Amdocs Limited ((DOX)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Amdocs Limited’s recent earnings call presented a balanced outlook, highlighting robust growth in cloud and managed services, alongside a successful transition in generative AI deals. However, these positives were tempered by challenges in achieving higher revenue growth and anticipated declines from key customers such as T-Mobile.
Cloud Revenue Growth
Amdocs reported impressive double-digit growth in its cloud services, which now contribute over 30% of the company’s total revenue for fiscal year 2025. This significant growth underscores the company’s strategic focus on expanding its cloud offerings and capturing a larger market share in this rapidly evolving sector.
Expansion in Managed Services
Managed services have reached a record 66% of Amdocs’ total revenue, showcasing the company’s strong business resilience and high renewal rates. This expansion highlights Amdocs’ ability to deliver consistent value to its clients, ensuring long-term partnerships and stable revenue streams.
Generative AI Momentum
Amdocs has successfully transitioned from proof-of-concept trials to actual deals in the generative AI space, including a new award from Telefonica Germany. This momentum indicates the company’s growing expertise and competitive edge in leveraging AI technologies to meet customer demands.
12-Month Backlog Increase
The company ended the quarter with a 12-month backlog of $4.19 billion, marking a $40 million sequential increase and a 3.2% rise from the previous year. This backlog growth reflects Amdocs’ strong order pipeline and its ability to secure future business commitments.
Non-GAAP EPS Growth
Amdocs achieved an 8.5% growth in non-GAAP diluted EPS for fiscal 2025, aligning with the midpoint of its guidance. This growth demonstrates the company’s effective financial management and operational efficiency.
Revenue Growth Challenges
Despite the positive developments, Amdocs faced challenges in overall revenue growth, which was 3.1% in pro forma constant currency, slightly below expectations. The guidance for fiscal 2026 projects revenue growth between 1.0% and 5.0%, indicating cautious optimism amid market uncertainties.
T-Mobile Revenue Decline
Amdocs anticipates a revenue decline from T-Mobile due to reduced discretionary spending in fiscal 2026. This expected decline highlights the potential impact of customer-specific challenges on Amdocs’ financial performance.
Operating Margin Constraints
The company expects its non-GAAP operating margin to increase by only 20 basis points in fiscal 2026, reflecting increased investments in R&D and marketing for generative AI. This constraint underscores the balance between pursuing growth opportunities and managing operational costs.
Forward-Looking Guidance
Looking ahead, Amdocs provided detailed guidance for fiscal 2026, anticipating revenue growth between 1.7% and 5.7% as reported, and 1.0% to 5.0% in constant currency. The company plans to accelerate investments in generative AI, aiming to drive long-term growth. Amdocs also forecasts a high single-digit total shareholder return, including dividends, while accounting for potential reductions in discretionary spending by T-Mobile and other macroeconomic uncertainties.
In summary, Amdocs Limited’s earnings call highlighted a balanced outlook with strong growth in cloud and managed services, alongside successful generative AI transitions. Despite facing revenue growth challenges and anticipated declines from key customers, the company remains focused on strategic investments to drive future growth. Investors should watch for Amdocs’ continued expansion in cloud and AI technologies as key drivers of its long-term success.