AMDOCS LTD Q1 FY2026 earnings call

• Shuky Sheffer reported a solid start to fiscal 2026 with revenue of $1.16 billion, slightly above guidance midpoint. Signed a new multiyear agreement with T-Mobile, expanded global customer footprint through organic and inorganic moves, and closed the acquisition of Matrix Software. Made progress in generative AI with the announcement of AOS, and had cloud migration collaboration with AT&T. - Jimmy Olfic expressed excitement to lead Amdocs into the next chapter, emphasizing the company's strengths in people, culture, customer trust, and technology innovation. - Tamar Rapaport-Dagim discussed financials: non-GAAP operating margin at 21.6%, up 40 basis points year-over-year; non-GAAP diluted EPS at $1.81; free cash flow before restructuring payments at $237 million; repurchased $146 million of shares and paid $57 million in cash dividends.

In the first fiscal quarter, Amdocs reported revenue of approximately $1.156 billion, which was up 3.5% year-over-year in constant currency. On a reported basis, revenue was up 4.1% from the prior year. North America saw nearly a 4% year-over-year increase and was higher sequentially for the fourth consecutive quarter. Europe experienced an 17% year-over-year increase and 1% sequential growth, driven by organic growth initiatives and the December 2024 acquisition of Profinet. Rest of the World was down year-over-year but improved slightly quarter-over-quarter. Managed Services revenue was $746 million, up 2.3% from the prior year and accounted for roughly 65% of total revenue.

Reiterated revenue growth guidance for fiscal 2026 of between 1.5% and 5.5% in constant currency. Non-GAAP diluted earnings per share growth expected to be between 4% to 8% for fiscal 2026. Q2 revenue expected to be between $1.15 billion to $1.19 billion. Non-GAAP operating margin targeted to be within 21.3% to 21.9% in fiscal 2026, excluding additional restructuring charges.

Monitoring macroeconomic, geopolitical, business, and operational uncertainty. Integration activities with T-Mobile (like UScellular integration) are nonrecurring and ramp down once completed.

Q: Shlomo Rosenbaum asked about the T-Mobile multiyear agreement details, including length, scope, and revenue trajectory, and about the Matrix acquisition's revenue contribution.

A: Tamar Rapaport-Dagim said the T-Mobile agreement is a five-year one covering managed services, development, and AI-related activities; Shuky Sheffer discussed Matrix acquisition as a consolidation of a strong product with tier-two capabilities. Tamar mentioned Matrix was incorporated in the revenue growth guidance with half of growth expected from M&A but being conservative on revenue visibility.

Q: Dan McDermott asked about the new agentic operating system AOS and Verizon's expenses and AI initiatives.

A: Shuky Sheffer explained AOS is a layer sitting on top of BSS/OSS infrastructure for generative AI, to be showcased at Mobile World Congress; stated he couldn't comment specifically on Verizon's restructuring but indicated Amdocs is engaging with them.

Q: George Notter asked about telcos' progress in accelerating and simplifying their AI journey and pipeline progression.

A: Shuky Sheffer said AOS is a holistic value proposition moving from opportunistic to strategic AI use cases for telcos, with early field trials and value realization but still early days.

Q: Tomer Zilberman asked about revenue beat and T-Mobile milestones trajectory.

A: Tamar Rapaport-Dagim said the revenue beat wasn't due to a specific customer but faster performance; stated the T-Mobile agreement covers multiple activities like managed services, development, AI, and UScellular integration, not a single specific milestone to point to.