Acxiom Corporation (NASDAQ:ACXM) Q4 2014 Earnings Conference Call May 14, 2014 5:00 PM ET
Lauren Russi - Director of IR
Scott Howe - CEO
Warren Jenson - CFO
Bill Warmington - Wells Fargo
Brett Huff - Stephens
Dan Salmon - BMO Capital Markets
Good day, ladies and gentlemen and welcome to the Acxiom Fourth Quarter Fiscal Year 2014 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded.
I would now like to introduce your host for today’s conference, Lauren Russi, Director of Investor Relations. Ma’am you may begin.
Thanks, Sam. Good afternoon and welcome. Thank you for joining us to discuss our fiscal 2014 fourth quarter and full year results. With me today are Scott Howe, our CEO; and Warren Jenson, our CFO.
Today’s press release and this call may contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. For a detailed description of these risks, please read the Risk Factors sections 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 Web site.
At this time, I will turn the call over to Scott Howe.
Thank you, Lauren. Good afternoon and thank you for joining us today. Fiscal 2014 was an incredible year for Acxiom and I would like to take this opportunity to highlight some of our key accomplishment as well as give you my perspective on where we are on our journey and where we will be going in the months and quarters ahead. I will also provide an update on AOS. And finally, discuss our acquisition of LiveRamp which we announced just this afternoon.
Fiscal 2014 was truly a year of innovation. After investing heavily in R&D in fiscal 2013, we saw a number of innovations hit the market in fiscal 2014. We’ve introduced Audience Propensities early last year and it won a Stevie award for the most innovative product of the year. In September, Aboutthedata.com became the first direct marketing database to provide consumers with visibility and choice. And most notably, in September, we launched new Audience Operating System with the mission to change the world of marketing forever by creating an industry solution that enables one-to-one marketing and scale across all channels and devices.
Fiscal 2014 was also a year of transformation. We set out to turn our core business into a leaner marketing and data services pure play and took important steps toward realizing that vision by separating our business unit so that each could operate on a fully standalone independent basis. In addition, in Q4 we also moved to repair a long time drain on our financials by deciding to exit the analog paper survey business in Europe. This business, a byproduct of legacy acquisitions throughout Europe, has been in steady decline for a decade due to the combination of increasing data collection costs and diminished demand. In addition, by removing shadow organizations eliminating layers of bureaucracy and demanding clear tolerability for client ownership we have dramatically simplified our organization.
Acxiom is not the company it was a year ago. But there is still a lot of work to be done. While we’ve made tremendous progress in 2014, it was only a warm up for what is yet to come. We are sharply focused on the continued growth of our marketing and data services business in 2015 and our efforts in the coming year will be concentrated on accelerating top line growth for both AOS and our core marketing database business while continuing to invest in product enhancement and connectivity.
Next, I will provide an update on AOS. Since launching the AOS last September, the response we’ve received from the industry has been astoundingly positively. We continue to make strong progress with marketers. We are now engaged with over 40 major marketing clients that has either adopted the platform or are using our Safe Heaven technology to onboard, anatomize and distribute their audience through our unmatched premium publisher network.
We signed seven key AOS deals in the quarter including one large deal in China. Our AOS pipeline continues to grow and remain strong at over 60 million. We also continue to expand our partner ecosystem and are very excited about our recently announced partnerships with comScore, Marketo and SHIFT. We are well underway integrating AOS with Marketo’s customer engagement platform and the combination has generated a lot of new local excitement. The joint offering will allow marketers to deliver more personalized content to their audiences.
Yesterday, we announced the partnership with SHIFT, a leading marketing software company for social advertisers. The integration of AOS into SHIFT’s open marketing cloud will provide marketers with enhanced insight and the ability to drive improved ad performance and achieve optimal business results. In fact, a large financial services company reported a 300% increase in click through rates by leveraging AOS audience data on the SHIFT’s platform already.
When we created AOS, our vision was not only to build out a rich suite of solutions specific to the Acxiom offering but to also provide the connective tissue that enhances and accelerates as marketing technologies. These partnerships reinforce that vision. We are now integrated with over 30 applications, fueling their solutions with our rich data and insights. We continue to add to our roster of premium publisher partners and are now partnered with all six of the top six U.S. premium online display publishers.
Further, we have begun to work with several key partners to execute campaigns in Europe and are especially enthusiastic about the work we are doing with Facebook and the UK, France and Germany. Our audience distribution solution continues to gain traction while gross media spend was down in Q4 to roughly 15 million, we expect a substantial ramp in medial spend throughout fiscal 2015.
Even more exciting are the results we have been able to deliver to our customers leveraging Acxiom’s unparallel matching ability, a nationwide women’s retailer recently generated a 10 times return on advertising spend through our Safe Heaven. A large global bank experienced a 10% lift in both applications and approvals using our segmenting and targeting technology. And the premium car manufacturer saw us online campaign click through rate increased by 64% when executing its campaign through AOS.
A final update on the partnership front. Last quarter, we announced our first agency partnership with Starcom MediaVest Group. I am pleased to share that this partnership is progressing nicely. We have trained more than 200 media planners at Starcom MediaVest and Spark over the last 60 days. We are already working with seven customers that many more in the queue. Just last week Starcom launched their first campaign through AOS, a targeted marketing buy on one of our premium publisher partners for a major online educator.
As we together develop great case studies and client successes, we expect that many more clients will launch in the coming months. The Starcom team has been truly great to work with and my enthusiasm about this partnership has never been stronger. Well, we are excited about what we have accomplished with AOS today we also recognize that product innovation is a continuous process and we are constantly thinking about how we can improve the product and its many features.
Earlier this month, we have released AOS Labs, a self service tool for marketers to discover the benefits of AOS recognition targeting and measurement. Last week alone, we had one client distribute over 25 audiences to Facebook using Audience Onboard and no one from Acxiom had to be involved. This is a great example of how scalable and user friendly our solution will be.
And now on the news I am sure you’ve been waiting for me to discuss. Let me just start by saying, today is an exciting day for Acxiom LiveRamp are in higher community of customers and partners and ultimately the entire industry. Acxiom’s vision has long been to deliver true one-to-one marketing with precision across all channels and all devices. With the launch of AOS, Acxiom took a step toward realizing that vision.
From its inception, AOS was never intended to compete with the marketing cloud solutions that many major enterprise software providers are building. Rather, we have always believed that AOS is the power grid but sits underneath the data ecosystem. A utility of connections and features that help virtually anyone in the industry better ingest, interpret and action useful data. In a cross channel world in which new data types are constantly being embedded, storage and processing cost continue to decline and everything is connected to everything else.
We are creating a new industry category, a category devoted to managing the data infrastructure, connections, security and permissions, to power each and every participant in the marketing ecosystem. Metaphorically, if the marketing ecosystem were a stereo, Acxiom’s role would be to serve as the receiver, connecting all of the various components to deliver amazing symphonic sound regardless of which input supply the source music and which outputs enable the sounds. If the marketing world were a railroad, Acxiom’s role would be to create maintain the network of track ensuring that freight or passengers could be delivered anywhere safely, efficiently and effortlessly. And at the marketing world deal transportation then we would be refining and supplying the fuel. Acxiom is after all a data refinery. We prospect the world for valuable raw data, refine dispirit data points into a cohesive data insights and then build standard pipelines to fuel all the supporting data enabled applications.
The addition of LiveRamp is yet another important step in our journey, a step that empowers the entire marketing ecosystem with better data and connections. With this announcement, the progress of one-to-one marketing becomes even more real. This deal brings together the established leader in marketing data with the emerging leader in data on-boarding, helping to bridge the gap between offline data and the ever expanding universe of online marketing.
Together, we will provide the industry’s fastest on-boarding solution with unparalleled matching capabilities and opportunities for personalization. Together, we will be able to connect the ecosystem to over 99% of the U.S. adult population at the household level. Together, we build a network of connections that influence billions of add impression every day. And finally, together with LiveRamp, we will accelerate the adoption of the Acxiom Data Safe Haven, ensuring all of business done in a privacy compliant and secure manner. This is great news for the entire industry as we intend to offer a neutral and open service which will ultimately benefit anyone and everyone.
For marketers and advertisers, we increase the opportunity to deliver the right message to the right person through the right channels. For technology providers, we help their customers extract more value on their solutions today, tomorrow and for years to come. For publishers and media providers, we make their audiences more accessible and profitable. And ultimately consumers win too, through better advertising and more connected experiences.
Let me speak specifically to one other constituency. The LiveRamp space of more than 200 customers let me assure you that you will continue to receive the same great and unbiased service while enjoying the extended capabilities and resources that Acxiom provides. This deal will accelerate LiveRamp stability to expand internationally and together we will innovate faster for you. While what’s remaining to be finalized in the coming weeks, Acxiom and LiveRamp have a common vision for the future, one that is built around in mutual and open service for all. One that creates new pathways to better marketing results and inspires exciting new innovations that will continue to change marketing forever.
Finally, and I know I speak for everyone at Acxiom; we’re delighted to welcome the LiveRamp team. I have tremendous respect for Auren Hoffman, and the products and culture his team had created. I’m incredibly excited for what we will be able to accomplish together.
In summary, 2014 was a great year and I have never been more excited about Acxiom’s future than I am right now. We are thrilled to announce this deal and believe the addition of LiveRamp will create meaningful value for our shareholders over time. The opportunity in front of us is big and we are confident that the combination of two companies will help virtually everyone in the industry achieve better connections, better insights and ultimately importantly better results. But we’re not done yet.
2014 was a milestone year that our corporate transformation must continue in 2015. More specifically in the coming year we have challenged the organization to make demonstrable progress against four overarching strategic competitors. More specifically, one, on top priority for the coming year we will be to expand our installed base, in a connected world in which everyone can benefit from plugging into the Acxiom power grid. Our goal is to get everyone on board.
Our definition of client has expanded from our historic perspective of Fortune 1000 direct marketer, to virtually anyone who can benefit from the ingestion insight and action ability of relative data. This includes software and application providers, major publishers across display and mobile and television, and the world leading agencies and marketers.
Second, the second top priority will be to continue our innovation in products and capabilities. For this, as we have, we look to the needs of our largest clients and partners. By helping them solve the challenges before them we build products that can ultimately be deployed even more broadly. Or near-term focus here will be on improving the functionality and current activity of AOS, powering a wider array of application partners and launching the world’s first ever truly targeted television buys.
Third, our third priority will be to evangelize Acxiom and our ideas throughout the market. Over the course of the last year Acxiom has been increasingly recognized and awarded for its innovation and client success stories. While industry products are nice, I don’t feel we have done a good job ourselves in publishing insights, white papers, ideas and client success stories. Ultimately it is not good enough to simply build good technology. Our role must be to help our clients and partners succeed. Finally, we will continue as we have to in the past to maniacally focus on running a better business, in recent years you’ve seen us take steps to make our organization leaner, faster and more accountable. Those efforts never truly end. In the months ahead we intend to put particular emphasis on modernizing our IT architecture and ensuring that our portfolio of assets fully aligns with our strategic vision.
Together, we’ve been on an amazing journey but we’re not done yet and the best is still to come. I look forward to updating you on our progress against our strategic imperatives in the months ahead. With that I will now turn the call over to Warren.
Great, thanks Scott and good afternoon everyone. Before commenting on the fourth quarter let me say from the outset we know there’s a lot going on and many moving pieces. But this is what a transformation looks like. I will do several things today to try and help provide clarity and comparability. We hope this will make your understanding and analysis easier. Before jumping into the quarter and year I would like to again update you on some of our initiatives and provide additional details related to our acquisition of LiveRamp, first running a better business; as Scott mentioned we are a dramatically different company than we were a year ago.
Over the last several quarters we’ve taken steps to streamline our management structure, transform the way we work and ultimately improve our operating leverage. I’m pleased to share that our delayering effort is substantially complete and as a result we expect our annualized expense run rate will be reduced by over 30 million. Obviously this year we will feel the sting of a drop in ITO’s profit contribution. However, we have chosen to use a portion of these savings to fund the expansion of AOS and LiveRamp. We think this is the right thing to do and our logical next step. Going forward, we’re all about further simplification and automation.
On our last call I spoke about our company wide effort to eliminate duplication and redundancy, both in the way we operate internally and how we deliver our products and customer service. At the beginning of February, we kicked off the implementation of our new financial and HR systems and we expect to go live with these systems in the second half of 2015. We expect several benefits including better and more actionable data, automated and streamlined business processes and ultimately efficiencies. In addition, we have begun a careful evaluation of our product portfolio and the way we deliver those products to our customers. This is a combined effort it involves our operations, delivery and engineering teams. In the quarters ahead, you’ll hear a lot more about this initiative and its effect.
Next the separation of our business units -- our separate audited financial statements and physical asset inventories for ITO are now complete. The final step is to separate the marketing and data service network from that of ITO. This activity is well under way and we expect the separation to be complete by this fall. As Scott mentioned we are exiting our paper survey business in Europe to focus more specifically on our database business and the global expansion of AOS and LiveRamp. This is part of our larger initiative to change the way we do business globally. In Europe this involves adjusting our asset base to support our go forward business, which includes resizing our labor, facilities and data content cost. In the fourth quarter, we incurred a $29 million noncash impairment charge associated with the write-down of goodwill and other long lived assets in Europe.
As we further rationalize our cost base in 2015, we expect to incur additional restructuring charges to complete this transition. And finally, I would like to provide additional color on the LiveRamp transaction. If you would now turn to our slide deck, I would be referencing slide three. Let me begin by providing a brief overview of LiveRamp. LiveRamp was founded in 2011. The team of approximately 70 employees is based in San Francisco and supports over 200 customers including some of the world’s largest brands in retail, communications, entertainment and financial services.
The company has an impressive network of partners and is integrated with nearly 100 of the leading marketing technologies. Under the terms of the definitive agreement we’ve agreed to acquire LiveRamp for approximately 310 million in cash, in addition we are providing an equity and retention pool to the LiveRamp associates. The transaction has been unanimously approved by the boards of both companies and it is expected to close midsummer. From an earnings perspective we expect this transaction to be dilutive on both a GAAP and non-GAAP basis in fiscal 2015. Specifically on a GAAP basis we expect the transaction to be dilutive by approximately $0.32 in FY 15 given the significance of intangible amortization and charges per stock-based compensation.
On a non-GAAP basis we expect the transaction to be dilutive to our fiscal ‘15 results by approximately $0.04. Let me remind everyone that of course these estimates are subject to final purchase accounting. Auren Hoffman and his team has built a fantastic company and we want to maintain a strong identity. LiveRamp will keep its office in San Francisco, and Auren will continue to lead the LiveRamp team while also taking on some heightened goals and accountabilities over time. He will report directly to Scott. Importantly though, LiveRamp will have access to all of LiveRamp’s resources including our technology and infrastructure, global sales force and our base of over 7000 customers. We are thrilled to announce this deal and believe it will create meaningful value for our shareholders over time.
Now let me turn back to our quarter, and our year. For the quarter, marketing and data service revenue was up 4% year-over-year. Total revenue, given a decline in ITL was flat. Total marketing and data service margins improved to 13% versus 10.3% a year ago. On a non-GAAP basis diluted earnings per share increase $0.05 to 24, compared to 19 in the prior year. We are pleased to report; we exceeded our full-year EPS guidance estimate. For the year non-GAAP EPS increased $0.10 to $0.86 compared to $0.76 in fiscal 2013. As a reminder, in Q3, we had a one-time tax benefit that improved results by $0.04 a share.
We did not repurchase any sharers in the fourth quarter. We chose to pause repurchase activity as obviously we had a few things in the works, and we thought it’s better to stay quiet. We expect to resume share purchases in fiscal 2015. Since inception we have acquired 193 million in stock out of our $250 million program. Today, we have retired approximately 15% of our outstanding common shares.
I will now discuss our quarterly results in more detail and we will begin by referring to slide deck that is posted on or website. Starting with slide 4, summary of financial results; total revenue was $277 million, flat compared to last year. Marketing and Data Service revenue was up 4% for the quarter. IT Infrastructure Management revenue was down as expected approximately 10%. OpEx for the quarter was $292 million compared to $257 million in the prior period.
Excluding unusual items, operating expense were down 4% primarily due to savings associated with our cost reduction program. Unusual items total 47 million for the quarter out of which 29 million was related to an impairment charge in connection with our European restructuring. We incurred an additional $10 million in severance cost and reported another 7 million of third-party expense associated with our business separation and transformation activities. Please note that the business separation and transformation costs are included in SG&A. GAAP diluted loss per share was $0.38 in the quarter. Excluding unusual expense and taxed items, diluted earnings per share were up 26% to $0.24 compared to $0.19 in the fourth quarter of last year.
Slide 5, U.S. Marketing and Data Service revenue was up 5% for the quarter. And as I mentioned IT Infrastructure Management revenue was down. International Marketing and Data Service revenue was down 3% to 28 million. Revenue improvement in Europe only partially offset declines in the other non-U.S. regions. International other services revenue was also down slightly year-over-year. There was no material FX impact in the quarter.
Now I am under slide 6. For the quarter, our operating margin excluding one-time items improved 340 basis points 11.4% compared to 8% in the prior year. In the U.S., M&DS margin was 13.4%, up from 11% last year. The improvement was primarily due to revenue increases and the impact of our cost savings initiatives. ITL margin increased to 6.5% compared to 3.6%. Expense reductions to offset the revenue impact of lost contracts grow this improvement. Operating margin for International M&DS increased to 11.5% compared to 6% last year. This was mostly due to performance improvements in Europe and Asia.
Now on to Slide 7 and 8; for the quarter, free cash flow to equity was $15 million compared to $42 million for the prior period. The decrease was largely due to cash restructuring and business separation expenses in the quarter. For the year, free cash flow to equity was up 36% to $76 million compared to $56 million for fiscal 2013. Improvements in working capital partially offset by cash restructuring and business separation expenses drove this increase. Cap software cost which were mostly AOS related were $5 million in the quarter and total capital spending decreased $2 million to $23 million.
Now on to our guidance. Before jumping into the numbers, I would like to walk you through a few slights that should provide additional context and clarity given there are several moving pieces. First, I will talk about revenue and how to think about our 2015 guidance as it relates to our 2014 performance.
Please turn to slide nine; in 2014, we reported revenue of $1.098 billion. We would suggest you make two adjustments to revise the base line; first, adjust for the lost ITO clients or a reduction of $60 million; next, 2014 revenue from our discarded European survey business was approximately $21 million. Excluding these adjustments our FY14 base line is $1.017 billion.
With this asset base, we would expect overall revenue to be flat to up 4% in fiscal 2015. We expect growth in marketing and data services and we expect ITO to be roughly flat compared to the adjusted base line. As part of this guidance we expect the combination of AOS and LiveRamp to generate between $50 million and $60 million in revenue in FY16.
Next, I will walk you through how we’re thinking about EPS guidance. Please take a look at slide 10. Going forward, in addition to one time separation and transformation expenses, acquisition related charges, restructuring and severance cost, we intend to exclude stock based compensation from our non-GAAP measures. This, we believe, is in line with our peers and is also necessitated as you might expect by our acquisition of LiveRamp. In this bridge, we have tried to highlight what our non-GAAP EPS would have been for FY14 as we excluded stock based compensation.
So if you start with our non-GAAP earnings of $0.86 and ad back stock based compensation expense of $0.11, the new FY11 starting point is $0.97. With that as a point of comparison, please turn to slide 11. Again, start with our FY14 non-GAAP EPS of $0.97 again which exclude stock based compensation. Next, subtract our EPS impact of three things; first the impact of the lost ITO clients; next, the impact of our Q3 onetime tax benefit of $0.04; and finally, the dilution associated with our acquisitions of LiveRamp. Taking together this provides an FY14 non-GAAP EPS of $0.69. With that as a backdrop, we expect our adjusted EPS for FY15 to be between $0.75 and $0.85.
Finally, a few other comments on FY15. First for Q1, we expect overall revenues to be flat to down and we expect overall margins to decrease as a result of ITO client life losses, continued transition cost in Europe and to a lesser extent an unfavorable mix shift in the U.S. For the year, we plan to move forward with our business transformation activities. This means additional onetime third party expenses. We are investing in a revitalized core technology capability. We are replacing our network, retooling our datacenter strategy and automating and standardizing our delivery approach.
As a result, we expect higher CapEx this year. We will keep you updated but we could spend as much as a 125 million. We would advise you to continue to use the tax rate of 38% to 39% and additional diluted acquisitions remain a possibility.
Thank you very much for joining us today. On behalf of all my colleagues we look forward to updating you throughout fiscal 2015.
With that operator we’ll now open the call to questions.
Thank you, sir. (Operator Instructions) Our first question comes from Bill Warmington of Wells Fargo. Your line is now open.
Bill Warmington - Wells Fargo
Good afternoon everyone. So on the $50 million to $60 million in revenue guidance coming from AOS and LiveRamp, what is the split there between the two of them?
Hey Bill, I’ll answer the question, and then, just so everybody knows. As we move forward we don’t intend to report separately our results for AOS and for LiveRamp as we will combine them but I do want to answer your question today. I look about 50-50 split.
Bill Warmington - Wells Fargo
Could be you know, plus or minus things could change, but roughly that’s it.
Bill Warmington - Wells Fargo
And then if you could talk a little about your history with LiveRamp, my understanding was that at one time you guys had worked with LiveRamp in the cookie syncing space and then that relationship has been discontinued and you’d competed against LiveRamp and kind of talk about how we’ve come to this point where you’re buying them.
Yes Bill, I’ll take that. I can’t comment on kind of a distant history I will tell you that in my time at Acxiom or and Hofmann was one of the first meetings that I had within the first few months of joining the company and they have been a very strong partner for us for the past couple of years and you know all of you guys have seen and heard Warren and my approach to acquisitions over the last couple of years. We have been very methodical and deliberate about our approach and we kicked the tires off many things but always with an eye towards two things. One - does this benefit our customers and two - how does this fit culturally. And because we have worked with LiveRamp over the last couple of years, we have worked really closely kind of in the trenches with their team and at the team levels we built trust and rapport. We’ve gotten to know their technology and capabilities very intimately. And we got to know their culture. Warren and I have had many conversations before this process around our view of kind of the need for a Switzerland, data utility, the power grid for the data world so to speak. So it felt like a really good complement, we knew a lot about them. Now when I think about AOS overlapped against LiveRamp it is really a perfect complement, so one of the challenges that we have in AOS, we have a lot of demand and its how do we get folks into the system. Well LiveRamp, they have on boarding, data on boarding, it’s really second to none. The second thing when we talked about AOS from the get go, we always talked about this three level stack and the final was the data ingestion layer, the operations layer but then importantly this API layer that would lead to a rich variety of applications. Our intent was never that Acxiom would build all those applications, but rather what we envisioned is that we would partner with everyone who did build those applications and provide them power to fuel their applications. Well LiveRamp brings us turnkey applications that scale and they have 80 incredible premium partners that we can immediately turn on, and so that’s incredible value, incremental value for not only our clients but anyone who wants to connect into the system. Our belief here - connections breed connections. We have more applications, then it’s more attractive to clients which makes it more attractive to publishers and there’s a real virtuous cycle. In a sense this whole acquisition was driven by our relationship with them coupled with all the things we learned with the successful launch of AOS. Once we saw AOS was getting legs this just made a ton of sense for us?
Bill Warmington - Wells Fargo
Got it, okay, one last question for you then on the ComScore partnership, how does that work and is it exclusive or is Neilson next.
You know, let me say, I don’t believe that we live in an exclusive world. If you look at Terry Kawaja’s LUMA scape map. It is overwhelming how many logos are on there, right. The pace of innovation always outpaces the pace of consolidation and so our belief is that we have created a new category, you know power grid, a utility that sits underneath all these different applications and so if there are 20,000 applications in the marketing space someday I would like to have 20,000 application partnerships. Each one of them will choose to use our services in their own unique way and that’s okay because each one of them has their own recipe for innovation, so all this to say is, ComScore is just getting started and I don’t think we’ve even necessarily announced to the world the full suite of the things that we intend to do together, but overtime yes, I would like to see Neilson and 20,000 other partners join the club.
Thank you, our next question comes from Brett Huff of Stephens; your line is now opened.
Brett Huff - Stephens
I have two questions; one is - on the new pro forma EPS Warren are you excluding the purchase amortization or is that included as an expense in the guidance.
In our non-GAAP guidance it would be excluded, so the way I think of it is, it’s excluding the typical items which you would normally see. Amortization of intangibles, stock based compensation, as well as our restructuring and other onetime expenses.
Brett Huff - Stephens
Okay, because I’m just trying to work through kind of compare it to where the street was for you guys.
Brett, maybe, just let me help clarify. The only thing that has changed in our guidance from the way we have done it historically, we are now excluding stock based compensation. Now the only complicating factor is, let’s say we’re also announcing a major acquisition with which comes the amortization of intangibles and much higher level of stock based compensation given the retention agreement, but leaving the acquisition aside the only thing that we have done to our forward guidance is to exclude stock based compensation which impacted FY 14 by about $0.11, so other than that fundamentally there’s no change but for the fact we made this acquisition.
Brett Huff - Stephens
Okay, and then the second question is just on the business AOS pipeline went from $45 to $60 million, I think the definitions are all still the same, the 12 month forward look, total contract value.
That is correct.
Brett Huff - Stephens
And then the one part of AOS that was confusing to me, is that it’s the dollar that ramped through the system, went from $20 million to 15. I am confused about how that could go down, although Scott you mentioned you expect a pretty big ramp in fiscal ’15 but I’m just confused about what would drive that.
Well I mean the biggest thing is seasonality and it’s exacerbated, I’ll tell you, I’m now kind of cranky about it, because what it tells me is that we haven’t done a good enough job of educating our clients, and so a lot of the -- a lot of the revenue that we’ve been generating, I want to say there were tens of thousands of Facebook campaigns that utilized Acxiom data, and so people self discovered it. What I’d like to do a lot more of is start educating both our clients in the broader set of the world about the capabilities here, because I think it’s still off a slow enough base but seasonality simply can’t be an excuse, we expect much more robust growth from that in the coming year.
Brett Huff - Stephens
Okay, those are my two questions, thank you.
Thank you and our final question comes from Dan Salmon of BMO Capital Markets, your line is now opened.
Dan Salmon - BMO Capital Markets
Just a quick question, some, obviously you’ve got a good strong partnership going with StarCom, you know some of the other agencies have indicated that the fact that there’s this service to the organization that exists at Acxiom around AOS has made it a bit of a challenge for them to look at it, because they see maybe some of your other businesses are competing with them. So to maybe turn that around the other way, would you ever, if you had a client who worked on a separate software platform or did not use AOS would you ever consider functionally creating a trading desk style of team that would help one of your advertiser clients in this case implement more of a programmatic strategy if they did not prefer AOS, it’s just a philosophical question, and then the second one Warren just to make sure I’m clear on this so it’s $310 million in cash for LiveRamp and then if I just look at the difference between the non-GAAP and GAAP dilution I think that’s probably a fair estimate of what the stock comp that’s built in for retainment, is that fair and correct?
Let me answer the first part and then we’ll have Scott talking about StarCom. That’s a fair estimate. The thing that’s tricky Dan as you know is the purchase accounting it’s not finalized so the splits are going to change once we go in and do the appraisals but the two principle items, largest is we’re estimating today the amortization of intangibles and then the second largest is the stock comp.
And then with respect to your first question Dan, yes. Yes with an exclamation point. Yes, yes, yes, yes - absolutely. And when we talk about neutrality, I have a ton of experience with this from my prior tenure at [Indiscernible], if you remember Atlas the app server served many Razorfish the sister divisions, competitors. And in a business like ours we live in a world where co-operation and connectivity are the new norm. And so as a result our sales force needs to change, and the days of cut throat competition needs to be replaced and is being replaced by dedicated sales resources that are solely and maniacally focused on their particular clients, and helping their particular clients succeed. One of our analysts and I can’t remember who it was a couple of quarters ago asked me if I envisioned a world where someday the folks that we have historically considered to be our competitors would someday be our clients. And if you recall at the time I said - absolutely and I think that day is coming through AOS and it’s not to power any one company but it’s to enable everyone in the industry to succeed. And so we’ll have to change some of our internal processes and culture which we’re doing to make that happen.
I’m showing no further questions, sir.
Wonderful, on behalf of Scott and our entire team here, thank you all very much for joining us and to our new associates at LiveRamp, we are really thrilled to have to be our partners, and great to have you with us. Thanks everyone.
Ladies and gentlemen, thank you for participating in today’s conference. This does conclude today’s program, you may all disconnect. Everyone have a wonderful day.
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