Amdocs Ltd at JPMorgan Global Technology, Media and Communications Conference

May 16, 2019 PM UTC 查看原文
DOX - Amdocs Ltd
Amdocs Ltd at JPMorgan Global Technology, Media and Communications Conference
May 16, 2019 / 02:00PM GMT 

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Corporate Participants
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   *  Joshua Sheffer
      Amdocs Limited - President & CEO
   *  Tamar Rapaport-Dagim
      Amdocs Limited - CFO & COO

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Conference Call Participants
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   *  Jackson Edmund Ader
      JP Morgan Chase & Co, Research Division - Analyst

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Presentation
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 Jackson Edmund Ader,  JP Morgan Chase & Co, Research Division - Analyst   [1]
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 All right. Good morning, everyone. My name is Jackson Ader. I'm part of the software technology research team here at JPMorgan. Pleased to have Shuky with us from Amdocs. We're going to have Shuky give -- introduce himself and then introduce Amdocs a little bit, spend 5 minutes just kind of giving a brief overview of the company, and then we'll jump into Q&A. I will be sure to leave some time with -- plenty of time left for any audience questions if there are any topics that I may have missed. So Shuky, go ahead.

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 Joshua Sheffer,  Amdocs Limited - President & CEO   [2]
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 Okay. Good morning, everyone. Shuky Sheffer. I'm the CEO of Amdocs for the last 6 months. By the way, Shuky is a nickname for Joshua.

 And if I show you about Amdocs, we are about, I think, 35 years old. We are a $4 billion company. In the last 8 years, we deliver a consistent EPS growth of 5% to 7%.

 I will start with the customers of Amdocs and then what Amdocs is doing. So we are serving -- it evolved over the years when we added more and more to our portfolio. But mainly, our customer is what we call the communication service providers, the AT&Ts of the world, the T-Mobile, Sprint and others. Then when we evolved and we added more services to our portfolio, now all the media service providers are our customer today, so companies like Comcast or Netflix. And also, we are serving some of the content creators in our media offering like all the big studios and other.

 And we have a very unique business model. So if you look in technology, some of the companies deliver products, some of the product -- companies implementing or deliver services. We have a product-led services strategy, meaning we produce products and we do all the services on our product. So it's not like the Accenture of the world or the people that are just deploying product. It's a very unique service model. We develop the products, we deliver the products, we do services on our products and we do operation on our products. So it's a full set of activities around our products.

 We evolved over the years. We started with doing billing systems in the beginning of -- the company is 30 years old, but I will talk about on relevant part of what we do today. So we started with a billing system, then we built a complete suite that handle end-to-end -- what any communication service provider needs to do, everything with regards to billing, to monetization, to commerce, to catalog, end-to-end solution what is called in our industry BSS. Then we evolved to do also the OSS, meaning all the operation support system of the customers, from inventory system, operation, provisioning the services, et cetera.

 Later, we evolved -- when we saw the network domain is transforming to be software-defined network and we are very good in developing software, we thought it makes sense to us to go in this domain. So we started to acquire assets in the network domain. And today, we have a lot of network services, deploying network, network optimization and others. And as I mentioned lately, we are also in the media domain, serving both the content creators and the content distributors.

 I think that our unique model actually helped us to be by far the market leader in this domain. We're operating in more than 85 countries. We have a blue-chip customer around the world. So if talking about North America, for example, so AT&T, T-Mobile, Sprint, U.S. Cellular, Rogers, Bell Canada, TELUS, all of them are our customers. We are by far the #1 in APAC. So we are the market leader there by far. We have a very strong presence in Europe and in Latin America. So over the years, we become a global player and global leader not just in North America that we were all the time but also across the world.

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Questions and Answers
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 Jackson Edmund Ader,  JP Morgan Chase & Co, Research Division - Analyst   [1]
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 Great. Thank you. So before we double-click on a lot of those, let's just talk about some current events, right? Announced just the other night that -- and you mentioned AT&T is about 1/3 of your revenue.

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 Joshua Sheffer,  Amdocs Limited - President & CEO   [2]
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 25%.

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 Jackson Edmund Ader,  JP Morgan Chase & Co, Research Division - Analyst   [3]
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 Right. So there have been some headwinds there. What have they been? How is it playing out relative to your expectations heading into this year?

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 Joshua Sheffer,  Amdocs Limited - President & CEO   [4]
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 So AT&T is a long-term customer of Amdocs, strategic partnership for many years. We enjoy a great relationship with AT&T. We do many activities with AT&T. The portfolio is very broad. We support all the mobile system from AT&T Mobility, Cricket, AT&T Mexico, Enterprise. We are doing all the -- a lot of in there -- and network domain, data legs, data warehouses and more.

 As we all know, AT&T is in -- right now, and this is publicly known, they are focusing on debt reduction and cost cutting, obviously its impacted us. We are not losing any business of AT&T. We continue to do a lot of activities in AT&T. But definitely, the -- all this cost reduction impact their discussion in spending.

 I mentioned yesterday in the call that we had some projection for this year, and I said that we saw some slowness. But at the same time, we believe that Q2 and Q4 levels are going to be just pretty much in the same level of Q2.

 We have many dialogues with AT&T today, both innovation, which eventually, they will be required to deploy the nationwide system. It could be 5G and any other offering. At the same time, how can we help them in cost cutting, doing some activities cheaper and faster that actually will add business to AT&T, but maybe can help them to reduce cost.

 In the other part of AT&T, which is WarnerMedia, there was not too much activity until the core tooling that happened a couple of 3 or 4 months ago. Now after the core tooling and the fact that WarnerMedia was -actually were able to finish the merger process and start to put the leadership in place. So we started to have a very productive discussion with the leaders of the new organization.

 We have incumbency in WarnerMedia through the Vubiquity acquisition and Vindicia. So WarnerMedia is a customer of Amdocs today. And we're starting to discuss with them some very important activities. It's not mature yet, but at least we have people to talk to. And we enjoy very good relationship with the leadership that was announced.

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 Jackson Edmund Ader,  JP Morgan Chase & Co, Research Division - Analyst   [5]
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 Within AT&T, I think a lot of investors and myself are curious, does this kind of prolonged period of cost cutting and debt reduction, does that actually generate some pent-up demand that we should see in 2020, possibly increase the level of spending with -- AT&T with Amdocs?

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 Joshua Sheffer,  Amdocs Limited - President & CEO   [6]
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 This is something that you need to ask AT&T. I can tell you that the rest of the market is heavily invested. So if you look at the rest of the market, everyone is investing in 5G, everything around 5G. Getting much more -- to be more digital, investing in the e-commerce platform.

 We announced yesterday a new deal with Sprint that we are going to modernize all their commerce catalog and system. We saw healthy activities in Comcast, in U.S. Cellular and all over. So my assumption, and I cannot talk for AT&T, that they will have eventually to catch up and to continue to compete like they've done before. AT&T was always, for us and for the industry, they were early adopter and coming with the new innovation first, and I think they will continue to do so.

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 Jackson Edmund Ader,  JP Morgan Chase & Co, Research Division - Analyst   [7]
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 Let's dig into 5G. Where does Amdocs fit into the 5G play from both the network side, your OSS and your BSS?

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 Joshua Sheffer,  Amdocs Limited - President & CEO   [8]
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 Okay. We have a very holistic view to 5G, which has been different than, I think, other companies. And because, as you mentioned, there are various angles to 5G. First of all, from the deployment part, everyone is trying -- starting to deploy 5G. Definitely deploying 5G, optimization of 5G network, it's something that all our customers started to do already. We are doing these services today. So by the way, deploying 5G network is more complex than 4G because of density and other reasons.

 Generally speaking, a general comment on 5G, 5G is a bad name. Because when you move to 3G to 4G, you enhance speed and capacity. 4G to 5G, this is not just another move. It's a completely new technology which delivers new capabilities. This is important because after a long time, our customer will be able to deliver new services they were not able to do in 4G. And this is what is -- relates to our strategy in 4G because the other part of monetization for Amdocs is how we are supporting our customers to monetize the 5G investment.

 You can deliver completely new services in 5G. Today, when you buy a package of data from T-Mobile, AT&T, wherever, you pay $50, $60. You don't guarantee the speed. It's mainly best effort. In 5G domain, suddenly you can sell packaging for a gamer, which -- quality of service that you can do based off network slicing that you could not do. So the monetization model are going to -- will be completely different.

 In order to be able to support this monetization model of 5G, and this is where we are coming into play, you will have to update your charging system, your rating system, your billing system, your catalog and many, many components of the traditional BSS system in the commerce system, in order to be able to deliver all these new services. And it doesn't make sense to invest billions of dollars in laying out a 5G network without being able to monetize it.

 So we now see a pickup with this dialogue with all our customer, not just on the network domain that we are doing today, but also how they can be -- how they can monetize all these new services that -- the 5G. And this is the holistic view that we see now in our offering. I think we are pretty advanced in this. And we have -- by the way, we are part of -- we announced it yesterday, the first real 5G deployment, not just radio. Radio and core network in Korea, which is running our charging system. From what we know, this is the real 5G first deployment in the world altogether, both radio and core network.

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 Jackson Edmund Ader,  JP Morgan Chase & Co, Research Division - Analyst   [9]
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 Am I characterizing it correctly if I think about it in this way that for -- on the network side and the rolling out of the actual physical network on OSS, that's kind of a project base that then leads to an annuity for the BSS side on the monetization and billing? Is that the right way to think about how 5G is going to ramp within Amdocs?

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 Joshua Sheffer,  Amdocs Limited - President & CEO   [10]
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 There is different discussions where 5G will be ready. We believe that the first 5G phone will come this year or next year. And probably, our customer will be able to deploy real 5G services probably 2022 going forward -- or '21 and going forward.

 Now all these changes I mentioned is challenging. This is not a simple project. This is significant upgrades. So if you want to be ready in mid-2021, you need to start now. This is not just flipping a switch. This is real projects. The whole protocol of 5G are different, different standards. You need to do these changes now in order to be able to start to monetize. So I think we will see some pickup pretty soon.

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 Jackson Edmund Ader,  JP Morgan Chase & Co, Research Division - Analyst   [11]
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 Okay. So sticking with the telecoms. Two, I think, interesting announcements that Sprint and T-Mobile kind of continue to invest even as they're going through this dance, right? First of all, what does that signal to you as a vendor? I mean are they just saying to themselves, "We don't have time to under-invest?" And what does that maybe say about the prospects for Amdocs if the deal goes through or if it doesn't?

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 Joshua Sheffer,  Amdocs Limited - President & CEO   [12]
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 So obviously, we are preparing for both scenarios, and we are enjoying the very healthy activities in both Sprint and T-Mobile. I think that I prefer to call us strategic partners for both of them, and I think that we are today a strategic partner both for T-Mobile and for Sprint.

 No, I cannot predict the future. I can tell you my view, what we've seen so far. When you do a merger, you don't -- you want to do it right. If I give you an example of a bad merger was Sprint Nextel, which after the merger, the whole Nextel base actually evaporated in -- from this deal. So I think it's important for T-Mobile and Sprint to make sure that in day 1, they can protect both the T-Mobile base, which they are doing pretty well and also the Sprint base.

 So I think that we're able to -- I'm sure they want to have some similarity between the different offering they want to do here in order to be attractive also for the Sprint base. By the way, this is everything this is Shuky saying. It's not that -- we have some discussion with them, but everything is NDA and we cannot share.

 But I think that historically, for example, when -- after merger, people can slow down spending or can accelerate spending. When T-Mobile acquired Metro, they wanted to do it successfully and they accelerated spending. So I cannot tell you exactly, but I think that so far, they are doing a very smart move to make sure that they are going to protect the base and to have the right offering to the market.

 Generally speaking, they announced the main focus on day 1 will be the network. So getting the network -- and this is also -- we have some dialogue with them building the first big 5G network. So I cannot predict the future, all I can tell you that I believe that we are part of the solution.

 We are -- both of them are a strategic partner of Amdocs. We have a good dialogue with them. I think that between the 2 of them, we are the only one that understand exactly what they have both [seen] and [heard]. So I think it's going to be -- continue to be a very good partnership for us.

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 Jackson Edmund Ader,  JP Morgan Chase & Co, Research Division - Analyst   [13]
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 Okay. Let's switch to maybe some other segments, the drivers of growth, and that would be Pay TV and media. Let's address Pay TV first. So how has this grown within Amdocs over time? What are you doing today? And do you run into maybe a different competitive set within Pay TV maybe versus your traditional telcos?

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 Joshua Sheffer,  Amdocs Limited - President & CEO   [14]
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 So the Pay TV industry understood, and I think we predicted it. And the former CEO Eli was talking a lot about this. The pay TV industry must transform. The majority of the pay industry -- pay TV industry are running legacy system, which are 40 years old and they are all still address-based. You cannot compare it to what is happening today. So this is a must.

 All of them, as we see, are starting to add mobile services. So Comcast came with an MVNO. Charter announced it. Altice announced it. So getting to a full play including mobile started to be as part of their offering. We announced that we won another big MVNO deal with another Pay TV customer yesterday. And we announced before already Altice, and we are doing it also for Comcast.

 So overall, we see that they are moving ahead. I think that also 5G is going to disrupt the market because today, in some place in the United States, you don't have enough option to buy broadband. You can either have one provider. With fixed wireless, suddenly the T-Mobiles and the Verizons of the world will be able to compete also on the broadband space, which is today is the bigger stickiness of the pay TV guys.

 So we believe this will initiate another push for transformation. But we have a very healthy activity in pay TV, by the way, not just in North America, also in APAC and other places. And I think that we have the right tools for them to transform because they have to.

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 Jackson Edmund Ader,  JP Morgan Chase & Co, Research Division - Analyst   [15]
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 Right. How is Amdocs positioned for the wave toward over-the-top or kind of à la carte television?

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 Joshua Sheffer,  Amdocs Limited - President & CEO   [16]
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 So I think that we are positioned better than we used to be ever. Because when you look about OTT, we have obviously -- we can bring them an [in-set] solution. We took -- like in the BSS and OSS, we came with a holistic view.

 So we have what we call our Amdocs Media suite. So every OTT, we have all the content management, digital rights, content preparation, formatting, everything, which is related to the content. We are having the monetization model, the subscription base, which is a software as a service model. And we have also the user lifestyle in the storefront and all the commerce application.

 So we're coming with now -- not every customer taking everything, some of you thinking. But the -- when you move to consumer -- to direct-to-consumer like Disney is doing, it's a completely new ball game. It's completely new from being a wholesaler that's selling content rather than to deal with -- dealing with millions of consumers.

 Now Amdocs wrote a book about how you deal with consumer. So we believe that we represent the more and more B2C will become a phenomenon in OTT, it will present us a big opportunity. Already today, we have a lot of incumbencies with Vubiquity and Vindicia position in the OTT [world].

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 Jackson Edmund Ader,  JP Morgan Chase & Co, Research Division - Analyst   [17]
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 What was the acquisition that you made that allows the OTT subscriptions?

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 Joshua Sheffer,  Amdocs Limited - President & CEO   [18]
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 Vindicia.

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 Jackson Edmund Ader,  JP Morgan Chase & Co, Research Division - Analyst   [19]
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 That's right. That's right. So Vindicia, Vubiquity bring you into basically brand-new customers, right?

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 Joshua Sheffer,  Amdocs Limited - President & CEO   [20]
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 Yes.

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 Jackson Edmund Ader,  JP Morgan Chase & Co, Research Division - Analyst   [21]
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 You said you have a bunch becoming...

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 Joshua Sheffer,  Amdocs Limited - President & CEO   [22]
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 And suddenly, Netflix is our customer, iTunes is our customer. So...

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 Jackson Edmund Ader,  JP Morgan Chase & Co, Research Division - Analyst   [23]
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 What is it that Vubiquity actually does for those -- for the media companies?

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 Joshua Sheffer,  Amdocs Limited - President & CEO   [24]
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 Vubiquity is dealing with everything around the content. When you need to distribute content, it's not just you get it in streamings. You need to prepare it. You need to make sure that it support every format, 4K, 8K, et cetera. Sometimes you want to deploy it in one day across the world -- so sometimes, it's subtitling and dubbing.

 So the whole content preparation and the ability to deliver it, including all the digital rights, we have -- in Vubiquity, we have current relationship with 600 content creators, including obviously, the big studios and others. So if you're working with Vubiquity, immediately you can get not just the content of the people, but sometimes they do directly but suddenly you're exposed to a large portfolio of content that sometimes you don't where to go and negotiate, et cetera. So everything about the content, the content management, preparation, et cetera, is done in Vubiquity and some of it is done in Managed Services.

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 Jackson Edmund Ader,  JP Morgan Chase & Co, Research Division - Analyst   [25]
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 Okay. A couple of follow-ups in media, but then I'm going to come to the audience for questions, so if you have them. So how quickly do you think that -- if you had to -- well, we'll get to kind of the rank order of growth later. But how big do you think that the media opportunity could be and how quickly is Vubiquity actually growing?

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 Joshua Sheffer,  Amdocs Limited - President & CEO   [26]
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 So we see 2 aspects or avenues of growth with Vubiquity. One is, Vubiquity was mainly U.S.-based company that serves the majority of the customers in the U.S. Suddenly, Amdocs, as I said, we are by far the #1 leader in APAC. Everyone is going to distribute content. So suddenly, we are leveraging all our contacts in APAC, in Europe, everywhere to push Vubiquity. These customers could take them months to get, suddenly we open the door for them immediately. So from -- so the geography expansion is a big advantage.

 The other one is that, on top of Vubiquity, which has their traditional content management, and now we added the subscription, we are adding all them, Amdocs capability to deal with consumers. All the storefront, the consumer, all the commerce, the catalog, everything that we do today with the rest of the industry is very relevant. So we are trying not to get out from just the content management and to get additional layers of services that Amdocs can bring, which are very relevant for my core business.

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 Joshua Sheffer,  Amdocs Limited - President & CEO   [27]
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 That makes sense. Okay. Questions from the audience? If you don't mind, it's -- all the way up front, so if you just want to shout it out, I'll repeat it.

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 Unidentified Analyst,    [28]
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 What is the percentage split of your revenue between U.S. , Europe and Asia. Where do you expect the maximum growth of the company for the coming year.

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 Jackson Edmund Ader,  JP Morgan Chase & Co, Research Division - Analyst   [29]
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 So the question is geographical split between the different regions.

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 Joshua Sheffer,  Amdocs Limited - President & CEO   [30]
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 I'm not sure maybe -- I don't know how we -- what is disclosed. We have disclosed North America and rest of the world?

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 Tamar Rapaport-Dagim,  Amdocs Limited - CFO & COO   [31]
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 And Europe.

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 Jackson Edmund Ader,  JP Morgan Chase & Co, Research Division - Analyst   [32]
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 And Europe.

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 Joshua Sheffer,  Amdocs Limited - President & CEO   [33]
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 And Europe. I don't recall it by heart.

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 Unidentified Analyst,    [34]
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 The split of the business is about 2/3 North America and 1/3 between Europe and rest of the world. We've been (inaudible) major expansion (inaudible) countries [indiscernible] consider for us now (inaudible) so we definitely have seen very much (inaudible) mostly in Europe (inaudible) that business (inaudible) for example, we're still (inaudible)

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 Joshua Sheffer,  Amdocs Limited - President & CEO   [35]
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 So the question, what -- we said it yesterday, what is nice right now that we see growth across all -- globally. So we see growth in North America. It's all our customer spending. Rest of the world become -- was a record quarter for us. We see growth in Europe also. So it's pretty consistent around the world. It's not just APAC or emerging market like it is here.

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 Jackson Edmund Ader,  JP Morgan Chase & Co, Research Division - Analyst   [36]
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 Just for reference, Tamar is the Chief Financial Officer and Chief Operating Officer, not just someone who wandered in off the street answering questions for us in the audience.

 All right. Sorry. Other questions from the audience? All right. I want to follow up actually. We haven't touched on NFV much at all. So we -- I think it was either yesterday morning or Tuesday morning, I can't remember. But Randall, AT&T's CEO, was talking about how much that they have virtualized their network. What does that do to the CapEx budgets at the -- for telecoms? And is it just a telco play? Or are there other areas that could virtualize their network? And then obviously, what does DOX actually provide?

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 Joshua Sheffer,  Amdocs Limited - President & CEO   [37]
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 Yes. So just to remind everyone, we have a very large portfolio of network services, NFV is one of them. Obviously, we do OSS system, inventory system, network deployment, network optimization and also NFV. And if you remember, NFV, we developed in partnership, ONAP, together with AT&T.

 Now NFV is -- when we talk about NFV in the Amdocs [side], this is not creating the VNFs. The VNF is all the virtual functions that you can do in the network. We are actually are able to -- this is the orchestration. So we are bringing an agnostic orchestrator that can deploy every VNF. And you can buy this VNF from Ericsson, from Nokia, from anyone and the -- and so this is our -- now we see people starting to deploy VNF -- sorry, orchestration. The main use case is mainly around B2B. There is less use cases on consumer. So this is where we see -- and we signed some agreements in APAC and in Europe and in Australia and in other places.

 And initially, we thought it would pick up faster, but the adoption of a full domain -- or a full orchestrator across the board, it's -- people are trying, and it's more like in trial mode. We see some pickup, and we see more RFPs coming on. I'm questioning myself if the focus on 5G is a bit taking some impact on the focus on NFV. But one thing I can tell you, 5G network is virtualized from the ground up. Over there, it's almost -- not even a must, it's part of the architecture.

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 Jackson Edmund Ader,  JP Morgan Chase & Co, Research Division - Analyst   [38]
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 So that should be a natural tailwind for NFV just with the rollout of a new network?

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 Joshua Sheffer,  Amdocs Limited - President & CEO   [39]
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 Yes. Yes, we believe so.

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 Jackson Edmund Ader,  JP Morgan Chase & Co, Research Division - Analyst   [40]
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 That makes sense. And when you first started talking about it, it was kind of positioned as NFV only -- or made the most sense -- really only made sense for the largest networks. But Amdocs has actually been seeing some more activity kind of down market. And you've sliced and diced your orchestrational offerings. So tell us how you've actually (inaudible)?

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 Joshua Sheffer,  Amdocs Limited - President & CEO   [41]
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 So I think that we see the main activity in the -- obviously in the big guys and also in the midsize guys. So when we signed an agreement -- NFV agreement with Globe. Globe is a $3 billion company in the Philippines that in the United States are considered a Tier 4, but they're a market leader in the Philippines. So we see it relates not just to the size of the company. It's also how much they are innovative. We see that the more innovative companies are doing it faster than later. But it's not just a big, big play for big guys. It's also happening also in the mid tiers.

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 Jackson Edmund Ader,  JP Morgan Chase & Co, Research Division - Analyst   [42]
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 Okay. I want to hit the business model, right? So you have this steady stream of Managed Services, where it's very user-based pricing and billing. And then you have these what you've described as discretionary projects that you do for customers. How do those discretionary projects -- just walk us through the mechanics how those go through the financial statements because obviously that was a big focus of a recent report, I guess, it's been a few months now, but walk us through that.

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 Joshua Sheffer,  Amdocs Limited - President & CEO   [43]
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 Okay. Okay. So we have different engagement with customers. By the way, the most -- if you ask what is the North Star from our end is what we call actually managed transformation. Managed transformation is like we've done -- we announced Veon which is a very significant deal. We announced other deals, PLDT.

 In this case, from day 1, we are starting the monetization, and we are taking the legacy system in Managed Services. So this is a full accountability. We take it from day 1. We are pushing it. The majority of the new deals that we'll sign are, from this prospect, is what you call managed transformation.

 Managed Services operation, as we do a lot -- by the way, most of our customers in North America, we're doing Managed Services. By the way, all APAC, we're doing Managed Services. So it's picking up. This is when we operate the system of -- on the customer's behalf. We pretty much become the IT of the customer.

 And now on the more project base or transformation [support] of these projects, this is -- I don't want to make it too complex, but this is also split into 2. In the -- in our existing large customers that we have already a lot of relationship and history and trust, when we do this -- so even these projects are more likely recurring nature. It's not like it will become -- we deliver it, we get it. And there's no -- in the more new logos that -- by the way, we have signed many -- [indiscernible] we have an amazing win rate in the last 3 years really. I mean we are [heading] the industry by far. This is where you start to build the relationship and trust.

 So over there, obviously, the model is that we are getting paid by milestone, first delivery of the system, first going to production, passing system tests. So in this -- so we are pretty much recognizing the revenue as we should, as far as completion, as much we complete, but we can invoice the customer only when we hit a milestone. Sometimes it creates some gap until you do -- you invested, you're preparing the system, you go to production, you can invoice the customer.

 So this gap, this is what was discussed. Actually, you can look at it as a bad thing. We can look at it as a great thing. The fact that we are winning so many new customers, it's a great thing because the majority of these customers, eventually, it's not a one-off. We do the project. We finish the project.

 After we finish the project, let's say, it was a BSS installation, then we come and say, "By the way, we have OSS, media, networks." So we have a lot of upsell opportunities. And also, we are trying to change this relationship to Managed Services. So it's not like going from 100 to 0 and then -- so every new win that have this phenomena later is translating to additional services or additional opportunity for Amdocs.

 So this is -- I mean, obviously, we are very, very disciplined, and we have a great execution mechanism with -- I think that in this industry, by far, we have close to 100% success rate in delivering. So our ability to meet this milestone and collect the money is pretty consistent.

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 Jackson Edmund Ader,  JP Morgan Chase & Co, Research Division - Analyst   [44]
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 A nitpicky follow-up on -- so Managed Services, that revenue stream, I would expect it to be pretty stable. It was up like almost 10% last quarter. Is that -- what's the reason for that?

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 Joshua Sheffer,  Amdocs Limited - President & CEO   [45]
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 This is the reason that -- the reason for that is that we were able to convert -- for example, we announced today a managed -- a couple of Managed Service agreement in Telefónica, which is one of our largest customer in Latin America. So it's meaning that we were successful in converting some of the project relationship to a Managed Services. It -- we finished projects and we move now to more like a Managed Services model. So it's a good sign that our strategy of enhancing the relationship with the customer is successful. And by the way, this -- it is interesting, the announcement today because Telefónica is by far one of the leaders -- the whole Latin America is [speak] with Telefónica and América Móvil and both of them are great customer of Amdocs.

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 Jackson Edmund Ader,  JP Morgan Chase & Co, Research Division - Analyst   [46]
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 Asia Pacific has been amazing, a really strong geography for you. You've announced Telefónica. How do you balance those 2? Or where you see growth coming from maybe over the next couple of years?

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 Joshua Sheffer,  Amdocs Limited - President & CEO   [47]
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 So in APAC was pretty consistent in growth for the last 5 years. We are by far the #1 in Indonesia -- by the way, we are not operating in China, so all this crossfire trade war does not impact us. And so Indonesia, Malaysia, Singapore, obviously, there is -- emerging APAC also developing, Australia. We were doing very well in this region, including Managed Services.

 Latin America was a bit dragging because it used to be the same in the last couple of years. But in the last quarter, we see good sign that it's starting to pick up, which is good, but -- by the way, another thing which is important for us is that APAC today is leading from innovation. So we see a lot of innovation that traditionally you come from either Europe or North America. Actually, the fact that we are a market leader there helped us to be part of this innovation and then to take it globally. But by far, they are the innovator today.

------------------------------
 Jackson Edmund Ader,  JP Morgan Chase & Co, Research Division - Analyst   [48]
------------------------------
 Okay. So under a minute left, I want to just sneak in a couple of questions still on AT&T. So if we think about the last 12 months or so, we said AT&T looks like it's going to be down 10%, right? And the fourth quarter came, it was down closer to like mid-teens. First quarter comes, it was all right. Now again, second quarter, it's actually a little worse than where we thought. So what gives you the confidence that we've either reached the trough? Or do you see the trough and are confident that things are going to play out as expected?

------------------------------
 Joshua Sheffer,  Amdocs Limited - President & CEO   [49]
------------------------------
 So we are in the middle of Q3 already now we are talking about. So you can assume there's pretty good visibility to Q3 and Q4. This is why we guided we believe that Q3 and Q4 are not going to be materially different then. It could be -- fluctuate, but -- now regarding next year for us, our fiscal year, I mean we are very working hard to make sure that we will be able to continue to -- this partnership like -- and start to help AT&T, as I said both on innovation or [make cost cutting]. We have an active dialogue on many opportunities yet to be seen until they are matured. But I can tell you, there is a major focus on our end to make it happen.

------------------------------
 Jackson Edmund Ader,  JP Morgan Chase & Co, Research Division - Analyst   [50]
------------------------------
 Okay. All right. Shuky, thank you very much. Thanks, everyone.

------------------------------
 Joshua Sheffer,  Amdocs Limited - President & CEO   [51]
------------------------------
 Thank you.

------------------------------
 Jackson Edmund Ader,  JP Morgan Chase & Co, Research Division - Analyst   [52]
------------------------------
 Well done.

------------------------------
 Joshua Sheffer,  Amdocs Limited - President & CEO   [53]
------------------------------
 Thank you.




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