Good afternoon, my name is [Mariama] and I will be your conference operator today. At this time, I would like to welcome everyone to the Acxiom Fiscal 2017 Fourth Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker remarks, there will be a question-and-answer session. [Operator Instructions]. Thank you. As a reminder, this conference call is being recorded. I would now like to turn the call over to your host, Mrs. Lauren Dillard, Head of Investor Relations.

Thank you, operator. Good afternoon and welcome. Thank you for joining us to discuss our fiscal 2017 fourth quarter and full year results. With me today are Scott Howe, our CEO; and Warren Jenson, our CFO. Today’s press release and this call may contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. For a detailed description of these risks, please read the Risk Factors sections of our public filings in the press release. Acxiom undertakes no obligation to release publicly any revisions to any of our forward-looking statements. A copy of our press release and financial schedules, including any reconciliation to non-GAAP financial measures is available at acxiom.com. Also during the call today, we will be referring to the slide-deck posted on our website. At this time, I will turn the call over to Scott Howe.

Thank you, Lauren. Good afternoon and thank you for joining us. Let me just say upfront that Lauren and I are in different locations for this call. I just wrapped up an important client meeting on the East Coast and so I am dialing in on my mobile. Let me start with our results. I am very pleased to report another solid quarter and a strong finish to the year. By almost any measure, FY 2017 was a year of tremendous execution and progress. We posted double digit revenue growth for the first time in over a decade, delivered meaningful bottom line improvement, continued to win new clients at an unprecedented rate and achieved exceptional results for our clients. Over the past five years, Acxiom has undergone a remarkable transformation and we are a much stronger and better positioned company today than we were when we began this journey. We are at the forefront of a massive shift towards data driven people based marketing. We are aligned against the single clear strategy. We moved faster and are more innovative, relevant and influential. And our recent results give me confidence we have rounded the corner. Our vision at Acxiom is to transform data into value for everyone. In a space plagued by fragmentation and complexicity, transformation means many things. Connections, curation, enhancements and activation are just a few relevant examples. Data is at the core of everything we do. And it is not only about people but increasingly about channels, devices and locations. Value is what we deliver to clients in the form of better experiences, insights, decisions and importantly ROI. And we want to do this for everyone. While clients and partners are our primary focus we also recognize that consumers must have visibility and choice. The industry needs a…

Thanks Scott and good afternoon everyone. In my portion of the call today I’d like to mention a few highlights then run through our results and finally provide guidance for FY 2018. FY 2017 was a milestone year. Acxiom has now re-established itself as an industry leader, innovator and a great place to work, and our results show it. For the year each segment posted top line growth, expanded gross margin and improved operating performance. Total revenue was up 11% and in three of the last four quarters revenue grew by more than 10%. Adjusted for items, international revenue was up 9%, representing a step function improvement. Gross margin expanded 370 basis points and was up by more than 200 basis points in each quarter of fiscal 2017. Our operating margin improved 250 basis points despite significant investments in connectivity. And finally our adjusted EBITDA margin was 19% up approximately 200 basis points, while FY 17 was a year of outstanding financial performance. What's more important is our trend line. If you’ll turn to slide four, over the last three years marketing services EBITDA margin has gone from the low 20s to the high 20s. Audience solutions has gone from a flattish business to 5% to 10% growth business and its gross margin has improved from the mid-50s to 60% plus. And finally connectivity gross margin has gone from the 40s to high 50s and EBITDA margin has gone from negative to approaching double digits. We are walking the talk. Now onto the fourth quarter. Starting with slide five our summary financial results. First, our GAAP results. Total revenue was up slightly, gross profit was $107 million, up 5% and gross margin improved 240 basis points to 47.4%. Operating loss for the quarter was $9 million compared to a loss…

[Operator Instructions] Your first question comes from the line as Bill Warmington with Wells Fargo. You line is open.

Good afternoon everyone.

Hey, Bill.

Hey, Bill.

So a couple of questions for you. On the connectivity side, the 50% growth rate that you gave, you talk about it accelerating on both organic and reported basis. I just wanted to be clear. The 50% is for both organic and reported or just want to make sure I follow that?

Bill, for the coming year we’re not going to break it down between product in organic or inorganic, simply on that side what we’ve said is that, we are fully integrated both Arbor and Circulate and breaking out the results next year is virtually impossible. Now, what we have done though is we've footnoted our acquisition, assumptions in our slides so that you can do the math, but we’re not going to break that down as part of our calls, but we do expect growth to be north of 50% organically and inorganically no matter how you do the math.

Got it. And then on the business separation front, what inning are we in, in terms of the separation of marketing services. I know you highlighted some of the spent for the quarter on that. I just want to know where we were in that process?

Bill, I would say middle of the fifth.

Okay.

What we’re doing right now is if you look back, I’ll just spend just a second on that Scott may want to add to is, if you think back over the last call it 18 months, the big accelerator for us has been divisionalization where we’ve added just a whole new level of accountability and transparency. We’re taken another step function forward with what we’re doing right now in driving a whole new level of performance management, accountability and transparency. What we get out of this a balance sheets, intercompany agreements with which we will operate the company and we believe just a whole new level of transparency and clarity, so we plan to take those steps, would put it probably right about middle of the fifth.

So you had mentioned some rationalization of the real estate portfolio, a couple million dollars charge this past year. It sounds like there’s another $5 million coming in FY 2018. Help me understand what’s – if you give us a sense for the annual savings that are going to be generated going forward from those moves?

I think 2 to 3 million bucks.

Okay.

And that’s factored into our guidance.

Got it. And the last question. I just wanted o ask how smart reach was going. How many clients you’re here up to at this point?

Hold on Bill. I have those numbers at my finger tips and I just have to find it for you. And so, over 70 clients signed up for smart reach. Over 30 of those clients actually implemented. And more importantly the results continue to really please us and our clients. I think we’ve mentioned in the past that 30% plus improvements in match rates are kind of the norm, so it’s really powerful.

All right. Well, thank you very much.

Thanks, Bill.

Your next question comes from Brett Huff with Stephens. Your line is open.

Good afternoon. Can you hear me okay?

We can Brett. Thank you.

Great. Thanks. Can you talk little bit more about the Google results that you're seeing and also the aggressively market, I’m not sure you kind of identified that for us, but I just had a lot of question about and just kind of -- what kind of benefits are Acxiom getting and what is the addressable market on that?

Hi, Brett, this is Scott. So, first off, addressable market, I think the stat we shared in the earnings script was together search and programmatic represent 80% of digital advertising. And so, we think that together those comprise to significant use cases, the most significant use cases. With customer matches, currently configured the first advertisers off the rank tend to be bigger advertisers, because they relies on them bringing their own data as opposed to creating any kind of standard data targeting schemes. So it’s the search advertisers. The results have been impressive and in two-fold, one is when you use us for identity, we often times are able to make a more accurate match, but I talked about the lift in the ability to make that match in the script today. And then the second is by bidding more granularly on certain words and adjusting that campaigns accordingly depending on whether someone is existing customer, what segment they fall into, we were able to generate better search results. And so it’s really a one or two punch. The answer is varied by client, but based on the adoption thus far, in some cases material lift seen, we’re really pleased with our performance today, still very early though, very early.

Okay. That’s helpful. And then other bigger picture question. Just talk a little bit about the main growth driver that are driving [Indiscernible]? Thank you.

Yes. The main growth drivers, there are handful, unfortunately Brett, I don’t think I can break for you top of mind, this is something we can do if we spend some time doing the math, but what I’m really pleased with – I think we’ve been able to do over the last few years at Acxiom is we've reseeded constant innovation in growth. And to me there’s kind of four levers, three of which we’re pulling today. Number one, is new client adoption. And this is true in both AS and LiveRamp. It is still the case that our share of the market is barely small relative to the size of the market. We’ve been adding sales people in both AS and LiveRamp and that’s – as they have hit the ground and started to win clients that has been I think our biggest growth driver. The second is use case expansion, The number that I’ve given in past in the last couple of calls, I’ve talked about the average number of use cases that our clients have embraced. And if you recall over year ago, the first time I share that stat. I think the average was 1.2, mean that most clients came on board and they activated Facebook or Google. Last quarter that number was in excess of nine. This quarter it is actually in double-digits. It’s broken ten. And so, as client expand their use cases, we get paid more in connectivity, likewise we typically purchase more data and utilize more data as they activate more channels. The third is geographic expansion, and I quite frankly I think this is for me, the most pleasant surprise of the quarter for us and it’s a huge credit to Warren Jenson. In my time at Acxiom every year we put Warren against one of our most difficult problems. Remember a few years we put him in-charge of IT to get those expenses under controlled, to modernize our architecture. He did a wonderful job. More recently international was an area that hasn’t been going well for Acxiom for 20 years. And he’s spend a lot of overseas and you can see it in the results, strong revenue growth in each of international markets and you heard the guidance, double-digit growth in every single non-U.S. market. That’s a credit to Warren and the leadership team internationally. This has gone from being something that quite frankly we view this problematic to something that when built around connectivity and data, we believe it can be real growth level for us. And then the final thing that I just touched on it at the very end, but you don’t see it all in our growth, but I want people to be aware that we’re exploring this is the whole concept of adjacent sectors beyond marketing.

Your next question comes from Dan Salmon from BMO Capital Markets. Your line is open.

Good afternoon, everyone. Scott, I am certainly going to follow-up on that comment about exploring adjacent sectors. When you first join the company five or six years ago, one of you key purposes was to move Acxiom to being more and solely focus on the marketing department, recognizing that the assets have changed significantly since then with the addition of LiveRamp and you’re clearly talking about areas of that side of the marketing department that were different from those that you were in previously, but just at the highest level possible in addition to having a different set of services if you can expand a little bit on why you think that is a winning strategy right now when there is a still a fair amount of low hanging fruit for you in the marketing area. And then just maybe as a part B to that for either you or Warren, does this signal any changes in your uses of free cash flow and potentially seeing more dedicated acquisitions in this area. And then maybe just a quick one for either you or Warren, marketing services guidance for revenue flat for the year, but a little dips here in the quarter just hoping that you can expand on that and help us understand the difference between the two? Thanks.

Sure. I’ll start and Warren I let you handle the two guidance questions. If you think back to a few years ago as we rationalized our portfolio what we realize Dan was that we were rationalizing to be a marketing services provider, in fact you heard me talk about the two paths that competitors on ours space have taken. We really retrench around the concept of identity resolution, connectivity and data stewardship. We believe that we would win by creating a data foundation that anyone and everyone could plug into, nowhere in that definition is it limited to solely marketing. Now other competitors have really double down on marketing services provision and created full scale agencies and for those companies in many cases that’s been a successful strategy. But here’s the thing. I grew up in the digital world and remember I grew up in Seattle for much of that time. And I am certain that 20 years ago, Jeff Bezos never has satisfied with building a retail infrastructure that could only be used for books and music. He was far more ambitious, and so are we. We built an infrastructure around ingesting, curative and activating data anywhere and for everyone. And so that’s what I’m looking to leverage. And what I’m communicating today is that is something that we’ll pursue, not for growth next year. Next year our growth will be predicated on expanding within marketing, building out the connectivity set, selling more data and upselling services. But this is about creating the growth trajectory that’s spends decade. We’re in the really, really early stages of assessing the opportunities, and we have a frame work for it. So, we’re trying to do this in intelligent way. We look at what are the overlaps between datasets, client overlaps, fragmentation of the industries, potential value that we can create for clients in those industries. The overall market size and a bunch of other things, and we’ll in the coming months approach this very methodically, very deliberately as we think about where and when we might want to expand beyond marketing services, but I will tell you that this is something I’m really excited about and as we talk about it within Acxiom, the biggest comment I get back from our associates is finally they are really excited that finally we’re thinking about doing more with our data than just improving marketing.

Yes. Let me take the last couple of questions. First on acquisitions, I’d say more of the same. If you think almost recent acquisition, acquisitions of Arbor and Circulate, I’ll say what’s terrific is the integration could not have gotten better. So far as Scott mentioned we've had over 50 new publisher integrations near and dear to my heart internationally, we better not in the short time since acquiring Arbor and Circulate we've already extended over 135 U.S.-based agreements internationally. That's real operating leverage plus the fact that we are now 100% integrated. So, we’re to look for acquisitions that fit within our culture and where we can drive real synergy. So I'd say more of more of the same, we’ll be looking to leverage the same things that we have in the past. On marketing data base, we do see a very stable business. We’ve got a great management team that is executing their strategy, there are going to be some quarters that are going to be down and quarters that are going to be up in a stable business. Now Q4 happened to be a quarter that was down. Q1 will be a quarter that will likely be down as well. I might add though for Q4 marketing data base was actually up where the weakness existed in Q4 was in our strategy and analytics consulting business but the marketing data base business was actually up for the quarter. And in Q1 we had a pretty tough comp lists and one time spend that we highlighted a year ago. So overall, got a great team leading the business, their strategy is sound, the business is stable doing the right things, but you are going to have some quarters that are going to be up and down.

If I can slip in just one follow up to tie together the two questions, Warren just to be clear is there anything in this fiscal year guidance for the potential to expand into different verticals in this year or is it fully at idea stage right now?

It’s fully at Idea stage.

Okay, great. Thank you.

Your next question comes from Kip Paulson with Cantor Fitzgerald. Your line is open

Hi, thanks for taking my questions. Just a couple from me, first given the slight topline be it in the fiscal fourth quarter and the nearly 60% LiveRamp product growth, the inline fiscal 2018 guide versus street estimates anyway seems a big conservative, what would need to happen to get adjusted revenue growth in the low teens year-on-year and what could [potentially way] growth down into the single digits. And then second question, could you just talk about your progress with IdentityLink for data owners and the availability of that data store, to what extent have you seen more data come online and maybe you could just talk a little bit about how this further differentiates the business? Thanks.

Yes Paul, I’ll go ahead and take the first one and then Scott maybe wants to jump in on the second one. Our guidance is very consistent with the way we’ve always given guidance which is we just call it right down the middle and our philosophy or practices have not changed a bit. What would take for us to be it’s all about execution. The great news across each of our segment is we have growth initiatives in place, we have plans in place and now what we need to do is execute on those plans. So if we can execute well and if things go our way, we’ll get to be if we can execute then we’ve got problems and we’ve got to go through and do some things to first correct and hopefully make up for it elsewhere. But in short, it’s one word and that’s about, it’s all about execution and taking advantage of the opportunities that the market is put in front of us.

And Kip on the data store question, if I were to take I think it was maybe Brad or Bill earlier asked what inning are we in to Warren. If you were to ask that similar question for Data Store, it’s the leadoff batter right now. It is very, very early. That said, we are making films from significant progress. For us to scale on data store we have to grow both sides simultaneously. So we need to constantly search the world for new data providers while also ensuring that more and more clients and platforms are injesting data procuring their data from the data store. Up from virtually zero on both measures a year ago, we are now just shy of 100 data store contributors and we are well over a 150 distribution partners or injestors. Most of them are in their very early stages of working with data store both from a supply and a demand side, but our success in attracting both publisher, both providers and buyers we feel pretty good about. That said, if you look at the overall revenue of data store, it’s not moving the needle yet amongst LiveRamp I think it’s for the year less than 10% and for the coming year I think that could be one of the things that could surprise us but it’s – we would have to make significant progress relative to where we are today and I think we’re still a year or two away from seeing that be a material contributor.

Hey Kip, one thing and Scott could weigh in on this too, but what another place where it’s literally a first batter is the definition of the old provider because what we are seeing is what first, how first parties are thinking about becoming providers. And even outside of the U.S. I can tell you in Europe there are some pretty big players that are really defining their role in the data world, and traditionally we’ve thought of them as first party clients that increasingly they are evaluating their place in the world of becoming data providers. So I’d concur a 100% with what Scott said, its first batter, first inning and the definitions are just going to continue to broaden.

All right. Great, very helpful. Thank you.

Your next question comes from Katelyn Young with William Blair. Your line is open.

Hi, good afternoon, thank you.

Hi Katelyn.

Hi, most of my questions are taken care of; I just wanted to follow up on the use case expansion that she mentioned earlier Scott from 1.2 to over 10 in the recent quarter. I know you mentioned a lot of initial to options with the Facebooks and Googles and I know there is a lot of use in the programmatic use cases. My question is, is there a common use case theme or area that clients are expanding into now recently beyond programmatic and if so what areas are you seeing from an optic perspective?

Yes I would say three areas. First off, I think you nailed it with search and programmatic hasn’t really started yet. We only announced that a couple of weeks ago but I think that could be a big use case for us, that’s number one. Number two, is a great expansion into torso publishers beyond just the mega walled gardens and that’s a real credit to Arbor and Circulate [Indiscernible] I mean they brought into LiveRamp a real great network of publishers that increasingly clients can activate with their data and the equivalent of activating a number of those torso publishers gives you the benefits of a walled garden. It’s the combination of reach and targeting efficacy. And then the third, but still small is things like addressable television where still very early stages of that but we continue to see more advertisers experiment with digital television typically by suppressing ads through addressable television as they are successful we hope that that will continue to scale in the years to come.

Great. Thank you very much.

There are no further questions at this time. I will now turn the call back over to Warren Jenson for closing remarks.

Well thank you operator and thanks to all of you on the call. Let me just wrap up the way I concluded my formal remarks today. FY 2017 was a milestone year for us. We’re pleased that we’ve been able to invest in some ground breaking new products and those products are changing the world of marketing. Our financial performance is showing the results. We believe that we are leaving fiscal 2017 in a position of real strategic strike. Two, it’s not just about FY 2017; it’s really about the trend lines. And those trend lines today are very, very clear. And then finally, everybody should rest assure we are not slowing down in fact, it’s now time for us to accelerate. Thanks so much for joining us today. We look forward to reporting on our results in the quarters ahead.

This concludes today’s conference call. You may now disconnect.