Consensus(CCSI) - 2025 Q1 - Quarterly Report

Part I. Financial Information Financial Statements The company presents unaudited Q1 2025 financials, reporting $87.1 million in revenue and a reduced stockholders' deficit Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $53,399 | $33,545 | | Total current assets | $91,461 | $74,525 | | TOTAL ASSETS | $629,647 | $602,201 | | Total current liabilities | $73,345 | $79,311 | | Long-term debt, net | $577,590 | $574,080 | | TOTAL LIABILITIES | $679,005 | $681,664 | | TOTAL STOCKHOLDERS' DEFICIT | $(49,358) | $(79,463) | Condensed Consolidated Statement of Income Highlights (in thousands, except per share data) | Account | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenues | $87,138 | $88,146 | | Gross profit | $69,068 | $71,098 | | Income from operations | $37,497 | $37,667 | | Net income | $21,152 | $26,370 | | Diluted EPS | $1.07 | $1.37 | Condensed Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $40,943 | $44,689 | | Net cash used in investing activities | $(12,196) | $(8,923) | | Net cash used in financing activities | $(10,122) | $(58,829) | | Net change in cash and cash equivalents | $19,854 | $(27,204) | - The company provides secure information delivery services via a scalable Software-as-a-Service (SaaS) platform[22] - The company operates as a single reportable segment, Cloud Fax, as the CEO reviews financial information on a consolidated basis[29] Revenues by Source (in thousands) | Revenue Source | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Corporate | $54,289 | $51,390 | | SoHo | $32,849 | $36,754 | | Total | $87,138 | $88,146 | - The majority of revenue ($86.5 million in Q1 2025) is recognized over time, consistent with its subscription-based services[35] Long-Term Debt Composition (in thousands) | Debt Instrument | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | 2026 Senior Notes | $240,139 | $248,980 | | 2028 Senior Notes | $348,247 | $349,137 | | Total | $588,386 | $598,117 | - The company has a Debt Repurchase Program to reduce up to $300 million in principal, with $216.6 million retired as of March 31, 2025[67][68] - A $25.0 million senior secured revolving credit facility remained undrawn as of March 31, 2025[65] - The effective tax rate decreased to 24.1% in Q1 2025 from 27.3% in Q1 2024, mainly due to a change in the geographical mix of income[75] - As of March 31, 2025, the company had $13.6 million in liabilities for uncertain income tax positions[77] - The Board of Directors extended the $100.0 million share repurchase program through February 2028, with $32.4 million used to date[79] - The company does not currently pay dividends, and future distributions are subject to Board approval and debt agreement restrictions[81] Revenues by Geographic Region (in thousands) | Region | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | United States | $68,756 | $69,712 | | Foreign countries | $18,382 | $18,434 | | Total | $87,138 | $88,146 | - Long-lived assets are predominantly located in the United States, totaling $109.3 million as of March 31, 2025[89] - Subsequent to quarter-end, the company repurchased an additional $6.0 million in principal of its senior notes[90] Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes a 1% revenue decline to $87.1 million, stable operating income, and a strong liquidity position - The company's strategic focus is on secure information exchange, with growth expected organically and through acquisitions[100][101] - Total revenues for Q1 2025 decreased by 1% year-over-year, as an 11% decline in SoHo revenue was partially offset by a 6% increase in Corporate revenue[103] - The company anticipates existing cash and operating cash flow will be sufficient to fund operations and repurchases for at least the next 12 months[122] Key Performance Metrics (Q1 2025 vs Q1 2024) | Metric | Segment | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | :--- | | Customer Accounts (thousands) | Corporate | 60 | 55 | | | SoHo | 730 | 808 | | | Consolidated | 790 | 863 | | Monthly ARPA ($) | Corporate | $306.54 | $316.07 | | | SoHo | $14.83 | $14.95 | | | Consolidated | $36.42 | $33.63 | | Monthly Churn % | Corporate | 2.49% | 1.92% | | | SoHo | 3.26% | 3.42% | | | Consolidated | 3.21% | 3.32% | - Cost of revenues increased by 6% in Q1 2025, primarily due to higher network operations costs and depreciation[104][105] - General and administrative expenses decreased by 10% in Q1 2025, driven by lower personnel costs and professional fees[110][111] - Interest expense increased to $9.0 million from $6.2 million, as a prior year gain on debt extinguishment was replaced by a small loss[113] - Cash and cash equivalents increased to $53.4 million as of March 31, 2025, from $33.5 million at year-end 2024[119] - Under its Debt Repurchase Program, the company has retired an aggregate of $216.6 million in principal of its senior notes as of March 31, 2025[123] - Net cash used in financing activities decreased significantly to $10.1 million in Q1 2025 from $58.8 million in Q1 2024 due to lower debt repurchases[128] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are low interest rate risk due to fixed-rate debt and foreign currency risk - The company does not have significant interest rate risk on its outstanding long-term debt because the arrangements have fixed interest rates[131] - The principal exposure to foreign currency risk relates to investments and intercompany debt in subsidiaries using the Euro and Japanese Yen[133] - For Q1 2025, the company recorded a foreign exchange loss of $1.1 million, compared to a gain of $3.9 million in Q1 2024[137] Controls and Procedures Management concluded that disclosure controls and internal controls over financial reporting were effective as of Q1 2025 - Based on an evaluation, the CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[139] - No material changes occurred during the first quarter of 2025 that are reasonably likely to materially affect internal control over financial reporting[141] Part II. Other Information Legal Proceedings The company faces no material legal proceedings that would adversely affect its financial position or results - Information regarding legal proceedings is detailed in Note 8 of the Notes to the Condensed Consolidated Financial Statements[142] - The company does not believe that any current legal proceedings are likely to have a material adverse effect on its financial position or results[71] Risk Factors No material changes to the company's previously disclosed risk factors were reported during the quarter - No material changes have been made to the risk factors previously described in the Annual Report on Form 10-K[143] Unregistered Sales of Equity Securities and Use of Proceeds The company continued its share repurchase program, buying back 1,471 shares in Q1 2025 under its extended plan Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | Approx. Dollar Value Remaining (in thousands) | | :--- | :--- | :--- | :--- | | Jan 1 - 31, 2025 | 0 | $— | $67,887 | | Feb 1 - 28, 2025 | 1,471 | $22.97 | $67,853 | | Mar 1 - 31, 2025 | 0 | $— | $67,853 | - The company's Board of Directors approved an extension of the share buyback program through February 2028[145] Defaults Upon Senior Securities The company reported no defaults upon its senior securities during the period - Not applicable[147] Mine Safety Disclosures This section is not applicable as the company has no mine safety-related operations or disclosures - Not applicable[148] Other Information No other material information or trading plans were reported for the period - No trading plans were reported[149] Exhibits This section lists all exhibits filed with the report, including officer certifications and XBRL data - The report includes CEO and CFO certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906, as well as XBRL financial data[151]