A month has gone by since the last earnings report for Amdocs (DOX). Shares have lost about 0.3% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Amdocs due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Amdocs Limited reported first-quarter fiscal 2025 non-GAAP earnings of $1.66 per share, which came above the midpoint of management’s guidance range of $1.61-$1.67 and increased 6.4% year over year. The figure also exceeded the Zacks Consensus Estimate of $1.64.
Amdocs’ first-quarter revenues of $1.11 billion matched the consensus mark. However, compared with the year-ago quarter, revenues were down 10.9% on a reported basis due to the phase-out of certain business activities. Excluding the effect of phase-out business activities, revenues were up 1.7% year-over-year in pro forma constant currency.
Amdocs reported a decline in revenues across all regions due to the phase-out of certain business activities. North America reported revenues of $737.4 million (66.4% of total revenues), which plunged 12% year over year.
Europe revenues (14% of total revenues) of $155.2 decreased 14.4% year over year. Rest of the World (RoW) revenues (19.6% of total revenues) declined 3.7% year over year to $217.4 million. Our model estimates for North America, Europe and RoW were pinned at $733.2 million, $164 million and $215.8 million, respectively.
Managed services revenues rose 0.9% year over year to $729 million. The company ended the first quarter of fiscal 2025 with a 12-month backlog of $4.14 billion, up $80 million sequentially. Our model estimates for managed services revenues and backlog were pegged at $646 million and $3.73 billion, respectively.
The non-GAAP operating income increased 4.5% year over year to $235.4 million, while the operating margin expanded 310 basis points (bps) to 21.2%.
Amdocs had cash and short-term investments of $349 million as of Dec. 31, 2024, compared with $514.3 million as of Sept. 30, 2024. Long-term debt was $646.4 million as of Dec. 31, slightly higher than $646.3 million as of Sept. 30.
During the first quarter, it generated an operating cash flow of $105.6 million and a free cash flow of $78 million.
Amdocs initiated guidance for the second quarter and updated the outlook for the full fiscal 2025. For the second quarter, the company expects revenues to be in the band of $1.105-$1.145 billion (mid-point $1.125 billion).
Amdocs expects non-GAAP earnings per share to be between $1.67 and $1.73.
For fiscal 2025, Amdocs now expects revenues to decline between 8.4% and 11.6% on a year-over-year basis, slightly higher than the previous guidance of a decline of 7.7-10.9%.
Non-GAAP operating margin is still anticipated to be in the range of 21.1-21.7% for fiscal 2025. Non-GAAP earnings are still expected to grow in the band of 6.5-10.5%.
The company continues to expect free cash flow between $710 million and $730 million.
It turns out, estimates revision have trended upward during the past month.
Currently, Amdocs has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Amdocs has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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This article originally published on Zacks Investment Research (zacks.com).
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