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ACXIOM ANNOUNCES FOURTH QUARTER AND FISCAL YEAR RESULTS

Fourth Quarter Revenue Grows 9% Year-over-Year

Revenue Increases in Each Segment

Full Year Connectivity Revenue Exceeds $100 Million

Fourth Quarter Financial Highlights

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Revenue: Total revenue was $225 million, up 9% compared to the fourth quarter of last year driven by growth in each segment. Excluding an unfavorable currency impact of approximately $1 million, revenue was up 10%. US revenue of $205 million was up 11% year-over-year. International revenue of $20 million increased 2% on a constant currency basis.

·	Operating Income (Loss): GAAP operating loss from continuing operations improved to $8 million compared to a loss of $11 million in the prior year. Non-GAAP operating income from continuing operations declined 7% to approximately $20 million.

·	Earnings (Loss) per Share: GAAP loss per share from continuing operations was $0.02 compared to a loss per share of $0.12 in the prior year. Non-GAAP diluted earnings per share from continuing operations were $0.18, up from $0.17 a year ago.

·	Operating Cash Flow: Operating cash flow from continuing operations was $43 million, up 47% from $29 million last year.

·	Free Cash Flow to Equity: Free cash flow to equity was $17 million, up from $2 million in the prior year.

Fiscal Year Financial Highlights

·

Revenue: Total revenue was $850 million, up 6% compared to fiscal 2015. Excluding an unfavorable currency impact of approximately $8 million, revenue was up 7%. US revenue of $770 million increased 9% year-over-year. International revenue of $80 million was down 8% on a constant currency basis. Connectivity revenue of $102 million increased 86% year-over-year.

·	Operating Income (Loss): GAAP operating loss from continuing operations improved to $13 million compared to a loss of $33 million in the prior year. Non-GAAP operating income from continuing operations improved 16% to approximately $76 million.

·	Earnings (Loss) per Share: GAAP loss per share from continuing operations was $0.11 compared to a loss per share of $0.34 in the prior year. Non-GAAP diluted earnings per share from continuing operations were $0.59, up from $0.49 a year ago.

Fourth Quarter Segment Results

Marketing Services

 

·	Revenue was $113 million, up 3% compared to the fourth quarter of last year. US revenue of $104 million was up 4% year-over-year.

·	Gross margin improved from 33% to 35%.

·	Operating income was $19 million, up 7% compared to the prior year.

Audience Solutions

·	Revenue was $80 million, up 4% compared to the prior year period. US revenue of $71 million was up 6% year-over-year.

·	Gross margin improved from 55% to 58%.

·	Operating income was $30 million, down 3% compared to the prior year.

Connectivity

·	Revenue was $31 million, up 62% compared to the fourth quarter of last year. Connectivity exited the quarter with an $110 million annualized revenue run-rate.

·	Gross margin improved from 43% to 63%.

·	Operating loss improved by $6 million to nearly break-even.

A detailed discussion of our non-GAAP financial measures is included at the bottom of this release, and a reconciliation between GAAP and non-GAAP results is attached.

"Our strong fourth quarter performance capped off a year of solid execution across each of our businesses," said Acxiom CEO Scott Howe. "In fiscal 2016, we extended our leadership in data connectivity with the launch of LiveRamp Customer Link™ and expansion of data onboarding to the UK and France. At the same time, Marketing Services and Audience Solutions had a number of key customer and partner wins. We enter fiscal 2017 from a position of strength, propelled by our recent progress and momentum."

Recent Business Highlights

·	LiveRamp™ launched its data onboarding service in the United Kingdom and France to meet rapidly growing demand from clients and partners. Global and local brands can now use LiveRamp to activate offline first and third-party data across their marketing stack.

·	Connectivity added more than 15 new customers during the quarter and added over 40 new partner integrations. Marketers can now onboard and activate their data across a growing network of more than 300 marketing platforms and data providers.

·	Marketing Services announced the Acxiom Marketing Analytics Environment™, a privacy-safe, closed-loop marketing analytics solution that allows clients to quickly leverage the power of data science and analytics to drive improved customer experiences and higher return on investment.

·	Acxiom was awarded the prestigious Innovation Partner Award by Citigroup Inc. in recognition of its high level of service and performance. Acxiom was among five companies recognized at this year's Citi Supplier Awards event.

·

Debora Beachner Tomlin was named to the Acxiom Board of Directors. Ms. Tomlin is a proven and respected marketing executive with a deep understanding of the value of data-driven marketing. She currently serves as chief marketing and distribution officer for CSAA Insurance Group. Prior to CSAA, Ms. Tomlin held several senior leadership positions at Capital One Bank.

·	Acxiom repurchased 731,000 shares for approximately $15 million during the quarter. Since inception of the share repurchase program in August 2011, Acxiom has repurchased 15.5 million shares for $255 million.

Financial Outlook

Acxiom's guidance excludes the impact of non-cash compensation, purchased intangible asset amortization, restructuring charges and separation and transformation costs.

For fiscal 2017, Acxiom expects to report:

·	Revenue in the range of $870 million to $890 million

·	Non-GAAP diluted earnings per share in the range of $0.55 to slightly higher

Conference Call

About Acxiom

Non-GAAP Financial Measures

The Company's press release includes (i) non-GAAP earnings from operations and non-GAAP earnings per share, both excluding items, and (ii) free cash flow available to equity, which is also a non-GAAP measure. Non-GAAP earnings from operations and non-GAAP earnings per share excluding items represent loss from the Company's continuing operations less expenses related to gains, losses and other items, impairment of goodwill and other assets, separation and transformation expenses recorded in general and administrative expense, purchased intangible asset and accelerated software amortization recorded in cost of revenue, non-cash stock compensation recorded in both cost of revenue and operating expenses, and accelerated amortization recorded in cost of revenue.  The Company's management believes that these non-GAAP measures are meaningful since they represent the recurring income from the Company's continuing operations before excluded unusual items, which are not indicative of the Company's ordinary course of operations, and before purchased intangible asset amortization and non-cash stock compensation, which are recurring non-cash expenses.  Management also believes these measures are useful in comparison to other companies who report similar measures.  The non-GAAP measures are reconciled to the corresponding GAAP measures of income (loss) from operations and earnings (loss) per share in schedules to the press release.

Free cash flow available 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. The Company's management believes that this measure of free cash flow available to equity 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, and it therefore provides a useful measure of liquidity for assessing the amount of cash available for general corporate and strategic purposes. Free cash flow available to equity is reconciled to operating cash flow, the nearest comparable GAAP measure, in a schedule to the press release.

Adjusted EBITDA is defined as net income or loss from continuing operations before other expense, income taxes, depreciation and amortization, equity in net income of affiliates, restructuring charges, goodwill and intangible asset impairment charges, stock-based compensation expense, gains, losses and other items, impairment of goodwill and other assets, separation and transformation expenses recorded in general and administrative expense, purchased intangible asset and accelerated software amortization recorded in cost of revenue, non-cash stock compensation recorded in both cost of revenue and operating expenses, and accelerated amortization recorded in cost of revenue. 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. The Company believes that its inclusion of Adjusted EBITDA provides useful supplementary information to and facilitates analysis by investors in evaluating the Company's performance and trends. Adjusted EBITDA is reconciled to Net loss from continuing operations, the nearest comparable GAAP measure, in a schedule attached to the press release.

The non-GAAP financial measures used by the Company may not be comparable to similarly titled measures used by other companies and should not be considered in isolation or as substitutes for measures of financial performance or liquidity prepared in accordance with GAAP.

Forward-Looking Statements

This release and today's conference call contains 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 divisions 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 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, 2015, which was filed with the Securities and Exchange Commission on May 27, 2015.

 

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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.

 

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ACXIOM CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in thousands, except earnings (loss) per share)

7

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9

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10

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11

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