Amdocs Limited Reports Record Quarterly Revenue of $897M, Up 7.7% YoY

ST. LOUIS, April 30, 2014 /PRNewswire/ --

Key highlights:

• Second fiscal quarter revenue of $897 million, within the $880-$910 million guidance range. Foreign currency movements negatively affected revenue by approximately $2 million relative to the first quarter of fiscal 2014
• The board of directors has authorized a share repurchase plan allowing the repurchase of up to $750 million of ordinary shares at the company's discretion; this plan has no expiration date and is in addition to the current authorization program, which, as of March 31, 2014, provided up to $167 million of remaining repurchase authority
• Second fiscal quarter non-GAAP operating income of $151 million; non-GAAP operating margin of 16.8%; GAAP operating income of $124 million
• Second fiscal quarter diluted non-GAAP EPS of $0.81, within the $0.75-$0.81 guidance range, excluding amortization of purchased intangible assets and other acquisition related costs and equity-based compensation expense, net of related tax effects
• Diluted GAAP EPS of $0.68 for the second fiscal quarter, within the $0.61-$0.69 guidance range
• Free cash flow of $106 million for the second fiscal quarter
• Twelve-month backlog of $2.94 billion at the end of the second fiscal quarter, up $50 million from the end of the first quarter of fiscal 2014
• Repurchased $85 million of ordinary shares during the second fiscal quarter
• The board of directors approved a $0.155 per share quarterly cash dividend to be paid on July 18, 2014  
• Third quarter fiscal 2014 guidance: Expected revenue of approximately $885-$915 million.  Expected diluted non-GAAP EPS of approximately $0.75-$0.81, excluding amortization of purchased intangible assets and other acquisition-related costs and approximately $0.05-$0.06 per share of equity-based compensation expense, net of related tax effects.  Expected diluted GAAP EPS of approximately $0.61-$0.69

Amdocs Limited (NASDAQ: DOX) today reported that for its fiscal quarter ended March 31, 2014, revenue was $896.9 million, up 3.8% sequentially from the first fiscal quarter of 2014 and up 7.7% as compared to last year's second fiscal quarter. Net income on a non-GAAP basis was $131.9 million, or $0.81 per diluted share, compared to non-GAAP net income of $119.3 million, or $0.73 per diluted share, in the second quarter of fiscal 2013. Non-GAAP net income excludes amortization of purchased intangible assets and other acquisition related costs and equity-based compensation expenses of $21.5 million, net of related tax effects, in the second quarter of fiscal 2014 and excludes such amortization and other acquisition related costs and equity-based compensation expenses of $14.4 million, net of related tax effects, in the second quarter of fiscal 2013. The Company's GAAP net income for the second quarter of fiscal 2014 was $110.4 million, or $0.68 per diluted share, compared to GAAP net income of $104.9 million, or $0.64 per diluted share, in the prior fiscal year's second quarter. 

"We are pleased with our solid second fiscal quarter results, which reflect ongoing global demand for Amdocs products and services, contributions from recently acquired assets and consistent execution.  We completed the acquisition of Celcite on January 1 and the post-merger integration with Actix is underway as part of a dedicated network software effort within Amdocs. Our network software offerings are well accepted, and we see encouraging signs of customer engagement and sales momentum which we view as an early validation of our strategy in this new domain.  Additionally, the future of network software also looks interesting, as demonstrated by our recent inclusion in AT&T's Domain 2.0 supplier program to support its long-term vision of a User-Defined Network Cloud. We believe our inclusion in this program is recognition of the value we can bring on the cutting edge of network software, including network virtualization," said Eli Gelman, chief executive officer of Amdocs Management Limited.

Gelman continued, "Today, we are pleased to announce that Sprint has extended its existing managed services deal with Amdocs for its billing and customer care systems.  Additionally, the agreement has been expanded to include Sprint's selection of Amdocs CES 9.1 Convergent Charging to enable real-time charging capability.  This new arrangement reinforces a long-standing strategic partnership with one of our largest customers and removes a key source of uncertainty that resulted from Softbank's investment in Sprint in 2013.  With that said, our outlook still remains subject to much uncertainty, including with respect to the outcomes of other industry consolidation activity in North America which is ongoing in wireless and Pay TV markets."

Gelman said, "In the emerging markets, we have been selected for the transformation of wireline business support systems (BSS) at Telefonica Argentina. This highly strategic customer win follows our successful transformation of Telefonica Argentina's wireless operations, and demonstrates the full breadth of support we expect to provide across multiple lines of business with our CES 9 market leading product set and integrated services."

Gelman concluded, "As we embark on the second half of fiscal 2014, we are on-track to deliver full year revenue growth toward the mid-point of our previously guided range of 5% to 8%. As a reminder, this outlook reflects many moving parts, including with respect to macroeconomic and industry conditions. We believe we are executing well and we remain comfortable with our non-GAAP earnings per share growth outlook of 6% to 9% for the full year. Furthermore, we remain committed to returning cash to shareholders over the long term.  Accordingly, our board has authorized an additional $750 million share repurchase plan.  This is in addition to the $167 million that remained as of March 31, 2014 under the current authorization of $500 million and will be executed at the company's discretion going forward."

Financial Discussion of Second Fiscal Quarter Results 
Free cash flow was $106 million for the quarter, comprised of cash flow from operations of $131 million less $25 million in net capital expenditures and other.

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 $2.94 billion at the end of the second quarter of fiscal 2014. 

Financial Outlook 
Amdocs expects that revenue for the third quarter of fiscal 2014 will be approximately $885-$915 million. Diluted earnings per share on a non-GAAP basis for the third fiscal quarter are expected to be $0.75-$0.81, excluding amortization of purchased intangible assets and other acquisition-related costs and approximately $0.05-$0.06 per share of equity-based compensation expense, net of related tax effects. Amdocs estimates GAAP diluted earnings per share for the third fiscal quarter will be $0.61-$0.69. 

Quarterly Cash Dividend Program
On April 30, 2014, the Board approved the Company's next quarterly cash dividend payment of $0.155 per share and set June 30, 2014 as the record date for determining the shareholders entitled to receive the dividend, which is payable on July 18, 2014.

Conference Call Details 
Amdocs will host a conference call on April 30, 2014 at 5:00 p.m. Eastern Time to discuss the Company's second fiscal quarter results. The call will be carried live on the Internet via the Amdocs website, www.amdocs.com.

Non-GAAP Financial Measures
This release includes non-GAAP diluted earnings per share and other non-GAAP financial measures, including free cash flow, non-GAAP cost of service, non-GAAP research and development, non-GAAP selling, general and administrative, non-GAAP operating income, non-GAAP operating margin, non-GAAP income taxes, 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;
• equity-based compensation expense; and
• tax effects related to the above.

These non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. Amdocs believes that non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with Amdocs' results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Amdocs' results of operations in conjunction with the corresponding GAAP measures.

Amdocs believes that the presentation of non-GAAP diluted earnings per share and other financial measures, including free cash flow, non-GAAP cost of service, non-GAAP research and development, non-GAAP selling, general and administrative, non-GAAP operating income, non-GAAP operating margin, non-GAAP income taxes, non-GAAP net income 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, equity-based compensation expense and related tax effects. Amdocs' management also uses the foregoing non-GAAP financial measures, in addition to the corresponding GAAP measures, in reviewing the financial results of Amdocs. In addition, Amdocs believes that significant groups of investors exclude these 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 service, research and development, selling, general and administrative, operating income, interest and other expense, 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.

About Amdocs 
For 30 years, Amdocs has ensured service providers' success and embraced their biggest challenges. To win in the connected world, service providers rely on Amdocs to simplify the customer experience, harness the data explosion, stay ahead with new services and improve operational efficiency. The global company uniquely combines a market-leading BSS, OSS and network control and optimization product portfolio with value-driven professional services and managed services operations.  With revenue of $3.3 billion in fiscal 2013, Amdocs and its 22,000 employees serve customers in more than 80 countries.

Amdocs: Embrace Challenge, Experience Success.

For more information, visit Amdocs at www.amdocs.com.

This press release includes information that constitutes forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995, including statements about Amdocs' growth and business results in future quarters. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be obtained or that any deviations will not be material. Such statements involve risks and uncertainties that may cause future results to differ from those anticipated. These risks include, but are not limited to, the effects of general economic conditions, Amdocs' ability to grow in the business markets that it serves, Amdocs' ability to successfully integrate acquired businesses, adverse effects of market competition, rapid technological shifts that may render the Company's products and services obsolete, potential loss of a major customer, our ability to develop long-term relationships with our customers, and risks associated with operating businesses in the international market. Amdocs may elect to update these forward-looking statements at some point in the future; however, the Company specifically disclaims any obligation to do so. These and other risks are discussed at greater length in the Company's filings with the Securities and Exchange Commission, including in our Annual Report on Form 20-F for the fiscal year ended September 30, 2013 filed on December 9, 2013 and our Form 6-K furnished for the first quarter of fiscal 2014 on February 11, 2014.

SOURCE Amdocs Limited