CCSI - Earnings call transcript Q2 2024 | Consensus Cloud Solutions, Inc.

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Operator

Good day ladies and gentlemen, and welcome to Consensus Q2 2024 Earnings Call. My name is Paul and I will be the operator assisting you today. [Operator Instructions] On this call from Consensus will be Scott Turicchi, 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 Consensus. Thank you.

You may begin.

Adam Varon

XXXX to financial investor our results, quarterly and welcome our to QX and guidance, XXXX QX other full-year afternoon the call Consensus discuss XXXX Good guidance. key information,

QX Turicchi, an QX Joining me of a XXXX and progress update opening begin on Malone, Jim QX remarks. After Johnny will the discuss XXXX At on our for our a you CRO The XXXX prepared financial call Scott will and the that instruct operational Operations; and Jim earnings guidance. asking quarterly CEO; XXXX results, question. we CFO. with remarks, today and then full-year we Q&A EVP time, Hecker, our Johnny finish investor will procedures Scott call, are will providing will since operator conduct session. give

our to you Slide begin to we factors our forward-looking prepared remarks me on and risk X. allow direct Before statements

call risks you that and involve may the this include actual Such the statements will webcast results anticipated materially to and results. As from know, differ forward-looking uncertainties cause would statements.

include, those our are of filing. XX-K uncertainties disclosed risk but we and risks the SEC not limited in factors that Some to have

call Scott. over turn me let Now, the to

R. Turicchi

QX outperforming adjusted you, We a and both had Thank adjusted channels of flow. Adam. revenue, earnings, cash on strong EBITDA, free EPS, adjusted

the laid we following. include goals out year As in this our our QX call, for earnings

to provide of costs SoHo the stabilization the channel, of certain for of marketing, eliminating base in over First, of especially the time. revenue area

channel. the space the to for pursue in our continuing corporate acquisition healthcare of primarily customers Second,

of XX% And debt reduce first to to EBITDA tranche in our repurchase XXXX. our goal our fourth, of anticipation Third, of continuing maturing the to ratio with further adjusted range. structure to to end higher improving the in EBITDA total reviewing and XX% the October adjusted our margins overall cost debt driving

turning highlights a provide me additional to few over the before call Let Johnny.

well as from a through current than to over offering e-commerce the our our range and lower of channel several eFax as average, SoHo $XXX new quarters relatively the customers, and between customers Protect. able our to were base add Our these primarily ARPA tight Notwithstanding new $XXX we continued upgrades $XXX. corporate of ARPA past a maintain still

sites to continue rolling revenue. of VA additional see new from out, the We and driving levels

Our for SoHo our our revenues the remind price XXXX, expectations to versus finished XXXX. you quarter. the in revenues beat base would a saw I and we that actually growth in increase QX slight QX

at viewed anomalous. growth the we As we this time, as stated,

have additional We to ads maintaining paid continue QX levels QX substantially to and found track and still while CAC. were XXXX, spend. and XXXX, higher marketing than more We a marketing budget strong opportunities LTV reduce of ahead XX,XXX XXXX to had generate to of our our spend which similar able

of discussed full from benefited structure optimization our call. that on quarter a we cost Our QX cost the

cash strong for a our long-term above As combination free allowed to mentioned our of QX of most us the details. basis. I a was debt provide net to EBITDA and million or to debt the you X.Xx more range. repurchases is XXXX. X.Xx to margin to on cost of quarter. result since the XX by additional improve XX.X% the XX-month of total more million trailing call million were November and reminder, EBITDA EBITDA, flow on primarily adjusted and collections, pickup adjusted which those upper The our than end retirement from a marketing SoHo earlier. percentage of point reductions X.X the from brings came our quarter, outstanding XXXX The improved over debt turn the debt will an This We now to our during in able of million $XXX program Johnny, $XX.X will adjusted $XXX who repurchase reducing launching operating total cash our

Johnny Hecker

and product covering the business share rollout will details and both SoHo I VA sector, along corporate public Today and our on the everyone. hello go-to-market enhancements. businesses, more specifically and updates Scott, you, with Thank

sharing the by our in start the operations sales Let's and solid update and business. corporate then performance

of year X% report increase healthcare. pleased for settings, pleased our outcome a X,XXX cases corporate the revenues, am versus offerings. The million e-commerce the the strength revenue valuable effectiveness portion marks the an in upmarket mostly are in our in unwavering in same increase of year. million strategy. fax approximately approximate record-setting SoHo serves quarter a acquisition indicating our with marking last customer of testament of $XX.X QX It and $XX.X over added last cloud period to source for upsell to continues and especially customers as use with I We This to of most business, the variable demonstrating be effectiveness another our growth. emphasizing for strategy QX corporate

During to planned we to changes. due upsell the last a projected call, operational in our decline QX SoHo during corporate

However, the helped a growth extent. of offset our Protect to the large eFax us slowdown service

expand based year-over-year rate not e-commerce this $XXX and for customers, report above realignment also and offering, that launch with steady corporate quarters eFax which XXXX. It corporate go-to-market several rate. has basis XXX second we growth to corporate, year. share offering to Protect, options and X% in metrics that invest reveal aligns we ARPA in reaching accounts our the driven corporate the for last increased channel in our mark. I points trend the with the a customers that rate to end on on by would to higher our customer basis of quarter of within shared new in the next of has strategy the in-person by phase need process. The for include significantly customers The continue e-commerce upsell Normalized will in-product lower leads at below you pleased the accounts cancellation this this eliminating are continuum at those range points this XX the remained remain quarter. We will interaction with for for the just remind X.XX% revenue. of cancer cancellation the is and $XXX quarter-over-quarter, that We foresaw $XXX

During automated being QX while slowdown QX, lower the the aligning half with This for to the The public temporary after the of as XX% second new sales at of this remains the new of our our advanced allowing execution deals to driving track last in up our go-to-market on We're is overall with for business. sales the sales processes, through than XXXX. for team products e-commerce year increasingly larger Unite implementation sector offering accounted the sales of its customers to also mainly and potential performance on the we're of strong ARPA is ECFax like plan It's in to QX. influenced our important a by enthusiasm highlight is fluctuates that core fax percentage note performance our lower fully spectrum focus attributed our proceeding contribution. unwavering. of sales productivity. I'd in and planned, services. Overall, also VA closing

level with and defense. ECFax sectors agencies controls. continued with steady FedRAMP with our projections, This on program distinction attests the we of and and law move confidently solution sensitive government utmost the enforcement, security, and complying operating for of more coming from the in out stands exceptional in as fax vital high growth XXXX million level integrity, availability the finance, forward. ECFax are in additional and like marketplace that We growth impact cloud to sole we years line in healthcare, forecast the the expect observing $X months we than revenue confirm the in as

As solution is advance FedRAMP apparent relationships it by a our standard being agencies, government. we with the increasingly that prerequisite for the high becomes potential even these meeting impact as a considered

a relevant other agencies with discussions our the beyond healthcare sector, approach share our to of government, area for strengthening corporate This and our state demand heightened us on are emphasis local planning the a pleased second are critical in in education. pillar and commercial prompts We as and We're business public to our XXXX witnessing the proceeding. process. sector public solutions explore as we

enhance keeping committed our the in platform, success. of the best fax investing Regarding the strategy, continued to strive of forefront, the enhancement economic our customers' in fully optimal innovation. particularly business, We and a remain and to qualified fax demonstrated has ongoing development at ensuring consistently be our scalability, our we cloud approach platform. Adopting terms cloud while interest resilience, to

We our unstructured cases, are heightened related particularly which Customers Clarity implementation contributing robust specific This interest models to use from intrigued the valuable data. clients number in workflows actionable technologies expanding to them to interest is to of by the unlock possible. currently enabling continue Clarity, proof-of-concept insights LLM intelligence offering proprietary of automate our our leverages potential their AI in and and requests, which and tailoring are never backlog. in to receive before extract growing reflected ways possibility

trials customers of total the of to with in slightly $XXX,XXX during free a ahead at previous SoHo QX improved expectations stable revenue SoHo previous marketing year. decreased is our majority discounted Similar in and $XX.X has quarter, inside while we allowing changes million for to revenue in base business, again quarter. a consistent we X.X% last sequentially the cancel the us $XX.X to first-month reduction see to X.XX% million to announced increase slightly year, continued remain ARPA Turning up plan, versus customer signing the focused rate the $XX.XX the price last population. We account from $XXX,XXX QX of velocity and the QX, with improving from year, was

results. to in Our around smarter positive boosting ad profitability spend strategy, continues which centers customer acquisition yield

outcomes. and Coupled SEO We that we certain robust successfully pleased optimized meeting have stable program report with to our organic initiatives outperforming SoHo marginally and evidenced improved are returns eFax intended business leading is and the by key our to metrics. objectives refreshed as expectations automated web presence, from this the

on closing, to in challenging result, and new IT with half in the these by our driving limited their conditions, hand navigate on for This Jim over details guide. business. And update light spend corporate customers of prospects, we level further second while will go-to-market financial processes approximately now my results focus our and continue and sales generation cash CFO, We efforts call approach in remain a strong profitability, provide of high within XXXX slow. using efficiency. flexibility cost to uncertainty, concludes who committed marketing the about and I'll SoHo resources and million. $X to our As strategy maintain increase a awareness, market a To go-to-market ongoing to decision-making will our on business. In we Malone, growth our economic this center prioritize nominally the remain of expect our our approach our

James Malone

XXXX release on this Johnny, call guidance. we you, our and good In afternoon, and QX XXXX Thank today, are everyone. press QX discussing results and earningâ€™s

adjusted We are increasing full-year guidance EPS and EBITDA reaffirming full-year range. adjusted our XXXX guidance revenue while

expect to We the file XX-Q today.

year, $XXX from our prior driven the XX over expectations. XXXX year, or increased points over several and X% lower in at QX and $XXX the last points ranging with an our of increase $XXX. year quarters from the the offer was X.X% in by basis of of of sequentially, $XXX corporate Corporate XXX with revenue down with and million start million, primarily XXXX business X.XX% to performing line continuum. churn a year or QX our customers $XX.X record results. Let's end customer new at line the customer in prior $X.X basis

in revenue cancel mentioned Corporate XX-month project, QX rate not Johnny these economically improvement is below would've the trailing been revenue. I script, and customers the Protect his customers As rate normalized a upon XXXX. also of that and this, our beneficial, delivered for remind over eFax you XX% cancel are Notwithstanding would retention net based X%.

$X.X the a net Churn With of trial our beneficial. due fewer the driven The decrease year-over-year SoHo, decrease QX reduced expectations. over line decreased and first revenue to an than of was year price $X.XX $XX.X as plans of declined basis XX.X% X.X% of with are a These sequentially, result better by resulting shifting or ads. plans Moving in paid million a versus quarter. ads points and to XX $XX.XX paid XXXX to ARPA free spend X.X% with advertising year-over-year expectations. higher million a year-over-year prior in discounted to year-over-year increase reduction planned month was of in and economically base is

our of recall, As was cycle. the XXXX quarter you increase price final QX

consolidated revenue. $X.X revenue $X.X expectations decrease XXXX EBITDA million in of of results by primarily SoHo prior Moving or million million structure was driven line with X.X% XXXX at X.X the million a QX higher of expense adjusted Adjusted an net and expectations by increase and SoHo of driven million interest prior through in as exceeding or of QX $X.XX to points offset $XX.X plan by year, $X.X XXXX over is $XX.X which cost flow XX%. in both of X.X% our advertising. Adjusted range, year share the count result tax repurchase XX.X% modestly X.X% XX.X% was above high a the end of shares EBITDA of of income by activity is of prior items Adjusted QX, million EPS is tax $X.XX income a our or driven optimization the increase X.X% share $XX.X is our million an over and area expense. the the or margin by of bond the mentioned higher over and Adjusted than and guidance. the net the D&A year, was reduction non-GAAP driven count. I rate lower QX by QX with consistent and $XX.X EBITDA

our Let's capital allocation strategy. about talk

to value face bond Program $XX XXXX program. value for cash. earnings our approximately we've In in November $XXX repurchase $XXX in face we mentioned As million million million QX, â€˜XX, $XXX we date, cash. repurchased million million call, three-year $XX repurchased QX for a in announced

remaining and $XXX reaffirming to at full-year approximately was a and million $XXX X.Xx full-year non-GAAP $XXX Total results, fund sufficient $X.X prior million XX.X%. $XX.X mentioned, rate our of EBITDA repurchases to our with EBITDA prior million $X.XX of between XXXX the adjusted EBITDA in in ended with $XX as way $XXX and CapEx count positive XXX% flow under revenue repurchases to and $XX.X shares; estimated $X.XX have achieving we million $XX.X million $X.X and with is rate EPS range was midpoint; free is Revenue tax with debt is leverage our million and adjusted ratio to $XXX increasing this midpoint; cash from down of year-to-date our QX EPS million spend a at adjusted the EBITDA are which Xx. We QX at midpoint adjusted our XXXX the guidance with at or guidance guidance and program. the million of our follows: million the QX equity. cash, goal We to well our million the $XXX and between to versus operations midpoint; period. versus $XXX debt range adjusted share income year. Based debt on on to tax million comparable million XX.X% $X.XX million debt

rates Revenues at For and XXXX $XX.X to with million to to million midpoint; XX.X% the my XX.X% rate $XX.X $XX.X are quarter are and million additional providing adjusted between EPS respectfully. This the to $XX tax count; of XXXX midpoint; $X.XX guidance, be shares between guidance as between spread income EBITDA expected and QX $XX.X we share estimated million million of $X.XX the within adjusted $X.XX results $XX.X million at formal tax concludes million $XX.X with remarks. with guidance follows: QX million $XX.X and are a midpoint; at

to like the to turn for Q&A. call I'd Now the back operator

Operator

CJS Securities. first [Operator question Tanwanteng Instructions] from Jon the coming And today is from

Unknown Analyst

bit. -- to [indiscernible] slightly the It's back you clients able that deployments is off? for Charlie the stack might little a reduce be be question Do and up in [indiscernible] And in Tanwanteng unemployment of with that my to healthcare or kind starting Jon up here. friction ticking still think

Johnny Hecker

out? You could issue faded in ticking audio. it you something I'm not to you with what do know is sure and the again? but had about I up, unemployment rephrase the

Unknown Analyst

back stack of be able think that Do you Absolutely. healthcare might deployment? to up to be starting in friction kind reduce your clients Yeah. and

Johnny Hecker

question. Johnny. you. This Itâ€™s questions. good Thank a So, interesting Appreciate is it.

that IT be So really that don't market see need drive we any all, the see that honest. projects. changes finding at We don't to to in have the right now, indicators we in dynamic talent any they more clients

Operator

from question BTIG coming [Operator David from Larsen is Next Instructions]

David Larsen

and start? about timing? the you're total are good Any process talk has will in you more far deployment very at? when and VA, helpful. we'll sort get dollars And you. there many how that it, Is pace along be around at call a to VA? pretty but much. has, many can full of How would Thanks not the improving of that metrics Hi, sort then ramp When like the to access the deployed evolved? situation the deployment sites VA tied up, how terms color very it And you a how of just did

Johnny Hecker

hospital. I or of be metric, we're huge it what on a a site a say a an sites really we're people think about a know what can't percentage we at itâ€™s, we be but they at cemetery, at the X,XXX can -- have handful of currently office can site operating

the a volume. have clear So beyond applications using don't are close the and we with the really have. site about are gives rolling Services. then that of and we people Remember that is Accenture indication number in the the of employees, good at majority of a metric It's this rollout not They And end driving of these the us number moment. that site that the out Federal partner seats more what the are a training inventory users. our we collaboration at and of

multifunctional final of to opening a provider they're with themselves, devices step-by-step because don't with it's account. in potential said we're very the We that of fax large don't number now, my track migrating we and want we're is like rollout on machines think Right the a infrastructure. very, solution. ECFax hundreds but on are We what operating organization had VA tremendous expected servers, pace, the in the that obviously, to put I a knows of the over they're it there really thousands on remarks, I and of

very the beginning. get we and the go we still out, But opportunity a that large roll we better how of total understanding at as will as So, we're along is.

R. Turicchi

facility year what of recall, the first September cases. ago, to which of started do, because number roll was first the David, VA there resulted faster meeting those then And from question, months forth proceeded, they the discuss the in beyond it has bring it a just pace. And in year the similar test because ways of when June, done, just in was literally part is structures your real rollout been at almost And â€˜XX, of back would had youâ€™ll then terms really a out see July and incentive March I how a about had format said, and a big bringing to alternative that to phase which down a a alternative going that rollouts we of a online. ago, Johnny that really add both was to of as

original was, facility, the view be at eventually X,XXX. So would yes, and facility by it be you'd

within While that really have metrics acceleration that is million close that's year of ago Since one there's only number of still I been a -- dramatic access service. really several matter because that that facilities Johnny are the true to pointed the the it's and of out, VA. a employees a to as think,

of constitutes that So you've another users. And applications. block got embedded then

is have what how I'll take going-forward the on a And place a so basis. we seen call rollout of will is what and liberalization

So increasing and result, month, basically we're rollout on traffic as the a degree to basis. month, previous of some seeing each relative a sequential

â€˜XX, get in users â€˜XX. on to of in even And the versus of as new year. you an we so I But â€˜XX we like this expect his at go growth that infinite as before would last increase million-ish year, two which referenced or based adding revenue end Johnny exit remarks new in run number significant rate that we'll facilities just think have is the into

challenging going Johnny So, we're because I it's the that's give very it as not quantification you the know out, to you even want, VA. not pointed with exact but to

just and different of them I is. systems number come a and that times, it's up so for what applications regions lot with to that even think many a there's challenge embedded

James Malone

where to years consider but we But getting of growth we of penetration what sit be full -- you to to a have today I meaning of think penetration, relative VA the in terms full opportunity. several not substantial might

David Larsen

improving a also that then is, hearing. what was I'm is It -- of And okay, sounds like kind when are yes? list you things

Johnny Hecker

that Yes, yes. was a

David Larsen

consistently to saying when traded listen that Their at reliance that traded actually hospitals I now? level report, thoughts on labor to labor the as inflation margins. shortages rates you're that do each healthcare reduced. question, the good hospital like any being been saying improved. the Has Volumes they the improvement? this from that are are first then the guess contract I resolved. facilities have -- the thoughts is publicly similar on They're also look And has you with any hospitals working and guess, demand EBITDA market there but very sort publicly any been on of

Johnny Hecker

that we're both of hospitals coin. doing see Again, well. very that Right are sides good now, question. seeing We

which is they line hearing still see to most hiring covering what as right? actually is the flip staff. XX is of They're distress, do filed I case IT are manage that coin also they're where don't is the need cost-conscious the the see that hospitals you on where increase Health support. the of their side, think Steward are just and in staff, we a that Chapter I are then We clinical mean, And that probably kind they public see necessarily in of which bottom very well. you recently. you the very trying side

of the industry. So I both in you think have coin that sides healthcare

the struggle. are very also doing the ones to well. ones have have But you continue large that You that

necessarily we contribute well. to that. to their optimize bad not And us, they're that's for Now, looking costs because right, can as

But we use infrastructure, the see costly. and as at to help lot improvement opportunity is money don't labor save them moment. side, an on So which can legacy usually of some we that of the rid a get

David Larsen

way any very there's prior clarity Thank from clients you total opportunity? sort one on just rate or a at incremental solution [indiscernible] take the quick more from Any and clinical of stab flow one me. dollar seeing or sort much. are [indiscernible] to dollar, of clarity you And there documentation? uptake What your comments

James Malone

do see we line. so in interest product Yes, that increased

of POCs. lot a have We in engagement, as customer particularly I said,

that the that be to building clarity has, it implementation amount is implementation I company quarter, teams, the think, of through this at It on revenue go building backlog to we're point. side motions. So we're growing, large out revenue material capacity. contribution with every not which that on still would we as our which is adding these fax have But is the

R. Turicchi

take a recheck questions to address come got more other we've in which want live questions email, that then come couple the and any in. we questions, can queue for if have you like there's Before of by Paul, to I'd any that

So we SoHo in increase have â€˜XX question regarding that a a marketing decline in be expected our the SoHo question about really changing to It's the in of might the business. rate â€˜XX perspective spend. versus â€˜XX, and how given

let even that's near-term of So a me which question relevant, answer last actually maybe more the is â€˜XX. two-quarters

So of of everybody that half the certain lower substantially first than understands, of just in spend have â€˜XX. we the first is a so half pace â€˜XX but

my was prepared that of remarks. some And in

has Johnny by of that Some Jim. noted been and

based the marketing on to on analysis We spend and have cohort seen, the based programs, ability incrementally. the

just the in that can't from spend And it. LTV is be QX to don't intend I a consider understand budgeted QX. a term, result, important of we that assumed spend. and million contribution limit, authorized both more to hit to average that each quarter. incremental beyond that's EBITDA is you we see is the CAC. or marginal an of of and programs spend particularly dollars what strong a standpoint that in a in budgetary we've of programs given maintains of amount What certain really If we spend, QX in key amount the I The think the or a Now to an chunks standpoint, as forecast not near is spend that's a the

â€˜XX marketing spend can the function is a it, hope fully of and in â€˜XX. So we go and of and certainly our as least spend our is QX. or a of what answer lot that of dollars into will QX level be of million at expectation each the the we a question, â€˜XX portion current sustained exit It to

than comps be we the which So we business lot of and of from was â€˜XX. are QX we expect exact you rate should spend of the in QX address I toughest on the us expect to four comp a quarters Those then run rate quantifying level we'll for call, we insight in saw the and of year. QX, easier is â€˜XX lesser of But good the results in this terms our or decline I what think in seeing terms of of QX. a â€˜XX. have decline what And into it November marketing SoHo than in that business on will a SoHo the in expecting look it stabilized lesser â€˜XX. hinge as now, forward as

with capital The CapEx. question second one refinancing. of and the question had to of do or premised deployment It's on nearing the

of away. debt. as more just So are would Jim, remind of than million in There two by have of X% I so two people that October noted we â€˜XX, years was $XXX tranches that. The notes due are

as will the â€˜XX what our looking are in I think certainly we at â€˜XX. or that a options in be is maturing tranche will be addressing premised, the question Although, at minimum

â€˜XX. X.X larger, is the which of tranche, mature second The in October

year weighted. this has CapEx Our more been front-end

of year. We near believe $XX the high we're million. in given a we've for million million range range end the â€˜XX, come to going the $XX around $XX So to you of for

function green $X back about we capital see you'll which ones lighting, â€˜XX, ones sequential are question QX on will in lot as million we budgetary So live investment to amount of think Yes, step-downs QX. way of to relative in a basis not if We influential level our million actually are debt. Paul, are of into the the what more but either be relates higher? I or terms spend. say and CapEx CapEx process have be how $X or to change million in Could lighting, of in you obviously material or $X the see not level the projects carrying any would see â€˜XX. any it which sitting on is as in This a million it we started green refinancing don't relative being of I today, there's $X a margin tranche to yet. we questions. lower really QX QX any here of don't I that

Operator

questions no at are Scott. live this There time, other

R. Turicchi

thank terms So various all call releases to we participating want in press of and participating look QX for upcoming in for in. our of that you we earnings may be conferences

the just I I full our of we results mentioned, November. QX week announce in think As first, will

course, a date you So us the exact and questions, or as to of of there'll release closer time. have the any you out can any we be press you. call reach as email get Thank to other us by you And, results. if digest

Operator

conference. This today's does you. conclude Thank

at wonderful this time day. for participation. have Thank and may you You disconnect a your

Consensus Cloud Solutions (CCSI) 8 Aug 242024 Q2 Earnings call transcript