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Csg Systems International (CSGS)
NASDAQ:CSGS
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CSG Systems International
(NASDAQ:CSGS)79Outperform
Positive Factors
New Client Acquisition
CSG won Telenor Denmark as a new client and will be deploying both Xponent and CSG Ascendon solutions as part of the engagement, a great example of the company’s ability to cross-sell.
Revenue Growth
Adjusted revenue grew 6.3% year-over-year and was driven by extensions with Fortune 1000 companies and new wins with global clients.
Negative Factors
Revenue Guidance
Management is now guiding to the low end of the revenue guidance range due to budget tightening at clients, headwinds in North American broadband markets, and timing on certain services-based.
CSG Systems International (CSGS) vs. S&P 500 (SPY)
Market Cap
$1.84B
Dividend Yield1.88%
Average Volume (3M)349.37K
Price to Earnings (P/E)21.1
Beta (1Y)0.91
Revenue Growth2.39%
EPS Growth39.20%
CountryUS
Employees6,000
SectorTechnology
Sector Strength48
IndustrySoftware
Share Statistics
EPS (TTM)3.04
Shares Outstanding28,839,470
10 Day Avg. Volume346,615
30 Day Avg. Volume349,371
Financial Highlights & Ratios
PEG Ratio0.54
Price to Book (P/B)N/A
Price to Sales (P/S)1.54
Price to Cash Flow (P/CF)5.60
P/FCF Ratio5.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$71.17Price Target Upside11.10% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering7
CSG Systems International Business Overview & Revenue Model
Company DescriptionCSG Systems International, Inc. (CSGS) is a global leader in providing business support solutions primarily to the communications industry. The company offers a broad range of products and services, including customer management, billing, and revenue management, that help service providers streamline their operations and enhance customer interactions. CSG's solutions are designed to support key business processes for telecommunications providers, cable operators, and digital content companies worldwide.
How the Company Makes MoneyCSG Systems International generates revenue primarily through the sale of its software solutions and related services. The company's revenue model includes licensing fees for its software products, subscription fees for cloud-based services, and professional services fees for implementation, customization, and consulting. A significant portion of CSG's earnings is derived from long-term contracts with major telecommunications and media companies, ensuring steady, recurring revenue streams. Additionally, strategic partnerships and acquisitions help to expand CSG's product offerings and market reach, further contributing to its financial performance.
CSG Systems International Financial Statement Overview
Summary
CSG Systems International shows strong financial health with consistent revenue growth, improved profitability, and efficient cash flow management. The balance sheet reflects reduced leverage, enhancing financial stability and shareholder value, although asset growth remains modest.Income Statement
The income statement reflects strong financial performance with consistent revenue growth, increasing from $1,169.3M in 2023 to $1,197.2M in 2024, marking a revenue growth rate of 2.39%. The gross profit margin remains robust at 48.68%, and the net profit margin has improved to 7.26%, indicating effective cost management. However, the EBIT and EBITDA margins have slightly decreased, suggesting areas for potential operational efficiency improvements.87
Very Positive
Balance Sheet
The balance sheet indicates a solid equity position with a debt-to-equity ratio of 0.15, significantly improved from previous levels, reflecting reduced leverage. The equity ratio stands at 18.83%, and ROE at 30.74%, which is a strong return for shareholders. However, the company's total assets have grown modestly, which may limit future expansion without additional financing.75
Positive
Cash Flow
Cash flow analysis shows a positive trajectory with a free cash flow growth rate of 9.02%, reflecting enhanced cash generation capabilities. The operating cash flow to net income ratio of 1.56 indicates strong cash earnings, supporting operational stability. The free cash flow to net income ratio of 1.30 further confirms the company's ability to generate cash relative to its net income, although capital expenditures should be monitored to sustain this trend.81
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.20B | 1.17B | 1.09B | 1.05B | 990.53M | Gross Profit |
| 582.78M | 554.22M | 524.58M | 503.28M | 454.94M | EBIT |
| 131.33M | 123.88M | 130.98M | 124.19M | 105.56M | EBITDA |
| 215.25M | 194.78M | 149.04M | 189.55M | 170.71M | Net Income Common Stockholders |
| 86.85M | 66.25M | 44.06M | 72.33M | 58.71M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 161.79M | 186.26M | 150.44M | 233.67M | 240.30M | Total Assets |
| 1.50B | 1.44B | 1.35B | 1.39B | 1.33B | Total Debt |
| 43.59M | 592.80M | 487.19M | 468.06M | 469.79M | Net Debt |
| -118.20M | 406.54M | 336.82M | 262.42M | 281.10M | Total Liabilities |
| 1.22B | 1.17B | 993.30M | 946.90M | 909.61M | Stockholders Equity |
| 282.57M | 273.33M | 355.25M | 436.61M | 422.39M |
| Cash Flow | Free Cash Flow | |||
| 113.30M | 103.92M | 26.61M | 113.66M | 143.62M | Operating Cash Flow |
| 135.72M | 131.90M | 63.60M | 140.22M | 173.02M | Investing Cash Flow |
| -5.13M | -27.91M | -9.04M | -66.71M | -66.26M | Financing Cash Flow |
| -79.92M | -31.30M | -51.69M | -33.39M | -76.97M |
CSG Systems International Technical Analysis
Positive
64.06
Price Trends
57.58
Positive
54.60
Positive
49.28
Positive
Market Momentum
1.85
Positive
60.25
Neutral
22.69
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CSGS, the sentiment is Positive. The current price of 64.06 is below the 20-day moving average (MA) of 64.12, above the 50-day MA of 57.58, and above the 200-day MA of 49.28, indicating a neutral trend. The MACD of 1.85 indicates Positive momentum. The RSI at 60.25 is Neutral, neither overbought nor oversold. The STOCH value of 22.69 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CSGS.
CSG Systems International Risk Analysis
CSG Systems International disclosed 26 risk factors in its most recent earnings report. CSG Systems International reported the most risks in the “Tech & Innovation” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
CSG Systems International Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $1.84B | 21.10 | 31.25% | 1.88% | 2.39% | 39.20% | |
78 Outperform | $12.44B | 24.36 | 34.88% | 0.69% | 11.19% | 51.03% | |
77 Outperform | $127.53B | 32.70 | 83.72% | 1.83% | 7.09% | 11.51% | |
75 Outperform | $440.44B | 38.54 | 132.00% | 1.02% | 6.40% | 12.83% | |
74 Outperform | $186.65B | 133.88 | 16.53% | ― | 22.44% | -18.31% | |
73 Outperform | $274.98B | 45.18 | 10.26% | 0.56% | 8.72% | 51.47% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% |
* Technology Sector Average
Performance Comparison
CSGS
CSG Systems International
64.06
12.13
23.36%
ADP
Automatic Data Processing
310.43
71.91
30.15%
ORCL
Oracle
161.56
50.49
45.46%
CRM
Salesforce
291.97
-10.11
-3.35%
NOW
ServiceNow
915.79
174.73
23.58%
PAYC
Paycom
217.39
42.58
24.36%
CSG Systems International Earnings Call Summary
Earnings Call Date: Feb 5, 2025 | % Change Since: 3.89% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Positive
The earnings call highlighted CSG's strong financial performance in Q4 and 2024, with record revenues, significant profitability growth, and increased dividends. However, ongoing challenging market conditions and modest organic growth in 2024 were notable concerns. Despite these challenges, the company has a positive outlook for 2025.Highlights
Record-Breaking Quarterly Revenue
CSG achieved a record quarterly revenue of $317 million in Q4, representing a 7% year-over-year growth.
Significant Profitability Increase
Operating income grew 32% year-over-year in Q4 to 20.1% of revenue, with an adjusted EBITDA growth of 21%, reaching a margin of 24.8%.
EPS Growth
Earnings per share (EPS) grew 79% year-over-year in Q4, reaching a new CSG record of $1.65.
Free Cash Flow Growth
CSG's free cash flow increased by 9% year-over-year, totaling $113 million in 2024.
Strong New Logo Wins
CSG won new logos including Gamma and expanded deals with existing clients like MTN South Africa and Mobily.
Dividend Increase
CSG announced a 7% increase in its dividend to $1.28 per year, marking the 12th consecutive annual increase.
Positive Outlook for 2025
CSG provided a positive outlook for 2025 with anticipated strong double-digit adjusted free cash flow growth.
Lowlights
Challenging Market Conditions
Despite strong sales wins, the company acknowledged ongoing tough market conditions and competition.
Modest Organic Growth in 2024
The company reported less than 2% organic growth in 2024, which was below expectations.
Company Guidance
During CSG's Q4 and full-year 2024 earnings call, the company reported a 5% year-over-year organic revenue growth for Q4, contributing to a record quarterly revenue of $317 million. Total revenue for Q4 grew by 7%, while operating income increased by 32% year-over-year, reaching 20.1% of revenue. Adjusted EBITDA for the quarter rose 21% to 24.8% margin, and EPS set a new record with a 79% year-over-year increase to $1.65. CSG announced a 9% year-over-year growth in free cash flow, totaling $113 million for 2024. Looking ahead, CSG aims for sustained double-digit adjusted free cash flow growth in 2025 and 2026, with a guidance range of $110 million to $150 million for 2025. The company also plans a 7% increase in dividends, marking the 12th consecutive annual rise. For 2025, CSG anticipates organic revenue growth of 2% to 6% and aims to expand its non-GAAP operating margin to 18%-20%. Additionally, CSG committed to over $100 million in share repurchases and dividends for 2025, continuing its focus on shareholder returns.CSG Systems International Corporate Events
Executive/Board Changes
CSG Systems Awards CEO Performance-Based Stock Package
Positive
Dec 11, 2024
CSG Systems International has approved a performance-based award for its CEO, Brian A. Shepherd, consisting of 74,475 shares of restricted stock valued at $4.0 million, with potential to earn up to 200% additional shares. The award, designed to ensure leadership continuity and drive long-term shareholder value, has a five-year performance period contingent on stock price thresholds, with vesting occurring in tranches over three to five years.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.