Consensus Cloud Solutions, Inc. Q3 FY2024 earnings call

Management Statement and Operational Highlights

• Corporate Business: Experienced best revenue growth in 6 quarters, driven by new customer additions (e-commerce eFax Protect, upgrades, enterprise wins), record usage, 100% LTM revenue retention, and VA rollout contributing to growth.
• SoHo Business: Revenue decline slowed, marketing spend reduced, new first month discounted plans boosted revenue velocity, and LTV to CAC was optimized.
• Cost and Debt: Adjusted EBITDA margin was 53.5%, repurchased $31.1 million of debt in Q3, total repurchases since Nov 2023 totaled $187 million, and total debt to adjusted EBITDA was 3.2x.

Segment Performance

• Corporate Channel: Q3 2024 revenue was $53.1 million, a 5.3% increase from the prior year, representing approximately 60.5% of total revenue. ARPA was $310, and customer accounts reached ~58,000. Revenue growth was driven by new customer additions, record usage, and enterprise wins.
• SoHo Channel: Q3 2024 revenue was $34.7 million, a 13.6% decrease from the prior year, making up approximately 39.5% of total revenue. ARPA was $14.88, and the account base decreased to 768,000. The decline rate slowed, and marketing spend was reduced while still generating 64,000 paid adds.

Guidance

• Q4 2024: Revenues projected to be between $83 million and $87 million (midpoint $85 million), Adjusted EBITDA between $42 million and $45 million (midpoint $43.5 million), and Adjusted EPS between $1.14 and $1.24 (midpoint $1.19).
• Full Year 2024: Narrowed guidance to revenues $346 million to $350 million, Adjusted EBITDA $186 million to $189 million, and Adjusted EPS $5.45 to $5.55.

Risks

• Macroeconomic uncertainties that could impact customer acquisition and revenue.
• Potential changes in market conditions affecting business performance.

Question and Answer

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

A: Johnny Hecker said some hospitals are doing well, some struggling; found success in specialty healthcare and multi-location providers. CMS impact not seen yet; Scott Turicchi said elections likely have weak direct impact on customer acquisition, too early to call.