Amdocs (DOX) Misses Q4 Earnings and Revenue Estimates

Amdocs Ltd. (DOX) reported financial numbers for the fourth quarter of fiscal 2014 wherein quarterly earnings of 73 cents per share missed the Zacks Consensus Estimate of 74 cents.

On a GAAP basis, the company reported net income of $100.5 million or 63 cents per share compared with $89 million or 54 cents per share in the prior-year quarter.

Result Details

Total revenue of this Zacks Rank #3 (Hold) stock came in at $900.3 million, up 6.5% year over year, but below the Zacks Consensus Estimate of $909 million.

Amdocs’ business opportunities in the U.S. are more visible after the stabilization of business with major customer, AT&T, Inc. (T), and the renewal of long-term contracts with several leading telecom and cable TV operators.

Earlier, 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 system (BSS) operations. Also, Sprint Corporation (S) extended its management services deal with Amdocs.

Twelve-month order backlog at the end of the reported quarter stood at $3 billion, increasing by $30 million from the end of the prior quarter.

Amdocs posted a gross margin of 35.4% against 35.4% in the year-ago quarter. Operating income stood at approximately $126.1 million, up 2.6% year over year, whereas operating margin contracted 50 basis points to 14%.

Segment Wise Results

Service revenues totaled $873.7 million, up 6.2% year over year. License revenues were approximately $26.6 million, up 19.8% year over year. Technologically, Customer Experience Solution revenues came in at $871.5 million, nearly flat with the year-earlier quarter figure while Directory revenues grossed $28.8 million, down 9.1% year over year. The company’s core Managed Service revenues stood at $436.4 million, down 0.4% from the prior-year quarter.

Geographically, North America generated $662.7 million, up 0.2% year over year. Europe recorded $105.3 million revenues, down 8.1% year over year, while the Rest of the World contributed $132.3 million, down 6% year over year. Revenues from the emerging markets stood at $101.5 million, up 13.2% year over year.

Other Financial Details

At the end of fiscal 2014, Amdocs generated around $709.3 million in cash from operations compared with 670.5 million at the end of fiscal 2013. Free cash flow, during the same period, stood at $597.7 million against $563.8 million in the same period of the last fiscal. At the end of the fourth quarter, Amdocs had approximately $1,424.5 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 $895–$925 million for the first quarter of fiscal 2015. Earnings per share, on a GAAP basis, are expected between 60 cents and 68 cents while non-GAAP earnings per share are projected in the 77–83 cent range.

For fiscal 2015, total revenue year-over-year growth is expected between the guided range of 2.5–5.5%. Meanwhile, non-GAAP earnings per share are projected to rise 4.5–7.5% year over year.