Amdocs delivered quarterly results that met Wall Street’s revenue expectations and modestly surpassed profit forecasts, prompting a positive market reaction. Management highlighted ongoing efficiency gains and robust execution in its managed services segment, which now contributes two-thirds of total revenue. CEO Shuky Sheffer credited strengthened relationships with key clients such as AT&T and new business from Consumer Cellular for helping offset a year-over-year revenue decline. Sheffer noted, “We are working with Microsoft to migrate Amdocs and non-Amdocs applications to the Microsoft Azure platform for a leading Tier 1 European operator,” emphasizing cloud migration as a central business driver.
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Amdocs (DOX) Q1 CY2025 Highlights:
- Revenue: $1.13 billion vs analyst estimates of $1.12 billion (9.4% year-on-year decline, in line)
- Adjusted EPS: $1.78 vs analyst estimates of $1.70 (4.5% beat)
- Adjusted EBITDA: $270.5 million vs analyst estimates of $279.9 million (24% margin, 3.4% miss)
- Revenue Guidance for Q2 CY2025 is $1.13 billion at the midpoint, roughly in line with what analysts were expecting
- Adjusted EPS guidance for the full year is $8.50 at the midpoint, beating analyst estimates by 21.9%
- Operating Margin: 17.5%, up from 12.5% in the same quarter last year
- Backlog: $4.17 billion at quarter end, down 1.4% year on year
- Market Capitalization: $10.2 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Amdocs’s Q1 Earnings Call
- Timothy Horan (Oppenheimer) asked if AI is materially contributing to revenue and how the NVIDIA collaboration is progressing. CEO Shuky Sheffer emphasized that while GenAI activities are expanding, most revenue impact is expected in future quarters, and recent progress has been in network automation.
- Timothy Horan (Oppenheimer) followed up on margin improvement and AI’s impact on productivity. Sheffer explained that GenAI is being deployed internally to boost operational efficiency, with early results seen in software development and operations.
- Shlomo Rosenbaum (Stifel) questioned changes in customer spending behavior amid macro uncertainty. Sheffer replied that client spending patterns remained consistent with prior quarters, with no recent shifts detected despite broader caution.
- Shlomo Rosenbaum (Stifel) asked about the recent trend in accounts receivable and unbilled balances. CFO Tamar Rapaport-Dagim stated these metrics fluctuate due to project mix and milestones, and do not indicate a structural change.
- Shlomo Rosenbaum (Stifel) sought clarity on the timing of large AI contracts. Sheffer confirmed progress but stated that major, referenceable commercial wins are still in development, with some clients already showing strong advances.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be tracking (1) the pace at which GenAI proof-of-concept projects convert to commercial contracts, (2) continued momentum in cloud migration wins and SaaS platform adoption, and (3) sustained high renewal rates and expansion in managed services agreements. We will also monitor for any changes in customer spending patterns due to macroeconomic developments.
Amdocs currently trades at $91.73, up from $89.42 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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