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Acxiom (ACXM) Misses Earnings & Revenues Estimates in Q1

Zacks

Acxiom Corp ACXM reported non-GAAP earnings (with stock-based compensation adjustments) of 3 cents per share in first-quarter fiscal 2018, missing the Zacks Consensus Estimate by 4 cents.

Total revenue was $213.0 million, declining approximately 1% from the year-ago quarter and lower than the Zacks Consensus Estimate of $217 million. Adjusted total revenue increased 6% to $214 million.

Domestic revenues for the quarter were $194 million, down 1% year over year. However, international revenues improved 2% to $18 million in the reported quarter. Excluding revenues related to Australia transition and foreign exchange effect, international revenues increased 15% year over year to $20 million.

Shares fell more than 0.26% following the unimpressive fiscal first-quarter results. However, Acxiom's shares have lost 0.11% year to date, underperforming the industry’s gain of 20.56%.


Segment Details

Marketing Services segmentrevenues decreased 16.5% year over year to $91.6 million.

Marketing Services segment revenues from the U.S. markets were $85 million, down 17% year over year. International revenues declined 6% to $7 million.

Audience Solutions segmentrevenues increased 2.7% to $75.7 million, driven by growing customer base. Sales from the U.S. markets were $68 million, up 4% year over year, while international revenues decreased 6% to $8 million.

Acxiom continues to expand distribution to digital channels. The company added 15 new data services partners in the reported quarter.

The company expanded data partnerships with Pinterest and an integration with LinkedIn. These deals will enhance people-based targeting on its platform.

Acxiom now offers data products in more than 60 countries representing 2.8 billion addressable consumers. In an effort to expand its operations and grow its market share in that region, the company partnered with Four Info to deliver more precise cross channel audience targeting and measurement to the Latin American market.

The Connectivity segmentcontinued to show strong momentum, as revenues increased an impressive 44.2% year over year to $45.2 million.

Sales from the U.S. markets were $42 million, advancing 44% year over year. International revenues jumped 51% to $4 million.

Connectivity added approximately 40 new direct customers during the quarter and added over 25 new partner integrations including Microsoft’s (MSFT) LinkedIn. Total direct customer count grew to more than 450.

Moreover, the integration of Arbor and Circulate with LiveRamp has been smooth and clients are already benefiting from the combination of match data and omnichannel identity graph.

Also, the company recently launched a new solution IdentityLink for publishers, allowing them to better monetize their audiences by supporting people-based marketing initiatives.

Operating Details

Non-GAAP gross margin expanded 480 basis points (bps) on a year-over-year basis to 49.9%. The improvement was primarily driven by robust performance from all the three segments. Connectivity, Audience Solutions and Marketing Services segment gross margins surged 480 bps, 550 bps and 10 bps, respectively.

Operating expenses as percentage of revenues (prior to one-time items) increased 1,020 bps to 49.1%, on the back of 240 bps jump in research & development (R&D) expense, 540 bps surge in sales & marketing expense and 240 bps increase in general & administrative expense.

Total segment operating margin expanded 150 bps to 22.7% in the reported quarter. Audience Solutions and Marketing Services operating margin expanded 370 and 320 bps, respectively. However, Connectivity reported operating margin contracted 100 bps from the year-ago quarter.

Non-GAAP operating margin improved 70 bps to 10.5% in the reported quarter.

Balance Sheet

Acxiom exited the fiscal first quarter with cash and cash equivalents of approximately $163.1 million compared with $170.3 million in the prior quarter. Accounts receivables were $131.3 million, down from $142.8 million in the previous quarter.

Cash flow from operations was $5.0 million against $30.7 million in the prior quarter.

Guidance

For fiscal 2018, Acxiom expects to report revenues in the range of $920—$930 million, up 7—8% over fiscal 2017. The Zacks consensus estimate for fiscal 2018 is pegged at $945.13 million. Non GAAP EPS is projected to be almost 80 cents, up 13% over fiscal 2017. The Zacks consensus estimate is pegged at 53 cents.

Management expects capital expenditure to be approximately $65 million for fiscal 2018, down from $70 million.

Acxiom Corporation Price, Consensus and EPS Surprise

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

Zacks Rank & Key Pick

Acxiom currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the same space are Lam Research Corporation LRCX, carrying a Zacks Rank #1 (Strong Buy), and Applied Materials AMAT and Fortive Corporation FTV, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Lam Research delivered a positive earnings surprise of 4.44%, on average, in the trailing four quarters.

Applied Materials delivered a positive earnings surprise of 3.35%, on average, in the trailing four quarters.

Fortive Corporation delivered a positive earnings surprise of 5.80%, on average, in the trailing four quarters.

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