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Amdocs Ltd. (DOX - Analyst Report) reported second quarter of fiscal 2013 financial results. The company has stabilized its business with its major client  AT&T Inc. (T - Analyst Report), limiting a major concern for its business fluctuations. Additionally, in the reported quarter, Amdocs achieved key production milestones in the modernization of United States Cellular Corp. (USM - Analyst Report) and expanded its managed services contract with Comcast Corp. (CMCSA - Analyst Report). Amdocs currently has a Zacks Rank #4 (Sell).  

Second Quarter Results in Details

Quarterly net income, on a GAAP basis, was $104.9 million or 64 cents per share compared with $101.9 million or 60 cents per share in the prior-year quarter. Second-quarter of fiscal 2013 adjusted earnings per share of 68 cents beat the Zacks Consensus Estimate of 66 cents. Second-quarter total revenue came in at $832.9 million, up 3% year over year, but slightly below the Zacks Consensus Estimate of $836 million.  

Amdocs posted gross margin of 35.3% in the reported quarter compared with 35.9% in the year-ago quarter. Reported operating income was approximately $122.9 million, up 11.8% year over year. Quarterly operating margin was 14.8% compared with 13.6% in the prior-year quarter. At the end of the second quarter of fiscal 2013, total order backlog was $2,810 million compared with $2,725 million at the end of the year-ago quarter. In the reported quarter, Amdocs repurchased shares worth $109 million.

During the first half of fiscal 2013, Amdocs generated around $265.5 million in cash from operations compared with $224.5 million in the prior-year period. Free cash flow (cash flow from operations less capital expenditure) in the first half of fiscal 2013 stood at $207.2 million compared with $174.3 million in the prior-year period.

At the end of the second quarter of fiscal 2013, Amdocs had approximately $978.2 million in cash and marketable securities and no outstanding debt on its balance sheet compared with $1,118.2 million of cash and marketable securities and no outstanding debt at the end of fiscal 2012.

Segment Wise Results

Service revenues were $811 million, up 3.6% year over year. License revenues were approximately $21.9 million, down 16.5% year over year. Technologically, Customer Experience Systems revenues were $789.3 million, up 4% year over year while Directory revenues were $43.6 million, down 12.8% year over year. The company’s core Managed Services revenues came in at $439.8 million, up 6.1% year over year.

Geographically, North America generated $601.3 million, up 6.8% year over year, Europe generated $99.3 million, down 11.2% year over year; while the Rest of the World contributed the remaining $132.3 million, down 1.2% year over year. Revenues from the emerging markets came in at $98.1 million, showing an annualized growth of 9.7%.

Financial Outlook

Management expects the revenues of the third quarter of fiscal 2013 to be in the range of $825–$855 million. Earnings per share, on a GAAP basis, are expected to be between 60 cents and 68 cents. Moreover, non-GAAP earnings per share, including 5–6 cents per share of equity-based compensation expense, are projected in the range of 70–76 cents. 

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