Amdocs(US:DOX)2022-11-09 08:27Financial Data and Key Metrics Changes - Amdocs reported record revenue of approximately $4.57 billion for fiscal 2022, an increase of 10.3% on a pro forma constant currency basis, consistent with the high end of the initial growth outlook of 6% to 10% [8][37] - The company achieved record non-GAAP diluted earnings per share of $5.30, up 12.1% on a pro forma basis [9][39] - The normalized free cash flow for fiscal 2022 was $665 million, exceeding the target of $650 million, with over 100% returned to shareholders via share repurchases and dividends [9][44] Business Line Data and Key Metrics Changes - Managed services revenue for Q4 was $715 million, up 12.1% year-over-year, accounting for about 61% of total revenue [41] - The 12-month backlog reached a record high of $3.97 billion, up 7.6% from a year ago, indicating strong sales momentum [40] Market Data and Key Metrics Changes - North America saw significant revenue growth driven by 5G and cloud transformation projects, with major customers including AT&T and T-Mobile [11] - Europe and the rest of the world also showed growth, with strategic awards from longstanding customers and new logos [12][38] Company Strategy and Development Direction - Amdocs' growth strategy focuses on enabling customers to drive growth, improve cost efficiency, and provide exceptional consumer experiences through innovation in cloud platforms, digital transformation, and 5G monetization [18] - The company is committed to M&A as a growth strategy, with recent acquisitions aimed at enhancing cloud consulting expertise and digital experience capabilities [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilient business model, which supports recurring revenue streams and strong visibility from multi-year engagements [27] - The outlook for fiscal 2023 anticipates revenue growth of 6% to 10% on a constant currency basis, supported by a record backlog and a strong pipeline of opportunities [29][52] Other Important Information - Amdocs plans to increase its quarterly cash dividend by 10% to $0.435 per share, subject to shareholder approval [49] - The company expects free cash flow of approximately $700 million for fiscal 2023, maintaining a conversion rate of around 100% relative to non-GAAP net income [49][88] Q&A Session Summary Question: Changes in project nature due to macroeconomic conditions - Management noted that while there is a focus on cost savings and managed services, they have not observed significant changes in customer behavior yet, with inflation and currency volatility being the immediate impacts [63] Question: Benefits from the new campus - The new campus is expected to provide direct savings in expenses and indirect benefits in productivity and team engagement, with full economic benefits anticipated in 2024 [66] Question: Fiscal 2023 outlook and guidance range - The guidance range of 6% to 10% for fiscal 2023 reflects a balance of good visibility from backlog and potential fluctuations in project activity and demand environment [69] Question: Backlog changes and currency impact - Currency fluctuations have impacted the backlog, with a 2% headwind expected year-over-year, but no significant slowdown in customer ordering patterns was noted [72] Question: Revenue guidance below consensus - The guidance reflects a $90 million headwind from foreign currencies, affecting revenue expectations for the upcoming quarters [78] Question: Cash conversion rate plans - Amdocs targets a 100% earnings to cash conversion rate for 2023, aiming for approximately $700 million in free cash flow [89]