CSGS - NASDAQ

Thank you for standing by. My name is Eric, and I will be your conference operator today. At this time, I would like to welcome everyone to the CSG's Second Quarter 2024 Earnings Call. [Operator Instructions] Thank you. I would now like to turn the call over to John Rea, Head of Investor Relations and Treasury. Please go ahead.

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 to, statements regarding our projected financial results, our ability to meet our client's 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 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 GAAP. 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 in our financial and operational decision-making. For more information regarding our use of non-GAAP financial measures, we refer you to today's earnings release and non-GAAP reconciliation tables on our website, which will also be furnished to the SEC on Form 8-K. With me today on the phone are, Brian Shepherd, Chief Executive Officer; and Hai Tran, Chief Financial Officer. With that, I'd like to now turn the call over to Brian.

Thanks, John. Hi, everyone. Welcome to the call today. As we begin on Slide 4, we are excited to share that based on the strength of our Q2 performance, we're raising both profitability and non-GAAP EPS guidance targets for 2024. The exciting new logo sales wins and deal expansions closed in the quarter also give us confidence that we will continue to deliver organic revenue growth for the full year in line with our 2% to 6% long-term target range, albeit we are likely to come in at the lower end of the organic revenue growth range for full-year 2024, which Hai will cover in more detail during his financial update. Overall, we really like what we see in our business, so we want to simplify for every investor the three key value creation commitments that the CSG leadership team and Board of Directors will hold ourselves accountable to deliver over the next several years. First, even as we grow through some smallish near-term headwinds on organic revenue growth, we aspire to consistently deliver 2% to 6% pure organic revenue growth and to diversify revenue from exciting new industry verticals to greater than 35% of total CSG revenue. As a reminder, since January 1, 2021, CSG has added nearly $160 million worth of new organic revenue through Q2 2024. Second, we aspire to expand non-GAAP operating margin from our previous long-term range of 16% to 18% to our new long-term range of 18% to 20%, with free cash flow growing faster than revenue growth, and to achieve this higher operating profit without impeding our ability to get back to the 5% or higher annual organic revenue growth that we achieved from 2021 through 2023 once we get past some of the smallest near-term headwinds. Third, we will continue to return significant capital to shareholders as our Board of Directors authorized an additional $100 million share buyback program this month. This enhanced share repurchase program is in addition to our inorganic growth strategy that will be focused on highly disciplined value creation for our shareholders. This new $100 million buyback authorization is on top of the approximately $76 million in buybacks remaining on the previous Board authorization. As a reminder, the combined $176 million in remaining authorized buybacks is on top of the nearly $480 million that CSG has returned to shareholders in dividends and buybacks since 2020. We are now in our 11th consecutive year of increasing our dividend, a key tenet of the CSG investment thesis. Turning to Slide 5 since we have a number of new investors to our story, we wanted to connect the dots on how team CSG is setting ourselves apart in the market as a leading provider of mission-critical enterprise SaaS solutions to global brands in a wide variety of industry verticals. With the record-setting revenue diversification results we keep reporting each quarter, many investors ask us how we determine which industry verticals that we target. The answer is simple. We target industry verticals that have highly recurring relationships with their end customers powered by complex subscription and consumption-based business models. This is why we've expanded so quickly beyond our traditional telecom and cable broadband customer base into exciting industry verticals like Media, Financial Services, Healthcare, Pharmacy, Retail, Technology, Government, and more. We help great brands like J.P. Morgan Chase, NRC Health, and Formula One solve similar customer engagement and monetization business challenges, just like we help Comcast, Charter, MTN, and Telstra in these same areas. While the industries are different, the customer pain points and business needs are surprisingly similar. This explains why we've been able to sell our industry-leading cloud-native SaaS Ascendon platform to one of the largest banks in Australia, and why Formula One and other big content providers have selected Ascendon to monetize their media and digital content businesses. And it's also why leading global telecom operators like Claro Brasil, M1 in Singapore, Telenor Denmark and Lyse in Norway have all selected Ascendon in the wireless and telecom industry vertical. These common business needs across industry verticals also explain why we've been able to sell our data-driven CX and payments SaaS solutions to so many big customers in faster-growing industry verticals. Many investors also ask us about our value proposition and what business problems we solve for customers in different industry verticals. The answer to this question also explains why CSG has been able to grow organic revenue over 5% on a compound annual growth rate basis since 2021. Every large customer in all these bigger, faster-growing, recurring revenue verticals have similar business challenges related to their post-acquisition or post-purchase customer engagement. They all need to lower the cost and effort to activate onboard and educate new customers. They all need to give their customers the power and flexibility to upgrade and downgrade their services more seamlessly through digital self-serve channels. They all need to harness their data to more proactively upsell, cross-sell, and retain their most valuable customers with real-time, data-driven promotional offers. And they all need to make it easier to build, collect, and resolve payment disputes on a timely basis. An important point that is often misunderstood by investors is that CSG is not just a billing company. Our comprehensive workflow engines are foundational to how our customers holistically serve their end customers and make money. Our investors also routinely ask us why we win against bigger competitors. The answer is because we relentlessly focus and prioritize our R&D, sales and marketing, and disciplined inorganic M&A to constantly strengthen our industry-leading future-ready SaaS portfolio, so we can grow faster and simultaneously expand our operating margins and profitability. As a reminder, CSG is ranked in the leaders quadrant in Gartner's Integrated Revenue and Customer Management category, and CSG is also ranked in the Leaders Quadrant in Forrester's Customer Journey Orchestration category, ahead of almost all other competitors. And CSG also routinely wins industry leadership awards in the payment space. We never take our customer relationships for granted, and we constantly push ourselves to be more future-ready, more innovative, and easier to do business with than our competitors. Is doing all this easy? No, it isn't. Being as mission-critical as it gets for giant customers all around the world in a wide variety of industry verticals is never easy. And yet, being a critical provider to help our customers lower their costs, retain and upsell their most valuable end customers, grow revenue faster, and make more money is precisely why our customer relationships are so sticky, often lasting three decades or longer. And it also explains why we've continued to grow organic revenue and close exciting new sales wins even in tough economic conditions, because our SaaS workflow solutions deliver faster ROI paybacks. On Slide 6 you can see the success we have had in increasing our organic revenue growth since 2021 and the industry vertical revenue diversification success we've had since 2017. The truly exciting part for us, notwithstanding some near-term market choppiness, is that even as we grow 2024 organic revenue in line with the lower end of our 2% to 6% organic growth range for the near-term quarters, CSG's profitability will continue to expand and its fastest clip in many years. This exciting business momentum is powered by the fact that CSG continues to close big, exciting new sales wins quarter in, quarter out like many Q2 wins that we'll talk about momentarily. One positive highlight in Q2 was the revenue growth we saw in our top two customers, Charter and Comcast. Even as their businesses faced slight broadband subscriber headwinds, we grew Q2 revenue from Comcast and Charter combined by over 1%, both sequentially and year-over-year. This growth is coming from several areas, including our expansion into new areas of their businesses that we have historically not served. Like team CSG being selected in signing a new standalone contract with Comcast to power a new strategic growth area for them. Turning to Slide 7, we wanted to provide more detail on the many exciting new logo sales wins and deal expansions we have delivered over the last few months. These wins are underpinned by our strong global sales teams that continue to perform well and deliver meaningful new wins like Clockwork. First, we won a fantastic new telecom logo at Telenor Denmark, the second-largest mobile operator in Denmark. We will be deploying both our cloud-native SaaS Ascendon and CSG Xponent Solutions. This win highlights our ability to cross-sell our cutting-edge digital customer experience suite of solutions together with our cloud monetization offerings. With CSG's help, Telenor Denmark will deliver enhanced digital experiences across all touchpoints, enhanced omnichannel support for all business segments, and win new revenue-generating opportunities. Second, we expanded our relationship with One New

Thanks, Brian. Let's walk through our Q2 2024 financial results and then I'll wrap up with some key conclusions. Starting on Slide 11, we generated $290 million of revenue in Q2 versus $286 million in the same prior year period. The increase in revenue can be attributed to the continued growth of our cloud revenue in addition to revenue generated from the acquired businesses which offset lower software and services revenue for the quarter. Our Q2 2024 non-GAAP operating income was $46 million or a non-GAAP adjusted operating margin of 17.3% as compared to $43 million or 16.2% in the prior year. We are very pleased with this approximately 110 basis point year-over-year improvement in our Q2 non-GAAP adjusted operating income. Similarly, our non-GAAP adjusted EBITDA was $60 million for Q2 2024, or 22.6% of revenue excluding transaction fees, as compared to $57 million or 21.4% in Q2 2023. Looking ahead, we expect our profitability metric to further improve as we took significant cost efficiency actions in the first half of 2024 to optimize our capacity and better align CSG resources to areas of our business that have higher growth profiles. Lastly, our Q2 2024 non-GAAP EPS grew almost 28% year-over-year to $1.02 as compared to $0.80 in Q2 2023. This big increase in non-GAAP EPS is mainly due to higher operating income and the benefit from our share repurchase activity over the last 12 months. Turning to Slide 12, I will go through the balance sheet, our cash flow performance, and shareholder returns. We had non-GAAP free cash flow of $39 million in Q2 2024 as compared to $5 million of non-GAAP free cash flow in Q2 2023. Our strong Q2 2024 cash flow performance was better than anticipated due to the timing of certain working capital items, including improvement in accounts receivables and unbilled revenue. Moving on, we ended the second quarter of 2024 with $110 million of cash and cash equivalents. That, along with our outstanding debt at June 30, 2024, results in [$444] million more in net debt, and our net debt leverage ratio sits at 1.9 times adjusted EBITDA. Further, we have $558 million in liquidity as of the end of the quarter. And on the bottom right of the slide, you can see we have returned $46 million in dividends and share repurchases to shareholders in the first half of 2024. Turning the page, I'll revisit our 2024 guidance targets. As Brian highlighted, we are pleased to be increasing certain 2024 guidance targets, including non-GAAP adjusted operating margin, non-GAAP adjusted EBITDA, and non-GAAP EPS. We are also excited to reiterate all other guidance targets for the full year 2024, specifically on our enhanced non-GAAP profitability target, we continue to take disciplined cost reduction actions that will optimize and streamline our business while still investing in higher growth activity that we believe will enable us to get back to mid-single-digit, non-GAAP adjusted operating profit in the quarters ahead. We believe these cost-efficiency moves will not only boost CSG's profitability in 2024 but will also create a meaningful tailwind to steadily improve our profitability next year and beyond. With that said the cost reduction steps we have and continue to take will result in some short-term impacts to our cash flows in 2024 due to restructuring expenses related to these initiatives. At this point, the cash impact from our restructuring activities in the first half of 2024 has been approximately $14 million and with respect to our original $1.2 billion to $1.24 billion revenue guidance range. As Brian mentioned, we are reiterating our original guidance range, but we will likely end up towards the low end of the range as the amount of revenue we expect to generate from our acquired assets in 2024 is anticipated to be more than offset by lower revenue expectations in our core business when compared to our original guidance expectations in February. Some of the main drivers of this include one, we are seeing a little belt-tightening with our current and prospective customers. Two, we are experiencing smallish headwinds in the North American broadband market. And three, there are some services-based revenue recognition timing-related headwinds surrounding a couple of the larger global telecommunication deployments as we continue to implement these important projects. Because of this, we expect our 2024 organic revenue growth to be towards the low end of our 2% to 6% range. Wrapping up, CSG will continue to relentlessly prioritize every investment we make and stay very disciplined in the allocation of resources and the use of capital. Innovation, including how we leverage the transformative power of AI across CSG and adherence to a risk-reward framework with continuous learning are key cornerstone of how we have and will continue to manage our business. CSG is extremely well positioned with a strong sales pipeline and a high-quality recurring revenue customer base that we believe will enable us to return closer to the approximately 5% year-over-year organic growth that we achieved from 2021 through 2023 once we work through some of the smallest headwinds to grow in the next several quarters. We remain committed to accelerating and diversifying our revenue growth, which may include closing and integrating disciplined value-adding acquisitions in the quarters ahead. We believe this approach, combined with our consistent capital contribution, will serve our shareholders well. With that, I will turn it over to the operator to facilitate the question-and-answer session.

[Operator Instructions] Your first question comes from the line of Maggie Nolan with William Blair. Please go ahead.

Hi. Thank you. I had a question about the near-term headwinds that you called out, in particular on some of your top client accounts. Have those headwinds gotten incrementally worse than you expected last quarter? What is the impact to Q2 versus what you're expecting maybe in Q3 or Q4? And how long do you expect these headwinds to persist?

Yes. Hi, Maggie, thanks for joining the call today. When we look at this, I wouldn't say it's gotten worse in terms of some of those headwinds. If anything, what we saw coming from the North American cable space with some of the broadband numbers they reported this quarter, it was actually better than we anticipated. So I'd say relative to where we were a quarter ago, probably about the same. What we see, if you look at our long-term guidance for this year and being at the lower end, call it the low twos to low threes, that actually implies a Q3 and Q4 that would actually be midpoint or higher of our 4% or higher range. So we actually love the sales booking wins we closed in the last couple of months. Gives us a lot of excitement and confidence that we have a strong second half of the year coming. And we just have to continue to kind of work through, I think, what the choppiness that a lot of providers are facing in the market right now. But it's not worse than what we saw a quarter ago, but it's something that we just have to sell through as we get back to that 5% or higher that we've delivered for a few years in a row now.

Got it. Thank you. And then as you think about your near-term aspiration of getting to an 18% to 20% margin, is there additional investments in cost savings programs or optimization that needs to happen in the near term before you start to see some benefit that would get you to that level? Or how are you thinking about the main levers to get you there over a maybe two-year period?

Yes. I think it's less about investments, but it's the restructuring charges that we called out because obviously, as we're making some of the difficult choices that are in the near term, that will yield some meaningful benefits in the longer term. That's where you'll see the impact to the business. Investments that we're looking to make to drive improved processes, greater automation, improved tooling. That's all going to be baked into our guidance and how we prioritize and allocate our resources.

Hi, Maggie. The only thing I would add on top of that is it's not going to take us two years to get to the 18% to 20% range. We absolutely expect that we'll operate 2025. We're not giving next year's guidance yet, but I can tell you with this discipline, focus on margin improvement that we've been driving these quarter turns, the wrench that we often talk about, we absolutely do expect that the business will operate above 18% starting next year.

That's helpful. Thank you, both.

Thanks, Maggie.

Thanks, Maggie.

Your next question comes from the line of George Notter with Jefferies. Please go ahead.

Hi, guys. This is [Tarun] on for George. Just a quick question regarding M&A. Any changes relative to last quarter in terms of the environment or plans and how you plan to approach that? Thanks.

No, thanks for the question. I think it's pretty similar to what we talked about last quarter and what we talked about in the script. We'd expect to be highly disciplined. We're constantly evaluating lots of opportunities. We've closed two small tuck-ins. We love those deals and what we're seeing, even though they're on the smaller side, and we're continuing to look at a range of deals. But as we talked with a higher cost of capital, with a higher hurdle rate, and with our stock being on the lower end, we're being even more disciplined. So therefore, that balance of strong capital return, the new $100 million share buyback that was authorized by the Board, we expect to continue to return a lot of capital to shareholders. And when there's a great M&A that comes at the right price, the right strategic fit, that can unlock a lot of value, and we know we can execute and deliver on the investment memo in a way that will be great for shareholders, you'll also hear us announce and execute those M&A deals as well.

Awesome. Great. Thank you.

Thank you.

Your next question comes from the line of Dan Bergstrom with RBC Capital Markets. Please go ahead. Your next question comes from the line of Shlomo Rosenbaum with Stifel. Please go ahead.

Hi, thank you very much for taking my questions. I do have two questions, really. One, the margin expansion is going pretty well and faster than planned, and you have that target. I just want to follow up back on the question that was started off with, which is what is driving the margin expansion? And can you point out some, maybe more, some specific examples of how you're going to get to that 18 to 20? It's a nice target. It's decently above where you've been only several years ago and you're not, the leverage, you should get some operating leverage. But it sounds like there's a lot more of an efficiency focus and maybe you could just give us some examples so that we can understand exactly what's going on?

Yes. Hi, Shlomo, thanks for being with us today. It's a great question. I think for us, like most of our initiatives, it isn't single-threaded, it's multi-pronged in nature. Obviously, you hit on one of them, which is just driving greater efficiencies. And so we're taking a hard look at kind of all of our businesses, our processes, and try to figure out what's going to yield the best return on capital and then making some difficult decisions to drive those efficiencies. I think the second thing is to look at mix of revenue. One of the things that you saw on our announcement in the prepared remarks was kind of the great new logo wins we've had. As you notice, many of those actually related to our SaaS platform products, right? And so as we think about our growth in the future periods, you're going to see a shifting of the mix of revenue to higher margin SaaS revenue. That's going to help us expand our gross margins even further. And then the third is operating leverage, right? It's just managing our expenses. So as we continue to grow the business from revenue perspective, our operating expenses are growing at a much lower pace. So those are the three things that we focus on internal and gives us great confidence in terms of tailwinds to margin expansion over a multi-year period.

Okay, great, thanks. And then the domestic business in terms of revenue geographically, continued to do well. EMEA revenue declined a pretty decent amount sequentially. Maybe you could give us a little bit of detail as to what's going on in EMEA?

Yes, it's really related more to the global telco, as Hai talked about in the past. And we have these biggest implementation programs, typically multi-year in nature. And so that drives more services revenue to get those implementations deployed. So you will see then on the telco side, that kind of move more quarter-to-quarter and over time. That's one of the things that we were so excited about will be now kind of third quarter in a row, large, exciting new Ascendon wins in the cloud and SaaS platforms. Those tend to be much less services heavy, much higher gross margin. So that's a trend that we're seeing. If we go back two or three years ago, a lot of the telecom companies were not willing to run their core in the cloud, and we're seeing that fundamentally shift with the six to eight big Ascendon wins that we've announced and two more this quarter with the cross-sell with Xponent. It's super exciting to see, but it really is driven by that services revenue with the more on-prem telco solutions that we've sold in prior years.

Got it. Thank you.

Thanks, Shlomo.

The next question comes from the line of Dan Bergstrom with RBC Capital Markets. Please go ahead.

Hi, thanks for taking my question. So it was nice to see the new industry verticals at 31% of revenue versus 30% last quarter. You mentioned aspiring to 35% at the start of the prepared remarks. Any thoughts around timing of that 30% target? Seems like the percentage is moving up about 100 bps a quarter. Is that a realistic way to think around timing and progression to that 35% number?

Yes. Hi, Dan. Thanks for joining. I think that's a good way to look at it. If you just kind of model what it's been the last four or five quarters, it's kind of been that steady step up and what we see in our CX and our payments business. Through the first half of the year, each of those businesses has continued to grow revenue on an organic basis, strong double-digit. And so that combined with some of the smaller acquisitions, both will be additives. So we think it is linear, may not be a 100%. You may see a little bit of movement up or not quite that same 100 basis points, but I think that's a good trend. That's why we felt good saying that that 35% should be achievable in the next two-year planning cycle, if not sooner in that period.

That's great. Then sticking with the verticals, any update around channel partners in those additional verticals? I think we're about a year into investments there. How's the new logo pipeline looking for partners?

Yes, no, we love the channel approach. I'd say with both our payments, our Ascendon, and our CX business, it'll continue to be a combination of channel-driven as well as direct sales. And in many cases, we're actually seeing the benefit of cross-selling into our telco base, which is exciting. With a couple of those big cross-sells of exponent at Telenor, Denmark, and in Lyse. But yes, we like what we're seeing on the channel side. We're signing up good partnerships. The pipelines are expanding in there and that's one that really hasn't even started to bear fruit yet. We think that's going to be part of this growth acceleration in Q3 and Q4 and into next year back closer to the 3%, 4%, 5% that we anticipate. That's going to come from some of those -- that investment we've made in channel, which I think is a big one, even as we've gotten to this margin expansion, it's not coming because we've cut sales and marketing. We're continuing to invest both in differentiated SaaS product, R&D. And we're continuing to invest in sales and marketing and channel partner sales. And that's going to continue. And that's why we really feel good about our ability over the medium longer term to be a mid-single-digit organic growth company or higher.

That's great. Thank you.

Thanks so much.

Your next question comes from the line of Nehal Chokshi with Northland Capital Market. Please go ahead.

Thank you. Big news on the operating margin raise. That's great. And how you mentioned that the mix shift to SaaS is a driver to the counter '25 margin expansion being discussed. What is the mature operating margin of your SaaS business?

Yes, I mean, I think you generally look at SaaS businesses in general, right? They -- most of them have gross margins in the 70% to 80%. I think that's something that we're looking to drive with scale as well.

What about the operating margin portion?

I think the operating margin, I think it depends. What I mean by that is, I think it depends on what phase of the growth expansion that we're in. Obviously, a lot of SaaS businesses over-invest in sales and marketing R&D as they're gaining traction and growing. But I can imagine a scenario at maturity, we're talking about EBITDA that's approaching kind of mid-20s to low 30s.

Okay, so in that context then, 18% to 20%, this is more of a milepost as opposed to the long-term potential -- long-term expectation. Is that fair?

Yes, I think it always comes down to revenue mix at the end of the day, right? A big chunk of our businesses are still very services-oriented from a revenue perspective and likely will remain so because there are geographies that we serve whereby an on-prem solution will remain kind of the better solution for those customers. So I think you'll always have a chunk of our revenue that will be lower margin. Strategically important for us, but lower margin in nature.

Yes. Thanks, Nehal. Appreciate you joining. I think the only thing I would add to that is we'll give more color for 2025 and I think a little more on this 18% to 20% next quarter and the following. But we kind of see that as a two to three-year horizon in terms of how we at least think about and see the business. And to your point, as we continue to shift mix, we have a higher percentage of our revenue coming from faster-growing SaaS, and we benefit at higher scale. You're exactly right. There's no reason that 18% to 20% would be our medium to longer-term cap. Not by any stretch. I think you're exactly right.

Okay, great. And then I do have another question. With the incremental buyback capacity that you've announced, but you did have plenty of capacity left on the existing buyback, are you trying to signal that your projected pace of share backs are going to materially hasten here?

Yes, I mean, I think that what we're trying to say is that we are committed to delivering value back to our shareholders. We understand that at these levels, that is a good use of our capital. And that's really what we're trying to signal at the end of the day, right? Because we speak a lot of times about organic growth, about inorganic growth. And sometimes, as investors have a certain perspective that somehow that inorganic growth is going to trump the value we deliver back to shareholders. And what you heard Brian says, we're going to be extremely disciplined and continue to be committed to delivering value back to our shareholders through buybacks.

Yes. And I think data -- historical performance is a great indicator. We've returned $480 million to shareholders since 2020. We've done well over $100 million each of the last two years. We've returned a lot of capital. And there's additional authorization for us to do more in the coming quarters.

Okay, thank you.

Thanks, Nehal.

The next question comes from the line of Matthew Harrigan with The Benchmark Company. Please go ahead.

Thank you. What is the beauty of Xponent in this environment is you can really show, I think, fairly readily to existing customers, and maybe new customers are somewhat lesser at really what the quantifiable impacts are on customer retention and cost efficiency on the customer journey and all that. And given that that's a priority, I mean, is there just sort of natural inertia on your corporate clients spending any money, even though you can demonstrate that the ROI is really high and if that's something you think they'll be able to work out over a period of time? What are the real hurdles on the selling process for Xponent and new customers, and then layering that more capabilities for existing customers? Thank you.

Yes, no. Hi, Matt. Thanks. I mean, what we're seeing on the CX Xponent side is almost identical to what you said. We can rig the cash register quickly with a very fast payback for lots of brands and lots of verticals on a wide number of fronts. We see some use cases getting deployed around our BillExplainer.AI where they want to reduce the number of calls into their call center and reduce churn during a promotional period. We've got other customers that want to deal with fraud alert notifications and that's the entry point to get a quick sale. We have other customers that are trying to actually grow revenue faster and they use it to do proactive offers, try to upsell or cross-sell, and it's more of a revenue driver. And often what we find on speed is it's use case driven. And then once they deploy for one or two use cases, they realize the power in that platform can actually be used for dozens of use cases. Occasionally we'll sell it more as a pure platform play and a Swiss army knife to solve any of their needs. But often in this, I'd say higher hurdle rate payback period, often it's just ring the cash register, solve a near-term problem, and then move on. So we have traditional SaaS economic pricing that you would expect with that, could it become more performance-based over time? Always open to that. It just has to work for us and for our customers. But we're always flexible to just different approaches over time. But we love what we're saying. And one of the real breakthroughs this quarter order on CX was that cross-sell into telco that we saw with Telenor Denmark and Lyse getting sold with our Authorization SaaS platform as well. That was super exciting for us and we think we can do a lot more of that.

And then you had a question on M&A earlier and you also went into it and extent on your commentary, and certainly, I understand the relative hurdle rates compared to buying back your own stock. But are you seeing any loosening of multiples? Are you seeing the likelihood of more for selling on the part of some smaller entrepreneurial companies who might not have had the access to capital that they had even 12 or 18 months ago?

Yes, I think that there's a couple of interesting dynamics on the M&A but also it relates to a couple of other non-M&A related portions. Periods like this actually tend to play to the favor of stronger, larger providers. And we've seen periods like this where customers have made decisions to maybe break some of their hard-held, long-held beliefs and open up new buying opportunities for CSG. And that's true on the M&A side as well. So in tougher periods, sometimes weaker performers, sometimes reevaluate whether they should still be in the business or not in various areas. And it can create opportunities where we can just win more sales organically from them and go take market share. And in some cases, it may create a fantastic opportunity to buy an extremely attractive price on a multiple of revenue and EBITDA pre-cost synergies that could create opportunities. And so even though I think the macroeconomic environment right now, we'd love it to be, have a few less single digit, 1% to 2% headwinds to growth, but we think it's actually to be a gift in the longer and medium term for CSG, both on the organic side of our business and potentially on the M&A. And what we just try to do, we just try to stay extremely disciplined on what we know would unlock a ton of value for our shareholders. And if it comes in, if a good M&A small, mid, or larger comes in and it fits the criteria, we have the flexible balance sheet to be able to act on that in a way that could be very attractive for our shareholders. If it doesn't come in, no problem. We'll just keep working and keep driving the organic part of our business. That's how we think about it.

You still have all those Nutcracker engineers sitting in Dubai now presumably. Okay, great. Thanks, Brian.

Thanks so much, Matt.

The next question comes from the line of Michael Berg with Wells Fargo Securities. Please go ahead.

Hi, thanks for taking my question. I want to double click on the dynamics happening within Comcast and Charter. Those are both healthy points in the quarter. You mentioned specifically expansion in new areas of business and that the Comcast renewal may get pulled forward here. So maybe you could just help us understand some more nuance of those new areas of the business. What areas of business are still left to capture at both Comcast and Charter? And any more details you can share on the Comcast renewal? Thank you.

No, thanks so much, Mike. Appreciate you joining. Yes. As we've talked, I mean, we've talked for a few quarters now. We have high confidence that Comcast, Charter, extremely strong brands, industry-leading companies. We believe they will mount a strong, formidable, competitive response to some of the things they see going on in the market. We love what they're doing in the business. We love our three decades-plus relationship with both. And we have significant opportunities to expand if they decide that that's good for their business. And so first, we serve over $63 million subscribers at Comcast and Charter combined, all of their triple play subscribers on both. As a reminder, we moved 11 million subscribers off of Amdocs to us a few years ago, and we moved 14 million off of Nutcracker a couple of years ago as well, and so we continue to serve them well. It was very exciting to see 1% growth, and it was exciting to sign a good new billing contract with Comcast in a new growth area for them. Unrelated to the 63 million triple-play subscribers we already serve with our long-term contracts. So love what we're seeing. We could have opportunities to grow in the CX space if they chose to use us in those areas. We could grow in the wireless space. Right now, both of them in their wireless growth are on an Amdocs platform. We could also just help them in other areas of the business where they might decide to rely on some of our proven technology. And so what we try to do is just always be on and resilient, always be future-ready with our platforms, and just constantly bring them ideas that can help them mount a more formidable response. And so that's why we gave the additional color on the Comcast renewal. We've never been better positioned at Comcast and yet we never take it for granted. And so what we're as you can imagine, with about 18 months left on that contract, we're in active discussions. Maybe something gets signed sooner this year. Maybe Comcast decides to sign the renewal sometime next year. There is going to be a good win-win renewal that brings a lot of value for Comcast and fantastic value for CSG. We're highly confident it's coming, whether it's next quarter, the quarter after, or in 2025, stay tuned. But we love where we're positioned.

I will now turn the call back over to Brian Shepherd for closing remarks. Please go ahead.

Thanks for joining, everyone. We were super excited about the great sales wins we saw in Q2. Gives us confidence that we'll see improved organic revenue growth in Q3 and Q4. We are going to consistently improve our non-GAAP adjusted operating margin and our EPS, and that is here to stay. And we're going to continue to execute on that like those quarter turns of the wrench. Super grateful to all the CSGers around the world for making this happen. Look forward to talking next quarter. We've got some work to do to deliver fantastic results in Q3. Thank you all.