Amdocs Limited reports 73.3% CAPEX growth in 2018 and 2.8% Revenue growth
11/08/2018 • About Amdocs Limited (
$DOX) • By InTwits
Amdocs Limited reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- Amdocs Limited has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.8%. At the same time it's a lot of higher than industry average of 5.2%.
- CAPEX is quite volatile: $53m in FY2018, $39m in FY2017, $63m in FY2016, $60m in FY2015, $23m in FY2014
- In the last 5 years the company invested considerably less than D&A: $727m vs. $975m
- The company has business model with average profitability: ROIC is 11.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Amdocs Limited's Revenue increased on 2.8%. Revenue growth showed slowdown in FY18Q4 - it was 2.3% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 7.4 pp from 23.1% to 30.6% in 2018.
Gross Margin showed almost no change in FY2018. During the last 5 years Gross Margin topped in FY2015 at 35.5% and was declining since that time. SG&A as a % of Revenue showed almost no change in FY2018. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in FY2018. During the last 5 years SBC as a % of Revenue bottomed in FY2016 at 0.96% and was growing since that time.
Net Income margin decreased on 2.4 pp from 11.3% to 8.9% in FY2018. The efficient tax rate was 15.9% in FY2018 while the average for the last five years was 14.6%.
Investments (CAPEX, working capital and M&A)
Amdocs Limited's CAPEX/Revenue was 5.8% in FY2018. The company showed CAPEX/Revenue growth of 2.5 pp from 3.3% in FY2015 to 5.8% in FY2018. Average CAPEX/Revenue for the last three years was 4.3%.
Accounts receivable as a % of Revenue increased on 2.1 pp from 22.4% to 24.4% in FY2018. Accounts payable as a % of Revenue increased on 2.5 pp from 5.0% to 7.5% in FY2018.
Amdocs Limited has spent
$355m on M&A in FY2018 which accounts for 8.9% of revenue.
Return on investment
The company operates at low ROIC (11.9%) and ROE (10.0%). ROIC decreased on 2.5 pp from 14.4% to 11.9% in FY2018. ROE decreased on 2.3 pp from 12.3% to 10.0% in FY2018.
Leverage (Debt)
The company has no debt. Cash dropped on 35.5%.
Valuation and dividends
The company's trades at EV/EBITDA 13.8x and P/E 26.0x.
The company paid 37.8% of Net Income as dividends in FY2018. Dividends grew on average at 8.0% per annum in the last 5 years).
Management team
Amdocs Limited's CEO Shuky Sheffer is a founder and has spent 0 years with the company. Tamar Rapaport-Dagim is a the company's CFO. Tamar Rapaport-Dagim has spent 0 years at the company.
At the end of financial year the company had 24,381 employees. The number of employees decreased slightly on 1.2%. Average revenue per employee in FY2018 was
$163,030 and it increased on 4.0%.
Financial and operational results
FY ended 09/30/2018
Amdocs Limited ($DOX) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 3,564 | 3,644 | 3,718 | 3,867 | 3,975 | 2.8% |
| Gross Profit | 1,257 | 1,294 | 1,310 | 1,359 | 1,380 | 1.5% |
| SG&A | 445 | 440 | 465 | 473 | 481 | 1.8% |
| EBITDA | 658 | 691 | 695 | 732 | 640 | -12.7% |
| EBIT | 496 | 516 | 483 | 517 | 428 | -17.2% |
| Interest expence | 3 | 3 | 2 | 2 | 3 | 72.8% |
| Tax | 67 | 67 | 75 | 76 | 67 | -11.8% |
| Net Income | 422 | 446 | 409 | 437 | 354 | -18.9% |
| Stock Based Compensation | 41 | 39 | 36 | 40 | 47 | 19.1% |
Balance Sheet
|
|---|
| Cash | 1,103 | 1,036 | 769 | 650 | 419 | -35.5% |
| Accounts Receivable | 716 | 715 | 819 | 865 | 972 | 12.3% |
| Accounts Payable | 143 | 112 | 137 | 126 | 195 | 54.0% |
| Short Term Debt | 210 | 220 | 200 | 0 | 0 | |
| Long Term Debt | 0 | 0 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 112 | 121 | 130 | 133 | 231 | 73.3% |
| Dividends | 91 | 101 | 109 | 122 | 134 | 9.8% |
| Acquisitions | 181 | 263 | 283 | 18 | 355 | 1,866.0% |
Ratios
|
|---|
| Revenue growth | 6.5% | 2.2% | 2.0% | 4.0% | 2.8% | |
| EBITDA growth | 5.8% | 4.9% | 0.6% | 5.4% | -12.7% | |
|
|---|
| Gross Margin | 35.3% | 35.5% | 35.2% | 35.2% | 34.7% | -0.4% |
| EBITDA Margin | 18.5% | 19.0% | 18.7% | 18.9% | 16.1% | -2.8% |
| EBIT Margin | 13.9% | 14.2% | 13.0% | 13.4% | 10.8% | -2.6% |
| SG&A, % of revenue | 12.5% | 12.1% | 12.5% | 12.2% | 12.1% | -0.1% |
| SBC, % of revenue | 1.1% | 1.1% | 1.0% | 1.0% | 1.2% | 0.2% |
| Net Income Margin | 11.8% | 12.2% | 11.0% | 11.3% | 8.9% | -2.4% |
| CAPEX, % of revenue | 3.1% | 3.3% | 3.5% | 3.4% | 5.8% | 2.4% |
|
|---|
| ROIC | 13.0% | 13.2% | 13.0% | 14.4% | 11.9% | -2.5% |
| ROE | 12.7% | 13.0% | 11.8% | 12.3% | 10.0% | -2.3% |
| Net Debt/EBITDA | -1.4x | -1.2x | -0.8x | -0.9x | -0.7x | 0.2x |
| Interest expence / Average debt | 1.7% | 1.5% | 0.8% | | | |
People
|
|---|
| Employees | 22,546 | 24,950 | 25,561 | 24,670 | 24,381 | -1.2% |
| Revenue/Employee, th. $ | 158 | 146 | 145 | 157 | 163 | 4.0% |
Amdocs Limited ($DOX) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 978 | 992 | 1,002 | 1,003 | | 2.4% | 2.7% | 3.7% | 2.3% |
| EBITDA | 171 | 185 | 160 | 123 | | -4.3% | 0.1% | -13.2% | -33.1% |
| Net Income | 117 | 102 | 92 | 44 | | 19.5% | -9.6% | -23.3% | -58.7% |
Balance Sheet
|
|---|
| Cash | 966 | 667 | 461 | 419 | | 57.4% | -18.9% | -27.6% | -35.5% |
| Short Term Debt | 0 | 120 | 0 | 0 | | | -40.0% | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 34.2% | 34.8% | 35.1% | 34.7% | | -0.8% | -0.8% | 0.1% | -0.4% |
| EBITDA Margin | 17.5% | 18.7% | 16.0% | 12.2% | | -1.2% | -0.5% | -3.1% | -6.5% |
| Net Income Margin | 12.0% | 10.3% | 9.1% | 4.4% | | 1.7% | -1.4% | -3.2% | -6.5% |
Peers in IT Consulting & Other Services
Below you can find Amdocs Limited benchmarking vs. other companies in IT Consulting & Other Services industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Gopher Protocol Inc ($GOPH) | | -25.0% | 83.3% | 5,471.1% | 461.0% |
| CLPS Incorporation ($CLPS) | | | | 8.1% | 56.0% |
| EPAM Systems, Inc. ($EPAM) | | 25.2% | 26.9% | 25.0% | 27.1% |
| Gartner, Inc. ($IT) | | 7.0% | 13.0% | 35.5% | 20.1% |
| Computer Task Group, Incorporated ($CTG) | | -6.0% | -12.1% | -7.3% | 19.1% |
| |
|---|
| Median (35 companies) | | 3.5% | 8.3% | 3.8% | 3.9% |
|---|
| Amdocs Limited ($DOX) | | 2.2% | 2.0% | 4.0% | 2.8% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Inpixon ($INPX) | 29.8% | 28.9% | 28.1% | 68.7% | 71.4% |
| Gartner, Inc. ($IT) | 60.5% | 61.2% | 61.3% | 60.1% | 63.1% |
| InterXion Holding N.V. ($INXN) | 59.2% | 60.8% | 61.5% | 61.1% | 60.9% |
| LiveRamp Holdings, Inc. ($RAMP) | 25.1% | 38.6% | 42.5% | 45.7% | 56.2% |
| Booz Allen Hamilton Holding Corporation ($BAH) | 50.4% | 50.8% | 52.3% | 53.6% | 53.5% |
| |
|---|
| Median (37 companies) | 25.8% | 30.9% | 28.1% | 27.7% | 28.9% |
|---|
| Amdocs Limited ($DOX) | 35.3% | 35.5% | 35.2% | 35.2% | 34.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InterXion Holding N.V. ($INXN) | 41.3% | 44.9% | 43.3% | 42.2% | 42.8% |
| Switch, Inc. ($SWCH) | | 50.7% | 37.0% | 28.5% | 39.8% |
| Cognizant Technology Solutions Corporation ($CTSH) | 20.4% | 19.9% | 19.8% | 19.7% | 20.5% |
| Taoping Inc. ($TAOP) | -54.0% | -237.5% | -117.7% | 13.2% | 18.7% |
| DXC Technology Company ($DXC) | | | | 8.0% | 16.3% |
| |
|---|
| Median (36 companies) | 4.8% | 3.3% | 6.7% | 6.3% | 7.2% |
|---|
| Amdocs Limited ($DOX) | 18.5% | 19.0% | 18.7% | 18.9% | 16.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InterXion Holding N.V. ($INXN) | 62.5% | 48.1% | 57.4% | 50.5% | 78.3% |
| Switch, Inc. ($SWCH) | | 71.5% | 90.2% | 106.4% | 67.9% |
| Taoping Inc. ($TAOP) | 1.4% | 29.2% | 34.0% | 20.8% | 8.7% |
| Teradata Corporation ($TDC) | 2.0% | 2.1% | 2.3% | 3.6% | 7.1% |
| ServiceSource International, Inc. ($SREV) | 3.4% | 4.7% | 10.4% | 7.2% | 6.5% |
| |
|---|
| Median (35 companies) | 0.9% | 0.8% | 1.1% | 1.2% | 1.5% |
|---|
| Amdocs Limited ($DOX) | 3.1% | 3.3% | 3.5% | 3.4% | 5.8% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Accenture plc ($ACN) | 80.5% | 81.0% | 81.3% | 61.7% | 66.1% |
| The Hackett Group, Inc. ($HCKT) | 11.2% | 19.5% | 31.7% | 23.8% | 24.6% |
| Cognizant Technology Solutions Corporation ($CTSH) | 24.7% | 22.0% | 21.3% | 21.9% | 23.8% |
| Booz Allen Hamilton Holding Corporation ($BAH) | 25.3% | 26.5% | 23.1% | 22.6% | 22.5% |
| EPAM Systems, Inc. ($EPAM) | 19.7% | 18.4% | 18.2% | 18.9% | 21.2% |
| |
|---|
| Median (44 companies) | 6.2% | 4.7% | 7.3% | 4.7% | 6.9% |
|---|
| Amdocs Limited ($DOX) | 13.0% | 13.2% | 13.0% | 14.4% | 11.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Infinite Group Inc ($IMCI) | | | 169.6x | | 10.5x |
| InterXion Holding N.V. ($INXN) | 3.3x | 2.9x | 3.4x | 3.8x | 4.6x |
| Gartner, Inc. ($IT) | 0.1x | 1.3x | 0.6x | 11.7x | 4.1x |
| Switch, Inc. ($SWCH) | | 2.2x | 4.0x | 3.2x | 3.3x |
| Presidio, Inc. ($PSDO) | 0.0x | | 5.6x | 3.6x | 3.1x |
| |
|---|
| Median (28 companies) | -0.2x | -0.2x | 0.4x | 0.8x | 1.0x |
|---|
| Amdocs Limited ($DOX) | -1.4x | -1.2x | -0.8x | -0.9x | -0.7x |
