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Amdocs Ltd (DOX -0.56%)
Q3Â 2019 Earnings Call
Aug 7, 2019, 5:00 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good day, ladies and gentlemen, and welcome to the Q3 2019 Amdocs Earnings Conference Call. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions]
I would now like to introduce your host for today's conference. Matthew Smith, Head of Investor Relations. You may begin.
Matthew Smith -- Head of Investor Relations
Thank you GG. 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 Securities and Exchange Commission, including in our annual report on Form 20-F for the fiscal year ended September 30, 2018, filed on December 10, 2018, our Form 6-K furnished for the first quarter of fiscal 2019 filed on February 19, 2019, and the second quarter of fiscal 2019 on May 28, 2019.
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.
And with that, I'll turn the table to Shuky.
Shuky Sheffer -- President & Chief Executive Officer
Thank you, Matt, and good afternoon to everyone joining us today. I am pleased to report a solid performance in our third fiscal quarter. Second quarter revenue grew 3.4% year-over-year in constant currency. It was driven by organic growth initiatives. Our profitability was stable and consistent with recent quarters and our normalized free cash flow generating was healthy. As we continue to progress many transformation project toward production for our customers.
We are particularly proud for positive execution this quarter, as we successfully delivered the world's largest BSS implementation by migration more than 200 million subscribers to our 5G capable to turbo [Phonetic] charging platform for a leading operator in Southeast Asia. Q3 was also notable for our managed services business, which has its best-ever quarter, strong growth was driven by the continued ramp-up of managed transformation activities for customer like [Indecipherable], where we are combining the deployment of large scale digital-transformation project with the operational benefits of our managed services model.
Additionally, we continue the same-store capabilities in next-generation networks, one of our core growth engines, where we are today excited to announce a strategic acquisition of TTS wireless to further enhance our open cloud and 5G network capabilities. I'll come back to TTS wireless later in the call, but first let me provide an overview of our original activities for the quarter.
Beginning with North America, sequential revenue growth was driven by stable trends of AT&T and hence activity levels of many customers in the border region. Earlier this year, we said Amdocs was selected by Altice USA to accelerate its digital and mobile offering, and I am pleased to report today, we're also helping to enable the mobile offering of North American two largest video internet providers. This includes Comcast, Xfinity Mobile Services. The operation of which we are hosting under a multi-year managed services agreement, and charter which has chosen to extend our continued relationship to support the growth of its Spectrum Mobile business.
This was also an active quarter for Amdocs media were we continue the path of integrating our media assets to serve directly evolving content amortization needs of our media customer. Both our traditional service providers and major studios. Along this line, we signed a managed services agreement for distribution of 3D video-on-demand services for new logo [Indecipherable] which includes distribution to mobile phones providing glasses with 3D content this comes to life in your hands.
Additionally, we are pleased to announce that Vubiquity and Vindicia transport agreements with Viacom and its existing multi VOD services agreement with the NFV Network.
Regarding the outlook for North America. Revenue in AT&T is stabilizing given the levels of Q2, in our fiscal second half as we predicted last quarter. Our partnership with AT&T remain strong based on the value we delivered in various growth areas and we are working hard to demonstrate the unique innovation and efficiency improvements we can bring to AT&T's communication business for the long term.
Additionally, we continue to sell WarnerMedia, and particularly Warner Brothers, we have recently extended our global agreement for the transaction of VOD. As to the future, we believe we are well-positioned to bring additional value in support of several potential media in direct to consumer-related opportunities at WarnerMedia, none of which are reflected in our fiscal 2019 outlook.
In T-Mobile in spring, we continue to see a healthy level of activities and they prepare for the merger that recently received -- approval. Assuming the deal is completed, we believe we have the right credentials to support T-Mobile is a strategic partner for its post-merger requirements. This reflects our yields of integration experience in our proven track record in both T-Mobile and Sprint.
Although, we had said before consolidation activity like this can introduce uncertainty that's come up the outcomes which made the helpful product. To summarize North America, favorable market dynamics that translates into basic customer activity in the border region, compensating for AT&T, while we expect full-year revenue to decline in most of the phase is compelled fiscal 2019. We are therefore on track to deliver a modest revenue growth in North America for the full fiscal year 2019, but we remind you that quarterly trends remained likely to fluctuate in the foreseeable future.
Moving to Europe, where we have delivered our eight consecutive quarter of positive year-over-year growth. Notwithstanding normal fluctuations in customer activity, which affect the sequential trend. Jointly play we signed an additional multi-managed service agreement in SKY Italia, which includes the modernization of its digital modernization operations to support its move to fixed broadband.
We also won additional new logo with an affiliate for large Western European operator when the children follow digital transformation that will modernize and automate the user experience for its enterprise and consumer customers. Looking ahead, regional consolidation activity and the growing trend toward multiplayer and convergence is driving new requirements for our customer that we really Amdocs is well positioned to address with our highly relevant product and services offering.
This will support positive long-term growth for us in Europe. Although, we have, of course, always monitoring the macroeconomic climate of the region. Turning to Rest of the World, we delivered our second straight quarter of record revenue. With year-over-year growth of nearly 8% as reported. Among the Q3 highlights we continue to see interest in our media offering outside North America.
Why Brazil? So like little Vubiquity asset as a preferred partner it is recently announced online video platform service all play.
Additionally, we are delighted to signed it's real content licensing and management agreement with Vodafone Qatar to enable to be sales mobile operator the large GST video on-demand services in Qatar and also its customer, the ability to stream and/or download a wide selection of movies and TV programs including first time exclusive divisions. We are also encouraged to see in emerging trend in managed services will some of our earliest customers in the region are embarking on a second wave of modernization activity by expanding the scope of the existing and engagement with the new multi-year agreements. For example, Vodafone India in India is extended our managed services agreement for several years and selected us for the project to consolidate the possibility and enterprise operation in Idea Cellular with reach Vodafone mails last year.
Additionally, today we announced the expansion of our decade long duration with XL Axiata, in Indonesia by winning a project to deploy the Amdocs C1 consumer experience and monetization solution under the multi-year managed digital transformation agreements.
Looking ahead, we are encouraged by our recent winning momentum and a solid pipeline of opportunity we see in the rest of the world, although we remind you that the revenue trends in the fluctuate from quarter to quarter. To conclude my little summary, we are executing well in generally new growth across our strategic areas of focus. This include next generation open cloud in 5G networks where I'm pleased to highlight some of recent new customer and project wins that demonstrate the innovation we are bringing to the market.
Just this week, we announced SES, a leading global satellite operation -- operator, we'll use Amdocs NFV constraints solution to deliver SD-WAN in other extended services on [Indecipherable] highly stable and public cloud infrastructure for Bosco, Telecom, corporate and government customers. Additionally, today when now -- Amdocs we provide Globe Telecom is our 5G policy control function solution to help Globe design and build open cloud 5G network and it will accelerate the rollout of an extensive set of 5G use cases for enterprise and consumer customers.
To accelerate our network services strategy we are excited to announce today the acquisition of TTS Wireless, a leading provider of mobile network engineering services which specialize network optimization, planning and software enabled solution. We believe the strategic relations for this acquisition make sense on two levels.
First, TTS Wireless is doodle 5G plenty experience its immediately expand our network customer foot print, a leading American operators including T-Mobile Veregen strong incumbency the complement of basis provisions.
Second, TTS Wireless springs our platform for growth in network services by bringing 100s of highly skilled mobile of mobile network engineers, which will enhance our opened 5G portfolio to help us to execute on our strategy of providing an end-to-end 5G solution, it can accelerate and simplify the deployment and monetization of open smart 5G network for our customers.
To wrap up, we are pleased with our performance for Q3 and the fiscal year-to-date, we enter Q4 with record 12-month backlog, which we believe reflects the strength of our market leading position. The pipeline of opportunities remained strong and we expect to maintain high win rates as we bring the innovative solution. Our customer needs to modernize, automate and digitize their business. Taking everything into consideration we are on track to meet our full year targets for constant currency revenue growth and normalized free cash flow.
Additionally, we now expect to deliver diluted non-GAAP earning per share growth in the range of 6.2% to 7.8% for the full-year 2019. The 7% mid-point which represents increase of approximately 50 basis points over the previous guidance. With that let me turn the call over to Tamar.
Tamar Rapaport-Dagim -- Chief Financial Officer & Chief Operating Officer
Thank you, Shuky. Third fiscal [Phonetic] quarter revenue of $1,025 million was in line with the midpoint of our guidance range and included an negative impact from foreign currency movements of approximately $3 million relative to the second quarter of fiscal '19. Revenue was slightly above the midpoint of our expected range after adjusting for the negative impact of approximately $1 million of foreign currency movements relative to our guidance. On a year-over-year basis, our third quarter revenue grew by 2.2% as reported and 3.4% after adjusting for foreign currency headwind of approximately 120 basis points.
Additionally, our year-over-year growth was organic in nature. Our third fiscal quarter, non-GAAP operating margin was 17.3% consistent 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 expense was $1.9 million in Q3. So, forward looking purposes we continue to expect the non-GAAP net interest and other expense in the range of $3 million quarterly due to foreign currency fluctuations, you look at non-GAAP EPS was $1.19 in Q3, above our guidance range of $1.08 and $1.14.
Our non-GAAP effective tax rate of 7% was lower annual target range of 13% to 17% in the third fiscal quarter and was primarily attributable to the net decrease in our provision for uncertain tax position accumulated over several years due to the lapse of statute of limitations in certain jurisdictions during the quarter.
Diluted GAAP EPS was $0.96 for the third fiscal quarter and was also above our guidance range of $0.82 to $0.90. Primarily due to the tax impact just as flat. Free cash flow was $129 million in Q3. This was comprised of cash flow from operations of approximately $165 million, less $36 million in net capital expenditures and other. Normalized free cash flow was $143 million in the third fiscal quarter, which is an improvement relative to $129 million a year ago. Please refer to the reconciliation table provided in our Q3 earnings release for an explanation of the difference between normalized and reported free cash flow in the quarter. BSO [Phonetic] 85 days decreased by 4 days year-over-year and we remind you that BSO may fluctuate from quarter-to-quarter.
Total unbilled receivable increased by $11 million as compared to the second fiscal quarter of 2019 and our total deferred revenue both short and long term decreased by $35 million sequentially in Q3. Accordingly, the gap between unbilled receivables in deferred revenue widened by $46 million as compared to the second quarter, primarily due to the timing of contract-specific milestones relating to the transformation project we're delivering for our customers.
Moving forward, we should still expect unbilled receivables and total deferred revenue to fluctuate from quarter-to-quarter in line with the normal business activities. Moving on, Amdocs backlog was a record high of $3.40 billion at the end of the third fiscal quarter, up $10 million sequentially from the end of the prior quarter. We believe our 12-month backlog continues to serve as a good indicator of our solid book of business. Our cash balance at the end of the third fiscal quarter was approximately $458 million and does not reflect the impact of TTS wireless. The acquisition of which closed earlier this week for a cash amount of approximately $50 million.
During the third fiscal quarter, we repurchased $89 million of our ordinary shares. In total, we have as of June 30, approximately $329 million of remaining authorized capacity for share repurchases. To be executed at the company's discretion going forward with no state of expiration date. As a reminder, we retain the flexibility to vary develop the level of share repurchase activity from quarter-to-quarter depending on factors such as the outlook for M&A financial markets and prevailing industry conditions. Now, turning to our outlook for the fourth fiscal quarter of 2019. We expect revenue to be within a range of being $1,015 million to $1,055 million.
Embedded within our Q4 revenue guidance, we anticipate a sequential positive impact from foreign currency fluctuations of approximately $2 million as compared to Q3. Additionally, our guidance incorporates the acquisition as TTS wireless, which we expect to contribute revenue of several million dollars over the remainder of Q4.
For the full fiscal year 2019, we now expect total revenue growth in the range of 2.4% to 3.4% on a reported basis, which compares with our previously guided annual range of 1.8% to 3.8%, the improved outlook including an anticipated drag from foreign currency fluctuations of about 1.2% year-over-year, which is in line with our previous expectations.
Due to the timing of the acquisition TTS Wireless will have a negligible impact on our expected total revenue growth rate as reported for the full fiscal year 2018 and will add just over a point of revenue growth in the first year after closing. On a constant currency basis, we expect revenue growth in the range of 3.6% to 4.6%, the midpoint of which is slightly higher compared with our previously guided annual range of 3% to 5%. We expect our quarterly non-GAAP operating margin to fluctuate at the higher end of the 16.5% to 17.5% range in Q4. We expect the fourth fiscal quarter diluted non-GAAP EPS to be in the range of $1.04 to $1.10.
We expect our non-GAAP effective tax rate to be at the high end of our annual target range of 17 -- to 17% in the fourth fiscal quarter. Additionally, our fourth fiscal quarter non-GAAP EPS guidance incorporates an expected average diluted share count of roughly 137 million shares. We exclude the impact of incremental future share buyback activity during the fourth fiscal quarter as the level of activity will depend on market conditions.
So the full fiscal year, we now expect to deliver diluted non-GAAP EPS growth of $6.2 to $7.8%, to 7% midpoint of which is an increase of 50 basis points of compared to our previous range of 4.5% to 8.5%. Our fourth fiscal quarter diluted non-GAAP EPS guidance and full-year fiscal 2019 diluted non-GAAP EPS growth guidance incorporates a neutral impact from the acquisition of TTS Wireless.
Based on our current estimates we expect the acquisition will be neutral to our non-GAAP earnings per share in the first full year after closing. After the impact of TTS Wireless and GAAP results this will not be know until after Amdocs completes the purchase price allocation for the acquisition. We expect our non-GAAP effective tax rate to remain within the same target range of 13% to 17% for the full fiscal year 2019. We remain on track to generate normalized free cash flow for fiscal year 2019 of approximately $600 million.
This equates to an expected conversion rate of approximately 100% relative to the full-year non-GAAP net income, driven by normal business operations, we continue to expect reported free cash flow of close to $500 million in fiscal 2019. Consistent with our previous guidance we plan to return a majority of our normalized free cash flow to shareholders in fiscal 2019 by way of our quarterly dividend and share repurchase program.
With that, we can turn it back to the operator and we're happy to take your questions.
Questions and Answers:
Operator
[Operator Instruction]. And our first question is from Ashwin Shirvaikar from Citi. Your line is now open.
Ashwin Shirvaikar -- Citigroup -- Analyst
Thank you. Hi, Shuky. Hi, Tamar.
Tamar Rapaport-Dagim -- Chief Financial Officer & Chief Operating Officer
Hi Ashwin.
Shuky Sheffer -- President & Chief Executive Officer
Hi.
Ashwin Shirvaikar -- Citigroup -- Analyst
Hey, So I guess let me jump in with a question on 5G and 5G opportunity to start could you, is it possible for you guys to size these 5G related work projects consulting that kind of stuff that Amdocs actually does today, and is that I'm assuming that's probably grows faster than company average. If you could talk about pace of growth and in the context of that layer in TTS and provide some financial information and on TTS with regards to either size or profitability things like that?
Shuky Sheffer -- President & Chief Executive Officer
Hi, this is Shuky. I can start and then Tamar can continue. Regarding the 5G offering, I'm not sure we can size it because as we described before our 5G offering across the different type of lines of business. It comes obviously, you've talked about TTS wireless or existing we have today, we are totaling the capabilities in deploying 5G, then we have over five capabilities and we talk about charging and then the sale, the network of 5G in demonetization. Now this is across the board of different activities that we do in different projects. So when we have like a new BSS transformation. Obviously, we need to support 5G. I'm not sure I can carve out what is the allocate revenue money, which is affected to 5G because most of our deployments today in the new projects to support 5G.
To market also regarding to TTS wireless, but both of them want to saying that we try to be a very holistic to you of 5G from definitely, from the deployment, optimization of the deal and using NFV capabilities and sort of the network capabilities and automation. Obviously, today's challenging aspects and the monetization aspect. So it pretty much touch every project that we do today. Across the company.
Tamar Rapaport-Dagim -- Chief Financial Officer & Chief Operating Officer
Just to add on, on TTS Wireless, actually been engaged in the where do you access optimization for some years now and we've been very pleased to find the TTS Wireless which augment that with great focus on 5G deployments. It has incumbency in leading carriers in North America, including very strong relationship with T-Mobile for 20 years, very active also in the Horizon in, in AT&T, we acquired the company for roughly $50 million, which is about one-X revenue we expect, as you said that the impact to Q4 '19 will be very small given some seasonality in August being a slower month, it will be just $7 million within the fourth quarter of ' 19 and moving forward looking in the first year post acquisition. We think it already contribute over a point of growth to away next year where numbers in terms of profitability has been tracking at the lower margin demand docs we believe that as part of the, the growth as well as the integration with Amdocs we can bring it over a couple of years into the corporate average of profitability, hence we talked about neutral impact to EPS in the first year for the acquisition, but I believe that pretty quickly. Afterwards, we can improve margins as well.
Ashwin Shirvaikar -- Citigroup -- Analyst
Got it. And then if I could ask about North America and I guess no discussion not to make a complete about without talking about consolidation as well as AT&T. I guess on the consolidation front, how soon after from a deal perspective things have settled, do you expect to see incremental benefit. Can you kind of walk us through, through the process there and it sounded like AT&T now it's stable. That is a good way to call it or I mean, if you could talk a little bit more about that?
Shuky Sheffer -- President & Chief Executive Officer
I mean, as we said on the call we cannot always predict what will be the activities of post-merge immediately, we know that's right now that we are engaging a lot on [Indecipherable] Spain to help them to prepare for the deal they want immediately post merger and, as you know, we have the strong relationship in Sprint, so many years large managed services engagement and we have the same in T-Mobile is the metro engagement and obviously with the [Indecipherable] brand . So, overall, as we said, we will see healthy -- healthy activities in 2019 so far. We believe that we will continue to -- continue to focus post-merger on the integration, but I cannot -- I think predict exactly what will happen. Obviously, we are optimistic, but at the same time we are caution.
Ashwin Shirvaikar -- Citigroup -- Analyst
Thank you.
Operator
Thank you. And our next question is from Tom Roderick from Stifel. Your line is now open.
Tom Roderick -- Stifel, Nicolaus & Company, Inc. -- Analyst
All right, thank you for taking my questions. So I wanted to just touch upon AT&T a little bit more. So it really encouraging to see that flatten out quarter-to-quarter, perhaps for sort of setting up to finally see a step back up and spend. But as you look at the categories, obviously there is a wide variety of things that you can do with AT&T. I'm particularly interested on the content side of the equation the NBC Universal [Phonetic] side, talk a little bit more about content. The way you can host that -- the way you can manage that, whether it's product catalog whether it's NFV support. I love to hear more about some of the growth initiatives on the content perspective from AT&T growth. Thank you.
Shuky Sheffer -- President & Chief Executive Officer
So regarding Amdocs Media, we have incumbency today which came with the Vubiquity and both Vindicia acquisition. And the activities are both from definitely the content management and licensing and at the same time for the motivation perspective from Vindicia. As you know they are -- because of the merger and everything was halted by the court actually they started activities I think several months ago to build the next generation organization and we are actively discussing with them different opportunities in different areas. They yet to mature also, we have good discussions and I believe that we have the right products and services to support them, because as you know they are going to come with new OTT services which is going to consumer, we have the assets regarding monetization, subscription management and definitely content management and content licensing.
So, so far we have traction. We extending all our deal with them. We have some incremental activity, but we continue working with them and for additional value we can bring to them.
Tom Roderick -- Stifel, Nicolaus & Company, Inc. -- Analyst
Got it. Thank you. Let me turn to my next question to Pay TV, a couple of nice amount this quarter with Xfinity with Charter, so really nice wins on that front. As you look at the opportunity on Pay TV, particularly US cable. Do you see more of an opportunity for their next generation services and both this quarter, you had some spectrum and some support in other arenas or do you still sort of harbor hopes to, to manage the full, the full spectrum of services, all the way through to core billing, talk a little bit more about how you think about the growth prospects of Pay TV? Thanks.
Shuky Sheffer -- President & Chief Executive Officer
First of all, you know, we will be breaking prior to the call apparently Pay TV is a bad name. I mean these guys are also selling TV. But if you check the revenues. There is a lot of coming from broadband and from security and from connected home, and now with mobility and obviously this is where the traditional Pay TV. So I think that obviously we inspire to support this industry, as they move to more of a multi-payer environment. So the tradition all of them actually the last year added the mobile part. They were missing before. So I believe that all the investments that we've done before in multi-play platforms from the customer experience to the old billing part or the capture on the handling all the provisioning up to the network in the -- all the activities only due to provision is very relevant to them, and we do many of these projects today in different places in the world, including North America, when we deploy end-to-end system it's including billing also. So I think this is eventually, the industry will transform and we move ahead today the majority of this operators are running really old legacy system. So, definitely we see a potential in the future to get to this -- to get into this domain.
Operator
Thank you. And our next question is from Will Power from Baird. Your line is now open.
William Power -- Robert W. Baird -- Analyst
Great. Yeah, a couple of questions. I guess first maybe just to come back to the TTS Wireless acquisition. I think it was a number of years ago now, you had acquired a couple of other network planning, engineering companies like [Indecipherable], cell site. How does that -- how does the new acquisition kind of fit with whatever tools, capabilities you had with those. I would've thought those might have been able to migrate from 3G, to 4G, to 5G as well. So I'd be interested in any color there and then it sounds like tomorrow you've paid a pretty reasonable multiple roughly one times revenues. I guess that suggest that perhaps there hasn't been much revenue growth, so I'd love to get some color on what the revenue growth has been, if it's not growing maybe any thoughts as to why.
Tamar Rapaport-Dagim -- Chief Financial Officer & Chief Operating Officer
So, actually it is growing and both organically, we've been growing, if you remember, we talked in the Analyst Day about our network being one of the growth drivers, we've been growing very nicely over the last couple of years, including the activities of the radio access optimization and also when we look at TTS Wireless as a stand-alone companies it has been growing, we've just seen a great opportunity that complemented what we had already built in-house. TTS is bringing a very nice know how about the deployment phase, the planning and deployment phase where our expenses were more about optimization post-deployment.
Shuky Sheffer -- President & Chief Executive Officer
5G.
Tamar Rapaport-Dagim -- Chief Financial Officer & Chief Operating Officer
Really 5G, as well. Plus, obviously sitting at the sweet spot of the major 5G roll-out that is happening in North America. So, we feel that this is continuing to support the growth opportunity we see in the software and services for the [Indecipherable]. And yes, we think we paid fair multiple, there is some contingent consideration based on some achievements moving forward. It not give you by size, but it's also giving some upside opportunities for the sellers in case certain thresholds are going to be met.
William Power -- Robert W. Baird -- Analyst
Okay. Okay, that's helpful. If I can -- and just maybe one more. Great to see that Comcast, Charter announcements any further color as to the timing of those, where you already helping those are this is now formalized are these new contracts and when do those start to benefit your results?
Shuky Sheffer -- President & Chief Executive Officer
Comcast is already in production. So Xfinity mobile today is running and then deployment as I mentioned on the managed services agreement. Charter, we volume this quarter and we are starting the project right now.
Operator
Thanks you. [Operator Instruction] And our next question is from Peter Zdebski from Barclays. Your line is now open.
Peter Zdebski -- Barclays Bank PLC -- Analyst
Yes, this is Peter on for Toby [Indecipherable] from Barclays. I was wondering, do you see any benefit or drag in the quarter from ASC 606 as you did last quarter?
Tamar Rapaport-Dagim -- Chief Financial Officer & Chief Operating Officer
Wasn't a material impact at all. We provide the full disclosure of 6-K, but shouldn't expect any big numbers there.
Peter Zdebski -- Barclays Bank PLC -- Analyst
Okay, thank you. And a follow-up on the, on TTS. If you could say, are they currently profitable. I know you mentioned there are neutral EPS impact, but in terms of their current?
Tamar Rapaport-Dagim -- Chief Financial Officer & Chief Operating Officer
So, as I, as I indicated, the margin is significantly lower than the corporate average we have with Amdocs, but we feel that given the synergies as well as the momentum we think we will see in terms of the growth, we should be able to improve margin over the several years to the corporate average. So, I don't think that should be concerning point for -- from your point of view.
Peter Zdebski -- Barclays Bank PLC -- Analyst
Okay, Okay. Thank you.
Operator
Thank you. And our next question is from Jackson Ader from JP Morgan. Your line is now open.
Jackson Ader -- J.P. Morgan -- Analyst
Great, thanks for taking my questions guys. First, I wanted to -- I may have missed this, that was kind of hoping around on some calls, but if I can follow-up on TTS, the 5G planning and optimization? How does this compare with some of the planning and optimization tools or solutions that you already had in the portfolio?
Tamar Rapaport-Dagim -- Chief Financial Officer & Chief Operating Officer
So, when we look on the things that we focused on, our core strength was more around the integration and optimization of existing rollout that has been done versus the strength that TTS is bringing in the planning and deployment phase, plus of course with the low having capabilities specifically within 5G roll out starting to happen in the US. We feel the combination of both is definitely winning package in terms of our open network strategy and capabilities. So you can see that as complementary in sense what we had before and built internally to capabilities, the TTS is bringing. With, of course, a great talent of 100s of network related engineers that they are helping us to scale up to the demand that we think we will, we are seeing today in the markets.
Jackson Ader -- J.P. Morgan -- Analyst
Okay, great and then follow-up, if we can just stay on TDS. What sort of opportunity do you feel like you have to maybe expand this to other geographies, with -- I think you mentioned in the release that this is mostly American operators here in the installed base?
Shuky Sheffer -- President & Chief Executive Officer
The information right now is mentioned North American in most of the television is here, but I believe we can take all the methodologies, capabilities and know-how that was developed over many years in GTS and take it to our other geographies that we are doing well. So, yes, we believe that we can expand it in time to other geographies.
Jackson Ader -- J.P. Morgan -- Analyst
Okay. All right, thanks guys.
Tamar Rapaport-Dagim -- Chief Financial Officer & Chief Operating Officer
Thank you.
Operator
Thank you. At this time, I'm showing no further questions. I would like to turn the call back over to Matthew Smith for closing remarks.
Matthew Smith -- Head of Investor Relations
Thanks you, and thanks everyone for joining us on the call this evening and for your interest in Amdocs. We look forward to hearing from you in the coming days. And if you do have any additional questions, please call the Investor Relations Group. With that, have a great evening. Thanks.
Operator
[Operator Closing Remarks]
Duration: 39 minutes
Call participants:
Matthew Smith -- Head of Investor Relations
Shuky Sheffer -- President & Chief Executive Officer
Tamar Rapaport-Dagim -- Chief Financial Officer & Chief Operating Officer
Ashwin Shirvaikar -- Citigroup -- Analyst
Tom Roderick -- Stifel, Nicolaus & Company, Inc. -- Analyst
William Power -- Robert W. Baird -- Analyst
Peter Zdebski -- Barclays Bank PLC -- Analyst
Jackson Ader -- J.P. Morgan -- Analyst
