CSG CSG Systems International Reports Second Quarter 2021 Results 04-Aug-2021 / 22:01 CET/CEST -----------------------------------------------------------------------------------------------------------------------

Raising All 2021 Financial Guidance Targets on the Back of Strong H1 2021 Result

Robust Q2 2021 Revenue & Adjusted Revenue Growth; Each up 6.2% Year-Over-Year

Successful Conversion of 300,000 Charter Communications Customers in Kansas City

CSG (NASDAQ: CSGS) today reported results for the quarter ended June 30, 2021.

Financial Results:

Second quarter 2021 financial results: . Total revenue was $255.1 million and total non-GAAP adjusted revenue was $238.5 million. . GAAP operating income was $32.2 million, or 12.6% of total revenue, and non-GAAP operating income was $39.8 million

, or 16.7% of non-GAAP adjusted revenue. . GAAP earnings per diluted share (EPS) was $0.60 and non-GAAP EPS was $0.82. . Cash flows used in operations were $44.5 million, with a non-GAAP free cash flow of $37.5 million.

Shareholder Returns: . In May 2021, CSG declared its quarterly cash dividend of $0.25 per share of common stock, or a total of

approximately $8 million, to shareholders. . During the second quarter of 2021, CSG repurchased under its stock repurchase program, approximately 153,000 shares

of its common stock for approximately $7 million.

'CSG continued to build off our Q1 momentum and delivered 6.2% year-over-year revenue and adjusted revenue growth in Q2, which was predominantly all organic growth,' said Brian Shepherd, President and Chief Executive Officer of CSG. 'On the back of our strong first half performance, we are boosting all 2021 financial guidance targets, including revenue, adjusted operating margin and EPS. Additionally, we are thrilled to expand our relationship with Charter Communications as we successfully converted approximately 300,000 of their Kansas City market subscribers from a competitor's billing platform to CSG during the quarter. Looking ahead, we remain well positioned to lengthen and strengthen our relationships with existing customers, accelerate our organic revenue growth, close good new strategic acquisitions, and diversify into higher growth industry verticals.'

Financial Overview (unaudited)

(in thousands, except per share amounts and percentages):

Quarter Ended June 30, Six Months Ended June 30,

Percent Percent

2021 2020 2021 2020

Changed Changed

GAAP Results:

$ $ % $ $ %

Revenue

255,134 240,321 6.2 508,253 485,938 4.6

Operating % % Income 32,166 19,775 63,543 52,934

62.7 20.0

Operating % % % % Margin Percentage 12.6 8.2 12.5 10.9

$ $ % $ $ %

EPS

0.60 0.32 87.5 1.21 0.99 22.2

Non-GAAP Results:

Adjusted $ $ % $ $ % Revenue

238,479 224,626 6.2 475,148 451,919 5.1

Operating % % Income 39,789 30,633 79,996 72,787

29.9 9.9

Adjusted % % % % Operating Margin 16.7 13.6 16.8 16.1 Percentage

$ $ % $ $ %

EPS

0.82 0.59 39.0 1.65 1.46 13.0

For additional information and reconciliations regarding CSG's use of non-GAAP financial measures, please refer to the attached Exhibit 2 and the Investor Relations section of CSG's website at csgi.com.

Results of Operations

GAAP Results: Total revenue for the second quarter of 2021 was $255.1 million, a 6.2% increase when compared to revenue of $240.3 million for the second quarter of 2020, and a 0.8% increase when compared to revenue of $253.1 million for the first quarter of 2021. The year-over-year increase in revenue can be primarily attributed to continued growth of CSG's revenue management solutions, favorable foreign currency movements, and to a lesser extent, the negative impact the COVID-19 pandemic had on CSG's second quarter of 2020 revenue. The sequential quarterly increase is mainly due to the continued growth of CSG's revenue management solutions.

GAAP operating income for the second quarter of 2021 was $32.2 million, or 12.6% of total revenue, compared to $19.8 million, or 8.2% of total revenue, for the second quarter of 2020, and $31.4 million, or 12.4% of total revenue, for the first quarter of 2021. The increase in operating income can be primarily attributed to the revenue growth in 2021 and an approximately $10 million impairment charge for the write-off of capitalized customer contract costs related to a discontinued project implementation in the second quarter of 2020.

GAAP EPS for the second quarter of 2021 was $0.60, as compared to $0.32 for the second quarter of 2020, and $0.61 for the first quarter of 2021. The year-over-year increase in GAAP EPS is mainly due to the increase in operating results, discussed above.

Non-GAAP Results: Non-GAAP adjusted revenue for the second quarter of 2021 was $238.5 million, a 6.2% increase when compared to non-GAAP adjusted revenue of $224.6 million for the second quarter of 2020, and a 0.8% increase when compared to $236.7 million for the first quarter of 2021.

Non-GAAP operating income for the second quarter of 2021 was $39.8 million, or 16.7% of total non-GAAP adjusted revenue, compared to $30.6 million, or 13.6% of total non-GAAP adjusted revenue for the second quarter of 2020, and $40.2 million, or 17.0% of total non-GAAP adjusted revenue for the first quarter of 2021.

Non-GAAP EPS for the second quarter of 2021 was $0.82 compared to $0.59 for the second quarter of 2020, and $0.82 for the first quarter of 2021.

The changes in non-GAAP adjusted revenue, non-GAAP operating income, and non-GAAP EPS between quarters are primarily due to the factors discussed above.

Balance Sheet and Cash Flows

Cash, cash equivalents and short-term investments as of June 30, 2021 were $212.1 million compared to $205.1 million as of March 31, 2021 and $240.3 million as of December 31, 2020. CSG had net cash flows from operations for the second quarters ended June 30, 2021 and 2020 of $44.5 million and $57.8 million, respectively, and had non-GAAP free cash flow of $37.5 million and $48.3 million, respectively.

Summary of 2021 Financial Guidance

CSG is updating its financial guidance for the full year 2021, as follows:

As of August 4,

Previous

2021

GAAP Measures:

$ $

Revenue

1,015 - $1,045 million 995 - $1,035 million

Operating Margin Percentage 12.3% - 12.7% 12.2% - 12.7%

$ $

EPS

2.35 - $2.53 2.30 - $2.53

$ $

Cash Flows from Operating Activities

140 - $160 million 135 - $155 million

Non-GAAP Measures:

$ $

Adjusted Revenue

946 - $964 million 922 - $954 million

Adjusted Operating Margin Percentage 16.5% - 17.0% 16.25% - 16.75%

$ $

EPS

3.16 - $3.34 3.02 - $3.24

$ $

Adjusted EBITDA

217 - $225 million 212 - $222 million

$ $

Free Cash Flow

115 - $125 million 110 - $120 million

For additional information and reconciliations regarding CSG's use of non-GAAP financial measures, please refer to the attached Exhibit 2 and the Investor Relations section of CSG's website at csgi.com.

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