Q1 2020 Earnings Call
Ladies and gentlemen, thank you for standing by your conference call will begin momentarily. Thank you for your patience employees continue to standby.
[music].
Ladies and gentlemen, thank you for standing by and welcome to the Q1, two any 20 Amdocs earnings conference call. At this time, all participants are no listen only mode. After the speakers presentation. There will be a question answer session to ask the question doing that session you would 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 and see real now it's my pleasure to hand, the conference over to your speaker today matches Smith head of Investor Relations.
Thank you operator before we begin I would like to point out of the during this call will discuss certain financial information that is now in accordance with John comedies management uses financial information and its internal analysis in order to exclude the effective acquisitions and other significant like him.
Oh, just proportionately back in that particular, PV Cordingley management believes that isolating the effects of such a bunch enables management's on exact seems to consistently on a lot of critical components and results of operations at the company's business and so have a meaningful comparison to criteria for more information regarding our uses non-GAAP financial measures, including reconciliations of these measures.
We refer you to todays earnings release, which will also be finished with the FCC on form 6K.
Also this call includes information that constitutes forward looking statements. Although we believe the expectations, reflecting such forward looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be up trading well 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 let me to the effects of general economic conditions, such risks as discussed in our earnings release today under greater length in the company's filings with the Securities Exchange Commission, including in our annual report on form 20. After the fiscal year ended September 32019 filed on December 16 to some 2000 or not.
Thank you.
I'm not familiar elect to what James forward looking statements at some point of the future. However, the company specifically disclaims any obligation to do so participating on coal with me today, she shops that president and Chief Executive Officer, Tom talked management, Lemonade and tomorrow coal into game, Chief Joint Chief financial and operational so without any type of issue.
Thank you mats and good afternoon, everyone. Joining us today I'm pleased to meet both sold so sportsters dogs, which includes exactly right hidden abundantly bookings guidance after the job people come in.
In addition instability was consistent results operating plan, including investments to support new customer.
We didn't them hold in one of person normalized weaker school, who share a window and we ended Q1. So that go right back a little more than 3.5 billion.
Your school book of business was sick so hard for me I wouldn't want to any cool. The recent so I mean this leaves you also mentioned projects such as wonderful in Germany, and no one thing both leach amongst the largest little girl comedies.
We believe it wasn't like these reflect all pending before innovation Oh position for of course, it's important to lean really no unique ability to when focused on that it's going to majorly. This is ryan so more confusing portfolio. What difference does is it boils. It has nothing to see if when it's 43000, they keep in mind citizens base a busy.
Well, so a couple of experience we.
Moving to all Muslims the survived and like all in Spain go we have to look up the correlation strengthened Vodafone, Germany, Olivia adopting see us when.
By combining these wells on Golden Monkey Ball mill like Microsoft goes you when they got the U.S.. We believe until she is what we shouldn't the great but when it comes so this is needed. So some of the biggest listed human reference back to the CLO overcome.
No no meaningful perceived it's usually we believe it will fall within that Gbpten billion region.
Beginning with North America subscription revenue was that's the because they should the 18.
And the ongoing strategic support you up to one or two cost them, though the border region, notably the what does include we go so I need to move to give confidence of this is something and globally legally you back wanting freedom in television studio and yet.
Regarding them from North America, let me pick a woman to call Muslims watering Mark and completion enriching hopefully.
So we believe the lungs in Russia regional market dynamics would make generally favorable it's providing to invest in specific areas like you get something formation wireless. It takes you can build news media psyche, there's a bunch of man and you're doing sort of CLO.
Investment isn't good news for I'm going to bring customers venue, we got bought up in services.
They kinda definitely this recent below revenue one we keep busy locums just when you do have been secrets, but we could engagement and improved customer experience. It's it probably something like let's say it'd be recently problems, Michael So super simple immigration agencies like Houston the topic, though.
Second we let me call me then was liking the future then we can bring to keep more buttons. Please oh they should remain strong in both comfortable now it's Dennis but didn't but just briefly some decision to collaborate border too and then Bips company, which would bring experiences would've been design and development to college Weve spoken sprinkled video.
Installation on the disposition of the customer experience, having said that the confused we'll see some people occasional softness relating to the delayed moved to be more but when do you need to go through reach left in the hands than before.
Some of those most America, we remain on track to Delever modest growth. It's difficult you basically reminds you that ongoing consolidation activities the reasonable to make its also for children you know many of them.
Moving to your old women's enhance the Eagle that we live in your well in Q1, and it's usually high mainly for the quarter. Do this included previously announced inflammation project at Vodafone Germany.
Additionally, real to basically we know the form on one side, who loves game. Most even made its also mentioned for the people in Spain did you include a deployment of won they definitely with cloud environments to bring orange improved customer experience smoke monetization and sometimes the market new services.
The new follows up eliminated selection, but discuss with no. If you bought those ago and position stainless a meaningful market rent goes by evening Baiding Rong lifting a few buttons.
Oh, No company weakness what they didn't do that moved your minutes. So this is doing business in one area. It's subsidiary of he wants technical most real.
It really being selected to modernize automate and deep dive its business, it's volatile for long term extension to our engagement.
Looking ahead, we expect moved to delivered solid growth. These fees because of you, including the longest second half its new border to feed the Red Sox, having said that real schools closing wanting to win macroeconomic developments in the region.
Turning to west of the World. We delivered another multiple times can give you will be good wells as we go do principles got somebody investment to modernize ultimate these types of businesses. It must be filings, we signed the moves even managed services when youre really don't be Latin America full of you know comfortable minutes with them formulas and successfully completed 11 new issuance.
Limitation, it's affordable and major little by little poison pill.
If you want was also most of them flowing importance fiveg awarded take people operation the largest workplace services provider in South Korea, which was a boy I'm stuck on a one on the cloud in order to us So nothing good luck.
New Funky services, what he thought he wasn't Nukhul Julie.
And if they don't sporting goods market. Felicia. This is one of the world's leading somebody's provide due to commercially launch funky services.
Looking ahead left with good morning publishing football's you feel it got too thin, but even by walking progress under each bifurcated opportunities, we see across southeast Asia nothing to really got involved because I wasn't remind you its quarterly trends may fluctuate given the politically impatient about activities in this region.
We'll go do not easily summary, Q1 was a successful what do we extended our global market leadership by bringing the go engines, we have been to support our customer need it to drive future balls.
At this age and he's a next generation missiles. When we recently launched so entered service in medical information solutions. This can be implemented well telco cloud with public cloud environments like Microsoft the doors of anyway.
This is already deployed component to leave because people are feeling like the network transformation ended we generally well similar customers, including Threed. The good service provider in Europe. It made you'll see one for bundles to implementation. So we can Asia Pacific and the leading into so North America.
I'm also people with both school from what the surgical mentally I'm going to media, which include the continent process management expertise would be could be the cloud based subscription billing capabilities will produce young and no newly launched markets look like.
In addition to energy game, which I mentioned earlier envelopes, we do not want said well you got supplemental did you want include anyone who's area to support their wallet or you want technical first few both platform in the region and you only see if I went on both even pay TV operators for which really provided content services and licensing or people.
Oh this looks like.
Then one so I think what's your production into sports Arena. We're also pleased to announce in video subscribers gets elected to support its the Buffalo now OLTP platform, but also to be.
Finally, we had accounts to reported positive and you feel comfortable the sponsor envelopes markets. One in new platform. This combined also listen full subscription monetization you still nights, okay management and efficient on boarding good OLTP politicals anyone.
As we mountain top quartile T mobile at least a few selected a monkey one to support it ultimately strategy in the field of additional this hopefully I'm pleased to live into data to be it also signed the major Latin America right Bill for the platform.
Although we believe Andrew media is developing this the growth engine for the future and provide an example of unique innovation, we can something to bring to our customer by combining strategic acquisition, we sell portfolio of products and services.
To wrap up we're pleased with operational and financial focus in the first one.
Oh political 12 month backlog is up 4.5% from the illegal imports to a stronger second half, which we expect revenue growth to accelerate and you've got somebody activities ramp up.
We have a threat to the legal total expected shareholder return in the mid to high single digit for the eighth consecutive year, it's difficult to plenti, including non-GAAP diluted earnings per share growth of 3% to 7% glass Oh given that.
With that let me turn the call a little tomorrow for Uh Huh.
Thank you shouldn't see.
First fiscal quarter revenue billion $42 million little above the midpoint of our guidance range of the ability to Spain. The ability to five include the positive impact from foreign currency fluctuation of approximately 3 million, they're looking for the fourth fiscal quarter to suddenly in.
Revenue performance was slightly above the midpoint of our expectations, excluding foreign currency fluctuations.
On a year over year basis first quarter revenue grew by 3%.
Consistent with our guidance Q1 revenue includes a fourth quarter revenue contribution from the previously completed the acquisition, let's keep it wireless to nearly all but 2018.
Our first fiscal quarter non-GAAP operating margin was 17.1% slightly above the midpoint of our long term arbitraged of 16 to have the seventh you're going to happen then.
And consistent with our guidance that profitability in the first half of the here will be impacted by investments required to support the ramp up of recent little more.
Below the operating line non-GAAP net interest and other expense was $400000 million name. So in 400000 in Q1.
The forward looking purposes, we continue to expect non-GAAP net interest and other expense in the range a few million dollars quarterly due to foreign currency fluctuations.
He uses non-GAAP basically it was a dollar expense in Q1, a penny above the midpoint of our guidance range of one or two to one away.
Hi, this is the bases on non-GAAP effective tax rate of 18.8% in the first fiscal quarter was above the high end of <unk> annual target crane, 13% to 17%.
He doesn't Gabby P.S. was 85 cents for the first fiscal quarter above the midpoint of our guidance range of 79 to 87 cents.
Big cash of $105 million and human.
This was comprised of cash with the local races of approximately 164 million, let's 59 million in net capital expenditures or not.
Normalized because there was 121 million in the first fiscal quarter and he is on track with our expectations, putting here, which I will bother spend on it a few minutes.
Please refer to the reconciliation table provided in our Q1 earnings leads for an explanation of the difference between normalizing reported free cash flow into quarter, one for past period.
Yes, no 88 days decreased by three over.
Last year, but well they want their compared to the prior to Slickwater.
We remind you that he is still may fluctuate from quarter to quarter.
The sequential gap between Unbilled receivables in fed revenue narrowed by 50 million of compared to the fourth fiscal quarter 19, reflecting a decrease in total and business symbols of 2 million and an increase in total deferred revenue, both short and long simple stuff.
That's a year ago that gap improved by $6 million.
Changes in his gap or primarily due to the timing of contract specific milestones relating to transformation project, we are delivering for our customers.
Moving forward, you should expect Unbilled receivables and told them deferred revenue fluctuates from quarter to quarter in line with building services.
Moving on a 12 month backlog was the record or respond 52 billion at the end of first fiscal quarter up 30 million sequentially from the end of the part quarter, an equivalent to European growth of roughly going to happen.
Our 12 month backlog increase was driven by signing up new deals during the quarter, including building Vodafone, Germany and the only thing.
As a reminder, we believe our 12 month backlog continues to serve as a good leading indicator of our forward looking revenue.
Our cash, though so the answer the first fiscal quarter was approximately $486 billion.
Additionally, as Q1 balance sheet reflects the adoption of AMC for easy to a new lease accounting standards under which leads to aspects at least liabilities I'm not recognized on the balance sheet for most places, including operating leases with its own greater than 12 month.
The adoption of 58 42, it does not materially impact our consolidated staples of Vietnam or the consolidated staples of casual for the period.
During the first fiscal quarter, we repurchased $90 million the ordinary shares under our conquering vision.
As of December 31st we had close to $1 billion of otherwise capacity for share repurchases. We know they said the situation today, which we will execute as a company. This question going forward.
This includes 149 million remaining on the kinds of television and bother 800 million other than utilization, which was approved by the board last quarter.
Now turning to our outlook for the second fiscal quarter. Once when you we expect revenue to be within a range of the billion 35 billion 75.
Embedded within our Q2 revenue guidance, we anticipate the sequential positively impact from foreign currency fluctuations of approximately 2 million a compared to Q1.
Regarding the full fiscal discipline is money, we expect to deliver total revenue growth into rage of roughly two and half was down to five and a half person on a constant currency basis.
The midpoint of which is unchanged compared to a previous expectations of 2% to 6% urea.
Our outlook can you just over a point of growth from TPS wireless consistent with our prior guidance.
On a reported basis, we now expect full year revenue growth in the range of doing it have to five in Afghanistan as compared with a range of wanting to have to five and a half previously.
The outlook now includes an immaterial year over year impact from foreign currency fluctuations in fiscal 2020.
As compared to an anticipated drag of about half a percent previously.
We continue to expect all three of our operating regions. We've grown on reported basis in fiscal 2020. It doesn't ramp up of recent project awards to consider that acceleration and ready to give me your revenue growth into fiscal second.
Well it depends on non-GAAP operating margins to be consistent with the higher end up are unchanged. Obviously, it's a 16 behalf to 17 to have over the full fiscal year 23.
As I touched on earlier, we remind you that due to investments required to support the ramp up of new deals non-GAAP operating margins in the first that the fiscal year might be slightly lower than the second huh.
What are still expected to remain at the where ball the guidance midpoint of 17% in Houston.
We expect on non-GAAP effective tax rate to remain within the same target range or sales people, 17% for the full fiscal year 2020.
We expect the second fiscal quarter diluted non-GAAP appears to be in the range of one Oakley to 1.09.
With respect to Q2, we expect on non-GAAP effective tax rate to be above that our youngest <unk> annual target range of 37.
Oh second fiscal quarter non-GAAP EPS guidance incorporates an expected average little bit Chicago, roughly 136 million shares when the likelihood of a negative impact from foreign currency fluctuation non-GAAP net interest and other them.
We exclude the impact of into medical future share buyback activity during the second fiscal quarter.
The level of activity will depend on market conditions.
For the full fiscal year now in shock to the legal diluted non-GAAP EPS growth of 3% to 7% consistence with enterprise.
Additionally off when you look yes outlook incorporates our expected repurchase activity over the years unusually impact comes acquisition of TCOS filing.
We now expect normalized free cash flow for fiscal 2020 up approximately $500 million.
Which is a slight improvement compared to previous guidance before excuse me.
As a reminder, we expect no must be casualty into first half of the year to be slightly lower than the second.
You too.
The initial impact of the new deal, where they can be as well as setup cost we expect incurred during the stoppage lets say you.
We acquired working capital investments relating to ramp up of recent transformation towards it.
The economy, the Seattle bone spring within fiscal Q2, just could we see every year.
As stated before we believe that roughly one third of the animal normalized free cash flow will be generated in the percent of the year and roughly two thirds into second half.
Yeah.
The significantly stronger second half normalized free cash flow will already reflect the conversion rate of 100% relative to non-GAAP net income.
We now expect important because for 40 years 2020 off approximately $400 million, which is improved compared to a previous guidance of 350 million.
Before it's because when closed the movie or development, that's all new campus. The news, though for which we now anticipate capital expenditure of up to 90 million in fiscal years when it's when you.
As compared to previous guidance of 120 and other writers.
Regarding our capital allocation plan, we still expect do we still roughly 100% of anomalous because during fiscal 2020.
As a reminder, we retain flexibility can vary the level of share repurchase activity from quarter to quarter, we depending on factors such as I was a preliminary financial markets and prevailing industry condition.
With that we can turn back to the up later and we happy to take your question.
Thank you [noise] NFL reminder, to ask a question you want me to press Star one on your telephone to withdraw your question press the pound key and we ask that you. Please.
To one question and one follow up and if necessary get back into queue.
Please standby, while we compile that came in a roster.
And our first question is from Shaul Eyal with Oppenheimer and company. Please go ahead.
[noise]. Thank you good afternoon, Shuki tomorrow in math, congrats on a well executed quarter improve that outlook as well Shuki I was counting.
Separate press releases of contract wins, each one is a screening different capabilities you bring to the market you know anything from micro services with sprint managed services with Telecom old Yeah, you mentioned that out of course your collaboration with nice systems at Vodafone, Spain, So really showcasing you'll broad range of okay.
Solutions are we currently seemed to fruition of prior investments and end market education, which is definitely supporting some some sort of a an acceleration at least from the midpoint of the prior guidance.
We had an accelerating backlog last quarter. This quarter. It's further grew sequentially, 4.5% year over year, what's what's happening out there from from a macro level, which is supporting that great improvement. We we have seen last quarter and without a doubt that we continue to see this quarter.
Yeah, Hi show would really be boards.
I think it's a what we see the nice spread in the inconsistent.
Yes overwhelmed the different type of offerings, we have from product and services.
Some of them all connected to investment this is Don in the last the two three deals like.
Building see one view on what do you can see as 20, all onto Swan with new platform that we have always deeper transformation, which is the microservices cloud basis colossal at the same time, we see more demand and with respect to not even scoopable c. difficile integration lead us into the trial.
So we talked about all activities and they use Microsoft.
Do you see but like the move to the drought you something that really discussion and in some cases, what would be well in progress. We've made before customers will be moved to the cloud and something this is due to accelerated lately.
Well, obviously real dialogue. The goals include Microsoft is able to Ensign Google is the if we.
One of our customers would do from preference of always good cloud problem, though.
We see acceleration in the media. So as you mentioned, we ever had success in into media. So I think that a over one which is nice to see my spread will be different offerings. So it's not just this over into the appeal and both of course product and services.
Got it got it and tomorrow, if I may it in terms of the foreign exchange impact I know amdocs is exposed to.
Probably coal correct five to six major currencies amongst others of course.
Well what is the one or two that that that have been mostly impacting the business or is it. The dollar shekel a is it the euro or pound sterling anyone screening at little or better or not during the quarter. I think also as we look and feel good remainder of the year.
I think we're talking about the revenue because the you know usually our hedging practices hyper focused on protecting bottom line exposure remains.
Topline. So some revenue perspective, I would say probably be you in British pounds are.
The ones that you know, maybe Columbus be would be Canadian dollar.
But typically those are the three currencies is almost impacting already line.
Got it. Thank you so a lot for that well done. Thanks. Thank you.
Thank you. Our next question comes from Ashwin Shirvaikar with Citi.
[laughter]. Thank you.
Hi should be high tomorrow, I, sorry for the ice in the back on Mcnair pork.
The question is on cash flow, so you're still finding transformational deals had a pretty good pace, but he also brought up the cash flow estimates and I want to understand you know sort of the breakout.
How much a 48 was due to reduced campus kept back [laughter] worsen the element of being maybe further along in terms of extracting any economics from older signed contracts what is the need to invest in newer ones.
And then you mentioned they can't campus.
Spend is lower is that it timing thing or is it more permanent or [noise].
So that's it thanks for the question when we're looking on the normalized free cash flow that exclude the investments into campus. So there you improvement there by 20 million in our outlook for the year to for 8500, it's coming from business fundamentals them and that's a combination of multiple reason the you know nothing.
Nothing specifically now with one quarter in our back already well, we felt comfortable to raise dot slightly but $20 million for the year and ask you mentioned rightfully. So yes, we're continuing to cycle installation. So while doing docking hardware picks up a new deal award we believe that business. This is oh I'm good outlook.
It's something obviously would feel comfortable but relative to the future capital things last month without impacting our record is cash flow. Yes, we updated the number for the year from a expectation of up to 122 or up to 90. It has to do with our progress in defense a contractual engagements as well.
Because you need to lots of different RFP, having better granularity projections and specific milestones, though it's not necessarily indicative of the overall investment going down but more about how we are seeing specifically 2020, it's been here as equals four walls in terms of the over all in sustaining cash.
Got it and then the second questions on pipeline.
You have had at this point Oh, it's the last couple of quarters have been I.
I would save quite strong in terms of signing new deal 10 growing the backlog.
That is that having a.
Possible negative impact I shouldn't say negative, but does it kind of whittling down your pipeline that you need now been no part is the pipeline continues to be stronger as before.
Are you.
Filling the pipeline.
I think the pipelines.
It's pretty consistent in the same ratio. The we're closing realistic really the new opportunity for the pipeline. So I don't see this is.
The fact, we feel reading, so module, winning and even very nicely.
He is impacting on Franklin.
Got it thank you get to know congratulations.
Thank you.
Thank you Sir our next question comes from Tom Roderick with Stifel.
Hi, Shuki Tomorrow, Matt Good afternoon. Thank you for taking my questions. So shuki all sort of the first off at the first question are you I. It's a it's a high level question, but I'm I'm gathering is starting to have more and more conversations about it would love to hear your updated thoughts relative to the impact of Fiveg on the conversations you're having with some of your bigger carriers.
Perhaps that is starting to play a role into some of the acceleration you see in your business, but could you just kinda give some thoughts as to the handful of carriers that you know that are that are looking more seriously a fiveg related services and how they're evaluating the amdocs portfolio as it relates to things like upgraded billings content support product catalog.
And then I guess the last part of that would be how do you currently evaluate NFC and this world of Fiveg, how did those things sort of play out in the future. Thanks.
So regarding Fiveg and obviously these activities accelerating really fiveg is real everyone is in the process of deploying fiveg. Some opening process on the left and I think I mentioned before we said we have three different angles four way and it by GE is the new Fiveg is required.
The way policy anyway, right people job named engines and it can a leverage only capabilities and a better way. That's an important one put differently on the new capabilities will see looks like GE and so this is the first angle that way as we speak real involving many I would be to go away activity.
And we have a very big price like new domain and the second one is then it deploying fiveg as we have a very robust the capabilities in fiveg deployment that would show accelerated by day.
It's easier to position in North America from frankly deployments in North America is leaving the wall is always difficult to predict it also euro so the capability that we have today supporting fiveg deployment and the second one man and this is good for example, they won't be announced already like new capital, which is a crowd lately the bed coupled today.
It is reducing the markets there.
It is the monetization of Fiveg when you probably know capabilities over the edge computing low latency netbooks likely goal is capabilities needs new monetization model.
Which require minimal.
Ordering system upgrade the overseas you can capital.
So and this is when we see from demonetization perspective, the so the so angle for Fiveg.
The government is really you know.
When you talk about a five G platform. So we believe the insurance on the drama well the design. So it's not like taking good coal much walk in the old Coleman woken up because it was down so I believe the same in Fiveg will it will also accelerate the activities in the in the domain.
But overall this is all the yields due to fiveg is well they lifting our money I like being proposed perspective to support the dangers Lynn.
[laughter] outstanding. Thank you should keep up tomorrow, just a couple of quick hitters here for you on the on the financial side you know one thing looking at the gross margins. They came down a little bit more then they typically would seasonally but certainly understanding that you take on some of these transformational projects and they come with some uploaded front front in front of.
Unloaded costs, perhaps more bodies to get those off the ground and you had a big extension with 80 and T. Can you give us a sense as to how we ought to think about gross margins moving forward from here in light of your big transformational deals to get out this quarter and then second quick financial question do you have an update as to how TTS participated or deliver.
During the quarter for you looks like your it still predicting just a 1% or.
Tailwind from by from T.D. as for the year, but wondering if you have a number for the first quarter. Thank you.
Hi, Tom So I'd say I think the likely to little bit I'm going to focus on the operating margin then why not the leap of course, a there is significant the gross margin versus the other operating expenses I was just margins due to a focus mainly on the operating margin line, having said that in back to your question.
As we said some of the pressure coming on some stability in the first half is related to the fact that ramping up new deals. The night awards that they're very excited about in some of them requires instead of cost I relate it to them for example de la.
Significant when we have made Vodafone, Germany around the transforming their business in a meaningful way across multiple lines of business.
Helping them you know become the beaches organization a consolidating a this is evidenced by that time for US is the major ramp up activity now in December in Germany, and just by way of examples. So hey, there are many of these vicki transformation is going on some of that require more set up investment than others. So I wouldn't say too.
Much attention to it I would think the probably the second half a you will see the improvements in the margin.
Contributing to the overall improvement in operating margin.
Excellent then our TTS real quickly did you haven't ever there [laughter] specifically is it the I couldn't agree so before we expect a heck of a positive contribution to your view rules. So we have the with the progress integration is going on well or we don't see new opportunities. We he said when we acquire.
Yes, but this is very complementary to what we have in terms of radio access network optimization. So to guess is being great capabilities around the planning design of networks and very relevant of course now with five GB are very very topical a investment cycle. So we're happy with additional progress.
It doesn't said we are I think he has a with roughly $50 million revenue annually or we are seeing pretty much the space starting to ramp up but I think it will take only couple of months just not translating the pipeline doesn't really accumulating with the synergies with amdocs into a higher revenue.
With me.
[noise] outstanding. Thank you both I appreciate it.
Thanks, Tom Thanks.
Thank you and ladies and gentleman asked how reminder to ask a question just press Star then one.
Well.
And our next question is from Willpower with Baird.
Hey, guys. Thanks for taking my questions is actually Charlie really gone for will.
Most of my questions actually been asked but could you just remind us of the work that you're doing this 18 t. under the new extended collaboration that you guys announced last quarter.
What kind of work are you doing exactly in.
Is it expected to potentially bring the 18 Ti revenue stream back to growing and 2020 year over year.
So the opportunities that we do a spoke of the agreements with 18 B.
Mainly related to the consumer domain.
These related to of activity.
These emobility maybe entertainment.
It's a combination of say admitted services activities and and the cordless and deliberate physically.
In some until you domain like security and the they felt relate to the based on management's exceeded this is a.
The border agreement.
If we go into gross.
We're very happy with stabilizing the business, which itself is a good the children for it and we are starting to build the pipeline for was in one area that they do we mentioned the these capabilities our partnership with Microsoft to deliberately activities of moving their application will say if you do the cloud. This is the justice though.
We think this increase we developed a nice business, but overall, it's a said last quarter, we had like a two phase approach first want to stabilize the business. We've done it looks brought them now it's a good it was likely be which is English is very strong and we're starting to build a new pipeline took so long as the business.
That's really helpful. Thanks, you can you just a quick follow up on that is five Ci also an opportunity and they tend to have you had any conversations related to that.
And finally, the there was no amdocs customer <unk> North America Europe, They don't have been.
Ongoing discussion about is like GE. So this is not just to break in diseases drupal It will be comfortable in North America.
ER and pretty much the do it for the World eight bookies movie, it's low towards 0.3 can bring you were thinking in North America is meetings in Europe than anymore, but we have is I don't know without these two it.
For example, we mentioned the.
Career telephone shoot it wouldn't believe you believe you agree.
In the World monetization five years view Fiveg It will go Standalone fiveg.
And then so for example, they took a couple of to start to ramp up the services on Fiveg, but reiterated this dialogue with the every major customers we have.
Great. Thank you very much and congrats on a strong results.
Thanks, Thank you.
Thank you and our next question comes from Jackson Ader with JP Morgan.
Great. Good evening guys. Thanks for taking my question.
Well, there's a lot of activity in a in Spain. It looked like new customer activity and also signing expansion deals can you just remind us.
Maybe how much activity you were doing previously in this particular geography, you mentioned before how.
Some of these deals require a large upfront kind of working capital investment and I'm, just trying to get a sense for what these deals may require.
Thanks, Jack the if you recall, we've talked already about the fact that we are paying a encouraged with our ability to expand within Europe to more and more countries in which we didnt have historically at present.
We gave the example, and the analysts they are equally well years ago violent watch it sounds like that's what I'm, saying is now another one of these examples where historically, we had very little activity and now we're renting up as falling to both with the the example of Vodafone in Spain, which we have friends and now or in Spain of course is a very meaningful.
A win for us with the mass installation and yes. There is some type of cost involving slots to open inside those TV. Some localization and later builds around the product set them up but I don't think it's a major investments still say just because it's a new country. The I think the reason we talked about some pressure on margins the Q.
Relation of all of this deal is that enough to some pressure and again, let's put it in perspective. He talks about you know movies from 17.3% to 17.1%. So it's like sub such huge investment Oh, we're very happy and spend should be one of these countries in which for many years to calm we are now putting the dog food.
In the door and.
And then be the relationship with this isn't split.
Great and that makes sense and then just to follow up and I apologize. If you mentioned it but b b contribution from T. T S in the quarter.
So did you ask is roughly a bringing a example teams per quarter a company required when around $50 million revenue annually and that's why we said that spoke specifically 2020, we think it to contribute roughly or you see slightly oprah coins to you for your growth.
But now we're starting to build up the package together of course and consolidating the city like business with our own <unk>, Oh, sorry, 52, Ts business with our own their mobile network optimization business as we had before so we are encouraged with the purpose of the being in line.
Students either.
Okay. Thank you.
Thank you and ladies and gentlemen, this concludes our key when a session I would like to turn the call back to Matthew Smith for his final remarks.
Thank you everyone for joining our call. This evening, a view interesting handoffs and look for the hearing from you in the coming days. If you do have any additional questions. Please give us a quality investor relations grid, we've got I would crazy.
Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.
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