Amdocs Limited Reports Record Quarterly Revenue of $841M, Up 4.0% YoY

ST. LOUIS, July 31, 2013 /PRNewswire/ --

Key highlights:

• Third fiscal quarter revenue of $841 million, within the $825-$855 million guidance range. Foreign currency movements negatively affected revenue by approximately $4 million relative to the second quarter of fiscal 2013
• Third fiscal quarter non-GAAP operating income of $142 million; non-GAAP operating margin of 16.8%; GAAP operating income of $123 million
• Third fiscal quarter diluted non-GAAP EPS of $0.83, compared to the $0.70-$0.76 guidance range, excluding amortization of purchased intangible assets and other acquisition related costs and equity-based compensation expense, net of related tax effects. A lower non-GAAP effective tax rate positively impacted diluted non-GAAP EPS by approximately $0.10
• Diluted GAAP EPS of $0.73 for the third fiscal quarter, compared to the $0.60-$0.68 guidance range. A lower GAAP effective tax rate positively impacted diluted GAAP EPS by approximately $0.10
• Free cash flow of $151 million for the third fiscal quarter
• Twelve-month backlog of $2.83 billion at the end of the third fiscal quarter, up $20 million from the end of the second quarter of fiscal 2013
• Repurchased $58 million of ordinary shares during the third fiscal quarter
• The board of directors approved a $0.13 per share quarterly cash dividend to be paid on October 18, 2013
• Fourth quarter fiscal 2013 guidance: Expected revenue of approximately $830-$860 million and diluted non-GAAP EPS of $0.60-$0.66, excluding amortization of purchased intangible assets and other acquisition-related costs and approximately $0.04-$0.05 per share of equity-based compensation expense, net of related tax effects. Diluted non-GAAP EPS guidance includes an expected negative impact of approximately $0.10 due to a higher non-GAAP effective tax rate in the fourth fiscal quarter. The non-GAAP effective tax rate for the full fiscal year 2013 is still anticipated to be within the previously expected range of 13%-15%. Diluted GAAP EPS is expected to be approximately $0.50-$0.58. Diluted GAAP EPS guidance includes an expected negative impact of approximately $0.10 due to a higher GAAP effective tax rate in the fourth fiscal quarter.
  

Amdocs Limited (NYSE: DOX) today reported that for its fiscal quarter ended June 30, 2013, revenue was $841.3 million, up 1.0% sequentially from the second fiscal quarter of 2013 and up 4.0% as compared to last year's third fiscal quarter. Net income on a non-GAAP basis was $134.4 million, or $0.83 per diluted share, compared to non-GAAP net income of $118.4 million, or $0.70 per diluted share, in the third quarter of fiscal 2012. Non-GAAP net income excludes amortization of purchased intangible assets and other acquisition related costs and equity-based compensation expenses of $14.9 million, net of related tax effects, in the third quarter of fiscal 2013 and excludes such amortization and other acquisition related costs and equity-based compensation expenses of $19.6 million, net of related tax effects, in the third quarter of fiscal 2012. The Company's GAAP net income for the third quarter of fiscal 2013 was $119.6 million, or $0.73 per diluted share, compared to GAAP net income of $98.8 million, or $0.59 per diluted share, in the prior fiscal year's third quarter. 

"We are pleased with our solid performance in the third fiscal quarter. Despite currency headwinds, we delivered revenue growth of 4% year-over-year, driven by continued strength in North America. AT&T was an important contributor to our performance, and we are also seeing growth at other key customers in North America. In the emerging markets, we remain focused on bringing many highly complex transformation projects into production, and we continue to see a substantial pipeline of opportunity with new and existing customers. Finally, in Europe, while overall economic conditions in the region remain challenging, we delivered another quarter of relatively consistent revenue on a sequential basis" said Eli Gelman, chief executive officer of Amdocs Management Limited.

Gelman continued, "We continued to sign strategic customer wins during the third fiscal quarter.  In North America, Amdocs was selected by Aio Wireless, a new, no-annual-contract wireless service, to provide managed services across Amdocs' business support systems (BSS), web portal and mobile applications, as well as to manage third party applications.  In Europe, we signed a five-year managed services agreement with a major European wireless group to manage its customer care and billing systems in a newly established shared services and development center.  In replacing a number of vendors with Amdocs, we believe this agreement is evidence of the value Amdocs can bring with managed services in Europe as operators seek to simplify and improve the quality of their operations. The contracts with Aio and the European operator demonstrate Amdocs' ability to deliver value, and, as such, grow our business in existing customers through the breadth of our product family and our expanded services capabilities that extend beyond Amdocs' own systems."

Gelman concluded, "As we embark on the fourth fiscal quarter, we will continue to monitor macroeconomic and industry conditions closely. These include the near term uncertainty arising from the effects of consolidation amongst North American carriers, challenging conditions in Europe, and some slowdown in subscriber and economic growth in segments of the emerging markets, all of which can affect the pace and scope of business demand. We remain keenly focused on our growth initiatives, our operational execution and capital efficiency.  As a result, we now expect to deliver non-GAAP EPS growth towards the higher end of our prior expectation of 5-8%."

Financial Discussion of Third Fiscal Quarter Results
Free cash flow was $151 million for the quarter, comprised of cash flow from operations of $173 million less $22 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 $2.83 billion at the end of the third quarter of fiscal 2013. 

Financial Outlook
Amdocs expects that revenue for the fourth quarter of fiscal 2013 will be approximately $830-$860 million. Diluted earnings per share on a non-GAAP basis for the fourth fiscal quarter are expected to be $0.60-$0.66, excluding amortization of purchased intangible assets and other acquisition-related costs and approximately $0.04-$0.05 per share of equity-based compensation expense, net of related tax effects. Amdocs estimates GAAP diluted earnings per share for the fourth fiscal quarter will be $0.50-$0.58. 

Quarterly Cash Dividend Program
On July 31, 2013, the Board approved the Company's next quarterly cash dividend payment and set September 30, 2013 as the record date for determining the shareholders entitled to receive the dividend, which is payable on October 18, 2013.

Conference Call Details
Amdocs will host a conference call on July 31, 2013 at 5:00 p.m. Eastern Time to discuss the Company's third 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 interest and other expense, net, non-GAAP income taxes, non-GAAP effective tax rate, non-GAAP net income and non-GAAP earnings per share growth. These non-GAAP measures exclude the following items:

• amortization of purchased intangible assets and other acquisition related costs;
• gain on sale of investment;
• 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 interest and other expense, net, non-GAAP income taxes, non-GAAP effective tax rate, non-GAAP net income and non-GAAP 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, gain on sale of investment, 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 product portfolio with value-driven professional services and managed services operations.  With revenue of $3.2 billion in fiscal 2012, Amdocs and its approximately 20,000 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, 2012 filed on December 11, 2012, our Form 6-K furnished for the first quarter of fiscal 2013 on February 12, 2013 and our Form 6-K furnished for the second quarter of fiscal 2013 on May 16, 2013.

SOURCE Amdocs