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Consensus Cloud Solutions, Inc. (CCSI)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered slight topline decline but healthy profitability: revenue $87.1M (-1.1% YoY), adjusted EBITDA $47.3M (54.2% margin), adjusted EPS $1.37 . Versus Wall Street, revenue and adjusted EPS modestly beat consensus; revenue $87.14M vs $87.02M* and adjusted EPS $1.37 vs $1.31*.
  • Corporate segment grew 5.6% YoY to a record $54.3M on strong usage, retention (TTM 101%), and new logos; SoHo declined as planned (-10.6%) to $32.8M to optimize cash efficiency .
  • Guidance reaffirmed for FY25 (revenue $343–$357M, adj. EBITDA $179–$190M, adj. EPS $5.03–$5.42) and Q2 2025 introduced (revenue $85–$89M, adj. EBITDA $45–$48M, adj. EPS $1.31–$1.42) .
  • Capital allocation remains disciplined: $9.7M debt repurchased in Q1, $6M more in Q2-to-date; net debt/adj. EBITDA ~2.9x; refinance plan for 6% notes targeted late Q2/early Q3 .
  • Narrative catalysts: corporate momentum (VA rollout, eFax Protect sign-ups), margin resilience, and maintained FY guide despite macro/tariff noise—supportive for estimate stability and potential sentiment improvement .

What Went Well and What Went Wrong

What Went Well

  • Corporate outperformance: “our corporate channel exceeded our revenue expectations…driven by strong usage, improved revenue retention, new customer acquisition and increased contribution from our advanced products” . Corporate revenue +5.6% YoY to $54.3M; TTM revenue retention improved to 101% .
  • Margin execution: adjusted EBITDA margin 54.2%, 100 bps above internal Q1 expectations, aided by cost discipline .
  • Public sector and product traction: VA usage increased with more facilities online; eFax Protect had record sign-ups; FedRAMP High authorization revitalized pipeline across agencies .

What Went Wrong

  • GAAP EPS compression: diluted EPS fell to $1.07 (-21.9% YoY), with drivers including debt extinguishment loss and FX revaluation shift; net income margin 24.3% vs 29.9% .
  • Planned SoHo contraction: SoHo revenue declined 10.6% to $32.8M as marketing spend was optimized; ARPA slipped to $14.83, partly due to holiday promo cohort mix .
  • FX excluded from non-GAAP starting 2025: change reduces comparability; prior-year adjusted EPS restated lower by $0.15 and adjusted net income by $2.9M for consistency .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$87.753 $86.983 $87.138
Adjusted EBITDA ($USD Millions)$46.916 $44.353 $47.250
Adjusted EBITDA Margin %53.5% 51.0% 54.2%
Net Income Margin % (GAAP)24.1% 20.8% 24.3%
Diluted EPS (GAAP, $)$1.09 $0.92 $1.07
Adjusted EPS ($)$1.31 $1.32 $1.37

Segment breakdown:

SegmentQ3 2024Q4 2024Q1 2025
Corporate Revenue ($USD Millions)$53.085 $52.917 $54.289
SoHo Revenue ($USD Millions)$34.664 $34.061 $32.849

Key KPIs:

KPIQ3 2024Q4 2024Q1 2025
Corporate customer accounts (000s)58 59 60
Corporate ARPA ($/month)$310.13 $303.62 $306.54
Corporate monthly churn %2.61% 2.63% 2.49%
SoHo customer accounts (000s)767 747 730
SoHo ARPA ($/month)$14.88 $14.99 $14.83
SoHo monthly churn %3.38% 3.38% 3.26%

Estimates vs actuals:

MetricQ3 2024 EstimateQ3 2024 ActualQ4 2024 EstimateQ4 2024 ActualQ1 2025 EstimateQ1 2025 Actual
Revenue ($USD)$85.34M*$87.75M $84.49M*$86.98M $87.02M*$87.14M
Primary EPS ($)$1.29*$1.31 $1.18*$1.32 $1.31*$1.37

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious Guidance (Feb 19, 2025)Current Guidance (May 7, 2025)Change
Revenue ($M)FY 2025$343–$357 $343–$357 Maintained
Adjusted EBITDA ($M)FY 2025$179–$190 $179–$190 Maintained
Adjusted EPS ($)FY 2025$5.03–$5.42 $5.03–$5.42 Maintained
Non-GAAP tax rate (%)FY 202520.5–22.5 20.5–22.5 Maintained
Revenue ($M)Q2 2025N/A$85.0–$89.0 Introduced
Adjusted EBITDA ($M)Q2 2025N/A$45.0–$48.0 Introduced
Adjusted EPS ($)Q2 2025N/A$1.31–$1.42 Introduced
Non-GAAP tax rate (%)Q2 2025N/A20.5–22.5 Introduced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Corporate growth driversQ3: corporate +5.3% YoY, usage strength; Q4: +7.1% YoY (normalized ~5.5%), retention >100% Q1: corporate record $54.3M (+5.6% YoY), TTM retention 101%, sequential ARPA uptick Improving and broad-based
SoHo strategyPlanned contraction to optimize advertising, ARPA ~$15; churn stable; FY decline ~13% Decline -10.6%; ARPA $14.83; churn improved; continued LTV/CAC focus Managed decline with efficiency
AI/advanced products (Unite/Clarity)In production; strong interest; prior auth and document classification use cases Adoption increasing; contribution rising; complements eFax Building momentum; small near-term revenue
Public sector/VAFedRAMP High achieved; 2024 VA ~$2.6M; 2025 ~ $5M expected VA usage ramping; more facilities online; pipeline revitalized Positive rollout; gradual ramp
Capital allocation & leverageDebt repurchases ($31M in Q3; $20M in Q4); target <=3x total debt/EBITDA $10M repurchased in Q1; net debt/EBITDA ~2.9x; bank refinance targeted Deleveraging on track
Tariffs/macroMonitoring; not directly impacted “Not currently seeing any impact”; stress test suggests modest H2 headwind still within guide Neutral; cautious watch

Management Commentary

  • CEO: “We slightly exceeded our revenue objective… We delivered a robust 54.2% adjusted EBITDA margin” .
  • CEO: “eFax Protect had record sign-ups… at the VA, we continue to see more facilities come online and a record level of usage” .
  • CRO: “Corporate business continues to demonstrate positive momentum… record high of $54.3 million… 101% [TTM] retention… ~60,000 corporate accounts” .
  • CFO: “We are reaffirming our 2025 full year guidance… Q2 2025 revenue $85–$89M, adj. EBITDA $45–$48M, adj. EPS $1.31–$1.42” .

Q&A Highlights

  • Corporate growth/VA: Drivers include usage, advanced solution adoption, and new customers; FedRAMP High opens new agency opportunities though 2025 impact modest .
  • SoHo trajectory: Decline expected to continue; pace depends on advertising ROI (LTV/CAC); stabilization unlikely in 2025 .
  • Tariffs impact: No observed demand or cost impact; base case unchanged; stress-tested scenarios still within guidance .
  • Hiring/investment: ~40 sales/GTMS functions ramping through 2025 to seed 2026+ growth; cautious pace tied to macro .
  • Capital allocation: $5M strategic vendor investment; building cash to satisfy lien test for expected $225M secured facility; continued debt retirement and opportunistic buybacks .

Estimates Context

  • Q1 2025 revenue and adjusted EPS modestly beat consensus; Q4 2024 also beat on both, while Q3 2024 was roughly in line on EPS and beat revenue. With FY25 guidance maintained and Q2 introduced, near-term estimates likely hold around guidance midpoints, with potential modest upward bias to EPS given persistent margin discipline. Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Corporate engine is re-accelerating with durable retention and pipeline breadth (healthcare and public sector), supporting a path to positive total revenue growth by Q4 and into 2026 .
  • Margin resilience (54.2% adj. EBITDA) and strong FCF ($33.7M) underpin deleveraging; net leverage ~2.9x and planned refinance reduces refinancing risk .
  • Non-GAAP policy shift (ex-FX) smooths adjusted earnings volatility; reconcile comparisons accordingly for 2024 base effects .
  • SoHo strategy is cash-focused; expect continued managed decline offset by corporate growth—watch ARPA/churn mix and marketing ROI signals .
  • Near-term setup: modest beats vs consensus and above-plan margins, plus maintained FY guide, are supportive for sentiment; watch Q2 execution and bank facility timing as next catalysts .
  • Product narrative matters: Clarity/Unite AI capabilities gaining adoption; while revenue contribution is small near term, they bolster upsell and stickiness in key verticals .
  • Recognition supports brand strength: eFax ranked #12 on G2 Best Healthcare Software, reinforcing positioning in regulated markets .

Additional Notes

  • FY/Q2 guidance is non-GAAP (except revenue); non-GAAP tax rate expected 20.5–22.5% .
  • Capital allocation in Q1: debt repurchase $9.7M, CapEx $7.2M; cash ended Q1 at $53.4M .