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Amdocs (DOX) Q4 Earnings Beat Estimates, Revenues Up Y/Y

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Amdocs Limited (DOX - Free Report) reported fourth-quarter fiscal 2020 non-GAAP earnings of $1.23 per share that beat the Zacks Consensus Estimate by 3.4% and increased 13.9% year over year.

Revenues of $1.05 billion also surpassed the consensus mark by 1.8% and were up 2.2% year over year. At constant currency (cc), revenues increased 1.8%.

Quarterly Details

North America revenues (64.7% of total revenues) grew 5.8% year over year to $681.6 million in the reported quarter. Moreover, Europe revenues (15.7% of total revenues) of $165.3 million increased 5.9% year over year.

However, Rest of the World revenues (19.6% of total revenues) declined 10.4% year over year to $206 million.

Managed services revenues (58% of total revenues) climbed 4.7% year over year to $610.5 million.
 

Amdocs Limited Price, Consensus and EPS Surprise

 

Amdocs Limited Price, Consensus and EPS Surprise

Amdocs Limited price-consensus-eps-surprise-chart | Amdocs Limited Quote

The company ended the quarter with a 12-month backlog of $3.62 billion, up 3.7% year over year.

Meanwhile, research & development expenses as percentage of revenues increased 40 basis points (bps) on a year-over-year basis to 7.1%.

However, selling, general & administrative expenses as percentage of revenues decreased 220 bps year over year to 9.7%.

Operating margin contracted 10 bps year over year to 17.2%.

Balance Sheet and Cash Flow

Amdocs had cash and cash equivalents of $983.9 million as of Sep 30, 2020, up from $1.19 billion on Jun 30, 2020.

Cash flow from operating activities was $204.7 million, up from $186.7 million recorded in the previous quarter and $213.6 million in the year-ago quarter.

Free cash flow was $145.1 million compared with the previous quarter’s $145.4 million and $179.3 million reported in the year-ago quarter.

During fiscal fourth quarter, the company repurchased shares worth $91 million. Amdocs’ board of directors approved the payment of a quarterly dividend of $0.3275 per share. The dividends will be paid out on Jan 22, 2021.

Amdocs’ board also approved a 10% increase in quarterly cash dividend payment to 36 cents per share.

Key Developments

Amdocs completed the acquisition of Openet during the reported quarter. The company also won a contract from AT&T (T - Free Report) which selected Openet’s 5G solution to quickly launch and monetize new 5G services on the cloud.

Moreover, it signed a new multi-year strategic agreement with Amazon’s (AMZN - Free Report) cloud arm AWS to bring its cloud-native BSS offerings and wide range of services to jointly address the rapidly growing cloud market.

Moreover, Amdocs announced the divestiture of OpenMarket for approximately $300 million cash with Infobip.

Guidance

For the first quarter of fiscal 2021, revenues are expected between $1.055 billion and $1.095 billion.

Non-GAAP earnings are projected to be $1.09-$1.15 per share.

Amdocs expects fiscal 2021 revenues to grow between 4% and 8% year over year. At cc, revenues are expected to grow in the 3.5-7.5% range. Openet is expected to contribute 1.5% growth, while favorable forex is likely to add 0.5%.

Adjusted earnings are estimated to grow between 5% and 9%.

The company expects free cash flow to be roughly $470 million.

Zacks Rank & A Key Pick

Amdocs currently carries a Zacks Rank #3 (Hold).

NVIDIA (NVDA - Free Report) is a better-ranked stock in the broader computer & technology sector carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

NVIDIA is set to report quarterly results on Nov 18.

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