CSGS - Earnings call transcript Q4 2019 | CSG Systems International, Inc.

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Operator

Good day, and welcome to the CSG Systems International Fourth Quarter 2019 Earnings Announcement. Today's conference is being recorded. At this time, I would like to turn the conference over to David Banks.

David Banks

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

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

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

our refer regarding For on non-GAAP will today's which to you we Form release be use X-K. earnings SEC more non-GAAP furnished measures, on our tables website, information financial to also and reconciliation of the

Communications Officer; and Officer; Bret and our Chief Executive Financial Johns, the Rollie our are phone With Bauer, Officer. Chief Investor Relations on Griess, me today Liz Chief

Bret. the turn I'll that, call over to With

Bret Griess

acquire, help quarter was for that execution has in provider for thank CSG This today. further year and revenue solutions their highlighting a better with positioned these the engage you, all record our customers. you and a and monetize, joining retain times. our of dynamic past of clients earnings, and Thank This as year quality us CSG, David, trusted good

to call in Rollie the results review few will a financial out but like key I'd highlights. more detail,

full for earnings to all-time that to with year, year-over-year share X% organic growth. share, $X.XX Non-GAAP almost grew million, the all-time grew for per First, XX% high. an adjusted CSG, half revenue of per coming high revenues from $XXX another

margin of us these results to of Our adjusted XX%. flow operating at at of we and our diversification million which came execute range $XXX XX.X%, in free year. XX% finally, growth the demonstrate high long-term is the driving And long-term was enable the making well for are target that our end We core in business. our believe to investments sustainable goal that against cash

the successes goal. we quarter, in delivering we are market had This on validate how several this to

extension great the contract customer, that our customers to just diversifying but with mix are and position. of our new our one was of that to delivering broad the signed our we we is affirmation long-term key the base worldwide largest in We added of First, a logos sales and wins. further Comcast, many December communications strengthening value marketplace competitive many entertainment

a who these managed renewal parties. reinforces companies. of our leading This entered Pacific's one of detail. both value quarter, extended This to relationship and technology software managed CSG. also we few services the with telecommunications wins a of first review in one long-term services and was customers Asia having our partner to global a like I'd Telstra, with Telstra relationship achieved brings more status contract into long-term past that

help season. gifting platform. digital global to media advantage diversified one helped rapidly out monetization us our turned This the capabilities we for add new of and entertainment brands leading its to capabilities of roll take gift-giving streaming service the Next, to holiday through customer

new revenues individuals weeks X Our their friend a in provider years, counted buying many capture member subscription implemented service family do and company capture were a and it revenue power a knew this capabilities to just or gifting new holidays. cloud-based We've than everything to this the from less important, management service offer to as we and in customer help capabilities they for our that them would for and, stream. a help knew more our

we a business solution were to Moving for first on, and digital wholesale, operating long-standing selected the client online unit. and CSG of Europe charging its world's provide IoT Asia by across cloud-native

and As part IoT revenue of and a their we cost and distribution internal settlement platform this support billing provide centralized to MVNO clients. engagement, will group for

and next-generation partner move Next, XG its we away omnichannel Unitel imperatives was We able companies their or to other solutions growth. to mobile the opportunities as world, market our entered evolving didn't to time through their operations. comprehensive experience on-premise looking into a and ability multiyear Unitel's strategic as future own as With to and its that necessary. well transformation to improve technology practices experience from to Unitel growth. support identified Mongolia's future-proof and best our share that business BSS were contract support business provide our solution scale models from with operators the demonstrate we operations are around vast

add our We of roster to Unitel clients. are to pleased

the and In in Working to with hundreds addition, the ecosystem deliver to entire constellation monetization rating required selected forge operating we satellites. help by were game-changing high-speed OneWeb, to a we a technology of everyone of to communications and service low-latency partner, deploying service closely global as network world service. and channel the pleased orbiting both to provider the provider low-earth the launch this are strong providers of new provider a Internet with relationship

of team services an exciting payments capabilities payments planning for one provide year. estate the in they're new our business later in launch the leaders helping finally, to And the real is world's

until of launch this of Forte, payments, opportunity to it for -- later after And in cross-sell of number X significant. not us base. customer the speaking next reinforcing early existing significant transactions potential also diversification, that clients bring are will that bring Forte's cross addition payment to one number of into acquisitions are revenue year service our this the those for of using to generate the could While year, year, solutions ownership products, that a payment our of they

When our down, mission clear. is you boil quite all this

innovative been that the our our and being We world's our will years. customer continuing deliver continually XX and this customer singularly trusted invest, on their that for We are in over We touchpoint in retain stakeholders this clients focused engagement monetize, our to customers. benefit and as help we invest each brands by solutions acquire, We've that and by optimize succeed, that and partner our engage doing help people leading do solutions, you that delivering the some companies companies believe clients. mean staying life to will of innovate must a solutions doing cycle. helping

where like executing set metrics. We're a As we I are. of well look broad I across forward,

are to to new logos retail a We diverse adding technology. of healthcare from from set ranging to wireless clients,

new mode. Importantly, from our our At time, are are revenues diversifying same our and, we we therefore, revenues competitive cable our lightening verticals. growing the business the market from

to business. are very existing our earn continuing lengthen more of with our and relationships their strengthen We important and customers

are hypercompetitive succeed solve compete and challenges future. to We biggest business our digital in this helping customers'

our evolving competitive are to cost continuously the are we market. in We ensure that structure

growth revenue that We delivering consistently growth organic is the are rates. industry above

acquisitions to while are we In sheet initiatives strong working, thanks are to to to we strategy not in our growth. ability a the benefits last executing but invest summary, new strategy. top least, and consistent and drive and of shareholders line balance on that cash, generate we are And longer-term is we capital seeing distributing that

experience the on with a Splunk ongoing and She that to product experience a as close, past we part Vice X Security security I'd I refresh our emphasis development, across Markets to recognized are of to that our Board to are continuing month, our the is software Haiyan skills engineering. on like and Song as good join currently and years. Board. share added talent, Inc. Haiyan President Haiyan of third new for Board. represented extensive member governance, industry in serves we Before Board board our past General This Manager Senior is the leader

our and in clients employees and who committed company us I'd and our greatness. their thank our globe like And our the to are finally, helping to dedicated thank clients trust achieve talented for across

financial it and full Rollie our turn our I'll for fourth over year. to quarter that, to review With performance

Rolland Johns

call and our discuss outlook XXXX. our Bret, results and quarter welcome, for the fourth to the today to well full for as financial Thanks, everyone, XXXX as the for year

XXXX We are guidance, or our pleased finishing near and performance, we and to in the continue strong with positioned end high our XXXX beyond. initiatives above strategic of well delivering upon feel the

financial quarter, X%, up So coming results. the for from growth. through of fourth our let's We million $XXX revenue organic walk all reported

reflects full Ink end guidance. the February and Business of acquired revenue about Forte in $XXX also for the X.X% October This year full year revenue of contribution full the XXXX a growth the record of additional and We growth year, exceeding of organic acquisitions acquired XXXX of revenue XXXX. our and our top of reported combination in up XX% million

our transaction for up quarter year, X%, $XXX of level. adjusted X% and In addition, and which non-GAAP on In full strong building was strength million delivered the previous million for growth the the the each $XXX performance fees, revenue teams for revenue, quarter respectively. XXXX, excludes summary, with

or on, Moving was non-GAAP revenue. operating quarter XX.X% our non-GAAP of $XX million fourth income adjusted

our the to our of range. XXXX at non-GAAP grow revenue clients. and ability in structure while cost Our guidance manage solutions the revenue our income XX.X% high or million $XXX adjusted continuing our full of was invest reflects to and operating end This continued people,

or EBITDA adjusted XX% million full the year-over-year. year adjusted million revenue, of up of was adjusted quarter non-GAAP revenue, XX% approximately for EBITDA adjusted $XX fourth $XXX with non-GAAP or XX% our Next, of

Our $X.XX, year. over and $X.XX, non-GAAP was year our was up EPS X% non-GAAP for last prior full the the XX% over quarter year, up EPS

the tax quarter XX% XX% non-GAAP rate the was Our income year. for for effective and

of vested settle by in to We million positively XXXX. end tax in $XX XXXX. to the tax cash resulting with remaining at exercise Our of of and income shares the additional the little December quarter, impacted, rate benefit Comcast in this payment Comcast elected income to was the an a so a granting exercise more related effective warrants

with to million of on million free of cash cash generated of flow ended flow moving for We $XX short-term the sheet. and and We So $XX the year from million balance investments. the operations $XXX quarter. cash

our our flow million free flow, ability earnings demonstrating $XXX $XXX year, free full from with cash expectations cash the and to million to and we operations of flow. exceeding convert of For generated further both metrics guidance cash

we As our half a year. was the case of vast in the flow XXXX, free second of majority generated this in cash

dividends year, we of in the $X.XXX that be and paid stock highlight per will our to our rate quarterly for I'd X%. repurchase once the for common share we'll like repurchased per payout also share million Additionally, again, million $X.XX or by per This of increasing $XX $XX dividend a under program. at stock quarter year.

for firm -- a X design, of XXXX. I'd engineering digital million outlook the Dallas-based out help with across levels. global client acquisition channels. of technology the call provide and of with to list. enablement of to our Their transformation financial our a based defined I earn-out communications January user drive potential employee for approximately we $XX assets and clients undertaking outlook TekZenit, a before is which success. services, all and including So a experiences TekZenit teams the payments for for are host future They like customer, majority operations advisory, upfront who employ world-class performance their paid strategic, on the

several this that XXXX, our to believe as client they been an and allocation is not business Forte our Like to CSG partner entirely nicely in wins. into M&A capital We strategy. fits existing new acquisition have TekZenit acquired contributing we

provide the reinvesting cash on our In our great has our to and solid to strategic shareholders, flow team, to existing acquisitions and continue strong cash cultural returning fit, TekZenit to alignment. reflect of to relationship. a meet forward in we to look a will business of a our deploy criteria financial addition and TekZenit the portion we a expansion

expect a earnings XXXX basis. will lift approximately acquisition million expect that be to non-GAAP the we on by return to We slightly a to accretive with profile revenue our $XX neutral

announcement guidance, XXXX our initial contract. for XXXX. Recall financial with an to the our December, on provided new Comcast of view moving into So in simultaneous our outlook we

revenue our and with year. of of updating will previously expectation raising the as which, add for believe revenue addition now million TekZenit, approximately I stated, are we We the $XX

And million As such, $XXX adjusted the basis. now on million non-GAAP range XXXX $XXX to in a to a $X.XX revenue of expect $XXX our of billion. be million range to we

to within margin Also, to December, our expect range as our range performance operating in previously conveyed target adjusted we of XX%. strong down from XX% our XXXX to long-term from non-GAAP XX% but in XX%. And well

$XXX of million expect EBITDA million. In to adjusted addition, $XXX we

in EPS tax based non-GAAP non-GAAP XX%. expect income on rate range This deliver to part approximately of also We is $X.XX. the expectation of XXXX $X.XX a to in

outstanding under million Our $XX million, with guidance expect of to to the range the we $XXX be our with million. share shares $XX an anticipated And operating buyback of assumes range spend also XX for flows program capital cash finally, million year continued approximately shares. of repurchases our to $XXX million annual

In CSG this We continue a growth line expect inorganic are earnings marketplace. and and continue cash believe to summary, strong And organic year to strong clients significant thrive quarter revenue this the performance, growth we compete and another with to as terrific driving revenue, execute the flow evolving result, longer well in positioned our term. to cash flow. help over we and drive a and was we as bottom team for free well

questions. With it for over that, I'll operator the to turn

Operator

Instructions]. [Operator

Silver question comes Zack Riley. B. first from Our with

Zachary Silver

the to just a into when what, the obviously, the of TekZenit, the revenues new the I opportunity you for opportunity drill wins with business? doing and about you think you TekZenit bit us core think think I a with partnership before But acquisition help them smaller than for perspective that, guess, you a size there things are can great. from wanted were about When I business Okay, Forte's. more. bit types

Bret Griess

to former which TekZenit, incredibly note, what are We work we today. that to saw Zach. we a in digital take the together truly the of table, clients help process we and their skills through as seriously. has together continue Thanks, partner and the we to that And to leverage table with knowledge going we for they the that with this the of the ones But is time. capital allocation, work so to opportunity the for say as some to the bring Yes. us we down period along questions. appreciate continue there, been great many transformation solutions said bring

million revenue, some was for of seeing that. only in $XX to similar deal And now. of pull-through revenue, Forte great Xx with I a so getting space said, we at the that, strategic as the through as already And though it's very what we the And think, we us. payment mentioned right activities fact we're went

bring for to can solutions we as notes. see drive it our that and right overall we ways that from with our our the and clarification So Is so capital of to just I line the his falling Rollie value customers. allocation in strategy there? ensure can believe looking one M&A continuing we for actually greater marketplace we're that And that there's had

Rolland Johns

yes, you. Oh, Thank yes.

thing So operating clarify, before cash on, our we to go I flubbed want guidance. flow one I did

I So is the $XXX million, I million. said to range million believe, $XXX $XXX actual

to So just million to $XXX $XXX that's million. clarify,

Bret Griess

Thanks for it. the Zach. question, We appreciate

Zachary Silver

Yes.

guess that going think over can that more may we and gift-giving could. something one course. quick. I sort intriguing Of after be. your was of I to off one, you there pretty to then, And a bring so when if who about, to table? holidays. capabilities guess, I media that service other when deepen these can guess, Maybe think things But you opportunity quick not company to is large with the you Or the you that's this, the this about I provided fall holidays? guess and with relationship an service maybe But

Bret Griess

solution we or the for in take take granted. granted customer no that we There's for marketplace that

work that very saw being we're time innovative our our were just to fast viewed off solutions going tails highly but another what we accentuate weeks. it. and started to solve I we that was So together, is to yet there to that are continue we and cost-competitive where to tried place it bit until the and two going for in actually marketplace was it from as why revenue to a them execute That's bring stream time the

for have that fact actually and see not we believe away, the so single lines. also but that to the value time we We delivered we compete fast every day. And it showed business going that in

Operator

Roderick Our Tom Stifel. next comes with from question

Thomas Roderick

all on contract us quarter, many think, I of fantastic. on bit in notably, Street. in things The clarity the resigned. of the for Congrats A most It's Comcast

kind sort Comcast you broader it time respect at could I I go maybe tackle So set, gives now product an with also opportunity of versus at look the that think Comcast a and but the to you're through did where to as customer us of last process. resign

additional Ascendon out the long recovers, payments through revenue how about last So what a they time a what versus more that you got through so. additional you've can stream more to kind when to that Can them. we offerings, given of us we life How think of to with should about additional hit revenue X of think you kind you in to revenue onetime ought happened how of kind There's offer that the have can cycle hole with every we that of holding down climb can things about product? you pace hit or you think that take of renegotiation? of particularly complete Comcast prior now, you this things offerings went and where Then products, years use that them started that this. than terms the other offer

Bret Griess

major Tom. organization extension you. enough their often no, the process seriousness, IT question, an to their been see do customers not like of traditionally, view is just our us services Comcast, to all you've many of a it's how Nothing renewal There And works. to around -- because in after deliver -- a it's problems. they value-added simple Thank solve as

of it in level -- out discounting you and would the cycle. grows over it your of as been get may there as time, back that cost But that happens. we benefits of services, in that some with it like benefits a So that, you have expect traditionally, happens

from I earnings slight very level what is historically with you'll reduction for a guidance This in revenue of through is path. notice the time, the that going one aspects things out after the and that but where see this see And the to we're for that not can there, of it's we the putting positive go as going traditionally down. not the fact a flat times revenue major on renewal is first you up. that that been that our slightly is guidance is the earnings, what One to

XX% the the better referenced, solutions as better as you as ones, Even that solutions more more continual that proposition. solutions us of it, through things where that range is a you have is that new land often move factors. have earnings to But the of we range we long-term improvement are numerous helps XX%. not of our offset adding. of value-added far to we're and combination table and to can these That's and, earnings innovating range other only hear which logos we that revenue some the is our in with historic keep and that in It's earnings where what to investing forecasted net the we XX% and bring XX% customers to of to new in that, in said solutions to forward, that getting keep we addition reference have how we diversification that

to we that what believe go truly quicker. And to fifth you've take getting So seen traditionally there. want out allows of that, out us hole. to that's fourth the We year hole of start that out it or

investments will well the out within of So long-term you hole not that happen, it really plus down but see we're projected in can get our the you to and the specifics day quicker. we going range revenues this being not with as think we're positioned earnings solutions, our on being to give

Rolland Johns

little additional Tom. Yes. color, And a just

provided to back discount, an I think revenue we to after generally X we're about where indicator, a is X back. it's quarters, earning that base if usually history

Operator

with next Our Burns question Greg Sidoti. comes from

Gregory Burns

your the the In large terms -- just out way? you now you the are ones can other have of next the renewals, of What timing of major remind are... us that Comcast that next

Rolland Johns

Yes.

will DISH. at and Charter services, So takes platform and of renew December through through XXXX. us us for are other through core print this -- least contract and both take year, the two for And next that XXXX, XXXX. us Comcast largest Those that takes services, an in additional

Gregory Burns

Okay.

the the view present terms more something renewal terms opportunity the in with in do your of to of of on do might some renewal with drivers that impetus that Charter, be you that contract Specifically in to them aren't maybe the platforms? you might customer? expanded broader How

Bret Griess

where value Yes, see we that we We others, Greg, that's it's with -- Comcast, problems. have great question, and it's seem can like also in I and like But and many solving one challenging do say their we them customers the of and a great more part always drive we believe constantly customers a market to been earn the business is we in to value. large of bring out. consolidate that most like DISH day more to day the do the

is model of of one Our to marketplace. scale, is the and bringing one it quality

them. we with marketplace. or we're logical price We of another at consolidate recently selection their in subs their is positivity point for Hawaii us bringing very we're believe well the proof value that that that to so positioned it's a of good point when Charter believe a bring And priority the to sign right that

And continue strive hope is more Charter, who as to our great chickens they've that forward. solve is but for and we'll never operators we hatched, a for an we'll go to until So business. impetus it count customer we great

Gregory Burns

with margin, what Okay. lower dynamic? step because up guiding when growing that is taking margins revenue, terms margin we mix operating And of the a you you're then back. the that just than in look you're help us from you're 'XX the guide but Comcast? of the where losing Could out for on at are Is

Rolland Johns

nature line platform that right? impacts from type there revenue a profitability. you the associated Comcast discount of and our and Sure. the a essentially aren't is Yes, provide basis So lot contract, bottom a we costs think a the product, margin to variable about of as with pass-through

some other of probably took areas efficiencies are you're you the actually reduction XX% way business see down, you because So the in sub-XX%. there gaining is that all we if other what

in our So we're that. areas looking growth, to for offset cost efficiencies of business other

Gregory Burns

Okay, And top incremental of types wanted or great. on add-on streaming think touch like when that about do just or internationally you domestic? just globally, these just lastly, service Was we provided. services platforms? you the And gifting to have that over I

the think of kind it applications. was billing, more simple historically, I

So you weren't on from when But seeing involved layer opportunity of really that want are incremental with some little an you broader Are a outside this them. services maybe now? a is you opportunity a of to billing there complicated bit more perspective?

Bret Griess

activity Yes, we It and as There's more and our an the that's of that for we're to some That's continue area a the these helps but only solve, for to helping question. not modularity is of lot the about. more great new continue to traditional us solutions have. to us solve cloud-based solve. modernize part customers go solutions customers, evolve a to we talking

with ability to clients always and That look we course, would with only we like feature continuously internationally but in new of and around other that will expand U.S., this add one adding ours. our gifting to a be increasing goal the value to as to and the explicitly forward, of customer was the functionality client go

Operator

there [Operator at queue. questions the no And are time, Instructions]. this in

Bret Griess

that I and Cory. is We're everybody to call, and time And appreciate remiss going. we if excited customers, taking to turn to that proud, every and hard wonderful it CSG employees we you, our about the and, are questions very where solve investors, Thank work know the importantly, as really always, I'd very day CSG answering listen. into most We become. can the bell the the be think don't greatness we're appreciate

day. time, a great your for have and thanks So

Operator

Thank call. you, today's This ladies concludes gentlemen. and

disconnect. You may now

CSG Systems International (CSGS) 5 Feb 202019 Q4 Earnings call transcript