CSGS - Earnings call transcript Q1 2022 | CSG Systems International, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the CSG Systems International First Quarter 2022 Earnings Call. [Operator Instructions] Thank you. John Rea, Head of Investor Relations, you may begin your conference.

John Rea

Thank you, Operator, and thanks to everyone for joining us. Like last quarter, we will be working from a Slide deck, which can be found on the Investor Relations section of our website. to Slides. moment a take locate these Please Today's contain a forward-looking statements. number of discussion will are to, in financial client's not projected but and operating and include, These limited and successfully to achieve our products, and integrate to their our our strategic ability financial acquired statements ability meet to through goals. our businesses needs manage services, performance order results, our regarding expected

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

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

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

Brian Shepherd

Thanks, John. everyone. Good afternoon,

continued business and line share as in strong pleased of using top Slides EPS. on Slide I'm delivered line X. another CSG's us those that revenue team For CSG bottom join momentum to quarter QX on today, please growth XXXX,

we that a as announced recurring of we the model with success to associated last is is It the renewals following and and DISH Communications in quarters of strength performance, to as and business Even top discounts of QX year. absorbed revenue testament the Charter of our our in the signed grow our SaaS sales continued as and of the three robust EPS which than revenue for proud ever, a nature two deliver $X CSG we quarterly who as in beyond better more as envisions, purpose-driven the invents important more CSG, Equally platform a is, elevation quarter, renewals. future-ready be as to in single results. excellent to world. longer-term results aspire SaaS and transformation At Company shapes and billion every us, profound committed customer CSG given of and employee every much and exciting any is

ourselves We to employees hold lives accountable customers for to serve of will the change are honored and our better. we the the

we We the are proud redefine industries lead. will to

the across in lasting which and spectrum. a and the impact world communities the we environmental, wider make in will and operate social We governmental

million where a provider a renewal signed on with open last multi-year delighted do, Services, has to XG, CSG of respect much we first XX ESG expansion perspective, in meaningful an the make with than D&I over contract Communications, six on our API the and digital signed eyes we product as the Charter have high I'm on the back on will From outlook, And stock the to win plan in receiving to to communication contract usually beginning important we that And of potential next experiences. we North of the a have Encompass is on deliver with market, system world. detail in in services analysis and subscribers ISS, that continuing and enables still financial Based billing To cable by short, stock we continued to we to honored a pleased a over converted guidance XX are agencies million recognize November back Institutional new to billion rating respective share who proud this fronts. While organizations expected, more is very in launched that service is our six-year months. designation, are distinction. platform buying And $XX leading for ESG rating an we Prime ESG have all broadband confidence a one top on of to a XXXX and XXXX. announce moments. within Prime commitment and are recently US. qualifies product our expansion an This ISS also be point, this our ecosystems, of the increased as honor. in spent industry with buybacks providers factors the XX And work the continue those global based provide customer activity share months, which that QX targets. sector-specific more now to XXX $XX digital planned the the Shareholder scores business we responsible and multi-faceted the big a ESG were we from approximately of $X.X cable over in with in truly QX. awarded the the million The we extraordinary from exciting longer-term generation complexity are unlock confirm by few I'll repurchase designation subscriber leading start, the this to conversion in receive product simplifying and good of CSG remaining continue our competitor's American next near-term investment

global of environment. QX that healthy and is economic turbulent proves the especially resilient today's growth good with Our CSG strong a Company, backdrop

easier will number diversify deliver of our future success. five which long-term we to industry more to our faster operating value-enhancing organic provider government, the X% accelerated expand of billion that the and our aspires disciplined healthcare I be competitors. These to Turning X. revisit in channel foundation end to and as be growth and add should We a most operating has $X.X expand in more been revenue billion scale our growth do long-term to business things with global who by strive big retail, We year we by growth And end for technology the being progress. revenue We direct will $X providing growth XXXX. a even organic complement value-adding financial big SaaS of to X% choice by CSPs, one everyone the solutions in to to within our customers our verticals least Slide and services, form to our familiar plan upper the by CSG's more. achieved with our turbocharge CSG strategic proudly following value bring with shareowners. sales in stretch-goal in in partner and M&A, growing the at finally, we leverage we technology, aim range, success objectives a XXXX, to revenue.

well in Moving you that we against QX strategic X, objectives. to Slide see performed five all can

million reported total revenue growth, QX in respect year-over-year growth. resulting revenue, in X.X% $XXX we with to First,

even We at X.X% EPS year-over-year. faster grew are also proud that growth

that SaaS high Slide billion the the current On balance inorganic of beyond. X, revenue healthy recurring benefits market model strong attractive and and believe economic we side sheet march environment organic CSG's opportunities $X on business creates the and right our to

if billion vertical to outpaces we gain investor in $X aspiration growth in acquisitions by XXXX. platform will better XXXX, scale stretch bigger to revenue aspire add call. billion to the become to continue building they so XX% profitable to a key by analyst allocate aspire almost more team our by billion will a recurring in on our sheet shared healthy are We shareholder $X.X exceed reminder, consistently for and trading that rewarded aspire annual scale will multi-industry CSG eventually come every strong over not CSG million up operating the revenue, in to and case $XXX even to that deserve, revenue and short we continue EPS stretch to industry. base that the empires. compete we in our and Company and business CSG. To I capital close value, which shareholders CSGs case, means, most to reach growth. multiples revenue purpose-driven Management we to to we faster-growth revenue our and on is creating when they This deliver even a $X point, XXXX, by against value-adding that with use case still like aspire billion exceed expand better balance As results, In leverage SaaS markets transformational grow We this ambitions, where deliver revenue. last point the reinforce use laser-focused over $X.X On invest its

our hold hard use, delight will a most-productive employees. growth, all highest on adding with to and customers accelerating ourselves like our to our We just our operating work and its and to expanding scale, we investors, accountable deploying capital focus every leverage, rewarding day

this in our X. strategic we good and with priority. for North technology communication CSPs that American one Turning continued had number providers success prove goal globally on of success executing sales Slide be provider well and QX the We service our choice against are to both to global

Telecom our new is that CSP's products, product, complicated Encompass, its Encompass for management and modular BXBXX a CSG's open for business monetization CSG brings our more to two the of end-to-end with Tango solution complexity problems holistic last the revolutionary together and global from solve DGIT. world. Our around of a At cutting-edge year, SaaS-based launch to ecosystems acquisitions the us and integrated multi-sided telecom models enabled simplifies revenue customers. most significantly solution core, and digital Encompass

market. provides CPQ a reminder, quote, that price, in the configure, short, presence adoption technology strong and a platform has telecom As DGIT's management global a order for

of absolutely technology Tango and both While Telecom's a crucial are dynamic which world. CSP's control in CSG XG policy call global to management, with armed real-time

CSG their new the to that including excited in-transport We network. of to long-term Encompass's have of manages and more over on last and public the the our transformation guaranteed combined platform, six CSG's cost-effective network of Charter to two provider state-owned having Charter, deployed all cable City transport completing government subscribers providers. migrated with both digital wins share VicTrack's hand-in-hand build customers. and are to cable half of and of solutions support Ohio, markets In Wisconsin million and XXXX, the the order telecommunications over With migrated, and in X to the a enterprise successfully We migrations and million millions with on early industry-leading in With years. success Victoria, million deal now QX tens we and be We Comcast Australia. market, processes subscribers, announce the NetCracker market wholesale year. years X infrastructure CSG Platform, last some Kansas deliver contracts VicTrack, management subscribers in choice the exciting ahead. of in BSS the Working efficient XX Amdocs in Encompass second for largest its including over the this solution plan CPQ automation

track While on the remaining million are next the XX customers over timing could migrate XX the to conversion still charter vary months. existing plan a the we little, with

all support and customer, service a Additionally, US customer's world. grow X.X as we'll America. we with Billing deal, and telecom over services Choice In X cutting-edge With And contract limited field renewal to with a Provider of extensions is homes leading we the million with our standing Top we North with new company market, passed. continue this expansion not around to multi-year our signed additional global expanded this to success with the and management operators wins continue platform. the telecom CSG's like cable

Digital but wireless with win, a deal win as that providers, and Australia that management two about is the were quarter, industry XX to forward This customers. not we pressing right largest Wholesale. further telecoms solve over unseat special the unseat solution, incumbent our What products our competitors. largest Provider the Axiata, a with to was Optus, six APAC's and SaaS During of this proving companies We we Further, to million Axiata most we incumbent with so is of Sri helping revenue Optus Wholesale who with experts further rating beat challenges. key strategic CSG deal, look fantastic positioned group one of one providers. one, Lanka. signed second multi-year Choice service CSG able their to closed in company operating replaces has deal the and for business This

year retail, like expanded at later grown has end largest CSG of two engagements. XXXX, industry financial little to from government, selected X% CSG some largest the to verticals, and the them the industry extremely new it for Last and of software Since from revenue year, be in revenue, where verticals. exciting the Choice bit game-changer over new continues deals in with came biggest CSG in clinic growth the power for engagement vary encouraging US and see CSG retail of total a QX CSG. a X. modernize And of we chains the revenue quarter-to-quarter, of customer all brands their industry to digitize metric higher and total drugstore can payments, world, Slide to retailers and from from big of while who won cloud Partner revenue XX% XXXX. XX% customer a one of services helps is Turning verticals healthcare, our this to and XXXX Being

to is during providers, requests getting, important pharmacies as with vaccinations, government further we one And to and given number large and appointments expanded of these are Our prescriptions. of healthcare devices. with as Further, all we very Formula the new a agencies three the direct-to-fan engagement we our pleased that a the I'm quarter. largest US, win deal announce the that close customers, to with of subscriptions, deal solution entitlements unprecedented QX, to related ago, new and signed OTT I'm continued this of increasingly the meaningful new retail in quarter. we inbound X, a we business business that during signed proud space, to drugstore years in relationship that user good multi-year of part to signed couple chains payments, contract where its with the and manage we manage digital them in report experience,

to to X we returned and this are QX, of as all of and to growth racing proud sales meaningful explode industry the award-winning results, growth partners, market, revenue gateway in capabilities, the integrated global vertical popularity industry credit, propelled and by facilitation ISV SaaS recurring a QX, platform. revenue payment X,XXX Forte merchants serving double-digit from CSG robust the extremely continues last capabilities XX,XXX of the PayFac, for was world. payment continue which verticals. In merchant payment months the full short Formula our industry-leading processing coming wide strong serving payment around active excited quarter, who good with We to in increase the provides in series revenue a ACH, and payments need growth range two recurring our

As in add partner a we a leader March, processing, continue to with ISV Velosimo, Management. Property in ACH industry scale which announced by growing signing fast like In we partners strategic planning partner. stacks agencies no-code, via government is resource connectors. technology augment the cloud-native, single provider enterprise with to of connect easily partnership only enables their technology This software and processing vendors a verticals

bodes to in well sustain the in our which growth, payments our double-digit sales to growth Looking revenue ahead, are our the business we've for an market. organic multiple good pipeline exciting payments contributing across that improved verticals built ability

the the in of earlier. launch as And market which of and the DGIT right-hand the our creation We foundation I X, a our recurring through Kitewheel, acquisition Journey mentioned us and M&A supports this continue Encompass, the about transaction interaction to the against offering bold customer revenue I innovative Telecom CSG digital with management analytics. real-time offering that multi-vertical omnichannel and engagement expanded playbook. disciplined Plus, we digital space. CSG enabled of Xponent a spoke formed company of market, Slide purchase value execute launch, Tango engagement to in earlier, Moving Orchestration SaaS-based to side

organic value new look and closing new remain that arenas elevate and winning grow we and deals CSG exciting help and inorganic and more even bigger these existing more. laser-focused on unlocking and we from in greater will As ahead, will even acquisitions,

that of up is wrap five We all will is and we our themselves. I purpose business. every long-term meaningful growth when the do CSG's inspiring speak expect we transformation. elevating our fully analyze momentum X, our you As across hope for continued aspect growth-oriented. results strategic same the business bold, thing and Slide CSG on fuel and see building priorities, we

focused vision Our and execution are strategic daily disciplined. and

turn and detail QX our now Hai results diversity, are more I culture, provide We outlook to year our our on will elevating our it And talent. to XXXX. over for global and fiscal

Hai Tran

Thanks, Brian.

off a we highlighted, Brian As are to XXXX. start good in

in non-GAAP million and Let's walk on quarter wrap of first of $XXX year-over-year key million then revenue growth. of respectively. with many world. the during adjusted through revenue financial These it providers I'll organic growth revenue results Approximately serve adjusted and we primarily The increase We communication represent generated results and of X.X% of largest solution, to the continued our and $XXX some by the were Starting increases management service up in first year-over-year X.X% quarter. XX. Slide growth revenue attributed two-thirds conclusion. driven revenue where these was the non-GAAP

healthy in retail, such offerings, large and also we addition, serve would customers. was largest growth of face industry engagement that to in X% services X% In our high-growth the where our growth discount two for note healthcare, headwind we in financial customers are three as of verticals this like government. I customer to seeing

or with prior operating XX% of XX.X% the non-GAAP to was quarter in our as adjusted or result operating XX.X% $XX first year to million long-term same $XX This range period. revenue, compared non-GAAP target is margin. consistent of Our million income XX%

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

current growing as first increase, EPS. our X.X% year be environment. other companies, We fast continue we a inflationary growth macroeconomic, to for geopolitical year-over-year period. year. monitor prior the and our or in the full faster bottom EPS It noted top $X.XX, delivered our like should and navigate to to the We non-GAAP uncertain as than that $X.XX compared Moving anticipate line line quarter

generation through So the I'll for quarter. balance Slide the and XX. shareholder turning sheet, cash flow returns to go our

XXXX cash in Our flow QX of as of compared in to outflow prior outflow Further, an of free outflow compared $XX used $X non-GAAP we year to period. million QX in cash XXXX. first million, of the $X million as $XX quarter million operations was in XXXX, had

million the year-end in QX our reminder, due XXXX. to other of working high $XX year. payment in the cash of from XXXX to As a incentive fiscal before recurring continue year year $XX each from Due flow than And generally quarters is our our remaining of first mainly robust nature quarters from the of generated capital XXXX. and the to flow, QX expect and employee million increased operations lower full accrued previous compensation generation we to the in cash flow visibility movements cash revenue quarter

$XXX we investments. million and of That ended remained ratio times. under leverage million quarter with X debt cash our $XXX along debt debt net our the on, and XXst, March with first net of of short-term results outstanding in XXXX, as Moving

we have transaction which follows we In undrawn. of revolver the convertible $XXX this Over our our million, lowering our credit had couple completed agreement debt. reshaped increasing the transactions, of term year, refinancing past of borrowing eight sheet. to our outstanding months, extending March last the and our balance This which September, $XXX of have a debt, million benefit financing of settled remains our costs the of which tenor

and capital reviewing had enhance look we structure mentioned quarters. coming our a in execute we plan ways currently are before, the As thoughtful to to

we shape a in lot options for have great and of remains Our future balance opportunities. sheet

the declared the to the during we dividends bottom Moving Slide, right million quarter. $X in of

our stock common repurchased million we under repurchase stock addition, In of program. $XX

the to Looking expense. expect dilution share from our XXXX repurchases stock ahead, we offset employee expected

XX. Slide to Moving

with quarter are first XXXX operating We pleased our results.

start of confidence is financial laid strong Slide. of in first right for the the outlook gives for the out the XXXX the the outlined our remainder Taken which our together, table in we guidance that to us confirm quarter and year, the February, on the

XX% half and fourth revenue of to our the third weighted believe continue XXXX, be in full our with We quarters. of approximately our towards year realized second revenue to

are And few Additionally, continue and I and revenue diversifying concluding and combined disciplined marketplace. the with strategic the our laser geopolitical the acquisitions. positions closing share believe committed it against facilitate are as our wanted thoughts. we session. to this We to I consistent momentum serve that capital you has shareholders And buyback, Operator future us finally, our and focus the that turn With industry to strategic results revenue, creating leadership uncertain leave the over value-adding team including growth the before, inflationary with monitor believe well. contribution a on priorities, we market, in our question-and-answer the to investment executing form the and dividends CSG will environment. we mentioned in growth, that the in current well is macroeconomic, in generating our to accelerating I'll that, integrating we our vertical of this

Operator

first of [Operator question line Blair. William from with Instructions] the Nolan comes Maggie Your

open. Your line is

Maggie Nolan

understand, an helpful. I streamlining wanted penetration offering additive of this there any opportunity this your on do CSP to more competitors? goal the CSG being be is business is early about bit to customer I little about easier than and comments adoption kind services then ask and a and Encompass would of with guess that or and base achieving your existing for

Hai Tran

the growing world. enterprise all is launch. for seen a the the fastest product is, Yes, telecom market of it's the Maggie, is Hai. global What and in thanks one Hi, profitable around This segments we've question. for new operators most

enterprise we partners so, structure, them businesses, Telecom and could help really help revenue integrate on with an DGIT, had them that return bring we on to opportunity marketplaces both after acquisitions launch and of telecom fully where Tango API's could a investment. open and new XG the their And to new modular accelerate allow a

the world, broad around a to to are and what it So do trying when they you buy think of range make are to goods about easier they trying all services.

to quote. telecom order improves gain It the So It that configure, deals that SLA it return. time. with really helps price, response provides It catalog. new launch monetize services orchestration, businesses unifies and

Maggie Nolan

how part the an expenses of looking? use you best strategy comment more integral Are term. on acquisition large just in your Can helpful and context. near that's likely companies Thanks. on becoming And long the term That's acquisition here? still and capital pipeline is if scale that's target a Okay. then of

Brian Shepherd

Yes. is couple on some that we of good there give No, insights. that, a questions could

done. focused to continuing extract on we've really and First We're on the value. ones create

part So really a last verticals. experience, big what's us CSG that Xponent we're success some That market, the you of Same so contributing year. sales the saw with is of Encompass. engagement customer can thing brands latter launch the of new in to customer launch we verticals. seeing That's lots in platform, the of helps with that more CSG embed those now

believe side, the to of continue the seeing as on buying disciplined strategy. for macroeconomic create can more turbulence Specifically globally, we some do M&A we execute CSG, opportunities that that we're the attractive actually

So we very continue even to strategic the the attractive make be larger areas And believe spot pretty the as it we an might we're with of on environment side. or more what we to those disciplined pursue sweet economic those think several and focused attractive midsize try tight on in opportunities is. acquisition we

Operator

Your comes the Sidoti line from next question Greg Company. Burns with & of

Your open. line is

Greg Burns

a Hai transformative, maybe you your you new market a something focuses Tran, completely at, looking in maybe looking new in what you're something is expanding then, use look technology technology, or and more or questioning. line do be that there platform -- from already particular you'd a in perspective, or whether any tuck-in terms industry? what vertical vertical at on M&A it's you of opportunities following just are When at your the terms new versus are up of of

Brian Shepherd

and different could It smaller, package us more we're - our those are the deals be midsize SaaS larger, very revenue and to could a growth avenues. Yes. open, on relevant the together and help it and would to contribution flexible really big it solutions we of not technology technology, be depends bring covers the good they accelerated stay really how and whether brands. to couple One, acquisition

help monetization, scale. focus that and that for that SaaS-based, experience, We payments. that customary kind is digital are So of One, customer those in We a we us really vertical. to industry can think couple key solutions on, an we expand areas. of opportunity by engagement, on focus varies areas there in that look

we to can the a higher growth. scale as customer. still integrate easily approach to contribute more If to a relevant more then sticky So it's synergies end the able to us revenue, be great have revenue cost if our suite, it's growth be of well more SaaS of existing our we're have geographic it growth needs provide be forward will as to looking value-adding modular then expand accretive, where on global expand acquisition, to market the that, that and complementary our to into to our rate of enable highly addressable either reach be and solutions and the

that really with focus look we that across So at M&A area. opportunities landscape entire

Greg Burns

into you the of to from terms do you then and now in in baked the Is and And fully strictly Okay. grow Charter, year-over-year decline expect of here? that price numbers the are that revenue setting? revenue sequentially, is a function

Hai Tran

of is subs X by far. and Because enables answer right. the of transition the subs, us XX - to yes, yes Greg, moved about here thus which part that already over we think million we've build I million

room more still with to is for over time. Charter there grow So us

Brian Shepherd

would year, that, And little X% we a think bit thing in. the to gave plus saw I that maybe color add come the or one the I late that range. of be Greg, renewals we in to We last minus expected

other in, besides discount revenue the that had the we some just renewal The aspect term. was over spread we factored

horizon. from months the getting some they revenue when longer left, period over then was three standpoint, that got shorter six-year as late revenue be last accounting a some an so just of time, saw we of period, spread over a And renewed year only we spread term to a

addition that subscribers we are there haven't So come like Hai yet. what different several on, all on-board in to commented seen factors the

Greg Burns

pre-pandemic the maybe lastly, And back - whether or the pipeline case. to but you the that's side, confirm levels, looks not look that just payment like what's thanks. And business? like Okay, could on for opportunities it the you're of

Brian Shepherd

revenue back we're the been We half normal in to months partners January saw and activations customer I started our really in in From direct we've or three both start of our continue. channel saw confidence in and transpire. we in revenue year to sales, last grow levels have channel not saw the second revenue will to on-board the to time in We in ISV four new to a payments we've what then to seeing the sales the account in some levels. love think business. performance performance, payments we part business. for back recognition and our and bear activation to fruit to of but improved that what now latter strong seeing space, sales results, we're and basically and high QX payment We little and acceleration in in start see signaling better, very, bit ISV and partners. very of a pre-pandemic the really we the and love and We the We've that that outperformed our reduce be new customers

Operator

CEO, for There time. turn closing Shepherd call are questions to back remarks. the this no further I'll at Brian

Brian Shepherd

We so appreciate joining. everybody thanks much. Now,

to all and laser-focused bring the on we're bottom growth, line around to top fantastic world. are brands what doing We accelerate more value

forward Thank elevating for look bigger better all and quarter. to difference, the single grateful things our We and are beyond to We for super CSG doing making XXXX every employees a time. you culture.

Operator

call. today's concludes conference This for joining. Thank you

You disconnect. may now

CSG Systems International (CSGS) 7 May 222022 Q1 Earnings call transcript