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Acxiom (ACXM) Up 9.3% Since Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Acxiom Corporation . Shares have added about 9.3% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is ACXM due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Recent Earnings

Acxiom delivered non-GAAP earnings of 27 cents per share in fourth-quarter fiscal 2018, beating the Zacks Consensus Estimate by 7 cents. The figure soared 80% from the year-ago quarter.

Revenues were $244.78 million, up 8.9% from the year-ago quarter marginally ahead of the Zacks Consensus Estimate of $245 million.

Domestic revenues were $222 million, up 7% year over year. Adjusted International revenues increased 18% year over year to $20 million. Excluding revenues related to Australia transition and foreign exchange effect, international revenues surged 28% year over year to $23 million.

During the quarter, Facebook had temporarily severed its collaboration with third-party data providers, Acxiom being one of them.

Audience Solutions division of the company provided data to Facebook which was available in Facebook Partner Categories. The data allowed marketers to target specific audience as required, and was aimed at enhancing value for both end users and businesses.

TechCrunch had revealed that Facebook shall, however, continue to work with Acxiom and Experian such that it can measure ad performance and provide metrics.

Notably, Facebook accounted for $60 million of fiscal 2018 revenues, representing 6.5% of total reported revenues.

Fiscal 2018 at a Glance

In fiscal 2018, non-GAAP total revenue increased 4.2% over fiscal 2017 to $917.41 million. The figure was better than management’s guided range of $910-$915 million. Earnings of 94 cents per share increased 32.4% over fiscal 2017 and were better than management’s guidance of 85-89 cents per share.

The fiscal 2018 results comfortably surpassed both the Zacks Consensus Estimate for revenues and earnings which were $912.16 million and 87 cents per share, respectively.

The company launched more than 20 logos to strengthen marketing initiatives and enhance clientele.

Total direct client count came in at 570, up by 170 clients reported at the end of fiscal 2017.

Segment Details

The company currently reports results into three units — Marketing Services, Audience Solutions and Connectivity.

Revenues in the Marketing Services segment (accounted for 40.4% of total revenues) rose 5.3% year over year to $99 million.

Marketing Services segment revenues from the U.S. markets were $91 million, up 4% year over year. International revenues surged 23% to $8 million.

Audience Solutions segment (36%) revenues inched up 2.3% to $88 million. Sales from the U.S. markets were $79 million, which increased 2% year over year. International revenues increased 7% to $9 million.

Connectivity segment (23.3%) continued to show strong momentum, as revenues surged 29.5% year over year to $57 million.

Sales from the U.S. markets were $52 million, advancing 25% year over year. International revenues soared 105% to $6 million.

In the quarter, Acxiom added around 30 new clients.

Quarter Highlights

The company has partnered with Microsoft’s LinkedIn and Yelp Local Audiences in the past. During the quarter, the company announced extended partnership with RedPoint Global.

Additionally, the company has teamed up with social media firm Twitter Inc. to aid advertisers gauge the efficacy of advertising campaigns on offline sales.

Acxiom extended its collaboration with Adobe Systems Inc. and launched Digital Transformation Services and Adobe Audience Manager. The new services will enrich end-user experience by focusing on people-based marketing.

The company launched Patients Insights Package to empower its healthcare solutions initiatives. The new offering will ensure that insights from data on prospective patients lead to customized and relevant campaigning.

Acxiom’s frequent product innovations like AbiliTecand and partnership with 4INFO — to provide location-based targeting segments for digital campaigns — are aiding the company to expand its availability, consequently boosting the top line. IdentityLink was extended to television medium, aiding the marketers to effectively campaign.

Operating Details

Non-GAAP gross margin expanded 310 basis points (bps) on a year-over-year basis to 53.8%. Connectivity and Marketing Services segment gross margins surged 690 bps and 500 bps, respectively. Audience Solutions gross margin contracted 290 bps.

Reported operating expenses inched up 2.8% to $118.5 million. Research and development (R&D) and Sales and marketing (S&M) increased 2.1% and 30.7%, respectively. However, General and administrative (G&A) declined 5.2% from the year-ago quarter.

Total segment operating margin contracted 40 bps to 24.1%. Connectivity operating margin expanded 510 bps. However, Audience Solutions and Marketing Services operating margin contracted 400 bps and 170 bps, respectively from the year-ago quarter.

Non-GAAP operating margin expanded 450 bps on a year-over-year basis to 14% in the reported quarter.

Balance Sheet & Cash Flow

As of Mar 31, 2018, Acxiom had cash and cash equivalents of approximately $142.3 million down from $170.3 million as of Mar 31, 2017.

Acxiom generated “free cash flow to equity” of $14 million, down from $26 million reported in the year-ago quarter.

Cash flow from operations was $35.8 million, up from $30.7 million in the prior-year quarter.

In the fourth quarter, Acxiom repurchased 1.7 million shares for approximately $49 million.


For fiscal 2019, Acxiom revenues are expected to come in the range of $935-$955 million, up 3.1% over fiscal 2018, considering the mid-point of the range. Facebook revenues, if any, are anticipated to come in at $5 million, representing around 0.5% of total fiscal 2019 revenues.

However, excluding Facebook, revenues are anticipated to reach $930-$950 million, representing growth of 2.5%, considering the mid-point of the range.

Non GAAP earnings are projected to be 90-95 cents.

Revenues as percentage of fiscal 2019, total revenue is expected to be 23% in the first quarter, 24% in the second quarter, 26% in the third quarter and 27% in the fourth quarter.

In the last reported quarter, Acxiom had announced plans to realign portfolio into two distinct business units — LiveRamp and Acxiom Marketing Solutions (“AMS”) — from fiscal 2019. Beginning first-quarter fiscal 2019, the company will report results under the realigned business units.

LiveRamp will comprise integrations which will include television, Data Store, Saas and DaaS services. Meanwhile, AMS will comprise Acxiom Data, database services, consulting and analytics and other services.

LiveRamp revenue is expected to be up 25-30% driven by growth in subscription, which is anticipated to generate 80% of segment’s revenues. However, the projected growth rate is lower than 43% segmental growth reported in fiscal 2018. Transactional revenues are anticipated to account 20% of segment revenue and grow in the low-single digits range considering the impact of decline pertaining to Facebook in Data Store revenue. Excluding Facebook, the segment is anticipated to be up 37%, down from the year ago growth of 47%.

AMS segment revenues are anticipated to be down low-single digits. Excluding Facebook, the segment is anticipated to be up low-single digits.

Management expects capital expenditure to be approximately $65 million for fiscal 2019.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter.

Acxiom Corporation Price and Consensus


Acxiom Corporation Price and Consensus | Acxiom Corporation Quote

VGM Scores

At this time, ACXM has a strong Growth Score of A, though it is lagging a lot on the momentum front with an F. The stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for growth based on our styles scores.


Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, ACXM has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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