Are Shorts Watching CSG Systems International?

There's no foolproof way to know the future for CSG Systems International (NAS: CSGS) or any other company. However, certain clues may help you see potential stumbles before they happen -- and before your stock craters as a result.

A cloudy crystal ball


Why might an upstanding firm like CSG Systems International do this? For the same reason any other company might: to make the numbers. Investors don't like revenue shortfalls, and employees don't like reporting them to their superiors.

Is CSG Systems International sending any potential warning signs? Take a look at the chart below, which plots revenue growth against AR growth, and DSO:



Watching the trends
When that red line (AR growth) crosses above the green line (revenue growth), I know I need to consult the filings. Similarly, a spike in the blue bars indicates a trend worth worrying about. CSG Systems International's latest average DSO stands at 109.5 days, and the end-of-quarter figure is 106.6 days. Differences in business models can generate variations in DSO, and business needs can require occasional fluctuations, but all things being equal, I like to see this figure stay steady. So, let's get back to our original question: Based on DSO and sales, does CSG Systems International look like it might miss its numbers in the next quarter or two?

The numbers don't paint a clear picture. For the last fully reported fiscal quarter, CSG Systems International's year-over-year revenue shrank 2.4%, and its AR grew 7.6%. That looks OK. End-of-quarter DSO increased 9.0% over the prior-year quarter. It was up 1.6% versus the prior quarter. Still, I'm no fortuneteller, and these are just numbers. Investors putting their money on the line always need to dig into the filings for the root causes and draw their own conclusions.


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