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Amdocs (DOX) Q2 Earnings Beat Estimates, Revenues Match
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Amdocs (DOX - Free Report) reported better-than-expected results for the second quarter of fiscal 2023.
The company reported second-quarter non-GAAP earnings of $1.47 per share, which surpassed the Zacks Consensus Estimate of $1.46 and came within management’s guidance range of $1.44-$1.50. However, quarterly non-GAAP earnings dropped 4.5% from the year-ago quarter’s earnings of $1.54 per share.
Amdocs reported record revenues of $1.22 billion, which matched the consensus mark and were more than the midpoint of management’s guidance range of $1.200-$1.240 billion. Compared with the year-ago quarter, revenues were up 6.8% on a reported basis and 8.2% on a constant-currency basis.
Amdocs’ top-line performance was primarily driven by continued strength in North America and healthy activity levels among top consumers in Europe. However, foreign currency movements subdued the figure.
North America reported record revenues of $829 million (67.8% of the total revenues), highlighting a 7.4% year-over-year increase. Europe revenues (14.1% of the total revenues) of $171.7 million increased 16.6% year over year. Rest of the World revenues (18.2% of the total revenues) fell 1.5% year over year to $222.6 million.
Managed services revenues grew 8.4% year over year to $718.9 million. The company ended the second quarter of fiscal 2023 with a 12-month backlog of $4.11 billion, up $20 million sequentially and $220 million year over year.
The non-GAAP operating income increased 8% year over year to $217.7 million, while the operating margin expanded 20 basis points to 17.8%. The year-over-year improvement in the non-GAAP operating margin was mainly driven by the company’s consistent project execution and ongoing efficiency gains.
Balance Sheet and Cash Flow
Amdocs had cash and short-term investments of $861.6 million as of Mar 31, 2023 compared with $734.6 million as of Dec 31, 2022.
In the second quarter of fiscal 2023, net cash provided by operating activities was $294.4 million, up from $83.2 million in the previous quarter and $168.9 million in the year-ago period. Free cash flow was $259.4 million compared with the previous quarter’s $49.5 million and the year-earlier quarter’s $121.6 million.
During the first half of fiscal 2023, net cash provided by operating activities was $377.7 million and free cash flow was $308.9 million.
In the fiscal second quarter, the company repurchased shares worth $106 million and paid out $47.7 million in dividends. Amdocs’ board approved the new increased quarterly cash dividend rate of 43.5 cents per share. The dividend will be paid out on Jul 28, 2023, to shareholders of record as of Jun 30.
FY23 Guidance Revised
For fiscal 2023, the company now anticipates revenue growth of 6-8% on a reported basis, tightened from the previous guidance range of 5-9%. On a constant-currency basis, revenues are projected to increase in the band of 7-9% year over year compared with previously estimated 6-10% band.
The updated fiscal 2023 outlook reflects an expected unfavorable foreign currency impact of approximately 1% on a year-over-year basis consistent with the previous forecast. Adjusted earnings are still estimated to grow between 9% and 13%.
For the third quarter of fiscal 2023, the company projects revenues between $1.215 billion and $1.255 billion and adjusted earnings in the range of $1.45-$1.51 per share.
Zacks Rank & Key Picks
Amdocs currently carries a Zacks Rank #3 (Hold). Shares of DOX have gained 17% over the past year.
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Amdocs (DOX) Q2 Earnings Beat Estimates, Revenues Match
Amdocs (DOX - Free Report) reported better-than-expected results for the second quarter of fiscal 2023.
The company reported second-quarter non-GAAP earnings of $1.47 per share, which surpassed the Zacks Consensus Estimate of $1.46 and came within management’s guidance range of $1.44-$1.50. However, quarterly non-GAAP earnings dropped 4.5% from the year-ago quarter’s earnings of $1.54 per share.
Amdocs reported record revenues of $1.22 billion, which matched the consensus mark and were more than the midpoint of management’s guidance range of $1.200-$1.240 billion. Compared with the year-ago quarter, revenues were up 6.8% on a reported basis and 8.2% on a constant-currency basis.
Amdocs Limited Price, Consensus and EPS Surprise
Amdocs Limited price-consensus-eps-surprise-chart | Amdocs Limited Quote
Quarterly Details
Amdocs’ top-line performance was primarily driven by continued strength in North America and healthy activity levels among top consumers in Europe. However, foreign currency movements subdued the figure.
North America reported record revenues of $829 million (67.8% of the total revenues), highlighting a 7.4% year-over-year increase. Europe revenues (14.1% of the total revenues) of $171.7 million increased 16.6% year over year. Rest of the World revenues (18.2% of the total revenues) fell 1.5% year over year to $222.6 million.
Managed services revenues grew 8.4% year over year to $718.9 million. The company ended the second quarter of fiscal 2023 with a 12-month backlog of $4.11 billion, up $20 million sequentially and $220 million year over year.
The non-GAAP operating income increased 8% year over year to $217.7 million, while the operating margin expanded 20 basis points to 17.8%. The year-over-year improvement in the non-GAAP operating margin was mainly driven by the company’s consistent project execution and ongoing efficiency gains.
Balance Sheet and Cash Flow
Amdocs had cash and short-term investments of $861.6 million as of Mar 31, 2023 compared with $734.6 million as of Dec 31, 2022.
In the second quarter of fiscal 2023, net cash provided by operating activities was $294.4 million, up from $83.2 million in the previous quarter and $168.9 million in the year-ago period. Free cash flow was $259.4 million compared with the previous quarter’s $49.5 million and the year-earlier quarter’s $121.6 million.
During the first half of fiscal 2023, net cash provided by operating activities was $377.7 million and free cash flow was $308.9 million.
In the fiscal second quarter, the company repurchased shares worth $106 million and paid out $47.7 million in dividends. Amdocs’ board approved the new increased quarterly cash dividend rate of 43.5 cents per share. The dividend will be paid out on Jul 28, 2023, to shareholders of record as of Jun 30.
FY23 Guidance Revised
For fiscal 2023, the company now anticipates revenue growth of 6-8% on a reported basis, tightened from the previous guidance range of 5-9%. On a constant-currency basis, revenues are projected to increase in the band of 7-9% year over year compared with previously estimated 6-10% band.
The updated fiscal 2023 outlook reflects an expected unfavorable foreign currency impact of approximately 1% on a year-over-year basis consistent with the previous forecast. Adjusted earnings are still estimated to grow between 9% and 13%.
For the third quarter of fiscal 2023, the company projects revenues between $1.215 billion and $1.255 billion and adjusted earnings in the range of $1.45-$1.51 per share.
Zacks Rank & Key Picks
Amdocs currently carries a Zacks Rank #3 (Hold). Shares of DOX have gained 17% over the past year.
Some top-ranked stocks from the broader Computer and Technology sector are Meta Platforms (META - Free Report) , Momo (MOMO - Free Report) and ServiceNow (NOW - Free Report) . While Meta Platforms and Momo sport a Zacks Rank #1 (Strong Buy), ServiceNow carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Meta Platforms' second-quarter 2023 earnings has been revised 14% upward to $2.79 per share over the past 30 days. For 2023, earnings estimates have moved north by 12.1% to $11.76 in the past 30 days.
META’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, missing twice, the average surprise being 15.5%. Shares of the company have gained 23.5% in the past year.
The Zacks Consensus Estimate for Momo’s first-quarter 2023 earnings has been revised southward from 36 cents to 32 cents per share over the past 30 days. For 2023, earnings estimates have moved down by 3 cents to $1.55 in the past 30 days.
MOMO's earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 31.9%. Shares of the company have gained 78.1% in the past year.
The Zacks Consensus Estimate for ServiceNow’s second-quarter 2023 earnings has been revised northward by 11 cents to $2.04 per share over the past 30 days. For 2023, earnings estimates have moved up by 39 cents to $9.54 in the past 30 days.
NOW's earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 10.4%. Shares of the company have inched up 8% in the past year.