Amdocs shares plunged 45% in after-hours trading on Wall Street after the veteran software company issued a bleak forecast for fiscal 2027, projecting a revenue decline of 14% to 18%. The outlook comes amid an escalating dispute with US telecommunications giant T-Mobile, one of Amdocs' largest customers for years.
"Looking ahead to fiscal 2027, our forecast reflects significant declines stemming from the dispute with T-Mobile, the completion of the USCellular customer integration project and reduced spending by T-Mobile. Nevertheless, the rest of our business remains strong and continues to grow in fiscal 2027," said Shimie Hortig, CEO of Amdocs.
Amdocs Park
(Photo: Oron Golkarov)
According to Amdocs, the two companies have exchanged formal notices, with each accusing the other of materially breaching one or more agreements under which Amdocs provides software and services to T-Mobile. Both sides have threatened to terminate contracts or pursue financial claims.
Meanwhile, Amdocs is making an unusual move beyond its core business, acquiring US insurance software company EIS in an effort to diversify its operations following years of stagnation in the telecommunications market, where it provides billing management solutions. Amdocs will pay $340 million in cash for EIS in a move intended to revive growth. Additional payments may be made if EIS meets certain performance targets.
The acquired company has developed a platform for managing insurance policies, billing and customer relationships. The acquisition marks Amdocs' first entry into the insurance industry, significantly expanding its potential market and positioning insurance as a strategic opportunity for long-term growth and diversification. Amdocs says the insurance industry shares many characteristics with the telecommunications sector, where it has operated for three decades.
Headquartered in San Francisco, EIS provides software solutions to dozens of leading insurance companies worldwide, including Aflac, CSAA, Allstate, Desjardins and BNP Paribas Cardif. The acquisition will give Amdocs an AI-powered core platform, an established global customer base and expertise in both life insurance and annuities and property and casualty insurance.
Amdocs plans to develop a new offering for insurers by combining EIS' insurance technology with its own aOS agentic operating system and leveraging its broad geographic reach. Originally developed for the telecommunications industry, aOS will be expanded into insurance to enhance the EIS platform and help insurers integrate AI capabilities into their core business operations.
"Expanding into a new industry vertical is a central pillar of our new growth strategy, and today we are taking an important first step," Hortig said.
This is not the first time Amdocs has attempted to expand into markets with business models similar to telecommunications, where companies must manage billing for a range of services. In 2018, Amdocs acquired Vubiquity, a US media company specializing in digital content distribution, for $224 million. However, the acquisition failed to deliver the expected results.
A look at Amdocs' financial results for the fiscal year ended in September helps explain why the company is seeking new markets. Revenue reached $4.7 billion, a modest increase of 3.5% compared with the previous fiscal year. Earnings per share fell 7% to $4.68, partly due to a companywide restructuring program.
About six months ago, Amdocs announced a major round of layoffs affecting approximately 3,000 employees, or about 10% of its global workforce. In Israel, hundreds of employees were laid off from a local workforce of approximately 5,000.