Summary
CSG closed fiscal 2025 with fourth-quarter revenue of $323.1 million, up 2.0% from the prior-year quarter. Full-year revenue reached $1.22 billion, up 2.2%. The top line benefited from continued growth in SaaS and related solutions. Profitability went the other way. Fourth-quarter GAAP operating income fell 31.3% to $29.1 million, and the operating margin was 9.0%, down 4.4 percentage points from the prior-year quarter. For the full year, GAAP operating income declined 9.6% to $118.7 million, with an operating margin of 9.7%, down 1.3 percentage points. CSG pointed to Merger transaction-related costs and higher stock-based compensation from accelerated vesting of certain awards as the main pressures. On a non-GAAP basis, fourth-quarter operating income was $65.8 million, up 12.8%, and the adjusted operating margin was 22.3%, compared with 20.1% in the prior-year quarter. Full-year non-GAAP operating income was $226.2 million, up 13.4%, with an adjusted operating margin of 20.3%, compared with 18.1%.
The GAAP earnings decline was sharper. Fourth-quarter net income was $7.0 million, down 79.7%. Full-year net income was $55.9 million, down 35.7%. Full-year diluted EPS was $1.98, down 34.7%. The company attributed the lower GAAP earnings to the drop in GAAP operating income and a higher GAAP effective income tax rate. It noted that 2024 benefited from a lower effective tax rate because of the release of valuation allowances related to certain U.S. and foreign deferred tax assets and certain one-time benefits. Non-GAAP EPS was $1.53 in the fourth quarter, compared with $1.65, and $5.14 for the full year, compared with $4.72. The decrease in fourth-quarter non-GAAP EPS was mainly due to a higher non-GAAP effective tax rate and foreign currency movements. The full-year increase reflected higher non-GAAP operating income, partly offset by foreign currency movements and a higher non-GAAP effective income tax rate.
Cash generation was mixed. Fourth-quarter operating cash flow was $59.2 million, down 28.2%, while full-year operating cash flow was $155.9 million, up 14.9%. Capital expenditures were $3.4 million in the fourth quarter, down 42.4%, and $14.5 million for the full year, down 35.1%. Non-GAAP adjusted free cash flow was $55.8 million in the fourth quarter, down 27.2%, and $146.4 million for the full year, up 29.2%. Deferred revenue was $80.2 million, down 0.8%, while remaining performance obligations were $2.20 billion, up 15.8%. The company declared a quarterly dividend of $0.32 per share, or about $9 million, bringing total 2025 dividends declared to about $37 million. In January 2026, the board approved a 6% increase to $0.34 per share. CSG repurchased about 332,000 shares for about $25 million in the fourth quarter and about 1,258,000 shares for about $83 million in the full year.
The Merger with NEC and Canvas Transaction Company dominates the strategic outlook. CSG entered the Merger Agreement on October 29, 2025, and stockholders approved it on January 30, 2026. The company expects the Merger to close by the end of 2026, subject to remaining customary closing conditions and required regulatory approvals. If the Merger Agreement is terminated under certain specified circumstances, CSG would owe a termination fee of $82.0 million. The pending deal creates execution and retention risks, and CSG has ceased stock repurchases since announcing the agreement.
Operational risks remain concentrated. Charter and Comcast each exceeded 10% of revenue. The company renewed its Charter relationship through September 30, 2031, while its Comcast agreement runs through December 31, 2030. A terminated Latin America implementation project left a material receivable, mostly unbilled, and CSG believes the amounts are recoverable but an impairment is possible if collection efforts fail. The company also faces potential earn-out payments of up to approximately $12 million for DGIT and $15.0 million for iCG, foreign currency exposure, and the costs of completing the Merger. With GAAP margins down sharply, non-GAAP margins expanding, and the NEC deal pending, the quarter shows a business growing modestly at the top line while its reported profitability is clouded by deal and compensation costs.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2025 | Q3 FY2025 | QoQ | Q4 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $323.1M | $303.6M | +6.4% | $316.7M | +2.0% |
| Gross profit | $161.7M | $146.1M | +10.7% | $162.5M | -0.5% |
| Gross margin | 50.0% | 48.1% | +1.9 pp | 51.3% | -1.3 pp |
| Research & development | $40.0M | $40.3M | -0.9% | $42.0M | -4.9% |
| Sales & marketing | $86.2M | $65.4M | +31.8% | $71.5M | +20.5% |
| Total operating expenses | $294.0M | $273.2M | +7.6% | $274.4M | +7.2% |
| Operating income (loss) | $29.1M | $30.5M | -4.6% | $42.3M | -31.3% |
| Operating margin | 9.0% | 10.0% | -1.0 pp | 13.4% | -4.4 pp |
| Net income (loss) | $7.0M | $20.5M | -65.8% | $34.5M | -79.7% |
| Net margin | 2.2% | 6.8% | -4.6 pp | 10.9% | -8.7 pp |
| Diluted EPS | $0.25 | $0.73 | -$0.48 | $1.20 | -$0.95 |
Risks
The pending acquisition by NEC is subject to remaining conditions, including antitrust approvals and absence of a Company Material Adverse Effect. Although the HSR waiting period expired on January 5, 2026, and stockholders adopted the Merger Agreement on January 30, 2026, closing is not assured and is anticipated by the end of 2026; failure to close could cause the stock price to decline and require CSG to pay Parent an $82.0 million termination fee under certain circumstances.
The pendency of the Merger could cause customers, suppliers, vendors, and partners to delay or defer decisions or end relationships, and competitors may target existing customers by highlighting uncertainty. It may also impair ability to attract or retain key personnel regardless of whether the Merger closes.
Revenue is highly concentrated, with Charter and Comcast together exceeding 35% of revenue. In 2025, Charter represented approximately 19% of total revenue (down from 20% in 2024) and Comcast approximately 17% (down from 19% in 2024); loss or reduced spending by a significant customer could materially harm results.
Risk factors materially expanded on AI, stating competitors may incorporate AI more rapidly or successfully and AI capabilities may enable customers to build, configure, or automate functions currently provided by CSG's SaaS platforms. These trends could reduce demand, lengthen buying decisions, and hurt ability to win or maintain business.
CSG terminated a Master Services Agreement for a Latin America implementation project on July 5, 2025, and recognized $1.4 million in revenue during 2025 related to it. As of December 31, 2025, $18.1 million of accounts receivable ($1.3 million billed and $16.8 million unbilled) related to this project; if collection is not successful, an impairment could result.
From the Merger Agreement date until closing, CSG is prohibited from taking specified actions without Parent consent and from soliciting alternative acquisition proposals, and must conduct business in the ordinary course. These restrictions may prevent beneficial business changes or opportunities and could be exacerbated by delays.
CSG recognized $13.7 million of acquisition-related costs in 2025, has accrued approximately $10 million to be paid upon closing, and entered retention bonus agreements for approximately $9 million. Additional costs cannot be estimated and many fees are payable even if the Merger is not completed.
Use of AI in solutions and third-party products introduces risks related to cybersecurity, data privacy, ethics, intellectual property, accuracy, and unintended biases. Unauthorized use of data in AI models could lead to regulatory scrutiny, contractual liability, or reputational harm, and new AI laws may restrict or hinder solution usability.
Merger pendency may cause employees to experience uncertainty about future roles, harming ability to attract or retain key personnel. CSG entered retention bonus agreements with certain key employees for approximately $9 million, payable immediately before closing or upon termination of the Merger Agreement.
The effective income tax rate increased to approximately 38% in 2025 from 23% in 2024, driven by accelerated vesting of stock awards, disallowed Merger transaction costs, and DGIT earn-out compensation for which a valuation allowance was established. Net income decreased 35.7% and diluted EPS decreased 34.7% for 2025 versus 2024.
Operating income for 2025 decreased 9.6% to $118.7 million and operating margin decreased to 9.7% from 11.0%, mainly due to higher acquisition-related costs and stock-based compensation. Q4 operating income decreased 31.3% and Q4 net income decreased 79.7%, showing profitability pressure.
As of December 31, 2025, CSG had approximately $325 million of goodwill and $179 million of long-lived assets other than goodwill. Future impairment could materially impact results of operations in the period recognized, though it would be a non-cash charge.
SaaS KPIs
All quarters →Non-GAAP Adjusted EBITDA
Non-GAAP Operating Income
Non-GAAP Adjusted EBITDA as a Percentage of Revenue Less Transaction Fees
Non-GAAP Adjusted Free Cash Flow
Summary, forecast, risks and KPIs are extracted from CSG SYSTEMS INTERNATIONAL INC's SEC filings for Q4 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.