Ladies and gentlemen, thank you for standing by and welcome to the Q1, 2021 Amdocs Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

[Operator Instructions] I would now like to hand the conference over to your speaker today, Matthew Smith, Head of Investor Relations. Please go ahead..

Thank you, operator. Before we begin, I would like to point out that during this call we will discuss certain financial information that is not prepared in accordance with GAAP.

The Company's management uses this financial information in its internal analysis in order to exclude the effects of acquisitions and other significant items that may have a disproportionate effect in a particular period.

Accordingly, management believes that isolating the effects of such events enables management and investors to consistently analyze the critical components and results of operations of the Company's business and to have a meaningful comparison to prior periods.

For more information regarding our use of non-GAAP financial measures, including reconciliations of these measures, we refer you to today's earnings release which will also be furnished with the SEC on Form 6-K. Also, this call includes information that constitutes forward-looking statements.

Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be obtained or that any deviations will not be material. Such statements involve risks and uncertainties that may cause future results to differ from those anticipated.

These risks include, but are not limited to, the effects of general economic conditions, the duration and severity of the COVID-19 pandemic, and its impact on the global economy, and such other risks as discussed in our earnings release today and at greater length in the Company's filings with the Securities and Exchange Commission, including in our Annual Report on Form 20-F for the fiscal year ended September 30, 2020 filed on December 14, 2020.

Amdocs may elect to update these forward-looking statements at some point in the future. However, the Company specifically disclaims any obligation to do so.

Participating on the call with me today are Shuky Sheffer, President and Chief Executive Officer of Amdocs Management Limited and Tamar Rapaport-Dagim, joint Chief Financial and Operating Officer. And finally, a copy of today's prepared remarks will be posted on the Investor Relations section of Amdocs' website following the conclusion of this call.

And with that, I'll turn it over to Shuky..

from Internet connectivity and accessibility, to digital literacy and advanced skills training. For example, we are connecting four schools in Kenya to the Internet, giving the opportunity to more than 7,000 children to use this window to the world in collaboration with Safaricom foundation.

In addition to donating thousands of computers to under-represented populations, many of our employees are also teaching different populations how to access the Internet, providing tailor-made digital skills training, and helping future generation to become more employable in the tech sector. We are committed to the journey toward digital inclusion.

We will continue to serve societies where they need us the most. With that, let me turn the call to Tamar for her remarks..

Thank you, Shuky. Since we completed the divestiture of OpenMarket on December 31, 2020, our reported numbers for income statement and cash flow in the first quarter fiscal 2021 still include OpenMarket, but the reported balance sheet as of December 31, 2020 and the 12 months backlog metric already excludes OpenMarket.

In order to provide you with a sense of the underlying business trends, my comments today will refer to certain financial metrics on a pro forma basis, which exclude the financial impact of OpenMarket from the current fiscal year and comparable fiscal year period.

First fiscal quarter revenue of $1.086 billion was above the midpoint of our guidance range of $1.055 billion to $1.095 billion, both on a reported and constant currency basis.

Revenue includes a positive impact from foreign currency fluctuations of approximately $5 million relative to the fourth fiscal quarter of 2020 and $6 million relative to guidance. On a year-over-year basis, our first quarter revenue grew by 4.3% as reported and 3.7% on constant currency.

Our first fiscal quarter non-GAAP operating margin was 17.3%, above the midpoint of our long-term target range of 16.5% to 17.5% and slightly better on a sequential and year-ago basis. Non-GAAP operating margin was consistent with our guidance that we will protect profitability despite the COVID-19 related challenges.

Below the operating line, non-GAAP net interest and other expense was $5.3 million in Q1, the mix of which includes interest expense related to our short-term borrowings and 10-year bond, and the impact of foreign currency fluctuations.

For forward-looking purposes, we expect that foreign currency fluctuations will continue to impact our non-GAAP net interest and other expense line in the range of a few million dollars on a quarterly basis. Diluted non-GAAP EPS was $1.16 in Q1, above the high-end our guidance range of $1.09 to $1.15.

Our non-GAAP effective tax rate was 16.3% in the first fiscal quarter, consistent with our annual target range of 13% to 17%.

Diluted GAAP EPS was $2.28 for the first fiscal quarter, well above the high-end of our guidance range of $0.85 to $0.93 due to a net gain of $1.42 per diluted share realized on the divestiture of OpenMarket, which was not included in the original guidance for the quarter. Free cash flow was $366 million in Q1.

This was comprised of cash flow from operations of approximately $416 million, less $50 million in net capital expenditures and other. Free cash flow reflected a healthy level of cash collections with our customers and included the benefit of the new multi-year strategic agreement we signed with T-Mobile during the first fiscal quarter.

Normalized free cash flow was $385 million in the first fiscal quarter. Please refer to the reconciliation table provided in our Q1 earnings release for an explanation of the difference between normalized and reported free cash flow in the quarter and for past periods.

DSO of 78 days decreased by 10 days year-over-year and increased by 3 days as compared to the prior fiscal quarter. We remind you that DSO's may fluctuate from quarter to quarter. As of December 31, total deferred revenue exceeded total unbilled receivables by $140 million.

This reflects a substantial increase in the total deferred revenue of $224 million as compared to the fourth fiscal quarter of 2020, slightly offset by an increase in total unbilled receivables of $10 million.

The increase in total deferred revenue is primarily related to the new T-Mobile agreement, as well as many other new activities signed during Q1. Changes in unbilled receivables and total deferred revenue are primarily due to the timing of contract-specific milestones.

Moving forward, you should expect these items to fluctuate from quarter to quarter in line with normal business activities. Moving on, our 12-month backlog was $3.49 billion at the end of first fiscal quarter and reflects already the exclusion of OpenMarket following its divestiture as of December 31.

On a pro forma basis, excluding the financial impact of OpenMarket, our 12-month backlog had a record increase of approximately $150 million sequentially from the end of the prior quarter and was up roughly 5.6% year-over-year.

As a reminder, we believe our 12-month backlog continues to serve as a good leading indicator of our forward-looking revenue. I am pleased to report another record quarter from managed services arrangements which comprised roughly 57% of total revenue.

This performance reflects high renewal rates, the adoption of our managed transformation model and continued expansion of activities within existing customers. To clarify, OpenMarket business was not classified as Managed Services and therefore its exit will not impact moving forward our revenue from managed services.

Our cash balance at the end of the first fiscal quarter was approximately $1.5 billion, including aggregate borrowings of roughly $750 million and gross proceeds of roughly $300 million realized from the divesture of OpenMarket.

Given our plans to use the majority of OpenMarket consideration for accelerated share buyback in the next several months, we expect our cash balance to be lower at the end of fiscal Q2.

We remain comfortable with our balance sheet and believe that we have ample liquidity to support our ongoing business needs while retaining the capacity to fund strategic growth investments as and when the right opportunities arise. Additionally, we are committed to maintaining our investment grade rating.

Now turning to the outlook, the prevailing level of macro-economic and business uncertainty surrounding the magnitude and duration of the COVID-19 pandemic remains elevated.

The midpoint of our revenue 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, and we remind you that our outlook may be impacted materially as our customers continue to evaluate their strategic business priorities and future pace of investment.

We expect revenue for the second fiscal quarter of 2021 to be within a range of $1.015 billion to $1.055 billion. Our Q2 revenue guidance anticipates a positive sequential impact of approximately $4 million from foreign currency fluctuations.

Regarding the full fiscal year 2021, we expect pro forma revenue growth of approximately 3.5% to 7.5% year-over-year on a constant currency basis, adjusting for OpenMarket. This outlook is in line with our previous guidance for expected pro forma revenue growth on a constant currency basis.

On a reported basis, we are adjusting our full year fiscal 2021 revenue outlook to reflect the divestiture of OpenMarket as of December 31, meaning that OpenMarket is included in the first fiscal quarter numbers only.

We therefore expect reported full year revenue growth in the range of negative 0.3% to plus 3.7% year-over-year as compared with our previous range of 4% to 8% year-over-year.

The adjusted revenue outlook on a reported basis anticipates a positive impact from foreign currency fluctuations of approximately 1.2% year-over-year as compared to a positive impact of 0.5% previously.

As a reminder, our initial outlook at the beginning of fiscal 2021 had anticipated revenue growth of 3.5% to 7.5% on a constant currency basis, including a full year contribution from OpenMarket.

Additionally, we expect the ramp-up of customer activity to contribute to an acceleration in the rate of year-over-year revenue growth on a pro forma basis in the fiscal second half. Moreover, we expect all three geographical regions to deliver pro forma revenue growth in the full year fiscal 2021.

As a final point to further help with your modeling, we remind you that we originally planned for OpenMarket fiscal 2021 annual revenues in the range of approximately $300 million which represented more or less the same growth rate year-over-year to the rest of the company.

OpenMarket generated roughly 75% of its revenues from North America with Europe accounting for the balance. Regarding profitability, we now anticipate quarterly non-GAAP operating margins to track roughly in line with high-end of the annual target range of 16.5% to 17.5%.

This improvement relative to the levels of the past several quarters reflects the benefit of ongoing cost and efficiency improvements and the divestiture of OpenMarket for which operating margins were below the corporate average, tracking in the low double-digits.

We remain focused on protecting our profitability while maintaining strong execution during the ongoing pandemic and increasing R&D investments to support our customers and future growth strategy. We expect the second fiscal quarter diluted non-GAAP EPS to be in the range of $1.09 to $1.15.

Our second fiscal quarter non-GAAP EPS guidance incorporates an expected average diluted share count of roughly 132 million shares. We excluded the impact of incremental future share buyback activity during the second fiscal quarter, as the level of activity will depend on market conditions.

Regarding the full year fiscal 2021 outlook, we expect non-GAAP diluted earnings-per-share growth of 5.5% to 9.5% on a pro forma basis, which is slightly better than the original pro forma guidance of 5% to 9% we provided for the year. On a reported basis, we expect to deliver full year diluted non-GAAP EPS growth of 4% to 8% year-over-year.

This outlook includes the impact of OpenMarket for the first quarter only and compares with our previous outlook of 5% to 9% year-over-year which included OpenMarket for the full year of fiscal 2021. We expect our non-GAAP effective tax rate to be within our annual target range of 13% to 17% for the full fiscal year 2021.

I am pleased to report we are raising our outlook for normalized free cash flow for the year 2021 to approximately $800 million compared to $620 million previously.

The new outlook is equivalent to approximately 8% of Amdocs' current market capitalization and represents a conversion rate of roughly 130% relative to our expectations for non-GAAP net income. As a reminder, we expect free cash flow to convert at a rate more on par with our expected non-GAAP net income over the long term.

Along similar lines, we are raising our outlook for reported free cash flow for fiscal year 2021 to approximately $600 million as compared to roughly $470 million previously.

Our reported free cash flow outlook anticipates expenditures of roughly $140 million in relation to the development of our new campus in Israel, $40 million of capital gains tax to be paid in relation to the divesture of OpenMarket, and other items.

As previously stated, we expect fiscal 2021 to be the peak year of capital expenditure for the new campus. Additionally, the gap between expected free cash flow on a normalized and reported basis has widened, primarily due to the tax to be paid on the capital gain of OpenMarket.

Additionally, we remind you that free cash flow in the second fiscal quarter is typically lower due to the timing of annual bonus payments. During the first fiscal quarter, we repurchased $90 million of our ordinary shares under our current authorization.

Regarding our capital allocations plans for the rest of fiscal 2021, we expect to return cash to shareholders in the form of our regular quarterly dividend and share repurchases at levels roughly similar to that of fiscal Q1, subject to factors such as the status of the COVID-19 pandemic, the outlook for M&A, financial markets and prevailing industry conditions.

In addition to our regular quarterly share repurchases, we also plan to return the majority of the net proceeds from OpenMarket to shareholders by way of our share repurchase program over the course of the next several months.

As of December 31, we had roughly $588 million of authorized capacity for share repurchases with no stated expiration date, which we will execute at the Company's discretion going forward.

Overall, we are on track to deliver accelerated pro forma revenue growth, improved profitability and better-than-expected free cash flow in fiscal 2021, the combination of which supports an outlook for total shareholders returns of nearly 10%, including the 7.5% midpoint of our pro forma non-GAAP earnings-per-share growth guidance, plus our dividend yield.

As a final comment, I am proud to say that Amdocs has been recognized once again for its commitment to sustainability and corporate responsibility by earning a place on the prestigious S&P Dow Jones Sustainability Index for North America for the second consecutive year.

I would like to join Shuky in acknowledging our employees for their dedication, commitment to best practices and ability to work together with our partners and customers, without which this achievement would not have been possible. With that, we can turn it back to the operator and we are happy to take your questions..

Thank you. [Operator Instructions] Our first question comes from Ashwin Shirvaikar with Citi. You may proceed with your question..

Hi, Shuky. Hi, Tamar. Good quarter, congratulations. And I wanted to start off maybe with a question on T-Mobile. First, it's great that we step beyond any contractual uncertainty that might have existed there due to the merger.

But does the new contract supersede the separate contracts that you had before, is it basically incremental functionality, is there a move to eventually convert the full relationship to a managed services deal just like on the Sprint side, any thoughts on the evolution of this relationship?.

Hi, Ashwin. The contract covers many activities.

As you mentioned, actually [indiscernible], managed services in Sprint, we have managed services in metro and of the T-Mobile and we have other managed services activities also on the Magenta brand, but the overall contract or agreement is comprised of transformation to the new Amdocs platform, both consumer and business.

It also includes managed services in the new form of cloud operation and a lot of activities that should support the complex integration that T-Mobile and Sprint are going to execute.

So overall, I believe that you can see some pickup in activity during probably in the next couple of years and we believe that there was a lot of activities for us to support T-Mobile in many activities we do.

So overall, we are very positive of this agreement and we believe definitely we can protect our activity and actually enhance of activity with strategic relationship that we formed which is translated to this new agreement..

Got it, got it. And then the other question, actually couple of clarifications. You had good cash flow in the quarter. I did not fully understand why this should be a benefit from the T-Mobile contract signing. Did they pre-pay you for services.

And if so, can you size that impact? And then the clarification is on the net proceeds from OpenMarket for buyback.

I know you don't normally put buyback in your forward expectation, but since you explicitly said in this case that you will use it for buyback, are you putting that in your EPS?.

So, Ashwin, on the first point, the collection this quarter has been very strong in general and the T-Mobile agreement also contributed by the fact that there was some payment related already to this new agreement given some initial milestone in this multi-agreement, but I have to say I was pleased with collections in general, not just related to T-Mobile.

As for the second question on the buyback, you're absolutely right that we are expecting to take the majority of the net consideration for the OpenMarket sale and put it into play in the next several months in buyback.

We just don't want to get into the technicality of including this already in the Q2 EPS guidance, but within the overall year guidance of earnings per share, it is expected.

And actually you know just given how it works and in the fact that any buyback is impacting EPS through weighted average share count anyway and also the impact of this activity will be in play in the second fiscal half of the year..

Understood. Thank you. Congratulations again..

Thank you..

Thank you..

And your next question comes from Tom Roderick with Stifel. You may proceed with your question. [Operator Instructions].

There we go, let's try that again. So, hi Shuky, hi Tamar, thanks for taking my question. Congratulations on a nice start to the year. So I'd love to kind of go a little step further just on -- not just on T-Mobile, but more broadly on what you're seeing with 5G adoption of net new services and how carriers are thinking about that.

So you have a little bit of visibility into it in the North American market and what your customers are thinking, talking about, how is that translating into demand for Amdocs, demand for net new services. And then Shuky, can you kind of give a little bit of an offset in terms of how that impacts the historical NFV vision.

I would love to hear if that's eating into that at all or if it's purely complementary. Thanks..

Okay. So, NFV, actually in order term, I mean it's evolved today to next generation networks which we have a lot of activity and we are pretty much in line with our next generation OSS offerings.

But back to your 5G question, all our customers, North America, are now building the next generation 5G products, both for consumers and both for business, B2B.

Our offering actually addresses the whole variety of system that needs to support this from -- obviously from the ordering system, from catalog, from a challenging in rating and all the monetization activity and also in the network domain. So I think that -- and everything but basically is on the cloud.

So I think that if you look at our strategy, it's actually to support the 5G offering on the cloud. It's very much in line with ongoing in North America, which is leading the world in their 5G adoption. So I think that we are with the right time, with the right offering and every one of our customers right now in North America investing in 5G..

Let me just add another point on that, in the other markets, in the other side of the world which is South Korea, definitely leading the way on 5G as well. We've also been very successful both with Korea Telecom and a more recent win with LG Uplus, gaining a lot of experience and good references from these wins as well..

And back to your NFV comment, so now we see a lot of demand for our network offering.

As I said today, it's called next-generation OSS, is orchestration, services on integration, everything cloud native, and as I think that now the 5G network offers so much capabilities for monetization, the integration between now BSS and OSS system is very relevant..

Wonderful, really helpful. And Tamar, this is probably still a little bit early an influx given the world is changing so much right now.

But as you put together, as you complete a new campus, a beautiful new campus and in the middle of all that the world is changing with respect to where employees can sit in the advancements of virtual and work from home environment.

Does any of what we've seen in the last year changed the way you think about the long-term margin structure and where your employee sit or do you expect that everyone will sort of be back in the office by the end of this year whenever the -- when the time is right?.

So in general we believe that working from the office provides a lot of advantages that are missing when everybody is at home, but naturally we believe and felt the same before COVID, the some kind of flexibility of an hybrid environment is advisable and good for employees in creating the good balance.

Remind you, in January of 2020 before we, also you, COVID is coming up, we actually moved to work, one day a week from home globally and we now with all the learnings and experiences, of course with this recent year, it forced on us the pandemic, we realize that there is an opportunity to build an hybrid model where we give flexibility to employees to work some days from home but naturally want them to come back to the office.

Now, relative to timing, that depends in each country and each region, sometimes even specifically to a city what's the overall situation because of course we are keeping the first priority the health and safety of our employees. So I cannot commit relative to timing when we are going back to this new normal situation.

Connecting it back to your point about the capital, we built a lot of flexibility in the design of thinking in this campus in terms of seating layout, in terms of how much we can establish to others because naturally we built a campus that is there to stay for decades, not just for the next year or two. And so we talked about all those things.

And given the different learnings in the last year, we've added of course different points of consideration to how we are thinking about seating layouts and things like that, but I think the fact that we are actually going to own the campus gives us much more flexibility to decide how much space we use versus sublease vis-a-vis the current situation where we are a tenant ourselves..

Fantastic. Really good. I appreciate it. Thank you, guys..

Thanks, Tom..

Thank you. Our next question comes from Shaul Eyal with Oppenheimer. You may proceed with your question..

Thank you. Good afternoon, Shuky, Tamar and Matt. Congrats on the ongoing healthy execution. My first question is [indiscernible] on T-Mobile from that expansion.

When you look at the number of subscribers that you've address several years ago when you compare that, maybe even contrast that with the recent expansion, is there a significant number of subscribers addition under the currently expanded engagement?.

Shaul, I don't think the thing here is the number of subscribers, it's more the debt of the adoption of -- from NextGen product portfolio and the fact that we are going to support a wider footprint in cloud, managed services rather than counting subscribers and the agreement is taking us to the next level, both in terms of this footprint as well as positioning us for further growth given the strategic relationship that is now enforcing this agreement..

Got it, got it. That is fair enough. And I have an additional question. So now that OpenMarket is fully divested, can you talk to us about the OpenMarket contribution that you've had during fiscal '20.

I know you might have a little bit to it being about one-time revenue give or take, but wanted to see if you could provide us with slightly more color about it now that you have it in the rearview mirror..

Yes, so certainly we were expecting roughly $300 million, which is 1x of the consideration that we received in 2021 and it was moving more or less like the rest of the company. So if you take it back to 2020 number, roughly $280 million.

So when we look now and carving it our, I think it's very of course kind of natural that we were trying to get more color about what the pro forma numbers look like. So people can understand the underlying business and direction which is very positive.

And every quarter during 2021, since the reported numbers will be apples and oranges, we will continue to give pro forma color just for people to understand the rate trends that's going on. So I hope that's going to be helpful..

Got it, got it. Awesome. Thank you so much. Congrats again..

Thank you..

Thank you, Shaul..

Thank you. Our next question comes from Jackson Ader with JPMorgan. You may proceed with your question..

Excellent, thanks for taking my questions guys. The first one is on Openet.

Few charging 5 or I'm sorry, charging 5G wins announced in the last couple of quarters and I'm just curious were these deals in the Openet's pipeline prior to the acquisition announcement are being closed or these are actually brand new deals that Amdocs has kind of sourced alongside Openet?.

I think it's pretty much, almost half and half, half of the deals were actually started -- the sales cycle started when Openet still was a stand-alone company.

But many deals were added when they were joined Amdocs and we are able to take them to a lot of customers worldwide and I can tell you that now they -- actually the pick up that we see all over this quarter and for the rest of the year is coming from the new pipeline, it does not exist in the Openet stand-alone pipeline..

Okay.

And then, just another follow-up on the T-Mobile announcement, you guys have talked a lot in the past about kind of the idea that Amdocs and the amdocsONE platform and different things that you can do being layered on top of maybe some legacy systems and then ripping and replacing those legacy systems is kind of on to come in the next quarters or years down the pipe.

Is that a similar way that we should be thinking about this particular partnership?.

No, this is more like -- the idea is to take the full amdocsONE platform, build it and then slowly migrate all the consumer and B2B customer of T-Mobile to this new platform..

Okay. I like it. Thank you..

Thank you. Our next question comes from Will Power with Baird. You may proceed with your question..

Okay, great. Thanks, yes. Congratulations on the results. I guess first question pertains principally to AT&T, I guess maybe to a degree to T-Mobile, but we just had a very big spectrum auction in the U.S.

and I'd love to get kind of your perspective on how you assess any potential risks from slower spending as that comes together and the carriers particularly AT&T figures out how it went to deploy that spectrum versus the medium and longer-term opportunities for you all around network planning with that spectrum, 5G opportunities, et cetera.

Any kind of early thoughts as to how that could impact the AT&T opportunity?.

Actually, I think it is the opposite. It means that our customers all of them are fully focused on 5G deployment. In order to deploy 5G, definitely you need spectrum to be the network, but the mass upgrades, older BSS system, they'll charging a policy system.

So I think it's another evidence that all the North America carriers are committed to the 5G journey and I think it's actually good news for us because it made a deal while there are others in the network, we must also upgrade the IT systems, the BSS systems policy charging and everything that touches 5G..

Okay. Yes, that makes sense. All right. I also just wanted to ask, Tamar, really nice growth in backlog, any other color you're able to share that, how much of that perhaps was related to T-Mobile versus other factors you might call out..

T-Mobile was a significant number, but definitely if you look on just even the wins we could announce, not to mention many others that we were not able to mention by name, and it was a very stronger signing quarter. So I'm very pleased with many first of all new logos.

We mentioned, for example, Wind Tre, they are one of the largest operators in Italy. And we've been speaking for a while about the success in Italy, a country, just several years ago we didn't have any business in and that we signed Vodafone Italy and then Telecom Italia and Sky, Italy, and now Wind Tre. So we are very happy about the momentum.

North America, we gave a couple of examples, Charter and we gave an indication that we signed another important deal in North America with a Pay TV player that is moving to 5G. We signed another prepaid customer with 5G policy. So really it's been a great quarter. Yes, T-Mobile contributed definitely but there are many other deals..

Okay, thank you..

Thanks..

Thank you. [Operator Instructions] Our next question comes from Tavy Rosner with Barclays. You may proceed with your question..

Hi, this is Chris Reimer on for Tavy. Thank you for taking my question. Just looking at managed services and last year being a record year and the strong performance this quarter, what would you say with the driving forces behind customers who choose the managed services..

I think the driving force is that, actually managed services is evolving, the new name is cloud operation or cloud managed services operation, and that in all the new deals and T-Mobile is a good example, it's -- the deal many aspects, many pillars, one of them is the deployment of a new transformation to our new amdocsONE platform but to operate the new cloud environment in the cloud with the services operation.

So I think that the same value that we are able to prove in the managed services, which was on premise, we can even have a bigger value in the cloud operation.

And I think giving the full accountability that we have, that's always was the main differentiator for us in the managed services, we see the same phenomenon or the same differentiation in the cloud managed service operation, and this is why we expect this to continue to grow..

Okay.

And can you talk about the traction you're seeing for Amdocs media and some of the content services that you provide?.

When we look on the media space, to remind you, when we entered these adjacent markets we saw a three-pronged strategy. One was to take the media business we acquired and broaden it internationally.

The beachhead at the time in our acquisition strategy was Vubiquity, we mainly focused back then in North America and we've had the major success in taking into many new logos, a new off in Latin America, in APAC et cetera. The second layer was the convergence that is happening between the connectivity and entertainment.

We've seen many communication service providers are being entertainment services was of through M&A or launching over the top brands and we've seen there, the success-driven. The strong layer which is the slower to evolve, from our point of view is to penetrate the [indiscernible] media companies as they go directly to consumers.

We are seeing this phenomenon today, it is happening with the big guys, but we're also targeting a mid-size media companies as they are moving forward and providing the right customer experience as they're launching their brand to consumers, and we are hoping to see that third-party evolving as well from our point of view.

Now, COVID has put obviously some challenges on everyone's producing content business given there is more difficult in launching new productions and new content into the market, but we believe that this will be obviously overcome as soon as the pandemic is over and also new -- and more new content will be launched into the market, which is always positive for the media business..

Okay, thank you. That's very helpful..

Thank you..

Thank you. And I'm not showing any further questions at this time, I would now like to turn the call back over to Matthew Smith for any further remarks..

Yes, thank you very much everyone for joining our call this evening and for your interest in Amdocs. We look forward to hearing from you in the coming days. If you do have any additional questions, please call us in the Investor Relations group. And with that, have a great evening and we will finish the call. Thanks..

Thank you ladies and gentlemen. This concludes today’s conference call. Thank you for participating. You may now disconnect..