CSG Systems International Inc (CSGS) 2013 Q4 法說會逐字稿

Good day ladies and gentlemen. Thank you for standing by. Welcome to the CSG Systems quarter-four 2013 conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions.

(Operator Instructions)

I would now like to hand the presentation over to Liz Bauer. Please go ahead, ma'am.

Thank you, Danielle, and thanks to everyone for joining us.

Today's discussion will contain a number of forward-looking statements. These will 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 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 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 in our most recently filed 10-K and 10-Q, which are all available in the Investor Relations section of our website.

Also, we disclose certain financial information that is not prepared in accordance with GAAP. We believe that these non-GAAP financial measures, when compared in conjunction -- or when reviewed in conjunction with our GAAP financial measures, provides investors with greater transparency to the information used by our management team, and 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 Peter Kalan, our Chief Executive Officer, and Randy Wiese, our Chief Financial Officer.

With that, I'd now like to turn the call over to Peter.

Thanks, Liz, and thanks to everyone for joining us on today's call.

We had another solid quarter and year, generating strong revenues, earnings, and cash flows, demonstrating the strength of our business model and our focus on execution. We've positioned ourselves to be a valued and dependable partner who helps our clients compete and win in today's challenging market place. Most importantly, we continue to strengthen our relationships with our clients around the world by continuing to do what we do best, execute.

As I look towards the future, I'd be remiss in not reminding those on the call about some key activities we accomplished in 2013 that are important to the Company's long-term growth. In 2013, we secured long-term contracts into 2017 with two of our largest clients, Comcast and Time Warner, providing us with strong visibility into our revenues and cash flows for many years.

Second, we saw further expansion of our Content Direct solutions into our cable and satellite clients, movie studios, and big-box retailers. Finally, during the year we introduced and have secured several long-term contracts for our Managed Services offering, with providers in EMEA and APAC regions.

While all of these activities are positive, I don't want to leave you with the impression that it's not a challenging business environment. Last year, while we saw growth in the EMEA and APAC markets, we saw a decline in our Americas region.

Overall, the broad telecom market continued to be a difficult market in 2013. Revenues from our cable and satellite clients in North America were flat between years, but we absorbed the pricing impacts from two large client contract renewals in 2013, which equaled approximately 3% of our total revenues.

I don't think the challenges facing the broader telecom market are unique by region or client, and in fact they are similar to the challenges our cable and satellite clients have confronted. After looking back on this last year, I think that how operators seek to solve their challenges is beginning to evolve and change across the globe. Therein lies why we're so excited about expanding our managed services offering globally.

Many communication service providers around the world are facing many of the same pain points. Their revenues and profits associated with their traditional businesses like video and voice are under pressure. They are facing increased and new competition from folks like Google, Amazon, and others, and their customers' expectations are shifting and increasing in demand. Not only do customers want it now, they expect you to know what they want before they ask for it.

These challenges are forcing service providers to explore new business models, fresh approaches to innovation, and different ways to drive cost out of their operations. This bodes well for CSG. We have a mindset aimed at identifying ways to manage and reduce costs of system ownership, while continuing to move a business forward.

Our 30-year approach to Managed Services is based on delivering not only enhanced technological and service results, but also an improved bottom line for our clients. We provide operators with a pragmatic transformation that enables them to simplify the complexity of their operations, while reinvesting in new areas to drive growth and improve the customer experience.

By working with us, we free up their resources to focus on innovation, which ultimately drives their future growth. And by working side-by-side with our clients, we have a tremendous opportunity to do what we do best: get broader and deeper in our clients' operations by helping them solve problems.

We are pleased with our progress over the past year with our Managed Services offering. During the fourth quarter, we signed a multi-year contract with a new EMEA-based operator, using our wholesale billing and routing platforms to help them deliver a data and voice minutes trading platform between operators.

Last year, we said that we believe that in the next three to five years that we could generate $50 million to $100 million in recurring revenues by expanding our Managed Services domain expertise to clients around the globe. Going into 2014, I continue to believe that we are well-positioned to achieve these goals.

2013 was a rather noisy year regarding the topic of content and consumer viewing behaviors, in particular in the United States. Practically every week there were headlines projecting that consumers would cut the cord and find new content-viewing alternatives. Netflix ended the year with 44 million subscribers, and was accountable for almost one third of the Internet traffic during peak times.

The federal appeals courts struck down the net neutrality rules, potentially paving the way for broadband providers to evolve how they monetize their networks. And consolidation plays seem to be everywhere, whether it be Dish and Softbank fighting over Sprint, or Charter pursuing Time Warner.

And the explosive growth in devices was starting to result in significant use of mobile content. For example, ESPN disclosed that in a recent 12-month period, their users viewed approximately 102 million minutes of video on smart phones and tablets via their Watch ESPN app. So clearly the world is changing.

The challenge for communication providers is that with the increase in the amount of traffic and events that are traveling across their networks and systems, the increased demand requires investment in networks, while most of this growth is not being incrementally monetized.

And while video consumption has historically been viewed as a zero-sum game, it is actually growing. There is a growing demand for more entertainment options and for flexibility in how and where it is consumed. These are trends that we spotted years ago and were the impetus behind our Content Direct solution. Our first-mover advantage in helping operators monetize content in this new connected world is gaining momentum.

Our Content Direct solution provides all the online components, including storefronts, the digital locker, online cart, and the applications for the PC, Mac, iPhone, iPad and Android. For example, this past quarter we helped Comcast launch their Xfinity TV store, which allows customers to purchase movies several weeks ahead of DVD release online or on their set-top boxes. Customers who buy a TV show or a movie from the Xfinity store may watch the purchased title in multiple ways: on the TV through Xfinity On Demand, on a computer from the Xfinity website, or through the Xfinity On Demand app on their mobile phones or tablets.

In addition, this past quarter we helped Middle East Broadcast Company re-launch their authenticated video on demand service in key countries throughout the region, across several mobile and computer devices. Clearly, consumers today are much more mobile and viewing content on their portable devices. Our cloud-based Content Direct solution allows content providers and producers to experiment with new ways to monetize and deliver content, while at the same time providing a highly interactive, personalized, and engaging experience. This is an area where CSG has established itself as the thought leader, and our existing clients are beginning to tap into this.

Finally, before I turn it over to Randy, I would like to summarize why I am optimistic about our future. During 2013, I had the good fortune to meet with many of our clients around the globe to gain their insights on their business, and what we can do to help them be successful. It is their comments that provide me with optimism. Are we perfect? No. However, there were several over-arching themes that came through loud and clear.

At CSG we're trusted. Our products and solutions are solid. We have great domain expertise, we understand operations, and we deliver. This is an incredible set of opportunities we have in our hands. Not only the skills and products, but the mindset and the clients who acknowledge what we can do.

Over the coming year, I look forward to sharing with you our progress on three key areas -- our continued emphasis on getting broader and deeper in our 500-plus clients operation throughout expanded service engagements and additional product implementations; our continued roll-out of our managed services offerings to providers globally; and our continued involvement in helping our clients maximize and monetize their content through the incredible explosion of content being delivered over the Internet.

I'd like to thank our employees for their dedication and hard work, and our shareholders for their continued interest in our Company.

With that, I'd like to turn it over to Randy to review our financial performance for the quarter and the year.

Thank you, Peter, and welcome to all of you on the call today to discuss our financial results for the fourth quarter and full year 2013, as well as our outlook for 2014.

We are pleased with our results, having met our revenue guidance and exceeding our non-GAAP earnings guidance for the year. We are also proud of the continued progress we made in the transformation of our Company over the past year.

Now I'd like to walk you through the financial results in more detail. Total revenues for the fourth quarter were $195 million, down 2% from the same quarter last year. Revenues for 2013 of $747 million came in close to the mid-point of our full-year guidance as we had expected, and were down 1% from the prior year.

These year-over-year declines were primarily due to the renewal discounts on the Comcast and Time Warner extensions completed in early 2013, and to a lesser degree the divesture of a small print operation in July. Sequentially, revenues in the quarter increased $8 million from the third quarter, as we typically experience stronger revenues in the fourth quarter of the year.

Breaking down revenues further, in 2013 we had three clients that each individually generated revenues of 10% or more of our total revenues: Comcast, Dish, and Time Warner. Together they were 45% of our revenues for the full year.

Additionally, for the full year 2013, we generated 85% of our revenues from the Americas region, 11% of our revenues from the Europe, Middle East, and Africa region, and 4% of our revenues from the Asia-Pacific region. Overall, we are pleased with how our revenues closed for the year.

Moving on, our non-GAAP operating income for the fourth quarter was $36 million, with a margin of 18%, and $123 million for the full year, with a 16.5% margin. These margins were slightly higher than anticipated, due to the unexpected one-time benefit of approximately $3 million from the favorable resolution of an expense item during the fourth quarter. Without this benefit, our non-GAAP operating margins would have been lower, and our full-year margin would have been in line with our guidance of approximately 16%.

GAAP operating income for the quarter was $16 million, or a margin of 8%, and $77 million and a margin of 10% for the full year. Our GAAP operating margins reflect $11 million in restructuring charges recognized during the fourth quarter, which relate to actions taken to further align our work force around our long-term growth initiatives, the divestiture of our Quaero marketing analytics business, and the termination of our previously frozen, defined-benefit pension plan.

For the fourth quarter, our non-GAAP adjusted EBITDA was $44 million, or 23% of our total revenues, and $158 million for the full year, or 21% of our total revenues, in line with the high end of our guidance range.

Non-GAAP EPS for the fourth quarter was $0.63, which compares to $0.67 for the same period last year. Non-GAAP EPS for the full year was $2.21, which exceeded the top end of our guidance range of $2.15. We were able to out-perform on our non-GAAP EPS expectations, largely due to the unexpected one-time expense item I mentioned earlier, which provided a favorable benefit of $0.06 per share to both our fourth-quarter and full-year results.

Our non-GAAP effective income tax rate for the quarter and year was 36%, as expected. GAAP EPS for the fourth quarter was $0.27 and $1.56 for the full year 2013. Foreign currency movements did not have a material impact on our results.

Now on to the balance sheet and cash flows. We ended the year with $211 million of cash and short-term investments, an increase of $42 million over the course of the year, largely due to our strong cash-flow generation. We had a total of $285 million in par value debt on our balance sheet at year end, a reduction of $15 million from the prior-year end total.

We had strong cash flows from operations of $40 million for the fourth quarter, bringing the total for the year to $127 million, which exceeded the high end of our guidance range, mainly due to our solid operating results.

In 2013, we spent approximately $30 million on capital expenditures, resulting in $97 million in free cash flow for the year. These results clearly demonstrate that cash-flow generation is a signature characteristic of our business model.

We used some of this cash flow to increase shelter returns during the year. Since initiating the cash dividend last June, we've paid a total of $0.45 per share, or $14 million to our shareholders in dividends. Additionally, we also spent $10 million in 2013 to repurchase approximately 500,000 shares of our common stock. Together, these are in line with our goal to return 25% to 50% of our annual free cash flow to our shareholders. Our strong cash-flow generation and solid balance sheet allow us to return capital to our shareholders, while still having sufficient means available to invest in and strategically grow our business.

Now let's move on to our guidance for 2014. Before I get into details, I want to provide some background information to help you further understand our 2013 performance, and how these matters relate to our 2014 guidance.

First, we completed two divestitures during 2013 that need to be considered in normalizing our revenue performance between years. We sold a small print operation on July 1, and also sold our Quaero marketing analytics business on December 31. As a result, our 2014 financial guidance includes a year-over-year $14-million revenue decrease associated with the divestiture of these two businesses. In other words, our 2013 revenues would have been approximately $733 million if we were to omit the impact of these two divested businesses.

Second, the full-year anniversary effect of the Comcast and Time Warner renewal discounts we provided in early 2013 will have a negative impact of $5 million on our 2014 revenues. Finally, we completed the acquisition of Volubill during December 2013, and we expect the contribution to our 2014 revenues from this newly acquired business to be approximately $5 million.

Now on to the guidance numbers. We are initiating a 2014 revenue guidance range of $745 million to $770 million. When considering the normalized 2013 revenue level I mentioned earlier due to divestitures we had in 2013, this guidance range reflects growth of approximately 2% to 5% for our ongoing operations, consistent with what we see in the market place. Over time, as our investments in various growth initiatives play out, we would hope to exceed the market growth.

Moving on, we expect non-GAAP operating margins for 2014 to be approximately 16.5%. Although this is consistent with our 2013 performance, it actually represents margin improvement, if you ignore the unexpected one-time expense benefit we realized in the fourth quarter of 2013, as I mentioned earlier. Also, the divestitures and the Volubill acquisition are expected to have a minimal impact to earnings.

We anticipate our non-GAAP adjusted EBITDA to be within the range of $152 million to $158 million, or 21% of expected total revenues. We expect a 2014 non-GAAP EPS guidance range of $2.05 to $2.17.

This range assumes dilution of 1.5 million shares related to the share equivalents from our convertible debt, based on our most recent stock trading levels. The diluted shares related to our convertible debt have a negative impact of $0.10 per share on our 2014 EPS guidance. Consistent with our past practices, our guidance does not assume any share buy-backs under our repurchase program for the year.

We anticipate operating cash flows for the year to be consistent with historical levels, in the range of $110 million to $120 million, and capital expenditures to also remain in line with our 2013 level of around $30 million. We expect our 2014 non-GAAP effective income tax rate will remain consistent with 2013's rate of 36%.

To summarize, 2013 was another solid year for CSG. Our financial performance demonstrated our commitment to both our clients and shareholders. We are proud of the achievements of our employees across the world, whose hard work helped to support our clients' successes, as well as the meaningful shareholder return that we provided to investors.

We also further strengthened the key pillars of our strong business model: cash-flow generation, solid balance sheet, and favorable shareholder returns. We are excited about the year ahead, and look forward to sharing our continued successes with you over the coming quarters.

With that, I will open it up to the operator so that we can take any questions you may have.

(Operator Instructions)

Mark Sue, RBC Capital Markets.

If I look at your base revenue growth of 2% to 5% this year, perhaps you can give us some qualitative comments on your assumptions as to what might make it 2%, and what might make it 5%. Particularly as your carrier service provider customers become more extranet focused and rely on more partners such as someone like CSGS, how some of the moving parts might move around in terms of the growth rates for you this year.

Additionally, along those lines, if you could just give us a sense of regionally where you expect the higher levels of growth as we progress through 2014. Thank you.

Sure, Mark. This is Peter.

A few thoughts on that. I think the things that have impacts to the range on our revenue expectations are going to be the timing of closure of deals, and especially since we know that the way that we recognize revenue is over the implementation period when we do new product deployments and new client deployments.

Additionally, when we sign our international managed services projects, they usually have a ramp-up period, and that is revenue that is going to be recognized over several years. And so the timing that those close within the year will have an impact of the range of our revenues.

Our focus is establishing long-term relationships and getting deep with our clients. Because of the nature of that, coupled with the nature of our -- the revenue dynamics and the relationships that we have with our cable and satellite clients, you need to win early and you need to have timely closure of deals, and those are the things that would have impact. And then successful implementations, as well, which I think has been traditionally a hallmark of what we do once we get a win.

From a regional perspective, we continue to think that we're starting to gain ground in Asia-Pacific. We had some slight growth between 2013 and 2012, and we would expect that will continue to grow. The EMEA region is a region that we had some growth between 2012 and 2013. We are looking for continued stability, and looking for upside on that market.

The Americas from a telco world is probably -- when I think of it, is probably not one of our strongest markets. There has been a lot of spending constraints that some of our larger clients that we have in the Americas have been somewhat limiting for us, but we are hopeful to see some loosening of that. But we are still cautious of it.

And then lastly, our cable and satellite clients probably have some of the most dynamic things going on with how they think about evolving. Now the challenge is on some of those, there's been a lot of talk about consolidation, and will that change any of our major clients as they think about the spending that they do on new initiatives.

We're not sure how that will play out, but as just shown in some of our previous comments, we had two large clients that we gave price renewals -- or we gave price concessions to as part of the long-term renewals, and we were able to hold the overall revenues from this market flat, after giving a significant amount of price reduction in the year. So it shows that there is need for our products and needs for our services. We just need to make sure they don't get slowed down by the -- any of the consolidation chatter that is in the market place.

Okay. Just so we are sure, there is no renewal or large renewal over the next foreseeable few years. Is that correct?

I think the next large renewal is going to be at the end of 2014. None of our large clients that are above 10% -- Charter, their contract is up at the end of this year, and that will be an opportunity for us to engage with them for extension terms.

Okay. And lastly, just so investors can potentially frame the variability of the outcome as it relates to your table consolidation, can you help us understand some of the dynamics you saw in the past, and the impact to your business, if any, that you saw in the past?

Our history, Mark, has been is that when consolidation takes place, and we've been through -- I think there's probably been at least three or four cycles in my 17 years within the Company -- we generally come out with more work to do, both in the number of subs that we support and the types of products and services that our clients are wanting to use.

I think that's first and foremost, because we have the largest footprint of subscribers in North America and with the leaders. It puts us with the largest market share as being in a good position to build off of that scale.

The depth of assets that we have, as well, not only to run their current operations and to run those in a cost-effective and a standardized way, but also the ability to support their next-generation offerings, whether it's Content Direct, their own over-the-top offerings, how they think about evolving the use of their broadband network, we think we're well served on all those.

Now, any time clients get larger scale, the largest clients for us always have probably the best pricing. And so there could be some price pressures that we may see from that, but those are ones that we've been very adept at managing and building additional revenues from, by helping those clients perform better.

Okay. Maybe lastly, a separate question just on capital returns. As you look at the stock price appreciation and your free-cash-flow generation and the options to -- you have a dividend and (inaudible) another time, you would also be purchasing your stock, is there any particular preference, considering the move in the stock we've had over the last 12 months?

Mark, as we think about our use of capital, we really think probably along three lines. We think about how do we return capital to shareholders and do it in a systemic way, and we implemented our dividend plan, whatever it would be three quarters ago, which showed our commitment to doing that.

We also look to manage dilution that may take place from any of our capital instruments, whether it's the incentive programs that are put for management, or from potentially our convertible debt. So we'll look at our use of capital, try to manage that dilution.

And then lastly, we like to make sure that we have capital available so that we can be flexible to invest in the business and be responsive to where we see the markets going and where the clients are going.

And so that's how we think about it. We are not ready to say we have a preference for doing more or less of stock buy-backs, because we really look to not have a single point in time, but look at managing these over a longer period. So that is how we think about the allocation.

Randy, anything you'd add to that?

To say if you quantify some of those pieces, Peter, our framework is that we're looking for 25% to 50% of our free cash flow back in the form of -- as you call it, the dividends and the share buy-backs and the management of dilutions. So leaving us with a pretty sufficient amount of capital left to invest back in the business. So very much in line with what you said.

And our dividends are probably close to that 25%.

You get the dividends, which is a pretty much fixed portion of that return, close to the 25% floor.

Okay. Does that help, Mark?

That's helpful. Thank you gentlemen. Thank you Liz.

Thanks.

Paul Thomas, Goldman Sachs.

In the past you've talked about getting back to the prior contract run rate for your two large deals that you gave the discounts for earlier this year in the four to six quarters. I'm just wondering where are we on that pace in 2014. You talked about a $5-million total contract impact, but I guess thinking four quarters or three quarters or so now into that renewal process, what's the pace look like? Is it ahead of what you are expecting, or kind of in line, or where are we?

Randy, do you want to talk to that?

Sure. I think on both of those, if you look at the results for 2013 we are on track for both of those. On the Comcast, you see we had a fairly decent year in light of the discount, and I think we are on track to hit that. You see on Time Warner we actually had a slight up-tick in the revenue for the year, if you look at our disclosed numbers. Some of that was special project work, so it may not be sustainable here in the next couple of quarters. But I think the four to six quarters, clearly on track to do that, so feel good about it.

Okay, and then on margins, too, you talked about the one-time benefit in 4Q, but you'll still be a little bit higher next year. What are the drivers there for the improvement in 2014?

I think it's a couple of different areas. Some that we have been focusing on is really -- some are just on some blocking and tackling on cost savings and process improvements. I think you will see a little bit of benefit as we get some maturity around the Content Direct platform, and we get some more Managed Services deals, we should get a little bit of scale and a little bit of improved processes there. I think probably on those two.

Right now you see us investing in some SG&A items. Really around some of the opportunities we see in expanding the Managed Services and getting more traction with Content Direct. So I think you see that somewhat at the level where it is at now across the year, but I would say maybe a little bit of expansion maybe on the gross-margin level.

Okay. Then last one for me. Just thinking about Content Direct and its contribution in 2014, how should we think about that potential?

One is we see growth, but we don't report on it as a separate offering, because it's really an extension of many of the things that we try to do in the market place. But percentage-wise, we're probably still looking at 5% or less of our consolidated revenues. Fair statement, Randy?

Yes.

Sterling Auty, JPMorgan.

Actually, I wanted to start with a quick question and a clarification. In the prepared remarks that statistic about ESPN, was 100% of those minutes consumed outside the home on ESPN, Bill, on tablets and smartphones?

No, it was a combination of in the home and outside the home. So they did not break out the statistic as to how much was outside of the home.

Okay, great. The $3 million expense savings that came through in the quarter, which line item did that hit, or was it broken up -- can you give us a little color there?

It would've come through cost of goods sold.

Okay, maybe that leads right into the next one. So if you add back the $3 million, would that be the right level that we should continue to think about gross margin? You mentioned on one of the previous questions, yes, you think we can get a little bit more scale and efficiency, but add the $3 million back and just work off of that level, in terms of the provided guidance?

Yes, that's exactly right.

Okay. The Volubill acquisition, you mentioned $5 million looking at the integrated billing. Could you give us more color on exactly what that is providing, and maybe what customers do they have, and who do you expect to compete against for that business?

What the Volubill business provides us is a policy management engine, as well as a light real-time charging asset. We think policy is going to be important as there continues to be more sophistication about how networks are used and how they -- how do you get to more personalization and the monetization and charging on networks. So that is one piece.

We've talked about policy, I think, on prior calls about the longer-term importance of that. This was an opportunity for us to get a, we think, a very good piece of technology at a very reasonable price. The light charging -- light real-time charging is important, because not every client wants to do a larger industrial-strength engine to go through -- to handle some of their real-time charging pieces -- which we have capabilities on with our Singleview platform. But in some places people want to do light weight, solve near-term problems, and we think this is a good way for us to address that.

From a client perspective, I don't want to go too much into the specific names, but they have some tier one providers around the world that are using those. They were strong in EMEA. It was a strong market for them, and we'll look to augment that in the end, to carry it forward into some of our other regions.

From a competitive perspective, many of our larger traditional competitors previously had policy engines. They did some acquisitions, and so we think we will see ourselves running up against some of the traditional ones like that. Then you have smaller stand-alone companies. They're not necessarily small-small, but folks like Redney and Openet also have these types of capabilities.

Got you. And just last question, the headwind on US telco spending. Do you believe that's still just the capital deployment for LTE build-outs, or is there anything else that's still kind of weighing or soaking up the resources?

I think there is a couple of things, Sterling. I think that in many cases, they are starting to see or starting to -- they are continuing to feel the revenue pressures that they have, and therefore trying to think about how they maintain margins, and they are being very, very careful about how they invest on larger-scale projects.

I think that's partly driven by the efforts of consumption, where people are not willing to pay more. There's new providers coming in with lower price points in the services to the end customers. As well as the consolidation that continues to take place, I think, slows down some of the decision-making on that. And they look to refine their performance as they think about maximizing putting businesses together.

Got it. Thank you.

Tom Roderick, Stifel Nicholas.

I apologize, I jumped on late but I'm going to guess by the context of Sterling's last question that part of this can be answered pretty easily. Volubill -- wanted to understand what the impact to the numbers were next year, and also the offset from Quaero being divested there at the end of the year. Can you just give a rough net break-down of how that impacts guidance for next year?

Yes, Tom, this is Randy. On the Volubill, our guidance included about $5 million worth of revenue for Volubill for 2014. The divestiture of Quaero was about a $9 million year-over-year impact. Also, just keep in mind also we divested a small print facility mid-year, so there's about $14 million of year-over-year revenue impact from the divestitures.

Got it. Okay, perfect. And shifting gears to Europe; you talked a little bit about Europe stabilizing, Peter. I'm kind of curious relative to some of the sales changes you put in place in the middle of the year. Are you seeing those having a beneficial impact at this point, too early to say, and maybe can you measure sales changes versus macro as to how you think about EMEA going into this next year?

It's a really timely question, Tom, because I just got back from Europe last Friday, unfortunately in time to see that Super Bowl.

Welcome home. (laughter)

Yes, thanks. But I spent a lot of time with -- in the market and spending time with the leadership that we brought in, and there is just a very -- there is a clarity that is coming about where the opportunities are in aligning our resources, along with looking to exploit the opportunities that we have around managed services in that region.

This is an area that we probably didn't maintain the focus that we needed to when we kicked off, and there is -- I'm very excited for what our leadership team there is positioning for. It's -- I don't think we're going to have a blowout year relative to 2013 for EMEA, but what I see is real foundational change coming in that is going to put us in a position to grow this business in Europe much longer.

Is EMEA a hotbed of the market today? Absolutely not, but it seems to be stabilizing. And I think with the team and the focus, we are putting ourselves in a much better position to exploit where our strengths are.

Great. Last one, I really appreciate you guys breaking out the kind of rough percentage of Content Direct. It seems like you're gaining a level of critical mass by which you are comfortable talking about that more. Curious if there is any push in terms of number of resources being put into that group, particular sales break-outs. How are you treating that product with respect to additional resources and investments going into this year?

We have been adding every year to the team, both from a sales and marketing perspective, as well as the delivery and development resources. We also look to build off the relationships that we have around the world, so that we don't have to duplicate everything. But there is a subject matter expertise to it that has to grow as part of the business grows.

So we look to leverage some of our sales relation -- our sales teams and our relationships that we have in a region, but incrementally invest to make sure we bring the right people to the table.

It is a -- the way I think about this business, Tom, is that what we are doing is we are acquiring real estate. And I use this in a lot of ways as I think the business. But every time we win a client, we look to get the product deployed where we're the choice platform. Then what we look to do is -- as our clients are successful, this being a Managed Services or cloud offering, our business grows as our clients continue to push and sign up more customers, or more customers consume more of the content that is effectually running through our platform.

So we are dependent upon our clients' success, but right now what we continue to do is win with carriers such as cable and satellite, win with network operators, and win with retailers, which is a good way for us to make sure that we have the real estate from which to build this business on top of.

Wonderful. Thank you, guys.

And our next question -- we have a follow-up from Sterling Auty with JPMorgan.

Yes, I just wondered on two things. First, cable consolidation. As you look at the stuff that's been in the news in terms of the different potential consolidation, how does this match versus what you've seen in the past? In other words, would these combinations be different in terms of how they might treat their technology platforms than consolidation in the past, or should it be the same?

I think what we -- it's hard to think if there would be any reason for it to be different, but until you see how things play out, it is hard to say that past is a definite predictor. But with the footprint of operations that we support across the different parties that you contemplated and whether these parties stay the same, we think we've got a very good footprint of our operations in place in support of clients' operations, which puts us as a very good -- being in a very good position to be a winner in the game of consolidation.

Now, importantly, sometimes these consolidation plays don't drive to immediate change-out of systems. They take time, because they want to make sure that they, as the medical profession says, first do no harm, run the operations, change the way offerings are done, take advantage of scale contract terms, whether it is on content or other pieces on some of their programming.

So it may not be -- you may not see immediate, but our history has been is that we have been a positive winner as people try to standardize their operations, and look to drive cost out, both from IT and their operational practices.

Got you. And you mentioned revenue acceleration. You had talked about 2% to 5% this year. When you think about it once you get past the Charter contract renewal and some of these other things, is there an aspirational growth goal for the Company? In other words, do you see yourself once you ramp demand services, et cetera, that you would be at 6% or 8%, 10%, 12%? Where do you think you can take the growth of the Company?

Look, what we established as a goal is we want to grow faster than what the market is growing for these types of services, the IT solutions and services that go to the communications space. These are areas that it will fluctuate from a period of time, and what we want to do is be north of where the range is. And right now, Randy's guidance is more in line with what the growth rates are projected. So if you think about it, we would look to accelerate above that with some of our initiatives.

We are also doing some smaller investments, trying to look at using some assets in new ways across some new verticals and solve some new problems that are in very early stage. Those would be things that could also elevate our growth rate, as well. We will have more to talk about that, if we are successful in coming periods.

Great. Thank you.

(Operator Instructions)

I am seeing no questions in the queue. Please continue with any closing statements.

Thank you, Danielle. I will just close with those still on the call to thank you for your participation today. Thank you for your the support through 2013, and we're looking forward to continuing to do what we do best, which is really deliver on behalf of our clients. And when we do that, we deliver on behalf of all our other constituencies, our employees, and our shareholders. So look forward to a successful 2014.

Ladies and gentlemen, that does conclude the CSG Systems quarter four 2013 conference. We would like to thank you for your participation and you may now disconnect.