Q4 2019 Earnings Call
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Ladies and gentlemen, thank you for standing by welcome to the Q4 2019 Amdocs earnings Conference call.
This time all participants are in listen only mode. After the speaker presentation. There will be a question and answer session to ask a question. During the session. You want me to press Star one on your telephone.
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I would now like to hand, the conference over to your Speaker today Mr., Matt Smith head of Investor Relations. Thank you. Please go ahead Sir.
Thank you out before we begin I would like to point out the during this call. We will discuss certain financial information that is not prepared in accordance with <unk>. The company's management uses this financial information in its internal analysis in order to exclude the effects of acquisitions. Another significant items that may have a disproportionate in fact in a particular period Accordingly management believe.
Page 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 comparisons to prior periods for more information regarding our use of non-GAAP financial measures, including reconciliations of these measures. We refer you to todays earnings release, which will also be finished with the FCC.
Oh 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 octane well that any deviations will not be material such statements involve risks and uncertainties that may cause future results.
Yes. It from those anticipated. He's risks include but are not limited to the effects of general economic conditions, such as the West House 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 20-F for the fiscal year ended September 32018 filed on December 10 18.
In a form 6K finish for the first quarter fiscal 19 filed on February 19th 2019.
Second quarter fiscal 2019 on May 28, 2019 on the third quarter fiscal 19 on August 19th 2019, Amdocs may elect to what's the 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, I'll, Shuki Schaeffer, President and Chief Executive Officer of Amdocs Management limited.
All right before the game joint Chief financial and operating officer with that I'll send it over to Schicchi.
Thank you, Matt and good afternoon to everyone joining yesterday.
I'm pleased to report strong operating results for full fiscal quarter. The hardest will feature included an exciting new agreement that 18, Pete significant managed services extension did you assume a few more bonds of mental prepaid and telephones with Africa in some new strategic wins seen handbooks media.
Well together, we maintained high win rate extended on market didn't position and exited Q4, so that cold 12 month backlog. This was arc Luckily focus and full de Boer from deal to go forth.
The garbage physical 19, we successfully met all financial targets called <unk>, which was my first it's into Axiall.
So this really copper frano performance, we didn't need because I could revenue, which was up 4% in constant currency any line because the midpoint of our guidance. These performance include living a decline of 20% of 18 team. It was higher than what we originally expected at the beginning of piece can 19, a wisdom remolded also be.
Sadly newstrike walks into border North America, Europe and this.
It could go with any of those managed services, which had these best ever do you.
What was driven by the computers like Buck well committed transformation activities with new customers like PDP beyond this guy, Italy, and it was supported by the moved to the extension of Civil claims they signed agreements it's harder to the topic partner relationship in good position, we continue to bring total longstanding Minnesota's casinos.
He's got to go not feasible dose and most have been fairly stable profitability and hence you guess collection. It's you focus on leaching King invoicing milestone with many transformation projects, we believe all essential for market position into long term goals.
As such we exceeded though for your targets for mobilize free cash flow well 600 million dollar imager. What's your fleet you would they tend to shareholder so quarterly share repurchase and David for.
Oh Boy, we believe that had no good anecdotes share growth of 6.9%, which he was in line with the high end of the original guidance wage 3% to 7% Disney properties Trust me that but no. Let me provide some quarterly golfing got original business activities in Q4, and Dimodica dynamic we expect to see endeavoring ahead.
Beginning with North America, we close all physical to talk to my team has a steep in fourth quarter performance cool season to be able to guidance.
Revenue from 18 to stop and I'd say, one deliberate since Q2 will fall if he's got second half. Additionally, we extended the along that spending in managed services agreement, we view as sort of like five deals and began the integration of Pts wireless which go to accomplish <unk> several million dollars with revenue this quarter.
Regarding dolphin mall Sonoco service provider, while making strategic investments in areas such as digital transformation why doesn't pay TV can diligence and cloud based Fiveg networks. It's we said few quarters ago Fiveg, we didn't they'd been many new business and consumer use cases over the next few years. This a baltimore.
They shouldn't reach we create demand for sophisticated solutions that I'm books is well positioned people buying.
No. These line we have today excited to announce that extend you go collaboration was 80 D to modernize and I'll get 18th these difficult because supports Houston.
Let me think make a few points field sales activities will be structured onto the move to your agreement that we believe in for a long term literally was that the.
Second the the alliance will be expanded to include the activities in strategic areas such as data analytics insecurity. In addition to existing experienced a digital and they've been pulled them. So the new agreement provides a solid foundation on which I'm just complete additional lumped them very late in the it's we seek to support these various.
Well started use for the next sort of as.
Overall, we believe this agreement is a testament drill deeper relationships spending many decades was 18 d. and we look forward to fill those funding apartment. She is the communication I mean dangerously continuously innovate it's it up because it didn't phase.
Regarding the border most America customer to de lever remain generally healthy, although we're seeing some indication of software related to the delayed metal Jones T mobile in Spain.
As we said before consolidation activity like this often present lumped in with that thank you for Amdocs. So we did make focus on demonstrating the future very we can bring to the combined T mobile sleep, assuming the deepest seats.
In the meantime relationship remains strong as shown by T. Mobile at least installation of Amdocs markets. One a new subscription monetization solution for all boating fault knows more efficiently and by doing what do you extension or four minutes services agreement you suppose T mobile's mental prepaid business.
To summarize the outlook in North America, the market dynamics will support modest growth from Amdocs in fiscal 220 fuel meal, you will but it doesn't get stability data <unk> D generally healthy living with diabetes the border business in the food in contribution from two deals wireless moving to New York.
We produce a stroke water to close out a bit you involved in a decade and most of the Q4 highlights we completed a significant milestone in the business leading digital transformation program, we are delivering to three aylwin. Additionally, well it'd be solution was selected by Vodafone Ziegel to enable Dutch enterprises in the move to service cloud.
Well in Denmark, and no wait till you extended the minutes. So this is agreement was I'm dose always these will be the system.
I'm pleased to see the double your opinion sales momentum is also continues in Q1 with their world of strategic transformation project at Vodafone, Germany, one of the loudest if he's gone into won't you did it was supposed to Vodafone integrated communication strategy. Following its leases acquisition of Liberty Global Gentleman Paytv assets instead, it was the bottom exam.
But it was how global communications companies outcomes for me the business to deliver it did he took a customer experience you said you philosophy in Lincoln schools.
Yes, there was like these.
It appears to be this is positioned for another real solid growth in physical to 20, but feel schools globally money to macroeconomic developments in the region.
Turning to the rest of the World, we delivered a solid Q4 in finishes nickel deal, which revenue so past 900 million dollar for the fills dawn.
During Q4 verticals with Africa selected Amdocs to modernize amenities would be to support operation under the move to use service agreement and then a funny because people love. This mobile operationally busy signed a moot deal agreed between the big with you for TV on demand content licensing laws.
Regarding the Allison. This is the world. We believe me I will then position to continue supporting the regions growing appetite for diesel consummation admitted services, but remind you that quarterly trends may fluctuate given the political annotation overall activities in these regions.
So some of those multi two comments, we believe fiscal 2015 was a strong do you any which way, which we pulled on luckily the sheep with innovative solutions. These strategic deals like these are some formation.
When it services pay TV media five gene Nixon relation open it for.
We believe me innovation would bring to the market is a company just well M&A activity, which we have also executed over that used to expand on customer base in the basic sorry, new adjacent sees closely related to a call domain.
The Prime example is endless media, which includes the quiet assets like juice worldwide Division of the liquidity. It will just awarded Netflix, but felt vendor will do you I'm also pleased to say that the value proposition of Amdocs Media's model was recently, but it did by a major content owner for which we support the distribution opioids.
Content library, and the remote that you'd amended seven cents agreement. Similarly, we continue to see momentum you dig it that's what fishing monetization. We recently added several of you mean de shows logos that includes gatehouse media the thermal by in Red book with mobile.
Looking ahead to be will meet the company remain committed to M&A, it's a vehicle to bring it to bring to which we execute all started you'd growth initiatives, possibly it is dead.
Okay. That's it well disciplined approach and it was only act when you find the right. So Patrick targets at the right buys into the right.
Now, let me wrap up with some comments about there you had we expect physical to 22 mugged the eighth consecutive you in which we have done even expected total shareholder returns in the mid to high single digits, including non-GAAP diluted earnings per share Golsen fleet to 7% Luxottica did you.
Now to consume adult to live in your growth within the range of roughly 2% to 6% well of course, Adelphi bases and reflected a nickel 12 month backlog and the positive sales momentum we've already seen Q1, we expected return roughly one or two santyl for a normalized free cash flow from shareholder the physical occupancy subject effect.
Two such as M&A financial markets intervening in just the conditions to support. These a bolt is authorized an additional share repurchase plan of 800 million with no expiration date, which we will execute it just wonderful news just condition going forward.
Additionally.
I'm also pleased to announce football's, 50% interest into quarterly cash dividend for the seventh consecutive view subject to shareholder approval it down while general meeting generally <unk> to 20.
With that let me turn to quote it's a mouthful remarks, thank you should be.
What piece a quarter of 1 billion 0.3.
It wasn't the midpoint of our guidance range on a constant currency basis. After adjusting for the negative impact of approximately $5 million, a foreign currency movements relative to guidance.
Our fourth quarter guidance range I'd use the sequential positive impact from foreign currency fluctuations over approximately 2 million that's compared to Q.
On a year over year basis, a fourth quarter revenue grew by with it the census reported and 3.6% after adjusting for foreign currency headwinds of approximately 80 basis points.
This concludes our guidance Q4 revenue included apart from quarter revenue contribution of several million dollars from TPS wireless the acquisition of which we closed early August .
Oh for fiscal non-GAAP operating margin was 17.3 person consistent with the higher end of our long term target range of 16 to have to 17 in the health systems.
Below the operating line non-GAAP net interest and other expense was $2.5 million in Q4.
Forward looking purposes, we continue to expect non-GAAP net interest and other expenses the range of a few million dollars quarterly due to foreign currency fluctuations.
Diluted non-GAAP bps was a dollar an eight cents in Q4 above the midpoint of our guidance range of a dollar and four cents to adorn sentence.
As anticipated our non-GAAP effective tax rate of 60.1 person was above the midpoint before I know target range of therapy to 17% in the fourth fiscal quarter.
You look at gap bps was 90 cents for the fourth fiscal quarter above our guidance range of 81 cents to 89 cents.
Free cash flow was 179 million in Q4. This was comprised of cash from operations of approximately 214 million less 34 million in net capital expenditures another.
Normalized free cash flow for the quarter was 190 million.
Which is an improvement relative to 89 billion a year ago.
For the full year fiscal 2019 normalized free cash flow generation was $613 million, which was better than our expectation of about 600 million an equivalent to a conversion ratio hundreds of 3% relative to non-GAAP net income.
Please refer to the conciliation table provided really not Q4 earnings release for an explanation of the difference between normalizing reported free cash flow into quarter and for the full year.
Yes, So 87 days decreased by one day year over year.
We remind you the d., so may fluctuate from quarter to quarter.
The sequential gap between Unbilled receivables and deferred revenue by $22 million of competitors, a certain supportive to supplement team.
Selecting an increase in total unbilled receivables of 21.
And a decrease in total deferred revenue fell short of a local ones.
Relative to a year ago, the gap actually improved by $17 million, primarily due to the timing of contract specific milestones.
Relating to the transformation projects were delivering for our customers.
People wouldn't you should expect Unbilled receivables in total deferred revenue to fluctuate from quarter to quarter line is no. This activity.
Moving on a 12 month backlog was a record of 3 billion in 490 million or the end of the fourth quarter, which is up 90 million sequentially from the end of the part quarter, an equivalent to a year over year growth of roughly 4%.
Our 12 month backlog was primarily driven by the signing of new deals during the quarter, including the agreement with 18 feet and the consolidation of Tcs wireless.
But does not include the transmission project award with Vodafone, Germany, which we signed in the first quarter fiscal 2020 [laughter].
Mine that we believe our 12 month backlog continues to serve as a good leading indicator of a forward looking revenue.
Our cash balance at the other fourth quarter was approximately 472 million and reflects the condition of PPS wireless, which we closed for approximately 50 million cash.
During the fourth fiscal quarter, we repurchased $90 million about ordinary shares I know Congress organization.
We had 239 million remaining under that with those nation as of September 30, and though board has to they also want the nada repurchase plan of $800 million, we'd know speak to the expiration date.
Now turning to our outlook for the first fiscal quarter of 2020, we expect wherever you to be within a range of a billion in 15.
<unk> billion and 55.
Including a full quarter contribution from TPS wireless.
Embedded within our Q1 revenue guidance, we anticipate the sequential Mega TV, but some foreign currency fluctuations oh, approximately $1 million compared to Q4.
For the full fiscal year 2020, we expect total revenue growth within the range of roughly wanting to have percentand, 5.5% as reported and roughly 2% to 6% on constant currency basis.
After adjusting for an expected negative impact from foreign currency fluctuations, though about half a percent point relative to exchange rates because many of the end of our fourth quarter fiscal 2019.
I Suky indicated earlier, we expect all three of our operating regions to contribute to revenue growth in fiscal 2020.
To assist you know modeling.
We expect to ramp up of recent project, which contributes to an acceleration in the rate of year over year revenue growth in the fiscal second half.
Additionally, a revenue outlook includes just over a point of growth from the recent the position of 50 as wireless.
We anticipate all non-GAAP operating margins could be consistent with the higher end of unchanged target range of 16, they have to 17.5% over the full fiscal year 2020.
Due to investments required to support ramp up of new deals non-GAAP operating margins in the first half of the fees they might be slightly lower than the second half, but they'll still expected to remain at or below the guidance midpoint of 17 person.
We expect all non-GAAP effective tax rates to remain within the same target range of built in to 17% for the full fiscal year two anyway.
We expect the first fiscal quarter diluted non-GAAP , yes could be within the range of <unk> dollar and two cents to a dollar an eight cents.
With respect to Q1, we expect our non-GAAP effective tax rate to be above the high end of our annual target range of 15% to 17%.
Oh first fiscal quarter non-GAAP EPS guidance incorporates an expected average diluted share count of roughly 136 million shares and the likelihood of a negative impact from foreign exchange fluctuations in non-GAAP net interest and other expense.
Excluding the impact of incremental future surely purchase activity during the first fiscal quarter as the level of activity it depends on market conditions.
For the full fiscal year, we expect to deliver diluted non-GAAP EPS growth of 3% to 7%.
Additionally, a full you repeat this outlook incorporates are expected to be purchase activity over the year and a neutral impact from the position of TV as well.
Absolutely Buckle studios wireless and GAAP results. This will not be known until after abbott's completes the purchase price allocation for they position.
We expect normalized free cash flow from fiscal year 2020 for approximately off approximately $480 million.
Which includes a slow start to the year, followed by significantly stronger second half.
Normalized free cash when the fed it still have.
We reflect the initially but to the new deals they TV as well a set of cost me expects to incur doing to stop the Smith phase of such a view.
Required working capital investments related to the ramp up of recent transformation Award.
And the timing of annual bonus payments in Q2 Justice, we see every year.
We expect normalized free cash flow will improve significantly into second half of fiscal 2020, reflecting a conversion rate of 70% to better relative to non-GAAP net income.
Included.
Including anticipated capital expenditure from $320 million associated with the week to your development before new campus in Israel and other I do.
We expect reported free cash flow roughly $350 million in physical 23.
Regarding our capital allocation plan, we expect the returned roughly how did the center for normalized free cash flow for $80 million in fiscal 2020.
This includes a quarterly share repurchase program for which our borders to they also wise in the vision $800 million with no state of exploration.
In total we now have more than $1 billion of also much capacity for share repurchases, which will execute at the company's this question going forward.
As a reminder, we retain flexibility to vary the level of share repurchase activity from quarter to quarter, depending on factors such as al good for M&A financial markets and prevailing industry conditions.
Additionally, we expect the talk on returning to deliver their shareholders will be enhanced beyond earnings will tell you.
Dividend program.
Which is the new quarterly dividend rate of 32 point its centsper share was approved.
But shareholders are the annual meeting in January would yield about 2% on the contrary Bryce.
Therefore, we expect to some of our diluted non-GAAP , yes, well lots of different than view to equate to a token shoulders returning to mid to high single digits. So the eighth consecutive year in fiscal 2020.
With that we can Tony back to the operator, and we're happy to take your questions.
Thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key please standby well, we compile the culinary roster.
Our first question comes from Tom Roderick with Stifel. Your line is now open.
Hi, Good afternoon. Thank you for taking my questions. So let me.
Let me just address the backlog here for a second to $90 million sequential backlog. That's a that's a level of increase we haven't seen in in quite a long time and really not anything close for a long time. So when I look at some of these deal looks like there was certainly some pent up demand the ATM t. deal in particular, it looks very very interesting can you just talk about that new.
New deal activity environment.
That that you're seeing.
Is there a pent up demand, particularly in the U.S. and should we expect to see a little bit more of that as it impacts the backlog going forward.
Or or should we just see view this sort of 90 million the increase is a bit of a one off.
I think we wish him the 90 million as they did a an exceptional sequentially was that that'd be said, we've not seen <unk> and.
For many years and I think it's a combination of primarily the 18 t. deal that we talked about as well as the the fact that in addition to that we had the factors of it did yes wireless coming into the backlog as well as several other award you seemed a the announcements that we've shared than before just example is not.
List of deals.
So I think the combination of all of that contributed to a significant increase.
Now looking forward, we already have I don't know the knowledge of signing the Vodafone Germany transformation in Q1 and in addition to that they had some said we feel when it was solid pipeline. So I don't think you should expect no at this kind of magnitude of backlog increases that from quarter to quarter, but always pretty much I feel good.
About what we're seeing in terms of the pipeline in the ability to convert that into deals.
Excellent okay. Congratulations on that so far can you that can you then just sort of help us think.
I think through what appears to be a little bit of a disconnect between that.
Really nice rise in the backlog and that sort of looking at the normalized free cash flow number of Foureighty. Your total of 350 next year, if I'm looking at that right can you help us understand why there is why why that normalized number what sort of look to be down what are some of the factors you, specifically mentioned 80 and tea and the renegotiation.
Our restructuring of that deal might lead to the first half being substantially lower than the second half can you just talk to you that dynamic and particularly hao-chi impacts it. Thank you.
So why it thanks, Tom for the question. So just to clear between reported free cash flow and a known when I speak out what the main difference is the hundreds in 20 million dollar of investment in the the moved to your development plan, we haven't been new campus in Israel.
We further rest of my question to before rating, which is more reflective of the business a itself. So what do we think is that the new awards 18th included as well as the mother awards that though very happy about does require investments into affluent awesome sets up a activities that are required things like building.
When you sign you want training programs Rebadging employees in some cases et cetera, as well as some and function or how the structuring of the milestones for English seem to customers look like so thinking about it as a somewhat of a small few years old.
Short periods of investment that is quickly coming back into second half of the here in the form of the cash flow acceleration, but we expect me to see returning in the second half the physical you're already to 100% earnings to cash conversion and obviously, we will catch up with for these kinds of investments later on the Lifecycles.
Yeah, and then tomorrow as we build our models do you have a suggestion as to how much of the full year number we ought to backend loaded into the second half is that sort of like 60% number higher than that just just ballparking. It what what's the what's a good way to think about the way that builds.
Yes.
I need to think about that but I would say probably roughly speaking no two thirds, but I have to run the them all that in my head again.
Okay. That's helpful. It's a good thank you very much nice job.
Thanks.
Thank you.
Thank you and as a reminder, in the interests of time, we ask you keep to one question and one follow up question before rejoining the queue. Our next question comes from Jackson Ader with Jpmorgan. Your line is now open.
Great. Thanks.
And then does question just a follow up on the cash flow does does this doesn't imply that you have kind of two separate headwinds here. So you have on the on the one.
<unk> increased the number of of investment and also people are pushing out payment terms that asking about correct.
I'm sorry can you repeat the question not we didn't he will.
Oh apologies.
Yes. This thing so I just wanted to clarify on the cash flow. We have we have on the one hand increased investments and then on the other hand.
The renegotiation of of the 18 P. contract is also kind of pushing out of invoicing milestones from from maybe what you would have invoice previously.
Yeah, it's a for a description it's a combination of both.
Okay. That's fair and then so when we think about.
$100 million are so roughly just like the year over year decline in normalized free cash flow.
I mean, how do you guys think about the payback or the return on that increase investment from the from the reduction in cash in general I wouldn't be looking on deals with customers. Many of our customer deals a multi year deals whether it's a you know lock transformation that can take beyond one fiscal.
Year or definitely movie multi year engagements that include managed services. So from my point of view of course, we look into cost of capital of the company and make sure that after taking that into consideration are looking on the opportunity to create the margin of the relationship as well as the departmental.
The specific deals plus additional potential activities, we see beyond that that it makes sense for us to do that.
Oh, so that would be always the case and whenever we go sometimes when we go into a new relationship that starts with a transformation projects as we always explained in the past the transformation project is usually though.
They they differentiate feel that we can penetrate the new customers with but it's also a nobody margins relative to the later bickering revenue managed services opportunities in our track record shows that with many of the new logos that we achieved in the last couple of years often times through a win of transformation project we.
Managed to expand this relationship to recurring revenue two additional upsells as well as managed services, we talked about it quite a lot like thinking the last quarter, giving some examples of customers in apex. That's we won in the last several years as new logos extending this relationship demand it services Delta.
Good examples I'm hearing to stage. For example, you said a lot started the transformation project then shifted gears to be more of a managed services agreement and now we're already in a more mature phase of their relationship moving into the next cycle Digitization and just released today an announcement of an extension of the managed services engagement there. So.
I'm, just giving you color around what's kind of expectations. We had when we go into customer relationship usually the longevity of relationship we have with customers runs over decades.
So again I'm not I'm when we're looking will not why we don't necessarily think about anything to call. It six decades looked at me wrong, we want to see no I faster.
But but definitely the technical chose that any new relationship evolves play to onto a long term relationship.
Sure, Okay, all right and that was helpful. Mark Thank you.
Thanks.
Thank you in the next question comes on Shaul Eyal with Oppenheimer. Your line is now open.
Thank you good afternoon Tomorrow Shuki congrats.
So really you know going back to Tom's commentary about the backlog really a flurry of contract announcement renewals 18 T. Mobile you a cellular obviously contributing to the healthy increase the 90 million mentioned sequentially quarter.
When we think about it also from a deferred revenue perspective, and I know docs, it's not be the best example, given the business model, but how should we reconcile that growing backlog number one the one hand with the fact that short term deferred revenue kind of still relatively low when I don't menu.
What's your cover no big enterprise software companies different business models, but hopefully be tomorrow to address that the point.
So certainly not in our business model. Unlike.
She was softer players I don't think deferred revenues, a leading indicator announced thing you should look for that correlation because you know it's nothing more than what we sell.
You know, many maintenance and license upfront, which create those deferred revenue balances he was expected to softer company.
Oh I believe that in our case actually the 12 month backlog has been much better leading indicator.
In terms of designation Sheeple project ramp up to both deferred revenue in Unbilled revenue.
You know, it's a mix of how the revenue recognition is progressing relative to they listen I, suppose but that but unfortunately, not case, usually because the customers expect to see some deliverable before we can influence.
So that means that over a project lifecycle, usually there's a lag between the revenue recognized and when we can actually to catch up with the invoicing. Hence the phenomenon. It does we are seeing where we have such a great meaning raised me transformation policy to believe it's great news for the company and I was actually before usually.
The beginning of the relationship old extension of relationship with a customer that leads me to onto more business.
Yes in the short on time of the project lifecycle, usually we are moving with certain lag between revenue recognition and the points have been with it.
Nevertheless.
Obviously, given the track record that we have of executing on this project given.
The the strong position of the customers. That's we serve its mainly just the lagging timing, but this catching up pretty quickly.
Absolutely completely completely understood and thank you so much for this color.
Right on absolutely and and Shuki, maybe slightly more from a macro perspective, and you know going back to this a flurry of renewals and the new announcement.
Should we look at Amdocs as some sort of the leading or lagging indicator into some of the trends that are taking place within the Teleco Marina.
Clark and maybe specifically as it relates to the U.S. telecom and cable market.
Yeah, I'm not sure understood the question.
That's one thing I don't see that either.
Sorry go ahead.
Oh I just.
Maybe trying to simplify that you know given the acceleration that we're seeing.
With a back from one to one hand and pretty much with.
The strong business momentum and contract announcement.
In your view is is amdocs, some sort of the leading or lagging indicator from an economic perspective into what's happening on the broader telecom arena.
And to an extent wonder what's happening specifically within the U.S. Telecom and cable arena.
I don't know if you can always connected to it and the macroeconomic situation and Amdocs success I can give me. One example, if you look at today in Europe .
Yeah Europe is a if you look at the owning displaying generally pretty much zero gross well the I'd remind you today, maybe I'm biggest the gross engine and the reason that both the trend the trends in the market. So Europe did things Namal could do this convergence.
All the big companies, obviously Vodafone included in the itself, we've talked about Vodafone, Germany, which is.
Pretty much significant Baltic waterfall in general and he's doing going to one of the most complex inflammation getting the wonderful more buyers a fixed line in the old edgy I'm going to one one consumer experience. So would you did very very big transformation. So don't not always you can find there is that the correlation.
Between the macroeconomics, Oh phase and the end to end the endorses success.
As I said in my script I think it's what these nice isn't when you look ahead, we see pretty much growth across the board. So we see a modest growth in North America, we see growth seems very expedited both in Europe , we see goals and it wasn't the world. So overall I think you're pretty happy with the the way the buttons and goals.
Peter if you can be a comfortable.
Thank you so much well done congrats.
Thank you. Thank you.
Thank you and our next question comes from Tavy Rosner with Barclays. Your line is now open.
Oh this is Peter Gretzky Entre Tavi Ah. Thanks for taking my question, where we wondering if a if you could provide any color up back on cash flow on any factoring that in 2019, and specifically how how that might have compare to 2018 and ended up.
So as we said that already in the beginning of 2019, not our expectations for a strong cash flow for the year as well that indeed, what's happened to have they actually happened. Despite the fact, we use a small amount the facts doing for technical reasons and even smaller than 18, so even with all it was a headwind rather than that.
Tailwind.
But overall it was the material.
That's very helpful. Thank you and then and then one follow up or.
Could you give or anything or have you seen any incremental or can you give any incremental color on a on traction with with NFC.
So when I think as mentioned before we sign another energy deal this quarter Weve <unk> vodafones equal, which is important because this is the fills deal and that's been doing Vodafone and I hope.
Which represents a lots of puts them in the later on and and we see it. So we see couple of deals every quarter and detection assigned a V is a as we said before he's this loyal.
I think that they the majority of customers move a lot to focus on Fiveg and building derived monetization solution charging solution. They in Fiveg you know what do five James so structure.
No just already obviously the core network is by definition is going to accelerate the they then if we if you make it a PBT, but we feel we see good hosts activity, but a he also said that the majority of the focus has shifted to fiveg deployments and Fiveg used cases.
Okay. Thanks, very much for the color and congrats mccourt.
Thank you thinking.
Thank you and our next question comes from Willpower with Baird. Your line is now open.
Hey, guys. This is Charlie really gone for well thanks for taking the question and sorry. If this has been asked before I joined a little bit late but I just wanted out but the 2020 revenue guidance.
You know given some of the strong wins this quarter with 18, T. and a lot of others in the really strong backlog as well I guess im little surprised at the 2020 revenue guns isn't even higher than it is am I getting ahead of myself on on these new deals in the backlog are there other things to consider thanks.
So so well we touched on that point that in fact, it was saying is that a lot of those new activities that we were talking about I'm going to ramp up more strongly for the second half of the year. So we do expect acceleration and that is some of these strengths in the.
Backlog would put to the direction into revenue recognition more into second half of the or so I think that's the simple answer between Oh, what we've talked about in terms of the on the wins as well as the backlog increase relative to the a revenue expectations.
Okay that makes sense and then just a quick housekeeping question could you tell us what the cash interest paid was in the quarter.
Cash interest paid asked to admit I didn't know if you remember, but it's immaterial amounts for sure.
Okay, alright, congrats on the quarter. Thanks for taking the question I.
Thank you.
Thank you and as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key well take a moment to see if any further questions or in the Q.
I'm showing no further questions in the queue at this time I'd like to turn the call back to Matt Smith for any closing remarks.
[noise]. Thank you very much for joining our call. This evening into your interesting I'm docs. So we'll look forward to hearing from you in the coming days and if you do have any additional questions. Please contact me here at the Investor Relations.
Thanks and have a great evening. Thank you.
Ladies and gentlemen, this concludes todays conference call. Thank you for participating you may now disconnect.