CSG Systems International, Inc. (NASDAQ:CSGS) Q4 2022 Earnings Call Transcript

CSG Systems International, Inc. (NASDAQ:CSGS) Q4 2022 Earnings Call Transcript February 1, 2023

Operator: Good morning. My name is Devon, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q4 2022 CSG Systems International Inc. Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Thank you for your patience. Head of Investor Relations, Mr. John Rea, you may begin the conference.

John Rea: 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 clients’ 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.

Brian Shepherd: Thanks, John. Hi, everyone. We appreciate you joining the call today as we get started on Slide 4. With a choppy macroeconomic environment as a backdrop, 2022 showcased the strengths of CSG and our recurring revenue business model. We delivered 4.1% year-over-year revenue growth, a fantastic result, especially when factoring in the discount headwinds from two of our top three customers coming from long-term renewals that we signed in late 2021. Historically, CSG’s revenue has been flat to down in the year following a top three customer renewal, let alone two customer renewals. Team CSG also proved the agile and resilient manner with which we will continue to run our business. After facing some inflationary cost pressures in Q2, we took timely action on our margin improvement plan that led to good profitability in both Q3 and Q4.

As a result, we finished 2022 with adjusted operating margin of 16.6%, up from 15.7% in H1 2022. In addition, as a result of this increased profitability, favorable foreign currency movements and increased share repurchases, we delivered $3.61 of non-GAAP EPS, a 7.8% year-over-year increase. As we have said many times, over the medium to long run, we aim to have the bottom-line growing as fast or faster than our top-line and that is exactly what we accomplished in 2022. At the end of the day, our revenue growth success is fueled by exciting ongoing market demand for CSG’s industry-leading SaaS products and our impressive sales results. We continue to win and wow big new customers in a wide variety of faster growth industry verticals. Team CSG grew annual contract value sales bookings a strong double-digit year-over-year in both Q4 and full year 2022.

These sales wins bode well for CSG’s continued revenue growth into 2023. Our 2023 guidance should prove that we see our strong business momentum continuing into the new year. I will go into more details on our 2023 guidance, but we are expecting organic revenue growth above the midpoint of our long-term 2% to 6%, with a revenue range between $1.13 billion and $1.17 billion this year. Put differently, the midpoint of this guidance represents year-over-year revenue organic growth of approximately 5.5%. Further, we foresee profitability, as measured by our adjusted operating margin percentage, remaining strong at a range of 16.5% to 17%. And tied to 2022 success and 2023 outlook, we are pleased to announce we are raising our dividend by 6% with a quarterly payout of $0.28 per share.

We’re also proud to announce that this will be our tenth consecutive year of increasing our dividend payout. At the heart of our success is what CSGers all over the globe are doing on a daily basis. Because of their dedication and innovation, we are taking CSG to heights unseen in our company’s rich 40-year history. Thank you, Team CSG, for delivering fantastic 2022 results for our customers and for CSG. We will continue investing in our people, our products, and our customer to grow faster and to wow leading brands all around the world. As we do this, we will also demand a higher and more disciplined return on every dollar we invest. This combination is what will enable CSG to expand our operating leverage and accelerate our profitable revenue growth in the years to come.

During Q4, we had several exciting customer wins and success stories. By year-end, we had successfully migrated substantially all the Charter subscribers we won in our November 2021 contract renewal and extension off a competitor’s billing system. Globally, we expanded our relationship with a leading UK connectivity provider and landed sizable new deals with large telecom providers in Asia Pacific and West Africa. And on the customer engagement front, we won our first global CSG Xponent customer with Standard Life, the UK’s largest long-term savings and retirement business. I’ll provide more color on these wins in a few moments. Turning to Slide 5, I want to reiterate our four strategic objectives that will help CSG create more shareholder value and allow followers of our story to track our progress.

CSG aspires to deliver long-term organic revenue growth in the 2% to 6% range, striving to consistently be at or above the midpoint of this range combined with highly disciplined accretive and strategic inorganic growth. We aim to add operating scale and expand our operating leverage by growing top and bottom-line to $1.5 billion in revenue by year-end 2025. We strive to be the number one SaaS provider of choice for global communication service providers by providing the most value-adding technology platforms and by being easier to do business with than our competitors. And finally, we plan to diversify revenue even more as we expand in big, faster growth industry verticals with more direct sales and channel partner success in retail, government, financial services, healthcare technology, and more.

Moving to Slide 6. You can see that 2022 was a great year in delivering against all four objectives. On strategic revenue growth, we reported $1.09 billion of revenue during the full year 2022, resulting in 4.1% year-over-year growth. On the right-hand side of Slide 6, we believe that CSG’s high recurring revenue SaaS business model and our strong healthy balance sheet make us a safe attractive harbor in the midst of macroeconomic uncertainty. By 2025, we aspire to gain scale in the markets where we compete and generate greater than $1.5 billion in annual revenue, which implies that CSG will add over $400 million in profitable recurring revenue by 2025. Over the medium to long term, we aspire to expand CSG’s operating leverage and use our strong balance sheet to deliver non-GAAP EPS growth that meets or exceeds revenue growth exactly as we did in 2022 even with the margin pressure we faced in the first half of the year.

On the last point, I will continually reinforce a key principle for the CSG Board of Directors and management team. Investors can be assured that Team CSG is laser-focused on creating shareholder value and growing profitable revenue, not building empires nor adding them calories. We will maintain a disciplined and high return on invested capital mindset as we explore a wide range of strategic moves to create more value. Turning to Slide 7. We had good success in 2022 on our goal to be the number one technology provider of choice for communication service providers globally. And our continued success with both North American and global CSPs proved that we are executing well against this strategic priority. It’s great to see that CSG grew revenue year-over-year combined in our two largest North American cable broadband customers in Q4 2022 despite the approximate 5% discount headwinds at Charter following our long-term renewal in late 2021.

With respect to Charter, the migrations of subscribers from a competitor’s billing system are largely complete as we successfully migrated another pool of Charter customers to our platform in November. And during the quarter, we closed a new deal with one of the six largest cable providers in the United States to help them streamline and modernize their operations. Specifically, we are deploying our field service management tools as well as certain components of our customer engagement portfolio. And we also won more business in the global telecom market. During Q4, we expanded our relationship with a leading UK connectivity provider to digitally transform their BSS stack. The CSG solution will simplify their architecture by consolidating CRM, collections, payments management, product catalog and billing into a single CSG-hosted and managed solution.

The new stack will reduce their time to market significantly and enable them to increase competitiveness in the UK connectivity market. We also signed a new deal with a leading telecommunications operator in the Asia Pacific region to digitize the revenue management and digital monetization efforts. This new customer has operations in six Pacific Island nations with approximately 4 million subscribers. Specifically, we were able to provide solutions that will help this customer bring new services to market quickly, gain better insights into their customer base to enhance customer satisfaction and provide improved business resilience through a fully supported BSS platform. And finally, we are pleased to announce that we won a significant deal with Moov Africa Malitel, the leading converged operator in Mali, West Africa.

Malitel has selected CSG to improve its time to market and to provide new service offerings with an easier-to-use and more modern-tooled application. Turning to Slide 8. Since 2017, CSG has grown revenue from exciting new industry verticals, from 7% of total 2017 CSG revenue to 26% in 2022. Being a partner of choice for big brands in higher growth industry verticals where we help them digitize and modernize their customer engagement and integrated payments continues to be a game changer for CSG and for our customers. Last fall, we launched CSG Xponent Ignite, which brings over 100 pre-packaged customer experience journey templates, connectors, and reports that will turbocharge unforgettable outcomes for communication service providers, financial services, retail, healthcare and life sciences.

This leading SaaS platform leads to quantifiably better business results with improved customer conversion, engagement and loyalty across the brand’s digital channels. What does this mean for brands and a wide range of industry verticals? Low entry points, rapid launch in 90 days or less, turning customer data into powerful insights and faster return on investment. It was fantastic to see Team CSG win our first CSG Xponent deal outside of North America, Standard Life, the UK’s largest long-term savings and retirement business. Standard Life will use our customer journey orchestration tool to operate dynamic, contextual and more personalized customer experiences across all channels. Also, we signed a CSG Xponent deal with one of the world’s leading government contractors.

This customer will use our Xponent smart notifications, so that they can simplify and digitize their communications with Medicaid enrollees for one of the largest states in the US. In the payments market, our growth is a testament to our industry-leading SaaS integrated payments platform. CSG Forte provides award-winning payment platforms to approximately 98,000 active merchants and ISV partners who need ACH, credit, payment gateway and payment processing capabilities, serving a wide range of recurring revenue industry verticals. As a leader in ACH processing, we continue to add scale by signing ISV partners in fast-growing industry verticals like property management. Looking ahead, we’ve built an exciting sales pipeline in our payments business that we believe will continue strong double-digit organic revenue growth in 2023 and beyond.

Before I turn it over to Hai, let me provide some high-level color on our 2023 guidance and a few closing thoughts. In fiscal year 2023, we expect organic revenue growth at or above the midpoint of our long-term 2% to 6% range as evidenced by our anticipated revenue range of $1.13 billion to $1.17 billion. This range translates into an expected year-over-year revenue growth range of 3.7% to 7.4%, with the midpoint equating to a 5.5% year-over-year growth rate. This revenue growth is 100% organic with any acquisitions we do in 2023 being added to the strong revenue growth. Put simply, CSG has built meaningful revenue growth acceleration heading into the new year. We expect good non-GAAP adjusted operating margin performance in 2023 with a range of 16.5% to 17%.

Hai will provide more details on all of our 2023 guidance. To wrap up on Slide 9, I hope you can see why Team CSG is excited by our outlook. We continue to turn today’s challenges into tomorrow’s breakthrough business results. CSG is building meaningful momentum and elevating every aspect of our business that we fully expect will fuel our continued long-term growth and transformation. We hope you see the same things we do when we analyze our business. We are attracting, retaining and developing the best and most diverse talent in the industry. We are helping transform the industries we serve, whether that be global CSPs, financial services, healthcare, retail or government customers. Our very strong sales win rate proves that the market wants more of what CSG has to offer.

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And when any part of our business underperforms our lofty expectations, then you see CSG’s operating intensity kick into high gear just like we did mid-year as we turned our disappointing first half 15.7% adjusted operating margin into a solid full-year result of 16.6% in 2022, and we built even faster revenue growth momentum heading into an exciting challenging and growth-oriented 2023. With that, I will turn it over to Hai to provide more detail on Q4, full year 2022 business results and 2023 guidance targets.

Hai Tran: Thanks, Brian. Let’s walk through our 2020 financial results. And then, I’ll wrap it up with some key conclusions. Starting on Slide 11. We generated $1.09 billion of revenue, which represents 4.1% year-over-year growth. For the year, the increase in revenue was mainly attributed to the continued growth of our revenue management solution, as the majority of the increase was attributed to organic growth. This growth was in the face of 3% to 5% discount headwinds for two of our three largest customers. Our 2022 non-GAAP operating income was $169 million or non-GAAP adjusted operating margin of 16.6%, as compared to $162 million or 16.5% in the prior year. The increase in non-GAAP operating income and non-GAAP adjusted operating income margin percentage can be mainly attributed to higher revenue along with the timely operating margin improvement initiatives we took in Q2 and the beginning of Q3.

Specifically, we have seen margin benefits from our decision to dissolve our controlling interest in a Latin American business, the continued streamlining of our office space footprint, a rationalization of our headcount and hiring practices, and the strengthening of the US dollar to most global currencies. Moving on, our non-GAAP adjusted EBITDA was $226 million for 2022, or 22.3% of revenue, excluding transaction fees, as compared to $221 million or 22.6% in the prior year. Lastly, our 2022 non-GAAP EPS was $3.61, a 7.8% year-over-year increase as compared to $3.35 in the prior year. The increase in non-GAAP EPS is mainly due to the higher operating income in 2022. Favorable foreign currency movements and share repurchase activity over the last 12 months, offset by higher tax rate and increase in interest expense due to increasing interest rates, as our debt is primarily floating rate in nature at this point in time.

Turning to Slide 12, I’ll go through the balance sheet, our cash flow generation, and shareholder returns. Our 2022 cash flow from operations was $64 million as compared to cash flow from operations of $140 million in the prior year. Further, we had non-GAAP free cash flow of $27 million in 2022 as compared to $114 million of free cash flow generated in 2021. The main drivers of the year-over-year decrease in free cash flow are primarily timing-related, and include: unfavorable changes in working capital, resulting primarily from the accrual of our 2022 annual employee bonuses, which are significantly lower than the previous year; higher tax obligation of which the primary negative impact was from Section 174 of the 2017 Tax Cuts and Jobs Act which deals with the amortization of R&D spending beginning in 2022.

As a result of this, we will not get the previously anticipated amount of the tax deduction benefit related to our R&D investment in 2022. We had previously expected this legislation to be repealed. But because the legislation would not repealed, we now anticipate higher cash taxes going forward. Over a five-year period, we believe this tax change will be neutral to our free cash flow generation. Further, we experienced higher taxation related to our profit mix in some of our global locations, which caused our tax rate to marginally increase. Slightly elongated cash conversion cycle from a couple of our recently signed large global telecom new logo wins that will result in good long-term profitable revenue as we continue to gain market share from competitors.

The negative cash impact of our operating margin improvement plan that we initiated in Q2 that included increased restructuring charges, continued streamlining of our office space footprint, headcount reductions and enhanced scrutiny regarding new hires. Cash flow generated from operations before changes in working capital in 2022 was $160 million compared to $179 million in 2021. Importantly, absent the aforementioned impact from Section 174, we would have shown slight growth in cash flow from operations before changes in working capital during 2022 on a year-over-year basis. And as we communicated on our last earnings call, our Q4 free cash flow of $49 million in 2022 was slightly better than our 2021 result of $48 million. Moving on, we ended the fourth quarter with a $150 million of cash and short-term investments.

That, along with our outstanding debt at December 31, 2022, results in $265 million of net debt, and our net debt leverage ratio sits at 1.1 times. Moving to the bottom right of the slide, we declared $34 million in dividends during 2022. In addition, we repurchased $88 million of common stock under our stock repurchase program. In total, we returned $122 million to our shareholders in 2022. Turning the page, let me layout our 2023 guidance. Starting with the top-line. We expect our revenue range — to range from $1.13 billion to $1.17 billion and transaction fees to range from $78 million to $82 million. We are currently forecasting our first and second half 2023 revenue to be split relatively equal. Further, we anticipate Q1 revenue to be the strongest of the year due to the timing of a few opportunities which moved out of Q4 and that we anticipate to close in Q1.

Similar to 2022, we also expect our non-GAAP adjusted operating margin percentage to range between 16.5% to 17.0%, well within our long-term target range of 16% to 18%. Consistent with the revenue trend above, we also expect Q1 to be our strongest quarter in terms of our non-GAAP adjusted operating margin. Further, we anticipate Q2 being the low point of the year on this metric as our annual merit increases begin to have an impact. On the next metric, we anticipate our non-GAAP EPS to range between $3.35 to $3.65 based on a non-GAAP tax rate of approximately 28.5% and a share count of 31 million shares for the year. The midpoint of our non-GAAP EPS range is below our 2022 performance of $3.61, primarily due to the projected higher effective tax rate, and increase in the borrowing cost of our debt in 2023 versus what we incurred in 2022, as a result of the full-year impact of higher interest rates.

As a reminder, we currently have a predominantly floating rate capital structure, but continue to explore potential ways to maximize our balance sheet efficiency. Moving on non-GAAP adjusted EBITDA is expected to range between $231 million to $242 million. And finally, we expect a range of free cash flow to be between $80 million to $120 million with capital expenditures expected to come in between $22 million to $28 million. Going forward, the current challenging inflationary environment means we must relentlessly prioritize every investment we make and be discipline in the allocation of resources. Innovation and adherence to a risk-reward framework with continuous learning are two cornerstones of how we run our business. We remain devoted to a disciplined approach to managing our capital.

In closing, our business is well-positioned with a strong sales pipeline, robust sales bookings momentum, a high-quality customer base and visibility into 90%-plus of our expected 2023 revenue. We remain committed to accelerating and diversifying our revenue growth, which may include closing and integrating disciplined value-adding acquisitions. Additionally, we are pleased with the results of our operating margin improvement initiatives in 2022, and we’ll continue to be very careful stewards of our capital, especially in this uncertain environment. We believe this approach, combined with our consistent capital distribution, will serve our shareholders well. With that, I will turn it over to the operator to facilitate the question-and-answer session.

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Q&A Session

Operator: Our first question comes from Greg Burns with Sidoti.

Greg Burns: Good afternoon.

Brian Shepherd: Hi, Greg.

Greg Burns: Just to start off, what’s a good tax rate for next year?

Hai Tran: I think the — what we guided to is roughly 28.5%.

Greg Burns: Okay, perfect. Okay. And then, when we look at the guide, obviously, solid revenue growth acceleration. But what’s holding back the operating leverage? Is it just kind of external still inflationary environment? Or are you spending in certain areas for growth? Like why won’t — or why aren’t we going to see the operating margin expand a little bit next year?

Hai Tran: Yes, I think you hit the nail on the head. There are still inflationary pressures that we’ll feel going into 2023. And I think we’ll be fairly conservative, middle of the road actually, in terms of our expectations of how those costs performance for 2023.

Brian Shepherd: I think — hey, Greg. Hope you’re doing well. The only thing I would add to that is, we saw a weaker first half of the year last year. This team is laser-focused on having a strong Q1 and Q2 top-line growth and on the profitability side. So, we still see some of those pressures around wage, supply chain and others, but we want to have a strong start to the year and then see how we progress from there.

Greg Burns: Okay. And then, the Xponent win that you announced in the UK, how — I don’t know if you gave this information, but how much revenue are you generating from Xponent or your broader customer engagement solutions in North America? And what’s the pipeline? Can the rest of the world be as big as your North American revenue stream? And what’s the pipeline of those global opportunities look like for those services?

Brian Shepherd: It’s a great question, Greg. So, thanks for that. What excites us about this product line so much is, A, just the applicability to all these industry verticals in terms of the value we can bring of being personalized around journey experiences of an individual customer, whether that’s a consumer or an enterprise level. And the other side is the range of revenue that we could actually get. We announced last quarter, in the previous quarter, a big win with one of the large U.S. pharmacy retailers that could be tens of millions of revenue that comes from that. But we also see — we can go in an individual use case and we can deploy for hundreds of thousands or low-single digit millions, add a lot of value, cross-sell into other lines of business they have in other vertical.

So, it really does run the gamut in terms of size, because we have this modular SaaS solution, and it can really land and expand well as we proved. So, if a customer has a bigger need across their entire enterprise, it could be a much larger annual revenue number. We could also get in with the lower price point that speeds sales, and that’s kind of what we’re seeing in the market. Specifically on your question around geography, we wanted to prove this out to be effective and efficient with our resources in North America. We think we have tons of headroom in the North America market, but this has applicability in every country, in almost every industry vertical. All around the world, we have a huge expectation. And globally, we could see that be as big or bigger than our North American business.

Obviously, we think we’ll have to scale up both in terms of direct sales and channel partner sales, but has huge opportunity to drive revenue growth.

Greg Burns: Great. And then, lastly, the $1.5 billion target by ’25, obviously, that’s going to require some acquisitions to get there. So, what are you looking for? Is it technology or maybe some broader scale acquisitions? And what’s the market for acquisitions looking like right now?

Brian Shepherd: Yes. I mean, it’s really that combination that we’ve been talking about. We’re pushing hard to perform at the upper level of our organic growth. That’s what drives this earn the right to grow with operating leverage and operating margin expansion, to your first question, and then, just layering on good smart acquisitions. So, what we really look for from an acquisition, and we think the market is turning in our favor with the strong balance sheet, we don’t have to do a deal, which means we can stay highly disciplined and be quite selective in terms of strategic fit, paying the right price with the financial accretiveness of deals we do, but it’s pretty much the same as our strategic focus; winning big and the number one technology provider of choice in telecom globally.

So, we’re going to look at scale and rounding out our portfolio to bring more value to our North American broadband cable or our global telecom customers. We look for opportunities in that digital CX. We’re again — like we did when we acquired Kitewheel, and then we did announced our CSG Xponent launch a couple of quarters after that. It can really turbo charge the value we bring brands all around the world. You could see us do something in the payment space. But it really is strategic fit, financial fit, read the right risk return profile. And we like where pricing is coming on some of these potential deals. As you know, we didn’t do a deal last year, because we wanted to stay disciplined. We did three or four the year before, and we think it could be a good opportunity, but it’s all around that discipline and paying the right price.

Greg Burns: All right. Perfect. Thank you.

Brian Shepherd: Thanks, Greg.

Operator: Our next question comes from Maggie Nolan with William Blair. One moment.

Maggie Nolan: Hi, thank you. Congrats on the growth. Another question on some of those goals around global expansion. Are you expecting the global growth to be heavier for you in cable and telecom, or equal weight in other verticals? How are you thinking about that?

Brian Shepherd: Hi, Maggie. Glad to hear you back, and I hope you’re doing well. I would say near-term, in terms of where we are, just the wins we continue to announce in global telecom, I would say, that’s, first and foremost, that I would hit. I mean the three really, really strong deals we announced in global telecom this quarter in different regions of the world; one in Africa, one in APAC, one in the UK. And then, we also had a good deal that moved into the early part of Q1. So, we think that’s just going to continue to drive nice growth in the telecom space. The digital CX, though, like we talked about on the answer to Greg’s question, we think it’s got a lot of opportunities. It was great to see the Standard Life win in the UK market and get the ball rolling around that.

We think it’ll take a little bit of time to both build the channel partnerships. And the reason we’re focused heavily on channel is to be efficient and leverage their (ph), their proven brand recognition with other partners in those different geographies, in those verticals. And we think we can get a lot of pull-through as we also build out direct sales and marketing as a secondary approach. So, we like what will come from that, but we think that’ll probably take time to build out with their focus, I would say, initially in the EMEA market to start.

Maggie Nolan: Got it. Thank you. And then, we’ve been talking about this Charter migration for some time now. With that fully wrapped, can you maybe kind of give us the recap, the detail on the impact of that in 2022, and then how you’re thinking about the impact on the year-over-year comparisons?

Brian Shepherd: Yes, I’ll hit the first part and then I’ll let Hai just provide a few of the financials. So, I mean just a fantastic effort by the team to work with our colleagues at Charter to convert 14 million subscribers and do that in a way in a good timeframe. That also just brought a lot of value that fit the business need of our biggest and strong customer at Charter. So, grateful to our colleagues on the Charter side that worked with us on that. That came on the heels of after converting 11 million subscribers off of Amdocs at Comcast. So, now from a triple play standpoint, we have all the business and our platforms run all the subscribers at both Comcast and Charter. Hai, you want to provide some of the financial perspectives on that?

Hai Tran: Yes. I mean, I think one of the tailwinds we benefited from and it contributes to our guidance range towards the higher end of our long-term guidance is that we have full year impact of those migrations. But in addition to that the other real benefit we have is over 90%-plus visibility into the business as a result, right? So, it gives us good confidence and good visibility in terms of our ability to generate that strong organic growth that we highlighted.

Maggie Nolan: That’s helpful. That’s all for me. Thank you.

Brian Shepherd: Thanks, Maggie.

Operator: Our next question comes from Timothy Horan with Oppenheimer.

Timothy Horan: Thanks, guys. The cable industry looks like it’s going through a fairly aggressive network and technology upgrades and — around the world, and here in the United States, kind of converging wireless with wireline a lot more. Do you think this is an opportunity as they do these upgrades? And do you think it’s — you kind of gain some market share during this process? Or maybe just how do you fit into the whole thing?

Brian Shepherd: Thanks for the question, Tim. Hope you’re doing great. Obviously, it changes some quarter-to-quarter. We tend to look at it having served these big players for going on three decades, over a slightly longer period of time. We’d love to see the broadband adds 105,000 getting added back at Charter this quarter. We love to see the investment we’re hearing in the infrastructure to expand the homes past 2% to 3% a year at both Charter and Comcast. I think Comcast, if you normalize out the hurricane, they added about 4,000. But yes, there is going to be technology evolution and disruption around this. And so that’s why we’re just focused on how can we bring more value, stay mission critical to what they’re doing, be easier to do business with, and then try to give them reasons why they might look at expanding some of the parts of the portfolio we don’t have with some of those other providers.

The other thing that we want to continue to focus on, it’s not loss on us when we see a competitor announce 50% of their revenue comes from two customers in the U.S., and those are big customers, and some of them are having some success on fixed wireless and that’s going to continue to have some wins in the market in terms of the net broadband adds in North America. We’d love to earn the right over time to actually take some of our telecom wins outside of North America and see if we could do more in the local. Obviously, that may be a longer-term play, but that is where our R&D investment and technology is going to try to really bring more around that convergence. We could serve both sides of that equation. And I think it’s going to continue to evolve, Because as you know and you report on quite a bit, there’s different approaches being taken by different large service providers around how they might win in different segments of the market.