Amdocs' CEO Discusses F2Q12 Results - Earnings Call Transcript

Amdocs Limited (DOX)

F2Q12 Earnings Call

May 1, 2012 5:00 PM ET


Elizabeth Grausam – VP, IR

Eli Gelman – CEO

Tamar Rapaport-Dagim – CFO


Jason Kupferberg – Jefferies

Ashwin Shirvaikar – Citi

Tom Roderick – Stifel Nicolaus

Shaul Eyal – Oppenheimer & Company

Shyam Patil – Raymond James & Associates

Sterling Audi – JP Morgan

Daniel Meron – RBC Capital Markets

David Kaplan – Barclays

Scott Sutherland – Wedbush Securities



Good day, everyone, and welcome to the Amdocs Second Quarter 2012 Earnings Release Conference Call. Today’s call is being recorded and webcast. At this time I would like to turn the conference over to Ms. Liz Grausam, Vice President of Investor Relations for Amdocs. Please go ahead, ma’am.

Elizabeth Grausam

Thank you, Isa. 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 internal analysis in order to exclude the effect of acquisitions and other significant items that may have a disproportionate effect in a particular period.

Accordingly, management believes that isolating the effect of said events enables management and investors to consistently analyze the critical components and results of operations of the company’s business and to have a 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 SEC of a Form 6-K.

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: defects to general economic conditions and such other risks as discussed in our earnings release today, and at greater lengths in the company’s filings with the Securities and Exchange Commission including in our annual report on Form 20-F for the fiscal year ending September 30, 2011 filed on December 8, 2011 and our form 6-K furnished for the first quarter of fiscal 2012, on February 14, 2012.

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 today, are Eli Gelman, President and Chief Executive Officer of Amdocs Management Limited; and Tamar Rapaport-Dagim, Chief Financial Officer. Following our prepared comments we’ll open the call to Q&A. With that let me turn the call over to Eli Gelman.

Eli Gelman

Thank you, Liz, and good afternoon to everybody on the call. Today we are pleased to announce that our second fiscal quarter is on where we’ve seen our guidance for revenue, EPS and margins. Similar to last quarter, I will separate my discussion of business strengths into two areas: AT&T and everything else. Also similar to last quarter, the trends remains quite different between AT&T, our largest account, and the vast majority of our business.

Last quarter we discussed that AT&T put certain programs on hold following the cancellation of the T-Mobile merger. Furthermore, we spoke about last quarter that we have limited visibility into AT&T plans as they were just beginning to formulate their new priorities. During our second quarter we gain greater clarity of AT&T ICE expanding plans, and we now understand that the ICE activity levels will be lower than our expectations a quarter ago.

Nevertheless we continue to have high confidence in our strategic partnership with AT&T. Our business deal stretches across multiple lines of businesses by incentive and activities. So what has changed is that the new discretionary IT spending has been quite slow to resume after the merger cancellation. As such, new projects are not being initiated as the sufficient volume to replace projects comes into completion.

What has not changed is that we remain confident in the strength of our large recurring revenue base with AT&T. So, we really do view this as a shift in timing of discretionary project and not a structural problem at AT&T.

Reinforcing this last point, during the second quarter we hosted a large group of very senior AT&T executives at our R-descended in Israel to focus on their future initiatives and our relevant offerings. We continue to see great opportunity within AT&T to grow our business and to help our customer execute against its strategic goal.

I will now turn the discussion to the majority of our business where the tone is quite different. We continue to see solid dementrants and strong signal signings during the second quarter, especially in the emerging markets and Europe. Our results in the emerging markets speak for themselves, with revenue tracking to be up in double-digits for the fiscal year. We continue to see strong momentum across Southeast Asia and Latin America with both new and existing customers. Additionally we are also excited by the signing, the arising level of interest in Managed Services within the emerging markets. This provides further evidence that our unique combination of products, Professional Services and Managed Services is well excessive value proposition in these regions and globally.

Today we officially announced our activities with Globe in the Philippines. We first spoke about Globe in November when the customer disclosed it had selected Amdocs for its BSS transformation program. We are now proud to announce that the deal was signed during the second quarter with significantly expanded scope. In Globe we will provide full transformation of the customer BSS and business intelligence data warehouse systems, include prime system innovation services and seven years support commitment.

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