Ladies and gentlemen, thank you for standing by, and welcome to the CSG Systems International First Quarter 2022 Earnings Call. Thank you. John Rea, Head of Investor Relations, you may begin your conference.

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 client's 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. Good afternoon, everyone. For those using Slides today, please join us on Slide 4. I'm pleased to share that CSG's business momentum continued in Q1 2022, as team CSG delivered another strong quarter of growth on top line revenue and bottom line EPS. Even as we absorbed the discounts associated with the exciting renewals of Charter Communications and DISH that we signed and announced in Q4 of last year. It is a testament to the strength of our recurring revenue SaaS business model and the continued success of our sales performance, which is as robust as ever, to grow revenue and EPS in the quarters following two of our top three customer renewals. Equally important for us, as proud and as committed as every CSG employee is, to deliver excellent results every single quarter, the elevation in transformation of CSG is much more profound and longer-term in nature than any given quarterly results. At CSG, we aspire to be a $2 billion and beyond purpose-driven SaaS platform Company who envisions, invents and shapes a better more future-ready world. We will hold ourselves accountable to change the lives of our employees and the customers we are honored to serve for the better. We will redefine the industries we are proud to lead. We will make a lasting impact in the communities and the world in which we operate and across the wider environmental, social and governmental spectrum. While we still have much important work to do, we are very proud that leading organizations are beginning to recognize the meaningful commitment CSG has and will continue to make on the ESG and D&I fronts. To this point, I'm delighted to announce that we were recently honored to receive our first Prime ESG rating from Institutional Shareholder Services, ISS for short,…

Thanks, Brian. As Brian highlighted, we are off to a good start in 2022. Let's walk through first quarter financial results and then I'll wrap it up with some key conclusion. Starting on Slide 11. We generated $264 million of revenue and $246 million of non-GAAP adjusted revenue during the first quarter. These results represent 4.5% and 4.1% year-over-year growth respectively. Approximately two-thirds of these increases were attributed to organic growth. The year-over-year increase in revenue and non-GAAP adjusted revenue was driven primarily by the continued growth of our revenue management solution, 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 such as healthcare, retail, financial services and government. I would also like to note that this growth was in the face of 3% to 5% discount headwind for two of our three largest customers. Our first quarter non-GAAP operating income was $40 million or 16.3% of non-GAAP adjusted revenue, as compared to $40 million or 17.0% in the same prior year period. This result is consistent with our long-term target range of 16% to 18% operating margin. Our non-GAAP adjusted EBITDA was $56 million for the first quarter or 22.9% of non-GAAP adjusted revenue, as compared to $54 million or 23.0% in the same prior year period. Moving to our first quarter non-GAAP EPS. We delivered $0.86, a 4.9% year-over-year increase, as compared to $0.82 in the prior year period. We anticipate our bottom line EPS growing as fast or faster than our top line growth for the full year. It should be noted that like other companies, we continue to monitor and navigate the current uncertain macroeconomic, geopolitical and inflationary environment. So turning…

Your first question comes from the line of Maggie Nolan with William Blair. Your line is open.

I wanted to ask a little bit more about CSG Encompass and understand, is this an additive offering for your existing CSP customer base or is this about kind of streamlining services and achieving that goal of being easier to do business with than your competitors? I guess any comments on the opportunity there and then early adoption and penetration would be helpful.

Yes, it's Hai. Hi, Maggie, thanks for the question. This is a new product launch. What we've seen in the market is, enterprise is one of the fastest growing and most profitable segments for global telecom operators all around the world. And so, we had an opportunity after the acquisitions of Tango Telecom and DGIT, to fully integrate a modular open API's structure, where we could help enterprise telecom businesses, both launch new marketplaces and allow them to bring on new partners that could really accelerate revenue and help them with a return on their 5G investment. So when you think about what they are trying to do all around the world, they are trying to make it easier to buy a broad range of goods and services. So it unifies the catalog. It provides configure, price, quote. It improves SLA response time. It deals with order orchestration, that really helps telecom businesses launch and monetize new services to gain that return.

Okay. That's helpful context. Thanks. And then on the acquisition pipeline and that's an integral part of your strategy long term. Can you just comment on how that's looking? Are target companies becoming more expenses and if large scale acquisition is still a likely best use of capital in the near term here?

Yes. No, there is a couple of good questions on that, that we could give some insights. First on the ones we've done. We're really focused on continuing to create and extract value. So you saw us launch CSG Xponent in the latter part of last year. That really is a customer experience, customer engagement platform, that helps big brands with lots of verticals. That's what's contributing to some of the sales success that we're seeing in the market, so we can more embed those new verticals. Same thing now with the launch of CSG Encompass. Specifically on the macroeconomic side, we do believe that some of the turbulence that we're seeing more globally, actually can create attractive disciplined buying opportunities for CSG, as we continue to execute the M&A strategy. So we're focused in several of those areas and we try to be very disciplined with the pretty tight sweet spot on what we believe an attractive midsize or larger acquisition is. And we think the economic environment might make it even more attractive as we continue to pursue those opportunities on the strategic side.

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

Hai Tran, just following up on the M&A line of questioning. When you look at opportunities in terms of maybe new vertical versus technology, what are your focuses or what are you looking at in terms of expanding your platform maybe from a tuck-in technology or vertical perspective, and then, do you use something more transformative, is there any particular market that you'd be looking at, whether it's something you're already in or a new -- a completely new industry?

Yes. It really covers a couple of different avenues. One, we're not - we stay very flexible and open, whether they are good deals and the acquisition would be larger, midsize and smaller, really depends on the SaaS technology, the contribution it could bring to accelerated revenue growth and how it could help us package our solutions and technology together to be more relevant to those big brands. So a couple of key areas that we focus on, that kind of varies by industry vertical. One, we look for solutions that are SaaS-based, that can help us in monetization, customary experience, customer engagement, and in digital payments. We really focus on those areas. We think that there is an opportunity to expand scale. So if it's more of a scale acquisition, then it needs to be able to have sticky revenue, be accretive, have great cost synergies as well as contribute to the revenue growth. If it's more on the higher growth SaaS end of that, then we're looking forward to be highly complementary where we can easily integrate into our existing suite, still provide a modular approach that will enable us to expand either the geographic global reach of our solutions to expand our addressable market and our growth rate and to be more value-adding and relevant to the customer. So we really look at M&A opportunities across that entire landscape with that focus area.

Okay. And then in terms of Charter, the decline in revenue year-over-year and sequentially, is that strictly a function of the price you are setting? Is that fully baked into the numbers now and do you expect revenue to grow from here?

Greg, the answer is yes and yes, right. Because I think part of the - that we build here enables us to transition by 15 million subs, of which we've already moved over about 5 million subs thus far. So there is still more room for us to grow with Charter over time.

And maybe the one thing I would add to that, Greg, I think we gave a little bit of color late last year, that we expected the renewals to be in the plus or minus 5% range. We saw that come in. The other aspect besides just the renewal discount we factored in, we had some revenue that was spread over the term. And so when we saw the term late last year only be three months left, some of that revenue was getting spread over a shorter period of time, as we then renewed to a six-year period, some revenue from an accounting standpoint, they got just spread over a longer horizon. So there are like several different factors in addition to what Hai commented on, that we haven't seen all the subscribers come on-board yet.

Okay, thanks. And lastly, the - on the payment side, it looks like you're back to pre-pandemic levels, but maybe you could just confirm whether or not that's the case. And what's the pipeline of opportunities look like for that business?

We love what we're seeing in the payments business. We started to see the performance in our sales, in our new customer account revenue activations and our ISV channel partners really start to bear fruit and start to grow in the second half of last year and I think we've been signaling that for three or four months now and we saw that really transpire. We saw January to be a little bit better, but not back to normal levels. We saw very, very strong results, back to pre-pandemic levels and then some in the latter part of Q1 and we have high confidence that will continue. From a sales performance, we've outperformed in the payment space, both in direct sales and in our ISV channel partners. We've improved in the activation of new customers to basically reduce the time to on-board and revenue recognition and revenue acceleration and we love what we're seeing in the payments business.

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

Now, thanks so much. We appreciate everybody joining. We are laser-focused on what we're doing to accelerate top and bottom line growth, bring more value to fantastic brands all around the world. We are super grateful to all 5200 and beyond CSG employees for making a difference, elevating our culture. We look forward to doing bigger and better things every single quarter. Thank you for the time.

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