CCSI - Earnings call transcript Q3 2024 | Consensus Cloud Solutions, Inc.

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Operator

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. [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

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

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

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

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.

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

turn the to Now let over me Scott. call

R. Turicchi

excellent EBITDA of point an our with ] XX% in and approach quarter to performance ] for of revenue. combined XX%. strong another in Thank disciplined We occurred of margin resulted to channels both income outperformance you, in non-GAAP Adam. had This range per revenue, and [ net above cost EBITDA our QX our [ of adjusted bid quarter the EBITDA beating expectations adjusted share. another The

base healthcare year customers first, marketing, our remarks; especially the call, of certain his of Johnny out our eliminating the for laid acquisition of in of XXXX the we our revenue in over SoHo pursue goals which for primarily the in will provide the adjusted XX%. area time, for of continuing the earnings months; address this maturing cost two, adjusted include: further first to stabilization anticipation As our total corporate ratio to structure channel, with XX.X% north space to in costs QX our EBITDA would the four, and of for of of X reviewing repurchase I it's in October driving overall our of reduce margins goal to debt debt XXXX. in note channel; the continuing three, EBITDA of the tranche

Our base, our eFax SoHo quarter. for customer still revenue key average, enterprise tight channel new our over as $XXX usage growth Protect The Protect, ARPA X customers of growth to than record additions adds current best had the maintain by were e-commerce in The efforts quarters. upgrades supplemented a X.X% well quarters. driven was past several and lower the through as and primarily from wins. eFax new of able corporate range came a our several per customer the Notwithstanding a ARPA we by

predicted, As additional sites the see and levels new driving usage from of VA rollout, we revenue. continue to

revenue saw channel. XXX% addition, corporate In retention LTM in return we a to our

reduction slowed be from pace expectations revenues and expect quarter. in The will QX ] there [ for of decline Our SoHo in the decline we our XXXX. a beat that rate of the

$XX.X year flow additional paid total generate more $XXX million, of to is preceding detail. We free Jim spend robust brings allowed and to program tested quarters. The cash to us which million of XXXX by quarter. our strong November adds the a combination will ahead the QX and to of strong total marketing and have of to than year million. driven the our and outstanding payments, generate in million, adjusted XXXX, our collections X were adds, XXXX our the debt debt adjusted more our a his flow XX-month the on since net We The address change presentation. will in X.Xx and repurchases EBITDA, from $XXX $XX QX reduce free approximately retirement EBITDA. Jim to in and discuss in our of in cash also cash in adjusted CAC. to debt guidance of basis for opportunities, launching tax debt substantially prior while reducing to additional marketing or trailing similar the to maintaining of continue the EBITDA timing and X.Xx repurchase were budget able LTV still track fiscal This portion able our XX,XXX We

the quarters fewest This However, are I puts to X/X X of pressure relative of QX would business our like to the QX total on usually the downward approximately days has revenues base. and note that revenues punitive, usage business most the both on year, for Year's is QX on Based a Christmas we the have calendar analysis, fall days. and Day compensated in historical calculation our New as QX. This however, of this Wednesday.

is [ less than will X days Johnny and provide business a now XX to a of X/XX more of a over of QX turn ] expect As less in result, X than to days XXXX. I we and which business business updates. approximately QX XXXX approximately XXXX, [ ] operational call and days QX X/X the

Johnny Hecker

Corporate for strategy. QX Thank you, including quarter details accounts I'm record very and in customer business. was for Corporate QX. pleased revenue, another with resulting everyone. growth momentum increased an our go-to-market hello, another and and revenue performance provide on SoHo update businesses, in and the operations will solid and on our Scott, I the go-to-market respectively,

approximately revenue same by Our X X.X% quarter in the the increased last the compared to period year, for quarters. rate highest last third the

existing able customers showed up million one growth total Particularly in our within to while base, the fax, we year. healthcare, a reached QX customer solid have million We were especially ramp board. and cloud $XX.X consumption across of recently previous in the from implement $XX.X of new

stable for e-commerce the the $XXX account overall in within maintained roughly that customer over since last to pleased flat customers I increase $XXX reached base now. range account another Corporate for and significant Corporate X and automation, $XXX added upsell ARPA And QX, to Our Driven Corporate the X,XXX XX,XXX, report by to quarter. quarters ever has am at to Corporate highest Consensus. well has quarter-over-quarter SoHo

eFax Protect further the investing in To Our momentum, in strategy on outlined year. capitalize is its experiencing we're represented this sustained go-to-market expansion, last growth. as service

While after the successful to Corporate reducing have the seeing upsell SoHo customer from this in-product options need been introduced recently driving plateau direct in we're growth, and quarters. upsell interaction strategy many successful for

QX the through customers e-commerce Moving the of the up by driven small end continue profitable to ARPA for account and basis sold XXXX. maintain forward, focus important than of rate. revenue. Corporate shift continues the to acquiring but points or the cancelation and points this basis as reaching we'll increased that influence XX has from corporate note to Corporate It lower driver our X.XX% accounts. The is a on e-commerce SoHo, rate towards channel spectrum, rather in by growth quarter-over-quarter, success year-over-year, our on cancelation per is on It primary of accounts XXX calculated basis acquired those new program,

believe As revenue than the more a we retention relevant is metric the that result, cancelation rate.

previously customer encouraging is the revenue increase that go-to-market entire channel. I to retention, the customer across in and am modest our corporate mentioned for past successfully. XXX% positive indicator driving revenue pleased XXXX momentum plan months with our remarkable the to growth results, and Corporate are our is channel. a in base. success shoots yielding dedication Our another retention unfolding The This cross XX over of is in revenue selling upselling we've green

continues customers adoption. utilization have service a a demonstrating made to As commitment are strong rise, who purchase to swift

the Department ECFax at a on VA. The the share of quick update is of Affairs implementation me Let planned. progressing as Veterans

projections allows over aligned have We that XXXX. us in $X and the forecast observed program our confirm ECFax steady growth the revenue in confidently to with is from million of

to primary particularly to our pricing years, across solidifying decrease beyond anticipate coming the from our previous the XX.X%, program's commitment months the enhancement Clarity. I new to With also investing we in satisfaction the business SoHo business our $XX.X shifting which in Channel. We our success. Clarity, robust decline, of of the of potential this capabilities introduction previous we're decreased $XX.XX. per exceed significant improve engaged We're SoHo stable AI by focus. our to SoHo. exemplified concepts we of in core the our now ongoing decline represents am experiencing the showcasing all of XXX,XXX maintain while in eFax. The generate decline compared consistently line the experience within remained account vision to and ensure increasing to million. year's slightly economic generated fax of backlog of has is a to a quarter, forward, for among interest move addressing cloud velocity VA. In million, plans at third brands further are development our to fax Despite quarter. from QX, account a This customer relatively quarter. platform, and success revenue total effective growth portfolio, the we interested remains $XX.X opportunity the discounted forefront, As month at in the slower the average strength Moreover, expectations, the proven to boosting business a during have XXX,XXX continued The revenue that manages and SoHo the has features XXXX, Simultaneously, clients. customers. modestly for rate working technology, revenue brand our the which several first base the with SoHo solution parties of proof continues platform. diligently the In sustained implementing at ensuring our actively

Additionally, X.XX% improvement to previous QX compared year. X.XX% modest the in to showed rate cancel the sequential a of

business current and growth resources. business, leverage aim on to this Looking maintaining strengths ahead, our focused SoHo the for to remain we our market. and sustainability our pursuing operations [ strategy long-term Rather ] and of ensure offerings the stability strategies, profitable we than optimizing existing executing in aggressive

program, strategy marginal success. across projected smarter designed has a and automating outcomes. The our channels, reaching between advertising compared like brands to in holistic current synergy our to customer achieved profitable and profitability, By to all customer sustained and to delivered in instrumental driving market optimizing acquisition conditions. Our we focus SEO the optimizing our on provide maintained We've an a update resulting our audience enhance target effectively these this digital comprehensive closing, digital strategy spend CAC on approach has been and ad initiatives to have ratio. I'd acquisition. In LTV integrating marketing, outperformance

pipeline, some our less signs are resulting well strategy, building customers generation Despite stay persist. we While and closing and sales promising government and local prioritizing around state they shown spectrum. in new we've uncertainties than specialty and across macroeconomic our these, healthcare committed to challenges been as navigating Particularly positive customer as profitability. a remain have emerging, results. Also, multilocation in cash successful the optimal,

[ customers our trust. And Over growth partners focus their Jim. go-to-market and Corporate within ] you a and will the our CFO, update heartfelt extend over you, to our Our want to about ] the continue I call and for to will to extraordinary on commitment, that, their efforts continued Malone, to [ I'll thank employees for driving business. With and to an collaboration Jim financial hand who now guidance. provide results our

James Malone

and disclosing QX Thank earnings year afternoon, release good and on XXXX Johnny, XXXX XXXX results In call are you, guidance. and our full this we QX everyone. today, press plus

expect our today. file We to QX XX-Q

X% lower customer like these Normalized prior the X.XX% customer year-over-year $XXX. QX basis QX cancel quarters, also is the customers or are revenue cancel several which on million $X.X Let's to XXXX is prior better business and months approximately that Johnny's and start the and XX basis. continuum. points retention, ranging at with last XX results. performing churn of came up to been and quarter record driven with was our XXXX flat in points a end XXX was beneficial. I sequentially. our comment a a ARPA increased account essentially the $XXX basis line than of trailing net year to XXX% from Notwithstanding rate X.X% X%. expectations. per with sequentially, eFax Corporate revenue for A economically would at a the of calculated we've churn measure $XXX Protect over Corporate primarily versus better in this, improvement repeat customer $XX.X million, by rate

is QX and line year prior XX.X% results. or a the $XX.X of decrease over of revenue XXXX expectations. $X.X SoHo million million with in

base is the X result As of a in to reduction a lower year-over-year mentioned paid year-over-year adds. corresponding of plan with ARPA previously, discounted as our and driven versus decreased this due X.X% advertising free by $XX.XX decrease shifting price month to reduction a with year-over-year plans advertising lower first that spend the benefit. are XX% plans XX be were spend amid at economically trial. These basis declined we flat basis net line It noted and expectations. should in paid sequentially, campaigns. to to continue year-over-year, Churn points as points optimize approximate X.XX% adds our

EBITDA over our the interest exchange program a consolidated prior decrease line a $X.X million million, intercompany offset primarily revaluation the amid repurchase million of on expenses points year, by QX $X.X noncash with and income -- XXXX by X.X% X.X% by is partially is driven revenue, QX million $X.X better a XX.X% prior over in over million QX lower over driven XX% over $XX.X -- such QX success decrease margin again cost Moving $XX.X $X.XX, XX.X% year of $X.X share of foreign driven a $XX.X the shares. of cost of rate decrease of million EBITDA offset expectations. the structure on or XX.X results. bond expectations Adjusted to items comparable of ahead area and optimization. Adjusted lower modestly revenue balances, XXXX, by and million tax was than of or in is approximately or and of the approximately a solid low of $X.XX XX.X% lower count XXXX a lower count. of margin net advertising. Adjusted by XXX and continued partially period, taxes. Adjusted prior cost basis share of delivering than -- optimization, million previously by EBITDA income the year SoHo a was non-GAAP was EPS mentioned primarily

$XXX million QX QX value we Program a November face million $XX.X we repurchases this cash. announced our and program. under date, $XXX in have for earnings mentioned value bond As face remaining repurchase X-year call, cash [ bond repurchased $XXX in approximately repurchased million have $XXX to XXXX for million we million $XX.X ] million program. XXXX, In

year. debt and total and XXXX repurchases Xx. debt QX adjusted XXXX is cash, free due which of versus in million tax ratio QX Relief target million or $XX.X which tax versus period. We're deferral With were to adjusted million to adjusted QX with cash repurchases fund ended QX net a is to is the This $XX.X sufficient the just and the Recovery debt mentioned, of in comparable our to down prior $X federal debt very achieving and debt EBITDA XX% XXXX Act, primarily payments Disaster was of in total operations to X.Xx. QX is flow close EBITDA getting subsequently California XXXX. prior $X income is X.Xx We EBITDA the under million $XX to foreign our equity. QX and the XXXX decrease CapEx of refund million paid

the $XX Now at and EBITDA QX million forward let's talk $XX million about $XX midpoint. $X.XX of and $X.XX income guidance million going between million to and rate. XX.X million count here. estimated at $XX.X EPS XX.X% the tax with midpoint. at Adjusted XXXX to midpoint. are $X.XX and guidance. share shares rate with Revenues $XX the between Adjusted million $XX QX million with XX.X% tax

Our -- year. full to revenue moving

QX million. between EBITDA XXXX $XXX million range EBITDA our plus $XXX QX year-to-date Adjusted and performance has million and based of range, guidance, been year guidance Therefore, adjusted EPS million. Adjusted adjusted $X.XX. revenue and to previously the full and $X.XX. within range Our EBITDA on XXXX EPS provided XXXX guidance between $X.XX narrowed revenues $XXX revenue between we're $X.XX to maintaining while $XXX narrowing adjusted

Our my count rate non-GAAP million XX.X% tax are estimated shares comments. and share tax concludes XX.X% formal and rate. That to XX.X income

turn like the I'd to call to operator. the back Now

Operator

from Larsen BTIG. David from coming is today question First Instructions] [Operator

Jenny Shen

This the Congrats is Jenny on Shen on quarter. for Dave.

right now. others. that coin know of doing Just I better doubling hospitals some on consensus X-sided the has down hospital environment kind a it's been with general the than

will in any even recent think physician hospital where And said speaking, or customers election trends you hospitals? anything so on of yet CMS's they've the inflation and if recent terms have are labor fee far? impact your whether also seeing Just the broadly schedule you for guys

Johnny Hecker

thank you Yes. Jenny, question. for Johnny. the This is

right? it's question, and well. I already, partially good Others a think hospitals doing are you really it answered struggling. are Some

and we think converting. -- We it actually growing mentioned green the I in see I right? shoots call, the

a in and way, found multi-location find where with, healthcare providers, think healthcare let in call I specialty me interest the customers it, can So we conversion. we especially accelerated the space,

take very new large to we and we found that So have customers. clients have time, some their area, convert continued ways in still ramp and see while we that headwinds still actually

at see the question point. the you CMS, want we said, find it's accelerating, are impact which we that to...? and about don't is business really there can engage you the encouraging, encouraging some a -- environment on like any administrative don't customers others slow. From our new change them Scott, and even know, the more So diverse out rules and them be and from we I that to this particular if with continue

R. Turicchi

I is lot is, impact There's election you race. it question generally which an acquisition. on a the this My be Obviously, had No, customer any at no. might going there's think a point. the unknowns undecided is answer and of have, to third specifically about guess still house

if ] Powell Congress; going we unified the and think lot are the I through a talked of even even subtled One, in because and there's may and have be Chairman so, future terms rate commentary lot forward, about probably Congress And then things: his policies don't ] the of on getting [ X and listen interest been a still of implemented. months getting cut actually today that you a [ a in to have two, implemented unknowns

Interest a around, a of So what it's think it in have general, the generally. could or it's the Clearly, of tax doesn't a if the give say correlation, our be to or say impact in can I that rates, I But either something on have Obviously, see but customer accelerant that weak. early headwind, it's But divided things acquisition, of moving too an elections you strategy. watch. generally call. whole There's economy does impact. to it. different and we obviously an implications. There's in terms that affect pieces -- to the how already will I'd direct control different things, all myriad kinds economy huge would go-to-market parties government,

Operator

questions will closing hand Instructions] now the were Scott the there at I other lines no back from [Operator for this time. remarks. And call to Turicchi

R. Turicchi

to thank Great. busy very was much obviously Well, a joining today. earnings. for day us very you It report

transcript of listening to feel reading replay any us. free the questions, to reach please if or you So to the in have out

next target X will will reporting We our which February. the or one and now of third conferences period, have probably between week for

Of not revenues, QX will and guidance but results, EBITDA XXXX this on discuss only per we'll that earnings we we've course, much release non-GAAP the done year. call, on adjusted as share,

So X forward about giving to we that the look you talking then months. interim you to in Thank you. in update and

Operator

Thank conclude does This you. today's conference.

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

Consensus Cloud Solutions (CCSI) 7 Nov 242024 Q3 Earnings call transcript