Good day, and thank you for standing by. And welcome to the Amdocs Investor Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star one on your telephone. Please be advised that today's conference is being recorded. I will now like to turn the conference over to your speaker today, Matt 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 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. 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 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, and our Form 6-K furnished for the first quarter of fiscal 2021 on February 16, 2021. 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, Chief Financial and Operating Officer. A copy of today's presentation slides will be posted on the investor relations section of Amdocs' website following the conclusion of this call. With that, I'll turn it over to Shuky. Thank you, Matt. Good morning, everyone, and thank you for joining us today. Last week, on March 31st, a short seller report was published by a previously unknown entity called Jehoshaphat Research. As we said in our press release last week, the report contains inaccurate statements, unfounded claims, and speculation that were solely designed to drive the stock price downwards to serve the short seller interest and to the detriment of Amdocs shareholders. Our intention with today's call is to provide color and more details on our business. As you saw, we published a supplementary investor presentation early this morning, which we'll walk you through today. Tamar and I will provide overview of our business and walk through our strong financial performance, cash generation, capital return to shareholders, and the global organization we have built to ensure optimal efficiency and local compliance across our operations. Our financial outlook remains strong. We are fully confident in our accounting and business practices and believe that the company is well-positioned to build on its success and create long-term shareholder value. Frankly, we have no idea who Jehoshaphat is. We don't know who is behind the report, and no one has contacted us. We are very surprised to see the report and believe there is no merit to it. I will now begin to walk through the presentation, followed by Tamar. We will open the call for a Q&A. Matthew, can you go to the agenda slide, please? Okay, this is the agenda that we are going to cover today. I will start with a short overview of Amdocs. Tamar will continue with our strong financial foundation, legal entities and auditors, cash position. We'll open the call for Q&A. Matthew? Next slide. Another one. I'm sure the majority of you know Amdocs, but to those who don't, Amdocs is de facto the market leader in our space, which is in the telecommunication and media industry, obviously in all the information technology system, OSS and BSS system. Just by the numbers, you can see at the right side some interesting numbers I want to share with you. You know the revenue, this is pretty much public, $4.2 billion. We have 26,000 employees, and we are operating in 85 countries. Our estimate that every, pretty much across the world, 3 billion people are touching Amdocs system, and we are managing roughly 1.7 billion digital journeys per day. We have over 350 customers, and I think that you can see the list of customers that we are very proud. Blue-chip customers. We were very successful in the last year to actually expand globally. If you go from the U.S., or obviously you know our major customer, AT&t, T-Mobile, Charter, Comcast, UScellular. In Canada, Bell Canada, Rogers, Telus. In Latin America, our main customer obviously are the main groups over there is Telefónica and América Móvil. If you go to Europe, Vodafone is a huge customer of ours between the different opcos. In Italy, Germany, Spain, U.K., Netherlands, we are now working with Vodafone on what we believe one of the largest transformations in the world in Vodafone Germany. Sky, the Three Group, BT, and all, and VEON, all the big, I would say, operators in Europe are working with Amdocs. We are definitely the market leader in APAC, between Singtel, Optus, Globe, and PLDT in the Philippines, Maxis in Malaysia. We have a lot of operation in Indonesia, et cetera. We can see all the list of customer. As I mentioned, Verizon in North America. As I mentioned, we are very proud with these blue-chip customers, and you can see our leading position is very much steady here on the global view. Next. Amdocs has a very unique business model. There are software companies and there are services companies. Amdocs is what we call a product-led service company, because we are doing mainly three things. We develop software, so all our BSS and OSS platform that serve the big companies in industry. This is what we do. We have major R&D centers to develop this software. Obviously, today, it's only cloud native, and I think that we have cutting-edge technology in our software. We do the deployment of our products. We are not just developing the product itself, but we are having the high-level consulting, all the implementation, deployment services for our products. We have unparalleled production per quarter. The company is taking pretty much 80 production per quarter, and I think by far, we are the market leader. We are managing tens of transformation as we speak all over the world. We are developing the software, we are doing deployment services, and we also operate our system, in many cases, in a managed services form. This unique accountability is, I think, the Amdocs' rightful fame. No one has this, and this is, I think, what help us to be the market leader in our domain. There was some reference for us as a BPO company. I can tell you, we are so far, we are nothing but a BPO company. You can see what type of offering we are giving to the market. As I said, it's a very, very unique offering. This accountability model is very linked to Amdocs and help us a lot to be in the market-leading position that we are today. Next. How can we do this globally? Amdocs have many centers around the world. You can see we have R&D centers, we have a software development center, and we have operational center. What you see right now on this illustration is not all of them. We have much more. Actually, we are leveraging these global assets to deliver the services to more than 350 customer across the world in the most efficient way. As we operate at 85 countries, this is what comprise for 155 legal entities. As I said, we build our competitive centers and R&D center to make sure that we maximize efficiency, we maximize talent in the different territories. We have follow-the-sun type of support for our customer. A lot of thought have been done in order to build this global infrastructure that support, as I said before, over 350 customer in 85 countries. Next. Probably by now, you understand that I'm very proud with Amdocs' position in the market. It's not only us think that we are the best. There is a huge market recognition that we are number one in our space. You see some of it on this slide from the gurus of the world, Analysys Mason and others. This is both for services and our product. I think this represent what the industry analysts think about Amdocs' leadership in our domain. Next. I will finish with that, which is again, another area, that domain that we are very proud, is the long-lasting, expanding relationship that we have with all our customer around the world. You see that this list of number of customer, from T-Mobile to Vodafone, Verizon, Bell, Comcast, Charter, Telefónica. We are very proud. Not just that we are having a great strategic partnership with these type of customer, but this is a very long-lasting relationship. I give couple of example here. We start from left to right, AT&T. We are expanding our activities in AT&T. Actually, our revenue grow year-over-year. We are busy right now in building the next-generation consumer mobility for AT&T as part of AT&T 5G strategy. We have managed services in AT&T. We have network activities in AT&T, AT&T Mexico, Cricket. We have a lot of activity in AT&T, and we see a very good progress now of modernization activity with our activity to modernize AT&T consumer domain. T-Mobile US, another good example of strategic account that used to be before two accounts of Amdocs, Sprint and T-Mobile, before the merger. We just announced in February a strategic long-term deal with T-Mobile US. That comprise, obviously, transition of all the system of T-Mobile to the AmdocsONE cloud-native platform, cloud operation, and many other activity. This is a very important agreement that we are very proud of and actually reflects the strategic partnership that exists today between Amdocs and T-Mobile. Overall, you can see we have a very strong position with our customer. We see very nice, consistently, growth across all geographies, and we continue to push forward in getting more customers and continue to serve our existing customer in the best way we can. With that, I will move to Tamar's part. Thank you, Shuky. With all that business capabilities and strategic focus, we have a business model, unique business model, that translates to strong financial performance and strong, consistent operating margins. When we look on the different characteristics of how this business model is translating to financial metrics, as you know, we publish every quarter a metric called 12-month backlog, and the 12-month backlog provide us strong visibility into the year to come. Usually, we start a year with around 80% visibility to the next 12 months' revenue, as presented already by this backlog. In addition to that, in general, we have highly recurring revenue streams. In many engagements, long-term engagements with our customers, we enjoy high recurring revenues. All of that is helping us plan and prepare for the execution of the commitment and the value that we are providing our customers. We are leveraging on this scalable global resource model based on the different centers around the world that Shuky described. It's not just about locations, about building different competencies around the world, whenever the demand is planned, we are obviously against that, planning very accurately how we are going to supply this demand, including taking into consideration time zones, talent availability, competencies, cost structure, et cetera. All of that is helping us create a good visibility on how we are planning our business. On top of that, of course, we would like to continuously create operational excellence into the business, bring efficiencies, bring savings in how we do things, so the savings and benefits from these efficiencies in our performing engines can be redeployed by our discretion into new investments. Investments in R&D, we mentioned before, we are investing around $300 million of R&D. We have accelerated R&D recently. We are investing, of course, in penetrating into new countries, new local acquisitions, et cetera. This balancing act that we see, this ongoing balancing act, helps us to drive new customer penetration, new market penetration, as well as over time, as you can see in this chart, constantly report on operating margins that are tracking at the higher end of our prevailing guidance range at that time, and over time, enable us to trend upwards with the operating margins that the business results in. Let's move forward. When we look on all of that and what does it mean in terms of generating cash, we've also shown a proven history of consistently converting, over time, those earnings into free cash flow from the business. You see here a full decade. Obviously, in any given year, there may be performance that is below or above the 100% earnings to cash conversion. Over time, you can clearly see how we are tracking on par. In fact, in this year, specifically, in 2021, after already having very strong two years of cash generated from the business, we have guided at the end of December, for the fiscal year 2021, a conversion rate of 130%, with the $800 million of normalized free cash flow, of which our first fiscal quarter ending December already generated close to $390 million. It's also only projection, some of it is has been actual in Q1 already. When we look on this ability to collect money from our customers, obviously, the continuity receiving model, the track record we have on delivering to our customers is translated into invoicing and collecting money from our customers, managing efficiently ongoing spendings, and converting earnings to cash and par over the long term. Let's move forward. When we're thinking about what does it mean to manage a multinational business with 155 legal entities serving 85 countries, it means that we are dealing also with a lot of local compliance in different countries. One of that implication is that you file, in many countries, by regulatory requirement in country, something called statutory financial statements. The business performance is best represented by the consolidated financial groups. Consolidated financial groups cannot be established through aggregation of some local statutory reports of specific subsidiaries. Definitely, it cannot be done by taking a selected number of 17 entities out of the total number of 155. Just to remind you, a selected entities of 17, mainly focusing on Europe, definitely does not represent our global business in which North America, i.e. U.S. and Canada, represent the majority or 2/3 of our business. It also miss one key operation that we have, which is Israel. Again, just by your example, how 17 entities cannot be representative of the full group. On top of that, in consolidation, there is accounting that requires you to delete, eliminate intercompany transactions. Sorry for getting technical here, but I do want to explain that point through an illustration. We have tried to simplify a real life through this illustration on this slide. Let's assume there is a deal with an end customer by Amdocs U.K., in which we are selling a relatively small project of $10 million digital transformation that includes one software module and include services of deploying that software into production until it goes live, which is part of what we do in many of the projects with our customers. Now Amdocs U.K., who signed an agreement with the end customer of $10 million in this illustration, is engaging internally in the supply chain of the Amdocs Group, other legal entities in the group. In this illustration, it's buying the software from Amdocs Cyprus for $2 million. It's buying some services from Amdocs Israel for $3 million and buying some services from Amdocs India, again, for $3 million. If you simply aggregate now all this revenue recorded by those four individual legal entities, and let's assume each individual entity in this illustration files financial statements for compliance purposes locally, just on this transaction. Again, very simplified. You add up 10 + 2 + 3 + 3, you get to 18. Obviously, the deal and the value that Amdocs Group generated is $10 million. It's not 18. You just overinflated by $8 million. If you continue to do that and just ignore elimination of intercompany transactions, you also obviously have twisted expenses on the other side. You cannot draw conclusions from selecting 17 entities, taking the local financials, ignoring elimination of intercompany transactions, and then try to compare it to the group numbers. Adding to that, additional two issues in that methodology attempted in the short seller report. One, is ignoring accounting standards that vary between countries. At a group level, we report US GAAP. Of course, all the numbers of all the transactions, all the activities are aligned to US GAAP when we file our consolidated financials with the SEC. When you file locally in different countries to comply with local regulation, you apply the local GAAP relevant in that country. For example, in Europe, in many of the countries, it's IFRS. In some European countries, it's still very specific GAAP for that country. Another problem in the methodology applied in the short seller report is ignoring different fiscal years. Amdocs Group is reporting by September year-end. Again, it means all the activities and everything we do around the world is aligned to fiscal year ending September 30 in our group financials. When you look on the local subsidiary reports filed for statutory purposes, different year-ends may apply, usually by way of practice in that country. For example, in Cyprus, the local statutory reports are December year-end. In Dublin, in Ireland, it's December year-end. In India, it's March. If you just add those numbers that are for different total year-ends, obviously, you get a mishmash of different set of numbers that are not relevant. All of that is just to explain why we think that the whole design of the attempt that was done to select few legal entities, add numbers that do not add up together, then try to find from that the group financials or some correlations to the group financials, we think it's flawed by design. As we said before, we believe our accounting is rigorous. We are very confident in our group financials. We are generating constant operating margins, we are translating those margins into healthy free cash flow from the business, which is at par all the time. Let's move forward. I want to touch on the legal entities and auditors topic and explain practically how we are looking on this topic. Again, just to run a business over so many countries and activities, you need to be optimal in how you operate in country, and which means typically, you need to open a legal entity, at least one per country. That by itself, you may say, "Okay, so you have 85 countries. Why don't you have 85 legal entities? Why you have 155?" Because over time, for different reasons, we have more coming in, usually by M&A. With every M&A that we do as a company, we inherit first the legal entities that are coming with the acquired business, and then we can try and rationalize it over time. Non-organically, we inherit over the years, many entities beyond the ones we decided to open ourselves. We intentionally and strategically try to rationalize the number of entities and reduce it over time. In the past few years, we have a dedicated task force, a dedicated program to try and rationalize the numbers and structure of our legal entities, and we've managed actually to reduce dozens of them over the last couple of years. At the same time, as the team handling this always tells me they feel like they're swimming upstream. Why? Because with any M&A, a new batch of legal entities coming in. Just by way of example, the recent acquisition we've done last summer of Openet, that by itself brought in 12 new legal entities. That's how we're thinking about this, and we will continuously try to optimize the legal entities and the structure to support the global business and the operational model that Shuky described before. Moving forward, when we look on this and the implication of that for audit purposes, when you have local subsidiaries around the world, in many of the countries, you are required to file the statutory financial statements with a local auditor signing off on those financials, which means we need to appoint different auditors for those entities. I want to emphasize, none of our subsidiary level extended auditors initiated any resignation. We, at our own initiative, conducted an RFP in 2018 for audit services in EMEA in order to rationalize 27 different audit firm engagements we had down to a select few. Again, one may ask itself, how did you get to 27 different audit engagements? Mainly over time through M&As. We inherited legal entities, and we inherited them also with their predefined auditor that we did not appoint ourselves. Going through this project, after issuing this RFP, we successfully concluded, and the outcome of this process resulted in the Big Four local affiliates remaining the auditors for our key EMEA business subsidiaries, including those that were mentioned in the report, Ireland, Cyprus, the U.K. While we have moved to non-Big Four firms, for the majority of the remaining subsidiaries, selecting reputable, non-Big Four firms that are working with other multinationals on exactly the same kind of service of auditing for compliance purposes locally in country. In accordance with local practices and regulation in many of these jurisdictions, the auditors may formalize our initiated replacement with a resignation letter, which is just a formal action. As a group financials, as filed with the SEC, it's a totally different topic because the group financials, when they're audited, have been audited by EY for many years, actually since 1988, and definitely since we're public in 1998. It's EY New York who have been auditing our financials, and this is filed with the SEC. This is the set of numbers we are talking to investors and the whole public when we are talking about our financial statements. The responsibility of EY when they are signing off on the audit of the group financials is not divided in any way, which means that whether it's EY foreign affiliate or other local audit firms, they are not relied upon in the consolidated audit. The team of EY in New York, who is leading the global audit of Amdocs, is taking that full responsibility, and all their opinions have been unqualified over the years. On top of that, just by way of best practice, which is very common, EY as a firm is doing the lead partner rotation every several years to have a new set of eyes to look on our financials and to look on the company controls. Again, a very common aspect of the Big Four firms. Moving forward. I want to address the point around our balance sheet and cash, which I think is extremely important, and we are very proud about the strength of the balance sheet and the disciplined capital policy framework we have exercised over the years and talked very openly with investors about. To remind you, our guiding principles have been always maintaining a strong balance sheet and investment-grade rating, both by S&P and Moody's, we have an investment-grade rating for many years. We ensure continuous customer confidence. We are serving our customers in mission-critical systems, in long-term engagements. Obviously, we want those relationships to have tenacity and the duration for many years, and we want them to feel comfortable with our balance sheet. And we retain sufficient cash for working capital purposes, as you would expect us to. The operational considerations. As a global company operating in many countries, we continuously optimize our cash and move cash as needed for the operations at the group level. I want to emphasize at the group level, this is not done at an individual legal entity level. As a group, we can move cash around where we need it, where we collect the money. Sometimes it's not where we actually need to pay suppliers or payroll, so we have the flexibility to move cash around. The whole notion of insignificant level of trapped cash is extremely important here. I want to refer to the term trapped cash. First of all, if you ask me, do we have cash that we cannot access at all? I would say it's close to zero. When we talk about $60 million of so-called trapped cash, what I refer to is cash that if used, we need to pay some extra tax cost. Even if we do pay this extra tax cost, it's equating the less than 1% of the group cash balance, i.e., immaterial. We do not have an issue of trapped cash, and this $60 million is not something we need to tap into until we find a solution for the tax cost. By the way, if we do, we will pay the several million dollars and use that cash. We do not have any external requirements to maintain a minimum cash level, not by customers, not by anyone else. We are investing our excess cash in a very conservative manner. We are giving full disclosure on the investment vehicles and our investment policy in the 20-F, we're never filing it on a quarterly basis. You can see we are investing it in highly rated securities, whether it's money market funds, treasuries, highly rated corporate bonds, or above the cash with Tier 1 banks. When we think about the company in our size, naturally, beyond the fact we do generate very healthy cash flow from the business, as I presented before, we want to have different sources of liquidity. We want flexibility. In the last year, we issued a 10-year bond of $660 million. It happened in June 2020 at an extraordinarily attractive rate of 2.538%. Very happy about this. We feel it's providing us with capacity to fund strategic growth investments when the right opportunities present themselves and to have that firepower available. On top of that, we have what's called more tactical tools. For example, we have a $500 million credit revolver that we use from time to time as a tactical vehicle to optimize cash efficiency. Why do we need it if we have so much cash available already within the group? Because from time to time, it's more economical to draw for a few weeks money from the facility, pay a small amount of interest, rather than maybe take securities we invested in or take deposits in banks and break them. We're doing an economical quick exercise of calculating what's better. Then if needed, we are tapping into the facility. The last time we've done such a short-term draw on the facility was actually way back in, I believe, the second quarter of 2018. Last year, due to the pandemic, like many other companies, just for precautionary measures, we drawn the facility around $300 million, but repaid it back since. In addition to that, another vehicle we put in place in 2018 was the factoring program. We used it very little, even in 2018. It was very immaterial in usage, and since then we even reduced using the factoring, so I don't think it's of any significance to the overall picture of our cash or cash flow. Just to be clear, all the strong cash flow that we performed over the last two years and the strong indication we provided as guidance for fiscal 2021 is not relying in any way on this factoring, and it's all coming from strong collections from our customers. On top of that, we recently decided as part of our strategic process to sell OpenMarket. That was non-core to our strategy. We sold it in November 2020 for around $300 million of cash. As we said in our February 2nd earnings call, we are going to return the majority of that cash to shareholders. On top, way and above the regular buyback that we do and the regular dividend that we do. Just to be clear, it's on top of all of that. Moving forward to the next slide. When you look on one of the major users of cash, which I think is of strong interest to the investors' community, is our consistent return of cash to shareholders. We've been introducing the dividend already in 2012, so it's running for many years now. We pay dividends every quarter since. We increase the dividend every year since, including 2020, the pandemic year, we increased the dividend double digits, and we've been consistently buying our own shares. You can see in this chart that over the 5 years presented here, on average, we returned over half a billion dollars per annum to shareholders in the form of share repurchase and dividends. That's roughly reflecting 101% in the aggregate for the 5-year period of normalized free cash flow generated in that period. We are clearly very consistent and continuingly returning cash to shareholders. As I said before, to top that up with the open market sale process, we are going to even do more than the usual in 2021. Very strong business model, strong position, very excited about our strategy. We are continuously tracking in our operating margin in a consistent manner and converting that into cash flow from the business, which is then invested conservatively and used for growth initiatives and our strategy buildup, as well as continuing to return cash to shareholders over the years. I suggest we will open it up now for Q&A. Thank you. As a reminder, to ask a question, you'll need to press star one on your telephone. We will take one question and one follow-up. Our first question comes from Tim Horan with Oppenheimer. Your line is open. Hi, guys. Just a brief question. Why not accelerate the stock buybacks with the pullback? Secondly, can you just describe your software in a little bit more detail? How unique is it and how scalable is it? I guess, how transferable is it from client to client? Thank you. On the buyback, just to make sure I heard well, Tim, the question was, I believe, on the acceleration of the buyback from the open market sale consideration. That happened as soon as we got the consideration at the end of December. As we said before, that is planned for over a couple of months, obviously subject to regulation of how much activity we can be involved in terms of market trading in any given day. The second question was about. Second question was about the software product. Yeah. We have a very unique software offering. We actually, over time, build a complete full stack to support BSS, OSS solution for the largest customer in the world. It means that we are covering all the aspects of the business, from the commerce activity to the billing activity, to the network provision activity, charging, rating, obviously a CRM system. What we call it open and dynamic, means on one hand, you can take the full stack from Amdocs end-to-end, like for example, what we do right now in Vodafone Germany. It's a full end-to-end transformation from commerce back up to the provisioning the services in the network. This is very unique. The majority of our customers have pieces of the solution. We are the only one that have a pre-integrated solution end-to-end. We allow customers, obviously, to pick and choose based on business needs, how to implement. This is a very, very unique software stack. Everything is cloud native. We have great relationship with Amazon, with GCP and with Microsoft. I think that we have the cutting-edge technology in our software, and this is, I think, recognized by industry analysts. Really, from a overall full stack solution, we are the only one that can get all the solution from the commerce up to provisioning the services in the network. Thank you. Thank you. Our next question comes from Tal Liani with Bank of America. Your line is open. Hi, guys. Thanks very much for the extra explanation of the entities. Are there any accounting benefits to having entities? Is there any tax benefits, when you move forward, you look at the next few years, do you think you'll maintain the same structure of having entities? Can you talk about the benefits to the company, from having these entities? Thanks. I would say it's kind of a necessity just to run the operations and the engagement with customers. Even before going to accounting and tax, first of all, it starts with how we need to operate and where we are signing business with customers. As you said, we're active in 85 countries. We need to pay payroll to employees, procure different services from vendors. You need to have the structure to do that. The structure to do that involves legal entities in different countries. At the same time, you want to do it in the most efficient manner in terms of how much it costs you to run this structure. What does it imply in terms of compliance? As I said before, many countries have their own local compliance requirements in-country, which obviously we need to comply with once we operate in that country and have entities there. Of course, there's the tax authorities that want their share in the pie. We are taking that into consideration when we are looking at activities. Practically speaking, if you ask me, Tal, the overarching theme is that we are trying to reduce the number of entities that we have, because sorry, it's kind of over it that we need to handle and just to do the business and operations of the company, but we want to do it in a rational way. Got it. I asked about taxes, just is there a tax benefit to having so many entities or entity per country? Is it every country is an entity or every client is an entity? How does it work? No. Usually, every country needs at least an entity to operate under. Sometimes there are different considerations on how you structure it. Yes, of course, tax is part of the equation here. It's not that for sake of tax planning, you just need to add more entities. It needs to be obviously relevant to what's happening in terms of the activity, the functions that are done in that country. Whether this is an R&D activity, whether this is a service center to support customers, whether this is a place in which we are actually owning IP assets or just doing services. There are many considerations we are looking at. Sometimes it's about foreign acquisition. What is the acquiring entity? A lot of decisions, obviously, we're trying to optimize that. For example, when we did Comverse in 2015, as part of the Comverse deal, we naturally looked, okay, how should we buy Comverse? Through which entity? The decision back then was the majority of the IP assets were acquired through Cyprus, in terms of different aspects that we looked at. Of course, tax is part of the equation, but this is not the why of why you establish entities. Usually, the why starts with you need to run operations, you need to sell to customers, you need to have a framework in which you can operate. Got it. Great. I have an odd question, Tamar. Do you know who put out the report? Do you know the identity of the company that put out the report by chance? I don't want to speculate, but we never heard about this name before. The first time, by the way, everyone that we talk with never heard Jehoshaphat, so we have no idea who is behind it. Thank you. Our next question comes from Ashwin Shirvaikar with Citi. Your line is open. Thank you. Thank you for doing this call and the additional information. Just a follow-up to that last question or the last answer that you gave, Shuky. If you don't know who published the report, I guess that rules out legal action. Have you considered kind of maybe working with regulators to figure out what seems like perhaps was targeting of the stock or any recourse that you can, action that you can take here? Well, I can tell you that what we do right now is what we do best. Focus on the business, focusing on accelerated growth, focusing on return money to shareholders, deliver value to our customers, making sure that we have the best employees. I think this is what we are focused on. We are not trying to look for anyone, and this is what we do. Got it. The legal entity structure and that complexity is fairly common for most global companies. In the example that you gave, Tamar, obviously, revenues flow a certain way, work is allocated a certain way depending on client requirements. Does profit flow back the same path, or can you flow through different path? Can you route it to maximize economic return to Amdocs? Just trying to understand. When you look on the allocation of the overall group profit for the different entities, it has to take into consideration what are the functions and the ownership of assets in those entities. Obviously, as any global multinational, we have to, and we are providing very robust transfer pricing policy and studies that are evaluated by the different tax authorities around the world. When you think about, eventually, we have the group profit and how you allocate that profit to different entities, here it has to do a lot with having the right functions allocation, the right asset ownership. Mainly, I'm talking here about software and IP asset ownership and what value you need to assign to the entities in terms of the profit that own those assets, who's taking which kind of commercial and legal risk in the agreement vis-a-vis the customer within the group. There are many considerations of how you do this allocation in a manner that will make sense from transfer pricing policy of a global multinational. All of that is, think about it, like an internal allocation of the value, which has nothing to do with how much value the group makes from engaging with the external world. Eventually, the money, the profit we make is how much is the deal value we signed with an end customer and how much it really cost us. Everything in between in terms of value, take that profit. Let's say that my illustration, the $10 million deal with $8 million cost, and let's say that really the profit to Amdocs is two, just to simplify. How you take that two and how it then distributed between the different entities, I think has no relevance to the fact that it's two. The checks that are done both by us, our internal and rigorous accounting practices, as well as the group audit done by EY New York, is to check eventually that the total revenue and the total profit we make from engaging with the external world is the right one. Sorry for the long answer, just wanted to frame that quickly. No, I think it's important. Thank you. Thanks, Ashwin. Thank you. Our next question comes from Tom Roderick with Stifel. Your line is open. Hi, Shuky. Hey, Tamar. Hi, Matt. Thank you for doing this. Really appreciate it. I guess, kind of sitting here on our side of the wall, we see these short reports pop up from time to time. We don't often see companies actually respond, and I'd love to hear on your side of the wall, what went into formulating the response, and did your Board gather to discuss the report? Did EY engage you in any sort of discussion? Did any of your lenders ask for more information? Just from your perspective, what drove the desire to communicate with the street to respond to this, and would love to just sort of hear what your independent advisors were asking for further information or anything like that. Yeah, I can start. Tamar will follow. Obviously, we were very surprised with the reports last week. As we discussed, again, no idea with this entity whatsoever. By the way, none of our advisors recognize this entity. As Tamar mentioned, we thought that after the report was issued, we issued a very short press release last week, saying that we believe the report has no merit into it. This week, we thought we should follow up because some of the items in the report were maybe more complex to understand. I think that as part of being transparent to our investor, we thought this is the right thing to do. Tamar, you want to add something? Just want to add that the timing the report came out was the last day of our quarter. As usual, we will come early May and report our results and provide an update about the business, et cetera. Given that it's still several weeks between when the report came out and when our normal next interaction with the investors is, we felt that it makes sense to give some more details now and give some updates on how we see those things. Some of these topics are usually not the kind of things that investors are really focused on, right? I mean, number of legal entities and things like that, local compliance of statutory reports. We thought it makes sense to come out and clarify some of these topics just to be on the safe side. Yeah. That's helpful. Shuky, follow up for you. Certainly, one of the more salacious claims in the report was the suggestion that AT&T, after 2023, would be looking to move to a different vendor across the board, which I guess for those of us that have followed the space for a long time, for those like you that have been in the space for a long time, it would be a pretty extraordinary set of circumstances for a Tier 1 carrier like AT&T to move off a billing vendor point blank, much less to do so in two or three years. Can you take us through your relationship in more recent times with AT&T that gives you comfort that that would just be not something that could happen, and you're feeling that this is a relationship that's not only stable at the current run rate, but can grow from here? I think that call it stable, this is not the right thing. I think that we enjoy now probably one of the top strategic partnerships with AT&T. This statement is completely disconnect with what's happening right now with AT&T. As we work on AT&T, I would say one of their main core engine is the consumer mobility. Building with AT&T, a completely new modernized platform based on AmdocsONE, our cloud-native platform, to modernize all AT&T consumer mobility, to allow AT&T to compete in the 5G domain, which is probably the most strategic area for AT&T. By the way, we signed, two years ago, or less than two years ago, a long-term. End of 2019. Managed services agreement. I can tell you that this is completely disconnected from what is going on in the field. I believe that we are going to continue to be a strategic partner for AT&T for years to come. By the way, as I mentioned before, our activities with AT&T is robust. It's AT&T Consumer, it's AT&T Mexico, it's AT&T network deployment, it's AT&T Cricket, and many, many other things. By the way, we partner with Microsoft Azure to help AT&T to move applications to the cloud. We are doing testing with AT&T, we are doing security, we are doing all the data for AT&T, so it's really robust activity. I think that the partnership now are stronger than ever. Outstanding. Thank you, Shuky. Thank you, Tamar. Thank you, Matt. Thanks, Tom. Thanks. Thank you. Our next question comes from Will Power with Baird. Your line is open. Okay, great. Thanks. A couple of questions. I'd echo, thanks for hosting the call. Seems like a lot of helpful background information. So maybe just to start, I think one of the other claims in the short report was that, it got some attention from people that I talked with, was that something had changed beginning in 2016 with respect to operating income and how the number was calculated. And I recognize that it looked like the short report was only looking at a small subset of your overall legal entities. But any further color as to anything that might have changed from an accounting standpoint or the calculation of operating income beginning in that 2016 timeframe? Again, relating to numbers that were put together in a flawed way, I don't think that's the right exercise, Will. In general, I would say that in any given entity, there could be change in profitability over time because of different reasons. Could be the mix of business in entity at that specific point, could be what are the functions that this entity is doing that year relative to the past. Could be an acquisition. As I said before, we acquired Comverse, for example, in 2015. It was bought through the Amdocs Cyprus entity. From 2016 and forward, we amortize intangibles for that entity. There are different things that are happening for any given entity. To take the numbers as they have tried to do it, I'm saying they, because I have no clue who it is, and ignore intercompany elimination, ignore different fiscal years, ignore that it's a different GAAP. At that time, take all these numbers, ignoring all of that, and try to mash it up and then compare it to the group numbers, it's totally flawed by design. I think to try to analyze this set of numbers, I'm sorry, I don't feel it's worth your time or mine. Okay. Yeah. No, that's fair. I guess, other question, just Tamar, just coming back to the presentation, and you were speaking to the strength of backlog and the visibility that provides, 80% visibility into a given year. Can you just remind us the key revenue components within that visibility? In rough terms, how much of that's managed services versus software, professional services? What are the key elements, I guess, of that 80% visibility into a given year? What we include in the backlog is the recurring revenue. 12-month backlog. The 12-month backlog. 12-month backlog. Thanks, Shuky. 12-month backlog is the recurring revenue in multi-year engagements that are signed. Typically, those are the managed services agreements. Could be from time to time, also multi-year maintenance agreements, but usually the heavy numbers there are the multi-year managed services engagements in which we are providing IT and automation services to our customers to run the systems for them. On top of that, we are including into the backlog recurring revenue of ongoing support. That is something that we are doing for many years, and we have very high level of visibility. To remind you, even during some stress periods such as 2008 and 2009, financial crisis or pandemic, we have not seen any change down in this kind of activity. The level of consistency we've seen, this is very high. For new projects, we only include in the backlog things that have been signed and secured with the customer. Whenever we include, for example, if you remember, we had, in the last two quarters, the fiscal first quarter of 2021 and the fourth quarter of 2020, we have very strong sequential increases in the 12-month backlog. Highest ever. The highest ever, yeah. The record high of the company. A lot of that had to do with signing new real activity that happened in the quarter. In the most recent quarter, for example, the new multi-year strategic engagement with T-Mobile that added to the 12-month backlog. Every quarter, we are publishing this metric in order to give you better indication of how we are seeing the visibility of the business. Okay. No, that's great. Thanks again for hosting the call here. Thanks, Will. Thank you. Our next question comes from Jackson Ader with JP Morgan. Your line is open Great. Thanks for taking my questions, guys. Just following up on one thing that Tom asked earlier. Just to clarify, will there be a Board investigation into the accounting practices? As always, in these kind of situations, we are giving full update. First of all, by the way, before the Board, I want to say on my behalf, obviously, I want to read every kind of report that comes out like that and double-check and triple-check, et cetera, our accounting practices. A, we believe we have rigorous accounting practices. We are very proud about that. After reading everything in that report, I'm telling you, there's no merit, it's groundless, et cetera. We are also obviously making sure that we review it with our auditor so they feel comfortable that there is nothing to it. We present the report. Then we present it to the audit committee and to the Board why we believe so. It's not a so-called investigation. It's just a regular practice, I think, or the best learning practice that we want to have as a company. Okay. All right. Gotcha. On the auditor turnover, I guess one question that we have, and that we fielded is, what benefits do you feel like you get from maybe going with a local auditor in a local country, which is essentially a completely unknown to the investment community, right? A reputation that's not good or bad, it's just completely unknown, relative to what you might get from a Big Four accounting firm in that local country. Just curious why local but unknown might be better sometimes. First of all, what we want to do is consolidate to fewer audit relationship. It does not make sense, I assume you agree with me, to have 27 different auditors engaged just in EMEA, the region alone. We try to consolidate. The rationale behind that, again, we're talking just about the local statutory financial statements. We are not talking about the audit of the group, which is in N.Y., New York for many years. When we did all these RFPs, the rationale was to keep for the large business entities, the key business entities in which there is more complex activity, to keep a Big Four firm. In many of those entities, we reappointed N.Y., in some PwC. Again, depending on the strength of the firm in that country. That's for the big and key business initiatives. You have different legal entities in which, for example, you have 50 employees, you just pay payroll, and all the revenue of that subsidiary is cost plus to another entity in the group. Very simple, relatively. For that, frankly, the attention given by Big Four firms is not that relevant, and also the price premium that they charge for that. On that, we went and selected a very reputable firm. It may not be a familiar name to you. Mazars. They are top 15 accounting firm in the world. They have over 40,000 employees. They have, if I remember correctly, something like $2 billion of turnover. They are doing these kind of services for many reputable multinationals, AXA, Wells Fargo, Decathlon. All of those multinational companies have been references of this firm. They're not nobody, just to be clear. And I think they are doing exactly what we need in terms of the level of service we need for those local statutory reports of smaller entities within the group. They were selected, just to be clear, in EMEA. The RFP was EMEA alone. We believe that the selection process has been very professional. We've had a very strong RFP going on with many good responses. It's not the report to the investors. I will say it for the third time, but I want to be absolutely clear. The consolidated financial statements of Amdocs Group, as filed with the SEC, have nothing to do with those local audits. Nothing. N.Y., New York, are taking full responsibility, not dividing this responsibility in any way to those local audits. All these local audits are saying that we're talking about is just for filing local reports as required by that country. It does not impact the group audits afterwards. Thank you. I'm showing no other questions at this time. I'd like to turn the call back to Matthew Smith for any closing remarks. Yes. Thank you very much for joining us at short notice. Matt, I think it's my turn. Oh, Shuky. Okay. Thank you all for your questions. We hope the information we have shared today helps provide a clear picture of certain aspects of our business model and organization. Today, Amdocs is well-positioned to continue to benefit from secular trends driving customer demand for digital modernization solution, the adoption of 5G, and the journey to the cloud. We are focused on execution of our strategy, expanding our leading position with our key customer across the world, and delivering shareholder value. We thank you, all of our stakeholders, for the continuous confidence in Amdocs, and we look forward to providing further updates on our business in early May when we report earnings consistent with our regular practice. Thank you, guys. This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.