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Amdocs (DOX) Beats Q2 Earnings Estimates, Guidance Revised

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Business software & services provider Amdocs Limited (DOX - Free Report) reported relatively healthy second-quarter fiscal 2017 results with modest year-over-year increase in revenues and earnings. GAAP earnings for the quarter improved to $112.6 million or 76 cents a share from $107.7 million or 71 cents per share in the year-earlier quarter.

Non-GAAP earnings were $139.2 million or 94 cents per share compared with $140.2 million or 92 cents in the year-ago quarter. Adjusted earnings for the reported quarter were 88 cents per share, which beat the Zacks Consensus Estimate by a penny.

Quarterly Performance

Amdocs’ total revenue came in at $966.0 million, up 4.3% year over year. The improvement resulted from impressive execution across multiple dimensions of its business and continuous project wins. The top line exceeded the Zacks Consensus Estimate of $962 million. The company’s 12-month order backlog at the end of the fiscal second quarter was $3.21 billion, up $30 million from the prior quarter.

Amdocs Limited Price, Consensus and EPS Surprise

 

Amdocs Limited Price, Consensus and EPS Surprise | Amdocs Limited Quote

Non-GAAP operating income was approximately $166.0 million compared with $158.0 million in the year-ago quarter. Non-GAAP operating margin for the quarter was 17.2%, up 10 basis points year over year.

Segmental Results

Managed Service revenues totaled $511.1 million compared with $501.1 million in the year-earlier quarter. Customer Experience revenues improved to $948.6 million from $902.3 million in the year-ago quarter. Systems Directory revenues were $17.4 million, down from $23.6 million in the prior-year quarter.

Geographically, revenues from North America were $636.3 million, up 8.5% year over year. Revenues from Europe decreased to $115.4 million from $139.2 million in the prior-year quarter while that from the Rest of the World increased to $214.3 million from $200.3 million.

Liquidity

At the quarter end, cash, cash equivalents and short-term interest-bearing investments were $1,149.5 million. Cash flow from operations for the first half of fiscal 2017 was $275.4 million compared with $316.7 million in the year-ago period. The company repurchased $80 million worth of shares during the quarter.
 
Updated Guidance

For fiscal 2017, Amdocs updated its guidance on favorable growth dynamics and strength in the business model. The company currently expects revenues to be up 3–5% year over year compared with the earlier projection of 1.5–5.5% growth. The company remains on track to deliver non-GAAP earnings per share (EPS) growth of 4.5–8.5%.

For third-quarter fiscal 2017, management expects revenues in the range of $945–$985 million. EPS on a GAAP basis is expected between 69 cents and 77 cents while non-GAAP EPS is projected in the 93–99 cents range.

Zacks Rank & Stocks to Consider

Currently, Amdocs carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include CSRA Inc. , CoStar Group, Inc. (CSGP - Free Report) and EPAM Systems, Inc. (EPAM - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.  

CSRA has a decent long-term earnings growth expectation of 10%. It delivered a trailing four quarter average positive earnings surprise of 10.3%.

CoStar Group has a healthy long-term earnings growth expectation of 17.5%. It reported a trailing four quarter average positive earnings surprise of 11.3%.

EPAM Systems has a solid long-term earnings growth expectation of 20%. It reported a trailing four quarter average positive earnings surprise of 3.2%.

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