Afternoon, everybody. Tim Horan. I am the Communications, Digital Infrastructure, and now Satellite Analyst here at Oppenheimer. As the whole world kind of converges on top of cloud, it's a little difficult to know exactly how to cover the sectors, but this is where we're at right now. Luckily, it is a growth sector thanks to AI and AI driving basically all things. My pleasure to be hosting the CEO of CSG . We have Brian Shepherd. Brian, I know we just talked last week at length after your earnings, so we'll probably just continue that conversation for a bit and get into a lot more detail. I find these 40-minute sessions incredibly useful, actually, and I know our investors do also. Thank you, Brian. Brian, I guess maybe we can just start out. Can you maybe just hit on the highlights of the quarter and what you thought the most important takeaways were?
Yeah, no, thanks, Tim. Great to be here. The big takeaways for us is even in the current macroeconomic environment, double-digit expansion of our profitability on the operating margin, double-digit expansion of EBITDA, double-digit growth year over year on the EPS, and almost 20% through the first half of the year, 20% year over year growth in free cash flow. We've been telling investors for a while, we love what we're seeing in the business, mix shift and more SaaS, strong operating discipline. We expect not quarter turns of the wrench, but half turns of the wrench on profitability and cash flow, and we're delivering on that, and that's going to continue, and that's our expectation. On the growth side, we like what we see on the sales side in the pipeline.
On the revenue side, we're a little bit lower than what we historically had delivered over the last prior three years of about 5.3% organic. We're operating more in the 2%- 3% range. What we've told people is there's no negative implication on our revenue view of the market, but there is a little more headwind coming from a few different areas, so we're likely to operate over the next couple of quarters more in that 2%- 4% heading into next year as we try to grow back to mid-single-digit organic revenue. Regardless, even with some of that current demand signal out there and some of that noise, strong double-digit across the board on cash flow and profitability, so we love what we see.
Very good. Before we go into the primary areas of growth and how we get back to the mid-single-digit, can you just talk about your two to four different major business units, what they do, and roughly, or just talk about them in order of size, I guess, would be great.
Yeah, yeah. For those that don't know our story as well on CSG, our claim to fame going back three decades has been the undisputed industry leader in the U.S. cable broadband market. We now serve over 75% of all the market share with players like Comcast, Charter, and others. Some people ask, well, you do the billing. It's like, no, we're not the biller for Comcast, Charter, and the U.S. cable broadband. We are their ATM. We are their backbone, all things digital customer experience, product catalog, order management, billing, every truck roll, every technician that goes into the home, printed statements, electronic statements, you name it, we touch it. That was our claim to fame. The real strength of that is a multi-tenant product solution that grew with the industry. We've served those giants for three decades. That's our largest.
We then said, starting back in the early 2010s, we're going to do the same thing in global telecom and become that disruptor, if you will, that brings a simplified product platform stack, a little different than an Amdocs or some of our other competitors, to simplify the experience, but do the same things. You've seen us since 2016 really grow significant new logos where we're replacing competitors and winning more market share both on the B2B side as well as on the consumer side of global wireless and telecom. Those are the two larger segments. Going back about seven, eight years ago, we think that there are similar business needs in other recurring industry verticals: financial services, insurance, government, healthcare, retail, big tech.
We started to invest and build SaaS platforms in both the digital CX and payments to serve those multiple other industry verticals who also have a similar need to have more digital, lower cost to serve, more agile approach. We started to bring significant value to those other verticals in data-driven CX, customer experience, and through our payment gateway, payment processing businesses that's kind of driven revenue diversification from about 7% of revenue in 2017, coming from non-cable, non-telco. To this last quarter, for the first half of 2025, we're at 32%. It shows how quickly we're improving both on the industry vertical diversification and reducing our concentration from some of our bigger customers.
Brian, can you just go back to what are the, you know, what are the three or four key things you do for like each one of these industries? I think it's pretty similar, but yeah, I know you started to describe it with cable. Can you just get into a little bit more detail of, you know, what exactly you do for cable?
Yeah, I think it's a great way to kind of tie it all together with reflecting on our strategy. Our strategy and what we believe is if we have a vertical-specific integrated technology stack that is increasingly SaaS, everything from onboarding a customer with product catalog, having all the product offers, everything around order management, how you can activate or enable a consumer to initiate service with the brand, billing, AR, collections, monetization, statements, and that side, that's that end-to-end workflow that when you deploy it, it becomes mission-critical to those brands. That's what we started out doing in the U.S. cable, and we touch every part of the customer experience and their operations, and that's why we've been sticky for going on three and a half decades with these customers.
We then take the same business model with, in some cases, different products and tie again that fully integrated digital experience and monetization platform from start of onboarding all the way through the monthly processing of their payments and bills for wholesale, enterprise business, wireless, and consumer. We do it all. In these other verticals, this is where our strategy, our inorganic strategy started to kick in. We use our digital CX and payments to get a foot in the door, and over time, though, we want to acquire, build, or cross-sell the monetization platform so we can do that same onboard, activate, deal with customer issues or resolution, upgrade, downgrade service, and then do the monetization. An example, we expanded into media and do a lot with some of the media players, including Formula One.
Now on race day, every subscription, whether it's an individual race or an annual subscription for Formula One, we handle the subscription, we handle the billing, we handle the digital experience, we handle the wallet, and we do that end-to-end. In some of these other verticals where we may just get a foothold at JPMorgan Chase, we're not doing the monetization, we're doing the digital experience engagement around fraud alert notification and some of their processes around insufficient funds or digital lending in an online world. With pharmacy retailers like Walgreens and CVS, we're doing things like helping them with prescription abandonment, notifying consumers on when there's a prescription refill, using their channel of choice, driving both revenue and lower cost engagement.
With that, and what we'd like to do over time is expand and have some of the monetization engines so that we're more sticky, more integrated, bring more value in all of these verticals. We do take a different approach depending on the vertical, but we're trying to get to the same strategic endpoint.
It sounds like you're doing an awful lot more of their IT of your customers, both front end and tying it into back-office a little bit more to automate everything. I mean, how much, like I guess the cable industry, you've probably doubled and tripled what you actually do for them in the last 30 years. Is there much, and maybe even describe that, and is there much more to go, or are there many more things you can do for the cable or telco industry and these other industries?
Yeah, we believe obviously different areas of our business and different verticals will have different headroom and will have different growth rates based on industry and based on where our position is, whether we're the de facto leader like we are in U.S. cable or we're more of the disruptor brand in some of these other verticals. If I just take them in the U.S. cable broadband, we are the undisputed leader. No question. We moved 9 million subscribers off of Amdocs at Comcast five or six years ago. We moved 14 million subscribers off a competitor at Charter, have 100% of their triple play, but we're still not fully penetrated. We don't have all their enterprise B2B. We don't have their wireless today. We don't have all of our digital CX solutions deployed.
Even though we are the undisputed leader, there's still headroom for growth even in a competitive U.S. cable broadband market. On global telco, we've made huge inroads over the last 10 years. We won MTN, we won Telstra, we won Mobily in Saudi Arabia, we won six or eight brands on our SaaS platform, industry-leading, only true native SaaS platform for monetization in global telecom in the last couple of quarters. Yet we still have massive headroom of growth to take from either internal or from competitors. In these other verticals, like financial services, healthcare, retail, government tech, they're faster growing than cable and telecom, number one. The natural growth in the industry helps us, and we're a fraction of the market share. When we're serving giant brands like JPMorgan Chase and CVS, Walgreens, and many others, the question is, we could serve everybody in the industry, why aren't we?
That means we have more opportunities on the sales side. We got to execute even better to just keep growing even faster in those on the organic side and then look for smart, disciplined capital deployment that can bring great technology solutions in to broaden our integrated reach in these industry verticals.
The telco, you have the only native SaaS platform for someone to, I guess, run a wireless company. What percentage of your IT or their CX or their operations are you doing now? I know you said there's a major area of growth there. How else do you grow in that vertical?
Yeah, on the SaaS side, this is where we see some of the fastest growing opportunities for us. We started out back in 2015 and 2016 building. We just thought that the industry, global telecom, was going to need to go through a massive business simplification. Simplify, it didn't start with technology. It starts with simplifying the product offer, simplifying the business processes that could lead to a more agile, lower cost platform product-based approach that could leverage SaaS. To be honest, we were four or five years ahead of the curve.
What we did, while we were waiting on the industry to realize this was what was going to help them drive price commoditization on the telco side, make more money, be more responsive, be more digital, easy to do business with, we started selling to a lot of the more digital disruptors in media, got a great placement in the media segment. What we've seen over the last two or three years is global telecom players start to embrace public cloud. Now, some of our competitors, they'll talk about their cloud offer, but the reality is they're taking on-prem solutions and taking them to a private data center or trying to take them to a cloud from a data center approach, which still has economic value to our customers, but it's a completely different approach than building a cloud-native monetization. We're on AWS.
They'll try to confuse that, but the reality is they don't have that. We've won six or eight great deals that we think will become the proof points that this is the path of the future. Lots of room for growth still in the early innings of adopting cable cloud in the core for monetization in telco, but we like where it's headed.
You know, telco is kind of interesting. I mean, it might be a situation where outside the U.S., they're substantially more efficient than inside the U.S. I guess these six to eight wins, are they generally for new startup divisions or have you had many incumbents more to port over to the platform?
I mean, it's a combination. We announced in Brazil a really cool MVNO solution where we had one of the leading wireless players actually want to drive an MVNO solution through banking partners. They did a bake-off. They wanted a more agile, more modern cloud solution. We beat one of our larger cloud competitors that's not one of the traditional monetization platforms, and we deployed it in record time ahead of schedule, and now that creates other opportunities. We've also announced two wins in the Nordics with Telenor and with LISA that actually are more incumbent traditional kinds of models. It's kind of a combination. We announced wins in the Asia-Pacific market that was more of a traditional wireless deployment. We see a combination of both.
I think the early wins we're seeing are players that really say the cost pressure that they're facing in their local telecom market and the consolidation, the increasing investment that's having to go into handsets and network buildouts, and ARPUs and growth is getting squeezed. These are the players that basically say for us to be competitive and become more digital and lower our cost to serve, we can't go with the complexity of a service or managed service model. We got to go with a product platform model. We think that's the trend that will clearly play in our favor over a longer period of time. This will be measured over the next three to 10 years relative to, say, a competitor that has more of a service or managed service model that wants to wrap it with the cloud story, but the underlying technology is not cloud.
How much more efficient and better is the product on your platform? I mean, versus maybe, I guess you can only measure to what they were doing before, and then maybe it's a little hard to measure, but yeah, any sense would be helpful.
Yeah, I mean, it really is not just about the product stacks of us, of our customers. The core of this strategy, and there's a fantastic article that the CEO of one of our customers, Mobily in Saudi Arabia, just put out in the last week on LinkedIn that talks about what they're doing to fundamentally transform all parts of their business, become a digital service operator, completely transform the engagement experience, be more agile, lower the cost, change their product offers, be more dynamic. That is what we believe the winning approach of global telecom in every market is going to have to go through. It starts with a fundamental belief that to compete and win big in global telecom over the next 10 years is going to take a rethink of the business, starting with business process and product offer.
If you do that, then you got to re-envision your entire tech stack, and you can't go with a highly customized services-based solution. If an operator does that holistic think, not just thinking about a technology upgrade, you're talking about you could drive 20%- 50% of the costs out if they take that kind of bold approach. It is that broader kind of reinvention of the business. Our technology would support them in doing that. It is not the only driver of them doing that. We think they have no choice. It is a business imperative.
Yeah, no, I would agree with you. You've got plenty of examples of your customers doing this very successfully, right? I mean, it would seem to be a no-brainer for management teams to want to do this. I know it's a lot of heavy lifting. That 20%- 50%, is that for, I guess, each individual thing you're looking to do? If it's customer care, you can improve that. If it's billing, you can improve it. The 20%- 50%, would that apply to SG&A primarily, or could you also apply that to kind of network operating costs?
I wouldn't say on the network costs itself. There are still big costs on the buildout. We don't go into, we're not a NAP. We don't compete against Ericsson and Huawei and Nokia. We don't, we're not a major player in OSS. We do some things around service fulfillment, policy management that really ties in more with billing and monetization. It's really the bigger costs. They can lower their tech stack, but the tech stack cost is relatively small. It's those other areas. It's the retail store operations. It's their contact center. It's becoming more online and digital, which can take out a majority of their, whether it's in their COGS line or in their SG&A line or their support costs, probably differs by operator. They can make a major dent in that.
We also think their IT and their tech costs will actually be lower as well because you don't have near the complexity and near the cost to customize and then change every time business wants to roll something out. Much more agile, different approach. It just is fundamentally a different business model that we would have relative to, say, a competitor like Amdocs.
I guess, you know, where are you focused on for the next two or three, you know, big opportunities to drive that revenue growth back up?
Yeah, it's really a couple. First, even though a lot of our investors ask us, you know, hey, you know, we see Comcast and Charter being the fastest growing wireless in the U.S. market. We see T-Mobile, Verizon, AT&T being the fastest growing broadband. You see net broadband losses on our players like Charter and Comcast. Our view is first, we just call it like it is. That does drive some smallish headwinds to our revenue that's contributed to us being more in the 2%- 3% revenue growth versus the 5% we were for three straight years. We'd love to get back. What we actually like on that is it's actually competitive difficulties that, like that, that actually lead players like Comcast and Charter to mount a much more formidable competitive response and maybe open up the aperture to things that we don't have. We don't have wireless today.
We don't do everything on the enterprise or B2B side. With the value we've brought these players over three decades, we actually think you could end up with some smallish headwinds and potentially lead to much bigger step-ups. Obviously, one of our customers has announced a major merger with Cox. If that goes through, we don't have the billing and monetization platform for Cox. That's on a competitor. If that gets consolidated and that merger goes through, that could be an opportunity for us. In the global telecom, I mean, I think we're just getting started on the market share. We're going to continue to win big. The good news is replacing your core ATM and monetization platform is still risky and it's still hard. Therefore, it is very sticky.
Therefore, what we see in global telecom in any given point in time, we'll have between five and ten major full-stack transformation sales pursuits that we're in. We won't win all those. Not all those will even make a decision. What that leads to is it tends to lead to at any point in time us working on five or six major billing system transformations. We continue to see that even in a tough macroeconomic environment. We got to continue to have a good sales win rate and continue to deploy with great success in those. On the CX and payment side, those have been strong double-digit growth businesses organically. They can continue to be that. Every now and then we might have a quarter that's more in the mid to high single digits. They'll bounce between rule of 40 and rule of 30 kind of performance.
We love the growth. That's what's driving this big step up in revenue diversification. On the organic side, what customers have come to expect is we're very disciplined and very opportunistic on both small, mid, and larger acquisitions. We'll continue to deploy capital where there's an opportunity to buy a great asset at the right price and integrate it and accelerate the strategic growth. That's exactly what we have and we'll continue to do.
Really helpful. I guess just getting back to the telco sector, thanks for the color on that. I know the industry is extremely conservative. You would think at this point it should be kind of a no-brainer for them. We've been through COVID. The cloud is pretty well proven at this point. There's not a huge amount of growth out there. Why not digitize the business as aggressively as you possibly can? Wouldn't you think we're hitting the S-curve adoption cycle of that at some point, I guess?
I think the answer should be yes. I think we're hitting the early inflection point. The reality is, if you think about kind of what I shared, it's really not about tech refresh. It's to really unlock the competitive advantages that really they need to do. It's a complete business overhaul, changing their product offers, changing their product catalog and how they go to market, changing their business processes from retail stores and online, which then leads down to a pretty big transformation of their technology stack. There are hundreds of systems in all these. The answer is, do I believe every telecom operator and management team in the world knows this is what they need to do? Yes, 99% of them know it. That's a lot of work. It's hard to do.
They all have, they're all in different stages of, do they do that in a series of steps? Do they do that as a holistic business transformation program? Do they want to believe the sales pitch of their incumbent and take a chance on the incumbent and then put some newer edge systems around the top? Do they want to replace the core? They're all trying slightly different approaches, even though the end goal is the same, because it's a lot of work. Most of these transformations are two to four years in the making. They know sometimes there's setbacks along that journey. I think that's why we still, even though it's clear what they need to do, the speed and pace of what you're going to do that over the next three to ten years does vary a lot.
Outside of the traditional business, the new growth business is 32% of revenues. What, I know you touched on some of them, but what are the two or three largest verticals there that you serve now? Are there new verticals you're looking to get into?
Yeah, so there's several. One, we continue to do a lot in the media space, like with the example I gave on Formula One, where they use our Ascendant AWS cloud platform and handle all of their race experience, whether it's in subscription management. There continue to be significant opportunities in media. We're doing a lot in financial services across different parts of our offer. We talked about on the CX side helping JPMorgan Chase with fraud alert notifications and managing that process and how they've expanded with us. We've also talked about big deals we've won, like deploying at one of the larger banks in Australia. They decided they needed to redo their deal management and pricing for SMB and their B2B side of their business. They looked at a lot of solutions. They selected our Ascendant billing solution and our quote and order platform on the banking side.
Ascendant was initially built for telecom, cable, and media. What we realized is there's actually similar needs with both the monetization and pricing and our quote and order offer that can be deployed in banks. Financial services is a huge one for us, Tim. Second one would be pharmacy, retail, and healthcare. We started out with our CX and digital communications, digital engagement platform, helping large pharmacy retailers with appointment scheduling and vaccinations because they had an influx of customers, winds of availability. How do you enable customers to sign up and then get them to come in? After that, we transitioned to help them with prescription abandonment to be able to take all that rich data they have and target consumers to then around prescription refill notifications through their channel of choice and drive revenue in a lower cost digital stack.
We're doing similar things around helping doctors and physician offices to deal with, in a digital way, appointment reminders because one of the biggest revenue losses there is missed appointments. Pharmacy and retail and healthcare are big growth verticals for us. We also have a pretty big presence in the technology and government space. What we're doing there is we have great solutions that we can get, I would say, at relatively modest price points, get a foot in the door, anywhere from $500,000 ARR to $2 million or $3 million. We perform well on a couple of targeted use cases, then we expand into those others. When we serve those giants, we then get great customer testimonial and references to try to go get other large or mid-sized players in those same verticals.
I mean, a lot of what you do is kind of new white spaces stuff, but have you also measured the productivity improvements there, you know, versus what they were doing previously? Is it kind of similar to that 20%- 50%?
There, it's a little different in terms, it depends on the vertical and the use case. For example, with one of the largest tech players in the world, they needed help. They have lots of product lines. They were having an issue where they had lots of data. They have lots of different call centers and 1-800 numbers by product. What they were having trouble with is with effectively their first call resolution and doing massive amounts of warm transfer because a consumer would come in, they would hit something wrong in the IVR, they would get to the wrong agent, they would spend a ton of time, they'd have to do a warm transfer.
We were able to work with them on some data-driven solutions we have, natural language processing and speech recognition to actually help them get the consumer to the right skilled agent in the right product line. What they saw from one of our biggest competitors was they went from a high 40% first call resolution and not needing a warm transfer to upwards of high 80% that drove tens of tens of millions of dollars of cost savings on a call center side with a more digital engagement and getting to the right agent. The metrics are different, but they are just as meaningful and large. That's why we've been able to maintain double-digit growth on that side of the business because these things pay for themselves extremely quickly. They tend to get deployed in three to six months. It's not, you know, 18 months to three years like replacing a billing system for a cable or wireless provider.
There is a lot of room to grow in each one of these existing verticals. You're probably just scratching the surface.
There are. I mean, we're on a market share basis. We're not even on the radar, you know, not beyond even single digit. These are large verticals. I would say both on the payment side and the CX, we've had a lot more success so far in the U.S. market. CX in particular, we think there's an opportunity with channel partners as we've proven success with large brands, but CSG doesn't have the reputation in financial services or insurance or healthcare or retail or government or tech in these in other global markets. Working with channel partners to say, hey, we've got the proven solution. We've got the proven use case. You can wrap some of your technology or your capabilities around ours, pull us in. That's where we're trying to expand globally with those businesses, but do it in a smart, high-return way with more of a channel approach.
Brian, just on that point, I guess what is it that you're doing? In customer experience, there's hundreds of companies going after it, right? AI is seeing major productivity improvements with new entrants kind of coming in. What's your core competency? What do you know how to do differently than, you know, someone who's been a traditional contact center supplier?
Yeah, I mean, our real strength is, and we would compete against what Adobe does on the marketing side, is what we do on the digital customer engagement side. We take massive amounts of structured and unstructured data. We pull them into our data platform. We then have advanced analytics to, in real time, referred to often as journey analytics and journey orchestration, get the insight at an individual consumer level, whether it's trying to drive an upsell, whether it's trying to identify a customer dissatisfaction event, or predict what it is they want when they want it through their channel of choice. We then also have the solutions that engage, whether it's text, whether it's an IM, whether it's a WhatsApp, whether it's an email, whether it's a phone call, to do the outreach to the consumer to solve a targeted use case.
The best way to really bring it home is think about the use cases. In telecom and cable, two of the biggest issues are promo rolloff and bill shock. What happens is if I get a wireless plan, I get a deep discount for six, 12 months, and then I roll off that promotional period, my price goes up. Guess what? Drives a call to a call center, drives a bill shock experience, higher risk of churn. By using advanced data that we get from our billing systems, from their data warehouses, and from other social and unstructured data, we can actually help them predict when there's going to be a bill shock or churn event and actually give a targeted digital outreach to either avoid the call center call, reduce the churn event, or educate the customer in a lower cost way.
Have you seen new competitors coming in that are doing something similar?
I mean, we've faced competition from, it could be an Adobe. What Adobe really excels on is more the marketing customer acquisition side. Our biggest issue there is some big brand has deployed them for marketing customer acquisition, and then they say, oh, well, we can do that digital experience, those other use cases. What we find, they're not as effective as us. We have to overcome that if they've already become the incumbent on the sales and the acquisition side. We are seeing some, I would say, slowing of sales cycles in some areas around just AI for some of the brands that say, hey, maybe we could use new technology and AI to try to do this ourselves.
What we find is with our ROIs and our value-based selling and how we're able to quantify, rarely can they, but sometimes that might lead to them trying some things like that. There is a lot of experimentation just like we're doing in terms of how we run our own R&D testing and using AI to make ourselves more efficient. We are seeing companies trying that, but so far the success we have on a targeted use case, when we go in and say, this is a giant problem, they tell us the size, the magnitude of the problem, and we show them they can solve that in less than three months with typically a six to 12 month payback or less, even if they go try it on themselves, often they come back to us and drive.
There is competition in this, in the current space, but we are performing well. We're closing great new wins and doing lots of land and expand in this, but we just have to keep performing better and keep working hard because it is a, there are a lot of choices out there for sure.
You know, just getting back to the cable side, I was pretty cautious on Charter for the last seven, eight years. I upgraded them a little soon, but you know, it seems to me that their product is improving dramatically. We're converging, obviously, fixed broadband and fixed services with mobile. We're converging, I think, legacy linear TV with over-the-top TV. I think, one, I'd like to know if you kind of agree with that or not. Secondly, there would seem to be a pretty big opportunity for you guys to do more for Cox and ultimately Charter if it's successful, but not to put words in your mouth.
You look at it, you look at the strategy that Charter is taking. You look at the operational discipline, truly one of the best operational performers across the market. When they hit something that snags them, they just get real intentional and go solve it. I think you're right on saying there's huge upside in Charter stock. We think there's probably been an overreaction, but I'll let investors make that decision for themselves. For us, we're critical to what they're doing. We've had almost a 35-year relationship with them. Love that they made a decision to move 14 million subscribers off a competitor three or four years ago to us. We converted those in less than 18 to 24 months. If the Cox merger goes through, which everything says it should, we think that could be a net benefit for us.
The fact that we don't have wireless, we don't have all their enterprise today, we love our opportunities, but what we know, we've got to earn it. If we bring more value, we outperform our competition, it should work out well for us over some period of time.
They are using a competitor for their wireless services. I mean, why should they go with you and when could they kind of converge everything?
I think first, that'll be their choice. What we talk to them about is, you know, if you have your triple play on CSG, you've got your wireless on another competitor, Amdocs in this case, you know, could you actually get cost synergies by not having two systems, not have to integrate everything twice? Could you improve your digital engagement with your customers and do that? That'll be their decision. Obviously, we have our beliefs and what we have to do is just keep bringing ideas. Maybe they'll make that decision someday. Maybe they'll never make that decision. Time will tell. We just keep working it. If I go back 10 years ago, the industry used to think they used to need to have two billing platforms for their triple play. That was a philosophical belief.
Then pressure, market changes, the opportunity eventually led them to move massive volume off our competitor onto us. We're trying to run the same playbook on wireless. Time will tell. We just got to keep working it, keep bringing in value.
I say the best for last. AI, is it reducing your expenses and/or driving new revenue opportunities? Yeah.
Combination of both. I mean, first, it's table stakes. We have to build more and more real-time insights driven into all of our platforms, whether it's our billing and monetization, whether it's our CX or our payments, we're doing that. What we're seeing is, I would say, so far, the double-digit expansion of our profitability and free cash flow is actually coming from more SaaS makeshift on the revenue side and just great operational discipline. The breakthroughs we've seen on AI in the last three to six months, we signaled that we believe by 2030, we could see EBITDA north of 28%- 30%. We believe we could have an operating margin approaching 24%, 25%. We have not committed to that yet or the exact horizons.
What we said is if we believe we can continue the SaaS revenue makeshift, the operational discipline, you'll start to see AI impact every part of our business from CFO, accounting, payroll, HR, marketing, how we do compliance and legal, all the way through how we do our R&D, engineering, test harnesses. We think it's going to have a massive impact. So far, the big growth in profitability has not come from AI, but you're going to see it start to come in the coming quarters and years. That is why we've been so bullish that investors will see this continued double-digit free cash flow and profitability expansion from CSG.
What has happened in the last six months in AI? Have the models just gotten so much better? Where are we?
I think we're just, everybody's in the early adoption curve of looking at all the use cases and then starting, you're seeing more experimentation inside our company, the large language models. We take an approach where we work with some of the large players to use their infrastructure and their models. We have unique proprietary capabilities on our side. We see an ecosystem of other innovative tech providers that can actually help us with some of the agentic capabilities on QA and testing and R&D that is absolutely game-changing. I think it's just the, it's all of the above, Tim. I think everybody's advancing. I think what we thought might be possible 18 months from now, we're now sitting here six months later saying this is possible in the next couple of quarters.
Obviously, it still takes, you know, it'll take a few years to fully ramp across every aspect of our business. We're now like, it's not two years out, it's one or two quarters out.
We are out of time, Brian.
Tim, it was great to catch up with you. Thanks for the time, and thanks for hosting us.
Absolutely. Thank you so much.