Amdocs CEO: 2027 will be "financially challenging," but "a year of strategic transition"
Shimie Hortig expects growth to return in fiscal 2028 after a year of falling revenue, a heavier debt load and a slower buyback. Amdocs shares dropped 44% in after-hours trading.
Amdocs told investors that 2027 will be "financially challenging," a year in which it expects revenue to fall by as much as 18% and earnings per share by as much as 30%. It also declined to say how much of its revenue comes from T-Mobile, the customer whose dispute with Amdocs could end in terminated contracts.
"Overall, although 2027 will be financially challenging, it will also be a year of strategic transition," CEO Shimie Hortig told analysts on the company's earnings call. He said he expects "mid-single-digit revenue growth" in fiscal 2028.
The forecast reflects "our best estimate as of this date, including in case of termination of our agreements with T-Mobile by either party," Hortig said. He said no termination has occurred. "We continue to support T-Mobile as we speak and to support their business," he said, adding that Amdocs is "prepared to fiercely defend our positions, including in arbitration."
Shares were trading around $34.50 in after-hours trading on Tuesday, against a $62.43 close. If they hold at that level, it would be their lowest since early 2013 and would erase roughly $3 billion of market value.
Shlomo Rosenbaum of Stifel asked how much of Amdocs' revenue T-Mobile accounts for. "We cannot get, Shlomo, all the details of the specific numbers right now," Hortig said. "I can just tell you that it's a major... It's a major reduction. Without it, we could have shown a significant growth in the business of the company."
Hortig called the situation "an isolated situation involving one customer" and said the rest of the business should grow in the mid-single digits in fiscal 2027. Tal Liani of Bank of America asked whether another large customer might follow. Hortig pointed to Amdocs' recent contract wins and said "T-Mobile is an isolated case."
The 14.3% to 17.9% revenue decline Amdocs forecast on a reported basis includes roughly 760 basis points from businesses it is leaving, CFO Tal Rosenfeld said. They are hardware resale and the media business, which together generated about $360 million in fiscal 2026.
"Adjusting for this, we expect revenue to decline by between 7% and 11% in pro forma constant currency this year," he said, adding that the midpoint "is well supported by our 12-month backlog." That backlog stood at $3.5 billion, down 9.6% pro forma and about $370 million from the previous quarter, according to Amdocs' results release.
Amdocs' managed services business, its largest, was already shrinking before the dispute hit guidance. Fourth-quarter managed services revenue was $728 million, down 3% from a year earlier, though the full year rose about 1%.
The company guided non-GAAP earnings per share down 26% to 30% and a non-GAAP operating margin of 19.2% to 19.8%. First-quarter revenue is guided to $955 million to $995 million. Operating margin will start the year "well below" the 19.5% midpoint and rise through the year, Rosenfeld said. Free cash flow before restructuring payments is guided to $440 million to $500 million, against $729 million this year.
Hortig announced "an eight-year strategic agreement with AT&T, our largest customer," built on Amdocs' agentic operating system, aOS. "AT&T and Amdocs will work as one delivery team," he said, with the two sharing "responsibility for delivering projects faster while reducing the total cost of modernization and operating critical systems."
He cited a 10-year agreement with VEON and agreements with Globe in the Philippines and VodafoneThree in the UK, along with a 10-year Liberty Latin America deal announced last quarter. None came with financial terms. An analyst at KeyBanc asked how much revenue the AT&T expansion could add, and Hortig did not give a figure.
Amdocs said it sold Vubiquity, its media unit, to Premiere Digital for cash proceeds of "roughly $66 million." Amdocs bought the company in 2018 for $224 million.
Rosenfeld said Amdocs took two term loans totaling $500 million to help pay the $340 million for insurance-software company EIS, on top of about $950 million of borrowings at the end of the quarter. After repurchasing $511 million of its shares in fiscal 2026, Amdocs expects "a slower pace of buyback activity" in fiscal 2027. Hortig called EIS "an entrance to another vertical of Amdocs, something that we have never done in the history of the company."
Amdocs recorded a restructuring charge of 130 cents per share for the full year, 22 cents of it in the fourth quarter, tied to "the acceleration of our internal transformation and our strategy to become an agentic-first organization," Rosenfeld said. Restructuring payments totaled $167 million.
