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Consensus Cloud Solutions, Inc. (CCSI)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $86.983M, reaching the high end of prior guidance; GAAP diluted EPS rose 5.7% YoY to $0.92, while adjusted EPS increased 18.9% to $1.32, driven by FX revaluation and lower net interest expense despite lower EBITDA .
  • Mix shift continued: Corporate revenue grew 7.1% YoY to $52.917M while SoHo declined 11.1% to $34.061M; corporate momentum reflected 100.5% revenue retention in 2024 and record customer count .
  • FY25 outlook: Revenues $343–$357M (midpoint $350M), adjusted EBITDA $179–$190M (midpoint $185M), adjusted EPS $5.03–$5.42 (midpoint $5.22); Q1 2025 guidance suggests $85–$89M revenue and $1.26–$1.36 adjusted EPS .
  • Capital allocation: record FY24 FCF of $88.3M enabled $207M cumulative bond repurchases; leverage near target (total debt/adj. EBITDA ~3.2x, net ~3.0x); management expects additional $30–$40M debt paydown by Oct 2026 and likely bank facility to retire 6% notes at maturity .
  • Potential stock narrative catalysts: visible corporate growth trajectory, clarity on refinancing path, and AI-enabled Clarity product deployments and FedRAMP High authorization supporting VA and broader public sector opportunities .

What Went Well and What Went Wrong

What Went Well

  • Corporate revenue up 7.1% YoY to $52.917M, with normalized growth ~5.5% after Q4’23 cleanups; corporate revenue retention improved to 100.5% for FY24, adding 3,000+ corporate customers in Q4 and reaching ~59k accounts .
  • Q4 adjusted EPS rose to $1.32 (+18.9% YoY), with GAAP EPS $0.92 (+5.7% YoY), and EBITDA margin achieved at 51% in line with plan, reflecting disciplined cost control and mix .
  • Record FY24 free cash flow of $88.3M and $206.9M cumulative debt repurchases to date; company exceeded full-year revenue target by >$5M and maintained high-50s EBITDA margin range for the year .

Management quotes:

  • “We exceeded our revenue target by more than $5 million for the year, maintained strong margins, generated record net cash provided by operating activities and free cash flow and made a significant reduction in our outstanding debt.” — CEO Scott Turicchi .
  • “We see a continuation of the trend for improved corporate growth and a slowing of the decline in SoHo.” — CEO Scott Turicchi .

What Went Wrong

  • Q4 adjusted EBITDA declined to $44.353M (-6.0% YoY) and adjusted EBITDA margin fell 280 bps YoY to 51.0%, driven by lower operating income and usage days .
  • SoHo revenue declined 11.1% YoY to $34.061M; ARPA and paid adds strategy (discounted first month) elevated churn, though within expected ranges .
  • Non-GAAP adjustments can obscure volatility: management plans to eliminate FX gains/losses from adjusted results beginning Q1’25; FX benefited FY24 adjusted EPS by $0.18, implying pro forma $5.45 .

Financial Results

Sequential and YoY Performance

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$87.500 $87.753 $86.983
Net Income ($USD Millions)$23.874 $21.120 $18.071
Diluted EPS ($USD)$1.24 $1.09 $0.92
Adjusted EBITDA ($USD Millions)$49.072 $46.916 $44.353
Adjusted EBITDA Margin (%)56.1% 53.5% 51.0%
Net Income Margin (%)27.3% 24.1% 20.8%
Adjusted EPS ($USD)$1.45 $1.31 $1.32
MetricQ4 2023Q4 2024
Revenue ($USD Millions)$87.754 $86.983
Diluted EPS ($USD)$0.87 $0.92
Adjusted EBITDA ($USD Millions)$47.189 $44.353
Adjusted EPS ($USD)$1.11 $1.32
Net Income ($USD Millions)$16.771 $18.071
Net Income Margin (%)19.1% 20.8%
Adjusted EBITDA Margin (%)53.8% 51.0%

Note on Wall Street consensus: S&P Global consensus estimates were unavailable at the time of this analysis due to access limits; therefore, estimate comparisons are not provided.

Segment Breakdown

Segment MetricQ2 2024Q3 2024Q4 2024
Corporate Revenue ($USD Millions)$51.720 $53.085 $52.917
SoHo Revenue ($USD Millions)$35.779 $34.664 $34.061

KPIs

KPIQ2 2024Q3 2024Q4 2024
Corporate Customer Accounts (000s)56 58 59
Corporate ARPA ($)$310.18 $310.13 $303.62
Corporate Paid Adds (000s)4 5 4
Corporate Monthly Churn (%)2.29% 2.61% 2.63%
SoHo Customer Accounts (000s)787 768 747
SoHo ARPA ($)$14.97 $14.88 $14.99
SoHo Paid Adds (000s)61 64 60
SoHo Monthly Churn (%)3.40% 3.38% 3.38%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q1 2025N/A$85–$89 (midpoint $87) New
Adjusted EBITDA ($USD Millions)Q1 2025N/A$44.8–$47.8 (midpoint $46.3) New
Adjusted EPS ($)Q1 2025N/A$1.26–$1.36 (midpoint $1.31) New
Non-GAAP Tax Rate (%)Q1 2025N/A19.5%–21.5% (call commentary) New
Revenue ($USD Millions)FY 2025N/A$343–$357 (midpoint $350) New
Adjusted EBITDA ($USD Millions)FY 2025N/A$179–$190 (midpoint $185) New
Adjusted EPS ($)FY 2025N/A$5.03–$5.42 (midpoint $5.22) New
Non-GAAP Tax Rate (%)FY 2025N/A20.5%–22.5% New
Adjusted EPS (policy change)FY 2024 (pro forma)N/AEx-FX: $5.45 (FX impact $(0.18)) Methodology update

Earnings Call Themes & Trends

TopicQ2 2024 (Prev)Q3 2024 (Prev)Q4 2024 (Current)Trend
AI/Clarity rolloutGrowing POCs; revenue immaterial; proprietary LLM; building implementation capacity Sustained interest; backlog of POCs; implementations underway Full production deployments; two replicable models (prior auth; clinical doc classification/CCDA) Increasing operationalization, still early revenue contribution
Corporate growth+2.7% YoY; eFax Protect driving adds; ARPA stable; VA momentum +5.3% YoY; record usage; retention ~100% +7.1% YoY reported; ~5.5% normalized; retention 100.5% FY24 Improving growth rate and retention
SoHo strategyPlanned ad spend cuts; discounted first month; churn ~3.40% Decline -13.6%; churn 3.38%; targeted marketing Decline -11.1%; ARPA $14.99; churn 3.38% Decline moderating; unit economics managed
Public sector (VA)Forecast >$2M FY24; FedRAMP High positioning Steady rollout; accelerating sites/users $2.6M FY24; targeting ~$5M FY25; FedRAMP High authorization completed Growth vector solidifying
Macro/decision cyclesSlow IT decisions; cost-conscious hospitals Mixed hospital environment; election impacts limited near-term “Cautiously optimistic”; normalization; 2025 growth investments Improving sentiment

Management Commentary

  • “We achieved margins for the year of approximately 54%... More importantly, this EBITDA translated into a record $88 million in free cash flow. We utilized this cash flow... to repurchase approximately $144 million principal amount of debt during the year.” — CEO Scott Turicchi .
  • “Corporate business demonstrated strong growth... revenue retention rate of 100.5% for fiscal year 2024.” — CRO Johnny Hecker .
  • “Our adjusted net income calculation will eliminate foreign exchange gains and losses on intercompany balances... pro forma EPS of $5.45 excluding the 2024 foreign exchange gain.” — CFO Jim Malone .

Q&A Highlights

  • Clarity adoption: In production with tailored models; focus on extracting structured fields (demographics, insurance, prior auth) and generating CCDA; revenue contribution still immaterial but demand robust via POCs .
  • Corporate growth path: Normalized ~5.5% YoY in Q4; FY25 midpoint implies ~6.25% corporate growth; progression expected to be reasonably smooth; fewer business days in 2025 noted .
  • 2025 investments: Ramp in GTM/sales headcount through the year (~$1M/quarter run-rate by Q4), with most revenue impact expected in 2026; increased corporate marketing (trade shows, digital, thought leadership) .
  • Guide conservatism: Acceleration constrained by upmarket sales/ramp cycles (6–12+ months); VA rollout multi-year (2–3 years to close; 3–5 years to fully penetrate) .
  • VA contribution & federal context: ~$5M FY25 contribution expected; rollout to continue “unimpeded” despite federal bureaucracy changes; broader healthcare impact minimal .

Estimates Context

  • S&P Global consensus estimates (revenue, EPS) were unavailable at the time of analysis due to access limits. As such, comparisons versus Wall Street consensus are not provided, and any estimate-driven conclusions are deferred pending data availability.

Key Takeaways for Investors

  • Corporate momentum is real: sequential acceleration, 100.5% FY24 revenue retention, and record customer counts point to durable growth; midpoint FY25 implies ~flat total revenue with corporate offsetting managed SoHo decline .
  • Margin investment in 2025: management will spend ~1ppt of EBITDA margin to scale GTM in corporate, targeting a return to total revenue growth in 2026; monitor sales hiring and enterprise win cadence .
  • Cash generation underwrites de-risking: $88.3M FY24 FCF and continued debt repurchases (~$207M to date) support leverage targets and set up bank-line refinancing of 2026 notes; watch trajectory to <3x total debt/EBITDA .
  • SoHo is controlled decline: marketing optimization and pricing mechanics stabilize unit economics; decline moderates (-11.1% in Q4); monitor churn/ARPA and paid adds efficiency .
  • Public sector tailwind: FedRAMP High authorization and accelerating VA deployment should lift corporate usage and revenue; FY25 VA ~$5M adds credibility to multi-year public sector thesis .
  • AI narrative gaining substance: Clarity in production with replicable models; while immaterial to revenue today, successful deployments and healthcare automation use cases could expand TAM and attach to core fax workflows .
  • Trading lens: Near-term prints likely hinge on corporate growth consistency, margin trade-off optics, and debt/refinancing updates; clarity on estimates (when available) and guidance progression will influence sentiment .

Appendix: Additional Q4 Press Releases

  • Operational updates and investor call logistics for Q4/Year End 2024 (Jan 21, 2025) .
  • AI-powered fax solutions showcased at ViVE 2025 (Feb 11, 2025) .