Amdocs (DOX) FY Conference Summary Company Overview - Amdocs operates primarily in the telecommunications (telco) industry, focusing on IT infrastructure and providing Business Support Systems (BSS) and operational support systems for service providers [3][4] - The company differentiates itself by being a product-led service provider, offering both product creation and implementation services, which creates a unique accountability model [4][5] Core Business and Market Position - Amdocs serves major telecommunications companies globally, including T-Mobile, AT&T, Comcast, and Verizon in North America, and Telefonica and America Mobile in Latin America, among others [6][7] - The company claims to be the market leader in the Asia-Pacific region and has a significant presence in North America, contributing approximately 60% of its revenue [14][41] - Amdocs' revenue structure includes 66% from managed services and 75% recurring revenue, indicating strong customer retention and long-term contracts [8] Growth Engines - Amdocs identifies several growth engines: 1. **Cloud Services**: Approximately 25% of revenue is cloud-related, with expectations for double-digit growth [16][36] 2. **Consumer Experience**: Enhancements in customer engagement and monetization capabilities [18] 3. **Network Automation**: Focus on optimizing network services without competing directly with core network providers [19] 4. **B2B Automation**: Aiming to improve efficiency in business-to-business services [20] 5. **Generative AI**: Developing AI capabilities to enhance customer service and operational efficiency [22][37] Competitive Landscape - Amdocs faces competition from system integrators like Accenture and product companies like Salesforce, but claims a unique value proposition due to its comprehensive product suite [10][11] - The company has a strong win ratio against competitors, emphasizing its delivery capabilities and customer satisfaction [11][12] Financial Performance and Outlook - Amdocs reported a 4% quarter-over-quarter revenue growth and a 93.5% twelve-month backlog visibility, indicating strong future revenue potential [40][49] - The company anticipates revenue growth of 1.7% to 3.7% for fiscal 2025, with a focus on margin expansion through automation and operational efficiencies [48][50] - Amdocs has a disciplined capital allocation strategy, returning a significant portion of free cash flow to shareholders through buybacks and dividends [8][57] Macro Environment and Customer Sentiment - Despite concerns about a potential macroeconomic slowdown, Amdocs has not observed significant changes in customer spending behavior, with clients focusing on growth and improving consumer experiences [41][44] - The company acknowledges that while it is not immune to macroeconomic pressures, its essential services in billing systems and cloud support are likely to sustain demand [46][47] Strategic Initiatives - Amdocs is actively pursuing acquisitions to enhance its capabilities, particularly in cloud and data science, while maintaining a focus on internal development [55][56] - The company emphasizes the importance of automation and generative AI in transforming its operations and service delivery [51][52] Conclusion - Amdocs is positioned as a leader in the telecommunications IT infrastructure space, with a strong focus on cloud services, customer experience, and automation. The company is navigating a complex macro environment while maintaining growth and profitability through strategic initiatives and a robust service offering.

Core Insights - Amdocs Limited (DOX) reported better-than-expected second-quarter fiscal 2025 results with non-GAAP earnings of $1.78 per share, exceeding management's guidance and increasing 14.1% year over year [1][2] - The company's revenues for the second quarter were $1.23 billion, surpassing the consensus estimate but down 9.4% year over year due to the phase-out of certain business activities [2][4] Financial Performance - Amdocs' earnings surpassed the Zacks Consensus Estimate in three of the last four quarters, with an average surprise of 0.1% [2] - Managed services revenues rose 3.7% year over year to $747 million, while the non-GAAP operating income increased 4.7% year over year to $240.1 million, with an operating margin expansion of 290 basis points to 21.3% [6] - The company ended the second quarter with a backlog of $4.17 billion, up $30 million sequentially [6] Regional Revenue Breakdown - North America generated revenues of $738.3 million, accounting for 65% of total revenues, but saw a decline of 10.3% year over year [4] - Europe revenues, making up 16% of total revenues, decreased 2.2% year over year to $180.7 million [5] - Rest of the World (RoW) revenues, which represent 19% of total revenues, declined 12% year over year to $209.2 million [5] Guidance and Outlook - For the third quarter, Amdocs expects revenues between $1.11 billion and $1.15 billion, with a midpoint of $1.13 billion, indicating a year-over-year decline of 9.3% [8] - Non-GAAP earnings per share guidance for the third quarter is set between $1.68 and $1.74, below the Zacks Consensus Estimate of $1.75 [9] - For fiscal 2025, the company revised its revenue decline rate guidance to 9.1-10.9% from a previous forecast of 8.4-11.6% [9][10] Balance Sheet and Cash Flow - As of March 31, 2025, Amdocs had cash and short-term investments of $324 million, down from $349 million at the end of 2024 [7] - The company generated operating cash flow of $172 million and free cash flow of $156 million during the second quarter [7]

Group 1: Earnings Performance - Amdocs reported quarterly earnings of $1.78 per share, exceeding the Zacks Consensus Estimate of $1.71 per share, and up from $1.56 per share a year ago, representing an earnings surprise of 4.09% [1] - The company posted revenues of $1.13 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.37%, but down from $1.25 billion year-over-year [2] Group 2: Stock Performance and Outlook - Amdocs shares have increased approximately 6.3% since the beginning of the year, contrasting with the S&P 500's decline of -4.7% [3] - The current consensus EPS estimate for the upcoming quarter is $1.75 on revenues of $1.13 billion, and for the current fiscal year, it is $6.97 on revenues of $4.52 billion [7] Group 3: Industry Context - The Computers - IT Services industry, to which Amdocs belongs, is currently ranked in the top 39% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Another company in the same industry, SAIC, is expected to report quarterly earnings of $2.17 per share, reflecting a year-over-year increase of +13% [9]

Amdocs Limited NASDAQ: DOX Fiscal Q2 2025 Earnings Presentation May 7, 2025 Shuky Sheffer President & CEO Tamar Rapaport-Dagim CFO & COO Disclaimer The information contained herein in this presentation or delivered or to be delivered to you during this presentation does not constitute an offer, expressed or implied, or a recommendation to do any transaction in Amdocs Limited securities or in any securities of its affiliates or subsidiaries. This presentation and the comments made by members of Amdocs manage ...

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $1,130,000,000, an increase of 4% year-over-year in pro forma constant currency, exceeding the midpoint of guidance [5][22] - Non-GAAP earnings per share (EPS) was $1.78, above the guidance range, primarily due to a lower than expected non-GAAP effective tax rate [6][24] - The twelve-month backlog increased by 3.5% year-over-year to $4,170,000,000, indicating strong demand and a healthy pipeline [6][29] Business Line Data and Key Metrics Changes - Revenue from managed services reached a record $747,000,000, up 3.7% from the previous year, accounting for 66% of total revenue [24] - The company reported a non-GAAP operating margin of 21.3%, which improved by 10 basis points sequentially and by 290 basis points year-over-year [23][24] Market Data and Key Metrics Changes - North America showed slight sequential growth and a 1.4% increase year-over-year in pro forma constant currency [22] - Europe rebounded from previous weaknesses, benefiting from new deal activities and contributions from acquisitions [22] - Southeast Asia experienced healthy customer activity, while Latin America showed mixed trends, leading to a sequential decline in the Rest of the World [22] Company Strategy and Development Direction - The company is focused on accelerating the adoption of GenAI in the telecom industry, collaborating with NVIDIA to enhance AI capabilities [16][17] - Amdocs aims to deliver double-digit growth in cloud-related revenue for fiscal 2025, supported by strong sales momentum and strategic partnerships [10][30] - The multi-pillar growth strategy emphasizes innovation in cloud, digital transformation, and network automation to meet customer needs [9][12] Management's Comments on Operating Environment and Future Outlook - Management noted rising global macroeconomic uncertainty but believes Amdocs is well-positioned to navigate the environment due to its unique business model [18][19] - The company reiterated a revenue growth outlook of 2.7% for fiscal 2025, with a tightened range of 1.7% to 3.7% [19][30] - Amdocs expects to achieve double-digit total shareholder returns for the fifth consecutive year, supported by improved profitability and cash conversion [31] Other Important Information - The company repurchased $135,000,000 of its own shares and authorized a new share repurchase plan of $1,000,000,000 [27][28] - Free cash flow for Q2 was $181,000,000, with a target of $710,000,000 to $730,000,000 for fiscal 2025 [28] Q&A Session Summary Question: Focus on AI contributions to revenue growth - Management indicated that GenAI activities are closely linked to data, with positive signs of proof of concepts maturing into real deals [34][36] Question: Customer spending behavior - Management reported no significant changes in customer spending behavior despite rising macroeconomic concerns [46][47] Question: Fluctuations in accounts receivable - Management explained that fluctuations in accounts receivable are normal due to the nature of project milestones and invoicing cycles [48][50] Question: Progress on AI offerings and contracting - Management noted good progress in data-related activities supporting GenAI, with several customers making significant strides [53][54]

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $1,130,000,000, an increase of 4% year-over-year in pro forma constant currency, exceeding the midpoint of guidance [5][21] - Non-GAAP earnings per share (EPS) was $1.78, above the guidance range, primarily due to a lower than expected non-GAAP effective tax rate [6][24] - The twelve-month backlog increased by 3.5% year-over-year to $4,170,000,000, supported by a strong pipeline [6][29] Business Line Data and Key Metrics Changes - Revenue from managed services reached a record $747,000,000, up 3.7% from a year ago, accounting for 66% of total revenue [24] - The company reported a non-GAAP operating margin of 21.3%, improving by 10 basis points sequentially and by 290 basis points year-over-year [23] Market Data and Key Metrics Changes - North America saw a slight sequential increase and a 1.4% year-over-year increase in pro forma constant currency [22] - Europe rebounded from previous weaknesses, benefiting from new deal activities and contributions from acquisitions [22] Company Strategy and Development Direction - The company is focused on accelerating the telco industry's adoption of GenAI and enhancing cloud services, with expectations of double-digit growth in cloud-related revenue for fiscal 2025 [16][30] - Amdocs is collaborating with Microsoft for cloud migrations and has secured significant projects in various regions, including the Philippines and Japan [7][10] Management's Comments on Operating Environment and Future Outlook - Management noted rising global macroeconomic uncertainty but believes the company is well-positioned due to its unique business model [18] - The company reiterated a revenue growth outlook of 2.7% for fiscal 2025, with a tightened range of 1.7% to 3.7% [19][30] Other Important Information - The company repurchased $135,000,000 of its own shares and authorized a new share repurchase plan of $1,000,000,000 [27][28] - Free cash flow before restructuring payments was $181,000,000, with a target of $710,000,000 to $730,000,000 for fiscal 2025 [28] Q&A Session Summary Question: Focus on AI contributions to revenue growth and collaboration with NVIDIA - Management indicated that GenAI activities are closely linked to data, with ongoing progress in AI-related projects contributing to revenue growth [34][35] Question: Customer spending behavior changes - Management reported no significant changes in customer spending behavior despite rising macroeconomic concerns [45][46] Question: Fluctuations in accounts receivable and unbilled balances - Management explained that fluctuations are normal due to the nature of various projects and milestones, and they do not guide for these balances due to their unpredictability [47][49] Question: Progress on AI offerings and contracting - Management noted good progress in data-related activities supporting GenAI, with several customers making significant strides, although specific names could not be disclosed [52][54]

Company Overview - Amdocs (DOX) shares increased by 6% to $85.32 in the last trading session, following a broader market rally after US President Donald Trump's announcement to pause reciprocal tariffs for 90 days [1] - The stock had previously experienced a 9.4% loss over the past four weeks [1] Earnings Expectations - Amdocs is expected to report quarterly earnings of $1.71 per share, reflecting a year-over-year increase of 9.6% [2] - Revenue is anticipated to be $1.12 billion, which is a decrease of 9.8% compared to the same quarter last year [2] Stock Performance and Trends - The consensus EPS estimate for Amdocs has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without trends in earnings estimate revisions [3] - Amdocs currently holds a Zacks Rank of 3 (Hold), suggesting a neutral outlook [3] Industry Context - Amdocs is part of the Zacks Computers - IT Services industry, where CoStar Group (CSGP) also operates [3] - CoStar's stock closed 7.5% higher at $78.70, but has returned -4.7% over the past month [3][4] - CoStar's consensus EPS estimate has remained unchanged at $0.10, indicating no growth compared to the previous year [4]

Core Insights - Amdocs and Google Cloud are launching a new Network AIOps solution aimed at automating network operations and enhancing customer experiences for telecommunications companies using AI and BigQuery [1][3][4] Industry Context - Communications service providers (CSPs) are under pressure to reduce operational costs, enhance network resiliency, and deliver exceptional customer experiences, prompting investments in cloud-native technologies for their 5G ecosystems [2][4] - The transition to distributed networks introduces challenges such as equipment integration from multiple vendors, management of distributed architectures, real-time optimization needs, and data insights extraction [2] Amdocs Network AIOps Solution - The solution leverages Google Cloud's AI infrastructure, including Cloud Storage, Dataflow, Dataproc, BigQuery, and Vertex AI, providing a scalable foundation for network optimization [3][5] - Key features of the Amdocs Network AIOps include: - AI-driven insights for predictive analytics and root-cause analysis, enabling proactive network management and reduced incident resolution times [5] - Automated workflows for routine tasks like network configuration and performance optimization, minimizing human error [5] - Closed-loop automation that continuously learns from data to enhance accuracy and efficiency over time [5] - Predictive maintenance using machine learning to foresee network failures, thereby minimizing downtime and operational costs [5]

Revenue Performance - Revenue for Q1 Fiscal 2025 was $1.11 billion, down 10.9% YoY as reported, but up 1.7% YoY in pro forma constant currency[2] - Amdocs reported revenue of $1.11 billion for the three months ended December 31, 2024, a decrease of 10.8% compared to $1.25 billion in the same period of 2023[32] - Total revenue for the three months ended December 31, 2024, was $1,110.1 million, down from $1,263.9 million in the previous quarter, representing a decrease of 12.1%[44] Managed Services - Managed services revenue accounted for approximately 66% of total revenue, totaling $729 million, reflecting a 0.9% increase compared to the previous year[3] - Managed Services Revenue for the same period was $728.9 million, slightly up from $721.4 million in the previous quarter, indicating a growth of 2.1%[44] Earnings and EPS - GAAP diluted EPS was $1.33, exceeding the guidance range of $1.20-$1.29, while non-GAAP diluted EPS was $1.66, at the higher end of the guidance range of $1.61-$1.67[3] - Non-GAAP diluted earnings per share increased to $1.66, up from $1.56 in the prior year, reflecting a growth of 6.4%[34] - Net income attributable to Amdocs Limited was $151.13 million, slightly up from $147.97 million, marking a year-over-year increase of 2.3%[32] - Net income for the three months ended December 31, 2024, was $151.852 million, an increase from $148.722 million in the same period of 2023, reflecting a growth of 1.5%[42] Cash Flow and Dividends - Free cash flow for Q1 was $78 million, with a full-year outlook of $710 million to $730 million, excluding restructuring payments[3] - Free cash flow for the quarter was $78.20 million, down from $138.64 million in the same quarter of 2023, indicating a decline of 43.5%[36] - A quarterly cash dividend of $0.527 per share was approved, with a record date of March 31, 2025[15] - The company declared cash dividends of $0.479 per ordinary share, an increase from $0.435 in the previous year[32] Backlog and Future Outlook - The twelve-month backlog increased to $4.14 billion, up $80 million sequentially and 2.7% YoY on a pro forma basis[2] - The 12-month backlog as of December 31, 2024, was $4,140 million, an increase from $4,060 million in the previous quarter, showing a growth of 2%[44] - The company expects Fiscal 2025 revenue growth of (11.6)% to (8.5)% YoY as reported, and 1% to 4.5% YoY in pro forma constant currency[2] - Amdocs reiterated its target for double-digit total shareholder returns for Fiscal 2025[2] Acquisitions and Strategic Focus - Amdocs completed the acquisition of Profinit for approximately $34 million, with additional performance-based considerations[15] - Amdocs continues to focus on integrating artificial intelligence and Generative AI into its offerings and operations as part of its growth strategy[29] Financial Position - Total assets decreased to $6.29 billion as of December 31, 2024, down from $6.39 billion at the end of September 2024[40] - Current liabilities decreased to $1.38 billion from $1.47 billion, showing a reduction of 6.1%[40] - Amdocs' cash and cash equivalents were reported at $213.83 million, down from $346.09 million, a decline of 38.2%[40] - Cash and cash equivalents at the end of the period were $213.833 million, down from $382.885 million at the end of the same period in 2023, reflecting a decrease of 44.2%[42] Operating Income and Expenses - Operating income for the same period was $198.83 million, representing an increase of 7.5% from $184.33 million year-over-year[32] - Net cash provided by operating activities for the three months ended December 31, 2024, was $105.555 million, a significant decrease from $182.387 million in the same period of 2023, down by 42.2%[42] - Net cash used in investing activities was $(34.729) million, compared to $(111.610) million in the same period of 2023, indicating an improvement of 68.9%[42] - Net cash used in financing activities for the three months ended December 31, 2024, was $(203.078) million, a slight decrease from $(207.972) million in the same period of 2023, down by 2.1%[42] - The company reported a loss from short-term interest-bearing investments of $662 thousand, compared to a loss of $548 thousand in the same period of 2023[42] - The company’s accounts payable and accrued expenses decreased significantly by $50.837 million, compared to an increase of $95.787 million in the same period of 2023[42]

Core Insights - Zacks Premium offers various tools for investors to enhance their stock market engagement and confidence [1] - The Zacks Style Scores serve as complementary indicators to the Zacks Rank, aiding in stock selection with high potential for market outperformance [2] Zacks Style Scores Overview - Stocks are rated from A to F based on value, growth, and momentum, with A indicating the highest potential for outperformance [3] - The Style Scores are categorized into four types: Value Score, Growth Score, Momentum Score, and VGM Score [3][4][5][6] Value Score - Focuses on identifying undervalued stocks using financial ratios such as P/E, PEG, Price/Sales, and Price/Cash Flow [3] Growth Score - Concentrates on a company's financial health and future growth potential, analyzing projected and historical earnings, sales, and cash flow [4] Momentum Score - Targets stocks with upward or downward price trends, utilizing factors like one-week price change and monthly earnings estimate changes [5] VGM Score - Combines all three Style Scores to provide a comprehensive rating, highlighting stocks with attractive value, strong growth forecasts, and promising momentum [6] Zacks Rank Integration - The Zacks Rank leverages earnings estimate revisions to guide investors in stock selection, with 1 (Strong Buy) stocks historically yielding an average annual return of +25.41% since 1988 [7][8] - Investors are encouraged to focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B for optimal returns [10] Stock Example: Amdocs (DOX) - Amdocs Limited is a leading provider in customer care and billing systems, currently rated 3 (Hold) with a VGM Score of A [12] - The stock has a Momentum Style Score of A, with a 3% increase in shares over the past four weeks [12] - Recent upward revision of earnings estimates for fiscal 2025, with the Zacks Consensus Estimate rising by $0.03 to $7 per share [13]