CSG Systems International, Inc. Q2 2008 Earnings Call Transcript

Jul.23.08 | About: CSG Systems (CSGS)

CSG Systems International, Inc. (NASDAQ:CSGS)

2Q08 Earnings Call

July 22, 2008 5:00 pm ET

Executives

Peter E. Kalan - President and Chief Executive Officer

Randy R. Wiese - Chief Financial Officer

Roger Metz – Vice President, Investor Relations

Analysts

Ashwyn Shabekar – Citigroup

Karl Keirstead - Kaufman Bros, L.P.

Scott Featherland - Wedbush Morgan Securities

Peter Jacobson - Palmer Murray

Larry Bowen - First Analysis Securities Corp.

Chris Cohen

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the CSG Systems Second Quarter conference call. (Operation Instructions) This conference is being recorded today, Tuesday July 22, 2008. At this time, I’d like to turn the conference over to Mr. Roger Metz. Please go ahead sir.

Roger Metz

Thank you Val and thanks to everyone on the call for joining us.

Today’s discussion will contain a number of forward-looking statements. In particular, these will include 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 statements 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 presentation and we undertake no obligation to revise or publically release any revisions to these forward-looking statements in light of new information 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 in our most recently filed 10-K and 10-Q which are all available in the Investor Relations section of our website.

With me today on the phone are Peter Kalan, Chief Executive Officer and Randy Wiese, Chief Financial Officer. Peter will begin.

Peter E. Kalan

Thank you, Roger and thanks to all of you for joining us today.

CSG continued to execute in the second quarter, posting strong revenues of $117 million and net income of $0.40 per share.

We also generated very strong cash flows, delivering new products and services and most importantly, achieved great successes with our clients.

Randy will share more detail on our financial performance after I conclude.

As we reach the midway point of 2008, I think it’s important to reflect on CSG’s successes during the first half of the year and where we are headed going forward.

On last quarter’s conference call, we talked about the strong start to the year with solid financial performance coupled with customer wins such as the 6-year Mediacom renewal through 2014, which included the deployment of several additional products. We also talked about our successes with interactive messaging, statement services, applications for customer service agents, and new solutions for managing digital content, sales and service.

Following on the first quarter, we stayed on a similar track of success, again, with solid financial results and noteworthy client wins. Of course, the most visible of these was the Comcast renewal that we told you about last week. We are very pleased to have this contract extension completed as we continue to deliver key services to Comcast while also providing our investors with increased visibility into the revenues of the company to the end of 2012.

In the second quarter, we signed a new client, Brinks Home Security Services to provide 670,000 monthly customer statements and letters. This new client relationship coupled with ADT, another home security service provider that is also our client, provides CSG with a strong footprint in the home security market.

Also during the quarter, we continued to make progress on delivering many of our solutions in modular components, so we can meet our clients’ needs for applications and solutions in a variety of ways.

Along with our workforce management application, interactive messaging services and statement and marketing services, we are also componentizing our ACP solutions to offer capabilities such as our product catalog as standalone applications that can be used in conjunction with other vendors’ products.

Going forward, we are focused on continuing to grow our revenues and profits while diversifying our revenue concentration in the markets we serve. Our business proposition is to help our clients maximize the value of their customers through optimizing the interactions they have with their customers. This is important to our clients as they are in extremely competitive marketplaces which require the highest level of customer service along with the ability to roll out new services for purchase.

Through our offerings, we help our clients build, engage and transact with their customers. The breadth of our solutions which are integrated to provide management of customer interactions across the many customer touchpoints is the unique offering in the marketplace and sets CSG apart from our competition.

To grow, we have been expanding our capabilities through our investment in research and development and also through acquisitions. We’ve seen our investment in products create and enhance solutions that have been helping our clients deliver new services to their customers, increasing the value of these relationships. As an example, we have recently seen our clients eclipse 6 million customers for voice services on our system which translates to a penetration rate of approximately 20% of the cable subscribers we support. This growth has principally been accomplished in approximately 30 months since our clients started aggressively marketing their digital voice services.

This is a testament to CSG’s ability to evolve, adapt, and grow alongside our customers. As our clients continue to evolve their businesses and provide new services, we will be a part of this.

We are providing solutions that improve our clients’ operational efficiencies and also improve the level of customer service delivered to the end consumer. Products such as Order Workflow and Workforce Express are changing the way our clients conduct their operations.

From a marketing and communication perspective, we are increasing our capabilities to provide enhanced communications to our clients’ customers. Through enhanced marketing services and the rollout of full-color printing, we are providing capabilities that improve the messages that our clients convey, enhancing understanding and awareness of the end consumer.

We will continue to add to our capabilities across the spectrum of build, engage and transact. We believe that there are opportunities to help our clients to continue to shift interactions with their customers to more cost-efficient platforms while also enhancing the delivery of customer sales and service.

We are looking to expand upon our already strong position of web interactions for today we support 7 million consumers or our scale of interactive messaging where today we average over 23 million messages a month.

We are focused on bringing to market an expanded e-commerce application, new marketing capabilities, and solutions that provide alternatives to customer service agents. The breadth of our offerings has built a strong market position in cable and satellite and this is still an important market to us. While growing our capabilities and relationships with the cable and satellite clients, we are also focused on developing additional vertical markets that generate strong growth and revenue diversification. We’re looking to grow in vertical markets that have high numbers of customers, large volumes of customer interactions, and where the service offerings are becoming more complex.

One year ago, virtually all of our revenues were derived from cable and satellite operators in North America. As of June 30, 2008, approximately 12% of our revenues are derived from markets other than cable and satellite and we will continue to increase our diversification by building upon the relationships and capabilities we have in new markets.

Many of the solutions that support our cable and satellite clients as well as the solutions we’ve acquired over the past 12 months, have cross vertical applicability that we will continue to exploit by bundling and selling solutions to these new verticals. We have modular applications and services that can be used by clients that support specific business needs working in conjunction with other vendors’ applications. Since our applications are integrated with our other CSG capabilities, we can also provide a wider scope of products and services to support our clients’ businesses.

We are building presence in utilities and municipals, telcos, financial institutions, and home security services. We have started to cross sell our capabilities into these new markets and believe that through enhancement in products and acquisitions of new capabilities, we will see momentum build in these new markets.

With the expansion of marketing statements services, e-commerce capabilities, interactive messaging, and self-care will provide a suite of capabilities that we believe will be valuable to clients and prospects as they run their businesses.

Today’s marketplace is more competitive than ever and as consumers have increased choices in where to purchase their services, great customer services become a requirement. CSG clients are able to engage with their customers more intelligently. Every communication and interaction with the customer is an information exchange providing additional insight that our clients use to enhance each subsequent customer experience.

Going forward, we will continue to deliver innovative ways to enable our clients to build strong customer relationships, provide compelling products and services and allow them to more effectively engage and transact with their customers. At CSG, we strive to make customer service not just a requirement, but a competitive advantage for our clients.

In summary, we are pleased with our continued strength of our operations, our progress in integrating and growing our required businesses, and the continued confidence that both long-term and new clients have placed in CSG. We have great employees, strong relationships with our clients and a very solid financial profile, all of which provide a strong foundation for us to continue delivering solutions that help our clients build their businesses one customer interaction at a time with outstanding applications and solutions that help them build, engage and transact their customers. We look forward to carrying the momentum from the first half of the year to the second half into 2009 and beyond, to the benefit of our clients and shareholders alike.

With that, I’ll turn it over to Randy to walk through our financial performance and outlook.

Randy R. Wiese

Thank you Peter and welcome to all of you on the call today. I’m happy to share with you the financial results for our second quarter 2008 as well as our outlook for the remainder of the year.

Total revenues for the second quarter were $116.9 million. This represents an increase of 17% when compared to $99.5 million of revenues for the same period in 2007 and an increase of 3% when compared to $113.6 million reported for the first quarter of 2008.

The increase in year-over-year revenues relates primarily to the additional revenues generated by the businesses we have acquired over the past 12 months with the remaining portion of the increase related to organic growth factors. A sequential quarterly increase relates primarily to our most recent acquisition of Dataprose which was completed on April 30, 2008.

We finished the quarter with 45.4 million subscriber accounts on our processing systems which were relatively consistent with the previous quarter.

Comcast continued as our largest client comprising approximately 27% of our total revenues for the quarter relatively consistent when compared to the first quarter. DISH Network continued as our second largest client and represented approximately 18% of our total revenues for the quarter, a slight decrease when compared to 19% for the first quarter.

Net income for the quarter was $13.3 million or $.40 per diluted share. This compares to $0.37 per share for the same period last year and $0.45 per share for the first quarter of 2008.

Earnings per share grew 8% year-over-year resulting primarily in the lower number of outstanding shares in the second quarter of 2008 following the completion of our stock repurchase program in late 2007.

The operating margin percentage for the second quarter came in at approximately 19%, an expected decrease when compared to 20% for the first quarter. As you may recall, we anticipated that our operating margin percentage would trend down in the remainder of 2008 as we continue to commit dollars to further invest in our products and solutions through enhanced R&D and other support efforts and because of the impact of the Dataprose acquisition.

Our affected income tax rate for the second quarter was 37%, up from 36% in the first quarter, due primarily to some timing matters.

The financial results for CSG include several non-cash charges, which led to depreciation, amortization, and stock-based compensation. These non-cash charges for the second quarter totaled $12 million or approximately $.24 per diluted share impact.

Turning to the balance sheet, as of June 30, cash and short-term investments totaled $148 million relatively consistent when compared to March 31 balance of $147 million.

Our net billed trade accounts receivable totaled approximately $106 million, down approximately $19 million from the previous quarter. This decrease is primarily due to a client’s delayed first quarter payment of $10 million that was not received until the first week of April. This resulted in the payment of four monthly invoices by this client during the second quarter. The remainder of the decrease for the quarter can be attributed to normal fluctuations in the timing of client payments at quarter-end.

Cash flows from operations for the second quarter were approximately $47 million, an increase of approximately $27 million over the first quarter. The second quarter cash flows were positively impacted by the decrease in accounts receivable that I just mentioned and other favorable changes in working capital. Our cash flows from operations continue to be very strong.

As of the end of the second quarter, we have $230 million in contingent convertible debt outstanding which mature in the year 2024. Holders of these securities can convert at any time after CSG’s common stock trades at a price in excess of $34.80 for a set period of time. The first scheduled put-or-fall option for the redemption of these securities is in 2011. We did not purchase any shares through our stock repurchase program during the second quarter of 2008.

Next, I’d like to provide you with an update to our financial expectations for the full year 2008. Overall, our expectations are consistent with or slightly better than our previous gains.

Revenues are expected to range between $470 million and $475 million which represent a tightening of the lower end of the range as we are now halfway through the year and thus have greater visibility into the numbers. This guidance represents an increase in revenue of 12%-13% for 2008 when compared to 2007.

We expect our earnings for 2008 to range between $1.58-$1.64 per diluted share. This represents a slight increase from our previous EPS gains with the increase due to a slight improvement in our expected full-year results of operations. This gain reflects an operating margin expectation of approximately 18% for the full year of 2008 which is consistent with our previous expectations.

We expect our full-year income tax rate to rise between 35%-36% which is also consistent with our previous expectations.

We expect cash flow from operations to range between $115 million and $120 million which are unchanged from our previous guidance. This assumes there is no significant net impact related to unexpected fluctuations in working capital items for the year.

At this time, we expect our capital expenditures for 2008 to be approximately $20 million to $25 million which is consistent with previous expectations.

We expect the total of our non-cash items and depreciation, amortization and stock-based compensation to be approximately $45 million. With the completion of our stock buyback program in late 2007, we no longer have a 10b5-1 plan in place. As a result, as we’ve done in the past under similar circumstances, we do not assume any stock repurchases in our guidance. We will continue to evaluate the best use of our capital throughout 2008 which may or may not include additional share repurchases.

In summary, we had another strong quarter. Our business continues to operate solidly and we are committed to grow the revenues and profits of our company, expanding on our customer relationships, and delivering on our long-term shareholder value. We are excited about the overall opportunities we see for the business and we look forward to reporting on continued success in the future.

I will now turn it over to the moderator for questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from the line of Ashwyn Shabekar with Citigroup. Please go ahead.

Ashwyn Shabekar – Citigroup

Congratulations, nice quarter. My first question is you mentioned you’re spending some R&D dollars on modularization, componentization, things like that. Is that in response to a specific client request?

Peter E. Kalan

No, Ashwyn. It’s not just specifically a request of a client. As we’ve watched our clients evolve their businesses and how we think also the best way to build products, we’re trying to be responsive to both aspects. We believe long-term that by componentizing we can build more flexibility into our own operations and into our own development methodologies as well as we believe it can broaden the market in which we can sell our products.

Ashwyn Shabekar – Citigroup

As I look forward to the back half of this year and into 2009, given that you’ve signed Comcast and hopefully you’ll sign DISH, after that, should I expect, because you don’t have any native contracts coming up for a couple of years, do I expect the SG&A dollars to taper off? Should I see any particular trend in that or R&D?

Peter E. Kalan

Ashwyn, with respect to SG&A, I think over the last several quarters, it’s been in the 11% or so of revenues. I wouldn’t expect any significant change in that going forward.

With respect to R&D, you saw it jump up a little bit this quarter as a percentage of revenue, I think it’s about 14.6% of revenues for the quarter compared to about 14% for the first quarter. I think in the near-term, you should probably expect it to stay in that general range.

Ashwyn Shabekar – Citigroup

Lower ranger or higher range?

Peter E. Kalan

The range of 14%-14.6% is probably a good range to look at in the near-term.

Ashwyn Shabekar – Citigroup

Last question. You have signed this Brinks Home Security contract. That’s an interesting plant on the print-mail side. As you grow that part of your business that’s not related to cable, generally speaking, what’s the margin and cash flow profile of those clients? Is there sort of a conversion of those clients or do you just take on a contract? How does it work?

Peter E. Kalan

Randy and I will tag-team this. One is, we bring in new clients such as Brinks. They’re building upon existing product that we have as well as in these relationships, we’ll be looking to cross-sell them and bring additional products to them on top of what we additionally sell as the initial contract. From margin perspective, I think Randy, it’s safe to say that they’re all fairly comparable.

Randy R. Wiese

I would say that’s a fair statement, Peter.

Peter E. Kalan

So you shouldn’t see necessarily a change in our margin profile based on these incremental sales.

Ashwyn Shabekar – Citigroup

They’re comparable to your core business?

Randy R. Wiese

Correct.

Ashwyn Shabekar – Citigroup

And cash flow requirement?

Randy R. Wiese

Yes, the same.

Ashwyn Shabekar – Citigroup

So you’re not making a big investment to get these clients.

Randy R. Wiese

No, Ashwyn, as Peter alluded to, a lot of the product sets are already in place so we’re utilizing products that we have and therefore there’s no significant investment upfront.

Ashwyn Shabekar – Citigroup

So that would be a good return on capital.

Randy R. Wiese

Yes, exactly.

Operator

Our next question comes from the line of Karl Keirstead from Kaufman Bros. Please go ahead.

Karl Keirstead - Kaufman Bros, L.P.

Unless I missed it, you usually provide an organic growth rate number for at least range for the quarter. Can you again just repeat that, what that was for the second quarter?

Randy R. Wiese

Karl, this is Randy. I know you ask this question every time. I never give the number but I always give some information to kind of get there. If you look back at some of the numbers that we disclosed for these acquired businesses, I think what you’ll get to is the fact that we probably came towards the middle of the range for the 4%-6% organic growth rate that I talk about. So we were able to achieve that again this quarter.

Karl Keirstead - Kaufman Bros, L.P.

Just one second question. It’s not a significant point but your software maintenance revenue line dipped to the $7.5 million range, it hasn’t been there since early ’06. Can you just explain what might have happened in the quarter?

Randy R. Wiese

There’s two things. One, if you recall from the first quarter, it was a very strong quarter for software so we had some software sales in the first quarter that we did not anticipate occurring in the second quarter and also we had some large professional services projects that we completed and recognized the revenue in the first quarter. We do not have comparable types of revenues in the second quarter.

I think if you look at the margins, Karl, the margin in the first quarter was very high. It was about 45% of the software services line. I think, if you look at the second quarter, it was more like 37% which is kind of in line with Q3 and Q4 of last year.

Operator

The next question comes from the line of Scott Featherland with Wedbush Morgan Securities. Please go ahead.

Scott Featherland - Wedbush Morgan Securities

Just a couple of questions. Following up on the organic growth, maybe can you just talk about Dataprose. Does that come in line with the expectations of the quarter or better or worse?

Randy R. Wiese

Dataprose is in line with our expectations for the quarter.

Scott Featherland - Wedbush Morgan Securities

A couple of longer questions. You are talking about these new products, the build, print representation and these other verticals, along with interactive messaging and workflow management, can you talk about are you seeing any better traction or worse traction in those? Which ones are you most optimistic about?

Peter E. Kalan

Well, I guess you have to look at where we are in the different markets, Scott. We’ve had very good success in the cable and satellite market where we’ve had broader relationships to begin with so we’ve seen good strength in interactive messaging. Our voice services, of course, have been very strong in this space. We’ve seen expansion on our e-care, that’s been by the shared numbers that I had talked about in my opening comments, very strong.

As we go into new markets, we’re seeing the initial strength is around our presentment services as well as our messaging and we’re looking to how do we bring other capabilities and cross-sell and cross-market these products together to bring a multi-faceted solution set to our clients.

Scott Featherland - Wedbush Morgan Securities

One last question. You made some comments on ACP. You’re looking to modularize that platform so you can tie it to other people’s platforms. What grows this division and do you see your guys as more of the core platform, are you more focused on bonus rate or do you see a lot more opportunities on add-on modules to other platforms?

Peter E. Kalan

We’ve been going down the modularization and componentization path for some time. We started it years ago with our workforce product where for the longest time, it was solely within only our own ACP clients. We found that we could take that asset and go to other billing platforms and integrate it and we’ve done that. We have other clients who aren’t traditional core CSG clients using Workforce. As we did the Telution acquisition back in 2006, we saw that we would be bringing in their capabilities and we brought that in and we looked to integrate that into a more modular component.

This is something that’s not been new. It’s really kind of in a strategic direction, that we say we’ve wanted to continue to change the way our products are architected which allowed us to change how, one, we deliver products in our full suite but also make it available to other clients on an individual product or application basis.

We still think there’s great value in the suite. The Vestive suite is, we think, a very strong, compelling, answer in the marketplace but you can’t always win every opportunity in a full vestive suite. You sometimes have to go in with other products to lead. We’re doing that with Workforce, we’re doing that with presentment services and in the cases of either Product Catalog or other componentizations of ACP, we’ll be looking to do that as well.

Randy R. Wiese

I’d like to add one thing to that, Peter. The increased interoperability between other systems is one benefit of modularization. The other is that it has made us more agile in the ability to make system changes as well. So the modularization has some benefits even within the Vestive suite.

Operator

Our next question comes from the line of Peter Jacobson with Palmer Murray. Please go ahead.

Peter Jacobson - Palmer Murray

First on the outlook for 2009 revenue growth and operating margins you provided on the last call. Do those numbers still apply and if so does the growth rate apply against the higher guidance rates for 2008?

Randy R. Wiese

Yeah, Peter, this is Randy. The targeted growth ranges I gave you last week were for revenue and operating margin. They still apply this week. No changes as of today. You can use the range, the high-low range, I think they’re still okay.

Peter Jacobson - Palmer Murray

I guess the higher base.

Randy R. Wiese

That would be okay.

Peter Jacobson - Palmer Murray

Can you explain the, at a summary level, what goes into the amortization of intangible assets line item? How much of that is associated with Dataprose and how do you expect that to trend going forward?

Randy R. Wiese

We typically don’t break it down into specific dollar amounts but I can tell you the components. One component is the amortization of client investment contracts which comes through as a contra revenue item but we still report it as an amortization item. The second is the amortization that has come from the acquisitions of Telution, Comtec, Prairie and Dataprose and from a trending standpoint, I think if you look at our most recent press release, you can see the amount for the second quarter and I wouldn’t see that trending anything significantly different over the next 12-18 months.

Peter Jacobson - Palmer Murray

So the increase versus last quarter, I would assume, most of that is associated with Dataprose?

Randy R. Wiese

What you should see going forward is you’ll see a downward pressure point for Comcast amortization because as you remember from last week, I mentioned that we were going to spread that out over the life of the contract so that won’t go down. However, that is being offset by an increase from Dataprose and some other acquisitions so I think the trend going forward from Q2 is probably pretty good.

Peter Jacobson - Palmer Murray

Finally, are there any updates regarding the status of DISH Network?

Peter E. Kalan

Peter, none beyond what we said last week. We still believe we are in position to give some type of extension and renewal in the second half of this year but nothing new to update you on that.

Operator

The next question comes from the line of Larry Bowen with First Analysis. Please go ahead.

Larry Bowen - First Analysis Securities Corp.

Quick question on the statements. Do you have a metric on how many statements per month that you guys generally generate?

Randy R. Wiese

Larry, if you look at our last press release, when we announced Dataprose, it was about 67 million statements we do on a monthly basis right now.

Larry Bowen - First Analysis Securities Corp.

On the second thing, a little bit more big picture, and I know one of my colleagues brought this up. What do you guys think of the voice-over IP for DOPS, is it wrong as it’s expected, are people moving over to your system as expected or is it slower or faster?

Peter E. Kalan

We continue to see a large number of accounts on our system. I don’t know if you were on the early part, Larry, but I mentioned that we now have 6 million voice service accounts on our system which is about 20% of our cable subscribers which has principally been accomplished in the last 30 months. So there’s been strong growth. I don’t like to try to suggest whether there’s continuing speed of growth or that the acceleration has decline because that’s really more a factor of our clients and their business. We feel very confident that we’ve been able to keep with our clients’ needs and support them as they rapidly grow in this business.

Larry Bowen - First Analysis Securities Corp.

Is that going to help to the revenue in the end?

Peter E. Kalan

Yes.

Larry Bowen - First Analysis Securities Corp.

Okay, sure, you never know.

Peter E. Kalan

We stopped being a non-profit, we’ve never been a non-profit.

Larry Bowen - First Analysis Securities Corp.

Same question with, we see here in the newspapers, we see all this buzz about all the new AT&T, Verizon offerings in the cable world. Do you see any change in the subscription and the number of subscribers due to new offerings from those companies and does that affect you in any way?

Randy R. Wiese

That’s generally a question that I think you should ask to our clients. We don’t like to speak on their behalf.

Peter E. Kalan

I think the one consistency is that we have about the same number of accounts on file as we did last quarter.

Randy R. Wiese

I say, at that point, the total number of sales hasn’t changed all that dramatically for us.

Operator

The next question comes from the line of Tom Weirich with [inaudible]. Please go ahead.

Chris Cohen

This is actually Chris Cohen for Tom today. Just a couple of quick housekeeping items. I know you mentioned that the reasons for the decline in software revenue. I was just wondering is it reasonable to expect that returns will be at historical levels going forward?

Randy R. Wiese

I would say, maybe within the next two quarters, we may be trending more towards the Q2, maybe slightly up from Q2.

Chris Cohen

So is there any insight you can provide us for the reason? I mean, I can understand the timing issue but it sounds like if it’s going to stay down there a little bit –

Randy R. Wiese

I only mentioned two quarters because it’s difficult to predict the timing of certain software transactions going forward. I don’t think you should look for any underlying changes. It’s really kind of what’s going on with business. It’s just the timing of transactions.

Chris Cohen

As far as, Randy, you mentioned on the Comcast call that you were assuming somewhere in the low 17s for the remainder of the year. Does that pretty much still hold?

Randy R. Wiese

I think if you do the math on the guidance I provided you, I think you’ll end up with something in that general range.

Chris Cohen

You guys had mentioned the modularization, I’m sorry to keep asking this question but apparently we haven’t paid enough attention to it before. You mentioned that that kind of allows you to put module components on top of competitors’ solutions. Can you give us an idea of, like as of right now, how many deployments are in that type of scenario and how high do you see the potential going? Theoretically, you could deploy Workforce Express or interactive messaging on all of your competitors’ platforms. I just want to see how you guys look at that.

Peter E. Kalan

From a workforce perspective, Chris, we don’t want to get into penetrations or how much size there is because there are competing solutions that have already been deployed in certain markets and clients. We have had significant success with Workforce putting it on top with other clients’ billing systems and we do believe that there still is market to do that further. From an interactive messaging perspective, I think we’re on the earlier stages of getting that penetrated especially around appointment verification and collection management services. It’s something that from outbound messaging, we look to see that grow. The business that we acquired back about a year ago, had had very strong success in other markets and has built their business in other markets in cable and satellite. It’s proven that those types of capabilities have value to people running consumer-oriented businesses.

Operator

There’s no further questions in the queue. I’ll turn it back over to management.

Peter E. Kalan

Alright, thank you, Val.

I’ll just close by thanking our investors, our clients and our employees who all help us be successful in running this business and we look forward to continued strong performance in the third and fourth quarter of this year and beyond. I will talk to you next quarter. Thanks.

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