Acxiom (ACXM) Beats Q2 Earnings & Revenues, Maintains View

Acxiom Corp. ACXM reported non-GAAP earnings of 22 cents per share in second-quarter fiscal 2018, beating the Zacks Consensus Estimate by 7 cents. The figure increased 22.2% from the year-ago quarter.

Revenues were $225.0 million, up 3.7% from the year-ago quarter and slightly better than the Zacks Consensus Estimate of $222 million. Excluding divestitures, Australia transition and foreign exchange effect, the company’s revenues increased 8%.

Adjusted domestic revenues were $206 million, up 8% year over year. Excluding revenues related to Australia transition and foreign exchange effect, international revenues increased 12% year over year to $19 million.

Notably, Acxiom’s shares have declined 8.1% year-to-date versus the 33.1% rally of the industry.

Segment Details

Marketing Services segment revenues fell 12% year over year to $94 million. The company added three new customers during the quarter.
 

Acxiom Corporation Price, Consensus and EPS Surprise

Acxiom Corporation Price, Consensus and EPS Surprise | Acxiom Corporation Quote

Marketing Services segment revenues from the U.S. markets were $87 million, down 11% year over year. International revenues also declined 11% to $7 million.

Audience Solutions segment revenues remained flat at $79 million. Sales from the U.S. markets were $71 million, flat year over year. International revenues increased 9% to $8 million.

Management stated that digital data growth or data being resold through indirect digital channels, like publishers and platforms, surged more than 30% in the quarter. During the quarter, the company entered into a new global data partnership with IPG Mediabrands. Acxiom also extended its relationship with PayPal PYPL, which currently has foothold in 14 markets.

The Connectivity segment continued to show strong momentum, as revenues increased an impressive 58% year over year to $52 million.

Sales from the U.S. markets were $48 million, advancing 57% year over year. International revenues jumped 77% to $4 million.

Connectivity added 25 new direct customers during the quarter. Total direct customer count increased to more than 475.

Acxiom stated that in the United States, LiveRamp now works with five of the top six financial services companies, four of the top five retailers, four of the top five automotive companies and all six of the top telecom providers.

Acxiom’s partner network continues to expand. The company has partnered with the likes of Adobe Systems Inc. ADBE and Microsoft Corporation’s MSFT LinkedIn in the recent past. During the quarter, the company announced a new partnership with Yelp Local Audiences.

Operating Details

Non-GAAP gross margin expanded 530 basis points (bps) on a year-over-year basis to 52.3%. Connectivity and Marketing Services segment gross margins surged 450 bps and 740 bps, respectively. Audience Solutions gross margin contracted 10 bps.

Reported operating expenses surged 21.8% to $109.7 million. Research and development (R&D) and Sales and marketing (S&M) increased 26.2% and 32.4%, respectively. However, General and administrative (G&A) declined 2.9% from the year-ago quarter.

Total segment operating margin expanded 160 bps to 25.3% in the reported quarter. Connectivity and Marketing Services operating margin expanded 590 and 450 bps, respectively. However, Audience Solutions operating margin contracted 80 bps from the year-ago quarter.

Non-GAAP operating margin improved 250 bps to 13.9% in the reported quarter.

Balance Sheet & Cash Flow

Acxiom exited the fiscal second quarter with cash and cash equivalents of approximately $169.5 million compared with $163.1 million in the prior quarter.

Cash flow from operations was $27.8 million against $5 million in the prior quarter.

Acxiom repurchased 860,000 shares for approximately $19.8 million.

Guidance

For fiscal 2018, Acxiom still expects revenues in the range of $920-$930 million, up 7-8% from fiscal 2017. Non-GAAP earnings are projected in the range of 80-85 cents per share, up 13-20% year over year.

Management expects capital expenditure to be approximately $60 million for fiscal 2018, down from $65 million.

Zacks Rank

Acxiom has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

 

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