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.

A strong balance sheet coupled with long-term customer relationships, passionate leadership, and an empowering culture. In fact, CSG's guiding principles and mission resonate deeply with me by putting customers and employees at the center of everything we do, which will drive long-term and sustained value creation for all of our stakeholders.

So now, let's review our financial performance and jump right into slide 11. We generated $275 million of revenue and $258 million of non-GAAP adjusted revenue during the fourth quarter.

These results represent 5.6% and 5.9% year-over-year growth, respectively, which were both substantially driven by organic growth. For the full year, both our revenue and non-GAAP adjusted revenue were up approximately 6% year-over-year. The year-over-year increase in revenue and non-GAAP adjusted revenue was driven primarily by the continued growth of our revenue management product platforms. where we serve many of the largest communication service providers in the world. In addition, we are seeing healthy growth in our customer engagement offerings, where we serve customers in large high growth industry verticals. While revenue growth was primarily organic, Inorganic growth through acquisitions is an important component of our overall growth strategy, focused on providing us access to and or increased penetration into multiple industry verticals where we can help our customers navigate and execute on their digital roadmap. Throughout 2021, you have seen us execute on that strategy as we close multiple new acquisitions, including Tangle Telecom, KiteWheel, and Digit Systems. As we accelerate our inorganic revenue growth in the quarters ahead, we will remain disciplined by focusing on the strategic, financial, and cultural and integration set with an appropriate risk-return profile for each acquisition we close. Our fourth quarter non-GAAP operating income was $40 million, or 15.6% of non-GAAP adjusted revenue. as compared to $43 million, or 17.7% in the same prior year period. Our Q4 2021 result was impacted by elevated one-time severance expense associated with changes intended to strengthen our growth-oriented executive leadership team, which totaled approximately $2 million.

We do not anticipate this elevated level of severance expense to recur in 2022. For the full year, our non-GAAP operating margin as a percentage of non-GAAP adjusted revenue was 16.5%, consistent with our longer-term target range of between 16% and 18%. Our non-GAAP adjusted EBITDA was $56 million for the fourth quarter, or 21.7% of non-GAAP adjusted revenue, as compared to $57 million, or 23.3% in the same prior year period.

For the full year, our non-GAAP adjusted EBITDA was $221 million, or 22.6% of non-GAAP adjusted revenue. For the full year, our non-GAAP EPS was $3.35, a 7.4% increase from the same prior year period. As proud as we are to be accelerating top-line revenue growth, we're equally excited to deliver strong EPS growth for our shareholders, where our bottom line grew even faster than our top line. Turning to slide 12, I'll go through the balance sheet, our cash flow generation, and shareholder returns for the quarter and full year.

Our fourth quarter 2021 cash flow from operations was $52 million, as compared to $57 million in the prior year period.

Further, we generated non-GAAP free cash flows of $48 million in Q4 of 2021, as compared to $52 million in Q4 of 2020. For the full year, we delivered $114 million in free cash flow, which, as we expected, was a decrease from the previous year's $144 million. As we mentioned on our Q4 2020 earnings call, our reported 2020 results benefited from, one, strong accounts receivable collections that were well in excess of historical trends and did not repeat in 2021, and two, certain costs that were incurred in 2020 that were paid in 2021, including separation costs related to the departure of our former CEO, a company-wide COVID-related cash bonus of $500 that was given to each employee in early 2021 to recognize their hard work and dedication during the first year of this COVID pandemic and COVID-related deferred tax payment. Additionally, the aforementioned elevated severance expense of $2 million in Q4 2021 was also detrimental to our Q4 and four-year cash flows. The combination of these one-time and timing-related items shifted the working capital impact between 2020 and 2021. That said, our full-year cash flow generated from operations before working capital movement increased from $164 million in 2020 to $179 million in 2021, a 9.1% year-over-year increase in cash flow from operations, which is the highest it's been in over a decade.

Moving on, we ended the fourth quarter with $234 million of cash and short-term investment. That, along with our outstanding debt at quarter end, results in $144 million in net debt and a net debt leverage ratio of 0.6 times. As a reminder, we refinanced our existing term bank debt and revolving credit agreement in September. This transaction had multiple benefits, including extending the tenor of our debt, lowering our borrowing costs,

and increasing our currently unused barn capacity to $450 million as we continue to review ways to opportunistically enhance our capital structure. During the fourth quarter of 2021, we declared $8 million in dividends. In addition, we repurchased $16 million of common stock under our stock repurchase program. Looking ahead, we expect our 2022 share repurchases to offset the expected dilution from employee stock expense. Moving on to slide 13, I'll conclude with 2022 guidance and some key takeaways. Starting with the top line, in November, we announced preliminary 2022 guidance, and we are pleased to increase our revenue range by $10 million, with 2022 revenue expected to range from $1.07 billion to $1.11 billion, and our non-GAAP adjusted revenue to range from $1.0 billion to $1.03 billion. As a reminder, our revenue generation is slightly back-end weighted. as we have historically generated more revenue in the second half of any given year versus the first half. We expect this to be the same in 2022 in general. Please note that existing customer renewal discounts begin January 1st, prior to more revenue growth coming in mid to later 2022, as our new sales bookings get implemented and revenues recognized. As such, we expect approximately 52% of our 2022 revenue generation to occur during the second half of the year.

Similar to 2021, we also expect our non-GAAP adjusted operating margin percentage to range between 16.5% to 17%, even after factoring in customer renewal discounts and our growth investments, well within our long-term target range of 16% to 18%. Further, we anticipate our non-GAAP ETFs to range between $3.44 to $3.68, based on a non-GAAP tax rate of 27.4% and a share count of 32.0 million shares per year. Non-GAAP adjusted EBITDA is expected to range between $225 to $236 million.

And finally, we expect the range of free cash flows to be $115 to $125 million based on expected operating cash flows of $150 to $170 million, with CapEx expected to come in between $35 to $45 million. The driver for our increased CapEx range year-over-year is additional plant monetization investments to drive improved efficiencies and, to a lesser extent, forward buying of IT-related equipment. And finally, I want to leave you with a few concluding thoughts. 2021 was a very strong year for CSG. We believe that the momentum we are creating in the market, the results that we are generating, and the laser focus that this leadership team has on executing against our strategic priorities positions us well in the marketplace. CSG is committed to accelerating our revenue growth and diversifying our industry vertical, including closing and integrating disciplines, value-adding acquisitions. And we believe this investment in our future strategic growth, combined with our consistent capital distribution in the form of both dividends and share buyback, will serve our shareholders well. With that, I'll turn it over to the operator to facilitate the question and answer session.

At this time, I would like to remind everyone, in order to ask a question, please press star followed by the number one on your telephone keypad. Your first question comes from Maggie Nolan with William Blair. Your line is open.

Thank you for taking my question. Hi, thanks for that color on what the revenue first half versus second half would look like. I'm wondering if there's anything qualitatively you can share with us about what margins will look like over the course of the year. And then any other puts and takes on margins going into 2022 that we should be thinking about outside of that one-time payment that you referenced?

Yeah, I mean, I would suggest that margins would uh improve throughout the year as well maggie you know once again As I said, part of the drivers of the spreading of the revenue, it's just a timing issue, right? We have discounts that are hitting us January 1 that everybody knows about, and then we have new business that takes some time for us to ramp up and contribute meaningfully over time. So, you know, we do expect the margins in the back half of the year to be better than margins in the first half of the year.

That's great. Thank you. And then, Brian, could you give a little bit more color on kind of the overall sales pipeline across your solution areas and specifically within CX and payments would be helpful? Thank you.

All right. Thanks, Maggie. Appreciate the question. So, yeah, across the board, as we've been talking about the last several quarters, our pipeline has never been bigger. We've never had more mega deals, larger deals in the pipeline. We've never had more late stage. We have a six-stage sales pipeline. If you kind of look across our portfolio, we like what we see in terms of deals and the shape of that pipeline across all parts of our business, specifically in the digital engagement, customer engagement space. multi-vertical. We love the number of deals. We love the bigger brands we're working with and these new verticals. And it's just a matter of continuing to execute on the sales. We announced that CSG exponent launch around the journey orchestration the journey as a service capability that can really provide a predictive proactive experience. That's resonating a lot because we get and have closed in the last couple of quarters really good deals with that solution. It gives us the ability then to rinse and repeat and go sell other brands and verticals. In the payment space, we've seen good steady progress on our sales bookings in payments with the PayFact payment gateway payment processing. Then sometimes you see a slight time period on which to activate and onboard the transaction volumes. And we're seeing a lot of those deals that we've actually closed in prior quarters then begin to activate to begin to come on. And that's why we've been growing increasingly optimistic. about the return to double-digit. We liked what we saw in the fourth quarter, and we do continue to push to get to double-digit organic. But the other thing I'd maybe just add, a little color on the payments. What we really like is also our ISV channel sales acceleration with partners. We do direct sales, but we also do a lot with ISV. And the awards that our CSG Forte platform has won against some of the biggest players in the industry are best API, best payment gateway really is attractive and appealing to those ISVs that can embed all of our solutions or parts of our solutions. They do the selling for us, and then we pick up the volume as they expand. So we do like what we're seeing a lot on those parts of the business.

Thank you, and congrats on the strong year.

Thank you very much, Maggie. We appreciate it.

Your next question comes from the line of Tom Roderick with Stifel. Your line is open.

Outstanding. Thank you for taking my questions, and hi. I should say welcome aboard on a nice first quarter here. Brian, let me start with you because it's too tempting not to kind of hit the big slide there where you lay out a billion and a half base case goal for $25 and a $2 billion goal. stretch goal. So if you take base case, it's kind of like 13%, 14% compounded growth and stretch goal maybe closer to 25%. I'd love to hear just the concepts around how much of that would be sort of driven by organic versus M&A. And then on the M&A side, how appealing is it to sort of look outside of the core telco markets into places like financial services, technology, and particularly healthcare and life sciences that seem to hold some appeal relative to where the customer engagement, digital engagement is going and some of the other things you can do on the payment side.

Thanks for the question, Tom. Love the questions. Hope you're doing well. So getting to the $1.5 billion, growing by 50%, top line, we still have the range of 2% to 6% organic. As you saw this year, we came in at the top end of the range. We aspire to continue to come in at midpoint to top end of that range and continue to get better and better. We have made what we think are smart but disciplined investments in direct sales, in brand awareness, in lead generation and in channel partner sales in some of these higher growth areas like the digital customer engagement solutions and the payments that Maggie was asking about. And we hold ourselves accountable to make sure that those investments deliver a return, as well as making sure that we have that leading SaaS platform capability that can continue to build that strong organic sale. And so getting to the 13% or 14%, you're exactly right. Getting to the upper end of our target or even beating our organic sales target, we use this phrase, we earn the right to grow. and we do that by delivering each and every quarter. But then what we constantly look for is not just buying calories and more growth. We actually look at where we can find additive SaaS higher growth platforms that could be relevant for cable or telco customers or that could be relevant for multiverticals that kind of have cross-unit, cross-vertical appeal around that. And that would get us the combination of those two are what would actually get us to the $1.5 billion. And we try to stay quite disciplined and yet really push the envelope in terms of the value we can create for our customers that then lead to value for shareholders. And that's why you hear us talking a lot about top line growth, but bottom line growing as fast as top line. And that gets back to that earning the right to grow and how we do more. On the core side of the business, it also means we've got to continue to win market share. And so this is something that we love the fact that we have high recurring revenue and we have stickiness with our revenue management solutions. We also believe we can continue to win market share like we've done over the last several years. And with the deal we announced with Charter, we've got to continue to do that both in the cable and in the global telecom space. And we do that by bringing more value, being easier to do business with. and just winning more and more deals and then letting our customers be some of our great customer references and testimonials for the new deals we're trying to get across the goal line. Specifically on the revenue diversification, we've talked in prior quarters about the fact that we've gotten to 24%. We aspire to get to 30% of our revenue to come from financial services, retail, healthcare. If we can serve some of the giant customers that we're serving extremely well, first, we can continue to land and expand and do even more with those big brands. And if we can wow them, we can wow dozens of other brands in the same industry verticals in the U.S. and around the world. So that's what we talk about in this rinse and repeat and just

continuing to grow our global sales yeah that's those okay fantastic points all the way around i mean if i think about the goal to grow eps faster than revenue and you know conceptualize that with some of the acquisitions you've made obviously they've got to work well right and they have to integrate well and then the technical integrations have to sort of pan out over time Perhaps you can talk about that in the context of Kitewheel and Digit. I know it's a little bit early on both of those, but as you look at the proof points of customers that are leaning into the core platform and then adopting Kitewheel and perhaps Digit, or Forte on the payment side, what do those technical integration proof points look like? How much work have you had to do on the backend? And how does that scale going forward?

Yeah, a lot in there. Let me just maybe take it in a few different steps. So, one, we do not treat our business at CSG as a one-size-fits-all. So we have faster growth, earlier stage, multivertical solutions, and we set very targeted strategic parameters around what enables us to invest, feed more capital, and what's a good, healthy return. And at the end of the day, it all comes down to increased sales pipeline, increased sales win rate, growing our revenue at a much faster pace. We have units inside of CSG that could be strong, strong double digit approaching the rule of 40. And we want to continue to make sure that those units continue to perform quarter in quarter out we never take it for granted it's proven by ourselves win rate and what the points they put on the board i think the second point is we see our larger more mature areas in 2021 and we don't think that's an anomaly can continue to grow at a much healthier organic rate than they have We also, with those businesses that have scale, we can do a continued better job of driving operating leverage, which is why we're able to give the renewal discounts we gave to two of our customers and still expand EPS and operating margin in 2022 by gaining operating scale, creating leverage that can then lead to combination of smart investments in these growth units and some of what you talked about, as well as delivering a nice return to our shareholders in terms of repurchase, dividends, and then funding our strategic investments. On the assets, you talked about acquisition, Tom, or about investment in R&D. After we acquired Forte, and it's a good example analogy for some of these other businesses, we did make significant investments in the quality of their AWS cloud platform. We expanded the capability. We did auto-provisioning. And we really owe a lot of great thanks to our technology and ops teams in Forte. We also expanded the brand awareness and the sales and marketing skills. And effectively, we're using the same discipline playbook for Kitewheel, for Digit, to roll out. We just announced the CSD exponent launch in Q4. We just announced this week a new launch of a product launch around the Digit solution for enterprise B2B on the telco side. And we have made additional investments in R&D to be more value-adding to our customers and try to show them the value to then lead to the sales win rate acceleration.

Fantastic. Thank you for the details. I'll jump back in queue. Appreciate it, Brian.

Thanks, Tom.

Your next question comes from the line of Greg Burns with Sedodian Company. Your line is open.

Good afternoon. What percent of North American cable subscribers are currently on your BSS platform?

Great question, Edgar. I hope you're doing well. We'll follow up. I don't have the precise. I want to say it's the vast majority. I would have said it's approaching 70 to 80, maybe even higher, but we'll get you the exact percentage.

Okay. And then, I guess, obviously, you know, large percent of the market already, but when we think about maybe that 25% or so remaining subscribers has, has the conversation in any way changed? Has anyone come, come to you now that you've closed charter, you've kind of proved that you could port over a significant number of customers pretty quickly and seamlessly. How's the, has the conversations changed in any way? And have you seen any opportunity to kind of go after the rest of that business?

Yeah, I mean, nothing that I can comment on specifically, but I would just say even prior to the charter win, we try to be active in all of the large customers in North America, but also not limited to North America in terms of the value. If we can deliver fantastic value to Comcast, Charter, DISH, and many of the other cable providers in North America and globally. We can do the same for them. What we've always found is there needs to be a combination where there's something that's going on with the business where they need more functionality. They may not be pleased with their incumbent. They need to improve the speed and agility at which their platforms can support their business or they can bring more cost-effectiveness. So usually there's a trigger that causes a customer to kind of stick their head up and say now's the time to really look at that. And what we're doing in all of our sales calls and have been is continuing to tell the story of what we think the value-add is, why it's a low-risk move. We've proven that with our successful conversions at the two largest, Comcast and Charter. So lots of dialogue, nothing that I could comment on specifically beyond that at this stage.

Okay. And then when we look at the revenue split between Charter and Comcast, I think Comcast still has more subscribers on your billing platform, but Charter has higher revenue. So what services is Charter consuming that Comcast is? And is there any opportunity to maybe upsell more into Comcast?

I mean, with all of our business objectives and sales objectives for the teams that run the accounts of the businesses, they always have targets to expand and grow more in every one of our customers. We don't think it's limited to just those two by any stretch. But really what we've seen is at Charter with some of the stuff they've done. There's some similarity, but there's certain areas where they've just relied on us for more, where some of our customers, including Comcast, sometimes will want to build some of the edge systems themselves, but want to do some of the integration themselves. And it really just depends on the strategy of that. I think there's head upside in both accounts. As big and successful as those two big customers are, there's always a ton of headroom, and we just got to work it day in, day out to try to bring them innovative ideas, show them the value of what they can do by even turning over more of their business to CSG and what we're doing, and that's always a focus in every one of our customers all around the world.

Okay, then maybe to that point, when we look at the really strong growth with Charter year over year, where is that growth coming from? Is that from, like, broadband subscriber growth there? Is it from incremental services? Can you just maybe touch on that a little bit?

It is. Yeah, it's from all of the above. So obviously the nice broadband net ads that the cable industry has added has benefited us in a significant way because we price on a per subscriber basis. regardless of the number of services or which services they take. We've been benefiting from that. We've also been benefiting as we just bring them more value. We bring them innovative ideas. Instead of doing it in-house or using someone else to provide some of those solutions, they turn to CSG. So it can be more small product sales. It can be more services. It can be customizing things that we do for them to build it into our SaaS platform. It's all of the above.

Okay, great.

Thank you.

Thanks so much, Greg.

There are no further questions at this time. I'll turn the call back over to Brian Shepard for closing remarks.

I would just say thank you for the time and joining us on the call today. Hopefully it's clear. We have a clear focus in our vision. We're excited by what's going on in the business. We thank our global leadership team and our global employees. We expect to every quarter deliver better and better results. We know that's what our shareholders are looking for, and we're going to hold ourselves accountable to do that. So look forward to talking to you in the quarters ahead. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.