UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, ~~2016~~

2017



[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ----- to -----

Commission file number 0-13163

~~Acxiom Corporation~~

Acxiom Corporation
(Exact Name of Registrant as Specified in Its Charter)

DELAWARE (State or Other Jurisdiction of Incorporation or Organization)	71-0581897 (I.R.S. Employer Identification No.)

~~P.O. Box 8190, 601~~ 301 E. ~~Third Street,~~ ~~Little Rock,~~Dave Ward Drive Conway, Arkansas (Address of Principal Executive Offices)	~~72203-8190~~ 72032 (Zip Code)

(501) 342-1000 (Registrant's Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated ~~filer” and~~filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer [X]	Accelerated filer [ ]

Non-accelerated filer [ ]	Smaller reporting company [ ]

(Do not check if a smaller reporting company)	Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

The number of shares of common stock, $ 0.10 par value per share, outstanding as of ~~January 27, 2017~~February 2, 2018 was ~~77,830,113.~~

79,100,637.

~~Table of Contents~~

ACXIOM CORPORATION AND SUBSIDIARIES

INDEX

REPORT ON FORM 10-Q

December 31, ~~2016~~

2017




Part I. Financial Information		Page No.
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of December 31, ~~2016~~2017 (Unaudited) and March 31, ~~2016~~2017	3
	Condensed Consolidated Statements of Operations for the ~~Three~~three months ended December 31, 2017 and 2016 ~~and 2015~~ (Unaudited)	4
	Condensed Consolidated Statements of Operations for the ~~Nine~~nine months ended December 31, 2017 and 2016 ~~and 2015~~ (Unaudited)	5
	~~Condensed Consolidated Statements of Comprehensive Loss~~ ~~for the Three months ended December 31, 2016 and 2015 (Unaudited)~~	6
	Condensed Consolidated Statements of Comprehensive Income for the ~~Nine~~three months ended December 31, 2017 and 2016 ~~and 2015~~ (Unaudited)	7 6
	Condensed Consolidated Statements of Comprehensive Income for the nine months ended December 31, 2017 and 2016 (Unaudited)	7
	Condensed Consolidated Statement of Equity for the ~~Nine~~nine months ended December 31, ~~2016~~2017 (Unaudited)	8
	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~nine months ended December 31, 2017 and 2016 ~~and 2015~~ (Unaudited)	~~9-10~~ 9
	Notes to Condensed Consolidated Financial Statements	~~11-29~~ 11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	~~30-44~~ 26
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	45 41
Item 4.	Controls and Procedures	45 41

Part II. Other Information
Item 1.	Legal Proceedings	46 42
Item 1A.	Risk Factors	46 42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46 42
Item 3.	~~Default~~Defaults Upon Senior Securities	47 42
Item 4.	Mine Safety Disclosures	47 42
Item 5.	Other Information	47 42
Item 6.	Exhibits	47 43

Signature		48 45

~~Exhibit Index~~		49

~~Table of Contents~~

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ACXIOM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

December 31,

March 31,

2016

2016

ASSETS

(Unaudited)

Current assets:

Cash and cash equivalents

$
137,850

$
189,629

Trade accounts receivable, net

137,523

138,650

Refundable income taxes

526

9,834

Other current assets

48,035

37,897

Total current assets

323,934

376,010

Property and equipment, net of accumulated depreciation and amortization

174,005

183,043

Software, net of accumulated amortization

51,308

55,735

Goodwill

591,102

492,745

Purchased software licenses, net of accumulated amortization

7,989

10,116

Deferred income taxes

9,115

6,885

Other assets, net

52,421

25,315

$
1,209,874

$
1,149,849

LIABILITIES AND EQUITY

Current liabilities:

Current installments of long-term debt

$
36,050

$
32,243

Trade accounts payable

43,117

37,717

Accrued payroll and related expenses

45,082

61,309

Other accrued expenses

57,187

48,254

Deferred revenue

32,644

44,477

Total current liabilities

214,080

224,000

Long-term debt

200,798

157,897

Deferred income taxes

57,165

53,964

Other liabilities

14,721

15,020

Commitments and contingencies

Equity:

Common stock

13,222

13,039

Additional paid-in capital

1,131,553

1,082,220

Retained earnings

610,690

598,501

Accumulated other comprehensive income

6,297

8,590

Treasury stock, at cost

(1,038,652)

(1,003,382)

Total equity

723,110

698,968

$
1,209,874

$
1,149,849



	December 31, 2017			March 31, 2017
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	177,807		$	170,343
Trade accounts receivable, net	155,634			142,768
Refundable income taxes	6,365			7,098
Other current assets	42,357			48,310
Total current assets	382,163			368,519

Property and equipment, net of accumulated depreciation and amortization	153,039			155,974
Software, net of accumulated amortization	37,489			47,638
Goodwill	592,827			592,731
Purchased software licenses, net of accumulated amortization	7,775			7,972
Deferred income taxes	9,621			10,261
Other assets, net	43,576			51,443
	$	1,226,490		$	1,234,538
LIABILITIES AND EQUITY
Current liabilities:
Current installments of long-term debt	$	1,837		$	39,819
Trade accounts payable	46,211			40,208
Accrued payroll and related expenses	36,592			53,238
Other accrued expenses	53,999			59,861
Deferred revenue	34,169			37,087
Total current liabilities	172,808			230,213

Long-term debt	227,943			189,241
Deferred income taxes	34,300			58,374
Other liabilities	17,328			17,730
Commitments and contingencies
Equity:
Common stock	13,552			13,288
Additional paid-in capital	1,216,565			1,154,429
Retained earnings	623,156			602,609
Accumulated other comprehensive income	9,826			7,999
Treasury stock, at cost	(1,088,988		)	(1,039,345		)
Total equity	774,111			738,980
	$	1,226,490		$	1,234,538

See accompanying notes to condensed consolidated financial statements.

~~Table of Contents~~

ACXIOM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in thousands, except per share amounts)

For the Three months ended

December 31,

2016

2015

Revenues

$
223,312

$
221,193

Cost of revenue

116,468

125,735

Gross profit

106,844

95,458

Operating expenses:

Research and development

20,950

18,400

Sales and marketing

43,048

36,581

General and administrative

31,620

36,793

Gains, losses and other items, net

2,111

4,058

Total operating expenses

97,729

95,832

Income (loss) from operations

9,115

(374)

Other income (expense):

Interest expense

(1,743)

(1,948)

Other, net

35

303

Total other expense

(1,708)

(1,645)

Income (loss) from continuing operations before income taxes

7,407

(2,019)

Income taxes (benefit)

6,334

(1,580)

Net earnings (loss) from continuing operations

1,073

(439)

Loss from discontinued operations, net of tax

—

(971)

Net earnings (loss)

$
1,073

$
(1,410)

Basic earnings (loss) per share:

Net earnings (loss) from continuing operations

$
0.01

$
(0.01)

Net loss from discontinued operations

—

(0.01)

Net earnings (loss)

$
0.01

$
(0.02)

Diluted earnings (loss) per share:

Net earnings (loss) from continuing operations

$
0.01

$
(0.01)

Net loss from discontinued operations

—

(0.01)

Net earnings (loss)

$
0.01

$
(0.02)



	For the three months ended
	December 31,
	2017			2016
Revenues	$	234,871		$	223,312
Cost of revenue	115,920			116,468
Gross profit	118,951			106,844
Operating expenses:
Research and development	23,318			20,950
Sales and marketing	53,730			43,048
General and administrative	30,886			31,620
Gains, losses and other items, net	(41		)	2,111
Total operating expenses	107,893			97,729
Income from operations	11,058			9,115
Other income (expense):
Interest expense	(2,566		)	(1,743		)
Other, net	419			35
Total other expense	(2,147		)	(1,708		)
Income before income taxes	8,911			7,407
Income taxes (benefit)	(14,030		)	6,334
Net earnings	$	22,941		$	1,073

Basic earnings per share	$	0.29		$	0.01

Diluted earnings per share	$	0.28		$	0.01

See accompanying notes to condensed consolidated financial statements.

~~Table of Contents~~

ACXIOM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in thousands, except per share amounts)

For the Nine months ended

December 31,

2016

2015

Revenues

$
655,380

$
625,433

Cost of revenue

359,392

364,756

Gross profit

295,988

260,677

Operating expenses:

Research and development

58,631

57,489

Sales and marketing

118,243

100,334

General and administrative

91,993

100,055

Impairment of goodwill and other assets

—

729

Gains, losses and other items, net

2,724

7,369

Total operating expenses

271,591

265,976

Income (loss) from operations

24,397

(5,299)

Other income (expense):

Interest expense

(5,244)

(5,789)

Other, net

135

666

Total other expense

(5,109)

(5,123)

Income (loss) from continuing operations before income taxes

19,288

(10,422)

Income taxes (benefit)

7,099

(3,456)

Net earnings (loss) from continuing operations

12,189

(6,966)

Earnings from discontinued operations, net of tax

—

15,240

Net earnings

$
12,189

$
8,274

Basic earnings per share:

Net earnings (loss) from continuing operations

$
0.16

$
(0.09)

Net earnings from discontinued operations

—

0.20

Net earnings

$
0.16

$
0.11

Diluted earnings per share:

Net earnings (loss) from continuing operations

$
0.15

$
(0.09)

Net earnings from discontinued operations

—

0.20

Net earnings

$
0.15

$
0.11



	For the nine months ended
	December 31,
	2017			2016
Revenues	$	672,625		$	655,380
Cost of revenue	344,952			359,392
Gross profit	327,673			295,988
Operating expenses:
Research and development	70,894			58,631
Sales and marketing	152,288			118,243
General and administrative	95,166			91,993
Gains, losses and other items, net	3,521			2,724
Total operating expenses	321,869			271,591
Income from operations	5,804			24,397
Other income (expense):
Interest expense	(7,432		)	(5,244		)
Other, net	(61		)	135
Total other expense	(7,493		)	(5,109		)
Income (loss) before income taxes	(1,689		)	19,288
Income taxes (benefit)	(19,994		)	7,099
Net earnings	$	18,305		$	12,189

Basic earnings per share	$	0.23		$	0.16

Diluted earnings per share	$	0.22		$	0.15

See accompanying notes to condensed consolidated financial statements.

~~Table of Contents~~

ACXIOM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~LOSS~~

INCOME

(Unaudited)

(Dollars in thousands)

For the Three months ended

December 31,

2016

2015

Net earnings (loss)

$
1,073

$
(1,410)

Other comprehensive income (loss):

Change in foreign currency translation adjustment

(1,340)

255

Unrealized gain on interest rate swap

21

217

Other comprehensive income (loss)

(1,319)

472

Comprehensive loss

$
(246)

$
(938)



	For the three months ended
	December 31,
	2017		2016
Net earnings	$	22,941	$	1,073
Other comprehensive income:
Change in foreign currency translation adjustment	416		(1,340		)
Unrealized gain on interest rate swap	—		21
Other comprehensive income	416		(1,319		)
Comprehensive income	$	23,357	$	(246	)

See accompanying notes to condensed consolidated financial statements.

~~Table of Contents~~

ACXIOM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollars in thousands)

For the Nine months ended


December 31,


2016

2015

Net earnings

$
12,189

$
8,274

Other comprehensive loss:

Change in foreign currency translation adjustment

(2,410)

(1,418)

Unrealized gain on interest rate swap

117

146

Other comprehensive loss

(2,293)

(1,272)

Comprehensive income

$
9,896

$
7,002



	For the nine months ended
	December 31,
	2017		2016
Net earnings	$	18,305	$	12,189
Other comprehensive income (loss):
Change in foreign currency translation adjustment	1,827		(2,410		)
Unrealized gain on interest rate swap	—		117
Other comprehensive income (loss)	1,827		(2,293		)
Comprehensive income	$	20,132	$	9,896

See accompanying notes to condensed consolidated financial statements.

~~Table of Contents~~

ACXIOM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

NINE MONTHS ENDED DECEMBER 31, ~~2016~~

2017

(Unaudited)

(Dollars in thousands)

Accumulated

Common Stock

Additional

other

Treasury Stock

Number

paid-in

Retained

comprehensive

Number

Total


of shares

Amount

Capital

earnings

income

of shares

Amount

Equity

Balances at March 31, 2016

130,390,106

$
13,039

$
1,082,220

$
598,501

$
8,590

(53,030,682)

$
(1,003,382)

$
698,968

Employee stock awards, benefit plans and other issuances

853,553

85

14,313

—

—

(211,567)

(4,728)

9,670

Tax impact of stock options and restricted stock

—

—

1,163

—

—

—

—

1,163

Non-cash stock-based compensation

87,717

9

33,946

—

—

—

—

33,955

Restricted stock units vested

892,480

89

(89)

—

—

—

—

—

Acquisition of treasury stock

—

—

—

—

—

(1,314,840)

(30,542)

(30,542)

Comprehensive income (loss):

Foreign currency translation

—

—

—

—

(2,410)

—

—

(2,410)

Unrealized gain on interest rate swap

—

—

—

—

117

—

—

117

Net earnings

—

—

—

12,189

—

—

—

12,189

Balances at December 31, 2016

132,223,856

$
13,222

$
1,131,553

$
610,690

$
6,297

(54,557,089)

$
(1,038,652)

$
723,110



									Accumulated
	Common Stock			Additional					other		Treasury Stock
	Number			paid-in			Retained		comprehensive		Number					Total
	of shares	Amount		Capital			earnings		income		of shares		Amount			Equity
Balances at March 31, 2017	132,875,373	$	13,288	$	1,154,429		$	602,609	$	7,999	(54,582,392	)	$	(1,039,345	)	$	738,980
Cumulative-effect adjustment from adoption of ASU 2016-09	—	—		384			2,242		—		—		—			$	2,626
Employee stock awards, benefit plans and other issuances	805,768	80		15,229			—		—		(389,912	)	(10,202		)	$	5,107
Non-cash stock-based compensation	487,385	49		46,658			—		—		—		—			$	46,707
Restricted stock units vested	1,351,652	135		(135		)	—		—		—		—			$	—
Acquisition of treasury stock	—	—		—			—		—		(1,588,964	)	(39,441		)	$	(39,441	)
Comprehensive income:
Foreign currency translation	—	—		—			—		1,827		—		—			$	1,827
Net earnings	—	—		—			18,305		—		—		—			$	18,305
Balances at December 31, 2017	135,520,178	$	13,552	$	1,216,565		$	623,156	$	9,826	(56,561,268	)	$	(1,088,988	)	$	774,111

See accompanying notes to condensed consolidated financial statements

~~Table of Contents~~

ACXIOM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)



	For the Nine months ended December 31,				For the nine months ended
	2016		2015		December 31,
					2017			2016
Cash flows from operating activities:
Net earnings	$	12,189	$	8,274	$	18,305		$	12,189
Earnings from discontinued operations, net of tax		—		(15,240)
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		61,097		63,221	63,719			61,097
Loss (gain) on disposal or impairment of assets		(520)		209	2,646			(520		)
Impairment of goodwill and other assets		—		729
Accelerated deferred debt costs					720			—
Deferred income taxes		(1,982)		(4,856)	(20,451		)	(1,982		)
Non-cash stock-based compensation expense		33,955		23,529
Non-cash stock compensation expense					46,707			33,955
Changes in operating assets and liabilities:
Accounts receivable, net		(6,161)		(15,238)	(11,432		)	(6,161		)
Other assets		8,653		(2,643)	(1,277		)	8,653
Accounts payable and other liabilities		(11,819)		3,182	(18,232		)	(11,819		)
Deferred revenue		(10,247)		9,205	(4,314		)	(10,247		)
Net cash provided by operating activities		85,165		70,372	76,391			85,165

Cash flows from investing activities:
Capitalized software development costs		(11,171)		(10,360)	(10,332		)	(11,171		)
Capital expenditures		(30,096)		(33,822)	(26,950		)	(30,096		)
Data acquisition costs		(463)		(1,135)	(621		)	(463		)
Equity investments					(1,000		)	—
Net cash received from disposition		16,988		—	4,000			16,988
Net cash paid in acquisitions		(137,383)		(5,386)	—			(137,383		)
Net cash used in investing activities		(162,125)		(50,703)	(34,903		)	(162,125		)

Cash flows from financing activities:
Proceeds from debt		70,000		—	230,000			70,000
Payments of debt		(24,173)		(79,183)	(226,732		)	(24,173		)
Fees for debt refinancing					(4,001		)	—
Sale of common stock, net of stock acquired for withholding taxes		9,670		6,343	5,107			9,670
Excess tax benefits from stock-based compensation		1,785		2,022	—			1,785
Acquisition of treasury stock		(30,542)		(37,535)	(39,441		)	(30,542		)
Net cash provided by (used in) financing activities		26,740		(108,353)
Net cash used in continuing operations		(50,220)		(88,684)
Net cash provided by (used) in financing activities					(35,067		)	26,740

Cash flows from discontinued operations:
Net cash provided by operating activities		—		10,277
Net cash provided by investing activities		—		124,506
Net cash used in financing activities		—		(206)
Net cash provided by discontinued operations		—		134,577
Net cash provided by (used in) continuing and discontinued operations		(50,220)		45,893
Effect of exchange rate changes on cash		(1,559)		(513)	1,043			(1,559		)

Net change in cash and cash equivalents		(51,779)		45,380	7,464			(51,779		)
Cash and cash equivalents at beginning of period		189,629		141,010	170,343			189,629
Cash and cash equivalents at end of period	$	137,850	$	186,390	$	177,807		$	137,850

See accompanying notes to condensed consolidated financial statements.

ACXIOM CORPORATION AND SUBSIDIARIES

~~Table of Contents~~

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Unaudited)

(Dollars in thousands)

For the Nine months ended December 31,

2016

2015

Supplemental cash flow information:

Cash paid during the period for:

Interest

$
5,301

$
6,220

Income taxes, net of refunds

4,796

6,004

Prepayment of debt

—

55,000

Payments on capital leases and installment payment arrangements

—

63

Payments on capital leases and installment payment arrangements of discontinued operations

—

206

Other debt payments

24,173

24,120



	For the nine months ended
	December 31,
	2017		2016
Supplemental cash flow information:
Cash paid during the period for:
Interest	$	6,712	$	5,301
Income taxes, net of refunds	1,152		4,796

Non-cash investing and financing activities:
Leasehold improvements paid directly by lessor	978		—

See accompanying notes to condensed consolidated financial statements.

~~Table of Contents~~

ACXIOM CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~1.BASIS~~

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

These condensed consolidated financial statements have been prepared by Acxiom Corporation (“Registrant,” ~~“Acxiom”,~~“Acxiom,” we, us or the “Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC” or the “Commission”). In the opinion of the Registrant’s management, all adjustments necessary for a fair presentation of the results for the periods included have been made, and the disclosures are adequate to make the information presented not misleading. All such adjustments are of a normal recurring nature. Certain note information has been omitted because it has not changed significantly from that reflected in Notes 1 through 1819 of the Notes to Consolidated Financial Statements filed as part of Item 8 of the Registrant’s annual report on Form 10-K for the fiscal year ended March 31, ~~2016~~2017 (“~~2016~~2017 Annual Report”), as filed with the Commission on May ~~27, 2016.~~26, 2017. This quarterly report and the accompanying condensed consolidated financial statements should be read in connection with the ~~2016~~2017 Annual Report. The financial information contained in this quarterly report is not necessarily indicative of the results to be expected for any other period or for the full fiscal year ending March 31, ~~2017.~~

2018.

Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”). Actual results could differ from those estimates. Certain of the accounting policies used in the preparation of these condensed consolidated financial statements are complex and require management to make judgments and/or significant estimates regarding amounts reported or disclosed in these financial statements. Additionally, the application of certain of these accounting policies is governed by complex accounting principles and their interpretation. A discussion of the Company’s significant accounting principles and their application is included in Note 1 of the Notes to Consolidated Financial Statements and in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of the Company’s ~~2016~~2017 Annual Report.

~~Unless otherwise indicated, information in these notes to the condensed consolidated financial statements relates to continuing operations.~~

Accounting Pronouncements Adopted During the Current Year

In ~~August 2016,~~January 2017, the Financial Accounting Standards Board ~~(“FASB”~~("FASB") issued Accounting Standards Update ~~(“ASU”~~("ASU") ~~2016-15, Statement~~No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of ~~Cash Flows: Clarification~~a Business" ("ASU 2017-01"), which amended the existing FASB Accounting Standards Codification. The standard provides additional guidance to assist entities with evaluation of ~~Certain Cash Receipts~~whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting, including acquisitions, disposals, goodwill, and ~~Cash Payments (“~~consolidation. ASU 2016-15”). The new standard eliminates the diversity in practice related to the classification of certain cash receipts and payments in the statement of cash flows by adding or clarifying guidance on eight specific cash flow issues, including payments for debt prepayments or extinguishments. ASU 2016-152017-01 is effective for ~~annual and interim reporting periods~~the Company beginning ~~after December 15, 2017 (fiscal~~in fiscal 2019, ~~for the Company) and~~with early ~~adoption is~~adoptions permitted. ~~ASU 2016-15 provides for retrospective application for all periods presented.~~ We ~~early~~ adopted the ~~new~~ standard ~~during~~in the current fiscal ~~quarter ended September 30, 2016. Early~~year, on a prospective basis, and do not expect the adoption ~~did not result in any changes~~of this guidance to ~~our existing accounting policies, presentation of items in~~have a material impact on our condensed consolidated financial statements ~~of cash flows, or any changes resulting from the retrospective application to all periods reported.~~

~~Recent Accounting Pronouncements Not Yet Adopted~~

Onand related disclosures.

In November ~~17,~~ 2016, the FASB issued ASU 2016-18, ~~Statement~~"Statement of Cash Flows (Topic 230): Restricted ~~Cash. It~~Cash" ("ASU 2016-18"). This standard is intended to reduce diversity in the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. The ~~new~~ standard requires that restricted cash and restricted cash equivalents be included as components of total cash and cash equivalents as presented on the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. ASU 2016-18 is effective for annual periods beginning after December 15, 2017 (fiscal 2019 for the Company), including interim periods

~~Table of Contents~~

within those fiscal ~~years. Earlier~~years; earlier adoption is permitted. We adopted the standard during the current fiscal year. Early adoption did not result in any changes to our existing accounting policies, presentation of items in our condensed consolidated financial statements and related disclosures, or any changes resulting from the retrospective application to all periods reported.

In March 2016, the FASB issued ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09"), which is intended to improve the accounting for stock-based payment transactions as part of the FASB's simplification initiative. The ASU changes five aspects of the accounting for stock-based payment award transactions that will affect public companies,

including: (1) accounting for income taxes; (2) classification of excess tax benefits on the statement of cash flows; (3) forfeitures; (4) minimum statutory tax withholding requirements; and (5) classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax-withholding purposes. The inclusion of excess tax benefits and deficiencies as a component of income tax expense will increase volatility within our provision for income taxes as the amount of excess tax benefits or deficiencies from stock-based compensation awards depends on our stock price at the date the awards vest or the date of option exercises. This guidance also requires excess tax benefits to be presented as an operating activity on the statement of cash flows and allows an entity to make an accounting policy election to either estimate expected forfeitures or to account for them as they occur.

We adopted ASU No. 2016-09 during the current fiscal year, which required us to reflect any adjustments as of April 1, 2017. We elected to account for forfeitures as they occur rather than estimating expected forfeitures. We recorded the cumulative impact of adoption through an increase in retained earnings of $2.2 million, of which $2.6 million related to deferred tax assets from certain federal and state research tax credit carryforwards attributable to excess tax benefits from stock-based compensation that had not been previously recognized, offset by $0.4 million related to elimination of the forfeiture pool. We elected to prospectively adopt the effect on the statement of cash flows and accordingly, did not restate the Condensed Consolidated Statement of Cash Flows for the nine months ended December 31, 2016.

Recent Accounting Pronouncements Not Yet Adopted

In January 2017, the FASB issued ASU 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment" ("ASU 2017-04"), which eliminates step two from the goodwill impairment test. Under ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for annual periods beginning after December 15, 2019 (fiscal 2021 for the Company), including interim periods within those fiscal years; earlier adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements and related ~~disclosures~~

In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting as part of its simplification initiative. The objective of the simplification initiative is to identify, evaluate, and improve areas of U.S. GAAP for which cost and complexity can be reduced while maintaining the usefulness of the information provided to users of financial statements. The areas for simplification in ASU 2016-09 involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2016 (fiscal 2018 for the Company), including interim periods within those fiscal years. Earlier adoption is permitted. The Company is continuing to evaluate the impact of the adoption of this guidance on its consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU No. 2016-02, ~~Leases~~"Leases (Topic 842)" ("ASU 2016-02"), as a comprehensive new standard that amends various aspects of existing guidance for leases and requires additional disclosures about leasing arrangements. The new standard will require lessees to recognize a right-of-use asset and a lease ~~assets and lease liabilities~~liability on the balance sheet for ~~those~~all leases with the exception of short-term leases. For lessees, leases will continue to be classified as either operating ~~leases under previous guidance, ASC 840, Leases. ASU 2016-02 creates a new Topic, ASC 842, Leases. This new Topic retains a distinction between~~or finance ~~leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially~~in the income statement. Lessor accounting is similar to the ~~classification criteria for distinguishing between capital~~current model but updated to align with certain changes to the lessee model. Lessors will continue to classify leases ~~and~~as operating, ~~leases in the previous leases guidance.~~direct financing or sales-type leases. ASU 2016-02 is effective for annual periods beginning after December 15, 2018 (fiscal 2020 for the Company), including interim periods within those fiscal years. Earlier adoption is permitted. In the financial statements in which the ASU is first applied, leases shall be measured and recognized at the beginning of the earliest comparative period presented with an adjustment to equity. The Company is continuing to evaluate the impact of the adoption of this guidance on its consolidated financial statements and related disclosures.

In May 2014, the FASB issued update ASU ~~No.~~ 2014-09, ~~Revenue~~"Revenue from Contracts with ~~Customers:~~Customers (Topic 606)" ("ASU 2014-09") and issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016, May 2016, and December 2016 within ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, respectively (ASU 2014-09 and the subsequent amendments, collectively, "Topic 606"). Topic 606 ~~to supersede~~supersedes nearly all existing revenue recognition guidance under U.S. GAAP, as well as some cost guidance and guidance on certain gains and losses. The FASB also issued ASU 2016-08, Revenue from Contracts with Customers – Principal versus Agent Considerations, and ASU 2016-10, Revenue from Contracts with Customers – Identifying Performance Obligations and Licensing.GAAP. The core principle of the new guidance is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The guidance defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation, among ~~other areas.~~others. Topic 606 also provides guidance on the recognition of costs related to obtaining customer contracts. The effective date for the ~~update has been deferred until~~Company is the first quarter of fiscal 2019 ~~for the Company, with early application allowed for fiscal 2018. Adoption of the update may be applied~~ using either of two methods: (i) retrospective application to each prior reporting period presented with the option to elect certain practical expedients; or (ii) retrospective application with the cumulative effect recognized at the date of initial application and providing certain additional disclosures. The Company has completed its preliminary assessment of the new standard and is continuing assessment as we complete

implementation design activities. ~~The Company cannot currently estimate~~We plan to adopt Topic 606 in the ~~financial statement~~first quarter of fiscal 2019 pursuant to the aforementioned adoption method (ii), and we do not believe there will be a material impact to our revenues upon adoption. We are continuing to evaluate the impact to our revenues related to our pending adoption of ~~adoption.~~

Topic 606 and our preliminary assessments are subject to change. We are also continuing to evaluate the provisions of Topic 606 related to costs of obtaining customer contracts.

The Company does not anticipate that the adoption of any other recent accounting pronouncements will have a material impact on the Company's consolidated financial ~~statements~~position, results of operations or ~~related disclosures.~~

cash flows.

~~Table of Contents~~

~~2.EARNINGS (LOSS)~~2. EARNINGS PER SHARE AND STOCKHOLDERS’ EQUITY:

Earnings ~~(Loss)~~ Per Share

A reconciliation of the numerator and denominator of basic and diluted earnings ~~(loss)~~ per share is shown below (in thousands, except per share amounts):

For the quarter ended

For the nine months ended

December 31,

December 31,

2016

2015

2016

2015

Basic earnings (loss) per share:

Net earnings (loss) from continuing operations

$
1,073

$
(439)

$
12,189

$
(6,966)

Net earnings (loss) from discontinued operations, net of tax

—

(971)

—

15,240

Net earnings (loss)

$
1,073

$
(1,410)

$
12,189

$
8,274

Basic weighted-average shares outstanding

77,507

77,831

77,475

77,903

Basic earnings (loss) per share:

Continuing operations

$
0.01

$
(0.01)

$
0.16

$
(0.09)

Discontinued operations

—

(0.01)

—

0.20

Net earnings (loss)

$
0.01

$
(0.02)

$
0.16

$
0.11

Diluted earnings (loss) per share:

Basic weighted-average shares outstanding

77,507

77,831

77,475

77,903

Dilutive effect of common stock options, warrants, and restricted stock as computed under the treasury stock method

2,344

—

2,019

—

Diluted weighted-average shares outstanding

79,851

77,831

79,494

77,903

Diluted earnings (loss) per share:

Continuing operations

$
0.01

$
(0.01)

$
0.15

$
(0.09)

Discontinued operations

—

(0.01)

—

0.20

Net earnings (loss)

$
0.01

$
(0.02)

$
0.15

$
0.11

Due to the net loss from continuing operations incurred by the Company during the quarter and nine months ended December 31, 2015, the dilutive effect of options, warrants and restricted stock units covering 1.5 million and 1.4 million shares of common stock, respectively, was excluded in each period from the diluted loss per share calculation since the impact on the calculation was anti-dilutive.

~~Additional options~~



	For the three months ended				For the nine months ended
	December 31,				December 31,
	2017		2016		2017		2016
Basic earnings per share:
Net earnings	$	22,941	$	1,073	$	18,305	$	12,189

Basic weighted-average shares outstanding	79,043		77,507		78,983		77,475

Basic earnings per share	$	0.29	$	0.01	$	0.23	$	0.16

Diluted earnings per share:
Basic weighted-average shares outstanding	79,043		77,507		78,983		77,475
Dilutive effect of common stock options, warrants, and restricted stock as computed under the treasury stock method	2,826		2,344		2,611		2,019
Diluted weighted-average shares outstanding	81,869		79,851		81,594		79,494

Diluted earnings per share	$	0.28	$	0.01	$	0.22	$	0.15

Options and warrants to purchase shares of common stock and restricted stock units ~~including performance-based restricted stock units not meeting performance criteria,~~ that were outstanding during the periods presented but were not included in the computation of diluted earnings per share because the effect was anti-dilutive are shown below ~~(in thousands, except share price amounts)~~(shares in thousands):

For the quarter ended

For the nine months ended

December 31,

December 31,

2016

2015

2016

2015

Number of shares outstanding under options, warrants and restricted stock units

156

1,112

345

1,751

Range of exercise prices for options

$
32.85 -  $32.85

$
17.49 -  $62.06

$
20.27 -  $32.85

$
17.49 -  $62.06



	For the three months ended		For the nine months ended
	December 31,		December 31,
	2017	2016	2017	2016
Number of shares outstanding under options, warrants and restricted stock units	97	156	89	345
Range of exercise prices for options	$32.85	$32.85	$32.85	$20.27-$32.85

Stockholders’ Equity

~~Table of Contents~~

ending June 30, 2018. During the nine months ended December 31, ~~2016,~~2017, the Company repurchased ~~1.3~~1.6 million shares of its common stock for ~~$30.5~~$39.4 million. Through December 31, ~~2016,~~2017, the Company had repurchased ~~16.8~~a total

of 18.4 million shares of its stock for ~~$285.7~~$325.2 million, leaving remaining capacity of ~~$114.3~~$74.8 million under the stock repurchase program.

Accumulated Other Comprehensive Income

~~The following table presents the accumulated balances for each component of~~

Accumulated other comprehensive income ~~(dollars in thousands):~~

accumulated balances of $9.8 million and $8.0 million at December 31, 2017 and March 31, 2017, respectively, reflect accumulated foreign currency translation adjustments.

December 31,

March 31,

2016

2016

Foreign currency translation

$
6,295

$
8,705

Unrealized gain (loss) on interest rate swap

2

(115)

$
6,297

$
8,590

~~3.SHARE-BASED~~

3. SHARE-BASED COMPENSATION:

Share-based Compensation Plans

The Company has stock option and equity compensation plans for which a total of ~~30.0~~34.5 million shares of the Company’s common stock have been reserved for issuance since the inception of the plans. These plans provide that the exercise prices of qualified options will be at or above the fair market value of the common stock at the time of the grant. Board policy requires that nonqualified options also be priced at or above the fair market value of the common stock at the time of grant. At December 31, ~~2016,~~2017, there were a total of ~~2.6~~6.2 million shares available for future grants under the plans.

~~Stock Option Activity~~

~~As part of~~

During the ~~Company’s acquisition of Arbor Technologies, Inc. (“Arbor”) (see note 4),~~quarter ended June 30, 2017, the ~~Company issued 284,985 replacement stock options having a per share weighted-average fair value~~Board voted to amend the Amended and ~~exercise price of $25.85 and $1.27, respectively,~~Restated 2005 Equity Compensation Plan to Arbor employees who had outstanding unvested stock options to purchase Arbor stock. The fair value of the replacement options was determined using a customized binomial lattice model with the following assumptions: dividend yield of 0.0%; risk-free interest rates from 2.24% to 2.32%, based on the rate of U.S. Treasury securities with a term equal to the remaining term of each option; remaining terms of each option from 8.6 to 9.9 years; expected volatility of 38%, based on both the historical volatility of Acxiom stock, as well as the implied volatility of traded Acxiom options; and a suboptimal exercise multiple of 1.4, based on actual historical exercise activity of Acxiom options.

~~The number of shares and exercise price of each replacement option were determined by converting Arbor options into equivalent Acxiom options by multiplying~~increase the number of shares ~~subject~~available under the plan from 28.4 million shares to ~~Arbor options by the exchange ratio of .41998 and by dividing the exercise price for each Arbor option by the exchange ratio of .41998. Once the value of each replacement option was determined,~~32.9 million shares, bringing the total ~~fair value~~number of ~~$7.4 million, net of any forfeitures, will be expensed by the Company over the remaining vesting period of each option.~~

~~As part~~shares reserved for issuance since inception of the ~~Company’s acquisition of Circulate.com, Inc. (“Circulate”),~~plans from 30.0 million shares at March 31, 2017 to 34.5 million shares at December 31, 2017. That amendment received shareholder approval at the Company issued 73,951 replacement stock options having a per share weighted-average fair value and exercise price of $24.80 and $2.29, respectively, to Circulate employees who had outstanding unvested stock options to purchase Circulate stock. The total fair value of $1.8 million, net of any forfeitures, will be expensed by the Company over the remaining vesting period of each option.

August 8, 2017 annual shareholders' meeting.

Stock Option Activity

~~Table of Contents~~

Stock option activity for the ~~nine-month period~~nine months ended December 31, ~~2016~~2017 was:

Weighted-‑average


Weighted-average

remaining

Aggregate

Number of

exercise price

contractual term

Intrinsic value

shares

per share

(in years)

(in thousands)

Outstanding at March 31, 2016

3,604,102

$
14.52

Arbor and Circulate replacement stock options

358,936

$
1.48

Exercised

(566,092)

$
13.73

$
5,785

Forfeited or cancelled

(67,513)

$
13.90

Outstanding at December 31, 2016

3,329,433

$
13.26

5.3

$
45,208

Exercisable at December 31, 2016

2,369,091

$
14.15

4.4

$
30,056



					Weighted-average
			Weighted-average		remaining	Aggregate
	Number of		exercise price		contractual term	Intrinsic value
	shares		per share		(in years)	(in thousands)
Outstanding at March 31, 2017	3,033,071		$	13.14
Performance units converted to options	299,641		$	21.32
Exercised	(526,842	)	$	15.05		$	6,044
Forfeited or canceled	(88,870	)	$	20.08
Outstanding at December 31, 2017	2,717,000		$	13.45	5.7	$	38,448
Exercisable at December 31, 2017	2,109,993		$	13.53	5.1	$	29,701

The aggregate intrinsic value ~~in the table above~~at period end represents the total pre-tax intrinsic value (the difference between Acxiom’s closing stock price on the last trading day of the ~~quarter~~period and the exercise price for each in-the-money option) that would have been ~~realized~~received by the option holders had option holders exercised their options on December 31, ~~2016.~~2017. This amount changes based upon changes in the fair market value of Acxiom’s common stock.

A summary of stock options outstanding and exercisable as of December 31, ~~2016~~2017 was:

Options outstanding

Options exercisable

Range of

Weighted-average

Weighted-average

Weighted-average

exercise price

Options

remaining

exercise price

Options

exercise price

per share

outstanding

contractual life

per share

exercisable

per share

$
0.85
-
$
9.99

906,395

6.5
years

$
1.68

459,760

$
1.71

$
10.00
-
$
19.99

1,580,005

5.1
years

$
15.21

1,270,848

$
14.60

$
20.00
-
$
24.99

823,481

4.4
years

$
21.78

623,820

$
21.97

$
25.00
-
$
32.85

19,552

6.9
years

$
32.85

14,663

$
32.85

3,329,433

5.3
years

$
13.26

2,369,091

$
14.15



					Options outstanding				Options exercisable
Range of						Weighted-average	Weighted-average			Weighted-average
exercise price					Options	remaining	exercise price		Options	exercise price
per share					outstanding	contractual life	per share		exercisable	per share
$	0.61	—	$	9.99	690,169	6.4 years	$	1.68	474,434	$	1.77
$	10.00	—	$	19.99	1,262,595	4.9 years	$	14.94	1,076,909	$	14.47
$	20.00	—	$	24.99	744,684	6.6 years	$	21.31	539,098	$	21.33
$	25.00	—	$	32.85	19,552	5.9 years	$	32.85	19,552	$	32.85
					2,717,000	5.7 years	$	13.45	2,109,993	$	13.53

Total expense related to stock options for the nine months ended December 31, ~~2016~~2017 and ~~2015~~2016 was approximately $4.1 million and $5.4 million, ~~and $7.0 million,~~ respectively. ~~Of the fiscal 2017 expense, $2.2 million relates to the LiveRamp acquisition-related replacement options.~~ Future expense for these options is expected to be approximately ~~$12.6~~$7.1 million in total over the next four years.

Performance Stock Option Unit Activity

During the nine months ended December 31, 2016, the Company granted 633,604 performance-based stock option units with a value at the date of grant of $4.9 million, determined using a Monte Carlo simulation model. All of the units granted in the current period vest and become exercisable in three equal tranches, each being subject to attainment of performance criteria and a subsequent service period established by the compensation committee of the board of directors (“Comp Committee”). Each of the three tranches may vest in a number of stock options, from zero to 300% of the initial award, each having a weighted-average exercise price of $21.40, based on the attainment of certain revenue growth and operating margin targets for the years ending March 31, 2017, 2018, and 2019 respectively. Each tranche is subject to a service period following the respective performance periods, such that each tranche will cliff vest in two separate 50% increments over two years beginning with the board of directors compensation committee meeting that immediately follows the end of the respective performance period.

~~Table of Contents~~

Performance stock option unit activity for the ~~nine-month period~~nine months ended December 31, ~~2016~~2017 was:

Weighted-average


Weighted-average

remaining

Aggregate

Number

exercise price

contractual term

intrinsic value

of shares

per share

(in years)

(in thousands)

Outstanding at March 31, 2016

—

$
—

Granted

633,604

$
21.40

Forfeited or cancelled

(24,677)

$
21.32

Outstanding at December 31, 2016

608,927

$
21.40

2.4

$
3,285

Exercisable at December 31, 2016

—

$
—

—

$
—



					Weighted-average
			Weighted-average		remaining	Aggregate
	Number		exercise price		contractual term	intrinsic value
	of shares		per share		(in years)	(in thousands)
Outstanding at March 31, 2017	555,123		$	21.41
Performance units converted to options	(183,322	)	$	21.41
Forfeited or canceled	(25,201	)	$	21.32
Outstanding at December 31, 2017	346,600		$	21.41	1.9	$	2,131
Exercisable at December 31, 2017	—		$	—	—	$	—

Of the performance stock option units outstanding at ~~December~~March 31, ~~2016, 203,277 will reach~~2017, 183,322 reached maturity of the relevant performance period at March 31, 2017. ~~The~~During the quarter ended June 30, 2017, the units ~~are expected to vest~~vested at an approximate ~~170%~~163% attainment level ~~during the subsequent service period,~~ resulting in issuance of ~~approximately 345,571~~299,641 stock options having a weighted average exercise price of ~~$21.40.~~

$21.32.

Total expense related to performance stock option units for the nine months ended December 31, 2017 and 2016 was $0.9 million and $1.0 ~~million.~~million, respectively. Future expense for these performance stock option units is expected to be approximately ~~$4.7~~$2.1 million in total over the next ~~five~~four years.

Stock Appreciation Right ~~(SAR)~~("SAR") Activity

SAR activity ~~for the nine-month period ended December 31, 2016 was:~~

Weighted-average


Weighted-average

remaining

Aggregate

Number

exercise price

contractual term

intrinsic value

of shares

per share

(in years)

(in thousands)

Outstanding at March 31, 2016

245,404

$
40.00

Outstanding at December 31, 2016

245,404

$
40.00

0.2

$
—

Exercisable at December 31, 2016

—

$
—

—

$
—

~~Total expense related to SARs~~ for the nine months ended December 31, ~~2016~~2017 was:



					Weighted-average
			Weighted-average		remaining	Aggregate
	Number		exercise price		contractual term	intrinsic value
	of shares		per share		(in years)	(in thousands)
Outstanding at March 31, 2017	245,404		$	40.00
Forfeited or canceled	(245,404	)	$	40.00
Outstanding at December 31, 2017	—		$	—	—	$	—

All of the SAR units outstanding at March 31, 2017 reached maturity of the relevant performance period on March 31, 2017. The units achieved a 100% performance attainment level. However, application of the vesting multiplier resulted in zero shares granted and ~~2015 was $0.1 million in both periods. Future expense for these SARs is not material.~~

cancellation of all the units during the quarter ended June 30, 2017.

Restricted Stock Unit Activity

During the nine months ended December 31, ~~2016,~~2017, the Company granted time-vesting restricted stock units covering ~~2,107,608~~1,687,416 shares of common stock with a fair value at the date of grant of ~~$50.1 million, of which units covering 768,710 shares, with a value at grant date of $20.0 million, were granted to former Arbor and Circulate employees subsequent to the acquisitions (see note 4).~~$44.2 million. Of the restricted stock units granted in the current period, ~~1,395,116~~358,812 vest in equal annual increments over four years, ~~357,829 partially cliff~~106,571 vest in equal annual increments over three years, 1,008,851 vest 25% at the one-year anniversary and ~~then over~~75% in equal quarterly increments ~~during~~over the subsequent ~~two~~three years, ~~316,481 partially cliff~~174,368 vest 50% at the one-year anniversary and ~~then over~~50% in equal quarterly increments ~~during~~over the ~~subsequent~~following year, and ~~38,182~~38,814 vest in one year. Grant date fair value of these units is equal to the quoted market price for the shares on the date of grant.

Non-vested time-vesting restricted stock unit activity for the ~~nine-month period~~nine months ended December 31, ~~2016~~2017 was:

Weighted average


fair value per

Weighted-average

Number

share at grant

remaining contractual

of shares

date

term (in years)

Outstanding at March 31, 2016

2,279,895

$
19.69

2.12

Granted

2,107,608

$
23.77

Vested

(890,127)

$
20.18

Forfeited or cancelled

(167,408)

$
19.94

Outstanding at December 31, 2016

3,329,968

$
22.13

2.63



			Weighted-average
			fair value per		Weighted-average
	Number		share at grant		remaining contractual
	of shares		date		term (in years)
Outstanding at March 31, 2017	3,307,577		$	22.57	2.45
Granted	1,687,416		$	26.17
Vested	(1,067,370	)	$	22.30
Forfeited or canceled	(345,581	)	$	23.36
Outstanding at December 31, 2017	3,582,042		$	24.27	2.48

~~Table of Contents~~

During the nine months ended December 31, ~~2016,~~2017, the Company granted performance-based restricted stock units covering ~~254,419~~425,880 shares of common stock ~~with~~having a fair value at the date of grant of ~~$6.3 million, determined using a Monte Carlo simulation model. All of~~$11.2 million. Of the performance-based restricted stock units granted in the current period, 221,746 units - having a fair value at the date of grant of $6.2 million, determined using a Monte Carlo simulation model - vest subject to attainment of performance criteria established by the ~~Comp Committee.~~compensation committee of the board of directors (“compensation committee”) and continuous employment through the vesting date. The 221,746 units ~~granted in the current period~~ may vest in a number of shares from zero to 200% of the award, based on the total shareholder return of Acxiom common stock compared to total shareholder return of a group of peer companies (“TSR”) established by the ~~Comp Committee of the board of directors~~compensation committee for the period from April 1, ~~2016~~2017 to March 31, 2020.

Of the performance-based restricted stock units granted in the current period, 87,184 units - having a fair value at the date of grant of $2.1 million, based on the quoted market price for the shares on the date of grant - vest over two periods, each being subject to attainment of performance criteria established by the compensation committee and continuous employment through the vesting date. At the end of the first year, the performance units may vest in a number of shares, from zero to 75% of the initial award. At the end of the second year, the performance units may vest in a number of shares, from zero to 150% of the initial award, less the number of shares awarded at completion of year one. The units will vest based on the attainment of certain revenue growth initiatives for the period from October 1, 2017 to September 30, 2019.

The remaining 116,950 performance-based restricted stock units granted in the current period - having a fair value at the date of grant of $2.9 million, based on the quoted market price for the shares on the date of grant - vest in three equal tranches, each being subject to attainment of performance criteria established by the compensation committee and continuous employment through the vesting date. Each of the three tranches may vest in a number of shares, from zero to 300% of the initial award, based on the attainment of certain revenue growth and operating margin targets for the years ending March 31, 2018, 2019, and 2020, respectively.

Non-vested performance-based restricted stock unit activity for the ~~nine-month period~~nine months ended December 31, ~~2016~~2017 was:

Weighted average


fair value per

Weighted-average

Number

share at grant

remaining contractual

of shares

date

term (in years)

Outstanding at March 31, 2016

516,818

$
18.62

1.67

Granted

254,419

$
24.66

Forfeited or cancelled

(28,950)

$
17.53

Outstanding at December 31, 2016

742,287

$
20.73

1.38



			Weighted-average
			fair value per		Weighted-average
	Number		share at grant		remaining contractual
	of shares		date		term (in years)
Outstanding at March 31, 2017	732,711		$	20.89	1.13
Granted	425,880		$	26.22
Additional earned performance shares	94,775		$	19.46
Vested	(252,760	)	$	19.46
Forfeited or canceled	(48,422	)	$	22.00
Outstanding at December 31, 2017	952,184		$	23.45	1.37

Of the performance-based restricted stock units outstanding at March 31, 2017, 157,985 related to a performance period ended March 31, 2017. During the quarter ended June 30, 2017, the units vested at a 160% attainment level based on performance results approved by the compensation committee, resulting in issuance of 252,760 shares of common stock, of which 94,775 were the additional earned performance shares referenced in the table above.

Of the performance-based restricted stock units outstanding at December 31, 2016, 159,306 will reach maturity of the relevant performance period at March 31, 2017. The units are expected to vest at an approximate 200% attainment level, resulting in issuance of approximately 318,612 shares of common stock before consideration of the TSR multiplier.

~~Of the performance-based restricted stock units outstanding at December 31, 2016, 287,630~~2017, 251,399 will reach maturity of the relevant performance period at March 31, 2018. The units are expected to vest at an approximate 200% attainment level, resulting in issuance of approximately ~~575,260~~502,798 shares of common stock, before consideration of the TSR ~~multiplier.~~

multiplier, in the first quarter of fiscal 2019.

Total expense related to ~~all~~ restricted stock ~~units~~ for the nine months ended December 31, ~~2016~~2017 and ~~2015~~2016 was approximately ~~$24.4~~$29.5 million and ~~$13.9~~$24.4 million, respectively. Future expense for ~~these~~ restricted stock units is expected to be approximately ~~$73.0~~$11.8 million ~~over~~for the ~~next four years.~~

three months ending March 31, 2018, $36.0 million in fiscal 2019, $24.6 million in fiscal 2020, $11.7 million in fiscal 2021, and $2.0 million in fiscal 2022.

Other Performance Unit Activity

Other performance-based stock unit activity for the ~~nine-month period~~nine months ended December 31, ~~2016~~2017 was:

Weighted average




fair value per

Weighted-average

Number

share at grant

remaining contractual


of shares

date

term (in years)

Outstanding at March 31, 2016

635,655

$
4.07

1.30

Forfeited or cancelled

(19,231)

$
2.94

Outstanding at December 31, 2016

616,424

$
4.10

0.55



			Weighted-average
			fair value per		Weighted-average
	Number		share at grant		remaining contractual
	of shares		date		term (in years)
Outstanding at March 31, 2017	597,193		$	4.14	0.30
Vested	(24,573	)	$	2.94
Forfeited or canceled	(461,509	)	$	3.92
Outstanding at December 31, 2017	111,111		$	5.33	0.25

Of the other performance-based stock units outstanding at March 31, 2017, 201,464 reached maturity of the relevant performance period on March 31, 2017. The units achieved a 100% performance attainment level. However, application of the share price adjustment factor resulted in zero shares granted and cancellation of all the units during the quarter ended June 30, 2017.

Of the other performance-based stock units outstanding at March 31, 2017, 284,618 reached maturity of the relevant performance period on June 30, 2017. The units achieved an approximate 9% performance attainment level, resulting in issuance of 24,573 shares of common stock during the quarter ended September 30, 2017.

The remaining 111,111 performance-based units outstanding at December 31, 2017 will reach maturity of the relevant performance period on March 31, 2018. The units are expected to achieve a 100% performance attainment level. However, application of the share price adjustment factor is expected to result in an approximate 75% reduction in shares granted, in the first quarter of fiscal 2019.

Total expense related to other performance units for the nine months ended December 31, 2017 and 2016 ~~and 2015~~ was ~~$0.7~~$0.1 million and ~~$0.6~~$0.7 million, respectively. Future expense for these performance units is expected to be approximately ~~$0.6~~$0.1 million over the next ~~two years.~~

three months ending March 31, 2018.

~~Table of Contents~~

Consideration Holdback

As part of the Company’s acquisition of Arbor in fiscal 2017, $38.3 million of the acquisition consideration otherwise payable with respect to shares of restricted Arbor common stock held by certain key employees was subject to holdback by the Company pursuant to agreements with those employees (each, a “Holdback Agreement”). The consideration holdback ~~will vest~~vests in 30 equal monthly increments following the date of close, subject to the Arbor key ~~employees~~employees' continued employment through each monthly vesting date. At each vesting date, 1/30th30th of the $38.3 million holdback consideration ~~will vest~~vests and beis settled in shares of Company common stock. The number of shares ~~will be~~is based on the ~~then current~~then-current market price of the Company common stock.

Total expense related to the Holdback Agreement for the nine months ended December 31, ~~2016~~2017 was approximately ~~$1.3~~$11.5 million.

~~4.ACQUISITIONS:~~

~~Arbor and Circulate~~

The Company acquired all of the outstanding shares of Arbor and Circulate on November 22, 2016 and November 29, 2016, respectively. Arbor and Circulate help publishers connect people-based data to the marketing ecosystem. As a result of these acquisitions, Arbor and Circulate are now wholly-owned subsidiaries of the Company included in the Connectivity segment, and increase the scale of the Company’s omni-channel identity graph and network. The Company has included the financial results of Arbor and Circulate in the condensed consolidated financial statements from the dates of acquisition. The consideration paid for the outstanding shares and vested stock options was approximately $137.4 million, net of cash acquired of approximately $9.5 million. The consideration paid for unvested stock options had an estimated fair value of $9.2 million. These options are not part of the purchase price and will be expensed as non-cash stock compensation over the applicable vesting periods.

In connection with the Arbor acquisition, the Company agreed to pay $38.3 million to certain key employees (see “Consideration Holdback” in note 3). The consideration holdback is payable over 30 equal, monthly increments and is settleable in shares of Company common stock. The number of shares to be issued on a monthly basis will vary depending on the market price of the shares on the date of issuance and will be recorded as non-cash stock compensation expense as the shares are issued. The consideration holdback is not part of the purchase price as vesting is dependent on continued employment of the key employees.

Following the closing of Arbor, the Company granted new awards of restricted stock units to select employees of Arbor to induce them to accept employment with the Company (the “Arbor Inducement Awards”). The Arbor Inducement Awards had a grant date fair value of $10.0 million, and will vest over three years with 34% of the total vesting on the first anniversary of the closing date and 8.25% vesting each three months thereafter, subject to the employee’s continued service through each vesting date. Following the closing of Circulate, the Company granted new awards of restricted stock units to select employees of Circulate to induce them to accept employment with the Company (the “Circulate Inducement Awards”). The Circulate Inducement Awards had a grant date fair value of $10.0 million. The Circulate Inducement Awards granted to certain key employees of Circulate will vest over two years with 50% of the total vesting on the first anniversary of the closing date and 12.5% vesting each three months thereafter, subject to the employee’s continued service through each vesting date and vesting acceleration upon a qualifying termination as set forth in the applicable employee’s offer letter with the Company. The Circulate Inducement Awards granted to all other Circulate employees will vest incrementally over four years with 25% of the total vesting on the first anniversary date of the closing, and 25% vesting each 12 months thereafter, subject to the employee’s continued service through each vesting date.

On November 29, 2016, the Company delivered approximately $5.9 million of the cash consideration to an escrow agent according to the terms of the Circulate acquisition agreement. The escrow deposit is restricted as to withdrawal or use by the Company and is expected to be delivered to the sellers one year from the acquisition dates. The principal escrow amount is owned by the Company until funds are delivered to the sellers. All interest and earnings on the principal escrow amount remain property of the Company. The escrow deposit is included in other current assets (note 6), with an offsetting liability included in other accrued expenses (note 7), in the condensed consolidated balance sheet.

4. DISPOSITION:

~~Table of Contents~~

~~The following table summarizes the preliminary estimated fair values of assets acquired and liabilities assumed as of the date of the acquisitions (dollars in thousands):~~



~~Assets acquired:~~
~~Cash~~	$	~~9,495~~
~~Trade accounts receivable~~		~~3,352~~
~~Goodwill~~		~~104,364~~
~~Intangible assets (Other assets)~~		~~41,800~~
~~Other current and noncurrent assets~~		~~278~~
~~Total assets acquired~~		~~159,289~~
~~Deferred income taxes~~		~~(8,093)~~
~~Accounts payable and accrued expenses~~		~~(4,317)~~
~~Net assets acquired~~		~~146,879~~
~~Less:~~
~~Cash acquired~~		~~9,495~~
~~Net cash paid~~	$	~~137,384~~

The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill and is primarily attributed to expectations of development of future technology and products, development of future customer relationships, and the Arbor and Circulate assembled workforces. The Company has allocated the goodwill to the reporting units that were expected to benefit from the acquired goodwill. The goodwill balance is not deductible for U.S. income tax purposes. The Company initially recognized the assets and liabilities acquired based on its preliminary estimates of their acquisition date fair values. As additional information becomes known concerning the acquired assets and assumed liabilities, management may make adjustments to the opening balance sheet of the acquired companies up to the end of the measurement period, which is not longer than a one-year period following the acquisition date. The determination of the fair values of the acquired assets and liabilities assumed (and the related determination of the estimated lives of depreciable tangible and identifiable intangible assets) requires significant judgement. As of December 31, 2016, the Company has not completed its fair value analysis and calculation in sufficient detail necessary to arrive at the final estimate of the fair value. The fair values currently assigned to tangible and identifiable intangible assets acquired and liabilities assumed were based on the information that was available as of the date of the acquisition. The Company plans to finalize its accounting for the acquisitions and related estimates of the acquisition date fair values of the acquired assets and assumed liabilities prior to July 1, 2017.

The amounts allocated to other intangible assets in the table above included developed technology, customer relationships, and a trade name. Intangible assets will be amortized on a straight-line basis over the estimated useful lives of 1 to 6 years. The following table presents the components of intangible assets acquired and their estimated useful lives as of the acquisition date (dollars in thousands):

Useful life

Fair value

(in years)

Publisher relationships

$
24,800

6

Developed technology

9,300

2 to 4

Customer relationships

7,100

6

Trade name

600

1

Total intangible assets

$
41,800

The Company has omitted disclosures of revenue and net loss of the acquired companies from the acquisition dates of November 22, 2016 and November 29, 2016, respectively, to December 31, 2016 as the amounts are not material.

~~Table of Contents~~

During the nine months ended December 31, 2016, the Company incurred $1.4 million of acquisition costs related to the Arbor and Circulate acquisitions, which are included in gains, losses, and other items, net on the condensed consolidated statement of operations (see note 12).

The unaudited pro forma financial information in the table below summarizes the combined results of operations for Acxiom, Arbor and Circulate for the purposes of unaudited pro forma financial information disclosure as if the companies were combined as of the beginning of fiscal 2016. The unaudited pro forma financial information for all periods presented included the business combination accounting effects resulting from these acquisitions, including amortization charges from acquired intangible assets (certain of which are preliminary), stock-based compensation charges for unvested restricted stock-based awards and stock options assumed, if any, and the related tax effects as though the aforementioned companies were combined as of the beginning of fiscal 2016. The unaudited pro forma financial information as presented below is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisitions had taken place at the beginning of fiscal 2016.

The unaudited pro forma financial information for the three and nine months ended December 31, 2016 and 2015, respectively, combined the historical results of Acxiom for the three and nine months ended December 31, 2016 and 2015, and the historical results of Arbor and Circulate for the three and nine months ended September 30, 2016 and 2015 (adjusted due to differences in reporting periods) and the effects of the pro forma adjustments listed above. The unaudited pro forma financial information was as follows (dollars in thousands, except per share data):

For the quarter ended

For the nine months ended

December 31,

December 31,

2016

2015

2016

2015

Revenues

$
226,012

$
221,964

$
663,096

$
627,300

Net loss

$
(3,421)

$
(6,245)

$
(4,068)

$
(9,329)

Basic loss per share

$
(0.04)

$
(0.08)

$
(0.05)

$
(0.12)

Diluted loss per share

$
(0.04)

$
(0.08)

$
(0.05)

$
(0.12)

~~5.DISCONTINUED OPERATIONS AND DISPOSITIONS:~~

Disposition of Impact email business

In ~~August 2016,~~fiscal 2017, the Company completed the sale of its Impact email business to Zeta Interactive for total consideration of $22.0 million, including a $4.0 million subordinated promissory note with interest accruing at a rate of 6.0% per ~~annum (see note 6).~~annum. The note ~~is payable on~~was paid in full during the ~~12 month anniversary of the closing date, and is included in other current assets in the condensed consolidated balance sheet.~~quarter ended September 30, 2017. The Company also entered into a separate multi-year contract to provide Zeta Interactive with Connectivity and Audience Solutions services. Prior to the disposition, the Impact email business was included in the Marketing Services segment results.

~~Table of Contents~~

The business did not meet the requirements of a discontinued business; therefore, all financial results are included in continuing operations. ~~The Company recorded a gain on sale of $0.8 million, included in gains, losses and other items, net (see note 12). The transaction also generated a $4.1 million income tax benefit.~~

Revenue and income from operations from the disposed Impact email business are shown below (dollars in thousands):

For the quarter ended

For the nine months ended

December 31,

December 31,

2016

2015

2016

2015
Revenues

$
—

$
14,967

$
20,375

$
46,490

Income from continuing operations before income taxes

$
—

$
2,435

$
120

$
8,710

~~IT Infrastructure Management business (“ITO”)~~

During fiscal 2016, the Company completed the sale of its ITO business to Charlesbank Capital Partners and M/C Partners. The business qualified for treatment as discontinued operations during fiscal 2016. Accordingly, the results of operations, cash flows, and the balance sheet amounts pertaining to ITO, for all periods reported, have been classified as discontinued operations in the condensed consolidated financial statements.

Summary results of operations of ITO for the three months and nine months ended December 31, 2015, are segregated and included in earnings from discontinued operations, net of tax, in the condensed consolidated statements of operations. The following table is a reconciliation of the major classes of line items constituting earnings (loss) from discontinued operations, net of tax (dollars in thousands):

For the quarter ended

For the nine months ended

December 31,

December 31,

2015

2015

Major classes of line items constituting earnings (loss) from discontinued operations, net of tax:

Revenues

$
—

$
69,410

Cost of revenue

—

50,837

Gross profit

—

18,573

Operating expenses:

Sales and marketing

—

1,192

General and administrative

—

6,053

Gain on sale of discontinued operations

1,011

(9,349)

Total operating expenses

1,011

(2,104)

Earnings (loss) from discontinued operations

(1,011)

20,677

Interest expense

—

(681)

Other, net

—

(230)

Earnings (loss) from discontinued operations before income taxes

(1,011)

19,766

Income taxes (benefit)

(490)

4,076

Earnings (loss) from discontinued operations, net of tax

$
(521)

$
15,690

ITO was a provider of managed hosting and cloud infrastructure services, optimized for mid-tier enterprises. The Company entered into certain agreements with ITO in which support services, including data center co-location services, are provided from the Company to ITO, and from ITO to the Company. Additionally, the Company entered into certain other agreements with ITO to provide or receive leased office space. The terms of these agreements range from several months to the longest of which continues through July 2020. The agreements generally provide cancellation provisions, without penalty, at various times throughout the term.



	For the three months ended				For the nine months ended
	December 31,				December 31,
	2017		2016		2017		2016
Revenues	$	—	$	—	$	—	$	20,375
Income from operations	$	—	$	—	$	—	$	120

~~Table of Contents~~

Cash inflows and outflows related to the agreements are included in cash flows from operating activities in the condensed consolidated statements of cash flows. Revenues and expenses related to the agreements are included in income (loss) from operations in the condensed consolidated statements of operations. The related cash inflows and outflows and revenues and expenses for all periods reported are shown below (dollars in thousands):

For the quarter ended

For the nine months ended

December 31,

December 31,


2016

2015

2016

2015

Cash inflows

$
1,329

$
1,986

$
5,017

$
2,685

Cash outflows

$
698

$
2,351

$
3,512

$
2,500

Revenues

$
1,502

$
1,752

$
5,055

$
2,918

Expenses

$
447

$
1,845

$
2,785

$
3,001

~~6.OTHER~~5. OTHER CURRENT AND NONCURRENT ASSETS:

Other current assets consist of the following (dollars in thousands):

December 31,

March 31,

2016

2016

Prepaid expenses

$
25,712

$
25,365

Escrow deposit (see note 4)

5,880

—

Note receivable (see note 5)

4,000

—

Assets of non-qualified retirement plan

12,443

12,532

Other current assets

$
48,035

$
37,897



	December 31, 2017		March 31, 2017
Prepaid expenses and other	$	28,246	$	25,714
Escrow deposit	—		5,880
Note receivable	—		4,000
Assets of non-qualified retirement plan	14,111		12,716
Other current assets	$	42,357	$	48,310

Other noncurrent assets consist of the following (dollars in thousands):

December 31,

March 31,

2016

2016

Acquired intangible assets, net

$
47,522

$
19,203

Deferred data acquisition costs

998

1,644

Other miscellaneous noncurrent assets

3,901

4,468

Noncurrent assets

$
52,421

$
25,315

~~7.OTHER~~



	December 31, 2017		March 31, 2017
Acquired intangible assets, net	$	36,183	$	43,884
Deferred data acquisition costs	982		1,116
Other miscellaneous noncurrent assets	6,411		6,443
Noncurrent assets	$	43,576	$	51,443

6. OTHER ACCRUED EXPENSES:

Other accrued expenses consist of the following (dollars in thousands):

December 31,

March 31,

2016

2016

Accrued purchase consideration (see note 4)

$
5,880

$
—

Other accrued expenses

51,307

48,254

Other current assets

$
57,187

$
48,254



	December 31, 2017		March 31, 2017
Accrued purchase consideration	$	—	$	5,880
Liabilities of non-qualified retirement plan	14,111		12,716
Other accrued expenses	39,888		41,265
Other accrued expenses	$	53,999	$	59,861

~~Table of Contents~~

~~8.GOODWILL:~~

7. GOODWILL:

The following table summarizes Goodwill activity, by segment, for the nine months endedDecember 31, ~~2016~~2017 (dollars in thousands).

Marketing

Audience


Services

Solutions

Connectivity

Total

Balance at March 31, 2016

$
124,586

$
273,430

$
94,729

$
492,745

Allant adjustment

—

19

—

19

Arbor and Circulate acquisitions (see note 4)

—

—

104,364

104,364

Impact email disposition (see note 5)

(5,684)

—

—

(5,684)

Change in foreign currency translation adjustment

(236)

—

(106)

(342)

Balance at December 31, 2016

$
118,666

$
273,449

$
198,987

$
591,102



	Marketing Services		Audience Solutions		Connectivity			Total
Balance at March 31, 2017	$	118,890	$	273,448	$	200,393		$	592,731
Arbor adjustment	—		—		(21		)	(21		)
Change in foreign currency translation adjustment	82		—		35			117
Balance at December 31, 2017	$	118,972	$	273,448	$	200,407		$	592,827

Goodwill by component included in each segment as of December 31, ~~2016~~2017 was:

Marketing

Audience


Services

Solutions

Connectivity

Total

U.S.

$
110,910

$
273,449

$
195,527

$
579,886

APAC

7,756

—

3,460

11,216

Balance at December 31, 2016

$
118,666

$
273,449

$
198,987

$
591,102

~~9.LONG-TERM~~



	Marketing Services		Audience Solutions		Connectivity		Total
U.S.	$	110,910	$	273,448	$	196,812	$	581,170
APAC	8,062		—		3,595		11,657
Balance at December 31, 2017	$	118,972	$	273,448	$	200,407	$	592,827

8. LONG-TERM DEBT:

Long-term debt consists of the following (dollars in thousands):

December 31,

March 31,

2016

2016

Term loan credit agreement

$
162,500

$
185,000

Revolving credit borrowings

70,000

—

Other debt and long-term liabilities

6,182

7,856

Total long-term debt and capital leases

238,682

192,856

Less current installments

36,050

32,243

Less deferred debt financing costs

1,834

2,716

Long-term debt, excluding current installments and deferred debt financing costs

$
200,798

$
157,897



	December 31, 2017		March 31, 2017
Term loan credit agreement	$	—	$	155,000
Revolving credit borrowings	230,000		70,000
Other debt	3,881		5,612
Total long-term debt	233,881		230,612

Less current installments	1,837		39,819
Less deferred debt financing costs	4,101		1,552
Long-term debt, excluding current installments and deferred debt financing costs	$	227,943	$	189,241

On June 20, 2017, the Company entered into a Sixth Amended and Restated Credit Agreement (the "restated credit agreement") as part of refinancing its prior credit agreement. On that day, the Company used an initial draw of $230 million to pay off the outstanding $225 million term and revolving loan balances, with interest, along with $4.0 million in fees related to the restated credit agreement. The ~~Company’s amended and~~fees are being amortized over the term of the agreement.

The Company's restated credit agreement provides for (1) ~~term loans up to an aggregate principal amount of $300 million and (2)~~ revolving credit facility borrowings consisting of revolving loans, ~~letter~~letters of credit ~~participations~~participation, and swing-line loans ~~up to~~(the “revolving loans”) in an aggregate amount of ~~$300~~$600 million and (2) a provision allowing the Company to request an increase of the aggregate amount of the revolving loans in an amount not to exceed $150 million.

The ~~term loan~~restated credit agreement is secured by the accounts receivable of the Company and its domestic subsidiaries, as well as by the outstanding stock of certain subsidiaries of the Company. The restated credit agreement contains customary representations, warranties, affirmative and negative covenants, and default and acceleration provisions. The restated credit agreement matures, and is fully due and payable, ~~in quarterly installments of $7.5 million through September 2017, followed by quarterly installments of $11.3 million through~~on June ~~2018, with a final payment of $106.3 million due October 9, 2018.~~ 20, 2022 and allows for prepayments before maturity.

The revolving loan ~~commitment expires October 9, 2018.~~

During the quarter ended December 31, 2016, the Company borrowed $70.0 million on its revolving credit facility and used the proceeds for the Arbor and Circulate acquisitions (see note 4). The revolving credit borrowings are payable and due October 9, 2018.

~~Term loan and revolving credit facility~~ borrowings bear interest at LIBOR or at an alternative base rate plus a credit spread. At December 31, ~~2016,~~2017, the revolving loan borrowing bears interest at LIBOR plus a credit spread ~~was 1.75%. The weighted-average interest rate on term loan borrowings at December 31, 2016 was 2.6%~~of 2%. The weighted-average interest rate on revolving credit borrowings at December 31, ~~2016~~2017 was ~~2.4%~~3.6%. There were no material outstanding letters of credit at December 31, ~~2016.~~

2017 or March 31, 2017.

~~Table of Contents~~

The term loan and revolving credit borrowings allow for prepayments before maturity. The credit agreement is secured by the accounts receivable of Acxiom and its domestic subsidiaries, as well as by the outstanding stock of certain Acxiom subsidiaries.

Under the terms of the ~~term loan,~~restated credit agreement, the Company is required to maintain certain debt-to-cash flow and ~~debt service~~interest coverage ratios, among other restrictions. At December 31, ~~2016,~~2017, the Company was in compliance with these covenants and restrictions. In addition, if certain financial ratios and other conditions are not satisfied, the revolving credit facility limits the Company’s ability to pay dividends in excess of $30 million in any fiscal year (plus additional amounts in certain circumstances).

On March 10, 2014, the Company entered into an interest rate swap agreement. The agreement provides for the Company to pay interest through March 10, 2017 at a fixed rate of 0.98% plus the applicable credit spread on $50.0 million notional amount, while receiving interest for the same period at the LIBOR rate on the same notional amount. The LIBOR rate as of December 31, 2016 was 0.98%. The swap was entered into as a cash flow hedge against LIBOR interest rate movements on the term loan. The Company assesses the effectiveness of the hedge based on the hypothetical derivative method. There was no ineffectiveness for the period ended December 31, 2016. Under the hypothetical derivative method, the cumulative change in fair value of the actual swap is compared to the cumulative change in fair value of the hypothetical swap, which has terms that identically match the critical terms of the hedged transaction. Thus, the hypothetical swap is presumed to perfectly offset the hedged cash flows. The change in the fair value of the hypothetical swap will then be regarded as a proxy for the present value of the cumulative change in the expected future cash flows from the hedged transactions. All of the fair values are derived from an interest-rate futures model. As of December 31, 2016, the hedge relationship still qualified as an effective hedge under applicable accounting standards. Consequently, all changes in fair value of the derivative will be deferred and recorded in other comprehensive income (loss) until the related forecasted transaction is recognized in the condensed consolidated statement of operations. The fair market value of the derivative was zero at inception and an immaterial unrealized loss since inception is recorded in other comprehensive income (loss). The fair value of the interest rate swap agreement recorded in accumulated other comprehensive income may be recognized in the condensed consolidated statement of operations if certain terms of the floating-rate debt change, if the floating-rate debt is extinguished or if the interest rate swap agreement is terminated prior to maturity. The Company has assessed the creditworthiness of the counterparty of the swap and concludes that no substantial risk of default exists as of December 31, 2016.

~~10.ALLOWANCE~~

9. ALLOWANCE FOR DOUBTFUL ACCOUNTS:

Trade accounts receivable are presented net of allowances for doubtful accounts, returns and credits of ~~$6.7~~$6.3 million at December 31, ~~2016~~2017 and ~~$7.3~~$6.1 million at March 31, ~~2016.~~

~~11.SEGMENT~~2017.

10. SEGMENT INFORMATION:

The Company reports segment information consistent with the way management internally disaggregates its operations to assess performance and to allocate resources.

Revenues and cost of revenue are generally directly attributed to the segments. Certain revenue contracts are allocated among the segments based on the relative value of the underlying products and services. Cost of revenue, excluding non-cash stock compensation expense and purchased intangible asset amortization, is directly charged in most cases and allocated in certain cases based upon proportional usage.

Operating expenses, excluding non-cash stock compensation expense and purchased intangible asset amortization, are attributed to the segment groups as follows:

~~Research and development expenses are primarily directly recorded to each segment group based on identified products supported.~~

Research and development expenses are primarily directly recorded to each segment group based on identified products supported.

~~Table of Contents~~

Sales and marketing expenses are primarily directly recorded to each segment group based on products supported and sold.

~~General and administrative expenses are generally not allocated to the segments.~~

~~Gains, losses and other items, net are not allocated to the segment groups.~~

General and administrative expenses are generally not allocated to the segments unless directly attributable.

Gains, losses and other items, net are not allocated to the segment groups.

We do not track our assets by operating segments. Consequently, it is not practical to show assets by operating segment.

The following table presents information by business segment (dollars in thousands):

For the quarter ended

For the nine months ended

December 31,

December 31,

2016

2015

2016

2015

Revenues:

Marketing Services

$
101,177

$
115,725

$
316,571

$
336,430

Audience Solutions

83,399

77,046

235,669

217,718

Connectivity

38,736

28,422

103,140

71,285

Total segment revenues

$
223,312

$
221,193

$
655,380

$
625,433

Gross profit(1):

Marketing Services

$
37,494

$
38,561

$
109,440

$
112,140

Audience Solutions

53,120

45,265

143,030

121,259

Connectivity

23,091

16,130

60,509

41,582

Total segment gross profit

$
113,705

$
99,956

$
312,979

$
274,981

Income (loss) from operations(1):

Marketing Services

$
21,127

$
20,309

$
61,109

$
55,070

Audience Solutions

34,572

30,723

89,640

80,000

Connectivity

1,877

(1,015)

3,831

(2,874)

Total segment income from operations

$
57,576

$
50,017

$
154,580

$
132,196

⁽¹⁾

Gross profit and Income (loss) from operations reflect only the direct and allocable controllable costs of each segment and do not include allocations of corporate expenses (primarily general and administrative expenses) and gains, losses, and other items, net. Additionally, Gross profit and Income (loss) from operations do not reflect non-cash stock compensation expense and purchased intangible asset amortization.



	For the three months ended				For the nine months ended
	December 31,				December 31,
	2017		2016		2017		2016
Revenues:
Marketing Services	$	94,457	$	101,177	$	280,093	$	316,571
Audience Solutions	84,436		83,399		238,984		235,669
Connectivity	55,978		38,736		153,548		103,140
Total segment revenues	$	234,871	$	223,312	$	672,625	$	655,380

Gross profit⁽¹⁾:
Marketing Services	$	35,798	$	37,494	$	101,476	$	109,440
Audience Solutions	52,821		53,120		148,352		143,030
Connectivity	37,914		23,091		100,730		60,509
Total segment gross profit	$	126,533	$	113,705	$	350,558	$	312,979

Income from operations⁽¹⁾:
Marketing Services	$	22,063	$	21,127	$	63,721	$	61,109
Audience Solutions	33,112		34,572		91,151		89,640
Connectivity	6,808		1,877		12,475		3,831
Total segment income from operations	$	61,983	$	57,576	$	167,347	$	154,580

~~Table~~⁽¹⁾ Gross profit and income from operations reflect only the direct and allocable controllable costs of ~~Contents~~

each segment and do not include allocations of corporate expenses (primarily general and administrative expenses) and gains, losses, and other items, net. Additionally, segment gross profit and income from operations do not include non-cash stock compensation expense and purchased intangible asset amortization.

The following table reconciles total ~~operating~~ segment gross profit to gross profit and total operating segment income from operations to income ~~(loss)~~ from ~~operations:~~

operations (dollars in thousands):


	For the quarter ended				For the nine months ended
	December 31,				December 31,				For the three months ended					For the nine months ended
	2016		2015		2016		2015		December 31,					December 31,
									2017			2016		2017		2016
Total segment gross profit	$	113,705	$	99,956	$	312,979	$	274,981	$	126,533		$	113,705	$	350,558	$	312,979

Less:
Purchased intangible asset amortization		4,621		3,754		12,588		11,263	5,971			4,621		17,958		12,588
Non-cash stock compensation		2,240		666		4,404		1,443	1,611			2,240		4,927		4,403
Accelerated amortization		—		78		—		1,598
Gross profit	$	106,844	$	95,458	$	295,988	$	260,677	$	118,951		$	106,844	$	327,673	$	295,988

Total segment income from operations	$	57,576	$	50,017	$	154,580	$	132,196	$	61,983		$	57,576	$	167,347	$	154,580

Less:
Corporate expenses (principally general and administrative)		24,185		27,827		75,342		76,868	23,862			24,184		75,582		75,342
Separation and transformation costs included in general and administrative		4,118		6,628		5,573		16,140	5,214			4,118		17,775		5,573
Gains, losses and other items, net		2,111		4,058		2,725		7,369	(41		)	2,111		3,521		2,725
Impairment of goodwill and other		—		—		—		729
Purchased intangible asset amortization		4,621		3,754		12,588		11,262	5,971			4,621		17,958		12,588
Non-cash stock compensation		13,427		8,046		33,955		23,529	15,919			13,427		46,707		33,955
Accelerated amortization		—		78		—		1,598
Income (loss) from operations	$	9,115	$	(374)	$	24,397	$	(5,299)
Income from operations									$	11,058		$	9,115	$	5,804	$	24,397

~~12.RESTRUCTURING,~~

11. RESTRUCTURING, IMPAIRMENT AND OTHER CHARGES:

The following table summarizes the restructuring activity for the nine months ended December 31, ~~2016~~2017 (dollars in thousands):

Associate-related

Ongoing


reserves

contract costs

Total

March 31, 2016

$
2,855

$
3,524

$
6,379

Restructuring charges and adjustments

2,107

—

2,107

Payments

(3,267)

(1,626)

(4,893)

December 31, 2016

$
1,695

$
1,898

$
3,593



	Associate-related reserves			Lease accruals			Total
March 31, 2017	$	2,400		$	4,308		$	6,708
Restructuring charges and adjustments	1,476			2,068			3,544
Payments	(2,842		)	(1,187		)	(4,029		)
December 31, 2017	$	1,034		$	5,189		$	6,223

The above balances are included in other accrued expenses and other liabilities on the condensed consolidated balance sheet.

Restructuring Plans

In the nine months ended December 31, ~~2016,~~2017, the Company recorded a total of ~~$2.1~~$3.5 million in restructuring charges and adjustments included in gains, losses and other items, net in the condensed consolidated statement of operations. The expense included severance and other associate-related charges of ~~which $0.8~~$1.5 million, ~~represented~~lease accruals and adjustments of $1.0 million, and leasehold improvement write-offs of $1.1 million.

The associate-related accruals of $1.5 million relate to the ~~fiscal 2016 restructuring plans. The remaining $1.3 million related to~~ termination of associates in the United States. Of the amount accrued, ~~for 2017, $0.8~~$0.3 million remained accrued as of December 31, ~~2016.~~2017. These ~~amounts~~costs are expected to be paid out in fiscal ~~2017.~~

2018.

The lease accruals and adjustments of $1.0 million result from the Company's exit from certain leased office facilities. Of the amount accrued, together with the deferred rent credits of $1.4 million related to the space, $2.1 million remained accrued as of December 31, 2017.

~~Table~~

In fiscal 2017, the Company recorded a total of ~~Contents~~

$8.9 million in restructuring charges and adjustments included in gains, losses and other items, net in the condensed consolidated statement of operations. The expense included severance and other associate-related charges of $3.8 million, lease accruals and adjustments of $3.0 million, and leasehold improvement write-offs of $2.1 million. Of the associate-related accruals of $3.8 million, $0.2 million remained accrued as of December 31, 2017. These costs are expected to be paid out in fiscal 2018. The lease accruals and adjustments of $3.0 million resulted from the Company's exit from certain leased office facilities ($1.5 million) and adjustments to estimates related to the fiscal 2015 lease accruals ($1.5 million). Of the amount accrued for fiscal 2017 lease accruals, $2.3 million remained accrued as of December 31, 2017.

In fiscal 2016, the Company recorded a total of $12.0 million in restructuring charges and adjustments included in gains, losses and other items, net in the condensed consolidated statement of operations. The expense included severance and other associate-related charges of $8.6 million, lease termination charges and accruals of $3.0 million, and leasehold improvement write-offs of $0.4 million.

~~The~~ Of the associate-related accruals of $8.6 million, ~~relate to the termination of associates in the United States, Europe, Brazil and Australia. Of the amount accrued for 2016, $0.6~~$0.2 million remained accrued as of December 31, ~~2016.~~2017. These amounts are expected to be paid out in fiscal ~~2017.~~

2018. The lease termination charges and accruals of $3.0 million included a $1.4 million lease early-termination fee in France, a lease accrual of $0.2 million, and a $1.4 million increase to the fiscal 2015 lease restructuring plans. The fiscal 2016 lease early-termination fee and lease accrual were fully paid during fiscal 2016.

In fiscal 2015, the Company recorded a total of $21.8 million in restructuring charges and adjustments included in gains, losses and other items, net in the condensed consolidated statement of operations. The expense included severance and other associate-related charges of $13.3 million, lease accruals of $6.5 million, and the write-off of leasehold improvements of $2.0 million.

~~The~~Of the associate-related accruals of $13.3 million, related to the termination of associates in the United States, Europe, Australia, and China and included an increase of $0.7 million to the fiscal 2014 restructuring plan. Of the amount accrued for 2015, $0.3 million remained accrued as of December 31, ~~2016.~~2017. These amounts are expected to be paid out in fiscal ~~2017.~~

~~The~~2018. Of the lease accruals of $6.5 million, ~~were determined in accordance with~~$0.8 million remained accrued as of December 31, 2017.

With respect to the ~~accounting standards that govern exit costs. These accounting standards require~~fiscal 2015, 2017, and 2018 lease accruals described above, the Company to accrue for lease costs that will continue to be incurred without economic benefit to the Company upon the date that the Company ceases using the leased properties. The Company has ceased using certain leased office facilities. The Company intends ~~to attempt~~ to sublease the facilities to the extent possible. The Company established a liability for the fair value of the remaining lease payments, partially offset by the estimated sublease payments to be received over the course of the leases. The fair value of these liabilities ~~is based on a net present value model using a credit-adjusted risk-free rate. The liability~~ will be ~~paid out~~satisfied over the remainder of the leased ~~properties’~~properties' terms, which continue through November 2025. Actual sublease ~~terms~~receipts may differ from the estimates originally made by

the Company. Any future changes in the estimates or in the actual sublease income could require future adjustments to the liabilities, which would impact net earnings (loss) in the period the adjustment is recorded. ~~Of the amount accrued for fiscal 2015, $1.9 million remained accrued as of December 31, 2016.~~

Gains, Losses and Other Items

Gains, losses and other items for each of the periods presented are as follows (dollars in thousands):

For the quarter ended

For the nine months ended

December 31,

December 31,


2016

2015

2016

2015

Restructuring plan charges and adjustments

$
899

$
4,008

$
2,107

$
7,310

Gain on disposition of Impact email business

(155)

—

(784)

—

Arbor and Circulate acquisition-related costs (see note 4)

1,365

—

1,365

—

Other

2

50

36

59

$
2,111

$
4,058

$
2,724

$
7,369



	For the three months ended						For the nine months ended
	December 31,						December 31,
	2017			2016			2017			2016
Restructuring plan charges and adjustments	$	(18	)	$	899		$	3,545		$	2,107
Gain on disposition of Impact email business	—			(155		)	—			(784		)
Arbor and Circulate acquisition-related costs	—			1,365			—			1,365
Other	(23		)	2			(24		)	36
	$	(41	)	$	2,111		$	3,521		$	2,724

~~Table of Contents~~

~~13.COMMITMENTS~~

12. COMMITMENTS AND CONTINGENCIES:

Legal Matters

The Company is involved in various claims and legal proceedings. Management routinely assesses the likelihood of adverse judgments or outcomes to these matters, as well as ranges of probable losses, to the extent losses are reasonably estimable. The Company records accruals for these matters to the extent that management concludes a loss is probable and the financial impact, should an adverse outcome occur, is reasonably estimable. These accruals are reflected in the Company’s condensed consolidated financial statements. In management’s opinion, the Company has made appropriate and adequate accruals for these matters, and management believes the probability of a material loss beyond the amounts accrued to be remote. However, the ultimate liability for these matters is uncertain, and if accruals are not adequate, an adverse outcome could have a material effect on the Company’s consolidated financial condition or results of operations. The Company maintains insurance coverage above certain limits. There are currently no matters pending against the Company or its subsidiaries for which the potential exposure is considered material to the Company’s condensed consolidated financial statements.

Commitments

The Company leases data processing equipment, office furniture and equipment, land and office space under noncancellable operating leases. The Company has a future commitment for lease payments over the next 2423 years of ~~$77.8~~$84.5 million.

In connection with the disposal of certain assets, the Company guaranteed a lease for the buyer of the assets. The Company guaranteed the lease as required by the asset disposition agreement. Should the third party default, the Company would be required to perform under this guarantee. At December 31, 2016, the Company’s maximum potential future payments under this guarantee totaled $0.1 million. In connection with the Acxiom Impact email disposition during ~~the current~~ fiscal ~~quarter (see Note 5),~~2017, the Company assigned a facility lease to the buyer of the business. The Company guaranteed the facility lease as required by the asset disposition agreement. Should the assignee default, the Company would be required to perform under the terms of the facility lease, which ~~runs~~continues through September 2021. At December 31, ~~2016,~~2017, the Company’s maximum potential future rent payments under this guarantee totaled ~~$2.8~~$2.3 million.

~~14.INCOME~~

13. INCOME TAX:

On December 22, 2017, the United States (“U.S.”) enacted significant changes to U.S. tax law following the passage of H.R.1, “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018” (the “Tax Act”) (previously known as “The Tax Cuts and Jobs Act”). The Tax Act included significant changes to existing tax law, including a permanent reduction to the U.S. federal corporate income tax rate from 35% to 21%, a one-time repatriation tax on deferred foreign income (“Transition Tax”), and numerous other changes to business-related deductions.

The permanent reduction to the U.S. federal corporate income tax rate from 35% to 21% is effective January 1, 2018 (the “Effective Date”). Because the Effective Date does not fall on the first day of our fiscal year, we are required to apply a blended tax rate for the entire fiscal year by applying a prorated percentage of the number of

days before and after the Effective Date. As a result of the Tax Act, we have determined that our U.S. federal statutory corporate income tax rate will be 31.5% for the fiscal year ending March 31, 2018.

We recorded a $20.3 million benefit for the remeasurement of net deferred tax liabilities, which was included in income tax expense (benefit) in the Company's Condensed Consolidated Statements of Operations. We remeasured our deferred taxes to reflect the reduced Federal tax rate that will apply when these deferred taxes are settled or realized in future periods. To calculate the remeasurement of deferred taxes we estimated the periods during which the existing deferred taxes will be settled or realized. The remeasurement of deferred taxes included in our condensed consolidated financial statements will be subject to further revisions if our current estimates are different from our actual future operating results.

Given the Company's aggregate deficit related to foreign earnings and profits, we have determined that the Company will not incur a Transition Tax liability.

On December 22, 2017, the SEC issued Staff Accounting Bulletin 118 (“SAB 118”) which provides guidance on accounting for the tax effects of the Tax Act. The SEC staff (the “Staff”) recognized that a registrant’s review of certain income tax effects of the Tax Act may be incomplete at the time financial statements are issued for the reporting period that includes the enactment date, including interim periods therein. If a company does not have the necessary information available, prepared or analyzed for certain income tax effects of the Tax Act, SAB 118 allows a company to report provisional numbers and adjust those amounts during the measurement period not to extend beyond one year. The adjustments to net deferred tax liabilities are provisional amounts estimated based on information available as of December 31, 2017. These amounts are subject to change as we obtain information necessary to complete the calculations. We will recognize any changes to the provisional amounts as we refine our estimates of the cumulative temporary differences, including those related to immediate deduction for qualified property, and our interpretations of the application of the Tax Act.

We continue to review the anticipated impacts of the global intangible low taxed income (“GILTI”) and base erosion anti-abuse tax (“BEAT”) on the Company, which are not effective until fiscal year 2019. The Company has not recorded any impact associated with either GILTI or BEAT in the tax rate for the third quarter of fiscal year 2018.

Within the calculation of its annual effective tax rate the Company has used assumptions and estimates that may change as a result of future guidance, interpretation, and rule-making from the Internal Revenue Service, the SEC, and the FASB and/or various other taxing jurisdictions. For example, the Company anticipates that the U.S. state jurisdictions will continue to determine and announce their conformity to the Tax Act, which could have an impact on the annual effective tax rate.

In determining the quarterly provision for income taxes, the Company makes its best estimate of the effective income tax rate expected to be applicable for the full fiscal year. The estimated effective income tax rate for the current fiscal year is ~~significantly~~ impacted by nondeductible ~~share-based~~stock-based compensation, ~~and to a lesser extent by~~ state income taxes, research tax credits, and losses in foreign jurisdictions. State income taxes are influenced by the geographic and legal entity mix of the Company’s U.S. income as well as the diversity of rules among the states. The Company does not record a tax benefit for certain foreign losses due to uncertainty of future utilization. ~~Income taxes for~~

As a result of adopting ASU 2016–09 during the first quarter of the current fiscal year, ~~includes a $4.1 million~~all excess tax benefits and deficiencies from stock–based compensation are recognized as income tax benefit and expense in ~~connection with~~ the ~~sale~~Company’s Condensed Consolidated Statement of Operations in the ~~Impact email business.~~

reporting period in which they occur. For the three months and nine months ended December 31, 2017, the Company recognized discrete income tax expense of $0.1 million and benefit of $1.9 million, respectively, related to net excess tax benefits and deficiencies.

~~Table of Contents~~

14. FAIR VALUE OF FINANCIAL INSTRUMENTS:

~~15.FINANCIAL INSTRUMENTS:~~

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that ~~value:~~

Cash and cash equivalents, trade receivables, unbilled and notes receivable, short-term borrowings and trade payables - The carrying amount approximates fair value because of the short maturity of these instruments.

value.

Long-term debt - The interest rate on the term loan and revolving credit agreement is adjusted for changes in market rates and therefore the carrying value of these loans approximates fair value. The estimated fair value of other long-term debt was determined based upon the present value of the expected cash flows considering expected maturities and using interest rates currently available to the Company for long-term borrowings with similar terms. At December 31, 2016, the estimated fair value of long-term debt approximates its carrying value.

Derivative instruments included in other liabilities - The carrying value is adjusted to fair value through other comprehensive income (loss) at each balance sheet date. The fair value is determined from an interest-rate futures model.

Long-term debt - The interest rate on the revolving credit agreement is adjusted for changes in market rates and therefore the carrying value approximates fair value. The estimated fair value of other long-term debt was

determined based upon the present value of the expected cash flows considering expected maturities and using interest rates currently available to the Company for long-term borrowings with similar terms. At December 31, 2017, the estimated fair value of long-term debt approximates its carrying value.

Under applicable accounting standards financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements. The Company assigned assets and liabilities to the hierarchy in the accounting standards, which is Level 1 - quoted prices in active markets for identical assets or liabilities, Level 2 - significant other observable inputs and Level 3 - significant unobservable inputs.

The following table presents the balances of assets ~~and liabilities~~ measured at fair value as of December 31, ~~2016~~2017 (dollars in thousands):

Level 1

Level 2

Level 3

Total

Assets:

Other current assets

$
12,443

$
—

$
—

$
12,443

Total assets

$
12,443

$
—

$
—

$
12,443

Liabilities:

Other accrued expenses

$
—

$
(2)

$
—

$
(2)

Total liabilities

$
—

$
(2)

$
—

$
(2)



	Level 1		Level 2		Level 3		Total
Assets:
Other current assets	$	14,111	$	—	$	—	$	14,111
Total assets	$	14,111	$	—	$	—	$	14,111

~~Table of Contents~~

~~PART I. FINANCIAL INFORMATION~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

We begin Management’s Discussion and Analysis of Financial Condition and Results of Operations with an overview of our operating segments, summary financial results and notable events. This overview is followed by a summary of our critical accounting policies and estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results. We then provide a more detailed analysis of our results of operations and financial condition.

Introduction and Overview

Acxiom Corporation is a global technology and enablement services company with a vision to ~~power~~transform data into value for everyone. Through a ~~world where all marketing is relevant. We~~simple, open approach to connecting systems and data, we provide the data foundation for the world’s best marketers. By making it safe and easy to activate, validate, enhance, and unify data, we provide marketers with the ability to deliver relevant messages at scale and tie those messages back to actual results. Our products and services enable people-based marketing, allowing our clients to generate higher return on investment and drive better ~~omni-channel~~omnichannel customer experiences.

Acxiom is a Delaware corporation founded in 1969 in Conway, Arkansas. Our common stock is listed on the NASDAQ Global Select Market under the symbol “ACXM.” We serve a global client base from locations in the United States, Europe, and the Asia-Pacific (“APAC”) region. Our client list includes ~~more than 3,000~~many of the world’s largest and ~~best known~~best-known brands across most major industry verticals, including but not limited to financial, insurance and investment services, automotive, retail, telecommunications, high tech, healthcare, travel, entertainment, non-profit, and government.

Operating Segments

Our operating segments provide management with a comprehensive view of our key businesses based on how we manage our operations and measure results. Additional information related to our operating segments and geographic information is contained in Note ~~11 –~~10 - Segment Information of the Notes to Condensed Consolidated Financial Statements.

Connectivity

As shown in the illustration below, our Connectivity segment enables our clients to build an omnichannel view of the consumer and activate that understanding across the marketing ecosystem.

Through integrations with more than 550 leading digital marketing platforms and data providers, we have become a key point of entry into the digital ecosystem, helping our clients eliminate data silos and unlock greater value from the marketing tools they use every day. We provide a foundational identity resolution layer enabling our clients to identify and reach consumers across channels and measure the impact of marketing on sales, using the marketing platform of their choice.

and third-party exposure, and transaction data to persistent anonymous consumer identifiers that represent real people in a privacy-safe way. This omnichannel view of the consumer can then be onboarded to and between any of the 550 plus partners in our ecosystem to support targeting, personalization and measurement use cases.



Targeting	Personalization	Measurement

Example	Example	Example
Clients can upload known data from first-, second-, and third-party data sources, resolve it to an omnichannel privacy-safe link with IdentityLink, then onboard to one of 550+ LiveRamp partners to deploy targeted ads to known customers.	Clients can deliver highly relevant content the moment viewers visit their website landing page, no login required. Leveraging IdentityLink, clients can resolve customer segment data to devices and digital IDs, onboard that data to a personalization platform and provide one-to-one experiences without compromising user privacy.	Clients can connect exposure data with first- and third-party purchase data across channels by resolving all customer devices back to the customers to which they belong. Then, clients can onboard that data to a measurement platform to clearly establish cause, effect and impact.

IdentityLink operates in an Acxiom SafeHaven® certified environment with technical, operational, and personnel controls designed to ensure our clients’ data is kept private and secure.

IdentityLink is sold to brands and the companies brands partner to execute their marketing, including marketing technology providers, data providers, publishers and agencies.

IdentityLink for Brands and Agencies. IdentityLink allows brands and their agencies to execute people-based marketing by creating an omnichannel understanding of the consumer and activating that understanding across their choice of best-of-breed digital marketing platforms.

IdentityLink for Marketing Technology Providers. IdentityLink provides marketing technology providers with the ability to offer people-based targeting, measurement and personalization within their platforms. This adds value for brands by increasing reach, as well as the speed at which they can activate their marketing data.

IdentityLink for Data Owners. IdentityLink allows data owners to easily connect their data to the digital ecosystem and better monetize it. Data can be distributed directly to clients or made available through the IdentityLink Data Store feature. This adds value for brands as it allows them to augment their understanding of consumers, and increase both their reach to and understanding of customers and prospects.

IdentityLink for Publishers. IdentityLink allows publishers to offer people-based marketing on their properties. This adds value for brands by providing direct access to their customers and prospects in the publisher’s premium inventory.

Our Connectivity revenue consists primarily of monthly recurring subscription fees sold on an annual basis. To a lesser extent, we generate revenue from data providers and certain digital publishers in the form of revenue-sharing agreements.

Audience Solutions (“AS”)

Our AS segment helps clients validate the accuracy of their data, enhance it with additional insight, and keep it up to date, enabling clients to reach desired audiences with highly relevant messages. Leveraging our recognition and data assets, clients can identify, segment, and differentiate their audiences for more effective marketing and superior customer experiences. AS offerings include InfoBase, our large consumer data store that serves as the basis for Acxiom’s consumer demographics products, and AbiliTec, our patented identity resolution technology that assists our clients in reconciling and managing variations of customer identity over time and across multiple channels.

InfoBase. With more than 1,500 demographic, socio-economic and lifestyle data elements and several thousand predictive models, our InfoBase products provide marketers with the ability to identify and reach the right audience with the right message across both traditional and digital channels. Through partnerships with over 100 online publishers and digital marketing platforms, including Facebook, Google, Twitter, 4INFO, AOL, eBay and MSN, marketers can use InfoBase data to create and target specific audiences. Data can be accessed directly or through the Acxiom Audience Cloud, a web-based, self-service tool that makes it easy to build and distribute third-party custom data segments.

AbiliTec. As shown in the illustration below, AbiliTec helps brands recognize individuals and households using a number of different input variables and connects identities online and offline.

By identifying and linking multiple identifiers and data elements back to a persistent ID, our clients are able to create a single view of the customer, which allows them to perform more effective audience targeting and deliver better, more relevant customer experiences.

Our AS revenue includes licensing fees, which are typically in the form of recurring monthly billings, as well as transactional revenue based on volume or one-time usage. In addition, AS generates digital data revenue from certain digital publishers and addressable television providers in the form of revenue sharing agreements. Our Marketing Database clients are a significant channel for our AS offerings.

Marketing Services (“MS”)

Our MS segment helps clients unify data at the individual level in a privacy-safe environment, so they can execute people-based marketing campaigns, tie back to real results, and drive a continual cycle of optimization. We help architect the foundation for data-driven marketing by delivering solutions that integrate customer and prospect data across the enterprise, thereby enabling our clients to establish a single view of the customer. We also support our clients in navigating the complexities of consumer privacy regulation, making it easy and safe for them to use innovative technology, maintain choice in channels and media, and stay agile in this competitive era of the consumer. These services allow our clients to generate higher return on marketing investments and, at the same time, drive better, more relevant customer experiences.

The MS segment includes the following service offerings: Marketing Database Services and Strategy and Analytics. The MS segment also included Impact Email Platform and Services until the disposition of the business in August 2016.

~~Marketing Database Services.~~ Our Marketing Database offering provides solutions that unify consumer data across an enterprise, enabling clients to execute relevant, people-based marketing and activate data across the marketing ecosystem. Our consumer marketing databases, which we design, build, and manage for our clients, make it possible for our clients to collect and analyze information from all sources, thereby increasing customer acquisition, retention, and loyalty. Through our growing partner network, clients are able to integrate their data with best-of-breed marketing solutions while respecting and protecting consumer privacy.

Marketing Database Services. Our Marketing Database offering provides solutions that unify consumer data across an enterprise, enabling clients to execute relevant, people-based marketing and activate data across the marketing ecosystem. Our consumer marketing databases, which we design, build, and manage for our clients, make it possible for our clients to collect and analyze information from all sources, thereby increasing customer acquisition, retention, and loyalty. Through our growing partner network, clients are able to integrate their data with best-of-breed marketing solutions while respecting and protecting consumer privacy.

Marketing Database Services are generally provided under long-term contracts. Our revenue consists primarily of recurring monthly billings, and to a lesser extent, other volume and variable based billings.

Strategy and Analytics. Our Strategy and Analytics offering consists of marketing strategists and data scientists who leverage industry knowledge and advanced analytics to assist our clients with identifying growth opportunities, addressing marketing data and technology needs, and adopting best practices. In addition, we help our clients identify and address their data privacy and governance requirements.

~~Table of Contents~~

~~Strategy and Analytics~~. Our Strategy and Analytics offering consists of marketing strategists and data scientists who leverage industry knowledge and advanced analytics to assist our clients with identifying growth opportunities, addressing marketing data and technology needs, and adopting best practices. In addition, we help our clients identify and address their data privacy and governance requirements.

Strategy and Analytics revenue consists primarily of project-based fees.

~~Impact Email Platform and Services.~~ Until the August 2016 disposition, Acxiom Impact™ provided email and cross-channel data-driven marketing solutions for enterprise marketers, including a proprietary marketing platform and agency services.

Impact Email Platform and Services. Until the August 2016 disposition, Acxiom Impact™ provided email and cross-channel data-driven marketing solutions for enterprise marketers, including a proprietary marketing platform and agency services.

Acxiom Impact^TM revenue ~~consists~~consisted of (1) volume-based fees for the use of the Impact email platform and (2) project-based and retainer-based fees for associated agency services.

~~Audience Solutions (“AS”)~~

~~InfoBase.~~ With more than 1,500 demographic, socio-economic and lifestyle data elements and several thousand predictive models, our InfoBase products provide marketers with the ability to identify and reach the right audience with the right message across both traditional and digital channels. Through partnerships with a wide range of online publishers and digital marketing platforms, including Facebook, Twitter, 4INFO, AOL, eBay, MSN, and Yahoo!, marketers can use InfoBase data to create and target specific audiences. For example, using InfoBase data available inside of Facebook’s Custom Audiences tool, a local pet store can run a campaign targeting male pet-owners who live in zip code 94123. Similarly, a regional bank can leverage our data to create and target an audience of households with children that generate a certain annual income and live in Central Arkansas.

~~AbiliTec.~~ ~~As shown in the illustration below, AbiliTec helps brands recognize individuals and households using a number of different input variables and connects identities online and offline.~~

Summary

~~Table of Contents~~

~~Connectivity~~

~~As shown in the illustration below, our Connectivity segment enables our clients to build an omnichannel view of the consumer and activate that understanding across the marketing ecosystem.~~

Through integrations with more than 450 leading digital marketing platforms and data providers, we have become a key point of entry into the digital ecosystem, helping our clients eliminate data silos and unlock greater value from the marketing tools they use every day. We provide a foundational identity resolution layer enabling our clients to identify and reach consumers across channels and measure the impact of marketing on sales, using the marketing platform of their choice.

Today, our primary Connectivity offering is LiveRamp IdentityLink, an identity resolution service that ties data back to real people and makes it possible to onboard that data for people-based marketing initiatives across digital channels. Leveraging AbiliTec and the LiveRamp identity graph, IdentityLink first resolves a clients’ first-, second-, and third-party, exposure, and transaction data to persistent anonymous consumer identifiers that represent real people in a privacy-safe way. This omni-channel view of the consumer can then be onboarded to and between any of the 450 plus partners in our ecosystem to support targeting, personalization and measurement use cases.

~~Table of Contents~~


~~Targeting~~	~~Personalization~~	~~Measurement~~

~~Example~~	~~Example~~	~~Example~~
Clients can upload known data from first-, second-, and third-party data sources, resolve it to an omnichannel privacy-safe link with IndentityLink, then onboard to one of 450+ LiveRamp partners to deploy targeted ads to known customers.	Clients can deliver highly relevant content the moment viewers visit their website landing page, no login required. Leveraging IdentityLink, clients can resolve customer segment data to devices and digital IDs, onboard that data to a personalization platform and provide one-to-one experiences without compromising user privacy.	Clients can connect exposure data with first- and third-party purchase data across channels by resolving all customer devices back to the customers to which they blong. Then, clients can onboard that data to a measurement platform to clearly establish cause, effect and impact.

~~IdentityLink operates in an Acxiom SafeHaven certified environment with technical, operational, and personnel controls designed to ensure our clients’ data is kept private and secure.~~

~~IdentityLink is sold to brands and the companies’ brands partner to execute their marketing including marketing technology providers, data providers, publishers and agencies.~~

~~IdentityLink for Brands and Agencies.~~ ~~IdentityLink allows brands and their agencies~~ ~~execute people-based marketing by creating an omnichannel understanding of the consumer and activating that understanding~~ ~~across their choice of best-of-breed digital marketing platforms~~.

~~IdentityLink for Marketing Technology Providers.~~ IdentityLink provides marketing technology providers with the ability to offer people-based targeting, measurement and personalization within their platforms. This adds value for brands by increasing reach, as well as the speed at which they can activate their marketing data.

~~IdentityLink for Data Owners.~~ IdentityLink allows data owners to easily connect their data to the digital ecosystem and better monetize it. This adds value for brands as it allows them to augment their understanding of consumers, and increase both their reach against and understanding of customers and prospects.

~~IdentityLink for Publishers.~~ IdentityLink allows publishers to offer people-based marketing on their properties. This adds value for brands by providing direct access to their customers and prospects in the publisher’s premium inventory.

~~Table of Contents~~

~~Summary~~

Together, our products and services form the “power grid” for data, the critical foundation for people-based marketing that brands need to engage consumers across today’s highly fragmented landscape of channels and devices.

We provide integrations with the largest number of marketing platforms and data providers in the digital marketing ecosystem, enabling our clients to innovate through their preferred choice of technology, data, and services providers. Our industry-leading ~~recognition~~identity resolution and data assets power best-in-class consumer identification and linking across channels and devices. And, our integrated services offering provides the expertise required to manage large sets of data legally, ethically, securely, and in a way that protects consumer privacy.

Summary Results and Notable Events

A summary of the quarter ended December 31, ~~2016~~2017 is presented below:

Revenues were $234.9 million, a 5.2% increase from $223.3 million in the same quarter a year ago.

Cost of revenue was $115.9 million, a 0.5% decrease from $116.5 million in the same quarter a year ago.

Gross margin increased to 50.6% from 47.8% in the same quarter a year ago.

Total operating expenses were $107.9 million, a 10.4% increase from $97.7 million in the same quarter a year ago.

Cost of revenue and operating expenses for the quarters ended December 31, 2017 and 2016 include the following items:

	·
◦		~~Revenues increased 1.0% to $223.3 million.~~

~~Cost of revenue was $116.5 million, a 7.4% decrease from $125.7 million in the same quarter a year ago.~~

~~Gross margin increased to 47.8% from 43.2%.~~

~~Total operating expenses were $97.7 million, a 2.0% increase from $95.8 million in the same quarter a year ago.~~

~~Cost of revenue and operating expenses for the quarters ended December 31, 2016 and 2015 include the following items:~~

Non-cash stock compensation of ~~$13.4~~$15.9 million and ~~$8.0~~$13.4 million, respectively (cost of revenue and operating expenses)

	o
◦		Purchased intangible asset amortization of ~~$4.6~~$6.0 million and ~~$3.8~~$4.6 million, respectively (cost of revenue)

	o
◦		~~Restructuring charges~~Separation and ~~other adjustments~~transformation costs of ~~$2.1~~$5.2 million and $4.1 million, respectively (operating expenses)

	o
◦		~~Separation~~Restructuring charges and ~~transformation costs~~other adjustments of ~~$4.1~~$0.0 million and ~~$6.6~~$2.1 million, respectively (operating expenses)

~~Net earnings from continuing operations was $1.1 million or $.01 per share compared to net loss from continuing operations of $0.4 million or $.01 per share in the same quarter a year ago.~~

The Company acquired all of the outstanding shares of Arbor Technologies, Inc. (“Arbor”) and Circulate.com, Inc. (“Circulate”) for an aggregate purchase price of $137.4 million, net of cash of $9.5 million. Both Arbor and Circulate are included in the Connectivity segment.

Net earnings increased to $22.9 million or $0.28 per diluted share compared to net earnings of $1.1 million or $0.01 per diluted share in the same quarter a year ago. The ~~summary above~~increase is ~~intended~~primarily due to ~~identify to the reader some~~recent changes as a result of the ~~more~~Tax Act, including a $20.3 million one-time benefit for the remeasurement of net deferred tax liabilities.

Net cash provided by operating activities of $43.6 million, a $5.3 million decrease compared to $48.9 million in the same quarter a year ago.

The Company repurchased 0.7 million shares of its common stock for $19.7 million under the Company's common stock repurchase program.

This summary highlights financial results as well as other significant events and transactions of the Company during the quarter ended December 31, ~~2016.~~2017. However, this summary is not intended to be a full discussion of the Company’s ~~results for the quarter.~~results. This summary should be read in conjunction with the following discussion of Results of Operations and Capital Resources and Liquidity and with the Company’s condensed consolidated financial statements and footnotes accompanying this ~~quarterly~~ report.

~~Table of Contents~~

Results of Operations

A summary of selected financial information for each of the periods reported is presented below (dollars in thousands, except per share amounts):

For the Three months ended

For the Nine months ended

December 31,

December 31,

%

%


2016

2015

Change

2016

2015

Change

Revenues

$
223,312

$
221,193

1

$
655,380

$
625,433

5

Cost of revenue

116,468

125,735

(7)

359,392

364,756

(2)

Gross profit

106,844

95,458

12

295,988

260,677

14

Operating expenses

97,729

95,832

2

271,591

265,976

2

Income (loss) from operations

9,115

(374)

2,537

24,397

(5,299)

560

Net earnings (loss) from continuing operations

1,073

(439)

344

12,189

(6,966)

275

Diluted earnings (loss) per share from continuing operations

$
0.01

$
(0.01)

338

$
0.15

$
(0.09)

272



	For the three months ended						For the nine months ended
	December 31,						December 31,
					%						%
	2017		2016		Change		2017		2016		Change
Revenues	$	234,871	$	223,312	5		$	672,625	$	655,380	3
Cost of revenue	115,920		116,468		(1	)	344,952		359,392		(4	)
Gross profit	118,951		106,844		11		327,673		295,988		11
Total operating expenses	107,893		97,729		10		321,869		271,591		19
Income from operations	11,058		9,115		21		5,804		24,397		(76	)
Net earnings	22,941		1,073		2,038		18,305		12,189		50
Diluted earnings per share	$	0.28	$	0.01	2,700		$	0.22	$	0.15	47

Revenues

The ~~following table presents the Company’s revenue~~Company's revenues by reporting segment for ~~each of~~ the periods reported is presented below (dollars in thousands):

For the Three months ended

For the Nine months ended

December 31,

December 31,

%

%


2016

2015

Change

2016

2015

Change

Marketing Services

$
101,177

$
115,725

(13)

$
316,571

$
336,430

(6)

Audience Solutions

83,399

77,046

8

235,669

217,718

8

Connectivity

38,736

28,422

36

103,140

71,285

45

Total revenues

$
223,312

$
221,193

1

$
655,380

$
625,433

5



	For the three months ended						For the nine months ended
	December 31,						December 31,
					%						%
Revenues	2017		2016		Change		2017		2016		Change
Marketing Services	$	94,457	$	101,177	(7	)	$	280,093	$	316,571	(12	)
Audience Solutions	84,436		83,399		1		238,984		235,669		1
Connectivity	55,978		38,736		45		153,548		103,140		49
Total revenues	$	234,871	$	223,312	5		$	672,625	$	655,380	3

Total revenues were ~~$223.3~~$234.9 million, an increase of ~~1.0%~~5.2%, or ~~$2.1~~$11.6 million, from ~~$221.2~~$223.3 million in the same quarter a year ago. ~~The~~Strong revenue growth in Connectivity ($17.2 million) was partially offset by a decline in MS of $6.7 million due to ~~strong AS~~non-recurring transactions in the prior year of $4.8 million as well as volume and contract reductions. The impact of exchange rates was positive by approximately $1.5 million.

Total revenues were $672.6 million, an increase of 2.6%, or $17.2 million for the nine months ended December 31, 2017. Strong revenue growth in Connectivity ~~results. The year over year growth~~($50.4 million) was ~~negatively impacted~~partially offset by ~~several~~ items totaling ~~$16.9~~$22.8 million: ~~the exit from Brazil during fiscal year 2016 ($0.4 million), the transition of the Australia operations business to a Connectivity focused business ($1.2 million reduction in MS and AS),~~ the disposition of the Acxiom Impact business ($~~15.0~~20.4 million), and ~~the unfavorable impact of exchange rates ($2.1 million).~~

For the nine months ended December 31, 2016, total revenues were $665.4 million, an increase of 4.8%, or $29.9 million, from $625.4 million in the same period a year ago. The revenue growth was due to strong AS and Connectivity results. The year over year growth was negatively impacted by the disposition of the Acxiom Impact business ($26.1 million), the unfavorable impact of exchange rates ($4.2 million), the transition of the Australia operations ~~business~~ to a Connectivity focused business ($~~3.6~~2.4 million reduction in MS and AS)~~, and the exit from Brazil during fiscal year 2016 ($2.0 million)~~.

MS revenue for the quarter ended December 31, ~~2016~~2017 was ~~$101.2~~$94.5 million, a ~~$14.5~~$6.7 million, or ~~12.6%~~6.6%, decrease compared to the same quarter a year ago. On a geographic basis, U.S. MS revenue decreased ~~$12.8~~$5.3 million, or ~~12.2%~~5.7%, due ~~largely~~ to non-recurring transactions in the ~~sale~~prior year of ~~Acxiom Impact ($15.0 million).~~$4.8 million and volume and contract reductions. International MS revenue decreased ~~$1.7~~$1.4 million, or ~~17.0%~~16.8%. ~~Excluding the unfavorable impact of exchange rates ($1.2 million), International MS revenue decreased $0.5 million.~~ By line of business, ~~increases in~~ Marketing Database ~~($4.3~~revenue decreased $6.8 million (U.S. $4.5 million, Europe $1.1 million and APAC $0.6 million) ~~were offset by declines in~~, while Strategy and Analytics ~~($3.3 million) and the sale of Acxiom Impact ($15.0 million).~~

was flat quarter over quarter.

MS revenue for the nine months ended December 31, ~~2016~~2017 was ~~$316.6~~$280.1 million, a ~~$19.9~~$36.5 million, or ~~5.9%~~11.5%, decrease compared to the same period a year ago. On a geographic basis, U.S. MS revenue decreased ~~$14.3~~$33.8 million, or 4.6%. New business and client upsell were offset by the Acxiom Impact disposition ($26.1 million). International MS revenue decreased $5.6 million, or 19.2%. Excluding the unfavorable impact of exchange rates ($2.6 million)11.5%, ~~International MS revenue decreased $3.0 million from the impact of the wind down of the MS business in Australia ($1.0 million), and Brazil ($1.0 million~~ due to ~~exit of the business). By~~

~~Table of Contents~~

~~line of business, increases in Marketing Database ($16.5 million) were offset by declines in Strategy and Analytics ($1.7 million) and~~ the sale of Acxiom Impact ($~~26.1~~20.4 million) and other volume and contract reductions. International MS revenue decreased $2.7 million, or 11.4%.

By line of business, Marketing Database revenue decreased $13.3 million (U.S. $9.9 million, Europe $2.7 million and APAC $0.7 million), Strategy and Analytics revenue declined $2.6 million (primarily U.S.) and Impact declined due to the sale of Acxiom Impact.

AS revenue for the quarter ended December 31, ~~2016~~2017 was ~~$83.4~~$84.4 million, a ~~$6.4~~$1.0 million, or ~~8.2%~~1.2%, increase compared to the same quarter a year ago. On a geographic basis, U.S. AS revenue increased ~~$7.9~~$0.2 million, or ~~12.0%~~0.2%,

due to increases of $1.3 million in Consumer Data and Recognition, offset by a reduction in Digital Data ~~business with existing customers.~~business. International AS revenue ~~decreased $1.6~~increased $0.9 million, or ~~14.5%~~9.4%, ~~due~~ primarily ~~to the impact of the wind down in Australia ($1.1 million).~~from Europe Digital Data. By line of business, AS revenue growth in Recognition ($1.2 million) and Global Data Sales ($1.1 million) was offset by a reduction in Digital Data ($~~10.2~~1.2 million), through our publisher and digital partner ~~network, were offset by declines in Consumer Data ($2.0 million) and Recognition ($1.5 million), due in part to the restructuring in Australia.~~network. As the ~~digital data~~Digital Data business model evolves, some revenue sharing arrangements will convert to license arrangements and certain publishers will decide to seek alternative data relationships. In fact, one significant publisher relationship recently converted to a license-based arrangement. As a result, we would expect more significant revenue declines in our fiscal 2018 fourth quarter. These ~~changes could impact AS growth rates in the future.~~

trends may continue into fiscal 2019.

AS revenue for the nine months ended December 31, ~~2016~~2017 was ~~$235.7~~$239.0 million, ~~an $18.0~~a $3.3 million, or ~~8.2%~~1.4%, increase compared to the same period a year ago. On a geographic basis, U.S. AS revenue increased ~~$19.4~~$2.3 million, or ~~10.1%~~1.1%, due to ~~increases~~an increase of $8.3 million in Digital Data business ~~with existing customers. International AS revenue decreased $1.4 million, or 5.4%. International AS revenue increases in Europe ($1.9 million) were~~ offset by decreases in ~~Brazil ($0.9 million)~~Consumer Data and ~~ANZ ($2.6 million) due to restructuring.~~Recognition. International AS revenue increased $1.1 million, or 4.3%, primarily in Europe. By line of business, AS revenue growth in Digital Data ($~~22.4~~11.7 million), through our publisher and digital partner network, ~~were~~was offset by declines in ~~Recognition~~Consumer Data ($~~3.1~~8.9 million) and ~~Consumer~~Recognition ($1.6 million). As the Digital Data ~~($1.3 million.~~

business model evolves, some revenue sharing arrangements will convert to license arrangements and certain publishers will decide to seek alternative data relationships.

Connectivity revenue for the quarter ended December 31, ~~2016~~2017 was ~~$38.7~~$56.0 million, a ~~$10.3~~$17.2 million, or ~~36.3%~~44.5%, increase compared to the same quarter a year ago. The increase was due to LiveRamp ~~growth, partially offset by a $3.3 million decrease in revenue from the revenue-sharing arrangements due to a lost customer.~~growth. On a geographic basis, U.S. Connectivity revenue increased ~~$9.5~~$14.6 million, or ~~35.7%~~40.4%, from the same quarter a year ago.

International Connectivity revenue increased $2.6 million, or 100.2%.

Connectivity revenue for the nine months ended December 31, ~~2016~~2017 was ~~$103.1~~$153.5 million, a ~~$31.9~~$50.4 million, or ~~44.7%~~48.9%, increase compared to the same period a year ago. The increase was due to LiveRamp ~~growth, partially offset by a $4.1 million decrease in revenue from the revenue-sharing arrangements due to a lost customer.~~growth. On a geographic basis, U.S. Connectivity revenue increased ~~$29.7~~$44.7 million, or ~~44.9%~~46.7%, from the same ~~quarter~~period a year ago.

International Connectivity revenue increased $5.7 million, or 76.6%.

Cost of revenue and Gross profit

The ~~following table presents the~~ Company’s cost of revenue and gross profit for each of the periods reported is presented below (dollars in thousands):

For the Three months ended

For the Nine months ended

December 31,

December 31,

%

%


2016

2015

Change

2016

2015

Change

Cost of revenue

$
116,468

$
125,735

(7)

$
359,392

$
364,756

(2)

Gross profit

$
106,844

$
95,458

12

$
295,988

$
260,677

14

Gross margin

47.8
%

43.2
%
11

45.2
%

41.7
%
8



	For the three months ended						For the nine months ended
	December 31,						December 31,
					%						%
	2017		2016		Change		2017		2016		Change
Cost of revenue	$	115,920	$	116,468	(1	)	$	344,952	$	359,392	(4	)
Gross profit	$	118,951	$	106,844	11		$	327,673	$	295,988	11
Gross margin %	50.6		47.8		6		48.7		45.2		8

Cost of revenue: Includes all direct costs of sales such as data and other third-party costs directly associated with revenue. Cost of revenue also includes expenses for each of the Company’s operations functions including client services, account management, agency, strategy and analytics, IT, data acquisition, and ~~products~~product operations. Finally, cost of revenue includes amortization of internally developed ~~software.~~

software and other acquisition related intangibles.

Cost of revenue was ~~$116.5~~$115.9 million for the quarter ended December 31, ~~2016,~~2017, a ~~$9.3~~$0.5 million, ~~decrease,~~ or ~~7.4%~~0.5%, decrease from the same quarter a year ~~ago, due primarily to the disposition of Acxiom Impact ($10.9 million).~~ago. Gross margins increased to ~~47.8% in the current year~~50.6% compared to ~~43.2%~~47.8% in the prior year. The gross margin increase is due to the ~~AS and~~ Connectivity revenue increases and MS cost efficiencies. U.S. gross margins increased to ~~49.0%~~51.7% in the current year from ~~44.0%~~49.0% in the prior year again due to the ~~AS and~~ Connectivity revenue ~~growth.~~growth and MS efficiencies. International gross margins ~~were flat in the current quarter at~~increased to 40.3% from 35.8%.

Cost of revenue was ~~$359.4~~$345.0 million for the nine months ended December 31, ~~2016,~~2017, a ~~$5.4~~$14.4 million, ~~decrease,~~ or ~~1.5%~~4.0%, decrease from the same period a year ago, due primarily to the disposition of Acxiom Impact ($~~14.4~~18.2 million).

~~Table of Contents~~

Gross margins increased to ~~45.2% in the current year~~48.7% compared to ~~41.7%~~45.2% in the prior year. The gross margin increase is due to the ~~AS and~~ Connectivity revenue increases and MS cost efficiencies. U.S. gross margins increased to ~~46.3%~~50.0% in the current year from ~~42.9% in~~46.3% for the ~~prior year due to the AS and Connectivity revenue growth.~~same reasons. International gross margins increased to ~~32.5% in the current year~~35.2% from ~~30.0% in the prior year due to AS revenue growth offset partially by investments in Connectivity.~~

32.5%.

Operating Expenses

The ~~following table presents the~~ Company’s operating expenses for each of the periods reported is presented below (dollars in thousands):

For the Three months ended

For the Nine months ended

December 31,

December 31,






%





%

2016

2015

Change

2016

2015

Change

Research and development

$
20,950

$
18,400
��
14

$
58,631

$
57,489

2

Sales and marketing

43,048

36,581

18

118,243

100,334

18

General and administrative

31,620

36,793

(14)

91,993

100,055

(8)

Impairment of goodwill and other assets

—

—

-

—

729

(100)

Gains, losses and other items, net

2,111

4,058

(48)

2,724

7,369

(63)

Total operating expenses

$
97,729

$
95,832

2

$
271,591

$
265,976

2



	For the three months ended							For the nine months ended
	December 31,							December 31,
						%						%
Operating expenses	2017			2016		Change		2017		2016		Change
Research and development	$	23,318		$	20,950	11		$	70,894	$	58,631	21
Sales and marketing	53,730			43,048		25		152,288		118,243		29
General and administrative	30,886			31,620		(2	)	95,166		91,993		3
Gains, losses and other items, net	(41		)	2,111		(102	)	3,521		2,724		29
Total operating expenses	$	107,893		$	97,729	10		$	321,869	$	271,591	19

Research and development (“R&D”): Includes operating expenses for the Company’s engineering and product/project management functions supporting research, new development, and related product enhancement.

R&D expenses were ~~$21.0~~$23.3 million for the quarter ended December 31, ~~2016,~~2017, an increase of ~~$2.6~~$2.4 million, or ~~13.9%~~11.3%, compared to the same quarter a year ago, and ~~is 9.4%~~are 9.9% of total revenues compared to ~~8.3%~~9.4% in the prior year. The increase is due primarily to non-cash stock compensation of $0.6 million, and Connectivity and AS investments of ~~$2.7 million.~~

$1.9 million and $0.4 million, respectively. The increase in non-cash stock compensation is largely related to the Arbor and Circulate acquisitions.

R&D expenses were ~~$58.6~~$70.9 million for the nine months ended December 31, ~~2016,~~2017, an increase of ~~$1.1~~$12.3 million, or ~~2.0%~~20.9%, compared to the same period a year ago, and ~~is 8.9%~~are 10.5% of total revenues compared to ~~9.2%~~8.9% in the prior year. The increase is due primarily to non-cash stock compensation of $4.0 million, and Connectivity and AS investments ~~($6.3 million) were~~of $8.8 million and $1.6 million, respectively, offset partially by a ~~$3.0~~decrease in MS of $2.8 million ~~reduction~~related mostly to the U.S. Impact disposition. The increase in non-cash stock ~~based~~ compensation is largely related to the Arbor and ~~cost reductions in MS ($4.6 million).~~

Circulate acquisitions.

Sales and marketing (“S&M”): Includes operating expenses for the Company’s sales, marketing, and product marketing functions.

S&M expenses were ~~$43.0~~$53.7 million for the quarter ended December 31, ~~2016,~~2017, an increase of ~~$6.5~~$10.7 million, or ~~17.7%~~24.8%, compared to the same quarter a year ago, and ~~is 19.3%~~are 22.9% of total revenues compared to ~~16.5%~~19.3% in the prior year. The increase is due to ~~headcount investments in U.S. AS sales, third-party corporate marketing expenses and~~primarily to non-cash stock compensation of $3.9 million (largely related to the Arbor and Circulate acquisitions), and Connectivity investments of $8.3 million. The increases were partially offset by a decrease in MS ($2.5 million) due primarily to lower variable compensation.

S&M expenses were ~~$118.2~~$152.3 million for the nine months ended December 31, ~~2016,~~2017, an increase of ~~$17.9~~$34.0 million, or ~~17.9%~~28.8%, compared to the same period a year ago, and ~~is 18.0%~~are 22.6% of total revenues compared to ~~16.0%~~18.0% in the prior year. The increase is due to ~~headcount investments in Connectivity, U.S. AS sales and~~primarily to non-cash stock compensation of $11.9 million (largely related to the Arbor and Circulate acquisitions), and Connectivity investments of $23.6 million, corporate marketing of $4.2 million, and AS investments of $2.2 million. The increases were partially offset by a decrease in MS ($7.8 million) due primarily to lower variable compensation.

General and administrative (G&A): Represents operating expenses for all corporate functions, including finance, human resources, legal, corporate IT, and the corporate office.

G&A expenses were ~~$31.6~~$30.9 million for the quarter ended December 31, ~~2016,~~2017, a decrease of ~~$5.2~~$0.7 million, or ~~14.1%~~2.3%, compared to the same quarter a year ago, and ~~is 14.2%~~are 13.2% of total revenues compared to ~~16.6%~~14.2% in the prior year. The decrease is due primarily to a decrease in non-cash stock compensation of $1.5 million, incentive compensation accruals, and ~~discretionary bonus expense and~~other cost savings offset by a ~~$2.5~~$1.1 million ~~decrease~~increase in separation and transformation costs.

G&A expenses were ~~$92.0~~$95.2 million for the nine months ended December 31, ~~2016, a decrease~~2017, an increase of ~~$8.1~~$3.2 million, or ~~8.1%~~3.4%, compared to the same period a year ago, and ~~is 14.0%~~are 14.1% of total revenues compared to ~~16.0%~~14.0% in the prior

year. The ~~decrease~~increase is due primarily to a ~~$10.5~~$12.2 million ~~decline~~increase in separation and transformation costs offset partially by ~~an increase~~a decrease in non-cash stock ~~based~~ compensation of ~~$6.9 million.~~

$4.5 million, incentive compensation accruals, and other cost savings. Prior year non-cash stock compensation costs were impacted by adjustments to increase expected performance levels for certain performance based awards.

~~Table of Contents~~

Gains, losses, and other items, net: Represents restructuring costs and other adjustments.

Gains, losses and other items, net of ~~$2.1~~$0.0 million for the quarter ended December 31, ~~2016~~2017 decreased ~~$1.9~~$2.2 million ~~or 48.0%,~~ compared to the same quarter a year ago. ~~The current year includes $1.4 million in merger related expenses related to the Arbor and Circulate acquisitions.~~

Gains, losses and other items, net of ~~$2.7~~$3.5 million for the nine months ended December 31, ~~2016 decreased $5.4~~2017 increased $0.8 million ~~or 66.4%,~~ compared to the same period a year ago. The current year includes ~~$1.4~~a $2.1 million charge related to the restructuring of the Redwood City, California lease and $1.5 million in ~~merger related expenses~~severance and other associate-related charges.

Income from Operations and Profit Margins

The Company’s income from operations, as well as operating margin by segment, for each of the periods reported is presented below (dollars in thousands):



	For the three months ended						For the nine months ended
	December 31,						December 31,
	2017			2016			2017			2016
Operating income and margin:
Marketing Services	$	22,063		$	21,127		$	63,721		$	61,109
	23.4		%	20.9		%	22.7		%	19.3		%
Audience Solutions	33,112			34,572			91,151			89,640
	39.2		%	41.5		%	38.1		%	38.0		%
Connectivity	6,808			1,877			12,475			3,831
	12.2		%	4.8		%	8.1		%	3.7		%
Less:
Corporate expenses	23,862			24,184			75,582			75,342
Purchased intangible asset amortization	5,971			4,621			17,958			12,588
Non-cash stock compensation	15,919			13,427			46,707			33,955
Restructuring charges	(41		)	2,111			3,521			2,725
Separation and transformation costs	5,214			4,118			17,775			5,573
Income from operations	$	11,058		$	9,115		$	5,804		$	24,397
Total operating margin	4.7		%	4.1		%	0.9		%	3.7		%

Income from operations was $11.1 million for the quarter ended December 31, 2017 compared to $9.1 million for the same quarter a year ago. Operating margin was 4.7% compared to 4.1%. The increase in income from operations of $1.9 million was due primarily to the increase in Connectivity income from operations, offset partially by increases in non-cash stock compensation, largely related to the Arbor and Circulate acquisitions, and ~~a $0.8 million gain on sale of the Acxiom Impact business.~~

~~Income (Loss) from Operations~~separation and ~~Profit (Loss) Margins~~

~~The following table presents the Company’s income (loss) from operations and margin by segment for each of the periods presented (dollars in thousands):~~

transformation costs.

For the Three months ended

For the Nine months ended

December 31,

December 31,


2016

2015


2016

2015

Operating income (loss) and margin:

Marketing Services

$
21,127

$
20,309

$
61,109

$
55,070

20.9%

17.5%

19.3%

16.4%

Audience Solutions

34,572

30,723

89,640

80,000

41.5%

39.9%

38.0%

36.7%

Connectivity

1,877

(1,015)

3,831

(2,874)

4.8%

(3.6%)

3.7%

(4.0%)

Less:

Corporate

28,302

34,533

80,915

94,606

Purchased intangible asset amortization

4,621

3,754

12,588

11,262

Non-cash stock compensation

13,427

8,046

33,955

23,529

Gains, losses and other items, net

2,111

4,058

2,725

8,098

Income (loss) from operations

$
9,115

$
(374)

$
24,397

$
(5,299)

Total operating margin

4.1
%

(0.2)
%

3.7
%

(0.8)
%

Income from operations was $9.1 million for the quarter ended December 31, 2016 compared to a loss of $0.4 million for the same quarter a year ago. The increase in income from operations of $9.5 million was due primarily to an increase in each of the operating segment’s income from operations and lower gains, losses and other items, net offset by an increase in non-cash stock compensation.

~~Income from operations was $24.4~~$5.8 million for the nine months ended December 31, ~~2016~~2017 compared to ~~a loss of $5.3~~$24.4 million for the same period a year ago. Operating margin was 0.9% compared to 3.7%. The ~~increase in income from operations~~decrease of ~~$29.7~~$18.6 million was due primarily to ~~an increase in each of the operating segment’s income from operations, lower corporate costs, and lower gains, losses and other items, net offset by an increase~~increases in non-cash stock ~~compensation.~~

compensation, largely related to the Arbor and Circulate acquisitions, and separation and transformation costs, offset partially by increases in operating segments' income from operations.

MS income from operations was ~~$21.1~~$22.1 million, a ~~20.9%~~23.4% margin, for the quarter ended December 31, ~~2016~~2017 compared to ~~$20.3~~$21.1 million, a ~~17.5%~~20.9% margin, for the same quarter a year ago. U.S. margins increased to ~~22.2%~~25.8% in the current quarter from ~~18.1%~~22.2% due to ~~R&D~~S&M cost reductions. International operating margins decreased to ~~6.6%~~a negative 7.5% from ~~11.9%~~6.6% due to the ~~decrease in gross profit.~~

revenue decrease.

MS income from operations was ~~$61.1~~$63.7 million, a ~~19.3%~~22.7% margin, for the nine months ended December 31, ~~2016~~2017 compared to ~~$55.1~~$61.1 million, a ~~16.4%~~19.3% margin, for the same period a year ago. U.S. margins increased to ~~20.2%~~24.9% in the

current ~~year~~period from ~~17.2%~~20.2% due to R&D and S&M cost ~~reductions.~~reductions, including R&D reductions related to the Impact disposition. International operating margins ~~increased~~decreased to ~~8.3%~~a negative 4.2% from ~~7.3% due to S&M reductions.~~

8.3%.

AS income from operations was ~~$34.6~~$33.1 million, a ~~41.5%~~39.2% margin, for the quarter ended December 31, ~~2016~~2017 compared to ~~$30.7~~$34.6 million, a ~~39.9%~~41.5% margin, for the same quarter a year ago. U.S. margins ~~increased~~decreased to ~~43.5%~~39.8% in the current quarter from ~~42.2%~~42.9% due to ~~gross profit improvements of $7.9 million offset partially by~~flat revenue and investments in S&M ~~of $3.4 million.~~and R&D. International operating margins increased to ~~30.2%~~34.8% from ~~26.8%~~30.2%.

~~Table of Contents~~

AS income from operations was ~~$89.6~~$91.2 million, a ~~38.0%~~38.1% margin, for the nine months ended December 31, ~~2016~~2017 compared to ~~$80.0~~$89.6 million, a ~~36.7%~~38.0% margin, for the same period a year ago. U.S. margins decreased to ~~39.7%~~39.6% in the current period from ~~40.2%.~~39.7% due to the increase in gross profit offset by investments in S&M and R&D. International operating ~~margin~~margins increased to ~~23.5%~~26.3% from ~~$11.7% due to expanding gross profit margins.~~

23.5%.

Connectivity income from operations was ~~$1.9~~$6.8 million, a ~~4.8%~~12.2% margin, for the quarter ended December 31, ~~2016~~2017 compared to ~~a loss of $1.0~~$1.9 million, a ~~negative 3.6%~~4.8% margin, for the same quarter a year ago. A ~~$7.0~~$14.8 million increase in gross profit was partially offset by R&D and S&M investments.

Connectivity income from operations was ~~$3.8~~$12.5 million, ~~a 3.7%~~an 8.1% margin, for the nine months ended December 31, ~~2016~~2017 compared to ~~a loss of $2.9~~$3.8 million, a ~~negative 4.0%~~3.7% margin, for the same period a year ago. ~~Gross~~A $40.2 million increase in gross profit ~~increased $18.9 million and~~ was partially offset by R&D and S&M investments.

~~Other Expense, Income Taxes and Other Items~~

~~Interest expense was $1.7~~

Corporate expenses were $23.9 million for the quarter ended December 31, ~~2016~~2017 compared to ~~$1.9~~$24.2 million for the same quarter a year ago, and are 10.2% of total revenues compared to 10.8% in the prior year.

Corporate expenses were $75.6 million for the nine months ended December 31, 2017 compared to $75.3 million for the same period a year ago, and are 11.2% of total revenues compared to 11.5% in the prior year.

Other Expense, Income Taxes and Other Items

Interest expense was $2.6 million for the quarter ended December 31, 2017 compared to $1.7 million for the same quarter a year ago. The ~~decrease~~increase is primarily related to ~~the term loan offset by $0.2~~$70 million of ~~new interest expense on line~~borrowings in the third quarter of ~~credit borrowings. The average balance of~~fiscal year 2017 related to the ~~term loan~~Arbor and ~~line of credit increased approximately $1 million~~Circulate acquisitions and an increase in the average rate ~~decreased~~of approximately 3096 basis points.

Interest expense was ~~$5.2~~$7.4 million for the nine months ended December 31, ~~2016~~2017 compared to ~~$5.8~~$5.2 million for the same period a year ago. The ~~decrease~~increase is primarily related to ~~the term loan offset by $0.2~~$70 million of ~~new interest expense on line~~borrowings in the third quarter of ~~credit borrowings. The average balance of~~fiscal year 2017 related to the ~~term loan~~Arbor and ~~line of credit decreased approximately $43 million~~Circulate acquisitions and an increase in the average rate of approximately 81 basis points. On June 20, 2017, the Company refinanced its debt facility to consist of a $600 million revolving credit facility, of which $230 million was ~~flat.~~

outstanding at December 31, 2017.

Other income was ~~$0.0~~$0.4 million for the quarter ended December 31, ~~2016~~2017 compared to ~~$0.3~~$0.0 million for the same quarter a year ago. Other ~~income and~~ expense ~~primarily consists of foreign currency transaction gains and losses in each period reported.~~

~~Other income~~ was $0.1 million for the nine months ended December 31, ~~2016~~2017 compared to ~~$0.7~~other income of $0.1 million for the same period a year ago. Other income and expense primarily consists of foreign currency transaction gains and losses in each period reported.

The current year to date period includes $0.7 million for accelerated deferred debt costs related to the debt refinancing.

Income tax benefit was $14.0 million on pretax income of $8.9 million for the quarter ended December 31, 2017 compared to income tax expense ~~was~~of $6.3 million on pretax income of $7.4 million for the ~~quarter ended December 31, 2016 compared to income tax benefit of $1.6 million on a pretax loss of $2.0 million for the~~ same quarter last year. The ~~current year~~decrease in the year-over-year effective tax rate for the quarter ended December 31, 2017 is primarily attributable to the $20.3 million discrete benefit for the remeasurement of net deferred tax liabilities as a result of the Tax Act. In addition, the effective tax rate for the quarter ended December 31, 2017 reflects the Tax Act's permanent reduction in the U.S. federal corporate income tax rate. The effective tax rate for the current quarter was also impacted by nondeductible share-based compensation related to the Arbor and Circulate acquisitions. ~~The prior year~~

Income tax benefit was $20.0 million on pretax loss of $1.7 million for the nine months ended December 31, 2017 compared to income tax ~~benefit includes a $1.5 million benefit due to the retroactive and permanent reinstatement~~expense of ~~the federal research tax credit in December of 2015.~~

~~Income tax expense was~~ $7.1 million on pretax income of $19.3 million for the same period last year. The increase in the year-over-year effective tax rate for the nine months ended December 31, ~~2016 compared~~2017 is primarily attributable to ~~income tax~~the $20.3 million discrete benefit ~~of $3.5 million on a pretax loss of $10.4 million~~ for the ~~same period last year. The current year~~remeasurement of net deferred tax liabilities as a result of the Tax Act. In addition, the effective tax rate isfor the nine months ended December 31, 2017 reflects the Tax Act's permanent reduction in the U.S. federal corporate income tax rate. The effective tax rate for the nine months ended

December 31, 2017 was impacted by nondeductible share-based compensation related to the Arbor and Circulate acquisitions. In the nine months ended December 31, 2017, the Company also recognized tax benefits of $1.9 million related to net excess tax benefits from share-based compensation. During the nine months ended December 31, 2016, the Company recorded a $4.1 million income tax benefit related to the disposition of the Acxiom ~~Impact. During~~Impact business.

As a result of the ~~same period~~Tax Act, we have determined that our U.S. federal statutory corporate income tax rate will be 31.5% for the fiscal year ending March 31, 2018, and we expect the U.S. federal statutory rate to be 21% for fiscal years beginning after March 31, 2018.

Over the last ~~year,~~three quarters, Acxiom has undergone a comprehensive review of its businesses to drive cleaner lines of sight, clearer accountabilities and to maximize its strategic flexibility. Following this review, the Company ~~recorded~~intends to reorganize its business and actively explore options to further strengthen Acxiom Marketing Solutions, a ~~$1.0 million tax benefit in connection with the completion~~business unit combining MS and lines of business from AS, and deliver greater value to its clients. These options may include a ~~U.S. income tax examination covering the fiscal years ended March 31, 2013 and 2012.~~

The effective tax rates for all periods were impacted by state income taxes, research tax credits, nondeductible share-based compensation, and losses in foreign jurisdictions. The Company does not record the income tax benefit of certain foreign losses due to uncertainty of future utilization.

strategic partnership, acquisition, tax-free merger, joint venture, tax-free spin-off, sale or other potential strategic combinations.

~~Table of Contents~~

Capital Resources and Liquidity

Working Capital and Cash Flow

Working capital at December 31, ~~2016~~2017 totaled ~~$109.9~~$209.4 million, a ~~$42.1~~$71.0 million ~~decrease~~increase when compared to ~~$152.0~~$138.3 million at March 31, ~~2016,~~2017, due primarily to ~~net cash paid of $137.4 million for~~ the ~~Arbor~~debt refinancing, as the amended credit agreement does not require periodic principal debt service, and ~~Circulate acquisitions, offset partially by the $70.0 million~~a decrease in ~~proceeds of debt borrowed related to the acquisitions.~~

accrued payroll.

The Company’s cash is primarily located in the United States. Approximately ~~$16.8~~$18.3 million of the total cash balance of ~~$137.9~~$177.8 million, or approximately ~~12.2%~~10.3%, is located outside of the United States. ��The Company has no current plans to repatriate this cash to the United States.

Accounts receivable days sales outstanding ~~from continuing operations,~~ was 5761 days at December 31, ~~2016~~2017 compared to 5657 days at March 31, ~~2016,~~2017, and is calculated as follows (dollars in thousands):

December 31,

March 31,

2016

2016

Numerator – trade accounts receivable, net

$
137,523

$
138,650

Denominator:

Quarter revenue

223,312

224,655

Number of days in quarter

92

91

Average daily revenue

$
2,427

$
2,469

Days sales outstanding

57

56



	December 31, 2017		March 31, 2017
Numerator – trade accounts receivable, net	$	155,634	$	142,768
Denominator:
Quarter revenue	234,871		224,867
Number of days in quarter	92		90
Average daily revenue	$	2,553	$	2,499
Days sales outstanding	61		57

Net cash provided by operating activities was ~~$85.2~~$76.4 million for the nine months ended December 31, ~~2016,~~2017, compared to ~~$70.4~~$85.2 million in the same period a year ago. The ~~$14.8~~$8.8 million ~~increase~~decrease resulted primarily from ~~improved cash earnings.~~

unfavorable changes in working capital.

Investing activities used cash of ~~$162.1~~$34.9 million during the nine months ended December 31, ~~2016~~2017 compared to ~~$50.7~~$162.1 million in the same period a year ago, due primarily to the $137.4 million of net cash paid in the Arbor and Circulate ~~acquisitions.~~acquisitions in the prior year. Investing activities also consisted of capital expenditures ($~~30.1~~27.0 million compared to ~~$33.8~~$30.1 million in the prior period) ~~and~~, capitalization of software ($~~11.2~~10.3 million compared to ~~$10.4~~$11.2 million in the prior period)~~. Current year investing activities were offset by the $17.0 million~~, net cash received in the disposition of the U.S. Impact ~~business.~~

business ($4.0 million compared to $17.0 million in the prior period), and $1.0 million in the current year for a long-term investment.

Financing activities ~~provided~~used cash of ~~$26.7~~$35.1 million during the nine months ended December 31, ~~2016~~2017 compared to ~~net~~ cash ~~used~~provided of ~~$108.4~~$26.7 million in the same period a year ~~ago, due primarily~~ago. Proceeds from the debt refinancing of $230.0 million were used to pay off the outstanding $225 million term and revolving loan balances, with interest, along with $4.0 million in fees related to the restated credit agreement. Other financing activities consisted of treasury stock purchases of $39.4 million (1.6 million shares of the Company's common stock pursuant to the board of directors' approved stock repurchase plan) compared to $30.5 million in the prior period (1.3 million shares). Financing activities in the prior year included proceeds offrom debt of $70.0 million to partially fund the Arbor and Circulate acquisitions. Financing activities in the current year period also consisted of treasury stock purchases of $30.5 million (1.3 million shares of the Company’s common stock pursuant to the board of directors’ approved stock repurchase plan) and payments of debt of $24.2 million. Financing activities in the prior year included a $55.0 million required term loan debt prepayment as a result of the ITO disposition.

On August 29, 2011, the board of directors adopted a common stock repurchase program. That program was subsequently modified and expanded, most recently on July 28, 2016 (see Note 2)2 - Earnings Per Share). Under the modified common stock repurchase program, the Company may purchase up to ~~$400~~$400.0 million of its common stock through the period ending June 30, 2018. During the nine months ended December 31, ~~2016,~~2017, the Company repurchased ~~1.3~~1.6 million shares of its common stock for ~~$30.5~~$39.4 million. Through December 31, ~~2016,~~2017, the Company had repurchased a total of ~~16.8~~18.4 million shares of its stock for ~~$285.7~~$325.2 million, leaving remaining capacity of ~~$114.3~~$74.8 million under the stock repurchase program.

Credit and Debt Facilities

See Note 98 “Long-Term Debt” of the Notes to Condensed Consolidated Financial Statements ~~(unaudited)~~ for further details related to the Company’s amended and restated credit ~~agreement and interest rate swap~~ agreement.

Based on our current expectations, we believe our liquidity and capital resources will be sufficient to operate our business. However, we may take advantage of opportunities to generate additional liquidity or refinance

~~Table of Contents~~

existing debt through capital market transactions. The amount, nature, and timing of any capital market transactions will depend on our operating performance and other circumstances; our then-current commitments and obligations; the amount, nature, and timing of our capital requirements; any limitations imposed by our current credit arrangements; and overall market conditions.

Off-Balance Sheet Items and Commitments

In connection with the Acxiom Impact disposition, ~~during the current fiscal quarter (see Note 5),~~ the Company assigned a facility lease to the buyer of the business. The Company guaranteed the facility lease as required by the asset disposition agreement. Should the assignee default, the Company would be required to perform under the terms of the facility lease, which ~~runs~~continues through September 2021. At December 31, ~~2016,~~2017, the ~~Company’s~~Company's maximum potential future rent payments ~~under~~subject to this guarantee totaled ~~$2.8~~$2.3 million.

There were no material outstanding letters of credit ~~which would reduce the borrowing capacity under the Company’s revolving credit facility,~~ at December 31, ~~2016.~~

2017 or March 31, 2017.

Contractual Commitments

The following table presents the Company’s contractual cash obligations, exclusive of interest, and purchase commitments at December 31, ~~2016.~~2017. The table does not include the future payment of liabilities related to uncertain tax positions of ~~$5.2~~$5.1 million as the Company is not able to predict the periods in which the payments will be made. The ~~column~~amounts for ~~2017 represents~~2018 represent the remaining three months ending March 31, ~~2017.~~2018. All other ~~columns~~periods represent fiscal years ending March 31 (dollars in thousands).

For the years ending March 31,


2017

2018

2019

2020

2021

Thereafter

Total

Term loan

$
7,500

$
37,500

$
117,500

$
—

$
—

$
—

$
162,500

Revolving credit borrowings

—

—

70,000

—

—

—

70,000

Other debt and long-term liabilities

569

2,320

1,583

1,362

348

—

6,182

Total long-term debt and capital leases

8,069

39,820

189,083

1,362

348

—

238,682

Operating lease payments

4,550

13,957

11,402

11,048

10,759

26,117

77,833

Total contractual cash obligations

$
12,619

$
53,777

$
200,485

$
12,410

$
11,107

$
26,117

$
316,515

For the years ending March 31,


2017

2018

2019

2020

2021

Thereafter

Total

Total purchase commitments

$
23,563

$
19,217

$
15,586

$
14,462

$
7,015

$
—

$
79,843



	For the years ending March 31,
	2018		2019		2020		2021		2022		Thereafter		Total
Revolving credit borrowings	$	—	$	—	$	—	$	—	$	—	$	230,000	$	230,000
Other debt	588		1,583		1,362		348		—		—		3,881
Total long-term debt	588		1,583		1,362		348		—		230,000		233,881
Operating leases	5,113		19,447		14,537		14,181		13,839		17,393		84,510
Total contractual cash obligations	$	5,701	$	21,030	$	15,899	$	14,529	$	13,839	$	247,393	$	318,391



	For the years ending March 31,
	2018		2019		2020		2021		2022		Thereafter		Total
Total purchase commitments	$	13,080	$	22,149	$	16,096	$	8,262	$	1,284	$	338	$	61,209

Purchase commitments include contractual commitments for the purchase of data and open purchase orders for equipment, paper, office supplies, construction and other items. Purchase commitments in some cases will be satisfied by entering into future operating leases, capital leases, or other financing arrangements, rather than payment of cash. The above commitments relating to long-term obligations do not include future payments of interest. The Company estimates future interest payments on debt for the remainder of fiscal ~~2017~~2018 of ~~$1.9~~$2.7 million.

~~Table of Contents~~

The following are contingencies or guarantees under which the Company could be required, in certain circumstances, to make cash payments as of December 31, ~~2016~~2017 (dollars in thousands):

~~Lease guarantees~~



Lease guarantees	$	2,260
Surety bonds	$	405

~~2,957~~

~~Surety bonds~~

~~405~~

While the Company does not have any other material contractual commitments for capital expenditures, certain levels of investments in facilities and computer equipment continue to be necessary to support the growth of the business. In some cases, the Company also licenses software and sells hardware to clients. Management believes that the Company’s existing available debt and cash flow from operations will be sufficient to meet the Company’s working capital and capital expenditure requirements for the foreseeable future. The Company also evaluates acquisitions from time to time, which may require up-front payments of cash.

For a description of certain risks that could have an impact on results of operations or financial condition, including liquidity and capital resources, see “Risk Factors” contained in Part I, Item 1A, of the Company’s ~~2016~~2017 Annual Report.

Non-U.S. Operations

The Company has a presence in the United Kingdom, France, Germany, Poland, Australia, China and ~~China.~~Japan. Most of the Company’s exposure to exchange rate fluctuation is due to translation gains and losses as there are no material transactions that cause exchange rate impact. In general, each of the foreign locations is expected to fund its own operations and cash flows, although funds may be loaned or invested from the U.S. to the foreign subsidiaries subject to limitations in the Company’s revolving credit facility. These advances are considered ~~to be~~ long-term investments, and any gain or loss resulting from changes in exchange rates as well as gains or losses resulting from translating the foreign financial statements into U.S. dollars are included in accumulated other comprehensive ~~income (loss).~~income. Exchange rate movements of foreign currencies may have an impact on the Company’s future costs or on future cash flows from foreign investments. The Company has not entered into any foreign currency forward exchange contracts or other derivative instruments to hedge the effects of adverse fluctuations in foreign currency exchange rates.

Critical Accounting Policies

We prepare our condensed consolidated financial statements in conformity with U.S. GAAP. These accounting principles require management to make certain judgments and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The consolidated financial statements in the Company’s ~~2016~~2017 Annual Report include a summary of significant accounting policies used in the preparation of Acxiom’s consolidated financial statements. In addition, the Management’s Discussion and Analysis filed as part of the ~~2016~~2017 Annual Report contains a discussion of the policies ~~which~~that management has identified as the most critical because they require management’s use of complex and/or significant judgments. None of the Company’s critical accounting policies have materially changed since the date of the last annual report.

Accounting Pronouncements Adopted During the Current Year

See “Accounting Pronouncements Adopted During the Current Year” under Note 1, “Basis of Presentation and Summary of Significant Accounting Policies,” of the Notes to Condensed Consolidated Financial Statements ~~(Unaudited)~~ for a discussion of certain accounting standards that have been issued and were adopted during the current fiscal year.

New Accounting Pronouncements Not Yet Adopted

See “Recent Accounting Pronouncements Not Yet Adopted” under Note 1, “Basis of Presentation and Summary of Significant Accounting Policies,” of the Notes to Condensed Consolidated Financial Statements ~~(Unaudited)~~ for a discussion of certain accounting standards that have been issued but not yet adopted.

~~Table of Contents~~

Forward-looking Statements

This ~~document~~Quarterly Report on Form 10-Q contains forward-looking statements. These statements, which are not statements of historical fact, may contain estimates, assumptions, projections and/or expectations regarding the Company’s financial position, results of operations, market position, product development, growth opportunities, economic conditions, and other similar forecasts and statements of expectation. Forward-looking statements are often identified by words or phrases such as “anticipate,” “estimate,” “plan,” “expect,” “believe,” “intend,” “foresee,” or the negative of these terms or other similar variations thereof. These forward-looking statements are not guarantees of future performance and are subject to a number of factors and uncertainties that could cause the Company’s actual results and experiences to differ materially from the anticipated results and expectations expressed in the forward-looking statements.

Forward-looking statements may include but are not limited to the following:

~~management's expectations about the macro economy;~~

~~statements containing a projection of revenues, expenses, income (loss), earnings (loss) per share, capital expenditures, dividends, capital structure, or other financial items;~~

~~statements of the plans and objectives of management for future operations;~~

management’s expectations about the macro economy;

statements of future economic performance, including, but not limited to, those statements contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this Quarterly Report on Form 10-Q;

~~statements containing any assumptions underlying or relating to any of the above statements; and~~

statements containing a projection of revenues, income (loss), earnings (loss) per share, capital expenditures, dividends, capital structure, or other financial items;

~~statements containing a projection or estimate.~~

statements of the plans and objectives of management for future operations, including, but not limited to, those statements contained under the heading “Acxiom’s Growth Strategy” in Part I, Item 1 of the Company's 2017 Annual Report on Form 10-K;

statements containing any assumptions underlying or relating to any of the above statements; and

statements containing a projection or estimate

Among the factors that may cause actual results and expectations to differ from anticipated results and expectations expressed in such forward-looking statements are the following:

~~the risk factors described in Part I, “Item 1A. Risk Factors” included in the Company’s 2016 Annual Report and those described from time to time in our future reports filed with the SEC;~~

the possibility that in the event a change of control of the Company is sought that certain clients may attempt to invoke provisions in their contracts allowing for termination upon a change in control, which may result in a decline in revenue and profit;

~~the possibility that the integration of acquired businesses may not be as successful as planned;~~

the risk factors described in Part I, “Item 1A. Risk Factors” included in the Company's 2017 Annual Report and those described from time to time in our future reports filed with the SEC;

~~the possibility that the fair value of certain of our assets may not be equal to the carrying value of those assets now or in future time periods;~~

~~the possibility that sales cycles may lengthen;~~

the possibility that, in the event a change of control of the Company is sought, certain clients may attempt to invoke provisions in their contracts allowing for termination upon a change in control, which may result in a decline in revenue and profit;

~~the possibility that we will not be able to properly motivate our sales force or other associates;~~

~~the possibility that we may not be able to attract and retain qualified technical and leadership associates, or that we may lose key associates to other organizations;~~

the possibility that the integration of acquired businesses may not be as successful as planned;

~~the possibility that we will not be able to continue to receive credit upon satisfactory terms and conditions;~~

~~the possibility that competent, competitive products, technologies or services will be introduced into the marketplace by other companies;~~

the possibility that the fair value of certain of our assets may not be equal to the carrying value of those assets now or in future time periods;

~~the possibility that there will be changes in consumer or business information industries and markets that negatively impact the Company;~~

~~the possibility that we will not be able to protect proprietary information and technology or to obtain necessary licenses on commercially reasonable terms;~~

the possibility that sales cycles may lengthen;

the possibility that there will be changes in the legislative, accounting, regulatory and consumer environments affecting our business, including but not limited to litigation, legislation, regulations and customs relating to our ability to collect, manage, aggregate and use data;

~~the possibility that data suppliers might withdraw data from us, leading to our inability to provide certain products and services;~~

the possibility that we will not be able to properly motivate our sales force or other associates;

the possibility that data purchasers will reduce their reliance on us by developing and using their own, or alternative, sources of data generally or with respect to certain data elements or categories;

~~the possibility that we may enter into short-term contracts which would affect the predictability of our revenues;~~

the possibility that we may not be able to attract and retain qualified technical and leadership associates, or that we may lose key associates to other organizations;

the possibility that we will not be able to continue to receive credit upon satisfactory terms and conditions;

~~Table~~

the possibility that competent, competitive products, technologies or services will be introduced into the marketplace by other companies;

the possibility that there will be changes in consumer or business information industries and markets that negatively impact the Company;

the possibility that we will not be able to protect proprietary information and technology or to obtain necessary licenses on commercially reasonable terms;

the possibility that there will be changes in the legislative, accounting, regulatory and consumer environments affecting our business, including but not limited to litigation, legislation, regulations and customs impairing our ability to collect, manage, aggregate and use data;

the possibility that data suppliers might withdraw data from us, leading to our inability to provide certain products and services;

the possibility that data purchasers will reduce their reliance on us by developing and using their own, or alternative, sources of ~~Contents~~

data generally or with respect to certain data elements or categories;

~~the possibility that the amount of ad hoc, volume-based and project work will not be as expected;~~

~~the possibility that we may experience a loss of data center capacity or interruption of telecommunication links or power sources;~~

the possibility that we may enter into short-term contracts, which would affect the predictability of our revenues;

~~the possibility that we may experience failures or breaches of our network and data security systems, leading to potential adverse publicity, negative customer reaction, or liability to third parties;~~

~~the possibility that our clients may cancel or modify their agreements with us;~~

the possibility that the amount of ad hoc, volume-based and project work will not be as expected;

the possibility that we will not successfully complete customer contract requirements on time or meet the service levels specified in the contracts, which may result in contract penalties or lost revenue;

~~the possibility that we experience processing errors which result in credits to customers, re-performance of services or payment of damages to customers; and~~

the possibility that we may experience a loss of data center capacity or interruption of telecommunication links or power sources;

~~general and global negative economic conditions.~~

the possibility that we may experience failures or breaches of our network and data security systems, leading to potential adverse publicity, negative customer reaction, or liability to third parties;

the possibility that our clients may cancel or modify their agreements with us;

the possibility that we may experience processing errors that result in credits to customers, re-performance of services or payment of damages to customers;

general and global negative economic conditions; and

our tax rate and other effects of the changes to U.S. federal tax law.

With respect to the provision of products or services outside our primary base of operations in the United States, all of the above factors apply, along with the difficulty of doing business in numerous sovereign jurisdictions due to differences in scale, competition, culture, laws and regulations.

Other factors are detailed from time to time in periodic reports and registration statements filed with the SEC. The Company believes that it has the product and technology offerings, facilities, associates and competitive and financial resources for continued business success, but future revenues, costs, margins and profits are all influenced by a number of factors, including those discussed above, all of which are inherently difficult to forecast.

In light of these risks, uncertainties and assumptions, the Company cautions readers not to place undue reliance on any forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information or otherwise.

~~Table of Contents~~

Item 3. Quantitative and Qualitative Disclosures about Market Risk

~~Acxiom’s earnings are affected by~~

We believe there have been no material changes in short-term interest rates primarily as a result of its term loan agreement and its revolving credit agreement, both of which bear interest at a floating rate. Acxiom currently uses an interest-rate swap agreement to mitigateour market risk exposures for the changes in interest rate risk on $50 million of its floating-rate debt. Risk can be estimated by measuring the impact of a near-term adverse movement of one percentage point in short-term market interest rates. If short-term market interest rates increase one percentage point during the next four quarters compared to the previous four quarters, there would be no material adverse impact on Acxiom’s results of operations. Acxiom has no material future earnings or cash flow expenses from changes in interest rates related to its other long-term debt obligations, as substantially all of Acxiom’s remaining long-term debt instruments have fixed rates. At bothnine months ended December 31, ~~2016 and~~2017, as compared with those discussed in our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2016, the fair value of the Company’s fixed rate long-term debt approximated carrying value.~~

The Company has a presence in the United Kingdom, France, Germany, Poland, Australia, and China. In general, each of the foreign locations is expected to fund its own operations and cash flows, although funds may be loaned or invested from the U.S. to the foreign subsidiaries. Therefore, exchange rate movements of foreign currencies may have an impact on Acxiom’s future costs or on future cash flows from foreign investments. Acxiom has not entered into any foreign currency forward exchange contracts or other derivative instruments to hedge the effects of adverse fluctuations in foreign currency exchange rates.

2017.

Item 4. Controls and Procedures

(a)Evaluation of Disclosure Controls and Procedures.

Our management, with the participation of our Chief Executive Officer and President (our principal executive officer) and our Chief Financial Officer and Executive Vice President (our principal financial and accounting officer), evaluated the effectiveness of our disclosure controls and procedures (as defined under Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended). Based on this evaluation, our principal executive officer and our principal financial and accounting officer concluded that as of December 31, ~~2016,~~2017, our disclosure controls and procedures were effective.

~~(b)~~

~~Changes in Internal Control over Financial Reporting~~

(b) Changes in Internal Control over Financial Reporting.

There have been no changes in our internal control over financial reporting that occurred during the fiscal quarter ended December 31, ~~2016, other than the implementation of internal control for financial reporting on the entities acquired in the Arbor and Circulate acquisitions,~~2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~Table of Contents~~

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

There are currently no matters pending against the Company or its subsidiaries for which the potential exposure is considered material to the Company’s condensed consolidated financial statements.

Item 1A. Risk Factors

The risks described in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended March 31, ~~2016,~~2017, which was filed with the Securities and Exchange Commission on May ~~27, 2016,~~26, 2017, remain current in all material respects. Those risk factors do not identify all risks that we face. Our operations could also be affected by factors that are not presently known to us or that we currently consider to be immaterial to our operations. If any of the identified risks or others not specified in our SEC filings materialize, our business, financial condition, or results of operations could be materially adversely affected. In these circumstances, the market price of our common stock could decline.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~(a)Not applicable.~~

~~(b)~~(a)Not applicable.

~~(c)The table below provides information regarding purchases by Acxiom of its common stock during the periods indicated.~~

~~Maximum Number (or Approximate~~

~~Total Number~~

~~Average Price~~

~~Total Number of Shares~~

~~Dollar Value) of Shares that May Yet~~

~~of Shares~~

~~Paid~~

~~Purchased as Part of Publicly~~

~~Be Purchased Under the~~

~~Period~~

~~Purchased~~

~~Per Share~~

~~Announced Plans or Programs~~

~~Plans or Programs~~

~~10/1/16 - 10/31/16~~

—

~~n/a~~

—

(b)Not applicable.

(c)The table below provides information regarding purchases by Acxiom of its common stock during the periods indicated.



				Maximum Number (or Approximate
	Total Number	Average Price	Total Number of Shares	Dollar Value) of Shares that May Yet
	of Shares	Paid	Purchased as Part of Publicly	Be Purchased Under the
Period	Purchased	Per Share	Announced Plans or Programs	Plans or Programs
October 2017	—	n/a	—	$	94,474,907
November 2017	339,883	26.54	339,883	85,455,426
December 2017	389,081	27.36	389,081	74,809,780
Total	728,964	26.98	728,964	$	74,809,780

~~114,250,978~~

~~11/1/16 - 11/30/16~~

—

~~n/a~~

—

~~12/1/16 - 12/31/16~~

—

~~n/a~~

—

~~Total~~

—

~~n/a~~

—

~~114,250,978~~

On August 29, 2011, the board of directors adopted a common stock repurchase program. That program was subsequently modified and expanded, most recently on July 28, 2016. Under the modified common stock repurchase program, the Company may purchase up to $400.0 million of its common stock through the period ending June 30, 2018. Through December 31, ~~2016,~~2017, the Company had repurchased ~~16.8~~a total of 18.4 million shares of its stock for ~~$285.7~~$325.2 million, leaving remaining capacity of ~~$114.3~~$74.8 million under the stock repurchase program.

~~Table of Contents~~

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

The following exhibits are filed with this quarterly report:


	~~31.1~~
10.1		Amended and Restated Key Associate Stock Option Plan of Acxiom Corporation (previously filed as Exhibit 10(e) to Acxiom’s Annual Report on Form 10-K for the fiscal year ended March 31, 2000, Commission File No. 0-13163, and incorporated herein by reference)

10.2		Amended and Restated 2005 Equity Compensation Plan of Acxiom Corporation (previously filed on August 4, 2017, as Exhibit 10.1 to Acxiom Corporation’s Quarterly Report on Form 10-Q, and incorporated herein by reference)

10.3		Amended and Restated 2010 Executive Officer Severance Policy (previously filed as Exhibit 10.7 to Acxiom Corporation’s Annual Report on Form 10‑K for the fiscal year ended March 31, 2015, Commission File No. 0‑13163, and incorporated herein by reference)

10.4		2011 Nonqualified Equity Compensation Plan of Acxiom Corporation (previously filed on July 27, 2011, as Exhibit 10.2 to Acxiom Corporation’s Current Report on Form 8-K, and incorporated herein by reference)

10.5		LiveRamp, Inc. 2006 Equity Incentive Plan (previously filed as Exhibit 99.1 to Acxiom Corporation’s Registration Statement on Form S-8, Commission File No. 333-197463, and incorporated herein by reference)

10.6		Arbor Equity Compensation Plan (previously filed as Exhibit 10.2 to Acxiom Corporation’s Registration Statement on Form S-8, Commission File No. 333-214926, and incorporated herein by reference)

10.7		Circulate Equity Compensation Plan (previously filed as Exhibit 10.4 to Acxiom Corporation’s Registration Statement on Form S-8, Commission File No. 333-214926, and incorporated herein by reference)

10.8		Form of Performance Unit Award Agreement under the Amended and Restated 2005 Equity Compensation Plan of Acxiom Corporation

31.1		Certification of Chief Executive Officer and President (principal executive officer) pursuant to SEC Rule 13a-14(a)/15d-14(a), as adopted pursuant to Sections 302 and 404 of the Sarbanes-Oxley Act of 2002

31.2	~~31.2~~	Certification of Chief Financial Officer and Executive Vice President (principal financial and accounting officer) pursuant to SEC Rule 13a-14(a)/15d-14(a), as adopted pursuant to Sections 302 and 404 of the Sarbanes-Oxley Act of 2002

32.1	~~32.1~~	Certification of Chief Executive Officer and President (principal executive officer) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2	~~32.2~~	Certification of Chief Financial Officer and Executive Vice President (principal financial and accounting officer) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


	~~101~~
101		The following financial information from our Quarterly Report on Form 10-Q for the quarter ended December 31, ~~2016,~~2017, formatted in XBRL: (i) Condensed Consolidated Balance Sheets at December 31, ~~2016,~~2017, and March 31, ~~2016,~~2017, (ii) Condensed Consolidated Statements of Operations for the Three ~~months~~Months ended December 31, ~~2016~~2017 and ~~2015,~~2016, (iii) Condensed Consolidated Statements of Operations for the Nine ~~months~~Months ended December 31, ~~2016~~2017 and ~~2015,~~2016, (iv) Condensed Consolidated Statements of Comprehensive ~~Loss~~Income (Loss) for the Three ~~months~~Months ended December 31, ~~2016~~2017 and ~~2015,~~2016, (v) Condensed Consolidated Statements of Comprehensive Income (Loss) for the Nine ~~months~~Months ended December 31, ~~2016~~2017 and ~~2015,~~2016, (vi) Condensed Consolidated Statement of ~~Stockholders’~~ Equity for the Nine ~~months~~Months ended December 31, ~~2016,~~2017, (vii) Condensed Consolidated Statements of Cash Flows for the Nine ~~months~~Months ended December 31, 2017 and 2016, and ~~2015, and (viii)~~(vi) the Notes to Condensed Consolidated Financial Statements, tagged in detail.

SIGNATURE

~~Table of Contents~~

~~SIGNATURE~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	~~Acxiom Corporation~~

			Acxiom Corporation


Dated: February ~~2, 2017~~ 7, 2018

	By:	/s/ Warren C. Jenson
		(Signature)
		Warren C. Jenson
		Chief Financial Officer & Executive Vice President
		(principal financial and accounting officer)

~~Table of Contents~~

~~EXHIBIT INDEX~~


~~Exhibit~~ ~~Number~~		~~Description~~
~~31.1~~		Certification of Chief Executive Officer and President (principal executive officer) pursuant to SEC Rule 13a-14(a)/15d-14(a), as adopted pursuant to Sections 302 and 404 of the Sarbanes-Oxley Act of 2002

~~31.2~~		Certification of Chief Financial Officer and Executive Vice President (principal financial and accounting officer) pursuant to SEC Rule 13a-14(a)/15d-14(a), as adopted pursuant to Sections 302 and 404 of the Sarbanes-Oxley Act of 2002

~~32.1~~		~~Certification of Chief Executive Officer and President (principal executive officer) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~

~~32.2~~		Certification of Chief Financial Officer and Executive Vice President (principal financial and accounting officer) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

~~101~~		The following financial information from our Quarterly Report on Form 10-Q for the quarter ended December 31, 2016, formatted in XBRL: (i) Condensed Consolidated Balance Sheets at December 31, 2016, and March 31, 2016, (ii) Condensed Consolidated Statements of Operations for the Three months ended December 31, 2016 and 2015, (iii) Condensed Consolidated Statements of Operations for the Nine months ended December 31, 2016 and 2015, (iv) Condensed Consolidated Statements of Comprehensive Loss for the Three months ended December 31, 2016 and 2015, (v) Condensed Consolidated Statements of Comprehensive Income (Loss) for the Nine months ended December 31, 2016 and 2015, (vi) Condensed Consolidated Statement of Stockholders’ Equity for the Nine months ended December 31, 2016, (vii) Condensed Consolidated Statements of Cash Flows for the Nine months ended December 31, 2016 and 2015, and (viii) the Notes to Condensed Consolidated Financial Statements, tagged in detail..


	December 31,		March 31,
	2016		2016
ASSETS		(Unaudited)
Current assets:
Cash and cash equivalents	$	137,850	$	189,629
Trade accounts receivable, net		137,523		138,650
Refundable income taxes		526		9,834
Other current assets		48,035		37,897
Total current assets		323,934		376,010

Property and equipment, net of accumulated depreciation and amortization		174,005		183,043
Software, net of accumulated amortization		51,308		55,735
Goodwill		591,102		492,745
Purchased software licenses, net of accumulated amortization		7,989		10,116
Deferred income taxes		9,115		6,885
Other assets, net		52,421		25,315
	$	1,209,874	$	1,149,849
LIABILITIES AND EQUITY
Current liabilities:
Current installments of long-term debt	$	36,050	$	32,243
Trade accounts payable		43,117		37,717
Accrued payroll and related expenses		45,082		61,309
Other accrued expenses		57,187		48,254
Deferred revenue		32,644		44,477
Total current liabilities		214,080		224,000

Long-term debt		200,798		157,897
Deferred income taxes		57,165		53,964
Other liabilities		14,721		15,020
Commitments and contingencies
Equity:
Common stock		13,222		13,039
Additional paid-in capital		1,131,553		1,082,220
Retained earnings		610,690		598,501
Accumulated other comprehensive income		6,297		8,590
Treasury stock, at cost		(1,038,652)		(1,003,382)
Total equity		723,110		698,968
	$	1,209,874	$	1,149,849


				Weighted-‑average
		Weighted-average		remaining	Aggregate
	Number of	exercise price		contractual term	Intrinsic value
	shares	per share		(in years)	(in thousands)
Outstanding at March 31, 2016	3,604,102	$	14.52
Arbor and Circulate replacement stock options	358,936	$	1.48
Exercised	(566,092)	$	13.73		$	5,785
Forfeited or cancelled	(67,513)	$	13.90
Outstanding at December 31, 2016	3,329,433	$	13.26	5.3	$	45,208
Exercisable at December 31, 2016	2,369,091	$	14.15	4.4	$	30,056


		Weighted average
		fair value per		Weighted-average
	Number	share at grant		remaining contractual
	of shares	date		term (in years)
Outstanding at March 31, 2016	2,279,895	$	19.69	2.12
Granted	2,107,608	$	23.77
Vested	(890,127)	$	20.18
Forfeited or cancelled	(167,408)	$	19.94
Outstanding at December 31, 2016	3,329,968	$	22.13	2.63


			Useful life
	Fair value		(in years)
Publisher relationships	$	24,800	6
Developed technology		9,300	2 to 4
Customer relationships		7,100	6
Trade name		600	1
Total intangible assets	$	41,800



	Marketing		Audience
	Services		Solutions		Connectivity		Total
Balance at March 31, 2016	$	124,586	$	273,430	$	94,729	$	492,745
Allant adjustment		—		19		—		19
Arbor and Circulate acquisitions (see note 4)		—		—		104,364		104,364
Impact email disposition (see note 5)		(5,684)		—		—		(5,684)
Change in foreign currency translation adjustment		(236)		—		(106)		(342)
Balance at December 31, 2016	$	118,666	$	273,449	$	198,987	$	591,102


	Associate-related		Ongoing
	reserves		contract costs		Total

March 31, 2016	$	2,855	$	3,524	$	6,379
Restructuring charges and adjustments		2,107		—		2,107
Payments		(3,267)		(1,626)		(4,893)
December 31, 2016	$	1,695	$	1,898	$	3,593