Core Thesis - Amdocs Limited (DOX) is viewed positively due to its strong market position, financial stability, and growth potential in the IT services sector [1][6][7] Company Overview - Amdocs Limited is a mid-cap IT services company that provides software and services for communications, media, and entertainment providers, with offerings in AI, cloud, 5G, and digital platforms [2] - The company has nearly 1,000 client relationships globally, which supports its operations and enhances digital experiences [3] Financial Performance - Amdocs has experienced mid-single-digit trailing revenue growth over the past five years, but has recently faced a revenue decline of -6.8% [4] - Gross margins are robust at 37.2%, with positive double-digit net profit margins, although these are below the S&P 500 benchmark [4] - Owners' earnings, which include EPS and dividend growth, have grown at a double-digit rate, reaching 26.2% when factoring in free cash flow [5] Capital Allocation and Shareholder Returns - The company has a disciplined approach to capital allocation, including a $1 billion share repurchase plan initiated in May 2025 [5] - A consistent dividend policy and strategic share repurchases highlight Amdocs' commitment to financial stability and shareholder-friendly management [6] Competitive Positioning - Amdocs benefits from a narrow economic moat due to sticky customer relationships, which foster recurring revenue and long-term engagement [3][6] - The company's cloud portfolio and high-margin services position it as a resilient player in the mid-cap technology services market [6]

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]