CSG Systems International, Inc.

on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one a second time. Thank you. And I would now like to turn the conference over to John Ray, Senior Vice President of Finance. 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 8K. 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. Q1 was an excellent start to 2025. We delivered 19.0% non-GAAP operating margin in the quarter, a 240 basis point improvement compared to 16.6%. in Q1 2024. Based on the confidence we have from our 90% plus revenue visibility, our success selling higher gross margin SAS deals, and our consistent ability to unlock greater operating efficiencies, we are pleased to raise our 2025 full-year profitability and non-GAAP EPS targets that Hai will cover in more detail. We diversified CSG's revenue even more with 33% of Q1 revenue coming from big, faster-growing industry verticals outside of cable and telecom, led by our data-driven CX, monetization, and payment solutions. This is a new quarterly record for CSG, up from 30% in the first quarter last year. Our top two customers, Charter and Comcast, now represent 37% of total Q1 revenue, down from 49% of revenue in 2017. The great news is that this significant improvement in CSG's revenue concentration is not because the revenue we earn from our top two customers is declining. In fact, we've grown the annual revenue of Charter and Comcast by approximately 76 million from 2017 to 2024, representing a 2.6% compound annual growth rate. And yet, the revenue concentration from our big two customers has significantly improved because the other parts of our business are growing revenue even faster, a trend that we believe will continue in the years ahead. We reported our best first quarter non-GAAP adjusted free cash flow performance since 2018, generating $7 million of non-GAAP adjusted free cash flow in Q1, a huge improvement over the negative $34 million free cash outflow in Q1 2024. And as promised, we rewarded shareholders with even more dividends and more buybacks. We announced a 7% annual dividend increase in Q1 for the 12th consecutive year, and we paid $9 million in dividends and repurchased $22 million worth of CSG shares in the first quarter. We hope these results prove the great operating discipline is becoming a trademark of Team CSG that investors can bank on. Slide five highlights the three long-term 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. For 2025, we are reiterating our original full-year 2025 revenue guidance range with a midpoint of $1.23 billion in revenue, which would result in approximately 2.7% revenue growth, even in the face of more macroeconomic uncertainty. Second, we are committed to consistently expanding non-GAAP adjusted operating margin with a long-term range of 18% to 20%. without impeding our ability to deliver mid-single-digit annual organic revenue growth most quarters and years. And we expect this improving profitability to convert nicely into strong double-digit adjusted free cash flow growth in both 2025 and 2026, with the midpoint of our 2025 guidance range sitting at $130 million, which would represent approximately 15% year-over-year growth in free cash flow. Third, we are also committed to excellent shareholder capital returns year in, year out, as evidenced by the over $570 million worth of capital returned to shareholders since 2020. And specifically for 2025, we committed to return more than $100 million in share repurchases and dividends combined, which we are well on our way towards achieving, with $32 million of capital returned to shareholders in Q1. On slide six, investors can see the exciting revenue growth coming from big new verticals. As a reminder, CSG targets industry verticals that have high recurring customer relationships powered by complex subscription and consumption-based business models because the business problems and customer pain points are surprisingly similar. With CSG's integrated workflow solutions, our customers sell, monetize, and engage better as we help them simplify their complex monetization and customer engagement processes. The highly sticky, mission-critical nature of our SaaS solutions is also why we enter most years with 90% or greater revenue visibility, and it's why the vast majority of our customers stay with CSG for decades, thereby reducing the risk for us and our investors even in times of greater market volatility. This also explains why we announced so many fantastic new sales wins including in 2024 with leading brands like Comcast, Formula One, Walgreens, NRC Health, Telenor Denmark, Lise in Norway, One New Zealand, Zain Sudan, and many others. CSG's global sales and go-to-market teams continue this momentum with more good sales wins in the first quarter. I'm excited to announce that we extended our 30-year relationship with Mediacom, the fifth largest cable provider in the United States. MediaCom employs an arsenal of integrated CSG solutions, trusting us to manage the billing, product catalog, order management, and provisioning activities, process secure payments with our cloud-based payments platform, optimize their dispatch and field tech ops functions, and digitally engage with customers in intuitive and personal ways to reduce call center volumes with CSG exponents. I'm also excited to announce that with this extension, MediaCom will continue to leverage CSG BillExplainer.ai, our leading edge AI-driven solution that helps eliminate bill confusion and irrelevant customer engagement to create a clear and engaging customer journey. We look forward to continuing to help MediaCom increase long-term customer loyalty and mitigate call center costs. In April, we announced a fantastic expansion with Liberty Latin America. a longstanding CSG customer, and one of the leading communication companies in the region. Liberty Latin America chose CSG to streamline its wholesale business and unify operations across 21 countries and multiple lines of business. CSG's digital wholesale suite will optimize their wholesale rating, charging, and settlement processes by reducing operational costs and simplifying the management of their B2B partner agreements and business relationships. We want an excellent extension with PLDT, the Philippines' largest fully integrated telecom company. Team CSG will continue to help PLDT enhance its wireless customer experience by delivering smart invoicing solutions that streamline their billing operations and enable more personalized and transparent billing communications. We are proud to help PLDT strengthen their customer retention as a result of their enhanced subscriber experience. In financial services, we expanded our relationship with JPMorgan Chase as CSG Solutions will now help improve their cardholder overdraft experience. This is another great example of our sales team growing CSG's share of wallet with existing customers. After helping JPMorgan Chase improve its fraud alert cardholder experience, With our data-driven CSG Exponent Suite, we were able to identify other areas to help them be even easier to do business with and lower their cost to serve. We closed an exciting new win with North Texas Tolling Authority. NTTA selected CSG to provide data-driven customer experience solutions to streamline communications with drivers who use their toll roads. This win further diversifies CSG's presence in the tolling and transportation industry and comes on the heels of another exciting tolling win we announced in Q4 2024 with the Oklahoma Turnpike Authority. CSG is highly focused on bringing greater value to toll road operators all across the U.S. with opportunities to expand our tolling presence globally over time. Payments also continues to contribute nicely to our revenue diversification success and our revenue growth. where we grew our payments merchant base 13% year-over-year to 135,000 merchants in Q1. We continue to see good business performance and growth in payments. Moving to slide seven, the CSG management team and board are fully committed to turbocharging our profitability and free cash flow well beyond our good Q1 results. We will hold ourselves accountable to become a more asset-light SaaS company where we generate much greater profit and cash flow from every dollar we invest. While we have relatively low annual CapEx spend ranging from $20 million to $30 million, we aspire to reduce our working capital needs and fixed asset levels going forward with the same discipline that we've applied to our profit improvement efforts. With the consistency that we have expanded, non-GAAP adjusted operating margin from 16.6% in 2022 to 17.2% in 2023, to 18.1% in 2024 with the midpoint of our revised 2025 guidance now sitting at 18.6%. Looking ahead, we absolutely believe there's a clear pathway for CSG to achieve at or above the upper end of our 18 to 20% non-GAAP adjusted operating margin over the next several years with an aspiration to operate in the 19% to 20% range for 2026. And we are seeing similar improvements in adjusted EBITDA margin, where we grew our adjusted EBITDA margin 220 basis points to 23.7% in Q1 year over year, a trend we expect to continue, which is represented in our revised 2025 guidance. As we work hard to achieve all these improved operating results, one of the metrics we care most about is seeing this better profitability convert nicely into strong, double-digit, non-gap adjusted free cash flow growth in both 2025 and 2026. Turning to slide eight, CSG has a strong, healthy balance sheet, a proven ability to unlock shareholder value with disciplined M&A, and a commitment to being an excellent offensive and defensive choice for investors looking for relative safety in today's turbulent markets. We believe CSG's stock price represents an excellent buy for investors and for CSG so we will stay balanced and disciplined as we focus on any strategic or financial move that the Board of Directors and management believe will deliver excellent value for shareholders. With respect to M&A, we are very pleased with the two smaller, highly accretive acquisitions closed in 2024. We were able to acquire both companies at highly attractive multiples with both small tuck-in deals adding highly profitable, high recurring revenue for CSG. We continue to actively search for, vet, and potentially close more value-creating M&A deals in 2025. As I wrap up my opening remarks, we are excited about our good Q1 start as we stay laser-focused on making 2025 a year of breakthrough results that can become the springboard for even bigger growth heading into 2026 and beyond. As we pursue every creative new idea that can help us elevate our performance and accelerate our results, the foundations of our success remain constant. CSG has an unwavering commitment to being a humble, culture-first, diverse global leader. CSG will hold ourselves accountable to world-class operating discipline with a relentless drive to constantly learn and get better. CSG will co-create with customers all around the world as we help them sell, monetize, and engage better with our integrated, domain-specific CSG workflow solutions. CSG will put our money where our mouth is by tightly linking management compensation to the business and financial commitments we make to our shareholders. And CSGers all around the world will stay hungry and obsessed because we know growth-oriented relentlessness is an essential ingredient to creating sustained value regardless of the obstacles standing in our way. With that, I will turn it over to Hai for more details.