Executive Summary

CSG beat Street on revenue and non-GAAP EPS: $299.5M vs $272.8M* and $1.14 vs $1.01*, driven by mix shift to higher-margin SaaS and operating discipline; GAAP EPS was $0.57 as restructuring elevated GAAP opex . Results slightly benefited from a couple million dollars of revenue timing pull-forward, per CFO .
Non-GAAP adjusted operating margin expanded 240 bps YoY to 19.0% and adj. EBITDA margin reached 23.7%; management raised FY25 non-GAAP margin, EPS, and EBITDA guidance while reiterating revenue and FCF .
Cash from operations was $11.5M with $7.1M in adjusted FCF, CSG’s strongest first-quarter adjusted FCF since 2018, aided by working capital improvements; management reaffirmed the plan to return $100M+ to shareholders in 2025 (Q1 dividend $0.32, buybacks $22M) .
Diversification advanced: “All other” verticals were 33% of revenue (record), with wins/extensions at Mediacom, Liberty Latin America, PLDT, JPMorgan Chase and NTTA; top-2 customers (Charter/Comcast) comprised 37% of Q1 revenue .

What Went Well and What Went Wrong

What Went Well

Margin/FCF execution: “We delivered 19.0% non-GAAP operating margin…[and] our best first quarter non-GAAP adjusted free cash flow performance since 2018,” with Q1 adj. FCF of $7M; FY25 midpoint FCF guidance implies ~15% YoY growth .
Revenue diversification and mix: A record 33% of revenue came from non-CSP verticals; payments merchants grew 13% YoY to 135,000; CEO: “Our operating discipline and improving revenue mix resulted in Q1 2025 adjusted non-GAAP profitability expanding…to 19%” .
Customer momentum: New/extended deals at Mediacom (includes Bill Explainer.ai), Liberty Latin America (digital wholesale suite), PLDT (smart invoicing), JPMorgan Chase (overdraft CX), and NTTA (data-driven CX) .

What Went Wrong

GAAP compression: GAAP operating margin fell to 9.8% (from 10.8% YoY) and GAAP EPS to $0.57 (from $0.68) due to higher restructuring/reorganization charges .
Big-2 optics: Comcast/Charter revenues were down sequentially vs Q4; management cited a tough comp from ~$10M one-time Comcast revenue in 2024 and no 2025 price increase in the 6-year Comcast renewal .
Telco decision timing/services mix: Management flagged extended decision cycles and an intentional pivot toward out-of-the-box SaaS (less services-heavy), which can slow near-term services revenue recognition even as SaaS pipeline builds .

Financial Results

Headline P&L vs prior quarters and vs estimates

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($M)	$295.1	$316.7	$299.5
Revenue Consensus Mean ($M)	$278.8*	$289.9*	$272.8*
GAAP EPS ($)	$0.67	$1.21	$0.57
Non-GAAP EPS ($)	$1.06	$1.65	$1.14
EPS Consensus Mean ($)	$1.061*	$1.207*	$1.014*
GAAP Operating Margin (%)	10.8%	13.4%	9.8%
Non-GAAP Adjusted Operating Margin (%)	18.4%	20.1%	19.0%
Adj. EBITDA Margin (% of revenue less txn fees)	23.4%	24.8%	23.7%

Notes: Q1 2025 revenue beat by ~$26.6M and non-GAAP EPS beat by ~$0.13 vs S&P Global consensus; Q4 2024 also delivered significant beats. Values marked with * retrieved from S&P Global.

Q1 2025 YoY comparison

Metric	Q1 2024	Q1 2025	YoY
Revenue ($M)	$295.1	$299.5	+1.5%
GAAP EPS ($)	$0.68	$0.57	(16.2%)
Non-GAAP EPS ($)	$1.01	$1.14	+12.9%
Non-GAAP Adjusted Operating Margin (%)	16.6%	19.0%	+240 bps

Segment/Customer/Geo mix

Revenue by Vertical (%)	Q3 2024	Q4 2024	Q1 2025
Broadband/Cable/Satellite	53%	51%	50%
Telecommunications	18%	20%	17%
All Other (non-CSP)	29%	29%	33%

Revenue by Geography (%)	Q3 2024	Q4 2024	Q1 2025
Americas	88%	84%	87%
EMEA	9%	10%	9%
APAC	3%	6%	4%

Top Customers	Q3 2024 ($M, % rev)	Q4 2024 ($M, % rev)	Q1 2025 ($M, % rev)
Charter	$59.1, 20%	$59.7, 19%	$57.6, 19%
Comcast	$58.7, 20%	$58.9, 19%	$52.8, 18%

KPIs and Capital Returns (Q1 2025)

KPI	Q1 2025
Payments merchants (’000)	135 (+13% YoY)
Operating Cash Flow ($M)	$11.5
Adj. Free Cash Flow ($M)	$7.1
Dividend per share	$0.32 (payable 7/2/25)
Share repurchases	~357k shares for ~$22M

Guidance Changes

Metric	Period	Previous Guidance (2/5/25)	Current Guidance (5/7/25)	Change
Revenue ($B)	FY 2025	$1.210–$1.250	No change	Maintained
Non-GAAP Adjusted Operating Margin (%)	FY 2025	18.1–18.5	18.4–18.8	Raised
Non-GAAP EPS ($)	FY 2025	4.55–4.80	4.65–4.90	Raised
Adj. EBITDA ($M)	FY 2025	256–267	258–269	Raised
Adj. Free Cash Flow ($M)	FY 2025	110–150	No change	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3’24 and Q4’24)	Current Period (Q1’25)	Trend
Operating discipline and margin expansion	Emphasized raising FY24 profitability targets; Q4 adj. op margin 20.1%	19.0% adj. op margin (+240 bps YoY); raised FY25 profit/EPS guidance	Improving
Revenue diversification beyond CSPs	“All other” 29% in Q3/Q4; Comcast 6-year renewal	Record 33% non-CSP; wins across media, financial services, tolling	Improving
Big-2 customers (Charter/Comcast)	Renewed Comcast through 2030; Q4 +3% YoY Big-2 revenue	Sequential softness; explained one-time 2024 comp (~$10M) and no 2025 price increase	Mixed optics, explained
SaaS/Cloud (Ascendon), AI in CX	Q4: cloud-native Ascendon wins; AI in CX highlighted	Continued pivot to out-of-the-box SaaS; AI (Bill Explainer.ai) cited at Mediacom	Positive mix shift
Telco macro/decision cycles	Tough but steady pipeline; 2–4% organic growth outlook	Macro uncertainty persists; timing is challenge, not demand	Stable/cautious
FCF and balance sheet	2024 adj. FCF $113M; net leverage ~1.5x	Best Q1 FCF since 2018; new $600M revolver; net debt leverage 1.6x	Strengthening
M&A	Disciplined tuck-ins in 2024; hunting for value	Active pipeline; mix of “better-than-us” SaaS and accretive scale deals	Optionality intact

Management Commentary

“We delivered 19.0% non-GAAP operating margin… We diversified CSG’s revenue even more with 33% of Q1 revenue coming from big faster-growing industry verticals outside of cable and telecom” – Brian Shepherd, CEO .
“Our Q1 2025 non-GAAP EPS was $1.14… Our margin expansion is being driven by increasing success in selling sticky SaaS solutions combined with operating leverage initiatives” – Hai Tran, CFO .
“Best first quarter non-GAAP adjusted free cash flow since 2018… We announced a 7% annual dividend increase… and repurchased $22M of shares in Q1” – Brian Shepherd .
“We extended our 30-year relationship with Mediacom… [including] CSG Bill Explainer.ai, our AI-driven solution” – Brian Shepherd .
“We entered into a new… $600M revolving credit facility… with identical borrowing rates to our former 2021 terms and a covenant-light package” – Hai Tran .

Q&A Highlights

Macro/timing: Management sees continued macro uncertainty and belt-tightening; short-ROI projects proceed, larger transformations move with caution but continue to sign .
Margin playbook: Ongoing “operating discipline,” cost optimization, and innovation reallocation; mix shift to higher-margin SaaS also lifts margins and FCF .
Comcast/Charter: Sequential declines tied to a ~$10M one-time Comcast benefit in 2024 and no 2025 price increase in the renewed Comcast deal; long-term CAGR for Big-2 still ~2.6% historically .
Telco vertical: No slowdown in wins; intentional pivot to out-of-the-box SaaS reduces services-heavy revenue; decision cycles extended but pipeline healthy .
Cash flow phasing: Q1 is expected to be the low point for 2025; free cash flow expected to grow through the year .

Estimates Context

CSG materially beat S&P Global consensus in Q1: revenue $299.5M vs $272.8M* and non-GAAP EPS $1.14 vs $1.01*; Q4 and Q3 also featured revenue/EPS beats, reinforcing estimate momentum .
With FY25 non-GAAP EPS, margin, and EBITDA guidance raised (revenue/FCF reiterated), Street models likely need to reflect higher profitability assumptions for 2025 while holding similar revenue/FCF trajectories .

Estimates vs Actuals (S&P Global consensus; $M except EPS)

Metric	Q3 2024 Est*	Q3 2024 Actual	Q4 2024 Est*	Q4 2024 Actual	Q1 2025 Est*	Q1 2025 Actual
Revenue	278.8*	295.1	289.9*	316.7	272.8*	299.5
Non-GAAP EPS	1.061*	1.06	1.207*	1.65	1.014*	1.14

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

Quality beat with profitable growth: Revenue and non-GAAP EPS beats, 240 bps YoY margin expansion, and strongest Q1 adjusted FCF since 2018 underscore execution on mix and discipline .
Guidance raise on profitability: FY25 non-GAAP margin, EPS, and EBITDA all raised; revenue and FCF maintained, signaling confidence in mix shift and cost actions without changing topline outlook .
Diversification de-risking story: Non-CSP revenue at a record 33% with multi-vertical wins (media, financials, tolling), while Big-2 concentration at 37% continues to trend down structurally .
Near-term optics manageable: Sequential Big-2 softness explained by one-time Q1’24 comp and contractual pricing timing; management reiterates 2–3% 2025 growth and strong pipeline .
Structural mix tailwinds: Intentional shift to out-of-the-box SaaS (Ascendon) and AI-infused CX (Bill Explainer.ai) should support sustained margin and FCF expansion .
Capital returns and balance sheet flexibility: $600M revolver, ~1.6x net leverage, ongoing buybacks/dividend support total shareholder yield and M&A optionality .
Trading setup: The narrative centers on durable profitability/FCF expansion and estimate revisions on margins; watch execution on SaaS ramps, services mix transition, and multi-vertical wins as catalysts .

Additional Supporting Details

Q1 2025 8-K furnished the earnings release (Item 2.02), including raised FY25 non-GAAP profitability/EPS targets and unchanged revenue/FCF guidance .
Other relevant Q1 press releases: CSG and NetLync launched an Entitlements-as-a-Service platform to accelerate eSIM transformation for MNOs/MVNOs (April 29, 2025) ; Board approved a $0.32 quarterly dividend, payable July 2, 2025 (announced May 23, 2025) .

CSG SYSTEMS INTERNATIONAL INC (CSGS)·Q1 2025 Earnings Summary