Acxiom turns a profit in the first quarter, sells email business to New York City tech firm

Acxiom Corp. on Thursday improved its first quarter earnings as the Little Rock-based tech company continued to tighten the focus on its data analytics business by agreeing to sell its email marketing arm to New York City-based Zeta Interactive.

For the period ended June 30, 2016, Acxiom reported earnings of $8 million, or five cents per share, compared to a loss of $3 million, or seven cents per share, in the same period of 2015. Acxiom’s first quarter revenues rose 9.1% to $214.8 million from $196.8 million a year ago.

Wall Street had forecasted the Little Rock data analytics firm to report first quarter earnings of nine cents per share on revenue of $203 million, according to a survey of analysts by Thomson Reuters. Unlike most publicly traded companies that follow a calendar year, Acxiom’s first quarter for fiscal 2017 begins on April 1.

“I am pleased to report a solid first quarter, highlighted by strong financial performance, new partnerships and continued product innovation,” said Acxiom CEO Scott Howe. “Fiscal 2017 is off to a good start, and we are focused on extending our early momentum through the remainder of the year.”

But the key business news from the quarterly report was that Acxiom had signed a deal to sell its email business (Acxiom Impact) to Zeta Interactive, a company founded by David Steinberg and former Apple and Pepsi CEO John Sculley. Although Acxiom did not disclose how many employees are part of that business, Zeta officials said the deal will grow its payroll substantially by adding several hundred former Acxiom employees.

It is unclear if the jobs will remain in central Arkansas.

ZETA CALLS DEAL A ‘GAME-CHANGER’
According to separate news release by Zeta, the deal to acquire Acxiom’s email marketing will strengthening its email marketing business and grow its top workforce by 300, including the addition of Acxiom Impact’s top executive. Following the acquisition, Zeta Interactive will have more than 1,300 employees operating in 25 offices across four continents. Prior to the deal, the company had 1,000 employees, company officials said.

“Adding Acxiom Impact’s highly-rated technology and world-class professional and managed services into Zeta’s world-class platform is a game-changer not only for us as a company, but also for the marketplace,” said David Steinberg, Zeta’s CEO and co-founder. “As Zeta drives towards realizing our vision of solving CMO’s biggest challenges by making data actionable at every step of the customer journey, we are constantly seeking opportunities to get there faster.”

Neither company disclosed terms of the deal, but TechCrunch reported that the deal was more than $50 million.

As part of the agreement, Zeta said has entered into a long-term strategic partnership with Acxiom. The goal is a smooth transition for Acxiom Impact’s Fortune 1000 clients, while strengthening the delivery of integrated solutions that combine Zeta’s cross-channel campaign execution expertise with Acxiom’s strength in data.

“I’m delighted to take the next step in the evolution of Acxiom Impact. This acquisition is a great opportunity for our associates, our partners and, especially, our clients,” said David Bonalle, Acxiom Impact’s general manager, who will continue in this role as Acxiom Impact becomes a division within Zeta.

ACXIOM TO BOOST SHARE BUYBACK
For its part, Acxiom said the deal with Zeta with allow the Little Rock data marketer “to sharpen its focus on providing the data foundation for the world’s best marketers and opens the door to deeper partnerships with the marketing ecosystem.”

The sale is expected to close in the second quarter of fiscal 2017, following the satisfaction of customary closing conditions. No terms of the deal were disclosed, but Acxiom said funds from the sale will help expand the company’s share buyback program.

As part of the revised program, Acxiom’s board of directors increased the share repurchase authorization by $100 million to $400 million and extended the duration of the program through June 30, 2018.

For fiscal 2017, Acxiom said it expects to report full-year earnings in the range of 10 to 14 cents and revenue between $850 million to $870 million.

Here are Acxiom’s other first quarter highlights.
• Connectivity added more than 20 new customers during the quarter and added over 50 new partner integrations. Marketers can now onboard and activate their data across a growing network of more than 350 marketing platforms and data providers.

• LiveRamp extended its data connectivity partnership with Google, adding Customer Match to an extensive set of integrations that include Google Analytics 360 Suite, Google DoubleClick Digital Marketing solutions and Google Store Transactions for both AdWords and DoubleClick Search. The new integration with Google Customer Match enables brands to activate their first-party data for targeting across YouTube, Search and Gmail.

• LiveRamp announced a new integration with Facebook’s Offline Conversions API, allowing clients to connect Facebook advertising campaigns with offline sales transactions taking place in stores, branch offices, contact centers and other brick-and-mortar locations.

• Acxiom announced strategic “next-gen” enhancements to its proprietary recognition technology, AbiliTec, improving marketers’ ability to bring together disparate consumer data sources for a single, current and accurate view of a customer across all channels.

• Acxiom repurchased 926,000 shares for approximately $20 million during the quarter. Since inception of the share repurchase program in August 2011, Acxiom has repurchased 16.4 million shares for $275 million.

At the close of trading Thursday, Acxiom’s shares (NASDAQ: ACXM) were up 10 cents to $23.10. The Little Rock tech firm’s stock has traded in the range of $17.32 and $23.57 over the past 52 weeks.