Amdocs (DOX) Q1 2025 earnings summary

Executive summary

• Q1 FY25 revenue was $1.11B, up 1.7% YoY on a pro forma constant currency basis, slightly above guidance midpoint, driven by cloud, digital, and GenAI-based solutions, and supported by the phase-out of low-margin business and efficiency initiatives.

• Non-GAAP operating margin improved to 21.2%, up 310bps YoY and 250bps sequentially, reflecting operational excellence and automation.

• 12-month backlog rose to $4.14B, up $80M sequentially and 2.7% YoY pro forma, supporting high revenue visibility.

• Managed services accounted for 66% of Q1 revenue ($729M), with strong renewals and expanded digital transformation projects.

• Generative AI adoption accelerated, with over 10 POCs executed globally and the acquisition of Profinit to strengthen data and AI capabilities.

Financial highlights

• Q1 revenue of $1.11B, up 1.7% YoY pro forma constant currency; reported revenue declined 10.9% due to phase-out of low-margin business.

• Non-GAAP operating margin reached 21.2%, up 310bps YoY and 250bps sequentially; GAAP operating margin was 17.9%.

• Non-GAAP diluted EPS was $1.66, above guidance midpoint; GAAP EPS was $1.33, above guidance range.

• Free cash flow before restructuring was $101M; after restructuring, $78M. Cash balance at $349M, borrowings at $650M, and total liquidity at $849M including a $500M credit facility.

• DSO increased to 81 days, up 6 days YoY and 7 days sequentially, mainly due to ramp-up of a mainframe-to-cloud deal.

Outlook and guidance

• FY25 revenue growth guidance reiterated at 1%-4.5% YoY pro forma constant currency, with double-digit cloud growth expected.

• FY25 non-GAAP operating margin guided at 21.1%-21.7%, a 300bps improvement YoY at midpoint.

• FY25 non-GAAP EPS growth expected at 6.5%-10.5%; GAAP EPS growth 27%-34%.

• FY25 free cash flow target is $710M-$730M, with over 90% conversion from non-GAAP net income.

• Q2 FY25 revenue expected between $1.105B-$1.145B; non-GAAP EPS: $1.67-$1.73.