Amdocs compensates for low growth with higher dividend

Eli Gelman
Eli Gelman

The company has also announced a further $800 million allocation for share buybacks.

Amdocs Ltd. (Nasdaq: DOX) continues to present low growth rates, but is compensating its shareholders by raising its dividend and through a new share buyback program. Yesterday, after the close of trading in New York, released its financials for its fourth quarter (ending in September) and for the 2017 financial year as a whole. Amdocs, which provides IT solutions to telecommunications companies, reported quarterly revenue of $980 million, slightly higher than the analysts' consensus estimate, while earnings were below estimates, at $0.94 per share, or $137 million in total, on a non-GAAP basis.

On a GAAP basis, the company posted a net profit of $107 million.

Revenue grew 4.2% and non-GAAP net profit grew 3.8% in comparison with the corresponding quarter of 2016.

For the financial year as a whole, Amdocs' revenue increased by 4.0% to $3.87 billion. GAAP net profit was $436.8 million, or $2.96 per diluted share, compared with $409.3 million, or $2.71 per diluted share, in 2016.

On a non-GAAP basis, net profit for the year was $560.6 million, or $3.80 per diluted share, up 3.8% compared with $540.1 million, or $3.57 per diluted share, in 2016.

A similar trend is expected to continue in the company's 2018 financial year. Amdocs projects growth of 0-4% in annual revenue to $3.87-4.02 billion, with analysts' estimates at the upper end of this guidance. Excluding exchange rate effects, Amdocs could see a fall in revenue in 2018. The company's revenue guidance excluding exchange rate effects lies between a drop of 1% and a rise of 3%. Non-GAAP earnings per share are expected to grow by 4-8% to $3.95-4.10, which is in line with market expectations.

As mentioned, in the absence of significant growth, Amdocs is compensating shareholders by increasing its quarterly dividend, from $0.22 to $0.25 per share, and the company is allocating a further $800 million to buying back its own shares, in addition to the $256 million remaining for buying back shares from its previous program. Amdocs has $980 million cash.

"Overall, our fourth quarter wrapped up a successful fiscal 2017 for Amdocs in which we delivered full year non-GAAP diluted earnings per share growth of 6.4% and free cash flow generation of more than $500 million," said Amdocs president and CEO Eli Gelman. "We sustained our high win rate in Q4 as we secured several modernization awards and increased our footprint with highly strategic customers. Earlier in the quarter, we were proud to announce that Altice USA has selected Amdocs to help accelerate the migration of key support systems to a single platform that will simplify and modernize its technology and improve the customer experience it provides. We were also delighted to enter a long-term services contract with Bharti Airtel, India’s largest telecommunications service provider, under which Amdocs will act as Airtel’s strategic partner to deploy machine learning and advanced artificial intelligence capabilities and to deliver a world class experience to its customers.

"Looking ahead, we expect to deliver full year non-GAAP diluted earnings per share growth of 4.0% to 8.0% and revenue growth of 0% to 4.0% in fiscal 2018. This outlook reflects the visibility provided by our record 12-month backlog, and incorporates our strong momentum in the North American Pay TV market, tempered by some slowdown in AT&T’s discretionary spending plans as we discussed last quarter."

Amdocs has a market cap of $9.3 billion, following a 13% rise in its share price over the past year.

Published by Globes [online], Israel business news - - on November 9, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018