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 ~~November 2, 2020,~~July 30, 2021, there were ~~32,945,906~~32,742,574 shares of the registrant’s common stock outstanding.

	September 30,			December 31,			June 30,			December 31,
	2020			2019			2021			2020
ASSETS
Current assets:
Cash and cash equivalents	$	174,489		$	156,548		$	163,768		$	188,699
Short-term investments		37,605			26,109			48,325			51,598
Total cash, cash equivalents and short-term investments		212,094			182,657			212,093			240,297
Settlement assets		117,452			169,327
Settlement and merchant reserve assets								142,684			166,031
Trade accounts receivable:
Billed, net of allowance of $3,730 and $3,735		225,117			244,058
Billed, net of allowance of $3,546 and $3,628								223,228			226,623
Unbilled		36,977			33,450			43,583			37,785
Income taxes receivable		3,341			4,297			8,170			2,167
Other current assets		42,205			35,293			48,186			41,688
Total current assets		637,186			669,082			677,944			714,591
Non-current assets:
Property and equipment, net of depreciation of $100,661 and $98,029		83,199			84,429
Property and equipment, net of depreciation of $117,113 and $105,073								81,261			81,759
Operating lease right-of-use assets		115,726			94,847			100,881			110,756
Software, net of amortization of $135,644 and $125,437		28,769			32,526
Software, net of amortization of $147,369 and $139,836								23,818			26,453
Goodwill		266,636			259,164			274,843			272,322
Acquired client contracts, net of amortization of $100,864 and $93,767		50,225			55,105
Client contract costs, net of amortization of $39,206 and $31,526		45,038			50,746
Acquired customer contracts, net of amortization of $110,438 and $105,778								52,995			48,012
Customer contract costs, net of amortization of $46,370 and $39,893								46,799			47,238
Deferred income taxes		9,641			9,392			9,500			10,205
Other assets		35,396			27,739			23,643			20,664
Total non-current assets		634,630			613,948			613,740			617,409
Total assets	$	1,271,816		$	1,283,030		$	1,291,684		$	1,332,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt	$	13,125		$	10,313
Current portion of long-term debt, net of unamortized discounts of $2,032 and 0							$	242,968		$	14,063
Operating lease liabilities		22,580			22,442			23,303			22,651
Client deposits		34,387			38,687
Customer deposits								32,418			39,992
Trade accounts payable		36,617			32,704			31,852			29,834
Accrued employee compensation		59,534			77,527			76,851			86,289
Settlement liabilities		116,032			168,342
Settlement and merchant reserve liabilities								141,130			165,064
Deferred revenue		52,835			45,094			54,956			52,357
Income taxes payable		3,664			2,806			937			6,627
Other current liabilities		18,612			20,778			18,824			19,383
Total current liabilities		357,386			418,693			623,239			436,260
Non-current liabilities:
Long-term debt, net of unamortized discounts of $6,543 and $10,053		339,707			346,509
Long-term debt, net of unamortized discounts of $880 and $5,346								104,120			337,154
Operating lease liabilities		101,262			78,936			85,599			95,926
Deferred revenue		18,884			18,552			14,288			17,275
Income taxes payable		2,734			2,543			2,508			2,436
Deferred income taxes		10,388			6,376			10,941			5,109
Other non-current liabilities		31,528			14,759			11,209			15,445
Total non-current liabilities		504,503			467,675			228,665			473,345
Total liabilities		861,889			886,368			851,904			909,605
Stockholders' equity:
Preferred stock, par value $.01 per share; 10,000 shares authorized; 0 shares issued and outstanding		-			-			-			-
Common stock, par value $.01 per share; 100,000 shares authorized; 33,125 and 32,891 shares outstanding		701			696
Common stock, par value $.01 per share; 100,000 shares authorized; 32,797 and 32,713 shares outstanding								704			700
Additional paid-in capital		462,775			454,663			477,010			470,557
Treasury stock, at cost; 35,646 and 35,356 shares		(880,162	)		(867,817	)
Treasury stock, at cost; 36,275 and 35,980 shares								(907,601	)		(894,126	)
Accumulated other comprehensive income (loss):
Unrealized gains on short-term investments, net of tax		30			16			-			13
Cumulative foreign currency translation adjustments		(44,265	)		(39,519	)		(29,294	)		(31,151	)
Accumulated earnings		870,848			848,623			898,961			876,402
Total stockholders' equity		409,927			396,662			439,780			422,395
Total liabilities and stockholders' equity	$	1,271,816		$	1,283,030		$	1,291,684		$	1,332,000

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

	Quarter Ended						Nine Months Ended						Quarter Ended						Six Months Ended
	September 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019			June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Revenue	$	244,108		$	251,414		$	730,046		$	742,063		$	255,134		$	240,321		$	508,253		$	485,938

Cost of revenue (exclusive of depreciation, shown separately below)		131,073			132,054			400,432			393,251			132,938			138,153			266,480			269,359
Other operating expenses:
Research and development		30,425			32,551			90,025			95,787			32,754			29,263			64,966			59,600
Selling, general and administrative		47,032			46,694			136,415			137,984			49,250			44,999			98,065			89,383
Depreciation		5,817			5,365			17,016			15,919			6,266			5,634			12,379			11,199
Restructuring and reorganization charges		814			1,330			4,277			3,271			1,760			2,497			2,820			3,463
Total operating expenses		215,161			217,994			648,165			646,212			222,968			220,546			444,710			433,004
Operating income		28,947			33,420			81,881			95,851			32,166			19,775			63,543			52,934
Other income (expense):
Interest expense		(3,641	)		(4,390	)		(11,894	)		(13,448	)		(3,633	)		(4,040	)		(7,225	)		(8,253	)
Amortization of original issue discount		(751	)		(709	)		(2,221	)		(2,099	)		(784	)		(740	)		(1,556	)		(1,470	)
Interest and investment income, net		254			392			1,086	��		1,328			84			303			208			832
Other, net		(2,067	)		108			(3,184	)		(123	)		(100	)		(1,048	)		(655	)		(1,117	)
Total other		(6,205	)		(4,599	)		(16,213	)		(14,342	)		(4,433	)		(5,525	)		(9,228	)		(10,008	)
Income before income taxes		22,742			28,821			65,668			81,509			27,733			14,250			54,315			42,926
Income tax provision		(9,176	)		(7,262	)		(20,222	)		(21,320	)		(8,412	)		(3,884	)		(15,363	)		(11,046	)
Net income	$	13,566		$	21,559		$	45,446		$	60,189		$	19,321		$	10,366		$	38,952		$	31,880

Weighted-average shares outstanding:
Basic		32,115			32,016			32,070			32,079			31,875			32,100			31,859			32,047
Diluted		32,273			32,518			32,296			32,472			31,993			32,258			32,070			32,308

Earnings per common share:
Basic	$	0.42		$	0.67		$	1.42		$	1.88		$	0.61		$	0.32		$	1.22		$	0.99
Diluted		0.42			0.66			1.41			1.85			0.60			0.32			1.21			0.99

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


	Quarter Ended						Nine Months Ended						Quarter Ended					Six Months Ended
	September 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019			June 30, 2021			June 30, 2020		June 30, 2021			June 30, 2020
Net income	$	13,566		$	21,559		$	45,446		$	60,189		$	19,321		$	10,366	$	38,952		$	31,880
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		7,667			(6,897	)		(4,746	)		(6,868	)		2,212			2,671		1,857			(12,413	)
Unrealized holding gains (losses) on short-term investments arising during period		(14	)		(4	)		14			24			(7	)		52		(13	)		28
Other comprehensive income (loss), net of tax		7,653			(6,901	)		(4,732	)		(6,844	)		2,205			2,723		1,844			(12,385	)
Total comprehensive income, net of tax	$	21,219		$	14,658		$	40,714		$	53,345		$	21,526		$	13,089	$	40,796		$	19,495

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

Shares of Common Stock Outstanding

Common Stock

Common Stock Warrants

Additional Paid-in Capital

Treasury Stock

Accumulated Other Comprehensive Income (Loss)

Accumulated Earnings

Total Stockholders' Equity

For the Nine Months Ended September 30, 2020:

BALANCE, January 1, 2020

32,891

$
696

$
-

$
454,663

$
(867,817
)
$
(39,503
)
$
848,623

$
396,662

Comprehensive income:

Net income

-

-

-

-

-

-

21,514

Unrealized gain on short-term investments, net of tax

-

-

-

-

-

(24
)

-

Foreign currency translation adjustments

-

-

-

-

-

(15,084
)

-

Total comprehensive income

6,406

Repurchase of common stock

(299
)

(2
)

-

(7,555
)

(6,408
)

-

-

(13,965
)
Issuance of common stock pursuant to employee stock purchase plan

14

-

-

564

-

-

-

564

Issuance of restricted common stock pursuant to stock-based compensation plans

476

5

-

(5
)

-

-

-

-

Cancellation of restricted common stock issued pursuant to stock-based compensation plans

(7
)

-

-

-

-

-

-

-

Stock-based compensation expense

-

-

-

4,857

4,857

Dividends

-

-

-

-

-

-

(7,693
)

(7,693
)
BALANCE, March 31, 2020

33,075

699

-

452,524

(874,225
)

(54,611
)

862,444

386,831

Comprehensive income:

Net income

-

-

-

-

-

-

10,366

Unrealized gain on short-term investments, net of tax

-

-

-

-

-

52

-

Foreign currency translation adjustments

-

-

-

-

-

2,671

-

Total comprehensive income

13,089

Repurchase of common stock

(11
)

-

-

(100
)

(367
)

-

-

(467
)
Issuance of common stock pursuant to employee stock purchase plan

18

-

-

683

-

-

-

683

Issuance of restricted common stock pursuant to stock-based compensation plans

12

-

-

-

-

-

-

-

Cancellation of restricted common stock issued pursuant to stock-based compensation plans

(14
)

-

-

-

-

-

-

-

Stock-based compensation expense

-

-

-

5,255

5,255

Declaration of cash dividends

-

-

-

-

-

-

(7,769
)

(7,769
)
BALANCE, June 30, 2020

33,080

$
699

$
-

$
458,362

$
(874,592
)
$
(51,888
)
$
865,041

$
397,622

Comprehensive income:

Net income

-

-

-

-

-

-

13,566

Unrealized gain on short-term investments, net of tax

-

-

-

-

-

(14
)

-

Foreign currency translation adjustments

-

-

-

-

-

7,667

-

Total comprehensive income

21,219

Repurchase of common stock

(143
)

-

-

(152
)

(5,570
)

-

-

(5,722
)
Issuance of common stock pursuant to employee stock purchase plan

16

-

-

591

-

-

-

591

Issuance of restricted common stock pursuant to stock-based compensation plans

183

2

-

(2
)

-

-

-

-

Cancellation of restricted common stock issued pursuant to stock-based compensation plans

(11
)

-

-

-

-

-

-

-

Stock-based compensation expense

-

-

-

3,976

3,976

Declaration of cash dividends

-

-

-

-

-

-

(7,759
)

(7,759
)
BALANCE, September 30, 2020

33,125

$
701

$
-

$
462,775

$
(880,162
)
$
(44,235
)
$
870,848

$
409,927

	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 Six Months Ended June 30, 2021:
BALANCE, January 1, 2021		32,713		$	700		$	470,557		$	(894,126	)	$	(31,138	)	$	876,402		$	422,395
Comprehensive income:
Net income		-			-			-			-			-			19,631
Unrealized loss on short-term investments, net of tax		-			-			-			-			(6	)		-
Foreign currency translation adjustments		-			-			-			-			(355	)		-
Total comprehensive income																				19,270
Repurchase of common stock		(252	)		(1	)		(5,202	)		(6,518	)		-			-			(11,721	)
Issuance of common stock pursuant to employee stock purchase plan		16			-			619			-			-			-			619
Issuance of restricted common stock pursuant to stock-based compensation plans		487			5			(5	)		-			-			-			-
Cancellation of restricted common stock issued pursuant to stock-based compensation plans		(1	)		-			-			-			-			-			-
Stock-based compensation expense		-			-			5,395												5,395
Dividends		-			-			-			-			-			(8,243	)		(8,243	)
BALANCE, March 31, 2021		32,963			704			471,364			(900,644	)		(31,499	)		887,790			427,715
Comprehensive income:
Net income		-			-			-			-			-			19,321
Unrealized loss on short-term investments, net of tax		-			-			-			-			(7	)		-
Foreign currency translation adjustments		-			-			-			-			2,212			-
Total comprehensive income																				21,526
Repurchase of common stock		(156	)		-			(92	)		(6,957	)		-			-			(7,049	)
Issuance of common stock pursuant to employee stock purchase plan		19			-			716			-			-			-			716
Issuance of restricted common stock pursuant to stock-based compensation plans		6			-			-			-			-			-			-
Cancellation of restricted common stock issued pursuant to stock-based compensation plans		(35	)		-			-			-			-			-			-
Stock-based compensation expense		-			-			5,022												5,022
Declaration of cash dividends		-			-			-			-			-			(8,150	)		(8,150	)
BALANCE, June 30, 2021		32,797		$	704		$	477,010		$	(907,601	)	$	(29,294	)	$	898,961		$	439,780

For the Six Months Ended June 30, 2020:
BALANCE, January 1, 2020		32,891		$	696		$	454,663		$	(867,817	)	$	(39,503	)	$	848,623		$	396,662
Comprehensive income:
Net income		-			-			-			-			-			21,514
Unrealized loss on short-term investments, net of tax		-			-			-			-			(24	)		-
Foreign currency translation adjustments		-			-			-			-			(15,084	)		-
Total comprehensive income																				6,406
Repurchase of common stock		(299	)		(2	)		(7,555	)		(6,408	)		-			-			(13,965	)
Issuance of common stock pursuant to employee stock purchase plan		14			-			564			-			-			-			564
Issuance of restricted common stock pursuant to stock-based compensation plans		476			5			(5	)		-			-			-			-
Cancellation of restricted common stock issued pursuant to stock-based compensation plans		(7	)		-			-			-			-			-			-
Stock-based compensation expense		-			-			4,857												4,857
Dividends		-			-			-			-			-			(7,693	)		(7,693	)
BALANCE, March 31, 2020		33,075			699			452,524			(874,225	)		(54,611	)		862,444			386,831
Comprehensive income:
Net income		-			-			-			-			-			10,366
Unrealized gain on short-term investments, net of tax		-			-			-			-			52			-
Foreign currency translation adjustments		-			-			-			-			2,671			-
Total comprehensive income																				13,089
Repurchase of common stock		(11	)		-			(100	)		(367	)		-			-			(467	)
Issuance of common stock pursuant to employee stock purchase plan		18			-			683			-			-			-			683
Issuance of restricted common stock pursuant to stock-based compensation plans		12			-			-			-			-			-			-
Cancellation of restricted common stock issued pursuant to stock-based compensation plans		(14	)		-			-			-			-			-			-
Stock-based compensation expense		-			-			5,255												5,255
Declaration of cash dividends		-			-			-			-			-			(7,769	)		(7,769	)
BALANCE, June 30, 2020		33,080		$	699		$	458,362		$	(874,592	)	$	(51,888	)	$	865,041		$	397,622

Shares of Common Stock Outstanding

Common Stock

Common Stock Warrants

Additional Paid-in Capital

Treasury Stock

Accumulated Other Comprehensive Income (Loss)

Accumulated Earnings

Total Stockholders' Equity

For the Nine Months Ended September 30, 2019:

BALANCE, January 1, 2019

33,158

$
693

$
9,082

$
441,417

$
(842,360
)
$
(42,935
)
$
795,127

$
361,024

Comprehensive income:

Net income

-

-

-

-

-

-

19,251

Unrealized gain on short-term investments, net of tax

-

-

-

-

-

18

-

Foreign currency translation adjustments

-

-

-

-

-

3,847

-

Total comprehensive income

23,116

Repurchase of common stock

(352
)

-

-

(4,134
)

(9,290
)

-

-

(13,424
)
Issuance of common stock pursuant to employee stock purchase plan

15

-

-

512

-

-

-

512

Issuance of restricted common stock pursuant to stock-based compensation plans

462

4

-

(4
)

-

-

-

-

Cancellation of restricted common stock issued pursuant to stock-based compensation plans

(3
)

-

-

-

-

-

-

-

Stock-based compensation expense

-

-

-

3,693

3,693

Dividends

-

-

-

-

-

-

(7,411
)

(7,411
)
BALANCE, March 31, 2019

33,280

697

9,082

441,484

(851,650
)

(39,070
)

806,967

367,510

Comprehensive income:

Net income

-

-

-

-

-

-

19,379

Unrealized gain on short-term investments, net of tax

-

-

-

-

-

10

-

Foreign currency translation adjustments

-

-

-

-

-

(3,818
)

-

Total comprehensive income

15,571

Repurchase of common stock

(148
)

-

-

(383
)

(6,536
)

-

-

(6,919
)
Issuance of common stock pursuant to employee stock purchase plan

15

-

-

603

-

-

-

603

Issuance of restricted common stock pursuant to stock-based compensation plans

6

-

-

-

-

-

-

-

Cancellation of restricted common stock issued pursuant to stock-based compensation plans

(91
)

(1
)

-

1

-

-

-

-

Stock-based compensation expense

-

-

-

4,807

4,807

Declaration of cash dividends

-

-

-

-

-

-

(7,248
)

(7,248
)
BALANCE, June 30, 2019

33,062

$
696

$
9,082

$
446,512

$
(858,186
)
$
(42,878
)
$
819,098

$
374,324

Comprehensive income:

Net income

-

-

-

-

-

-

21,559

Unrealized gain on short-term investments, net of tax

-

-

-

-

-

(4
)

-

Foreign currency translation adjustments

-

-

-

-

-

(6,897
)

-

Total comprehensive income

14,658

Repurchase of common stock

(97
)

-

-

(216
)

(4,731
)

-

-

(4,947
)
Issuance of common stock pursuant to employee stock purchase plan

12

-

-

515

-

-

-

515

Issuance of restricted common stock pursuant to stock-based compensation plans

34

-

-

-

-

-

-

-

Cancellation of restricted common stock issued pursuant to stock-based compensation plans

(32
)

-

-

-

-

-

-

-

Stock-based compensation expense

-

-

-

4,795

-

-

-

4,795

Declaration of cash dividends

-

-

-

-

-

(7,309
)

(7,309
)
BALANCE, September 30, 2019

32,979

$
696

$
9,082

$
451,606

$
(862,917
)
$
(49,779
)
$
833,348

$
382,036

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

	Nine Months Ended						Six Months Ended
	September 30, 2020			September 30, 2019			June 30, 2021			June 30, 2020
Cash flows from operating activities:
Net income	$	45,446		$	60,189		$	38,952		$	31,880
Adjustments to reconcile net income to net cash provided by operating activities-
Depreciation		17,016			15,919			12,379			11,199
Amortization		32,998			34,579			22,018			22,043
Amortization of original issue discount		2,221			2,099			1,556			1,470
Asset impairment		10,438			365			415			10,595
Gain on short-term investments and other		(120	)		(285	)
(Gain)/loss on short-term investments								32			(110	)
Deferred income taxes		3,844			6,124			6,434			6,771
Stock-based compensation		14,088			13,295			10,417			10,112
Changes in operating assets and liabilities, net of acquired amounts:
Trade accounts receivable, net		13,322			(8,748	)		1,128			(6,286	)
Other current and non-current assets and liabilities		(9,228	)		(15,312	)		(7,623	)		(8,568	)
Income taxes payable/receivable		1,542			3,468			(11,620	)		1,332
Trade accounts payable and accrued liabilities		(24,618	)		(7,978	)		(29,817	)		(36,381	)
Deferred revenue		8,736			3,812			(2,042	)		6,803
Net cash provided by operating activities		115,685			107,527			42,229			50,860

Cash flows from investing activities:
Purchases of software, property and equipment		(24,201	)		(27,706	)		(15,158	)		(14,334	)
Purchases of short-term investments		(49,100	)		(25,446	)		(46,195	)		(35,112	)
Proceeds from sale/maturity of short-term investments		37,743			38,029			49,419			34,185
Acquisition of and investments in business, net of cash acquired		(11,491	)		(17,194	)		(12,097	)		(9,991	)
Net cash used in investing activities		(47,049	)		(32,317	)		(24,031	)		(25,252	)

Cash flows from financing activities:
Proceeds from issuance of common stock		1,838			1,630			1,335			1,247
Payment of cash dividends		(23,441	)		(21,980	)		(16,654	)		(15,856	)
Repurchase of common stock		(19,926	)		(25,683	)		(18,792	)		(14,515	)
Payments on long-term debt		(7,500	)		(5,625	)		(6,563	)		(4,687	)
Settlement and merchant reserve activity								(23,967	)		(28,745	)
Net cash used in financing activities		(49,029	)		(51,658	)		(64,641	)		(62,556	)
Effect of exchange rate fluctuations on cash		(1,666	)		(2,199	)
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash								(1,835	)		(3,981	)

Net increase in cash and cash equivalents		17,941			21,353
Net decrease in cash, cash equivalents and restricted cash								(48,278	)		(40,929	)

Cash and cash equivalents, beginning of period		156,548			139,277
Cash and cash equivalents, end of period	$	174,489		$	160,630
Cash, cash equivalents and restricted cash, beginning of period								354,730			337,654
Cash, cash equivalents and restricted cash, end of period							$	306,452		$	296,725

Supplemental disclosures of cash flow information:
Cash paid during the period for-
Interest	$	12,941		$	14,521		$	6,370		$	7,327
Income taxes		14,756			11,779			20,540			2,865

Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents							$	163,768		$	144,019
Settlement and merchant reserve assets								142,684			152,706
Total cash, cash equivalents and restricted cash							$	306,452		$	296,725

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

We have prepared the accompanying unaudited condensed consolidated financial statements as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, and for the quarters and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, in accordance with accounting principles generally accepted in the United States of America (“U.S.”) (“GAAP”) for interim financial information, and pursuant to the instructions to Form 10-Q and the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of our management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of our financial position and operating results have been included. The unaudited Condensed Consolidated Financial Statements (the “Financial Statements”) should be read in conjunction with the Consolidated Financial Statements and notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), contained in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 (our ~~“2019~~“2020 10-K”), filed with the SEC. The results of operations for the quarter and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 are not necessarily indicative of the expected results for the entire year ending December 31, ~~2020.~~

Use of Estimates in Preparation of Financial Statements. The preparation of the accompanying Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at 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.

Reclassifications. Certain amounts for the prior period have been reclassified to conform to the June 30, 2021 presentation.

Beginning with the second quarter of 2021, we determined that settlement and merchant reserve assets consist of restricted cash and are now included with cash, cash equivalents and restricted cash when reconciling the beginning-of-period and end-of-period total amounts shown on the condensed consolidated statements of cash flows (the “Statements of Cash Flows”). Historically, we presented the change in settlement and merchant reserve assets and liabilities as part of the changes in operating assets and liabilities on the Statements of Cash Flows. Additionally, cash flows related to our settlement and merchant reserve liabilities have been reclassified from cash flows from operating activities to cash flows from financing activities.

Prior period amounts have been reclassified to conform to the current period presentation. These changes have no impact on our previously reported consolidated net income, total assets, including cash and cash equivalents, liabilities, and equity. In addition, these changes have no material impact on our previously reported cash flows from operating activities.

Revenue. The majority of our future revenue is related to our revenue management solution ~~client~~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 ~~2020~~2021 through 2028. Our ~~client~~customer contracts may ~~also~~ include guaranteed minimums and fixed monthly or annual fees. As of ~~September~~June 30, ~~2020,~~2021, our aggregate amount of the transaction price allocated to the remaining performance obligations is approximately ~~$1 billion,~~$900 million, 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 approximately ~~70%~~80% of this amount by the end of ~~2022,~~2023, with the remaining amount recognized by the end of 2028. We have excluded from this amount variable consideration expected to be recognized in the future related to performance obligations that are 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, ~~(using~~and customer vertical.

Revenue by type for the quarters and six months ended June 30, 2021 and 2020 were as follows (in thousands):

We use the location of the ~~client~~customer as the basis of attributing revenue to geographic regions. Revenue by geographic region for the ~~individual regions)~~quarters and six months ended June 30, 2021 and 2020, as ~~follows (in thousands):~~a percentage of our total revenue, were as follows:

We generate our revenue primarily from the global communications markets; however, we serve an expanding group of customers in markets including financial services, healthcare, media and entertainment companies, and government entities. Revenue by customer vertical for the quarters and six months ended June 30, 2021 and 2020, as a percentage of our total revenue, were as follows:

Deferred revenue recognized during the quarters ended ~~September~~June 30, 2021 and 2020 ~~and 2019~~ was ~~$6.1~~$11.9 million and ~~$5.7~~$9.7 million, respectively, and during the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020 ~~and 2019~~ was ~~$33.4~~$32.0 million and ~~$35.5~~$27.4 million, respectively.

Cash and Cash Equivalents. We consider all highly liquid investments with original maturities of three months or less at the date of the purchase to be cash equivalents. As of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, 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. As of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, we had ~~$1.6~~$1.8 million and ~~$2.7~~$1.7 million, respectively, of restricted cash that serves to collateralize outstanding letters of ~~credit. This restricted cash is~~credit included in cash and cash equivalents in our Condensed Consolidated Balance Sheets (“Balance Sheets” or “Balance Sheet”).

~~Short-term Investments~~Settlement and ~~Other~~ Merchant Reserve Assets and Liabilities. Settlement assets and liabilities represent cash collected on behalf of customers via payment 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, risk profile, and contractual terms with the customer. During the holding period, cash is held in trust with various major financial institutions and a corresponding liability is recorded for the amounts owed to the merchant. At any given time, there may be differences between the cash held in trust and the corresponding liability due to the timing of operating-related cash transfers.

Merchant reserves represent deposits collected from customers to mitigate our risk of loss due to nonperformance of settlement obligations initiated by our customers using our payment 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 the basis for the deposit amount required for each customer. For the duration of our relationship with each customer, we hold their reserve deposits with major financial institutions. We hold these funds in separate accounts and 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):

Financial Instruments. Our financial instruments as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 include cash and cash equivalents, short-term investments, settlement and merchant reserve assets and liabilities, accounts receivable, accounts payable, and debt. ~~Because of~~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.

Primarily all short-term investments held by us as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 have contractual maturities of less than two years from the time of acquisition. Our short-term investments as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 consisted almost entirely of fixed income securities. Proceeds from the sale/maturity of short-term investments for the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020 ~~and 2019~~ were ~~$37.7~~$49.4 million and ~~$38.0~~$34.2 million, respectively.

Our short-term investments as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 were ~~$37.6~~$48.3 million and ~~$26.1~~$51.6 million, respectively.

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, 2020						December 31, 2019						June 30, 2021						December 31, 2020
	Level 1		Level 2		Total		Level 1		Level 2		Total		Level 1		Level 2		Total		Level 1		Level 2		Total
Cash equivalents:
Money market funds	$	28,548	$	—	$	28,548	$	4,847	$	—	$	4,847	$	9,987	$	—	$	9,987	$	33,535	$	—	$	33,535
Commercial paper		—		6,098		6,098		—		26,964		26,964		—		—		—		—		15,746		15,746
Corporate debt securities																—		—				1,351		1,351
Short-term investments:
Corporate debt securities		—		35,432		35,432		—		22,159		22,159		—		38,070		38,070		—		38,672		38,672
U.S. government agency bonds														—		4,611		4,611		—		4,642		4,642
Asset-backed securities		—		2,173		2,173		—		3,950		3,950		—		5,644		5,644		—		8,284		8,284
Total	$	28,548	$	43,703	$	72,251	$	4,847	$	53,073	$	57,920	$	9,987	$	48,325	$	58,312	$	33,535	$	68,695	$	102,230

Valuation inputs used to measure the fair values of our money market funds ~~and corporate equity securities~~ 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 ~~measure~~record our debt at fair value, with changes recognized in earnings each reporting period. The following table indicates the carrying value (par value for convertible debt) and estimated fair value of our debt as of the indicated periods (in thousands):

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

~~Equity Method Investment.~~ ~~During the nine months ended September 30, 2020, we made an additional $1.5 million investment in a payment technology and services company.~~ ~~As of September 30, 2020, we held a 15% noncontrolling interest with a carrying value of $8.0 million.~~

Accounting Pronouncement Issued But Not Yet Effective. In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. ASU 2020-06 also amends the related Earnings Per Share guidance. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, and can be adopted on either a fully retrospective or modified retrospective basis. We are currently evaluating the method of adoption and overall impact of this standard on our Financial Statements.

Goodwill. The changes in the carrying amount of goodwill for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 wereas follows (in thousands):

Goodwill acquired during the period primarily relates to the acquisition of Tango Telecom Limited. See Note 5 for discussion regarding the ~~Tekzenit, Inc.~~Tango Telecom Limited acquisition.

Other Intangible Assets. Our other intangible assets subject to ongoing amortization consist primarily of acquired ~~client~~customer contracts and software. As of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the carrying values of these assets were as follows (in thousands):

September 30, 2020

December 31, 2019

Gross

Gross

Carrying

Accumulated

Net

Carrying

Accumulated

Net

Amount

Amortization

Amount

Amount

Amortization

Amount

Acquired client contracts

$
151,089

$
(100,864
)

$
50,225

$
148,872

$
(93,767
)

$
55,105

Software

164,413

(135,644
)

28,769

157,963

(125,437
)

32,526

Total intangible assets

$
315,502

$
(236,508
)

$
78,994

$
306,835

$
(219,204
)

$
87,631

	June 30, 2021							December 31, 2020
	Gross							Gross
	Carrying		Accumulated			Net		Carrying		Accumulated			Net
	Amount		Amortization			Amount		Amount		Amortization			Amount
Acquired customer contracts	$	163,433	$	(110,438	)	$	52,995	$	153,790	$	(105,778	)	$	48,012
Software		171,187		(147,369	)		23,818		166,289		(139,836	)		26,453
Total other intangible assets	$	334,620	$	(257,807	)	$	76,813	$	320,079	$	(245,614	)	$	74,465

Other intangible assets as of June 30, 2021 include assets acquired in the Tango Telecom Limited business acquisition (see Note 5).

The total amortization expense related to other intangible assets for the ~~third~~second quarters of 2021 and 2020 ~~and 2019~~ were ~~$6.3~~$5.9 million and ~~$5.9~~$6.3 million, respectively, and for the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020 ~~and 2019~~ were ~~$18.9~~$11.5 million and ~~$17.3~~$12.6 million, respectively. Based on the ~~September~~June 30, ~~2020~~2021 net carrying value of our other intangible assets, the estimated total amortization expense for each of the five succeeding fiscal years ending December 31 are: ~~2020 – $25.3 million;~~ 2021 – ~~$18.4~~$22.7 million; 2022 – ~~$13.9~~$17.4 million; 2023 – ~~$10.0~~$12.9 million; 2024 – $8.9 million; and ~~2024~~2025 – ~~$6.7~~$7.7 million.

~~Client~~Customer Contract Costs. As of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the carrying values of our ~~client~~customer contract cost assets, related to those contracts with a contractual term greater than one year, were as follows (in thousands):

During the ~~nine months ended September 30,~~second quarter of 2020, we recorded an impairment charge of $10.3 million for the write-off of capitalized ~~client~~customer contract costs related to a discontinued project implementation. This non-cash impairment charge is included primarily in cost of revenue in our Condensed Consolidated Statements of Income (“Income ~~Statement”~~Statements”).

The total amortization expense related to ~~client~~customer contract costs for the ~~third~~second quarters of 2021 and 2020 ~~and 2019~~ were ~~$4.2~~$5.0 million and ~~$3.7~~$4.6 million, respectively, and for the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020 ~~and 2019~~ were ~~$12.8~~$9.7 million and ~~$16.1~~$8.6 million, respectively.

Our long-term debt, as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, was as follows (in thousands):

. During the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, we made ~~$7.5~~$6.6 million of principal repayments on our $150 million aggregate principal five-year term loan (the “2018 Term Loan”). As of ~~September~~June 30, ~~2020,~~2021, our interest rate on the 2018 Term Loan is ~~1.72%~~1.65% (adjusted LIBOR plus 1.50% per annum), effective through ~~December 2020,~~June 2021, and our commitment fee on the unused $200 million aggregate principal five-year revolving loan facility (the “2018 Revolver”) is 0.20%. As of ~~September~~June 30, ~~2020,~~2021, we had 0 borrowings outstanding on our 2018 Revolver and had the entire $200.0 million available to us.

The interest rates under the 2018 Credit Agreement are based upon our choice of an adjusted LIBOR rate plus an applicable margin of 1.50% – 2.50%, or an alternate base rate plus an applicable margin of 0.50% – 1.50%, with the applicable margin, depending on our then-net secured total leverage ratio. We will pay a commitment fee of 0.200% – 0.375% of the average daily unused amount of the 2018 Revolver, with the commitment fee rate also dependent upon our then-net secured total leverage ratio. If the LIBOR rate is no longer available, then our interest rate under the Credit Agreement will be determined by the alternate base rate plus an applicable margin as discussed above.

~~Upon conversion~~ We will settle conversions of the 2016 Convertible Notes ~~we will settle our conversion obligation~~ by paying or delivering, as the case may be, cash, shares of our common stock, or a combination thereof, at our election. It is our current intent and policy to settle our conversion obligations as follows: (i) pay cash for 100% of the par value of the 2016 Convertible Notes that are converted; and (ii) to the extent the value of our conversion obligation exceeds the par value, we can satisfy the remaining conversion obligation in ~~cash, shares of~~ our common stock, cash, or a combination ~~thereof, at our election.~~thereof.

The 2016 Convertible Notes will be convertible at the option of the note holders upon the satisfaction of specified conditions and during certain periods. During the period from, and including, December 15, 2021 to the close of business on the business day immediately preceding March 15, 2022 and on or after December 15, 2035, holders may convert all or any portion of their 2016 Convertible Notes at the conversion rate then in effect at any time regardless of these conditions. For the 2016 Convertible Notes presented during this time frame, the settlement amount will be equal to the sum of the daily settlement amounts for each of the following 40 consecutive trading days during the related observation period.

As the 2016 Convertible Notes can be converted at the holder's option beginning December 15, 2021 and ending March 15, 2022, subject to an observation holding period of 40 days, the net carrying value of the 2016 Convertible Notes of $228.0 million has been classified as a current liability in our Balance Sheet as of June 30, 2021.

As a result of our quarterly dividend in ~~September 2020~~June 2021 (see Note 9)8), the previous conversion rate for the 2016 Convertible Notes of ~~17.6222~~17.6898 shares of our common stock per $1,000 principal amount of the 2016 Convertible Notes, which is equivalent to an initial conversion price of ~~$56.75~~$56.53 per share of our common stock, has been adjusted to ~~17.645~~17.7159 shares of our common stock per $1,000 principal amount of the 2016 Convertible Notes, which is equivalent to an initial conversion price of ~~$56.67~~$56.45 per share of our common stock.

Holders may require us to repurchase the 2016 Convertible Notes for cash on each of March 15, 2022, March 15, 2026, and March 15, 2031, or upon the occurrence of a fundamental change (as defined in the 2016 Convertible Notes Indenture) in each case at a purchase price equal to the principal amount thereof plus accrued and unpaid interest.

We may redeem for cash all or part of the 2016 Convertible Notes if the last reported sale 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. On or after March 15, 2022, we may redeem for cash all or part of the 2016 Convertible Notes regardless of the sales price condition described in the preceding sentence. In each case, the redemption price will equal the principal amount of the 2016 Convertible Notes to be redeemed, plus accrued and unpaid interest.

As of ~~September~~June 30, ~~2020,~~2021, none of the conversion features have been achieved, and thus, the 2016 Convertible Notes are not convertible by the holders.

~~On January 2, 2020,~~Forte Payment Systems, Inc. In 2018, we acquired ~~Tekzenit~~Forte Payment Systems, Inc. (“~~Tekzenit”~~Forte”) for a purchase price of approximately $10 million. This acquisition will allow us to accelerate our go-to-market approach serving clients who are focused on improving their customers’ experience while transforming their business.. The purchase agreement ~~includes~~included provisions for ~~additional purchase price (“Provisional Purchase Price”)~~$18.8 million of potential future earn-out payments. The earn-out payments ~~in the form of earn-out and qualified sales payments for up to $10 million over a~~ ~~three-year~~ measurement period upon meeting certain financial and sales criteria. Of the Provisional Purchase Price amount, $6 million is considered contingent purchase price payments, of which $1.5 million was accrued upon acquisition. The remaining $4 million isare tied to ~~certain financial~~performance-based goals and ~~sales criteria over~~ a defined service period by the eligible recipients and ~~is therefore~~are accounted for as post-acquisition compensation. In the second quarter of 2021, a recipient notified us they would be voluntarily resigning later this year. Under the terms of the earn-out provisions, the entire earn-out will terminate upon exit of the recipient. As ~~of September 30, 2020,~~a result, we ~~have 0t~~reversed $2.4 million that had been accrued ~~any amounts~~ related to the ~~post-acquisition compensation payments due~~potential earn-out payments.

Tango Telecom Limited. On May 5, 2021, we acquired Tango Telecom Limited (“Tango”), a leading supplier of convergent policy control and messaging solutions headquartered in Limerick, Ireland. We acquired 100% of the equity of Tango for a purchase price of approximately $13 million, or approximately $11 million, net of cash acquired. This acquisition will allow us to ~~the uncertainty of payment.~~ deliver digital monetization solutions to our customers and allow our customers to more effectively manage voice and data transactions. Coupled with our charging and digital monetization capabilities, we possess an end-to-end solution for converged voice and data services across 3G, 4G, and 5G networks.

~~There were no material changes to the purchase accounting~~The preliminary estimated fair values of assets acquired ~~and liabilities assumed during the third quarter~~primarily include acquired customer contracts of ~~2020. As~~$7.0 million, acquired trade accounts receivable of ~~September 30, 2020, the purchase accounting for the Tekzenit acquisition was complete. We recorded goodwill of $9.1~~$3.4 million and acquired ~~client contracts~~software of ~~$2.9~~$2.0 million and liabilities assumed primarily include deferred revenue of $1.7 million. The estimated fair values are considered provisional and are based on the ~~contingent~~information that was available as of the acquisition date. Thus, the provisional measurements of fair value set forth above are subject to change. Such changes are not expected to be significant. We expect to finalize the valuation and complete the purchase price ~~liabilities~~allocation as soon as practicable but not later than one year from the acquisition date.

Kitewheel, LLC. On July 1, 2021, we acquired Kitewheel, the leading provider for customer journey orchestration and analytics, headquartered in Boston, Massachusetts. We acquired 100% of ~~$1.5~~the equity of Kitewheel for a purchase price of $40 million, with $34 million paid upon close and the remaining $6 million to be paid in equal annual amounts over the next three years. This acquisition will allow us to expand our customer engagement business, providing real-time, meaningful end-to-end customer experiences for leading brands. The results of Kitewheel will be included in our results of operations from the acquisition date. We have not completed the valuation analysis and calculations necessary to finalize the required purchase price allocations.

MobileCard Holdings, LLC. In 2018, we invested in MobileCard Holdings, LLC (“MobileCard”), a mobile money fintech payment company that enables omni-channel digital payments and financial inclusion in Latin America. As of June 30, 2021 and December 31, 2020, we held a 15% noncontrolling interest with a carrying value of approximately $8 million included in other non-current assets in our Balance Sheets. In July 2021, we made an additional investment of $6.1 million.

~~For~~ After this investment, we will hold a 64% controlling interest in the ~~nine months ended September 30, 2020 and 2019, we recorded restructuring and reorganization charges of $4.3 million and $3.3 million, respectively.~~

Our restructuring activities during the nine months ended September 30, 2020 were primarily made up of organizational changes made to pursue global opportunities and efficiencies, for which we reduced our workforce by approximately 60 employees.company. As a result, ~~we incurred restructuring and reorganization charges related to involuntary terminations of $3.3 million.~~

~~The activity~~beginning in the ~~business restructuring and reorganization reserves during~~third quarter of 2021, the ~~nine months ended September 30, 2020 was as follows:~~

Asresults of ~~September 30, 2020, $0.7 million of the business restructuring and reorganization reserves were~~MobileCard will be included in ~~current liabilities~~our results of operations. We have not completed the valuation analysis and calculations necessary to finalize the required purchase price allocations.

Guarantees. In the ordinary course of business, we may provide guarantees in the form of bid bonds, performance bonds, or standby letters of credit. At June 30, 2021, we had $2.7 million of restricted assets used to collateralize these guarantees, with $1.8 million included in cash and cash equivalents and $0.9 million included in other non-current assets. We have bid bonds and performance guarantees in the form of surety bonds issued through a third-party of $4.5 million that were not required to be recorded on our Balance Sheet. 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.

Additionally, we have money transmitter bonds issued through a third-party for the benefit of various states to comply with the states’ financial requirements and industry regulations for money transmitter licenses. At June 30, 2021, we had total aggregate money transmitter bonds of approximately $16 million outstanding.

Warranties. We generally warrant that our solutions and related offerings will conform to published specifications, or to specifications provided in an individual ~~client~~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 workmanlike 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 ~~client~~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. Our arrangements with our ~~clients~~customers generally include an indemnification provision that will indemnify and defend a ~~client~~customer in actions brought against the ~~client~~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 ~~clients~~customers typically ~~cap~~limit our liability for breach to a specified amount of the direct damages incurred by the ~~client~~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 outsourced customer care and billing solutions, provisions for damages related to service level performance requirements. The service level performance requirements typically relate to system availability and timeliness of service delivery. As of ~~September~~June 30, ~~2020,~~2021, 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 ~~clients.~~customers.

Indemnifications Related to Officers and the Board of Directors. We have agreed to indemnify members of our Board of Directors (the “Board”) and certain of our officers if they are named or threatened to be named as a party to any proceeding by reason of the fact that they acted in such capacity. 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. As a result, we have not recorded any liabilities related to such indemnifications as of ~~September~~June 30, ~~2020.~~2021. 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.

Basic and diluted earnings per common share (“EPS”) amounts are presented on the face of the accompanying Income Statements.

No reconciliation of the basic and diluted EPS numerators is necessary as net income is used as the numerators for all periods presented. The reconciliation of the basic and diluted EPS denominators related to the common shares is included in the following table (in thousands):

The Convertible Notes have a dilutive effect only in those quarterly periods in which our average stock price exceeds the current effective conversion price (see Note 4).

The stock warrants have a dilutive effect only in those quarterly periods in which our average stock price exceeds the exercise price of $26.68 per warrant (under the treasury stock method), and are not subject to performance vesting conditions (see Note 9)7).

Potentially dilutive common shares related to non-participating unvested restricted stock excluded from the computation of diluted EPS, as the effect was antidilutive, were not material in any period presented.

Stock Repurchase Program. We currently have a stock repurchase program, approved by our Board, authorizing us to repurchase our common stock from time-to-time as market and business conditions warrant (the “Stock Repurchase Program”). During the ~~third~~second quarters of ~~2020~~2021 and ~~2019~~2020 we repurchased approximately ~~139,000~~153,000 shares of our common stock for ~~$5.5~~$7.0 million (weighted-average price of ~~$39.93~~$45.56 per share) and approximately ~~92,000~~9,000 shares of our common stock for ~~$4.7~~$0.4 million (weighted-average price of ~~$51.09~~$40.74 per share), respectively, and during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 we repurchased approximately ~~290,000~~295,000 shares of our common stock for ~~$12.3~~$13.5 million (weighted-average price of ~~$42.55~~$45.74 per share), and approximately ~~485,000~~151,000 shares of our common stock for ~~$20.6~~$6.8 million (weighted-average price of ~~$42.37~~$44.99 per share), respectively, under a SEC Rule 10b5-1 Plan. ~~In early April 2020, we suspended stock repurchases under the Stock Repurchase Program and terminated our SEC Rule 10b5-1 Plan. In September 2020, we entered into a new SEC Rule 10b5-1 Plan.~~

As of ~~September~~June 30, ~~2020,~~2021, the total remaining number of shares available for repurchase under the Stock Repurchase Program totaled ~~4.7~~4.0 million shares.

Stock Repurchases for Tax Withholdings. In addition to the above-mentioned stock repurchases, during the ~~third~~second quarters of ~~2020~~2021 and ~~2019~~2020 we repurchased and then cancelled approximately ~~4,000~~3,000 shares of common stock for $0.1 million and approximately ~~4,000~~2,000 shares of common stock for ~~$0.2~~$0.1 million, respectively, and during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 we repurchased and then cancelled approximately ~~163,000~~113,000 shares of common stock for ~~$7.8~~$5.3 million and approximately ~~112,000~~159,000 shares of common stock for ~~$4.7~~$7.7 million, respectively, in connection with minimum tax withholding requirements resulting from the vesting of restricted common stock under our stock incentive plans.

~~Stock Incentive Plan~~. In May 2020, our stockholders approved an increase of 3.6 million shares authorized for issuance under the Amended and Restated 2005 Stock Incentive Plan, from 21.4 million shares to 25.0 million shares.

Cash Dividends. During the ~~third~~second quarter of 2021, the Board approved a quarterly cash dividend of $0.25 per share of common stock, totaling $8.2 million. During the second quarter of 2020, the Board approved a quarterly cash dividend of $0.235 per share of common stock, totaling $7.8 million. ~~During the third quarter of 2019, the Board approved a quarterly cash dividend of $0.2225 per share of common stock, totaling $7.3 million.~~ Dividends declared for the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020 ~~and 2019~~ totaled ~~$23.2~~$16.4 million and ~~$22.0~~$15.5 million, respectively.

Warrants. In 2014, in conjunction with the execution of an amendment to our current 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 Advanced Convergent Platform (“ACP”) based on various milestones. The Stock Warrants have a ten-year term and an exercise price of $26.68 per warrant.

As of ~~September~~June 30, ~~2020,~~2021, 1.0 million Stock Warrants remain issued, NaN of which were vested. The remaining unvested Stock Warrants will be accounted for as a ~~client~~customer contract cost asset once the performance conditions necessary for vesting are considered probable.

Stock-Based Awards. A summary of our unvested restricted common stock activity during the quarter and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 is as follows (shares in thousands):

Included in the awards granted during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 are performance-based awards for 0.1 million restricted common stock shares issued to members of executive management and certain key employees, which vest in the first quarter of ~~2022~~2023 upon meeting certain pre-established financial performance objectives over a two-year performance ~~period. Also, during the third quarter of 2020, market-based awards for 0.1 million restricted common stock shares were granted to certain members of~~

~~executive management which vest upon meeting pre-established share price targets over a~~ ~~four-year~~ period. Certain of these awards become fully vested upon a change in control, as defined, and the subsequent involuntary termination of employment.

The other restricted common stock shares granted during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 are primarily time-based awards, which vest annually over ~~two to~~ four years with no restrictions other than the passage of time. Certain shares of the restricted common stock become fully vested upon a change in control, as defined, and the subsequent involuntary termination of employment, or death.

We recorded stock-based compensation expense for the ~~third~~second quarters of 2021 and 2020 ~~and 2019~~ of ~~$4.0~~$5.0 million and ~~$4.8~~$5.2 million, respectively,, and for ~~nine~~the six months ended ~~September~~June 30, 2021 and 2020 ~~and 2019~~ of ~~$14.1~~$10.4 million and ~~$13.3~~$10.1 million, ~~respectively~~.

~~Modifications to Stock-Based Awards.~~ ~~In August 2020, we entered into a Separation Agreement~~ ~~(the “Separation Agreement”),~~ with our President and Chief Executive Officer (“CEO”) which includes a provision that accelerates the vesting of approximately 198,000 shares of unvested restricted stock at December 30, 2020, the resignation date. This modification resulted in a reversal of stock-based compensation expense in the third quarter of 2020 of $2.7 million. The fair value of the modified award of $8.3 million is being recognized ratably from the date of modification through the resignation date, of which $2.3 million was recognized in the third quarter of 2020.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 ~~2019~~2020 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 ~~II Item 1A. Risk Factors of this report and in Part~~ I Item 1A. Risk Factors of our ~~2019~~2020 10-K. Readers are strongly encouraged to review ~~those sections~~that section closely in conjunction with MD&A.

We are one of the world’s leading providers of revenue management, customer ~~experience,~~engagement, and payment solutions that enable a growing list of companies around the world to monetize relationships with their customers in an era of rapid change and digital transformation. We leverage more than 35 years of experience to deliver innovative customer engagement solutions that help our ~~clients acquire, monetize, engage, and retain~~customers solve their ~~customers.~~toughest challenges, helping them make ordinary customer experiences extraordinary. Our diverse, worldwide workforce draws from real-world knowledge and extensive expertise to design and implement business solutions that make our ~~clients’~~customers’ hardest decisions simpler so that they can focus on delivering differentiated and real-time experiences to their customers.

We offer ~~revenue management, customer experience, and payment~~ solutions for every stage of the customer lifecycle so service providers can deliver an outstanding customer experience that adapts to their customers’ rapidly changing demands. Our proven solutions are built on a combination of on-premise, public and private cloud platforms, either customized or pre-integrated, as well as managed services models that adapt to fit our ~~clients’~~customers’ unique business needs and enable the transformative change required to create personalized experiences that drive loyalty and retention.

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 service providers. Our scalable, modular, and flexible solutions combined with our domain expertise and our ability to effectively migrate ~~clients~~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 service providers a phased, incremental approach to transforming their businesses, thereby reducing the business interruption risk associated with this evolution.

WeAs discussed in Note 2 to our Financial Statements, we generate our revenue primarily from the global communications markets; however, we serve an expanding group of ~~clients~~customers in other markets including financial services, healthcare, media and entertainment companies, and government entities. ~~A summary of our revenue by industry for the indicated periods was as follows:~~

In March 2020, the World Health Organization declared a global pandemic related to the rapidly spreading coronavirus (COVID-19) outbreak which has led to a global health emergency. ~~This outbreak has negatively affected~~Throughout the ~~U.S.~~COVID-19 crisis, we have remained focused on protecting the health and safety of our employees, while meeting the ~~global economy, created a significant disruption~~needs of ~~the financial markets, disrupted global supply chains, and has resulted in mandated closures, orders to shelter-in-place, and significant travel restrictions.~~our customers. While we have taken measures to protect ~~the health and safety of~~ our employees, to include ~~work from home options~~a remote working environment for those employees ~~whom~~who are able to conduct business from home and ~~significantly~~ reduced travel, we are still conducting business as usual and are working with our ~~clients~~customers to minimize any potential disruption. For those locations that remain open, such as our statement production centers, we require daily self-assessments. We will continue to provide work from home options through December 31, 2021, or such later date as conditions warrant. At this time, we do not believe that our work from home options and limited staffing in select office locations have adversely impacted our internal controls, financial reporting systems, or our operations.

The full extent of the impact of the COVID-19 pandemic on our business, operations, and financial results will depend on numerous evolving factors that we may not be able to accurately predict. See Part II Item 1A. Risk Factors of this report for additional details. While the outbreak did not negatively impact our operating results for the first quarter of 2020, we began to realize these impacts to revenue during the second quarter of 2020 as we experienced extended sales and implementation cycles related to our revenue management and customer experience solutions, as well as processing volume reductions. During the third quarter of 2020, we began to see some stabilization in the impacted areas of our business and we continued to build our sales pipeline, driven in large part by the accelerating demand for digital transformation. However, we continue to experience revenue headwinds as a result of continued foreign currency fluctuations. Although we have started to see improvements, we still anticipate that these impacts to revenue will continue for the remainder of 2020, or until economic conditions improve. We will continue to diligently monitor and manage our expense levels in line with our anticipated revenue profile for the remainder of 2020 and beyond.

As we continue to manage our business in this uncertain environment, our priorities ~~will~~ remain the health and safety of our employees, providing our ~~clients~~customers with world-class services and solutions, and prudently managing our liquidity to ensure our continued financial strength. As of ~~September~~June 30, ~~2020,~~2021, we had approximately $212 million in cash, cash equivalents and short-term investments, and an additional $200 million available to borrow under our revolving credit facility. ~~Given~~

See our financial strength, we expect to be able to maintain adequate liquidity as we manage through the current environment, though we cannot reasonably estimate the duration and severity of this global pandemic or its ultimate impact on the global economy andRisk Factors in our ~~business results.~~2020 Form 10-K for additional details.

~~Third~~Second Quarter Highlights. A summary of our results of operations for the ~~third~~second quarter of ~~2020,~~2021, when compared to the ~~third~~second quarter of ~~2019,~~2020, is as follows (in thousands, except per share amounts and percentages):

	Quarter Ended						Quarter Ended
	September 30, 2020			September 30, 2019			June 30, 2021			June 30, 2020
Revenue	$	244,108		$	251,414		$	255,134		$	240,321
Transaction fees (1)		16,413			16,364			16,655			15,695
Operating Results:
Operating income	$	28,947		$	33,420		$	32,166		$	19,775
Operating income margin		11.9	%		13.3	%		12.6	%		8.2	%
Diluted EPS	$	0.42		$	0.66		$	0.60		$	0.32
Supplemental Data:
Restructuring and reorganization charges ~~(2)~~	$	814		$	1,330		$	1,760		$	2,497
Executive transition costs ~~(2)~~		1,786			-			5			-
Acquisition-related costs:
Amortization of acquired intangible assets		3,051			3,153			2,618			3,033
Earn-out compensation								(2,521	)		-
Transaction-related costs		15			-			623			73
Stock-based compensation (2)		4,500			4,801			5,138			5,255
Amortization of OID		751			709			784			740

Revenue. Revenue for the ~~third~~second quarter of ~~2020~~2021 was ~~$244.1~~$255.1 million, a ~~3% decrease~~6.2% increase when compared to revenue of ~~$251.4~~$240.3 million for the ~~third~~second quarter of ~~2019, with the decrease mainly~~2020. This year-over-year increase can be primarily attributed to the ~~pricing adjustments associated with the Comcast five-year extension effective January 1, 2020, as well as~~continued growth of our revenue management solutions, favorable foreign currency ~~headwinds.~~movements, and the negative impact the COVID-19 pandemic on our second quarter of 2020 revenue.

Operating Results. Operating income for the ~~third~~second quarter of ~~2020~~2021 was ~~$28.9~~$32.2 million, or a ~~11.9%~~12.6% operating margin percentage, compared to ~~$33.4~~$19.8 million, or ~~a 13.3%~~an 8.2% operating margin percentage for the ~~third~~second quarter of ~~2019.~~ 2020. The ~~decrease~~increase in operating income iscan be primarily ~~due~~attributed to the ~~lower revenues generated~~revenue growth in 2021 and an approximately $10 million impairment charge for the write-off of capitalized customer contract costs related to a discontinued project implementation in the ~~third~~second quarter of ~~2020, discussed above.~~2020.

Diluted EPS. Diluted EPS for the ~~third~~second quarter of 2021 was $0.60 compared to $0.32 for the second quarter of 2020, ~~was $0.42 compared to $0.66 for the third quarter of 2019,~~ with the ~~decrease mainly~~increase primarily due to the ~~lower~~increase in our operating ~~income,~~results, discussed ~~above, and foreign currency losses included in other income.~~above.

Cash and Cash Flows. As of ~~September~~June 30, ~~2020,~~2021, we had cash, cash equivalents and short-term investments of $212.1 million, as compared to ~~$171.2~~$205.1 million as of ~~June 30, 2020~~March 31, 2021 and ~~$182.7~~$240.3 million as of December 31, ~~2019~~.2020. Our cash flows from operating activities for the quarter ended ~~September~~June 30, ~~2020~~2021 were ~~$65.2~~$44.5 million. See the Liquidity section below for further discussion of our cash flows.

In August 2020, we announced that effective December 30, 2020, Bret Griess, our current President and CEO will step down and effective January 1, 2021, Brian Shepherd, our current Executive Vice President and Group President will become President and CEO.

As a result of these changes, we entered into a Separation Agreement, dated August 26, 2020 with Mr. Griess. Under the terms of the Separation Agreement, Mr. Griess will be entitled to the following:

The net impact of the executive transition costs for the third quarter of 2020 was $1.8 million, and is recorded in selling, general and administrative expense (“SG&A”). The remaining executive transition costs of approximately $12 million will be recognized in the fourth quarter of 2020.

~~Client~~Customer Concentration. A large percentage of our historical revenue ~~have~~has been generated from our two largest ~~clients,~~customers, which are ~~Comcast and~~ Charter Corporation Inc. (“Charter”). and Comcast.

Revenue from these ~~clients~~customers for the indicated periods ~~were~~was as follows (in thousands, except percentages):

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

See our ~~2019~~2020 10-K for additional discussion of our business relationships and contractual terms with ~~Comcast~~Charter and ~~Charter.~~Comcast.

19Charter. Charter is one of our significant customers representing approximately 22% of our revenue. During the second quarter of 2021, we converted approximately 300,000 customer accounts onto our ACP solution. Our agreement with Charter runs through December 31, 2021, with an option to extend the agreement for an additional one-year term. We are currently engaged in discussions with Charter regarding contract renewal terms.

Risk of ~~Client~~Customer Concentration. We expect to continue to generate a significant percentage of our future revenue from our largest ~~clients~~customers mentioned above. There are inherent risks whenever a large percentage of total revenue are concentrated with a limited number of ~~clients.~~customers. Should a significant ~~client:~~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 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 ~~2019~~2020 10-K.

Revenue. Total revenue for the: (i) ~~third~~second quarter of 2021 was $255.1 million, a 6.2% increase when compared to $240.3 million for the second quarter of 2020; and (ii) six months ended June 30, 2021 was $508.3 million, a 4.6% increase when compared to $485.9 million for the six months ended June 30, 2020. These year-over-year increases can be primarily attributed to the continued growth of our revenue management solutions, favorable foreign currency movements, and the negative impact the COVID-19 pandemic on our second quarter of 2020 was $244.1 million, a 3% decrease when compared to $251.4 million for the third quarter of 2019; and (ii) nine months ended September 30, 2020 was $730.0 million, a 2% decrease when compared to $742.1 million for the nine months ended September 30, 2019. These decreases reflect the pricing adjustments associated with the five-year Comcast extension effective January 1, 2020, discussed in our 2019 Form 10-K, as well as foreign currency headwinds. Additionally, our revenues for 2020 have been negatively impacted as a result of the COVID-19 pandemic, as we have experienced extended sales and implementation cycles related to our revenue management and customer experience solutions as well as processing volume reductions at certain payment solutions clients. However, our third quarter of 2020 revenue increased 2% when compared to our second quarter 2020 revenue of $240.3 million, thus, we believe that we are beginning to see some stabilization in areas of our business impacted by COVID-19.revenue.

We use the location of the ~~client~~customer as the basis of attributing revenue to individual countries. Revenue by geographic regions for the ~~third~~second quarters and ~~nine~~six months ended ~~September~~June 30, 2021 and 2020 ~~and 2019 were~~was as follows (in thousands):

Total Operating Expenses. ~~Our~~Total operating expenses for ~~the:~~the: (i) ~~third~~ second quarter of ~~2020~~2021 were ~~$215.2~~$223.0 million, a ~~1% decrease~~1.1% increase when compared to $~~218.0~~220.5 million for the ~~third~~second quarter of ~~2019;~~2020; and (ii) ~~nine~~six months ended ~~September~~June 30, ~~2020 were $648.2~~2021 was $444.7 million, a ~~slight~~2.7% increase when compared to ~~$646.2~~$433.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019. The decrease between~~2020. These increases can be mainly attributed to the ~~third quarters of 2020 and 2019 is mainly due to lower~~year-over-year increases in employee-related costs ~~offset~~as we continue to ~~a certain degree by~~grow the ~~executive transition~~business, to include the costs ~~described above. The increase in operating expenses between~~associated with the ~~nine months ended September 30, 2020~~recently acquired Tango business, and ~~2019 can be attributed to an approximately $10 million impairment charge recorded in~~unfavorable foreign currency movements. In addition, the second quarter of 2020 ~~for the write-off of capitalized client~~includes an approximately $10 million customer contract costs ~~related to a discontinued project implementation and the executive transition costs, offset to a certain degree by lower employee-related costs.~~impairment charge discussed above.

Cost of Revenue (Exclusive of Depreciation). The cost of revenue for the: (i) ~~third~~second quarter of ~~2020~~2021 was ~~$131.1~~$132.9 million, a 1%3.8% decrease when compared to ~~$132.1~~$138.2 million for the ~~third~~second quarter of ~~2019;~~2020; and (ii) ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 was ~~$400.4~~$266.5 million, a ~~2% increase~~1.1% decrease when compared to ~~$393.3~~$269.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~ 2020. The ~~decrease~~decreases in cost of revenue between ~~quarters~~periods can be ~~primarily~~mainly attributed ~~to lower employee-related costs. The increase in cost of revenue between the nine months ended September 30, 2020 and 2019 is mainly due~~ to the approximately $10 million impairment charge incurred in the second quarter of 2020, discussed above, offset ~~to a certain degree~~ by ~~lower~~higher employee-related ~~costs.~~cost, reflective of the continued growth of the business and the higher 2021 revenue. Total cost of revenue as a percentage of revenue for the: (i) ~~third~~second quarters of 2021 and 2020 ~~and~~

~~2019 was 53.7%~~were 52.1 % and ~~52.5%~~57.5%, respectively; and (ii) ~~nine~~six months ended ~~September~~June 30, 2021 and 2020 were 52.4% and ~~2019 was 54.9% and 53.0%~~55.4%, respectively.

R&D Expense. R&D expense for ~~the~~the: (i) ~~third~~second quarter of ~~2020~~2021 was ~~$30.4~~$32.8 million, a ~~7% decrease~~11.9% increase when compared to ~~$32.6~~$29.3 million for the ~~third~~second quarter of ~~2019;~~2020; and (ii) ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 was ~~$90.0~~$65.0 million, a ~~6% decrease~~9.0% increase when compared to ~~$95.8~~$59.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~ 2020. These ~~decreases~~increases in R&D expense ~~are~~can be mainly attributed to ~~lower~~increased employee-related costs, to include personnel and the related costs previously assigned to ~~R&D~~cost of revenue projects being reassigned to ~~cost of revenue~~R&D projects. As a percentage of total revenue, R&D expense for the ~~third~~second quarters of 2021 and 2020 were 12.8% and ~~2019 was 12.5% and 12.9%~~12.2%, respectively.

Our R&D efforts are focused on the continued evolution of our solutions that enable service providers worldwide to provide a more personalized customer experience while introducing new digital products and services. This includes the continued investment in our cloud-based solutions and integration of the recently acquired assets into our solutions.

SG&A Expense. SG&A expense for the: (i) ~~third~~second quarter of ~~2020~~2021 was ~~$47.0~~$49.3 million, a 1%9.4% increase when compared to ~~$46.7~~$45.0 million for the ~~third~~second quarter of ~~2019;~~2020; and (ii) ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 was ~~$136.4~~$98.1 million, a ~~1% decrease~~9.7% increase when compared to ~~$138.0~~$89.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019. As stated above, included~~2020. The increases in SG&A ~~for~~expense are mainly attributed to the ~~quarter~~increases in employee-related costs, and ~~nine months ended September 30, 2020~~ is ~~$1.8 million~~reflective of ~~executive transition costs.~~our growth strategy, as we pursue organic and inorganic growth opportunities. Our SG&A costs as a percentage of total revenue for ~~the third~~the: (i) second quarters of ~~2020~~2021 and ~~2019~~2020 were 19.3% and ~~18.6%~~18.7%, ~~respectively, with the increase reflective of the lower revenue for the current quarter.~~respectively.

Depreciation. Depreciation expense for the: (i) ~~third~~second quarter of ~~2020~~2021 was ~~$5.8~~$6.3 million, an 8%11.2% increase when compared to ~~$5.4~~$5.6 million for the ~~third~~second quarter of ~~2019;~~2020; and (ii) ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 was ~~$17.0~~$12.4 million, a 7%10.5% increase when compared to ~~$15.9~~$11.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020. These increases can be primarily attributed to the increased level of capital expenditures on items such as technology, security, infrastructure, and modernization of equipment.

~~. Restructuring and reorganization charges for the:~~ (i) third quarter of 2020 was $0.8 million, compared to $1.3 million for the third quarter of 2019; and (ii) nine months ended September 30, 2020 was $4.3 million compared to $3.3 million for the nine months ended September 30, 2019. ~~See Note 6 to our Financial Statements for further discussion regarding our restructuring and reorganization activities.~~

Operating Income. Operating income for the: (i) ~~third~~second quarter of ~~2020~~2021 was ~~$28.9~~$32.2 million, or ~~11.9%~~12.6% of total revenue, compared to ~~$33.4~~$19.8 million, or ~~13.3%~~8.2% of total revenue for the ~~third~~second quarter of ~~2019;~~2020, and (ii) ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 was ~~$81.9~~$63.5 million or ~~11.2%~~12.5% of total revenue, compared to ~~$95.9~~$52.9 million or ~~12.9%~~10.9% of total revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2019. These decreases~~2020. The increases in operating income between periods can be ~~mainly~~primarily attributed to the ~~lower~~ revenue ~~generated during~~growth in 2021 and the second quarter 2020 ~~with the year-to-date also negatively impacted by the~~customer contract costs impairment charge of approximately $10 million, ~~impairment charge,~~ discussed above.

~~Other, Net.~~ Other expense for the: (i) third quarter of 2020 was $2.1 million, compared to other income of $0.1 million for the third quarter of 2019; and (ii) nine months ended September 30, 2020 was $3.2 million, compared to other expense of $0.1 million for the nine months ended September 30, 2019, with the amounts mainly attributed to foreign currency losses.

Income Tax Provision. The effective income tax rates for the ~~third~~second quarters and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 were as follows:

~~The third quarter of 2020 rate reflects an adjustment for the income tax impact related to the Separation Agreement entered into during the quarter with our current President and CEO.~~ Our estimated full year ~~2020~~2021 effective income tax rate is approximately ~~30%~~28%.

Liquidity.As of ~~September~~June 30, ~~2020,~~2021, our principal sources of liquidity included cash, cash equivalents and short-term investments of $212.1 million, as compared to ~~$171.2~~$205.1 million as of ~~June 30, 2020,~~March 31, 2021, and ~~$182.7~~$240.3 million as of December 31, ~~2019.~~ 2020. We generally invest our excess cash balances in low-risk, short-term investments to limit our exposure to market and credit risks.

As part of our 2018 Credit Agreement, we have a $200 million senior secured revolving loan facility with a syndicate of financial institutions that expires in March 2023. As of ~~September~~June 30, ~~2020,~~2021, there were no borrowings outstanding on the 2018 Revolver. The

2018 Credit Agreement contains customary affirmative covenants and financial covenants. As of ~~September~~June 30, ~~2020,~~2021, and the date of this filing, we believe that we are in compliance with the provisions of the 2018 Credit Agreement.

Our cash, 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, cash equivalents, and short-term investment balances, but may face limitations on moving cash out of certain foreign jurisdictions due to currency ~~controls.~~controls and potential negative economic consequences. As of ~~September~~June 30, ~~2020,~~2021, we had ~~$1.6~~$1.8 million of cash restricted as to use primarily to collateralize outstanding letters of ~~credit.~~credit included in our total cash, cash equivalents and short-term investments balance.

Additionally, as of June 30, 2021 and December 31, 2020, we have $142.7 million and $166.0 million, respectively of settlement and merchant reserve assets. These funds are held with major financial institutions and while not legally or contractually restricted, we do hold these funds in separate accounts, and classify them as restricted cash in the Statements of Cash Flows.

We calculate our cash flows from operating activities ~~in accordance with U.S. GAAP,~~ beginning with net income, adding back the impact of non-cash items or non-operating activity (e.g., depreciation, amortization, amortization of OID, impairments, gain/loss from debt extinguishments, deferred income taxes, stock-based compensation, etc.), and then factoring in the impact of changes in operating assets and liabilities. See our ~~2019~~2020 10-K for a description of the primary uses and sources of our cash flows from operating activities.

Our ~~2020~~2021 and ~~2019~~2020 net 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):

						Net Cash								Net Cash
			Changes in			Provided by					Changes in			Provided by
			Operating			(Used In) Operating					Operating			(Used In) Operating
			Assets and			Activities –					Assets and			Activities –
	Operations		Liabilities			Totals			Operations		Liabilities			Totals
Cash Flows from Operating Activities:
2021:
March 31									$	49,273	$	(51,497	)	$	(2,224	)
June 30										42,930		1,523			44,453
Total									$	92,203	$	(49,974	)	$	42,229

2020:
March 31	$	52,938	$	(60,151	)	$	(7,213	)	$	52,938	$	(59,900	)	$	(6,962	)
June 30		41,022	$	16,668			57,690			41,022		16,800			57,822
September 30		31,971		33,237			65,208
Total	$	125,931	$	(10,246	)	$	115,685		$	93,960	$	(43,100	)	$	50,860


2019:
March 31	$	42,003	$	(29,177	)	$	12,826
June 30		46,072		(30,469	)		15,603
September 30		44,210		34,888			79,098
Total	$	132,285	$	(24,758	)	$	107,527

Cash flows from operating activities for the first quarter of 2021 and the first and second quarters 2020 were negatively impacted by the timing of certain recurring key customer payments that were delayed and received subsequent to quarter-end, of approximately $26 million for the first quarter of 2021, and $33 million and $26 million for the first and second quarters of ~~2020~~2020.

Additionally, cash flows from operating activities for the first quarters of 2021 and ~~2019~~2020 reflect the ~~negative~~ impacts of the payment of the ~~2019~~2020 and ~~2018~~2019 year-end accrued employee incentive compensation in the first quarter subsequent to the year-end accrual for these items. Additionally, cash flows from operating activities for the first and second quarters of 2020 and 2019 were negatively impacted by the timing of certain recurring key client payments that were delayed and received subsequent to quarter-end, of approximately $33 million and $26 million for the first and second quarters of 2020, respectively, and $14 million and $25 million for the first and second quarters of 2019, respectively. As of the end of the third quarters of 2020 and 2019, these recurring key client payments were up-to-date, resulting in the third quarters of 2020 and 2019 cash flows from operating activities having the benefit of an additional payment due to the timing delays in previous quarters.

We believe the above table illustrates our ability to generate recurring quarterly cash flows from our operations, and the importance of managing our working capital items. Variations in our net cash provided by operating activities are generally related to the changes in our operating assets and liabilities (related mostly to fluctuations in timing at quarter-end of ~~client~~customer payments 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 ~~2020~~2021 and ~~2019~~2020 that impacted our cash flows from operating activities are as follows:

Management of our billed accounts receivable is one of the primary factors in maintaining strong ~~quarterly~~ cash flows from operating activities. Our billed trade accounts receivable balance includes 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 accounts receivable through our calculation of days billings outstanding (“DBO”) rather than a typical days sales outstanding (“DSO”) calculation.

Our gross and net billed trade accounts receivable and related allowance for doubtful accounts receivable (“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):

Quarter Ended	Gross		Allowance			Net Billed		DBOs		Gross		Allowance			Net Billed		DBOs
2021:
March 31										$	250,743	$	(3,718	)	$	247,025		70
June 30											226,774		(3,546	)		223,228		68

2020:
March 31	$	264,601	$	(3,888	)	$	260,713		72	$	264,601	$	(3,888	)	$	260,713		72
June 30		248,470		(4,057	)		244,413		73		248,470		(4,057	)		244,413		73
September 30		228,847		(3,730	)		225,117		68

2019:
March 31	$	247,833	$	(2,897	)	$	244,936		65
June 30		268,656		(2,861	)		265,795		67
September 30		245,972		(3,356	)		242,616		67

As of ~~September~~June 30, 2021 and 2020, approximately 96% and ~~2019, approximately 95%~~93%, ~~for both periods,~~respectively, of our billed accounts receivable balance were less than 60 days past due.

The ~~increase in DBOs during~~DBO metric for the first quarter of 2021 and the first and second ~~quarter~~quarters of 2020 ~~can be directly attributed to~~were negatively impacted by the ~~delay~~delays of certain recurring key ~~client~~customer payments, as noted above. We may experience future adverse impacts to our DBOs if ~~we experience~~and when these payment delays ~~which may be exacerbated~~occur. However, these recurring monthly payments that cross a reporting period-end do not raise any collectability concerns, as ~~a result~~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 ~~the impact of the COVID-19 pandemic on~~customer payments at quarter-end, as evidenced by our ~~clients and their ability to pay in a timely manner. Additionally, as~~relatively consistent DBO metric.

As a global ~~company,~~provider of software and professional services, a portion of our 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, our ability to invoice ~~certain clients outside of the U.S.~~and collect arrangement fees may be 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; (iii) the overall project status in certain situations in which ~~may be impacted~~we act as a subcontractor to another vendor on a project; or ~~delayed~~(iv) due to ~~the global pandemic. While we currently do not expect the impact to our net accounts receivable to be significant, the duration and severity of this global pandemic are still evolving and uncertain.~~currency controls in certain foreign jurisdictions.

Accrued employee compensation decreased ~~$18.0~~$9.4 million to ~~$59.5~~$76.9 million as of ~~September~~June 30, ~~2020,~~2021, from ~~$77.5~~$86.3 million as of December 31, ~~2019,~~2020, due primarily to the payment of the ~~2019~~2020 employee incentive compensation that was fully accrued at December 31, ~~2019,~~2020, offset to a certain degree by the accrual for the ~~2020~~2021 employee incentive compensation.

Net income taxes payable/receivable (current and non-current) at June 30, 2021 was a net income taxes receivable balance of $4.7 million, compared to a net income taxes payable balance of $6.9 million at December 31, 2020. This net of $11.6 million change is primarily due to the timing of our estimated Federal and state income tax payments.

Activities.Our typical investing activities consist of purchases/sales of short-term investments and purchases of software, property and equipment, which are discussed below. Additionally, during the second quarter of 2021 we acquired Tango for approximately $11 million, net of cash acquired, and during the first quarter of 2020 we acquired Tekzenit, Inc. for approximately $10 million, which ~~is included in our cash flows from investing activities.~~ Additionally, as discussed in Note 2 to our Financial Statements, during the nine months ended September 30, 2020 and 2019, we made investments in a payment technology and services company for $1.5 million and $4.0 million, respectively. All of these activities are included in our cash flows from investing activities.

For the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, we purchased ~~$49.1~~$46.2 million and ~~$25.4~~$35.1 million, respectively, and sold (or had mature) ~~$37.7~~$49.4 million and ~~$38.0~~$34.2 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, and will likely purchase and sell additional short-term investments in the future.~~liquidity.

Our capital expenditures for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 for software, property and equipment were ~~$24.2~~$15.2 million and ~~$27.7~~$14.3 million, respectively, and consisted principally of investments ~~in: (i)~~in statement production ~~equipment; (ii)~~equipment and computer hardware, software, and related ~~equipment; and (iii) facilities and internal infrastructure items.~~equipment.

Activities.Our financing activities typically consist of activities associated with our common stock, long-term debt, and ~~our long-term debt.~~ settlement and merchant reserve activity.

During the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, the Board approved dividends totaling ~~$23.2~~$16.4 million and ~~$22.0~~$15.5 million, respectively, and made dividend payments of ~~$23.4~~$16.7 million and ~~$22.0~~$15.9 million, respectively, through ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, with the differences attributed to dividends on unvested incentive shares that are paid upon vesting of those shares.

During the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, we repurchased approximately ~~290,000~~295,000 and ~~485,000~~151,000 shares of our common stock, respectively, under the guidelines of our Stock Repurchase Program for ~~$12.3~~$13.5 million and ~~$20.6~~$6.8 million, respectively, and paid ~~$12.1~~$13.5 million and ~~$21.0~~$6.9 million, respectively, through ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, with the differences attributed to the timing of share settlement.

Outside of our Stock Repurchase Program, during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, we repurchased from our employees and then cancelled approximately ~~163,000~~113,000 and ~~112,000~~159,000 shares of our common stock, respectively, for ~~$7.8~~$5.3 million and ~~$4.7~~$7.7 million, respectively, in connection with minimum tax withholding requirements resulting from the vesting of restricted common stock under our stock incentive plans.

During the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, we made principal repayments of ~~7.5~~$6.6 million and ~~$5.6~~$4.7 million, respectively.

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

During the six months ended June 30, 2021 and 2020, we had net settlement and merchant reserve activity of $24.0 million and $28.7 million, respectively, related to the cash collected, held on behalf, and paid to our customers related to our payment processing services and the net change in deposits held on behalf of our customers.

Our off-balance sheet arrangements are mainly limited to money transmitter bonds, bid bonds, and performance bonds. 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, liquidity, capital expenditures, or capital resources. See Note 6 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 ~~future~~ share repurchases ~~will be~~are dependent on ~~then~~the current market conditions and other business-related factors. Our common stock repurchases are discussed in more detail in Note 98 to our Financial Statements.

During the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, we repurchased approximately ~~290,000~~295,000 shares of our common stock for ~~$12.3~~$13.5 million (weighted-average price of ~~$42.55~~$45.74 per share).

Outside of our Stock Repurchase Program, during the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, we repurchased from our employees and then cancelled approximately ~~163,000~~113,000 shares of our common stock for ~~$7.8~~$5.3 million in connection with minimum tax withholding requirements resulting from the vesting of restricted common stock under our stock incentive plans.

In ~~January 2020,~~May 2021, we acquired ~~certain assets~~Tango, a leading supplier of ~~Tekzenit, Inc. (“Tekzenit”)~~convergent policy control and messaging solutions, for a purchase price of approximately ~~$10 million.~~ $13 million, or approximately $11 million, net of cash acquired.

~~The purchase agreement includes provisions~~On July 1, 2021, we acquired Kitewheel, a leading provider of customer journey orchestration and analytics for ~~additional~~a purchase price of $40 million, of which $34 million was paid upon close and the remaining $6 million to be paid in annual payments inover the ~~form of earn-out and qualified sales payments for up to $10 million over a three-year measurement period upon meeting certain financial and sales criteria.~~ next three years.

~~As of September 30, 2020, we have made no earn-out or qualified sales payments for either of these acquisitions.~~

These acquisitions were funded from currently available cash. Our ~~acquisition of Tekzenit is~~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 ~~client~~customers and expansion into verticals outside the global communications market.

The Stock Warrants are discussed in more detail in Note 98 to our Financial Statements.

~~During the next twelve months, there are no scheduled conversion triggers on our~~Our 2016 Convertible ~~Notes.~~Notes will be convertible at the option of the note holders during the period from December 15, 2021 to the close of business on the day immediately preceding March 15, 2022, subject to an observation holding period of 40 days. For notes presented during this time frame, the settlement amount will be equal to the sum of the daily settlement amounts for each of the following 40 consecutive trading days during the related observation period. As a result, we ~~expect~~have reclassified our ~~required~~2016 Convertible Notes as a current liability in our Balance Sheet. If none of the notes are converted, called, or put, our debt ~~service~~interest cash outlay during the next twelve months for the 2016 Convertible Notes towill be ~~limited to~~$9.8 million of interest ~~payments of $9.8 million.~~payments.

Our 2018 Credit Agreement mandatory repayments and the cash interest expense (based upon current interest rates) for the next twelve months is ~~$13.1~~$15.0 million, and ~~$2.2~~$1.9 million, respectively. We have the ability to make prepayments on our 2018 Credit Agreement without penalty.

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, cash equivalents and short-term investments balances and our 2018 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~~June 30, ~~2020,~~2021, we are exposed to various market risks, including changes in interest rates, fluctuations and changes in the market value of our cash equivalents and short-term investments, 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 2016 Convertible Notes is fixed, and thus, as it relates to our convertible debt borrowings, we are not exposed to changes in interest rates.

The interest rates on our 2018 Credit Agreement are based upon an adjusted LIBOR rate plus an applicable margin, or an alternate base rate plus an applicable margin. See Note 4 to our Financial Statements for further details of our long-term debt.

A hypothetical adverse change of 10% in the ~~September~~June 30, ~~2020~~2021 adjusted LIBOR rate would not have had a material impact upon our results of operations.

Cash Equivalents and Short-term Investments.Our cash and cash equivalents as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 were ~~$174.5~~$163.8 million and ~~$156.5~~$188.7 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. Our cash equivalents are invested primarily in institutional money market funds, commercial paper, and time deposits held at major banks. We have minimal market risk for our cash and cash equivalents due to the relatively short maturities of the instruments.

Our short-term investments as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 were ~~$37.6~~$48.3 million and ~~$26.1~~$51.6 million, respectively. Currently, we utilize short-term investments as a means to invest our excess cash only in the U.S. The day-to-day management of our short-term investments is performed by a large financial institution in the U.S., using strict and formal investment guidelines approved by our Board. Under these guidelines, short-term investments are limited to certain acceptable investments with: (i) a maximum maturity; (ii) a maximum concentration and diversification; and (iii) a minimum acceptable credit quality. At this time, we believe we have minimal liquidity risk associated with the short-term investments included in our portfolio.

Settlement and Merchant Reserve Assets.We are exposed to market risk associated with cash held on behalf of our ~~clients~~customers related to our payment processing services. As of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020, we had ~~$117.5~~$142.7 million and ~~$169.3~~$166.0 million, respectively, of cash collected on behalf of our ~~clients which is held for an established holding period until settlement with the client.~~customers. The ~~holding period is generally one to four business days depending on the payment model and contractual terms with the client. During the holding period,~~ 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 ~~clients.~~customers. These balances can significantly fluctuate between periods due to activity at the end of the period and the day in which the period ends.

Long-Term ~~Debt.~~ 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~~June 30, ~~2020,~~2021, the fair value of the 2016 Convertible Notes was estimated at ~~$240.4~~$237.2 million, using quoted market prices.

Due to foreign operations around the world, our balance sheet and income statement are exposed to foreign currency exchange risk due to the fluctuations in the value of currencies in which we conduct business. 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.

During the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, we generated approximately ~~89%~~88% 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.

As of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, 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):

A hypothetical adverse change of 10% in the ~~September~~June 30, ~~2020~~2021 exchange rates would not have had a material impact upon our results of operations based on the monetary assets and liabilities as of ~~September~~June 30, ~~2020.~~2021.

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, we are involved in litigation relating to claims arising out of our operations in the normal course of business. 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 ~~2019~~2020 Form 10-K. There were no material changes to the risk factors disclosed in our ~~2019~~2020 Form 10-K during the ~~third~~second quarter of ~~2020, other than the addition of the following below.~~2021.

~~Our Business May be Disrupted and Our Results of Operations and Cash Flows May be Adversely Affected by the Recent Coronavirus (COVID-19) Pandemic.~~

In March 2020, the World Health Organization declared a global pandemic related to the rapidly spreading coronavirus (COVID-19) outbreak which has led to a global health emergency. This outbreak has adversely affected workforces, clients, economies, and financial markets globally. The significance of the impact on our operations is not yet certain and depends on numerous evolving factors that we may not be able to accurately predict or effectively respond to, including, among others:

While we have significant sources of cash and liquidity and access to a committed credit line, a prolonged period of generating lower cash from operations could adversely affect our financial condition and the achievement of our strategic objectives.

The following table presents information with respect to purchases of our common stock made during the ~~third~~second quarter of ~~2020~~2021 by CSG Systems International, Inc. or any “affiliated purchaser” of CSG Systems International, Inc., as defined in Rule 10b-18(a)(3) under the Exchange Act.

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

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~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 (Unaudited)	3

	Condensed Consolidated Statements of Income for the Quarters and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 (Unaudited)	4

	Condensed Consolidated Statements of Comprehensive Income for the Quarters and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 (Unaudited)	5

	Condensed Consolidated Statements of Stockholders’ Equity for the Quarters and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 (Unaudited)	6

	Condensed Consolidated Statements of Cash Flows for the Quarters and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 (Unaudited)	87

	Notes to Condensed Consolidated Financial Statements (Unaudited)	98

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4.	Controls and Procedures	27

Part II - OTHER INFORMATION

Item 1.	Legal Proceedings	28

Item 1A.	Risk Factors	28

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28

Item 6.	Exhibits	2928

	Index to Exhibits	3029

	Signatures	3130

	Quarter Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Cloud and related solutions	$	228,248	$	214,280	$	455,267	$	436,500
Software and services		15,033		15,036		29,812		28,242
Maintenance		11,853		11,005		23,174		21,196
Total revenue	$	255,134	$	240,321	$	508,253	$	485,938

	September 30, 2020				December 31, 2019				June 30, 2021				December 31, 2020
	Carrying		Fair		Carrying		Fair		Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value		Value		Value		Value		Value
2018 Credit Agreement (carrying value including current maturities)	$	129,375	$	129,375	$	136,875	$	136,875	$	120,000	$	120,000	$	126,563	$	126,563
2016 Convertible debt (par value)		230,000		240,350		230,000		262,775		230,000		237,188		230,000		244,663


January 1, 2020 balance	$	259,164
Tekzenit, Inc. acquisition		9,083
Adjustments related to prior acquisitions		(45	)
Effects of changes in foreign currency exchange rates		(1,566	)
September 30, 2020 balance	$	266,636

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

	Shares of Common Stock Outstanding			Common Stock			Common Stock Warrants		Additional Paid-in Capital			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Accumulated Earnings			Total Stockholders' Equity
For the Nine Months Ended September 30, 2020:
BALANCE, January 1, 2020		32,891		$	696		$	-	$	454,663		$	(867,817	)	$	(39,503	)	$	848,623		$	396,662
Comprehensive income:
Net income		-			-			-		-			-			-			21,514
Unrealized gain on short-term investments, net of tax		-			-			-		-			-			(24	)		-
Foreign currency translation adjustments		-			-			-		-			-			(15,084	)		-
Total comprehensive income																						6,406
Repurchase of common stock		(299	)		(2	)		-		(7,555	)		(6,408	)		-			-			(13,965	)
Issuance of common stock pursuant to employee stock purchase plan		14			-			-		564			-			-			-			564
Issuance of restricted common stock pursuant to stock-based compensation plans		476			5			-		(5	)		-			-			-			-
Cancellation of restricted common stock issued pursuant to stock-based compensation plans		(7	)		-			-		-			-			-			-			-
Stock-based compensation expense		-			-			-		4,857												4,857
Dividends		-			-			-		-			-			-			(7,693	)		(7,693	)
BALANCE, March 31, 2020		33,075			699			-		452,524			(874,225	)		(54,611	)		862,444			386,831
Comprehensive income:
Net income		-			-			-		-			-			-			10,366
Unrealized gain on short-term investments, net of tax		-			-			-		-			-			52			-
Foreign currency translation adjustments		-			-			-		-			-			2,671			-
Total comprehensive income																						13,089
Repurchase of common stock		(11	)		-			-		(100	)		(367	)		-			-			(467	)
Issuance of common stock pursuant to employee stock purchase plan		18			-			-		683			-			-			-			683
Issuance of restricted common stock pursuant to stock-based compensation plans		12			-			-		-			-			-			-			-
Cancellation of restricted common stock issued pursuant to stock-based compensation plans		(14	)		-			-		-			-			-			-			-
Stock-based compensation expense		-			-			-		5,255												5,255
Declaration of cash dividends		-			-			-		-			-			-			(7,769	)		(7,769	)
BALANCE, June 30, 2020		33,080		$	699		$	-	$	458,362		$	(874,592	)	$	(51,888	)	$	865,041		$	397,622
Comprehensive income:
Net income		-			-			-		-			-			-			13,566
Unrealized gain on short-term investments, net of tax		-			-			-		-			-			(14	)		-
Foreign currency translation adjustments		-			-			-		-			-			7,667			-
Total comprehensive income																						21,219
Repurchase of common stock		(143	)		-			-		(152	)		(5,570	)		-			-			(5,722	)
Issuance of common stock pursuant to employee stock purchase plan		16			-			-		591			-			-			-			591
Issuance of restricted common stock pursuant to stock-based compensation plans		183			2			-		(2	)		-			-			-			-
Cancellation of restricted common stock issued pursuant to stock-based compensation plans		(11	)		-			-		-			-			-			-			-
Stock-based compensation expense		-			-			-		3,976												3,976
Declaration of cash dividends		-			-			-		-			-			-			(7,759	)		(7,759	)
BALANCE, September 30, 2020		33,125		$	701		$	-	$	462,775		$	(880,162	)	$	(44,235	)	$	870,848		$	409,927

	June 30, 2021				December 31, 2020
	Assets		Liabilities		Assets		Liabilities
Settlement assets/liabilities	$	126,565	$	125,011	$	149,785	$	148,818
Merchant reserve assets/liabilities		16,119		16,119		16,246		16,246
Total	$	142,684	$	141,130	$	166,031	$	165,064


January 1, 2021 balance	$	272,322
Goodwill acquired during period		890
Adjustments related to prior acquisitions		(30	)
Effects of changes in foreign currency exchange rates		1,661
June 30, 2021 balance	$	274,843


	Termination
	Benefits			Other			Total
January 1, 2020 balance	$	822		$	-		$	822
Charged to expense during period		3,270			1,007			4,277
Cash payments		(3,206	)		(373	)		(3,579	)
Adjustment for asset impairment		—			(634	)		(634	)
Other		(147	)		—			(147	)
September 30, 2020 balance	$	739		$	-		$	739

	As of									As of
	September 30,			June 30,			December 31,			June 30,			March 31,			December 31,
	2020			2020			2019			2021			2021			2020
Charter											24	%		31	%		20	%
Comcast		22	%		20	%		24	%		20	%		20	%		19	%
Charter		26	%		31	%		24	%

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 (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plan or Programs (2)
July 1 - July 31		546	$	42.10		-		4,810,967
August 1 - August 31		2,282		45.32		-		4,810,967
September 1 - September 30		140,278		39.92		139,500		4,671,467
Total		143,106	$	40.02		139,500


Exhibit Number		Description

10.26AK10.26AS		~~Forty-First~~Fifty-First Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and Charter Communications Operating, LLC
10.26AL10.26AT		~~Forty-Second~~Fifty-Second Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and Charter Communications Operating, LLC
~~10.81~~10.26AU*		~~Forms of~~Fifty-Third Amendment to Consolidated CSG Master Subscriber Management System Agreement ~~for Equity Compensation~~between CSG Systems, Inc. and Charter Communications Operating, LLC
~~10.82~~10.27E*		~~Forms of~~Fourth Amendment to the CSG Master Subscriber Management System Agreement ~~for Equity Compensation~~between CSG Systems, Inc. and Comcast Cable Communications Management, LLC
10.27F*		Fifth Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and Comcast Cable Communications Management, LLC
10.27G*		Fifth Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and Comcast Cable Communications Management, LLC
10.27H*		Eighth Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and Comcast Cable Communications Management, LLC
10.56		Employment Agreement with Elizabeth A. Bauer, dated May 20, 2021
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 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
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

	Quarter Ended					Nine Months Ended					Quarter Ended					Six Months Ended
	September 30, 2020					September 30, 2020					June 30, 2021					June 30, 2021
	Shares			Weighted- Average Grant Date Fair Value		Shares			Weighted- Average Grant Date Fair Value		Shares			Weighted- Average Grant Date Fair Value		Shares			Weighted- Average Grant Date Fair Value
Unvested awards, beginning		1,143		$	41.98		1,117		$	42.60		1,212		$	43.87		1,041		$	41.31
Awards granted		183			39.15		695			40.86		6			45.82		519			47.86
Awards forfeited/cancelled		(26	)		41.02		(54	)		41.82		(37	)		41.61		(39	)		41.90
Awards vested		(39	)		48.55		(497	)		43.72		(14	)		43.08		(354	)		41.70
Unvested awards, ending		1,261		$	41.39		1,261		$	41.39		1,167		$	43.95		1,167		$	43.95