GREENWOOD VILLAGE, Colo.--(BUSINESS WIRE)--Aug 1, 2018--CSG (NASDAQ: CSGS), the trusted partner to simplify the complexity of business transformation in the digital age, today reported results for the quarter ended June 30, 2018.

Key Highlights:

Second quarter 2018 financial results: Total revenues were $213.0 million.GAAP operating income was $24.1 million, or 11.3% of total revenues, and non-GAAP operating income was $35.6 million, or 16.7% of total revenues.GAAP earnings per diluted share (EPS) was $0.46. Non-GAAP EPS was $0.73.Cash flows from operations were negative $(3.6)million. CSG declared its quarterly cash dividend of $0.21 per share of common stock, or a total of approximately $7 million, to shareholders.

“We delivered another solid quarter demonstrating the progress that we are making on our strategic initiatives aimed at driving revenue growth and profits,” said Bret Griess, president and chief executive officer for CSG. “We grew our Ascendon, managed services and total revenues by double digits. We expanded our footprint in the telecom and financial services verticals, helping to diversify our revenue streams. And importantly, we continue to get broader and deeper within our clients’ businesses. We remain focused on our continued execution of our plan aimed at creating long-term value for our shareholders, clients and employees.”

Financial Overview (unaudited)

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 www.csgi.com.

Results of Operations

Total Revenues: Total revenues for the second quarter of 2018 were $213.0 million, an 11% increase when compared to revenues of $192.7 million for the second quarter of 2017, and a 6% increase when compared to revenues of $201.7 million for the first quarter of 2018. The year-over-year increase in revenues can be primarily attributed to the acquisition of Business Ink on February 28, 2018, which generated approximately $16 million of revenue for the second quarter of 2018, and the continued growth in CSG’s cloud solutions and managed services offerings. The sequential quarterly increase is mainly due to the second quarter of 2018 having a full quarter of Business Ink revenues as compared to only one month of revenues in the first quarter of 2018.

GAAP Results: GAAP operating income for the second quarter of 2018 was $24.1 million, or 11.3% of total revenues, compared to $24.2 million, or 12.6% of total revenues, for the second quarter of 2017, and $25.8 million, or 12.8% of total revenues, for the first quarter of 2018.

GAAP EPS for the second quarter of 2018 was $0.46, as compared to $0.35 for the second quarter of 2017, and $0.42 for the first quarter of 2018. The year-over-year increase in GAAP EPS is primarily due to a lower effective tax rate resulting primarily from the U.S. Tax Reform enacted in December 2017.

Non-GAAP Results: Non-GAAP operating income for the second quarter of 2018 was $35.6 million, or 16.7% of total revenues, compared to $34.7 million, or 18.0% of total revenues, for the second quarter of 2017, and $35.3 million, or 17.5% of total revenues for the first quarter of 2018. Non-GAAP EPS for the second quarter of 2018 was $0.73, compared to $0.62 for the second quarter of 2017, and $0.69 for the first quarter of 2018.

The higher non-GAAP EPS for the second quarter of 2018 when compared to the second quarter of 2017 is primarily the result of a lower non-GAAP effective income tax rate of 27%, compared to 34% for the second quarter of 2017. The lower non-GAAP effective income tax rate is due to the U.S. Tax Reform enacted in December 2017.

Balance Sheet and Cash Flows

Cash, cash equivalents and short-term investments at June 30, 2018 were $186.4 million, compared to $222.1 million as of March 31, 2018 and $261.4 million as of December 31, 2017. CSG had net cash flows from operations for the second quarters ended June 30, 2018 and 2017 of negative $(3.6) million and $34.5 million, respectively, and had non-GAAP free cash flow of negative $(18.1) million and $25.3 million, respectively. Cash flows from operations for the second quarter of 2018 were negatively impacted by an increase in accounts receivable, primarily related to the timing around a recurring client payment that was delayed and received subsequent to quarter-end.

Summary of 2018 Financial Guidance

CSG is updating its financial guidance for the full year 2018 as follows:

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 www.csgi.com.

Conference Call

CSG will host a conference call on Wednesday, August 1, 2018 at 5:00 p.m. Eastern Time, to discuss CSG’s second quarter results for 2018. 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, dial 1-877-260-1479 and ask the operator for the CSG conference call and Liz Bauer, chairperson.

Additional Information

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

About CSG

CSG simplifies the complexity of business transformation in the digital age for the most respected communications, media and entertainment service providers worldwide. With over 35 years of experience, CSG delivers revenue management, customer experience and digital monetization solutions for every stage of the customer lifecycle. The company is the trusted partner driving digital transformation for leading global brands, including Arrow Electronics, AT&T, Bharti Airtel, Charter Communications, Comcast, DISH, Eastlink, iflix, MTN, TalkTalk, Telefonica, Telstra and Verizon.

At CSG, we have one vision: flexible, seamless, limitless communications, information and content services for everyone. For more information, visit our website at csgi.com and follow us on LinkedIn, Twitter and Facebook.

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 sixty percent of its revenues from its three largest clients; 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 as a result of its dependency on software sales, which are subject to greater volatility; Increasing competition in CSG’s market from companies of greater size and with broader presence in the communications sector; 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 maintain a reliable, secure computing environment; 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 Fluctuations in credit market conditions, general global economic and political conditions, and foreign currency exchange rates.

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.

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