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Thank you for standing by. Welcome to the Amdocs Limited Fourth Quarter 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions]. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Matthew Smith, Head of Investor Relations. Please go ahead, sir.

Thank you, Jonathan. Before we begin, I need to call your attention to our disclaimer statement on Slide two 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's 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, Shuki will recap our business and financial achievements for the fourth quarter and fall fiscal year 2024 and will update you on the continued progress we have made executing against our strategic growth framework, including generative AI and our continued sales momentum in cloud. Shuki will finish by discussing our financial outlook for the full fiscal year 2025, after which Tamar will provide additional details on our fourth quarter financial performance and forward guidance. And with that, I'll turn it over to Shuky.

Thank you, Matt, and everyone joining us on the call today. Starting on Slide six, fiscal 2024 was another important year in Amdocs' journey, my thanks for which goes to our thousands of employees worldwide who continuously serve our customers with innovative software products and services designed to accelerate their migration and adoption of the cloud, monetize next generation networks, digitally transform the customer experience, and automate their mission critical operations. Despite a continuously challenging industry demand environment the year was notable in several respects. We expanded activities with new and existing customers, winning important deals at AT&T, T-Mobile, Charter, and Rogers in North America, Vodafone

Thank you, Shuky, and hello everyone. Thank you for joining us. I'm pleased with our solid financial results for the fourth fiscal quarter, as detailed on slide 18. Record Q4 revenue of approximately $1.26 billion was up 2.1% year-over-year in constant currency. On a reported basis, revenue increased 1.7% from a year ago and was slightly above the midpoint of guidance adjusting for a positive impact from foreign currency movements of approximately $3 million compared to our guidance assumptions. From a geographical perspective, we delivered year-over-year growth in North America, Europe and Rest of World this quarter. Europe and Rest of World grew 5% year-over-year while North America grew modestly by 0.2%. Shifting down the income statement, non-GAAP operating margin improved to 18.7% in the fourth quarter, up 90 basis points year-over-year and 10 basis points sequentially. Profitability in Q4 was consistent with the high-end of our target range for the year, reflecting the cumulative benefits of disciplined resources management, automation, and tools leveraging AI as well as Generative AI, to drive cost savings and efficiency gains across the board. Interest and other expenses amounted to roughly $7 million in the fourth quarter, including adverse foreign currency movements. On the bottom-line, non-GAAP diluted EPS of $1.70 was in line with the midpoint of guidance and included a non-GAAP effective tax rate of 14.8% which was consistent with our annual target range of 13% to 17%. Diluted GAAP EPS was $0.76 for the fourth fiscal quarter. This included a charge relating to our current restructuring program of approximately $83 million, or $0.64 per share, without which diluted GAAP EPS would have been at the higher end of the guidance range of $1.34 to $1.42. Summarizing our full year fiscal 2024 performance on Slide 19, revenue was up 2.7% in constant currency, consistent with the midpoint of guidance. As Shuky referenced, we achieved strong double-digit growth in cloud, which accounted for roughly 25% of total revenue. On a geographical basis, we delivered record revenue across all three operating regions, with North America up slightly and Europe and Rest of World growing by 3.3% and 8.6% respectively on a reported basis. Highlighting the ongoing diversification of our business and growing traction in international markets, 2 of our top 10 customers were new logos added in the last ten years. Additionally, the number of countries in which we generate annual revenue of more than $40 million has almost doubled over the ten years, some of those added to the list include Philippines, Italy, and India. Overall, we delivered non-GAAP diluted earnings per share growth of 9.0% in fiscal year 2024, consistent with the midpoint of guidance and driven by sustained revenue growth, improved operating profitability and the benefits of our share repurchase activity. Turning to slide 20, managed services revenue was a record $2.9 billion in fiscal 2024, up 1.7% from the prior year and equivalent to approximately 58% of total revenue. During Q4, we signed important cloud migration deals with Vodafone Italy and NTT Infranet, both of which were structured under expanded multi-year managed services engagements. Additionally, we are extending our collaboration with Telia Denmark under a long-term agreement to provide managed services for their billing platform through 2032. This renewal will enhance Telia Denmark's operational efficiency, empowering them to deliver more streamlined services to their customers. Now, turning to the balance sheet and cash flow highlights on Slide 21. DSOs of 74 days increased by 5 days year-over-year and were unchanged sequentially. The sequential increase in unbilled receivables net of deferred revenue was $49 million in Q4, aggregating the short-term and long-term balances. As a reminder, the net difference between unbilled receivables and deferred revenue fluctuates from quarter-to-quarter, in line with normal business activities, as well as our progress on significant, multi-year transformation programs we are currently running in North America. Reflecting strong execution, free cash flow before restructuring payments was $694 million for the full year fiscal 2024, roughly in line with our annual guidance target of $700 million. Including restructuring payments of $75 million, reported free cash flow was $619 million. Overall, we ended the fiscal year with a strong balance sheet, including a healthy cash balance of approximately $500 million, and aggregate borrowings of roughly $650 million. We have ample liquidity to support our ongoing business needs while retaining the capacity to fund our future strategic growth. Turning to capital allocation on Slide 22, we repurchased $120 million of our shares in the fourth quarter and paid cash dividends of $55 million. Overall, we returned a total of $775 million to shareholders through share repurchases and dividends in fiscal 2024, significantly exceeding free cash flow. Looking ahead, we expect free cash flow of between $710 million to $730 million in fiscal 2025, which does not include additional payments we expect to make under our current restructuring program. Our free cash flow outlook equates to a conversion rate of more than 90% relative to expected non-GAAP net income and translates to a healthy free cash flow yield of roughly 7% relative to Amdocs' current market capitalization. Regarding our capital allocations in fiscal year 2025, we expect to return the majority of our free cash flow to shareholders. This includes dividends, for which we are pleased to announce a proposed increase of 10% in our quarterly cash payment to a new rate of $0.527 per share, subject to shareholder approval at the annual meeting in January. Turning now to Slide 23, as mentioned last quarter, we have continued to invest in our strategic priorities while also evaluating ways to optimize our existing portfolio of products, services, and business activities. Following a comprehensive review, we have already started to phase out several low-margin, non-core business activities that are becoming commoditized and hold little potential for long-term value addition or profitability enhancement in the future. These activities were barely accretive to net income. The activities being phased out include, among others. Certain low-margin software and hardware partner activities, including phase out of some on-premises software and hardware infrastructure, and other legacy-type activities, as we focus more on cloud-related infrastructure, and GenAI partner infrastructure. Vubiquity's transactional video on demand business, where we see a decreasing demand, and non-core subscription services. To provide some added context for our decision, Amdocs has historically demonstrated the discipline to optimize our business activities in response to market conditions and the ever-changing telecommunications landscape. During the 2010-2015 timeframe, for instance, we managed the gradual decline of our historical Yellow-Pages directory business which we chose to hold on to while optimizing for positive free cash flow despite a persistent topline headwind. As another more recent example, in fiscal 2021, we announced the divestiture and sale of OpenMarket, a rapidly commoditizing mobile messaging business that we elected to monetize while market conditions permitted. Back to our current decision, we believe phasing out certain activities will reinforce our level of business visibility, including a higher share of revenue from long-term managed services engagements. It will also sharpen our focus on higher-margin strategic priorities like cloud, monetization platforms and GenAI where we are well placed to lead the communications industry through our commitment to innovation. Most of all, we believe this move will substantially improve our profitability, a point I will come back to in a few minutes. Moving to Slide 24, 12-month backlog was $4.06 billion at the end of Q4. Adjusting comparable periods for the phase out of the previously discussed business activities, 12-month backlog was up 2.5% from a year ago, and up $30 million sequentially on a pro forma basis. The sequential increase reflects a combination of strong sales momentum in the quarter and ramp-up of recently won deals within the next 12 months. As I just mentioned, phasing out certain business activities will also improve our overall level of visibility in the year ahead, with 12-month backlog now equating to roughly 90% of forward-looking revenue as compared with the historical average of roughly 80%. Now, turning to our revenue outlook on Slide 25, we are continuing to closely monitor the prevailing level of macro-economic, geopolitical, business, and operational uncertainty, which remains elevated in the current business environment. Thus, the first quarter and full year fiscal 2025 financial guidance reflects what we consider to be the most likely outcomes based on the information we have today, but we cannot predict all possible scenarios. The activities we are phasing out were substantially already ceased in the first quarter, and thus will naturally impact reported revenue for the full year fiscal 2025. To therefore calculate our fiscal 2025 revenue growth versus fiscal 2024 in a comparable manner, we are providing an adjusted pro forma number based on our assessment that revenue from phased out activities was roughly $600 million in fiscal 2024. To assist your modelling, the regional mix of this revenue was similar to the overall company and contributed roughly $150 million per quarter. Overall, we expect revenue growth of between 1% and 4.5% on a pro forma, constant currency basis in fiscal 2025, which does not include the activities we are phasing out. The forecast growth rate midpoint is similar to the prior fiscal year, includes some inorganic contribution, and incorporates another year of double-digit growth in cloud. As to the first fiscal quarter, we expect revenue within a range of $1.095 billion to $1.135 billion, which assumes a favorable sequential impact of $2 million from foreign currency fluctuations as compared to Q4. Moving down the income statement, I am excited to share that we expect non-GAAP operating margins within a new and improved range of 21.1% to 21.7% in fiscal 2025, the midpoint of which equates to a substantial increase of roughly 300 basis points as compared with our full year non-GAAP operating margin of 18.4% in fiscal 2024. Assuming the midpoint of our new fiscal 2025 guidance, we believe our focus on operational excellence, automation and the gradual implementation of GenAI, will support ongoing margin expansion of about 60 to 70 basis points, similar to the size of margin improvement we generated in fiscal 2024. The rest of the margin expansion in fiscal 2025 will result from phasing out of noncore, low-margin business activities. Our margin outlook excludes additional restructuring charges we may take. Below the operating line, we anticipate that foreign currency fluctuations and hedging costs will impact our non-GAAP net interest and other expense line in the range of several million dollars on a quarterly basis. We expect our non-GAAP effective tax rate for fiscal 2025 to be within an annual target range of 15% to 17% for the full fiscal year 2025, and for Q1 specifically, above the high end of our annual range. Bringing everything together on Slide 27, we expect to deliver non-GAAP diluted earnings per share growth of 6.5% to 10.5% in fiscal 2025, the midpoint of which positions us to achieve double-digit expected total shareholder returns for the fifth year running when including our dividend yield of roughly 2.3% based on the proposed 10% payment increase announced today. With that, back to you, Shuky.

Thank you, Tamar. We enter fiscal 2025 with strong 12-month backlog visibility, supported by our unique business model. Across our large serviceable addressable market, and within a challenging demand environment, we continue to see a healthy pipeline of opportunity. And, with our ongoing commitment to innovation and best-in-class execution, we are positioned to maintain a high win rate across strategic domains such as cloud, which continues to grow at double-digit rates, next-generation monetization platforms, and GenAI, where we are starting to shift from production pilots to our first commercial awards. We are also confident in our ability to drive ongoing margin improvement and robust earnings to cash conversion, further supporting our commitment to deliver double-digit expected total shareholder returns in fiscal 2025. With that, we are happy to take your questions.

Certainly. [Operator Instructions]. Our first question comes in the line of Tim Horan from OPCO. Your question, please.

Two questions. How integrated were these businesses with other units and how difficult is it to carve it out or were they fairly distinct? And secondly, the free cash flow is growing the guidance by 3.5%, but earnings are growing 8.5%. Why such a big gap in the two different growth rates? Thank you.

So, Tim, those businesses or activities that we decided to phase out from were not much integrated with other things. And we've been working on that for some time now in terms of how to do it in a best way, of course, that it doesn't interfere with other activities that we have. So, we feel comfortable that this is achievable, and this is why we said we already phased out as we started the fiscal year from these activities. And regarding the free cash flow, look, things are not tracking one-to-one in terms of earning growth to free cash flow, but if you look overall on the health of the business ability to translate earnings to cash, we feel very comfortable looking on the past several years. You can see the good conversion rates, some years have been over 100%, some years in the 90%. So, I don't think it's like a mathematical accurate formula because, of course, we need to build it bottom up based on the plan of record of the different business activities, the projects, the different deals that we have, and we're trying to give the best outlook that we got in terms of what's happening. But I don't think there's any reason for concerning that and I don't think there's any fundamental change in the way we run the business in terms of expectations that we should be tracking on our earnings to cash over time.

And then just can you characterize the backlog, and I guess the overall demand levels out there right now compared to what it was a year or a couple of years ago? Thank you.

Regarding the overall demand environment, I think we've been seeing on the one hand a lot of excitement around the cloud opportunities that we can provide to our customers and it's obviously presented in the very strong double-digit growth we've been doing and cloud activities in the last two years. And to remind you, when we say cloud activities, anything between cloud-native products that are coming out of R&D shop to be deployed to the customer, including gradual modernization to the cloud that we enable our customers to take with upgrading prior product versions of Amdocs, migration into the cloud from different legacy platforms into the cloud platforms and many services of cloud ops that we provide our customers. So it includes many, many aspects, including consulting, how to do it, et cetera. So from that point of view, the demand is strong. In terms of the overall environment, I would say we are not seeing relative to the prior quarters we've been discussing, I don't feel there's a reflection point, but we continue to see a strong pipeline. Still, in some aspects, I would say slow conversion of pipeline to deal, but you can see we have a very strong win rate. We've been winning a lot of deals, both in terms of managed services renewal and expansion, as well as new transformations and new activities, very strong proof of concepts with the GenAI that we start seeing conversion into deals, et cetera.

Thank you. And our next question comes from the line of Shlomo Rosenbaum from Stifel. Your question, please.

Hi, thank you for taking my questions. I just wanted to ask you a little bit tomorrow 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 if I strip out the non-core businesses that you're exiting, that it's really the same. Just trying to think of what the trajectory of the business really is that you're expecting in the guidance.

Thanks for the question, Shlomo. We've been trying to give a comparable number, so that's why when we say 1% o 4.5%, that's after taking out the $600 million of the business we are phasing out from. So from that point of view, we definitely feel that that's like the real expectation of comparing apples-to-apples. The high end of that expects, I would say, better activity in terms of the pace of conversion of pipelines as well to some extent, the backlog while we have such a great visibility of 90% entering the deal. Of course, there are different moving parts in terms of pace of execution, the activities that we're taking into consideration. So that's also a question there.

So is it a, what's it called, 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 --

Yes, when you have something in the pipeline, you seem to close the deal, right? It's not guaranteed. So yes, it's about making certain estimations on how fast we can convert the deals into closure, but it's also to some extent about the pace of taking the back to the things that are in the backlog and recognizing it in the next year. So while we may have a lot, we have a great visibility entering the year, it's based on certain estimations of how the business we already have in hand is going to convert into revenue, right? So we are taking some scenarios on that as well.

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 how, or is it just going to be bumping down somewhere in between quarters?

Yes, we will see acceleration of the revenue through the year. It's hard to predict exactly, the exact trajectory, but yes, overall, this is what we expect.

And then what should we think about in terms of the restructuring costs that we're going to be backing out of or adding back to free cashflow? Is there a number or that you have a line of sight to or a range that we should think about that so we can get actual free cashflow and then, kind of build back to the adjusted free cashflow?

I would expect something in the ballpark of what we've had in 2024. So I would take that assumption into consideration. So we're talking about roughly 70 million, 75 million.

Thank you. And our next question comes to the line of Tal Liani from Bank of America. Your question, please.

I normally don't give compliments 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 comes the tough question. You pay for it now. 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. 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 had 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 kinds of projects and what changes the current weakness that we're seeing?

Hi Tal. I don't think we see deterioration in 2025 compared to 2024, but on the other hand, we don't see yet a recovery of the environment. So far, while we have a lot of opportunities, we're experiencing the same demand environment, which means our win rate is high, but it takes more time to convert deals obviously to real projects and revenue and everything. On the other hand, as we report, we see a lot of growth on the cloud. So on one hand, we have this growth engine which is working extremely well for us. I mean, last year it was 20% of revenue, now it's 25% of revenue. It's going double digits. On the other hand, there is some headwinds in certain respects of legacy systems, as we discussed before. So obviously, this offsets some of the nice activity that we see in the cloud. But overall, to your question, we don't see deterioration in the demand environment. It's relatively similar, and we check ourselves also with other people to see that we are not something else, and everyone pretty much sees the same thing, is that we see relatively the same demand environment, while extremely strong in areas like cloud, monetization, and others, and less strong if you talk about legacy implementation, et cetera. So I think it's pretty much the same environment, and this is why we didn't feel comfortable, although we see a lot of opportunities to change the growth projection for next year.

Tal, I do want to add one point, which is about the amazing success we had in 2024 in renewal and expansion of managerial engagements, which is positioning as a base in a strong way. And given the fact that we're continuing to bring new innovation to the table, and a lot of our success in winning new opportunities within existing customers, as well as new logos, has to do with the fact that, A, the base is secured, and then the fact that we can continue and upsell into these accounts the new innovation we bring. So I think that by that, we are positioned in a very good way. So once the demand environment is accelerating, we are coming with the right offerings, we have the right base of customers, we have secured our long-term agreement, and we can hopefully accelerate the sale of the new things we bring to the table.

But, Tamar, if I take the question, 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, is cloud --

Some of the cloud activities, not all of them are incremental. For example, if we had managed services on-premise, and we do a project and the migration to the cloud, and we are moving from on-premise managed services to cloud, there is some incremental, but you cannot assume that everything is incremental. So you're replacing one type of managed services, which is a more expanded one, but it's not like everything is incremental.

Got it.

And on a set basis, eventually the company is growing, given the phenomena that Shuky mentioned, as well as the fact that we are continuing to add new scope in certain customers. So in some aspects, it's replacing activities we've done before, and in some aspects, it's new activities.

It's a combination of replacing on-premise activities with cloud, and in many cases, some incremental.

And lastly --

Yes.

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 patents? Meaning how do you participate in the cloud patent environment, and how important is that part to your business?

So it's a good question. We have different types of cloud activities. It runs from our activities in T-Mobile and AT&T, which is a complete rip and replace. We are replacing everything in the legacy platform to a completely our next-generation platform, which is cloud-native. And we are bringing to the customer a full model of holistic value proposition from the system, the operation, the cloud consumption, everything. They are just paying us, and we are obviously giving the whole service A to

Thank you. And our next question comes from the line of Tavi Rosner from Barclays. Your question please.

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-pred 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?

We are very confident. First of all, we have an excellent 100% retention of all our customers. And actually, we discussed it before, and our access in the cloud operation, it's a bit, they are even more expanded comparing to the on-premise. And I will give an example. In most of the cases, in the on-premise environment, our managed services operation, well, for the most part, including running our Amdocs system or other systems in the data center. All the data center operations was, in most cases, was running by the customers. When we move to cloud operation, actually, we are taking everything. We are both running our system in the managed services. At the same time, we are running all the cloud infrastructure as part of the managed service. So I would argue that our position in the cloud definitely is not eroded. If any, it's even more stronger.

Thank you. Our next question comes from the line of Ryan Potter from Citigroup. Your question, please.

This is Gates Schwarzmann. I'm for Ryan Potter. I'm 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 already begun, but I'm curious if it's like a gradual phase-out throughout 2025, or is this something that you guys are expecting to happen by a certain point in time? Is there any attempt at selling these businesses prior to phasing them out? And to what degree is true cash flow being impacted by these phase-outs? Thank you.

I will start. First of all, it's starting immediately. It started in our first quarter in 2025, so we are implementing this immediately. The whole phase-out process is a result of a very slow, I would say, methodological process that we've gone through throughout the second part of 2024, as we prepare for 2025. And when we talk about the business when we are phasing out, it's clearly impacted by the strategic priorities of the company. When we move much more to cloud activities and cloud operations, and we are actually phasing out on-premise activities, when we move to support more type of data, generative AI, and this type. So actually, we did not see any point to continue to hold a low-margin business, which is a lower visibility, low margin. There's not much more on-premise and legacy activities, and that we thought we didn't see any way to improve the portability or to make it much more strategic. So the priority was on the strategic domain of the company. This is where we are investing, and this is where we want to make sure that we continue to grow. And this was the rationale for the phase-out. Tamar, do you want to?

I just want to say that, as we explained through some historical examples, when we decide that there is a business that is not going to be part of our future strategy, naturally, we ask ourselves whether we want to keep it and milk it for margins and cash. Do we want to sell it, or do we just want to cease doing it? And given these kind of activities that we are talking about now, unlike maybe other decisions we had in the past, in this case, we decided the best approach would be to stop doing it, and we prepared ourselves for doing it, of course, making sure that we do it in the right way while taking into consideration all aspects, and this is how we got to the conclusion. So it's not something that makes sense to sell in any way.

And it resulted, I think, as we discussed, with a new milestone in the stability, which is over 21%.

Got you. And are there any opportunities, like additional opportunities here to optimize the portfolio that you guys are evaluating? Is that possible, maybe, to near-term?

I think any healthy company should ask that question on an ongoing basis, right? So never say never. There isn't anything imminent that we can talk about, but it's something that we need to assess all the time and ask ourselves that question. What do we want to accelerate? What do we want to keep doing versus what do we need to stop doing? But it's not that there is such a big announcement next week that we forgot to mention that.

Got you. Yes, that makes sense. And the last question for me is just on some of the business that we're phasing out. It seems like some of these 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 has your approach for M&A, as you enter 2025, changed at all, or really capital allocation more broadly?

Yes, but just to put some framework to that, the one piece there that is related to M&A was something that we've done in 2018, so it's quite a while ago, and it's a specific piece of it that has to do with video on demand. So it's not that the whole business there is changing. It's just that speed on demand became something that is really reduced and not relevant as it was in the past. But back to M&A, we're actually very happy with the M&A we've done. When you look on some early success signs of recent M&A, like in the case of TEOCO, which is around service assurance, we've won a big deal of NextGen OSS in APAC, as we mentioned last quarter, in which the offering of TEOCO has been a major piece. We talked about the large deal of AT&T, of mainframe to cloud, in which capabilities we acquired from the Astadia deal, a deal that we've done last November, was a part of. So we're actually pretty pleased with the recent M&A activities that we've done, and we will continue to look on the right opportunities. There isn't anything to talk about in terms of change of M&A strategy. We've been continuing to do cap-on deals, where we may find opportunities to enhance our offering, original spread, et cetera. So I think you should consider that approach as something we will move on and do also in the future.

Thank you. And our next question comes from the line of William Power from Baird. Your question, please.

I guess maybe a couple of follow-ups. I guess, Tamar, it'd be great if there was 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, just let's 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.

So I will start with generative AI question. I think we will see it accelerate throughout the year. And maybe when we talk about generative AI, there are different layers or domains that we see potential revenue acceleration. There is the high-end generative AI, when we partner with NVIDIA and OpenAI and others, and we create the agent or the super-agent and the capabilities. But as we discussed before, generative AI, everything is about data. And actually, the whole plumbing that you need to do under the hood to allow the models to be accurate and to be efficient, so it's a very big data play. So we see a lot of potential data play. For example, we announced that we are collaborating with T-Mobile, with OpenAI and T-Mobile, and they are leveraging our data platform, it's called DataONE, to be able to provide all the relevant data in real time, which is relevant for all these activities. So we won a couple of deals, one of them we could not announce this quarter because we didn't get approval. So we see, I believe that throughout the year, when more and more proof of concept become real projects, and we see more adaption to our platform in the data domain, we see acceleration in revenue. Now I forgot the first question.

Yes. And I'll go back to the question about the inorganic contribution to the growth rate. So the majority of the growth is expected to be organic. Yes, we did factor in some impact also from M&A that will come through the year. And from margin point of view, definitely organic, based on a lot of activities we do around operational excellence, automation, the tools, the GenAI, et cetera, as well as the change in the business mix, given the phase-out that we discussed.

Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Matthew Smith for any further remarks.

Yes, thanks, Jon. And thanks, everybody, for joining us this evening. If you have any additional questions, just reach out to us here in the IR group. And with that, have a great night. Thanks.