Q2 2025 Financial Performance - Revenue reached $1.13 billion, a 40% year-over-year increase on a pro forma constant currency basis[18] - Non-GAAP operating margin was 213%, up 290 basis points year-over-year[18] - Free cash flow was $156 million, or $181 million excluding restructuring payments[18] - Non-GAAP EPS was $1.78, exceeding guidance[18] - The 12-month backlog grew to $4.17 billion, a 35% year-over-year increase on a pro forma basis[18] Strategic Progress - Amdocs is expanding with new and existing customers in North America, including strengthened relationships with payment solutions, dealer commissions, and expanded IT services[20] - The company is achieving project milestones for major operators, such as progressing AT&T's mainframe-to-cloud migration and delivering a cloud-native platform in Japan[21] - Managed services achieved a record quarter, representing approximately 66% of total revenue in Q2 2025[23, 51] - Amdocs is focused on strategic growth domains, including accelerating the journey to the cloud, digitally transforming the customer experience, monetizing next-generation networks, delivering dynamic connected experiences, and simplifying the adoption of Generative AI[24] FY2025 Outlook - Amdocs is reiterating its FY2025 revenue growth outlook of 17%-37% year-over-year in pro forma constant currency[39] - The company is targeting a non-GAAP operating margin of 211%-217%, up 300 basis points year-over-year at the midpoint[39] - Free cash flow is projected to be between $710 million and $730 million, with a free cash flow yield of approximately 7%[39] - Amdocs is positioned for double-digit expected total shareholder returns in FY2025[39]

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]

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Core Insights - Amdocs' international operations are crucial for understanding its financial strength and growth potential [1][2] - The company's reliance on international markets influences its earnings durability and growth capabilities [2][3] Revenue Performance - Amdocs reported total revenue of $1.11 billion for the quarter, a decrease of 10.9% year-over-year [4] - Revenue from Europe was $155.2 million, accounting for 13.98% of total revenue, which was below the consensus estimate of $163.62 million [5] - The "Rest of the World" contributed $217.4 million, or 19.58% of total revenue, exceeding expectations of $215.11 million [6] Future Revenue Projections - Analysts expect Amdocs to report total revenue of $1.13 billion in the current fiscal quarter, reflecting a decline of 9.5% from the prior year [7] - For the entire year, total revenue is forecasted at $4.53 billion, a reduction of 9.5% from the previous year, with Europe contributing 14.6% ($659.8 million) and the Rest of the World 19.9% ($900.8 million) [8] Market Context - The interconnected global economy presents both opportunities and challenges for Amdocs, making the analysis of international revenue trends essential for forecasting [9][10] - Wall Street analysts are closely monitoring these trends, especially in light of geopolitical tensions and their impact on earnings predictions [10] Stock Performance - Amdocs' stock has increased by 4.6% over the past month, outperforming the Zacks S&P 500 composite, which rose by 2.1% [13] - Over the past three months, the company's stock price increased by 2.4%, compared to a 1.2% rise in the S&P 500 index [13]