Amdocs (DOX) Q3 2024 earnings summary

Executive summary

• Achieved record Q3 revenue of $1.25 billion, up 1.1% year-over-year as reported and 1.8% in constant currency, with managed services revenue at $741 million (59% of total).

• Non-GAAP operating margin reached 18.6%, up 80bps year-over-year and 20bps sequentially, the highest in many years, reflecting operational excellence and automation benefits.

• Non-GAAP diluted EPS was $1.62, at the high end of guidance; GAAP EPS was $1.21, including a $0.11 restructuring charge.

• Record 12-month backlog of $4.25 billion, up 2.7% year-over-year and $20 million sequentially, supporting strong business visibility.

• Strong demand for cloud, digital modernization, 5G, and generative AI, with major multi-year deals signed with AT&T, TELUS, Vodafone Ziggo, and Charter.

Financial highlights

• Q3 revenue: $1.25 billion (+1.1% YoY, +1.8% constant currency); North America up 0.7% QoQ, down 0.3% YoY; Europe down ~6% YoY; Rest of World up 13% YoY.

• Non-GAAP operating income was $232 million (18.6% margin); GAAP operating income was $176 million (14.1% margin).

• Non-GAAP net income was $187.8 million; GAAP net income was $140 million.

• Free cash flow was $175 million, with a cash balance of $502 million and borrowings of $650 million.

• Returned $225 million to shareholders in Q3 via $56 million dividends and $169 million share repurchases; $601 million returned year-to-date.

Outlook and guidance

• Fiscal 2024 revenue growth expected at 2.3%-3.1% in constant currency (midpoint 2.7%) and 1.9%-2.7% as reported, reflecting ~40bps FX headwind.

• Non-GAAP diluted EPS growth outlook midpoint reiterated at 9%, with a range of 8.5%-9.5%; GAAP EPS growth forecasted at 7.4%-9.2%.

• Non-GAAP operating margin expected between 18.1% and 18.7% for fiscal 2024.

• Free cash flow target for fiscal 2024 is $700 million before restructuring payments, over 90% of expected non-GAAP net income.

• Q4 FY2024 revenue guidance: $1,240-$1,280 million; non-GAAP EPS: $1.67-$1.73.