Amdocs Beats on Q2 Earnings & Revs - Analyst Blog

Amdocs Ltd. ( DOX ) reported strong financial numbers for the second quarter of fiscal 2014. The quarterly earnings came in at 76 cents a share that surpassed the Zacks Consensus Estimate of 73 cents and up 7.4% from the prior year quarter.

On a GAAP basis, the company reported earnings of 68 cents per share compared with 64 cents per share in the prior-year quarter.

Further Unveiling the Results

Total revenue of this Zacks Rank #3 (Hold) stock came in at $896.9 million, up 7.7% year over year, outpacing the Zacks Consensus Estimate of $892 million.

Amdocs business opportunity in the U.S. is more visible after stabilization of businesses with its major customer AT&T, Inc. ( T ) and renewal of long-term contracts with several leading telecom and cable TV operators.

Recently, AT&T selected Amdocs to help the company achieve its goal of establishing a user-defined network cloud. Telefonica 's ( TEF ) Argentina also chose Amdocs for the alteration of its wireline business support systems (BSS) operations. Also, Sprint Corporation ( S ) extended its management services deal with Amdocs.

Twelve month order backlog at the end of the quarter stood at $2,940 million against $2,890 million at the end of the year-ago quarter.

Amdocs posted a gross margin of 35.0% that contracted 30 basis points from the year-ago quarter. Operating income stood at approximately $123.8 million, up 0.8% year over year, whereas operating margin shriveled 90 basis points to 13.8%.

Segment Wise Results

Service revenues totaled $870.7 million, up 7.4% year over year. License revenues were approximately $26.2 million, up 19.5% year over year. Technologically, Customer Experience Systems revenues came in at $863.6 million, up 4.1% from the year-earlier quarter while Directory revenues were $33.3 million, down 3.2% year over year. The company's core Managed Services revenues stood at $426.3 million, down 0.7% from the prior-year quarter.

Geographically, North America generated $651.7 million, up 3.8% year over year. Europe recorded $113.8 million revenues, down 2.7% year over year, while the Rest of the World contributed $131.4 million, up 10.4% year over year. Revenues from the emerging markets stood at $103.4 million, up 2.7% year over year.

Other Financial Details

In the reported quarter, Amdocs repurchased shares worth $85 million.

During the first six months of fiscal 2014, Amdocs generated around $317.6 million in cash from operations compared with 265.5 million in the comparable period of fiscal 2013. Free cash flow during the first six months of fiscal 2014 stood at $265.6 million, up from $207.2 million in the same period of the last fiscal. At the end of the quarter, Amdocs had approximately $1,108.7 million in cash, cash equivalents and short-term interest-bearing investments compared with $1,326.4 million at the end of fiscal 2013.

Financial Outlook

Management expects revenues in the range of $885-$915 million for the third quarter of fiscal 2014. Earnings per share, on a GAAP basis, are expected between 61 cents and 69 cents. Moreover, non-GAAP earnings per share, including 5-6 cents per share of equity-based compensation expense, are projected in the 80-87 cents range.

For fiscal 2014, total revenue growth is expected to reach the mid-point of its previously guided range of 5%-8% year over year. Non-GAAP earnings per share are projected to rise 6%-9% year over year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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