Photo: Oron Golkarov / Amdocs / CC BY 4.0 (Amdocs Park, Ra’anana, 2022 archive)
Amdocs forecast a sharp drop in fiscal 2027 revenue on Tuesday as a dispute with T-Mobile overshadowed growth in its latest annual results. The software and services company also announced an eight-year agreement with AT&T and a move into insurance technology through its acquisition of EIS.
Amdocs shares fell to $35.80 in Tuesday after-hours trading, Investing.com reported, compared with a regular-session close of $62.47. That was a decline of about 42.65% from the close.
Revenue rises, but annual GAAP earnings fall
For the fiscal year ended September 30, Amdocs reported revenue of $4.697 billion, up 3.6% as reported and 3.0% in constant currency, according to its investor release. Managed services brought in $3.023 billion, about 64% of total revenue.
Annual earnings under generally accepted accounting principles, or GAAP, fell 7.3% to $4.68 per diluted share. Non-GAAP diluted earnings, which exclude certain costs, rose 6.0% to $7.41 per share. Free cash flow was $562 million.
Fourth-quarter revenue was $1.194 billion, up 3.8% as reported. Non-GAAP diluted earnings were $1.98 per share, compared with $1.83 a year earlier.
T-Mobile dispute weighs on the forecast
Amdocs expects fiscal 2027 revenue to fall between 14.3% and 17.9% as reported. On a pro forma, constant-currency basis, the forecast is for a decline of 7% to 11%. The latter measure adjusts the prior-year comparison for businesses being sold or exited, including the media business and non-strategic hardware resale activities.
The company said it and T-Mobile have each sent notices alleging that the other materially breached one or more agreements. Those notices raise the possibility of contract termination and claims for money or other relief, including arbitration. Amdocs said it is prepared to pursue its claims and defend against T-Mobile’s assertions.
No outcome has been determined. Amdocs said its guidance includes its best estimates of the dispute’s effects, including possible termination by either party. It also cited the completion of a USCellular customer integration project and lower discretionary spending by T-Mobile as headwinds.
For the first quarter of fiscal 2027, Amdocs forecast revenue of $955 million to $995 million and non-GAAP diluted earnings of $1.27 to $1.33 per share. For the full year, it expects non-GAAP diluted earnings to fall 26% to 30%.
AT&T agreement and insurance expansion
The new eight-year AT&T agreement pairs Amdocs’ aOS software with AT&T’s AI-enabled delivery framework to modernize business and customer operations. Amdocs described AT&T as its largest customer.
Amdocs also said it acquired insurance technology company EIS on November 3 for about $340 million in cash. Additional payments may follow if specified performance targets are met. EIS provides software for policy administration, billing, claims and customer engagement.
The acquisition takes Amdocs into insurance, adding another market alongside its telecommunications business. The company said it expects the deal to contribute some revenue in fiscal 2027, while warning that its forecasts remain subject to the T-Mobile dispute and other risks.
JBizNews Desk | Jersey City, New Jersey
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