Amortization of acquired intangible assets X X X

Earn-out compensation X X X

Transaction-related costs X X X

Stock-based compensation X X X

Amortization of original issue discount - - X ('OID')

Gain (loss) on extinguishment of debt - - X

Unusual income tax matters - - X

CSG believes that excluding certain items in calculating its non-GAAP financial measures provides meaningful supplemental information regarding CSG's performance and these items are excluded for the following reasons: . Transaction fees are primarily comprised of interchange and other payment-related fees paid, in conjunction with

the delivery of service to customers under CSG's payment services contracts, to third-party payment processors and

financial institutions by CSG. Because CSG controls the integrated service provided under its payment services

customer contracts, these transaction fees are presented gross, and not netted against revenue; however, other

payments companies who do not provide and/or control an integrated service present their revenue net of transaction

fees. The exclusion of these fees in calculating CSG's non-GAAP adjusted revenue provides management and investors

an additional means to use to compare CSG's current revenue with historical and future periods, as well as with

other payments companies. . Restructuring and reorganization charges are expenses that result from cost reduction initiatives and/or

significant changes to CSG's business, to include such things as involuntary employee terminations, changes in

management structure, divestitures of businesses, facility consolidations and abandonments, and fundamental

reorganizations impacting operational focus and direction. These charges are not considered reflective of CSG's

recurring business operating results. The exclusion of these items in calculating CSG's non-GAAP financial measures

allows management and investors an additional means to compare CSG's current financial results with historical and

future periods. . Executive transition costs include expenses incurred related to the departure of CSG's former CEO under the terms

of his separation agreement. These costs were primarily recognized during the third and fourth quarters of 2020

(the CEO's remaining term) and were not considered reflective of CSG's recurring business operating results. The

exclusion of these costs in calculating CSG's non-GAAP financial measures allows management and investors an

additional means to compare CSG's current financial results with historical and future periods. . Acquisition-related expenses include amortization of acquired intangible assets, earn-out compensation, and

transaction-related costs. Transaction-related costs, which typically include expenses related to legal,

accounting, and other professional services, are direct and incremental expenses related to business acquisitions,

and thus, are not considered reflective of CSG's recurring business operating results. The total amount of

acquisition-related expenses can vary significantly between periods based on the number and size of acquisition

activities, previously acquired intangible assets becoming fully amortized, and ultimate realization of earn-out

compensation. In addition, the timing of these expenses may not directly correlate with underlying performance of

the CSG's operations. Therefore, the exclusion of acquisition-related expenses in calculating CSG's non-GAAP

financial measures allows management and investors an additional means to compare CSG's current financial results

with historical and future periods. . Stock-based compensation results from CSG's issuance of equity awards to its employees under incentive compensation

programs. The amount of this incentive compensation in any period is not generally linked to the level of

performance by employees or CSG. The exclusion of these expenses in calculating CSG's non-GAAP financial measures

allows management and investors an additional means to evaluate the non-cash expense related to compensation

included in CSG's results of operations, and therefore, the exclusion of this item allows investors to further

evaluate the cash generating capabilities of CSG's business. . The convertible notes OID is the result of allocating a portion of the principal balance of the debt at issuance to

the equity component of the instrument, as required under current accounting rules. This OID is then amortized to

interest expense over the life of the respective convertible debt instrument. The interest expense related to the

amortization of the OID is a non-cash expense, and therefore, the exclusion of this item allows investors to

further evaluate the cash interest costs of CSG's convertible notes for cash flow, liquidity, and debt service

purposes. . Gains and losses related to the extinguishment of debt are a result of the refinancing of CSG's credit agreement

and/or repurchase of CSG's convertible notes. These activities are not considered reflective of CSG's recurring

business operating results. Any resulting gain or loss is generally non-cash income or expense, and therefore, the

exclusion of this item allows investors to further evaluate the cash impact of these repurchases for cash flow and

liquidity purposes. In addition, the exclusion of these gains and losses in calculating CSG's non-GAAP EPS allows

management and investors an additional means to compare CSG's current operating results with historical and future

periods. . Unusual items within CSG's quarterly and/or annual income tax expense can occur from such things as income tax

accounting timing matters, income taxes related to unusual events, or as a result of different treatment of certain

items for book accounting and income tax purposes. Consideration of such items in calculating CSG's non-GAAP

financial measures allows management and investors an additional means to compare CSG's current financial results

with historical and future periods.

CSG also reports non-GAAP adjusted EBITDA and non-GAAP free cash flow. Management believes non-GAAP adjusted EBITDA is a useful measure to investors in evaluating CSG's operating performance, debt servicing capabilities, and enterprise valuation. CSG defines non-GAAP adjusted EBITDA as income before interest, income taxes, depreciation, amortization, stock-based compensation, foreign currency transaction adjustments, acquisition-related expenses, and unusual items, such as restructuring and reorganization charges, executive transition costs, and gains and losses related to the extinguishment of debt, as discussed above. Additionally, management uses non-GAAP free cash flow, among other measures, to assess its financial performance and cash generating capabilities, and believes that it is useful to investors because it shows CSG's cash available to service debt, make strategic acquisitions and investments, repurchase its common stock, pay cash dividends, and fund ongoing operations. CSG defines non-GAAP free cash flow as net cash flows from operating activities less the purchases of software, property and equipment.

Non-GAAP Financial Measures

Non-GAAP Adjusted Revenue:

The reconciliations of GAAP revenue to non-GAAP adjusted revenue for the indicated periods are as follows (in thousands):

Quarter Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

$ $ $ $

GAAP revenue

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

Less: Transaction fees ) ) ) )

(16,655 (15,695 (33,105 (34,019

Non-GAAP adjusted $ $ $ $ revenue

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

Non-GAAP Operating Income:

The reconciliations of GAAP operating income to non-GAAP operating income for the indicated periods are as follows (in thousands, except percentages):

Quarter Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

$ $ $ $

GAAP operating income

32,166 19,775 63,543 52,934

Restructuring and reorganization charges (1) 1,760 2,497 2,820 3,463

Executive transition costs 5 - 60 -

Acquisition-related expenses:

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