UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION
PERIOD FROM _____ TO _____
Commission File Number 0-27512
CSG SYSTEMS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware
47-0783182
(State or other jurisdiction
of incorporation or organization)
(I.R.S. Employer
Identification No.)
169 Inverness Dr W, Suite 300
Englewood, Colorado
80112
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (303) 200-2000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol
Name of Each Exchange on Which Registered
Common Stock, Par Value $0.01 Per Share
CSGS
Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☒ NO ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. YES ☐ NO ☒
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or Section 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of
this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). YES ☒ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the voting and non-voting common equity held by nonaffiliates of the registrant, based on the closing price of the shares of common stock
on The Nasdaq Stock Market on June 28, 2024, was $844,833,184.
The number of shares of registrant’s Common Stock outstanding as of February 18, 2025 was 28,839,469.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s Definitive Proxy Statement for its 2025 Annual Meeting of Stockholders, to be filed on or prior to April 30, 2025, are incorporated by reference
into Part III of this Annual Report on Form 10-K.
2
CSG SYSTEMS INTERNATIONAL, INC.
2024 FORM 10-K
TABLE OF CONTENTS
Page
PART I
Item 1.
Business
4
Item 1A.
Risk Factors
10
Item 1B.
Unresolved Staff Comments
19
Item 1C.
Cybersecurity
20
Item 2.
Properties
21
Item 3.
Legal Proceedings
21
Item 4.
Mine Safety Disclosures
21
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
24
Item 6.
[Reserved]
25
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
26
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
36
Item 8.
Financial Statements and Supplementary Data
37
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
70
Item 9A.
Controls and Procedures
70
Item 9B.
Other Information
70
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
70
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
71
Item 11.
Executive Compensation
71
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
71
Item 13.
Certain Relationships and Related Transactions, and Director Independence
71
Item 14.
Principal Accounting Fees and Services
71
PART IV
Item 15.
Exhibits, Financial Statement Schedules
71
Item 16.
Form 10-K Summary
71
Signatures
80
3
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-K, including Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations", contains forward-
looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We may also make forward-looking statements in
other reports filed with the Securities and Exchange Commission, in materials delivered to stockholders, and in press releases. In addition, our
representatives may from time to time make oral forward-looking statements.
Forward-looking statements relate to future events and typically address our expected future business and financial performance. Statements in
this report that are not historical facts are forward-looking statements. Words such as "expect," "anticipate," "intend," "plan," "aspire," "believe,"
"seek," "see," "will," "would," "may," "target," and similar expressions and variations or negatives of these words, typically identify such forward-
looking statements. These include, among others, statements relating to:
•
relationships with and financial condition of our significant customers;
•
fluctuations in credit market conditions, general global economic and political conditions, and foreign currency exchange rates;
•
our ability to maintain a reliable, secure computing environment;
•
continued market acceptance of our products and services;
•
our ability to continuously develop and enhance products in a timely, cost-effective, technically advanced, and competitive manner;
•
our ability to deliver our solutions in a timely fashion within budget, particularly large software implementations;
•
our dependency on the industries in which we serve;
•
our ability to meet our financial expectations;
•
increasing competition in our market from companies of greater size and with broader presence;
•
our ability to successfully integrate and manage acquired businesses or assets to achieve expected strategic, operating, and
financial goals;
•
our ability to protect our intellectual property rights;
•
our ability to conduct business in the international marketplace;
•
our ability to comply with applicable U.S. and international laws and regulations; and
•
risks related to a global pandemic.
We assume no obligation to update or revise any forward-looking statements except as required by federal securities laws.
Forward-looking statements are based on management’s beliefs, assumptions and expectations of future events and trends that are subject to
risks and uncertainties. Forward-looking statements speak only as of the date made, and actual future results and trends may differ materially
from historical results or those reflected in any such forward-looking statements depending on a variety of factors. We have included important
factors in this Form 10-K, particularly under "Item 1A. Risk Factors" that we believe could cause actual results to differ materially from any
forward-looking statement. Investors are cautioned not to place undue reliance on forward-looking statements. For additional information
concerning factors that may cause actual results to vary materially from those stated in the forward-looking statements, see our reports on Form
10-K, 10-Q, and 8-K filed with the Securities and Exchange Commission ("SEC").
4
PART I
Item 1.
Business
Who We Are
CSG Systems International, Inc. (the “Company”, “CSG”, or forms of the pronoun “we”) is a purpose-driven, SaaS platform company that enables
global companies in a wide variety of industry verticals to simplify their complex customer engagement and how they monetize in the digital age.
Our cloud-first architecture and customer-centric approach empower companies to deliver unforgettable experiences for their B2B (business-to-
business), B2C (business-to-consumer), and B2B2X (business-to-business-to-consumer) customers, making it easier for people and businesses
to buy, use, and pay for the services they value most. CSG manages billions of critical customer interactions annually, and we do it with a
singular focus – an obsession on our customers’ success.
As a global technology leader, we aspire to envision, invent, and shape a better, more future-ready world. Specifically, our mission is focused on
helping some of the world's most recognizable brands compete and win in the digital age by making it easier for their customers to do business.
Every company in every industry vertical with recurring customer relationships needs to make it easier for their consumer and enterprise
customers to do business with them in their customers’ preferred channel of choice. They need to make it easier for customers to identify which
product or service is right for them; easier to buy, procure, provision, and pay for their goods and services; easier to communicate with or get
updates from them; and easier to modify the goods/services they buy. This is exactly where CSG’s SaaS platforms come in. Industry leaders in
telecom, broadband cable, media, retail, healthcare, financial services, insurance, government, and other industries leverage the power of our
integrated, domain specific technology to compete and win in the digital age.
Our 5,800-plus employees around the globe have made CSG a trusted technology leader and SaaS platform company to some of the biggest
and most innovative brands around the world.
Our corporate headquarters is located at 169 Inverness Dr W, Suite 300, Englewood, Colorado 80112, and the telephone number at that address
is (303) 200-2000.
Our common stock is listed on the Nasdaq Stock Market LLC (“Nasdaq”) under the symbol “CSGS”. We are a member of the S&P Small Cap
600 and Russell 2000 indices.
What We Do
Simply put, CSG helps companies solve their toughest business challenges. We help our customers deliver personalized, secure, and integrated
customer experience solutions in order to grow their revenue and wow their customers with future-ready solutions that drive exceptional customer
experiences.
Our Industry-Leading Solutions
Revenue Management and Digital Monetization: We provide robust, integrated real-time revenue management platforms leveraging
public cloud, private cloud, or on-premise deployments to optimize and monetize transactions at every stage of the customer lifecycle. Our
flexible, configurable business support systems help companies be more profitable because they sell, engage, and monetize better with
CSG integrated, domain specific technology. These solutions span the commerce lifecycle, streamlining the entire revenue monetization
process from concept to cash, helping companies address digital transformation in the ever-changing and dynamic business world in which
they operate.
With the growth in digital services across many industries, the way our customers interact with their customers is rapidly changing. For
Communication Service Providers ("CSPs"), it provides new revenue sources beyond connectivity, information, and communications
services. For consumers, it enables personalized new digital capabilities in a simpler to consume and engage model. But, behind these
‘simple’ user experiences are complex B2B, B2C, and B2B2X platforms, rich collaboration ecosystems, and a web of partnerships which
are underpinned by open application programming interfaces, or APIs, distributed architecture, and microservices technology. Our
solutions are architected to bring speed, agility, and interoperability while maintaining the operational stability, security, reliability, and
scalability needed to power these complex ecosystems. We enable companies to bring new services to market with hyper speed and
scale with our revenue management platforms which are key to growing revenue and profits in a digital world.
Transformational Customer Experiences: We believe customer experience is the number one differentiator for businesses today. We
help businesses "win" on this front by helping them be easier to do business with digitally in the moments that matter. We do this with our
SaaS platforms that leverage AI technology and drive loyalty, growth, and cost efficiency across the customer lifecycle.
5
Some of the biggest communications, financial services, healthcare, and retail brands in the world rely on our solutions, expertise, and
insights to enable better experiences and drive customer engagement and retention. Retaining and growing these consumer relationships
is critical for industry leaders to continue to thrive and grow. We help our customers deliver differentiated experiences across digital
channels creating engagements that are personalized, predictive, and proactive.
Our extensive customer analytics unlock critical insights from the trail of data footprints across websites, stores, billing systems, internal
data warehouses, emails, texts, and other channels to power personalized consumer journeys and real-time customer engagement. Our
data and orchestration approach utilizes AI to ignite exceptional experiences that fuel loyalty and growth by creating detailed profiles and
propelling customized acquisition, engagement, and retention strategies. This translates into faster results, lower risk, and ultimately,
better business outcomes for our customers with a lower total cost to serve.
Payments: We continue to see an increase in the velocity and the expectations from our merchants and partners that make digital
payments table stakes for every facet of their customer's life – whether that be paying rent, property taxes, gym memberships, educational
fees, or other goods and services.
We have been recognized as a leader in payments, providing a full end-to-end SaaS payments platform, allowing organizations to accept
electronic check/ACH, debit and credit card payments, and offer the ability to receive funds quicker via same-day ACH. With one of the
most robust and complete payments platforms in the market, we enable integrated software vendors ("ISV") to differentiate their solution
stack by offering a fully customizable payments platform that seamlessly integrates into existing architectures to help their customers scale
payments smarter and faster. Our all-in-one payments platform simplifies and enables businesses and governments to onboard
merchants quickly, deliver ongoing innovation, and address the changing market demands in digital payments. Our platform handles tens
of billions of dollars in payment volumes annually for approximately 131,000 active merchants and we do this all in a secure, PCI-compliant
environment. With our advanced fraud identification and prevention, utilizing AI-driven behavioral analysis and detection, we are able to
help entities optimize their revenue, minimize their losses, and most importantly, protect their reputation.
Taken in whole or in modules, our SaaS payments platform combined with our deep domain expertise, helps leading brands across
different industries optimize their business processes and integrate critical back- and front-office technology platforms to create a
differentiated customer experience, resulting in accelerated growth and profits.
Technology Innovation & Operations
Our customers are looking for the best, most modern, and cost-efficient technologies to solve their toughest business challenges. We
continue to make meaningful investments in research and development (“R&D”), incorporating AI and other emerging technologies into our
solutions, to ensure that we stay ahead of our customers’ needs, advancing our customers’ businesses as well as our own.
Our products are recognized by industry analysts as best-in-class in the areas of monetization, financial services, technology, telecom,
field service management, OSS/BSS, journey orchestration, journey analytics, customer experience, and integrated payments. In 2024,
analysts ranked CSG as a Leader in the Forrester Wave: Customer Journey Orchestration, a Champion in Clearing & Settlement and
Testing, and a High-Flyer in Roaming Analytics in the 2024 Kaleido Intelligence Roaming Vendor Hub Report. For the fourth consecutive
year, we received a BIG Innovations Award, as CSG Bill Explainer was named Best Product in Telecommunications 2024. We were
awarded for top innovation in payments at the 2024 PayTech Awards USA and honored for our omnichannel experience and recurring
payment innovation at the 2024 Juniper Future Digital Awards. We also earned the TSG Best of Breed API Award for Payments for the
second year in a row, and TSG honored CSG as the payment gateway provider with the Lowest Minute Outage in North America at the
TSG 2024 Real Transaction Metrics Awards.
In addition, we provide operational services encompassing infrastructure management (including hardware, application, and environmental
management), application configuration management (including configuration development, release, and deployment) and business
operations management (including event processing, revenue management, and settlement). Our pre-integrated approach, combined with
our deep domain experts managing the applications, allow our customers to scale their operations and do what matters most – focus on
satisfying their end customers and growing their businesses.
6
Why We Win
At CSG, many of our significant customer relationships span decades. To earn the right to do business with companies for that length of time,
you need to be trusted, dependable, and innovative. You need to be bold, future-forward, relentlessly focused, passionate, customer-obsessed,
people-centric, innovative – and most importantly – you need to deliver.
We do all of this by constantly obsessing over the needs and success of our customers as we help them design and deliver exceptional, digitally-
enabled, customer and employee experiences. We believe in innovating jointly with our current and potential future customers to anticipate
future-market trends and then redesign and technologically-enable personalized engagements with their consumer and enterprise customers.
And, since our modular solutions are mission-critical systems at the heart of our customers’ business, operational excellence, security, and
reliability will always be our top priority.
In addition, working side-by-side with some of the biggest and most innovative companies in the world helps us to develop breakthrough
technologies that address the market’s most pressing needs today and into the future.
How We Grow
We believe the successful execution of our goals will allow us to accelerate our revenue and earnings growth, and therefore, create long-term
sustained value for our customers, employees, and stockholders.
Our strategic focus is underpinned by our key business priorities:
Harnessing the best culture, the best talent, and the most energized and globally diverse team: Our global employees and leaders
continue to be CSG’s greatest competitive differentiator. As a purpose-driven, SaaS platform company, we foster a culture where we
prioritize employee experience, learning, and development to provide a workplace environment where our employees can do their best
work and thrive. By being customer-obsessed every day, CSG will continue to win big in the market.
Accelerating our revenue growth: We continue to target accelerated long-term organic revenue growth and unlock significant value with
disciplined strategic, financially-attractive acquisitions. Accelerating our growth will enable CSG to add scale and operating leverage in
order to create greater customer and stockholder value. We look to acquire capabilities, proven product platforms, market share in high-
growth industry verticals, and human capital talent. In today’s challenging macroeconomic environment, we will remain highly disciplined
and strive to ensure that every acquisition meets our four criteria: strategic fit, culture/integration fit, financial fit, and risk/return profile.
Creating and leading with category-defining technology: Our broad portfolio of industry-leading integrated, domain specific technology
provides our customers with a competitive advantage. These solutions enable customers to simplify the complexity in their traditional
customer engagements while being able to quickly deliver new digital services and incorporating AI to create a more personalized and
relevant experience to their consumers. We will continually add relevant capabilities to what we do as a company, both in terms of our
people and our solutions.
Delivering an exceptional customer experience: We believe we deliver more business value by doing what we say and being easy to
do business with. We do this by putting the customer at the heart of our decision-making and by continuing to raise the bar on our agility,
delivery capabilities, efficiency, and reliability to power our customers’ success.
Becoming the SaaS technology provider of choice for CSPs: We have a strong presence in the world’s largest CSPs technology
ecosystems with our award-winning revenue management and customer engagement platforms. As these companies wrestle with new
competitors, changes in customer demands, and disruptive technologies, they need a partner that can provide them with a suite of
solutions that can help them turn these challenges into opportunities, higher revenues, and greater operating profits. With our vast portfolio
of solutions, we can help service providers launch and scale new digital services quickly, provide a great customer experience across any
channel, and simplify and monetize B2B2X ecosystems and marketplaces, across industry verticals.
Expanding into big, higher growth industry verticals: Brands in many large, high-growth industry verticals rely on and need the
technology products and platforms that CSG provides. We are focused on increasing the amount of revenue we generate from customers
outside of the CSP industry. While we’ve made significant progress over the years, we have an ongoing opportunity to further expand our
footprint in these verticals. CSG is helping some of the biggest brands in retail, healthcare, financial services, insurance, and government
digitize and modernize their revenue management, customer experience, and payments capabilities.
7
Customers
We work with some of the world’s leading brands in a wide variety of industry verticals, including leading CSPs like Charter, Comcast, MTN, Airtel
Africa, DISH, Mobily, Verizon, AT&T, American Movil, and Telstra. Outside of the CSP space, we work with hundreds of other customers like JP
Morgan Chase, Walgreens, Formula 1, and NRC Health, and approximately 131,000 active merchants including some of the largest financial
services companies, property management companies, and state and local governments.
Customers that represented 10% or more of our revenue for 2024 and 2023 were as follows (in millions, except percentages):
2024
2023
Amount
% of Revenue
Amount
% of Revenue
Charter
$
240
20 %
$
241
21 %
Comcast
225
19 %
215
18 %
See the Significant Customer Relationships section of our Management’s Discussion and Analysis (“MD&A”) for additional information regarding
our business relationships with these key customers.
Professional Services
We employ professional services experts globally who bring both deep domain expertise and a wide range of skills – including solution
architecture, project management, systems implementation, system integration, and business consultancy – to every services project. We apply
a structured methodology to each of our engagements, leveraging consistent world-class processes, best-practice program management, and
systemized templates in the deployment of our solutions.
Sales and Marketing
We organize our sales efforts to customers primarily within our geographically dispersed, dedicated account teams, with senior level account
managers who are responsible for winning new customers, expanding our business with existing customers, and renewing existing contracts. In
addition, we have partnerships and alliances with leading industry participants. The account teams are supported by sales support personnel
who are experienced in the various industry-leading solutions that we provide. And because our customers trust and depend on CSG, we have
built a self-sustaining customer ecosystem that provides us with the opportunity to gain a greater share of our customers’ IT spend by cross-
selling more solutions to them.
In marketing, we have taken a digital-first approach aimed at identifying and accelerating opportunities through the pipeline by establishing CSG
as an innovative, results-driven thought leader and proven partner in helping our customers solve their toughest business problems.
Competition
The market for our offerings is competitive and evolving. We compete with both independent providers and in-house developers of revenue
management, digital monetization, customer experience, and payments systems. Our current competitors include companies who deliver on-
premise bespoke custom offerings (i.e., Amdocs Limited, NEC Netcracker), software solutions (i.e., Salesforce, Adobe, Pegasystems, Twilio),
internally developed enterprise applications, network operators (i.e., Ericsson, Huawei), large outsourced transactional communications
companies (i.e., Intrado, Genesys), systems integrators (i.e., Accenture, Tech Mahindra) and large payments processors (i.e., FIS, Chase
Payment Solutions) and payments specialists (i.e., Stripe, Square) and niche players (i.e., Paymentus, Invoice Cloud).
Proprietary Rights and Licenses
We rely on a combination of trade secret, copyright, trademark, and patent laws in the U.S. and similar laws in other countries, and non-
disclosure, confidentiality, and other types of contractual arrangements to establish, maintain, and enforce our intellectual property rights in our
solutions. Despite these measures, any of our intellectual property rights could be challenged, invalidated, circumvented, or misappropriated.
Although we hold a select number of patents and patent applications on some of our newer solutions, we do not rely upon patents as a primary
means of protecting our rights in our intellectual property. In any event, there can be no assurance that our patent applications will be approved,
that any issued patents will adequately protect our intellectual property, or that such patents will not be challenged by third parties. Also, much of
our business and many of our solutions rely on key technologies developed or licensed by third parties, and we may not be able to obtain or
continue to obtain licenses and technologies from these third parties at all or on reasonable terms. Our failure to adequately establish, maintain,
and protect our intellectual property rights could have a material adverse impact on our business, financial position, and results of operations.
8
For a description of the risks associated with our intellectual property rights, see “Item 1A - Risk Factors – Failure to Protect Our Intellectual
Property Rights or Claims by Others That We Infringe Their Intellectual Property Rights Could Substantially Harm Our Business, Financial
Position and Results of Operations,” and “Item 1A - Risk Factors – We Rely on A Limited Number of Third-Party Vendor Relationships to Execute
Our Business Which Exposes Us to Supply Chain Disruptions, Costs Increases, and Cyberattacks”.
Human Capital
We believe that our culture serves as a competitive differentiator in the marketplace and gives CSG a competitive edge. As a result, our success
is dependent upon our ability to attract, develop, and retain this smart, talented, and inclusive team. We have introduced a framework that
outlines our ethos for how we serve not only our customers and each other, but the greater communities in which we operate.
Our Purpose:
To envision, invent, and shape a better, more future-ready world.
Our Mission:
By channeling the power of all, we make ordinary customer and employee experiences extraordinary.
Our Guiding Principles:
Integrity: Be Authentic, Be Inclusive, Be Trusted Team Players
Inspiration: Be Bold, Be Inventive, Be Agile
Impact: Be Customer Obsessed, Be Game Changers, Be Drivers of Growth
At CSG, we believe in the power of all so much that it is a cornerstone of our mission statement. The power of all means that we draw on the
experiences and innovations of the best, most diverse global talent to serve our customers. The power of all means we are mindful of living our
guiding principles and creating an inclusive environment where team members around the world can reach their full potential by being valued for
their authentic selves. And the power of all means that together, we strive to make a bigger difference in the communities in which we operate by
envisioning, inventing, and shaping a better, more future-ready world.
Delivering on our greater purpose and mission at speed and scale while delighting our customers and being mindful of our team members’
growth, wellbeing, and happiness requires a people and culture philosophy that accelerates sustainable growth and innovation through three
pillars:
•
Leading the Future of Work by fostering an industry leading employee experience focused on employee choice and flexibility,
providing programs and events focusing on wellbeing and mental health of all team members, and inspiring collaborative and
connected teams.
•
Winning with Talent by attracting and retaining the best, most diverse global talent; accelerating time to productivity, integration,
and engagement; embedding sustainability and inclusion considerations into our strategy; and ensuring our global team members
thrive in an inclusive environment. In addition to our already competitive pay and benefits, we continue to introduce many new
benefits and programs that are designed to promote mental and physical wellness.
•
Developing our People into bold, agile, inventive team members and leaders; innovating talent development and succession
planning; and expanding cross-company and cross-unit rotations and promotions is critical to the success of CSG and our
employees. We continue to expand our personalized learning platform and internal talent marketplace, which allows employees to
browse open roles, see their skills match for roles they might be interested in, and receive curated learning pathways designed to
provide them the skills they need to take on more responsibility or move to an entirely different role or department.
We believe that our culture and our team members are a key reason our customers continue to rely on us to help them achieve their business
goals and objectives and do business with us for years.
As of December 31, 2024, we employed over 5,800 people, of which approximately 46% were in our locations in Asia-Pacific and Australia, 36%
were in our locations in North America, 10% were in our locations in Europe, the Middle East, and Africa, and 8% were in our locations in South
and Central America.
As of December 31, 2024, our workforce was approximately 63% male and 37% female. The race/ethnicity of our U.S. workforce was 67%
White, 12% Asian, 7% Hispanic or Latino, 6% Black or African American, 1% two or more races, <1% American Indian/Alaskan Native, <1%
other, and 6% unknown or undeclared.
We believe our employee relations are good and we work hard to constantly improve in this area.
9
Sustainability and Social Responsibility
We aspire to envision, invent, and create a better, more inclusive, and future ready world by channeling the power of all. To accomplish that, we
are focusing on these key areas:
Expanding Our Community Impact: We support Community Based Organizations (“CBOs”) that provide underrepresented communities
with the opportunity to participate, thrive, and make a lasting impact across the globe. We continue to expand our partnerships with
CBOs like WeMakeChange, WeHero, The Arbor Day Foundation, and Earthday.org. In addition, we've continued our commitment to
CSG's Global Days of Action, where we give every team member an opportunity (two days of paid leave) to volunteer their time giving
back to the community.
Enhancing Our Environmental Stewardship: With employees in over 20 countries and serving customers globally, this is a vital and
important focus area. We seek to work with partners that are committed to reducing and recycling waste, investing in green energy, and
responsible sourcing to create a more sustainable future. Reducing global emissions is critical, and we have a goal to be carbon neutral
for Scope 1 and 2 greenhouse emissions by 2035. With the goal of reducing our environmental impact, we’ve established a baseline to
drive improvement in our environmental performance as part of our ongoing business strategy and operating methods and we recently
completed our Double Materiality Assessment.
Enabling Digital Inclusion: We strive to develop technological solutions that promote social progress and make navigating the digital
world easier for anyone, anywhere in the world. We also believe that diverse experiences and perspectives help bring out the best
ideas, drive innovation, and achieve transformative results to benefit the clients we serve. We are committed to digital inclusivity, doing
the right thing for the users of our products, and taking action to improve the accessibility of our digital products and services.
Regulatory Matters
We are subject to numerous international, federal, state, and local laws and regulations. These laws and regulations govern matters that include
environmental, employment, and occupational health and safety matters. Additionally, these laws and regulations also require us to obtain and
comply with permits, registrations, and other authorizations issued by governmental authorities. These authorities can modify or revoke our
permits, registrations, or other authorizations and can enforce compliance through fines and injunctions. We expect to incur ongoing costs to
comply with existing and future requirements.
We are also subject to regulation by various U.S. federal regulatory agencies and by the applicable regulatory authorities in countries in which we
operate. Additionally, as a U.S. entity operating through subsidiaries in non-U.S. jurisdictions, we are subject to foreign exchange control, transfer
pricing, and custom laws that regulate the flow of funds between CSG and its subsidiaries. We are also required to comply with transfer pricing,
securities laws, and other statutes and regulations, such as the Foreign Corrupt Practices Act (“FCPA”), and other countries’ anti-corruption and
anti-bribery laws.
In addition, we are subject to laws relating to information security, privacy, anti-money laundering, counter-terrorist financing, consumer credit,
protection, and fraud. An increasing number of government and industry groups worldwide have established data privacy laws and standards for
the protection of personal information, including financial information, social security numbers, and health information. We are also subject to
labor and employment laws, including regulations established by the U.S. Department of Labor, the countries in which we do business, and other
local regulatory agencies, which sets laws governing working conditions, paid leave, workplace safety, wage and hour standards, and hiring and
employment practices.
We believe that our operations are in compliance with all applicable laws and regulations in all material respects, and that we hold all necessary
permits to operate our business in each jurisdiction in which we operate. Laws and government regulations are subject to change and
interpretation. In some cases, compliance with applicable laws and regulations may cause us to make additional capital and operational
expenditures. While there are no current regulatory developments that we expect to be material to our results of operations, financial position, or
cash flows, there can be no assurances that existing or future environmental laws or other regulations applicable to our operations would not lead
to a material adverse impact on our results of operations, financial position, or cash flows.
Available Information
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy materials, and amendments to those
reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") are
available free of charge on our website at www.csgi.com. Information on our website is not incorporated by reference into this report and should
not be considered part of this document. Additionally, these reports are available on the SEC’s website at www.sec.gov.
10
Code of Conduct and Business Ethics
A copy of our Code of Conduct and Business Ethics (the “Code of Conduct”) is maintained on our website. Any future amendments to the Code
of Conduct, or any future waiver of a provision of our Code of Conduct, will be timely posted to our website upon their occurrence. Information on
our website is not incorporated by reference into this report and should not be considered part of this document. Historically, we have had no
waivers of a provision of our Code of Conduct.
Item 1A. Risk Factors
We or our representatives from time-to-time may make or may have made certain forward-looking statements, whether orally or in writing,
including without limitation, any such statements made or to be made in MD&A contained in our various Securities and Exchange Commission
(“SEC”) filings or orally in conferences or teleconferences. We wish to ensure that such statements are accompanied by meaningful cautionary
statements, so as to ensure, to the fullest extent possible, the protections of the safe harbor established in the Private Securities Litigation Reform
Act of 1995.
We operate in rapidly changing and evolving markets throughout the world addressing the complex needs of industry leaders in the telecom,
broadband, cable media, retail, healthcare, financial services, insurance, government, and other industries. As a result, new risk factors will likely
emerge and currently identified risk factors will likely evolve in their scope. Further, as we enter new market sectors as well as new geographic
markets, we could be subject to new regulatory requirements that increase the risk of non-compliance and the potential for economic harm to us
and our customers. Accordingly, the risk factors and any forward-looking statements are qualified in their entirety by reference to, and are
accompanied by, the following meaningful cautionary statements:
•
If any of the following risk factors should occur, it could have a material adverse effect on our business, financial position, results of
operations, and/or trading price of our common stock.
•
This list of risk factors is not exhaustive, and management cannot predict all of the relevant risk factors, nor can it assess the
potential impact, if any, of such risk factors on our business or the extent to which any risk factor, or combination of risk factors, may
create.
•
There can be no assurances that forward-looking statements will be accurate indicators of future actual results, and it is likely that
actual results will differ from results projected in the forward-looking statements, and that such differences may be material.
Risks Related to Our Business
We Derive a Significant Portion of Our Revenue from a Limited Number of Customers, and the Loss of the Business of a Significant
Customer Could Have a Material Adverse Effect on Our Financial Position and Results of Operations.
Over the past decade, the global communications industry has experienced significant consolidation, resulting in a large percentage of the market
being served by a limited number of CSPs, with greater size and scale, and there are possibilities of further consolidation. A large percentage of
our revenue is generated from a limited number of customers in the global communications industry, with our three largest customers being
Charter, Comcast, and DISH Network L.L.C. Consistent with this market concentration, we generate approximately 40% of our revenue from our
two largest customers, Charter and Comcast, which each accounted for over 10% or more of our total revenue. See the Significant Customer
Relationships section of MD&A for a brief summary of our business relationship with these customers.
There are inherent risks whenever a large percentage of total revenue is concentrated with a limited number of customers. Such risks include,
but are not limited to, a significant customer: (i) undergoing a formalized process to evaluate alternative providers for solutions and services we
provide; (ii) terminating or failing to renew their contracts with us, in whole or in part, for any reason; (iii) significantly reducing the number of
customer accounts processed on our solutions, the price paid for our solutions and services, or the scope of solutions and services that we
provide; or (iv) experiencing financial or operating difficulties. Any such development could have a material adverse effect on our financial position
and results of operations and/or the trading price of our common stock.
Our industry is highly competitive, and as a result, it is possible that a competitor could increase its footprint and share of customers serviced at
our expense, or a customer could develop their own internal solutions. While our customers may incur costs in switching to our competitors or
developing their own solutions, they may do so for a variety of reasons, including: (i) price; (ii) dissatisfaction with our solutions or service levels,
including our ability to adequately protect their data; or (iii) dissatisfaction with our relationship.
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A Reduction in Demand for Our Revenue Management Platforms Could Have a Material Adverse Effect on Our Financial Position and
Results of Operations.
Historically, a substantial percentage of our total revenue has been generated from our SaaS platforms and related solutions. Our platforms and
solutions are expected to continue to provide a large percentage of our total revenue in the foreseeable future. Any significant reduction in
demand for these products could have a material adverse effect on our business.
The Delivery of Our Solutions is Dependent on a Variety of Computing and Processing Environments and Communications Networks,
Including our Customer’s Systems and Networks, Which May Not Be Available or May Be Subject to Security Attacks.
Our solutions are generally delivered through a variety of sources including public and hybrid cloud, third-party data center and other service
providers, and internally operated computing and processing environments (collectively referred to hereafter in this section as “Systems”). We
and/or end users are connected to the Systems through a variety of public and private communications networks, which we will collectively refer
to herein as “Networks”. Our solutions are generally considered to be mission critical customer management systems by our customers. As a
result, our customers are highly dependent on the consistent availability and uncompromised security of the Networks and Systems to conduct
their business operations.
Networks and Systems are subject to the risk of an extended interruption, outage, or security breach due to many factors such as: (i) changes to
the Systems and Networks for such things as scheduled maintenance and technology upgrades, or conversions to other technologies, service
providers, or physical location of hardware; (ii) failures or lack of continuity of services from public cloud or third-party data center and other
service providers; (iii) defects and/or critical security vulnerabilities in software program(s); (iv) human and machine error; (v) acts of war and/or
nature; (vi) intentional, unauthorized attacks from computer “hackers”, or cyber-attacks; and (vii) using the Systems to perpetrate identity theft
through unauthorized authentication to our customers’ customers’ accounts.
Most recently, the global marketplace is experiencing an ever-increasing exposure to both the number and severity of cyber-attacks. In particular,
ransomware attacks are increasingly prevalent and can lead to significant reputational harm, loss of data, operational disruption, and significant
monetary loss. Organized criminals, nation state threat actors, and motivated hacktivists have the possibility of impacting our Systems, Networks,
data, and business operations, as well as our customers' systems, networks, data, and business operations. Neither we, nor our customers, may
be able or willing to respond to any such attacks due to policy, laws, regulations, or other reasons. In addition, we continue to expand our use of
third-party Systems and Networks with our solution offerings thereby permitting, for example, our customers’ customers to access our cloud
solutions to review account balances, order services, or execute similar account management functions. Increased access to Networks and
Systems has the potential to increase their vulnerability to unauthorized access and corruption, as well as increasing the dependency of the
Systems’ reliability on the availability and performance of our cloud solutions and end users’ infrastructure they obtain through other third-party
providers.
The method, manner, cause, and timing of an extended interruption, outage, or security breach in third-party and/or the Networks or Systems are
impossible to predict. As a result, there can be no assurances that these Networks and Systems will not fail or suffer a security breach or that the
third-party and/or our business continuity or remediation plans will adequately mitigate the negative effects of a disruption or security breach to
the Networks or Systems. Further, our property, technology errors and omissions, contractual relationship with third-party providers, and
business interruption insurance may not adequately compensate us for losses that we incur as a result of such interruptions or security breaches.
Should the Networks or Systems: (i) experience an extended interruption or outage; (ii) have their security breached; (iii) have their data lost,
corrupted or otherwise compromised; and/or (iv) fail to meet contractual requirements related to our cybersecurity program, it would impede our
ability to meet our delivery obligations, and likely have an immediate impact to the business operations of our customers. In addition, this would
most likely result in damaging our reputation as well as our long-term ability to attract and retain new customers. The loss of confidential
information could result in losing the customers’ confidence, as well as claims for contractual breach, and imposition of penalties, fines, and/or
damages. These risks will increase as our business continues to expand to include new solutions, technologies, verticals, and markets.
Additionally, any of the events described above could cause our customers to make claims against us for damages allegedly resulting from a
security breach or service disruption. These risks, individually or collectively, could result in an adverse material impact to our business.
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We May Not Be Able to Efficiently and Effectively Implement New Solutions or Migrate Customers and Merchants onto Our Solutions.
Our continued growth plans include the implementation of new solutions, as well as migrating both new and existing customers and merchants to
our solutions. Such implementations or migrations (collectively referred to hereafter in this section as “implementations”), regardless of whether
they involve new solutions or new customers, have become increasingly more difficult because of the sophistication, complexity,
interdependencies of the various software and network environments, and the impact to our customers’ and merchants’ underlying business
processes. In addition, the complexity of the implementations increases when the arrangement includes other vendors participating in the project,
including but not limited to, prime and subcontractor relationships with our company. For these reasons, implementations subject our customers
and merchants to potential business disruption, which could cause them to delay or even cancel future implementations.
As a result, there is a risk that we may experience cancellations, delays, changes in scope, or unexpected costs associated with implementations.
In addition, our inability to complete implementations in an efficient and effective manner could damage our reputation in the global marketplace,
adversely impacting our financial results and/or reducing our opportunity to grow our organic business with both new and existing customers and
merchants.
We May Not Be Able to Respond to Rapid Technological Changes.
The market for our solutions is characterized by rapid changes in technology and is highly competitive with respect to the need for timely
innovations and new product and technology introductions. As a result, we believe that our future success in sustaining and growing our revenue
depends upon: (i) our ability to continuously expand, adapt, modify, maintain, and operate our solutions to address the increasingly complex and
evolving needs of our customers without sacrificing the reliability or quality of the solutions; (ii) the integration of acquired technologies and their
widely distributed, complex worldwide operations; and (iii) creating and maintaining an integrated suite of products and technologies which are
portable to new verticals. In addition, the market is demanding that our solutions have greater architectural flexibility and interoperability, and that
we are able to meet the demands for technological advancements to our solutions at a greater pace. Our attempts to meet these demands
subject our R&D efforts to greater risks. As a result, substantial and effective R&D and solution investment will be required to maintain the
competitiveness of our solutions in the market. Technical problems may arise in developing, maintaining, integrating, and operating our solutions
as the complexities continue to increase. Development projects can be lengthy and costly, and may be subject to changing requirements,
programming difficulties, a shortage of qualified personnel, and/or unforeseen factors which can result in delays. In addition, we may be
responsible for the implementation of new solutions and/or the conversion of customers to new solutions, and depending upon the specific
solution, we may also be responsible for operations of the solution.
There is an inherent risk in the successful development, implementation, migration, integration, and operation of our solutions as the
technological complexities, and the pace at which we must deliver these solutions to market, continue to increase. The risk of making an error
that causes significant operational disruption to a customer, or results in incorrect processing of customer or vendor data that we perform on
behalf of our customers, increases proportionately with the frequency and complexity of changes to our solutions and new delivery models.
There can be no assurance: (i) of continued market acceptance of our solutions; (ii) that we will be successful in the development of
enhancements or new solutions that respond to technological advances or changing customer needs at the pace the market demands; or (iii) that
we will be successful in supporting the implementation, conversion, integration, and/or operations of enhancements or new solutions.
We Use Artificial Intelligence in Our Business and Solutions and May Have Challenges with Properly Managing its Use Resulting in
Operational, Financial, and Other Adverse Consequences to Our Business.
We have been and expect to continue to use artificial intelligence (“AI”) in our solutions and other third-party products that support our business.
This technology continues to evolve and presents a number of risks inherent in its use, including risks related to cybersecurity, data privacy,
ethics, and intellectual property ownership. Additionally, AI algorithms are based on machine learning and predictive analytics, which can create
accuracy issues and unintended biases. Further, our competitors or other third parties may incorporate AI into their business and solutions more
rapidly or more successfully than us, which could hinder our ability to compete effectively. The technologies underlying AI and their use cases
are rapidly developing, and it is not possible to predict all of the legal, operational, or technological risks related to the use of AI. Implementing
the use of AI successfully, ethically, and as intended, will require significant resources, including having the technical competency and expertise
required to develop, test, and continuously monitor our solutions. In addition, we expect that there will continue to be new laws or regulations
implemented concerning the use of AI. It is possible that certain governments may seek to regulate, limit, or block the use of AI in our solutions or
otherwise impose other restrictions that may hinder the usability or effectiveness of our solutions. Any failure to successfully or ethically
implement the use of AI into our operations or our products could result in an adverse material impact to our business or to a third party and could
cause reputational harm to our business.
13
We May Incur Material Restructuring or Reorganization Charges in the Future.
In the past, we have recorded restructuring and reorganization charges related to involuntary employee terminations, various facility
abandonments, and various other restructuring and reorganization activities. We continually evaluate ways to reduce our operating expenses
through restructuring plans, including more effective utilization of our assets, workforce, and operating facilities. As a result, there is a risk, which
is increased during economic downturns and with expanded global operations, that we may incur material restructuring or reorganization charges
in the future.
We Rely on A Limited Number of Third-Party Vendor Relationships to Execute Our Business Which Exposes Us to Supply Chain
Disruptions, Cost Increases, and Cyberattacks.
We rely on third-party providers for software, distributed computing infrastructure environments (or commonly referred to as “cloud” computing
services), processing, and other suppliers to deliver our solutions to our customers. Our ability to deliver according to our contractual
commitments and market demands depends significantly on being able to obtain the necessary licenses, components, computing capacity, and
other vital services and supplies as needed and on competitive terms. Our growth and ability to meet customer demands depend in part on our
ability to obtain timely deliveries from our suppliers and partners. In addition, if a third party were to experience a material breach of their
information technology systems which results in the unauthorized access, theft, use, destruction, or unauthorized disclosures of customers' or
employees' data or confidential information of the Company stored in such systems, including through cyberattacks or other external or internal
methods, it could result in a material loss of revenue from the potential adverse impact to our reputation, our ability to retain or attract new
customers, potential disruption or loss of services from the vendor and disruption to our business. Such a breach could also result in contractual
claims, and it could lead to our being named as a party in litigation brought by or on behalf of impacted individuals. Although we strive to avoid
single-source supplier solutions, this is not always possible. Failure by any of our third-party vendors could interrupt our operations and the
delivery of our solutions, and/or substantially increase our costs. Additionally, if these third-party vendors decide to significantly increase our
costs, due to inflationary pressures or otherwise, it could have an adverse financial impact to our business as we may have limited third-party
options and the ability to shift to a competing solution, or redesign our solutions would take considerable time, effort, and money.
Our Global Operations Subject Us to Additional Risks.
We currently conduct a portion of our business outside the U.S. We are subject to certain risks associated with operating globally including the
following items:
•
Our solutions may not meet local or legal requirements;
•
Fluctuations and unexpected changes in foreign currency exchange rates that may be due to inflation, interest rate spreads, and
geopolitical events;
•
Staffing and managing of our global operations at a reasonable cost;
•
Longer sales cycles for new contracts;
•
Longer collection cycles for customer billings or accounts receivable, as well as heightened customer collection risks, especially in
countries with high inflation rates and/or restrictions on the movement of cash or certain currencies out of the country;
•
Trade barriers;
•
Governmental and economic sanctions;
•
Complying with varied legal and regulatory requirements across jurisdictions;
•
Growing requirements related to human rights and occupational safety and health;
•
Reduced protection for intellectual property rights in some countries;
•
Inability to recover value added taxes and/or goods and services taxes in foreign jurisdictions;
•
Political and financial instability and threats of terrorism and/or war;
•
A potential adverse impact to our overall effective income tax rate resulting from, among other things:
o
Operations in foreign countries with higher tax rates than the U.S.;
o
The inability to utilize certain foreign tax credits; and
o
The inability to utilize some or all losses generated in one or more foreign countries.
One or any combination of these or other risks could have an adverse impact on our operations and business.
14
Failure to Deal Effectively with Fraud, Fictitious Transactions, Bad Transactions, and Negative Experiences Could Increase Our Loss
Rate and Harm Our Payments Business, and Could Severely Diminish Merchant and Consumer Confidence in and Use of Our Services.
In the event that merchants do not fulfill their obligations to consumers, or a consumer disputes a transaction for various reasons, we may incur
losses as a result of chargebacks and/or claims from consumers. We would seek to recover such losses from the merchant; however, we may
not be able to recover the amounts in full if the merchant is unwilling or unable to pay or the deposit does not cover the losses, but we are still
required to meet obligations with our banks and card brands we serve. While we have established financial reserves based on assumptions and
estimates that we believe are reasonable to cover such eventualities, these reserves for individual merchants may be insufficient. We may also
incur losses from claims that the consumer did not authorize the purchase, from consumer fraud, from erroneous transactions, and as a result of
consumers who have closed bank accounts or have insufficient funds in their bank accounts to satisfy payments. In addition, if losses incurred by
us related to payment card transactions become excessive, we could lose the ability to process credit card transactions, which would significantly
impact our payments business. We have taken measures to detect and reduce the risk of fraud, including underwriting and risk management
procedures and processes. These measures need to be continually updated to address emerging means of perpetrating fraud or to
accommodate new solution offerings, but the increase in costs could adversely impact our business.
Our Use of Open Source Software May Subject Us to Certain Intellectual Property-Related Claims or Require Us to Re-Engineer Our
Software, Which Could Harm Our Business.
We use open source software in connection with our solutions, processes, and technology. Companies that use or incorporate open source
software into their solutions have, from time to time, faced claims challenging their use, ownership and/or licensing rights associated with that
open source software. As a result, we could be subject to suits by parties claiming certain rights to what we believe to be open source software.
Some open source software licenses require users who distribute open source software as part of their software to publicly disclose all or part of
the source code in their software and make any derivative works of the open source code available on unfavorable terms or at no cost. In addition
to risks related to license requirements, use of open source software can lead to greater risks than use of third-party commercial software, as
open source licensors generally do not provide warranties, support, or controls with respect to origin of the software. Use of open source
software also complicates compliance with export-related laws. While we take measures to protect our use of open source software in our
solutions, and comply with applicable laws, open source license terms may be ambiguous, and many of the risks associated with usage of open
source software cannot be eliminated. If we were found to have inappropriately used open source software, we may be required to release our
proprietary source code, re-engineer our software, discontinue the sale of certain solutions in the event re-engineering cannot be accomplished
on a timely basis, or take other remedial action that may divert resources away from our development efforts.
Failure to Protect Our Intellectual Property Rights or Claims by Others That We Infringe Their Intellectual Property Rights Could
Substantially Harm Our Business, Financial Position and Results of Operations.
We rely on a combination of trade secret, copyright, trademark, and patent laws in the U.S. and similar laws in other countries, and non-
disclosure, confidentiality, and other types of contractual arrangements to establish, maintain, and enforce our intellectual property rights in our
solutions. Despite these protective measures, any of our intellectual property rights could be challenged, invalidated, circumvented, or
misappropriated. Further, our contractual arrangements may not effectively prevent disclosure of our confidential information or provide an
adequate remedy in the event of unauthorized disclosure of our confidential information. Others may independently discover trade secrets and
proprietary information, which may complicate our assertion of trade secret rights against such parties. Costly and time-consuming litigation
could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could
adversely affect our competitive business position. In addition, the laws of certain countries do not protect proprietary rights to the same extent as
the laws of the U.S. Therefore, in certain jurisdictions, we may be unable to protect our proprietary technology adequately against unauthorized
third party copying or use, which could adversely affect our competitive position.
Although we hold a limited number of patents and patent applications on some of our solutions, we do not rely upon patents as a primary means
of protecting our rights in our intellectual property. In any event, there can be no assurance that our patent applications will be approved, any
issued patents will adequately protect our intellectual property, or such patents will not be challenged by third parties. Also, much of our business
and many of our solutions rely on key technologies developed or licensed by third parties, and we may not be able to obtain or continue to obtain
licenses and technologies from these third parties at all or on reasonable terms.
Finally, third parties may claim that we, our customers, licensees, or other parties indemnified by us, are infringing upon their intellectual property
rights. Even if we believe that such claims are without merit, they can be time consuming and costly to defend and can divert management and
technical staff attention and resources. Claims of intellectual property infringement also might require us to redesign affected solutions, enter into
costly settlement or license agreements or pay material damage awards, or face a temporary or permanent injunction prohibiting us from
marketing or selling certain of our solutions. Even if we have an agreement to indemnify us against such costs, the indemnifying party may be
unable to uphold its contractual obligations. If we cannot or do not license the infringed technology on reasonable pricing terms or at all, or
substitute similar technology from another source, our business could be adversely impacted. Our failure to adequately establish, maintain, and
protect our intellectual property rights could have a material adverse effect on our business.
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We May Not Be Successful in the Integration or Achievement of Financial Targets of Our Acquisitions.
As part of our growth strategy, we seek to acquire assets, technology, access to new markets, human capital talent, and businesses which will
provide the technology and personnel to expedite our solutions and services development efforts, provide complementary solutions, or provide
access to new markets and customers.
Acquisitions involve a number of risks and potential disruptions, including: (i) expansion into new markets and business ventures; (ii) the
requirement to understand local business practices; (iii) the diversion of management’s attention to the integration of acquired operations and
personnel; (iv) being bound by acquired customer or vendor contracts with unfavorable terms; and (v) potential adverse effects on a company’s
operating results for various reasons, including, but not limited to, the following items: (a) the inability to achieve financial targets; (b) the inability
to achieve certain integration expectations, operating goals, and synergies; (c) costs incurred to exit current or acquired contracts or restructuring
activities; (d) costs incurred to service acquisition debt, if any; and (e) the amortization or impairment of acquired intangible assets.
Due to the multiple risks and potential disruptions associated with any acquisition, there can be no assurance that we will be successful in
achieving our expected strategic, operating, and financial goals for any such acquisition(s).
Our Alliances with Strategic Partners Could Put Our Business at Risk if the Partner Does Not Perform as Expected.
We rely on long-term strategic partnerships and alliances with leading industry participants to develop new technologies, deliver large customer
implementations and products, and execute strategic growth. If our strategic partners encounter financial or other business difficulties, if their
strategic objectives change, or if they no longer perceive us to be an attractive alliance partner, they may no longer desire or be able to participate
in our partnerships and alliances. Our business could be hurt if we are unable to continue one or more of our alliances. We participate in large
projects where various other companies provide services and products that are integrated into systems to meet customer requirements. If any of
the services or products that any other company provides have any defects or problems causing the integrated systems to malfunction or
otherwise fail to meet customer requirements, our reputation and business could be harmed.
Risks Related to Our Industry
Our Business is Highly Dependent on the Global Communications Industry.
Since a large percentage of our revenue is generated from customers that operate within the global communications industry, we are highly
dependent on the health and the business trends occurring within this industry (in particular for our North American cable and satellite
customers). Key factors within this industry that could potentially impact our customers’ businesses, and thus, our business, are as follows:
•
Key Market Conditions: The global communications industry has undergone significant fluctuations in growth rates and capital
investment cycles in the past decade.
In addition, changes in demand or customer preferences for traditional services for CSPs are causing them to seek new revenue
sources, while also managing their cost structure and quality of service delivery during their business transformation. The result is
that many CSPs are delaying investment decisions on legacy systems, directing investment towards internal development and
engineering efforts and making investments in new solutions to drive their business forward into new areas. However, cost
pressures and/or our ability to develop solutions to meet their future needs may begin to cause a decline in new revenue
opportunities and adversely impact our business.
•
Market Consolidation: The pace of consolidation within the industry continues to accelerate as CSPs look to increase the scale of
their operations and footprint within the entire digital communications ecosystem. Potential byproducts of this consolidation that
could impact us are as follows: (i) there could be fewer providers in the market, each with potentially greater bargaining power and
economic leverage due to their larger size, which may result in our having to lower our prices to remain competitive, retain our
market share, or comply with the surviving customer’s current more favorable contract terms; and (ii) the controlling entity in a
consolidation that is not our current customer, may acquire one of our existing customers and choose to consolidate both entities
onto the controlling entity’s customer management platform, thus reducing and possibly eliminating our business with our existing
customer.
Also, as consolidated entities execute on their revenue and operational synergies, there is generally a slowdown in decision-making
on discretionary spending and/or on new business initiatives which could adversely impact our quarterly and annual financial results.
16
•
Competition: Our customers operate in a highly competitive environment. Our competitors include companies who deliver on-
premise bespoke custom offerings (i.e., Amdocs Limited, NEC Netcracker), software solutions (i.e., Salesforce, Adobe,
Pegasystems, Twilio), internally developed enterprise applications, network operators (i.e., Ericsson, Huawei), large outsourced
transactional communications companies (i.e., Intrado, Genesys), systems integrators (i.e., Accenture, Tech Mahindra) and large
payments processors (i.e., FIS, Chase Payments Solutions) and payments specialists (i.e., Stripe, Square) and niche players (i.e.,
Paymentus, Invoice Cloud). Should these competitors be successful in their strategies, it could threaten our customers’ market
share, pricing power, and level of services delivered. These threats could negatively impact our customers’ revenue, putting
pressure on our source of revenue, as generally speaking, these companies do not use our core solutions and there can be no
assurance that new entrants will become our customers. In addition, demand for spectrum, network bandwidth and content continue
to increase and any changes in the regulatory environment could have a significant impact to not only our customers’ businesses,
but in our ability to help our customers be successful.
The above industry factors are impacting our customers’ businesses, and thus could cause delays, cancellations/loss of business, and/or
downward pricing pressure on our sales and services. This could cause us to either fall short of revenue expectations or have a cost model that
is misaligned with revenue.
We Face Significant Competition in Our Industry.
The market for our solutions is highly competitive. We directly compete with both independent providers and in-house solutions developed by
existing and potential customers. In addition, some independent providers are entering into strategic alliances with other independent providers,
resulting in either new competitors, or competitors with greater resources. Many of our current and potential competitors have significantly
greater financial, marketing, technical, and other competitive resources than our Company, many with significant and well-established domestic
and international operations. There can be no assurance that we will be able to compete successfully with our existing competitors or with new
competitors.
Risks Related to Laws and Regulations
The Occurrence or Perception of a Security Breach or Disclosure of Confidential Personally Identifiable Information Could Harm Our
Business.
In providing solutions to our customers, we transmit, use, store and otherwise process, confidential and personally identifiable information (“PII”)
including health, financial, and other personal information. Our treatment of such information is subject to contractual restrictions and federal,
state, and foreign data privacy laws and regulations, which continue to evolve resulting in greater scrutiny and regulation over the protection of
PII.
In response to these evolving restrictions and regulations (which include, without limitation, the Health Insurance Portability and Accountability Act
(“HIPAA”), the Health Information Technology for Economic and Clinical Health Act (“HITECH”), the California Consumer Privacy Act (“CCPA”),
the Gramm-Leach-Bliley Act (“GLBA”), and other U.S. federal and state privacy laws and regulations, the European Union’s General Data
Protection Regulation (“EU GDPR”), the United Kingdom’s GDPR (“UK GDPR”), the South Africa Protection of Personal Information Act
(“POPIA”), the Brazilian General Data Protection Law (“LGPD”), the Colombian General Data Protection Law (“GDPL”) and other global privacy
laws and regulations), we have implemented and maintain administrative, technical, and physical security measures and it is our standard
practice to contractually require our service providers to whom we disclose data (including PII) to implement and maintain reasonable privacy,
data protection, and information security measures, in each case to protect against loss, theft, misuse, or unauthorized access to or disclosure of
such information, and otherwise comply with these laws and regulations. These measures include standard industry practices (e.g., payment
card industry (“PCI”) requirements, ISO/IEC 27001), periodic security reviews of our systems by independent parties, secure development
practices, network firewalls, policy directives, procedural controls, training of our personnel, intrusion detection systems, and antivirus
applications. However, due to the inherent risks and complexities of defending against cybercrime and other information security incidents, these
measures may fail to adequately protect this information. Any failure on our part to protect the security and privacy of PII and other confidential
information, or otherwise comply with data privacy laws and regulations, may subject us to contractual liability and damages, loss of business,
damages from individual claimants (including class action litigation), substantial fines/penalties, criminal prosecution, and unfavorable publicity.
Even the mere perception of a security breach or inadvertent disclosure of PII could damage our reputation and inhibit market acceptance of our
solutions. In addition, third-party vendors that we engage to perform services for us may unintentionally release PII or otherwise fail to comply
with applicable laws and regulations. Under our terms of service and our contracts with customers, if there is a breach of PII that we process, we
could be liable to the customer for their losses and related expenses. As new laws and regulations emerge and evolve and as our business
continues to expand to include new products and technologies, these risks will likely continue to increase, and our compliance costs are likely to
increase as well. Bad actors, individual and State sponsored, will increasingly attempt to compromise our security controls or gain unauthorized
access to our, and our customers’, sensitive information and PII. Further, because a significant number of our employees work remotely, these
security risks may increase. We have implemented heightened monitoring of our Networks and Systems, but cannot guarantee that our efforts,
or those of third parties on whom we rely on or with whom we partner, will be successful in preventing any such information security incidents or
attacks.
17
We May Be Subject to Enforcement Actions or Financial Penalties with Payments Regulation in the U.S.
Many states in which we operate have laws that govern payments activities and have implemented various definitions and licensing requirements
for entities deemed to be money transmitters. These licenses require us to maintain certain financial metrics, file periodic reports, and subject us
to inspections by state regulatory agencies.
There are substantial costs and potential solution changes involved in maintaining such licenses, and we could be subject to fines or other
enforcement action if we are found to have violated applicable federal, state, and local laws and regulations, including those related to licensing
and supervision, anti-money laundering, the Bank Secrecy Act, financial privacy, and cybersecurity and data security. These factors could
impose substantial additional costs and involve considerable delay to the development or provision of our solutions or services, or could require
significant and costly operational changes or prevent us from providing our solutions or services in a given market. In addition, as we continue to
provide new services, these limitations may adversely affect our ability to grow our business. Further, laws governing payments activities may
evolve and changes in such laws could affect our ability to provide our solutions or services in the same form and on the same terms as we have
historically, or at all.
We may also be subject to card association and network rules and requirements, and violations of such rules and requirements could result in
fines or the inability to use third-party networks to conduct our business.
We Are Subject to Various Anti-Money Laundering and Counter-Terrorist Financing Laws and Regulations.
We are subject to various anti-money laundering (“AML”) and counter-terrorist financing laws and regulations that prohibit, among other things,
our involvement in processing the proceeds associated with criminal activities. We maintain AML Compliance Policies and Procedures applicable
to our payments processing business which policies are intended to comply with any applicable U.S. federal and foreign requirements. The laws
or their application, our interpretation of the laws, and/or our services may change such that we could be subject to additional regulation and incur
additional costs of compliance. We may not be able to meet additional regulatory requirements or the cost of adhering to such requirements
could be substantial or could severely impact our ability to continue to maintain and/or grow our payments processing business or retain
merchants or partners. The regulations of other countries and/or increased compliance costs associated with such regulations could prevent us
from entering new markets for our services.
Our Global Operations Require Us to Comply with Applicable U.S. and International Laws and Regulations.
Doing business on a global basis requires our Company and our subsidiaries to comply with the laws and the regulations of the U.S. government
and various international jurisdictions. In addition, the number of countries enacting anti-corruption laws and related enforcement activities is
increasing. These regulations place restrictions on our operations, trade practices and trade partners, as such we may face increasing
compliance and legal costs in operating our trade compliance program. In particular, our global operations are subject to U.S. and foreign anti-
corruption laws and regulations such as the Foreign Corrupt Practices Act (“FCPA”), the U.K. Anti-Bribery Act and economic sanction programs
administered by the Office of Foreign Assets Control (“OFAC”).
The FCPA prohibits us from providing anything of value to foreign officials for the purposes of influencing official decisions or obtaining or
retaining business. In addition, the FCPA imposes accounting standards and requirements on publicly traded U.S. corporations and their foreign
affiliates, which are intended to prevent the diversion of corporate funds to the payment of bribes and other improper payments, and to prevent
the establishment of “off books” slush funds from which such improper payment can be made. As part of our business, we regularly deal with
state-owned business enterprises, the employees of which are considered foreign officials for purposes of the FCPA. In addition, some of the
international locations in which we operate lack a developed legal system and have higher than normal levels of corruption. We require
compliance from our personnel and third-party sales representatives with the requirements of the FCPA and other anti-corruption laws, including,
but not limited to their reporting requirements. We have also developed and will continue to develop and implement systems for formalizing
contracting processes, performing due diligence on agents and partners while improving our recordkeeping and auditing practices regarding
these regulations. However, there is no guarantee that our employees, third-party sales representatives, or other partners have not or will not
engage in conduct undetected by our processes and for which we might be held responsible under the FCPA or other anti-corruption laws.
Economic sanctions programs restrict our business dealings with certain countries and individuals. As a global provider, we are exposed to a
heightened risk of violating OFAC regulations. Violations of these laws and regulations are punishable by civil penalties, including fines,
injunctions, asset seizures, debarment from government contracts and revocations or restrictions of licenses, as well as criminal fines and
imprisonment. While we actively screen and monitor the global companies and individuals that we do business with, utilizing a risk-based
approach, there is no guarantee that we have not or will not, through the lack of accurate information, changing customer business structures,
process failure, oversight, or error, have violations occur.
18
General Risks
Our Business Is Exposed to Global Market and Economic Conditions.
Our business is exposed to global market and economic conditions. Downturns in these conditions may result in rising inflation rates and interest
rates, slower or deferred customer buying decisions, and pricing pressures that may adversely affect our ability to generate profitable revenue
and sustain revenue growth. Macroeconomic conditions, including geopolitical events, or other global or regional events such as pandemics, and
foreign exchange rate fluctuations, can impact our customers’ businesses and their willingness to make investments in technology, which in turn
may delay or reduce the purchases of our solutions, as well as their ability to pay amounts due. Additionally, market disruptions may limit our
ability to access financing or increase our cost of financing to meet liquidity needs. The combination of these factors could negatively impact our
business, operating results, and financial condition as we could experience a reduction in demand for our solutions and increased pressure on
our profit margins.
Failure to Attract and Retain Our Key Management and Other Highly Skilled Personnel Could Have a Material Adverse Effect on Our
Business.
Our future success depends in large part on the continued service of our key management, sales, product development, professional services,
and operational personnel. We believe that our future success also depends on our ability to attract and retain a diverse, highly skilled technical,
managerial, operational, and sales and marketing personnel, including, in particular, personnel in the areas of R&D, professional services, and
technical support. Competition for qualified personnel at times can be intense, particularly in the areas of R&D, conversions, software
implementations, and technical support, which could lead to increased costs to attract and/or retain personnel. This risk is heightened with a
widely dispersed customer base and employee populations, and potential inflationary pressures on wages. For these reasons, we may not be
successful in attracting and retaining the personnel we require, which could have a material adverse effect on our ability to meet our commitments
and new solution delivery objectives.
Variability of Our Quarterly Revenue and Our Failure to Meet Revenue and Earnings Expectations Would Negatively Affect the Market
Price of Our Common Stock.
From time to time, we may experience variability in quarterly revenue and operating results. Common causes of failure to meet revenue and
operating profit expectations include, among others:
•
Inability to close and/or recognize revenue on certain transactions in the period originally anticipated;
•
Inability to accurately forecast payments transaction volumes and related transaction costs;
•
Delays in renewal of multiple or individually significant agreements;
•
Inability to renew existing customer or vendor arrangements at anticipated rates;
•
Delays in timing of implementation or changes in scope of significant projects or arrangements;
•
Inability to meet customer expectations materially within our cost estimates;
•
Changes in spending and investment levels;
•
Inflationary pressures;
•
Significant increase in our cost of borrowing;
•
Foreign currency fluctuations; and
•
Economic and political conditions.
Should we fail to meet our revenue and earnings expectations of the investment community, by even a relatively small amount, it could have a
disproportionately negative impact upon the market price of our common stock.
Changes in Tax Laws and Regulations Could Adversely Affect Our Results of Operations and Financial Position.
Our operations are subject to tax by federal, state, local, and international taxing jurisdictions. Tax laws are subject to change as new laws are
passed and new interpretations of the law are issued or applied. Such changes may be effective on a prospective or retrospective basis and may
have a significant impact on our effective tax rate and/or the amount of taxes we pay. In addition, tax laws and regulations are extremely complex
and subject to varying interpretations and examination. There can be no assurance that our tax positions will not be challenged by relevant tax
authorities or that we would be successful in any such challenge.
19
Our Business May Be Disrupted and Our Results of Operations and Cash Flows May be Adversely Affected by a Global Pandemic.
The significance of the impact of a global pandemic on our operations depends on numerous evolving factors that we may not be able to
accurately predict or effectively respond to, including, among others:
•
the effect on global economic activity and the resulting impact on our customers' businesses, their credit and liquidity, and their
demand for our solutions and services, as well as their ability to pay;
•
our ability to deliver and implement our solutions in a timely manner, including as a result of supply chain disruptions and related
cost increases; and
•
actions taken by U.S., foreign, state, and local governments, suppliers, and individuals in response to the outbreak.
While we have significant sources of cash and liquidity and access to a committed credit line, a prolonged period of generating lower cash from
operations could adversely affect our financial condition and the achievement of our strategic objectives.
We are Subject to a Series of Risks Associated with Our Environmental, Social, and Governance Initiatives and Sustainability
Commitments.
As part of the growing interest in environmental, social, and governance (“ESG”) matters, we face increased scrutiny and changing expectations
from a variety of stakeholders related to our ESG practices. Additionally, we anticipate that we will become subject to changes in regulation and
disclosure requirements related to ESG matters, including environmental and social topics. Although we have engaged in certain ESG-related
voluntary disclosures on goals and commitments, there can be no assurances that stakeholders will be satisfied with our efforts. Additionally, our
ability to achieve these goals and commitments is subject to numerous risks and uncertainties, many of which are outside of our control. If we fail
to meet any of our goals and commitments, or if there are unfavorable stakeholder perceptions of our ESG efforts, we may be subject to various
adverse impacts to our business, reputational harm, or legal liability. There are also changing expectations for ESG-related disclosures that may
be required by regulators. Any changes in laws, regulations, or customer requirements could result in significant revisions to our current goals
and commitments, reported progress, or ability to achieve such goals and commitments in the future. Furthermore, the application of these laws
and regulations to our business is often unclear and may at times conflict. Compliance with the applicable regulatory requirements may be
onerous, time-consuming, and expensive, especially when these requirements vary from jurisdiction to jurisdiction or where the jurisdictional
reach of certain requirements is not clearly defined. Non-compliance with the applicable laws or regulations could result in fines, damages,
business restrictions, and damage to our reputation.
Substantial Impairment of Goodwill and Long-lived Assets in the Future May Be Possible.
As a result of various acquisitions and the growth of our Company over the last several years, as of December 31, 2024, we have approximately
$201 million of long-lived assets other than goodwill (principally, property and equipment, operating lease right-of-use assets, software, acquired
customer contracts, and customer contract costs) and approximately $316 million of goodwill. Long-lived assets are required to be evaluated for
possible impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable and
goodwill is tested for impairment at least annually, and more frequently if there are signs of impairment. We utilize our market capitalization, third
party valuation and/or cash flow models as the primary basis to estimate the fair value amounts used in our impairment valuations. If an
impairment was to be recorded in the future, it could materially impact our results of operations in the period such impairment is recognized, but
such an impairment charge would be a non-cash expense, and therefore would have no impact on our current or future cash flows.
Item 1B.
Unresolved Staff Comments
None.
20
Item 1C.
Cybersecurity
We are committed to protecting our information assets and systems from cybersecurity threats and ensuring compliance with applicable laws and
regulations. Despite our commitment to protecting our systems, data and assets, we know that networks and systems are subject to the risk of
an extended interruption, outage, or security incident due to many factors including, without limitation: (i) changes to our systems and networks
for such things as scheduled maintenance and technology upgrades, or conversions to other technologies, service providers, or physical location
of hardware; (ii) failures or lack of continuity of services from public cloud or third-party data center and other service providers; (iii) defects and/or
critical security vulnerabilities in software programs; (iv) human and machine error; (v) acts of war and/or nature; (vi) intentional, unauthorized
attacks from computer “hackers” or other cybersecurity attacks; and (vii) using the systems to perpetrate identity theft through unauthorized
authentication to our customers’ customers’ accounts. In the following sections we describe how we identify, assess, and manage material risks
related to cybersecurity, and how our Board of Directors (the “Board”) oversees our cybersecurity program.
We believe we have implemented a cybersecurity program that is aligned with the ISO 27001 framework, SEC regulations, and industry best
practices. It is our goal to identify and manage material risks related to cybersecurity and implement effective controls and measures to mitigate
such risks. The Board endeavors to provide effective oversight and governance of our cybersecurity program and ensure that our cybersecurity
program supports our strategic objectives and risk appetite.
Although we take reasonable and effective measures to ensure the protection of any data that is stored, processed, or transmitted through our
systems, we know that attackers have the means, motives, and opportunities to attack. As of the date of this filing we are not aware of any
material risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company, including our
business strategy, results of operations, or financial condition. In addition, we maintain controls and procedures that are designed to ensure
prompt escalation of critical cybersecurity incidents so that decisions regarding public disclosure and reporting of such incidents can be made by
management and the Board in a timely manner. Please refer to “Item 1A. Risk Factors” for further information about the material risks associated
with various cybersecurity threats.
Risk Management and Strategy
Our cybersecurity risk management process is aligned with our enterprise risk program. We continuously identify, assess, treat, and monitor
cybersecurity risks and report those risks on a periodic and as-needed basis to executive management and the Board. We use various sources
of information, including internal and external audits, tabletop exercises, threat intelligence, vulnerability scans, penetration tests, customer and
employee feedback, and industry benchmarks, to identify and mitigate our cybersecurity risks. We will also engage third-party services, from
time-to-time, to conduct evaluations of our security controls, whether through penetration testing, independent audits, or consulting on best
practices to address new challenges. Additionally, we evaluate trends in the legal and regulatory environment and consider business drivers,
emerging threats, and technology changes to identify risks across our people, processes, and technology. We then assess our current controls
and capabilities to mitigate those risks and develop action plans to address any identified gaps or weaknesses. Action plans are prioritized and
implemented with monitoring of completion and effectiveness against the identified risks. We also monitor our performance and progress against
various key indicators and objectives based upon ever-changing risks and provide ongoing updates to relevant stakeholders, including executive
management and the Board.
We leverage the ISO 27001 framework for cybersecurity risk management. Our cybersecurity risk management strategy is frequently reviewed
and adapted to address and meet current and emerging threats. In addition, we have taken steps to address cybersecurity threats presented by
third-party service providers, to include third-party systems that could adversely impact our business in the event of a significant cybersecurity
incident affecting those third-party systems. We have formal requirements that these third parties maintain certain security controls, we assess
their compliance with these requirements on an ongoing basis, and we require timely notification of potential or confirmed security breaches. We
also use third-party services that help us to monitor the security risks associated with our third-party service providers. Risk treatment plans are
strategically prioritized and executed, and residual risks are reported through our enterprise risk program and elevated to executive management
and the Board.
We foster a proactive cybersecurity culture across our organization through employee education, awareness, and engagement. This approach
includes monthly e-mail phishing simulations, quarterly computer-based security awareness training on topics relevant to protecting our
organization, role-based secure design and coding training, role-based security practitioner training, cybersecurity tabletop exercises, and
adversary emulation exercises.
Our cross-functional Information Security Steering Committee (“ISSC”) is the senior management team that oversees the direction, execution,
and effectiveness of our cybersecurity program, policies and procedures including: cyber risks, mitigations, risk treatment plans, incident
response plans, compliance with applicable regulations, and ensuring business-aligned cybersecurity objectives. The ISSC is chaired by our
Chief Information Security Officer (“CISO”) and consists of representatives from risk, compliance, internal audit, IT, accounting, finance, legal, and
other key executives, including our Chief Information Officer (“CIO”) and Chief Financial Officer. The ISSC meets quarterly to guide, direct, and
monitor the performance and effectiveness of our cybersecurity program and elevates risks and mitigation plans, as appropriate, to the Board.
21
Governance
Overall Risk Approach
The Board is responsible for oversight of our risks, including establishing our risk appetite and overseeing our risk management framework. The
Board recognizes that effective risk oversight is important to the success of our strategy and is an integral part of exercising its fiduciary duties
with respect to the Company and our stockholders. The Board believes our current leadership structure facilitates its oversight of risk by
combining independent leadership through the Board with executive management members who have an intimate knowledge of our business,
industry, and challenges.
Cybersecurity Risk Management and Oversight
The Board is responsible for overseeing the Company’s cybersecurity program and ensuring that it is aligned with our strategic goals and risk
appetite. The Board has diverse expertise on topics including accounting and financial management, corporate governance, global business,
technology and innovation, human capital management, ESG, and cybersecurity. The Board also reviews the strategic direction of the Company’s
cybersecurity program and ensures that adequate resources and budget are allocated to address cybersecurity threats.
The Board exercises its cyber risk oversight primarily through updates provided by executive management, our CIO, and our CISO. Our CIO and
CISO have expertise in the areas of information security and cybersecurity, through decades of management, prominent cybersecurity training,
and real-world experience. Intimate knowledge of best practices, incident response, technologies, and IT and business processes enable the
management team to be effective in their approach.
The Board also has a standing committee (the “Cybersecurity Committee”), comprised of certain members of the Board, that advises it on
cybersecurity matters and provides strategic guidance and direction for our cybersecurity program. The Cybersecurity Committee convenes as
necessary to address critical or emerging cybersecurity concerns and to ensure alignment on approach. Our CIO and CISO collaborate with the
Cybersecurity Committee and report to the entire Board on a quarterly basis, or more frequently as needed. Additionally, the Cybersecurity
Committee reviews the outcomes of our regular tabletop exercises with our CIO and CISO and ensures that lessons learned have been
incorporated into the overall strategy.
Item 2.
Properties
Our corporate headquarters is located in Denver, Colorado where we occupy office space under a lease that expires in 2033. We also lease
office space for our operations in various locations throughout the U.S. as well as a number of countries in Europe, North America, Asia, South
America, and Africa. These leases run through 2026.
Beginning in 2022, in connection with our flexible work approach, we made the decision to reduce our real estate footprint and exit office space in
certain locations. See Note 8 to our Financial Statements for information regarding these office space closures and consolidations.
Additionally, we lease approximately 330,000 square feet for our three design and delivery centers located in: (i) Omaha, Nebraska; (ii)
Crawfordville, Florida; and (iii) Fort Worth, Texas. The leases for these facilities expire in the years 2026 through 2029, all of which include the
option to extend the leases for up to an additional ten years.
We believe that our facilities are adequate for our current and anticipated needs. We may enter into new leases or renew or terminate existing
leases as necessary as our business evolves. See Note 6 to our Financial Statements for information regarding our obligations under our facility
leases.
Item 3.
Legal Proceedings
From time-to-time, we are involved in litigation relating to claims arising out of our operations in the normal course of business. In the opinion of
our management, we are not presently a party to any material pending or threatened legal proceedings.
Item 4.
Mine Safety Disclosures
Not applicable.
22
Information about our Executive Officers
As of the date of this filing, our executive officers are Brian A. Shepherd (President and Chief Executive Officer), Hai Tran (Executive Vice
President and Chief Financial Officer), Elizabeth A. Bauer (Executive Vice President and Chief Experience Officer), Rasmani Bhattacharya
(Executive Vice President and Chief Legal Officer), Chad C. Dunavant (Executive Vice President and Chief Product and Strategy Officer),
Michael J. Woods (Executive Vice President and President of North America Communications, Media, and Technology), and Lori J. Szwanek
(Senior Vice President and Chief Accounting Officer).
Brian A. Shepherd
President and Chief Executive Officer
Mr. Shepherd, 57, is the President and Chief Executive Officer at CSG and a member of the Board, having been appointed in January 2021.
Prior to his role as Chief Executive Officer, Mr. Shepherd served as Executive Vice President and Group President (2017-2021), where he
focused on accelerating the growth and strategic development of the Company, and Executive Vice President and President of Global
Broadband, Cable and Satellite at CSG (2016-2017). Mr. Shepherd received an MBA from Harvard Business School and graduated from
Wabash College with a BA in Economics.
Hai Tran
Executive Vice President and Chief Financial Officer
Mr. Tran, 55, is Chief Financial Officer of CSG, where he oversees finance, accounting, treasury, investor relations and also serves as President
of Global Telecommunications. Mr. Tran joined CSG in November 2021 and brings over 30 years of finance and operational experience, having
most recently served as President and Chief Operating Officer (2020-2021) and Chief Operations Officer and Chief Financial Officer (2015-2020)
at SOC Telemed, the largest U.S. provider of acute care telemedicine solutions. Prior to that, he served as Chief Financial Officer for many
health-care companies, including BioScrip, Inc., Harris Healthcare Solutions, and Catalyst Health Solutions. Mr. Tran holds a BS in Electrical
Engineering from the University of Virginia and an MBA from the University of Richmond.
Elizabeth A. Bauer
Executive Vice President and Chief Experience Officer
Ms. Bauer, 62, is Chief Experience Officer at CSG, leading the human capital management, marketing, corporate communications, customer
centricity, and sales enablement teams. Having previously served as Chief Marketing and Customer Officer (2021-2022) and Senior Vice
President, Chief Investor Relations and Communications Officer (2016-2021), Ms. Bauer has greatly impacted the Company’s growth strategy
and the development of CSG’s customer-first, values-based culture. She brings over 30 years of combined business management, investor
relations, and integrated marketing and communications experience, including managing a Midwest-based advertising agency. Ms. Bauer holds
a BSBA in Business and Journalism from Creighton University.
Rasmani Bhattacharya
Executive Vice President and Chief Legal Officer
Ms. Bhattacharya, 56, is Chief Legal Officer at CSG, where she leads the Company’s legal, compliance, and procurement teams. Ms.
Bhattacharya joined CSG in January 2022, having previously served as Executive Vice President, General Counsel and Corporate Secretary at
Gates Corporation from 2015-2017, where she led a global team responsible for legal, mergers and acquisitions, intellectual property, regulatory,
compliance, insurance, and environmental matters. She has extensive experience in structuring and negotiating complex, multi-jurisdictional
transactions supporting business transformations, including joint ventures, corporate restructurings, and strategic partnerships. Ms. Bhattacharya
started her career as a corporate lawyer in the Houston office of the law firm of Vinson & Elkins, LLP. She holds a BA in Economics and Foreign
Affairs from the University of Virginia and JD from the University of Virginia School of Law.
Chad C. Dunavant
Executive Vice President and Chief Product and Strategy Officer
Mr. Dunavant, 48, serves as Chief Strategy and Product Officer at CSG, responsible for developing, communicating, executing, and sustaining
corporate strategic initiatives. Mr. Dunavant has been with CSG for over 20 years, previously as Senior Vice President and Global Head of
Product Management (2017-2020) where he developed the strategic direction for CSG’s products and services. He possesses deep industry
knowledge and experience developing enterprise SaaS software for multiple industry verticals and is an author and speaker on best practices for
driving profits in the digital era. Mr. Dunavant holds a BBS in Finance and Management Information Systems from Gonzaga University and
received an MBA in International Business from the University of Denver.
23
Michael J. Woods
Executive Vice President and President of North America Communications, Media, and Technology
Mr. Woods, 40, is President of North America Communications, Media and Technology at CSG, where he is responsible for driving revenue,
business development, product management, and account management for CSG’s largest customers in North America. Since joining CSG in
March 2018, Mr. Woods has served as Senior Vice President, Broadband, Cable, and Satellite (2023-2024), Senior Vice President and General
Manager, Communications, Design and Delivery (2022- 2023), Vice President, Output Solutions (2021-2022) and Executive Director, Customer
Business Executive (2018-2020). Previously, he held leadership roles at Business Ink, prior to its acquisition by CSG, in addition to, finance and
commercial roles at Shell plc. Mr. Woods holds a BS in Business Administration and a BA in History from the University of Colorado at Boulder as
well as an MBA from Rice University, where he was a Jones Scholar.
Lori J. Szwanek
Senior Vice President and Chief Accounting Officer
Ms. Szwanek, 58, serves as Chief Accounting Officer at CSG, having re-joined CSG in September 2023. Previously, Ms. Szwanek was the Chief
Accounting Officer at Orion Advisor Solutions, LLC (2021-2023). Prior to that, Ms. Szwanek held multiple roles at CSG, beginning in 1996, most
recently as Vice President and Global Controller (2014-2021). Ms. Szwanek possesses a wealth of expertise in technical accounting matters and
is a demonstrated strategic leader within the technology industry. Ms. Szwanek obtained a Bachelor of Business Administration from Midland
University in Nebraska and is a Certified Public Accountant (inactive) and is a member of the AICPA and Nebraska Society of CPAs.
24
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common stock is listed on Nasdaq under the symbol ‘‘CSGS’’. On January 31, 2025, the number of holders of record of common stock was
124.
Stock Price Performance
The following graph compares the cumulative total stockholder return on our common stock, the Russell 2000 Index, and our Standard Industrial
Classification (“SIC”) Code Index: Computer Processing and Data Preparation and Processing Services during the indicated five-year period. The
graph assumes that $100 was invested on December 31, 2019, in our common stock and in each of the two indexes, and all dividends, if any,
were reinvested.
As of December 31,
2019
2020
2021
2022
2023
2024
CSG Systems International, Inc.
$
100.00 $
89.00 $
116.15 $
117.44 $
111.64 $
110.00
Russell 2000 Index
$
100.00 $
119.96 $
137.74 $
109.59 $
128.14 $
142.93
Data Preparation and Processing Services
$
100.00 $
142.13 $
111.46 $
57.13 $
39.65 $
43.33
25
Issuer Purchases of Equity Securities
The following table presents information with respect to purchases of our common stock made during the fourth quarter of 2024 by CSG Systems
International, Inc. or any “affiliated purchaser” of CSG Systems International, Inc., as defined in Rule 10b-18(a)(3) under the Exchange Act.
Period
Total
Number of Shares
Purchased (1) (2)
Average
Price Paid
Per Share
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs (2)
Maximum Dollar Value
of
Shares that May
Yet Be Purchased
Under the
Program (2)
October 1 - October 31
181,841 $
48.18
179,182 $
153,400,374
November 1 - November 30
142,915
53.58
140,521 $
145,863,553
December 1 - December 31
149,320
53.18
148,792 $
137,950,850
Total
474,076 $
51.38
468,495
(1)
The total number of shares purchased that are not part of the Stock Repurchase Program represents shares purchased and cancelled
in connection with stock incentive plans.
(2)
In August 2023, our Board authorized the repurchase of $100.0 million of common stock under our Stock Repurchase Program. In
August 2024, our Board authorized an additional $100.0 million of repurchases under our Stock Repurchase Program, with all
outstanding authorized repurchases to be completed by December 31, 2025. See Note 12 to our Financial Statements for additional
information regarding our share repurchases and our Stock Repurchase Program.
Item 6.
[Reserved]
26
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management Overview
Results of Operations. A summary of our results of operations for 2024 and 2023, and other key performance metrics, are as follows (in
thousands, except percentages and per share amounts):
2024
2023
Revenue
$
1,197,248
$
1,169,258
Transaction fees (1)
97,857
87,430
Operating results:
Operating income
131,333
123,877
Operating margin percentage
11.0 %
10.6 %
Diluted EPS
$
3.03
$
2.20
Supplemental data:
Restructuring and reorganization charges (2)
$
13,323
$
16,336
Executive transition costs
352
1,754
Acquisition-related costs:
Amortization of acquired intangible assets
14,014
12,185
Earn-out compensation
5,644
(14 )
Transaction-related costs
381
2,109
Stock-based compensation (2)
34,385
29,480
(1)
Transaction fees are primarily comprised of fees paid to third-party payment processors and financial
institutions and interchange fees under our payment services. contracts. Transaction fees are included
in revenue in our Income Statement (and not netted against revenue) because we maintain control and
act as the principal over the integrated service provided under our payment services customer contracts.
(2)
Restructuring and reorganization charges includes stock-based compensation which is not included in
the stock-based compensation line in the table above, and depreciation, which has not been recorded to
the depreciation line on our Income Statement.
Revenue. Revenue for 2024 was $1,197.2 million, a 2.4% increase when compared to $1,169.3 million for 2023. The increase in revenue is
primarily attributed to continued growth of our SaaS and related solutions revenue to include the revenue generated from the businesses acquired
in the second quarter of 2024, which more than offset lower software and services revenue for the year.
Operating Results. Operating income for 2024 was $131.3 million, or an 11.0% operating income margin percentage, compared to $123.9
million, or a 10.6% operating income margin percentage for 2023. The increase in operating income in 2024 can be mainly attributed to the
higher revenue, discussed above.
Diluted Earnings Per Share (“EPS”). Diluted EPS for 2024 was $3.03 compared to $2.20 for 2023, with the increase mainly attributed to the
higher operating income, discussed above, and 2024 benefited from a lower effective income tax rate and lower share count.
Balance Sheet and Cash Flows. As of December 31, 2024, we had cash and cash equivalents of $161.8 million, compared to $186.3 million as
of December 31, 2023. Cash flows from operating activities for 2024 were $135.7 million, compared to $131.9 million for 2023. See the Liquidity
section below for further discussion of our cash flows.
27
Significant Customer Relationships
A large percentage of our historical revenue has been generated from a limited number of customers in the global communications industry, with
our three largest customers being, Charter Communications Inc. (“Charter”), Comcast Corporation (“Comcast”), and DISH Network L.L.C. We
have significant customer concentration, with Charter and Comcast each exceeding 10% of our revenue.
Charter. For 2024 and 2023, revenue from Charter was $240 million and $241 million, respectively, representing approximately 20% and 21% of
our total revenue. Our agreement with Charter runs through March 31, 2028, and will automatically be extended for an additional one-year term,
subject to Charter achieving certain conditional processing minimums on July 1, 2027, unless Charter provides us with written notice of non-
renewal.
A copy of the Charter Agreement and related amendments, with confidential information redacted, is included in the exhibits to this Form 10-K.
Comcast. For 2024 and 2023, revenue from Comcast was $225 million and $215 million, respectively, representing approximately 19% and 18%
of our total revenue. In October 2024, we entered an amendment to our current agreement with Comcast (the "Amended Agreement"). The key
terms of the Amended Agreement are as follows:
•
The Amended Agreement extends our contractual relationship with Comcast through December 31, 2030.
•
The fees to be generated under the Amended Agreement will be based primarily on monthly charges for SaaS and related solutions
per Comcast residential customer account, and various other ancillary services based on actual usage. The Amended Agreement
includes annual price escalators beginning in 2026 and certain of the per-unit fees include volume-based pricing tiers. We did not
provide a renewal discount to Comcast in the Amended Agreement.
•
The Amended Agreement contains certain financial commitments associated with the number of Comcast residential customer
accounts that are to be processed on our solutions.
•
We maintain the exclusive right to provide print and mail services to all Comcast residential customer accounts through the term of
the Amended Agreement.
•
The Amended Agreement contains certain rights and obligations of both parties, including the following key items: (i) the termination
of the agreement under certain conditions; (ii) various service level commitments; and (iii) remedies and limitations on liabilities
associated with specified breaches of contractual obligations.
A copy of the Amended Agreement, with confidential information redacted, is filed as Exhibit 10.27AA to this Form 10-K.
Stock-Based Compensation Expense
Stock-based compensation expense is included in the following captions in our Income Statements as follows (in thousands):
2024
2023
Cost of revenue
$
5,078 $
4,454
Research and development
3,796
3,289
Selling, general and administrative
25,512
21,737
Restructuring and reorganization charges
(822 )
(490 )
Total stock-based compensation expense
$
33,564 $
28,990
See Notes 2 and 13 to our Financial Statements for additional discussion of our stock-based compensation expense.
Critical Accounting Policies and Estimates
The preparation of our Financial Statements in conformity with accounting principles generally accepted in the U.S. requires us to select
appropriate accounting policies, and to make judgments and estimates affecting the application of those accounting policies. On an ongoing
basis, we evaluate our estimates and assumptions. In applying our accounting policies, different business conditions or the use of different
assumptions may result in materially different amounts reported in our Financial Statements.
We believe that of our significant accounting policies, which are described in the notes to our Financial Statements, the following accounting
policies and specific estimates involve a greater degree of judgment and complexity.
28
Revenue Recognition. Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects
the consideration that we expect to receive in exchange for those products and services. We derive our revenue from SaaS-based revenue
management platform arrangements, managed services arrangements, SaaS payments platform arrangements, software license and service
arrangements, professional services arrangements, and bundled service arrangements. These arrangements are often complex long-term
contracts that include multiple performance obligations. Key factors considered in accounting for these arrangements include the following
criteria: (i) identification of performance obligations within the contract; (ii) determination of the transaction price as our contracts may include
both fixed and variable consideration; (iii) determination of stand-alone selling price for each performance obligation and the allocation of value
between the performance obligations; and (iv) calculation of revenue recognized in each period which may include estimates to measure
progress for delivery.
We generally determine stand-alone selling prices using pricing calculations (which include regional market factors) for our software license and
maintenance fees, and cost-plus margins for services. The pricing calculations can be complex and require estimates based on expected
volumes and/or costs to complete a project. Additionally, for certain of our software license and professional service performance obligations that
are satisfied over time, we use an hours-based method to measure progress for delivery based on the total expected hours to complete a project.
These estimates are inherently complex and require significant judgment by us. Changes in estimates as a result of additional information as
work progresses on a project are inherent characteristics of this method of revenue recognition as we are exposed to business risks in completing
these types of performance obligations. The estimation process to support our hours-based recognition method is more difficult for projects of
greater length and/or complexity.
Our contracts are subject to modification by amendments, change requests, and/or statements of work. Such modifications may occur frequently.
The accounting for contract modifications is complex and requires significant judgments to be made by us as to whether the contract modification
is treated as either a separate contract or part of the existing contract.
The evaluation of the factors above and ultimate revenue recognition decision requires us to make significant judgments and estimates. Our
judgments and estimates could have a significant effect on revenue recognized in any period by changing the amount and/or the timing of the
revenue recognized.
Income Taxes. We are a U.S.-based multinational company operating in multiple U.S. and foreign jurisdictions. We are required to estimate our
income tax liability in each jurisdiction in which we operate, including U.S. Federal, state, and foreign income taxes.
Various judgments are required in evaluating our income tax positions and determining our provisions for income taxes. We regularly assess the
likelihood of the future realization of our deferred income tax assets. To the extent we believe that it is not more likely than not that a deferred
income tax asset will be realized, a valuation allowance is established. Significant judgment is required in determining any valuation allowance
recorded against deferred tax assets. In assessing the need for a valuation allowance, we consider all the available evidence, both positive and
negative, including past operating results, estimates of future taxable income, and the feasibility of tax planning strategies. In the event that we
change our determination as to the amount of deferred tax assets that can be realized, we will adjust our valuation allowance with a
corresponding impact to the provision for (benefit from) income taxes in the period in which such determination is made.
During the ordinary course of our business, there are certain transactions and calculations for which the ultimate income tax determination may
be uncertain. In addition, we may be subject to examination of our income tax returns by various tax authorities which could result in adverse
outcomes. For these reasons, we establish a liability associated with unrecognized tax benefits based on estimates of whether additional taxes
and interest may be due. We adjust this liability based upon changing facts and circumstances, such as the closing of a tax audit, the closing of a
tax year upon the expiration of a statute of limitations, or the refinement of an estimate. Should any of the factors considered in determining the
adequacy of this liability change significantly, an adjustment to the liability may be necessary. Due to the potential significance of these issues,
such an adjustment could be material.
Loss Contingencies. In the ordinary course of business, we are subject to potential claims related to various items including but not limited to the
following: (i) legal and regulatory matters; (ii) vendor contracts; (iii) solution and service delivery matters; (iv) labor matters; and (v) certain tax
matters. Accounting and disclosure requirements for loss contingencies require us to assess the likelihood of any adverse judgments in a range
of potential outcomes for these matters. A determination of the amount of reserves for such contingencies, if any, is based on an analysis of the
issues, often with the assistance of legal counsel. The evaluation of such issues, and our ultimate accounting and disclosure decisions, are by
their nature, subject to various estimates and highly subjective judgments. Should any of the factors considered in determining the adequacy of
any required reserves change significantly, an adjustment to the reserves may be necessary. Due to the potential significance of these issues,
such an adjustment could be material.
29
Detailed Discussion of Results of Operations
The following discussion includes a comparison of our results of operations and liquidity for 2024 compared to 2023. For a discussion of the 2023
compared to 2022, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in
our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 16, 2024.
Revenue. Revenue for 2024 was $1,197.2 million, a 2.4% increase when compared to $1,169.3 million for 2023.
Revenue by type for 2024 and 2023 was as follows (in thousands):
2024
2023
Revenue:
SaaS and related solutions
$
1,069,325
$
1,024,572
Software and services
80,935
98,078
Maintenance
46,988
46,608
Total revenue
$
1,197,248
$
1,169,258
The increase in revenue is primarily attributed to the continued growth of our SaaS and related solutions revenue, due primarily to higher
payments volumes and increased usage of our digital solutions, which includes approximately $15 million of revenue generated from the
businesses acquired during the second quarter of 2024 (see Note 7 to our Financial Statements). This increase was offset to a certain degree by
lower software and services revenue in 2024, due primarily to the closure of approximately $10 million of license upgrades in the first quarter of
2023.
We use the location of the customer as the basis of attributing revenue to individual countries and corresponding geographic region. Revenue by
geographic region for 2024 and 2023 was as follows (in thousands):
2024
2023
Americas (principally the U.S.)
$
1,038,235
$
999,725
Europe, Middle East, and Africa
104,789
117,759
Asia Pacific
54,224
51,774
Total revenue
$
1,197,248
$
1,169,258
Total Operating Expenses. Our operating expenses for 2024 increased 2.0% to $1,065.9 million, from $1,045.4 million for 2023. The increase in
total operating expenses is reflective of the higher SaaS and related solutions revenue between periods and the additional costs from the
acquired businesses, to include acquired intangible asset amortization and earn-out compensation. The components of total operating expenses
are discussed in more detail below.
Cost of Revenue (Exclusive of Depreciation). Our cost of revenue consist principally of the following: (i) computing capacity and network
communications costs; (ii) statement production costs (e.g., labor, paper, envelopes, equipment, equipment maintenance, etc.); (iii) transaction
fees, which are primarily comprised of fees paid to third-party payment processors and financial institutions and interchange fees; (iv) customer
support organizations (e.g., customer support call center, account management, etc.); (v) professional services organization; (vi) various product
delivery and support organizations (e.g., managed services delivery, product management, product maintenance, etc.); (vii) third-party software
costs and/or royalties related to certain software products; (viii) facilities and infrastructure costs related to the statement production and support
organizations; and (ix) amortization of acquired intangibles. The costs related to new solution development (including significant enhancements
to existing products and services) are included in R&D expense.
The cost of revenue for 2024 was $614.5 million, a slight decrease when compared to $615.0 million for 2023. The slight decrease in cost of
revenue is mainly attributed to lower employee-related costs, due to the reallocation of resources to development projects and deferred SaaS
implementation projects. This decrease is partially offset by the increased costs reflective of the increase in SaaS and related solutions revenue
between periods, to include the acquired businesses. Total cost of revenue as a percentage of revenue for 2024 and 2023 was 51.3% and
52.6%, respectively.
R&D Expense (Exclusive of Depreciation). R&D expense for 2024 was $158.2 million, a 10.5% increase when compared to $143.2 million for
2023, with the increase mainly attributed to employee-related costs. During 2024 our R&D investment increased from prior periods as a result of
the continued development of our SaaS platforms as we gain further traction in new industry verticals along with the integration of the recently
acquired businesses into our solutions. These investments are focused on the continued evolution of our solutions that enable us to launch,
monetize, and scale new digital services quickly and across any channel, while delivering an exceptional customer experience. As a percentage
of total revenue, R&D expense for 2024 and 2023 was 13.2% and 12.2%, respectively.
Selling, General, and Administrative ("SG&A") Expense (Exclusive of Depreciation). SG&A expense for 2024 was $258.3 million, a 4.3%
increase from $247.6 million for 2023. The increase in SG&A expense between 2024 and 2023 is primarily due to increased employee-related
costs, to include stock-based compensation and acquisition-related earn-out compensation. As a percentage of total revenue, SG&A expense for
2024 and 2023 was 21.6% and 21.2%, respectively.
30
Restructuring and Reorganization Charges. In 2024 and 2023, we implemented cost reduction and efficiency initiatives that resulted in
restructuring and reorganization charges of $13.3 million and $16.3 million, respectively. The restructuring and reorganization charges for 2024
relate mainly to initiatives to better align and allocate resources to areas of the business where we have identified growth opportunities, which
have resulted in restructuring charges related to involuntary terminations of $10.1 million.
See Note 8 to our Financial Statements for additional information regarding these initiatives.
Operating Income. Operating income and operating income margin for 2024 was $131.3 million, or 11.0% of total revenue, compared to $123.9
million, or 10.6% of total revenue for 2023. The increase in operating income in 2024 can be mainly attributed to higher revenue, discussed
above.
Interest Income. Interest income for 2024 was $8.7 million, a $4.4 million increase when compared to $4.3 million for 2023, with the increase
primarily attributed to certain settlement assets being swept into overnight money market accounts on a daily basis.
Other, net. Other, net for 2024 was $2.7 million of other income, a $7.4 million change when compared to $4.7 million of other expense for 2023,
with the change primarily the result of foreign currency transaction gains due to the strengthening of the U.S. dollar.
Income Tax Provision. Our effective income tax rates for 2024 and 2023 were approximately 23% and 28%, respectively. The 2024 effective
income tax rate benefited from: (i) the release of valuation allowances related to certain U.S. and foreign deferred tax assets; and (ii) the
utilization of foreign tax credits.
Liquidity
Cash and Liquidity. As of December 31, 2024, our principal sources of liquidity were cash and cash equivalents of $161.8 million, compared to
$186.3 million as of December 31, 2023.
As part of our 2021 Credit Agreement, we have a $450.0 million senior secured revolving loan facility with a syndicate of financial institutions that
expires in September 2026, the 2021 Revolver. As of December 31, 2024, we had no borrowings outstanding on the 2021 Revolver and have
issued standby letters of credit for $0.3 million that count against the available 2021 Revolver balance, leaving $449.7 million available to us. The
2021 Credit Agreement contains customary affirmative, negative, and financial covenants. As of December 31, 2024, and the date of this filing,
we believe we are in compliance with the provisions of the 2021 Credit Agreement.
Our cash and cash equivalents balances as of the end of the indicated periods were located in the following geographical regions (in thousands):
December 31, 2024
December 31, 2023
Americas (principally the U.S.)
$
102,417 $
142,515
Europe, Middle East, and Africa
43,609
32,974
Asia Pacific
15,763
10,775
Total cash and cash equivalents
$
161,789 $
186,264
We generally have ready access to substantially all of our cash and cash equivalents, but may face limitations on moving cash out of certain
foreign jurisdictions due to currency controls and potential negative economic consequences.
As of December 31, 2024, we had $1.7 million of cash restricted as to use primarily to collateralize guarantees included in our non-current asset
balance. In addition, we had $343.2 million of settlement and merchant reserve assets which are deemed restricted due to contractual
restrictions with the merchants and restrictions arising from our policy and intention. It has historically been our policy to segregate settlement
and merchant reserve assets from our operating cash balances and we intend to continue to do so.
Cash Flows from Operating Activities. We calculate our cash flows from operating activities beginning with net income, adding back the impact of
non-cash items or non-operating activity (e.g., depreciation, amortization, impairments, gain/loss on items such as investments, lease
modifications, and debt extinguishments/conversions, unrealized foreign currency transactions gain/loss, deferred income taxes, stock-based
compensation, etc.), and then factoring in the impact of changes in operating assets and liabilities.
Our primary source of cash is from our operating activities. Our current business model consists of a significant amount of recurring revenue
sources related to our long-term revenue management solutions and managed services arrangements (primarily billed monthly), payments
transaction services (primarily billed monthly), and software maintenance agreements (which may be billed monthly, quarterly, or annually). This
recurring revenue base provides us with a reliable and predictable source of cash. In addition, software license fees and professional services
revenue are sources of cash, but the payment streams for these items are less predictable.
31
The primary use of our cash is to fund our operating activities. Over half of our total operating costs relate to labor costs (both employees and
contracted labor) for the following: (i) compensation; (ii) related fringe benefits; (iii) incentive compensation; and (iv) reimbursements for travel and
entertainment expenses. Other operating expenses consist of: (i) computing capacity and related services and communication lines for our
outsourced cloud-based business; (ii) transaction fees paid in conjunction with the delivery of services under our payment services contracts; (iii)
hardware and software maintenance and other SaaS-based services; (iv) paper, envelopes, and related supplies for our customer
communications; and (v) rent and related facility costs. These items are purchased under a variety of both short-term and long-term contractual
commitments. A discussion of our material contractual obligations is provided below.
Our 2024 and 2023 net cash flows from operating activities, broken out between operations and changes in operating assets and liabilities, for the
indicated quarterly periods are as follows (in thousands):
Operations
Changes in
Operating Asset
and Liabilities
Net Cash Provided
by (Used In)
Operating
Activities – Totals
Cash Flows from Operating Activities:
2024:
March 31 (1)
$
51,655 $
(81,006 ) $
(29,351 )
June 30
35,625
7,480
43,105
September 30
44,354
(4,895 )
39,459
December 31 (2)
44,805
37,699
82,504
Total
$
176,439 $
(40,722 ) $
135,717
2023:
March 31 (3)
$
50,158 $
(34,761 ) $
15,397
June 30
26,539
(14,153 )
12,386
September 30
34,618
(10,036 )
24,582
December 31 (4)
29,550
49,981
79,531
Total
$
140,865 $
(8,969 ) $
131,896
(1)
Cash flows from operating activities for the first quarter of 2024 were negatively impacted by unfavorable working capital changes, to
include the impact of the payment of the 2023 year-end accrued employee incentive compensation and timing of trade accounts
receivable.
(2)
Cash flows from operating activities for the fourth quarter of 2024 were positively impacted by favorable changes in working capital,
which can mainly be attributed to the timing of our estimated federal and state income tax payments, and decreases in our accounts
receivable balance.
(3)
Cash flows from operating activities for the first quarter 2023 reflect the impact of the payment of the 2022 year-end accrued
employee incentive compensation.
(4)
Cash flows from operating activities for the fourth quarter of 2023 were positively impacted by favorable changes in working capital,
which can mainly be attributed to decreases in our accounts receivable balance and increases in our accrued employee
compensation.
Variations in our net cash provided by (used in) operating activities are generally related to the changes in our operating assets and liabilities
(related mostly to fluctuations in timing of customer payments and changes in accrued expenses), and generally over longer periods of time, do
not significantly impact our cash flows from operations.
Significant fluctuations in key operating assets and liabilities between 2024 and 2023 that impacted our cash flows from operating activities are as
follows:
Billed Trade Accounts Receivable
Management of our billed trade accounts receivable is one of the primary factors in maintaining strong cash flows from operating activities.
These balances include significant billings for several non-revenue items (primarily postage, sales tax, and deferred revenue items). As a
result, we evaluate our performance in collecting our billed trade accounts receivable through our calculation of Days Billings Outstanding
(“DBO”) rather than a typical Days Sales Outstanding (“DSO”) calculation.
32
Our gross and net billed trade accounts receivable and related allowance for expected losses (“Allowance”) as of the end of the indicated
quarterly periods, and the related DBOs for the quarters then ended, are as follows (in thousands, except DBOs):
Quarter Ended
Gross
Allowance
Net Billed
DBOs
2024:
March 31
$
281,051 $
(5,692 ) $
275,359
67
June 30
270,934
(4,720 )
266,214
66
September 30
284,740
(4,810 )
279,930
64
December 31
269,944
(3,041 )
266,903
64
2023:
March 31
$
261,028 $
(5,254 ) $
255,774
68
June 30
260,928
(4,618 )
256,310
65
September 30
279,892
(4,731 )
275,161
66
December 31
273,112
(5,432 )
267,680
68
As of December 31, 2024 and 2023, approximately 96% and 92%, respectively, of our net billed trade accounts receivable balances were
less than 60 days past due.
We may experience adverse impacts to our DBOs if and when customer payment delays occur. However, the recurring monthly payments
that cross a reporting period-end do not raise collectability concerns, as payment is generally received subsequent to quarter-end. All other
changes in our gross and net billed accounts receivable reflect the normal fluctuations in the timing of customer payments at quarter-end,
as evidenced by our relatively consistent DBO metric.
As a global provider of solutions and services, a portion of our trade accounts receivable balance relates to international customers. This
diversity in the geographic composition of our customer base may adversely impact our DBOs as longer billing cycles (i.e., billing terms and
cash collection cycles) are an inherent characteristic of international software and professional services transactions. As a result, we may
experience fluctuations in our trade accounts receivable balance as our ability to invoice and collect arrangement fees is dependent upon,
among other things: (i) the completion of various customer administrative matters, local country billing protocols and processes (including
local cultural differences), and non-customer administrative matters; (ii) meeting certain contractual invoicing milestones and dates; (iii) the
overall project status in certain situations in which we act as a subcontractor to another vendor on a project; or (iv) currency controls in
certain foreign jurisdictions.
Unbilled Trade Accounts Receivable
Unbilled trade accounts receivable decreased $2.0 million to $80.2 million as of December 31, 2024, from $82.2 million as of December 31,
2023. These unbilled trade accounts receivable balances relate primarily to large implementation projects where various milestone and
contractual billing dates have not yet been reached or are delayed. Unbilled trade accounts receivable are an inherent characteristic of
certain software and services transactions and may fluctuate between quarters, as these types of transactions typically have scheduled
invoicing terms over several quarters, as well as certain milestone billing events.
Accrued Employee Compensation
Accrued employee compensation decreased $16.5 million to $67.9 million as of December 31, 2024, from $84.4 million as of December 31,
2023, due primarily to higher incentive-compensation accruals in 2023.
Cash Flows from Investing Activities. Our typical investing activities consist of purchases of software, property, and equipment, and in 2024, our
business combination activities, which are discussed below.
Purchases of Software, Property, and Equipment
Our annual capital expenditures for software, property, and equipment for 2024 and 2023 were $22.4 million and $28.0 million,
respectively. Our capital expenditures for these periods consisted principally of investments in: (i) communication design and delivery
center equipment and infrastructure; (ii) software and related equipment; (iii) computer hardware; and (iv) leasehold improvements.
Business Combinations, net of Cash and Settlement Assets Acquired
The cash paid for the acquisitions discussed in Note 7 to our Financial Statements, less cash and settlement assets acquired, resulted in
net cash provided by business combinations for 2024 of $17.3 million.
33
Cash Flows from Financing Activities. Our financing activities typically consist of activities with our common stock, various debt-related
transactions, and settlement and merchant reserve activity, which are discussed below. Additionally, during 2024 and 2023, we made deferred
acquisition payments related to our previous acquisitions of $2.5 million and $3.2 million, respectively.
Issuance of Common Stock
Proceeds from the issuance of common stock for 2024 and 2023 were $3.1 million and $3.3 million, respectively, and relate primarily to our
employee stock purchase plan.
Cash Dividends Paid on Common Stock
During 2024 and 2023, the Board approved dividend payments totaling $34.8 million and $34.3 million, respectively. During 2024 and
2023, we paid dividends of $26.6 million and $33.9 million, respectively, with the differences between the amount approved and paid
attributed to the fourth quarter 2024 dividend being paid in January 2025 and dividends accrued on unvested incentive shares that are paid
upon vesting.
Repurchase of Common Stock
During 2024 and 2023 we repurchased approximately 1,185,000 shares and 2,188,000 shares of our common stock under the guidelines
of our Stock Repurchase Program for $57.8 million and $117.1 million, respectively.
Additionally, outside of our Stock Repurchase Program, during 2024 and 2023, we repurchased from our employees and then canceled
approximately 177,000 shares and 182,000 shares of our common stock for $9.4 million and $10.2 million, respectively, in connection with
minimum tax withholding requirements resulting from the vesting of restricted stock under our stock incentive plans.
During 2024 and 2023, we paid $67.7 million and $127.1 million, respectively, for our total repurchases of common stock, with any
differences when compared to the amounts purchased attributed to the timing of the settlement and the excise tax on share repurchases.
See Note 12 to our Financial Statements for additional discussion of our repurchases of common stock.
Long-Term Debt
During 2024 and 2023, we made principal repayments on our 2021 Term Loan of $7.5 million during each period. Additionally, during
2024, we borrowed and subsequently repaid $15.0 million from our 2021 Revolver for general corporate purposes.
During 2023, we also borrowed $45.0 million under our 2021 Revolver for general corporate purposes and subsequently repaid this
amount during the year. In September 2023, we issued the 2023 Convertible Notes offering and received proceeds of $425.0 million. We
used a portion of these proceeds to repay $275.0 million of our 2021 Revolver balance and pay the $34.3 million premiums for the capped
call transactions. Additionally, during 2023, we paid deferred financing costs of $14.5 million.
See Note 5 to our Financial Statements for additional discussion of our long-term debt and capped call transactions.
Settlement and Merchant Reserve Activity
During 2024 and 2023, we had net settlement and merchant reserve activity of $23.9 million and $36.0 million, respectively, related to the
cash collected, held on behalf, and paid to our merchants related to our payments services and the net change in deposits held on behalf
of our merchants. These balances can significantly fluctuate between periods due to activity at the end of the period and the day in which
the period ends.
See Note 2 to our Financial Statements for additional discussion of our settlement and merchant reserves.
Contractual Obligations and Other Commercial Commitments and Contingencies
We have various contractual obligations that are recorded as liabilities in our Balance Sheets. Other items, such as certain purchase
commitments and other executory contracts, are not recognized as liabilities in our Balance Sheets but are required to be disclosed.
Our 2023 Convertible Notes are convertible at the option of the noteholders before June 15, 2028 upon the occurrence of certain events. On or
after June 15, 2028 and until the close of business on the second scheduled trading day immediately preceding the maturity date, noteholders
may convert all or any portion of their notes at any time regardless of these conditions. Upon settlement, our cash obligation will not exceed the
principal amount, and interest paid through maturity is at a rate of 3.875%. Our estimated remaining interest for our 2023 Convertible Notes
through their maturity date of September 15, 2028 is approximately $65 million.
34
Our 2021 Credit Agreement includes mandatory quarterly amortization payments on the term loan, interest payments throughout the life of the
term loan, interest payments on the used balance of the revolver, and a commitment fee on the unused balance of the revolver. As of December
31, 2024, the outstanding balance on our 2021 Term Loan was $125.6 million and we had no borrowings outstanding on our 2021 Revolver. Our
estimated interest for our 2021 Credit Agreement over the remaining life of the loan includes: (i) approximately $12 million for our 2021 Term
Debt; and (ii) approximately $1 million for the commitment fee. These amounts are based on the current leverage ratio and SOFR rates and
assumes that no amounts are borrowed on the 2021 Revolver.
Our long-term debt obligations are discussed in more detail in Note 5 to our Financial Statements.
Our operating leases are discussed in Note 6 to our Financial Statements. As of December 31, 2024, the value of our obligations under our real
estate leases were approximately $35 million.
Our contractual commitments consist primarily of our expected minimum base fees under our outsourced computing service agreement with
Ensono, Inc., which includes embedded lease components (discussed in Notes 6 and 11 to our Financial Statements), and to a lesser degree,
cloud computing, networking, and communication services. As of December 31, 2024, the total value of our contractual commitments were
approximately $331 million, with approximately $98 million due within the next twelve months.
Off-Balance Sheet Arrangements
Our off-balance sheet arrangements are mainly limited to money transmitter bonds, bid bonds, performance bonds, and standby letters of credit.
These arrangements do not have a material impact and are not reasonably likely to have a material future impact to our financial condition,
results of operations, liquidity, capital expenditures, or capital resources. See Note 11 to our Financial Statements for additional information on
these guarantees.
Capital Resources
The following are the key items to consider in assessing our sources and uses of capital resources:
Current Sources of Capital Resources. Below are the key items to consider in assessing our current sources of capital resources:
•
Cash and Cash Equivalents. As of December 31, 2024, we had cash and cash equivalents of $161.8 million, of which
approximately 58% is in U.S. dollars and held in the U.S. For the remainder of the monies denominated in foreign currencies and/or
located outside the U.S., we do not anticipate any material amounts being unavailable for use in funding our business, but may face
limitations on moving cash out of certain foreign jurisdictions due to currency controls and potential negative economic
consequences.
•
Operating Cash Flows. As described in the Liquidity section above, we believe we have the ability to generate strong cash flows to
fund our operating activities and act as a source of funds for our capital resource needs, although we may experience quarterly
variations in our cash flows from operations related to the changes in our operating assets and liabilities.
•
Revolving Loan Facility. As part of our 2021 Credit Agreement, we have a $450.0 million revolving loan facility, our 2021 Revolver.
As of December 31, 2024, we had no borrowings outstanding on our 2021 Revolver, and had issued standby letters of credit for
$0.3 million that count against the available 2021 Revolver balance, currently leaving $449.7 million available to us. Our long-term
debt obligations are discussed in more detail in Note 5 to our Financial Statements.
Uses/Potential Uses of Capital Resources. Below are the key items to consider in assessing our uses/potential uses of capital resources:
•
Common Stock Repurchases and Cash Dividends. We have made repurchases of our common stock in the past under our Stock
Repurchase Program. In August of 2024, our Board authorized an additional $100.0 million of repurchases under our Stock
Repurchase Program, with all outstanding authorized repurchases to be completed by December 31, 2025. As of December 31,
2024, we had $138.0 million authorized for repurchase remaining under our Stock Repurchase Program. Our 2021 Credit
Agreement places certain limitations on our ability to repurchase our common stock.
Under our Stock Repurchase Program, we may repurchase shares in the open market or in privately negotiated transactions,
including through an accelerated stock repurchase plan or under a SEC Rule 10b5-1 plan. The actual timing and amount of share
repurchases are dependent on the current market conditions and other business-related factors. Our common stock repurchases
are discussed in more detail in Note 12 to our Financial Statements.
35
During 2024, we repurchased approximately 1,185,000 shares of our common stock for $57.8 million (weighted-average price of
$48.79 per share) under our Stock Repurchase Program.
Outside of our Stock Repurchase Program, during 2024, we repurchased from our employees and then cancelled approximately
177,000 shares of our common stock for $9.4 million in connection with minimum tax withholding requirements resulting from the
vesting of restricted common stock under our stock incentive plans.
During 2024, the Board declared dividends totaling $34.8 million. Going forward, we expect to pay cash dividends each year in
January, April, July, and October, with the amount and timing subject to our Board’s approval.
We expect to return a total of $100.0 million to our shareholders through combined common stock repurchases and cash dividends
in 2025.
•
Acquisitions. As a result of our previous acquisition activity, during 2024 we made $2.5 million of deferred acquisition payments.
Additionally, there are provisions for up to approximately $13 million of potential future earn-out payments through December 31,
2026. As of December 31, 2024, we have accrued $0.4 million related to potential earn-out payments.
During 2024, we acquired two businesses, discussed in further detail in Note 7 to our Financial Statements. The acquisition date fair
value of the consideration transferred totaled $32.6 million. The iCG purchase agreement includes provisions for up to $15.0 million
of potential future earn-out payments tied to performance-based goals and a defined service period through June 3, 2027. As of
December 31, 2024, we have accrued $5.5 million related to potential earn-out payments. These acquisitions were funded with
available cash.
As part of our growth strategy, we are continually evaluating potential business and/or asset acquisitions and investments in market
share expansion with our existing and potential new customers and expansion into verticals outside the global communications
market.
•
Exit of Reseller Agreements. During 2023, we exited out of two reseller agreements that were acquired with the acquisition of Forte
Payment Systems, Inc. in 2018. As a result, we incurred expenses of $9.9 million, of which we paid $1.8 million in 2023 and $5.6
million in 2024, with $1.3 million to be paid in 2025 and $1.2 million to be paid in 2026.
•
Capital Expenditures. During 2024, we spent $22.4 million on capital expenditures.
•
Financing Agreements. We have financing agreements for certain of our internal use software. During 2024, we paid $3.5 million
related to these financing agreements, with $4.5 million to be paid in 2025, $3.6 million to be paid in 2026, and $0.9 million to be
paid in 2027.
•
Long-Term Debt. As of December 31, 2024, our long-term debt consisted of the following: (i) 2023 Convertible Notes in the principal
aggregate amount of $425.0 million; and (ii) 2021 Credit Agreement term loan borrowings of $125.6 million.
2023 Convertible Notes. The 2023 Convertible Notes are convertible at the option of the note holders before June 15, 2028 upon
the occurrence of certain events, however, there are no scheduled conversion triggers over the next twelve months. As a result, we
expect our required debt service cash outlay during the next twelve months for the 2023 Convertible Notes to be limited to interest
payments of $16.5 million.
2021 Credit Agreement. The mandatory repayments under our 2021 Credit Agreement for the next twelve months are $7.5 million
and the cash interest expense (based upon then current interest rates) for the 2021 Term Loan is $7.2 million. We have the ability
to make prepayments without penalties on our 2021 Credit Agreement.
Our long-term debt obligations are discussed in more detail in Note 5 to our Financial Statements.
In summary, we expect to continue to have material needs for capital resources going forward, as noted above. We believe that our current cash
and cash equivalents balances and our 2021 Revolver, together with cash expected to be generated in the future from our current operating
activities, will be sufficient to meet our anticipated capital resource requirements for at least the next twelve months. We believe we could obtain
additional capital through refinancing options or other debt sources which may be available to us if deemed appropriate.
36
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
Market risk is the potential loss arising from adverse changes in market rates and prices. As of December 31, 2024, we are exposed to various
market risks, including changes in interest rates, fluctuations and changes in the market value of our cash equivalents and settlement and
merchant reserve assets, and changes in foreign currency exchange rates. We have not historically entered into derivatives or other financial
instruments for trading or speculative purposes.
Interest Rate Risk
Long-Term Debt. The interest rate on our 2023 Convertible Notes is fixed, and thus, as it relates to our convertible debt borrowings, we are not
exposed to changes in interest rates.
The interest rates on our 2021 Credit Agreement are based upon an adjusted SOFR rate (including a 0.10% credit spread adjustment) plus an
applicable margin, or an alternate base rate ("ABR") plus an applicable margin. See Note 5 to our Financial Statements for further details related
to our long-term debt.
A hypothetical adverse change of 10% in the December 31, 2024 adjusted SOFR rate would not have a material impact upon our results of
operations.
Market Risk
Cash and Cash Equivalents. Our cash and cash equivalents as of December 31, 2024 and 2023 were $161.8 million and $186.3 million,
respectively. Certain of our cash balances are swept into overnight money market accounts on a daily basis, and at times, any excess funds are
invested in low-risk, somewhat longer term, cash equivalent instruments. Our cash equivalents are invested primarily in institutional money
market funds held at major banks. We have minimal market risk for our cash and cash equivalents due to the relatively short maturities of the
instruments.
Settlement and Merchant Reserve Assets. We are exposed to market risk associated with cash held on behalf of our merchants related to our
payment processing services. As of December 31, 2024 and 2023, we had $343.2 million and $274.7 million, respectively, of cash collected on
behalf of our merchants. The cash is held in accounts with various major financial institutions in the U.S. and Canada in an amount equal to at
least 100% of the aggregate amount owed to our merchants. These balances can significantly fluctuate between periods due to activity at the
end of the period and the day in which the period ends. Certain settlement assets are swept into overnight money market accounts on a daily
basis.
Long-Term Debt. The fair value of our convertible debt is exposed to market risk. We do not carry our convertible debt at fair value but present
the fair value for disclosure purposes (see Note 2 to our Financial Statements). Generally, the fair value of our convertible debt is impacted by
changes in interest rates and changes in the price and volatility of our common stock. As of December 31, 2024, the fair value of the 2023
Convertible Notes was estimated at $429.1 million, using quoted market prices.
Foreign Currency Exchange Rate Risk
Due to foreign operations around the world, our financial statements are exposed to foreign currency exchange risk due to the fluctuations in the
value of currencies in which we conduct business. Our principal currency exposures include the British Pound, Euro, Australian Dollar, Saudi
Riyal, and South African Rand. While we attempt to maximize natural hedges by incurring expenses in the same currency in which we contract
revenue, the related expenses for that revenue could be in one or more differing currencies than the revenue stream. In particular, if the U.S.
Dollar were to strengthen it would reduce the reported amount of our foreign-denominated cash, cash equivalents, trade receivables, revenue,
and expenses that we translate into U.S. Dollars and report in our consolidated financial statements for, and as of the end of, each reporting
period. We have removed our previous tabular presentation of the carrying amounts of our monetary assets and monetary liabilities on the books
of our non-U.S. subsidiaries in currencies denominated in a currency other than the functional currency of those non-U.S. subsidiaries as other
than the U.S. Dollar, they were not material in any period presented.
During the year ended December 31, 2024, we generated approximately 89% of our revenue in U.S. dollars. We expect that, in the foreseeable
future, we will continue to generate a very large percentage of our revenue in U.S. dollars.
We have analyzed our foreign currency exposure as of December 31, 2024. A hypothetical adverse change of 10% in the December 31, 2024
exchange rates would not have had a material impact upon our results of operations.
37
Item 8.
Financial Statements and Supplementary Data
CSG SYSTEMS INTERNATIONAL, INC.
CONSOLIDATED FINANCIAL STATEMENTS
INDEX
Management's Report on Internal Control Over Financial Reporting
38
Reports of Independent Registered Public Accounting Firm (PCAOB: 185)
39
Consolidated Balance Sheets as of December 31, 2024 and 2023
42
Consolidated Statements of Income for the Years Ended December 31, 2024, 2023, and 2022
43
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2024, 2023, and 2022
44
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2024, 2023, and 2022
45
Consolidated Statements of Cash Flows for the Years Ended December 31, 2024, 2023, and 2022
46
Notes to Consolidated Financial Statements
47
38
Management’s Report on Internal Control Over Financial Reporting
Management of CSG Systems International, Inc. and subsidiaries (the “Company”) is responsible for establishing and maintaining adequate
internal control over financial reporting as defined in Rule 13a-15(f) or 15d-15(f) under the Securities Exchange Act of 1934, as amended. The
Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. The Company’s
internal control over financial reporting includes those policies and procedures that:
(i)
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the Company;
(ii)
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made
only in accordance with authorizations of management and directors of the Company; and
(iii)
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the
Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies and procedures may deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024. In making this
assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control-Integrated Framework (2013).
Based on our assessment, management believes that the Company maintained effective internal control over financial reporting as of December
31, 2024.
The Company’s independent registered public accounting firm, KPMG LLP, has issued an attestation report on the effectiveness of the
Company’s internal control over financial reporting as of December 31, 2024. That report appears immediately following.
39
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
CSG Systems International, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited CSG Systems International, Inc. and subsidiaries' (the Company) internal control over financial reporting as of December 31,
2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as
of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the
consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive
income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes
(collectively, the consolidated financial statements), and our report dated February 20, 2025 expressed an unqualified opinion on those
consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial
Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a
public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of
internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A
company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
Omaha, Nebraska
February 20, 2025
40
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
CSG Systems International, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of CSG Systems International, Inc. and subsidiaries (the Company) as of
December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for
each of the years in the three-year period ended December 31, 2024, and the related notes (collectively, the consolidated financial statements).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December
31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in
conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the
Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 20, 2025
expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our
audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe
that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was
communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the
consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical
audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating
the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Agreements with significant customers
As discussed in Note 3 to the consolidated financial statements, the Company generated 39% of its revenue from its two largest customers
(significant customers). The agreements with these significant customers are complex and subject to modification in the form of
amendments, change requests, or statements of work, which can occur frequently. The accounting for these agreements requires significant
judgments to be made by the Company, specifically whether a new or revised agreement is treated as either a separate contract or
modification of an existing contract. The judgments could significantly affect revenue recognized in any period.
We identified the evaluation of agreements with significant customers as a critical audit matter. Due to the subjectivity and complexity in the
application of the portion of the accounting standard related to contract modifications, the assessment of the Company’s judgments
regarding whether each new or revised agreement is treated as a separate contract or modification of an existing contract required a higher
degree of auditor judgment.
41
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the
operating effectiveness of certain internal controls related to the Company’s revenue recognition process. This included controls over
monitoring and evaluating agreements with significant customers. For certain new or revised agreements with significant customers, we
obtained and read the agreement, performed an independent analysis of the accounting treatment as a separate contract or modification of
an existing contract, and compared our conclusions to those made by the Company.
/s/ KPMG LLP
We have served as the Company’s auditor since 2002.
Omaha, Nebraska
February 20, 2025
42
CSG SYSTEMS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
December 31,
2024
December 31,
2023
ASSETS
Current assets:
Cash and cash equivalents
$
161,789
$
186,264
Settlement and merchant reserve assets
343,235
274,699
Trade accounts receivable:
Billed, net of allowance of $3,041 and $5,432
266,903
267,680
Unbilled
80,173
82,163
Income taxes receivable
2,600
1,345
Other current assets
46,182
50,075
Total current assets
900,882
862,226
Non-current assets:
Property and equipment, net of depreciation of $133,514 and $121,816
56,595
65,545
Operating lease right-of-use assets
24,166
34,283
Software, net of amortization of $154,648 and $157,601
19,927
14,224
Goodwill
316,041
308,596
Acquired customer contracts, net of amortization of $133,279 and $126,469
39,377
35,879
Customer contract costs, net of amortization of $44,587 and $42,094
60,809
54,421
Deferred income taxes
73,295
57,855
Other assets
9,595
10,017
Total non-current assets
599,805
580,820
Total assets
$
1,500,687
$
1,443,046
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt
$
7,500
$
7,500
Operating lease liabilities
11,067
15,946
Customer deposits
41,448
41,035
Trade accounts payable
36,370
46,406
Accrued employee compensation
67,944
84,380
Settlement and merchant reserve liabilities
341,924
273,817
Deferred revenue
54,424
54,199
Income taxes payable
7,802
4,104
Other current liabilities
46,730
33,449
Total current liabilities
615,209
560,836
Non-current liabilities:
Long-term debt, net of unamortized discounts of $12,128 and $15,628
530,997
534,997
Operating lease liabilities
25,020
34,360
Deferred revenue
26,469
23,447
Income taxes payable
2,732
3,041
Deferred income taxes
94
123
Other non-current liabilities
17,597
12,916
Total non-current liabilities
602,909
608,884
Total liabilities
1,218,118
1,169,720
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; 5,513 and 6,781 shares reserved for
employee stock purchase plan and stock incentive plans; 28,854 and 29,541 shares outstanding
718
713
Additional paid-in capital
518,215
490,947
Treasury stock, at cost; 41,583 and 40,398 shares
(1,194,224 )
(1,136,055 )
Accumulated other comprehensive income (loss):
Unrealized gain on short-term investments, net of tax
-
1
Cumulative foreign currency translation adjustments
(62,290 )
(50,414 )
Accumulated earnings
1,020,150
968,134
Total stockholders' equity
282,569
273,326
Total liabilities and stockholders' equity
$
1,500,687
$
1,443,046
The accompanying notes are an integral part of these consolidated financial statements.
43
CSG SYSTEMS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
Year Ended December 31,
2024
2023
2022
Revenue
$
1,197,248
$
1,169,258
$
1,089,752
Cost of revenue (exclusive of depreciation, shown separately below)
614,463
615,042
565,168
Other operating expenses:
Research and development
158,194
143,201
137,913
Selling, general and administrative
258,313
247,613
238,018
Depreciation
21,622
23,189
23,598
Restructuring and reorganization charges
13,323
16,336
46,308
Total operating expenses
1,065,915
1,045,381
1,011,005
Operating income
131,333
123,877
78,747
Other income (expense):
Interest expense
(30,469 )
(31,176 )
(16,432 )
Interest income
8,685
4,336
877
Loss on derivative liability upon debt conversion
-
-
(7,456 )
Other, net
2,723
(4,686 )
5,045
Total other
(19,061 )
(31,526 )
(17,966 )
Income before income taxes
112,272
92,351
60,781
Income tax provision
(25,420 )
(26,105 )
(16,721 )
Net income
$
86,852
$
66,246
$
44,060
Weighted-average shares outstanding:
Basic
28,345
29,938
31,028
Diluted
28,665
30,115
31,298
Earnings per common share:
Basic
$
3.06
$
2.21
$
1.42
Diluted
3.03
2.20
1.41
The accompanying notes are an integral part of these consolidated financial statements.
44
CSG SYSTEMS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
Year Ended December 31,
2024
2023
2022
Net income
$
86,852
$
66,246
$
44,060
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments
(11,877 )
8,416
(20,483 )
Unrealized holding gain on short-term investments arising during
period
-
-
7
Other comprehensive income (loss), net of tax
(11,877 )
8,416
(20,476 )
Total comprehensive income, net of tax
$
74,975
$
74,662
$
23,584
The accompanying notes are an integral part of these consolidated financial statements.
45
CSG SYSTEMS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
Shares of
Common Stock
Outstanding
Common
Stock
Additional
Paid-in
Capital
Treasury
Stock
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Earnings
Noncontrolling
Interest
Total
Stockholders'
Equity
BALANCE, January 1, 2022
32,495 $
705 $
488,303 $ (930,106 ) $
(38,353 ) $
916,060 $
3,635 $
440,244
Comprehensive income:
Net income
-
-
-
-
-
44,060
-
Unrealized gain on short-term investments, net of tax
-
-
-
-
7
-
-
Foreign currency translation adjustments
-
-
-
-
(20,483 )
-
-
Total comprehensive income
23,584
Repurchase of common stock
(1,635 )
(1 )
(8,675 )
(87,928 )
-
-
-
(96,604 )
Issuance of common stock pursuant to employee stock
purchase plan
57
-
2,969
-
-
-
-
2,969
Issuance of restricted common stock pursuant to stock-
based compensation plans
544
6
(6 )
-
-
-
-
-
Cancellation of restricted common stock issued pursuant to
stock-based compensation plans
(192 )
(2 )
2
-
-
-
-
-
Stock-based compensation expense
-
-
27,243
-
-
-
-
27,243
Settlement of convertible debt securities, net of tax
-
-
(4,845 )
-
-
-
-
(4,845 )
Adjustments due to adoption of new accounting standard
-
-
(9,802 )
-
-
9,802
-
-
Dividends
-
-
-
-
-
(33,707 )
-
(33,707 )
Write-off of noncontrolling interest
-
-
-
-
-
-
(3,635 )
(3,635 )
BALANCE, December 31, 2022
31,269
708
495,189
(1,018,0
34 )
(58,829 )
936,215
-
355,249
Comprehensive income:
Net income
-
-
-
-
-
66,246
-
Foreign currency translation adjustments
-
-
-
-
8,416
-
-
Total comprehensive income
74,662
Repurchase of common stock
(2,369 )
(2 )
(10,156 )
(118,021 )
-
-
-
(128,179 )
Issuance of common stock pursuant to employee stock
purchase plan
74
-
3,284
-
-
-
-
3,284
Issuance of restricted common stock pursuant to stock-
based compensation plans
666
7
(7 )
-
-
-
-
-
Cancellation of restricted common stock issued pursuant to
stock-based compensation plans
(99 )
-
-
-
-
-
-
-
Stock-based compensation expense
-
-
28,990
-
-
-
-
28,990
Purchase of capped call transactions, net of tax
-
-
(26,353 )
-
-
-
-
(26,353 )
Dividends
-
-
-
-
-
(34,327 )
-
(34,327 )
BALANCE, December 31, 2023
29,541
713
490,947
(1,136,0
55 )
(50,413 )
968,134
-
273,326
Comprehensive income:
Net income
-
-
-
-
-
86,852
-
Foreign currency translation adjustments
-
-
-
-
(11,877 )
-
-
Total comprehensive income
74,975
Repurchase of common stock
(1,362 )
(1 )
(9,361 )
(58,169 )
-
-
-
(67,531 )
Issuance of common stock pursuant to employee stock
purchase plan
73
-
3,072
-
-
-
-
3,072
Issuance of restricted common stock pursuant to stock-
based compensation plans
777
8
(9 )
-
-
-
-
(1 )
Cancellation of restricted common stock issued pursuant to
stock-based compensation plans
(175 )
(2 )
2
-
-
-
-
-
Stock-based compensation expense
-
-
33,564
-
-
-
-
33,564
Dividends
-
-
-
-
-
(34,836 )
-
(34,836 )
BALANCE, December 31, 2024
28,854 $
718 $
518,215 $
(1,194,2
24 ) $
(62,290 ) $
1,020,150 $
- $
282,569
The accompanying notes are an integral part of these consolidated financial statements.
46
CSG SYSTEMS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended December 31,
2024
2023
2022
Cash flows from operating activities:
Net income
$
86,852
$
66,246
$
44,060
Adjustments to reconcile net income to net cash provided by operating activities-
Depreciation
22,061
23,585
27,967
Amortization
50,447
47,667
48,984
Asset impairments
717
2,061
31,761
Gain on lease modifications
(174 )
(4,349 )
-
(Gain) loss on unrealized foreign currency transactions and other, net
(525 )
225
(85 )
Loss on derivative liability upon debt conversion
-
-
7,456
Deferred income taxes
(16,503 )
(23,560 )
(27,627 )
Stock-based compensation
33,564
28,990
27,243
Changes in operating assets and liabilities, net of acquired amounts:
Trade accounts receivable, net
4,134
(22,401 )
(51,005 )
Other current and non-current assets and liabilities
(13,042 )
(6,566 )
(12,833 )
Income taxes payable/receivable
2,126
(1,849 )
9,336
Trade accounts payable and accrued liabilities
(38,486 )
12,541
(36,971 )
Deferred revenue
4,546
9,306
(4,689 )
Net cash provided by operating activities
135,717
131,896
63,597
Cash flows from investing activities:
Purchases of software, property, and equipment
(22,421 )
(27,977 )
(36,991 )
Proceeds from sale/maturity of short-term investments
-
71
27,953
Business combinations, net of cash and settlement assets acquired of $46,432 in 2024
17,293
-
-
Net cash used in investing activities
(5,128 )
(27,906 )
(9,038 )
Cash flows from financing activities:
Proceeds from issuance of common stock
3,072
3,284
2,969
Payments of cash dividends
(26,608 )
(33,930 )
(33,475 )
Repurchases of common stock
(67,745 )
(127,065 )
(96,720 )
Deferred acquisition payments
(2,488 )
(3,220 )
(2,314 )
Proceeds from long-term debt
15,000
470,000
290,000
Payments on long-term debt
(22,500 )
(327,500 )
(264,801 )
Purchase of capped call transactions related to convertible notes
-
(34,298 )
-
Payments of deferred financing costs
-
(14,539 )
-
Payments on financing obligations
(2,538 )
-
-
Settlement and merchant reserve activity
23,884
35,963
52,656
Net cash used in financing activities
(79,923 )
(31,305 )
(51,685 )
Effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash
(7,779 )
2,173
(5,758 )
Net increase (decrease) in cash, cash equivalents, and restricted cash
42,887
74,858
(2,884 )
Cash, cash equivalents, and restricted cash, beginning of period
463,876
389,018
391,902
Cash, cash equivalents, and restricted cash, end of period
$
506,763
$
463,876
$
389,018
Supplemental disclosures of cash flow information:
Cash paid during the period for-
Interest
$
27,119
$
24,730
$
18,314
Income taxes
39,944
51,675
34,671
Non-cash investing and financing activities-
Software, property, and equipment included in current and noncurrent liabilities
8,469
-
-
Reconciliation of cash, cash equivalents, and restricted cash:
Cash and cash equivalents
$
161,789
$
186,264
$
150,365
Settlement and merchant reserve assets
343,235
274,699
238,653
Restricted cash included in current and non-current assets
1,739
2,913
-
Total cash, cash equivalents, and restricted cash
$
506,763
$
463,876
$
389,018
The accompanying notes are an integral part of these consolidated financial statements.
47
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
General
CSG Systems International, Inc. (the “Company”, “CSG”, or forms of the pronoun “we”), a Delaware corporation, was formed in October 1994 and
is based in Denver, Colorado. We are a purpose-driven, SaaS platform company with revenue management and digital monetization, customer
experience, and payments solutions serving a wide variety of industry verticals. Our cloud-first architecture and customer-centric approach help
companies around the world acquire, monetize, engage, and retain their B2B (business-to-business), B2C (business-to-consumer), and B2B2X
(business-to-business-to-consumer) customers. Over the years, we have focused our research and development (“R&D”) and acquisition
investments on expanding our solution set to address the complex, transformative needs of our customers. We are a member of the S&P
SmallCap 600 and Russell 2000 indices.
The accompanying Consolidated Financial Statements (“Financial Statements”) are prepared in conformity with generally accepted accounting
principles (“GAAP”) in the United States of America (“U.S.”).
2.
Summary of Significant Accounting Policies
Principles of Consolidation. Our Financial Statements include all of our accounts and our subsidiaries’ accounts. All material intercompany
accounts and transactions have been eliminated.
Translation of Foreign Currency. Our foreign subsidiaries generally use the local currency of the countries in which they operate as their
functional currency. Their assets and liabilities are translated into U.S. dollars at the exchange rates in effect at the balance sheet date.
Revenue, expenses, and cash flows are translated at the average exchange rates prevailing during the period. Foreign currency translation
adjustments are included in comprehensive income in stockholders’ equity. Foreign currency transaction gains and losses are included in the
determination of net income.
Use of Estimates in Preparation of Our Financial Statements. The preparation of our Financial Statements requires management to make
estimates and use assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as
of the date of our Financial Statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ
from those estimates. The more critical accounting estimates and related assumptions that may affect our financial position and results of
operations are in the areas of: (i) revenue recognition; (ii) income taxes; and (iii) loss contingencies.
Revenue Recognition. We recognize revenue from our customer contracts when we satisfy our performance obligations by transferring control of
a particular product or service, or group of products or services, to our customers, as described in more detail below. Taxes assessed on our
products and services based on governmental authorities at the time of invoicing are generally excluded from our revenue.
SaaS and Related Solutions
Our SaaS and related solutions include: (i) our revenue management platform solutions; (ii) our managed services offering in which we operate
software solutions (primarily our software solutions) on behalf of our customers; and (iii) our SaaS payments platform solutions.
We contract for our revenue management platform solutions using long-term arrangements whose terms have typically ranged from three to five
years. These arrangements consist of a series of multiple services delivered daily or monthly, to include: (i) revenue management platforms; (ii)
related products and services (e.g., field service management tools, consumer credit verifications, etc.); (iii) digital enablement and delivery
functions; and (iv) customer statement invoice printing and mailing services. The fees for these services typically are billed to our customers
monthly based upon actual monthly volumes and/or usage of services (e.g., the number of customer accounts maintained on our solutions, the
number of transactions processed on our solutions, and/or the quantity and content of the monthly statements and mailings processed through
our solutions).
For revenue management platform arrangements, the total contract consideration (including impacts of discounts, incentives, and/or service level
agreements) is primarily variable dependent upon actual monthly volumes and/or usage of services; however, these contracts can also include
ancillary fixed consideration in the form of one-time, monthly, or annual fees. The pricing of products and services in these contracts is generally
at stand-alone selling price, with no allocation of value between the individual performance obligations. In situations where we do an allocation,
we determine stand-alone selling price based on established pricing and/or cost, plus an applicable margin. Revenue is generally recognized
based on activities performed over a series of daily or monthly periods.
We contract for managed services using long-term arrangements whose terms have typically ranged from three to five years. Under managed
services arrangements, we operate software products (primarily our software solutions) on behalf of our customers: (i) out of a customer’s data
center; (ii) out of our data center; or (iii) out of a third-party data center. Managed services can also include us providing other services, such as
transitional services, fulfillment, remittance processing, operational consulting, back office, and end-user billing services.
48
For managed services arrangements, the total contract consideration is typically a fixed monthly fee, but these contracts may also have variable
fee components. The fees for these services typically are billed to our customers on a monthly basis. Unless managed services are included
with a software license contract (as discussed further below), there is generally only one performance obligation and revenue is recognized for
these arrangements on a ratable basis as the services are performed.
Our contracts for SaaS payments platform solutions are generally month-to-month or fixed term with automatic renewals. Services provided under
these arrangements primarily include Automated Clearing House (“ACH”) transaction processing, credit/debit card processing, web-based and
telephone payment processing, and real-time check verification and authentication services. The fees for these services typically are billed on a
monthly basis.
Our SaaS payments platform arrangements are comprised of one performance obligation. Revenue for these services is based primarily on a fee
per transaction or a percentage of the transaction principal, and is recognized as delivered over a series of daily service periods. Transaction
fees collected from merchants are recognized as revenue on a gross basis when we are the principal in completing the payment processing
transaction. As a principal to the transaction, we control the service of processing payments on our platform. We bear primary responsibility for
the fulfillment of the payment service, contract directly with the merchant, and have full discretion in determining the fee charged to our customers
which is independent of the costs we incur when we utilize payment processors or other financial institutions to perform services on our behalf.
We therefore bear full margin risk when completing a payment processing transaction. Transaction fees are primarily comprised of fees paid to
third-party payment processors and other financial institutions and interchange fees paid in conjunction with the delivery of service to customers
under our payments services contracts. These fees are recognized in cost of revenue.
Fees related to set-up or implementation activities for both SaaS and related solutions and managed services contracts are generally deferred
and recognized ratably over the related service period to which the activities relate.
Depending on the significance of variable consideration, number of products/services, complex pricing structures, and long-term nature of these
types of contracts, the judgments and estimates made in this area could have a significant effect on the amount and timing of revenue recognized
in any period.
Software and Services
Our software and services revenue relates primarily to: (i) software license sales on either a perpetual or term license basis; and (ii) professional
services to implement the software. Our software and services contracts are often contracted in bundled arrangements that include the software
license and related implementation services, and may also include maintenance, managed services, and/or additional professional services.
For our software arrangements, total contract consideration is allocated between the separate performance obligations based on stand-alone
selling prices for software licenses, cost plus applicable margin for third-party licenses and/or services, and established pricing for maintenance.
The initial sale of our software products generally requires significant production, modification, or customization, such that the delivery of the
software license and related professional services required to implement the software represent one combined performance obligation that is
satisfied over time based on hours worked (i.e., hours-based method). We are using hours worked on the project, compared against total
expected hours to complete the project, as the measure to determine progress toward completion as we believe it is the most appropriate metric
to measure such progress. The software and services fees are generally fixed fees billed to our customers on a milestone or date basis.
The determination of the performance obligations and allocation of value for software license arrangements require significant judgment. We
generally determine stand-alone selling prices using pricing calculations (which include regional market factors) for our software license fees and
maintenance, and cost-plus margins for services. Additionally, our use of an hours-based method of accounting for software license and other
professional services performance obligations that are satisfied over time requires estimates of the total expected hours necessary to complete a
project. Changes in estimates as a result of additional information or experience on a project as work progresses are inherent characteristics of
this method of revenue recognition as we are exposed to business risks in completing these types of performance obligations. The estimation
process to support our hours-based recognition method is more difficult for projects of greater length and/or complexity. The judgments and
estimates made for these types of obligations could: (i) have a significant effect on revenue recognized in any period by changing the amount
and/or the timing of the revenue recognized; and/or (ii) impact the expected profitability of a project, including whether an overall loss on an
arrangement has occurred. To mitigate the inherent risks in using this hours-based method, we track our current hours expended against our
estimates on a periodic basis and continually reevaluate the appropriateness of our estimates.
In certain instances, we sell software license volume upgrades, which provide our customers with the right to use our software to process higher
transaction volume levels. In these instances, we analyze the contract to determine if the volume upgrade is a separate performance obligation
and if so, we recognize the value associated with the software license as revenue on the effective date of the volume upgrade.
49
A portion of our professional services revenue is contracted separately (e.g., business consulting services, etc.). Such contracts can either be on
a fixed-price or time-and-materials basis. Revenue from fixed-price professional service contracts is recognized using an estimated hours-based
method (discussed above), as these professional services represent a performance obligation that is satisfied over time. Revenue from
professional services contracts billed on a time-and-materials basis is recognized as the services are performed.
Maintenance
Our maintenance revenue relates primarily to support of our software once it has been implemented and placed in service. Maintenance revenue
is recognized ratably over the software maintenance period as services are provided. Our maintenance consists primarily of customer and
product support, technical updates (e.g., bug fixes, etc.), and unspecified upgrades or enhancements to our software products. If specified
upgrades or enhancements are offered in a contract, they are accounted for as a separate performance obligation. Maintenance may be invoiced
to our customers on a monthly, quarterly, or annual basis.
Transaction Price Allocated to Remaining Performance Obligations
As of December 31, 2024, our aggregate amount of the transaction price allocated to the remaining performance obligations was approximately
$1.9 billion, which is made up of fixed fee consideration and guaranteed minimums expected to be recognized in the future related to
performance obligations that are unsatisfied (or partially unsatisfied). We expect to recognize over 70% of this amount by the end of 2027, with
the remaining amount recognized by the end of 2036. We have excluded from this amount variable consideration expected to be recognized in
the future related to performance obligations that are unsatisfied. The majority of our future revenue is related to our SaaS and related solutions
customer contracts that includes variable consideration dependent upon a series of monthly volumes and/or daily usage of services and have
contractual terms ending from 2025 through 2036.
Disaggregation of Revenue
The nature, amount, timing, and uncertainty of our revenue and how revenue and cash flows are affected by economic factors is most
appropriately depicted by revenue type, geographic region, and customer vertical.
Revenue by type for 2024, 2023, and 2022 was as follows (in thousands):
2024
2023
2022
Revenue:
SaaS and related solutions
$
1,069,325
$
1,024,572
$
956,995
Software and services
80,935
98,078
87,247
Maintenance
46,988
46,608
45,510
Total revenue
$
1,197,248
$
1,169,258
$
1,089,752
We use the location of the customer as the basis of attributing revenue to geographic regions. Revenue by geographic region for 2024, 2023,
and 2022, as a percentage of our total revenue, was as follows:
2024
2023
2022
Americas (principally the U.S.)
87 %
86 %
85 %
Europe, Middle East, and Africa (principally Europe)
9 %
10 %
11 %
Asia Pacific
4 %
4 %
4 %
Total revenue
100 %
100 %
100 %
We generate our revenue primarily from the global communications markets; however, we serve an expanding group of customers in markets
including retail, financial services, healthcare, insurance, and government entities. Revenue by customer vertical for 2024, 2023, and 2022, as a
percentage of our total revenue, was as follows:
2024
2023
2022
Broadband/Cable/Satellite
52 %
52 %
54 %
Telecommunications
18 %
20 %
20 %
Other
30 %
28 %
26 %
Total revenue
100 %
100 %
100 %
50
Billed and Unbilled Accounts Receivable. Billed accounts receivable represents our unconditional rights to consideration. Once invoiced, our
payment terms are generally between 30-60 days. Unbilled accounts receivable represents our rights to consideration for work completed but not
billed. Unbilled accounts receivable is transferred to billed accounts receivable when the rights become unconditional, which is generally at the
time of invoicing.
The following table rolls forward our unbilled accounts receivable from January 1, 2023 to December 31, 2024 (in thousands):
Unbilled Receivables
Beginning Balance, January 1, 2023
$
52,830
Recognized during the period
287,844
Reclassified to receivables
(258,792 )
Other
281
Ending Balance, December 31, 2023
82,163
Recognized during the period
267,879
Reclassified to receivables
(268,855 )
Other
(1,014 )
Ending Balance, December 31, 2024
$
80,173
Deferred Revenue. Deferred revenue represents consideration received from customers in advance of services being performed.
The following table rolls forward our deferred revenue from January 1, 2023 to December 31, 2024 (in thousands):
Deferred Revenue
Beginning Balance, January 1, 2023
$
68,024
Revenue recognized that was included in deferred revenue at the beginning
of the period
(45,699 )
Consideration received in advance of services performed net of revenue
recognized in the current period
55,920
Other
(599 )
Ending Balance, December 31, 2023
77,646
Revenue recognized that was included in deferred revenue at the beginning
of the period
(55,359 )
Consideration received in advance of services performed net of revenue
recognized in the current period
59,917
Other
(1,311 )
Ending Balance, December 31, 2024
$
80,893
Postage. We pass through to our customers the cost of postage that is incurred on behalf of those customers, and typically require an advance
payment on expected postage costs. These advance payments are included in customer deposits in the accompanying Consolidated Balance
Sheets (“Balance Sheets” or “Balance Sheet”) and are classified as current liabilities regardless of the contract period. We net the cost of
postage against the postage reimbursements and include the net amount (which is not material) in SaaS and related solutions revenue.
Cash and Cash Equivalents. We consider all highly liquid investments with original maturities of three months or less as of the date of purchase
to be cash equivalents. As of December 31, 2024 and 2023, our cash equivalents consist primarily of institutional money market funds and time
deposits held at major banks. For the cash and cash equivalents denominated in foreign currencies and/or located outside the U.S., we do not
anticipate any material amounts being unavailable for use in running our business, but may face limitations on moving cash out of certain foreign
jurisdictions due to currency controls and potential negative economic consequences.
Restricted Cash. Restricted cash includes cash that is legally or contractually restricted, as well as our settlement and merchant reserve assets
(discussed below). The nature of the restrictions on our settlement and merchant reserve assets consists of contractual restrictions with the
merchants and restrictions arising from our policy and intention. It has historically been our policy to segregate settlement and merchant reserve
assets from our operating cash balances and our intention is to continue to do so. Our restricted cash mainly serves to collateralize bank and
performance guarantees. As of December 31, 2024 and 2023, we had $1.7 million and $2.9 million, respectively, of restricted cash included in
other current and non-current assets in our Balance Sheets.
51
Financial Instruments. Our financial instruments as of December 31, 2024 and 2023 include cash and cash equivalents, settlement and merchant
reserve assets and liabilities, accounts receivable, accounts payable, and debt. Due to their short maturities, the carrying amounts of cash
equivalents, settlement and merchant reserve assets and liabilities, accounts receivable, and accounts payable approximate their fair value.
Valuation inputs used to measure the fair value of our cash equivalents held in money market funds and time deposits were derived from quoted
market prices, which are considered Level 1 Inputs.
We have chosen not to record our debt at fair value, with changes recognized in earnings each reporting period. The following table indicates the
carrying value and estimated fair value of our debt as of the indicated periods (in thousands):
December 31, 2024
December 31, 2023
Carrying Value
Fair Value
Carrying Value
Fair Value
2023 Convertible Notes (par value)
$
425,000
$
429,144 $
425,000
$
428,506
2021 Credit Agreement (carrying value including
current maturities)
125,625
125,625
133,125
133,125
The fair value of our convertible notes was estimated based upon quoted market prices or recent sales activity, while the fair value of our credit
agreement was estimated using a discounted cash flow methodology, both of which are considered Level 2 inputs. See Note 5 for discussion
regarding our debt.
Settlement and Merchant Reserve Assets and Liabilities. Settlement assets and settlement liabilities represent cash collected on behalf of
merchants via payments processing services which is held for an established holding period until settlement with the customer. The holding
period is generally one to four business days depending on the payment model and contractual terms with the customer. During the holding
period, cash is subject to restriction and segregation based on the nature of our custodial relationship with the merchants. Should we fail to remit
these funds to our merchants, the merchant’s sole recourse would be against us, for payment. These rights and obligations are set forth in the
contracts between us and the merchants. Settlement assets are held with various major financial institutions and a corresponding liability is
recorded for the amounts owed to the customer. At any given time, there may be differences between the cash held and the corresponding
liability due to the timing of operating-related cash transfers.
Merchant reserve assets/liabilities represent deposits collected from merchants to mitigate our risk of loss due to nonperformance of settlement
obligations initiated by those merchants using our payments processing services, or non-payment by customers for services rendered by us. We
perform a credit risk evaluation on each customer based on multiple criteria, which provides the basis for the deposit amount required for each
merchant. For the duration of our relationship with each merchant, we hold their reserve deposits with major financial institutions. We hold these
funds in separate accounts and are offset by corresponding liabilities.
The following table summarizes our settlement and merchant reserve assets and liabilities as of the indicated periods (in thousands):
December 31, 2024
December 31, 2023
Assets
Liabilities
Assets
Liabilities
Settlement assets/liabilities
$
330,769
$
329,458 $
260,712 $
259,825
Merchant reserve assets/liabilities
12,466
12,466
13,987
13,992
Total
$
343,235
$
341,924 $
274,699 $
273,817
Concentrations of Credit Risk. In the normal course of business, we are exposed to credit risk. The principal concentrations of credit risk relate
to cash deposits, cash equivalents, and accounts receivable. We regularly monitor credit risk exposures and take steps to mitigate the likelihood
of these exposures resulting in a loss. We hold our cash deposits and cash equivalents with financial institutions we believe to be of sound
financial condition.
We generally do not require collateral or other security to support accounts receivable. We evaluate the creditworthiness of our customers in
conjunction with our revenue recognition process, as well as through our ongoing collectability assessment process for accounts receivable. We
maintain an allowance for expected losses based upon factors surrounding the credit risk of specific customers, historical trends, and other
information. We use various judgments and estimates in determining the adequacy of the allowance for expected losses. See Note 3 for
additional details of our concentration of accounts receivable.
The activity in our allowance for expected losses is as follows (in thousands):
2024
2023
2022
Balance, beginning of year
$
5,432
$
5,528
$
4,250
Additions to/(reversals of) expense
(951 )
1,765
1,295
Write-offs
(1,419 )
(1,767 )
(8 )
Other
(21 )
(94 )
(9 )
Balance, end of year
$
3,041
$
5,432
$
5,528
52
Property and Equipment. Property and equipment are recorded at cost (or at estimated fair value if acquired in a business combination) and are
depreciated over their estimated useful lives ranging from three to ten years. Leasehold improvements are depreciated over the shorter of their
economic life or the lease term. Depreciation expense is computed using the straight-line method for financial reporting purposes. Depreciation
expense for property and equipment is reflected in our Consolidated Statements of Income ("Income Statement" or "Income Statements")
separately in the aggregate and is not included in the cost of revenue or the other components of operating expenses, except for accelerated
depreciation expense that is included in our restructuring and reorganization charges (see Note 8).
Software. We spend substantial amounts on R&D, particularly for new solutions and enhancements of existing products and services. For
development of software solutions that are to be licensed by us, we expense all costs related to the development of the software until
technological feasibility is established. For development of software to be used internally (e.g., cloud-based systems software), we expense all
costs prior to the application development stage.
During 2024, 2023, and 2022, we spent $158.2 million, $143.2 million, and $137.9 million, respectively, on R&D projects. We did not capitalize
any R&D costs in 2024, 2023, and 2022, as the costs subject to capitalization during these periods were not material. We did not have any
capitalized R&D costs included in our December 31, 2024 and 2023 Balance Sheets.
Realizability of Long-Lived Assets. We evaluate our long-lived assets, other than goodwill, for possible impairment whenever events or changes
in circumstances indicate that the carrying value of these assets may not be recoverable. A long-lived asset is impaired if estimated future
undiscounted cash flows associated with that asset are insufficient to recover the carrying amount of the long-lived asset. If deemed impaired,
the long-lived asset is written down to its estimated fair value.
Goodwill. We evaluate our goodwill for impairment on an annual basis, as well as we may evaluate our goodwill on a more periodic basis (e.g.,
quarterly) if events occur or circumstances change that could indicate a potential impairment may have occurred. Goodwill is considered
impaired if the carrying value of the reporting unit which includes the goodwill is greater than the estimated fair value of the reporting unit.
Contingencies. We accrue for a loss contingency when: (i) it is probable that an asset has been impaired, or a liability has been incurred; and (ii)
the amount of the loss can be reasonably estimated. The determination of loss contingencies is subject to various judgments and estimates. We
do not record the benefit from a gain contingency until the benefit is realized.
Earnings Per Common Share (“EPS”). Basic and diluted EPS amounts are presented on our Income Statements. The reconciliation of the basic
and diluted EPS denominators related to the common shares is included in the following table (in thousands):
2024
2023
2022
Basic weighted-average common shares
28,345
29,938
31,028
Dilutive effect of restricted common stock
320
177
270
Diluted weighted-average common shares
28,665
30,115
31,298
The dilutive effect of time-based awards is computed using the treasury stock method. The dilutive effect of performance-based and market-
based awards is computed based on the number of shares that would be issued as if the end of the reporting period was the end of the
performance period. The dilutive effect of the 2023 Convertible Notes is computed using the if-converted method and will only have an effect in
those quarterly periods in which our average stock price exceeds the current effective conversion price.
Potentially dilutive common shares related to non-participating unvested restricted stock were excluded from the computation of diluted EPS, as
the effect was anti-dilutive, and were not material in any period presented.
Stock-Based Compensation. Stock-based compensation represents the cost related to stock-based awards granted to employees and non-
employee directors. We measure stock-based compensation cost at the grant date of the award, based on the estimated fair value of the award,
and recognize the cost (net of estimated forfeitures) over the requisite service period.
Income Taxes. We account for income taxes using the asset and liability method. Under this method, income tax expense is recognized for the
amount of taxes payable or refundable for the current year. Deferred tax assets and liabilities are recognized for expected future tax
consequences of temporary differences between the financial reporting and tax basis of assets and liabilities using enacted tax rates in effect for
the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized
in income in the period that includes the enactment date.
53
Accounting Pronouncements Adopted. Effective for the year ended December 31, 2024, we adopted ASU No. 2023-07, Segment Reporting
(Topic 280), (“ASU 2023-07”), which enhances reportable segment disclosure requirements in part by requiring entities to disclose significant
expenses related to their reportable segments. ASU 2023-07 also requires disclosure of the title and position of the company’s Chief Operating
Decision Maker (“CODM”) and how the CODM uses financial reporting to assess segment performance and allocate resources. The adoption of
this standard only impacts disclosures and did not have a material impact on our Financial Statements.
Effective January 1, 2022, we adopted ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. (“ASU
2020-06”), which simplified the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible
instruments and contracts in an entity’s own equity. ASU 2020-06 also amended the related EPS guidance. We adopted ASU 2020-06 using the
modified retrospective transition method and recorded a $9.8 million cumulative-effect adjustment to our accumulated earnings and additional
paid-in capital balances.
Accounting Pronouncements Issued but Not Yet Effective. In December 2023, the Financial Accounting Standards Board ("FASB") issued ASU
No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires entities to disclose more
detailed information about their effective tax rate reconciliation as well as information on income taxes paid. ASU 2023-09 is effective for fiscal
years beginning after December 15, 2024. The adoption of this standard only impacts disclosures and is not expected to have a material impact
on our Financial Statements.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation
Disclosures (Subtopic 220-40) (“ASU 2024-03”), which requires entities to disclose disaggregated information about certain income statement
expense line items in the notes to their financial statements on an annual and interim basis. ASU 2024-03 is effective for fiscal years beginning
after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. We are currently in
the process of evaluating the impact of this ASU on our Financial Statements and related disclosures.
3.
Segment Reporting and Significant Concentration
Segment Information. Our CODM is our President and Chief Executive Officer. We have evaluated how our CODM has organized our Company
for purposes of making operating decisions, preparing budgets and forecasts, setting targets, allocating resources, and assessing performance.
Our CODM manages all business activities on a consolidated basis, and as a result, we have concluded that as of December 31, 2024, there is
one reportable segment.
Our one segment provides solutions and services that help companies around the world monetize and digitally enable the customer experience
by accurately capturing, managing, generating, and optimizing the interactions and revenue associated with their customers. We generate a
substantial percentage of our revenue from customers utilizing Advanced Convergent Platform (“ACP”), a private SaaS platform, and related
solutions (e.g., service technician management, analytics, electronic bill presentment, etc.) within the North American communications markets.
In addition, a smaller portion of our revenue is generated from our public SaaS revenue management and payments platforms, serving customers
globally. In addition, we license certain solutions (e.g., mediation, partner management, rating, and charging) and provide our professional
services to implement, configure, and maintain these solutions. These solutions are sometimes provided under a managed service arrangement,
where we assume long-term responsibility for delivering and maintaining our solutions and related operations under a defined scope and
specified service levels.
The accounting policies of our one segment are the same as those described in the summary of significant accounting policies (see Note 2). As
our one segment is managed on a consolidated basis, our measure of segment profit or loss is consolidated net income. Our CODM uses
consolidated net income to assess the performance of our one segment and decide how and where to allocate resources and reinvest profits into
the business in areas such as R&D, business and/or asset acquisitions, investments in market share expansion with our existing and potential
new customers, talent, technology, the repurchase of our common stock, and/or the payment of dividends. Net income, and components of net
income, are used to monitor actual performance and are compared to budgeted and forecasted results to assess the performance of our one
segment, set targets, and establish management’s incentive compensation. The measure of consolidated segment assets is reported on our
Balance Sheets as total assets. We do not have intra-entity sales or transfers.
54
We regularly provide our CODM a reporting package that shows our results by functional expenses, similar to our Income Statements. However,
for purposes of this reporting package, depreciation is included in these functional expense categories, rather than broken out separately.
Additionally, certain expenses such as restructuring and reorganization charges, executive transition costs, and acquisition-related charges, along
with non-cash charges such as stock-based compensation and amortization of acquired intangibles, are excluded. The following table provides
the significant expenses that are regularly provided to our CODM for our one segment, the required disclosable amounts that are included in
consolidated net income, and a reconciliation to consolidated net income for the following years:
2024
2023
2022
Revenue
$
1,197,248
$
1,169,258
$
1,089,752
Less:
Cost of revenue:
Transaction fees
97,857
87,430
75,679
All other (1)
513,237
530,109
488,934
Total cost of revenue
611,094
617,539
564,613
Research and development (1)
155,638
142,962
137,102
Selling and marketing (1)
114,323
114,207
111,693
General and administrative (1)
116,761
108,823
107,513
Restructuring and reorganization charges (1)
13,323
16,336
46,308
Stock-based compensation
34,385
29,480
27,945
Other segment items (2)
8,983
16,384
17,365
Interest expense
30,469
31,176
16,432
Income tax provision
25,420
26,105
16,721
Segment net income
86,852
66,246
44,060
Reconciliation of profit or loss:
Adjustments and reconciling items
-
-
-
Consolidated net income
$
86,852
$
66,246
$
44,060
(1)
These functional expense lines include depreciation expense, which is presented separately on our Income Statements.
(2)
Other segment items include acquisition-related costs (both transaction-related and amortization of acquired intangible assets),
executive transition costs, interest income, loss on derivative liability upon debt conversion, and foreign currency gains/losses.
Depreciation expense and interest income are separately disclosed on our Income Statements. Amortization expense is separately disclosed on
our Statements of Cash Flows and is discussed in Note 4.
Geographic Concentration. We use the location of the customer as the basis of attributing revenue to geographic location. Revenue from
countries exceeding 10% of our total revenue for the following years were as follows:
2024
2023
2022
United States
$
978,308
$
935,391
$
869,486
All other
218,940
233,867
220,266
Total revenue
$
1,197,248
$
1,169,258
$
1,089,752
Long-lived assets (principally, property and equipment, operating lease right-of-use assets, software, acquired customer contracts, and customer
contract costs) classified by the location of the controlling statutory company for countries exceeding 10% of the total long lived asset balance for
the following years were as follows:
2024
2023
2022
United States
$
172,412
$
175,997
$
210,656
All other
28,462
28,355
33,744
Total long-lived assets
$
200,874
$
204,352
$
244,400
55
Customer Concentration. A large percentage of our revenue is generated from a limited number of customers in the global communications
industry, with our three largest customers being Charter Communications, Inc. (“Charter”), Comcast Corporation (“Comcast”), and DISH Network
L.L.C.
Revenue from customers exceeding 10% of our total revenue for the following years were as follows:
2024
2023
2022
Charter
20 %
21 %
20 %
Comcast
19 %
18 %
20 %
As of December 31, 2024 and 2023, the percentage of net billed accounts receivable balances attributable to these customers were as follows:
As of December 31,
2024
2023
Charter
20 %
23 %
Comcast
17 %
17 %
We expect to continue to generate a large percentage of our future revenue from our significant customers. There are inherent risks whenever a
large percentage of total revenue is concentrated with a limited number of customers. Should a significant customer: (i) terminate or fail to renew
their contracts with us, in whole or in part for any reason; (ii) significantly reduce the number of customer accounts processed on our solutions,
the price paid for our services, or the scope of services that we provide; or (iii) experience financial or operating difficulties, it could have a
material adverse effect on our financial position and results of operations.
4.
Goodwill and Long-Lived Assets
Property and Equipment. Property and equipment as of December 31, 2024 and 2023 consisted of the following (in thousands, except years):
Useful Lives (Years)
December 31,
2024
December 31,
2023
Computer equipment
3-6 $
94,574 $
89,946
Leasehold improvements
10
25,415
27,134
Operating equipment
3-8
67,651
67,825
Furniture and fixtures
8
2,469
2,456
190,109
187,361
Less – accumulated depreciation
(133,514 )
(121,816 )
Property and equipment, net
$
56,595 $
65,545
Goodwill. We do not have any intangible assets with indefinite lives other than goodwill. A rollforward of goodwill for 2023 and 2024 is as follows
(in thousands):
January 1, 2023 balance
$
304,036
Adjustments related to prior acquisitions
(20 )
Impairment charge related to Keydok, LLC
(1,118 )
Effects of changes in foreign currency exchange rates
5,698
December 31, 2023 balance
308,596
Goodwill acquired during the period
10,662
Effects of changes in foreign currency exchange rates
(3,217 )
December 31, 2024, balance
$
316,041
The 2023 impairment charge relates to the decision to dissolve the Keydok, LLC (“Keydok”) business, discussed in Note 8, and the 2024 goodwill
acquired during the period relates to the acquisitions, discussed in Note 7.
56
Other Intangible Assets. Our other intangible assets subject to ongoing amortization consist of acquired customer contracts and software.
Acquired Customer Contracts. As of December 31, 2024 and 2023, the carrying values of our acquired customer contracts were as follows (in
thousands):
December 31, 2024
December 31, 2023
Gross
Carrying
Amount
Accumulated
Amortization
Net Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net Amount
Acquired customer contracts (1)
$
172,656 $ (133,279 ) $
39,377 $
162,348 $ (126,469 ) $
35,879
The aggregate amortization related to acquired customer contracts included in our operations for 2024, 2023, and 2022 was as follows (in
thousands):
2024
2023
2022
Acquired customer contracts amortization (1)
$
11,346 $
9,775 $
11,605
(1)
Acquired customer contracts represent assets acquired in our business acquisitions, to include the 2024 acquisitions discussed in
Note 7. Acquired customer contracts are amortized over their estimated useful lives ranging from five to twenty years based on the
approximate pattern in which the economic benefits of the intangible assets are expected to be realized, with the amortization
expense included as cost of revenue in our Income Statements.
The remaining weighted-average amortization period of the acquired customer contracts as of December 31, 2024 was approximately 71 months.
Based on the net carrying value of these acquired customer contracts, the estimated amortization for each of the five succeeding fiscal years
ending December 31 will be: 2025 – $11.0 million; 2026 – $8.5 million; 2027 – $5.2 million; 2028 – $4.1 million; and 2029 – $3.2 million.
Software. As of December 31, 2024 and 2023, the carrying values of our software assets were as follows (in thousands):
December 31, 2024
December 31, 2023
Gross
Carrying
Amount
Accumulated
Amortization
Net Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net Amount
Acquired software (2)
$
84,283 $
(79,843 ) $
4,440 $
84,031 $
(77,520 ) $
6,511
Internal use software (3)
90,292
(74,805 )
15,487
87,794
(80,081 )
7,713
Total software
$
174,575 $ (154,648 ) $
19,927 $
171,825 $ (157,601 ) $
14,224
The aggregate amortization related to software included in our operations for 2024, 2023, and 2022 was as follows (in thousands):
2024
2023
2022
Acquired software amortization (2)
$
2,668 $
2,410 $
2,750
Internal use software amortization (3)
11,671
13,624
14,140
Total software amortization
$
14,339 $
16,034 $
16,890
(2)
Acquired software represents software and similar intellectual property rights acquired in our business acquisitions, which are
amortized over their estimated useful lives ranging from two to eight years. The amortization of acquired software is reflected as a
cost of revenue in our Income Statements.
(3)
Internal use software represents: (i) third-party software licenses; and (ii) the internal and external costs related to the
implementation of third-party software licenses. Internal use software is amortized over its estimated useful life ranging from one to
ten years.
The remaining weighted-average amortization period of the software intangible assets as of December 31, 2024 was approximately 24 months.
Based on the net carrying value of these intangible assets, the estimated amortization for each of the four succeeding fiscal years ending
December 31 will be: 2025 – $11.4 million; 2026 – $6.7 million; 2027 – $1.7 million; and 2028 – $0.1 million; with the software intangible assets
being fully amortized by the end of 2028.
57
Customer Contract Costs. As of December 31, 2024 and 2023, the carrying values of our customer contract cost assets, related to those
contracts with a contractual term greater than one year, were as follows (in thousands):
December 31, 2024
December 31, 2023
Gross
Carrying
Amount
Accumulated
Amortization
Net Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net Amount
Customer contract incentives (4)
$
5,035 $
(3,183 ) $
1,852 $
7,027 $
(4,935 ) $
2,092
Capitalized costs (5)
82,363
(33,836 )
48,527
71,976
(29,027 )
42,949
Capitalized commission fees (6)
17,998
(7,568 )
10,430
17,512
(8,132 )
9,380
Total customer contract costs
$
105,396 $
(44,587 ) $
60,809 $
96,515 $
(42,094 ) $
54,421
The aggregate amortization related to our customer contract costs included in our operations for 2024, 2023, and 2022 was as follows (in
thousands):
2024
2023
2022
Customer contract incentives amortization (4)
$
748 $
1,136
$
792
Capitalized costs amortization (5)
17,216
15,422
15,918
Capitalized commission fees amortization (6)
3,298
3,733
3,028
Total customer contract costs amortization
$
21,262 $
20,291
$
19,738
(4)
Customer contract incentives consist principally of incentives provided to new or existing customers to convert their customer
accounts to, or retain their customer accounts on, our solutions. Customer contract incentives are amortized ratably over the
contract period to include renewal periods, if applicable, which as of December 31, 2024, have termination dates that range from
2025 to 2030. The amortization of customer contract incentives is reflected as a reduction of revenue in our Income Statements.
(5)
Capitalized costs are related to: (i) customer conversion/set-up activities; and (ii) direct material costs to fulfill long-term revenue
management solutions and managed services arrangements. These costs are amortized over the contract period based on the
transfer of goods or services to which the assets relate, which as of December 31, 2024, range from 2025 to 2036, and are included
in cost of revenue in our Income Statements.
(6)
Capitalized commission fees are incremental commissions paid as a result of obtaining a customer contract. These fees are
amortized over the contract period based on the transfer of goods or services to which the assets relate, which as of December 31,
2024, range from 2025 to 2031, and are included in Selling, General, and Administrative (“SG&A”) expenses in our Income
Statements. Incremental commission fees incurred as a result of obtaining a customer contract are expensed when incurred if the
amortization period of the asset that we otherwise would have recognized is one year or less.
5.
Debt
As of December 31, 2024 and 2023, our long-term debt was as follows (in thousands):
December 31,
2024
December 31,
2023
2023 Convertible Notes:
2023 Convertible Notes – senior unsecured convertible notes, due
September 2028, cash interest at 3.875%
$
425,000 $
425,000
Less – deferred financing costs
(10,618 )
(13,216 )
2023 Convertible Notes, net of unamortized discounts
414,382
411,784
2021 Credit Agreement:
2021 Term Loan, due September 2026, interest at adjusted SOFR plus
applicable margin (combined rate of 5.804% at December 31, 2024)
125,625
133,125
Less – deferred financing costs
(1,510 )
(2,412 )
2021 Term Loan, net of unamortized discounts
124,115
130,713
$450 million revolving loan facility, due September 2026, interest at adjusted
SOFR plus applicable margin
-
-
Total debt, net of unamortized discounts
538,497
542,497
Current portion of long-term debt
(7,500 )
(7,500 )
Long-term debt, net of unamortized discounts
$
530,997 $
534,997
2023 Convertible Notes. In September 2023, we completed an offering of $425.0 million of 3.875% senior convertible notes due September 15,
2028 (the “2023 Convertible Notes”) to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The
2023 Convertible Notes are unsecured obligations and pay 3.875% annual cash interest, payable semiannually in arrears on March 15 and
September 15 of each year.
58
The 2023 Convertible Notes will be convertible at the option of the noteholders before June 15, 2028, upon the occurrence of certain events. On
or after June 15, 2028, and until the close of business on the second scheduled trading day immediately preceding September 15, 2028, the
maturity date, noteholders may convert all or any portion of their notes at any time regardless of these conditions. The 2023 Convertible Notes
will be convertible at a conversion rate of 14.0753 shares of our common stock per $1,000 principal amount of the 2023 Convertible Notes, which
is equivalent to a conversion price of $71.05 per share of our common stock and the conversion rate and conversion price will be subject to
adjustment upon the occurrence of certain events, in accordance with the terms of the indenture. Under the terms of the 2023 Convertible Notes,
the conversion rate is adjusted for any quarterly dividends exceeding $0.28 per share. We are required to satisfy our conversion obligation as
follows: (i) paying cash up to the aggregate principal amount of notes to be converted; and (ii) to the extent the value of our conversion obligation
exceeds the par value, we will satisfy the remaining conversion obligation in our common stock, cash, or a combination thereof, at our election.
As of December 31, 2024, none of the conditions to early convert have been met.
Holders may require us, subject to certain conditions, to repurchase all or a portion of their 2023 Convertible Notes for cash upon the occurrence
of a fundamental change (as defined in the Indenture related to the 2023 Convertible Notes (“2023 Notes Indenture”)). The repurchase price will
be equal to the principal amount thereof plus accrued and unpaid interest to, but excluding, the repurchase date.
We may not redeem the 2023 Convertible Notes prior to September 21, 2026. On or after September 21, 2026, we may redeem for cash all or
part of the 2023 Convertible Notes, subject to a partial redemption limitation that requires at least $100.0 million of the principal amount of the
2023 Convertible Notes to remain outstanding if the last reported sales price of our common stock has been at least 130% of the conversion price
then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day
of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption. The
redemption price will equal the principal amount of the 2023 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but
excluding, the redemption date. No sinking fund has been established for the 2023 Convertible Notes.
The 2023 Notes Indenture includes customary terms, including certain events of default after which the 2023 Convertible Notes may be due and
payable immediately. The 2023 Notes Indenture contains customary affirmative covenants, including a reporting covenant.
In September 2023, in connection with the pricing of the 2023 Convertible Notes, we entered into privately negotiated capped call transactions
(the “Capped Call Transactions”) with certain of the initial purchasers of the 2023 Convertible Notes and other financial institutions (collectively,
the “Option Counterparties”). We used $34.3 million of the net proceeds from the offering of the 2023 Convertible Notes to pay the premiums of
the Capped Call Transactions.
The Capped Call Transactions cover, subject to anti-dilution adjustments substantially similar to those applicable to the 2023 Convertible Notes,
5.98 million shares of our common stock, the same number of shares of common stock underlying the 2023 Convertible Notes. The Capped Call
Transactions will expire upon the maturity of the 2023 Convertible Notes.
The Capped Call Transactions are expected generally to reduce the potential dilution to our common stock upon conversion of the 2023
Convertible Notes and/or offset any cash payments we are required to make in excess of the principal amount of the 2023 Convertible Notes, in
the event that the market price per share of common stock (as measured under the terms of the Capped Call Transactions) is greater than the
strike price of the Capped Call Transactions. The strike price of the Capped Call Transactions initially corresponds to the initial conversion price
of the 2023 Convertible Notes, or $71.05 per share of our common stock, plus any carryforward adjustments not yet effected. The Capped Call
Transactions have an initial cap price of $96.52 per share of our common stock, which represents a premium of 80% over the last reported sale
price of our common stock on the date the 2023 Convertible Notes were issued, subject to certain adjustments under the terms of the Capped
Call Transactions.
The Capped Call Transactions are separate transactions entered into by us with the Option Counterparties. They are not part of the terms of the
2023 Convertible Notes and do not change the holders’ rights under the 2023 Convertible Notes. The Capped Call Transactions do not meet the
criteria for separate accounting as a derivative as they meet the criteria for equity classification. The premiums paid for the Capped Call
Transactions of $34.3 million have been included as a reduction to additional paid-in capital, net of $7.9 million of deferred income taxes.
The proceeds from the sale of the 2023 Convertible Notes, net of financing costs, were $411.0 million. We used the net proceeds to: (i) repay the
principal amount of $275.0 million of outstanding borrowings under our $450.0 million, five-year revolving loan facility; (ii) repurchase 1.7 million
shares of our common stock for $90.1 million in privately negotiated transactions, concurrently with the pricing of the offering of the 2023
Convertible Notes; and (iii) pay the $34.3 million premium for the Capped Call Transactions. The remaining net proceeds were used for general
corporate purposes.
In conjunction with the closing of the 2023 Convertible Notes, we incurred financing costs of $14.0 million which are being amortized to interest
expense using the effective interest method through maturity.
59
2021 Credit Agreement. In September 2021, we entered into a $600.0 million credit agreement (the “2021 Credit Agreement”) with a consortium
of banks to replace our $350.0 million credit agreement (“2018 Credit Agreement”).
The 2021 Credit Agreement provides borrowings in the form of: (i) a $150.0 million aggregate principal five-year term loan (the “2021 Term
Loan”); and (ii) a $450.0 million aggregate principal five-year revolving loan facility (the “2021 Revolver”). With the $150.0 million proceeds from
the 2021 Term Loan, we repaid the outstanding $120.0 million balance of the term loan under the 2018 Credit Agreement, resulting in a net
increase of available cash of $30.0 million, a portion of which we used to pay certain fees and expenses in connection with the refinancing, and
the remainder of which was used for general corporate purposes.
In April 2023, we entered into the First Amendment to the 2021 Credit Agreement (the “First Amendment”). The First Amendment replaced the
interest rate benchmark, from LIBOR to the Secured Overnight Financing Rate ("SOFR"), and all references to “Eurodollar Borrowing(s)” or
“Eurodollar Loans” were replaced with “Term SOFR Borrowing(s)” or “Term SOFR Loans”. All Term SOFR Loans are subject to a 0.10% credit
spread adjustment.
The interest rates under the 2021 Credit Agreement are based upon our choice of an adjusted SOFR rate plus an applicable margin of 1.375% -
2.125%, or an alternate base rate ("ABR") plus an applicable margin of 0.375% - 1.125%, with the applicable margin being determined in
accordance with our then-net secured total leverage ratio. We pay a commitment fee of 0.150% - 0.325% of the average daily unused amount of
the 2021 Revolver, with the commitment fee rate also determined in accordance with our then-net secured total leverage ratio.
The 2021 Credit Agreement contains customary affirmative, negative, and financial covenants that places limits on our ability to: (i) incur
additional indebtedness; (ii) create liens on its property; (iii) make investments; (iv) enter into mergers and consolidations; (v) sell assets; (vi)
declare dividends or repurchase shares; (vii) engage in certain transactions with affiliates; (viii) prepay certain indebtedness; and (ix) issue capital
stock of subsidiaries. We must also meet certain financial covenants to include: (i) a maximum total leverage ratio; (ii) a maximum first-lien
leverage ratio; and (iii) a minimum interest coverage ratio. In conjunction with the 2021 Credit Agreement, we entered into a security agreement
in favor of Bank of America N.A., as collateral agent (the “Security Agreement”). Under the Security Agreement and 2021 Credit Agreement,
certain of our domestic subsidiaries have guaranteed its obligations, and have pledged substantially all of our assets to secure the obligations
under the 2021 Credit Agreement and such guarantees.
During 2024, we made $7.5 million of principal repayments on our 2021 Term Loan. Additionally, during 2024, we borrowed and subsequently
repaid $15.0 million from our 2021 Revolver for general corporate purposes. As of December 31, 2024, we had no borrowings outstanding on our
2021 Revolver, and had issued standby letters of credit of $0.3 million that count against our available 2021 Revolver balance, leaving $449.7
million available to us.
As of December 31, 2024, our interest rate on the 2021 Term Loan was 5.804% (adjusted SOFR, credit spread adjustment of 0.10%, plus
1.375% per annum), effective through March 2025, and our commitment fee on the 2021 Revolver was 0.15%.
In September 2023, we entered into the Second Amendment to the 2021 Credit Agreement (the “Second Amendment”). The Second
Amendment permitted the issuance and sale of the 2023 Convertible Notes and the related Capped Call Transactions (described above). In
conjunction with the Second Amendment, we incurred financing costs of $0.5 million which when combined with the existing deferred financing
costs totaled $3.2 million and is being amortized to interest expense using the effective interest method over the remaining term of the 2021
Credit Agreement.
2016 Convertible Notes. In March 2016, we completed an offering of $230.0 million of 4.25% senior convertible notes due March 15, 2036 (the
“2016 Convertible Notes”) to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended.
In November 2021, we entered into the First Supplemental Indenture to the 2016 Notes Indenture, in which we made an irrevocable election to
settle the par amount in cash. On December 15, 2021, we notified holders of the 2016 Convertible Notes that we elected a cash settlement
method for any conversions of the 2016 Convertible Notes during the period of December 15, 2021 to March 14, 2022. On December 27, 2021,
we notified holders of the 2016 Convertible Notes that we had elected to redeem all of the outstanding notes on March 15, 2022, at a redemption
price of 100% of the principal amount.
During the conversion period, $229.1 million principal amount of the 2016 Convertible Notes were converted. On March 15, 2022, we paid each
converting holder that exercised their conversion right, cash in an amount equal to $1,053.68 per each $1,000 principal amount of 2016
Convertible Notes being converted, for a total cash payment of $241.4 million. The remaining principal amount of $0.9 million that was not
converted by the holders was redeemed and paid for on March 15, 2022 at a redemption price of 100% of the principal amount. Total settlement
of the 2016 Convertible Notes was $242.3 million.
60
As a result of our irrevocable election made in December 2021 to settle all conversions during the conversion period in cash, a derivative liability
was created and required to be separated from the debt upon conversion by the holders. We recognized a $7.5 million loss on derivative liability
upon debt conversion due to the related change in our stock price over the 40 consecutive trading days during the period of January 12, 2022 to
March 10, 2022 (the observation period). The loss was recorded to other income (expense) in our Income Statements with the remaining amount
paid above par of $4.8 million, net of tax, recorded to additional paid-in capital.
Estimated Maturities on Long-Term Debt. As of December 31, 2024, the maturities of our long-term debt, based upon: (i) the maturity date of the
2023 Convertible Notes; and (ii) the mandatory repayment schedule for the 2021 Term Loan, were as follows (in thousands):
2025
2026
2027
2028
Total
2023 Convertible Notes
$
-
$
-
$
-
$ 425,000
$ 425,00
0
2021 Term Loan
7,500
118,125
-
-
125,62
5
Total long-term debt repayments
$
7,500
$
118,125
$
-
$ 425,000
$ 550,62
5
Deferred Financing Costs. As of December 31, 2024, net deferred financing costs related to the 2023 Convertible Notes were $10.6 million and
are being amortized to interest expense through the maturity date of the 2023 Convertible Notes (September 2028). As of December 31, 2024,
net deferred financing costs related to the 2021 Credit Agreement were $1.5 million and are being amortized to interest expense over the related
term of the 2021 Credit Agreement (through September 2026). The net deferred financing costs are presented as a reduction from the carrying
amount of the corresponding debt liability in our Balance Sheets. Interest expense for 2024, 2023, and 2022 includes amortization of deferred
financing costs of $3.7 million, $1.7 million, and $1.0 million, respectively. The weighted-average interest rate on our debt borrowings,
amortization of deferred financing costs, and commitment fees on the revolving loan facility, for 2024, 2023, and 2022, was approximately 5%,
7%, and 4%, respectively.
Other. We finance certain of our internal use software. During 2024, we entered into two additional financing agreements at a total cost of $10.6
million with payments through 2027. As a result, as of December 31, 2024, we had $8.5 million outstanding under these agreements, of which
$4.2 million was included in current liabilities and $4.3 million was included in non-current liabilities in our Balance Sheets. These arrangements
are treated as non-cash investing and financing activities for purposes of our Consolidated Statements of Cash Flows ("Statements of Cash
Flows").
6.
Leases
We have operating leases for: (i) real estate which includes office space and our design and delivery centers; and (ii) our outsourced data center
environment, as discussed further in Note 11. Our leases have remaining terms through 2033, some of which include options to extend the
leases for up to an additional ten years. The exercise of lease renewal options is at our sole discretion. Additionally, certain of our leases include
payments that are adjusted periodically for inflation.
We have made an accounting policy election not to recognize on our Balance Sheets leases with an initial term of twelve months or less, for any
class of underlying asset. We have also made an election for real estate leases not to separate the lease and non-lease components, but rather
account for the entire arrangement as a single lease component. For our outsourced data center environment agreement, we have concluded
that there are lease and non-lease components and have allocated the consideration in the agreement on a relative stand-alone price basis. Due
to the significant assumptions and judgments required in accounting for leases (to include whether a contract contains a lease, the allocation of
the consideration, and the determination of the discount rate), the judgments and estimates made could have a significant effect on the amount of
assets and liabilities recognized.
We sublease certain of our leased real estate to third parties. These subleases have remaining lease terms through 2031.
The components of lease expense for 2024, 2023, and 2022 were as follows (in thousands):
2024
2023
2022
Operating lease expense
$
13,222
$
16,073
$
21,516
Variable lease expense
2,847
3,299
4,103
Short-term lease expense
944
1,115
1,105
Sublease income
(1,746 )
(2,691 )
(2,246 )
Total net lease expense
$
15,267
$
17,796
$
24,478
The decrease in lease expense is due to our flexible work approach that began in 2022 and resulted in the consolidation and closure of office
space at numerous of our leased real estate locations (see Note 8).
61
Other information related to leases for 2024, 2023, and 2022 was as follows (in thousands, except term and discount rate):
2024
2023
2022
Supplemental Cash Flows Information:
Cash paid for amounts included in the
measurement of
operating lease liabilities
$
15,285
$
20,559
$
21,125
Right-of-use assets obtained in exchange for
new
operating lease liabilities
2,348
2,787
3,817
Weighted-average remaining lease term -
operating
leases
65 months
58 months
54 months
Weighted-average discount rate - operating
leases
4.08 %
3.95 %
3.84 %
Future minimum lease payments under non-cancelable leases as of December 31, 2024 were as follows (in thousands):
2025
$
12,274
2026
5,570
2027
5,119
2028
4,933
2029
4,278
Thereafter
8,492
Total future minimum lease payments (1)
40,666
Less: Interest (2)
(4,579 )
Total
$
36,087
Current operating lease liabilities
$
11,067
Non-current operating lease liabilities
25,020
Total
$
36,087
(1)
For leases commencing prior to 2019, minimum lease payments exclude payments for real estate taxes and non-lease
components.
(2)
We use our functional currency adjusted incremental borrowing rate for the discount rate.
During 2023, we entered into a new agreement with our outsourced data center environment provider that is effective in 2025 (see Note 11). As
a result, upon commencement we will evaluate the lease and non-lease components and allocate the consideration between them.
7.
Acquisitions
Current Year Acquisitions. On April 1, 2024, we acquired a customer communication services business that operates in multiple industry
verticals. The acquisition date fair value of the consideration transferred was $15.0 million, which consisted of $11.5 million in cash paid upfront
and a non-cash settlement of working capital items of $3.5 million. The results of this acquisition are included in our results of operations for the
periods subsequent to the acquisition date.
As of December 31, 2024, the purchase accounting for this acquisition was complete. We recorded goodwill of $6.4 million, acquired customer
contracts of $4.3 million, trade accounts receivable of $2.1 million, and liabilities assumed of $2.7 million. The amount allocated to goodwill is
deductible over 15 years for income tax purposes.
On June 3, 2024, we acquired 100% of the equity of iCheckGateway.com, LLC (“iCG”), an ACH and credit card payment processing company.
We acquired iCG to further expand the industry verticals we serve and to provide opportunities for the continued growth of our business. The
acquisition date fair value of the consideration transferred was $17.6 million in cash paid upon close.
The iCG acquisition includes provisions for up to $15.0 million of potential future earn-out payments. The earn-out payments are tied to
performance-based goals and a defined service period and are accounted for as post-acquisition compensation, as applicable. The earn-out
period is through June 3, 2027. As of December 31, 2024, we accrued $5.5 million related to the potential earn-out payments. The results of iCG
are included in our results of operations for the periods subsequent to the acquisition date.
62
As of December 31, 2024, the purchase accounting for this acquisition was complete. We recorded settlement assets of $45.9 million, acquired
customer contracts of $10.7 million, goodwill of $4.2 million, and settlement liabilities assumed of $44.7 million. The amount allocated to goodwill
is deductible over 15 years for income tax purposes.
The cash paid for the acquisitions discussed above, less cash and settlement assets acquired, resulted in net cash provided by business
combinations for 2024 of $17.3 million on our Statements of Cash Flows.
Prior Years Acquisition. On October 4, 2021, we acquired DGIT, a provider of configure, price and quote (CPQ), and order management
solutions for the telecommunications industry. We acquired 100% of the equity of DGIT for a purchase price of approximately $16 million, with
approximately $14 million paid upon close and the remaining consideration of approximately $2 million paid through 2025, subject to certain
reductions, as applicable. During 2024, 2023, and 2022, we made deferred acquisition payments of $0.5 million, $1.2 million, and $0.3 million,
respectively.
The DGIT acquisition includes provisions for up to approximately $13 million of potential future earn-out payments. The earn-out payments are
tied to performance-based goals and a defined service period by the eligible recipients and are accounted for as post-acquisition compensation,
as applicable. During 2024, the earn-out period was extended from September 30, 2025 through December 31, 2026. During 2022, $0.3 million
of the earn-out had been achieved and was paid in 2023. As of December 31, 2024, we have accrued $0.4 million related to the potential future
earn-out payments.
8.
Restructuring and Reorganization Charges
Restructuring and reorganization charges are expenses that generally result from cost reduction initiatives and/or significant changes to our
business, to include such things as involuntary employee terminations, changes in management structure or skillset, divestitures of businesses,
facility consolidations and abandonments, modifications of leases, impairment of acquired intangible assets, and fundamental reorganizations
impacting operational focus and direction. The following are the key restructuring and reorganizational activities we incurred over the last three
years that have impacted our results from operations.
During 2024 we implemented the following restructuring and reorganizational activities:
•
We reduced our global workforce by approximately 300 employees, as part of initiatives to better align and allocate resources to
areas of the business where we have identified growth opportunities. As a result, we incurred restructuring charges related to
involuntary terminations of $10.1 million.
•
We modified a real estate lease in India, resulting in an earlier termination date and the recognition of a $0.2 million gain. We also
recorded $0.7 million of leasehold improvements and computer equipment impairments.
During 2023 we implemented the following restructuring and reorganizational activities:
•
We decided to dissolve the Keydok business which we had acquired in 2021. As a result, we recorded net impairment charges of
$1.2 million, to include the write-off of the acquired goodwill. We also subsequently terminated approximately 30 Mexico-based
employees, which resulted in restructuring charges related to involuntary terminations of $1.6 million.
•
We reduced our workforce by approximately 110 employees, mainly in the U.S., as a result of organizational changes and
efficiencies. As a result, we incurred restructuring charges related to involuntary terminations of $3.5 million.
•
We modified three of our real estate leases, at previously closed locations in India and the U.S., resulting in earlier termination dates
and the recognition of a $4.3 million gain. We also recorded $0.5 million of operating lease right-of-use asset impairments.
•
We exited two reseller agreements that were acquired with the acquisition of Forte Payment Systems, Inc. in 2018. As a result, we
incurred expenses of $9.9 million, of which $1.8 million was paid in 2023 and $5.6 million was paid in 2024, leaving $2.5 million
accrued as of December 31, 2024.
During 2022 we implemented the following restructuring and reorganizational activities:
•
In connection with our flexible work approach, we consolidated or closed office space at 13 of our leased real estate locations in
Australia, India, Sweden, and the U.S., resulting in restructuring charges of $23.1 million related to the impairments of operating
lease right-of-use assets, furniture and fixtures, and leasehold improvements, and $4.4 million of accelerated depreciation.
•
We dissolved the MobileCard business, which we had acquired a controlling interest of in July of 2021. As a result, we recorded net
impairment charges of $7.0 million, to include the write-offs of the remaining acquired intangible assets, goodwill, and the
noncontrolling interest. We also terminated approximately 40 Mexico-based employees, which resulted in restructuring charges
related to involuntary terminations of $0.6 million.
63
•
We reduced our workforce by approximately 100 employees, mainly in the U.S., as a result of organizational changes and
efficiencies, to include a margin improvement initiative that began in the second quarter of 2022. As a result, we incurred
restructuring charges related to involuntary terminations of $7.1 million.
The activities discussed above resulted in total restructuring and reorganizational charges for 2024, 2023, and 2022 of $13.3 million, $16.3
million, and $46.3 million, respectively, which have been reflected as a separate line item in our Income Statements.
The activity in the business restructuring and reorganization reserves during 2024, 2023, and 2022 is as follows (in thousands):
Termination Benefits
Other
Total
January 1, 2022, balance
$
675 $
- $
675
Charged to expense during period
7,720
38,588
46,308
Cash payments
(7,665 )
(4,098 )
(11,763 )
Adjustment for accelerated depreciation
-
(30,121 )
(30,121 )
Adjustment for asset impairments
-
(4,369 )
(4,369 )
Other
1,761
-
1,761
December 31, 2022, balance
2,491
-
2,491
Charged to expense during period
5,128
11,208
16,336
Cash payments
(7,027 )
(5,386 )
(12,413 )
Adjustment for accelerated depreciation
-
(396 )
(396 )
Adjustment for asset impairments
-
(1,675 )
(1,675 )
Adjustment for gain on lease modifications
-
4,349
4,349
Other
842
-
842
December 31, 2023, balance
1,434
8,100
9,534
Charged to expense during period
10,065
3,258
13,323
Cash payments
(11,265 )
(7,855 )
(19,120 )
Adjustment for accelerated depreciation
-
(440 )
(440 )
Adjustment for asset impairments
-
(717 )
(717 )
Adjustment for gain on lease modification
-
174
174
Other
968
-
968
December 31, 2024, balance
$
1,202 $
2,520 $
3,722
As of December 31, 2024, $2.5 million of the business restructuring and reorganization reserves were included in current liabilities.
9.
Income Taxes
Income Tax Provision. The components of net income before income taxes are as follows (in thousands):
2024
2023
2022
Domestic
$
89,166 $
72,769 $
53,251
Australia
(5,722 )
854
(5,851 )
India
12,537
10,008
9,517
Ireland
(297 )
(236 )
(3,391 )
United Kingdom
7,105
2,029
2,533
Foreign other
9,483
6,927
4,722
Total
$
112,272 $
92,351 $
60,781
64
The income tax provision consists of the following (in thousands):
2024
2023
2022
Current:
Federal
$
28,602 $
34,438 $
30,012
State
6,483
8,230
6,517
Australia
(474 )
(333 )
55
India
2,977
3,601
4,370
Ireland
548
336
273
United Kingdom
867
1,002
349
Foreign other
2,920
2,391
2,772
41,923
49,665
44,348
Deferred:
Federal
(2,596 )
(19,687 )
(21,962 )
State
(10,741 )
(1,982 )
(3,073 )
Australia
(1,629 )
(896 )
(890 )
India
655
(1,231 )
(1,388 )
Ireland
(223 )
(205 )
(341 )
United Kingdom
(2,774 )
(233 )
469
Foreign other
805
674
(442 )
(16,503 )
(23,560 )
(27,627 )
Total income tax provision
$
25,420 $
26,105 $
16,721
The effective tax rates in the various foreign jurisdictions differ from the statutory rates due primarily to changes in valuation allowances on
deferred tax assets, withholding taxes incurred, foreign tax credit utilization, and the impact of foreign exchange recognition on certain
intercompany loans.
The difference between our income tax provision computed at the statutory Federal income tax rate and our financial statement income tax
provision is summarized as follows (in thousands):
2024
2023
2022
Provision at Federal rate of 21%
$
23,577 $
19,394 $
12,764
State income taxes, net of Federal impact
2,526
4,485
2,079
Research and experimentation credits
(1,601 )
(1,053 )
(1,560 )
Stock award vesting
159
(554 )
(1,355 )
Tax uncertainties
(323 )
(289 )
(227 )
Section 162(m) compensation limitation
2,389
2,955
2,326
Foreign rate differential
1,229
987
571
Valuation allowance for deferred tax assets
(2,599 )
(1,655 )
638
Withholding tax
2,701
2,728
1,948
FMLA Credit
(174 )
(112 )
(245 )
Foreign tax credit
(2,712 )
(36 )
-
Other impact of foreign operations
(131 )
256
422
Statutory rate change
(457 )
111
303
Convertible debt premium
-
-
(1,017 )
Other
836
(1,112 )
74
Total income tax provision
$
25,420 $
26,105 $
16,721
We have undistributed earnings of approximately $88 million from certain foreign subsidiaries. We intend to indefinitely reinvest these foreign
earnings; therefore, a provision has not been made for foreign withholding taxes that might be payable upon remittance of such earnings.
Determination of the amount of unrecognized deferred tax liability on unremitted foreign earnings is not practicable because of the complexities of
the hypothetical calculation.
Deferred Income Taxes. Net deferred income tax assets as of December 31, 2024 and 2023 are as follows (in thousands):
2024
2023
Deferred income tax assets
$
125,057
$
109,536
Deferred income tax liabilities
(28,889 )
(25,351 )
Valuation allowance
(22,967 )
(26,453 )
Net deferred income tax assets
$
73,201
$
57,732
65
The components of our net deferred income tax assets (liabilities) as of December 31, 2024 and 2023 are as follows (in thousands):
2024
2023
Net deferred income tax assets (liabilities):
Accrued expenses and reserves
$
9,472
$
10,907
Stock-based compensation
6,753
5,643
Software
(509 )
80
Client contracts and related intangibles
(10,419 )
(7,536 )
Goodwill
(16,638 )
(14,874 )
Net operating loss carryforwards
23,668
25,379
Property and equipment
(1,323 )
(2,941 )
Deferred revenue
6,373
6,539
Debt financing
6,010
7,396
Foreign exchange gain/loss
1,512
2,010
Operating lease right-of-use assets and lease liabilities
2,763
3,555
Research and Development
66,178
46,817
Unrecognized tax benefit
413
326
Credits and incentives
1,672
384
Other
243
500
Total net deferred income tax assets
96,168
84,185
Less: valuation allowance
(22,967 )
(26,453 )
Net deferred income tax assets
$
73,201
$
57,732
Beginning January 1, 2022, certain R&D expenditures are required to be capitalized in accordance with Section 174 of the Internal Revenue
Code, as amended by the Tax Cuts and Jobs Act of 2017, and amortized over a 5-year period if incurred domestically or a 15-year period if
incurred outside the U.S. Of the total R&D related deferred income tax assets as of December 31, 2024, $65.7 million is attributable to
capitalized R&D (net of applicable amortization) with the remaining amount attributable to foreign and state R&D credits.
We regularly assess the likelihood of the future realization of our deferred income tax assets. To the extent we believe that it is more likely than
not that a deferred income tax asset will not be realized, a valuation allowance is established. As of December 31, 2024, we believe we will
generate sufficient taxable income in the future such that we will realize 100% of the benefit of our U.S. Federal deferred income tax assets, thus
no valuation allowance has been established. As of December 31, 2024, we have net state and foreign deferred income tax assets (net of federal
benefit related to state and foreign income tax jurisdictions) of $0.3 million and $34.2 million, respectively, and have established valuation
allowances against those state and foreign income tax deferred income tax assets of $0.4 million and $21.3 million, respectively.
As of December 31, 2024 and 2023, we have an acquired U.S. Federal net operating loss (“NOL”) carryforward of approximately $2.0 million and
$8.0 million, respectively, which will begin to expire in 2029 and can be utilized through 2033. The acquired U.S. Federal NOL carryforward is
attributable to the pre-acquisition periods of acquired businesses. The annual utilization of this U.S. Federal NOL carryforward is limited pursuant
to Section 382 of the Internal Revenue Code of 1986, as amended. In addition, as of December 31, 2024 and 2023, we have: (i) state NOL
carryforwards of approximately $31.0 million and $29.0 million, respectively, which will expire beginning in 2025 with a portion of the losses
available over an indefinite period of time; and (ii) foreign subsidiary NOL carryforwards of approximately $98.0 million and $102.0 million,
respectively, which will expire beginning in 2031, with a portion of the losses available over an indefinite period of time.
Pillar Two. Numerous foreign jurisdictions have enacted or are in the process of enacting legislation to adopt a minimum effective tax rate. Pillar
Two, which was established by the Organization for Economic Co-operation and Development (OECD), generally provides for a 15 percent
minimum effective tax rate for multinational enterprises in every jurisdiction in which they operate. The U.S. has not yet adopted Pillar Two,
however, various governments around the world have adopted, some of which are effective for tax periods beginning on or after December 31,
2023. We considered the applicable tax law changes on Pillar Two implementation in the relevant countries, and there is no material impact to
our tax provision for the year ended December 31, 2024. We will continue to evaluate the impact of these tax law changes on future reporting
periods.
Accounting for Uncertainty in Income Taxes. We are required to estimate our income tax liability in each jurisdiction in which we operate,
including U.S. Federal, state, and foreign income tax jurisdictions. Various judgments and estimates are required in evaluating our tax positions
and determining our provisions for income taxes. There are certain transactions and calculations for which the ultimate income tax determination
may be uncertain. In addition, we may be subject to examination of our income tax returns by various foreign, federal, state, or local tax
authorities, which could result in adverse outcomes. For these reasons, we establish a liability associated with unrecognized tax benefits based
on estimates of whether additional taxes and interest may be due. This liability is adjusted based upon changing facts and circumstances, such
as the closing of a tax audit, the expiration of a statute of limitations or the refinement of an estimate.
66
A reconciliation of the beginning and ending balances of our liability for unrecognized tax benefits is as follows (in thousands):
2024
2023
2022
Balance, beginning of year
$
1,858 $
2,562 $
2,929
Additions related to prior acquisitions
-
-
2
Lapse of statute of limitations
(692 )
(409 )
5
Additions for tax positions of prior years
-
100
8
Reductions for tax positions of prior years
(54 )
(395 )
(382 )
Balance, end of year
$
1,112 $
1,858 $
2,562
We recognize interest and penalty expense associated with our liability for unrecognized tax benefits as a component of income tax expense in
our Income Statements. In addition to the $1.1 million, $1.9 million, and $2.6 million of liability for unrecognized tax benefits as of December 31,
2024, 2023, and 2022, we had $1.3 million, $0.9 million, and $0.6 million, respectively, of income tax-related accrued interest, net of any federal
benefit of deduction. If recognized, the $1.1 million of unrecognized tax benefits as of December 31, 2024, would favorably impact our effective
tax rate in future periods.
We file income tax returns in the U.S. Federal jurisdiction, various U.S. state and local jurisdictions, and many foreign jurisdictions. The U.S.,
U.K., India, and Australia are the primary taxing jurisdictions in which we operate. The years open for audit vary depending on the taxing
jurisdiction. We estimate that it is reasonably possible that the amount of gross unrecognized tax benefits will decrease by up to $0.6 million over
the next twelve months due to completion of tax audits and the expiration of statute of limitations.
10.
Employee Retirement Benefit Plans
We sponsor a defined contribution plan covering substantially all of our U.S.-based employees. Eligible participants may defer up to 100% of
their eligible pay, subject to certain limitations, as pre-tax, Roth, or traditional after-tax contributions. We make certain matching, and at our
discretion, non-elective employer contributions to the plan. All contributions are subject to certain IRS limits. The expense related to these
contributions for 2024, 2023, and 2022 was $12.9 million, $12.8 million, and $13.2 million, respectively. We also have defined contribution-type
plans for certain of our non-U.S.-based employees. The total contributions made to these plans in 2024, 2023, and 2022 were $9.5 million, $7.7
million, and $6.6 million, respectively.
11.
Commitments, Guarantees and Contingencies
Service Agreements. We have an agreement with Ensono, Inc. (“Ensono”) to provide us with outsourced computing services through September
30, 2028. We outsource the computer processing and related services required for the operation of our SaaS platforms. Our proprietary software
and other software applications are run in an outsourced data center environment in order to obtain the necessary computer processing capacity
and other computer support services without us having to make the substantial capital and infrastructure investments that would be necessary for
us to provide these services internally. Our customers are connected to the outsourced data center environment through a combination of private
and commercially provided networks. Our SaaS platforms are generally considered to be mission critical customer management systems by our
customers. As a result, we are highly dependent upon Ensono for system availability, security, and response time.
Guarantees. In the ordinary course of business, we may provide guarantees in the form of bid bonds or performance bonds. As of December 31,
2024, we had $1.7 million of restricted assets used to collateralize these guarantees, which are included in other non-current assets in our
Balance Sheets.
We have performance guarantees in the form of surety bonds and standby letters of credit, along with money transmitter bonds, issued through
third-parties that are not required to be on our Balance Sheets. As of December 31, 2024, we had performance guarantees of $4.2 million, which
includes $0.3 million in standby letters of credit and $0.1 million in bid bonds. We are ultimately liable for claims that may occur against these
guarantees. We have no history of material claims or are aware of circumstances that would require us to pay under any of these arrangements.
We also believe that the resolution of any claim that may arise in the future, either individually or in the aggregate, would not be material to our
Financial Statements. As of December 31, 2024, we had total aggregate money transmitter bonds of $24.8 million outstanding. These money
transmitter bonds are for the benefit of various states to comply with the states’ financial requirements and industry regulations for money
transmitter licenses.
67
Warranties. We generally warrant that our solutions and related offerings will conform to published specifications, or to specifications provided in
an individual customer arrangement, as applicable. The typical warranty period is 90 days from the date of acceptance of the solution or offering.
For certain service offerings we provide a warranty for the duration of the services provided. We generally warrant that those services will be
performed in a professional and skillful manner. The typical remedy for breach of warranty is to correct or replace any defective deliverable, and
if not possible or practical, we will accept the return of the defective deliverable and refund the amount paid under the customer arrangement that
is allocable to the defective deliverable. Our contracts also generally contain limitation of damages provisions in an effort to reduce our exposure
to monetary damages arising from breach of warranty claims. Historically, we have incurred minimal warranty costs, and as a result, do not
maintain a warranty reserve.
Solution and Services Indemnifications. Arrangements with our customers generally include an indemnification provision that will indemnify and
defend a customer in actions brought against the customer that claim our products and/or services infringe upon a copyright, trade secret, or valid
patent. Historically, we have not incurred any significant costs related to such indemnification claims, and as a result, do not maintain a reserve
for such exposure.
Claims for Company Non-performance. Our arrangements with our customers typically limit our liability for breach to a specified amount of the
direct damages incurred by the customer resulting from the breach. From time-to-time, these arrangements may also include provisions for
possible liquidated damages or other financial remedies for our non-performance, or in the case of certain of our solutions, provisions for
damages related to service level performance requirements. The service level performance requirements typically relate to system availability
and timeliness of service delivery. As of December 31, 2024, we believe we have adequate reserves, based on our historical experience, to
cover any reasonably anticipated exposure as a result of our nonperformance for any past or current arrangements with our customers.
Sales and Use Tax. In the ordinary course of business, we are, from time to time, subject to audits performed by state taxing authorities. We
continually assess our sales and use tax exposure and as of December 31, 2024, we believe that we have adequate reserves to cover any taxes
owed and related penalties and interest. While we believe that the assumptions and estimates used to determine these liabilities are reasonable,
the ultimate outcome of these matters cannot be certain, and we will adjust these estimated liabilities as new information becomes available.
Indemnifications Related to Officers and the Board of Directors. Other guarantees include promises to indemnify, defend, and hold harmless our
directors, and certain officers. Such indemnification covers any expenses and liabilities reasonably incurred by a person, by reason of the fact
that such person is, was, or has agreed to be a director or officer, in connection with the investigation, defense, and settlement of any threatened,
pending, or contemplated action, suit, proceeding, or claim. We maintain directors’ and officers’ (“D&O”) insurance coverage to protect against
such losses. We have not historically incurred any losses related to these types of indemnifications and are not aware of any pending or
threatened actions or claims against any officer or member of our Board of Directors (the “Board”). As a result, we have not recorded any
liabilities related to such indemnifications as of December 31, 2024. In addition, as a result of the insurance policy coverage, we believe these
indemnification agreements are not significant to our results of operations.
Legal Proceedings. From time-to-time, we are involved in litigation relating to claims arising out of our operations in the normal course of
business.
12.
Stockholders’ Equity
Stock Repurchase Program. We currently have a stock repurchase program, approved by our Board, authorizing us to repurchase shares of our
common stock from time-to-time as market and business conditions warrant (the “Stock Repurchase Program”).
During 2024, we repurchased approximately 1,185,000 shares of our common stock for $57.8 million (weighted–average price of $48.79 per
share) under a Securities and Exchange Commission (“SEC”) Rule 10b5-1 Plan. During 2023, we repurchased approximately 508,000 shares of
our common stock for $27.0 million (weighted-average price of $53.15 per share) under a SEC Rule 10b5-1 Plan, and approximately 1,680,000
shares of our common stock for $90.1 million (weighted-average price of $53.62 per share) concurrent with the pricing of the offering of the 2023
Convertible Notes. During 2022, we repurchased approximately 1,497,000 shares of our common stock for $87.9 million (weighted-average price
of $58.71 per share) under a SEC Rule 10b5-1 Plan.
The excise tax imposed as part of the 2022 Inflation Reduction Act, which is included as a cost of treasury stock, is not reflected in the share
repurchase amounts above.
In 2024, our Board authorized an additional $100.0 million of repurchases under the Stock Repurchase Program. This, combined with the
remaining value from the prior Board authorization in 2023, leaves $138.0 million remaining value of shares available for repurchase at December
31, 2024, with the amount authorized for repurchase through December 31, 2025.
68
Stock Repurchases for Tax Withholdings. In addition to the above-mentioned stock repurchases, during 2024, 2023, and 2022, we repurchased
and then cancelled approximately 177,000 shares, 182,000 shares, and 138,000 shares for $9.4 million, $10.2 million, and $8.7 million,
respectively, of common stock from our employees in connection with minimum tax withholding requirements resulting from the vesting of
restricted stock under our stock incentive plans.
Cash Dividend. During 2024, 2023, and 2022 our Board approved total cash dividends of $1.20 per share, $1.12 per share, and $1.06 per share
of common stock, totaling $34.8 million, $34.3 million, and $33.7 million, respectively. As of December 31, 2024 and 2023, we had $10.3 million
and $2.1 million, respectively, of dividends accrued, which are included in other current and non-current liabilities in our Balance Sheets. The
increase in accrued dividends for 2024 relates primarily to our fourth quarter of 2024 dividends that were declared in December, but will be paid in
January 2025.
Warrants. In July 2014, in conjunction with the execution of an amendment to our agreement with Comcast, we issued stock warrants for the
right to purchase up to 2.9 million shares of our common stock (the “Stock Warrants”) as an additional incentive for Comcast to convert customer
accounts onto our solutions based on various milestones. The Stock Warrants had a ten-year term and an exercise price of $26.68 per warrant.
Of the total Stock Warrants issued, 1.9 million Stock Warrants vested and were exercised. In July 2024, the remaining 1.0 million issued and
unvested Stock Warrants expired.
13.
Equity Compensation Plans
Stock Incentive Plan. Our stockholders have approved the issuance of up to 27.9 million shares under the Amended and Restated 2005 Stock
Incentive Plan (the “2005 Plan”). Shares reserved under the 2005 Plan can be granted to officers and other key employees of our Company and
its subsidiaries and to non-employee directors of our Company in the form of stock options, stock appreciation rights, performance unit awards,
restricted stock awards, or stock bonus awards. Shares granted in the form of a performance unit award, restricted stock award, or stock bonus
award are counted toward the aggregate number of shares of common stock available for issuance under the 2005 Plan as two shares for every
one share granted or issued in payment of such award. As of December 31, 2024, 4.5 million shares were available for issuance, with 4.0 million
shares available for grant.
Restricted Stock. We generally issue new shares (versus treasury shares) to fulfill restricted stock award grants. Restricted stock awards are
granted at no cost to the recipient.
Time-Based Awards
We issue restricted stock awards that vest annually over a period of time (generally over two to four years) with no restrictions other than the
passage of time (i.e., the shares are released upon calendar vesting with no further restrictions) (“Time-Based Awards”). Unvested Time-Based
Awards are typically forfeited and cancelled upon termination of employment with our Company. Certain Time-Based Awards may vest (i.e.,
vesting accelerates) upon the involuntary termination of employment, a change in control (as defined) and the subsequent involuntary termination
of employment, or death. The fair value of the Time-Based Awards (determined by using the closing market price of our common stock on the
grant date) is charged to expense on a straight-line basis over the requisite service period for the entire award.
A summary of our unvested Time-Based Awards activity during 2024 is as follows (shares in thousands):
Shares
Weighted-Average Grant Date
Fair Value
Unvested awards, beginning
839 $
52.96
Awards granted
559
50.00
Awards forfeited/cancelled
(108 )
53.16
Awards vested
(404 )
52.15
Unvested awards, ending
886 $
51.44
Performance-Based Awards
We also issue restricted stock awards to key members of management that vest upon meeting pre-established financial and operational
performance objectives (“Performance-Based Awards”) over a defined measurement period. The structure of the performance goals for the
Performance-Based Awards has been approved by our stockholders. Certain Performance-Based Awards may vest (i.e., vesting accelerates)
upon the involuntary termination of employment or a change in control (as defined) and the subsequent involuntary termination of employment.
The fair value of the Performance-Based Awards (determined by using the closing market price of our common stock on the grant date) is
charged to expense on a straight-line basis over the performance period (generally two years), based on the probability of achievement of the
performance condition.
69
A summary of our unvested Performance-Based Awards activity during 2024 is as follows (shares in thousands):
Shares
Weighted-Average Grant Date
Fair Value
Unvested awards, beginning
280 $
57.24
Awards granted
140
53.03
Awards forfeited/cancelled
(33 )
53.10
Awards vested
(107 )
63.00
Unvested awards, ending
280 $
52.81
Market-Based Awards
In 2022, we began issuing restricted stock awards to key members of management which vest upon the achievement of specified Company
market valuations and conditions ("Market-Based Awards"). The majority of our outstanding Market-Based Awards vest upon meeting a relative
total shareholder return performance achievement tier over a three-year measurement period. Additionally, during 2024, we issued an award of
approximately 74,000 shares to our President and Chief Executive Officer, which vests contingent upon the achievement of predetermined share
price thresholds over a five-year period, subject to time-based service vesting conditions. Certain Market-Based Awards may vest (i.e., vesting
accelerates) upon the involuntary termination of employment or a change in control (as defined) and the subsequent involuntary termination of
employment. The fair value of the Market-Based Awards (determined using a Monte Carlo valuation method) is charged to expense on a
straight-line basis over the performance period or the estimated service period, if applicable.
A summary of our unvested Market-Based Awards activity during 2024 is as follows (shares in thousands):
Shares
Weighted-Average Grant Date
Fair Value
Unvested awards, beginning
128 $
49.94
Awards granted
127
45.89
Awards forfeited/cancelled
(65 )
41.42
Unvested awards, ending
190 $
50.17
The weighted-average grant date fair value per share of restricted stock shares granted during 2024, 2023, and 2022 was $49.94, $52.09, and
$63.25, respectively. The total market value of restricted stock shares vesting during 2024, 2023, and 2022 was $26.6 million, $28.0 million, and
$26.4 million, respectively.
1996 Employee Stock Purchase Plan. As of December 31, 2024, we have an employee stock purchase plan whereby 2.9 million shares of our
common stock have been reserved for sale to our U.S. employees through payroll deductions. The price for shares purchased under the plan is
85% of the market value on the last day of the purchase period. Purchases are made at the end of each month. During 2024, 2023, and 2022,
74,615 shares, 73,982 shares, and 58,362 shares, respectively, were purchased under the plan for $3.1 million ($34.99 to $46.59 per share),
$3.3 million ($39.83 to $50.72 per share), and $3.0 million ($44.95 to $55.46 per share), respectively. As of December 31, 2024, 1.0 million
shares remain eligible for purchase under the plan.
Stock-Based Compensation Expense. We recorded stock-based compensation expense of $33.6 million, $29.0 million, and $27.2 million,
respectively, for 2024, 2023, and 2022. As of December 31, 2024, there was $41.2 million of total compensation cost related to unvested awards
not yet recognized. This amount, excluding the impact of forfeitures, is expected to be recognized over a weighted-average period of 3.0 years.
We recorded a deferred income tax benefit related to stock-based compensation expense during 2024, 2023, and 2022, of $6.9 million, $6.0
million, and $5.7 million, respectively. The actual income tax benefit realized for the tax deductions from the vesting of restricted stock for 2024,
2023, and 2022, totaled $5.3 million, $4.8 million, and $4.5 million, respectively.
70
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A.
Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b), our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), conducted an
evaluation as of the end of the period covered by this report of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-
15(e). Based on that evaluation, the CEO and CFO concluded that our disclosure controls and procedures were effective as of the end of the
period covered by this report.
(b) Management’s Report on Internal Control over Financial Reporting
As required by Rule 13a-15(d), our management, including the CEO and CFO, also conducted an evaluation of our internal control over financial
reporting, as defined by Rule 13a-15(f). Management’s Report on Internal Control over Financial Reporting is located at the front of Part II, Item 8
of this report.
(c) Attestation Report of the Independent Registered Public Accounting Firm
Our independent registered public accounting firm issued an attestation report on the effectiveness of our internal control over financial reporting
as of December 31, 2024. KPMG LLP’s report is located immediately following Management’s Report on Internal Control over Financial
Reporting at the front of Part II, Item 8 of this report.
(d) Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of
Exchange Act Rules 13a-15 or 15d-15 that occurred during the fourth quarter of 2024 that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
Item 9B.
Other Information
(b) Rule 10b5-1 Trading Plans
During the three months ended December 31, 2024, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act)
adopted, modified, or terminated any contract, instruction, or written plan for the purchase or sale of our securities that was intended to satisfy the
affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or any "non-Rule 10b5-1 trading arrangement" as defined in Item 408(c)
of Regulation S-K.
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspection
Not applicable.
71
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
See the Proxy Statement for our 2025 Annual Meeting of Stockholders, from which information regarding directors is incorporated herein by
reference. Information regarding our executive officers will be omitted from such proxy statement and is furnished in a separate item captioned
‘‘Information about our Executive Officers’’ included at the end of Part I of this Form 10-K.
Item 11.
Executive Compensation
See the Proxy Statement for our 2025 Annual Meeting of Stockholders, from which information in response to this Item is incorporated herein by
reference.
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
See the Proxy Statement for our 2025 Annual Meeting of Stockholders, from which information required by this Item is incorporated herein by
reference.
Item 13.
Certain Relationships and Related Transactions, and Director Independence
See the Proxy Statement for our 2025 Annual Meeting of Stockholders, from which information in response to this Item is incorporated herein by
reference.
Item 14.
Principal Accounting Fees and Services
See the Proxy Statement for our 2025 Annual Meeting of Stockholders, from which information in response to this Item is incorporated herein by
reference.
PART IV
Item 15.
Exhibits, Financial Statement Schedules
(a) Financial Statements, Financial Statement Schedules, and Exhibits
(1) Financial Statements
The financial statements filed as part of this report are listed on the Index to Consolidated Financial Statements on page
37.
(2) Financial Statement Schedules
None. Any information required in the Financial Statement Schedules is provided in sufficient detail in our Financial
Statements and notes thereto.
(3) Exhibits
Exhibits are listed in the Exhibit Index on page 72.
The Exhibits include management contracts, compensatory plans and arrangements required to be filed as exhibits to
the Form 10-K by Item 601 of Regulation S-K.
(b) Exhibits
The Exhibits filed or incorporated by reference herewith are as specified in the Exhibit Index.
Item 16.
Form 10-K Summary
None.
72
EXHIBIT INDEX
Exhibit
Number
Description
2.10 (7)
Implementation Agreement between CSG Systems International, Inc. and Intec
3.01 (1)
Restated Certificate of Incorporation of the Company (P)
3.02 (31)
Amended and Restated Bylaws of CSG Systems International, Inc.
3.03 (2)
Certificate of Amendment of Restated Certificate of Incorporation of CSG Systems International, Inc.
3.04 (37)
Certificate of Amendment of Restated Certificate of Incorporation of CSG Systems International, Inc.
4.01 (1)
Form of Common Stock Certificate (P)
4.20 (38)
Indenture, dated as of September 11, 2023, between CSG Systems International, Inc. and U.S. Bank Trust Company,
National Association, as trustee
4.25 (38)
Form of 3.875% Convertible Senior Note due 2028 (included as Exhibit A in Exhibit 4.20)
4.60 (25)
$600.0 million Amended and Restated Credit Agreement dated September 13, 2021, among CSG Systems
International, Inc., as Borrower, the Subsidiary Guarantors Party Hereto, Bank of America, N.A., as Administrative
Agent, Collateral Agent, Swingline Lender and an Issuing Bank, Wells Fargo Bank, National Association, as
Syndication Agent, BBVA, USA and U.S. Bank National Association, as Co-Documentation Agents, the Lenders Party
Hereto, and the Other Issuing Banks Party Hereto BofA Securities, Inc. and Wells Fargo Securities, LLC, as Joint
Lead Arrangers and Joint Bookrunners
4.60A (34)
First Amendment to Amended and Restated Credit Agreement
4.60B (39)
Second Amendment to Amended and Restated Credit Agreement, dated September 5, 2023
4.90 (17)
Description of Capital Stock
10.02 (29)+
Third Amended and Restated 1996 Employee Stock Purchase Plan, as adopted on May 18, 2022
10.04 (36)+
CSG Systems International, Inc. Amended and Restated 2005 Stock Incentive Plan, as amended on May 17, 2023
10.05 (8)+
CSG Systems International, Inc. Performance Bonus Program, as amended on August 14, 2007
10.06 (5)+
CSG Systems International, Inc. 2001 Stock Incentive Plan, as amended August 14, 2007
10.15 (6)+
Form of Indemnification Agreement between CSG Systems International, Inc. and Directors and Executive Officers
10.16 (4)+
Indemnification Agreement between CSG Systems International, Inc. and Mr. Ronald Cooper, dated November 16,
2006
10.25** (37)
Amended and Restated CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and
Charter Communications Operating, LLC
10.26* (9)
Consolidated CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and Charter
Communications Operating, LLC
10.26A* (9)
Second Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26B* (9)
Third Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG Systems,
Inc. and Charter Communications Operating, LLC
10.26C* (9)
Fourth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26D (10)
First Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG Systems,
Inc. and Charter Communications Operating, LLC
10.26E* (10)
Fifth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG Systems,
Inc. and Charter Communications Operating, LLC
10.26F* (10)
Sixth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG Systems,
Inc. and Charter Communications Operating, LLC
10.26G* (10)
Eighth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26H* (10)
Ninth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG Systems,
Inc. and Charter Communications Operating, LLC
10.26I (10)
Tenth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26J* (11)
Eleventh Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26K* (12)
Thirteenth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26L* (12)
Fifteenth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26M* (12)
Seventeenth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26N* (12)
Eighteenth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26O* (13)
Seventh Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26P* (13)
Twelfth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26Q* (13)
Fourteenth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26R* (13)
Nineteenth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26S* (14)
Twentieth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26T* (15)
Twenty-Second Amendment to Consolidated CSG Master Subscriber Management System Agreement between
CSG Systems, Inc. and Charter Communications Operating, LLC
10.26U* (15)
Twenty-Fourth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26V* (15)
Twenty-Fifth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26W* (15)
Twenty-Sixth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26X* (15)
Twenty-Seventh Amendment to Consolidated CSG Master Subscriber Management System Agreement between
CSG Systems, Inc. and Charter Communications Operating, LLC
10.26Y* (15)
Twenty-Eighth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26Z* (16)
Twenty-Third Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26AA* (16)
Thirty-First Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26AB* (16)
Thirty-Second Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
73
74
10.26AC* (16)
Thirty-Third Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26AD* (16)
Thirty-Fourth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26AE* (17)
Thirty-Fifth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26AF* (18)
Thirty-Seventh Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26AG* (18)
Thirty-Eighth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26AH* (19)
Twenty-First Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26AI* (19)
Thirty-Ninth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26AJ* (19)
Fortieth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26AK* (21)
Forty-First Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26AL* (21)
Forty-Second Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26AM* (22)
Forty-Fifth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26AN* (22)
Forty-Sixth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26AO* (22)
Forty-Seventh Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26AP* (23)
Forty-Eighth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26AQ* (23)
Forty-Ninth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26AR* (23)
Forty-Ninth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26AS* (24)
Fifty-First Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26AT* (24)
Fifty-Second Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26AU* (24)
Fifty-Third Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26AV* (25)
Fifty-Fifth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26AW* (27)
Fifty-Seventh Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26AX* (27)
Fifty-Eighth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26AY* (27)
Fifty-Ninth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26AZ* (28)
Sixty-First Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26BA* (28)
Sixty-Third Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26BB* (30)
Sixty-Fifth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26BC* (32)
Sixty-Fourth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26BD* (32)
Sixty-Seventh Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26BE* (33)
Sixty-Eighth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26BF* (33)
Seventieth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26BG* (33)
Seventy-First Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26BH* (33)
Seventy-Second Amendment to Consolidated CSG Master Subscriber Management System Agreement between
CSG Systems, Inc. and Charter Communications Operating, LLC
10.26BI* (33)
Seventy-Third Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.26BJ* (35)
Sixtieth Amendment to Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.27* (17)
CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and Comcast Cable
Communications Management, LLC
10.27A* (17)
CD Addendum to CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and
Comcast Cable Communications Management, LLC
10.27B* (18)
First Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and
Comcast Cable Communications Management, LLC
10.27C* (22)
Second Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc.
and Comcast Cable Communications Management, LLC
10.27D* (23)
Third Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and
Comcast Cable Communications Management, LLC
10.27E* (24)
Fourth Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and
Comcast Cable Communications Management, LLC
10.27F* (24)
Fifth Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and
Comcast Cable Communications Management, LLC
10.27G* (24)
Fifth Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and
Comcast Cable Communications Management, LLC
10.27H* (24)
Eighth Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and
Comcast Cable Communications Management, LLC
10.27I* (25)
Seventh Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc.
and Comcast Cable Communications Management, LLC
10.27J* (25)
Ninth Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and
Comcast Cable Communications Management, LLC
10.27K* (27)
Tenth Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and
Comcast Cable Communications Management, LLC
10.27L* (27)
Eleventh Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc.
and Comcast Cable Communications Management, LLC
75
76
10.27M* (27)
Twelfth Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc.
and Comcast Cable Communications Management, LLC
10.27N* (27)
Thirteenth Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc.
and Comcast Cable Communications Management, LLC
10.27O* (28)
Fourteenth Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc.
and Comcast Cable Communications Management, LLC
10.27P* (28)
Fifteenth Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc.
and Comcast Cable Communications Management, LLC
10.27Q* (28)
Sixteenth Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc.
and Comcast Cable Communications Management, LLC
10.27R* (28)
Seventeenth Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems,
Inc. and Comcast Cable Communications Management, LLC
10.27S* (28)
Eighteenth Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc.
and Comcast Cable Communications Management, LLC
10.27T* (28)
Nineteenth Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc.
and Comcast Cable Communications Management, LLC
10.27U* (37)
Twentieth Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc.
and Comcast Cable Communications Management, LLC
10.27V* (37)
Twenty-First Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems,
Inc. and Comcast Cable Communications Management, LLC
10.27W* (37)
Twenty-Second Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems,
Inc. and Comcast Cable Communications Management, LLC
10.27X* (41)
Twenty-Third Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems,
Inc. and Comcast Cable Communications Management, LLC
10.27Y* (43)
Encompass Addendum to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc.
and Comcast Cable Communications Management, LLC
10.27Z* (44)
First Amendment to Encompass Addendum to the CSG Master Subscriber Management System Agreement between
CSG Systems, Inc. and Comcast Cable Communications Management, LLC
10.27AA*
Twenty-Fourth Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems,
Inc. and Comcast Cable Communications Management, LLC
10.28A* (40)
Second Amendment to the Amended and Restated CSG Master Subscriber Management System Agreement
between CSG Systems, Inc. and Charter Communications Operating, LLC
10.28B* (40)
Third Amendment to the Amended and Restated CSG Master Subscriber Management System Agreement between
CSG Systems, Inc. and Charter Communications Operating, LLC
10.28C* (41)
Fourth Amendment to the Amended and Restated CSG Master Subscriber Management System Agreement between
CSG Systems, Inc. and Charter Communications Operating, LLC
10.28D* (42)
Fifth Amendment to the Amended and Restated CSG Master Subscriber Management System Agreement between
CSG Systems, Inc. and Charter Communications Operating, LLC
10.28E* (42)
Sixth Amendment to the Amended and Restated CSG Master Subscriber Management System Agreement between
CSG Systems, Inc. and Charter Communications Operating, LLC
10.28F* (43)
Seventh Amendment to the Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.28G*
Ninth Amendment to the Consolidated CSG Master Subscriber Management System Agreement between CSG
Systems, Inc. and Charter Communications Operating, LLC
10.39 (13)+
CSG Systems, Inc. Wealth Accumulation Plan, as restated and amended effective December 6, 2017
77
10.39A (13)+
Adoption Agreement to CSG Systems, Inc. Wealth Accumulation Plan, executed September 13, 2018
10.40 (38)
Form of Capped Call Confirmations
10.50 (3)+
CSG Systems International, Inc. 2001 Stock Incentive Plan
10.55 (20)+
Employment Agreement with Brian A. Shepherd, dated August 26, 2020
10.56 (24)+
Employment Agreement with Elizabeth A. Bauer, dated May 20, 2021
10.57 (26)+
Employment Offer Letter with Hai Tran, dated November 16, 2021
10.60 (35)+
CSG Systems International, Inc. Executive Severance Plan
10.61 (35)+
CSG Systems International, Inc. Executive Severance Plan Participation Agreement with Brian A. Shepherd, dated
March 28, 2023
10.63 (35)+
CSG Systems International, Inc. Executive Severance Plan Participation Agreement with Elizabeth A. Bauer, dated
March 28, 2023
10.80 (45)+
Performance-Based Restricted Stock Award Agreement with Brian A. Shepherd, dated December 10, 2024
10.81 (28)+
Forms of Agreement for Equity Compensation
10.84 (28)+
Forms of Agreement for Equity Compensation
10.85 (42)+
Forms of Agreement for Equity Compensation
19.01
CSG Systems International, Inc. Insider Trading Policy
21.01
Subsidiaries of the Registrant
23.01
Consent of KPMG LLP
31.01
Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.02
Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.01
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
97.00 (41)
Clawback Policy of CSG Systems International, Inc., as adopted on November 14, 2023
101.INS
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL
tags are embedded within the Inline XBRL document
101.SCH
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)
(1)
Incorporated by reference to the exhibit of the same number to the Registration Statement No. 333-244 on Form S-1.
(2)
Incorporated by reference to the exhibit of the same number to the Registrant’s Quarterly Report on Form 10-Q for the period ended June
30, 1997.
(3)
Incorporated by reference to the exhibit of the same number to the Registrant’s Quarterly Report on Form 10-Q for the period ended June
30, 2002.
(4)
Incorporated by reference to the exhibit of the same number to the Registrant’s Current Report on Form 8-K for the event dated November
16, 2006.
(5)
Incorporated by reference to the exhibit of the same number to the Registrant’s Quarterly Report on Form 10-Q for the period ended
September 30, 2007.
(6)
Incorporated by reference to the exhibit of the same number to the Registrant’s Quarterly Report on Form 10-Q for the period ended March
31, 2010.
(7)
Incorporated by reference to the exhibit of the same number to the Registrant’s Quarterly Report on Form 10-Q for the period ended
September 30, 2010.
(8)
Incorporated by reference to the exhibit of the same number to the Registrant’s Current Report on Form 8-K for the event dated May 17,
2011.
(9)
Incorporated by reference to the exhibit of the same number to the Registrant’s Quarterly Report on Form 10-Q for the period ended
September 30, 2017.
78
(10)
Incorporated by reference to the exhibit of the same number to the Registrant’s Annual Report on Form 10-K for the year ended December
31, 2017.
(11)
Incorporated by reference to the exhibit of the same number to the Registrant’s Quarterly Report on Form 10-Q for the period ended March
31, 2018.
(12)
Incorporated by reference to the exhibit of the same number to the Registrant’s Quarterly Report on Form 10-Q for the period ended June
30, 2018.
(13)
Incorporated by reference to the exhibit of the same number to the Registrant’s Quarterly Report on Form 10-Q for the period ended
September 30, 2018.
(14)
Incorporated by reference to the exhibit of the same number to the Registrant’s Quarterly Report on Form 10-Q for the period ended March
31, 2019.
(15)
Incorporated by reference to the exhibit of the same number to the Registrant’s Quarterly Report on Form 10-Q for the period ended June
30, 2019.
(16)
Incorporated by reference to the exhibit of the same number to the Registrant’s Quarterly Report on Form 10-Q for the period ended
September 30, 2019.
(17)
Incorporated by reference to the exhibit of the same number to the Registrant’s Annual Report on Form 10-K for the year ended December
31, 2019.
(18)
Incorporated by reference to the exhibit of the same number to the Registrant’s Quarterly Report on Form 10-Q for the period ended March
31, 2020.
(19)
Incorporated by reference to the exhibit of the same number to the Registrant’s Quarterly Report on Form 10-Q for the period ended June
30, 2020.
(20)
Incorporated by reference to the exhibit of the same number to the Registrant’s Current Report on Form 8-K for the event dated August 26,
2020.
(21)
Incorporated by reference to the exhibit of the same number to the Registrant’s Quarterly Report on Form 10-Q for the period ended
September 30, 2020.
(22)
Incorporated by reference to the exhibit of the same number to the Registrant’s Annual Report on Form 10-K for the year ended December
31, 2020.
(23)
Incorporated by reference to the exhibit of the same number to the Registrant’s Quarterly Report on Form 10-Q for the period ended March
31, 2021.
(24)
Incorporated by reference to the exhibit of the same number to the Registrant’s Quarterly Report on Form 10-Q for the period ended June
30, 2021.
(25)
Incorporated by reference to the exhibit of the same number to the Registrant’s Quarterly Report on Form 10-Q for the period ended
September 30, 2021.
(26)
Incorporated by reference to the exhibit of the same number to the Registrant’s Current Report on Form 8-K for the event dated November
22, 2021.
(27)
Incorporated by reference to the exhibit of the same number to the Registrant’s Annual Report on Form 10-K for the year ended December
31, 2021.
(28)
Incorporated by reference to the exhibit of the same number to the Registrant’s Quarterly Report on Form 10-Q for the period ended March
31, 2022.
(29)
Incorporated by reference to the exhibit of the same number to the Registrant’s Current Report on Form 8-K for the event dated May 18,
2022.
(30)
Incorporated by reference to the exhibit of the same number to the Registrant’s Quarterly Report on Form 10-Q for the period ended June
30, 2022.
(31)
Incorporated by reference to the exhibit of the same number to the Registrant’s Current Report on Form 8-K for the event dated August 17,
2022.
(32)
Incorporated by reference to the exhibit of the same number to the Registrant’s Quarterly Report on Form 10-Q for the period ended
September 30, 2022.
(33)
Incorporated by reference to the exhibit of the same number to the Registrant’s Annual Report on Form 10-K for the year ended December
31, 2022.
(34)
Incorporated by reference to the exhibit of the same number to the Registrant’s Current Report on Form 8-K for the event dated April 12,
2023.
(35)
Incorporated by reference to the exhibit of the same number to the Registrant’s Quarterly Report on Form 10-Q for the period ended March
31, 2023.
(36)
Incorporated by reference to the exhibit of the same number to the Registrant’s Current Report on Form 8-K for the event dated May 17,
2023.
(37)
Incorporated by reference to the exhibit of the same number to the Registrant’s Quarterly Report on Form 10-Q for the period ended June
30, 2023.
(38)
Incorporated by reference to the exhibit of the same number to the Registrant’s Current Report on Form 8-K for the event dated September
6, 2023.
(39)
Incorporated by reference to the exhibit of the same number to the Registrant’s Current Report on Form 8-K for the event dated September
5, 2023.
(40)
Incorporated by reference to the exhibit of the same number to the Registrant’s Quarterly Report on Form 10-Q for the period ended
September 30, 2023.
(41)
Incorporated by reference to the exhibit of the same number to the Registrant’s Annual Report on Form 10-K for the year ended December
31, 2023.
(42)
Incorporated by reference to the exhibit of the same number to the Registrant’s Quarterly Report on Form 10-Q for the period ended March
31, 2024.
(43)
Incorporated by reference to the exhibit of the same number to the Registrant’s Quarterly Report on Form 10-Q for the period ended June
30, 2024.
(44)
Incorporated by reference to the exhibit of the same number to the Registrant’s Quarterly Report on Form 10-Q for the period ended
September 30, 2024.
79
(45)
Incorporated by reference to the exhibit of the same number to the Registrant’s Current Report on Form 8-K for the event dated December
6, 2024.
* Portions of the exhibit have been omitted pursuant to an application for confidential treatment, and the omitted portions have been filed
separately with the Commission.
** Certain of the schedules (or similar attachments) to this Exhibit have been omitted in accordance with Item 601(a)(5) of Regulation S-K under
the Securities Act because they do not contain information material to an investment or voting decision and that information is not otherwise
disclosed in the Exhibit or the disclosure document. The registrant hereby agrees to furnish a copy of all omitted schedules (or similar
attachments) to the SEC upon its request.
+ Management contract or compensatory plan or arrangement.
80
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
CSG SYSTEMS INTERNATIONAL, INC.
By:
/s/ BRIAN A. SHEPHERD
Brian A. Shepherd
President and Chief Executive Officer
(Principal Executive Officer)
Date: February 20, 2025
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on
behalf of the registrant and in capacities and on the dates indicated.
Signature
Title
Date
/s/ RONALD H. COOPER
Chair of the Board of Directors
February 20, 2025
Ronald H. Cooper
/s/ BRIAN A. SHEPHERD
Director, President and Chief Executive Officer
February 20, 2025
Brian A. Shepherd
(Principal Executive Officer)
/s/ HAI TRAN
Chief Financial Officer
February 20, 2025
Hai Tran
(Principal Financial Officer)
/s/ LORI J. SZWANEK
Chief Accounting Officer
February 20, 2025
Lori J. Szwanek
(Principal Accounting Officer)
/s/ RACHEL A. BARGER
Director
February 20, 2025
Rachel A. Barger
/s/ DAVID G. BARNES
Director
February 20, 2025
David G. Barnes
/s/ GREGORY A. CONLEY
Director
February 20, 2025
Gregory A. Conley
/s/ MARWAN H. FAWAZ
Director
February 20, 2025
Marwan H. Fawaz
/s/ SAMANTHA GREENBERG
Director
February 20, 2025
Samantha Greenberg
/s/ RAJAN NAIK
Director
February 20, 2025
Rajan Naik
/s/ HAIYAN SONG
Director
February 20, 2025
Haiyan Song
/s/ SILVIO TAVARES
Director
February 20, 2025
Silvio Tavares
/s/ TSE LI YANG
Director
February 20, 2025
Tse Li Yang
Exhibit 10.27AA
THIS DOCUMENT CONTAINS INFORMATION WHICH HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH (I) NOT
MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION IS
IDENTIFIED BY BRACKETS AND MARKED WITH (***).
TWENTY-FOURTH AMENDMENT
TO THE
CSG MASTER SUBSCRIBER MANAGEMENT SYSTEM AGREEMENT
BETWEEN
CSG SYSTEMS, INC.
AND
COMCAST CABLE COMMUNICATIONS MANAGEMENT, LLC
THIS TWENTY-FOURTH AMENDMENT (this “Twenty-Fourth Amendment”) is made by and between CSG Systems, Inc. (“CSG”) and Comcast Cable
Communications Management, LLC (“Customer”). The effective date of this amendment is the date last signed below (the “Twenty-Fourth Amendment
Effective Date”). CSG and Customer entered into a certain CSG Master Subscriber Management System Agreement (CSG document #4131273) with an
effective date of January 1, 2020, as amended (the “Agreement”), and now desire to further amend the Agreement in accordance with the terms and conditions
set forth in this Twenty-Fourth Amendment. If the terms and conditions set forth in this Twenty-Fourth Amendment conflict with the Agreement, the terms and
conditions of this Twenty-Fourth Amendment shall control. Any terms in initial capital letters or all capital letters used as a defined term but not defined in this
Twenty-Fourth Amendment shall have the meaning set forth in the Agreement. Upon execution of this Twenty-Fourth Amendment by the Parties, any
subsequent reference to the Agreement between the Parties shall mean the Agreement as amended by this Twenty-Fourth Amendment. Except as amended by
this Twenty-Fourth Amendment, the terms and conditions set forth in the Agreement shall continue in full force and effect according to their terms.
WHEREAS, the Parties wish to extend the Term (as defined in Section 1.2 of the Agreement), provide financial consideration for the extension of the Term,
and amend other terms and conditions in connection with the extension of the Term.
NOW THEREFORE, in consideration of the mutual promises set forth in the Agreement and in this Twenty-Fourth Amendment, CSG and Customer agree to
the following amendments to the Agreement, all of which shall be effective as of the Twenty-Fourth Amendment Effective Date unless a different date is
specified as the effective date for any particular amendment contained herein:
1.
CSG and Customer agree to extend the Term of the Agreement for a period of [**** (*)] years commencing on January 1, 20[**] and ending on
December 31, 20[**]. Therefore, Section 1.2, entitled “Term”, is hereby deleted in its entirety and replaced with the following:
1.2
Term.
(a)Unless earlier terminated pursuant to Section 6.1, Section 9.2(c) or Schedule L, this Agreement shall commence on the Effective Date and remain in
effect until the expiration of the last Service Specific Term (as defined in Section 1.2(b)) (the “Term”) and, if applicable, any De-conversion Period (as
defined in Section 6.2). Termination of a given Service Specific Term is subject to Section 6.1.
(b)Customer’s right to purchase and CSG’s obligation to provide a given Product or Service under this Agreement or an Ancillary Agreement is subject to
a distinct and independent term for such Product and/or Services as set forth in this Section 1.2 (each, a “Service Specific Term”). The term of any specific
license for the Products and the term for any specific Services to be provided shall be effective from the Effective Date or the date set forth in an applicable
amendment to this Agreement or Ancillary Agreement and shall terminate upon the expiration of the Service Specific Term applicable to such Product or
Service, unless stated otherwise herein or as otherwise provided in the applicable Schedule, Exhibit, amendment or Ancillary Agreement.
(c)
The Service Specific Terms under this Agreement are as follows:
(i)
ACP Term and ACP Extension. CSG shall provide the ACP Related Services to Customer from the Effective Date through December 31,
20[**] (the “ACP Term”). After the ACP Term, CSG shall provide the ACP Related Services to Customer from January 1, 20[**] through
December 31, 20[**] (the “ACP Extension”).
(ii)
Output / Print Term. CSG shall provide the Output / Print Services to Customer from the Effective Date through December 31, 20[**]
(the “Output / Print Original Term”). After the Output / Print Original Term, CSG shall provide the Output / Print Services to Customer from
January 1, 20[**] through December 31, 20[**] (the “Output / Print Extension Term”). The Output / Print Original Term together with the
Output / Print Extension Term shall be collectively referred to as the “Output / Print Term”.
(iii)
Kiosk Term. CSG shall provide the Kiosk Managed Services (as defined in the Master Kiosk SOW) to Customer from the Effective Date
through December 31, 20[**] (the “Kiosk Term”). For the convenience of the Parties, the Parties acknowledge and agree that the Kiosk Term
shall be extended to December 31, 20[**], pursuant to that certain mutually agreed upon Change Order No. 6 (CSG document #53041.0) to the
Master Kiosk SOW. If the Kiosk Term is subsequently modified via amendment or change order, or the Parties enter into an additional SOW
that by its terms expressly states that the term of such SOW is intended to renew or extend the Kiosk Term under this Agreement, then the Kiosk
Term shall be automatically amended accordingly without the need to amend this Agreement. The Parties acknowledge and agree that the
Legacy Kiosk Services provided by CSG to Customer with respect to Legacy Kiosk Units expired effective April 15, 20[**].
(iv)
Other Products / Services. Any Products and/or Services (a) that are not ACP Related Services, Output / Print Services or Kiosk Services,
and (b) which have a specific term associated with such Products or Services as set forth in this Agreement or an Ancillary Agreement shall be
provided during the term specified hereunder or in such Ancillary Agreement. By way of examples only, (a) the Base Ascendon Platform and
related Ascendon SaaS Services and Ascendon System provided by CSG to Customer pursuant to that certain Ascendon Service Order No. 2
(Document Number 33060) effective as of April 29, 2021 (“Ascendon Service Order No. 2”) is subject to the Ascendon Order Term as specified
in such Ascendon Service Order No. 2, and (b) the Encompass CSG Licensed Offering provided by CSG to Customer pursuant to that certain
Encompass Order Document (Document Number 50034.0) effective as of June 20, 20[**] (“Encompass Order”) is subject to the Initial
Encompass Term as specified in such Encompass Order.
2.
The definition of a Connected Subscriber set forth in Schedule A, entitled “Definitions”, is hereby deleted in its entirety and replaced with the
following:
“Connected Subscriber” shall mean [** ****** ********** ** ***** ******** ********** ******** (“***”) ** ********** ** *** **********
****** **** *** ****** ******** ****** ** *** **** ********** *** ** * ********** ****** ** * ***** ** ************** ** *** ***** ****
* ******** ** ********* **** **** *** (*) ******* (**** ***** *** ***) ** * ****** ********** ******* ** *** **** ********** *** ** *
********** ****** **** ******** ***** ** ******* ** *** (*) ********* *********** ******** ** *** ***** **** * ******** ** *********
**** **** *** (*) ******* (**** ***** *** ***) ** *** ******** ********** ******** ** *** **** ********** *** ** * ********** ****** ****
******** ***** ** ******* ** *** (*) ********* ************ ******** ************ **** ***** ***** **** ******** ********** ********
*** ******** ** *** **** ** * ******** *** ******* ** **** ******** ********** ******** ** ******** ** ******** ******** ***** ********
** **** ********* ** ** ******** ** *** ***** **** * ******** ******* ** ******* **** **** *** (*) ******* (**** ***** *** ***) *** ****
******* ** **** * ******** ********* (********** ** *****) ********* *** **** ******** **** ******** ***** ** ******** ***** *** ** **
*** ** ** *** (*) ******** ********** ******** *** ********* ***** ** ******* ** *** (*) ********* ************]
3.
Section 4.1, entitled [******** ********** **********] and [******* ********** ********** **********], is hereby deleted in its entirety and
replaced with the following:
4.1 [******* ********** **********] and [******* ********** ********** *********].
(a) For each month during the ACP Term and the ACP Extension, [******** ****** ** ******* * ******* ****** ** ********* *********** ****
***** ** *** ***** ********** ******** ****** ** **** ******* ****** *** ** ******* ******** ** *** ******* ********** **********
********** ***** ********* ** ********** (*)(*)(*) ** ******** * (** ********* *** ******** ********** ***********)*]
[******** ****]
[******* ********* *********** *** *****]
[******** ***** ****** ***
*** ****]
[******** **** *
****]
[**********]
[******** **** *
****]
[**********]
[******** **** *
****]
[**********]
[******** **** *
****]
[**********]
[******** **** *
****]
[**********]
[******** **** *
****]
[**********]
[******** ***** ****** ***
*** *********]
[******** **** *
****]
[**********]
[******** **** *
****]
[**********]
[******** **** *
****]
[**********]
[******** **** **
****]
[**********]
[******** **** **
****]
[**********]
(b) [** *** ***** ** ***** *** ****** ******* ********* *********** *** **** **** *** ******* ********** ********** (* ********
********** ********** **********)* ******** ***** **** ** ******** ** *** ******* *** **** *** *** *** ********* ************ **
********** *** ***** ** *** ********** ******* *** *** ********** ** *** ******* ********** ********** ********** *** *************
** *** ********** ******* *** *** (***** *** ****) ********** ** ********* *********** *** *** ******* ********** ********** *********
**** ** ***** ** *** ******* ********** ********** *** *** ***** (*** ******** ****) ** ***** *** ******* ********** **********
********* *********]
(c) [******* ** *** ******* ********** ********** ********* **** ****** ** ******* **** ******** *** ********** *********
************ ***** ** ********’* ******* ********** ********** *** ***** ******** *** * ******* ********** ********** ********* **
****** ** ******* ***** ** ** ******* ** *** ******* *** *** *** ******* ********** ********** ********* ***** ******** **** **
******** ************** *** *** ******* *** *** (********** ********** ** ********) *** ********* (****** ********** ** ********)*]
*[***** ******* ** *** **** ********** **** ********** ** *** ******* (**) ** ******* ** ******* ****]
4.
CSG and Customer desire to incorporate Customer’s supplier policies into the Agreement while establishing a mechanism for CSG to receive
notices in advance of any updates to such policies and to have an opportunity to review and a right to object to such updates. Therefore, Section 4.10
of the Agreement, entitled “Privacy, Data Transfer and Security Obligations”, is hereby deleted in its entirety and replaced with a new Section 4.10,
entitled “Customer Policies”, as follows:
4.10
Customer Policies.
(a) “Policies” means Customer’s vendor policies set forth in the Comcast Supplier Policies [****** ** ********************************** ** ****
******** *** ** ******* **** **** ** *****] CSG agrees to comply with the Policies and shall be bound by such Policies with the same force and
effect as if fully set forth herein. The Policies shall take precedence and prevail over any conflicting or inconsistent provisions set forth in this Agreement
and any Orders or SOW(s), provided, however, that any exceptions with, or modifications, objections or clarifications to, such Policies shall take
precedence and prevail over the provisions of the Policies where (i) the Agreement or a mutually agreed addendum thereto (e.g., a rider addendum to any
particular Policy) expressly states that it shall prevail, or (ii) the requirements specified in this Agreement(s) exceed those set forth in the Policies. CSG
may register to receive updates to the Policies [** *************************************]. If CSG registers to receive notice of updates pursuant to
the preceding sentence, then CSG shall have [****** (**)] days from the date of the such notice to raise any objection to the applicable Policy updates;
provided, that, CSG shall not be permitted to submit an objection with respect to any Policy updates implemented as a result in changes to any applicable
Laws. Upon Customer’s receipt of such objection, the Parties shall meet to discuss and resolve the concern. If the Parties agree to any modifications to the
updated policies, those will be documented as an addendum to this Agreement (e.g., a rider addendum to any particular Policy). During the pendency of
such discussions, CSG shall continue to adhere to the Policies as they existed immediately prior to the change of the Policy in question except in the case
of Policy changes in response to applicable Law, in which case such compliance shall be reasonably prompt in accordance with industry standards. If
mutually agreeable terms cannot be reached during the initial meeting to resolve any dispute with an objection to a Policy update, the Parties agree to
attempt to resolve such dispute by promptly escalating the matter to their respective Vice Presidents responsible for the account, who shall meet as soon as
reasonably practicable thereafter. If a satisfactory resolution is not reached within [*** (**)] business days following the date that such Vice Presidents
first met, the matter shall then be escalated to each Party’s respective Senior Vice Presidents for resolution prior to exercising any other rights provided in
the Agreement. If a satisfactory resolution is not reached within [****** (**)] days following the date that such Senior Vice Presidents first met, then any
ongoing noncompliance by CSG with the applicable Policy modification or update may be treated by Customer as a breach of a material term pursuant to
Article 6.1(b) of the Agreement. For the avoidance of doubt, CSG shall continue to provide the Products and Services pending final resolution of any
dispute hereunder, unless otherwise requested by Customer.
(b)
Schedule N of the Agreement, entitled “Rider to Comcast Policies”, attached hereto contains the mutually agreed upon modifications, exceptions,
objections, and clarifications to the Policies as of the effective date of the 24th Amendment (CSG document #53181.0) to the Agreement.
5.
Schedule N of the Agreement, entitled “Data Security Measures”, and its related exhibits, is hereby deleted in its entirety and replaced with a
new Schedule N of the Agreement, entitled “Rider to Comcast Policies”, attached hereto.
6.
[*** ******** **** * (****** ********* ******** *** ****** **********)* *** *** ******** ***** **** ***** **** ** ** ******
******** ** *** ******* *** *** ********* ************ *** *** ****** ******** ******* ********** **** *** *** *** ****** *********
********** **** ********** ********* ******* ** ***** *** ********* ****** ***** ***** ** *** ******* *** *** ********* ************ ***
*** ****** ******** ******* ********** **** *** *** *** ****** ********* ********** *** ** **** ** *** ****** **** ********* ******** ****
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[****** ******** ******* ********** *** *****]
[*** ****** ********
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*** (*** ********* * **
******* **** *****
***
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**
**** ***)]
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**** ********
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**** ********
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[****** ********* ********** *** *****
[*** ****** *********
********** *** ]
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**** ********
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7.
Beginning in [******** **** * (****** ********* ******** *** ****** **********)] and continuing through [******** **** ** (******
********* ******** *** ****** **********)], CSG and Customer agree that all fees under the Agreement shall be [********* ** *** ******* (**)
******** **** **** ****** **** ******** ****** ****** ** ******* * ** *** ********** ******** ****]. Therefore, effective January 1, 20[**],
Section 5.4, entitled “Adjustment to Fees”, is hereby deleted in its entirety and replaced with the following:
5.4
Adjustment to Fees. During the [****], all fees included in this Agreement shall be [********* ******** ** *** ******* (**) ********* **
******* * ** *** ********** ******** ****], except for (i) Materials, as defined below, and (ii) the [******* ******** **** (*** ****** ********
********)] set forth in Section 8 of
the [****] Amendment (CSG document [******)] to the Agreement, which [******* ******** **** (*** ****** ******** ********)] already
incorporate fee [*********] and thus, no other [********] is applicable for these items. For clarification purposes, the [*** ******* (**) ********]
shall apply to [******** **** * (****** ********* ******** *** ****** **********)], which [*** ********] shall take effect on January 1, 20[**].
The [******] Adjustment to Fees shall be communicated to Customer no later than [********] 1 of the preceding year (i.e., for [******** **** *], CSG
will provide notice to Customer by [******** 1, 20**)], but in no event shall Customer be relieved of the [********] should CSG fail to provide timely
notice described herein. CSG may [********] the fees payable by Customer for paper and envelopes (“Materials”) at any time based upon [*** ******
** (*) ********** ******* ** ********* ***** **** *** ** ****** ***** ** *** **** *** ********* ******* ** (*) ****]. For the purpose of
determining Materials fee [*********], “RISI” shall mean the [********] tied directly to a [*******] paper industry index published by RISI for Pulp
and Paper for North America which closely tracks price changes for the primary raw material paper Table 6 entitled Delivered Printing and Writing Paper
Prices for Most Common Transactions (US Dollars per Ton), and the line item entitled 20 lb. Form bond. The Parties agree that in the event CSG
undergoes a [****** ** *******], any [********] in the fees for Materials shall be based upon [*** ****** ** (*) ********** ******* ** *********
***** **** *** ** ****** ***** ** *** **** *** ********* ******** (*) ***** ** (*) *** ******* (**)]. In the event the RISI is replaced, the
Parties will discuss in good faith a replacement measure.
8.
For the specific Customer lines of business (LOB) identified in the table below, CSG and Customer agree that the following [******* ***** ***
**** (*** ********** ** *** ********)] shall apply to Customer’s use of the [******** ****** *** ******** **** ******** ** ******* **** ***].
CSG and Customer further acknowledge and agree that CSG shall make the [******** ****** *** ******** **** *******] available to Customer
pursuant to one or more mutually agreed upon [******** ******* ******], which shall be subject to the terms and conditions of the Agreement and
the [******* * ******** ******** ********] (Document Number [*******]).
[*********** ** ***
********* ** ******* (***
****** ******** ******** ***
********* ********)]
[(**** *)]
[(**** *)]
[(**** *)]
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****
********
****]
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****
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****]
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********
**
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****
******** **
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****]
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****
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[*******
****
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A.[***** ****** ******
******** ********* (**** **
**** ** **** *)]
▪[** ** *********]
[*******]
[*******]
[*******]
[*******]
[*******]
[*******]
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▪[********* ** *********]
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▪[********** ** *******]
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B.[********]
[(**** *)]
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[*******]
C.[*******]
[(**** *)]
[*******]
[*******]
[*******]
[*******]
[*******]
[*******]
[*******]
Note 1: [****** ******** ******** ** ******* ** ******** * ** ******** ******* ***** *** **]
Note 2: [*** ***** *** **** ** *** ***** ***** **** ***** ** ********** (*) **** ****** ****** ******** ********* **** (**) ******** **** ***
(***) ******* **** *** ********** ***** *** (***** ***** ******* ** ******* ******)* *** ******* *** ***** ** ******** ******* ***** *** *
***** ******** ** ******]
Note 3: [*** ***** *** **** ** *** ***** ***** **** ***** ** ******** ************* ******** ** *** **** ******* *********** *** *******
******** ****** ******** ********** ***** *** **** ***** ** ********** ******** ****** ****** ************* *** **** ** ****** ** ****
**** ********** ********]
Note 4: [ ** ****** ******** ******** ** ******** ** **** ** ******* ******** ** ***** ******** ********** ******** (***) ** ***** ** *******
*** ******** ***** *** **** ** *** ***** ****** *** ******** ** * ******** ** ******* ** ** ****** ******** ******** *** ** **** * *********
********** *** *** ********** ******* ******* *** ***** ** *** *** ***** *** ********* *********** ***** *** *** *** ***** ******** *****
*** *****]
Note 5: [*** ******* ***** *** ***** ** *** ***** ***** *** ******** ** ** *********** ****** ******* *** ***** ********* ****** ********
********* *** ******* ** *** *** ** *** ***** ***** *** **** ********* ****** ******** ********* *** ******* ** *** *** ** *** **** *****
**** *** ******** ** ******** *** ********* ****** ******** ********* ** *** ******* ***** ** ******* ***** *** ***** ******* ********
******* **** ** *** ****** ** ************* (********* ********** ** ******* **** ********* ********** ** *******)*]
Note 6:[*** ************* ********* *** ******** ******** ********* ** *** ** ******** ** ****** ******** ********* ***** *** *** ****
********* ** ***** ******** ********** ******** (***) ** ********* *********** ** *** ***** ****** *** ******* ********** ********** ***
***** ** ******* *** ** *** ********** ******** ******** ********** ********** *** ******* ********** ********** ***********]
Note 7: [ *** ***** *** **** ** *** ***** ***** *** ******** *** ******* ********* *** ** ******** ** *** ***** ********** **** **** ** ***
********** ******* *** *** ** ********** **** ****** ****** ******** ********* ******** ******** ****]
9. Schedule A of the Agreement, entitled “Definitions,” shall be amended by adding the following definitions, which new definitions shall be situated
within Schedule A in alphabetical order in relation to the other definitions set forth in Schedule A:
“Business Contact Information” means [*********** **** *********** ******* *** ********** ** ********** ******* ** ***** **********
***** ** ***** ********** ** ******* ******** ** *********** **** * ********** ********* ****** ************** ** ****** ** *** *****
***** **** ** ********* ** ********** **** *** ********* *** ******** ** (*) *********** * ******** ************ **** *** ***** ******
(**) ********* **** *********** ***** *** ********* (***** *********** ****** ************ ******* **** **** *** ******* *****
********** ** ******** ******* *********** ** *** ********* ** *** ********)* (***) ********** ** ********* *** ****** ***** ***
********** (**) ******** **** ********** *** *************** (*) ********* **** *** *** *********** ** (**) ** *********** *********
****** ** ******* *** ************** **** ****** (***** ***** *********** *** * ****** ******)* ****** ** ********** *** ********* **
******* ** *** *********]
“Personal Information” means [*********** ******** ** *** ** ******* ** **** *** ******** ********* ** ********* ********* ** ****** **
******** **** *********** ******* *** ********** ** ********** ******* ** ***** ********** ***** ** ***** ********** ** *******
********* ** *********** **** * ********** ********** ********** ** ******* *** *********** *** *********** ******* ** *********
************* ********* ****** ** ***** ******* ******* ***** *** ********** **** *********** ** *********]
“Process” and its cognates means [*** ********* ** *** ** ********** ***** ** ********* ** *********** ******* ** *** ** ********* ******
**** ** *********** ********** ************* ************ ******** ********** ** *********** ********** ************* ****
********** ** ************* ************* ** ********* ****** ********** ********* ** ************ ************ ******* **
************]
10. Article 3, entitled “Confidential Information”, shall be modified with the addition of Section 10.11, entitled “Data Processing Agreement and
Information Security Requirements”, and Section 10.12, entitled “Business Contact Information”, as follows:
10.11
Data Processing Agreement and Information Security Requirements.
If CSG Processes Personal Information, other than Business Contact Information, under the Agreement, CSG shall comply with the Data Processing
Agreement (“DPA”), the [************ *******] of which is [********* ** ********************************] and is incorporated into the
Agreement by reference, subject to Section 4.10 of the Agreement, entitled “Customer Policies”. CSG hereby agrees to complete and submit to
Comcast on or before November 30, 2024, the DPA Schedules set forth in Schedule S of the Agreement, entitled “FORM of DPA Schedules,” attached
hereto. CSG will maintain reasonable security practices that meet or exceed the Information Security Requirements (“ISR”), the [************
*******] of which is [********* ** ********************************] and is incorporated into the Agreement by reference, subject to Section
4.10 of the Agreement, entitled “Customer Policies”.
10.12
Business Contact Information.
Each Party will: (i) only Process Business Contact Information for the purposes described in the definition of Business Contact Information; (ii) take
appropriate technical and organizational measures in accordance with industry standards and applicable law to protect Business Contact Information;
(iii) comply with its obligations under applicable law with respect to Business Contact Information; (iv) grant the other Party the right to take reasonable
and appropriate steps to help ensure that Business Contact Information is being Processed in accordance with this section; (v) notify the other Party if it
cannot meet the obligations under this section; and (vi) grant the other Party the right, upon notice, to take reasonable and appropriate steps to stop and
remediate unauthorized use of Business Contact Information. Each Party shall promptly notify the other party upon receiving a consumer data request
with respect to the other Party’s Business Contact Information, and the Parties will work together to honor such requests, unless subject to an applicable
exclusion under law.
11.
The Agreement is hereby amended to delete and replace in its entirety Section 12.21 of the Agreement, entitled “Schedules and Attachments,”
as follows:
12.21
Schedules and Attachments. The following Schedules and Exhibits are attached and incorporated herein, and each reference herein to the
“Agreement” shall be construed to include the following:
Schedule A – Definitions
Schedule B and associated Exhibits – Product License, Maintenance and Support
Schedule C and associated Exhibits – Recurring Services
Schedule D – Services Commitment Rules
Schedule E and associated Exhibits– Technical Services
Schedule F – Fees
Schedule G – Interim Letter Agreement
Schedule H – Support Services
Schedule I – Authorized Customer Representatives
Schedule J – Outstanding Ancillary Agreements
Schedule K – Guidelines for Passer and Agent Transfer Program Requests
Schedule L – Performance Standards and Remedies
Schedule M – Sample Entity Addendum
Schedule N – Rider to Comcast Policies
Schedule O – Examples Illustrating Application of Subsection (d)(i) of Schedule L (Remedies for Failed
Performance Standards of subsection (a)(i))
Schedule P – Customer Authorization Schedule
Schedule Q – COVID-19 Requirements
Schedule R – Active IM Statements of Work from the CSG Interactive Messaging Services Agreement
Schedule S – DPA Schedules
12.
CSG and Customer desire to amend the [******** ***** ********** *** ***** ** ******* ****] of the Agreement, which was added to the
Agreement pursuant to the [************] Amendment to the Agreement (CSG document [******]). Therefore, the Agreement is hereby amended as
follows: [(*) *** ******** ***** ********** ********* ******** ** ***** *** ******* *** ******* ******** ******* ***** ******** ** ***** **
** **** *** *** ********* ******** ***** *** *** ******** ** *** ***** (**) *** ******** ***** ********** ****** ***** ******* ****
********** ******** ***** ****** *** **** (***** ** ***** ** ***** ** ***** ** **** *** ** ****)* (***) **** ******* ** ** ***** ** *****
******** ** ********** ******** ******** ***** ********** ********* **** ******* ** *********** **** ******** ** ********** (*)* ********
************ ****** ** ******* **** ******** ******* ** ******** ** ******** ******* ** ******** ******* ***** *** ** (**) **** ******* **
** **** *** *** ********* ******** ***** *** *** ******** ** *** ***** ** ***** ******** ** ********’* ******** ******** ***** **********
********* **** ******* ** *********** **** ******** ** ********** (*)* ******** ************ ****** ** ******* **** ******** ******* **
******** ** ******** ******* ** ******** ******* ***** *** ** *** (*) *** ***** ***** *** ********** ******* ** *** ******** *****
*********** ** *** ***** ** ******* **** ** *** ********** ***** ***** ** *** ******* ********** *********** *** *** ******** ** *** *****]
IN WITNESS WHEREOF the parties hereto have caused this 24th Amendment to be executed by their duly authorized representatives.
COMCAST CABLE COMMUNICATIONS MANAGEMENT, LLC
(“CUSTOMER”)
CSG SYSTEMS, INC. (“CSG”)
By: /s/ Peter Kiriacoulacos
By: /s/ Michael Woods
Name: Peter Kiriacoulacos
Name: Michael Woods
Title: EVP CPO
Title: EVP
Date: 30-Oct-24
Date:10/24/24
SCHEDULE N
RIDER TO COMCAST POLICIES
This Rider to Comcast Policies (this “Rider to Policies”) is a rider to the Comcast Policies found in Comcast’s Supplier Policies Portal available [**
*********************************]. This Rider to Policies contains the mutually agreed upon modifications, exceptions, objections, and clarifications of
the Policies, as of the effective date of the 24th Amendment (CSG document #53181.0) to the Agreement.
[******* ********** ********* ********** ****** *** *********]
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*** ******* **** *** ************ ** *********** ***** ** ********** *** ***** ** *** **************** ******* ********** *** *********
************* *********** *********** *** ************** *** ****** **** ** *** **************** *******]
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* (******* ***** *** **********) ** *** ********* *********]
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**** ********]
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************ ** *********** ***** ** ********** *** ***** ** *** **************** ******* ********** *** ********* **************
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******** *** ********* * ****** ** ***** *************** ********** ** ******** *************** ***** ********** *********(*)
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******** ** *** ***** ***** ********** ** *** **** ******** ************ ****** ** ******* ****** ******* (****)* ********* ***
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******* ** *** ***’* ********* **********]
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SCHEDULE S
DPA Schedules
Schedule 1 - Description of Processing of Personal Information
“Table 1” Company as a Processor (Comcast PI)
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Additional Information Required if there is a Restricted Transfer of European PI
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Schedule 3 - Description of the Technical and Organizational Security Measures implemented by the Company
Company will maintain security measures at least as protective as those in the ISRs in addition to the measures set out below.
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Please provide further details of the supplementary technical and organizational measures employed by Company to protect the transfer of Personal Information
to third countries and/or to protect any transfer of sensitive information. Any such additional supplementary terms shall only apply to the extent that they
describe the privacy or security
controls of Company and that they are no less protective of Personal Information than otherwise provided under the Agreement.
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Technical and Organisational Measures
including technical, organisational and contractual measures to ensure the security of the data
Description of the technical and organisational measures implemented by CSG as data importer (including any relevant certifications) to ensure an appropriate
level of security, taking into account the nature, scope, context and purpose of the processing, and the risks for the rights and freedoms of natural persons.
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Exhibit 10.28G
THIS DOCUMENT CONTAINS INFORMATION WHICH HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH (I) NOT
MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION IS
IDENTIFIED BY BRACKETS AND MARKED WITH (***).
NINTH AMENDMENT
TO
AMENDED AND RESTATED
CSG MASTER SUBSCRIBER MANAGEMENT SYSTEM AGREEMENT
BETWEEN
CSG SYSTEMS, INC.
AND
CHARTER COMMUNICATIONS OPERATING, LLC
SCHEDULE AMENDMENT
This Ninth Amendment (the “Amendment”) is made by and between CSG Systems, Inc., a Delaware corporation (“CSG”), and Charter Communications
Operating, LLC, a Delaware limited liability company (“Customer”). CSG and Customer entered into that certain Amended and Restated CSG Master
Subscriber Management System Agreement effective as of January 1, 2022 (CSG document no. 44754), as amended (the “Agreement”), and now desire to
further amend the Agreement in accordance with the terms and conditions set forth in this Amendment. If the terms and conditions set forth in this Amendment
shall be in conflict with the Agreement, the terms and conditions of this Amendment shall control. Any terms in initial capital letters or all capital letters used as
a defined term but not defined in this Amendment shall have the meaning set forth in the Agreement. Upon execution of this Amendment by the parties, any
subsequent reference to the Agreement between the parties shall mean the Agreement as amended by this Amendment. Except as amended by this Amendment,
the terms and conditions set forth in the Agreement shall continue
in full force and effect according to their terms.
WHEREAS, CSG and Customer have agreed that CSG will provide and Customer will consume a new Print and Mail service that will allow CSG to process
Customer-provided flagged data files of [**** ******* (***) ** ***** *********]; and
WHEREAS, CSG and Customer have agreed that CSG will provide [****** *********] services and [*********] shipping for those certain Customer-
designated data files; and
WHEREAS, CSG and Customer have agreed to amend Schedule C, “Recurring Services,” and Schedule F, “Fees,” accordingly for the new Print and Mail
Services and associated Alternate Delivery Services.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, CSG and Customer agree to the following as of the Amendment Effective Date (defined below).
1.
Customer hereby requests and CSG agrees that CSG will configure and implement a process by which data files for statement processing
provided by Customer that require print and delivery are flagged to identify any such data files that will include [**** ******* (***) ** *****]
documents (commonly known as “[***** ****]”). For the avoidance of doubt [**** **********] is not included in [***** ****]. Therefore, upon
the Amendment Effective Date, the following changes are hereby made to the Agreement:
(a)
Schedule C of the Agreement, entitled “Recurring Services,” Exhibit C-2, “Print and Mail Services,” will be amended to add a new Section 16,
“[***** ****] Statement Processing” as follows:
“16. [***** ****] Statement Processing. [***** ****] Statement Processing will be performed by CSG for statement data files
provided to CSG by Customer or its third party biller that require print and delivery and are flagged by Customer or its third party biller for
[***** ****] statement processing. Such flagged data will be segregated and separately processed as [***** ****]
statements by CSG according to CSG-configured systems and tools and will be prepped by CSG for delivery pursuant to the terms of the
Agreement and subject to the [***** ****] Statement Processing fees specified in Schedule F, “Fees,” to the Agreement. For the
avoidance of doubt [**** **********] is not included in [***** ****].”
2.
Customer hereby requests and CSG agrees to configure and implement [****** ********* *********] Statement Processing pursuant to
CSG’s Print and Mail Services. Therefore, upon the Amendment Effective Date, the following changes are hereby made to the Agreement:
a)
Schedule C of the Agreement, entitled “Recurring Services,” Exhibit C-2, “Print and Mail Services,” will be amended to add a new Section 17,
“[****** ********* *********] Statement Processing” as follows:
“17.
[****** ********* *********] Statement Processing. [****** ********* *********] Statement Processing will be available to
allow certain Customer-identified data to be processed outside the defined Print and Mail statement processes under the Agreement. The
specified [****** ********* *********] Statements data will be [********] captured from Customer-provided data files for statement
processing. Printed documents will be [******** ********] to a specified carrier envelope or box (the “Package”) for shipping as
directed by Customer via [********** *********] courier.”
3.
In connection with Sections 1 and 2 of this Amendment, the following additional changes are hereby made to the Agreement:
Schedule F, “Fees,” Section 1, “CSG Services,” Section III, “Payment Procurement,” subsection A, “Direct Solutions (Print and Mail),”
subsection 9, “Other Print and Mail Ancillary Service Fees, shall be amended to add, respectively a new subsection g, “[***** ****] Statement
Processing,” and h, “[****** ********* *********] Statement Processing,” as follows:
Description of Item/Unit of Measure
Frequency
Fee
g. [***** ****] Statement Processing
1. Setup Fees for statement processing of five hundred (500) or fewer documents (a
“Small Job”) (Note 46)
[*** ***** ***]
[******]
h. [****** ********* *********] Statement Processing
1. [****** ********* *********] Processing Fee (Note 47)
[*** *******]
[*****]
2. [*********] Courier Package Shipping Fees (Note 48)
[*******]
[******]
Note 46: A “[***]” is each Customer-provided data file for statement processing by CSG; the specified [*** ***] fee in the fee table
above for such individual [****] is in addition to any other applicable Direct Solutions (Print and Mail) fees under the Agreement.
Note 47: The [****** ********* *********] Processing Fee includes a [******* *******] fee of [*******], irrespective of whether
the total number of Customer-requested Packages from [***** ****] prepped for [********* **********] courier delivery, even if such
total number of Packages in any [******* *****] is fewer than [*** ******* (***)]. The total number of Packages will not exceed [***
******* (***)] Packages per [******* *****]; the specified [****** ********* *********] Processing Fee in the fee table above is in
addition to any other applicable Direct Solutions (Print and Mail) fees under the Agreement.
Note 48: [*********] Courier Package Shipping Fees will be invoiced to Customer [*******] in arrears.
THIS AMENDMENT is executed on the days and year signed below to be effective as of the date last signed below (the "Amendment Effective Date").
CHARTER COMMUNICATIONS OPERATING, LLC
(“CUSTOMER”)
CSG SYSTEMS, INC. (“CSG”)
By: Charter Communications, Inc., its Manager
By:
/s/ Kevin Brosnan
By:
/s/ Michael J Woods
Name:
Kevin Brosnan
Name:
Michael Woods
Title:
GVP, Billing Solutions
Title:
President, NA CMT
Date:
Oct 3, 2024
Date:
Oct 3, 2024
EXHIBIT 19.01
1.
INTRODUCTION
This Insider Trading Policy (“Policy”) has been adopted in order to take an active role in the prevention of insider trading
violations. This Insider Trading Policy applies to CSG and the Covered Parties identified below, regardless of the
geographies in which they are located.
2.
STATEMENT OF INTENT
U.S. federal and state securities laws prohibit trading in securities when aware of material nonpublic information about the
securities or the issuer of the securities (referred to as “insider trading”). In order to avoid penalties and reputational
damage to CSG and persons subject to this Policy, CSG has adopted this Policy to implement procedures designed to
prevent trading based on material nonpublic information.
3.
INDIVIDUAL RESPONSIBILITY
Every Covered Party has the individual responsibility to comply with this Policy, and the applicable insider trading laws. A
Covered Party may, from time to time, have to forego a proposed transaction in CSG’s securities even if she or he planned
to make the transaction before learning of the material nonpublic information and even though the person believes she or
he may suffer an economic loss or forego anticipated profit by waiting. The U.S. securities laws do not recognize mitigating
circumstances, and even small violations or trades that do not result in a profit are prosecuted. Trading in CSG’s securities
during an Open Window should not be considered a “safe harbor,” and all Covered Parties should use good judgment at all
times.
4.
COVERED PARTIES
The Policy applies to the following, who are defined as “Covered Parties” under this Policy:
•
Officers of CSG;
•
Members of CSG’s Board of Directors;
•
All other employees of CSG and all of its subsidiaries;
•
Consultants or contractors to CSG and its subsidiaries whose work brings them into contact with material
nonpublic information related to CSG;
•
Members of the immediate family or household of all of the foregoing; and
•
Entities controlled or influenced by any of the foregoing (including corporations, partnerships, or trusts).
This Policy also applies to CSG insofar as CSG will not engage in transactions in CSG’s securities while aware of material
nonpublic information relating to CSG or CSG securities.
5.
COVERED TRANSACTIONS
This Policy applies to all transactions in CSG’s securities, including common stock, options for common stock and any other
securities CSG may issue from time to time, such as preferred stock, warrants and convertible debentures, as well as to
derivative securities relating to CSG’s stock, whether or not issued by CSG, such as publicly traded options. Transactions
subject to this Policy include purchases, sales and other transactions in CSG securities as set forth below.
6.
PROHIBITION ON INSIDER TRADING
No Covered Party shall engage in any transaction involving CSG’s securities, including any offer to purchase or offer to sell,
during any period when the Covered Party is aware of material nonpublic information concerning CSG.
No Covered Party shall disclose (“tip”) material nonpublic information about CSG to any other person, nor shall such
Covered Party make recommendations or express opinions on the basis of material nonpublic information as to trading in
CSG’s securities.
This Policy also prohibits trading in another company’s securities (such as customers, vendors, suppliers or competitors of
CSG) while the Covered Party is aware of material nonpublic information concerning that company when that information is
obtained in the course of employment with, or through services performed on behalf of, CSG. This Policy also prohibits
tipping or making trading recommendations on the basis of such information.
This Policy shall continue to apply to transactions in CSG’s securities even after termination of a Covered Party’s service to
the company. If a person is aware of material nonpublic information when his or her service terminates, that individual may
not engage in transactions in CSG’s securities until that information has become public or is no longer material.
7.
DEFINITION OF MATERIAL NONPUBLIC INFORMATION
It is not possible to define all categories of material nonpublic information. However, information should be regarded as
material if there is a substantial likelihood that a reasonable investor would consider the information important in making an
investment decision regarding the purchase or sale of CSG’s securities.
Put another way, there must be a substantial likelihood that the information would be viewed by a reasonable investor as
having significantly altered the total mix of information available in the market concerning CSG.
Either positive or negative information may be material. Questions concerning whether nonpublic information is material
can be directed to CSG’s General Counsel, who serves as the trading compliance officer for this Policy (the “Compliance
Officer”).
It is not possible to define all categories of material information, but information about the following subjects are examples
of the type of information that would often be regarded as material and should be analyzed carefully:
•
Financial results or projections of future financial results;
•
Significant mergers, acquisitions, joint ventures or other strategic relationships;
•
Significant new products or services;
•
Gain or loss, or change in status of, a significant customer or supplier or a significant contract with a customer or
supplier;
•
Significant changes in pricing or cost structures;
•
Significant pending or threatened litigation or regulatory actions;
•
Significant cybersecurity incidents or technology disruption;
•
Changes in senior management;
•
Changes in dividend policy, repurchase programs or stock splits;
•
Significant restructuring or impairment;
•
Changes in accountants or any financial restatement; and
•
Financial liquidity problems, bankruptcy or receivership.
The above list is only illustrative; many other types of information may be considered “material” depending on the
circumstances.
Information is considered nonpublic if it has not been previously disclosed to the general public and is otherwise not
available to the general public. Material information ceases to be nonpublic when it has been disseminated and absorbed
by the market, which is considered to occur after one full trading day has passed following the public disclosure of that
information.
8.
PROHIBITED SPECULATIVE TRANSACTIONS
Regardless of whether a Covered Party is aware of material nonpublic information, at no time may any Covered Party
engage in speculative transactions in CSG securities, including:
•
Using CSG securities as collateral for loans or in margin accounts;
•
Engaging in transactions involving publicly traded options, such as puts and calls, relating to CSG securities;
•
Short sales of CSG securities; and
•
Transactions that are designed to hedge or offset any decrease in the market value of CSG securities, including
the purchase of zero-cost collars, prepaid variable forward sales contracts, equity swaps and exchange funds
(provided that general portfolio diversification or investing in broad-based index funds is permitted).
These activities are prohibited under this Policy because, among other problems, these types of transactions:
•
May result in transactions in CSG securities occurring outside the Open Window (defined below); and/or
•
May create an appearance of impropriety because these types of transactions often focus on short-term and
speculative interest in CSG’s securities or otherwise result in a profit from poor company performance.
Limit orders with brokers should not extend beyond any Open Window and be cancellable upon an imposition of a Closed
Window (as defined below).
9.
CSG’S TRADING WINDOWS
CSG has determined that all members of CSG’s Board of Directors, all employees of CSG with a director-level role or
above, members of CSG’s accounting, finance, investor relations, corporate strategy and development, and legal teams,
and executive assistants to any of the same (as well as such other individuals as may be determined from time to time by
the Compliance Officer), together with the members of their immediate families and households and related entities that
constitute Covered Parties (collectively, all of the foregoing are referred to as “Access Persons”) shall be prohibited from
buying, selling or otherwise effecting transactions in any securities of CSG or derivative securities thereof EXCEPT during
the following trading window:
Beginning at the open of market after one full trading day has passed following public disclosure of CSG’s financial results
for a preceding calendar quarter or year and ending at the close of market on the 15th day of the final month of the current
calendar quarter (the “Open Window”).
In addition, CSG, through the Compliance Officer, may authorize longer or additional trading windows in which buying,
selling, or otherwise effecting transactions in CSG’s securities shall be permitted pursuant to this Policy as if it were the
“Open Window.” Similarly, CSG, through the Compliance Officer, may
impose special “Closed Window” periods during which certain Covered Persons will be prohibited from buying, selling, or
otherwise effecting transactions in CSG’s securities, even though the trading window would otherwise be open. If a Closed
Window is imposed, CSG will notify affected individuals, who should thereafter not engage in any purchase, sale or other
transaction in CSG’s securities and should not disclose to others the fact of such suspension of trading until notified by the
Compliance Officer that the Closed Window has ended.
Even during an Open Window, any person aware of material nonpublic information should not engage in any transactions
in CSG’s securities until one full trading has passed following the date of public disclosure of such information, whether or
not CSG has recommended a suspension of trading to that person.
Finally, in the event a Covered Party’s service to CSG ends, please note that the prohibitions on trading on the basis of
material nonpublic information continue and the Compliance Officer may authorize limitations on the trading of CSG
securities by a departing Covered Party following the termination of such person’s service.
10.
PRE-CLEARANCE OF TRADES BY CERTAIN LEADERS AND MEMBERS OF THE BOARD
OF DIRECTORS
All members of CSG’s Board of Directors and all employees of CSG with a Senior Vice President-level role or above are
prohibited from trading in CSG’s securities, even during the Open Window, without first contacting CSG’s Compliance
Officer and obtaining pre-clearance to commence trading in CSG’s securities by submitting a pre-clearance form provided
by the Compliance Officer.
Pre-clearance of any trade must be submitted to the Compliance Officer, and pre-clearance of any trade shall only last for a
period of three trading days after approval of such request.
11.
ADOPTION AND EFFECT OF 10B5-1 TRADING PLANS
CSG permits all Access Persons to adopt trading plans in accordance with Securities and Exchange Commission Rule
10b5-1(c) (17 C.F.R. § 240.10b5-1(c)) (a “10b5-1 trading plan”). The restrictions on trading set forth in this Policy shall not
apply to trades made pursuant to a 10b5-1 trading plan that complies with applicable laws, regulations, and this Policy,
including the requirements set forth on Appendix A.
In addition, the entry into or amendment of a 10b5-1 trading plan by a member of CSG’s Board of Directors or any
employee of CSG with a Senior Vice President-level role or above, must be pre-approved by CSG’s Compliance Officer.
Unless otherwise authorized by the Compliance Officer, all 10b5-1 trading plans must be
made through CSG’s outside stock plan administrator, Fidelity Investments. The adoption, amendment and termination of,
and trades made pursuant to, 10b5-1 trading plans will be disclosed as required under applicable law and Access Persons
must cooperate with CSG in the preparation of such disclosures. More information concerning trading plans is available
from the Compliance Officer including information about any applicable public disclosure requirements.
12.
EXEMPTIONS FROM THIS POLICY
The exercise of stock options under CSG’s equity compensation plan with a cash payment, stock swap or net exercise to
pay the exercise price and tax withholding is exempt from this Policy since the other party to these transactions is CSG
itself. This exemption does not apply to the sale of any shares issued upon such exercise and it does not apply to a broker-
assisted cashless exercise of options, which is accomplished by a sale of a portion of the shares issued upon exercise of
an option. Other transactions which are also exempt from this Policy include: (i) the vesting of restricted stock awards or
units, including performance-based restricted stock awards or units, or the withholding of shares to satisfy tax withholding
requirements; (ii) purchases of CSG securities in the employee stock purchase plan; provided however, this Policy does
apply to an election to participate in the plan and any amendments or adjustments to such involvement; (iii) automatic
purchases of CSG securities under CSG’s dividend reinvestment plan; and (iv) bona fide gifts of CSG securities (a) to a
Covered Party subject to the provisions of this Policy as the person making the gift or (b) where the person making the gift
has a reasonable basis for believing that the recipient of the gift will not sell the CSG securities during a Closed Window
applicable to the person making the gift at the time of the gift; provided that all such gifts by persons subject to the pre-
clearance requirements must still be pre-cleared by the Compliance Officer.
13.
CONSEQUENCES FOR VIOLATION
Employees who violate this Policy shall be subject to disciplinary action by CSG, which may include ineligibility for future
participation in CSG’s equity and other incentive plans or termination of employment.
Pursuant to U.S. federal and state securities laws, Covered Parties who engage in insider trading may be subject to
criminal and civil fines and penalties as well as imprisonment for engaging in transactions in securities at a time when they
have knowledge of material nonpublic information regarding the issuer of the securities. In addition, Covered Parties may
be liable for improper transactions by any person (commonly referred to as a “tippee”) to whom they have disclosed
material nonpublic information regarding the issuer of the securities or to whom they have made recommendations or
expressed opinions on the basis of such information as
to trading in the company’s securities.
14.
COMPLIANCE OFFICER
The duties of the Compliance Officer shall include:
a.
Pre-clearing transactions and the entry into or amendment of 10b5-1 trading plans, as required under this Policy. In
order to pre-clear a trade or enter into or amend a 10b5-1 trading plan, a Covered Party must first email
preclearance@csgi.com, and the Covered Party will receive instructions on how to complete and submit the relevant
information and/or form;
b.
Distributing quarterly reminders of the dates that the Open Window begins and ends, and informing impacted persons
regarding Closed Windows; and
c.
Assisting CSG in implementation of this Policy.
The duties of the Compliance Officer may be delegated by the Compliance Officer to such other individuals as the
Compliance Officer deems appropriate. For any questions concerning this Policy or its application, please email the
Compliance Officer at preclearance@csgi.com.
Appendix A
Rule 10b5-1 Trading Plan Transactions Policy
Rule 10b5-1 under the Securities Exchange Act of 1934 (the “Exchange Act”) provides a defense from insider trading liability under
Rule 10b-5. In order to be eligible to rely on this defense, a person subject to this Policy must enter into a 10b5-1 trading plan for
transactions in CSG securities that meets certain conditions specified in that rule. Once the plan is adopted, the person must not
exercise any influence over the amount of securities to be traded, the price at which they are to be traded or the date of the trade.
The plan must either specify the amount, pricing and timing of transactions in advance or delegate discretion on these matters to an
independent third party.
The following guidelines apply to all 10b5-1 trading plans (unless otherwise approved by the Compliance Officer):
•
For persons subject to Section 16 of the Exchange Act (“Section 16 Persons”), no transaction may take place under a
10b5-1 trading plan until expiration of a cooling-off period consisting of the later of (a) 90 days after adoption or
modification (as specified in Rule 10b5-1) of the 10b5-1 trading plan or (b) two business days following the disclosure of
the company’s financial results in a Form 10-Q or Form 10-K for the fiscal quarter (the company’s fourth fiscal quarter in
the case of a Form 10-K) in which the 10b5-1 trading plan was adopted or modified (as specified in Rule 10b5-1), but in
any event, this required cooling-off period is subject to a maximum of 120 days after adoption of the plan.
•
For persons other than Section 16 Persons, no transaction may take place under a 10b5-1 trading plan until the expiration
of a cooling-off period that is 30 days following the adoption or modification (as specified in Rule 10b5-1) of a 10b5-1
trading plan.
•
Subject to certain limited exceptions specified in 10b5-1, a Covered Party may not have more than one 10b5-1 trading
plan in effect at any same time.
•
Subject to certain limited exceptions specified in Rule 10b5-1, a Covered Party may only enter into a 10b5-1 trading plan
that is designed to effect an open market purchase or sale of the total amount of securities subject to the 10b5-1 trading
plan as a single transaction (a “single-transaction plan”) if the Covered Party has not entered into a “single-transaction
plan” in the prior 12 months.
•
A Covered Party must act in good faith with respect to a 10b5-1 trading plan. A 10b5-1 trading plan cannot be entered into
as part of a plan or scheme to evade the prohibition of Rule 10b-5. Therefore, although modifications to an existing
10b5-1 trading plan are not prohibited, a 10b5-1 trading plan should be adopted with the intention that it will not be
amended or terminated prior to its expiration.
•
Section 16 Persons must include a representation in the 10b5-1 trading plan that (i) the person is not aware of material,
nonpublic information about the company or CSG securities and (ii) the person is adopting the plan in good faith and not
as part of plan or scheme to evade the prohibitions of Rule 10b-5.
For purposes of the above, a modification as specified in Rule 10b5-1 includes any modification of a 10b5-1 trading plan that
changes the amount, price or timing of the purchase or sale of securities underlying the 10b5-1 trading plan.
EXHIBIT 21.01
CSG Systems International, Inc.
Subsidiaries of the Registrant
As of December 31, 2024
Subsidiary
State or Country
of Organization
Ascade AB
Sweden
Ascade Middle East FZ-LLC
United Arab Emirates
Billing Intec Uruguay S.A.
Uruguay
CSG Forte Payments Holdings, Inc.
Delaware
CSG Forte Payments, Inc.
Delaware
CSG Forte Payments Canada, Inc.
Canada
CSG International Australia Pty Limited
Australia
CSG International Colombia SAS
Colombia
CSG International Pty Limited
Australia
CSG International PTE Ltd
Singapore
CSG International Sdn Bhd
Malaysia
CSG SA Holdings (Pty) Limited
South Africa
CSG SA Services (Pty) Limited
South Africa
CSG Systems International, Inc.
Delaware
CSG Systems International (India) Pvt. Ltd.
India
CSG Systems U.K. Limited
United Kingdom
CSG Systems, Inc.
Delaware
CSGI Maroc Sarl
Morocco
Designgen, Comunicação Visual, Unipessoal Lda.
Portugal
DGIT Systems Pty, Ltd.
Australia
DGIT Holdings Pty, Ltd.
Australia
DGIT NZ Limited
New Zealand
Digiquant, Inc.
Delaware
Independent Technology Billing Solutions S de RL de CV
Mexico
Inomial Pty, Ltd.
Australia
Independent Technology Systems Limited
United Kingdom
Independent Technology Systems for Information Technology LLC
Saudi Arabia
Independent Technology Systems SL Unipersonal
Spain
Intec Billing Canada Ltd.
Canada
Intec Billing Ireland Ltd.
Ireland
Intec Billing, LLC
Delaware
Intec Billing Nigeria Limited
Nigeria
Intec Telecom Systems (France) SARL
France
Intec Telecom Systems Denmark A/S
Denmark
Intec Telecom Systems Deutschland GmbH
Germany
Intec Telecom Systems do Brasil Limitada
Brazil
Intec Telecom Systems Italia S.P.A.
Italy
Intec Telecom Systems Limited
United Kingdom
Intec Telecom Systems South Africa (Pty) Limited
South Africa
Keydok Mexico SA de CV
Mexico
MobileCard Holdings, LLC
Delaware
PT CSG Systems Indonesia
Indonesia
Tango Telecom Ltd.
Ireland
Tango Telecom Sdn Bhd
Malaysia
Volubill Danmark ApS
Denmark
Volubill, Inc.
Delaware
EXHIBIT 23.01
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the registration statements (Nos. 333-248228, 333-266669, 333-274126) on Form S-8 of our
reports dated February 20, 2025, with respect to the consolidated financial statements of CSG Systems International, Inc. and the effectiveness
of internal control over financial reporting.
/s/ KPMG LLP
Omaha, Nebraska
February 20, 2025
EXHIBIT 31.01
CERTIFICATIONS PURSUANT TO
SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Brian A. Shepherd, certify that:
1.
I have reviewed this annual report on Form 10-K of CSG Systems International, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)
and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
Date:
February 20, 2025
/s/ Brian A. Shepherd
Brian A. Shepherd
President and Chief Executive Officer
EXHIBIT 31.02
CERTIFICATIONS PURSUANT TO
SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Hai Tran, certify that:
1.
I have reviewed this annual report on Form 10-K of CSG Systems International, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)
and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
Date:
February 20, 2025
/s/ Hai Tran
Hai Tran
Executive Vice President and Chief Financial Officer
EXHIBIT 32.01
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The certification set forth below is being submitted in connection with the Annual Report on Form 10-K (the “Report”) for the purpose of complying
with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of
the United States Code.
Brian A. Shepherd, the Chief Executive Officer and Hai Tran, the Chief Financial Officer of CSG Systems International, Inc., each certifies that, to
the best of his knowledge:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of
CSG Systems International, Inc.
February 20, 2025
/s/ Brian A. Shepherd
Brian A. Shepherd
President and Chief Executive Officer
February 20, 2025
/s/ Hai Tran
Hai Tran
Executive Vice President and Chief Financial Officer