Amdocs Ltd Q4 2024 Earnings Call Summary

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

Question: Tim Horan - Oppenheimer & Co. Inc. - Analyst : I guess, two questions. How integrated were these businesses with other units and how difficult is it to carve it out or were they fairly distinct. Secondly, the free cash flow is growing the guidance by 3.5%, but earnings growing 8.5%. Why such a big gap in the two different growth rates? Thank you.

Question: Tim Horan - Oppenheimer & Co. Inc. - Analyst : Thank you. And then just can you characterize the backlog and, I guess, overall demand levels out there right now compared to what it was a year or a couple of years ago? Thank you.

Question: Tim Horan - Oppenheimer & Co. Inc. - Analyst : Thank you.

Question: Shlomo Rosenbaum - Stifel Nicolaus & Co., Inc. - Analyst : Hi. Thank you for taking my questions. I just wanted to ask you a little bit Tamar about the cadence of revenue growth that you expect in fiscal year '25 because the high end of the revenue growth and even just the midpoint implies a tick-up in growth over what you've been seeing over the last three quarters? And maybe you can just talk a little bit about that and how we should be thinking about it? Or is it if I strip out the noncore businesses that you're exiting, that it really is the same. Just trying to think of what the trajectory of the business really is that you're expecting in the guidance?

Question: Shlomo Rosenbaum - Stifel Nicolaus & Co., Inc. - Analyst : So is it -- what's -- is it really -- it's basically you have line of sight to the vast majority, it's just a matter of how fast the pipeline is going to move. Is that the way to think of it? And in terms of -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 12, 2024 / 10:00PM, DOX.OQ - Q4 2024 Amdocs Ltd Earnings Call

Question: Shlomo Rosenbaum - Stifel Nicolaus & Co., Inc. - Analyst : So should we see the revenue growth accelerating? Is that -- that's kind of what I'm looking for. Are we going to see an acceleration of the revenue growth through the year or is it just going to be bumping down around between quarters?

Question: Shlomo Rosenbaum - Stifel Nicolaus & Co., Inc. - Analyst : And then how should we think about in terms of the restructuring costs that we're going to be backing out of or adding back to free cash flow -- is there a number that you have a line of sight to or a range that we should think about that so we can get actual free cash flow and then kind of build back to the adjusted free cash flow.

Question: Shlomo Rosenbaum - Stifel Nicolaus & Co., Inc. - Analyst : Okay, thank you.

Question: Tal Liani - BofA Global Research - Analyst : Hi, guys. I normally don't give complements to management teams on the call, but I want to give you a compliment for the transparency and great detail in your presentation, very clear. But now is a tough question. You pay for it now. If I -- I want to continue the last question in a different angle. So if I remove the $600 million, I'm still at the same growth rate of last year, which means -- and that's the midpoint, which means the environment -- so I assume, I just assumed that the $600 million didn't have a high growth rate. So that means the core business is X the $600 million is likely continuing the same weakness of last year. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 12, 2024 / 10:00PM, DOX.OQ - Q4 2024 Amdocs Ltd Earnings Call And the question is about the spending environment. I don't have -- I don't think looking at your presentation, which is excellent and understanding what you're doing, I don't think we have any concerns whatsoever with what you offer with your portfolio, with your added value, but we do have a concern over the spending environment. So can you take us through what happened in 2024, meaning how the environment deteriorated? What have you seen in 2024 and your expectations for 2025 when it comes to the spending environment to the willingness of customers to spend money on these kind of projects and what changes the current weakness that we're seeing?

Question: Tal Liani - BofA Global Research - Analyst : But Tamar, if I take the question is, is cloud substituting the other 75% of revenues? Because you said that cloud is 25% of revenues. You said it's going to grow double digits. So if I take 10% on 25%, it's 2.5% growth. So that means almost your entire growth is cloud and the other 75% of the business is flat. That's just from taking your midpoint, give or take. So the question is --

Question: Tal Liani - BofA Global Research - Analyst : Lastly -- I understand. So lastly, how do you define cloud? Meaning I saw the chart -- and on the right-hand corner on top, you say partnership with Amazon and others. So can you -- I understand what you're doing with cloud activities with telecom providers which you just described. What do you do with cloud titans, meaning how do you participate in the cloud titan environment? And how important is that part of your business?

Question: Tal Liani - BofA Global Research - Analyst : Got it. Thank you very much for the detailed answer. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 12, 2024 / 10:00PM, DOX.OQ - Q4 2024 Amdocs Ltd Earnings Call

Question: Tavy Rosner - Barclays PLC - Analyst : Hi, good afternoon. Thanks for taking my questions. I just wanted to ask about the competitive environment and especially around the strategic domains. Are you concerned that some of your customers whenever they will transition from on-prem to the cloud, might they be tempted to use kind of point solution for your competitors or you're still confident around your retention rate?

Question: Tavy Rosner - Barclays PLC - Analyst : Thanks for that, Shuky. That's all for me. Thank you.

Question: Unidentified Partifipant - - Analyst : (inaudible) on for Ryan Potter. I just going to dive back into the phase out. I was curious if you could maybe go into a little bit more color on the business lines that are being included here and the mechanics of how that will be phased out? It sounds like it's began, but curious if it's like a gradual phase out there at 2025? Or is this something that you guys are expecting to happen by a certain point in time? Is there any attempt also selling these businesses prior to taking them out? And to what degree is free cash flow being impacted by these phaseout? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 12, 2024 / 10:00PM, DOX.OQ - Q4 2024 Amdocs Ltd Earnings Call

Question: Unidentified Partifipant - - Analyst : Got you. And that makes -- are there any opportunities -- like additional opportunities here to optimize the portfolio that you guys are evaluating? Is that possible maybe to near term, but just curious about that.

Question: Unidentified Partifipant - - Analyst : Got you. Yeah, that makes sense. And last question for me is just on some of the business lines that we're phasing out. Just it seems like some of these were from that were related to acquisitions that we made in prior years and the thought process around M&A and maybe the due diligence process there changed at all? And your approach for M&A as you enter 2025 change at all or really capital allocation more broadly?

Question: Unidentified Partifipant - - Analyst : Okay. Thank you.

Question: William Power - Robert W. Baird & Co. Inc. - Analyst : Okay, great. Thanks. I guess maybe a couple of follow-ups. I guess, Tamar, it'd be great if there's anything you could share on the inorganic contribution to fiscal '25, any kind of framework there, I think, would be helpful. And then maybe for Shuky, I just like to get your perspective on the generative AI momentum. You're seeing customer conversations, how we should expect the revenue on that front to potentially build over the course of the year?

Question: William Power - Robert W. Baird & Co. Inc. - Analyst : Okay, thank you, all.