Amdocs Ltd at Oppenheimer Technology, Internet & Communications Conference (Virtual) Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Timothy Horan - Oppenheimer & Co. Inc. - Analyst : Yeah. Well, summers in Texas. Well, Anthony, thanks a million. I guess a lot going on. You guys are migrating to the cloud. You're doing a lot on AI. It sounds like one of your first major AI contract and revenue growth is improving here. It sounds like the bookings. At a really, really high level, though, I get this question all the time, like a few years ago, you guys were growing almost double digit. And then you kind of went back to flat a little revenue growth. I mean can you just describe why were you growing so rapidly then? What was the thing that changed? Was there like certain customers are doing major projects and they stopped and they might do it again? Or were there -- just any color around why --?

Question: Timothy Horan - Oppenheimer & Co. Inc. - Analyst : That's a great point. And what we've seen from the wireless industry in the US, I don't know outside the US as much, but they had huge amounts of investments for 5G. And frankly, the balance sheet's largely got destroyed. Now they're kind of working on improving the balance sheet. I think next year, the balance sheets look a lot better. And the other component, I think, that happened is 5G -- they got incremental revenue from fixed wireless, but they didn't really get it from a lot of new products and services they were talking about in terms of enterprise revenue or maybe even like charging for quality of service. But it looks like we're going to get stand-alone getting increasingly rolled out. And then hopefully, that and the whole back end kind of gets upgraded that allows them to now create new products and services. But not to put words in your mouth, do you think standalone will be a big deal for them to -- and getting the balance sheet in a better order a big deal for them to kind of resume growth?

Question: Timothy Horan - Oppenheimer & Co. Inc. - Analyst : And I have to be clear, that is the mainframe migration to the cloud.

Question: Timothy Horan - Oppenheimer & Co. Inc. - Analyst : Okay, sorry.

Question: Timothy Horan - Oppenheimer & Co. Inc. - Analyst : Yeah, you bring up a whole bunch of great points, as always. And maybe just stepping back on the fiber side. I guess the big terms of AT&T this quarter, but many others is convergence, right? But actually, the industry doesn't really have a converged go-to-market yet. I mean AT&T doesn't have one broadband product or brand name, right? And they don't seem to have really converged billing yet or converge customer care. And not to put words in your mouth, but that would seem to be like a requirement if we're going to go to convergence over time. Is that very hard for the industry to do? Is it -- would that be a meaningful project for you guys to do longer term?

Question: Timothy Horan - Oppenheimer & Co. Inc. - Analyst : And so I have a daughter working in the CLM industries and says, dad, you know what that is? I'm like no, a year ago. And contract lifetime management, just trying to automate B2B and use AI, all this stuff. And it's a lot of heavy lifting. I get to hear her. I get to hear her on conference calls around the clock. Enterprises definitely want to do it because they see the massive benefits that you can kind of hit there. Have you ever kind of disclosed like what percentage of your business now do you think is a little bit more in the business market side of things. And I think it's probably more like 25%, 30% of our overall communications spending. Have you ever disclosed how meaningful it is now and where it can kind of get to?

Question: Timothy Horan - Oppenheimer & Co. Inc. - Analyst : Yeah. No, I would think it has to be or to your point, a lot of that is going to go to the hyperscalers. I guess -- and do you guys work with the hyperscalers now much? Do you guys --?

Question: Timothy Horan - Oppenheimer & Co. Inc. - Analyst : So when -- just stepping back, if you look at maybe one of your larger customers that's cutting-edge, that's really moving everything to the cloud and trying to automate everything, can you talk about where they are in that life cycle, how much more do they got to go to improve? And how much better are their operations becoming as they really are trying to do the cutting-edge stuff?

Question: Timothy Horan - Oppenheimer & Co. Inc. - Analyst : And as they move more and more to the cloud, does your percentage of revenues of their spend increase as a percentage, do they have to use you more? And also maybe on a recurring basis, is it more and more outsourcing to you through this process? Unidentified_1 Yeah. We always try to find a compelling event to have a discussion with our customer about managed services. We feel that we can add the best value when we do it because at the end of the day, we take accountability, right? So you have your products, you have your services, you have your operations and then you take responsibility end-to-end on delivering kind of the results and the KPIs that they believe in. And you've known Amdocs for a while. I think we're one of these companies that take pride in taking the responsibility and accountability we take it, obviously, all our employees take it very personally and we're very proud of what we deliver to our customers. So when this decision comes about moving to the cloud, it gives us this opportunity to have a discussion with them, okay, so you're using our platform. Now you need to run cloud operations. You need to do FinOps because it's a completely different model, right? I always give this example. If you were a developer on-prem and you needed extra petabytes of storage you have to fill in a form, you have to wait, someone needs to ship storage into your data center. It may take three months to set it up, get the power get the AC today, you're just going to console, click a button and you're spinning it up, right? With that amazing flexibility also comes this kind of financial impact that suddenly you could go three months and you go hang on a second. All these developers are using all of these greater storage areas. So all of FinOps management and operational management become very critical to this space. And because we've invested so much in things like our cloud management operational platform, we feel like it's a great time to have a discussion with our customers about managed services. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 14, 2024 / 2:45PM, DOX.OQ - Amdocs Ltd at Oppenheimer Technology, Internet & Communications Conference (Virtual) And so this transformation, we will build it for you. Here's why we can operate it for you and run it for you. And as part of it, we have this added advantage now with our cloud-native platform, we're doing releases product releases are seasonal ones, right? So every quarter, we're bringing them out. So they can take advantage of all the R&D investment we're doing versus previously, they would have to essentially wait for 18 or 24 months until the version came out.

Question: Timothy Horan - Oppenheimer & Co. Inc. - Analyst : I think we all have. Because I have a wife and children --?

Question: Timothy Horan - Oppenheimer & Co. Inc. - Analyst : So Anthony, one criticism, I guess, I mean, I think you guys -- your cloud offering and your Gen AI offering, you should be able to substantially improve the telcos operations. You should be able to lower their costs, and you should be able to drive incremental revenue for them versus what they can do internally. And I guess, I don't know if I hear that enough from you guys, like, you know what -- kind of like because that's what the telcos care about, right? They're star for revenue growth. They're star for free cash flow. You guys are one of the avenues that we can improve your free cash flow growth, guys.

Question: Timothy Horan - Oppenheimer & Co. Inc. - Analyst : Done it over a year, we can do it here.

Question: Timothy Horan - Oppenheimer & Co. Inc. - Analyst : And so Anthony, if we're setting -- I mean, so it sounds like you could see the industry hundreds of millions of dollars a year. Is that fair?

Question: Timothy Horan - Oppenheimer & Co. Inc. - Analyst : I'm sure the industry is spending tens of billions of dollars on CX, right? And if you can prove that by 20%, 30%, you're talking billions and billions of dollars.

Question: Timothy Horan - Oppenheimer & Co. Inc. - Analyst : Do you have the same -- I mean, I follow other contact center company. They say for digital interactivity for every dollar an enterprise of spending with them. Like someone like a night or and there's plenty of them out there. They save the customers $5. Like literally, they can measure this stuff like perfectly. I mean do you.

Question: Timothy Horan - Oppenheimer & Co. Inc. - Analyst : And do you have that capability now?

Question: Timothy Horan - Oppenheimer & Co. Inc. - Analyst : And how much of an improvement is this versus what they were doing before, that end-to-end capability. Like so the contact center basically is you can -- basically almost look like a service alignment, I mean, of the old days, right, where they don't have to block you out and connect the wire and turn up the CPU equipment.

Question: Timothy Horan - Oppenheimer & Co. Inc. - Analyst : So Anthony, in three months, I'm going to have another chat with you going into more details about AI. I know we could have used up this entire time period about what you've done. But can you just give us some -- an elevator pitch of how you've been able to say? Is it that you have great data, great operating support system. Just any color around what you're doing in AI?

Question: Timothy Horan - Oppenheimer & Co. Inc. - Analyst : And Anthony, will this accelerate their migration to the cloud or using some of your other products or more of your catalog? Will this accelerate buying all your products, do you think? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 14, 2024 / 2:45PM, DOX.OQ - Amdocs Ltd at Oppenheimer Technology, Internet & Communications Conference (Virtual)

Question: Timothy Horan - Oppenheimer & Co. Inc. - Analyst : Well, it sounds like a really, really exciting time, and I think we're going to -- I think you and I have another chat in three months. So I appreciate it. We'll go through a lot (multiple speakers)

Question: Timothy Horan - Oppenheimer & Co. Inc. - Analyst : Yeah. Absolutely. And you'll be able to give us a lot more detail and update on what -- kind of what's going on. But thank you, Anthony. Thank you, Matt.

Question: Timothy Horan - Oppenheimer & Co. Inc. - Analyst : Let me thank Anthony again. Take care. Thank you very much.