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Acxiom Announces Second Quarter Results

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Acxiom(R) (Nasdaq: ACXM), an enterprise data, analytics and software-as-a-service Company, today announced financial results for its second quarter ended September 30, 2014.

Second Quarter Financial Highlights

Total revenue was down 3 percent compared to the second quarter of fiscal 2014 as a result of expected IT Infrastructure Management declines.

  • Marketing and Data Services revenue was $204 million, up 2 percent compared to the second quarter of fiscal 2014.
  • IT Infrastructure Management revenue was down approximately 17 percent compared to the same period a year ago.
  • AOS(R) revenue, which includes LiveRamp, was approximately $15 million in the quarter.
  • Gross media spend through the Audience Operating System was approximately $37 million, up 32 percent compared to the first quarter of fiscal 2015.

GAAP operating income and diluted earnings per share were down due to expenses associated with business separation and transformation activities, non-cash compensation and acquired intangible asset amortization, as well as declines in IT Infrastructure Management.

  • Net loss per diluted share from continuing operations was $0.02 compared to earnings per share of $0.12 a year ago. Unusual items, non-cash compensation and intangible asset amortization impacted GAAP earnings per share by $0.20 in the quarter. Unusual items included expenses associated with the Company’s restructuring activities, separation and transformation initiatives and LiveRamp acquisition costs.
  • Operating cash flow from continuing operations was $132 million for the trailing twelve months, down 22 percent compared to the same period a year ago. Free cash flow to equity was $33 million for the trailing twelve-month period compared to $69 million for the comparable period. The decline was primarily due to cash restructuring and business transformation expenses.

Non-GAAP operating income and diluted earnings per share were down as a result of the declines in the IT Infrastructure Management business.

  • Non-GAAP diluted earnings per share were $0.18 compared to $0.23 a year ago.
  • Non-GAAP operating income was $25 million, down from $32 million for the same period last year.
  • Non-GAAP Marketing and Data Services operating margin improved to 10% from 9% a year ago.

Our non-GAAP results exclude unusual items, non-cash compensation and acquired intangible asset amortization. A reconciliation between GAAP and non-GAAP results is attached to this release.

The Company tightens its full year revenue and earnings per share guidance.

“While we remain hard at work rebuilding our U.S. Marketing and Data Services pipeline, we are excited that AOS adoption continues to accelerate,” said Acxiom CEO Scott Howe. “The second quarter was our best quarter to date. We signed 15 new AOS agreements during the quarter and gross media spend through the platform was up over 30 percent sequentially. With the addition of LiveRamp, our partner network expanded substantially. Advertisers can now connect their data to over 120 marketing applications.”

Second Quarter Business Highlights

  • Acxiom signed several Marketing and Data Services agreements during the quarter including new database contracts with Duke Energy, Dennis Publishing and TD Bank Group, as well as renewals with a top three credit card issuer and a leading insurance agency.
  • The Company signed 15 new AOS agreements during the quarter with several industry-leading companies including AT&T Inc., Toyota Motor Company, a global retailer and two major credit card issuers.
  • Acxiom inked three new agency partnerships during the second quarter. The Company signed a European-wide partnership with Starcom Mediavest Group, the number one ranked global media network. Acxiom also struck partnerships with Hakuhodo Inc., Japan’s second largest advertising agency, and DMG Solutions, a leading multicultural marketing solutions provider.
  • The Company signed a strategic partnership with Weibo Corporation, China’s leading social media platform. As part of the relationship, Weibo will leverage AOS to deliver greater digital marketing efficiency to its advertisers in a privacy-compliant and secure fashion.
  • Acxiom repurchased approximately 529,000 shares for $9.9 million during the quarter. Since inception of the share repurchase program in August 2011, the Company has repurchased 12.9 million shares, or approximately 16 percent of the outstanding common stock, for $202 million.

Financial Outlook

Our guidance includes the impact of the LiveRamp acquisition but excludes the impact of unusual items, non-cash compensation and acquired intangible asset amortization. Acxiom’s estimates for fiscal 2015 are as follows:

  • We now expect revenue from continuing operations for the fiscal year to be down roughly four percent compared to fiscal year 2014. The decline in revenue is primarily due to the impact of lost IT Infrastructure Management customers and the exit of our analog paper survey business in Europe.
  • We now expect earnings per diluted share to be in the range of $0.73 to $0.78.

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 at www.acxiom.com. A slide presentation will be referenced during the call and can be accessed here.

About Acxiom

Acxiom is an enterprise data, analytics and software-as-a-service Company that uniquely fuses trust, experience and scale to fuel data-driven results. For over 40 years, Acxiom has been an innovator in harnessing the most important sources and uses of data to strengthen connections between people, businesses and their partners. Utilizing a channel and media neutral approach, we leverage cutting-edge, data-oriented products and services to maximize customer value. Every week, Acxiom powers more than a trillion transactions that enable better living for people and better results for our clients. For more information about Acxiom, visit Acxiom.com.

Forward-Looking Statements

This release and today’s conference call may 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 expected revenue from the LiveRamp transaction may not be realized within the expected timeframe; 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 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 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 other risks and uncertainties, including those detailed from time to time in our 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, 2014, which was filed with the Securities and Exchange Commission on May 28, 2014.

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.

Acxiom is a registered trademark of Acxiom Corporation.

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

ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
For the Three Months Ended
September 30,
$ %
2014 2013 Variance Variance
Revenue:
Marketing and data services 204,248 200,952 3,296 1.6 %
IT Infrastructure management services 55,789 66,825 (11,036 ) (16.5 %)
Total revenue 260,037 267,777 (7,740 ) (2.9 %)
Operating costs and expenses:
Cost of revenue 205,318 199,107 6,211 3.1 %
Selling, general and administrative 50,483 42,859 7,624 17.8 %
Gains, losses and other items, net 929 6,584 (5,655 ) (85.9 %)
Total operating costs and expenses 256,730 248,550 8,180 3.3 %
Income from operations 3,307 19,227 (15,920 ) (82.8 %)

% Margin

1.3 % 7.2 %
Other income (expense):
Interest expense (2,395 ) (2,980 ) 585 19.6 %
Other, net (115 ) (350 ) 235 (67.1 %)
Total other income (expense) (2,510 ) (3,330 ) 820 24.6 %
Earnings from continuing operations before income taxes 797 15,897 (15,100 ) (95.0 %)
Income taxes 2,293 6,459 (4,166 ) (64.5 %)
Net earnings (loss) from continuing operations (1,496 ) 9,438 (10,934 ) (115.9 %)
Earnings from discontinued operations, net of tax (48 ) 426 (474 ) (111.3 %)
Net earnings (loss) (1,544 ) 9,864 (11,408 ) (115.7 %)
Less: Net earnings attributable to noncontrolling interest 25 (25 ) 100.0 %
Net earnings (loss) attributable to Acxiom (1,544 ) 9,839 (11,383 ) (115.7 %)
Basic earnings (loss) per share:
Net earnings (loss) from continuing operations (0.02 ) 0.13 (0.15 ) (115.4 %)
Earnings (loss) from discontinued operations 0.01 (0.01 ) 0.0 %
Net earnings (loss) (0.02 ) 0.13 (0.15 ) (115.4 %)
Net earnings (loss) attributable to Acxiom stockholders (0.02 ) 0.13 (0.15 ) (115.4 %)
Diluted earnings (loss) per share:
Net earnings (loss) from continuing operations (0.02 ) 0.12 (0.14 ) (116.7 %)
Earnings (loss) from discontinued operations 0.01 (0.01 ) 0.0 %
Net earnings (loss) (0.02 ) 0.13 (0.15 ) (115.4 %)
Net earnings (loss) attributable to Acxiom stockholders (0.02 ) 0.13 (0.15 ) (115.4 %)
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
For the Six Months Ended
September 30,
$ %
2014 2013 Variance Variance
Revenue:
Marketing and data services 390,931 388,745 2,186 0.6 %
IT Infrastructure management services 111,321 136,210 (24,889 ) (18.3 %)
Total revenue 502,252 524,955 (22,703 ) (4.3 %)
Operating costs and expenses:
Cost of revenue 397,621 395,212 2,409 0.6 %
Selling, general and administrative 97,421 80,474 16,947 21.1 %
Gains, losses and other items, net 8,381 6,584 1,797 27.3 %
Total operating costs and expenses 503,423 482,270 21,153 4.4 %
Income (loss) from operations (1,171 ) 42,685 (43,856 ) (102.7 %)
% Margin -0.2 % 8.1 %
Other income (expense):
Interest expense (4,966 ) (5,999 ) 1,033 17.2 %
Other, net (528 ) (246 ) (282 ) (114.6 %)
Total other income (expense) (5,494 ) (6,245 ) 751 12.0 %
Earnings (loss) from continuing operations before income taxes (6,665 ) 36,440 (43,105 ) (118.3 %)
Income taxes 903 14,499 (13,596 ) (93.8 %)
Net earnings (loss) from continuing operations (7,568 ) 21,941 (29,509 ) (134.5 %)
Earnings (loss) from discontinued operations, net of tax (1,580 ) 1,018 (2,598 ) (255.2 %)
Net earnings (loss) (9,148 ) 22,959 (32,107 ) (139.8 %)
Less: Net loss attributable to noncontrolling interest (60 ) 60 100.0 %
Net earnings (loss) attributable to Acxiom (9,148 ) 23,019 (32,167 ) (139.7 %)
Basic earnings (loss) per share:
Net earnings (loss) from continuing operations (0.10 ) 0.30 (0.40 ) (133.3 %)
Earnings (loss) from discontinued operations (0.02 ) 0.01 (0.03 ) (300.0 %)
Net earnings (loss) (0.12 ) 0.31 (0.43 ) (138.7 %)
Net earnings (loss) attributable to Acxiom stockholders (0.12 ) 0.31 (0.43 ) (138.7 %)
Diluted earnings (loss) per share:
Net earnings (loss) from continuing operations (0.10 ) 0.29 (0.39 ) (134.5 %)
Earnings (loss) from discontinued operations (0.02 ) 0.01 (0.03 ) (300.0 %)
Net earnings (loss) (0.12 ) 0.30 (0.42 ) (140.0 %)
Net earnings (loss) attributable to Acxiom stockholders (0.12 ) 0.30 (0.42 ) (140.0 %)
ACXIOM CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP EPS
(Unaudited)
(Dollars in thousands, except earnings per share)
For the Three Months Ended For the Six Months Ended
September 30, September 30,
2014 2013 2014 2013
Earnings (loss) from continuing operations before income taxes 797 15,897 (6,665 ) 36,440
Income taxes 2,293 6,459 903 14,499
Net earnings (loss) from continuing operations (1,496 ) 9,438 (7,568 ) 21,941
Earnings (loss) from discontinued operations, net of tax (48 ) 426 (1,580 ) 1,018
Net earnings (loss) (1,544 ) 9,864 (9,148 ) 22,959
Less: Net earnings (loss) attributable to noncontrolling interest 25 (60 )
Net earnings (loss) attributable to Acxiom (1,544 ) 9,839 (9,148 ) 23,019
Earnings (loss) per share attributable to Acxiom stockholders:
Basic (0.02 ) 0.13 (0.12 ) 0.31
Diluted (0.02 ) 0.13 (0.12 ) 0.30
Unusual items:
Legal settlement accruals 3,200 3,200
Purchased intangible asset amortization 3,802 96 3,884 210
Live Ramp acquisition costs 40 820
Non-cash stock compensation 7,867 3,708 11,956 6,889
Restructuring charges and other adjustments 889 3,384 7,561 3,384
Separation and transformation costs 9,291 2,186 21,328 2,186
Total unusual items, continuing operations 21,889 12,574 45,549 15,869

Earnings from continuing operations before income taxes and excluding unusual items

22,686 28,471 38,884 52,309
Income taxes 8,734 11,246 14,970 20,348
Non-GAAP earnings from continuing operations 13,952 17,225 23,914 31,961
Earnings from discontinued operations, net of tax
Non-GAAP net earnings 13,952 17,225 23,914 31,961
Less: Net loss attributable to noncontrolling interest 25 60
Non-GAAP Net earnings attributable to Acxiom 13,952 17,200 23,914 31,901
Non-GAAP earnings per share attributable to Acxiom stockholders:
Basic 0.18 0.23 0.31 0.43
Diluted 0.18 0.23 0.31 0.42
Basic weighted average shares 77,123 73,778 76,978 73,728
Diluted weighted average shares 78,307 76,036 78,324 75,764
ACXIOM CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP INCOME FROM OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
For the Three Months Ended For the Six Months Ended
September 30, September 30,
2014 2013 2014 2013
Income (loss) from operations 3,307 19,227 (1,171 ) 42,685
Unusual items 21,889 12,574 45,549 15,869
Income (loss) from operations before unusual items 25,196 31,801 44,378 58,554
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF EARNINGS PER SHARE
(Unaudited)
(In thousands, except earnings per share)
For the Three Months Ended
September 30, September 30,
2014 2013
Basic earnings (loss) per share from continuing operations:
Numerator – net earnings (loss) (1,496 ) 9,438
Denominator – weighted-average shares outstanding 77,123 73,778
Basic earnings (loss) per share (0.02 ) 0.13
Basic earnings (loss) per share – net earnings (loss) attributable to Acxiom stockholders:
Numerator – net earnings (loss) attributable to Acxiom (1,544 ) 9,839
Denominator – weighted-average shares outstanding 77,123 73,778
Basic earnings (loss) per share – net earnings (loss) attributable to Acxiom stockholders (0.02 ) 0.13
Diluted earnings (loss) per share from continuing operations:
Numerator – net earnings (loss) (1,496 ) 9,438
Denominator – weighted-average shares outstanding 77,123 73,778
Dilutive effect of common stock options, warrants and restricted stock 2,258
77,123 76,036
Diluted earnings (loss) per share from continuing operations (0.02 ) 0.12
Diluted earnings (loss) per share – net earnings (loss) attributable to Acxiom stockholders:
Numerator – net earnings (loss) attributable to Acxiom (1,544 ) 9,839
Denominator – weighted-average shares outstanding 77,123 73,778
Dilutive effect of common stock options, warrants, and restricted stock 2,258
77,123 76,036
Diluted earnings (loss) per share – net earnings (loss) attributable to Acxiom stockholders (0.02 ) 0.13
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF EARNINGS PER SHARE
(Unaudited)
(In thousands, except earnings per share)
For the Six Months Ended
September 30, September 30,
2014 2013
Basic earnings (loss) per share from continuing operations:
Numerator – net earnings (loss) (7,568 ) 21,941
Denominator – weighted-average shares outstanding 76,978 73,728
Basic earnings (loss) per share (0.10 ) 0.30
Basic earnings (loss) per share – net earnings (loss) attributable to Acxiom stockholders:
Numerator – net earnings (loss) attributable to Acxiom (9,148 ) 23,019
Denominator – weighted-average shares outstanding 76,978 73,728
Basic earnings (loss) per share – net earnings (loss) attributable to Acxiom stockholders (0.12 ) 0.31
Diluted earnings (loss) per share from continuing operations:
Numerator – net earnings (loss) (7,568 ) 21,941
Denominator – weighted-average shares outstanding 76,978 73,728
Dilutive effect of common stock options, warrants and restricted stock 2,036
76,978 75,764
Diluted earnings (loss) per share from continuing operations (0.10 ) 0.29
Diluted earnings (loss) per share – net earnings (loss) attributable to Acxiom stockholders:
Numerator – net earnings (loss) attributable to Acxiom (9,148 ) 23,019
Denominator – weighted-average shares outstanding 76,978 73,728
Dilutive effect of common stock options, warrants, and restricted stock 2,036
76,978 75,764
Diluted earnings (loss) per share – net earnings (loss) attributable to Acxiom stockholders (0.12 ) 0.30
ACXIOM CORPORATION AND SUBSIDIARIES
RESULTS BY SEGMENT
(Unaudited)
(Dollars in thousands)
For the Three Months Ended
September 30, September 30,

Revenue:

2014 2013
Marketing and data services 204,248 200,952
IT Infrastructure management services 55,789 66,825
Total revenue 260,037 267,777

Income from continuing operations:

Marketing and data services 9,397 16,030
IT Infrastructure management services 4,130 11,967
Corporate (10,220 ) (8,770 )
Total income (loss) from continuing operations 3,307 19,227

Margin:

Marketing and data services 4.6 % 8.0 %
IT Infrastructure management services 7.4 % 17.9 %
Total margin 1.3 % 7.2 %
ACXIOM CORPORATION AND SUBSIDIARIES
RESULTS BY SEGMENT
(Unaudited)
(Dollars in thousands)
For the Six Months Ended
September 30, September 30,
Revenue: 2014 2013
Marketing and data services 390,931 388,745
IT Infrastructure management services 111,321 136,210
Total revenue 502,252 524,955
Income from continuing operations:
Marketing and data services 19,669 28,727
IT Infrastructure management services 8,869 22,728
Corporate (29,709 ) (8,770 )
Total income (loss) from continuing operations (1,171 ) 42,685
Margin:
Marketing and data services 5.0 % 7.4 %
IT Infrastructure management services 8.0 % 16.7 %
Total margin -0.2 % 8.1 %
ACXIOM CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP SEGMENT RESULTS
(Unaudited)
(Dollars in thousands, except earnings per share)
For the Three Months Ended For the Six Months Ended
September 30, September 30,
2014 2013 2014

2013

Marketing and data services income from operations 9,397 16,030 19,669 28,727
Unusual items:
Purchased intangible asset amortization 3,802 96 3,884 210
Non-cash stock compensation 7,285 2,825 10,369 5,250
Marketing and data services income
from operations before unusual items 20,484 18,951 33,922 34,187
Margin 10.0 % 9.4 % 8.7 % 8.8 %
IT infrastructure management services income
from operations 4,130 11,967 8,869 22,728
Unusual items:
Purchased intangible asset amortization
Non-cash stock compensation 582 883 1,587 1,639
IT infrastructure management services income
from operations before unusual items 4,712 12,850 10,456 24,367
Margin 8.4 % 19.2 % 9.4 % 17.9 %
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
September 30, March 31, $ %
2014 2014 Variance Variance

Assets

Current assets:
Cash and cash equivalents 109,810 418,586 (308,776 ) (73.8 %)
Trade accounts receivable, net 156,500 160,718 (4,218 ) (2.6 %)
Deferred income taxes 18,090 12,870 5,220 40.6 %
Refundable income taxes 5,128 11,535 (6,407 ) (55.5 %)
Restricted cash held in escrow 31,000 31,000 100.0 %
Other current assets 57,373 54,484 2,889 5.3 %
Assets of discontinued operations 952 7,332 (6,380 ) (87.0 %)
Total current assets 378,853 665,525 (286,672 ) (43.1 %)
Property and equipment 859,574 852,236 7,338 0.9 %
Less – accumulated depreciation and amortization 637,764 635,330 2,434 0.4 %
Property and equipment, net 221,810 216,906 4,904 2.3 %
Software, net of accumulated amortization 79,768 39,425 40,343 102.3 %
Goodwill 573,468 358,384 215,084 60.0 %
Purchased software licenses, net of accumulated amortization 16,114 18,584 (2,470 ) (13.3 %)
Other assets, net 45,215 24,477 20,738 84.7 %
1,315,228 1,323,301 (8,073 ) (0.6 %)

Liabilities and Stockholders’ Equity

Current liabilities:
Current installments of long-term debt 34,118 28,567 5,551 19.4 %
Trade accounts payable 50,112 36,179 13,933 38.5 %
Accrued payroll and related expenses 31,956 62,182 (30,226 ) (48.6 %)
Other accrued expenses 67,229 70,412 (3,183 ) (4.5 %)
Acquisition escrow payable 31,000 31,000 (100.0 %)
Deferred revenue 35,678 47,638 (11,960 ) (25.1 %)
Income taxes 241 (241 ) (100.0 %)
Liabilities of discontinued operations 1,671 4,250 (2,579 ) (60.7 %)
Total current liabilities 251,764 249,469 2,295 0.9 %
Long-term debt 270,869 289,043 (18,174 ) (6.3 %)
Deferred income taxes 101,424 90,226 11,198 12.4 %
Other liabilities 12,689 11,706 983 8.4 %
Stockholders’ equity:
Common stock 12,707 12,584 123 1.0 %
Additional paid-in capital 1,005,443 981,985 23,458 2.4 %
Retained earnings 593,681 602,829 (9,148 ) (1.5 %)
Accumulated other comprehensive income 11,856 13,662 (1,806 ) (13.2 %)
Treasury stock, at cost (945,205 ) (928,203 ) (17,002 ) (1.8 %)
Total stockholders’ equity 678,482 682,857 (4,375 ) (0.6 %)
1,315,228 1,323,301 (8,073 ) (0.6 %)
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the Three Months Ended
September 30,
2014 2013
Cash flows from operating activities:
Net earnings (loss) (1,544 ) 9,864
Earnings from discontinued operations, net of tax 48 (426 )
Non-cash operating activities:
Depreciation and amortization 28,162 25,193
Deferred income taxes (4,179 ) 60
Non-cash stock compensation expense 7,867 3,708
Changes in operating assets and liabilities:
Accounts receivable (3,874 ) (7,058 )
Other assets 744 (736 )
Accounts payable and other liabilities 4,480 8,952
Deferred revenue (5,912 ) 2,698
Net cash provided by operating activities 25,792 42,255
Cash flows from investing activities:
Capitalized software (5,608 ) (7,660 )
Capital expenditures (19,396 ) (9,130 )
Data acquisition costs (468 ) (913 )
Net cash paid in acquisitions (265,672 )
Net cash provided (used) by investing activities (291,144 ) (17,703 )
Cash flows from financing activities:
Payments of debt (5,356 ) (4,343 )
Sale of common stock, net of stock acquired for withholding taxes (1,813 ) 12,804
Acquisition of treasury stock (9,868 ) (22,698 )
Net cash used by financing activities (17,037 ) (14,237 )
Cash flows from discontinued operations:
From operating activities 82 (1,734 )
From investing activities (139 )
Net cash provided by discontinued operations 82 (1,873 )
Effect of exchange rate changes on cash (801 ) 544
Net change in cash and cash equivalents (283,108 ) 8,986
Cash and cash equivalents at beginning of period 392,918 207,630
Cash and cash equivalents at end of period 109,810 216,616
Supplemental cash flow information:
Cash paid during the period for:
Interest 2,516 2,975
Income taxes 59 9,924
Payments on capital leases and installment payment arrangements 1,084 2,339
Other debt payments, excluding line of credit 4,272 2,004
ACXIOM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
For the Six Months Ended
September 30,
2014 2013
Cash flows from operating activities:
Net earnings (loss) (9,148 ) 22,959
Loss (earnings) from discontinued operations, net of tax 1,580 (1,018 )
Non-cash operating activities:
Depreciation and amortization 55,686 50,241
Deferred income taxes (6,022 ) (528 )
Non-cash stock compensation expense 11,956 6,889
Changes in operating assets and liabilities:
Accounts receivable 8,608 (4,842 )
Other assets 3,480 7
Deferred costs (1,383 )
Accounts payable and other liabilities (24,542 ) (18,874 )
Deferred revenue (12,556 ) 3,929
Net cash provided by operating activities 27,659 58,763
Cash flows from investing activities:
Capitalized software (10,577 ) (13,614 )
Capital expenditures (38,397 ) (18,042 )
Data acquisition costs (1,103 ) (2,874 )
Net cash paid in acquisitions (265,672 )
Net cash provided (used) by investing activities (315,749 ) (34,530 )
Cash flows from financing activities:
Payments of debt (10,858 ) (9,233 )
Sale of common stock, net of stock acquired for withholding taxes (2,487 ) 18,559
Acquisition of treasury stock (9,868 ) (38,837 )
Net cash used by financing activities (23,213 ) (29,511 )
Cash flows from discontinued operations:
From operating activities 69 (1,393 )
From investing activities 2,927 (147 )
Net cash provided by discontinued operations 2,996 (1,540 )
Effect of exchange rate changes on cash (469 ) 460
Net change in cash and cash equivalents (308,776 ) (6,358 )
Cash and cash equivalents at beginning of period 418,586 430,604
Cash and cash equivalents at end of period 109,810 424,246

Supplemental cash flow information:

Cash paid during the period for:
Interest 5,391 5,986
Income taxes 356 11,008
Payments on capital leases and installment payment arrangements 2,319 5,239
Other debt payments, excluding line of credit 8,539 3,994
ACXIOM CORPORATION AND SUBSIDIARIES
CALCULATION OF FREE CASH FLOW AVAILABLE TO EQUITY
AND RECONCILIATION TO OPERATING CASH FLOW
(Unaudited)
(Dollars in thousands)
06/30/13 09/30/13 12/31/13 03/31/14 YTD FY2014 06/30/14 09/30/14 YTD FY2015 TTM 9/30/13 TTM 9/30/14
Net cash provided by operating activities – continuing operations 16,508 42,255 63,791 40,687 163,241 1,867 25,792 27,659 168,694 132,137
Net cash provided by operating activities – discontinued operations 341 (1,734 ) (19 ) 3,147 1,735 (13 ) 82 69 1,440 3,197
Less:
Payments for investments 3,633 190 3,823 3,823
Capitalized software (5,954 ) (7,660 ) (5,495 ) (5,408 ) (24,517 ) (4,969 ) (5,608 ) (10,577 ) (25,746 ) (21,480 )
Capital expenditures (8,912 ) (9,130 ) (6,681 ) (14,409 ) (39,132 ) (19,001 ) (19,396 ) (38,397 ) (44,553 ) (59,487 )
Data acquisition costs (1,961 ) (913 ) (1,786 ) (3,085 ) (7,745 ) (635 ) (468 ) (1,103 ) (7,746 ) (5,974 )
Discontinued operations investing activities (8 ) (139 ) (19 ) (166 ) 2,927 2,927 (411 ) 2,908
Payments on capital leases and installment payment arrangements (2,900 ) (2,339 ) (1,675 ) (1,465 ) (8,379 ) (1,235 ) (1,084 ) (2,319 ) (14,317 ) (5,459 )
Other required debt payments (1,990 ) (2,004 ) (4,259 ) (4,263 ) (12,516 ) (4,267 ) (4,272 ) (8,539 ) (8,249 ) (17,061 )
Total (4,876 ) 18,336 47,490 15,394 76,344 (25,326 ) (4,954 ) (30,280 ) 69,112 32,604
ACXIOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per share)
Q2 FY15 to Q2 FY14
06/30/13 09/30/13 12/31/13 03/31/14 YTD FY2014 06/30/14 09/30/14 YTD FY2015 % $
Revenue:
Marketing and data services 187,793 200,952 206,662 209,746 805,153 186,683 204,248 390,931 1.6 % 3,296
IT Infrastructure management services 69,385 66,825 62,099 58,816 257,125 55,532 55,789 111,321 -16.5 % (11,036 )
Total revenue 257,178 267,777 268,761 268,562 1,062,278 242,215 260,037 502,252 -2.9 % (7,740 )
Operating costs and expenses:
Cost of revenue 196,105 199,107 201,430 198,920 795,562 192,303 205,318 397,621 3.1 % 6,211
Selling, general and administrative 37,615 42,859 43,383 45,519 169,376 46,938 50,483 97,421 17.8 % 7,624
Impairment of goodwill and other 24,953 24,953 0 0.0 %
Gains, losses and other items, net 6,584 4,657 10,673 21,914 7,452 929 8,381 -85.9 % (5,655 )
Total operating costs and expenses 233,720 248,550 249,470 280,065 1,011,805 246,693 256,730 503,423 3.3 % 8,180
Income (loss) from operations 23,458 19,227 19,291 (11,503 ) 50,473 (4,478 ) 3,307 (1,171 ) -82.8 % (15,920 )
% Margin 9.1 % 7.2 % 7.2 % -4.3 % 4.8 % -1.8 % 1.3 % -0.2 %
Other expense
Interest expense (3,019 ) (2,980 ) (3,114 ) (2,558 ) (11,671 ) (2,571 ) (2,395 ) (4,966 ) 19.6 % 585
Other, net 104 (350 ) 1,484 579 1,817 (413 ) (115 ) (528 ) 67.1 % 235
Total other expense (2,915 ) (3,330 ) (1,630 ) (1,979 ) (9,854 ) (2,984 ) (2,510 ) (5,494 ) -24.6 % 820
Earnings (loss) from continuing operations before income taxes 20,543 15,897 17,661 (13,482 ) 40,619 (7,462 ) 797 (6,665 ) -95.0 % (15,100 )
Income taxes 8,040 6,459 3,083 12,045 29,627

(1,390

) 2,293 903 -64.5 % (4,166 )
Net earnings (loss) from continuing operations 12,503 9,438 14,578 (25,527 ) 10,992 (6,072 ) (1,496 ) (7,568 ) -115.9 % (10,934 )
Earnings (loss) from discontinued operations, net of tax 592 426 489 (3,696 ) (2,189 ) (1,532 ) (48 ) (1,580 ) -111.3 % (474 )
Net earnings (loss) 13,095 9,864 15,067 (29,223 ) 8,803 (7,604 ) (1,544 ) (9,148 ) -115.7 % (11,408 )
Less: Net gain (loss) attributable
to noncontrolling interest (85 ) 25 (60 ) -100.0 % (25 )
Net earnings (loss) attributable to Acxiom 13,180 9,839 15,067 (29,223 ) 8,863 (7,604 ) (1,544 ) (9,148 ) -115.7 % (11,383 )
Diluted earnings (loss) per share – net earnings (loss) attributable
to Acxiom stockholders 0.17 0.13 0.19 (0.38 ) 0.12 (0.10 ) (0.02 ) (0.12 ) -115.4 % (0.15 )
ACXIOM CORPORATION AND SUBSIDIARIES
RESULTS BY SEGMENT
(Unaudited)
(Dollars in thousands)
Q2 FY15 to Q2 FY14
06/30/13 09/30/13 12/31/13 03/31/14 YTD FY2014 06/30/14 09/30/14 YTD FY2015 % $
Revenue:
Marketing and data services 187,793 200,952 206,662 209,746 805,153 186,683 204,248 390,931 2 % 3,296
IT Infrastructure management services 69,385 66,825 62,099 58,816 257,125 55,532 55,789 111,321 -17 % (11,036 )
Total revenue 257,178 267,777 268,761 268,562 1,062,278 242,215 260,037 502,252 -3 % (7,740 )
Income from continuing operations:
Marketing and data services 12,697 16,030 22,529 27,244 78,500 10,272 9,397 19,669 -41 % (6,633 )
IT Infrastructure management services 10,761 11,967 6,316 3,803 32,847 4,739 4,130 8,869 -65 % (7,837 )
Corporate (8,770 ) (9,554 ) (42,550 ) (60,874 ) (19,489 ) (10,220 ) (29,709 ) 17 % (1,450 )
Total income (loss) from continuing operations 23,458 19,227 19,291 (11,503 ) 50,473 (4,478 ) 3,307 (1,171 ) -83 % (15,920 )
Margin:
Marketing and data services 6.8 % 8.0 % 10.9 % 13.0 % 9.7 % 5.5 % 4.6 % 5.0 %
IT Infrastructure management services 15.5 % 17.9 % 10.2 % 6.5 % 12.8 % 8.5 % 7.4 % 8.0 %
Total 9.1 % 7.2 % 7.2 % -4.3 % 4.8 % -1.8 % 1.3 % -0.2 %

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