CSG Systems International, Inc. (CSGS) Q2 2025 Earnings Call Transcript

Non-GAAP Operating Margin 19.5% in the first half of 2025, a 250-basis-point improvement compared to 17% in the same prior year period. The improvement is attributed to a highly recurring revenue model, success in selling higher gross margin SaaS deals, and greater operating efficiencies.

Revenue Diversification 32% of total CSG revenue in the first half of 2025 came from industries outside of cable and telecom, up from 31% in the prior year period. This diversification is driven by data-driven CX, monetization, and payment solutions.

Revenue Concentration Revenue from top 2 customers (Charter and Comcast) now represents 36% of total CSG revenue, reduced from 49% in 2017. This reduction is due to diversification efforts, although revenue from these customers has grown since 2017.

Non-GAAP Adjusted Free Cash Flow $47 million in the first half of 2025, a significant improvement from $5 million in the same period last year. This improvement is attributed to increased operating margins and improvements in working capital.

Shareholder Returns $19 million in dividends and $40 million in share repurchases in the first half of 2025, contributing to a total of $59 million returned to shareholders.

Revenue $597 million in the first half of 2025, up from $585 million in 2024. This represents the highest revenue in the first half of the year in CSG's history. The increase includes a $6 million nonrecurring high-margin license revenue arrangement recognized in Q2.

Non-GAAP Adjusted Operating Income $106 million in the first half of 2025, compared to $91 million in the prior year period. This represents a non-GAAP adjusted operating margin of 19.5%, up from 17.0%.

Non-GAAP Adjusted EBITDA $132 million in the first half of 2025, or 24.4% of revenue, compared to $118 million, or 22.0% in the prior year period. The increase is driven by improved operating efficiencies and success in selling SaaS revenue solutions.

Non-GAAP EPS $2.29 in the first half of 2025, a 13% increase compared to $2.02 in the prior year period. The increase is due to higher non-GAAP adjusted operating income, a lower non-GAAP effective tax rate, and lower diluted shares outstanding, partially offset by adverse foreign currency movements.

Cash Flow from Operations $49 million in the first half of 2025, compared to $14 million in the first half of the prior year. This increase is driven by higher operating margins and improvements in working capital.