CSG Systems International Reports Fourth Quarter and Full Year 2024 Results

Share Name	Share Symbol	Market	Type
CSG Systems International Inc	NASDAQ:CSGS	NASDAQ	Common Stock

	Price Change	% Change	Share Price	Bid Price	Offer Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
	-1.32	-2.17%	59.53	58.98	59.77	61.06	59.32	61.06	228,374	00:00:00

CSG Systems (NASDAQ:CSGS)
Historical Stock Chart

From Jan 2025 to Mar 2025

Reported Record Quarterly Revenue of $317 Million in Q4 2024, up 7% YoY

Achieved or Exceeded All Profitability and Cash Flow Guidance Targets in 2024

2024 Operating Cash Flow of $136 Million; $113 Million of Non-GAAP Adjusted Free Cash Flow, up 9% YoY

Dividend Payout Increased 7% in 2025; Marks 12th Consecutive Year of Increased Payout

$100+ Million Shareholder Remuneration Target via Dividends and Buybacks in 2025

CSG (NASDAQ: CSGS) today reported results for the quarter and year ended December 31, 2024.

Financial Results:

Fourth quarter 2024 financial results:

Total revenue was $316.7 million.
GAAP operating income was $42.3 million, or an operating margin of 13.4%, and non-GAAP operating income was $58.3 million, or a non-GAAP adjusted operating margin of 20.1%.
GAAP earnings per diluted share (EPS) was $1.21 and non-GAAP EPS was $1.65.
Cash flows from operations were $82.5 million, with non-GAAP adjusted free cash flow of $76.6 million.

Full year 2024 financial results:

Total revenue was $1.20 billion.
GAAP operating income was $131.3 million, or an operating margin of 11.0%, and non-GAAP operating income was $199.4 million, or a non-GAAP adjusted operating margin of 18.1%.
GAAP EPS was $3.03 and non-GAAP EPS was $4.72.
Cash flows from operations were $135.7 million, with non-GAAP adjusted free cash flow of $113.3 million.

Shareholder Returns:

CSG declared its quarterly cash dividend of $0.30 per share of common stock, or a total of approximately $8 million, to shareholders, bringing total 2024 dividends declared to approximately $35 million.
In January 2025, CSG’s Board of Directors approved a 7% increase in CSG’s cash dividend, with quarterly payments of $0.32 per share of common stock.
During the fourth quarter and full year 2024, CSG repurchased under its stock repurchase program, approximately 468,000 shares of its common stock for approximately $24 million and approximately 1,185,000 shares of its common stock for approximately $58 million, respectively.

“Team CSG delivered excellent fourth quarter results and built significant momentum for 2025,” said Brian Shepherd, President and Chief Executive Officer of CSG. “It was great to see 5% year-over-year organic revenue growth in Q4 on top of very good profitability and free cash flow performance. Our sales and go-to-market teams continue to perform well across our business with the fantastic win-win contract expansion at Comcast through year-end 2030, the multiple Ascendon cloud wins, and the ongoing revenue diversification with 30% of our revenue coming from big faster growth industry verticals. These results combined with our 2025 guidance prove that Team CSG is improving our operating discipline and business agility in a way that we believe will create meaningful value for our shareholders, our customers, and our employees in the quarters and years ahead. For fiscal year 2025, we anticipate revenue to grow to between $1.21 and $1.25 billion prior to the impact of any M&A deals we close during the year with non-GAAP operating margins between 18.1% to 18.5% and non-GAAP adjusted free cash flow of $110 million to $150 million.”

Financial Overview (unaudited)

(in thousands, except per share amounts and percentages):

Quarter Ended December 31,

Year Ended December 31,

2024

2023

Percent Changed

2024

2023

Percent Changed

GAAP Results:

Revenue

316,652

297,324

6.5

1,197,248

1,169,258

2.4

Operating Income

42,294

24,747

70.9

131,333

123,877

6.0

Operating Margin Percentage

13.4

8.3

11.0

10.6

EPS

1.21

0.44

175.0

3.03

2.20

37.7

Non-GAAP Results:

Operating Income

58,347

44,063

32.4

199,432

185,727

7.4

Adjusted Operating Margin Percentage

20.1

16.1

18.1

17.2

EPS

1.65

0.92

79.3

4.72

3.69

27.9

For additional information and reconciliations regarding CSG’s use of non-GAAP financial measures, please refer to the attached Exhibit 2 and the Investor Relations section of CSG’s website at csgi.com.

Results of Operations

GAAP Results: Total revenue for the fourth quarter of 2024 was $316.7 million, a 6.5% increase when compared to revenue of $297.3 million for the fourth quarter of 2023. Total revenue for the full year 2024 was $1,197.2 million, a 2.4% increase when compared to revenue of $1,169.3 million for the full year 2023. The increases in revenue are primarily attributed to the continued growth of our SaaS and related solutions revenue, to include approximately $6 million and $15 million of revenue generated during the fourth quarter and the full year 2024, respectively, from the businesses acquired during 2024. These increases more than offset the lower software and services revenue for the full year.

GAAP operating income for the fourth quarter of 2024 was $42.3 million, or 13.4% of total revenue, compared to $24.7 million, or 8.3% of total revenue, for the fourth quarter of 2023. GAAP operating income for the full year 2024 was $131.3 million, or 11.0% of total revenue, compared to $123.9 million, or 10.6% of total revenue, for the full year 2023. The increases in GAAP operating margin are primarily due to the higher revenue, discussed above, and reflect the cost efficiency actions taken during 2024 to optimize capacity and align resources to areas of the business with higher growth profiles.

GAAP EPS for the fourth quarter of 2024 was $1.21, compared to $0.44 for the fourth quarter of 2023, and GAAP EPS for the full year 2024 was $3.03, compared to $2.20 for the full year 2023. The increases in GAAP EPS are mainly due to the higher operating income, discussed above, and a lower effective income tax rate. The full year 2024 EPS also benefitted from a lower diluted share count.

Non-GAAP Results: Non-GAAP operating income for the fourth quarter of 2024 was $58.3 million, or a non-GAAP adjusted operating margin of 20.1%, compared to $44.1 million, or a non-GAAP adjusted operating margin of 16.1% for the fourth quarter of 2023. Non-GAAP operating income for the full year 2024 was $199.4 million, or a non-GAAP adjusted operating margin of 18.1%, compared to $185.7 million, or a non-GAAP adjusted operating margin of 17.2% for the full year 2023. The increases in non-GAAP operating margin can be primarily attributed to the higher revenue and cost efficiency actions, discussed above.

Non-GAAP EPS for the fourth quarter of 2024 was $1.65, compared to $0.92 for the fourth quarter of 2023, and non-GAAP EPS for the full year 2024 was $4.72, compared to $3.69 for the full year 2023. The increases in non-GAAP EPS are mainly due to the higher non-GAAP operating income, discussed above, and a lower non-GAAP effective income tax rate, with the full year 2024 non-GAAP EPS also benefitting from the lower diluted share count.

Balance Sheet and Cash Flows

Cash and cash equivalents as of December 31, 2024 were $161.8 million compared to $118.4 million as of September 30, 2024 and $186.3 million as of December 31, 2023. CSG generated net cash flows from operations for the fourth quarters ended December 31, 2024 and 2023 of $82.5 million and $79.5 million, respectively, and had non-GAAP adjusted free cash flow of $76.6 million and $74.5 million, respectively. For the year ended December 31, 2024 and 2023, CSG generated net cash flows from operations of $135.7 million and $131.9 million, respectively, and had non-GAAP adjusted free cash flow of $113.3 million and $103.9 million, respectively.

Summary of Financial Guidance

CSG’s financial guidance for the full year 2025 is as follows:

GAAP Measures:

Revenue

1,210 - 1,250 million

Non-GAAP Measures:

Adjusted Operating Margin Percentage

18.1% - 18.5%

EPS

$4.55 - $4.80

Adjusted EBITDA

$256 - $267 million

Adjusted Free Cash Flow

$110 - $150 million

Conference Call

CSG will host a conference call on Wednesday, February 5, 2025 at 5:00 p.m. ET, to discuss CSG’s fourth quarter and full year 2024 earnings results. The call will be carried live and archived on CSG’s website. A link to the conference call is available at http://ir.csgi.com. In addition, to reach the conference by phone, call 1-888-412-4131 and use the passcode 2327393.

Additional Information

For information about CSG, please visit CSG’s website at csgi.com. Additional information can be found in the Investor Relations section of the website.

About CSG

CSG empowers companies to build unforgettable experiences, making it easier for people and businesses to connect with, use and pay for the services they value most. Our customer experience, billing and payments solutions help companies of any size make money and make a difference. With our SaaS solutions, company leaders can take control of their future and tap into guidance along the way from our fiercely committed and forward-thinking CSGers around the world.

Want to be future-ready and a change-maker like the global brands that trust CSG? Visit csgi.com to learn more.

Forward-Looking Statements

This news release contains forward-looking statements as defined under the Securities Act of 1933, as amended, that are based on assumptions about a number of important factors and involve risks and uncertainties that could cause actual results to differ materially from what appears in this news release. Some of these key factors include, but are not limited to the following items:

CSG derives a significant portion of its revenue from a limited number of customers, with approximately forty percent of its revenue from its two largest customers;
Fluctuations in credit market conditions, general global economic and political conditions, and foreign currency exchange rates;
CSG’s ability to maintain a reliable, secure computing environment;
Continued market acceptance of CSG’s products and services;
CSG’s ability to continuously develop and enhance products in a timely, cost-effective, technically advanced and competitive manner;
CSG’s ability to deliver its solutions in a timely fashion within budget, particularly large and complex software implementations;
CSG’s dependency on the global telecommunications industry, and in particular, the North American telecommunications industry;
CSG’s ability to meet its financial expectations;
Increasing competition in CSG’s market from companies of greater size and with broader presence;
CSG’s ability to successfully integrate and manage acquired businesses or assets to achieve expected strategic, operating and financial goals;
CSG’s ability to protect its intellectual property rights;
CSG’s ability to conduct business in the international marketplace;
CSG’s ability to comply with applicable U.S. and International laws and regulations; and
CSG’s business may be disrupted, and its results of operations and cash flows adversely affected by a global pandemic.

This list is not exhaustive, and readers are encouraged to review the additional risks and important factors described in CSG’s reports on Forms 10-K and 10-Q and other filings made with the SEC.

CSG SYSTEMS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS-UNAUDITED

(in thousands)

December 31, 2024

December 31, 2023

ASSETS

Current assets:

Cash and cash equivalents

161,789

186,264

Settlement and merchant reserve assets

343,235

274,699

Trade accounts receivable:

Billed, net of allowance of $3,041 and $5,432

266,903

267,680

Unbilled

80,173

82,163

Income taxes receivable

2,600

1,345

Other current assets

46,182

50,075

Total current assets

900,882

862,226

Non-current assets:

Property and equipment, net of depreciation of $133,514 and $121,816

56,595

65,545

Operating lease right-of-use assets

24,166

34,283

Software, net of amortization of $154,648 and $157,601

19,927

14,224

Goodwill

316,041

308,596

Acquired customer contracts, net of amortization of $133,279 and $126,469

39,377

35,879

Customer contract costs, net of amortization of $44,587 and $42,094

60,809

54,421

Deferred income taxes

73,295

57,855

Other assets

9,595

10,017

Total non-current assets

599,805

580,820

Total assets

1,500,687

1,443,046

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Current portion of long-term debt

7,500

Operating lease liabilities

11,067

15,946

Customer deposits

41,448

41,035

Trade accounts payable

36,370

46,406

Accrued employee compensation

67,944

84,380

Settlement and merchant reserve liabilities

341,924

273,817

Deferred revenue

54,424

54,199

Income taxes payable

7,802

4,104

Other current liabilities

46,730

33,449

Total current liabilities

615,209

560,836

Non-current liabilities:

Long-term debt, net of unamortized discounts of $12,128 and $15,628

530,997

534,997

Operating lease liabilities

25,020

34,360

Deferred revenue

26,469

23,447

Income taxes payable

2,732

3,041

Deferred income taxes

123

Other non-current liabilities

17,597

12,916

Total non-current liabilities

602,909

608,884

Total liabilities

1,218,118

1,169,720

Stockholders' equity:

Preferred stock, par value $.01 per share; 10,000 shares authorized; zero shares issued and outstanding

Common stock, par value $.01 per share; 100,000 shares authorized; 28,854 and 29,541 shares outstanding

718

713

Additional paid-in capital

518,215

490,947

Treasury stock, at cost; 41,583 and 40,398 shares

(1,194,224

)

(1,136,055

)

Accumulated other comprehensive income (loss):

Unrealized gain on short-term investments, net of tax

Cumulative foreign currency translation adjustments

(62,290

)

(50,414

)

Accumulated earnings

1,020,150

968,134

Total stockholders' equity

282,569

273,326

Total liabilities and stockholders' equity

1,500,687

1,443,046

CSG SYSTEMS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME-UNAUDITED

(in thousands, except per share amounts)

Quarter Ended

Year Ended

December 31, 2024

December 31, 2023

December 31, 2024

December 31, 2023

Revenue

316,652

297,324

1,197,248

1,169,258

Cost of revenue (exclusive of depreciation, shown separately below)

154,197

156,145

614,463

615,042

Other operating expenses:

Research and development

42,023

35,800

158,194

143,201

Selling, general and administrative

71,519

66,683

258,313

247,613

Depreciation

5,336

6,034

21,622

23,189

Restructuring and reorganization charges

1,283

7,915

13,323

16,336

Total operating expenses

274,358

272,577

1,065,915

1,045,381

Operating income

42,294

24,747

131,333

123,877

Other income (expense):

Interest expense

(7,487

)

(8,084

)

(30,469

)

(31,176

)

Interest income

2,044

1,820

8,685

4,336

Other, net

4,178

(1,639

)

2,723

(4,686

)

Total other

(1,265

)

(7,903

)

(19,061

)

(31,526

)

Income before income taxes

41,029

16,844

112,272

92,351

Income tax provision

(6,561

)

(4,174

)

(25,420

)

(26,105

)

Net income

34,468

12,670

86,852

66,246

Weighted-average shares outstanding:

Basic

27,957

28,607

28,345

29,938

Diluted

28,523

28,842

28,665

30,115

Earnings per common share:

Basic

1.23

0.44

3.06

2.21

Diluted

1.21

0.44

3.03

2.20

CSG SYSTEMS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS-UNAUDITED

(in thousands)

Year Ended

December 31, 2024

December 31, 2023

Cash flows from operating activities:

Net income

86,852

66,246

Adjustments to reconcile net income to net cash provided by operating activities-

Depreciation

22,061

23,585

Amortization

50,447

47,667

Asset impairments

717

2,061

Gain on lease modifications

(174

)

(4,349

)

(Gain) loss on unrealized foreign currency transactions and other, net

(525

)

225

Deferred income taxes

(16,503

)

(23,560

)

Stock-based compensation

33,564

28,990

Subtotal

176,439

140,865

Changes in operating assets and liabilities, net of acquired amounts:

Trade accounts receivable, net

4,134

(22,401

)

Other current and non-current assets and liabilities

(13,042

)

(6,566

)

Income taxes payable/receivable

2,126

(1,849

)

Trade accounts payable and accrued liabilities

(38,486

)

12,541

Deferred revenue

4,546

9,306

Net cash provided by operating activities

135,717

131,896

Cash flows from investing activities:

Purchases of software, property, and equipment

(22,421

)

(27,977

)

Proceeds from sale/maturity of short-term investments

Business combinations, net of cash and settlement assets acquired of $46,432 and zero

17,293

Net cash used in investing activities

(5,128

)

(27,906

)

Cash flows from financing activities:

Proceeds from issuance of common stock

3,072

3,284

Payments of cash dividends

(26,608

)

(33,930

)

Repurchases of common stock

(67,745

)

(127,065

)

Deferred acquisition payments

(2,488

)

(3,220

)

Proceeds from long-term debt

15,000

470,000

Payments on long-term debt

(22,500

)

(327,500

)

Purchase of capped call transactions related to convertible notes

(34,298

)

Payments of deferred financing costs

(14,539

)

Payments on financing obligations

(2,538

)

Settlement and merchant reserve activity

23,884

35,963

Net cash used in financing activities

(79,923

)

(31,305

)

Effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash

(7,779

)

2,173

Net increase in cash, cash equivalents, and restricted cash

42,887

74,858

Cash, cash equivalents, and restricted cash, beginning of period

463,876

389,018

Cash, cash equivalents, and restricted cash, end of period

506,763

463,876

Supplemental disclosures of cash flow information:

Cash paid during the period for -

Interest

27,119

24,730

Income taxes

39,944

51,675

Non-cash investing and financing activities-

Software, property, and equipment included in current and noncurrent liabilities

8,469

Reconciliation of cash, cash equivalents, and restricted cash:

Cash and cash equivalents

161,789

186,264

Settlement and merchant reserve assets

343,235

274,699

Restricted cash included in current and non-current assets

1,739

2,913

Total cash, cash equivalents, and restricted cash

506,763

463,876

EXHIBIT 1

CSG SYSTEMS INTERNATIONAL, INC.

SUPPLEMENTAL REVENUE ANALYSIS

Revenue by Significant Customers: 10% or more of Revenue

Quarter Ended

December 31, 2024

September 30, 2024

December 31, 2023

Amount

% of Revenue

Amount

% of Revenue

Amount

% of Revenue

Charter

59,733

59,070

60,128

Comcast

58,935

58,688

54,651

Year Ended

December 31, 2024

December 31, 2023

Amount

% of Revenue

Amount

% of Revenue

Charter

240,281

241,267

Comcast

225,004

215,476

Revenue by Vertical

Quarter Ended

December 31, 2024

September 30, 2024

December 31, 2023

Broadband/Cable/Satellite

Telecommunications

All other

Total revenue

100

Year Ended

December 31, 2024

December 31, 2023

Broadband/Cable/Satellite

Telecommunications

All other

Total revenue

100

Revenue by Geography

Quarter Ended

December 31, 2024

September 30, 2024

December 31, 2023

Americas

Europe, Middle East and Africa

Asia Pacific

Total revenue

100

Year Ended

December 31, 2024

December 31, 2023

Americas

Europe, Middle East and Africa

Asia Pacific

Total revenue

100

EXHIBIT 2 CSG SYSTEMS INTERNATIONAL, INC. DISCLOSURES FOR NON-GAAP FINANCIAL MEASURES

Use of Non-GAAP Financial Measures and Limitations

To supplement its condensed consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP), CSG uses non-GAAP operating income, non-GAAP adjusted operating margin percentage, non-GAAP EPS, non-GAAP adjusted EBITDA, and non-GAAP adjusted free cash flow. CSG believes that these non-GAAP financial measures, when reviewed in conjunction with its GAAP financial measures, provide investors with greater transparency to the information used by CSG’s management in its financial and operational decision making. CSG uses these non-GAAP financial measures for the following purposes:

Certain internal financial planning, reporting, and analysis;
Forecasting and budgeting;
Certain management compensation incentives; and
Communications with CSG’s Board of Directors, stockholders, financial analysts, and investors.

These non-GAAP financial measures are provided with the intent of providing investors with the following information:

A more complete understanding of CSG’s underlying operational results, trends, and cash generating capabilities;
Consistency and comparability with CSG’s historical financial results; and
Comparability to similar companies, many of which present similar non-GAAP financial measures to investors.

Non-GAAP financial measures are not measures of performance under GAAP, and therefore should not be considered in isolation or as a substitute for GAAP financial information. Limitations with the use of non-GAAP financial measures include the following items:

Non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles;
The way in which CSG calculates non-GAAP financial measures may differ from the way in which other companies calculate similar non-GAAP financial measures;
Non-GAAP financial measures do not include all items of income and expense that affect CSG’s operations and that are required by GAAP to be included in financial statements;
Certain adjustments to CSG’s non-GAAP financial measures result in the exclusion of items that are recurring and will be reflected in CSG’s financial statements in future periods; and
Certain charges excluded from CSG’s non-GAAP financial measures are cash expenses, and therefore do impact CSG’s cash position.

CSG compensates for these limitations by relying primarily on its GAAP results and using non-GAAP financial measures as a supplement only. Additionally, CSG provides specific information regarding the treatment of GAAP amounts considered in preparing the non-GAAP financial measures and reconciles each non-GAAP financial measure to the most directly comparable GAAP measure.

Non-GAAP Financial Measures: Basis of Presentation

The table below outlines the exclusions from CSG’s non-GAAP financial measures:

Non-GAAP Exclusions

Operating Income

Adjusted Operating Margin Percentage

EPS

Transaction fees

—

Restructuring and reorganization charges

Executive transition costs

Acquisition-related expenses:

Amortization of acquired intangible assets

Earn-out compensation

Transaction-related costs

Stock-based compensation

Gain (loss) on debt extinguishment/conversion

—

Gain (loss) on acquisitions or dispositions

—

Unusual income tax matters

—

CSG believes that excluding certain items in calculating its non-GAAP financial measures provides meaningful supplemental information regarding CSG’s performance and these items are excluded for the following reasons:

Transaction fees are primarily comprised of fees paid to third-party payment processors and financial institutions and interchange fees under CSG’s payment services contracts. Transaction fees are included in revenue in CSG’s Income Statement (and not netted against revenue) because CSG maintains control and acts as principal over the integrated service provided under its payment services customer contracts. However, CSG excludes expense associated with transaction fees from the numerator and denominator in calculating its non-GAAP adjusted operating margin percentage in order to provide comparability with historical and future periods and with its peer group and competitors.
Restructuring and reorganization charges are expenses that result from cost reduction initiatives and/or significant changes to CSG’s business, to include such things as involuntary employee terminations, changes in management structure, divestitures of businesses, facility consolidations and abandonments, and fundamental reorganizations impacting operational focus and direction. These charges are not considered reflective of CSG’s recurring business operating results. The exclusion of these items in calculating CSG’s non-GAAP financial measures allows management and investors an additional means to compare CSG’s current financial results with historical and future periods.
Executive transition costs include expenses incurred related to a departure of a CSG executive officer under the terms of the related separation agreement. These types of costs are not considered reflective of CSG’s recurring business operating results. The exclusion of these costs in calculating CSG’s non-GAAP financial measures allows management and investors an additional means to compare CSG’s current financial results with historical and future periods.
Acquisition-related expenses include amortization of acquired intangible assets, earn-out compensation, and transaction-related costs. Transaction-related costs, which typically include expenses related to legal, accounting, and other professional services, are direct and incremental expenses related to business acquisitions, and thus, are not considered reflective of CSG’s recurring business operating results. The total amount of acquisition-related expenses can vary significantly between periods based on the number and size of acquisition activities, previously acquired intangible assets becoming fully amortized, and ultimate realization of earn-out compensation. In addition, the timing of these expenses may not directly correlate with underlying performance of the CSG’s operations. Therefore, the exclusion of acquisition-related expenses in calculating CSG’s non-GAAP financial measures allows management and investors an additional means to compare CSG’s current financial results with historical and future periods.
Stock-based compensation results from CSG’s issuance of equity awards to its employees under incentive compensation programs. The amount of this incentive compensation in any period is not generally linked to the level of performance by employees or CSG. The exclusion of these expenses in calculating CSG’s non-GAAP financial measures allows management and investors an additional means to evaluate the non-cash expense related to compensation included in CSG’s results of operations, and therefore, the exclusion of this item allows investors to further evaluate the cash generating capabilities of CSG’s business.
Gains and losses related to the extinguishment/conversion of debt can be as a result of the refinancing of CSG’s credit agreement and/or repurchase, conversion, or settlement of CSG’s convertible notes. These activities, to include any derivative activity related to debt conversions, are not considered reflective of CSG’s recurring business operating results. Any resulting gain or loss is generally non-cash income or expense, and therefore, the exclusion of these items allows investors to further evaluate the cash impact of these activities for cash flow and liquidity purposes. In addition, the exclusion of these gains and losses in calculating CSG’s non-GAAP EPS allows management and investors an additional means to compare CSG’s current operating results with historical and future periods.
Gains or losses related to the acquisition or disposition of certain of CSG’s business activities are not considered reflective of CSG’s recurring business operating results. Any resulting gain or loss is generally non-cash income or expense, and therefore, the exclusion of these items allows investors to further evaluate the cash impact of these activities for cash flow and liquidity purposes. In addition, the exclusion of these gains and losses in calculating CSG’s non-GAAP EPS allows management and investors an additional means to compare CSG’s current operating results with historical and future periods.
Unusual items within CSG’s quarterly and/or annual income tax expense can occur from such things as income tax accounting timing matters, income taxes related to unusual events, or as a result of different treatment of certain items for book accounting and income tax purposes. Consideration of such items in calculating CSG’s non-GAAP financial measures allows management and investors an additional means to compare CSG’s current financial results with historical and future periods

CSG also reports non-GAAP adjusted EBITDA and non-GAAP adjusted free cash flow. Management believes non-GAAP adjusted EBITDA is a useful measure to investors in evaluating CSG’s operating performance, debt servicing capabilities, and enterprise valuation. CSG defines non-GAAP adjusted EBITDA as income before interest, income taxes, depreciation, amortization, stock-based compensation, foreign currency transaction adjustments, acquisition-related expenses, and unusual items, such as restructuring and reorganization charges, executive transition costs, gains and losses related to the extinguishment of debt, and gains and losses on acquisitions or dispositions, as discussed above. Additionally, management uses non-GAAP adjusted free cash flow, among other measures, to assess its financial performance and cash generating capabilities, and believes that it is useful to investors because it shows CSG’s cash available to service debt, make strategic acquisitions and investments, repurchase its common stock, pay cash dividends, and fund ongoing operations. CSG defines non-GAAP adjusted free cash flow as net cash flows from operating activities before earn-out compensation payments related to acquisitions less the purchases of software, property and equipment.

Non-GAAP Financial Measures

Non-GAAP Operating Income and Non-GAAP Adjusted Operating Margin Percentage:

The reconciliation of GAAP operating income to non-GAAP operating income, and calculation of CSG’s non-GAAP adjusted operating margin percentage, for the indicated periods are as follows (in thousands, except percentages):

Quarter Ended December 31,

Year Ended December 31,

2024

2023

2024

2023

Non-GAAP Operating Income

GAAP operating income

42,294

24,747

131,333

123,877

Restructuring and reorganization charges (1)

1,283

7,915

13,323

16,336

Executive transition costs

606

352

1,754

Acquisition-related expenses:

Amortization of acquired intangible assets

3,840

2,982

14,014

12,185

Earn-out compensation

2,228

5,644

(14

)

Transaction-related costs

138

(27

)

381

2,109

Stock-based compensation (1)

8,564

7,840

34,385

29,480

Non-GAAP operating income

58,347

44,063

199,432

185,727

Non-GAAP Adjusted Operating Margin Percentage

Revenue

316,652

297,324

1,197,248

1,169,258

Less: Transaction fees (2)

(26,064

)

(23,967

)

(97,857

)

(87,430

)

Revenue less transaction fees

290,588

273,357

1,099,391

1,081,828

Non-GAAP adjusted operating margin percentage

20.1

16.1

18.1

17.2

(1)

Restructuring and reorganization charges include stock-based compensation, which is not included in the stock-based compensation line in the tables above and following, and depreciation, which has not been recorded to the depreciation line item on CSG’s Income Statement.

(2)

Transaction fees are primarily comprised of fees paid to third-party payment processors and financial institutions and interchange fees under CSG’s payment services contracts. Transaction fees are included in revenue in CSG's Income Statement (and not netted against revenue) because CSG maintains control and acts as principal over the integrated service provided under its payment services customer contracts. However, CSG excludes expense associated with transaction fees from the numerator and denominator in calculating its non-GAAP adjusted operating margin percentage in order to provide comparability with historical and future periods and with its peer group and competitors.

Non-GAAP EPS:

The reconciliations of GAAP EPS to non-GAAP EPS for the indicated periods are as follows (in thousands, except per share amounts):

Quarter Ended

December 31, 2024

December 31, 2023

Amounts

EPS (4)

Amounts

EPS (4)

GAAP net income

34,468

1.21

12,670

0.44

GAAP income tax provision (3)

6,561

4,174

GAAP income before income taxes

41,029

16,844

Restructuring and reorganization charges (1)

1,283

7,915

Executive transition costs

606

Acquisition-related costs:

Amortization of acquired intangible assets

3,840

2,982

Earn-out compensation

2,228

Transaction-related costs

138

(27

)

Stock-based compensation (1)

8,564

7,840

Non-GAAP income before income taxes

57,082

36,160

Non-GAAP income tax provision (3)

(9,956

)

(9,535

)

Non-GAAP net income

47,126

1.65

26,625

0.92

Year Ended

December 31, 2024

December 31, 2023

Amounts

EPS (4)

Amounts

EPS (4)

GAAP net income

86,852

3.03

66,246

2.20

GAAP income tax provision (3)

25,420

26,105

GAAP income before income taxes

112,272

92,351

Restructuring and reorganization charges (1)

13,323

16,336

Executive transition costs

352

1,754

Acquisition-related expenses:

Amortization of acquired intangible assets

14,014

12,185

Earn-out compensation

5,644

(14

)

Transaction-related costs

381

2,109

Stock-based compensation (1)

34,385

29,480

Non-GAAP income before income taxes

180,371

154,201

Non-GAAP income tax provision (3)

(45,093

)

(43,176

)

Non-GAAP net income

135,278

4.72

111,025

3.69

(3)

For the fourth quarter and year ended December 31, 2024, the GAAP effective income tax rates were approximately 16% and 23%, respectively, and the non-GAAP effective income tax rates were approximately 17% and 25%, respectively. For the fourth quarter and year ended December 31, 2023, the GAAP effective income tax rates were approximately 25% and 28%, respectively, and the non-GAAP effective income tax rates were approximately 26% and 28%, respectively. The decreases in the fourth quarter and full year 2024 GAAP and non-GAAP effective income tax rates are due primarily to the release of valuation allowances related to certain U.S. and foreign deferred tax assets and the utilization of foreign tax credits.

(4)

The outstanding diluted shares for the fourth quarter and year ended December 31, 2024 were 28.5 million and 28.7 million, respectively, and for the fourth quarter and year ended December 31, 2023 were 28.8 million and 30.1 million, respectively.

Non-GAAP Adjusted EBITDA:

CSG’s calculation of non-GAAP adjusted EBITDA and the reconciliation of CSG’s non-GAAP adjusted EBITDA measure to GAAP net income is provided below for the indicated periods (in thousands, except percentages):

Quarter Ended

Year Ended

December 31,

2024

2023

2024

2023

GAAP net income

34,468

12,670

86,852

66,246

GAAP income tax provision

6,561

4,174

25,420

26,105

Interest expense (5)

7,487

8,084

30,469

31,176

Interest income and other, net

(6,222

)

(181

)

(11,408

)

350

GAAP operating income

42,294

24,747

131,333

123,877

Restructuring and reorganization charges (1)

1,283

7,915

13,323

16,336

Executive transition costs

606

352

1,754

Acquisition-related expenses:

Amortization of acquired intangible assets (6)

3,840

2,982

14,014

12,185

Earn-out compensation

2,228

5,644

(14

)

Transaction-related costs

138

(27

)

381

2,109

Stock-based compensation (1)

8,564

7,840

34,385

29,480

Amortization of other intangible assets (6)

3,087

3,350

11,671

13,624

Amortization of customer contract costs (6)

5,167

5,901

21,262

20,291

Depreciation (1)

5,336

6,034

21,622

23,189

Non-GAAP adjusted EBITDA

71,937

59,348

253,987

242,831

Non-GAAP adjusted EBITDA as a percentage of revenue less transaction fees (2)

24.8

21.7

23.1

22.4

(5)

Interest expense includes amortization of deferred financing costs as provided in Note 6 below.

(6)

Amortization on the statement of cash flows is made up of the following items for the indicated periods (in thousands):

Quarter Ended

Year Ended

December 31,

2024

2023

2024

2023

Amortization of acquired intangible assets

3,840

2,982

14,014

12,185

Amortization of other intangible assets

3,087

3,350

11,671

13,624

Amortization of customer contract costs

5,167

5,901

21,262

20,291

Amortization of deferred financing costs

886

891

3,500

1,567

Total amortization

12,980

13,124

50,447

47,667

Non-GAAP Adjusted Free Cash Flow:

CSG’s calculation of non-GAAP adjusted free cash flow and the reconciliation of CSG’s non-GAAP adjusted free cash flow measure to cash flows from operating activities are provided below for the indicated periods (in thousands):

Quarter Ended

Year Ended

December 31,

2024

2023

2024

2023

Cash flows from operating activities

82,504

79,531

135,717

131,896

Purchases of software, property and equipment

(5,893

)

(5,037

)

(22,421

)

(27,977

)

Non-GAAP adjusted free cash flow

76,611

74,494

113,296

103,919

Non-GAAP Financial Measures – 2025 Financial Guidance

Non-GAAP Operating Income and Non-GAAP Adjusted Operating Margin Percentage:

The reconciliation of GAAP operating income to non-GAAP operating income, and calculation of non-GAAP adjusted operating margin percentage, as included in CSG’s 2025 full year financial guidance, is as follows (in thousands, except percentages):

2025 Guidance Range

Low Range

High Range

Non-GAAP Operating Income

GAAP operating income

144,400

155,400

Acquisition-related expenses:

Amortization of acquired intangible assets

13,800

Earn-out compensation

7,000

Stock-based compensation

34,500

Non-GAAP operating income

199,700

210,700

Non-GAAP Operating Margin Percentage

Revenue

1,210,000

1,250,000

Less: Transaction fees

(106,000

)

(111,000

)

Revenue less transaction fees

1,104,000

1,139,000

Non-GAAP adjusted operating margin percentage

18.1

18.5

Non-GAAP EPS:

The reconciliation of GAAP EPS to non-GAAP EPS as included in CSG’s 2025 full year financial guidance is as follows (in thousands, except per share amounts):

2025 Guidance Range

Low Range

High Range

Amounts

EPS (8)

Amounts

EPS (8)

GAAP net income

86,300

3.11

94,200

3.37

GAAP income tax provision (7)

33,600

36,700

GAAP income before income taxes

119,900

130,900

Acquisition-related expenses:

Amortization of acquired intangible assets

13,800

Earn-out compensation

7,000

Stock-based compensation

34,500

Non-GAAP income before income taxes

175,200

186,200

Non-GAAP income tax provision (7)

(49,000

)

(52,200

)

Non-GAAP net income

126,200

4.55

134,000

4.80

(7)

For 2025, the estimated effective income tax rates for GAAP and non-GAAP purposes are both expected to be approximately 28%.

(8)

The weighted-average diluted shares outstanding are expected to be approximately 28 million.

Non-GAAP Adjusted EBITDA:

CSG’s calculation of non-GAAP adjusted EBITDA and the reconciliation of CSG’s non-GAAP adjusted EBITDA measure to GAAP net income is provided below for CSG’s 2025 full year financial guidance (in thousands, except percentages):

2025 Guidance Range

Low Range

High Range

GAAP net income

86,300

94,200

GAAP income tax provision (7)

33,600

36,700

Interest expense

30,500

Interest income

(6,000

)

(6,000

)

GAAP operating income

144,400

155,400

Acquisition-related expenses:

Amortization of acquired intangible assets

13,800

Earn-out compensation

7,000

Stock-based compensation

34,500

Amortization of other intangible assets

8,300

Amortization of client contract costs

23,200

Depreciation

24,800

Non-GAAP adjusted EBITDA

256,000

267,000

Non-GAAP adjusted EBITDA as a percentage of revenue less transaction fees (2)

23.2

23.4

Non-GAAP Adjusted Free Cash Flow:

CSG’s calculation of non-GAAP adjusted free cash flow and the reconciliation of CSG’s non-GAAP adjusted free cash flow measure to cash flows from operating activities is provided below for CSG’s 2025 full year financial guidance (in thousands):

2025 Guidance Range

Low Range

High Range

Cash flows from operating activities

123,000

173,000

Earn-out compensation payments

7,000

Purchases of software, property and equipment

(20,000

)

(30,000

)

Non-GAAP adjusted free cash flow

110,000

150,000

View source version on businesswire.com: https://www.businesswire.com/news/home/20250205575297/en/

For more information, contact: John Rea, SVP, Head of Finance, Treasury, Investor Relations, and ESG Reporting (210) 687-4409 E-mail: John.Rea@csgi.com

Davis Barker, Senior Manager, Investor Relations & Corporate Development (303) 884-4506 E-mail: Davis.Barker@csgi.com

Market Data

News

Trading Tools

Markets

Discover

Hot Features

Follow Feed

Options Flow

Monitor

CSGS CSG Systems International Inc