Q2 2024 Earnings Summary
Reported on Feb 18, 2025 (After Market Close)
Pre-Earnings Price$43.07Last close (Aug 7, 2024)
Post-Earnings Price$47.34Open (Aug 8, 2024)
Price Change
$4.27(+9.91%)
- CSG is driving significant margin expansion through greater efficiencies, shifting revenue mix to higher-margin SaaS products, and achieving operating leverage, providing confidence in multi-year margin expansion towards their 18%-20% operating margin target.
- The increasing mix of high-margin SaaS revenue, with mature SaaS businesses having gross margins of 70%-80% and EBITDA margins approaching mid-20s to low 30s, is expected to drive operating margins higher in the future, potentially beyond the 18%-20% target.
- CSG is successfully diversifying its revenue into new industry verticals, with new verticals contributing 31% of revenue and growing about 100 basis points per quarter, driven by strong double-digit organic growth in CX and payments businesses, and expects further acceleration from investments in channel partnerships, leading to mid-single-digit organic growth rates.
- The company is experiencing revenue declines in the EMEA region, with a significant sequential decrease due to reductions in services revenue from on-premises telecom solutions.
- Near-term headwinds with top client accounts may impact growth, leading the company to anticipate organic revenue growth for 2024 to be at the low end of their 2% to 6% target range.
- The shift to higher-margin SaaS revenue may take longer than expected, as a substantial portion of revenue remains in lower-margin, services-oriented segments due to geographies where on-premise solutions are preferred.