Summary
CSG Systems International reported second quarter 2025 revenue of $297.1 million, up 2.3% from the prior-year quarter. Management linked the increase to SaaS and related solutions growth, including revenue from the acquired iCG business, and to a software license arrangement that was partly offset by lower professional services revenue. GAAP operating income was $29.9 million, up 17.5%. GAAP operating margin was 10.0%, up 1.3 percentage points. The company said lower restructuring and reorganization charges and cost efficiency actions taken in 2024 and the first six months of 2025 helped the margin. Non-GAAP operating income was $54.5 million, and non-GAAP adjusted operating margin was 20.1%, compared with 17.3% in the prior-year quarter. For the first six months of 2025, non-GAAP adjusted operating margin was 19.5%, up 250 bps.
Profitability below the operating line moved the other way. GAAP net income was $12.3 million for the second quarter of 2025, down 11.3%. Diluted EPS was $0.44, down 8.3%. The company said a higher effective income tax rate, driven mostly by earn-out compensation related to a prior acquisition, hurt GAAP EPS. Non-GAAP EPS was $1.16, compared with $1.02 in the second quarter of 2024. On a year-to-date basis, GAAP net income was $28.4 million, down 14.7%, and diluted EPS was $1.01, down 12.9%.
Cash generation was mixed by period. Cash flows from operating activities were $37.3 million for the second quarter of 2025, down 13.4% from the prior-year quarter. For the first six months of 2025, cash flows from operating activities were $48.8 million, up 254.8%. Capital expenditures were $2.8 million for the quarter, down 36.0%, and $7.2 million for the first six months, down 21.2%. Non-GAAP adjusted free cash flow was $39.6 million for the quarter, compared with $38.8 million in the prior-year quarter, and $46.6 million for the first six months, compared with $4.7 million. Current deferred revenue was $62.3 million, up 10.9%. Remaining performance obligations were $1.7 billion, up 21.4%.
CSG also highlighted customer activity. It cited new wins and expanded long-term relationships with Orange Business and Liberty Puerto Rico. The company returned capital through its quarterly dividend of $0.32 per share and repurchased about 289,000 shares for about $18 million in the second quarter. It continues to expect more than $100 million of combined share repurchases and dividends in 2025.
Guidance for the full year 2025 moved higher on profitability and cash flow. Adjusted operating margin is now projected at 18.6% to 19.0%, up from 18.4% to 18.8%. Adjusted EBITDA is forecast at $261 million to $272 million, up from $258 million to $269 million. Adjusted free cash flow is expected at $120 million to $150 million, up from $110 million to $150 million. Non-GAAP EPS guidance was unchanged at $4.65 to $4.90. This guidance is for the full fiscal year 2025.
Risks remain concentrated. CSG derives a significant portion of revenue from a limited number of customers, and the MD&A identifies Charter and Comcast as large customers. The company terminated a master services agreement for a Latin America implementation project in July 2025 and plans to pursue remedies. It carries receivables tied to the project, and management warned that an impairment could occur if collections fail, although it does not expect the termination to have a material impact on 2025 revenue. Macroeconomic uncertainties include inflation, tariffs, changes in trade policy, supply chain disruptions, and labor shortages. Higher earn-out compensation and the related tax valuation allowance also weighed on GAAP earnings.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2025 | Q1 FY2025 | QoQ | Q2 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $297.1M | $299.5M | -0.8% | $290.3M | +2.3% |
| Gross profit | $147.0M | $145.0M | +1.4% | $137.4M | +7.0% |
| Gross margin | 49.5% | 48.4% | +1.1 pp | 47.3% | +2.1 pp |
| Research & development | $40.4M | $40.9M | -1.2% | $38.4M | +5.2% |
| Sales & marketing | $67.5M | $62.3M | +8.4% | $61.2M | +10.4% |
| Total operating expenses | $267.3M | $270.1M | -1.0% | $264.9M | +0.9% |
| Operating income (loss) | $29.9M | $29.4M | +1.6% | $25.4M | +17.5% |
| Operating margin | 10.1% | 9.8% | +0.2 pp | 8.8% | +1.3 pp |
| Net income (loss) | $12.3M | $16.1M | -23.9% | $13.8M | -11.3% |
| Net margin | 4.1% | 5.4% | -1.3 pp | 4.8% | -0.6 pp |
| Diluted EPS | $0.44 | $0.57 | -$0.13 | $0.48 | -$0.04 |
Risks
MD&A Macroeconomic Outlook highlights geopolitical and economic uncertainties, including inflation, tariffs, changes in trade policy, supply chain disruptions, and labor shortages, that could have a material adverse effect on results of operations. Management notes it cannot predict the duration or expansion of tariffs, retaliatory measures, inflationary effects, or broader macroeconomic responses.
MD&A states a large percentage of revenue comes from a limited number of global communications customers, with Charter and Comcast being two customers exceeding 10% of revenue in the quarter ended June 30, 2025. Termination, non-renewal, significant reduction in accounts or price, or financial or operating difficulties at a significant customer could materially adversely affect financial position and results.
CSG terminated a Latin America master services agreement on July 5, 2025, after the customer allegedly unlawfully renounced its obligations. As of June 30, 2025, $18.5 million of accounts receivable ($1.4 million billed and $17.1 million unbilled) related to the project remained, and failure to collect could result in impairment.
MD&A attributes the decrease in second quarter 2025 diluted EPS to a higher effective income tax rate, primarily from increased earn-out compensation related to the DGIT acquisition for which a valuation allowance was established. The second quarter 2025 effective tax rate was 38% versus 31% in the second quarter of 2024, and the estimated full year 2025 effective tax rate is approximately 30%.
Other, net was $3.6 million of expense in the second quarter of 2025, a $3.8 million change from $0.2 million of income in the second quarter of 2024, primarily attributed to foreign currency movements. For the six months ended June 30, 2025, other, net was $5.8 million of expense compared with $0.7 million of income in the prior-year period.
SaaS KPIs
All quarters →Non-GAAP Adjusted Operating Margin
Non-GAAP Operating Income
Non-GAAP Adjusted EBITDA Margin
Non-GAAP Adjusted Free Cash Flow
Summary, forecast, risks and KPIs are extracted from CSG SYSTEMS INTERNATIONAL INC's SEC filings for Q2 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 1, 2026.