Amdocs (NASDAQ:DOX) reported fourth-quarter and full-year fiscal 2026 results in line with its guidance while outlining a fiscal 2027 outlook that reflects a significant expected revenue and profit impact from its situation with T-Mobile.
President and Chief Executive Officer Shimie Hortig said the company is repositioning around its Amdocs Agentic Operating System for Telco, or aOS, while expanding into the insurance software market through the $340 million cash acquisition of EIS. However, Amdocs expects fiscal 2027 revenue to decline as it incorporates conservative assumptions related to T-Mobile and exits certain non-strategic activities.
Fiscal 2026 Results Meet Guidance
For the fourth quarter, Amdocs reported revenue of approximately $1.194 billion, up 3.8% from a year earlier as reported and 4% in constant currency. Non-GAAP operating margin was 21.6%, unchanged sequentially, while non-GAAP diluted earnings per share totaled $1.98, one cent above the midpoint of the company’s guidance.
GAAP diluted earnings per share was $1.35, below Amdocs’ guided range of $1.48 to $1.56. Chief Financial Officer Tal Rozenfeld attributed the shortfall primarily to a restructuring charge of roughly $0.22 per share associated with accelerating the company’s internal transformation and agentic-first strategy.
Fourth-quarter free cash flow before restructuring payments was $202 million.
For fiscal 2026, revenue rose 3.6% as reported to $4.697 billion and increased 3% in constant currency at the midpoint of guidance. North American revenue grew approximately 0.6%, while Europe rose about 8% and the rest of the world increased roughly 11%.
- Non-GAAP operating margin improved 20 basis points to 21.6%.
- Non-GAAP diluted EPS rose 6% for the year.
- Free cash flow before restructuring payments was $729 million, at the high end of the company’s $710 million to $730 million guidance range.
- Reported free cash flow, including $167 million in restructuring payments, was $562 million.
aOS Agreements and Insurance Expansion
Hortig highlighted an eight-year strategic agreement with AT&T, Amdocs’ largest customer, designed to accelerate AT&T’s adoption of agentic technology alongside its own artificial intelligence capabilities. Under the arrangement, the companies will operate as one delivery team and share responsibility for delivering projects more quickly while reducing the cost of modernizing and operating critical systems.
The company also announced a 10-year agreement with VEON to apply aOS across operations, customer experiences and digital services. Other aOS-related agreements included a multi-year deal with Globe in the Philippines to modernize core business platforms and IT operations, and an engagement with VodafoneThree in the United Kingdom to upgrade B2B support systems and consolidate legacy systems onto an Amdocs enterprise stack.
Amdocs said its previously announced 10-year Liberty Latin America agreement was another example of the platform’s sales momentum. Hortig said the company’s aOS wins, including its agreement with AT&T, are expected to contribute to growth outside the T-Mobile relationship during fiscal 2027.
Separately, Amdocs acquired EIS for $340 million in cash as part of its move into insurance software. EIS provides insurance core systems spanning policy administration, billing, claims and customer engagement. Hortig said EIS serves insurance carriers including Aflac, Allstate, AAA, BNP Paribas and Carrefour.
“Insurance is a large and growing market,” Hortig said, describing it as an industry with regulated operating environments, complex mission-critical platforms and data-intensive workflows similar to telecommunications. The company said it does not currently plan to expand into multiple additional verticals beyond insurance.
T-Mobile Headwind Drives Fiscal 2027 Outlook
Amdocs said it faces a major headwind from T-Mobile, citing reduced discretionary spending, the completion of a one-time UScellular customer integration project during fiscal 2026, and a dispute related to a recently signed agreement that has escalated into a legal dispute.
Hortig said Amdocs continues to support T-Mobile and that there has been no termination of its agreement. He declined to provide customer-specific revenue figures because of the confidential nature of the matter, but said the company was prepared to defend its position, including through arbitration.
“This is an isolated situation involving one customer,” Hortig said. The company expects the rest of its business, excluding T-Mobile, to grow at a mid-single-digit rate in fiscal 2027.
After adjusting for the divestiture of its Vubiquity media business and the exit of certain hardware resale and other non-strategic activities, Amdocs expects fiscal 2027 revenue to decline 7% to 11% in pro forma constant currency. On a reported basis, revenue is expected to decline 14.3% to 17.9%, including an estimated 760-basis-point impact from the exited activities.
The company said revenue associated with the media divestiture and hardware resale activities was roughly $360 million in fiscal 2026. It expects first-quarter fiscal 2027 revenue of $955 million to $995 million.
Amdocs’ 12-month backlog stood at $3.5 billion at the end of the fourth quarter. On a pro forma basis, backlog declined 9.6% year over year and sequentially, primarily reflecting assumptions related to T-Mobile. Excluding T-Mobile, the company said backlog for the rest of the business rose by a mid-single-digit percentage from a year earlier.
Margin, Cash Flow and Capital Return Plans
The company expects fiscal 2027 non-GAAP operating margin of 19.2% to 19.8%, with the midpoint about 210 basis points below fiscal 2026. Rozenfeld said margins are expected to begin the year below the annual midpoint before improving sequentially and reaching the high end of the annual range by the fourth quarter.
Non-GAAP diluted EPS is expected to decline 26% to 30% in fiscal 2027, reflecting the T-Mobile impact, higher financing costs associated with merger-and-acquisition activity, and a projected non-GAAP effective tax rate of 16% to 19%.
Amdocs expects fiscal 2027 free cash flow before restructuring payments of $440 million to $500 million. The company plans to return the majority of free cash flow to shareholders, although it expects a slower pace of share repurchases as it prioritizes investment in its growth strategy.
The board authorized a proposed 3% increase in the quarterly cash dividend to $0.586 per share, subject to shareholder approval at the January 2027 annual meeting.
Looking toward fiscal 2028, Amdocs said it expects to be positioned for mid-single-digit revenue growth and high-single-digit growth in non-GAAP diluted EPS, supported by aOS sales momentum, its insurance expansion and internal productivity initiatives.
About Amdocs (NASDAQ:DOX)
Amdocs Ltd. (NASDAQ: DOX) is a global provider of software and technology services for communications, media and entertainment companies. Its solutions help service providers manage customer relationships, billing, subscriptions, product offerings and digital experiences across consumer and enterprise markets.
The company’s portfolio includes business support systems and operational support systems, cloud-based software, artificial intelligence and automation tools, network and service management platforms, and solutions for media distribution and monetization.
