CSG Systems International, Inc.

of Finance. John, you may begin.

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.

Thanks, John. Hi, everyone. Welcome to the call as we begin on slide four. Team CSG closed a challenging 2024 with record-setting results that built good momentum for revenue, profit expansion, and adjusted free cash flow growth heading into 2025. On the revenue side, we grew Q4 year-over-year organic revenue 5% with 7% total revenue growth, setting a new CSG record for quarterly revenue of $317 million for the quarter. A giant thank you to CSG employees around the world for the strong sales and revenue results in Q4. On the profitability adjusted free cash flow and EPS fronts, our non-GAAP adjusted Q4 results were even better. as our operating efficiency and gross margin expansion contributed to fantastic results. CSG grew operating income 32% year-over-year in Q4 to 20.1% of revenue for the quarter. Q4 year-over-year adjusted EBITDA grew 21%, reaching close to a CSG high of 24.8% margin. And EPS topped all the metrics with 79% year-over-year Q4 growth also setting a new CSG record of $1.65 EPS in the quarter. Our strong profit performance contributed nicely to free cash flow with $113 million or 9% year-over-year growth in 2024, setting the foundation for what we anticipate will be sustained strong double-digit adjusted free cash flow growth in 2025 and 2026. On the dividend front, CSG will be increasing our dividend by approximately 7% to $1.28 per year, paid in quarterly increments. This marks our 12th consecutive annual increase and underpins our dedication to a friendly shareholder return policy. On the sales renewal and new logo wins front, CSG also had a very good 2024, which I will share more on briefly. Slide five highlights the three key value creation commitments that the CSG leadership team and board of directors will hold ourselves accountable to deliver. First, CSG aspires to deliver 2% to 6% pure organic revenue growth and to diversify revenue from bigger, faster growing new industry verticals to greater than 35% of total CSG revenue by 2026. It was great to close Q4 at the upper end of our range with 5% organic revenue growth in Q4. Second, we have committed to expanding non-GAAP operating margin to our new long-term range of 18% to 20%, which we plan to achieve without impeding our ability to deliver mid-single-digit annual organic revenue growth most quarters and years. We also have a goal to become more asset-like to help us deliver strong double-digit adjusted free cash flow growth in 2025 and 2026 with our 2025 guidance range of $110 million to $150 million in adjusted free cash flow. Third, we will continue to return significant capital to shareholders as we've committed to over $100 million in share repurchases and dividends combined in 2025. As a reminder, we have returned nearly $540 million to shareholders in dividends and buybacks since 2020. On slide six, you can see the success we've had increasing our organic revenue growth since 2021 and diversifying our industry vertical revenue since 2017. CSG targets industry verticals that have highly recurring customer relationships powered by complex subscription and consumption-based business models. Across these verticals, CSG helps brands simplify their complex customer engagements with our industry-leading technology. Our platforms help customers reduce their cost to serve while their customers and be more profitable, which is why the vast majority of our customers stay with CSG for decades. This is also why we've expanded so quickly beyond our traditional telecom and cable broadband customer base into exciting industry verticals like media, financial services, healthcare, pharmacy, retail, technology, government, and more. Our sticky, mission-critical technology helps great brands like Walgreens, JPMorgan Chase, NRC Health, and Formula One solve similar customer engagement and monetization business challenges, just like we help Comcast, Charter, MTN, and Telstra in these same areas. While the industries are different, the customer pain points and business needs are surprisingly similar. Turning to slide seven, we want to highlight some of the exciting new logo wins and deal expansions in Q4 and remind investors of the new sales wins in the year. Starting with big wins in Q4, We want a fantastic new logo with Gamma, a leading provider of technology-based communication services across Europe. Gamma selected CSG's configure price quote solution running in the cloud to help them adapt more quickly to market needs, offer personalized solutions, and enable a more seamless self-service user experience. This win highlights the great momentum we are seeing with our industry-leading quote and order product. Team CSG also strengthened a 20-plus year relationship with MTN South Africa by securing an exciting multi-year managed services extension. MTN is one of South Africa's largest operators, serving 39 million subscribers. CSG will optimize their billing and provisioning operations and enable MTN to further monetize their relationship with their consumer, SME, and enterprise customers. We also had a fantastic multi-year managed services extension with Mobily, one of Saudi Arabia's largest telecom providers, to continue supporting them on their journey to becoming a fully integrated operator. Team CSG became Mobily's digital transformation partner in 2021, and we are thrilled to continue to help Mobily create exceptional experiences for their customers. CSG won a contract extension with M1, a market-leading communication service provider in Singapore. Since successfully launching CSG Ascendant and Digital Wholesale to support the monetization of M1's enterprise business in 2024, we're excited to expand our relationship with a great managed service contract to continue to support M1 in their digital transformation journey. Another big highlight was the fantastic six-year contract renewal with Comcast to extend our 35-plus year partnership CSG will continue to provide broad mission critical support for Comcast triple play broadband subscribers and other areas of Comcast business. This giant deal was in addition to a meaningful new standalone billing deal at Comcast in another part of the business that was also won in early Q3. We were also excited to land fantastic renewals with two of the largest global technology companies in the world. For a decade, CSG has provided interactive voice response messaging on behalf of these companies to enable them to securely and effectively communicate with their end customers through their mobile device. PSG is powering a secure two-factor authentication experience and providing tailored IVR for more personalized customer engagement. Another Q4 win outside of telecom was with the Oklahoma Turnpike Authority, one of the largest turnpike authorities in the US. selected CSG to provide data-driven customer experience solutions to streamline transactional communication with drivers and optimize the revenue collection. This win further diversifies CSG's presence in exciting new verticals like tolling and transportation. In payments, we won a great new logo with dealer-owned Warranty Company, a fast-growing leader in the insurance and vehicle service contract industry. d-o-w-c had been working with multiple payment providers leading to complexity in how they manage their payment transactions they selected csg's cloud payment platform to consolidate ach cards and digital wallets into a single system to centralize payment processing and improve their end-to-end customer experience moving to exciting sales wins across 2024 and global telecom we announced several fantastic new ascendant wins including Telenor Denmark, Lise in Norway, and Claro in Brazil. These wins highlight an important inflection point that we're seeing in the telecom market as more leading wireless operators are willing to run their core billing and monetization engines in the cloud, a trend that bodes very well for our revenue growth with our AWS cloud native ascendant platform. Other exciting new logo sales wins and extensions in the telecom space in 2024 included One New Zealand, formerly Vodafone New Zealand, Moscom Botswana, a leading telecom operator in Africa, Telstra, a 20-plus year customer of CSGs, and Selyusis. In the immediate vertical, another 2024 Ascendant sales highlight was the excellent multi-year contract extension with the iconic brand Formula One, the world's most prestigious motor racing series. In the financial services market, we announced a fantastic deal extension and expansion with JPMorgan Chase where we're deploying our CSG Exponent suite of solutions to create an enhanced fraud alert notification experience for Chase cardholders. In the pharmacy retail vertical, Walgreens has been a CSG customer and partner for nearly 15 years through a third-party relationship. In 2024, we successfully executed a direct contract with Walgreens to provide CSG's smart communications platform with real-time customer notifications to Walgreens prescription customers. CSG is executing real-time prescription refill reminders and a prescription status messaging to drive higher drug adherence, a critical KPI for Walgreens' success. In the healthcare vertical, CSG expanded our relationship with NRC Health, one of the nation's largest healthcare experience management firms, supporting over half the healthcare systems in the U.S. We are partnering with NRC to execute a digital multi-channel customer engagement strategy in a streamlined, cost-effective, and scalable manner. Moving to slide A, we'd like to remind our investors of the very good progress that Team CSG has made to consistently expand our profitability and adjusted free cash flow. A meaningful highlight of 2024 is the high confidence we have in CSG to continue to significantly expand our profitability and operating leverage in the quarters and years ahead. We've shown continuous improvement in our non-GAAP adjusted operating margin from 16.6% in 2022 to 17.2% in 2023 to 18.1% in 2024. Looking ahead, we absolutely believe there is a clear pathway for CSG to consistently achieve 18 to 20% non-GAAP adjusted operating margin in 2025 and beyond. The midpoint of our 2025 non-GAAP operating margin guidance is 18.3, with an aspiration to operate in the 19% range by 2026. And we have every intention for this better profitability to convert nicely into strong double-digit non-GAAP adjusted free cash flow growth in both 2025 and 2026, as we strive to become a more asset-light company that generates significantly greater adjusted free cash flow from every dollar that we invest. Turning to slide nine, CSG committed to returning over $100 million to shareholders via share buybacks and dividends in 2025. Discipline, capital allocation, and a dedication to returning capital to our shareholders is a cornerstone of our shareholder return strategy. We believe that CSG's stock price represents an excellent buy for both investors and for CSG, so we will stay balanced, disciplined, and focused on any strategic or financial move that the board of directors and management team believe will deliver the greatest value for our shareholders. With respect to M&A, we are very pleased with the two smaller, highly accretive acquisitions that we closed in 2024. We were able to acquire both companies at highly accretive multiples. Both small tuck-in deals at highly profitable recurring revenue for CSG. And with respect to integration, both deals remain well on track to deliver the value we expected in our M&A business cases. We will continue to actively search for, vet, and potentially close more value creating M&A deals in 2025. As I wrap up my opening remarks, I want to share an observation that I don't believe is visible yet to those outside of CSG. Something extremely positive is starting to change across this good company of ours. We see traditional CSG humility and high integrity getting amplified with a ferocious resolve to consistently deliver better and faster business results. Leaders across every level of CSG are building an operating discipline and an agility that is just beginning to generate the big breakthroughs that we absolutely believe are possible and likely in the quarters and years ahead. To every CSG listening, it is up to each of us to prove this with better and better operating results, quarter in, quarter out. If we expect to be the best of the best, then we have to prove it with the quality of our results, not the boldness of our words. Thank you for making Q4 a fantastic explanation point on 2024 as we now focus on building momentum for an even better 2025. With that, I will turn it over to Hai.