Csg Systems International Inc (NASDAQ: CSGS)

Sector: Technology Industry: Software - Infrastructure CIK: 0001005757
Market Cap 2.22 Bn
P/B 7.68
P/E 26.68
P/S 1.83
ROIC (Qtr) 11.99
Div Yield % 1.99
Rev 1y % (Qtr) 2.87
Total Debt (Qtr) 566.30 Mn
Debt/Equity (Qtr) 1.96

About

CSG Systems International Inc., or CSG, operates as a leading SaaS platform company in the technology industry, providing solutions that enable global companies to manage business complexities in the digital age. With a presence in over 20 countries and serving customers worldwide, CSG has established itself as a trusted technology leader for some of the biggest and most innovative brands. CSG's primary business activities involve the provision of cloud-first architecture and customer-centric solutions aimed at optimizing and monetizing transactions,...

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Price action

Investment thesis

Bull case

  • Healthy cash reserves of 158.38M provide 26.48x coverage of short-term debt 5.98M, demonstrating strong liquidity position and minimal refinancing risk.
  • Robust free cash flow of 162.52M exceeds capital expenditure of 16.72M by 9.72x, indicating strong organic growth funding capability.
  • Tangible assets of 1.03B provide exceptional 11.77x coverage of deferred revenue 87.11M, showing strong service capability backing.
  • Robust tangible asset base of 1.03B provides 3.56x coverage of working capital 287.95M, indicating strong operational backing.
  • Retained earnings of 1.04B provide full 1.86x coverage of long-term debt 560.32M, indicating strong internal capital position.

Bear case

  • Operating cash flow of 179.24M barely covers its investment activities of (16.72M), with a coverage ratio of -10.72, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (16.72M) provide weak support for R&D spending of 163.64M, which is -0.10x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 179.24M provides thin coverage of dividend payments of (27.43M) with a -6.54 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating earnings of 138.24M show weak coverage of depreciation charges of 72.72M, with a 1.90 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 162.52M represents just -15.31x of debt issuance (10.62M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Geographical Breakdown of Revenue (2024)

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Software - Infrastructure
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MSFT Microsoft Corp 3,563.59 Bn 33.97 12.13 60.56 Bn
2 ORCL Oracle Corp 561.87 Bn 36.43 9.21 124.39 Bn
3 PLTR Palantir Technologies Inc. 413.65 Bn 377.64 106.17 0.24 Bn
4 PANW Palo Alto Networks Inc 126.45 Bn 113.19 13.23 0.35 Bn
5 CRWD CrowdStrike Holdings, Inc. 116.42 Bn -370.56 25.50 0.82 Bn
6 SNPS Synopsys Inc 86.06 Bn 64.60 12.20 14.29 Bn
7 NET Cloudflare, Inc. 62.78 Bn -609.27 31.18 3.50 Bn
8 FTNT Fortinet, Inc. 60.83 Bn 32.47 9.28 1.00 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.79 2.69
EV to Cash from Ops. EV/CFO 14.74 28.91
EV to Debt EV to Debt 4.67 19.83
EV to EBIT EV/EBIT 19.12 -9.95
EV to EBITDA EV/EBITDA 12.91 6.82
EV to Free Cash Flow [EV/FCF] EV/FCF 16.26 26.09
EV to Market Cap EV to Market Cap 1.19 0.36
EV to Revenue EV/Rev 2.17 -9.34
Price to Book Value [P/B] P/B 7.68 3.88
Price to Earnings [P/E] P/E 26.68 -10.66
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 3.04 -0.30
Dividend Payout Ratio % Div Payout % (Qtr) 42.30 2.71
Dividend per Basic Share Div per Share (Qtr) 1.26 0.10
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 21.42 1.68
Interest Coverage Int. cover (Qtr) 4.69 -14.20
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 22.47 -408.01
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 33.72 226.39
Dividend Growth (1y) % Div 1y % (Qtr) 6.78 -0.28
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 20.36 25.27
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 9.39 47.48
EBIT Growth (1y) % EBIT 1y % (Qtr) 16.02 20.13
EBT Growth (1y) % EBT 1y % (Qtr) 23.50 14.16
EPS Growth (1y) % EPS 1y % (Qtr) 30.70 67.50
FCF Growth (1y) % FCF 1y % (Qtr) 46.18 296.60
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 6.94 46.75
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.83 0.67
Cash Payout Ratio Cash Payout (Qtr) 0.14 0.01
Cash Ratio Cash Ratio (Qtr) 0.28 1.22
Current Ratio Curr Ratio (Qtr) 1.50 2.59
Debt to Equity Ratio Debt/Equity (Qtr) 1.96 -0.96
Interest Cover Ratio Int Coverage (Qtr) 4.69 -14.20
Times Interest Earned Times Interest Earned (Qtr) 4.69 -14.20
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 17.30 -548.16
EBIT Margin % EBIT Margin % (Qtr) 11.36 -199.84
EBT Margin % EBT Margin % (Qtr) 8.94 -607.20
Gross Margin % Gross Margin % (Qtr) 49.30 51.88
Net Profit Margin % Net Margin % (Qtr) 6.80 -610.00