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Fourth Quarter Results for Fiscal 2017
Nov 08, 2017
Record Quarterly Revenue of $980M
Expects Fiscal 2018 GAAP Diluted EPS Growth of 3.0%-9.0% and Non-GAAP Diluted EPS Growth of 4.0%-8.0% YoY
Additional
Quarterly Cash Dividend to be Raised From
Fourth Quarter Fiscal 2017 Highlights
- Revenue of
$980 million , slightly above the midpoint of the$955-$995 million guidance range including a positive impact from foreign currency movements of approximately$9 million relative to the third quarter of fiscal 2017 - GAAP diluted EPS of
$0.73 , above the mid-point of the$0.68-$0.76 guidance range - Non-GAAP diluted EPS of
$0.94 , at the mid-point of the$0.91-$0.97 guidance range - GAAP operating income of
$132 million ; GAAP operating margin of 13.5% - Non-GAAP operating income of
$168 million ; non-GAAP operating margin of 17.2% - Free cash flow of
$165 million , comprised of cash flow from operations of$199 million , less$34 million in net capital expenditures and other - Twelve-month backlog of
$3.25 billion , up$30 million sequentially - Quarterly cash dividend of
$0.22 per share to be paid onJanuary 19, 2018 - The board of directors has approved a share repurchase plan authorizing the repurchase of up to
$800 million of ordinary shares at the company’s discretion; this plan has no expiration date and is in addition to the current authorization, which, as ofSeptember 30, 2017 , provided for up to$256 million of remaining repurchase authority - The board of directors also approved an increase in the Company’s quarterly cash dividend payment from
$0.22 per share to$0.25 per share, anticipated to be paid inApril 2018 , subject to shareholder approval at theJanuary 2018 annual meeting
“We are pleased to deliver solid operating results in Q4, which included another quarter of record revenue and sequential growth across
Gelman continued, “We sustained our high win rate in Q4 as we secured several modernization awards and increased our footprint with highly strategic customers. Earlier in the quarter, we were proud to announce that
Gelman concluded, “Looking ahead, we expect to deliver full year non-GAAP diluted earnings per share growth of 4.0% to 8.0% and revenue growth of 0% to 4.0% in fiscal 2018. This outlook reflects the visibility provided by our record 12-month backlog, and incorporates our strong momentum in the North American Pay TV market, tempered by some slowdown in AT&T’s discretionary spending plans as we discussed last quarter. Additionally, we remain committed to the proactive and disciplined return of capital to shareholders. In support of this, our Board has today authorized an additional shareholder repurchase plan of
Revenue
Revenue for the fourth fiscal quarter ended
For the fiscal year ended
Net Income and Earnings Per Share
The Company's GAAP net income for the fourth quarter of fiscal 2017 was
The Company's GAAP net income in fiscal 2017 was
Returning Cash to Shareholders
- Quarterly Cash Dividend Program: On
November 8, 2017 , the Board approved the Company’s next quarterly cash dividend payment of$0.22 per share and setDecember 29, 2017 as the record date for determining the shareholders entitled to receive the dividend, which will be payable onJanuary 19, 2018 . The Board also approved an increase in the Company’s quarterly cash dividend payment to$0.25 per share, which is anticipated to be paid inApril 2018 , provided that the increase is approved by shareholders at theJanuary 2018 annual general meeting of shareholders. - Share Repurchase Activity: Repurchased
$90 million of ordinary shares during the fourth quarter of fiscal 2017. The board of directors has approved a share repurchase plan authorizing the repurchase of up to$800 million of ordinary shares at the company’s discretion; this plan has no expiration date and is in addition to the current authorization, which, as ofSeptember 30, 2017 , provided for up to$256 million of remaining repurchase authority.
Twelve-month Backlog
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
First Quarter Fiscal 2018 Outlook
- Revenue of approximately
$960-$1,000 million , including an immaterial sequential impact from foreign currency fluctuations as compared to the fourth quarter of fiscal 2017 - Diluted GAAP EPS of approximately
$0.66-$0.74 - Diluted non-GAAP EPS of approximately
$0.94-$1.00 , excluding 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 2018 Outlook
- Expects revenue growth of 0.0%-4.0% year-over-year as reported
- Expects revenue growth of (1.0%)-3.0% year-over-year on a constant currency basis
- GAAP diluted earnings per share growth of roughly 3.0-9.0% year-over-year
- Non-GAAP diluted earnings per share growth of roughly 4.0%-8.0% year-over-year, excluding amortization of purchased intangible assets and other acquisition-related costs and approximately
$0.28-$0.32 per share of equity-based compensation expense, net of related tax effects
Our first fiscal quarter 2018 and full year fiscal 2018 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,
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 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;
- 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, 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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About
For more information, visit
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.
Contact:
Head of Investor Relations
314-212-8328
E-mail: dox_info@amdocs.com
AMDOCS LIMITED | ||||||||||||||
Consolidated Statements of Income | ||||||||||||||
(In thousands, except per share data) | ||||||||||||||
Three months ended | Fiscal year ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||
Revenue | $ | 979,724 | $ | 940,656 | $ | 3,867,155 | $ | 3,718,229 | ||||||
Operating expenses: | ||||||||||||||
Cost of revenue | 636,445 | 611,107 | 2,507,656 | 2,408,040 | ||||||||||
Research and development | 64,686 | 61,043 | 259,097 | 252,292 | ||||||||||
Selling, general and administrative | 120,237 | 117,030 | 472,778 | 464,883 | ||||||||||
Amortization of purchased intangible assets and other | 26,309 | 32,979 | 110,291 | 109,873 | ||||||||||
847,677 | 822,159 | 3,349,822 | 3,235,088 | |||||||||||
Operating income | 132,047 | 118,497 | 517,333 | 483,141 | ||||||||||
Interest and other (expense) income, net | (2,342 | ) | 649 | (4,421 | ) | 1,557 | ||||||||
Income before income taxes | 129,705 | 119,146 | 512,912 | 484,698 | ||||||||||
Income taxes | 22,496 | 23,437 | 76,086 | 75,367 | ||||||||||
Net income | $ | 107,209 | $ | 95,709 | $ | 436,826 | $ | 409,331 | ||||||
Basic earnings per share | $ | 0.74 | $ | 0.65 | $ | 2.99 | $ | 2.74 | ||||||
Diluted earnings per share | $ | 0.73 | $ | 0.64 | $ | 2.96 | $ | 2.71 | ||||||
Basic weighted average number of shares outstanding | 144,764 | 147,281 | 146,017 | 149,168 | ||||||||||
Diluted weighted average number of shares outstanding | 146,141 | 148,984 | 147,431 | 151,176 | ||||||||||
Cash dividends declared per share | $ | 0.220 | $ | 0.195 | $ | 0.855 | $ | 0.755 | ||||||
AMDOCS LIMITED | ||||||||||||
Selected Financial Metrics | ||||||||||||
(In thousands, except per share data) | ||||||||||||
Three months ended | Fiscal year ended | |||||||||||
September 30, | September 30, | |||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Revenue | $ | 979,724 | $ | 940,656 | $ | 3,867,155 | $ | 3,718,229 | ||||
Non-GAAP operating income | 168,197 | 161,078 | 665,472 | 635,714 | ||||||||
Non-GAAP net income | 137,419 | 132,360 | 560,590 | 540,116 | ||||||||
Non-GAAP diluted earnings per share | $ | 0.94 | $ | 0.89 | $ | 3.80 | $ | 3.57 | ||||
Diluted weighted average number of shares outstanding | 146,141 | 148,984 | 147,431 | 151,176 | ||||||||
AMDOCS LIMITED | |||||||||||||
Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP | |||||||||||||
(In thousands) | |||||||||||||
Three months ended September 30, 2017 |
|||||||||||||
Reconciliation items |
|||||||||||||
GAAP | Amortization of purchased intangible assets and other |
Equity based compensation expense |
Tax effect |
Non-GAAP | |||||||||
Operating expenses: | |||||||||||||
Cost of revenue | $ | 636,445 | $ | - | $ | (4,481 | ) | $ | - | $ | 631,964 | ||
Research and development | 64,686 | - | (822 | ) | - | 63,864 | |||||||
Selling, general and administrative | 120,237 | - | (4,538 | ) | - | 115,699 | |||||||
Amortization of purchased intangible assets and other | 26,309 | (26,309 | ) | - | - | - | |||||||
Total operating expenses | 847,677 | (26,309 | ) | (9,841 | ) | - | 811,527 | ||||||
Operating income | 132,047 | 26,309 | 9,841 | - | 168,197 | ||||||||
Income taxes | 22,496 | - | - | 5,940 | 28,436 | ||||||||
Net income | $ | 107,209 | $ | 26,309 | $ | 9,841 | $ | (5,940 | ) | $ | 137,419 | ||
Three months 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 | $ | 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 | ||
AMDOCS LIMITED | ||||||||||||||||
Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP | ||||||||||||||||
(In thousands) | ||||||||||||||||
Fiscal year ended September 30, 2017 |
||||||||||||||||
Reconciliation items |
||||||||||||||||
GAAP | Amortization of purchased intangible assets and other |
Equity based compensation expense |
Changes in fair value of certain acquisition- related liabilities |
Tax effect |
Non-GAAP |
|||||||||||
Operating expenses: | ||||||||||||||||
Cost of revenue | $ | 2,507,656 | $ | - | $ | (19,215 | ) | $ | 6,691 | $ | - | $ | 2,495,132 | |||
Research and development | 259,097 | - | (3,536 | ) | - | - | 255,561 | |||||||||
Selling, general and administrative | 472,778 | - | (21,788 | ) | - | - | 450,990 | |||||||||
Amortization of purchased intangible assets and other | 110,291 | (110,291 | ) | - | - | - | - | |||||||||
Total operating expenses | 3,349,822 | (110,291 | ) | (44,539 | ) | 6,691 | - | 3,201,683 | ||||||||
Operating income | 517,333 | 110,291 | 44,539 | (6,691 | ) | - | 665,472 | |||||||||
Income taxes | 76,086 | - | - | - | 24,375 | 100,461 | ||||||||||
Net income | $ | 436,826 | $ | 110,291 | $ | 44,539 | $ | (6,691 | ) | $ | (24,375 | ) | $ | 560,590 | ||
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 | ||
AMDOCS LIMITED | ||||||
Condensed Consolidated Balance Sheets | ||||||
(In thousands) | ||||||
As of | ||||||
September 30, 2017 |
September 30, 2016 |
|||||
ASSETS | ||||||
Current assets | ||||||
Cash, cash equivalents and short-term interest-bearing investments | $ | 979,608 | $ | 1,095,723 | ||
Accounts receivable, net, including unbilled of $229,695 and $134,122, respectively | 865,068 | 818,531 | ||||
Prepaid expenses and other current assets | 203,810 | 186,137 | ||||
Total current assets | 2,048,486 | 2,100,391 | ||||
Equipment and leasehold improvements, net | 355,685 | 331,728 | ||||
Goodwill and other intangible assets, net | 2,398,535 | 2,493,166 | ||||
Other noncurrent assets | 476,674 | 406,070 | ||||
Total assets | $ | 5,279,380 | $ | 5,331,355 | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
Current liabilities | ||||||
Accounts payable, accruals and other | $ | 1,059,855 | $ | 992,679 | ||
Short-term financing arrangements | - | 200,000 | ||||
Deferred revenue | 113,091 | 173,331 | ||||
Total current liabilities | 1,172,946 | 1,366,010 | ||||
Other noncurrent liabilities | 532,364 | 511,784 | ||||
Shareholders’ equity | 3,574,070 | 3,453,561 | ||||
Total liabilities and shareholders’ equity | $ | 5,279,380 | $ | 5,331,355 | ||
AMDOCS LIMITED | ||||||||
Consolidated Statements of Cash Flows | ||||||||
(In thousands) | ||||||||
Fiscal year ended September 30, | ||||||||
2017 | 2016 | |||||||
Cash Flow from Operating Activities: | ||||||||
Net income | $ | 436,826 | $ | 409,331 | ||||
Reconciliation of net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 214,885 | 211,791 | ||||||
Equity-based compensation expense | 44,539 | 42,700 | ||||||
Deferred income taxes | 6,551 | (2,315 | ) | |||||
Excess tax benefit from equity-based compensation | (4,666 | ) | (6,913 | ) | ||||
Loss from short-term interest-bearing investments | 9 | 407 | ||||||
Net changes in operating assets and liabilities, net of amounts acquired: | ||||||||
Accounts receivable | (41,075 | ) | (70,859 | ) | ||||
Prepaid expenses and other current assets | 11,002 | (11,164 | ) | |||||
Other noncurrent assets | (52,667 | ) | 2,587 | |||||
Accounts payable, accrued expenses and accrued personnel | 72,049 | 59,982 | ||||||
Deferred revenue | (50,230 | ) | (49,828 | ) | ||||
Income taxes payable | (15,145 | ) | 10,112 | |||||
Other noncurrent liabilities | 14,034 | 24,403 | ||||||
Net cash provided by operating activities | 636,112 | 620,234 | ||||||
Cash Flow from Investing Activities: | ||||||||
Payments for purchase of equipment and leasehold improvements, net | (133,392 | ) | (130,086 | ) | ||||
Proceeds from sale of short-term interest-bearing investments | 278,066 | 361,960 | ||||||
Purchase of short-term interest-bearing investments | (281,983 | ) | (370,742 | ) | ||||
Net cash paid for acquisitions | (18,064 | ) | (283,450 | ) | ||||
Other | (29,940 | ) | (18,533 | ) | ||||
Net cash used in investing activities | (185,313 | ) | (440,851 | ) | ||||
Cash Flow from Financing Activities: | ||||||||
Borrowings under financing arrangements | 200,000 | 200,000 | ||||||
Payments under financing arrangements | (400,000 | ) | (220,000 | ) | ||||
Repurchase of shares | (340,597 | ) | (413,422 | ) | ||||
Proceeds from employee stock options exercised | 87,586 | 89,600 | ||||||
Payments of dividends | (121,503 | ) | (109,304 | ) | ||||
Excess tax benefit from equity-based compensation and other | 4,666 | 6,830 | ||||||
Net cash used in financing activities | (569,848 | ) | (446,296 | ) | ||||
Net decrease in cash and cash equivalents | (119,049 | ) | (266,913 | ) | ||||
Cash and cash equivalents at beginning of period | 768,660 | 1,035,573 | ||||||
Cash and cash equivalents at end of period | $ | 649,611 | $ | 768,660 | ||||
AMDOCS LIMITED | |||||||||||||||
Supplementary Information | |||||||||||||||
(In millions) | |||||||||||||||
Three months ended | |||||||||||||||
September 30, 2017 |
June 30, 2017 |
March 31, 2017 |
December 31, 2016 |
September 30, 2016 |
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North America | $ | 644.1 | $ | 637.9 | $ | 636.3 | $ | 628.0 | $ | 626.2 | |||||
Europe | 129.8 | 125.2 | 115.4 | 118.5 | 118.9 | ||||||||||
Rest of the World | 205.8 | 203.6 | 214.3 | 208.2 | 195.6 | ||||||||||
Total Revenue | $ | 979.7 | $ | 966.7 | $ | 966.0 | $ | 954.7 | $ | 940.7 | |||||
Three months ended | |||||||||||||||
September 30, 2017 |
June 30, 2017 |
March 31, 2017 |
December 31, 2016 |
September 30, 2016 |
|||||||||||
Managed Services Revenue | $ | 503.8 | $ | 496.3 | $ | 511.1 | $ | 494.2 | $ | 478.5 | |||||
Three months ended | |||||||||||||||
September 30, 2017 |
June 30, 2017 |
March 31, 2017 |
December 31, 2016 |
September 30, 2016 |
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Customer Experience Systems | $ | 967.7 | $ | 954.8 | $ | 948.6 | $ | 937.9 | $ | 924.9 | |||||
Directory | 12.0 | 11.9 | 17.4 | 16.8 | 15.8 | ||||||||||
Total Revenue | $ | 979.7 | $ | 966.7 | $ | 966.0 | $ | 954.7 | $ | 940.7 | |||||
As of | |||||||||||||||
September 30, 2017 |
June 30, 2017 |
March 31, 2017 |
December 31, 2016 |
September 30, 2016 |
|||||||||||
12-Month Backlog | $ | 3,250 | $ | 3,220 | $ | 3,210 | $ | 3,180 | $ | 3,170 | |||||