Amdocs (NASDAQ:DOX) released second-quarter financial results and hosted an earnings call on Wednesday. Read the complete transcript below.

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The full earnings call is available at https://edge.media-server.com/mmc/p/c69qinae/

Summary

Amdocs reported a solid second quarter with revenue of $1.17 billion and non-GAAP diluted EPS of $1.78, both above the midpoint of guidance.

The company is focusing on the 'Agentic Era,' aiming to transform IT and network ecosystems for communication service providers using AI technologies.

Amdocs launched its Agentic Operating System (AOS) and secured initial commercial agreements with clients like Cricket, Lumen, and Bell Canada.

The company reported year-over-year revenue growth in North America and record revenue in Europe and other regions.

Amdocs is reiterating its revenue growth guidance of 2% to 4% and EPS growth of 5% to 7% for the full fiscal year 2026.

Management announced a CFO transition, with Tal Rosenfeld succeeding Tamar Rapoport, who is retiring after 22 years with the company.

The company plans to evolve its product portfolio to be more agentic and automated, partnering with AI and cloud partners to achieve this vision.

Full Transcript

OPERATOR

Thank you for standing by and welcome to the Amdocs second quarter 2026 earnings conference call. At this time all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 11 again. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Matt Smith, Head of Investor Relations. Please go ahead sir.

Matt Smith (Head of Investor Relations)

Thank you, John, before we begin, I need to call your attention to our disclaimer statement on Slide two of the presentation. It notes that some of our comments today may be forward looking statements and are subject to risks, uncertainties and other important factors including as described in AMDOCS SEC filings and that we will discuss certain financial information that is not prepared in accordance with GAAP. For more information regarding our use of non GAAP financial measures, including reconciliations of these measures, we refer you to today's Earnings release which will also be furnished with the SEC on Form 6K. Participating on the call with me today are Shimi Hortig, President and Chief Executive Officer of Amdocs Management Ltd. And Tamar Rapoport, D. Gim, Chief Financial and Operating Officer. To support today's earnings call, we are providing a presentation which can be found on the Investor Relations section of our website and as always, a copy of today's prepared remarks will also be posted immediately following the conclusion of this call. On today's agenda, Shimmy will recap our business and financial achievements for the second fiscal quarter 2026 and he'll also present his vision as AMDOCS new CEO for the AgentIQ era. Shimi will finish by addressing our financial and business outlook, after which Tamar will provide additional details on our second quarter financial performance and guidance for the full fiscal year 2026. So with that I'll turn it over to Shimi.

Shimi Hortig (President and Chief Executive Officer)

Thank you Matt and good afternoon to everyone joining us today for Amdocs fiscal second quarter 2026 earnings call. I'm pleased to join you today live from our AMDOCS New Jersey offices. When I spoke to you in February, I talked about my excitement to lead Amdocs in its next chapter. Several weeks into the CEO role and after spending more time with our customers, partners and global teams, I'm even more excited and convinced about the opportunity ahead of us. As laid out on slide 6 today, I will divide my comments into two parts. First, I will begin by laying out some initial thoughts on the future vision for Amdocs where we plan to become the primary partner of choice to our customers in their genetic journey, leveraging our unique domain expertise and deep industry knowledge. From there, I will highlight the company's solid second quarter performance including new deals we have won and the operations milestones achieved for our customers that reflect the strength and discipline of our global teams. To begin on slide 8, I want to spend a few minutes sharing my initial view. For now, I'm thinking about mdocs in the Agentic Era, what is changing in our news industry, what I believe Amdocs is uniquely positioned to do, and my vision on how we plan to turn this opportunity into meaningful outcomes for our customers. The Agentic Era is an exciting opportunity for our industry and for our customers. For communication service providers globally, the Agentic Revolution is a unique moment in time to fundamentally transform their IT and network ecosystems in a nonlinear fashion, simplifying complexity, rethinking critical workflows end to end and unlocking the ability to accelerate the launch of new offerings. I strongly believe that Amdocs is in the best position to to lead our customers and turn this agentic opportunity into reality. Let me break down the reasons why. First, we have in Amdocs decades of deep industry knowledge and domain expertise. We have an industry context based on our Telco taxonomy ontology and the core business workflows that will power the Agentic Era. This is our native language. Second, Amdocs has strong engineering pedigree, a commitment to innovation and a long history of leading our customers through major technological shifts. Third, we understand what it takes to design, build, deliver and operate mission critical systems and we are therefore best placed to lead our customers through the complex Agentic transformation. Fourth, we have always been and will continue to be an outcome based company. MDOCS has long supported customers under long term engagement committing to predefined KPIs and this remains highly relevant as our customers look for measurable gen AI driven outcomes. To support this vision, our focus will be on the following areas highlighted on slide 9. We will evolve our product portfolio to be agentic and automated. Our portfolio is already moving in this direction with AMDOCS aos, our agentic operating system for telco. We will partner with each customer to design a tailored agentic roadmap. We recognize that every service provider has a unique baseline and we will guide each to a fully agentic operation that unlocks meaningful value. We will also continue to work closely with leading AI and cloud partners to accelerate this vision, taking a strategic ecosystems approach in support of our customers Agentic journey and we will accelerate our internal transformation to become a Gen AI native organization. We are leading by example and deploying agentic technologies and capabilities across our own engineering, delivery and operations. We'll adjust our way of working and become a more agile organization. This vision sets the foundation for a stronger future at Amdocs in the agentic era, one defined by a sharper technology focus and greater agility. IT positions Amdocs to expand our addressable market in telco. It also presents a potential opportunity to extend our reach into a new industry. With that said, we are still in the process of refining our strategy and we'll continue to update you as things progress over the next couple of quarters. I also realize that this is going to be a journey, but in this context I'm glad to report that we have already made initial progress. I will spend more on slide 10 at mobile work Congress Last quarter we officially launched AOS, Amdocs' Agentic operating system Purpose built for Telco. So far we have received excellent feedback from the market and I'm happy to share that we already have several initial commercial agreements with customers to launch and to implement AOS. This includes the following Cricket, Lumen, Bell Canada, EchoStar and PLDT,. In PLDT, we can already report early signs of business success where more than 90% of customer requests are now resolved through the AOS platform, enabling faster handling times and higher productivity in the retail stores. Now let me turn to Part two and address the key financial highlights, significant deals and operational milestones we achieved for the second fiscal quarter starting on Slide 12. Our second quarter results were solid with revenue of $1.17 billion and non GAAP diluted earnings per share of $1.78, both above the midpoint of our guidance. Our results included year over year revenue growth in North America as well as record revenue in Europe and a strong revenue performance in rest of the world. Non GAAP operating margin improved by 20 basis points from a year ago as we continue to balance our investment for growth with the focus on operational excellence. Overall, we closed the quarter with 12 months backlog of 4.28 billion, up 30 million sequentially and 2.6% from a year ago. Beyond the already mentioned AOS wins, this quarter we secured several significant deals which demonstrate wide ranging demand for our products and services and the confidence customers have in Amdocs. Slide 13 highlights many of these deal wins, but here are a few examples In AT&T Cricket Wireless, we signed an expanded multi year extension of our Managed Services agreement including dealer onboarding modernization to enhance partner experience and drive faster market expansion. In Vodafone Spain we secured a five year agreement covering CRM and OSS modernization alongside long term support and enhancement services. And in South Korea, KT has extended its multi year agreement with amdocs to upgrade, modernize and operate its charging system, empowering faster service rollout and advanced 5G monetization. Our cloud based platform solution also generated significant customers momentum in Q2. ConnectX added multiple new names including Vanta Wireless which will launch a unique mobile service with AT&T using AI driven connectivity. Quattel Mobile, a US based MVNO servicing Hispanic communities and in Singapore a leading operator went live with the platform to accelerate digital modernization. Additionally, Amdocs ESIM was chosen by Silio, in Brazil to support payment terminal connectivity and by Mobiphone in Vietnam for seamless zero touch customer activation. MDocs project execution was another highlight for the company. In Q2 we achieved a high number of project milestones across different programs for flagship customers such as AT and T Optimum, Vodafone Germany, ELISA and PLDT to highlight a few of them in AT and T. AMBOX is now servicing significant part of at and t's 5 GSA subscribers in our next gen charging platform and we played a key role in the recent launch of AT and T New One Connect plan In Vodafone Germany, we marked a pivotal milestone in our journey as we reach commercial launch AT ELISA in Finland we delivered the key milestones in support of its mainframe to Google Cloud migration. I'm also pleased to share that BrightSpeed, a US based fiber broadband and telecommunication provider, has gone live with AMDOCS Resource Manager. This smooth deployment enables BrightSpeed to strengthen its network inventory management and streamline operational processes. Now moving back to the outlook on slide 15, we are reiterating the midpoint of our revenue growth guidance of 3% in constant currency for the full year fiscal 2026, which is within tightened range of 2% to 4%. Likewise, we are reiterating the midpoint of our guidance for non GAAP diluted earnings per share growth of roughly 6% in fiscal 2026, which is within a tightened range of 5% to 7%. That said, we are of course closely monitoring customer demand and spending behavior within the current global macroeconomic climate. To wrap it up, we believe amdocs is best positioned to turn agentic vision into reality for our customers. We are shaping our strategy direction based on the vision and direction I discussed with you today and we will continue to share more over the next couple of quarters. We know this is going to be a journey for us and for our customers, but in this context we already have initial commercial engagement on aos. We are building our strategy on strong business foundations demonstrated by our solid Q2 results, and we are on track to hit our full financial targets while monitoring our customer spending behavior within the current microeconomic climate. Before we move to the financial Overview, I would like to spend a few minutes talking about the CFO transition. First and foremost, I would like to thank Tamar for her remarkable contribution to Amdocs over the last 19 years as CFO, including the past eight years serving as both CFO and COO, and 22 years overall with the company. I have known her for a long time and I can say that she has been an exceptional business partner and a personal friend. Tamar played an instrumental role in the evolution of amdocs and I know she will be missed by the entire amdocs family. On behalf of all of us Tamar, please accept our sincere appreciation for your endless dedication and service to amdocs through the years and we wish you nothing but the best on your well deserved retirement. I'm excited to introduce to you Tal Rosenfeld and welcome him as Amdoc's next CFO. Tyle has played a major part of Amdoc's finance organization over his impressive 20 years career with us, during which he has acquired extensive experience across senior and management roles in accounting and finance. Stahl is also a proven business performer. He has served as a Division Business Leader for APAC and he's currently General Manager Head of Finance where he has responsibility for managing the entire finance organization. Reporting directly to Tamar. I have known Tal for his entire career in amdocs and having worked closely with him on many occasions, I am well aware of his great leadership qualities. I strongly believe he is the best fit for this world. Congratulations Tal and welcome to my leadership team. I look forward to working together to take amdocs to the next chapter. Tal will say a few words in a moment, but first let me hand the floor to Tomar.

Tamar Rapoport (Chief Financial and Operating Officer)

Thank you Shimi for your kind words and hello to everybody on the call today. AMDOCS indeed has been a family to me, but as Shimmy said, I've decided to retire and finally take some time for myself. As you can appreciate, making this decision was neither quick nor easy, but after almost 20 years as CFO, I felt that now was the appropriate time for me to retire. My decision was made easier by how seamlessly Shimmy has transitioned into the CEO position over the past few months and by the strong team he has built around him. This includes Tal, of whom I could not be prouder. I personally recruited TAL to Amdocs' Finance 20 years ago and I've been preparing him for CFO as part of an internal succession plan for some time. I believe he's undoubtedly the best person for this role. Congratulations on your point and tell

Tal Rosenfeld (Chief Financial Officer)

Shimi and Tamar thank you both for your kind words. Tamar, I want to thank you personally for your mentorship, guidance and partnership over the years. Your leadership and friendship have meant a great deal to me and I wish you only the best. Shimi, I'm very excited by the opportunity to step into the CFO role. I'm looking forward to building on AMDOC's strong foundations and supporting you and the leadership team as we lead the company forward. Thank you, Tal. Now let's get back to business. Tamar, would you like to take us through the quarterly financial summary, please?

Tamar Rapoport (Chief Financial and Operating Officer)

Yes, of course. Thanks Shimi Q2 Revenue of approximately 1.172 billion was up 3.9% year over year as reported, revenue was above the midpoint of our guidance, including a positive impact from foreign currency movements of approximately $2 million compared to our guidance assumptions in constant currency revenue was up 2.2% from a year ago on a regional basis, North America revenue of $754 million was up more than 2% from a year ago, but was slightly lower on a sequential basis due to normal fluctuations in customer activity. Outside North America, our international growth continued. Europe delivered record quarter revenue of $192 million, up more than 6% year over year on a mix of organic growth and the impact of matrix acquisition. Rest of the World revenue grew by 8% year over year to $226 million, the highest since fiscal Q3 2024. Rest of the World remains on track to grow in fiscal 2026 driven by the strong sales momentum of recent quarters. As a reminder, quarterly trends in both Europe and Rest of the World may fluctuate given project orientation of our customer activities in these regions. Shifting down the income statement, non GAAP operating margin of 21.5% was up by 20 basis points from a year ago, reflecting cost and efficiency gains resulting from focus on operational excellence, automation and the deployment of AI based tools balanced against long term growth investments including the development and go to market costs of our next generation AOS platform on a sequential basis. Non GAAP operating margin declined by 10 basis points. As a reminder, our non GAAP operating margin may fluctuate slightly on a quarter to quarter basis. Interest and other expenses amounted to roughly 14 million in Q2 which included a few million dollars for the accounting of net losses of equity related investment activities in the quarter. On the bottom line, non GAAP diluted EPS of $1.78 was $0.02 above the guidance midpoint primarily due to items below the operating line and a lower share count. Diluted GAAP EPS of $1.28 exceeded the guidance midpoint also due to items below operating line and lower share count. Diluted GAAP EPS included a restructuring charge of nearly $0.10 per share which was not included in our guidance for the quarter and the positive impact of realized and unrealized gains from equity investments, among others. Turning to slide 20, managed services revenue of $759 million was up 1.6% from the prior year in the second fisc as a share of total revenue. Managed services accounted for roughly 65%, consistent with the last several quarters. Renewal rates remain typically high during Q2, underpinning our business resiliency as we signed expanded multi year engagements with multiple customers in North America. For instance, we expanded and extended our managed services contract with Cricket Wireless for BSS and OSS services including AOS capabilities driving faster time to market and improved customer experience. Moving to the balance sheet and cash flow highlights on Slide 21 DSO of 73 days decreased by 4 days from a year ago and 3 days sequentially. Unbilled receivable net of deferred revenue decreased by $42 million versus a year ago and by 2 million sequentially in Q2, aggregating the short and the long term balances. As a reminder, the net difference between unbilled receivables and deferred revenue fluctuates from quarter to quarter in line with normal business activities as well as our progress on multi year engagements. Free cash flow before restructuring payments was $97 million in Q2. This includes the seasonal timing of bonus payments for the prior fiscal year which typically occurs in the second fiscal quarter, highlighting strong free cash flow for the year so far, we've already achieved nearly 50% of our fiscal 2026 target, including restructuring payments of $17 million. Reported free cash flow was $80 million in the quarter. As a further update in fiscal Q2, we established a U.S. commercial paper program of up to $800 million to further enhance our financial flexibility and optimize Amdocs' short term funding mix. Proceeds from issuance under the program will be used for general corporate purposes. We also upsized our evolving credit facility from $500 million to $800 million, which supports the Commercial Paper Program and further enhances our overall funding flexibility. Overall, we ended Q2 with a healthy cash balance of approximately $214 million and aggregate borrowings of roughly $900 million, including our $650 million senior notes maturing in June 2030 and short term financing arrangements of $250 million. As of March 31, 2026, there was no outstanding borrowing amount under the Commercial paper program and $630 million remains available on the Revolving Credit Facility. Overall, we have ample liquidity to support our ongoing business needs while retaining the capacity to fund our future strategic growth. Switching to Capital allocation on Slide 22 this quarter we repurchased $138 million of our shares, leaving us with up to $702 million of remaining repurchase authority as of March 31, 2026. We paid cash dividends of $57 million in the second fiscal quarter. In the last week of fiscal Q2, we acquired the business of Connect44, a European based provider of end to end network planning, building and management solutions for approximately 21 million net in cash at closing plus future potential contingent consideration. Looking to fiscal 2026, we are on track to generate free cash flow between 710 million to 730 million, not including payments we expect to make under our current restructuring program. Our free cash flow outlook equates to conversion rate of roughly 90% relative to expected non GAAP net income and translates to a healthy free cash flow yield of roughly 10% relative to AMDOC's current market capitalization. Regarding our capital allocations for the coming year, we expect to return the majority of our free cash flow to shareholders. Moving to slide 23, 12 months backlog was 4 billion 28 at the end of Q2, up 30 million sequentially and 2.6% from a year ago. We believe 12 months backlog remains a good leading indicator of our business and forward visibility. Now, turning to our revenue outlook on Slide 24, we are continuing to closely monitor the prevailing level of macroeconomic geopolitical business and operational uncertainty, including our customer spending behavior in the current business environment. The third quarter and full fiscal year 2026 financial guidance reflect what we consider to be the most likely outcomes based on the information we have today, but we cannot predict all possible scenarios. For the full fiscal year 2026, we have tightened our revenue growth outlook to between 2.6% and 4.6% as reported, the midpoint of which is 10 basis points better than our prior outlook of 1.5 to 5.5% due to foreign currency tailwinds, which are now expected to benefit by roughly 0.6% this year as compared to 0.5% previously. Consistent with our prior guidance, we expect that roughly half of the expected growth in fiscal 2026 will be inorganic in nature on a consistent currency basis. We are reiterating the 3% midpoint of our revenue growth outlook, which we have tightened to a new range of between 2 to 4% for the full fiscal year as compared to prior outlook of 1 to 5%. As to the third fiscal quarter, we expect revenue of between 1.155 billion to 1.195 billion. Moving down the income statement as we anticipated in the beginning of the fiscal year, we are now on track to deliver non GAAP operating margins within our target range of 21.3% to 21.9% in the FISC 2026, the midpoint of which is roughly 20 basis points higher than prior fiscal year of 21.4%. Our profitability outlook reflects an intentional decision to accelerate our investment in Genai and our next generation Agentic operating system, including R and D sales and marketing, while balancing this with our focus on operational excellence and initiatives to drive efficiencies below the operating line. We expect non GAAP net interest and other expenses to be impacted by higher financing costs this year resulting from a reduced cash balance and short term borrowing to fund working capital. As anticipated in the beginning of the year, we expect our non GAAP effective tax rate to be within an annual Target range of 16 to 19% for the full fiscal year 2026 as summarized on slide 26, we are reiterating the midpoint of our guidance for non GAAP diluted earnings per share growth of roughly 6% in fiscal 2026, which is within a tightened range of 5 to 7% as compared to 4 to 8% previously. With that, back to you Shimi.

Shimi Hortig (President and Chief Executive Officer)

Thank you Tamar. Thank you for everything. And again, best of luck in your future retirement. With that we are happy to take your questions. Operator.

OPERATOR

Certainly. And our first question for today comes from the line of Tal Leone from Bank of America. Your question please.

Tal Leone (Equity Analyst)

Hello Tamar. First Chuki,, now you. What's going to happen? Good luck with your retirement. You're breaking my heart. I want to ask you a few things. First, when I collectively look at your space without the details of where you're playing etcetera. But collectively, look at your space. There is tremendous investment in data centers and companies are even buying. Customers are even buying more now because they're buying ahead of demand because of supply constraints. So Cisco just reported 19% order growth outside of AI. And the environment is not that good. Some of it has to be some forward ordering. The question is, when I look at your revenues, I see some acceleration of growth, a little bit of acceleration of growth. But the question is, do you have a way to participate in this massive growth we're seeing, whether it's through neo-clouds or cloud, or whether it's through service providers, your traditional customers who are also taking some of this traffic and they also have to build data centers. So can you talk about your ability to play and benefit from the current cycle? Maybe we'll start with that. I have another question, but I'll take it one by one.

Shimi Hortig (President and Chief Executive Officer)

Hi Tal, it's Jimmy and thank you for the question. Maybe to try to explain what I was trying to paint in the vision that I described at the beginning of the call. We see the Agentic Revolution that is happening right now as an amazing opportunity for Amdocs. We believe that we are the right partner for our customers to help them transform from where they are today to the future, agentic and leveraging all the great capabilities that this technology can bring. And as you know, as of today, there's a major gap between the technology and the potential and the actual adoption that we see among our customers in general in enterprise software and customers around the world. So we believe at Amdocs, with our deep knowledge on this industry, with our capability to transform organization to move through technological shift, position us as the best partner that can take them to this future. So definitely a major opportunity for us going forward.

Tal Leone (Equity Analyst)

Got it. So what changes, Shimi? What changes are you bringing to the company? You've been there less than 100 days. How do you, you know, what are your focus areas in terms of growth acceleration and addressing new opportunities and things?

Shimi Hortig (President and Chief Executive Officer)

How long do you think also it will take you to show an impact on growth? Yeah, so again, as I mentioned, I think we are trying to accelerate everything that we do in the company in order to help our customers transform in this amazing technological transformation that is happening right now all over the world. So the thing that I want to focus is the following. First, we want to evolve, as I mentioned, our portfolio to be agentic and automated. This is an effort that we started already and we continue to focus on that as we provide our customers with the right solutions. The other Thing is engage with customers. We want to tailor to each one of them this specific roadmap. How we take them from where they are today to this future agentic end state where they can enjoy all the benefits of this technology. The third thing that we want to do is to partner strategically with the ecosystem, leading AI and cloud partners that will help us and our customers to transform in this industry. And last but not least, I mentioned the internal transformation. We want to accelerate the internal information and to make sure that Amdocs is a gen AI native organization which means we are changing the way we operate. We implement agentic SDLC within the company, we change the structure of the teams and we want to become a much more agile organization and to lead by example this journey.

Tal Leone (Equity Analyst)

Got it. Last question. Tamar is leaving the CFO position for some company? I think pretty well the CFO position is extremely important just because of timing of recognition of revenues, timing of recognition of expenses, managing operating margins, etc. Can you give us a little bit of details on the succession plan? I know you nominated someone with a great first name to be the successor of Tamar. So can you give us some. You have good taste I have to say.

Tamar Rapoport (Chief Financial and Operating Officer)

My first name being Tal. Yeah. Which is great name. So first of all I fully agree with you and I think that the fact Tal experience is very deep in terms of not only the professional, you know, he's a cpa, he was an expert in revenue recognition in his early days in the career in amdocs. He did the SEC filing like he had all the core basic things you would expect from a strong finance professional. He's also done different roles that included field support, the business support, including several years in my management team leading all of the finance of the business, being the very strong bridge between, let's call it the professional finance domain and driving the business of the company and structuring the deals in the right way, recognizing the revenue in the right way, etc. Plus as a leader and as someone who has definitely built strong teams around him and have been able to build, not just, you know, as a leader, it's just about you. It's about how you really bring the right talent, develop the right talent, create a sense of purpose. Like I've seen him again and again doing that in an amazing way and in some years that I call it, I loaned Tal the business side to lead the APAC division. I mean I've been talking about the APAC growth for some time now. Now you know who is the person behind it. Tal did amazing Job as leading the business there and then when he came back to finance to lead finance under me, definitely there's been a big part of the succession planning. So I feel while I'm sorry that I need to say goodbye as I'm retiring and of course we, we can stay in touch beyond the amdocs capacity. I feel very comfortable that we have the best person for the job and it has been a very thorough succession process. Overall, you're in good hands.

Tal Leone (Equity Analyst)

Good, thank you.

OPERATOR

Thank you. And our next question comes from the line of Timothy Horan from Oppenheimer. Your question please.

Timothy Horan (Equity Analyst)

Hi guys and Tamara, Congratulations and good luck. Would you like to focus on the agentic business a little bit more? Can you give us any color on the deals and what the pipeline is looking like? Also maybe where is kind of a low hanging fruit for customers, you know, to adopt AOS and you know, when do you think it starts to move the needle on revenue growth?

Shimi Hortig (President and Chief Executive Officer)

Thank you. Yeah. Hi Tim. Look, as we started to see, we're quite happy with the initial reaction from the market on our AOS launch. We just launched it in Mobile World Congress and since then we have quite a lot of engagement with customers. Some of them already translate into concrete opportunities or concrete deals that we are actually implementing right now with our customer base. Those opportunities are starting small, but we know that over time they will grow. So if you ask if we embedded anything right now in this fiscal year, not yet, it's not so meaningful right now, but it's definitely going to grow over time. And as I mentioned before, we are starting to have detailed discussion with each and every one of our customers on their journey, how we take them from where they are today into the future. And here we're evolving with a lot of interesting discussions based on aos. Now some of our customers would like to collaborate with us and to do things together and to implement our tools. Some of them are even discussing with us broader responsibility to move to amdocs and to help them to transform the organization and to deliver the business benefits and the savings that they are looking forward. So I hope that in the next few quarters we can share more about those discussions. But we are having some meaningful discussion with customers these days. I mean, so the US Telcos seem

Timothy Horan (Equity Analyst)

to be, or at least they're talking about adopting AI much, much more rapidly than what you're describing. And I think, you know, they're talking about splashing expenses, improving services. Are they doing this in house? Are they using other, you know, AI companies? Are they using other competitors of Yours or are they using you? But you know, the commentary that they're laying out is that, you know, they're adopting AI now and they're slashing expenses as a result of it.

Shimi Hortig (President and Chief Executive Officer)

Yeah, it is true that they are implementing A.I. i think in our domain in the area that you need to deal with mission critical systems and to transform them into the future, to become agentic and autonomous and everything that we want to achieve together with them, we are the best partner to do them. They are not using it with competitors, they are having those discussions with us. You know, our claim for fame was always to help our customer, to transform them. In the past it was the cloud that we know. We moved them and we're still moving them from on prem to cloud. Now obviously the opportunity around Magentic is front and center, but they understand that in order to do it in mission critical systems and the complexity of what we do for them, they want to partner with us. And these are exactly the discussions that we're having right now.

Timothy Horan (Equity Analyst)

Very helpful, thank you and good luck.

OPERATOR

Thank you. As a reminder, if you do have a question at this time, please press star 11 on your telephone. Our next question comes from the line of George Nader from Wolf Research. Your question please.

Taran Guidah

Hey guys, this is Taran Guidah on for George Nader. Congrats to Mara on the retirement. I just wanted to add. Thank you. If you could talk a little more about how you expect to progress in implementing AI internally to get efficiencies going forward, Are there any incremental new areas where you're finding use cases and then

Shimi Hortig (President and Chief Executive Officer)

as a follow up, can you give more detail in terms of how customer conversations are progressing as you drive those gains internally? Yeah, so internally again, it's a process. We've been in this process for quite some time. My goal right now, and the team is mainly to accelerate. We are accelerating everything. We are done with the pilot, experimenting, trying it here and there. I'm moving it to full blown implementation across the entire company. It includes, as I mentioned, changing the way we operate, implementing agentic SDLC, changing the way we operate our systems, leveraging the agentic tools, and we're going all the way to try to accelerate the internal transformation and become a more agile organization going forward. Now, the discussions that we're having with the customers are exactly along the same lines of how we can help them do the same for their organization in our domain and some of the discussions, everyone understands that the best way to help them is if we look at the flows end to end. So if you look at the end to end business flows around those areas from the business requirements all the way down to the provisioning. The best way to get the out the best outcome of implementing those agentic is when you have an end to end workflow. So they're engaging us right now in discussions in which we are basically expanding the footprint of what we do today going to areas that are not done today by amdocs. But everyone realize right now that in order to get those benefits it's better that we'll get involved and help them in the end to end processes. So those discussions along this end to end responsibility to transform things for our customers are evolving. And as I mentioned before, I hope we can share some more updates over the next couple of quarters.

Tamar Rapoport (Chief Financial and Operating Officer)

Just want to add on that to remind you we've been a company pushing for an outcome based business model forever. That was our a way of showing confidence to our customers that we believe that we can bring them the right innovative engineering solutions as well as a commitment to deliver on certain KPIs and outcomes. So we want to take conceptually the same idea and build based on what Shimi mentioned this end to end ability to take business processes and push it forward with the customer to show accountability to bring the results that they need to see practically what is it that they consider success and how do we design it into the deals we are going to sign.

Taran Guidah

Thank you.

OPERATOR

Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Matt Smith for any further remarks.

Matt Smith (Head of Investor Relations)

All right, John, thanks very much and thanks everyone for joining the call tonight. If you do have any other questions, please give us a call here in the IR group. And with that, have a great evening.

OPERATOR

Thank you ladies and gentlemen for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.