Q3 2023 Amdocs Ltd Earnings Call
Good day and thank you for standing by welcome to the third quarter of 2023 Amdocs earnings Conference call.
At this time all participants are in a listen only mode.
After the speaker's presentation there'll be a question and answer session.
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Please be advised that today's conference is being recorded.
I would not like to hand, the conference over to your Speaker today, Matt Smith head of Investor Relations. Please go ahead.
Thank you Liz before we begin I need to call your attention to our disclaimer statement on slide presentation. It knows that some of my comments today may be forward looking statements and also object to risks and uncertainties, including as described in Amdocs Jesse feet SEC filings and that we will discuss certain financial information that is not prepared in accordance with God.
For more information regarding our use of non-GAAP financial measures, including reconciliation of these measures. We refer you to today's earnings release, which will also be finished with the F. C. C on form 6K.
Participating on the call with me today are Sneaky Schaeffer, President and Chief Executive Officer of Amdocs Management Limited and Tomorrow, Rappaport again, chief financial and operating officer.
Just for today is there any school, we are providing a presentation, which can be found on the investor Relations section of our web site and it was always a copy of today's prepared remarks will also be posted immediately following the conclusion of this call on today's agenda shoot keep I'll recap, our business and financial achievements for the third quarter physical 20, twenty-three and we'll update you on the continued progress.
We've made executing against our strategic row framework, including the best opportunity of the rapidly emerging field of January to AI. She could will finish by commenting on our financial I work for the for fiscal year 2000 twenty-three after waste tomorrow will provide additional details on our third quarter financial performance and forward looking guidance and also elaborate on a continued commitment.
E S G and so with that I'll turn it over to <unk>.
Thanks, Matt and good afternoon to everyone joining to ask them to call today.
I'd like to begin taking on global base of <unk> for the hard work and incredible contribution towards another solid financial aid operation performance in ourselves with the Gulf War too as we continue to execute against a cold gross pillows or do you get along with the organization five G monetization.
Out of network information.
As you can see the financial highlights on slide six reckon revenue 1.24 billion was slightly above the mid point of our guide.
Guidance on a reported basis and was up 6.9% for an ear going constant currency.
non-GAAP operating margin increased by 20 basis points for me to go as we continued to realize the benefits of operational efficiency initiatives and that'll business on.
On the bottom line Nongame diluted earnings per share of one dollar and 57 cents was above the guidance lanes, mainly do a lower than anticipated non get effective tax rate in the quarter.
Whereas a backlog was a record high 4.14 billion roughly 5% for me to go despite some inbox from your challenging Michael I need to sleep environment.
Amongst the Celts quote quote the operational highlights I'm encouraged to report continued cloud related salesman.
It's shown on slide seven falling Lusk, Walter Williams, which pvt into leaving your opinion operators Amdocs was recently selected to support the cloud strategies of Bell and tell us in Canada and Clawing proceed.
Additionally, you wouldn't you wouldn't wallets and deepened relationship with Verizon and dish in North America, and one in telecom Sandwich Southeast Asia, and many ideas around the world as we focus on driving great till adoption off a boat product offering and capturing most Cheryl fall. It it is our customers.
Significant long term growth potential also exist in minutes services, which would you leave it another record quarter driven by expanded activities, we longstanding customer like log in the Philippines and contribution from new first time local signed earlier. Additionally, I'm pleased to repulse growing style of demand for next Gen cloud operations.
It's the latest future already component of our minutes services offering.
And I'd also like to highlight Jamelia, where it looks rubik with the extended his position is this started trusted provider towards the walls, leading streaming services during cute sweet.
We continued to walk Rosie with Disney to execute on their content strategy globally S. We expand out and gave it to me today.
And that's ridiculous. He has also been selected by landscape to support the technical enhancements of its iconic 18000, plus film and television titled Library by performing quality assessment Colton editing using industry leading automation.
<unk> to reach Rebecca continent catalog services was recently chosen to support streaming services for what Brazil, and read that in the U S.
Suburban diffusion was another highlight of your tree. It's we achieved a very high number of project Bilestone in support of digital transformation, Jeremy This customer like AT&T T mobile Vodafone and three okay.
Denver suddenly endless capabilities were recently surpasses immigration of more than 80 million previous subscribers to our newest highly robust cable system for <unk> in Indonesia.
Moving to slide eight elect to hide it is very important strategic priority to establish amdocs, if the Telcom industries leader in the rapidly emerging field of general <unk>.
Elliott a three three way announced the launch of Amdocs amazed at cutting edge and to persuade General T V. I framework, which creates a foundation for global service providers to benefit from the men's potential of Virginia area.
Undocks amaze confines of carry a great architecture and telco specific expertise with open at night and industry. Most advanced open source technology allows language models.
Also empower service provider to deploy general debate I use cases, it caused the telecom ecosystem from customer experience to network provisioning phone for consumer and enterprise customer.
The end of the maze framework photos the expansion of our strategic partnership with Microsoft earlier, Lucia and marks an important step towards the capitalization of market, winning journalist <unk> I keep abilities, such as those resulting from the pharmacy.
Wonder if there's also allows your company wide program to accelerate the way in which general theory.
Can be harnessed internally to derive organizational agility operational efficiency and for production.
Spending the software development cycle of minutes services activities and many corporate functions. The program has so far identified more than 80, Janie I use cases, many of which already in progress.
Now let me provide you with a bogus object in respect to our strategic gross pillows, which have driven a major expansion of our addressable market by ensuring you bring market, leading innovation to help our customers accelerated journey to the cloud great seamless digital experiences by transforming I T system and operations.
For consumer M. B, two b lunch and Monetise, new five G services and deliver dynamic connected experiences with real time automated networks.
Studying a slice nine with clouds the value of potential switch service provider are still in the early stages of a maximize it for.
For most of the cloud will be a Maltese Jeremy which will require deep woven capabilities of amdocs, including a cloud native product suite and the ability to simplify complexity by delivering and entwined fully accountable immigration pass.
It is highlighted earlier, we signed cloud deals with multiple tier one operators in the Americas These quarter.
First Amdocs is supporting Bell Canada's a digital transformation by moving on premise essential application to the cloud <unk>.
Second and just collaborate with tell us in Canada to move on price application to Google cloud, helping tell us to be more flexible and cost efficient unlock new business models. So it's cloud <unk>, we are moving on premise infrastructure to the clouds unlocking new opportunities in the customer and and an enterprise Mark.
And improving cost effectiveness.
Overall, we are pleased with the least it says momentum in a cloud business, which you believe reflects the combination of our unique industry expertise in our strategic cloud partnerships.
Moving to Slide 10, 74 Valley continue down the path of digital mobilization to grow revenue would use costs and improve experiences for consumer M. B two b customers.
Making a significant milestone Vodafone Spain's multiple digital confirmation Jeremy Amdocs recently completed successful modernization with a customer engagements software for this operator.
And engage with an improved system stability security and performance, while enabling the delivery of new and exciting services to vertical space customers.
Among other highlights this quarter.
Kind of sign an agreement with dish.
For a new software as a service based billing presentment for boosting <unk> subscribe bills, providing and enhance it for years.
We successfully added Suisse operate till sunrise modernization capabilities, enabling them to sell and deliver a wide range of innovative products to the customers.
South Africa, we started our family. She was mellow digitalis did is a leg mobile wheelchair network enabler, we should selected Mturk ceasing cloud platform to provide its customers worldwide recent capabilities on the primary and secondary devices.
In South East Asia, and have successfully implemented and Iot connectivity management platform, it telecom selling Indonesia, thereby enabling this operator to increase business agility and quickly launch new Iot services for consumer and enterprise customer meals.
Turning to five G monetization on slightly laughing I'm just continue to provide global service provider with the next generation solution that we need to monetize and unlocked the future market potential of it's all five G. Standalone, let's walk is the wallet open in the next few years.
Five G fixed wireless is one of the most powerful use cases to a mailed for five G.
And we can now say that T mobile selected Amdocs home operating system to simplify internet and device management and to ultimate consumer customer support for five G home Internet customers.
Additionally, we recently delivered the five G ready next generation charging solution for a major you were pregnant operator to enable enhanced agility and time to market for innovative new products and services.
One of the early adopters of it's all five G stand alone networks, Singapore, where we are they likely to continue work with N y limited.
Lithium data network, operator, which is selected and also literation engine to probably its prepaid platform below average I'm only possession platform to launch the prepaid and they've been offering M. One will be able to mean cutting edge experiences to enterprise and consume males and drive new revenue streams, while increasing the agility.
And efficiency.
It's only two letters information on slides with.
It may be to say that we close the previously announced acquisition of New York was a service assurance business on June 30th.
Thereby equate what address would you leave your unique end to end service orchestration offering is showing the quality of the service and enabling them modernization of next generation dynamic customer experiences.
Undocks expertise in network domain continues to be recognized by the market.
Great. Among recent example dish.
Amanda Amdocs network services to expand it's five G services on the public clouds.
Which include five G Ryan call and voice services.
<unk> successful wallet off a comprehensive five G network did now reaches over 70% of the U S population.
Additionally, in Verizon we went live with the five G orchestration platform, enabling service of network automation. In addition to reach we have expanded our engagement in operation Engineering to include continued platform support network function on balding and improves information.
Now I would like to make a few points about our business within the current operating environment. It's presented on site slide 13.
To begin with a mental debuted at the ambulance is sitting at the heart of Malta ear technology, driven investment cycle center around the major long term trends or five G network automation digital modernization and clouds <unk>, we strongly believe global service provider must continue to persist participate.
In this investment cycle to ensure the long term competitive position.
In their respective markets.
Therefore, <unk> technology enabler entrusted files nailed to the communication industry, we continue to see high level of customer engagements.
Large pipeline of opportunity, which you believe amdocs is what position to monetize.
The car to economic uncertainty.
Pressure <unk> beginning to weigh on the spending decision of some custom ma'am, we shall know prioritizing multiuse strategic modernization programs, a little further investment to enhance legacy systems.
Ambulances are the the house of this one realisation Jeremy with many customers and we are ideally placed to expand our fully future scope of activity in these programs, giving we are also the incumbent provider of the legacy application for discuss this.
This will be the dynamics, nevertheless, presenting some headway into revenue growth.
To adjust to this business dynamics, we are taking for active and appropriate measures to optimize our expenditure and resource location and to ensure continuous longterm goes together with continuous gradual improvement of operating margins.
These major ignored even greater emphasis on the operational excellence and cost leadership, primarily led by efficiency gain resulting form of growing adoption of automation sophisticated tools and the future expected benefits of the journey I related capabilities, while maintaining investment in also.
TG grass areas.
Wrapping everything together revenue growth for the full fiscal twenty-three is now taking slightly below the 8% mid point of our original guidance range of 6% to 10% in constant currency.
On the bottom line, we are raising the mid point of our outlook for non Gabe diluted earnings per share Ross and fiscal twenty-three for the second time this fiscal year.
Additionally, we are reiterating our free cash flow outlook of approximately $700 million for the full fiscal year.
Equating to a conversion rate roughly on par with expect a non-GAAP net income.
Overall, we are well on track to deliver double digit expected total shareholder return for the sales are you running including I'll leave interviews with that let me turn the call over to tomorrow for a mouse.
Thank you Shopian allow everyone. Thank you for joining us.
I'm pleased with our solid financial results for the third quarter, the highlights of which you can see them slide 15.
Record Q3 revenue of approximately 1.2 36 billion was up 6.9% a year in constant currency.
And Ah reported basis revenue increased 6.5% in looks likely above the midpoint of guidance, including a positive impact from foreign currency movements of approximately $5 million compared to our guidance assumption to.
To clarify there was no revenue contribution from the position of the offer service insurance business.
Tier three as the deal closed on the last day of the quarter June 30.
On a geographical basis, North America delivered its best ever quarter as we continue to support the strategic modernization journey the customers across the border region well.
In Europe , we achieved the second consecutive quarter of record revenue as projects activity continued to wrap up.
That's what the world decline on sequential and it'll be a basis in Q3, reflecting some fluctuations in customer projects activity.
Moving down the income statement non-GAAP operating margin of 17.8% was up 20 basis points from a year ago and unchanged as compared with the prior quarter.
On the bottom line non-GAAP diluted EPS of one dollar and 57 cents was above the guidance range, primarily due to a non-GAAP effective tax rate of 12.3%, which was lower than anticipated.
These are the gap EPS was $132 for the third quarter, which was above the guidance range of 116 to 126 also due to a lower than anticipated gap effective tax rate.
Moving to slide 16, I'd like two double click on our non-GAAP operating margin, which a trend in hiring fiscal 2023 in line with the new and improved guidance range of 17, an app to 18.1%, which we provide us at the beginning of the year.
The year over year improvement in profitability reflects our commitment to operational excellence and cost leadership in respect to which we are now planning to take additional an appropriate measures to father optimize our expenditures in Mr location and to realize ongoing efficiency gains led by growing use of automation sophisticated tool.
And the future expected benefits of January <unk> related capabilities.
These measures include the workforce reductions in line with our global site strategy and work model and will result in restructuring charges of roughly 50 million to 60 million and afford fiscal quota.
Looking ahead, we expect a sustained gradual long term improvement in non-GAAP operating margin has we have done over the last year.
Moving to slide 17, 12 months backlog was the record high at $4 billion 14, approximately 5% on a sequential basis or 12 months backlog was up by $30 million in Q3.
Doing gives me we continue to sign deals with new logos, an existing customers. Additionally work in backlog is progressing with no project constellations and managed services renewals are tracking of 100 per cent.
As such 12 months backlog increased again in Q3.
Older compared with Q2, the year over year growth by the 5% with lower this quarter.
Reflecting the business dynamics reference by Schulke Eliana.
As a reminder, a 12 month backlog has traditions served as a good leading indicator of our business having consistently average roughly 80 per cent are forward looking 12 months revenue over the years.
Turning to slide 18 managed services revenue was the record $720 million in Q3.
Cleveland to about 58% of total revenue.
In fact fiscal 2023, so far been a landmark here and managed services with revenue in the first nine months approximately 5% from a year ago.
During Q3, we signed a multi year extension of an existing managed services agreement with a tier one operator in western Europe .
I looked is also selected was also selected like customer into Caribbean to consolidate its been support systems under a single stack, while taking over 80 operation.
The amount of services.
To remind you of managed services engagements underpin the resiliency of our business with recurring revenue stream near 100 per cent renewal rates and expanded activities under multi your engagement.
This sometimes include modernization project, which further deepen our relationship in recent example of wages are extended partnership with globe in the Philippines as announced this quarter at last.
Now turning to the balance sheet and cash flow highlight on slide 19.
D. S. L 79 days decreased by three days year over year in Q3 and increased by five days sequentially.
Positive difference between deferred revenue in and build receivables.
Getting the short term and long term balances.
Now it by 101 million sequentially, largely offsetting the sequential increase of $102 million recorded in the previous quarter.
As a reminder, the difference between deferred revenue named Bill receivables fluctuates from quarter to quarter in line with normal business activities.
Reflecting strong execution and healthy customer cash collections in the period, we generated free cash flow of $144 million in Q3 free cash flow was comprised of Castro Corporation of approximately 173 minutes left.
<unk> $29 million net capital expenditures.
Overall, we ended Q3 with a strong balance sheet and a healthy cash balance of approximately $750 million, including aggregate boring of roughly $650 million.
Our cash balance already reflects the acquisition of <unk> service assurance business, which closed that consideration of roughly $90 million.
Wherever we have ample liquidity to support ongoing business needs, while retaining the capacity to fund our future strategic growth.
Turning to cabinet or location on slide 20.
Quarter, we repurchase $129 million of our shares and all kinds of organization.
Which there was roughly $156 million remaining as of June 30.
Reflecting a confidence in the future success of <unk> and the company's ability to generate cash or board is today authorized and you. Shortly felt this plan of $1.1 billion with no state of the expiration date.
300 to authorizations, we have up to 126 billion of remaining repurchase authority.
Additionally, we paid cash dividend of $52 million into therapy itself quota.
Irrespective the full year fiscal 2000 twenty-three we are reiterating our free cash flow outlook approximately $700 million.
Excluding payments related to the restructuring charges referenced earlier.
Our free cashflow outlook assume the conversion rate roughly on par with non that for non-GAAP net income and.
And equates to a healthy free casually yields of roughly 6% relative to <unk> current market capitalization.
Regarding a capital of locations in fiscal year 2023, we now expect to return the vast majority of our free cash flow to shareholders by way of our quarterly share repurchases and dividend payments for awhile.
Now turning to our outlook on slide 21.
To begin we are continuing to closely monitor the prevailing level of macroeconomic business and operational certainty, which remains elevated in the current business environment.
That's the fourth quarter and full year fiscal 2023 financial guidance.
What we consider to be the most likely outcome.
Just on the information we have today, but we cannot predict all possible scenarios.
We now expect you'll be revenue growth of approximately 7.6% in constant currency.
Sealing the mid point of our full year fiscal 2023 outlook.
This is likely below the 8% please point of our previous guidance range of 7% to 9%, yes, we well within the original six to 10 range.
For the year.
As a reminder, initial outlook for the fiscal year included and expect a contribution of roughly 60 basis points to revenue growth from inorganic activity, which never materialized.
On a reported basis, we now expect revenue growth of 6.3% to 7.1% year over year as compared with 6% to 8% year over year previously.
The new outlook anticipates, an unfavorable foreign currency impact of approximately 0.9% year over year, which is slightly less than our previous assumption of one per cent.
Annually outlook includes fourth fiscal quarter revenue within a range of 122 billion to $126 billion and then immaterial contribution from the consolidation of T offers service assurance business.
Moving down the income statement to anticipate quarterly non-GAAP operating margins to fluctuate amount the midpoint of our annual target range of 78, and a half $218 one.
Below the operating line, we anticipate the foreign currency fluctuations in cost of hedging will continue to impact on non-GAAP net interest and other expense line in the range of a few million dollars on a quarterly basis.
For the fiscal year, we expect that are non-GAAP effective tax rate will remain within an unchanged annual target range of therapy to 17% for the full fiscal year 2023, but above the high end of the range in queue form.
Bringing everything together, we now expect non-GAAP diluted earnings per share growth within an age of 11% to 12% in fiscal 2023.
The 11th five per cent mid point of which is roughly 50 basis points higher than our previous outlook.
And roughly 150 basis points better than all original guidance issued at the beginning of the year.
For your modeling purposes anticipated Q for restructuring charge will be excluded from a non-GAAP financial results.
Overall, we are on track to deliver double digit expect the total shareholders return for the third year running in fiscal 2023, assuming the sound of are expected non-GAAP EPS growth and our dividend yield of nearly 2%.
Before passing it back to shore. He let me say a few quick words about ESG, which sits at the core of Alex VNA, and which is embedded reliable business operation.
Physic priorities and the value, we deliver to customers and.
Well many highness this quarter, we are thrilled to say the tablet ubiquity has been selected to provide a full suite of content management services to power Catholics is subscription free online streaming service focused on film for about and by women.
I must believe that representation matters and by championing Phenolate narrative. We believe this partnership that allows us to contribute to a more inclusive and representative media landscape that reflects the diversity of our society.
Another killing mention of RUC strategy is the environment in support of which we are <unk> at least of the agreement that will enable all and looks parking Israel to be powered by the nearby energy from 2024.
We look forward to providing a fuller account of our easy strategy in recent initiatives and a new 2022, 23, corporate social responsibility and ESG report, which we expect to publish later this month.
With an ESG investor Webby now to follow in September .
<unk>.
Thank you to mouth as you can probably tell a former <unk> today, we are pleased with our solid financial and operational position as we entered the final quarter of fiscal year.
Notwithstanding the uncertainty of the global macroeconomic needlessly environment was that we are happy to take your questions.
As a reminder, if you'd like to ask a question at this time. Please press star one one on your Touchtone telephone.
Our first question comes from the line of Tabby Rosner with Barclays.
[noise] hi, good afternoon, thanks for taking my questions.
<unk> Hi, guys, you you mentioned lowering slightly the the mid point of guidance do too.
Three pressure can you talk a little bit about.
The kind of push back you're getting is it from a certain geography is it for certain <unk>.
How do you see Oh did you see the next couple of.
Of course, you're bobbing around the care of pushback.
Thank you for the question of Tabbies. So I just want to remind me of the civil facts first of all this you know and Ah roughly 60% of our business is the amount of services.
<unk> actually this is because continuing to rule.
A as I mentioned last quarter and this quarter.
We see very strong momentum of all the cloud relate to deals.
You can see the reset we know some of these today last quarter, but really see a great momentum you know activities in the in taking a customer to the clouds when you see mobile mobile.
And momentum around these.
At the same time, we see also acceleration in all the large with desertion program that we are doing fallout disgustingly like M. T mobile Vodafone three and others. So we still need acceleration in the in the in Humanization program and we don't have any cancellations for money for my date projects.
<unk>, where we see some pressure if.
If you know if you remember we in most of our customers. We are running both the legacy platform. While the car platform Powell why we are and <unk> building. The next generation platform for these customers at the same time. So once we seize more so effect to your question what do we see later.
Leaves more a prioritization done by our customer.
And they a prioritizing much more of the model immunization program that we are doing for them comparing the current war legacy platform that will.
<unk> and when you usually continue to enhance them also as we speak but we see some pressure.
In this area of enhancing the comments on the legacy system comparing the out of the <unk> relations. So all in all of this is the area and and as we see some pressure historically, we see <unk> down in this area, what we call legacy on <unk> the system spending a I can tell you.
The date of the day and while we aim spends it oh with our customers a lot of attention and money and therefore, it's two way to deploy <unk>. The next generation platform.
The current platform is actually what is running the business. Today. So this is you still need to invest in this platform, while we are bringing or billing to get the the image Ocean thoughtful but is is the key reason that the.
And it will reflect the pressure is another reminder, I'll start with that you can remember when we gave the guy. This is the beginning of the year, we anticipated lovely talking about half a percentage of <unk> also a contribution from the <unk>.
A service of <unk>.
Service Assurance a company that's was email numbers. This issue. So we called this unfortunately this.
The acquisition did not materialized and so this is obviously a revenue that.
He's not part of our guidance, but I think all in all just two days to make a long story short they may.
Pressure is coming from investments in the coverage or like a successful.
Thank you that's that's helpful and maybe as a follow up most of the presentation <unk> talk about this <unk> domain is like the new domain cents sorry.
<unk> and <unk>.
Perhaps would be interesting to understand where the growth is coming from.
Because you seem to have besides mostly the new domain. So is it is it fair to say that most of the growth Nowadays it's really.
The new domains rather than.
I would call it legacy, but perhaps the existing kind of infrastructure that can we get a sense of how much is coming from.
For the <unk> for the most part you arrived I mean, they're awesome and not too many by the way.
Customer <unk> and it's all running the current or legacy systems that they don't have at this point at least there or do you not started any modification programs will discuss almost thinking investing heavily in the car platform. Because this is what is running a business I was reflecting more and to the customers out to actually build.
A very very robust motivation, playing while running the platform stealing on legacy and but you're perfectly right. The groceries coming from the Gulf engine as I mentioned, the the the clouds related fields momentum that's B C.
Everything around five G monetization network automation Vega transformation <unk> in general Leashes. The I think this is the pillar of course, which we see wireless I said, we continue to maintain many many.
Activities in the in the cards, a platform and modernization platform, but they'll get all this <unk>.
And this phenomenon is more related to customers at the investing heavily.
Modernization and we have lots of customer that are hoping listing yet and just modification. So for this customer they will continue to invest a lot in the in the legacy thoughtful.
Thank you and maybe just housekeeping questions. So you've mentioned the acquisition of the Yoko what kind of rubbing your contribution will they bring if you look at it on the on the 12 months basically.
And it will be roughly half a percent as we said before stopping you know naturally starting slower and then limping up as we move along then.
So that's the way we said specific in queue fall contribution is.
Insignificant in May we believe that it will build itself up as you move so 2024.
Great. Thanks for taking my question.
Thank you Tammy.
As a reminder, that is star one one to ask a question.
Our next question comes from the line of Kennedy ran with Oppenheimer. Thanks.
Thanks, guys. A few questions. So can you give us some sense of the magnitude of what you're talking about like what percentage of your revenue you know.
<unk> I'm, assuming it just said that legacy businesses and growing but you don't give us a sense of how much of your income mental growth came from but yeah, I guess upgrading or doing whatever he needs to do on the legacy business and was that reflected in the quarter in the third quarter or you've seen that in the fourth quarter. You know do you expect to hit that next year, just kind of any sense of the magnitude that we're talking about here.
Those sound naturally the majority of growth <unk> said is coming from the new drivers for Monday Musaceous right everything we're talking about on our strategic rose pillars.
Why investing in the future while building. The next Gen stack typically customers would like to make changes you know in terms of go to market. The throats adjustment to the existing systems et cetera. So it's something that is managing them to run the business, while they'll building. The next generation stacked so it's never it's never.
Was the growth survivor, it's more of a kind of keep keep the existing capabilities while building the right stack for the future. We have started to see that a bit more doing Q3, and we're taking that into consideration for Q4, well not guiding right now specifically for next year and of course, we will have more.
Data points as we move along and see how does that's happening, but I really want to emphasize again.
We see the momentum in the pipeline, we see the findings of new deals. We don't see any project installation hundred per cent renewal date of manager. So it's really wanted to just to put some focus on that's phenomena, but we need to take it day in to perspective, it's not a big part of those are those stowing definitely you can see the girls into sequential increase.
And also we've seen in the battle $30 million, which is continuing to be healthy.
Okay I've been getting it seems.
Historically this is not the first time that you received fluctuation in there.
So we see so it is not a new to us.
And on that.
Okay, Great Verizon can we get a sense of how big of a contract doses or.
<unk> you know a 10% increase in their revenue spend with you was it a 50 per cent hundred per cent just any kind of you know.
Sense of what's going on here and yeah, I I I I <unk> don't share with these type of information I can tell you that this is a very important 40 G project for Verizon and all of this service orchestration domain, which actually is doing the outlook installation of all the new five G services. So it's not the.
It's a it's a strategic project it's not in this project.
<unk>, we expanded this quarter is actually be we will implementing the <unk>.
The the offering in the in the <unk> will be expanding is actually the operation of the same service of service that is S. D O C. The service delivery of frustration.
This is what we've done a file quarters in this quarter actually.
Actually be expanding the operation of this stuff is still there.
And they're also Verizon he was running a catalog so all the service operating or the offering of <unk>, Verizon a running sore caseloads too okay.
The last thing on the AI side can I mean, the eight I think you said 80 different use cases, I mean cause this mean material to margins and you know where are you with the appointments for your customers you know some of the same capabilities.
A.
So so far away for customers.
We are building many many amazing use cases.
I <unk> I will give you. One example of what we implemented so we know catalog today.
When you want to be offering you will say I want to actually you can talk.
I want to be in an offering in Dallas area for millennia. In this range tell me what you think will be the population and what would be the right offering and do some general 845 different options for you and it will also anticipates voted in the optic. So these are like a game changing the way you a and this is one example, we have many of these.
Mmm how to create offering. So this is for me a customer perspective, we are implementing a lot of improvement for what we call. The S. D F C. The software development lifecycle.
Making many areas in this domain from testing requirements gathering and I think that we probably will be more mature next quarter, but I can tell you that's part of the <unk> <unk> <unk> <unk>.
Thing is we are doing today and <unk> most of them.
Relying on previously a automation as we develop and a lot of them are related to expected the capabilities.
The abilities.
And we're going to get <unk>. So this is for them you know from what we do I mean this is two four minutes services for the development for missing. This we do on software development and the last thing like every good cooperate <unk> corporate activities in the shopping finance and other there's also believe we could do things faster.
Cheap Bill also will contributed to imagine expansion.
Thank you.
Thank you.
Our next question comes smell a line of Ashwin sure My car, which city.
Alright, thank you.
And I had.
Hey, how 'bout your blood.
Good good execution here.
My My my question is.
Regards to.
Some of these types of projects get to your signing a cloud mowing existing on premise work to to the cloud how did the economics.
What you're doing I mean, how how does your economics change when that happens if he could provide maybe some some cut out around <unk>.
I don't know if they'll <unk>, let let me show festivals redo so when we do it and when we are doing a cloud.
<unk>, mainly stopped with consulting so we look at the vehicle sustainable assisted by the way. This is before it looks system and all that looks system and then we come as a commendation what is the right plan.
And then the next step after we agree we actually doing all the execution billing live plus I'll need the cloud and then doing all the immigration of the data to the cloud and then we were doing the operation.
We'll do this as as I said this is the cloud of operation. So you'd say, it's a it's a very robust and dwayne the comparability pulled up.
By the way. Many cases, we are also managing the <unk> or the cloud itself and the or the how they call it the workload.
<unk>. Some of this is part of it and as you know we were very very very good well.
<unk> and strategic partnership visit Microsoft's Reds and poker. So so I don't think it and and and I don't think there is a big change into that makes I can tell you is michelle before that obviously victim and Daniel platforms.
It's especially the one that we are investing heavily in general T V I.
Give us more opportunities for miles an expansion of the future because we came from and you implement it.
Well Architected Microservice this environment of the offer.
<unk> in the cloud in this as well.
We put all our friend with all sorts of automation jobs.
Definitely in the future Patel.
Potential margin expansion.
Maybe just to add Ashwin <unk> I think we can fax it the three types of moved to the cloud won the customer has declined next gen stack cloud native would take it <unk> it all the way potentially too.
Cloud upset the second is that they want to take a more gradual approach and they're moving from an existing version of an amdocs product and we've allowed them to actually step up to the clouds and then modernize over time and the third could be that they want our help in migrating some applications.
But we are running on plan to the cloud sometimes I'm on an application.
None of them looks application such as the examples we've provided in the past and AT&T. Another example, well we are helping them actually do that so we're giving them a very wide variety of how to go about it which is accepted very well and customers feel that they can take your modular and gradual approach that can do it in a more aggressive.
Way so that's it perceived in except it's very well by customers and giving them a lot of optionality.
Thank you that's that's very useful and comprehensive I get you know.
Have to ask about the.
The the environment the business environment, you've mentioned in in your prepared remarks, as well Mmm business day and that makes it <unk>.
<unk> kind of sit here and beginning of August <unk> planning for next year.
Yeah, how should be how should we can see there.
You know at least the framework what magazine you can't give guidance now, but at least the framework in terms of the ability.
The pieces.
To get to a double digit.
That account.
That's all I think that the.
First of all I think that we were pretty confident that we can <unk>. We believe it's not <unk> guiding right now, but it will come as more but the definitely we want to continue with your spouse and give you more details and when you talk to November .
Like I don't think the the environment itself and I think that the <unk>, what's been effect right now what we see now as I said there was fluctuation in these in these activities.
And the and the and become as a full guidance.
Yeah, So as I mentioned before.
There are certain elements of our revenue like minutes services that we see an increase in the <unk>.
Don't think there's any impact from anything that you see around us from the macroeconomic environment.
And the other areas as we see some headwind as I mentioned some type of legacy system. So some customers.
But overall I think it's a as you might imagine we are doing all the bottom up and top down the <unk> and took down the <unk>.
Activities to come with regarding next door to them.
Understood Alright, thank you very much.
As a reminder, if you'd like to ask a question at this time. Please press star one one on your Touchtone telephone.
I'm showing no further questions in queue at this time I'd like to turn the call back to Matt Smith for closing remarks.
Thank you live and thanks, everyone for joining the call. This evening, we do look forward to hearing from you very soon and if you have any questions just reach out to us here in the group have a great evening. Thanks a lot.
This concludes today's conference call. Thank you for participating.
May now disconnect.
Mmm.
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