UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
OF THE SECURITIES EXCHANGE ACT OF 1934
For the month of August 2023
Commission File Number 1-14840
AMDOCS LIMITED
Hirzel House, Smith Street,
St. Peter Port, Island of Guernsey, GY1 2NG
Amdocs, Inc.
625 Maryville Centre Drive, Suite 200, Saint Louis, Missouri 63141
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
FORM 20-F ☒ FORM 40-F ☐
On August 2, 2023 Amdocs Limited (“Amdocs”) issued a press release announcing financial results for the quarter ended June 30, 2023. A copy of the press release and the accompanying presentation are furnished as Exhibits 99.1 and 99.2 to this Report of Foreign Private Issuer on Form 6-K.
The information in this Form 6-K (including Exhibits 99.1 and 99.2) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act.
EXHIBIT INDEX
| EXHIBIT NO. |
DESCRIPTION | |
| 99.1 | Amdocs Limited Press Release Announcing Q3 Earnings, dated August 2, 2023. | |
| 99.2 | Fiscal Q3 2023 Earnings Presentation | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| AMDOCS LIMITED | ||
| By: | /s/ Matthew E. Smith | |
| Matthew E. Smith | ||
| Secretary and Authorized Signatory | ||
Date: August 2, 2023
Exhibit 99.1
Amdocs Limited Reports Third Quarter Fiscal 2023 Results
Record Quarterly Revenue of $1.24 Billion, Above Midpoint of Guidance and up 6.5% YoY as Reported and 6.9% YoY in Constant Currency(2)
Record 12-Month Backlog of $4.14 Billion, up ~5% YoY
Improved Profitability Reflecting Continued Focus on Operational Excellence
Additional $1.1 Billion Share Repurchase Program Authorized
Launched Amdocs amAIz, a Cutting-Edge Enterprise-Grade Generative AI Framework
Third Quarter Fiscal 2023 Highlights
(All comparisons are against the prior year)
| • | Record revenue of $1,236 million, up 6.5% as reported and up 6.9% in constant currency(2); revenue was above the midpoint of $1,215-$1,255 million guidance range |
| • | Record revenue of $831 million in North America, up 5.4%, and record revenue of $187 million in Europe, up 28.2% |
| • | Record managed services revenue of $720 million, equivalent to approximately 58% of total revenue |
| • | GAAP diluted EPS of $1.32, above the guidance range of $1.16-$1.26, primarily due to a lower than anticipated GAAP effective tax rate |
| • | Non-GAAP diluted EPS of $1.57, above the guidance range of $1.45-$1.51, primarily due to a lower than anticipated non-GAAP effective tax rate |
| • | GAAP operating income of $183 million; GAAP operating margin of 14.8%, up 20 basis points as compared to last year’s third fiscal quarter and down 10 basis points sequentially |
| • | Non-GAAP operating income of $220 million; non-GAAP operating margin of 17.8%, up 20 basis points as compared to last year’s third fiscal quarter and unchanged sequentially, reflecting a continued focus on operational excellence |
| (1) | Please refer to the Selected Financial Metrics tables below (figures may not sum because of rounding). |
| (2) | Revenue on a constant currency basis assumes exchange rates in the current period were unchanged from the prior period |
| • | Free cash flow of $144 million, comprised of cash flow from operations of $173 million, less $29 million in net capital expenditures and other(1) |
| • | Repurchased $129 million of ordinary shares during the third fiscal quarter |
| • | Record twelve-month backlog of $4.14 billion, up approximately 5% as compared to last year’s third fiscal quarter |
| • | Completed the acquisition of TEOCO’s service assurance business on June 30, 2023 for a net consideration of approximately $90 million |
JERSEY CITY, NJ – August 2, 2023 – Amdocs Limited (NASDAQ: DOX), a leading provider of software and services to communications and media companies, today reported operating results for the three months ended June 30, 2023.
“Q3 was another solid quarter for Amdocs as we executed our strategy to bring cutting-edge innovation across our core growth pillars of digital modernization, 5G monetization, cloud, and network automation. Record revenue of $1.24 billion was up 6.9% in constant currency(2), driven by our best-ever performance in North America and Europe. Q3 was also notable for new cloud-related deals with two North American Tier 1 operators, including a collaboration with TELUS in Canada to move on-premise applications to the public cloud. As a market leader, we further strengthened our position with the launch of Amdocs amAIz, the industry’s first enterprise-grade Generative AI framework which creates a cutting-edge foundation for global communications service providers to benefit from the immense potential of the Gen AI era,” said Shuky Sheffer, president and chief executive officer of Amdocs Management Limited.
“Consistent with our reputation for superb execution, we achieved a high number of project milestones in support of our customers’ digital transformation journeys. XL Axiata in Indonesia is one of many examples, where the migration to our newest highly robust and scalable system recently surpassed 80 million prepaid subscribers. In managed services, we delivered a record quarter as we continued to expand the scope of existing activities while also signing new first-time customers under long-term engagements. Adding to our list of third quarter achievements, we also improved our profitability compared with a year ago, mainly driven by our cost leadership focus, including the implementation of automation and other sophisticated tools,” said Tamar Rapaport-Dagim, chief financial officer & chief operating officer of Amdocs Management Limited.
Sheffer concluded, “As a key technology enabler to the communications industry, we see a large pipeline of opportunities as our customers’ consider the multi-year investments needed to unlock the potential of cloud-based 5G and broadband networks, Generative AI, and improved consumer and B2B experience. Customer engagement levels remain high, but the impact of economic uncertainty and industry pressure is leading our customers to prioritize and carefully evaluate their investments. Taking everything into consideration, we now expect revenue growth in constant currency(2) to be slightly below the 8% midpoint of our original guidance range of 6% to 10% for fiscal 2023, while delivering improved year-over-year profitability and robust earnings to cash conversion for the full year.”
Revenue
(All comparisons are against the prior year period)
| In millions | ||||||||
| Three months ended | ||||||||
| June 30, 2023 | ||||||||
| Actual | Guidance | |||||||
| Revenue |
$ | 1,236 | $1,215 - $1,255 | |||||
| Revenue Growth, as reported |
6.5 | % | ||||||
| Revenue Growth, constant currency (2) |
6.9 | % | ||||||
| • | Revenue for the third fiscal quarter of 2023 was above the midpoint of Amdocs’ guidance and includes a positive impact from foreign currency movements of approximately $5 million compared to our guidance assumptions |
| • | Revenue for the third fiscal quarter includes a positive impact from foreign currency movements of approximately $3 million relative to the second quarter of fiscal 2023 |
Net Income and Earnings Per Share
| ` | In thousands, except per share data | |||||||
| Three months ended | ||||||||
| June 30, | ||||||||
| 2023 | 2022 | |||||||
| GAAP Measures |
||||||||
| Net Income |
$ | 160,115 | $ | 128,466 | ||||
| Net Income attributable to Amdocs Limited |
$ | 159,428 | $ | 128,466 | ||||
| Diluted earnings per share |
$ | 1.32 | $ | 1.04 | ||||
| Non-GAAP Measures |
||||||||
| Non-GAAP Net Income |
$ | 189,605 | $ | 156,520 | ||||
| Non-GAAP Net Income attributable to Amdocs Limited |
$ | 188,918 | $ | 156,520 | ||||
| Non-GAAP Diluted earnings per share |
$ | 1.57 | $ | 1.27 | ||||
| • | Non-GAAP net income excludes amortization of purchased intangible assets and other acquisition-related costs, changes in certain acquisition related liabilities measured at fair value, equity-based compensation expenses and other, net of related tax effects, in all the periods presented |
For further details of the reconciliation of selected financial metrics from GAAP to Non-GAAP, please refer to the tables below.
Capital Allocation: Returning Cash to Shareholders
| • | M&A Activity: On June 30, 2023, Amdocs completed the acquisition of TEOCO’s service assurance business for a net consideration of approximately $90 million |
| • | Quarterly Cash Dividend Program: On August 2, 2023, the Board approved the Company’s next quarterly cash dividend payment of $0.435 per share and set September 29, 2023 as the record date for determining the shareholders entitled to receive the dividend, which will be payable on October 27, 2023 |
| • | Share Repurchase Activity: Repurchased $129 million of ordinary shares during the third quarter of fiscal 2023. The board of directors has approved a share repurchase plan authorizing the repurchase of up to $1.1 billion of ordinary shares at the company’s discretion; this plan has no expiration date and is in addition to the current authorization, which, as of June 30, 2023, provided for up to $156 million of remaining repurchase authorization. Between the two authorizations, we have up to $1.26 billion of remaining repurchase authority |
Twelve-month Backlog
Twelve-month backlog was a record $4.14 billion at the end of the third quarter of fiscal 2023, up approximately 5% as compared to last year’s third fiscal quarter. Twelve-month backlog includes anticipated revenue related to contracts, estimated revenue from managed services contracts, letters of intent, maintenance and estimated on-going support activities.
Fourth Quarter Fiscal 2023 Outlook
| In millions, except per share data | ||||
| Q4 2023 | ||||
| Revenue |
$ | 1,220-$1,260 | ||
| GAAP diluted EPS |
$ | 0.67-$0.81 | ||
| Non-GAAP diluted EPS |
$ | 1.38-$1.44 | ||
| • | Fourth quarter revenue guidance assumes negative $2m sequential impact from foreign currency fluctuations as compared to the third quarter of fiscal 2023 |
| • | Fourth quarter non-GAAP diluted EPS guidance excludes restructuring charges of approximately $0.33-$0.40 per share, equity-based compensation expense of approximately $0.17-$0.19 per share, amortization of purchased intangible assets and other acquisition-related costs of approximately $0.11 per share, changes in certain acquisitions related liabilities measured at fair value, and other, net of related tax effects |
Full Year Fiscal 2023 Outlook
| FY 2023, year-over-year growth | ||||||||
| Current Guidance | Previous Guidance | |||||||
| Revenue growth, as reported |
6.3%-7.1 | % | 6.0%-8.0 | % | ||||
| Revenue growth, constant currency(2) |
7.2%-8.0 | % | 7.0%-9.0 | % | ||||
| GAAP diluted EPS growth |
(3.0)%-0.0 | % | 3.0%-10.0 | % | ||||
| Non-GAAP diluted EPS growth |
11.0%-12.0 | % | 9.0%-13.0 | % | ||||
| FY 2023, in millions | ||||||||
| Current Guidance | Previous Guidance | |||||||
| Free cash flow(1) |
~$ | 700 | ~$ | 700 | ||||
| • | Full year fiscal 2023 revenue guidance incorporates an expected unfavorable impact from foreign currency fluctuations of approximately 0.9% year-over-year, as compared with an unfavorable impact of approximately 1% year-over-year previously, and an immaterial contribution from the consolidation of TEOCO’s service assurance business |
| • | Non-GAAP diluted earnings per share growth excludes equity-based compensation expense of approximately $0.60-$0.62 per share, restructuring charges of approximately $0.49-$0.55 per share, amortization of purchased intangible assets and other acquisition-related costs of approximately $0.38 per share, changes in certain acquisitions related liabilities measured at fair value, and other, net of related tax effects |
| • | The impact of the acquisition of TEOCO’s service assurance business on Amdocs’ non-GAAP diluted earnings per share is expected to be neutral in the full fiscal year 2023 |
| • | Non-GAAP effective tax rate is anticipated to be within a range of 13.0% to 17.0% for the full year fiscal 2023 |
| • | Free cash flow(1) is comprised of cash flow from operations, less net capital expenditures and other, and excludes payments related to the anticipated restructuring charges |
The forward looking statements regarding our fourth fiscal quarter 2023 and full year fiscal 2023 guidance take into consideration the Company’s current expectations regarding macro and industry specific risks and various uncertainties and certain assumptions that we will discuss on our earnings conference call. However, we note that market dynamics continue to shift rapidly and we cannot predict all possible outcomes, including those resulting from certain geopolitical events, the current inflationary environment, global or regional events, such as the COVID-19 pandemic and the prevailing level of macro-economic, business and operational uncertainty, which have created, and continue to create, a significant amount of uncertainty, or from current and potential customer consolidation or their other strategic corporate activities.
Conference Call and Earnings Webcast Presentation Details
Amdocs will host a conference call and earnings webcast presentation on August 2, 2023 at 5:00 p.m. Eastern Time to discuss the Company’s third quarter of fiscal 2023 results.
To participate in the call, please register here to receive the dial-in numbers and unique access PIN. The conference call and webcast will also be carried live on the Internet and may be accessed via the Amdocs website at https://investors.amdocs.com. Presentation slides will be available shortly before the webcast.
Non-GAAP Financial Measures
This release includes non-GAAP diluted earnings per share and other non-GAAP financial measures, including free cash flow and normalized free cash flow, revenue on a constant currency(2) basis, 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 expenses, net, non-GAAP income taxes, non-GAAP effective tax rate, non-GAAP net income, non-GAAP net income attributable to Amdocs Limited and non-GAAP diluted earnings per share growth. These other 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; |
| • | restructuring and unusual charges or benefits (such as a gain from divestiture of OpenMarket); |
| • | equity-based compensation expense; |
| • | other; and |
| • | tax effects related to the above. |
Free cash flow equals cash generated by operating activities less net capital expenditures and other. Normalized free cash flow, a measure of our operating performance, is further adjusted to exclude net capital expenditures related to the new campus development, payments for non-recurring and unusual charges (such as capital gains tax in relation to the
divestiture of OpenMarket), and payments of acquisition related liabilities. Normalized free cash flow is not comparable to free cash flow. 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 and normalized free cash flow, revenue on a constant currency(2) basis, 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 expenses, net, non-GAAP income taxes, non-GAAP effective tax rate, non-GAAP net income, non-GAAP net income attributable to Amdocs Limited 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, changes in certain acquisition-related liabilities measured at fair value, restructuring and unusual charges or benefits, equity-based compensation expense, other 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, interest and other expenses, net, 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.
Supporting Resources
| • | Keep up with Amdocs news by visiting the Company’s website |
| • | Subscribe to Amdocs’ RSS Feed and follow us on Twitter, Facebook, LinkedIn and YouTube |
About Amdocs
Amdocs helps those who build the future to make it amazing. With our market-leading portfolio of software products and services, we unlock our customers’ innovative potential, empowering them to provide next-generation communication and media experiences for both the individual end user and large enterprise customers. Our approximately 30,000 employees around the globe are here to accelerate service providers’ migration to the cloud, enable them to differentiate in the 5G era, and digitalize and automate their operations. Listed on the NASDAQ Global Select Market, Amdocs had revenue of $4.58 billion in fiscal 2022.
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 and years. 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 macroeconomic conditions, prevailing level of macroeconomic, business and operational uncertainty, including as a result of geopolitical events or other global or regional events such as the COVID-19 pandemic, as well as the current inflationary environment, and the effects of these conditions on the company’s clients’ businesses and levels of business activity, 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, risks associated with operating businesses in the international market, and our ability to be successful in our artificial intelligence initiatives. 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, 2022 filed on December 13, 2022 and in our Form 6-K furnished for the first quarter of fiscal 2023 filed on February 13, 2023 and for the second quarter of fiscal 2023 filed on May 22, 2023.
Contact:
Matthew Smith
Head of Investor Relations
Amdocs
314-212-8328
E-mail: dox_info@amdocs.com
AMDOCS LIMITED
Consolidated Statements of Income
(In thousands, except per share data)
| Three months ended June 30, |
Nine months ended June 30, |
|||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue |
$ | 1,235,962 | $ | 1,160,290 | $ | 3,644,986 | $ | 3,410,193 | ||||||||
| Operating expenses: |
||||||||||||||||
| Cost of revenue |
804,007 | 748,214 | 2,356,341 | 2,206,189 | ||||||||||||
| Research and development |
92,162 | 89,479 | 277,162 | 258,488 | ||||||||||||
| Selling, general and administrative |
143,777 | 136,110 | 430,327 | 399,168 | ||||||||||||
| Amortization of purchased intangible assets and other |
13,302 | 17,173 | 41,555 | 53,237 | ||||||||||||
| Restructuring charges |
— | — | 24,536 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 1,053,248 | 990,976 | 3,129,921 | 2,917,082 | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating income |
182,714 | 169,314 | 515,065 | 493,111 | ||||||||||||
| Interest and other expense, net |
(4,421 | ) | (7,811 | ) | (12,322 | ) | (18,992 | ) | ||||||||
| Gain from sale of a business |
— | — | — | 10,000 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income before income taxes |
178,293 | 161,503 | 502,743 | 484,119 | ||||||||||||
| Income tax expense |
18,178 | 33,037 | 62,447 | 63,554 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income |
$ | 160,115 | $ | 128,466 | $ | 440,296 | $ | 420,565 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income attributable to noncontrolling interests |
687 | — | 1,598 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income attributable to Amdocs Limited |
$ | 159,428 | $ | 128,466 | $ | 438,698 | $ | 420,565 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Basic earnings per share attributable to Amdocs Limited |
$ | 1.33 | $ | 1.05 | $ | 3.65 | $ | 3.41 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Diluted earnings per share attributable to Amdocs Limited |
$ | 1.32 | $ | 1.04 | $ | 3.62 | $ | 3.39 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Cash dividends declared per ordinary share |
$ | 0.435 | $ | 0.395 | $ | 1.265 | $ | 1.150 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Basic weighted average number of shares outstanding |
119,520 | 122,319 | 120,230 | 123,271 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Diluted weighted average number of shares outstanding |
120,351 | 123,153 | 121,070 | 124,098 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
AMDOCS LIMITED
Selected Financial Metrics
(In thousands, except per share data)
| Three months ended June 30, |
Nine months ended June 30, |
|||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue |
$ | 1,235,962 | $ | 1,160,290 | $ | 3,644,986 | $ | 3,410,193 | ||||||||
| Non-GAAP operating income |
220,222 | 204,325 | 647,497 | 599,557 | ||||||||||||
| Non-GAAP net income |
189,605 | 156,520 | 545,445 | 497,599 | ||||||||||||
| Non-GAAP net income attributable to Amdocs Limited |
188,918 | 156,520 | 543,847 | 497,599 | ||||||||||||
| Non-GAAP diluted earnings per share |
$ | 1.57 | $ | 1.27 | $ | 4.49 | $ | 4.01 | ||||||||
| Diluted weighted average number of shares outstanding |
120,351 | 123,153 | 121,070 | 124,098 | ||||||||||||
Free Cash Flows
(In thousands)
| Three months ended June 30, |
Nine months ended June 30, |
|||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net Cash Provided by Operating Activities |
$ | 172,557 | $ | 166,826 | $ | 550,259 | $ | 539,800 | ||||||||
| Purchases of property and equipment, net (a) |
(28,983 | ) | (40,904 | ) | (97,805 | ) | (145,400 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Free Cash Flow |
$ | 143,574 | $ | 125,922 | $ | 452,454 | $ | 394,400 | ||||||||
Normalized Free Cash Flow (b) for the nine months ended June 30, 2022: $489,619, excluding net capital expenditures related to the new campus, development of $77,676, payment for acquisition related liability of $14,350, and tax payment on sale of business of $3,193. Normalized Free Cash Flow (b) for the three months ended June 30, 2022: $144,182, excluding net capital development of $18,260 expenditures related to the new campus.
| (a) | The amounts under “Purchase of property and equipment, net” include proceeds from sale of property and equipment of $380 and $521 for the nine months ended June 30, 2023 and 2022, respectively. |
| (b) | Since Q12023, the Normalized Free Cash Flow is no longer applicable. |
AMDOCS LIMITED
Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
(In thousands)
| Three Months Ended June 30, 2023 | ||||||||||||||||||||||||||||
| GAAP | Amortization of purchased intangible assets and other |
Equity based compensation expense |
Changes in certain acquisitions related liabilities measured at fair value |
Other | Tax effect |
Non-GAAP | ||||||||||||||||||||||
| Operating expenses: |
||||||||||||||||||||||||||||
| Cost of revenue |
$ | 804,007 | $ | — | $ | (11,852 | ) | $ | (152 | ) | $ | — | $ | — | $ | 792,003 | ||||||||||||
| Research and development |
92,162 | (2,037 | ) | 90,125 | ||||||||||||||||||||||||
| Selling, general and administrative |
143,777 | (10,165 | ) | 133,612 | ||||||||||||||||||||||||
| Amortization of purchased intangible assets and other |
13,302 | (13,302 | ) | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total operating expenses |
1,053,248 | (13,302 | ) | (24,054 | ) | (152 | ) | — | 1,015,740 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Operating income |
182,714 | 13,302 | 24,054 | 152 | — | 220,222 | ||||||||||||||||||||||
| Interest and other expense, net |
(4,421 | ) | $ | 508 | (3,913 | ) | ||||||||||||||||||||||
| Income tax expense |
18,178 | 8,526 | 26,704 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net income |
160,115 | 13,302 | 24,054 | 152 | 508 | (8,526 | ) | 189,605 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net income attributable to noncontrolling interests |
687 | 687 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net income attributable to Amdocs Limited |
$ | 159,428 | $ | 13,302 | $ | 24,054 | $ | 152 | $ | 508 | $ | (8,526 | ) | $ | 188,918 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Three Months Ended June 30, 2022 | ||||||||||||||||||||||||||||
| GAAP | Amortization of purchased intangible assets and other |
Equity based compensation expense |
Changes in certain acquisitions related liabilities measured at fair value |
Other | Tax effect |
Non-GAAP | ||||||||||||||||||||||
| Operating expenses: |
||||||||||||||||||||||||||||
| Cost of revenue |
$ | 748,214 | $ | — | $ | (8,523 | ) | $ | 284 | $ | — | $ | — | $ | 739,975 | |||||||||||||
| Research and development |
89,479 | (1,495 | ) | 87,984 | ||||||||||||||||||||||||
| Selling, general and administrative |
136,110 | (8,104 | ) | 128,006 | ||||||||||||||||||||||||
| Amortization of purchased intangible assets and other |
17,173 | (17,173 | ) | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total operating expenses |
990,976 | (17,173 | ) | (18,122 | ) | 284 | — | — | 955,965 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Operating income |
169,314 | 17,173 | 18,122 | (284 | ) | — | — | 204,325 | ||||||||||||||||||||
| Interest and other expense, net |
(7,811 | ) | 500 | (7,311 | ) | |||||||||||||||||||||||
| Income tax expense |
33,037 | 7,457 | 40,494 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net income |
$ | 128,466 | $ | 17,173 | $ | 18,122 | $ | (284 | ) | $ | 500 | $ | (7,457 | ) | $ | 156,520 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
AMDOCS LIMITED
Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
(In thousands)
| Nine Months Ended June 30, 2023 | ||||||||||||||||||||||||||||||||
| GAAP | Amortization of purchased intangible assets and other |
Equity based compensation expense |
Changes in certain acquisitions related liabilities measured at fair value |
Restructuring charges |
Other | Tax effect |
Non-GAAP | |||||||||||||||||||||||||
| Operating expenses: |
||||||||||||||||||||||||||||||||
| Cost of revenue |
$ | 2,356,341 | $ | — | $ | (30,568 | ) | $ | (1,436 | ) | $ | — | $ | — | $ | 2,324,337 | ||||||||||||||||
| Research and development |
277,162 | (5,224 | ) | 271,938 | ||||||||||||||||||||||||||||
| Selling, general and administrative |
430,327 | (29,113 | ) | 401,214 | ||||||||||||||||||||||||||||
| Amortization of purchased intangible assets and other |
41,555 | (41,555 | ) | — | ||||||||||||||||||||||||||||
| Restructuring charges |
24,536 | (24,536 | ) | — | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total operating expenses |
3,129,921 | (41,555 | ) | (64,905 | ) | (1,436 | ) | (24,536 | ) | — | 2,997,489 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Operating income |
515,065 | 41,555 | 64,905 | 1,436 | 24,536 | — | 647,497 | |||||||||||||||||||||||||
| Interest and other expense, net |
(12,322 | ) | 508 | (11,814 | ) | |||||||||||||||||||||||||||
| Income tax expense |
62,447 | 27,791 | 90,238 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Net income |
440,296 | 41,555 | 64,905 | 1,436 | 24,536 | 508 | (27,791 | ) | 545,445 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Net income attributable to noncontrolling interests |
1,598 | 1,598 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Net income attributable to Amdocs Limited |
$ | 438,698 | $ | 41,555 | $ | 64,905 | $ | 1,436 | $ | 24,536 | $ | 508 | $ | (27,791 | ) | $ | 543,847 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Nine Months Ended June 30, 2022 | ||||||||||||||||||||||||||||||||
| GAAP | Amortization of purchased intangible assets and other |
Equity based compensation expense |
Changes in certain acquisitions related liabilities measured at fair value |
Gain from sale of a business |
Other | Tax effect |
Non-GAAP | |||||||||||||||||||||||||
| Operating expenses: |
||||||||||||||||||||||||||||||||
| Cost of revenue |
$ | 2,206,189 | $ | — | $ | (23,740 | ) | $ | (509 | ) | $ | — | $ | — | $ | — | $ | 2,181,940 | ||||||||||||||
| Research and development |
258,488 | (4,093 | ) | 254,395 | ||||||||||||||||||||||||||||
| Selling, general and administrative |
399,168 | (24,867 | ) | 374,301 | ||||||||||||||||||||||||||||
| Amortization of purchased intangible assets and other |
53,237 | (53,237 | ) | — | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total operating expenses |
2,917,082 | (53,237 | ) | (52,700 | ) | (509 | ) | — | — | — | 2,810,636 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Operating income |
493,111 | 53,237 | 52,700 | 509 | — | — | — | 599,557 | ||||||||||||||||||||||||
| Interest and other expense, net |
(18,992 | ) | (2,005 | ) | (20,997 | ) | ||||||||||||||||||||||||||
| Gain from sale of a business |
10,000 | $ | (10,000 | ) | — | |||||||||||||||||||||||||||
| Income tax expense |
63,554 | 17,407 | 80,961 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Net income |
$ | 420,565 | $ | 53,237 | $ | 52,700 | $ | 509 | $ | (10,000 | ) | $ | (2,005 | ) | $ | (17,407 | ) | 497,599 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
AMDOCS LIMITED
Condensed Consolidated Balance Sheets
(In thousands)
| As of | ||||||||
| June 30, 2023 |
September 30, 2022 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 517,657 | $ | 573,377 | ||||
| Short-term interest-bearing investments |
231,858 | 244,603 | ||||||
| Accounts receivable, net, including unbilled of $195,028 and $157,165, respectively |
1,076,123 | 946,777 | ||||||
| Prepaid expenses and other current assets |
270,197 | 238,390 | ||||||
|
|
|
|
|
|||||
| Total current assets |
2,095,835 | 2,003,147 | ||||||
| Property and equipment, net |
783,257 | 794,287 | ||||||
| Lease assets |
149,586 | 176,884 | ||||||
| Goodwill and other intangible assets, net |
2,897,340 | 2,841,137 | ||||||
| Other noncurrent assets |
613,324 | 574,938 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 6,539,342 | $ | 6,390,393 | ||||
|
|
|
|
|
|||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable, accruals and other |
$ | 1,054,029 | $ | 955,658 | ||||
| Lease liabilities |
39,609 | 43,336 | ||||||
| Deferred revenue |
307,708 | 253,686 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
1,401,346 | 1,252,680 | ||||||
| Lease liabilities |
111,869 | 138,378 | ||||||
| Long-term debt, net of unamortized debt issuance costs |
645,549 | 645,117 | ||||||
| Other noncurrent liabilities |
728,302 | 793,940 | ||||||
| Total Amdocs Limited Shareholders’ equity |
3,608,378 | 3,517,769 | ||||||
| Noncontrolling interests |
43,898 | 42,509 | ||||||
|
|
|
|
|
|||||
| Total equity |
3,652,276 | 3,560,278 | ||||||
|
|
|
|
|
|||||
| Total liabilities and equity |
$ | 6,539,342 | $ | 6,390,393 | ||||
|
|
|
|
|
|||||
AMDOCS LIMITED
Consolidated Statements of Cash Flows
(In thousands)
| Nine months ended June 30, |
||||||||
| 2023 | 2022 | |||||||
| Cash Flow from Operating Activities: |
||||||||
| Net income |
$ | 440,296 | $ | 420,565 | ||||
| Reconciliation of net income to net cash provided by operating activities: |
||||||||
| Depreciation, amortization and impairment |
148,412 | 174,712 | ||||||
| Amortization of debt issuance cost |
432 | 421 | ||||||
| Equity-based compensation expense |
64,905 | 52,700 | ||||||
| Gain from sale of a business |
— | (10,000 | ) | |||||
| Deferred income taxes |
(45,906 | ) | (20,442 | ) | ||||
| Loss from short-term interest-bearing investments |
2,185 | 2,028 | ||||||
| Net changes in operating assets and liabilities, net of amounts acquired: |
||||||||
| Accounts receivable, net |
(128,371 | ) | (157,557 | ) | ||||
| Prepaid expenses and other current assets |
(34,353 | ) | 3,534 | |||||
| Other noncurrent assets |
3,410 | 27,918 | ||||||
| Lease assets and liabilities, net |
(2,937 | ) | 3,603 | |||||
| Accounts payable, accrued expenses and accrued personnel |
108,922 | (63,804 | ) | |||||
| Deferred revenue |
1,207 | 28,465 | ||||||
| Income taxes payable, net |
(42,744 | ) | 19,903 | |||||
| Other noncurrent liabilities |
34,801 | 57,754 | ||||||
|
|
|
|
|
|||||
| Net cash provided by operating activities |
550,259 | 539,800 | ||||||
|
|
|
|
|
|||||
| Cash Flow from Investing Activities: |
||||||||
| Purchase of property and equipment, net (a) |
(97,805 | ) | (145,400 | ) | ||||
| Proceeds from sale of short-term interest-bearing investments |
15,553 | 20,043 | ||||||
| Purchase of short-term interest-bearing investments |
— | (34,275 | ) | |||||
| Net cash paid for business acquisitions |
(84,425 | ) | (24,430 | ) | ||||
| Net cash received from sale of a business |
— | 10,000 | ||||||
| Other |
(2,438 | ) | (5,030 | ) | ||||
|
|
|
|
|
|||||
| Net cash used in investing activities |
(169,115 | ) | (179,092 | ) | ||||
|
|
|
|
|
|||||
| Cash Flow from Financing Activities: |
||||||||
| Repurchase of shares |
(334,499 | ) | (400,922 | ) | ||||
| Proceeds from employee stock option exercises |
45,975 | 72,957 | ||||||
| Payments of dividends |
(147,679 | ) | (137,893 | ) | ||||
| Distribution to noncontrolling interests |
(208 | ) | — | |||||
| Payment of contingent consideration from a business acquisition |
(453 | ) | (6,153 | ) | ||||
|
|
|
|
|
|||||
| Net cash used in financing activities |
(436,864 | ) | (472,011 | ) | ||||
|
|
|
|
|
|||||
| Net decrease in cash and cash equivalents |
(55,720 | ) | (111,303 | ) | ||||
| Cash and cash equivalents at beginning of period |
573,377 | 709,064 | ||||||
|
|
|
|
|
|||||
| Cash and cash equivalents at end of period |
$ | 517,657 | $ | 597,761 | ||||
|
|
|
|
|
|||||
AMDOCS LIMITED
Supplementary Information
(In millions)
| Three months ended | ||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| 2023 | 2023 | 2022 | 2022 | 2022 | ||||||||||||||||
| North America |
$ | 830.9 | $ | 829.0 | $ | 812.7 | $ | 794.4 | $ | 788.0 | ||||||||||
| Europe |
187.3 | 171.7 | 168.7 | 146.4 | 146.1 | |||||||||||||||
| Rest of the World |
217.8 | 222.6 | 204.3 | 225.7 | 226.2 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Revenue |
$ | 1,236.0 | $ | 1,223.3 | $ | 1,185.7 | $ | 1,166.5 | $ | 1,160.3 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Three months ended | ||||||||||||||||||||
| June 30, 2023 |
March 31, 2023 |
December 31, 2022 |
September 30, 2022 |
June 30, 2022 |
||||||||||||||||
| Managed Services Revenue |
$ | 719.8 | $ | 718.9 | $ | 699.8 | $ | 714.6 | $ | 717.9 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| as of | ||||||||||||||||||||
| June 30, 2023 |
March 31, 2023 |
December 31, 2022 |
September 30, 2022 |
June 30, 2022 |
||||||||||||||||
| 12-Month Backlog |
$ | 4,140 | $ | 4,110 | $ | 4,090 | $ | 3,970 | $ | 3,950 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
# # #
Amdocs Limited NASDAQ: DOX Fiscal Q3 2023 Earnings Presentation August 2, 2023 Tamar Rapaport-Dagim CFO & COO Shuky Sheffer President & CEO Exhibit 99.2
Disclaimer The information contained herein in this presentation or delivered or to be delivered to you during this presentation does not constitute an offer, expressed or implied, or a recommendation to do any transaction in Amdocs Limited securities or in any securities of its affiliates or subsidiaries. This presentation and the comments made by members of Amdocs management in conjunction with it include 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 macro-economic conditions, prevailing level of macroeconomic, business and operational uncertainty, including as a result of geopolitical events or other global or regional events such as the COVID-19 pandemic, as well as the current inflationary environment, and the effects of these conditions on the company’s clients’ businesses and levels of business activity, 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, 2022 filed on December 13, 2022 and our Form 6-K furnished for the first quarter of fiscal 2023 on February 13, 2023 and for the second quarter of fiscal 2023 on May 22, 2023. This presentation includes non-GAAP financial measures, including non-GAAP operating margin, free cash flow, revenue on a constant currency basis, non-GAAP net income, non-GAAP net income attributable to Amdocs Limited, and non-GAAP earnings per share. Free cash flow equals cash generated by operating activities less net capital expenditures and other. While in prior years Amdocs used normalized free cash flow, a measure of our operating performance, is further adjusted to exclude net capital expenditures related to the new campus development, payments for non-recurring and unusual charges (such as capital gains tax to be paid in relation to the divestiture of OpenMarket), and payments of acquisition related liabilities, Amdocs is no longer reporting normalized free cash flow. Normalized free cash flow is not comparable to free cash flow. 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. Please refer to the appendix for a reconciliation of these metrics to the most comparable GAAP provision. This presentation also includes pro forma metrics which exclude the financial impact of OpenMarket (divested on December 31, 2020) from fiscal year 2021. Please also review the information contained in Amdocs’ press release dated August 2, 2023 with respect to earnings for fiscal Q3 2023. The press release contains additional information regarding Amdocs’ outlook for fiscal year 2023 and certain non-GAAP metrics and their reconciliations.
Today’s Speakers Shuky Sheffer President & Chief Executive Officer Tamar Rapaport-Dagim Chief Financial Officer & Chief Operating Officer
Earnings call agenda Strategy & Business Performance Update Shuky Sheffer, President & Chief Executive Officer 1 2 Financial Review & Outlook Tamar Rapaport-Dagim, Chief Financial Officer & Chief Operating Officer 3 Q&A
Strategy and Business Performance Update President & Chief Executive Officer Shuky Sheffer
Solid Q3 financial performance Record revenue & ongoing margin expansion Revenue (1) Up ~7%(1) YoY Above guidance midpoint on reported basis Record Non-GAAP operating margin(2) +20bps YoY, as we continue to realize operational efficiencies benefits 17.8% Non-GAAP EPS(2) Above guidance range, mainly due to lower than anticipated non-GAAP effective tax rate 12-month backlog Up ~5% YoY Constant currency. Assumes exchange rates in the current period were unchanged from the prior period Non-GAAP. See reconciliation tables in appendix $1.24B $1.57 Record $4.14B
Q3 operational highlights Positive sales momentum Superb execution Continue to deliver high number of project milestones Continued cloud-related sales momentum Bell XL? Supporting digital transformation journeys 80m+ subscribers now live on our flagship suite What VF, should not be no name? Brazil Canada Indonesia Singapore Indonesia Expanded managed services activities in existing and new logos with accelerated cloud operations Amdocs Media: Vubiquity continues to gain trust as a top provider to the world’s leading streaming services Deepened our customer relationships globally Major western European operator & Tier 1 North American Operator
Generative AI is a company priority AI-powered products Software development life- cycle Efficiency Services innovation Corporate/ support functions Amdocs AmAIz Framework Announced our cutting-edge Gen AI framework Industry’s first enterprise-grade generative AI framework Carrier-grade architecture & telco-specific expertise Follows on strategic partnership with Microsoft Leveraging OpenAI, advanced open-source tech and LLMs For consumer & enterprise customers 80+ use cases in progress
Progress in strategic domains (1/4) Continued sales momentum as we enable our customers to drive growth, improve cost-efficiency and provide an amazing experience to consumers and enterprises B2B customers Cloud Accelerate the multi-year journey to the public cloud Selected projects Business value Flexible and cost-efficient infrastructure and unlock new business models Upgrade and migration of mission-critical monetization applications to the public cloud Digital transformation support Move on-premise, essential applications to the cloud New opportunities in the consumer and enterprise market, and improving cost-effectiveness Moving consumer and B2B infrastructure to the cloud Brazil Tier 1 North American Operator Canada
Progress in strategic domains (2/4) Enable our customers to drive growth, improve cost-efficiency and provide an amazing experience to consumers and enterprises B2B customers Spain Digital transformation Creating seamless digital experiences by transforming IT operations for consumer and B2B customers Selected projects Business value Improved system stability, security, and performance while enabling the delivery of new and exciting services to customers Deployment of our customer engagement software Ability to sell and deliver a wide range of innovative products to customers Upgrade of monetization capabilities Increased business agility and ability to quickly launch new IoT services for consumer and enterprise customers Successful implementation an IoT connectivity management platform Indonesia Switzerland SaaS-based billing presentment Boost Infinite subscribers, providing an enhanced experience Provide consumers with seamless digital experiences on smartphones, smartwatches, and other connected devices Amdocs’ eSIM Cloud platform
Progress in strategic domains (3/4) Enable our customers to drive growth, improve cost-efficiency and provide an amazing experience to consumers and enterprises B2B customers Selected projects Business value Simplify internet and device management; automate customer support for its 5G home internet customers Home Operating System Drive new revenue streams across enterprise and consumer, while increasing agility and efficiency Amdocs’ monetization engine to launch prepaid and MVNO offerings Enhanced agility and time to market for innovative new products and services Amdocs next-gen Charging Next-generation solutions to unlock future market potential from true 5G standalone networks 5G monetization *Mentioned in Q2-23 earning call as Leading North America service provider Singapore * Major European operator
Progress in strategic domains (4/4) Enable our customers to drive growth, improve cost-efficiency and provide an amazing experience to consumers and enterprises B2B customers Selected projects Business value Successful rollout of a comprehensive 5G network that now reaches over 70% of US population Network deployment services Continued platform support in Network Function onboarding and improved automation. 5G Orchestration platform go-live and operations expansion Delivering dynamic connected experiences with real-time, automated networks Network automation Closed acquisition of TEOCO’s service assurance business, adding assurance capabilities, providing a unique end-to-end service orchestration offering, assuring quality of service and enabling equipping Amdocs to deliver a unique end-to-end service orchestration offering
Improved midpoint, and the 2nd guidance raise this year May-23 9%−13% YoY growth Fiscal 2023 Outlook We are positioned to deliver double-digit expected total shareholder returns(3) for the third straight year in 2023, including our dividend yield Constant currency. Assumes exchange rates in the current period were unchanged from the prior period Non-GAAP. See reconciliation tables in appendix Expected total shareholder return assumes Non-GAAP EPS growth plus dividend yield (based on fiscal year end closing share price); FY2023E assumed midpoint of pro forma non-GAAP EPS outlook, and dividend yield based on proposed new quarterly rate of $0.435 as of share price on 11/8/22 August-23 11%−12% YoY growth 11.5% midpoint 11% midpoint Non-GAAP Operating Margin(2) Free cash flow(2) Revenue(1) B A C Non-GAAP diluted earnings per share growth(2) D Tracking slightly below the 8% midpoint of original guidance of 6%−10% On track to achieve improved profitability guidance of 17.5%−18.1% in FY23 Reiterating FY23 FCF generation of $700M Plan to return vast majority of FCF to to shareholders YoY growth YoY growth 50 basis points better than our previous guidance midpoint and 150 basis points better than original guidance midpoint
Financial Update & Outlook Chief Financial Officer & Chief Operating Officer Tamar Rapaport-Dagim
Q3 Revenue $1,236 million +6.5% YoY, +6.9% constant currency(1) Above guidance midpoint ($1,215M - $1,255M) Q3 Non-GAAP(2) Operating Margin 17.8%, +20bps YoY Unchanged. QoQ and within annual target range of 17.5% - 18.1% Q3 GAAP Diluted EPS $1.32 Above guidance range ($1.16 - $1.26) Q3 Non-GAAP(2) Diluted EPS $1.57 Above guidance range ($1.45 - $1.51) Q3 FY2023 Financial Highlights Q3 2023 Revenue by Region $ Millions Q3 2023 Revenue vs. Guidance $ Millions Q3 2023 Results Constant currency. Assumes exchange rates in the current period were unchanged from the prior period Non-GAAP. See reconciliation tables in appendix Slightly above guidance midpoint Record revenue, +6.5% YoY as reported, +6.9% YoY constant currency(1) Record quarter in North America Record quarter in Europe Improved non-GAAP(2) operating margin YoY, reflecting ongoing efficiency gains
Gradually Improving Profitability Quarterly Non-GAAP(1) Operating Margin: Q1F20 – Q3F23 $ Millions 16.5% 17.2% 17.5% 17.8% 18.1% Achieved higher profitability in FY2023 Further measures planned to optimize investment and resource allocation Q4F23 restructuring charge of ~$50M - $60M anticipated Sustain gradual long-term margin improvement, led by automation, sophisticated tools and future expected Gen AI-related benefits Non-GAAP operating margins have consistently tracked at the mid-to-higher end of guidance, and have gradually improved over time Non-GAAP. See reconciliation tables in appendix
(1) (1) (1) 12-Month Backlog ~$4.14B Record-high as of June 30, 2023 ~ +5% YoY Leading Indicator Roughly 80% 12-month backlog typically covers ~80% of forward 12-month revenue 12-month backlog growth has accelerated year-over-year over the past several quarters (1) Record Quarterly 12-Month Backlog in Q3F23 $ Billions ~ +5% YoY +$30M QoQ Leading Indicators & Business Model Visibility 12-month backlog includes: Anticipated revenue related to contracts Estimated revenue from managed services contracts Letters of intent Maintenance Estimated ongoing support activities
Managed Services ~$720M Best-ever Quarter ~58% of total revenue Managed Services Revenue: Fiscal Year to Date $ Millions Managed services arrangements support business model resiliency with highly recurring revenue streams, multi-year engagements and high renewal rates, and may also include large-scale digital transformation projects Leading Indicators & Business Model Visibility ~ +5% YoY 100% Close to managed services contract renewals Selected to consolidate BSS under a single stack and takeover operations via managed services Caribbean operator Signed an expanded, multi-year extension of an existing managed services agreement Tier 1 western European operator
Balance Sheet & Cash Flow Liquidity: Cash + Credit Facility $1.25 billion DSO’s 79 days -3 days YoY and +5 days QoQ DSO’s may fluctuate from quarter to quarter Ample liquidity including available $500M revolving credit facility Baa2 Moody’s Remain committed to maintaining our Investment grade credit rating Q3 2023 Free cash flow(2) bridge Credit Facility Cash $650M senior note, maturing June 2030 *Figures may not sum due to rounding Non-GAAP. See reconciliation tables in appendix BBB S&P Cash, Credit Facility & Debt Position $ Millions, as of June 30, 2023 (1) Free cash flow(2) of $144M, reflecting strong execution and healthy cash collections Acquired TEOCO’s service assurance business for net consideration of $90M Ample liquidity to support ongoing business needs while retaining the capacity to fund future strategic growth investments * The net positive difference between deferred revenue and unbilled receivables narrowed by $101 million sequentially in Q3, largely offsetting the sequential increase of $102 million recorded in the previous quarter
Disciplined Capital Allocation Q3 2023 Cash Returned to Shareholders $ Millions ~$1.1B additional share repurchase authorization approved by board of directors, with no expiration date Up to ~$156M of existing share repurchase capacity remaining as of June 30 ~$1.26B remaining share repurchase authorization in aggregate Quarterly dividend of 43.5 cents authorized Non-GAAP. See appendix tables for reconciliation of normalized FCF Yield = expected reported free cash flow of $700M in FY2023 as a percentage of Amdocs’ market capitalization as of August 2, 2023 FCF in FY2020, FY2021 and FY2022 is presented on a normalized basis, which mainly excludes net capital expenditures related to the new campus development; normalized FCF disclosure is no longer applicable in FY2023 Refer to https://investors.amdocs.com/ and earnings reports issued on 11/2/2021 and 11/8/2022 for reconciliation of normalized FCF in FY2020, FY2021 and FY2022 % Normalized FCF(1)(3)/ Non-GAAP Net Income(1) Normalized FCF(1)(3) ($M) % of Normalized FCF(1)(3) Returned to Shareholders Normalized FCF (1)(3)(4): Three-year historical trend and FY2023E outlook (Guidance) FY2023E guidance: return vast majority 100% Additional $1.1B share repurchase program authorized Reiterating FY2023 free cash flow(1) (FCF) outlook of $700M ~6% free cash flow yield(2) Expects to return vast majority of free cash flow to shareholders in FY2023 (3) (1) (1) (1)
FY2023 Outlook Pro forma metrics exclude the financial impact of OpenMarket (which was divested on December 31, 2020) from fiscal year 2021. Expected total shareholder return assumes Non-GAAP EPS growth plus dividend yield (based on fiscal year end closing share price); FY2023E assumed 11.5% midpoint of pro forma non-GAAP EPS outlook, and dividend yield based on proposed new quarterly rate of $0.435 as of share price on 11/8/22 Non-GAAP. See reconciliation tables in appendix Constant currency. Assumes exchange rates in the current period were unchanged from the prior period Total Shareholder Return(3)(5) Non-GAAP(2) Diluted EPS Growth YoY % + Dividend Yield FY21 and FY22 non-GAAP EPS growth is presented pro forma(1) (1)(4) (4) 12.0% (1) ~13.5%* *Non-GAAP(2) EPS growth of 11.5%, plus ~2% dividend yield FY2023E revenue growth outlook tightened to ~7.2%-8.0% YoY(4) constant currency from 7%-9%(4) previously FY2023E non-GAAP(2) diluted EPS outlook raised for 2nd time to ~11%-12% YoY, +50bps at midpoint, and +150bps versus original guidance On-track to deliver double-digit expected total shareholder returns for third year running (1)(4) (1) New midpoint of 11.5% YoY, +50bps versus prior range, and +150 bps versus original FY23 guidance 3.0% Refer to https://investors.amdocs.com/ and earnings reports issued on 11/10/2020, 11/2/2021 and 11/8/2022 for non-GAAP reconciliation in FY2019, FY2020, FY2021 and FY2022 Range tightened to 7.2%-8.0% (7.6% midpoint)
Committed to ESG Starting 2024, Amdocs Park will be powered by renewable energy sources Standing together for equality - LGBTQ+ Friendly Employer Award Marking World Environment Day, with local events, including ~5,000 hours of Volunteering Global campaign to celebrate Pride month with events and activities all around the world Multiple digital inclusion programs globally, including robotics programs to Mexico's low-income students and upskilling in the Philippines, impacting 10,000 students Vubiquity, an Amdocs company, will provide content management for HERFLIX, a free streaming service highlighting women-centric films
Q&A
Non-GAAP. See reconciliation tables in appendix Constant currency. Assumes exchange rates in the current period were unchanged from the prior period Q4 Fiscal 2023 Outlook Category Revenue $1,220 - $1,260 million GAAP EPS $0.67 - $0.81 Non-GAAP(1) EPS $1.38 - $1.44 Share Count 120 million Non-GAAP(1) Effective Tax Rate Above the annual target range of 13%-17% Full Year Fiscal 2023 Outlook Updated Previous Revenue growth As reported 6.3% - 7.1% 6.0% - 8.0% Revenue growth Constant currency(2) 7.2% – 8.0% 7.0% - 9.0% GAAP EPS growth (3.0) % - 0.0% 3.0% - 10.0% Non-GAAP(1) EPS growth 11.0% - 12.0% 9.0% - 13.0% Non-GAAP(1) Operating Margin 17.5% - 18.1% 17.5% -18.1% Non-GAAP(1) Effective Tax Rate 13.0% - 17.0% 13.0% -17.0% Free cash flow(1) $700 million $700 million Q4 & FY2023 Outlook On-track to deliver double-digit total shareholder returns for the third year running
Appendix Reconciliation Tables
Reconciliation Tables The amounts under "Purchase of property and equipment, net” include proceeds from sale of property and equipment of $380 and $521 for the nine months ended June 30, 2023 and 2022, respectively. Since Q12023, the Normalized Free Cash Flow is no longer applicable.
Reconciliation Tables
Reconciliation Tables
