) reported dismal first-quarter fiscal 2015 results with non-GAAP
earnings of $9.9 million or 13 cents per share, down from $14.6
million or 19 cents per share in the year-ago period. The
year-over-year decrease in adjusted earnings was primarily due to
the lackluster performance of the IT Infrastructure Management
business. The adjusted earnings also missed the Zacks Consensus
Estimate by 4 cents.
The company reported GAAP loss of $7.6 million or loss of 10 cents
per share versus net income of $13.2 million or 17 cents in the
year-ago quarter. The year-over-year decrease in GAAP earnings was
largely driven by one-time expenses associated with business
separation and restructuring activities.
Total revenue for first-quarter fiscal 2015 came in at $242.2
million, down 5.8% year over year, due to a combination of two
factors that include European business restructuring activities and
decline in IT Infrastructure Management revenue.
By segments, sales from the Marketing and Data Services segment
decreased 0.6% year over year to $186.7 million. IT Infrastructure
Management Services segment revenues were down 20.0% to $55.5
million. Operating loss for the reported quarter stood at $4.5
million versus operating income of $23.5 million in the prior-year
Significant Developments in the Quarter
During the reported quarter, Acxiom divested its U.K. call center
business 2Touch to a leading European business process outsourcing
service provider Parseq Ltd for an undisclosed amount. Of late,
Acxiom has been making efforts to reposition its portfolio by
divesting assets that no longer fit its corporate strategy and
instead has focused on making investments in other attractive
The strategic decision to divest the call centre business has come
through a careful consideration of portfolio optimization. This
sell-off helps Acxiom to become a marketing technology company and
expand its business in Europe. Over the last couple of quarters,
Acxiom has been focusing on improving its product portfolio through
strategic initiatives, which enable it to concentrate on its
fast-growing businesses and target marketing efforts across all
channels and devices.
During the quarter, Acxiom acquired LiveRamp - a leading service
provider for onboarding customer data into digital marketing
applications, for $310 million in cash. The strategic transaction
enables Acxiom to fulfill its long-term goal of bridging the gap
between offline data and the rapidly growing universe of online
marketing applications for a connected ecosystem.
The acquisition brings together one of the best global marketing
data companies (in the form of Acxiom) with an emerging leader in
data onboarding (in LiveRamp) to create arguably the industry's
most comprehensive network of connections. The combined company
offers one of the industry-leading solutions by merging offline
customer data with online connectivity and faster onboarding,
delivering a true one-to-one marketing at scale.
Together, Acxiom and LiveRamp have access to over 99% of the adult
U.S. population to deliver relevant and targeted messages from more
than 7,000 global customers and partnerships across all channels
and devices. By leveraging LiveRamp's extensive network and a rich
clientele that includes some of the world's leading brands in
retail, entertainment, communications and financial services,
Acxiom expects to strengthen its customer pool and venture into a
potentially profitable area of digital advertising. Acxiom further
intends to extend this capability in Europe and the Asia-Pacific
Region within a year.
Additionally, Acxiom signed seven new Audience Operating Systems
(AOS) agreements during the quarter with customers in several key
industries. At the same time, the company inked several Marketing
and Data Services agreements during the quarter.
Balance Sheet and Cash Flow
Acxiom ended the quarter with cash and cash equivalents of $392.9
million and long-term debt came in at $279.0 million.
Net cash provided by operating activities aggregated $1.9 million
during the quarter compared with $16.5 million in the prior-year
period. Free cash flow to equity stood at $56 million for the
trailing four quarters compared with $70 million in the prior-year
period due to higher restructuring and capital spending.
For fiscal 2015, management reiterated its earlier guidance and
continues to expect revenues to be down approximately 5%. The
decline in revenues is expected to be driven by the impact of lost
IT infrastructure management customers and the exit of analog paper
survey business in Europe.
Earning per share is expected in the range of 75 cents to 85 cents.
The year-over-year decline in earnings is expected to be driven by
lost IT infrastructure management customers and dilution from the
acquisition of LiveRamp and other expenses. Adjusted earnings after
taking into consideration the 2Touch divestiture are anticipated to
be within 73 to 83 cents per share.
Acxiom currently has a Zacks Rank #3 (Hold). Other stocks in the
industry that are worth reckoning include Amdocs Limited (
), Barracuda Networks, Inc (
) and Science Applications International Corporation (
), each carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
AMDOCS LTD (DOX): Free Stock Analysis Report
ACXIOM CORP (ACXM): Free Stock Analysis Report
SCIENCE APP INT (SAIC): Free Stock Analysis
BARRACUDA NTWRK (CUDA): Free Stock Analysis
To read this article on Zacks.com click here.