Amdocs shares plunge 44% as T-Mobile dispute threatens revenue and forces a strategic rethink
The software company warned that revenue could fall as much as 18% in fiscal 2027, citing its dispute with one of its biggest customers. It is also spending $340 million to enter the insurance software market in search of new growth.
Amdocs shares plunged 44% in after-hours trading on Wall Street after the long-established software company issued a bleak forecast for fiscal 2027, projecting a 14%-18% decline in revenue. The outlook reflects a severe dispute with T-Mobile, the U.S. telecommunications giant that has been one of Amdocs’ key customers for many years.
“Looking into fiscal 2027, our guidance reflects major headwinds from T-Mobile due to a recent dispute, the completion of the integration project of the USCellular customers and reduction in T-Mobile's discretionary spending,” said Shimie Hortig, president and CEO of Amdocs. “That said, the rest of our business remains robust and continues showing growth in fiscal 2027.”
According to Amdocs, the two companies have issued notices to one another, each alleging that the other has materially breached one or more of the agreements governing the software and services Amdocs provides to T-Mobile. Both notices include threats to terminate the agreements or pursue legal action seeking financial compensation.
Against this backdrop, Amdocs is making an unusual move into a new industry, agreeing to acquire U.S.-based insurance software company EIS for $340 million in cash. The acquisition is part of an effort to diversify its business and find new sources of growth after years of stagnation in the telecommunications market, where Amdocs specializes in billing management solutions. The deal also includes the possibility of additional payments if EIS meets certain performance targets.
EIS has developed a platform for managing insurance policies, billing and customer relationships. The acquisition marks Amdocs’ first step into the insurance industry, expanding its addressable market and positioning the sector as a potential source of long-term growth. Amdocs says insurance shares several characteristics with telecommunications, an industry in which it has operated for three decades.
Headquartered in San Francisco, EIS provides software to dozens of insurance companies around the world, including Aflac, CSAA, Allstate, Desjardins and BNP Paribas Cardif. The acquisition will give Amdocs access to an AI-based core platform, an international customer base and expertise in life and annuity insurance, as well as property and casualty (P&C) insurance.
Amdocs plans to combine EIS’s industry-specific technology with its own capabilities, particularly its aOS “agentic” operating system, as well as its extensive global presence. Originally developed for the telecommunications industry, aOS will be extended to insurance, with the aim of upgrading EIS’s platform and helping insurers integrate AI into their core business operations.
“Expansion into the insurance market and internal transformation will position us for long-term growth and improved profitability,” said Hortig.
Amdocs has previously tried to expand into other markets with business models resembling telecommunications, particularly industries that require billing and management systems for a range of services. In 2018, for example, it acquired Vubiquity, a U.S. company specializing in digital content distribution, for $224 million. That move, however, did not deliver the results the company had hoped for.
A look at Amdocs’ financial performance helps explain its search for new growth opportunities. The company’s fiscal year ends in September. In the latest fiscal year, revenue reached $4.7 billion, up a modest 3.5% from the previous year. Earnings per share fell 7% to $4.68, partly reflecting the cost of a corporate restructuring program.
Around six months ago, Amdocs announced a major round of layoffs affecting approximately 3,000 employees, or roughly 10% of its global workforce. In Israel, hundreds of employees were laid off from a local workforce of approximately 5,000.
