Amdocs' 2Q Earnings Beat Zacks Est.

Zacks

Amdocs Ltd. (DOX) reported second quarter of fiscal 2013 financial results. The company has stabilized its business with its major client  AT&T Inc. (T), limiting a major concern for its business fluctuations. Additionally, in the reported quarter, Amdocs achieved key production milestones in the modernization of United States Cellular Corp. (USM) and expanded its managed services contract with Comcast Corp. (CMCSA). Amdocs currently has a Zacks Rank #4 (Sell).  

Second Quarter Results in Details

Quarterly net income, on a GAAP basis, was $104.9 million or 64 cents per share compared with $101.9 million or 60 cents per share in the prior-year quarter. Second-quarter of fiscal 2013 adjusted earnings per share of 68 cents beat the Zacks Consensus Estimate of 66 cents. Second-quarter total revenue came in at $832.9 million, up 3% year over year, but slightly below the Zacks Consensus Estimate of $836 million.  

Amdocs posted gross margin of 35.3% in the reported quarter compared with 35.9% in the year-ago quarter. Reported operating income was approximately $122.9 million, up 11.8% year over year. Quarterly operating margin was 14.8% compared with 13.6% in the prior-year quarter. At the end of the second quarter of fiscal 2013, total order backlog was $2,810 million compared with $2,725 million at the end of the year-ago quarter. In the reported quarter, Amdocs repurchased shares worth $109 million.

During the first half of fiscal 2013, Amdocs generated around $265.5 million in cash from operations compared with $224.5 million in the prior-year period. Free cash flow (cash flow from operations less capital expenditure) in the first half of fiscal 2013 stood at $207.2 million compared with $174.3 million in the prior-year period.

At the end of the second quarter of fiscal 2013, Amdocs had approximately $978.2 million in cash and marketable securities and no outstanding debt on its balance sheet compared with $1,118.2 million of cash and marketable securities and no outstanding debt at the end of fiscal 2012.

Segment Wise Results

Service revenues were $811 million, up 3.6% year over year. License revenues were approximately $21.9 million, down 16.5% year over year. Technologically, Customer Experience Systems revenues were $789.3 million, up 4% year over year while Directory revenues were $43.6 million, down 12.8% year over year. The company’s core Managed Services revenues came in at $439.8 million, up 6.1% year over year.

Geographically, North America generated $601.3 million, up 6.8% year over year, Europe generated $99.3 million, down 11.2% year over year; while the Rest of the World contributed the remaining $132.3 million, down 1.2% year over year. Revenues from the emerging markets came in at $98.1 million, showing an annualized growth of 9.7%.

Financial Outlook

Management expects the revenues of the third quarter of fiscal 2013 to be in the range of $825–$855 million. Earnings per share, on a GAAP basis, are expected to be between 60 cents and 68 cents. Moreover, non-GAAP earnings per share, including 5–6 cents per share of equity-based compensation expense, are projected in the range of 70–76 cents. 

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