In This Article:
Release Date: May 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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CSG Systems International Inc (NASDAQ:CSGS) reported a 19.0% non-GAAP operating margin for Q1 2025, a 240 basis point improvement from Q1 2024.
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The company achieved its highest first-quarter revenue in history at $299 million, slightly exceeding expectations.
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CSG Systems International Inc (NASDAQ:CSGS) diversified its revenue, with 33% coming from industry verticals outside of cable and telecom, marking a new quarterly record.
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The company reported its best first-quarter non-GAAP adjusted free cash flow performance since 2018, generating $7 million.
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CSG Systems International Inc (NASDAQ:CSGS) announced a 7% annual dividend increase for the 12th consecutive year and repurchased $22 million worth of shares in Q1 2025.
Negative Points
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Revenue growth from top customers Charter and Comcast showed some fluctuations, with Comcast being flat year-over-year and Charter experiencing a slight decline.
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The global macroeconomic uncertainty continues to impact decision-making processes across industry verticals, leading to some belt-tightening.
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There is a strategic focus on shifting to less service-heavy, more SaaS-oriented solutions, which may impact short-term revenue recognition.
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The company faces challenges in maintaining growth in the highly competitive global telecom market, with extended decision-making cycles.
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Despite strong performance, CSG Systems International Inc (NASDAQ:CSGS) acknowledges the need for continuous improvement in operating discipline and innovation to sustain growth.
Q & A Highlights
Q: Can you share insights on customer sentiment at the end of the quarter and the tone of business in the new quarter? A: Brian Shepherd, CEO: There wasn't anything unique in Q1 or the first month of this quarter. The global macroeconomic uncertainty continues, leading to some belt-tightening. Solutions that improve experience, drive cross-sell or upsell, or cut operating costs with a short ROI are still moving forward. Strategic, longer-term transformations are still happening, but customers are being more thoughtful and measuring multiple times before proceeding.
Q: Can you expand on your approach to optimizing costs and improving margins? A: Brian Shepherd, CEO: We focus on operating discipline, eliminating non-value-adding activities, and leveraging AI and operational improvements. We're also investing in innovation, ensuring our platforms are future-ready. Our revenue mix shift towards higher-margin deals and diversification into faster-growing verticals is enhancing our operating leverage. We're focused on becoming more asset-light and generating double-digit returns through 2026.