Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~October~~April 30, ~~2023,~~2024, there were ~~29,671,105~~29,685,975 shares of the registrant’s common stock outstanding.


	September 30, 2023			December 31, 2022			March 31, 2024			December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	146,730		$	150,365		$	120,810		$	186,264
Short-term investments		-			71
Total cash, cash equivalents, and short-term investments		146,730			150,436
Settlement and merchant reserve assets		193,371			238,653			192,962			274,699
Trade accounts receivable:
Billed, net of allowance of $4,731 and $5,528		275,161			274,189
Billed, net of allowance of $5,692 and $5,432								275,359			267,680
Unbilled		83,612			52,830			84,347			82,163
Income taxes receivable		2,492			1,270			2,364			1,345
Other current assets		58,701			48,577			57,960			50,075
Total current assets		760,067			765,955			733,802			862,226
Non-current assets:
Property and equipment, net of depreciation of $118,424 and $105,466		68,029			71,787
Property and equipment, net of depreciation of $126,435 and $121,816								60,834			65,545
Operating lease right-of-use assets		37,196			49,687			31,472			34,283
Software, net of amortization of $159,451 and $150,337		16,741			22,774
Software, net of amortization of $160,580 and $157,601								13,406			14,224
Goodwill		302,996			304,036			306,581			308,596
Acquired customer contracts, net of amortization of $127,490 and $120,080		37,932			45,417
Customer contract costs, net of amortization of $38,174 and $30,601		53,336			54,735
Acquired customer contracts, net of amortization of $127,773 and $126,469								33,477			35,879
Customer contract costs, net of amortization of $39,539 and $42,094								54,535			54,421
Deferred income taxes		46,271			26,206			49,552			57,855
Other assets		7,034			7,956			9,293			10,017
Total non-current assets		569,535			582,598			559,150			580,820
Total assets	$	1,329,602		$	1,348,553		$	1,292,952		$	1,443,046
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt	$	22,500		$	37,500		$	7,500		$	7,500
Operating lease liabilities		16,915			21,012			15,400			15,946
Customer deposits		33,084			40,472			36,967			41,035
Trade accounts payable		42,623			47,720			43,768			46,406
Accrued employee compensation		64,313			68,321			44,006			84,380
Settlement and merchant reserve liabilities		191,637			237,810			191,498			273,817
Deferred revenue		61,419			46,033			56,404			54,199
Income taxes payable		2,211			5,455			1,886			4,104
Other current liabilities		26,831			22,886			23,738			33,449
Total current liabilities		461,533			527,209			421,167			560,836
Non-current liabilities:
Long-term debt, net of unamortized discounts of $16,502 and $2,656		535,998			375,469
Long-term debt, net of unamortized discounts of $14,764 and $15,628								533,986			534,997
Operating lease liabilities		37,574			53,207			31,099			34,360
Deferred revenue		20,828			21,991			23,382			23,447
Income taxes payable		3,243			3,410			3,117			3,041
Deferred income taxes		128			117			124			123
Other non-current liabilities		9,807			11,901			10,737			12,916
Total non-current liabilities		607,578			466,095			602,445			608,884
Total liabilities		1,069,111			993,304			1,023,612			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; 29,726 and 31,269 shares outstanding		713			708
Common stock, par value $.01 per share; 100,000 shares authorized; 29,779 and 29,541 shares outstanding								717			713
Additional paid-in capital		483,063			495,189			491,005			490,947
Treasury stock, at cost; 40,202 and 38,210 shares		(1,125,897	)		(1,018,034	)
Treasury stock, at cost; 40,583 and 40,398 shares								(1,145,738	)		(1,136,055	)
Accumulated other comprehensive income (loss):
Unrealized gain on short-term investments, net of tax		1			1			-			1
Cumulative foreign currency translation adjustments		(60,773	)		(58,830	)		(55,388	)		(50,414	)
Accumulated earnings		963,384			936,215			978,744			968,134
Total stockholders' equity		260,491			355,249			269,340			273,326
Total liabilities and stockholders' equity	$	1,329,602		$	1,348,553		$	1,292,952		$	1,443,046

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


	Quarter Ended						Nine Months Ended						Quarter Ended
	September 30, 2023			September 30, 2022			September 30, 2023			September 30, 2022			March 31, 2024			March 31, 2023
Revenue	$	286,868		$	273,308		$	871,934		$	799,876		$	295,135		$	298,739

Cost of revenue (exclusive of depreciation, shown separately below)		152,734			138,462			458,897			415,014			157,887			155,021
Other operating expenses:
Research and development		35,292			35,754			107,401			103,365			36,095			35,464
Selling, general and administrative		59,097			59,026			180,930			173,833			61,722			59,147
Depreciation		5,862			5,896			17,155			17,685			5,636			5,720
Restructuring and reorganization charges		1,152			14,193			8,421			46,304			1,998			5,194
Total operating expenses		254,137			253,331			772,804			756,201			263,338			260,546
Operating income		32,731			19,977			99,130			43,675			31,797			38,193
Other income (expense):
Interest expense		(8,036	)		(4,328	)		(23,092	)		(10,286	)		(7,506	)		(7,219	)
Interest and investment income, net		1,175			281			2,516			537
Loss on derivative liability upon debt conversion		-			-			-			(7,456	)
Interest income														2,616			569
Other, net		813			2,790			(3,047	)		6,044			558			(2,432	)
Total other		(6,048	)		(1,257	)		(23,623	)		(11,161	)		(4,332	)		(9,082	)
Income before income taxes		26,683			18,720			75,507			32,514			27,465			29,111
Income tax provision		(7,989	)		(6,239	)		(21,931	)		(8,603	)		(7,998	)		(8,183	)
Net income	$	18,694		$	12,481		$	53,576		$	23,911		$	19,467		$	20,928

Weighted-average shares outstanding:
Basic		30,097			30,941			30,381			31,219			28,516			30,418
Diluted		30,284			31,159			30,540			31,487			28,797			30,609

Earnings per common share:
Basic	$	0.62		$	0.40		$	1.76		$	0.77		$	0.68		$	0.69
Diluted		0.62			0.40			1.75			0.76			0.68			0.68

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ~~(LOSS)~~ - UNAUDITED

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


	Shares of Common Stock Outstanding			Common Stock			Additional Paid-in Capital			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Accumulated Earnings			Total Stockholders' Equity			Shares of Common Stock Outstanding			Common Stock			Additional Paid-in Capital			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Accumulated Earnings			Total Stockholders' Equity
For the Nine Months Ended September 30, 2023:
BALANCE, January 1, 2023		31,269		$	708		$	495,189		$	(1,018,034	)	$	(58,829	)	$	936,215		$	355,249
For the Quarter Ended March 31, 2024:																						For the Quarter Ended March 31, 2024:
BALANCE, January 1, 2024																							29,541		$	713		$	490,947		$	(1,136,055	)	$	(50,413	)	$	968,134		$	273,326
Comprehensive income:
Net income		-			-			-			-			-			20,928						-			-			-			-			-			19,467
Foreign currency translation adjustments		-			-			-			-			2,843			-						-			-			-			-			(4,975	)		-
Total comprehensive income																				23,771																					14,492
Repurchase of common stock		(166	)		(2	)		(9,304	)		-			-			-			(9,306	)		(344	)		(2	)		(8,538	)		(9,683	)		-			-			(18,223	)
Issuance of common stock pursuant to employee stock purchase plan		19			-			893			-			-			-			893			20			-			866			-			-			-			866
Issuance of restricted common stock pursuant to stock-based compensation plans		574			6			(6	)		-			-			-			-			573			6			(6	)		-			-			-			-
Cancellation of restricted common stock issued pursuant to stock-based compensation plans		(18	)		-			-			-			-			-			-			(11	)		-			-			-			-			-			-
Stock-based compensation expense		-			-			6,412			-			-			-			6,412			-			-			7,736			-			-			-			7,736
Dividends		-			-			-			-			-			(8,796	)		(8,796	)		-			-			-			-			-			(8,857	)		(8,857	)
BALANCE, March 31, 2023		31,678			712			493,184			(1,018,034	)		(55,986	)		948,347			368,223
Comprehensive income:
Net income		-			-			-			-			-			13,954
Foreign currency translation adjustments		-			-			-			-			1,709			-
Total comprehensive income																				15,663
Repurchase of common stock		(2	)		-			(112	)		-			-			-			(112	)
Issuance of common stock pursuant to employee stock purchase plan		18			-			771			-			-			-			771
Issuance of restricted common stock pursuant to stock-based compensation plans		64			1			(1	)		-			-			-			-
Cancellation of restricted common stock issued pursuant to stock-based compensation plans		(7	)		-			-			-			-			-			-
Stock-based compensation expense		-			-			7,644			-			-			-			7,644
Dividends		-			-			-			-			-			(8,878	)		(8,878	)
BALANCE, June 30, 2023		31,751			713			501,486			(1,018,034	)		(54,277	)		953,423			383,311
Comprehensive income:
Net income		-			-			-			-			-			18,694
Foreign currency translation adjustments		-			-			-			-			(6,495	)		-
Total comprehensive income																				12,199
Repurchase of common stock		(1,994	)		-			(144	)		(107,863	)		-			-			(108,007	)
Issuance of common stock pursuant to employee stock purchase plan		20			-			877			-			-			-			877
Issuance of restricted common stock pursuant to stock-based compensation plans		12			-			-			-			-			-			-
Cancellation of restricted common stock issued pursuant to stock-based compensation plans		(63	)		-			-			-			-			-			-
Stock-based compensation expense		-			-			7,197			-			-			-			7,197
Purchase of capped call transactions (net of tax)		-			-			(26,353	)		-			-			-			(26,353	)
Dividends		-			-			-			-			-			(8,733	)		(8,733	)
BALANCE, September 30, 2023		29,726		$	713		$	483,063		$	(1,125,897	)	$	(60,772	)	$	963,384		$	260,491
BALANCE, March 31, 2024																							29,779		$	717		$	491,005		$	(1,145,738	)	$	(55,388	)	$	978,744		$	269,340


	Shares of Common Stock Outstanding			Common Stock			Additional Paid-in Capital			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Accumulated Earnings			Noncontrolling Interest			Total Stockholders' Equity			Shares of Common Stock Outstanding			Common Stock			Additional Paid-in Capital			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Accumulated Earnings			Total Stockholders' Equity
For the Nine Months Ended September 30, 2022:
BALANCE, January 1, 2022		32,495		$	705		$	488,303		$	(930,106	)	$	(38,353	)	$	916,060		$	3,635		$	440,244
For the Quarter Ended March 31, 2023:
BALANCE, January 1, 2023																										31,269		$	708		$	495,189		$	(1,018,034	)	$	(58,829	)	$	936,215		$	355,249
Comprehensive income:
Net income		-			-			-			-			-			6,113			-						-			-			-			-			-			20,928
Unrealized loss on short-term investments, net of tax		-			-			-			-			(2	)		-			-
Foreign currency translation adjustments		-			-			-			-			(1,182	)		-			-						-			-			-			-			2,843			-
Total comprehensive income																							4,929																					23,771
Repurchase of common stock		(389	)		(1	)		(7,804	)		(15,996	)		-			-			-			(23,801	)		(166	)		(2	)		(9,304	)		-			-			-			(9,306	)
Issuance of common stock pursuant to employee stock purchase plan		12			-			650			-			-			-			-			650			19			-			893			-			-			-			893
Issuance of restricted common stock pursuant to stock-based compensation plans		476			5			(5	)		-			-			-			-			-			574			6			(6	)		-			-			-			-
Cancellation of restricted common stock issued pursuant to stock-based compensation plans		(34	)		-			-			-			-			-			-			-			(18	)		-			-			-			-			-			-
Stock-based compensation expense		-			-			5,581			-			-			-			-			5,581			-			-			6,412			-			-			-			6,412
Settlement of convertible debt securities, net of tax		-			-			(4,845	)		-			-			-			-			(4,845	)
Adjustments due to adoption of new accounting standard		-			-			(9,802	)		-			-			9,802			-			-
Dividends		-			-			-			-			-			(8,586	)		-			(8,586	)		-			-			-			-			-			(8,796	)		(8,796	)
BALANCE, March 31, 2022		32,560			709			472,078			(946,102	)		(39,537	)		923,389			3,635			414,172
Comprehensive income:
Net income		-			-			-			-			-			5,317			-
Unrealized gain on short-term investments, net of tax		-			-			-			-			5			-			-
Foreign currency translation adjustments		-			-			-			-			(16,000	)		-			-
Total comprehensive loss																							(10,678	)
Repurchase of common stock		(362	)		-			(116	)		(21,557	)		-			-			-			(21,673	)
Issuance of common stock pursuant to employee stock purchase plan		15			-			773			-			-			-			-			773
Issuance of restricted common stock pursuant to stock-based compensation plans		42			1			(1	)		-			-			-			-			-
Cancellation of restricted common stock issued pursuant to stock-based compensation plans		(60	)		(1	)		1			-			-			-			-			-
Stock-based compensation expense		-			-			6,536			-			-			-			-			6,536
Dividends		-			-			-			-			-			(8,473	)		-			(8,473	)
Write-off of noncontrolling interest					-			-			-			-			-			(3,635	)		(3,635	)
BALANCE, June 30, 2022		32,195			709			479,271			(967,659	)		(55,532	)		920,233			-			377,022
Comprehensive income:
Net income		-			-			-			-			-			12,481			-
Unrealized gain on short-term investments, net of tax		-			-			-			-			3			-			-
Foreign currency translation adjustments		-			-			-			-			(17,919	)		-			-
Total comprehensive loss																							(5,435	)
Repurchase of common stock		(495	)		-			(435	)		(27,947	)		-			-			-			(28,382	)
Issuance of common stock pursuant to employee stock purchase plan		16			-			794			-			-			-			-			794
Issuance of restricted common stock pursuant to stock-based compensation plans		13			-			-			-			-			-			-			-
Cancellation of restricted common stock issued pursuant to stock-based compensation plans		(65	)		(1	)		1			-			-			-			-			-
Stock-based compensation expense		-			-			8,661			-			-			-			-			8,661
Dividends		-			-			-			-			-			(8,355	)		-			(8,355	)
BALANCE, September 30, 2022		31,664		$	708		$	488,292		$	(995,606	)	$	(73,448	)	$	924,359		$	-		$	344,305
BALANCE, March 31, 2023																										31,678		$	712		$	493,184		$	(1,018,034	)	$	(55,986	)	$	948,347		$	368,223

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


	Nine Months Ended						Quarter Ended
	September 30, 2023			September 30, 2022			March 31, 2024			March 31, 2023
Cash flows from operating activities:
Net income	$	53,576		$	23,911		$	19,467		$	20,928
Adjustments to reconcile net income to net cash provided by operating activities-
Adjustments to reconcile net income to net cash provided by (used in) operating activities-
Depreciation		17,549			21,817			5,636			5,757
Amortization		34,543			36,470			11,309			11,471
Asset impairment		1,689			30,126			-			1,595
Gain on lease modifications		(4,349	)		-			-			(125	)
Loss on short-term investments and other		-			19
Loss on derivative liability upon debt conversion		-			7,456
Unrealized foreign currency transactions gain, net		(442	)		(1,700	)
Unrealized foreign currency transaction (gain) loss, net								(352	)		41
Deferred income taxes		(12,504	)		(16,457	)		7,859			4,079
Stock-based compensation		21,253			20,778			7,736			6,412
Changes in operating assets and liabilities, net of acquired amounts:
Trade accounts receivable, net		(33,351	)		(22,026	)		(10,959	)		(1,825	)
Other current and non-current assets and liabilities		(11,449	)		(16,430	)		(9,827	)		(6,871	)
Income taxes payable/receivable		(4,650	)		(7,188	)		(3,158	)		1,647
Trade accounts payable and accrued liabilities		(24,158	)		(67,053	)		(59,581	)		(36,071	)
Deferred revenue		14,658			(150	)		2,519			8,359
Net cash provided by operating activities		52,365			9,573
Net cash provided by (used in) operating activities								(29,351	)		15,397

Cash flows from investing activities:
Purchases of software, property and equipment		(22,940	)		(31,564	)
Purchases of software, property, and equipment								(4,774	)		(8,700	)
Proceeds from sale/maturity of short-term investments		71			27,447			-			71
Net cash used in investing activities		(22,869	)		(4,117	)		(4,774	)		(8,629	)

Cash flows from financing activities:
Proceeds from issuance of common stock		2,541			2,217			866			893
Payment of cash dividends		(26,231	)		(25,396	)		(9,463	)		(9,088	)
Repurchase of common stock		(116,418	)		(73,380	)		(17,973	)		(9,306	)
Deferred acquisition payments		(3,220	)		(1,959	)		(488	)		(274	)
Proceeds from long-term debt		470,000			290,000			-			30,000
Payments on long-term debt		(310,625	)		(247,926	)		(1,875	)		(1,875	)
Purchase of capped call transactions related to convertible notes		(34,298	)		-
Payments of deferred financing costs		(13,518	)		-
Settlement and merchant reserve activity		(46,196	)		(13,931	)		(82,212	)		(61,482	)
Net cash used in financing activities		(77,965	)		(70,375	)		(111,145	)		(51,132	)
Effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash		(448	)		(7,689	)		(1,962	)		327

Net decrease in cash, cash equivalents, and restricted cash		(48,917	)		(72,608	)		(147,232	)		(44,037	)

Cash, cash equivalents, and restricted cash, beginning of period		389,018			391,902			463,876			389,018
Cash, cash equivalents, and restricted cash, end of period	$	340,101		$	319,294		$	316,644		$	344,981

Supplemental disclosures of cash flow information:
Cash paid during the period for-
Interest	$	21,772		$	12,367		$	10,898		$	7,005
Income taxes		39,136			31,817			3,288			2,211

Reconciliation of cash, cash equivalents, and restricted cash:
Cash and cash equivalents	$	146,730		$	146,685		$	120,810		$	167,681
Settlement and merchant reserve assets		193,371			172,609			192,962			177,300
Restricted cash included in current and non-current assets								2,872			-
Total cash, cash equivalents, and restricted cash	$	340,101		$	319,294		$	316,644		$	344,981

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates in Preparation of Financial Statements. The preparation of our Financial Statements requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of our Financial Statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

Revenue. The majority of our future revenue is related to our ~~revenue management solution~~SaaS and related solutions customer contracts that include variable consideration dependent upon a series of monthly volumes and/or daily usage of services and have contractual terms ending from ~~2023~~2024 through 2036. Our customer contracts may include guaranteed minimums and fixed monthly or annual fees. As of ~~September 30, 2023,~~March 31, 2024, our aggregate amount of the transaction price allocated to the remaining performance obligations iswas approximately $~~1.5~~1.4 billion, which is made up of fixed fee consideration and guaranteed minimums expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied). We expect to recognize over 6575% of this amount by the end of ~~2025~~2026, with the remaining amount recognized by the end of 2036. We have excluded from this amount variable consideration expected to be recognized in the future related to performance obligations that are ~~unsatisfied from this amount.~~unsatisfied.

The nature, amount, timing, and uncertainty of our revenue and how revenue and cash flows are affected by economic factors is most appropriately depicted by revenue type, geographic region, and customer vertical.

Revenue by type for the quarters ended March 31, 2024 and ~~nine months ended September 30,~~ 2023 ~~and 2022 were~~was as follows (in thousands):


	Quarter Ended				Nine Months Ended				Quarter Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022		March 31, 2024		March 31, 2023
SaaS and related solutions	$	250,777	$	238,614	$	764,253	$	704,303	$	261,695	$	257,876
Software and services		23,578		23,123		73,235		61,627		22,394		30,891
Maintenance		12,513		11,571		34,446		33,946		11,046		9,972
Total revenue	$	286,868	$	273,308	$	871,934	$	799,876	$	295,135	$	298,739

We use the location of the customer as the basis of attributing revenue to geographic regions. Revenue by geographic region for the quarters ended March 31, 2024 and ~~nine months ended September 30,~~ 2023, ~~and 2022,~~ as a percentage of our total revenue, ~~were~~was as follows:


	Quarter Ended						Nine Months Ended						Quarter Ended
	September 30, 2023			September 30, 2022			September 30, 2023			September 30, 2022			March 31, 2024			March 31, 2023
Americas (principally the U.S.)		86	%		86	%		86	%		85	%		86	%		84	%
Europe, Middle East, and Africa		9	%		10	%		10	%		11	%		9	%		12	%
Asia Pacific		5	%		4	%		4	%		4	%		5	%		4	%
Total revenue		100	%		100	%		100	%		100	%		100	%		100	%

We generate our revenue primarily from the global communications markets; however, we serve an expanding group of customers in other ~~industry~~ markets including retail, ~~healthcare,~~ financial services, healthcare, insurance, and government entities. Revenue by customer vertical for the quarters ended March 31, 2024 and ~~nine months ended September 30,~~ 2023, ~~and 2022,~~ as a percentage of our total revenue, ~~were~~was as follows:


	Quarter Ended						Nine Months Ended						Quarter Ended
	September 30, 2023			September 30, 2022			September 30, 2023			September 30, 2022			March 31, 2024			March 31, 2023
Broadband/Cable/Satellite		53	%		55	%		53	%		55	%		51	%		52	%
Telecommunications		20	%		20	%		20	%		19	%		19	%		20	%
Other		27	%		25	%		27	%		26	%		30	%		28	%
Total revenue		100	%		100	%		100	%		100	%		100	%		100	%

Deferred revenue as of December 31, ~~2022~~2023 and ~~2021,~~2022 recognized during the quarters ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~ was $~~7.8~~19.1 million and $~~7.6~~ ~~million, respectively, and during the nine months ended September 30, 2023 and 2022 was $39.3~~ ~~million and $47.9~~20.2 million, respectively.

Cash and Cash Equivalents. We consider all highly liquid investments with original maturities of three months or less atas of the date of ~~the~~ purchase to be cash equivalents. As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, our cash equivalents consist primarily of institutional money market funds ~~commercial paper,~~ and time deposits held at major banks. For the cash and cash equivalents denominated in foreign currencies and/or located outside the U.S., we do not anticipate any material amounts being unavailable for use in running our business, but may face limitations on moving cash out of certain foreign jurisdictions due to currency controls and potential negative economic consequences.

Restricted Cash. Restricted cash includes cash that is legally or contractually restricted, as well as our settlement and merchant reserve assets (discussed below). The nature of the restrictions on our settlement and merchant reserve assets consists of contractual restrictions with the merchants and restrictions arising from our policy and intention. It has historically been our policy to segregate settlement and merchant reserve assets from our operating cash balances and our intention is to continue to do so. As of ~~September 30, 2023~~both March 31, 2024 and December 31, ~~2022,~~2023, we had $~~1.2~~2.9 million ~~and $1.0~~ ~~million, respectively,~~ of restricted cash that mainly serves to collateralize bank ~~guarantees~~ and ~~outstanding letters of credit~~performance guarantees included in ~~cash~~other current and ~~cash equivalents~~non-current assets in our unaudited Condensed Consolidated Balance Sheets (“Balance Sheets” or “Balance Sheet”).

~~Short-term Investments.~~ ~~Our short-term investments as of September 30, 2023 and December 31, 2022 were~~ ~~zero~~ ~~and $0.1~~ ~~million, respectively. Primarily all short-term investments held by us have contractual maturities of less than~~ ~~two years~~ from the time of acquisition. Our short-term investments as of December 31, 2022 consisted of fixed income securities. Proceeds from the sale/maturity of short-term investments for the nine months ended September 30, 2023 and 2022 were $~~0.1~~ ~~million and $27.4~~ ~~million, respectively.~~

Settlement and Merchant Reserve Assets and Liabilities. Settlement assets and settlement liabilities represent cash collected on behalf of merchants via ~~payment~~payments processing services which is held for an established holding period until settlement with the customer. The holding period is generally one to four business days depending on the payment model and contractual terms with the customer. During the holding period, cash is subject to restriction and segregation based on the nature of our custodial relationship with the merchants. Should we fail to remit these funds to our merchants, the merchant's sole recourse for payment would be against us. These rights and obligations are set forth in the contracts between us and the merchants. Settlement assets are held with various major financial institutions and a corresponding liability is recorded for the amounts owed to the customer. At any given time, there may be differences between the cash held and the corresponding liability due to the timing of operating-related cash transfers.

Merchant reserve assets/liabilities represent deposits collected from merchants to mitigate our risk of loss due to nonperformance of settlement obligations initiated by those merchants using our ~~payment~~payments processing services, or non-payment by customers for services rendered by us. We perform a credit risk evaluation on each customer based on multiple criteria, which ~~provide~~provides the basis for the deposit amount required for each merchant. For the duration of our relationship with each merchant, we hold their reserve deposits with major financial institutions. We hold these funds in separate accounts, ~~and~~which are ~~fully~~ offset by corresponding liabilities.

The following table summarizes our settlement and merchant reserve assets and liabilities as of the indicated periods (in thousands):

September 30, 2023

December 31, 2022

Assets

Liabilities

Assets

Liabilities

Settlement assets/liabilities

$
178,367

$
176,633

$
219,368

$
218,525

Merchant reserve assets/liabilities

15,004

15,004

19,285

19,285

Total

$
193,371

$
191,637

$
238,653

$
237,810


	March 31, 2024				December 31, 2023
	Assets		Liabilities		Assets		Liabilities
Settlement assets/liabilities	$	178,679	$	177,207	$	260,712	$	259,825
Merchant reserve assets/liabilities		14,283		14,291		13,987		13,992
Total	$	192,962	$	191,498	$	274,699	$	273,817

Financial Instruments. Our financial instruments as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 include cash and cash equivalents, ~~short-term investments,~~ settlement and merchant reserve assets and liabilities, accounts receivable, accounts payable, and debt. Due to their short maturities, the carrying amounts of cash equivalents, settlement and merchant reserve assets and liabilities, accounts receivable, and accounts payable approximate their fair value.

Our short-term investments and certain of our cash equivalents are considered “available-for-sale” and are reported at fair value in our Balance Sheets, with unrealized gains and losses, net of the related income tax effect, excluded from earnings and reported in a separate component of stockholders’ equity. Realized and unrealized gains and losses were not material in any period presented.

The following table represents the fair value hierarchy based upon three levels of inputs, of which Levels 1 and 2 are considered observable and Level 3 is unobservable, for our financial assets measured at fair value (in thousands):

September 30, 2023

December 31, 2022

Level 1

Level 2

Total

Level 1

Level 2

Total

Cash equivalents:

Money market funds

$
5,457

$
-

$
5,457

$
5,318

$
-

$
5,318

Short-term investments:

Asset-backed securities

-

-

-

-

71

71

Total

$
5,457

$
-

$
5,457

$
5,318

$
71

$
5,389

Valuation inputs used to measure the fair values of our money market funds were derived from quoted market prices. The fair values of all other financial instruments are based upon pricing provided by third-party pricing services. These prices were derived from observable market inputs.

We have chosen not to record our debt at fair value, with changes recognized in earnings each reporting period. The following table indicates the carrying value and estimated fair value of our debt as of the indicated periods (in thousands):

September 30, 2023

December 31, 2022

Carrying Value

Fair Value

Carrying Value

Fair Value

2023 Convertible Notes (par value)

$
425,000

$
414,694

$
-

$
-

2021 Credit Agreement (carrying value including
current maturities):

Term Loan

135,000

135,000

140,625

140,625

Revolver

15,000

15,000

275,000

275,000


	March 31, 2024				December 31, 2023
	Carrying Value		Fair Value		Carrying Value		Fair Value
2023 Convertible Notes (par value)	$	425,000	$	420,856	$	425,000	$	428,506
2021 Credit Agreement (carrying value including current maturities)		131,250		131,250		133,125		133,125

The fair value of our convertible notes was estimated based upon quoted market prices or recent sales activity, while the fair value of our credit agreement was estimated using a discounted cash flow methodology, both of which are considered Level 2 inputs. See Note 4 for a discussion regarding our debt.

Pillar Two. Numerous foreign jurisdictions have enacted or are in the process of enacting legislation to adopt a minimum effective tax rate. Pillar Two, which was established by the Organization for Economic Co-operation and Development (OECD), generally provides for a 15 percent minimum effective tax rate for multinational enterprises in every jurisdiction in which they operate. The U.S. has not yet adopted Pillar Two, however, various other governments around the world have. These rules did not have a material impact on our taxes for the three months ended March 31, 2024. We continue to monitor evolving tax legislation in the jurisdictions in which we operate.

Accounting Pronouncements Issued but Not Yet Effective. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280), (“ASU 2023-07”), which enhances reportable segment disclosure requirements in part by requiring entities to disclose significant expenses related to their reportable segments. ASU 2023-07 also requires disclosure of the title and position of the company’s Chief Operating Decision Maker (“CODM”) and how the CODM uses financial reporting to assess segment performance and allocate resources. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. We are in the process of evaluating what impact this ASU will have on our Financial Statements and disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires entities to disclose more detailed information about their effective tax rate reconciliation as well as information on income taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. We are in the process of evaluating what impact this ASU will have on our Financial Statements and disclosures.

3. GOODWILL AND INTANGIBLE ASSETS

Goodwill. The changes in the carrying amount of goodwill for the ~~nine months ended September 30, 2023~~first quarter of 2024 were as follows (in thousands):

January 1, 2023, balance

$
304,036

Adjustments related to prior acquisitions

(20
)
Impairment charge related to Keydok, LLC

(1,118
)
Effects of changes in foreign currency exchange rates

98

September 30, 2023, balance

$
302,996

~~See Notes 5 and 6 for further discussion of management's decision to shut down Keydok, LLC ("Keydok") resulting in the impairment charge recorded above.~~


January 1, 2024, balance	$	308,596
Effects of changes in foreign currency exchange rates		(2,015	)
March 31, 2024, balance	$	306,581

Other Intangible Assets. Our other intangible assets subject to ongoing amortization consist ~~primarily~~ of acquired customer contracts and software. As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the carrying values of these assets were as follows (in thousands):

September 30, 2023

December 31, 2022

Gross Carrying Amount

Accumulated Amortization

Net Amount

Gross Carrying Amount

Accumulated Amortization

Net Amount

Acquired customer contracts

$
165,422

$
(127,490
)

$
37,932

$
165,497

$
(120,080
)

$
45,417

Software

176,192

(159,451
)

16,741

173,111

(150,337
)

22,774

Total other intangible assets

$
341,614

$
(286,941
)

$
54,673

$
338,608

$
(270,417
)

$
68,191


	March 31, 2024							December 31, 2023
	Gross Carrying Amount		Accumulated Amortization			Net Amount		Gross Carrying Amount		Accumulated Amortization			Net Amount
Acquired customer contracts	$	161,250	$	(127,773	)	$	33,477	$	162,348	$	(126,469	)	$	35,879
Software		173,986		(160,580	)		13,406		171,825		(157,601	)		14,224
Total other intangible assets	$	335,236	$	(288,353	)	$	46,883	$	334,173	$	(284,070	)	$	50,103

The total amortization expense related to other intangible assets for the ~~third~~first quarters of ~~2023~~2024 and ~~2022~~2023 were $~~6.4~~5.4 million and $~~6.9~~ ~~million, respectively, and for the nine months ended September 30, 2023 and 2022 were $19.5~~ ~~million and $21.8~~6.7 million, respectively. Based on the ~~September 30, 2023~~March 31, 2024 net carrying value of our intangible assets, the estimated total amortization expense for each of the five succeeding fiscal years ending December 31 are: ~~2023 - $25.7~~ ~~million;~~ 2024 - $~~15.8~~18.6 million; 2025 - $~~11.3~~11.9 million; 2026 - $~~7.8~~8.0 million; 2027 - $3.2 million; and ~~2027~~2028 - $~~3.1~~2.5 million.

Customer Contract Costs. As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the carrying values of our customer contract cost assets, related to those contracts with a contractual term greater than one year, were as follows (in thousands):

September 30, 2023

December 31, 2022

Gross Carrying Amount

Accumulated Amortization

Net Amount

Gross Carrying Amount

Accumulated Amortization

Net Amount

Customer contract costs

$
91,510

$
(38,174
)

$
53,336

$
85,336

$
(30,601
)

$
54,735


	March 31, 2024							December 31, 2023
	Gross Carrying Amount		Accumulated Amortization			Net Amount		Gross Carrying Amount		Accumulated Amortization			Net Amount
Customer contract costs	$	94,074	$	(39,539	)	$	54,535	$	96,515	$	(42,094	)	$	54,421

The total amortization expense related to customer contract costs for the ~~third~~first quarters of ~~2023~~2024 and ~~2022~~2023 were $5.0 million and $~~3.8~~ ~~million, respectively, and for the nine months ended September 30, 2023 and 2022 were $14.4~~ ~~million and $14.2~~4.6 million, respectively.

4. DEBT

~~Our long-term debt, as~~As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, our long-term debt was as follows (in thousands):


	September 30, 2023			December 31, 2022			March 31, 2024			December 31, 2023
2023 Convertible Notes:
2023 Convertible Notes – senior unsecured convertible notes, due September 15, 2028, cash interest at 3.875%	$	425,000		$	-
2023 Convertible Notes – senior unsecured convertible notes, due September 2028, cash interest at 3.875%							$	425,000		$	425,000
Less – deferred financing costs		(13,864	)		-			(12,577	)		(13,216	)
2023 Convertible Notes, net of unamortized discounts		411,136			-			412,423			411,784
2021 Credit Agreement:
2021 Term Loan, due September 2026, interest at adjusted SOFR plus applicable margin (combined rate of 7.115% at September 30, 2023)		135,000			140,625
2021 Term Loan, due September 2026, interest at adjusted SOFR plus applicable margin (combined rate of 6.777% at March 31, 2024)								131,250			133,125
Less – deferred financing costs		(2,638	)		(2,656	)		(2,187	)		(2,412	)
2021 Term Loan, net of unamortized discounts		132,362			137,969			129,063			130,713
$450 million revolving loan facility, due September 2026, interest at adjusted SOFR plus applicable margin (combined rate of 7.115% at September 30, 2023)		15,000			275,000
$450 million revolving loan facility, due September 2026, interest at adjusted SOFR plus applicable margin								-			-
Total debt, net of unamortized discounts		558,498			412,969			541,486			542,497
Current portion of long-term debt, net of unamortized discounts		(22,500	)		(37,500	)		(7,500	)		(7,500	)
Long-term debt, net of unamortized discounts	$	535,998		$	375,469		$	533,986		$	534,997

2023 Convertible Notes. ~~In September 2023, we completed an offering of $425.0~~ ~~million of~~ ~~3.875% senior convertible notes due~~ ~~September 15, 2028~~ ~~(the "2023 Convertible Notes") to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The 2023 Convertible Notes are unsecured obligations and will pay~~ ~~3.875% annual cash interest, payable semiannually in arrears on March 15 and September 15 of each year, beginning on March 15, 2024.~~

The 2023 Convertible Notes will be convertible at the option of the noteholders before June 15, 2028, upon the occurrence of certain events. On or after June 15, 2028, and until the close of business on the second scheduled trading day immediately preceding September 15, 2028, the maturity date, noteholders may convert all or any portion of their notes at any time regardless of these conditions.

The 2023 Convertible Notes will be convertible at an initial conversion rate of 14.0753 shares of our common stock per $1,000 principal amount of the 2023 Convertible Notes, which is equivalent to an initial conversion price of $71.05 per share of our common stock, plus carryforward adjustments not yet effected pursuant to the terms of the indenture governing the 2023 Convertible Notes. Under the terms of the 2023 Convertible Notes, we will adjust the conversion rate for any quarterly dividends exceeding $0.28 per share.

We are required to satisfy our conversion obligation as follows: (i) paying cash up to the aggregate principal amount of notes to be converted; and (ii) to the extent the value of our conversion obligation exceeds the par value, we will satisfy the remaining conversion obligation in our common stock, cash, or a combination thereof, at our election. As of ~~September 30, 2023,~~March 31, 2024, none of the conditions to early convert have been met.

~~The 2023 Convertible Notes will be convertible at an initial conversion rate of~~ ~~14.0753~~ ~~shares of our common stock per $1,000~~ ~~principal amount of the 2023 Convertible Notes, which is equivalent to an initial conversion price of approximately $71.05~~ per share of our common stock. The conversion rate and conversion price will be subject to adjustment upon the occurrence of certain events. Under the terms of the 2023 Convertible Notes, we will adjust the conversion rate for any quarterly dividends exceeding $~~0.28~~ ~~per share.~~

Holders may require us, subject to certain conditions, to repurchase all or a portion of their 2023 Convertible Notes for cash upon the occurrence of a fundamental change (as defined in the Indenture related to the 2023 Convertible Notes (“2023 Notes Indenture”)). The repurchase price will be equal to the principal amount thereof plus accrued and unpaid interest to, but excluding, the repurchase date.

We may not redeem the 2023 Convertible Notes prior to September 21, 2026. On or after September 21, 2026, we may redeem for cash all or part of the 2023 Convertible Notes, subject to a partial redemption limitation that requires at least $100.0 million of the principal amount of the 2023 Convertible Notes to remain outstanding if the last reported sales price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption. The redemption price will equal the principal amount of the 2023 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund has been established for the 2023 Convertible Notes.

The 2023 Notes Indenture includes customary terms, including certain events of default after which the 2023 Convertible Notes may be due and payable immediately. The 2023 Notes Indenture contains customary affirmative covenants, including a reporting covenant.

In ~~September 2023, in~~ connection with the pricing of the 2023 Convertible Notes, we entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain of the initial purchasers of the 2023 Convertible Notes and other financial institutions (collectively, the “Option Counterparties”). ~~We used $34.3~~ ~~million~~As of ~~the net proceeds from the offering of the 2023 Convertible Notes to pay the premiums of~~March 31, 2024, all the Capped Call ~~Transactions.~~

~~The Capped Call~~ Transactions were outstanding and cover, subject to anti-dilution adjustments substantially similar to those applicable to the 2023 Convertible Notes, 5.98 million shares of our common stock, the same number of shares of common stock underlying the 2023 Convertible Notes. The Capped Call Transactions will expire upon the maturity of the 2023 Convertible ~~Notes.45~~

The Capped Call Transactions are expected generally to reduce the potential dilution to the common stock upon conversion of the 2023 Convertible Notes and/or offset any cash payments we are required to make in excess of the principal amount of the 2023 Convertible Notes, in the event that the market price per share of common stock (as measured under the terms of the Capped Call Transactions) is greater than the strike price of the Capped Call Transactions. The strike price of the Capped Call Transactions initially corresponds to the initial conversion price of the 2023 Convertible Notes, or approximately $~~71.05~~ ~~per share of our common stock. The Capped Call Transactions have an initial cap price of approximately $96.52~~ ~~per share of our common stock, which represents a premium of~~ 80~~% over the last reported sale price of our common stock on the date the 2023 Convertible Notes were issued, subject to certain adjustments under the terms of the Capped Call Transactions.~~

The Capped Call Transactions are separate transactions, entered into by us with the Option Counterparties. They are not part of the terms of the 2023 Convertible Notes and do not change the holders’ rights under the 2023 Convertible Notes. Holders of the 2023 Convertible Notes do not have any rights with respect to the Capped Call Transactions. The Capped Call Transactions do not meet the criteria for separate accounting as a derivative as they meet the criteria for equity classification. The premiums paid for the Capped Call Transactions of $~~34.3~~ ~~million have been included as a reduction to additional paid-in capital, net of $7.9~~ ~~million of deferred income taxes.~~

~~The proceeds from the sale of the 2023 Convertible Notes, net of financing costs, were $411.0~~ ~~million. We used the net proceeds to: (i) repay the principal amount of $275.0~~ ~~million of outstanding borrowings under our $450.0~~ ~~million,~~ ~~five-year~~ ~~revolving loan facility (the "2021 Revolver"); (ii) repurchase~~ ~~1.7~~ ~~million shares of our common stock for $90.1~~ ~~million in privately negotiated transactions, concurrently with the pricing of the offering of the 2023 Convertible Notes; and (iii) pay the $34.3~~ ~~million premium for the Capped Call Transactions. The remaining net proceeds were used for general corporate purposes.~~

~~In conjunction with the closing of the 2023 Convertible Notes, we incurred financing costs of $14.0~~ ~~million which are being amortized to interest expense using the effective interest method through maturity.~~

2021 Credit Agreement. During the ~~nine months~~quarter ended ~~September 30, 2023,~~March 31, 2024, we made $~~5.6~~1.9 million of principal repayments on our $150.0 million aggregate principal five-year term loan (the “2021 Term Loan”). ~~In conjunction with the issuance~~As of ~~the 2023 Convertible Notes,~~March 31, 2024, we ~~repaid~~had no borrowings outstanding on our $~~275.0~~450.0 million onaggregate principal five-year revolving loan facility (the "2021 Revolver"), however we had issued a standby letter of credit of $1.2 million that counts against our available 2021 ~~Revolver. As of September 30, 2023,~~Revolver balance. In April 2024, we ~~had~~borrowed $15.0 million ~~outstanding~~ on ~~our~~the 2021 Revolver, currently leaving $~~435.0~~433.8 million available to us.

As of ~~September 30, 2023, the~~March 31, 2024, our interest rate on ~~our~~the 2021 Term Loan ~~and our 2021 Revolver~~ was ~~7.115~~6.777% (adjusted ~~SOFR,~~Secured Overnight Financing Rate ("SOFR"), credit spread adjustment of 0.10%, plus ~~1.625~~1.375% per annum), effective through ~~December 2023,~~June 2024, and our commitment fee on the ~~unused~~ 2021 Revolver was ~~0.20~~0.15%.

The interest rates under the 2021 Credit Agreement are based upon our choice of an adjusted SOFR rate plus an applicable margin of 1.375% - 2.125%, or an alternate base rate (“ABR”) plus an applicable margin of 0.375% - 1.125%, with the applicable margin ~~being~~ determined in accordance with our then-net secured total leverage ratio. We pay a commitment fee of 0.150% - 0.325% of the average daily unused amount of the 2021 Revolver, with the commitment fee rate ~~being~~also determined in accordance with our then-net secured total leverage ratio.

In April 2023, we entered into the First Amendment to the 2021 Credit Agreement (the “First Amendment”). The First Amendment replaced the interest rate benchmark, from LIBOR to the Secured Overnight Financing Rate ("SOFR"), and all references to “Eurodollar Borrowing(s)” or “Eurodollar Loans” were replaced with “Term SOFR Borrowing(s)” or “Term11

SOFR Loans”. Any loan amounts outstanding at the effective date of the First Amendment continued to bear interest at the applicable LIBOR rate until the end of the interest election period applicable to such loan. All Term SOFR Loans are subject to a ~~0.10% credit spread adjustment.~~

In September 2023, we entered into the Second Amendment to the 2021 Credit Agreement (the “Second Amendment”). The Second Amendment permits the issuance and sale of the 2023 Convertible Notes and the related Capped Call Transactions (described above). In conjunction with the Second Amendment, we incurred financing costs of $~~0.5~~ ~~million.~~

5. ACQUISITIONS

~~Keydok, LLC.~~ On September 14, 2021, we acquired Keydok, a digital identity and document management platform provider, headquartered in Mexico. In March 2023, we decided to dissolve the Keydok business. See Note 6 for additional discussion.

DGIT Systems Pty Ltd. On October 4, 2021, we acquired DGIT Systems Pty Ltd (“DGIT”), a provider of configure, price and quote (CPQ) and order management solutions for the telecommunications industry. We acquired 100% of the equity of DGIT for a purchase price of approximately $16 million, approximately $14 million paid upon close and the remaining ~~escrowed funds~~consideration of approximately $2 million to be paid through ~~the first quarter of~~ 2025, subject to certain reductions, as applicable. AsDuring the first quarter of ~~September 30, 2023,~~2024, we made a purchase price payment of $~~1.2~~0.5 ~~million of the escrowed funds had been paid.~~million.

The DGIT acquisition includes provisions for up to approximately $13 million of potential future earn-out payments. The earn-out payments are tied to performance-based goals and a defined service period by the eligible recipients and are accounted for as post-acquisition compensation, as applicable. The earn-out period is through September 30, 2025. ~~During 2022,~~

Subsequent Event. On April 1, 2024, we acquired certain assets of a customer communication services business that operates in multiple industry verticals for a purchase price of $~~0.3~~11.5 million, subject to customary working capital adjustments. The results of this acquisition will be included in our results of operations for the ~~earn-out had been achieved and was paid out in March 2023.~~period subsequent to the acquisition date.

6. RESTRUCTURING AND REORGANIZATION CHARGES

During the ~~third~~first quarters of ~~2023~~2024 and ~~2022,~~2023, we recorded restructuring and reorganization charges of $~~1.2~~$2.0 million and $~~14.2~~ ~~million, respectively, and for the nine months ended September 30, 2023 and 2022, we recorded restructuring and reorganization charges of $8.4~~ ~~million and $46.3~~$5.2 million, respectively.

During the ~~nine months ended September 30, 2023~~first quarter of 2024 we ~~implemented the following restructuring and reorganizational activities:~~

•

~~In March 2023, we decided to dissolve the Keydok business, which we had acquired in September of 2021. As a result, we recorded net impairment charges of $1.2~~ ~~million, to include the write-off of the acquired goodwill. We also subsequently terminated approximately~~ 30 ~~Mexico-based employees, which resulted in restructuring charges related to involuntary terminations of $1.6~~ ~~million.~~

•

We reduced our workforce by approximately 8235 employees, mainly in the U.S., as a result of organizational changes and efficiencies. As a result, we incurred restructuring charges related to involuntary terminations of $~~2.2~~1.6 million.

•

~~We modified~~ ~~three~~ ~~of our real estate leases, at previously closed locations in India and the United States, resulting in earlier termination dates and the recognition of a $4.3~~ ~~million gain. We also recorded $0.5~~ ~~million of additional operating lease right-of-use asset impairments.~~

•

~~During the second quarter of 2023 we exited a reseller agreement that was acquired with the acquisition of Forte Payment Systems, Inc. in 2018. As a result, we incurred expense of $3.6~~ ~~million, of which $1.8~~ ~~million has been paid and $1.8~~ ~~million was accrued as of September 30, 2023.~~

The activity in the restructuring and reorganization reserves during the ~~nine months ended September 30, 2023~~first quarter of 2024 was as follows (in thousands):


	Termination Benefits			Other			Total			Termination Benefits			Other			Total
January 1, 2023, balance	$	2,491		$	-		$	2,491		$	1,434		$	8,100		$	9,534
Charged to expense during period		3,801			4,620			8,421			1,582			416			1,998
Cash payments		(6,570	)		(4,407	)		(10,977	)		(1,288	)		(4,196	)		(5,484	)
Adjustment for asset impairment		-			(1,675	)		(1,675	)
Adjustment for gain on lease modifications		-			4,349			4,349
Adjustment for accelerated depreciation		-			(394	)		(394	)
Other		688			-			688			115			-			115
September 30, 2023, balance	$	410		$	2,493		$	2,903
March 31, 2024, balance										$	1,843		$	4,320		$	6,163

As of ~~September 30, 2023~~March 31, 2024, $~~2.9~~4.9 million of the restructuring and reorganization reserves were included in current liabilities.

7. COMMITMENTS, GUARANTEES AND CONTINGENCIES

Guarantees. In the ordinary course of business, we may provide guarantees in the form of bid bonds or performance ~~bonds, or standby letters of credit.~~bonds. As of ~~September 30, 2023,~~March 31, 2024, we had $~~1.9~~2.9 million of restricted assets used to collateralize these guarantees, with $~~1.2~~0.4 million included in ~~cash and cash equivalents~~other current assets and $~~0.7~~2.5 million included in other non-current assets.

We have performance guarantees in the form of surety bonds and a standby letter of credit, along with money transmitter bonds, ~~both~~ issued through ~~a third-party~~third-parties that are not required to be reflected on our Balance ~~Sheet.~~Sheets. As of ~~September 30, 2023,~~March 31, 2024, we had performance guarantees of $~~4.3~~6.0 ~~million.~~million, which includes a $1.2 million standby letter of credit. We are ultimately liable for claims that may occur against these guarantees. We have no history of material claims or are aware of circumstances that would require us to pay under any of these arrangements. We also believe that the resolution of any claim that may arise in the future, either individually or in the aggregate, would not be material to our Financial Statements. As of ~~September 30, 2023,~~March 31, 2024, we had total aggregate money transmitter bonds of $~~19.9~~20.8 million outstanding. These money transmitter bonds are for the benefit of various states to comply with the states’ financial requirements and industry regulations for money transmitter licenses.

Warranties. We generally warrant that our solutions and related offerings will conform to published specifications, or to specifications provided in an individual customer arrangement, as applicable. The typical warranty period is 90 days from the date of acceptance of the solution or offering. For certain service offerings we provide a warranty for the duration of the services provided. We generally warrant that those services will be performed in a professional and skillful manner. The typical remedy for breach of warranty is to correct or replace any defective deliverable, and if not possible or practical, we will accept the return of the defective deliverable and refund the amount paid under the customer arrangement that is allocable to the defective deliverable. Our contracts also generally contain limitation of damages provisions in an effort to reduce our exposure to monetary damages arising from breach of warranty claims. Historically, we have incurred minimal warranty costs, and as a result, do not maintain a warranty reserve.

Solution and Services Indemnifications. Arrangements with our customers generally include an indemnification provision that will indemnify and defend a customer in actions brought against the customer that claim our products and/or services infringe upon a copyright, trade secret, or valid patent. Historically, we have not incurred any significant costs related to such indemnification claims, and as a result, do not maintain a reserve for such exposure.

Claims for Company Non-performance. Our arrangements with our customers typically limit our liability for breach to a specified amount of the direct damages incurred by the customer resulting from the breach. From time-to-time, these arrangements may also include provisions for possible liquidated damages or other financial remedies for our non-performance, or in the case of certain of our solutions, provisions for damages related to service level performance requirements. The service level performance requirements typically relate to ~~platform~~system availability and timeliness of service delivery. As of ~~September 30, 2023,~~March 31, 2024, we believe we have adequate reserves, based on our historical experience, to cover any reasonably anticipated exposure as a result of our nonperformance for any past or current arrangements with our customers.

Indemnifications Related to Officers and the Board of Directors. Other guarantees include promises to indemnify, defend, and hold harmless our directors, and certain officers. Such indemnification covers any expenses and liabilities reasonably incurred by a person, by reason of the fact that such person is, was, or has agreed to be a director or officer, in connection with the investigation, defense, and settlement of any threatened, pending, or contemplated action, suit, proceeding, or claim. We maintain directors’ and officers’ (“D&O”) insurance coverage to protect against such losses. We have not historically incurred any losses related to these types of indemnifications and are not aware of any pending or threatened actions or claims against any officer or member of our Board of Directors (the "Board"). As a result, we have not recorded any liabilities related to such indemnifications as of ~~September 30, 2023.~~March 31, 2024. In addition, as a result of the insurance policy coverage, we believe these indemnification agreements are not significant to our results of operations.

Legal Proceedings. From time to time, we are involved in litigation relating to claims arising out of our operations in the normal course of business.

8. EARNINGS PER COMMON SHARE

Basic and diluted earnings per common share (“EPS”) amounts are presented on the face of our unaudited Condensed Consolidated Statements of Income (the "Income Statements").

The reconciliation of the basic and diluted EPS denominators related to common shares is included in the following table (in thousands):


	Quarter Ended				Nine Months Ended				Quarter Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022		March 31, 2024		March 31, 2023
Basic weighted-average common shares		30,097		30,941		30,381		31,219		28,516		30,418
Dilutive effect of restricted common stock		187		218		159	268			281		191
Diluted weighted-average common shares		30,284		31,159		30,540		31,487		28,797		30,609

The dilutive effect of restricted common stock is computed using the treasury stock method. The dilutive effect of the 2023 Convertible Notes is computed using the if-converted method and will only have an effect in those quarterly periods in which our average stock price exceeds the current effective conversion price.

Potentially dilutive common shares related to non-participating unvested restricted stock and stock warrants were excluded from the computation of diluted EPS, as the effect was anti-dilutive, and were not material in any period presented. Stock warrants (see Note 9) will only have a dilutive effect upon vesting in those periods in which our average stock price exceeds the exercise price of $26.68 per warrant.

9. STOCKHOLDERS’ EQUITY AND EQUITY COMPENSATION PLANS

Stock Repurchase Program. We currently have a stock repurchase program, approved by our Board, authorizing us to repurchase shares of our common stock from time-to-time as market and business conditions warrant (the “Stock Repurchase Program”). During the ~~third~~first quarter ~~and nine months ended September 30, 2023,~~of 2024, we repurchased approximately ~~1,991,000~~185,000 shares of our common stock for $~~107.0~~9.6 million (weighted-average price of $~~53.73~~51.96 per share)~~. During~~ under a SEC Rule 10b5-1 Plan. We did not make any share repurchases during the ~~third~~first quarter of ~~2022 we repurchased approximately~~ ~~488,000~~ ~~shares of our common stock for $27.9~~ ~~million (weighted-average price of $57.27~~ ~~per share), and during the nine months ended September 30, 2022 we repurchased approximately~~ ~~1,114,000~~ ~~shares of our common stock for $65.5~~ ~~million (weighted-average price of $58.80~~ ~~per share), respectively.~~2023.

The ~~repurchases during third quarter of 2023 were executed~~excise tax imposed as ~~follows:~~

•

~~In August 2023, we entered into an SEC Rule 10b5-1 Plan under which we repurchased approximately~~ ~~275,000~~ ~~shares of our common stock for $15.0~~ ~~million (weighted-average price of $54.65~~ ~~per share). This plan was terminated by us in early September 2023.~~

•

~~In September 2023, and concurrent with the pricing of the offering of the 2023 Convertible Notes, we repurchased approximately~~ ~~1,680,000~~ ~~million shares of our common stock for $90.1~~ ~~million (weighted-average price of $53.62~~ ~~per share) in privately negotiated transactions effected through one of the initial purchasers of the offering or its affiliate, as our agent.~~

•

~~In September 2023, we entered into a second SEC Rule 10b5-1 Plan under which we repurchased approximately~~ ~~36,000~~ ~~shares of our common stock for $1.9~~ ~~million (weighted-average price of $52.13~~ ~~per share). This plan will remain in effect, unless terminated by us or by the provisions of the plan, through the earlier of: (i) December 31, 2024; or (ii) when an aggregate purchase price of $100.0~~ ~~million of our common stock is repurchased under the plan.~~

As part of the 2022 Inflation Reduction Act, ~~effective January 1, 2023, a one percent excise tax is imposed on net share repurchases during the year. As of September 30, 2023, we accrued $0.9~~ ~~million for the excise tax~~ which is included as a cost of treasury stock, ~~however this~~ is not reflected in the share repurchase ~~amounts~~amount above.

As of ~~September 30, 2023,~~March 31, 2024, the total remaining ~~number~~value of shares available for repurchase ~~pursuant to the prior authorization (as defined below)~~ under the Stock Repurchase Program totaled $~~0.1~~86.2 ~~million shares. In August 2023, our Board authorized an additional $~~million.~~100.0~~ ~~million of repurchases under the Stock Repurchase Program in addition to, and after the repurchase of, the remaining~~ ~~0.1~~ ~~million shares under the prior authorization.~~

Stock Repurchases for Tax Withholdings. In addition to the above-mentioned stock repurchases, during the ~~third~~first quarters of ~~2023~~2024 and ~~2022,~~2023, we repurchased and then cancelled approximately ~~3,000~~159,000 shares of common stock for $~~0.1~~8.5 million and approximately ~~7,000~~166,000 shares of common stock for $~~0.4~~ ~~million, respectively, and during the nine months ended September 30, 2023 and 2022 we repurchased and then cancelled approximately~~ ~~171,000~~ ~~shares of common stock for $9.6~~ ~~million and approximately~~ ~~132,000~~ ~~shares of common stock for $8.4~~9.3 million, respectively, in connection with minimum tax withholding requirements resulting from the vesting of restricted common stock under our stock incentive ~~plans.~~plan.

~~Stock Incentive Plan.~~ ~~In August 2023, we increased the number of shares of our common stock authorized and reserved for issuance under the Amended and Restated 2005 Stock Incentive Plan by~~ ~~2.9~~ ~~million shares to a total of~~ ~~27.9~~ ~~million shares. This increase was approved by our stockholders at our 2023 Annual Meeting.~~

Cash Dividends. During the ~~third~~first quarter of 2024, our Board approved a quarterly cash dividend of $0.30 per share of common stock, totaling $8.9 million. During the first quarter of 2023, our Board approved a quarterly cash dividend of $0.28 per share of common stock, totaling $~~8.7~~8.8 million. ~~During the third quarter of 2022, our Board approved a quarterly cash dividend of $0.265~~ ~~per share of common stock, totaling $8.4~~ ~~million. Dividends declared for the nine months ended September 30, 2023 and 2022 totaled $26.4~~ ~~million and $25.4~~ ~~million, respectively.~~

Warrants. In July 2014, in conjunction with the execution of an amendment to our agreement with Comcast Corporation (“Comcast”), we issued stock warrants (the “Warrant Agreement”) for the right to purchase up to 2.9 million shares of our common stock (the “Stock Warrants”) as an additional incentive for Comcast to convert customer accounts onto our solutions based on various milestones. The Stock Warrants have a ten-year term and an exercise price of $26.68 per warrant.

As of ~~September 30, 2023,~~March 31, 2024, 1.0 million Stock Warrants remain issued, none of which have vested. The remaining unvested Stock Warrants will be accounted for as a customer contract cost asset once the performance conditions necessary for vesting are considered probable.

Stock-Based Awards. ~~A summary~~During the first quarter of ~~our unvested~~2024 we granted restricted ~~common~~ stock ~~activity during the quarter and nine months ended September 30, 2023 is as follows (shares in thousands):~~

Quarter Ended

Nine Months Ended

September 30, 2023

September 30, 2023

Shares

Weighted-
Average
Grant
Date Fair Value

Shares

Weighted-
Average
Grant
Date Fair Value

Unvested awards, beginning

1,334

$
53.44

1,147

$
53.34

Awards granted

13

53.29

701

51.69

Awards forfeited/cancelled

(69
)

53.07

(99
)

53.30

Awards vested

(9
)

53.17

(480
)

50.30

Unvested awards, ending

1,269

$
53.46

1,269

$
53.46

~~Included in the~~ awards ~~granted during the nine months ended September 30, 2023are awards issued~~ to key members of ~~executive~~ management ~~and certain key employees~~ in the form of: (i) performance-based awards of approximately ~~134,000~~155,000 restricted common stock shares, which vest in the first quarter of ~~2025~~2026 upon meeting certain pre-established financial performance objectives over a two-year performance period; and (ii) market-based awards of approximately ~~45,000~~52,000 restricted common stock shares, which vest in the first quarter of ~~2026~~2027 upon meeting a relative total shareholder return performance achievement tier. Certain of these awards ~~become fully vested~~may vest (i.e., vesting accelerates) upon the involuntary termination of employment or a change in control, as defined, and the subsequent involuntary termination of employment.

~~The other~~During the first quarter of 2024, we also granted restricted stock awards to key members of management in the form of time-based awards of approximately 414,000 restricted common stock shares, ~~granted during the nine months ended September 30, 2023are primarily time-based awards,~~ which vest annually over~~two~~ to three years with no restrictions other than the passage of time. Certain ~~shares~~ of these awards may vest (i.e., vesting accelerates) upon the ~~restricted common stock become fully vested upon~~involuntary termination of employment, a change in control, as defined, and the subsequent involuntary ~~terminations~~termination of employment, or death.

We recorded stock-based compensation expense for the ~~third~~first quarters of ~~2023~~2024 and ~~2022~~2023 of $~~7.2~~7.7 million and $~~8.7~~ ~~million, respectively, and for the nine months ended September 30, 2023 and 2022 of $21.3~~ ~~million and $20.8~~6.4 million, respectively.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information contained in this MD&A should be read in conjunction with the Financial Statements and Notes thereto included in this Form 10-Q and the audited consolidated financial statements and notes thereto in our ~~2022~~2023 10-K.

This report contains a number of forward-looking statements relative to our future plans and our expectations concerning our business and the industries we serve. These forward-looking statements are based on assumptions about a number of important factors and involve risks and uncertainties that could cause actual results to differ materially from estimates contained in the forward-looking statements. Some of the risks that are foreseen by management are outlined within Part I, Item 1A. Risk Factors of our ~~2022~~2023 10-K. Readers are strongly encouraged to review that section closely in conjunction with MD&A.

We are a purpose-driven SaaS platform company that enables ~~large enterprise customers~~global companies in a wide variety of industry verticals to tackle the ever-growing complexity of business in the digital age. Our industry leading revenue management and digital monetization, customer experience, and payments solutions make ordinary customer experiences extraordinary. Our cloud-first architecture and customer-centric approach help companies around the world acquire, monetize, engage, and retain the B2B (business-to-business), B2C (business-to-consumer), and B2B2X (business-to-business-to-consumer) customers. As brands reimagine their engagement strategies in an increasingly connected world, we sit at the center of a complex, multi-sided business model ensuring monetization and customer engagement is handled at all levels of the ecosystem.

We leverage 40 years of experience to deliver innovative customer engagement solutions for every stage of the customer lifecycle so our customers can deliver an outstanding customer experience that adapts to their customers’ rapidly changing demands. Our diverse, worldwide workforce draws from real-world knowledge and extensive expertise to design and implement business solutions that make our customers’ hardest decisions simpler so that they can focus on delivering differentiated and real-time experiences to their customers. As a global technology leader, we aspire to envision, invent, and shape a better, more future-ready world.

We focus our research and development (“R&D”) and acquisition investments on expanding our offerings in a timely and efficient manner to address the complex, transformative needs of our customers. Our scalable, modular, and flexible solutions combined with our domain expertise and our ability to effectively migrate customers to our solutions, provide the industry with proven solutions to improve their profitability and consumers’ experiences. We have specifically architected our solutions to offer a phased, incremental approach to transforming our customers' businesses, thereby reducing the business interruption risk associated with this evolution.

As discussed in Note 2 to our Financial Statements, we generate a majority of our revenue from the global communications markets; however, we serve an expanding group of customers in other markets including retail, ~~healthcare,~~ financial services, healthcare, insurance, and government entities.

~~Third~~First Quarter Highlights. A summary of our results of operations for the ~~third~~first quarter of ~~2023,~~2024, when compared to the ~~third~~first quarter of ~~2022,~~2023, is as follows (in thousands, except per share amounts and percentages):

Revenue. Revenue for the ~~third~~first quarter of ~~2023~~2024 was ~~$286.9~~$295.1 million, a ~~5.0% increase~~1.2% decrease when compared to revenue of ~~$273.3~~$298.7 million for the ~~third~~first quarter of ~~2022.~~2023. The ~~increase can be mainly~~decrease in revenue is primarily attributed to lower software and services revenue in the first quarter of 2024, resulting from the closure of approximately $10 million of software license upgrades in the first quarter of 2023. This was offset to a certain degree by the continued growth of our SaaS and related solutions revenue, ~~management~~to include our payments solutions.

Operating Results. Operating income for the ~~third~~first quarter of ~~2023~~2024 was ~~$32.7~~$31.8 million, or ~~an 11.4%~~a 10.8% operating margin percentage, compared to ~~$20.0~~$38.2 million, or a ~~7.3%~~12.8% operating margin percentage for the ~~third~~first quarter of ~~2022.~~2023. The ~~increase~~decrease in operating income ~~can be~~is mainly attributed to the ~~$13.0 million decrease~~higher software and services revenue recognized in the first quarter of 2023, discussed above, as the costs associated with this revenue is not generally dependent upon on the timing of the deal closure, offset to a certain degree by lower restructuring and reorganization ~~charges between years.~~charges.

Diluted EPS. Diluted EPS for the ~~third~~first quarter of 2024 and 2023 was ~~$0.62 compared to $0.40~~$0.68, for both periods, with the ~~third~~first quarter of ~~2022, with the increase mainly attributed to the higher operating income in the third quarter of 2023, discussed above.~~2024 benefiting primarily from foreign currency movements and a lower share count.

Cash and Cash Flows. As of ~~September 30, 2023,~~March 31, 2024, we had cash and cash equivalents ~~and short-term investments~~ of ~~$146.7~~$120.8 million, as compared to ~~$146.2 million as of June 30, 2023, and $150.4~~$186.3 million as of December 31, ~~2022.~~2023. Our cash flows ~~provided by~~used in operating activities for the ~~third~~first quarter of 2024 were ($29.4) million. Cash flows for the first quarter of 2024 were negatively impacted by unfavorable working capital changes, to include the payment of 2023 ~~were $24.6 million.~~accrued employee incentive compensation. See the Liquidity section below for further discussion of our cash flows.

~~Customer Concentration.~~ A large percentage of our ~~historical~~ revenue ~~has been~~is generated from a limited number of customers in the global communications industry, with our ~~two~~three largest customers ~~which are~~being Charter Communications Inc. (“Charter”), Comcast, and ~~Comcast.~~DISH Network L.L.C.

~~Revenue from these~~Customer Concentration. We have significant customer concentration, with the following two customers ~~for the indicated periods was as follows~~exceeding 10% of our revenue (in thousands, except percentages):

~~During the first quarter of 2023 we completed the consolidation of Charter's residential and small and medium business internet, video, and landline voice customers that began in late 2021.~~

The percentages of net billed accounts receivable balances attributable to ~~our largest~~these customers as of the indicated dates were as follows:

~~Charter.~~ ~~In April~~See our 2023 ~~we entered into an Amended~~10-K for additional discussion of our business relationships and ~~Restated CSG Master Subscriber Management System Agreement (the “Agreement”)~~contractual terms with ~~Charter. The primary purpose of the Agreement was to consolidate the previous agreement~~Comcast and amendments with Charter into one document. The Agreement formalized the extension of the term through March 31, 2028, from December 31, 2027, as was contemplated in the previous agreement, in connection with the final conversion of Charter’s customer accounts, discussed above. The Agreement continues to provide that the term will automatically be extended for an additional one-year term, subject to Charter achieving certain conditional processing minimums on July 1, 2027, unless Charter provides us with written notice of non-renewal. All other material terms, provisions, and conditions of the previous agreement remain unchanged.

~~A copy of the Agreement, with confidential information redacted, is included as Exhibit 10.25 in our periodic filings with the SEC.~~

~~Comcast.~~ On June 29, 2023, Comcast exercised their option to extend the term of their processing and other related solutions agreement through December 31, 2025, which aligns with the term of their print and mail services agreement. Terms of the processing agreement extension remain consistent with the financial terms and obligations under the original agreement.

~~A copy of the Comcast agreement and related amendments, with confidential information redacted, is included in the exhibits to our periodic filings with the SEC.~~Charter.

Risk of Customer Concentration. We expect to continue to generate a ~~significant~~large percentage of our future revenue from ~~our largest~~a limited number customers. There are inherent risks whenever a large percentage of total revenue is concentrated with a limited number of customers. Should a significant customer: (i) terminate or fail to renew their contracts with us, in whole or in part, for any reason; (ii) significantly reduce the number of customer accounts processed on our solutions, the price paid for our services, or the scope of services that we provide; or (iii) experience ~~significant~~ financial or operating difficulties, it could have a material adverse effect on our financial ~~condition~~position and results of operations.

The preparation of our Financial Statements in conformity with U.S. GAAP requires us to select appropriate accounting policies, and to make judgments and estimates affecting the application of those accounting policies. In applying our accounting policies, different business conditions or the use of different assumptions may result in materially different amounts reported in our Financial Statements.

We have identified the most critical accounting policies that affect our financial position and the results of our operations. Those critical accounting policies were determined by considering the accounting policies that involve the most complex or subjective decisions or assessments. The most critical accounting policies identified relate to the following items: (i) revenue recognition; (ii) impairment assessments of long-lived assets; (iii) income taxes; and (iv) loss contingencies. These critical accounting policies, as well as our other significant accounting policies, are discussed in our ~~2022~~2023 10-K.

Revenue. Total revenue for ~~the: (i) third~~the first quarter of ~~2023~~2024 was ~~$286.9~~$295.1 million, a ~~5.0% increase~~1.2% decrease when compared to ~~$273.3~~$298.7 million for the ~~third~~first quarter of ~~2022;~~2023.

Revenue by type for the first quarters of 2024 and ~~(ii) nine months ended September 30,~~ 2023 was ~~$871.9 million, a 9.0% increase when compared to $799.9 million for the nine months ended September 30, 2022. These increases~~as follows (in thousands):

The decrease in revenue ~~are~~is primarily attributed to lower software and services revenue in the first quarter of 2024 resulting from the closure of approximately $10 million of software license upgrades in the first quarter of 2023. This was offset to a certain degree by the continued growth of ~~our revenue management solutions as we generated continued year-over-year growth in~~ our SaaS and related solutions revenue, ~~driven mainly by conversion of customer accounts onto~~to include our solutions, increased usage of our other ancillary services, and higher payment volumes. Additionally, the first quarter of 2023 saw strong software and services revenue due to the timing of the closure of software license upgrades and from our communication design and delivery centers. In the first quarter of 2023, we also completed the final conversions of Charter's customer accounts onto our platforms, converting over nine million customer accounts since June 2022 and more than fourteen million in total.payments solutions.

We use the location of the customer as the basis of attributing revenue to individual countries. Revenue by geographic regions for the ~~third~~first quarters of 2024 and ~~nine months ended September 30,~~ 2023 ~~and 2022~~ was as follows (in thousands):

Total Operating Expenses. Total operating expenses for ~~the: (i) third~~the first quarter of ~~2023~~2024 were ~~$254.1~~$263.3 million, a ~~0.3%~~1.1% increase when compared to ~~$253.3~~$260.5 million for the ~~third~~first quarter of ~~2022; and (ii) nine months ended September 30, 2023 were $772.8 million, a 2.2% increase when compared to $756.2 million for the nine months ended September 30, 2022.~~2023. The increases in total operating expenses are reflective of the higher SaaS and related solutions revenue between periods, ~~to include increased employee-related costs,~~ partially offset by the ~~decreases~~decrease in restructuring and reorganization charges, discussed below.

Cost of Revenue (Exclusive of Depreciation). The cost of revenue for ~~the: (i) third~~the first quarter of ~~2023~~2024 was ~~$152.7~~$157.9 million, a ~~10.3%~~1.8% increase when compared to ~~$138.5~~$155.0 million for the ~~third~~first quarter of ~~2022; and (ii) nine months ended September 30, 2023 was $458.9 million, a 10.6% increase when compared to $415.0 million for the nine months ended September 30, 2022.~~2023. The increase in cost of revenue between periods is reflective of the increase in SaaS and related solutions revenue ~~year-over-year, to include increased employee-related costs.~~year-over-year. Total cost of revenue as a percentage of revenue for ~~the: (i) third~~the first quarters of 2024 and 2023 ~~and 2022~~ was ~~53.2% and 50.7%, respectively; and (ii) nine months ended September 30, 2023 and 2022 was 52.6%~~53.5% and 51.9%, respectively.

R&D Expense (Exclusive of Depreciation). R&D expense for ~~the: (i) third~~the first quarter of ~~2023~~2024 was ~~$35.3~~$36.1 million, a ~~1.3% decrease when compared to $35.8 million for the third quarter of 2022; and (ii) nine months ended September 30, 2023 was $107.4 million, a 3.9%~~1.8% increase when compared to ~~$103.4~~$35.5 million for the ~~nine months ended September 30, 2022.~~first quarter of 2023. The ~~year-to-date~~ increase in R&D expense between periods is mainly attributed to ~~higher~~increased employee-related costs. As a percentage of total revenue, R&D expense for the: (i) third quarters of 2023 and 2022 was 12.3% and 13.1%, respectively; and (ii) nine months ended September 30, 2023 and 2022 was 12.3% and 12.9%, respectively.

Our R&D efforts are focused on the continued evolution of our solutions that enable ~~our customers~~us to launch, monetize, and scale new digital services quickly and across any channel, while delivering an exceptional customer experience. As a percentage of total revenue, R&D expense for the first quarters of 2024 and 2023 was 12.2% and 11.9%, respectively.

Selling, General, and Administrative ("SG&A") Expense (Exclusive of Depreciation). SG&A expense for ~~the: (i) third~~the first quarter of ~~2023~~2024 was ~~$59.1 million, relatively consistent when compared to $59.0 million for the third quarter of 2022; and (ii) nine months ended September 30, 2023 was $180.9~~$61.7 million, a ~~4.1%~~4.4% increase when compared to ~~$173.8~~$59.1 million for the ~~nine months ended September 30, 2022.~~first quarter of 2023. The ~~year-to-date~~ increase in SG&A expense is primarily attributed to increases in employee-related costs, to include ~~incentive~~stock-based compensation ~~offset to a certain degree by lower building related costs due to our office closures in 2022. Our SG&A costs as~~and travel expense. As a percentage of total revenue, SG&A expense for ~~the: (i) third~~the first quarters of 2024 and 2023 was 20.9% and ~~2022 were 20.6% and 21.6%, respectively; and (ii) nine months ended September 30, 2023 and 2022 were 20.8% and 21.7%~~19.8%, respectively.

Restructuring and Reorganization Charges. Restructuring and reorganization charges for ~~the: (i) third~~the first quarter of ~~2023~~2024 were ~~$1.2~~$2.0 million, a ~~$13.0~~$3.2 million decrease when compared to ~~$14.2~~$5.2 million for the ~~third~~first quarter of ~~2022; and (ii) nine months ended September 30, 2023 were $8.4 million, a $37.9 million decrease when compared to $46.3 million for the nine months ended September 30, 2022.~~2023. The restructuring and reorganization charges for the ~~third~~first quarter ~~and nine months ended September 30, 2023~~of 2024 relate mainly to ~~the following:~~

Operating Income. Operating income for ~~the: (i) third~~the first quarter of ~~2023~~2024 was ~~$32.7~~$31.8 million, or ~~11.4%~~10.8% of total revenue, compared to ~~$20.0~~$38.2 million, or ~~7.3%~~12.8% of total revenue for the ~~third~~first quarter of ~~2022; and (ii) nine months ended September 30, 2023 was $99.1 million, or 11.4% of total revenue, compared to $43.7 million, or 5.5% of total revenue, for the nine months ended September 30, 2022.~~2023. The ~~increase~~decrease in operating income ~~can be~~is mainly attributed to the $10 million of software license revenue recognized in the first quarter of 2023, discussed above, as the cost associated with this revenue is not generally dependent upon on the timing of the deal closures, offset to a certain degree by lower restructuring and reorganization ~~charges, discussed above, with the year-to-date increase also attributed to higher revenue and improved profitability.~~charges.

Interest Expense. Interest expense for ~~the: (i) third~~the first quarter of ~~2023~~2024 was ~~$8.0~~$7.5 million, a ~~$3.7 million~~4.0% increase when compared to ~~$4.3~~$7.2 million for the ~~third~~first quarter of ~~2022; and (ii) nine months ended September 30, 2023 was $23.1 million, a $12.8 million increase when compared to $10.3 million for the nine months ended September 30, 2022.~~2023. Our interest expense relates primarily to ~~our~~the 2023 Convertible Notes and 2021 Credit Agreement. The increase in interest expense between periods can be attributed to ~~rising interest rates and~~ a higher ~~average~~ outstanding debt balance during ~~2023.~~the first quarter of 2024, partially offset by a lower average interest rate.

See Note 4 to our Financial Statements for additional discussion of our long-term debt.

~~Loss on Derivative Liability Upon Debt Conversion~~Interest Income. ~~. In March 2022, we settled our 2016 Convertible Notes~~Interest income for ~~approximately $242~~the first quarter of 2024 was $2.6 million, ~~in cash. As~~ a ~~result~~$2.0 million increase when compared to $0.6 million for the first quarter of 2023, with the ~~conversion of the 2016 Convertible Notes, we recognized a $7.5 million loss~~increase primarily attributed to certain settlement assets being swept into overnight money market accounts on a ~~derivative liability related to the change in our stock price over the observation period prior to settlement.~~daily basis.

Other, net. Other, net for ~~the: (i) third~~the first quarter of ~~2023~~2024 was ~~$0.8~~$0.6 million of other income, a ~~$2.0~~$3.0 million change when compared to ~~$2.8 million of other income for the third quarter of 2022; and (ii) nine months ended September 30, 2023 was $3.0~~$2.4 million of other expense ~~a $9.0 million change when compared to $6.0 million of other income~~ for the ~~nine months ended September 30, 2022,~~first quarter of 2023, with the ~~changes~~change primarily attributed to foreign currency movements.

Income Tax Provision. The effective income tax rates for the ~~third~~first quarters of 2024 and ~~nine months ended September 30,~~ 2023 were 29% and ~~2022 were as follows:~~

28%, respectively. Our estimated full year ~~2023~~2024 effective income tax rate is approximately 29%.

~~The effective income tax rate for the third quarter of 2022 was impacted by the timing of certain discrete tax items during the quarter. The~~, a slight increase when compared to our 2023 full year ~~2022 effective income tax~~ rate ~~was~~of approximately 28%.

Cash and Liquidity. As of ~~September 30, 2023,~~March 31, 2024, our principal sources of liquidity included cash and cash equivalents ~~and short-term investments~~ of ~~$146.7~~$120.8 million, compared to ~~$146.2 million as of June 30, 2023, and $150.4~~$186.3 million as of December 31, ~~2022. We generally invest our excess cash balances in low-risk, short-term investments to limit our exposure to market and credit risks.~~2023.

As part of our 2021 Credit Agreement, we have a $450.0 million senior secured revolving loan facility with a syndicate of financial institutions that expires in September ~~2026.~~2026, the 2021 Revolver. As of ~~September 30, 2023, we had $15.0 million~~March 31, 2024, there were no borrowings outstanding on the 2021 Revolver balance, however we issued a standby letter of credit for $1.2 million that counts against the available 2021 Revolver balance. In April 2024, we borrowed $15.0 million on the 2021 Revolver, for general corporate purposes, currently leaving ~~$435.0~~$433.8 million available to us. The 2021 Credit Agreement contains customary affirmative, negative, and financial covenants. As of ~~September 30, 2023,~~March 31, 2024, and the date of this filing, we believe ~~that~~ we are in compliance with the provisions of the 2021 Credit Agreement.

Our cash and cash equivalents ~~and short-term investment~~ balances as of the end of the indicated periods were located in the following geographical regions (in thousands):

We generally have ready access to substantially all of our cash and cash equivalents, ~~and short-term investment balances,~~ but may face limitations on moving cash out of certain foreign jurisdictions due to currency controls and potential negative economic consequences.

As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2024, we had ~~$1.2~~$2.9 million, ~~and $1.0 million, respectively,~~for both periods, of cash restricted as to use primarily to collateralize guarantees and outstanding letters of credit included in our ~~total cash, cash equivalents,~~other current and ~~short-term investments balance.~~non-current asset balances. In addition, as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, we had ~~$193.4~~$193.0 million and ~~$238.7~~$274.7 million, respectively, of settlement and merchant reserve assets which are deemed restricted due to contractual restrictions with the merchants and restrictions arising from our policy and intention. It has historically been our policy to segregate settlement and merchant reserve assets from our operating cash balances and we intend to continue to do so.

Cash Flows from Operating Activities. We calculate our cash flows from operating activities beginning with net income, adding back the impact of non-cash items or non-operating activity (e.g., depreciation, amortization, impairments, ~~gains/losses~~gain/loss on items such as investments, lease modifications, and debt extinguishments/conversions, unrealized foreign currency transactions gain/~~losses,~~loss, deferred income taxes, stock-based compensation, etc.), and then factoring in the impact of changes in operating assets and liabilities. See our ~~2022~~2023 10-K for a description of the primary uses and sources of our cash flows from operating activities.

Our cash flows from operating activities, broken out between operations and changes in operating assets and liabilities, for the indicated quarterly periods are as follows (in thousands):

Variations in our net cash provided by/(used in) operating activities are generally related to the changes in our operating assets and liabilities (related mostly to fluctuations in timing at quarter-end of customer payments, billing milestones, and changes in accrued expenses), and generally over longer periods of time, do not significantly impact our cash flows from operations.

Significant fluctuations in key operating assets and liabilities between ~~2023~~2024 and ~~2022~~2023 that impacted our cash flows from operating activities are as follows:

Management of our billed trade accounts receivable is one of the primary factors in maintaining strong cash flows from operating activities. ~~Our billed trade accounts receivable balance includes~~These balances include significant billings for several non-revenue items (primarily postage, sales tax, and deferred revenue items). As a result, we evaluate our performance in collecting our billed trade accounts receivable through our calculation of ~~days billings outstanding~~Days Billings Outstanding (“DBO”) rather than a typical ~~days sales outstanding~~Days Sales Outstanding (“DSO”) calculation.

Our gross and net billed trade accounts receivable and related allowance for ~~doubtful accounts receivable~~expected losses (“Allowance”) as of the end of the indicated quarterly periods, and the related DBOs for the quarters then ended, are as follows (in thousands, except DBOs):

As of ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ approximately ~~93%~~95%, for both periods, of our net billed trade accounts receivable ~~balance~~balances were less than 60 days past due.

We may experience adverse impacts to our DBOs if and when customer payment delays occur. However, these recurring monthly payments that cross a reporting period-end do not raise ~~any~~ collectability concerns, as payment is generally received subsequent to quarter-end. All other changes in our gross and net billed accounts receivable reflect the normal fluctuations in the timing of customer payments at quarter-end, as evidenced by our relatively consistent DBO metric.

As a global provider of solutions and services, a portion of our trade accounts receivable balance relates to international customers. This diversity in the geographic composition of our customer base may adversely impact our DBOs as longer billing cycles (i.e., billing terms and cash collection cycles) are an inherent characteristic of international software and professional services transactions. ~~For example,~~As a result, we may experience fluctuations in our trade accounts receivable balance as our ability to invoice and collect arrangement fees ~~may be~~is dependent upon, among other things: (i) the completion of various customer administrative matters, local country billing protocols and processes (including local cultural differences), and non-customer administrative matters; (ii) meeting certain contractual invoicing ~~milestones;~~milestones and dates; (iii) the overall project status in certain situations in which we act as a subcontractor to another vendor on a project; or (iv) ~~due to~~ currency controls in certain foreign jurisdictions.

Unbilled trade accounts receivable increased ~~$30.8~~$2.1 million to ~~$83.6~~$84.3 million as of ~~September 30, 2023,~~March 31, 2024, from ~~$52.8~~$82.2 million as of December 31, ~~2022, due~~2023. These unbilled trade accounts receivable balances relate primarily to large implementation projects where various milestone and contractual billing dates have not yet been reached or delayed. Unbilled trade accounts receivable are an inherent characteristic of certain software and services transactions and may fluctuate between quarters, as these types of transactions typically have scheduled invoicing terms over several quarters, as well as certain milestone billing events.

Accrued employee compensation decreased $40.4 million to $44.0 million as of March 31, 2024, from $84.4 million as of December 31, 2023, due primarily to the payment of the 2023 employee incentive compensation during the first quarter of 2024 that was fully accrued at December 31, 2023.

Other current and non-current liabilities decreased $11.9 million to $34.5 million as of March 31, 2024, from $46.4 million as of December 31, 2023, primarily due to a decrease of $4.3 million related to accrued interest on our outstanding debt and payments related to the exit of our reseller agreements of $3.8 million.

Cash Flows ~~from~~From Investing Activities. Our typical investing activities consist of ~~purchases/sales of short-term investments and~~ purchases of software, property, and equipment, which are discussed below.

During the nine months ended September 30, 2023 and 2022, we sold (or had mature) $0.1 million and $27.4 million, respectively, of short-term investments. We continually evaluate the appropriate mix of our investment of excess cash balances between cash equivalents and short-term investments in order to maximize our investment returns and liquidity.

Our capital expenditures for the ~~nine months ended September 30,~~first quarters of 2024 and 2023 ~~and 2022~~ for software, property, and equipment were ~~$22.9~~$4.8 million and ~~$31.6~~$8.7 million, respectively, and consisted principally of investments in: (i) ~~communication design and delivery center equipment and infrastructure; (ii)~~ software and related equipment; ~~(iii)~~and (ii) computer ~~hardware; and (iv) leasehold improvements and related infrastructure for our new corporate headquarters.~~hardware.

Cash Flows ~~from~~From Financing Activities. Our financing activities typically consist of activities ~~associated~~ with our common stock, ~~long-term debt,~~various debt-related transactions, and settlement and merchant reserve activity, discussed below. Additionally, during the nine months ended September 30, 2023, we made the following deferred acquisition payments: (i) Kitewheel deferred purchase price payment of $2.0 million; and (ii) DGIT earn-out and escrowed payments of $1.2 million.activity.

During the ~~nine months ended September 30,~~first quarters of 2024 and 2023, ~~and 2022, the~~our Board approved dividends totaling ~~$26.4~~$8.9 million and ~~$25.4~~$8.8 million, respectively, and we made dividend payments of ~~$26.2~~$9.5 million and ~~$25.4~~$9.1 million, respectively, with the differences between the amount approved and paid attributed to dividends accrued on ~~accrued~~ unvested incentive shares that are paid upon vesting.

During the ~~nine months ended September 30, 2023 and 2022,~~first quarter of 2024, we repurchased approximately ~~1,991,000 and 1,114,000~~185,000 shares of our common stock ~~respectively,~~ under ~~the guidelines of~~ our Stock Repurchase Program for ~~$107.0 million and $65.5 million, respectively.~~$9.6 million. We did not make any share repurchases during the first quarter of 2023.

~~Outside~~Additionally, outside of our Stock Repurchase Program, during the ~~nine months ended September 30,~~first quarters of 2024 and 2023, ~~and 2022,~~ we repurchased from our employees and then ~~cancelled~~canceled approximately ~~171,000~~159,000 and ~~132,000~~166,000 shares of our common stock, respectively, for ~~$9.6~~$8.5 million and ~~$8.4~~$9.3 million, respectively, in connection with minimum tax withholding requirements resulting from the vesting of restricted ~~common~~ stock under our stock incentive plans.

Through the ~~nine months ended September 30,~~first quarters of 2024 and 2023, ~~and 2022,~~ we have paid ~~$116.4~~$18.0 million and ~~$73.4~~$9.3 million, respectively, for our total repurchases of common stock, with ~~the~~any differences when compared to the amounts purchased attributed to the timing of the settlement.

See Note 9 to our Financial Statements for additional discussion of our repurchases of common stock.

During the ~~nine months ended September 30,~~first quarters of 2024 and 2023, we borrowed $45.0 million under our 2021 Revolver for general corporate purposes and subsequently repaid $30.0 million. In September 2023, we issued the 2023 Convertible Notes offering and received proceeds of $425.0 million. We used a portion of these proceeds to repay $275.0 million of our 2021 Revolver balance and pay the $34.3 million premiums for the Capped Call Transactions.

Additionally, during the nine months ended September 30, 2023, we paid deferred financing costs of $13.5 million, of which $13.0 million related to the 2023 Convertible Notes and $0.5 million related to the Second Amendment to the 2021 Credit Agreement.

During the nine months ended September 30, 2022, we borrowed $290.0 million under our 2021 Revolver using $242.3 million to settle our 2016 Convertible Notes, and the remainder for general corporate purposes.

~~Additionally, during the nine months ended September 30, 2023 and 2022,~~ we made principal repayments on our 2021 Term Loan of ~~$5.6~~$1.9 million during each period. Additionally, during the first quarter of 2023, we borrowed $30.0 million from our 2021 Revolver for general corporate purposes.

See Note 4 to our Financial Statements for additional discussion of our long-term debt.

During the ~~nine months ended September 30,~~first quarters of 2024 and 2023, ~~and 2022,~~ we had net settlement and merchant reserve activity of ~~($46.2)~~$82.2 million and ~~($13.9)~~$61.5 million, respectively, related to the cash collected, held on behalf, and paid to our merchants related to our ~~payment processing~~payments services and the net change in deposits held on behalf of our merchants. These balances can significantly fluctuate between periods due to activity at the end of the period and the day in which the period ends.

See Note 2 to our Financial Statements for additional discussion of our settlement and merchant reserves.

Our off-balance sheet arrangements are mainly limited to money transmitter bonds, ~~bid~~performance bonds, and ~~performance bonds.~~a standby letter of credit. These arrangements do not have a material impact and are not reasonably likely to have a material future impact to our financial condition, results of ~~operation,~~operations, liquidity, capital expenditures, or capital resources. See Note 7 to our Financial Statements for additional information on these guarantees.

The following are the key items to consider in assessing our sources and uses of capital resources:

Current Sources of Capital Resources. Below are the key items to consider in assessing our current sources of capital resources:

Uses/Potential Uses of Capital Resources. Below are the key items to consider in assessing our uses/potential uses of capital resources:

Under our Stock Repurchase Program, we may repurchase shares in the open market or in privately negotiated transactions, including through an accelerated stock repurchase plan or under a SEC Rule 10b5-1 plan. The actual timing and amount of share repurchases are dependent on the current market conditions and other business-related factors. Our common stock repurchases are discussed in more detail in Note 9 to our Financial Statements.

During the ~~nine months ended September 30, 2023,~~first quarter of 2024, we repurchased approximately ~~1,991,000~~185,000 shares of our common stock for ~~$107.0~~$9.6 million (weighted-average price of ~~$53.73~~$51.96 per share).

Outside of our Stock Repurchase Program, during the ~~nine months ended September 30, 2023,~~first quarter of 2024, we repurchased from our employees and then cancelled approximately ~~171,000~~159,000 shares of our common stock for ~~$9.6~~$8.5 million in connection with minimum tax withholding requirements resulting from the vesting of restricted common stock under our stock incentive plans.

these past acquisitions. Additionally, there are provisions for up to approximately $13 million of potential future earn-out ~~payments~~payments. The earn-out period is through September 30, 2025. ~~Through September 30, 2023,~~

On April 1, 2024, we ~~have made earn-out payments~~acquired certain assets of ~~$0.3 million.~~a customer communication services business that operates in multiple industry verticals for a purchase price of $11.5 million, subject to customary working capital adjustments.

Our acquisitions are discussed in more detail in Note 5 to our Financial Statements. As part of our growth strategy, we are continually evaluating potential business and/or asset acquisitions and investments in market share expansion with our existing and potential new customers and expansion into verticals outside the global communications market.

~~Additionally, in October 2023, we exited out~~the second quarter of ~~a second reseller agreement, which we~~2024. Of the remaining $2.5 million, $1.3 million will ~~pay a total of $6.3 million, with $3.8 million to~~ be paid in ~~2024, $1.3 million in~~ 2025 and ~~the remainder~~$1.2 million will be paid in 2026.

The stock warrants are discussed in more detail in Note 9 to our Financial Statements.

The proceeds from the sale of the 2023 Convertible Notes, net of financing costs, were $411.0 million. We used the net proceeds to: (i) repay the principal amount of $275.0 million of outstanding borrowings under our 2021 Revolver; (ii) repurchase 1.7 million shares of our common stock for $90.1 million; and (iii) pay the $34.3 million premiums for the Capped Call Transactions. The remaining net proceeds were used for general corporate purposes.

Although the 2023 Convertible Notes are convertible at the option of the note holders before June 15, 2028 upon the occurrence of certain events, ~~during the next twelve months~~however, there are no scheduled conversion ~~triggers.~~triggers over the next twelve months. As a result, we expect our required debt service cash outlay during the next twelve months for the 2023 Convertible Notes to be limited to interest payments of $16.5 million.

The mandatory repayments under our 2021 Credit Agreement for the next twelve months ~~under our 2021 Credit Agreement~~ are $7.5 million and the cash interest expense (based upon then-current interest rates) for the 2021 Term Loan and 2021 Revolver ~~(assuming~~(to include the ~~current amount outstanding,~~$15.0 million that was borrowed in April 2024, assuming no further amounts are borrowed, and the amount is not ~~voluntarily repaid) are $9.6 million and $1.1 million, respectively.~~paid down) is $9.9 million. We have the ability to make prepayments without penalties on our 2021 Credit Agreement.

Our long-term debt obligations are discussed in more detail in Note 4 to our Financial Statements.

In summary, we expect to continue to have material needs for capital resources going forward, as noted above. We believe that our current cash and cash equivalents balances and our 2021 Revolver, together with cash expected to be generated in the future from our current operating activities, will be sufficient to meet our anticipated capital resource requirements for at least the next twelve months. We ~~also~~ believe we could obtain additional capital through other debt sources which may be available to us if deemed appropriate.

Market risk is the potential loss arising from adverse changes in market rates and prices. As of ~~September 30, 2023,~~March 31, 2024, we are exposed to various market risks, including changes in interest rates, fluctuations and changes in the market value of our cash equivalents ~~short-term investments~~ and settlement and merchant reserve assets, and changes in foreign currency exchange rates. We have not historically entered into derivatives or other financial instruments for trading or speculative purposes.

Long-Term Debt. The interest rate on our 2023 Convertible Notes is fixed, and thus, as it relates to our convertible debt borrowings, we are not exposed to changes in interest rates.

The ~~current~~ interest rates on our 2021 Credit Agreement are based upon an adjusted SOFR rate (including 0.10% credit spread adjustment) plus an applicable margin, or an ABR plus an applicable margin. See Note 4 to our Financial Statements for further details related to our long-term debt.

A hypothetical adverse change of 10% in the ~~September 30, 2023~~March 31, 2024 adjusted SOFR rate would not have a material impact upon our results of operations.

Cash ~~Equivalents~~ and ~~Short-Term Investments.~~Cash Equivalents. Our cash and cash equivalents as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 were ~~$146.7~~$120.8 million and ~~$150.4~~$186.3 million, respectively. Certain of our cash balances are swept into overnight money market accounts on a daily basis, and at times, any excess funds are invested in low-risk, somewhat longer term, cash equivalent ~~instruments and short-term investments.~~instruments. Our cash equivalents are invested primarily in institutional money market funds held at major banks. We have minimal market risk for our cash and cash equivalents due to the relatively short maturities of the instruments.

Settlement and Merchant Reserve Assets. We are exposed to market risk associated with cash held on behalf of our merchants related to our payment processing services. As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, we had ~~$193.4~~$193.0 million and ~~$238.7~~$274.7 million, respectively, of cash collected on behalf of our merchants. The cash is held in accounts with various major financial institutions in the U.S. and Canada in an amount equal to at least 100% of the aggregate amount owed to our merchants. These balances can significantly fluctuate between periods due to activity at the end of the period and the day in which the period ends. Certain settlement assets are swept into overnight money market accounts on a daily basis.

Long-Term Debt. The fair value of our convertible debt is exposed to market risk. We do not carry our convertible debt at fair value but present the fair value for disclosure purposes (see Note 2 to our Financial Statements). Generally, the fair value of our convertible debt is impacted by changes in interest rates and changes in the price and volatility of our common stock. As of ~~September 30, 2023,~~March 31, 2024, the fair value of the 2023 Convertible Notes was estimated at ~~$414.7~~$420.9 million, using quoted market prices.

Due to foreign operations around the world, our ~~balance sheet and income statement~~financial statements are exposed to foreign currency exchange risk due to the fluctuations in the value of currencies in which we conduct business. Our principal currency exposures include the British Pound, Euro, Australian Dollar, Saudi Riyal, and South African Rand. While we attempt to maximize natural hedges by incurring expenses in the same currency in which we contract revenue, the related expenses for that revenue could be in one or more differing currencies than the revenue stream. In particular, if the U.S. Dollar were to strengthen it would reduce the reported amount of our foreign-denominated cash, cash equivalents, trade receivables, total revenues and total expenses that we translate into U.S. Dollars and report in our consolidated financial statements for, and as of the end of, each reporting period.

During the ~~nine months ended September 30, 2023,~~first quarter of 2024, we generated approximately ~~88%~~89% of our revenue in U.S. dollars. We expect that, in the foreseeable future, we will continue to generate a very large percentage of our revenue in U.S. dollars.

AsWe have analyzed our foreign currency exposure as of ~~September 30, 2023 and December~~March 31, 2022, the carrying amounts of our monetary assets and monetary liabilities on the books of our non-U.S. subsidiaries in currencies denominated in a currency other than the functional currency of those non-U.S. subsidiaries are as follows (in thousands, in U.S. dollar equivalents):

2024. A hypothetical adverse change of 10% in the ~~September 30, 2023~~March 31, 2024 exchange rates would not have had a material impact upon our results of operations.

As required by Rule 13a-15(b), our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), conducted an evaluation as of the end of the period covered by this report of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e). Based on that evaluation, the CEO and CFO concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

As required by Rule 13a-15(d), our management, including the CEO and CFO, also conducted an evaluation of our internal control over financial reporting, as defined by Rule 13a-15(f), to determine whether any changes occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, the CEO and CFO concluded that there has been no such change during the quarter covered by this report.

From ~~time to time,~~time-to-time, we are involved in litigation relating to claims arising out of our operations in the normal course of business. In the opinion of our management, we are not presently a party to any material pending or threatened legal proceedings.

A discussion of our risk factors can be found in Item 1A. Risk Factors in our ~~2022 Form~~2023 10-K. There were no material changes to the risk factors disclosed in our ~~2022 Form~~2023 10-K during the ~~third~~first quarter of ~~2023.~~2024.

The following table presents information with respect to purchases of our common stock made during the ~~third~~first quarter of ~~2023~~2024 by CSG Systems International, Inc. or any “affiliated purchaser” of CSG Systems International, Inc., as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, as amended.

During the ~~three months ended September 30, 2023,~~first quarter of 2024, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated any contract, instruction, or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or any “non-Rule 10b5-1 trading arrangement” as defined in Item 408(c) of Regulation S-K.

The Exhibits filed or incorporated by reference herewith are as specified in the Exhibit Index.

* Portions of the exhibit have been omitted pursuant to SEC rules regarding confidential information.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Delaware	47-0783182
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)


		Page No.

Part I - FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Balance Sheets as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 (Unaudited)	3

	Condensed Consolidated Statements of Income for the Quarters ended March 31, 2024 and ~~Nine Months Ended September 30,~~ 2023 ~~and 2022~~ (Unaudited)	4

	Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~ for the Quarters ended March 31, 2024 and ~~Nine Months Ended September 30,~~ 2023 ~~and 2022~~ (Unaudited)	5

	Condensed Consolidated Statements of Stockholders’ Equity for the Quarters ended March 31, 2024 and ~~Nine Months Ended September 30,~~ 2023 ~~and 2022~~ (Unaudited)	6

	Condensed Consolidated Statements of Cash Flows for the ~~Nine Months Ended September 30,~~Quarters ended March 31, 2024 and 2023 ~~and 2022~~ (Unaudited)	87

	Notes to Condensed Consolidated Financial Statements (Unaudited)	98

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1815

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2823

Item 4.	Controls and Procedures	2924

Part II - OTHER INFORMATION

Item 1.	Legal Proceedings	3025

Item 1A.	Risk Factors	3025

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3025

Item 5.	Other Information	3025

Item 6.	Exhibits	3025

	Exhibit Index	3126

	Signatures	3227


	September 30, 2023		December 31, 2022		March 31, 2024		December 31, 2023
Americas (principally the U.S.)	$	108,705	$	91,569	$	87,718	$	142,515
Europe, Middle East and Africa		24,950		49,099		22,311		32,974
Asia Pacific		13,075		9,768		10,781		10,775
Total cash, equivalents, and short-term investments	$	146,730	$	150,436
Total cash and cash equivalents					$	120,810	$	186,264


						Net Cash
			Changes in			Provided by
			Operating			(Used In) Operating
			Assets and			Activities –
	Operations		Liabilities			Totals
Cash Flows from Operating Activities:
2023:
March 31 (1)	$	50,158	$	(34,761	)	$	15,397
June 30		26,539		(14,153	)		12,386
September 30		34,618		(10,036	)		24,582
Total	$	111,315	$	(58,950	)	$	52,365

2022:
March 31 (1)	$	49,687	$	(55,236	)	$	(5,549	)
June 30 (2)		36,881		(44,597	)		(7,716	)
September 30		35,852		(13,014	)		22,838
Total	$	122,420	$	(112,847	)	$	9,573


	Operations		Changes in Operating Asset and Liabilities			Net Cash Provided by (Used In) Operating Activities – Totals
Cash Flows from Operating Activities:
2024:
March 31 (1)	$	51,655	$	(81,006	)	$	(29,351	)

2023:
March 31 (2)	$	50,158	$	(34,761	)	$	15,397


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐


	September 30, 2023						December 31, 2022
	Level 1		Level 2		Total		Level 1		Level 2		Total
Cash equivalents:
Money market funds	$	5,457	$	-	$	5,457	$	5,318	$	-	$	5,318
Short-term investments:
Asset-backed securities		-		-		-		-		71		71
Total	$	5,457	$	-	$	5,457	$	5,318	$	71	$	5,389


January 1, 2023, balance	$	304,036
Adjustments related to prior acquisitions		(20	)
Impairment charge related to Keydok, LLC		(1,118	)
Effects of changes in foreign currency exchange rates		98
September 30, 2023, balance	$	302,996


	Quarter Ended
	September 30, 2023					June 30, 2023					September 30, 2022
	Amount		% of Revenue			Amount		% of Revenue			Amount		% of Revenue
Charter	$	59,432		21	%	$	60,175		21	%	$	57,974		21	%
Comcast		53,653		19	%		53,757		19	%		53,533		20	%


	As of									As of
	September 30, 2023			June 30, 2023			December 31, 2022			March 31, 2024			December 31, 2023			March 31, 2023
Charter		21	%		23	%		22	%		21	%		23	%		22	%
Comcast		17	%		18	%		17	%		18	%		17	%		19	%


Quarter Ended	Gross		Allowance			Net Billed		DBOs
2023:
March 31	$	261,028	$	(5,254	)	$	255,774		68
June 30		260,928		(4,618	)		256,310		65
September 30		279,892		(4,731	)		275,161		66

2022:
March 31	$	243,292	$	(4,924	)	$	238,368		70
June 30		241,682		(5,105	)		236,577		66
September 30		243,829		(4,998	)		238,831		66


	September 30, 2023					December 31, 2022
	Monetary			Monetary		Monetary			Monetary
	Liabilities			Assets		Liabilities			Assets
Pounds sterling	$	(4	)	$	1,243	$	(119	)	$	601
Euro		(68	)		2,645		(425	)		1,992
U.S. Dollar		(282	)		31,742		(597	)		31,646
Other		(4	)		1,718		(72	)		503
Totals	$	(358	)	$	37,348	$	(1,213	)	$	34,742


							Stock Repurchase Program
Period	Total Number of Shares Purchased (1) (2)		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)		Maximum Number of Shares that May Yet Be Purchased Under the Program (2) (3)		Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program (3) (4)
July 1 - July 31		810	$	51.92		-		2,107,047
August 1 - August 31		260,552		54.63		259,852		1,847,195	$	100,000,000
September 1 - September 30		1,732,785		53.60		1,731,594		115,601		100,000,000
Total		1,994,147	$	53.73		1,991,446


Exhibit Number		Description

~~4.20 (1)~~10.28D		~~Indenture, dated September 11, 2023, between CSG Systems International, Inc. and U.S. Bank Trust Company, National Association, as trustee~~
~~4.25 (1)~~		~~Form of 3.875% Convertible Senior Note due 2028 (included as Exhibit A in Exhibit 4.20)~~
~~4.60B (2)~~		~~Second Amendment to Amended and Restated Credit Agreement, dated September 5, 2023~~
10.28A*		~~Second~~Fifth Amendment to the Amended and Restated CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and Charter Communications Operating, LLC
10.28B*10.28E		~~Third~~Sixth Amendment to the Amended and Restated CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and Charter Communications Operating, LLC
~~10.40 (1)~~10.85		~~Form~~Forms of ~~Capped Call Confirmations~~
~~10.53D (3)~~		~~Transition Services~~ Agreement ~~with Kenneth M. Kennedy, dated September 27, 2023~~
~~10.53E (3)~~		~~Separation and Release Agreement with Kenneth M. Kennedy, dated September 28, 2023~~for Equity Compensation
31.01		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.02		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.01		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH		Inline XBRL Taxonomy Extension Schema ~~Document~~
~~101.CAL~~		~~Inline XBRL Taxonomy Extension Calculation~~With Embedded Linkbase ~~Document~~
~~101.DEF~~		~~Inline XBRL Taxonomy Extension Definition Linkbase Document~~
~~101.LAB~~		~~Inline XBRL Taxonomy Extension Label Linkbase Document~~
~~101.PRE~~		~~Inline XBRL Taxonomy Extension Presentation Linkbase Document~~Documents
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)