Amdocs Limited DOX reported first-quarter fiscal 2025 non-GAAP earnings of $1.66 per share, which came above the midpoint of management’s guidance range of $1.61-$1.67 and increased 6.4% year over year. The figure also exceeded the Zacks Consensus Estimate of $1.64.

In the trailing four quarters, DOX’s earnings surpassed the Zacks Consensus Estimate twice, matched once and missed once, with an average negative surprise of 0.1%.

Amdocs’ first-quarter revenues of $1.11 billion matched the consensus mark. However, compared with the year-ago quarter, revenues were down 10.9% on a reported basis due to the phase-out of certain business activities. Excluding the effect of phase-out business activities, revenues were up 1.7% year-over-year in pro forma constant currency.

Amdocs’ Q1 Details

Amdocs reported a decline in revenues across all regions due to the phase-out of certain business activities. North America reported revenues of $737.4 million (66.4% of total revenues), which plunged 12% year over year.

Europe revenues (14% of total revenues) of $155.2 decreased 14.4% year over year. Rest of the World (RoW) revenues (19.6% of total revenues) declined 3.7% year over year to $217.4 million. Our model estimates for North America, Europe and RoW were pinned at $733.2 million, $164 million and $215.8 million, respectively.

Managed services revenues rose 0.9% year over year to $729 million. The company ended the first quarter of fiscal 2025 with a 12-month backlog of $4.14 billion, up $80 million sequentially. Our model estimates for managed services revenues and backlog were pegged at $646 million and $3.73 billion, respectively.

The non-GAAP operating income increased 4.5% year over year to $235.4 million, while the operating margin expanded 310 basis points (bps) to 21.2%.

Amdocs’ Balance Sheet & Cash Flow

Amdocs had cash and short-term investments of $349 million as of Dec. 31, 2024, compared with $514.3 million as of Sept. 30, 2024. Long-term debt was $646.4 million as of Dec. 31, slightly higher than $646.3 million as of Sept. 30.

During the first quarter, it generated an operating cash flow of $105.6 million and a free cash flow of $78 million.

Amdocs Guidance Update

Amdocs initiated guidance for the second quarter and updated the outlook for the full fiscal 2025. For the second quarter, the company expects revenues to be in the band of $1.105-$1.145 billion (mid-point $1.125 billion). The Zacks Consensus Estimate for revenues is pegged at $1.12 billion, suggesting a year-over-year decline of 9.7%.

Amdocs expects non-GAAP earnings per share to be between $1.67 and $1.73. The Zacks Consensus Estimate for earnings is pegged at $1.69 per share, indicating a year-over-year rise of 8.3%.

For fiscal 2025, Amdocs now expects revenues to decline between 8.4% and 11.6% on a year-over-year basis, slightly higher than the previous guidance of a decline of 7.7-10.9%. The Zacks Consensus Estimate for revenues is pegged at $4.52 billion, suggesting a year-over-year decline of 9.6%.

Non-GAAP operating margin is still anticipated to be in the range of 21.1-21.7% for fiscal 2025. Non-GAAP earnings are still expected to grow in the band of 6.5-10.5%. The Zacks Consensus Estimate for earnings is pegged at $6.97 per share, indicating a year-over-year rise of 8.2%.

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).

Gitlab GTLB, Planet Labs PBC PL and Fortinet FTNT are some top-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. GTLB, PL and FTNT carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Gitlab shares have dropped 4% for the past year. The Zacks Consensus Estimate for GTLB’s full-year 2025 earnings is pegged at 63 cents per share, indicating a 210% year-over-year increase.

Planet Labs PBC shares have surged 152% in the past year. The Zacks Consensus Estimate for PL’s fiscal 2025 bottom line is pinned at a loss of 15 cents per share. In the year-ago quarter, the company had reported a loss of 50 cents per share.

Fortinet shares have gained 52.2% for the past year. The Zacks Consensus Estimate for FTNT’s full-year 2025 earnings is pegged at $2.39 per share, suggesting an increase of 6.5% from the year-ago quarter’s reported figure.

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