Summary
CSG Systems International reported first quarter 2025 revenue of $299.5 million, up 1.5% from $295.1 million in the prior-year quarter. The top line growth came mostly from businesses acquired in 2024; those acquired businesses contributed approximately $5.5 million of revenue during the quarter. Software and services revenue declined. GAAP operating income was $29.4 million, down 7.6%, and the operating margin slipped to 9.8% from 10.8%. Net income was $16.1 million, down 17.1% from $19.5 million, and diluted EPS was $0.57, down from $0.68. The profit decline reflected higher restructuring and reorganization charges tied to cost efficiency actions. CSG also plans to close its Crawfordville, Florida design and delivery center in August 2025.
Non-GAAP results moved the other way. Non-GAAP operating income was $51.5 million, up 14.7%, and non-GAAP adjusted operating margin was 19.0%, compared with 16.6%. Non-GAAP EPS was $1.14, compared with $1.01, up 12.9%. Adjusted EBITDA was $64.3 million, up 10.7%, and adjusted EBITDA as a percentage of revenue less transaction fees was 23.7%, compared with 21.5%. Management said cost efficiency actions taken in 2024 helped expand non-GAAP profitability by over 240 basis points versus the prior-year quarter. The company also pointed to a better revenue mix as a support for margins.
Cash generation improved sharply. Operating cash flow was $11.5 million, up $40.8 million from a use of $29.4 million in the prior-year quarter. Capital expenditures were $4.4 million, down 7.8% from $4.8 million. Non-GAAP adjusted free cash flow was $7.1 million, compared with a deficit of $34.1 million, and the release called it the highest first quarter non-GAAP adjusted free cash flow since 2018. Current deferred revenue was $62.7 million, up 11.1% from $56.4 million, while remaining performance obligations reached $1.80 billion, up 28.6% from $1.40 billion. That RPO growth offers visibility, though it can be lumpy and depends on contract timing.
Operationally, CSG signed or extended work with Mediacom, Liberty Latin America, and PLDT. Revenue diversification continued, with 33% of revenue coming from industry verticals outside communication service providers. Customer concentration remains a key risk. Charter accounted for 19% of revenue and Comcast for 18% in the quarter, and the company has said approximately forty percent of revenue comes from its two largest customers. A significant customer loss, renewal failure, or reduced scope could pressure results. Macroeconomic risks include inflation, tariffs, trade policy changes, supply chain disruptions, labor shortages, and foreign currency movements.
Guidance for full-year 2025 was updated. CSG raised its non-GAAP adjusted operating margin target to 18.4% to 18.8% from 18.1% to 18.5%, and lifted non-GAAP EPS guidance to $4.65 to $4.90 from $4.55 to $4.80. Adjusted EBITDA guidance moved to $258 million to $269 million from $256 million to $267 million. Adjusted free cash flow guidance was unchanged at $110 million to $150 million. Revenue guidance for the full year was also unchanged. The company said the midpoint of its 2025 cash flow guidance represents 15% year-over-year growth. CSG declared a quarterly dividend of $0.32 per share, about $9 million, and repurchased approximately 357,000 shares for approximately $22 million. It also entered a new credit agreement made up of a $600.0 million revolving facility through March 2030. Management said it expects to return over $100 million to shareholders in 2025 and has increased its dividend for 12 consecutive years.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2025 | Q4 FY2024 | QoQ | Q1 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $299.5M | $316.7M | -5.4% | $295.1M | +1.5% |
| Gross profit | $145.0M | $162.5M | -10.8% | $137.2M | +5.6% |
| Gross margin | 48.4% | 51.3% | -2.9 pp | 46.5% | +1.9 pp |
| Research & development | $40.9M | $42.0M | -2.7% | $36.1M | +13.3% |
| Sales & marketing | $62.3M | $71.5M | -12.9% | $61.7M | +0.9% |
| Total operating expenses | $270.1M | $274.4M | -1.6% | $263.3M | +2.6% |
| Operating income (loss) | $29.4M | $42.3M | -30.5% | $31.8M | -7.6% |
| Operating margin | 9.8% | 13.4% | -3.5 pp | 10.8% | -1.0 pp |
| Net income (loss) | $16.1M | $34.5M | -53.2% | $19.5M | -17.1% |
| Net margin | 5.4% | 10.9% | -5.5 pp | 6.6% | -1.2 pp |
| Diluted EPS | $0.57 | $1.20 | -$0.63 | $0.68 | -$0.11 |
Risks
The MD&A Macroeconomic Outlook warns that current geopolitical and economic uncertainties, including inflation, tariffs and changes in trade policy, supply chain disruptions, and labor shortages, could adversely affect the business. It states the potential impact depends on the duration and expansion of tariffs, retaliatory measures, inflationary effects, and broader macroeconomic responses, and that there is no assurance these can be fully mitigated.
Revenue remains highly concentrated in the global communications industry, with two customers exceeding 10% of revenue in Q1 2025 and Charter representing 19% of revenue. The filing warns that termination or non-renewal, significant reductions in processed accounts or pricing, or financial or operating difficulties at a significant customer could materially adversely affect financial position and results.
Restructuring and reorganization charges increased in Q1 2025, mainly for involuntary terminations, and the company announced it will close its Crawfordville, Florida design and delivery center in August 2025. The company expects additional restructuring and reorganization charges related to this closure almost entirely during the remainder of 2025, and these charges contributed to operating income down 7.6%, net income down 17.1%, and diluted EPS down 16.2% versus Q1 2024.
Q1 2025 revenue growth was primarily attributed to businesses acquired in Q2 2024, which contributed approximately $5.5 million of revenue. Acquisition-related costs included amortization of acquired intangible assets and earn-out compensation, and the company has potential future earn-out payments tied to performance goals for DGIT and iCG, creating integration, performance, and earn-out liability risks.
In March 2025 the company entered the 2025 Credit Agreement, replacing the 2021 Credit Agreement, and incurred a loss on debt extinguishment. The 2025 Credit Agreement contains customary affirmative, negative, and financial covenants and places certain limitations on common stock repurchases, which could constrain capital returns or require compliance management.
The company expects to return in excess of $100.0 million to shareholders through combined common stock repurchases and cash dividends in 2025, while it also faces capital needs for acquisitions, earn-outs, financing agreements, data center commitments, and debt service. The MD&A states it believes current resources will be sufficient for at least the next twelve months, but capital return and debt obligations could pressure liquidity.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Summary, forecast, risks and KPIs are extracted from CSG SYSTEMS INTERNATIONAL INC's SEC filings for Q1 FY2025 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.