Acxiom Announces Second Quarter Results

Connectivity Revenue Increases 65% Year-over-Year

Total US Revenue Grows 6% Year-over-Year

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Q2 FY16 Text and Financials

LITTLE ROCK, Ark.--()--Acxiom® (Nasdaq: ACXM), an enterprise data, analytics and software-as-a-service company, today announced financial results for its second quarter ended September 30, 2015.

Financial Highlights

  • Revenue: Total revenue was $207 million, up approximately 2% compared to the second quarter of last year. US revenue of $189 million was up 6% year-over-year.
  • Operating Income (Loss): GAAP operating loss from continuing operations was $2 million compared to a loss of $6 million in the prior year. Non-GAAP operating income from continuing operations improved 30% to approximately $18 million compared to $14 million a year ago.
  • Earnings (Loss) per Share: GAAP loss per share from continuing operations was $0.02 compared to a net loss of $0.09 in the prior year. Non-GAAP diluted earnings per share from continuing operations were $0.14, up 40% from $0.10 a year ago.
  • Operating Cash Flow: Operating cash flow from continuing operations was $21 million, up from $14 million a year ago.
  • Free Cash Flow to Equity: Free cash flow to equity improved $11 million to negative $1 million. This measure excludes cash flows related to the IT Infrastructure Management divestiture.

Segment Results

Marketing Services and Audience Solutions

  • Revenue was $185 million, down 3% compared to the second quarter of last year. Excluding a negative currency impact of approximately $3 million, total Marketing Services and Audience Solutions revenue was down 2%. US revenue of $168 million was up 2% year-over-year.
  • Non-GAAP gross margin decreased from 44% to 41%.
  • Non-GAAP operating income was $43 million compared to $54 million in the prior year.
  • The declines were primarily driven by International results. In addition, operating income was impacted by continued investment in the US.

Connectivity

  • Revenue was $22 million, up approximately 65% compared to the second quarter of last year, driven by continued onboarding momentum. Connectivity exited the quarter with a $90 million revenue run-rate.
  • Non-GAAP gross margin improved from 19% to 62%.
  • Non-GAAP operating loss improved by approximately $11 million to a loss of roughly $1 million, driven by growth in subscriptions and royalties.

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

“Connectivity had another impressive quarter highlighted by strong revenue growth, new customer additions and the launch of LiveRamp Customer Link™,” said Acxiom CEO Scott Howe. “At the same time, our Marketing Services and Audience Solutions businesses had a number of key wins during the quarter, including several large renewals.”

Business Highlights

  • LiveRamp™ added 40 new customers during the quarter and added over 30 new partner integrations. Marketers can now onboard and distribute their data to a growing network of more than 250 marketing platforms and data providers.
  • Connectivity powered $82 million of gross media spend in the second quarter, up 122% year-over-year. On a trailing twelve-month basis, Connectivity powered $268 million of gross media spend, up 167% over the comparable period.
  • LiveRamp announced the launch of Customer Link, a new software-as-a-service product that connects campaign and sales data across channels and devices, solving the linking challenge that prevents marketers from creating a unified view of customer activity. Customer Link extends LiveRamp’s suite of open connectivity services.
  • Acxiom repurchased approximately 607,000 shares for $12 million during the quarter. Since inception of the share repurchase program in August 2011, Acxiom has repurchased 14.3 million shares for $230 million.

Financial Outlook

Acxiom’s guidance excludes the impact of unusual items, non-cash compensation and acquired intangible asset amortization. Acxiom reconfirms the following estimates for fiscal 2016:

  • Revenue from continuing operations in the range of $815 million to $840 million
  • Non-GAAP diluted earnings per share from continuing operations in the range of $0.45 to $0.50

Conference Call

Acxiom will hold a conference call at 4:00 p.m. CST 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
September 30,
$ %
2015 2014 Variance     Variance
 
Revenues 207,345 204,248 3,097 1.5 %
 
Cost of revenue 121,312   122,845   (1,533 ) (1.2 %)
Gross profit 86,033 81,403 4,630 5.7 %
% Gross margin 41.5 % 39.9 %
 
Operating expenses:
Research and development 19,078 19,798 (720 ) (3.6 %)
Sales and marketing 34,259 28,842 5,417 18.8 %
General and administrative 31,519 38,373 (6,854 ) (17.9 %)
Gains, losses and other items, net 3,233   833   2,400 288.1 %
Total operating expenses 88,089   87,846   243 0.3 %
 
Loss from operations (2,056 ) (6,443 ) 4,387 68.1 %
% Margin -1.0 % -3.2 %
Other income (expense):
Interest expense (1,956 ) (1,821 ) (135 ) (7.4 %)
Other, net 59   (163 ) 222 136.2 %

Total other expense

(1,897 ) (1,984 ) 87 4.4 %
 
Loss from continuing operations before income taxes (3,953 ) (8,427 ) 4,474 53.1 %
 
Income taxes (2,608 ) (1,326 ) (1,282 ) (96.7 %)
 
Net loss from continuing operations (1,345 ) (7,101 ) 5,756 81.1 %
 
Earnings from discontinued operations, net of tax 12,068   5,557   6,511 117.2 %
 
Net earnings (loss) 10,723   (1,544 ) 12,267 794.5 %
 
Basic earnings (loss) per share:
Net loss from continuing operations (0.02 ) (0.09 ) 0.07 81.3 %
Net earnings from discontinued operations 0.15   0.07   0.08 114.8 %
Net earnings (loss) 0.14   (0.02 ) 0.16 787.0 %
 
 
Diluted earnings (loss) per share:
Net loss from continuing operations (0.02 ) (0.09 ) 0.07 81.3 %
Net earnings from discontinued operations 0.15   0.07   0.08 114.8 %
Net earnings (loss) 0.14   (0.02 ) 0.16 787.0 %
 
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 Six Months Ended
September 30,
$ %
2015 2014 Variance     Variance
 
Revenues 404,240 390,931 13,309 3.4 %
 
Cost of revenue 239,021   235,935   3,086 1.3 %
Gross profit 165,219 154,996 10,223 6.6 %
% Gross margin 40.9 % 39.6 %
 
Operating expenses:
Research and development 39,089 36,148 2,941 8.1 %
Sales and marketing 63,753 55,342 8,411 15.2 %
General and administrative 63,262 75,074 (11,812 ) (15.7 %)
Gains, losses and other items, net 4,040   7,961   (3,921 ) (49.3 %)
Total operating expenses 170,144   174,525   (4,381 ) (2.5 %)
 
Loss from operations (4,925 ) (19,529 ) 14,604 74.8 %
% Margin -1.2 % -5.0 %
Other income (expense):
Interest expense (3,841 ) (3,769 ) (72 ) (1.9 %)
Other, net 363   (269 ) 632 234.9 %
Total other expense (3,478 ) (4,038 ) 560 13.9 %
 
Loss from continuing operations before income taxes (8,403 ) (23,567 ) 15,164 64.3 %
 
Income taxes (1,876 ) (5,725 ) 3,849 67.2 %
 
Net loss from continuing operations (6,527 ) (17,842 ) 11,315 63.4 %
 
Earnings from discontinued operations, net of tax 16,211   8,694   7,517 86.5 %
 
Net earnings (loss) 9,684   (9,148 ) 18,832 205.9 %
 
Basic earnings (loss) per share:
Net loss from continuing operations (0.08 ) (0.23 ) 0.15 63.9 %
Net earnings from discontinued operations 0.21   0.11   0.10 84.2 %
Net earnings (loss) 0.12   (0.12 ) 0.24 204.6 %
 
 
Diluted earnings (loss) per share:
Net loss from continuing operations (0.08 ) (0.23 ) 0.15 63.9 %
Net earnings from discontinued operations 0.21   0.11   0.10 84.2 %
Net earnings (loss) 0.12   (0.12 ) 0.24 202.7 %
 
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 Six Months Ended
September 30, September 30,
2015 2014 2015 2014
 
 
Loss from continuing operations before income taxes (3,953 ) (8,427 ) (8,403 ) (23,567 )
 
Income taxes (2,608 ) (1,326 ) (1,876 ) (5,725 )
 
Net loss from continuing operations (1,345 ) (7,101 ) (6,527 ) (17,842 )
 
Earnings from discontinued operations, net of tax 12,068   5,557   16,211   8,694  
 
Net earnings (loss) 10,723   (1,544 ) 9,684   (9,148 )
 
Earnings (loss) per share:
 
Basic 0.14   (0.02 ) 0.12   (0.12 )
 
Diluted 0.14   (0.02 ) 0.12   (0.12 )
 
Excluded items:
Purchased intangible asset amortization (cost of revenue) 3,754 3,827 7,508 3,890
Non-cash stock compensation (cost of revenue and operating expenses) 7,360 7,725 15,483 11,650
Restructuring charges and other adjustments (gains, losses, and other) 3,233 833 4,040 7,961
Separation and transformation costs (general and administrative) 6,098 8,291 9,512 18,829
Accelerated amortization (cost of revenue) 78   -   1,520   -  
 
Total excluded items, continuing operations 20,523   20,676   38,063   42,330  
 

Earnings from continuing operations before income taxes and excluding items

16,570 12,249 29,660 18,763
 
Income taxes 5,163   4,757   10,795   7,274  
 
Non-GAAP net earnings 11,407   7,492   18,865   11,489  
 
Non-GAAP earnings per share:
 
Basic 0.15   0.10   0.24   0.15  
 
Diluted 0.14   0.10   0.24   0.15  
 
Basic weighted average shares 77,960   77,123   77,939   76,978  
 
Diluted weighted average shares 79,310   78,307   79,332   78,324  
 
 
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF EARNINGS (LOSS) PER SHARE
(Unaudited)
(In thousands, except earnings (loss) per share)
       
For the Three Months Ended
 
September 30, September 30,
2015 2014
 
Basic loss per share from continuing operations:
Numerator - net loss (1,345 ) (7,101 )
 
Denominator - weighted-average shares outstanding 77,960   77,123  
Basic loss per share (0.02 ) (0.09 )
 
Diluted loss per share from continuing operations:
Numerator - net loss (1,345 ) (7,101 )
 
Denominator - weighted-average shares outstanding 77,960   77,123  
Diluted loss per share (0.02 ) (0.09 )
 
Basic earnings per share from discontinued operations:
Numerator - net earnings 12,068 5,557
 
Denominator - weighted-average shares outstanding 77,960   77,123  
Basic earnings per share 0.15   0.07  
 
Diluted earnings per share from discontinued operations:
Numerator - net earnings 12,068 5,557
 
Denominator - weighted-average shares outstanding 77,960 77,123
Dilutive effect of common stock options, warrants and restricted stock -   -  
77,960   77,123  
 
Diluted earnings per share 0.15   0.07  
 
Diluted earnings (loss) per share:
Numerator - net earnings (loss) 10,723 (1,544 )
 
Denominator - weighted-average shares outstanding 77,960 77,123
Dilutive effect of common stock options, warrants, and restricted stock -   -  
77,960   77,123  
 
Diluted earnings (loss) per share 0.14   (0.02 )
 
 
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF EARNINGS (LOSS) PER SHARE
(Unaudited)
(In thousands, except earnings (loss) per share)
       
For the Six Months Ended
 
September 30, September 30,
2015 2014
 
Basic loss per share from continuing operations:
Numerator - net loss (6,527 ) (17,842 )
 
Denominator - weighted-average shares outstanding 77,939   76,978  
Basic loss per share (0.08 ) (0.23 )
 
Diluted loss per share from continuing operations:
Numerator - net loss (6,527 ) (17,842 )
 
Denominator - weighted-average shares outstanding 77,939   76,978  
Diluted loss per share (0.08 ) (0.23 )
 
Basic earnings per share from discontinued operations:
Numerator - net earnings 16,211 8,694
 
Denominator - weighted-average shares outstanding 77,939   76,978  
Basic earnings per share 0.21   0.11  
 
Diluted earnings per share from discontinued operations:
Numerator - net earnings 16,211 8,694
 
Denominator - weighted-average shares outstanding 77,939 76,978
Dilutive effect of common stock options, warrants and restricted stock -   -  
77,939   76,978  
 
Diluted earnings per share 0.21   0.11  
 
Diluted loss per share:
Numerator - net earnings (loss) 9,684 (9,148 )
 
Denominator - weighted-average shares outstanding 77,939 76,978
Dilutive effect of common stock options, warrants, and restricted stock -   -  
77,939   76,978  
 
Diluted earnings (loss) per share 0.12   (0.12 )
 
 
ACXIOM CORPORATION AND SUBSIDIARIES
RESULTS BY SEGMENT-GAAP
(Unaudited)
(Dollars in thousands)
                               
For the Three Months Ended
 
September 30, 2015 September 30, 2014
Marketing Services Marketing Services
& Audience Solutions Connectivity Corporate Total & Audience Solutions Connectivity Corporate Total
 
Revenues 185,101 22,244 - 207,345 190,776 13,472 - 204,248
 
Gross profit (loss) 76,030 10,081 (78 ) 86,033 82,652 (1,249 ) - 81,403
% Gross margin 41.1 % 45.3 % n/a 41.5 % 43.3 % -9.3 % n/a 39.9 %
 
Operating income (loss) 41,586 (10,192 ) (33,450 ) (2,056 ) 52,302 (20,277 ) (38,468 ) (6,443 )
% margin 22.5 % -45.8 % n/a -1.0 % 27.4 % -150.5 % n/a -3.2 %
 
 
ACXIOM CORPORATION AND SUBSIDIARIES
RESULTS BY SEGMENT-GAAP
(Unaudited)
(Dollars in thousands)
                               
For the Six Months Ended
 
September 30, 2015 September 30, 2014
Marketing Services Marketing Services
& Audience Solutions Connectivity Corporate Total & Audience Solutions Connectivity Corporate Total
 
Revenues 361,377 42,863 - 404,240 373,125 17,806 - 390,931
 
Gross profit (loss) 148,049 18,690 (1,520 ) 165,219 159,876 (4,880 ) - 154,996
% Gross margin 41.0 % 43.6 % n/a 40.9 % 42.8 % -27.4 % n/a 39.6 %
 
Operating income (loss) 79,873 (18,217 ) (66,581 ) (4,925 ) 98,523 (34,538 ) (83,514 ) (19,529 )
% margin 22.1 % -42.5 % n/a -1.2 % 26.4 % -194.0 % n/a -5.0 %
 
 
ACXIOM CORPORATION AND SUBSIDIARIES
RESULTS BY SEGMENT-NON-GAAP
(Unaudited)
(Dollars in thousands)
                               
For the Three Months Ended
 
September 30, 2015 September 30, 2014
Marketing Services Marketing Services
& Audience Solutions Connectivity Corporate Total & Audience Solutions Connectivity Corporate Total
 
Revenues 185,101 22,244 - 207,345 190,776 13,472 - 204,248
 
Gross profit 76,404 13,810 - 90,214 83,043 2,503 - 85,546
% Gross margin 41.3 % 62.1 % n/a 43.5 % 43.5 % 18.6 % n/a 41.9 %
 
Operating income (loss) 42,696 (664 ) (23,565 ) 18,467 53,556 (11,702 ) (27,621 ) 14,233
% margin 23.1 % -3.0 % n/a 8.9 % 28.1 % -86.9 % n/a 7.0 %
 
 
ACXIOM CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP SEGMENT RESULTS
(Unaudited)
(Dollars in thousands)
                               
For the Three Months Ended
 
September 30, 2015 September 30, 2014
Marketing Services Marketing Services
& Audience Solutions Connectivity Corporate Total & Audience Solutions Connectivity Corporate Total
 
Gross profit (loss) 76,030 10,081 (78 ) 86,033 82,652 (1,249 ) - 81,403
 
Purchased intangible asset amortization 25 3,729 - 3,754 75 3,752 - 3,827
Non-cash stock compensation 347 - - 347 316 - - 316
Accelerated amortization - - 78 78 - - - -
Restructuring charges and other adjustments 2     -       -       2   -     -       -       -  
 
Gross profit (loss) before excluded items 76,404     13,810       -       90,214   83,043     2,503       -       85,546  
 
 
Operating income (loss) 41,586 (10,192 ) (33,450 ) (2,056 ) 52,302 (20,277 ) (38,468 ) (6,443 )
 
Purchased intangible asset amortization 25 3,729 - 3,754 75 3,752 - 3,827
Non-cash stock compensation 1,053 5,625 682 7,360 804 5,560 1,361 7,725
Restructuring charges and other adjustments 32 174 3,027 3,233 375 (737 ) 1,195 833
Separation and transformation costs - - 6,098 6,098 - - 8,291 8,291
Accelerated amortization -     -       78       78   -     -       -       -  
 
Operating income (loss) before excluded items 42,696     (664 )     (23,565 )     18,467   53,556     (11,702 )     (27,621 )     14,233  
 
 
ACXIOM CORPORATION AND SUBSIDIARIES
RESULTS BY SEGMENT-NON-GAAP
(Unaudited)
(Dollars in thousands)
                               
For the Six Months Ended
 
September 30, 2015 September 30, 2014
Marketing Services Marketing Services
& Audience Solutions Connectivity Corporate Total & Audience Solutions Connectivity Corporate Total
 
Revenues 361,377 42,863 - 404,240 373,125 17,806 - 390,931
 
Gross profit (loss) 148,877 26,148 - 175,025 160,602 (1,096 ) - 159,506
% Gross margin 41.2 % 61.0 % n/a 43.3 % 43.0 % -6.2 % n/a 40.8 %
 
Operating income (loss) 82,949 (837 ) (48,974 ) 33,138 100,826 (25,554 ) (52,471 ) 22,801
% margin 23.0 % -2.0 % n/a 8.2 % 27.0 % -143.5 % n/a 5.8 %
 
 
ACXIOM CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP SEGMENT RESULTS
(Unaudited)
(Dollars in thousands)
                               
For the Six Months Ended
 
September 30, 2015 September 30, 2014
Marketing Services Marketing Services
& Audience Solutions Connectivity Corporate Total & Audience Solutions Connectivity Corporate Total
 
Gross profit (loss) 148,049 18,690 (1,520 ) 165,219 159,876 (4,880 ) - 154,996
 
Purchased intangible asset amortization 50 7,458 - 7,508 106 3,784 - 3,890
Non-cash stock compensation 776 - - 776 620 - - 620
Accelerated amortization - - 1,520 1,520 - - - -
Restructuring charges and other adjustments 2     -       -       2   -     -       -       -  
 
Gross profit (loss) before excluded items 148,877     26,148       -       175,025   160,602     (1,096 )     -       159,506  
 
 
Operating income (loss) 79,873 (18,217 ) (66,581 ) (4,925 ) 98,523 (34,538 ) (83,514 ) (19,529 )
 
Purchased intangible asset amortization 50 7,458 - 7,508 106 3,784 - 3,890
Non-cash stock compensation 2,967 9,748 2,768 15,483 1,811 5,937 3,902 11,650
Restructuring charges and other adjustments 59 174 3,807 4,040 386 (737 ) 8,312 7,961
Separation and transformation costs - - 9,512 9,512 - - 18,829 18,829
Accelerated amortization -     -       1,520       1,520   -     -       -       -  
 
Operating income (loss) before excluded items 82,949     (837 )     (48,974 )     33,138   100,826     (25,554 )     (52,471 )     22,801  
 
 
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
               
September 30, March 31, $ %
2015 2015 Variance     Variance

Assets

Current assets:
Cash and cash equivalents 180,945 141,010 39,935 28.3 %
Trade accounts receivable, net 135,894 126,896 8,998 7.1 %
Deferred income taxes 15,511 25,610 (10,099 ) (39.4 %)
Refundable income taxes 5,097 5,239 (142 ) (2.7 %)
Restricted cash held in escrow 130 31,000 (30,870 ) (99.6 %)
Other current assets 37,807 34,975 2,832 8.1 %
Assets of discontinued operations 2,000   172,284   (170,284 ) (98.8 %)
 
Total current assets 377,384   537,014   (159,630 ) (29.7 %)
 
Property and equipment 509,573 505,721 3,852 0.8 %
Less - accumulated depreciation and amortization 333,405   329,467   3,938 1.2 %
 
Property and equipment, net 176,168   176,254   (86 ) (0.0 %)
 
Software, net of accumulated amortization 59,975 68,962 (8,987 ) (13.0 %)
Goodwill 495,843 497,362 (1,519 ) (0.3 %)
Purchased software licenses, net of accumulated amortization 13,037 9,551 3,486 36.5 %
Other assets, net 30,214   33,281   (3,067 ) (9.2 %)
 
1,152,621   1,322,424   (169,803 ) (12.8 %)
 

Liabilities and Stockholders’ Equity

Current liabilities:
Current installments of long-term debt 32,205 32,232 (27 ) (0.1 %)
Trade accounts payable 40,798 30,094 10,704 35.6 %
Accrued payroll and related expenses 32,684 36,659 (3,975 ) (10.8 %)
Other accrued expenses 46,019 62,754 (16,735 ) (26.7 %)
Acquisition escrow payable 130 31,000 (30,870 ) (99.6 %)
Deferred revenue 36,051 33,620 2,431 7.2 %
Liabilities of discontinued operations 2,436   57,433   (54,997 ) (95.8 %)
 
Total current liabilities 190,323   283,792   (93,469 ) (32.9 %)
 
Long-term debt 176,744 247,855 (71,111 ) (28.7 %)
 
Deferred income taxes 70,875 80,675 (9,800 ) (12.1 %)
 
Other liabilities 10,703 6,845 3,858 56.4 %
 

Stockholders’ equity:

Common stock 12,957 12,794 163 1.3 %
Additional paid-in capital 1,059,087 1,034,526 24,561 2.4 %
Retained earnings 601,482 591,798 9,684 1.6 %
Accumulated other comprehensive income 7,669 9,413 (1,744 ) (18.5 %)
Treasury stock, at cost (977,219 ) (945,274 ) (31,945 ) (3.4 %)

Total stockholders’ equity

703,976   703,257   719 0.1 %
 
1,152,621   1,322,424   (169,803 ) (12.8 %)
 
 
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
       
For the Three Months Ended
September 30,
2015     2014
 
Cash flows from operating activities:
Net earnings (loss) 10,723 (1,544 )
Earnings from discontinued operations, net of tax (12,068 ) (5,557 )
Non-cash operating activities:
Depreciation and amortization 20,635 18,257
Loss (gain) on disposal or impairment of assets (57 ) 47
Impairment of goodwill and other 706 -
Deferred income taxes 1,806 (4,179 )
Non-cash stock compensation expense 7,360 7,725
Changes in operating assets and liabilities:
Accounts receivable (1,244 ) (848 )
Other assets (2,007 ) 1,778
Deferred costs (398 ) -
Accounts payable and other liabilities (6,806 ) 967
Deferred revenue 2,707   (2,321 )
Net cash provided by (used in) operating activities 21,357   14,325  
Cash flows from investing activities:
Capitalized software (3,936 ) (5,608 )
Capital expenditures (10,244 ) (15,362 )
Data acquisition costs (281 ) (468 )
Net cash paid in acquisitions -   (265,672 )
Net cash used in investing activities (14,461 ) (287,110 )
Cash flows from financing activities:
Payments of debt (63,039 ) (4,839 )
Sale of common stock, net of stock acquired for withholding taxes 2,033 (1,813 )
Income tax impact of stock options, warrants and restricted stock (475 ) -
Acquisition of treasury stock (12,310 ) (9,868 )
Net cash used in financing activities (73,791 ) (16,520 )
Cash flows from discontinued operations:
From operating activities (1,938 ) 11,547
From investing activities 127,315 (4,034 )
From financing activities (53 ) (517 )
Net cash provided by discontinued operations 125,324   6,996  
Effect of exchange rate changes on cash (676 ) (801 )
 
Net change in cash and cash equivalents 57,753 (283,110 )
Cash and cash equivalents at beginning of period 123,192   392,918  
Cash and cash equivalents at end of period 180,945   109,808  
 
Supplemental cash flow information:
Cash paid during the period for:
Interest 2,152 2,516
Income taxes 6,310 59
Payments on capital leases and installment payment arrangements 53 1,084
Other debt payments, excluding line of credit 8,039 4,272
Prepayment of debt 55,000 -
 
 
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
       
For the Six Months Ended
September 30,
2015     2014
 
Cash flows from operating activities:
Net earnings (loss) 9,684 (9,148 )
Earnings from discontinued operations, net of tax (16,211 ) (8,694 )
Non-cash operating activities:
Depreciation and amortization 42,410 34,177
Loss (gain) on disposal or impairment of assets 184 (207 )
Impairment of goodwill and other 706 -
Deferred income taxes 284 (6,022 )
Non-cash stock compensation expense 15,483 11,650
Changes in operating assets and liabilities:
Accounts receivable (9,281 ) 10,551
Other assets (1,198 ) 5,368
Deferred costs (823 ) (211 )
Accounts payable and other liabilities (10,336 ) (28,090 )
Deferred revenue 2,452   (10,505 )
Net cash provided by (used in) operating activities 33,354   (1,131 )
Cash flows from investing activities:
Capitalized software (6,733 ) (10,577 )
Capital expenditures (23,120 ) (32,140 )
Data acquisition costs (711 ) (1,103 )
Net cash paid in acquisitions -   (265,672 )
Net cash used in investing activities (30,564 ) (309,492 )
Cash flows from financing activities:
Payments of debt (71,138 ) (9,756 )
Sale of common stock, net of stock acquired for withholding taxes 4,102 (2,487 )
Income tax impact of stock options, warrants and restricted stock (552 ) (9,868 )
Acquisition of treasury stock (27,261 ) -  
Net cash used in financing activities (94,849 ) (22,111 )
Cash flows from discontinued operations:
From operating activities 9,715 28,857
From investing activities 122,831 (3,330 )
From financing activities (206 ) (1,102 )
Net cash provided by discontinued operations 132,340   24,425  
Effect of exchange rate changes on cash (346 ) (469 )
 
Net change in cash and cash equivalents 39,935 (308,778 )
Cash and cash equivalents at beginning of period 141,010   418,586  
Cash and cash equivalents at end of period 180,945   109,808  
 
Supplemental cash flow information:
Cash paid during the period for:
Interest 4,337 5,391
Income taxes 5,266 356
Payments on capital leases and installment payment arrangements 269 2,319
Other debt payments, excluding line of credit 16,075 8,539
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     YTD FY2016
 
Net cash provided by operating activities - continuing operations (15,456 ) 14,325 32,890 29,372 61,131 11,997 21,357 33,354
 
Less:
Capitalized software (4,969 ) (5,608 ) (4,408 ) (3,602 ) (18,587 ) (2,797 ) (3,936 ) (6,733 )
Capital expenditures (16,778 ) (15,362 ) (10,212 ) (14,600 ) (56,952 ) (12,876 ) (10,244 ) (23,120 )
Data acquisition costs (635 ) (468 ) (394 ) (374 ) (1,871 ) (430 ) (281 ) (711 )
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 )     (16,075 )
 
Total (42,755 )     (11,952 )     9,378       2,449       (42,880 ) (12,205 )     (1,143 )     (13,348 )
 
 
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS-GAAP
(Unaudited)
(Dollars in thousands, except earnings per share)
                                       
    Q2 FY16 to Q2 FY15
06/30/14     09/30/14     12/31/14     03/31/15     YTD FY2015 06/30/15     09/30/15     YTD FY2016 %     $
Revenues 186,683 204,248 208,246 205,734 804,911 196,895 207,345 404,240 1.5 % 3,097
 
Cost of revenue 113,090       122,845       123,290       123,712       482,937   117,709       121,312       239,021   -1.2 % (1,533 )
Gross profit 73,593 81,403 84,956 82,022 321,974 79,186 86,033 165,219 5.7 % 4,630
% Gross margin 39.4 % 39.9 % 40.8 % 39.9 % 40.0 % 40.2 % 41.5 % 40.9 %
 
Operating expenses
Research and development 16,350 19,798 18,973 19,080 74,201 20,011 19,078 39,089 -3.6 % (720 )
Sales and marketing 26,500 28,842 30,997 32,319 118,658 29,494 34,259 63,753 18.8 % 5,417
General and administrative 36,701 38,373 33,895 30,230 139,199 31,743 31,519 63,262 -17.9 % (6,854 )
Gains, losses and other items, net 7,128       833       3,381       11,258       22,600   807       3,233       4,040   288.1 % 2,400
Total operating expenses 86,679 87,846 87,246 92,887 354,658 82,055 88,089 170,144 0.3 % 243
 
Loss from operations (13,086 ) (6,443 ) (2,290 ) (10,865 ) (32,684 ) (2,869 ) (2,056 ) (4,925 ) 68.1 % 4,387
% Margin -7.0 % -3.2 % -1.1 % -5.3 % -4.1 % -1.5 % -1.0 % -1.2 %
Other income (expense)
Interest expense (1,948 ) (1,821 ) (2,005 ) (1,898 ) (7,672 ) (1,885 ) (1,956 ) (3,841 ) -7.4 % (135 )
Other, net (106 )     (163 )     35       (757 )     (991 ) 304       59       363   136.2 % 222
Total other expense (2,054 ) (1,984 ) (1,970 ) (2,655 ) (8,663 ) (1,581 ) (1,897 ) (3,478 ) 4.4 % 87
 
Loss from continuing operations before income taxes (15,140 ) (8,427 ) (4,260 ) (13,520 ) (41,347 ) (4,450 ) (3,953 ) (8,403 ) 53.1 % 4,474
Income taxes (4,399 )     (1,326 )     (4,597 )     (4,483 )     (14,805 ) 732       (2,608 )     (1,876 ) -96.7 % (1,282 )
 
Net earnings (loss) from continuing operations (10,741 ) (7,101 ) 337 (9,037 ) (26,542 ) (5,182 ) (1,345 ) (6,527 ) 81.1 % 5,756
 
Earnings from discontinued operations, net of tax 3,137       5,557       3,819       2,998       15,511   4,143       12,068       16,211   117.2 % 6,511
 
Net earnings (loss) (7,604 ) (1,544 ) 4,156 (6,039 ) (11,031 ) (1,039 ) 10,723 9,684 794.5 % 12,267
 
Diluted earnings (loss) per share (0.10 )     (0.02 )     0.05       (0.08 )     (0.14 ) (0.01 )     0.14       0.12   775.3 % 0.16
 
 
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS-NON GAAP
(Unaudited)
(Dollars in thousands, except earnings per share)
                                     
    Q2 FY16 to Q2 FY15
06/30/14     09/30/14     12/31/14     03/31/15     YTD FY2015 06/30/15     09/30/15     YTD FY2016 %   $
Revenues 186,683 204,248 208,246 205,734 804,911 196,895 207,345 404,240 1.5 % 3,097
 
Cost of revenue 112,723       118,702       119,136       115,243       465,804   112,084       117,131       229,215   -1.3 % (1,571 )
Gross profit 73,960 85,546 89,110 90,491 339,107 84,811 90,214 175,025 5.5 % 4,668
% Gross margin 39.6 % 41.9 % 42.8 % 44.0 % 42.1 % 43.1 % 43.5 % 43.3 %
 
Operating expenses
Research and development 15,911 16,529 15,559 15,956 63,955 16,384 15,400 31,784 -6.8 % (1,129 )
Sales and marketing 25,854 27,040 28,941 30,150 111,985 28,170 32,945 61,115 21.8 % 5,905
General and administrative 23,627 27,744 23,869 22,656 97,896 25,586 23,402 48,988 -15.7 % (4,342 )
Gains, losses and other items, net -       -       -       -       -   -       -       -   - -
Total operating expenses 65,392 71,313 68,369 68,762 273,836 70,140 71,747 141,887 0.6 % 434
 
Income from operations 8,568 14,233 20,741 21,729 65,271 14,671 18,467 33,138 29.7 % 4,234
% Margin 4.6 % 7.0 % 10.0 % 10.6 % 8.1 % 7.5 % 8.9 % 8.2 %
Other income (expense)
Interest expense (1,948 ) (1,821 ) (2,005 ) (1,898 ) (7,672 ) (1,885 ) (1,956 ) (3,841 ) -7.4 % (135 )
Other, net (106 )     (163 )     35       (757 )     (991 ) 304       59       363   136.2 % 222
Total other expense (2,054 ) (1,984 ) (1,970 ) (2,655 ) (8,663 ) (1,581 ) (1,897 ) (3,478 ) 4.4 % 87
 
Earnings from continuing operations before income taxes 6,514 12,249 18,771 19,074 56,608 13,090 16,570 29,660 35.3 % 4,321
Income taxes 2,517       4,757       5,755       5,324       18,353   5,632       5,163       10,795   8.5 % 406
 
Net earnings from continuing operations 3,997 7,492 13,016 13,750 38,255 7,458 11,407 18,865 52.3 % 3,915
 
Earnings from discontinued operations, net of tax -       -       -       -       -   -       -       -   - -
 
Net earnings 3,997 7,492 13,016 13,750 38,255 7,458 11,407 18,865 52.3 % 3,915
 
Diluted earnings per share 0.05       0.10       0.17       0.17       0.49   0.09       0.14       0.24   50.3 % 0.05
 
 
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     YTD FY2016
 
 
Loss from continuing operations before income taxes (15,140 ) (8,427 ) (4,260 ) (13,520 ) (41,347 ) (4,450 ) (3,953 ) (8,403 )
 
Income taxes (4,399 )     (1,326 )     (4,597 )     (4,483 )     (14,805 ) 732       (2,608 )     (1,876 )
 
Net earnings (loss) from continuing operations (10,741 ) (7,101 ) 337 (9,037 ) (26,542 ) (5,182 ) (1,345 ) (6,527 )
 
Earnings loss from discontinued operations, net of tax 3,137       5,557       3,819       2,998       15,511   4,143       12,068       16,211  
 
Net earnings (loss) (7,604 )     (1,544 )     4,156       (6,039 )     (11,031 ) (1,039 )     10,723       9,684  
 
Earnings (loss) per share:
 
Basic (0.10 )     (0.02 )     0.05       (0.08 )     (0.14 ) (0.01 )     0.14       0.12  
 
Diluted (0.10 )     (0.02 )     0.05       (0.08 )     (0.14 ) (0.01 )     0.14       0.12  
 
Unusual items:
Purchased intangible asset amortization (cost of revenue) 63 3,827 3,783 3,781 11,454 3,754 3,754 7,508
Non-cash stock compensation (cost of revenue and operating expenses) 3,925 7,725 8,450 8,216 28,316 8,123 7,360 15,483
Restructuring charges and other adjustments (gains, losses, and other) 7,128 833 3,381 11,258 22,600 807 3,233 4,040
Separation and transformation costs (general and administrative) 10,538 8,291 7,417 5,023 31,269 3,414 6,098 9,512
Accelerated amortization (cost of revenue) -       -       -       4,316       4,316   1,442       78       1,520  
 
Total unusual items, continuing operations 21,654       20,676       23,031       32,594       97,955   17,540       20,523       38,063  
 

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 29,660
 
Income taxes 2,517       4,757       5,755       5,324       18,353   5,632       5,163       10,795  
 
Non-GAAP net earnings 3,997       7,492       13,016       13,750       38,255   7,458       11,407       18,865  
 
Non-GAAP earnings per share:
 
Basic 0.05       0.10       0.17       0.18       0.50   0.10       0.15       0.24  
 
Diluted 0.05       0.10       0.17       0.17       0.49   0.09       0.14       0.24  
 
Basic weighted average shares 76,833       77,123       77,039       77,427       77,106   77,918       77,918       77,918  
 
Diluted weighted average shares 78,341       78,307       78,302       79,027       78,494   79,352       79,352       79,352  
 
 
ACXIOM CORPORATION AND SUBSIDIARIES
RESULTS BY SEGMENT-GAAP
(Unaudited)
(Dollars in thousands)
 
                Q2 FY16 to Q2 FY15
06/30/14     09/30/14     12/31/14     03/31/15     YTD FY2015 06/30/15     09/30/15     YTD FY2016 %     $
                           
Revenues:
 
Marketing services and audience solutions 182,349 190,776 190,336 186,478 749,939 176,276 185,101 361,377 -3.0 % (5,675 )
Connectivity 4,334       13,472       17,910       19,256       54,972   20,619       22,244       42,863   65.1 % 8,772  
 
Total revenues 186,683       204,248       208,246       205,734       804,911   196,895       207,345       404,240   1.5 % 3,097  
 
Gross profit from continuing operations:
 
Marketing services and audience solutions 77,224 82,652 82,991 81,937 324,804 72,019 76,030 148,049 -8.0 % (6,622 )
Connectivity (3,631 ) (1,249 ) 1,964 4,400 1,484 8,609 10,081 18,690 907.1 % 11,330
Corporate -       -       -       (4,315 )     (4,315 ) (1,442 )     (78 )     (1,520 ) n/a (78 )
 
Total gross profit from continuing operations 73,593       81,403       84,955       82,022       321,973   79,186       86,033       165,219   5.7 % 4,630  
 
Gross margin:
 
Marketing services and audience solutions 42.3 % 43.3 % 43.6 % 43.9 % 43.3 % 40.9 % 41.1 % 41.0 %
Connectivity -83.8 % -9.3 % 11.0 % 22.9 % 2.7 % 41.8 % 45.3 % 43.6 %
 
Total 39.4 % 39.9 % 40.8 % 39.9 % 40.0 % 40.2 % 41.5 % 40.9 %
 
Income (loss) from continuing operations:
 
Marketing services and audience solutions 46,221 52,302 51,268 48,065 197,856 38,287 41,586 79,873 -20.5 % (10,716 )
Connectivity (14,261 ) (20,277 ) (16,876 ) (17,444 ) (68,858 ) (8,025 ) (10,192 ) (18,217 ) 49.7 % 10,085
Corporate (45,046 )     (38,468 )     (36,682 )     (41,486 )     (161,682 ) (33,131 )     (33,450 )     (66,581 ) 13.0 % 5,018  
 
Total loss from continuing operations (13,086 )     (6,443 )     (2,290 )     (10,865 )     (32,684 ) (2,869 )     (2,056 )     (4,925 ) 68.1 % 4,387  
 
Margin:
 
Marketing services and audience solutions 25.3 % 27.4 % 26.9 % 25.8 % 26.4 % 21.7 % 22.5 % 22.1 %
Connectivity -329.0 % -150.5 % -94.2 % -90.6 % -125.3 % -38.9 % -45.8 % -42.5 %
 
Total -7.0 % -3.2 % -1.1 % -5.3 % -4.1 % -1.5 % -1.0 % -1.2 %
 
 
ACXIOM CORPORATION AND SUBSIDIARIES
RESULTS BY SEGMENT - NON GAAP
(Unaudited)
(Dollars in thousands)
 
                Q2 FY16 to Q2 FY15
06/30/14     09/30/14     12/31/14     03/31/15     YTD FY2015 06/30/15     09/30/15     YTD FY2016 %     $
                       
Revenues:
 
Marketing services and audience solutions 182,349 190,776 190,336 186,478 749,939 176,276 185,101 361,377 -3.0 % (5,675 )
Connectivity 4,334       13,472       17,910       19,256       54,972   20,619       22,244       42,863   65.1 % 8,772  
 
Total revenues 186,683       204,248       208,246       205,734       804,911   196,895       207,345       404,240   1.5 % 3,097  
 
Gross profit from continuing operations:
 
Marketing services and audience solutions 77,559 83,043 83,411 82,355 326,368 72,473 76,404 148,877 -8.0 % (6,639 )
Connectivity (3,599 ) 2,503 5,699 8,136 12,739 12,338 13,810 26,148 451.7 % 11,307
Corporate -       -       -       -       -   -       -       -   n/a 0  
 
Total income from continuing operations 73,960       85,546       89,110       90,491       339,107   84,811       90,214       175,025   5.5 % 4,668  
 
Gross margin:
 
Marketing services and audience solutions 42.5 % 43.5 % 43.8 % 44.2 % 43.5 % 41.1 % 41.3 % 41.2 %
Connectivity -83.0 % 18.6 % 31.8 % 42.3 % 23.2 % 59.8 % 62.1 % 61.0 %
 
Total 39.6 % 41.9 % 42.8 % 44.0 % 42.1 % 43.1 % 43.5 % 43.3 %
 
Income from continuing operations:
 
Marketing services and audience solutions 47,270 53,556 52,445 50,803 204,074 40,253 42,696 82,949 -20.3 % (10,860 )
Connectivity (13,852 ) (11,702 ) (7,391 ) (5,809 ) (38,754 ) (173 ) (664 ) (837 ) 94.3 % 11,038
Corporate (24,850 )     (27,621 )     (24,313 )     (23,265 )     (100,049 ) (25,409 )     (23,565 )     (48,974 ) 14.7 % 4,056  
 
Total income from continuing operations 8,568       14,233       20,741       21,729       65,271   14,671       18,467       33,138   29.7 % 4,234  
 
Margin:
 
Marketing services and audience solutions 25.9 % 28.1 % 27.6 % 27.2 % 27.2 % 22.8 % 23.1 % 23.0 %
Connectivity -319.6 % -86.9 % -41.3 % -30.2 % -70.5 % -0.8 % -3.0 % -2.0 %
 
Total 4.6 % 7.0 % 10.0 % 10.6 % 8.1 % 7.5 % 8.9 % 8.2 %
 

Contacts

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

Contacts

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