Consensus Cloud Solutions, Inc.

highlights from the quarter. Our corporate channel continues to demonstrate strong execution and sustained positive momentum. In Q3 2025, revenue reached a record $56.3 million, a 6.1% increase over $53.1 million in Q3 of 2024, and a sequential increase from the $55.3 million in revenue we reported in Q2 2025. As we noted last quarter, Q3 2024 was a particularly strong comparable, which makes this continued 6% plus year-over-year growth even more encouraging. This growth is driven by the sustained expansion and increased usage within our upper enterprise accounts and the continued momentum in our public sector business, complemented by stable growth in advanced products and strong performance in our corporate e-commerce channels. This reaffirms our corporate go-to-market strategy and lays the foundation for our future go-to-market, which I will address later in my remarks. I am pleased to announce that our trailing 12-month revenue retention rate stands at 101.9%. This is stable from 102% in the previous quarter, again confidently meeting our greater than 100% target up from 99.8% in Q3 2024. Our corporate customer base expanded to a new record of approximately 65,000 at the close of Q3. This represents an increase of over 12% from 58,000 in Q3 of last year and a sequential increase from approximately 63,000 at the close of Q2. The primary driver for this growth remains our eFax Protect offering, which expanded by approximately 6,700 new customers this quarter, contributing to our SMB cohort. Corporate ARPA was $293 for the quarter, compared to $301 in the prior quarter and $310 in Q3 of last year. This expected trend is a direct result of two counterbalancing factors. The successful expansion of our smaller SMB cohort, which includes our EFX Protect product at an ARPA of around $50, balanced by strong, high-value performance from our large enterprise clients. Importantly, we are proud to report strong sustained growth in our corporate ARPA net of eFax Protect for several quarters now, which demonstrates the underlying strength and growing value of our core enterprise customer base. Our corporate performance this quarter continued to trend from recent quarters, demonstrating sustained success at all levels of the market. We're effectively pairing robust revenue growth at high retention rates from our enterprise clients with steady customer base expansion in the SMB cohort. This balanced approach to growth proves our ability to execute across the entire customer continuum and provide significant stability to our business, which is evident by a continued expansion on two key metrics in our effects network, the number of participants or endpoints, and the volume of data we process across the network. Turning to the public sector, I want to make a clear distinction. Our main revenue driver in this vertical, the VA, saw its rollout and usage remain unfazed by the government shutdown. The VA continues to set new all-time high records for usage, a clear proof of deepening adoption that has persisted even during the shutdown. Separately, since achieving our official FedRAMP high-impact certification, we have built a solid pipeline among other government agencies and non-government organizations. we're successfully winning and onboarding new customers onto the ECFAX product. While the temporary government shutdown has led to some delayed decision-making, we see this as a short-term timing impact on the conversion pace, and it does not affect our positive outlook for this new pipeline. Moving on to our Soho business, we recorded Q3 revenue of $31.5 million, representing a strategic planned year-over-year decrease of 9.2% from $34.7 million in Q3 2024. This is a slight sequential decrease from $32.4 million in Q2 2025, reflecting our continued strategic focus on optimizing profitability and maximizing the efficiency of our advertising investments in this channel. The global Soho account base declined from approximately 682,000 in the prior quarter to approximately 661,000 during Q3. Soho ARPA for Q3 2025 was $15.56 compared to $15.62 in Q2 2025 and $15.38 in Q3 of last year. Our Soho cancellation rate in Q3 2025 was 3.71% down from 3.84% in the previous quarter. As I explained in our Q2 call, our Soho customer acquisition strategy led to an unusual spike in ads last quarter, which temporarily influenced the cancel rate in both Q2 and Q3. Since then, our customer acquisition has reverted to a more normal pattern. Yet, like all businesses that rely on digital marketing, we are actively navigating the recent changes in the search environment. This has created a near-term headwind contributing to a slight decline in organic signups in Q3, which we believe will continue in Q4. We are already executing a multi-step plan to recover from these impacts. While we continue to manage profitability with discipline, we are determined to return our paid ads numbers to the mid-50s, which we expect several months to fully realize. One key factor in this plan is to emphasize one of our greatest assets, our trademark and redesigned EFAX brand. This strategic focus on EFAX follows a year-long intensive brand study. From day one, more than 30 years ago, EFAX was a pioneer and leader in digital transformation, and we have invested heavily in this brand over decades. With the brand refresh, we now better leverage that established market trust, proven by millions of visitors to our web assets every month, to unify our advanced solutions. It allows us to bring our entire go-to-market portfolio from cloud fax to interoperability and AI under one familiar name, clarifying our evolution from a simple fax service to a comprehensive platform for secure data exchange and digital transformation. Consensus Cloud Solutions, which has also received a brand refresh, will remain the company's NASDAQ-listed brand for investor continuity and as a universal home for employees. To summarize, we are very pleased with the quarter's performance and remain highly confident in our outlook. We will continue on our go-to-market path, which has proven to be very effective. Healthcare remains at the center of our strategy, complemented by strong execution on our automated e-commerce channel for the down market. We are expanding our efforts in the corporate SMB and upper enterprise markets, which has extended into the public sector. We expect our SOHO business to continue on its trajectory with a clear focus on profitability. Before handing the call over, I want to express my sincere thanks to our employees for their hard work and dedication this past quarter. My gratitude also extends to our customers and partners for their ongoing trust and collaboration. We have delivered another excellent quarter, and we are focused on building on this momentum. With that, I'm handing over to our CFO, Jim Malone. We will now provide a detailed update on our financial performance and outlook. Jim.

Thank you, Johnny, and good afternoon, everyone. In our press release and on this call today, we are discussing Q3 2025 results and guidance for Q4 2025. We expect to file our 10Q by close of business today. Moving to corporate. Beginning with our corporate business results, Q3 2025 was another strong quarter for corporate with record revenue of $56.3 million, an increase of $3.2 million or 6.1% versus the prior year quarter. As Johnny just mentioned, Q3 2024 was a particularly strong comparable quarter. which makes the continued 6 percent plus corporate growth even more meaningful. Our record of Q3 2025 corporate revenue delivered a trailing 12-month revenue retention rate of approximately 102 percent, up from 99.8 percent from the prior comparable period and stable sequentially. Our corporate customer base expanded to approximately 65,000 in Q3 2025 versus 63,000 in Q2 2025 and 58,000 in the prior comparable period. Corporate offer was $293 versus $301 in Q2 2025 and $310 in Q3, 2024. This trend is in line with our expectations and an expanding customer base in the lower SMB cohort, primarily due to record eFax Protect paid ads, which generated an approximate $50 offer. As Johnny stated, corporate offer net of eFax Protect has experienced sustained growth for several quarters demonstrating strong performance from our core enterprise customer base. Moving to SOHO, Q3 2025 revenue of $31.5 million compared to $34.7 million representing a strategic plan decline of $3.2 million or 9.2% from the prior comparable period and a slowing decline from the Q2 2025 comparable year-over-year period of 9.4%. Q3 2025 ARPA of $15.56 had an improvement from the prior year comparable period of 18 cents and was in line sequentially. The Soho cancel rate improved sequentially to 3.71%, from 3.84 percent in Q2 2025. Moving to consolidated results, 87.8 million revenue was consistent with the prior year comparable period. Just at EBITDA, 46.4 million is a decrease of 0.6 million or 1.2 percent versus Q3 2024. primarily driven by planned headcount additions. We delivered a healthy 52.8 percent adjusted EBITDA margin for approximately 60 basis points favorable to the midpoint of our Q3 2025 guidance range. Q3 2025 adjusted net income of 26.6 million is a decrease of 0.2 million or 0.8%, versus Q3 2024, primarily driven by lower interest expense and depreciation and amortization, offset in part by lower adjusted EBITDA and higher income tax. Adjusted EPS of $1.38 was unchanged from the prior year comparable period. Q3 2025 non-GAAP tax rate and share count was 22.3%, and 19.3 million shares. Capital allocation, free cash flow. Q3 2025, free cash flow is 44.4 million, an increase of approximately 11 million, or 32 percent, versus the prior comparable period, driven primarily by operational performance. Q3 2025, CapEx of 7.2 million, a decrease of 0.8 million or approximately 10 percent versus the prior year. Cash and cash equivalents. We ended Q3 2025 with cash of approximately 98 million, which is sufficient to fund our operations and repurchases of equity and debt. Six percent notes debt retirement. As noted in our 8-K filed on July 14, 2025, we executed a $225 million three-bank club deal, including standard covenants, to retire our 6% notes to October 2026. The loan consists of a $150 million delayed draw term loan plus a $75 million revolving credit facility. The interest rate is SOFR plus an applicable margin based on total net leverage ratio. Subsequent to the quarter end on October 15, 2025, we called $200 million of our 6% notes at par, leaving $34 million outstanding. We utilized our $150 million delayed draw term loan plus $50 million on the revolver. We didn't retire the entire $234 million. as our secure lien capacity under our bond indentures was $200 million based upon our June 30, 2025 cash balance. The borrowing cost will be approximately 10 to 35 basis points, lower than our current 6% rate. We have notified our trustee, and we will call the remaining balance of the 6% notes, $34 million, on or about November 10th. with a combination of $14 million balance sheet cash and $20 million of the remaining volume. Equity repurchases. In February 2025, the Board approved an extension to the previously approved program for another three years and up to $67 million. In Q3 2025, we repurchased 121,000 shares for $2.7 million bringing the total equity purchases to date of approximately 1.8 million shares for approximately 47 million. There were no bond repurchases in Q3 2025. Moving to guidance, we are providing Q4 2025 guidance as follows. Revenues between 84.9 million and 88.9 million with 86.9 million at the midpoint. Adjusted EBITDA between 43.1 million and 46 million with 44.5 million at the midpoint. Adjusted EPS of $1.27 to $1.37 with $1.32 at the midpoint. Estimated Q4 2025 share count is approximately 19.4 million shares with a tax rate between 20.5% and 22.5%, with 21.5% at the midpoint. Please remember that as previously mentioned, our 2025 guidance and actual results exclude foreign exchange gain or losses on revaluation of intercompany accounts. That concludes my formal remarks. I'd like to turn the call back to the operator for a Q&A. Thank you.

Thank you. We will now be conducting a question and answer session. In the interest of time, we ask that you please limit yourself to one question. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we begin. And the first question today is coming from David Larson from BTIG. David, your line is live.