EX-99.1 2 ex991.htm EXHIBIT 99.1 PRESS RELEASE AND FINANCIALS
 



 For more information, contact:
Lauren Dillard
 Investor Relations
(650) 372-2242
investor.relations@acxiom.com
EACXM


ACXIOM ANNOUNCES FIRST QUARTER RESULTS

Total Revenue Grows 9% Year-over-Year

Enters Into Definitive Agreement to Sell Impact Email Business

Expands Share Repurchase Program

LITTLE ROCK, Ark. – August 4, 2016 Acxiom® (Nasdaq: ACXM), an enterprise data, analytics and software-as-a-service company, today announced financial results for its first quarter ended June 30, 2016.

Financial Highlights

·
Revenue: Total revenue was $215 million, up 9% compared to the first quarter of last year driven by growth in each segment. US revenue of $197 million was up 11% year-over-year.
·
Operating Income (Loss): GAAP operating income from continuing operations improved to $8 million compared to a loss of $3 million in the prior year. Non-GAAP operating income from continuing operations improved 44% to approximately $21 million.
·
Earnings (Loss) per Share: GAAP diluted earnings per share from continuing operations were $0.05 compared to a loss per share of $0.07 in the prior year. Non-GAAP diluted earnings per share from continuing operations were $0.15, up from $0.09 a year ago.
·
Operating Cash Flow: Operating cash flow from continuing operations was $1 million, down from $12 million last year. For the trailing twelve-month period, operating cash flow from continuing operations was $102 million, up from $89 million in the comparable period.
●
Free Cash Flow to Equity: Free cash flow to equity was negative $22 million compared to negative $12 million in the prior year. For the trailing twelve-month period, free cash flow to equity was $8 million, up from negative $12 million in the comparable period.

Segment Results

Marketing Services

●
Revenue was $110 million, up 2% compared to the first quarter of last year. Marketing Database and Consulting revenue grew 8% year-over-year, but was offset by declines in Acxiom Impact. US revenue of $102 million was up 4% year-over-year.
·
Gross margin improved from 33% to 34%.
·
Segment income was $20 million, up 20% compared to the prior year.

Audience Solutions

·
Revenue was $74 million, up 8% compared to the prior year. US revenue of $66 million was up 9% year-over-year.
·
Gross margin improved from 54% to 57%.
·
Segment income was $25 million, up 4% compared to the prior year.

Connectivity

·
Revenue was $31 million, up 52% compared to the first quarter of last year. Connectivity exited the quarter with a $120 million annualized revenue run rate.
·
Gross margin declined from 58% to 56%.
·
Segment income was break-even compared to a loss of $1 million in the prior year.

A detailed discussion of our non-GAAP financial measures and a reconciliation between GAAP and non-GAAP results is provided in the schedules to this press release.

"I am pleased to report a solid first quarter, highlighted by strong financial performance, new partnerships and continued product innovation," said Acxiom CEO Scott Howe. "Fiscal 2017 is off to a good start, and we are focused on extending our early momentum through the remainder of the year."

Recent Business Highlights

·
Connectivity added more than 20 new customers during the quarter and added over 50 new partner integrations. Marketers can now onboard and activate their data across a growing network of more than 350 marketing platforms and data providers.

·
LiveRamp™ extended its data connectivity partnership with Google, adding Customer Match to an extensive set of integrations that include Google Analytics 360 Suite, Google DoubleClick Digital Marketing solutions and Google Store Transactions for both AdWords and DoubleClick Search. The new integration with Google Customer Match enables brands to activate their first-party data for targeting across YouTube, Search and Gmail.

·
LiveRamp announced a new integration with Facebook's Offline Conversions API, allowing clients to connect Facebook advertising campaigns with offline sales transactions taking place in stores, branch offices, contact centers and other brick-and-mortar locations.

·
Acxiom announced strategic "next-gen" enhancements to its proprietary recognition technology, AbiliTec®, improving marketers' ability to bring together disparate consumer data sources for a single, current and accurate view of a customer across all channels.

·
Acxiom repurchased 926,000 shares for approximately $20 million during the quarter. Since inception of the share repurchase program in August 2011, Acxiom has repurchased 16.4 million shares for $275 million.

Acxiom Impact Divestiture

Acxiom also announced that it has entered into a definitive agreement to sell its Impact email business (Acxiom Impact) to Zeta Interactive. In addition, Acxiom will enter into a separate multi-year contract to provide Zeta Interactive with Connectivity and Audience Solutions services. The transaction sharpens Acxiom's focus on providing the data foundation for the world's best marketers and opens the door to deeper partnerships with the marketing ecosystem.

The sale is expected to close in the second quarter of fiscal 2017, following the satisfaction of customary closing conditions.

Acxiom will use proceeds from the sale to help fund the expansion of its share repurchase program. As part of the revised program, Acxiom's Board of Directors has increased the share repurchase authorization by $100 million to $400 million and extended the duration of the program through June 30, 2018.  The company is authorized to repurchase shares from time to time in open market or privately negotiated transactions, depending on prevailing market conditions and other factors. The repurchase program may be suspended or discontinued at any time.

 
 
2
Financial Outlook

Acxiom's non-GAAP guidance excludes the impact of non-cash compensation, purchased intangible asset amortization, restructuring charges and separation and transformation costs. Acxiom's fiscal 2017 guidance assumes that the sale of Acxiom Impact will close on September 30, 2016.
For fiscal 2017, Acxiom now expects to report:
·
Revenue in the range of $850 million to $870 million

·
GAAP diluted earnings per share in the range of $0.10 to $0.14

·
Non-GAAP diluted earnings per share in the range of $0.55 to $0.60

Conference Call

Acxiom will hold a conference call at 4:00 p.m. CT today to further discuss this information. Interested parties are invited to listen to the call which will be broadcast via the Internet at investors.acxiom.com. A slide presentation will be referenced during the call and can be accessed here.

About Acxiom

Acxiom is an enterprise data, analytics and software-as-a-service company that uniquely fuses trust, experience and scale to fuel data-driven results. For over 45 years, Acxiom has been an innovator in harnessing the most important sources and uses of data to strengthen connections between people, businesses and their partners. Utilizing a channel and media neutral approach, we leverage cutting-edge, data-oriented products and services to maximize customer value. Every week, Acxiom powers more than a trillion transactions that enable better living for people and better results for our 3,250+ global clients. For more information about Acxiom, visit Acxiom.com.
Forward-Looking Statements
This release and today's conference call contains forward-looking statements including, without limitation, statements regarding expected levels of revenue and earnings per share. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially. The following are factors, among others, that could cause actual results to differ materially from these forward-looking statements: the possibility that the expected revenue from the divisions may not be realized within the expected timeframe; the possibility that certain contracts may not generate the anticipated revenue or profitability or may not be closed within the anticipated time frames; the possibility that significant customers may experience extreme, severe economic difficulty or otherwise reduce or cancel the amount of business they do with us; the possibility that we will not successfully complete customer contract requirements on time or meet the service levels specified in the contracts, which may result in contract penalties or lost revenue; the possibility that we will not complete the sale of Acxiom Impact within the anticipated timeframe; the possibility that data suppliers might withdraw data from us, leading to our inability to provide certain products and services to our clients; the possibility that we may not be able to attract, retain or motivate qualified technical, sales and leadership associates, or that we may lose key associates; the possibility that we may not be able to adequately adapt to rapidly changing computing environments, technologies and marketing practices; the possibility that we will not be able to continue to receive credit upon satisfactory terms and conditions; the possibility that negative changes in economic conditions in general or other conditions might lead to a reduction in demand for our products and services; the possibility that there will be changes in consumer or business information industries and markets that negatively impact the company; the possibility that the historical seasonality of our business may change; the possibility that we will not be able to achieve anticipated cost reductions and avoid unanticipated costs; the possibility that the fair value of certain of our assets may not be equal to the carrying value of those assets now or in future time periods; the possibility that unusual charges may be incurred; the possibility that changes in accounting pronouncements may occur and may impact these forward-looking statements; the possibility that we may encounter difficulties when entering new markets or industries; the possibility that we could experience loss of data center capacity or interruption of telecommunication links; the possibility that new laws may be enacted which limit our ability to provide services to our clients and/or which limit the use of data; and other risks and uncertainties, including those detailed from time to time in our current and periodic reports filed with the Securities and Exchange Commission, including our current reports on Form 8-K, quarterly reports on Form 10-Q and annual reports on Form 10-K, particularly the discussion under the caption "Item 1A. RISK FACTORS" in our Annual Report on Form 10-K for the year ended March 31, 2016, which was filed with the Securities and Exchange Commission on May 27, 2016.
3
With respect to the provision of products or services outside our primary base of operations in the United States, all of the above factors apply, along with the difficulty of doing business in numerous sovereign jurisdictions due to differences in scale, competition, culture, laws and regulations.
We undertake no obligation to update the information contained in this press release or any other forward-looking statement.
Acxiom is a registered trademark of Acxiom Corporation.

To automatically receive Acxiom Corporation financial news by email, please visit www.acxiom.com and subscribe to email alerts.
 
4
 
 
                         
ACXIOM CORPORATION AND SUBSIDIARIES
  
CONSOLIDATED STATEMENTS OF OPERATIONS
  
(Unaudited)
  
(Dollars in thousands, except earnings (loss) per share)
  
                         
                         
   
For the Three Months Ended
  
   
June 30,
  
                 $    
 
%
  
   
2016
    
2015
    
Variance
    
Variance
  
                           
Revenues
    
214,801
      
196,895
      
17,906
      
9.1
%
                                 
Cost of revenue
    
122,819
      
117,709
      
5,110
      
4.3
%
     Gross profit
    
91,982
      
79,186
      
12,796
      
16.2
%
     % Gross margin
    
42.8
%
    
40.2
%
                
                                 
Operating expenses:
                                
    Research and development
    
18,652
      
20,011
      
(1,359
)
    
(6.8
%)
    Sales and marketing
    
37,348
      
29,494
      
7,854
      
26.6
%
    General and administrative
    
27,506
      
31,743
      
(4,237
)
    
(13.3
%)
    Gains, losses and other items, net
    
314
      
807
      
(493
)
    
(61.1
%)
Total operating expenses
    
83,820
      
82,055
      
1,765
      
2.2
%
                                 
    Income (loss) from operations
    
8,162
      
(2,869
)
    
11,031
      
384.5
%
     % Margin
    
3.8
%
    
-1.5
%
                
   Other income (expense):
                                
     Interest expense
    
(1,812
)
    
(1,885
)
    
73
      
3.9
%
     Other, net
    
307
      
304
      
3
      
1.0
%
   Total other expense
    
(1,505
)
    
(1,581
)
    
76
      
4.8
%
                                 
   Earnings (loss) from continuing operations before income taxes
    
6,657
      
(4,450
)
    
11,107
      
249.6
%
                                 
   Income taxes
    
2,681
      
732
      
1,949
      
266.3
%
                                 
   Net earnings (loss) from continuing operations
    
3,976
      
(5,182
)
    
9,158
      
176.7
%
                                 
   Earnings from discontinued operations, net of tax
    
-
      
4,143
      
(4,143
)
    
(100.0
%)
                                 
    Net earnings (loss)
    
3,976
      
(1,039
)
    
5,015
      
482.7
%
                                 
Basic earnings (loss) per share:
                                
   Net earnings (loss) from continuing operations
    
0.05
      
(0.07
)
    
0.12
      
177.2
%
   Net earnings from discontinued operations
    
-
      
0.05
      
(0.05
)
    
(100.0
%)
      Net earnings (loss)
    
0.05
      
(0.01
)
    
0.06
      
484.9
%
                                 
Diluted earnings (loss) per share:
                                
   Net earnings (loss) from continuing operations
    
0.05
      
(0.07
)
    
0.12
      
175.3
%
   Net earnings from discontinued operations
    
-
      
0.05
      
(0.05
)
    
(100.0
%)
      Net earnings (loss)
    
0.05
      
(0.01
)
    
0.06
      
475.8
%
                                 
Basic weighted average shares
    
77,471
      
77,918
                  
                                 
Diluted weighted average shares
    
79,353
      
77,918
                  
                                 
Some earnings (loss) per share amounts may not add due to rounding
                                
                                 
 
 
5
             
ACXIOM CORPORATION AND SUBSIDIARIES
  
RECONCILIATION OF GAAP TO NON-GAAP EPS (1)
  
(Unaudited)
  
(Dollars in thousands, except earnings (loss) per share)
  
             
   
For the Three Months Ended
  
   
June 30,
  
   
2016
    
2015
  
             
             
   Earnings (loss) from continuing operations before income taxes
    
6,657
      
(4,450
)
                 
   Income taxes
    
2,681
      
732
  
                 
   Net earnings (loss) from continuing operations
    
3,976
      
(5,182
)
                 
   Earnings from discontinued operations, net of tax
    
-
      
4,143
  
                 
   Net earnings (loss)
    
3,976
      
(1,039
)
                 
Earnings (loss) per share:
                
                 
    Basic
    
0.05
      
(0.01
)
                 
    Diluted
    
0.05
      
(0.01
)
                 
Excluded items:
                
  Purchased intangible asset amortization  (cost of revenue)
    
4,077
      
3,754
  
  Non-cash stock compensation (cost of revenue and operating expenses)
    
8,590
      
8,123
  
  Restructuring charges and other adjustments (gains, losses, and other)
    
314
      
807
  
  Separation and transformation costs (general and administrative)
    
-
      
3,414
  
  Accelerated amortization (cost of revenue)
    
-
      
1,442
  
                 
 Total excluded items, continuing operations
    
12,981
      
17,540
  
                 
   Earnings from continuing operations before income taxes
                
     and excluding items
    
19,638
      
13,090
  
                 
   Income taxes (2)
    
7,852
      
5,632
  
                 
   Non-GAAP net earnings
    
11,786
      
7,458
  
                 
Non-GAAP earnings per share:
                
                 
    Basic
    
0.15
      
0.10
  
                 
    Diluted
    
0.15
      
0.09
  
                 
Basic weighted average shares
    
77,471
      
77,918
  
                 
Diluted weighted average shares
    
79,353
      
79,352
  
                 
(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a
  
substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial
  
statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP
  
measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on
  
the usefulness of these measures, please see Appendix A.
                
                 
(2) Income taxes were calculated reflecting an effective non-GAAP tax rate of 40.0% and 43.0% in the first quarter of fiscal
  
2017 and 2016, respectively. The difference between our GAAP and non-GAAP tax rates in the first quarter of fiscal 2017 and
  
2016 were primarily due to the net tax effects of excluded items.
                
                 
                 

6
                         
ACXIOM CORPORATION AND SUBSIDIARIES
  
RESULTS BY SEGMENT
  
(Unaudited)
  
(Dollars in thousands)
  
                         
                         
   
For the Three Months Ended
  
   
June 30,
  
                 $    
 
%
  
   
2016
    
2015
    
Variance
    
Variance
  
                           
Revenues
                          
Marketing Services
    
109,715
      
107,726
      
1,989
      
1.8
%
Audience Solutions
    
73,744
      
68,550
      
5,194
      
7.6
%
Connectivity
    
31,342
      
20,619
      
10,723
      
52.0
%
Total operating segment revenues
    
214,801
      
196,895
      
17,906
      
9.1
%
                                 
Gross profit
                                
Marketing Services
    
37,466
      
36,034
      
1,432
      
4.0
%
Audience Solutions
    
41,912
      
36,824
      
5,089
      
13.8
%
Connectivity
    
17,575
      
11,953
      
5,622
      
47.0
%
Total operating segment gross profit
    
96,953
      
84,811
      
12,142
      
14.3
%
                                 
Gross profit margin %
                                
Marketing Services
    
34.1
%
    
33.4
%
                
Audience Solutions
    
56.8
%
    
53.7
%
                
Connectivity
    
56.1
%
    
58.0
%
                
Total operating segment gross margin
    
45.1
%
    
43.1
%
                
                                 
Income (loss) from operations
                                
Marketing Services
    
20,145
      
16,853
      
3,292
      
19.5
%
Audience Solutions
    
25,096
      
24,087
      
1,009
      
4.2
%
Connectivity
    
291
      
(791
)
    
1,082
      
136.8
%
Total operating segment income from operations
    
45,532
      
40,149
      
5,383
      
13.4
%
                                 
Operating income (loss) margin %
                                
Marketing Services
    
18.4
%
    
15.6
%
                
Audience Solutions
    
34.0
%
    
35.1
%
                
Connectivity
    
0.9
%
    
-3.8
%
                
Total operating segment operating margin
    
21.2
%
    
20.4
%
                
                                 
                                 
                                 
                                 
                                 
 

 
7
             
ACXIOM CORPORATION AND SUBSIDIARIES
  
RECONCILIATION OF SEGMENT RESULTS
  
(Unaudited)
  
(Dollars in thousands)
  
             
   
For the Three Months Ended
  
   
June 30,
  
             
   
2016
    
2015
  
             
Total operating segment gross profit
    
96,953
      
84,811
  
                 
Less:
                
  Purchased intangible asset amortization
    
4,077
      
3,754
  
  Non-cash stock compensation
    
894
      
429
  
  Accelerated amortization
    
-
      
1,442
  
                 
Gross profit
    
91,982
      
79,186
  
                 
                 
Total operating segment income from operations
    
45,532
      
40,149
  
                 
Less:
                
  Corporate expenses
    
24,389
      
25,478
  
  Purchased intangible asset amortization
    
4,077
      
3,754
  
  Non-cash stock compensation
    
8,590
      
8,123
  
  Restructuring charges and other adjustments
    
314
      
807
  
  Separation and transformation costs
    
-
      
3,414
  
  Accelerated amortization
    
-
      
1,442
  
                 
Income (loss) from operations
    
8,162
      
(2,869
)
                 
                 
                 

8
             
ACXIOM CORPORATION AND SUBSIDIARIES
  
RECONCILIATION OF ADJUSTED EBITDA (1)
  
(Unaudited)
  
(Dollars in thousands)
  
             
   
For the Three Months Ended
  
   
June 30,
  
   
2016
    
2015
  
             
             
   Net earnings (loss) from continuing operations
    
3,976
      
(5,182
)
                 
   Income taxes
    
2,681
      
732
  
                 
   Other expense
    
(1,505
)
    
(1,581
)
                 
   Income (loss) from operations
    
8,162
      
(2,869
)
                 
Depreciation and amortization
    
20,790
      
21,775
  
Less:
                
  Deferred interest amortization
    
-
      
256
  
Adjusted depreciation and amortization
    
20,790
      
21,519
  
                 
EBITDA
    
28,952
      
18,650
  
                 
                 
Other adjustments:
                
  Non-cash stock compensation (cost of revenue and operating expenses)
    
8,590
      
8,123
  
  Restructuring charges and other adjustments (gains, losses, and other)
    
314
      
807
  
  Separation and transformation costs (general and administrative)
    
-
      
3,414
  
                 
 Other adjustments
    
8,904
      
12,344
  
                 
Adjusted EBITDA
    
37,856
      
30,994
  
                 
(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a
  
substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial
  
statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP
  
measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on
  
the usefulness of these measures, please see Appendix A.
                
                 
                 

9
                         
ACXIOM CORPORATION AND SUBSIDIARIES
  
CONDENSED CONSOLIDATED BALANCE SHEETS
  
(Unaudited)
  
(Dollars in thousands)
  
                         
   
June 30,
    
March 31,
      $    
 
%
  
   
2016
    
2016
    
Variance
    
Variance
  
Assets
                          
Current assets:
                          
  Cash and cash equivalents
    
150,160
      
189,629
      
(39,469
)
    
(20.8
%)
  Trade accounts receivable, net
    
127,655
      
138,650
      
(10,995
)
    
(7.9
%)
  Refundable income taxes
    
7,606
      
9,834
      
(2,228
)
    
(22.7
%)
  Other current assets
    
34,919
      
37,897
      
(2,978
)
    
(7.9
%)
                                 
     Total current assets
    
320,340
      
376,010
      
(55,670
)
    
(14.8
%)
                                 
Property and equipment
    
530,588
      
528,675
      
1,913
      
0.4
%
  Less - accumulated depreciation and amortization
    
351,377
      
345,632
      
5,745
      
1.7
%
                                 
Property and equipment, net
    
179,211
      
183,043
      
(3,832
)
    
(2.1
%)
                                 
Software, net of accumulated amortization
    
52,537
      
55,735
      
(3,198
)
    
(5.7
%)
Goodwill
    
492,598
      
492,745
      
(147
)
    
(0.0
%)
Purchased software licenses, net of accumulated amortization
    
9,561
      
10,116
      
(555
)
    
(5.5
%)
Deferred income taxes
    
6,170
      
6,885
      
(715
)
    
(10.4
%)
Other assets, net
    
23,547
      
25,315
      
(1,768
)
    
(7.0
%)
                                 
     
1,083,964
      
1,149,849
      
(65,885
)
    
(5.7
%)
                                 
Liabilities and Stockholders' Equity
                                
Current liabilities:
                                
  Current installments of long-term debt
    
32,262
      
32,243
      
19
      
0.1
%
  Trade accounts payable
    
26,216
      
37,717
      
(11,501
)
    
(30.5
%)
  Accrued payroll and related expenses
    
27,733
      
61,309
      
(33,576
)
    
(54.8
%)
  Other accrued expenses
    
47,977
      
48,254
      
(277
)
    
(0.6
%)
  Deferred revenue
    
38,378
      
44,477
      
(6,099
)
    
(13.7
%)
                                 
   Total current liabilities
    
172,566
      
224,000
      
(51,434
)
    
(23.0
%)
                                 
Long-term debt
    
150,124
      
157,897
      
(7,773
)
    
(4.9
%)
                                 
Deferred income taxes
    
52,571
      
53,964
      
(1,393
)
    
(2.6
%)
                                 
Other liabilities
    
14,939
      
15,020
      
(81
)
    
(0.5
%)
                                 
  Stockholders' equity:
                                
  Common stock
    
13,102
      
13,039
      
63
      
0.5
%
  Additional paid-in capital
    
1,095,510
      
1,082,220
      
13,290
      
1.2
%
  Retained earnings
    
602,477
      
598,501
      
3,976
      
0.7
%
  Accumulated other comprehensive income
    
7,590
      
8,590
      
(1,000
)
    
(11.6
%)
  Treasury stock, at cost
    
(1,024,915
)
    
(1,003,382
)
    
(21,533
)
    
(2.1
%)
Total stockholders' equity
    
693,764
      
698,968
      
(5,204
)
    
(0.7
%)
                                 
     
1,083,964
      
1,149,849
      
(65,885
)
    
(5.7
%)
                                 
                                 

 
 
10
             
ACXIOM CORPORATION AND SUBSIDIARIES
  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  
(Unaudited)
  
(Dollars in thousands)
  
             
   
For the Three Months Ended
  
             
   
June 30,
  
             
   
2016
    
2015
  
             
Cash flows from operating activities:
            
  Net earnings (loss)
    
3,976
      
(1,039
)
  Earnings from discontinued operations, net of tax
    
-
      
(4,143
)
  Non-cash operating activities:
                
    Depreciation and amortization
    
20,790
      
21,775
  
    Loss on disposal or impairment of assets
    
-
      
241
  
    Deferred income taxes
    
(678
)
    
(1,522
)
    Non-cash stock compensation expense
    
8,590
      
8,123
  
    Changes in operating assets and liabilities:
                
      Accounts receivable
    
9,487
      
(8,037
)
      Other assets
    
5,383
      
384
  
      Accounts payable and other liabilities
    
(41,021
)
    
(3,530
)
      Deferred revenue
    
(5,777
)
    
(255
)
      Net cash provided by operating activities
    
750
      
11,997
  
Cash flows from investing activities:
                
    Capitalized software
    
(3,982
)
    
(2,797
)
    Capital expenditures
    
(10,694
)
    
(12,876
)
    Data acquisition costs
    
(20
)
    
(430
)
      Net cash used in investing activities
    
(14,696
)
    
(16,103
)
Cash flows from financing activities:
                
    Payments of debt
    
(8,053
)
    
(8,099
)
    Sale of common stock, net of stock acquired for withholding taxes
    
2,974
      
2,069
  
    Excess tax benefits from share-based compensation
    
514
      
(77
)
    Acquisition of treasury stock
    
(20,207
)
    
(14,951
)
      Net cash used in financing activities
    
(24,772
)
    
(21,058
)
Cash flows from discontinued operations:
                
    From operating activities
    
-
      
11,653
  
    From investing activities
    
-
      
(4,484
)
    From financing activities
    
-
      
(153
)
      Net cash provided by discontinued operations
    
-
      
7,016
  
      Effect of exchange rate changes on cash
    
(751
)
    
330
  
                 
  Net change in cash and cash equivalents
    
(39,469
)
    
(17,818
)
  Cash and cash equivalents at beginning of period
    
189,629
      
141,010
  
  Cash and cash equivalents at end of period
    
150,160
      
123,192
  
                 
   Supplemental cash flow information:
                
    Cash paid (received) during the period for:
                
      Interest
    
2,258
      
2,185
  
      Income taxes
    
(76
)
    
(1,044
)
      Payments on capital leases and installment payment arrangements
    
-
      
216
  
      Other debt payments, excluding line of credit
    
8,053
      
8,036
  
                 
                 

11
                                     
ACXIOM CORPORATION AND SUBSIDIARIES
  
CALCULATION OF FREE CASH FLOW TO EQUITY (1)
  
(Unaudited)
  
(Dollars in thousands)
  
                                     
                                     
   
06/30/15
    
09/30/15
    
12/31/15
    
03/31/16
    
FY2016
    
06/30/16
  
                                     
GAAP Net Cash Provided by Operating Activities
    
11,997
      
21,357
      
37,018
      
43,270
      
113,642
      
750
  
                                                 
Less:
                                                
    Capitalized software
    
(2,797
)
    
(3,936
)
    
(3,627
)
    
(4,520
)
    
(14,880
)
    
(3,982
)
    Capital expenditures
    
(12,876
)
    
(10,244
)
    
(10,702
)
    
(13,601
)
    
(47,423
)
    
(10,694
)
    Data acquisition costs
    
(430
)
    
(281
)
    
(424
)
    
(418
)
    
(1,553
)
    
(20
)
    Payments on capital leases and installment payment arrangements
    
(63
)
    
-
      
-
      
-
      
(63
)
    
-
  
    Other required debt payments
    
(8,036
)
    
(8,039
)
    
(8,045
)
    
(8,048
)
    
(32,168
)
    
(8,053
)
                                                 
Free Cash Flow to Equity
    
(12,205
)
    
(1,143
)
    
14,220
      
16,683
      
17,555
      
(21,999
)
                                                 
(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a
                          
substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial
                          
statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP
                          
measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on
                          
the usefulness of these measures, please see Appendix A.
                                                
                                                 

12
                                                 
ACXIOM CORPORATION AND SUBSIDIARIES
  
CONSOLIDATED STATEMENTS OF OPERATIONS-GAAP
  
(Unaudited)
  
(Dollars in thousands, except earnings (loss) per share)
  
                                                 
                                       
Q1 FY17 to Q1 FY16
  
   
06/30/15
    
09/30/15
    
12/31/15
    
03/31/16
    
FY2016
    
06/30/16
    
%
    
 
 $   
Revenues
    
196,895
      
207,345
      
221,193
      
224,655
      
850,088
      
214,801
      
9.1
%
    
17,906
  
                                                                 
Cost of revenue
    
117,709
      
121,312
      
125,735
      
123,626
      
488,382
      
122,819
      
4.3
%
    
5,110
  
     Gross profit
    
79,186
      
86,033
      
95,458
      
101,029
      
361,706
      
91,982
      
16.2
%
    
12,796
  
     % Gross margin
    
40.2
%
    
41.5
%
    
43.2
%
    
45.0
%
    
42.5
%
    
42.8
%
                
                                                                 
Operating expenses
                                                                
    Research and development
    
20,011
      
19,078
      
18,400
      
16,758
      
74,247
      
18,652
      
-6.8
%
    
(1,359
)
    Sales and marketing
    
29,494
      
34,259
      
36,581
      
45,842
      
146,176
      
37,348
      
26.6
%
    
7,854
  
    General and administrative
    
31,743
      
31,519
      
36,793
      
35,330
      
135,385
      
27,506
      
-13.3
%
    
(4,237
)
    Impairment of goodwill and other
    
-
      
729
      
-
      
6,100
      
6,829
      
-
      
-
      
-
  
    Gains, losses and other items, net
    
807
      
2,504
      
4,058
      
4,763
      
12,132
      
314
      
-61.1
%
    
(493
)
Total operating expenses
    
82,055
      
88,089
      
95,832
      
108,793
      
374,769
      
83,820
      
2.2
%
    
1,765
  
                                                                 
Income (loss) from operations
    
(2,869
)
    
(2,056
)
    
(374
)
    
(7,764
)
    
(13,063
)
    
8,162
      
384.5
%
    
11,031
  
  % Margin
    
-1.5
%
    
-1.0
%
    
-0.2
%
    
-3.5
%
    
-1.5
%
    
3.8
%
                
Other income (expense)
                                                                
  Interest expense
    
(1,885
)
    
(1,956
)
    
(1,948
)
    
(1,880
)
    
(7,669
)
    
(1,812
)
    
3.9
%
    
73
  
  Other, net
    
304
      
59
      
303
      
(214
)
    
452
      
307
      
1.0
%
    
3
  
Total other expense
    
(1,581
)
    
(1,897
)
    
(1,645
)
    
(2,094
)
    
(7,217
)
    
(1,505
)
    
4.8
%
    
76
  
                                                                 
Earnings (loss) from continuing operations before income taxes
    
(4,450
)
    
(3,953
)
    
(2,019
)
    
(9,858
)
    
(20,280
)
    
6,657
      
249.6
%
    
11,107
  
Income taxes
    
732
      
(2,608
)
    
(1,580
)
    
(8,176
)
    
(11,632
)
    
2,681
      
266.3
%
    
1,949
  
                                                                 
Net earnings (loss) from continuing operations
    
(5,182
)
    
(1,345
)
    
(439
)
    
(1,682
)
    
(8,648
)
    
3,976
      
176.7
%
    
9,158
  
                                                                 
Earnings (loss) from discontinued operations, net of tax
    
4,143
      
12,068
      
(971
)
    
111
      
15,351
      
-
      
-100.0
%
    
(4,143
)
                                                                 
Net earnings (loss)
    
(1,039
)
    
10,723
      
(1,410
)
    
(1,571
)
    
6,703
      
3,976
      
482.7
%
    
5,015
  
                                                                 
Diluted earnings (loss) per share
    
(0.01
)
    
0.14
      
(0.02
)
    
(0.02
)
    
0.09
      
0.05
      
475.8
%
    
0.06
  
                                                                 
Diluted earnings (loss) per share continuing operations
    
(0.07
)
    
(0.02
)
    
(0.01
)
    
(0.02
)
    
(0.11
)
    
0.05
      
175.3
%
    
0.12
  
                                                                 
Some earnings (loss) per share amounts may not add due to rounding
                                                          
                                                                 

 
13
                                     
ACXIOM CORPORATION AND SUBSIDIARIES
        
RECONCILIATION OF GAAP TO NON-GAAP EPS
        
(Unaudited)
        
(Dollars in thousands, except earnings (loss) per share)
        
                                     
                                     
                                     
   
06/30/15
    
09/30/15
    
12/31/15
    
03/31/16
    
FY2016
    
06/30/16
  
                                     
                                     
   Earnings (loss) from continuing operations before income taxes
    
(4,450
)
    
(3,953
)
    
(2,019
)
    
(9,858
)
    
(20,280
)
    
6,657
  
                                                 
   Income taxes
    
732
      
(2,608
)
    
(1,580
)
    
(8,176
)
    
(11,632
)
    
2,681
  
                                                 
   Net earnings (loss) from continuing operations
    
(5,182
)
    
(1,345
)
    
(439
)
    
(1,682
)
    
(8,648
)
    
3,976
  
                                                 
   Earnings (loss) from discontinued operations, net of tax
    
4,143
      
12,068
      
(971
)
    
111
      
15,351
      
-
  
                                                 
   Net earnings (loss)
    
(1,039
)
    
10,723
      
(1,410
)
    
(1,571
)
    
6,703
      
3,976
  
                                                 
Earnings (loss) per share:
                                                
                                                 
    Basic
    
(0.01
)
    
0.14
      
(0.02
)
    
(0.02
)
    
0.09
      
0.05
  
                                                 
    Diluted
    
(0.01
)
    
0.14
      
(0.02
)
    
(0.02
)
    
0.09
      
0.05
  
                                                 
Excluded items:
                                                
  Purchased intangible asset amortization  (cost of revenue)
    
3,754
      
3,754
      
3,754
      
4,204
      
15,466
      
4,077
  
  Non-cash stock compensation (cost of revenue and operating expenses)
    
8,123
      
7,360
      
8,046
      
7,934
      
31,463
      
8,590
  
  Impairment of goodwill and other
    
-
      
729
      
-
      
6,100
      
6,829
      
-
  
  Restructuring charges and other adjustments (gains, losses, and other)
    
807
      
2,504
      
4,058
      
4,763
      
12,132
      
314
  
  Separation and transformation costs (general and administrative)
    
3,414
      
6,098
      
6,628
      
4,686
      
20,826
      
-
  
  Accelerated amortization (cost of revenue)
    
1,442
      
78
      
78
      
252
      
1,850
      
-
  
                                                 
 Total excluded items, continuing operations
    
17,540
      
20,523
      
22,564
      
27,939
      
88,566
      
12,981
  
                                                 
   Earnings from continuing operations before income taxes
                                                
     and excluding items
    
13,090
      
16,570
      
20,545
      
18,081
      
68,286
      
19,638
  
                                                 
   Income taxes
    
5,632
      
5,163
      
6,399
      
4,262
      
21,456
      
7,852
  
                                                 
   Non-GAAP net earnings
    
7,458
      
11,407
      
14,146
      
13,819
      
46,830
      
11,786
  
                                                 
Non-GAAP earnings per share:
                                                
                                                 
    Basic
    
0.10
      
0.15
      
0.18
      
0.18
      
0.60
      
0.15
  
                                                 
    Diluted
    
0.09
      
0.14
      
0.18
      
0.18
      
0.59
      
0.15
  
                                                 
Basic weighted average shares
    
77,918
      
77,960
      
77,831
      
76,753
      
77,616
      
77,471
  
                                                 
Diluted weighted average shares
    
79,352
      
79,310
      
79,346
      
78,386
      
79,099
      
79,353
  
                                                 
Some earnings per share amounts may not add due to rounding
                                                
                                                 
 
14
 
 
     
ACXIOM CORPORATION AND SUBSIDIARIES
            
     RESULTS BY SEGMENT            
     (Unaudited)            
     (Dollars in thousands)            
                                                 
                                                 
                                                 
                                                 
                                       
Q1 FY17 to Q1 FY16
  
   
06/30/14
    
09/30/14
    
12/31/14
    
03/31/15
    
FY2016
    
06/30/16
    
%
    
 
 $   
                                                   
                                                   
Marketing services
    
107,726
      
112,979
      
115,725
      
113,342
      
449,772
      
109,715
      
1.8
%
    
1,989
  
Audience Solutions
    
68,550
      
72,122
      
77,046
      
80,128
      
297,846
      
73,744
      
7.6
%
    
5,194
  
Connectivity
    
20,619
      
22,244
      
28,422
      
31,185
      
102,470
      
31,342
      
52.0
%
    
10,723
  
                                                                 
Total operating segment revenues
    
196,895
      
207,345
      
221,193
      
224,655
      
850,088
      
214,801
      
9.1
%
    
17,906
  
                                                                 
                                                                 
                                                                 
Marketing services
    
36,034
      
37,545
      
38,561
      
40,117
      
152,257
      
37,466
      
4.0
%
    
1,432
  
Audience Solutions
    
36,824
      
39,170
      
45,265
      
46,457
      
167,716
      
41,912
      
13.8
%
    
5,089
  
Connectivity
    
11,953
      
13,499
      
16,130
      
19,617
      
61,199
      
17,575
      
47.0
%
    
5,622
  
                                                                 
Total operating segment gross profit
    
84,811
      
90,214
      
99,956
      
106,191
      
381,172
      
96,953
      
14.3
%
    
12,142
  
                                                                 
                                                                 
                                                                 
Marketing services
    
33.4
%
    
33.2
%
    
33.3
%
    
35.4
%
    
33.9
%
    
34.1
%
                
Audience Solutions
    
53.7
%
    
54.3
%
    
58.8
%
    
58.0
%
    
56.3
%
    
56.8
%
                
Connectivity
    
58.0
%
    
60.7
%
    
56.8
%
    
62.9
%
    
59.7
%
    
56.1
%
                
                                                                 
Total operating segment gross margin
    
43.1
%
    
43.5
%
    
45.2
%
    
47.3
%
    
44.8
%
    
45.1
%
                
                                                                 
                                                                 
                                                                 
Marketing services
    
16,853
      
17,908
      
20,309
      
19,301
      
74,371
      
20,145
      
19.5
%
    
3,292
  
Audience Solutions
    
24,087
      
25,190
      
30,723
      
29,598
      
109,598
      
25,096
      
4.2
%
    
1,009
  
Connectivity
    
(791
)
    
(1,068
)
    
(1,015
)
    
(424
)
    
(3,298
)
    
291
      
136.8
%
    
1,082
  
                                                                 
Total operating segment income from operations
    
40,149
      
42,030
      
50,017
      
48,475
      
180,671
      
45,532
      
13.4
%
    
5,383
  
                                                                 
                                                                 
                                                                 
Marketing services
    
15.6
%
    
15.9
%
    
17.5
%
    
17.0
%
    
16.5
%
    
18.4
%
                
Audience Solutions
    
35.1
%
    
34.9
%
    
39.9
%
    
36.9
%
    
36.8
%
    
34.0
%
                
Connectivity
    
-3.8
%
    
-4.8
%
    
-3.6
%
    
-1.4
%
    
-3.2
%
    
0.9
%
                
                                                                 
Total operating segment operating margin
    
20.4
%
    
20.3
%
    
22.6
%
    
21.6
%
    
21.3
%
    
21.2
%
                
                                                                 
Some totals may not add due to rounding.                                                                
                                                                 

 
15
             
ACXIOM CORPORATION AND SUBSIDIARIES
  
RECONCILIATION OF GAAP TO NON-GAAP EPS GUIDANCE (1)
  
(Unaudited)
  
(Dollars in thousands, except earnings per share)
  
             
   
For the year ending
  
   
March 31, 2017
  
   
Low Range
    
High Range
  
             
   Earnings before income taxes
    
14,000
      
21,000
  
                 
   Income taxes
    
7,000
      
9,870
  
                 
   Net earnings
    
7,000
      
11,130
  
                 
  Diluted earnings per share
  
$
0.09
    
$
0.14
  
                 
Excluded items:
                
  Purchased intangible asset amortization
    
16,000
      
16,000
  
  Non-cash stock compensation
    
32,000
      
32,000
  
  Restructuring charges
    
1,000
      
1,000
  
  Separation and transformation costs
    
10,000
      
10,000
  
                 
 Total excluded items
    
59,000
      
59,000
  
                 
   Earnings before income taxes and excluding items
    
73,000
      
80,000
  
                 
   Income taxes (2)
    
29,200
      
32,000
  
                 
   Non-GAAP net earnings
    
43,800
      
48,000
  
                 
  Non-GAAP diluted earnings per share
  
$
0.55
    
$
0.60
  
                 
  Diluted weighted average shares
    
80,000
      
80,000
  
                 
(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a
  
substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial
  
statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP
  
measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on
  
the usefulness of these measures, please see Appendix A.
                
                 
(2) Income taxes were calculated reflecting an effective non-GAAP tax rate of 40.0%. The difference between our GAAP and Non-GAAP
  
tax rates was due to the effect of excluded items.
                
                 
                 

16
ACXIOM CORPORATION
APPENDIX A
  
Q1 FISCAL 2017 FINANCIAL RESULTS
  
EXPLANATION OF NON-GAAP MEASURES
  
                       
To supplement our financial results we use non-GAAP measures as indicated in the press release
    
schedules, which excludes certain expenses related to acquisitions as well as other significant expenses
  
including non-cash stock compensation and restructuring charges, that we belive are helpful in
    
understanding our past performance and our future results.  Our non-GAAP financial measures and
    
schedules are not meant to be considered in isolation or as a substitute for comparable GAAP
    
measures and should be read only in conjunction with our condensed consolidated financial statements
    
prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP
    
financial measures internally to understand, manage and evaluate our business and to make operating
    
decisions. These non-GAAP measures are among the primary factors management uses in planning
    
for and forecasting future periods. Compensation of our executives is also based in part on the
    
performance of our business based on these non-GAAP measures.
          
                       
Our non-GAAP financial measures, including non-GAAP earnings per share and adjusted EBITDA,
    
reflect adjustments based on the following items, as well as the related income tax effects when applicable:
  
                       
Purchased intangible asset amortization: We incur amortization of purchased intangibles in connection with our
  
acquisitions. Purchased intangibles include (i) developed technology, (ii) customer relationships, and (iii) trade
  
names. We expect to amortize for accounting purposes the fair value of the purchased intangibles based on the
  
pattern in which the economic benefits of the intangible assets will be consumed as revenue is generated.
  
Although the intangible assets generate revenue for us, we exclude this item because this expense is non-cash
  
in nature and because we believe the non-GAAP financial measures excluding this item provide meaningful
  
supplemental information regarding our operational performance.
          
                       
Non-cash stock compensation: Non-cash stock compensation consists of charges for associate restricted stock
  
units, performance shares and stock options in accordance with current GAAP related to stock-based
  
compensation including expense associated with stock-based compensation related to unvested options assumed
  
in connection with our acquisitions. As we apply current stock-based compensation standards, we believe that it
  
is useful to investors to understand the impact of the application of these standards to our operational
    
performance. Although stock-based compensation expense is calculated in accordance with current GAAP and
  
constitutes an ongoing and recurring expense, such expense is excluded from non-GAAP results because it is
  
not an expense that typically requires or will require cash settlement by us and because such expense is not used
  
by us to assess the core profitability of our business operations.
          
                       
Restructuring charges and other adjustments: During the past several years, we have initiated certain
    
restructuring activities in order to align our costs in connection with both our operating plans and our business
  
strategies based on then-current economic conditions. As a result, we recognized costs related to termination
  
benefits for associates whose positions were eliminated, lease termination charges, and leasehold improvement
  
write offs. These charges, reported as gains, losses, and other items, net, are excluded from non-GAAP results
  
because such expense is not used by us to assess the core profitability of our business operations.
    
                       
Separation and transformation costs:  We incurred significant expenses in connection with the separation
  
of the IT Infrastructure Management and Marketing and Data Services business and subsequent
    
transformation activities post separation, which we generally would not have otherwise incurred in the periods
  
presented as part of our continuing operations.  Separation and transformation costs consist of third party
  
consulting arrangements. We believe it is useful for investors to understand the effects of these items and
  
excluding such items in non-GAAP financial measures provides meaningful supplemental information.
    
17
 
                       
 
Our non-GAAP financial schedules are:
                
                       
Non-GAAP EPS: Our non-GAAP earnings per share reflects adjustments as described above, as well as the
  
related tax effects where applicable.
                
                       
Adjusted EBITDA: Adjusted EBITDA is defined as net income (loss) from continuing operations before income
  
taxes, other expenses, depreciation and amortization, and including adjustments as described above.  We use
  
Adjusted EBITDA to measure our performance from period to period both at the consolidated level as well as
  
within our operating segments and to compare our results to those of our competitors. We believe that the
  
inclusion of Adjusted EBITDA provides useful supplementary information to and facilitates analysis by investors
  
in evaluating the Company's performance and trends. The presentation of Adjusted EBITDA is not meant to be
  
considered in isolation or as an alternative to net earnings as an indicator of our performance.
    
                       
Free Cash Flow to Equity: To supplement our statement of cash flows, we use a non-GAAP measure of cash
  
flow to analyze cash flows generated from operations. Free cash flow to equity is defined as operating cash flow
  
less cash used by investing activities (excluding the impact of cash paid in acquisitions), less required payments
  
of debt, and excluding the impact of discontinued operations. Management believes that this measure of cash
  
flow is meaningful since it represents the amount of money available from continuing operations for the
    
Company's discretionary spending after funding all required obligations including scheduled debt payments.
  
The presentation of non-GAAP free cash flow to equity is not meant to be considered in isolation or as an
  
alternative to cash flows from operating activities as a measure of liquidity.
        
                       
                       
                       

18