CSG Systems International(CSGS) - 2025 Q2 - Quarterly Report

Part I - FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and related notes for the reporting period Item 1. Financial Information This section presents the unaudited condensed consolidated financial statements for the quarter and six months ended June 30, 2025, along with detailed notes on accounting policies and key financial items Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity at specific dates Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Total Assets | $1,421,238 | $1,500,687 | | Total Liabilities | $1,130,517 | $1,218,118 | | Total Stockholders' Equity | $290,721 | $282,569 | - Total assets decreased by $79.4 million from December 31, 2024, to June 30, 2025, primarily driven by a decrease in current assets, notably cash and cash equivalents and settlement and merchant reserve assets[9] - Total liabilities decreased by $87.6 million, mainly due to a reduction in current liabilities, including current portion of long-term debt and settlement and merchant reserve liabilities[9] - Stockholders' equity increased by $8.1 million, driven by accumulated earnings and additional paid-in capital, partially offset by treasury stock repurchases[9] Condensed Consolidated Statements of Income This section presents the company's revenues, expenses, and net income over specific reporting periods Condensed Consolidated Statements of Income (in thousands) | Metric | Quarter Ended June 30, 2025 (in thousands) | Quarter Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Revenue | $297,128 | $290,318 | $596,581 | $585,453 | | Cost of Revenue | $150,140 | $152,892 | $304,638 | $310,779 | | Operating Income | $29,857 | $25,420 | $59,240 | $57,217 | | Net Income | $12,267 | $13,829 | $28,397 | $33,296 | | Basic EPS | $0.44 | $0.48 | $1.02 | $1.17 | | Diluted EPS | $0.44 | $0.48 | $1.01 | $1.16 | - Revenue increased by 2.3% for the quarter and 1.9% for the six months ended June 30, 2025, compared to the prior year periods[11] - Operating income increased by 17.4% for the quarter and 3.5% for the six months ended June 30, 2025, reflecting improved operating efficiency[11] - Net income decreased by 11.3% for the quarter and 14.7% for the six months ended June 30, 2025, primarily due to higher income tax provision and other net expenses[11] Condensed Consolidated Statements of Comprehensive Income This section details net income and other comprehensive income items, reflecting the total change in equity from non-owner sources Condensed Consolidated Statements of Comprehensive Income (in thousands) | Metric | Quarter Ended June 30, 2025 (in thousands) | Quarter Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Net Income | $12,267 | $13,829 | $28,397 | $33,296 | | Foreign currency translation adjustments | $13,575 | $(241) | $20,398 | $(5,216) | | Total Comprehensive Income | $25,842 | $13,588 | $48,795 | $28,080 | - Total comprehensive income significantly increased for both the quarter and six months ended June 30, 2025, primarily driven by positive foreign currency translation adjustments[13] Condensed Consolidated Statements of Stockholders' Equity This section outlines changes in stockholders' equity, including net income, stock repurchases, and dividends Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric | June 30, 2025 (in thousands) | January 1, 2025 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Total Stockholders' Equity | $290,721 | $282,569 | | Net Income | $28,397 | $16,130 (Q1 2025) | | Repurchase of common stock | $(40,545) (6 months) | $(22,236) (Q1 2025) | | Dividends | $(18,583) (6 months) | $(9,364) (Q1 2025) | | Stock-based compensation expense | $16,953 (6 months) | $8,404 (Q1 2025) | - Stockholders' equity increased from $282.6 million at January 1, 2025, to $290.7 million at June 30, 2025, reflecting net income and stock-based compensation, partially offset by common stock repurchases and dividends[14] - The company repurchased 647,000 shares of common stock for $40.5 million during the six months ended June 30, 2025, including shares for tax withholdings[14] - Cash dividends totaling $18.6 million were declared for the six months ended June 30, 2025[14] Condensed Consolidated Statements of Cash Flows This section reports cash generated and used by operating, investing, and financing activities Cash Flow Activity (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net cash provided by operating activities | $48,795 | $13,754 | | Net cash provided by (used in) investing activities | $(7,000) | $8,220 | | Net cash used in financing activities | $(152,111) | $(137,823) | | Net decrease in cash, cash equivalents, and restricted cash | $(102,941) | $(118,287) | | Cash, cash equivalents, and restricted cash, end of period | $403,822 | $345,589 | - Net cash provided by operating activities significantly increased to $48.8 million for the six months ended June 30, 2025, from $13.8 million in the prior year, primarily due to favorable changes in operating assets and liabilities[15] - Investing activities shifted from providing $8.2 million in cash in 2024 to using $7.0 million in 2025, mainly due to the absence of business combinations in 2025[15] - Net cash used in financing activities increased to $152.1 million, driven by higher payments on long-term debt and increased common stock repurchases[15] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements 1. GENERAL This note outlines the basis of presentation for the unaudited interim financial statements - The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information and SEC rules, and should be read with the 2024 10-K[16] 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note details the key accounting principles and estimates used in preparing the financial statements - As of June 30, 2025, the aggregate transaction price allocated to remaining performance obligations is approximately $1.7 billion, with about 70% expected to be recognized by the end of 2027[18] Revenue by Type (in thousands) | Revenue Type | Quarter Ended June 30, 2025 | Quarter Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------- | :-------------------------- | :-------------------------- | :----------------------------- | :----------------------------- | | SaaS and related solutions | $269,548 | $262,658 | $539,488 | $524,353 | | Software and services | $16,290 | $14,681 | $34,913 | $37,075 | | Maintenance | $11,290 | $12,979 | $22,180 | $24,025 | | Total Revenue | $297,128 | $290,318 | $596,581 | $585,453 | Revenue by Geographic Region (Percentage of Total Revenue) | Geographic Region | Quarter Ended June 30, 2025 | Quarter Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :-------------------------- | :-------------------------- | :----------------------------- | :----------------------------- | | Americas | 85% | 89% | 86% | 87% | | Europe, Middle East, and Africa | 11% | 6% | 10% | 8% | | Asia Pacific | 4% | 5% | 4% | 5% | | Total Revenue | 100% | 100% | 100% | 100% | Revenue by Customer Vertical (Percentage of Total Revenue) | Customer Vertical | Quarter Ended June 30, 2025 | Quarter Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------ | :-------------------------- | :-------------------------- | :----------------------------- | :----------------------------- | | Broadband/Cable/Satellite | 51% | 53% | 50% | 52% | | Telecommunications | 18% | 16% | 18% | 17% | | Other | 31% | 31% | 32% | 31% | | Total Revenue | 100% | 100% | 100% | 100% | - The company holds settlement and merchant reserve assets and liabilities, which represent cash collected on behalf of merchants and deposits to mitigate risk, totaling $256.1 million in assets and $253.1 million in liabilities as of June 30, 2025[25] - New tax legislation, the One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, is being assessed for potential impact on deferred tax balances and cash flows, but is not currently expected to materially impact the effective tax rate[27] 3. SEGMENT REPORTING AND CUSTOMER CONCENTRATION This note describes the company's operating segments and revenue concentration from major customers - The company operates as one reportable segment, with the President and CEO serving as the Chief Operating Decision Maker (CODM) managing all business activities on a consolidated basis[30][31] - Consolidated net income is used by the CODM to assess performance, allocate resources, and monitor actual results against budgets[31] 4. GOODWILL AND INTANGIBLE ASSETS This note provides details on the carrying value and changes in goodwill and other intangible assets Goodwill (in thousands) | Date | Balance | | :------------------- | :-------- | | January 1, 2025 | $316,041 | | June 30, 2025 | $325,773 | - Goodwill increased by $9.7 million during the six months ended June 30, 2025, primarily due to the effects of changes in foreign currency exchange rates[34] Other Intangible Assets (Net Carrying Value in thousands) | Asset Type | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Acquired customer contracts | $34,071 | $39,377 | | Software | $21,677 | $19,927 | | Total | $55,748 | $59,304 | - Total amortization expense for other intangible assets was $13.3 million for the six months ended June 30, 2025, up from $11.7 million in the prior year[35] - Estimated total amortization expense for intangible assets for the remainder of 2025 is $26.0 million, decreasing to $3.6 million by 2029[35] 5. DEBT This note outlines the company's long-term debt obligations, including credit agreements and convertible notes Long-Term Debt (Net of Unamortized Discounts, in thousands) | Debt Type | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | 2025 Credit Agreement | $122,041 | $- | | 2023 Convertible Notes | $415,726 | $414,382 | | 2021 Credit Agreement | $- | $124,115 | | Total Long-Term Debt | $537,767 | $530,997 | - In March 2025, the company entered into a new $600.0 million 2025 Credit Agreement, replacing the 2021 Credit Agreement, consisting of a five-year revolving loan facility[37] - Upon execution, $140.6 million was drawn from the 2025 Revolver to repay the outstanding balances of the 2021 Term Loan and 2021 Revolver, and for general corporate purposes[38] - As of June 30, 2025, $125.0 million was outstanding on the 2025 Revolver, with $475.0 million available[42] - The 2023 Convertible Notes have a principal amount of $425.0 million, due September 2028, with a cash interest rate of 3.875% and an initial conversion price of $71.05 per share[44][45] 6. ACQUISITIONS This note details recent business acquisitions, including purchase prices and earn-out provisions - The company acquired iCheckGateway.com, LLC (iCG) in June 2024 for $17.6 million in cash, with provisions for up to $15.0 million in future earn-out payments through June 2027[51][52] - During Q2 2025, $5.0 million in earn-out payments were made for iCG, and $3.5 million is accrued as of June 30, 2025[52] - The DGIT Systems Pty Ltd (DGIT) acquisition (October 2021) includes provisions for up to $12 million in earn-out payments through December 2026; $0.1 million was paid in Q1 2025, and $8.0 million is accrued as of June 30, 2025[53][54] 7. RESTRUCTURING AND REORGANIZATION CHARGES This note reports on charges incurred for restructuring and reorganization activities, including workforce reductions Restructuring and Reorganization Charges (in thousands) | Period | 2025 | 2024 | | :------------------------ | :----- | :----- | | Quarter Ended June 30 | $4,588 | $7,099 | | Six Months Ended June 30 | $11,956 | $9,097 | - Restructuring charges for the six months ended June 30, 2025, primarily relate to a workforce reduction of approximately 150 employees ($7.7 million in involuntary terminations) and the planned closure of a design and delivery center in Crawfordville, Florida ($3.2 million incurred to date, with total estimated cost of $5 million)[55] 8. COMMITMENTS, GUARANTEES AND CONTINGENCIES This note discloses the company's contractual commitments, guarantees, and potential contingent liabilities - The company extended its outsourced computing services agreement with Ensono, Inc. through December 31, 2032, resulting in a finance lease right-of-use asset of $10.6 million as of June 30, 2025[58] - As of June 30, 2025, the company had $1.8 million in restricted assets collateralizing bank and performance guarantees, and $3.8 million in off-balance sheet performance guarantees (surety bonds and standby letters of credit)[59][60] - Total aggregate money transmitter bonds outstanding were $23.7 million as of June 30, 2025, to comply with state financial requirements[60] 9. EARNINGS PER COMMON SHARE This note provides the calculation of basic and diluted earnings per common share Weighted-Average Common Shares (in thousands) | Share Type | Quarter Ended June 30, 2025 | Quarter Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :-------------------------- | :-------------------------- | :----------------------------- | :----------------------------- | | Basic weighted-average common shares | 27,843 | 28,546 | 27,829 | 28,531 | | Diluted weighted-average common shares | 28,132 | 28,600 | 28,199 | 28,698 | - The dilutive effect of the 2023 Convertible Notes is computed using the if-converted method and only impacts periods where the average stock price exceeds the effective conversion price[68] 10. STOCKHOLDERS' EQUITY AND EQUITY COMPENSATION PLANS This note details changes in stockholders' equity and information on equity compensation plans - Under the Stock Repurchase Program, the company repurchased approximately 275,000 shares for $17.1 million in Q2 2025 and 428,000 shares for $26.7 million in the six months ended June 30, 2025[70] - As of June 30, 2025, $111.3 million remained authorized for repurchase under the program, to be completed by December 31, 2025[71] - Cash dividends of $0.32 per share ($9.2 million total) were approved for Q2 2025, with total dividends declared for the six months ended June 30, 2025, amounting to $18.6 million[73][74] - Stock-based compensation expense was $8.6 million for Q2 2025 and $17.0 million for the six months ended June 30, 2025[77] 11. SUBSEQUENT EVENT This note describes significant events occurring after the balance sheet date but before financial statement issuance - On July 5, 2025, CSG terminated a master services agreement (MSA) for an implementation project in Latin America due to the customer's unlawful renunciation of obligations[78] - The project recognized $1.4 million in revenue during the six months ended June 30, 2025, and had $18.5 million in accounts receivable ($1.4 million billed, $17.1 million unbilled) as of June 30, 2025[79] - CSG intends to pursue all available remedies and does not believe there has been an impairment to asset carrying values, expecting amounts to be recoverable[79] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition, results of operations, liquidity, and capital resources, highlighting key trends and risks Company Overview This section describes CSG's business model as a SaaS platform company focused on customer engagement and monetization - CSG is a purpose-driven SaaS platform company focused on simplifying customer engagement and monetization for global companies across various industry verticals[82] - The company's solutions include revenue management, digital monetization, customer experience, and payments, built on a cloud-first architecture[82] - R&D and acquisition investments are focused on expanding offerings, including new AI capabilities, to address complex customer needs and improve profitability[84][106] Macroeconomic Outlook This section discusses potential impacts of global economic uncertainties on the company's business operations - Current geopolitical and economic uncertainties, including inflation, tariffs, supply chain disruptions, and labor shortages, could adversely affect the business[86] - The company cannot predict the full impact of these events and may not be able to fully mitigate related financial and competitive impacts[86] Management Overview of Quarterly Results This section provides a high-level summary of the company's financial performance for the recent quarter Second Quarter Highlights (in thousands, except per share amounts and percentages) | Metric | Quarter Ended June 30, 2025 | Quarter Ended June 30, 2024 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Revenue | $297,128 | $290,318 | | Transaction fees | $25,866 | $24,207 | | Operating income | $29,857 | $25,420 | | Operating margin percentage | 10.0% | 8.8% | | Diluted EPS | $0.44 | $0.48 | | Restructuring and reorganization charges | $4,588 | $7,099 | | Amortization of acquired intangible assets | $3,458 | $3,393 | | Earn-out compensation | $7,806 | $- | | Transaction-related costs | $- | $1,036 | | Stock-based compensation | $8,762 | $9,193 | - Revenue increased by 2.3% in Q2 2025, driven by growth in SaaS and related solutions, including revenue from the iCG acquisition[87] - Operating income rose to $29.9 million (10.0% margin) in Q2 2025 from $25.4 million (8.8% margin) in Q2 2024, due to decreased restructuring charges and benefits from cost efficiency actions[88] - Diluted EPS decreased to $0.44 in Q2 2025 from $0.48 in Q2 2024, mainly due to a higher effective income tax rate related to DGIT earn-out compensation[89] Significant Customer Relationships This section highlights revenue concentration from key customers and associated risks - A large percentage of revenue is generated from a limited number of customers, with Charter and Comcast exceeding 10% of total revenue[91] Customer Revenue Concentration (Percentage of Total Revenue) | Customer | Quarter Ended June 30, 2025 | Quarter Ended June 30, 2024 | | :------- | :-------------------------- | :-------------------------- | | Charter | 19% | 21% | | Comcast | 17% | 19% | - The company faces inherent risks from customer concentration, including potential adverse effects on financial position and results of operations if a significant customer terminates contracts, reduces services, or experiences financial difficulties[94] Contract Termination This section details the termination of a master services agreement and its financial implications - On July 5, 2025, CSG terminated a master services agreement (MSA) for an implementation project in Latin America due to the customer's unlawful renunciation of obligations[96] - The project generated $1.4 million in revenue during the six months ended June 30, 2025, and had $18.5 million in accounts receivable ($1.4 million billed, $17.1 million unbilled)[97] - CSG does not expect a material impact on 2025 revenue and believes the accounts receivable are recoverable, but an impairment is possible if collection efforts are unsuccessful[97] Critical Accounting Policies and Estimates This section discusses the key accounting policies and estimates requiring significant management judgment - Key critical accounting policies and estimates include revenue recognition, income taxes, and loss contingencies, which involve complex judgments and assumptions[99] Results of Operations This section provides a detailed analysis of revenue, expenses, and profitability trends Revenue by Type (in thousands) | Revenue Type | Quarter Ended June 30, 2025 | Quarter Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------- | :-------------------------- | :-------------------------- | :----------------------------- | :----------------------------- | | SaaS and related solutions | $269,548 | $262,658 | $539,488 | $524,353 | | Software and services | $16,290 | $14,681 | $34,913 | $37,075 | | Maintenance | $11,290 | $12,979 | $22,180 | $24,025 | | Total Revenue | $297,128 | $290,318 | $596,581 | $585,453 | - Revenue growth was primarily driven by SaaS and related solutions, including contributions from 2024 acquisitions, and approximately $6 million from a software license arrangement in Q2 2025[102] Revenue by Geographic Region (in thousands) | Geographic Region | Quarter Ended June 30, 2025 | Quarter Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :-------------------------- | :-------------------------- | :----------------------------- | :----------------------------- | | Americas | $253,164 | $258,035 | $512,511 | $512,573 | | Europe, Middle East, and Africa | $31,855 | $18,989 | $58,890 | $45,818 | | Asia Pacific | $12,109 | $13,294 | $25,180 | $27,062 | | Total Revenue | $297,128 | $290,318 | $596,581 | $585,453 | - Total operating expenses increased by 0.9% for the quarter and 1.7% for the six months, mainly due to acquisition-related expenses (DGIT earn-out compensation) and acquired businesses, partially offset by cost efficiency actions[103] - Cost of revenue decreased by 1.8% for the quarter and 2.0% for the six months, attributed to lower employee-related costs and cost efficiency actions, despite increased SaaS revenue[105] - R&D expense increased by 5.2% for the quarter and 9.1% for the six months, reflecting increased investments in faster-growing SaaS solutions and acquisitions[106] - SG&A expense increased by 10.4% for the quarter and 5.7% for the six months, primarily due to $7 million of DGIT earn-out compensation in Q2 2025[107] - Operating income increased to $29.9 million (10.0% of revenue) for Q2 2025 and $59.2 million (9.9% of revenue) for the six months, benefiting from cost efficiency actions[110] - Interest income decreased due to lower cash balances swept into overnight money market accounts[111] - A $0.5 million loss on debt extinguishment was recognized in March 2025 due to the replacement of the 2021 Credit Agreement[112] - Other, net shifted from income to expense, primarily due to foreign currency movements[113] - The effective income tax rate increased to 38% for Q2 2025 and 31% for the six months, mainly due to DGIT earn-out compensation for which a valuation allowance was established[114] Liquidity This section assesses the company's ability to meet short-term obligations using available cash and credit facilities - As of June 30, 2025, cash and cash equivalents were $145.9 million, with $475.0 million available under the 2025 Revolver[115][116] Cash and Cash Equivalents by Geographical Region (in thousands) | Region | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Americas | $89,023 | $102,417 | | Europe, Middle East, and Africa | $41,089 | $43,609 | | Asia Pacific | $15,763 | $15,763 | | Total | $145,875 | $161,789 | - Restricted cash totaled $1.8 million, and settlement and merchant reserve assets were $256.1 million as of June 30, 2025[118] - Net cash provided by operating activities for the six months ended June 30, 2025, was $48.8 million, a significant increase from $13.8 million in the prior year, primarily due to changes in operating assets and liabilities[121] - Days Billings Outstanding (DBO) remained consistent at 66 days for Q2 2025 and Q2 2024, indicating stable collection performance[123] - Unbilled trade accounts receivable increased by $10.6 million to $90.8 million, with $17.1 million related to the recently terminated Latin America project[127] Cash Flows from Investing Activities This section details cash flows related to the acquisition and disposal of long-term assets and businesses - Capital expenditures for software, property, and equipment were $7.2 million for the six months ended June 30, 2025, a decrease from $9.1 million in the prior year[131] - Net cash provided by business combinations was $17.3 million for the six months ended June 30, 2024, with no significant business combination cash flows in 2025[132] Cash Flows from Financing Activities This section reports cash flows from debt, equity transactions, and dividend payments - Cash dividends paid totaled $18.5 million for the six months ended June 30, 2025, up from $18.1 million in the prior year[133] - The company repurchased $26.7 million of common stock under its Stock Repurchase Program and an additional $13.8 million for tax withholdings during the six months ended June 30, 2025[134][135] - Long-term debt activities included borrowing $140.6 million from the new 2025 Revolver and repaying $135.6 million of the previous 2021 Credit Agreement debt[137] - Net settlement and merchant reserve activity resulted in $(89.1) million cash used in financing activities for the six months ended June 30, 2025[139] Off-Balance Sheet Arrangements This section discloses contractual obligations not recognized on the balance sheet - Off-balance sheet arrangements are primarily limited to money transmitter bonds and performance bonds, which are not expected to have a material impact on financial condition or results of operations[141] Capital Resources This section outlines the company's available capital, including cash, credit, and planned uses - Current capital sources include $145.9 million in cash and cash equivalents (58% in U.S. dollars) and $475.0 million available under the 2025 Revolver[142] - Expected uses of capital include common stock repurchases ($111.3 million authorized remaining for 2025), cash dividends (expected quarterly), and potential acquisitions[143][146] - The company expects to return over $100.0 million to shareholders through combined common stock repurchases and cash dividends in 2025[146] - Long-term debt obligations include $125.0 million from the 2025 Credit Agreement and $425.0 million in 2023 Convertible Notes, with expected interest payments of $7.3 million and $16.5 million, respectively, over the next twelve months[149][150] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discusses the company's exposure to various market risks, including interest rate risk, market risk related to cash and debt, and foreign currency exchange rate risk Interest Rate Risk This section analyzes the company's exposure to fluctuations in interest rates on its debt obligations - The 2023 Convertible Notes have a fixed interest rate, limiting exposure to interest rate changes for this debt[154] - Interest rates on the 2025 Credit Agreement are variable, based on adjusted SOFR plus an applicable margin[154] - A hypothetical 10% adverse change in the adjusted SOFR rate would not materially impact results of operations[155] Market Risk This section assesses the company's exposure to market value changes in financial instruments - The company has minimal market risk for cash and cash equivalents ($145.9 million as of June 30, 2025) due to short maturities of instruments[156] - Market risk is associated with settlement and merchant reserve assets ($256.1 million as of June 30, 2025), held in accounts with major financial institutions[157] - The fair value of the 2023 Convertible Notes was estimated at $481.3 million as of June 30, 2025, influenced by interest rates and common stock price/volatility[158] Foreign Currency Exchange Rate Risk This section discusses the impact of foreign currency fluctuations on the company's financial results - The company is exposed to foreign currency exchange risk from operations in various currencies, including the British Pound, Euro, Australian Dollar, Saudi Riyal, and South African Rand[159] - Approximately 88% of revenue was generated in U.S. dollars during the six months ended June 30, 2025[160] - A hypothetical 10% adverse change in exchange rates as of June 30, 2025, would not have a material impact on results of operations[160] Item 4. Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes to internal control over financial reporting during the quarter Disclosure Controls and Procedures This section confirms the effectiveness of controls ensuring timely and accurate financial disclosures - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[161] Internal Control Over Financial Reporting This section reports on any material changes to the company's internal controls over financial reporting - The CEO and CFO concluded that there has been no material change in the company's internal control over financial reporting during the quarter ended June 30, 2025[162] Part II - OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal, risk, and equity matters Item 1. Legal Proceedings This section states that the company is not currently a party to any material pending legal proceedings - The company is not presently a party to any material pending legal proceedings[164] Item 1A. Risk Factors This section refers to the risk factors disclosed in the company's 2024 10-K and notes no material changes during the second quarter of 2025, while also referencing the macroeconomic outlook discussed in MD&A - There were no material changes to the risk factors disclosed in the 2024 10-K during the second quarter of 2025[165] - Reference is made to the 'Macroeconomic Outlook' in Item 2 for additional potential risks and uncertainties[165] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's common stock repurchases during the second quarter of 2025, including those under publicly announced plans and for tax withholdings Common Stock Repurchases (Q2 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Program | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Program | | :---------------- | :----------------------------- | :--------------------------- | :---------------------------------------------------------------- | :---------------------------------------------------------------- | | April 1 - April 30 | 98,959 | $59.07 | 97,830 | $122,571,557 | | May 1 - May 31 | 98,474 | $64.14 | 90,834 | $116,760,007 | | June 1 - June 30 | 91,962 | $64.05 | 85,690 | $111,275,656 | | Total | 289,395 | $62.38 | 274,354 | | - The total number of shares purchased includes 15,041 shares not part of a publicly announced plan, which were purchased and cancelled for stock incentive plans[167] - As of June 30, 2025, $111.3 million remained authorized for repurchase under the Stock Repurchase Program, to be completed by December 31, 2025[167] Item 5. Other Information This section reports that no directors or officers adopted, modified, or terminated any Rule 10b5-1 trading plans during the second quarter of 2025 - No directors or officers adopted, modified, or terminated any Rule 10b5-1 trading plans during the second quarter of 2025[170] Item 6. Exhibits This section lists the exhibits filed or incorporated by reference with the Form 10-Q, including amendments to agreements, certifications, and XBRL documents - Exhibits include the Twenty-Fifth Amendment to the CSG Master Subscriber Management System Agreement with Comcast Cable Communications Management, LLC, and various certifications (302 and 906 of Sarbanes-Oxley Act)[173] - XBRL documents (Instance, Taxonomy Extension Schema, and Cover Page Interactive Data File) are also included[173]