ST. LOUIS – Amdocs Limited today reported operating results for the three months ended September 30, 2020.
"I am pleased to report a return to sequential revenue growth in our fourth fiscal quarter, primarily driven by healthy activity levels in North America and the ramp-up of new customer engagements in Europe, where we had our best-ever performance. At the operating level, we accelerated our R&D investments while maintaining consistent project execution and stable profitability. Amid the ongoing global pandemic, our sales momentum also accelerated, as reflected in our record 12-month backlog which grew $140 million sequentially and 3.7% year-over-year," said Shuky Sheffer, president and chief executive officer of Amdocs Management Limited.
Sheffer continued, "Over the last few months, we have taken several steps to accelerate our growth strategy around 5G and the cloud. The post-merger integration of Openet is proceeding well and we are happy to report a new award at AT&T, which has selected Openet's 5G solution to quickly launch and monetize exciting new 5G services on the cloud. Additionally, we have signed a new multi-year strategic agreement with AWS as part of which we will bring our cloud-native BSS offerings and wide range of services to jointly address the rapidly growing cloud market in the coming years. As part of another move to focus on our strategy, we have also signed an agreement for the divestiture of OpenMarket for approximately $300 million cash with Infobip, a company in which One Equity Partners is the primary institutional investor. With this transaction, Amdocs is divesting a non-strategic asset in the mobile messaging domain and remaining laser-focused on our core strategic growth initiatives."
Sheffer concluded, "Turning to our fiscal 2021 outlook, I am happy to report an expected acceleration in growth, with revenue projected to increase at more than twice the rate of last year in constant currency. This outlook is based on the visibility of our record 12-month backlog, the full-year consolidation of Openet and the ramp-up of customer activities across strategic growth areas, including 5G and the cloud."
Revenue for the fourth fiscal quarter ended September 30, 2020 was $1,053 million, up $27 million sequentially from the third fiscal quarter of 2020. Revenue was up 2.2% as reported and 1.8% in constant currency as compared to last year's fourth fiscal quarter. Revenue for the fourth fiscal quarter of 2020 includes a positive impact from foreign currency movements of approximately $11 million relative to the third quarter of fiscal 2020. Revenue was slightly above the midpoint of Amdocs' guidance after adjusting for the positive impact of approximately $7 million of foreign currency movements relative to guidance assumptions and revenue from Openet, which was not included in the fourth quarter guidance range.
Revenue for the fiscal year ended September 30, 2020, was $4.2 billion, up 2.0% from the last fiscal year and consistent with the high-end of Amdocs' guidance range for growth of 1.1% to 2.1% year-over-year as reported. Adjusting for the negative impact of foreign currency movements, revenue was up 2.4% from the last fiscal year and consistent with the high-end of Amdocs' guidance range for growth of 1.6% to 2.6% year-over-year.
Net Income and Earnings Per Share
The Company's GAAP net income for the fourth quarter of fiscal 2020 was $134.5 million, or $1.01 per diluted share, compared to GAAP net income of $122.0 million, or $0.90 per diluted share, in the prior fiscal year's fourth quarter. Net income on a non-GAAP basis was $162.7 million, or $1.23 per diluted share, compared to non-GAAP net income of $147.1 million, or $1.08 per diluted share, in the fourth quarter of fiscal 2019. Non-GAAP net income excludes amortization of purchased intangible assets and other acquisition-related costs, changes in certain acquisitions related liabilities measured at fair value, equity-based compensation expenses and other, net of related tax effects, in the fourth quarter of fiscal 2020 and in the fourth quarter of fiscal 2019.
The Company's GAAP net income in fiscal 2020 was $497.8 million, or $3.71 per diluted share, compared to GAAP net income of $479.4 million, or $3.47 per diluted share, in fiscal 2019. Fiscal 2020 net income on a non-GAAP basis was $595.8 million, or $4.44 per diluted share, compared to non-GAAP net income of $595.1 million, or $4.31 per diluted share, in fiscal 2019. Non-GAAP net income excludes amortization of purchased intangible assets and other acquisition-related costs, changes in certain acquisitions related liabilities measured at fair value, equity-based compensation expenses and other, net of related tax effects, in fiscal years 2020 and 2019.
For further details of reconciliation of selected financial metrics from GAAP to Non-GAAP, please refer to the tables below.
Returning Cash to Shareholders
- Quarterly Cash Dividend Program: On November 10, 2020, the Board approved the Company's next quarterly cash dividend payment of $0.3275 per share and set December 31, 2020 as the record date for determining the shareholders entitled to receive the dividend, which will be payable on January 22, 2021. The Board also approved a 10% increase in the Company's quarterly cash dividend payment to $0.36 per share, which is anticipated to be first paid in April 2021, provided that the increase is approved by shareholders at the January 2021 annual general meeting of shareholders.
- Share Repurchase Activity: Repurchased $91 million of ordinary shares during the fourth quarter of fiscal 2020.
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 $3.62 billion at the end of the fourth quarter of fiscal 2020, up $140 million from the end of the prior quarter and up 3.7% as compared to last year's fourth fiscal quarter.
First Quarter Fiscal 2021 Outlook
- Revenue of approximately $1,055-$1,095 million, assuming approximately $2 million sequential negative impact from foreign currency fluctuations as compared to the fourth quarter of fiscal 2020 and a full quarter revenue contribution from the acquisition of Openet
- GAAP diluted EPS of approximately $0.85-$0.93
- Non-GAAP diluted EPS of approximately $1.09-$1.15, excluding amortization of purchased intangible assets and other acquisition-related costs, changes in certain acquisitions related liabilities measured at fair value, and approximately $0.08-$0.10 per share of equity-based compensation expense, net of related tax effects
Full Year Fiscal 2021 Outlook
- Revenue growth of 4.0%-8.0% year-over-year as reported
- Revenue growth of 3.5%-7.5% year-over-year on a constant currency basis
- Full year fiscal 2021 revenue guidance incorporates roughly 1.5% of growth from the acquisition of Openet, and an expected positive impact from foreign currency fluctuations of about 0.5% year-over-year
- GAAP diluted earnings per share growth of roughly 1.5%-8.5% year-over-year
- Non-GAAP diluted earnings per share growth of roughly 5.0%-9.0% year-over-year, excluding amortization of purchased intangible assets and other acquisition-related costs, changes in certain acquisitions related liabilities measured at fair value, and approximately $0.32-$0.40 per share of equity-based compensation expense, net of related tax effects. The impact of the acquisition of Openet on Amdocs' non-GAAP diluted earnings per share is expected to be neutral in fiscal year 2021, and accretive thereafter
- Free cash flow of approximately $470 million, comprised of cash flow from operations, less net capital expenditures and other
- Normalized free cash flow of approximately $620 million; normalized free cash flow excludes capital expenditure of up to $150 million related to the new campus development in Israel, and other items
- Divestiture of OpenMarket is expected to close within the next few months, at which time the full fiscal year 2021 outlook will be updated, as the current 2021 outlook includes anticipated full year results from OpenMarket
Our first fiscal quarter 2021 and full year fiscal 2021 outlook takes into consideration the Company's current expectations regarding macro and industry specific risks and various uncertainties and certain assumptions that we will discuss on our earnings conference call. However, we note that market dynamics continue to shift rapidly and we cannot predict all possible outcomes, including those resulting from the COVID-19 pandemic, which has created, and continues to create, a significant amount of uncertainty, and from T-Mobile's completed merger with Sprint, or from other current and potential customer consolidation activity.