Acxiom stock ticked up Tuesday despite missing revenue estimates and lowering revenue guidance. A likely reason: The company announced a strategic review of its Marketing Services business and some of its Audience Solutions assets to consider a potential sale, merger, spin-off or other exit.
CEO Scott Howe told investors the plan is to consolidate Acxiom’s three divisions – Connectivity (LiveRamp), Audience Solutions (the legacy data business) and Marketing Services – into just two: a marketing solutions business and LiveRamp.
Acxiom has been heavily investing in LiveRamp and its identity-linking business, a crucial growth driver as the company’s legacy database management unit shrinks and its third-party data offering remains flat.
In 2016, LiveRamp acquired the data and identity-matching startups Arbor and Circulate for more than $140 million combined.
Howe also cited LiveRamp’s cookie-based identity consortium with AppNexus, Index Exchange and other ad tech platforms, which he said will launch its first commercial product in the coming weeks, as an expected source of revenue growth.
Connectivity generates a relatively small portion of Acxiom’s revenue, bringing in $147 million in 2017, compared to $322 million from Audience Solutions and $411 million from Marketing Services. But it’s part of Acxiom’s evolution from a data broker and on-boarder into an agnostic data infrastructure service.
“LiveRamp took a major step forward, going beyond data onboarding,” Howe said in an earnings report last year.
The Marketing Services business, though the largest revenue producer, is a managed services offering to help onboarding customers use Acxiom’s audience and identity match solutions.
And Acxiom has been trimming the Marketing Services division even as it expands its programmatic business. In 2016, the marketing cloud Zeta Interactive acquired Acxiom Impact, its email marketing services unit.
BMO Capital Markets raised its price target on Acxiom stock from $32 to $36, based on optimism that a strategic buyer for its marketing and audience solutions will be willing to pay a premium.
“We also don’t rule out a second deal for LiveRamp,” wrote BMO senior analyst Dan Salmon in an investor note, which he said would likely be a scaled software company that could cut overhead while integrating the data and identity-matching technology.
