Consensus Cloud Solutions, Inc. Reports First Quarter 2025 Results; Reaffirms Full Year 2025 and Provides Q2 2025 Guidance

LOS ANGELES--(BUSINESS WIRE)--May 07, 2025-- 

Consensus Cloud Solutions, Inc. $(CCSI)$ today reported financial results for the first quarter of 2025.

"I am pleased with our start for fiscal year 2025. Our Corporate revenue growth continued its improvement, driven primarily by strong usage, improved revenue retention and new customer acquisition. Our SoHo revenue performed as expected. Our operating margins remained robust. Our strong cash flows from operations and cash balances enabled us to further reduce our overall debt levels. Collectively, this fuels our confidence for the remainder of the year despite the volatility in the capital markets," said Scott Turicchi, CEO of Consensus.

FIRST QUARTER UNAUDITED 2025 HIGHLIGHTS

Q1 2025 quarterly revenues decreased by $1.0 million or 1.1% to $87.1 million compared to $88.1 million for Q1 2024. This decline was primarily due to a planned decrease of $3.9 million or 10.6% in our Small office home office ("SoHo") business, partially offset by an increase of $2.9 million or 5.6% in our Corporate business.

Net income(1) decreased to $21.2 million in Q1 2025 compared to $26.4 million for Q1 2024. The decrease was primarily due to a debt extinguishment loss in Q1 2025 compared to a gain in Q1 2024, as well the change in foreign exchange revaluation. The effect of these two items and the reduction in income tax expense contributed to a net decrease of $6.7 million. Q1 2025 net income margin(1) was 24.3% compared to 29.9% for Q1 2024.

Earnings per diluted share(1) decreased to $1.07 or by 21.9% in Q1 2025 compared to $1.37 for Q1 2024. The decrease was due to the items discussed above.

Adjusted EBITDA(3)(4) for Q1 2025 of $47.3 million decreased compared to Q1 2024 of $48.1 million primarily driven by a $1.0 million decline in revenues, partially offset by the benefit of our cost saving measures. Q1 2025 Adjusted EBITDA margin(3) of 54.2% was consistent with our Adjusted EBITDA margin(3) of 54.5% in Q1 2024.

Adjusted net income(1)(2) in Q1 2025 increased to $27.0 million from $26.9 million in Q1 2024.

Adjusted earnings per diluted share(1)(2) for the quarter decreased to $1.37 or by 2.1% compared to $1.40 for Q1 2024 primarily due to an increase in the weighted average share count of approximately 457,000 shares in Q1 2025 compared to Q1 2024.

Net cash provided by operating activities in Q1 2025 decreased to $40.9 million from $44.7 million in Q1 2024. Free cash flow(5) in Q1 2025 decreased to $33.7 million from $35.8 million in Q1 2024. The decrease in these two items was primarily attributable to a decrease in net cash inflows resulting from changes in our working capital accounts, as well as decreased income after excluding noncash items.

Key financial results from operations for Q1 2025 versus Q1 2024 are set forth in the following table. Reconciliations of GAAP measures to comparable non-GAAP financial measures accompany this press release.

 
(Unaudited, in thousands 
except per share amounts and                             Favorable / 
percentages)                                            (Unfavorable) 
----------------------------  ------------------------  -------------- 
                                Q1 2025      Q1 2024        Change 
                              -----------  ----------- 
Revenues                      $87,138      $88,146          (1.1)% 
Net income (1)                $21,152      $26,370         (19.8)% 
Net income margin (1)            24.3%        29.9%       (5.6) pts 
Earnings per diluted share 
 (1)                          $  1.07      $  1.37         (21.9)% 
Adjusted net income (1)(2)    $26,968      $26,903           0.2% 
Adjusted earnings per 
 diluted share (1)(2)         $  1.37      $  1.40          (2.1)% 
Adjusted EBITDA (3)(4)        $47,250      $48,066          (1.7)% 
Adjusted EBITDA margin (3)       54.2%        54.5%       (0.3) pts 
Net cash provided by 
 operating activities         $40,943      $44,689          (8.4)% 
Free cash flow (5)            $33,747      $35,766          (5.6)% 
----------------------------   ------       ------      -------------- 
 

Notes:

 
(1)    The effective tax rates were approximately 24.1% for Q1 2025 and 27.3% 
       for Q1 2024. The non-GAAP effective tax rates were approximately 21.2% 
       for Q1 2025 and 20.9% for Q1 2024. The calculation for net income 
       margin is net income divided by revenues. 
(2)    Adjusted net income and Adjusted earnings per diluted share exclude 
       certain non-GAAP items, as defined in the accompanying Reconciliation 
       of GAAP to non-GAAP Financial Measures. Such exclusions totaled $0.30 
       and $0.03 per diluted share, respectively, for the three months ended 
       March 31, 2025 and 2024. Adjusted net income and Adjusted earnings per 
       diluted share are not meant as a substitute for measures calculated in 
       accordance with GAAP, but are presented solely for informational 
       purposes. Starting in 2025, the Company excludes any foreign exchange 
       gains or losses from Adjusted net income and Adjusted earning per 
       diluted share. The prior year amounts have been adjusted for 
       consistency with the current year. For the three months ended March 31, 
       2024, such exclusion reduced Adjusted net income by $2.9 million and 
       $0.15 per diluted share, respectively. 
(3)    Adjusted EBITDA is defined as earnings before interest expense; 
       interest income; other (expense) income, net; income tax expense; 
       depreciation and amortization; and other items used to reconcile net 
       income per diluted share to Adjusted earnings per diluted share, as 
       presented in the Reconciliation of GAAP to Adjusted non-GAAP Financial 
       Measures. Adjusted EBITDA margin is defined as Adjusted EBITDA divided 
       by revenues. Adjusted EBITDA amounts and Adjusted EBITDA margin are not 
       meant as a substitute for measures calculated in accordance with GAAP, 
       but are presented solely for informational purposes. The most directly 
       comparable GAAP financial measure to Adjusted EBITDA and Adjusted 
       EBITDA margin is net income and net income margin. 
(4)    See Net Income to Adjusted EBITDA Reconciliation for the components of 
       Adjusted EBITDA. 
(5)    Free cash flow is defined as net cash provided by operating activities, 
       less purchases of property and equipment. Free cash flow amounts are 
       not meant as a substitute for measures calculated in accordance with 
       GAAP, but are solely for informational purposes. 
 

CAPITAL ALLOCATION STRATEGIC INITIATIVES

Consensus ended the quarter with $53.4 million in cash and cash equivalents after the cash outlays detailed below.

The following table consists of our material capital allocation strategic initiatives (in thousands):

 
                                                             Remaining 
Capital Allocation:        Q1 2025    Cumulative Total     Under the Plan 
                          ---------  ------------------  ----------------- 
Debt repurchase program 
 (6)                       $  9,731   $         216,614    $        83,386 
Common stock repurchase 
 program (7)               $     34   $          32,147    $        67,853 
 
                           Q1 2025          2025 
                          ---------  ------------------  ----------------- 
Purchases of property 
 and equipment             $  7,196   $           7,196 
------------------------      -----      --------------  ----------------- 
 

Notes:

 
(6)    On November 9, 2023, the Company's Board of Directors approved a debt 
       repurchase program, pursuant to which Consensus may reduce, through 
       redemptions, open market purchases, tender offers, privately negotiated 
       purchases or other retirements, a combination of the outstanding 
       principal balance of the 2026 Senior Notes and 2028 Senior Notes. The 
       authorization permits an aggregate principal amount reduction of up to 
       $300 million and expires on November 9, 2026. 
(7)    On March 1, 2022, the Company's Board of Directors approved a share 
       buyback program. Under this program, the Company may purchase in the 
       public market or in off-market transactions up to $100.0 million worth 
       of the Company's common stock through February 2025. In February 2025, 
       the Company's Board of Directors authorized and approved a three-year 
       extension of the share repurchase program through February 2028. 
 

FY 2025 GUIDANCE (i)

The following table presents ranges for the Company's 2025 guidance (in millions, except per share amounts):

 
                                            Low    Midpoint   High 
                                           -----  ----------  ----- 
Revenue                                    $ 343   $     350  $ 357 
Adjusted EBITDA                            $ 179   $     185  $ 190 
Adjusted earnings per diluted share (ii)   $5.03   $    5.22  $5.42 
 

Q2 2025 GUIDANCE (i)

The following table presents ranges for the Company's Q2 2025 guidance (in millions, except per share amounts):

 
                                            Low    Midpoint   High 
                                           -----  ----------  ----- 
Revenue                                    $85.0   $    87.0  $89.0 
Adjusted EBITDA                            $45.0   $    46.5  $48.0 
Adjusted earnings per diluted share (ii)   $1.31   $    1.37  $1.42 
 

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May 07, 2025 16:01 ET (20:01 GMT)