Amdocs Limited Reports Strong Revenue Growth
Amdocs Reports Record Quarterly Revenue of $774 Million, Exceeding Guidance
Key highlights:
-- Second quarter revenue increased to $774 million, exceeding guidance of
$757-$767 million
-- Second quarter diluted non-GAAP EPS, excluding acquisition-related costs
and equity-based compensation expense, net of related tax effects,
increased to $0.58, in line with guidance of $0.57-$0.59 diluted EPS
-- Diluted GAAP EPS of $0.46 for the quarter
-- Free cash flow of $63 million for the quarter
-- Third quarter fiscal 2008 guidance: Expected revenue of approximately
$790-$805 million and diluted non-GAAP EPS of $0.59-$0.61, excluding
acquisition-related costs and approximately $0.06-$0.07 per share of
equity-based compensation expense, net of related tax effects. Diluted GAAP
EPS is expected to be approximately $0.45-$0.48, without taking into
account potential purchase price adjustments relating to the acquisition of
Jacobs Rimell in April 2008
-- Updated fiscal 2008 guidance: Expected revenue of approximately
$3.09-$3.15 billion and diluted non-GAAP EPS of $2.31-$2.37, excluding
acquisition-related costs and approximately $0.21-$0.24 per share of
equity-based compensation expense, net of related tax effects. Diluted GAAP
EPS is expected to be approximately $1.81-$1.90, without taking into
account potential purchase price adjustments relating to the acquisition of
Jacobs Rimell in April 2008
ST. LOUIS, Mo., April 17 /PRNewswire-FirstCall/ -- Amdocs Limited
(NYSE: DOX) today reported that for the quarter ended March 31, 2008,
revenue was $774.3 million, an increase of 9.6% from last year's second
quarter. Net income on a non-GAAP basis was $126.6 million, or $0.58 per
diluted share (excluding acquisition-related costs, which include
amortization of purchased intangible assets, and excluding equity-based
compensation expense, net of related tax effects, of $26.8 million),
compared to non-GAAP net income of $114.5 million, or $0.52 per diluted
share, in the second quarter of fiscal 2007 (excluding acquisition-related
costs, which include amortization of purchased intangible assets,
in-process research and development write-off and other, and excluding
restructuring charges and equity-based compensation expense, net of related
tax effects, of $27.3 million). The Company's GAAP net income was $99.9
million, or $0.46 per diluted share, compared to GAAP net income of $87.2
million, or $0.40 per diluted share, in the second quarter of fiscal 2007.
Free cash flow for the quarter was $63.1 million, comprised of cash flow
from operations of $97.3 million less $34.2 million in net capital
expenditures and other.
"We are pleased to report that we have exceeded our plans for this
quarter and for the first half of fiscal 2008," said Dov Baharav, chief
executive officer of Amdocs Management Limited. "Our strong results are
driven by an expansion of our managed services business and by expanding
our implementations of mission-critical systems in both developed and
emerging markets. We recognize that there is uncertainty in the market as
economic conditions have become more challenging and we believe that our
forecasts for the second half of this fiscal year take this into account.
Our customers recognize that Amdocs systems including our new CES 7.5
offering can help them to increase revenue and reduce costs; the result for
Amdocs is greater customer commitments and a strong pipeline of potential
business. We continue to see demand for projects supporting new initiatives
as well as from projects focused more on cost savings, including managed
services opportunities, and we look forward to continued growth in the
second half of fiscal 2008."
In the second quarter Amdocs had numerous wins across lines of business
and geographies. The Company continued to show progress in the operational
support systems (OSS) area by winning a strategic deal with a large North
American service provider. In Europe, Amdocs signed an important CRM deal
with a large wireless carrier to help them improve their customer
experience. The Company had several wins with wireless carriers including a
consulting engagement to help a service provider introduce new, innovative
offerings. Amdocs won several new deals in emerging markets based on the
Amdocs Compact Convergence Suite.
Amdocs is continuing to expand and strengthen its position in the
broadband cable and satellite market with several wins and a recent
acquisition. In addition to the wins noted above, a large broadband cable
operator in North America has chosen Amdocs to provide self-service
capabilities including an eBill presentment and payment solution. The
Company also won service projects related to requirements scoping, which
can be the initial phase of system transformation. Shortly after the end of
the quarter, Amdocs announced the acquisition of Jacobs Rimell in order to
expand its capabilities in OSS for broadband.
Financial Outlook
Amdocs expects that revenue for the third quarter of fiscal 2008 will
be approximately $790-$805 million. Diluted earnings per share on a
non-GAAP basis for the third quarter are expected to be $0.59-$0.61,
excluding acquisition-related costs and approximately $0.06-$0.07 per share
of equity-based compensation expense, net of related tax effects. Diluted
GAAP EPS is expected to be approximately $0.45-$0.48, without taking into
account potential purchase price adjustments relating to the acquisition of
Jacobs Rimell in April 2008.
Updated fiscal 2008 guidance: Expected revenue of approximately
$3.09-$3.15 billion and diluted non-GAAP EPS of $2.31-$2.37, excluding
acquisition-related costs and approximately $0.21-$0.24 per share of
equity-based compensation expense, net of related tax effects. Diluted GAAP
EPS is expected to be approximately $1.81-$1.90, without taking into
account potential purchase price adjustments relating to the acquisition of
Jacobs Rimell in April 2008.
Amdocs will host a conference call on April 17, 2008 at 5 p.m. Eastern
Time to discuss the Company's second quarter results. The call will be
carried live on the Internet via www.InvestorCalendar.com and 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 income taxes and
non-GAAP net income. These non-GAAP measures exclude the following items:
-- amortization of purchased intangible assets;
-- in-process research and development write-off and other,
-- restructuring charges
-- 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 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, in-process research and
development write-off and other, restructuring charges, 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, 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
Amdocs is the market leader in customer experience systems innovation,
enabling world-leading service providers to deliver an integrated,
innovative and the intentional customer experience(TM) -- at every point of
service. Amdocs provides solutions that deliver customer experience
excellence, combining the software, service and expertise to help its
customers execute their strategies and achieve service, operational and
financial excellence. A global company with revenue of $2.84 billion in
fiscal 2007, Amdocs has more than 17,000 employees and serves customers in
more than 50 countries around the world. 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, 2007 filed on December
3, 2007 and on Form 6-K furnished on February 11, 2008.
AMDOCS LIMITED
Consolidated Statements of Income
(in thousands, except per share data)
Three months ended Six months ended
March 31, March 31,
---------------------- ------------------------
2008 2007 2008 2007
--------- --------- ----------- -----------
Revenue:
License $ 32,109 $ 37,526 $ 58,326 $ 69,270
Service 742,172 668,835 1,458,205 1,328,123
--------- --------- ----------- -----------
774,281 706,361 1,516,531 1,397,393
Operating expenses:
Cost of license 938 1,016 1,712 2,085
Cost of service 493,956 446,860 964,697 881,981
Research and
development 56,088 57,734 112,103 118,202
Selling, general
and administrative 98,666 91,280 196,331 180,450
Amortization of
purchased
intangible assets 21,753 18,912 43,506 36,610
Restructuring charges,
in-process research
and development and
other - 6,761 - 6,761
--------- --------- ----------- -----------
671,401 622,563 1,318,349 1,226,089
--------- --------- ----------- -----------
Operating income 102,880 83,798 198,182 171,304
Interest income and
other, net 8,822 10,899 17,638 22,638
--------- --------- ----------- -----------
Income before income
taxes 111,702 94,697 215,820 193,942
Income taxes 11,843 7,526 20,297 13,429
--------- --------- ----------- -----------
Net income $ 99,859 $ 87,171 $ 195,523 $ 180,513
========= ========= =========== ===========
Basic earnings per
share $ 0.48 $ 0.42 $ 0.94 $ 0.87
========= ========= =========== ===========
Diluted earnings
per share (1) $ 0.46 $ 0.40 $ 0.89 $ 0.82
========= ========= =========== ===========
Basic weighted average
number of shares
outstanding 206,759 207,293 207,437 206,867
========= ========= =========== ===========
Diluted weighted
average number of
shares outstanding 219,786 222,499 220,912 222,608
========= ========= =========== ===========
(1) To reflect the impact of assumed conversion of the convertible
notes, $985 and $1,970, representing interest expense and amortization of
issuance costs, were added back to net income for the three and six months
ended March 31, 2008 and 2007, for the purpose of computing diluted
earnings per share.
AMDOCS LIMITED
Selected Financial Metrics
(in thousands, except per share data)
Three months ended Six months ended
March 31, March 31,
--------------------- ------------------------
2008 2007 2008 2007
--------- ---------- ----------- -----------
Revenue $774,281 $706,361 $1,516,531 $1,397,393
Non-GAAP operating
income 138,046 121,437 269,317 241,966
Non-GAAP net income 126,647 114,471 249,937 232,587
Non-GAAP diluted
earnings per share (1) $ 0.58 $ 0.52 $ 1.14 $ 1.05
Diluted weighted average
number of shares
outstanding 219,786 222,499 220,912 222,608
(1) To reflect the impact of assumed conversion of the convertible
notes, $985 and $1,970, representing interest expense and amortization of
issuance costs, were added back to net income for the three and six months
ended March 31, 2008 and 2007, for the purpose of computing diluted
earnings per share.
AMDOCS LIMITED
Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
(in thousands)
Three months ended
March 31, 2008
-----------------------------------------------------
Reconciliation items
----------------------------------
GAAP Amortization Equity based Tax Non-
of purchased compensation effect GAAP
intangible expense
assets
-----------------------------------------------------
Operating expenses:
Cost of license $ 938 $ - $ - $ - $ 938
Cost of service 493,956 - (5,431) - 488,525
Research and
development 56,088 - (1,146) - 54,942
Selling, general
and administrative 98,666 - (6,836) - 91,830
Amortization of
purchased
intangible assets 21,753 (21,753) - - -
-----------------------------------------------------
Total operating
expenses 671,401 (21,753) (13,413) - 636,235
-----------------------------------------------------
Operating income 102,880 21,753 13,413 - 138,046
-----------------------------------------------------
Income taxes 11,843 - - 8,378 20,221
-----------------------------------------------------
Net income $ 99,859 $ 21,753 $ 13,413 $ (8,378) $126,647
-----------------------------------------------------
Three months ended
March 31, 2007
-----------------------------------------------------------
Reconciliation items
----------------------------------------
Restructuring
charges
in-process
research
Amortization and
of develop- Equity
purchased ment based
intangible and compensation Tax Non-
GAAP assets other expense effect GAAP
-----------------------------------------------------------
Operating
expenses:
Cost of
license $ 1,016 $ - $ - $ - $ - $ 1,016
Cost of
service 446,860 - - (6,005) - 440,855
Research and
development 57,734 - - (1,587) - 56,147
Selling,
general and
administ-
rative 91,280 - - (4,374) - 86,906
Amortization
of purchased
intangible
assets 18,912 (18,912) - - - -
Restructuring
charges,
in-process
research and
development
and other 6,761 - (6,761) - - -
-------------------------------------------------------------
Total
operating
expenses 622,563 (18,912) (6,761) (11,966) - 584,924
-------------------------------------------------------------
Operating
income 83,798 18,912 6,761 11,966 - 121,437
-------------------------------------------------------------
Income taxes 7,526 - - - 10,339 17,865
-------------------------------------------------------------
Net income $ 87,171 $ 18,912 $ 6,761 $11,966 $(10,339) $114,471
-------------------------------------------------------------
AMDOCS LIMITED
Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
(in thousands)
Six months ended
March 31, 2008
-----------------------------------------------------
Reconciliation items
----------------------------------
GAAP Amortization Equity based Tax Non-
of purchased compensation effect GAAP
intangible expense
assets
------------------------------------------------------
Operating expenses:
Cost of license $ 1,712 $ - $ - $ - $ 1,712
Cost of service 964,697 - (11,713) - 952,984
Research and
development 112,103 - (2,522) - 109,581
Selling, general
and
administrative 196,331 - (13,394) - 182,937
Amortization of
purchased
intangible assets 43,506 (43,506) - - -
-------------------------------------------------------
Total operating
expenses 1,318,349 (43,506) (27,629) - 1,247,214
-------------------------------------------------------
Operating income 198,182 43,506 27,629 - 269,317
-------------------------------------------------------
Income taxes 20,297 - - 16,721 37,018
-------------------------------------------------------
Net income $ 195,523 $ 43,506 $ 27,629 $(16,721) $ 249,937
-------------------------------------------------------
Six months ended
March 31, 2007
------------------------------------------------------------
Reconciliation items
---------------------------------------
Restructuring
charges
in-process
research
Amortization and
of develop- Equity
purchased ment based
intangible and compensation Tax Non-
GAAP assets other expense effect GAAP
-----------------------------------------------------------
Operating
expenses:
Cost of
license $ 2,085 $ - $ - $ - $ - $ 2,085
Cost of
service 881,981 - - (12,327) - 869,654
Research
and
development 118,202 - - (3,365) - 114,837
Selling,
general and
administ-
rative 180,450 - - (11,599) - 168,851
Amortization
of purchased
intangible
assets 36,610 (36,610) - - - -
Restructuring
charges,
in-process
research and
development
and other 6,761 - (6,761) - - -
------------------------------------------------------------
Total
operating
expenses 1,226,089 (36,610) (6,761) (27,291) - 1,155,427
------------------------------------------------------------
Operating
income 171,304 36,610 6,761 27,291 - 241,966
------------------------------------------------------------
Income taxes 13,429 - - - 18,588 32,017
------------------------------------------------------------
Net income $ 180,513 $36,610 $ 6,761 $27,291 $(18,588) $232,587
------------------------------------------------------------
AMDOCS LIMITED
Condensed Consolidated Balance Sheets
(in thousands)
As of
--------------------------------
March 31, September 30,
2008 2007
-------------- ----------------
ASSETS
Current assets
Cash, cash equivalents and short-term
interest-bearing investments $1,181,797 $1,179,280
Accounts receivable, net, including
unbilled of $41,300 and $43,870
respectively (*) 568,503 473,847
Deferred income taxes and taxes
receivable 108,959 117,623
Prepaid expenses and other current
assets 113,463 98,746
-------------- ----------------
Total current assets 1,972,722 1,869,496
Equipment, vehicles and leasehold
improvements, net 296,288 283,839
Goodwill and other intangible assets,
net 1,772,346 1,792,588
Other noncurrent assets (*) 464,047 399,427
-------------- ----------------
Total assets $4,505,403 $4,345,350
============== ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accruals $ 581,437 $ 592,937
Short-term portion of capital lease
obligations and other financing
arrangements 2,178 2,055
Deferred revenue (*) 209,226 174,526
Deferred income taxes and taxes payable 35,882 205,960
-------------- ----------------
Total current liabilities 828,723 975,478
0.50% Convertible notes 450,000 450,000
Noncurrent liabilities and other 502,986 319,629
Shareholders' equity 2,723,694 2,600,243
-------------- ----------------
Total liabilities and shareholders'
equity $4,505,403 $4,345,350
============== ================
(*) Certain amounts in prior period financial statements have been
reclassified to conform to the current period presentation.
SOURCE Amdocs Limited
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