Amdocs Limited

Amdocs reported Q3 FY2026 revenue of $1.175 billion, up 2.7% year over year as reported and up 2.2% in constant currency. Non-GAAP diluted EPS was $1.84; non-GAAP operating margin was 21.6%, up 20 basis points year over year and 10 basis points sequentially. GAAP diluted EPS was $0.59, down from the non-GAAP result due to a restructuring charge of roughly $0.91 per share. Free cash flow before restructuring payments was $193 million in Q3, and reported free cash flow was $172 million after $21 million of restructuring payments. Managed Services revenue reached a record $791 million, up 2.5% year over year, and 12-month backlog was $4.26 billion, up 2.7% year over year but down $20 million sequentially. For FY2026, Amdocs now expects revenue growth of 3.2% to 4% as reported and 2.6% to 3.4% in constant currency, non-GAAP operating margin of 21.3% to 21.9%, and non-GAAP diluted EPS growth of 5.5% to 6.5%. Q4 FY2026 revenue guidance was $1.175 billion to $1.215 billion, and free cash flow for FY2026 was guided to $710 million to $730 million before restructuring payments, with roughly $720 million cited as the midpoint.

Shimie Hortig framed the quarter as a proof point for Amdocs’ strategic shift toward the Agentic era, emphasizing that the company is moving from traditional telecom software and services into broader AI-driven transformation work. He said the new Liberty Latin America deal is a flagship example of Amdocs managing and transforming an entire IT ecosystem with aOS, and he described early aOS wins as the start of longer journeys that could become more meaningful over time. His tone was confident but measured, repeatedly noting that adoption will vary by customer readiness and that Amdocs is still in the early stages of the rollout.

Tal Rozenfeld highlighted that Q3 revenue, EPS, and margin were in line with expectations, with operating margin at 21.6% and free cash flow before restructuring at $193 million. He said the company generated strong cash conversion and had already achieved nearly 75% of its FY2026 free cash flow target, while ending the quarter with about $206 million of cash, roughly $930 million of aggregate borrowing, and $520 million available on its revolver. He also noted $143 million of share repurchases in the quarter, $60 million of cash dividends, and said Amdocs expects to return the majority of free cash flow to shareholders this year.

Analysts focused heavily on how transformative Agentic AI could be for both Amdocs and its customers, and Shimie said the company believes customer cost structures can come down meaningfully when Amdocs expands its scope into end-to-end operations. He added that internal adoption is progressing and will eventually create efficiencies, though near-term gains are being balanced against investment in future capabilities and uncertainty around technology and token costs. On aOS adoption, he said the main constraint is timing and customer readiness rather than lack of interest, adding that the company already has 10 engagements after launching aOS in March and that small pilots are expected to evolve into larger commercial relationships. On backlog, management said the Liberty Latin America deal is only partially reflected and that backlog can fluctuate as a snapshot in time, while still pointing to healthy year-over-year growth.