ST. LOUIS -- Amdocs Limited (NASDAQ:DOX) today reported that for its first fiscal quarter ended December 31, 2016, revenue was $954.7 million, up 1.5% or $14.1 million sequentially from the fourth fiscal quarter of 2016 and up 3.6% as compared to last year’s first fiscal quarter. Revenue for the first fiscal quarter of 2017 includes a negative impact from foreign currency movements of approximately $7 million relative to the fourth quarter of fiscal 2016. The Company's GAAP net income for the first quarter of fiscal 2017 was $97.8 million, or $0.66 per diluted share, compared to GAAP net income of $100.8 million, or $0.66 per diluted share, in the prior fiscal year’s first quarter. Net income on a non-GAAP basis was $133.6 million, or $0.90 per diluted share, compared to non-GAAP net income of $132.0 million, or $0.86 per diluted share, in the first quarter of fiscal 2016. Non-GAAP net income excludes amortization of purchased intangible assets and other acquisition-related costs and equity-based compensation expenses of $35.8 million, net of related tax effects, in the first quarter of fiscal 2017, and excludes such amortization and other acquisition-related costs and equity-based compensation expenses of $31.2 million, net of related tax effects, in the first quarter of fiscal 2016.
First Quarter Results for Fiscal 2017
First fiscal quarter revenue of $955 million, at the midpoint of the $935-$975 million guidance range despite foreign currency movements that negatively affected revenue by approximately $7 million relative to the fourth quarter of fiscal 2016. Revenue was above the midpoint of Amdocs’ guidance, excluding foreign currency movements
Diluted GAAP EPS of $0.66 for the first fiscal quarter, towards the high-end of the $0.59-$0.67 guidance range
First fiscal quarter diluted non-GAAP EPS of $0.90, at the mid-point of the $0.87-$0.93 guidance range (non-GAAP EPS excludes amortization of purchased intangible assets and other acquisition-related costs, and equity-based compensation expense, net of related tax effects)
First fiscal quarter GAAP operating income of $122 million; non-GAAP operating income of $164 million; non-GAAP operating margin of 17.2% Free cash flow of $127 million for the first fiscal quarter
Repurchased $80 million of ordinary shares during the first fiscal quarter Twelve-month backlog of $3.18 billion at the end of the first fiscal quarter, up $10 million from the end of the fourth quarter of fiscal 2016 despite the negative affect of foreign currency movements
The board of directors approved a quarterly cash dividend at the new increased rate of $0.22 per share, as approved at the January 2017 annual general meeting of shareholders, to be paid on April 14, 2017
Second quarter fiscal 2017 guidance: Expected revenue of approximately $940-$980 million. Expected diluted GAAP EPS of approximately $0.66-$0.74. Expected diluted non-GAAP EPS of approximately $0.90-$0.96 (which excludes amortization of purchased intangible assets and other acquisition-related costs and approximately $0.06-$0.07 per share of equity-based compensation expense, net of related tax effects)
Full year fiscal 2017 guidance: expected revenue growth of 2.5-6.5% year-over-year on a constant currency basis, raised from the previous expectation of 2.0-6.0%, and 1.5-5.5% year-over-year as reported, including an anticipated negative impact from foreign currency movements of approximately 1.0% year-over-year. Expected GAAP diluted earnings per share growth of roughly 2.5-8.5% year-over-year and non-GAAP diluted earnings per share growth of roughly 4.5-8.5% year-over-year, including the impact of share repurchase activity anticipated over the course of the fiscal year
“We are pleased with our first quarter results which reflect record revenue above the midpoint of our guidance on a constant currency basis and further signs of stabilization in North America. Our win rate remained high and included our selection for significant transformation projects with Vodafone Italy and a leading communications service provider in Southeast Asia. Additionally, we renewed important managed services arrangements with existing customers, strengthening the base on which to further expand our future scope of business activities. These include five-year services extension agreements with BT, the largest communications service provider in the UK, and Rostelecom, Russia's national service provider,” said Eli Gelman, president and chief executive officer of Amdocs Management Limited.
Gelman continued, “Over the last several months, we have made significant progress in the field of Network Functions Virtualization (NFV). We became the first information technology company to partner with the Linux Foundation to accelerate the global adoption of AT&T’s ECOMP platform by making it available in open source to service providers and cloud developers in 2017. Additionally, Orange Polska and Amdocs jointly announced the industry’s first trial to test and assess open source ECOMP in a live cloud environment, initially for virtual services in Poland, and then globally across the Orange footprint. We believe our selection as technology integrator for this landmark project reflects the unique industry expertise we bring as a result of our co-development of ECOMP with AT&T, and we are excited to validate the capabilities and potential benefits of an ECOMP deployment within the Orange network.”
Gelman concluded, “We are encouraged by our solid start to fiscal 2017, the visibility provided by our unique business model and record twelve-month backlog. We remain focused on delivering consistent execution and maximizing free cash flow, the majority of which we still plan to return to shareholders in fiscal 2017 while retaining capacity for M&A as opportunities arise. Taking everything into consideration, we are on-track to deliver diluted non-GAAP earnings per share growth of 4.5-8.5% for the full fiscal year although we will of course continue to monitor macro and industry specific risks closely, including those which may result from consolidation activity in North America.”
Financial Discussion of First Fiscal Quarter Results
Free cash flow was $127 million for the first quarter of fiscal 2017, comprised of cash flow from operations of $168 million, less $41 million in net capital expenditures and other.
Twelve-month backlog, which includes anticipated revenue related to contracts, estimated revenue from managed services contracts, letters of intent, maintenance and estimated on-going support activities, was $3.18 billion at the end of the first quarter of fiscal 2017, up $10 million from the end of the prior quarter.
Amdocs expects that revenue for the second quarter of fiscal 2017 will be approximately $940-$980 million. Embedded within this guidance is an immaterial sequential impact from foreign currency fluctuations as compared to the first quarter of fiscal 2017. This outlook takes into consideration the company’s expectations regarding macro and industry specific risks and various uncertainties and certain assumptions that we will discuss on our earnings conference call. However, Amdocs notes that it cannot predict all possible outcomes, including those resulting from AT&T’s proposed merger with Time Warner or from other current and potential customer consolidation activity in North America.
Amdocs estimates GAAP diluted earnings per share for the second fiscal quarter of 2017 will be $0.66-$0.74. Diluted earnings per share on a non-GAAP basis for the second quarter of fiscal 2017 is expected to be $0.90-$0.96, excluding amortization of purchased intangible assets and other acquisition-related costs and approximately $0.06-$0.07 per share of equity-based compensation expense, net of related tax effects.
Quarterly Cash Dividend Program
On February 1, 2017, the Board approved the Company’s next quarterly cash dividend payment at the new rate of $0.22 per share and set March 31, 2017 as the record date for determining the shareholders entitled to receive the dividend, which will be payable on April 14, 2017.
Amdocs Ltd. (NYSE: DOX)