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First Quarter Results for Fiscal 2017
Feb 01, 2017
Raises Fiscal 2017 Revenue Growth Outlook to 2.5-6.5% YoY in Constant Currency
Reiterates Fiscal 2017 Non-GAAP Diluted EPS Growth Outlook of 4.5%-8.5% YoY
Key highlights:
- First fiscal quarter revenue of
$955 million , at the midpoint of the$935-$975 million guidance range despite foreign currency movements that negatively affected revenue by approximately$7 million relative to the fourth quarter of fiscal 2016. Revenue was above the midpoint of Amdocs’ guidance, excluding foreign currency movements - Diluted GAAP EPS of
$0.66 for the first fiscal quarter, towards the high-end of the$0.59-$0.67 guidance range - First fiscal quarter diluted non-GAAP EPS of
$0.90 , at the mid-point of the$0.87-$0.93 guidance range (non-GAAP EPS excludes amortization of purchased intangible assets and other acquisition-related costs, and equity-based compensation expense, net of related tax effects) - First fiscal quarter GAAP operating income of
$122 million ; non-GAAP operating income of$164 million ; non-GAAP operating margin of 17.2% - Free cash flow of
$127 million for the first fiscal quarter - Repurchased
$80 million of ordinary shares during the first fiscal quarter - Twelve-month backlog of
$3.18 billion at the end of the first fiscal quarter, up$10 million from the end of the fourth quarter of fiscal 2016 despite the negative affect of foreign currency movements - The board of directors approved a quarterly cash dividend at the new increased rate of
$0.22 per share, as approved at theJanuary 2017 annual general meeting of shareholders, to be paid onApril 14, 2017 - Second quarter fiscal 2017 guidance: Expected revenue of approximately
$940-$980 million . Expected diluted GAAP EPS of approximately$0.66-$0.74 . Expected diluted non-GAAP EPS of approximately$0.90-$0.96 (which excludes amortization of purchased intangible assets and other acquisition-related costs and approximately$0.06-$0.07 per share of equity-based compensation expense, net of related tax effects) - Full year fiscal 2017 guidance: expected revenue growth of 2.5-6.5% year-over-year on a constant currency basis, raised from the previous expectation of 2.0-6.0%, and 1.5-5.5% year-over-year as reported, including an anticipated negative impact from foreign currency movements of approximately 1.0% year-over-year. Expected GAAP diluted earnings per share growth of roughly 2.5-8.5% year-over-year and non-GAAP diluted earnings per share growth of roughly 4.5-8.5% year-over-year, including the impact of share repurchase activity anticipated over the course of the fiscal year
“We are pleased with our first quarter results which reflect record revenue above the midpoint of our guidance on a constant currency basis and further signs of stabilization in
Gelman continued, “Over the last several months, we have made significant progress in the field of Network Functions Virtualization (NFV). We became the first information technology company to partner with the
Gelman concluded, “We are encouraged by our solid start to fiscal 2017, the visibility provided by our unique business model and record twelve-month backlog. We remain focused on delivering consistent execution and maximizing free cash flow, the majority of which we still plan to return to shareholders in fiscal 2017 while retaining capacity for M&A as opportunities arise. Taking everything into consideration, we are on-track to deliver diluted non-GAAP earnings per share growth of 4.5-8.5% for the full fiscal year although we will of course continue to monitor macro and industry specific risks closely, including those which may result from consolidation activity in North America.”
Financial Discussion of First Fiscal Quarter Results
Free cash flow was
Twelve-month backlog, which includes anticipated revenue related to contracts, estimated revenue from managed services contracts, letters of intent, maintenance and estimated on-going support activities, was
Financial Outlook
Quarterly Cash Dividend Program
On
Conference Call Details
Non-GAAP Financial Measures
This release includes non-GAAP diluted earnings per share and other non-GAAP financial measures, including free cash flow, non-GAAP cost of revenue, non-GAAP research and development, non-GAAP selling, general and administrative, non-GAAP operating income, non-GAAP operating margin, non-GAAP income taxes, non-GAAP net income and non-GAAP diluted earnings per share growth. These non-GAAP measures exclude the following items:
- amortization of purchased intangible assets and other acquisition-related costs;
- equity-based compensation expense; and
- tax effects related to the above.
These non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles.
For its internal budgeting process and in monitoring the results of the business, Amdocs’ management uses financial statements that do not include amortization of purchased intangible assets and other acquisition-related costs, equity-based compensation expense and related tax effects. Amdocs’ management also uses the foregoing non-GAAP financial measures, in addition to the corresponding GAAP measures, in reviewing the financial results of
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This press release includes information that constitutes forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995, including statements about Amdocs’ growth and business results in future quarters. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be obtained or that any deviations will not be material. Such statements involve risks and uncertainties that may cause future results to differ from those anticipated. These risks include, but are not limited to, the effects of general economic conditions, Amdocs’ ability to grow in the business markets that it serves, Amdocs’ ability to successfully integrate acquired businesses, adverse effects of market competition, rapid technological shifts that may render the company's products and services obsolete, potential loss of a major customer, our ability to develop long-term relationships with our customers, and risks associated with operating businesses in the international market.
AMDOCS LIMITED | |||||||
Consolidated Statements of Income | |||||||
(in thousands, except per share data) | |||||||
Three months ended | |||||||
December 31, | |||||||
2016 | 2015 | ||||||
Revenue | $ | 954,727 | $ | 921,505 | |||
Operating expenses: | |||||||
Cost of revenue | 620,834 | 595,568 | |||||
Research and development | 59,990 | 62,487 | |||||
Selling, general and administrative | 124,079 | 119,548 | |||||
Amortization of purchased intangible assets and other | 28,231 | 24,367 | |||||
833,134 | 801,970 | ||||||
Operating income | 121,593 | 119,535 | |||||
Interest and other expense, net | 2,763 | 1,665 | |||||
Income before income taxes | 118,830 | 117,870 | |||||
Income taxes | 21,037 | 17,028 | |||||
Net income | $ | 97,793 | $ | 100,842 | |||
Basic earnings per share | $ | 0.67 | $ | 0.67 | |||
Diluted earnings per share | $ | 0.66 | $ | 0.66 | |||
Basic weighted average number of shares outstanding | 146,817 | 150,631 | |||||
Diluted weighted average number of shares outstanding | 148,382 | 153,053 | |||||
Cash dividends declared per share | $ | 0.195 | $ | 0.170 | |||
AMDOCS LIMITED | |||||||
Selected Financial Metrics | |||||||
(in thousands, except per share data) | |||||||
Three months ended | |||||||
December 31, | |||||||
2016 | 2015 | ||||||
Revenue | $ | 954,727 | $ | 921,505 | |||
Non-GAAP operating income | 164,085 | 156,872 | |||||
Non-GAAP net income | 133,567 | 132,020 | |||||
Non-GAAP diluted earnings per share | $ | 0.90 | $ | 0.86 | |||
Diluted weighted average number of shares outstanding | 148,382 | 153,053 | |||||
AMDOCS LIMITED | ||||||||||||||||||||
Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Three months ended December 31, 2016 |
||||||||||||||||||||
Reconciliation items |
||||||||||||||||||||
GAAP | Amortization of purchased intangible assets and other |
Equity based compensation expense |
Tax effect | Non-GAAP | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Cost of revenue | $ | 620,834 | $ | - | $ | (4,998 | ) | $ | - | $ | 615,836 | |||||||||
Research and development |
59,990 | - | (899 | ) | - | 59,091 | ||||||||||||||
Selling, general and administrative |
124,079 | - | (8,364 | ) | - | 115,715 | ||||||||||||||
Amortization of purchased intangible assets and other |
28,231 | (28,231 | ) | - | - | - | ||||||||||||||
Total operating expenses | 833,134 | (28,231 | ) | (14,261 | ) | - | 790,642 | |||||||||||||
Operating income | 121,593 | 28,231 | 14,261 | - | 164,085 | |||||||||||||||
Income taxes | 21,037 | - | - | 6,718 | 27,755 | |||||||||||||||
Net income | $ | 97,793 | $ | 28,231 | $ | 14,261 | $ | (6,718 | ) | $ | 133,567 | |||||||||
Three months ended December 31, 2015 |
||||||||||||||||||||
Reconciliation items |
||||||||||||||||||||
GAAP | Amortization of purchased intangible assets and other |
Equity based compensation expense |
Tax effect |
Non-GAAP | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Cost of revenue | $ | 595,568 | $ | - | $ | (4,124 | ) | $ | - | $ | 591,444 | |||||||||
Research and development |
62,487 | - | (842 | ) | - | 61,645 | ||||||||||||||
Selling, general and administrative |
119,548 | - | (8,004 | ) | - | 111,544 | ||||||||||||||
Amortization of purchased intangible assets and other |
24,367 | (24,367 | ) | - | - | - | ||||||||||||||
Total operating expenses | 801,970 | (24,367 | ) | (12,970 | ) | - | 764,633 | |||||||||||||
Operating income | 119,535 | 24,367 | 12,970 | - | 156,872 | |||||||||||||||
Income taxes | 17,028 | - | - | 6,159 | 23,187 | |||||||||||||||
Net income | $ | 100,842 | $ | 24,367 | $ | 12,970 | $ | (6,159 | ) | $ | 132,020 | |||||||||
AMDOCS LIMITED | ||||||
Condensed Consolidated Balance Sheets | ||||||
(in thousands) | ||||||
As of | ||||||
December 31, 2016 |
September 30, 2016 |
|||||
ASSETS | ||||||
Current assets | ||||||
Cash, cash equivalents and short-term interest-bearing investments | $ | 940,324 | $ | 1,095,723 | ||
Accounts receivable, net, including unbilled of $148,364 and $134,122, respectively | 862,000 | 818,531 | ||||
Prepaid expenses and other current assets | 193,716 | 186,137 | ||||
Total current assets | 1,996,040 | 2,100,391 | ||||
Equipment and leasehold improvements, net | 325,275 | 331,728 | ||||
Goodwill and other intangible assets, net | 2,453,428 | 2,493,166 | ||||
Other noncurrent assets | 414,599 | 406,070 | ||||
Total assets | $ | 5,189,342 | $ | 5,331,355 | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
Current liabilities | ||||||
Accounts payable, accruals and other | $ | 1,053,622 | $ | 992,679 | ||
Short-term financing arrangements | - | 200,000 | ||||
Deferred revenue | 167,779 | 173,331 | ||||
Total current liabilities | 1,221,401 | 1,366,010 | ||||
Other noncurrent liabilities | 497,455 | 511,784 | ||||
Shareholders’ equity | 3,470,486 | 3,453,561 | ||||
Total liabilities and shareholders’ equity | $ | 5,189,342 | $ | 5,331,355 | ||
AMDOCS LIMITED | ||||||||
Consolidated Statements of Cash Flows | ||||||||
(in thousands) | ||||||||
Three months ended December 31, | ||||||||
2016 | 2015 | |||||||
Cash Flow from Operating Activities: | ||||||||
Net income | $ | 97,793 | $ | 100,842 | ||||
Reconciliation of net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 57,552 | 51,127 | ||||||
Equity-based compensation expense | 14,261 | 12,970 | ||||||
Deferred income taxes | 7,355 | (10,597 | ) | |||||
Excess tax benefit from equity-based compensation | (912 | ) | (2,868 | ) | ||||
(Gain) loss from short-term interest-bearing investments | (194 | ) | 140 | |||||
Net changes in operating assets and liabilities, net of amounts acquired: | ||||||||
Accounts receivable | (42,555 | ) | (7,783 | ) | ||||
Prepaid expenses and other current assets | (1,969 | ) | (13,017 | ) | ||||
Other noncurrent assets | (22,774 | ) | 4,518 | |||||
Accounts payable, accrued expenses and accrued personnel | 68,226 | 59,354 | ||||||
Deferred revenue | (6,913 | ) | (9,304 | ) | ||||
Income taxes payable | (1,386 | ) | 10,267 | |||||
Other noncurrent liabilities | (456 | ) | 3,194 | |||||
Net cash provided by operating activities | 168,028 | 198,843 | ||||||
Cash Flow from Investing Activities: | ||||||||
Payments for purchase of equipment and leasehold improvements, net | (41,736 | ) | (38,253 | ) | ||||
Proceeds from sale of short-term interest-bearing investments | 67,140 | 100,910 | ||||||
Purchase of short-term interest-bearing investments | (67,714 | ) | (103,599 | ) | ||||
Other | 3,733 | (332 | ) | |||||
Net cash used in investing activities | (38,577 | ) | (41,274 | ) | ||||
Cash Flow from Financing Activities: | ||||||||
Payments under financing arrangements | (200,000 | ) | (220,000 | ) | ||||
Repurchase of shares | (80,219 | ) | (99,964 | ) | ||||
Proceeds from employee stock options exercised | 23,705 | 15,546 | ||||||
Payments of dividends | (28,693 | ) | (25,697 | ) | ||||
Excess tax benefit from equity-based compensation | 912 | 2,868 | ||||||
Other | - | (2 | ) | |||||
Net cash used in financing activities | (284,295 | ) | (327,249 | ) | ||||
Net decrease in cash and cash equivalents | (154,844 | ) | (169,680 | ) | ||||
Cash and cash equivalents at beginning of period | 768,660 | 1,035,573 | ||||||
Cash and cash equivalents at end of period | $ | 613,816 | $ | 865,893 | ||||
AMDOCS LIMITED | |||||||||||||||
Supplementary Information | |||||||||||||||
(in millions) | |||||||||||||||
Three months ended | |||||||||||||||
December 31, | September 30, |
June 30, | March 31, | December 31, | |||||||||||
2016 | 2016 | 2016 | 2016 | 2015 | |||||||||||
North America | $ | 628.0 | $ | 626.2 | $ | 591.8 | $ | 586.4 | $ | 576.7 | |||||
Europe | 118.5 | 118.9 | 126.3 | 139.2 | 128.9 | ||||||||||
Rest of World | 208.2 | 195.6 | 212.0 | 200.3 | 215.9 | ||||||||||
Total Revenue | $ | 954.7 | $ | 940.7 | $ | 930.1 | $ | 925.9 | $ | 921.5 | |||||
Three months ended |
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December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||
2016 | 2016 | 2016 | 2016 | 2015 | |||||||||||
Managed Services Revenue | $ | 494.2 | $ | 478.5 | $ | 479.2 | $ | 501.1 | $ | 487.6 | |||||
Three months ended | |||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||
2016 | 2016 | 2016 | 2016 | 2015 | |||||||||||
Customer Experience | $ | 937.9 | $ | 924.9 | $ | 908.1 | $ | 902.3 | $ | 894.4 | |||||
Solutions | |||||||||||||||
Directory | 16.8 | 15.8 | 22.0 | 23.6 | 27.1 | ||||||||||
Total Revenue | $ | 954.7 | $ | 940.7 | $ | 930.1 | $ | 925.9 | $ | 921.5 | |||||
As of | |||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||
2016 | 2016 | 2016 | 2016 | 2015 | |||||||||||
12-Month Backlog | $ | 3,180 | $ | 3,170 | $ | 3,110 | $ | 3,100 | $ | 3,090 | |||||
Contact:Matthew Smith Head of Investor RelationsAmdocs 314-212-8328 E-mail: dox_info@amdocs.com