Amdocs Q1 Earnings Call Highlights

Key Points

• Financials & guidance: Amdocs reported Q1 revenue of $1.16 billion (up 4.1% YoY), non‑GAAP operating margin of 21.6% and EPS of $1.81, with a 12‑month backlog of $4.25 billion, and reiterated fiscal‑2026 guidance of 1%–5% constant‑currency revenue growth and 4%–8% non‑GAAP EPS growth.
• AI strategy and AOS: The company is accelerating investment in generative AI (Amaze platform and NVIDIA partnerships) and unveiled AOS, an “agentic operating system” for telecoms to be shown at Mobile World Congress, though AOS was not expected to contribute significant revenue in FY2026.
• Corporate moves: Amdocs closed the MATRIXX Software acquisition for $197 million to bolster billing/monetization capabilities, and announced a planned CEO succession with Jimmy Hortick succeeding Shuky Sheffer on March 31, 2026.

Amdocs NASDAQ: DOX reported first fiscal quarter 2026 results that management described as a “solid start” to the year, while highlighting continued investment in generative AI and data services, an expanded customer footprint in Europe, and the closing of its MATRIXX Software acquisition. The company also announced a planned CEO transition, with longtime executive Jimmy Hortick set to succeed Shuky Sheffer as president and CEO at the end of March 2026.

First-quarter results and backlog

For the first quarter, Amdocs reported revenue of $1.16 billion, which was slightly above the midpoint of its guidance range. Revenue increased 4.1% year-over-year on a reported basis and 3.5% in constant currency.

Non-GAAP operating margin was 21.6%, improving by 40 basis points from a year ago and remaining stable sequentially, as the company balanced cost and efficiency initiatives with increased investment to support long-term growth. Non-GAAP diluted earnings per share were $1.81, above the guidance range, which management attributed primarily to a lower-than-expected tax rate for the quarter.

Amdocs ended the quarter with 12-month backlog of $4.25 billion, up $60 million sequentially and 2.7% from a year earlier.

Customer activity: T-Mobile agreement and European wins

Management emphasized several customer developments during the quarter, including a new multi-year agreement with T-Mobile. Sheffer said the agreement includes managed services, software development, AI innovation, and integration work related to “common systems,” and that Amdocs is also supporting T-Mobile in the integration of UScellular. On the Q&A, Sheffer said the T-Mobile agreement is a five-year agreement, which he characterized as typical for long-term managed services engagements.

Despite the renewal, Sheffer reiterated expectations that Amdocs will see a revenue decline with T-Mobile in fiscal 2026 due to a lower level of spending. He added that integration work is inherently non-recurring and typically ramps down once completed.

In Europe, Amdocs said it signed an expanded multi-year engagement at Vodafone Germany, which Sheffer described as Vodafone’s largest operating company. The company also cited “significant transformation awards” with two new logos in Western Europe. Additional deals mentioned included:

• Fastweb (Swisscom subsidiary) broadening use of the Amdocs OMS platform as a unified orchestration layer following post-merger integration with Vodafone Italy.
• Sunrise extending its collaboration with Amdocs to support AI evolution in CRM.
• A four-year renewal with Telefónica Germany for the Actix mobile network platform.
• A proof of concept with a “leading operator in Japan” deploying Amdocs RevenueONE billing capabilities for real operational scenarios.

Generative AI strategy and the AOS announcement

Amdocs positioned generative AI as a central part of its growth strategy, pointing to continued wins tied to its Amaze generative AI platform and partnerships that leverage NVIDIA’s AI capabilities. Sheffer cited execution work tied to prior commercial awards with Optimum, Consumer Cellular, EE, and Telefónica Germany, among others, and said the company is seeing “consistent pipeline expansion” and growing commercial progress.

During the quarter, Amdocs also announced AOS, an “agentic operating system purpose-built for telecommunications,” which it plans to showcase at Mobile World Congress in early March. Sheffer described AOS as a layer designed to operate on top of any BSS/OSS stack, embedding what the company calls “Cognitive Core” to enable end-to-end workflows across environments. In response to an analyst question, Sheffer said Amdocs did not include any significant AOS-related revenue in its fiscal 2026 outlook, but believes it could be a long-term growth engine as telecom providers move from isolated AI use cases to more strategic, holistic adoption.

MATRIXX acquisition and financial position

Amdocs said it closed its acquisition of MATRIXX Software for $197 million in cash in the last week of the quarter, making its Q1 revenue contribution “immaterial,” according to CFO and COO Tamar Rapaport-Dagim. Management described MATRIXX as a strategic consolidation move that complements Amdocs’ billing, monetization, and charging solutions, and highlighted MATRIXX’s customer base, including Verizon, TELUS, Telefónica, Three, Virgin Media O2, and Telstra.

On the balance sheet, Amdocs ended Q1 with approximately $248 million in cash and roughly $780 million in aggregate borrowings, including a $130 million drawdown on its revolving credit facility to fund the MATRIXX acquisition and a $650 million senior note maturing in June 2030.

Free cash flow before restructuring payments was $237 million in Q1. After $49 million of restructuring payments, reported free cash flow was $188 million. Amdocs also repurchased $146 million of shares and paid $57 million in dividends during the quarter. The company said it had $840 million remaining under its repurchase authorization as of December 31, 2025.

Guidance reiterated; CEO succession announced

Amdocs reiterated its outlook for fiscal 2026 constant-currency revenue growth of 1% to 5% and non-GAAP diluted EPS growth of 4% to 8%. For the full year on a reported basis, the company guided to revenue growth of 1.5% to 5.5%, with management stating that roughly half of the growth is expected to be inorganic, including MATRIXX (which was incorporated into assumptions when guidance was provided last quarter). Second-quarter revenue guidance was $1.15 billion to $1.19 billion.

Rapaport-Dagim said Amdocs expects to deliver non-GAAP operating margins within a 21.3% to 21.9% range in fiscal 2026, reflecting accelerated R&D, sales, and marketing investments tied to generative AI and AOS, balanced by continued automation and operational efficiency initiatives. The company also reiterated its expectation for a 16% to 19% non-GAAP effective tax rate for the full year, while noting that Q2’s tax rate is expected to be above the high end of that annual range.

Separately, Sheffer announced he will retire as president and CEO after more than seven years in the role. He said Jimmy Hortick will succeed him effective March 31, 2026, following a planned transition period. Hortick told investors he is “excited to lead Amdocs to the next chapter,” pointing to the company’s culture, customer trust, and technology and innovation as key strengths.

About Amdocs NASDAQ: DOX

Amdocs NASDAQ: DOX is a global software and services provider specializing in solutions for communications, media and entertainment companies. The company designs, develops and integrates revenue management, customer experience and digital services platforms that enable service providers to launch and monetize new offerings, streamline operations and enhance subscriber engagement. Amdocs' product suite encompasses billing and order management, customer relationship management, digital commerce and network function virtualization, supported by professional services for implementation, integration and managed operations.

Founded in 1982 and structured as a separate public company in 1998, Amdocs has its corporate headquarters in Chesterfield, Missouri, and maintains major development centers in Ra'anana, Israel.

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