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Fourth Quarter Results for Fiscal 2016
Nov 08, 2016
Expects Fiscal 2017 Revenue Growth of 2.0-6.0% YoY
Quarterly Cash Dividend to be Raised From
Key highlights:
- Fourth fiscal quarter revenue of
$941 million , at the midpoint of the$920-$960 million guidance range. As we anticipated, foreign currency movements negatively affected revenue by approximately$2 million relative to the third quarter of fiscal 2016 - Diluted GAAP EPS of
$0.64 for the fourth fiscal quarter, below the$0.66-$0.74 guidance range due to higher acquisition-related costs in connection with the acquisitions of Pontis, Vindicia and Brite:Bill announced onSeptember 14, 2016 - Fourth fiscal quarter diluted non-GAAP EPS of
$0.89 , slightly above the mid-point of the$0.85-$0.91 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) - Fourth fiscal quarter GAAP operating income of
$118 million ; non-GAAP operating income of$161 million ; non-GAAP operating margin of 17.1% - Free cash flow of
$125 million for the fourth fiscal quarter - Repurchased
$90 million of ordinary shares during the fourth fiscal quarter - Twelve-month backlog of
$3.17 billion at the end of the fourth fiscal quarter, up$60 million from the end of the third quarter of fiscal 2016 - The board of directors approved a
$0.195 per share quarterly cash dividend to be paid onJanuary 13, 2017 , and, subject to shareholders’ approval at theJanuary 2017 annual general meeting of shareholders, an increase in the quarterly cash dividend to$0.22 per share, anticipated to be paid inApril 2017 - First quarter fiscal 2017 guidance: Expected revenue of approximately
$935-$975 million . Expected diluted GAAP EPS of approximately$0.59-$0.67 . Expected diluted non-GAAP EPS of approximately$0.87-$0.93 (which excludes amortization of purchased intangible assets and other acquisition-related costs and approximately$0.09-$0.10 per share of equity-based compensation expense, net of related tax effects) - Full year fiscal 2017 guidance: Expected revenue growth of 2.0-6.0% on a constant currency basis and reported basis. Expected non-GAAP diluted earnings per share growth of roughly 4.5-8.5%, incorporating the impact of anticipated share repurchase activity over the course of the fiscal year
“Our fourth quarter performance was solid and culminated in a stronger second half along the lines we predicted a year ago.
Gelman continued, “During the fourth quarter we expanded our activities with several important customers. In
Gelman concluded, “We enter fiscal 2017 focused on building the engines to support our customers in strategic areas such as digital modernization, the enterprise segment, Pay TV and network function virtualization. With the visibility provided by our record 12-month backlog we are targeting full year non-GAAP earnings per share growth of 4.5% to 8.5% while monitoring various macro and industry specific risks, including the impact of consolidation activity in
Financial Discussion of Fourth 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
Fiscal Year 2016 Results
For the fiscal year ended
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 interest and other expense, net, non-GAAP income taxes, non-GAAP effective tax rate, 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;
- changes in fair value of certain acquisition-related liabilities;
- nonrecurring restructuring charges associated with the Comverse acquisition;
- 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, nonrecurring restructuring charges associated with the acquisition of the Comverse BSS assets, changes in fair value of certain acquisition-related liabilities, 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 | Fiscal year ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Revenue | $ | 940,656 | $ | 926,776 | $ | 3,718,229 | $ | 3,643,538 | ||||||||
Operating expenses: | ||||||||||||||||
Cost of revenue | 611,107 | 603,105 | 2,408,040 | 2,349,488 | ||||||||||||
Research and development | 61,043 | 65,900 | 252,292 | 254,944 | ||||||||||||
Selling, general and administrative | 117,030 | 111,191 | 464,883 | 440,085 | ||||||||||||
Amortization of purchased intangible assets and other | 32,979 | 23,880 | 109,873 | 70,073 | ||||||||||||
Restructuring charges | - | 13,000 | - | 13,000 | ||||||||||||
822,159 | 817,076 | 3,235,088 | 3,127,590 | |||||||||||||
Operating income | 118,497 | 109,700 | 483,141 | 515,948 | ||||||||||||
Interest and other income (expense), net | 649 | (1,375 | ) | 1,557 | (2,544 | ) | ||||||||||
Income before income taxes | 119,146 | 108,325 | 484,698 | 513,404 | ||||||||||||
Income taxes | 23,437 | 17,195 | 75,367 | 67,241 | ||||||||||||
Net income | $ | 95,709 | $ | 91,130 | $ | 409,331 | $ | 446,163 | ||||||||
Basic earnings per share | $ | 0.65 | $ | 0.60 | $ | 2.74 | $ | 2.89 | ||||||||
Diluted earnings per share | $ | 0.64 | $ | 0.59 | $ | 2.71 | $ | 2.85 | ||||||||
Basic weighted average number of shares outstanding | 147,281 | 152,601 | 149,168 | 154,423 | ||||||||||||
Diluted weighted average number of shares outstanding | 148,984 | 155,201 | 151,176 | 156,809 | ||||||||||||
Cash dividends declared per share | $ | 0.195 | $ | 0.170 | $ | 0.755 | $ | 0.665 | ||||||||
AMDOCS LIMITED | ||||||||||||||||
Selected Financial Metrics | ||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||
Three months ended | Fiscal year ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Revenue | $ | 940,656 | $ | 926,776 | $ | 3,718,229 | $ | 3,643,538 | ||||||||
Non-GAAP operating income | 161,078 | 156,917 | 635,714 | 618,675 | ||||||||||||
Non-GAAP net income | 132,360 | 130,353 | 540,116 | 529,700 | ||||||||||||
Non-GAAP diluted earnings per share | $ | 0.89 | $ | 0.84 | $ | 3.57 | $ | 3.38 | ||||||||
Diluted weighted average number of shares outstanding | 148,984 | 155,201 | 151,176 | 156,809 | ||||||||||||
AMDOCS LIMITED | ||||||||||||||||||||||
Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||
|
Three months ended September 30, 2016 |
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Reconciliation items |
||||||||||||||||||||||
GAAP | Amortization of purchased intangible assets and other |
Equity based compensation expense |
Tax effect |
Non-GAAP | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||
Cost of revenue | $ | 611,107 | $ | - | $ | (4,802 | ) | $ | - | $ | 606,305 | |||||||||||
Research and development |
61,043 | - | (929 | ) | - | 60,114 | ||||||||||||||||
Selling, general and administrative |
117,030 | - | (3,871 | ) | - | 113,159 | ||||||||||||||||
Amortization of purchased intangible assets and other |
32,979 | (32,979 | ) | - | - | - | ||||||||||||||||
Total operating expenses | 822,159 | (32,979 | ) | (9,602 | ) | - | 779,578 | |||||||||||||||
Operating income | 118,497 | 32,979 | 9,602 | - | 161,078 | |||||||||||||||||
Income taxes | 23,437 | - | - | 5,930 | 29,367 | |||||||||||||||||
Net income | $ | 95,709 | $ | 32,979 | $ | 9,602 | $ | (5,930 | ) | $ | 132,360 | |||||||||||
Three months ended September 30, 2015 |
||||||||||||||||||
Reconciliation items | ||||||||||||||||||
GAAP | Amortization of purchased intangible assets and other |
Equity based compensation expense |
Restructuring charges |
Tax effect |
Non-GAAP | |||||||||||||
Operating expenses: | ||||||||||||||||||
Cost of revenue | $ | 603,105 | $ | - | $ | (3,854 | ) | $ | - | $ | - | $ | 599,251 | |||||
Research and development |
65,900 | - | (830 | ) | - | - | 65,070 | |||||||||||
Selling, general and administrative |
111,191 | - | (5,653 | ) | - | - | 105,538 | |||||||||||
Amortization of purchased intangible assets and other |
23,880 | (23,880 | ) | - | - | - | - | |||||||||||
Restructuring charges | 13,000 | - | - | (13,000 | ) | - | - | |||||||||||
Total operating expenses | 817,076 | (23,880 | ) | (10,337 | ) | (13,000 | ) | - | 769,859 | |||||||||
Operating income | 109,700 | 23,880 | 10,337 | 13,000 | - | 156,917 | ||||||||||||
Income taxes | 17,195 | - | - | - | 7,994 | 25,189 | ||||||||||||
Net income | $ | 91,130 | $ | 23,880 | $ | 10,337 | $ | 13,000 | $ | (7,994 | ) | $ | 130,353 | |||||
AMDOCS LIMITED | ||||||||||||||||||||||||||||||||
Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP | ||||||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||
Fiscal year ended September 30, 2016 |
||||||||||||||||||||||||||||||||
Reconciliation items |
||||||||||||||||||||||||||||||||
GAAP | Amortization of purchased intangible assets and other |
Equity based compensation expense |
Tax effect |
Non-GAAP | ||||||||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||||
Cost of revenue | $ | 2,408,040 | $ | - | $ | (18,249 | ) | $ | - | $ | 2,389,791 | |||||||||||||||||||||
Research and development |
252,292 | - | (3,742 | ) | - | 248,550 | ||||||||||||||||||||||||||
Selling, general and administrative |
464,883 | - | (20,709 | ) | - | 444,174 | ||||||||||||||||||||||||||
Amortization of purchased intangible assets and other |
109,873 | (109,873 | ) | - | - | - | ||||||||||||||||||||||||||
Total operating expenses | 3,235,088 | (109,873 | ) | (42,700 | ) | - | 3,082,515 | |||||||||||||||||||||||||
Operating income | 483,141 | 109,873 | 42,700 | - | 635,714 | |||||||||||||||||||||||||||
Income taxes | 75,367 | - | - | 21,788 | 97,155 | |||||||||||||||||||||||||||
Net income | $ | 409,331 | $ | 109,873 | $ | 42,700 | $ | (21,788 | ) | $ | 540,116 | |||||||||||||||||||||
Fiscal year ended September 30, 2015 |
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Reconciliation items | |||||||||||||||||||||||
GAAP |
Amortization of purchased intangible assets and other |
Equity based compensation expense |
Restructuring charges |
Changes in fair value of certain acquisition- related liabilities |
Tax effect |
Non-GAAP | |||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Cost of revenue | $ | 2,349,488 | $ | - | $ | (15,621 | ) | $ | - | $ | 24,906 | $ | - | $ | 2,358,773 | ||||||||
Research and development |
254,944 | - | (3,400 | ) | - | - | - | 251,544 | |||||||||||||||
Selling, general and administrative |
440,085 | - | (25,539 | ) | - | - | - | 414,546 | |||||||||||||||
Amortization of purchased intangible assets and other |
70,073 | (70,073 | ) | - | - | - | - | - | |||||||||||||||
Restructuring charges | 13,000 | - | - | (13,000 | ) | - | - | - | |||||||||||||||
Total operating expenses |
3,127,590 | (70,073 | ) | (44,560 | ) | (13,000 | ) | 24,906 | - | 3,024,863 | |||||||||||||
Operating income | 515,948 | 70,073 | 44,560 | 13,000 | (24,906 | ) | - | 618,675 | |||||||||||||||
Interest and other expense, net |
2,544 | - | - | - | 3,921 | - | 6,465 | ||||||||||||||||
Income taxes | 67,241 | - | - | - | - | 15,269 | 82,510 | ||||||||||||||||
Net income | $ | 446,163 | $ | 70,073 | $ | 44,560 | $ | 13,000 | $ | (28,827 | ) | $ | (15,269 | ) | $ | 529,700 |
AMDOCS LIMITED | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
(in thousands) | ||||||||
As of |
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September 30, 2016 |
September 30, 2015 |
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ASSETS | ||||||||
Current assets | ||||||||
Cash, cash equivalents and short-term interest-bearing investments | $ | 1,095,723 | $ | 1,354,012 | ||||
Accounts receivable, net, including unbilled of $134,122 and $80,197, respectively | 818,531 | 714,784 | ||||||
Deferred income taxes | - | 150,733 | ||||||
Prepaid expenses and other current assets | 186,137 | 158,633 | ||||||
Total current assets | 2,100,391 | 2,378,162 | ||||||
Equipment and leasehold improvements, net | 331,728 | 309,320 | ||||||
Goodwill and other intangible assets, net | 2,493,166 | 2,301,610 | ||||||
Other noncurrent assets | 406,070 | 335,560 | ||||||
Total assets | $ | 5,331,355 | $ | 5,324,652 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable, accruals and other | $ | 992,679 | $ | 945,033 | ||||
Short-term financing arrangements | 200,000 | 220,000 | ||||||
Deferred revenue | 173,331 | 198,470 | ||||||
Total current liabilities | 1,366,010 | 1,363,503 | ||||||
Other noncurrent liabilities | 511,784 | 554,307 | ||||||
Shareholders’ equity | 3,453,561 | 3,406,842 | ||||||
Total liabilities and shareholders’ equity | $ | 5,331,355 | $ | 5,324,652 | ||||
____________
Due to the early adoption of Accounting Standard Update 2015-17, starting the first quarter of fiscal year 2016, all deferred tax assets and liabilities are classified as noncurrent on the balance sheet. Prior balance sheets were not retrospectively adjusted.
AMDOCS LIMITED | ||||||||
Consolidated Statements of Cash Flows | ||||||||
(in thousands) | ||||||||
Fiscal year ended September 30, | ||||||||
2016 | 2015 | |||||||
Cash Flow from Operating Activities: | ||||||||
Net income | $ | 409,331 | $ | 446,163 | ||||
Reconciliation of net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 211,791 | 174,795 | ||||||
Equity-based compensation expense | 42,700 | 44,560 | ||||||
Deferred income taxes | (2,315 | ) | (26,887 | ) | ||||
Excess tax benefit from equity-based compensation | (6,913 | ) | (5,949 | ) | ||||
Loss from short-term interest-bearing investments | 407 | 476 | ||||||
Net changes in operating assets and liabilities, net of amounts acquired: | ||||||||
Accounts receivable | (70,859 | ) | 39,829 | |||||
Prepaid expenses and other current assets | (11,164 | ) | 22,690 | |||||
Other noncurrent assets | 2,587 | 7,406 | ||||||
Accounts payable, accrued expenses and accrued personnel | 59,982 | 63,894 | ||||||
Deferred revenue | (49,828 | ) | 2,434 | |||||
Income taxes payable | 10,112 | 23,474 | ||||||
Other noncurrent liabilities | 24,403 | (20,263 | ) | |||||
Net cash provided by operating activities | 620,234 | 772,622 | ||||||
Cash Flow from Investing Activities: | ||||||||
Payments for purchase of equipment and leasehold improvements, net | (130,086 | ) | (120,503 | ) | ||||
Proceeds from sale of short-term interest-bearing investments | 361,960 | 252,818 | ||||||
Purchase of short-term interest-bearing investments | (370,742 | ) | (250,184 | ) | ||||
Net cash paid for acquisitions | (283,450 | ) | (263,193 | ) | ||||
Other | (18,533 | ) | 1,408 | |||||
Net cash used in investing activities | (440,851 | ) | (379,654 | ) | ||||
Cash Flow from Financing Activities: | ||||||||
Borrowings under financing arrangements | 200,000 | 220,000 | ||||||
Payments under financing arrangements | (220,000 | ) | (210,000 | ) | ||||
Repurchase of shares | (413,422 | ) | (454,020 | ) | ||||
Proceeds from employee stock options exercised | 89,600 | 78,206 | ||||||
Payments of dividends | (109,304 | ) | (100,790 | ) | ||||
Excess tax benefit from equity-based compensation | 6,913 | 5,949 | ||||||
Other | (83 | ) | (9 | ) | ||||
Net cash used in financing activities | (446,296 | ) | (460,664 | ) | ||||
Net decrease in cash and cash equivalents | (266,913 | ) | (67,696 | ) | ||||
Cash and cash equivalents at beginning of period | 1,035,573 | 1,103,269 | ||||||
Cash and cash equivalents at end of period | $ | 768,660 | $ | 1,035,573 | ||||
AMDOCS LIMITED | ||||||||||||||||||||
Supplementary Information | ||||||||||||||||||||
(in millions) | ||||||||||||||||||||
Three months ended | ||||||||||||||||||||
September 30, 2016 |
June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
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North America | $ | 626.2 | $ | 591.8 | $ | 586.4 | $ | 576.7 | $ | 626.6 | ||||||||||
Europe | 118.9 | 126.3 | 139.2 | 128.9 | 115.3 | |||||||||||||||
Rest of the World | 195.6 | 212.0 | 200.3 | 215.9 | 184.9 | |||||||||||||||
Total Revenue | $ | 940.7 | $ | 930.1 | $ | 925.9 | $ | 921.5 | $ | 926.8 | ||||||||||
Three months ended | |||||||||||||||||||||
September 30, 2016 |
June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
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Managed Services Revenue |
$ | 478.5 | $ | 479.2 | $ | 501.1 | $ | 487.6 | $ | 466.6 |
Three months ended | ||||||||||||||||||||
September 30, 2016 |
June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
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Customer Experience Systems |
924.9 | 908.1 | 902.3 | 894.4 | 899.4 | |||||||||||||||
Directory | 15.8 | 22.0 | 23.6 | 27.1 | 27.4 | |||||||||||||||
Total Revenue | $ | 940.7 | $ | 930.1 | $ | 925.9 | $ | 921.5 | $ | 926.8 | ||||||||||
As of | ||||||||||||||||||||
September 30, 2016 |
June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
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12-Month Backlog | $ | 3,170 | $ | 3,110 | $ | 3,100 | $ | 3,090 | $ | 3,080 |
Contact:Matthew Smith Head of Investor RelationsAmdocs 314-212-8328 E-mail: dox_info@amdocs.com