CCSI

• Strategic Business Realignment

  • The company is executing a long-term structural shift from the legacy SoHo segment to high-margin, high-growth corporate revenue, with SoHo managed as a cash optimization engine to fund corporate expansion.
  • Formed a new dedicated Healthcare Strategy and Solutions group led by 35-year healthcare technology executive Steve Tolle (Chief Healthcare Solutions Officer), tasked with unifying the company's non-fax healthcare portfolio and building AI-powered workflow and structured data solutions for clinical customers.
  • Completed a tuck-in acquisition of doc.health, a clinically adjacent workflow platform for referral management, care coordination, and administrative tasks that aligns with the company's Harmony platform vision; the acquisition brought 14 employees, an existing customer base, pipeline, and core technology to accelerate product roadmap development.
  • Launched the general availability of the new eFax platform in Q2, with a dedicated business plan replacing eFax Protect for new customers to create a smoother upgrade and self-service experience; enhanced mobile capabilities and a frictionless legacy-to-new platform migration path are scheduled for Q3 release.

• Core Corporate Channel Performance

  • Secure cloud fax remains the primary driver of top-line growth, supported by three reliable pillars: new customer acquisition, growing traffic from existing customers, and increasing wallet share within established accounts, as migration to cloud fax in regulated industries (healthcare and public sector) remains in early stages.
  • Corporate net revenue retention reached 103.1%, an improvement of more than 1% sequentially, confirming successful expansion of footprint and deeper embedding within customer operations after acquiring enterprise accounts.
  • Search and AI search optimization efforts have driven higher-quality traffic to customer acquisition channels, with measurable positive results.

• Public Sector Highlight

  • The U.S. Department of Veterans Affairs (VA) issued a policy mandating ECFax powered by Consensus eFax as its official secure fax solution, driving record usage and creating a strong pipeline of qualified leads across the public sector and adjacent government contractor organizations. The company is highly confident VA 2026 revenue contribution will exceed $9 million, and the VA engagement serves as a lighthouse customer proof point for future public sector wins, supported by the company's FedRAMP Class D certification.

• Capital Allocation Update

  • The Board of Directors increased the total equity repurchase authorization to $200 million; the company repurchased 300,000 shares for approximately $9.6 million in Q2 2026, with approximately $118 million remaining available under the program as of quarter end. Ended Q2 2026 with $99 million in cash, and net debt-to-EBITDA stood at 2.45x.

• Full year 2026 guidance is reaffirmed at the previously announced range: total revenue between $350 million and $364 million (midpoint of $357 million), adjusted EBITDA between $182 million and $193 million (midpoint of $187.5 million), and adjusted EPS between $5.55 and $5.95 (midpoint of $5.75). Management expects full year 2026 results will land between the midpoint and high end of the revenue range, with adjusted EBITDA and adjusted EPS tracking slightly above the guidance midpoint, after incorporating the immaterial impact of the doc.health acquisition.
• Full year 2026 free cash flow guidance is maintained at approximately $106 million, matching 2025's full year free cash flow.
• Q3 2026 guidance is provided as: total revenue between $89.2 million and $93.2 million (midpoint of $91.2 million), adjusted EBITDA between $45 million and $48 million (midpoint of $46.5 million), and adjusted EPS between $1.34 and $1.44 (midpoint of $1.39).
• Management expects SoHo segment year-over-year revenue will decline in a range of 5% to 7% in each of the remaining two quarters of 2026.

1. Corporate Segment: Q2 2026 revenue hit a record $60.5 million, which is a 9.3% year-over-year increase (a $5.2 million year-over-year gain) and a 3% sequential increase from Q1 2026. This is the strongest year-over-year growth rate for the segment since Q4 2022, and it contributed 66.2% of total consolidated revenue in Q2 2026. The segment ended the quarter with approximately 67,000 corporate customers, a 9.4% year-over-year increase, with trailing 12-month net revenue retention (NRR) reaching 103.1% (a 110 basis point sequential and year-over-year increase), and corporate ARPA increasing 1% year-over-year to $305.

2. SoHo Segment: Q2 2026 revenue was $30.9 million, representing a 4.7% year-over-year decrease (a $1.5 million year-over-year decline), which narrowed from the 9.5% decline recorded in Q1 2026. The segment contributed 33.8% of total consolidated revenue in Q2 2026.

Consolidated performance: Total consolidated Q2 2026 revenue was $91.4 million, a 4.1% year-over-year increase (a $3.6 million gain) and a 3.3% sequential increase from Q1 2026. Adjusted EBITDA was $48.3 million, a 0.5% year-over-year increase, with an adjusted EBITDA margin of 52.9%. Adjusted EPS was $1.49, a 2.1% year-over-year increase. Free cash flow was $25.5 million, a 25% year-over-year increase.

• Hospital spending and procurement is slowing, with hospitals becoming more diligent in vendor selection and more reluctant to enter new contracts, creating headwinds for new customer acquisition in the core healthcare vertical.
• SoHo segment revenue is expected to see continued volatility in net subscriber adds, ARPA, and total revenue as the company prioritizes cash and contribution margin optimization over chasing low-margin volume, and the 4.7% year-over-year decline rate in Q2 2026 may not recur in future quarters.
• Public sector procurement and deployment moves at a slow government pace, so meaningful new revenue contributions from additional public sector wins are not expected for the next couple of years.
• The company's $5.3 million non-cash GAAP gain recorded on an AI partner investment is subject to future valuation volatility (up or down) based on the partner's performance and future financing round pricing, as these private company investments are inherently risky.
• Forward-looking statements are subject to general risks and uncertainties that could cause actual results to differ materially from expectations, with additional risks disclosed in the company's 10-K and 10-Q SEC filings.

Q: With hospitals starting to report volume pressures, have customer conversations and product positioning changed, and why did management reaffirm rather than raise full-year guidance despite a strong Q2 beat?

A: Hospitals are slowing procurement and are more diligent in vendor selection, with a stronger focus on ROI and EHR integration from new vendors. Consensus benefits from its existing strong EHR partner integrations that help balance these headwinds, and the company now emphasizes ROI more strongly when pitching solutions to hospital customers. Management does not have a practice of revising guidance ranges after strong quarterly beats; while the company expects to land above the midpoint of all full-year 2026 guidance ranges, the outperformance to date is not large enough to justify changing the announced full-year range.

Q: What is the progress of the VA ECFax rollout, and what is the growth runway for other public sector opportunities?

A: The company estimates it is between 65% and 80% through the VA rollout, but does not disclose exact site counts as site numbers do not directly correlate to revenue volume due to variation in size and usage across VA facilities. The VA mandate has opened new opportunities with VA contractors and other public sector agencies, and the company is expanding its public sector go-to-market team with strong early engagement. Meaningful revenue contributions from new non-VA public sector wins are not expected for a couple of years due to slow government procurement timelines.

Q: What are the company's plans for capital deployment in the back half of 2026, given strong free cash flow generation?

A: The company views its own stock as very attractive, with a free cash flow yield of 16-17% at current prices, and expects to continue repurchasing shares as liquidity allows. There is insufficient open market volume to repurchase the company's 6.5% high-yield notes at attractive levels below par, and the call price (101.625% when callable in 2026, par in October 2027) is not attractive for early retirement. The second near-term use of cash is to pay down a portion of the company's revolver balance, which captures a 2-2.5% arbitrage between the cost of debt and money market returns on excess U.S. cash.

Q: Why is Q3 guidance implying lower EBITDA margins relative to Q2, and what is the update on planned hiring?

A: Hiring was slower than budgeted in Q1, but the company has now caught up, growing total headcount to ~550 from ~520 at the start of the year (including the doc.health acquisition), so compensation expense is now ramping as expected. Additionally, the company currently records annual audit and professional fees entirely in the second half of the year, adding ~$1.3 million of incremental expense in both Q3 and Q4 that pushes margins lower sequentially. Most new hires are for go-to-market, product, and the new healthcare solutions group, so they are focused on future revenue growth rather than incremental G&A expense.