Good day, ladies and gentlemen. And welcome to the First Quarter 2018 Amdocs Earnings Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct the question-and-answer session and instructions will be given at that time [Operator Instructions]. As a reminder, today's conference is being recorded. I would now like to turn the call over to Mr. Matthew Smith, Head of Investor Relations. Sir, you may begin.

Thank you, Chelsea. 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 effect 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 and such other risks as discussed in our earnings release today and at greater length in the Company’s filings with the SEC, including our Annual Report on Form 20-F for the fiscal year ended September 30, 2017, filed on December 11, 2017. 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 Eli Gelman, President and Chief Executive Officer of Amdocs Management Limited and Tamar Rapaport-Dagim, Chief Financial Officer. And with that, I’ll turn it over to Eli.

Thank you, Matt, and good afternoon to anyone joining us on the call today. I am pleased to report the solid start to our fiscal year. First quarter revenue was consistent with the midpoint of our expectation adjusting for currency. Our operating profitability was stable and we delivered another quarter of record 12 months backlog as we levered our reputation of bringing value through consistent project delivery and new product innovation. In addition to our tight execution, we are committed to investing in the growth engines of the future. An important compounds of which includes innovation we bring through our acquisition strategy. Along these lines, we are excited to announce a signed agreement to acquire Vubiquity, a leading provider of premium content services and technology solutions that will further expand our capabilities in the world of media and entertainment, which is increasingly converging with our traditional and domain communications. I will explain the strategic rationale for this move later in my remark. But let me first review our quarterly activities on a regional basis. Beginning with North America, first quarter performance was in line with our expectations, primarily in relation to the slowdown in agency discretionary spending we anticipated and shared with you last quarter, and the positive momentum we continue to see in Pay TV. In this context, we added to our growing list of Pay TV related projects with a new award of Rogers Communications in Canada to provide its next-generation customer experience platform. Our integrated and scalable software solution will enable Rogers to deliver consistent and high-quality customer experience with the latest innovation in voice, video data and other connected devices in the home. Regarding the outlook in North America, let me first comment on AT&T where the overall level of spending in the next two quarters…

Thank you, Eli. First fiscal quarter revenue of $978 million was at a high -- at the midpoint of our guidance range of $950 million to $1 billion, after adjusting for a negative impact from foreign currency fluctuations of approximately $2 million relative to the fourth fiscal quarter of 2017. During Q1 to support our digital strategy, we acquired Project 202, a leader in experience driven software design and development, based in the U.S. that helps large-scale organizations like Southwest Airlines and Mercedes-Benz Financial Services to navigate complex digital transformations. Project 202 was acquired for $54 million in cash and the revenue contribution for the quarter was immaterial. Our first fiscal quarter non-GAAP operating margin was 17.3%, an increase of 10 basis points year-over-year and in line with the higher end of our long-term target range of 16.5% to 17.5%. Below the operating line, non-GAAP net interest and other income was $0.1 million in Q1, primarily reflecting foreign exchange movements. For forward-looking purposes, we continue to expect non-GAAP net interest and other expense in the range of few million quarterly due to foreign currency fluctuations. Diluted non-GAAP EPS was $1.06 in Q1, above the guidance range of $0.94 to $1. Our non-GAAP effective tax rate of 8.7% in Q1 was better than our expected annual range of 13% to 17%, primarily due to the release of tax reserve connected with the funding decisions for the construction of our new campus in Israel. Additionally, our diluted non-GAAP EPS excludes an immaterial one-time benefit relating to the new U.S. tax legislation, which took effect in December. Diluted GAAP EPS was $0.80 for the first fiscal quarter, above the guidance range of $0.66 to $0.74, including the benefit of a lower GAAP effective tax rate. Additionally, as we look at GAAP EPS includes…

[Operator Instructions] And our first question comes from the line of Tom Roderick with Stifel. Your line is open.

Matt van Vliet for Tom, thanks for taking my questions. I guess, really wanted to dig into some of the North American trends and how you see the next generation possibilities outweighing some of the declines in discretionary spending for may be some of the legacy solutions at your North America carriers.

So it’s not only own up that is going to compensate for some of this discretionary. First of all, we see a strong demand on the Pay TV industry in North America and we basically now won six out of the six bids that have been out there in the last probably year and half. And as we execute these projects, we see it as a growth component in our North American market. Then as they comes on top of it then it’s true to add it up to like Bell Canada and AT&T of course but also to Comcast and other carriers that are participating in this trend. And I would say that we have a unique proposition, not only that we are one of the co-creator of ONAF, we're also the only people that have experience in executing and turn it into reality and into production. And we are very pleased with the rate of success that we have with the use cases. You have to remember that a year, year and half ago there was still a debate whether NFV is reality and whether it can be done and is it feasible. I think all of that is behind us and behind the industry. Last but not least, when we're getting into the new dynamics of the industry, which is completely unknown right now and I'm not guiding to that but I'm just saying that the level of entropy and the level of dynamics is increasing. When you about T-Mobile going into video to layer 3 and then DISH going into mobility and Comcast going to the mobility and strategy, and they have many other components. And on top of all that, the new acquisition will allow us to get and participate into entertainment and media space and all of the above are converging. So this level of dynamics is good for business, that’s kind of the description of the dynamics in North America.

And then I guess as a follow-up to that, looking at potential build out of a 5G network and some report for last few days that there is potential for the administration to try to push through maybe a national network instead of the carriers building it out. How might you play into that overall network build-out and would one method of build out versus the other, whether it’s the carriers versus maybe more government led benefit Amdocs more or less?

So we are not so sensitive to whether the industry will build it or the government will build it. And this is much more a concern for the network equipment providers, the people that build the base stations and some of the back haul. We have quite a lot of tools to manage this deployment and we can sell it to either or to any builder, let's put it this way. And mostly, we want 5G network elected because we are coming after this network and we monetize it. We have the carriers to offer new services and monetize the 5G network. So we are much more sensitive whether there will be an 5G network or not, and we believe there will be a 5G network this way or another. But we are not that sensitive with been getting and in what measure they are and what ways they’re building it.

Thank you. And our next question comes from the line Jackson Ader with JPMorgan. Your line is open.

First question on the Philippine customer that you signed, and I think is announced late last week. Do you have any visibility as to the major milestones and when you would expect to start recognizing revenue from that deal, and maybe in the next nine months 12 months and thereafter?

So this is a managed transformation deal, which is very exciting for us, because it includes both modernization including as we said new elements as well as managed services. And we are taking them through this journey from day one through the managed services, meaning taking growth responsibility for legacy and later on as the new staff is being deployed, we are continuing to manage it for them. So it will take some time to take over the responsibility given the transition of mission critical system responsibility to operate et cetera, et cetera. We already starting the scoping sessions at the high level design sessions with the customers. So I would expect that to translate to revenue more to the second half of the year, and of course later on as we go into fiscal '19 and the following years.

And then Tamar, there was some discussion about the tax benefit in this quarter and then the expectation for the tax rate next quarter was expected to be above the 13% to 17%. Is that correct on a non-tax or on a non-GAAP tax rate?

Yes, on overall basis for the year, we keep on track with the original guidance we have of 13% to 17%. There are from fluctuations between the quarter and this quarter that was actually low tax rate, next quarter will be somewhat higher. But if you look overall on average for the year, we are continuing to track in the regular range of 13% to 17%.

Thank you. And our next question comes from the line of Ashwin Shirvaikar with Citi. Your line is open.

Question on Vubiquity, it seem strategically important and what your clients are doing. Can you potentially in the view financial information on Vubiquity in terms of the revenue growth on top of that 100 million base that you mentioned or any seasonality, margins, client base overlap. And I want to clarify where basically into ’18, because it seems like there in between the creators of content and the content use endpoints or are they involved in the creation of content themselves.

So Ashwin, this is scares to us that we are quite excited to marry with and joining into the Amdcos family for several reasons, but I'll start from there answering your second part of the question. Today, if you think about a triangle, the content owners and the content creator on one hand, let's call them A, the B point is that distributor -- the aggregator of the Comcast of the world and Cellcom to be of the world and so on so forth. And the third one is let’s say B and the third one is a consumers, they primarily sit between A and B that is to say they take -- they do not correct rate content, they create content -- they take correct content from I think 630 sources, including all the major studios very trusted partners of the studios, including the independent studios and independent creators and they would take care of this content and the management of this content through the monetization through the distributors and the content distribution aggregators. That is to say they will create the meta data that goes along with the content and they will add dubbing or subtitles, they will be able to monetize or obviously the digital rights, the digital right management is a very important component of distributing digital content. So they are not creating this, they are basically just allowing this content to reach many, many, many other distributions. Now on one hand, they have relationship with 630 sources and on the other hand about double that, about 1,200 and more 1,000 distributors, aggregators you name it, so additional ones wireless company that add the video content and pay TV companies for additional one that, including over the top companies like even NetFlix and others. So they…

And let me ask second question, but if you could also go back to any incremental financial information that you could provide us. But the additional question was on the long-term effect of U.S. tax reform. I understand what's going to happen in next couple of quarters here through the end of this fiscal year. But longer term is your tax rate I guess moving upper teens or closer to the 21% rate, and how should we think about that?

I’ll add few points of color on the Vubiquity financial attributes and then address the tax question. So Vubiquity as we can understand from the message that we think it will be mutual impact on EPS in fiscal '18 is coming with low margin to start with. And we believe we can build it up along time quite quickly given both the top line synergies and the cost structure synergies we see in terms of opportunities. And definitely with the synergies that Eli talked about and the fact that we think though some synergies to begin here, we can drive from the $100 million base of revenue overtime upwards to gain higher level of top line. Now on the tax reform, as you know we’re a global company, yes the U.S. is one of our major jurisdictions but not the only ones, so it’s an overall combination of different things that are happening. And as you know, there are many initiatives going on globally these days around taxation. We talked in the past about that, which is the initiative done from the new now tax reform and Israel does some and contemplate the changes in other countries as well. So we are factoring all of this in when we're looking into the long-term. Now specifically in the U.S. tax reform, we're still evaluating the implications. I feel it’s a bit premature to get into too many details. But I think that for now we should think about the range of 13% to 17% overall as the right place to take into your models as soon as we have any news, whether it’s related to U.S. tax implications or otherwise in some other places in the world of course we will update.

Thank you. And our next question comes from the line of Shaul Eyal with Oppenheimer. Your line is open.

Eli, I have listened to your comments about AT&T, it sounds probably a little better than last quarter. Can you provide us with more color on what you’re seeing from AT&T on discretionary or maybe even non-discretionary spending?

So Shaul, as always, you listen carefully. Look, it’s really hard to measure it week by week. But basically what we are trying to say that the assessment that we had at the beginning of the year are more or less what we see in industry which is good, it’s not always easy to assess when you have so many moving parts. So as a base, we see this. And on the overall business environment, we see a lot of activities in AT&T and they are going into many dimensions in many areas. And when we align those areas on this strategic direction and the type of engineering and projects that are going to need, we find a lot of them relevant to Amdocs. So overall, that’s what we need. Obviously, we cannot guarantee anything but we are going to work diligently and try to win some of these projects and some of this -- and most of them are discretionary. And the non-discretionary thing of the AT&T Mexico or mobility or whatever, that’s usually when we see this fluctuation, because AT&T is a very active company and you don’t fairly save on those areas. But on discretionary that was a concern we had. We estimated properly and now we see more opportunities, which is yes, you are right is good, it’s better. The rest of it we’ll see for the execution but it’s in our numbers, including the acceleration of growth for the second half.

And probably sticking with North American carriers, so also I think we’ve all listened to your ONAF comments in the Verizon context. I think it also is encouraging. Hypothetically speaking, Eli, is there a potential backdoor into Verizon, probably being the most notable apps and [indiscernible] from your North American billing and OSS customers, maybe doing that through ONAF and then NFV capabilities and activities?

So we don’t know yet. But I believe that the fact that Verizon -- it’s a new thing Verizon joined ONAF and will support ONAF. It’s a new thing, it’s exciting for us. In theory, anywhere they look for help it should end up with people like us and probably us, because there is very little knowledge elsewhere. We are the most advanced company in terms of creating this product and implementing this product. So I'm sure that everybody would say that they know something about it, but in reality we have by far better skills and capabilities. So if Verizon is going to execute and not only talked about ONAF but would start having all kind of use cases and they would look at what AT&T is doing and what Comcast is doing and what Bell Canada is doing, anywhere they look they will find Amdocs. So yes, potentially maybe -- so it’s a backdoor, it’s a front door, but that might be a potential way to get into Verizon so the angle of the NFV. And we will have a lot of support on AT&T and to do that they’re trying all for sure, because the AT&T for them is more important that there will be North American adoption to ONAF rather than to see it as the differentiator of the network, maybe in the future it will change. But right now any implementation of ONAF, especially North America, is exciting for us and for AT&T.

Thank you. And our next question comes from the line of Ramsey El-Assal from Jefferies. Your line is open.

I wanted to ask you about your NFV Bell Canada implementation. In the context in which potentially you are seeing any further crystallization or clarity in the revenue model around NFV. If you could just provide us with your latest thoughts about how monetization of NFV for Amdocs would work overtime. I know it's a pretty broad and forward-looking question, but generally latest thoughts would be appreciated.

Ramsey, it's a very fair question. It's evolving as we speak and we see actually already few different models around the world. And the one thing for sure is that we monetize the services around NFV that has nothing to do within the ONAF or other even open source component, implementation of this very complex operating system if you like to call them this way, because ONAF is basically an operating system for the network, the big one of the network. So the unique skill that we have and can be monetized around services. These are very expensive people but very, very knowledgeable, so that's one component. The second one is what we call the enterprise version of ONAF. In other words like in other cases like Unix or Linux or whatever, you don’t really download open source and start using it. This is a very dangerous thing to do. It gives you flexibility that you may find different people that understand the topic if it’s an open source. But in reality, you would need to have what we call the enterprise version of it, Redhat model, that is to say you would sell capabilities that are in the open source that are part of the add-ons and operational features that are not in the open source. And that's another source for us for monetization. And the third one is the fact that we can actually as like a bee, we go from one flower to the other, the fact that we learn from one use case in Europe and then can take this knowledge into North America and then from North America you can take it to Latin America. The fact that we are global and we actually as we speak having experiences in NFV around the world, I believe will give us an edge that is far stronger than any other competitors in the field. Maybe the last one I would say that it's an ecosystem. We are the brain of the network but we are working with -- at least depends on the project or at least to any different smaller companies, sometimes large company but smaller function of the virtual VNS, like the virtual IMS, the virtual EPC, the virtual probing and so on so forth. So the fact that we integrate that, this integration function anything of all this smaller companies that provide component into the ecosystem. And so is in a way like an SI for the network, think about this way. So that’s something we also. But as I said, it’s evolving, it’s progressing, I wish it would progress faster, but it’s faster because we are anxious to show the capabilities, not because we believe that the industry can move really faster, it’s just a tectonic shift of the industry when we think about it.

One more from me. Could you again walk us through your historical experience with working through an AT&T merger cycle? I know pre-merger obviously, there is a slowdown. If the merger goes through, do you see the immediate snapback of spending or is there a pause and then conversely if the merger falls through, would spending snapback quickly or is there long period of readjustment. I'm trying to gain out not the outcome or even the timing of a possible resolution, but just the different scenarios in terms of the spending cadence related to each one?

For whatever it brought, historically AT&T always believe in consolidation of vacant systems in order to help to facilitate the smoothness of the service level of whatever they are acquiring. So that’s not very common around the world, this is the right way to do it. So usually what we see is that they have some kind of a slowdown prior to the acquisition, saving money, making sure that they are not spending on something that may change later on once they have the assets and so on so forth. And we've seen it in with the DIRECTV, with cricket event with other components of the business, and this part of what we see today. Specifically on the Time Warner deal, the dynamics might be little bit different, because it’s a little bit farther away from the core business, from the normal course of doing business and so forth and it’s a different unit they are going to create. And for that reason, we did not build any revenue into our guidance in ’18 or’19 for that matter. For product that may come may be in the future from the outcome of the acquisition itself. But we expect once the acquisition is done that the discretion expenses of the core AT&T, which is also under some slowdown pressure, this may spring bank and whether it’s the same level or different level it’s really hard to know. How fast it goes, look this is a very large company so everything in measured in months and sometime quarters, not in days.

The new element we have now is because the acquisition is obviously the fact we can serve both traditional side, the connectivity side of the AT&T as well as the media entertainment side that they are contemplating and buying and the connection of both will create new business models, et cetera, is very exciting in light of the Vubiquity acquisition.

And in the mean time, because we don’t want to wait until AT&T sort out this thing with the government and call also whatever that I mean, I never understood what has happened but whatever it is, it’s happening. So we basically go and take our energy with AT&T into energy and into Mexico and into enterprise and into to any other thing that you can still do. Under the notion that discretionary expenses are a little bit under pressure, just kind of the way to describe the overall situation.

[Operator Instructions] And our next question comes from the line of Will Power with Baird. Your line is open.

Maybe sticking with North America, the other big merger scenario last year been Sprint, T-Mobile obviously that transaction didn’t happen. I'm just curious you now closed to or hedged down to separate independent paths. Have you seen an improvement in spending there? And what does the outlook look like on that front? And I guess tied to that a follow up on the tax reform question in the U.S. Are you seeing any of the carriers considering hoping their wallets a little bit more given new expensing rules that are free cash flow or is it still too early on that front for potential projects?

So really on the first part of your question, no doubt that both companies had to go through back to the drawing board and decide what to do with their future, because both of them were quite busy with contemplated M&A they did not go through. And we don’t believe it will come back any time soon. I mean like in the past, if you’ve heard about it coming in and going out every couple of months. But I really think that they made a point that they are not going to come together. So yes, what we see is that both companies each one of them is doing it separately and in a different way. But each one of them is designing certain other ways to expand and to grow. Each one of them has to invest in the network and in the customer experience. Sand so T-Mobile for example already announced its public, they want to go into the video and Pay TV type service. We hope that this -- again Vubiquity acquisition might be relevant to what we can offer them, but that’s at least one component of the strategy that they announced already. But I would imagine there will be other component streams as the same. They already announced accelerated rollout of network element. As you remember, we have acquired all the process on the network from radio access network optimization to vehicle optimization and to deployment of new services and now NFV of course from provisioning and going into assurances with. So that’s the best color I can give without giving you the delicate information that we are exposed to. But both of them are -- the legislations of the joint boards or into execution of new strategies, and we are trying to make sure that we are relevant in any way that would go forward. In terms of the tax reform and whether it change the dynamics, it’s too early to say. We didn’t see people jumping up and down saying now we did more money, while we understand it. No, I don't think it’s a trend yet or that if this is a trend that it’s of any significant size that’s worth mentioning.

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

Thank you very much for joining our call today and for your continued interest in Amdocs. We look forward to hearing from you in the coming days. If you do have any additional questions, please give us a call at the Investor Relations group. And with that, have a great evening and we’ll conclude the call.

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone, have a great day.