Financial Performance & Growth - CSG achieved a record-setting year in 2023, with revenue growing by 7.3% year-over-year, the best full-year result in nearly 20 years[6, 7] - The company is targeting revenue to exceed $1.5 billion by FY2025, representing over 50% business growth from 2020 revenue of $1 billion[9, 10] - CSG's full-year 2023 revenue reached $1.169 billion, a 7% increase compared to $1.090 billion in FY22[40, 49] - The company's non-GAAP adjusted operating margin increased from 16.6% in FY22 to 17.2% in FY23[50] - Non-GAAP adjusted EBITDA increased to $243 million in FY23 from $226 million in FY22[51] - Non-GAAP EPS increased by 2% from $3.61 in FY22 to $3.69 in FY23[31] - Free cash flow increased significantly year-over-year, reaching $372 million in FY23 compared to $265 million in FY22[54] Strategic Priorities & Diversification - CSG is focused on strategic revenue acceleration and sustained long-term revenue growth[9] - The company is diversifying its revenue streams, with 28% coming from industry verticals outside of CSPs[7, 15] - CSG aims to consistently grow organic revenue by 2% to 6% year-over-year[23] Shareholder Returns & Capital Allocation - CSG increased its dividend by 7% to $1.20 per year, marking the 11th consecutive annual increase[7] - The company repurchased $117 million of shares during 2023[22] - CSG successfully completed a $425 million convertible debt offering in Q3, lowering the interest rate to 3.875%[32] 2024 Guidance - CSG has established 2024 financial guidance targets with mid-single-digit revenue growth and strong profitability[7] - The company anticipates revenue between $1.20 billion and $1.24 billion for 2024[59] - CSG projects an adjusted operating margin of 17.0% to 17.4%, EPS of $3.85 to $4.15, adjusted EBITDA of $245 million to $255 million, and free cash flow of $95 million to $135 million for 2024[59]

DENVER--(BUSINESS WIRE)--CSG® (NASDAQ: CSGS) today announced that its Board of Directors approved a 7% increase in the Company’s quarterly cash dividend payment. The new quarterly payment amount has been increased to $0.30 per share of common stock to be paid on March 28, 2024 for shareholders of record as of the close of business on March 15, 2024. 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 ...

BOSTON, Jan. 30, 2024 /PRNewswire/ -- Lendica, an embedded AI lending company, and CSG Forte, a CSG® (NASDAQ: CSGS) company and a leader in complete and customizable digital payments, announce a strategic partnership to deliver an embedded business credit solution to small and medium sized US companies. Lendica and CSG Forte's offering, called the iBranch, is an embedded financing service that enables SMBs to borrow money from their software vendors instead of traditional financial institutions. Embedded le ...

DENVER--(BUSINESS WIRE)--Communication service providers (CSPs) are racing to modernize their operations and deliver dynamic and personalized experiences for their customers. To leverage automation, intelligence and orchestration, they’re working to improve the customer experience across all touchpoints. In 2023, CSG® (NASDAQ: CSGS)’s award-winning solutions and integrated omnichannel approach helped global brands transform their customer experience, earning CSG recognition from leading analyst firms Gartne ...

Financial Data and Key Metrics Changes - The company reported a year-to-date non-GAAP adjusted operating margin of 17.5%, an improvement from 16.6% in the same period of 2022 [5][33] - Year-to-date 2023 non-GAAP EPS was $2.76, unchanged from the prior year, as revenue and operating margin increases were offset by higher interest expenses and foreign currency headwinds [35] - Non-GAAP adjusted EBITDA for the first nine months of 2023 was $183 million, or 22.7% of revenue, compared to $166 million or 22.3% in the first nine months of 2022 [68] Business Line Data and Key Metrics Changes - The company achieved 9% year-over-year revenue growth for the first nine months of 2023, all from organic growth, marking the best results in nearly two decades [8][13] - Revenue management solutions and digital customer experience (CX) solutions contributed significantly to revenue growth, with strong year-over-year growth in payment volumes [32] - The payments market saw continued double-digit revenue growth, with the company providing solutions to 110,000 active merchants and ISV partners [24] Market Data and Key Metrics Changes - The company has diversified its revenue, with over 27% coming from faster-growing industry verticals such as healthcare, financial services, retail, technology, and government [30][54] - The relationship with major clients like Comcast and Charter remains stable, with their residential and SMB customer base staying broadly flat during Q3 despite video subscriber losses [20] Company Strategy and Development Direction - The company aims to grow revenue to $1.5 billion by year-end 2025, with bottom-line growth expected to outpace top-line revenue growth [7] - The strategic focus includes maintaining a disciplined high return on invested capital mindset while exploring various strategic moves to create shareholder value [17] - The integration of AI into business operations is a key focus, with efforts to drive internal efficiencies and enhance customer interactions [26][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining accelerated organic growth, with expectations to perform at or above the midpoint of their 2% to 6% growth range [41] - The company anticipates continued growth potential with major cable customers, despite current short-term challenges in the market [42] - Management emphasized the importance of operational discipline and the potential for margin expansion in the future [87] Other Important Information - The company completed a $100 million share repurchase plan, repurchasing $107 million worth of stock during Q3, marking the largest quarterly share repurchase since Q3 of 2007 [14] - The company is committed to a disciplined approach to M&A, focusing on strategic product capabilities that add value to customers [101] Q&A Session Summary Question: What drove the strong revenue growth rate? - Management highlighted diversification in new industry verticals and strong ongoing market demand for their SaaS products as key drivers of growth [94] Question: What is the outlook for margins in the fourth quarter? - Management indicated that they do not expect a step back in margins and are focused on operational discipline to improve performance [86][87] Question: How does the company view M&A opportunities? - The company sees potential for disciplined acquisitions that align with their strategic goals, particularly in the AI space [100][101] Question: What is the impact of AI on operational efficiency? - Management noted that AI is expected to enhance productivity and efficiency across various departments, potentially leading to headcount avoidance rather than cuts [139] Question: Why was the 2023 guidance not raised despite strong performance? - Management decided to maintain guidance to focus on achieving results that exceed predictions in Q4 [144]

Part I - Financial Information [Item 1. Financial Statements](index=3&type=section&id=Item%201%2E%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for CSG Systems International, Inc., including Balance Sheets, Statements of Income, Statements of Cash Flows, and accompanying notes, for the period ended September 30, 2023 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2023, total assets slightly decreased to **$1.33 billion**, while total liabilities increased to **$1.07 billion** due to higher long-term debt, leading to a reduction in stockholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total current assets | $760,067 | $765,955 | | Total assets | $1,329,602 | $1,348,553 | | Total current liabilities | $461,533 | $527,209 | | Long-term debt, net | $535,998 | $375,469 | | Total liabilities | $1,069,111 | $993,304 | | Total stockholders' equity | $260,491 | $355,249 | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For Q3 2023, revenue grew **5.0%** to **$286.9 million** with net income increasing to **$18.7 million**, while for the nine months, revenue grew **9.0%** to **$871.9 million** and net income more than doubled to **$53.6 million** Financial Performance Summary (in thousands, except per share data) | Metric | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $286,868 | $273,308 | $871,934 | $799,876 | | Operating Income | $32,731 | $19,977 | $99,130 | $43,675 | | Net Income | $18,694 | $12,481 | $53,576 | $23,911 | | Diluted EPS | $0.62 | $0.40 | $1.75 | $0.76 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2023, net cash from operations significantly increased to **$52.4 million**, while investing activities used **$22.9 million** and financing activities used **$78.0 million**, primarily for stock repurchases and dividends Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $52,365 | $9,573 | | Net cash used in investing activities | ($22,869) | ($4,117) | | Net cash used in financing activities | ($77,965) | ($70,375) | | Net decrease in cash, cash equivalents, and restricted cash | ($48,917) | ($72,608) | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail critical financial disclosures, including revenue recognition, the issuance of **$425 million** in new convertible notes, significant restructuring activities, and substantial stock repurchase and dividend activities - The aggregate amount of transaction price allocated to remaining performance obligations is **$1.5 billion** as of September 30, 2023, with over **65%** expected to be recognized by the end of 2025[17](index=17&type=chunk) Revenue by Type (Nine Months Ended Sep 30, in thousands) | Revenue Type | 2023 | 2022 | | :--- | :--- | :--- | | SaaS and related solutions | $764,253 | $704,303 | | Software and services | $73,235 | $61,627 | | Maintenance | $34,446 | $33,946 | | **Total Revenue** | **$871,934** | **$799,876** | - In September 2023, the company issued **$425.0 million** of 3.875% senior convertible notes due 2028[60](index=60&type=chunk) - During the nine months ended September 30, 2023, the company recorded restructuring and reorganization charges of **$8.4 million**, a significant decrease from **$46.3 million** in the same period of 2022, including charges for dissolving the Keydok business and workforce reductions[98](index=98&type=chunk)[100](index=100&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=22&type=section&id=Item%202%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's performance, highlighting a **9.0%** revenue increase and substantial operating income growth, while also addressing significant customer concentration, new debt issuance, and capital allocation strategies [Results of Operations](index=25&type=section&id=Results%20of%20Operations) For the nine months ended September 30, 2023, revenue increased **9.0%** to **$871.9 million**, with operating income rising to **$99.1 million** due to higher revenue and reduced restructuring charges, while the Americas region contributed **86%** of total revenue - Revenue for the nine months ended September 30, 2023, increased by **9.0%** year-over-year, primarily attributed to the continued growth of revenue management solutions and strong performance in SaaS and related solutions revenue[122](index=122&type=chunk) - Operating income for the nine months ended September 30, 2023, was **$99.1 million** (**11.4%** of revenue), a significant increase from **$43.7 million** (**5.5%** of revenue) in the same period of 2022, mainly due to lower restructuring charges and higher revenue[127](index=127&type=chunk) Revenue by Geographic Region (Nine Months Ended Sep 30, in thousands) | Region | 2023 | 2022 | | :--- | :--- | :--- | | Americas (principally the U.S.) | $746,299 | $679,002 | | Europe, Middle East, and Africa | $88,795 | $88,878 | | Asia Pacific | $36,840 | $31,996 | | **Total Revenue** | **$871,934** | **$799,876** | [Significant Customer Relationships](index=24&type=section&id=Significant%20Customer%20Relationships) The company's revenue is highly concentrated with Charter and Comcast, accounting for **21%** and **19%** of Q3 2023 revenue respectively, though recent agreement extensions mitigate near-term renewal risk Revenue Concentration from Major Customers (Q3 2023) | Customer | % of Revenue | Revenue (in thousands) | | :--- | :--- | :--- | | Charter | 21% | $59,432 | | Comcast | 19% | $53,653 | - In April 2023, the agreement with Charter was amended and restated, extending the term through March 31, 2028[146](index=146&type=chunk) - In June 2023, Comcast exercised its option to extend its processing and other related solutions agreement through December 31, 2025[147](index=147&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2023, the company held **$146.7 million** in cash, having issued **$425 million** in convertible notes, repaid **$275 million** on its revolver, repurchased **$197.1 million** in stock, and paid **$26.2 million** in dividends - In September 2023, the company issued **$425.0 million** in 2023 Convertible Notes, using net proceeds to repay **$275.0 million** of its 2021 Revolver, repurchase **$90.1 million** of common stock, and pay **$34.3 million** for Capped Call Transactions[91](index=91&type=chunk)[168](index=168&type=chunk) - During the nine months ended September 30, 2023, the company repurchased approximately **1,991,000 shares** of common stock for **$107.0 million** under its Stock Repurchase Program[191](index=191&type=chunk)[173](index=173&type=chunk) - The Board approved dividends totaling **$26.4 million** during the first nine months of 2023, with **$26.2 million** paid during the period[190](index=190&type=chunk) - As of September 30, 2023, the company had **$15.0 million** outstanding on its **$450.0 million** revolving loan facility, leaving **$435.0 million** available[179](index=179&type=chunk)[197](index=197&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks include interest rate risk from variable-rate debt, market value fluctuations of fixed-rate convertible debt, and foreign currency exchange rate risk, though **88%** of revenue is U.S. dollar-denominated, and management deems these risks immaterial - The company is exposed to interest rate risk on its 2021 Credit Agreement, based on a variable adjusted SOFR rate, where a hypothetical **10%** adverse change is not expected to have a material impact[232](index=232&type=chunk)[205](index=205&type=chunk) - The fair value of the company's convertible debt is exposed to market risk, with the **$425 million** 2023 Convertible Notes estimated at **$414.7 million** as of September 30, 2023[208](index=208&type=chunk) - The company is exposed to foreign currency exchange rate risk, mitigated by approximately **88%** of revenue for the first nine months of 2023 being U.S. dollar-denominated[209](index=209&type=chunk)[235](index=235&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204%2E%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[236](index=236&type=chunk) - Management concluded that there were no changes during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[211](index=211&type=chunk) Part II - Other Information [Item 1. Legal Proceedings](index=37&type=section&id=Item%201%2E%20Legal%20Proceedings) Management believes CSG Systems International, Inc. is not currently involved in any material pending or threatened legal proceedings that would significantly impact its operations or financial condition - In the opinion of management, the company is not presently a party to any material pending or threatened legal proceedings[214](index=214&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A%2E%20Risk%20Factors) No material changes occurred to the risk factors previously disclosed in the company's 2022 Annual Report on Form 10-K during the third quarter of 2023 - No material changes to the risk factors disclosed in the 2022 Form 10-K occurred during the third quarter of 2023[238](index=238&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q3 2023, the company repurchased **1,994,147 shares** at an average price of **$53.73** per share, including shares under its repurchase program, with an additional **$100.0 million** authorized for future repurchases Share Repurchases in Q3 2023 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | July 2023 | 810 | $51.92 | | August 2023 | 260,552 | $54.63 | | September 2023 | 1,732,785 | $53.60 | | **Total Q3** | **1,994,147** | **$53.73** | - In August 2023, the Board authorized an additional **$100.0 million** for stock repurchases under the Stock Repurchase Program[216](index=216&type=chunk) [Item 6. Exhibits](index=38&type=section&id=Item%206%2E%20Exhibits) This section indexes all exhibits filed with the Form 10-Q, including the Indenture for the new 3.875% Convertible Senior Notes due 2028, Capped Call Confirmations, and various agreement amendments - Key exhibits filed include the Indenture for the 2023 Convertible Notes, the Second Amendment to the 2021 Credit Agreement, and the form of Capped Call Confirmations[219](index=219&type=chunk)[241](index=241&type=chunk)[246](index=246&type=chunk)

CSG Systems International, Inc. (NASDAQ:CSGS) Q2 2023 Earnings Conference Call August 2, 2023 5:00 PM ET Company Participants John Rea - Head of Investor Relations Brian Shepherd - President & Chief Executive Officer Hai Tran - Chief Financial Officer Conference Call Participants Maggie Nolan - William Blair Nehal Chokshi - Northland Capital Markets Shlomo Rosenbaum - Stifel Matthew Harrigan - The Benchmark Company Brett Knoblauch - Cantor Fitzgerald Dan McDermott - Oppenheimer Operator Good afternoon, ladi ...

[Part I - Financial Information](index=3&type=section&id=Part%20I%20-%20FINANCIAL%20INFORMATION) The first part details the company's financial performance and position, including statements, management's analysis, market risks, and internal controls [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for Q2 2023 show decreased total assets and liabilities, with significant increases in revenue and net income [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2023, total assets decreased to $1.29 billion from $1.35 billion, while total liabilities also decreased to $909.8 million Balance Sheet Summary (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$1,293,069** | **$1,348,553** | | Total Current Assets | $725,415 | $765,955 | | **Total Liabilities** | **$909,758** | **$993,304** | | Total Current Liabilities | $431,102 | $527,209 | | Long-term Debt, net | $402,092 | $375,469 | | **Total Stockholders' Equity** | **$383,311** | **$355,249** | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For Q2 2023, revenue increased 9.2% to $286.3 million, and net income surged 162.4% to $14.0 million, with diluted EPS rising to $0.45 Q2 2023 vs Q2 2022 Performance (in thousands, except EPS) | Metric | Q2 2023 | Q2 2022 | Change | | :--- | :--- | :--- | :--- | | Revenue | $286,327 | $262,168 | +9.2% | | Operating Income | $28,206 | $7,283 | +287.3% | | Net Income | $13,954 | $5,317 | +162.4% | | Diluted EPS | $0.45 | $0.17 | +164.7% | Six Months 2023 vs 2022 Performance (in thousands, except EPS) | Metric | Six Months 2023 | Six Months 2022 | Change | | :--- | :--- | :--- | :--- | | Revenue | $585,066 | $526,568 | +11.1% | | Operating Income | $66,399 | $23,698 | +180.2% | | Net Income | $34,882 | $11,430 | +205.2% | | Diluted EPS | $1.14 | $0.36 | +216.7% | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities for the first six months of 2023 was $27.8 million, a significant improvement from a $13.3 million use in the prior year Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $27,783 | $(13,265) | | Net cash provided by (used in) investing activities | $(16,357) | $7,108 | | Net cash used in financing activities | $(78,543) | $(35,187) | | **Net decrease in cash, cash equivalents, and restricted cash** | **$(66,409)** | **$(44,672)** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail key accounting policies, including revenue from SaaS solutions, significant reduction in restructuring charges, and increased total debt - The aggregate amount of transaction price allocated to remaining performance obligations is **$1.6 billion** as of June 30, 2023, with approximately **70%** expected to be recognized by the end of 2025[13](index=13&type=chunk) Revenue by Type (in thousands) | Revenue Type | Q2 2023 | Q2 2022 | | :--- | :--- | :--- | | SaaS and related solutions | $255,600 | $230,712 | | Software and services | $18,766 | $20,068 | | Maintenance | $11,961 | $11,388 | | **Total revenue** | **$286,327** | **$262,168** | - Restructuring and reorganization charges for the six months ended June 30, 2023 were **$7.3 million**, significantly lower than the **$32.1 million** recorded in the same period of 2022[56](index=56&type=chunk)[75](index=75&type=chunk) - As of June 30, 2023, total debt stood at **$424.6 million**, consisting of a **$136.9 million** term loan and **$290.0 million** drawn on the revolving loan facility, both with an interest rate of **6.967%**[37](index=37&type=chunk)[54](index=54&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2023 revenue growth driven by revenue management solutions, improved operating income due to lower restructuring charges, significant customer concentration, and strong liquidity [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Q2 2023 revenue increased 9.2% to $286.3 million, while operating expenses rose modestly, leading to a substantial improvement in operating income to $28.2 million - Q2 2023 revenue increased by **9.2%** YoY, primarily attributed to the continued growth of revenue management solutions, conversion of customer accounts, and higher payment volumes[110](index=110&type=chunk) - Operating expenses for Q2 2023 increased by **1.3%** YoY, reflecting higher employee-related costs associated with revenue growth, but were significantly offset by a **$16.9 million** decrease in restructuring and reorganization charges[111](index=111&type=chunk)[133](index=133&type=chunk) - Operating income for Q2 2023 was **$28.2 million** (**9.9% margin**), a significant increase from **$7.3 million** (**2.8% margin**) in Q2 2022, mainly due to lower restructuring charges and higher revenue[134](index=134&type=chunk) [Significant Customer Relationships](index=21&type=section&id=Significant%20Customer%20Relationships) The company maintains significant revenue concentration with Charter and Comcast, which accounted for 21% and 19% of Q2 2023 revenue, respectively, with extended agreements Revenue from Largest Customers (as % of Total Revenue) | Customer | Q2 2023 | Q1 2023 | Q2 2022 | | :--- | :--- | :--- | :--- | | Charter | 21% | 21% | 20% | | Comcast | 19% | 18% | 20% | - In April 2023, the agreement with Charter was amended and restated, extending the term through **March 31, 2028**[103](index=103&type=chunk) - On June 29, 2023, Comcast exercised its option to extend its processing and other related solutions agreement through **December 31, 2025**[104](index=104&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2023, the company had $146.2 million in cash and equivalents, supported by operating cash flow and a $450 million revolving credit facility - Principal sources of liquidity as of June 30, 2023, included **$146.2 million** in cash and equivalents, and a **$450.0 million** revolving loan facility with **$145.0 million** available as of July 2023[140](index=140&type=chunk)[118](index=118&type=chunk) - Days Billings Outstanding (DBO) was **65 days** at the end of Q2 2023, an improvement from **68 days** at the end of Q1 2023 and **66 days** at the end of Q2 2022[122](index=122&type=chunk) - During the six months ended June 30, 2023, the company paid **$17.7 million** in dividends and used **$9.4 million** to repurchase common stock for tax withholding requirements, with no repurchases under the formal Stock Repurchase Program[150](index=150&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk) - In August 2023, the company announced its intention to enter into an approximately **$100 million** share repurchase plan through the end of 2024[193](index=193&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks primarily from variable interest rates on its debt and foreign currency fluctuations, though foreign currency exposure is limited - The company is exposed to interest rate risk as its 2021 Credit Agreement is based on a variable adjusted SOFR rate, which replaced LIBOR in April 2023[181](index=181&type=chunk) - Foreign currency exchange risk exists due to global operations, but is limited as approximately **88%** of revenue for the first six months of 2023 was generated in U.S. dollars[202](index=202&type=chunk)[203](index=203&type=chunk) - As of June 30, 2023, the company held **$176.4 million** in settlement and merchant reserve assets, which are exposed to market risk but are held in accounts with major financial institutions[201](index=201&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) As of June 30, 2023, the company's CEO and CFO concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[186](index=186&type=chunk) - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[205](index=205&type=chunk) [Part II - Other Information](index=33&type=section&id=Part%20II%20-%20OTHER%20INFORMATION) The second part covers other relevant information, including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material pending or threatened legal proceedings outside the normal course of business - In the opinion of management, the company is not presently a party to any material pending or threatened legal proceedings[189](index=189&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) There were no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2022 - There were no material changes to the risk factors disclosed in the 2022 Form 10-K during the second quarter of 2023[190](index=190&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2023, the company repurchased 2,189 shares for employee stock incentive plans, with 2,107,047 shares remaining available under the authorized program Share Repurchases in Q2 2023 | Period | Total Shares Purchased | Average Price Paid Per Share | Purchased as Part of Public Plan | | :--- | :--- | :--- | :--- | | April 2023 | 563 | $54.17 | - | | May 2023 | 888 | $49.75 | - | | June 2023 | 738 | $50.70 | - | | **Total** | **2,189** | **$51.21** | **-** | - As of the end of Q2 2023, the maximum number of shares that may yet be purchased under the company's publicly announced plan is **2,107,047**[215](index=215&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section provides an index of all exhibits filed with or incorporated by reference into the Form 10-Q, including credit agreements and customer contracts - Key exhibits filed include the First Amendment to the Amended and Restated Credit Agreement and amendments to the Master Subscriber Management System Agreement with Comcast[210](index=210&type=chunk)

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Financial Data and Key Metrics Changes - The company ended Q1 2023 with $168 million in cash and short-term investments, resulting in a net debt of $276 million and a net debt leverage ratio of 1.0x [1] - Q1 2023 revenue was $299 million, representing a 13% year-over-year growth, all organic [40][44] - Non-GAAP operating income for Q1 2023 was $54 million, with a non-GAAP adjusted operating margin of 19.3%, up from 16.3% in the prior year [41][44] - Non-GAAP adjusted EBITDA was $67 million for Q1 2023, or 24.3% of revenue, compared to 22.9% in Q1 2022 [42] - Non-GAAP EPS for Q1 2023 was $1.04, a 20.9% increase from $0.86 in the prior year [42] Business Line Data and Key Metrics Changes - The digital CX and payments business experienced strong double-digit growth, with a healthy sales pipeline and good conversion rates [12][14] - The payments business delivered excellent topline growth with strong double-digit year-over-year revenue growth, serving approximately 102,000 active merchants [34][36] Market Data and Key Metrics Changes - Revenue from new industry verticals increased from 7% of total revenue in 2017 to 28% in Q1 2023, indicating successful diversification [30] - The company reported a 10% year-over-year revenue growth from its two largest North American cable broadband customers in Q1 2023 [27] Company Strategy and Development Direction - The company aims for long-term organic revenue growth in the 2% to 6% range, with a target of $1.5 billion in revenue by year-end 2025 [20][25] - The strategy includes diversifying revenue by winning in faster growth industry verticals such as retail, government, and healthcare [22][30] - The company is focused on maintaining a disciplined approach to capital management and exploring strategic acquisitions [8][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong sales pipeline and visibility of over 90% of expected 2023 revenue, despite a challenging inflationary environment [7][8] - The company anticipates Q2 to be a low point for profitability metrics due to annual merit increases and normal revenue timing [6][8] - Management reiterated that the first half of 2023 is expected to be slightly stronger than the second half [4][71] Other Important Information - The company declared $9 million in dividends during Q1 2023 and has repurchased $72 million in stock over the last 12 months [2][3] - The company received a Prime rating from ISS and a AA rating from MSCI for its ESG disclosures, indicating strong performance in sustainability practices [50] Q&A Session Summary Question: Insights on product pipeline and demand - Management noted strong double-digit growth in digital CX and payments, with a growing pipeline and good conversion rates [12][14] Question: Partner ecosystem contribution - Management highlighted a combination of direct sales and partnerships, with a focus on industry-specific solutions [16][18] Question: Guidance consistency despite strong Q1 - Management explained that while Q1 was strong, there are macroeconomic pressures and they want to see continued performance before adjusting guidance [71][78] Question: Customer spending pressures - Management emphasized that customers recognize the value and cost-saving potential of their solutions, which helps maintain spending [82] Question: Consolidation in cable companies - Management confirmed ongoing trends towards digital transformation and the company's readiness to support over-the-top video offerings [86]