CSGS

CSG Systems International, Inc. (CSGS)

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Exchange: NASDAQ
Industry: Technology
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CSG Systems International Inc., (CSGS)

Q2 2010 Earnings Call

July 27, 2010 5:00 p.m. ET

Executives

Peter Kalan – Chief Executive Officer

Randy Wiese – Chief Financial Officer

Liz Bauer – Vice President of Investor Relations

Analysts

Ashwin Shirvaikar – Citigroup

[Shatille Long] – Kaufman Brothers

VJ Corey – Raymond James

Scott Sutherland – Wedbush Securities

Chris Koh – Stifel Nicolaus

Shaul Eyal – Oppenheimer Funds

Lauren Ye – JP Morgan

Presentation

Operator

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the CSG Systems Q2 2010 results conference call. (Operator instructions.) This conference is being recorded today, Tuesday, the 27th of July, 2010. I would now like to turn the conference over to Ms. Liz Bauer, Vice President of Investor Relations. Please go ahead, ma’am.

Liz Bauer

Thank you, Lorenzo, and thanks to everyone for joining us. Today’s discussion will contain a number of forward looking statements. These will include but are not limited to statements regarding our projected financial results; our ability to meet our clients’ needs to our products, services, and performance; and our ability to successfully integrate and manage acquired business in order to achieve their expected strategic, operating, and financial goals. While these statements reflect our best current judgments they are subject to risks and uncertainties that could cause our actual results to differ materially.

Please note that these forward looking statements reflect our opinions only as of the date of this call and we undertake no obligation to revise or publicly release any revision to these forward looking statements in light of new or future events. In addition to factors noted during this call, a more comprehensive discussion of our risk factors can be found in today’s press release as well as our most recently filed 10-K and 10-Q, which are all available on the Investor Relations section of our website.

Also we will discuss certain financial information that is not prepared in accordance with GAAP. We use this non-GAAP information in our internal analysis in order to exclude significant items that may have a disproportionate effect in a particular period. We believe that isolating the effects of such events enables us as well as investors to consistently analyze the critical components of our operating results and to have meaningful comparisons to prior periods. For more information regarding our use of non-GAAP financial measures we will refer you to today’s earnings release and non-GAAP reconciliation tables on our website, which will also be furnished to the SEC on form 8-K.

With me today on the phone are Peter Kalan, our Chief Executive Officer and Randy Wiese, our Chief Financial Officer. Before I turn it over to Peter and Randy I want to encourage everyone to save the date for our Analysts Day. We’ll be holding our Analysts Day on Thursday, December 9th, at the London Hotel in New York City. We hope that you’ll be able to attend.

With that, I’d now like to turn the call over to Peter.

Peter Kalan

Thank you, Liz, and thanks to everyone for joining us on the call. I’m pleased to report that CSG continued to execute well, posting Q2 revenues of $131 million and non-GAAP EPS of $0.53 per share. Our revenues increased 5% from the Q2 of 2009, and we experienced growth over our Q1 of this year also. Equally impressive, we’ve also been able to expand our profitability measures during this time frame.

As we assess the overall business environment today, we continue to see our clients spend on those areas that have a well-defined return on investment and those areas that drive revenue growth. However, we’ve not seen an increase in spending on those items that are discretionary in nature, like advertising or marketing services. Our clients’ businesses are changing at a pace that this industry has not experienced in years. This can be attributed to competition, consumer choice, and the need to simplify the complexity involved with delivering a broad and deep number of products and services to the end consumer.

In order to help our clients meet the demands of this dynamic and evolving marketplace, we continue to invest in those areas that enable our clients to succeed. We believe that our value proposition, providing highly scalable integrative solutions that maximize and monetize every customer interaction, will help fuel our growth in the future as we continue to help our clients execute on their business objectives. Our business target is three-pronged: first, we’ll expand the relationship with our existing clients. Second, we’ll expand our presence in new targeted verticals through existing relationships. And finally, we’ll improve the profitability of the business.

Let me share with you some highlights from the quarter that demonstrate how we’re executing against these strategies. First, this quarter we signed a contract with Time Warner for our commercial services solution. Our solution will enable Time Warner to enhance a roll out of their voice and high-speed data offerings to small and medium businesses, enabling increased flexibility, reporting, and servicing of this market. Our cable clients are gaining tremendous success in the market long owned by the telephone companies by providing competitively priced and feature-rich all IT-based packages.

Second, in this last quarter we reached a significant milestone as a result of our clients’ success in providing a voice solution to the marketplace. CSG now processes and manages the interactions of over 10 million voice customers on behalf of our clients. Enabling our clients’ success is a key motivator and driving force for our employees. These solutions that we provide to our clients are aimed at helping them drive new revenue streams and increasing their share of their consumer spend on content, communications, and information.

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