Acxiom Tanks on Q1 Outlook

Acxiom (ACXM - Analyst Report) shares have slumped since the company's updated Q1 outlook released after the market close yesterday. The company also held a conference call discussing the revised outlook. ACXM shares opened trading this morning down nearly 20% compared to yesterday's close, and has fallen another 4% in trading so far today.

The company is now forecasting a sharp decline in Q1 (June quarter) revenues to the tune of 17%-21% sequentially, resulting in an implied sequential decline of roughly $45 million. Management cited two major reasons for the decline: (a) Clients are delaying decisions to award new projects and are pushing back implementation of existing projects, and (b) Consolidation and other financial issues within certain verticals have added to revenue shortfall.

Put together, the company now expects Q1:FY2010 revenues to come between $245-$255 million with EPS of $0.03 - $0.07. This compares to current consensus of $283 million in revenues and EPS of $0.21.

ACXM management pointed out that its pipeline remains robust, with $335 million of total contract wins still in place. The difficulty appears to be the slow pace at which the pipeline is translating into revenues. Management attributed cutback in discretionary expenditures at the client level (roughly 25% of its business) as the main reason for the expected revenue shortfall.

Evidently, around 50% of this shortfall has stemmed from order delays or volume reductions, all of which may filter into the revenue stream in the coming quarters. The company also noted that Europe continues to be slow.

Founded in 1969, Acxiom Corporation is headquartered in Little Rock, Arkansas, with locations throughout the United States and Europe, as well as in Australia and China. The company integrates data, services and technology to create and deliver customer and information management solutions for companies.