Good day ladies and gentlemen. Welcome to the Acxiom third quarter fiscal year 2010 earnings conference call. As a reminder today's call is being recorded. At this time for opening remarks and introductions, I'd like to turn the conference over to Chief Operating Officer, Mr. John Adams. Please go ahead, sir.

Thank you, good morning and welcome. Thank you for joining us to discuss our fiscal 2010 third quarter results. With me today are John Meyer, our CEO and President and Chris Wolf, our CFO. Today's press release and this call may contain forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. For a detailed description of these risks, please read the risk factor section of our public filings and the press release. Acxiom undertakes no obligation to release publicly any revisions to any of our forward-looking statements. The copy of our press release and financial schedules including any reconciliation of non-GAAP financial measures is available at acxiom.com. At this time I'd like to turn the call over to John Meyer.

Great, thank you, John and thank you for joining us in today's call. So for consistency in these discussions, I'll begin with a few remarks about our results, a look back if you will and then look forward to our four primary focus areas for improving our business. As a reminder, you'll recall that those are insight, integration, international and incubator. So let’s get started with a recap of our third quarter numbers. As you can tell from our earnings release Q3 marked our second straight quarter of sequential improvement in revenue, up nearly 5% over Q2, which was 6% higher than Q1. These numbers reflect the impact of improving economy and are consistent with our historical seasonality of our results. Our Q3 improvement came both from previously reported contracts kicking in and the good mix of new business that we generated this quarter. We saw evidence of stabilizing client spendings both in ad hoc work and strategic multi-channel programs. As of last quarter each of our industry units, minus retail this quarter which had a small decline, increased their revenue sequentially. I'll give you a few examples. In financial services, we saw our best sales quarter this year and the average size of the deals being up substantially. In our manufacturing and distribution business, revenue grew 5% year-over-year and margins improved considerably. In retail, our pipeline was the strongest since been all year and we closed a few deals with a home improvement chain and a video retailer. In travel, we had a significant extension with Marriott Vacation Club International and in media we signed two new solution lines with Time Inc. The quarter continues to highlight our focus on operational leverage, resulting in solid earnings performance with diluted earnings per share of $0.18, up $0.12 in Q2. Additionally…

Great, thanks John. I'll be reviewing selected financial highlights for the quarter. I direct you to our website for the supporting financial schedules to assist you with your analysis. Let me begin with the consolidated figures of the income statement. For the three months ended December 31, 2009, total revenue was $283.8 million, compared to $301 million excluding the $20.1 million revenue from a pass-through data contract in the same period last year. This represents a decrease of $17.2 million or 5.7%. Normalizing for exchange rates, the decrease was 6.7%. As we’ve discussed with you previously, the company now recognizes revenue on a net basis from this data contract. Total operating expenses for the current quarter, decreased 4.7% to $253.9 million compared to $266.4 million excluding expenses related to the pass-through contract and excluding unusual items for the prior year three-month period. Operating income was $29.9 million this quarter compared to a loss of $8.6 million a year ago. Excluding unusual items, the prior year operating income was $34.6 million. Net income was $14.3 million compared to a loss of $11.4 million last year. Excluding unusual items, the prior year net income was $16.2 million. Fully diluted earnings per share was $0.18, down from $0.21 before the affect of unusual items in the third quarter last year. GAAP diluted loss per share in the prior year was $0.15. I'd also like to comment on our third quarter results compared to our second quarter. Total revenue was up by $12.7 million or 4.7% and operating income was up by $8.6 million or 40%. Operating margin improved to 10.5% in the third quarter, from 7.8% in the second. As John mentioned, this represents the second consecutive quarter of sequential improvement and is representative of our historical seasonal pattern. Turning to revenue, services…

(Operator Instructions). We'll take our first question from Todd Van Fleet with First Analysis.

You gave commentary on SG&A, what drove the sequential increase, I am just wondering, can you briefly go over that again. You said healthcare costs and was there incentive comp that was driving that?

Todd, to answer that question it was a healthcare accrual just to give you a little color. We did have an increase on clients which we considered a bit unusual that came through in the third quarter, the current fourth calendar quarter. As far as the incentive compensation, it was primarily sales commission. We've alluded if we talk a little bit about that. Our pipeline has started to look a little bit better and so we did have increased sales commissions during the quarter.

It's a good thing that we sold a lot of new business.

Just in terms of that commission plan, is it quarterly? Is it semiannually, is it annually? The December quarter payout, I'm trying to understand, if you continue this trajectory should we expect to see the same SG&A rise here to comparable levels?

No, first with the healthcare there was a bit of a catch-up on the accrual. So that trues up the accrual.

How much was that?

$3.3 million.

That's really an annual number to catch things up. So you'll be able to spread it out for your models. And then with the commission, it's all deal based. So when big deals get sold, that's when we pay the commission. So those things, when they happen they get paid, if they don't happen they don't get paid.

Okay, so you'll land a big deal, so just understanding this structurally. So you'll sign a deal, you'll pay the commission, so that's an accrual and cash cost. I imagine if there's modification afterwards there is crawl back, but if the accrual and cash cost happens at the same time?

That's right, if we do a multi-year deal, there's some hold back on that, just to give a little color on that, but to add to John's point on the SG&A, we're still examining the healthcare costs, so we're trying, to John's point, if that were to normalize, that could be an additional $1 million for the quarter. We've been running at $38 million to $40 million run rate in SG&A. If this does come to pass and it's sustainable or it becomes sustainable, we'd probably end up towards the high end of that range.

And just thinking about the seasonality, again, here, and there's moving parts and pieces, you're making improvements in the business, you're increasing the backlog, you're realizing expense savings, working against going into the March quarter here, which is a seasonally softer quarter, how should we think about just kind of general direction on the margin here which is going to win the day in the March quarter? Is it the seasonality and the pressure from a seasonality point of view? Is that going to more than offset the improvements that have been made?

It's the March quarter and it's hard to predict, I think we've proven that we manage our cost structure based on where the revenue flows are and I think you can go back a number of years and see what the trends are and the seasonality and between the third and the fourth quarter and then traditionally the first half of our fiscal year, so I think you should look at, historically what has happened in that period and bring it forward.

Our next question is from Carter Malloy with Stephens Incorporated.

Great quarter. Looking at uh, the card piece of the business, can you tell us, is that still probably 17, 18% of revenues? Your card mailings, specifically card direct mail?

Carter, I wasn’t sure if I heard that. Could you repeat the question.

Okay. So, looking at the credit card piece of the business, is that piece of your business still 17%, 18%?

Yes, that’s still fairly accurate.

Have you seen a meaningful lift in your ITA business during the third quarter?

Oh, okay. Prospecting an [invitation] to apply. More anecdotally than we have seen the financial industry business as an entire industry improve sequentially as we said versus last quarter and last quarter improved. So we're seeing it come back. The world hasn't gone back to '97 because there's a lot less credit card companies around, WaMu being one of them, HSBC being gone. So less customers but they are being more aggressive on the ITA part.

And if I could add color to that, I guess to John's point Carter, I think it does apply to individual institutions. Some institutions are more aggressive and I think a lot of us know who they are and so you're seeing some institutions being more aggressive on the spend but it is not across the board.

Okay. And do you think that trend, at least the stabilization or slight improvement there, do you think that will continue post February 22'd or do you think we're going to slow down here.?

It's funny. We've had that question a couple times on the credit card act and I tell you that the credit card act is going to put the, especially with the fine requirements, is going to put the onus on the credit card companies to know much more specifically who they're offering credit cards to and that consumer knowledge is one of the strengths that Acxiom brings to bear. So we think its going to play pretty well into our hands as opposed to even put it at risk. So, for example, with the college students and their requirement on that, our data and our consumer recognition, the ability to know who they are and where they are, is an important part of what we bring to them.

Okay, and then looking out here, I know you guys are very reluctant to give guidance but I was thinking about your answer to Todd's question a moment ago on historicals which are usually pretty tough for me to filter through because of a lot of the noise in the model in previous years. And just wondering if general seasonality, fiscal fourth quarter, if that's still a good data-buying quarter and so if we could expect maybe revenues to be flat here sequentially.

As we said last quarter, the second half of the year was going to be substantially better than the first half and Q3 is representative of that and I think you can expect more of the same.

Our final question comes from Dan Leben with Robert W. Baird.

You talked a little about sensing some stabilization in the market. Can you just talk about what you're hearing anecdotally in terms of our customers kind of saying with this kind of level we hit in the third quarter, this is third calendar quarter, kind of a level we need to have going forward or are you hearing more people talking about hey, we cut too far in 2009 and need to have a little bit of a resumption to a more normalized market in 2010.

Let me try that. It really is somewhat anecdotal and individual clients going different ways, but there is no doubt that a lot of clients pulled back quite significantly during the downturn and the realization that that basically can't go on forever. So there's a combination of two things working. There's a little bit of an, sort of optimism in the budget, an increased spend within those budgets. But what they're really looking for is better return from the spend that they're getting. There is a much greater focus on the return they're getting for that investment, rather than the investment in marketing just going up somewhat arbitrarily. So I think as John said in his comments, it probably plays to a sweet spot in that we can really target, specifically and measure the returns on a lot of the campaigns that we run. So there's a little bit of freedom in spending, the budgets beginning to ease a little bit. We're seeing that with some of the new business sold that hasn't yet flowed into the revenue line. But there is still considerable pressure from each company to measure that return that they're getting from that investment.

And we think measurable marketing fits right into our sweet spot, Dan. So that's what we do. People aren't buying as many of the $100 million branding campaigns but they're turning to us and saying 'can you tell me what I'm going to get for it' and that's what Acxiom does.

Agreed. Now, just to follow-up on Carter's question a little bit, when you look at that card business, obviously there are some players that have gone away. If you look at kind of a same client sales or revenues-type basis, are you seeing that business getting to the point where you're starting to get to, their year-over-year increases are kind of backed up flat or how should I think about that in terms of the individual clients that are still around and surviving?

Well, I think Chris probably alluded to it just now. It really is client by client. There are one or two that are coming back with higher levels of spending, not back really to the more booming period previously but they're coming back and they're getting more focused. There are others still holding back in a little bit of sort wait and see. So it literally is client by client. It would be unfair to say that there is a trend.

And, in the commentary you mentioned that 55% of your volumes are now going through the standard Acxiom platform. Could you talk a little bit about how we should think about, how that number is going to move going forward and also the cost savings that are related to standardization of platforms?

Well, I mean, we'll continue to approve on that standardization. I think you're seeing it reflect in the increased margins. So, you're seeing it flow through and it's to the benefit. I don't think you'll ever see that and we don't aspire for that to be 100%. One of the things that our clients value is the customization nature of some of the things we do and for the right clients and for the right price we're willing to keep maintaining that customization because it's very important to the client on this. We have other clients that are price sensitive and are looking for some, are willing to adapt to the way they do things to match our profile and to the extent they do, there's an associated benefit for us and a reduced price to them.

And I think what we shouldn’t lose sight of, we spent a lot of time focusing on the price or cost to us of providing these services. By standardizing a large portion of what we do the quality of those services actually is more predictable and goes up as well. So sort of a double benefit comes through to the client.

Okay, and then last one from me is just on the retail segment. Obviously you had a couple of nice wins there but that was the one business that lagged in terms of sequential growth. Was there any kind of large one-time items in the third quarter that kind of weren't there in the fourth quarter or is there something else going on in retail that you're not seeing in other verticals?

No, it wasn't nearly anything you could point out. The decline was small. But because it didn't increase, it was the only one that didn’t increase, we had to single it out. So there is nothing significant. You shouldn't read anything into that from our business in the retail segment. It just is what it is.

In fact, what happened at the end of the quarter was we got a couple of very nice wins that obviously flow into the future and despite those two pretty decent wins I think we could have the had the strongest pipeline we've had in a while in the retail space. Yet to be converted of course, but a pretty strong pipeline.

Yeah, I'll add actually a comment that our Q2 was actually a pretty good quarter. So it was a tough comp for retail. Had a very good (inaudible).

Okay, and then just to clarify on the sales commission's timing, do the sales commissions start getting paid before any revenue is recognized? For example, those large retail deals at the end of the quarter? Did sales commissions hit this quarter in terms of the costs but the revenues are going to start falling going forward or is there more of a timing of recognition around when the revenues start?

It's variable. I guess I would say, traditionally commissions are paid shortly after a contract is signed. If it's a particular contract where we have a large migration period to incorporate them, it might be that the commissions come before the revenue flow does. On the other types of offers, migrations are really short and, and you know, those things, where we would recognize revenue in the same quarter. So, I guess the answer is, it depends.

And, as I said earlier, Dan, if it's a multiyear deal, we do hold back a portion of the commission and actually have a pretty rigorous process internally where we determine when the revenue is going to flow and what some of the contract provisions are and we do adjust the timing and the commissions accordingly.

We do have time for a follow-up question from Todd Van Fleet with First Analysis.

I can't let you skate by with a 35-minute call. So I thought I'd sneak in one more here. With respect to international, if I could ask you to comment on a few things and think about it in terms of Europe and Asia and so when you think about the barriers or the hurdles to overcome for Acxiom to accelerate its revenue growth rate internationally and I guess to think about it in three different ways. One is the relationships. So how, I'm thinking of three different areas, okay; relationships, the customer relationships, the technology, the ability, essentially to kind of add alpha if you will from an information standpoint to your customers stream of thinking and then kind of the macro environment. So when you think about the hurdles that Acxiom has today in making inroads into, be it Europe or Asia or both, what are the primary things that the company is focused on to get that traction? Is it getting the customer relationship? Maybe that's the number one factor in Asia? Maybe it's getting the technology? Maybe that's a short second in Asia. And then maybe the macro environment in Asia certainly isn't an impediment the way it is perhaps in Europe. But I think if you understand what I'm getting at, I'm trying just to understand how you guys are thinking about the international growth.

Great question. So the macro environment is probably the easiest one to look at first. And I think we all have a view in Europe that they would, a little later in being hit by some of the credit squeeze and they've come back later. For us, the biggest impact has been in the U.K. And remember, a lot of the business that we have in Europe is product-based and most of the service business is in the UK. And that's remained fairly stable. So take that off the table for a moment. So definitely UK is our biggest market. It has got quite a lot of product business in it and it's been the slowest market to recover of all of European markets. So that, that's the biggest issue from a macro point of view. If you look at Asia-Pac and predominantly China, that actually rebounded a little quicker and probably didn’t get down as far as just about every other economy. So that's remained relatively stable for us in a macro sense. Then look at the particular aspects that allow it to be successful. Probably it's around a combination of leadership and ability to penetrate large clients. And what we've done, as you know, we've hired a new leadership team in Europe for example. But underneath that, which we don’t really talk about very much, we're hiring leaders of each industry area where we think well be successful in Europe. So we're working pretty closely with the industry leaders in the US, using their capability, knowledge and so on and that is proving to be the right way to go to penetrate one or two of the large industry groups. So I think we're making inroads in that area. China is obviously a little bit different. Relationships are very important. We have an almost entirely Chinese-legged team there. The actual federal leader of China is a French guy that has lived in China and speaks the language for a number of years. The entire rest of the team is Chinese. They do have local contacts that work for other large multinational companies very often. So we're making inroads there as well and improving on that slightly less declined economies. We’re going fairly well.

Our customer base is still the Fortune 500 stuff and wherever we establish the initial relationship, we try to follow that relationship to other subsidiaries where they operate. So we deal with [Car Force] or [L'Oreal] that started in China. We've used that as a potential access point and a relationship into France similar with the financial institutions as they are globalized following them in other places, so they're working together. Our groups really across the whole company have substantially improved and we operate and target customers on a global basis, not just a particular ad hoc project by project.

Great, thanks for that. You didn't really mention anything with respect to technology or a platform, a technology platform that maybe is necessary in one market versus another. So are you content and happy with the technology capabilities that you have; the ability to deliver on a multi-channel basis, be it via mobile or over the net. Do you think you have pretty much all the tools that you need at this point to execute in various markets?

I think the honest answer is no because we still have a predominantly product-based business other than the UK and France is actually getting there as well. The French service business is part of the growth that we talked about a little bit earlier where France had its best quarter ever. So probably France and the UK are ahead in terms of platform and capability and we're looking at the other key markets and what we need to bring there. But the honest answer is no, it's been a product-based business.

And some of it is just in evolution and maturity of those markets. So products like InfoBase and AbiliTec, we roll those out as it makes business sense in those respective regions and where it can actually satisfy what we think the market needs are, on that. As far as utilizing some of the multi-channel stuff, you can send e-mails, which we do already, for multinationals around the globe from one place. So we service some of our customers in 60 countries, but just send it out of one location, that's the beauty of e-mail on this and so same with mobile and smses. We have that same kind of capability and strength. So we're, we're feeling pretty good about our technical capabilities. We're constantly looking to for other new technologies or different kinds of analytic processes that we need to capture the expertise on it and we're evaluating those on a day-to-day basis. We do have $200 million. That's one of our uses of capital will be to look at geographic capital areas or technical competencies that we need to gain and use our cash to springboard into that.

That does conclude the question-and-answer session for the call. I'd like to turn it over to Mr. John Meyer for any additional or closing remarks.

Just to summarize, the four key points I want to leave you with. First we see some loosening of the marketing wallets. The second is we'll benefit by our dual focus on long-term relationships and our focus on value-added solutions and measurable solutions, most importantly. Third, we're gaining leverage from our infrastructure and I have said that a couple times, around our economic leverage and then fourth, during the downturn, we've continued to invest in improving our products and creating some new innovative solutions, we think we can take advantage of going forward. We expect the momentum to grow in the coming weeks with the introduction of a new marketing message that will emphasize our strengths and play to our position as the industry leader. I look forward to having more to share with you on that on a later date. Thank you for your participation in the call. Talk to you next quarter.

That does conclude today's call. Once again thank you for your participation.