Amdocs Limited (DOX) Earnings Call Transcript & Summary

All right. Good morning. Welcome to Oppenheimer's 26th Annual Technology Internet and Communications Conference. I'm Ed Yang research analyst, Oppenheimer's Cloud and Communications team. We've got Tim Horan, Group Head, who'll lead Q&A. This is a fireside chat format, so please send us your questions into the dashboard. Today, we're very pleased to host CFO and COO of Amdocs, Tamar Rapaport-Dagim and start in a little bit...

All set?

Yes. Yes, I think we're waiting for Tamar to get set up again, yes.

All right. Go ahead.

Okay. Well, Tamar, great to see you go.

Sorry about that. Let me move the chair here just in case it doesn't move in, okay.

I think we're good. All right, Tim, you want to kick us off with questions?

Yes. Tamar, thanks for the time. Really appreciate it Tamar, can you just give us a little bit more color on Amdocs, maybe just describe the company a little bit in terms of number of employees, how do this employee break down between maybe software programmers or sales and marketing? And can you maybe just describe through the 3 or 4 kind of primary products and services and how they've evolved over the last few years to kick off.

Thank you, Tim. Hi, everyone. Good to be here. So Amdocs is a player in the IT and technology space serving primarily the telecommunication and media industry as a provider of the capabilities, both the software as well as deployment services, to provide the service providers the ability to digitize themselves, to automate their business processes, to move to the cloud, and that's definitely a big driver that we're starting to see as much more compelling into our growth rates. And naturally, all the shift that's happening in terms of network automation and the 5G journey that the service providers are going through globally in different pace in different regions. We are very excited about innovation. It's kind of the DNA of the company. And naturally as we are doing now, the world is going through generative AI is the recent innovation wave. We are embracing it, and I would love to talk about that more as we go along. As well as the fact of how Amdocs is taking this innovation in a practical way to help our customers to move ahead. We are working in 90 countries, serving the industry leading operators across North America, Europe and all the regions and Rest of the World which is grew to primarily APAC and Latin America. And we have roughly 30,000 employees spreads in different development centers in the world. Ranging, in terms of our revenue growth, between 6% to 10% and generating total shareholders' return, as defined by EPS growth was about 2% dividend yield at double digits for the third consecutive year as we talking about our fiscal year 2023.

Very, very good. Could you talk a little bit about maybe what your differentiation or moat is around your business kind of core competencies, what sets you apart from any competitors out there.

[indiscernible] as we start the vertical focus. We are coming with years, many, many decades, I would say, of expertise taking technology and software and serving the communication industry, which is creating a unique angle to how we're thinking about things. And we are coming also with a unique business model, taking full accountability that includes both best-in-class software that is relevant for the needs of our customers. The responsibility to actually deploy that software in our customers' environment and take the full responsibility to bring them to, what we call, the finish line of the project phase, the setup phase, that's offering the production environment. And then if our customers agree to it, also support and run this software stack for our customers. And a model that is typically including multiyear engagement, we call it Managed Services. Managed Services engagements already comprise roughly 60% of our revenue. And we believe that this full accountability model will not only bring the best technology, but also taking responsibility to make this technology achieve its business value in the customer environment is pretty unique one. Typically, the competition environment we're seeing is either software, pure play, some system integrators that are coming and trying to stitch together different technologies and software. And including sometimes different players that are coming from a multi-vertical angle and trying to come into the communication market. And we're coming with the combination of both the vertical-specific expertise as well as the focus on, what we call, the full accountability at the end of the software, and deploying it and servicing in the customer environment.

So Ed Yang here is really our in-house expert on AI. And I know AI is a huge opportunity for you. You have incredible historical data. I know you've been partnering with Microsoft on a few different endeavors, both for customer engagement and figuring out how to come up with new AI products that I'll let kind of Ed kind of go through that with you now. Ed?

Yes. Tamar, if we could dive deeper into the generative AI piece of your business, you had 2 major announcements this year, the exclusive partnership with Microsoft for CRM, and that's directed to CSPs. And this quarter, you also had amAIz, your generative AI platform for carriers. When you look at those 2 businesses, what's your differentiation and moat with AI? Is it your data? Is it the applications, the industry expertise?

So I would say the fact that everybody is looking on generative AI is clear and everybody is trying to run as fast as possible and so are we. But we are coming at it from, again, the standing of the specific needs of the service providers, the telecom industry, and trying to come. And I think that's enabling us to move very fast in answering the generative AI needs, and embedding the generative AI needs in our offering to our customers, as well as to come with specific needs of telecommunication industry. Let me give you maybe some examples. When you think about what needs to be carrier grade, for example, resiliency of the system, ability to stay, response time, we can't wait 40 seconds for the next step. It needs to be literally real-time, milliseconds. You need to be very aware of the cost aspect and how to monitor the best case. So what's the best route to use generative AI for the specific case that is required of now for the communication industry, to have the flexibility to move to different kind of access to all the lenses based on the specific needs that is happening at that moment. Things around security level that has to be extremely robust, of course, and there are more aspects to it. So the way we are thinking about it, and that's what we came fast with, what we believe, is the leading industry framework of generative that is amAIz, important amAIz. And that includes both the deployment of generative AI into all our products stack. So by September of this year, all of our software portfolios stack will be with generative AI embedded in. Just to give some context, even pre-generative AI, our product software portfolio being modular. So it means that every customer choosing to go with our software stack doesn't have to take it all in. They can choose certain parts of it, they can move and modernize in a gradual way. So from their point of view, knowing now every product that they're choosing from our software portfolio, beginning in September, has generative AI embedded in, it is obviously a very strong message. On top of that, as I said before, helping our customers actually deploy the software in their environment, integrated and also support it under Managed Services. And if you think of what it means is that not only we understand that they can model [indiscernible], we actually run a lot of the operations' IT systems around leading passengers around the world, and have years, over a decade of experience in understanding different incidents and different issues that may happen there. Taking a lot of that internal knowledge that we have and putting generative AI on top of that in terms of how we run operations, they accelerate significantly the value we can bring to customers. Things like self-filling processors, things that are automating, there are different aspects of zero-touch operations we started even before generative AI, and we're actually starting to support and have been selected by customers for the cloud ops, with the north of being zero-touch operations. Now with generative AI, of course, we can accelerate that journey and use that internally. So we see this as being a major differentiation growth, again, the combination of our software products, that will be generative AI embedded within, as well as how we found the deployment and the operations of the IT environment for our customers.

And when Microsoft chose you as sort of the partner for this vertical, did they evaluate other partners or communicate why they went with Amdocs?

That's actually an interesting story. Our partnership with Microsoft started around the customer engagement platform, which is very complementary to our product suite. When we have taken about the domains that Microsoft is bringing into their customer engagement domain, and now Salesforce automation, lead management, et cetera, this is coming at the front end of what we bring later on from the commerce aspect of capturing the order, fulfilling the order, charging and monetizing for this service provided to the end customer. So the partnership with Microsoft started around that, and that has been launched already in Mobile World Congress in February, getting big feedback from the customers, from analysts. And then came generative AI into the picture, and as Microsoft actually is market leader, we are partnering now in a very strong way with Microsoft around how to take generative AI forward. But frankly speaking, around generative AI, we will see Microsoft as a great partner, but it will not be an exclusive partnership in the sense that we want to give our customers the optionality of how to embed generative AI in which way and when they want to choose different LLMs, whether it's the Meta LLaMA, whether it's Open AI. Of course, we have our viewpoint. We have a professional aspect around this in terms of how to do it most effectively, again, thinking into also the aspect of the cost effectiveness, not just the performance. And we want, of course, to work and leverage the relationship with Microsoft, having access to the best engineering teams around that, which is wonderful. So we are using the Microsoft relationship to a large extent, the customer engagement platform and going together with customers. We are the prime. We are integrated into our portfolio stack. We are taking, again, full accountability model. But we are deploying the end-to-end solution, including the Microsoft Dynamics telco version, and that's supposed to get a very interesting upside in terms of the opportunity of what we can sell to the market. Sales processes started, and actually in the last several months, we're getting good feedback. But it's too early to talk about actual wins, but we definitely see the pipeline evolving very nicely and excited about that. And now bringing into this relationship, the angle of generative AI, of course, it's a great added value.

And you mentioned some of the complexities and works with the CSP market, and they've been a little bit slower to embrace cloud for similar reasons as well. Are they ready for these products? Or are there bottlenecks to resolve before we could deploy them?

I think we're very excited about that. And actually, they're looking to see how to move quickly in a way that enables them the right flexibility at the right cost structure and whether -- I'm not objective, of course, but I think we are the best partner for them to really do that. In terms of moving fast, we understand the environment. We are already deployed in over 300 customers in the industry. We have a standard data models. We have the technology capabilities and we're bringing this really fast to market. As I said before, as early as next month, we are ready already in generative AI within our software product portfolio. So we've been in dialogues with many of our customers. We see them moving ahead. I don't think there are any roadblocks, if you will. It's a matter of which space they want to do it, where is the first domains that they want to deploy. Our job is to bring them the best capabilities and best engines to address that and leverage this opportunity. And again, it's moving really fast. We're getting wonderful feedback about the amAIz generative AI platform and framework we are building. And I think it's going to be a wonderful, I would say, accelerator to why people go and modernize. There are many reasons why to invest in modernization, right, whether you're moving to improve your customer experience, whether you want to be 5G ready or whether it's about moving to the cloud. And now it's another accelerator of what's the value in modernizing your system. So we find it as another exciting opportunity to talk about and accelerate decisions for modernization organization of our customers.

Maybe just a final question on this topic, and you could put on your CFO hat. There are concerns about the cost of GAI. Do you think it's going to be margin and ARPU accretive to Amdocs? And also, how does it affect your capital allocation? Because traditionally, you've had very nice free cash flow margins and you've returned 100% of that annually to shareholders, either through dividend and share buybacks. And you just did upsize the buyback to $1.3 billion. Does investing in generative AI change that math at all?

So I think it's a great point as we're all get excited about the value of generative AI. Unfortunately, to take all the time how we are taking the cost aspect into consideration, and it has to do in how we design everything we do. From the software development life cycle and how we leverage generative AI to improve the velocity of development, to improve the productivity in other words, of how we develop software. It has to do with how we are taking massive data and information we have about supporting incidents in our customers' environment over the years and running faster to analyze and solve those issues. And as I said before, with the idea being that self-healing will become more and more prominent in our delivery. So many, many opportunities we see. Including naturally within corporate functions, support functions, et cetera, many opportunities we see to continue and accelerate the automation that we've already started doing it in before the generative AI era as part of the margin expansion story of Amdocs. If you look at Amdocs, we are gradually expanding margins from year-to-year. And a lot of that has been achieved through automation, and generative AI now is a wonderful opportunity to continue that journey to the level that even though we are not even formally guiding yet for 2024, as a fiscal year has not ended for '23. We already have the visibility and the concrete half of how we see margin expansion already in 2024. So definitely, that's a positive aspect of how we are thinking about generative AI when we're looking inbound in terms of how we are single opportunity beyond what I talked before, which was about how they're serving our customers. In addition to that, when we look at capital allocation, I don't see any reason why we -- the cash aspects of Amdocs should change from the -- being on par over time. It's not for us, not a capital-intensive journey. Yes, of course, we want to invest, we want to invest in tools in R&D, in different things that will help us serve, But this is within the overall spend environment that we are thinking about why we are looking into the margin expansion opportunity. I don't think this is going to change the capital, I would say, generation of our remodel, going back to cash conversion. And also, as well as we touched -- as we chart on capital allocation, the way we've been thinking about capital allocation is that the majority of our cash flow is going back to shareholders in the form of the dividend that is increasing from year-to-year at double-digit. And then the share repurchase, we just got additional authorization from our Board last week of additional $1.1 billion for our share repurchase programs. It's a strong indication of our confidence in the model moving forward. And the fact, we believe, that why we are continuing to investing in innovation organically, to a large extent are definitely also supported by M&A. We have the capital capacity to continue to return most of our cash flow to shareholders. And that model is part of the investment thesis of how the company that is growing at the high single digits can actually generate double-digit shareholders' return on a continuous level.

Can I just maybe refocus back on AI, because it's pretty fascinating what you've done. To be able to embed this in your -- most of your software or all your software, it sounds like, in September, I mean, that's pretty incredible. I mean you've moved like unbelievably rapidly here. Can you just talk about how hard it was to do? Have you actually been able to use your decade or more worth of data to basically train the models already? And can you just talk about that whole process a little bit?

I think it starts with the architecture of our software stack that is very robust. And the fact that we have a software portfolio that is sitting on top of a common foundation in terms of the architecture, yes, it's modular. That's the power of the suite, right? I mean on the one hand, we have a lot of products that we offer to the market, but the underlying architecture is very robust and common. So we can move fast in terms of how we're making changes in our portfolio. Now when we say generative AI is embedded in our products as soon as September, it doesn't mean that journey is over, of course. And I'm sure we'll continue and build more and more capabilities and move as the industry as they always moving faster on this, right? And the capabilities in terms of what generative AI is all about are evolving, and we want to be ahead of the curve in terms of taking those capabilities and providing those engines into our software product portfolio. We've been all over it with great focus, starting with our Head of Technology and CTO of the company, all the way to -- all the functions in the company. So it's not just a technology group initiative, it's something that is a cross-company initiative. Because I said before, part of our uniqueness is that we don't only bring the software and say, "Hey, dear customer, here take it and go it over the fence." We actually bring that software and make sure that we help our customers deploy that successfully. So the understanding not only in terms of how to embed that into the technology of our products, but also, okay, what does it mean now to move ahead and deploy the generative AI capabilities definitely connect also to our understanding of the whole ecosystem, understanding of the data structure. We've been very active around AI and the data aspect of our customers before generative AI. Obviously, that's a great jumping board when we think about generative AI. And also in terms of, what does it mean then to operate the software later on, and what kind of use cases can we take into the ongoing environment, the ongoing needs of our customers. And yes, it's fast. Yes, it's a journey. We are going to continue and invest heavily into that in order to move fast and actually make amAIz a more robust framework as we move along and then very fast how to take the benefits of generative AI in addition version. And it's a continuous development, continuous integration for us. So as soon as we bring more capabilities into our products, we can bring it fast to our customers in terms of them getting the value from it.

And do you think this is going to be a major improvement to your software and to the functionality for your customers and what you've experimented with so far?

I think it's [indiscernible] in addition to the software in terms of what you can do and how fast you can move and how easy are these for our customers to use the capabilities of the software. So let's take -- now the catalog is a major part of our software stack, it's where you actually define the offers to the market. What are the attributes of the service offers to the market, how they connect later on to pricing, et cetera. And think about generative AI, you can literally just say, I want now your offer to be relevant for these demographics in this city. I want this to be relevant for a price level of such and such, and you can even do it in such -- just speaking, right, regular speaking, which is means that every marketer in the organization potentially you can do that. They don't need technical translation on the way. So the speed in which you can move using these capabilities, just using this specific example of just the Catalog, it's amazing. The Catalog is a very robust product. Many leading service providers in the world already bought our Catalog, from Korea all the way to Horizon and obviously many others. Now adding generative AI capabilities into our Catalog is obviously accelerating the way in which our customers can move and use that, and speak to market and being very relevant in terms of the market offers you go with is what it's all about, right? So I think this is just one example out of many of the use cases that can evolve in terms of what are the capabilities that are being added in the software stack.

No. And I was just over to see you guys in Israel a month or so ago, and I was kind of amazed about the new use cases. I didn't really realize you were kind of getting them out that quickly. And has this generated a lot of interest from your customers? I mean have your conversations increased with your customers and leads increase as a result of GAI?

Yes, definitely. I think it was a great [indiscernible] and definitely -- shortly after your visit to our experience center in Israel, we have, for example, a massive event for the industry analysts with dozens of industry analysts coming into this event. So we already shared some initial -- this and yes, the progress is very fast. They'll be -- it's moving to another phase. And already then, when we share the thesis with them, we got the great feedback. And we have another session with top executives of our customers and it's like it's moving forward. And that's why I said, we need acknowledge its a journey. On the one hand, we are moving very fast. We already launched to the market. We have amAIz, which is definitely way ahead in terms of the market understanding and administration of how generative AI can serve the industry. But it will keep moving ahead and changing, and we invest in thinking how to that. And I'm sure that with the earlier news cases being deployed, we will learn a lot together with our customers how to make it even better and better. And also where are the [indiscernible] of what is relevant and practical for what our customers need. So yes, we're very excited about that. I think we will see the next several quarters, this adoption happening. And hopefully starting to impact revenues move along, and we move very fast. That I can promise you.

And I know on the last quarter call, you talked about -- and you mentioned it a few times now, you really need to be on the cloud to really take advantage of GAI, and your customers now have really kind of gotten the mindset, all right, we really have to modernize and move to the cloud and really digitize and kind of figure out how to monetize our data and automate our business a lot more. But -- so it means you're spending maybe a little bit less on some of the legacy systems that they had. Is that a fair characterization? And can you talk about maybe how much of your revenue or growth is what you would consider more legacy at this point, how the business model kind of breaks down so we can understand the impact over the next couple of years?

I think it look naturally -- maybe legacies just [indiscernible]. But there is an installed base. The industry is running on current systems, and a lot of these current systems are run by Amdocs. Now majority of our large customers are running their system, they're running the software on an online basis just to serve their markets. This is their day to day. In many of these opportunities, we are running those softwares under Managed Services engagement. Nothing changes there. This is something that designed in a multiyear contracts running and continue to serve new. Now, now it's a matter of, as you modernize them, and you're making big decisions on modernization and spending capital on that as a service provider, how much you can continue to invest in enhancing your existing system until the new system is ready. It's a natural decision, right? Because currently, our go to market, new initiatives to the market are running on your current system. Let's say that you're building now with 4 new stack, and this new stack will be ready fully in 2 years. Okay, what do you do in the midterm? Do you continue to enhance the legacy, the existing system that you have, how much do you invest in that relative to the fact you know you're investing in the future because the life is obviously short, right, in terms of enhancing the legacy. So what we've seen recently is some big customers that are investing in the future in a meaningful way and chose Amdocs to do so, which is wonderful, we are the partner for building the future. But [ on this moment ], how much they are enhancing this existing systems until the new one is ready. And this is what you mentioned. This was like a reason why, in the short term, we've seen some, I would say, softness in the guidance for current year growth, that instead of midpoint being 8%, instead midpoint we are expecting 7.6%. Not a huge change in sales, roughly $20 million, but it is something we wanted to be very concerned about and share in the market. I think the most important thing is, there is modernization going on, more and more customers have said they realized they need to move to the cloud. If they want the benefit of generative AI benefits, they need to move to the cloud, even more than what they did before. They are choosing Amdocs to do so, and we are the partner for the future. We are coming -- more to come in modernization that makes us understand okay. Totally what we invested so far, we are committed to investing in the future in bringing more and more innovation that will be relevant their needs. And we continue to see many great examples of more customers making these decisions. Last week, we shared we see Canada and the Canadian market moving ahead with the shift to the cloud. So we've been selected by Bell Canada to be a partner to move to the cloud. The activities now with TELUS in Canada to move to the cloud. Obviously, outside in other international markets, where we gave examples in [indiscernible], et cetera. And naturally, in the U.S., for those that are less familiar with us, we are a big partner of T-Mobile, of AT&T or many others in their journey to the cloud. So I think generative AI is going to be an accelerator and it's going to be another reason for those that haven't made the move yet, to go ahead and move.

And I know -- can you talk about -- great, great color. Can you just talk about maybe where your penetration is in Europe and it's just changing the conversations there? And I know Verizon, they're taking more of your products. And is GAI kind of another real selling point as you're talking to the customers right now? And do you expect to maybe get some more wins in Europe at this point?

Yes. So in terms of regions split, about 2/3 of our business is North America and then another 1/3 in the rest of the world. And for us, the European business has been a tremendous success in the recent several quarters, and it wasn't by surprise. It's something -- obviously, we're still finding and talked about it already last year that we're starting to see this strong momentum in Europe being built, and we're growing double digits, stronger, we reached over 20% in the recent quarter renewal. And the driver for that has been the strategic growth areas we've been talking about, the continuous shift to digital and customer experience with, by the way, more focus also on the business segment of our customers, what is called B2B. We see there also other places in the world, I can touch about that later. But specifically, in Europe, we continue to see digital transformation as a driver, consolidation and the need in the consolidated and merged entity to provide a much better customer experience. Obviously, getting ready for 5G. And the move to the cloud and the net [indiscernible]. So these have been there, the drivers all along, as we've seen now success in Europe. And for us, Europe, it's not just about, okay, how do we modernize existing customers, a lot of that is about adding more and more new logos. We've been underpenetrated in Europe. It is a great opportunity for us to expand our footprint with more customers in the European market, which is happening as we speak. Generative AI is a nice add-on to what was that and another accelerate for more to move hopefully into modernization, which is a great thing for us. Typically, our entry point -- which is to clarify typically, our entry point into a new customer is beyond modernization. This is what they need to choose, okay, they were deploying a new stack, we need the best in class. But this is where they get to know Amdocs. Oftentimes, they choose us to be the partners so that we have a very high win rate, so they choose Amdocs to be the partner for that modernization. And then we manage over time -- and again, not all customers but a lot of the customers, we manage over time to make this a more recurring relationship all the way to, what I call, the North Star model, which is the full Managed Services, where we continue to be the partner, run the systems for them and then continue in their modernization path. And I think the fact that we also brought -- especially for the smaller carriers in Europe, the fact we can provide a modular modernization path is extremely important. Because not necessarily they have the capacity or the risk appetite to do a bit out of the existing system and bring it all in of the new stack, they want a little bit more gradual way and we are providing very good path to do so. Again, based on the modularity of our product set, but also in terms of the capability we've provided for those that already have our installed legacy systems to shift to the cloud in a modular way. And we also have acquired a couple of years ago, hired a consulting group around the journey to the cloud. So now we are coming to our customers from a very early stage of let's advise and consult and think about what's the journey to the cloud for you given how much you want to invest, what is your biggest pain point, how you can do it in a -- in the past, that fits your need to your customer. And then taking that to the actual execution, leveraging our technology, leveraging our deployment services, migration to the cloud, and all the way to the full Managed Services. And we see that story more and more. And also, by the way, we are seeing extension to East Europe. We're talking about a couple of wins in East Europe, quite interesting. We see the investment in modernization. Some private equity groups that are required assets and building one stack for these assets across multiple countries. That's another example we've seen. So strong momentum in Europe. Definitely continue to see the relationship involving with Vodafone, a long-time customer of us in Europe, but many more new logos are lining up.

So we're getting close to time. I had 2 more questions, and I'll turn it over to Ed for the final one. But have you been able to GAI to improve your own productivity? I know you have a huge amount of software programmers, obviously -- and obviously, your sales motion. Yes, can you just talk about what you're doing internally with it?

Definitely, when you think about... [Technical Difficulty]

I think we have some connectivity issues here with Tamar.

Yes. [Technical Difficulty] So thanks, Tamar. We were just kind of talking about using GAI to improve your own productivity internally. Can you give us some examples and some initiatives there?

Yes, sure. So as a software company, we're using, obviously, software development cycle in everything we do, from developing products and developing deployment services to customers, all the way to the actually running the systems under our Managed Services practices. And we see that as a big opportunity to see how we are improving things from requirement definition, all the way to how we actually develop the code, all the way to testing, et cetera. So there are many ideas of how to take generative AI, and ideas that are already starting to be deployed. It's too early to say, okay, we can gain that kind of productivity point. But we've been seeing gradually signs and a lot of the, let's call it, the thesis looks compelling. And actually early proof points look great. So that is building our confidence to how we can build it actually into many things we'll do. This is just one example in terms of the actual development of software, obviously, around support functions and many other things. So short answer, yes. We see many things that we can improve and change in terms of the productivity in how we do things. It's relatively early. Time will move by and we'll be more concrete in terms of what are the measures that we are seeing in terms of the magnitude.

And can you remind us just your long-term kind of targets for revenue growth at this point? And just thinking...

Sure. We've been tracking at 6% to 10% in terms of our target. We've expanded our serviceable addressable market given our recent strategy to expand to more domains. Maybe shortly, we've been doing for years with the digital transformation. That has been an addressable market of roughly $30 billion. Moving into and expanding to cloud, 5G, network automation. We talked about the serviceable addressable market doubling to roughly $60 billion. So that's a very important change. And, of course, now looking forward with [indiscernible] evolving, on the one end, we see macro pressure, we are seeing also the industry pressures. But on the other end, those mega trends of investments that we've been identifying in our strategy, and we talked a lot about generative AI becoming like another layer on top of everything, is obviously giving us opportunity to see modernization happening and also offer our customers with new capabilities...

We lost. [Technical Difficulty]

So Tamar, a lot of moving parts. We have macro on the negative side. We have legacy on the negative side, but we have cloud and we have GAI. So your 6% to 10% long-term guide, I guess, are you feeling better about that now than you were 6 months ago or what you've learned in the last few months? Or worse? How are you thinking about that 6% to 10% long-term guide?

We are almost, I would say, ending fiscal year '23. Naturally, in this time scale, we are building up plans and doing a much more bottom-up exercise of what is our -- thinking about fiscal '24, our specific growth rate within -- over time thinking. So I think it's premature to say, okay, looking -- let's take on this. Looking into fiscal '24, what's your growth rate? I think this is a much bottom-up exercise than just looking on the overall long-term trends. But the signs are there, the positive signs out there. Now sometimes the reality is that we can see what deal signed exactly each time. And now with the vast revenue recognition over the quarters, and this is an exercise you'll do now and make sure that we come with the full information about that in November as we give guidance for 2024. But I think the levers are there. The important thing that we are focusing all the time to see how we're leveraging these levers, how to generate the top line growth and convert that into the margin expansion, and we are seeing the size by margin expansion should continue. And then, of course, with the right focus on the capital allocation that I spoke about before is how we take all of that to double-digit shareholders' return in a consistent manner over the years. So that's kind of the short summary from a financial point of view and we can come more concrete information around, specifically '24, in November.

That's a great summary and a really exciting time for you guys. I really look forward to the guidance, as everyone else does too, but it sounds like it's going to be pretty good. And the main thing is the long term, right, the next 5- to 10-year kind of growth. And it seems like you absolutely have it at this point. But Tamar, thanks a lot for your time. Thanks, everybody. Have a great rest of the day.

Thank you very much, Tim.