Investor Relations

• Reconfirming All 2021 Financial Guidance Targets; Preliminary 2022 Targets Announced
• Robust Q3 2021 Revenue & Adjusted Revenue Growth Up 7.8% and 8.5% Year-Over-Year
• Signed Landmark Charter Communications Contract Extension and Expansion through 2027
• Successful Conversion of ~800,000 Charter Communications Customers in Midwest
• Signed DISH Network Contract Extension Through Mid-2026

DENVER--(November 3, 2021) — CSG (NASDAQ: CSGS) today reported results for the quarter ended September 30, 2021.

Financial Results:

Third quarter 2021 financial results:

• Total revenue was $263.2 million and total non-GAAP adjusted revenue was $247.0 million.
• GAAP operating income was $32.8 million, or 4% of total revenue, and non-GAAP operating income was $41.6 million, or 16.8% of non-GAAP adjusted revenue.
• GAAP earnings per diluted share (EPS) was $0.50 and non-GAAP EPS was $0.88.
• Cash flows used in operations were $46.1 million, with a non-GAAP free cash flow of $38.7 million.

Shareholder Returns:

• In August 2021, CSG declared its quarterly cash dividend of $0.25 per share of common stock, or a total of approximately $8 million, to shareholders.
• During the third quarter of 2021, CSG repurchased under its stock repurchase program, approximately 143,000 shares of its common stock for approximately $7 million.

Business Activities:

• In September 2021, CSG refinanced its existing credit agreement, extending the term of the agreement through September 2026, and increasing the revolving credit facility from $200 million to $450 million.
• In October 2021, CSG extended its contract with Charter, its largest client, through December 31, 2027.
• In October 2021, CSG extended its contract with DISH through June 30, 2026.

“Our third quarter results and the landmark Charter contract expansion highlight the excellent momentum we currently have across our global business,” said Brian Shepherd, President and Chief Executive Officer of CSG. “With regards to the six-year Charter contract, which represents the largest deal ever signed in CSG’s history, we are extremely proud to become the revenue management provider of choice for all 32 million Charter subscribers across their residential and small-and-medium-sized business footprints. Additionally, we reported a robust set of financial results highlighted by our best quarterly organic revenue and adjusted revenue growth results since Q3 2010. And on the back of our strong year-to-date 2021 results, our continued sales success in the market, and the exciting renewals at both Charter and DISH Network, we are pleased to issue growth-oriented 2022 preliminary financial guidance targets. Looking ahead, CSG remains well positioned to create meaningful value for our customers, our employees and our shareholders as we lengthen and strengthen our relationships with existing customers, accelerate our organic revenue growth, close good new strategic acquisitions, and diversify into higher growth industry verticals.”

Financial Overview (unaudited)

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

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 third quarter of 2021 was $263.2 million, a 7.8% increase when compared to revenue of $244.1 million for the third quarter of 2020, and a 3.2% increase when compared to revenue of $255.1 million for the second quarter of 2021.  These increases in revenue can be primarily attributed to the continued growth of CSG’s revenue management solutions, as substantially all was attributed to organic growth year-over-year. 

GAAP operating income for the third quarter of 2021 was $32.8 million, or 12.4% of total revenue, compared to $28.9 million, or 11.9% of total revenue, for the third quarter of 2020, and $32.2 million, or 12.6% of total revenue, for the second quarter of 2021.  The increase in year-over-year operating income can be primarily attributed to the revenue growth in 2021.

GAAP EPS for the third quarter of 2021 was $0.50, as compared to $0.42 for the third quarter of 2020, and $0.60 for the second quarter of 2021.  GAAP EPS for the third quarter of 2021 was impacted by a $6.2 million loss, or $0.14 per share, recorded on obtaining a controlling interest in a pre-existing equity investment.     

            Non-GAAP Results:  Non-GAAP adjusted revenue for the third quarter of 2021 was $247.0 million, an 8.5% increase when compared to non-GAAP adjusted revenue of $227.7 million for the third quarter of 2020, and a 3.6% increase when compared to $238.5 million for the second quarter of 2021. 

Non-GAAP operating income for the third quarter of 2021 was $41.6 million, or 16.8% of total non-GAAP adjusted revenue, compared to $39.1 million, or 17.2% of total non-GAAP adjusted revenue for the third quarter of 2020, and $39.8 million, or 16.7% of total non-GAAP adjusted revenue for the second quarter of 2021.    

Non-GAAP EPS for the third quarter of 2021 was $0.88 compared to $0.76 for the third quarter of 2020, and $0.82 for the second quarter of 2021.

The changes in non-GAAP adjusted revenue and non-GAAP operating income between quarters are primarily due to the factors discussed above.

Balance Sheet and Cash Flows

Cash, cash equivalents and short-term investments as of September 30, 2021 were $224.5 million compared to $212.1 million as of June 30, 2021 and $240.3 million as of December 31, 2020.  CSG had net cash flows from operations for the third quarters ended September 30, 2021 and 2020 of $46.1 million and $65.3 million, respectively, and had non-GAAP free cash flow of $38.7 million and $55.4 million, respectively. 

Summary of Financial Guidance

CSG is reaffirming its financial guidance for the full year 2021 and providing a preliminary financial outlook for certain full year 2022 financial measures, as follows:

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, November 3, 2021 at 5:00 p.m. ET, to discuss CSG’s third quarter 2021 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 1-888-440-4531 and use the passcode 6134021.

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 is a leader in innovative customer engagement, revenue management and payments solutions that make ordinary customer experiences extraordinary. Our cloud-first architecture and customer-obsessed mindset help companies around the world launch new digital services, expand into new markets, and create dynamic experiences that capture new customers and build brand loyalty. For nearly 40 years, CSG’s technologies and people have helped some of the world’s most recognizable brands solve their toughest business challenges and evolve to meet the demands of today’s digital economy with future-ready solutions that drive exceptional customer experiences. With 5,000 employees in over 20 countries, CSG is the trusted technology provider for leading global brands in telecommunications, retail, financial services and healthcare. Our solutions deliver real world outcomes to more than 900 customers in over 120 countries. To learn more, visit us at csgi.com and connect with us on LinkedIn and Twitter.

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’s business may be disrupted, and its results of operations and cash flows adversely affected by the COVID-19 pandemic;
• CSG derives over forty percent of its revenue from its two largest customers;
• 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 maintain a reliable, secure computing environment;
• 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
• Fluctuations in credit market conditions, general global economic and political conditions, and foreign currency exchange rates.

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