Consensus Cloud Solutions, Inc.

Good day, ladies and gentlemen, and welcome to Consensus Q1 2024 Earnings Call. My name is Paul, and I will be the operator assisting you today. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. On this call from Consensus will be Scott Chiriki, CEO, Jim Malone, CFO, Johnny Hecker, CRO and Executive Vice President of Operations, and Adam Varon, Senior Vice President of Finance. I will now turn the call over to Adam Varon, Senior Vice President of Finance at ConsenSys. Thank you. You may begin.

Good afternoon and welcome to the ConsenSys Investor Call to discuss our Q1 2024 financial results, other key information, Q2 2024 guidance, and our 2024 guidance full year. Joining me today are Scott Tariki, CEO, Johnny Hecker, CRO and EVP of Operations, and Jim Malone, CFO. The earnings call will begin with Scott providing opening remarks. Johnny will give an update on operational progress since our year-end 2023 investor call, and then Jim will discuss our Q1 2024 financial results, Q2 guidance, and reaffirmation of our full year 2024 guidance. After we finish our prepared remarks, we will conduct a Q&A session. At that time, the operator will instruct you on the procedures for asking a question. Before we begin our prepared remarks, allow me to direct you to the Safe Harbor language on slide two. As you know, this call and the webcast will include forward-looking statements. Such statements may involve risks and uncertainties that would cause actual results to differ materially from the anticipated results. Some of those risks and uncertainties include but are not limited to the risk factors outlined on slide three that we have disclosed in our 10-K SEC filing, as well as a summary of those risk factors that we have included as part of the slideshow for the webcast. We refer you to discussions in those documents regarding Safe Harbor language as well as forward-looking statements. Now, let me turn the call over to Scott.

Thank you, Adam. As noted in the press release, I am pleased with the results of our first fiscal quarter. As we discussed on the Q4 earnings call, our goals for this year include the following. First, eliminating certain costs of the SOHO channel, especially in the area of marketing, allowing us to stabilize the base of revenue over time. Two, continuing to pursue the acquisition of customers primarily in the healthcare space for our corporate channel. Three, reviewing our overall cost structure with the goal of driving EBITDA margins north of 54%. And four, continuing the repurchase of our debt to further reduce our net debt to EBITDA ratio in anticipation of the first tranche maturing in October of 2026. Johnny will provide more detail in his portion of the presentation. However, I'd like to highlight several things before turning the presentation over to him. I'm happy to report that while revenues for the Soho Channel dipped in the quarter versus Q1 of 2023, it was better than our expectation. We were able to substantially reduce our marketing spend and still generate 63,000 paid ads, more than in Q4, and similar to our Q3 productivity that had higher levels of marketing spend. We continue to monitor the various cohorts and look for opportunities to possibly allocate additional marketing dollars to work above our budgeted amount later in the year. In our corporate channel, our new CloudFax product, eFax Protect, had strong signups in only its second full quarter of offering. We also saw a record number of upgrades from our SOHO channel to corporate. In addition, we saw more facilities come online and a ramping of usage from the VA. All of these contributed to 4% growth, which, while not to our desired long-term target, is an improvement over the past three quarters. On the AI front, we saw additional wins for Clarity PA and Clarity CD. We maintained our discipline on the cost side with cuts primarily coming from the SOHO marketing mentioned earlier. The result was a six percentage point pickup on our EBITDA margin to 54.5% and near the upper end of our long-term range. The combination of improved EBITDA, strong cash collections, and retirement of debt allowed us to improve our free cash flow by more than 20% from Q1 of 2023 to approximately 36 million in Q1 of 2024, which is before our reduction in CapEx that begins this quarter. We were able to repurchase an additional 63.5 million of debt during the quarter. This brings our total repurchases since launching the repurchase program in November of 2023 to $126 million and reducing our outstanding debt to $679 million, or 3.6 times our trailing 12-month EBITDA on a gross basis and 3.2 times on a net basis. I will turn the call over to Johnny, who will provide you more operating details.