Amdocs Limited (NASDAQ:DOX) stock plunged more than 40% in Wednesday's premarket trading after the company reported weaker-than-expected fourth-quarter results and issued a disappointing fiscal 2027 outlook.

A contract dispute with major customer T-Mobile US Inc. (NASDAQ:TMUS) drove the sharp outlook cut. Both companies have accused each other of breaching agreements and threatened legal action.

On Tuesday's earnings call, CEO Shimie Hortig described the dispute as an isolated issue rather than a sign of broader business weakness.

Amdocs Misses Earnings Estimates, Cuts Outlook

Amdocs reported fourth-quarter adjusted earnings of $1.98 per share, missing the $1.99 estimate.

Revenue reached $1.194 billion, below Wall Street's $1.195 billion estimate.

For the first quarter, Amdocs forecast adjusted earnings of $1.27 to $1.33 per share, far below the $1.94 estimate. Its revenue forecast of $955 million to $995 million also missed the $1.199 billion consensus.

For fiscal 2027, Amdocs expects adjusted earnings of $5.19 to $5.48 per share, compared with the $8.08 estimate. Its revenue forecast of $3.856 billion to $4.025 billion trails the $4.845 billion consensus.

The company expects reported revenue to decline 14.3% to 17.9%. It forecasts free cash flow of $440 million to $500 million.

Cash and cash equivalents fell to $197 million as of Sept. 30 from $325 million a year earlier.

T-Mobile Dispute Threatens Revenue and Profits

During the earnings call, an analyst pressed Hortig to disclose how much revenue Amdocs generated from T-Mobile. Hortig declined to provide specific figures but acknowledged that the company expects a major reduction in revenue tied to the customer in fiscal 2027.

"It's a major reduction," Hortig said, adding that Amdocs could have delivered significant growth without the T-Mobile setback.

Hortig called the T-Mobile dispute a major headwind for fiscal 2027. Both companies have issued notices alleging material contract breaches and threatening termination, financial claims or arbitration.

Amdocs said its outlook accounts for the possibility that either company could terminate the agreements.

However, Hortig said the remaining business should grow at a mid-single-digit rate in fiscal 2027.

The company also faces pressure from the completion of its U.S. Cellular integration project and reduced discretionary spending by T-Mobile.

AT&T Deals and AI Strategy Offer Growth Opportunities

Hortig highlighted an eight-year agreement with AT&T Inc. (NYSE:T), Amdocs' largest customer, as evidence of continued demand.

Amdocs also secured agentic operating system agreements with VodafoneThree, VEON and Globe.

The company recently acquired insurance technology provider EIS for approximately $340 million in cash.

Meanwhile, Amdocs has introduced AI-powered workflows to 10,000 employees across 800 hubs to improve productivity.

Looking beyond fiscal 2027, management expects mid-single-digit revenue growth and high-single-digit earnings growth in fiscal 2028.

DOX Price Action: Amdocs shares were down 40.09% at $37.40 during premarket trading on Wednesday. The stock is trading at a new 52-week low, according to market data.