Good day, and thank you for standing by. Welcome to the Second Quarter 2024 Amdocs Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to Matt Smith, Head of Investor Relations. Please go ahead.

Thank you, operator. Before we begin, I need to call your attention to our disclaimer statement on Slide 2 of the presentation. It notes that some of our comments today may be forward-looking statements and are subject to risks and uncertainties, including as described in Amdocs' SEC filings, and that we will discuss certain financial information that is not prepared in accordance with GAAP. 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 on Form 6-K. Participating on the call with me today are Shuky Sheffer, President and Chief Executive Officer of Amdocs Management Limited; and Tamar Rapaport-Dagim, Chief Financial and Operating Officer. To support today's earnings call, we are providing a presentation, which can be found on the Investor Relations section of our website. And as always, a copy of today's prepared remarks will also be posted immediately following the conclusion of this call. On today's agenda, Shuky will recap our business and financial achievements for the second quarter of fiscal 2024, and we'll also update you on the continued progress we've made executing against our strategic growth framework, including gen AI and our continued sales momentum in cloud. Shuky will finish by discussing our financial outlook for the full fiscal year 2024, after which Tamar will provide additional details on our second quarter financial performance, our forward guidance and also our continued commitment to ESG. So with that, I'll turn it over to Shuky.

Thanks, Matt, and good afternoon to everyone joining us on the call today. Let me begin by thanking our amazing employees around the world who every day work with our customer to deliver successful project execution and deployment, seamless mission-critical IT operation support and cutting-edge innovation build on Amdocs' unique blend of telco industry expertise, generative AI leadership and cloud-native agility. The collective effort of Amdocs talented people are reflected in our solid financial results for the second fiscal quarter. The key highlights of which are shown on Slide 7. Within an environment of persistent macro uncertainty and industry pressure, we achieved record revenue of $1.25 billion, up 2.0% from a year ago in constant currency and slightly better than the midpoint of guidance. Non-GAAP operating margin improved by 60 basis points year-over-year and 30 basis points sequentially, driven by our ongoing initiatives to accelerate profitability. Non-GAAP earnings per share was $1.56, consistent with the midpoint of our expectation and we closed Q2 with record 12 months backlog of $4.3 billion up approximately 3% from a year ago. I believe our record 12 months backlog reflects Amdocs market leadership and healthy sales momentum as we are repeatedly chosen as the technology partner best equipped to support our customers' next gen, multiyear modernization investments. Slide 8 highlights some of the key achievements in Q2. In North America, during Q2, we continued to expand our product and services offering at AT&T. In addition, I'm very pleased to report that we just signed a significant 5-year deal at AT&T, which expands our activities in new cloud domain as well as extends our engagement with AT&T in the consumer domain throughout 2029. At T-Mobile, we secured additional awards to support its ongoing modernization and strategy to provide market-leading consumer and B2B customer experiences. Charter…

Thank you, Shuky, and hello, everyone. Thank you for joining us. I'm pleased with our solid financial performance in the second fiscal quarter, the highlights of which you can see on Slide 18. Record Q2 revenue of approximately $1.246 billion was up 2% year-over-year in constant currency. And on a reported basis, revenue increased 1.8% year-over-year and are slightly above the midpoint of guidance, including an immaterial impact from foreign currency movements compared to our guidance assumptions. On a sequential basis, revenue included an impact from foreign currency movements of approximately $2 million. From a geographical perspective, North America declined 0.7% from a year ago, primarily due to a slower pipeline to sales conversion. This was offset by a healthy growth of 8% year-over-year in Europe and a record quarter in Rest of the World, which increased 7% as projects in Managed Services activities ramped up with various customers. Moving down the income statement, I'm proud to report a non-GAAP operating margin of 18.4% in the second quarter, the highest in many years. Non-GAAP operating margin rose 60 basis points from a year ago and 30 basis points sequentially, driven by our continued initiatives to improve operational excellence through disciplined resource management, the ongoing adoption of automation and sophisticated tools and the implementation of AI to drive additional cost and efficiency improvements across our business. Interest and other expenses amounted to roughly $8 million in the second quarter as we continue to see some adverse foreign currency movements in the quarter. On the bottom line, non-GAAP diluted EPS of $1.56 was at the midpoint of guidance and included a non-GAAP effective tax rate of 17.2%, roughly in line with the high end of our annual target range of 13% to 17%. Diluted GAAP EPS was $1.01 for the second fiscal…

Thank you, Tamar. As I said in my prepared remarks, I am pleased with our solid second quarter results. Meanwhile, the operating environment remains challenging, I believe our market leadership reach pipeline of opportunities, focused execution and commitment to operational excellence position us to deliver a fourth consecutive year of double-digit expected total shareholder return in fiscal '24. With that, we are happy to take your questions.

[Operator Instructions] Our first question comes from the line of George Notter with Jefferies.

I guess I wanted to start by asking about the reduction in expectations for top line, I guess, 50 basis points at the midpoint. I think I heard you say it's not due to the trade-offs that customers are looking at between modernizations and legacy type upgrades but rather slower milestones associated with billing. Can you talk about this? Is this something that's more like execution related for Amdocs? Is it something maybe where customers are slowing down the progress on specific projects? Or any more detail there would be great.

George, let me correct you. We didn't say that the impact of the 50 basis points of the revenue growth is related to milestone. We said that we see in some cases that the time it takes to convert deal in the pipeline to sell and then to start to execute, take some longer. I think a good example is the significant AT&T that we just mentioned. This is something that in the work for a lot of time. We saw that we'd be able to close it early in Q2. Eventually, we just closed it in the last week. So this is a good example of a very good deal to Amdocs and definitely for AT&T, very significant that it took us more time. So we're not -- it's not related to a project milestone. It's the fact that -- and by the way, there are some other very important and significant deals we are working right now. It takes us a bit more time than we anticipated at the beginning of the year to close this deal but we are not losing any deal and the pipeline is very rich. It's more like how we convert especially the large deal to -- from pipeline to sell.

Just to clarify the comment on the milestones was in the context of our free cash flow expectations for the year, where there some specific milestones moving a bit ahead, pushing forward our ability to collect that in the fourth quarter of the year and actually pushing that into next year. But again, I don't think it's a collectability issue. It's all a matter of a shift in time line.

Got it. Okay. And then as I think about your business, you're around 83% of next 12-month sales in backlog. I guess as I thought about your visibility as a company, I guess, I tended to think about your pipeline being pretty full for the subsequent 3 quarters and then 4 quarters out is really the revenue that you're chasing and projects that you're kind of filling out. So I guess I'm a little confused around why we're seeing shortfalls in the next quarter or 2 because of this pipeline effect?

In any given quarter, even in current quarter, we don't have 100% coverage by a backlog. It's a very nice visibility. And you're right that as we look closer on time line, the visibility is better. But still, there are specific deals that have to be signed in order to fulfill the rest of the revenue. I would say that on top of that, when we are talking about 12 months backlog, it's not just about having something signed already, it's about predicting exactly how this signed business is converting into revenue in the next 12 months. This time, this is not the major change that happened. I'm just clarifying in general that as part of our prediction cycle, thinking about what we have signed already, we always have to also look on the plan of record on certain projects, et cetera. But to be more specific to the reason now, it was more about conversion of things that were still in the pipeline and the pace in which they are being signed and then from the point of filing, again, it's not an immediate recognition. Based on our business from the point of signing a deal, it's how you start to ramp up a new deal. So this has changed a bit the view that we have on the second half of the year. But the pattern that we expected of acceleration sequentially, both in Q3 and then in Q4 is still the case, it's just going to be a bit more moderate than we originally expected.

[Operator Instructions] Our next question comes from the line of William Power with Baird.

Okay. I guess probably a question for Shuky. I'm just -- I'm interested in thoughts around generative AI. It feels like you put a lot of the pieces in place, whether it's CES24, the relationships with NVIDIA, Microsoft, et cetera, what's it going to take? I guess, or what are the next kind of catalyst to kind of turn the generative AI capabilities into revenue? Is it the telcos have to get their data organized catalog, to get the right quality in place? And how long does that take? What kind of needs to happen, I guess, to start actually generating revenue for you all here?

I mean this technology is evolving. I mean, you cannot even compare what we had a quarter ago with what we have today. But typically, since this is a completely new domain for our customers, usually, this type of engagement starting with proof-of-concept. So as we speak, we are engaged with many proof-of-concept with the customer trying to define the best use case, getting some traction we're convinced that we are getting the right accuracy. So this is where we are right now. We are in the process of converting some of these proof-of-concept to deal and sign them. So it's moving nicely, but this is where we are right now. We have many proof-of-concepts because when you deploy this technology and let's say, you want to take some decision regarding your call center workforce, assuming that, let's say, this technology, this copilot can, let's say, give an impact of 10% of the workforce of the call center, you want to be really sure that this is mission-critical already that is provide the right accuracy and it's giving you the right the right accuracy, as I mentioned. So this is why, as I said, we have many, many proof-of-concept, buying with many different customers globally. And I'm sure that they will slowly convert to real deal.

Okay. Yes, that makes sense. And I guess for the second question, looking at North America, it was a bit weaker overall, I guess, underperformed the other geographies. Does that come back just to the prior kind of legacy spending comments? Anything else you call out there?

No, not at all. I mean, it's -- I will start and Tamar will add in. It's related to the same impact. I mean some of the significant deals that we are working right now, by the way, we talked about AT&T that was signed are in North America. So it's not -- we don't see any more deterioration in the legacy that we discussed at the beginning of the year. It's more of the same pattern that we see some slow conversion of pipeline to deals, mainly on the large deals.

[Operator Instructions] I'm showing no further questions in queue at this time. I'd like to turn the call back to Matt Smith for closing remarks.

Thanks, operator, and thanks, everyone, for joining today. As always, if you have any additional questions, just reach out to us here in the IR group, and we look forward to speaking with you soon. Have a great night.

This concludes today's conference call. Thank you for participating. You may now disconnect.