Consensus Cloud Solutions, Inc.

Good day, ladies and gentlemen, and welcome to Consensus Q3 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 ConsenSys 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 Q3 2024 financial results. Other key information, and our Q4 and full year 2024 guidance. Joining me today are Scott Taricki, 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 Q2 2024 investor call, and then Jim will discuss Q3 2024 financial results and Q4 quarterly and 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 our forward-looking statements and risk factors 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 risk factors and uncertainties include but are not limited to the risk factors that we have disclosed in our 10-K SEC filing. Now, let me turn the call over to Scott.

Thank you, Adam. We had another strong quarter in Q3, beating our expectations for revenue, adjusted EBITDA, and adjusted non-GAAP net income per share. The outperformance occurred in both channels of revenue. This combined with our disciplined approach to cost resulted in another quarter of excellent EBITDA performance and an EBITDA margin above the bid point of our range of 50% to 55%. As we laid out in our Q4 2023 earnings call, our goals for this year include First, eliminating certain costs of the SOHO channel, especially in the area of marketing, to provide for stabilization of the base of revenue over time, which Johnny will address in his remarks. 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 adjusted EBITDA margins north of 54%. I would note it's 54.7% for the nine months. And four, continuing the repurchase of our debt to further reduce our total debt to adjusted EBITDA ratio in anticipation of the first trance maturing in October of 2026. Our corporate channel had the best revenue growth in six quarters. The 5.3% growth was driven by new customer additions and record usage for a quarter. The new ads came primarily through our e-commerce efforts of eFax Protect, supplemented by upgrades from our Soho base, as well as several key enterprise wins. Notwithstanding the lower ARPA of eFact Protect customers than our current average, we were still able to maintain a $310 ARPA per customer in a tight range over the past several quarters. As predicted, we continue to see additional sites from the VA rollout driving new levels of usage and revenue. In addition, we saw a return to 100% LTM revenue retention in our corporate channel. Our solo revenues beat our expectations for the quarter. The rate of decline slowed from Q2 and we expect that there will be a reduction in the pace of decline in 2025. We continue to track ahead of our 2024 budget and have tested additional marketing opportunities while maintaining a strong LTV to CAC. We were able to substantially reduce our marketing spend and still generate 64,000 paid ads, similar to Q3 2023 and more ads than in the preceding three quarters. The combination of robust adjusted EBITDA, strong cash collections, and retirement of debt allowed us to generate free cash flow of approximately 34 million. The change in free cash flow from the prior year is driven by the timing of tax payments, which Jim will address in more detail. We were also able to repurchase an additional 31.1 million of debt in the quarter. This brings our total repurchases since launching the program in November 2023 to 187 million, and reducing our outstanding total debt to $618 million, or 3.2 times our trailing 12-month adjusted EBITDA, and 2.9 times on a net debt basis to our adjusted EBITDA. Jim will discuss our guidance for Q4 and the fiscal year in his portion of the presentation. However, I would like to note that Q4 usually has the fewest business days of the four quarters, and approximately one-third of our total revenues are usage-based This puts downward pressure on Q4 revenues relative to Q3. This year, however, the calendar is the most punitive as Christmas and New Year's Day both fall on a Wednesday. Based on historical analysis, we have compensated for this in the calculation of our Q4 business days. As a result, we expect approximately 61 business days in Q4 of 2024, which is one and a quarter business days less than Q4 of 2023, and approximately three and a quarter business days less than Q3 of 2024. I will now turn the call over to Johnny to provide more operational updates.