Information technology services provider
) second-quarter fiscal 2014 adjusted earnings of 20 cents per
share marginally missed the year-ago tally and the Zacks
Consensus Estimate by a penny.
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Net income for the reported quarter dropped significantly to $9.8
million or 13 cents per share compared with $16.5 million or 21
cents per share in the year-ago quarter. The year-over-year
decline in reported earnings was primarily attributable to high
Total revenue for second quarter fiscal 2014 came in at $276.3
million, down 0.4% year over year owing to dismal performances in
two of the three segments.
By segments, the
Marketing and Data Services
segment sales improved 1.2% year over year to $201.0 million in
the reported quarter. IT Infrastructure
segment revenues dipped 4.7% to $66.8 million. Revenues from
segment decreased 3.4% year over year to $8.5 million in the
Operating margin for the reported quarter dropped to 7.1% from
10.9% in the year-ago quarter due to lower margin from Marketing
and Data Services segment, which accounts for bulk of the
revenues. With reduced margin levels, Acxiom intends to trim its
operating costs by approximately $20 million to $30 million
within the next 6-12 months. However, this would not entail any
reduction in ongoing investments for innovative products and
Marketing and Data Services operating margin was 8.0% compared
with 11.2% in the previous-year quarter. The IT Infrastructure
Management segment reported an operating margin of 17.9%, up from
12.2% in the year-ago quarter, while the respective figures for
the Other Services segment were 2.6% and (6.2%).
Significant Quarter Developments
During the reported quarter, the company launched a new Acxiom
AOS (Audience Operating System) - the first of its kind
cloud-based platform that delivers data and insights at
marketers' fingertips for a one-to-one marketing at scale and
revolutionizes customer experiences.
At the same time, Acxiom introduced AboutTheData.com - the first
online consumer portal that allows individuals to view and update
core data elements that are part of the information Acxiom makes
available to advertisers for digital marketing.
Balance Sheet and Cash Flows
Acxiom ended the quarter with cash and cash equivalents of $216.6
million. Long-term debt came in at $230.7 million.
Net cash provided by operating activities aggregated $40.5
million during the reported quarter compared with $39.2 million
in the prior-year period. Operating cash flow was $170 million
for the trailing twelve-month period, compared with $176 million
in the year-ago period. Free cash flow to equity stood at $69
million for the trailing twelve-month period, compared with $159
million for the prior-year period.
Subsequent to the quarter-end, Acxiom refinanced its $300 million
term loan and a $300 million undrawn revolving credit facility,
both maturing in Oct 2018. The proceeds of the term loan were
used to repay debt under its existing $215 million term loan and
for other general corporate purposes.
In the reported quarter, Acxiom repurchased 900,000 shares for
$22.7 million. Since Aug 2011, the company has repurchased 12
million shares for $179 million. Acxiom's total share repurchase
authorization is worth $200 million.
Concurrent with the earnings release, management slightly
modified its guidance for fiscal 2014. For fiscal 2014,
management expects revenues to dip marginally (versus flat
projections earlier) and earnings to remain flat (unchanged from
before). Management opined that fiscal 2013 was a transition
period for the company, wherein it invested considerably for new
product innovation and strengthening its client base. Acxiom
expects to continue with these initiatives in fiscal 2014,
thereby reaping synergistic benefits in future.
Acxiom currently has a Zacks Rank #3 (Hold). Other stocks in the
industry such as
CoStar Group Inc.
EPAM Systems, Inc.
), each with a Zacks Rank #2 (Buy), are worth considering at the