Amdocs (DOX) Q1 Earnings Miss Estimates, Revenues Match

Amdocs Limited DOX reported first-quarter fiscal 2024 results, wherein earnings missed the Zacks Consensus Estimate while revenues matched the same. However, both the top and bottom lines marked a year-over-year improvement.

The company reported first-quarter non-GAAP earnings of $1.56 per share, missing the consensus mark by a penny. The non-GAAP earnings per share matched the midpoint of management’s guidance of $1.53-$1.59. Quarterly earnings also increased 7.6% from the year-ago quarter’s $1.45 per share.

Amdocs reported revenues of $1.25 billion, which came in line with the Zacks Consensus Estimate as well as matched the midpoint of management’s guidance range of $1.23-$1.27 billion. Compared with the year-ago quarter, revenues were up 5% on a reported basis and 4.8% on a constant-currency basis.

Amdocs Limited Price, Consensus and EPS Surprise 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.

North America reported record revenues of $838.1 million (67.3% of the total revenues), highlighting a 3% year-over-year increase. Europe revenues (14.6% of the total revenues) of $181.4 million increased 8% year over year. Rest of the World revenues (18.1% of the total revenues) grew 10% year over year to $225.7 million. Our model estimates for North America, Europe and Rest of the World were pegged at $842.5 million, $179.1 million and $223.4 million, suggesting growth of 3.7%, 6.2% and 9.3%, respectively.

Managed services revenues grew 3.2% year over year to $722.5 million. The company ended the first quarter of fiscal 2024 with a 12-month backlog of $4.21 billion, up $60 million sequentially and $120 million year over year. Our model estimates for managed services revenues and backlog were pegged at $727.7 million and $4.20 billion, respectively.

The non-GAAP operating income increased 7.5% year over year to $225 million, while the operating margin expanded 40 basis points to 18.1%. The year-over-year improvement in the non-GAAP operating margin was mainly driven by the company’s continuous focus on improving operational excellence and the adoption of automation and artificial intelligence.

Balance Sheet and Cash Flow

Amdocs had cash and short-term investments of $601 million as of Dec 31, 2023, compared with $742.5 million as of Sep 30, 2023.

In the first quarter of fiscal 2024, net cash provided by operating activities was $182.4 million, down from $272.4 million in the previous quarter and up from $83.2 million in the year-ago period. Free cash flow was $138.6 million compared with the previous quarter’s $245.8 million and the year-earlier quarter’s $49.5 million.

The company repurchased shares worth $159 million in the first quarter of fiscal 2024.

Amdocs paid out $51 million in dividends and repurchased stocks worth $158.5 million during the first quarter of fiscal 2024. The company’s board has approved the next quarterly cash dividends at the rate of 47.9 cents in its February 2024 annual general meeting. The increased quarterly cash dividend will be first paid on Apr 26, 2024, to shareholders of record as of Mar 29, 2024.

FY24 Guidance

For fiscal 2024, the company raised the revenue growth guidance from 1-5% to 1.1-5.1% on a reported basis. On a constant-currency basis, revenues are projected to increase in the range of 1.2-5.2% year over year.

For fiscal 2024, the company has raised the GAAP diluted earnings per share guidance from 11-18% to 13-19.5%. The non-GAAP earnings per share is estimated to grow in the band of 8-12%.

The fiscal 2024 outlook reflects an expected unfavorable foreign currency impact of approximately 0.1% on a year-over-year basis. For fiscal 2024, the non-GAAP operating margin is expected in a range of 18.1-18.7%, the non-GAAP effective tax rate is anticipated in the band of 13-17% and free cash flow is projected at $750 million.

For the second quarter of fiscal 2024, the company projects revenues between $1.225 billion and $1.265 billion and adjusted earnings in the range of $1.53-$1.59 per share.

Zacks Rank and Stocks to Consider

Currently, Amdocs carries a Zacks Rank #3 (Hold). Shares of DOX have declined 2.6% in the past year.

Some better-ranked stocks from the broader technology sector are BlackLine BL, Arista Networks ANET and Dell Technologies DELL, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for BlackLine’s fourth-quarter 2023 earnings has been revised by a penny northward to 55 cents per share in the past 30 days. Shares of BL have lost 20.1% in the past year.

The Zacks Consensus Estimate for Arista’s fourth-quarter 2023 earnings has been revised by a penny northward to $1.70 per share in the past 90 days. Shares of ANET have rallied 96.3% in the past year.

The Zacks Consensus Estimate for DELL's fourth-quarter 2024 earnings per share has been revised northward to $1.73 in the past 30 days. Shares of DELL have surged 96.1% in the past 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.

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