Amdocs Beats on Q2 Earnings & Revs - Analyst Blog

Amdocs Ltd. DOX reported strong financial numbers for the second quarter of fiscal 2014. The quarterly earnings came in at 76 cents a share that surpassed the Zacks Consensus Estimate of 73 cents and up 7.4% from the prior year quarter.

On a GAAP basis, the company reported earnings of 68 cents per share compared with 64 cents per share in the prior-year quarter.

Further Unveiling the Results

Total revenue of this Zacks Rank #3 (Hold) stock came in at $896.9 million, up 7.7% year over year, outpacing the Zacks Consensus Estimate of $892 million.  

Amdocs business opportunity in the U.S. is more visible after stabilization of businesses with its major customer AT&T, Inc. T and renewal of long-term contracts with several leading telecom and cable TV operators.

Recently, AT&T selected Amdocs to help the company achieve its goal of establishing a user-defined network cloud. Telefonica's TEF Argentina also chose Amdocs for the alteration of its wireline business support systems (BSS) operations. Also, Sprint Corporation S extended its management services deal with Amdocs.

Twelve month order backlog at the end of the quarter stood at $2,940 million against $2,890 million at the end of the year-ago quarter.

Amdocs posted a gross margin of 35.0% that contracted 30 basis points from the year-ago quarter. Operating income stood at approximately $123.8 million, up 0.8% year over year, whereas operating margin shriveled 90 basis points to 13.8%.

Segment Wise Results

Service revenues totaled $870.7 million, up 7.4% year over year. License revenues were approximately $26.2 million, up 19.5% year over year. Technologically, Customer Experience Systems revenues came in at $863.6 million, up 4.1% from the year-earlier quarter while Directory revenues were $33.3 million, down 3.2% year over year. The company's core Managed Services revenues stood at $426.3 million, down 0.7% from the prior-year quarter.

Geographically, North America generated $651.7 million, up 3.8% year over year. Europe recorded $113.8 million revenues, down 2.7% year over year, while the Rest of the World contributed $131.4 million, up 10.4% year over year. Revenues from the emerging markets stood at $103.4 million, up 2.7% year over year.

Other Financial Details

In the reported quarter, Amdocs repurchased shares worth $85 million.

During the first six months of fiscal 2014, Amdocs generated around $317.6 million in cash from operations compared with 265.5 million in the comparable period of fiscal 2013. Free cash flow during the first six months of fiscal 2014 stood at $265.6 million, up from $207.2 million in the same period of the last fiscal. At the end of the quarter, Amdocs had approximately $1,108.7 million in cash, cash equivalents and short-term interest-bearing investments compared with $1,326.4 million at the end of fiscal 2013.

Financial Outlook

Management expects revenues in the range of $885–$915 million for the third 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 growth is expected to reach the mid-point of its previously guided range of 5%-8% year over year. Non-GAAP earnings per share are projected to rise 6%-9% year over year.