CSG Systems International Reports Strong Third-Quarter 2024 Financial Results, Major Contract Renewal with Comcast, and Increased Profitability Forecast
CSG Systems International, Inc. (NASDAQ: CSGS), a global leader in customer engagement and revenue management solutions, today announced its third-quarter 2024 financial results, underscoring impressive growth, an extension of its strategic partnership with Comcast, and a solid commitment to shareholder returns. These strong performance indicators have led the company to raise its annual profitability guidance for the second consecutive quarter.
Key Developments:
- Contract Renewal with Comcast: CSG successfully secured a critical contract extension with Comcast, extending their partnership through the end of 2030. This multi-year agreement solidifies CSG’s role as a key player in the telecommunications industry, showcasing the company’s ability to maintain and grow long-term customer relationships.
- Enhanced Shareholder Returns: CSG remains committed to delivering substantial value to its shareholders. The company plans to return more than $100 million to shareholders through dividends and share repurchases in both 2024 and 2025. Since 2020, CSG has returned nearly $500 million to its investors, reflecting its dedication to shareholder wealth.
Financial Performance Overview:
For the third quarter of 2024, CSG delivered solid financial results, marked by revenue growth, strong profitability, and a robust cash flow position.
Q3 2024 Financial Highlights:
- Revenue: CSG reported total revenue of $295.1 million, an increase of 2.9% compared to $286.9 million for the third quarter of 2023. This growth was driven by strong demand for SaaS and related solutions, including an additional $6 million in revenue from acquisitions completed in Q2 2024.
- Operating Income: GAAP operating income was $31.8 million, or 10.8% of total revenue, while non-GAAP operating income was $50.1 million, representing an 18.4% non-GAAP adjusted operating margin.
- Earnings Per Share: The company reported GAAP earnings per diluted share (EPS) of $0.67, a solid 8.1% increase from the same period last year. Non-GAAP EPS came in at $1.06, reflecting a 15.2% year-over-year improvement.
- Cash Flow: CSG generated $39.5 million in cash flows from operations, with non-GAAP free cash flow of $32.0 million. This indicates the company’s healthy financial position and ability to fund its strategic initiatives while rewarding shareholders.
Shareholder Return Initiatives:
CSG continues to prioritize returning capital to shareholders, as evidenced by its recent actions and future commitments:
- Quarterly Dividend: CSG declared a quarterly cash dividend of $0.30 per share, amounting to approximately $9 million for the third quarter. This is in line with the company’s strategy to provide consistent and attractive returns to its shareholders.
- Share Repurchases: In Q3, the company repurchased approximately 313,000 shares of its common stock for a total of $15 million, demonstrating its confidence in the company’s long-term prospects.
Brian Shepherd, President and Chief Executive Officer of CSG, expressed his enthusiasm about the company’s progress: “We are thrilled to announce our significant contract expansion with Comcast, ensuring our partnership through 2030. Regarding our third-quarter results, the team at CSG has posted strong operating performance, and we’re excited to raise our 2024 profitability and non-GAAP EPS guidance for the second consecutive quarter. Our commitment to returning value to shareholders remains a top priority, with plans to return over $100 million in capital in both 2024 and 2025. Since 2020, we’ve returned nearly half a billion dollars to shareholders, and we will continue to focus on this important aspect of our business.”
Detailed Financial Results:
Third Quarter 2024 (unaudited)
- Revenue: $295.1 million (2.9% increase year-over-year)
- GAAP Operating Income: $31.8 million (10.8% operating margin)
- Non-GAAP Operating Income: $50.1 million (18.4% non-GAAP operating margin)
- GAAP EPS: $0.67 (8.1% increase from Q3 2023)
- Non-GAAP EPS: $1.06 (15.2% increase from Q3 2023)
- Free Cash Flow: $32.0 million (compared to $18.1 million in Q3 2023)
Nine-Months Ended September 30, 2024:
- Revenue: $880.6 million (1.0% increase year-over-year)
- GAAP Operating Income: $89.0 million (10.1% operating margin)
- Non-GAAP Operating Income: $141.1 million (17.4% non-GAAP operating margin)
- GAAP EPS: $1.83 (4.6% increase from the same period in 2023)
- Non-GAAP EPS: $3.08 (11.6% increase from the same period in 2023)
Balance Sheet and Cash Flow:
As of September 30, 2024, CSG’s cash and cash equivalents totaled $118.4 million, compared to $110.4 million as of June 30, 2024, and $186.3 million as of December 31, 2023. The increase in cash flow from operations reflects strong operational efficiency and cash generation capability.
Revised 2024 Financial Guidance:
CSG has raised its 2024 financial guidance, reflecting its strong performance in the first nine months of the year and optimism for continued growth through the end of the year. Key guidance updates include:
- Revenue: Expected to be in the range of $1.2 billion to $1.24 billion (no change from prior guidance).
- Non-GAAP EPS: Increased to $4.25 – $4.55, up from the previous range of $4.05 – $4.35.
- Adjusted Operating Margin: Expected to be in the range of 17.7% – 18.1% (up from the prior range of 17.3% – 17.7%).
- Free Cash Flow: Expected to be in the range of $95 million – $135 million (no change).
Upcoming Conference Call:
CSG will host a conference call on Wednesday, November 6, 2024, at 5:00 p.m. ET to discuss the third-quarter 2024 earnings and outlook for the rest of the year. The call will be broadcast live and available for replay via the CSG Investor Relations website at csgi.com. For phone access, please dial 1-888-412-4131 and use the passcode 2327393.
About CSG:
CSG Systems International, Inc. is a leading global provider of customer engagement and revenue management solutions. The company delivers innovative software and services that help clients in telecommunications, media, and entertainment industries improve customer experiences, optimize business processes, and drive revenue growth. CSG is committed to helping organizations navigate the digital transformation journey while creating value for their customers and shareholders.
