Acxiom Discloses Layoffs Are Coming In Quarterly Results (UPDATED)

Revenue held steady but profits slipped as data marketer Acxiom Corp. announced its latest quarterly earnings, including a disclosure that layoffs could occur.

Little Rock-based Acxiom reported second quarter net income of $9.84 million, down from a year ago when it posted earnings of $16.5 million.

Revenues for the quarter were $276.3 million compared to $277.5 million in last year’s comparable period.

Acxiom also disclosed this bullet point in its earnings report:

“The company expects over the next 6 to 12 months to reduce its annual cost base by roughly $20 to $30 million. These reductions will not impact the company’s ongoing investment in the Audience Operating System or the continued investment in innovation.”

In a subsequent SEC filing, Acxiom disclosed:

“The initiative seeks to improve the company’s performance by simplifying the company’s management structure, centralizing duplicative efforts and standardizing workflows. The components of the restructuring program are not finalized and actual total savings and timing may vary from those estimated due to changes in the scope or assumptions underlying the restructuring program.

The restructuring program will occur in a number of phases, and the company is unable to make a determination of the estimated amount or range of future costs and cash expenditures. The company will file an amendment to this report upon the determination of such amounts.”

While alluding to a workforce “reduction,” company leaders never specifically stated that employees would be laid off but the suggestion was clear.  Talk Business sources have also confirmed that layoffs are part of the initiative.

Acxiom CFO Warren Jenson said in an earnings call with investors and the media that it would not be a “slash and burn” effort.

Jenson said there would be “measurable actions before year-end.” In a subsequent question, he declined to give a timeline stating that the reductions would be “linear not back-end loaded.”

He reiterated that areas where the company has duplication and a need for centralization would be a focus, as would a longer-term rethinking on work flows, particularly in engineering, that could be reconfigured by workforce and processes.

The company said that client losses in its ITO (Information Technology Outsourcer) area were partially attributable for the workforce reduction. Acxiom previously reported in its first quarter that its ITO division had a string of “bad luck.”

The $20-$30 million in savings from the cost reduction effort will be reinvested in other areas of the business, Jenson and CEO Scott Howe said.

“We are at an inflection point and starting the next chapter in our journey,” said Howe. “We are a new company. Over the past two years we have worked to build a better business and to drive innovation. While it’s early, we are pleased with our launch of the Acxiom Audience Operating System (AOS) and the resulting customer reaction and support.”

The AOS presents marketers with a comprehensive view of their audiences and allows one-to-one marketing capabilities at scale across all channels and devices. It was launched in late September.

Segment results for Acxiom included:

Marketing and Data Services – Revenue for the second quarter increased slightly to $201 million, as compared to $199 million for the same period a year ago. U.S. revenue of $173 million increased 2 percent compared to $170 million in the prior period. Income from operations for the second quarter was $16 million, compared to $22 million in the prior period. Operating margin was 8 percent, compared to 11 percent in the previous year.

IT Infrastructure Management – Revenue for the second quarter decreased 5 percent to $67 million, compared to $70 million for the same period a year ago. Income from operations for the quarter was $12 million compared to $9 million in the comparable period. Operating margin was approximately 18 percent, compared to 12 percent.

Other Services – Revenue was $8 million, slightly down as compared to $9 million in the prior-year period. Operating margin was approximately 3 percent compared to a loss in the prior period.

Shares of Acxiom Corp. (NASDAQ: ACXM) were trading lower on Wednesday below $33 per share. The company’s stock has traded between $16.43 and $34.38 during the past year.