Amdocs Limited Reports Quarterly Revenue of $807 Million, Up 4.1% YoY
ST. LOUIS, Feb. 1, 2012 /PRNewswire/ --
Key highlights:
-- First fiscal quarter revenue of $807 million, compared to the $805-$825
million guidance range. Foreign currency movements negatively affected
revenue by approximately $6 million sequentially relative to the fourth
fiscal quarter of 2011
-- First fiscal quarter non-GAAP operating income of $133 million; non-GAAP
operating margin of 16.5%; GAAP operating income of $109 million
-- First fiscal quarter diluted non-GAAP EPS of $0.64, compared to the
$0.61-$0.67 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 $0.53 for the first fiscal quarter, compared to the
$0.49-$0.57 guidance range
-- Free cash flow of $121 million for the first fiscal quarter
-- Twelve-month backlog of $2.69 billion at the end of the first fiscal
quarter, up $20 million from the end of the fourth fiscal quarter of
2011
-- Repurchased $140 million of ordinary shares during the first fiscal
quarter
-- Second quarter fiscal 2012 guidance: Expected revenue of approximately
$800-$820 million and diluted non-GAAP EPS of $0.62-$0.68, 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. Diluted
GAAP EPS is expected to be approximately $0.50-$0.58
-- Fiscal 2012 guidance: At least 11-13% non-GAAP EPS growth expected in
fiscal 2012. Expected revenue growth of 5-6% on a constant currency
basis and expected reported revenue growth of 4-5% including the effects
of foreign currency fluctuations
Amdocs Limited (NYSE: DOX) today reported that for its first fiscal quarter ended December 31, 2011, revenue was $807.0 million, down 0.6% sequentially from the fourth fiscal quarter of 2011 and up 4.1% as compared to last year's first fiscal quarter. Net income on a non-GAAP basis was $111.3 million, or $0.64 per diluted share, compared to non-GAAP net income of $99.8 million, or $0.52 per diluted share, in the first quarter of fiscal 2011. Non-GAAP net income excludes amortization of purchased intangible assets and other acquisition related costs and equity-based compensation expenses of $18.5 million, net of related tax effects, in the first quarter of fiscal 2012 and excludes such amortization and other acquisition related costs and equity-based compensation expenses of $26.4 million, net of related tax effects, in the first quarter of fiscal 2011. The Company's GAAP net income for the first quarter of fiscal 2012 was $92.7 million, or $0.53 per diluted share, compared to GAAP net income of $73.4 million, or $0.38 per diluted share, in the prior year's first fiscal quarter.
"During the first fiscal quarter, our market leading position continued to translate into healthy demand across our portfolio. Our results benefitted from strong performance in the emerging markets and Europe, somewhat tempered by slower spending at AT&T in conjunction with the cancellation of the merger with T-Mobile. In the emerging markets, our global market position and track record of successful implementations continue to result in new, influential deals with some of the largest carriers in these regions. Additionally, we are seeing healthy and diverse business activity in Europe with minimal impact to date from macroeconomic uncertainty in the region. In North America, AT&T's mid-December withdrawal of its bid for T-Mobile USA caused some spending slowdown in our largest customer, while the rest of the region performed as expected," said Eli Gelman, chief executive officer of Amdocs Management Limited.
Gelman continued, "During the quarter, we signed several key strategic wins, including the agreement with Comcast announced today and three deals in Latin America. These wins are strong evidence that the investment decisions we made over the last year were focused in the right areas and are supporting exciting new activities. First, the cable industry continues to progress forward with gradual transformation. The multi-year agreement with Comcast demonstrates that Amdocs is partnering with leading cable operators to realize their vision. Additionally, the new business in Latin America further establishes Amdocs as a leader in providing next-generation customer experience systems in one of the fastest growing emerging markets."
Gelman concluded, "We continue to demonstrate our belief in the future success of Amdocs by repurchasing our shares. Since resuming the buy-back program in April 2010, we have repurchased approximately $1.2 billion of our ordinary shares as of December 31, 2011, or roughly 20% of our shares outstanding. Incorporating our repurchase activity thus far in fiscal 2012, we are raising our fiscal 2012 non-GAAP earnings per share outlook to at least 11-13% year-over-year growth, compared to our prior outlook of at least 10-12% growth. This outlook does not include any future repurchase activity. Our earnings forecast factors in expected revenue growth of 5-6% on a constant currency basis and a revised reported revenue growth outlook of 4-5% including the effects of foreign currency fluctuations. The pace of reacceleration at AT&T is one of the largest variables to consider within our revenue outlook range."
Financial Discussion of First Fiscal Quarter Results
Free cash flow was $121 million for the quarter, comprised of cash flow from operations of $150 million less $29 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 $2.69 billion at the end of the first quarter of fiscal 2012.
Financial Outlook
Amdocs expects that revenue for the second quarter of fiscal 2012 will be approximately $800-$820 million. Diluted earnings per share on a non-GAAP basis for the second fiscal quarter are expected to be $0.62-$0.68, 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 second fiscal quarter will be $0.50-$0.58.
Conference Call Details
Amdocs will host a conference call on February 1, 2012 at 5:00 p.m. Eastern Time to discuss the Company's first 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 and non-GAAP net income. 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 and non-GAAP net income, when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and results of operations, as well as the net amount of cash generated by its business operations after taking into account capital spending required to maintain or expand the business.
For its internal budgeting process and in monitoring the results of the business, Amdocs' management uses financial statements that do not include amortization of purchased intangible assets 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 non-cash expenses in reviewing its results and those of its competitors, because the amounts of the expenses between companies can vary greatly depending on the assumptions used by an individual company in determining the amounts of the expenses.
Amdocs further believes that, where the adjustments used in calculating non-GAAP diluted earnings per share are based on specific, identified amounts that impact different line items in the Consolidated Statements of Income (including cost of service, research and development, selling, general and administrative, operating income, 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 product portfolio with value-driven professional services and managed services operations. With revenue of $3.2 billion in fiscal 2011, Amdocs and its over 19,000 employees serve customers in more than 60 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, 2011 filed on December 8, 2011.
AMDOCS LIMITED
Consolidated Statements of Income
(in thousands, except per share data)
Three months ended
December 31,
------------
2011 2010
---- ----
Revenue:
License $35,796 $29,906
Service 771,214 745,275
807,010 775,181
Operating expenses:
Cost of license 931 700
Cost of service 516,181 508,138
Research and development 61,307 54,992
Selling, general and
administrative 106,337 104,357
Amortization of purchased
intangible assets and other 13,206 19,410
697,962 687,597
Operating income 109,048 87,584
Interest and other expense,
net 3,613 3,117
----- -----
Income before income taxes 105,435 84,467
Income taxes 12,704 11,076
Net income $92,731 $73,391
Basic earnings per share $0.54 $0.38
===== =====
Diluted earnings per share $0.53 $0.38
Basic weighted average
number of shares
outstanding 172,712 191,599
Diluted weighted average
number of shares
outstanding 173,812 192,969
======= =======
AMDOCS LIMITED
Selected Financial Metrics
(in thousands, except per share data)
Three months ended
December 31,
------------
2011 2010
---- ----
Revenue $807,010 $775,181
Non-GAAP operating income 132,807 120,268
Non-GAAP net income 111,254 99,769
Non-GAAP diluted earnings per share $0.64 $0.52
Diluted weighted average number of
shares outstanding 173,812 192,969
AMDOCS LIMITED
Reconciliation of Selected Financial Metrics from GAAP
to Non-GAAP
(in thousands)
Three months ended
------------------
December 31, 2011
-----------------
Reconciliation items
--------------------
Amortization Equity Tax
GAAP of purchased based effect Non-GAAP
---- intangible compensation ------- --------
assets and expense
other -------
-----
Operating
expenses:
Cost of license $931 $- $- $- $931
Cost of service 516,181 - (5,603) - 510,578
Research and 61,307 - (1,041) - 60,266
development
Selling, general
and 106,337 - (3,909) - 102,428
administrative
Amortization of 13,206 (13,206) - - -
purchased
intangible
assets and other
Total operating
expenses 697,962 (13,206) (10,553) - 674,203
------- ------- ------- --- -------
Operating income 109,048 13,206 10,553 - 132,807
------- ------ ------ --- -------
Income taxes 12,704 - - 5,236 17,940
------ --- --- ----- ------
Net income $92,731 $13,206 $10,553 $(5,236) $111,254
------- ------- ------- ------- --------
Three months ended
------------------
December 31, 2010
-----------------
Reconciliation items
--------------------
Amortization Equity Tax
GAAP of based effect Non-GAAP
---- purchased compensation ------- --------
intangible expense
assets and -------
other
-----
Operating
expenses:
Cost of license $700 $- $- $- $700
Cost of service 508,138 - (4,484) - 503,654
Research and
development 54,992 - (849) - 54,143
Selling, general
and 104,357 - (7,941) - 96,416
administrative
Amortization of 19,410 (19,410) - - -
purchased
intangible
assets and other
Total operating
expenses 687,597 (19,410) (13,274) - 654,913
------- ------- ------- --- -------
Operating income 87,584 19,410 13,274 - 120,268
------ ------ ------ --- -------
Income taxes 11,076 - - 6,306 17,382
------ --- --- ----- ------
Net income $73,391 $19,410 $13,274 $(6,306) $99,769
------- ------- ------- ------- -------
AMDOCS LIMITED
Condensed Consolidated Balance Sheets
(in thousands)
As of
September
December 31, 30,
2011 2011
---- ----
ASSETS
Current assets
Cash, cash equivalents and short-
term interest-bearing
investments $924,976 $1,173,470
Accounts receivable, net,
including unbilled of $98,849 and
$72,048, respectively 590,681 565,853
Deferred income taxes and taxes
receivable 106,368 112,656
Prepaid expenses and other current
assets 127,059 127,341
-------
Total current assets 1,749,084 1,979,320
Equipment and leasehold
improvements, net 248,047 258,402
Goodwill and other intangible
assets, net 1,921,481 1,933,154
Other noncurrent assets 488,629 465,696
Total assets $4,407,241 $4,636,572
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities
Accounts payable, accruals and
other $640,259 $594,603
Short-term financing arrangements - 250,000
Deferred revenue 151,347 151,423
Deferred income taxes and taxes
payable 22,050 15,180
------ ------
Total current liabilities 813,656 1,011,206
Other noncurrent liabilities 603,268 602,065
Shareholders' equity 2,990,317 3,023,301
Total liabilities and
shareholders' equity $4,407,241 $4,636,572
========== ==========
AMDOCS LIMITED
Consolidated Statements of Cash Flows
(in thousands)
Three months ended December
31,
----------------------------
2011 2010
---- ----
Cash Flow from Operating
Activities:
Net income $92,731 $73,391
Reconciliation of net income
to net cash provided by
operating activities:
Depreciation and
amortization 40,542 49,153
Equity-based compensation
expense 10,553 13,274
Deferred income taxes (5,776) 6,903
Excess tax benefit from
equity-based compensation (37) (24)
Loss from short-term
interest-bearing
investments 602 832
Net changes in operating
assets and liabilities, net
of amounts acquired:
Accounts receivable (20,673) 34,330
Prepaid expenses and other
current assets (1,470) (40,891)
Other noncurrent assets (6,239) (26,751)
Accounts payable, accrued
expenses and accrued
personnel 40,203 5,462
Deferred revenue (6,580) 39,015
Income taxes payable 9,049 (2,515)
Other noncurrent liabilities (2,959) 10,122
Net cash provided by
operating activities 149,946 162,301
------- -------
Cash Flow from Investing
Activities:
Payments for purchase of
equipment and leasehold
improvements, net (28,314) (35,340)
Proceeds from sale of short-
term interest-bearing
investments 74,108 124,797
Purchase of short-term
interest-bearing
investments (61,675) (88,605)
Other (2,967) (7,672)
------ ------
Net cash used in investing
activities (18,848) (6,820)
------- ------
Cash Flow from Financing
Activities:
Payments under financing
arrangements (250,000) (200,000)
Repurchase of shares (139,715) (113,431)
Proceeds from employee stock
options exercised 23,852 13,845
Payments under capital
lease, short-term
financing arrangements and
other (190) (228)
Net cash used in financing
activities (366,053) (299,814)
-------- --------
Net decrease in cash and
cash equivalents (234,955) (144,333)
Cash and cash equivalents at
beginning of period 831,371 1,036,195
Cash and cash equivalents at
end of period $596,416 $891,862
AMDOCS LIMITED
Supplementary Information
(in millions)
Three months ended
------------------
December September June 30, March 31, December
31, 2011 30, 2011 2011 2011 31, 2010
--------- --------- --------- ---------- --------
North America $573.8 $585.1 $584.9 $598.4 $564.6
Europe 110.3 102.0 105.5 97.2 98.4
Rest of World 122.9 125.1 111.0 93.3 112.2
----- ----- ----- ---- -----
Total Revenue $807.0 $812.2 $801.4 $788.9 $775.2
====== ====== ====== ====== ======
As of
-----
December September June 30, March 31, December
31, 2011 30, 2011 2011 2011 31, 2010
-------- --------- --------- ---------- --------
Emerging Markets
Revenue $82.5 $79.5 $73.2 $52.1 $67.8
----- ----- ----- ----- -----
As of
-----
December September June 30, March 31, December
31, 2011 30, 2011 2011 2011 31, 2010
-------- --------- --------- ---------- --------
Managed Services
Revenue $419.7 $384.8 $384.2 $382.6 $371.2
------ ------ ------ ------ ------
Three months ended
------------------
December September June 30, March 31, December
31, 2011 30, 2011 2011 2011 31, 2010
--------- --------- --------- ---------- --------
Customer
Experience
Systems $758.0 $764.6 $751.1 $737.2 $725.4
Directory 49.0 47.6 50.3 51.7 49.8
---- ---- ---- ---- ----
Total Revenue $807.0 $812.2 $801.4 $788.9 $775.2
====== ====== ====== ====== ======
As of
-----
December September June 30, March 31, December
31, 2011 30, 2011 2011 2011 31, 2010
-------- --------- --------- ---------- --------
12-Month Backlog $2,690 $2,670 $2,620 $2,590 $2,560
------ ------ ------ ------ ------
SOURCE Amdocs