Market Overview

Acxiom Announces First Quarter Results

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First Quarter Revenue Increases 7%

LiveRamp Top-Line Grows 34% – Segment Margin Reaches a Record 15%

IPG AMS Deal on Track to Close in Third Fiscal Quarter

Repurchases 1.9 Million Shares in the Quarter

Acxiom®
(Nasdaq: ACXM), the data foundation for the world's best marketers,
today announced financial results for its first quarter ended June 30,
2018.

This press release features multimedia. View the full release here:
https://www.businesswire.com/news/home/20180809005756/en/

First Quarter Financial Highlights

  • Revenue: Total revenue was $227 million, up 7% compared to the
    first quarter of last year.
  • Operating Income (Loss): GAAP operating loss was $6 million
    compared to an operating loss of $6 million in the prior year.
    Non-GAAP operating income improved 29% to $29 million.
  • Earnings (Loss) per Share: GAAP loss per share was $0.04
    compared to a loss per share of $0.02 in the prior year. Non-GAAP
    diluted earnings per share were $0.24 compared to $0.14 a year ago.
    Current period results include a $0.02 GAAP and non-GAAP benefit
    associated with the adoption of ASC 606.
  • Operating Cash Flow: Operating cash flow was $17 million, up
    from $5 million in the prior year.
  • Free Cash Flow to Equity: Free cash flow to equity was $8
    million, up from negative $6 million in the prior year.
 

Segment Results

$M

 

LiveRamp™

 

Q119

 

Q118

 

Y/Y Δ

Revenue

  $62   $47   34%

Gross Profit

$44 $28 57%
Gross Margin 71% 60% 1,040 bps

Segment Operating Income (Loss)

$9 ($0) NM
Segment Margin 15% (0%) 1,490 bps
 

Acxiom Marketing Solutions

  Q119   Q118   Y/Y Δ

Revenue

$165 $166 (1%)

Gross Profit

$73 $78 (6%)
Gross Margin 44% 47% (250 bps)

Segment Operating Income

$47 $48 (2%)
Segment Margin 29% 29% (40 bps)
 

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

"This is an inflection point for our Company. The first quarter was
another strong performance for both AMS and LiveRamp," said Acxiom CEO
Scott Howe. "We look forward to finalizing the IPG transaction and to
the emergence of LiveRamp as a pure-play public SaaS platform."

Recent Business Highlights

  • On July 2nd, Acxiom entered into a
    definitive agreement to sell Acxiom Marketing Solutions to Interpublic
    Group for $2.3 billion
    .
    • The combination of IPG and AMS creates an industry powerhouse for
      data-driven marketing.
    • The Company expects to realize approximately $1.7 billion in net
      cash proceeds, after taxes and fees, and intends to return up to
      $1 billion to shareholders.
    • The transaction is expected to close in the third fiscal quarter,
      subject to Acxiom shareholder approval and other customary closing
      conditions.
    • Following the transaction close, the Company will be renamed
      LiveRamp and, shortly thereafter, begin trading its common stock
      under the new ticker symbol "RAMP."
  • LiveRamp added approximately 30 new direct clients during the
    quarter and added several new partner integrations
    . On a direct
    basis, LiveRamp now works with more than 600 clients worldwide and
    serves hundreds of additional brands through its expansive ecosystem
    of partners and resellers.
  • LiveRamp and Adobe are partnering to integrate LiveRamp's
    IdentityLink™ for TV solution across Adobe Advertising Cloud and Adobe
    Audience Manager.
    The partnership enables advertisers to engage in
    addressable TV advertising using the same first- or third-party
    audiences they already deploy through Adobe, while unlocking household
    level insight.
  • Acxiom Marketing Solutions posted another strong bookings quarter,
    driven by six new logo wins and two key renewals.
  • Acxiom repurchased 1.9 million shares for approximately $46 million
    during the first quarter
    . Since the inception of its share
    repurchase program in August 2011, Acxiom has repurchased a total of
    22 million shares for $420 million.

Financial Outlook

Non-GAAP guidance excludes the impact of non-cash stock compensation,
purchased intangible asset amortization, restructuring charges and
business separation costs.

The Company does not intend to update its existing guidance until the
pending IPG AMS transaction is complete.

Therefore, for fiscal 2019, the Company reaffirms its previously issued
guidance and continues to expect:

  • Total revenue of between $935 million and $955 million.
  • GAAP loss per share of between $0.23 and $0.18.
  • Non-GAAP diluted earnings per share of between $0.90 and $0.95.

Conference Call

Acxiom will hold a conference call at 3:30 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 and can be found on
our investor
site
. A slide presentation will be referenced during the call and
can be accessed here.

About Acxiom

Acxiom provides the data foundation for the world's best marketers. We
enable people-based marketing everywhere through a simple, open approach
to connecting systems and data that drives seamless customer experiences
and higher ROI. A leader in identity and ethical data use for nearly 50
years, Acxiom helps thousands of clients and partners around the globe
work together to create a world where all marketing is relevant. Acxiom
is a registered trademark of Acxiom Corporation. For more information,
visit Acxiom.com.

Forward-Looking Statements

This release and today's conference call contain 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 proposed sale
of Acxiom Marketing Solutions to Interpublic Group is not completed; the
possibility of business disruption associated with the proposed sale;
the possibility that the expected revenue from the divisions may not be
realized within the expected timeframe; the possibility that the
integration of acquired businesses may not be successful as planned; 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 data purchasers will
reduce their reliance on us by developing and using their own, or
alternative, sources of data generally or with respect to certain data
elements or categories; 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 the European General Data
Protection Regulation, which became effective May 25, 2018, will make it
more difficult and/or costly for us to do business in the EU; 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
the possibility that other risks and uncertainties may emerge, 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, 2018, which was filed with the Securities and Exchange Commission on
May 25, 2018 and the discussion under the caption "Item 1A. RISK
FACTORS" in our Quarterly Report on Form 10-Q for the quarter ended June
30, 2018, which was filed with the Securities and Exchange Commission
today.

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.

To automatically receive Acxiom Corporation financial news by email,
please visit www.acxiom.com
and subscribe to email alerts.

Acxiom, LiveRamp, IdentityLink, InfoBase and all other Acxiom marks
contained herein are trademarks or service marks of Acxiom Corporation.
All other marks are the property of their respective owners.

 
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
 
 
  For the Three Months Ended
June 30,
      $   %
2018 2017 Variance   Variance
 
Revenues 226,960 212,514 14,446 6.8 %
 
Cost of revenue 117,271   113,960   3,311 2.9 %
Gross profit 109,689 98,554 11,135 11.3 %
% Gross margin 48.3 % 46.4 %
 
Operating expenses:
Research and development 24,536 23,563 973 4.1 %
Sales and marketing 54,850 48,440 6,410 13.2 %
General and administrative 34,718 32,356 2,362 7.3 %
Gains, losses and other items, net 1,286   (98 ) 1,384 1412.2 %
Total operating expenses 115,390   104,261   11,129 10.7 %
 
Loss from operations (5,701 ) (5,707 ) 6 0.1 %
% Margin -2.5 % -2.7 %
Other income (expense):
Interest expense (2,838 ) (2,342 ) (496 ) (21.2 %)
Other, net 524   (672 ) 1,196 178.0 %
Total other expense (2,314 ) (3,014 ) 700 23.2 %
 
Loss before income taxes (8,015 ) (8,721 ) 706 8.1 %
 
Income taxes (5,000 ) (7,421 ) 2,421 32.6 %
 
Net loss (3,015 ) (1,300 ) (1,715 ) (131.9 %)
 
Basic loss per share (0.04 ) (0.02 ) (0.02 ) (100.0 %)
 
Diluted loss per share (0.04 ) (0.02 ) (0.02 ) (100.0 %)
 
Basic weighted average shares 76,935 78,672
 
Diluted weighted average shares 76,935 78,672
 
ACXIOM CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP EPS (1)

(Unaudited)
(Dollars in thousands, except per share amounts)
 
 
  For the Three Months Ended
June 30,
2018   2017
 
 
Loss before income taxes (8,015 ) (8,721 )
 
Income taxes (5,000 ) (7,421 )
 
Net loss (3,015 ) (1,300 )
 
Loss per share:
 
Basic (0.04 ) (0.02 )
 
Diluted (0.04 ) (0.02 )
 
Excluded items:
Purchased intangible asset amortization (cost of revenue) 6,054 5,966
Non-cash stock compensation (cost of revenue and operating expenses) 20,360 15,031
Restructuring and merger charges (gains, losses, and other) 1,286 (98 )
Separation and transformation costs (general and administrative) 6,822   7,119  
 
Total excluded items 34,522   28,018  
 

 

Income before income taxes and excluding items

26,507 19,297
 
Income taxes (2) 7,467   7,720  
 
Non-GAAP earnings from continuing operations 19,040 11,577
 
Earnings from discontinued operations, net of tax -   -  
 
Non-GAAP net earnings 19,040   11,577  
 
Non-GAAP earnings per share:
 
Basic 0.25   0.15  
 
Diluted 0.24   0.14  
 
Basic weighted average shares 76,935   78,672  
 
Diluted weighted average shares 79,311   81,440  
 
(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 and the material limitations on the
usefulness of these measures, please see Appendix A.
 
(2) Income taxes were calculated using an effective non-GAAP tax
rate of 28.2% and 40.0% in the first quarter of fiscal 2019 and
2018, respectively. The difference between our GAAP and non-GAAP tax
rates were primarily due to the net tax effects of the excluded
items. The rates in the first quarter of fiscal 2019 reflect the
impact of the Tax Acts and Jobs Act.
 
ACXIOM CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP INCOME
(LOSS) FROM OPERATIONS (1)

(Unaudited)
(Dollars in thousands)
 
 
  For the Three Months Ended
June 30,
2018   2017
 
 
Loss from operations (5,701 ) (5,707 )
 
Excluded items:
Purchased intangible asset amortization (cost of revenue) 6,054 5,966
Non-cash stock compensation (cost of revenue and operating expenses) 20,360 15,031
Restructuring and merger charges (gains, losses, and other) 1,286 (98 )
Separation and transformation costs (general and administrative) 6,822   7,119  
 
Total excluded items 34,522   28,018  
 
Income from operations before excluded items 28,821   22,311  
 
(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 and the material limitations on the
usefulness of these measures, please see Appendix A.
 
ACXIOM CORPORATION AND SUBSIDIARIES
RESULTS BY SEGMENT
(Unaudited)
(Dollars in thousands)
 
 
  For the Three Months Ended
June 30,
      $   %
2018 2017 Variance   Variance
 
Revenues
LiveRamp 62,458 46,757 15,701 33.6 %
Acxiom Marketing Solutions 164,502   165,757   (1,255 ) (0.8 %)
Total operating segment revenues 226,960 212,514 14,446 6.8 %
 
Gross profit
LiveRamp 44,200 28,229 15,971 56.6 %
Acxiom Marketing Solutions 73,174   77,864   (4,690 ) (6.0 %)
Total operating segment gross profit 117,374 106,093 11,281 10.6 %
 
Gross margin %
LiveRamp 70.8 % 60.4 %
Acxiom Marketing Solutions 44.5 % 47.0 %
Total operating segment gross margin 51.7 % 49.9 %
 
Income (loss) from operations
LiveRamp 9,203 (97 ) 9,300 9587.6 %
Acxiom Marketing Solutions 47,458   48,374   (916 ) (1.9 %)
Total operating segment income from operations 56,661 48,277 8,384 17.4 %
 
Operating income (loss) margin %
LiveRamp 14.7 % (0.2 %)
Acxiom Marketing Solutions 28.8 % 29.2 %
Total operating segment operating margin 25.0 % 22.7 %
 
 
Some totals may not add due to rounding.
 
ACXIOM CORPORATION AND SUBSIDIARIES
RECONCILIATION OF SEGMENT RESULTS
(Unaudited)
(Dollars in thousands)
 
 
  For the Three Months Ended
June 30,
 
2018 2017
 
Total operating segment gross profit 117,374 106,093
 
Less:
Purchased intangible asset amortization 6,054 5,966
Non-cash stock compensation 1,631   1,573  
 
Gross profit 109,689   98,554  
 
 
Total operating segment income from operations 56,661 48,277
 
Less:
Corporate expenses 27,840 25,966
Purchased intangible asset amortization 6,054 5,966
Non-cash stock compensation 20,360 15,031
Restructuring charges 1,286 (98 )
Separation and transformation costs 6,822   7,119  
 
Loss from operations (5,701 ) (5,707 )
 
 
Some totals may not add due to rounding.
 
ACXIOM CORPORATION AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA (1)
(Unaudited)
(Dollars in thousands)
 
 
  For the Three Months Ended
June 30,
2018   2017
 
 
Net loss (3,015 ) (1,300 )
 
Income taxes (5,000 ) (7,421 )
 
Other expense (2,314 ) (3,014 )
 
Loss from operations (5,701 ) (5,707 )
 
Depreciation and amortization 21,529   21,110  
 
EBITDA 15,828   15,403  
 
 
Other adjustments:
Non-cash stock compensation (cost of revenue and operating expenses) 20,360 15,031
Restructuring and merger charges (gains, losses, and other) 1,286 (98 )
Separation and transformation costs (general and administrative) 6,822   7,119  
 
Other adjustments 28,468   22,052  
 
Adjusted EBITDA 44,296   37,455  
 
(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.
 
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
 
 
  June 30,   March 31,     $   %
2018 2018 Variance   Variance
 

Assets

Current assets:
Cash and cash equivalents 95,099 142,279 (47,180 ) (33.2 %)
Trade accounts receivable, net 163,767 167,188 (3,421 ) (2.0 %)
Refundable income taxes 11,761 9,733 2,028 20.8 %
Other current assets 40,167   41,145   (978 ) (2.4 %)
 
Total current assets 310,794   360,345   (49,551 ) (13.8 %)
 
Property and equipment 492,602 491,266 1,336 0.3 %
Less - accumulated depreciation and amortization 341,195   334,733   6,462 1.9 %
 
Property and equipment, net 151,407   156,533   (5,126 ) (3.3 %)
 
Software, net of accumulated amortization 31,719 34,984 (3,265 ) (9.3 %)
Goodwill 595,795 595,995 (200 ) (0.0 %)
Purchased software licenses, net of accumulated amortization 6,670 7,703 (1,033 ) (13.4 %)
Deferred income taxes 11,488 12,225 (737 ) (6.0 %)
Deferred commissions, net 18,137 - 18,137 -
Other assets, net 40,958   41,468   (510 ) (1.2 %)
 
1,166,968   1,209,253   (42,285 ) (3.5 %)
 

Liabilities and Stockholders' Equity

Current liabilities:
Current installments of long-term debt 1,327 1,583 (256 ) (16.2 %)
Trade accounts payable 47,668 46,688 980 2.1 %
Accrued payroll and related expenses 21,939 42,499 (20,560 ) (48.4 %)
Other accrued expenses 58,938 55,865 3,073 5.5 %
Deferred revenue 31,621   31,720   (99 ) (0.3 %)
 
Total current liabilities 161,493   178,355   (16,862 ) (9.5 %)
 
Long-term debt 227,435 227,837 (402 ) (0.2 %)
 
Deferred income taxes 42,258 40,243 2,015 5.0 %
 
Other liabilities 13,726 13,723 3 0.0 %
 
Stockholders' equity:
Common stock 13,773 13,609 164 1.2 %
Additional paid-in capital 1,256,442 1,235,679 20,763 1.7 %
Retained earnings 638,043 628,331 9,712 1.5 %
8,899 10,767 (1,868 ) (17.3 %)
Treasury stock, at cost (1,195,101 ) (1,139,291 ) (55,810 ) (4.9 %)
Total stockholders' equity 722,056   749,095   (27,039 ) (3.6 %)
 
1,166,968   1,209,253   (42,285 ) (3.5 %)
 
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
 
 
  For the Three Months Ended
June 30,
2018   2017
 
Cash flows from operating activities:
Net loss (3,015 ) (1,300 )
Non-cash operating activities:
Depreciation and amortization 21,529 21,110
Loss on disposal or impairment of assets 48 163
Accelerated deferred debt costs - 720
Deferred income taxes (1,335 ) 2,497
Non-cash stock compensation expense 20,360 15,038
Changes in operating assets and liabilities:
Accounts receivable 4,329 11,960
Deferred commissions (2,939 ) -
Other assets (56 ) (3,377 )
Accounts payable and other liabilities (21,704 ) (37,073 )
Deferred revenue (33 ) (4,787 )
Net cash provided by operating activities 17,184   4,951  
Cash flows from investing activities:
Capitalized software (3,606 ) (3,388 )
Capital expenditures (4,399 ) (6,888 )
Data acquisition costs (179 ) (190 )
Equity investments (2,500 ) -  
Net cash used in investing activities (10,684 ) (10,466 )
Cash flows from financing activities:
Proceeds from debt - 230,000
Payments of debt (592 ) (225,572 )
Fees from debt refinancing (300 ) (4,001 )
Sale of common stock, net of stock acquired for withholding taxes (5,928 ) (2,539 )
Acquisition of treasury stock (45,766 ) -  
Net cash used in financing activities (52,586 ) (2,112 )
Effect of exchange rate changes on cash (1,094 ) 430  
 
Net change in cash and cash equivalents (47,180 ) (7,197 )
Cash and cash equivalents at beginning of period 142,279   170,343  
Cash and cash equivalents at end of period 95,099   163,146  
 
Supplemental cash flow information:
Cash paid during the period for:
Interest 2,607 2,375
Income taxes 1,100 354
 
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF FREE CASH FLOW TO EQUITY (1)
(Unaudited)
(Dollars in thousands)
 
                         
06/30/17   09/30/17   12/31/17   03/31/18   FY2018 06/30/18
       
Net Cash Provided by Operating Activities 4,951 27,810 43,630 35,762 112,153 17,184
 
Less (plus):
Capitalized software (3,388 ) (3,756 ) (3,188 ) (3,407 ) (13,739 ) (3,606 )
Capital expenditures (6,888 ) (7,630 ) (12,432 ) (17,247 ) (44,197 ) (4,399 )
Data acquisition costs (190 ) (233 ) (198 ) (286 ) (907 ) (179 )
Required debt payments (572 ) (578 ) (582 ) (588 ) (2,320 ) (592 )
Net cash received in disposition -     4,000     -     -     4,000   -  
 
Free Cash Flow to Equity (6,087 )   19,613     27,230     14,234     54,990   8,408  
 
(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.
 
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
 
                              Q1 FY19 to Q1 FY18
06/30/17   09/30/17   12/31/17   03/31/18   FY2018 06/30/18 %   $
Revenues 212,514   225,240   234,871   244,781   917,406 226,960 6.8 %   14,446
 
Cost of revenue 113,960     115,072     115,920     121,484     466,436   117,271   2.9 % 3,311
Gross profit 98,554 110,168 118,951 123,297 450,970 109,689 11.3 % 11,135
% Gross margin 46.4 % 48.9 % 50.6 % 50.4 % 49.2 % 48.3 %
 
Operating expenses
Research and development 23,563 24,013 23,318 23,979 94,873 24,536 4.1 % 973
Sales and marketing 48,440 50,118 53,730 63,311 215,599 54,850 13.2 % 6,410
General and administrative 32,356 31,924 30,886 28,360 123,526 34,718 7.3 % 2,362
Gains, losses and other items, net (98 )   3,660     (41 )   2,852     6,373   1,286   1412.2 % 1,384
Total operating expenses 104,261 109,715 107,893 118,502 440,371 115,390 10.7 % 11,129
 
Income (loss) from operations (5,707 ) 453 11,058 4,795 10,599 (5,701 ) 0.1 % 6
% Margin -2.7 % 0.2 % 4.7 % 2.0 % 1.2 % -2.5 %
Other income (expense)
Interest expense (2,342 ) (2,524 ) (2,566 ) (2,699 ) (10,131 ) (2,838 ) -21.2 % (496 )
Other, net (672 )   192     419     302     241   524   178.0 % 1,196
Total other expense (3,014 ) (2,332 ) (2,147 ) (2,397 ) (9,890 ) (2,314 ) 23.2 % 700
 
Income (loss) before income taxes (8,721 ) (1,879 ) 8,911 2,398 709 (8,015 ) 8.1 % 706
Income taxes (7,421 )   1,457     (14,030 )   (2,777 )   (22,771 ) (5,000 ) 32.6 % 2,421
 
Net earnings (loss) (1,300 ) (3,336 ) 22,941 5,175 23,480 (3,015 ) -131.9 % (1,715 )
 
Diluted earnings (loss) per share (0.02 )   (0.04 )   0.28     0.06     0.29   (0.04 ) -137.2 % (0.02 )
 
Some earnings (loss) per share amounts may not add due to rounding.
 
ACXIOM CORPORATION AND SUBSIDIARIES
RESULTS BY SEGMENT
(Unaudited)
(Dollars in thousands)
 
                              Q1 FY19 to Q1 FY18
06/30/17   09/30/17   12/31/17   03/31/18   FY2018 06/30/18 %   $
         
Revenues:
 
LiveRamp 46,757 54,043 59,095 60,231 220,125 62,458 33.6 % 15,701
Acxiom Marketing Solutions 165,757     171,198     175,776     184,550     697,281   164,502   (0.8 %) (1,255 )
Total operating segment revenues 212,514     225,240     234,871     244,781     917,406   226,960   6.8 % 14,446
 
Gross profit:
 
LiveRamp 28,229 36,105 40,553 42,679 147,566 44,200 56.6 % 15,971
Acxiom Marketing Solutions 77,864     81,828     85,981     89,067     334,739   73,174   (6.0 %) (4,690 )
Total operating segment gross profit 106,093     117,932     126,533     131,746     482,305   117,374   10.6 % 11,281
 
Gross margin %:
 
LiveRamp 60.4 % 66.8 % 68.6 % 70.9 % 67.0 % 70.8 %
Acxiom Marketing Solutions 47.0 % 47.8 % 48.9 % 48.3 % 48.0 % 44.5 %
Total operating segment gross margin 49.9 % 52.4 % 53.9 % 53.8 % 52.6 % 51.7 %
 
Income (loss) from operations:
 
LiveRamp (97 ) 5,883 9,022 8,128 22,936 9,203 9587.6 % 9,300
Acxiom Marketing Solutions 48,374     51,203     52,962     50,421     202,959   47,458   (1.9 %) (916 )
Total operating segment income from operations 48,277     57,086     61,983     58,548     225,895   56,661   17.4 % 8,384
 
Operating income (loss) margin %:
 
LiveRamp (0.2 %) 10.9 % 15.3 % 13.5 % 10.4 % 14.7 %
Acxiom Marketing Solutions 29.2 % 29.9 % 30.1 % 27.3 % 29.1 % 28.8 %
Total operating segment operating margin 22.7 % 25.3 % 26.4 % 23.9 % 24.6 % 25.0 %
 
Some totals may not add due to rounding.
 
ACXIOM CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP EPS (1)
(Unaudited)
(Dollars in thousands, except per share amounts)
 
                         
06/30/17   09/30/17   12/31/17   03/31/18   FY2018 06/30/18
       
 
Earnings (loss) before income taxes (8,721 ) (1,879 ) 8,911 2,398 709 (8,015 )
 
Income taxes (7,421 )   1,457     (14,030 )   (2,777 )   (22,771 ) (5,000 )
 
Net earnings (loss) (1,300 )   (3,336 )   22,941     5,175     23,480   (3,015 )
 
Earnings (loss) per share:
 
Basic (0.02 )   (0.04 )   0.29     0.07     0.30   (0.04 )
 
Diluted (0.02 )   (0.04 )   0.28     0.06     0.29   (0.04 )
 
Excluded items:
Purchased intangible asset amortization (cost of revenue) 5,966 6,021 5,971 5,963 23,920 6,054
Non-cash stock compensation (cost of revenue and operating expenses) 15,031 15,757 15,919 16,527 63,234 20,360
Restructuring and merger charges (gains, losses, and other) (98 ) 3,660 (41 ) 2,852 6,373 1,286
Separation and transformation costs (general and administrative) 7,119 5,442 5,214 3,070 20,846 6,822
Accelerated amortization (cost of revenue) -     -     -     999     999   -  
 
Total excluded items 28,018     30,880     27,063     29,411     115,372   34,522  
 
 

Income before income taxes and excluding items

19,297 29,001 35,974 31,809 116,081 26,507
 
Income taxes 7,720     11,289     10,704     10,045     39,758   7,467  
 
Non-GAAP net earnings 11,577     17,712     25,270     21,764     76,323   19,040  
 
Non-GAAP earnings per share:
 
Basic 0.15     0.22     0.32     0.28     0.97   0.25  
 
Diluted 0.14     0.22     0.31     0.27     0.94   0.24  
 
Basic weighted average shares 78,672     79,235     79,043     78,614     78,891   76,935  
 
Diluted weighted average shares 81,440     81,472     81,869     81,282     81,516   79,311  
 
Some totals may not add due to rounding
 
(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 and the material limitations on the
usefulness of these measures, please see Appendix A.
 
ACXIOM CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP EPS
GUIDANCE (1)

(Unaudited)
(Dollars in thousands, except per share amounts)
 
 
  For the year ending
March 31, 2019
 
Low Range High Range
 
Loss before income taxes (15,500 ) (10,000 )
 
Income taxes 3,000   4,500  
 
Net loss (18,500 ) (14,500 )
 
Diluted loss per share $ (0.23 ) $ (0.18 )
 
Excluded items:
Purchased intangible asset amortization 16,000 16,000
Non-cash stock compensation 84,000 84,000
Gains, losses and other items, net 3,000 3,000
Separation and related costs 16,000   16,000  
 
Total excluded items 119,000   119,000  
 
Income before income taxes and excluding items 103,500 109,000
 
Income taxes (2) 29,000   30,500  
 
Non-GAAP net earnings 74,500   78,500  
 
Non-GAAP diluted earnings per share $ 0.90   $ 0.95  
 
Basic weighted average shares 81,000 81,000
 
Diluted weighted average shares 83,000 83,000
 
(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 using an effective non-GAAP tax
rate of approximately 28.0%. The difference between our GAAP and
Non-GAAP tax rates was due to the effect of excluded items.
 

APPENDIX A

ACXIOM CORPORATION
Q1 FISCAL 2019 FINANCIAL RESULTS
EXPLANATION
OF NON-GAAP MEASURES

To supplement our financial results, we use non-GAAP measures which
exclude certain acquisition related expenses, non-cash stock
compensation and restructuring charges. We believe these measures 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 consolidated GAAP
financial statements. Our management regularly uses these non-GAAP
financial measures internally to understand, manage and evaluate our
business and to make operating decisions. These 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,
income from operations 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 and publisher 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 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: 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 items, reported as gains,
losses, and other items, net, are excluded from non-GAAP results because
such amounts are not used by us to assess the core profitability of our
business operations.

Separation and transformation costs: In
previous years, we incurred significant expenses in connection with the
separation of our IT Infrastructure Management ("ITO") and the
subsequent transformation of our remaining operating segments. This work
enabled us to transform our external reporting and provide investors
with enhanced transparency and more granular segment-level disclosures
in addition to facilitating the ITO disposition. In the prior year, we
also incurred expenses to further separate the financial statements of
our three operating segments, with particular focus on segment-level
balance sheets, and to evaluate portfolio priorities. Our criteria for
excluding separation and transformation expenses from our non-GAAP
measures is as follows: 1) projects are discrete in nature; 2) excluded
expenses consist only of third-party consulting fees that we would not
incur otherwise; and 3) we do not exclude employee related expenses or
other costs associated with the ongoing operations of our business. We
substantially completed those projects during the third quarter of
fiscal year 2018. Beginning in the fourth quarter of fiscal 2018, we
incurred transaction analysis and support expenses related to the
Company's announced evaluation of strategic options for its Marketing
Solutions business. Our criteria for excluding these transaction related
costs are the same. We believe excluding these items from our non-GAAP
financial measures is useful for investors and provides meaningful
supplemental information.

Our non-GAAP financial schedules are:

Non-GAAP EPS and Non-GAAP Income from Operations:
Our non-GAAP earnings per share and Non-GAAP income from operations
reflect adjustments as described above, as well as the related tax
effects where applicable.

Adjusted EBITDA: Adjusted EBITDA is defined
as net income 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.

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