Amdocs Limited EBITDA surged on 14.0% and EBITDA Margin increased on 2.2 pp from 19.0% to 21.2%
11/10/2020 • About Amdocs Limited (
$DOX) • By InTwits
Amdocs Limited reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Amdocs Limited has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.2%. At the same time it's in pair with industry average of 3.5%
- CAPEX is quite volatile: $294m in FY2020, $217m in FY2019, $163m in FY2018, $113m in FY2017, $77m in FY2016
- The company has highly profitable business model: ROIC is 14.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Amdocs Limited's Revenue increased on 2.0%. Revenue growth showed acceleration in FY20Q4 - it increased 2.2% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 2.2 pp from 19.0% to 21.2% in FY2020.
Gross Margin decreased slightly on 1.2 pp from 35.1% to 33.9% in FY2020. SG&A as a % of Revenue decreased slightly on 1.1 pp from 12.1% to 11.0% in FY2020. SG&A as a % of Revenue stuck to a declining trend at -0.32 pp per annum in the last 5 years.
Net Income margin showed almost no change in FY2020.
Investments (CAPEX, working capital and M&A)
In FY2020 the company had CAPEX/Revenue of 4.9%. The company showed small growth in CAPEX/Revenue of 1.5 pp from 3.4% in FY2017 to 4.9% in FY2020. It's average CAPEX/Revenue for the last three years was 4.6%.
Return on investment
The company operates at good ROIC (14.5%) and ROE (14.0%). ROIC decreased slightly on 1.5 pp from 15.9% to 14.5% in FY2020. ROE showed almost no change in FY2020.
Leverage (Debt)
Debt level is 0.1x Net Debt / EBITDA and 1.2x Debt / EBITDA. Net Debt / EBITDA jumped on 0.7x from -0.6x to 0.1x in FY2020. Debt surged while cash surged on 108%. During FY2016-FY2020 Net Debt/EBITDA bottomed in FY2017 at -0.9x and was growing since that time.
Amdocs Limited has no short term refinancing risk: cash is higher than short term debt (618.0%).
Valuation and dividends
The company's trades at EV/EBITDA 9.7x and P/E 17.1x.
Management team
The company's CEO is Shuky Sheffer. Shuky Sheffer has 2 years tenure with the company. Amdocs Limited's CFO is Tamar Rapaport-Dagim. Tamar Rapaport-Dagim has 2 years tenure at the company.
Financial and operational results
FY ended 09/30/2020
Amdocs Limited ($DOX) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 3,718 | 3,867 | 3,975 | 4,087 | 4,169 | 2.0% |
| Gross Profit | 1,310 | 1,359 | 1,380 | 1,433 | 1,413 | -1.4% |
| SG&A | 465 | 473 | 481 | 492 | 459 | -6.9% |
| EBITDA | 695 | 732 | 640 | 776 | 884 | 14.0% |
| EBIT | 483 | 517 | 428 | | | |
| Interest expence | 2 | 2 | 3 | | | |
| Tax | 75 | 76 | 67 | | | |
| Net Income | 409 | 437 | 354 | 479 | 498 | 3.8% |
| Stock Based Compensation | 36 | 40 | 47 | | | |
Balance Sheet
|
|---|
| Cash | 769 | 650 | 419 | 472 | 983 | 108.5% |
| Accounts Receivable | 819 | 865 | 972 | | | |
| Accounts Payable | 137 | 126 | 195 | | | |
| Short Term Debt | 200 | 0 | 0 | 0 | 159 | |
| Long Term Debt | 0 | 0 | 0 | 0 | 874 | |
Cash flow
|
|---|
| Capex | 130 | 133 | 231 | 128 | 206 | 60.4% |
| Dividends | 109 | 122 | 134 | | | |
| Acquisitions | 283 | 18 | 355 | | | |
Ratios
|
|---|
| Revenue growth | 2.0% | 4.0% | 2.8% | 2.8% | 2.0% | |
| EBITDA growth | 0.6% | 5.4% | -12.7% | 21.3% | 14.0% | |
|
|---|
| Gross Margin | 35.2% | 35.2% | 34.7% | 35.1% | 33.9% | -1.2% |
| EBITDA Margin | 18.7% | 18.9% | 16.1% | 19.0% | 21.2% | 2.2% |
| EBIT Margin | 13.0% | 13.4% | 10.8% | | |
| SG&A, % of revenue | 12.5% | 12.2% | 12.1% | 12.1% | 11.0% | -1.1% |
| SBC, % of revenue | 1.0% | 1.0% | 1.2% | | |
| Net Income Margin | 11.0% | 11.3% | 8.9% | 11.7% | 11.9% | 0.2% |
| CAPEX, % of revenue | 3.5% | 3.4% | 5.8% | 3.1% | 4.9% | 1.8% |
|
|---|
| ROIC | 13.0% | 14.4% | 11.9% | 15.9% | 14.5% | -1.5% |
| ROE | 11.8% | 12.3% | 10.0% | 13.7% | 14.0% | 0.3% |
| Net Debt/EBITDA | -0.8x | -0.9x | -0.7x | -0.6x | 0.1x | 0.7x |
| Interest expence / Average debt | 0.8% | | | | | |
People
|
|---|
| Employees | 25,561 | 24,670 | 24,381 | | | |
| Revenue/Employee, th. $ | 145 | 157 | 163 | | | |
Amdocs Limited ($DOX) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 1,042 | 1,048 | 1,026 | 1,053 | | 3.0% | 2.8% | 0.1% | 2.2% |
| EBITDA | 193 | 206 | 194 | 201 | | 4.3% | 2.6% | -0.8% | 3.1% |
| Net Income | 116 | 127 | 120 | 134 | | 14.0% | 2.2% | -8.4% | 10.2% |
Balance Sheet
|
|---|
| Cash | 486 | 763 | 1,194 | 983 | | 35.5% | 69.6% | 192.8% | 108.5% |
| Short Term Debt | 58 | 410 | 163 | 159 | | - | - | - | - |
| Long Term Debt | 224 | 218 | 877 | 874 | | - | - | - | - |
Ratios
|
|---|
| Gross Margin | 34.1% | 34.7% | 33.6% | 33.2% | | -0.4% | -0.7% | -1.5% | -2.1% |
| EBITDA Margin | 18.5% | 19.6% | 18.9% | 19.1% | | 0.2% | -0.0% | -0.2% | 0.2% |
| Net Income Margin | 11.1% | 12.1% | 11.7% | 12.8% | | 1.1% | -0.1% | -1.1% | 0.9% |
Peers in IT Consulting & Other Services
Below we provide Amdocs Limited benchmarking against other companies in IT Consulting & Other Services industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| CLPS Incorporation ($CLPS) | - | 8.1% | 56.0% | 32.7% | 37.7% |
| Endava plc ($DAVA) | - | 38.1% | 36.5% | 32.3% | 21.9% |
| EPAM Systems, Inc. ($EPAM) | - | 25.0% | 27.1% | 24.5% | 15.9% |
| Switch, Inc. ($SWCH) | - | 18.8% | 7.3% | 13.9% | 10.7% |
| Perficient, Inc. ($PRFT) | - | -0.4% | 2.7% | 13.5% | 8.2% |
| |
|---|
| Median (14 companies) | 8.3% | 4.7% | 4.3% | 7.6% | 0.9% |
|---|
| Amdocs Limited ($DOX) | - | 4.0% | 2.8% | 2.8% | 2.0% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Gartner, Inc. ($IT) | 61.3% | 60.1% | 63.1% | 63.5% | 67.2% |
| Teradata Corporation ($TDC) | 51.2% | 47.5% | 47.4% | 50.3% | 55.5% |
| Switch, Inc. ($SWCH) | 47.0% | 47.6% | 44.7% | 47.5% | 45.4% |
| Perficient, Inc. ($PRFT) | 31.1% | 33.3% | 35.8% | 37.4% | 37.8% |
| Cognizant Technology Solutions Corporation ($CTSH) | 39.9% | 38.2% | 39.0% | 36.6% | 35.9% |
| |
|---|
| Median (14 companies) | 28.8% | 28.8% | 29.4% | 35.9% | 33.2% |
|---|
| Amdocs Limited ($DOX) | 35.2% | 35.2% | 34.7% | 35.1% | 33.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Switch, Inc. ($SWCH) | 37.0% | 28.5% | 39.8% | 44.1% | 47.8% |
| Gartner, Inc. ($IT) | 15.0% | 7.1% | 13.0% | 16.2% | 19.8% |
| EPAM Systems, Inc. ($EPAM) | 13.5% | 13.9% | 15.3% | 17.9% | 19.4% |
| Accenture plc ($ACN) | 15.9% | 14.8% | 16.3% | 16.7% | 18.7% |
| Cognizant Technology Solutions Corporation ($CTSH) | 19.8% | 19.7% | 20.5% | 19.2% | 17.8% |
| |
|---|
| Median (14 companies) | 6.7% | 6.9% | 7.2% | 13.9% | 11.7% |
|---|
| Amdocs Limited ($DOX) | 18.7% | 18.9% | 16.1% | 19.0% | 21.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Switch, Inc. ($SWCH) | 90.2% | 106.4% | 67.9% | 66.6% | 67.8% |
| ServiceSource International, Inc. ($SREV) | 10.4% | 7.2% | 6.5% | 4.7% | 4.0% |
| Endava plc ($DAVA) | 2.4% | 4.1% | 2.5% | 2.6% | 2.8% |
| EPAM Systems, Inc. ($EPAM) | 2.5% | 2.1% | 2.0% | 4.3% | 2.6% |
| Teradata Corporation ($TDC) | 2.3% | 3.6% | 7.1% | 2.8% | 2.4% |
| |
|---|
| Median (14 companies) | 1.1% | 1.4% | 1.5% | 2.0% | 1.7% |
|---|
| Amdocs Limited ($DOX) | 3.5% | 3.4% | 5.8% | 3.1% | 4.9% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Accenture plc ($ACN) | 81.3% | 61.7% | 66.1% | 62.1% | 40.7% |
| EPAM Systems, Inc. ($EPAM) | 18.2% | 18.9% | 21.2% | 20.2% | 19.4% |
| Cognizant Technology Solutions Corporation ($CTSH) | 21.3% | 21.9% | 23.8% | 20.4% | 17.5% |
| Gartner, Inc. ($IT) | 41.0% | -0.2% | 6.9% | 10.8% | 12.7% |
| Endava plc ($DAVA) | - | 36.0% | 29.6% | 26.1% | 9.8% |
| |
|---|
| Median (14 companies) | 7.3% | 4.7% | 6.9% | 9.9% | 7.8% |
|---|
| Amdocs Limited ($DOX) | 13.0% | 14.4% | 11.9% | 15.9% | 14.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Switch, Inc. ($SWCH) | 4.0x | 3.2x | 3.3x | 4.0x | 4.0x |
| Gartner, Inc. ($IT) | 0.6x | 11.7x | 4.1x | 4.1x | 2.6x |
| Perficient, Inc. ($PRFT) | 0.4x | 1.0x | 1.3x | 1.0x | 1.5x |
| ServiceSource International, Inc. ($SREV) | 156.0x | - | -35.5x | 2.9x | 0.6x |
| Teradata Corporation ($TDC) | -1.1x | -1.5x | -1.3x | 0.9x | 0.5x |
| |
|---|
| Median (12 companies) | 0.3x | 0.6x | 0.8x | 0.3x | -0.4x |
|---|
| Amdocs Limited ($DOX) | -0.8x | -0.9x | -0.7x | -0.6x | 0.1x |
