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Fourth Quarter Results for Fiscal 2015
Nov 10, 2015
Expects Fiscal 2016 Revenue Growth of 2.0-6.0% YoY in Constant Currency and 1.0-5.0% YoY as Reported
Quarterly Cash Dividend to be Raised From
Key highlights:
-
Fourth fiscal quarter revenue of
$927 million , within the$915-$955 million guidance range. Revenue was slightly above the midpoint of expectations, excluding foreign currency movements. Foreign currency movements negatively affected revenue by approximately$9 million relative to the third quarter of fiscal 2015 -
Fourth fiscal quarter diluted non-GAAP EPS of
$0.84 , in line with the high-end of the$0.79-$0.85 guidance range, excluding amortization of purchased intangible assets and other acquisition-related costs, nonrecurring restructuring charges associated with the acquisition of the Comverse BSS assets, and equity-based compensation expense, net of related tax effects -
Fourth fiscal quarter non-GAAP operating income of
$157 million ; non-GAAP operating margin of 16.9%; GAAP operating income of$110 million -
Diluted GAAP EPS of
$0.59 for the fourth fiscal quarter, in line with the high-end of the$0.49-$0.59 guidance range -
Strong free cash flow of
$180 million for the fourth fiscal quarter -
Repurchased
$182 million of ordinary shares during the fourth fiscal quarter -
Twelve-month backlog of
$3.08 billion at the end of the fourth fiscal quarter, up$70 million from the end of the third quarter of fiscal 2015 -
The board of directors approved a
$0.17 per share quarterly cash dividend to be paid onJanuary 15, 2016 , and, subject to shareholders' approval at theFebruary 2016 annual general meeting of shareholders, an increase in the quarterly cash dividend to$0.195 per share, anticipated to be paid inApril 2016 -
First quarter fiscal 2016 guidance: Expected revenue of approximately
$905-$945 million . Expected diluted non-GAAP EPS of approximately$0.82-$0.88 , excluding amortization of purchased intangible assets and other acquisition-related costs, and approximately$0.09-$0.10 per share of equity-based compensation expense, net of related tax effects. Expected diluted GAAP EPS of approximately$0.59-$0.67 - Fiscal 2016 guidance: Expected revenue growth of 2.0-6.0% in constant currency and 1.0-5.0% as reported, including a negative impact from foreign currency movements of approximately 1%, and non-GAAP diluted earnings per share growth of roughly 3.5-7.5%, including the impact of anticipated share repurchase activity over the course of the fiscal year
"We concluded fiscal 2015 with another solid quarter. Revenue was slightly above the mid-point of our expectations after adjusting for the negative impact of foreign currencies, and the quarter included another record contribution in our Rest-of-World markets where we delivered growth of 27% for the full year. As we previously anticipated, uncertainty resulting from customer consolidation activity continued to impact our performance in
Gelman continued, "Our win rate was strong across all regions in fiscal 2015 and included several significant new awards in the fourth quarter. We are delighted to announce today that Vodafone UK has selected
Gelman concluded, "Looking into fiscal 2016, we expect to deliver non-GAAP earnings per share growth of 3.5% to 7.5%. This outlook takes into consideration many macro and industry specific risks and unknowns, including uncertainties related to
Financial Discussion of Fourth Fiscal Quarter Results
Free cash flow was
Twelve-month backlog, which includes anticipated revenue related to contracts, estimated revenue from managed services contracts, letters of intent, maintenance and estimated on-going support activities, was
Fiscal Year 2015 Results
For the fiscal year ended
Financial Outlook
Diluted earnings per share on a non-GAAP basis for the first fiscal quarter is expected to be
Quarterly Cash Dividend Program
On
Conference Call Details
Non-GAAP Financial Measures
This release includes non-GAAP diluted earnings per share and other non-GAAP financial measures, including free cash flow, non-GAAP cost of revenue, non-GAAP research and development, non-GAAP selling, general and administrative, non-GAAP operating income, non-GAAP operating margin, non-GAAP interest and other expense, net, non-GAAP income taxes, non-GAAP net income and non-GAAP diluted earnings per share growth. These non-GAAP measures exclude the following items:
- amortization of purchased intangible assets and other acquisition-related costs;
- changes in fair value of certain acquisition-related liabilities;
- nonrecurring restructuring charges associated with the Comverse acquisition;
- equity-based compensation expense; and
- tax effects related to the above.
These non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles.
For its internal budgeting process and in monitoring the results of the business,
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This press release includes information that constitutes forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995, including statements about
| AMDOCS LIMITED | ||||
| Consolidated Statements of Income | ||||
| (in thousands, except per share data) | ||||
| Three months ended | Fiscal year ended | |||
| September 30, | September 30, | |||
| 2015 | 2014 | 2015 | 2014 | |
| Revenue | $926,776 | $900,261 | $3,643,538 | $3,563,637 |
| Operating expenses: | ||||
| Cost of revenue | 603,105 | 581,601 | 2,349,488 | 2,306,892 |
| Research and development | 65,900 | 67,604 | 254,944 | 257,896 |
| Selling, general and administrative | 111,191 | 110,056 | 440,085 | 445,134 |
| Amortization of purchased intangible assets and other | 23,880 | 14,893 | 70,073 | 58,067 |
| Restructuring charges | 13,000 | -- | 13,000 | -- |
| 817,076 | 774,154 | 3,127,590 | 3,067,989 | |
| Operating income | 109,700 | 126,107 | 515,948 | 495,648 |
| Interest and other expense, net | 1,375 | 2,038 | 2,544 | 6,098 |
| Income before income taxes | 108,325 | 124,069 | 513,404 | 489,550 |
| Income taxes | 17,195 | 23,566 | 67,241 | 67,428 |
| Net income | $91,130 | $100,503 | $446,163 | $422,122 |
| Basic earnings per share | $0.60 | $0.64 | $2.89 | $2.65 |
| Diluted earnings per share | $0.59 | $0.63 | $2.85 | $2.62 |
| Basic weighted average number of shares outstanding | 152,601 | 157,346 | 154,423 | 159,012 |
| Diluted weighted average number of shares outstanding | 155,201 | 159,667 | 156,809 | 161,366 |
| Cash dividends declared per share | $0.170 | $0.155 | $0.665 | $0.595 |
| AMDOCS LIMITED | ||||
| Selected Financial Metrics | ||||
| (in thousands, except per share data) | ||||
| Three months ended | Fiscal year ended | |||
| September 30, | September 30, | |||
| 2015 | 2014 | 2015 | 2014 | |
| Revenue | $926,776 | $900,261 | $3,643,538 | $3,563,637 |
| Non-GAAP operating income | 156,917 | 151,558 | 618,675 | 598,293 |
| Non-GAAP net income | 130,353 | 124,269 | 529,700 | 509,602 |
| Non-GAAP diluted earnings per share | $0.84 | $0.78 | $3.38 | $3.16 |
| Diluted weighted average number of shares outstanding | 155,201 | 159,667 | 156,809 | 161,366 |
| AMDOCS LIMITED | ||||||
| Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP | ||||||
| (in thousands) | ||||||
| Three months ended | ||||||
| September 30, 2015 | ||||||
| Reconciliation items | ||||||
| GAAP |
Amortization of purchased intangible assets and other |
Equity based compensation expense |
Restructuring charges |
Tax effect | Non-GAAP | |
| Operating expenses: | ||||||
| Cost of revenue | $603,105 | $ -- | $(3,854) | $ -- | $ -- | $599,251 |
| Research and development | 65,900 | -- | (830) | -- | -- | 65,070 |
| Selling, general and administrative | 111,191 | -- | (5,653) | -- | -- | 105,538 |
| Amortization of purchased intangible assets and other | 23,880 | (23,880) | -- | -- | -- | -- |
| Restructuring charges | 13,000 | -- | -- | (13,000) | -- | -- |
| Total operating expenses | 817,076 | (23,880) | (10,337) | (13,000) | -- | 769,859 |
| Operating income | 109,700 | 23,880 | 10,337 | 13,000 | -- | 156,917 |
| Income taxes | 17,195 | -- | -- | -- | 7,994 | 25,189 |
| Net income | $91,130 | $23,880 | $10,337 | $13,000 | $(7,994) | $130,353 |
| Three months ended | ||||||
| September 30, 2014 | ||||||
| Reconciliation items | ||||||
| GAAP |
Amortization of purchased intangible assets and other |
Equity based compensation expense |
Changes in fair value of certain acquisition- related liabilities |
Tax effect | Non-GAAP | |
| Operating expenses: | ||||||
| Cost of revenue | $581,601 | $ -- | $(4,276) | $ -- | $ -- | $577,325 |
| Research and development | 67,604 | -- | (914) | -- | -- | 66,690 |
| Selling, general and administrative | 110,056 | -- | (5,368) | -- | -- | 104,688 |
| Amortization of purchased intangible assets and other | 14,893 | (14,893) | -- | -- | -- | -- |
| Total operating expenses | 774,154 | (14,893) | (10,558) | -- | -- | 748,703 |
| Operating income | 126,107 | 14,893 | 10,558 | -- | -- | 151,558 |
| Interest and other expense, net | 2,038 | -- | -- | (3,921) | -- | (1,883) |
| Income taxes | 23,566 | -- | -- | -- | 5,606 | 29,172 |
| Net income | $100,503 | $14,893 | $10,558 | $3,921 | $(5,606) | $124,269 |
| AMDOCS LIMITED | |||||||
| Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP | |||||||
| (in thousands) | |||||||
| Fiscal year ended | |||||||
| September 30, 2015 | |||||||
| Reconciliation items | |||||||
| GAAP |
Amortization of purchased intangible assets and other |
Equity based compensation expense |
Restructuring charges |
Changes in fair value of certain acquisition- related liabilities |
Tax effect | Non-GAAP | |
| Operating expenses: | |||||||
| Cost of revenue | $2,349,488 | $ -- | $(15,621) | $ -- | $24,906 | $ -- | $2,358,773 |
| Research and development | 254,944 | -- | (3,400) | -- | -- | -- | 251,544 |
| Selling, general and administrative | 440,085 | -- | (25,539) | -- | -- | -- | 414,546 |
| Amortization of purchased intangible assets and other | 70,073 | (70,073) | -- | -- | -- | -- | -- |
| Restructuring charges | 13,000 | -- | -- | (13,000) | -- | -- | -- |
| Total operating expenses | 3,127,590 | (70,073) | (44,560) | (13,000) | 24,906 | -- | 3,024,863 |
| Operating income | 515,948 | 70,073 | 44,560 | 13,000 | (24,906) | -- | 618,675 |
| Interest and other expense, net | 2,544 | -- | -- | -- | 3,921 | -- | 6,465 |
| Income taxes | 67,241 | -- | -- | -- | -- | 15,269 | 82,510 |
| Net income | $446,163 | $70,073 | $44,560 | $13,000 | $(28,827) | $(15,269) | $529,700 |
| Fiscal year ended | ||||||
| September 30, 2014 | ||||||
| Reconciliation items | ||||||
| GAAP |
Amortization of purchased intangible assets and other |
Equity based compensation expense |
Changes in fair value of certain acquisition- related liabilities |
Tax effect | Non-GAAP | |
| Operating expenses: | ||||||
| Cost of revenue | $2,306,892 | $ -- | $(17,496) | $ -- | $ -- | $2,289,396 |
| Research and development | 257,896 | -- | (3,599) | -- | -- | 254,297 |
| Selling, general and administrative | 445,134 | -- | (23,483) | -- | -- | 421,651 |
| Amortization of purchased intangible assets and other | 58,067 | (58,067) | -- | -- | -- | -- |
| Total operating expenses | 3,067,989 | (58,067) | (44,578) | -- | -- | 2,965,344 |
| Operating income | 495,648 | 58,067 | 44,578 | -- | -- | 598,293 |
| Interest and other expense, net | 6,098 | -- | -- | (3,921) | -- | 2,177 |
| Income taxes | 67,428 | -- | -- | -- | 19,086 | 86,514 |
| Net income | $422,122 | $58,067 | $44,578 | $3,921 | $(19,086) | $509,602 |
| AMDOCS LIMITED | ||
| Condensed Consolidated Balance Sheets | ||
| (in thousands) | ||
| As of | ||
|
September 30, 2015 |
September 30, 2014 |
|
| ASSETS | ||
| Current assets | ||
| Cash, cash equivalents and short-term interest-bearing investments | $1,354,012 | $1,424,465 |
| Accounts receivable, net, including unbilled of $80,197 and $134,523, respectively | 714,784 | 715,837 |
| Deferred income taxes and taxes receivable | 193,207 | 148,346 |
| Prepaid expenses and other current assets | 116,159 | 135,326 |
| Total current assets | 2,378,162 | 2,423,974 |
| Equipment and leasehold improvements, net | 309,320 | 288,956 |
| Goodwill and other intangible assets, net | 2,301,610 | 2,106,452 |
| Other noncurrent assets | 335,560 | 365,895 |
| Total assets | $5,324,652 | $5,185,277 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Current liabilities | ||
| Accounts payable, accruals and other | $871,555 | $785,548 |
| Short-term financing arrangements | 220,000 | 210,000 |
| Deferred revenue | 198,470 | 156,743 |
| Deferred income taxes and taxes payable | 73,478 | 48,456 |
| Total current liabilities | 1,363,503 | 1,200,747 |
| Other noncurrent liabilities | 554,307 | 588,694 |
| Shareholders' equity | 3,406,842 | 3,395,836 |
| Total liabilities and shareholders' equity | $5,324,652 | $5,185,277 |
| AMDOCS LIMITED | ||
| Consolidated Statements of Cash Flows | ||
| (in thousands) | ||
| Fiscal year ended September 30, | ||
| 2015 | 2014 | |
| Cash Flow from Operating Activities: | ||
| Net income | $446,163 | $422,122 |
| Reconciliation of net income to net cash provided by operating activities: | ||
| Depreciation and amortization | 174,795 | 162,772 |
| Equity-based compensation expense | 44,560 | 44,578 |
| Deferred income taxes | (26,887) | (6,510) |
| Excess tax benefit from equity-based compensation | (5,949) | (3,925) |
| Loss from short-term interest-bearing investments | 476 | 1,023 |
| Net changes in operating assets and liabilities, net of amounts acquired: | ||
| Accounts receivable | 39,829 | 5,540 |
| Prepaid expenses and other current assets | 22,690 | (1,769) |
| Other noncurrent assets | 7,406 | 7,434 |
| Accounts payable, accrued expenses and accrued personnel | 63,894 | 73,949 |
| Deferred revenue | 2,434 | (1,967) |
| Income taxes payable | 23,474 | 1,106 |
| Other noncurrent liabilities | (20,263) | 4,905 |
| Net cash provided by operating activities | 772,622 | 709,258 |
| Cash Flow from Investing Activities: | ||
| Payments for purchase of equipment and leasehold improvements, net | (120,503) | (111,569) |
| Proceeds from sale of short-term interest-bearing investments | 252,818 | 379,484 |
| Purchase of short-term interest-bearing investments | (250,184) | (389,800) |
| Net cash paid for acquisitions | (263,193) | (180,540) |
| Other | 1,408 | 3,872 |
| Net cash used in investing activities | (379,654) | (298,553) |
| Cash Flow from Financing Activities: | ||
| Borrowings under financing arrangements | 220,000 | 210,000 |
| Payments under financing arrangements | (210,000) | (200,000) |
| Repurchase of shares | (454,020) | (372,014) |
| Proceeds from employee stock options exercised | 78,206 | 128,125 |
| Payments of dividends | (100,790) | (90,939) |
| Excess tax benefit from equity-based compensation | 5,949 | 3,925 |
| Other | (9) | (725) |
| Net cash used in financing activities | (460,664) | (321,628) |
| Net (decrease) increase in cash and cash equivalents | (67,696) | 89,077 |
| Cash and cash equivalents at beginning of period | 1,103,269 | 1,014,192 |
| Cash and cash equivalents at end of period | $1,035,573 | $1,103,269 |
| AMDOCS LIMITED | |||||
| Supplementary Information | |||||
| (in millions) | |||||
| Three months ended | |||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |
| 2015 | 2015 | 2015 | 2014 | 2014 | |
| North America | $626.6 | $623.1 | $646.7 | $659.1 | $662.7 |
| Europe | 115.3 | 102.3 | 97.6 | 106.9 | 105.3 |
| Rest of World | 184.9 | 182.5 | 158.3 | 140.3 | 132.3 |
| Total Revenue | $926.8 | $907.9 | $902.6 | $906.3 | $900.3 |
| Three months ended | |||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |
| 2015 | 2015 | 2015 | 2014 | 2014 | |
| Managed Services Revenue | $466.6 | $460.6 | $448.8 | $467.1 | $436.4 |
| Three months ended | |||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |
| 2015 | 2015 | 2015 | 2014 | 2014 | |
| Customer Experience | |||||
| Solutions | $899.4 | $883.7 | $877.1 | $882.4 | $871.5 |
| Directory | 27.4 | 24.2 | 25.5 | 23.9 | 28.8 |
| Total Revenue | $926.8 | $907.9 | $902.6 | $906.3 | $900.3 |
| As of | |||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |
| 2015 | 2015 | 2015 | 2014 | 2014 | |
| 12-Month Backlog | $3,080 | $3,010 | $3,000 | $3,030 | $3,000 |
CONTACT:Matthew Smith Head of Investor RelationsAmdocs 314-212-8328 E-mail: dox_info@amdocs.com
