Amdocs Limited

Thank you for standing by and welcome to the MDoc's third quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 11 again. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Matt Smith. Head of Investor Relations. Please go ahead, sir.

Thanks, 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 Amdocs' 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 finished 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 Rapoport-DeGinn, 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 today's call. On today's agenda, Shuki will recap our business and financial achievements for the third quarter and full fiscal year 2025. And he'll also update you on our strategic progress, including our continued sales momentum in cloud and recent commercial developments in generated AI and data services. Shuki will finish by discussing our financial outlook for the full fiscal year 2025, after which tomorrow we'll provide additional details on our third quarter financial performance and forward guidance. As we've communicated previously, Shuki and Tamar will compare certain financial metrics on a pro forma basis, which adjusts prior fiscal year 2024 revenue by approximately $600 million to reflect the end of certain low margin non-core business activities, which were substantially already ceased in the first quarter of fiscal 2025. And with that, I'll turn it over to Shuki.

Thank you, Matt, and everyone joining us on the call today. Starting on slide six, Amdocs deliver solid financial results and achieve important business milestones in Q3 as our global team of amazing people continue to support the strategic business imperative of our customers with innovative cloud, digital, and AI-based solutions. Touching on the quarterly financial highlights. Revenue of $1.14 billion was up 3.5% from a year ago in a performer constant currency, exceeding the midpoint of our guidance with sequential growth in all regions and a record quarter in Europe. Profitability improved by 10 basis points sequentially, driven by internal efficiency improvements. Non-GAAP diluted earning per share was $1.73, a penny above the midpoint of our expectation, and we wrapped up the quarter with a healthy transfer backlog of $4.15 billion, up 3% from a year ago performer. Jumping to slide seven. Q3 featured several important wins, which showcased Amdoc's market and technology leadership and our proven ability to power the mission-critical needs of our telco customers. We have continued to see positive sales momentum in cloud, where we have recently won key modernization immigration deals, which expand our long-standing partnership with Alisa in Finland, Cloud Brazil, and a leading Eastern European operator, leveraging our end-to-end cloud offering and telco vertical expertise. In the emerging domain of generative AI and data services, I'm encouraged to say that our tech leadership and key partner collaboration with NVIDIA and Microsoft are bearing fruit as we start to convert previously discussed POCs into commercial success. Notably, we recently won strategic GenAI-related deal with three customers, including a leading U.S. service provider, Consumer Cellular, an EHUAE, And I believe this will provide a foundation to which we demonstrate mDocs' GenAI capabilities to further expand our customer activities over time. Turning to project execution, mDocs is engaged in complex mission critical transformation, closely working with our customer as a key partner. During CRUDE 3, we delivered a record number of deployments, achieving key outcome milestones at AT&T, Comcast, Vodafone Italy and Netherlands, PLDT in the Philippines, and others. Among the highlights, Bell Canada and AppDocs set a new benchmark by moving critical billing systems to the cloud, simplifying thousands of daily operations and interfaces in the process. We also supported the go-live of our B2B platform in Optus in Australia and completed BSS modernization supporting 25 million subscribers in Telecom South Africa. Rounding out my operational review, Q3 was another record quarter in managed services. Moreover, we have recently strengthened our managed services engagement with several key customers, including a leading service provider in the U.S., BT. in the UK, and Telstra in Australia. Turning to slide eight, I'd like to elaborate of our growth strategy, which is built to address our customer strategic business imperative and investment need to accelerate the journey to the cloud, simplify and accelerate the adoption of generative AI and data services, digitalize customer experience of consumer and B2B, and monetize next generation network investments and streamline and automate complex network ecosystem. The execution of our growth strategy is enabled by Amdoc's unique tech-led business model, which integrates cutting-edge technology across platform and solution, project deployment, and IP-based IT operation support. By continually investing in innovation to further extend our tech-led offering and capabilities, we are consistently able to bring value to our customers. We see every engagement as an opportunity to showcase our value position and gradually scale activities within our existing customer as well as new ones. A great example of our model at work is the way which we help our customer on their journey to the cloud. As we can see on slide nine, more customers are choosing Amdocs as their primary partner for public, private, and hybrid cloud migration. Using our comprehensive cloud solution, and telescope expertise. We are happy to announce the expansion of our partnership with ELISA in Finland to modernize the B2B platform using Amdoc CS Digital Suite deployed on Google Cloud GCP. This transformation will enable ELISA to accelerate time to market, streamline the lead-to-order journey, and deliver a unified experience across mobile and fixed services, all on a single converged digital platform. It marked a significant step forward, enhancing agility, improving customer engagement, and supporting ELISA long-term growth in the B2B space. We are also pleased to announce a new win with one of Eastern European leading service providers who will be leveraging our cloud-based customer experience platform, a solution designed to transform customer experience and operational agility. As part of this engagement, Amdocs will also work with the service provider to migrate newly acquired mobile customers to the platform, driving long-term efficiency and innovation. Among other notable awards, Amdocs has finalized an agreement with Claro Brazil to modernize their enterprise systems. I also want to highlight Amdocs' unique suite of SaaS-based cloud solutions, which are gaining market traction and contributing to growth. Our suite includes ConnectX, which is helping every nose and telcos to launch strong, powerful brands, create to target specific consumer groups with unique user experiences. ConnectX was recently adopted by Consumer Cellular and several other new logos, in addition to which we have deepened our collaboration with AT&T by extending our ConnectX platform agreement to accelerate its next-gen market offering. An example of a way in which ConnectUS is supporting our customer is Mobifone, a leading Vietnamese operator, which recently used platform to launch Saimi, its new digital brand, especially tailored to meet evolving needs of young, tech-savvy Gen Z subscribers. Supported by a strong sales momentum of the last several quarter, we expected to reach our double digital revenue growth target for cloud in fiscal 2025. Furthermore, we believe cloud will remain a primary ghost engine for Amdocs in the foreseeable future as most of our customers are only just getting started on their multi-year migration journeys. Turning to slide 10, we are intent to find our focus on generative AI and data services as a key ghost pillar for Amdocs. Let me take a moment to elaborate. First, a leading US service provider, assign an expanded multi-year agreement which extends managed services to transform its billing, commerce, catalog, and order management through Gen-AI power solution. This includes a Gen-AI-enabled AMAZE agent, bill presenter, to simplify billing inquiries and enhance customer experience. Second, AMDA is expanding multi-year agreement with consumer cellular as this wireless provider transition to an AI-powered MV&E. building on our recent deployment of ConnectX, this agreement leveraged Amdoc's AI and data platform, customer experience insight, and the main suite to transform telecom data into actionable insight and real-time predictive analytics for greater automation intelligence. Third, I am pleased to share that we expanded our collaboration with the UAE's largest service provider, EN UAE, through additional new Gen AI use cases. This development built on the successful implementation of our AMAZE platform and marks another step in the journey towards fully powering all of E and UAE's customer-facing channels with GenAI. Overall, I'm encouraged by this recent deal because they reflect MDoc's GenAI data service and leadership in the telco industry. and because they provide strategic foundation of which we can demonstrate value and gradually scale our customer activities in this emerging domain over time. Moving on, Q3 also includes notable customer development that was our additional key strategic pillars, as shown on slide 11. BT has awarded Amdocs a digital transformation project. starting date to be finalized, that will enhance the consumer customer experience as part of a multi-year managed services engagement. Comcast extended the multi-year commitment to leverage the Amdocs build presenter solution across all services. In network, we have extended an engagement with Australia's Telstra, and we are continuing multi-year OSS digitization, which will enable Telstra to benefit from our Gen-AI and network automation capabilities. Additionally, AT&T renewed its open-end policy management services engagement with Amdocs under an expanded low-term agreement. Claro Brazil expanded its policy platform agreement with Amdocs to better serve the evolving needs of its pre-paid and post-paid customers. And Globe Telecom in the Philippines selected Amdocs to deliver end-to-end RAN optimization services. This engagement covered the full spectrum of RAN services, including installation, commissioning, integration, testing, acceptance and optimization of its radio sites. Global service providers are also accelerating their fiber network expansion investment to enable converged value-added offerings which bundle broadband and mobile together. The trend is creating strong demand for fiber network design, deployment, orchestration, and digital infrastructure management solution which Amdoc is positioned to support with our next-gen fiber solution. For instance, we've significantly increased our fiber engineering services in support of AT&T's fiber expansion, serving them as their connectivity design partner across the majority of AT&T's markets. To further augment our capabilities and market position in fiber, We recently closed the deal to acquire the Telco Network Engineering business of Mobia, a privately owned company which will expand our fiber offering and fiber custom footprint in Canada. Finally, in next-gen network monetization, A1 Group in Europe has selected Amdoc's billing, charging, and product catalog solution to establish a converged cloud-ready monetization platform for its Macedonian affiliates. Turning now to the current operating environment on slide 12. We continue to see rich and encouraging pipeline of opportunities across our large market of nearly $60 billion. Our 12-month backlog position is healthy, and as I mentioned, we are on track to achieve our double-digit growth target in cloud this year. We are closely watching any impacts of the uncertain global macroeconomic environment on us and our customer spending behavior. Bringing it all together on slide 13, we now expect slightly better revenue growth of roughly 2.9% in pro forma constant currency at the midpoint of our fiscal 2025 outlook, equating to an improvement of about 20 basis points compared with our prior guidance. We are also on track to deliver double-digit expected total share of return for the fifth consecutive year, assuming the midpoint of our non-GAAP diluted earning per share outlook supported by significantly improved profitable and robust earning to cash conversion. With that, let me turn the call to Tamar for her remarks.

Thank you, Shuki, and hello, everyone. Thank you for joining us. Before I begin in today's comments, I will compare certain financial metrics on a performer basis which adjust prior fiscal year 2024 revenue by approximately $600 million to reflect the phase-out of certain low-margin non-core business activities which were substantially already seized in the first quarter of fiscal 2025. To further assist your modeling, the original mix of this revenue was similar to the overall company, and it contributed roughly $150 million per quarter. To begin, I'm pleased with our solid financial performance for the third fiscal quarter as detailed on slide 15. Q3 revenue of approximately $1.14 billion was up 3.5% year-over-year in pro forma constant currency and exceeded the midpoint of our guidance even after adjusting for a positive impact from foreign currency movements of approximately $9 million compared to our assumptions. Reflecting the phase-out of certain business activities, reported revenue declined by 8.4% from a year ago. On a regional basis, North America improved by 1% sequentially, posting its strongest quarter of the fiscal year. Europe delivered a record quarter with year-over-year revenue growth of nearly 8%, driven primarily by the ramp-up of New Deal activities as well as some contribution from the earlier requisition of profit net, which we closed at the end of Q1. Test of the world was slightly higher on a sequential basis. We continue to see mixed trends, while Southeast Asia growth is partially offset by weakness in Latin America. Shifting down the income statement, non-GAAP operating margin was 21.4%, improved by 280 basis points from a year ago, reflecting the announced phase out of the low margin non-core business activities, and the benefits of ongoing efficiency gains within our operations. NADGAP operating margin improved by 10 basis points sequentially. Interest and other expenses amounted to roughly $11.7 million in the third quarter and included a one-time charge taken in respect to $2.5 million write-off of a small minority investment this quarter. On the bottom line, non-GAAP diluted EPS of 1.72 was a penny above the midpoint of guidance, and diluted GAAP EPS of 1.39 was slightly above our guidance range in the third quarter. Turning to slide 16, revenue for managed services was a record, $771 million in the third fiscal quarter, up 4.1% from a year ago. Accounting for roughly two-thirds of total revenue, managed services engagements are a key measure of Amrok's long-term visibility and business resiliency, underpinned by customer renewal rates which have historically approached 100%. To provide some recent examples of the ways in which we deliver value to our managed services customers over time, we recently signed a significant multi-year agreement which extends and expands our managed services engagement with a leading U.S. service provider, leveraging our generative AI-powered platform. In Australia, Telstra extended its managed services engagement, continuing a multi-year OSS digitization, which will enable it to benefit from our gen AI and network automation capabilities. And BT has awarded Amdocs a digital transformation project, starting dates to be finalized, that will enhance the consumer-customer experience as a part of a multi-year managed services engagement. Moving to the balance sheet and cash flow highlights on slide 17, DSO of 76 days was down by one day sequentially and up two days year over year, reflecting normal fluctuations in business activity. Unbuilt receivables, net of deferred revenue, declined by 71 million sequentially in Q3, aggregating the short-term and long-term balances. This is the second consecutive quarter of sequential improvement in this metric, as billings have been running higher than revenue. As a reminder, the net difference between unbilled receivables and deferred revenue fluctuates from quarter to quarter, in line with normal business activities, as well as our progress on multi-year transformation programs. With free cash flow before restructuring payments of $230 million in Q3, we are on track to achieve our annual targets. including restructuring payments of $19 million, reported free cash flow was $212 million. Overall, we ended Q3 with a healthy cash balance of approximately $342 million and an available $500 million revolving credit facility, providing ample liquidity to support our ongoing business needs while retaining the capacity to fund our future strategic growth. Switching to capital allocation on slide 18, This quarter, we repurchased $135 million of our shares. Including the new $1 billion share repurchase authorization approved by our board last quarter, we add up to $1.12 billion of remaining repurchase authority as of June 30, 2025. We paid cash dividends of $59 million in the third fiscal quarter. Looking ahead, we are optimizing our annual free cash flow target of between $710 to $730 million in fiscal 2025, which is before restructuring payments. Our annual free cash flow outlook equates to a conversion rate of more than 90% relative to expected non-GAAP net income and translates to a healthy free cash flow yield of more than 7% relative to AMLO's current market capitalization. Regarding our capital allocations in fiscal year 2025, we expect to return the majority of our free cash flow to shareholders. Moving to slide 19, 12-month backlog was $4.25 billion at the end of Q3, up 3% from a year ago on a performance basis. We expect 12-month backlog to represent roughly 90% of forward-looking revenue, further underscoring the importance of this metric as a leading indicator of our businesses. Now turning to our revenue outlook on slide 20, we are continuing to closely monitor the prevailing level of macroeconomic, geopolitical, business, and operational uncertainty in the current business environment. The fourth quarter and full fiscal year 2025 financial guidance reflects what we consider to be the most likely outcome based on the information we have today, but we cannot predict all possible scenarios. For the full fiscal year 2025, we now expect revenue growth of between 2.4% and 3.4% in pro forma constant currency. The 2.9% midpoint of which equates to an improvement of roughly 20 basis points as compared with our previous outlook. Our annual guidance incorporates double-digit growth in cloud and some contribution from inorganic deal activity. As to the fourth fiscal quarter, we expect revenue between $1.125 billion to $1.165 billion. And for your modeling purposes, revenue from acquisition of Mobia's network engineering business will be immaterial in Q4. Moving down the income statement, we are on track to produce non-GAAP operating margins within our guidance range of 21.1% to 21.7% in fiscal year 2025. The midpoint of our guidance equates to a substantial increase of roughly 300 basis points this fiscal year, roughly 230 basis points of which is from the previously announced phase-out of business activities. Another 60 to 70 basis points of margin expansion is resulting from our continued focus on operational excellence, automation, and the gradual implementation of GEN-AI. As part of our process of accelerating the internal adoption of Gen AI across everything we do at Amdocs, we are proactively evaluating our strategic investment priorities for fiscal 2026, having regard to our future workforce allocation and the optimal mix of technology, infrastructure, workspace, and other resources. Below the operating line, foreign currency fluctuations and hedging costs are expected to impact non-GAAP net interest and other expenses. by roughly several million dollars on a quarterly basis. We expect our non-GAAP effective tax rate for fiscal 2025 to be within an annual target range of 15 percent to 17 percent for the full fiscal year 2025, consistent with our initial guidance. Wrapping everything together on slide 22, we now expect non-GAAP diluted earnings per share growth within a tighter range of 8 percent and 9 percent, for the full fiscal year 2025. The 8.5 midpoint of which is unchanged as compared with our prior outlook of 6 1⁄2 to 8, sorry, to 10 1⁄2 previously. Assuming the 8 1⁄2 midpoint, we are on track to achieve double-digit expected total shareholders return for a fifth consecutive year in fiscal 2025, including our dividend yield. With that, back to you, Shuki.

Thanks, Tamal. I am pleased with our solid financial performance and business achievement in the third quarter, including our ongoing momentum in cloud and encouraging signs of commercial progress in Gen AI and data services. With our unique technology-led business model, we are on track to meet our national targets for the full fiscal year. With that, we are happy to take your questions.

Certainly. And our first question for today comes from the line of George Nader from Wolf Research. Your question, please.

Hi, guys. Thanks very much. I guess I wanted to start by asking you about the British Telecom win. Looking back, I don't think you guys did much business there. I guess I'm just wondering how big that opportunity is for you. If you could size it, that would be very interesting. Also, if I go back in the last three or six months, you guys talked about some bigger deals kind of working through your pipeline. I assume you're referencing the BT transaction And then also I'm just curious if that BT situation is in backlog at this point or not. Thanks.

The second question is not in our backlog because it was signed after June 30. And second, we did have, we are doing many years business with what used to be Everything Everywhere, which was acquired by British Telecom. And they are running some of our legacy platforms. This deal is actually modernizing all the commerce domain of everything everywhere. It's a combination of a full modernization project with extended managed services to support everything there. So it's an incremental activity, significant incremental activity to our previous activities with everything everywhere, which is now BT.

And just to refer to your other point about having significant deals in the pipeline, we mentioned a couple of examples that were signed in the quarter, some of which I would say are important and strategic, not necessarily huge in size like Telstra and some of which like the U.S. leading operator, which we cannot mention by name right now, is a significant deal. including modernization, including GNI, including multi-year managed services extension and expansion. So definitely an example of a deal that is on the other, I would say, scale in terms of sizing. So we see both, George. And, yes, we continue to sign deals as we speak. So, you know, life is cut in a way by a cutoff point on June 30, but in reality it continues, obviously, in the weeks since.

Got it. That's great. And then I guess I'd also just ask you about, you know, AI. You know, I know you guys, I think, had around a dozen POCs going on with the Amaze product, I think mainly in call center types of applications. I was just curious about, you know, what kind of progress you're making there. Have you had customers convert from trial to production rollouts? You know, anything you can say there would be interesting, too. Thanks a lot.

Thanks, Joe. So we converted actually four different customers from POCs to actual deals this quarter. And this, in one of them, in the UAE, it's the expansion of the previous deal that we've signed. And actually, they will continue expanding, build agents on top of the infrastructure that we've built. In the other three customers that we mentioned, we are installing our AMAZE platform, and we are building, starting to build use cases on top of it. We are helping also the customer to arrange the data to support it. It's a combination of care-related, billing care or care-related use cases, and also commerce and upsell use cases.

Okay. Thank you very much. Thanks, George.

Thank you. And our next question comes from the line of slow-mo. Rosenbaum from Stiefel, your question, please.

Hi. Thank you very much. It's good to hear about all the deals, and I just wanted to follow on a comment that you made, Tamar, about the June 30th being kind of just a cut-off point in time. It's the first time in many years that we've seen a sequential tick down, albeit small, in backlog. It's down $20 million today. Can you talk a little bit about that and what's contributing to that? And then afterwards, I just want to ask a little bit more following up on the AI deals, if you could just help kind of dimensionalize them. And do you think that that's going to, you know, at what point in time will we help and see that be incremental to revenue growth? So, you know, kind of lifting up the expectation for, you know, revenue growth on a year over year basis, even just a little bit.

Thanks, Shlomo. So when we look on backlog, and as I always say, it's a good leading indicator, you know, as we look on the next 12 months backlog. And we continue to see nice year-over-year growth, 3% this quarter. You're right, sequentially it was down 20. I'm less focused on that since eventually, you know, signing of deals can happen on August 1st and August 2nd. And you're right that it's unusual, but at the same time, we've seen deals being signed, like the BT-1 that is a significant one and others. So we are focused on looking forward and continue to see the back of them, giving us great visibility. We talk about roughly 90%. I never take it as an accurate mathematical formula, but it is giving us a good coverage as we look forward, both in terms of understanding the revenue picture as well as ability to plan, which is really important in terms of resources and how we are thinking about executing the deals and being prepared to do so. And regarding GNAI, we do see contribution already, but it's starting in small increments. And I think the importance, like the E and UAE example, which we've been talking about them adopting our Maze platform. And since then, every quarter we see adoption of additional use cases. So the idea is we get the customer excited about what they see and we grow from them and we bring the value and hopefully we can grow even farther. And another layer I would mention is that the data-related services preparing for the Gen AI use cases is another important part and actually comes first typically in the cycle in terms of getting the data ready and the services that are associated with that as well as our data one platform in order to help customers do so. So this is the two, I would say, vectors that we are seeing from pure revenue point of view. The data-related activities are bigger right now, and the Gen AI use cases are the ones we are, as we said, converting now from POCs to commercial deals, and we like this conversion rate, and we expect to see more as we move forward.

Thank you.

Thanks, Lomo.

Thank you. And our next question comes from the line of Timothy Horan from Oppenheimer. Your question, please.

Thanks, guys. The North American win, is that a relatively smaller customer that's going to become larger? Can you give us some sense of how meaningful a material that is? It's a bigger customer that's become bigger. Got it. On the SaaS products, can you tell us how meaningful that is to overall revenue or maybe just incremental revenue growth at this point? And I know you talk a lot about ConnectX. Are there other SaaS products that are doing well?

I will start to describe the SaaS product and the market give more. It's going double-digit. I mean, it's a growth engine for us. We have several SaaS products. There is obviously the ConnectX MarketOne, which is our monetization platform. is also SaaS, and our eSIM platform is also a SaaS platform. So I think that we developed it quite nice, and I think in eSIM we have more than 40 customers worldwide. So we see more and more traction. I think obviously the ConnectX is getting a lot of attention lately because this is really, really We achieved 10 customers.

And it's the newest one and one that we launched to the market several quarters ago. And you see very nice traction since addressing both the MVNO opportunity as well as the digital brands of the larger players. And people are really excited about it. We mentioned, for example, consumer seller love. It's a new win of last quarter. This quarter already we've seen expansion of the business with them. So the momentum is being built. Now, it aggregating all of the revenue we see in the SaaS business. It's not in the hundreds of millions, don't get me wrong, but the fact that it's going very nicely and it is obviously generating, as it scales up, nice margin is giving us the appetite, I would say, to invest more into these kinds of offerings.

And do you have a sense of where we are in the cloud migration by your customers? You know, maybe... you know, what percentage or what inning, you know, we're in. And do they recognize that they have to migrate to the cloud to really, you know, use Gen AI? And, you know, are they thinking that Gen AI is going to really help them move the needle fundamentally?

I think it's two different things. I think that although obviously we are using Gen AI tools, but many customers of Amdocs started the journey to move to the cloud. The journey includes, obviously, some type of consulting. And then you need to have all the activity of taking the platform to the cloud. Then you have migration. So it's not a simple necessarily. Definitely, it's not a short project. So we have many, many customers that are either starting to do migration or the midst of the migration. I would say less than a handful of Amdocs customers completed it. But we really did start the journey with many customers. So there is a lot of activities ahead of us in this specific domain.

And Les, the margin expansion you saw this year, 60-70 basis points, do you think that's sustainable or repeatable? Thanks.

We're not committing now to the next year margin expansion, but the trajectory, I would say, of the ability to take technology and automation, and definitely GenAI now is an accelerated opportunity. It is definitely there, and it's in everything we do. At the same time, there's always a balancing act between how much we see productivity gains and how much we are investing into the business and the growth. So this is why I'm being careful, you know, to get ahead of ourselves and talk now explicitly about what's the margin number for 2026. But we continue to see the productivity gains. We continue to see the ability to take different capabilities that we have that are tech-led and build that into the way we do things internally.

Thank you. Thank you. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press star 1-1 on your telephone. And our next question comes from the line of Tal Leone from Bank of America. Your question, please.

Hi, guys. This is Kevin Niederprum on for Tal Leone of Bank of America. I have two questions for you. The first one is about Gen AI, and I know we already had some questions about Gen AI. But I wanted to ask you in a little bit of a different sense in the terms of, what are you guys thinking about the potential for GenAI to contribute meaningfully to revenue over time, whether it's a standalone opportunity or an accelerator of the existing service lines? And directionally speaking, is it crazy to think that in a year from now that GenAI is a meaningful contributor to revenues, or is this still a few years out?

I think what we see in 2025, as we said, it's the year of exploration. As we expected, during the year we had several or say quite a lot of proof of concept engagement with customers that are evaluating the capabilities, how to take it into supporting their business, either to create a better customer experience or reduce cost and create efficiencies. We are starting to see conversion, again, as expected of this proof of concept into commercial deals now. The pace is hard to predict. Another thing that we are seeing, as I noted before, is that a lot of the investment needs to go into the data layer, meaning in order to be ready to leverage the opportunity of Gen AI, there needs to be like to call it the plumbing, the plumbing behind the scenes of the data domains. So we do see the revenue picking up on that aspect already. We are not there with a crystal baller to say exactly what's going to be the revenue contribution and the pace of maturity. But I'm optimistic as we are seeing it. I mean, we're seeing the value. We're seeing the dialogues with customers. They start definitely to experiment and move to commercial deployment. We are seeing – it's not just – when we say proof of concept, just to be clear, it's not in a lab. It's taking the production environment, real customer data, and showing concrete KPIs improvement relative to the comparison. So I would say the elements are there. The pace of impact of revenue yet to be seen.

Got it. Thank you. And then again, I'm not asking for any number, but just again, directionally, you know, as we get towards the end of the year and into fiscal year 26, can you maybe speak to some of the broader demand trends you're seeing across your service lines? Is there anything, you know, structural or secular drivers or anything that's really sticking out that would make you believe that, you know, the current fiscal year growth rate of fiscal year 25 growth rate could differ up or down in fiscal year 26, or are we seeing kind of more consistent trends?

I think the trend from spending behavior, we see the same. Still the same uncertainty that we discussed before, and, you know, because of different macroeconomic tariff, geopolitical and others. So we see the same interest rate cuts, et cetera. So we see the same pressure on spending, but it's the same. We don't see any change, I think, from this quarter to previous quarter. We don't see any erosion, but at the same time, we don't see necessarily that these things are changing. But we believe we are... So far, we are navigating pretty much the same environment that we have in the prior portals.

Got it. Thank you, guys.

Thank you. Thank you.

Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Matt Smith for any further remarks.

Thanks, operator, and thanks, everyone, for joining the call. If you have any additional questions, please give us a call here in the IR department. And with that, have a great night. Thanks.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.