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First Quarter Results for Fiscal 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 the January 2017 annual general meeting of shareholders, to be paid on April 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

ST. LOUIS, Feb. 01, 2017 (GLOBE NEWSWIRE) -- Amdocs Limited (NASDAQ:DOX) today reported that for its first fiscal quarter ended December 31, 2016, revenue was $954.7 million, up 1.5% or $14.1 million sequentially from the fourth fiscal quarter of 2016 and up 3.6% as compared to last year’s first fiscal quarter. Revenue for the first fiscal quarter of 2017 includes a negative impact from foreign currency movements of approximately $7 million relative to the fourth quarter of fiscal 2016. The Company's GAAP net income for the first quarter of fiscal 2017 was $97.8 million, or $0.66 per diluted share, compared to GAAP net income of $100.8 million, or $0.66 per diluted share, in the prior fiscal year’s first quarter. Net income on a non-GAAP basis was $133.6 million, or $0.90 per diluted share, compared to non-GAAP net income of $132.0 million, or $0.86 per diluted share, in the first quarter of fiscal 2016. Non-GAAP net income excludes amortization of purchased intangible assets and other acquisition-related costs and equity-based compensation expenses of $35.8 million, net of related tax effects, in the first quarter of fiscal 2017, and excludes such amortization and other acquisition-related costs and equity-based compensation expenses of $31.2 million, net of related tax effects, in the first quarter of fiscal 2016.

“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 North America. Our win rate remained high and included our selection for significant transformation projects with Vodafone Italy and a leading communications service provider in Southeast Asia. Additionally, we renewed important managed services arrangements with existing customers, strengthening the base on which to further expand our future scope of business activities. These include five-year services extension agreements with BT, the largest communications service provider in the UK, and Rostelecom, Russia's national service provider,” said Eli Gelman, president and chief executive officer of Amdocs Management Limited.

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 Linux Foundation to accelerate the global adoption of AT&T’s ECOMP platform by making it available in open source to service providers and cloud developers in 2017. Additionally, Orange Polska and Amdocs jointly announced the industry’s first trial to test and assess open source ECOMP in a live cloud environment, initially for virtual services in Poland, and then globally across the Orange footprint. We believe our selection as technology integrator for this landmark project reflects the unique industry expertise we bring as a result of our co-development of ECOMP with AT&T, and we are excited to validate the capabilities and potential benefits of an ECOMP deployment within the Orange network.”

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 $127 million for the first quarter of fiscal 2017, comprised of cash flow from operations of $168 million, less $41 million in net capital expenditures and other.

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 $3.18 billion at the end of the first quarter of fiscal 2017, up $10 million from the end of the prior quarter.

Financial Outlook
Amdocs expects that revenue for the second quarter of fiscal 2017 will be approximately $940-$980 million. Embedded within this guidance is an immaterial sequential impact from foreign currency fluctuations as compared to the first quarter of fiscal 2017. This outlook takes into consideration the company’s expectations regarding macro and industry specific risks and various uncertainties and certain assumptions that we will discuss on our earnings conference call. However, Amdocs notes that it cannot predict all possible outcomes, including those resulting from AT&T’s proposed merger with Time Warner or from other current and potential customer consolidation activity in North America.

Amdocs estimates GAAP diluted earnings per share for the second fiscal quarter of 2017 will be $0.66-$0.74. Diluted earnings per share on a non-GAAP basis for the second quarter of fiscal 2017 is expected to be $0.90-$0.96, excluding 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.

Quarterly Cash Dividend Program
On February 1, 2017, the Board approved the Company’s next quarterly cash dividend payment at the new rate of $0.22 per share and set March 31, 2017 as the record date for determining the shareholders entitled to receive the dividend, which will be payable on April 14, 2017.

Conference Call Details
Amdocs will host a conference call on February 1, 2017 at 5:00 p.m. Eastern Time to discuss the Company's first quarter of fiscal 2017 results. To participate, please dial +1 (844) 513-7152, or +1 (508) 637-5600 outside the United States, approximately 15 minutes before the call and enter passcode 43552017. The call will also be carried live on the Internet via the Amdocs website, www.amdocs.com.

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. Amdocs believes that non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with Amdocs’ results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Amdocs’ results of operations in conjunction with the corresponding GAAP measures.

Amdocs believes that the presentation of non-GAAP diluted earnings per share and other 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 when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and results of operations, as well as the net amount of cash generated by its business operations after taking into account capital spending required to maintain or expand the business.

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 Amdocs. In addition, Amdocs believes that significant groups of investors exclude these items in reviewing its results and those of its competitors, because the amounts of the items between companies can vary greatly depending on the assumptions used by an individual company in determining the amounts of the items.

Amdocs further believes that, where the adjustments used in calculating non-GAAP diluted earnings per share are based on specific, identified amounts that impact different line items in the Consolidated Statements of Income (including cost of revenue, research and development, selling, general and administrative, operating income, income taxes and net income), it is useful to investors to understand how these specific line items in the Consolidated Statements of Income are affected by these adjustments. Please refer to the Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP tables below.

About Amdocs
Amdocs is the market leader in customer experience software solutions and services for the world’s largest communications, entertainment and media service providers. For more than 30 years, Amdocs solutions, which include BSS, OSS, network control, optimization and network functions virtualization, coupled with professional and managed services, have accelerated business value for its customers by simplifying business complexity, reducing costs and delivering a world-class customer experience.

The Amdocs portfolio enables service providers to capture the world of digital immediacy by operating across digital dimensions to engage customers with personalized, omni-channel experiences; creating a diversified business to capture new revenue streams; becoming data empowered to make business and operational decisions based on insight-based and predictive analytics; and achieving service agility to accelerate the fast rollout of new technologies and hybrid network services.

Amdocs and its 25,000 employees serve customers in over 85 countries. Listed on the NASDAQ Global Select Market, Amdocs had revenue of $3.7 billion in fiscal 2016.

Amdocs: Embrace Challenge, Experience Success.

For more information, visit Amdocs at www.amdocs.com.

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, Amdocs specifically disclaims any obligation to do so. These and other risks are discussed at greater length in Amdocs’ filings with the Securities and Exchange Commission, including in our Annual Report on Form 20-F for the fiscal year ended September 30, 2016 filed on December 12, 2016.

   
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
    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 Relations
Amdocs
314-212-8328
E-mail: dox_info@amdocs.com

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