Letter to Shareholders

Fiscal 2021: A pivotal year of accelerated and profitable growth

  • Record annual revenue of $4.3 billion, highlighting strength of business model
  • Revenue growth of 7% on a pro forma1 constant currency2 basis while meeting profitability targets
  • Industry-leading 5G monetization projects at top North American service providers
  • Acquisition of Sourced Group to accelerate communications industry's migration to the cloud
  • Product and services innovation enabling our customers to make it amazing for their end users

Dear Fellow Shareholders,

We begin this letter by thanking our talented and dedicated employees worldwide who, over the course of this past year, ensured that we continue to deliver great value to our customers and consistently and seamlessly execute on our projects despite the ongoing pandemic. Their expertise and professionalism enable our customers to unlock their innovative potential for the benefit of their customers as they digitally transform, roll out new 5G services and accelerate their migration to the cloud.

With our global reach and industry-leading portfolio of technology and services, we are proud to play a major role in serving the communications and media industry, empowering our increasingly connected world. We are deeply aware of the responsibility this brings, and therefore we focus on enabling digital inclusion not just across our offerings, but also into the communities in which we work. From providing laptops, internet connectivity and accessibility, to digital literacy and advanced skills training, Amdocs employees across the globe are committed to serving the societies where we are needed.

In terms of our business, key financial highlights for fiscal 20213 include:


  • Record revenue of $4.3 billion;
  • GAAP operating margin of 14.0%;
  • GAAP diluted earnings per share growth of 43.4% as reported, including a gain from previously announced divestiture of OpenMarket;
  • Non-GAAP3 operating margin of 17.5%;
  • Non-GAAP3 diluted earnings per share growth of up 9.8% on a pro forma1 basis and 8.3% as reported; and
  • Record 12-month backlog of $3.7 billion, up 10.5% on a pro forma1 basis as compared to last year's fourth fiscal quarter.

Reflecting the strength and resiliency of our technology and product-led services model, our full-year revenue and non-GAAP3 diluted earnings per share grew 7.0% on a pro forma1 basis in constant currency2 and up 9.8% on a pro forma1 basis respectively in fiscal 2021. We completed the divesture of a non-strategic asset, OpenMarket, for approximately $300 million cash to remain focused on our core strategic growth initiatives. Our strong execution translated to better than expected normalized free cash flow of $869 million3 for the year, and we returned a similar amount to shareholders through our quarterly dividend and share repurchase program. Reflecting our confidence in the future success of Amdocs, our Board has also approved the ninth consecutive annual increase in our quarterly cash dividend, subject to shareholder approval.

In fiscal 2021, we saw year-over-year growth in all the geographical regions in which we operate, with record revenue in North America, healthy year-over-year revenue growth on a pro forma1 basis in Europe, a ramp up of our activities in Latin America and continued project expansion with our customers in Southeast Asia. We believe we are well positioned to expand our scope of activities and deliver even more value to our customers going forward as our growth strategy is well-aligned with our customers' ever-evolving needs as they accelerate their multi-year investments around major industry trends such as 5G, the journey to the cloud, digital modernization and network automation.

Digitizing our customers IT business systems

By modernizing, automating and digitizing our customers' IT business systems, we enable service providers to create competitive, disruptive offers that deliver a fully optimized and personalized customer experience for both individual end users and enterprises while lowering costs.

AT&T selected our CES cloud-native platform to support their business support systems evolution (BSSe) technology modernization and simplification program, focused on increasing speed to market, improved customer experiences and long-term cost-effectiveness while delivering on the promise of 5G. Also, as part of our long-term strategic partnership with T-Mobile US, we signed a new, multi-year agreement to accelerate their digital modernization and journey to the cloud, so as to drive their business growth, time-to-market agility, and operational efficiencies for existing and emerging services, including 5G.


The importance of digital engagement was also accelerated by the pandemic, as service providers reduced their dependency on their call centers and retail stores and had to find alternative ways to engage with customers. This was made possible using our software and consultancy services, including our experience-driven design and development methodology, to create completely digital customer journeys across multiple channels.

Selected customer digital modernization projects

  • AT&T
  • T-Mobile US
  • Telefonica
  • America Mobile
  • Veon
  • Globe
  • Cellcom
  • BT
  • Three UK
  • MTS
  • True

Monetizing the 5G era

Service providers are investing heavily in fiber and 5G deployment as the importance of a strong 5G network and fast and secure broadband connectivity are now regarded as the backbone of modern society, a trend accelerated by the impact of Covid. To monetize their investment and maximize the return on their massive investments, service providers must bring attractive new 5G offers and services to their individual end users and enterprise customers. Over the course of the past fiscal year, we engaged in more than 25 new 5G operations and monetization projects across 15 countries, including agreements with communications service providers like AT&T, T-Mobile and Three UK.

Throughout fiscal 2021, we have increased our research and development investment as a percentage of revenue, extending our lead in what we define as the 5G Value Plane. Building on our successful integration of last year's acquisition of Openet, the 5G Value Plane incorporates key capabilities such as charging, policy and monetization, as well as multi-access computing and next-generation networks to support the upcoming roll-out of 5G standalone networks that will enable service providers to drive premium 5G services with innovative business models. At Verizon, we are implementing our cloud-native platform to rapidly create and launch new 5G services offerings, and Verizon is also leveraging our next-generation 5G network platform for services and network automation.

The latest evolution of our 5G-native customer experience suite provides our customers with the ability to create such services and leverage partner offerings, automate and orchestrate next-generation networks, as well as the opportunity to introduce new business models such as B2B2x, roll out private enterprise networks (PEN) and expose network-as-a-service (NaaS) functionality. Through our work with the 5G Open Innovation Lab and collaborators like T-Mobile and Microsoft, we have invested in developing state-of-the-art 5G use cases across a range of industry verticals and consumer needs, including driverless cars, rural connectivity and food resiliency.

Selected customer 5G and next-generation network projects

  • AT&T
  • Verizon
  • Comcast
  • Orange
  • Globe
  • Vodafone
  • A1 Telekom Group
  • Fastweb
  • SES

Accelerating service providers' journey to the cloud

A key element of Amdocs' strategy is to accelerate the communications and media industry's journey to the cloud. While some of our customers have already begun this migration, the vast majority still run their systems on premise. By using our new cloud-native products and various cloud-related services, these service providers are able to begin their cloud migration and we have tailor-made cloud journeys for each of our customers to help them accelerate their transition and capitalize on the benefits that the cloud brings, such as faster time to market, smarter ways of working, the ability to innovate via open-source platforms, as well as lower costs.

AT&T, for example, has selected us under a long-term agreement for the next-gen cloud operations of its BSSe project, using our deep set of cloud-native products. Amdocs is already in the process of modernizing AT&T's consumer mobility domain and this engagement, which will run on Microsoft Azure, further expands that activity.

As part of our investment in the cloud, in fiscal 2021 we acquired the Sourced Group, a leading global technology consultancy specializing in large-scale cloud transformation for sophisticated, high-end enterprises in financial services, communications and other industries across North America, Asia-Pacific and Australia. Sourced Group's proven cloud migration platform, deployment framework and trusted design process, alongside its deep partnerships with Amazon Web Services, Microsoft Azure and Google Cloud Platform, complement our portfolio of cloud-native products and services and also expand and diversify our customer base.

In recognition of our market-leading cloud-native portfolio, Amdocs was awarded the 2021 Global Amazon Web Services (AWS) Partner Network (APN) Public Sector Partner Award for Best Telco Solution, which called out our ability to provide customers with a safe and rapid path to the cloud, drive innovation and build solutions using AWS Cloud technology. Furthermore, we also announced an expansion of our strategic collaboration with Microsoft to widen the availability of our portfolio on Microsoft Azure and the Azure for Operators (AFO) initiative, enabling service providers to transform to the cloud with cloud-native solutions and cloud transformation services, as well as deploy 5G networks in the cloud.

Selected customer cloud projects

  • AT&T
  • T-Mobile US
  • Dish
  • Globe

Record managed services and successful project execution

Fiscal 2021 continued to prove the value of our managed transformation model, which combines the deployment of large-scale digital transformation projects with the operational benefits of our managed services. Over the year, we experienced high managed services renewal rates and considerable expansion among existing customers such as AT&T and BT. Additionally, we signed new deals at customers such as Three in the UK and True in Thailand. We have also seen strong momentum for our quality engineering services, signing a multi-year services deal to provide agile, scalable and DevOps-based quality assurance at AT&T. Furthermore, T-Mobile selected our zero-touch operations to implement next-generation automation, leveraging machine learning and AI tools in their operations.

As mentioned at the beginning of this letter, despite the effects of the pandemic and the move to working from home for most of our employees, we continued to deliver and seamlessly execute our projects across all regions, including completing a successful subscriber migration for Altice USA and the introduction of AI-driven automated operations to Airtel's existing business support systems in India, for which we won a prestigious TM Forum Excellence Award.

In all, our managed services agreements comprised around 59% of our total revenue for the financial year which, given the long-term nature of these deals, along with our record 12-month backlog, provides a good leading indicator of our business.

Selected customer managed services engagements

  • AT&T
  • T-Mobile US
  • Three UK
  • Airtel
  • BT
  • True
  • Comcast
  • Charter
  • Telefonica

ESG accomplishments

We are also proud of the success of our sustainability, environmental, social and ethical performance achievements: for the third consecutive year, Amdocs was included among the leaders in the prestigious S&P Dow Jones Sustainability Index (DJSI) North America; we received a gold rating standard from EcoVadis, a leading provider of business sustainability ratings; and we were rated as a leading company by the Carbon Disclosure Project for both our greenhouse-gas emissions management and supplier-chain engagement for sustainability.

Key to our success is our commitment to a diverse workforce. We are passionate about leveling the playing field and hiring talented people representing a rich universe of gender, sexual orientation, ethnic and generational identities. We are prioritizing innovative company-wide internal programs to increase women's representation and recruit more women for core technology and managerial roles, and we also promote initiatives to increase the representation of persons with disabilities.

Throughout the pandemic, alongside donating medical equipment, vaccines for our employees and their families and food for the needy, we also encouraged our employees' professional development, embracing a culture of continuous learning and upskilling. Additionally, we significantly expanded our employee well-being program to support our people's physical and mental needs during this challenging Covid period.

Where it was safe to do so, we welcomed back our staff to the office and will continue to do so as we believe working together in a physical office provides a spur to collaboration and innovation, as well as social benefits, that a virtual environment cannot match. We will continue to monitor the pandemic closely, with the health and well-being of our employees remaining our priority.

Looking forward with confidence

We end fiscal 2021 optimistically, having delivered full-year revenue growth acceleration on a pro forma1 basis. We believe our growth engines around 5G monetization and network automation, cloud migration, and digital modernization, coupled with our highly talented employees, make us well-placed to continue our upward trajectory of accelerated and profitable growth.

We expect to deliver accelerated revenue growth of roughly 8% in fiscal 2022, assuming the midpoint of our guidance on a pro forma1 constant currency2 basis. Moreover, we are confident we are positioned to deliver a double-digit expected total shareholder return for the second year running in fiscal 2022.

We thank you, our shareholders, alongside our customers, for the trust and confidence you have placed in us. We are determined to continue to earn this trust going forward as we maintain our focus on enabling our customers to "make it amazing" for their end users.

Shuky Sheffer
President and chief executive officer

Robert A. Minicucci
Chairman of the board

1 Pro forma growth rate excludes the financial impact of OpenMarket (which was divested on December 31, 2020) from fiscal year 2021 and comparable fiscal year

2 Revenue on a constant currency basis assumes exchange rates in the current period were unchanged from the prior period

3 For further details of reconciliation of selected financial metrics from GAAP to Non-GAAP, please refer to the tables on pages 11-12.