CSG Systems International Inc (CSGS) Reports Strong 2023 Financial Results
Total Revenue: $1.17 billion in 2023, a 7.3% increase YoY.
GAAP Operating Income: $123.9 million for the full year, with a 10.6% operating margin.
Non-GAAP Operating Income: $185.7 million for the full year, with a 17.2% adjusted operating margin.
GAAP EPS: $2.20 for the full year, a 56.0% increase YoY.
Non-GAAP EPS: $3.69 for the full year, a 2.2% increase YoY.
Non-GAAP Free Cash Flow: Record $103.9 million for the full year.
Dividend Payout: Increased by 7% in 2024, marking the 11th consecutive year of increased payouts.
On February 7, 2024, CSG Systems International Inc (NASDAQ:CSGS) released its 8-K filing, announcing its financial results for the fourth quarter and full year of 2023. The company, a leading SaaS platform provider known for enabling businesses to deliver exceptional customer experiences, reported robust growth and financial performance, achieving or exceeding all its financial guidance targets for the year.
Company Overview
CSG Systems International Inc operates as a single segment, Solutions and Services, with a primary geographical focus on the Americas, particularly the U.S. The company's cloud-first architecture and customer-centric approach have been instrumental in driving its success, allowing businesses to connect with and serve their B2B, B2C, and B2B2X customers more effectively.
Financial Performance and Challenges
The company's 2023 organic revenue grew by 7.3% year-over-year (YoY), marking CSG's best annual results in nearly two decades. This growth is primarily attributed to the expansion of CSGs revenue management solutions, growth in digital solutions, and increased payment volumes. Despite the strong performance, challenges such as restructuring and reorganization charges and increased interest expenses were noted, which could impact future results.
Financial Achievements
CSG's financial achievements in 2023 are significant, particularly in the context of the software industry where consistent revenue growth and robust free cash flow generation are critical indicators of a company's health and its ability to invest in innovation and return value to shareholders. The company's ability to increase its dividend payout for the 11th consecutive year underscores its commitment to shareholder returns.
Key Financial Metrics
Key metrics from the financial statements include a GAAP operating margin of 10.6% and a non-GAAP adjusted operating margin of 17.2% for the full year. The company's GAAP EPS increased by 56.0% YoY to $2.20, while non-GAAP EPS saw a modest rise of 2.2% YoY to $3.69. The record non-GAAP free cash flow of $103.9 million reflects the company's strong cash generation capabilities.
Management Commentary
"Team CSG had a record-setting 2023 as we delivered excellent financial results across the board highlighted by 7.3% year-over-year organic revenue growth, our strongest annual result in nearly two decades," said Brian Shepherd, President and Chief Executive Officer of CSG. "Additionally, we delivered strong profitability and cash flow generation as our non-GAAP adjusted operating margin improved from 16.6% in 2022 to 17.2% in 2023, while generating $104 million in non-GAAP free cash flow. Plus, we continue to return capital to shareholders in the form of buybacks and dividends, having delivered over $150 million in shareholder remuneration in 2023. On this note, we are pleased to announce our 11th consecutive year of increasing dividend payout in 2024. Looking forward, we anticipate mid-single-digit organic revenue growth, resulting in revenue between $1.2 and $1.24 billion in 2024 with non-GAAP adjusted operating margins in the range of 17.0% to 17.4%."
Financial Guidance for 2024
CSG anticipates continued growth in the coming year, with projected revenue between $1.2 and $1.24 billion and non-GAAP adjusted operating margins between 17.0% and 17.4%. The company also forecasts non-GAAP EPS in the range of $3.85 to $4.15 and expects to generate between $95 and $135 million in free cash flow.
For a detailed analysis and further information, readers are encouraged to review the full 8-K filing and visit the Investor Relations section of CSGs website at csgi.com.
Explore the complete 8-K earnings release (here) from CSG Systems International Inc for further details.
This article first appeared on GuruFocus.
