Executive Vice President & Chief Financial Officer, CSG SYSTEMS INTL INC
CSG Systems (CSGS) CFO On Revenue & Payment Solutions
CSG Systems (CSGS) provides revenue and payment solutions to the communications industry. CFO Hai Tran joins Nicole ...
About Hai Tran
Hai Tran, Executive Vice President and Chief Financial Officer of CSG International, discussed the company's recent performance and strategy in a September 2024 interview. Tran stated that CSG reported its best annual results in nearly two decades, with organic growth of 7.3% and 11 consecutive years of dividend increases. He attributed this to a "culture first, people first" approach and a diversification strategy that has created "multiple avenues for growth." Tran described CSG's offerings as encompassing revenue monetization, customer experience, and integrated payments, serving communication service providers and brands in retail, financial services, healthcare, and technology. Tran said the company anticipates organic growth of 2 to 6% annually, with a focus on the midpoint or higher, describing 4 to 6% growth as "the new normal." He noted that CSG partnered with Lenda to offer credit access to small and medium-sized businesses within its payments ecosystem of over 100,000 merchants. Tran also mentioned the launch of "Bill Explainer," a generative AI tool aimed at improving bill comprehension and reducing customer service calls. He stated that CSG's solutions resonate in both strong and challenging economies by delivering "meaningful cost savings and new revenue growth opportunities" for customers.
Transcript (11 segments)
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Interviewer0:00
Taking a focus here on CSG Systems. The company reported its earnings on Wednesday and joining me now, the Chief Financial Officer of the company, Hai Tran, is with us. And we are happy you are here. In fact, the best annual results in nearly two decades with organic growth of 7.3%, the dividend payout increased, 11 consecutive years of dividend payouts, making those shareholders happy. Tell me about the latest year and how you were able to achieve the best annual results in nearly two decades.
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Hai Tran0:34
Thank you, Nicole, for having me. We have focused at CSG on a culture-first, people-first approach. And in doing so, we've begun to really diversify and create multiple avenues for growth. When we think about CSG, we empower companies to build unforgettable experiences. To do that, we enable people and businesses the ability to connect, to use, and to pay for services that they value the most. Because of that, we're able to serve some of the world's largest communication service providers, along with major brands in verticals such as retail, financial services, healthcare, and technology. That diversification strategy is starting to pay off because we go to market now with broadly speaking three different offerings: our solutions around revenue monetization, our solutions around customer experience, and our solutions around integrated payments. As a result, we're able to have multiple channels for growth and we're starting to see the benefits of that.
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Interviewer1:48
So do you need a better economy for that? You're working with all of these solutions for the communications industry, you mentioned some retailers. We think about what happens in the payment space — if things are moving and people are spending, is that a better scenario for you, and do you see that for 2024?
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Hai Tran2:10
Of course, a good economy is always a good tailwind for us. But with that said, even in challenging economies, I think our solutions resonate because we deliver meaningful value to our customers. Even in difficult times, at the end of the day, as you look back at the anxiety around the economy this past year, the trends we're seeing are that customers are hyper-focused on how quickly we can deliver a return on their investment in a tangible fashion. When they look at deploying our solutions, it's about how we can help them execute on their digital and business transformations in a way that delivers meaningful cost savings or new revenue growth opportunities.
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Interviewer2:57
I know you have a new partnership — buy now, pay later — and lending. Tell me a little bit about Lendio and maybe the AI capabilities that come into this as well. Why is this the right time for this partnership?
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Hai Tran3:09
Yeah, so Lendio is a new partner on our payments offering. What we've done is we've created an ecosystem of over north of 100,000 merchants. We're constantly thinking about how we deliver value to those relationships. Many of those are small and medium-sized businesses, and one of the ways we deliver value is to offer them access to credit in a pretty seamless fashion. After a thorough search, we partnered with Lendio as the right solution to do that. We're constantly thinking about how we upsell, cross-sell, and continuously deliver value to our customer ecosystem.
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Interviewer3:51
Tell me, give me an example about how your company works. I know you have access to software as a service, but a company that wants to build this unforgettable experience. When you look about the description of the company, tell me about a company and give us some color on how a happy customer for example.
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Hai Tran4:11
Yeah, so let me give you a great example. You had asked about AI. This past year, we launched a new offering called Bill Explainer, which is a solution that leverages generative AI in order to improve bill comprehension. As you can well imagine from your own personal experience, the bill you receive from many of your communication service providers can be frustrating or confusing. In fact, many of the calls into the help desk are really bill-related. So what we've done is we've taken a tool and leveraged generative AI to anticipate and deliver explanations on changes to a consumer's bill. And therefore, what we've done is not only enhance that consumer experience on the back end, but also drive some meaningful cost savings because it reduces calls into the help desk.
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Interviewer5:11
Okay, that's a good example. I look at some of the analyst calls here. Canaccord Genuity has a $63 target and overweight rating; Wells Fargo maintains an equal weight and has its price target at around $50. You're around $53, so you have some that are more hot on the company's outlook than others. Tell me about your guidance and how you're going to make that happen for your outlook.
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Hai Tran5:38
Great question. We have consistently said to the market that we anticipate our organic growth to be in the range of 2% to 6% a year, year in and year out, with really an emphasis on midpoint or higher. That's something we've delivered the last couple of years. For us, I think this kind of focus on delivering in that 4% to 6% range is the new normal for us. In fact, the midpoint of our guidance is slightly above the midpoint of that range. The way we're going to do that is continue to execute the way we have executed — quarter turns of the wrench, focus on the fundamentals, take advantage of what is a very robust pipeline for us, and make sure we're delivering exceptional customer value so that we can take advantage of the upsell and cross-sell opportunities.
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Interviewer6:31
Well, congratulations to you and your team. Great to see you, Hai Tran, Chief Financial Officer at CSG. Thank you for being here today.