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CSG Systems International Reports Fourth Quarter and Full Year 2022 Results

Returned over $120 million to Shareholders in 2022 including Repurchasing 1.5 Million Shares

Increased Dividend Payout in 2023 by 6%; Marks 10th Consecutive Year of Increased Payout

Substantially Completed Charter Subscriber Migration from a Competitor’s System

2023 Revenue Growth Anticipated to Accelerate; Mid-point of Guidance Implies 5.5% YoY Growth

CSG (NASDAQ: CSGS) today reported results for the quarter and year ended December 31, 2022.

Financial Results:

Fourth quarter 2022 financial results:

  • Total revenue was $289.9 million.
  • GAAP operating income was $35.1 million, or an operating margin of 12.1%, and non-GAAP operating income was $45.2 million, or a non-GAAP adjusted operating margin of 16.8%.
  • GAAP earnings per diluted share (EPS) was $0.66 and non-GAAP EPS was $0.84.
  • Cash flows from operations were $54.0 million, with non-GAAP free cash flow of $48.6 million.

Full year 2022 financial results:

  • Total revenue was $1.09 billion.
  • GAAP operating income was $78.7 million, or an operating margin of 7.2%, and non-GAAP operating income was $168.8 million, or a non-GAAP adjusted operating margin of 16.6%.
  • GAAP EPS was $1.41 and non-GAAP EPS was $3.61.
  • Cash flows from operations were $63.6 million, with non-GAAP free cash flow of $26.6 million.

Shareholder Returns:

  • In November 2022, CSG declared its quarterly cash dividend of $0.265 per share of common stock, or a total of approximately $8 million, to shareholders, bringing total 2022 dividends to approximately $34 million.
  • In January 2023, CSG’s Board of Directors approved a 6% increase in CSG’s cash dividend, with quarterly payments of $0.28 per share of common stock to be paid in March 2023.
  • During the fourth quarter and full year 2022, CSG repurchased under its stock repurchase program, approximately 384,000 shares of its common stock for approximately $22 million and approximately 1,498,000 shares of its common stock for approximately $88 million, respectively.

“After hitting some headwinds in the first half of 2022, Team CSG delivered strong, healthy revenue growth in the second half, including 6.1% sequential quarter-over-quarter growth in Q4. Further, on the back of our timely Operating Margin Improvement Initiative, we reported non-GAAP adjusted operating margin of 16.6% for full-year 2022. Plus, we continue to return capital to shareholders in the form of buybacks and dividends, having delivered over $120 million in shareholder remuneration in 2022. On this front, we are also pleased to announce our 10th consecutive year of increasing dividend payout in 2023,” said Brian Shepherd, President and Chief Executive Officer of CSG. “Looking forward, we anticipate accelerating revenue growth in 2023 coupled with non-GAAP adjusted operating margins in the range of 16.5% to 17.0%.”

Financial Overview (unaudited)

(in thousands, except per share amounts and percentages):

 

 

 

Quarter Ended December 31,

 

 

Year Ended December 31,

 

 

 

 

 

 

 

 

 

 

 

Percent

 

 

 

 

 

 

 

 

 

 

Percent

 

 

 

2022

 

 

2021

 

 

Changed

 

 

2022

 

 

2021

 

 

Changed

 

GAAP Results:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

289,876

 

 

$

275,025

 

 

 

5.4

%

 

$

1,089,752

 

 

$

1,046,487

 

 

 

4.1

%

Operating Income

 

 

35,072

 

 

 

27,880

 

 

 

25.8

%

 

 

78,747

 

 

 

124,186

 

 

 

(36.6

%)

Operating Margin Percentage

 

 

12.1

%

 

 

10.1

%

 

 

 

 

 

 

7.2

%

 

 

11.9

%

 

 

 

 

EPS

 

$

0.66

 

 

$

0.54

 

 

 

22.2

%

 

$

1.41

 

 

$

2.26

 

 

 

(37.6

%)

Non-GAAP Results:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

$

45,157

 

 

$

40,152

 

 

 

12.5

%

 

$

168,830

 

 

$

161,713

 

 

 

4.4

%

Adjusted Operating Margin Percentage

 

 

16.8

%

 

 

15.6

%

 

 

 

 

 

 

16.6

%

 

 

16.5

%

 

 

 

 

EPS

 

$

0.84

 

 

$

0.83

 

 

 

1.2

%

 

$

3.61

 

 

$

3.35

 

 

 

7.8

%

For additional information and reconciliations regarding CSG’s use of non-GAAP financial measures, please refer to the attached Exhibit 2 and the Investor Relations section of CSG’s website at csgi.com.

Results of Operations

GAAP Results: Total revenue for the fourth quarter of 2022 was $289.9 million, a 5.4% increase when compared to revenue of $275.0 million for the fourth quarter of 2021. Total revenue for the full year 2022 was $1,089.8 million, a 4.1% increase when compared to revenue of $1,046.5 million for the full year 2021. The increases in revenue can be primarily attributed to the continued growth of CSG’s revenue management solutions, as the majority of the increases were attributed to organic growth for the full year, resulting mainly from increased payments volumes, conversions of customer accounts onto CSG solutions, and other ancillary services.

GAAP operating income for the fourth quarter of 2022 was $35.1 million, or 12.1% of total revenue, compared to $27.9 million, or 10.1% of total revenue, for the fourth quarter of 2021. GAAP operating income for the full year 2022 was $78.7 million, or 7.2% of total revenue, compared to $124.2 million, or 11.9% of total revenue, for the full year 2021. The decrease in full year operating income can be primarily attributed to the $41.4 million increase in restructuring and reorganization charges related mainly to an operating margin improvement initiative that began in the second quarter of 2022.

GAAP EPS for the fourth quarter of 2022 was $0.66, as compared to $0.54 for the fourth quarter of 2021. GAAP EPS for the full year 2022 was $1.41, compared to $2.26 for the full year 2021. The decrease in full year GAAP EPS is mainly due to the impact of the restructuring and reorganization charges, discussed above.

Non-GAAP Results: Non-GAAP operating income for the fourth quarter of 2022 was $45.2 million, or a non-GAAP adjusted operating margin of 16.8%, compared to $40.2 million, or a non-GAAP adjusted operating margin of 15.6% for the fourth quarter of 2021. Non-GAAP operating income for the full year 2022 was $168.8 million, or a non-GAAP adjusted operating margin of 16.6%, compared to $161.7 million, or a non-GAAP adjusted operating margin of 16.5% for the full year 2021. The increases in non-GAAP operating income and non-GAAP adjusted operating margin can be mainly attributed to the higher revenue along with the margin improvement initiatives, mentioned above.

Non-GAAP EPS for the fourth quarter of 2022 was $0.84 compared to $0.83 for the fourth quarter of 2021. Non-GAAP EPS for the full year 2022 was $3.61 compared to $3.35 for the full year 2021. The increase in full year non-GAAP EPS is mainly due to the higher operating income in 2022, discussed above, favorable foreign currency movements, and lower outstanding shares as a result of share repurchases.

Balance Sheet and Cash Flows

Cash, cash equivalents and short-term investments as of December 31, 2022 were $150.4 million compared to $147.3 million as of September 30, 2022 and $233.7 million as of December 31, 2021. CSG had net cash flows from operations for the fourth quarters ended December 31, 2022 and 2021 of $54.0 million and $51.9 million, respectively, and had non-GAAP free cash flow of $48.6 million and $47.9 million, respectively. For the year ended December 31, 2022 and 2021, CSG generated net cash flows from operations of $63.6 million and $140.2 million, respectively, and had non-GAAP free cash flow of $26.6 million and $113.7 million, respectively.

Summary of Financial Guidance

CSG’s financial guidance for the full year 2023 is as follows:

GAAP Measures:

 

 

Revenue

 

$1,130 - $1,170 million

Non-GAAP Measures:

 

 

Adjusted Operating Margin Percentage

 

16.5% - 17.0%

EPS

 

$3.35 - $3.65

Adjusted EBITDA

 

$231 - $242 million

Free Cash Flow

 

$80 - $120 million

For additional information and reconciliations regarding CSG’s use of non-GAAP financial measures, please refer to the attached Exhibit 2 and the Investor Relations section of CSG’s website at csgi.com.

Conference Call

CSG will host a conference call on Wednesday, February 1, 2023 at 5:00 p.m. ET, to discuss CSG’s fourth quarter and full year results for 2022. The call will be carried live and archived on the Internet. A link to the conference call is available at http://ir.csgi.com. In addition, to reach the conference by phone, call 1-888-412-4131 and use the passcode 2327393.

Additional Information

For information about CSG, please visit CSG’s web site at csgi.com. Additional information can be found in the Investor Relations section of the website.

About CSG

CSG empowers companies to build unforgettable experiences, making it easier for people and businesses to connect with, use and pay for the services they value most. Our customer experience, billing and payments solutions help companies of any size make money and make a difference. With our SaaS solutions, company leaders can take control of their future, and tap into guidance along the way from our more than 5k-strong experienced global CSG services team.

Want to learn more about how to be a change maker and industry shaper like our 1,000-plus clients? Visit csgi.com to learn more.

Forward-Looking Statements

This news release contains forward-looking statements as defined under the Securities Act of 1933, as amended, that are based on assumptions about a number of important factors and involve risks and uncertainties that could cause actual results to differ materially from what appears in this news release. Some of these key factors include, but are not limited to the following items:

  • CSG derives approximately forty percent of its revenue from its two largest customers;
  • Fluctuations in credit market conditions, general global economic and political conditions, and foreign currency exchange rates;
  • CSG’s ability to maintain a reliable, secure computing environment;
  • Continued market acceptance of CSG’s products and services;
  • CSG’s ability to continuously develop and enhance products in a timely, cost-effective, technically advanced and competitive manner;
  • CSG’s ability to deliver its solutions in a timely fashion within budget, particularly large and complex software implementations;
  • CSG’s dependency on the global telecommunications industry, and in particular, the North American telecommunications industry;
  • CSG’s ability to meet its financial expectations;
  • Increasing competition in CSG’s market from companies of greater size and with broader presence;
  • CSG’s ability to successfully integrate and manage acquired businesses or assets to achieve expected strategic, operating and financial goals;
  • CSG’s ability to protect its intellectual property rights;
  • CSG’s ability to conduct business in the international marketplace;
  • CSG’s ability to comply with applicable U.S. and International laws and regulations; and
  • CSG’s business may be disrupted, and its results of operations and cash flows adversely affected by the COVID-19 pandemic.

This list is not exhaustive, and readers are encouraged to review the additional risks and important factors described in CSG’s reports on Forms 10-K and 10-Q and other filings made with the SEC.

 

CSG SYSTEMS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS-UNAUDITED

(in thousands)

 

 

 

December 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

150,365

 

 

$

205,635

 

Short-term investments

 

 

71

 

 

 

28,037

 

Total cash, cash equivalents and short-term investments

 

 

150,436

 

 

 

233,672

 

Settlement and merchant reserve assets

 

 

238,653

 

 

 

186,267

 

Trade accounts receivable:

 

 

 

 

 

 

 

 

Billed, net of allowance of $5,528 and $4,250

 

 

274,189

 

 

 

244,317

 

Unbilled

 

 

52,830

 

 

 

35,802

 

Income taxes receivable

 

 

1,270

 

 

 

6,414

 

Other current assets

 

 

48,577

 

 

 

41,727

 

Total current assets

 

 

765,955

 

 

 

748,199

 

Non-current assets:

 

 

 

 

 

 

 

 

Property and equipment, net of depreciation of $105,466 and $111,244

 

 

71,787

 

 

 

73,580

 

Operating lease right-of-use assets

 

 

49,687

 

 

 

86,034

 

Software, net of amortization of $150,337 and $152,283

 

 

22,774

 

 

 

29,757

 

Goodwill

 

 

304,036

 

 

 

321,330

 

Acquired customer contracts, net of amortization of $120,080 and $114,166

 

 

45,417

 

 

 

57,207

 

Customer contract costs, net of amortization of $30,601 and $32,410

 

 

54,735

 

 

 

46,618

 

Deferred income taxes

 

 

26,206

 

 

 

8,584

 

Other assets

 

 

7,956

 

 

 

15,840

 

Total non-current assets

 

 

582,598

 

 

 

638,950

 

Total assets

 

$

1,348,553

 

 

$

1,387,149

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

37,500

 

 

$

237,500

 

Operating lease liabilities

 

 

21,012

 

 

 

23,270

 

Customer deposits

 

 

40,472

 

 

 

43,546

 

Trade accounts payable

 

 

47,720

 

 

 

35,397

 

Accrued employee compensation

 

 

68,321

 

 

 

91,115

 

Settlement and merchant reserve liabilities

 

 

237,810

 

 

 

185,276

 

Deferred revenue

 

 

46,033

 

 

 

53,748

 

Income taxes payable

 

 

5,455

 

 

 

398

 

Other current liabilities

 

 

22,886

 

 

 

24,852

 

Total current liabilities

 

 

527,209

 

 

 

695,102

 

Non-current liabilities:

 

 

 

 

 

 

 

 

Long-term debt, net of unamortized discounts of $2,656 and $3,406

 

 

375,469

 

 

 

137,219

 

Operating lease liabilities

 

 

53,207

 

 

 

70,068

 

Deferred revenue

 

 

21,991

 

 

 

19,599

 

Income taxes payable

 

 

3,410

 

 

 

4,058

 

Deferred income taxes

 

 

117

 

 

 

7,752

 

Other non-current liabilities

 

 

11,901

 

 

 

13,107

 

Total non-current liabilities

 

 

466,095

 

 

 

251,803

 

Total liabilities

 

 

993,304

 

 

 

946,905

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Preferred stock, par value $.01 per share; 10,000 shares authorized; zero shares issued and outstanding

 

 

-

 

 

 

-

 

Common stock, par value $.01 per share; 100,000 shares authorized; 31,269 and 32,495 shares

outstanding

 

 

708

 

 

 

705

 

Additional paid-in capital

 

 

495,189

 

 

 

488,303

 

Treasury stock, at cost; 38,210 and 36,713 shares

 

 

(1,018,034

)

 

 

(930,106

)

Accumulated other comprehensive income (loss):

 

 

 

 

 

 

 

 

Unrealized gain (loss) on short-term investments, net of tax

 

 

1

 

 

 

(6

)

Cumulative foreign currency translation adjustments

 

 

(58,830

)

 

 

(38,347

)

Accumulated earnings

 

 

936,215

 

 

 

916,060

 

Total CSG stockholders' equity

 

 

355,249

 

 

 

436,609

 

Noncontrolling interest

 

 

-

 

 

 

3,635

 

Total stockholders' equity

 

 

355,249

 

 

 

440,244

 

Total liabilities and stockholders' equity

$

1,348,553

 

 

$

1,387,149

 

 

CSG SYSTEMS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME-UNAUDITED

(in thousands, except per share amounts)

 

 

Quarter Ended

 

Year Ended

 

December 31,

2022

 

December 31,

2021

 

December 31,

2022

 

December 31,

2021

Revenue

$

289,876

 

 

$

275,025

 

 

$

1,089,752

 

 

$

1,046,487

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue (exclusive of depreciation, shown separately below)

 

150,154

 

 

 

142,026

 

 

 

565,168

 

 

 

543,211

 

Other operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

34,548

 

 

 

35,341

 

 

 

137,913

 

 

 

134,691

 

Selling, general and administrative

 

64,185

 

 

 

61,706

 

 

 

238,018

 

 

 

214,694

 

Depreciation

 

5,913

 

 

 

6,231

 

 

 

23,598

 

 

 

24,835

 

Restructuring and reorganization charges

 

4

 

 

 

1,841

 

 

 

46,308

 

 

 

4,870

 

Total operating expenses

 

254,804

 

 

 

247,145

 

 

 

1,011,005

 

 

 

922,301

 

Operating income

 

35,072

 

 

 

27,880

 

 

 

78,747

 

 

 

124,186

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(6,146

)

 

 

(3,708

)

��

 

(16,432

)

 

 

(14,569

)

Amortization of original issue discount

 

-

 

 

 

(671

)

 

 

-

 

 

 

(3,021

)

Interest and investment income, net

 

340

 

 

 

79

 

 

 

877

 

 

 

365

 

Loss on derivative liability upon debt conversion

 

-

 

 

 

-

 

 

 

(7,456

)

 

 

-

 

Other, net

 

(999

)

 

 

515

 

 

 

5,045

 

 

 

(6,015

)

Total other

 

(6,805

)

 

 

(3,785

)

 

 

(17,966

)

 

 

(23,240

)

Income before income taxes

 

28,267

 

 

 

24,095

 

 

 

60,781

 

 

 

100,946

 

Income tax provision

 

(8,118

)

 

 

(6,846

)

 

 

(16,721

)

 

 

(28,615

)

Net income

$

20,149

 

 

$

17,249

 

 

$

44,060

 

 

$

72,331

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

30,455

 

 

 

31,628

 

 

 

31,028

 

 

 

31,776

 

Diluted

 

30,732

 

 

 

31,939

 

 

 

31,298

 

 

 

32,010

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.66

 

 

$

0.55

 

 

$

1.42

 

 

$

2.28

 

Diluted

 

0.66

 

 

 

0.54

 

 

 

1.41

 

 

 

2.26

 

 

CSG SYSTEMS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS-UNAUDITED

(in thousands)

 

 

Year Ended

 

December 31,

2022

 

December 31,

2021

Cash flows from operating activities:

 

 

 

 

 

Net income

$

44,060

 

 

$

72,331

 

Adjustments to reconcile net income to net cash provided by operating activities-

 

 

 

 

 

Depreciation

 

27,967

 

 

 

24,835

 

Amortization

 

48,984

 

 

 

47,966

 

Amortization of original issue discount

 

-

 

 

 

3,021

 

Asset impairment

 

31,761

 

 

 

1,270

 

Loss on short-term investments and other

 

18

 

 

 

(294

)

Loss on derivative liability upon debt conversion

 

7,456

 

 

 

-

 

Loss on extinguishment of debt

 

-

 

 

 

132

 

Loss on acquisition of controlling interest

 

-

 

 

 

6,180

 

Unrealized foreign currency transactions gains, net

 

(103

)

 

 

(424

)

Deferred income taxes

 

(27,627

)

 

 

2,388

 

Stock-based compensation

 

27,243

 

 

 

21,400

 

Subtotal

 

159,759

 

 

 

178,805

 

Changes in operating assets and liabilities, net of acquired amounts:

 

 

 

 

 

Trade accounts receivable, net

 

(51,005

)

 

 

(10,278

)

Other current and non-current assets and liabilities

 

(12,833

)

 

 

(1,527

)

Income taxes payable/receivable

 

9,336

 

 

 

(10,174

)

Trade accounts payable and accrued liabilities

 

(36,971

)

 

 

(15,607

)

Deferred revenue

 

(4,689

)

 

 

(996

)

Net cash provided by operating activities

 

63,597

 

 

 

140,223

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Purchases of software, property and equipment

 

(36,991

)

 

 

(26,562

)

Purchases of short-term investments

 

-

 

 

 

(66,970

)

Proceeds from sale/maturity of short-term investments

 

27,953

 

 

 

90,452

 

Acquisition of and investments in business, net of cash acquired

 

-

 

 

 

(63,626

)

Net cash used in investing activities

 

(9,038

)

 

 

(66,706

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Proceeds from issuance of common stock

 

2,969

 

 

 

2,610

 

Payment of cash dividends

 

(33,475

)

 

 

(32,587

)

Repurchase of common stock

 

(96,720

)

 

 

(42,253

)

Deferred acquisition payments

 

(2,314

)

 

 

-

 

Proceeds from long-term debt

 

290,000

 

 

 

150,000

 

Payments on long-term debt

 

(264,801

)

 

 

(128,438

)

Payments of deferred financing costs

 

-

 

 

 

(3,000

)

Settlement and merchant reserve activity

 

52,656

 

 

 

20,277

 

Net cash used in financing activities

 

(51,685

)

 

 

(33,391

)

Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash

 

(5,758

)

 

 

(2,954

)

 

 

 

 

 

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

(2,884

)

 

 

37,172

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash, beginning of period

 

391,902

 

 

 

354,730

 

Cash, cash equivalents and restricted cash, end of period

$

389,018

 

 

$

391,902

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

Cash paid during the period for-

 

 

 

 

 

Interest

$

18,314

 

 

$

12,882

 

Income taxes

 

34,671

 

 

 

36,690

 

 

 

 

 

 

 

Reconciliation of cash, cash equivalents and restricted cash:

 

 

 

 

 

Cash and cash equivalents

$

150,365

 

 

$

205,635

 

Settlement and merchant reserve assets

 

238,653

 

 

 

186,267

 

Total cash, cash equivalents and restricted cash

$

389,018

 

 

$

391,902

 

EXHIBIT 1

CSG SYSTEMS INTERNATIONAL, INC.

SUPPLEMENTAL REVENUE ANALYSIS

 

Revenue by Significant Customers: 10% or more of Revenue

 

 

 

Quarter Ended

 

 

Quarter Ended

 

 

Quarter Ended

 

 

 

December 31, 2022

 

 

September 30, 2022

 

 

December 31, 2021

 

 

 

Amount

 

 

% of

Revenue

 

 

Amount

 

 

% of

Revenue

 

 

Amount

 

 

% of

Revenue

 

Charter

 

$

58,006

 

 

 

20

%

 

$

57,974

 

 

 

21

%

 

$

57,332

 

 

 

21

%

Comcast

 

 

55,383

 

 

 

19

%

 

 

53,533

 

 

 

20

%

 

 

54,861

 

 

 

20

%

 

 

 

Year Ended

 

 

Year Ended

 

 

 

 

December 31, 2022

 

 

December 31, 2021

 

 

 

 

Amount

 

 

% of

Revenue

 

 

Amount

 

 

% of

Revenue

 

 

Charter

 

$

221,222

 

 

 

20

%

 

$

221,148

 

 

 

21

%

 

Comcast

 

 

214,359

 

 

 

20

%

 

 

215,944

 

 

 

21

%

 

 

Revenue by Vertical

 

 

Quarter Ended

 

Quarter Ended

 

Quarter Ended

 

 

December 31,

 

September 30,

 

December 31,

 

 

2022

 

2022

 

2021

Broadband/Cable/Satellite

 

 

53

%

 

 

55

%

 

 

55

%

Telecommunications

 

 

20

%

 

 

20

%

 

 

20

%

All other

 

 

27

%

 

 

25

%

 

 

25

%

Total revenue

 

 

100

%

 

 

100

%

 

 

100

%

 

 

Year Ended

 

Year Ended

 

 

December 31,

 

December 31,

 

 

2022

 

2021

Broadband/Cable/Satellite

 

 

54

%

 

 

57

%

Telecommunications

 

 

20

%

 

 

19

%

All other

 

 

26

%

 

 

24

%

Total revenue

 

 

100

%

 

 

100

%

 

Revenue by Geography

 

 

 

Quarter Ended

 

Quarter Ended

 

Quarter Ended

 

 

December 31,

 

September 30,

 

December 31,

 

 

2022

 

2022

 

2021

Americas

 

 

86

%

 

 

86

%

 

 

83

%

Europe, Middle East and Africa

 

 

9

%

 

 

10

%

 

 

13

%

Asia Pacific

 

 

5

%

 

 

4

%

 

 

4

%

Total revenue

 

 

100

%

 

 

100

%

 

 

100

%

 

 

Year Ended

 

Year Ended

 

 

December 31,

 

December 31,

 

 

2022

 

2021

Americas

 

 

85

%

 

 

85

%

Europe, Middle East and Africa

 

 

11

%

 

 

11

%

Asia Pacific

 

 

4

%

 

 

4

%

Total revenue

 

 

100

%

 

 

100

%

 

EXHIBIT 2

CSG SYSTEMS INTERNATIONAL, INC.

DISCLOSURES FOR NON-GAAP FINANCIAL MEASURES

Use of Non-GAAP Financial Measures and Limitations

To supplement its condensed consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP), CSG uses non-GAAP operating income, non-GAAP adjusted operating margin percentage, non-GAAP EPS, non-GAAP adjusted EBITDA, and non-GAAP free cash flow. CSG believes that these non-GAAP financial measures, when reviewed in conjunction with its GAAP financial measures, provide investors with greater transparency to the information used by CSG’s management in its financial and operational decision making. CSG uses these non-GAAP financial measures for the following purposes:

  • Certain internal financial planning, reporting, and analysis;
  • Forecasting and budgeting;
  • Certain management compensation incentives; and
  • Communications with CSG’s Board of Directors, stockholders, financial analysts, and investors.

These non-GAAP financial measures are provided with the intent of providing investors with the following information:

  • A more complete understanding of CSG’s underlying operational results, trends, and cash generating capabilities;
  • Consistency and comparability with CSG’s historical financial results; and
  • Comparability to similar companies, many of which present similar non-GAAP financial measures to investors.

Non-GAAP financial measures are not measures of performance under GAAP, and therefore should not be considered in isolation or as a substitute for GAAP financial information. Limitations with the use of non-GAAP financial measures include the following items:

  • Non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles;
  • The way in which CSG calculates non-GAAP financial measures may differ from the way in which other companies calculate similar non-GAAP financial measures;
  • Non-GAAP financial measures do not include all items of income and expense that affect CSG’s operations and that are required by GAAP to be included in financial statements;
  • Certain adjustments to CSG’s non-GAAP financial measures result in the exclusion of items that are recurring and will be reflected in CSG’s financial statements in future periods; and
  • Certain charges excluded from CSG’s non-GAAP financial measures are cash expenses, and therefore do impact CSG’s cash position.

CSG compensates for these limitations by relying primarily on its GAAP results and using non-GAAP financial measures as a supplement only. Additionally, CSG provides specific information regarding the treatment of GAAP amounts considered in preparing the non-GAAP financial measures and reconciles each n on-GAAP financial measure to the most directly comparable GAAP measure.

Non-GAAP Financial Measures: Basis of Presentation

The table below outlines the exclusions from CSG’s non-GAAP financial measures:

Non-GAAP Exclusions

 

Operating

Income

 

Adjusted

Operating

Margin

Percentage

 

EPS

Transaction fees

 

 

X

 

Restructuring and reorganization charges

 

X

 

X

 

X

Executive transition costs

 

X

 

X

 

X

Acquisition-related expenses:

 

 

 

 

 

 

Amortization of acquired intangible assets

 

X

 

X

 

X

Transaction-related costs

 

X

 

X

 

X

Stock-based compensation

 

X

 

X

 

X

Amortization of original issue discount (“OID”)

 

 

 

X

Gain (loss) on debt extinguishment/conversion

 

 

 

X

Gain (loss) on acquisitions or dispositions

 

 

 

X

Unusual income tax matters

 

 

 

X

CSG believes that excluding certain items in calculating its non-GAAP financial measures provides meaningful supplemental information regarding CSG’s performance and these items are excluded for the following reasons:

  • Transaction fees are primarily comprised of fees paid to third-party payment processors and financial institutions and interchange fees under CSG’s payment services contracts. Transaction fees are included in revenue in CSG’s Income Statement (and not netted against revenue) because CSG maintains control and acts as principal over the integrated service provided under its payment services customer contracts. However, CSG excludes expense associated with transaction fees from the numerator and denominator in calculating its non-GAAP adjusted operating margin percentage in order to provide comparability with historical and future periods and with its peer group and competitors.
  • Restructuring and reorganization charges are expenses that result from cost reduction initiatives and/or significant changes to CSG’s business, to include such things as involuntary employee terminations, changes in management structure, divestitures of businesses, facility consolidations and abandonments, and fundamental reorganizations impacting operational focus and direction. These charges are not considered reflective of CSG’s recurring business operating results. The exclusion of these items in calculating CSG’s non-GAAP financial measures allows management and investors an additional means to compare CSG’s current financial results with historical and future periods.
  • Executive transition costs include expenses incurred related to a departure of a CSG executive officer under the terms of the related separation agreement. These types of costs are not considered reflective of CSG’s recurring business operating results. The exclusion of these costs in calculating CSG’s non-GAAP financial measures allows management and investors an additional means to compare CSG’s current financial results with historical and future periods.
  • Acquisition-related expenses include amortization of acquired intangible assets and transaction-related costs, to include earn-out compensation. Transaction-related costs, which typically include expenses related to legal, accounting, and other professional services, are direct and incremental expenses related to business acquisitions, and thus, are not considered reflective of CSG’s recurring business operating results. The total amount of acquisition-related expenses can vary significantly between periods based on the number and size of acquisition activities, previously acquired intangible assets becoming fully amortized, and ultimate realization of earn-out compensation. In addition, the timing of these expenses may not directly correlate with underlying performance of the CSG’s operations. Therefore, the exclusion of acquisition-related expenses in calculating CSG’s non-GAAP financial measures allows management and investors an additional means to compare CSG’s current financial results with historical and future periods.
  • Stock-based compensation results from CSG’s issuance of equity awards to its employees under incentive compensation programs. The amount of this incentive compensation in any period is not generally linked to the level of performance by employees or CSG. The exclusion of these expenses in calculating CSG’s non-GAAP financial measures allows management and investors an additional means to evaluate the non-cash expense related to compensation included in CSG’s results of operations, and therefore, the exclusion of this item allows investors to further evaluate the cash generating capabilities of CSG’s business.
  • The convertible notes OID is the result of allocating a portion of the principal balance of the debt at issuance to the equity component of the instrument, as required under current accounting rules. This OID is then amortized to interest expense over the life of the respective convertible debt instrument. The interest expense related to the amortization of the OID is a non-cash expense, and therefore, the exclusion of this item allows investors to further evaluate the cash interest costs of CSG’s convertible notes for cash flow, liquidity, and debt service purposes.
  • Gains and losses related to the extinguishment/conversion of debt can be as a result of the refinancing of CSG’s credit agreement and/or repurchase, conversion, or settlement of CSG’s convertible notes. These activities, to include any derivative activity related to debt conversions, are not considered reflective of CSG’s recurring business operating results. Any resulting gain or loss is generally non-cash income or expense, and therefore, the exclusion of these items allows investors to further evaluate the cash impact of these activities for cash flow and liquidity purposes. In addition, the exclusion of these gains and losses in calculating CSG’s non-GAAP EPS allows management and investors an additional means to compare CSG’s current operating results with historical and future periods.
  • Gains or losses related to the acquisition or disposition of certain of CSG’s business activities are not considered reflective of CSG’s recurring business operating results. Any resulting gain or loss is generally non-cash income or expense, and therefore, the exclusion of these items allows investors to further evaluate the cash impact of these activities for cash flow and liquidity purposes. In addition, the exclusion of these gains and losses in calculating CSG’s non-GAAP EPS allows management and investors an additional means to compare CSG’s current operating results with historical and future periods.
  • Unusual items within CSG’s quarterly and/or annual income tax expense can occur from such things as income tax accounting timing matters, income taxes related to unusual events, or as a result of different treatment of certain items for book accounting and income tax purposes. Consideration of such items in calculating CSG’s non-GAAP financial measures allows management and investors an additional means to compare CSG’s current financial results with historical and future periods.

CSG also reports non-GAAP adjusted EBITDA and non-GAAP free cash flow. Management believes non-GAAP adjusted EBITDA is a useful measure to investors in evaluating CSG’s operating performance, debt servicing capabilities, and enterprise valuation. CSG defines non-GAAP adjusted EBITDA as income before interest, income taxes, depreciation, amortization, stock-based compensation, foreign currency transaction adjustments, acquisition-related expenses, and unusual items, such as restructuring and reorganization charges, executive transition costs, gains and losses related to the extinguishment of debt, and gains and losses on acquisitions or dispositions, as discussed above. Additionally, management uses non-GAAP free cash flow, among other measures, to assess its financial performance and cash generating capabilities, and believes that it is useful to investors because it shows CSG’s cash available to service debt, make strategic acquisitions and investments, repurchase its common stock, pay cash dividends, and fund ongoing operations. CSG defines non-GAAP free cash flow as net cash flows from operating activities less the purchases of software, property and equipment.

Non-GAAP Financial Measures

Non-GAAP Operating Income and Non-GAAP Adjusted Operating Margin Percentage:

The reconciliation of GAAP operating income to non-GAAP operating income, and calculation of CSG’ non-GAAP adjusted operating margin percentage, for the indicated periods are as follows (in thousands, except percentages):

 

 

Quarter Ended

December 31,

 

Year Ended

December 31,

 

 

2022

 

2021

 

2022

 

2021

Non-GAAP Operating Income

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating income

 

$

35,072

 

 

$

27,880

 

 

$

78,747

 

 

$

124,186

 

Restructuring and reorganization charges (1)

 

 

4

 

 

 

1,841

 

 

 

46,308

 

 

 

4,870

 

Executive transition costs

 

 

-

 

 

 

443

 

 

 

1,302

 

 

 

503

 

Acquisition-related expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of acquired intangible assets

 

 

3,338

 

 

 

3,573

 

 

 

14,355

 

 

 

11,645

 

Transaction-related costs

 

 

(296

)

 

 

313

 

 

 

173

 

 

 

(1,071

)

Stock-based compensation (1)

 

 

7,039

 

 

 

6,102

 

 

 

27,945

 

 

 

21,580

 

Non-GAAP operating income

 

$

45,157

 

 

$

40,152

 

 

$

168,830

 

 

$

161,713

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Adjusted Operating Margin Percentage

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

289,876

 

 

$

275,025

 

 

$

1,089,752

 

 

$

1,046,487

 

Less: Transaction fees (2)

 

 

(20,751

)

 

 

(17,377

)

 

 

(75,679

)

 

 

(66,722

)

Revenue less transaction fees

 

$

269,125

 

 

$

257,648

 

 

$

1,014,073

 

 

$

979,765

 

Non-GAAP adjusted operating margin percentage

 

 

16.8

%

 

 

15.6

%

 

 

16.6

%

 

 

16.5

%

(1)

Restructuring and reorganization charges include stock-based compensation, which is not included in the stock-based compensation line in the tables above and following, and depreciation, which has not been recorded to the depreciation line item on the income statement.

(2)

Transaction fees are primarily comprised of fees paid to third-party payment processors and financial institutions and interchange fees under CSG’s payment services contracts. Transaction fees are included in revenue in CSG's Income Statement (and not netted against revenue) because CSG maintains control and acts as principal over the integrated service provided under its payment services customer contracts. However, CSG excludes expense associated with transaction fees from the numerator and denominator in calculating its non-GAAP adjusted operating margin percentage in order to provide comparability with historical and future periods and with its peer group and competitors.

 

Non-GAAP EPS:

The reconciliations of GAAP EPS to non-GAAP EPS for the indicated periods are as follows (in thousands, except per share amounts):

 

 

Quarter Ended

 

Quarter Ended

 

 

December 31, 2022

 

December 31, 2021

 

 

Amounts

 

EPS (5)

 

Amounts

 

EPS (5)

GAAP net income

 

$

20,149

 

 

$

0.66

 

$

17,249

 

 

$

0.54

GAAP income tax provision (4)

 

 

8,118

 

 

 

 

 

 

6,846

 

 

 

 

GAAP income before income taxes

 

 

28,267

 

 

 

 

 

 

24,095

 

 

 

 

Restructuring and reorganization charges (1)

 

 

4

 

 

 

 

 

 

1,841

 

 

 

 

Executive transition costs

 

 

-

 

 

 

 

 

 

443

 

 

 

 

Acquisition-related costs:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of acquired intangible assets

 

 

3,338

 

 

 

 

 

 

3,573

 

 

 

 

Transaction-related costs

 

 

(296

)

 

 

 

 

 

313

 

 

 

 

Stock-based compensation (1)

 

 

7,039

 

 

 

 

 

 

6,102

 

 

 

 

Amortization of OID

 

 

-

 

 

 

 

 

 

671

 

 

 

 

Non-GAAP income before income taxes

 

 

38,352

 

 

 

 

 

 

37,038

 

 

 

 

Non-GAAP income tax provision (4)

 

 

(12,435

)

 

 

 

 

 

(10,650

)

 

 

 

Non-GAAP net income

 

$

25,917

 

 

$

0.84

 

$

26,388

 

 

$

0.83

 

 

Year Ended

 

Year Ended

 

 

December 31, 2022

 

December 31, 2021

 

 

Amounts

 

EPS (5)

 

Amounts

 

EPS (5)

GAAP net income

 

$

44,060

 

 

$

1.41

 

$

72,331

 

 

$

2.26

GAAP income tax provision (4)

 

 

16,721

 

 

 

 

 

 

28,615

 

 

 

 

GAAP income before income taxes

 

 

60,781

 

 

 

 

 

 

100,946

 

 

 

 

Restructuring and reorganization charges (1)

 

 

46,308

 

 

 

 

 

 

4,870

 

 

 

 

Executive transition costs

 

 

1,302

 

 

 

 

 

 

503

 

 

 

 

Acquisition-related expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of acquired intangible assets

 

 

14,355

 

 

 

 

 

 

11,645

 

 

 

 

Transaction-related costs

 

 

173

 

 

 

 

 

 

(1,071

)

 

 

 

Stock-based compensation (1)

 

 

27,945

 

 

 

 

 

 

21,580

 

 

 

 

Loss on extinguishment of debt

 

 

7,456

 

 

 

 

 

 

-

 

 

 

 

Amortization of OID

 

 

-

 

 

 

 

 

 

3,021

 

 

 

 

Loss on acquisition of controlling interest (3)

 

 

-

 

 

 

 

 

 

6,180

 

 

 

 

Non-GAAP income before income taxes

 

 

158,320

 

 

 

 

 

 

147,674

 

 

 

 

Non-GAAP income tax provision (4)

 

 

(45,427

)

 

 

 

 

 

(40,522

)

 

 

 

Non-GAAP net income

 

$

112,893

 

 

$

3.61

 

$

107,152

 

 

$

3.35

(3)

During the third quarter of 2021, CSG acquired a controlling interest in a mobile money fintech payment company that it previously held only an equity interest in. Upon acquisition of the controlling interest, CSG recognized a non-cash loss in other income (expense) related to the fair value remeasurement of the pre-existing equity investment.

(4)

For the fourth quarter and year ended December 31, 2022, the GAAP effective income tax rates were approximately 29% and 28%, respectively, and the non-GAAP effective income tax rates were approximately 32% and 29%, respectively. For the fourth quarter and year ended December 31, 2021 the GAAP effective income tax rates were approximately 28% for both periods, and the non-GAAP effective income tax rates were approximately 29% and 27%, respectively.

(5)

The outstanding diluted shares for the fourth quarter and year ended December 31, 2022 were 30.7 million and 31.3 million, respectively, and for the fourth quarter and year ended December 31, 2021 were 31.9 million and 32.0 million, respectively.

 

Non-GAAP Adjusted EBITDA:

CSG’s calculation of non-GAAP adjusted EBITDA and the reconciliation of CSG’s non-GAAP adjusted EBITDA measure to GAAP net income is provided below for the indicated periods (in thousands, except percentages):

 

 

Quarter Ended

 

Year Ended

 

 

December 31,

 

December 31,

 

 

2022

 

2021

 

2022

 

2021

GAAP net income

 

$

20,149

 

 

$

17,249

 

 

$

44,060

 

 

$

72,331

 

GAAP income tax provision

 

 

8,118

 

 

 

6,846

 

 

 

16,721

 

 

 

28,615

 

Interest expense (6)

 

 

6,146

 

 

 

3,708

 

 

 

16,432

 

 

 

14,569

 

Amortization of OID

 

 

-

 

 

 

671

 

 

 

-

 

 

 

3,021

 

Loss on derivative liability upon debt conversion

 

 

-

 

 

 

-

 

 

 

7,456

 

 

 

-

 

Interest and investment income and other, net (8)

 

 

659

 

 

 

(594

)

 

 

(5,922

)

 

 

5,650

 

GAAP operating income

 

 

35,072

 

 

 

27,880

 

 

 

78,747

 

 

 

124,186

 

Restructuring and reorganization charges (1)

 

 

4

 

 

 

1,841

 

 

 

46,308

 

 

 

4,870

 

Executive transition costs

 

 

-

 

 

 

443

 

 

 

1,302

 

 

 

503

 

Acquisition-related expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of acquired intangible assets (7)

 

 

3,338

 

 

 

3,573

 

 

 

14,355

 

 

 

11,645

 

Transaction-related costs

 

 

(296

)

 

 

313

 

 

 

173

 

 

 

(1,071

)

Stock-based compensation (1)

 

 

7,039

 

 

 

6,102

 

 

 

27,945

 

 

 

21,580

 

Amortization of other intangible assets (7)

 

 

3,399

 

 

 

3,383

 

 

 

14,140

 

 

 

13,316

 

Amortization of customer contract costs (7)

 

 

5,588

 

 

 

6,247

 

 

 

19,738

 

 

 

21,218

 

Depreciation (1)

 

 

5,913

 

 

 

6,231

 

 

 

23,598

 

 

 

24,835

 

Non-GAAP adjusted EBITDA

 

$

60,057

 

 

$

56,013

 

 

$

226,306

 

 

$

221,082

 

Non-GAAP adjusted EBITDA as a percentage of revenue less transaction fees (2)

 

 

22.3

%

 

 

21.7

%

 

 

22.3

%

 

 

22.6

%

(6)

Interest expense includes amortization of deferred financing costs as provided in Note 7 below.

(7)

Amortization on the statement of cash flows is made up of the following items for the indicated periods (in thousands):

 

 

Quarter Ended

 

 

Year Ended

 

 

December 31,

 

 

December 31,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

Amortization of acquired intangible assets

 

$

3,338

 

 

$

3,573

 

 

$

14,355

 

 

$

11,645

Amortization of other intangible assets

 

 

3,399

 

 

 

3,383

 

 

 

14,140

 

 

 

13,316

Amortization of customer contract costs

 

 

5,588

 

 

 

6,247

 

 

 

19,738

 

 

 

21,218

Amortization of deferred financing costs

 

 

189

 

 

 

449

 

 

 

751

 

 

 

1,787

Total amortization

 

$

12,514

 

 

$

13,652

 

 

$

48,984

 

 

$

47,966

(8)

Included in interest and investment income and other, net for the year ended December 31, 2021, is the $6.2 million loss on acquisition of controlling interest, discussed above.

 

Non-GAAP Free Cash Flow:

CSG’s calculation of non-GAAP free cash flow and the reconciliation of CSG’s non-GAAP free cash flow measure to cash flows from operating activities are provided below for the indicated periods (in thousands):

 

 

Quarter Ended

 

Year Ended

 

 

December 31,

 

December 31,

 

 

2022

 

2021

 

2022

 

2021

Cash flows from operating activities

 

$

54,024

 

 

$

51,914

 

 

$

63,597

 

 

$

140,223

 

Purchases of software, property and equipment

 

 

(5,427

)

 

 

(4,031

)

 

 

(36,991

)

 

 

(26,562

)

Non-GAAP free cash flow

 

$

48,597

 

 

$

47,883

 

 

$

26,606

 

 

$

113,661

 

Non-GAAP Financial Measures – 2023 Financial Guidance

Non-GAAP Operating Income and Non-GAAP Adjusted Operating Margin Percentage:

The reconciliation of GAAP operating income to non-GAAP operating income, and calculation of non-GAAP adjusted operating margin percentage, as included in CSG’s 2023 full year financial guidance, is as follows (in thousands, except percentages):

 

 

2023 Guidance Range

 

 

Low Range

 

High Range

Non- GAAP Operating Income

 

 

 

 

 

 

GAAP operating income

 

$

126,500

 

 

$

137,900

 

Acquisition-related expenses:

 

 

 

 

 

 

Amortization of acquired intangible assets

 

 

12,200

 

 

 

12,200

 

Stock-based compensation

 

 

34,800

 

 

 

34,800

 

Non-GAAP operating income

 

$

173,500

 

 

$

184,900

 

 

 

 

 

 

 

 

Non-GAAP Operating Margin Percentage

 

 

 

 

 

 

Revenue

 

$

1,130,000

 

 

$

1,170,000

 

Less: Transaction fees (2)

 

 

(78,000

)

 

 

(82,000

)

Revenue less transaction fees

 

$

1,052,000

 

 

$

1,088,000

 

Non-GAAP adjusted operating margin percentage

 

 

16.5

%

 

 

17.0

%

 

Non-GAAP EPS:

The reconciliation of GAAP EPS to non-GAAP EPS as included in CSG’s 2023 full year financial guidance is as follows (in thousands, except per share amounts):

 

 

2023 Guidance Range

 

 

Low Range

 

 

High Range

 

 

Amounts

 

EPS (10)

 

 

Amounts

 

EPS (10)

GAAP net income

 

$

70,800

 

 

$

2.28

 

 

$

79,000

 

 

$

2.55

GAAP income tax provision (9)

 

 

28,200

 

 

 

 

 

 

 

31,400

 

 

 

 

GAAP income before income taxes

 

 

99,000

 

 

 

 

 

 

 

110,400

 

 

 

 

Acquisition-related expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of acquired intangible assets

 

 

12,200

 

 

 

 

 

 

 

12,200

 

 

 

 

Stock-based compensation

 

 

34,800

 

 

 

 

 

 

 

34,800

 

 

 

 

Non-GAAP income before income taxes

 

 

146,000

 

 

 

 

 

 

 

157,400

 

 

 

 

Non-GAAP income tax provision (9)

 

 

(42,200

)

 

 

 

 

 

 

(44,100

)

 

 

 

Non-GAAP net income

 

$

103,800

 

 

$

3.35

 

 

$

113,300

 

 

$

3.65

(9)

For 2023, the estimated effective income tax rate for GAAP and non-GAAP purposes is expected to be approximately 28.5%.

(10)

The weighted-average diluted shares outstanding are expected to be approximately 31 million.

 

Non-GAAP Adjusted EBITDA:

CSG’s calculation of non-GAAP adjusted EBITDA and the reconciliation of CSG’s non-GAAP adjusted EBITDA measure to GAAP net income is provided below for CSG’s 2023 full year financial guidance (in thousands, except percentages):

 

 

2023 Guidance Range

 

 

Low Range

 

High Range

GAAP net income

 

$

70,800

 

 

$

79,000

 

GAAP income tax provision (9)

 

 

28,200

 

 

 

31,400

 

Interest expense

 

 

28,800

 

 

 

28,800

 

Interest and investment income and other, net

 

 

(1,300

)

 

 

(1,300

)

GAAP operating income

 

 

126,500

 

 

 

137,900

 

Acquisition-related expenses:

 

 

 

 

 

 

Amortization of acquired intangible assets

 

 

12,200

 

 

 

12,200

 

Stock-based compensation

 

 

34,800

 

 

 

34,800

 

Amortization of other intangible assets

 

 

9,600

 

 

 

9,600

 

Amortization of client contract costs

 

 

19,100

 

 

 

19,100

 

Depreciation

 

 

28,600

 

 

 

28,600

 

Non-GAAP adjusted EBITDA

 

$

230,800

 

 

$

242,200

 

Non-GAAP adjusted EBITDA as a percentage of revenue less transaction fees (2)

 

 

21.9

%

 

 

22.3

%

 

Non-GAAP Free Cash Flow:

CSG’s calculation of non-GAAP free cash flow and the reconciliation of CSG’s non-GAAP free cash flow measure to cash flows from operating activities is provided below for the indicated period (in thousands):

 

 

2023 Guidance Range

 

 

Low Range

 

High Range

Cash flows from operating activities

 

$

102,000

 

 

$

148,000

 

Purchases of software, property and equipment

 

 

(22,000

)

 

 

(28,000

)

Non-GAAP free cash flow

 

$

80,000

 

 

$

120,000

 

 

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