Why Acxiom Corp. Shares Sank on Wednesday

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

Jeremy Bowman
Jeremy Bowman
May 18, 2016 at 5:30PM
Technology and Telecom

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What: Shares of Acxiom Corp. (NYSE:RAMP)  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.