CSG SYSTEMS INTERNATIONAL INC

CSG Systems International, Inc. is 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. The company serves industry leaders in telecom, broadband cable, media, retail, healthcare, financial services, insurance, government, and other industries. CSG manages billions of critical customer interactions annually and its 5,500-plus employees around the globe have made it a trusted technology leader and SaaS platform company to some of the biggest and most innovative brands around the world. The company is a member of the S&P Small Cap 600 and Russell 2000 indices.

CSG's primary competitors include companies who deliver on-premise bespoke custom offerings (i.e., Amdocs Limited, NEC Netcracker), software solutions (i.e., Salesforce, Adobe, Pegasystems, Twilio), internally developed enterprise applications, network operators (i.e., Ericsson, Huawei), cloud based vendors (i.e., Aria, Zuora, Salesforce), large outsourced transactional communications companies (i.e., Intrado, Genesys), systems integrators (i.e., Accenture, Tech Mahindra), large payments processors (i.e., FIS, Chase Payment Solutions), payments specialists (i.e., Stripe, Square), and niche players (i.e., Paymentus, Invoice Cloud). The company's stated competitive advantages include its cloud-first architecture, customer-centric approach, and its ability to help some of the world's most recognizable brands compete and win in the digital age. Many of CSG's significant customer relationships span decades, and the company believes in innovating jointly with current and potential future customers to anticipate future-market trends.

CSG generates revenue through a mix of recurring and transactional income. The company's revenue is derived from SaaS-based revenue management platform arrangements, managed services arrangements, SaaS payments platform arrangements, software license and service arrangements, professional services arrangements, and bundled service arrangements. The company's primary customer segments include Communication Service Providers (CSPs) and other large enterprises in retail, healthcare, financial services, insurance, and government. The company's platform and ecosystem dynamics are underpinned by open application programming interfaces (APIs), distributed architecture, and microservices technology.

CSG's solutions are organized into three main categories: Revenue Management and Digital Monetization, Transformational Customer Experiences, and Payments. The Revenue Management and Digital Monetization solutions provide robust, integrated real-time revenue management platforms leveraging public cloud, private cloud, or on-premise deployments to optimize and monetize transactions at every stage of the customer lifecycle. These solutions span the commerce lifecycle, streamlining the entire revenue monetization process from concept to cash. The Transformational Customer Experiences solutions help businesses deliver personalized, secure, and integrated customer experience solutions using SaaS platforms that leverage AI technology and drive loyalty, growth, and cost efficiency across the customer lifecycle. The Payments solutions provide a full end-to-end SaaS payments platform, allowing organizations to accept electronic check/ACH, debit and credit card payments, and offer the ability to receive funds quicker via same-day ACH. The payments platform handles tens of billions of dollars in payment volumes annually for approximately 163,000 ¹ active merchants.

CSG's products are recognized by industry analysts as best-in-class in the areas of monetization, financial services, technology, telecom, field service management, OSS/BSS, journey orchestration, journey analytics, customer experience, and integrated payments. In 2025, IDC named CSG Ascendon a Major Player in Subscription Management, while MGI Research recognized it as a leader in Agile Billing. Gartner and QKS highlighted CSG Quote & Order for its advanced B2B capabilities, and QKS also positioned CSG Xponent as a leader in journey management, analytics, and communications. IDC further recognized both Xponent and Ascendon as Major Players for customer experience in the telecommunications market. CSG Xponent was honored with the 2025 Banking Tech Award from FinTech Futures for Best Personalisation and User Experience Solution, while CSG Bill Explainer (part of CSG Xponent) won Gold in the 2025 CMSWire IMPACT Awards for Best Customer Experience Transformation. CSG was also named to CRM Magazine's prestigious CRM Top 100 list, and CSG Quote & Order was named a finalist in Fierce Network's 2025 Innovation Awards for Customer Engagement.

On October 29, 2025, CSG entered into an Agreement and Plan of Merger with NEC Corporation, a company incorporated under the laws of Japan, and Canvas Transaction Company, Inc., a direct or indirect wholly owned subsidiary of NEC. Pursuant to the terms, each share of CSG common stock will be converted into the right to receive $80.70 ² per share in cash. The Board of Directors unanimously approved the Merger Agreement, and on January 30, 2026, at a special meeting, stockholders adopted the Merger Agreement and approved the Merger. As of December 31, 2025, in connection with the proposed Merger, CSG recognized $13.7 million ³ of acquisition-related costs primarily within Selling, General and Administrative expenses, of which approximately $10 million ⁴ will be paid upon closing. During 2025, CSG closed its design and delivery center in Crawfordville, Florida. The company also repurchased approximately 788,000 ⁵ shares of its common stock under its Stock Repurchase Program for $49.7 million ⁶ and repurchased from employees and then canceled approximately 470,000 ⁷ shares of common stock for $33.1 million ⁸ in connection with minimum tax withholding requirements. On December 31, 2025, all remaining Board authorized repurchases under the Stock Repurchase Program expired.

Revenue for 2025 was $1,223.3 million ⁹, a 2.2% ¹⁰ increase when compared to $1,197.2 million ¹¹ for 2024. Operating income for 2025 was $118.7 million ¹², or a 9.7% ¹³ operating income margin percentage, compared to $131.3 million ¹⁴, or an 11.0% ¹⁵ operating income margin percentage for 2024. Diluted EPS for 2025 was $1.98 ¹⁶ compared to $3.03 ¹⁷ for 2024. Net income for 2025 was $55.9 million ¹⁸, compared to $86.9 million ¹⁹ for 2024. Cash flows from operating activities for 2025 were $155.9 million ²⁰, compared to $135.7 million ²¹ for 2024.

CSG's growth strategy includes accelerating long-term organic revenue growth and unlocking significant value with disciplined strategic, financially-attractive acquisitions. The company looks to acquire capabilities, proven product platforms, market share in high-growth industry verticals, and human capital talent. The company is focused on increasing the amount of revenue it generates from customers outside of the CSP industry, with an ongoing opportunity to further expand its footprint in verticals such as retail, healthcare, financial services, insurance, and government. CSG is helping some of the biggest brands in these verticals digitize and modernize their revenue management, customer experience, and payments capabilities. The company also aims to become the SaaS technology provider of choice for CSPs, helping service providers launch and scale new digital services quickly, provide a great customer experience across any channel, and simplify and monetize B2B2X ecosystems and marketplaces.

CSG continues to make meaningful investments in research and development, incorporating AI and other emerging technologies into its solutions, to ensure that it stays ahead of customers' needs. The company's strategic focus includes creating and leading with category-defining technology, and it will continually add relevant capabilities to what it does as a company, both in terms of its people and its solutions. The company's R&D expense for 2025 was $161.6 million ²², a 2.1% ²³ increase when compared to $158.2 million ²⁴ for 2024, with the increase mainly attributed to increased R&D investments in faster growing SaaS solutions, such as Ascendon monetization; quote and order; and payments. As a percentage of total revenue, R&D expense for 2025 and 2024 was 13.2% ²⁵, for both periods.

CSG provides operational services encompassing infrastructure management, application configuration management, and business operations management. The company's pre-integrated approach, combined with its deep domain experts managing the applications, allows customers to scale their operations. The company's capital expenditures for software, property, and equipment for 2025 were $14.5 million ²⁶, compared to $22.4 million ²⁷ for 2024. As of December 31, 2025, CSG employed over 5,500 ²⁸ people, of which approximately 47% ²⁹ were in Asia-Pacific and Australia, 35% ³⁰ were in North America, 10% ³¹ were in Europe, the Middle East, and Africa, and 8% ³² were in South and Central America.

During 2025, the Board approved dividend payments totaling $36.9 million ³³. In January 2026, the Board approved a quarterly cash dividend of $0.34 ³⁴ per share of common stock. Going forward, the company expects to pay cash dividends in the normal course, with the amount and timing subject to the Board's approval, as well as the consummation of the Merger. During 2025, the company repurchased approximately 788,000 ³⁵ shares of its common stock for $49.7 million ³⁶ under its Stock Repurchase Program. On December 31, 2025, all remaining Board authorized repurchases under the Stock Repurchase Program expired. As of December 31, 2025, the company had $125.0 million ³⁷ outstanding on the 2025 Revolver, and had issued a standby letter of credit for $0.2 million ³⁸ that counts against the available 2025 Revolver balance, leaving $474.8 million ³⁹ available.

The company faces structural headwinds from the global communications industry, which has undergone significant fluctuations in growth rates and capital investment cycles. Changes in demand or customer preferences for traditional services for CSPs are causing them to seek new revenue sources while managing their cost structure, resulting in many CSPs delaying investment decisions on legacy systems. The pace of consolidation within the industry continues to accelerate, which could result in fewer providers with greater bargaining power and economic leverage. The company also faces risks from geopolitical and economic uncertainties, including inflation, tariffs, changes in trade policy, supply chain disruptions, and labor shortages, which could result in slower or deferred customer buying decisions and pricing pressures.

The pendency of the Merger with NEC Corporation could negatively impact the business, as some customers, suppliers, vendors, and other business partners may delay or defer decisions or may end their relationships. Current and prospective employees may experience uncertainty about their future roles, which may materially adversely affect the company's ability to attract and retain key personnel during the pendency of the Merger. The Merger Agreement restricts the company from taking specified actions without the consent of Parent and requires it to use commercially reasonable efforts to conduct its business in the ordinary course of business consistent with past practice, which may prevent the company from making changes to its business or pursuing business opportunities that may arise prior to the completion of the Merger.

CSG derives a significant portion of its revenue from a limited number of customers, with its two largest customers, Charter and Comcast, generating over 35% ⁴⁰ of total revenue. For 2025, revenue from Charter was $236 million ⁴¹ and from Comcast was $210 million ⁴². The loss of business from a significant customer could have a material adverse effect on financial position and results of operations. The company is also exposed to risks related to the proposed Merger with NEC, including that if the Merger Agreement is terminated under certain specified circumstances, the company will be required to pay a termination fee of $82.0 million ⁴³. Additionally, the company faces risks from cybersecurity threats, as its solutions are generally considered mission critical customer management systems by its customers, and the global marketplace continues to experience an ever-increasing exposure to both the number and severity of cyber-attacks. The company also faces risks related to its use of artificial intelligence, as AI algorithms are based on machine learning and predictive analytics, which can create accuracy issues and unintended biases, and rapid developments in AI may significantly change how customers design, develop, and operate technology solutions, potentially reducing demand for certain of the company's current products and services.

Management's message emphasizes the company's purpose-driven, SaaS platform approach and its focus on helping global companies simplify complex customer engagement and monetization in the digital age. The strategic priorities for the period ahead include accelerating revenue growth through organic means and disciplined strategic acquisitions, creating and leading with category-defining technology, delivering an exceptional customer experience, becoming the SaaS technology provider of choice for CSPs, and expanding into big, higher growth industry verticals. Management highlights that the successful execution of these goals will allow the company to accelerate its revenue and earnings growth, and therefore, create long-term sustained value for customers, employees, and stockholders. The company also aspires to envision, invent, and shape a better, more future-ready world, with a mission focused on helping some of the world's most recognizable brands compete and win in the digital age.