Pomegra
Amdocs shares fell about 37% premarket after a fiscal 2027 revenue warning of up to an 18% decline, tied to an escalating contract dispute with T-Mobile.
- Amdocs guided fiscal 2027 revenue down 14.3% to 17.9% as reported, and non-GAAP EPS down 26% to 30%.
- Shares fell roughly 37% to 40% premarket, from a $62.47 close, after the T-Mobile dispute became public.
- Amdocs and T-Mobile have each served notices alleging material breach, with termination and arbitration possible.
Lead
Amdocs (NASDAQ: DOX) shares dropped roughly 37% to 40% in premarket trading on Wednesday, November 4, 2026, to around $38 from a Tuesday close of $62.47. The sell-off followed fiscal 2026 results and a fiscal 2027 outlook that projects reported revenue falling 14.3% to 17.9%. The company attributed the decline mainly to a dispute with T-Mobile (NASDAQ: TMUS), one of its largest customers. The guidance implies fiscal 2027 revenue of about $3.86 billion to $4.03 billion, against $4.70 billion in fiscal 2026.What Did Amdocs Report for Fiscal 2026?
Amdocs reported fiscal 2026 revenue of $4.697 billion, up 3.6% on a reported basis, and non-GAAP earnings per share of $7.41, up 6.0%. Fourth-quarter revenue reached $1.194 billion, up 3.8%, with non-GAAP EPS of $1.98, just above the midpoint of the company's own guidance. Non-GAAP operating margin held at 21.6%.
Below the headline figures, the picture was weaker. Free cash flow came in at $562 million, below the original $710 million to $730 million target because of restructuring costs. Adjusted for those costs, it was $729 million. The 12-month backlog fell 9.6% on a pro forma basis to $3.50 billion. GAAP EPS was $4.68 for the year, down 7.3%.
What Is the T-Mobile Dispute About?
The dispute is a contractual conflict in which Amdocs and T-Mobile have each issued notices alleging that the other materially breached the agreements governing software and services Amdocs provides. Both sides have raised the possibility of termination, monetary relief or arbitration.
T-Mobile was Amdocs' second-largest customer in fiscal 2025, at about 19.9% of revenue, or roughly $900 million. Chief Executive Shimie Hortig said the company is prepared to "fiercely defend our positions, including in arbitration." She described the matter as an isolated legal dispute over a recently signed agreement that escalated during the fourth quarter. Management declined to give specifics, citing confidentiality, and did not quantify T-Mobile's current revenue contribution.
How Deep Is the Fiscal 2027 Guidance Cut?
The guidance cut is severe on every line. On a pro forma, constant-currency basis, which strips out divestitures and currency effects, revenue is projected to fall 7% to 11%. The gap between that and the reported decline reflects the exit of non-strategic businesses, including the divested media unit and hardware resale.
The full outlook:
- Non-GAAP EPS decline of 26% to 30%
- Non-GAAP operating margin of 19.2% to 19.8%, down about 200 basis points
- Free cash flow of $440 million to $500 million, versus $562 million in fiscal 2026
- First-quarter revenue of $955 million to $995 million, and non-GAAP EPS of $1.27 to $1.33
Amdocs said the framework is a conservative best estimate, including the scenario in which either party terminates the T-Mobile agreements. The outlook also reflects reduced discretionary spending by T-Mobile and the completion of the USCellular customer integration project. The revenue range sits well below the market consensus of about $4.85 billion that had been in place before the report.
Why Did the Stock React So Violently?
The stock fell sharply because the guidance converted a customer concentration risk into a quantified revenue loss. Shares had been trading near $62 and fell to about $36 in after-hours trading, a drop of about 43%, before settling near $38 premarket. The level is well below the previous 52-week low of $49.74.
Management stated that the T-Mobile reset drives the entire negative outlook and that the rest of the business is expected to grow at a mid-single-digit rate. Investors, however, questioned whether other large carriers could follow a similar path. Disputes of this kind rarely resolve quickly, and arbitration can run for many months, leaving revenue and cash flow visibility limited.
Strategic Context
The warning arrived alongside strategic announcements that management positioned as evidence of broader momentum. Amdocs signed an eight-year agreement with AT&T (NYSE: T) for its agentic operating system, or aOS, an AI-driven platform for running telecom operations. It also cited new aOS deals with VodafoneThree in the UK, VEON in Eurasia and Globe in the Philippines.
Amdocs also agreed to acquire EIS for about $340 million in cash, a move that opens the insurance software market. The company approved a 3% dividend increase to $0.586 per share and repurchased $511 million of stock in fiscal 2026. Those capital returns now sit against lower projected free cash flow.
Outlook
The near-term trajectory for Amdocs depends on the T-Mobile dispute. A negotiated settlement would restore part of the revenue now excluded from guidance. Termination or prolonged arbitration would lock in the lower base through fiscal 2027. The first-quarter revenue guide of $955 million to $995 million, a step down from the $1.194 billion just reported, is the first test of how large the reset is. Shareholder investigation notices from law firms have already begun to appear, adding legal noise to an already uncertain setup.
Mentioned tickers: DOX, TMUS, T
