Amdocs Q3 Earnings Meet Estimates as Managed Services Hit Record

DOX's Managed Services Business Sets a Record

Managed services delivered record revenues and accounted for 67% of total revenues. Managed services revenues rose 2.5% year over year to a record $791 million. The business continued to provide revenue visibility through multiyear agreements and consistently high renewal rates.

Amdocs expanded its managed services relationships during the quarter. The company signed an agreement with a U.S. digital television entertainment provider for a billing migration program and extended its collaboration with Telefonica Vivo to support customer growth and OSS modernization.

The company ended the third quarter of fiscal 2026 with a 12-month backlog of $4.26 billion, up 2.7% year over year. Our model estimates for managed services revenues and backlog were pegged at $769.5 million and $4.29 billion, respectively.

Amdocs’ Q2 Details

DOX reported growth in revenues across North America, Europe and the Rest of the World (RoW). North America reported revenues of $748.1 million (63.7% of the total revenues), which increased 0.4% year over year. Europe revenues (16.5% of the total revenues) of $193.5 million increased 2.2% year over year.

RoW revenues (19.9% of the total revenues) increased 11.3% year over year to $233.3 million. Our model estimates for North America, Europe and RoW were pinned at $765.9 million, $197.2 million and $212.8 million, respectively.

Non-GAAP operating income increased to $253.4 million from $244.7 million in the year-ago quarter. The non-GAAP operating margin expanded 20 basis points year over year and 10 basis points sequentially to 21.6%.

DOX’s Balance Sheet & Cash Flow

Amdocs had cash and cash equivalents of $206.5 million as of June 30, 2026, compared with $214.5 million as of March 31, 2026. Long-term debt was $647.4 million as of June 30, 2026, increasing marginally from the March 31, 2026, level of $647.2 million.

In the fiscal third quarter, the company generated an operating cash flow of $197.2 million and a free cash flow of $171.9 million. During the quarter, it repurchased shares worth $143 million and paid out $60 million in dividends.

DOX Reiterates Key Fiscal 2026 Targets

For the fourth quarter of fiscal 2026, Amdocs expects revenues between $1.175 billion and $1.215 billion. Non-GAAP diluted earnings are projected in the range of $1.94-$2 per share, while GAAP earnings are forecast between $1.48 and $1.56.

The Zacks Consensus Estimate for fourth-quarter fiscal 2026 revenues and earnings is currently pegged at $1.19 billion and $1.98 per share, respectively.

For fiscal 2026, reported revenue growth is now expected between 3.2% and 4% compared with the previous range of 2.6-4.6%. Constant-currency growth is projected between 2.6% and 3.4%, retaining the prior 3% midpoint.

Non-GAAP earnings growth is expected between 5.5% and 6.5%, with the 6% midpoint unchanged. The company maintained its non-GAAP operating margin forecast of 21.3-21.9% and free cash flow outlook of $710-$730 million.

The Zacks Consensus Estimate for fiscal 2026 revenues and earnings is currently pegged at $4.70 billion and $7.42 per share, respectively.

DOX’s Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the broader Zacks Computer and Technology sector are Lumentum LITE, Applied Materials AMAT and Analog Devices ADI, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Lumentum have surged 123% year to date. The Zacks Consensus Estimate for LITE’s fiscal 2026 earnings is pegged at $8.19 per share, up by 5 cents over the past 30 days, indicating an increase of 297.6% year over year.

Shares of Applied Materials have jumped 107.9% year to date. The Zacks Consensus Estimate for AMAT’s fiscal 2026 earnings is pegged at $12.14 per share, up by 3 cents over the past 30 days, indicating a rise of 28.9% year over year.

Analog Devices shares have surged 39.2% year to date. The Zacks Consensus Estimate for ADI’s fiscal 2026 earnings is pegged at $12.42 per share, up by 10 cents over the past 30 days, indicating an increase of 33.9% year over year.

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