Thank you for standing by, and welcome to the Amdocs Second Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Matt Smith, Head of Investor Relations. Please go ahead, sir.

Thank you. Before we begin, I need to call your attention to our disclaimer statement on Slide 2 of the presentation. I note 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. Today's speakers 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 and will update you on the continued progress that we've made executing against our strategic growth framework, including GenAI and our continued sales momentum in cloud. Shuky will finish by discussing our financial outlook for the full fiscal year 2025, after which Tamar will provide additional details on our second quarter financial performance and forward guidance. As we communicated previously, Shuky and Tamar will compare certain financial metrics on a pro forma basis, which adjusts prior fiscal year 2024 revenue by approximately $600 million to reflect the end of certain low-margin noncore business activities which were substantially already ceased in the first quarter of fiscal 2025. And with that, I'll turn it over to Shuky.

Thank you, Matt and everyone joining us on the call today. Starting on Slide 6. I'm pleased to report good results for our fiscal second quarter, credit for which belongs to Amdocs global base of employees while executing our strategy to deliver the next-gen cloud, digital and AI-based solution our customer needs to ensure amazing experiences and seamless connectivity for billions of people each day. Among the second quarter financial highlights. Revenue of $1.13 billion was above the midpoint of our guidance and increased by 4% from a year ago in pro forma constant currency. Profitability improved by 10 basis points sequentially, reflecting ongoing internal efficiency gains. We generated robust free cash flow of $181 million, excluding restructuring-related payments supported by healthy customer cash collection, and non-GAAP earnings per share was $1.78, above the guidance range, primarily due to lower-than-expected non-GAAP effective tax rate in the quarter. Additionally, we closed the second quarter with a 12-month backlog of $4.17 billion, up by 3.5% pro forma from a year ago. The healthy increase in 12 months backlog was supported by a strong pipeline to deal conversion as shown on Slide 7. Among the highlights, we're strengthening our relationship with AT&T Cricket Wireless through payment solutions, dealer commission and expanded IT services. Consumer Cellular, a new logo for Amdocs in the U.S. has selected our onnectX SaaS solution to introduce new digital brands and we benefit from a healthy customer demand for our fiber deployment orchestration and digital infrastructure management offering. Strong sales momentum in cloud also continued this quarter. We are working with Microsoft to migrate Amdocs and non-Amdocs application to the Microsoft Azure platform for a leading Tier 1 European operator. And in Philippines, we signed an agreement to support the next phase of PLDT's cloud modernization project. As to…

Thank you, Shuky, and hello everyone. Thank you for joining us. Before I begin, in today's comments I will compare certain financial metrics on a pro forma basis which adjust prior fiscal year 2024 revenue by approximately $600 million, to reflect the phaseout of certain low margin, noncore business activities which were substantially already ceased in the first quarter of fiscal 2025. To further assist your modelling, the regional mix of this revenue was similar to the overall company and it contributed roughly $150 million per quarter. Now, picking up on Shuky's earlier comments, we delivered a good set of results for the second fiscal quarter, as detailed on Slide 18. Q2 revenue of approximately $1.13 billion was up 4% year-over-year in pro forma constant currency and was above the midpoint of our guidance, despite a negative foreign currency movement of approximately $2 million compared to our guidance assumptions. We are pleased with the stronger pace of growth in Q2, which reflects robust sales, the ramp-up of previously signed engagements, and recent acquisitions. Reflecting the phaseout of certain business activities, reported revenue declined by 9.4% from a year ago. On a regional basis North America was slightly up sequentially and up 1.4% from a year ago in pro forma constant currency. As anticipated, Europe rebounded from the weakness of the prior quarter, benefiting from the ramp-up of new deal activities and a contribution from the previously completed acquisition of Profinit. In Southeast Asia, healthy customer activity was offset by mixed trends in Latin America, resulting in a sequential decline in rest of the world. Shifting down the income statement, non-GAAP operating margin of 21.3% improved by 10 basis points sequentially, supported by the ongoing adoption of automation, AI and other sophisticated tools within our operations. Compared with a year ago,…

Thanks, Tamar. I am pleased with our performance in the first two quarters and we are entering the second half with a strong backlog position and rich pipeline of opportunities. With our market-leading offering and proven ability to execute, we believe we are well positioned to achieve our targets for the full fiscal year while of course monitoring the current macro environment closely. With that, we are happy to take your questions.

[Operator Instructions] Our first question comes from the left of Timothy Horan from Oppenheimer. Your question please.

Great. Thanks guys. Can we focus on AI a minute? Is it -- are you starting to see material contributions to revenue growth from AI or improvements to the product? And how are you kind of working with NVIDIA on AI at this point? Any more color on that collaboration? And then related to that, it sounds like cloud growth is accelerating, is that true? And is AI helping that growth? Or is it go-to-market or other improvements in the product there?

Tim, good to hear you. I think that what we see in GenAI, I think all along, we said that in order to -- we connect strongly GenAI activities with data because the only way to get the benefit of GenAI is to sell the data. And this is, to some degree, what you mention is some overlap on the cloud because definitely, when we move the data to the new platform, whether it's Microsoft, AWS or others, definitely, it goes on the cloud. We see a lot of activity that support GenAI in the data domain, which we see some expanded activities in the domain, which obviously contribute to revenue growth. And in the use cases, I would say we see good signs of POC that are maturing to real deals. I think it will be more evident in the future quarters. But overall, we see good progress. Regarding NVIDIA, we are obviously collaborating with NVIDIA in many domains. I think what -- the progress that we've done this quarter beyond what we discussed before, how we can support call centers and monetization and upsell use cases. I think that the progress we've done this quarter was mainly in the network domain, so now we are having -- actually, we built our network automation and domain this quarter, building on NVIDIA tools. So I think this was the progress regarding NVIDIA on top of what we've done with them already before.

Very helpful. And Tamar, a quick follow-up. Great improvement to the margins here. Are you using AI to improve your own productivity much? And is there -- can you kind of continue the pace of margin improvements going forward for a few years?

So Tim, let me take this. When we talk about GenAI, there are three pillars in Amdocs that I think that we are actively working. One is the offering, building on our amAIz platform and developing AI factory, different use cases and data to support the GenAI. This is one. The other one is all our products today are GenAI enabled. So when you take our products, they are coming with GenAI capabilities. And the third element is more how we are going to get the efficiencies in our software development life cycle in operation using GenAI tools. We see a lot of progress and definitely when we look at the -- remember, we talked before a lot of automation that we've done historically to support our efficiency and productivity. The next wave of improvement is coming by using the new store. We are starting to deploy it across all of our software development life cycle and operation, and we're starting to see good results.

Thank you.

Thank you.

Thank you. Our next question comes from the line of Shlomo Rosenbaum from Stifel. Your question please.

Thank you. Shuky, can you just talk a little bit about the customer spending behavior, what you saw this quarter versus what you saw last quarter? And we're into May already. There's obviously more risk and concern out there, but are your clients changing anything? Or is it really kind of the same? And then I have another follow-up.

I would say we don't see any change right now in our customer spending behavior. And I think they were cautious before because of different macro that we discussed before. But we did not see yet any change in the spending behavior following what we experienced in the last three, four months.

Okay. Great. And then maybe for Tamar. The AR after several quarters of going up, has seen a couple of quarters of going down. It looks like you're hitting milestones and unbilleds are going down. Should we think about this as something that was kind of lumpy that you needed to go past or is this something where there's a certain range that you expect to operate within, and these are just kind of the fluctuations within that range? In other words, did you have a lot of projects that were unusual that you had the milestones kind of in front of you when you got past them? Or is this the normal cadence of bouncing around?

I was just -- the cadence is bouncing around because it's a combination eventually of a portfolio of different projects. But as I mentioned in the prepared remarks that we are running very large transformations in North America. Of course, we have project transformation all over the world, but sizing-wise, when we are thinking about what's happening specifically in the unbilled, AR and deferred position, and I'm usually looking at the net difference because sometimes the customer may be in an unbilled position and then two quarters later, in the deferred because eventually, it's the gap between how we -- what's the pace of recognition versus invoicing. So I don't think we can say that, oh, now it was a peak level of milestones, and we issued invoices and necessarily now the only way is down, it may bounce around. I think the good news is in everyone -- in any one of these customers, in any one of these projects, we are making progress. We are reaching the invoicing milestones. Once we do, we collect the money, the cycle works. And I think that looking forward, as we are going after additional significant deals that are in the pipeline, of course, that will be good news, right? I mean if we get to win additional deals, and then they have the cycle of their own. But too early to tell exactly what will be the mix of this. And that's why we don't guide for these balances. It's very hard to predict exactly in every quarter all the moving elements.

Okay. If you don't mind me squeezing one more in. Just following up on the one kind of question from previously. There's a lot of POCs on the AI offerings, and we've been talking about that for the last few quarters. Is there anything large that has hit in terms of contracting yet? Or we still kind of waiting for the really big -- few big referenceable clients to kind of start the cascading?

Shlomo, I think that for me, data-related activities to support GenAI, we do see good progress, as I said before. And I cannot mention, but we have at least a couple of customers that are doing very good progress also from the commercial side, but I cannot name them yet.

Are they though referenceable for other clients and others, I understand you want to talk to us about it, but if someone else called in, are the ones that are far enough that they could -- someone else could talk to.

Yes.

Very good. Thank you.

Thank you.

Thank you. [Operator Instructions] And this does conclude the question-and-answer session of today's program. I'd like to hand the program back to Matt Smith for any further remarks.

Thanks, operator, and thanks, everyone, for joining this evening. If you do have any additional questions, please reach out to us here in the IR group. And with that, have a great night.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.