In-Line Q1 Earnings at Amdocs

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Amdocs Ltd. (DOX) reported mixed financial results for the first quarter of fiscal 2014. The company’s earnings came in line with the Zacks Consensus Estimate. However, revenues beat the same. The recent takeover of Actix and Celcite has helped Amdocs to win fresh deals from companies like TIM Brasil, TELUS Corporation (TU), NII Holdings Inc.’s (NIHD) Nextel Brasil, Vodafone Germany of Vodafone Group plc. (VOD) and Telefonica Germany. Amdocs currently has a Zacks Rank #2 (Buy).

First-Quarter Results in Details

Quarterly net income, on a GAAP basis, was $101.4 million or 63 cents per share compared with $99 million or 61 cents per share in the prior-year quarter. First-quarter fiscal 2014 adjusted earnings per share of 69 cents were exactly in line with the Zacks Consensus Estimate. Quarterly total revenue came in at $864 million, up 4.6% year over year, outpacing the Zacks Consensus Estimate of $859 million.  

Amdocs posted gross margin of 35.48% in the reported quarter against 35.17% in the year-ago quarter. Reported operating income was approximately $120.7 million, up 7.1% year over year. Quarterly operating margin was 14.0% compared with 13.6% in the prior-year quarter. At the end of the first quarter of fiscal 2014, total order backlog was $2,890 million against $2,800 million at the end of the year-ago quarter. In the reported quarter, Amdocs repurchased shares worth $84 million.

During the first quarter of fiscal 2014, Amdocs generated around $186.5 million in cash from operations compared with $145.5 million in the comparable prior-year quarter. Free cash flow in the reported quarter stood at $159.8 million against $115.6 million in the prior-year quarter. At the end of first quarter of fiscal 2014, Amdocs had approximately $1,211.6 million in cash and marketable securities compared with $1,326.4 million at the end of fiscal 2013.

Segment Wise Results

Service revenues were $836.8 million, up 3.6% year over year. License revenues were approximately $27.2 million, up 43.8% year over year. Technologically, Customer Experience Systems revenues were $829.6 million, up 5.8% from the year-earlier quarter while Directory revenues were $34.4 million, down 19.2% year over year. The company’s core Managed Services revenues came in at $429.3 million, down 0.1% from the prior-year quarter.

Geographically, North America generated $628 million, up 5.8% year over year. Europe generated $117 million, up 17.9% year over year, while the Rest of the World contributed the remaining $119 million, down 10.9% year over year. Revenues from the emerging markets stood at $100.7 million, up 2.5% year over year.

Financial Outlook

Management expects revenues in the range of $880–$910 million in the second quarter of fiscal 2014. Earnings per share, on a GAAP basis, are expected between 61 cents and 69 cents. Moreover, non-GAAP earnings per share, including 5–6 cents per share of equity-based compensation expense, are projected in the 80–87 cents range.  

For fiscal 2014, total revenue is expected to grow 4%-6% year over year. Non-GAAP earnings per share are projected to rise 6%-9% year over year.

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