Q3 2019 Earnings Call
As a reminder, this conference is being recorded.
I would now like to introduce your host for today's conference Matthew Smith head of Investor Relations you may begin.
Nike G and before we begin I would like to point out that during this call. We will discuss certain financial information that is not prepared in accordance with GAAP. The company's management uses this financial information in its intent on my analysis in order to exclude the effects of acquisitions and other significant items that may have a disproportionate effect in a particular period. Accordingly management believes 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 actually how the meaningful comparison to prior periods for more information regarding our use of non-GAAP financial measures, including reconciliations of these measures. We refer you to today's earnings release, which will also be furnished with the FCC on 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 obtained or 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 limited to the effects of general economic conditions and such other risks as discussed in earnings release today and at 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, 2018, our form 6K finished for the first quarter fiscal 2019 filed on February 19, 2019, and the second quarter of fiscal 2019 on May 28, 2019, Amdocs may elect to 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 are Schicchi Sheppard, President and Chief Executive Officer, Ron blocks Management Limited and Tomorrow, Rockport Dugan, Chief financial Chief Financial and operating officer with that I'll turn it over to <unk>.
Thank you, Matt and good afternoon to everyone joining us today.
I'm pleased to report a solid performance you know felt physically courtship.
Second quarter revenue grew 3.4% to give us either in constant currency and was driven by organic growth initiatives.
Our profitability will stay there and consistent with recent quarters, you know mobile mostly cash flow generating was healthy as we continue to progress many transformation projects towards production forecast.
We are particularly proud for project execution. This quarter, it's been successful to de lever the world's largest business implementation, but maybe they should more than 200 million subscribers. So fiveg capable to bill juggling platform for leading a breakthrough in southeast Asia.
You got it was also notable so minutes others business.
We chose its best ever quarter Star Wars was driven by the continued ramp up of minutes also mentioned that David do for customers like being the gene for you on where we are combining the deployment of folks can dig it up so much and project with the operational benefits of five minutes or was this more of it.
Additionally, we continue the same some capabilities in next generation. That's one of the phone calls engines will be up to very excited to announce that the perfect acquisition of Pts wireless to further enhance our open cloud and Fiveg network. It could be the teams are to come back to TPS wireless mentally into cold, but first let me provide an overview of our original activities for the quarter.
Beginning with North America sequentially revenue growth was driven by stable trends with 80, Mg and hence the activity level as many customer into border region.
Earlier this year, we said its arms, which was selected by LTC, let's say to accept other people did he taught in mobile offering and I'm pleased to report today, but also helping to enable the mobile offering of North American two largest video and you've done it providers.
This concludes corn cost exceeded the mobile services, the operational which we are hosting under the multiyear managed services agreement and shop, too, which has chosen to extend they'll still didnt relationship to support the growth of that spectrum mobile business.
This was also an active quarter for Amdocs media really continue the process of integrating old media assets to sell the rapidly evolving punching the motivation needs will follow me discussing though both felt traditional service providers and me just two deals along this line we signed the minutes. So this agreement for distribution of three D video on demand services for new logo walkie, which include distribution to mobile phones. Both I think last week sleazy content just comes to life in your hands. Additionally, we are pleased to announce would be could be extended its transport agreements with Viacom and its existing multi your voice video services agreement. We then defend that.
Regarding the other for North America revenue in 18, P. you stop it doesn't go out at the levels of Q2, we know fiscal second house, it's we predicted last quarter.
Oh, but when she was 18 feet remains strong based on the value with the Leeville de beers gazillion variables failures and we are working hard to demonstrate the unique innovation and efficiency improvements, we can bring to ATM fees communication business for the long term.
Additionally, we continue to send Volner made particularly water bottles, we recently extended our global agreement full transaction of field.
As to the future. We believe we are well positioned to bring additional value in support of civil potential media and direct to consumer related opportunities. It's warmer media none of it none of which are reflected in our fiscal 2000 feet out.
If you move on in spring two we continue to see healthy level of activities is that the pencil the mail Joe that recently to see yields you approval.
Assuming the deal is completed we believe we have the right credentials to support the mobile it's a strategic partner for its full smelter requirements. This reflects oh heels of integration experience in a bluebird threats I called it boasts T mobile and sprint.
Although we have said before consolidation activity like these can introduce uncertainty that's come up the outcomes, which may be helpful.
To summarize most America.
Certainly when market dynamics that translates into healthy customer exceeded the the border region compensating for activity what do we expect full year revenue to decline in most of the base is comparing fiscal 2019 real difficult trip to deliver modest revenue growth in North America for the full fiscal year 2019, but we remind you that quarterly trends remain likely to fluctuate in the foreseeable future.
Moving to Europe .
Well, we'll deliver our eighth consecutive quarter of positive year over handballs, nobody standing normal fluctuations in customer activity, which affect the sequential trend.
During Q3, we signed an additional multi element. It's obviously damage from Sky Italia, which includes the modernization of its bigger doubled completion operations to support its move to fix born but we also one of the addition of new logo wins in that figure to fill out the rest of your opinion operator, when we children fully digital transformation, that's me to modernize and automate the user experience for its enterprise and consumer customers.
Looking ahead, Richard of consolidation activity and the growing trend towards multi play in convergence is driving new requirements for that customer that's probably amdocs is well positioned for a lot less these are highly relevant product and services offering some support positive long term goals for Watson Youre, Although we of course always monitoring the market economic slide missiles religion.
Selling to rest of the world, we delivered a second straight quarter of record revenue.
We see over his golf nearly 8% this reported and love. The Q3 highlights we continued to see usually as you know media offering outside North America.
I believe so there could be a big with U.S. at least so far no. If its recently announced online video platform service oil play. Additionally, we have elected to sort it through your content licensing and management agreements with Vodafone capital to enable to be first mobile operator, they're not CST video on demand services in Qatar and also gives customers the ability to sleep and the old doubled.
A wide selection of movies and TV programs, including first storm exclusively exclusive TV shows.
Yeah also in college to see an emerging trend in managed services well some of our earliest customers in the region.
Backing on the second wave of modernization activity by expanding the scope of the existing engagement because we knew what the other agreements for example, Vodafone India, India is extended though minutes services agreement for several years and selected us for that project to consider the possibility to it and that's a place operation you like the instead of low.
We reached Vodafone males left.
Additionally, today, we announced the expansion of a decade long relationship with Accelops, yet, though you mean dementia by winning a project to deploy the Amdocs one consumer experience and it was his vision solution under the multiyear managed tickets information agreements.
Looking ahead, we are encouraged by the recent green momentum and a solid pipeline of opportunity we see in the rest of the world. Although we remind you that living you plans may fluctuate from quarter to quarter.
To conclude on you're going to somebody well executing well and generally you've lost a close all strategic areas of focus does a good mix in relation open cloud and Fiveg networks, but I'm pleased to find a time of recent new customer the project wins the demos for the innovation, we're bringing to the market.
Just this week, we announced with SCS, a leading global said some of the points you operate till we use and books and they'll be able to installation solution to deliver is the one thing I do extended services, Microsoft Jules how you skip in a public cloud infrastructure for Bostco cynical corporate and government customers. Additionally, today, we know that those will have blocked technical resolve fiveg policy control function solution to help glove designed to be open cloud five unit walk in to look similar to all not often extensive set of fiveg use cases for enterprise and consumer customers.
Truck Center network services strategy very excited to announce today, the acquisition of Pts wireless and leading provider of mobile network Engineering services, which places like network optimization blending in softer than they've been solution. We believe the strategic relations relationships. You'll know 46 physician makes sense on two levels first 50 US wireless is even five deep learning experience. It's immediately expensed on it will cost them a full bleep it leaders American operators, including T mobile, but it didn't strong incumbency.
The complement the abuses publishing second.
Yes wireless things a platform for growth in network services by bringing habits of.
Highly skewed mobile mobile network engineer this will enhance open five new portfolio to help us to execute on our strategy of providing an end to end fiveg solution, it's getting accelerate and simplify the deployment and monetization of open smiles Fiveg network for customers.
To wrap up we are pleased with our performance for Q3 and the physical year to date, we entered Q4 with the nickel 12 months backlog. That's we believe it reflects the strength of our market leading position.
The black on the properties remain strong and we expect to maintain high we need as we bring these innovative solution of customer needs to modernize automate indeed thatll business.
Taking everything into consideration we are on track to meet our full year targets for cost, Wisconsin evident goals and normalized free cash flow. Additionally, we now expect to deliver diluted non-GAAP , earning per share growth in the range of 6.2% to 7.8% for the full year 2019, the 7% midpoint do fleet should it present increase of approximately 50 basis points over the previous guidance with that let me turn the call over to them.
Thank you should be.
Second quarter revenue stability and $25 million was in line with the midpoint of our guidance range and include the negative impact from foreign currency movements of approximately $3 million relative to the second quarter fiscal 19.
I think it was slightly above the midpoint of our expected range. After adjusting for the negative impact of approximately $1 million, a foreign currency movements relative to our guidance.
On a year over year basis, our third quarter revenue grew by 2.2% as reported and 3.4% after adjusting for foreign currency headwind of approximately 120 basis points.
Additionally, our year over year growth was organic in nature.
Our third fiscal quarter non-GAAP operating margin was 17.3% consistent with the high end of our long term target range of six point, 16.5% to 17.5%.
Below the operating line non-GAAP net interest and other expense was $1.9 million in Q3.
For forward looking purposes, we continue to expect the non-GAAP net interest and other expense in the range of $3 million quarterly due to foreign currency fluctuations.
You look at non-GAAP EPS was $1.19 cents in Q3 above our guidance range of a dollar eight and $1.14.
Our non-GAAP effective tax rate of 7% was below our annual target range of 15% to 17% in the third fiscal quarter and was primarily attributable to the net decrease in our provision for uncertain tax position accumulated over several years.
Due to the left the statute of limitations in certain jurisdictions during the Florida.
[noise] diluted GAAP EPS was 96 cents for the third fiscal quarter and was also above our guidance range of 80 to 90 cents.
Primarily due to the tax impacts just this way.
Free cash flow was $129 million in Q3.
This was comprised of cash flow from operations of approximately 165 billion less 36 million in net capital expenditures another.
Normalized free cash flow was $143 million in the third fiscal quarter.
Which is an improvement relative to 129 million a year ago.
Please refer to the reconciliation table provided in our Q3 earnings release for an explanation of the difference between normalized and reported free cash flow into Florida.
Yes over 85 days decreased by four days year over year.
And we remind you that you just still may fluctuate from quarter to quarter.
Total unbilled receivable increased by $11 million as compared to the second fiscal quarter of 2019 and not total deferred revenue.
Both short and long term decreased by 35 million sequentially in Q3.
Accordingly, the gap between Unbilled receivables and deferred revenue widens by $46 million as compared to the second quarter, primarily due to the timing of sponsored specific milestones relating to the transformation project were delivering for our customers.
Moving forward you should still expect Unbilled receivables and total deferred revenue can fluctuate from quarter to quarter in line with the normal business activities.
Moving on.
12 month backlog was a record high.
3.040 billion.
At the end of the third fiscal quarter up 10 million sequentially from the end of the prior quarter.
We believe our 12 months backlog continues to serve as a good indicator of our solid book of business.
Our cash balance at the end of the third fiscal quarter was approximately $458 million and does not reflect the bucket the us wireless the acquisition of which closed earlier this week.
For cash him out of approximately $50 million.
During the third fiscal quarter, we repurchased $89 million of ordinary shares in total we have as of June 30, approximately 329 million remaining authorized capacity for share repurchases to be executed at the company's discretion going forward with no stated expiration date.
As a reminder, we retain flexibility to very developed the level of share repurchase activity from quarter to quarter.
Depending on factors, such as the outlook preliminary financial markets and prevailing industry conditions.
Now turning to our outlook for fourth fiscal quarter of 2019, we expect revenue to be within a range of between 15 2.055 billion, though.
Billion and $55.
Embedded within our Q4 revenue guidance, we anticipate a sequential positive impact from foreign currency fluctuations of approximately $2 million as compared to Q3.
Additionally, our guidance incorporates the conditions, Pts wireless, which we expect to contribute revenue of several million dollars over the remainder of Q4.
For the full fiscal year 2019, we now expect total revenue growth in the range of 2.4% to 3.4% on a reported basis.
Which compares with our previously guided annual range of 1.8% to 3.8%.
The improved outlook includes an anticipated drag from foreign currency fluctuations of about 1.2% fewer real which is in line with our previous expectation.
Due to the timing of the acquisition TPS wireless we have a negligible impact on our expected total revenue growth was reported for <unk>.
For the full fiscal year, 2000, and team and will add just over a point of revenue growth in the first year after closing.
On a constant currency basis, we expect revenue growth in the range of 3.6% to 4.6%.
The midpoint of which is slightly higher compared with our previously guided annual angel, 3% to 5%.
We expect the quarterly non-GAAP operating margin to fluctuate with the higher end of the 16.5 to 17.5 range in Q4.
We expect the fourth fiscal quarter diluted non-GAAP EPS to be in the range of <unk> dollar and four cents to $1.10 cents.
We expect our non-GAAP effective tax rate to be at the high end of our annual target range of 15% to 17% in the fourth fiscal quarter.
Additionally, our fourth fiscal quarter non-GAAP EPS guidance incorporates an expected average diluted share count of roughly 137 million shares.
Because of the impact of incremental future share buyback activity during the fourth fiscal quarter as the level of activity will depend on market conditions.
For the full fiscal year, we now expect to deliver diluted non-GAAP EPS growth of 6.2% to 7.8% to 7% midpoint of which is an increase of 50 basis points as compared to our previous range of 4.5% to 8.5%.
Oh fourth fiscal quarter diluted non-GAAP , EPS guidance and full year fiscal 2000 men team diluted non WPS <unk> guidance incorporates a neutral impact from the acquisition of Pts wireless.
Based on our current estimates, we expect that position be neutral to our non-GAAP earnings per share in the first full year after closing.
Absolutely because TPS wireless and GAAP results. These will not be known until after I looks completes the purchase price allocation for their position.
We expect our non-GAAP effective tax rate to remain within the same target range of 15% to 17% for the full fiscal year 2019.
We remain on track to generate normalized free cash flow for fiscal year 2019 of approximately $600 million.
This equates to an expected conversion rate of approximately 100% relative to the full year non-GAAP net income driven by normal business operations.
We continue to expect reported free cash flow close to $500 million in fiscal 2019.
Consistent with our previous guidance, we plan to return the majority of our normalized free cash flow to shareholders in fiscal 2019 by way of our quarterly dividend and share repurchase program.
With that we can turn it back to the operator and we'd happy to take your questions.
Ladies and gentlemen at this time if you have a question. Please press. The Star then the number one key on your Touchtone telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key to prevent any background noise. We ask that you. Please place your line on mute. Once your question has been stated we ask that you. Please limit yourself to one question and one follow up question.
And our first question is from Ashwin Shirvaikar from Citi. Your line is now open.
Thank you Patrick Hi Tomorrow.
Hi.
Hi, Hey, so I think it's a them jump in with a question on Fiveg inside of GE opportunity.
The stock could you is it possible for you guys to size.
The five G.'s related work project disconcerting that kind of stuff that amdocs actually does today and you know is that right.
I'm, assuming that's probably grows much faster than company average if you could talk about pace of growth.
And in the context of that led NTT, I guess and provide some financial information yet on Pts with regards to you know either size or.
Profitability.
Hi, This is Sean I can start and then Mark can come to you Rick regarding decide you offering up I'm not sure. We can size. It because this we described before fiveg offering the course of the different type of lines of business and its comes obviously youve talk about Pts wireless over existing therapies. We have today, we'll still be new capability using deployment of fiveg.
And then we have over five be capabilities me talk about child, Jean and then to sell the incremental five G isn't doesn't position no. This is across the board with different activities that they need to be doing different projects. So when we have like can you be assessed transformation, obviously, we need to support Fiveg and I'm not sure I can carve out what these days.
I look at the revenue money, which is reflected to fiveg because most of our deployments today, the new projects will support Fiveg.
Tomorrow can also remotely gardening telus wireless, but both of the one of the things that we tried to be a very holistic view of Fiveg from me definitely from phone to deployment optimization of the right deal mm.
Using <unk> and the v. capabilities in certain financial capabilities and automation, obviously to the challenging aspect and then monetization aspect. So it's pretty much touched every project that we do today across the company.
Just two I don't think he has wireless as you know ashwin, it's been engaged and video access optimization for for some years now and we've been.
Very pleased to find that the kids wireless which meant that it would be a great focus on fiveg deployments have incumbency in leading carriers in North America, including very strong relationship with T. Mobile for 20 years, a very active though so in their lives I mean.
In 18, P., we acquired the company for a roughly $50 million, which is about onex on revenue.
We expect as we said that the impact to Q4 19, we'd be very small you know given some seasonality in August being a slower month. So it will be just several million dollars within the fourth quarter of 19 and moving forward looking beyond the first year post acquisition. We think it is already contribute a over a point of growth or two away next year round numbers in terms of profitability has been tracking.
It's a lower margin than Amdocs. So we believe that this part of the the growth as well as the integration with Amdocs, we can bring it over a couple of years into the corporate average of profitability.
Oh, yes, we talked about neutral impact T. P S and the first year post acquisition, but I believe that a pretty quickly afterwards, we can improve margins as well.
Got it.
And then if I can ask about North America, I guess no discussion not to make a complete about you know without talking about the consolidation as well as Oh 80 and T.
I guess on the consolidation.
How soon after you know from a deal perspective things have settled you expect to see.
Mentally banning sweet can you kind of walk us to through the process. There then.
Sounded like 18 came out was stable.
That would need to call it or maybe if you could talk a little bit more about that.
I mean, as we said on the call we cannot always predict.
What would be the.
And TV tuners off.
Both mail jail immediately.
We know that's right now the <unk>.
Engaging a local both steam opens for you.
To help them to prepare for the deal will be one immediately and post merger.
And as you know you have a strong relationship between spring for many years and large managed services engagement that we have the same in T mobile and metro engagement in August .
Gentlemen.
Yeah. So overall as we said to you see health C.
Hi, This is <unk> in 2019, so far yeah, we believed that we would continue to.
We continue to focus city.
Post mail jail and on the integration, but I cannot say company I think predict.
Exactly what would happen obviously, we'll optimistic but the same thing of course.
Thank you.
Thank you and our next question is from Tom Roderick from Stifel. Your line is now open.
Hi, Thank you for taking my questions. So I wanted to just touch upon a 18 to you a little bit more it's really encouraging to see that flatten out quarter to quarter.
Perhaps for sort of setting up to finally see a step back up in spend but as you look at the categories. Obviously, there's just a wide variety of things that.
Hey, I'm, particularly interested on the content side.
The.
Universal side.
Talk a little bit more about content. The way you can always that way though.
Whether it's product catalog.
<unk> Board.
Love to hear more about some of the growth initiatives.
Perspective.
Great. Thank you.
So we don't think.
Well no media, we have incumbency and today that came with the big City and boasted Endicia acquisition.
The activities of Bulls from me mm.
Yeah definitely for the content management and licensing and at the same time for them to position with respect to come in this year.
And it's you know the download a because of the mill drilling and everything was halted by the cold actually this talent activities I think several months ago too.
To build the mix in relation to the organization.
And we are actively discussing with them different opportunities in different areas. It the yet to mature and although we have good discussions and I believe that do we have the right to product and services to support them. Because it's you know they'll going to call. These newly old you de services, which is direct to consumer channel. We have the assets, we're doubling moving sensation subscription management and definitely content management and content licensing. So so far we have traction and we extended goal I will deal with them and we have some incremental activity.
But we can tell you you're welcome them for additional value, we can bring to them.
Wonderful thank you.
Let me turn my next question the pay TV out a couple of.
This quarter with Saturday with charter.
So really nice wins on that front as you look at the opportunity.
Pay TV, particularly stable.
Do you see more of an opportunity for their next generation services, an important this quarter yet spectrum it.
And.
Sport and other arenas or or do you still sort of harbor.
Hopes to.
So to manage the full a full spectrum of services all the way through to core billing.
Talk talk a little bit more about how you think about that.
Prospects and pay TV. Thanks.
Hey, I'm first of all let you know we will do baking prior to the call apparently pay TV is a bad name I mean these guys are also setting TV, but if you check the revenues there is lots of coming from broad band then from security and phone made connected home and now with mobility and obviously these are the traditional pay TV. So so I think that the and obviously you were inspired to to support this industry is the move to more of a multi pay environment. So that's what you should know all of them actually the last deal ended the mobile piloted it won't be seen before so I believe that the old investment that we have done it before new multi play platforms from the customer experience to the opening part all to capture on the handling all that provisioning up to the network and they all the activities can you do to provision is very positive.
To them and we do many of these projects are they different places in the world, including North America. When you deploy end to end use them, it's including billing also so I think this is eventually dangerously bid tons from <unk> and <unk> and we move ahead in the today. The majority of the C. In particular is the army was really old legacy systems. So definitely we see a potential in the future to get to this to get confused duties for me.
[noise].
Thank you and our next question is from Willpower from Baird. Your line is now open.
Great a couple of questions I guess first maybe just to come back to the CTG US wireless acquisition I think it was a number of years ago. Now you had acquired a couple of other.
Network planning engineering companies I think activates a cell site.
How does this how does the new acquisition kind of fit with whatever tools.
Capabilities, you had with those I would have thought those might have been able to migrate from threeg to fourg to fiveg as well so I'd be interested in any color there.
And then it sounds like Tomorrow, you you paid a pretty reasonable multiple or roughly one times revenues that I guess that suggest that perhaps there hasn't been much revenue growth. So I wanted to get some color on.
You know what the revenue growth has been and if it's not growing maybe any thoughts as to as to why.
Yeah. So actually it is drawing in both organically we've been growing if you remember we talked in the analyst day about network being one of the growth drivers weve been going very nicely over the last couple of years, including the activities of the where do you access immunization and also when we look into kids wireless as a Standalone company has been growing we've just seen a a great opportunity that complemented what we had already built in house.
Cts is bringing a very nice no how about the deployment phase the planning and deployment phase, where our expenses were more about optimization post deployment.
So I really fiveg fiveg as well flat, obviously sitting at the sweet spot of the major Fiveg rollout what is happening in North America.
So we feel that this is continuing to support the growth opportunity, we see in the software and services for the natural domain.
And yes, we think we paid a fair multiple there is some contingent consideration based on some achievements moving forward, it's not for future by size, but its also giving some upside opportunity for the sellers in cases, certain thresholds are going to be met.
Okay. Okay. That's helpful. If I could and just maybe one more great to see the Comcast charter announcements any further color as to.
You know the timing of those were you already helping those and this is now formalized or are these new contracts and when do those start to benefit your results.
A comcast is already in production so like synergy mobile in two days running and Amdocs deployment as I mentioned a minute services agreement.
Yeah, Sharlto and we were awarded this quarter and we are starting the project right now.
Thank you as a reminder, ladies and gentlemen, if you have a question. Please press. The Star then the number one key on your Touchtone telephone we ask that you. Please limit yourself to one question and one follow up question.
And our next question is from Peters to ski from Barclays. Your line is now open.
Yes.
This is Peter on for his hobby rather from Barclays.
Hi, I was wondering.
Do you see any benefit.
Or drag in the quarter from from from AOCI six six as you did last quarter.
Was it wasn't a material impact at all.
We've provided full disclosure fix gave us the soon to expect any big numbers there.
Okay. Thank you and a follow up on.
On to Ts.
If you could say are they currently profitable and I know you mentioned a neutral EPS impact.
In terms of.
Correct.
So as I indicated the margin is a significantly lower than the corporate average Vietnam docs, but we feel that given the dissynergies as one of the momentum. We think we will see in terms of the growth we should be able to improve margin.
Over several years to the corporate average.
So I don't think that that should be concerning point for your from your point of view.
Okay. Okay. Thank you.
Thank you.
And our next question is from Jackson Adder from JP Morgan. Your line is now open.
Great. Thanks for taking my questions guys.
First one and I may have missed this that was kind of hopping around on calls but.
If I can follow up on on Tcs, the the Fiveg planning and optimization.
How does this compare with some of the planning and optimization tools or or solutions that you already had in the portfolio.
So when we opened on the things that we are focused on a course to impose more around the integration and optimization of existing robots with has been done versus the the strengths that TPS is bringing into planning and deployment phase.
Lots of course with the know how and capability specifically, we've been slide you you're also starting to happen in the U.S.. We filled the combination of both is definitely winning package in terms of our open network strategy and capabilities.
So you can see that as complementary incensed to what we had before and built internally to introduce the PPS is bringing with of course, a great talent of hundreds of a network related engineers that don't helping us to scale up to the demand that we think because we are seeing today in the markets.
Okay, Great and then follow up if we can just stay on on T.S., what sort of opportunities do you feel like you have to maybe expand this to other geographies.
Well I think you mentioned in the release that but this is mostly American operator, she loves installed base.
[noise] essential mission or I can always mentioned, though somebody come in most of the Teligent is here, but I believe we can take old and look to build a juice capabilities and know how that.
Yeah that was developed over many years.
In TPS and take you to 12.
I'll do the geographies that we are doing well.
So yes, we believe that we can expand it in time to other geographies.
Okay, Alright, thanks, guys.
Thanks Frank.
Thank you at this time I'm showing no further questions I would like to turn the call back over to Matthew Smith for closing remarks.
Thanks, Julie and thanks, everyone for joining us on the call. This evening and for your interest in Amdocs. We look forward to hearing from you in the coming days and if you do have any additional questions. Please call the Investor Relations group, we have a great evening. Thanks.
Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program you may now disconnect.