CSG Systems International, Inc.

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 8K. With me today on the phone are Brian Shepard, Chief Executive Officer, and Hai Tran, Chief Financial Officer. With that, I'd like to now turn the call over to Brian.

Thanks, John. For those using our slides today, please join us on slide 4. Over the past year, I've highlighted how CSG will strive to win big in the market and consistently outperform by investing in our culture, investing in our talent, and investing in our future-ready software platforms. These investments, combined with our customer-obsessed values, are elevating every part of CSG. Our Q4 and full year results prove that our strategy is working. 2021 was an exciting year for CSG as we surpassed $1 billion in annual revenue for the first time ever. We achieved this milestone by growing revenue 5.6% year over year, ending the year with $1.046 billion in revenue. We also delivered our fastest organic revenue growth in over a decade. Our 2021 business highlights also included the exciting six-year contract renewal and significant expansion with our largest customer, Charter Communications. This deal is the largest deal in company history and makes CSG the BSS provider of choice for all 32 million Charter customers supporting residential and small to medium business for high-speed broadband video and voice. And this giant win proves that CSG has the right SaaS platforms, the right industry leadership, and the right talent to win meaningful market share away from our competitors. Further on the customer renewal front, we announced an exciting renewal with DISH Networks, our third largest customer. The contract extends our relationship with DISH for four and a half more years with contractual guarantees, and it paves the way to celebrate our 30th anniversary as we help this innovative leader achieve greater success. So what does all this contract renewal success and expansion mean? It means that these renewals become the springboard for CSG's continued organic revenue growth in 2022 and beyond. Additionally, when combined with our large healthy sales pipeline with more late-stage deal value than ever, it also means that CSG is increasing our 2022 revenue guidance, which Hai will share the details on shortly. Turning to slide five, I will provide some updates on five strategic objectives that will continue to increase our velocity. At this point, these themes should be familiar to everyone who has been following our progress the last few quarters. CSG aspires to more than double our long-term organic revenue growth rate in the 2% to 6% range, which we proudly achieved at the upper end in 2021. We aim to add operating scale and expand our operating leverage by growing to at least $1.5 billion in revenue by year-end 2025, with a stretch goal of $2 billion in revenue, which, yes, is ambitious, but not out of the realm of possibility. We also strive to be the number one SaaS provider of choice for global CSPs by providing the most value-adding technology solutions and by being easier to do business with than our competitors. We plan further revenue diversification as we expand in big, faster growth industry verticals with more direct sales and channel partner success in retail, government, financial services, healthcare, technology, and more. And finally, we will complement our accelerated organic revenue growth with disciplined value-enhancing M&A to turbocharge the value we bring our customers. Starting on slide six, let's get into a little more detail on each. First, with respect to doubling our organic growth, our 2021 results prove that we are delivering on this commitment. We reported $1.046 billion in total revenue, resulting in 5.6% year-over-year growth. Even better, our four-year adjusted revenue was $980 million, representing 6.2% year-over-year growth. Both are the fastest organic annual revenue growth for CSG in over a decade. I want to take a moment to thank our 5,000-plus CSGers all around the world for the big impact you all made in 2021. Your dedication, your excellence, and your continued obsession to wow our customers each and every day are what's powering CSG's resurgence. Thank you, everyone. On the right-hand side of slide six, Second, we committed to boldly elevate our market aspirations, and this is exactly what we're doing and will continue to do. Last quarter, we unveiled CSG's $2 billion and beyond growth strategy. So let me reshare some of the details. By 2025, we aspire to gain scale in the markets where we compete to exceed $1.5 billion to $2 billion in annual revenue. We aspire to expand CSG's operating leverage and use our strong, healthy balance sheet to deliver EPS growth that outpaces revenue growth. And we aspire to consistently deliver better and better business results so that our shareholders are rewarded with the trading multiples that they deserve when they invest in a purpose-driven, faster growth, multi-industry vertical SaaS platform company like CSG. The question we keep getting is how will CSG get there? $2 billion revenue, EPS growth that outpaces revenue, and a true SaaS trade multiple sounds ambitious. You're right. It is an ambitious plan. Yet this management team absolutely believes that we can deliver against it with the same discipline and high integrity that consistently defines CSG. Our disciplined strategic plan includes a base case component and a stretch component. Our base case, we aspire to exceed $1.5 billion in revenue, which means even if we come up a little short against our stretch case ambition, CSG will still grow revenue by over 50% and add over $500 million in profitable recurring revenue by 2025. To reach the $2 billion stretch case revenue aspiration over the next five years, we will continue to allocate capital to its most productive and value-added use and to eventually close bigger-scale acquisitions that become even more transformational for both CSG and the industries that we serve. On the last point, I'd like to reinforce a key point shared on many analyst and investor calls. This management team is laser focused on creating shareholder value, not building empires. We will hold ourselves accountable to adding scale, accelerating growth, expanding our operating leverage, and deploying capital to its highest and most productive use, all with a focus on rewarding our shareholders, just like we work hard every day to delight our customers and our employees. Turning to slide seven, we are committed to being the number one technology provider of choice for communication service providers globally. And our continued sales success with both North American and global CSPs prove that we're executing well against this strategic priority. In the cable market, we have long-term guaranteed contracts to be the BSS provider of choice for all 65 million combined Comcast and Charter subscribers, the two largest cable providers, with CSG having migrated tens of millions of subscribers off of both Amdocs and Netcracker over the last six years. We plan to build on this market share success in the years ahead. Working hand-in-hand with talented colleagues at Charter, CSG also successfully migrated over 5 million subscribers in the Ohio, Wisconsin, and Kansas City markets in 2021, including completing over 4 million migrations in the second half of 2021. While the timing could still vary a little, we anticipate migrating all remaining Charter customers over the next 9 to 15 months. And CSG's success is not limited to North America. In the global telecom market, we continue to grow with new wins and contract extensions with leading telecom operators all around the world. In early 2021, we signed an exciting new deal with Mobily, the second largest wireless operator in Saudi Arabia with nearly 14 million customers. Mobiley was looking for a partner to future-proof their business, accelerate innovation, and improve their customer experience. Demonstrating our strength as a technology leader in wireless, CSG was selected as the prime systems integrator to deploy our full revenue management platform for this digital leader. We expect big growth to continue in our Middle East and Africa telecom business. Another exciting global telecom win is TalkTalk, the UK's leading value-for-money connectivity provider. CSG's cloud-based end-to-end SaaS platform enabled TalkTalk to launch the country's first-ever Netflix subscription outside of a traditional TV bundle. With CSG's marketplace solution at the heart of its entertainment operations, TalkTalk has the scalability to add new content providers and evolve its offering to keep pace with the ever-changing consumer demands. And finally, in May, we announced a multi-year contract expansion with MTN South Africa, the largest mobile network operator in Africa with over 30 million consumers. As part of this agreement, we are advancing and enhancing MTN's digital ecosystem, which includes migrating MTN's enterprise and consumer customers to a new technology platform that will drive future growth and enable rapid delivery of innovative new products and services. We look forward to continuing our journey with MTN as we help them digitally transform their business. Turning to slide eight, I shared that CSG would continue diversifying our industry vertical revenue, and we did exactly this in 2021 as we grew revenue coming from large, faster-growth, new industry verticals. Since 2017, CSG has grown revenue from exciting new industry verticals like retail, government, financial services, and healthcare from $55 million, or 7% of total revenue, to more than $250 million, or 24% of total revenue this year. Being a partner of choice for some of the biggest brands in higher growth industry verticals where CSG helps them digitize and modernize their customer engagement and their cloud payments is a game changer for CSG. During the year, we won and expanded many exciting new deals with leading brands in faster growth big industry verticals. We won and later in 2021 expanded deals with two of the largest drugstore chains in the U.S. and one of the largest retailers in the world. who all selected CSG software to power their retail and clinic customer engagements. Our solution is increasingly important to all three of these large customers, given the unprecedented number of inbound requests that healthcare providers, retail pharmacies, and government agencies are getting related to COVID vaccinations, appointments, and prescriptions. We also expanded our relationship with one of the largest software companies in the world as they continue to unlock value in different parts of their business by leveraging CSG's innovative conversational AI, short for artificial intelligence, SaaS platform. We also expanded our penetration in the fitness market by signing a good deal with 24 Hour Fitness, a leading fitness center chain to digitize their customer engagement. And finally, we close the deal with a leading insurance provider to also digitize their customer engagement. This important win adds another great brand to our enterprise-grade customer engagement software platform, which also serves the property and casualty insurance markets. In the payments market, we continue to see positive signs that post-COVID growth is beginning to return with strong industry vertical sales results propelled by our industry-leading recurring revenue fast payment platform. CSG Forte provides award-winning full payback short for payment facilitation capabilities for over 81,000 active merchants and ISV partners who need ACH credit, payment gateway, and payment processing capabilities, serving a wide range of recurring revenue industry verticals. During 2021, we signed key wins in the government and healthcare ISV markets to further extend our payments leadership in these critical bill or direct recurring revenue industry verticals. Also, as a leader in ACH processing, we continue to add scale by signing ISV partners in fast-growing industry verticals like property management. Looking ahead, we've built an exciting sales pipeline across multiple verticals and payments that are contributing to both sequential quarter-over-quarter and Q4 year-over-year organic revenue growth, which bodes well for our return to double-digit organic growth in the payments market. Fifth, we told you that CSG would be a disciplined strategic acquirer of SaaS platforms, which is exactly what we did in 2021. We expanded our offering in the digital customer engagement market with the purchase of Kitewheel, a SaaS-based recurring revenue company that supports real-time interaction management through omni-channel journey orchestration and journey analytics. I'm pleased to report that the post-merger integration is progressing well as we added and integrated fantastic new talent and SaaS capabilities. A few months ago, we unveiled CSG Exponent, a bold and innovative new multi-vertical market offering that combines CSG's proven digital engagement SaaS platform with our new journey-as-a-service capabilities that Kygo brings to the table. This new microservices-based SaaS platform drives differentiated digital experiences that are proactive, predictive, and personalized as CSG is helping leading brands compete and win with great customer experience all around the world. Our second half sales performance in the digital customer engagement market was also encouraging as we signed and extended deals with a number of leading brands in financial services and retail. We couldn't be more excited about our digital customer engagement growth opportunities in 2022 and beyond. In revenue management, we made two value-adding acquisitions this year. First, we acquired Tango Telecom, a leading supplier of convergent policy control and messaging solutions. The acquisition was a culmination of a longstanding relationship that delivers end-to-end digital monetization and 5G solutions to some of the world's largest and most successful CSPs. Second, we announced in October that CSG acquired DigiSystems, a configure price quote, CPQ for short, and order management technology platform that has a strong presence and adoption in the global telecommunications market. Digit is recognized by TM Forum as a leading multi-cloud microservices platform, which has won 11 major industry awards since 2015, including TM Forum's most innovative use of assets award, excellent award for open APIs, and outstanding architecture. As we look ahead, we will remain laser-focused on winning more and more bigger deals in these exciting new arenas and unlocking even greater value from existing and new acquisitions that will help CSG grow and elevate even more. As I wrap up on slide nine, across all five strategic priorities, the results speak for themselves. CSG is building meaningful business momentum that we fully expect will fuel our continued long-term growth and transformation. We hope you see the same things we do when we analyze our business. CSG's purpose is bold and inspiring. Our strategic vision and our daily execution are focused and disciplined. And we are elevating our culture, our diversity and our global talent. And on this note, I'm thrilled to introduce Hai Tran, CSG's new CFO. Hai and I have been working together now for several months, and I couldn't be more excited by what he brings to the table. His proven track record as a strategic, growth-oriented executive with deep public company technology and global SaaS experience make him the perfect fit for CSG at this transformative moment in our history. With that as an introduction, I'll turn it over to Hyde to provide more detail on Q4 and full year 2021 financial results prior to digging deeper into our 2022 guidance. Thank you, Brian, for the kind introduction.

Before I get into my slides, I wanted to take a moment to say how excited I am to join CSG at this truly transformational time in the company's history. I'm passionate about helping companies grow, and I see CSG as having all the critical ingredients for accelerating growth, including a robust strategy focused on being a purpose-driven platform company that helps the biggest and best brands monetize and engage their customers in the digital world.