CSG Systems International(US:CSGS)2020-05-09 23:21Financial Data and Key Metrics Changes - For Q1 2020, GAAP revenue was $246 million, slightly up year-over-year, while non-GAAP adjusted revenue was $227 million, essentially flat year-over-year [33] - Non-GAAP operating income was $42 million, representing an operating margin of 18.5%, benefiting from a mark-to-market reduction in compensation liability due to stock market decline [34] - Non-GAAP adjusted EBITDA was $55 million, up slightly year-over-year, representing 24% of non-GAAP adjusted revenue [35] - Non-GAAP EPS for the quarter was $0.87, a 6% increase compared to the same quarter last year [35] Business Line Data and Key Metrics Changes - The company experienced some softness in project implementations starting mid-March due to COVID-19, but overall, the majority of business remained strong [17][18] - The payments business saw a slowdown in the last two weeks of March, particularly affecting small to midsized companies, but was less impacted than other sectors like travel and hospitality [21][56] - The company extended its long-term relationship with Mediacom for another five years, indicating continued strength in its client relationships [16] Market Data and Key Metrics Changes - North American broadband, cable, and satellite customers continued to perform close to business as usual, driven by increased demand for internet connectivity during quarantine [17] - Global communication service providers showed mixed results, with some experiencing slowdowns in early engagement stages while others accelerated discussions about digital customer engagement solutions [18] - EMEA and APAC revenues were down, with EMEA remaining in line with previous quarters and APAC showing softness not directly correlated to COVID-19 [66] Company Strategy and Development Direction - The company is focused on maintaining a healthy balance sheet and liquidity, with $131 million in cash and short-term investments and $200 million available on a committed line of credit [36][38] - The company plans to continue evaluating investments and spending as it adapts to the new normal, emphasizing a product platform model that reduces dependency on heavy investments [27] - The pandemic has accelerated the need for digital transformation, positioning the company to support clients in adapting to new customer engagement methods [75] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilient business model, which provides over 90% revenue visibility entering each year [9][48] - The company anticipates a revenue range adjustment to $960 million to $1 billion for 2020, reflecting a 3% decrease due to project delays and economic impacts from COVID-19 [41] - Management noted that while the majority of business remains unaffected, there are risks in specific areas such as payments and managed services [41] Other Important Information - The company has implemented measures to protect employee health and safety during the pandemic, including work-from-home mandates for over 90% of employees [12][13] - The company has doubled its supply of paper and ink and accelerated printer additions to mitigate potential disruptions in print and mail facilities [28] Q&A Session Summary Question: What is the primary reason for the revenue guidance adjustment? - The primary reason for the revenue guidance adjustment is a $30 million reduction due to project delays and longer sales cycles, particularly for new projects [53][55] Question: What volume declines are expected in the payments business? - The payments business is experiencing less than 30% decline, with signs of recovery as economic activities resume [57] Question: Were there any price concessions in the Mediacom deal? - There were price concessions during the renewal, but the deal was considered fair for both parties, with healthy discussions around the terms [58][61] Question: How are IT budgets changing among primary end customers? - There have not been significant changes in IT budgets, but spending is being approached with caution, especially in EMEA and APAC regions [66][68]