« Back
Third Quarter Results for Fiscal 2008
Jul 23, 2008
Amdocs Reports Record Quarterly Revenue of $820 Million, Exceeding Guidance
Key highlights:
- Third quarter revenue increased to $820 million, exceeding guidance of $790-$805 million
- Third quarter diluted non-GAAP EPS, excluding acquisition-related costs and equity-based compensation expense, net of related tax effects, increased to $0.61, in line with guidance of $0.59-$0.61 diluted non-GAAP EPS
- Diluted GAAP EPS of $0.46 for the quarter
- Free cash flow of $83 million for the quarter
- Fourth quarter fiscal 2008 guidance: Expected revenue of approximately $825-$835 million and diluted non-GAAP EPS of $0.61-$0.63, excluding acquisition-related costs and approximately $0.06-$0.07 per share of equity-based compensation expense, net of related tax effects. Diluted GAAP EPS is expected to be approximately $0.47-$0.50
St. Louis, MO - July 23, 2008 - Amdocs Limited (NYSE: DOX) today reported that for its fiscal third quarter ended June 30, 2008, revenue was $820.3 million, an increase of 15.2% from last year's third quarter. Net income on a non-GAAP basis was $132.5 million, or $0.61 per diluted share (excluding acquisition-related costs, which include amortization of purchased intangible assets and in-process research and development write-off, and excluding equity-based compensation expense, net of related tax effects, of $31.8 million), compared to non-GAAP net income of $120.6 million, or $0.54 per diluted share, in the third quarter of fiscal 2007 (excluding acquisition-related costs, which include amortization of purchased intangible assets and equity-based compensation expense, net of related tax effects, of $32.4 million). The Company's GAAP net income was $100.7 million, or $0.46 per diluted share, compared to GAAP net income of $88.2 million, or $0.40 per diluted share, in the third quarter of fiscal 2007. Free cash flow for the quarter was $83.2 million, comprised of cash flow from operations of $115.1 million less $31.9 million in net capital expenditures and other.
"Our role as a strategic partner with our customers is translating into excellent business results for Amdocs," said Dov Baharav, chief executive officer of Amdocs Management Limited. "We continue to provide innovative solutions to solve real-world business needs for the leading service providers around the world. Our unique combination of industry-leading integrated products, services and domain expertise provides us with growth opportunities in areas such as managed services and transformational projects in developed markets and in emerging markets around the world. We continue to see strong demand at this time but there are macro-economic uncertainties which may have an impact on our results in the future. We believe that we are well-positioned for future growth."
In the third quarter Amdocs had numerous wins across lines of business and geographies. The Company had a win in North America with the Amdocs CES - Qpass 7.5 offering and continues to show momentum in broadband cable and satellite with wins for operational support systems (OSS) and mediation solutions. Amdocs had additional OSS success including a win in Asia Pacific, which builds on a strong existing relationship, and in Europe with Slovak Telecom. Amdocs enjoyed success in emerging markets as Bakcell in Azerbaijan selected Amdocs Compact Convergence Suite and another service provider chose Amdocs CRM.
Financial Outlook
Amdocs expects that revenue for the fourth quarter of fiscal 2008 will be approximately $825-$835 million. Amdocs expects diluted earnings per share on a non-GAAP basis for the fourth quarter to be $0.61-$0.63, excluding acquisition-related costs and approximately $0.06-$0.07 per share of equity-based compensation expense, net of related tax effects. Diluted GAAP EPS is expected to be approximately $0.47-$0.50.
Amdocs will host a conference call on July 23, 2008 at 5 p.m. Eastern Time to discuss the Company's third quarter results. The call will be carried live on the Internet via www.InvestorCalendar.com and 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 service, non-GAAP research and development, non-GAAP selling, general and administrative, non-GAAP operating income, non-GAAP income taxes and non-GAAP net income. These non-GAAP measures exclude the following items:
- amortization of purchased intangible assets;
- in-process research and development write-off and other;
- restructuring charges;
- 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 service, non-GAAP research and development, non-GAAP selling, general and administrative, non-GAAP operating income, non-GAAP income taxes and non-GAAP net income, 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, in-process research and development write-off and other, restructuring charges, 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 non-cash expenses in reviewing its results and those of its competitors, because the amounts of the expenses between companies can vary greatly depending on the assumptions used by an individual company in determining the amounts of the expenses.
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 service, 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 systems innovation, enabling world-leading service providers to deliver an integrated, innovative and the intentional customer experienceTM - at every point of service. Amdocs provides solutions that deliver customer experience excellence, combining the software, service and expertise to help its customers execute their strategies and achieve service, operational and financial excellence. A global company with revenue of $2.84 billion in fiscal 2007, Amdocs has more than 17,000 employees and serves customers in more than 50 countries around the world. 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, 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 for the fiscal year ended September 30, 2007 filed on December 3, 2007 and on Form 6-K furnished on February 11 and May 6, 2008.
Contact:
Thomas G. O'Brien
Treasurer and Vice President of Investor Relations
Amdocs Limited
314-212-8328
E-mail: dox_info@amdocs.com
AMDOCS LIMITED
Consolidated Statements of Income
(in thousands, except per share data)
Three months ended Nine months ended
June 30, June 30,
--------------------- ----------------------
2008 2007 2008 2007
-------- ------- --------- ---------
Revenue:
License $ 35,244 $43,821 $ 93,570 $113,091
Service 785,044 668,270 2,243,249 1,996,393
-------- ------- --------- ---------
820,288 712,091 2,336,819 2,109,484
Operating expenses:
Cost of license 555 960 2,267 3,045
Cost of service 528,437 448,795 1,493,134 1,330,776
Research and development 56,137 56,727 168,240 174,929
Selling, general and
administrative 104,632 94,445 300,963 274,895
Amortization of purchased
intangible assets 22,796 19,175 66,302 55,785
Restructuring charges,
in-process research and
development and other 1,780 - 1,780 6,761
-------- ------- --------- ---------
714,337 620,102 2,032,686 1,846,191
-------- ------- --------- ---------
Operating income 105,951 91,989 304,133 263,293
Interest income and
other, net 6,159 14,290 23,797 36,928
-------- ------- --------- ---------
Income before income taxes 112,110 106,279 327,930 300,221
Income taxes 11,438 18,098 31,735 31,527
-------- ------- --------- ---------
Net income $100,672 $88,181 $296,195 $268,694
======== ======= ========= =========
Basic earnings per share $ 0.49 $ 0.42 $ 1.43 $ 1.30
======== ======= ========= =========
Diluted earnings
per share (1) $ 0.46 $ 0.40 $ 1.36 $ 1.22
======== ======= ========= =========
Basic weighted average
number of shares
outstanding 206,329 208,262 207,069 207,332
======== ======= ========= =========
Diluted weighted average
number of shares
outstanding 219,120 223,775 220,315 222,997
======== ======= ========= =========
(1) To reflect the impact of assumed conversion of the convertible notes,
$985 and $2,955, representing interest expense and amortization of
issuance costs, were added back to net income for the three and nine
months ended June 30, 2008 and 2007, for the purpose of computing
diluted earnings per share.
AMDOCS LIMITED
Selected Financial Metrics
(in thousands, except per share data)
Three months ended Nine months ended
June 30, June 30,
--------------------- ------------------------
2008 2007 2008 2007
-------- -------- ---------- ----------
Revenue $820,288 $712,091 $2,336,819 $2,109,484
Non-GAAP operating
income 146,608 123,843 415,925 365,809
Non-GAAP net income 132,463 120,576 382,400 353,163
Non-GAAP diluted
earnings per
share (1) $ 0.61 $ 0.54 $ 1.75 $ 1.60
Diluted weighted
average number of
shares outstanding 219,120 223,775 220,315 222,997
(1) To reflect the impact of assumed conversion of the convertible notes,
$985 and $2,955, representing interest expense and amortization of
issuance costs, were added back to net income for the three and nine
months ended June 30, 2008 and 2007, for the purpose of computing
diluted earnings per share.
AMDOCS LIMITED
Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
(in thousands)
Three months ended
June 30, 2008
------------------------------------------------------------
Reconciliation items
-------------------------------------------
Restructuring
Amortization charges,
of in-process Equity
purchased research and based
intangible development compensation Tax Non-
GAAP assets and other expense effect GAAP
------------------------------------------------------------
Operating
expenses:
Cost of
license $ 555 $ - $ - $ - $ - $ 555
Cost of
service 528,437 - - (5,998) - 522,439
Research and
development 56,137 - - (1,104) - 55,033
Selling,
general and
admini-
strative 104,632 - - (8,979) - 95,653
Amortization
of purchased
intangible
assets 22,796 (22,796) - - - -
Restructuring
charges,
in-process
research and
development
and other 1,780 - (1,780) - - -
------------------------------------------------------------
Total
operating
expenses 714,337 (22,796) (1,780) (16,081) - 673,680
------------------------------------------------------------
------------------------------------------------------------
Operating
income 105,951 22,796 1,780 16,081 - 146,608
------------------------------------------------------------
------------------------------------------------------------
Income taxes 11,438 - - - 8,866 20,304
------------------------------------------------------------
------------------------------------------------------------
Net income $100,672 $22,796 $1,780 $16,081 $(8,866) $132,463
------------------------------------------------------------
Three months ended
June 30, 2007
---------------------------------------------------------
Reconciliation items
-------------------------------------
Amortization
of purchased Equity based
intangible compensation
GAAP assets expense Tax effect Non-GAAP
-----------------------------------------------------------
Operating
expenses:
Cost of
license $ 960 $ - $ - $ - $ 960
Cost of
service 448,795 - (6,587) - 442,208
Research and
development 56,727 - (1,734) - 54,993
Selling,
general and
admini-
strative 94,445 - (4,358) - 90,087
Amortization
of purchased
intangible
assets 19,175 (19,175) - - -
-----------------------------------------------------------
Total operating
expenses 620,102 (19,175) (12,679) - 588,248
-----------------------------------------------------------
-----------------------------------------------------------
Operating
income 91,989 19,175 12,679 - 123,843
-----------------------------------------------------------
-----------------------------------------------------------
Income taxes 18,098 - - (541) 17,557
-----------------------------------------------------------
-----------------------------------------------------------
Net income $88,181 $19,175 $12,679 $541 $120,576
-----------------------------------------------------------
AMDOCS LIMITED
Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
(in thousands)
Nine months ended
June 30, 2008
-------------------------------------------------------------
Reconciliation items
--------------------------------------------
Restructuring
Amortization charges,
of in-process Equity
purchased research and based
intangible development compensation Tax Non-
GAAP assets and other expense effect GAAP
-------------------------------------------------------------
Operating
expenses:
Cost of
license $ 2,267 $ - $ - $ - $ - $ 2,267
Cost of
service 1,493,134 - - (17,711) - 1,475,423
Research and
development 168,240 - - (3,626) - 164,614
Selling,
general and
admini-
strative 300,963 - - (22,373) - 278,590
Amortization
of purchased
intangible
assets 66,302 (66,302) - - - -
Restructuring
charges,
in-process
research and
development
and other 1,780 - (1,780) - - -
-------------------------------------------------------------
Total
operating
expenses 2,032,686 (66,302) (1,780) (43,710) - 1,920,894
-------------------------------------------------------------
-------------------------------------------------------------
Operating
income 304,133 66,302 1,780 43,710 - 415,925
-------------------------------------------------------------
-------------------------------------------------------------
Income taxes 31,735 - - - 25,587 57,322
-------------------------------------------------------------
-------------------------------------------------------------
Net income $ 296,195 $66,302 $1,780 $43,710 $(25,587) $ 382,400
-------------------------------------------------------------
AMDOCS LIMITED
Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
(in thousands)
Nine months ended
June 30, 2007
--------------------------------------------------------------
Reconciliation items
--------------------------------------------
Restructuring
Amortization charges,
of in-process Equity
purchased research and based
intangible development compensation Tax Non-
GAAP assets and other expense effect GAAP
--------------------------------------------------------------
Operating
expenses:
Cost of
license $ 3,045 $ - $ - $ - $ - $ 3,045
Cost of
service 1,330,776 - - (18,914) - 1,311,862
Research
and
development 174,929 - - (5,099) - 169,830
Selling,
general and
admini-
strative 274,895 - - (15,957) - 258,938
Amortization
of purchased
intangible
assets 55,785 (55,785) - - - -
Restructuring
charges,
in-process
research and
development
and other 6,761 - (6,761) - - -
--------------------------------------------------------------
Total
operating
expenses 1,846,191 (55,785) (6,761) (39,970) - 1,743,675
--------------------------------------------------------------
--------------------------------------------------------------
Operating
income 263,293 55,785 6,761 39,970 - 365,809
--------------------------------------------------------------
--------------------------------------------------------------
Income taxes 31,527 - - - 18,047 49,574
--------------------------------------------------------------
--------------------------------------------------------------
Net income $ 268,694 $55,785 $6,761 $39,970 $(18,047) $ 353,163
--------------------------------------------------------------
AMDOCS LIMITED
Condensed Consolidated Balance Sheets
(in thousands)
As of
-----------------------
June 30, September 30,
2008 2007
---------- ----------
ASSETS
Current assets
Cash, cash equivalents and short-term
interest-bearing investments $1,180,405 $1,179,280
Accounts receivable, net, including unbilled
of $35,744 and $43,870 respectively(*) 588,667 473,847
Deferred income taxes and taxes receivable 98,605 117,623
Prepaid expenses and other current assets 104,050 98,746
---------- ----------
Total current assets 1,971,727 1,869,496
Equipment, vehicles and leasehold
improvements, net 304,146 283,839
Goodwill and other intangible assets, net 1,794,893 1,792,588
Other noncurrent assets(*) 493,225 399,427
---------- ----------
Total assets $4,563,991 $4,345,350
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accruals $ 584,424 $ 592,937
Short-term portion of capital lease
obligations and other financing arrangements 2,033 2,055
Deferred revenue(*) 188,336 174,526
Deferred income taxes and taxes payable 39,591 205,960
---------- ----------
Total current liabilities 814,384 975,478
0.50% Convertible notes 450,000 450,000
Noncurrent liabilities and other 500,238 319,629
Shareholders' equity 2,799,369 2,600,243
---------- ----------
Total liabilities and shareholders' equity $4,563,991 $4,345,350
========== ==========
(*) Certain amounts in prior period financial statements have been
reclassified to conform to the current period presentation.
