Core Viewpoint - Consensus Cloud Solutions, Inc. (CCSI) has been upgraded to a Zacks Rank 2 (Buy), indicating an upward trend in earnings estimates which is a significant factor affecting stock prices [1][4]. Earnings Estimates and Ratings - The Zacks rating system is based solely on a company's changing earnings picture, tracking the Zacks Consensus Estimate for EPS from sell-side analysts [2]. - The Zacks rating upgrade reflects a positive outlook on the earnings potential of Consensus Cloud Solutions, which could positively influence its stock price [4][6]. Impact of Earnings Estimates on Stock Prices - Changes in future earnings potential, as shown by earnings estimate revisions, are strongly correlated with near-term stock price movements [5]. - Institutional investors utilize earnings estimates to determine the fair value of stocks, leading to significant price movements based on their trading activities [5]. Performance of Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [8]. - The upgrade of Consensus Cloud Solutions to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [11]. Earnings Estimate Revisions for Consensus Cloud Solutions - For the fiscal year ending December 2025, Consensus Cloud Solutions is expected to earn $5.52 per share, with no year-over-year change [9]. - Over the past three months, the Zacks Consensus Estimate for the company has increased by 3.7%, reflecting a positive trend in earnings estimates [9].

Group 1: Earnings Performance - Consensus Cloud Solutions, Inc. (CCSI) reported quarterly earnings of $1.46 per share, exceeding the Zacks Consensus Estimate of $1.36 per share, and showing a slight increase from $1.45 per share a year ago, resulting in an earnings surprise of +7.35% [1] - The company has surpassed consensus EPS estimates in all four of the last quarters, indicating consistent performance [2] - The revenue for the quarter ended June 2025 was $87.72 million, which also surpassed the Zacks Consensus Estimate by 1.24%, compared to $87.5 million in the same quarter last year [2] Group 2: Stock Performance and Outlook - Consensus Cloud Solutions shares have declined approximately 15.7% since the beginning of the year, contrasting with the S&P 500's gain of 7.9% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to those expectations [4] - The current consensus EPS estimate for the next quarter is $1.32 on revenues of $87.78 million, and for the current fiscal year, it is $5.32 on revenues of $349.65 million [7] Group 3: Industry Context - The Internet - Software industry, to which Consensus Cloud Solutions belongs, is currently ranked in the top 28% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5] - The Zacks Rank for Consensus Cloud Solutions is currently 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6]

Financial Data and Key Metrics Changes - The company reported total revenue of $87.7 million for Q2 2025, representing a 0.3% increase compared to Q2 2024, marking the first quarterly year-over-year revenue increase in eight quarters [32] - Adjusted EBITDA for Q2 2025 was $48.1 million, a decrease of 2.1% from Q2 2024, primarily due to planned headcount increases [32] - Adjusted net income for Q2 2025 was $28.4 million, up 3.2% from the prior year, driven by lower interest expenses and depreciation [33] - Free cash flow increased by 29% to $20.3 million compared to Q2 2024, attributed to effective management of receivables and lower interest expenses [11][33] Business Line Data and Key Metrics Changes - Corporate revenue reached a record $55.3 million in Q2 2025, a 6.9% increase from $51.7 million in Q2 2024, marking the highest growth in the past ten quarters [14][27] - SOHO revenue was $32.4 million, reflecting a planned decrease of 9.4% from $35.8 million in the prior year [22][29] - The corporate customer base grew to approximately 63,000, an 11% increase year-over-year, with a trailing twelve months revenue retention rate of 102% [16][27] Market Data and Key Metrics Changes - The company noted strong performance in the healthcare vertical, which is becoming a larger portion of total corporate revenue [15] - The public sector pipeline remains robust, with ongoing discussions and progress in the VA rollout [19][20] Company Strategy and Development Direction - The company aims to pursue customer acquisitions primarily in the healthcare space and drive revenue growth exceeding 6.25% for the year [7] - A focus on optimizing profitability in the SOHO channel while managing advertising investments is emphasized [22][24] - The company is studying the impact of the One Big Beautiful Bill Act, particularly regarding anticipated cuts to Medicaid and Medicare, and believes it is well-positioned to assist providers in reducing costs [12][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving double-digit growth for the corporate business channel, supported by a strong sales pipeline [15] - The company is not experiencing a slowdown in demand from healthcare providers, despite challenges faced by major hospital systems [44][45] - Management expects to maintain a retention rate above 100% and is actively working on programs to improve customer retention [50] Other Important Information - The company concluded a $225 million bank facility to retire 6% notes due in October 2026, consisting of a $150 million term loan and a $75 million revolver [8][35] - The company repurchased approximately $12 million of its common stock during the quarter at an attractive valuation [11][33] Q&A Session Summary Question: Thoughts on demand and pipeline amidst hospital system challenges - Management indicated that they are not experiencing a slowdown and have closed significant deals with large health systems recently [44][45] Question: Drivers behind improved revenue retention rate - Key drivers include large strategic accounts, improved service methodologies, and programs targeting churn in the SMB sector [48][50] Question: Length of sales cycle in the public sector and partnerships - Sales cycles vary significantly, with smaller deals closing quickly while larger government contracts may take years [52][53] - The partnership with Accenture is progressing well, enhancing the company's position in the public sector [54]

Part I. Financial Information [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements and accompanying notes for the period [Condensed Consolidated Balance Sheets (unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(unaudited)) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------- | :----------------------------- | :------------------------------- | | Total Assets | $641,518 | $602,201 | | Total Liabilities | $667,997 | $681,664 | | Total Stockholders' Deficit | $(26,479) | $(79,463) | | Cash and cash equivalents | $57,894 | $33,545 | | Current portion of long-term debt | $— | $18,902 | [Condensed Consolidated Statements of Income (unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(unaudited)) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenues | $87,721 | $87,500 | $174,859 | $175,646 | | Gross profit | $70,097 | $70,378 | $139,165 | $141,476 | | Income from operations| $39,049 | $39,881 | $76,546 | $77,548 | | Net income | $20,781 | $23,874 | $41,933 | $50,244 | | Basic EPS | $1.07 | $1.24 | $2.15 | $2.61 | | Diluted EPS | $1.07 | $1.24 | $2.14 | $2.61 | [Condensed Consolidated Statements of Comprehensive Income (unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(unaudited)) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income | $20,781 | $23,874 | $41,933 | $50,244 | | Foreign currency translation adjustment | $9,859 | $(1,337) | $14,227 | $(7,651) | | Comprehensive income | $30,640 | $22,537 | $56,160 | $42,593 | [Condensed Consolidated Statements of Cash Flows (unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $69,242 | $69,054 | | Net cash used in investing activities | $(20,150) | $(17,479) | | Net cash used in financing activities | $(28,588) | $(86,101) | | Net change in cash and cash equivalents | $24,349 | $(39,514) | | Cash and cash equivalents at end of period| $57,894 | $49,201 | [Condensed Consolidated Statements of Stockholders' Deficit (unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Deficit%20(unaudited)) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Total Stockholders' Deficit | $(26,479) | $(79,463) | | Net income (6 months) | $41,933 | $50,244 | | Foreign currency translation adjustment (6 months) | $14,227 | $(7,651) | | Repurchase of common stock (6 months) | $(12,574) | $(708) | | Share-based compensation (6 months) | $9,878 | $9,665 | [Notes to Condensed Consolidated Financial Statements (unaudited)](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) [1. Basis of Presentation](index=10&type=section&id=1.%20Basis%20of%20Presentation) The company provides secure SaaS information delivery services and operates as a single 'Cloud Fax' segment - Consensus Cloud Solutions, Inc is a provider of secure information delivery services with a scalable Software-as-a-Service ("SaaS") platform, serving customers globally across healthcare, government, financial services, law, and education[21](index=21&type=chunk) - The Company operates **one reportable segment** known as Cloud Fax, with the CEO reviewing financial information on a consolidated basis for performance assessment and resource allocation[28](index=28&type=chunk) [2. Recent Accounting Pronouncements](index=12&type=section&id=2.%20Recent%20Accounting%20Pronouncements) The company is evaluating the impact of recent FASB accounting standards updates on its financial statements - ASU No 2023-09, 'Income Taxes (Topic 740): Improvements to Income Tax Disclosures,' is effective for annual periods beginning after December 15, 2024, and is expected to impact the Company's income tax disclosures from the fiscal year ending December 31, 2025[31](index=31&type=chunk) - ASU No 2024-03, 'Income Statement: Expense Disaggregation Disclosures,' is effective for fiscal periods beginning after December 15, 2026, and the Company is currently evaluating its potential impact[32](index=32&type=chunk) [3. Revenues](index=12&type=section&id=3.%20Revenues) Revenue is primarily generated from cloud-based solutions, with Corporate revenue growing while SoHo revenue declines Revenues by Source (in thousands) | Revenue Source | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Corporate | $55,302 | $51,720 | $109,591 | $103,110 | | SoHo | $32,414 | $35,779 | $65,263 | $72,533 | | Total | $87,721 | $87,500 | $174,859 | $175,646 | - The Company's business primarily consists of performance obligations satisfied over time, with revenue for cloud-based services recognized on a **straight-line basis** over the subscription period[39](index=39&type=chunk)[40](index=40&type=chunk) [4. Fair Value Measurements](index=14&type=section&id=4.%20Fair%20Value%20Measurements) The company uses a three-tier hierarchy for fair value measurements, with cash valued using Level 1 inputs - Cash and cash equivalents, including money market funds, are valued based on **Level 1 inputs** (quoted prices in active markets)[45](index=45&type=chunk) - The fair value of long-term debt is determined using **Level 1 inputs** (recent quoted market prices or dealer quotes)[47](index=47&type=chunk) - Non-financial assets are reported at carrying value and written down to fair value using **Level 3 inputs** if impaired[48](index=48&type=chunk) [5. Property and Equipment](index=15&type=section&id=5.%20Property%20and%20Equipment) Net property and equipment increased, driven by costs for internal-use software development Property and Equipment, Net (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------------- | :------------ | :---------------- | | Internal-use software development costs | $91,047 | $88,244 | | Internal-use software development costs in process | $60,296 | $46,676 | | Total property and equipment, net | $108,111 | $100,076 | - Depreciation and amortization expense for property and equipment was **$8.4 million** for the six months ended June 30, 2025[50](index=50&type=chunk) [6. Goodwill and Intangible Assets](index=15&type=section&id=6.%20Goodwill%20and%20Intangible%20Assets) Goodwill increased due to foreign exchange translation, while customer relationships remain the largest intangible asset Goodwill (in thousands) | Metric | Amount | | :------------------------ | :---------- | | Balance as of January 1, 2025 | $345,036 | | Foreign exchange translation | $7,707 | | Balance as of June 30, 2025 | $352,743 | Intangible Assets Subject to Amortization (Net, in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Customer relationships | $7,166 | $8,233 | | Other purchased intangibles | $1,174 | $1,338 | | Trade names | $216 | $281 | | Total | $8,556 | $9,852 | - Amortization expense for intangible assets was **$1.3 million** for the six months ended June 30, 2025[55](index=55&type=chunk) [7. Long-Term Debt](index=17&type=section&id=7.%20Long-Term%20Debt) Total long-term debt stands at $578.2 million, with the company actively repurchasing senior notes Long-Term Debt (in thousands) | Debt Type | June 30, 2025 | December 31, 2024 | | :----------------- | :------------ | :---------------- | | 2026 Senior Notes | $234,139 | $248,980 | | 2028 Senior Notes | $348,247 | $349,137 | | Total debt, net | $578,155 | $592,982 | - The Company has a Debt Repurchase Program authorizing up to **$300 million** in principal reduction, with **$222.6 million** retired as of June 30, 2025[67](index=67&type=chunk)[68](index=68&type=chunk) - The Company is in **compliance with all debt covenants** as of June 30, 2025[62](index=62&type=chunk)[64](index=64&type=chunk)[66](index=66&type=chunk) [8. Commitments and Contingencies](index=19&type=section&id=8.%20Commitments%20and%20Contingencies) The company faces no material adverse effects from legal proceedings but has reserved for sales tax liabilities - The Company does not believe any current legal proceedings or claims are likely to have a **material adverse effect** on its consolidated financial position, results of operations, or cash flows[71](index=71&type=chunk) - The Company has reserved for historical sales tax liabilities, but state taxing authorities may challenge its position or impose other taxes[72](index=72&type=chunk) [9. Other Balance Sheet Account Details](index=19&type=section&id=9.%20Other%20Balance%20Sheet%20Account%20Details) Prepaid expenses and accounts payable both decreased, driven by lower marketing and compensation accruals Prepaid Expenses and Other Current Assets (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Prepaid insurance | $1,204 | $2,601 | | Prepaid income taxes | $1,360 | $2,065 | | Prepaid marketing expense | $— | $3,365 | | Prepaid software licenses | $3,657 | $4,346 | | Other prepaid expenses | $3,266 | $3,389 | | Other current assets | $214 | $293 | | Total | $9,701 | $16,059 | Accounts Payable and Accrued Expenses (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Accounts payable | $5,991 | $7,383 | | Accrued sales and other taxes | $7,042 | $6,796 | | Accrued interest | $7,638 | $7,939 | | Accrued compensation | $6,102 | $10,425 | | Accrued advertising expenses | $1,643 | $2,719 | | Other accrued expenses | $3,186 | $1,215 | | Total | $31,602 | $36,477 | [10. Income Taxes](index=20&type=section&id=10.%20Income%20Taxes) The effective tax rate fluctuated due to geographical income mix, with liabilities for uncertain tax positions noted Effective Tax Rates | Period | 2025 | 2024 | | :------------------------ | :---- | :---- | | Three Months Ended June 30 | 27.2% | 26.5% | | Six Months Ended June 30 | 25.7% | 26.9% | - The increase in the effective tax rate for the three months ended June 30, 2025, was primarily due to a change in the **geographical mix of income** and other factors[75](index=75&type=chunk) - As of June 30, 2025, the Company had **$14.1 million in liabilities for uncertain income tax positions** and is evaluating the impact of the new OBBBA legislation[77](index=77&type=chunk)[78](index=78&type=chunk) [11. Stockholders' Deficit](index=20&type=section&id=11.%20Stockholders'%20Deficit) The company extended its $100 million stock repurchase program and repurchased $12.6 million in shares - The common stock repurchase program was extended through February 2028, with an authorization of up to **$100.0 million**[80](index=80&type=chunk)[81](index=81&type=chunk) Common Stock Repurchase Activity | Period | Shares Repurchased | Aggregate Cost (in millions) | | :------------------------ | :----------------- | :--------------------------- | | 3 Months Ended June 30, 2025 | 551,873 | $12.5 | | 6 Months Ended June 30, 2025 | 553,344 | $12.6 | | 6 Months Ended June 30, 2024 | 42,962 | $0.7 | | Cumulatively as of June 30, 2025 | 1,639,069 | $44.9 | - The Company withheld **51,045 shares** in the six-month period for tax withholding obligations related to vested restricted stock[82](index=82&type=chunk) [12. Equity Incentive Plan](index=21&type=section&id=12.%20Equity%20Incentive%20Plan) The company has 1.4 million shares available for grant and $29.6 million in unrecognized compensation cost - Under the 2021 Equity Incentive Plan, 4,000,000 shares of common stock are authorized, with **1,397,224 shares available** as of June 30, 2025[85](index=85&type=chunk) - As of June 30, 2025, unrecognized share-based compensation cost related to restricted stock units was **$29.6 million**, to be recognized over a weighted-average period of 2.4 years[86](index=86&type=chunk) [13. Earnings Per Share](index=22&type=section&id=13.%20Earnings%20Per%20Share) Basic and diluted earnings per share declined compared to the prior year for both three and six-month periods Net Income Per Common Share | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Basic | $1.07 | $1.24 | $2.15 | $2.61 | | Diluted| $1.07 | $1.24 | $2.14 | $2.61 | - For the three and six months ended June 30, 2025, **1,017,505 and 994,209 anti-dilutive shares**, respectively, were excluded from the earnings per share calculation[88](index=88&type=chunk) [14. Segment Information](index=23&type=section&id=14.%20Segment%20Information) The company operates a single 'Cloud Fax' segment, with the majority of its revenue generated in the United States Segment Operating Profit (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Segment operating profit | $39,049 | $39,881 | $76,546 | $77,548 | Revenues by Geographic Region (in thousands) | Region | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | United States | $68,620 | $69,199 | $137,376 | $138,911 | | Canada | $14,113 | $13,254 | $27,736 | $26,373 | | Ireland | $2,775 | $3,037 | $5,477 | $6,211 | | All other countries | $2,213 | $2,010 | $4,270 | $4,151 | | Foreign countries | $19,101 | $18,301 | $37,483 | $36,735 | [15. Subsequent Events](index=24&type=section&id=15.%20Subsequent%20Events) The company repurchased additional shares and entered into a new, larger credit facility after the quarter ended - Subsequent to June 30, 2025, the Company repurchased **115,652 shares for $2.6 million** under its share buyback program[91](index=91&type=chunk) - On July 9, 2025, the Company entered into a new **$75.0 million Revolving Credit Facility** and a **$150.0 million Delayed-Draw Term Loan (DDTL) Facility**[92](index=92&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition, operational results, and liquidity for the reporting period [Forward-Looking Information](index=25&type=section&id=Forward-Looking%20Information) - The report contains forward-looking statements subject to risks and uncertainties, for which the Company claims the protection of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995[94](index=94&type=chunk) - Factors that could cause actual results to differ include economic uncertainty, ability to sustain growth/profitability, customer acquisition/retention, and managing technological changes[95](index=95&type=chunk) [Overview](index=26&type=section&id=Overview) - Consensus is a leading provider of secure information delivery services with a scalable SaaS platform, serving approximately **745,000 customers across 44 countries**[97](index=97&type=chunk) - The Company's mission is to democratize secure information interchange and solve the healthcare interoperability challenge[97](index=97&type=chunk) [Key Performance Metrics](index=27&type=section&id=Key%20Performance%20Metrics) Key Performance Metrics (in thousands, except percentages and ARPA) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Corporate Revenue | $55,302 | $51,720 | $109,591 | $103,110 | | SoHo Revenue | $32,414 | $35,779 | $65,263 | $72,533 | | Consolidated Revenue | $87,721 | $87,500 | $174,859 | $175,646 | | Corporate ARPA | $301.29 | $310.18 | $300.99 | $313.13 | | SoHo ARPA | $15.62 | $15.45 | $15.51 | $15.41 | | Consolidated ARPA | $38.82 | $35.24 | $38.24 | $34.87 | | Corporate Customer Accounts | 63 | 56 | 63 | 56 | | SoHo Customer Accounts | 682 | 760 | 682 | 760 | | Consolidated Customer Accounts | 745 | 816 | 745 | 816 | | Corporate Monthly Churn % | 2.86 % | 2.29 % | 2.68 % | 2.10 % | | SoHo Monthly Churn % | 3.84 % | 3.55 % | 3.68 % | 3.57 % | | Consolidated Monthly Churn % | 3.76 % | 3.46 % | 3.60 % | 3.48 % | - The Company eliminated dormant accounts not contributing to revenue from the number of SoHo customer accounts in the current period, and prior year periods were revised for consistency[101](index=101&type=chunk) [Critical Accounting Estimates](index=28&type=section&id=Critical%20Accounting%20Estimates) - There were **no significant changes** in the Company's critical accounting policies and estimates during the six months ended June 30, 2025[102](index=102&type=chunk) [Results of Operations for the Three and Six Months Ended June 30, 2025 and 2024](index=28&type=section&id=Results%20of%20Operations%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) [Revenues](index=28&type=section&id=Revenues) Consolidated revenues remained flat as Corporate growth was offset by a decline in the SoHo business segment Revenue Changes (in thousands) | Period | 2025 | 2024 | Change (3M) | Change (6M) | | :------------------------ | :-------- | :-------- | :---------- | :---------- | | 3 Months Ended June 30 | $87,721 | $87,500 | +$0.2M | | | 6 Months Ended June 30 | $174,859 | $175,646 | | -$0.8M | - For the three months ended June 30, 2025, Corporate business revenue **increased by $3.6 million (7%)**, while SoHo business revenue **declined by $3.4 million (9%)**[106](index=106&type=chunk) - For the six months ended June 30, 2025, Corporate business revenue **increased by $6.5 million (6%)**, while SoHo business revenue **declined by $7.3 million (10%)**[107](index=107&type=chunk) [Cost of Revenues](index=28&type=section&id=Cost%20of%20Revenues) Cost of revenues increased due to higher network operations, personnel, and data transmission costs Cost of Revenues (in thousands) | Period | 2025 | 2024 | Change (3M) | Change (6M) | | :------------------------ | :-------- | :-------- | :---------- | :---------- | | 3 Months Ended June 30 | $17,624 | $17,122 | +$0.5M | | | 6 Months Ended June 30 | $35,694 | $34,170 | | +$1.5M | - The increase in cost of revenues for the three months was primarily due to increases of **$0.5 million in network operations costs** and **$0.3 million in personnel-related expenses**[109](index=109&type=chunk) - The increase for the six months was primarily due to increases of **$1.3 million in network operations costs**, **$0.5 million in depreciation**, and **$0.4 million in data transmission costs**[111](index=111&type=chunk) [Operating Expenses](index=29&type=section&id=Operating%20Expenses) Operating expenses varied, with higher sales and marketing costs and lower general and administrative expenses [Sales and Marketing](index=29&type=section&id=Sales%20and%20Marketing) Sales and Marketing Expenses (in thousands) | Period | 2025 | 2024 | Change (3M) | Change (6M) | | :------------------------ | :-------- | :-------- | :---------- | :---------- | | 3 Months Ended June 30 | $12,452 | $11,718 | +$0.7M | | | 6 Months Ended June 30 | $25,240 | $24,276 | | +$1.0M | - The increase in sales and marketing expenses for the three months was primarily due to increases of **$0.4 million in third-party advertising spend** and **$0.2 million in personnel-related expenses**[113](index=113&type=chunk) - The increase for the six months was primarily due to an increase of **$1.0 million in third-party advertising spend**[113](index=113&type=chunk) [Research, Development and Engineering](index=29&type=section&id=Research,%20Development%20and%20Engineering) Research, Development and Engineering Expenses (in thousands) | Period | 2025 | 2024 | Change (3M) | Change (6M) | | :------------------------ | :-------- | :-------- | :---------- | :---------- | | 3 Months Ended June 30 | $1,744 | $1,643 | +$0.1M | | | 6 Months Ended June 30 | $3,456 | $3,548 | | -$0.092M | - Research, development and engineering costs for both the three and six months ended June 30, 2025, **remained consistent** with the prior year comparable periods[115](index=115&type=chunk) [General and Administrative](index=29&type=section&id=General%20and%20Administrative) General and Administrative Expenses (in thousands) | Period | 2025 | 2024 | Change (3M) | Change (6M) | | :------------------------ | :-------- | :-------- | :---------- | :---------- | | 3 Months Ended June 30 | $16,852 | $17,136 | -$0.3M | | | 6 Months Ended June 30 | $33,923 | $36,104 | | -$2.2M | - The decrease in G&A expenses for the three months was primarily due to decreases of **$0.5 million in bad debt expense** and **$0.4 million in depreciation and amortization expense**[117](index=117&type=chunk) - The decrease for the six months was primarily due to decreases of **$0.9 million in non-income related tax expenses** and **$0.6 million in depreciation and amortization expense**[118](index=118&type=chunk) [Share-Based Compensation](index=31&type=section&id=Share-Based%20Compensation) Total share-based compensation expense increased, with the largest portion allocated to general and administrative costs Share-Based Compensation Expense (in thousands) | Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Cost of revenues | $511 | $481 | $987 | $984 | | Sales and marketing | $702 | $585 | $1,416 | $1,264 | | Research, development and engineering | $107 | $70 | $212 | $165 | | General and administrative | $2,887 | $2,602 | $5,856 | $5,775 | | Total | $4,207 | $3,738 | $8,471 | $8,188 | [Non-Operating Income and Expenses](index=31&type=section&id=Non-Operating%20Income%20and%20Expenses) Changes were driven by a loss on debt extinguishment, lower interest income, and foreign currency fluctuations [Interest expense](index=31&type=section&id=Interest%20expense) Interest Expense (in thousands) | Period | 2025 | 2024 | Change (3M) | Change (6M) | | :------------------------ | :-------- | :-------- | :---------- | :---------- | | 3 Months Ended June 30 | $(8,673) | $(8,657) | $(16) | | | 6 Months Ended June 30 | $(17,649) | $(14,856) | | $(2,793) | - The increase in interest expense for the six months was due to a **net loss on debt extinguishment** of $(0.1) million in 2025 compared to a net gain of $6.6 million in 2024[120](index=120&type=chunk) [Interest income](index=31&type=section&id=Interest%20income) Interest Income (in thousands) | Period | 2025 | 2024 | Change (3M) | Change (6M) | | :------------------------ | :------ | :------ | :---------- | :---------- | | 3 Months Ended June 30 | $484 | $593 | $(109) | | | 6 Months Ended June 30 | $935 | $1,516 | | $(581) | - Interest income decreased for both periods as the Company **decreased its investment in money market funds** to repurchase common stock and long-term debt[121](index=121&type=chunk) [Other (expense) income, net](index=31&type=section&id=Other%20(expense)%20income,%20net) Other (Expense) Income, Net (in thousands) | Period | 2025 | 2024 | Change (3M) | Change (6M) | | :------------------------ | :-------- | :------ | :---------- | :---------- | | 3 Months Ended June 30 | $(2,316) | $663 | $(2,979) | | | 6 Months Ended June 30 | $(3,413) | $4,565 | | $(7,978) | - The change was primarily attributable to **exchange rate fluctuations** on intercompany balances between periods in foreign subsidiaries[122](index=122&type=chunk) [Income Taxes](index=31&type=section&id=Income%20Taxes) The effective tax rate fluctuated due to geographical income mix, valuation allowances, and uncertain tax positions Income Tax Expense (in thousands) | Period | 2025 | 2024 | | :------------------------ | :------ | :------ | | 3 Months Ended June 30 | $7,763 | $8,606 | | 6 Months Ended June 30 | $14,486 | $18,529 | Effective Tax Rates | Period | 2025 | 2024 | | :------------------------ | :---- | :---- | | 3 Months Ended June 30 | 27.2% | 26.5% | | 6 Months Ended June 30 | 25.7% | 26.9% | - The increase in the effective income tax rate for the three months ended June 30, 2025, was primarily due to a change in the **geographical mix of income**[126](index=126&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) [Cash and Cash Equivalents](index=32&type=section&id=Cash%20and%20Cash%20Equivalents) Cash and cash equivalents increased, driven by operating cash flow partially offset by repurchase activities Cash and Cash Equivalents (in millions) | Date | Amount | | :------------ | :----- | | June 30, 2025 | $57.9 | | Dec 31, 2024 | $33.5 | - The increase in cash and cash equivalents resulted primarily from **cash provided by operations**, partially offset by cash used for debt repurchases, capitalized expenditures, and share repurchases[128](index=128&type=chunk) [Credit Agreement](index=32&type=section&id=Credit%20Agreement) The company retired its previous credit facility and entered into a new, larger agreement in July 2025 - The previous $25.0 million revolving credit facility was retired subsequent to June 30, 2025, with no amount drawn down[129](index=129&type=chunk) - A new 2025 Credit Agreement was entered into in July 2025, providing a **$75.0 million revolving credit facility** and a **$150.0 million delayed-draw term loan facility**[129](index=129&type=chunk) [Material Cash Requirements](index=32&type=section&id=Material%20Cash%20Requirements) Material cash requirements include debt principal, lease payments, and liabilities for uncertain tax positions - As of June 30, 2025, the Company had **$582.4 million** in aggregate principal amount of indebtedness outstanding[130](index=130&type=chunk) - Total minimum lease payments were **$15.6 million** with a weighted average remaining lease term of 5.2 years[130](index=130&type=chunk) - Liability for uncertain tax positions was **$14.1 million**, with timing of cash settlement uncertain[130](index=130&type=chunk) [Debt Repurchase Program](index=32&type=section&id=Debt%20Repurchase%20Program) The company has retired $222.6 million in principal under its $300 million debt repurchase authorization - The Debt Repurchase Program authorizes an aggregate principal amount reduction of up to **$300 million** and expires on November 9, 2026[132](index=132&type=chunk) - As of June 30, 2025, the Company had retired an aggregate of **$222.6 million in principal** of its senior notes under this program[133](index=133&type=chunk) [Common Stock Repurchase Program](index=33&type=section&id=Common%20Stock%20Repurchase%20Program) The company's $100 million stock repurchase program was extended, with $12.5 million in shares bought back - The common stock repurchase program was extended through February 2028, with an authorization to purchase up to **$100.0 million** of common stock[134](index=134&type=chunk) Common Stock Repurchase Activity (in millions) | Period | Shares Repurchased | Aggregate Cost | | :------------------------ | :----------------- | :------------- | | 3 Months Ended June 30, 2025 | 551,873 | $12.5 | | 6 Months Ended June 30, 2025 | 553,344 | $12.6 | | Cumulatively as of June 30, 2025 | 1,639,069 | $44.9 | [Vested Restricted Stock](index=33&type=section&id=Vested%20Restricted%20Stock) The company withholds shares from vested restricted stock awards to satisfy employee tax obligations - During the three months ended June 30, 2025, the Company withheld **37,568 shares** related to net share settlement for vested restricted stock[135](index=135&type=chunk) - During the six months ended June 30, 2025, the Company withheld **51,045 shares** related to net share settlement for vested restricted stock[135](index=135&type=chunk) [Cash Flows](index=33&type=section&id=Cash%20Flows) Operating cash flow was stable, while financing cash use decreased significantly due to lower debt repurchases - Net cash provided by operating activities was **$69.2 million** for the six months ended June 30, 2025, consistent with the prior year[136](index=136&type=chunk) - Net cash used in investing activities **increased to $20.2 million** for the six months ended June 30, 2025, primarily due to the purchase of investments[137](index=137&type=chunk) - Net cash used in financing activities **decreased to $28.6 million** for the six months ended June 30, 2025, primarily due to a decrease in cash outflows related to debt repurchases[138](index=138&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to interest rate and foreign currency risks but does not currently use hedging instruments [Interest Rate Risk](index=34&type=section&id=Interest%20Rate%20Risk) - The Company's cash and cash equivalents are **not subject to significant interest rate risk** due to their short maturities[140](index=140&type=chunk) - The Company does not have interest rate risk on its outstanding long-term debt as these arrangements have **fixed interest rates**[141](index=141&type=chunk) [Foreign Currency Risk](index=34&type=section&id=Foreign%20Currency%20Risk) - The Company's principal exposure to foreign currency risk relates to investment and intercompany debt in foreign subsidiaries, primarily in the **Euro and the Japanese Yen**[143](index=143&type=chunk) - Foreign exchange (loss) gain was **$(2.3) million** for the three months ended June 30, 2025, compared to a gain of $0.7 million in the prior year period[147](index=147&type=chunk) - The Company currently **does not have derivative financial instruments** for hedging purposes but may engage in hedging transactions in the future[146](index=146&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes in internal controls [Evaluation of Disclosure Controls and Procedures](index=35&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - The CEO and CFO concluded that the Company's disclosure controls and procedures were **effective**, at a reasonable assurance level, as of June 30, 2025[150](index=150&type=chunk) [Limitations on the Effectiveness of Controls](index=35&type=section&id=Limitations%20on%20the%20Effectiveness%20of%20Controls) - Management acknowledges that disclosure controls and internal control over financial reporting are designed to provide **reasonable, not absolute, assurance**[151](index=151&type=chunk) [Changes in Internal Controls](index=35&type=section&id=Changes%20in%20Internal%20Controls) - There were **no changes** in internal control over financial reporting during the second quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, the Company's internal control[152](index=152&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 8 of the financial statements for details on legal proceedings - Information regarding legal proceedings is provided in **Note 8 - Commitments and Contingencies** of the Notes to the Condensed Consolidated Financial Statements[153](index=153&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) This section directs readers to the Annual Report on Form 10-K for risk factors, noting no material changes - There have been **no material changes** to the risk factors described in the Company's Annual Report on Form 10-K for the year ended December 31, 2024[154](index=154&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company details its common stock repurchase activity and confirms no unregistered sales of equity securities [Unregistered Sales of Equity Securities](index=35&type=section&id=Unregistered%20Sales%20of%20Equity%20Securities) - There were **no unregistered sales** of equity securities[155](index=155&type=chunk) [Issuer Purchases of Equity Securities](index=35&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) - The Company's Board of Directors approved a share buyback program authorizing up to **$100.0 million** of common stock purchases, which was extended through February 2028[156](index=156&type=chunk) Share Repurchase Activity for Three Months Ended June 30, 2025 | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Program (in thousands) | | :---------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------------------------- | | April 1 - 30, 2025 | — | $— | $67,853 | | May 1 - 31, 2025 | 221,816 | $22.56 | $62,849 | | June 1 - 30, 2025 | 330,057 | $22.51 | $55,419 | | Total | 551,873 | | $55,419 | [Item 3. Defaults Upon Senior Securities](index=37&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the Company for the reporting period - This item is **not applicable**[159](index=159&type=chunk) [Item 4. Mine Safety Disclosures](index=37&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company for the reporting period - This item is **not applicable**[160](index=160&type=chunk) [Item 5. Other Information](index=37&type=section&id=Item%205.%20Other%20Information) This section indicates that there are no trading plans to disclose [Trading Plans](index=37&type=section&id=Trading%20Plans) - There are **no trading plans** to disclose[161](index=161&type=chunk) [Item 6. Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q, including corporate and financial documents - Key exhibits include the Amended and Restated Certificate of Incorporation and Bylaws, the Credit Agreement dated July 9, 2025, officer certifications, and XBRL financial information[162](index=162&type=chunk) [Signatures](index=39&type=section&id=Signatures) The report is duly signed by the Chief Executive Officer and Chief Financial Officer - The report was signed on August 7, 2025, by **R. Scott Turicchi, Chief Executive Officer and Director**, and **James C. Malone, Chief Financial Officer**[164](index=164&type=chunk)[166](index=166&type=chunk)

Financial Performance - Consolidated revenue increased by 0.3%, reaching $87.721 million in Q2'25[33, 42] - Adjusted EBITDA decreased by 2.1% year-over-year, totaling $48.065 million, with an adjusted EBITDA margin of 54.8%[33, 50] - Adjusted EPS increased by 2.0% year-over-year[33] - Free cash flow for Q2'25 was $20.3 million, compared to $15.8 million in Q2'24[36] Corporate Business - Corporate revenue increased by 6.9% to $55.3 million in Q2'25, compared to $51.7 million in Q2'24[13] - Corporate revenue retention rate improved to 102% in Q2'25, up from 99% in Q2'24[13] - Total corporate customer count increased to 63,000 in Q2'25, compared to 56,000 in Q2'24, an 11.3% increase[13, 20] SoHo Business - SoHo revenue decreased to $32.4 million in Q2'25, compared to $35.8 million in the previous year, a 9.4% decline[16] - SoHo account base was 682,000 in Q2'25, compared to 702,000 in Q1'25[16] - SoHo churn rate increased to 3.84% in Q2'25, compared to 3.52% in Q1'25[16] Capital Allocation - The company repurchased 546,000 shares for approximately $12 million in Q2'25[36] - Bond repurchases in Q2'25 amounted to approximately $6 million face value[36] - A $225 million credit facility was executed, including a $150 million delayed draw term loan and a $75 million revolving credit facility[36]

[Q2 2025 Earnings Release Overview](index=1&type=section&id=Q2%202025%20Earnings%20Release%20Overview) Consensus Cloud Solutions reported positive total revenue growth in Q2 2025, driven by strong Corporate segment performance, robust operating margins, and successful debt refinancing [1.1 Management Commentary](index=1&type=section&id=1.1%20Management%20Commentary) Management reported a return to positive total revenue growth in Q2 2025, exceeding expectations, with strong Corporate segment performance and robust operating margins - Consensus Cloud Solutions, Inc. (NASDAQ: CCSI) reported financial results for Q2 2025[1](index=1&type=chunk) - Total positive revenue growth returned in Q2, exceeding expectations, with **Corporate revenue growing 6.9%** year-over-year due to strong usage, improved retention, and new customer acquisition[2](index=2&type=chunk) - Robust operating margins contributed to strong cash flows from operations and healthy cash balances[2](index=2&type=chunk) - Post-quarter, a **$225 million credit facility** was secured to partially retire 6% senior notes due October 2026[2](index=2&type=chunk) [1.2 Q2 2025 Financial Highlights](index=1&type=section&id=1.2%20Q2%202025%20Financial%20Highlights) Q2 2025 revenues increased slightly to **$87.7 million**, driven by Corporate segment growth, while Adjusted net income and free cash flow saw positive increases despite a GAAP net income decrease Q2 2025 vs Q2 2024 Key Financial Results | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | Change | | :----------------------------- | :------ | :------ | :------- | | Revenues | $87,721 | $87,500 | 0.3% | | Net income | $20,781 | $23,874 | (13.0)% | | Net income margin (%) | 23.7 % | 27.3 % | (3.6) pts | | Earnings per diluted share ($) | $1.07 | $1.24 | (13.7)% | | Adjusted net income | $28,444 | $27,555 | 3.2% | | Adjusted earnings per diluted share ($) | $1.46 | $1.43 | 2.1% | | Adjusted EBITDA | $48,065 | $49,072 | (2.1)% | | Adjusted EBITDA margin (%) | 54.8 % | 56.1 % | (1.3) pts | | Net cash provided by operating activities | $28,299 | $24,365 | 16.1% | | Free cash flow | $20,345 | $15,809 | 28.7% | - Q2 2025 revenues increased by **$0.2 million (0.3%) to $87.7 million**, driven by a **6.9% increase in Corporate business** revenue, partially offset by a **9.4% planned decrease in SoHo business** revenue[3](index=3&type=chunk) - GAAP net income decreased to **$20.8 million** in Q2 2025 from $23.9 million in Q2 2024, primarily due to foreign exchange fluctuations[4](index=4&type=chunk) - Adjusted net income increased to **$28.4 million** in Q2 2025 from $27.6 million in Q2 2024, mainly due to reduced interest expense from debt repurchases[4](index=4&type=chunk) - Net cash provided by operating activities increased to **$28.3 million** from $24.4 million, and free cash flow rose to **$20.3 million** from $15.8 million in Q2 2024[4](index=4&type=chunk) [Capital Allocation Strategic Initiatives](index=3&type=section&id=Capital%20Allocation%20Strategic%20Initiatives) This section details the company's capital allocation strategies, including debt and stock repurchase programs, aimed at optimizing its financial structure [2.1 Debt and Stock Repurchase Programs](index=3&type=section&id=2.1%20Debt%20and%20Stock%20Repurchase%20Programs) The company ended Q2 2025 with **$57.9 million in cash**, actively repurchasing **$6.0 million in debt** and **$12.4 million in common stock**, and extending its stock repurchase program - Consensus ended Q2 with **$57.9 million in cash and cash equivalents**[9](index=9&type=chunk) Q2 2025 Capital Allocation Strategic Initiatives | Capital Allocation | Q2 2025 ($ thousands) | Cumulative Total ($ thousands) | Remaining Under the Plan ($ thousands) | | :---------------------- | :------ | :--------------- | :----------------------- | | Debt repurchase program | $6,000 | $222,614 | $77,386 | | Common stock repurchase program | $12,436 | $44,581 | $55,419 | | Purchases of property and equipment | $7,954 | $15,150 | | - The Board approved a debt repurchase program on November 9, 2023, authorizing up to **$300 million** in principal reduction, expiring November 9, 2026[10](index=10&type=chunk) - The share repurchase program was extended for three years through February 2028 by the Board in February 2025[10](index=10&type=chunk) [Financial Guidance](index=4&type=section&id=Financial%20Guidance) This section provides the company's financial outlook for the full year 2025 and Q3 2025, including revenue, Adjusted EBITDA, and Adjusted earnings per diluted share [3.1 Full Year 2025 Guidance](index=4&type=section&id=3.1%20Full%20Year%202025%20Guidance) Full-year 2025 revenue and Adjusted EBITDA guidance were reaffirmed, while **Adjusted earnings per diluted share guidance was raised by approximately $0.22** based on year-to-date performance FY 2025 Guidance | Metric | Low ($ millions) | Midpoint ($ millions) | High ($ millions) | | :----------------------------- | :---- | :------- | :---- | | Revenue | $343 | $350 | $357 | | Adjusted EBITDA | $179 | $185 | $190 | | Adjusted earnings per diluted share ($) | $5.25 | $5.45 | $5.65 | - Adjusted earnings per diluted share guidance was increased by approximately **$0.22 per share** from previous guidance, reflecting year-to-date 2025 performance[11](index=11&type=chunk) [3.2 Q3 2025 Guidance](index=4&type=section&id=3.2%20Q3%202025%20Guidance) Q3 2025 guidance projects revenues between **$85.9 million and $89.9 million**, Adjusted EBITDA between **$44.4 million and $47.4 million**, and Adjusted EPS between **$1.33 and $1.42** Q3 2025 Guidance | Metric | Low ($ millions) | Midpoint ($ millions) | High ($ millions) | | :----------------------------- | :---- | :------- | :---- | | Revenue | $85.9 | $87.9 | $89.9 | | Adjusted EBITDA | $44.4 | $45.9 | $47.4 | | Adjusted earnings per diluted share ($) | $1.33 | $1.38 | $1.42 | - Annual and quarterly guidance, excluding revenues, is provided on a non-GAAP basis due to the inherent difficulty in predicting certain GAAP measures and their future financial impact[13](index=13&type=chunk) [Company Information](index=4&type=section&id=Company%20Information) This section provides an overview of Consensus Cloud Solutions' business and a safe harbor statement regarding forward-looking information [4.1 About Consensus Cloud Solutions](index=4&type=section&id=4.1%20About%20Consensus%20Cloud%20Solutions) Consensus Cloud Solutions is a global leader in digital cloud fax technology, providing AI-driven interoperability solutions for secure data exchange and workflow automation in regulated industries - Consensus Cloud Solutions, Inc. (NASDAQ: CCSI) is a global leader in digital cloud fax technology[14](index=14&type=chunk) - The company provides AI-driven interoperability solutions for secure data exchange, workflow automation, and operational efficiency[14](index=14&type=chunk) - Consensus is a preferred partner for heavily regulated industries, including healthcare and financial services, due to its industry-leading compliance standards[14](index=14&type=chunk) [4.2 Safe Harbor Statement](index=5&type=section&id=4.2%20Safe%20Harbor%20Statement) This statement clarifies that forward-looking statements are subject to risks and uncertainties, and actual results may differ materially, directing readers to SEC filings for detailed risk factors - This press release contains \"forward-looking statements\" as defined by The Private Securities Litigation Reform Act of 1995[16](index=16&type=chunk) - Forward-looking statements are based on current expectations and subject to assumptions, risks, and uncertainties that could cause actual results to differ materially[16](index=16&type=chunk) - Detailed risk factors and uncertainties are available in the 2024 Annual Report on Form 10-K filed February 20, 2025, and other SEC filings at www.sec.gov[16](index=16&type=chunk) [Condensed Consolidated Financial Statements](index=6&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the company's condensed consolidated balance sheets, statements of income, and statements of cash flows for the reported periods [5.1 Balance Sheets](index=6&type=section&id=5.1%20Balance%20Sheets) Total assets increased to **$641.5 million** by June 30, 2025, driven by cash growth, while total liabilities decreased, significantly reducing the total stockholders' deficit Condensed Consolidated Balance Sheets Highlights | Metric | June 30, 2025 ($ thousands) | December 31, 2024 ($ thousands) | | :-------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $57,894 | $33,545 | | Total current assets | $92,424 | $74,525 | | TOTAL ASSETS | $641,518 | $602,201 | | Total current liabilities | $61,936 | $79,311 | | Long-term debt, net of current portion | $578,155 | $574,080 | | TOTAL LIABILITIES | $667,997 | $681,664 | | TOTAL STOCKHOLDERS' DEFICIT | $(26,479) | $(79,463) | [5.2 Statements of Income](index=7&type=section&id=5.2%20Statements%20of%20Income) Q2 2025 revenues slightly increased to **$87.7 million**, but net income decreased by **13.0% to $20.8 million**, with similar trends for the six-month period Condensed Consolidated Statements of Income (Three Months Ended June 30) | Metric | 2025 ($ thousands) | 2024 ($ thousands) | | :-------------------------- | :------ | :------ | | Revenues | $87,721 | $87,500 | | Gross profit | $70,097 | $70,378 | | Income from operations | $39,049 | $39,881 | | Net income | $20,781 | $23,874 | | Diluted EPS ($) | $1.07 | $1.24 | Condensed Consolidated Statements of Income (Six Months Ended June 30) | Metric | 2025 ($ thousands) | 2024 ($ thousands) | | :-------------------------- | :--------- | :--------- | | Revenues | $174,859 | $175,646 | | Gross profit | $139,165 | $141,476 | | Income from operations | $76,546 | $77,548 | | Net income | $41,933 | $50,244 | | Diluted EPS ($) | $2.14 | $2.61 | [5.3 Statements of Cash Flows](index=8&type=section&id=5.3%20Statements%20of%20Cash%20Flows) Net cash from operating activities remained strong at **$69.2 million** for the six months ended June 30, 2025, while net cash used in financing activities significantly decreased due to lower debt repurchases Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30) | Metric | 2025 ($ thousands) | 2024 ($ thousands) | | :------------------------------------ | :--------- | :--------- | | Net cash provided by operating activities | $69,242 | $69,054 | | Net cash used in investing activities | $(20,150) | $(17,479) | | Net cash used in financing activities | $(28,588) | $(86,101) | | Net change in cash and cash equivalents | $24,349 | $(39,514) | | Cash and cash equivalents at end of period | $57,894 | $49,201 | - Debt repurchases for the six months ended June 30 were **$(15,764) thousand in 2025** compared to $(85,525) thousand in 2024[24](index=24&type=chunk) [Non-GAAP Financial Measures & Reconciliations](index=5&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) This section defines and reconciles non-GAAP financial measures, including Adjusted net income, Adjusted EBITDA, and Free cash flow, to their most comparable GAAP counterparts [6.1 About Non-GAAP Financial Measures](index=5&type=section&id=6.1%20About%20Non-GAAP%20Financial%20Measures) The company utilizes non-GAAP measures like Adjusted net income and Free cash flow to supplement GAAP, providing insights into core operating results by excluding non-cash or non-recurring expenses - Non-GAAP financial measures used to supplement GAAP statements include Adjusted net income, Adjusted earnings per diluted share, Adjusted EBITDA, Adjusted EBITDA margin, and Free cash flow[17](index=17&type=chunk) - Non-GAAP financial information is not intended to be considered in isolation from, or as a substitute for, GAAP financial information[17](index=17&type=chunk) - Management believes these non-GAAP measures offer meaningful supplemental information on performance and liquidity by excluding non-recurring or non-core business expenses[18](index=18&type=chunk) [6.2 Net Income to Adjusted Net Income Reconciliation](index=9&type=section&id=6.2%20Net%20Income%20to%20Adjusted%20Net%20Income%20Reconciliation) Adjusted net income for Q2 2025 increased to **$28.4 million ($1.46 per diluted share)**, up from $27.6 million, after adjusting for share-based compensation, foreign exchange, and amortization Net Income to Adjusted Net Income Reconciliation (Three Months Ended June 30) | Metric | 2025 ($ thousands) | Per Diluted Share ($) | 2024 * ($ thousands) | Per Diluted Share * ($) | | :-------------------------- | :----- | :---------------- | :----- | :------------------ | | Net income | $20,781 | $1.07 | $23,874 | $1.24 | | Plus: Share-based compensation | $4,207 | $0.22 | $3,738 | $0.19 | | Plus: Foreign exchange loss (gain) | $2,330 | $0.12 | $(667) | $(0.03) | | Plus: Amortization | $632 | $0.03 | $845 | $0.04 | | Plus: Debt extinguishment loss (gain) | $46 | — | $(1,691) | $(0.09) | | Adjusted net income | $28,444 | $1.46 | $27,555 | $1.43 | - Beginning in 2025, foreign exchange gains or losses are excluded from Adjusted net income and Adjusted earnings per diluted share, with prior year amounts adjusted for consistency[25](index=25&type=chunk) [6.3 Net Income to Adjusted EBITDA Reconciliation](index=11&type=section&id=6.3%20Net%20Income%20to%20Adjusted%20EBITDA%20Reconciliation) Adjusted EBITDA for Q2 2025 was **$48.1 million**, a decrease from $49.1 million in Q2 2024, after adding back interest, taxes, depreciation, amortization, and share-based compensation Net Income to Adjusted EBITDA Reconciliation (Three Months Ended June 30) | Metric | 2025 ($ thousands) | 2024 ($ thousands) | | :-------------------------- | :----- | :----- | | Net income | $20,781 | $23,874 | | Plus: Interest expense | $8,673 | $8,657 | | Plus: Income tax expense | $7,763 | $8,606 | | Plus: Depreciation and amortization | $4,571 | $5,163 | | Plus: Share-based compensation | $4,207 | $3,738 | | Adjusted EBITDA | $48,065 | $49,072 | [6.4 Net Cash Provided by Operating Activities to Free Cash Flow Reconciliation](index=12&type=section&id=6.4%20Net%20Cash%20Provided%20by%20Operating%20Activities%20to%20Free%20Cash%20Flow%20Reconciliation) Free cash flow for Q2 2025 increased by **28.7% to $20.3 million**, and for the six months ended June 30, 2025, it reached **$54.1 million**, reflecting strong operating cash flow less capital expenditures Free Cash Flow Reconciliation (Three Months Ended June 30) | Metric | 2025 ($ thousands) | 2024 ($ thousands) | | :------------------------------------ | :----- | :----- | | Net cash provided by operating activities | $28,299 | $24,365 | | Less: Purchases of property and equipment | $(7,954) | $(8,556) | | Free cash flow | $20,345 | $15,809 | Free Cash Flow Reconciliation (Six Months Ended June 30) | Metric | 2025 ($ thousands) | 2024 ($ thousands) | | :------------------------------------ | :--------- | :--------- | | Net cash provided by operating activities | $69,242 | $69,054 | | Less: Purchases of property and equipment | $(15,150) | $(17,479) | | Free cash flow | $54,092 | $51,575 | - The increase in free cash flow was primarily due to decreased net cash outflows from working capital changes, partially offset by lower income (excluding non-cash items)[41](index=41&type=chunk) [6.5 Explanation of Non-GAAP Adjustments](index=10&type=section&id=6.5%20Explanation%20of%20Non-GAAP%20Adjustments) This section details specific non-GAAP adjustments, such as share-based compensation, foreign exchange, and amortization, to provide a clearer view of core operational performance - Non-GAAP financial measures are adjusted for share-based compensation, foreign exchange loss (gain), amortization, intra-entity transfers, debt extinguishment loss (gain), and other items[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) - The company believes these non-GAAP measures provide meaningful supplemental information on the business's operational performance[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) [Key Performance Metrics](index=13&type=section&id=Key%20Performance%20Metrics) This section presents key performance indicators for the Corporate and SoHo segments, including revenue, customer accounts, ARPA, paid adds, and monthly account churn [7.1 Corporate Segment Metrics](index=13&type=section&id=7.1%20Corporate%20Segment%20Metrics) Corporate segment revenue grew **6.9% to $55.3 million** in Q2 2025, with increased customer accounts and paid adds, despite a slight decrease in ARPA and higher churn Corporate Segment Key Performance Metrics (Three Months Ended June 30) | Metric | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Corporate revenue ($ thousands) | $55,302 | $51,720 | | Corporate customer accounts (thousands) | 63 | 56 | | Corporate Average Revenue per Customer Account ("ARPA") ($) | $301.29 | $310.18 | | Corporate paid adds (thousands) | 8 | 4 | | Corporate monthly account churn (%) | 2.86 % | 2.29 % | - Corporate revenue growth reached **6.9%** year-over-year, driven by strong usage, improved revenue retention, and new customer acquisition[2](index=2&type=chunk) [7.2 SoHo Segment Metrics](index=13&type=section&id=7.2%20SoHo%20Segment%20Metrics) SoHo segment revenue saw a planned **9.4% decrease to $32.4 million** in Q2 2025, with fewer customer accounts, stable paid adds, and increased monthly churn SoHo Segment Key Performance Metrics (Three Months Ended June 30) | Metric | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | SoHo revenue ($ thousands) | $32,414 | $35,779 | | SoHo customer accounts (thousands) | 682 | 760 | | SoHo ARPA ($) | $15.62 | $15.45 | | SoHo paid adds (thousands) | 62 | 61 | | SoHo monthly account churn (%) | 3.84 % | 3.55 % | - SoHo revenue decreased as planned by **$3.4 million (9.4%)**[2](index=2&type=chunk)[3](index=3&type=chunk) - Dormant accounts were eliminated from SoHo customer accounts in the current period, with prior year figures revised for consistency, resulting in a **26 thousand decrease** in prior year SoHo customer accounts[45](index=45&type=chunk)

Core Viewpoint - Consensus Cloud Solutions, Inc. (CCSI) shows potential for upside with a mean price target of $27.4, indicating a 25.1% increase from the current price of $21.91 [1] Price Targets - The average price target consists of five estimates ranging from a low of $20.00 to a high of $37.00, with a standard deviation of $7.06, suggesting variability in analyst predictions [2] - The lowest estimate indicates a potential decline of 8.7%, while the highest suggests a 68.9% upside [2] Analyst Sentiment - Analysts are optimistic about CCSI's earnings prospects, as indicated by a positive trend in earnings estimate revisions, which historically correlates with stock price movements [4][11] - Over the last 30 days, the Zacks Consensus Estimate for the current year has increased by 0.4%, with one estimate moving higher and no negative revisions [12] Zacks Rank - CCSI holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate factors, indicating strong potential for upside [13] Caution on Price Targets - While price targets are a common metric, they should be approached with skepticism as they can mislead investors; analysts often set overly optimistic targets due to business incentives [7][8][10]

Group 1 - Consensus Cloud Solutions, Inc. (CCSI) closed at $21.37, with a 10.2% gain over the past four weeks, and a mean price target of $27.40 indicating a 28.2% upside potential [1] - The average price targets range from a low of $20 to a high of $37, with a standard deviation of $7.06, suggesting variability in analyst estimates [2] - Analysts show strong agreement in revising earnings estimates higher, which correlates with potential stock price movements [4][11] Group 2 - The Zacks Consensus Estimate for the current year has increased by 0.4% over the past month, with two estimates going higher and no negative revisions [12] - CCSI holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [13] - While the consensus price target may not be a reliable indicator of potential gains, the implied direction of price movement appears to be a good guide [13]

Core Insights - Consensus Cloud Solutions, Inc. reported its Q1 2025 earnings, focusing on modernizing the fax technology, which is considered outdated in the current business environment [1] Company Overview - The company aims to reengineer fax technology to make it more relevant and efficient for modern business needs [1] Market Position - Consensus Cloud Solutions operates in the small- to mid-cap segment, which is often overlooked by many investors, but also occasionally examines large-cap companies for a broader market perspective [1]

Group 1: Earnings Performance - Consensus Cloud Solutions, Inc. (CCSI) reported quarterly earnings of $1.37 per share, exceeding the Zacks Consensus Estimate of $1.30 per share, but down from $1.55 per share a year ago, representing an earnings surprise of 5.38% [1] - The company has surpassed consensus EPS estimates in all four of the last quarters [2] - The revenue for the quarter ended March 2025 was $87.14 million, slightly missing the Zacks Consensus Estimate by 0.55%, and down from $88.15 million year-over-year [2] Group 2: Stock Performance and Outlook - Consensus Cloud Solutions shares have declined approximately 9.1% since the beginning of the year, compared to a decline of 4.7% for the S&P 500 [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the upcoming quarter is $1.34 on revenues of $86.83 million, and for the current fiscal year, it is $5.26 on revenues of $348.88 million [7] Group 3: Industry Context - The Internet - Software industry, to which Consensus Cloud Solutions belongs, is currently ranked in the top 37% of over 250 Zacks industries, indicating a favorable industry outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5] - Another company in the same industry, Phunware (PHUN), is expected to report a quarterly loss of $0.12 per share, with a year-over-year change of +70.7% [9]