LITTLE ROCK — Acxiom Corp. on Wednesday reported quarterly results that beat analysts’ expectations even as profit slid more than 7 percent to $12.3 million compared with a year earlier.
Revenue for the Little Rock-based marketing services provider was $300 million for the quarter that ended Sept. 30, up 2.9 percent from a year earlier.
Acxiom helps major credit-card companies, retailers and other types of companies use consumer data to enhance their marketing campaigns.
Scott Howe, who was hired as Acxiom’s chief executive in July, said revenue growth and better margins will be a focus of the company’s future efforts.
“We must enhance [revenue] growth in an environment in which clients carefully scrutinize their spending while asking us to do more,” he said in a conference call with analysts.
Howe said the company’s “highest investments” will be in improving its capabilities as a “data refinery” - mining consumer data, refining it, and enabling clients to use the insights obtained in their marketing.
Carter Malloy, an analyst who covers Acxiom for Stephens Inc., said in a re-search note that the approach outlined by Howe “differs from prior concerns that the company would either build or acquire new digital marketing technology and take the company in a fundamentally different direction.”
In an interview Wednesday, Malloy said he believed there were “investor concerns that any new management team could be tempted to go out and overspend on acquiring their way into the digital-marketing tool ecosystem. It’s very clear that Scott is recognizing that trying to out-innovate a bunch of [venture capital] -backed ...Internet startups is a tough value proposition.”
Howe’s strategy, Malloy said, is more to partner with such startups by helping them understand their own data and build new data sets.
Malloy said he was surprised by the strength of Acxiom’s results for revenue and earnings per share, adding that they show Acxiom’s “core business is very steady.”
Earnings per share for the quarter were 15 cents, down from 16 cents a year earlier. Excluding one-time items, mostly related to the disposal of certain overseas operations, the earnings would have been 19 cents compared with the average estimate from analysts of 17 cents, according to Zacks Investment Research.
Shares of Acxiom on Wednesday rose 7 percent, or 82 cents, to $12.45, on the Nasdaq exchange.
Howe said in the conference call that the company continues to search for a chief financial officer to replace Chris Wolf, who left the company this summer. Acxiom has interviewed several candidates in the past few months, but had nothing definitive to announce Wednesday, Howe said.
Shares of the company have ranged form $8.94 to $18.83 in the past 52 weeks, and analysts said the shares were hurt in recent months as fears of another recession raised concerns that companies would cut back on their marketing budgets.
During the quarter covered by the report, which is Acxiom’s fiscal second, the company began a $50 million stock buyback program.
“It just made a lot of sense because we had a lot of cash,” Howe said of the buyback. “We felt like [Wall Street] was undervaluing our shares.”
So far, Acxiom has bought about 3.7 million shares for $39.1 million.
The company also paid down $75 million of a term loan during the quarter.
When asked by an analyst how clients are viewing their marketing budgets for next year, Howe said that “we haven’t seen any negative signals,” adding that “I’ve been told our pipeline is historically strong.”
Daniel Leben and Mircea Dobre, analysts for Robert W. Baird, said in a research note before the conference call Wednesday that Acxiom faces a challenging economy and time is required “for any strategic changes to start producing results.” They are maintaining a neutral rating on the shares, the research note said.
Malloy wrote that Stephens continues to believe that Acxiom shares are undervalued and that near-term option for the company may include divesting business units like the company’s background screening service or more stock buybacks.
Business, Pages 25 on 10/27/2011