Consensus Cloud Solutions, Inc. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Scott's Remarks: Since the spin 4+ years ago, Consensus has generated over $800 million in adjusted EBITDA, retired $243 million in debt, repurchased $57 million in stock, and added 75 employees. Q4 beat top line objectives, had sequential revenue growth despite fewer business days, and SoHo channel improved customer acquisition. Free cash flow was $106 million in 2025, up 20% from 2024.
• Johnny's Operational Update: Corporate revenue continues to grow, with 64% of total revenue in 2025 and projected 68% in 2026. Health care and public sector drove corporate growth, with health care clients bundling solutions and public sector ECFax in high demand. Corporate revenue retention rate is 101.3%, and SoHo focuses on efficiency and strategic cash generation.
• Jim's Financial Update: Q4 2025 consolidated revenue was $87.1 million, third consecutive quarter of growth. Adjusted EBITDA was $45.2 million, and full year 2025 adjusted EBITDA was $186.9 million. 2026 guidance: Revenue $350M-$364M, adjusted EBITDA $182M-$193M, adjusted EPS $5.55-$5.95; Q1 2026: Revenue $85.4M-$89.4M, adjusted EBITDA $43.8M-$46.8M, adjusted EPS $1.36-$1.46

Segment Performance

• Corporate Segment: Q4 2025 corporate revenue was $56.8 million, a 7.3% year-over-year increase, representing a record and breaking historical Q4 sequential decline trends. Full year 2025 corporate revenue was $222.7 million, a 6.5% growth rate, and is projected to reach 68% of total revenue in 2026. Corporate revenue retention rate stands at 101.3%, with the customer base up 11.3% year-over-year.
• SoHo Segment: Q4 2025 SoHo revenue was $30.3 million, a 11.1% year-over-year decrease. Full year 2025 SoHo revenue was $127 million, a 10% decline. ARPA for SoHo held steady at $15.55, and the segment is managed as a strategic cash engine with a deliberate decline in revenue to fund corporate strategy.

Guidance

• Full year 2026: Revenue expected to be between $350 million and $364 million (midpoint $357 million), adjusted EBITDA between $182 million and $193 million (midpoint $187.5 million), adjusted EPS between $5.55 and $5.95 (midpoint $5.75).
• Q1 2026: Revenue expected to be between $85.4 million and $89.4 million (midpoint $87.4 million), adjusted EBITDA between $43.8 million and $46.8 million (midpoint $45.3 million), adjusted EPS between $1.36 and $1.46 (midpoint $1.41). Guidance range accounts for known and unknown economic variables, with midpoint based on budget and extrapolation of top line.

Risks

• Forward-looking statements involve risks and uncertainties, including those disclosed in regulatory filings. Market conditions could affect debt refinancing, as there are no substantial debt maturities until 2028, and opportunistic refinancing is monitored but likely in 2027. Economic changes or unforeseen events could impact revenue and margin projections.

Question and Answer

• Q: Discuss the demand environment, including Big Beautiful Bill Act and Medicaid cuts, and VA success.

A: Hospitals are monitoring budgets but showing increased engagement with services like Consensus. VA exceeded 2025 expectations and is projected to contribute over $9 million in 2026, with continued rollout success and engagement in public sector with FedRAMP solutions.

• Q: Talk about Clarity revenue, demand dynamics, competition, and 2026 guidance range.

A: Clarity has multimillion dollar revenue line of sight, driven by demand for document indexing, referral management, and prior authorization. Competition exists, but focus is on specific use cases. Guidance range is based on budget midpoint with extrapolation for top line variability, considering margin flow-through and fixed costs below the line.

• Q: Discuss corporate ARPA expectations and margin color.

A: Corporate ARPA is bifurcated, with eFax Protect biasing aggregate ARPA downward, but revenue retention rate is a stronger indicator. Margins are expected to be around 80% as most cost increases are in OpEx, not COGS, with stable non-GAAP margins projected.