Amdocs Q2 2025 Earnings Call Transcript

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May 7, 2025
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Operator

As a As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Matt Smith, Head of Investor Relations. Please go ahead, sir.

Matthew Smith
Matthew Smith
Secretary & Head of Investor Relations at Amdocs

Thank you. Before we begin, I need to call your attention to our disclaimer statement on Slide two of the presentation. Note that some of our comments today may be forward looking statements and are subject to risks and uncertainties, including as described in Amdoc's SEC filings and that we will discuss certain financial information that is not prepared in accordance with GAAP. More information regarding our use of non GAAP financial measures including reconciliations of these measures, we refer you to today's earnings release which will also be furnished with the SEC on Form six ks. Today's speakers participating on the call with me today are Shuky Shaffer, President and Chief Executive Officer of Amdocs Management Limited and Tamar Rappaport Deghim, Chief Financial and Operating Officer.

Matthew Smith
Matthew Smith
Secretary & Head of Investor Relations at Amdocs

To support today's earnings call, we are providing a presentation which can be found on the Investor Relations section of our website. And as always, a copy of today's prepared remarks will also be posted immediately following the conclusion of this call. On today's agenda, Shuky will recap our business and financial achievements for the second quarter and will update you on the continued progress that we've made executing against our strategic growth framework, including Gen AI and our continued sales momentum in cloud. Shuky will finish by discussing our financial outlook for the full fiscal year 2025, after which Tamar will provide additional details on our second quarter financial performance and forward guidance. As we communicated previously, Shuky and Tamar will compare certain financial metrics on a pro form a basis, which adjusts prior fiscal year twenty twenty four revenue by approximately $600,000,000 to reflect the end of certain low margin non core business activities, which were substantially already ceased in the first quarter of fiscal twenty twenty five.

Matthew Smith
Matthew Smith
Secretary & Head of Investor Relations at Amdocs

And with that, I'll turn it over to Shuky.

Shuky Sheffer
Shuky Sheffer
President and CEO at Amdocs

Thank you, Matt, and everyone joining us on the call today. Starting on slide six, I am pleased to report good results for fiscal second quarter, credit for which belongs to Amdoc's global base of employees, while executing our strategy to deliver the next gen cloud, digital, and AI based solution our customer needs to ensure amazing experiences and seamless connectivity for billions of people each day. Among the second quarter financial highlights, revenue of 1,130,000,000.00 was above the midpoint of our guidance and increased by 4% from a year ago in pro form a constant currency. Profitability improved by 10 basis points sequentially, reflecting ongoing internal efficiency gains. We generate robust free cash flow of $181,000,000 excluding restructuring related payments, supported by healthy customer cash collection.

Shuky Sheffer
Shuky Sheffer
President and CEO at Amdocs

And non GAAP earning per share was $1.78 above the guidance range primarily due to lower than expected non GAAP effective tax rate in the quarter. Additionally, we closed the second quarter with a twelve month backlog of 4,170,000,000 up by 3.5% pro form a from a year ago. The healthy increase in twelve months backlog was supported by a strong pipeline to deal conversion as shown on slide seven. Among the highlights, we're striking our relationship with AT and T Cricket Wireless through payment solution, dealer commission, and expedited services. Consumer cellular, a new logo for Amdocs in The US, has selected our ConnectX solution to introduce new digital brands, And we benefit from a healthy customer demand for our fiber deployment, orchestration, and digital infrastructure management serve offering.

Shuky Sheffer
Shuky Sheffer
President and CEO at Amdocs

Strong sales momentum in cloud also continued this quarter. We are working with Microsoft to migrate Amdocs and non Amdocs application to the Microsoft Azure platform for a leading tier one European operator. And in Philippines, we signed an agreement to support the next phase of PLDT's cloud modernization project. As to our project execution this quarter, we successfully achieved a high number of major milestone for many of our world's largest operation. At AT and T, we are progressing the mainstream to cloud migration using the Amdocs Argentinian migration paradigm, which entails migration application and operational ecosystem to operate on the cloud.

Shuky Sheffer
Shuky Sheffer
President and CEO at Amdocs

We also reached notable milestone in Japan, a strategic market for Amdocs, where we deliver an advanced cloud native platform to enable NT and T infraNets to modernize and migrate its IT operation system to the cloud. This achievement continues our momentum in Japan, where we are now supporting three flagship customer including JCOM and Paramount, in addition to NTT Infinite. Rounding out the operation highlights, we delivered another record quarter in managed services, which contributed roughly two thirds of total revenue. Renewal rate also remained very high in Q2 as we signed new multi year managed services agreements that expand end of scope of activities with Telia Norway, PVT, and M1 in Singapore. Moving now to slide eight.

Shuky Sheffer
Shuky Sheffer
President and CEO at Amdocs

Let me address our multi pillar growth strategy, which is designed to provide our customer with the innovation and cutting edge technology they need to accelerate the journey to the cloud, digitize the customer experience for consumer and b to b, monitor investment next generation networks, streamline automated complex network ecosystem, and simplify and accelerate the adoption of JantiVi. Beginning with cloud on slide nine, q two was another strong quarter of sales momentum and best in cloud project execution. Working with our strategic partner Microsoft, I'm excited to announce that mDocs was selected to play a critical role in facilitating the migration of both mDocs and non mDocs application to the Microsoft Azure platform for a tier one European service provider. Under the Microsoft umbrella, Amdocs is heading the delivery of number of work stream, pivotal to the operator strategic transition to the cloud first architecture, which will enhance performance, accept innovation, and improve operational efficiency across its markets. Androx already successfully completed the first phase of its cloud modernization project for a leading Philippine services provider, PLDT, and its wireless subsidiary, Smart, migrating PLDT business critical system and legacy application to AWS.

Shuky Sheffer
Shuky Sheffer
President and CEO at Amdocs

We also signed a new agreement to upgrade and migrate PLDT's data platform and additional core system in the next phase. Additionally, Telstra in Australia has engaged Amdocs to consult its segment specific Amdocs service order management solution to a single cloud platform servicing all segments, which will provide the operator with a faster time to market for new services, greater business agility, and improve customer satisfaction. I believe our ability to win deals and execute projects in the cloud is a testament to our expertise and end to end cloud offering. Moreover, we remain on track to deliver another year of double digit growth in cloud related revenue in fiscal twenty twenty five. Moving to digital transformation on slide 10.

Shuky Sheffer
Shuky Sheffer
President and CEO at Amdocs

I'm delighted to announce that Consumer Cellular, a US wireless provider, has become the latest in the growing list of customer to select the mDocs ConnectX cloud native SaaS platform to support the launch of innovation, new digital brands, innovative new digital brands. As a new client of Amdocs, we look forward to partnering with consumer to help rapidly create and deploy new plans, achieve operational excellence, and boost customer satisfaction for the roughly 4,000,000 subscribers. Amdocs MarketOne, a SaaS based and scalable platform that enables service provider to rapidly monetize OTT and digital consumer service experiences is also generating healthy customer demand. MarketOne was recently selected by CK Hutchinson to equip participating group companies such as three Ireland and WinTrey in Italy with the ability to grow the digital ecosystem, capture new revenue streams, and deliver enhanced customer experiences. Another of our SaaS platform, mDocs eSIM Cloud, was recently ranked number one in the global eSIM orchestration landscape for the 30 running by Counterpoint Research.

Shuky Sheffer
Shuky Sheffer
President and CEO at Amdocs

The accelerated adoption of eSIM globally is creating opportunities for mDocs. For instance, Amdocs is working with Tensile, the largest mobile operator in Mexico and a subsidiary of America Mobile to bring innovative eSIM technology to millions of Tensile users. Turning to slide 11. Amdocs continue to be recognized as the global market leader in overall monetization platforms. Illustrating our domain strengths, Comcast has renewed its multi year commitment to Amdocs bill experience as the bill presented platform for its residential and business customers.

Shuky Sheffer
Shuky Sheffer
President and CEO at Amdocs

And we recently modernized n one Bulgaria's convert charging platform to reduce billing processing times and speed up customer facing interaction. In Latin America, we signed an agreement with Movistar El Salvador for full BSS modernization to enhance its current prepaid platform. And Amdocs was recently selected by Botswana Telecommunication to modernize its converged charging and billing platform. Moving to network automation on slide 12. Amdocs has extended its network policy platform agreement at Cloud Brazil for multiple consumer line of business.

Shuky Sheffer
Shuky Sheffer
President and CEO at Amdocs

And we have secured multi year extension of our o OSS engagement with Costa Rica, Grupo Ise, reinforcing our long standing collaboration and commitment. I also would like to highlight recent milestone at PVT in Philippines, where we partnered with Microsoft to deliver the successful go live of the Amdocs customer engagement platform. This enterprise b to b platform was seamlessly integrated with Amdocs intelligent network suite to connect customer service needs directly to the underlying network performance in an automated end to end manner. Beyond wireless, Amdoc is well positioned to meet strong demand for fiber deployment, orchestration, and data infrastructure management as global service provider accelerated their fiber expansion investment to launch converged broadband and mobile services offering. Turning to slide thirteen and fourteen.

Shuky Sheffer
Shuky Sheffer
President and CEO at Amdocs

AMP's top strategic priority is to accelerate the telco industry's adoption of GenAI. Ankit Agarwal was recently recognized at NVIDIA GTC event during CEO Jensen Hung's keynote address, where Amdocs was spotlighted as the key partner in driving the next wave of AI innovation in telecom. This quarter, we continue to evolve the Amdocs MH platform in close collaboration with NVIDIA and other GenAI partners. As part of the newly introduced MH platform offerings, we launched our innovating network agents supporting both network design and deployment, as well as network operation. This agent leverage our depot access and mobile network design and deployment expertise coupled with NVIDIA's AI enterprise, NVIDIA Omniverse, digital twin capabilities, and Amazon SageMaker to support accelerated network design, planning and deployment network troubleshooting and healing.

Shuky Sheffer
Shuky Sheffer
President and CEO at Amdocs

Additionally, we launched mDOCS AI factory, which is designed to help service provider monetize surging enterprise customer demand for AI driven infrastructure, such as GPU as a service, LLMs, and vertically tailored application, and M and M to unlock significant new revenue streams. They're offering Meri's M Docs and Maze platform, agentic agentic experiences and monetization suite with NVIDIA and Dell infrastructure to provide the full ecosystem of capabilities needed to create innovative new services. As to our commercial progress, we are running multiple POCs in several of our flagship customer, many of which are in the relatively mature stage and producing highly compelling results. Adding to the expanding pipeline of opportunity, Amdocs is naturally well positioned to meet the new wave of demand for data, the data related services needed to support GenAI adoption. Amdocs is already playing an expanding role in supporting GenAI related data requirements for several customers such as AT and T and Globe in The Philippines.

Shuky Sheffer
Shuky Sheffer
President and CEO at Amdocs

As another example, Amdocs will support a tier one operator in Canada, We start a unified customer profile as part of the data in our strategy, creating a single integrated view of each customer across worldwide operations. Now, to address the current operating environment on slide 15. The level of global macroeconomic uncertainty is clearly rising in the recent months. But we believe Amdoc is relatively well positioned to navigate the present environment due to our unique business model. As a specialist software and service provider to the global communication media industry, Endoc is currently directly affected by the announced tariffs.

Shuky Sheffer
Shuky Sheffer
President and CEO at Amdocs

Across our serviceable addressable market of nearly 60,000,000,000, we continue to see rich and encouraging pipeline which we are working hard to convert to new deals by leveraging our technology leadership, project and operational expertise, and our proven ability to support customer industry consolidation initiatives. Having said that, no company is completely immune to operating environment, and we are, of course, closely monitoring any indirect impact of macro conditions on us and our customers' spending behavior. Bringing it all together, considering our strong first half performance and our current level of visibility provided by our twelve months backlog, we are reiterating the midpoint of fiscal twenty twenty five pro form a revenue growth outlook of 2.7% in constant currency, albeit within a tightened range of 1.7% to 3.7%. We are also on track to achieve our target of double digit expected total share of return for the fifth consecutive year supported by significantly improved profitability and a robust earning to cash conversion. With that, let me turn the call over to Tamar for her remarks.

Tamar Rapaport-Dagim
Tamar Rapaport-Dagim
Chief Financial Officer and Chief Operating Officer at Amdocs

Thank you, Shuky, and hello, everyone. Thank you for joining us. Before I begin in today's comments, I will compare certain financial metrics on a pro form a basis, which adjust prior fiscal year twenty twenty four revenue by approximately $600,000,000 to reflect the phase out of certain low margin, non core business activities, which were substantially already seized in the first quarter of fiscal twenty twenty five. To further assist your modeling, the regional mix of this revenue was similar to the overall company, and it contributed roughly $150,000,000 per quarter. Now picking up on Shuky's earlier comments, we delivered a good set of results for the second fiscal quarter as detailed on Slide 18.

Tamar Rapaport-Dagim
Tamar Rapaport-Dagim
Chief Financial Officer and Chief Operating Officer at Amdocs

Q2 revenue of approximately $1,130,000,000 was up 4% year over year in pro form a constant currency and was above the midpoint of our guidance despite negative foreign currency movement of approximately $2,000,000 compared to our guidance assumptions. We are pleased with the stronger pace of growth in Q2, which reflects robust sales, the ramp up of previously signed engagements and recent acquisitions. Reflecting the phase out of certain business activities, reported revenue declined by 9.4% from a year ago. On a regional basis, North America was slightly up sequentially and up 1.4 from a year ago in pro form a constant currency. As anticipated, Europe rebounded from the weakness of the prior quarter, benefiting from the ramp up of new deal activities and a contribution from the previously completed acquisition of Profinet.

Tamar Rapaport-Dagim
Tamar Rapaport-Dagim
Chief Financial Officer and Chief Operating Officer at Amdocs

In Southeast Asia, healthy customer activity was offset by mixed trends in Latin America, resulting in sequential decline in Rest of the World. Shifting down the income statement, non GAAP operating margin of 21.3% improved by 10 basis points sequentially, supported by the ongoing adoption of automation, AI and other sophisticated tools within our operations. Compared with a year ago, non GAAP operating margin jumped by two ninety basis points, primarily reflecting the end of the low margin business activities and efficiency gains. Interest and other expenses amounted to roughly $8,500,000 in the second quarter. On the bottom line, non GAAP diluted EPS of $1.78 was above our guidance range.

Tamar Rapaport-Dagim
Tamar Rapaport-Dagim
Chief Financial Officer and Chief Operating Officer at Amdocs

This was primarily a result of a lower non GAAP effective tax rate in the quarter, which included a tax benefit that materialized earlier than planned in the year. Similarly, diluted GAAP EPS of 1.45 was also above our guidance range due to a lower than expected effective GAAP tax rate in the second quarter. Turning to Slide 19, revenue from managed services was a record $747,000,000 in the second fiscal quarter, up 3.7% from a year ago. Revenue for multiyear managed services engagements accounted for 66% of total revenue in q two, supporting our visibility and underscoring the importance of managed services as a key measure of business resiliency for Amdocs. Our renewal rates for managed services engagements have historically approached hundred percent and typically include an expansion in our scope of activities.

Tamar Rapaport-Dagim
Tamar Rapaport-Dagim
Chief Financial Officer and Chief Operating Officer at Amdocs

To provide a few recent examples, we are extending our long term strategic relationship with Telia Norway through 02/1930 to deliver enhanced managed services. This continued collaboration will improve Telia Norway's operational efficiency, empowering them to offer more streamlined and effective services to their customers. We are also expanding our managed services in PLDT with our current long term engagement to cover non Amdocs applications. And we recently extended the multi year managed services agreement with M1 Limited in Singapore to manage these customers' new cloud native charging platform. Turning to the balance sheet and cash flow highlights on slide 20.

Tamar Rapaport-Dagim
Tamar Rapaport-Dagim
Chief Financial Officer and Chief Operating Officer at Amdocs

DSO of seventy seven days fell four days sequentially and rose by one day year over year, reflecting normal fluctuations in business activity. Unbilled receivables net of deferred revenue declined by $25,000,000 sequentially in Q2, aggregating both the short term and long term balances. As a reminder, the net difference between unbilled receivables and deferred revenue fluctuates from quarter to quarter, in line with normal business activities as well as our progress on significant multiyear transformation programs we are currently running in North America. Reflecting strong execution, free cash flow before restructuring payments was $181,000,000 in Q2. Including restructuring payments of $25,000,000 reported free cash flow was $156,000,000 As expected, Q2 free cash flow was affected by the payment of our annual bonuses for the prior fiscal year, the timing of which occurred as it normally does in the second fiscal quarter.

Tamar Rapaport-Dagim
Tamar Rapaport-Dagim
Chief Financial Officer and Chief Operating Officer at Amdocs

Overall, we ended Q2 with a healthy cash balance of approximately $324,000,000 and bond borrowing of roughly $650,000,000 providing ample liquidity to support our ongoing business needs while retaining the capacity to fund our future strategic growth. Turning to capital allocation on Slide 21. This quarter, we repurchased $135,000,000 of our own shares under our current authorization, of which there was roughly two fifty eight million dollars remaining as of 03/31/2025. Reflecting our confidence in the future success of Amdocs and the company's ability to generate cash, our board has today authorized a new share repurchase plan of $1,000,000,000 with no stated expiration date. Between the two authorizations, we have up to 1,260,000,000.00 of remaining purchase repurchase authority as of as of March 31.

Tamar Rapaport-Dagim
Tamar Rapaport-Dagim
Chief Financial Officer and Chief Operating Officer at Amdocs

Additionally, we paid cash dividends of $54,000,000 in the second fiscal quarter. Looking ahead, we are reiterating our free cash flow target of between seven ten million dollars to $730,000,000 in fiscal twenty twenty five, which is before restructuring payments. Given the previously mentioned seasonality relating to the timing of second quarter bonus payments with roughly 40% of fiscal year twenty twenty five free cash flow target already achieved in the first fiscal half of the year, we are well on track to deliver our annual free cash flow targets. Our annual free cash flow outlook equates to conversion rate of more than 90% relative to expected non GAAP net income and translates to a healthy free cash flow yield of roughly 7% relative to Amdoc's current market capitalization. Regarding our capital allocations in fiscal year twenty twenty five, we expect to return the majority of our free cash flow to shareholders.

Tamar Rapaport-Dagim
Tamar Rapaport-Dagim
Chief Financial Officer and Chief Operating Officer at Amdocs

Moving to Slide '22, '12 months backlog was $4,170,000,000 at the end of Q2, up 3.5% pro form a from a year ago and $30,000,000 sequentially. We expect twelve months backlog to represent roughly 90% of forward looking revenue, further underscoring the importance of this metric as a leading indicator of our business. Now turning to our revenue outlook on slide '23, we are continuing to closely monitor the prevailing level of macroeconomic, geopolitical, business and operational uncertainty in the current business environment. The third quarter and full year 2025 financial guidance reflects what we consider to be the most likely outcome based on the information we have today, but we cannot predict all possible scenarios. On a pro form a constant currency basis, we are reiterating the 2.7% midpoint of our fiscal twenty twenty five revenue growth outlook, which we have tightened to a range of 1.7 to 3.7% year over year as compared to 1% to 4.5% previously.

Tamar Rapaport-Dagim
Tamar Rapaport-Dagim
Chief Financial Officer and Chief Operating Officer at Amdocs

As a reminder, our annual guidance includes another year of double digit growth in cloud and some contributions from inorganic deal activity this year. As of the third fiscal quarter, we expect revenue between $1,110,000,000 to $1,150,000,000 which assumes a positive sequential impact of roughly 4% from foreign currency fluctuations as compared to second quarter of fiscal twenty twenty five. Moving down the income statement, we are on track to produce non GAAP operating margins within our guidance range of 21.1% to 21.7% in fiscal twenty twenty five, the midpoint of which equates to substantial increase of roughly 300 basis points as compared with the prior fiscal year. As previously stated, the midpoint of our full year margin outlook assumes two 30 basis points improvement from phased out business activities and another 60 to 70 basis points resulting from our continued focus on operational excellence, automation and gradual implementation of Gen Below the operating line, foreign currency fluctuations and hedging costs are expected to impact non GAAP net interest and other expense by roughly several million dollars on a quarterly basis. As indicated at the beginning of the year, we expect our non GAAP effective tax rate for fiscal twenty twenty five to be within an annual target range of 15% to 17% for the full fiscal year 2025.

Tamar Rapaport-Dagim
Tamar Rapaport-Dagim
Chief Financial Officer and Chief Operating Officer at Amdocs

Bringing everything together on Slide 25, we are reiterating our non GAAP diluted earnings per share growth outlook of 6.5% to 10.5% in fiscal twenty twenty five. Considering our strong first half earnings per share performance and the midpoint of our Q3 EPS guidance, we expect that by the end of Q3, will have achieved roughly three quarters of our full year targets for non GAAP diluted EPS growth. Overall, we are on track to deliver double digit expected total shareholders returns for its fifth consecutive year in 2025, including our dividend yield of more than 2%. With that, back to you, Shuky.

Shuky Sheffer
Shuky Sheffer
President and CEO at Amdocs

Thanks, Tamal. I am pleased with our performance in the first two quarters, and we are entering the second half with a strong backlog position and rich pipeline of opportunities. We have market leading offering and proven ability to execute. We believe we are well positioned to achieve our targets for the full fiscal year, while we, of course, we're monitoring the current macro environment closely. With that, we are happy to take out your questions.

Operator

Certainly. Our first question comes from the line of Timothy Horan from Oppenheimer. Your question, please.

Timothy Horan
Managing Director at Oppenheimer & Co. Inc.

Great. Thanks, guys. Can we focus on AI a minute? Is it are you starting to see material contributions to revenue growth from AI or improvements to the product? And how are you kind of working with NVIDIA on AI at this point?

Timothy Horan
Managing Director at Oppenheimer & Co. Inc.

Any more color on that collaboration? And then related to that, it sounds like cloud growth is accelerating. Is, is that true? And, you know, is AI helping that growth, or is it go to market or other improvements in the product there? Thanks.

Shuky Sheffer
Shuky Sheffer
President and CEO at Amdocs

So, IT, good to hear you. I think that, what we see in GenAI, I think all along we said that, in order to, we connect strongly GenAI activities with data. Because the only way to get the benefit of GenAI is is to send the data. And this is to some degree what you mentioned, is there some over from the cloud Because definitely, when we move the the data to the new platform, whether it's Microsoft, AWS, or others, definitely it's also on the cloud. We see a lot of activity that supports in AI in the data domain, which we see some expanded activity in the domain, which obviously contribute to revenue growth.

Shuky Sheffer
Shuky Sheffer
President and CEO at Amdocs

And in the use cases, I would say we see good signs of POC that are maturing to real deals. I think it will be more evident in the in the future quarters. But but overall, we see good progress. Regarding NVIDIA, we are obviously collaborating with NVIDIA in many domains. I think what the what was the progress that is done in this quarter beyond what we discussed before, how we can support, you know, calls and sales and and monetization and upsell use cases.

Shuky Sheffer
Shuky Sheffer
President and CEO at Amdocs

I think that the the progress we've done was mainly this quarter was mainly the network domain. And so now we are having actually, we build our network automation and domain domain this quarter building on NVIDIA tools. So I think this was the the the progress regarding NVIDIA on top of what we've done with them already before.

Timothy Horan
Managing Director at Oppenheimer & Co. Inc.

Oh, very helpful. And, Tamar, quick follow-up. Great improvement to, the margins here. Are you using AI to improve your own productivity much? And, you know, is there can you kinda continue the pace of margin improvements going forward for a few years?

Timothy Horan
Managing Director at Oppenheimer & Co. Inc.

Thanks.

Shuky Sheffer
Shuky Sheffer
President and CEO at Amdocs

So so, Tim, let me take this. When we when we talk about GenAI, there are three pillars in Amdocs that we I think that we are actively working. One is the offering, the building on our image platform, and developing AI factory and different use cases, and the and data to support the GenAI. This is one. The other one is all our products today are are are So when they when you when you take our product, they are coming with Gen AI capabilities.

Shuky Sheffer
Shuky Sheffer
President and CEO at Amdocs

And the third element is more of how we are going to get the efficiencies in our software development lab site, in operation using GenAI tool. We see a lot of progress. And definitely, when we look at the remember, we talked before, a lot of automation that we've done historically to support our efficiency and productivity. The next wave of improvement is coming by using the new stool. We are starting to to deploy to cross all our soul development life cycle and operation, and we're starting to see good results.

Timothy Horan
Managing Director at Oppenheimer & Co. Inc.

Thank you.

Shuky Sheffer
Shuky Sheffer
President and CEO at Amdocs

Thank you.

Operator

Thank you. Our next question comes from the line of Shlomo Rosenbaum from Stifel. Your question please.

Shlomo Rosenbaum
Managing Director at Stifel Institutional

Hi, thank you. Shuky, can you just talk a little bit about the customer spending behavior, what you saw this quarter versus what you saw last quarter and we're into May already. There's obviously more risk and concern out there, but are are your clients changing anything, or is it really kind of the same? And then I have another follow-up.

Shuky Sheffer
Shuky Sheffer
President and CEO at Amdocs

I I would say we don't see any change right now in our customer spending behavior. And I think they were cautious before because of different, you know, macro that we discussed before, but we did not see yet any change in the spending behavior following the what we experienced in the last, three, four months.

Shlomo Rosenbaum
Managing Director at Stifel Institutional

Okay. Great. And then, maybe for Tamar. The AR, after several quarters of going up, has seen a couple quarters of of going down. It looks like you're you're hitting milestones and and unbilled are going down.

Shlomo Rosenbaum
Managing Director at Stifel Institutional

Should we think about this as something that was kinda lumpy that you needed to go past? And and and or is this something where there's a certain range that you expect to operate within, and these are just kind of the fluctuations within that range? In other words, did you have a lot of projects that were unusual that you had the milestones kind of in front of you when you got past them, or is this the the normal cadence of bouncing around?

Tamar Rapaport-Dagim
Tamar Rapaport-Dagim
Chief Financial Officer and Chief Operating Officer at Amdocs

I was just the cadence is bouncing around because it's a combination eventually of a portfolio of different projects. But but as I mentioned in the prepared remarks, we are running very large transformations in North America. Of course, we have projects of transformation all over the world. But sizing wise, when we are thinking about what's happening specifically in the and build the AR, we failed position. And I'm usually looking at the net difference because, you know, sometimes the customer may be in an unbilled position and then two quarters later, it will be failed because eventually Mhmm.

Tamar Rapaport-Dagim
Tamar Rapaport-Dagim
Chief Financial Officer and Chief Operating Officer at Amdocs

It's the gap between, how we, what's the pace of recognition versus invoicing. So I I don't think we can say that, oh, now it was a peak level of milestones, and we issued invoices unnecessarily. Now the only way is down. It may bounce around. I think the good news is in every one of these in any one of these customers, in any one of these projects, we are making progress.

Tamar Rapaport-Dagim
Tamar Rapaport-Dagim
Chief Financial Officer and Chief Operating Officer at Amdocs

We are reaching the inwarding milestones. Once we do, we collect the money, so the cycle works. And and I think that looking forward, you know, as we are going after additional significant deals that are in the pipeline, of course, that will be good news. Right? I mean, if we get to win additional deals, and and then they have the cycle of their own, but too early to tell exactly what will be the mix of of these moving elements.

Tamar Rapaport-Dagim
Tamar Rapaport-Dagim
Chief Financial Officer and Chief Operating Officer at Amdocs

And that's why we don't guide for these balances. It's very hard to predict exactly in every quarter all the moving elements.

Shlomo Rosenbaum
Managing Director at Stifel Institutional

Okay. If you don't mind me squeezing one more in. Just following up on the one kind of question from, previously. There's a lot of POCs on the AI offerings, and we've been talking about that for the last few quarters. Is there anything large that has hit in terms of contracting yet?

Shlomo Rosenbaum
Managing Director at Stifel Institutional

Or we still, you know, kinda waiting for the really big, you know, a few big referenceable clients to kind of, start the cascading?

Shuky Sheffer
Shuky Sheffer
President and CEO at Amdocs

Hi, Shlomo. I think that for me, data related activities to support Geni, we do see a good progress, as I said before. And and I cannot mention, but we have at least couple of customer that they are doing a very good progress also from the commercial side, but I cannot name them yet.

Shlomo Rosenbaum
Managing Director at Stifel Institutional

Are they, though, referenceable for other, clients and others? I understand you wanna talk to us about it. But if someone else called in, are they ones that are far enough that they could someone else could talk to? Okay.

Shlomo Rosenbaum
Managing Director at Stifel Institutional

Yes.

Shlomo Rosenbaum
Managing Director at Stifel Institutional

Very good. Thank you.

Shuky Sheffer
Shuky Sheffer
President and CEO at Amdocs

Thank you.

Operator

Thank you. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press 11 on your telephone. And this does conclude the question and answer session of today's program. I'd like to hand the program back to Matt Smith for any further remarks.

Matthew Smith
Matthew Smith
Secretary & Head of Investor Relations at Amdocs

Thanks, operator, and thanks, everyone, for joining this evening. If you do have any additional questions, please reach out to us here in the IR group. And, with that, have a great night. Thanks.

Operator

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Executives
    • Matthew Smith
      Matthew Smith
      Secretary & Head of Investor Relations
    • Shuky Sheffer
      Shuky Sheffer
      President and CEO
    • Tamar Rapaport-Dagim
      Tamar Rapaport-Dagim
      Chief Financial Officer and Chief Operating Officer
Analysts
    • Timothy Horan
      Managing Director at Oppenheimer & Co. Inc.
    • Shlomo Rosenbaum
      Managing Director at Stifel Institutional
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Key Takeaways

  • Amdocs delivered Q2 revenue of $1.13 billion, up 4% year-over-year on a pro forma constant-currency basis, with non-GAAP EPS of $1.78 beating guidance and generating $181 million in free cash flow; its twelve-month backlog rose 3.5% to $4.17 billion.
  • The company maintained strong cloud momentum, winning deals with Microsoft to migrate Amdocs and non-Amdocs applications to Azure for a leading European operator and securing the next phase of PLDT’s AWS modernization, supporting its target of double-digit cloud revenue growth in FY 2025.
  • On the digital transformation front, Amdocs landed new SaaS wins including ConnectX for Consumer Cellular and MarketOne for CK Hutchison, while its eSIM Cloud platform was ranked #1 globally by Counterpoint, underpinning rapid launch of digital brands and monetization offerings.
  • Under its multi-pillar strategy to drive GenAI adoption in telecom, Amdocs launched AI-powered network agents and an AI Factory in collaboration with NVIDIA and Amazon SageMaker, and is progressing multiple POCs with flagship customers to scale data-driven AI services.
  • Managed services revenues hit a record $747 million (66% of total), with near-100% renewal rates and scope expansions at Telia, PLDT and M1, while the company reaffirmed its FY 2025 guidance of ~2.7% pro forma revenue growth (1.7%–3.7% range) and authorized a new $1 billion share repurchase plan.
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Earnings Conference Call
Amdocs Q2 2025
00:00 / 00:00

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