CSGS - CSG Systems International Inc. (CSGS) Q4 2023 Earnings Call Transcript

2024-02-07 21:09:04 ET

CSG Systems International, Inc. (CSGS)

Q4 2023 Earnings Conference Call

February 07, 2024 5:00 PM ET

Company Participants

John Rea – Treasurer and Head of Investor Relations

Brian Shepherd – Chief Executive Officer

Hai Tran – Chief Financial Officer

Conference Call Participants

Maggie Nolan – William Blair

Matthew Harrigan – Benchmark

Greg Burns – Sidoti & Company

George Notter – Jefferies

Nehal Chokshi – Northland Capital Markets

Brett Knoblauch – Cantor Fitzgerald

Michael Berg – Wells Fargo

Presentation

Operator

Thank you for standing by. My name is Greg, and I will be your conference operator today. At this time, I would like to welcome everyone to CSG’s Q4 and Full Year 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions]

I would now like to turn the call over to John Rea, Treasurer and Head of Investor Relations. John, please go ahead.

John Rea

Thank you, operator, and thanks to everyone for joining us. Like last quarter, we will be working from a slide deck, which can be found on the Investor Relations section of our website. Please take a moment to locate these slides. Today’s discussion will contain a number of forward-looking statements. These include, but are not limited to, statements regarding our projected financial results, our ability to meet our clients’ needs through our products, services and performance and our ability to successfully integrate and manage acquired businesses in order to achieve their expected strategic operating and financial goals. While these risks reflect our best current judgment, they are subject to risks and uncertainties that could cause our actual results to differ materially. Please note that these forward-looking statements reflect our opinions only as of the date of this call, and we undertake no obligation to revise or publicly release any revision to these forward-looking statements in light of new or future events.

In addition to factors noted during this call, a more comprehensive discussion of our risk factors can be found in today’s press release as well as our most recently filed 10-K and 10-Q, which are all available in the Investor Relations section of our website. Also, we will discuss certain financial information that is not prepared in accordance with GAAP. We believe that these non-GAAP financial measures, when reviewed in conjunction with our GAAP financial measures, provide investors with greater transparency to the information used by our management team in our financial and operational decision-making. For more information regarding our use of non-GAAP financial measures, we refer you to today’s earnings release and non-GAAP reconciliation tables on our website, which will also be furnished to the SEC on Form 8-K. With me today on the phone are Brian Shepherd, Chief Executive Officer; and Hai Tran, Chief Financial Officer.

With that, I’d like to now turn the call over to Brian.

Brian Shepherd

Thanks, John. Hi, everyone. We appreciate you joining the call as we begin on Slide 4. Team CSG finished a record-setting 2023 with a strong fourth quarter. We posted 7.3% year-over-year revenue growth in 2023, all coming from organic growth. Our performance this year was the best annual result in nearly two decades. Our full year non-GAAP adjusted operating margin was 17.2%, which is a significant improvement over the 16.6% we reported in 2022 proving our ability and our commitment to consistently expand CSG’s operating leverage with disciplined execution.

Another highlight of the year was our strong 2023 free cash flow performance, especially during Q4. For the year, we generated $104 million in free cash flow, including over $74 million in Q4, our best quarterly free cash flow performance on record. At the end of the day, our faster revenue growth is fueled by strong ongoing market demand for CSG’s industry-leading SaaS products and good sales performance across all areas of our business. CSG’s sales pipeline is large and healthy as we win and wow big new customers in a wide variety of faster growth industry verticals....

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