Amdocs Q2 Sales Top Estimates, Expects $1.15B in Q3 Revenue

Amdocs reported Q2 CY2025 revenue of $1.14 billion, an 8.4% YoY decline, but slightly above estimates. Non-GAAP profit of $1.72 per share was 0.6% above consensus estimates. The company expects Q3 revenue to be around $1.15 billion, close to analysts' estimates, and reiterated its full-year Adjusted EPS guidance of $8.50 at the midpoint.

Amdocs Limited (NASDAQ: DOX) reported its Q2 CY2025 revenue of $1.14 billion, marking an 8.4% year-over-year (YoY) decline. However, this figure was slightly above analysts' estimates. The company's non-GAAP earnings per share (EPS) came in at $1.72, which was 0.6% above consensus estimates. Amdocs expects its Q3 revenue to be around $1.15 billion, close to analysts' estimates, and reaffirmed its full-year adjusted EPS guidance of $8.50 at the midpoint [1].

Despite the revenue decline, Amdocs' pro forma growth of 3.5% in constant currency terms highlights the company's resilience. The company's managed services revenue, which accounts for approximately 67% of total revenue, grew by 4.1% YoY, reflecting demand for its expertise in automating operations and reducing costs [2].

Amdocs' free cash flow for Q2 was $212 million, comprised of cash flow from operations of $241 million, less $29 million in net capital expenditures, including $19 million in restructuring payments. The company repurchased $135 million of ordinary shares during the third fiscal quarter [2].

The company's strategic pivot to AI is evident in its partnerships with leading telecom providers and technology companies. Amdocs' AI-driven solutions, such as hybrid customer care and autonomous agents, have already demonstrated significant benefits, including reducing churn by 35% and boosting telecom efficiency [1].

Amdocs' 12-month backlog of $4.15 billion, up 3.0% YoY on a pro forma basis, indicates strong demand for its services. The company's full-year free cash flow guidance of $710–730 million, excluding restructuring costs, and its $1.26 billion remaining share repurchase authority suggest a disciplined approach to capital allocation [1].

Amdocs' stock trades at a discount to peers, with a price-to-free cash flow ratio of 12x, significantly below the 18x average for communications software firms. The company's AI-driven reinvention and $1 billion share buyback program suggest a path to re-rating [1].

References:
[1] https://www.ainvest.com/news/amdocs-strategic-reinvention-resilient-cash-flow-case-undervalued-growth-communications-software-sector-2508/
[2] https://investors.amdocs.com/news-releases/news-release-details/third-quarter-results-fiscal-2025