The one area that I think we are seeing valuations come in is more in the AI space. And so what we see right now is, A, we have strong AI capabilities inside our four walls, and we are leveraging that for internal efficiencies as well as improved and expanding the offering and the value we bring customers. But you are seeing us take a more partner-driven approach like the partnership we referenced with Microsoft. If there is big players in the space, and there is a lot of the smaller players that have what we might consider overinflated valuations, we think there is going to be a lot of shake out at the low end of this. We don’t think that is a great, highly disciplined approach on the AI side specifically, but we are not ruling any of those out.
Again, just stick to our disciplined strategic focus on M&A.
Operator: Your next question comes from the line of Timothy Horan with Oppenheimer.
Timothy Horan: Congratulations on moving so rapidly on AI. Just wanted to focus on that if you don’t mind. Do you own the label data to train the models? And can you give us a little bit more color on what model you are using? And how long do you think it will take to have a material impact on your financials, either to reduce expenses or drive new revenue growth? And do you have a lot of new products in mind that can leverage AI? Thanks.
Brian Shepherd: Hey, Tim, thanks. Yes, really good questions and timely questions. First, AI, the way we describe it is – we don’t think we are leading it, but we do think we are leading edge in terms of how we are deploying and using. On the data side specifically, I would say that the majority of the data is actually not ours. There is some data in some of our solutions in some of our businesses where we actually have access to and can leverage more directly. But I would say the bigger is it would actually be customers’ data and they would be needing to opt in and work with us on that, as many of them are, and looking at different opportunities. Specifically on kind of the balance between revenue growth and accelerating and contributing to being at the upper end or above, upper end of our long-range targets, is it is – you have seen us launch three products and there is more in the works around that.
And we just think it is kind of core to the capability and it is an extension of what we have already been doing on machine learning and others. We are really excited by the Bill Explainer.AI launch to address bill shot. That is a huge opportunity and big driver in cable global telecom, but also in lots of other industries, whether that be insurance, utilities, other enterprise businesses that serve the consumer on that side. We do expect to be doing more launches around it. And on the model side, you see us – we have data scientists inside our four walls. We will also leverage some of our bigger partners and some of our smaller partners that have targeted large language models around that. Hai, maybe you want to talk about the efficiency side of this.
Our long-term debt range is 16% to 18%. We have shown we can solidly operate the company in the 17%. We’d love to get to the upper end. How do you think about AI on the margin side, Hai?
Hai Tran: Yes. I think it increases the pace at which we can get to the debt rate of our target. We are clearly trying to take full advantage of the new and immersing technology, and we are democratizing that across the organization as we speak. As you can see in the chart that Brian shared, every department across the organization, we are now starting to explore unique and interesting opportunities. And that is where I think we really unlock a lot of the efficiencies in the model.
Timothy Horan: And then just maybe two financial questions. Broadband has been, revenue has been relatively stable now in the last three, four quarters. When do you expect that to accelerate? And what is it going to take there? It sounds like you have some basically new products, maybe it is related to AI, to kind of get that going again.
Brian Shepherd: Yes. On the cable side, I mean I think there is a couple of things. One, I think one of the biggest maybe misunderstood aspects of our story and our company, is video core coming, core big cable customers, does not hurt CSG. It is about the customer relationship. And what we focus on is even though we have a high market share in North American cable, we have huge headroom for growth. They do a lot on internal IT development. There is still meaningful parts that we don’t serve today that we could displace vendors. They also we think will grow through some of the current challenges they have. We absolutely expect and think that our big two and our North American cable in general can grow year in-year out at or above the rate of the company growth.
Any given quarter may not be that way exactly. That is on us to say what do we do in that. We have got to bring them more value. We have got to constantly have the best operational ups of any vendor they use. Because usually when bigger customers feel pressure, they tend to turn and give more to those partners and vendors that are serving the best. Ours is, we don’t take it for granted. We try to go earn that respect and value every day. We absolutely think we can continue to do that nicely even with some short-term headwinds or even intermediate headwinds that any of our customers may face.
Operator: Your next question comes from Gregory Burns, Sidoti & Company.
Gregory Burns: Why are margins projected to be down sequentially in the fourth quarter? And then looking beyond the fourth quarter, obviously you are driving steady, consistent organic growth driving that scale. Do you see upside to your operating margin targets? I know in the past historically, you have kind of operated at certain points at higher levels of profitability. Is there potential there for margins to expand from here?
Brian Shepherd: Yes. Thanks, Greg. First, we thought about that in terms of the guidance for the remainder of the year. And so first, we always come into every quarter expecting and believing we have a chance to be at the upper end, not the lower end. And it is absolutely our expectation to be able to drive that from the revenue growth. But we have got – we know we have got to execute well in Q4, and we are already a month into the quarter. We don’t expect currently to have any step down, but let’s see how Q4 comes in. We have got some work to do with 2 months left in the year. Now specifically on the margin side of that, it was great to see where we actually last quarter increased our non-GAAP adjusted op margin range up to 16.75% to 17.1%.
You see us now through three quarters in the business at 17.5%, which is just shy of 100 basis points improvement over last year. It is well within our 16% to 18%. And what we like to say is we like 17% better than 16%. Now that we are operating solidly at the 17%, we are not giving guidance yet for next year. We would expect – we don’t expect to take a step back, Greg. And we talk a lot about just operational discipline. And that is more small terms of the rents, constantly looking at how do we redirect our OpEx to better sales, better value and performance for customers and accelerated growth. And that is what we have been doing. We expect to continually expand operating leverage now. Bottom line grows faster, faster than top line. Year in-year out, there may be some quarter that is better or a little lower than the others, but we like the discipline we are seeing across our business.
