St. Louis, July 26, 2016: (GLOBE NEWSWIRE)- Amdocs Limited (NASDAQ:DOX) today reported that for its third fiscal quarter ended June 30, 2016, revenue was $930.1 million, up 0.5% or $4.2 million sequentially from the second fiscal quarter of 2016 and up 2.4% as compared to last year’s third fiscal quarter. Revenue for the third fiscal quarter of 2016 includes a positive impact from foreign currency movements of approximately $5 million relative to the second quarter of fiscal 2016. The Company's GAAP net income for the third quarter of fiscal 2016 was $105.1 million, or $0.70 per diluted share, compared to GAAP net income of $107.8 million, or $0.69 per diluted share, in the prior fiscal year’s third quarter. Net income on a non-GAAP basis was $135.6 million, or $0.90 per diluted share, compared to non-GAAP net income of $131.2 million, or $0.84 per diluted share, in the third quarter of fiscal 2015. Non-GAAP net income excludes amortization of purchased intangible assets and other acquisition-related costs and equity-based compensation expenses of $30.5 million, net of related tax effects, in the third quarter of fiscal 2016, and excludes such amortization and other acquisition-related costs and equity-based compensation expenses of $23.4 million, net of related tax effects, in the third quarter of fiscal 2015. 

“We are pleased with our third fiscal quarter performance, which included ongoing signs of stabilization in North America, robust profitability and diluted earnings per share consistent with the high end of our expectations. Additionally, we maintained our high win rate across business lines and geographies in Q3. Demonstrating our strengthening relationship with the Singtel group, we signed a four-year services framework agreement with Globe Telecom, designed to accelerate innovation through strategic consulting and ongoing IT improvements. We also continued to strengthen our market position in Europe where Vodafone Germany selected Amdocs for digital transformation of its sales channels across mobile, fixed, cable TV and Internet lines of business,” said Eli Gelman, president and chief executive officer of Amdocs Management Limited.

Gelman continued, “As we discussed last quarter, AT&T has selected Amdocs as a leading partner to build key components of the Domain 2.0 software program, and we have followed this today by announcing more details regarding our involvement in this highly strategic initiative. Amdocs is uniquely positioned as the integration partner for AT&T’s Enhanced Control, Orchestration, Management and Policy architecture program, more commonly referred to as ECOMP. ECOMP is designed to be the highly sophisticated engine that will operationalize and commercialize network function virtualization services, and is the cornerstone of AT&T’s plan to virtualize 75% of their network by 2020. Additionally, Amdocs will have the right to market the entire solution globally, offering an end-to-end suite of functions and service capabilities to provide support in the industry for the ECOMP platform.”

Gelman concluded, “We enter our fourth fiscal quarter encouraged by our sales momentum and record backlog although we remain cognizant of the many moving parts affecting our outlook. These include the ongoing challenges of the global macroeconomic and industry environment in which we operate. We are laser-focused on our execution and profitability and we are committed to returning roughly 100% of our free cash flow to shareholders over the second half of fiscal 2016. Taking all these factors into consideration, we are reiterating our expectation for diluted non-GAAP earnings per share growth towards the midpoint of our previously guided range of 3.5% to 7.5% for the full fiscal year.”

Financial Discussion of Third Fiscal Quarter Results

Free cash flow was $117 million for the third quarter of fiscal 2016, comprised of cash flow from operations of $151 million, less $34 million in net capital expenditures and other.

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 $3.11 billion at the end of the third quarter of fiscal 2016, up $10 million from the end of the prior quarter.

Financial Outlook

Amdocs expects that revenue for the fourth quarter of fiscal 2016 will be approximately $920-$960 million. Embedded within this guidance is an immaterial sequential impact from foreign currency fluctuations as compared to the third quarter of fiscal 2016. This outlook takes into consideration the company’s expectations regarding macro and industry specific risks and various uncertainties resulting from current and potential customer consolidation activity in North America. However, Amdocs notes that it cannot predict all possible outcomes.

Amdocs estimates GAAP diluted earnings per share for the fourth fiscal quarter of 2016 will be $0.66-$0.74. Diluted earnings per share on a non-GAAP basis for the fourth quarter of fiscal 2016 is expected to be $0.85-$0.91, excluding amortization of purchased intangible assets and other acquisition-related costs and approximately $0.05-$0.06 per share of equity-based compensation expense, net of related tax effects.

Quarterly Cash Dividend Program

On July 26, 2016, the Board approved the Company’s next quarterly cash dividend payment of $0.195 per share and set September 30, 2016 as the record date for determining the shareholders entitled to receive the dividend, which will be payable on October 21, 2016.

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 effective tax rate, 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; - Equity-based compensation expense; - 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. Amdocs believes that non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with Amdocs’ results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Amdocs’ results of operations in conjunction with the corresponding GAAP measures.

Amdocs believes that the presentation of non-GAAP diluted earnings per share and other 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 effective tax rate, non-GAAP net income and non-GAAP diluted earnings per share growth when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and results of operations, as well as the net amount of cash generated by its business operations after taking into account capital spending required to maintain or expand the business. For its internal budgeting process and in monitoring the results of the business, Amdocs’ management uses financial statements that do not include amortization of purchased intangible assets and other acquisition-related costs, changes in fair value of certain acquisition-related liabilities, equity-based compensation expense and related tax effects. Amdocs’ management also uses the foregoing non-GAAP financial measures, in addition to the corresponding GAAP measures, in reviewing the financial results of Amdocs. In addition, Amdocs believes that significant groups of investors exclude these items in reviewing its results and those of its competitors, because the amounts of the items between companies can vary greatly depending on the assumptions used by an individual company in determining the amounts of the items.

Amdocs further believes that, where the adjustments used in calculating non-GAAP diluted earnings per share are based on specific, identified amounts that impact different line items in the Consolidated Statements of Income (including cost of revenue, research and development, selling, general and administrative, operating income, interest and other expense, net, income taxes and net income), it is useful to investors to understand how these specific line items in the Consolidated Statements of Income are affected by these adjustments. Please refer to the Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP tables below.