense (2,054 ) (1,984 ) (1,970 ) (2,655 ) (8,663 ) (1,581 ) (1,897 ) (1,645 ) (5,123 ) 16.5 % 325
 
Earnings from continuing operations before income taxes 6,514 12,249 18,771 19,074 56,608 13,090 16,570 20,545 50,205 9.5 % 1,774
Income taxes 2,517     4,757     5,755     5,324     18,353   5,632     5,163     6,399     17,194   11.2 % 644
 
Net earnings from continuing operations 3,997 7,492 13,016 13,750 38,255 7,458 11,407 14,146 33,011 8.7 % 1,130
 
Earnings from discontinued operations, net of tax                                
 
Net earnings 3,997 7,492 13,016 13,750 38,255 7,458 11,407 14,146 33,011 8.7 % 1,130
 
Diluted earnings per share 0.05     0.10     0.17     0.17     0.49   0.09     0.14     0.18     0.42   7.3 % 0.01
                   
ACXIOM CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP EPS
(Unaudited)
(Dollars in thousands, except earnings per share)
 
 
                               
06/30/14   09/30/14   12/31/14   03/31/15   FY2015 06/30/15   09/30/15   12/31/15   YTD FY2016
 
 
Loss from continuing operations before income taxes (15,140 ) (8,427 ) (4,260 ) (13,520 ) (41,347 ) (4,450 ) (3,953 ) (2,019 ) (10,422 )
 
Income taxes (4,399 )   (1,326 )   (4,597 )   (4,483 )   (14,805 ) 732     (2,608 )   (1,580 )   (3,456 )
 
Net earnings (loss) from continuing operations (10,741 ) (7,101 ) 337 (9,037 ) (26,542 ) (5,182 ) (1,345 ) (439 ) (6,966 )
 
Earnings loss from discontinued operations, net of tax 3,137     5,557     3,819     2,998     15,511   4,143     12,068     (971 )   15,240  
 
Net earnings (loss) (7,604 )   (1,544 )   4,156     (6,039 )   (11,031 ) (1,039 )   10,723     (1,410 )   8,274  
 
Earnings (loss) per share:
 
Basic (0.10 )   (0.02 )   0.05     (0.08 )   (0.14 ) (0.01 )   0.14     (0.02 )   0.11  
 
Diluted (0.10 )   (0.02 )   0.05     (0.08 )   (0.14 ) (0.01 )   0.14     (0.02 )   0.11  
 
Unusual items:
Purchased intangible asset amortization (cost of revenue) 63 3,827 3,783 3,781 11,454 3,754 3,754 3,754 11,262
Non-cash stock compensation (cost of revenue and operating expenses) 3,925 7,725 8,450 8,216 28,316 8,123 7,360 8,046 23,529
Restructuring charges and other adjustments (gains, losses, and other) 7,128 833 3,381 11,258 22,600 807 3,233 4,058 8,098
Separation and transformation costs (general and administrative) 10,538 8,291 7,417 5,023 31,269 3,414 6,098 6,628 16,140
Accelerated amortization (cost of revenue)             4,316     4,316   1,442     78     78     1,598  
 
Total unusual items, continuing operations 21,654     20,676     23,031     32,594     97,955   17,540     20,523     22,564     60,627  
 
Earnings from continuing operations before income taxes
and excluding unusual items 6,514 12,249 18,771 19,074 56,608 13,090 16,570 20,545 50,205
 
Income taxes 2,517     4,757     5,755     5,324     18,353   5,632     5,163     6,399     17,194  
 
Non-GAAP net earnings 3,997     7,492     13,016     13,750     38,255   7,458     11,407     14,146     33,011  
 
Non-GAAP earnings per share:
 
Basic 0.05     0.10     0.17     0.18     0.50   0.10     0.15     0.18     0.42  
 
Diluted 0.05     0.10     0.17     0.17     0.49   0.09     0.14     0.18     0.42  
 
Basic weighted average shares 76,833     77,123     77,039     77,427     77,106   77,918     77,960     77,831     77,903  
 
Diluted weighted average shares 78,341     78,307     78,302     79,027     78,494   79,352     79,310     79,346     79,336  
 
ACXIOM CORPORATION AND SUBSIDIARIES
RESULTS BY SEGMENT
(Unaudited)
(Dollars in thousands)
                                              Q3 FY16 to Q3 FY15
06/30/14   09/30/14   12/31/14   03/31/15   YTD FY2015 06/30/15   09/30/15   12/31/15   YTD FY2016 %   $
               
Revenues:
Marketing services 109,288 112,750 114,403 109,662 446,103 107,726 112,979 115,725 336,430 1.2 % 1,322
Audience Solutions 73,061 78,026 75,933 76,816 303,837 68,550 72,122 77,046 217,718 1.5 % 1,113
Connectivity 4,334     13,472     17,910     19,256     54,972   20,619     22,244     28,422     71,285   58.7 % 10,512
 
Total operating segment revenues 186,683     204,248     208,246     205,735     804,911   196,895     207,345     221,193     625,433   6.2 % 12,947
 
Gross profit:
 
Marketing services 39,452 39,251 41,572 36,169 156,444 36,033 37,545 38,561 112,139 -7.2 % (3,011 )
Audience Solutions 35,605 41,425 39,215 42,141 158,386 36,823 39,170 45,265 121,258 15.4 % 6,050
Connectivity (3,527 )   2,757     5,858     8,234     13,322   11,953     13,499     16,130     41,582   175.3 % 10,272
 
Total operating segment gross profit 71,530     83,433     86,645     86,544     328,152   84,809     90,214     99,956     274,979   15.4 % 13,311
 
Gross margin:
 
Marketing services 36.1 % 34.8 % 36.3 % 33.0 % 35.1 % 33.4 % 33.2 % 33.3 % 33.3 %
Audience Solutions 48.7 % 53.1 % 51.6 % 54.9 % 52.1 % 53.7 % 54.3 % 58.8 % 55.7 %
Connectivity -81.4 % 20.5 % 32.7 % 42.8 % 24.2 % 58.0 % 60.7 % 56.8 % 58.3 %
 
Total operating segment gross margin 38.3 % 40.8 % 41.6 % 42.1 % 40.8 % 43.1 % 43.5 % 45.2 % 44.0 %
 
Income from continuing operations:
 
Marketing services 20,828 20,576 21,859 17,984 81,247 16,853 17,908 20,309 55,070 -7.1 % (1,550 )
Audience Solutions 24,190 31,375 28,919 30,594 115,078 24,087 25,190 30,723 80,000 6.2 % 1,804
Connectivity (14,089 )   (12,152 )   (7,802 )   (6,026 )   (40,069 ) (791 )   (1,068 )   (1,015 )   (2,874 ) 87.0 % 6,787
 
Total operating segment income from operations 30,929     39,799     42,976     42,552     156,256   40,149     42,030     50,017     132,196   16.4 % 7,041
 
Margin:
 
Marketing services 19.1 % 18.2 % 19.1 % 16.4 % 18.2 % 15.6 % 15.9 % 17.5 % 16.4 %
Audience Solutions 33.1 % 40.2 % 38.1 % 39.8 % 37.9 % 35.1 % 34.9 % 39.9 % 36.7 %
Connectivity -325.1 % -90.2 % -43.6 % -31.3 % -72.9 % -3.8 % -4.8 % -3.6 % -4.0 %
 
Total operating segment operating margin 16.6 % 19.5 % 20.6 % 20.7 % 19.4 % 20.4 % 20.3 % 22.6 % 21.1 %

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