Amdocs Limited

ladies and gentlemen thank you for standing by and I'd like to welcome you all to today's call the second fiscal quarter 2020 earnings conference call and all participants lines are in a listen only mode and after the speaker's presentation there will be a question and answer session I would now like to turn our call over to your speaker today Mr. Matthew Smith please go ahead sir

Thank you, Ryan. Before we begin, I would like to point out that during this call, we will discuss certain financial information that is not prepared in accordance with GAAP. The company's management uses this financial information in its internal analysis in order to exclude the effect of acquisitions and other significant items that may have a disproportionate effect in a particular period. Accordingly, management believes that isolating the effects of such events enables management and investors to consistently analyze the critical components and results of operations of the company's business and to have a meaningful comparison to prior periods. 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 be also furnished with the SEC on form 6K. Also, this call includes information that constitutes forward-looking statements. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be obtained or that any deviations will not be material. Such statements involve risks and uncertainties that may cause future results to differ from those anticipated. These risks include but are not limited to the effects of general economic conditions, the duration and severity of the COVID-19 pandemic and its impact on the global economy, and such other risks as discussed in our earnings release today and at greater length in the company's filings with the Securities and Exchange Commission. including in our annual report on Form 20F for the fiscal year ended September 30, 2019, filed on December 16, 2019, and our Form 6K furnished for the first quarter of Fiscal 20 on February 18, 2020. Amdocs may elect to update these forward-looking statements at some point in the future. However, the company specifically disclaims any obligation to do so. Participating on the call with me today are Shuki Sheffer, President and Chief Executive Officer of Amdocs Management Limited, and Tamar Rappaport-Digim, Joint Chief Financial and Operating Officer. And with that, I'll turn it over to Shuki.

Thank you, Matt. Good afternoon, everyone. Thank you for joining us on the call today, and I sincerely hope that you and your loved ones are safe and well in this difficult time in the world. I'm proud of our second fiscal quarter performance, especially considering the global health and economic crisis created by the COVID-19 pandemic. We delivered a record high revenue that was slightly above the midpoint of our guidance, adjusting for foreign currency headwinds. We maintained stable profitability with solid free cash flow generation, and we added fuel too with a strong balance sheet and enough liquidity to support our ongoing business needs and long-term investment. Regarding our response to the COVID-19 pandemic, We demonstrated incredible execution as we adapted our global operations to ensure business continuity and the health and well-being of our global workforce, our customers and their respective families. From our vantage point in Southeast Asia, Handox among the first in our industry to proactively address the business impact and the evolving crisis. We acted decisively to communicate professional measures and employee travel restrictions throughout the region In early February, we were one of the first companies to announce our withdrawal for GSMA Mobile World Congress in Barcelona. By mid-March, almost 1% of our 25,000 employees were equipped to securely work from home, remotely operating the mission-critical system required to keep our customer operations running seamlessly across 85 countries. For the sole number of essential employees required to be on-premise at customer and end-of-site, we took a proper step to ensure their safety. To support and transition Andoc's global development, project delivery, and managed service operation without short-term productivity intact, it is not trivial. We successfully completed an incredible 20 goal lives in March and another 26 in April, using new methodologies, best-in-class practices, and various collaboration and deployment tools to meet the required project goals. At the same time, we supported the business continuity for our customers with remote solutions to address pain points in billing and collection, contact center and retail store support, and revenue optimization. Our support for the community was also another pillar of our response. We donated medical masks, medical supplies, protective equipment, life-saving machines, and food for the needy. With the leadership of our CSR team, we also started a digital assistant call center, operated by Amherst volunteers to assist elderlies and other populations who were socially and digitally disconnected and unable to operate a video call. Overall, I believe our response to COVID-19 highlight the vital role of Amdocs play in the communication ecosystem and our ability to effectively share, collaborate and communicate internally and with service providers and partners. I would like to take a moment to warmly thank our employees for their professionalism, commitment and ability to quickly adapt to the new circumstances. I would also like to say that I am proud of the dependability we showed our customers who took heroic steps to ensure essential services for everyone at this critical time. I will talk about COVID-19 in respect to our outlook later in the call. But first, let me provide a review of our second quarter activities on a regional basis. Beginning with North America, we delivered the record quarter that included the steady ramp-up of our new managed services agreement at AT&T, remote operational management assistance support to assist COVID-19 response at cricket, The live deployment of M-Docs data and intelligence systems on Google Cloud at Artis USA and continuous progress in the successful deployment of the new digital customer self-care and commerce capabilities at US Cellular and our customer experience portfolio to help monetizing, billing and simplify operations at Rogers. We are delighted to report a pivotal win at a major new logo, which has selected Amdocs Catalog One on AWS Cloud to rapidly launch new services across its customer base, including 5G wireless, wireless, and enterprise. We believe this award reflects the strengths of our next-generation offering and provides us with an important foothold for which to demonstrate the long-term value proposition Amdocs can bring as an innovative and trusted partner. Our media offering also gained further traction in Q2. We signed a multi-year under which Amdocs Media's cloud-based platform will provide the content navigation, processing compliance, and delivery services to support the VU platform of a leading Canadian operator. Meanwhile, Amdocs Media's MarketOne platform is providing team-level U.S. with an easy way to onboard OTT partners, such as innovative new entrance Quibi, making them quickly available to T-Doppel's Flashy, Magenta, and One Family Plan customers. To comment briefly on T-Mobile and Sprint, we have developed a deep relationship with these service providers over many years, and both are top 10 customers of Andos today. Over the last few years, we have supported T-Mobile growth strategies, and more recently, the new video strategy in 5G network planning and deployment. While at Sprint, we have delivered Digital One to modernize and accelerate Sprint's digital transformation. As T-Mobile merger with Sprint is now complete, we are working hard to demonstrate that we have the right credentials to be the main partner for the new T-Mobile after expected launch later in the summer. Having said that, there is no guarantee of new roles and we assume that future opportunities may take several quarters to materialize within the current economic environment. Overall, we continue to see many long-term growth opportunities in North America. But we do have steps of crucial trends to weaken in the fiscal second half, given the prevailing level of economic uncertainty. Moving to Europe, underlying activity levels were healthy, adjusting for foreign currency hedging and normal business fluctuation. I can recall that recent projects like Vodafone Germany and Oral Spain are ramping up as planned, albeit using remote capabilities. We are also helping our European communication media customers adapt their business to the COVID-19 environment. For instance, we have expanded our managed services deal with EE in the UK to implement secure remote digital engagement for its customers alongside partner Riteco, enabling EE's customers to complete sales cycle from the safety of the comfort of their home home. Additionally, as people stay home during the COVID-19 lockdown and use the vulnerable NTD services more, we extend Double gig increase in virtual media store and virtual movies activity as supported by Ubiquiti. As a final highlight, we expanded our collaboration with Liberty Global in Q2 to provide seamless access on multiple devices using our unified digital identity solution which will be delivered on the cloud to serve Liberty's pan-European group of operators. Turning to the rest of the world, we delivered an impressive quarter of execution adjusting for foreign currency movement and normal business fluctuation. And we used two activities including a successful go-live of market run on the cloud at AT&T Mexico, as well as further run other notable deliverables. For instance, we deployed our entire customer experience suite on AWS cloud in a DevOps delivery model as part of a data transformation we are supporting for a leading content and consume platform. and Consumer Company in Southeast Asia. Despite the considerable limitations posed by the COVID-19 pandemic, we successfully collaborate with the customer and the Andos project team, which involve hundreds of people in several countries, resulting to goal line that was achieved on time and budget with nearly all our employees working secure and effectively from the remoteness of their home. At Vodafone Idea in India, we led a multi-vendor effort to migrate large section of their subscriber base in record time. Despite our challenges as a global pandemic while excelling at SIACA, in Indonesia we delivered a fair set of new capabilities as part of our multi-eminent digital transformation project. In terms of new wins, Globe in the Philippines selected our leading cloud native Catalog One and Digital One solution to transform its enterprise operations Avishai Sharlin, Anthony Goonetilleke, Avishai Sharlin, Tal Rozenfeld, Mustafa Oyumi Avishai Sharlin, Anthony Goonetilleke, Avishai Sharlin, Mustafa Oyumi Overall, I am pleased with our performance across all regions in the second quarter and the essential support we provide to the world's largest communication and media companies. However, the continuing COVID-19 pandemic has disrupted global economic activity on an unprecedented scale and there is very little clarity as to when the economy can recover and what we look when it does. With respect to our outlook for the fiscal year, We are providing our current expectations based on information we have to date, but remind you that we are in time of great uncertainty regarding the spread of severity of the COVID-19 pandemic and its adverse effect on the global economy remains. With these factors in mind, let me take a moment to talk about our current market position, our forward strategy and financial expectations for the full fiscal year. We believe Andos is the right solution, ready to support our customers' long-term investments in digital monetization, 5G network deployment and monetization, system migration to the cloud, and launching media and the same offering. At the same time, we plan to tailor and accelerate certain R&D investments in order to bring the innovation our customers will need to succeed in the post-COVID-19 environment. Second, While there has been no project cancellation due to the COVID-19 pandemic, there was some slippage in the deal pipeline during March as our customers prioritized their own business continuity plans. I am encouraged to report that some of these deals have already closed in Q3, while others are progressing through the deal sales process. Nevertheless, the slower-than-expected pace of pipeline conversion is impacting our revenue growth outlook for the full fiscal year 2020. We have moved quickly to align our core structure to the reality of the current business environment and we are expected to maintain operating margin in the fiscal second half at similar level to the last couple of quarters. Fourth, we remain committed to a proactive and disciplined allocation of capital. We are on track to meet our normalized free cash flow targets for the full fiscal year and we have enough liquidity to support our ongoing business needs and Long-Term Organic Growth Investment. Additionally, we continue to see M&A as a strategic vehicle for our long-term growth, possibly using that where appropriate. To wrap up, we expect to generate positive revenue and early growth at the midpoint of the four-year guidance, even though the COVID-19 pandemic is negatively impacting our physical second half. The visibility for our 12-month backlog, land support, to our outlook and we believe we have the right mix of product offerings and employee talent to ensure we emerge from this crisis stronger than before and in a position to generalize future goals. With that, let me turn the call to Tamar for remarks.