Good afternoon, ladies and gentlemen, and welcome to the Acxiom Fiscal 2018 Third Quarter Earnings Call. As a reminder, this conference call is being recorded. I would now like to turn the call over to your host, Ms. Lauren Dillard, Head of Investor Relations.

Thank you, operator. Good afternoon and welcome. Thank you for joining us to discuss our fiscal 2018 third quarter results. With me today are Scott Howe, our CEO; and Warren Jenson, our CFO. Today's press release and this call may contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. For a detailed description of these risks, please read the Risk Factors 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. A copy of our press release and financial schedules, including any reconciliation to non-GAAP financial measures, is available at acxiom.com. Also, during the call today, we will be referring to the slide deck posted on our website. At this time, I'll turn the call over to Scott Howe.

Thank you, Lauren. Good afternoon and thank you for joining us. Today Warren and I will be talking about three major topics. I'll start by talking a little bit about some of the changes in our portfolio structure we announced earlier today. We'll then review the quarter in a bit more detail. Finally, we'll also provide our initial thoughts on next year's financials. Let's start with the portfolio changes by laying out 1) What we are doing? 2) Why we are doing it? and 3) what it means for each business moving forward. First, what we are doing? In the recent calls, we've talked about the portfolio separation activities we have been pursuing so that we can create clear lines of sight, independence, and strategic flexibility for each of our major businesses. This process took several quarter represented a significant one-time investment and required us to think very strategically about each of our businesses. Earlier today, we announced a plan to reconfigure our portfolio into two distinct business units, LiveRamp and Acxiom Marketing Solutions. As part of this structure, key Audience Solutions assets will be distributed across each in a way that we believe best positions both businesses for long-term success. LiveRamp will own identity and integrations. All identity assets including IdentityLink, AbiliTec IP, and Acxiom's TV integrations will be consolidated within LiveRamp creating the world's first truly end-to-end Identity Cloud for people-based marketing. We believe these are Natural Network businesses that should be provisioned at scale to anyone and everyone in the industry. And our goal for this business is to introduce the entire ecosystem of advertisers, agencies, publishers, platforms and data providers to our capabilities. The remaining Audience Solutions lines of business for data and data services will be combined with marketing services to create Acxiom Marketing Solutions.…

Thank you, Scott, and good afternoon, everyone. In my portion of today's call, I'd like to cover three things. I'll touch on the highlights from the quarter in today's announcement. Next, I'll discuss the impact of tax reform and provide updated FY2018 guidelines. And finally, share a few preliminary comments on our outlook for FY2019. At the conclusion of my prepared remarks Scott and I will again proactively address some anticipated QA. Announcement highlights. Please turn to Slide 3. Today we announced the next strategic step and what has been a multi-year journey. We have unlocked what we and many of you foresee as hidden and trap value. We have given direct line of sight to some of the parts valuation. Please turn to Slide 4. We believe LiveRamp is a high revenue multiple SaaS business with strong operating characteristics. This quarter LiveRamp added over 50 new logos and continue to build out its partner network both in the U.S. and internationally. Revenue was up 45% year-over-year. Gross margin was 68%, a record for any quarter. Segment margin was 12% also a record. On a trailing 12-month basis, connectivity generated $24 million of segment EBITDA as compared to $11 million for the comparable period. Next, we have presented a preliminary draft view of our new segment Acxiom Marketing Solutions or AMS. Please keep in mind these numbers represent a starting point for your models. Over the coming months, we will finalize adjustments still expect movement. That said, we believe these numbers to be directionally correct. Like many of you, we expect this business to be valued on its cash flows and EBITDA performance. Make no mistake the combination of AS and MS is nothing like Acxiom of the past. From top to bottom, we have a world class team. While…

Thanks, Warren. First, I'd like to focus on the quarter and guidance for Q4 in FY2018. Warren, what contributed to the softness and audience provisions and can you elaborate on the lowered guidance for the year?

Lauren, I am happy too. First, there were two important positives in AS for the quarter. Digital revenue outside of our largest publisher partner was up more than 40%, this was a very strong performance, next our core revenue that being data and recognition was up low single-digits. Now what didn't pan out as expected with the revenue contribution from other initiatives. Specifically our efforts around global data in penetration of new verticals. This caused Audience Solutions to miss their quarterly forecasts. For the year we made the call to lower our expectations consistent with this performance.

Thanks. That's helped. And just a follow up for you Scott. Last call you are very confident that the new initiatives inside of Audience Solutions would offset the anticipated decline in your largest digital publisher partner. What happened it seems like quite a shift?

Yes, Lauren, first half you're right. Our full-year guidance reflects to step back. As Warren just mentioned, we had a couple real positives in the quarter. Specifically digital revenue growth exclusive of our largest digital partner and growth in the quarter. That said our other initiatives are taking longer to kick in than we anticipated. Even a few months ago and as a result we made the guidance call with it. Remember we planned a lot of feeds to the extent of some aren't working. We'll of course correct and prioritize those that are.

Thanks. Warren, your statement and guidance, and prior sharp deceleration and connectivity growth in Q4, given this, what gives you confidence in 30% plus growth next year?

Lauren, in shortage our core bookings like any other SaaS business and material portion of our growth will be reflected in our Q4 run rate. That our underlying bookings trend is what gives us confidence. Let me just add the way incredibly excited about the core prospects for LiveRamp and other growth initiatives specifically data store, addressable TV and International. We said it before and will say it again, we believe our business stacks up with best-in-class SaaS.

Thanks. Now just a few questions on the realignment. Warren, this one is for you. Have you hired bankers and what is you anticipated timing?

Yes, we have we're pleased to be supported by both Morgan Stanley and Evercore as to process we're not committing to a specific timetable. As I mentioned we only intend to provide updates when conducting our quarterly calls.

Thanks. Scott, can you give us a little bit more color on the AbiliTec realignment?

Yes, sure, well the only thing that is truly moving is the IP, the intellectual property, but that is a big deal. You may recall, we saying that I believe one of the biggest mid steps in Acxiom history is that when the AbiliTec was created a couple decades ago, it wasn't license to the entire world. We're making that possible now. Anyone else who has created their own identity solution to reevaluate our solution, because we believe we can provide it cheaper and better. I want to remind everyone at the legacy recognition revenue associated with data and data base services remains with AMS. We would expect a cross licensing arrangement, this specifics of which we are currently finalizing.

Thanks for that. Warren, a final one for you; first, thanks for the color on the new statements. One thing that might help with my model is some directional color on how corporate expense should be allocated between the segments?

Great question Lauren. Let me first provide a baseline. Today we have approximately $105 million in corporate overhead. This represents roughly 11% of revenue. That is how I would think about it in a go-forward world. For AMS, given we are looking at all alternatives, the amount of corporate overhead required would be determined by the type and character of the potential transaction. By our estimates, this could range anywhere from 0% to 10% of segment revenue. For LiveRamp, if you look at public company peers relevant to LiveRamp size, we estimate corporate expense as a percentage of revenue is to be in the high teens.

Thanks Warren and Scott. That's all for me. So operator, we will now open the call to question.

[Operator Instructions] Our first question comes from the line of Bill Warmington of Wells Fargo. Please go ahead. Your line is open.

Hey Bill.

Good afternoon, everyone. A question for you on the implementation of the new structure. It sounds like that's going to be taking place along when you start reporting FY 2019. What are you thinking in terms of a timeline for starting to consider these strategic options? Or has that already started?

We're out of the gate on that. Yes, so that's started. And then in terms of your structure question, that work has also started. We will staff to our new operating structure effective April 1, which is when we will also start to report our financials in that fashion.

Exactly Bill. And the only other thing I would add on top of what Scott said is, we intend to continue to provide a considerable level of detail. This is not about loss of information in our segments rather it's about the structural changes we're making and the business reasons behind it.

Okay. And then a question for you on the connectivity growth. So it had been in the 40% to 50% growth range, which I know is very strong, and I understand that you have a high class problem in the sense of growing at that rate for a number of years, you start to build up a sizable base. And so the new growth or at least preliminary thoughts on the growth at 30% or better, I wanted to ask about if there's anything other than the larger base, is there anything else that's going on in the market which is taking that growth rate down from the 40% to 50% level to the 30% plus level.

Bill, we see positives, so obviously we have a high degree of predictability as we sit here and as I mentioned in the formal part of our remarks, we have bookings that allowed us to say what we did. At the same time, we would ask everyone to think about our growth levers as we head into FY 2019 and we believe them to be considerable. First one is new sales, so accelerate more branded option. The second thing is higher same-store sales, as we believe it's very early days in terms of the use case development. And then the third thing is new products, so we remain extremely bullish on that which we're doing around data store that Scott mentioned what's going on in TV. And then finally, international, so as we think about where we are; one, we love our position, we love the performance of the business, we like its size, its scale, its financial metrics and we believe that we have the right growth levers in place.

Okay. And then on the digital data front, you mentioned the 40% growth about the one large customer, I mean if you could talk a little bit about whether you think that level of growth is sustainable for that piece of the business?

Well, we'll see as we go forward next year. Scott wants to jump in here, but at the end of the day, we're very positive. When you think of what we've been able to do outside of the single large publisher as we believe where the forefront and the cutting edge of what's going on in the digital data world. So we wanted to highlight that because it's key to our performance next year. We believe that without committing to a specific growth rate that we can assume to put a lot of positive things into place.

Yes, it's more than just Rick and his team in terms of the growth that we think we'll generates AMS over time. It's also increasingly LiveRamp and Data Store. So what's going on here is that, the walled gardens have really created a playbook for the rest of the industry to follow, and so now we're seeing a secular way that next year of publishers, large platforms and agencies, embracing data as part of the products they build in the prophecies that they're engineered. And so we think in both sides of the business, there's a level for us to pull of ongoing growth.

Got it. All right, well, thank you very much.

Thank you, Bill.

Your next question comes from line of Brett Huff of Stephens, Inc. Please go ahead. Your line is open.

Good afternoon everybody.

Hi, Brett.

Thanks for taking my question. Just a couple, number one, Warren you talked a little bit and Scott you talked a lot about the Audience Solutions driving the guide down mostly. And I want to make sure, I got it. Was it the worst place compression and renegotiation with the large publisher or was it slower other revenue growth drivers to try and do you try to develop or was it a mix of both and if the mix kind of 80/20, 50/50 anything likes that would be helpful?

No inside of Audience Solutions, it really didn't have to do with the single large publisher. This had to do mostly Brett with our initiatives. It's kind of 50/50 between that and as you recall in our last conversation we talked about contract revenue, check we delivered as planned and then we had a commit from our sales force, we candidly that came in a little bit lower than we had expected. So I put - and again this is against our internal numbers about 50/50 between again a lower than expected contribution from the commit. And then secondly it was lower performance out of our initiatives and then the combination really the initiatives most specifically the initiatives cost us to lower our guidance for Q4.

Okay, And then to dig in a little bit more on the connectivity, 30% growth is still great and you said more than 30% potentially in 2019 and you guys tend to be trying to be conservative on that asset, I know and it's done very well. Can you give us a sense of you mentioned some of the growth drivers are levers that you do have available to you, how big a pull on those levers would be required to get us a meaningfully above 30% to 35% or even 40% level or not I know you're not going to guided that. I'm just curious what are the levers that could get us there?

Yes, there are some things in each, and in just winning new clients, we've laid down a pretty successful track record of new bookings, quarter-after-quarter. To the extent that we can accelerate that our evangelization efforts are waking people up to the category and they find us, market are kind of them me to industry. So some clients experience success with data driven marketing and other clients follows. So number one would be just continued or even accelerated new bookings? Second is a lever that quite frankly we haven't done a great job polling over the last couple years and that is just increasing usage. We have it historically had a team that has been designed to kind of evangelize, adoption and you've heard me talk about this before like Google did a really good job of this a decade ago when they brought in Torrence Boone, they teach marketers, how to use Google products. We think that's an opportunity for us. That we've seen an increase over time in usage and then from an average one use case now north of 11 per client, but that's nowhere near where we think it could land. And so we're starting to think about what would it look like if we were to put some people against driving usage and kind of a evangelizing, teaching the industry, how to expand their data driven efforts. And in the final piece is new products, we have a lot of things going on there. So I talked about the people based programmatic efforts with the consortium. I mean that's a good example of that and we have five or six things that we have underway, but as you can see from the new initiatives in AS. We're reluctant to like [indiscernible] growth behind those until we actually see the proof points. And so we have some best that we're making but all very early and very small.

Okay. Last one for me just go customer match I think it seems like it's going to be a really big deal just given such a powerful use case and so many people use Google. How you mentioned that I think you had 150 clients live and maybe 20 international. How big does that get and how quickly I mean is that one of the things that we should really look for as a growth driver?

Well, I think it will be a growth driver as much as it is oftentimes the first use case that someone will apply when they sign up for an IdentityLink subscription. So it's not you want to see incremental revenue from that per sale, you'll see it drive adoption. And I've had a look at that is the other side of the coin of people there's programmatic because together search and programmatic represent what like 75% of display advertising or digital advertising spend. And so I always sudden what we do becomes relevant to nearly every digital advertiser on the planet. So it certainly helps us prospect when we go in with a strong case studies around both of these use cases.

Great. Thanks your time. That's I needed.

Thank you, Brett.

Your next question comes from the line of Dan Salmon of BMO Capital Markets. Please go ahead. Your line is open.

Hey, good afternoon, guys. Two questions. First, Scott I know that you've taken down your footprint in Europe pretty considerably over the course of your tenure, but I'd just be curious about your thoughts on the impact of GDPR. Not just across your businesses but maybe how your clients are looking at preparing for it as well when it enforcement begins to go into effect in May. And then second a couple quarters ago you talked a little bit about briefly about initially exploring the opportunity for LiveRamp technology outside of the marketing division I'd be curious if you have any updated thoughts on how that's gone.

Hey, Dan, this is Warren. I'll jump in on the first one on GDPR I'd say a couple of headlines. First, everyone on the call should understand that data driven marketing is every buddies as important for companies outside of the U.S. as it is inside the U.S., retailers across Europe across Asia are competing with Amazon.com it was an expert at data driven marketing and it cannot see data driven marketing to the large internet. So this is very important across the board. Now that's when people are being very, very cautious because it's really heightened the importance of privacy and heighten the importance of compliance. I would tell you flat out that benefits Acxiom and benefits LiveRamp in the long-term. Because that is one of the things that we bring to the table an expertise as to how to deal with privacy compliance we believe that we are the gold standard on that front. Now what we are seeing however you know in dollars. Is in the short-term in particular inside of LiveRamp for some match partners they're pulling back a little bit just trying to make sure - everyone's making sure that they are compliant. So I would say the short-term which we will break into our plans of course will be higher match costs. And then sometimes just a little bit of reluctant to see sign up as they make sure they have the clients to sign up. As they make sure that they have their ducks in a row. Would repeat what we've said in past calls in the long-term GRPR works well in our favor some short-term pain which we like many others are feeling but this is our sweet spot and something that we believe I'd long-term over to advantage. And then in terms of the exploration of additional verticals. And then I think we have a track record over the last six or seven years of trying to be pretty judicious stewards of capital. In other words we're not big on make a liquidity big bets we make very small that's. If they work and will double-down behind them. And so we're still in the exploration stage and we will get a few things healthcare, B2B risk. But I will tell you none of them - yes, we're not in position where we're ready to make a big announcement around any of them we're still in the developing case studies and proof points and deciding you know what kind of investment we want to put behind us those efforts.

Great. Thank you, both.

Thank you.

Your next question comes from the line of Adam Klauber of William Blair. Please go ahead. Your line is open.

Good afternoon. Couple different questions. So with the split up, can you just give us a ballpark where the majority of Audience Solutions revenues be with LiveRamp or will go with AMS?

Let me touch on that, and Scott may want to provide an additional piece of color. If you look at our slide deck, we've given you a bridge to the segments. Now as I mentioned in my portion of the call, there are going to be some tweaks at the margins here, particularly as it relates to the history, but they're going to be at the margin, so consider this to be directionally correct. So directly to answer your question, the bulk of the revenue will go from Audience Solutions into AMS. And then as it relates to the go-forward, there are going to be some variables depending upon the nature of any transaction in our company agreements and/or as Scott mentioned, the potential of a commercial deal between a new partner and LiveRamp in a go-forward world.

And then just to rip of that and then one way to think about it, maybe a good rule of thumb here would be to say, where we have scaleable naturally network products then the IP, the intellectual property goes to LiveRamp such that we can sell it to anyone and everyone in the industry. The existing contracted revenue goes to AMS who becomes a reseller of LiveRamp products. And our goal over time is to have a host of resellers of LiveRamp products including some of the traditional competitors to AMS.

And just to add, that was page four of our slide deck.

Right. Okay. Thank you. And then as far as connectivity, so for the first three quarters your growth was close to 50%, how much of that really came from the deals at year-end?

Is that from the deals at year-end that you are talking about this most recent quarter from Arbor and Circulate?

Yes, year-to-date. [Indiscernible] to growth?

Again, as we mentioned even going back a year ago, we immediately integrated Arbor and Circulate. Our guidance was for the year which I'll reiterate that it would provide roughly $15 million of incremental revenue and EBITDA, may not quite exactly that amount of EBITDA, but $15 million of incremental revenue. We've really just mentioned to people for purposes of your models you could straight line that, but right from the outset, one of the strengths of this acquisition and why it's performed so well as we immediately integrated it.

Right. That's helpful. And then as far as Audience Solutions, once you get to next year and the change in the larger client - the contract with the large client that annualize as I guess how confident are you that that business starts growing again or shows growth again?

Let me start from the outset on the numbers, and then Scott will jump in qualitatively to. If I want to be clear with everybody and we have been in past, but to reiterate that this is a significant headwind for next year. And we would sit here and put three important considerations for our performance in FY 2019. Number one is stabilization of the core. Number two, which we've highlighted today is our growth in other digital. And then third will be what we're doing and continue to do around other growth initiatives. Those are the things that will drive our performance. Those are the things that our team is 100% focused on.

Okay. Thank you. That's helpful.

Thank you.

Your next question comes from the line of Richard Kramer of Arete Research. Please go ahead. Your line is open.

Thanks very much guys. Just two quick ones. Just to follow-up on GDPR, I guess we're hearing from over here in the UK a very different set of perspectives. Is LiveRamp kind of access the data processor or data collector and you sort of flesh out a little bit your role and whether you're going to have some one-off compliance costs, for example, the right for consumers to be removed from data sets. And then, Scott maybe could you just comment a little bit more about your comment about license revenue going to LiveRamp because it does seem a bit of a sticking point with the AppNexus' Index Exchange and other sort of joining a central pool. What sort of ways in which you envision that you might assuage some of the commercial concerns that those players have in terms of sharing data with LiveRamp that even license out to really - exclusively on its own behalf? Thanks.

Let me touch on GDPR and then again I'll let turn it over to Scott. First on GDPR, we're going to continue with LiveRamp to provide the role we always have, the same what we provided in the United States. As it relates to the higher level of compliance cost, sure there is some higher level of compliance costs as an example we today are working with all of our match partners to ensure that we have the appropriate levels of commission in place as we go forward. And as I mentioned earlier to some degree, there are some people that might be pulling out of that that might make our match network in the short-term more costly. But we are incurring additional levels of compliance that's just part of doing the business that we do and in the short-term, we have higher match cost and then also to some degree people are slowing down particularly as we go through the transition. And on the programmatic, I don't think I have zero concern as to whether anyone in the industry views, LiveRamp as a threat, when we launched literally the response was phenomenal, there are well over 20 partners that have participated and along the way that given a speech back about what they want LiveRamp's role to be and how this comes together. We have stayed completely true to our positioning has neutral and agnostic. And so we've opened up some of these capabilities such that others could participate. The design has changed from what we had originally envisioned when we first started the conversations. It's really important in everything we do that the market views as a neutral agnostic provider for anyone and everyone. And so we don't take any kind of biased information or repurpose that to our advantage here, anyone and everyone can participate in this effort.

Okay, thanks. And maybe could you just comment a little bit on any additional sort of data sources you might need to pull in on the mobile side, so that's augment what you've got on desktop?

Well, yes, I mean I think your questions are even broad net, which is to us identity isn't one thing. It's not email or a physical post or drafts or anything like that. When we think about identity, we think about dozens of hundreds of elements of information, which can be used to create a match. And so we're pursuing any at all information that can be part of the identity graph. And I think in mobile, you'll see a pattern that follows what we've done on the PC and the browser, where if you go back, gosh, four or five years ago, our match rates were probably 10% to 20% now. In many cases it can be a 60% to 80% or higher. And on mobile now, we've gone embarking on a similar journey. We're just under 50%. But well significant progress from where we were a couple years ago.

Okay, thank you.

Thank you.

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

Great, thank you operator and thank you all for joining us. I'd like to take this opportunity to remind everyone that ramp up, the Premier Industry Conference, the leaders in Martec is taking place March 5 and 6 of the Fairmont in San Francisco. Similar to last year, we will be holding an investor breakout session, the afternoon of the 5. Again, we will be holding at investor breakout session in the afternoon of the 5. If you're interested in participating or getting more information, more information is available on the Investor Relations website under events and presentations or you can reach out to either me or Lauren directly. We hope to see everyone there. Let me simply summarize our - today's call again by thanking you, but also reiterating something that we said earlier. Today marks we started yet another inflection point in our journey together. We believe we are unlocking some of the parts valuation for a company. We're organizing the two strong operating units each with a trend line of performance, strengthen leadership, and finally our Q4 performance is yet another group in a trend line of continuous improvement. As always we ask that you will be conservative in your forward expectations. Thank you for joining us today.

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