CSGS - Earnings call transcript Q1 2021 | CSG Systems International, Inc.

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Operator

Good day, everyone, and welcome to the CSG System International First Quarter 2021 Earnings Announcement. [Operator Instructions]. At this time, I would like to turn the conference over to Mr. John Rae, Head of Investor Relations. Please go ahead.

John Rea

everyone us. to thanks and for joining Operator,

and take For from be a earnings discussion call, meet products, will website. limited found slides. number locate be statements. working projected integrate we acquired will financial and ability expected performance, to our services, These Please successfully to, our our results, slide strategic through regarding our of forward ability statements the contain relations not this needs moment Today's investor and are to those quarter's businesses, on but to section client's to in a operating our of and achieve goals. deck looking our a which can manage include, will financial order their

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

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

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

Brian Shepherd

John. Thanks,

For accessing accelerate of end along build on please on diversify XXXX, our Since behalf I growth, being outperforming. starting at X. Slide consistent earnings our today's CEO revenues, follow for call, named and revenue the that of CSG team, entire vertical industry track of those would we slides the record and grow committed, leadership a the

pleased report one around results the them. each of QX Together, While we solve to grateful the business. we employee rise only I'm are to we is CSG extremely more has accelerated, with in makes To related their the are occasion, world employees QC that to problems. one our experiences refresh, business and we customer and CSG channeling globally, ordinary the mission as across help headwinds, By Powerball, face QX strategy, of toughest resonating even extraordinary. CSG. continued regained quarter strong ambitious clearly the COVID to customers with momentum into our in XXXX continue all business

CSG make we this people social the potential our of by As unleashing reality, and full growth mission our turning we is our amplify than culture. continue turbocharge committed to impact into the ever more and

strategic pillars. achieve growth We X will by executing against relentlessly this

help enable value and engagements CSG believe create customers in technologically and we experiences. as First, our design and employee the digitally redesign enable obsess over the jointly them to their consumer personalized exceptional enterprise we for for will customers, and We innovative customer customers. success and

initiators. competitors adding and are CSG simple do While to easier more key being seemingly than concepts, with business value

category develop and biggest market's pressing most that leading will technology and CSG the Second partner needs. acquire address

customers operational our monetization, innovation, combined and customer in an responsive Speed, payments solutions a cost market advantage increasingly and pre-integrated real marketplace platforms digital world. data-driven management, revenue time agility, and a digital SAS and Our give engagement, communication accelerating in service in cloud industry set provider cloud globally, And to technology critical digital providers while will be for with revenues mission diversified us excellence, continue engagement vertical apart. third, simultaneously choice will and payments. of CSG the

growth, news grow our great diversify we and we we help will software outpacing more adjusted synergies positioning, worldwide revenue, which their all and acquirer. organic good the and organic is CSP which retain increasing verticals engagement market many share get revenue, in million into our by payment that year-over-year areas our improve even which quarterly help million, are We market $XXX financial revenues much customers. QX, $XXX industry strategic Equally and fees, strengthen growth, results. better, that we X The brands customer acquire, digitize our X.X% year-over-year adjusted CSG by In Even of that efforts revenue portfolio from XXXX. important, monetize, as processes. organic brands strategic higher more growth our represents becoming as better a their leading transaction and market represents the excludes partner cross-selling revenue will best and since growth consistent business benefits organic generated And translating revenue engage, X.X% QX growth. approach our was our friendly QX

organic. to QX leverage business, sheet, to in This and ahead. right spent grow on to balance of strength that much of consistent expect on and dividends money proud our with to growth the low to our and earned on that our the was and good commitment we repurchases. become good QX, acquirer, $X share our has million the means million quarters a our of the We fully elevate $X made business also more us health faster. especially return are our strategic growth shareholders, XXX% our strategic against execute In We revenue fact inorganic discipline with our plan, the debt

to which XXXX. business are color To by for refer revenue all generated targets Finally, the on reconfirm and of momentum conversion some more the add across results, of of financial strong good our we highlights optimism provides our A sales these QX to with is QX acceleration, please pipeline. driver our pleased rate our X, sales continued our win from the key left Slide side business. performance

have our well in CSG's larger it significantly we market meaningful win all pipeline extend share sustaining North stronger satellite the As stages deals Consistently delivering cycle, organic us American deals, bigger both leadership on new than to contained our sales, and around position. commitments later and keys winning are and in growth. our continues sales customer revenue that In higher continue larger to are cable ever exceptionally CSG business, has customer is to of highlighted recent calls, we been, the and sales deals world.

increases QX to continue strengthen important and revenue these evidenced our with each of Charter We and our from in Comcast, and as X.X% lengthen relationship customers, top our customers. X.X% year-over-year by X

goes providers continue and customer it to new to cable these CSG's as their and speed experience, continue high saying quarter, subscribers We nicely. to continues deploy American Comcast, grow solutions and also SAS each internet add entertainment customers enhance leading North our Charter, industry digital that help broadband without to X other revenue

Turning to global business. our communication

will to Cincinnati provide operators market, rate and our redesigned Solutions our a all CSG Maxis, solutions help services the on without TV, leading a out to a change digitally to Ascendon platform, of demand for overall a Technology people. help feature them able output be the fully market voice resilient data their stream or Malaysian applications with CBTS customer targeted scale new customers. With selected with Maxis solution and programs with with telecom leading experience additional regional new for subscribers. win new In to flexibility monetization the sets launch network secure needed will Bell improve with proud accelerate to enterprise deploy partners. also customer of our digital continue roll consumer marketplace and growth XX and CSG their for marketing are we over and around to selected Ascendon movies equipment CBTS CSP TV leverage world. sales investment go-live and We Maxis from our million greater win Ascendon our invoice messages. to cloud

powering multiple consumer additional content partners. are services. digital and at new already TV, offerings experience and implemented partners add for enabling to across underway Maxis passes bundle date including content and Ascendon special is more Plans demand, flexible the is fully and offers consumers the

excited full groups. And are their a potential. signing the Axiata week, partnership finally, this to earlier one announce help telecom Digital for digital Maxis of technology with realize Asia's to center we We largest the were close proud Labs, of

keys As an in with capabilities to customers to our and jointly leading our new are Asia Digital monetize This are us Forum rapidly future to digital marketplace customers. and digital enables consumer TM monetization create digital adheres Net-net, their to API's CSG infinite and charging of problems. a enterprise to success. partnership earlier, selecting technology Telco solve and Enabler This new and with offers services business combines partner own exciting I large Axiata's more mentioned launch number marketplace that companies toughest global co-creating CSPs innovating their and more standards. to Open

of side the percentage the our from our growth, priority by share of wins I'll industry points. coming X, to verticals Slide percentage non-CSP right strategic We've moving recent increased to concentration. revenue from higher also to industry XX Now some diversify related our verticals

trend committed positive are both shareholders. that our this our We and to benefits business continuing

because good operations to grow in customers new these reliable new customer important and value ready consistently we largest always are verticals continue our customers great also CSP have extremely While delivered, and to with industry backed us winning technology we're future service. customers what diversified nicely,

and CSG selected to engage a their with one the and and large in industry QX, we clinic very to for As drug customer growth software the solutions world In customers, high our to large communicate CSC the store power chains are and of very largest retail largest in operations. brands business the leading and our their the expanded X software important of increasingly innovative turning engagement with X retailers digitally in verticals communications U.S. customers. result, CSG

that important increasingly getting is retail given inbound and to government and COVID the solution providers, are large X of number customers, agencies of healthcare pharmacies, vaccinations employments. to requests Our all unprecedented related these

announce also exciting call are finally, of service AI the their we that in software digitize signed part of our one customer operations. business. a And conversational update companies and to largest payments center new world on an quick deal cloud with the proud We to

growth revenue our sales our to COVID we the quarterly are in financial to that we cautious QX will transaction envision, we trust We and Put of In continued COVID our payments CSG's have results the than digit continue grow worldwide team, business QX behalf feel deliver a to to invent rate continued will world. improved and last While business and our vertical every us in cloud-based as payments volumes as future We win results can had we the simply, another tells ready than delivered to company XXXX their of our fact single good strength have is payments more create our is gives will value us continue resilient quarter the right storm and since and to healthier single our healthy, prove growth that from earned in and you. prior as revenue closing, in revenues. shape we to reduction thank dream growth a continue see our even impacts unit sometime over the CSG quarter accelerating of face boldly, the and competitors, performance. CFP consistently and we in for value headwinds that first to the shareholders, of to grateful thank the it foundational which revenue QX doing extremely payments for continue weathering business and turn leadership we out, put global this you, we them act we that, Rollie diversifying is organic our return COVID, deliver our for bigger, I'll to rate, that faster. in year-over-year, saw is our highest QX, that XXXX, the And that business. customers details pandemic. customers a we better, QX to our continue to it to high day On believing for well. our we month employees greater the resiliency that our the With review ever organic industry Testament more optimism more

Rolland Johns

Brian. Thanks,

growth full revenue to As quarter, resilient XXXX highlighted, quarter strong targets. are a guidance we in that year-over-year the Brian face the pleased strong our ongoing pandemic. business financial year have of COVID healthy With even first the a start, reconfirm generated in we first

quarter first the for results financial revisit our and through our walk let's So outlook. XXXX

best to third X. year-over-year organic our XXXX. of X.X% million the quarterly growth representing Slide We quarter the $XXX Turning growth, quarter of since in generated organic revenue first

first X.X% business fees win. contracts of are implementation In transaction continue to customer management These million solutions, attributed non-GAAP addition, to $XXX year-over-year to excludes revenue with revenue new we which quarter payments along quarter was growth increase. increases continued adjusted to the our related of our revenue, services mainly related of professional representing a the a strong our that

to quarter with real Additionally, solutions verticals. some of we industry digital this started see some key telephone highlighted our wins on momentum communication Brian building cable that our and outside

position our As our diversification strategy quarter growth. organic growth in new first verticals Brian our are leadership markets. at important earlier, our into That component increasing advancing of all mentioned an core acquisitions is industry our said, and growth aimed

in focusing return we the and an fit appropriate acquisition each financial, for profile ahead, inorganic strategic, cultural As quarters disciplined we growth on remain our we close. risk by will with accelerate

to Moving the slide. on the bottom of

income quarter non-GAAP as million, XX% prior non-GAAP adjusted period. year million or the compared $XX first same Our revenue operating or $XX is XX,X% in to of

Like just of our is representative midpoint at of from decline in XXXX I As pandemic. operations our of XXXX onset any operating margin which our mentioned. compensation benefit margin benefited range stock long-term market, to of from I operating of COVID XX% of steep outside XX%, ongoing quarter XX% first our time believe non-GAAP absent first highlighted target expenses lower our of the last resulting is control. following factors this We the deferred year, that quarter the the the the

year discussed. Moving $X.XX, operating EBITDA non-GAAP down year-over-year first finally, impacted on $X.XX for X% the the and non-GAAP first quarter on. And EPS million adjusted benefit, by for compared of Non-GAAP XXXX the current in just our mentioned. the $XX was adjusted to that mostly was to prior I impact Down revenue. quarter our already margin performance due or XX% I of quarter margin the

balance the to sheet. Turning

Our renumeration cash generation X. for on the and Slide flow shareholder are quarter included

modest same first Our a represent period increase results quarter, over year. XXXX cashflow the last

out quarter the those However, by ends. delayed were payments subsequently periods were and point after timing key I received will both customer impacted that that of negatively

payment million note each also For cashflow I was the same an that million quarter due while first of this delayed the lower used million quarter resulted first quarter. non-data our free incentive year of deficit year than XXXX, period other our approximately operations of represents compensation. employee end an of increase a $XX cashflow fiscal last is net generally mainly that year, over of $X $XX for quarter accrued the in and should quarters, and to the payments

short-term of times. Moving debt first leverage outstanding at in on. of end, We investments. $XXX quarter a That, and with the debt cash million and our $XXX with million quarter net ended X.X of results along ratio net

our quarter as liability of sheet. on balance As a now reminder, current in be is as a result our classified the convertible first settled XXXX. a debt can And

further We leverage carry. the sheet, balance the we are including increasing currently amount our revealing of optimize several possibility of options to

XXXX, During declared we approximately the in X% $X and by our of first dividend increased dividends. quarter million year-over-year

stock of In and under balancing committed addition, to our stock return opportunities, to on growth use on common million we of invested repurchase cash return capital, investment, We internal program. repurchased inorganic focusing shareholders. and providing $X our remain

our revisit We XXXX XXXX pleased of I'll Slide and our results. Moving were first quarter with financial on with takeaways key X. conclude some to objectives. operating

question future investment XXXX priorities will of to this execute in outlook of that we vertical the capital the it confidence while is together, laid year, reconfirm operator will strategic share this that Taken us well accelerating With out the guidance model, session. committed with on combined distributing believe strategic the answer the earlier gives shareholders of our the first pipeline, remainder our our to and that, year, strength and growth, higher sales and quarter And in CSG start buybacks, strong our over revenue turn give in dividends facilitate discussed our financial of revenues. serve recurring the our growth, beyond confidence the our well. business our the Brian the we slide. looking consistently outlined the us table form to for to earlier. to And diversifying both revenue also we XXXX, as I'll that the against industry the right the

Operator

Instructions]. [Operator go And first, Tom from we'll Roderick to Stifel.

Thomas Roderick

great of with Congratulations. Very first see some way, these by nice the Brian, I'll love slide. quarter, really the to I growth visual you. to In nice go and sustainable some having my there. some it. of to question ask wins

talk customer. Ascendon critical being like you of it the wins maybe the but Ascendon and yet embracing more it's a you're the point to And long, customers. hasn't key more driver, Ascendon as into that bit component more perspective being revenue from about but becoming, so into even conversations. of its a to customers, to go the Can it we've there of Some way material landing highlighted finding you doing seems talked customers, little drive about market risen for a a hands of and what new

Brian Shepherd

the that's more great with trend We Maybe us more see well the Tom, market in color thanks the holistically. case days. management. a market first doing hadn't to That's for becoming first comfortable great a a approach, these see and hope adopting question, more Now the which joining in marketplace. Cloud you're from little is revenue historically and been a

and continued in we we marketplace other which rate. more have Ascendon announced, the we we the more And and with investing still like XXXX has but point our with the but in year, Secondly, revenue adoption We see the last ahead to growth like seeing growth saying win deliver ready. means we're was interest of more our business. as reminder, materiality, as as market. just more revenue. we value our and percentage and also like have It's smaller more native Ascendon. we're be a the wins in sell liked fastest continue and saying great revenue in to And of CST the a Cloud we've and curve, we still and And what is we're to But what Ascendon technology to highest our platform. It's did your always overall in to the future small, X And in we solutions. it. that on management overall we for talked, exactly what what

Thomas Roderick

great a It's trend.

Turning the customer terms probably mind, from as understand this what that understand revenue seems I the has trend how to but like the a extent that a to sequential In of was are base some in of on face, And think on would half the it attention that the as on growth customer the seeing challenges being the be relative well. back? It you XXXX come basis, year you wasn't to might some revenue helpful perspective, of year, of here, to of Remind opposed sequential if stabilized? churn about the start fully line, themselves don't COVID seeing year, has that some of then, year Brian, year back on those as to in transactions we a just in side us you churn if payment of transpired bad that business. that much or the headwinds business. transactions dropping. the on versus headwind words, other sort transactional sort

Brian Shepherd

volumes last around the good question. your of or year This our is stronger we question was What saw, it month in that again, a close great but business on to erosion decline No, QX, to And see pre drove the growth. what rate. nicely, a the we March digit we by month. double is And saw saw the depending half industry. was growth saw we about transaction drop about COVID X% XX%, the that the was in of what growing on a drop organic

driven a the So merchants of about headwinds in in of customer the we small the When reduction customers actually would we volumes, talk merchants, environment, saw. recurring the a by that you overall base because we that facing. that fared our on nature we've struggled well or our majority was overall just been of X but X COVID the from that transaction impact have lost been and

end can into momentum. We're I but progress in But we to optimistic cautiously half growth and of So and the year. just business strong to Last continue a we like as another the still to say, second eroded see saw quarter some get months saw we regain we growth, nicely. the of performed that that need back the more XXXX the QX. quite year, would we at

Thomas Roderick

the What of M&A not about and push levering on have there extra this think line kind some of how quick immediate back to prefer Rollie, environment. with debts, you. you How and I you sheet? leverage future. that pull do of Super about well balance that business. rate rates the business, think done Or up you would Brian, on starting would mentioned philosophically, enough low the accelerating diversifying taking topic? Great. that the keep it. but interest you've how little love targets to that one philosophical, do are to just know courts think hear and The your up for is you last also in from you acquisitions and the not a but then And sight? about bit, roadmap. CSG, the Are pick

Rolland Johns

fair No, points.

in levered. a you historically, I good perspective, debt really been we're say, we think position at. raised wouldn't we're from it, I under where a have

our I have times at we Certainly, marketplace. leverage. to investments We're could We're M&A every X ability looking the provide shareholders. we future to increase day. our in the to targets returns afford the and X potential currently to think for

from now, valuations are to Brian, valuation that Brian's we've I know if as to you pretty that anything it add well? discussed want I don't perspective, have frothy. out right you and think, as as a previously, pointed well,

Brian Shepherd

at. something to do leverage. it All that believe I allows looking us and right is business direction is, actively the would we increase say the that's strength And the we're our No. debt of

say I'd stay tuned. So

attractive culture, ready actually us give assets future the solve our more that customers. On strategic very to the we problems our offering fit see could of acquisitions,

price sure that close can the the actionable, staying lot, think to deals. just ones we I the Tom, growth. assets that that strategy making attractiveness the will we that are we and it's But a that sure with bring it's value. financial believe We look accelerates making also really, on the bring good us disciplined and at see get most

Operator

[Operator Instructions].

Next, Sidoti to from Greg we'll go & Burns Company.

Gregory Burns

wanted done to, the tell some guess, adding I technology the bit some In you’ve gone prepared I in little And remarks. about strategy. past, a positions, you've mentioned us scale more into you new acquisition also verticals. forte, then getting these you

your of terms in are you're deals what when So at in priorities acquisitions? of looking terms and

Brian Shepherd

Greg, for well. Thanks doing hope joining. you're

all out, best the culture industry our the it serve way, in for us or. adding the that need us There's is And ability the enables in key attractive categories. it an around think framed ready to matches to all we talent that and world. verticals future kind of integrate, what you either be technology customers all more the isn't assets I those for of

tuck-in, scale And so or in America both high product add new market looking we're strategic that and nice as with at reach. growth our and as North and verticals strength, are global well expand And we globally. conditions the can We're that prices in looking capability that capability can drive. looking higher at being assets elevated, for deals also current

you'll in and us categories across value on those acquisitions business. So it really and that. focused we board, the accelerate And of all extracting close continue we're those several the to does there's to fall see believe elevate and in categories,

Gregory Burns

the to the a kind just we that were then through start maintaining And that first what at the so in the drive not the but look range will the where to back range, Okay. full be relative walk strong might us year the I is you strong can guidance, guess guidance of down quarter? when issue, you revenue to relative full start year? an year versus of margins the year, into

Brian Shepherd

the and let I'll level Rollie give you I’ll [indiscernible]. high

year. into one quarter the we're First,

quarter Obviously, out. we a how that to we're of building So a pleased started. outperforming and extremely culture quarter we deliver is record with need track something in,

we momentum, we a second the that but more want you do. the But So to margin question we see the on And we to color continued had? execution third. to that know to the provide really that, in and work quarter Rollie, including have on continue want Greg little expect

Rolland Johns

still are a Still, said, percentage current of a Yes. the right dab strong ranges first our first Like for good performance. XX% middle our I quarter after quarter, indicator the of believe factors margin are is target smack the XX% how an And of any of absent is in the I can range. good long-term pandemic, indicator control. ongoing events CSG really of think midst perform a or that outside in our

So we the in it's year, see. early what like know as Brian we said, we but

Gregory Burns

Okay.

on making mean, Like, the guidance, a the incremental you're full is sense year investment in on at front. I Just the low trying get it. of year? balance of planning midpoint margin the quarter. to Being I'm little a bit in just there first the

Rolland Johns

No, the for guidance higher of our XXXX, was costs. and potential had expenses. related question, initially into highlighted employee that the we of as levels of fair the trending to Especially form in out Greg. XXXX of had things one ranges, provided we a When entertainment headwinds couple potential travel performance

December The the was contracts the re-pricing this dish other of the for potential in pressure execution charter potential the renewal for coming the year. with that and are associated for up on early both

Gregory Burns

Okay.

year? before extensions update is up, guess, So there the done that to of possible since end I you Or any on Do that there? you the the is there of get can progress current brought deal talks, to expect the the that made? be

Brian Shepherd

continuing Other this history that's hard to window, they've our out updates. that. if done is including we've than, just the we've sure Yes. well darn our customers, what we working have focus well. ongoing What the those, large look growth Greg, we're of we're to update, At value. you always work all and see Obviously and there's us. no on other greater at work the of make time several to any and this And Charter, greater that with for happens quarters love around revenue don't stage, as CSG, tended to inner last bringing announced renewal

Operator

And I'll to remarks. closing it further with for back no questions, turn Brian Shepherd

Brian Shepherd

continue say, doing on talking well. going all to forward We're I start hope ahead. build Thank to just in to quarters staying would to the you're you. healthy, QX. the Look strong

Operator

that for today. your for Thank And call conclude does you our participation.

now may You disconnect.

CSG Systems International (CSGS) 9 May 212021 Q1 Earnings call transcript