CSG Systems International reported its first quarter 2025 financial results on May 7, 2025, with revenue increasing 1.5% year-over-year to $299.5 million. This growth was primarily driven by approximately $5.5 million from businesses acquired in Q2 2024, offsetting a decrease in software and services revenue.
GAAP operating income decreased to $29.4 million, or 9.8% of revenue, mainly due to a significant increase in restructuring and reorganization charges. However, non-GAAP adjusted operating margin improved significantly to 19.0% from 16.6% in Q1 2024, and non-GAAP adjusted EBITDA margin improved over 200 basis points to 23.7%.
The company achieved a dramatic turnaround in cash flow, with net cash provided by operating activities reaching $11.5 million compared to a $29.4 million outflow in Q1 2024. Non-GAAP adjusted free cash flow improved to $7 million, a significant positive swing from a $34 million outflow in the prior-year quarter, marking the strongest Q1 free cash flow performance in seven years.
CSG reiterated its full-year 2025 revenue guidance midpoint of $1.23 billion, representing approximately 2.7% growth. The company also raised its 2025 full-year profitability and non-GAAP EPS targets, aiming for a long-term non-GAAP adjusted operating margin of 18% to 20% and double-digit adjusted free cash flow growth, with a $130 million midpoint for 2025.
Management expects Q1 2025 to be the lowest point for most metrics, with revenue growth and profitability projected to increase in subsequent quarters. The reported non-GAAP EPS of $1.14 surpassed Wall Street expectations, indicating strong underlying performance despite some GAAP headwinds.
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