[10-Q] CSG Systems International Quarterly Earnings Report
CSGS Q2-25 topline accelerated but earnings slipped. Revenue rose 2.3% YoY to $297.1 M, led by 3% growth in SaaS & related solutions (91% of total). Americas softened (-2%) while EMEA jumped 68%, lifting geographic mix. Operating income climbed 17% to $29.9 M as cost-efficiency actions trimmed cost of revenue 200 bp; operating margin expanded to 10.0% (8.8% LY).
Bottom line pressure. Net income fell 11% to $12.3 M and diluted EPS to $0.44 (vs $0.48) on higher tax expense and $7.8 M DGIT earn-out charges within SG&A. Six-month net income is down 15% to $28.4 M.
Cash & leverage. Cash decreased to $145.9 M (-10% YTD) after $26.7 M buybacks, $18.6 M dividends and $40.5 M share repurchases for tax/treasury. Operating cash flow strengthened to $48.8 M YTD (vs $13.8 M). Debt totals $537.8 M, chiefly $425 M 3.875% 2028 converts and $125 M drawn on the new $600 M 2025 Revolver replacing the 2021 facility; net leverage approximates 2.1× EBITDA.
Strategic & risk updates. Workforce rationalization (≈150 heads) and closure of a Florida design center incurred $12.0 M YTD charges; annual savings expected in 2H-25. A Latin-America implementation contract was terminated 5 Jul 25, leaving $18.5 M receivables at risk, though management asserts recoverability. Goodwill increased $9.7 M on FX. Future SaaS backlog stands at ~$1.7 B (70% recognizable by 2027).
CSGS Q2-25: accelerazione del fatturato ma utili in calo. Il fatturato è cresciuto del 2,3% su base annua, raggiungendo 297,1 M$, trainato da una crescita del 3% nei servizi SaaS e soluzioni correlate (91% del totale). Le Americhe hanno mostrato un calo del 2%, mentre l'EMEA è aumentata del 68%, migliorando la composizione geografica. L'utile operativo è salito del 17% a 29,9 M$ grazie a misure di efficienza che hanno ridotto il costo del fatturato di 200 punti base; il margine operativo è salito al 10,0% (8,8% nell'anno precedente).
Pressione sul risultato netto. L'utile netto è diminuito dell'11% a 12,3 M$ e l'EPS diluito a 0,44$ (da 0,48$), a causa di maggiori spese fiscali e oneri di 7,8 M$ relativi all'acquisizione DGIT inclusi nelle spese SG&A. Nei primi sei mesi l'utile netto è sceso del 15% a 28,4 M$.
Liquidità e indebitamento. La liquidità è scesa a 145,9 M$ (-10% da inizio anno) dopo riacquisti per 26,7 M$, dividendi per 18,6 M$ e riacquisti azionari per 40,5 M$ destinati a tasse e tesoreria. Il flusso di cassa operativo è migliorato a 48,8 M$ da inizio anno (contro 13,8 M$). Il debito totale è di 537,8 M$, composto principalmente da 425 M$ di obbligazioni convertibili al 3,875% 2028 e 125 M$ utilizzati sul nuovo revolving da 600 M$ 2025 che sostituisce la linea 2021; la leva finanziaria netta è circa 2,1× EBITDA.
Aggiornamenti strategici e rischi. La razionalizzazione del personale (circa 150 unità) e la chiusura di un centro di progettazione in Florida hanno generato oneri per 12,0 M$ da inizio anno; i risparmi annuali sono attesi nella seconda metà del 2025. Un contratto di implementazione in America Latina è stato terminato il 5 luglio 2025, mettendo a rischio 18,5 M$ di crediti, anche se la direzione ritiene recuperabili tali importi. L'avviamento è aumentato di 9,7 M$ per effetto del cambio. Il backlog SaaS futuro è di circa 1,7 miliardi di dollari (70% riconoscibile entro il 2027).
CSGS Q2-25: aceleración en ingresos pero caída en ganancias. Los ingresos aumentaron un 2,3% interanual hasta 297,1 M$, impulsados por un crecimiento del 3% en SaaS y soluciones relacionadas (91% del total). América se debilitó un 2%, mientras que EMEA creció un 68%, mejorando la mezcla geográfica. La utilidad operativa subió un 17% hasta 29,9 M$ gracias a acciones de eficiencia que recortaron el costo de ingresos en 200 puntos básicos; el margen operativo se expandió al 10,0% (8,8% el año pasado).
Presión en el resultado neto. La utilidad neta cayó un 11% a 12,3 M$ y la EPS diluida a 0,44$ (vs 0,48$) debido a mayores gastos fiscales y cargos por 7,8 M$ relacionados con la adquisición de DGIT incluidos en SG&A. El ingreso neto semestral bajó un 15% a 28,4 M$.
Liquidez y apalancamiento. El efectivo disminuyó a 145,9 M$ (-10% en el año) tras recompras por 26,7 M$, dividendos de 18,6 M$ y recompras de acciones por 40,5 M$ para impuestos/tesorería. El flujo de caja operativo se fortaleció a 48,8 M$ en lo que va del año (vs 13,8 M$). La deuda total es de 537,8 M$, principalmente 425 M$ en convertibles al 3,875% 2028 y 125 M$ usados en la nueva línea revolvente de 600 M$ 2025 que reemplaza la de 2021; el apalancamiento neto es aproximadamente 2,1× EBITDA.
Actualizaciones estratégicas y riesgos. La racionalización de personal (≈150 empleados) y el cierre de un centro de diseño en Florida generaron cargos por 12,0 M$ en el año; se esperan ahorros anuales en el segundo semestre de 2025. Un contrato de implementación en Latinoamérica fue terminado el 5 de julio de 2025, poniendo en riesgo 18,5 M$ en cuentas por cobrar, aunque la dirección afirma su recuperabilidad. La plusvalía aumentó 9,7 M$ por efecto cambiario. El backlog futuro de SaaS es de aproximadamente 1,7 B$ (70% reconocible para 2027).
CSGS 2분기 25년: 매출은 가속화되었으나 수익은 감소. 매출은 전년 대비 2.3% 증가한 2억 9,710만 달러로, SaaS 및 관련 솔루션(전체의 91%)이 3% 성장하며 주도했습니다. 미주 지역은 2% 감소한 반면, EMEA 지역은 68% 급증하여 지역별 매출 구성이 개선되었습니다. 영업이익은 비용 효율화 조치로 매출원가가 200bp 줄어들면서 17% 증가한 2,990만 달러를 기록했고, 영업이익률은 10.0%(전년 8.8%)로 확대되었습니다.
순이익 압박. 순이익은 세금 비용 증가와 SG&A 내 DGIT 인수 관련 780만 달러의 지급 조건 비용으로 인해 11% 감소한 1,230만 달러, 희석 주당순이익은 0.44달러(전년 0.48달러)로 하락했습니다. 6개월 누적 순이익은 15% 감소한 2,840만 달러입니다.
현금 및 레버리지. 현금은 자사주 매입 2,670만 달러, 배당금 1,860만 달러, 세금/재무 목적의 자사주 재매입 4,050만 달러 집행 후 연초 대비 10% 감소한 1억 4,590만 달러입니다. 영업현금흐름은 올해 누적 4,880만 달러로 전년 동기 1,380만 달러 대비 강화되었습니다. 부채 총액은 5억 3,780만 달러로, 주로 3.875% 2028년 만기 전환사채 4억 2,500만 달러와 2021년 시설을 대체하는 6억 달러 2025년 리볼버 중 1억 2,500만 달러 차입분입니다. 순레버리지는 EBITDA 대비 약 2.1배 수준입니다.
전략 및 리스크 업데이트. 약 150명 규모의 인력 구조조정과 플로리다 디자인 센터 폐쇄로 올해 1,200만 달러의 비용이 발생했으며, 연간 절감 효과는 2025년 하반기부터 기대됩니다. 2025년 7월 5일 라틴아메리카 구현 계약이 종료되어 1,850만 달러의 미수금이 위험에 처했으나, 경영진은 회수가 가능하다고 보고 있습니다. 환율 변동으로 인해 영업권이 970만 달러 증가했습니다. 향후 SaaS 백로그는 약 17억 달러이며, 70%는 2027년까지 인식될 예정입니다.
CSGS T2-25 : accélération du chiffre d'affaires mais bénéfices en baisse. Le chiffre d'affaires a progressé de 2,3 % en glissement annuel pour atteindre 297,1 M$, porté par une croissance de 3 % du SaaS et des solutions associées (91 % du total). Les Amériques ont fléchi de 2 %, tandis que la zone EMEA a bondi de 68 %, améliorant la répartition géographique. Le résultat opérationnel a augmenté de 17 % à 29,9 M$, grâce à des actions d'efficacité qui ont réduit le coût des revenus de 200 points de base ; la marge opérationnelle s'est étendue à 10,0 % (8,8 % l'an dernier).
Pression sur le résultat net. Le résultat net a chuté de 11 % à 12,3 M$ et le BPA dilué à 0,44$ (contre 0,48$), en raison d'une charge fiscale plus élevée et de 7,8 M$ de charges liées à un earn-out DGIT incluses dans les SG&A. Le résultat net semestriel est en baisse de 15 % à 28,4 M$.
Trésorerie et endettement. La trésorerie a diminué à 145,9 M$ (-10 % depuis le début de l'année) après des rachats d'actions pour 26,7 M$, des dividendes de 18,6 M$ et des rachats d'actions pour 40,5 M$ destinés aux impôts/gestion de trésorerie. Les flux de trésorerie opérationnels se sont renforcés à 48,8 M$ depuis le début de l'année (contre 13,8 M$). La dette totale s'élève à 537,8 M$, principalement composée de 425 M$ d'obligations convertibles à 3,875 % échéance 2028 et de 125 M$ tirés sur la nouvelle ligne de crédit renouvelable de 600 M$ 2025 qui remplace celle de 2021 ; le levier net est d'environ 2,1× l'EBITDA.
Mises à jour stratégiques et risques. La rationalisation des effectifs (≈150 personnes) et la fermeture d'un centre de conception en Floride ont entraîné des charges de 12,0 M$ depuis le début de l'année ; des économies annuelles sont attendues au second semestre 2025. Un contrat d'implémentation en Amérique latine a été résilié le 5 juillet 2025, mettant en risque 18,5 M$ de créances, bien que la direction affirme leur recouvrabilité. Le goodwill a augmenté de 9,7 M$ en raison des fluctuations de change. Le carnet de commandes SaaS futur s'élève à environ 1,7 Md$ (70 % reconnaissable d'ici 2027).
CSGS Q2-25: Umsatz beschleunigt, aber Gewinn gesunken. Der Umsatz stieg im Jahresvergleich um 2,3 % auf 297,1 M$, angetrieben durch ein Wachstum von 3 % im Bereich SaaS und verwandte Lösungen (91 % des Gesamtumsatzes). Die Amerikas schwächten sich um 2 % ab, während EMEA um 68 % zulegte, was die geografische Mischung verbesserte. Das Betriebsergebnis stieg um 17 % auf 29,9 M$, da Effizienzmaßnahmen die Umsatzkosten um 200 Basispunkte senkten; die operative Marge wuchs auf 10,0 % (vorjahr 8,8 %).
Druck auf das Ergebnis. Der Nettogewinn fiel um 11 % auf 12,3 M$ und das verwässerte Ergebnis je Aktie auf 0,44$ (vorher 0,48$) aufgrund höherer Steueraufwendungen und 7,8 M$ Earn-out-Kosten von DGIT in den SG&A. Der Halbjahresnettogewinn sank um 15 % auf 28,4 M$.
Barmittel & Verschuldung. Die liquiden Mittel sanken auf 145,9 M$ (-10 % seit Jahresbeginn) nach Rückkäufen von 26,7 M$, Dividenden von 18,6 M$ und Aktienrückkäufen von 40,5 M$ für Steuern/Treasury. Der operative Cashflow verbesserte sich auf 48,8 M$ im Jahresverlauf (vorher 13,8 M$). Die Gesamtverschuldung beträgt 537,8 M$, hauptsächlich bestehend aus 425 M$ 3,875% Wandelanleihen 2028 und 125 M$ aus der neuen 600 M$ Revolving-Kreditlinie 2025, die die 2021er-Fazilität ersetzt; die Nettoverschuldung liegt bei etwa dem 2,1-fachen EBITDA.
Strategische & Risiko-Updates. Die Personalabbau-Maßnahmen (ca. 150 Mitarbeiter) und die Schließung eines Designzentrums in Florida führten zu Aufwendungen von 12,0 M$ im laufenden Jahr; jährliche Einsparungen werden in der zweiten Hälfte 2025 erwartet. Ein Implementierungsvertrag in Lateinamerika wurde zum 5. Juli 2025 gekündigt, wodurch Forderungen in Höhe von 18,5 M$ gefährdet sind, obwohl das Management die Einbringlichkeit bestätigt. Der Geschäfts- oder Firmenwert stieg aufgrund von Währungseffekten um 9,7 M$. Der zukünftige SaaS-Auftragsbestand beträgt rund 1,7 Mrd. $ (70 % bis 2027 erkennbar).
- Revenue up 2.3% YoY with SaaS & related solutions driving growth and margin expansion.
- Operating margin improved to 10.0% vs 8.8%, reflecting cost-efficiency measures.
- Operating cash flow surged to $48.8 M YTD, enhancing internal funding capacity.
- New $600 M credit agreement extends liquidity to 2030 and repaid higher-cost 2021 debt.
- Net income and EPS fell 11% and 8%, respectively, due to higher taxes and earn-out costs.
- Cash balance down $102.9 M YTD amid heavy buybacks and dividends.
- $18.5 M receivable at risk following termination of a Latin America contract post-quarter.
- Customer concentration: Charter and Comcast still represent 36% of revenue.
- Leverage elevated at ~2× EBITDA with $538 M total debt.
Insights
TL;DR: Solid revenue & margin uptick offset by EPS decline and rising execution risk.
CSGS continues to pivot toward higher-growth SaaS, evident in 91% mix and strong EMEA traction. Margin expansion to 10% and OCF rebound are encouraging, indicating cost-takeout initiatives are gaining traction. However, bottom-line erosion from earn-out charges and a higher effective tax rate trimmed EPS, and aggressive capital returns pushed net cash negative. The new credit facility extends maturity to 2030 and adds $475 M liquidity headroom, but leverage remains above 2×, limiting buyback capacity if growth wobbles. Guidance was not included; investors will watch whether the contract dispute converts into a write-off.
TL;DR: Receivable exposure and restructuring elevate near-term risk.
The $18.5 M Latin America receivable equals ~63% of Q2 net income and, if impaired, could erase 2025 profits. Ongoing restructuring, facility closure, and workforce cuts may disrupt service delivery and raise execution risk. Debt refinancing replaced amortizing term debt with revolver draws, increasing interest-rate sensitivity and covenant reliance on the total-net-leverage test. Concentration remains high: Charter and Comcast supply 36% of revenue and 36% of billed AR. Overall risk profile has deteriorated slightly, warranting close monitoring of collections and covenant headroom.
CSGS Q2-25: accelerazione del fatturato ma utili in calo. Il fatturato è cresciuto del 2,3% su base annua, raggiungendo 297,1 M$, trainato da una crescita del 3% nei servizi SaaS e soluzioni correlate (91% del totale). Le Americhe hanno mostrato un calo del 2%, mentre l'EMEA è aumentata del 68%, migliorando la composizione geografica. L'utile operativo è salito del 17% a 29,9 M$ grazie a misure di efficienza che hanno ridotto il costo del fatturato di 200 punti base; il margine operativo è salito al 10,0% (8,8% nell'anno precedente).
Pressione sul risultato netto. L'utile netto è diminuito dell'11% a 12,3 M$ e l'EPS diluito a 0,44$ (da 0,48$), a causa di maggiori spese fiscali e oneri di 7,8 M$ relativi all'acquisizione DGIT inclusi nelle spese SG&A. Nei primi sei mesi l'utile netto è sceso del 15% a 28,4 M$.
Liquidità e indebitamento. La liquidità è scesa a 145,9 M$ (-10% da inizio anno) dopo riacquisti per 26,7 M$, dividendi per 18,6 M$ e riacquisti azionari per 40,5 M$ destinati a tasse e tesoreria. Il flusso di cassa operativo è migliorato a 48,8 M$ da inizio anno (contro 13,8 M$). Il debito totale è di 537,8 M$, composto principalmente da 425 M$ di obbligazioni convertibili al 3,875% 2028 e 125 M$ utilizzati sul nuovo revolving da 600 M$ 2025 che sostituisce la linea 2021; la leva finanziaria netta è circa 2,1× EBITDA.
Aggiornamenti strategici e rischi. La razionalizzazione del personale (circa 150 unità) e la chiusura di un centro di progettazione in Florida hanno generato oneri per 12,0 M$ da inizio anno; i risparmi annuali sono attesi nella seconda metà del 2025. Un contratto di implementazione in America Latina è stato terminato il 5 luglio 2025, mettendo a rischio 18,5 M$ di crediti, anche se la direzione ritiene recuperabili tali importi. L'avviamento è aumentato di 9,7 M$ per effetto del cambio. Il backlog SaaS futuro è di circa 1,7 miliardi di dollari (70% riconoscibile entro il 2027).
CSGS Q2-25: aceleración en ingresos pero caída en ganancias. Los ingresos aumentaron un 2,3% interanual hasta 297,1 M$, impulsados por un crecimiento del 3% en SaaS y soluciones relacionadas (91% del total). América se debilitó un 2%, mientras que EMEA creció un 68%, mejorando la mezcla geográfica. La utilidad operativa subió un 17% hasta 29,9 M$ gracias a acciones de eficiencia que recortaron el costo de ingresos en 200 puntos básicos; el margen operativo se expandió al 10,0% (8,8% el año pasado).
Presión en el resultado neto. La utilidad neta cayó un 11% a 12,3 M$ y la EPS diluida a 0,44$ (vs 0,48$) debido a mayores gastos fiscales y cargos por 7,8 M$ relacionados con la adquisición de DGIT incluidos en SG&A. El ingreso neto semestral bajó un 15% a 28,4 M$.
Liquidez y apalancamiento. El efectivo disminuyó a 145,9 M$ (-10% en el año) tras recompras por 26,7 M$, dividendos de 18,6 M$ y recompras de acciones por 40,5 M$ para impuestos/tesorería. El flujo de caja operativo se fortaleció a 48,8 M$ en lo que va del año (vs 13,8 M$). La deuda total es de 537,8 M$, principalmente 425 M$ en convertibles al 3,875% 2028 y 125 M$ usados en la nueva línea revolvente de 600 M$ 2025 que reemplaza la de 2021; el apalancamiento neto es aproximadamente 2,1× EBITDA.
Actualizaciones estratégicas y riesgos. La racionalización de personal (≈150 empleados) y el cierre de un centro de diseño en Florida generaron cargos por 12,0 M$ en el año; se esperan ahorros anuales en el segundo semestre de 2025. Un contrato de implementación en Latinoamérica fue terminado el 5 de julio de 2025, poniendo en riesgo 18,5 M$ en cuentas por cobrar, aunque la dirección afirma su recuperabilidad. La plusvalía aumentó 9,7 M$ por efecto cambiario. El backlog futuro de SaaS es de aproximadamente 1,7 B$ (70% reconocible para 2027).
CSGS 2분기 25년: 매출은 가속화되었으나 수익은 감소. 매출은 전년 대비 2.3% 증가한 2억 9,710만 달러로, SaaS 및 관련 솔루션(전체의 91%)이 3% 성장하며 주도했습니다. 미주 지역은 2% 감소한 반면, EMEA 지역은 68% 급증하여 지역별 매출 구성이 개선되었습니다. 영업이익은 비용 효율화 조치로 매출원가가 200bp 줄어들면서 17% 증가한 2,990만 달러를 기록했고, 영업이익률은 10.0%(전년 8.8%)로 확대되었습니다.
순이익 압박. 순이익은 세금 비용 증가와 SG&A 내 DGIT 인수 관련 780만 달러의 지급 조건 비용으로 인해 11% 감소한 1,230만 달러, 희석 주당순이익은 0.44달러(전년 0.48달러)로 하락했습니다. 6개월 누적 순이익은 15% 감소한 2,840만 달러입니다.
현금 및 레버리지. 현금은 자사주 매입 2,670만 달러, 배당금 1,860만 달러, 세금/재무 목적의 자사주 재매입 4,050만 달러 집행 후 연초 대비 10% 감소한 1억 4,590만 달러입니다. 영업현금흐름은 올해 누적 4,880만 달러로 전년 동기 1,380만 달러 대비 강화되었습니다. 부채 총액은 5억 3,780만 달러로, 주로 3.875% 2028년 만기 전환사채 4억 2,500만 달러와 2021년 시설을 대체하는 6억 달러 2025년 리볼버 중 1억 2,500만 달러 차입분입니다. 순레버리지는 EBITDA 대비 약 2.1배 수준입니다.
전략 및 리스크 업데이트. 약 150명 규모의 인력 구조조정과 플로리다 디자인 센터 폐쇄로 올해 1,200만 달러의 비용이 발생했으며, 연간 절감 효과는 2025년 하반기부터 기대됩니다. 2025년 7월 5일 라틴아메리카 구현 계약이 종료되어 1,850만 달러의 미수금이 위험에 처했으나, 경영진은 회수가 가능하다고 보고 있습니다. 환율 변동으로 인해 영업권이 970만 달러 증가했습니다. 향후 SaaS 백로그는 약 17억 달러이며, 70%는 2027년까지 인식될 예정입니다.
CSGS T2-25 : accélération du chiffre d'affaires mais bénéfices en baisse. Le chiffre d'affaires a progressé de 2,3 % en glissement annuel pour atteindre 297,1 M$, porté par une croissance de 3 % du SaaS et des solutions associées (91 % du total). Les Amériques ont fléchi de 2 %, tandis que la zone EMEA a bondi de 68 %, améliorant la répartition géographique. Le résultat opérationnel a augmenté de 17 % à 29,9 M$, grâce à des actions d'efficacité qui ont réduit le coût des revenus de 200 points de base ; la marge opérationnelle s'est étendue à 10,0 % (8,8 % l'an dernier).
Pression sur le résultat net. Le résultat net a chuté de 11 % à 12,3 M$ et le BPA dilué à 0,44$ (contre 0,48$), en raison d'une charge fiscale plus élevée et de 7,8 M$ de charges liées à un earn-out DGIT incluses dans les SG&A. Le résultat net semestriel est en baisse de 15 % à 28,4 M$.
Trésorerie et endettement. La trésorerie a diminué à 145,9 M$ (-10 % depuis le début de l'année) après des rachats d'actions pour 26,7 M$, des dividendes de 18,6 M$ et des rachats d'actions pour 40,5 M$ destinés aux impôts/gestion de trésorerie. Les flux de trésorerie opérationnels se sont renforcés à 48,8 M$ depuis le début de l'année (contre 13,8 M$). La dette totale s'élève à 537,8 M$, principalement composée de 425 M$ d'obligations convertibles à 3,875 % échéance 2028 et de 125 M$ tirés sur la nouvelle ligne de crédit renouvelable de 600 M$ 2025 qui remplace celle de 2021 ; le levier net est d'environ 2,1× l'EBITDA.
Mises à jour stratégiques et risques. La rationalisation des effectifs (≈150 personnes) et la fermeture d'un centre de conception en Floride ont entraîné des charges de 12,0 M$ depuis le début de l'année ; des économies annuelles sont attendues au second semestre 2025. Un contrat d'implémentation en Amérique latine a été résilié le 5 juillet 2025, mettant en risque 18,5 M$ de créances, bien que la direction affirme leur recouvrabilité. Le goodwill a augmenté de 9,7 M$ en raison des fluctuations de change. Le carnet de commandes SaaS futur s'élève à environ 1,7 Md$ (70 % reconnaissable d'ici 2027).
CSGS Q2-25: Umsatz beschleunigt, aber Gewinn gesunken. Der Umsatz stieg im Jahresvergleich um 2,3 % auf 297,1 M$, angetrieben durch ein Wachstum von 3 % im Bereich SaaS und verwandte Lösungen (91 % des Gesamtumsatzes). Die Amerikas schwächten sich um 2 % ab, während EMEA um 68 % zulegte, was die geografische Mischung verbesserte. Das Betriebsergebnis stieg um 17 % auf 29,9 M$, da Effizienzmaßnahmen die Umsatzkosten um 200 Basispunkte senkten; die operative Marge wuchs auf 10,0 % (vorjahr 8,8 %).
Druck auf das Ergebnis. Der Nettogewinn fiel um 11 % auf 12,3 M$ und das verwässerte Ergebnis je Aktie auf 0,44$ (vorher 0,48$) aufgrund höherer Steueraufwendungen und 7,8 M$ Earn-out-Kosten von DGIT in den SG&A. Der Halbjahresnettogewinn sank um 15 % auf 28,4 M$.
Barmittel & Verschuldung. Die liquiden Mittel sanken auf 145,9 M$ (-10 % seit Jahresbeginn) nach Rückkäufen von 26,7 M$, Dividenden von 18,6 M$ und Aktienrückkäufen von 40,5 M$ für Steuern/Treasury. Der operative Cashflow verbesserte sich auf 48,8 M$ im Jahresverlauf (vorher 13,8 M$). Die Gesamtverschuldung beträgt 537,8 M$, hauptsächlich bestehend aus 425 M$ 3,875% Wandelanleihen 2028 und 125 M$ aus der neuen 600 M$ Revolving-Kreditlinie 2025, die die 2021er-Fazilität ersetzt; die Nettoverschuldung liegt bei etwa dem 2,1-fachen EBITDA.
Strategische & Risiko-Updates. Die Personalabbau-Maßnahmen (ca. 150 Mitarbeiter) und die Schließung eines Designzentrums in Florida führten zu Aufwendungen von 12,0 M$ im laufenden Jahr; jährliche Einsparungen werden in der zweiten Hälfte 2025 erwartet. Ein Implementierungsvertrag in Lateinamerika wurde zum 5. Juli 2025 gekündigt, wodurch Forderungen in Höhe von 18,5 M$ gefährdet sind, obwohl das Management die Einbringlichkeit bestätigt. Der Geschäfts- oder Firmenwert stieg aufgrund von Währungseffekten um 9,7 M$. Der zukünftige SaaS-Auftragsbestand beträgt rund 1,7 Mrd. $ (70 % bis 2027 erkennbar).
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction |
(I.R.S. Employer |
(Address of principal executive offices, including zip code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of August 5, 2025, the registrant had
CSG SYSTEMS INTERNATIONAL, INC.
FORM 10-Q for the Quarter Ended June 30, 2025
INDEX
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Page No. |
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Part I - FINANCIAL INFORMATION |
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Item 1.
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Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024 (Unaudited) |
3 |
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Condensed Consolidated Statements of Income for the Quarters and Six Months Ended June 30, 2025 and 2024 (Unaudited) |
4 |
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Condensed Consolidated Statements of Comprehensive Income for the Quarters and Six Months Ended June 30, 2025 and 2024 (Unaudited) |
5 |
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Condensed Consolidated Statements of Stockholders’ Equity for the Quarters and Six Months Ended June 30, 2025 and 2024 (Unaudited) |
6 |
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Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024 (Unaudited) |
7 |
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
8 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
18 |
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Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
27 |
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Item 4. |
Controls and Procedures |
28 |
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Part II - OTHER INFORMATION |
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Item 1. |
Legal Proceedings |
29 |
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Item 1A. |
Risk Factors |
29 |
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Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
29 |
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Item 5. |
Other Information |
29 |
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Item 6. |
Exhibits |
29 |
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Exhibit Index |
30 |
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Signatures |
31 |
2
Item 1. Financial Information
CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED
(in thousands)
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June 30, |
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December 31, 2024 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Settlement and merchant reserve assets |
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Trade accounts receivable: |
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Billed, net of allowance of $ |
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Unbilled |
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Income taxes receivable |
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Other current assets |
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Total current assets |
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Non-current assets: |
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Property and equipment, net of depreciation of $ |
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Operating lease right-of-use assets |
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Finance lease right-of-use assets |
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Software, net of amortization of $ |
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Goodwill |
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Acquired customer contracts, net of amortization of $ |
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Customer contract costs, net of amortization of $ |
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Deferred income taxes |
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Other assets |
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Total non-current assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Current portion of long-term debt |
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$ |
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$ |
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Operating lease liabilities |
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Customer deposits |
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Trade accounts payable |
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Accrued employee compensation |
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Settlement and merchant reserve liabilities |
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Deferred revenue |
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Income taxes payable |
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Other current liabilities |
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Total current liabilities |
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Non-current liabilities: |
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Long-term debt, net of unamortized discounts of $ |
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Operating lease liabilities |
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Deferred revenue |
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Income taxes payable |
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Deferred income taxes |
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Other non-current liabilities |
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Total non-current liabilities |
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Total liabilities |
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Stockholders' equity: |
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Preferred stock, par value $ |
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Common stock, par value $ |
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Additional paid-in capital |
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Treasury stock, at cost; |
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( |
) |
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( |
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Accumulated other comprehensive income (loss): |
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Cumulative foreign currency translation adjustments |
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( |
) |
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( |
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Accumulated earnings |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(in thousands, except per share amounts)
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Quarter Ended |
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Six Months Ended |
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June 30, 2025 |
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June 30, 2024 |
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June 30, 2025 |
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June 30, 2024 |
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Revenue |
$ |
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$ |
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$ |
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$ |
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Cost of revenue (exclusive of depreciation, shown separately below) |
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Other operating expenses: |
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Research and development |
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Selling, general and administrative |
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Depreciation |
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Restructuring and reorganization charges |
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Total operating expenses |
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Operating income |
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Other income (expense): |
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Interest expense |
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( |
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( |
) |
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( |
) |
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( |
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Interest income |
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Loss on debt extinguishment |
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( |
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Other, net |
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( |
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( |
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Total other |
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( |
) |
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( |
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( |
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( |
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Income before income taxes |
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Income tax provision |
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( |
) |
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( |
) |
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( |
) |
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( |
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Net income |
$ |
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$ |
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$ |
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$ |
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Weighted-average shares outstanding: |
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Basic |
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Diluted |
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Earnings per common share: |
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Basic |
$ |
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$ |
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$ |
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$ |
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Diluted |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - UNAUDITED
(in thousands)
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Quarter Ended |
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Six Months Ended |
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June 30, 2025 |
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June 30, 2024 |
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June 30, 2025 |
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June 30, 2024 |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Other comprehensive income (loss), net of tax: |
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Foreign currency translation adjustments |
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( |
) |
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( |
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Other comprehensive income (loss), net of tax |
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( |
) |
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( |
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Total comprehensive income, net of tax |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - UNAUDITED
(in thousands)
|
Shares of Common Stock Outstanding |
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Common Stock |
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Additional Paid-in Capital |
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Treasury Stock |
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Accumulated Other Comprehensive Income (Loss) |
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Accumulated Earnings |
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Total Stockholders' Equity |
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For the Six Months Ended June 30, 2025: |
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BALANCE, January 1, 2025 |
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$ |
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$ |
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$ |
( |
) |
$ |
( |
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$ |
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$ |
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Comprehensive income: |
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Net income |
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- |
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- |
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- |
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- |
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- |
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Foreign currency translation adjustments |
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- |
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- |
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- |
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- |
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- |
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Total comprehensive income |
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Repurchase of common stock |
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( |
) |
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( |
) |
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( |
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( |
) |
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- |
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- |
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( |
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Issuance of common stock pursuant to employee stock |
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- |
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- |
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Issuance of restricted common stock pursuant to |
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( |
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- |
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- |
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- |
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- |
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Cancellation of restricted common stock issued |
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( |
) |
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- |
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- |
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- |
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- |
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- |
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- |
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Stock-based compensation expense |
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- |
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- |
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- |
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- |
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- |
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Dividends |
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- |
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- |
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- |
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- |
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- |
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( |
) |
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( |
) |
BALANCE, March 31, 2025 |
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( |
) |
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( |
) |
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Comprehensive income: |
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Net income |
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- |
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- |
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- |
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- |
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- |
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Foreign currency translation adjustments |
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- |
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- |
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- |
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- |
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- |
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Total comprehensive income |
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|||||||
Repurchase of common stock |
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( |
) |
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- |
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( |
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( |
) |
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- |
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- |
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( |
) |
Issuance of common stock pursuant to employee stock |
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- |
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- |
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- |
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- |
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Issuance of restricted common stock pursuant to |
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- |
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- |
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- |
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- |
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- |
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- |
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Cancellation of restricted common stock issued |
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( |
) |
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- |
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- |
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- |
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- |
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- |
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- |
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Stock-based compensation expense |
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- |
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- |
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- |
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- |
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- |
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Dividends |
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- |
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- |
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- |
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- |
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- |
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( |
) |
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( |
) |
BALANCE, June 30, 2025 |
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|
$ |
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$ |
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$ |
( |
) |
$ |
( |
) |
$ |
|
$ |
|
|||||
|
Shares of Common Stock Outstanding |
|
Common Stock |
|
Additional Paid-in Capital |
|
Treasury Stock |
|
Accumulated Other Comprehensive Income (Loss) |
|
Accumulated Earnings |
|
Total Stockholders' Equity |
|
|||||||
For the Six Months Ended June 30, 2024: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
BALANCE, January 1, 2024 |
|
|
$ |
|
$ |
|
$ |
( |
) |
$ |
( |
) |
$ |
|
$ |
|
|||||
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net income |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
|
|
||
Foreign currency translation adjustments |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
( |
) |
|
- |
|
|
|
|
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Repurchase of common stock |
|
( |
) |
|
( |
) |
|
( |
) |
|
( |
) |
|
- |
|
|
- |
|
|
( |
) |
Issuance of common stock pursuant to employee stock |
|
|
|
- |
|
|
|
|
- |
|
|
- |
|
|
- |
|
|
|
|||
Issuance of restricted common stock pursuant to |
|
|
|
|
|
( |
) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
||
Cancellation of restricted common stock issued |
|
( |
) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Stock-based compensation expense |
|
- |
|
|
- |
|
|
|
|
- |
|
|
- |
|
|
- |
|
|
|
||
Dividends |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
( |
) |
|
( |
) |
BALANCE, March 31, 2024 |
|
|
|
|
|
|
|
( |
) |
|
( |
) |
|
|
|
|
|||||
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net income |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
|
|
||
Foreign currency translation adjustments |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
( |
) |
|
- |
|
|
|
|
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Repurchase of common stock |
|
( |
) |
|
- |
|
|
( |
) |
|
( |
) |
|
- |
|
|
- |
|
|
( |
) |
Issuance of common stock pursuant to employee stock |
|
|
|
- |
|
|
|
|
- |
|
|
- |
|
|
- |
|
|
|
|||
Issuance of restricted common stock pursuant to |
|
|
|
|
|
( |
) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
||
Cancellation of restricted common stock issued |
|
( |
) |
|
( |
) |
|
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
Stock-based compensation expense |
|
- |
|
|
- |
|
|
|
|
- |
|
|
- |
|
|
- |
|
|
|
||
Dividends |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
( |
) |
|
( |
) |
BALANCE, June 30, 2024 |
|
|
$ |
|
$ |
|
$ |
( |
) |
$ |
( |
) |
$ |
|
$ |
|
|||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
CSG SYSTEMS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(in thousands)
|
Six Months Ended |
|
|
|||||
|
June 30, 2025 |
|
|
June 30, 2024 |
|
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net income |
$ |
|
|
$ |
|
|
||
Adjustments to reconcile net income to net cash provided by operating activities- |
|
|
|
|
|
|
||
Depreciation |
|
|
|
|
|
|
||
Amortization |
|
|
|
|
|
|
||
Loss on debt extinguishment |
|
|
|
|
|
|
||
(Gain) loss on unrealized foreign currency transactions, net |
|
|
|
|
( |
) |
|
|
Deferred income taxes |
|
( |
) |
|
|
|
|
|
Stock-based compensation |
|
|
|
|
|
|
||
Changes in operating assets and liabilities, net of acquired amounts: |
|
|
|
|
|
|
||
Trade accounts receivable, net |
|
|
|
|
|
|
||
Other current and non-current assets and liabilities |
|
( |
) |
|
|
( |
) |
|
Income taxes payable/receivable |
|
( |
) |
|
|
( |
) |
|
Trade accounts payable and accrued liabilities |
|
( |
) |
|
|
( |
) |
|
Deferred revenue |
|
|
|
|
|
|
||
Net cash provided by operating activities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Cash flows from investing activities: |
|
|
|
|
|
|
||
Purchases of software, property, and equipment |
|
( |
) |
|
|
( |
) |
|
Receipts from sale of software, property, and equipment |
|
|
|
|
|
|
||
Business combinations, net of cash and settlement assets acquired of |
|
|
|
|
|
|
||
Net cash provided by (used in) investing activities |
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||
Cash flows from financing activities: |
|
|
|
|
|
|
||
Proceeds from issuance of common stock |
|
|
|
|
|
|
||
Payments of cash dividends |
|
( |
) |
|
|
( |
) |
|
Repurchases of common stock |
|
( |
) |
|
|
( |
) |
|
Deferred acquisition payments |
|
( |
) |
|
|
( |
) |
|
Proceeds from long-term debt |
|
|
|
|
|
|
||
Payments on long-term debt |
|
( |
) |
|
|
( |
) |
|
Payments of debt financing costs |
|
( |
) |
|
|
|
|
|
Payments on financing obligations |
|
( |
) |
|
|
( |
) |
|
Payments on finance lease obligations |
|
( |
) |
|
|
|
|
|
Settlement and merchant reserve activity |
|
( |
) |
|
|
( |
) |
|
Net cash used in financing activities |
|
( |
) |
|
|
( |
) |
|
Effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash |
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||
Net decrease in cash, cash equivalents, and restricted cash |
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
||
Cash, cash equivalents, and restricted cash, beginning of period |
|
|
|
|
|
|
||
Cash, cash equivalents, and restricted cash, end of period |
$ |
|
|
$ |
|
|
||
|
|
|
|
|
|
|
||
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
||
Cash paid during the period for- |
|
|
|
|
|
|
||
Interest |
$ |
|
|
$ |
|
|
||
Income taxes |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Non-cash investing and financing activities- |
|
|
|
|
|
|
||
Software, property, and equipment included in current and non-current liabilities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Reconciliation of cash, cash equivalents, and restricted cash: |
|
|
|
|
|
|
||
Cash and cash equivalents |
$ |
|
|
$ |
|
|
||
Settlement and merchant reserve assets |
|
|
|
|
|
|
||
Restricted cash included in current and non-current assets |
|
|
|
|
|
|
||
Total cash, cash equivalents, and restricted cash |
$ |
|
|
$ |
|
|
||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7
CSG SYSTEMS INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. GENERAL
CSG Systems International, Inc. (the "Company", "CSG", or forms of the pronoun "we") have prepared the accompanying unaudited condensed consolidated financial statements as of June 30, 2025 and December 31, 2024, and for the quarters and six months ended June 30, 2025 and 2024, in accordance with accounting principles generally accepted in the United States of America (“U.S.”) (“GAAP”) for interim financial information, and pursuant to the instructions to Form 10-Q and the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of our management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of our financial position and operating results have been included. The unaudited Condensed Consolidated Financial Statements (the “Financial Statements”) should be read in conjunction with the Consolidated Financial Statements and notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), contained in our Annual Report on Form 10-K for the year ended December 31, 2024 (our “2024 10-K”), filed with the SEC. The results of operations for the quarter and six months ended June 30, 2025 are not necessarily indicative of the expected results for the entire year ending December 31, 2025.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue. As of June 30, 2025, our aggregate amount of the transaction price allocated to the remaining performance obligations was approximately $
The nature, amount, timing, and uncertainty of our revenue and how revenue and cash flows are affected by economic factors is most appropriately depicted by revenue type, geographic region, and customer vertical.
Revenue by type for the quarters and six months ended June 30, 2025 and 2024 was as follows (in thousands):
|
|
Quarter Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
||||
SaaS and related solutions |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Software and services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Maintenance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
We use the location of the customer as the basis of attributing revenue to geographic regions. Revenue by geographic region for the quarters and six months ended June 30, 2025 and 2024, as a percentage of our total revenue, was as follows:
|
|
Quarter Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
||||
Americas (principally the U.S.) |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Europe, Middle East, and Africa (principally Europe) |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Asia Pacific |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Total revenue |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
8
We generate our revenue primarily from the global communications markets; however, we serve an expanding group of customers in other markets including retail, financial services, healthcare, insurance, and government entities. Revenue by customer vertical for the quarters and six months ended June 30, 2025 and 2024, as a percentage of our total revenue, was as follows:
|
|
Quarter Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
||||
Broadband/Cable/Satellite |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Telecommunications |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Other |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Total revenue |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Deferred revenue recognized during the quarters ended June 30, 2025 and 2024 was $
Cash and Cash Equivalents. We consider all highly liquid investments with original maturities of three months or less as of the date of purchase to be cash equivalents. As of June 30, 2025 and December 31, 2024, our cash equivalents consist primarily of time deposits held at major banks. For the cash and cash equivalents denominated in foreign currencies and/or located outside the U.S., we do not anticipate any material amounts being unavailable for use in running our business, but may face limitations on moving cash out of certain foreign jurisdictions due to currency controls and potential negative economic consequences.
Settlement and Merchant Reserve Assets and Liabilities. Settlement assets and settlement liabilities represent cash collected on behalf of merchants via payments processing services which is held for an established holding period until settlement with the customer. The holding period is generally one to four business days depending on the payment model and contractual terms with the customer. During the holding period, cash is subject to restriction and segregation based on the nature of our custodial relationship with the merchants. Should we fail to remit these funds to our merchants, the merchant's sole recourse for payment would be against us. These rights and obligations are set forth in the contracts between us and the merchants. Settlement assets are held with various major financial institutions, and a corresponding liability is recorded for the amounts owed to the customer. At any given time, there may be differences between the cash held and the corresponding liability due to the timing of operating-related cash transfers.
Merchant reserve assets/liabilities represent deposits collected from merchants to mitigate our risk of loss due to nonperformance of settlement obligations initiated by those merchants using our payments processing services, or non-payment by customers for services rendered by us. We perform a credit risk evaluation on each customer based on multiple criteria, which provides the basis for the deposit amount required for each merchant. For the duration of our relationship with each merchant, we hold their reserve deposits with major financial institutions. We hold these funds in separate accounts, which are offset by corresponding liabilities.
The following table summarizes our settlement and merchant reserve assets and liabilities as of the indicated periods (in thousands):
|
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||||||||||
|
|
Assets |
|
|
Liabilities |
|
|
Assets |
|
|
Liabilities |
|
||||
Settlement assets/liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Merchant reserve assets/liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Financial Instruments. Our financial instruments as of June 30, 2025 and December 31, 2024 include cash and cash equivalents, settlement and merchant reserve assets and liabilities, accounts receivable, accounts payable, and debt. Due to their short maturities, the carrying amounts of cash equivalents, settlement and merchant reserve assets and liabilities, accounts receivable, and accounts payable approximate their fair value. Realized and unrealized gains and losses were not material in any period presented.
9
We have chosen not to record our debt at fair value, with changes recognized in earnings each reporting period. The following table indicates the carrying value and estimated fair value of our debt as of the indicated periods (in thousands):
|
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||||||||||
|
|
Carrying Value |
|
|
Fair Value |
|
|
Carrying Value |
|
|
Fair Value |
|
||||
2025 Credit Agreement (carrying value) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
2023 Convertible Notes (par value) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
2021 Credit Agreement (carrying value including |
|
|
|
|
|
|
|
|
|
|
|
|
||||
The fair value of our convertible notes was estimated based upon quoted market prices or recent sales activity, while the fair values of our credit agreements were estimated using a discounted cash flow methodology, both of which are considered Level 2 inputs. See Note 5 for a discussion regarding our debt.
New Tax Legislation. The One Big Beautiful Bill Act (“OBBBA”) was enacted on July 4, 2025 and we are assessing the impact of this new legislation. The effect of changes in tax laws, including retroactive changes, are recognized in the financial statement in the period that the changes are enacted. The OBBBA is not currently expected to materially impact our effective tax rate, but we are still assessing the potential impact to our deferred tax balances and cash flows which will be reflected in our financial statements beginning in the third quarter of 2025.
Accounting Pronouncements Issued but Not Yet Effective. In December 2023, the Financial Accounting Standards Board ("FASB") issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires entities to disclose more detailed information about their effective tax rate reconciliation as well as information on income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. The adoption of this standard only impacts disclosures and is not expected to have a material impact on our Financial Statements.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”), which requires entities to disclose disaggregated information about certain income statement expense line items in the notes to their financial statements on an annual and interim basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. We are currently in the process of evaluating the impact of this ASU on our Financial Statements and related disclosures.
3. SEGMENT REPORTING AND CUSTOMER CONCENTRATION
Segment Information. Our Chief Operating Decision Maker ("CODM") is our President and Chief Executive Officer. We have evaluated how our CODM has organized the Company for purposes of making operating decisions, preparing budgets and forecasts, setting targets, allocating resources, and assessing performance. Our CODM manages all business activities on a consolidated basis, and as a result, we have concluded that as of June 30, 2025, there is
As our one segment is managed on a consolidated basis,
10
We regularly provide our CODM a reporting package that shows our results by functional expense, similar to our Income Statements. However, for purposes of this reporting package, depreciation is included in these functional expense categories, rather than broken out separately. Additionally, certain expenses such as restructuring and reorganization charges, executive transition costs, and acquisition-related charges, along with non-cash charges such as stock-based compensation and amortization of acquired intangibles, are excluded.
|
|
Quarter Ended |
|
|
Six Months Ended |
|
|
||||||||||
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
|
||||
Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Transaction fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
All other (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling and marketing (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Restructuring and reorganization charges (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other segment items (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income tax provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Reconciliation of profit or loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjustments and reconciling items |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Consolidated net income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||
Depreciation expense and interest income are separately disclosed on our Income Statements. Amortization expense is separately disclosed on our Statements of Cash Flows and is discussed in Note 4.
4. GOODWILL AND INTANGIBLE ASSETS
Goodwill.
January 1, 2025, balance |
|
$ |
|
|
Effects of changes in foreign currency exchange rates |
|
|
|
|
June 30, 2025, balance |
|
$ |
|
Other Intangible Assets. Our other intangible assets subject to ongoing amortization consist of acquired customer contracts and software.
|
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||||||||||||||||||
|
|
Gross |
|
|
Accumulated Amortization |
|
|
Net Amount |
|
|
Gross |
|
|
Accumulated Amortization |
|
|
Net Amount |
|
||||||
Acquired customer contracts |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Software |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Total other intangible assets |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
11
The total amortization expense related to other intangible assets for the second quarters of 2025 and 2024 was $
Customer Contract Costs.
|
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||||||||||||||||||
|
|
Gross |
|
|
Accumulated Amortization |
|
|
Net Amount |
|
|
Gross |
|
|
Accumulated Amortization |
|
|
Net Amount |
|
||||||
Customer contract costs |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
The total amortization expense related to customer contract costs for the second quarters of 2025 and 2024 was $
5. DEBT
As of June 30, 2025 and December 31, 2024, our long-term debt was as follows (in thousands):
|
|
June 30, |
|
|
December 31, |
|
||
2025 Credit Agreement: |
|
|
|
|
|
|
||
$ |
|
$ |
|
|
$ |
|
||
Less – deferred financing costs |
|
|
( |
) |
|
|
|
|
2025 Term Loan, net of unamortized discounts |
|
|
|
|
|
|
||
2023 Convertible Notes: |
|
|
|
|
|
|
||
2023 Convertible Notes – senior unsecured convertible notes, due |
|
|
|
|
|
|
||
Less – deferred financing costs |
|
|
( |
) |
|
|
( |
) |
2023 Convertible Notes, net of unamortized discounts |
|
|
|
|
|
|
||
2021 Credit Agreement: |
|
|
|
|
|
|
||
2021 Term Loan, due September 2026, interest at adjusted SOFR plus |
|
|
|
|
|
|
||
Less – deferred financing costs |
|
|
|
|
|
( |
) |
|
2021 Term Loan, net of unamortized discounts |
|
|
|
|
|
|
||
$ |
|
|
|
|
|
|
||
Total debt, net of unamortized discounts |
|
|
|
|
|
|
||
Current portion of long-term debt |
|
|
|
|
|
( |
) |
|
Long-term debt, net of unamortized discounts |
|
$ |
|
|
$ |
|
||
2025 Credit Agreement. In March 2025, we entered into a $
Upon execution of the 2025 Credit Agreement, we withdrew $
12
The interest rates under the 2025 Credit Agreement are based upon our choice of an adjusted Secured Overnight Financing Rate ("SOFR") plus an applicable margin of
The 2025 Credit Agreement requires quarterly commitment fee payments and interest payments based on the interest election period. The 2025 Credit Agreement contains certain customary prepayment or repayment provisions. As specified in the 2025 Credit Agreement, if certain customary events were to occur, we may be required to pay all amounts outstanding under the 2025 Credit Agreement, together with interest payable thereon.
The 2025 Credit Agreement contains customary affirmative covenants. In addition, the 2025 Credit Agreement has customary negative covenants that places limits on our ability to: (i) incur additional indebtedness; (ii) create liens on its property; (iii) make investments; (iv) enter into mergers and consolidations; (v) sell assets; (vi) declare dividends or repurchase shares; (vii) engage in certain transactions with affiliates; (viii) prepay certain indebtedness; and (ix) issue capital stock of subsidiaries. We must also meet a total net leverage ratio financial covenant.
During the second quarter of 2025, we repaid $
In conjunction with the closing of the 2025 Credit Agreement, we incurred total debt financing costs of $
2023 Convertible Notes. The 2023 Convertible Notes will be convertible at the option of the noteholders before June 15, 2028, upon the occurrence of certain events. On or after June 15, 2028, and until the close of business on the second scheduled trading day immediately preceding September 15, 2028, the maturity date, noteholders may convert all or any portion of their notes at any time regardless of these conditions.
The 2023 Convertible Notes will be convertible at an initial conversion rate of
We are required to satisfy our conversion obligation as follows: (i) paying cash up to the aggregate principal amount of notes to be converted; and (ii) to the extent the value of our conversion obligation exceeds the par value, we will satisfy the remaining conversion obligation in our common stock, cash, or a combination thereof, at our election. As of June 30, 2025, none of the conditions to early convert have been met.
We may not redeem the 2023 Convertible Notes prior to September 21, 2026. On or after
In connection with the pricing of the 2023 Convertible Notes, we entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain of the initial purchasers of the 2023 Convertible Notes and other financial institutions (collectively, the “Option Counterparties”). As of June 30, 2025, all the Capped Call Transactions were outstanding and cover, subject to anti-dilution adjustments substantially similar to those applicable to the 2023 Convertible Notes,
13
Other. We finance certain of our internal use software. During the second quarter of 2025, we entered into financing agreements at a total cost of $
Additionally, during the first quarter of 2025, we extended our agreement with our outsourced computing services provider (see Note 8) and elected to extend our current data center environment through 2028, which required us to reassess the lease classification. As a result, as of June 30, 2025, we have a finance lease right-of-use asset of $
6. ACQUISITIONS
iCheckGateway.com, LLC. On
The iCG acquisition includes provisions for up to $
DGIT Systems Pty Ltd. On
The DGIT acquisition includes provisions for up to approximately $
7. RESTRUCTURING AND REORGANIZATION CHARGES
During the second quarters of 2025 and 2024, we recorded restructuring and reorganization charges of $
During the six months ended June 30, 2025, we implemented the following restructuring and reorganizational activities:
14
The activity in the restructuring and reorganization reserves during the six months ended June 30, 2025 was as follows (in thousands):
|
|
Termination Benefits |
|
|
Other |
|
|
Total |
|
|||
January 1, 2025, balance |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Charged to expense during period |
|
|
|
|
|
|
|
|
|
|||
Cash payments |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Adjustment for accelerated depreciation |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Other |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
June 30, 2025, balance |
|
$ |
|
|
$ |
|
|
$ |
|
|||
During the first quarter of 2025, we paid $
As of June 30, 2025, all restructuring and reorganization reserves were included in current liabilities.
8. COMMITMENTS, GUARANTEES AND CONTINGENCIES
Service Agreements. In March 2025, we extended our agreement with Ensono, Inc. to provide us with outsourced computing services through December 31, 2032. As part of this extension, we elected to extend our current data center environment through 2028, which resulted in the lease classification of the data center environment being reassessed. The data center environment is now being accounted for as a finance lease right-of-use asset on our Balance Sheet with the corresponding liability in other current and non-current liabilities.
Guarantees. In the ordinary course of business, we may provide guarantees in the form of bid bonds or performance bonds. As of June 30, 2025, we had $
We have performance guarantees in the form of surety bonds and standby letters of credit, along with money transmitter bonds, issued through third-parties that are not required to be reflected on our Balance Sheets. As of June 30, 2025, we had performance guarantees of $
Warranties. We generally warrant that our solutions and related offerings will conform to published specifications, or to specifications provided in an individual customer arrangement, as applicable. The typical warranty period is
Solution and Services Indemnifications. Arrangements with our customers generally include an indemnification provision that will indemnify and defend a customer in actions brought against the customer that claim our products and/or services infringe upon a copyright, trade secret, or valid patent. Historically, we have not incurred any significant costs related to such indemnification claims, and as a result, do not maintain a reserve for such exposure.
Claims for Company Non-performance. Our arrangements with our customers typically limit our liability for breach to a specified amount of the direct damages incurred by the customer resulting from the breach. From time-to-time, these arrangements may also include provisions for possible liquidated damages or other financial remedies for our non-performance, or in the case of certain of our solutions, provisions for damages related to service level performance requirements. The service level performance requirements typically relate to system availability and timeliness of service delivery. As of June 30, 2025, we believe we have adequate reserves, based on our historical experience, to cover any reasonably anticipated exposure as a result of our non-performance for any past or current arrangements with our customers.
Sales and Use Tax. In the ordinary course of business, we are, from time to time, subject to audits performed by state taxing authorities. We continually assess our sales and use tax exposure and as of June 30, 2025, we believe that we have adequate reserves to cover any taxes owed and related penalties and interest. While we believe that the assumptions and estimates used to determine these liabilities are reasonable, the ultimate outcome of these matters cannot be certain, and we will adjust these estimated liabilities as new information becomes available.
15
Indemnifications Related to Officers and the Board of Directors. Other guarantees include promises to indemnify, defend, and hold harmless our directors, and certain officers. Such indemnification covers any expenses and liabilities reasonably incurred by a person, by reason of the fact that such person is, was, or has agreed to be a director or officer, in connection with the investigation, defense, and settlement of any threatened, pending, or contemplated action, suit, proceeding, or claim. We maintain directors’ and officers’ (“D&O”) insurance coverage to protect against such losses. We have not historically incurred any losses related to these types of indemnifications and are not aware of any pending or threatened actions or claims against any officer or member of our Board of Directors (the "Board"). As a result, we have not recorded any liabilities related to such indemnifications as of June 30, 2025. In addition, as a result of the insurance policy coverage, we believe these indemnification agreements are not significant to our results of operations.
9. EARNINGS PER COMMON SHARE
Basic and diluted earnings per common share (“EPS”) amounts are presented on the face of our unaudited Condensed Consolidated Statements of Income (the "Income Statements").
The reconciliation of the basic and diluted EPS denominators related to common shares is included in the following table (in thousands):
|
|
Quarter Ended |
|
|
Six Months Ended |
|
|
||||||||||
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
|
||||
Basic weighted-average common shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dilutive effect of restricted common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Diluted weighted-average common shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
The dilutive effect of time-based awards is computed using the treasury stock method. The dilutive effect of performance-based and market-based awards is computed based on the number of shares that would be issued as if the end of the reporting period was the end of the performance period. The dilutive effect of the 2023 Convertible Notes is computed using the if-converted method and will only have an effect in those quarterly periods in which our average stock price exceeds the current effective conversion price.
Potentially dilutive common shares related to non-participating unvested restricted stock were excluded from the computation of diluted EPS, as the effect was anti-dilutive, and were not material in any period presented.
10. STOCKHOLDERS’ EQUITY AND EQUITY COMPENSATION PLANS
Stock Repurchase Program. We currently have a stock repurchase program, approved by our Board, authorizing us to repurchase shares of our common stock from time-to-time as market and business conditions warrant (the “Stock Repurchase Program”). During the second quarters of 2025 and 2024, we repurchased approximately
As of June 30, 2025, the total remaining value of shares available for repurchase under the Stock Repurchase Program totaled $
Stock Repurchases for Tax Withholdings. In addition to the above-mentioned stock repurchases, during the second quarters of 2025 and 2024, we repurchased and then cancelled approximately
Cash Dividends. During the second quarter of 2025, our Board approved a quarterly cash dividend of $
16
Stock-Based Awards. During the six months ended June 30, 2025 we granted restricted stock awards to key members of management in the form of: (i) performance-based awards of approximately
During the six months ended June 30, 2025, we also granted restricted stock awards to key members of management in the form of time-based awards of approximately
We recorded stock-based compensation expense for the second quarters of 2025 and 2024 of $
11. SUBSEQUENT EVENT
On July 5, 2025, CSG terminated a master services agreement (the “MSA”) for one of our implementation projects in the Latin America region on the basis that the customer unlawfully renounced its obligations under the MSA. At this time, there is no work being performed on the project and CSG intends to pursue any and all available remedies.
During the six months ended June 30, 2025, we recognized $
17
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The information contained in this MD&A should be read in conjunction with the Financial Statements and Notes thereto included in this Form 10-Q and the audited consolidated financial statements and notes thereto in our 2024 10-K.
Forward-Looking Statements
This report contains a number of forward-looking statements relative to our future plans and our expectations concerning our business and the industries we serve. These forward-looking statements are based on assumptions about a number of important factors and involve risks and uncertainties that could cause actual results to differ materially from estimates contained in the forward-looking statements. Some of the risks that are foreseen by management are outlined within Part I, Item 1A. Risk Factors of our 2024 10-K. Readers are strongly encouraged to review that section closely in conjunction with MD&A.
Company Overview
We are a purpose-driven SaaS platform company that enables global companies in a wide variety of industry verticals to simplify their complex customer engagement and how they monetize in the digital age. Our industry leading revenue management and digital monetization, customer experience, and payments solutions make ordinary customer experiences extraordinary. Our cloud-first architecture and customer-centric approach help companies around the world acquire, monetize, engage, and retain the B2B (business-to-business), B2C (business-to-consumer), and B2B2X (business-to-business-to-consumer) customers. As brands reimagine their engagement strategies in an increasingly connected world, we sit at the center of a complex, multi-sided business model ensuring monetization and customer engagement is handled at all levels of the ecosystem.
We leverage 40 years of experience to deliver innovative customer engagement solutions for every stage of the customer lifecycle so our customers can deliver an outstanding customer experience that adapts to their customers’ rapidly changing demands. Our diverse, worldwide workforce draws from real-world knowledge and extensive expertise to design and implement business solutions that make our customers’ hardest decisions simpler so that they can focus on delivering differentiated and real-time experiences to their customers. As a global technology leader, we aspire to envision, invent, and shape a better, more future-ready world.
We focus our research and development (“R&D”) and acquisition investments on expanding our offerings in a timely and efficient manner to address the complex, transformative needs of our customers. Our scalable, modular, and flexible solutions combined with our domain expertise and our ability to effectively migrate customers to our solutions, provide the industry with proven solutions to improve their profitability and consumers’ experiences. We have specifically architected our solutions to offer a phased, incremental approach to transforming our customers' businesses, thereby reducing the business interruption risk associated with this evolution.
As discussed in Note 2 to our Financial Statements, we generate a majority of our revenue from the global communications markets; however, we serve an expanding group of customers in other markets including retail, financial services, healthcare, insurance, and government entities.
We are a member of the S&P Small Cap 600 and Russell 2000 indices.
Macroeconomic Outlook
Current geopolitical and economic uncertainties, including inflation, tariffs and changes in trade policy, supply chain disruptions, and labor shortages, could adversely affect our business. The potential impact to our business could depend on multiple factors, including the duration and potential expansion of tariffs, retaliatory measures by impacted exporting countries, inflationary effects, and broader macroeconomic responses. Because we cannot predict the impact these events could have on current economic conditions or our business, there is no assurance that we will be able to fully mitigate the financial and competitive impacts related to such uncertainties, any of which could have a material adverse effect on our results of operations.
18
Management Overview of Quarterly Results
Second Quarter Highlights. A summary of our results of operations for the second quarter of 2025, when compared to the second quarter of 2024, was as follows (in thousands, except per share amounts and percentages):
|
|
Quarter Ended |
|
|
|||||
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
|
||
Revenue |
|
$ |
297,128 |
|
|
$ |
290,318 |
|
|
Transaction fees (1) |
|
|
25,866 |
|
|
|
24,207 |
|
|
Operating results: |
|
|
|
|
|
|
|
||
Operating income |
|
$ |
29,857 |
|
|
$ |
25,420 |
|
|
Operating margin percentage |
|
|
10.0 |
% |
|
|
8.8 |
% |
|
Diluted EPS |
|
$ |
0.44 |
|
|
$ |
0.48 |
|
|
Supplemental data: |
|
|
|
|
|
|
|
||
Restructuring and reorganization charges (2) |
|
$ |
4,588 |
|
|
$ |
7,099 |
|
|
Acquisition-related costs: |
|
|
|
|
|
|
|
||
Amortization of acquired intangible assets |
|
|
3,458 |
|
|
|
3,393 |
|
|
Earn-out compensation |
|
|
7,806 |
|
|
|
- |
|
|
Transaction-related costs |
|
|
- |
|
|
|
1,036 |
|
|
Stock-based compensation (2) |
|
|
8,762 |
|
|
|
9,193 |
|
|
Revenue. Revenue for the second quarter of 2025 was $297.1 million, a 2.3% increase when compared to revenue of $290.3 million for the second quarter of 2024. The increase in revenue was primarily attributed to the continued growth of our SaaS and related solutions revenue, to include the revenue generated from the iCG business acquired in June of 2024.
Operating Results. Operating income for the second quarter of 2025 was $29.9 million, or a 10.0% operating margin percentage, compared to $25.4 million, or an 8.8% operating margin percentage for the second quarter of 2024. The increase in operating income was mainly attributed to the decrease in restructuring and reorganization charges between years along with the benefits received from the cost efficiency actions taken during 2024 and the first six months of 2025 to optimize and align resources to areas of the business with higher growth profiles.
Diluted EPS. Diluted EPS for the second quarter of 2025 was $0.44 compared to $0.48 for the second quarter of 2024, with the decrease mainly attributed to a higher effective income tax rate in the second quarter of 2025 due primarily to the increase in earn-out compensation related to the DGIT acquisition, for which a valuation allowance has been established for income tax purposes.
Cash and Cash Flows. As of June 30, 2025, we had cash and cash equivalents of $145.9 million, as compared to $136.0 million as of March 31, 2025 and $161.8 million as of December 31, 2024. Our cash flows provided by operating activities for the second quarter of 2025 were $48.8 million. See the Liquidity section below for further discussion of our cash flows.
Significant Customer Relationships
A large percentage of our revenue is generated from a limited number of customers in the global communications industry, with our three largest customers being Charter, Comcast, and DISH Network L.L.C.
Customer Concentration. We have significant customer concentration, with the following two customers exceeding 10% of our revenue (in thousands, except percentages):
|
|
Quarter Ended |
|
|||||||||||||||||||||
|
|
June 30, 2025 |
|
|
March 31, 2025 |
|
|
June 30, 2024 |
|
|||||||||||||||
|
|
Amount |
|
|
% of Revenue |
|
|
Amount |
|
|
% of Revenue |
|
|
Amount |
|
|
% of Revenue |
|
||||||
Charter |
|
$ |
57,667 |
|
|
|
19 |
% |
|
$ |
57,602 |
|
|
|
19 |
% |
|
$ |
60,629 |
|
|
|
21 |
% |
Comcast |
|
|
51,415 |
|
|
|
17 |
% |
|
|
52,759 |
|
|
|
18 |
% |
|
|
54,576 |
|
|
|
19 |
% |
19
The percentages of net billed accounts receivable balances attributable to these customers as of the dates indicated were as follows:
|
|
As of |
|
|||||||||
|
|
June 30, 2025 |
|
|
March 31, 2025 |
|
|
December 31, 2024 |
|
|||
Charter |
|
|
19 |
% |
|
|
20 |
% |
|
|
20 |
% |
Comcast |
|
|
17 |
% |
|
|
17 |
% |
|
|
17 |
% |
See our 2024 10-K for additional discussion of our business relationships and contractual terms with Charter and Comcast.
Risk of Customer Concentration. We expect to continue to generate a large percentage of our future revenue from a limited number of customers. There are inherent risks whenever a large percentage of total revenue is concentrated with a limited number of customers. Should a significant customer: (i) terminate or fail to renew their contracts with us, in whole or in part, for any reason; (ii) significantly reduce the number of customer accounts processed on our solutions, the price paid for our services, or the scope of services that we provide; or (iii) experience financial or operating difficulties, it could have a material adverse effect on our financial position and results of operations.
Contract Termination
It is customary for us to enter into software implementation projects with certain customers. These implementation projects range from relatively short and noncomplex projects to long and complex projects, ranging from several months to several years in duration depending on the specifics of the project.
On July 5, 2025, CSG terminated a master services agreement (the “MSA”) for one of our implementation projects in the Latin America region on the basis that the customer unlawfully renounced its obligations under the MSA. At this time, there is no work being performed on the project and CSG intends to pursue any and all available remedies.
During the six months ended June 30, 2025, we recognized $1.4 million in revenue related to this project. CSG does not expect the termination of this contract to have a material impact on 2025 revenue. As of June 30, 2025, we had accounts receivable of $18.5 million ($1.4 million billed and $17.1 million unbilled) related to this project. As of the date of this filing, CSG does not believe there has been an impairment to the carrying values of the assets and believes such amounts are recoverable per the terms of the MSA or as a matter of common law. However, if we are not successful in collecting the amount expected under the terms of the MSA or as a matter of common law, it is possible that an impairment of these assets could result.
Critical Accounting Policies and Estimates
The preparation of our Financial Statements in conformity with U.S. GAAP requires us to select appropriate accounting policies, and to make judgments and estimates affecting the application of those accounting policies. On an ongoing basis, we evaluate our estimates and assumptions. In applying our accounting policies and estimates, different business conditions or the use of different assumptions may result in materially different amounts reported in our Financial Statements.
We have identified the most critical accounting policies and estimates that affect our financial position and the results of our operations. Those critical accounting policies and estimates were determined by considering the accounting policies that involve the most complex or subjective decisions or assessments. The most critical accounting policies and estimates identified relate to the following items: (i) revenue recognition; (ii) income taxes; and (iii) loss contingencies. These critical accounting policies, as well as our other significant accounting policies, are discussed in our 2024 10-K.
Results of Operations
Revenue. Total revenue for the: (i) second quarter of 2025 was $297.1 million, a 2.3% increase when compared to $290.3 million for the second quarter of 2024; and (ii) six months ended June 30, 2025 was $596.6 million, a 1.9% increase when compared to $585.5 million for the six months ended June 30, 2024.
Revenue by type for the second quarters and six months ended June 30, 2025 and 2024 was as follows (in thousands):
|
|
Quarter Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
||||
SaaS and related solutions |
|
$ |
269,548 |
|
|
$ |
262,658 |
|
|
$ |
539,488 |
|
|
$ |
524,353 |
|
Software and services |
|
|
16,290 |
|
|
|
14,681 |
|
|
|
34,913 |
|
|
|
37,075 |
|
Maintenance |
|
|
11,290 |
|
|
|
12,979 |
|
|
|
22,180 |
|
|
|
24,025 |
|
Total revenue |
|
$ |
297,128 |
|
|
$ |
290,318 |
|
|
$ |
596,581 |
|
|
$ |
585,453 |
|
20
The increases in revenue were primarily due to the continued growth of our SaaS and related solutions revenue, to include the revenue generated from the businesses acquired during the second quarter of 2024. Additionally, revenue for the second quarter of 2025 includes approximately $6 million of revenue recognized from a software license arrangement, which was offset by lower professional services revenue.
We use the location of the customer as the basis of attributing revenue to individual countries. Revenue by geographic regions for the second quarters and six months ended June 30, 2025 and 2024 was as follows (in thousands):
|
|
Quarter Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
||||
Americas (principally the U.S.) |
|
$ |
253,164 |
|
|
$ |
258,035 |
|
|
$ |
512,511 |
|
|
$ |
512,573 |
|
Europe, Middle East, and Africa |
|
|
31,855 |
|
|
|
18,989 |
|
|
|
58,890 |
|
|
|
45,818 |
|
Asia Pacific |
|
|
12,109 |
|
|
|
13,294 |
|
|
|
25,180 |
|
|
|
27,062 |
|
Total revenue |
|
$ |
297,128 |
|
|
$ |
290,318 |
|
|
$ |
596,581 |
|
|
$ |
585,453 |
|
Total Operating Expenses. Total operating expenses for the: (i) second quarter of 2025 were $267.3 million, a 0.9% increase when compared to $264.9 million for the second quarter of 2024; and (ii) six months ended June 30, 2025 were $537.3 million, a 1.7% increase when compared to $528.2 million for the six months ended June 30, 2024. The increases in total operating expenses were primarily a result of the increases in acquisition-related expenses, mainly attributed to the approximately $7 million of DGIT earn-out compensation recognized in the second quarter of 2025, along with the additional costs of the acquired businesses. These additional costs were offset to a certain degree by the cost efficiency actions taken during 2024 and the first six months of 2025 to optimize capacity and align resources to areas of the business with higher growth profiles.
The components of total operating expenses are discussed in more detail below.
Cost of Revenue (Exclusive of Depreciation). The cost of revenue for the: (i) second quarter of 2025 was $150.1 million, a 1.8% decrease when compared to $152.9 million for the second quarter of 2024; and (ii) six months ended June 30, 2025 was $304.6 million, a 2.0% decrease when compared to $310.8 million for the six months ended June 30, 2024. These decreases in cost of revenue are mainly attributed to lower employee-related costs, due to the reallocation of resources to development projects, deferred costs related to SaaS implementation projects, and our cost efficiency actions, discussed above. These decreases are partially offset by the increased costs reflective of the increases in SaaS and related solutions revenue between periods, to include the acquired businesses. Total cost of revenue as a percentage of revenue for the: (i) second quarters of 2025 and 2024 was 50.5% and 52.7%, respectively; and (ii) six months ended June 30, 2025 and 2024 was 51.1% and 53.1%, respectively.
R&D Expense (Exclusive of Depreciation). R&D expense for the: (i) second quarter of 2025 was $40.4 million, a 5.2% increase when compared to $38.4 million for the second quarter of 2024; and (ii) six months ended June 30, 2025 was $81.3 million, a 9.1% increase when compared to $74.5 million for the six months ended June 30, 2024. The increases in R&D expense between periods are attributed primarily to increased R&D investments in our faster growing SaaS solutions, such as Ascendon monetization and payments, and the impact of the acquisitions that we closed in 2024. Delivering future-ready solutions that have best-in-industry innovation (including new AI capabilities) is a key competitive advantage for us. As a percentage of total revenue, R&D expense for the: (i) second quarters of 2025 and 2024 was 13.6% and 13.2%, respectively; and (ii) six months ended June 30, 2025 and 2024 was 13.6% and 12.7%, respectively.
Selling, General, and Administrative ("SG&A") Expense (Exclusive of Depreciation). SG&A expense for the: (i) second quarter of 2025 was $67.5 million, a 10.4% increase when compared to $61.2 million for the second quarter of 2024; and (ii) six months ended June 30, 2025 was $129.8 million, a 5.7% increase when compared to $122.9 million for the six months ended June 30, 2024. These increases are mainly attributed to approximately $7 million of DGIT earn-out compensation recognized in the second quarter of 2025. As a percentage of total revenue, SG&A expense for the: (i) second quarters of 2025 and 2024 was 22.7% and 21.1%, respectively; and (ii) six months ended June 30, 2025 and 2024 was 21.8% and 21.0%, respectively.
Restructuring and Reorganization Charges. Restructuring and reorganization charges for the: (i) second quarter of 2025 were $4.6 million, a $2.5 million decrease when compared to $7.1 million for the second quarter of 2024; and (ii) six months ended June 30, 2025 was $12.0 million, a $2.9 million increase when compared to $9.1 million for the six months ended June 30, 2024. The restructuring and reorganization charges for the six months ended June 30, 2025 relate mainly to cost efficiency actions to optimize our capacity and better align resources along with costs associated with the closure of our design and delivery center in Crawfordville, Florida. These activities have resulted in restructuring charges of $9.7 million related to involuntary terminations.
See Note 7 to our Financial Statements for additional discussion.
21
Operating Income. Operating income for the: (i) second quarter of 2025 was $29.9 million, or 10.0% of total revenue, compared to $25.4 million, or 8.8% of total revenue for the second quarter of 2024; and (ii) six months ended June 30, 2025 was $59.2 million, or 9.9% of total revenue, compared to $57.2 million, or 9.8% of total revenue, for the six months ended June 30, 2024. The increases in operating income are mainly attributed to the benefits received from the cost efficiency actions taken during 2024 and the first six months of 2025 to optimize and align resources to areas of the business with higher growth profiles.
Interest Income. Interest income for the: (i) second quarter of 2025 was $1.1 million, a $1.0 million decrease when compared to $2.1 million for the second quarter of 2024; and (ii) six months ended June 30, 2025 was $3.0 million, a $1.7 million decrease when compared to $4.7 million for the six months ended June 30, 2024. These decreases are primarily attributed to lower cash balances being swept into overnight money market accounts on a daily basis.
Loss on Extinguishment of Debt. In March 2025, we entered into the 2025 Credit Agreement, which replaced the 2021 Credit Agreement (see Note 5 to our Financial Statements). As a result, we incurred a loss of $0.5 million related to the write-off of debt issuance costs.
Other, net. Other, net for the: (i) second quarter of 2025 was $3.6 million of other expense, a $3.8 million change from $0.2 million of other income for the second quarter of 2024; and (ii) six months ended June 30, 2025 was $5.8 million of other expense, a $6.5 million change when compared to $0.7 million of other income for the six months ended June 30, 2024. These changes were primarily attributed to foreign currency movements.
Income Tax Provision. The effective income tax rates for the: (i) second quarters of 2025 and 2024 were 38% and 31%, respectively; and (ii) six months ended June 30, 2025 and 2024 were 31% and 30%, respectively. Our estimated full year 2025 effective income tax rate is approximately 30%, with the increase in the full year rate attributed to the DGIT earn-out compensation, for which a valuation allowance has been established for income tax purposes (see Note 6 for further discussion of the DGIT earn-out payments).
Liquidity
Cash and Liquidity. As of June 30, 2025, our principal sources of liquidity included cash and cash equivalents of $145.9 million, compared to $136.0 million as of March 31, 2025, and $161.8 million as of December 31, 2024.
During the first quarter of 2025, we entered into the 2025 Credit Agreement, which consists of a $600.0 million five-year revolver, the 2025 Revolver, which replaced our $600.0 million five-year credit agreement entered into September 2021, the 2021 Credit Agreement. As of June 30, 2025, we had $125.0 million outstanding on the 2025 Revolver. The 2025 Credit Agreement contains customary affirmative, negative, and financial covenants. As of June 30, 2025, and the date of this filing, we believe we are in compliance with the provisions of the 2025 Credit Agreement.
Our cash and cash equivalents balances as of the end of the indicated periods were located in the following geographical regions (in thousands):
|
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||
Americas (principally the U.S.) |
|
$ |
89,023 |
|
|
$ |
102,417 |
|
Europe, Middle East, and Africa |
|
|
41,089 |
|
|
|
43,609 |
|
Asia Pacific |
|
|
15,763 |
|
|
|
15,763 |
|
Total cash and cash equivalents |
|
$ |
145,875 |
|
|
$ |
161,789 |
|
We generally have ready access to substantially all of our cash and cash equivalents, but may face limitations on moving cash out of certain foreign jurisdictions due to currency controls and potential negative economic consequences.
As of June 30, 2025 and December 31, 2024, we had $1.8 million and $1.7 million, respectively, of cash restricted as to use primarily to collateralize guarantees included in our non-current asset balance. In addition, as of June 30, 2025 and December 31, 2024, we had $256.1 million and $343.2 million, respectively, of settlement and merchant reserve assets which are deemed restricted due to contractual restrictions with the merchants and restrictions arising from our policy and intention. It has historically been our policy to segregate settlement and merchant reserve assets from our operating cash balances and we intend to continue to do so.
Cash Flows from Operating Activities. We calculate our cash flows from operating activities beginning with net income, adding back the impact of non-cash items or non-operating activity (e.g., depreciation, amortization, impairments, gain/loss on items such as investments, lease modifications, and debt extinguishments/conversions, unrealized foreign currency transactions gain/loss, deferred income taxes, stock-based compensation, etc.), and then factoring in the impact of changes in operating assets and liabilities. See our 2024 10-K for a description of the primary uses and sources of our cash flows from operating activities.
22
Our cash flows from operating activities, broken out between operations and changes in operating assets and liabilities, for the indicated quarterly periods are as follows (in thousands):
|
|
Operations |
|
|
Changes in Operating Asset and Liabilities |
|
|
Net Cash Provided by (Used In) Operating Activities – Totals |
|
|||
Cash Flows from Operating Activities: |
|
|
|
|
|
|
|
|
|
|||
2025: |
|
|
|
|
|
|
|
|
|
|||
March 31 (1) |
|
$ |
40,619 |
|
|
$ |
(29,150 |
) |
|
$ |
11,469 |
|
June 30 |
|
|
38,999 |
|
|
|
(1,673 |
) |
|
|
37,326 |
|
Total |
|
$ |
79,618 |
|
|
$ |
(30,823 |
) |
|
$ |
48,795 |
|
|
|
|
|
|
|
|
|
|
|
|||
2024: |
|
|
|
|
|
|
|
|
|
|||
March 31 (2) |
|
$ |
51,655 |
|
|
$ |
(81,006 |
) |
|
$ |
(29,351 |
) |
June 30 |
|
|
35,625 |
|
|
|
7,480 |
|
|
|
43,105 |
|
Total |
|
$ |
87,280 |
|
|
$ |
(73,526 |
) |
|
$ |
13,754 |
|
Variations in our net cash provided by (used in) operating activities are generally related to the changes in our operating assets and liabilities (related mostly to fluctuations in timing of customer payments and changes in accrued expenses), and generally over longer periods of time, do not significantly impact our cash flows from operations.
Significant fluctuations in key operating assets and liabilities between 2025 and 2024 that impacted our cash flows from operating activities are as follows:
Billed Trade Accounts Receivable
Management of our billed trade accounts receivable is one of the primary factors in maintaining strong cash flows from operating activities. These balances include significant billings for several non-revenue items (primarily postage, sales tax, and deferred revenue items). As a result, we evaluate our performance in collecting our billed trade accounts receivable through our calculation of Days Billings Outstanding (“DBO”) rather than a typical Days Sales Outstanding (“DSO”) calculation.
Our gross and net billed trade accounts receivable and related allowance for expected losses (“Allowance”) as of the end of the indicated quarterly periods, and the related DBOs for the quarters then ended, are as follows (in thousands, except DBOs):
Quarter Ended |
|
Gross |
|
|
Allowance |
|
|
Net Billed |
|
|
DBOs |
|
||||
2025: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
March 31 |
|
$ |
269,326 |
|
|
$ |
(4,152 |
) |
|
$ |
265,174 |
|
|
|
66 |
|
June 30 |
|
|
262,975 |
|
|
|
(3,959 |
) |
|
|
259,016 |
|
|
|
66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
2024: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
March 31 |
|
$ |
281,051 |
|
|
$ |
(5,692 |
) |
|
$ |
275,359 |
|
|
|
67 |
|
June 30 |
|
|
270,934 |
|
|
|
(4,720 |
) |
|
|
266,214 |
|
|
|
66 |
|
As of June 30, 2025 and 2024, approximately 94% and 95%, respectively, of our net billed trade accounts receivable balances were less than 60 days past due.
We may experience adverse impacts to our DBOs if and when customer payment delays occur. However, the recurring monthly payments that cross a reporting period-end do not raise collectability concerns, as payment is generally received subsequent to quarter-end. All other changes in our gross and net billed accounts receivable reflect the normal fluctuations in the timing of customer payments at quarter-end, as evidenced by our relatively consistent DBO metric.
23
As a global provider of solutions and services, a portion of our trade accounts receivable balance relates to international customers. This diversity in the geographic composition of our customer base may adversely impact our DBOs as longer billing cycles (i.e., billing terms and cash collection cycles) are an inherent characteristic of international software and professional services transactions. As a result, we may experience fluctuations in our trade accounts receivable balance as our ability to invoice and collect arrangement fees is dependent upon, among other things: (i) the completion of various customer administrative matters, local country billing protocols and processes (including local cultural differences), and non-customer administrative matters; (ii) meeting certain contractual invoicing milestones and dates; (iii) the overall project status in certain situations in which we act as a subcontractor to another vendor on a project; or (iv) currency controls in certain foreign jurisdictions.
Unbilled Trade Accounts Receivable
Unbilled trade accounts receivable (current and non-current) increased $10.6 million to $90.8 million as of June 30, 2025, from $80.2 million as of December 31, 2024. These unbilled trade accounts receivable balances relate primarily to implementation projects where various milestone billing dates have not yet been reached or are delayed and to timing related to billing cutoff or contractual billing dates. As discussed in Contract Termination above, as of June 30, 2025, $17.1 million of the unbilled trade accounts receivable balance is related to one of our implementation projects. Unbilled trade accounts receivable are an inherent characteristic of certain software and services transactions and may fluctuate between quarters, as these types of transactions typically have scheduled invoicing terms over several quarters, as well as certain milestone billing events.
Income Taxes Receivable/Payable
Net income taxes receivable/payable (current and non-current) as of June 30, 2025 was a net income taxes receivable balance of $7.8 million, compared to a net income taxes payable balance of $7.9 million at December 31, 2024. This net $15.7 million change was primarily due to the timing of our estimated federal and state income tax payments.
Accrued Employee Compensation
Accrued employee compensation decreased $6.9 million to $61.0 million as of June 30, 2025, from $67.9 million as of December 31, 2024, due primarily to the payment of 2024 employee incentive compensation during the first quarter of 2025 that was fully accrued at December 31, 2024, partially offset by the accrual for 2025 employee incentive compensation.
Cash Flows from Investing Activities. Our typical investing activities consist of purchases of software, property, and equipment, which are discussed below.
Purchases of Software, Property, and Equipment
Our capital expenditures for the six months ended June 30, 2025 and 2024 for software, property, and equipment were $7.2 million and $9.1 million, respectively, and consisted principally of investments in software and related equipment.
Business Combinations, Net of Cash and Settlement Assets Acquired
The cash paid for the businesses acquired during the second quarter of 2024, less cash and settlement assets acquired, resulted in net cash provided by business combinations for the six months ended June 30, 2024 of $17.3 million.
Cash Flows from Financing Activities. Our financing activities typically consist of activities with our common stock, various debt-related transactions, and settlement and merchant reserve activity.
Cash Dividends Paid on Common Stock
During the six months ended June 30, 2025 and 2024, our Board approved dividends totaling $18.6 million and $17.6 million, respectively, and we made dividend payments of $18.5 million and $18.1 million, respectively, with the differences between the amount approved and paid attributed to dividends accrued on unvested incentive shares that are paid upon vesting.
Repurchase of Common Stock
During the six months ended June 30, 2025 and 2024, we repurchased approximately 428,000 and 404,000 shares of our common stock, respectively, under our Stock Repurchase Program for $26.7 million and $19.3 million, respectively.
Additionally, outside of our Stock Repurchase Program, during the six months ended June 30, 2025 and 2024, we repurchased from our employees and then canceled approximately 219,000 and 168,000 shares of our common stock, respectively, for $13.8 million and $8.9 million, respectively, in connection with minimum tax withholding requirements resulting from the vesting of restricted stock under our stock incentive plans.
24
Through the six months ended June 30, 2025 and 2024, we paid $40.5 million and $27.9 million, respectively, for our total repurchases of common stock, with any differences when compared to the amounts purchased attributed to the timing of the settlement and the excise tax imposed on share repurchases.
See Note 10 to our Financial Statements for additional discussion of our repurchases of common stock.
Long-Term Debt
During the first quarter of 2025, we borrowed $10.0 million from our 2021 Revolver for general corporate purposes. In March 2025, we entered into the 2025 Credit Agreement and as a result, we borrowed $140.6 million under the 2025 Revolver and repaid: (i) the outstanding 2021 Term Loan principal balance of $125.6 million; (ii) the outstanding 2021 Revolver balance of $10.0 million; and (iii) $2.3 million of debt financing costs; with the remainder used for general corporate purposes. Subsequently, we have repaid $15.6 million of the 2025 Revolver, leaving us with an outstanding balance of $125.0 million.
During the second quarter of 2024, we made principal repayments on our 2021 Term Loan of $3.8 million.
See Note 5 to our Financial Statements for additional discussion of our long-term debt.
Settlement and Merchant Reserve Activity
During the six months ended June 30, 2025 and 2024, we had net settlement and merchant reserve activity of $(89.1) million and $(88.7) million, respectively, related to the cash collected, held on behalf, and paid to our merchants related to our payments services and the net change in deposits held on behalf of our merchants. These balances can significantly fluctuate between periods due to activity at the end of the period and the day in which the period ends.
See Note 2 to our Financial Statements for additional discussion of our settlement and merchant reserves.
Off-Balance Sheet Arrangements
Our off-balance sheet arrangements are mainly limited to money transmitter bonds and performance bonds. These arrangements do not have a material impact and are not reasonably likely to have a material future impact to our financial condition, results of operations, liquidity, capital expenditures, or capital resources. See Note 8 to our Financial Statements for additional information on these guarantees.
Capital Resources
The following are the key items to consider in assessing our sources and uses of capital resources:
Current Sources of Capital Resources. Below are the key items to consider in assessing our current sources of capital resources:
25
Uses/Potential Uses of Capital Resources. Below are the key items to consider in assessing our uses/potential uses of capital resources:
Under our Stock Repurchase Program, we may repurchase shares in the open market or in privately negotiated transactions, including through an accelerated stock repurchase plan or under a SEC Rule 10b5-1 plan. The actual timing and amount of share repurchases are dependent on the current market conditions and other business-related factors. Our common stock repurchases are discussed in more detail in Note 10 to our Financial Statements.
During the six months ended June 30, 2025, we repurchased approximately 428,000 shares of our common stock for $26.7 million (weighted-average price of $62.39 per share) under our Stock Repurchase Program.
Outside of our Stock Repurchase Program, during the six months ended June 30, 2025, we repurchased from our employees and then cancelled approximately 219,000 shares of our common stock for $13.8 million in connection with minimum tax withholding requirements resulting from the vesting of restricted common stock under our stock incentive plans.
During the six months ended June 30, 2025, our Board declared dividends totaling $18.6 million. Going forward, we expect to pay cash dividends each year in January, April, July, and October, with the amount and timing subject to our Board’s approval.
We expect to return in excess of $100.0 million to our shareholders through combined common stock repurchases and cash dividends in 2025.
As part of our growth strategy, we are continually evaluating potential business and/or asset acquisitions and investments in market share expansion with our existing and potential new customers and expansion into verticals outside the global communications market.
During the first quarter of 2025, we entered into a new agreement with our outsourced data center environment provider in which we elected to maintain our current data center environment through 2028. As a result, the lease classification of the data center environment was reassessed and accounted for as a finance lease. As a result, as of June 30, 2025, we have a finance lease right-of-use asset of $10.6 million. During the six months ended June 30, 2025, we have made finance lease payments of $0.9 million.
26
2025 Credit Agreement. The mandatory payments under our 2025 Credit Agreement for the next twelve months are the cash interest expense (based upon then-current interest rates) for the 2025 Revolver (assuming no further amounts are borrowed, and the amount is not paid down) of $7.3 million.
2023 Convertible Notes. The 2023 Convertible Notes are convertible at the option of the note holders before June 15, 2028 upon the occurrence of certain events, however, there are no scheduled conversion triggers over the next twelve months. As a result, we expect our required debt service cash outlay during the next twelve months for the 2023 Convertible Notes to be limited to interest payments of $16.5 million.
Our long-term debt obligations are discussed in more detail in Note 5 to our Financial Statements.
In summary, we expect to continue to have material needs for capital resources going forward, as noted above. We believe that our current cash and cash equivalents balances and our 2025 Revolver, together with cash expected to be generated in the future from our current operating activities, will be sufficient to meet our anticipated capital resource requirements for at least the next twelve months. We believe we could obtain additional capital through refinancing options or other debt sources which may be available to us if deemed appropriate.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the potential loss arising from adverse changes in market rates and prices. As of June 30, 2025, we are exposed to various market risks, including changes in interest rates, fluctuations and changes in the market value of our cash equivalents and settlement and merchant reserve assets, and changes in foreign currency exchange rates. We have not historically entered into derivatives or other financial instruments for trading or speculative purposes.
Interest Rate Risk
Long-Term Debt. The interest rate on our 2023 Convertible Notes is fixed, and thus, as it relates to our convertible debt borrowings, we are not exposed to changes in interest rates.
The interest rates on our 2025 Credit Agreement are based upon an adjusted SOFR rate (including a 0.10% credit spread adjustment) plus an applicable margin, or an ABR plus an applicable margin. See Note 5 to our Financial Statements for further details related to our long-term debt.
A hypothetical adverse change of 10% in the June 30, 2025 adjusted SOFR rate would not have a material impact upon our results of operations.
Market Risk
Cash and Cash Equivalents. Our cash and cash equivalents as of June 30, 2025 and December 31, 2024 were $145.9 million and $161.8 million, respectively. Certain of our cash balances are swept into overnight money market accounts on a daily basis, and at times, excess funds may be invested in low-risk institutional money market funds held at a major bank. We have minimal market risk for our cash and cash equivalents due to the relatively short maturities of the instruments.
Settlement and Merchant Reserve Assets. We are exposed to market risk associated with cash held on behalf of our merchants related to our payment processing services. As of June 30, 2025 and December 31, 2024, we had $256.1 million and $343.2 million, respectively, of cash collected on behalf of our merchants. The cash is held in accounts with various major financial institutions in the U.S. and Canada in an amount equal to at least 100% of the aggregate amount owed to our merchants. These balances can significantly fluctuate between periods due to activity at the end of the period and the day in which the period ends. Certain settlement assets are swept into overnight money market accounts on a daily basis.
Long-Term Debt. The fair value of our convertible debt is exposed to market risk. We do not carry our convertible debt at fair value but present the fair value for disclosure purposes (see Note 2 to our Financial Statements). Generally, the fair value of our convertible debt is impacted by changes in interest rates and changes in the price and volatility of our common stock. As of June 30, 2025, the fair value of the 2023 Convertible Notes was estimated at $481.3 million, using quoted market prices.
27
Foreign Currency Exchange Rate Risk
Due to foreign operations around the world, our financial statements are exposed to foreign currency exchange risk due to the fluctuations in the value of currencies in which we conduct business. Our principal currency exposures include the British Pound, Euro, Australian Dollar, Saudi Riyal, and South African Rand. While we attempt to maximize natural hedges by incurring expenses in the same currency in which we contract revenue, the related expenses for that revenue could be in one or more differing currencies than the revenue stream. In particular, if the U.S. Dollar were to strengthen it would reduce the reported amount of our foreign-denominated cash, cash equivalents, trade receivables, revenue, and expenses that we translate into U.S. Dollars and report in our consolidated financial statements for, and as of the end of, each reporting period.
During the six months ended June 30, 2025, we generated approximately 88% of our revenue in U.S. dollars. We expect that, in the foreseeable future, we will continue to generate a very large percentage of our revenue in U.S. dollars.
We have analyzed our foreign currency exposure as of June 30, 2025. A hypothetical adverse change of 10% in the June 30, 2025 exchange rates would not have had a material impact upon our results of operations.
Item 4. Controls and Procedures
(a) Disclosure Controls and Procedures
As required by Rule 13a-15(b), our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), conducted an evaluation as of the end of the period covered by this report of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e). Based on that evaluation, the CEO and CFO concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.
(b) Internal Control Over Financial Reporting
As required by Rule 13a-15(d), our management, including the CEO and CFO, also conducted an evaluation of our internal control over financial reporting, as defined by Rule 13a-15(f), to determine whether any changes occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, the CEO and CFO concluded that there has been no such change during the quarter covered by this report.
28
CSG SYSTEMS INTERNATIONAL, INC.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time-to-time, we are involved in litigation relating to claims arising out of our operations in the normal course of business. In the opinion of our management, we are not presently a party to any material pending legal proceedings.
Item 1A. Risk Factors
A discussion of our risk factors can be found in Item 1A. Risk Factors in our 2024 10-K. There were no material changes to the risk factors disclosed in our 2024 10-K during the second quarter of 2025. Reference is made to “Macroeconomic Outlook” in Item 2. Management Discussion and Analysis of Financial Condition and Results of Operations for additional potential risks and uncertainties.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table presents information with respect to purchases of our common stock made during the second quarter of 2025 by CSG Systems International, Inc. or any “affiliated purchaser” of CSG Systems International, Inc., as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Period |
|
Total Number of Shares Purchased (1) (2) |
|
|
Average Price Paid per Share |
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Program (2) |
|
|
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Program (2) |
|
||||
April 1 - April 30 |
|
|
98,959 |
|
|
$ |
59.07 |
|
|
|
97,830 |
|
|
$ |
122,571,557 |
|
May 1 - May 31 |
|
|
98,474 |
|
|
|
64.14 |
|
|
|
90,834 |
|
|
|
116,760,007 |
|
June 1 - June 30 |
|
|
91,962 |
|
|
|
64.05 |
|
|
|
85,690 |
|
|
|
111,275,656 |
|
Total |
|
|
289,395 |
|
|
$ |
62.38 |
|
|
|
274,354 |
|
|
|
|
|
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
(c) Rule 10b5-1 Trading Plans
During the second quarter of 2025, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act)
Item 6. Exhibits
The Exhibits filed or incorporated by reference herewith are as specified in the Exhibit Index.
29
CSG SYSTEMS INTERNATIONAL, INC.
EXHIBIT INDEX
Exhibit |
|
Description |
10.27AB* |
Twenty-Fifth Amendment to the CSG Master Subscriber Management System Agreement between CSG Systems, Inc. and Comcast Cable Communications Management, LLC |
|
31.01 |
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
31.02 |
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
32.01** |
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
101.INS |
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
|
101.SCH |
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
|
104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
|
|
* Portions of the exhibit have been omitted pursuant to SEC rules regarding confidential information.
** Furnished herewith.
30
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: August 7, 2025
CSG SYSTEMS INTERNATIONAL, INC. |
/s/ Brian A. Shepherd |
Brian A. Shepherd |
President and Chief Executive Officer |
(Principal Executive Officer) |
/s/ Hai Tran |
Hai Tran |
Executive Vice President and Chief Financial Officer |
(Principal Financial Officer) |
/s/ Lori J. Szwanek |
Lori J. Szwanek |
Chief Accounting Officer |
(Principal Accounting Officer) |
31
FAQ
How much revenue did CSGS (CSGS) generate in Q2 2025?
What was CSGS diluted EPS for Q2 2025?
What is the status of the new 2025 Credit Agreement?
Why did operating margin improve despite lower EPS?
Is there any significant receivable risk disclosed?
How much stock did CSGS repurchase in 2025 so far?
