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Why Acxiom Corp. Shares Sank on Wednesday

By Jeremy Bowman – May 18, 2016 at 4:30PM

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The software-as-a-service provider turned in a positive quarterly report, but the market was more interested in its outlook.

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What: Shares of Acxiom Corp. (RAMP -1.62%)  took a spill Wednesday after the software-as-a-services provider gave weak guidance in its fiscal fourth-quarter report. The stock closed the trading day down 12.1%.

So what: Acxiom actually beat analysts' estimates for the quarter that ended March 31, posting an adjusted profit of $0.18 against expectations of $0.09. Revenue improved 9% to $225 million, also beating estimates. CEO Scott Howe said the performance capped a strong year, and said the company extended its leadership in data connectivity with "the launch of LiveRamp Customer Link" and expansion of data onboarding in the U.K. and France.

Now what: The issue that seemed to sink the stock was its guidance for the current year; management expects revenue will improve in fiscal 2017 by just 2.5% to 5% to between $870 million and $890 million, and foresees earnings per share of around $0.55, down from $0.59 in fiscal 2016. Analysts had been forecasting EPS of $0.65 and revenue of $893.5 million. 

The reasons for the downbeat guidance were not immediately clear. However, the company has a strong track record of easily beating estimates, so it may just be playing it conservative as it enters the new fiscal year. I wouldn't change my investing thesis based on Wednesday's news.

 

Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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