Amdocs Limited

Ladies and gentlemen, thank you for standing by and welcome to the Amdocs Q3 2020 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telesong. If you require any further assistance, please press star 0. I would now like to hand the conference to your speaker today, Matt Smith, Head of Investor Relations. Please go ahead sir.

Thank you very much operator. 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 also be 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 and for the second fiscal quarter of Fiscal 20 on May 18, 2020. AMDOPS may elect to update the 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 AMDOPS Management Limited, and Tamar Rapoport Digim, Joint Chief Financial and Operating Officer. And with that, I'll send it over to Shuki.

Thank you, Matt, and good afternoon to everyone joining us today for our third fiscal quarter results. This was our first full quarter of ratings Under the global condition of the COVID-19 pandemic, consider which I'm proud of the company's performance. Revenue exceeded the midpoint of guidance and grew 1% year-over-year in constant currency. We delivered a significant number of live deployments, demonstrating incredible operating execution using remote deployment tools and methodologies, and we maintained stable profitability and robust free cash flow generation, the latter which was driven by healthy cash collection across our customer base. Year 3 was also notable for another record quarter in managed services where revenue grew 4.6% year over year. This performance reflects the ramp-up of activities with new logos and long-standing customers where we continue to expand our scope of work under multi-year agreements with highly recurring revenue streams. Our ability to seamlessly operate the mission critical system of our customers Without interruption, during the COVID-19 pandemic, FEDER underscored the value MDocs consistently bring to our mental services model. I am pleased to say that we ended Q3 with a sequential and year-over-year increase in our 12-month backlog. After a slow start into the quarter, the pace of the deal signing accelerated as Q3 progressed, which we see an early but encouraging sign of business stabilization following the disruption of March and April. Moreover, we see an attractive and increasing pipeline of opportunity as our customers focus on the critical investments needed to thrive the post-COVID-19 environment, including digital modernization in consumer and enterprise B2B, 5G deployment and monetization, system migration to the cloud, and launching media and entertainment offerings. Androx is a best-in-class cloud native engine to support such investment today, and we remain committed to investing in R&D and M&A to make sure we bring the innovation our customers will need in the future. I recently announced the acquisition of OpenNet to strike our 5G and cloud migration capabilities as a prime example of this. I will come back to OpenNet later in my remarks, but first let me provide an update of our activities by region in Q3. Beginning with North America, we deliver a positive year-over-year revenue growth as we continue to work closely with the region's largest service providers, many of which are leading the world in 5G investment and the journey to the cloud. With AT&T, we continue to see momentum supporting a wide scope of activities that include AT&T investment in customer experience, digital enablement, data analytics and security under the multi-year managed services deal we announced last November. More recently, we have partnered with Microsoft Azure to shift some AT&T IT applications to the public cloud, and I am pleased to say that we have now started a program to modernize AT&T's consumer mobility domain. Let me also comment on T-Mobile and Sprint, which unified their operation under the T-Mobile brand nationwide on August 2nd. Andros is playing a key role in enabling the new T-Mobile merger objectives through a wide range of activities, which reflects The deep relationship we have developed both T-Mobile and Sprint over many years. Moving forward, we will continue to work hard to demonstrate that we have the right credentials to be T-Mobile's key partner in support of future strategic requirements. Across the board of North America, we started an expanded agreement with Bank Canada, which selected our real-time microservices portfolio to further increase its platform agility and accelerate its cloud strategy. And we won a multi-year deal with a leading Canadian operator, under which Amdocs Media's cloud-based platform will provide content navigation, processing, compliance, and delivery services. Moving to Europe, performance was stable on a year-over-year basis. I am pleased to report that we are on track with the large digital transformation projects we are progressing at Vodafone Germany in Old Spain, both of which are adopting our latest next-generation offering deployed on modern cloud-native technology architecture. Recently, we completed a method of summation project at Tree Ireland, the great success of which has led to our first project at much larger Tree UK, where we have been selected as the prime system integrator in a multi-year method services deal for its enterprise B2B segment. Another example of our ability to expand within the major telecom galaxies is the Orange Group. where Andos is now partnering with Orange Liberia to upgrade its end-to-end digital enablement platform, the opportunity of which resulted from initial entry point at Orange Spain. Additionally, Andos chosen by SERCUM in Israel to accelerate the pace of data transformation across all business lines, and we also won new awards in the network domain to provide end-to-end cloud-native services orchestration solution to streamline and simplify the order of service delivery management processes for SES. The world leading global satellite operator. To some of the viewers, the Breast of Fire industry leading product suite is providing highly relevant with new logos and existing customers. And we remain well positioned to sustain growth in the region over the long term. Turning to the rest of the world, where we are seeing contracts between stronger business conditions in Southeast Asia and a slower pace activity in Latin America. India was among the operational highlights of U3. We will successfully migrate the wonderful ideas, largeness of post and custom mails onto a single digital experience platform that will enable speedy introduction of new services, innovation price plan, binding operational efficiencies. We also expand our strategic partnership in the Philippines during the quarter. Glob Telecom choose our cloud native catalog one and digital one solution as part of a project to transform its enterprise operation and is also planning to use our customer flow management system to overcome COVID-19 related challenges in its regular store. Additionally, at PLDT, Amgas was selected to accelerate the digital transformation of the enterprise business, fully automating the company's operation by modernizing and consolidating its operational support system across consumer and enterprise services offerings. We also remain encouraged by the positive signs of demand we are seeing for our media offering in the rest of the world. Such as Vrario Corp, ATT company, which has signed a multi-agreement with Ubiquity to process S-word content for Direct TV in Latin America, Sky Brazil, and Direct TV Go. Regarding the outlook in the rest of the world, we are well positioned to support a stockpiling of opportunity in Southeast Asia, but market conditions are more challenging in Latin America, where service providers are weighing their discretionary spending requirements against a weak The COVID-19 pandemic and potential market consolidation activity. Now, with my original comments completed, let me take a moment to discuss our plenar position of OpenNet, a leading provider of 5G charging policy and cloud technologies whose customers include several of the world's top 10 service providers. OpenNet is part of our strategy to accelerate the pace at which we believe Amdocs can take the communication industry to the cloud while also helping service providers to differentiate in the 5G area. The strategic rationale is threefold. First, open its world-class team of highly talented software professionals and build a new 5G charging policy and data management product which are recognized worldwide for innovation in the modern open cloud native architecture. We believe OpenNet technologies naturally complement the multiple capabilities of our hyperscale turbocharged platforms, as well as our 5G monetization and order handling solution, the combination of which should greatly strengthen our leading technology position relating to the journey to the cloud and 5G adoption. Third, we see an exciting opportunity to bring OpenNet to our global customer base of more than 350 service providers to further succeed in the wave of 5G investments around cloud, edge compute, IoT, and new customer experience. Overall, we believe OpenEdge represents the right acquisition at the right time in the industry, and we look forward to welcoming the innovative team of software professionals to Amdocs upon closing later this quarter. To wrap up, I am proud of our future performance in which we achieved are both financial targets with seamless operational execution using their most industrial capabilities. With respect to our outlook for the remainder of the fiscal year, we are providing our current expectations based on information we have to date, but remind you that we are in a time of great uncertainty regarding the spread and severity of the COVID-19 pandemic and its adverse effects on the global economy remains. With this in mind, we believe our business trends are gradually turning towards the resumption of growth. Our trends must better be showing early but encouraging signs of stabilization and support and outlook for both year-over-year and sequential revenue growth in Q4 at the guidance midpoint, without including open eggs. As such, we now expect to deliver revenue growth for the full fiscal year between 1.6% to 2.6% on a constant charity basis, which is better than we expected three months ago. We are on track to generate normalized free cash flow of $500 million, which is slightly better than the original guidance of $408 million, which we provided at the beginning of our fiscal year. Additionally, we've seen attractive and increasing pipelines of opportunities ahead of us, which we believe we can sustain for future long-term growth as we leverage our market-leading and cutting-edge product offerings Threat Records of Execution, Pedigree of Innovation, and Employee Talent. To add a final point, I would like to take a moment to recognize our global base of talent and employees to whom we are thankful for the extraordinary professionalism and commitment they've shown during the global pandemic. With that, let me turn the call over to Tamar for her remarks.