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CSG Systems International Reports Second Quarter 2024 Results

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CSG Systems International (NASDAQ: CSGS) reported solid Q2 2024 results, with total revenue of $290.3 million, up 1.4% year-over-year. The company achieved GAAP EPS of $0.48 and non-GAAP EPS of $1.02, a 27.5% increase from Q2 2023. CSG raised its 2024 profitability and non-GAAP EPS guidance targets, while reiterating other guidance. The company announced exciting customer wins, including Telenor Denmark, Telstra, One New Zealand, and Lyse Norway. CSG's Board authorized an additional $100 million share repurchase program. The company's industry diversification strategy progressed, with 31% of revenue now coming from verticals outside Communication Service Providers, up from 7% in 2017.

CSG Systems International (NASDAQ: CSGS) ha riportato risultati solidi per il secondo trimestre del 2024, con un fatturato totale di 290,3 milioni di dollari, in crescita dell'1,4% rispetto all'anno precedente. L'azienda ha raggiunto un GAAP EPS di 0,48 dollari e un non-GAAP EPS di 1,02 dollari, con un aumento del 27,5% rispetto al secondo trimestre del 2023. CSG ha rivisto al rialzo le sue previsioni di redditività e il target di non-GAAP EPS per il 2024, confermando altre indicazioni. L'azienda ha annunciato importanti successi con i clienti, tra cui Telenor Danimarca, Telstra, One Nuova Zelanda e Lyse Norvegia. Il Consiglio di CSG ha autorizzato un programma di riacquisto di azioni aggiuntivo da 100 milioni di dollari. La strategia di diversificazione settoriale dell'azienda ha fatto progressi, con il 31% del fatturato proveniente ora da settori al di fuori dei Fornitori di Servizi di Comunicazione, rispetto al 7% nel 2017.

CSG Systems International (NASDAQ: CSGS) reportó resultados sólidos en el segundo trimestre de 2024, con ingresos totales de 290,3 millones de dólares, un aumento del 1,4% en comparación con el año anterior. La compañía logró un EPS GAAP de 0,48 dólares y un EPS no GAAP de 1,02 dólares, un incremento del 27,5% respecto al segundo trimestre de 2023. CSG elevó sus objetivos de rentabilidad y de EPS no GAAP para 2024, mientras reafirmó otras guías. La empresa anunció emocionantes nuevos clientes, incluidos Telenor Dinamarca, Telstra, One Nueva Zelanda y Lyse Noruega. La Junta de CSG autorizó un programa de recompra de acciones adicional por 100 millones de dólares. La estrategia de diversificación de la industria de la compañía avanzó, con el 31% de los ingresos ahora provenientes de sectores fuera de los Proveedores de Servicios de Comunicación, en comparación con el 7% en 2017.

CSG 시스템스 인터내셔널(NASDAQ: CSGS)는 2024년 2분기 실적을 발표하며 총 수익 2억 9,030만 달러를 기록했다고 밝혔으며, 이는 전년 대비 1.4% 증가한 수치입니다. 회사는 GAAP EPS 0.48 달러, 비GAAP EPS 1.02 달러를 달성하며, 이는 2023년 2분기 대비 27.5% 증가한 것입니다. CSG는 2024년 수익성 및 비GAAP EPS 목표를 상향 조정했으며, 다른 가이던스도 재확인했습니다. 또한 Telenor Denmark, Telstra, One New Zealand, Lyse Norway를 포함한 흥미로운 고객 확보 발표했습니다. CSG의 이사회는 추가 1억 달러의 자사주 매입 프로그램을 승인했습니다. 회사의 산업 다각화 전략이 진행되어, 현재 수익의 31%가 통신 서비스 공급업체 외의 분야에서 발생하고 있으며, 이는 2017년의 7%에서 증가한 수치입니다.

CSG Systems International (NASDAQ: CSGS) a annoncé des résultats solides pour le deuxième trimestre 2024, avec un chiffre d'affaires total de 290,3 millions de dollars, en hausse de 1,4 % par rapport à l'année précédente. L'entreprise a réalisé un BPA GAAP de 0,48 dollar et un BPA non-GAAP de 1,02 dollar, soit une augmentation de 27,5 % par rapport au deuxième trimestre 2023. CSG a relevé ses prévisions de rentabilité et ses objectifs de BPA non-GAAP pour 2024, tout en réitérant d'autres prévisions. L'entreprise a annoncé des succès clients passionnants, y compris Telenor Danemark, Telstra, One Nouvelle-Zélande et Lyse Norvège. Le conseil d'administration de CSG a autorisé un programme supplémentaire de rachat d'actions de 100 millions de dollars. La stratégie de diversification sectorielle de l'entreprise a progressé, 31 % des revenus provenant désormais de secteurs hors Prestataires de Services de Communication, contre 7 % en 2017.

CSG Systems International (NASDAQ: CSGS) meldete solide Ergebnisse für das 2. Quartal 2024, mit Gesamterlösen von 290,3 Millionen US-Dollar, was einer Steigerung von 1,4 % im Vergleich zum Vorjahr entspricht. Das Unternehmen erzielte GAAP EPS von 0,48 US-Dollar und non-GAAP EPS von 1,02 US-Dollar, was einem Anstieg von 27,5 % gegenüber dem 2. Quartal 2023 entspricht. CSG erhöhte seine Ziele für Rentabilität und non-GAAP EPS für 2024 und bestätigte andere Prognosen. Das Unternehmen kündigte spannende Neukunden an, darunter Telenor Dänemark, Telstra, One Neuseeland und Lyse Norwegen. Der Vorstand von CSG genehmigte ein zusätzliches Aktienrückkaufprogramm über 100 Millionen US-Dollar. Die Diversifizierungsstrategie des Unternehmens machte Fortschritte, wobei nun 31 % des Umsatzes aus Bereichen außerhalb von Kommunikationsdienstleistern stammen, verglichen mit 7 % im Jahr 2017.

Positive
  • Revenue increased by 1.4% year-over-year to $290.3 million
  • Non-GAAP EPS grew by 27.5% to $1.02
  • Non-GAAP operating income increased by 7.4% to $46.1 million
  • New customer wins including Telenor Denmark, Telstra, One New Zealand, and Lyse Norway
  • Board authorized additional $100 million share repurchase program
  • Raised 2024 profitability and non-GAAP EPS guidance targets
  • Industry diversification strategy progressed, with 31% of revenue from non-CSP verticals
Negative
  • GAAP operating income decreased by 9.9% to $25.4 million
  • GAAP operating margin declined from 9.9% to 8.8%
  • $5 million increase in restructuring and reorganization charges due to workforce reduction

Insights

CSG Systems International's Q2 2024 results show a mixed performance. While revenue increased by 1.4% to $290.3 million, GAAP operating income decreased by 9.9% to $25.4 million. However, non-GAAP metrics paint a more positive picture:

  • Non-GAAP operating income increased by 7.4% to $46.1 million
  • Non-GAAP EPS rose by 27.5% to $1.02
  • Non-GAAP adjusted operating margin improved to 17.3% from 16.2%

The company's raised guidance for profitability and non-GAAP EPS is encouraging, indicating management's confidence in future performance. The additional $100 million share repurchase authorization further supports this optimism.

CSG's strategic shift towards industry diversification is yielding results, with 31% of revenue now coming from verticals outside Communication Service Providers, up from 7% in 2017. This diversification could provide resilience against sector-specific downturns. The company's recent customer wins, including Telenor Denmark and Telstra, demonstrate its ability to compete in a challenging macroeconomic environment. However, investors should note the slight decline in GAAP operating margin to 8.8% from 9.9% year-over-year, which warrants monitoring in future quarters.

CSG's focus on SaaS and related solutions is driving growth, offsetting lower software and services revenue. This shift towards recurring revenue models could enhance long-term stability. The company's recent acquisitions, totaling $33 million, suggest a strategic approach to expanding capabilities or market reach. However, the $5 million increase in restructuring charges related to workforce reduction indicates ongoing operational adjustments. Investors should watch for the impact of these changes on innovation and service delivery in upcoming quarters.

DENVER--(BUSINESS WIRE)-- CSG (NASDAQ: CSGS) today reported results for the quarter ended June 30, 2024.

Exciting Customer Wins including Telenor Denmark, Telstra, One New Zealand & Lyse Norway

Raising 2024 Profitability and Non-GAAP EPS Guidance Targets; Reiterating All Others

Board of Directors Authorized Additional $100 Million Share Repurchase Program

Financial Results:

Second quarter 2024 financial results:

  • Total revenue was $290.3 million.
  • GAAP operating income was $25.4 million, or an operating margin of 8.8%, and non-GAAP operating income was $46.1 million, or a non-GAAP adjusted operating margin of 17.3%.
  • GAAP earnings per diluted share (EPS) was $0.48 and non-GAAP EPS was $1.02.
  • Cash flows from operations were $43.1 million, with non-GAAP free cash flow of $38.8 million.

Shareholder Returns:

  • CSG declared its quarterly cash dividend of $0.30 per share of common stock, or a total of approximately $9 million, to shareholders.
  • During the second quarter of 2024, CSG repurchased under its stock repurchase program, approximately 219,000 shares of its common stock for approximately $10 million.
  • In August, CSG’s Board of Directors increased the authorization under CSG’s existing Stock Repurchase Program by an additional $100 million.

Business Activities:

  • During the quarter, CSG closed two acquisitions at a total combined purchase price of approximately $33 million.

“Team CSG delivered solid results in a challenging macroeconomic environment during the first half of 2024. With this backdrop, we are thrilled to raise our profitability and non-GAAP EPS guidance targets for the full year. Further, we are very excited to announce several important new logo sales wins and deal expansions, including with Telenor Denmark, One New Zealand (formerly Vodafone New Zealand), Lyse Norway, Telstra, and many others. We also achieved another high-water mark on our industry diversification strategy as 31% of our revenue now comes from bigger, faster growing industry verticals outside of the Communication Service Providers (“CSPs”) space versus only 7% of our revenue from these other industry verticals in 2017,” said Brian Shepherd, President and Chief Executive Officer of CSG. “From a financial perspective, we are excited that the new sales wins combined with our proven ability to expand CSG’s operating leverage will enable us to grow profitability and non-GAAP EPS even faster than expected when we started the year, which gives our Board of Directors the confidence to authorize an additional $100 million share repurchase plan on top of the $480 million we have returned to shareholders via dividends and share repurchases since 2020.”

Financial Overview (unaudited)

(in thousands, except per share amounts and percentages):

 

 

Quarter Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2024

 

 

2023

 

 

Percent
Changed

 

 

2024

 

 

2023

 

 

Percent
Changed

 

GAAP Results:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

290,318

 

 

$

286,327

 

 

 

1.4

%

 

$

585,453

 

 

$

585,066

 

 

 

0.1

%

Operating Income

 

 

25,420

 

 

 

28,206

 

 

 

(9.9

%)

 

 

57,217

 

 

 

66,399

 

 

 

(13.8

%)

Operating Margin Percentage

 

 

8.8

%

 

 

9.9

%

 

 

 

 

 

 

9.8

%

 

 

11.3

%

 

 

 

 

EPS

 

$

0.48

 

 

$

0.45

 

 

 

6.7

%

 

$

1.16

 

 

$

1.14

 

 

 

1.8

%

Non-GAAP Results:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

$

46,141

 

 

$

42,950

 

 

 

7.4

%

 

$

91,009

 

 

$

96,461

 

 

 

(5.7

%)

Adjusted Operating Margin Percentage

 

 

17.3

%

 

 

16.2

%

 

 

 

 

 

 

17.0

%

 

 

17.8

%

 

 

 

 

EPS

 

$

1.02

 

 

$

0.80

 

 

 

27.5

%

 

$

2.02

 

 

$

1.84

 

 

 

9.8

%

For additional information and reconciliations regarding CSG’s use of non-GAAP financial measures, please refer to the attached Exhibit 2 and the Investor Relations section of CSG’s website at csgi.com.

Results of Operations

GAAP Results: Total revenue for the second quarter of 2024 was $290.3 million, a 1.4% increase when compared to revenue of $286.3 million for the second quarter of 2023. The increase in revenue can be attributed to the continued growth of our SaaS and related solutions revenue in addition to the approximately $3 million of revenue generated from the acquired businesses which offset lower software and services revenue for the quarter.

GAAP operating income for the second quarter of 2024 was $25.4 million, or 8.8% of total revenue, compared to $28.2 million, or 9.9% of total revenue, for the second quarter of 2023. The decrease in operating income is mainly attributed to the $5 million increase in restructuring and reorganization charges in the second quarter of 2024 related to a reduction in CSG’s global workforce. This workforce reduction is part of initiatives to better align and allocate CSG’s resources to areas of the business where CSG has identified growth opportunities.

GAAP EPS for the second quarter of 2024 was $0.48, compared to $0.45 for the second quarter of 2023, with the second quarter of 2024 benefiting primarily from a lower share count.

Non-GAAP Results: Non-GAAP operating income for the second quarter of 2024 was $46.1 million, or a non-GAAP adjusted operating margin of 17.3%, compared to $43.0 million, or a non-GAAP adjusted operating margin of 16.2% for the second quarter of 2023. The increase in non-GAAP operating income and non-GAAP adjusted operating margin can be primarily attributed to lower non-GAAP operating expenses.

Non-GAAP EPS for the second quarter of 2024 was $1.02 compared to $0.80 for the second quarter of 2023. The increase in non-GAAP EPS is mainly due to the higher non-GAAP operating income, discussed above, and the lower share count.

Balance Sheet and Cash Flows

Cash and cash equivalents as of June 30, 2024 were $110.4 million compared to $120.8 million as of March 31, 2024 and $186.3 million as of December 31, 2023. CSG had net cash flows provided by operations for the second quarters ended June 30, 2024 and 2023 of $43.1 million and $12.4 million, respectively, and non-GAAP free cash flow of $38.8 million and $4.7 million, respectively.

Summary of Financial Guidance

CSG is revising its financial guidance for the full year 2024, as follows:

 

 

As of August 7, 2024

 

Previous

GAAP Measures:

 

 

 

 

Revenue

 

No change

 

$1,200 - $1,240 million

Non-GAAP Measures:

 

 

 

 

Adjusted Operating Margin Percentage

 

17.3% - 17.7%

 

17.0% - 17.4%

EPS

 

$4.05 - $4.35

 

$3.85 - $4.15

Adjusted EBITDA

 

$247 - $257 million

 

$245 - $255 million

Free Cash Flow

 

No change

 

$95 - $135 million

For additional information and reconciliations regarding CSG’s use of non-GAAP financial measures, please refer to the attached Exhibit 2 and the Investor Relations section of CSG’s website at csgi.com.

Conference Call

CSG will host a conference call on Wednesday, August 7, 2024 at 5:00 p.m. ET, to discuss CSG’s second quarter of 2024 earnings results. The call will be carried live and archived on the Internet. A link to the conference call is available at http://ir.csgi.com. In addition, to reach the conference by phone, call 1-888-412-4131 and use the passcode 2327393.

Additional Information

For information about CSG, please visit CSG’s web site at csgi.com. Additional information can be found in the Investor Relations section of the website.

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.

Forward-Looking Statements

This news release contains forward-looking statements as defined under the Securities Act of 1933, as amended, that are based on assumptions about a number of important factors and involve risks and uncertainties that could cause actual results to differ materially from what appears in this news release. Some of these key factors include, but are not limited to the following items:

  • CSG derives a significant portion of its revenue from a limited number of customers, with approximately forty percent of its revenue from its two largest customers;
  • Fluctuations in credit market conditions, general global economic and political conditions, and foreign currency exchange rates;
  • CSG’s ability to maintain a reliable, secure computing environment;
  • Continued market acceptance of CSG’s products and services;
  • CSG’s ability to continuously develop and enhance products in a timely, cost-effective, technically advanced and competitive manner;
  • CSG’s ability to deliver its solutions in a timely fashion within budget, particularly large and complex software implementations;
  • CSG’s dependency on the global telecommunications industry, and in particular, the North American telecommunications industry;
  • CSG’s ability to meet its financial expectations;
  • Increasing competition in CSG’s market from companies of greater size and with broader presence;
  • CSG’s ability to successfully integrate and manage acquired businesses or assets to achieve expected strategic, operating and financial goals;
  • CSG’s ability to protect its intellectual property rights;
  • CSG’s ability to conduct business in the international marketplace;
  • CSG’s ability to comply with applicable U.S. and International laws and regulations; and
  • CSG’s business may be disrupted, and its results of operations and cash flows adversely affected by a global pandemic.

This list is not exhaustive, and readers are encouraged to review the additional risks and important factors described in CSG’s reports on Forms 10-K and 10-Q and other filings made with the SEC.

CSG SYSTEMS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS-UNAUDITED

(in thousands)

 

 

 

June 30,
2024

 

 

December 31,
2023

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

110,435

 

 

$

186,264

 

Settlement and merchant reserve assets

 

 

232,054

 

 

 

274,699

 

Trade accounts receivable:

 

 

 

 

 

 

 

 

Billed, net of allowance of $4,720 and $5,432

 

 

266,214

 

 

 

267,680

 

Unbilled

 

 

84,570

 

 

 

82,163

 

Income taxes receivable

 

 

10,028

 

 

 

1,345

 

Other current assets

 

 

55,740

 

 

 

50,075

 

Total current assets

 

 

759,041

 

 

 

862,226

 

Non-current assets:

 

 

 

 

 

 

 

 

Property and equipment, net of depreciation of $131,573 and $121,816

 

 

59,111

 

 

 

65,545

 

Operating lease right-of-use assets

 

 

28,656

 

 

 

34,283

 

Software, net of amortization of $164,369 and $157,601

 

 

21,408

 

 

 

14,224

 

Goodwill

 

 

317,129

 

 

 

308,596

 

Acquired customer contracts, net of amortization of $128,867 and $126,469

 

 

46,818

 

 

 

35,879

 

Customer contract costs, net of amortization of $44,140 and $42,094

 

 

57,128

 

 

 

54,421

 

Deferred income taxes

 

 

54,934

 

 

 

57,855

 

Other assets

 

 

9,063

 

 

 

10,017

 

Total non-current assets

 

 

594,247

 

 

 

580,820

 

Total assets

 

$

1,353,288

 

 

$

1,443,046

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

7,500

 

 

$

7,500

 

Operating lease liabilities

 

 

14,841

 

 

 

15,946

 

Customer deposits

 

 

35,993

 

 

 

41,035

 

Trade accounts payable

 

 

52,862

 

 

 

46,406

 

Accrued employee compensation

 

 

49,765

 

 

 

84,380

 

Settlement and merchant reserve liabilities

 

 

229,636

 

 

 

273,817

 

Deferred revenue

 

 

56,145

 

 

 

54,199

 

Income taxes payable

 

 

645

 

 

 

4,104

 

Other current liabilities

 

 

29,057

 

 

 

33,449

 

Total current liabilities

 

 

476,444

 

 

 

560,836

 

Non-current liabilities:

 

 

 

 

 

 

 

 

Long-term debt, net of unamortized discounts of $13,893 and $15,628

 

 

532,982

 

 

 

534,997

 

Operating lease liabilities

 

 

27,722

 

 

 

34,360

 

Deferred revenue

 

 

22,375

 

 

 

23,447

 

Income taxes payable

 

 

3,241

 

 

 

3,041

 

Deferred income taxes

 

 

122

 

 

 

123

 

Other non-current liabilities

 

 

17,073

 

 

 

12,916

 

Total non-current liabilities

 

 

603,515

 

 

 

608,884

 

Total liabilities

 

 

1,079,959

 

 

 

1,169,720

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Preferred stock, par value $.01 per share; 10,000 shares authorized; zero shares issued and outstanding

 

 

-

 

 

 

-

 

Common stock, par value $.01 per share; 100,000 shares authorized; 29,591 and 29,541 shares outstanding

 

 

717

 

 

 

713

 

Additional paid-in capital

 

 

499,995

 

 

 

490,947

 

Treasury stock, at cost; 40,802 and 40,398 shares

 

 

(1,155,542

)

 

 

(1,136,055

)

Accumulated other comprehensive income (loss):

 

 

 

 

 

 

 

 

Unrealized gain on short-term investments, net of tax

 

 

-

 

 

 

1

 

Cumulative foreign currency translation adjustments

 

 

(55,629

)

 

 

(50,414

)

Accumulated earnings

 

 

983,788

 

 

 

968,134

 

Total stockholders' equity

 

 

273,329

 

 

 

273,326

 

Total liabilities and stockholders' equity

$

1,353,288

 

 

$

1,443,046

 

 

CSG SYSTEMS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME-UNAUDITED

(in thousands, except per share amounts)

 

 

Quarter Ended

 

Six Months Ended

 

 

June 30, 2024

 

June 30, 2023

 

June 30, 2024

 

June 30, 2023

 

Revenue

$

290,318

 

 

$

286,327

 

 

$

585,453

 

 

$

585,066

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue (exclusive of depreciation, shown separately below)

 

152,892

 

 

 

151,142

 

 

 

310,779

 

 

 

306,163

 

 

Other operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

38,411

 

 

 

36,645

 

 

 

74,506

 

 

 

72,109

 

 

Selling, general and administrative

 

61,159

 

 

 

62,686

 

 

 

122,881

 

 

 

121,833

 

 

Depreciation

 

5,337

 

 

 

5,573

 

 

 

10,973

 

 

 

11,293

 

 

Restructuring and reorganization charges

 

7,099

 

 

 

2,075

 

 

 

9,097

 

 

 

7,269

 

 

Total operating expenses

 

264,898

 

 

 

258,121

 

 

 

528,236

 

 

 

518,667

 

 

Operating income

 

25,420

 

 

 

28,206

 

 

 

57,217

 

 

 

66,399

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(7,698

)

 

 

(7,837

)

 

 

(15,204

)

 

 

(15,056

)

 

Interest income

 

2,103

 

 

 

772

 

 

 

4,719

 

 

 

1,341

 

 

Other, net

 

174

 

 

 

(1,428

)

 

 

732

 

 

 

(3,860

)

 

Total other

 

(5,421

)

 

 

(8,493

)

 

 

(9,753

)

 

 

(17,575

)

 

Income before income taxes

 

19,999

 

 

 

19,713

 

 

 

47,464

 

 

 

48,824

 

 

Income tax provision

 

(6,170

)

 

 

(5,759

)

 

 

(14,168

)

 

 

(13,942

)

 

Net income

$

13,829

 

 

$

13,954

 

 

$

33,296

 

 

$

34,882

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

28,546

 

 

 

30,629

 

 

 

28,531

 

 

 

30,524

 

 

Diluted

 

28,600

 

 

 

30,726

 

 

 

28,698

 

 

 

30,668

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.48

 

 

$

0.46

 

 

$

1.17

 

 

$

1.14

 

 

Diluted

 

0.48

 

 

 

0.45

 

 

 

1.16

 

 

 

1.14

 

 

 

CSG SYSTEMS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS-UNAUDITED

(in thousands)

 

 

Six Months Ended

 

 

June 30, 2024

 

June 30, 2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

$

33,296

 

 

$

34,882

 

 

Adjustments to reconcile net income to net cash provided by operating activities-

 

 

 

 

 

 

Depreciation

 

11,409

 

 

 

11,506

 

 

Amortization

 

24,147

 

 

 

22,808

 

 

Asset impairment

 

-

 

 

 

1,689

 

 

Gain on lease modifications

 

-

 

 

 

(3,812

)

 

Unrealized foreign currency transaction (gain) loss, net

 

(254

)

 

 

241

 

 

Deferred income taxes

 

2,311

 

 

 

(4,673

)

 

Stock-based compensation

 

16,371

 

 

 

14,056

 

 

Subtotal

 

87,280

 

 

 

76,697

 

 

Changes in operating assets and liabilities, net of acquired amounts:

 

 

 

 

 

 

Trade accounts receivable, net

 

892

 

 

 

(7,789

)

 

Other current and non-current assets and liabilities

 

(11,154

)

 

 

(16,083

)

 

Income taxes payable/receivable

 

(11,937

)

 

 

(7,235

)

 

Trade accounts payable and accrued liabilities

 

(52,596

)

 

 

(26,853

)

 

Deferred revenue

 

1,269

 

 

 

9,046

 

 

Net cash provided by operating activities

 

13,754

 

 

 

27,783

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of software, property, and equipment

 

(9,073

)

 

 

(16,428

)

 

Proceeds from sale/maturity of short-term investments

 

-

 

 

 

71

 

 

Business combinations, net of cash and settlement assets acquired of $46,432 and zero

 

17,293

 

 

 

-

 

 

Net cash provided by (used in) investing activities

 

8,220

 

 

 

(16,357

)

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from issuance of common stock

 

1,618

 

 

 

1,664

 

 

Payment of cash dividends

 

(18,088

)

 

 

(17,712

)

 

Repurchase of common stock

 

(27,943

)

 

 

(9,418

)

 

Deferred acquisition payments

 

(488

)

 

 

(1,220

)

 

Proceeds from long-term debt

 

15,000

 

 

 

30,000

 

 

Payments on long-term debt

 

(18,750

)

 

 

(18,750

)

 

Payments on financing obligations

 

(469

)

 

 

-

 

 

Settlement and merchant reserve activity

 

(88,703

)

 

 

(63,107

)

 

Net cash used in financing activities

 

(137,823

)

 

 

(78,543

)

 

Effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash

 

(2,438

)

 

 

708

 

 

 

 

 

 

 

 

 

Net decrease in cash, cash equivalents, and restricted cash

 

(118,287

)

 

 

(66,409

)

 

 

 

 

 

 

 

 

Cash, cash equivalents, and restricted cash, beginning of period

 

463,876

 

 

 

389,018

 

 

Cash, cash equivalents, and restricted cash, end of period

$

345,589

 

 

$

322,609

 

 

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

Cash paid during the period for-

 

 

 

 

 

 

Interest

$

13,566

 

 

$

14,672

 

 

Income taxes

 

23,822

 

 

 

23,720

 

 

 

 

 

 

 

 

 

Non-cash investing and financing activities:

 

 

 

 

 

 

Software, property, and equipment included in current and noncurrent liabilities

 

9,017

 

 

 

-

 

 

 

 

 

 

 

 

 

Reconciliation of cash, cash equivalents, and restricted cash:

 

 

 

 

 

 

Cash and cash equivalents

$

110,435

 

 

$

146,212

 

 

Settlement and merchant reserve assets

 

232,054

 

 

 

176,397

 

 

Restricted cash included in current and non-current assets

 

3,100

 

 

 

-

 

 

Total cash, cash equivalents, and restricted cash

$

345,589

 

 

$

322,609

 

 

 

EXHIBIT 1

CSG SYSTEMS INTERNATIONAL, INC.

SUPPLEMENTAL REVENUE ANALYSIS

 

Revenue by Significant Customers: 10% or more of Revenue

 

 

 

Quarter Ended

 

 

Quarter Ended

 

 

Quarter Ended

 

 

 

June 30, 2024

 

 

March 31, 2024

 

 

June 30, 2023

 

 

 

Amount

 

 

% of Revenue

 

 

Amount

 

 

% of Revenue

 

 

Amount

 

 

% of Revenue

 

Charter

 

$

60,629

 

 

 

21

%

 

$

60,849

 

 

 

21

%

 

$

60,175

 

 

 

21

%

Comcast

 

 

54,576

 

 

 

19

%

 

 

52,804

 

 

 

18

%

 

 

53,757

 

 

 

19

%

Revenue by Vertical

 

 

 

Quarter Ended

 

Quarter Ended

 

Quarter Ended

 

 

June 30, 2024

 

March 31, 2024

 

June 30, 2023

Broadband/Cable/Satellite

 

 

53

%

 

 

51

%

 

 

54

%

Telecommunications

 

 

16

%

 

 

19

%

 

 

18

%

All other

 

 

31

%

 

 

30

%

 

 

28

%

Total revenue

 

 

100

%

 

 

100

%

 

 

100

%

Revenue by Geography

 

 

Quarter Ended

 

Quarter Ended

 

Quarter Ended

 

 

June 30, 2024

 

March 31, 2024

 

June 30, 2023

Americas

 

 

89

%

 

 

86

%

 

 

87

%

Europe, Middle East and Africa

 

 

6

%

 

 

9

%

 

 

9

%

Asia Pacific

 

 

5

%

 

 

5

%

 

 

4

%

Total revenue

 

 

100

%

 

 

100

%

 

 

100

%

EXHIBIT 2
CSG SYSTEMS INTERNATIONAL, INC.
DISCLOSURES FOR NON-GAAP FINANCIAL MEASURES

Use of Non-GAAP Financial Measures and Limitations

To supplement its condensed consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP), CSG uses non-GAAP operating income, non-GAAP adjusted operating margin percentage, non-GAAP EPS, non-GAAP adjusted EBITDA, and non-GAAP free cash flow. CSG believes that these non-GAAP financial measures, when reviewed in conjunction with its GAAP financial measures, provide investors with greater transparency to the information used by CSG’s management in its financial and operational decision making. CSG uses these non-GAAP financial measures for the following purposes:

  • Certain internal financial planning, reporting, and analysis;
  • Forecasting and budgeting;
  • Certain management compensation incentives; and
  • Communications with CSG’s Board of Directors, stockholders, financial analysts, and investors.

These non-GAAP financial measures are provided with the intent of providing investors with the following information:

  • A more complete understanding of CSG’s underlying operational results, trends, and cash generating capabilities;
  • Consistency and comparability with CSG’s historical financial results; and
  • Comparability to similar companies, many of which present similar non-GAAP financial measures to investors.

Non-GAAP financial measures are not measures of performance under GAAP, and therefore should not be considered in isolation or as a substitute for GAAP financial information. Limitations with the use of non-GAAP financial measures include the following items:

  • Non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles;
  • The way in which CSG calculates non-GAAP financial measures may differ from the way in which other companies calculate similar non-GAAP financial measures;
  • Non-GAAP financial measures do not include all items of income and expense that affect CSG’s operations and that are required by GAAP to be included in financial statements;
  • Certain adjustments to CSG’s non-GAAP financial measures result in the exclusion of items that are recurring and will be reflected in CSG’s financial statements in future periods; and
  • Certain charges excluded from CSG’s non-GAAP financial measures are cash expenses, and therefore do impact CSG’s cash position.

CSG compensates for these limitations by relying primarily on its GAAP results and using non-GAAP financial measures as a supplement only. Additionally, CSG provides specific information regarding the treatment of GAAP amounts considered in preparing the non-GAAP financial measures and reconciles each non-GAAP financial measure to the most directly comparable GAAP measure.

Non-GAAP Financial Measures: Basis of Presentation

The table below outlines the exclusions from CSG’s non-GAAP financial measures:

Non-GAAP Exclusions

 

Operating Income

 

Adjusted Operating
Margin Percentage

 

EPS

Transaction fees

 

 

X

 

Restructuring and reorganization charges

 

X

 

X

 

X

Executive transition costs

 

X

 

X

 

X

Acquisition-related expenses:

 

 

 

 

 

 

Amortization of acquired intangible assets

 

X

 

X

 

X

Transaction-related costs

 

X

 

X

 

X

Stock-based compensation

 

X

 

X

 

X

Gain (loss) on debt extinguishment/conversion

 

 

 

X

Gain (loss) on acquisitions or dispositions

 

 

 

X

Unusual income tax matters

 

 

 

X

CSG believes that excluding certain items in calculating its non-GAAP financial measures provides meaningful supplemental information regarding CSG’s performance and these items are excluded for the following reasons:

  • Transaction fees are primarily comprised of fees paid to third-party payment processors and financial institutions and interchange fees under CSG’s payment services contracts. Transaction fees are included in revenue in CSG’s Income Statement (and not netted against revenue) because CSG maintains control and acts as principal over the integrated service provided under its payment services customer contracts. However, CSG excludes expense associated with transaction fees from the numerator and denominator in calculating its non-GAAP adjusted operating margin percentage in order to provide comparability with historical and future periods and with its peer group and competitors.
  • Restructuring and reorganization charges are expenses that result from cost reduction initiatives and/or significant changes to CSG’s business, to include such things as involuntary employee terminations, changes in management structure, divestitures of businesses, facility consolidations and abandonments, and fundamental reorganizations impacting operational focus and direction. These charges are not considered reflective of CSG’s recurring business operating results. The exclusion of these items in calculating CSG’s non-GAAP financial measures allows management and investors an additional means to compare CSG’s current financial results with historical and future periods.
  • Executive transition costs include expenses incurred related to a departure of a CSG executive officer under the terms of the related separation agreement. These types of costs are not considered reflective of CSG’s recurring business operating results. The exclusion of these costs in calculating CSG’s non-GAAP financial measures allows management and investors an additional means to compare CSG’s current financial results with historical and future periods.
  • Acquisition-related expenses include amortization of acquired intangible assets and transaction-related costs, to include earn-out compensation. Transaction-related costs, which typically include expenses related to legal, accounting, and other professional services, are direct and incremental expenses related to business acquisitions, and thus, are not considered reflective of CSG’s recurring business operating results. The total amount of acquisition-related expenses can vary significantly between periods based on the number and size of acquisition activities, previously acquired intangible assets becoming fully amortized, and ultimate realization of earn-out compensation. In addition, the timing of these expenses may not directly correlate with underlying performance of the CSG’s operations. Therefore, the exclusion of acquisition-related expenses in calculating CSG’s non-GAAP financial measures allows management and investors an additional means to compare CSG’s current financial results with historical and future periods.
  • Stock-based compensation results from CSG’s issuance of equity awards to its employees under incentive compensation programs. The amount of this incentive compensation in any period is not generally linked to the level of performance by employees or CSG. The exclusion of these expenses in calculating CSG’s non-GAAP financial measures allows management and investors an additional means to evaluate the non-cash expense related to compensation included in CSG’s results of operations, and therefore, the exclusion of this item allows investors to further evaluate the cash generating capabilities of CSG’s business.
  • Gains and losses related to the extinguishment/conversion of debt can be as a result of the refinancing of CSG’s credit agreement and/or repurchase, conversion, or settlement of CSG’s convertible notes. These activities, to include any derivative activity related to debt conversions, are not considered reflective of CSG’s recurring business operating results. Any resulting gain or loss is generally non-cash income or expense, and therefore, the exclusion of these items allows investors to further evaluate the cash impact of these activities for cash flow and liquidity purposes. In addition, the exclusion of these gains and losses in calculating CSG’s non-GAAP EPS allows management and investors an additional means to compare CSG’s current operating results with historical and future periods.
  • Gains or losses related to the acquisition or disposition of certain of CSG’s business activities are not considered reflective of CSG’s recurring business operating results. Any resulting gain or loss is generally non-cash income or expense, and therefore, the exclusion of these items allows investors to further evaluate the cash impact of these activities for cash flow and liquidity purposes. In addition, the exclusion of these gains and losses in calculating CSG’s non-GAAP EPS allows management and investors an additional means to compare CSG’s current operating results with historical and future periods.
  • Unusual items within CSG’s quarterly and/or annual income tax expense can occur from such things as income tax accounting timing matters, income taxes related to unusual events, or as a result of different treatment of certain items for book accounting and income tax purposes. Consideration of such items in calculating CSG’s non-GAAP financial measures allows management and investors an additional means to compare CSG’s current financial results with historical and future periods

CSG also reports non-GAAP adjusted EBITDA and non-GAAP free cash flow. Management believes non-GAAP adjusted EBITDA is a useful measure to investors in evaluating CSG’s operating performance, debt servicing capabilities, and enterprise valuation. CSG defines non-GAAP adjusted EBITDA as income before interest, income taxes, depreciation, amortization, stock-based compensation, foreign currency transaction adjustments, acquisition-related expenses, and unusual items, such as restructuring and reorganization charges, executive transition costs, gains and losses related to the extinguishment of debt, and gains and losses on acquisitions or dispositions, as discussed above. Additionally, management uses non-GAAP free cash flow, among other measures, to assess its financial performance and cash generating capabilities, and believes that it is useful to investors because it shows CSG’s cash available to service debt, make strategic acquisitions and investments, repurchase its common stock, pay cash dividends, and fund ongoing operations. CSG defines non-GAAP free cash flow as net cash flows from operating activities less the purchases of software, property and equipment.

Non-GAAP Financial Measures

Non-GAAP Operating Income and Non-GAAP Adjusted Operating Margin Percentage:

The reconciliation of GAAP operating income to non-GAAP operating income, and calculation of CSG’s non-GAAP adjusted operating margin percentage, for the indicated periods are as follows (in thousands, except percentages):

 

 

Quarter Ended June 30,

 

Six Months Ended June 30,

 

 

2024

 

2023

 

2024

 

2023

Non-GAAP Operating Income

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating income

 

$

25,420

 

 

$

28,206

 

 

$

57,217

 

 

$

66,399

 

Restructuring and reorganization charges (1)

 

 

7,099

 

 

 

2,075

 

 

 

9,097

 

 

 

7,269

 

Executive transition costs

 

 

-

 

 

 

-

 

 

 

352

 

 

 

-

 

Acquisition-related expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of acquired intangible assets

 

 

3,393

 

 

 

2,998

 

 

 

6,245

 

 

 

6,207

 

Transaction-related costs

 

 

1,036

 

 

 

2,004

 

 

 

1,036

 

 

 

2,162

 

Stock-based compensation (1)

 

 

9,193

 

 

 

7,667

 

 

 

17,062

 

 

 

14,424

 

Non-GAAP operating income

 

$

46,141

 

 

$

42,950

 

 

$

91,009

 

 

$

96,461

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Adjusted Operating Margin Percentage

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

290,318

 

 

$

286,327

 

 

$

585,453

 

 

$

585,066

 

Less: Transaction fees (2)

 

 

(24,207

)

 

 

(21,176

)

 

 

(49,269

)

 

 

(43,149

)

Revenue less transaction fees

 

$

266,111

 

 

$

265,151

 

 

$

536,184

 

 

$

541,917

 

Non-GAAP adjusted operating margin percentage

 

 

17.3

%

 

 

16.2

%

 

 

17.0

%

 

 

17.8

%

(1)

Restructuring and reorganization charges include stock-based compensation, which is not included in the stock-based compensation line in the tables above and following, and depreciation, which has not been recorded to the depreciation line item on CSG’s Income Statement.

(2)

Transaction fees are primarily comprised of fees paid to third-party payment processors and financial institutions and interchange fees under CSG’s payment services contracts. Transaction fees are included in revenue in CSG's Income Statement (and not netted against revenue) because CSG maintains control and acts as principal over the integrated service provided under its payment services customer contracts. However, CSG excludes expense associated with transaction fees from the numerator and denominator in calculating its non-GAAP adjusted operating margin percentage in order to provide comparability with historical and future periods and with its peer group and competitors.

 

Non-GAAP EPS:

The reconciliations of GAAP EPS to non-GAAP EPS for the indicated periods are as follows (in thousands, except per share amounts):

 

 

Quarter Ended

 

 

Quarter Ended

 

 

 

June 30, 2024

 

 

June 30, 2023

 

 

 

Amounts

 

EPS (4)

 

 

Amounts

 

EPS (4)

 

GAAP net income

 

$

13,829

 

 

$

0.48

 

 

$

13,954

 

 

$

0.45

 

GAAP income tax provision (3)

 

 

6,170

 

 

 

 

 

 

 

5,759

 

 

 

 

 

GAAP income before income taxes

 

 

19,999

 

 

 

 

 

 

 

19,713

 

 

 

 

 

Restructuring and reorganization charges (1)

 

 

7,099

 

 

 

 

 

 

 

2,075

 

 

 

 

 

Acquisition-related costs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of acquired intangible assets

 

 

3,393

 

 

 

 

 

 

 

2,998

 

 

 

 

 

Transaction-related costs

 

 

1,036

 

 

 

 

 

 

 

2,004

 

 

 

 

 

Stock-based compensation (1)

 

 

9,193

 

 

 

 

 

 

 

7,667

 

 

 

 

 

Non-GAAP income before income taxes

 

 

40,720

 

 

 

 

 

 

 

34,457

 

 

 

 

 

Non-GAAP income tax provision (3)

 

 

(11,605

)

 

 

 

 

 

 

(9,820

)

 

 

 

 

Non-GAAP net income

 

$

29,115

 

 

$

1.02

 

 

$

24,637

 

 

$

0.80

 

 

 

Six Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2024

 

 

June 30, 2023

 

 

 

Amounts

 

EPS (4)

 

 

Amounts

 

EPS (4)

 

GAAP net income

 

$

33,296

 

 

$

1.16

 

 

$

34,882

 

 

$

1.14

 

GAAP income tax provision (3)

 

 

14,168

 

 

 

 

 

 

 

13,942

 

 

 

 

 

GAAP income before income taxes

 

 

47,464

 

 

 

 

 

 

 

48,824

 

 

 

 

 

Restructuring and reorganization charges (1)

 

 

9,097

 

 

 

 

 

 

 

7,269

 

 

 

 

 

Executive transition costs

 

 

352

 

 

 

 

 

 

 

-

 

 

 

 

 

Acquisition-related expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of acquired intangible assets

 

 

6,245

 

 

 

 

 

 

 

6,207

 

 

 

 

 

Transaction-related costs

 

 

1,036

 

 

 

 

 

 

 

2,162

 

 

 

 

 

Stock-based compensation (1)

 

 

17,062

 

 

 

 

 

 

 

14,424

 

 

 

 

 

Non-GAAP income before income taxes

 

 

81,256

 

 

 

 

 

 

 

78,886

 

 

 

 

 

Non-GAAP income tax provision (3)

 

 

(23,158

)

 

 

 

 

 

 

(22,483

)

 

 

 

 

Non-GAAP net income

 

$

58,098

 

 

$

2.02

 

 

$

56,403

 

 

$

1.84

 

(3)

For the second quarter and six months ended June 30, 2024 the GAAP effective income tax rates were approximately 31% and 30%, respectively, and the non-GAAP effective income tax rates were 28.5% for both periods. For the second quarter and six months ended June 30, 2023 the GAAP effective income tax rates were approximately 29% for both periods, and the non-GAAP effective income tax rates were 28.5% for both periods.

(4)

The outstanding diluted shares for the second quarter and six months ended June 30, 2024 were 28.6 million and 28.7 million, respectively, and for the second quarter and six months ended June 30, 2023 were 30.7 million, for both periods.

 

Non-GAAP Adjusted EBITDA:

CSG’s calculation of non-GAAP adjusted EBITDA and the reconciliation of CSG’s non-GAAP adjusted EBITDA measure to GAAP net income is provided below for the indicated periods (in thousands, except percentages):

 

 

Quarter Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2024

 

2023

 

2024

 

2023

GAAP net income

 

$

13,829

 

 

$

13,954

 

 

$

33,296

 

 

$

34,882

 

GAAP income tax provision

 

 

6,170

 

 

 

5,759

 

 

 

14,168

 

 

 

13,942

 

Interest expense (5)

 

 

7,698

 

 

 

7,837

 

 

 

15,204

 

 

 

15,056

 

Interest and investment income and other, net

 

 

(2,277

)

 

 

656

 

 

 

(5,451

)

 

 

2,519

 

GAAP operating income

 

 

25,420

 

 

 

28,206

 

 

 

57,217

 

 

 

66,399

 

Restructuring and reorganization charges (1)

 

 

7,099

 

 

 

2,075

 

 

 

9,097

 

 

 

7,269

 

Executive transition costs

 

 

-

 

 

 

-

 

 

 

352

 

 

 

-

 

Acquisition-related expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of acquired intangible assets (6)

 

 

3,393

 

 

 

2,998

 

 

 

6,245

 

 

 

6,207

 

Transaction-related costs

 

 

1,036

 

 

 

2,004

 

 

 

1,036

 

 

 

2,162

 

Stock-based compensation (1)

 

 

9,193

 

 

 

7,667

 

 

 

17,062

 

 

 

14,424

 

Amortization of other intangible assets (6)

 

 

2,880

 

 

 

3,383

 

 

 

5,445

 

 

 

6,836

 

Amortization of customer contract costs (6)

 

 

5,694

 

 

 

4,771

 

 

 

10,722

 

 

 

9,393

 

Depreciation (1)

 

 

5,337

 

 

 

5,573

 

 

 

10,973

 

 

 

11,293

 

Non-GAAP adjusted EBITDA

 

$

60,052

 

 

$

56,677

 

 

$

118,149

 

 

$

123,983

 

Non-GAAP adjusted EBITDA as a percentage of revenue less transaction fees (2)

 

 

22.6

%

 

 

21.4

%

 

 

22.0

%

 

 

22.9

%

(5)

Interest expense includes amortization of deferred financing costs as provided in Note 6 below.

(6)

Amortization on the statement of cash flows is made up of the following items for the indicated periods (in thousands):

 

 

 

Quarter Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Amortization of acquired intangible assets

 

$

3,393

 

 

$

2,998

 

 

$

6,245

 

 

$

6,207

 

Amortization of other intangible assets

 

 

2,880

 

 

 

3,383

 

 

 

5,445

 

 

 

6,836

 

Amortization of customer contract costs

 

 

5,694

 

 

 

4,771

 

 

 

10,722

 

 

 

9,393

 

Amortization of deferred financing costs

 

 

871

 

 

 

185

 

 

 

1,735

 

 

 

372

 

Total amortization

 

$

12,838

 

 

$

11,337

 

 

$

24,147

 

 

$

22,808

 

 

Non-GAAP Free Cash Flow:

CSG’s calculation of non-GAAP free cash flow and the reconciliation of CSG’s non-GAAP free cash flow measure to cash flows from operating activities are provided below for the indicated periods (in thousands):

 

 

Quarter Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2024

 

2023

 

2024

 

2023

Cash flows from operating activities

 

$

43,105

 

 

$

12,386

 

 

$

13,754

 

 

$

27,783

 

Purchases of software, property and equipment

 

 

(4,299

)

 

 

(7,728

)

 

 

(9,073

)

 

 

(16,428

)

Non-GAAP free cash flow

 

$

38,806

 

 

$

4,658

 

 

$

4,681

 

 

$

11,355

 

 

Non-GAAP Financial Measures – 2024 Financial Guidance

Non-GAAP Operating Income and Non-GAAP Adjusted Operating Margin Percentage:

The reconciliation of GAAP operating income to non-GAAP operating income, and calculation of non-GAAP adjusted operating margin percentage, as included in CSG’s 2024 full year financial guidance, is as follows (in thousands, except percentages):

 

 

2024 Guidance Range

 

 

Low Range

 

High Range

Non-GAAP Operating Income

 

 

 

 

 

 

GAAP operating income

 

$

131,600

 

 

$

141,600

 

Restructuring and reorganization charges

 

 

9,100

 

 

 

9,100

 

Executive transition costs

 

 

400

 

 

 

400

 

Acquisition-related expenses:

 

 

 

 

 

 

Amortization of acquired intangible assets

 

 

14,400

 

 

 

14,400

 

Transaction-related costs

 

 

1,000

 

 

 

1,000

 

Stock-based compensation

 

 

34,200

 

 

 

34,200

 

Non-GAAP operating income

 

$

190,700

 

 

$

200,700

 

 

 

 

 

 

 

 

Non-GAAP Operating Margin Percentage

 

 

 

 

 

 

Revenue

 

$

1,200,000

 

 

$

1,240,000

 

Less: Transaction fees

 

 

(98,000

)

 

 

(103,000

)

Revenue less transaction fees

 

$

1,102,000

 

 

$

1,137,000

 

Non-GAAP adjusted operating margin percentage

 

 

17.3

%

 

 

17.7

%

 

Non-GAAP EPS:

The reconciliation of GAAP EPS to non-GAAP EPS as included in CSG’s 2024 full year financial guidance is as follows (in thousands, except per share amounts):

 

 

2024 Guidance Range

 

 

 

Low Range

 

 

High Range

 

 

 

Amounts

 

 

EPS (8)

 

 

Amounts

 

EPS (8)

 

GAAP net income

 

$

75,700

 

 

$

2.59

 

 

$

82,900

 

 

$

2.88

 

GAAP income tax provision (7)

 

 

31,500

 

 

 

 

 

 

 

34,300

 

 

 

 

 

GAAP income before income taxes

 

 

107,200

 

 

 

 

 

 

 

117,200

 

 

 

 

 

Restructuring and reorganization charges

 

 

9,100

 

 

 

 

 

 

 

9,100

 

 

 

 

 

Executive transition costs

 

 

400

 

 

 

 

 

 

 

400

 

 

 

 

 

Acquisition-related expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of acquired intangible assets

 

 

14,400

 

 

 

 

 

 

 

14,400

 

 

 

 

 

Transaction-related costs

 

 

1,000

 

 

 

 

 

 

 

1,000

 

 

 

 

 

Stock-based compensation

 

 

34,200

 

 

 

 

 

 

 

34,200

 

 

 

 

 

Non-GAAP income before income taxes

 

 

166,300

 

 

 

 

 

 

 

176,300

 

 

 

 

 

Non-GAAP income tax provision (7)

 

 

(48,500

)

 

 

 

 

 

 

(51,000

)

 

 

 

 

Non-GAAP net income

 

$

117,800

 

 

$

4.05

 

 

$

125,300

 

 

$

4.35

 

(7)

For 2024, the estimated effective income tax rates for GAAP and non-GAAP purposes are expected to be approximately 29%.

(8)

The weighted-average diluted shares outstanding are expected to be approximately 29 million.

Non-GAAP Adjusted EBITDA:

CSG’s calculation of non-GAAP adjusted EBITDA and the reconciliation of CSG’s non-GAAP adjusted EBITDA measure to GAAP net income is provided below for CSG’s 2024 full year financial guidance (in thousands, except percentages):

 

 

2024 Guidance Range

 

 

Low Range

 

High Range

GAAP net income

 

$

75,700

 

 

$

82,900

 

GAAP income tax provision (7)

 

 

31,500

 

 

 

34,300

 

Interest expense

 

 

31,100

 

 

 

31,100

 

Interest and investment income

 

 

(6,700

)

 

 

(6,700

)

GAAP operating income

 

 

131,600

 

 

 

141,600

 

Restructuring and reorganization charges

 

 

9,100

 

 

 

9,100

 

Executive transition costs

 

 

400

 

 

 

400

 

Acquisition-related expenses:

 

 

 

 

 

 

Amortization of acquired intangible assets

 

 

14,400

 

 

 

14,400

 

Transaction-related costs

 

 

1,000

 

 

 

1,000

 

Stock-based compensation

 

 

34,200

 

 

 

34,200

 

Amortization of other intangible assets

 

 

10,000

 

 

 

10,000

 

Amortization of client contract costs

 

 

22,500

 

 

 

22,500

 

Depreciation

 

 

23,800

 

 

 

23,800

 

Non-GAAP adjusted EBITDA

 

$

247,000

 

 

$

257,000

 

Non-GAAP adjusted EBITDA as a percentage of revenue less transaction fees (2)

 

 

22.4

%

 

 

22.6

%

 

Non-GAAP Free Cash Flow:

CSG’s calculation of non-GAAP free cash flow and the reconciliation of CSG’s non-GAAP free cash flow measure to cash flows from operating activities is provided below for CSG’s 2024 full year financial guidance (in thousands):

 

 

2024 Guidance Range

 

 

Low Range

 

High Range

Cash flows from operating activities

 

$

120,000

 

 

$

170,000

 

Purchases of software, property and equipment

 

 

(25,000

)

 

 

(35,000

)

Non-GAAP free cash flow

 

$

95,000

 

 

$

135,000

 

 

John Rea, Head Investor Relations, Treasury and ESG Reporting

(210) 687-4409

E-mail: John.Rea@csgi.com

Davis Barker, Manager Investor Relations & Corporate Development

(303) 884-4506

E-mail: Davis.Barker@csgi.com

Source: CSG Systems International

FAQ

What were CSG Systems International's Q2 2024 financial results?

CSG reported Q2 2024 revenue of $290.3 million, GAAP EPS of $0.48, and non-GAAP EPS of $1.02. The company's non-GAAP operating income was $46.1 million with a 17.3% adjusted operating margin.

Has CSG Systems International (CSGS) updated its 2024 financial guidance?

Yes, CSG raised its 2024 profitability and non-GAAP EPS guidance targets. The company now expects an adjusted operating margin of 17.3% - 17.7% and non-GAAP EPS of $4.05 - $4.35 for the full year 2024.

What major customer wins did CSG Systems International (CSGS) announce in Q2 2024?

CSG announced exciting customer wins including Telenor Denmark, Telstra, One New Zealand (formerly Vodafone New Zealand), and Lyse Norway in Q2 2024.

How much did CSG Systems International (CSGS) spend on share repurchases in Q2 2024?

During Q2 2024, CSG repurchased approximately 219,000 shares of its common stock for approximately $10 million under its stock repurchase program.

CSG Systems International

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