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Amdocs (DOX) Earnings and Revenues Beat Estimates in Q1

Amdocs Limited DOX started fiscal 2023 on a strong note by reporting better-than-expected results for the first quarter of fiscal 2023. The company reported first-quarter non-GAAP earnings of $1.45 per share, which surpassed the Zacks Consensus Estimate of $1.32 and came ahead of management’s guidance range of $1.29-$1.35.

Quarterly non-GAAP earnings improved 20.8% from the year-ago quarter’s earnings of $1.20 per share. The robust year-over-year growth in the bottom line was mainly driven by the lower effective tax rate and non-GAAP operating margin improvement on higher revenues.

Quarterly Details

Amdocs reported record revenues of $1.19 billion, which came slightly ahead of the consensus mark of $1.18 billion and more than the midpoint of management’s guidance range of $1.155-$1.195 billion. Compared with the year-ago quarter, revenues were up 7.3% on a reported basis and 9.5% on a constant-currency basis.

Amdocs Limited Price, Consensus and EPS Surprise

Amdocs Limited Price, Consensus and EPS Surprise
Amdocs Limited Price, Consensus and EPS Surprise

Amdocs Limited price-consensus-eps-surprise-chart | Amdocs Limited Quote

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Amdocs’ top-line performance was primarily driven by continued strength in North America and healthy activity levels among top consumers in Europe. However, foreign currency movements subdued the figure.

North America reported record revenues of $812.7 million (68.5% of the total revenues), highlighting a 9% year-over-year increase. Europe revenues (14.2% of the total revenues) of $168.7 million increased 18.4% year over year. Rest of the World revenues (17.3% of the total revenues) fell 5.7% year over year to $204.3 million.

Managed services revenues grew 6.1% year over year to $699.8 million. The company ended the first quarter of fiscal 2023 with a 12-month backlog of $4.09 billion, up $120 million sequentially and $260 million year over year.

The non-GAAP operating income increased 8.2% year over year to $209.5 million, while the operating margin expanded 20 bps to 17.7%. The year-over-year improvement in the non-GAAP operating margin was mainly driven by the company’s consistent project execution and ongoing efficiency gains.

Balance Sheet and Cash Flow

Amdocs had cash and short-term investments of $734.6 million as of Dec 31, 2022 compared with $573.4 million as of Sep 30, 2022.

In the first quarter of fiscal 2023, net cash provided by operating activities was $83.2 million, down from $216.9 million in the previous quarter and $204.1 million in the year-ago period. Free cash flow was $49.5 million compared with the previous quarter’s $135 million and the year-earlier quarter’s $146.9 million.

In the fiscal first quarter, the company repurchased shares worth $100 million and paid out $47.7 million in dividends. Amdocs’ board approved the new increased quarterly cash dividend rate of 43.5 cents per share. The dividend will be paid out on Mar 31, 2023, to shareholders of record as of Apr 28.

FY23 Guidance Update

Buoyed by strong first-quarter results, DOX raised its revenue and earnings growth guidance for fiscal 2023. For fiscal 2023, the company now anticipates revenue growth of 5-9% on a reported basis, up from the previous guidance range of 4-8%. However, on a constant-currency basis, revenues are still projected to increase in the band of 6-10% year over year.

The updated fiscal 2023 outlook reflects an expected unfavorable foreign currency impact of approximately 1% on a year-over-year basis compared with the previous forecast of 2%. Meanwhile, adjusted earnings are estimated to grow between 9% and 13% compared with the prior projection of 8-12%.

For the second quarter of fiscal 2023, the company projects revenues between $1.2 billion and $1.24 billion and adjusted earnings in the range of $1.44-$1.50 per share. The outlook reflects an expected favorable foreign currency impact of approximately $4 million compared with the first quarter.

Zacks Rank & Key Picks

Currently, Amdocs carries a Zacks Rank #4 (Sell). Shares of DOX have increased 19.4% over the past year.

Some better-ranked stocks from the broader technology sector are Paylocity Holding PCTY, Zscaler ZS and ServiceNow NOW. Paylocity sports a Zacks Rank #1 (Strong Buy) at present, while Zscaler and ServiceNow each carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Paylocity’s second-quarter fiscal 2023 earnings has remained unchanged at 70 cents per share over the past 60 days. For fiscal 2023, earnings estimates have remained unchanged at $4.05 per share in the past 60 days.

Paylocity's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 51.2%. Shares of PCTY have risen 0.1% in the trailing 12 months.

The Zacks Consensus Estimate for Zscaler's second-quarter fiscal 2023 earnings has been revised 2 cents upward to 29 cents per share over the past 60 days. For fiscal 2023, earnings estimates have moved up by a penny to $1.24 per share in the past 30 days.

ZS’ earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 27.3%. Shares of the company have declined 52.6% over the past year.

The Zacks Consensus Estimate for ServiceNow's first-quarter 2023 earnings has been revised southward by 4 cents to $2.01 per share over the past seven days. For 2023, earnings estimates have moved upward by 19 cents to $9.17 per share in the past seven days.

ServiceNow's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 6.9%. Shares of NOW have plunged 22.4% in the trailing 12 months.

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Amdocs Limited (DOX) : Free Stock Analysis Report

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