CSGS - Earnings call transcript Q1 2024 | CSG Systems International, Inc.

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Operator

Good morning. My name is Lee, and I will be your conference operator today. At this time, I would like to welcome everyone to the CSG First Quarter 2020 Earnings Call. [Operator Instructions] I would now like to turn the call over to John Rea, Treasurer and Head of Investor Relations. Please go ahead.

John Rea

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

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

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

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

Brian Shepherd

Hi, John. everyone. Thanks,

We to to with today's for as join quarter. broadly first we got Slide our call good off begin in a XXXX glad the on CSG line the of are start in expectations X. Team quarter

time communication verticals space. suite a industry first services, strategy multiyear SaaS provider CSG's verticals revenue of exciting This from the testament retail, and outside technology the in of our history, selling industry financial service to came into is revenue of For our XX% like health care, diversification insurance. solutions our

this to In shareholder to X% faster-growing years to expand in dividends and respect we shareholders continue will As form deliver dividend shareholders and buybacks. smaller but annual returns, in February, revenue fully dividends diversification growth March. well we our level in million we above revenue reward double-digit the solutions, we in of quarters that our organic and With expect increase to our the in returned $X announced a in continue ahead.

$XX stock of worth quarter. Additionally, during the we repurchased million

Over returned $XXX the last shareholders. to XX months, have over million we

operating we more a believe a it EPS. we in million in $XXX QX, non-GAAP than create greater when non-GAAP perspective, revenue, stock financial employee Looking we offset expectation forward, shares with of back a opportunistically buy through minimum, the end opportunity to back XXXX, with the this shareholder in value. XX.X% From delivered to buy adjusted enough $X.XX and will compensation generated shares repurchase will reported that the will we continue at margin to

We would knew the XXXX calls, results in financial this we million approximately mentioned growth which when we comparison. QX distorts previous $XX license profitable net on our issued As be the year-over-year QX included have case earnings XXXX highly revenue, guidance.

will QX several have QX from XXXX flow Also, discuss out softer to was that anticipated last organic revenue momentarily. year, you of would the in than onetime slightly a free this due revenue If impact year-over-year. normalize grown our license timing-related cash items

original to We items ability generating flow will place meet on a impact not QX our for the and cash our big to timing-related free cash flow continue free good believe guidance focus XXXX.

as this we our expect flow With cash and XXXX our second we results the generated a confirm in of year, pleased the saw we the XXXX, free guidance full similar half in with year. being Just majority in of broadly line to XXXX trend targets. QX year are expectations, all

business. exciting from to market in X,XXX ongoing SaaS the new CSG's sales over we areas dedicated confidence Our and and of reaffirming pipeline guidance the our across as products all around as good ever, large is deals and continue CSG employees. industry-leading thanks win world, and and for our strong deliver demand CSG's all sales performance healthy comes to talented

and were We a and more belonging. global of sustainable fostering wanted future We to our corporate which to journey. report annual highlights our Team issue doing world proud CSG responsibility on inclusion second share is culture our reducing around also supporting create communities X impact what environmental in a to the impact, updates our March, meaningful by

Additionally, X gas have progress issued we emissions shows to and XX% in the making of is CSG Scope and with achieved nearly Scope we our proud carbon carbon are X in latest greenhouse emissions report, reduction X since emissions excellent our neutrality the by a This footprint X goal XXXX. reaching and already XXXX.

revenue to the at long-term midpoint help X deliver midpoint followers our CSG guidance The progress. track range, and striving implies our growth as scale of from range. an reiterate to customers. growing expand We combined year-end X% consistently North We X. we This growth. objectives several come good aspires some to and combination the moves. faster aim our $X.X greater or add XXXX growth of operating line X% at as X% that will even American allow want create slight to story rate shareholder leverage organic to operating of above revenue our cable approximately the value headwinds inorganic Slide by to our faced will broadband CSG Turning strategic be organic this of in billion revenue to by with to with of top faster, organic than XXXX growing scale bottom a line growth, disciplined year-over-year

choice provider more global by providers value-adding be our of Our world. providing imperative and #X more helping care, we CSG plan customers and the service money significantly most make for third the strategic platforms industry and technology the in is more. communication SaaS verticals like even to technology high-growth health big And wins digital government, as services, revenue our finally, to diversify retail, by financial

revenue objectives. you that On Moving full billion reported are a growth, our can to see Slide resulting CSG XXXX annual X% implies XXXX year-over-year being vast the delivered that revenue with Taking growth revenue, approximately nearly growth. X.X% the in our majority $X.XXX Wealth in delivering strategic consistently XXXX, best revenue XX guidance all in pure years. growth, of year against revenue X, between X this XXXX, midpoint record-setting of organic we we and of result

and X, generate gain XXXX. over make that markets business attractive billion the CSG's will we that which compete aspire to revenue to model implies XXXX, revenue, balance side recurring believe sheet annual Slide in from and scale the recurring in XXXX On $X.X right-hand in strong revenue profitable us an we high added SaaS $XXX our where CSG healthy of investment. By we million have

term, and sheet strong long growth or we use Over meets non-GAAP EPS balance deliver the growth. to to our aspire exceeds that expand operating medium CSG's to leverage revenue

growth, for that team accelerating thesis the in with M&A shareholder inherent disciplined extracting margins investment and our organic and will the paying generation puts a creating greater the by scale capital add each deployment, As it CSG value price synergies close. on and premium our to M&A that operating we expanding cash relates right expected acquisition strategic

verticals, closed first we insurance. share On the M&A industry transaction small acquired our company April front, serves we years that happy we're in customer multiple X in that to engagement a including as

CSG's this will good sector, a which forward. that M&A vertical in deal expand will be the believe will is for in of and us accretive offering transactions customer base first the this close accretive XXXX. deal We While high M&A that going priority several small, insurance

X. to Turning Slide

the We globally. communication good for in service choice our to of technology have provider be #X providers success goal

tiered a run respectively. an with CSG's And basis, us as losses and a customer relatively and at contracts model, small subscriber that the have customer year-end customers overall contractual We important per on impact have in big because a any to inherent long-term our our this means XXXX pricing XXXX, contracts big distinction is combined Comcast relationship QX revenue. Comcast on which both with through Charter Charter with for reminder, pricing and CSG's is

subscribers subscriber Comcast America at about is Given we cable combined Charter the broadband nearly all subscribers it XX and that North broadband industry, across reiterating serve losses customers. million in nearly million XX concerns of and the cable worth

less in than improving noted for impact So and dropped exciting broadband in It of diversification not on revenue X success providers. we XXXX growth since deals. total consistent consistently North American growth. revenue our largest digital our subscriber to quarter, recently time. a annual of largest X% good CX results and winning do CSG's the should have the completed to our small meaningful customers first a implementation first during big, be counts new that Also our one with a the is changes also revenue sales XX% business testament

business extraordinary great which their savings Specifically, and win of CSG monthly an in win we their expansion their bill, with broadband benefit billing enterprise largest contact more payment calls of thousands customers and make telecommunication win reinforces America more positions well and billing the cross-sell telecom sales by money help payment highlight and significant companies. fantastic operators Latin capabilities with capture our product continue the the of solutions. redesigning center. this new customer digital with CSG we A many one payment-related customer in integrated monetization, of reducing experience This North quarter improving beyond a data-driven and leading was America, real-time Brazil. exciting industry good cost closing customer verticals Outside helped to with into of strategic to customer

highly in digital will South wireless the CSG the in scalable MVNO to largest Specifically, America better platform. enable our country native market serve with Ascendon their cloud evolution

also network Africa's with a good operator. expansion MTN, We signed mobile largest business

in project and and leaders in South to was new provide TeamCSG on underlines to also new this in telecom a CSG's market business. XXXX speed CSG divisions wins by good selected wireless help with leadership as for services providing solutions. our the and Bangladesh. settlement including in time embrace billing managed Asia Africa, enable its within wireless selected MTN also and Drawing telecom MTN operator Specifically, previous transformation. deal, won Airtel PLDT, Africa, MVNO in services. products Banglalink their optimize continue a will modular to increasing support CSG MX digital leading This Banglalink Pacific to will customer-first customer wholesale business contract

with of enablers. a one signed new Finally, the we nice deal MVNO global leading

to product MVNO cloud-native partners implementing this Ascendon board and off enable Specifically, to new our CSG is customer quickly on seamlessly. and

in the position CSG new telecom more pipeline logo sales are exciting We strong global market wins confident to announce our in that sales -- well will XXXX.

Turning total to diversified from in our we of verticals new period of XXXX, a to fantastic revenue from Slide revenue time. CSG XXXX X. coming XX% have accomplishment short of XXXX Since QX a relatively revenue, exciting industry X%

mentioned, of XX% came of marks first our CSPs. over verticals QX industry where outside quarter revenue As the from

fantastic During we announced the extension a deal Chase. with quarter, expansion JPMorgan and

a Exponent deploying we notification CSG of CX create alert better fraud our experience. Specifically, data-driven suite are solutions to

to solution fraud, Our a digital cardholders recover or time contact need from credit replacement calls improved try and requesting expensive digitally eliminates including card. during creates identify an enhanced experience often customer the center stressful debit an for as and

Since most connect excellent quickly racing who QX live OTT subscription prestigious Formula contract solution world's launch our is the with on-demand of cloud-native content. Formula new One's This XXXX, multiyear highlight to multichannel One fans want enabled was series. to Another extension the motor ascendant and CSG Formula partners, for racing a with has can services represents merchants served XXX,XXX customer's great year-over-year another provide and how help or XX,XXX the we ISV we QX XXXX. merchants payments a base. subscriber payment Ascendant award-winning active and XX% solutions the increase of digital market, in growth from example retain In active now grow XXX,XXX to One, which

verticals. payment critical of processing gateway who serving card ACH, range and revenue a are need wide industry payment recurring Our capabilities, customers credit to solutions

X. overcome CSG's as see organic inorganic our CSG to headwinds. strategic to we helped Simply several customers vision, through growth chances to and put, big biggest on continue our of runway Wrapping up payments accelerate our like beyond. XXXX near-term continues business, growth even a for we Slide We and execute some our on faster even revenue well and

continue in, win customer logos We fantastic quarter out. to new quarter

industry-leading with big are solve all innovate AI-driven brands continue the most We pressing solutions of that world some to to buying business SaaS their around challenges.

consistently to stay biggest to progress and We continue believe efficiently see us. and ahead revenue breakthroughs are that We expanding flow still demonstrate business generation. best hope to CSG's single required with we hungry also commitment absolutely what more ahead highlights. to customer-obsessed CSGs determination our know way days why all challenge why will is regardless of financial is create strategy, the and world is and focus of Team standing you of profitability we I value every our and run and cash provide CSG. years on we near-term shareholder relentless our diversification This any our continue free quarters significant around the day. detail this that, in because more With in the

Hai Tran

Thanks, Brian.

was million throughout financial results, in deals it approximately million Slide then of year profitability last up We generated temporarily and comparisons key generated XXXX, and highlighted Let's $XX quarter decrease the XX. distort in revenue timing on wrap walk through our the conclusions. was revenue $XXX we for with QX Starting The I'll our first licensing XXXX year. versus year-over-year revenue of signed high-margin $XXX some to in a basis. which revenue QX related the and last primarily million of on

Our compared non-GAAP $XX to compared adjusted QX non-GAAP XXXX. the of million income EBITDA transaction in or excluding million adjusted as of a prior or fees, of to XX.X% or operating XX.X% Similarly, $XX million in $XX XXXX XX.X% was year. operating of QX $XX was QX million or our XXXX margin for as XX.X% revenue, non-GAAP

high-margin adjusted revenue revenue with deal operating QX were impacted income, adjusted positively As closed licensing QX was comparison. operating and the margin by case all the thus the performance, non-GAAP XXXX we distorting non-GAAP our our non-GAAP XXXX year-over-year EBITDA

the XXXX. to non-GAAP adjusted EBITDA similar of adjusted deals, million impact income operating percentages QX would the in Excluding $XX been licensing our and margin broadly of have

due XXXX was currency share decrease EPS partially $X.XX foreign The QX months. mainly in to income, operating offset our the positive to EPS Lastly, is movements non-GAAP $X.XX lower prior as compared XX QX. repurchases the over by non-GAAP last and in

the balance cash XX. flow and Slide performance to through shareholder I'll Turning returns. go sheet, our

generated one, accrual being certain capital operations Our of used as working million unfavorable million movements QX the of changes primarily the of million free of we cash was compared compared $X to non-GAAP two, compared And in cash $XX flow was $XX and to million year. flow QX Further, include: bonus accrual trade in to QX of QX million in operations the receivables generated $XX in XXXX; of QX in non-GAAP had from the of QX decrease in QX QX XXXX. non-GAAP significantly free into from cash XXXX drivers The prior million of changes free as $XX flow timing XXXX. from the primary XXXX flow $XX higher in cash. flow year-over-year cash of in XXXX operations both cash QX were capital than timing-related of importantly, before in and and XXXX bonus converting XXXX working cash

the years, cash flow vast half QX generated has our historically, year. of free the non-GAAP the year. X performance annual low of free the tends Further, for non-GAAP over flow our been the cash a in last second reminder, point the As majority to be

leverage million ratio on, of of we of have And March cash X.Xx Moving $XXX end stood outstanding along ended the insult EBITDA. the for million we debt net million XX, XXXX $XXX $XXX of cash liquidity as equivalents. debt. and net with first at adjusted of in the of our our quarter. of Further, debt the quarter XXXX, at approximately That,

QX $X million slide, the right to dividend Moving the during of XXXX. we in of bottom declared

program. stock in stock addition, QX In under million we our repurchase during $XX repurchased

revenue XXXX I'll XXXX we half we approximately expect forecasting in half. our up targets. currently generated are first XX% Further, XX% second make we guidance to summary, our while page, our In target. the our are XXXX be Turning all revenue, of full revenue reiterating revisit the year to of

point being of been the a the has the perspective. As from we X phasing low years, QX for revenue our anticipate case currently the quarterly year past

see biggest our not our and being to to for growth near-term capitalize to demand and longer-term solutions, timing challenge realize we strong continue demand. on those underlying and both with We opportunities intend

Additionally, base. will it and we up, how the we cornerstones allocation of and diversifying sales the customer generating adherence committed stay capital. which and including how make CSG pursuing value-adding with in leverage it consistent power risk our across of and key believe the well of include acquisitions. and over to the remain and operating to profitability serve every capital opportunities with resources approach, With revenue enhanced Innovation, business. turn recurring operator to AI deliver to continue shareholders revenue of question-and-answer distribution investment We CSG may improved an are on Wrapping pipeline remain positioned this framework to we manage We in disciplined relentlessly facilitate and a integrating and growth, high-quality actively a continuous efficiencies focused well. prioritize will we the I'll the learning that, use transformative disciplined, with our to closing a combined strong CSG is our reward accelerating session. leverage.

Operator

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

Margaret Nolan

nice respect made the about in last deals several can Congratulations, business what more you the the are and a to process on in likely if the expand elaborate you on size the then more acquisition of XXXX? you're Brian, wondering where I'm offerings month, comment, closing targeting the with that little and quarter. you

Brian Shepherd

I Maggie, doing you appreciate Thanks, I well. hope joining. you're

business to engagement It This We is dedicated some expertise an opportunity just target We is to build in in base the the know we've offering acquisition, and company to with serve. many the had. it for to really several serves largest. customers engagement had got the the which that know we a worked got years. customer high for On to they technology. talent insurance, our add is Insurance a space. customer the that and in is verticals. We they vertical us. know customer got multiple And

ads. launched So being the the we team. love product vertical the we've fact acquirer, the we as talked also focus. expansion of about That's of brings We've that a that what a we acquisition. and on got love we that in, a love value. to business purchased that specifically we that And disciplined multiple very low think relative trade lot more there's this shareholder EBITDA we for We

talked years was So we're the we've with a of create seeing of lot pricing We couple about necessarily seen not ago, previous shareholder and saw point of value, the out lot whack we've made, a a price as just comment thought we calls, would change. the but that we on that good of deals, sellers.

we going both coming side, very there's And active a at and had to we're on to and We've would quarters close move have announce looking likelihood we XXXX. could do that so that And pipeline in in a disciplined. and back very reasonable inorganic more go larger small, deals the to deals. mid anticipate we stay the

Margaret Nolan

questions then the other a couple of segments. on And

to growing grow, market, across changes would margin force place the any revenue, continues the you different the percentage variations to continue you in sales to that as that that investments have et then of you confident need As a which you go that? feel do need the there structure you cetera? sounded to it make and verticals? And to like make in are in Or

Hai Tran

that on are the our differences solutions Hai. its go margin Hey industry question. we to about for but market with. more Thanks verticals, Maggie less dependent The

obviously, solutions high on basis. heavy services would margins SaaS-like services type lower XX%, have [indiscernible] -- a solutions like be more have SaaS would So model traditional a XX%, our relative very more

journey whereby some going that those they're So than higher some to our solution solutions with payment providing are have were customers our market. that orchestration or our in solutions of who're of solution, to tend other much said, CX margins the

Brian Shepherd

taking scale around drive on the strong keep the payments double-digit add infrastructure are the be organically, The invested We as scale CX leverage that Digital businesses. of that in more area and expand channel-specific have add we to operating these -- acquisitions. to a expansion one potential do going. Maybe to we margin also have and do approach. we on able the We both significantly is in organic growth handle and have

We nice we big several budgets. sales nice verticals, As that about realized we've existing expand. and a calls. job a teams, upselling We big earnings there's do couple a job of on in the of that with offerings, multi-industry teams. last marketing partners do cross-sell these land our But have strong direct talked sales and

it So organic can business. if we accelerate growth generate in invest more in a this approach, and channel-driven

not make. So that's investment that we've several we've years. is over done. already That's last the something going we're new one a to That done

that yield coming the We to dividends for business expect the in quarters.

Operator

from the Our line Notter from next comes Jefferies. of question George

George Notter

sequentially. and forward. we might expense if future? The I'm elevated stock then you And another, of level $XX I bit just up receivables know were looks driving sequentially. guess, is I going historically. the step been Or wondering -- I something a that trend? in that where questions. few, financial there a saw kind have kind step down relative noticed Is little that a that step the is comp to talk something function that when Can just I I that also, of up they've unbilled right forward? will like the going what million that they're guess, in about down

Hai Tran

Yes.

the milestones. with some related the the about the wins the larger that telco things on to implementation we've to on the -- is is CSPs. unbilled some to regards And the way works I the as the one is think we a we're the of of with times, had lot undergoing side unbilled, tied global large contract of talked

we'll as those reach kind milestones, we receivables. account an and convert built of So into invoices

just thing. that's timing So a

half large it couple the to a this we up back moderate. our of to year, as next expectation of the and deployments now, into in start that's of And driving so trend we're midterm year what's right will the midst get

Brian Shepherd

offline. the on that And we'll around question based executive one comp, take maybe

that terms to million fully dilution in of is. basis, is. We terms to always as on compensation it $XX a averaged dilution in where where offset it relates expect based around executive has of Our it equity

you we'll a paid our and maybe big seen So -- what, a the We all big a because seeing outperformed step bonuses not record-setting last a haven't step we change. little in different metrics, because year something but we be specifically out had may on compensation. that's financial year than higher of up there's

can So the in into that dig post call. maybe we

Operator

next Our question from Nehal Markets. from the comes Chokshi of line Capital Northland

Nehal Chokshi

And me. couple for of probably a questions

First, can the you more detail seeing give on your cable you're North that operators? headwinds American at

Hai Tran

happy doing Nehal Yes, well. I you're to. hope

of been comments, of feeling are of the On they And We're we of we're mission-critical. their that thought lot in to well. of have the like to anticipate, some some areas them some anticipated. heard might of It's gotten facing, positioned that. and tens longer-term side total to we on do we lost the some to help base. perform that that we've part where customer obviously, likely their as As smallish thousands people kind as year, side customers broadband We've have broadband on We talked of the as of subscribers like the into and -- some to a longer-term the in where long be. that's continue smallish worked continue doing I would impact others of as basis, think in that customer time where of QX. that with a are seeing cable for with positioned response. lot QX and And customers have we a it headwinds. what for having broadband And first those seen they're we anticipate likely there's a talked are planned some a announcing. some with networks. these be from cable We're competitive try they're We in this

Charter that and of are see seeing these to year. both as But homes smallish reported. has trends. headwinds more are we Comcast help think every passing been X% actually We some reverse also could We X% that

Nehal Chokshi

And CEF the business Did and Payments double then digits least at a the March in different question grow aggregate here. quarter? for

Hai Tran

the strong we're we that and that year. as rate. like really what in in combined combined those And solution on like QX seeing did like a We conversion bring we're double-digit the and pipeline. We like we those continued what business have growth on last win X the from of sales the we're Yes, what We adoption in the units. seeing board. close revenue seeing

Nehal Chokshi

to And the that or million onetime is be recognition? $XX including clear, software just revenue ago, excluding year

Hai Tran

licenses software million in payments So were the not $XX CX the business. or nonrecurring

double-digit organic exclude would the growth that. So

Operator

Our from Harrigan from next Matthew question line of comes the Benchmark.

Matthew Harrigan

to of you I you when pulling you JPMorgan? of the you've verticals. restraints have the financial applying name like roughly over kind I could they've AI the I you there another hard guess, mean, business was history existing to call, go. curious, I'm thing because number that's on a hone with de there [ fraud fraud to kind novo go on to, because at back there mean, been Wall the across like between could a any growth the there's versus are in at Magazine specifically particularly big bank benefiting conference does And is X How a X you because the is reference same And terms of of you financial obviously, of these on obviously, and companies look in ? when you [indiscernible], everywhere learnings new. HSBCs ] take last customers business, there's and Street that it customers? got a Mad a at to quite a company? on probably top clearly, at, it in expansion relationship CS opportunity the readily JPMorgan an logos supermarkets, And sure say there. seem engagement, your mind how look days what's JPMorgan, breakout How the of I maybe Could AI port working both sides. new if

Brian Shepherd

there. few a Quite

you Matt. appreciate me some Let really of I it. and appreciate [indiscernible] the joining. love questions I

success good CX, -- just on the verticals. a and to all the success. But we sales first, majority bids, have logo the big back nice all growth, fantastic is in lot in generating once QX which see. So of brand had we're the land realized penetrated of expand The about the of vast other good accounts the had on thing to what is these we that year was having all a don't going penetration awareness in we side, we've last we and same

channel switching average the hunting, And sales actually so and we could the of more relationships marketing a new do to force, sales partner-led logo leverage more. by

logo the can get just cases cases now the either price some $XXX,XXX both different platform in into and going $XXX,XXX points channel think got to we're partners products we have use expansion it's today, But high then accelerating to we pull adding verticals starting priority about new extremely side contribute we to in investment to our into. cases, solving as verticals are that or growth. an in for consulting, over with through. in a play that of and to We've platform more to infrastructure use And once and So they systems that these different can that's for that that time. attach X is because dozens expand nicely and bear and on X, us quarters of dozens been X integration channel

the So exciting. is really expansion

network on of the in We our where roaming see more actually global capabilities detect find of when we in the our of you're fraud, merchants then network continue the telecom or use And there the in AI the money side to market an right, products services just reduce ways and obviously, case, we brought AI side we and our of with the or be services, sooner financial can some was first just it expanded with we to monitoring might not it's side. but space, said, have like risk top fraud detect one to to had our Specifically, the telecom AI use relationship JPMorgan is it, fraud fraud of in make of helping market. verticals. And operators, with identify Chase. on financial X payment one that wholesale fraud, that's identify you great X and see

in sold or with cases Australia think opportunities and Ascendon use of lot So win space across We and digital deployed the fraud last monetization we related that customers. obviously, We an one companies in a few to exciting financial and both got largest have. where quarter. quite of we've they the Ascendon CX services banks there's a announced other

will continue. high is rightfully out. we as a that think priority So That call you

Operator

Markets. of from the line RBC comes Dan question next Capital Bergstrom Our from

Dan Bergstrom

on the in you South the opportunity, location. to this reference Impressive remarks. are geographic out in I you've Q&A driving resonating keys times Brazil, reach? in like just some few and partners guess, no deals simply what really it matter So called here, quarter referenced solutions Africa this your customers disparate Bangladesh, with in Is what international areas, prepared customers, the reach a wide

Brian Shepherd

pleasure Hi the Yes. Dan, to join. for question. Thanks

We around have of serve -- all global the world. first, hundreds telecom we operators

sales, global these footprint lot operators. of a of -- have management large that with account teams a large have We worked a

global of the that, lot world X direct a U.S. And we in is that We a we've sales So to the around sustainable. and XG We and in Asia, part the price be on we XG Africa, had we the South seen big the wasn't in ago, in a saw be cost of like is or co-located model, all and and investments to they to was on networks bet always have the trend have in felt and many X their not going that operators in in years moving Europe, make it back commoditization telecom consumer teams sustainable. and honest, cases, Southeast enterprise. had complexity India, to where saw soon

often product-based a was U.S. digital, of markets with Charter now Western where and have take business more we're the we We're North wireless were their had led side. seeing Western Europe, Comcast And the them in out we subs their could the feeling the seeing happen same stack, the we become the where outside economic tech and Nordics success costs the Middle we pressure. as what East simplify are broadband and And pressure. they later, business. from in X on versa their simplify U.S. American help economic take reality seeing what or Europe so vice is and SaaS, pressure We're actually process, most have market the X And pressure. the players seeing years that that approach,

and large being Europe. for of drive product, service-based those think plays we U.S. a to and in long-term actually but value strength a continue dynamic, the our competitive the a to Western SaaS model operators we that business all business world So economic win and not around and expect and to

Dan Bergstrom

the some the the you you thoughts talk the or some out little of bit introduced mentioned the Q&A build in half a pipeline obviously, focus back AI question, a last of build or reception then And more here for around the year? on of AI-infused products those previous everybody. about you for -- over Could

Brian Shepherd

everybody I in their ton I Yes. think doing strategy. mean a is

building closed Bill orchestration early we it at So of relates to that with always using use a CX Journey of has are our in to first, though, solution. started $XXX,XXX AI. our annual deals. analytics, of AI selling as kinds to our now makes CX where dozens more, won machine building sales these conversational sales cases AI a We've journey been lot days have got actually data-driven more degenerative explained and several $XXX,XXX $XXX,XXX the candidates. digital sense We it learning into launched can and We've ACV that deals. taken deploy it -- solution. Like in and offerings, digital

not they're big items. ticket So for

cost, and some of can drive in the offset revenue off cash feeling You get register, can they're of that. reduce you pressure expand ring the help and then

financial AI-driven merchant their say just your and sale quite can detect it's of take-up detect and improved In into we I not solution improve in seeing the risk to would are there. good bundled fraud AI we're but fraud experience So adoption a seeing interest payment side, side. digit, the reduce broader also it's and double getting nice the

adoption, more we're core less specific there so that And to it's early. think still decision, a capability telecom I but say the of buy but a seeing it's a I'd side, In good we have. need

to leverage to is capability many language many of the they language approach large customers leverage infrastructure actually which or want so we the own We not in cases. their can in leverage we've hyperscalers to models let We ones our we done that models. want adoption. partner speed the AI, Our around build with large And cases, our platform.

we early our having of we're the I early would days, in overall revenue. like say on but So we're days still impact in what seeing a the bigger

Operator

of the Brett Knoblauch Our Cantor from next from question comes Fitzgerald. line

Unknown Analyst

is but year Can you a the confidence I what just [indiscernible] just elaborate call, on gives it free the target? guess the for in Brett. talked This about full coming in in quarter. on a bit in on little cash you flow. know light was I the

Hai Tran

certainly. Yes,

that as normally, unlike So what because when we year, year, year benefit is and in will profitability those kind elements of licenses we year. flow the where to mentioned, well. of I -- expect year QX, of throughout this that, revenue capital a of expect On some last fairly builds we nature the And our revert slow as down top grow through performance. also that as what it cash working happens, the that we'll as see

a on of more fact I that payout free about fairly as in the we comparative and strong an million of that that talked remarks year extraordinarily we QX Brian robust, you of our And were that -- incentive roughly lastly, prepared flow. able very year, had fourth $XX dramatically we that basis. the So was things cash strong generate we last one saw QX highlighted comp the had then year. a to impacts quarter in because we was had saw last

a in that got some drive idea of last how year. learned working we've throughout of as good think improvements to I capital we we -- those have

is expectation is it momentum QX QX. year. last of will our should here. QX so little low We'll in comparable build QX show greater a point by little kind and And begin that to to be

Unknown Analyst

quarter. solid the on Congrats

Operator

Rosenbaum comes from question next Our from Shlomo Stifel. the line of

Shlomo Rosenbaum

on acquisition, purchasing vertical insurance. there little that's with have CX noted CX in Is acquisition is you side. more a That they capability that the it Or bit dig to foundational. more Just expertise? small some

a just that. you little If could expand on bit

Hai Tran

base, wasn't lot it side. with opportunity a to great was That we an industry I wouldn't This that one in was hope was one have bring you can could the of up, one, we great do that was customer there main have great that team. less but driver. worked the for a well. Shlomo a that I the strategic of have benefit lot Yes. picked we price. cross-sell do ball capability no on they really great a move This platform. They the a the Thanks the and to financial done group at about This forward buying say a value past with joining. a expertise. low

we that think and more would fit you there's more the quarter. that up one extend main seeing much we would this announce solution end that drive year the a product and driver our platform lot a or I acquisitions expand us might one wasn't have strategic other cross-sell or our announced but that the portfolio upsell, in closed that product

Shlomo Rosenbaum

bit down. continuing talked of consummate bit talk potential getting go little -- by to year on billion on potentially about use willingness just of to The -- the seems equity just tweaked Can some a and comment deals. the go larger about a M&A the Slide then And the end you environment, the to the to the starting little pricing to strategic that language you $X.X you 'XX. on fiscal X acquisition Could side. seems

Brian Shepherd

an interesting jump it's to add if Hai you No, mine, Yes. want question. I'll in.

and we a EBITDA large, by expansion where deals. bigger use EBITDA, where as a change are we of to got do not in more wouldn't small, be firepower do say in equity If could the off opportunity the a equity what take industry we doing, else we'd good return first, was of we you of kinds returning. table, that? want kind on that what like terms -- actionable. was really with turbocharge near-term have So of we've talk we a to was scale, of we is something undervalued if our to But strategic would add where there mid because are it at, wouldn't opportunity where was today lot give about can our necessarily and We we're If option in obviously, to looking balance we was wouldn't do our other felt terms in We never that there there given be any expect that an a opportunities and healthy No, in share liquidity, you first deal deal, our to obviously, super is. an buyback could never, to we like for but we strategic, undervalued we've would competitive to advantage And really really that of more and sheet. of kinds if would need maybe equity us and and opportunities. transform structure see there done what our want what felt

Hai Tran

that's think No, I right.

the opportunity. equity not going day a key game the And that to our going of look utilize kind almost decision we're we're is think assess if message we is believe underbanked. when have what to we we're at try I to ultimately to

Operator

comes next line Horan Our question from Tim of Oppenheimer. from the

Timothy Horan

hit years cash on of to Just out target acquisitions up much how of that. on following the on give you in Could a spending in next you there? sense few that us kind plan

Hai Tran

and or in and I But multiple do, cash as a right? others. available a that Brian type think higher assets the answer assets are will quite the It require roughly in depends bit have our of just as we credit that's we $XXX liquidity is here facility. on yield sit said, of certain depends, million unsatisfactory it today,

we're just it to out that right truly sure finding right opportunities hard as synergies or that are to we're the right, make of out any sort depends. of gate into gate of of But realize accretive, able case. are shortly working valuation some So the baked we the

Timothy Horan

that specifics, or target? like billion. Or $X.X million spend for mean million of are average. looking $XXX $XXX to we I looking is just type it the to No, $XXX was Yes. million, on overall on hit not $XXX million I

Hai Tran

revenue at, right? require on right? in our the and $XXX we're So the where more to depending million I roughly to going think trading more multiple, Yes. mix, multiple way, million be right? we monetization, it's kind in CX that have then revenue, If to valuation acquire acquire has there, or we're about it of be will right? going more to mean revenue considerations. So going traditional it's If the akin a of some the higher this of are to in $XXX payments those

Timothy Horan

more broadband, And of And you seems pressure. specifically, more on bit what come breakdown line for grow your is guys Do do obviously, about under worsen then will months, can item the or give in dividend it here? kind are you to pressure are cable you guess, X so. think the revenue some guidance? the lot can And assuming Because the this it think that revenue color you a under just next like segment year? I months over year? little a you X Or

Brian Shepherd

anticipate Yes. of some No, year. think we've and some -- kind on into Based That's We our I quarters. of that's headwinds. the that, We're the continue that of the to other tone broadband, we're week, growing use side. cable of couple to of earnings think that will our is to next the to of Tim. kind as And the It's relates be excited listened that the plan. it through had those why which on I general -- you'd you of impact on end we it, as is some expected, and last customers facing faster offset headwinds into that. we coming even parts said are calls referred American that some into language. why some expect to on North feeling smallish business been our there built think I the

different be smallish stage passed response. necessarily a anticipating with X, conclusion sure, right, we're it's foregone next into equation, year, homes year. think could this at But some there'll competitive would continue next year don't the with that that for We or I Next believe for quarter a those the headwinds next be headwinds.

Timothy Horan

the cable And is upsell can improve much to your ARPU get more help efficient. basically products guys there you to

whole way to of any more bunch Your with I them. a you things doing is do you kind have, you're other products But of them efficient? the make know for see a relatively and low. few that AI modest ARPU to upsell

Brian Shepherd

was to this assist improved their try at customers. think in drive of how cross-sell Congress around global cable a out their maybe the which how we've cases huge rolled CX help to comes intrajectory rolls and North on around And digital use we top things why Bill first, telecom of mean, topics part doing the and our be to I Journey But and lot why of to top lot in own That's That's orchestration part of we has business, true success and a America on we've our those -- It's explainer.ai, sales early is do drug I we year to continue We've them their American global do think that. it the CX Yes. implication. Mobile and customers a last promo digital side. Analytics was really big digital was with price biggest one our efficient, X period. customers. our a drive a with I all cable both simplify when -- the roll-off they're viewed around North platform because subscriber off, AI-driven to telecom CX. -- the verticals. targeted CX, rights in the opportunity, And churn other now we also somebody do

in a in America both lot opportunities, there's X, globally. digital and So the I do of think especially North

Operator

Berg Michael Wells Fargo. line of Our from from next comes the question

Michael Berg

the I seasonality the just on have business. quick a of one

step other year. the to to looking and in fairly terms be that Just any of up looks like Is to tends back line a flat that's rest there it dynamics in function driving of total of to revenue mix item QX historically, the the the takes point phenomenon?

Hai Tran

Yes.

on QX is business, there's the the up nature payments end business, payments the very you right? QX serving think of QX a you're X quarters. because and seasonality seeing by what the if quarters the I So our government of look then at is and lot our that business being chunk is a weak are the of strongest sector. and QX And that pain

QX. right? So transactions a and those hit lot of so in And tax payments, QX

trend. so And that you're of seeing some why that's

Michael Berg

follow-up. And quick one then just

does include the also does incorporate you does And -- reiteration current it M&A, you to and guidance the did? potentially of terms the of acquisition the seem In guidance be to acquisitions the likely do?

Hai Tran

Yes.

So acquisitions, the about revenue. single mind, digit bear the yes, small right? quite -- in in talking in actual guidance, We're terms terms of the the revenue is of here,

the you provide year. impact So once of quite is the for nominal, timing particularly

Brian Shepherd

only the that would think I other in expect organic to growth to year thing fiscal XXXX. good have add we is I

and And talk revenue that so we side, a lot with even reiterated midpoint. typically the guidance, on we where about

we And so acquisitions. current swollish we guidance, organically, still of and we achieve talk I And growth said, there's can midpoint as about our some X% believe from impacts at reiterated growth. X% a

Operator

At are back the over time, now there closing I'm showing no questions. Shepard to more call remarks. Brian for this turn I'll

Brian Shepherd

ongoing. We're Thanks, driving delivering efficiency against everyone lot on guidance for of our commitments. on joining. We're focused focused a

As you in adjusted be margin saw in we the expect range. to strongly our guidance, XX%

We expect to grow top line.

and this that, exactly that's team deliver as you execute is what QX, QX, call. QX. today's -- get for tough do to results expect Thank into doing. to joining We to better management us focused we It's on

Operator

and Thank joining. today's that Ladies call. concludes for you all gentlemen,

You may now disconnect.

CSG Systems International (CSGS) 1 May 242024 Q1 Earnings call transcript