CSG Systems International(US:CSGS)2021-11-06 04:00Financial Data and Key Metrics Changes - Q3 2021 revenue grew by 7.8% year-over-year, driven predominantly by organic revenue growth, marking the highest quarterly organic revenue growth in over a decade [9][10] - Year-to-date revenue results through nine months increased by 5.7% year-over-year, achieving the commitment to more than double organic revenue growth [10][19] - Non-GAAP EPS for Q3 was $0.88, up $0.12 year-over-year, with year-to-date non-GAAP EPS at $2.52, reflecting a 13.5% increase [52] Business Line Data and Key Metrics Changes - Revenue management product platforms saw significant growth, serving many of the largest communication service providers [48] - Customer engagement offerings also experienced growth, particularly in high-growth industry verticals [48] Market Data and Key Metrics Changes - CSG's revenue from higher growth industry verticals outside of core CSP customers increased from $55 million (7% of total revenue) in 2017 to over $225 million (23% of total revenue) last year [34] - The company is expanding its footprint in the global telecom market, with contract renewals and extensions with leading telecom operators [32] Company Strategy and Development Direction - CSG aims to achieve $2 billion in annual revenue by 2025, focusing on gaining scale in competitive markets and expanding operating leverage [22][25] - The company is committed to diversifying its industry vertical revenue, targeting 30% or more from higher growth sectors [34][80] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, highlighting strong sales performance and a robust sales pipeline [65] - The overall rising water level in the North American broadband industry is seen as beneficial for CSG's growth [65] Other Important Information - CSG announced a significant contract renewal with DISH Networks and the largest contract in its history with Charter Communications [11][12] - The company is focused on integrating recent acquisitions, including Kitewheel and DGIT, to enhance its service offerings [41][43] Q&A Session Summary Question: How is CSG able to drive top line growth and consistent margins in 2022 following recent contract renewals? - Management attributed growth to a strong sales pipeline, the success of customers in the broadband industry, and the expansion of offerings to existing and new customers [65] Question: What is the timeline for migrating Charter subscribers to the CSG platform? - The migration is expected to occur steadily over a 12 to 18-month period, with significant progress anticipated [66][67] Question: What is the acquisition strategy moving forward? - CSG's acquisition approach focuses on strategic, financial, and cultural fit, targeting both large-scale and innovative SaaS platforms [70][72] Question: How important are industry verticals in the journey to $2 billion? - Industry vertical diversification is crucial, with growth driven by both new deployments and displacing competitors [78][80]