Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K Q1FY18 - LiveRamp Holdings, Inc. | f8k.htm |
ACXIOM ANNOUNCES FIRST QUARTER RESULTS
Connectivity Revenue Growth Accelerates to 44% Year-Over-Year
CONWAY, Ark., August 3, 2017—Acxiom® (Nasdaq: ACXM), the data foundation for the world's best marketers, today announced financial results for its first quarter ended June 30, 2017.
Financial Highlights
|
·
|
Revenue: Total revenue was $213 million or down 1% compared to the first quarter of last year. Year-over-year revenue growth was negatively impacted by $12 million associated with the 2017 divestiture of Acxiom Impact and $1 million of FX.
|
|
·
|
Operating Income (Loss): GAAP operating loss was $6 million compared to operating income of $8 million in the prior year. Non-GAAP operating income improved 6% to approximately $22 million.
|
|
·
|
Earnings (Loss) per Share: GAAP diluted loss per share was $0.02 compared to earnings per share of $0.05 in the prior year. Non-GAAP diluted earnings per share were $0.14 compared to $0.15 a year ago.
|
|
·
|
Operating Cash Flow: Operating cash flow was $5 million, up from $1 million in the prior year.
|
|
·
|
Free Cash Flow to Equity: Free cash flow to equity was negative $6 million, up from negative $22 million in the prior year. For the trailing twelve-month period, free cash flow to equity improved to $79 million, up from $8 million in the comparable period.
|
Segment Results
$M
|
Connectivity
|
Q118
|
Q117
|
Y/Y Δ
|
|
|
Revenue
|
$ 45
|
$ 31
|
44%
|
|
|
Gross Profit
|
$ 28
|
$ 18
|
57%
|
|
|
Gross Margin
|
61%
|
56%
|
480 bps
|
|
|
Segment Operating Income (Loss)
|
$ (0)
|
$ 0
|
(117%)
|
|
|
Segment Margin
|
(0%)
|
1%
|
(100) bps
|
|
|
Audience Solutions
|
Q118
|
Q117
|
Y/Y Δ
|
|
|
Revenue
|
$ 76
|
$ 74
|
3%
|
|
|
Gross Profit
|
$ 47
|
$ 42
|
13%
|
|
|
Gross Margin
|
62%
|
57%
|
550 bps
|
|
|
Segment Operating Income
|
$ 29
|
$ 25
|
14%
|
|
|
Segment Margin
|
38%
|
34%
|
370 bps
|
|
1
|
Marketing Services
|
Q118
|
Q117
|
Y/Y Δ
|
|
|
Revenue
|
$ 92
|
$ 110
|
(17%)
|
|
|
Gross Profit
|
$ 31
|
$ 37
|
(16%)
|
|
|
Gross Margin
|
34%
|
34%
|
10 bps
|
|
|
Segment Operating Income
|
$ 20
|
$ 20
|
(2%)
|
|
|
Segment Margin
|
22%
|
18%
|
320 bps
|
A detailed discussion of our non-GAAP financial measures and a reconciliation between GAAP and non-GAAP results is provided in the schedules to this press release.
"We remain on track to meet our profit objectives for the year," said Acxiom CEO Scott Howe. "While our near-term top-line expectations have declined, our business remains strong. We are expanding internationally, our Connectivity business continues to fire on all cylinders, and we are making good progress against our key growth inititiatives."
Recent Business Highlights
|
·
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LiveRamp® added approximately 40 new direct clients during the quarter and added over 25 new partner integrations. Marketers can now onboard and activate their data across a growing network of more than 500 publishers and marketing technology providers.
|
|
·
|
LiveRamp launched IdentityLink™ for publishers. This solution allows publishers to better monetize their audiences by supporting brands' people-based marketing initiatives. Over 200 publishers are now using IdentityLink, which unifies LiveRamp's identity resolution suite of capabilities with those acquired in the 2016 acquisitions of Arbor and Circulate.
|
|
·
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Audience Solutions announced several new data partnerships, including a measurement partnership with Pinterest and an integration with LinkedIn that will enhance people-based targeting on its platform.
|
|
·
|
Acxiom launched Connected Spaces, a global solution designed to deliver more relevant customer experiences at retail, travel and leisure locations such as airports, malls, sports stadiums, concert arenas and resorts. In partnership with Adobe Experience Cloud, Connected Spaces enables locations to identify, understand and engage with the thousands of people coming through their doors.
|
|
·
|
Acxiom launched its InfoBase® consumer database and AbiliTec® Identity Resolution offering in Mexico, enabling companies to reach 78 million unique individuals, covering 84 percent of all adults in Mexico.
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|
·
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Acxiom was awarded five new patents for data processing and management technology. Designed to support the data science underlying its best-of-breed marketing solutions, the new patents extend Acxiom's leadership in people-based marketing and ethical data use.
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|
·
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Acxiom was named one of the Best Places to Work in Arkansas by Arkansas Business. Acxiom has previously been recognized as a Best Place to Work by Glassdoor, San Francisco Business Times and Silicon Valley Business Journal, among others. It has also been certified as a great workplace by the independent analysts at Great Place to Work®.
|
2
Financial Outlook
Acxiom's non-GAAP guidance excludes the impact of non-cash compensation, purchased intangible asset amortization, restructuring charges and business separation costs.
For fiscal 2018, Acxiom expects to report:
|
·
|
Revenue of between $920 million and $930 million, an increase of between 7% and 8% year-over-year after adjusting for the Acxiom Impact divestiture. This represents a downward adjustment of $15 million to $25 million from prior guidance.
|
|
·
|
GAAP diluted loss per share of approximately $0.06
|
|
·
|
Non-GAAP diluted earnings per share of approximately $0.80, an increase of 13% year-over-year
|
Conference Call
Acxiom will hold a conference call at 4:00 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 more than 45 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 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 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, 2017, which was filed with the Securities and Exchange Commission on May 26, 2017.
3
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.
For more information, contact:
Lauren Dillard
Acxiom Investor Relations
(650) 372-2242
investor.relations@acxiom.com
Acxiom Investor Relations
(650) 372-2242
investor.relations@acxiom.com
EACXM
4
|
ACXIOM CORPORATION AND SUBSIDIARIES
|
||||||||||||||||
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||||||
|
(Unaudited)
|
||||||||||||||||
|
(Dollars in thousands, except per share amounts)
|
||||||||||||||||
|
For the Three Months Ended
|
||||||||||||||||
|
June 30,
|
||||||||||||||||
| $ |
|
%
|
||||||||||||||
|
2017
|
2016
|
Variance
|
Variance
|
|||||||||||||
|
Revenues
|
212,514
|
214,801
|
(2,287
|
)
|
(1.1
|
%)
|
||||||||||
|
Cost of revenue
|
113,960
|
122,819
|
(8,859
|
)
|
(7.2
|
%)
|
||||||||||
|
Gross profit
|
98,554
|
91,982
|
6,572
|
7.1
|
%
|
|||||||||||
|
% Gross margin
|
46.4
|
%
|
42.8
|
%
|
||||||||||||
|
Operating expenses:
|
||||||||||||||||
|
Research and development
|
23,563
|
18,652
|
4,911
|
26.3
|
%
|
|||||||||||
|
Sales and marketing
|
48,440
|
37,348
|
11,092
|
29.7
|
%
|
|||||||||||
|
General and administrative
|
32,356
|
27,506
|
4,850
|
17.6
|
%
|
|||||||||||
|
Gains, losses and other items, net
|
(98
|
)
|
314
|
(412
|
)
|
(131.2
|
%)
|
|||||||||
|
Total operating expenses
|
104,261
|
83,820
|
20,441
|
24.4
|
%
|
|||||||||||
|
Income (loss) from operations
|
(5,707
|
)
|
8,162
|
(13,869
|
)
|
(169.9
|
%)
|
|||||||||
|
% Margin
|
-2.7
|
%
|
3.8
|
%
|
||||||||||||
|
Other income (expense):
|
||||||||||||||||
|
Interest expense
|
(2,342
|
)
|
(1,812
|
)
|
(530
|
)
|
(29.2
|
%)
|
||||||||
|
Other, net
|
(672
|
)
|
307
|
(979
|
)
|
(319.0
|
%)
|
|||||||||
|
Total other expense
|
(3,014
|
)
|
(1,505
|
)
|
(1,509
|
)
|
(100.3
|
%)
|
||||||||
|
Earnings (loss) before income taxes
|
(8,721
|
)
|
6,657
|
(15,378
|
)
|
(231.0
|
%)
|
|||||||||
|
Income taxes
|
(7,421
|
)
|
2,681
|
(10,102
|
)
|
(376.8
|
%)
|
|||||||||
|
Net earnings (loss)
|
(1,300
|
)
|
3,976
|
(5,276
|
)
|
(132.7
|
%)
|
|||||||||
|
Basic earnings (loss) per share
|
(0.02
|
)
|
0.05
|
(0.07
|
)
|
(132.2
|
%)
|
|||||||||
|
Diluted earnings (loss) per share
|
(0.02
|
)
|
0.05
|
(0.07
|
)
|
(133.0
|
%)
|
|||||||||
|
Basic weighted average shares
|
78,672
|
77,471
|
||||||||||||||
|
Diluted weighted average shares
|
78,672
|
79,353
|
||||||||||||||
5
|
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,
|
||||||||
|
2017
|
2016
|
|||||||
|
Earnings (loss) before income taxes
|
(8,721
|
)
|
6,657
|
|||||
|
Income taxes
|
(7,421
|
)
|
2,681
|
|||||
|
Net earnings (loss)
|
(1,300
|
)
|
3,976
|
|||||
|
Earnings (loss) per share:
|
||||||||
|
Basic
|
(0.02
|
)
|
0.05
|
|||||
|
Diluted
|
(0.02
|
)
|
0.05
|
|||||
|
Excluded items:
|
||||||||
|
Purchased intangible asset amortization (cost of revenue)
|
5,966
|
4,077
|
||||||
|
Non-cash stock compensation (cost of revenue and operating expenses)
|
15,031
|
8,590
|
||||||
|
Restructuring and merger charges (gains, losses, and other)
|
(98
|
)
|
314
|
|||||
|
Separation and transformation costs (general and administrative)
|
7,119
|
-
|
||||||
|
Total excluded items
|
28,018
|
12,981
|
||||||
|
Earnings before income taxes
|
||||||||
|
and excluding items
|
19,297
|
19,638
|
||||||
|
Income taxes (2)
|
7,720
|
7,852
|
||||||
|
Non-GAAP net earnings
|
11,577
|
11,786
|
||||||
|
Non-GAAP earnings per share:
|
||||||||
|
Basic
|
0.15
|
0.15
|
||||||
|
Diluted
|
0.14
|
0.15
|
||||||
|
Basic weighted average shares
|
78,672
|
77,471
|
||||||
|
Diluted weighted average shares
|
81,440
|
79,353
|
||||||
|
(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 40.0% in both periods presented. The difference between our GAAP and non-GAAP tax rates were primarily due to the net tax effects of the excluded items.
|
||||||||
6
|
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,
|
||||||||
|
2017
|
2016
|
|||||||
|
Income (loss) from operations
|
(5,707
|
)
|
8,162
|
|||||
|
Excluded items:
|
||||||||
|
Purchased intangible asset amortization (cost of revenue)
|
5,966
|
4,077
|
||||||
|
Non-cash stock compensation (cost of revenue and operating expenses)
|
15,031
|
8,590
|
||||||
|
Restructuring and merger charges (gains, losses, and other)
|
(98
|
)
|
314
|
|||||
|
Separation and transformation costs (general and administrative)
|
7,119
|
-
|
||||||
|
Total excluded items
|
28,018
|
12,981
|
||||||
|
Income from operations before excluded items
|
22,311
|
21,143
|
||||||
|
(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.
|
||||||||
7
|
ACXIOM CORPORATION AND SUBSIDIARIES
|
||||||||||||||||
|
RESULTS BY SEGMENT
|
||||||||||||||||
|
(Unaudited)
|
||||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||
|
For the Three Months Ended
|
||||||||||||||||
|
June 30,
|
||||||||||||||||
| $ |
|
%
|
||||||||||||||
|
2017
|
2016
|
Variance
|
Variance
|
|||||||||||||
|
Revenues
|
||||||||||||||||
|
Marketing Services
|
91,594
|
109,715
|
(18,121
|
)
|
(16.5
|
%)
|
||||||||||
|
Audience Solutions
|
75,734
|
73,744
|
1,990
|
2.7
|
%
|
|||||||||||
|
Connectivity
|
45,186
|
31,342
|
13,844
|
44.2
|
%
|
|||||||||||
|
Total operating segment revenues
|
212,514
|
214,801
|
(2,287
|
)
|
(1.1
|
%)
|
||||||||||
|
Gross profit
|
||||||||||||||||
|
Marketing Services
|
31,358
|
37,466
|
(6,108
|
)
|
(16.3
|
%)
|
||||||||||
|
Audience Solutions
|
47,210
|
41,912
|
5,298
|
12.6
|
%
|
|||||||||||
|
Connectivity
|
27,525
|
17,575
|
9,950
|
56.6
|
%
|
|||||||||||
|
Total operating segment gross profit
|
106,093
|
96,953
|
9,140
|
9.4
|
%
|
|||||||||||
|
Gross margin %
|
||||||||||||||||
|
Marketing Services
|
34.2
|
%
|
34.1
|
%
|
||||||||||||
|
Audience Solutions
|
62.3
|
%
|
56.8
|
%
|
||||||||||||
|
Connectivity
|
60.9
|
%
|
56.1
|
%
|
||||||||||||
|
Total operating segment gross margin
|
49.9
|
%
|
45.1
|
%
|
||||||||||||
|
Income (loss) from operations
|
||||||||||||||||
|
Marketing Services
|
19,784
|
20,145
|
(361
|
)
|
(1.8
|
%)
|
||||||||||
|
Audience Solutions
|
28,542
|
25,096
|
3,446
|
13.7
|
%
|
|||||||||||
|
Connectivity
|
(48
|
)
|
291
|
(339
|
)
|
(116.6
|
%)
|
|||||||||
|
Total operating segment income from operations
|
48,277
|
45,532
|
2,745
|
6.0
|
%
|
|||||||||||
|
Operating income (loss) margin %
|
||||||||||||||||
|
Marketing Services
|
21.6
|
%
|
18.4
|
%
|
||||||||||||
|
Audience Solutions
|
37.7
|
%
|
34.0
|
%
|
||||||||||||
|
Connectivity
|
(0.1
|
%)
|
0.9
|
%
|
||||||||||||
|
Total operating segment operating margin
|
22.7
|
%
|
21.2
|
%
|
||||||||||||
|
Some totals may not add due to rounding.
|
||||||||||||||||
8
|
ACXIOM CORPORATION AND SUBSIDIARIES
|
||||||||
|
RECONCILIATION OF SEGMENT RESULTS
|
||||||||
|
(Unaudited)
|
||||||||
|
(Dollars in thousands)
|
||||||||
|
For the Three Months Ended
|
||||||||
|
June 30,
|
||||||||
|
2017
|
2016
|
|||||||
|
Total operating segment gross profit
|
106,093
|
96,953
|
||||||
|
Less:
|
||||||||
|
Purchased intangible asset amortization
|
5,966
|
4,077
|
||||||
|
Non-cash stock compensation
|
1,573
|
894
|
||||||
|
Gross profit
|
98,554
|
91,982
|
||||||
|
Total operating segment income from operations
|
48,277
|
45,532
|
||||||
|
Less:
|
||||||||
|
Corporate expenses
|
25,967
|
24,389
|
||||||
|
Purchased intangible asset amortization
|
5,966
|
4,077
|
||||||
|
Non-cash stock compensation
|
15,031
|
8,590
|
||||||
|
Restructuring charges
|
(98
|
)
|
314
|
|||||
|
Separation and transformation costs
|
7,119
|
-
|
||||||
|
Income (loss) from operations
|
(5,707
|
)
|
8,162
|
|||||
|
Some totals may not add due to rounding.
|
||||||||
9
|
ACXIOM CORPORATION AND SUBSIDIARIES
|
||||||||
|
RECONCILIATION OF ADJUSTED EBITDA (1)
|
||||||||
|
(Unaudited)
|
||||||||
|
(Dollars in thousands)
|
||||||||
|
For the Three Months Ended
|
||||||||
|
June 30,
|
||||||||
|
2017
|
2016
|
|||||||
|
Net earnings (loss)
|
(1,300
|
)
|
3,976
|
|||||
|
Income taxes
|
(7,421
|
)
|
2,681
|
|||||
|
Other expense
|
(3,014
|
)
|
(1,505
|
)
|
||||
|
Income (loss) from operations
|
(5,707
|
)
|
8,162
|
|||||
|
Depreciation and amortization
|
21,110
|
20,790
|
||||||
|
EBITDA
|
15,403
|
28,952
|
||||||
|
Other adjustments:
|
||||||||
|
Non-cash stock compensation (cost of revenue and operating expenses)
|
15,031
|
8,590
|
||||||
|
Gains, losses, and other items, net
|
(98
|
)
|
314
|
|||||
|
Separation and transformation costs (general and administrative)
|
7,119
|
-
|
||||||
|
Other adjustments
|
22,052
|
8,904
|
||||||
|
Adjusted EBITDA
|
37,455
|
37,856
|
||||||
|
(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.
|
||||||||
10
|
ACXIOM CORPORATION AND SUBSIDIARIES
|
||||||||||||||||
|
CONSOLIDATED BALANCE SHEETS
|
||||||||||||||||
|
(Unaudited)
|
||||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||
|
June 30,
|
March 31,
|
$ |
|
%
|
||||||||||||
|
2017
|
2017
|
Variance
|
Variance
|
|||||||||||||
|
Assets
|
||||||||||||||||
|
Current assets:
|
||||||||||||||||
|
Cash and cash equivalents
|
163,146
|
170,343
|
(7,197
|
)
|
(4.2
|
%)
|
||||||||||
|
Trade accounts receivable, net
|
131,339
|
142,768
|
(11,429
|
)
|
(8.0
|
%)
|
||||||||||
|
Refundable income taxes
|
15,925
|
7,098
|
8,827
|
124.4
|
%
|
|||||||||||
|
Other current assets
|
44,809
|
48,310
|
(3,501
|
)
|
(7.2
|
%)
|
||||||||||
|
Total current assets
|
355,219
|
368,519
|
(13,300
|
)
|
(3.6
|
%)
|
||||||||||
|
Property and equipment
|
480,212
|
476,281
|
3,931
|
0.8
|
%
|
|||||||||||
|
Less - accumulated depreciation and amortization
|
325,962
|
320,307
|
5,655
|
1.8
|
%
|
|||||||||||
|
Property and equipment, net
|
154,250
|
155,974
|
(1,724
|
)
|
(1.1
|
%)
|
||||||||||
|
Software, net of accumulated amortization
|
44,089
|
47,638
|
(3,549
|
)
|
(7.4
|
%)
|
||||||||||
|
Goodwill
|
592,761
|
592,731
|
30
|
0.0
|
%
|
|||||||||||
|
Purchased software licenses, net of accumulated amortization
|
7,159
|
7,972
|
(813
|
)
|
(10.2
|
%)
|
||||||||||
|
Deferred income taxes
|
12,240
|
10,261
|
1,979
|
19.3
|
%
|
|||||||||||
|
Other assets, net
|
48,179
|
51,443
|
(3,264
|
)
|
(6.3
|
%)
|
||||||||||
|
1,213,897
|
1,234,538
|
(20,641
|
)
|
(1.7
|
%)
|
|||||||||||
|
Liabilities and Stockholders' Equity
|
||||||||||||||||
|
Current liabilities:
|
||||||||||||||||
|
Current installments of long-term debt
|
2,339
|
39,819
|
(37,480
|
)
|
(94.1
|
%)
|
||||||||||
|
Trade accounts payable
|
41,414
|
40,208
|
1,206
|
3.0
|
%
|
|||||||||||
|
Accrued payroll and related expenses
|
22,230
|
53,238
|
(31,008
|
)
|
(58.2
|
%)
|
||||||||||
|
Other accrued expenses
|
58,111
|
59,861
|
(1,750
|
)
|
(2.9
|
%)
|
||||||||||
|
Deferred revenue
|
32,522
|
37,087
|
(4,565
|
)
|
(12.3
|
%)
|
||||||||||
|
Total current liabilities
|
156,616
|
230,213
|
(73,597
|
)
|
(32.0
|
%)
|
||||||||||
|
Long-term debt
|
228,145
|
189,241
|
38,904
|
20.6
|
%
|
|||||||||||
|
Deferred income taxes
|
60,026
|
58,374
|
1,652
|
2.8
|
%
|
|||||||||||
|
Other liabilities
|
15,653
|
17,730
|
(2,077
|
)
|
(11.7
|
%)
|
||||||||||
|
Stockholders' equity:
|
||||||||||||||||
|
Common stock
|
13,407
|
13,288
|
119
|
0.9
|
%
|
|||||||||||
|
Additional paid-in capital
|
1,174,496
|
1,154,429
|
20,067
|
1.7
|
%
|
|||||||||||
|
Retained earnings
|
603,551
|
602,609
|
942
|
0.2
|
%
|
|||||||||||
|
Accumulated other comprehensive income
|
8,651
|
7,999
|
652
|
8.2
|
%
|
|||||||||||
|
Treasury stock, at cost
|
(1,046,648
|
)
|
(1,039,345
|
)
|
(7,303
|
)
|
(0.7
|
%)
|
||||||||
|
Total stockholders' equity
|
753,457
|
738,980
|
14,477
|
2.0
|
%
|
|||||||||||
|
1,213,897
|
1,234,538
|
(20,641
|
)
|
(1.7
|
%)
|
|||||||||||
11
|
ACXIOM CORPORATION AND SUBSIDIARIES
|
||||||||
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
|
(Unaudited)
|
||||||||
|
(Dollars in thousands)
|
||||||||
|
For the Three Months Ended
|
||||||||
|
June 30,
|
||||||||
|
2017
|
2016
|
|||||||
|
Cash flows from operating activities:
|
||||||||
|
Net earnings (loss)
|
(1,300
|
)
|
3,976
|
|||||
|
Non-cash operating activities:
|
||||||||
|
Depreciation and amortization
|
21,110
|
20,790
|
||||||
|
Loss on disposal of assets
|
163
|
-
|
||||||
|
Accelerated deferred debt costs
|
720
|
-
|
||||||
|
Deferred income taxes
|
2,497
|
(678
|
)
|
|||||
|
Non-cash stock compensation expense
|
15,038
|
8,590
|
||||||
|
Changes in operating assets and liabilities:
|
||||||||
|
Accounts receivable
|
11,960
|
9,487
|
||||||
|
Other assets
|
(3,377
|
)
|
5,383
|
|||||
|
Accounts payable and other liabilities
|
(37,073
|
)
|
(41,021
|
)
|
||||
|
Deferred revenue
|
(4,787
|
)
|
(5,777
|
)
|
||||
|
Net cash provided by operating activities
|
4,951
|
750
|
||||||
|
Cash flows from investing activities:
|
||||||||
|
Capitalized software
|
(3,388
|
)
|
(3,982
|
)
|
||||
|
Capital expenditures
|
(6,888
|
)
|
(10,694
|
)
|
||||
|
Data acquisition costs
|
(190
|
)
|
(20
|
)
|
||||
|
Net cash used in investing activities
|
(10,466
|
)
|
(14,696
|
)
|
||||
|
Cash flows from financing activities:
|
||||||||
|
Proceeds from debt
|
230,000
|
-
|
||||||
|
Payments of debt
|
(225,572
|
)
|
(8,053
|
)
|
||||
|
Fees for debt refinancing
|
(4,001
|
)
|
-
|
|||||
|
Sale of common stock, net of stock acquired for withholding taxes
|
(2,539
|
)
|
2,974
|
|||||
|
Excess tax benefits from share-based compensation
|
-
|
514
|
||||||
|
Acquisition of treasury stock
|
-
|
(20,207
|
)
|
|||||
|
Net cash used in financing activities
|
(2,112
|
)
|
(24,772
|
)
|
||||
|
Effect of exchange rate changes on cash
|
430
|
(751
|
)
|
|||||
|
Net change in cash and cash equivalents
|
(7,197
|
)
|
(39,469
|
)
|
||||
|
Cash and cash equivalents at beginning of period
|
170,343
|
189,629
|
||||||
|
Cash and cash equivalents at end of period
|
163,146
|
150,160
|
||||||
|
Supplemental cash flow information:
|
||||||||
|
Cash paid (received) during the period for:
|
||||||||
|
Interest
|
2,375
|
2,258
|
||||||
|
Income taxes
|
354
|
(76
|
)
|
|||||
12
|
ACXIOM CORPORATION AND SUBSIDIARIES
|
||||||||||||||||||||||||
|
CALCULATION OF FREE CASH FLOW TO EQUITY (1)
|
||||||||||||||||||||||||
|
(Unaudited)
|
||||||||||||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||||
|
06/30/16
|
09/30/16
|
12/31/16
|
03/31/17
|
FY2017
|
06/30/17
|
|||||||||||||||||||
|
Net Cash Provided by Operating Activities
|
750
|
35,482
|
48,933
|
30,665
|
115,830
|
4,951
|
||||||||||||||||||
|
Less (plus):
|
||||||||||||||||||||||||
|
Capitalized software
|
(3,982
|
)
|
(3,893
|
)
|
(3,296
|
)
|
(3,306
|
)
|
(14,477
|
)
|
(3,388
|
)
|
||||||||||||
|
Capital expenditures
|
(10,694
|
)
|
(9,845
|
)
|
(9,557
|
)
|
(17,897
|
)
|
(47,993
|
)
|
(6,888
|
)
|
||||||||||||
|
Data acquisition costs
|
(20
|
)
|
(247
|
)
|
(196
|
)
|
(418
|
)
|
(881
|
)
|
(190
|
)
|
||||||||||||
|
Required debt payments
|
(8,053
|
)
|
(8,058
|
)
|
(8,062
|
)
|
(8,070
|
)
|
(32,243
|
)
|
(572
|
)
|
||||||||||||
|
Net cash received in disposition
|
-
|
16,988
|
-
|
-
|
16,988
|
-
|
||||||||||||||||||
|
Proceeds from sales of assets
|
-
|
-
|
-
|
25,494
|
25,494
|
-
|
||||||||||||||||||
|
Free Cash Flow to Equity
|
(21,999
|
)
|
30,427
|
27,822
|
26,468
|
62,718
|
(6,087
|
)
|
||||||||||||||||
|
(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.
|
||||||||||||||||||||||||
13
|
ACXIOM CORPORATION AND SUBSIDIARIES
|
||||||||||||||||||||||||||||||||
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||||||||||||||||||||||
|
(Unaudited)
|
||||||||||||||||||||||||||||||||
|
(Dollars in thousands, except per share amounts)
|
||||||||||||||||||||||||||||||||
|
Q1 FY18 to Q1 FY17
|
||||||||||||||||||||||||||||||||
|
06/30/16
|
09/30/16
|
12/31/16
|
03/31/17
|
FY2017
|
06/30/17
|
%
|
|
$ | ||||||||||||||||||||||||
|
Revenues
|
214,801
|
217,267
|
223,312
|
224,867
|
880,247
|
212,514
|
-1.1
|
%
|
(2,287
|
)
|
||||||||||||||||||||||
|
Cost of revenue
|
122,819
|
120,105
|
116,468
|
118,294
|
477,686
|
113,960
|
-7.2
|
%
|
(8,859
|
)
|
||||||||||||||||||||||
|
Gross profit
|
91,982
|
97,162
|
106,844
|
106,573
|
402,561
|
98,554
|
7.1
|
%
|
6,572
|
|||||||||||||||||||||||
|
% Gross margin
|
42.8
|
%
|
44.7
|
%
|
47.8
|
%
|
47.4
|
%
|
45.7
|
%
|
46.4
|
%
|
||||||||||||||||||||
|
Operating expenses
|
||||||||||||||||||||||||||||||||
|
Research and development
|
18,652
|
19,029
|
20,950
|
23,478
|
82,109
|
23,563
|
26.3
|
%
|
4,911
|
|||||||||||||||||||||||
|
Sales and marketing
|
37,348
|
37,847
|
43,048
|
48,433
|
166,676
|
48,440
|
29.7
|
%
|
11,092
|
|||||||||||||||||||||||
|
General and administrative
|
27,506
|
32,866
|
31,620
|
37,721
|
129,714
|
32,356
|
17.6
|
%
|
4,850
|
|||||||||||||||||||||||
|
Impairment of goodwill and other
|
-
|
-
|
-
|
1,315
|
1,315
|
-
|
-
|
-
|
||||||||||||||||||||||||
|
Gains, losses and other items, net
|
314
|
300
|
2,111
|
4,335
|
7,058
|
(98
|
)
|
-131.3
|
%
|
(412
|
)
|
|||||||||||||||||||||
|
Total operating expenses
|
83,820
|
90,042
|
97,729
|
115,282
|
386,872
|
104,261
|
24.4
|
%
|
20,441
|
|||||||||||||||||||||||
|
Income (loss) from operations
|
8,162
|
7,120
|
9,115
|
(8,709
|
)
|
15,689
|
(5,707
|
)
|
-169.9
|
%
|
(13,869
|
)
|
||||||||||||||||||||
|
% Margin
|
3.8
|
%
|
3.3
|
%
|
4.1
|
%
|
-3.9
|
%
|
1.8
|
%
|
-2.7
|
%
|
||||||||||||||||||||
|
Other income (expense)
|
||||||||||||||||||||||||||||||||
|
Interest expense
|
(1,812
|
)
|
(1,689
|
)
|
(1,743
|
)
|
(2,137
|
)
|
(7,381
|
)
|
(2,342
|
)
|
-29.2
|
%
|
(530
|
)
|
||||||||||||||||
|
Other, net
|
307
|
(207
|
)
|
35
|
199
|
334
|
(672
|
)
|
-319.0
|
%
|
(979
|
)
|
||||||||||||||||||||
|
Total other expense
|
(1,505
|
)
|
(1,896
|
)
|
(1,708
|
)
|
(1,937
|
)
|
(7,047
|
)
|
(3,014
|
)
|
-100.3
|
%
|
(1,509
|
)
|
||||||||||||||||
|
Earnings (loss) before income taxes
|
6,657
|
5,224
|
7,407
|
(10,646
|
)
|
8,642
|
(8,721
|
)
|
-231.0
|
%
|
(15,378
|
)
|
||||||||||||||||||||
|
Income taxes
|
2,681
|
(1,916
|
)
|
6,334
|
(2,565
|
)
|
4,534
|
(7,421
|
)
|
-376.8
|
%
|
(10,102
|
)
|
|||||||||||||||||||
|
Net earnings (loss)
|
3,976
|
7,140
|
1,073
|
(8,081
|
)
|
4,108
|
(1,300
|
)
|
-132.7
|
%
|
(5,276
|
)
|
||||||||||||||||||||
|
Diluted earnings (loss) per share
|
0.05
|
0.09
|
0.01
|
(0.10
|
)
|
0.05
|
(0.02
|
)
|
-133.0
|
%
|
(0.07
|
)
|
||||||||||||||||||||
|
Some earnings (loss) per share amounts may not add due to rounding.
|
||||||||||||||||||||||||||||||||
14
|
ACXIOM CORPORATION AND SUBSIDIARIES
|
||||||||||||||||||||||||
|
RECONCILIATION OF GAAP TO NON-GAAP EPS (1)
|
||||||||||||||||||||||||
|
(Unaudited)
|
||||||||||||||||||||||||
|
(Dollars in thousands, except per share amounts)
|
||||||||||||||||||||||||
|
06/30/16
|
09/30/16
|
12/31/16
|
03/31/17
|
FY2017
|
06/30/17
|
|||||||||||||||||||
|
Earnings (loss) before income taxes
|
6,657
|
5,224
|
7,407
|
(10,646
|
)
|
8,642
|
(8,721
|
)
|
||||||||||||||||
|
Income taxes
|
2,681
|
(1,916
|
)
|
6,334
|
(2,565
|
)
|
4,534
|
(7,421
|
)
|
|||||||||||||||
|
Net earnings (loss)
|
3,976
|
7,140
|
1,073
|
(8,081
|
)
|
4,108
|
(1,300
|
)
|
||||||||||||||||
|
Earnings (loss) per share:
|
||||||||||||||||||||||||
|
Basic
|
0.05
|
0.09
|
0.01
|
(0.10
|
)
|
0.05
|
(0.02
|
)
|
||||||||||||||||
|
Diluted
|
0.05
|
0.09
|
0.01
|
(0.10
|
)
|
0.05
|
(0.02
|
)
|
||||||||||||||||
|
Excluded items:
|
||||||||||||||||||||||||
|
Purchased intangible asset amortization (cost of revenue)
|
4,077
|
3,890
|
4,621
|
6,056
|
18,644
|
5,966
|
||||||||||||||||||
|
Non-cash stock compensation (cost of revenue and operating expenses)
|
8,590
|
11,938
|
13,427
|
15,190
|
49,145
|
15,031
|
||||||||||||||||||
|
Impairment of goodwill and other
|
-
|
-
|
-
|
1,315
|
1,315
|
-
|
||||||||||||||||||
|
Restructuring and merger charges (gains, losses, and other)
|
314
|
300
|
2,111
|
7,321
|
10,045
|
(98
|
)
|
|||||||||||||||||
|
Gain on sales of assets (gains, losses and other)
|
-
|
-
|
-
|
(2,986
|
)
|
(2,986
|
)
|
-
|
||||||||||||||||
|
Separation and transformation costs (general and administrative)
|
-
|
1,455
|
4,118
|
3,066
|
8,639
|
7,119
|
||||||||||||||||||
|
Total excluded items
|
12,981
|
17,583
|
24,277
|
29,962
|
84,803
|
28,018
|
||||||||||||||||||
|
Earnings before income taxes
|
||||||||||||||||||||||||
|
and excluding items
|
19,638
|
22,807
|
31,684
|
19,315
|
93,444
|
19,297
|
||||||||||||||||||
|
Income taxes
|
7,852
|
8,910
|
12,751
|
7,139
|
36,652
|
7,720
|
||||||||||||||||||
|
Non-GAAP net earnings
|
11,786
|
13,897
|
18,933
|
12,177
|
56,792
|
11,577
|
||||||||||||||||||
|
Non-GAAP earnings per share:
|
||||||||||||||||||||||||
|
Basic
|
0.15
|
0.18
|
0.24
|
0.16
|
0.73
|
0.15
|
||||||||||||||||||
|
Diluted
|
0.15
|
0.18
|
0.24
|
0.15
|
0.71
|
0.14
|
||||||||||||||||||
|
Basic weighted average shares
|
77,471
|
77,446
|
77,507
|
78,012
|
77,609
|
78,672
|
||||||||||||||||||
|
Diluted weighted average shares
|
79,353
|
79,277
|
79,851
|
80,912
|
79,848
|
81,440
|
||||||||||||||||||
|
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.
|
||||||||||||||||||||||||
15
|
ACXIOM CORPORATION AND SUBSIDIARIES
|
||||||||||||||||||||||||||||||||
|
RESULTS BY SEGMENT
|
||||||||||||||||||||||||||||||||
|
(Unaudited)
|
||||||||||||||||||||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||||||||||||
|
Q1 FY18 to Q1 FY17
|
||||||||||||||||||||||||||||||||
|
06/30/16
|
09/30/16
|
12/31/16
|
03/31/17
|
FY2017
|
06/30/17
|
%
|
|
$ | ||||||||||||||||||||||||
|
Revenues:
|
||||||||||||||||||||||||||||||||
|
Marketing Services
|
109,715
|
105,679
|
101,177
|
94,269
|
410,840
|
91,594
|
-16.5
|
%
|
(18,121
|
)
|
||||||||||||||||||||||
|
Audience Solutions
|
73,744
|
78,526
|
83,399
|
86,396
|
322,065
|
75,734
|
2.7
|
%
|
1,990
|
|||||||||||||||||||||||
|
Connectivity
|
31,342
|
33,062
|
38,736
|
44,203
|
147,342
|
45,186
|
44.2
|
%
|
13,844
|
|||||||||||||||||||||||
|
Total operating segment revenues
|
214,801
|
217,267
|
223,312
|
224,867
|
880,247
|
212,514
|
-1.1
|
%
|
(2,287
|
)
|
||||||||||||||||||||||
|
Gross profit:
|
||||||||||||||||||||||||||||||||
|
Marketing Services
|
37,466
|
34,480
|
37,494
|
31,207
|
140,647
|
31,358
|
-16.3
|
%
|
(6,108
|
)
|
||||||||||||||||||||||
|
Audience Solutions
|
41,912
|
47,998
|
53,120
|
55,154
|
198,185
|
47,210
|
12.6
|
%
|
5,298
|
|||||||||||||||||||||||
|
Connectivity
|
17,575
|
19,843
|
23,091
|
27,742
|
88,251
|
27,525
|
56.6
|
%
|
9,950
|
|||||||||||||||||||||||
|
Total operating segment gross profit
|
96,953
|
102,321
|
113,705
|
114,104
|
427,084
|
106,093
|
9.4
|
%
|
9,140
|
|||||||||||||||||||||||
|
Gross margin %:
|
||||||||||||||||||||||||||||||||
|
Marketing Services
|
34.1
|
%
|
32.6
|
%
|
37.1
|
%
|
33.1
|
%
|
34.2
|
%
|
34.2
|
%
|
||||||||||||||||||||
|
Audience Solutions
|
56.8
|
%
|
61.1
|
%
|
63.7
|
%
|
63.8
|
%
|
61.5
|
%
|
62.3
|
%
|
||||||||||||||||||||
|
Connectivity
|
56.1
|
%
|
60.0
|
%
|
59.6
|
%
|
62.8
|
%
|
59.9
|
%
|
60.9
|
%
|
||||||||||||||||||||
|
Total operating segment gross margin
|
45.1
|
%
|
47.1
|
%
|
50.9
|
%
|
50.7
|
%
|
48.5
|
%
|
49.9
|
%
|
||||||||||||||||||||
|
Income (loss) from operations:
|
||||||||||||||||||||||||||||||||
|
Marketing Services
|
20,145
|
19,837
|
21,127
|
19,513
|
80,622
|
19,784
|
-1.8
|
%
|
(361
|
)
|
||||||||||||||||||||||
|
Audience Solutions
|
25,096
|
29,972
|
34,572
|
33,598
|
123,238
|
28,542
|
13.7
|
%
|
3,446
|
|||||||||||||||||||||||
|
Connectivity
|
291
|
1,663
|
1,877
|
1,502
|
5,333
|
(48
|
)
|
-116.6
|
%
|
(339
|
)
|
|||||||||||||||||||||
|
Total operating segment income from operations
|
45,532
|
51,472
|
57,576
|
54,613
|
209,193
|
48,277
|
6.0
|
%
|
2,745
|
|||||||||||||||||||||||
|
Operating income (loss) margin %:
|
||||||||||||||||||||||||||||||||
|
Marketing Services
|
18.4
|
%
|
18.8
|
%
|
20.9
|
%
|
20.7
|
%
|
19.6
|
%
|
21.6
|
%
|
||||||||||||||||||||
|
Audience Solutions
|
34.0
|
%
|
38.2
|
%
|
41.5
|
%
|
38.9
|
%
|
38.3
|
%
|
37.7
|
%
|
||||||||||||||||||||
|
Connectivity
|
0.9
|
%
|
5.0
|
%
|
4.8
|
%
|
3.4
|
%
|
3.6
|
%
|
-0.1
|
%
|
||||||||||||||||||||
|
Total operating segment operating margin
|
21.2
|
%
|
23.7
|
%
|
25.8
|
%
|
24.3
|
%
|
23.8
|
%
|
22.7
|
%
|
||||||||||||||||||||
|
Some totals may not add due to rounding.
|
||||||||||||||||||||||||||||||||
16
|
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, 2018
|
||||
|
Earnings before income taxes
|
1,500
|
|||
|
Income taxes
|
6,500
|
|||
|
Net loss
|
(5,000
|
)
|
||
|
Diluted loss per share
|
$
|
(0.06
|
)
|
|
|
Excluded items:
|
||||
|
Purchased intangible asset amortization
|
24,000
|
|||
|
Non-cash stock compensation
|
64,000
|
|||
|
Gains, losses and other items, net
|
6,000
|
|||
|
Separation and transformation costs
|
15,000
|
|||
|
Total excluded items
|
109,000
|
|||
|
Earnings before income taxes and excluding items
|
110,500
|
|||
|
Income taxes (2)
|
44,200
|
|||
|
Non-GAAP net earnings
|
66,300
|
|||
|
Non-GAAP diluted earnings per share
|
$
|
0.80
|
||
|
Basic weighted average shares
|
80,000
|
|||
|
Diluted weighted average shares
|
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 40.0%. The difference between our GAAP and Non-GAAP tax rates was due to the effect of excluded items.
|
||||
|
|
||||
17
|
ACXIOM CORPORATION
|
APPENDIX A
|
|||||||||
|
Q1 FISCAL 2018 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 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 and
|
||||||||||
|
current year, we are incurring 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 expect to complete these current projects in this fiscal year. We believe excluding these items from
|
||||||||||
|
our non-GAAP financials measures is useful for investors and provides meaningful supplemental information.
|
||||||||||
18
|
Our non-GAAP financial schedules are:
|
||||||||||
|
Non-GAAP EPS and Non-GAAP Income (loss) from Operations: Our non-GAAP earnings per share and Non-
|
||||||||||
|
GAAP income (loss) 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 (loss) 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.
|
||||||||||
19