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- **Record Revenue and Margin Growth**: H1 2025 revenue ($597M) and non-GAAP operating margin (19.5%) set new highs, driven by SaaS expansion and cost efficiency
- **Accelerating Free Cash Flow**: H1 free cash flow ($47M) up 10x YoY, with full-year target of $135M (20% growth)
- **Diversification Success**: 32% of revenue from non-cable/telecom verticals, targeting >35% by 2026
- **Strategic Wins**: Major deals with Orange Business, Liberty Puerto Rico, and U.S. property management tech company
- **AI-Driven Innovation**: Integrating AI into all products to enhance customer value and operational efficiency
- **Shareholder Returns**: $59M returned in H1 (dividends + buybacks), on track for >$100M annual target

**【CEO Summary Section】**
- **Revenue Growth and Margin Expansion**: Q2 2025 revenue reached $597 million (highest first-half total in company history), with non-GAAP operating margin improving to 19.5% (up 250 basis points YoY). Free cash flow hit $47 million in H1, a 10x increase vs. H1 2024.
- **Diversification Strategy**: 32% of H1 revenue came from non-cable/telecom verticals (vs. 31% prior year), targeting >35% by 2026. Top 2 customers (Charter/Comcast) now account for 36% of revenue (down from 49% in 2017).
- **New Sales Wins**: Key deals include:
  - Orange Business (25-country digital transformation)
  - Liberty Puerto Rico (billing expansion)
  - U.S. property management tech company (payment platform)
  - Mutual life insurance company (customer engagement platform)
- **AI and Innovation**: Integrating AI into all products to drive efficiency and customer value. 2025 guidance includes 18.8% non-GAAP operating margin midpoint (up from 18.1% in 2024).

**【CFO Financial Commentary】**
- **Q2 Financials**: 
  - Revenue: $597 million (H1 record)
  - Non-GAAP EPS: $2.29 (13% YoY growth)
  - Adjusted EBITDA margin: 24.4% (up 240 basis points YoY)
  - Free cash flow: $47 million (vs. $5 million H1 2024)
- **Guidance Updates**: 
  - Full-year non-GAAP adjusted free cash flow midpoint raised to $135 million (20% YoY growth)
  - Operating margin target midpoint raised to 18.8%
  - Revenue growth expected at lower end of 2%-3% range due to North American broadband headwinds
- **Balance Sheet**: $146 million cash, $621 million liquidity, 1.5x net debt/EBITDA

**【Q&A Highlights】**
- **Macro Environment**: Customers cautious on discretionary spend, but strategic deals (e.g., digital transformation) still moving forward
- **M&A Strategy**: Actively pursuing small, accretive tuck-in acquisitions (e.g., 2024 deals added high-margin recurring revenue)
- **AI Impact**: Already embedded in all products, with potential to accelerate margin expansion beyond 20% target range
- **Telecom Billing Challenges**: Complex legacy systems create opportunities for CSG's SaaS solutions (e.g., 14% YoY growth in payments merchant base to 142,000)
- **Customer Concentration**: Top 2 customers represent stable 36% of revenue, with strong renewal terms (e.g., Comcast contract extended to 2030 with no price discount)


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

- **Profitability surge**: Q1 non-GAAP operating margin jumps to 19.0% (vs. 16.6% last year), with EBITDA margin up 220bps to 23.7%.
- **Revenue diversification**: 33% of Q1 sales from high-growth verticals (tolling, financial services), up from 30% in Q1 2024.
- **Cash flow turnaround**: $7M free cash flow in Q1 (vs. -$34M last year), with $130M 2025 guidance (+15% YoY growth).
- **Customer retention**: Top 2 customers (Charter/Comcast) now 37% of revenue (down from 49% in 2017), despite $76M CAGR growth in their spend.
- **M&A strategy**: Targeting <20x EBITDA SaaS platforms, e.g., 2024 tuck-in deals added $15M+ ARR with 100%+ gross margins.

**【CEO Opening Remarks】**
- Q1 2025 non-GAAP operating margin improved to 19.0% (vs. 16.6% in Q1 2024), driven by higher SaaS revenue and operational efficiency.
- 33% of Q1 revenue came from faster-growing verticals outside cable/telecom, up from 30% in Q1 2024.
- Free cash flow of $7M in Q1 (vs. -$34M in Q1 2024), with $32M returned to shareholders via dividends and buybacks.
- 2025 guidance: $1.23B revenue (2.7% growth), 18.6% non-GAAP operating margin, $130M free cash flow.

**【CFO Financial Highlights】**
- Q1 revenue $299M (up 1.4% YoY), highest Q1 in company history.
- Non-GAAP EPS $1.14 (13% YoY growth), beating expectations.
- Adjusted EBITDA margin 23.7% (up 220bps YoY), targeting >25% in coming years.
- 2025 guidance: 2-3% revenue growth, 18.6% operating margin, $130M free cash flow.

**【Key Wins & Pipeline】**
- New deals with Mediacom (30-year extension), Liberty Latin America (21-country expansion), JPMorgan Chase (odern overdraft solutions).
- Payments merchant base grows 13% YoY to 135,000.
- 2025 pipeline shows strong momentum across telecom, financial services, tolling.

**【Q&A Highlights】**
- Charter/Comcast revenue concentration down to 37% (from 49% in 2017), despite $76M CAGR growth in their spend.
- Cost optimization initiatives (procurement, process reengineering) driving 15% op income growth vs. 2.7% revenue growth.
- M&A focus on high-margin SaaS platforms with <20x EBITDA multiples, e.g., 2024 tuck-in acquisitions adding $15M+ ARR.
- Global telecom transformation accelerating adoption of cloud-based billing platforms (e.g., Ascendant SaaS).

CSG Systems International (CSGS)-7 May 25-2025 Q1 Earnings call transcript

- **Record Q4 Results**: $317M revenue (+7% YoY), $1.65 EPS (+79% YoY), and $113M free cash flow
- **2025 Growth Targets**: 2-4% organic revenue, 18-20% operating margin, $110-150M free cash flow
- **Strategic Wins**: Ascendon cloud wins in telecom, media, and financial services
- **AI Differentiation**: Proactive customer engagement tools reducing churn and driving upsell
- **Dividend Growth**: 12th consecutive increase with 7% hike to $1.28 annual dividend

**【CEO Summary Section】**
- Q4 2024 organic revenue grew 5% year-over-year, with total revenue reaching $317 million, a new record. 
- Non-GAAP EPS increased 79% YoY to $1.65, driven by operating efficiency and gross margin expansion.
- 2025 dividend increased 7% to $1.28 annually, marking 12 consecutive years of dividend growth.
- Strategic goals include 2-6% organic revenue growth, 18-20% non-GAAP operating margin by 2026, and >35% revenue from new verticals by 2026.
- Key wins in Q4: Gamma (Europe), MTN South Africa, Mobily (Saudi Arabia), Comcast, and Formula One.

**【CFO Financial Commentary】**
- Q4 2024 non-GAAP operating income: $58 million (20.1% margin vs 16.1% prior year)
- Non-GAAP adjusted EBITDA: $72 million (24.8% margin vs 21.7% prior year)
- 2024 adjusted free cash flow: $113 million (9% YoY growth)
- 2025 guidance: 
  - Organic revenue: $1.21-1.25 billion
  - Non-GAAP operating margin: 18.1-18.5%
  - Non-GAAP EPS: $4.55-4.80
  - Adjusted free cash flow: $110-150 million

**【Q&A Highlights】**
- Pipeline health: "Healthiest ever" with balanced opportunities across verticals
- 2025 organic growth outlook: 2-4% (midpoint 3%), guided by cautious market conditions
- AI impact: Embedded in solutions like Bill Explainer.ai, driving customer retention and revenue
- Free cash flow strategy: Focus on working capital efficiency and asset-light model
- Vertical diversification: Other verticals growing 2x-3x faster than core telecom business

CSG Systems International (CSGS)-5 Feb 25-2024 Q4 Earnings call transcript

CSG Systems International (CSGS)-6 Nov 24-2024 Q3 Earnings call transcript

CSG Systems International (CSGS)-7 Aug 24-2024 Q2 Earnings call transcript

CSG Systems International (CSGS)-1 May 24-2024 Q1 Earnings call transcript

CSG Systems International (CSGS)-7 Feb 24-2023 Q4 Earnings call transcript

CSG Systems International (CSGS)-1 Nov 23-2023 Q3 Earnings call transcript

CSG Systems International (CSGS)-2 Aug 23-2023 Q2 Earnings call transcript

CSG Systems International (CSGS)-1 Feb 23-2022 Q4 Earnings call transcript

CSG Systems International (CSGS)-2 Nov 22-2022 Q3 Earnings call transcript

CSG Systems International (CSGS)-7 Aug 22-2022 Q2 Earnings call transcript

CSG Systems International (CSGS)-7 May 22-2022 Q1 Earnings call transcript

CSG Systems International (CSGS)-2 Feb 22-2021 Q4 Earnings call transcript

CSG Systems International (CSGS)-6 Nov 21-2021 Q3 Earnings call transcript

CSG Systems International (CSGS)-8 Aug 21-2021 Q2 Earnings call transcript

CSG Systems International (CSGS)-9 May 21-2021 Q1 Earnings call transcript

CSG Systems International (CSGS)-4 Feb 21-2020 Q4 Earnings call transcript

CSG Systems International (CSGS)-4 Nov 20-2020 Q3 Earnings call transcript

CSG Systems International (CSGS)-7 Aug 20-2020 Q2 Earnings call transcript

CSG Systems International (CSGS)-9 May 20-2020 Q1 Earnings call transcript

CSG Systems International (CSGS)-5 Feb 20-2019 Q4 Earnings call transcript

CSG Systems International (CSGS)-3 Nov 19-2019 Q3 Earnings call transcript

CSG Systems International (CSGS)-10 Aug 19-2019 Q2 Earnings call transcript

CSG Systems International (CSGS)-5 May 19-2019 Q1 Earnings call transcript

CSG Systems International (CSGS)-6 Feb 19-2018 Q4 Earnings call transcript

CSG Systems International (CSGS)-11 Nov 18-2018 Q3 Earnings call transcript

CSG Systems International (CSGS)-2 Aug 18-2018 Q2 Earnings call transcript

CSG Systems International (CSGS)-2 May 18-2018 Q1 Earnings call transcript

CSG Systems International (CSGS)-7 Feb 18-2017 Q4 Earnings call transcript

CSG Systems International (CSGS)-1 Nov 17-2017 Q3 Earnings call transcript

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