EXHIBIT 99.1

FOR IMMEDIATE RELEASE

PRESS RELEASE

CSG Systems INTERNATIONAL reports results  

for FIRST Quarter 2019

GREENWOOD VILLAGE, COLO. (May 1, 2019) — CSG (NASDAQ: CSGS), the trusted partner to simplify the complexity of business transformation in the digital age, today reported results for the quarter ended March 31, 2019.

Key Highlights:

• First quarter 2019 financial results:

• Total revenues were $244.8 million and total non-GAAP adjusted revenues were $227.7 million.

• GAAP operating income was $32.1 million, or 13.1% of total revenues, and non-GAAPoperating income was $41.3 million, or 18.1% of non-GAAP adjusted revenues.

• GAAP earnings per diluted share (EPS) was $0.59 and non-GAAP EPS was $0.82.

• Cash flows from operations were $12.8 million.

• CSG declared its quarterly cash dividend of $0.2225 per share of common stock, or a total of approximately $7 million, to shareholders.

“We continue to execute well against our strategy which has driven growth rates above the industry average and a more diversified revenue mix,” said Bret Griess, president and chief executive officer for CSG.  “We continue to take a holistic approach to creating long-term sustainable value by balancing our investments in our customers and solutions with our return of capital to our shareholders.  This quarter reflects a healthy balance of both.”

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Financial Overview (unaudited)

(in thousands, except per share amounts and percentages):

	Quarter Ended March 31,
							Percent
	2019			2018			Changed
GAAP Results:
Revenues	$	244,793		$	201,704			21	%
Operating Income		32,093			25,767			25	%
Operating Margin Percentage		13.1	%		12.8	%	—
EPS	$	0.59		$	0.42			40	%
Non-GAAP Results:
Adjusted Revenues	$	227,661		$	201,704			13	%
Operating Income		41,313			35,299			17	%
Adjusted Operating Margin Percentage		18.1	%		17.5	%	—
EPS	$	0.82		$	0.69			19	%

For additional information and reconciliations regarding CSG’s use of non-GAAP financial measures, please refer to the attached Exhibit 2 and the Investor Relations section of CSG’s website at www.csgi.com.

Results of Operations

GAAP Results: Total revenues for the first quarter of 2019 were $244.8 million, a 21% increase when compared to revenues of $201.7 million for the first quarter of 2018, and 1% decrease when compared to $247.3 million for the fourth quarter of 2018.  The year-over-year increase in revenues can be primarily attributed to the acquisitions of Forte on October 1, 2018 and Business Ink on February 28, 2018, while the sequential quarterly decrease in revenues is mainly due to the higher level of software and services revenues CSG typically experiences in the fourth quarter.  

GAAP operating income for the first quarter of 2019 was $32.1 million, or 13.1% of total revenues, compared to $25.8 million, or 12.8% of total revenues, for the first quarter of 2018, and $29.4 million, or 11.9% of total revenues, for the fourth quarter of 2018.  

GAAP EPS for the first quarter of 2019 was $0.59, as compared to $0.42 for the first quarter of 2018, and $0.64 for the fourth quarter of 2018.  The year-over-year increase in GAAP EPS is reflective of the higher operating income for the quarter, while the sequential quarterly decrease in GAAP EPS is mainly attributed to a higher effective income tax rate for the first quarter of 2019.  

Non-GAAP Results:  Non-GAAP adjusted revenues for the first quarter of 2019 were $227.7 million, a 13% increase when compared to $201.7 million for the first quarter of 2018, and a 2% decrease when compared to $231.7 million for the fourth quarter of 2018.  

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Non-GAAP operating income for the first quarter of 2019 was $41.3 million, or 18.1% of total non-GAAP adjusted revenues, compared to $35.3 million, or 17.5% of total non-GAAP adjusted revenues for the first quarter of 2018, and $41.4 million, or 17.9% of total non-GAAP adjusted revenues for the fourth quarter of 2018.  

Non-GAAP EPS for the first quarter of 2019 was $0.82, compared to $0.69 for the first quarter of 2018, and $0.95 for the fourth quarter of 2018.  

These fluctuations in non-GAAP adjusted revenues and non-GAAP EPS between periods are primarily due to the factors discussed above.  

Balance Sheet and Cash Flows

Cash, cash equivalents and short-term investments as of March 31, 2019 were $141.9 million compared to $162.9 million as of December 31, 2018. CSG had net cash flows from operations for the first quarters of 2019 and 2018 of $12.8 million and $29.9 million, respectively, and had non-GAAP free cash flow of $4.5 million and $17.6 million, respectively.  Cash flows from operating activities for the first quarter of 2019 were negatively impacted by the timing around a certain recurring client payment at quarter-end which was subsequently collected.

Summary of 2019 Financial Guidance

CSG is updating its financial guidance for the full year 2019 as follows:

	As of May 1, 2019	Previous
GAAP Measures:
Revenues	No change	$965 - $995 million
Operating Margin Percentage	11.9% - 12.2%	11.7%
EPS	$2.16 - $2.33	$2.17 - $2.27
Cash Flows from Operating Activities	$125 - $150 million	$125 - $145 million
Non-GAAP Measures:
Adjusted Revenues	No change	$903 - $920 million
Adjusted Operating Margin Percentage	17.0% - 17.5%	17.0%
EPS	$3.15 - $3.31	$3.15 - $3.27

For additional information and reconciliations regarding CSG’s use of non-GAAP financial measures, please refer to the attached Exhibit 2 and the Investor Relations section of CSG’s website at www.csgi.com.

Conference Call

CSG will host a conference call on Wednesday, May 1, 2019 at 5:00 p.m. EDT, to discuss CSG’s first quarter results for 2019.  The call will be carried live and archived on the Internet.  A link to the conference call is available at http://ir.csgi.com.  In addition, to reach the conference by phone, dial 1-800-458-4121 and ask the operator for the CSG conference call and Liz Bauer, chairperson.

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Additional Information

For information about CSG, please visit CSG’s web site at www.csgi.com.  Additional information can be found in the Investor Relations section of the website.

About CSG

CSG is a provider of software and services that help companies around the world monetize and digitally enable the customer experience.  For more than 35 years, CSG has simplified the complexity of business, providing revenue management and digital monetization, payments, and customer engagement solutions to help our customers tackle any business challenge and thrive in an ever-changing marketplace.

Operating across more than 120 countries worldwide, CSG manages billions of critical customer interactions annually.  CSG is the trusted partner driving digital innovation for hundreds of leading global brands, including Arrow Electronics, AT&T, Charter Communications, Comcast, DISH, Eastlink, Formula One, iflix, MTN, and Telstra.

To learn more, visit our website at csgi.comand connect with us on LinkedIn, TwitterandFacebook.

Forward-Looking Statements

This news release contains forward-looking statements as defined under the Securities Act of 1933, as amended, that are based on assumptions about a number of important factors and involve risks and uncertainties that could cause actual results to differ materially from what appears in this news release.  Some of these key factors include, but are not limited to the following items:

• CSG derives approximately forty percent of its revenues from its two largest clients;

• Continued market acceptance of CSG’s products and services;  

• CSG’s ability to continuously develop and enhance products in a timely, cost-effective, technically-advanced and competitive manner;

• CSG’s ability to deliver its solutions in a timely fashion within budget, particularly large and complex software implementations;

• CSG’s dependency on the global telecommunications industry, and in particular, the North American telecommunications industry;

• CSG’s ability to meet its financial expectations as a result of its dependency on software solution sales, which are subject to greater volatility;

• Increasing competition in CSG’s market from companies of greater size and with broader presence;

• CSG’s ability to successfully integrate and manage acquired businesses or assets to achieve expected strategic, operating and financial goals;

• CSG’s ability to protect its intellectual property rights;

• CSG’s ability to maintain a reliable, secure computing environment;

• CSG’s ability to conduct business in the international marketplace;

• CSG’s ability to comply with applicable U.S. and International laws and regulations; and

• Fluctuations in credit market conditions, general global economic and political conditions, and foreign currency exchange rates.

This list is not exhaustive, and readers are encouraged to review the additional risks and important factors described in CSG’s reports on Forms 10-K and 10-Q and other filings made with the SEC.

For more information, contact:

Liz Bauer, Chief Communications and Investor Relations Officer

(303) 804-4065

E-mail: liz.bauer@csgi.com

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CSG SYSTEMS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS-UNAUDITED

(in thousands, except per share amounts)

	March 31,			December 31,
	2019			2018
ASSETS
Current assets:
Cash and cash equivalents	$	123,572		$	139,277
Short-term investments		18,333			23,603
Total cash, cash equivalents and short-term investments		141,905			162,880
Settlement assets		87,853			124,627
Trade accounts receivable:
Billed, net of allowance of $2,897 and $3,115		244,936			235,827
Unbilled		40,432			37,227
Income taxes receivable		3,161			6,720
Other current assets		32,441			32,286
Total current assets		550,728			599,567
Non-current assets:
Property and equipment, net of depreciation of $98,122 and $93,278		85,895			81,813
Operating lease right-of-use assets		78,263			-
Software, net of amortization of $122,549 and $119,381		35,274			36,400
Goodwill		258,512			255,816
Acquired client contracts, net of amortization of $86,434 and $82,692		62,914			65,456
Client contract costs, net of amortization of $49,100 and $43,051		37,420			37,289
Deferred income taxes		10,821			11,087
Other assets		27,220			26,934
Total non-current assets		596,319			514,795
Total assets	$	1,147,047		$	1,114,362
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt	$	7,500		$	7,500
Operating lease liabilities		18,737			-
Client deposits		34,501			36,889
Trade accounts payable		40,792			45,386
Accrued employee compensation		51,474			61,107
Settlement liabilities		86,471			123,613
Deferred revenue		47,212			40,236
Income taxes payable		625			218
Other current liabilities		32,168			35,442
Total current liabilities		319,480			350,391
Non-current liabilities:
Long-term debt, net of unamortized discounts of $13,444 and $14,549		351,556			352,326
Operating lease liabilities		66,842			-
Deferred revenue		16,928			17,527
Income taxes payable		2,638			2,284
Deferred income taxes		8,798			8,205
Other non-current liabilities		13,295			22,605
Total non-current liabilities		460,057			402,947
Total liabilities		779,537			753,338
Stockholders' equity:
Preferred stock, par value $.01 per share; 10,000 shares authorized; zero shares issued and outstanding		-			-
Common stock, par value $.01 per share; 100,000 shares authorized; 33,280 and 33,158 shares outstanding		697			693
Common stock warrants; 439 warrants vested; 1,425 issued		9,082			9,082
Additional paid-in capital		441,484			441,417
Treasury stock, at cost; 35,028 and 34,779 shares		(851,650	)		(842,360	)
Accumulated other comprehensive income (loss):
Unrealized gain on short-term investments, net of tax		20			2
Cumulative foreign currency translation adjustments		(39,090	)		(42,937	)
Accumulated earnings		806,967			795,127
Total stockholders' equity		367,510			361,024
Total liabilities and stockholders' equity	$	1,147,047		$	1,114,362

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CSG SYSTEMS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME-UNAUDITED

(in thousands, except per share amounts)

	Quarter Ended
	March 31, 2019			March 31, 2018
Revenues	$	244,793		$	201,704
Cost of revenues (exclusive of depreciation, shown separately below)		128,963			101,096
Other operating expenses:
Research and development		32,591			29,379
Selling, general and administrative		45,918			40,648
Depreciation		5,113			3,914
Restructuring and reorganization charges		115			900
Total operating expenses		212,700			175,937
Operating income		32,093			25,767
Other income (expense):
Interest expense		(4,560	)		(4,266	)
Amortization of original issue discount		(690	)		(652	)
Interest and investment income, net		519			811
Loss on extinguishment of debt		-			(810	)
Other, net		(1,511	)		(646	)
Total other		(6,242	)		(5,563	)
Income before income taxes		25,851			20,204
Income tax provision		(6,600	)		(6,190	)
Net income	$	19,251		$	14,014
Weighted-average shares outstanding:
Basic		32,128			32,528
Diluted		32,438			33,102
Earnings per common share:
Basic	$	0.60		$	0.43
Diluted		0.59			0.42

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CSG SYSTEMS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS-UNAUDITED

(in thousands)

	Quarter Ended
	March 31, 2019			March 31, 2018
Cash flows from operating activities:
Net income	$	19,251		$	14,014
Adjustments to reconcile net income to net cash provided by operating activities-
Depreciation		5,113			3,914
Amortization		11,949			9,946
Amortization of original issue discount		690			652
Asset impairment		69			339
Gain on short-term investments and other		(157	)		(17	)
Loss on extinguishment of debt		-			810
Deferred income taxes		1,395			4,017
Stock-based compensation		3,693			4,572
Subtotal		42,003			38,247
Changes in operating assets and liabilities, net of acquired amounts:
Trade accounts receivable, net		(12,018	)		25,459
Other current and non-current assets and liabilities		(1,575	)		(4,629	)
Income taxes payable/receivable		3,886			1,035
Trade accounts payable and accrued liabilities		(25,594	)		(26,926	)
Deferred revenue		6,124			(3,331	)
Net cash provided by operating activities		12,826			29,855
Cash flows from investing activities:
Purchases of software, property and equipment		(8,286	)		(12,235	)
Purchases of short-term investments		(14,168	)		(15,070	)
Proceeds from sale/maturity of short-term investments		19,619			79,508
Acquisition of and investments in business, net of cash acquired		(4,000	)		(68,636	)
Net cash used in investing activities		(6,835	)		(16,433	)
Cash flows from financing activities:
Proceeds from issuance of common stock		512			484
Payment of cash dividends		(7,641	)		(7,437	)
Repurchase of common stock		(13,568	)		(11,920	)
Proceeds from long-term debt		-			150,000
Payments on long-term debt		(1,875	)		(120,000	)
Payments of deferred financing costs		-			(1,442	)
Net cash provided by (used in) financing activities		(22,572	)		9,685
Effect of exchange rate fluctuations on cash		876			2,153
Net increase (decrease) in cash and cash equivalents		(15,705	)		25,260
Cash and cash equivalents, beginning of period		139,277			122,243
Cash and cash equivalents, end of period	$	123,572		$	147,503
Supplemental disclosures of cash flow information:
Cash paid during the period for-
Interest	$	6,507		$	5,844
Income taxes		1,374			1,162

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EXHIBIT 1

CSG SYSTEMS INTERNATIONAL, INC.

SUPPLEMENTAL REVENUE ANALYSIS

Revenues by Geography

	Quarter Ended			Quarter Ended			Quarter Ended
	March 31,			December 31,			March 31,
	2019			2018			2018
Americas		86	%		85	%		84	%
Europe, Middle East and Africa		10	%		10	%		10	%
Asia Pacific		4	%		5	%		6	%
Total revenues		100	%		100	%		100	%

Revenues by Significant Customers: 10% or more of Revenues

	Quarter Ended			Quarter Ended			Quarter Ended
	March 31,			December 31,			March 31,
	2019			2018			2018
Comcast		22	%		22	%		28	%
Charter		19	%		18	%		21	%

Components of Revenues

	Quarter Ended		Quarter Ended
	March 31,		March 31,
	2019		2018
Cloud and related solutions	$	219,590	$	177,516
Software and services		13,028		11,959
Maintenance		12,175		12,229
Total revenues	$	244,793	$	201,704

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EXHIBIT 2

CSG SYSTEMS INTERNATIONAL, INC.

DISCLOSURES FOR NON-GAAP FINANCIAL MEASURES

Use of Non-GAAP Financial Measures and Limitations

To supplement its condensed consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP), CSG uses non-GAAP adjusted revenues, non-GAAP operating income, non-GAAP adjusted operating margin percentage, non-GAAP EPS, non-GAAP adjusted EBITDA, and non-GAAP free cash flow.  CSG believes that these non-GAAP financial measures, when reviewed in conjunction with its GAAP financial measures, provide investors with greater transparency to the information used by CSG’s management in its financial and operational decision making.  CSG uses these non-GAAP financial measures for the following purposes:

• Certain internal financial planning, reporting, and analysis;

• Forecasting and budgeting;

• Certain management compensation incentives; and

• Communications with CSG’s Board of Directors, stockholders, financial analysts, and investors.

These non-GAAP financial measures are provided with the intent of providing investors with the following information:

• A more complete understanding of CSG’s underlying operational results, trends, and cash generating capabilities;

• Consistency and comparability with CSG’s historical financial results; and

• Comparability to similar companies, many of which present similar non-GAAP financial measures to investors.

Non-GAAP financial measures are not measures of performance under GAAP, and therefore should not be considered in isolation or as a substitute for GAAP financial information.  Limitations with the use of non-GAAP financial measures include the following items:

• Non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles;

• The way in which CSG calculates non-GAAP financial measures may differ from the way in which other companies calculate similar non-GAAP financial measures;

• Non-GAAP financial measures do not include all items of income and expense that affect CSG’s operations and that are required by GAAP to be included in financial statements;

• Certain adjustments to CSG’s non-GAAP financial measures result in the exclusion of items that are recurring and will be reflected in CSG’s financial statements in future periods; and

• Certain charges excluded from CSG’s non-GAAP financial measures are cash expenses, and therefore do impact CSG’s cash position.

CSG compensates for these limitations by relying primarily on its GAAP results and using non-GAAP financial measures as a supplement only.  Additionally, CSG provides specific information regarding the treatment of GAAP amounts considered in preparing the non-GAAP financial measures and reconciles each non-GAAP financial measure to the most directly comparable GAAP measure.

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Non-GAAP Financial Measures: Basis of Presentation

The table below outlines the exclusions from CSG’s non-GAAP financial measures:

Non-GAAP Exclusions	Adjusted Revenue	Operating Income	Adjusted Operating Margin Percentage	EPS
Transaction fees	X	—	X	—
Restructuring and reorganization charges	—	X	X	X
Acquisition-related expenses:
Amortization of acquired intangible assets	—	X	X	X
Earn-out compensation	—	X	X	X
Transaction-related costs	—	X	X	X
Stock-based compensation	—	X	X	X
Amortization of original issue discount (“OID”)	—	—	—	X
Gain (loss) on extinguishment of debt	—	—	—	X
Unusual income tax matters	—	—	—	X

CSG believes that excluding certain items in calculating its non-GAAP financial measures provides meaningful supplemental information regarding CSG’s performance and these items are excluded for the following reasons:

• Transaction fees are primarily comprised of interchange and other payment-related fees paid in conjunction with the delivery of service to clients under CSG’s payment services contracts, to third-party payment processors and financial institutions by Forte, a CSG company acquired in October 2018.  Because Forte controls the integrated service provided under its payment services client contracts, these transaction fees are presented gross, and not netted against revenues; however, other payments companies who do not provide and/or control an integrated service present their revenues net of transaction fees.  The exclusion of these fees in calculating CSG’s non-GAAP adjusted revenues provides management and investors an additional means to use to compare CSG’s current revenues with historical and future periods, as well as with other payments companies.

• Restructuring and reorganization charges are expenses that result from cost reduction initiatives and/or significant changes to CSG’s business, to include such things as involuntary employee terminations, changes in management structure, divestitures of businesses, facility consolidations and abandonments, and fundamental reorganizations impacting operational focus and direction.  These charges are not considered reflective of CSG’s recurring core business operating results.  The exclusion of these items in calculating CSG’s non-GAAP financial measures allows management and investors an additional means to compare CSG’s current financial results with historical and future periods.

• Acquisition-related expenses include amortization of acquired intangible assets, earn-out compensation, and transaction-related costs.  Transaction-related costs, which typically include expenses related to legal, accounting, and other professional services, are direct and incremental expenses related to business acquisitions, and thus, are not considered reflective of CSG’s recurring core business operating results.  The total amount of acquisition-related expenses can vary significantly between periods based on the number and size of acquisition activities, previously acquired intangible assets becoming fully amortized, and ultimate realization of earn-out compensation.  In addition, the timing of these expenses may not

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directly correlate with underlying performance of the CSG’s operations.  Therefore, the exclusion of acquisition-related expenses  in calculating CSG’s non-GAAP financial measures allows management and investors an additional means to compare CSG’s current financial results with historical and future periods.

• Stock-based compensation results from CSG’s issuance of equity awards to its employees under incentive compensation programs.  The amount of this incentive compensation in any period is not generally linked to the level of performance by employees or CSG.  The exclusion of these expenses in calculating CSG’s non-GAAP financial measures allows management and investors an additional means to evaluate the non-cash expense related to compensation included in CSG’s results of operations, and therefore, the exclusion of this item allows investors to further evaluate the cash generating capabilities of CSG’s business.

• The convertible notes OID is the result of allocating a portion of the principal balance of the debt at issuance to the equity component of the instrument, as required under current accounting rules.  This OID is then amortized to interest expense over the life of the respective convertible debt instrument.  The interest expense related to the amortization of the OID is a non-cash expense, and therefore, the exclusion of this item allows investors to further evaluate the cash interest costs of CSG’s convertible notes for cash flow, liquidity, and debt service purposes.

• Gains and losses related to the extinguishment of debt are a result of the refinancing of CSG’s credit agreement and/or repurchase of CSG’s convertible notes.  These activities are not considered reflective of CSG’s recurring core business operating results.  Any resulting gain or loss is generally non-cash income or expense, and therefore, the exclusion of this item allows investors to further evaluate the cash impact of these repurchases for cash flow and liquidity purposes.  In addition, the exclusion of these gains and losses in calculating CSG’s non-GAAP EPS allows management and investors an additional means to compare CSG’s current operating results with historical and future periods.  

• Unusual items within CSG’s quarterly and/or annual income tax expense can occur from such things as income tax accounting timing matters, income taxes related to unusual events, or as a result of different treatment of certain items for book accounting and income tax purposes.  Consideration of such items in calculating CSG’s non-GAAP financial measures allows management and investors an additional means to compare CSG’s current financial results with historical and future periods.

CSG also reports non-GAAP adjusted EBITDA and non-GAAP free cash flow.  Management believes non-GAAP adjusted EBITDA is a useful measure to investors in evaluating CSG’s operating performance, debt servicing capabilities, and enterprise valuation.  CSG defines non-GAAP adjusted EBITDA as income before interest, income taxes, depreciation, amortization, stock-based compensation, foreign currency transaction adjustments, acquisition-related expenses, and unusual items, such as restructuring and reorganization charges, and gains and losses related to the extinguishment of debt, as discussed above.  Additionally, management uses non-GAAP free cash flow, among other measures, to assess its financial performance and cash generating capabilities, and believes that it is useful to investors because it shows CSG’s cash available to service debt, make strategic acquisitions and investments, repurchase its common stock, pay cash dividends, and fund ongoing operations.  

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CSG defines non-GAAP free cash flow as net cash flows from operating activities less the purchases of property and equipment.

Non-GAAP Financial Measures

Non-GAAP Adjusted Revenues:

The reconciliations of GAAP revenues to non-GAAP adjusted revenues for the indicated periods are as follows (in thousands):

	Quarter Ended
	March 31,
	2019			2018
GAAP revenues	$	244,793		$	201,704
Less:  Transaction fees		(17,132	)		-
Non-GAAP adjusted revenues (1)	$	227,661		$	201,704

(1) Non-GAAP adjusted revenues are defined as GAAP revenues less transaction fees.  Transaction fees are primarily comprised of interchange and other payment-related fees paid, in conjunction with the delivery of service to clients under CSG’s payment services contracts, to third-party payment processors and financial institutions by Forte, a CSG company acquired in October 2018.  Because Forte controls the integrated service provided under its payment services client contracts, these transaction fees are presented gross, and not netted against revenues; however, other payments companies who do not provide and/or control an integrated service present their revenues net of transaction fees.

Non-GAAP Operating Income:

The reconciliations of GAAP operating income to non-GAAP operating income for the indicated periods are as follows (in thousands, except percentages):

	Quarter Ended
	March 31, 2019
	2019			2018
GAAP operating income	$	32,093		$	25,767
Restructuring and reorganization charges (2)		115			900
Acquisition-related expenses:
Amortization of acquired intangible assets		3,181			1,707
Earn-out compensation		1,260			-
Transaction-related costs		-			2,355
Stock-based compensation (2)		4,664			4,570
Non-GAAP operating income	$	41,313		$	35,299
Non-GAAP adjusted revenues	$	227,661		$	201,704
Non-GAAP adjusted operating margin percentage		18.1	%		17.5	%

(2) Stock-based compensation included in the tables above and following excludes amounts that have been recorded in restructuring and reorganization charges.  

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Non-GAAP EPS:

The reconciliations of GAAP EPS to non-GAAP EPS for the indicated periods are as follows (in thousands, except per share amounts):

	Quarter Ended					Quarter Ended
	March 31, 2019					March 31, 2018
	Amounts			EPS (4)		Amounts			EPS (4)
GAAP net income	$	19,251		$	0.59	$	14,014		$	0.42
GAAP income tax provision (3)		6,600					6,190
GAAP income before income taxes		25,851					20,204
Restructuring and reorganization charges (2)		115					900
Acquisition-related expenses:
Amortization of acquired intangible assets		3,181					1,707
Earn-out compensation		1,260					-
Transaction-related costs		-					2,355
Stock-based compensation (2)		4,664					4,570
Loss on extinguishment of debt		-					810
Amortization of OID		690					652
Non-GAAP income before income taxes		35,761					31,198
Non-GAAP income tax provision (3)		(9,298	)				(8,423	)
Non-GAAP net income	$	26,463		$	0.82	$	22,775		$	0.69

(3) For the quarters ended March 31, 2019 and 2018 the GAAP effective income tax rates were approximately 26% and 31%, respectively, and the non-GAAP effective income tax rates were approximately 26% and 27%, respectively.  

(4) The outstanding diluted shares for the quarters ended March 31, 2019 and 2018, were 32.4 million and 33.1 million, respectively.

CSG Systems International, Inc.

May 1, 2019

Page 14

Non-GAAP Adjusted EBITDA:

CSG’s calculation of non-GAAP adjusted EBITDA and the reconciliation of CSG’s non-GAAP adjusted EBITDA measure to GAAP net income is provided below for the indicated periods (in thousands, except percentages):

	Quarter Ended
	March 31,
	2019			2018
GAAP net income	$	19,251		$	14,014
GAAP income tax provision		6,600			6,190
Interest expense (5)		4,560			4,266
Amortization of OID		690			652
Loss on extinguishment of debt		-			810
Interest and investment income and other, net		992			(165	)
GAAP operating income		32,093			25,767
Restructuring and reorganization charges (2)		115			900
Acquisition-related expenses:
Amortization of acquired intangible assets (6)		3,181			1,707
Earn-out compensation		1,260			-
Transaction-related costs		-			2,355
Stock-based compensation (2)		4,664			4,570
Amortization of other intangible assets (6)		2,374			2,258
Amortization of client contract costs (6)		5,979			5,478
Depreciation		5,113			3,914
Non-GAAP adjusted EBITDA	$	54,779		$	46,949
Non-GAAP adjusted EBITDA as a percentage of non-GAAP adjusted revenues		24	%		23	%

(5) Interest expense includes amortization of deferred financing costs as provided in Note 6 below.

(6) Amortization on the statement of cash flows is made up of the following items for the indicated periods (in thousands):

	Quarter Ended
	March 31,
	2019		2018
Amortization of acquired intangible assets	$	3,181	$	1,707
Amortization of other intangible assets		2,374		2,258
Amortization of client contract costs		5,979		5,478
Amortization of deferred financing costs		415		503
Total amortization	$	11,949	$	9,946

Non-GAAP Free Cash Flow:

CSG’s calculation of non-GAAP free cash flow and the reconciliation of CSG’s non-GAAP free cash flow measure to cash flows from operating activities are provided below for the indicated periods (in thousands):

	Quarter Ended
	March 31,
	2019			2018
Cash flows from operating activities	$	12,826		$	29,855
Purchases of property and equipment		(8,286	)		(12,235	)
Non-GAAP free cash flow	$	4,540		$	17,620

CSG Systems International, Inc.

May 1, 2019

Page 15

Non-GAAP Financial Measures – 2019 Financial Guidance

Non-GAAP Adjusted Revenues:

The reconciliation of GAAP revenues to non-GAAP adjusted revenues, as included in CSG’s 2019 full year financial guidance, is as follows:

	2019 Guidance Range
	Low Range			High Range
GAAP revenues	$	965,000		$	995,000
Less:  Transaction fees		(62,000	)		(75,000	)
Non-GAAP adjusted revenues	$	903,000		$	920,000

Non-GAAP Operating Income:

The reconciliation of GAAP operating income to non-GAAP operating income, as included in CSG’s 2019 full year financial guidance, is as follows (in thousands, except percentages):

	2019 Guidance Range
	Low Range			High Range
Operating Income
GAAP operating income	$	114,400		$	121,800
Restructuring and reorganization charges		600			600
Acquisition-related expenses:
Amortization of acquired intangible assets		12,600			12,600
Earn-out compensation		5,100			5,100
Stock-based compensation		20,800			20,800
Non-GAAP operating income	$	153,500		$	160,900
Operating Margin Percentage
GAAP revenues	$	965,000		$	995,000
GAAP operating margin percentage		11.9	%		12.2	%
Non-GAAP adjusted revenues	$	903,000		$	920,000
Non-GAAP adjusted operating margin percentage		17.0	%		17.5	%

CSG Systems International, Inc.

May 1, 2019

Page 16

Non-GAAP EPS:

The reconciliation of GAAP EPS to non-GAAP EPS as included in CSG’s 2019 full year financial guidance is as follows (in thousands, except per share amounts):

	2019 Guidance Range
	Low Range					High Range
	Amounts			EPS (8)		Amounts			EPS (8)
GAAP net income	$	69,700		$	2.16	$	75,100		$	2.33
GAAP income tax provision (7)		24,400					26,400
GAAP income before income taxes		94,100					101,500
Restructuring and reorganization charges		600					600
Acquisition-related expenses:
Amortization of acquired intangible assets		12,600					12,600
Earn-out compensation		5,100					5,100
Stock-based compensation		20,800					20,800
Amortization of OID		2,800					2,800
Non-GAAP income before income taxes		136,000					143,400
Non-GAAP income tax provision (7)		(34,700	)				(36,800	)
Non-GAAP net income	$	101,300		$	3.15	$	106,600		$	3.31

(7) For 2019, the estimated effective income tax rate for GAAP and non-GAAP purposes is expected to be approximately 26%.

(8) The weighted-average diluted shares outstanding are expected to be approximately 32 million.

Non-GAAP Adjusted EBITDA:

CSG’s calculation of non-GAAP adjusted EBITDA and the reconciliation of CSG’s non-GAAP adjusted EBITDA measure to GAAP net income is provided below for CSG’s 2019 full year financial guidance (in thousands, except percentages):

	2019 Guidance Range
	Low Range			High Range
GAAP net income	$	69,700		$	75,100
GAAP income tax provision		24,400			26,400
Interest expense		18,500			18,500
Amortization of OID		2,800			2,800
Interest and investment income and other, net		(1,000	)		(1,000	)
GAAP operating income		114,400			121,800
Restructuring and reorganization charges		600			600
Acquisition-related expenses:
Amortization of acquired intangible assets		12,600			12,600
Earn-out compensation		5,100			5,100
Stock-based compensation		20,800			20,800
Amortization of other intangible assets		8,900			8,900
Amortization of client contract costs		18,500			18,500
Depreciation		24,600			24,600
Non-GAAP adjusted EBITDA	$	205,500		$	212,900
Non-GAAP adjusted EBITDA as a percentage of non-GAAP adjusted revenues		23	%		23	%

Non-GAAP Free Cash Flow:

CSG’s calculation of non-GAAP free cash flow and the reconciliation of CSG’s non-GAAP free cash flow measure to cash flows from operating activities is provided below for the indicated period (in thousands):

	2019 Guidance Range
	Low Range			High Range
Cash flows from operating activities	$	125,000		$	150,000
Purchases of property and equipment		(30,000	)		(40,000	)
Non-GAAP free cash flow	$	95,000		$	110,000