CSGS

• Team CSG delivered strong results in Q2 and H1 2025 with 19.5% non-GAAP operating margin in H1, a 250-basis-point improvement from prior year.
• Raised 2025 full year profitability targets and increased midpoint of non-GAAP adjusted free cash flow expectations.
• Aim to have >35% of revenue from new industry verticals by 2026; 32% in H1 2025 from non-cable/telecom.
• Signed new deals with Orange Business, Liberty Communications, an insurance/financial services company, and a property management company.
• Focus on becoming asset-light SaaS business, optimizing working capital, margin expansion, and returning capital to shareholders with over $600M returned since 2020.
• Reiterated revenue guidance range for 2025, expecting 2%-3% growth, and focus on operational discipline, R&D innovation, and sales mix.

• Reiterated 2025 revenue guidance range, expects revenue growth 2%-3%.
• Raised profitability targets and increased non-GAAP adjusted free cash flow target, with midpoint of 2025 guidance at $135M.
• Terminated a Latin American telecom customer contract with $1.4M revenue in H1 2025, no significant impact on 2025 revenue.
• Expect 49% of 2025 revenue in H1, 51% in H2, with Q4 revenue higher than Q3. Likely 2%-4% revenue growth in 2026.

In the first half of 2025, CSG reported a record high revenue of $597 million, up from $585 million in 2024. The non-GAAP operating margin was 19.5% in the first half of 2025, a 250-basis-point improvement from 17.0% in the same period prior year. Non-GAAP adjusted EBITDA was $132 million for the first half, or 24.4% of revenue. In the first half of 2025, 32% of total CSG revenue came from industries outside of cable and telecom, up from 31% in the prior year period. The top 2 customers, Charter and Comcast, now represent 36% of total CSG revenue, a significant reduction from 49% in 2017.

• Market volatility affecting customer spending.
• Potential impact of contract terminations (e.g., Latin American telecom customer).
• Elongated sales cycles and cautious customer spending in certain markets.

Q: Dan Bergstrom asked about the macro environment and M&A in customer base.

A: Brian Shepherd noted cautiousness in customer spending leading to revenue growth in 2%-3% range, and historical success with consolidation in telecom but no guarantees with specific M&A.

Q: Greg Burns asked about global telecom enterprise success.

A: Hai Tran and Brian Shepherd discussed CSG's differentiated capability in enterprise space, success with Orange Business, and cross-sell examples with MTN and Asia Pacific customers.

Q: Matthew Harrigan asked about AI and telecom integrations.

A: Brian Shepherd and Hai Tran talked about AI's impact on margin expansion and telecom operators' need for business simplification and digital transformation.

Q: Unidentified Analyst asked about M&A and Latin America contract.

A: Brian Shepherd and Hai Tran mentioned disciplined M&A approach and minimal impact of Latin American contract termination on revenue.

Q: Nehal Chokshi asked about ROIC and EPS.

A: Brian Shepherd and Hai Tran discussed ROIC exceeding WACC and adverse currency impacts affecting EPS.

Q: George Notter asked about AI competition and CX/payments growth.

A: Brian Shepherd and Hai Tran noted no direct AI competition for CSG's core business, and expectation of acceleration in CX and payments business in H2.

Q: Matt Dezort asked about new business pipeline and pricing/renewals.

A: Brian Shepherd discussed healthy sales pipeline, elongated sales cycles, and positive renewals with Comcast and Charter, expecting continued upside with value delivery.