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Shares of Acxiom Corporation (ACXM - Analyst Report) increased 13.5% on Jan 30, following the company’s earnings release. Acxiom reported third-quarter 2014 earnings of $15.1 million or 19 cents per share versus $14.5 million or 19 cents in the year-ago quarter.

Adjusted earnings per share were 25 cents in the reported quarter, up from 19 cents in the year-ago period. The adjusted earnings beat the Zacks Consensus Estimate of 18 cents. The increase in earnings was driven by increase in sales.

Revenues

Total revenue for third quarter 2014 came in at $278.0 million, up 2.0% year over year. The increase in revenue was driven by increase in sales in Marketing and Data Services and also Other Services.

By segments, the Marketing and Data Services segment sales improved 6.0% year over year to $207.0 million in the reported quarter. IT Infrastructure Management Services segment revenues were down 11.0 % to $62.0 million. Revenues from Other Services segment were $9 million versus $8 million year over year.

Margins

Operating margin for the reported quarter dropped to 7.1% from 9.8% in the year-ago quarter. With reduced margin levels, Acxiom intends to trim its operating costs by approximately $20 million to $30 million within the next 6–12 months.

Marketing and Data Services operating margin was 11.0% compared with 9.0% in the previous-year quarter. The IT Infrastructure Management segment reported an operating margin of 10.0%, down from 14.0% in the year-ago quarter, while the Other Services segment’s operating margin improved to approximately 6% compared to a loss in the prior year.

Significant Quarter Developments

During the reported quarter, Acxiom and Starcom MediaVest Group (SMG) entered into a partnership by which SMG becomes the first agency to license Acxiom’s Audience Operating System (AOS). It is 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.

Additionally, Acxiom signed seven new AOS agreements during the quarter with customers in several key industries including Financial Services, Insurance, Telecommunications and Retail.

Balance Sheet and Cash Flows

Acxiom ended the quarter with cash and cash equivalents of $380.9 million. Long-term debt came in at $297.7 million.

Net cash provided by operating activities aggregated $63.8 million during the reported quarter compared with $38.5 million in the prior-year period. Operating cash flow was $195 million for the trailing twelve-month period compared with $133 million in the year-ago period. Free cash flow to equity stood at $103 million for the trailing twelve-month period compared with $44 million in the prior-year period.

Share Repurchase

Acxiom increased its share repurchase authorization from $200 million to $250 million. In the reported quarter, Axciom repurchased approximately 400,000 shares for $13.8 million during the quarter. Since Aug 2011, the company has repurchased 12.3 million shares for $193 million.

Outlook

For 2014, management expects revenues to be down marginally compared to $1.099 billion in 2013 and earnings per share to remain at 82 cents.

Acxiom currently has a Zacks Rank #2 (Buy). Other stocks that look equally good include GTT Communications, Inc (GTT - Snapshot Report)), Barracuda Networks, Inc (CUDA - Snapshot Report) and Fair Isaac Corporation (FICO - Snapshot Report), each carrying a Zacks Rank #2 (Buy).

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