Leading analytics and software-as-a-service provider Acxiom Corporation ACXM reported relatively modest first-quarter fiscal 2016 results with GAAP loss of $1.0 million or loss of a penny per share, compared with loss of $7.6 million or loss of 10 cents per share in the year-ago period. The year-over-year narrower reported loss was primarily due to comparatively higher revenues and lower operating expenses.
Non-GAAP earnings for the reported quarter were 9 cents per share versus 5 cents in the year-ago quarter. The adjusted earnings (with stock-based compensation adjustments) of 2 cents per share for the quarter missed the Zacks Consensus Estimate by a couple of cents.
Quarter Details
Total revenue for first-quarter fiscal 2016 was $196.9 million, up 5.5% year over year driven by significant contribution from the acquisition of LiveRamp and continued onboarding momentum. Revenues for the reported quarter exceeded the Zacks Consensus Estimate of $187 million.
During the reported quarter, Acxiom closed the divestiture of its IT Infrastructure Management business. The divestiture was part of Acxiom’s strategic initiatives to realign its operations and increase focus on core Marketing and Data Services business to strengthen foothold in onboarding and connectivity markets. Consequently, the company reorganized its organizational structure into the following segments: Marketing Services and Audience Solutions, and Connectivity.
Sales from the Marketing Services and Audience Solutions segment decreased approximately 3% year over year to $176.3 million due to lower revenues from the International markets. Revenues from the Connectivity segment were up a stellar 376% year over year to $20.6 million due to the positive impact from the LiveRamp acquisition.
Adjusted gross profit for the reported quarter was $84.8 million compared with $74.0 million in the year-ago quarter, resulting in gross margin improvement from 39.6% to 43.1%. The improvement was driven by growth in the Connectivity segment and benefits from LiveRamp purchase. Adjusted operating income was $14.7 million, up about 71% year over year.
Other Significant Developments in the Quarter
During the reported quarter, the company relaunched its email and cross-channel marketing business titled Acxiom Impact that is specifically designed to meet the unique needs of sophisticated enterprise marketers. About 30 new customers were added by LiveRamp during the quarter. This would enable marketers to onboard and distribute their data to a growing network of over 200 marketing platforms and data providers.
Balance Sheet and Cash Flow
At quarter end, Acxiom had cash and cash equivalents of $123.2 million with long-term debt of $184.8 million. Net cash provided by operating activities aggregated $12.0 million during the quarter compared to net cash utilization of $15.5 million in the prior-year period. Free cash flow to equity stood at negative $12 million for the reported quarter compared with negative $43 million in the prior-year period.
During the reported quarter, Acxiom repurchased approximately 832,000 shares for $15 million. Since Aug 2011, the company has repurchased 13.7 million shares for $217 million under the share repurchase program.
Outlook Maintained
For fiscal 2016, Acxiom reiterated its earlier guidance and expects revenues to be within $815 million and $840 million. Earnings are expected in the range of 45 cents to 50 cents per share.
Acxiom currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector are CDW Corporation CDW, EarthLink Holdings Corp. ELNK and Rightside Group, Ltd. NAME, each carrying a Zacks Rank #2 (Buy).
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