CSGS - Earnings call transcript Q1 2019 | CSG Systems International, Inc.

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Operator

Good day, everyone, and welcome to the CSG System International First Quarter 2019 Earnings Announcement. All participants are in a listen-only mode. A question-and-answer session will follow today's presentation and instructions will be provided at that time. Today's call is being recorded. At this time, I would like to turn the call over to Ms. Relations. Investor Bauer, Liz ahead. go Please

Liz Bauer

regarding meet you, Anne, Today's statements. order through for our our us. financial to, to expected operating will to results; and achieve and and products, manage and will contain goals. thanks needs successfully and statements limited discussion not forward-looking but everyone projected to a financial their ability integrate clients' include, acquired our to joining are Thank our number services performance; These ability our of businesses in strategic,

While revise of opinions are revision the statements that light these results uncertainties these any date cause judgment, reflect risks in reflect note our only actual forward-looking forward-looking these obligation best that to we subject new as current to they to events. publicly or or our Please future our of call release this and and to materially. statements of differ risks undertake no could

of management with with more investors website. information greater not factors financial to as financial noted addition all conjunction discussion transparency our in filed in that financial the financial press discuss team our certain measures, reviewed today's our found decision-making. provide believe well will Investor In prepared to factors GAAP. used in is that XX-K accordance call, We as when non-GAAP and release which the section GAAP most our by these Relations during with measures, operational information our a can available XX-Q, we are in recently of be comprehensive our Also, and this on risk

reconciliation to Officer; X-K. Rollie like our With that, to Johns, Financial and Executive on Griess, phone Chief I'd today also Officer. now earnings the we our financial our release website, regarding to non-GAAP and Bret. Bret SEC be information Form the turn call With furnished measures, me more Chief will and refer you For of are our which to today's tables over non-GAAP the use on

Bret Griess

first Liz, the with you, We're all results several year-over-year per revenues XXXX you $X.XX. million, earnings us starting We're factors. quarter XX% these non-GAAP and of and joining today. adjusted pleased for strong growing attribute to the We year. to XX% growing with $XXX to thank Thank for results our share strong

First, the cloud as communications from investments customers' in our These we and are platforms well journeys. transformation platforms and own powering realizing are wireless our benefits our solutions management solutions. customer digital as our

our ensure your Second, continuing spending this we more prudent customers. reliable that for for to to your a have just always There trusted remain business been than model competitive you reinventing partner and expenses. involves It known is be while of management less. to

technologies job to internal structure and cost cost from optimizing evolve improve in our have the we locations processes, platforms. functions We our the standpoint ensuring continue to a right right and

I've out to business. couple there share our and I months, opportunity but through their of the investors continue business to our that shareholder-friendly increased several dividends past and of that diversify over strengthen had and adjacent repurchases. into we finally, we're that consistent resulted Third, has diversified not rely that This And verticals putting excellence. and processing company. work on revenue our only reach in to cash more to for expanding the high-volume operational mix strong generate flow transaction logical, be are realize our with view impact a we're opinions and meet to the a there

some We it the not most cable cutting, on meaningful that don't fact video associated of companies planet. we with combined with represent work First, concerned investors revenue, the that from and customers the will of part threats innovative survive the the with like just operators Well, are with cord all competitive Netflix headlines that companies a our see way. Amazon.

services think in or decline or They with they offsetting have as increases or digital software video than cable data in now. themselves companies of as any categorize broadband fact, don't anymore. entertainment high-speed companies customers. customers even been technology In They themselves more

XX is by experience with they're an world like user the entire enabling talking While about XG, and partnering They're reinventing their talking competitors. XXG. ecosystem platforms with about the

never We our against bet will clients.

and will We terms. their that platforms enable their invest them in technologies on customers serve to

consumers quarter, with intervention or Just signed their our this without past the their solutions we and Comcast expand that bills of of human. contracts kiosk their upgrade expanded to Charter solutions use pay enable a to

third-party Charter's more customers In migrating management migrated and small a our summer. addition, we a onto solution revenue off of anticipate number of this platform

focused While and Charter to to them remain of their their strategy, their from has operations. Bottom not and lower well-positioned compete line, market, on in continue experience X-vendor serving we a to to away customer cost continuing customers standardize move improve this helping to on decision and win we made well-capitalized very and the space. in digital are will them smart, our focus core

the and take solutions Next, of truth not nature own around with describe our granted. There our is moat several for creating a business-critical this, investors business. is relationships long-term some we customers as something to the our this nature our but of

core customer-obsessed. of is being our One values

Our our so employees deeper business. get work and and customers in their hard we to can broader earn the that operations trust of

enterprise In we with past fact, operations. expanded this just our AT&T's quarter, Rican relationship Puerto

into win Wireless that America we where and performance. them internal responsible last example their This another wireless management and maintenance improve various proud AT&T's services business in next with work be another have lower a the years, of do revenue within and Over their the five solutions, helping for following a customer client Freedom units managed software we of is transitioned we managing North We're quarter. longer-term will cost AT&T.

helping companies their One. content, are asked lot those how Formula like we ability to about our going help Next, are that direct-to-consumers we a with get

the utilizing race In engagement fact, racers. just of for Formula One FX are app consumers their who seeing their platform we are for new number off kicked in season the significant increases these and

of Japan's partnership recently video largest we mobile programs the available service in phone the and television mega addition, to their on-demand mobile and web, a DOCOMO for entertainment movies subscription NTT with DOCOMO. service In operator, customers various on brand's helped NTT will make first launch direct-to-consumer the this for followers, customer seeing recognizable Formula have promotional XX-hours will customers you in-home a loyal exceeded offerings. in pay brand OTT in like new devices. when We're offering Without companies and name One expectations. what your that any the service, activity, sign-ups

very Finally, and and for three with do and deliver new our pursue input investors ideas with us in business approach. strong their this to best drive put our shared on to appreciate opportunities by take innovation, to growth. work. cash executing We cash flow We we areas: way generation, to services, this the First, invest a support in balanced try world-class our

back to we cash stock. the Next, have back in every its and a we year of return shareholders form by our buying dividend, inception grown our which since

This Forte scale operational like utilized health $XX either time margins help Ink of our have accelerate expand acquisition quarter, Business services, These or optimize footprint the with market, and that care. payments acquisition government nearly our And these verticals activities diversify combined our acquisitions cash. financial we finally, provided. to us provide revenues also has like a and million acquisitions us like pursue fast-growing our into to will the our industry expand in to two continue helped with

on shareholder and of In years came are and to we revenues a XX% and our plan. over several business benefits enviable cable outside are verticals are our executing ago fortunate to of we we model we as look an satellite, future, a from us quarter, strategy First, value. have with executing several summary, And established seeing Forte key position that of acquisitions strategy. fundamentals Business the thanks our position of This that we and are Ink business: we strong that drive in to to the well characteristics

experience digital the management payment in industries. the Second, customer domain we and have monetization, unrivaled expertise revenue and

dedicated the transformation really solid and we most sheet, in of work service and the are Fourth, a world, for we to partner well. flexibility our capital a generate proven this business diversify turn quarter. balance I'll trusted undertaking review greatness. journey. Rollie it innovative are that, achieve and still to flows first committed over ourselves important, for largest Fifth, we shareholders. solutions we our our return grow Third, and strong who to and companies the our company our across globe And to providers with us give have digital talented a and for solid With employees helping have which cash most some we clients have our technology tremendous establishing as performance to reputation the operating and and financial

Rollie Johns

our call Thanks, XXXX. outlook welcome, financial results quarter to as everyone, Bret, first remainder discuss of the for as our the to for today well and the

are with progress We making solid are the to and pleased on the year start we our strategic initiatives. our

consolidated our like walk in to presentation the change you within financial statement through Before I'd our highlight statements. results, I income a financial

success detail for individually to disclosed continue our As Form discussed of our presentation total of With wireline and results. have under related quarter. maintenance and let's revenues on to statement and within will revenues, million through our separate financial within our as grown those of wireless be attributable however, significant rules reported our in of revenues cloud cost separate no face are the first and in We our the MD&A income XX-Q. no Those both many revenues is a $XXX of related services and acquisitions and to longer the of revenue that, converting customers through longer cost and software revenue revenues. our section walk solutions related to long-term required relationships, our SEC the

of $XXX X.X%; Ink, Forte revenues, transaction the last Systems, year. and reflective acquired is February of Our one, of both last XX% two contributions non-GAAP This growth we acquired from we early were about and which in exclude million, organic which of increase key items: fees, over year, which October. increase Payment adjusted Business in an two,

non-GAAP income first or Moving our XX% of was quarter revenues. non-GAAP adjusted million, $XX on,

of results quarter previously contributions Bret management, thoughtful and operating project as positive Our the acceleration mentioned. work the this from expense reflect

non-GAAP million EBITDA Next, revenues. adjusted or first of was our adjusted for quarter, XX% the $XX non-GAAP

our Our non-GAAP operating for due was $X.XX, up quarter EPS mainly the year to current over XX% last performance. quarter

non-GAAP was tax rate our XX%. expected, As

and cash million We sheet; million investments. from flow the free to flows operations of million on with of the quarter and cash short-term $XX Moving generated of the balance we $X quarter. ended $XXX for cash

and operations received the timing of payment the was client Now cash our shortly impacted end. after significant from by be a delayed when as flows payments time quarter this quarter case from may time, was to

dividends occasionally per last we Also over which have While $X our million of of share on paid of our level in to rate over X% reflects fluctuations we find dividend approximately short-term quarter, note, we increase tend capital, these working occurrences year. the out an for time. timing

quarter. totaled million share addition, the In buybacks for $X

are million. $XXX million guidance; of range at we moving our $XXX to So on to revenue a maintaining guidance our XXXX

X% of We X% between $XXX to increase revenues be and continue to to million, expect our $XXX non-GAAP adjusted over XXXX. million an

reminder, As traditional growth expected a our this as from revenue reflects well XXXX acquisitions. business the our as incremental in increase the contributions

the and XX% from So range strong our first operating year, for outlook to acknowledging our margin to the of increasing quarter our performance the we're of remainder for percentage our for non-GAAP adjusted a XX.X%. outlook XX%

expected million from for increasing of range $XXX to adjusted new a We our also million. EBITDA range to to million are $XXX $XXX $XXX million

are XX%. end In addition, a of for $X.XX XXXX non-GAAP high to anticipate $X.XX. the to increasing by new our of said, to rate $X.XX approximately EPS tax we be we range continue That XXXX our non-GAAP

for of plan and to million. end range $XXX million buyback shares are we year $XXX our And a operating program to finally, expected of million. for under outstanding our new by the the $XX of also increasing million approximately to range repurchasing cash high flows $X We shares our continue anticipate

in to our efficiencies, to upon bottom a plan annual for have of In from growth. summary, revenues to and strategy executing outlook executing addition, $XX shareholder business we additional well. a ways workforce on we look capital provide to and In initial and innovative million for as $XX in this Taking range execute processes our expanding improve $XX returning long-term this our cash we Bangalore, We're shareholders into are, spend consideration, line expand later India We're our initiated existing value. year. our gain plan long-term and and continue facilities to driving we're to to objectives million. solid million our achieving turn,

performance, delivering strong We continuing are to that, turn build it operator to With for I'll over future. the a the for the current quarter while questions. pleased results solid business with

Operator

from first & Sidoti [Operator Instructions] Burns our Company. question take with We'll Greg

Gregory Burns

and is can third-party specific part Thanks. you So on about moving opportunity the Maybe protocol what I bit a on you geography business? of a a you ask about Charter's of platform. subs off is? you what there? wanted Charter what us just it And competing their comments Can are maybe of just give the to remind had us longer-term more or subscribers Is a that of of business some for kind color a platform? percent little

Bret Griess

was you Yes. to across. of for group thank Greg, a the geography tied subs that a question. It moved smaller

summer this not very do it. recently and we is that Approximately so we to And material. for us, we believe on smaller do will have Charter think competitor. a as it's we long-term continue that extremely view XX% that for summer one a we said, of an a and to them as long But is as opportunity key to It's positioned time. business subscriber serve and their more continue and won There's base we go as area long, with have as we're our to serve as their we move well say customer continue to forward. expect agreement, I we're But forward well this positioned important we we power. today, to coming everything in that of

Gregory Burns

smaller or having or these these to with agreement, view we as movement bigger should like them, to how you a you're discussion are -- the trials a like these view Are there? bigger wins a prelude

Bret Griess

would large available to us, willing balance that our opportunity have that all a We're use and opportunity whatever, resources business. improve we It's it's one to welcome to always the discussion. to continue sheet, to people,

that subscribers position believe, of If We in with to had to that their with material our welcome opportunity. XXXX, our XXX% coming any things led of help the we well. onto customers, platform. Comcast are you ones, recall we would Winning that back residential discussions smaller that us

us small communication that But to more efficient believe investing are bigger strategy, just in strongly the longer-term, to are longer-term when that the a area continuing there discussions, employee providers. ones, that discussions geography welcome. our day deliver, the for those things For time, sometimes, incredible in base, these service day an it's in on a where for at be position that causes our CSP execute -- and business, we out, we that by we point those

Gregory Burns

ago, Can were a like Comcast? in outlook missed, it what's XX% that? think of then right, I mentioned a bit Thanks. I if Comcast, of year-over-year. you down potentially, but revenue color of about maybe some you give terms driving is project your And on little for just they delaying looks your us quarters couple work what's

Rollie Johns

Thanks, Greg.

year-over-year I the for think Comcast revenue is quarter tops. down maybe X%, our

So it's not a large one.

Bret Griess

that on We've place the the I to and down longer-term phenomenal possible them have diligently We longer-term with to support, but discussions serve in to and do with customers have agreement possible. to serve in with very in we're for flat one-year agreement activities. June serve with at them them down. and we'll the the a hope possibility lot We're are for discussion them that to through going around extension. solve we're with fashion, revenues the a a are very more XXXX to that current a working Charter, continue got And goes for and Comcast. primarily in work slightly way best work. them that's and like to project if more do our with previous And they There's grateful of

Gregory Burns

that of obviously, services the then services quarter. And this software? another business, international man and you business win split AT&T with But managed between lastly, what's highlighted the now

Bret Griess

into it the good and software level continues to from detail we because it managed to continue of things be our that being is about. a We that believe don't one-off very transitioning disclose to strategy takes a that multi-year. in being we services asking have you're we'll that The shared businesses

teams there, incredible on customers, into our business. with just we Puerto people it's thought that software Rico, helps over the our services our traditionally more AT&T those Comcast Africa We an not is have similar maintenance, roughly grow the ones more and the customers on like with Telstra MTN winning only a we're numbers that continuing one-year evolve million to year but years. agreement. want managed for mentioned of a business a doing deals $XX and we with like find AT&T work five-year a instead like done Charter mid-term, deals our and and DISH with $XX services I and doing to managed our do turn Puerto the million it the work short we We're in with The executing As and what with what shared South course those plans job and numerous the to and that our we've could to benefit Rico customers to to businesses. and are people, grow

Gregory Burns

the than deal kind value software gained what you AT&T? traditional total greater from of Is that a to have five-year sales would of

Bret Griess

have of greater because exercise a than which would software sales, gotten time from a what that always it's Absolutely yes, traditional period we longer works better. in

Gregory Burns

thanks. Okay,

Operator

Zach go FBR. Silver We'll with next B. to Riley

Zach Silver

On it to you that two Can efforts payments talk gone gateway those and cross-selling with pair a perhaps a marketing you the cloud-based you seems a solution? big Forte, that combined how have now have how opportunity have like between Ascendon. you're about

Bret Griess

closed the last on to appreciate it some order. get very Zach, Thank with said when the absolutely what the moved on questions, and We we were very acquisition. short to for And cross-sell the but you of business, closed we was activities intend quickly we just do executing it along that it. fall plan in

sales the on and impressed activities there the growth to opportunities that sell-through continued continue with platform and of going be there. are We out the by are hugely that the both

as We it. do interesting plan right it's faster see what with the we hit course where on So more space payment growing, and a thought we space. to

logical rational payment believe look that balance do and sell-through the there in what in into to that the But we traditionally that with we'll what both from space and executing broader management So monetization to be with and a revenue we we vertical digital space. will a with maximize market.

Zach Silver

question it, Got then the helpful. And on guidance. one that's

So XX.X%. but I be Knowing -- that at the margin for, you're XQ guide I should new there's in margin full in XXXX about XX.X% with thinking we some but to year operating think, guidance? particular anything XX% involved, know came seasonality

Bret Griess

with would long-term to there our seasonality give we like Rollie I'll when for always answer to also. opportunities benefit that that front. Rollie, work to ourselves always But is you let like other... But it that range. is some do willing This have on of if there, there's bring as that capability, see, and a we to some give it get some some we're did do extensions up customers you

Rollie Johns

really quarter, the I strong, Yes. why -- and that left a When good, range strong as revenue we've saw look is think impacts I timing we the mean within perspective, quarter. from some I that's We brought year comfortable now. see continue can high think for that's there, at that but on the end why and were we efficiencies the through did EPS. we some we we it

Operator

go Roderick We'll Instructions] next to with [Operator Tom Stifel.

Matthew Van Vliet

the on am that verticals the How's has some Tom. building? the Forte a of off, first up opportunities looking been I potential you newer been? how's we're following acquisition, at helped of activity the that Matt least How bigger in Van far? so Vliet way. guess for volume I pipeline into sales on overall And at get

Bret Griess

I the Matt. question. Thanks, appreciate

there. never the there. some always through detailed pipeline As about would portfolio activity of gone what's and the happen. to also I is excited as that far assets I would you having it through before, what pipeline, But go tell thought a very those acquisition, big the we're sales enough. said as review The you of that it's just Whenever there's we happens plan executing integration

bigger in but different the of to as does diversity we'll a go for good we'll and type some faster ways us pushing to to, to payment we different So give for what fuel drive it, it's continue us pipeline jet make on that plans some and through and It sales put on look do intend that's go they that space. to to continue in continue it make there markets it higher. and our execute to we of

Matthew Van Vliet

you obviously highlighted Japan. then some of deal nice at And Ascendon a looking the in opportunities,

do what in of you platform with terms -- look going revenue that to or to specific to in curious continue the a of use be case-specific us Just of see of to are the or what revenue be specific customers. sort level gain to that you're volume of drive maybe finding narrowing on model you're what have you contribution to understand and or overall helping sort build-out can

Bret Griess

a of great That is to more we're you lot teams tell and have question. have us, there on things a and a we would on for the been where been that we're We've while getting models the this what take worked. been front. at intend different disciplined I a that lot and doing Ascendon

start volume that to out. And models a so the themselves consistent times traditional play there's couple of pretty are It's model. rate that a

percentage seen pretty rev we that times then there's a they're with where rate. subscriber one our subscription, we're And of revenue well. successful, works That's share pretty model, if works seeing That's well. or that get You've that it. that one the also share,

As there's knows areas, new lot around lot things a this industry entrants of in these of on. going everyone and a and

but share on at specific customers so we monetization. and and this those some we're we there, amount And this are generation getting and focused digital that in and material serving those flushing management broader the and we see don't models not what revenue revenue to of continue our we next because of point more they're space of great in customers The hope do. out see

Operator

And time, Instructions] further questions have no [Operator queue. this at we in

Bret Griess

lengthen and our for time on taking appreciate here and for and appreciate give the or thank and the make employees you We these tails always, we to diversify which on community. realize from input to who's and are above an the their basis industry to were who really out, Well, are doing And and as that revenues CSG great. hugely growth help the strategy to are investment we us the basis. organic the inorganic appreciate day rates who, We continue feedback us our day working how grow call and call strengthen on call. in the everyone relationships, benefits at customers for to off our of our in being

So great I CSG make you. day. say to everyone do to for remiss would great, be have and you you to what help not Thank thank a

Operator

does This participation. thank conference. your today's concludes We you for

disconnect. now may You

CSG Systems International (CSGS) 5 May 192019 Q1 Earnings call transcript