Acxiom to acquire two East Coast startups for $190 million in cash-and-stock deal

Acxiom Corp. announced after the close of business on Thursday (Nov. 17) that its San Francisco-based LiveRamp subsidiary has entered a purchase agreement to acquire two “people-based” data marketing startups in a deal valued at $190 million.

Acxiom said it will acquire New York City-based Arbor and Philadelphia-founded Circulate to increase the scale of LiveRamp’s identity and customer recognition network, and enable both startup brands to expand their people-based marketing beyond Google and Facebook.

The deal will also allow Acxiom’s publishing partners to better support marketer’s people-based initiatives, company officials said. Both Arbor and Circulate have found a niche market in providing a transparent marketplace for publishers to securely monetize their first party data and for buyers to create value by accessing scaled cross-device, location-based, and audience data sets across mobile and online channels.

The Little Rock data marketer said it will purchase both companies for total cash consideration of nearly $140 million, plus the issuance of $50 million in Acxiom stock awards to replace unvested equity in the two East Coast startups.

“This is a huge win for the LiveRamp ecosystem and the biggest set of actions we could have taken to increase the value of our network and thereby deliver more value to our clients and partners,” said LiveRamp President and General Manager Travis May. “These acquisitions both increase the deterministic reach we can provide marketers and gives us the ability to help all publishers tap into people-based marketing budgets.”

Arbor and Circulate will double Acxiom’s publisher partnerships to more than 450 and bring strong “mobile-first” technology, international reach and impressive employee rosters to LiveRamp, company officials said. The addition of Arbor and Circulate also extends LiveRamp’s leadership in identity resolution and provides meaningful scale to drive growth and value for Acxiom’s shareholders, the companies said.

ARBOR, CIRCULATE STILL IN EARLY FUNDING STAGES
Both Arbor and Circulate are fairly early in their companies’ respective development. Only two months ago, Arbor completed its second round of funding after securing a $6.5 million Series A investment led by Canaan Partners.

The first round of $2.55 million in funding was led by First Round Capital in April 2015 and was filled out by MoPub CEO Jim Payne and Flatiron Health co-founders Nat Turner and Zach Weinberg. Arbor, which has offices in New York City and San Francisco, was founded in 2014 by three former Google employees David Yaffe, John Graettinger and Nikhil Dixit.

“We saw this as a great opportunity to accelerate adoption and the value we deliver,” said Yaffe, Arbor’s chief executive. “With IdentityLink, we’ll be able to empower our publishers with new tools, insights and relationships that build on our current industry-leading monetization platform.”

Circulate, which has offices in Philadelphia and New York City, also counts seed-stage venture firm First Round as one of its early investors. Founded in 2009, venture capital firms Bullpen Capital, New Atlantic Ventures and Charles River Ventures are also part of Circulate funding roster. According to Crunchbase, Circulate has received $17.4 million from 10 investors in four founds of seed funding.

“Our publishers provide a global footprint when it comes to identity-based data,” said Ari Jacoby, CEO of Circulate. “As part of LiveRamp, we can help them better monetize that data working with marketers who want to reach global audiences, and accelerate LiveRamp’s global expansion.”

In fiscal 2017, Arbor and Circulate are expected to contribute approximately $5 million in revenue and be neutral to adjusted earnings per share. In addition, Acxiom expects the transactions to be dilutive by eleven cents to GAAP diluted earnings per share due to higher non-cash compensation and estimated purchased intangible asset amortization.

ACXIOM REVENUES BELOW $1 BILLION FOR FIRST TIME IN PAST DECADE
In fiscal 2018, Acxiom expects the transactions to be accretive to both pre-tax and non-GAAP diluted earnings per share. On an annual basis, Acxiom now expects to report revenue in the range of $865 million to $875 million, and see a yearly profit of one penny per share. Still, even with the small financial boost from Arbor and Circulate, Acxiom’s yearly revenue is expected to fall below $1 billion for the first time in more than a decade.

Over the past year, Acxiom has continued to transform its operations with the sale of underperforming assets and businesses, while tightening its focus on providing data analytics, onboarding and identity solutions to large global clients seeking to harness their interactions with consumers through various media channels, including online, mobile and TV.

In August, Acxiom completed the sale of its Acxiom Impact email marketing business to Zeta Interactive for an undisclosed sum. The close of that deal coincided with the launch of LiveRamp IdentityLink, which is based in San Francisco.

In June, Acxiom said it was considering the sale of its downtown Little Rock headquarters, a 12-story, curved office tower in the city’s River Market district that was built in 2003. Some of Acxiom’s former employees that worked in the downtown office are now part of Ensono, the data technology management division of the Little Rock publicly-traded company that sold for $190 million to private equity firms Capital Partners and M/C Partners in August 2015. Ensono has over 700 employees, including at least 100 that work at the company’s Conway data center.

No longer in the IT outsourcing business, Acxiom still has offices in eight locations in the United States, SEC filings show. Besides its varied locations in Conway and Little Rock, Acxiom also has employees in San Francisco and Redwood City, Calif., Downers Grove, Ill., Nashville, Tenn., Austin, Texas, and New York City.