Business News

Amdocs Limited Reports Quarterly Revenue Growth of 14%

Thursday 06. November 2008 - Amdocs Reports Record Annual Revenue of $3.16 Billion

Key highlights:

– Fourth quarter revenue increased to $825 million, in line with guidance

– Fourth quarter non-GAAP operating income of $148 million, an increase of 16% over prior year fourth quarter

– Fourth quarter diluted non-GAAP EPS, excluding acquisition-related costs, restructuring charges and equity-based compensation expense, net of related tax effects, of $0.54; foreign exchange rate losses reflected in interest expense reduced EPS by $0.08 per share

– Diluted GAAP EPS of $0.38 for the quarter

– Strong free cash flow of $145 million for the quarter, comprised of cash flow from operations of $178 million less $33 million in net capital expenditures and other

Amdocs Limited (NYSE:DOX) today reported that for its fiscal fourth quarter ended September 30, 2008, revenue was $825.3 million, an increase of 13.6% from last year’s fourth quarter. Net income on a non-GAAP basis was $117.2 million, or $0.54 per diluted share, compared to non-GAAP net income of $120.7 million, or $0.54 per diluted share, in the fourth quarter of fiscal 2007. Non-GAAP net income excludes amortization of purchased intangible assets, equity-based compensation expenses and restructuring charges of $34.5 million, net of related tax effects, in the fourth quarter of fiscal 2008 and excludes such amortization and compensation expenses of $24.5 million, net of related tax effects, in the fourth quarter of fiscal 2007. The Company’s GAAP net income for the fourth quarter of fiscal 2008 was $82.7 million, or $0.38 per diluted share, compared to GAAP net income of $96.2 million, or $0.43 per diluted share, in the prior year’s fourth quarter.

“Fiscal 2008 was a good year for Amdocs as we achieved record revenues,” said Dov Baharav, chief executive officer of Amdocs Management Limited. “Revenue in the fourth quarter was up 13.6% and non-GAAP operating income rose to $148 million, an increase of 16.4% compared to the prior year fourth quarter. Our earnings per share were adversely impacted by the unprecedented extreme volatility in exchange rates and the rapid strengthening of the U.S. dollar against other currencies, adversely affecting certain balance sheet items denominated in other currencies which reduced fourth quarter earnings per share by $0.08. Absent this, our non-GAAP diluted earnings per share would have been within our guidance range of $0.61 to $0.63.”

In the fourth quarter Amdocs had numerous wins across lines of business and geographies. These wins include new business with Comcast, which will deploy customer care, billing and OSS (operational support systems) products based on Amdocs CES 7.5. Another customer in the cable and satellite market has chosen Amdocs Enterprise Product Catalog. Amdocs signed a six-year managed services agreement to support MetroPCS, a provider of advanced wireless services, using Amdocs CES 7.5 capabilities. In Europe, Amdocs was chosen by Debitel, the largest provider of mobile services in Germany, to provide a single billing platform to support its consolidated operations. Vodafone has selected Amdocs OSS fulfillment products for deployments in key European locations. International Telecommunications Company in the Ukraine has selected Amdocs Compact Convergence offering for real-time charging and service delivery across its CDMA network.

Baharav continued, “The financial volatility that we experienced in the fourth quarter is accompanied by economic uncertainty and these factors are impacting our outlook for fiscal 2009. Amdocs expects that revenue for the first quarter of fiscal 2009 will be approximately $785-$810 million. Foreign exchange in particular is a headwind in the first quarter of fiscal 2009, accounting for all of the decrease in forecasted revenue when compared to the fourth quarter of fiscal 2008. We are not seeing cancellations of existing projects and in fact we have signed some significant new deals in the past few weeks. Our growth engines, including emerging markets, cable and satellite and managed services, are right for this environment. However, our ability to forecast the level of new signings later in the fiscal year is impacted by these unprecedented market conditions. While we cannot today commit to guidance for the full year, we are managing our expenses under the assumption that fiscal 2009 revenue could be flat to low single-digit percentage growth for the year with operating margins similar to what we saw in the fourth quarter. This assumes that foreign exchange rates stay relatively stable compared to mid-October levels and that economic conditions do not deteriorate materially from what we see today.”

As reported, GAAP EPS per diluted share for the fourth quarter of fiscal 2008 was $0.38. Non-GAAP EPS per diluted share was $0.54 for the quarter, (excluding acquisition-related costs which include amortization of purchased intangible assets, and excluding restructuring charges and equity-based compensation expense, net of related tax effects). The excluded pre-tax restructuring charges amounted to approximately $12 million, reducing GAAP EPS per diluted share by $0.04. The charges consist primarily of severance and other employment related obligations incurred in connection with Amdocs’ measures designed to align its operational structure to its expected future growth and to improve efficiency. During the quarter, rapid and large foreign exchange rate changes, especially the strengthening of the U.S. dollar, caused the Company to record foreign exchange rate losses of approximately $17 million net of tax, or $0.08 per diluted share. These losses were primarily due to revaluation of assets and liabilities denominated in other currencies.

For the fiscal year ended September 30, 2008, revenue increased by 11.5% to $3.16 billion. Fiscal 2008 net income on a non-GAAP basis was $499.6 million, or $2.29 per diluted share (excluding acquisition-related costs, which include amortization of purchased intangible assets and in-process research and development write-off, and excluding restructuring charges and equity-based compensation expense, net of related tax effects, of $120.7 million), compared to non-GAAP net income of $473.9 million, or $2.14 per diluted share, in fiscal 2007 (excluding acquisition-related costs, which include amortization of purchased intangible assets, in-process research and development write-off and other, and excluding restructuring charges, and equity-based compensation expense, net of related tax effects, of $108.9 million). The Company’s GAAP net income in fiscal 2008 was $378.9 million, or $1.74 per diluted share, compared to GAAP net income of $364.9 million, or $1.65 per diluted share, in fiscal 2007.

Financial Outlook

Amdocs expects that revenue for the first quarter of fiscal 2009 will be approximately $785-$810 million. Foreign exchange in particular is a headwind in the first quarter of fiscal 2009, accounting for all of the decrease in forecasted revenue when compared to the fourth quarter of fiscal 2008. Amdocs expects diluted earnings per share on a non-GAAP basis for the first quarter to be $0.54-$0.57, excluding acquisition-related costs and approximately $0.05-$0.06 per share of equity-based compensation expense, net of related tax effects. Estimated diluted GAAP EPS will not be known until after preliminary purchase price accounting adjustments for the ChangingWorlds Limited acquisition have been determined.