26% Growth in Diluted Earnings Per Share Before Certain Items to $0.44; Diluted GAAP EPS of $0.38
Second quarter revenue grew 23% to $601 million
26% increase in second quarter diluted EPS, excluding acquisition-related costs and equity-based compensation expense, net of related tax effects, to $0.44; Exceeds guidance of $0.42
Diluted GAAP EPS of $0.38
Free cash flow of $86 million for the quarter
Sprint Nextel selected Amdocs to provide a single platform to support its more than 45 million wireless subscribers
After the quarter, Amdocs announced that it had signed an agreement to acquire Qpass, a leading provider of digital commerce software and solutions, for $275 million in cash
Third quarter fiscal 2006 guidance: Expected revenue of approximately $622 million and diluted EPS of $0.46, excluding acquisition-related costs, net of related tax effects, and approximately $0.04-$0.05 per share of equity-based compensation expense. Diluted GAAP EPS is expected to be approximately $0.39-$0.40. This guidance excludes any potential impact of the pending acquisition of Qpass
Updated fiscal 2006 guidance: Expected revenue of approximately $2.445-$2.465 billion and diluted EPS of $1.78-$1.80, excluding acquisition-related costs, net of related tax effects, and approximately $0.16-$0.18 per share of equity-based compensation expense. Diluted GAAP EPS is expected to be approximately $1.51-$1.55. This guidance excludes any potential impact of the pending acquisition of Qpass
St. Louis, MO – April 26, 2006 – Amdocs Limited (NYSE: DOX) today reported that for the second quarter ended March 31, 2006, revenue was $601.1 million, an increase of 23.1% from last year's second quarter. Excluding acquisition-related costs and equity-based compensation expense, net of related tax effects, of $13.7 million, net income was $95.5 million, or $0.44 per diluted share, compared to net income, excluding $1.7 million of acquisition-related costs net of related tax effects, of $76.0 million, or $0.35 per diluted share, in the second quarter of fiscal 2005. The Company's net income was $81.8 million, or $0.38 per diluted share, compared to net income of $74.3 million, or $0.34 per diluted share, in the second quarter of fiscal 2005. Free cash flow, defined as cash flow from operations less net capital expenditures and principal payments on capital leases, was $86.4 million in the quarter.
"This was another very successful quarter for Amdocs," said Dov Baharav, Chief Executive Officer of Amdocs Management Limited. "Revenue grew 23%, helping to increase earnings at an even greater rate. This performance is the result of the 13,000 employees at Amdocs executing on our strategy of providing systems to support integrated customer management to the top tier service providers.
"This was one of our best quarters ever for new business signings. Demand for Amdocs products and services continues to be driven by service providers' need to address competition, consolidation and convergence. Digital content will be an increasingly important revenue driver in the future as service providers continue to introduce new products and services, and we will expand our presence in this area with our acquisition of Qpass. We are the leading provider to our market and are confident that we will deliver strong results in fiscal 2006 and beyond," continued Baharav.
During the second quarter, Amdocs new business included eleven new key wins. In addition to Sprint Nextel, these wins include a large project with a subsidiary of a current wireline customer as it adopts an integrated customer management strategy. In the directory area, Amdocs had several wins with projects involving sales force automation, digital advertising, and business process outsourcing. Amdocs was selected by Vimpelcom and its affiliates in the Commonwealth of Independent States as they standardize on Amdocs technology to manage their wireless and wireline customers in an integrated fashion.
Amdocs expects that revenue for the third quarter of fiscal 2006 ending June 30, 2006, will be approximately $622 million. Diluted earnings per share for the quarter are expected to be $0.46, excluding acquisition-related costs, net of related tax effects, and the impact of approximately $0.04-$0.05 per share of equity-based compensation expense. Diluted GAAP EPS is expected to be approximately $0.39-$0.40. This guidance excludes any potential impact of the pending acquisition of Qpass. Amdocs may incur a one-time charge in its third fiscal quarter to account for certain costs related to the Qpass acquisition.
Updated fiscal 2006 guidance: Expected revenue of approximately $2.445-$2.465 billion and diluted EPS of $1.78-$1.80, excluding acquisition-related costs, net of related tax effects, and approximately $0.16-$0.18 per share of equity-based compensation expense. Diluted GAAP EPS is expected to be approximately $1.51-$1.55. This guidance excludes any potential impact of the pending acquisition of Qpass.
Amdocs will host a conference call on April 26, 2006 at 5 p.m. Eastern Time to discuss the Company's second quarter results. The call will be carried live on the Internet via www.InvestorCalendar.com and the Amdocs website, www.amdocs.com.
Amdocs combines innovative software and services with deep business knowledge to accelerate implementation of integrated customer management by the world's leading service providers. By delivering a comprehensive portfolio of software and services that spans the customer lifecycle, Amdocs enables service companies to deliver an intentional customer experienceTM, which results in stronger, more profitable customer relationships. Service providers also benefit from a rapid return on investment, lower total cost of ownership and improved operational efficiencies. A global company with revenue of more than $2 billion in fiscal 2005, Amdocs has 13,000 employees and serves customers in more than 50 countries around the world. For more information, visit Amdocs at www.amdocs.com.
Investors are cautioned that this press release contains certain information that is not prepared in accordance with GAAP. Investors should not construe these financial measures as being superior to GAAP. The Company's management uses this financial information in its internal analysis in order to exclude the effect of acquisitions and other significant items that may have a disproportionate effect in a particular period. Accordingly, management believes that isolating the effects of such items enables management and investors to consistently analyze the critical components and results of operations of the Company's business and to have a meaningful comparison to prior periods.
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 may elect to update these forward-looking statements at some point in the future; however, the Company specifically disclaims any obligation to do so. These and other risks are discussed at greater length in the Company's filings with the Securities and Exchange Commission, including in our Annual Report on Form 20-F, filed on December 28, 2005 and our quarterly 6-K furnished on February 15, 2006.
Thomas G. O'Brien
Treasurer and Vice President of Investor Relations