August 1, 2018
OSS giant Amdocs has broken the $1 billion sales mark for the first time ever in a single quarter, meeting its revenue expectations for the April-to-June quarter, and announced that Shuky Sheffer, president of its global business group, will succeed Eli Gelman as CEO later this year.
Revenues of just over $1 billion were in line with guidance of between $990 million and $1.03 billion, with just over half coming from managed services, 47% from software sales and 1% from telephone directory services.
While sales were up 3.7% year-on-year, Amdocs Ltd. (NYSE: DOX) did not specify to what degree this was boosted by its acquisition of UXP Systems and Vubiquity, although the company previously said Vubiquity would contribute about $100 million in revenues in the first 12 months after closing. (See Amdocs Scoops Up Vubiquity in $224M Deal.)
Amdocs lowered revenue guidance for the full year (ending in September) to growth of 2.2-3.2% from a prior estimate of 2.3-4.3%. In constant currency terms, sales are expected to rise 1.7-2.7%, in line with the midpoint of its prior range of 1.3-3.3%. "If we assume Vubiquity contributes $50 million of revenues in fiscal 2018, the implied organic revenue growth would be approximately 0.9%," said James Crawshaw, a senior analyst with Heavy Reading.
As usual, Amdocs' guidance comes with the caveat that "market dynamics continue to shift rapidly and that it cannot predict all possible outcomes, including those resulting from T-Mobile's proposed merger with Sprint, or from other current and potential customer consolidation activity in North America." According to a Seeking Alpha transcript, Gelman noted that "revenue from AT&T will probably decline in a double-digit rate in fiscal 2018."
Adjusted earnings per share (EPS) for the quarter were in line with guidance, while GAAP EPS of $0.64 was below the $0.71-$0.81 guidance range due to restructuring charges primarily associated with recently completed acquisitions and internal business realignment actions in North America.
Asked about the progress of ONAP, an Amdocs-backed virtualization platform, Gelman said: "We do see overall more opportunities and more initial phases. Unfortunately, all of them start very small. But fortunately, we have more and more major carriers, especially the early adopters because the people that make the decision now see Amdocs as a major contribution to their journey into NFV. So I think that there is no question about NFV. I think we have a better share than anyone has in cooperation with these companies. And we see uptick in the number of activities we have."
Separately, Amdocs announced that Gelman will retire at the end of September after eight years in the role and 31 with the company. He will be replaced by Shuky Sheffer, a senior vice president and head of the global business group, who has worked at Amdocs for more than 20 years.
Amdocs also announced deals to support Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s SD-WAN service with its "portfolio of orchestration, fulfillment and automation capabilities" and to supply Telstra Corp. Ltd. (ASX: TLS; NZK: TLS) with a next generation OSS platform for its B2B line of business.
— The Staff, Light Reading
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