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Amdocs Beats Q3 Earnings, Lags Rev

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Amdocs Ltd. (DOX - Free Report) reported mixed financial results for the third quarter of fiscal 2013. Management stated that AT&T Inc. (T - Free Report) , its major client, significantly contributed to its performance. Additionally, other key North American clients, including United States Cellular Corp. (USM - Free Report) and Comcast Corp. (CMCSA - Free Report) have also played their parts. Amdocs currently has a Zacks Rank #3 (Hold).  

Third-Quarter Results in Details

Quarterly net income, on a GAAP basis, was $119.6 million or 73 cents per share compared with $98.8 million or 59 cents per share in the prior-year quarter. Third-quarter fiscal 2013 adjusted earnings per share of 77 cents were significantly above the Zacks Consensus Estimate of 68 cents. Quarterly total revenue came in at $841.3 million, up 4% year over year, but fell below the Zacks Consensus Estimate of $847 million.  

Amdocs posted gross margin of 35% in the reported quarter compared with 35.7% in the year-ago quarter. Reported operating income was approximately $123.2 million, up 11.9% year over year. Quarterly operating margin was 14.6% compared with 13.6% in the prior-year quarter. At the end of the third quarter of fiscal 2013, total order backlog was $2,830 million compared with $2,760 million at the end of the year-ago quarter. In the reported quarter, Amdocs repurchased shares worth $58 million.

During the first nine months of fiscal 2013, Amdocs generated around $438.8 million in cash from operations compared with $362 million in the comparable prior-year period. Free cash flow in the first nine months of fiscal 2013 stood at $358.7 million compared with $282.8 million in the comparable period a year ago.

At the end of the third quarter of fiscal 2013, Amdocs had approximately $1,090.7 million in cash and marketable securities compared with $1,118.2 million at the end of fiscal 2012. The company had no outstanding debt.

Segment Wise Results

Service revenues were $822.7 million, up 6.2% year over year. License revenues were approximately $18.6 million, down 46% year over year. Technologically, Customer Experience Systems revenues were $803.2 million, up 4.8% year over year while Directory revenues were $38.1 million, down 10.6% year over year. The company’s core Managed Services revenues came in at $417.1 million, down 2.3% year over year.

Geographically, North America generated $619.2 million, up 10.8% year over year. Europe generated $98 million, down 8% year over year, while the Rest of the World contributed the remaining $124.1 million, down 13.6% year over year. Revenues from the emerging markets came in at $101.3 million, down 0.4% year over year.

Financial Outlook

Management expects fourth quarter fiscal 2013 revenues in the range of $830 million–$860 million. Earnings per share, on a GAAP basis, are expected between 50 cents and 58 cents. Moreover, non-GAAP earnings per share, including 4 cents–5 cents per share of equity-based compensation expense, are projected in the range of 60 cents–66 cents. 

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