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Amdocs (DOX) Q1 Earnings & Revenues Beat Estimates, Up Y/Y

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Zacks Equity Research
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Amdocs Limited DOX delivered first-quarter fiscal 2021 non-GAAP earnings of $1.16 per share. The reported figure beat the Zacks Consensus Estimate by 7.4% as well as increased 9.4% year over year.

Revenues of $1.09 billion also surpassed the consensus mark by 1% and went up 4.3% year over year. At constant currency (cc), revenues were up 3.7%.

Quarterly Details

North America revenues (64.8% of total revenues) grew 6.2% year over year to $703.4 million in the reported quarter. Moreover, Europe revenues (15.8% of total revenues) of $171.6 million increased 10.9% year over year.

Amdocs Limited Price, Consensus and EPS Surprise

Amdocs Limited Price, Consensus and EPS Surprise
Amdocs Limited Price, Consensus and EPS Surprise

Amdocs Limited price-consensus-eps-surprise-chart | Amdocs Limited Quote

However, Rest of the World revenues (19.4% of total revenues) declined 6.2% year over year to $211.3 million.

Managed services revenues climbed 7.6% year over year to $623.7 million.

The company ended the fiscal first quarter with a 12-month backlog of $3.49 billion, down 0.9% year over year.

Meanwhile, non-GAAP research & development expenses as percentage of revenues expanded 50 basis points (bps) on a year-over-year basis to 6.9%.

However, non-GAAP selling, general & administrative expenses as percentage of revenues shrunk 80 bps year over year to 10.6%.

Operating margin expanded 20 bps year over year to 17.3%.

Balance Sheet and Cash Flow

Amdocs had cash and short-term investments of $1.51 billion as of Dec 31, 2020, up from $983.9 billion on Sep 30, 2020.

Cash flow from operating activities was $416.5 million, up from the $204.7 million recorded in the previous quarter and $163.9 million seen in the year-ago quarter.

Free cash flow was $366 million compared with the previous quarter’s $145.4 million and the year-earlier quarter’s $105 million.

During the fiscal first quarter, the company repurchased shares worth $90 million and paid dividend of $43.1 million. Amdocs’ board also approved a 10% increase in quarterly cash dividend payment to 36 cents per share. The dividends will be paid out on Apr 23, 2021.

Guidance

Amdocs updated the fiscal 2021 outlook to reflect the divestiture of the OpenMarket business. The company now anticipates revenues to be up in the range of negative 0.3% to positive 3.7% compared with the previous forecast of a 4-8% increase. At cc, revenues are projected to grow in the band of negative 1.5% to positive 2.5% versus the earlier projection of 3.5-7.5% growth. Nonetheless, the company has reiterated pro forma revenue growth of 3.5-7.5%.

Adjusted earnings are now estimated to grow between 4% and 8%, down from the 5-9% projected earlier. However, the company raised its pro forma non-GAAP earnings per share projection to 5.5-9.5% from 5-9% guided earlier.

The company expects free cash flow to be roughly $600 million, up from the $470 million anticipated previously. Normalized free cash flow is now estimated to be approximately $800 million, up from the earlier forecast of $62 million.

For the second quarter of fiscal 2021, revenues are expected between $1.015 billion and $1.055 billion.Non-GAAP earnings are projected at $1.09-$1.15 per share.

Zacks Rank and Stocks to Consider

Amdocs currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector include Shopify SHOP, Zoom Video Communications ZM and Apple AAPL, all flaunting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Shopify, Zoom and Apple is currently pegged at 32.5%, 25% and 11.5%, respectively.

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