Amdocs Limited

Good day, and thank you for standing by. Welcome to the second quarter 2024 MDocs earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Matt Smith, Head of Investor Relations. Please go ahead.

Thank you, Operator. Before we begin, I need to call your attention to our disclaimer statement on slide two of the presentation. It notes that some of our comments today may be forward-looking statements and are subject to risks and uncertainties, including as described in Amdox's SEC filings, and that we will discuss certain financial information that is not prepared in accordance with GAAP. 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. Participating on the call with me today are Shuki Sheffer, President and Chief Executive Officer of Amdocs Management Limited, and Tamar Rappaport-DeGim, Chief Financial and Operating Officer. To support today's earnings call, we are providing a presentation, which can be found on the investor relations section of our website. And as always, a copy of today's prepared remarks will also be posted immediately following the conclusion of this call. On today's agenda, Shuki will recap our business and financial achievements for the second quarter fiscal 2024, and we'll also update you on the continued progress we've made executing against our strategic growth framework, including GenAI and our continued sales momentum in cloud. Shuki will finish by discussing our financial outlook for the full fiscal year 2024, after which tomorrow we'll provide additional details on our second quarter financial performance our forward guidance, and also our continued commitment to ESG. So with that, I'll turn it over to Shuki.

Thanks, Matt, and good afternoon to everyone joining us on the call today. Let me begin by thanking our amazing employees around the world who every day work with our customer to deliver successful project execution and deployment, seamless mission-critical IT operations support, and cutting-edge innovation built on mDoc's unique blend of telco industry expertise, generative AI leadership, and cloud-native agility. The collective effort of mDoc's talented people are reflected in our solid financial results for the second fiscal quarter. The key highlights of which are shown on slide seven. Within an environment of persistent macro uncertainty and industry pressure, we achieved record revenue of $1.25 billion up 2.0% from Erirgo in constant currency and slightly better than the midpoint of guidance. Non-GAAP operating margin improved by 60 basis points, ERO of Erir, and 30 basis points sequentially, driven by our ongoing initiative to accelerate profitability. Non-GAAP earning per share was $1.56, consistent with the midpoint of our expectation, and We closed Q2 with a record 12-month backlog of $4.3 billion, up approximately 3% from a year ago. I believe our record 12-month backlog reflects MDoc's market leadership and healthy sales momentum as we are repeatedly chosen as the technology partner best equipped to support our customer next-gen multi-year modernization investments. Slide 8 highlights some of the key achievements in Q2. In North America, during Q2, we continue to expand our product and services offering at AT&T. In addition, I'm very pleased to report that we just signed a significant five-year deal at AT&T, which expands our activities in new cloud domain, as well as extends our engagement with AT&T in the consumer domain throughout 2020. A T-Mobile, we secured additional awards to support its ongoing modernization and strategy to provide market-leading consumer and B2B customer experiences. Charter signed a five-year continuous modernization agreement to leverage MDoc's customer experience suite to unlock business enhancement and new revenue opportunities. Comcast business continue to modernize and expand adoption of Omnidex B2B platform across their product offering. Additionally, we expand our international footprint, winning a new digital transformation project with JCOM in Japan, an important connectivity and network automation related deals at Colt in the UK, and a major service provider in Southeast Asia. Amdoc's subscription and content management offering also gained further worldwide traction in Q2. Amdoc's subscription marketplace was selected by Virgin Media O2 in the UK, and various affiliates of CK Hutchison Group, the platform was recently deployed at Foxtel in Australia. A leading Japanese content service owned by Paramount selected Amdo's ubiquity to deliver future-ready entertainment experiences to customers by managing the end-to-end content lifecycle from programming to podcasts and StarHub, Singapore's leading telecommunication and digital TV service provider conducted a migration of their TV services for set of boxes, smart TVs, mobile and web utilizing ubiquities solution for their entire subscriber base. Regarding project execution, Q2 was another quarter of successful milestone deployment, which includes a major upgrade for Verizon to the latest version of our catalog one. We also completed the unified single BSS and OSS platform for a leading service provider in Ireland, which ensures the retirement of several IT legacy systems while delivering on the promise of seamless customer experiences across both the BSS and OSS suites. And we enabled the possible migration of approximately 55 million subscribers for two corporations in Thailand. Achievements such as this will inform Amdoc's unmatched reputation for consistent delivery and provide a foundation on which to further extend our market leadership by winning future project awards and by growing our managed services business with new logos and existing customers alike. For instance, we recently expanded our multi-year agreement with a major South Asian service provider to include full cloud managed services in operation And we signed an expanded long-term managed services agreement to support the strategic objectives of Rogers in Canada, which recently merged with Shaw and Colt in the UK, following its acquisition of Lumens EMEA business last year. Overall, I believe our Q2 performance demonstrates MDoc's strong market position and the technological leadership we are bringing in strategic domain like generative AI, which we are incorporating into our platform. This was evident at Mobile World Congress in Barcelona this February, where I was extremely encouraged by the high level of customer engagement and positive strategic feedback we received during the hundreds of C-level and senior management meetings my team and I hosted during the Wink Long Show. Now, moving to slide nine. I would like to review our growth strategy, which is designed to power service providers' delivery of seamless next generation services by accelerating the journey to the cloud across all major cloud providers, creating seamless digital experiences by transforming customer journeys for consumer and B2B, monetizing the future market potential of 5G standalone network, fixed wireless access, and fiber with innovative services, and delivering dynamic connected experiences by streamlining and automating complex network ecosystems. Let me begin so on slide 10 with generative AI, which for past 12 months has been a top strategic priority for Amdocs. During Q2, we continue to execute against the three pillars of our generative AI strategy. The first of which was to equip Amdocs flagship CS24 suite we see as co-pilot a set of embedded GeneAI assistants powered by AMAZE. This suite is soon to be deployed in production at several customers. Second, we are focused on accelerating the introduction of new GeneAI use cases through our AMAZE app factory, the prioritization of which is based on the highest value opportunities. For example, Working with several leading service providers, we are piloting billing care and conversational selling capabilities. Early results indicate promising improvements in both the customer and agent experiences, driving meaningful reductions in time to address customer issues and improving NPS. In the third pillar, we are pleased to see fruits of our work with NVIDIA. to expand our collaboration with industry leaders, including Microsoft and AWS. With NVIDIA, we unveiled meaningful progress towards carrier-scale production imperatives, including reducing token consumption by as much as 60%, reduce query latency by as much as 80%, and improving response accuracy by up to 30%. And with AWS, we have partnered to integrate AWS GenAI tools into our AMAZ platform to fuel innovation across telco domains from network operation to customer experience. Lastly, we continue to work with Microsoft and OpenAI across our portfolio. To summarize, we believe Amdocs has a leading role to play as a dominant industry technology enabler capable of helping service providers to fully harness the power of generative AI and deliver real-world value and savings. Moving to slide 11, strong sell momentum continues in cloud, which is on track for double digital revenue growth this year as we advance our customer cloud strategy with our unique end-to-end product and services and fully accountable migration model. A great example is AT&T Mexico. which has successfully transitioned its Amdocs customer experience suite systems to Oracle Cloud Infrastructure, or CI, thereby enabling flexibility and capacity growth, reduced operational cost, and state-of-the-art cloud infrastructure that will allow it to provide superior services, security, and customer experiences. Amdocs is also collaborating with Australia's Optus to modernize the Amdocs customer experience suite, marking a significant step in Optus modernization journey. As mentioned, we also just signed a significant five-year deal to expand our cloud activities in AT&T to a new domain. In this program, we will leverage the technology capabilities of Astadia, which we acquired last November. As a reminder, our study technology supports highly sophisticated cloud migration. Moving to digital modernization on slide 12. Amdocs has been chosen as a key partner to modernize and accelerate the digital transformation of JCOM, a leading provider of communication and broadcasting services in the competitive Japanese market, to drive operational efficiencies, elevate customer experiences, and unlock new monetization opportunities. I can also report positive demand for ConnectX, MDoc SaaS cloud native platform that is powered by generative AI. This enables MVNOs or any company to seamlessly launch a digital connectivity brand on the cloud. Adding to existing customer like Finetwork in Spain and Melon in South Africa, ConnectX was recently selected by Winity in Brazil to provide the necessary BSS capabilities for a newly established MV&E, providing digital services to its multiple MV&Os. Similarly, we see growing customer appetite for Amdoc's subscription marketplace, a SaaS-based scalable platform that seamlessly enables service providers to deliver OTT and digital consumer services straight to their customers. Recently, CK Hutchinson selected Amdoc Subscription Marketplace to enable various group operating companies in Europe to launch additional entertainment and other digital services together with its core offering, providing an extremely aggregated and convenient experience for its customer as one-stop shop for digital subscription. Subscription Marketplace were also selected by Virgin Media in the UK to launch NextGen's streaming and gaming services for its mobile customer, and was recently deployed for Foxtel in Australia, thereby extending the customer list, which already includes T-Mobile US and AT&T Mexico. Switching to advanced connectivity and the modernization of 5G and fiber network on Site 13, I am pleased to announce an expanded collaboration with Colt, a digital infrastructure company in the UK. Colt will leverage Amdocs' legal transformation inventory management services to streamline its inventory process, enhance agility, and accelerate time to market for new services bundle and upsell strategies to drive greater revenue generation and competitive advantage in the wholesale and enterprise B2B markets. Turning to slide 14, Amdocs is positioned for growth in the network automation, leveraging expertise and unique end-to-end offerings. In South Africa, we are deploying Amdoc's cloud-native Helix service assurance suite to modernize CELSI service assurance, making a significant step in transformation this service provider faulted performance and management, and driving streamlined assurance processes with the power of artificial intelligence and machine learning. Notably, this deal follows Amdoc's acquisition of Tioco's service assurance business last year, providing another example of the way in which they use M&A as a tool to accelerate our growth strategies. Additionally, major service providers in Southeast Asia recently selected Amdocs to deliver our end-to-end service orchestration solution as an important component of its customer OSS and cloud monetization program. And finally, through its collaboration with Amdocs, SCS announced that O3B empowered its second generation Medium Air's Orbit software-enabled satellite system is now operational and poised to deliver connectivity services worldwide. Amdex provides support with its industry-leading OSS solution, encompassing orchestration, inventory, and service assurance systems. Now turning to slide 15, let me say a few words about our market position as we enter the fiscal second half. We continue to operate within a challenging environment of macro uncertainty and industry pressure. Having said that, as the preferred technology partner for modernization, we continue to see healthy market demand for Amdoc's innovative products and services around our strategic pillars, which altogether should support another year of double digital revenue growth in cloud this year. Amdoc's market win rate remains high, And I'm encouraged by the great progress advancing multiple Gen AI use cases engagements, which we are supporting in collaboration with industry leaders such as NVIDIA, Microsoft, and AWS, and several flagship customers. Altogether, we expect quarterly revenue growth to accelerate sequentially in the fiscal second half, albeit at a more moderate rate than we initially anticipated, mainly due to a slower pace of pipeline-to-sales conversion. Wrapping everything together on slide 16, we now expect revenue growth of between 1.7 to 3.7 percent on a constant currency basis in fiscal 24, and we are on track to deliver accelerated profitability improvement in fiscal 2024, reflecting our constant focus on operational excellence initiatives to improve business efficiency. Overall, we are now expected full-year non-GAAP diluted earnings per share growth of between 7% and 11%, which combined with our dividend yield of approximately 2%, positioned us to deliver double-digit expected total share of returns for the fourth straight year in fiscal 2024. With that, let me turn the call to Tamar for her remarks.