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First Quarter Results for Fiscal 2019
Feb 05, 2019
Record Quarterly Revenue of Over
Positives Sales Momentum, Including New Awards With
First Quarter Fiscal 2019 Highlights
- Revenue of
$1,012 million , slightly above the midpoint of the$990-$1,030 million guidance range including a negative impact from foreign currency movements of approximately$4 million relative to the fourth quarter of fiscal 2018 and also relative to our first quarter guidance - GAAP diluted EPS of
$0.72 , above the midpoint of the$0.67-$0.75 guidance range - Non-GAAP diluted EPS of
$0.98 , at the midpoint of the$0.95-$1.01 guidance range - GAAP operating income of
$133 million ; GAAP operating margin of 13.2% - Non-GAAP operating income of
$175 million ; non-GAAP operating margin of 17.3% - Quarterly free cash flow of
$72 million , comprised of cash flow from operations of$110 million , less$37 million in net capital expenditures and other, and normalized free cash flow of$136 million , excluding non-recurring payments of$55 million incurred to settle a previously disclosed long-running legal dispute, payments for previously expensed restructuring charges of$7 million and net capital expenditures related to the new campus development of$2 million - Twelve-month backlog of
$3.37 billion , up$10 million sequentially - The board of directors approved a quarterly cash dividend at the new increased rate of
$0.285 per share, as approved at theJanuary 2019 annual general meeting of shareholders, to be paid onApril 19, 2019
“We are pleased to report a solid start to the fiscal year, with first quarter revenue above the midpoint of our guidance.
Sheffer continued, “During Q1, we won several new deals that demonstrate the execution of our strategy, our market leadership and extend our penetration across regions. We signed a multi-year agreement to accelerate Altice USA’s digital and mobile offerings, while in
Sheffer concluded, “Winning and delivering transformation projects requires the breadth of innovative solutions and track-record of execution that we believe can only be met with our unique capabilities and business model. Moreover, such projects provide important footholds in the market which over time translate to long-lasting customer relationships, ongoing service revenues and a base for future growth. Overall, we believe our market position is strong as we enter our second fiscal quarter, the outlook for which is supported by the visibility of our record 12-month backlog.”
Revenue
Revenue for the first fiscal quarter ended
Net Income and Earnings Per Share
The Company's GAAP net income for the first quarter of fiscal 2019 was
Returning Cash to Shareholders
- Quarterly Cash Dividend Program: On
February 5, 2019 , the Board approved the Company’s next quarterly cash dividend payment of$0.285 per share and setMarch 29, 2019 as the record date for determining the shareholders entitled to receive the dividend, which will be payable onApril 19, 2019 . - Share Repurchase Activity: Repurchased
$99 million of ordinary shares during the first quarter of fiscal 2019.
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
Second Quarter Fiscal 2019 Outlook
- Revenue of approximately
$995-$1,035 million , assuming an immaterial sequential impact from foreign currency fluctuations as compared to the first quarter of fiscal 2019 - GAAP diluted EPS of approximately
$0.75-$0.83 - Non-GAAP diluted EPS of approximately
$1.00-$1.06 , excluding amortization of purchased intangible assets and other acquisition-related costs, changes in certain acquisitions related liabilities measured at fair value, and approximately$0.05-$0.07 per share of equity-based compensation expense, net of related tax effects.
Full Year Fiscal 2019 Outlook
- Expects revenue growth of 0.5%-4.5% year-over-year on a reported basis as compared with 1.0%-5.0% year-over-year previously
- Reiterates revenue growth of 2.0%-6.0% year-over-year on a constant currency basis
- Full year fiscal 2019 revenue guidance incorporates an expected negative impact from foreign currency fluctuations of about 1.5% year-over-year as compared with a negative impact of about 1.0% year-over-year previously
- Reiterates GAAP diluted earnings per share growth of roughly 29.0%-38.0% year-over-year
- Reiterates non-GAAP diluted earnings per share growth of roughly 3.0%-7.0% year-over-year, excluding amortization of purchased intangible assets and other acquisition-related costs, changes in certain acquisitions related liabilities measured at fair value, and approximately
$0.22-$0.28 per share of equity-based compensation expense, net of related tax effects
Our second fiscal quarter 2019 and full year fiscal 2019 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 certain acquisition-related liabilities measured at fair value;
- non-recurring and unusual 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.
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 certain acquisition-related liabilities measured at fair value, non-recurring and unusual 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
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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
Consolidated Statements of Income
(In thousands, except per share data)
Three months ended | ||||||
December 31, | ||||||
2018 | 2017 | |||||
Revenue | $ | 1,012,055 | $ | 977,711 | ||
Operating expenses: | ||||||
Cost of revenue | 662,568 | 643,197 | ||||
Research and development | 68,686 | 68,177 | ||||
Selling, general and administrative | 121,860 | 118,668 | ||||
Amortization of purchased intangible assets and other | 25,844 | 25,526 | ||||
878,958 | 855,568 | |||||
Operating income | 133,097 | 122,143 | ||||
Interest and other income, net | 1,522 | 121 | ||||
Income before income taxes | 134,619 | 122,264 | ||||
Income taxes | 32,927 | 5,391 | ||||
Net income | $ | 101,692 | $ | 116,873 | ||
Basic earnings per share | $ | 0.73 | $ | 0.81 | ||
Diluted earnings per share | $ | 0.72 | $ | 0.80 | ||
Basic weighted average number of shares outstanding | 139,639 | 143,915 | ||||
Diluted weighted average number of shares outstanding | 140,511 | 145,346 | ||||
Cash dividends declared per share | $ | 0.250 | $ | 0.220 | ||
Selected Financial Metrics
(In thousands, except per share data)
Three months ended | |||||||
December 31, | |||||||
2018 | 2017 | ||||||
Revenue | $ | 1,012,055 | $ | 977,711 | |||
Non-GAAP operating income | 174,849 | 169,064 | |||||
Non-GAAP net income | 137,818 | 154,466 | |||||
Non-GAAP diluted earnings per share | $ | 0.98 | $ | 1.06 | |||
Diluted weighted average number of shares outstanding | 140,511 | 145,346 | |||||
Normalized Free Cash Flows
(In thousands)
Three months ended | ||||||||
December 31, | ||||||||
2018 | 2017 | |||||||
Net Cash Provided by Operating Activities | $ | 109,650 | $ | 164,601 | ||||
Purchases of property and equipment, net (*) | (37,278 | ) | (51,779 | ) | ||||
Free Cash Flow | 72,372 | 112,822 | ||||||
Payments for Legal Dispute Settlement | 55,000 | - | ||||||
Payments for Previously Expensed Restructuring Charges | 6,625 | - | ||||||
Net capital expenditures related to the new campus development | 2,054 | 12,818 | ||||||
Normalized Free Cash Flow | 136,051 | 125,640 |
(*) The amounts under "Purchase of property and equipment, net”, include proceeds from sale of property and equipment of
Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
(In thousands)
Three months ended | |||||||||||||||||||
December 31, 2018 | |||||||||||||||||||
Reconciliation items | |||||||||||||||||||
GAAP | Amortization of | Equity based | Changes in | Tax | Non-GAAP | ||||||||||||||
purchased | compensation | certain | effect | ||||||||||||||||
intangible | expense | acquisitions | |||||||||||||||||
assets and | related liabilities | ||||||||||||||||||
other | measured at fair | ||||||||||||||||||
value | |||||||||||||||||||
Operating expenses: | |||||||||||||||||||
Cost of revenue | $ | 662,568 | $ | - | $ | (4,851 | ) | $ | (3,791 | ) | $ | - | $ | 653,926 | |||||
Research and | 68,686 | - | (765 | ) | - | - | 67,921 | ||||||||||||
development | |||||||||||||||||||
Selling, general and | 121,860 | - | (6,501 | ) | - | - | 115,359 | ||||||||||||
administrative | |||||||||||||||||||
Amortization of | |||||||||||||||||||
purchased intangible assets and other | 25,844 | (25,844 | ) | - | - | - | - | ||||||||||||
Total operating | 878,958 | (25,844 | ) | (12,117 | ) | (3,791 | ) | - | 837,206 | ||||||||||
expenses | |||||||||||||||||||
Operating income | 133,097 | 25,844 | 12,117 | 3,791 | - | 174,849 | |||||||||||||
Income taxes | 32,927 | - | - | - | 5,626 | 38,553 | |||||||||||||
Net income | $ | 101,692 | $ | 25,844 | $ | 12,117 | $ | 3,791 | $ | (5,626 | ) | $ | 137,818 | ||||||
Three months ended | |||||||||||||||||||
December 31, 2017 | |||||||||||||||||||
Reconciliation items |
|||||||||||||||||||
GAAP | Amortization of | Equity based | Changes in | Tax | One-time | Non-GAAP | |||||||||||||
purchased | compensation | certain | effect | tax benefit | |||||||||||||||
intangible | expense | acquisitions | relating to | ||||||||||||||||
assets and | related liabilities | the new | |||||||||||||||||
other | measured at fair | U.S. tax | |||||||||||||||||
value | legislation | ||||||||||||||||||
Operating expenses: | |||||||||||||||||||
Cost of revenue | $ | 643,197 | $ | - | $ | (4,698 | ) | $ | (7,890 | ) | $ | - | $ | - | $ | 630,609 | |||
Research and | 68,177 | - | (824 | ) | - | - | - | 67,353 | |||||||||||
development | |||||||||||||||||||
Selling, general and | 118,668 | - | (7,983 | ) | - | - | - | 110,685 | |||||||||||
administrative | |||||||||||||||||||
Amortization of | |||||||||||||||||||
purchased intangible assets and other | 25,526 | (25,526 | ) | - | - | - | - | - | |||||||||||
Total operating expenses | 855,568 | (25,526 | ) | (13,505 | ) | (7,890 | ) | - | - | 808,647 | |||||||||
Operating income | 122,143 | 25,526 | 13,505 | 7,890 | - | - | 169,064 | ||||||||||||
Income taxes | 5,391 | - | - | - | 6,078 | 3,250 | 14,719 | ||||||||||||
Net income | $ | 116,873 | $ | 25,526 | $ | 13,505 | $ | 7,890 | $ | (6,078 | ) | $ | (3,250 | ) | $ | 154,466 | |||
Condensed Consolidated Balance Sheets
(In thousands)
As of | |||||
December 31, 2018 |
September 30, 2018 |
||||
ASSETS | |||||
Current assets | |||||
Cash, cash equivalents and short-term interest-bearing investments | $ | 458,650 | $ | 519,216 | |
Accounts receivable, net, including unbilled of $246,409 and $263,997, respectively | 1,008,748 | 971,502 | |||
Prepaid expenses and other current assets | 213,996 | 229,999 | |||
Total current assets | 1,681,394 | 1,720,717 | |||
Property and equipment, net | 486,662 | 496,585 | |||
Goodwill and other intangible assets, net | 2,690,050 | 2,710,144 | |||
Other noncurrent assets | 437,923 | 420,369 | |||
Total assets | $ | 5,296,029 | $ | 5,347,815 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
Current liabilities | |||||
Accounts payable, accruals and other | $ | 1,135,277 | $ | 1,162,543 | |
Deferred revenue | 138,420 | 132,414 | |||
Total current liabilities | 1,273,697 | 1,294,957 | |||
Other noncurrent liabilities | 523,172 | 560,816 | |||
Total Amdocs Limited Shareholders’ equity | 3,452,031 | 3,448,879 | |||
Noncontrolling interests | 47,129 | 43,163 | |||
Total equity | 3,499,160 | 3,492,042 | |||
Total liabilities and equity | $ | 5,296,029 | $ | 5,347,815 | |
Consolidated Statements of Cash Flows
(In thousands)
Three months ended December 31, |
|||||||
2018 | 2017 | ||||||
Cash Flow from Operating Activities: | |||||||
Net income | $ | 101,692 | $ | 116,873 | |||
Reconciliation of net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 51,477 | 49,237 | |||||
Equity-based compensation expense | 12,117 | 13,505 | |||||
Deferred income taxes | (4,505 | ) | (9,245 | ) | |||
Gain from short-term interest-bearing investments | (30 | ) | (142 | ) | |||
Net changes in operating assets and liabilities, net of amounts acquired: | |||||||
Accounts receivable, net | (26,406 | ) | (68,797 | ) | |||
Prepaid expenses and other current assets | 20,174 | 2,067 | |||||
Other noncurrent assets | 2,552 | (4,804 | ) | ||||
Accounts payable, accrued expenses and accrued personnel | (50,332 | ) | 70,632 | ||||
Deferred revenue | (11,922 | ) | (2,944 | ) | |||
Income taxes payable, net | 23,887 | 598 | |||||
Other noncurrent liabilities | (9,054 | ) | (2,379 | ) | |||
Net cash provided by operating activities | 109,650 | 164,601 | |||||
Cash Flow from Investing Activities: | |||||||
Purchases of property and equipment, net (*) | (37,278 | ) | (51,779 | ) | |||
Proceeds from sale of short-term interest-bearing investments | 860 | 56,698 | |||||
Purchase of short-term interest-bearing investments | - | (52,648 | ) | ||||
Net cash paid for acquisitions | (8,331 | ) | (53,948 | ) | |||
Other | 857 | 707 | |||||
Net cash used in investing activities | (43,892 | ) | (100,970 | ) | |||
Cash Flow from Financing Activities: | |||||||
Repurchase of shares | (99,182 | ) | (119,898 | ) | |||
Proceeds from employee stock options exercised | 8,379 | 31,053 | |||||
Payments of dividends | (35,046 | ) | (31,736 | ) | |||
Investment by noncontrolling interests, net | - | 48,123 | |||||
Other | (35 | ) | - | ||||
Net cash used in financing activities | (125,884 | ) | (72,458 | ) | |||
Net decrease in cash and cash equivalents | (60,126 | ) | (8,827 | ) | |||
Cash and cash equivalents at beginning of period | 418,783 | 649,611 | |||||
Cash and cash equivalents at end of period | $ | 358,657 | $ | 640,784 | |||
(*) The amounts under "Purchase of property and equipment, net”, include proceeds from sale of property and equipment of
Supplementary Information
(In millions)
Three months ended | ||||||||||||||
December 31, 2018 |
September 30, 2018 |
June 30, 2018 |
March 31, 2018 |
December 31, 2017 |
||||||||||
North America | $ | 660.5 | $ | 638.2 | $ | 644.8 | $ | 624.2 | $ | 643.0 | ||||
Europe | 146.1 | 150.6 | 139.3 | 148.6 | 133.7 | |||||||||
Rest of the World | 205.5 | 213.8 | 218.1 | 219.5 | 201.0 | |||||||||
Total Revenue | $ | 1,012.1 | $ | 1,002.6 | $ | 1,002.2 | $ | 992.3 | $ | 977.7 |
Three months ended | ||||||||||||||
December 31, 2018 |
September 30, 2018 |
June 30, 2018 |
March 31, 2018 |
December 31, 2017 |
||||||||||
Managed Services Revenue | $ | 525.5 | $ | 508.9 | $ | 515.0 | $ | 508.9 | $ | 518.7 |
As of | ||||||||||||||
December 31, 2018 |
September 30, 2018 |
June 30, 2018 |
March 31, 2018 |
December 31, 2017 |
||||||||||
12-Month Backlog | $ | 3,370 | $ | 3,360 | $ | 3,330 | $ | 3,320 | $ | 3,260 |