Amdocs Q3 Earnings Surpass Expectations, Revenues Fall Y/Y

Amdocs Limited DOX reported better-than-expected third-quarter fiscal 2025 results. The company posted non-GAAP earnings of $1.72 per share, which came above the midpoint of the management’s guidance of $1.68-$1.74 and increased 6.2% year over year. The figure also exceeded the Zacks Consensus Estimate of $1.71.

In the trailing four quarters, DOX’s earnings surpassed the Zacks Consensus Estimate thrice while matching once, with an average surprise of 1.5%.

Amdocs’ third-quarter revenues of $1.14 billion surpassed the consensus mark of $1.13 billion. However, compared with the year-ago quarter, revenues were down 8.4% on a reported basis due to the phase-out of certain business activities. Excluding the effect of phase-out business activities, revenues were up 3.5% year over year in pro forma constant currency.

Amdocs Limited Price, Consensus and EPS Surprise

Amdocs Limited price-consensus-eps-surprise-chart | Amdocs Limited Quote

Amdocs’ Q3 Details

Amdocs reported a decline in revenues across North America and the Rest of the World (RoW) due to the phase-out of certain business activities. North America reported revenues of $745.4 million (65.1% of total revenues), which plunged 10.1% year over year. RoW revenues (18.3% of total revenues) declined 14.5% year over year to $209.6 million.

Europe revenues (16.6% of total revenues) of $189.4 million increased 7.7% year over year. Our model estimates for North America, RoW and Europe were pinned at $736.8 million, $234.2 million and $159.3 million, respectively.

Managed services revenues rose 4.1% year over year to $771.5 million. The company ended the third quarter of fiscal 2025 with a 12-month backlog of $4.15 billion, down $20 million sequentially. Our model estimates for managed services revenues and backlog were pegged at $701.3 million and $3.97 billion, respectively.

The non-GAAP operating income increased 5.3% year over year to $244.7 million, while the operating margin expanded 280 basis points (bps) to 21.4%.

Amdocs’ Balance Sheet & Cash Flow

Amdocs had cash and short-term investments of $342.5 million as of June 30, 2025, compared with $324 million as of March 31, 2025. Long-term debt was $646.7 million as of June 30, 2025, almost flat to the March 31, 2025’s level of 646.6 million.

During the third quarter, it generated an operating cash flow of $241.2 million and a free cash flow of $211.8 million. In the first three quarters of fiscal 2025, it generated operating cash flow and free cash flow of $519.3 million and $446.5 million, respectively.

Amdocs Updates Guidance for Q4 & FY2025

Amdocs initiated guidance for the fourth quarter and updated the outlook for fiscal 2025. For the fourth quarter, the company expects revenues to be in the band of $1.125-$1.165 billion (mid-point $1.145 billion). The Zacks Consensus Estimate for revenues is pegged at $1.14 billion, suggesting a year-over-year decline of 9.6%.

Amdocs expects non-GAAP earnings per share to be between $1.79 and $1.85. The Zacks Consensus Estimate for earnings is pegged at $1.79 per share, indicating a year-over-year rise of 5.3%.

For fiscal 2025, Amdocs updated revenue decline rate guidance to 9.0-10.0% from 9.1-10.9% forecasted previously. The mid-point of the new guidance range suggests a decline of 9.5%. The Zacks Consensus Estimate for revenues is pegged at $4.51 billion, suggesting a year-over-year decline of 9.9%.

Non-GAAP operating margin is still anticipated to be in the range of 21.1-21.7% for fiscal 2025. Non-GAAP earnings per share are now expected to grow in the band of 8.0-9.0%, up from 6.5-10.5% forecasted previously. The Zacks Consensus Estimate for earnings is pegged at $6.96 per share, indicating a year-over-year rise of 8.1%.

The company continues to expect free cash flow between $710 million and $730 million.

DOX’s Zacks Rank & Stocks to Consider

Currently, Amdocs carries a Zacks Rank #3 (Hold).

Some better-ranked stocks that investors can consider in the Zacks Computers - IT Services industry are CDW CDW, Genpact G and EXL Service EXLS, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for CDW’s 2025 earnings has been revised upwards by 2 cents to $9.73 per share in the past 30 days, implying a year-over-year increase of 2.2%. CDW shares have lost 4.9% year to date.

The Zacks Consensus Estimate for Genpact’s 2025 earnings has been revised by 2 cents to $3.49 per share over the past 30 days and suggests a year-over-year increase of 6.4%. Genpact shares have lost 1.8% year to date.

The Zacks Consensus Estimate for EXL Service’s 2025 earnings has been revised upward by 2 cents to $1.90 per share in the past seven days, calling for a 15.2% year-over-year increase. EXL Service shares have lost 3.7% year to date.

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