Amdocs Q3 Earnings Call Highlights

Amdocs (NASDAQ:DOX) reported fiscal third-quarter 2026 revenue of approximately $1.175 billion, up 2.7% from a year earlier on a reported basis and 2.2% in constant currency. Non-GAAP diluted earnings per share totaled $1.84, in line with the midpoint of the company’s guidance.

President and CEO Shimie Hortig said the quarter reflected “solid financial and operating performance,” while highlighting the company’s strategy to expand its agentic artificial intelligence offerings. Non-GAAP operating margin rose 20 basis points year over year to 21.6%.

GAAP diluted EPS was $0.59, below the company’s prior guided range, due to a restructuring charge of roughly $0.91 per share. CFO Tal Rozenfeld said the charge resulted from accelerating Amdocs’ internal transformation and its strategy to become an “agentic-first” organization. Excluding the restructuring charge, GAAP diluted EPS would have exceeded the guided range, he said.

Managed Services Reach Record Revenue

Managed services revenue reached a record $791 million during the quarter, representing about 67% of total company revenue and increasing 2.5% from the prior-year period. Hortig said the company continued to see sales momentum for its core products and services, citing customer wins involving Lumen, Telus, Three Scandinavia, Telefônica Vivo, PLDT and Opteck.

The company closed the quarter with 12-month backlog of $4.26 billion, up 2.7% from a year earlier but down $20 million sequentially. Rozenfeld said the measure remains a leading indicator of the company’s business and forward visibility. He added that the Liberty Latin America agreement was partially included in the backlog figure.

Amdocs generated free cash flow before restructuring payments of $193 million in the quarter, or $172 million after $21 million in restructuring payments. The company said it had achieved nearly 75% of its fiscal-year free-cash-flow target through the first nine months.

At June 30, Amdocs had approximately $206 million in cash, aggregate borrowings of about $930 million, and $520 million available under its revolving credit facility. During the quarter, the company repurchased $143 million of its shares and paid $60 million in cash dividends. It had $560 million remaining under its share-repurchase authorization at quarter-end.

Liberty Latin America Signs 10-Year IT Transformation Deal

The company’s principal strategic announcement was a new 10-year agreement with Liberty Latin America to manage and transform the provider’s end-to-end IT ecosystem. Hortig characterized the arrangement as a large-scale flagship engagement that will use Amdocs’ aOS, or Agentic Telco Operating System.

According to Amdocs, the project moves beyond traditional IT operations to an AI-driven model intended to accelerate time to market, increase product innovation, improve customer and employee experiences, and create cost savings. Hortig said the agreement represents a major expansion of Amdocs’ prior, smaller footprint with Liberty Latin America.

Hortig said aOS is designed to help telecommunications providers apply agentic AI across business and IT operations, simplify workflows and reduce operating costs. He said the company had launched aOS in early March and had secured 10 customer engagements within roughly five months, although some were smaller initial projects.

Amdocs said AT Cricket, Lumen, EchoStar, Bell and PLDT were among the early adopters of aOS. More recently, Verizon, Telus, Sunrise Switzerland, Three Scandinavia and an unnamed Tier 1 Asia-Pacific provider signed initial aOS agreements.

Among examples discussed on the call, Hortig said Telus has shown early results from a customer digital-twin engagement designed to personalize service and sales interactions. Amdocs is also working with Verizon on an agentic AI program to automate RF-design workflows, which remains in active development.

Four-Pillar Agentic Strategy

Hortig outlined a four-pillar growth strategy centered on aOS. The first pillar is expanding aOS as the company’s agentic operating system for telecommunications providers. The second is pursuing potential expansion into additional regulated, high-volume and mission-critical industries where Amdocs believes its core-system transformation experience could be relevant.

The third pillar, described as emerging growth horizons, focuses on identifying and scaling technology offerings that address new customer needs arising from generative AI. The fourth calls for Amdocs to transform its own software development, service delivery and operations through agentic capabilities.

Hortig said the company is using its own technology internally as “customer zero.” While Amdocs expects internal agentic transformation to create efficiencies over time, he said it is currently balancing those potential gains with investments in aOS, research and development, sales and marketing, as well as uncertainty around future technology and token costs.

Fiscal 2026 Outlook Reaffirmed

Amdocs narrowed its full-year revenue outlook while maintaining its midpoint expectations. The company now expects reported revenue growth of 3.2% to 4.0% for fiscal 2026, including an expected foreign-exchange tailwind of roughly 0.6%. Constant-currency revenue growth is projected at 2.6% to 3.4%, maintaining the 3% midpoint of prior guidance.

About half of expected fiscal 2026 revenue growth is anticipated to be inorganic, Rozenfeld said. Fourth-quarter revenue is projected to be between $1.175 billion and $1.215 billion.

• Full-year non-GAAP operating margin is expected to be 21.3% to 21.9%.
• Non-GAAP diluted EPS growth is expected to be 5.5% to 6.5%, retaining a 6% midpoint.
• Free cash flow before restructuring payments is expected to be $710 million to $730 million.
• The company expects to return the majority of its free cash flow to shareholders during fiscal 2026.

Rozenfeld said the guidance reflects ongoing monitoring of macroeconomic, geopolitical, business and operational uncertainty, including customer spending behavior.

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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