Amdocs (DOX) Q4 Earnings and Revenues Meet Estimates, Rise Y/Y

Amdocs Limited DOX reported fourth-quarter fiscal 2023 results, wherein both earnings and revenues matched the Zacks Consensus Estimates. Moreover, both the top and bottom lines marked a year-over-year improvement as well.

The company reported fourth-quarter non-GAAP earnings of $1.42 per share, which matched the consensus mark and came above the midpoint of management’s guidance of $1.38-$1.44. Quarterly earnings also increased 10.1% from the year-ago quarter’s earnings of $1.29 per share.

Amdocs reported record revenues of $1.24 billion, which also came in line with the consensus mark and were above the midpoint of management’s guidance range of $1.22-$1.26 billion. Compared with the year-ago quarter, revenues were up 6.5% on a reported basis and 6.3% 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 $834.4 million (67.2% of the total revenues), highlighting a 5% year-over-year increase. Europe revenues (14.1% of the total revenues) of $175.5 million increased 20% year over year. Rest of the World revenues (18.7% of the total revenues) climbed 3% year over year to $232.6 million. Our model estimates for North America and Europe were pegged at $842.8 million and $173.6 million, suggesting growth of 6.1% and 18.6%, respectively, while the Rest of the World was pegged at $224.6 million, suggesting a decline of 0.5%.

Managed services revenues grew 0.5% year over year to $718 million. The company ended the fourth quarter of fiscal 2023 with a 12-month backlog of $4.15 billion, up $10 million sequentially and $180 million year over year. Our model estimates for managed services revenues and backlog were pegged at $736 million and $4.21 billion, respectively.

The non-GAAP operating income increased 7.7% year over year to $221 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 continuous focus on improving operational excellence.

Balance Sheet and Cash Flow

Amdocs had cash and short-term investments of $742.5 million as of Sep 30, 2023 compared with $749.5 million as of Jun 30, 2023.

In the third quarter of fiscal 2023, net cash provided by operating activities was $272.3 million, up from $172.6 million in the previous quarter and $217 million in the year-ago period. Free cash flow was $245.8 million compared with the previous quarter’s $144.2 million and the year-earlier quarter’s $135.1 million. In fiscal 2023, the company generated operating cash flow and free cash flow of $822.6 million and $698.3 million, respectively.

The company repurchased shares worth $155 million in the fourth quarter and $490 million in the fiscal 2023.

Amdocs paid out $52 million in dividends during the fourth quarter and $199.5 million in full fiscal 2023. The company’s board has approved a 10% increase in quarterly cash dividend to 47.9 cents per share from 43.5 cents. The increased quarterly cash dividend will be first paid in April 2024 following the shareholder approval in the February 2024 annual general meeting.

Meanwhile, management has declared a quarterly cash dividend of 43.5 cents per share to be payable on Jan 26, 2024, to shareholders of record as of Dec 29, 2023.

FY24 Guidance

For fiscal 2024, the company anticipates revenue growth of 1-5% on a reported basis. On a constant-currency basis, revenues are projected to increase in the band of 1.2-5.2% year over year.

The fiscal 2024 outlook reflects an expected unfavorable foreign currency impact of approximately 0.9% on a year-over-year basis. Adjusted earnings are estimated to grow in the band of 8-12%.

For the first 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, DOX carries a Zacks Rank #3 (Hold). Shares of the company have declined 7.9% year to date.

Some better-ranked stocks from the broader technology sector are NVIDIA NVDA, NetEase NTES and Asure Software ASUR, 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 NVDA’s third-quarter fiscal 2024 earnings has been revised by 10 cents northward to $3.34 per share in the past 60 days. For fiscal 2024, earnings estimates have increased by 28 cents to $10.74 in the past 60 days.

NVIDIA's earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, while missing the same on one occasion, the average surprise being 9.8%. Shares of NVDA have rallied 214.5% year to date.

The Zacks Consensus Estimate for NetEase's third-quarter 2023 earnings has been revised upward by 8 cents to $1.65 per share in the past 30 days. For fiscal 2023, earnings estimates have increased by 42 cents to $6.96 per share in the past 30 days.

NTES' earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, while missing the same on one occasion, the average surprise being 24.54%. Shares of NTES have gained 54% year to date.

The Zacks Consensus Estimate for Asure Software's third-quarter 2023 earnings has been revised upward by a penny to 6 cents per share in the past 60 days. For fiscal 2023, earnings estimates have increased by 3 cents to 54 cents per share in the past 60 days.

ASUR’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 676.39%. Shares of ASUR have declined 8.5% year to date.

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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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