ACXIOM Q3 FY18 Conference Call. February 6, 2018

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Transcription:

ACXIOM Q3 FY18 Conference Call February 6, 2018

SAFE HARBOR STATEMENT Some of the matters discussed in this presentation contain forward-looking statements regarding the company s future business prospects which are subject to certain risks and uncertainties, including competitive pressures, adverse economic conditions and governmental regulations. These issues and other factors that may be identified from time to time in the Company s reports filed with the SEC could cause actual results to differ materially from those indicated in the forward-looking statements. Our discussion today will include non-gaap financial measures. We refer you to the appendix of this presentation and the Investor Relations section of our website, which include reconciliations to the comparable GAAP measures for each of the non-gaap financial measures included in this discussion. The location of our website is www.acxiom.com. The information contained on, or that can be accessed through, our website is not incorporated by reference into this presentation, and you should not consider any information contained on, or that can be accessed through, our website as part of this presentation. 2

PORTFOLIO REALIGNMENT Three Division Structure ACXM LiveRamp and Acxiom Marketing Solutions ACXM LiveRamp AMS Conn. AS MS Identity Integrations Data Store Identity Acxiom Data Data Services Database services Consulting & Analytics Identity Integrations Data Store Neutral Ubiquitous Network Effect SaaS / DaaS Acxiom Data Data Services Database Services Consulting & Analytics Economies of Scale Service Quality New Capabilities Services 3

SEGMENT BRIDGE Trailing Twelve Month Revenue & EBITDA, Current Segments MS Revenue EBITDA $374 / $110 AS Revenue EBITDA $325 / $144 Conn Revenue EBITDA $198 / $24 Corp Revenue EBITDA $ - / $(104) Total Revenue EBITDA $897 / $174 Rev Growth 1 / GM% / EBITDA% (5%) / 35% / 29% Rev Growth / GM% / EBITDA% 3% / 63% / 44% Rev Growth / GM% / EBITDA% 47% / 65% / 12% Rev Growth 1 / GM% / EBITDA% 6% / 52% / 19% Combined MS + AS 2 MS + AS Revenue EBITDA $700 / $254 Conn Revenue EBITDA $198 / $24 Corp Revenue EBITDA $ - / $(104) Total Revenue EBITDA $897 / $174 Rev Growth 1 / GM% / EBITDA% (2%) / 48% / 36% Rev Growth / GM% / EBITDA% 47% / 65% / 12% 1 TTM revenue and revenue growth adjusted for the Acxiom Impact divestiture. See reconciliation of Marketing Services ex. Impact in the appendix. Rev Growth 1 / GM% / EBITDA% 6% / 52% / 19% 2 Combined MS + AS is a sum of existing MS and AS divisions. New segments may differ from these amounts.. All figures calculated on a trailing twelve-month basis. 4

THREE YEARS OF IMPROVEMENT Trailing Twelve Month Performance AdjustedRevenueGrowth 1 Non-GAAP Margin Expansion Free Cash Flow to Equity 2 Improvement 900 850 800 750 700 650 600 550 $886 $897 $846 $860$870 19% 15% $829 13% $811 17% $790 Revenue $751$754 $769 10% 10% 11% 15% 9% 8% 9% 7% 7% 7% 13% 6% 1% 1% 3% Revenue growth 7% 11% 5% 3% 9% 46% 45% 45% 43% 42% 43% 9% 9% 9% 9% 9% 10% 51% 52% 50% 48% 49% 13% 12% 11% 11% 12% 53% 48% 43% 38% 33% 73 63 53 43 33 23 13 3-7 -2% 0% -$2 $3 0% $18 2% $8 1% $39 4% $53 6% $63 7% $79 9% $68 $67 8% 7% 15% 13% 11% 9% 7% 5% 3% 1% - 1% 500 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 FY16A FY17A FY18A 1% 7% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 FY16A FY17A FY18A 28% -17 -$12 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 FY16A FY17A FY18A - 3% 1 TTM revenue and revenue growth adjusted for the Acxiom Impact divestiture. See reconciliation of Marketing Services ex. Impact in the appendix. 2 TTM free cash flow to equity is as reported. All figures calculated on a trailing twelve-month basis. 5

KEY GROWTH METRICS Direct Connectivity Customers 1 540 475 450 410 Connectivity Revenue Run-Rate 2 Audience Solutions Digital Data Revenue $18.1 $18.4 $224 $17.1 $17.8 $210 $177 $181 Q417A Q118A Q218A Q318A Q/Q 10% 6% 14% Y/Y 50% 44% 40% 1 Excludes agency and reseller deployments and Data Store-only customers. Q417A Q118A Q218A Q318A Q/Q 14% 16% 7% Y/Y 42% 58% 45% Q417A Q118A Q218A Q318A Q/Q 6% 2% (4%) Y/Y 70% 37% (5%) 2 Revenue run-rate is calculated as quarterly Connectivity revenue as reported multiplied by four. 6

CONNECTIVITY BY THE NUMBERS Q3 Segment Results CustomerDetail 1 SaaSRevenue Metrics 1 $224M Revenue Run-Rate 540 Direct Customers >110% Dollar-based Net Retention 2 68% Gross Margin 14% of Fortune 500 85% Committed Recurring Revenue 2 12% Segment Margin 30+ $1M+ Customers Today 3 ~$400K Revenue per Head 1 Customer Detail and Key SaaS Metrics are for LiveRamp US only. 2 85% recurring revenue excludes Data Store revenue, non-recurring one-time revenues and credits. 3 Revenue per head calculation excludes headcount related to shared corporate functions. 7

Q3 SUMMARY FINANCIAL RESULTS, except per share amounts Revenue Gross Profit Gross Margin Operating Income Operating Margin EPS Share Count GAAP Q318 Y/Y Change $ 235 5% $ 119 11% 50.6% 280 bps $ 11 21% 4.7% 60 bps $ 0.28 $ 0.27 81.9 Non-GAAP 1 Q318 Y/Y Change $ 235 5% $ 127 11% 53.9% 300 bps $ 38 14% 16.2% 120 bps $ 0.31 $ 0.07 81.9 1 Non-GAAP results exclude non-cash stock compensation, purchased intangible asset amortization, restructuring charges and separation costs. 8

Q3 REVENUE BY GEOGRAPHY Q318 Q317 Y/Y Change US Connectivity $ 51 $ 36 40% Audience Solutions $ 74 $ 74 0% Marketing Services $ 88 $ 93 (6%) Total US $ 213 $ 203 5% International: Connectivity $ 5 $ 3 100% Audience Solutions $ 10 $ 9 9% Marketing Services $ 7 $ 8 (17%) Total International $ 22 $ 20 11% Total Company: Connectivity $ 56 $ 39 45% Audience Solutions $ 84 $ 83 1% Marketing Services $ 94 $ 101 (7%) Total Company $ 235 $223 5% Numbers may not foot due to rounding. 9

Q3 ADJUSTED REVENUE Q318 Q317 Y/Y Change US 1 $ 213 $ 203 5% International $ 22 $ 20 11% Australia Transition - $ (1) FX $ (2) - Adjusted International $ 21 $ 20 7% Adjusted Total Revenue 1 $ 233 $ 223 5% 1 Revenue is not adjusted for the acquisitions of Arbor and Circulate given the deep integration of the organizations. The divestiture of Impact no longer affects the growth rate. Numbers may not foot due to rounding. 10

Q3 MARKETING SERVICES RESULTS Q318 Q317 Y/Y Change US: Revenue 1 $ 88 $ 93 (6%) Gross Profit $ 34 $ 35 (3%) Gross Margin 38.4% 37.4% 100 bps Segment Income $ 23 $ 21 10% Global: Revenue 1 $ 94 $ 101 (7%) Gross Profit $ 36 $ 37 (5%) Gross Margin 37.9% 37.1% 80 bps Segment Income $ 22 $ 21 4% Segment EBITDA 2 $ 29 $ 28 2% 1 Revenue is not adjusted for the acquisitions of Arbor and Circulate given the deep integration of the organizations. The divestiture of Impact has been fully anniversary ed and no longer affects the growth rate. 2 Adjusted EBITDA reconciliation included in the appendix. Numbers may not foot due to rounding. 11

Q3 AUDIENCE SOLUTIONS RESULTS Q318 Q317 Y/Y Change US: Revenue $ 74 $ 74 0% Gross Profit $ 47 $ 49 (2%) Gross Margin 63.9% 65.5% (160) bps Segment Income $ 30 $ 32 (7%) Global: Revenue $ 84 $ 83 1% Gross Profit $ 53 $ 53 (1%) Gross Margin 62.6% 63.7% (110 bps) Segment Income $ 33 $ 35 (4%) Segment EBITDA 1 $ 38 $ 39 (4%) 1 Segment EBITDA reconciliation included in the appendix. 12

Q3 CONNECTIVITY RESULTS Q318 Q317 Y/Y Change Revenue $ 56 $ 39 45% Gross Profit $ 38 $ 23 64% Gross Margin 67.7% 59.6% 810 bps Segment Income $ 7 $ 2 263% Segment EBITDA 1 $ 10 $ 4 134% 1 Segment EBITDA reconciliation included in the appendix. 13

Q3 CASH FLOW RESULTS Q318 Q317 Y/Y Change Operating Cash Flow $ 44 $ 49 (11%) Free Cash Flow to Equity 1 $ 27 $ 28 (2%) Total Capital Spending 1 $ 16 $ 13 21% 1 Includes capital expenditures, capitalized software and data acquisition costs. 14

TAX REFORM IMPACT, except per share amounts and tax rate, except EPS Q318 Results Q318 Tax Reform Impact GAAP Net Income 1,2 $23 $23 GAAP EPS $0.28 $0.28 Non-GAAP Net Income $25 $4 Non-GAAP EPS $0.31 $0.04 Non-GAAP Effective Tax Rate 29.8% (8.7 pts) Updated Fiscal 2018 Guidance (Low) Updated Fiscal 2018 Guidance (High) Fiscal 2018 Tax Reform Impact $16 $19 $23 $0.19 $0.23 $0.28 $70 $74 $4 $0.85 $0.89 $0.04 to $0.05 36.5% 36.5% (3.0 pts) 1 Q3 18 GAAP net income and GAAP EPS before tax reform are estimated to be $0.0M and $0.00, respectively. 2 Updated GAAP pre-tax income (loss) for FY18 is expected to be between ($3M) to $2.5M. GAAP income tax benefit is expected to be $18.5M to $16.5M netting to $15.5M and $19M in GAAP net income, respectively. 15

FISCAL 2018 GUIDANCE, except per share amounts Revenue Bridge $910 to $915 GAAP Non-GAAP 1 +6% Revenue $910 to $915 $910 to $915 $20 Diluted EPS $0.19 to $0.23 $0.85 to $0.89 $880 $860 FY17 As Reported FY17 Impact Revenue FY17 Adjusted Baseline FY18 Guidance (Associated with Divestiture) 1 Non-GAAP guidance excludes non-cash stock compensation, purchased intangible asset amortization, restructuring charges and separation costs. 16

FISCAL 2018 OTHER GUIDANCE ITEMS FY18E Capital Spending 1 $60 Non-Cash Stock Compensation Expense 2 $65 One-Time Separation Expense $20 Non-GAAP Tax Rate 36.5% Diluted Shares Outstanding 3 82.5M 1 Includes capital expenditures, capitalized software and data acquisition costs. 2 Approximately 40% of our non-cash stock compensation expense in FY18 is acquisition related. 3 Assumes no additional buyback activity. 17

APPENDIX

FY16 Q3 FY18 MS EX. IMPACT Marketing Services ex. Impact revenue, gross profit, and segment income are non-gaap financial measures. We believe these non-gaap measures provide investors with meaningful supplemental information to evaluate the ongoing performance of the Marketing Services segment after the divestiture of Acxiom Impact. This schedule reconciles the results excluding the divested business to the reported Marketing Services segment results. Numbers may not foot due to rounding. Marketing Services FY16A FY17A FY18A Full Year Q116A Q216A Q316A Q416A Q117A Q217A Q317A Q417A Q118A Q218A Q318A FY16A FY17A Revenue $ 108 $ 113 $ 116 $ 113 $ 110 $ 106 $ 101 $ 94 $ 92 $ 94 $ 94 $ 450 $ 411 V% -1% 0% 1% 3% 2% -6% -13% -17% -17% -11% -7% 1% -9% Gross Profit 36 37 38 40 37 34 37 31 31 34 36 152 141 GM % 33% 33% 33% 35% 34% 33% 37% 33% 34% 36% 38% 34% 34% Segment Income 17 18 20 19 20 20 21 20 20 22 22 74 81 Segment Margin % 16% 16% 18% 17% 18% 19% 21% 21% 22% 23% 23% 17% 20% Acxiom Impact FY16A FY17A FY18A Full Year Q116A Q216A Q316A Q416A Q117A Q217A Q317A Q417A Q118A Q218A Q318A FY16A FY17A Revenue $ 16 $ 16 $ 15 $ 14 $ 12 $ 8 - - - - - $ 60 $ 20 Gross Profit 6 4 4 3 1 1 - - - - - 17 2 GM % 35% 27% 27% 21% 11% 10% - - - - - 28% 10% Segment Income 3 3 3 1 (0) 0 - - - - - 10 (0) Segment Margin % 21% 19% 17% 11% 0% 2% - - - - - 17% -1% Marketing Services ex. Impact FY16A FY17A FY18A Full Year Q116A Q216A Q316A Q416A Q117A Q217A Q317A Q417A Q118A Q218A Q318A FY16A FY17A Revenue $ 92 $ 97 $ 101 $ 100 $ 97 $ 98 $ 101 $ 94 $ 92 $ 94 $ 94 $ 390 $ 390 V% -1% 0% 3% 6% 6% 0% 0% -5% -6% -4% -7% 2% 0% Gross Profit 31 33 34 37 36 34 38 31 31 34 36 136 139 GM % 33% 34% 34% 37% 37% 34% 37% 33% 34% 37% 38% 35% 35% Segment Income 13 15 18 18 20 20 21 20 20 22 22 64 81 Segment Margin % 15% 15% 18% 18% 21% 20% 21% 21% 22% 23% 23% 16% 21% 19

ADJUSTED EBITDA BY SEGMENT Segment Income from Operations FY17A FY18A Q3 Y/Y Change Q117A Q217A Q317A Q417A FY17A Q118A Q218A Q318A V% V$ Marketing Services $20 $20 $21 $20 $81 $20 $22 $22 4% $1 Audience Solutions $25 $30 $35 $34 $123 $29 $29 $33-4% ($1) Connectivity $0 $2 $2 $1 $5 ($0) $6 $7 263% $5 Total Segment Income from Operations $46 $51 $58 $55 $209 $48 $57 $62 8% $4 Segment D&A Marketing Services $8 $8 $7 $7 $30 $7 $6 $7-6% ($0) Audience Solutions $6 $5 $5 $5 $21 $5 $5 $5 1% $0 Connectivity $2 $2 $2 $2 $8 $3 $3 $3 24% $1 Total Segment D&A $15 $15 $14 $14 $59 $14 $14 $14 1% $0 Segment EBITDA Marketing Services $28 $28 $28 $27 $111 $26 $28 $29 2% $1 Audience Solutions $31 $35 $39 $38 $144 $33 $34 $38-4% ($1) Connectivity $2 $3 $4 $4 $13 $2 $9 $10 134% $5 Total Segment EBITDA $61 $67 $71 $69 $268 $62 $71 $76 6% $5 Segment EBITDA is a non-gaap measure. We believe Segment EBITDA provides useful supplemental information to and facilitates analysis by investors in evaluating segment performance and trends. The presentation of segment EBITDA is not meant to be considered in isolation or as an alternative to segment income from operations as an indicator of segment performance. This schedule reconciles segment income from operations to segment EBITDA. D&A by segment includes allocated corporate D&A for shared facilities and infrastructure based on usage. Numbers may not foot due to rounding. 20

GAAP TO NON-GAAP RECON, Non-GAAP Q318 Intangible Q318 GAAP Restructuring Amort. SBC Separation Tax Non-GAAP Revenue $234.9 - - - - - $234.9 Cost of revenue 115.9 - (6.0) (1.6) - - 108.3 Gross profit 119.0-6.0 1.6 - - 126.5 % Gross margin 50.6% 53.9% Operating expenses: Research and development 23.3 - - (3.8) - - 19.5 Sales and marketing 53.7 - - (7.0) - - 46.8 General and administrative 30.9 - - (3.5) (5.2) - 22.1 Gains, losses and other items, net (0.0) 0.0 - - - - - Total operating expenses 107.9 0.0 - (14.3) (5.2) - 88.4 Income (loss) from operations 11.1 (0.0) 6.0 15.9 5.2-38.1 % Margin 4.7% 16.2% Other expense: Interest expense (2.6) - - - - - (2.6) Other, net 0.4 - - - - - 0.4 Total other expense (2.1) - - - - - (2.1) Earnings (loss) before income taxes 8.9 (0.0) 6.0 15.9 5.2-36.0 Income taxes (14.0) (0.1) 0.8 1.7 0.8 21.5 10.7 Net earnings (loss) 22.9 0.1 5.1 14.2 4.4 (21.5) 25.3 Diluted earnings (loss) per share: $0.28 $0.00 $0.06 $0.17 $0.05 ($0.27) $0.31 Basic shares 79.0 79.0 79.0 79.0 79.0 79.0 79.0 FDWA Shares 81.9 81.9 81.9 81.9 81.9 81.9 81.9 All reconciling items include applicable tax impact. 21

NON-CASH STOCK COMPENSATION TREND FY15A FY16A FY17A FY18E Non-Cash Stock Compensation Expense Time-Based $ 10 $ 12 $ 20 $ 26 Performance $ 1 $ 1 $ 14 $ 11 Acquisition Related $ 17 $ 19 $ 16 $ 28 Total $ 28 $ 32 $ 49 $ 65 % of Total Non-Cash Stock Compensation Expense Time-Based 37% 37% 40% 40% Performance 1% 4% 28% 17% Acquisition Related 62% 59% 32% 43% Numbers may not foot due to rounding. 22