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Acxiom Beats on Both Q3 Earnings and Revenue, Shares Up 9%

Leading analytics and software-as-a-service provider Acxiom Corporation'sACXM third quarter fiscal 2016 earnings beat estimates as its adjusted earnings (with stock-based compensation adjustments) of 8 cents exceeded the Zacks Consensus Estimate of 6 cents.

Investors applauded the company's solid results, as shares soared 9.0% to close at $19.83 during the regular trading session on Feb 5, 2016.

GAAP loss came in at $1.4 million or loss of 2 cents per share, compared with an income of $4.2 million or 5 cents per share in the year-ago period. The GAAP loss for the reported quarter, despite a healthy top-line improvement, was primarily due to high operating costs. However, the company reported decent non-GAAP earnings of 18 cents per share versus 17 cents in the year-ago quarter.

Quarter Details

Total revenue for third-quarter fiscal 2016 was $221.2 million, up 6.2% compared to the prior-year quarter. Revenues were ahead of the Zacks Consensus Estimate of $216 million. The increase in revenues was due to over all growth in connectivity segment.

Sale from the Marketing Services segment increased to $115.7 million in comparison to the prior year quarter which was $114.4 million, due to expansion of business and client upsell set off by a few contract terminations. Segment sales from the U.S. market were $106 million, up about 2.5%.

The Audience Solutions segment increased to $77.0 million from $76.0 million in the year ago quarter. This increase was due to the same reason seen in the Marketing segment.

The Connectivity segment continued to show strong momentum, as revenues were up an impressive 58.7% year over year to $28.4 million compared to 17.9% in the prior-year quarter, driven by new customer additions of the LiveRamp Customer Link.

Gross profit for the reported quarter was $95.5 million compared with $82.4 million in the year-ago quarter, resulting in gross margin improvement to 43.2% from 39.6%. The improvement was driven by growth in the Connectivity segment.

Other Significant Developments in the Quarter

During third quarter fiscal 2016, Acxiom strengthened its Connectivity segment by adding around 20 new partners. On the other hand, it also acquired Audience Interconnect data platform from Allant Group, which will help expand its business and customer base since this company caters to about 50 million homes and over 100 million individuals.

Balance Sheet and Cash Flow

At quarter end, Acxiom had cash and cash equivalents of $186.4 million, while long-term debt stood at $168.7 million.

Net cash provided by operating activities aggregated $37.0 million during the quarter compared with $32.9 million in the prior-year period. Free cash flow to equity came in at $14.2 million for the reported quarter, showing a drastic improvement from $2.5 million in the prior-year period. The improvement was driven largely by lower capital spending.

During the reported quarter, Acxiom repurchased approximately 463,000 shares for $10 million. Since August 2011, the company has repurchased 14.8 million shares for $240 million under its share repurchase program.

Outlook Revised

For fiscal 2016, Acxiom revised its earlier guidance and expects revenues to be within $835 million and $840 million compared to the previous expectation of $815-$840 million. Non-GAAP earnings are expected to be around 54 cents per share in comparison to the earlier guidance of 45-50 cents.

Acxiom currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the IT services space include Science Applications International Corporation SAIC ,ServiceNow, Inc. NOW and Unisys Corporation UIS , each carrying a Zacks Rank #1 (Strong Buy).

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UNISYS (UIS): Free Stock Analysis Report

ACXIOM CORP (ACXM): Free Stock Analysis Report

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SCIENCE APP INT (SAIC): Free Stock Analysis Report

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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 Nasdaq, Inc.


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

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