Amdocs Limited

Ladies and gentlemen, thank you for standing by and welcome to the Q1 2021 AMDOCS earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Matthew Smith, head of investor relations.

Please go ahead. Thank you, 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 effects 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 finished 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 a 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, 2020, filed on December 14, 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 finally, a copy of today's prepared remarks will be posted on the investor relations section of Amdocs' website following the conclusion of this call. And with that, I'll turn it over to Shuki.

Thank you, Matt, and good afternoon to everyone joining us on today's call. I would like to preface today's remarks by referring to the previously announced Diversion of the Open Market, which we successfully completed on December 31st. My comments on this call will therefore refer to certain financial metrics on a pro forma basis, where applicable in order to provide you with a sense of the underlying business trends, excluding the financial impacts of open markets. I am pleased to report a strong quarter to start our fiscal year 2021, among the highlights. We delivered a record high revenue, which was up 4.3% year over year as reported and above the midpoint of our guidance even without the benefit of foreign currency movements. With our best ever quarter in North America and Europe. We maintain a high win rate, including significant new multi-year strategic partnership agreement with T-Mobile USA, and we generate a robust normalized free cash flow of $385 million for the quarter. During year one, we focus on accelerating our growth by monetizing the strategic engines we've built to meet our customer requirements for digital modernization, 5G, the journey to the cloud and next generation OSS platform that accelerate innovative 5G network service in the cloud era. I'm happy to report that we are seeing some encouraging signs Our first quarter sales momentum was strong, as reflected in our performer 12-month backlog, which grew by a record amount of approximately $150 million sequentially and 5.6% year-over-year. The mix of the new awards was also well-balanced across our product portfolio and included several new wins for OpenEdge 5G charging and policy solutions. Now, let me provide you some call-out regarding our regional performance during Q1. Beginning with North America, we delivered a record quarter as ramp-up customer activities to support their strategic investment in the next generation 5G customer experience solution. We delivered on the cloud. At AT&T, for instance, We are accelerating a program to modernize the consumer mobility domain by including the deployment of 5G monetization solution leveraging OpenAI's capabilities as we announced last quarter. As I mentioned in opening remarks, we are today delighted to announce that Amdocs has been selected to modernize and accelerate a T-Mobile digital transformation and journey to the cloud by signing a new multi-year agreement which further strength our long-term strategic partnership. As part of the engagement, T-Mobile will implement the Amdocs One product portfolio to support next-generation communication and media services for its consumer and business customers. Additionally, Amdocs will provide extended next-generation hybrid cloud operation in the form of a multi-year managed services engagement for T-Mobile digital platform covering automation and operation and continued support for T-Mobile as it navigates through a complex integration process. Among some after-the-first-quarter highlights, Charter selected Amdos for a multi-year managed services agreement in support of its Spectrum mobile business. Additionally, a pay TV provider has shown our cloud-based monetization platform to support enterprise and wholesale services in its next-generation 5G network. To summarize North America, we are pleased to welcome Q1 sales momentum, which we believe reflects the strength of our next-generation 5G customer experience solution and our ability to accelerate our customer journey to the cloud. Moving to Europe, we deliver a second straight quarter of record revenue. During Q1, we continue to win new logos such as Wintrade, one of the largest mobile operators in Italy, which has chosen to deploy Amdocs Optima to the public cloud to provide a more than 5G ready monetization platform for its post-paid consumer and its enterprise customer across all lines of business. An emerging theme in the communication industry is the shift from physical to software-based SIM cards. This trend has been accelerated by the global pandemic and is translating to growing demand for the Amdocs cloud-based eSIM platform, which has already been deployed, adopted by Telefonica in Brazil and Chile, and which is recently chosen by Cellcom Israel to be deployed on Microsoft Azure for its commercial launch of eSIM-enabled devices like smartwatches, cellular phones, laptops, tablets, and more. We are also delighted to be growing our presence in Russia, where Project 202, our digital experience group, has been selected by MTS as a consultancy partner in its plans to take its customer ecosystem and retail experience to the next level and to help identify new business revenue streams and opportunities. Amdor's media offering also continues to gain traction. In Eastern Europe, Ubiquiti strengthens its footprint at A1, Telecom Austria Group, by renewing its multi-year partnership with A1 or Watsky to provide transaction-based offerings for premium studio content as well as end-to-end content management which includes marketing localization and processing services. Regarding the Outlook in Europe, we are focused on our project execution and on winning new business opportunities that will further expand our regional customer footprint for the longer term. Turning to the rest of the world, Q1 revenue improved on a sequential basis. Among the highlights of the quarter, we continue to strengthen our relationship with long-standing strategic customers across the region. A good example is the Telefonica Group, where we recently expanded our existing multi-year services agreement with Movistar Peru to modernize and accelerate its wireless corporate enterprise transformation. Additionally, we signed a multi-year extension and expansion of our limited services agreement with Telefonica Movistar Chile to include the launch of our cloud-based digital ESAM solution, which I mentioned before. To round out my original comments, I am pleased with our first quarter performance. Excluding open market, we are on track to deliver a full year worth on a performer basis in each of the three geographical regions in which we operate in physical 2-in-1. Although, we remind you that sequential trends may fluctuate across regions due to foreign currency movements and sizing and timing of project activities and other factors. Our confidence in the outlook is supported by recent sales momentum and our ability to monetize the strategic engines of growth We've built to support our customer needs for digital modernization to enhance customer experience, 5G, the journey to the cloud, and a next-generation OSS platform that accelerates innovative 5G network services in the cloud era. We are seeing strong interest in OpenNet's 5G charging policy solution, which naturally complements the multiplayer capabilities of our charging platform and 5G Monetization and Order Handling offerings. The integration of these technologies has strengthened our market offering and helped us to win new awards with AT&T and several other service providers in the past months. These awards include one of America's largest prepaid, no-contract wireless provider, which has recently selected Amdocs OpenEdge 5G Policy Management System running on AWS Cloud to enable Management and Control of 5G and all other wireless services. Over in Europe, we've expanded our partnership with A1 Telecom Australia Group with a multi-year deal to provide digital monetization using OpenEd 5G charging and policy products and services. And at Glob Telecom in the Philippines, we have successfully implemented the Amdocs OpenEd solution on AWS Cloud to support Glob's fully digital telecom brand. Overall, we are pleased with OpenEdge's recent progress and its proven ability to support the future charging and policy needs of the World Service Provider as they accelerate the 5G investments. To wrap up, I am pleased with the strong start we have made to the fiscal year, especially amid the great uncertainty regarding the spread and severity of the COVID-19 pandemic which continues to adversely affect the global economic outlook. We remain on track to deliver accelerated growth in physical 2021 on a perforal basis consistent with our present guidance, and we continue to expect a stronger second half as we execute on our strategy and ramp up recent customer rewards. Our confidence in the outlook is supported by the visibility of our backlog. Our proven ability to execute, the accountability we provide to our customers, and our focused strategy, which we believe is aligned with the needs of the market. With our commitment to profitability and disciplined use of cash, we remain well-placed to deliver total share and return of almost 10% in FY21, including a slightly improved outlook for performer non-GAAP earnings per share growth of 7.5% at the midpoint of our new guidance Finally, I would like to take a moment to thank our employees for supporting our social responsibilities and related activities, including our mission to derive connectivity and digital inclusion in the many communities in which we operate worldwide. Throughout the global pandemic, people's ability to interact, access services, learn and work has been essential. Our focus on enabling digital inclusion runs across our offerings but also extends to our communities, from internet connectivity and accessibility to digital literacy and advanced skill training. For example, we are connecting four schools in Kenya to the internet, giving the opportunity to more than 7,000 children to use this window to the world collaboration with Safaricom Foundation. In addition to donating thousands of computers to underrepresented populations, many of our employees are also teaching different populations how to access the Internet, providing tailor-made digital skills training, and helping future generations to become more employable in the tech sector. We are committed to the journey towards digital inclusion. We will continue to serve societies where they need us the most. With that, let me turn the call to Tamar for remarks.