Reported Record Quarterly Revenue of $317 Million in Q4 2024,
up 7% YoY
Achieved or Exceeded All Profitability and Cash Flow Guidance
Targets in 2024
2024 Operating Cash Flow of $136 Million; $113 Million of
Non-GAAP Adjusted Free Cash Flow, up 9% YoY
Dividend Payout Increased 7% in 2025; Marks 12th Consecutive
Year of Increased Payout
$100+ Million Shareholder Remuneration Target via Dividends
and Buybacks in 2025
CSG (NASDAQ: CSGS) today reported results for the quarter and
year ended December 31, 2024.
Financial Results:
Fourth quarter 2024 financial results:
- Total revenue was $316.7 million.
- GAAP operating income was $42.3 million, or an operating
margin of 13.4%, and non-GAAP operating income was $58.3
million, or a non-GAAP adjusted operating margin of
20.1%.
- GAAP earnings per diluted share (EPS) was $1.21 and
non-GAAP EPS was $1.65.
- Cash flows from operations were $82.5 million, with
non-GAAP adjusted free cash flow of $76.6 million.
Full year 2024 financial results:
- Total revenue was $1.20 billion.
- GAAP operating income was $131.3 million, or an
operating margin of 11.0%, and non-GAAP operating income was
$199.4 million, or a non-GAAP adjusted operating margin of
18.1%.
- GAAP EPS was $3.03 and non-GAAP EPS was
$4.72.
- Cash flows from operations were $135.7 million,
with non-GAAP adjusted free cash flow of $113.3
million.
Shareholder Returns:
- CSG declared its quarterly cash dividend of $0.30 per
share of common stock, or a total of approximately $8
million, to shareholders, bringing total 2024 dividends
declared to approximately $35 million.
- In January 2025, CSG’s Board of Directors approved a 7%
increase in CSG’s cash dividend, with quarterly payments of
$0.32 per share of common stock.
- During the fourth quarter and full year 2024, CSG repurchased
under its stock repurchase program, approximately 468,000
shares of its common stock for approximately $24 million
and approximately 1,185,000 shares of its common stock for
approximately $58 million, respectively.
“Team CSG delivered excellent fourth quarter results and built
significant momentum for 2025,” said Brian Shepherd, President and
Chief Executive Officer of CSG. “It was great to see 5%
year-over-year organic revenue growth in Q4 on top of very good
profitability and free cash flow performance. Our sales and
go-to-market teams continue to perform well across our business
with the fantastic win-win contract expansion at Comcast through
year-end 2030, the multiple Ascendon cloud wins, and the ongoing
revenue diversification with 30% of our revenue coming from big
faster growth industry verticals. These results combined with our
2025 guidance prove that Team CSG is improving our operating
discipline and business agility in a way that we believe will
create meaningful value for our shareholders, our customers, and
our employees in the quarters and years ahead. For fiscal year
2025, we anticipate revenue to grow to between $1.21 and $1.25
billion prior to the impact of any M&A deals we close during
the year with non-GAAP operating margins between 18.1% to 18.5% and
non-GAAP adjusted free cash flow of $110 million to $150
million.”
Financial Overview
(unaudited)
(in thousands, except per share amounts and percentages):
Quarter Ended December
31,
Year Ended December
31,
2024
2023
Percent Changed
2024
2023
Percent Changed
GAAP Results:
Revenue
$
316,652
$
297,324
6.5
%
$
1,197,248
$
1,169,258
2.4
%
Operating Income
42,294
24,747
70.9
%
131,333
123,877
6.0
%
Operating Margin Percentage
13.4
%
8.3
%
11.0
%
10.6
%
EPS
$
1.21
$
0.44
175.0
%
$
3.03
$
2.20
37.7
%
Non-GAAP Results:
Operating Income
$
58,347
$
44,063
32.4
%
$
199,432
$
185,727
7.4
%
Adjusted Operating Margin Percentage
20.1
%
16.1
%
18.1
%
17.2
%
EPS
$
1.65
$
0.92
79.3
%
$
4.72
$
3.69
27.9
%
For additional information and reconciliations regarding CSG’s
use of non-GAAP financial measures, please refer to the attached
Exhibit 2 and the Investor Relations section of CSG’s website at
csgi.com.
Results of Operations
GAAP Results: Total revenue for the
fourth quarter of 2024 was $316.7 million, a 6.5% increase when
compared to revenue of $297.3 million for the fourth quarter of
2023. Total revenue for the full year 2024 was $1,197.2 million, a
2.4% increase when compared to revenue of $1,169.3 million for the
full year 2023. The increases in revenue are primarily attributed
to the continued growth of our SaaS and related solutions revenue,
to include approximately $6 million and $15 million of revenue
generated during the fourth quarter and the full year 2024,
respectively, from the businesses acquired during 2024. These
increases more than offset the lower software and services revenue
for the full year.
GAAP operating income for the fourth quarter of 2024 was $42.3
million, or 13.4% of total revenue, compared to $24.7 million, or
8.3% of total revenue, for the fourth quarter of 2023. GAAP
operating income for the full year 2024 was $131.3 million, or
11.0% of total revenue, compared to $123.9 million, or 10.6% of
total revenue, for the full year 2023. The increases in GAAP
operating margin are primarily due to the higher revenue, discussed
above, and reflect the cost efficiency actions taken during 2024 to
optimize capacity and align resources to areas of the business with
higher growth profiles.
GAAP EPS for the fourth quarter of 2024 was $1.21, compared to
$0.44 for the fourth quarter of 2023, and GAAP EPS for the full
year 2024 was $3.03, compared to $2.20 for the full year 2023. The
increases in GAAP EPS are mainly due to the higher operating
income, discussed above, and a lower effective income tax rate. The
full year 2024 EPS also benefitted from a lower diluted share
count.
Non-GAAP Results: Non-GAAP
operating income for the fourth quarter of 2024 was $58.3 million,
or a non-GAAP adjusted operating margin of 20.1%, compared to $44.1
million, or a non-GAAP adjusted operating margin of 16.1% for the
fourth quarter of 2023. Non-GAAP operating income for the full year
2024 was $199.4 million, or a non-GAAP adjusted operating margin of
18.1%, compared to $185.7 million, or a non-GAAP adjusted operating
margin of 17.2% for the full year 2023. The increases in non-GAAP
operating margin can be primarily attributed to the higher revenue
and cost efficiency actions, discussed above.
Non-GAAP EPS for the fourth quarter of 2024 was $1.65, compared
to $0.92 for the fourth quarter of 2023, and non-GAAP EPS for the
full year 2024 was $4.72, compared to $3.69 for the full year 2023.
The increases in non-GAAP EPS are mainly due to the higher non-GAAP
operating income, discussed above, and a lower non-GAAP effective
income tax rate, with the full year 2024 non-GAAP EPS also
benefitting from the lower diluted share count.
Balance Sheet and Cash
Flows
Cash and cash equivalents as of December 31, 2024 were $161.8
million compared to $118.4 million as of September 30, 2024 and
$186.3 million as of December 31, 2023. CSG generated net cash
flows from operations for the fourth quarters ended December 31,
2024 and 2023 of $82.5 million and $79.5 million, respectively, and
had non-GAAP adjusted free cash flow of $76.6 million and $74.5
million, respectively. For the year ended December 31, 2024 and
2023, CSG generated net cash flows from operations of $135.7
million and $131.9 million, respectively, and had non-GAAP adjusted
free cash flow of $113.3 million and $103.9 million,
respectively.
Summary of Financial
Guidance
CSG’s financial guidance for the full year 2025 is as
follows:
GAAP Measures:
Revenue
1,210 - 1,250 million
Non-GAAP Measures:
Adjusted Operating Margin Percentage
18.1% - 18.5%
EPS
$4.55 - $4.80
Adjusted EBITDA
$256 - $267 million
Adjusted Free Cash Flow
$110 - $150 million
For additional information and reconciliations regarding CSG’s
use of non-GAAP financial measures, please refer to the attached
Exhibit 2 and the Investor Relations section of CSG’s website at
csgi.com.
Conference Call
CSG will host a conference call on Wednesday, February 5, 2025
at 5:00 p.m. ET, to discuss CSG’s fourth quarter and full year 2024
earnings results. The call will be carried live and archived on
CSG’s website. A link to the conference call is available at
http://ir.csgi.com. In addition, to reach the conference by phone,
call 1-888-412-4131 and use the passcode 2327393.
Additional Information
For information about CSG, please visit CSG’s website at
csgi.com. Additional information can be found in the Investor
Relations section of the website.
About CSG
CSG empowers companies to build unforgettable experiences,
making it easier for people and businesses to connect with, use and
pay for the services they value most. Our customer experience,
billing and payments solutions help companies of any size make
money and make a difference. With our SaaS solutions, company
leaders can take control of their future and tap into guidance
along the way from our fiercely committed and forward-thinking
CSGers around the world.
Want to be future-ready and a change-maker like the global
brands that trust CSG? Visit csgi.com to learn more.
Forward-Looking
Statements
This news release contains forward-looking statements as defined
under the Securities Act of 1933, as amended, that are based on
assumptions about a number of important factors and involve risks
and uncertainties that could cause actual results to differ
materially from what appears in this news release. Some of these
key factors include, but are not limited to the following
items:
- CSG derives a significant portion of its revenue from a limited
number of customers, with approximately forty percent of its
revenue from its two largest customers;
- Fluctuations in credit market conditions, general global
economic and political conditions, and foreign currency exchange
rates;
- CSG’s ability to maintain a reliable, secure computing
environment;
- Continued market acceptance of CSG’s products and
services;
- CSG’s ability to continuously develop and enhance products in a
timely, cost-effective, technically advanced and competitive
manner;
- CSG’s ability to deliver its solutions in a timely fashion
within budget, particularly large and complex software
implementations;
- CSG’s dependency on the global telecommunications industry, and
in particular, the North American telecommunications industry;
- CSG’s ability to meet its financial expectations;
- Increasing competition in CSG’s market from companies of
greater size and with broader presence;
- CSG’s ability to successfully integrate and manage acquired
businesses or assets to achieve expected strategic, operating and
financial goals;
- CSG’s ability to protect its intellectual property rights;
- CSG’s ability to conduct business in the international
marketplace;
- CSG’s ability to comply with applicable U.S. and International
laws and regulations; and
- CSG’s business may be disrupted, and its results of operations
and cash flows adversely affected by a global pandemic.
This list is not exhaustive, and readers are encouraged to
review the additional risks and important factors described in
CSG’s reports on Forms 10-K and 10-Q and other filings made with
the SEC.
CSG SYSTEMS INTERNATIONAL,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS-UNAUDITED
(in thousands)
December 31, 2024
December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
161,789
$
186,264
Settlement and merchant reserve assets
343,235
274,699
Trade accounts receivable:
Billed, net of allowance of $3,041 and
$5,432
266,903
267,680
Unbilled
80,173
82,163
Income taxes receivable
2,600
1,345
Other current assets
46,182
50,075
Total current assets
900,882
862,226
Non-current assets:
Property and equipment, net of
depreciation of $133,514 and $121,816
56,595
65,545
Operating lease right-of-use assets
24,166
34,283
Software, net of amortization of $154,648
and $157,601
19,927
14,224
Goodwill
316,041
308,596
Acquired customer contracts, net of
amortization of $133,279 and $126,469
39,377
35,879
Customer contract costs, net of
amortization of $44,587 and $42,094
60,809
54,421
Deferred income taxes
73,295
57,855
Other assets
9,595
10,017
Total non-current assets
599,805
580,820
Total assets
$
1,500,687
$
1,443,046
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt
$
7,500
$
7,500
Operating lease liabilities
11,067
15,946
Customer deposits
41,448
41,035
Trade accounts payable
36,370
46,406
Accrued employee compensation
67,944
84,380
Settlement and merchant reserve
liabilities
341,924
273,817
Deferred revenue
54,424
54,199
Income taxes payable
7,802
4,104
Other current liabilities
46,730
33,449
Total current liabilities
615,209
560,836
Non-current liabilities:
Long-term debt, net of unamortized
discounts of $12,128 and $15,628
530,997
534,997
Operating lease liabilities
25,020
34,360
Deferred revenue
26,469
23,447
Income taxes payable
2,732
3,041
Deferred income taxes
94
123
Other non-current liabilities
17,597
12,916
Total non-current liabilities
602,909
608,884
Total liabilities
1,218,118
1,169,720
Stockholders' equity:
Preferred stock, par value $.01 per share;
10,000 shares authorized; zero shares issued and outstanding
-
-
Common stock, par value $.01 per share;
100,000 shares authorized; 28,854 and 29,541 shares outstanding
718
713
Additional paid-in capital
518,215
490,947
Treasury stock, at cost; 41,583 and 40,398
shares
(1,194,224
)
(1,136,055
)
Accumulated other comprehensive income
(loss):
Unrealized gain on short-term investments,
net of tax
-
1
Cumulative foreign currency translation
adjustments
(62,290
)
(50,414
)
Accumulated earnings
1,020,150
968,134
Total stockholders' equity
282,569
273,326
Total liabilities and stockholders'
equity
$
1,500,687
$
1,443,046
CSG SYSTEMS INTERNATIONAL,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME-UNAUDITED
(in thousands, except per
share amounts)
Quarter Ended
Year Ended
December 31, 2024
December 31, 2023
December 31, 2024
December 31, 2023
Revenue
$
316,652
$
297,324
$
1,197,248
$
1,169,258
Cost of revenue (exclusive of
depreciation, shown separately below)
154,197
156,145
614,463
615,042
Other operating expenses:
Research and development
42,023
35,800
158,194
143,201
Selling, general and administrative
71,519
66,683
258,313
247,613
Depreciation
5,336
6,034
21,622
23,189
Restructuring and reorganization
charges
1,283
7,915
13,323
16,336
Total operating expenses
274,358
272,577
1,065,915
1,045,381
Operating income
42,294
24,747
131,333
123,877
Other income (expense):
Interest expense
(7,487
)
(8,084
)
(30,469
)
(31,176
)
Interest income
2,044
1,820
8,685
4,336
Other, net
4,178
(1,639
)
2,723
(4,686
)
Total other
(1,265
)
(7,903
)
(19,061
)
(31,526
)
Income before income taxes
41,029
16,844
112,272
92,351
Income tax provision
(6,561
)
(4,174
)
(25,420
)
(26,105
)
Net income
$
34,468
$
12,670
$
86,852
$
66,246
Weighted-average shares outstanding:
Basic
27,957
28,607
28,345
29,938
Diluted
28,523
28,842
28,665
30,115
Earnings per common share:
Basic
$
1.23
$
0.44
$
3.06
$
2.21
Diluted
1.21
0.44
3.03
2.20
CSG SYSTEMS INTERNATIONAL,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS-UNAUDITED
(in thousands)
Year Ended
December 31, 2024
December 31, 2023
Cash flows from operating activities:
Net income
$
86,852
$
66,246
Adjustments to reconcile net income to net
cash provided by operating activities-
Depreciation
22,061
23,585
Amortization
50,447
47,667
Asset impairments
717
2,061
Gain on lease modifications
(174
)
(4,349
)
(Gain) loss on unrealized foreign currency
transactions and other, net
(525
)
225
Deferred income taxes
(16,503
)
(23,560
)
Stock-based compensation
33,564
28,990
Subtotal
176,439
140,865
Changes in operating assets and
liabilities, net of acquired amounts:
Trade accounts receivable, net
4,134
(22,401
)
Other current and non-current assets and
liabilities
(13,042
)
(6,566
)
Income taxes payable/receivable
2,126
(1,849
)
Trade accounts payable and accrued
liabilities
(38,486
)
12,541
Deferred revenue
4,546
9,306
Net cash provided by operating
activities
135,717
131,896
Cash flows from investing activities:
Purchases of software, property, and
equipment
(22,421
)
(27,977
)
Proceeds from sale/maturity of short-term
investments
-
71
Business combinations, net of cash and
settlement assets acquired of $46,432 and zero
17,293
-
Net cash used in investing activities
(5,128
)
(27,906
)
Cash flows from financing activities:
Proceeds from issuance of common stock
3,072
3,284
Payments of cash dividends
(26,608
)
(33,930
)
Repurchases of common stock
(67,745
)
(127,065
)
Deferred acquisition payments
(2,488
)
(3,220
)
Proceeds from long-term debt
15,000
470,000
Payments on long-term debt
(22,500
)
(327,500
)
Purchase of capped call transactions
related to convertible notes
-
(34,298
)
Payments of deferred financing costs
-
(14,539
)
Payments on financing obligations
(2,538
)
-
Settlement and merchant reserve
activity
23,884
35,963
Net cash used in financing activities
(79,923
)
(31,305
)
Effect of exchange rate fluctuations on
cash, cash equivalents, and restricted cash
(7,779
)
2,173
Net increase in cash, cash equivalents,
and restricted cash
42,887
74,858
Cash, cash equivalents, and restricted
cash, beginning of period
463,876
389,018
Cash, cash equivalents, and restricted
cash, end of period
$
506,763
$
463,876
Supplemental disclosures of cash flow
information:
Cash paid during the period for -
Interest
$
27,119
$
24,730
Income taxes
39,944
51,675
Non-cash investing and financing
activities-
Software, property, and equipment included
in current and noncurrent liabilities
8,469
-
Reconciliation of cash, cash equivalents,
and restricted cash:
Cash and cash equivalents
$
161,789
$
186,264
Settlement and merchant reserve assets
343,235
274,699
Restricted cash included in current and
non-current assets
1,739
2,913
Total cash, cash equivalents, and
restricted cash
$
506,763
$
463,876
EXHIBIT 1
CSG SYSTEMS INTERNATIONAL,
INC.
SUPPLEMENTAL REVENUE
ANALYSIS
Revenue by
Significant Customers: 10% or more of Revenue
Quarter Ended
Quarter Ended
Quarter Ended
December 31, 2024
September 30, 2024
December 31, 2023
Amount
% of Revenue
Amount
% of Revenue
Amount
% of Revenue
Charter
$
59,733
19
%
$
59,070
20
%
$
60,128
20
%
Comcast
58,935
19
%
58,688
20
%
54,651
18
%
Year Ended
Year Ended
December 31, 2024
December 31, 2023
Amount
% of Revenue
Amount
% of Revenue
Charter
$
240,281
20
%
$
241,267
21
%
Comcast
225,004
19
%
215,476
18
%
Revenue by Vertical
Quarter Ended
Quarter Ended
Quarter Ended
December 31, 2024
September 30, 2024
December 31, 2023
Broadband/Cable/Satellite
51
%
53
%
51
%
Telecommunications
20
%
18
%
21
%
All other
29
%
29
%
28
%
Total revenue
100
%
100
%
100
%
Year Ended
Year Ended
December 31, 2024
December 31, 2023
Broadband/Cable/Satellite
52
%
52
%
Telecommunications
18
%
20
%
All other
30
%
28
%
Total revenue
100
%
100
%
Revenue by Geography
Quarter Ended
Quarter Ended
Quarter Ended
December 31, 2024
September 30, 2024
December 31, 2023
Americas
84
%
88
%
85
%
Europe, Middle East and Africa
10
%
9
%
10
%
Asia Pacific
6
%
3
%
5
%
Total revenue
100
%
100
%
100
%
Year Ended
Year Ended
December 31, 2024
December 31, 2023
Americas
87
%
86
%
Europe, Middle East and Africa
9
%
10
%
Asia Pacific
4
%
4
%
Total revenue
100
%
100
%
EXHIBIT 2 CSG SYSTEMS INTERNATIONAL,
INC. DISCLOSURES FOR NON-GAAP FINANCIAL MEASURES
Use of Non-GAAP Financial Measures and
Limitations
To supplement its condensed consolidated financial statements
presented in accordance with generally accepted accounting
principles (GAAP), CSG uses non-GAAP operating income, non-GAAP
adjusted operating margin percentage, non-GAAP EPS, non-GAAP
adjusted EBITDA, and non-GAAP adjusted free cash flow. CSG believes
that these non-GAAP financial measures, when reviewed in
conjunction with its GAAP financial measures, provide investors
with greater transparency to the information used by CSG’s
management in its financial and operational decision making. CSG
uses these non-GAAP financial measures for the following
purposes:
- Certain internal financial planning, reporting, and
analysis;
- Forecasting and budgeting;
- Certain management compensation incentives; and
- Communications with CSG’s Board of Directors, stockholders,
financial analysts, and investors.
These non-GAAP financial measures are provided with the intent
of providing investors with the following information:
- A more complete understanding of CSG’s underlying operational
results, trends, and cash generating capabilities;
- Consistency and comparability with CSG’s historical financial
results; and
- Comparability to similar companies, many of which present
similar non-GAAP financial measures to investors.
Non-GAAP financial measures are not measures of performance
under GAAP, and therefore should not be considered in isolation or
as a substitute for GAAP financial information. Limitations with
the use of non-GAAP financial measures include the following
items:
- Non-GAAP financial measures are not based on any comprehensive
set of accounting rules or principles;
- The way in which CSG calculates non-GAAP financial measures may
differ from the way in which other companies calculate similar
non-GAAP financial measures;
- Non-GAAP financial measures do not include all items of income
and expense that affect CSG’s operations and that are required by
GAAP to be included in financial statements;
- Certain adjustments to CSG’s non-GAAP financial measures result
in the exclusion of items that are recurring and will be reflected
in CSG’s financial statements in future periods; and
- Certain charges excluded from CSG’s non-GAAP financial measures
are cash expenses, and therefore do impact CSG’s cash
position.
CSG compensates for these limitations by relying primarily on
its GAAP results and using non-GAAP financial measures as a
supplement only. Additionally, CSG provides specific information
regarding the treatment of GAAP amounts considered in preparing the
non-GAAP financial measures and reconciles each non-GAAP financial
measure to the most directly comparable GAAP measure.
Non-GAAP Financial Measures: Basis of
Presentation
The table below outlines the exclusions from CSG’s non-GAAP
financial measures:
Non-GAAP Exclusions
Operating Income
Adjusted Operating Margin
Percentage
EPS
Transaction fees
—
X
—
Restructuring and reorganization
charges
X
X
X
Executive transition costs
X
X
X
Acquisition-related expenses:
Amortization of acquired intangible
assets
X
X
X
Earn-out compensation
X
X
X
Transaction-related costs
X
X
X
Stock-based compensation
X
X
X
Gain (loss) on debt
extinguishment/conversion
—
—
X
Gain (loss) on acquisitions or
dispositions
—
—
X
Unusual income tax matters
—
—
X
CSG believes that excluding certain items in calculating its
non-GAAP financial measures provides meaningful supplemental
information regarding CSG’s performance and these items are
excluded for the following reasons:
- Transaction fees are primarily comprised of fees paid to
third-party payment processors and financial institutions and
interchange fees under CSG’s payment services contracts.
Transaction fees are included in revenue in CSG’s Income Statement
(and not netted against revenue) because CSG maintains control and
acts as principal over the integrated service provided under its
payment services customer contracts. However, CSG excludes expense
associated with transaction fees from the numerator and denominator
in calculating its non-GAAP adjusted operating margin percentage in
order to provide comparability with historical and future periods
and with its peer group and competitors.
- Restructuring and reorganization charges are expenses that
result from cost reduction initiatives and/or significant changes
to CSG’s business, to include such things as involuntary employee
terminations, changes in management structure, divestitures of
businesses, facility consolidations and abandonments, and
fundamental reorganizations impacting operational focus and
direction. These charges are not considered reflective of CSG’s
recurring business operating results. The exclusion of these items
in calculating CSG’s non-GAAP financial measures allows management
and investors an additional means to compare CSG’s current
financial results with historical and future periods.
- Executive transition costs include expenses incurred related to
a departure of a CSG executive officer under the terms of the
related separation agreement. These types of costs are not
considered reflective of CSG’s recurring business operating
results. The exclusion of these costs in calculating CSG’s non-GAAP
financial measures allows management and investors an additional
means to compare CSG’s current financial results with historical
and future periods.
- Acquisition-related expenses include amortization of acquired
intangible assets, earn-out compensation, and transaction-related
costs. Transaction-related costs, which typically include expenses
related to legal, accounting, and other professional services, are
direct and incremental expenses related to business acquisitions,
and thus, are not considered reflective of CSG’s recurring business
operating results. The total amount of acquisition-related expenses
can vary significantly between periods based on the number and size
of acquisition activities, previously acquired intangible assets
becoming fully amortized, and ultimate realization of earn-out
compensation. In addition, the timing of these expenses may not
directly correlate with underlying performance of the CSG’s
operations. Therefore, the exclusion of acquisition-related
expenses in calculating CSG’s non-GAAP financial measures allows
management and investors an additional means to compare CSG’s
current financial results with historical and future periods.
- Stock-based compensation results from CSG’s issuance of equity
awards to its employees under incentive compensation programs. The
amount of this incentive compensation in any period is not
generally linked to the level of performance by employees or CSG.
The exclusion of these expenses in calculating CSG’s non-GAAP
financial measures allows management and investors an additional
means to evaluate the non-cash expense related to compensation
included in CSG’s results of operations, and therefore, the
exclusion of this item allows investors to further evaluate the
cash generating capabilities of CSG’s business.
- Gains and losses related to the extinguishment/conversion of
debt can be as a result of the refinancing of CSG’s credit
agreement and/or repurchase, conversion, or settlement of CSG’s
convertible notes. These activities, to include any derivative
activity related to debt conversions, are not considered reflective
of CSG’s recurring business operating results. Any resulting gain
or loss is generally non-cash income or expense, and therefore, the
exclusion of these items allows investors to further evaluate the
cash impact of these activities for cash flow and liquidity
purposes. In addition, the exclusion of these gains and losses in
calculating CSG’s non-GAAP EPS allows management and investors an
additional means to compare CSG’s current operating results with
historical and future periods.
- Gains or losses related to the acquisition or disposition of
certain of CSG’s business activities are not considered reflective
of CSG’s recurring business operating results. Any resulting gain
or loss is generally non-cash income or expense, and therefore, the
exclusion of these items allows investors to further evaluate the
cash impact of these activities for cash flow and liquidity
purposes. In addition, the exclusion of these gains and losses in
calculating CSG’s non-GAAP EPS allows management and investors an
additional means to compare CSG’s current operating results with
historical and future periods.
- Unusual items within CSG’s quarterly and/or annual income tax
expense can occur from such things as income tax accounting timing
matters, income taxes related to unusual events, or as a result of
different treatment of certain items for book accounting and income
tax purposes. Consideration of such items in calculating CSG’s
non-GAAP financial measures allows management and investors an
additional means to compare CSG’s current financial results with
historical and future periods
CSG also reports non-GAAP adjusted EBITDA and non-GAAP adjusted
free cash flow. Management believes non-GAAP adjusted EBITDA is a
useful measure to investors in evaluating CSG’s operating
performance, debt servicing capabilities, and enterprise valuation.
CSG defines non-GAAP adjusted EBITDA as income before interest,
income taxes, depreciation, amortization, stock-based compensation,
foreign currency transaction adjustments, acquisition-related
expenses, and unusual items, such as restructuring and
reorganization charges, executive transition costs, gains and
losses related to the extinguishment of debt, and gains and losses
on acquisitions or dispositions, as discussed above. Additionally,
management uses non-GAAP adjusted free cash flow, among other
measures, to assess its financial performance and cash generating
capabilities, and believes that it is useful to investors because
it shows CSG’s cash available to service debt, make strategic
acquisitions and investments, repurchase its common stock, pay cash
dividends, and fund ongoing operations. CSG defines non-GAAP
adjusted free cash flow as net cash flows from operating activities
before earn-out compensation payments related to acquisitions less
the purchases of software, property and equipment.
Non-GAAP Financial
Measures
Non-GAAP Operating Income and Non-GAAP
Adjusted Operating Margin Percentage:
The reconciliation of GAAP operating income to non-GAAP
operating income, and calculation of CSG’s non-GAAP adjusted
operating margin percentage, for the indicated periods are as
follows (in thousands, except percentages):
Quarter Ended December
31,
Year Ended December
31,
2024
2023
2024
2023
Non-GAAP
Operating Income
GAAP operating income
$
42,294
$
24,747
$
131,333
$
123,877
Restructuring and reorganization charges
(1)
1,283
7,915
13,323
16,336
Executive transition costs
-
606
352
1,754
Acquisition-related expenses:
Amortization of acquired intangible
assets
3,840
2,982
14,014
12,185
Earn-out compensation
2,228
-
5,644
(14
)
Transaction-related costs
138
(27
)
381
2,109
Stock-based compensation (1)
8,564
7,840
34,385
29,480
Non-GAAP operating income
$
58,347
$
44,063
$
199,432
$
185,727
Non-GAAP Adjusted
Operating Margin Percentage
Revenue
$
316,652
$
297,324
$
1,197,248
$
1,169,258
Less: Transaction fees (2)
(26,064
)
(23,967
)
(97,857
)
(87,430
)
Revenue less transaction fees
$
290,588
$
273,357
$
1,099,391
$
1,081,828
Non-GAAP adjusted operating margin
percentage
20.1
%
16.1
%
18.1
%
17.2
%
(1)
Restructuring and reorganization
charges include stock-based compensation, which is not included in
the stock-based compensation line in the tables above and
following, and depreciation, which has not been recorded to the
depreciation line item on CSG’s Income Statement.
(2)
Transaction fees are primarily
comprised of fees paid to third-party payment processors and
financial institutions and interchange fees under CSG’s payment
services contracts. Transaction fees are included in revenue in
CSG's Income Statement (and not netted against revenue) because CSG
maintains control and acts as principal over the integrated service
provided under its payment services customer contracts. However,
CSG excludes expense associated with transaction fees from the
numerator and denominator in calculating its non-GAAP adjusted
operating margin percentage in order to provide comparability with
historical and future periods and with its peer group and
competitors.
Non-GAAP EPS:
The reconciliations of GAAP EPS to non-GAAP EPS for the
indicated periods are as follows (in thousands, except per share
amounts):
Quarter Ended
Quarter Ended
December 31, 2024
December 31, 2023
Amounts
EPS (4)
Amounts
EPS (4)
GAAP net income
$
34,468
$
1.21
$
12,670
$
0.44
GAAP income tax provision (3)
6,561
4,174
GAAP income before income taxes
41,029
16,844
Restructuring and reorganization charges
(1)
1,283
7,915
Executive transition costs
-
606
Acquisition-related costs:
Amortization of acquired intangible
assets
3,840
2,982
Earn-out compensation
2,228
-
Transaction-related costs
138
(27
)
Stock-based compensation (1)
8,564
7,840
Non-GAAP income before income taxes
57,082
36,160
Non-GAAP income tax provision (3)
(9,956
)
(9,535
)
Non-GAAP net income
$
47,126
$
1.65
$
26,625
$
0.92
Year Ended
Year Ended
December 31, 2024
December 31, 2023
Amounts
EPS (4)
Amounts
EPS (4)
GAAP net income
$
86,852
$
3.03
$
66,246
$
2.20
GAAP income tax provision (3)
25,420
26,105
GAAP income before income taxes
112,272
92,351
Restructuring and reorganization charges
(1)
13,323
16,336
Executive transition costs
352
1,754
Acquisition-related expenses:
Amortization of acquired intangible
assets
14,014
12,185
Earn-out compensation
5,644
(14
)
Transaction-related costs
381
2,109
Stock-based compensation (1)
34,385
29,480
Non-GAAP income before income taxes
180,371
154,201
Non-GAAP income tax provision (3)
(45,093
)
(43,176
)
Non-GAAP net income
$
135,278
$
4.72
$
111,025
$
3.69
(3)
For the fourth quarter and year
ended December 31, 2024, the GAAP effective income tax rates were
approximately 16% and 23%, respectively, and the non-GAAP effective
income tax rates were approximately 17% and 25%, respectively. For
the fourth quarter and year ended December 31, 2023, the GAAP
effective income tax rates were approximately 25% and 28%,
respectively, and the non-GAAP effective income tax rates were
approximately 26% and 28%, respectively. The decreases in the
fourth quarter and full year 2024 GAAP and non-GAAP effective
income tax rates are due primarily to the release of valuation
allowances related to certain U.S. and foreign deferred tax assets
and the utilization of foreign tax credits.
(4)
The outstanding diluted shares
for the fourth quarter and year ended December 31, 2024 were 28.5
million and 28.7 million, respectively, and for the fourth quarter
and year ended December 31, 2023 were 28.8 million and 30.1
million, respectively.
Non-GAAP Adjusted EBITDA:
CSG’s calculation of non-GAAP adjusted EBITDA and the
reconciliation of CSG’s non-GAAP adjusted EBITDA measure to GAAP
net income is provided below for the indicated periods (in
thousands, except percentages):
Quarter Ended
Year Ended
December 31,
December 31,
2024
2023
2024
2023
GAAP net income
$
34,468
$
12,670
$
86,852
$
66,246
GAAP income tax provision
6,561
4,174
25,420
26,105
Interest expense (5)
7,487
8,084
30,469
31,176
Interest income and other, net
(6,222
)
(181
)
(11,408
)
350
GAAP operating income
42,294
24,747
131,333
123,877
Restructuring and reorganization charges
(1)
1,283
7,915
13,323
16,336
Executive transition costs
-
606
352
1,754
Acquisition-related expenses:
Amortization of acquired intangible assets
(6)
3,840
2,982
14,014
12,185
Earn-out compensation
2,228
-
5,644
(14
)
Transaction-related costs
138
(27
)
381
2,109
Stock-based compensation (1)
8,564
7,840
34,385
29,480
Amortization of other intangible assets
(6)
3,087
3,350
11,671
13,624
Amortization of customer contract costs
(6)
5,167
5,901
21,262
20,291
Depreciation (1)
5,336
6,034
21,622
23,189
Non-GAAP adjusted EBITDA
$
71,937
$
59,348
$
253,987
$
242,831
Non-GAAP adjusted EBITDA as a percentage
of revenue less transaction fees (2)
24.8
%
21.7
%
23.1
%
22.4
%
(5)
Interest expense includes
amortization of deferred financing costs as provided in Note 6
below.
(6)
Amortization on the statement of
cash flows is made up of the following items for the indicated
periods (in thousands):
Quarter Ended
Year Ended
December 31,
December 31,
2024
2023
2024
2023
Amortization of acquired intangible
assets
$
3,840
$
2,982
$
14,014
$
12,185
Amortization of other intangible
assets
3,087
3,350
11,671
13,624
Amortization of customer contract
costs
5,167
5,901
21,262
20,291
Amortization of deferred financing
costs
886
891
3,500
1,567
Total amortization
$
12,980
$
13,124
$
50,447
$
47,667
Non-GAAP Adjusted Free Cash
Flow:
CSG’s calculation of non-GAAP adjusted free cash flow and the
reconciliation of CSG’s non-GAAP adjusted free cash flow measure to
cash flows from operating activities are provided below for the
indicated periods (in thousands):
Quarter Ended
Year Ended
December 31,
December 31,
2024
2023
2024
2023
Cash flows from operating activities
$
82,504
$
79,531
$
135,717
$
131,896
Purchases of software, property and
equipment
(5,893
)
(5,037
)
(22,421
)
(27,977
)
Non-GAAP adjusted free cash flow
$
76,611
$
74,494
$
113,296
$
103,919
Non-GAAP Financial Measures – 2025
Financial Guidance
Non-GAAP Operating Income and Non-GAAP
Adjusted Operating Margin Percentage:
The reconciliation of GAAP operating income to non-GAAP
operating income, and calculation of non-GAAP adjusted operating
margin percentage, as included in CSG’s 2025 full year financial
guidance, is as follows (in thousands, except percentages):
2025 Guidance Range
Low Range
High Range
Non-GAAP
Operating Income
GAAP operating income
$
144,400
$
155,400
Acquisition-related expenses:
Amortization of acquired intangible
assets
13,800
13,800
Earn-out compensation
7,000
7,000
Stock-based compensation
34,500
34,500
Non-GAAP operating income
$
199,700
$
210,700
Non-GAAP
Operating Margin Percentage
Revenue
$
1,210,000
$
1,250,000
Less: Transaction fees
(106,000
)
(111,000
)
Revenue less transaction fees
$
1,104,000
$
1,139,000
Non-GAAP adjusted operating margin
percentage
18.1
%
18.5
%
Non-GAAP EPS:
The reconciliation of GAAP EPS to non-GAAP EPS as included in
CSG’s 2025 full year financial guidance is as follows (in
thousands, except per share amounts):
2025 Guidance Range
Low Range
High Range
Amounts
EPS (8)
Amounts
EPS (8)
GAAP net income
$
86,300
$
3.11
$
94,200
$
3.37
GAAP income tax provision (7)
33,600
36,700
GAAP income before income taxes
119,900
130,900
Acquisition-related expenses:
Amortization of acquired intangible
assets
13,800
13,800
Earn-out compensation
7,000
7,000
Stock-based compensation
34,500
34,500
Non-GAAP income before income taxes
175,200
186,200
Non-GAAP income tax provision (7)
(49,000
)
(52,200
)
Non-GAAP net income
$
126,200
$
4.55
$
134,000
$
4.80
(7)
For 2025, the estimated effective
income tax rates for GAAP and non-GAAP purposes are both expected
to be approximately 28%.
(8)
The weighted-average diluted
shares outstanding are expected to be approximately 28 million.
Non-GAAP Adjusted EBITDA:
CSG’s calculation of non-GAAP adjusted EBITDA and the
reconciliation of CSG’s non-GAAP adjusted EBITDA measure to GAAP
net income is provided below for CSG’s 2025 full year financial
guidance (in thousands, except percentages):
2025 Guidance Range
Low Range
High Range
GAAP net income
$
86,300
$
94,200
GAAP income tax provision (7)
33,600
36,700
Interest expense
30,500
30,500
Interest income
(6,000
)
(6,000
)
GAAP operating income
144,400
155,400
Acquisition-related expenses:
Amortization of acquired intangible
assets
13,800
13,800
Earn-out compensation
7,000
7,000
Stock-based compensation
34,500
34,500
Amortization of other intangible
assets
8,300
8,300
Amortization of client contract costs
23,200
23,200
Depreciation
24,800
24,800
Non-GAAP adjusted EBITDA
$
256,000
$
267,000
Non-GAAP adjusted EBITDA as a percentage
of revenue less transaction fees (2)
23.2
%
23.4
%
Non-GAAP Adjusted Free Cash
Flow:
CSG’s calculation of non-GAAP adjusted free cash flow and the
reconciliation of CSG’s non-GAAP adjusted free cash flow measure to
cash flows from operating activities is provided below for CSG’s
2025 full year financial guidance (in thousands):
2025 Guidance Range
Low Range
High Range
Cash flows from operating activities
$
123,000
$
173,000
Earn-out compensation payments
7,000
7,000
Purchases of software, property and
equipment
(20,000
)
(30,000
)
Non-GAAP adjusted free cash flow
$
110,000
$
150,000
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250205575297/en/
For more information, contact: John Rea, SVP, Head of Finance,
Treasury, Investor Relations, and ESG Reporting (210) 687-4409
E-mail: John.Rea@csgi.com
Davis Barker, Senior Manager, Investor Relations & Corporate
Development (303) 884-4506 E-mail: Davis.Barker@csgi.com
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