Summary
CSG reported third-quarter revenue of $303.6 million, up 2.9% from the prior-year quarter. GAAP operating income was $30.5 million, down 4.3%, and the operating margin was 10.0%, down from the prior-year quarter. Net income was $20.5 million, up 7.3%, and diluted EPS was $0.73, up 9.0%. The GAAP results absorbed higher restructuring and reorganization charges and acquisition-related costs, including transaction-related costs tied to the proposed Merger. Non-GAAP operating income was $54.5 million, up 8.8%, with a non-GAAP adjusted operating margin of 19.5%. Non-GAAP EPS was $1.31, up 23.6%.
Cash generation improved. Operating cash flow was $47.9 million for the quarter, up 21.5% from the prior-year quarter. For the nine months ended September 30, 2025, operating cash flow was $96.7 million, up 81.8%. Capital expenditures were $4.0 million in the quarter, down 46.3%, and $11.2 million for the nine months, down 32.5%. Non-GAAP adjusted free cash flow was $43.9 million in the quarter, up 37.3%, and $90.6 million for the nine months, up 146.9%. Non-GAAP adjusted EBITDA was $68.975 million in the quarter, up 7.9%.
Backlog and deferred revenue moved in opposite directions. Remaining performance obligations were $2.20 billion, up 69.2% from the prior-year quarter. Deferred revenue, current portion, was $60.2 million, down 4.2%. Revenue growth came mainly from continued expansion of SaaS and related solutions, which more than offset lower professional services revenue. CSG still carries significant customer concentration. Approximately forty percent of revenue came from the two largest customers. Charter represented 19% of revenue and Comcast 18% in the quarter. In September 2025, CSG amended its Charter agreement, extending the relationship through September 30, 2031. The amendment keeps monthly SaaS and related services charges based on Charter customer accounts and maintains exclusive print and mail rights. The company also terminated one Latin America implementation contract during the quarter after the customer renounced its obligations. CSG intends to pursue remedies, but collection risk remains.
Capital returns continued. CSG declared a quarterly dividend of $0.32 per share, or approximately $9 million in total. During the quarter, the company repurchased approximately 275,000 shares for approximately $18 million. Through the first nine months of 2025, CSG repurchased approximately 703,000 shares for $44.2 million under its Stock Repurchase Program and repurchased approximately 223,000 shares for $14.0 million outside the program for employee tax withholding. CSG expects to return in excess of $100.0 million to shareholders through combined repurchases and dividends in 2025. The company had borrowings outstanding on its 2025 Revolver as of September 30, 2025, and it believes current cash, the revolver, and future operating cash flows will meet capital needs for at least the next twelve months.
The Merger with NEC is the central strategic event. On October 29, 2025, CSG entered a Merger Agreement under which each share will convert into the right to receive $80.70 per share in cash. The deal is expected to close during 2026, subject to stockholder approval and required regulatory approvals. The filing gives one full-year guidance item: an estimated full year 2025 effective income tax rate of approximately 29%. Macroeconomic risks include inflation, tariffs and changes in trade policy, supply chain disruptions, and labor shortages. Merger-related risks include litigation, diversion of management time, and potential disruption to business relationships. CSG also faces the risk that a significant customer could terminate or fail to renew, reduce accounts processed, or face financial difficulties, any of which could materially affect results.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2025 | Q2 FY2025 | QoQ | Q3 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $303.6M | $297.1M | +2.2% | $295.1M | +2.9% |
| Gross profit | $146.1M | $147.0M | -0.6% | $145.7M | +0.3% |
| Gross margin | 48.1% | 49.5% | -1.4 pp | 49.4% | -1.2 pp |
| Research & development | $40.3M | $40.4M | -0.3% | $41.7M | -3.3% |
| Sales & marketing | $65.4M | $67.5M | -3.1% | $63.9M | +2.4% |
| Total operating expenses | $273.2M | $267.3M | +2.2% | $263.3M | +3.7% |
| Operating income (loss) | $30.5M | $29.9M | +2.0% | $31.8M | -4.3% |
| Operating margin | 10.0% | 10.1% | -0.0 pp | 10.8% | -0.8 pp |
| Net income (loss) | $20.5M | $12.3M | +67.0% | $19.1M | +7.3% |
| Net margin | 6.8% | 4.1% | +2.6 pp | 6.5% | +0.3 pp |
| Diluted EPS | $0.73 | $0.44 | +$0.29 | $0.67 | +$0.06 |
Risks
The proposed Merger with NEC and Merger Sub, announced October 29, 2025, is subject to conditions including shareholder approval, HSR and other antitrust and foreign investment approvals, and no Company Material Adverse Effect. While closing is anticipated by the end of 2026, there is no assurance conditions will be satisfied, and failure under certain circumstances could require payment of an $82,000,000 termination fee to Parent.
The pendency of the Merger may cause customers, suppliers, vendors, and business partners to delay or defer decisions or end relationships, and competitors may target existing customers by highlighting uncertainty. It may also impair the company's ability to attract or retain key personnel.
A large percentage of revenue is generated from a limited number of customers in the global communications industry, with approximately forty percent of revenue from the two largest customers. For the quarter ended September 30, 2025, Charter represented 19% and Comcast represented 18% of revenue, and loss or reduction of these relationships could materially adversely affect financial position and results.
During the pendency of the Merger, the Merger Agreement restricts CSG from taking specified actions without Parent consent and limits solicitation of alternative acquisition proposals. These restrictions may prevent beneficial business changes or discourage a competing acquirer from proposing a higher per share price.
CSG has incurred and will continue to incur significant direct and indirect Merger costs, including regulatory, professional services, and transaction costs, with little or no benefit if the Merger is not completed. As of September 30, 2025, the company had accrued $3.2 million of transaction costs related to the proposed Merger.
Lawsuits may be filed challenging the adequacy of proxy disclosures or making other claims in connection with the Merger, potentially seeking to enjoin consummation. Because one closing condition is the absence of an order prohibiting the Merger, a successful injunction could prevent or delay completion within the expected timeframe.
The all-cash consideration is fixed at $80.70 per share and will not be adjusted for changes in CSG's business, assets, liabilities, prospects, outlook, financial condition, operating results, or stock price. The consideration is taxable to U.S. holders, and if the Merger closes, stockholders will no longer hold an interest in CSG and will forego the potential long-term value of the independent strategy.
On July 5, 2025, CSG terminated an MSA for a Latin America implementation project after the customer allegedly unlawfully renounced its obligations, recognizing $1.4 million of revenue in 2025 through the termination date. As of September 30, 2025, accounts receivable of $18.1 million ($1.3 million billed and $16.8 million unbilled) related to this project, and failure to collect could result in impairment.
Current geopolitical and economic uncertainties, including inflation, tariffs and changes in trade policy, supply chain disruptions, and labor shortages, could adversely affect the business. The duration and potential expansion of tariffs, retaliatory measures, inflationary effects, and broader macroeconomic responses create uncertainty, with no assurance of full mitigation.
Uncertainty about future roles following the Merger may materially adversely affect CSG's ability to attract and retain key personnel during the pendency of the Merger. If the Merger is not completed, the Merger Agreement also limits the company's ability to attract and retain key personnel.
SaaS KPIs
All quarters →Non-GAAP Adjusted Operating Margin
Non-GAAP Adjusted EBITDA
Non-GAAP Operating Income
Non-GAAP Adjusted Free Cash Flow
SaaS and Related Solutions Revenue
Summary, forecast, risks and KPIs are extracted from CSG SYSTEMS INTERNATIONAL INC's SEC filings for Q3 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.