Latest news with #CSGSystems
Yahoo
2 days ago
- Business
- Yahoo
CSGS Q1 Earnings Call: Management Highlights Diversification and Margin Expansion
Customer experience software company CSG Systems (NASDAQ:CSGS) reported Q1 CY2025 results beating Wall Street's revenue expectations , with sales up 1.5% year on year to $299.5 million. The company's full-year revenue guidance of $1.23 billion at the midpoint came in 8.1% above analysts' estimates. Its non-GAAP profit of $1.14 per share was 12% above analysts' consensus estimates. Is now the time to buy CSGS? Find out in our full research report (it's free). Revenue: $299.5 million vs analyst estimates of $295.2 million (1.5% year-on-year growth, 1.4% beat) Adjusted EPS: $1.14 vs analyst estimates of $1.02 (12% beat) Adjusted EBITDA: $64.34 million vs analyst estimates of $59.35 million (21.5% margin, 8.4% beat) The company reconfirmed its revenue guidance for the full year of $1.23 billion at the midpoint Management raised its full-year Adjusted EPS guidance to $4.78 at the midpoint, a 2.1% increase EBITDA guidance for the full year is $263.5 million at the midpoint, below analyst estimates of $265 million Operating Margin: 9.8%, in line with the same quarter last year Market Capitalization: $1.79 billion CSG's first quarter results reflected the company's ongoing shift toward higher-margin SaaS solutions and expanded presence in non-telecom verticals. Management noted that 33% of revenue now comes from industries outside of cable and telecom, up from 30% a year ago, which CEO Brian Shepherd described as a record for the company. Shepherd emphasized customer wins in areas like payments, healthcare, and transportation, citing extensions with Mediacom and Liberty Latin America and a new deal with the North Texas Tolling Authority as contributors to growth. These developments, alongside improved operating discipline and cost efficiencies, drove the improvement in non-GAAP operating margin compared to the prior year. Looking forward, CSG's guidance for the remainder of the year rests on continued momentum in SaaS and recurring revenue streams, as well as disciplined cost management. Management stated that margin expansion will be fueled by a mix shift toward higher-margin SaaS deals and ongoing process improvements, with CFO Hai Tran projecting a clear path to achieve non-GAAP adjusted EBITDA margins above 25% in the coming years. Shepherd added, 'We absolutely believe there's a clear pathway for CSG to achieve at or above the upper end of our 18% to 20% non-GAAP adjusted operating margin over the next several years,' and highlighted that revenue visibility remains high due to the mission-critical nature of CSG's solutions. Management attributed the quarter's performance to expanding into new industry verticals, a growing SaaS revenue mix, and focused cost optimization measures. Revenue diversification progress: CSG increased its share of revenue from non-cable and non-telecom verticals to 33%, with notable wins in healthcare, financial services, and transportation. This broadening of customer base is reducing reliance on legacy telecom clients. Large customer concentration declines: The top two customers, Charter and Comcast, now comprise 37% of total revenue, down significantly from 49% in 2017. Shepherd clarified that this is not due to declining revenue from those clients, but rather faster growth in other business areas. SaaS margin expansion: Higher-margin SaaS product sales are driving company-wide operating leverage. CFO Hai Tran pointed to improved procurement, increased productivity, and process reengineering as key contributors to better margins. Payments business momentum: The payments division expanded its merchant base by 13% year-over-year, reaching 135,000 merchants in the quarter, supporting both revenue growth and further diversification. Cash flow improvement: Non-GAAP adjusted free cash flow marked its strongest first quarter result since 2018, attributed to margin gains, improved working capital, and disciplined vendor management. Management expects continued double-digit free cash flow growth as profitability scales. CSG expects continued growth driven by SaaS adoption, recurring revenues from diversified verticals, and further operating efficiency gains. Broadening industry exposure: Management expects further expansion into industries like healthcare, payments, and transportation to drive both top-line growth and reduced revenue concentration risk. This is supported by recent contract wins and ongoing initiatives to address complex customer needs in these sectors. Margin expansion initiatives: The company plans to maintain or improve non-GAAP operating margins through a mix of cost discipline, greater SaaS penetration, and a shift to more asset-light operations. Shepherd pointed to continuous process optimization and targeted R&D investment as foundations for achieving margin targets. Disciplined M&A approach: Management signaled ongoing interest in acquisitions that complement CSG's domain expertise in monetization and customer engagement, but stressed a commitment to only pursuing highly accretive, value-adding deals. The company's strong balance sheet and new revolving credit facility provide flexibility for such opportunities. In the coming quarters, the StockStory team will be watching (1) the pace and scale of new customer wins outside of cable and telecom, (2) the degree to which SaaS solutions and payments drive further margin expansion, and (3) management's execution on disciplined M&A to support diversification. Sustained free cash flow improvement and reduced customer concentration will also be important indicators of long-term progress. CSG currently trades at a forward P/E ratio of 13.6×. Should you double down or take your chips? Find out in our full research report (it's free). Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs. While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
Yahoo
08-05-2025
- Business
- Yahoo
CSG's (NASDAQ:CSGS) Q1 Sales Beat Estimates, Guides for Strong Full-Year Sales
Customer experience software company CSG Systems (NASDAQ:CSGS) beat Wall Street's revenue expectations in Q1 CY2025, with sales up 1.5% year on year to $299.5 million. The company's full-year revenue guidance of $1.23 billion at the midpoint came in 8.1% above analysts' estimates. Its non-GAAP profit of $1.14 per share was 12% above analysts' consensus estimates. Is now the time to buy CSG? Find out in our full research report. CSG (CSGS) Q1 CY2025 Highlights: Revenue: $299.5 million vs analyst estimates of $295.2 million (1.5% year-on-year growth, 1.4% beat) Adjusted EPS: $1.14 vs analyst estimates of $1.02 (12% beat) Adjusted EBITDA: $64.34 million vs analyst estimates of $59.35 million (21.5% margin, 8.4% beat) The company reconfirmed its revenue guidance for the full year of $1.23 billion at the midpoint Management raised its full-year Adjusted EPS guidance to $4.78 at the midpoint, a 2.1% increase EBITDA guidance for the full year is $263.5 million at the midpoint, below analyst estimates of $265 million Operating Margin: 9.8%, in line with the same quarter last year Free Cash Flow was $7.07 million, up from -$34.13 million in the same quarter last year Market Capitalization: $1.66 billion 'Team CSG's strong first quarter results enabled us to raise our 2025 non-GAAP profitability and EPS guidance targets. We grew revenue nicely at customers outside of communication service providers ('CSPs') with a third of our revenue now coming from big, faster growing industry verticals providing a buffer against today's macro-economic uncertainty.' said Brian Shepherd, President and Chief Executive Officer of CSG. Company Overview Powering billions of critical customer interactions annually, CSG Systems (NASDAQ:CSGS) provides cloud-based software platforms that help companies manage customer interactions, process payments, and monetize their services. Sales Growth Examining a company's long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. With $1.20 billion in revenue over the past 12 months, CSG is a small player in the business services space, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and numerous distribution channels. As you can see below, CSG's 4.2% annualized revenue growth over the last five years was mediocre. This shows it couldn't generate demand in any major way and is a tough starting point for our analysis. CSG Quarterly Revenue We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. CSG's annualized revenue growth of 3.4% over the last two years aligns with its five-year trend, suggesting its demand was consistently weak.
Yahoo
02-04-2025
- Business
- Yahoo
3 Reasons to Avoid CSGS and 1 Stock to Buy Instead
In a sliding market, CSG has defied the odds, trading up to $60.37 per share. Its 27% gain since October 2024 has outpaced the S&P 500's 1.7% drop. This was partly thanks to its solid quarterly results, and the performance may have investors wondering how to approach the situation. Is there a buying opportunity in CSG, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it's free. We're glad investors have benefited from the price increase, but we're swiping left on CSG for now. Here are three reasons why there are better opportunities than CSGS and a stock we'd rather own. Powering billions of critical customer interactions annually, CSG Systems (NASDAQ:CSGS) provides cloud-based software platforms that help companies manage customer interactions, process payments, and monetize their services. A company's long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last four years, CSG grew its sales at a mediocre 4.9% compounded annual growth rate. This was below our standard for the business services sector. Forecasted revenues by Wall Street analysts signal a company's potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite. Over the next 12 months, sell-side analysts expect CSG's revenue to drop by 1.6%, a decrease from its 4.8% annualized growth for the past two years. This projection doesn't excite us and implies its products and services will face some demand challenges. Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king. As you can see below, CSG's margin dropped by 5 percentage points over the last five years. If its declines continue, it could signal increasing investment needs and capital intensity. CSG's free cash flow margin for the trailing 12 months was 9.5%. We cheer for all companies serving everyday consumers, but in the case of CSG, we'll be cheering from the sidelines. With its shares outperforming the market lately, the stock trades at 13.5× forward price-to-earnings (or $60.37 per share). This valuation tells us it's a bit of a market darling with a lot of good news priced in - we think there are better opportunities elsewhere. We'd recommend looking at a dominant Aerospace business that has perfected its M&A strategy. The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years. Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free. Sign in to access your portfolio
