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Consensus Cloud Solutions, Inc. (CCSI)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered stable revenue ($87.8M) with corporate growth (+6.1% YoY to $56.3M) offset by planned SoHo decline (-9.2% YoY to $31.5M); adjusted EBITDA margin was 52.8% and adjusted EPS was $1.38 .
  • Consensus slightly beat S&P Global consensus on revenue ($87.77M actual vs $87.58M estimate*) and EPS ($1.38 actual vs $1.357 estimate*); adjusted EBITDA was broadly in-line with consensus methodology differences noted* .
  • Management retired $200M of 6% notes post-quarter and expects to retire the remaining $34M by year-end, lowering interest cost and moving toward ~3x gross debt/adjusted EBITDA leverage target .
  • Q4 2025 guidance implies seasonal margin compression from hiring and audit costs: revenue $84.9–$88.9M, adjusted EBITDA $43.1–$46.0M, adjusted EPS $1.27–$1.37; non-GAAP tax rate 20.5%–22.5% and ~19.4M diluted shares .
  • Near-term stock narrative centers on resilient enterprise usage (including VA ramp), strong FCF ($44.4M in Q3), and balance sheet de-risking, versus SOHO acquisition headwinds from search changes and guided Q4 margin step-down .

What Went Well and What Went Wrong

What Went Well

  • Corporate channel posted record revenue of $56.3M (+6.1% YoY) with ~102% trailing-12-month revenue retention; “record usage” and “record net adds from eFax Protect” underpinned growth .
  • Exceptional free cash flow conversion: FCF rose to $44.4M (+32% YoY) on strong collections and DSOs down to 25 days; management expects FY FCF >$95M despite Q4 interest timing .
  • Balance sheet actions: Drew ~$200M on new credit facility to retire 6% notes; expects to retire remaining $34M, lowering interest rate to ~5.65% and reducing gross debt toward ~3x adjusted EBITDA .

Quoted management:

  • “Q3 was another solid quarter led by our corporate channel revenue with growth in excess of 6%...” .
  • “Free cash flow in the quarter was an exceptional amount of $44.4 million...” .
  • “We utilized our new credit facility to retire $200 million of the 6% Notes... expect to retire the remaining $34 million before year end.” .

What Went Wrong

  • Adjusted EBITDA slightly down (-1.2% YoY to $46.4M) driven by higher personnel-related expenses; corporate ARPA fell as SMB mix expanded (eFax Protect ~$50 ARPA) .
  • SoHo revenue declined 9.2% YoY to $31.5M with lower paid adds and higher churn vs prior year; marketing “search environment” changes created near-term acquisition headwinds expected to persist into Q4 .
  • Guided Q4 margin lower due to continued hiring and seasonal cash costs associated with year-end audit; management flagged limited Q4 FCF given semiannual bond interest payment .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$87.75 $87.72 $87.77
GAAP Diluted EPS ($USD)$1.09 $1.07 $1.15
Adjusted EPS ($USD)$1.38 $1.46 $1.38
Net Income Margin (%)24.1% 23.7% 25.2%
Adjusted EBITDA ($USD Millions)$46.92 $48.07 $46.36
Adjusted EBITDA Margin (%)53.5% 54.8% 52.8%

Segment breakdown:

Segment Revenue ($USD Millions)Q3 2024Q2 2025Q3 2025
Corporate$53.09 $55.30 $56.30
SoHo$34.66 $32.41 $31.46

KPIs:

KPI (units)Q3 2024Q2 2025Q3 2025
Corporate Customer Accounts (000s)58 63 65
Corporate ARPA ($)$310.13 $301.29 $293.12
Corporate Monthly Churn (%)2.61% 2.86% 3.47%
Corporate Paid Adds (000s)5 8 8
SoHo Customer Accounts (000s)741 682 661
SoHo ARPA ($)$15.38 $15.62 $15.56
SoHo Monthly Churn (%)3.53% 3.84% 3.71%
SoHo Paid Adds (000s)64 62 51

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q4 2025N/A$84.9 – $88.9 Introduced
Adjusted EBITDA ($USD Millions)Q4 2025N/A$43.1 – $46.0 Introduced
Adjusted EPS ($USD)Q4 2025N/A$1.27 – $1.37 Introduced
Non-GAAP Tax Rate (%)Q4 2025N/A20.5% – 22.5% Introduced
Diluted Share Count (M)Q4 2025N/A~19.4 Introduced
FY Revenue ($USD Millions)FY 2025$343 – $357 Narrowed within prior range (no new numbers provided) Maintained/Narrowed
FY Adjusted EBITDA ($USD Millions)FY 2025$179 – $190 Narrowed within prior range (no new numbers provided) Maintained/Narrowed
FY Adjusted EPS ($USD)FY 2025$5.25 – $5.65 (raised in Q2) Narrowed within prior range (no new numbers provided) Maintained/Narrowed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3 2025)Trend
Corporate growth & retentionCorporate revenue +5.6% YoY (Q1); +6.9% YoY (Q2); margins robust Corporate +6.1% YoY; ~102% TTM revenue retention; record usage and eFax Protect net adds Sustained growth, retention >100%
VA/Public SectorCredit facility timing; positive enterprise usage (Q2) VA usage/revenue at record highs; >50% site deployment; runway to capture more traffic Expanding adoption; multi-year ramp
SOHO channelPlanned decline; acquisition costs disciplined (Q1/Q2) -9.2% YoY; search changes headwind; paid adds expected to recover to mid-50s over months Declining but stabilizing efforts underway
AI/Tech initiativesCompany leverages AI in platform (About sections) Clarity AI (unstructured→structured) and Integration Engine upsell gaining traction Growing advanced product adoption
Capital allocation & LeverageDebt repurchase program; strong cash generation (Q1/Q2) $200M notes retired post quarter; remaining $34M to be called; interest rate ~5.65% De-risking balance sheet; lower interest
Guidance/MarginsFY EPS guidance raised (Q2) Q4 guidance introduced; margin step-down expected from hiring/audit seasonality Near-term margin compression in Q4
Regulatory/FedRAMPCompliance leadership noted FedRAMP High certification supports public sector pipeline Regulatory positioning strengthens
Macro/TariffsGeneral macro risks reiterated Safe harbor notes tariffs/shutdown risks; no new macro changes Macro monitored; limited direct impact in Q3

Management Commentary

  • Strategic focus: “Record number of eFax Protect net additions and consistent revenue retention of approximately 102%... operating margins remained robust resulting in strong cash flows” — Scott Turicchi, CEO .
  • Capital structure: “Drew approximately $200 million of our credit facility and retired a like amount of the 6% notes… will call the remaining $34 million… interest rate on the new debt will be 5.65%” — Scott Turicchi .
  • Margin cadence: “We would expect a lower adjusted EBITDA margin in Q4 than we experienced in Q3” — Scott Turicchi .
  • Product momentum: “Clarity adoption… AI product that abstracts data… Integration Engine… connectivity to our eFax network is driving revenue” — Johnny Hecker (CRO) .
  • Guidance specifics: “Q4 revenues $84.9–$88.9M; adjusted EBITDA $43.1–$46.0M; adjusted EPS $1.27–$1.37; tax rate 20.5%–22.5%; share count ~19.4M” — Jim Malone (CFO) .

Q&A Highlights

  • VA trajectory: Management sees VA revenue scaling from ~$5M in 2025 toward $10–$20M over 2–3+ years as deployment expands and incumbent contracts roll off; >50% sites deployed but not all traffic captured yet .
  • SOHO stabilization: Decline unlikely to reach low single digits before 2028; near-term friction from search changes and Q2 acquisition cohort dynamics; paid adds targeted back to mid-50s over months .
  • Advanced products: Clarity AI and Integration Engine upsell to enterprise customers accelerating, enhancing interoperability and value capture .
  • Capital allocation mix: 2026 buybacks vs debt retirement will be opportunistic; revolver likely target for prepayments given reborrow flexibility; mandatory ~$2M/quarter delayed-draw term loan amortization .
  • Near-term noise: SOHO rate of decline trend could “break modestly” in Q4 given marketing headwinds; normalization expected into early 2026 .

Estimates Context

Consensus vs actual (S&P Global where noted):

MetricQ3 2024Q2 2025Q3 2025
Revenue Consensus Mean ($USD Millions)*$85.34*$86.51*$87.58*
Actual Revenue ($USD Millions)$87.75 $87.72 $87.77
Primary EPS Consensus Mean ($USD)*$1.293*$1.341*$1.357*
Actual Adjusted EPS ($USD)$1.38 $1.46 $1.38
  • Q3 2025: Slight revenue beat and EPS beat versus consensus; EBITDA comparisons vary with GAAP vs adjusted definitions (SPGI “EBITDA Consensus Mean” ~$46.19M*, company reported adjusted EBITDA $46.36M) .
  • Q2 2025: Revenue and EPS beats; Q3 2024: Revenue and EPS beats relative to consensus*.
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Enterprise strength offsets SoHo headwinds: corporate growth and retention remain robust; watch ARPA mix as SMB expands and eFax Protect scales .
  • Public sector optionality: VA ramp has credible pathway to $10M+ revenue over time; deployment pace and incumbent contract roll-offs drive trajectory .
  • Cash generation and de-leveraging: continued strong FCF and retirement of 6% notes reduce interest burden; leverage trending toward ~3x adjusted EBITDA .
  • Q4 margin seasonality: model a step-down in adjusted EBITDA margin (hiring and audit costs); tax rate 20.5%–22.5%; diluted shares ~19.4M .
  • SOHO acquisition recovery: marketing/search changes are a near-term headwind; paid adds expected to normalize over months—monitor Q4 and early-2026 trajectory .
  • Advanced product monetization: Clarity AI and Integration Engine upsell support ARPA and stickiness among enterprise customers .
  • Estimate revisions: Modest upward bias to near-term EPS/revenue estimates plausible given Q3 beats and balance sheet de-risking, tempered by Q4 margin guidance and SOHO headwinds* .
    Values retrieved from S&P Global.*