CSG Accelerates Diversification Strategy with Accretive Acquisition of High Growth Payment Company iCG Pay
CSG (NASDAQ: CSGS) announced the acquisition of iCheckGateway.com (iCG Pay), a North American ACH and credit card payment processing company. The acquisition is expected to enhance CSG's profitability in 2024. iCG Pay has a growing customer base in sectors like financial services, insurance, utilities, and government, with 2023 revenue of approximately $9.5 million. CSG paid an upfront purchase price of $17 million, with additional earn-out amounts based on performance goals. This acquisition aims to integrate both companies' solutions, expand channel partnerships, and strengthen CSG's leadership in the payments market.
- CSG expects the acquisition to be accretive to profitability in 2024.
- iCG Pay has a rapidly growing customer base in high recurring revenue industries.
- The acquisition adds new ISV channel partnerships, enhancing market reach.
- iCG Pay delivered double-digit organic revenue growth, with 2023 revenue at $9.5 million.
- CSG strengthens its leadership in North American payments markets with this acquisition.
- The acquisition cost CSG an upfront purchase price of $17 million.
- Additional earn-out amounts are tied to performance goals, adding financial uncertainty.
Insights
CSG's acquisition of iCG Pay could have significant implications for its financial outlook. The upfront purchase price of
The acquisition is expected to be accretive to CSG's profitability by 2024, indicating that the returns from this investment will likely enhance earnings per share (EPS) soon. For investors, this is a positive signal as it highlights the management's confidence in the acquired company's ability to generate substantial profits and integrate seamlessly into CSG's existing operations.
iCG Pay’s double-digit organic revenue growth and
In terms of valuation, the acquisition's price point relative to iCG Pay’s revenue suggests a reasonable multiple, especially considering the growth prospects. However, the success of this acquisition will largely depend on effective integration and the realization of anticipated synergies.
The acquisition of iCG Pay presents strategic advantages for CSG in the highly competitive payments processing industry. By combining forces with iCG Pay, which has a growing merchant base and established partnerships with independent software vendors (ISVs), CSG can enhance its competitive positioning.
For retail investors, it's important to understand that the ACH (Automated Clearing House) and credit card processing markets are rapidly evolving with increasing demand for seamless and secure payment solutions. The integration of iCG Pay’s solutions into CSG's platform could potentially attract more merchants and ISVs, thereby boosting CSG’s market presence and customer base.
Moreover, the addition of new ISV channel partnerships expands CSG's distribution network, providing opportunities for cross-selling and upselling of complementary products and services. This diversification strategy not only helps in capturing a larger market share but also in sustaining long-term growth.
While the immediate financial impact is positive, investors should monitor the integration process and the achievement of performance goals tied to the earn-out. The long-term success of this acquisition hinges on CSG’s ability to leverage iCG Pay's technological capabilities and market relationships effectively.
The integration of iCG Pay’s technology with CSG’s existing solutions could be a game-changer in the payments processing industry. iCG Pay brings advanced ACH and credit card processing technology that can enhance CSG’s product offerings, making them more attractive to merchants and ISVs.
For investors, it's essential to recognize that technological synergy is a key factor in the success of such acquisitions. The ability to seamlessly merge iCG Pay’s technology with CSG’s platform will likely result in improved transaction processing efficiency, enhanced security features and a broader range of payment solutions, all of which are critical in retaining and attracting clients.
Furthermore, the acquisition brings a team of experienced payments leaders who can drive innovation and address the technological challenges that come with integration. This human capital is equally valuable as it ensures continuity and leverages domain expertise to create a more competitive offerings portfolio.
However, potential risks include integration challenges and the alignment of technological roadmaps. Investors should keep an eye on updates regarding the integration process and any technological advancements that result from the combined entity.
iCG Pay has a rapidly growing merchant customer base in high recurring revenue industry verticals including financial services, insurance, utilities and government. Both CSG and iCG Pay provide market leading solutions in ACH and credit card processing such that merchants and independent software vendor (ISV) partners will benefit greatly from our combined offerings once the two platforms are fully integrated. The acquisition also adds attractive new ISV channel partnerships and a proven team of payments leaders who will help extend CSG’s leadership in the North American payments markets.
“We are extremely excited to welcome the talented iCG Pay team and the innovative merchants and ISV partners to CSG,” said Brian Shepherd, president and chief executive officer of CSG. “CSG is a culture first, customer obsessed technology leader focused on solving our customers’ biggest business challenges. This acquisition is a great example of our relentless commitment to grow and diversify our business in a way that adds value for shareholders, customers and employees.”
iCG Pay has historically delivered double-digit organic revenue growth with 2023 total revenue less transaction fees of approximately
1 There are additional earn-out amounts tied to performance goals.
About CSG
CSG empowers companies to build unforgettable experiences, making it easier for people and businesses to connect with, use and pay for the services they value most. Our customer experience, billing and payments solutions help companies of any size make money and make a difference. With our SaaS solutions, company leaders can take control of their future and tap into guidance along the way from our fiercely committed and forward-thinking CSGers around the world.
Want to be future-ready and a change-maker like the global brands that trust CSG? Visit csgi.com to learn more.
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Tammy Hovey
Public Relations
+1 (917) 520-2751
tammy.hovey@csgi.com
John Rea
Investor Relations
+1 (210) 687-4409
john.rea@csgi.com
Source: CSG
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