FOR IMMEDIATE RELEASE

PRESS RELEASE

CSG SYSTEMS INTERNATIONAL REPORTS

FIRST QUARTER 2024 RESULTS

Confirming All 2024 Financial Guidance Targets

Revenue Coming from Industry Verticals Outside of CSPs Exceeds 30% for the First Time Returned Over $160 Million to Shareholders in the Last Twelve Months, including $19 Million in Q1 Continued Strong Sales Performance with Many Key Wins in Q1, including MTN and Banglalink

DENVER--(May1, 2024) - CSG(NASDAQ: CSGS) today reported results for the quarter ended March 31, 2024.

Financial Results:

First quarter 2024 financial results:

  • Total revenue was $295.1 million.
  • GAAP operating income was $31.8 million, or an operating margin of 10.8%, and non-GAAP operating income was $44.9 million, or a non-GAAP adjusted operating margin of 16.6%.
  • GAAP earnings per diluted share (EPS) was $0.68 and non-GAAP EPS was $1.01.
  • Cash flows used in operations were ($29.4) million, with a non-GAAP free cash flow deficit of ($34.1) million.

Shareholder Returns:

  • CSG declared its quarterly cash dividend of $0.30 per share of common stock, or a total of approximately $9 million, to shareholders.
  • During the first quarter of 2024, CSG repurchased under its stock repurchase program, approximately 185,000 shares of its common stock for approximately $10 million.

"Team CSG got off to a good start in the first quarter. For the first time in CSG's history, 30% of our revenue is coming from industry verticals outside of the Communication Service Providers ("CSPs") space. For context, we generated only 7% of our revenue from these other industry verticals in 2017," said Brian Shepherd, President and Chief Executive Officer of CSG. "From a financial perspective, we are pleased to confirm all 2024 financial guidance targets. Plus, we continue to return capital to shareholders in the form of buybacks and dividends, having delivered over $160 million in shareholder remuneration over the last twelve months."

CSG Systems International, Inc.

May 1, 2024

Page 2

Financial Overview (unaudited)

(in thousands, except per share amounts and percentages):

Quarter Ended March 31,

Percent

2024

2023

Changed

GAAP Results:

Revenue

$

295,135

$

298,739

(1.2

%)

Operating Income

31,797

38,193

(16.7

%)

Operating Margin Percentage

10.8

%

12.8%

EPS

$

0.68

$

0.68

-

Non-GAAP Results:

Operating Income

$

44,868

$

53,511

(16.2

%)

Adjusted Operating Margin Percentage

16.6

%

19.3%

EPS

$

1.01

$

1.04

(2.9

%)

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 first quarter of 2024 was $295.1 million, a 1.2% decrease when compared to revenue of $298.7 million for the first quarter of 2023. The decrease in revenue is primarily attributed to lower software and services revenue, resulting from the closure of approximately $10 million of software license upgrades in the first quarter of 2023. This was offset to a certain degree by the continued growth of CSG's cloud revenue, to include its payments solutions.

GAAP operating income for the first quarter of 2024 was $31.8 million, or 10.8% of total revenue, compared to $38.2 million, or 12.8% of total revenue, for the first quarter of 2023. The decrease in operating income is mainly attributed to the higher software and services revenue recognized in the first quarter of 2023, discussed above, as the costs associated with this revenue is not generally dependent upon on the timing of the deal closure, offset to a certain degree by lower restructuring and reorganization charges.

GAAP EPS for the first quarter of 2024 was $0.68, consistent with the first quarter of 2023, with the first quarter of 2024 benefiting primarily from foreign currency movements and a lower share count.

Non-GAAPResults:Non-GAAP operating income for the first quarter of 2024 was $44.9 million, or a non-GAAP adjusted operating margin of 16.6%, compared to $53.5 million, or a non-GAAP adjusted operating margin of 19.3% for the first quarter of 2023. The decrease in non-GAAP operating income and non-GAAP adjusted operating margin is mainly attributed to the higher software and services revenue recognized in the first quarter of 2023, discussed above.

Non-GAAP EPS for the first quarter of 2024 was $1.01 compared to $1.04 for the first quarter of 2023. The decrease in non-GAAP EPS is mainly due to the lower non-GAAP operating income, partially offset by foreign currency movements and a lower share count.

CSG Systems International, Inc.

May 1, 2024

Page 3

Balance Sheet and Cash Flows

Cash and cash equivalents as of March 31, 2024 were $120.8 million compared to $186.3 million as of December 31, 2023. CSG had net cash flows provided by (used in) operations for the first quarters ended March 31, 2024 and 2023 of ($29.4) million and $15.4 million, respectively, and had non-GAAP free cash flow (deficit) of ($34.1) million and $6.7 million, respectively. Cash flows for the first quarter of 2024 were negatively impacted by unfavorable working capital changes, to include the payment of 2023 accrued employee incentive compensation.

Summary of Financial Guidance

CSG is reaffirming its financial guidance for the full year 2024, as follows:

As of May 1, 2024

GAAP Measures:

Revenue

$1,200 - $1,240 million

Non-GAAP Measures:

Adjusted Operating Margin Percentage

17.0% - 17.4%

EPS

$3.85 - $4.15

Adjusted EBITDA

$245 - $255 million

Free Cash Flow

$95 - $135 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, May 1, 2024 at 5:00 p.m. ET, to discuss CSG's first quarter of 2024 earnings results. The call will be carried live and archived on the Internet. 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 web site 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.comto learn more.

CSG Systems International, Inc.

May 1, 2024

Page 4

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.

For more information, contact: John Rea, Investor Relations (210) 687-4409

E-mail:john.rea@csgi.com

CSG Systems International, Inc.

May 1, 2024

Page 5

CSG SYSTEMS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS-UNAUDITED

(in thousands)

March 31,

December 31,

ASSETS

2024

2023

Current assets:

Cash and cash equivalents

$

120,810

$

186,264

Settlement and merchant reserve assets

192,962

274,699

Trade accounts receivable:

Billed, net of allowance of $5,692 and $5,432

275,359

267,680

Unbilled

84,347

82,163

Income taxes receivable

2,364

1,345

Other current assets

57,960

50,075

Total current assets

733,802

862,226

Non-current assets:

Property and equipment, net of depreciation of $126,435 and $121,816

60,834

65,545

Operating lease right-of-use assets

31,472

34,283

Software, net of amortization of $160,580 and $157,601

13,406

14,224

Goodwill

306,581

308,596

Acquired customer contracts, net of amortization of $127,773 and $126,469

33,477

35,879

Customer contract costs, net of amortization of $39,539 and $42,094

54,535

54,421

Deferred income taxes

49,552

57,855

Other assets

9,293

10,017

Total non-current assets

559,150

580,820

Total assets

$

1,292,952

$

1,443,046

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Current portion of long-term debt

$

7,500

$

7,500

Operating lease liabilities

15,400

15,946

Customer deposits

36,967

41,035

Trade accounts payable

43,768

46,406

Accrued employee compensation

44,006

84,380

Settlement and merchant reserve liabilities

191,498

273,817

Deferred revenue

56,404

54,199

Income taxes payable

1,886

4,104

Other current liabilities

23,738

33,449

Total current liabilities

421,167

560,836

Non-current liabilities:

Long-term debt, net of unamortized discounts of $14,764 and $15,628

533,986

534,997

Operating lease liabilities

31,099

34,360

Deferred revenue

23,382

23,447

Income taxes payable

3,117

3,041

Deferred income taxes

124

123

Other non-current liabilities

10,737

12,916

Total non-current liabilities

602,445

608,884

Total liabilities

1,023,612

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; 29,779 and 29,541 shares

outstanding

717

713

Additional paid-in capital

491,005

490,947

Treasury stock, at cost; 40,583 and 40,398 shares

(1,145,738)

(1,136,055)

Accumulated other comprehensive income (loss):

Unrealized gain on short-term investments, net of tax

-

1

Cumulative foreign currency translation adjustments

(55,388

)

(50,414

)

Accumulated earnings

978,744

968,134

Total stockholders' equity

269,340

273,326

Total liabilities and stockholders' equity

$

1,292,952

$

1,443,046

CSG Systems International, Inc.

May 1, 2024

Page 6

CSG SYSTEMS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME-UNAUDITED

(in thousands, except per share amounts)

Quarter Ended

March 31, 2024

March 31, 2023

...............................................................................................................Revenue

$

295,135

$

298,739

Cost of revenue (exclusive of depreciation, shown separately below)

157,887

155,021

Other operating expenses:

Research and development

36,095

35,464

Selling, general and administrative

61,722

59,147

Depreciation

5,636

5,720

Restructuring and reorganization charges

1,998

5,194

Total operating expenses

263,338

260,546

.................................................................................................Operating income

31,797

38,193

Other income (expense):

Interest expense

(7,506

)

(7,219

)

Interest income

2,616

569

Other, net

558

(2,432

)

Total other

(4,332

)

(9,082

)

.................................................................................Income before income taxes

27,465

29,111

Income tax provision

(7,998

)

(8,183

)

...........................................................................................................Net income

$

19,467

$

20,928

Weighted-average shares outstanding:

Basic

28,516

30,418

Diluted

28,797

30,609

Earnings per common share:

Basic

$

0.68

$

0.69

Diluted

0.68

0.68

CSG Systems International, Inc.

May 1, 2024

Page 7

CSG SYSTEMS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS-UNAUDITED

(in thousands)

Quarter Ended

March 31, 2024

March 31, 2023

Cash flows from operating activities:

Net income

$

19,467

$

20,928

Adjustments to reconcile net income to net cash provided by (used in) operating activities-

Depreciation

5,636

5,757

Amortization

11,309

11,471

Asset impairment

-

1,595

Gain on lease modifications

-

(125

)

Unrealized foreign currency transaction (gain) loss, net

(352

)

41

Deferred income taxes

7,859

4,079

Stock-based compensation

7,736

6,412

Subtotal

51,655

50,158

Changes in operating assets and liabilities, net of acquired amounts:

Trade accounts receivable, net

(10,959

)

(1,825

)

Other current and non-current assets and liabilities

(9,827)

(6,871)

Income taxes payable/receivable

(3,158

)

1,647

Trade accounts payable and accrued liabilities

(59,581)

(36,071)

Deferred revenue

2,519

8,359

..............................................Net cash provided by (used in) operating activities

(29,351

)

15,397

Cash flows from investing activities:

Purchases of software, property, and equipment

(4,774

)

(8,700

)

Proceeds from sale/maturity of short-term investments

-

71

Net cash used in investing activities

(4,774

)

(8,629

)

Cash flows from financing activities:

Proceeds from issuance of common stock

866

893

Payment of cash dividends

(9,463

)

(9,088

)

Repurchase of common stock

(17,973

)

(9,306

)

Deferred acquisition payments

(488

)

(274

)

Proceeds from long-term debt

-

30,000

Payments on long-term debt

(1,875

)

(1,875

)

Settlement and merchant reserve activity

(82,212)

(61,482)

Net cash used in financing activities

(111,145

)

(51,132

)

......Effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash

(1,962)

327

Net decrease in cash, cash equivalents, and restricted cash

(147,232

)

(44,037

)

Cash, cash equivalents, and restricted cash, beginning of period

463,876

389,018

Cash, cash equivalents, and restricted cash, end of period

$

316,644

$

344,981

Supplemental disclosures of cash flow information:

Cash paid during the period for-

Interest

$

10,898

$

7,005

Income taxes

3,288

2,211

Reconciliation of cash, cash equivalents, and restricted cash:

Cash and cash equivalents

$

120,810

$

167,681

Settlement and merchant reserve assets

192,962

177,300

Restricted cash included in current and non-current assets

2,872

-

Total cash, cash equivalents, and restricted cash

$

316,644

$

344,981

CSG Systems International, Inc.

May 1, 2024

Page 8

EXHIBIT 1

CSG SYSTEMS INTERNATIONAL, INC.

SUPPLEMENTAL REVENUE ANALYSIS

Revenue by Significant Customers: 10% or more of Revenue

Quarter Ended

Quarter Ended

Quarter Ended

March 31, 2024

December 31, 2023

March 31, 2023

% of

% of

% of

Amount

Revenue

Amount

Revenue

Amount

Revenue

Charter

$

60,849

21

%

$

60,128

20

%

$

61,532

21

%

Comcast

52,804

18%

54,651

18%

53,415

18%

Revenue by Vertical

Quarter Ended

Quarter Ended

Quarter Ended

March 31, 2024

December 31, 2023

March 31, 2023

Broadband/Cable/Satellite

............................

51

%

51

%

52

%

Telecommunications

19%

21%

20%

.........................................................All other

30

%

28

%

28

%

.............................................Total revenue

100

%

100

%

100

%

Revenue by Geography

Quarter Ended

Quarter Ended

Quarter Ended

March 31, 2024

December 31, 2023

March 31, 2023

.......................................................Americas

86

%

85

%

84

%

.....................Europe, Middle East and Africa

9

%

10

%

12

%

....................................................Asia Pacific

5

%

5

%

4

%

.............................................Total revenue

100

%

100

%

100

%

CSG Systems International, Inc.

May 1, 2024

Page 9

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 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-GAAPfinancial 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-GAAPfinancial 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.

CSG Systems International, Inc.

May 1, 2024

Page 10

Non-GAAP Financial Measures: Basis of Presentation

The table below outlines the exclusions from CSG's non-GAAP financial measures:

Adjusted Operating

Non-GAAP Exclusions

Operating Income

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

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.

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CSG Systems International Inc. published this content on 01 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 May 2024 11:52:27 UTC.