Q3 2021 CSG Systems International Inc Earnings Call
All over to John Ray head of Investor Relations you May begin your conference.
Thank you operator, and thanks to everyone for joining us like last quarter, we will be working from a slide deck, which can be found on the investor Relations section of our website. Please take a moment to locate these slides today's discussion will contain a number of forward looking statements. These include but are not limited.
Two statements regarding our projected financial results, our ability to meet our clients needs through our products services and performance and our ability to successfully integrate and manage acquired businesses in order to achieve their expected strategic operating and financial goals.
While these risks reflect our best current judgment 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 a 10-K and 10-Q, which are all available in the Investor Relations section of our website also we will discuss certain financial information that is not prepared in accordance with gas.
We believe that these non-GAAP financial measures when reviewed in conjunction with our GAAP financial measures provide investors with greater transparency to the information used by our management team and our financial and operational decision, making for more information regarding our use of non-GAAP financial measures. We refer you to today is Earl.
Earnings release, and non-GAAP reconciliation tables on our website, which will also be furnished to the S. E C on form 8-K.
With me today on the phone or Brian Shepherd, Chief Executive Officer in Raleigh, Johns Chief Financial Officer with that I'd like to now turn the call over to Brian.
Thanks, John for those using the slides today, please join a starting on slide four and five.
Many people, who know see a few well commented that something seems to be changing inside are good company or market vision is more innovative and global in nature or strategic growth aspirations are loftier and more bold our senior leadership team and board of directors or more diverse and our customer base is less concentrated.
His research bigger brands and a wide variety of large high growth industry verticals all around the world. These changes are noticeable and they are real to see a few that I see every day is purpose driven industry impacting and future shaping and the cool thing about all of this is that we're <unk>.
Just getting started to the theme that we selected for today's Q3 2021 or <unk> call is velocity everything we do is intentional and focused on creating more velocity every single day what matters. Most is not the boldness of our words or our vision what matters. Most is the quality of the.
The results that this management team delivers day in day out quarter and quarter out. This is the yardstick by which we will continue to measure our progress at C. S. G delivery for our customers delivery for employees and delivering for our shareholders. This mindset. This relentless determined.
Asian, this passion for growth and transformation transcends any one quarter and will power C. S. G to heights in the years ahead that many people listening to this earnings call might not yet allow themselves to believe but make no mistake about this management team absolutely believes we are all in and.
Here to turn our beliefs into your reality with this is the backdrop I'm pleased to report that Q3 2021 is a quarter that will go down in the record books as one of the truly great quarters in the almost four decades of C. S. Jeeze proud history. So how good 1234 C S.
Gee, Please turn to slide six for the summary, Q3 quarterly your your revenue growth was 7.8% predominantly driven by organic revenue growth. This represents the highest quarterly organic revenue growth. The C. S. G as delivered and well over a decade Q3 year to date revenue.
Results through nine months grew 5.7% year over year, which achieves the commitment that I have repeatedly shared that we would more than double organic revenue growth equally exciting cft's grow philosophy on the bottom line was even better than our top line growth with non gap year to date.
P S through nine months in 2021 up double digits with 13.5% EPS growth year over year on the big customer renewal front, we just announced an exciting four and a half year renewal with dish networks are third largest customer we are honored to have served for over 24.
Five years and now with this renewal we paved the way to celebrate our 30th anniversary with dish as we help them achieve their own walk the business objectives, and last but definitely not least we announced the largest contract ever sign in the history of C. S. G with a landmark six year contract renewal insignificant.
Expansion of our relationship with our largest customer charter communications, even better C. S. G will become the BSS provider of choice for all 32 million charter customers supported residential and small medium business for high speed broadband video and voice with over one milk.
Customers already successfully migrated off of our competitors platform I will provide more details on this meaningful when in a few minutes.
As impressive as are cute three results are what might excite shareholders. Even more is how these results combined with our strong sales performance has positioned C. S. G for growth in 2022 and beyond over the last three quarters. Every time, we have been asked about the headwinds. These two renewals my cause.
I have answered the team C. S. G is committed to proving that they would become the springboard for C. S. Jeeze accelerated revenue growth not an excuse for why we couldn't grow into your following big renewals turning to slide seven we were pleased to share. How this commitment that we made to you has now been turned into reality.
For the first time ever see if he has provided a preliminary 2022 guidance is part of our two three earnings and this preliminary guidance represents year over year revenue growth next year.
Specifically is part of our preliminary growth oriented 2022 guidance, we expect 2022 revenue to range from $1.06 billion to $1.1 billion in our justice revenue to range from 990 million to one dot zero 2 billion.
Further we expect our 2022 adjusted operating income on an absolute dollar basis to grow your per year and are operating margin percentage to remain consistent with our current 16.5% to 17.0% 2021 guidance.
Consistent with our aspiration to grow bottom line is faster faster than our top line.
We also expect EPS growth in 2022 to continue to outpaced revenue growth just as we have delivered so far and year to date 2021 and for avoidance of doubt. This preliminary 2022 guidance is based only on the business results sales wins and acquisitions that we have close.
Those so far through a Q3 it does not yet factor in any other new sales wins for future acquisitions, we might close in the fourth quarter or in the early part of 2022.
As such we will provide an update at four year of 2022 guidance as we normally do during our queue for earnings call in February with.
With all of this contact setting I hope it is clear to everyone listening why we continue to proudly highlight and see if she has never been healthier our future outlook has never been more encouraging and R. Accelerated growth in revenue diversification has never been more real with that summary, please turn to slide eight for an update.
On five important strategic objectives first we committed the C. S. G would more than double our long term organic revenue growth rate and the 2% to 6% range up from our historical range of 1% to 3% in our 2021 results prove we're delivering on this commitment in Q3 C.
<unk> delivered 263 million in total revenue, which represent 7.8% year over year growth substantially all coming from organic revenue growth.
Even better are adjusted to three revenue was 247 million, representing eight 5% year over year growth. Both the results represent the fastest G. S. G organic revenue growth and well over a decade and our gear to day results had been almost as good with Rev.
GNU and adjusted revenue growing 5.7% and 6.3% year over year, respectively through nine months Q3, really was a special quarter and I Wonder again, thank our talented C. S. G employees and leaders for their dedication their continued excellence and for obsessing over the customer.
Value the redeliver, each and every day.
On the right hand of slide nine second we committed to boldly elevate our market aspirations and this is exactly what team C. S. G is doing many of you might've heard me on recent fireside chats talking about Cfcs 2 billion M beyond growth strategy. So let me provide more insights on that.
Our strategic aspiration is to achieve three main business objectives by 2025 first game scale of the markets, where we compete in order to achieve $2 billion in annual revenue.
Second expand C. S jeeze operating leverage and use our strong healthy balance sheet to deliver EPS growth that outpaces revenue growth third consistently deliver better and better business results. So that our shareholders are rewarded with the trading multiples that they deserve when they invest in it fast.
After growing multi industry vertical highly recurring revenue SAS platform company like C. S. G U.
You may be asking yourself, how C. S. G get there 2 billion revenue EPS growth that outpaces revenue growth and a true SAS training multiple sounds ambitious you're exactly right. It is an ambitious plan and yet this management team absolutely believes that we can deliver against it with the same.
Discipline and high integrity that consistently defined C. S. G. R discipline strategic plan includes a base case components and a stretch goal components in our base case, we'd be aspire to exceed $1.5 billion in revenue over the next five years.
Which means even if we come up a little sure against our stretch case aspirations C. S. G will still grow revenue by over 50% and add over $500 million and profitable recurring revenue by 2025 are stretched case ambitions C S ranting to $2 billion.
An annual revenue our management plan to achieve both scenarios combined a healthy mix of good organic revenue growth in the 2% to 6% range, which is more than double what C. S. G. As as historically delivered and see if she will continue to be a consistent disciplined acquire within <unk>.
Growth amplifying organic growth just as you have seen as close announced three good acquisition so far in 2021.
Reach the 2 billion dollar stretch revenue case aspiration over the next five years, we will continue to allocate capital to its most value, adding use and to eventually close much bigger scale acquisitions that become even more transformational for both C. S G and the industry.
On this last point I would like to reinforce a key point shared on many analyst and Investor calls recently this management team is laser focused on creating value for our shareholders not building empires, we will hold ourselves accountable to adding scale accelerating growth expanding our operating leverage.
And deploying capital to its highest and most productive use all with a focus on rewarding our investors just like we work hard every day to delight, our customers and our employees.
Turning to slide 10, third we committed the C. S. G would be the technology provider of choice for the communications service providers globally, and our continued sales success with both North American and global C. S. P's proved that we're executing well against this strategic priority.
And the cable market, becoming the BSS provider choice for all 32 million charter customers is a huge win in the market Charter communications is it doubtfully one of the biggest and best cable operators in the world and we are extremely proud to serve them in an expanded capacity working he.
Hand in hand, with talented charter colleagues C. S. T has already successfully migrated over 1 million customers with 300000 customers completed in the Kansas City market in Q2, and approximately 800000 customers migrated in the Wisconsin market in August while.
The timing could still very a little we anticipate migrating all remaining charter customers over the next 12 to 18 months.
Turning to dish networks as a long standing later in P. T V and content and now with its bold expansion into wireless G. S. G is honored to earn the right as we've done every year since 1996 to serve dish for another four and a half years C. S. G will work harder smarter and more innovative late every day.
To try to bring more value to this dynamic industry leader.
M. C. S. G success is not limited to North America, and the global Telecom market, we continue to succeed and grow with new and and contract extensions with Lightning telecom operators. During two three we announced our revenue management contract renewal and extension with their tell Africa across all.
14 countries, where they operate this is yet. Another example of how P. M. C. S. G E continues to expand our footprint with our existing customers by helping solve their toughest business problems are global telecom success wouldn't be possible without our innovative technology products and a good example of the <unk>.
Eating edge nature of our technology platforms is C. S. G being recognized by T. M Forum as the 2021 catalysts team award winner for visionary impact and the communication service provider marketplace.
Turning to slide 11 fourth we told you to see if she would continue to diversify our industry vertical revenue and during the first nine months of this year, we are continuing to grow revenue coming from higher growth industry verticals outside of our core C. S. P customer base since 2017.
We have grown C. S T revenue from exciting new industry vertical like retail government financial services, and health care from $55 million or 7% of total C. S T revenue to more than $225 million or 23% of total revenue.
Last year and now through the first nine months of 2021, we've continued our industry vertical diversification being.
Being a partner of choice for some of the biggest customers and higher growth industry verticals, where C. S. G helps them digitized and modernise their customer engagement and cloud payments capabilities is an important driver of our accelerated growth.
Two three we signed a good deal with 24 hour fitness and leading fitness center chain to digitize their customer engagement services. This important when proves that are SaaS platforms solve the needs a good brands and many large and dynamic industry verticals. We're also proud to announce that in Q3 with further.
Expanded our relationship with one of the largest software companies in the world as they continue to unlock value in different parts of their business by leveraging C. S. Jeeze innovated conversational a I SAS platform.
And the field service management space, where C. S. G. As the market share leader in North American cable or SaaS platform is recognized in the 2021 gardener magic quadrant for the first time ever. This product is a global multi industry SaaS based platform that Optimizes Guild service operations before during.
And after the day of service the platform enables technicians in the field and dispatchers to make informed decisions based on real time predicted data. It offers intelligent insights and increased customer satisfaction gardeners ratings are deeply respected in the industry and it's a tremendous.
<unk> to receive this on an.
And our payments business, we continue to see positive signs that postcode with growth momentum is beginning to return was strong industry vertical sales results propelled by our industry, leading recurring revenue SaaS payment gateway and payment processing platform, we sign T with the government that health care.
There I S V markets to further extend our payments leadership in these critical biller direct recurring revenue industry verticals also T. I S. B partnerships that we want and signed earlier this year and the Fintech government and property management vehicles are now fully integrated deployed.
And beginning to generate new revenue streams for C. S. E. Forte looking ahead, we're excited about our payments pipeline and returned a strong double digit organic growth in this area.
Moving to the Middle of flight 11, 50, we told you that see if she would be a consistent strategic acquire while maintaining good financial discipline on the strategic SaaS platforms that we buy and this is exactly what we have accomplished so far in 2021.
Last quarter in order to expand our offering in the digital customer engagement space. We shared that we purchase kite will a SAS based recurring revenue company to support real time interaction management through Omnichannel journey orchestration and journey analytics I'm pleased to report that the post merger integrate.
<unk> is progressing well as we just unveiled C. S. G exponents, a bold and innovative new multi vertical market offering to combine C. S. Jeeze proven digital engagement SaaS platform with our new journey as a service capabilities. The Kai will brings to the table this fantastic new <unk>.
Micro services based <unk> platform will drive differentiated digital experiences that are personalised predicted and proactive the for the world's most successful brands and we're already building sales and market momentum with C. S. G X phones, and two three of leading financial services company, where.
Was an existing kind will customer expanded its relationship with C. S. G and adopted our entire unified cloud engagement hub to help them solve their biggest business needs around customer experience and the revenue management market on top of the policy management acquisition of Tango, we acquired in Q2.
We also announced in October that C. S. G acquired digi, it configure price quote or C. P. Two for short and order management technology platform that has strong presence in adoption in the global telecommunications market digit is recognized by T. M Forum as.
A leading multicloud Microservices platform, which has received 11 major industry wars since 2015, including T. M forums. Most innovative use of assets Award Excellence Award. We're open a P is an outstanding architecture Award put simply this ad.
That is a perfect fit for our telecom revenue management business and opens the door to bigger growth opportunities in the future.
We look ahead, we will remain laser focused on integrating the teams and the technologies from these required companies and then walking even greater market and shareholder value and we will continue to be a strategic discipline and consistent acquire or in the quarters and years ahead in order to strengthen and grow C. S. G.
Clothes on slide 12 across all five of these important strategic priorities. The results speak for themselves see if she is building meaningful and sustainable velocity that we fully expect will fuel our continued longterm growth and transformation.
As I wrap up my opening remarks, and turn it over to Raleigh, I will leave you with these part and thoughts <unk> purpose is inspiring and bold or strategic vision is focused and disciplined we are elevating our culture, our talent and our diversity.
And T. M. C. S. G continues to create value for our customers and for our shareholders and yet as proud as we are with our excellent two three results and the velocity that we're generating we also humbly and resolutely remind you of one simple bully.
The best of C. S. G is still to come with that I'll turn it over to Raleigh for more detail on the third quarter financial results and our 2021 and 2022 Alex.
Thanks, Brian as Brian highlighted 2021 continues to be a year of growth Perseus G N.
R Q3 performance did not disappoint.
Let's first start by walking through our Q3 financial results and I'll share a little more detail about our outlook for the remainder of 2021 and our preliminary guidance for 2022 on the heels of our recently announced contract renewals and expansions with both charter communications and dish network turning to slide 14.
<unk>, we generated $263 million in revenue in $247 million of non-GAAP adjusted revenue during the third quarter.
These results represent 7.8% and 8.5% year over year growth respectively.
Which were substantially driven by organic growth.
On a year to date basis, both our revenue and non-GAAP adjusted revenue, we're up approximately 6% year over year.
The year over year increase in revenue and non-GAAP adjusted revenue was driven primarily by continued growth in our revenue management product platforms Rover serve many of the largest communications service providers in the world.
In addition, we're seeing nice growth in our customer engagement offerings, where we serve customers in large high growth industry verticals.
While our revenue growth was primarily organic inorganic grow through acquisitions is an important component of our overall growth strategy aimed at advancing are diversification into faster growing new industry verticals and increasing our leadership position in our core markets.
Over the past few quarters, you've seen us execute on a strategy as we close multiple new acquisitions, including Tango telecom tight wheel and our most recent acquisition digit systems.
As we accelerate are inorganic growth in the quarters ahead, we will remain disciplined by focusing on strategic financial and cultural fit with an appropriate risk return profile for each acquisition we close.
Moving to the bottom of the slide our third quarter non-GAAP operating income was $42 million or 16.8% of non-GAAP adjusted revenue.
As compared to $39 million or 17.2% in the same prior year period.
This year over year increase in operating income was primarily related to current year revenue growth.
On a year to date basis are non-GAAP operating margin as a percentage of 90 up adjusted revenue was 16.8%.
Are non-GAAP adjusted EBITDA was $56 million for the third quarter or 22.8% of non-GAAP adjusted revenue as compared to $52 million or 23% and the same prior year period.
On a year to date basis are non-GAAP, adjusted EBITDA was $165 million or 22.9% of non-GAAP adjusted revenue.
Finally, <unk> B P. S for the current quarter was 88 cents up 12 cents your over a year due mostly to our operating performance.
On a year to date basis are non-GAAP EPS was $2.52.
13.5% increase from the same prior year period.
As proud as we are to be accelerated our top line revenue growth. We are equally excited to deliver strong EPS growth for our shareholders, where a bottom line grew even faster than our top line a performance trend at the entire C. S. G management team is focused on perpetuating going forward.
Turning to balance sheet or cash flow generation shareholder returns for the quarter are included on 515 or third quarter of 2021 cash flow from operations was $46 million as compared to $65 million in the prior year period.
Further we generated non depth free cash flow of $39 million in Q3 of 2021 as compared to $55 million and two three of 2020 year over your decreases are specifically related to movements in our working capital mostly connected with the timing of certain receivables anticipated to be collected in queue for.
That said our year to date cash flow generated from operations before work the capital movements increased from $126 million in 2000, and $20 million to $135 million in 2021, which is the highest it's been in the last 10 years.
Moving on we ended the third quarter with $225 million of cash and short term investments.
That along with our outstanding debt quarter N results in $155 million of net debt.
And a net debt leverage ratio of 0.7 times.
As a reminder, we refinanced our existing term thing that and revolving credit agreement in Q3.
This transaction had multiple benefits, including extending the tenor of our debt lowering our borrowing costs and increasing are currently unused borrowing capacity to $450 million as we continue to review ways to opportunistically enhance our capital structure.
During the third quarter of 2021, we declared $8 million in dividends. In addition, we repurchased $7 million of our common stock under our stock repurchase program move.
Moving on to slide 16, I'll conclude with some key takeaways.
First of all we're pleased with our Q3 and year to date 2021 operating results.
A strong year to date results and our outlook for the remainder of the year give us the confidence to reconfirm, our 2021 financial guidance that we increased across the board last quarter.
In addition, we anticipate closing out 2021 closer to the upper end of those guidance ranges.
These targets are outlined on a table on the right on the slide.
In addition, with the continuing strength of our business and following exciting news of the recent contract renewals with two of our largest customers, we felt well positioned to provide a snapshot of some preliminary 2022 guidance O'brien highlighted earlier.
As Brian outlined we expect our 2022 revenue to range from 1.06 billion to $1.1 billion.
And are non-GAAP adjusted revenue to range from 990 million to $1.02 billion.
With growth and our 2022 non-GAAP operating income year over year.
Dedicated on a non-GAAP operating margin percentage consistent with that of our 2021 guidance range of 16.5% to 17%.
Two also reinforce what Brian mentioned in his comments. This preliminary 2022 guidance is only based on sales wins partnerships on acquisitions closed as of this earnings call any of those types of potential new events in queue for or in the early part of 2022 would become additive to this preliminary.
2022 guidance.
As we've done in the past will provide a full set of our 2022 guidance targets during our queue for earnings call. This February.
As we focus on finishing 2021 strong and look to 2022 and beyond we believe that the velocity, we're creating in the market. The results, we are generating and a laser focus that our leadership team has on executing well against our strategic priorities position as well in the marketplace.
C. S. G is committed to accelerating our revenue growth and diversifying our industry vertical revenues include.
Including disciplined acquisitions contributing to our inorganic growth, which in turn will only perpetuate our organic growth.
And we believe this investment in our future strategic growth combined with our consistent capital distribution and both the form of dividends and share buybacks will serve our shareholders well.
What's that I'll turn it over to the operator to facilitate the question and answer session.
At this time I'd like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad will posture, just a moment to compile the Q&A roster, we'll take our first question from Tom Roderic with Stifel.
Where I apologize, we'll take our first question from Greg Burns with <unk> and company.
Good morning, or afternoon, sorry, so.
Congratulations on the the contract extensions just had a couple about <unk>.
Charter you know when you add.
Uhm the contract extension with Comcast.
I guess at the time you know there was a new you updated guidance following that you lower revenue guidance lowered your margin uhm.
Guidance for the following year, obviously, we're not seeing that and the preliminary 2022 results cause it so could you just.
Help us understand I can still able to drive top line growth and consistent margins in 2022, even following.
The the recent contract renewals.
Yeah, No happy to Greg and appreciate you joining today I'd Love to question. So first is we are accelerating as we've been talking about the last several quarters are overall sales performance ourselves pipeline as as large and has as many large late stage deals in that pipeline and our closure a continue.
Used to be quite strong and we love what we're saying in the market. So one is just the underlying performance of our sales teams. Secondly, when you look at the renewals and you see what's going on in the North American broadband industry with the number of subscribers that our customers are adding it's fantastic to see there.
Our success and their growth and C. S G as in Maine partner and platform provider, we're benefiting from the overall rising water level of the industry and then third we continue to expand the offerings in the business that we went with our existing in our new customers and so with the charter announcement.
What's also factored in.
Along with the any discount we gave them was the fact that we're gaining significant number of subscribers and will be migrating those onto our platforms like we've done in 2021, but in in in an accelerated fashion over the next 12 to 18 months. So it's really all of those things are going into the growth.
In the guidance that we gave preliminarily for 2022 for both topline adjusted revenue and the operating margin as well staying consistent with at 16.5% to 17% range.
Okay, Great and I'd definitely <unk> was surprised to see the the timeline uhm you laid out in terms of porting over all those charter subscribers. So I'd think it was a a multiyear process with.
With Comcast so and at 12 to 18 months is there like.
Like a a target a number of subs per quarter like How's your how should we think about that does that back end loaded is it equally prorated over that time period, how should we think about the timing of those ports.
Yeah. So first it's you know one of the things that that charter communications has done is they've invested a lot in their infrastructure and their technology platforms and they really get a lot of credit for the work, they're doing and trying to deliver that <unk> that excellent customer experience for their spectrum customers and that's a benefit in.
A testament to them and so from our standpoint, what you could expect is a steady progression of the conversion or the migration of the additional <unk> customers that they serve from their existing platform that they use onto the C. S. G SaaS platform and fairly consistent over that 12 to 18.
[noise] month period and.
Can't really comment more than that at this stage.
Okay, and just the the absolute number I guess you said you had courted 1 million set that'll be 13 million is that then the number we should be thinking about that's not on your platform.
That's correct.
Okay.
Okay, and then in terms of.
The.
The.
Acquisitions, you've been doing of late I think.
All of them have been prior partners of yours. So is that kind of <unk> I'm I'm, just trying to get a feel for maybe do you have a handful of partners that you are you looking to like kind of vertically integrate. These are you know how should we think about things like come on a little tuck ins going forward do you have a number of partners you still working with that kind of might.
Make a make sense to bring in house and then it also sounded like now with these deals out of the way you might be looking at bigger opportunities going forward Uhm. So maybe you can just give us a little bit more color on your your thought process in terms of acquisitions going forward.
No perfect Great question. So it it our acquisition approach, we really kind of use four main criteria, we focus on strategic fit financial fit cultural Fad and integration and then the rest of return profile. So we really target deals across the spectrum from an M&A standpoint.
When you look at large scale that could just add operating leverage to our business is one category a second big category are fantastic innovative new SAS platforms, where we see our large enterprise customers in every industry vertical wanting to buy more from kind of a one stop shop from partners. They trust like C. A.
S G and so when we can add innovative high growth multi vertical SaaS platforms. That's a second big category. A third one is exactly what you said a lot of times, where more partner friendly easier to emigrate easier to do business with and some of our customers and so by actually partnering with more and more companies to bring greater van.
You too are global customer base, often we see great companies, great talent, great SAS platforms, and we decide hey, if we've had success in the market why not go ahead and acquire and you'll also see us doing some innovative early stage investments in companies, even pre crossing the chasm to really support this initial.
We have to deliver category defining SaaS platforms, and so I'd be acquisitions can fall in any one of those and it could lead us to do much larger acquisitions mid size or smaller and we really laughed the the discipline nature of our process dry which acquisitions, we ended up closing it wasn't.
We weren't waiting to do mid size and bigger acquisitions. This year until the renewals. We're done we all know that the valuations in the market are quite quite high. These days. So we try to stay very disciplined on the companies, we buy and it just turns out that the last three.
To have been more of those and those partner categories. Like you said, we expect to do more of those but also in the other categories as well, but we like we like discipline and strong value creation drive how we think about that.
Okay, and then the maximum leverage you'd be willing to put on the balance sheet.
I I don't know if there's a maximum but I <unk>, what we target as we target two times net dead leverage for the right deal or for the ride larger deal doesn't mean, we would not go above that but I think the the higher we go the bigger the deal the more we need to have that much conviction had and have.
Done that much deep due diligence to ensure that we could actually deliver value creation for our business for our customers and for our shareholders. So there isn't a limit that we put on that there's obviously plenty of capital in the market, but we like to discipline and our strategic vision kind of dry this on those.
But but to ask us to.
To actually add that is our target operating as our target kind of capital structure range and plant.
Okay. Thank you.
Thanks, Greg.
And as a reminder, ladies and gentlemen to ask a question at Star one on your telephone Keypad next we'll go to Tom Roderic with Stifel.
Hi, guys. Its Max amount of time for Tom I would like to start by just like going to congrats cause. This is truly unimpressive quarter and I know those two big contract renewals are kind of an overhang for a little bit.
Go back for starters, Yeah, you're welcome I guess for starters I just want to kind of.
Go back to those renewals in the the upside for charter was a little more clear just based on the amount of subscribers that we're able to get kind of one over to the platform, but could you kind of go into more detail on the expand expanded business with dish.
Yeah. So the the dish contract is a four and a half year extension of the of the contract we provide all their.
Platform for their pay T V business, obviously dish is a fantastic innovative later in the industry and pay T V and content there bold move into wireless and what they're doing today C. S. G. As a main partner in provider for their pay T V business, we'd love the opportunity to extend and expand even.
Further with dish, that's not something they decided to do at this stage. So we continue to focus on bringing them value and innovative solutions every day and see if there's an opportunity to expand with that fantastic customer overtime, but it is it is similar.
Similar business to what we have today extended four four and a half years on a term.
Got it that makes sense and then just thinking about the industry vertical diversification come in it's in the presentation. Other has grown incredibly from 20th 17 to 2020, how important are those industries and the kind of journey to 2 billion N.
What is it that's driving that so much I mean as a as a customer.
Customers that are realizing cloud transitions in software and need someone might be or are they just displacing old provide.
Providers as they move or is it kind of a new greenfield opportunity and a lot of cases.
It's really a combination of both of <unk> the industry vertical diversification is a huge focus going from 7% to 23% last year. We have a stated goal to get to 30% or more and that growth will come as we also continue to grow nicely in both our north American cable in our.
Global Telecom business. So we want to continue to expand as a leading highly recurring revenue SaaS platform Company survey multi vertical kinds of companies financial services retail government health care technology, and many others are platforms have what those big brands all around the world.
<unk> it lets us serve a much larger addressable market than just our cable and telecom base and it lets US yeah also participate in higher growth industry verticals, where the water levels rising even faster and that is a meaningful part of our strategy. It's also a meaningful part of our current growth.
Nation, and what we see in the years to come so it's something that we're extremely excited about we announced this quarter. The the rollout of our SaaS platform brand named C. S. G. Exponent four were serving great brands and many vehicles and it's a huge opportunity for growth and we just need to.
<unk> to bring great good value in some cases, it's a it's a new greenfield deployment in solution in some cases word displacing competitors, it's kind of across the board Max.
Got it and then just one more quick one from me just thinking about as you just mentioned exponent and you said the Forte payments pipeline is returning strong is there anything that's kind of really driving a lot of activity lately that maybe has in the past.
I don't know, if I would say compared to the past, but it <unk> on the big trend a couple of big trends that we see in every industry vertical.
Is number one the world's going digital N as the World goes digital brands have to work that much harder to really use real time analytics and insights to improve the experience and the engagement that they offer to their customers on a real time individualized basis, and we all know customer satisfaction and grew.
Right experience is becoming table steaks, and the use of data and insights and breaking down the silos in that experience is critical and so those are some of the main drivers that's really causing you know great brands to want to do business with C. S. G. We we've talked about last quarter of the three fantastic <unk>.
<unk> <unk> with with three large pharmacy retailers, where they're wanting to go more digit all with Covid appointment scheduling appointment vaccinations. Your prescriptions are ready and our solutions with some of the that's our partner providers are solving those needs with our SaaS platforms and that's also true in financial services.
Well, we've talked about J P. Morgan Chase, an hour, helping improve the efficiency and the customer experience of some of their processes from mortgage lending dato lending to how they're doing fraud alert notifications that that's what excites us about our customer engagement offer and some of these.
Diversifications into other industry verticals.
It makes sense. Thanks for taking my question congrats against.
Thanks, so much Max.
I'm sure that there are no further questions at this time on their turn the call back over to Brian Shepherd for any additional are closing remarks.
I would just say we're proud of the quarter. Thank you two teams C. S G and all of the the the employees all around the world and our leaders were focused on obsessing over our customers success and the value we bring them in more laser focused on making sure that every quarter, we accelerate the results and deliver for our investors as well. So thank you for joining today.
This concludes today's conference call you may now disconnect.
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