Acxiom Misses on Q1 Earnings, Maintains Fiscal Guidance - Analyst Blog

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Acxiom Corporation ( ACXM ) 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.

Revenues

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 quarter.

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 markets.

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.

Outlook

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 ( DOX ), Barracuda Networks, Inc ( CUDA ) and Science Applications International Corporation ( SAIC ), each carrying a Zacks Rank #2 (Buy).


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: AOS , DOX , ACXM , SAIC , CUDA

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