Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For transition period from to

Commission File Number: 001-40750

Consensus Cloud Solutions, Inc.

(Exact name of registrant as specified in its charter)


Delaware						87-1139414
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

700 S. Flower Street, 15th Floor

Los Angeles, California 90017

(Address of principal executive offices)

(323) 860-9200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.01 par value

CCSI

Nasdaq Stock Market LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of August 4, 2023, there were approximately 19,648,265 shares of the registrant's common stock outstanding.

TABLE OF CONTENTS


			Page

Part I.	Financial Information

	Item 1.	Financial Statements
		Condensed Consolidated Balance Sheets (unaudited)	3
		Condensed Consolidated Statements of Income (unaudited)	4
		Condensed Consolidated Statements of Comprehensive Income (unaudited)	5
		Condensed Consolidated Statements of Cash Flows (unaudited)	6
		Condensed Consolidated Statements of Stockholders’ Deficit (unaudited)	7
		Notes to Condensed Consolidated Financial Statements (unaudited)	9

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39

	Item 4.	Controls and Procedures	39

Part II.	Other Information

	Item 1.	Legal Proceedings	41

	Item 1A.	Risk Factors	41

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41

	Item 3.	Defaults Upon Senior Securities	42

	Item 4.	Mine Safety Disclosures	42

	Item 5.	Other Information	42

	Item 6.	Exhibits	43

		Signatures	44

-2-

Part I - Financial Information

Item 1. Financial Statements.

CONSENSUS CLOUD SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands except share and per share data)


	June 30, 2023		December 31, 2022
ASSETS
Cash and cash equivalents	$	111,977	$	94,164
Accounts receivable, net of allowances of $5,359 and $4,681, respectively	30,814		28,029
Prepaid expenses and other current assets	13,043		14,335
Total current assets	155,834		136,528

Property and equipment, net	68,210		54,958
Operating lease right-of-use assets	7,252		7,875
Intangibles, net	47,091		49,156
Goodwill	347,855		346,585
Deferred income taxes	34,804		35,981
Other assets	6,037		2,816
TOTAL ASSETS	$	667,083	$	633,899

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Accounts payable and accrued expenses	$	35,532	$	41,246
Income taxes payable, current	3,175		2,548
Deferred revenue, current	23,334		24,579
Operating lease liabilities, current	2,893		2,793
Due to Former Parent	36		156

Total current liabilities	64,970		71,322
Long-term debt	794,830		793,865
Deferred revenue, noncurrent	2,301		2,319
Operating lease liabilities, noncurrent	13,026		13,877

Liability for uncertain tax positions	8,153		6,725
Deferred income taxes	951		728
Other long-term liabilities	298		324
TOTAL LIABILITIES	884,529		889,160
Commitments and contingencies (Note 8)
Common stock, $0.01 par value. Authorized 120,000,000; total issued is 20,176,291 and 20,105,545 shares and total outstanding is 19,648,623 and 19,916,431 shares at June 30, 2023 and December 31, 2022, respectively	202		201
Treasury stock, at cost (527,668 and 189,114 shares at June 30, 2023 and December 31, 2022, respectively)	(18,937)		(7,596)
Additional paid-in capital	32,182		21,650
Accumulated deficit	(213,892)		(250,408)
Accumulated other comprehensive loss	(17,001)		(19,108)
TOTAL STOCKHOLDERS’ DEFICIT	(217,446)		(255,261)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	667,083	$	633,899

See Notes to Condensed Consolidated Financial Statements

-3-

CONSENSUS CLOUD SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited, in thousands except share and per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenues	$	92,792	$	91,115	$	184,246	$	180,413

Cost of revenues (1)	17,246		15,587		34,754		30,692
Gross profit	75,546		75,528		149,492		149,721
Operating expenses:
Sales and marketing (1)	17,507		16,394		34,400		32,224
Research, development and engineering (1)	1,765		2,741		3,669		5,077
General and administrative (1)	17,432		15,816		38,584		33,185
Total operating expenses	36,704		34,951		76,653		70,486
Income from operations	38,842		40,577		72,839		79,235
Interest expense	(12,817)		(12,359)		(25,383)		(25,632)
Interest income	661		—		665		—
Other (expense) income, net	568		1,577		(280)		1,750
Income before income taxes	27,254		29,795		47,841		55,353
Income tax expense	6,196		7,874		11,325		14,912


Net income	$	21,058	$	21,921	$	36,516	$	40,441









Net income per common share:
Basic	$	1.07	$	1.10	$	1.85	$	2.02
Diluted	$	1.07	$	1.10	$	1.85	$	2.02

Weighted average shares outstanding:
Basic	19,654,922		19,928,316		19,750,570		19,924,864
Diluted	19,662,201		19,968,340		19,772,898		20,002,103


(1) Includes share-based compensation expense as follows:
Cost of revenues	$	334	$	216	$	630	$	439
Sales and marketing	387		270		759		543
Research, development and engineering	52		340		92		696
General and administrative	3,890		4,097		8,322		8,648

Total	$	4,663	$	4,923	$	9,803	$	10,326

See Notes to Condensed Consolidated Financial Statements

-4-

CONSENSUS CLOUD SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited, in thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022

Net income	$	21,058	$	21,921	$	36,516	$	40,441
Other comprehensive income (loss):
Foreign currency translation adjustment	(971)		(4,344)		2,107		(6,461)
Other comprehensive income (loss)	(971)		(4,344)		2,107		(6,461)
Comprehensive income	$	20,087	$	17,577	$	38,623	$	33,980

See Notes to Condensed Consolidated Financial Statements

-5-

CONSENSUS CLOUD SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)


	Six Months Ended June 30,
	2023		2022
Cash flows from operating activities:
Net income	$	36,516	$	40,441
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	8,689		7,564
Amortization of financing costs and discounts	1,004		901
Non-cash operating lease costs	874		787
Share-based compensation	9,803		10,326
Provision for doubtful accounts	3,080		191
Deferred income taxes, net	2,036		(2,435)





Changes in operating assets and liabilities:
Decrease (increase) in:
Accounts receivable	(5,852)		(4,280)
Prepaid expenses and other current assets	1,237		(37)
Other assets	780		(279)
Increase (decrease) in:
Accounts payable and accrued expenses	(5,829)		(1,857)
Income taxes payable	651		(6)
Deferred revenue	(1,173)		1,681
Operating lease liabilities	(1,121)		(939)
Liability for uncertain tax positions	1,428		1,458
Other liabilities	(31)		(1,310)
Net cash provided by operating activities	52,092		52,206
Cash flows from investing activities:
Purchases of property and equipment	(18,675)		(13,744)
Acquisition of businesses, net of cash received	—		(14,355)

Purchase of investments	(4,000)		—

Purchases of intangible assets	—		(1,000)
Net cash used in investing activities	(22,675)		(29,099)
Cash flows from financing activities:





Debt issuance costs	—		(232)
Proceeds from the issuance of common stock under employee stock purchase plan	871		631
Repurchase of common stock	(11,244)		(7,596)
Taxes paid related to net share settlement	(1,175)		(1,590)



Net cash used in financing activities	(11,548)		(8,787)
Effect of exchange rate changes on cash and cash equivalents	(56)		(4,806)
Net change in cash and cash equivalents	17,813		9,514
Cash and cash equivalents at beginning of period	94,164		66,778
Cash and cash equivalents at end of period	$	111,977	$	76,292

See Notes to Condensed Consolidated Financial Statements

-6-

CONSENSUS CLOUD SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Unaudited, in thousands except share amounts)


	Common stock			Additional paid-in	Treasury stock				Accumulated		Accumulated other comprehensive				Total
	Shares	Amount				capital		Shares	Amount		Deficit		loss			Deficit
Balance, April 1, 2022	19,995,528	$	200			$	7,108	—	$	—	$	(303,037)	$	(18,974)		$	(314,703)
Net income	—	—				—		—	—		21,921		—			21,921
Other comprehensive loss	—	—				—		—	—		—		(4,344)			(4,344)
Vested restricted stock	12,401	—				—		—	—		—		—			—
Shares withheld related to net share settlement	(7,897)	—				(417)		—	—		—		—			(417)
Repurchase of common stock	—	—				—		(189,114)	(7,596)		—		—			(7,596)
Share-based compensation	—	—				4,923		—	—		—		—			4,923
Issuance of shares under ESPP	15,806	—				631		—	—		—		—			631
Reclassifications related to the Separation	—	—				—		—	—		(622)		—			(622)
Balance, June 30, 2022	20,015,838	$	200			$	12,245	(189,114)	$	(7,596)	$	(281,738)	$	(23,318)		$	(300,207)


	Common stock			Additional paid-in	Treasury stock				Accumulated		Accumulated other comprehensive				Total
	Shares	Amount				capital		Shares	Amount		Deficit		loss			Deficit
Balance, April 1, 2023	20,118,967	$	201			$	26,859	(459,306)	$	(16,791)	$	(234,950)	$	(16,030)		$	(240,711)

Net income	—	—				—		—	—		21,058		—			21,058
Other comprehensive loss	—	—				—		—	—		—		(971)			(971)
Vested restricted stock	49,280	1				(1)		—	—		—		—			—
Shares withheld related to net share settlement	(21,538)	—				(724)		—	—		—		—			(724)
Repurchase of common stock	—	—				—		(68,362)	(2,146)		—		—			(2,146)
Share-based compensation	—	—				5,177		—	—		—		—			5,177
Issuance of shares under ESPP	29,582	—				871		—	—		—		—			871

Balance, June 30, 2023	20,176,291	$	202			$	32,182	(527,668)	$	(18,937)	$	(213,892)	$	(17,001)		$	(217,446)

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CONSENSUS CLOUD SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Unaudited, in thousands except share amounts)


	Common stock			Additional paid-in	Treasury stock				Accumulated		Accumulated other comprehensive				Total
	Shares	Amount				capital		Shares	Amount		Deficit		loss			Deficit
Balance, January 1, 2022	19,978,580	$	200			$	2,878	—	$	—	$	(318,886)	$	(16,857)		$	(332,665)

Net income	—	—				—		—	—		40,441		—			40,441
Other comprehensive loss	—	—				—		—	—		—		(6,461)			(6,461)


Vested restricted stock	49,271	—				—		—	—		—		—			—
Shares withheld related to net share settlement	(27,819)	—				(1,590)		—	—		—		—			(1,590)
Repurchase of common stock	—	—				—		(189,114)	(7,596)		—		—			(7,596)
Share-based compensation	—	—				10,326		—	—		—		—			10,326
Issuance of shares under ESPP	15,806	—				631		—	—		—		—			631
Reclassifications related to the Separation	—	—				—		—	—		(3,293)		—			(3,293)

Balance, June 30, 2022	20,015,838	$	200			$	12,245	(189,114)	$	(7,596)	$	(281,738)	$	(23,318)		$	(300,207)


	Common stock			Additional paid-in	Treasury stock				Accumulated		Accumulated other comprehensive				Total
	Shares	Amount				capital		Shares	Amount		Deficit		loss			Deficit
Balance, January 1, 2023	20,105,545	$	201			$	21,650	(189,114)	$	(7,596)	$	(250,408)	$	(19,108)		$	(255,261)
Net income	—	—				—		—	—		36,516		—			36,516
Other comprehensive income	—	—				—		—	—		—		2,107			2,107
Vested restricted stock	74,120	1				(1)		—	—		—		—			—
Shares withheld related to net share settlement	(32,956)	—				(1,175)		—	—		—		—			(1,175)
Repurchase of common stock	—	—				—		(338,554)	(11,341)		—		—			(11,341)
Share-based compensation	—	—				10,837		—	—		—		—			10,837
Issuance of shares under ESPP	29,582	—				871		—	—		—		—			871

Balance, June 30, 2023	20,176,291	$	202			$	32,182	(527,668)	$	(18,937)	$	(213,892)	$	(17,001)		$	(217,446)

See Notes to Condensed Consolidated Financial Statements

-8-

CONSENSUS CLOUD SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Basis of Presentation

The Company

Consensus Cloud Solutions, Inc., together with its subsidiaries (“Consensus Cloud Solutions”, “Consensus”, the “Company”, “our”, “us” or “we”), is a provider of secure information delivery services with a scalable Software-as-a-Service (“SaaS”) platform. Consensus serves approximately 1 million customers of all sizes, from enterprises to individuals, across approximately 50 countries and multiple industry verticals including healthcare, government, financial services, law and education. Beginning as an online fax company over two decades ago, Consensus has evolved into a global provider of enterprise secure communication solutions. Our communication and digital signature solutions enable our customers to securely and cooperatively access, exchange and use information across organizational, regional and national boundaries.

Consensus Cloud Solutions, Inc. Spin-Off

On September 21, 2021, J2 Global, Inc., known since October 7, 2021 as Ziff Davis, Inc. (“Ziff Davis” or the “Former Parent”) announced that its Board of Directors approved its separation of the Cloud Fax business (the “Separation” or the “Spin-Off”), into an independent publicly traded company, Consensus Cloud Solutions, Inc. On October 7, 2021, the Separation was completed and the Former Parent transferred certain assets and liabilities associated with its Cloud Fax business to Consensus, including the equity interests in J2 Cloud Services, LLC (“J2 Cloud Services”), in exchange for approximately $259.1 million in cash, an asset related to $500.0 million in aggregate principal amount of the 6.5% Senior Notes due 2028, and the return of the assets and liabilities related to the non-fax business back to Ziff Davis. On October 8, 2021, Consensus began trading on the Nasdaq Stock Market LLC (“Nasdaq”) under the stock symbol “CCSI”. Ziff Davis retained a 19.9% interest in Consensus following the Separation. Subsequently Ziff Davis has sold, or otherwise disposed of, a portion of its Consensus shares, reducing its beneficial ownership in the Company to under 10% as of June 30, 2023 and December 31, 2022 (see Note 15 - Related Party Transactions).

Principles of Consolidation

The accompanying interim condensed consolidated financial statements include the accounts of Consensus and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Basis of Presentation

The accompanying interim condensed consolidated financial statements are unaudited and have been prepared in accordance with instructions for Form 10-Q and Article 10 of Regulation S-X issued by the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. The Company believes that the disclosures made are adequate to make that information not misleading. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for the fair statement of these interim financial statements have been reflected. It is suggested that these financial statements be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2022, included in our Annual Report (Form 10-K) filed with the SEC on March 31, 2023. Accordingly, significant accounting policies and other disclosures normally provided have been omitted since such items are disclosed therein.

The results of operations for this interim period are not necessarily indicative of the operating results for the full year or for any future period.

-9-

Use of Estimates

The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, including judgments about the reported amounts of revenue and expenses during the reporting period. The Company believes that its most significant estimates are those related to revenue recognition, share-based compensation expense, impairment or disposal of long-lived and intangible asset impairment, income taxes, contingencies and allowances for doubtful accounts. On an ongoing basis, management evaluates its estimates based on historical experience and on various other factors that the Company believes to be reasonable under the circumstances. Actual results could materially differ from those estimates due to risks and uncertainties, including uncertainty in the current economic environment due to factors such as inflationary pressures, elevated interest rates and the novel coronavirus pandemic (“COVID-19”).

Allowances for Doubtful Accounts

The Company maintains an allowance for credit losses for accounts receivable, which is recorded as an offset to accounts receivable and changes in such are classified as general and administrative expenses in the Condensed Consolidated Statements of Income. The Company assesses collectability by reviewing accounts receivable on a collective basis where similar characteristics exist and on an individual basis when it identifies specific customers with known disputes or collectability issues. In determining the amount of the allowance for credit losses, the Company considers historical collectability based on past due status. It also considers customer-specific information, current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data. On an ongoing basis, management evaluates the appropriateness of these reserves.

Revenue Recognition

The Company recognizes revenue when the Company satisfies its obligation by transferring control of the goods or services to its customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services (see Note 3 - Revenues).

Principal vs. Agent

The Company determines whether revenue should be reported on a gross or net basis by assessing whether the Company is acting as the principal or an agent in the transaction. If the Company is acting as the principal in a transaction, the Company reports revenue on a gross basis. If the Company is acting as an agent in a transaction, the Company reports revenue on a net basis. In determining whether the Company acts as the principal or an agent, the Company follows the accounting guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), for principal-agent considerations and assesses: (i) if another party is involved in providing goods or services to the customer and (ii) whether the Company controls the specified goods or services prior to transferring control to the customer.

Sales Taxes

The Company has made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are (i) both imposed on and concurrent with a specific revenue-producing transaction and (ii) collected by the Company from a customer.

Impairment or Disposal of Long-Lived Assets

The Company accounts for long-lived assets, which include property and equipment, operating lease right-of-use assets and identifiable intangible assets with finite useful lives (subject to amortization), in accordance with the provisions of FASB ASC Topic No. 360, Property, Plant, and Equipment (“ASC 360”). ASC 360 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount of an asset to the expected undiscounted future net cash flows generated by the asset. If it is determined that the asset may not be recoverable, and if the carrying amount of an asset exceeds its estimated fair value, an impairment charge is recognized to the extent of the difference.

-10-

The Company assesses the impairment of identifiable definite-lived intangibles and long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors it considers important which could individually or in combination trigger an impairment review include the following:

•Significant underperformance relative to expected historical or projected future operating results;

•Significant changes in the manner of the Company’s use of the acquired assets or the strategy for Consensus’ overall business;

•Significant negative industry or economic trends;

•Significant decline in the Company’s stock price for a sustained period; and

•The Company’s market capitalization relative to net book value.

If the Company determines that the carrying value of definite-lived intangibles and long-lived assets may not be recoverable based upon the existence of one or more of the above indicators of impairment, it would record an impairment equal to the excess of the carrying amount of the asset over its estimated fair value.

The Company assessed whether events or changes in circumstances have occurred that potentially indicate the carrying amount of long-lived assets may not be recoverable. No impairment was recorded during the six months ended June 30, 2023 and 2022.

The Company classifies its long-lived assets to be sold as held for sale in the period if (i) it has approved and committed to a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition, (iii) an active program to locate a buyer and other actions required to sell the asset have been initiated, (iv) the sale of the asset is probable, (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value, and (vi) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The Company initially measures a long-lived asset that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset until the date of sale. Upon designation as an asset held for sale, the Company stops recording depreciation expense on the asset. The Company assesses the fair value of a long-lived asset less any costs to sell at each reporting period and until the asset is no longer classified as held for sale.

Business Combinations and Valuation of Goodwill and Intangible Assets

The Company applies the acquisition method of accounting for business combinations in accordance with GAAP and uses estimates and judgments to allocate the purchase price paid for acquisitions to the fair value of the assets, including identifiable intangible assets, and liabilities acquired. Such estimates may be based on significant unobservable inputs and assumptions such as, but not limited to, future revenue growth rates, gross and operating margins, customer attrition rates, royalty rates, discount rates and terminal growth rate assumptions. The Company uses established valuation techniques and may engage reputable valuation specialists to assist with the valuations. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Fair values are subject to refinement for up to one year after the closing date of an acquisition as information relative to closing date fair values becomes available. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Intangible assets resulting from the acquisitions of entities accounted for using the acquisition method of accounting are recorded at the estimated fair value of the assets acquired. Identifiable intangible assets are comprised of purchased customer relationships, trademarks and trade names, developed technologies and other intangible assets. Intangible assets subject to amortization are amortized over the period of estimated economic benefit ranging from 1 to 20 years and the amortization expense is included in general and administrative expenses on the Condensed Consolidated Statements of Income.

The Company evaluates its goodwill and indefinite-lived intangible assets for impairment pursuant to FASB ASC Topic No. 350, Intangibles - Goodwill and Other (“ASC 350”), which provides that goodwill and other intangible assets with

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indefinite lives are not amortized, but tested annually for impairment or more frequently if the Company believes indicators of impairment exist. In connection with the annual impairment test for goodwill, the Company has the option to perform a qualitative assessment in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company determines that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, then it performs the impairment test on goodwill. The impairment test involves comparing the fair values of the applicable reporting units with their aggregate carrying values, including goodwill. The Company generally determines the fair value of its reporting units using the income approach methodology of valuation. If the carrying value of a reporting unit exceeds the reporting unit’s fair value, an impairment loss is recognized for the difference. No impairment was recorded during the six months ended June 30, 2023 or 2022.

Investments

The Company accounts for investments in equity securities in accordance with FASB ASC Topic No. 321, Investments - Equity Securities (“ASC 321”), which requires the accounting for equity investments, other than those accounted for under the equity method of accounting, generally be measured at fair value for equity securities with readily determinable fair values. Equity securities without a readily determinable fair value, which are not accounted for under the equity method of accounting, are measured at their cost, less impairment, if any, and adjusted for observable price changes arising from orderly transactions in the same or similar investment from the same issuer. Any unrealized gains or losses are reported within earnings on the Condensed Consolidated Statement of Income.

As of June 30, 2023 the carrying amount of the Company’s investments accounted for using the measurement alternative method in accordance with ASC 321 was $4.0 million and is included in other assets within the Company’s Condensed Consolidated Balance Sheets. If the Company becomes aware of a significant decline in value that is other-than-temporary, the Company assesses whether an other-than-temporary impairment loss on an investment has occurred due to declines in fair value or other market conditions. The loss will be recorded in the period in which the Company identifies the decline. During the three and six months ended June 30, 2023, the Company did not recognize any investment gain or loss and did not have any impairments during the respective periods.

Income Taxes

The Company’s income is subject to taxation in both the U.S. and numerous foreign jurisdictions. Significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. The Company establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves for tax contingencies are established when the Company believes that certain positions might be challenged despite the Company’s belief that its tax return positions are fully supportable. The Company adjusts these reserves in light of changing facts and circumstances, such as the outcome of a tax audit or lapse of a statute of limitations. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate (see Note 9 - Income Taxes).

The Company accounts for income taxes in accordance with FASB ASC Topic No. 740, Income Taxes (“ASC 740”), which requires that deferred tax assets and liabilities are recognized using enacted tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities. ASC 740 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the net deferred tax assets will not be realized. The valuation allowance is reviewed quarterly based upon the facts and circumstances known at the time. In assessing this valuation allowance, the Company reviews historical and future expected operating results and other factors, including its recent cumulative earnings experience, expectations of future taxable income by taxing jurisdiction and the carryforward periods available for tax reporting purposes, to determine whether it is more likely than not that deferred tax assets are realizable.

ASC 740 provides guidance on the minimum threshold that an uncertain income tax benefit is required to meet before it can be recognized in the financial statements and applies to all income tax positions taken by a company. ASC 740 contains a two-step approach to recognizing and measuring uncertain income tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. If it is not more likely than not that the benefit will be sustained on its technical merits, no benefit will be recorded. Uncertain income tax positions that relate only to timing of when an item is included on a tax return are considered to have met the recognition threshold. The Company

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recognized accrued interest and penalties related to uncertain income tax positions in income tax expense on its Condensed Consolidated Statements of Income.

In addition, on March 27, 2020, the “Coronavirus Aid, Relief and Economic Security (“CARES”) Act” was enacted into law providing for changes to various tax laws that impact business. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, increased limitations on qualified charitable contributions and technical corrections to tax depreciation methods for qualified improvement property.

On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was enacted into law and is effective for taxable years beginning after December 31, 2022. The IRA includes a new corporate alternative minimum tax of 15% on adjusted financial statement income of corporations with profits greater than $1 billion, a 1% excise tax on the fair market value of net share buy-backs, in addition to multiple incentives to the clean energy industry (see Note 10 - Stockholders' Equity).

The Company does not believe these provisions have a significant impact to our current and deferred income tax balances. The Company benefited from the technical correction to tax depreciation related to qualified improvement property and has elected to defer the employer side social security payments where eligible. The Company remitted the deferred employer side social security payments during the year ended December 31, 2022. The Company will continue to monitor the impact of these provisions on its financial statements.

Share-Based Compensation

The Company accounts for share-based awards to employees and non-employees in accordance with the provisions of FASB ASC Topic No. 718, Compensation - Stock Compensation (“ASC 718”). Accordingly, the Company measures share-based compensation expense at the grant date, based on the fair value of the award, and recognizes the expense over the employee’s requisite service period using the straight-line method. The measurement of share-based compensation expense is based on several criteria, including but not limited to, the valuation model used and associated input factors, such as expected term of the award, stock price volatility, risk free interest rate, dividend rate and award cancellation rate. These inputs are subjective and are determined using management’s judgment. If differences arise between the assumptions used in determining share-based compensation expense and the actual factors, which become known over time, the Company may change the input factors used in determining future share-based compensation expense. Any such changes could materially impact the Company’s results of operations in the period in which the changes are made and in periods thereafter. The Company estimates the expected term based upon the contractual term of the award (see Note 11 - Equity Incentive and Employee Stock Purchase Plan).

Earnings Per Common Share (“EPS”)

EPS is calculated pursuant to the two-class method as defined in FASB ASC Topic No. 260, Earnings per Share (“ASC 260”), which specifies that all outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends or dividend equivalents are considered participating securities and should be included in the computation of EPS pursuant to the two-class method.

Basic EPS is calculated by dividing net distributed and undistributed earnings allocated to common shareholders, excluding participating securities, by the weighted-average number of common shares outstanding. The Company’s participating securities consist of its unvested share-based payment awards that contain rights to nonforfeitable dividends or dividend equivalents. Diluted EPS includes the determinants of basic EPS and, in addition, reflects the impact of other potentially dilutive shares outstanding during the period. The dilutive effect of participating securities is calculated under the more dilutive of either the treasury method or the two-class method.

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Segment Reporting

FASB ASC Topic No. 280, Segment Reporting (“ASC 280”), establishes standards for the way that public business enterprises report information about operating segments in their annual consolidated financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. ASC 280 also establishes standards for related disclosures about products and services, geographic areas and major customers. The Company’s business segment is based on the organization’s structure used by the chief operating decision maker for making operating and investment decisions and for assessing performance. The chief operating decision maker views the Company as one reportable segment known as Cloud Fax (see Note 13 - Segment Information).

Reclassifications

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

2.Recent Accounting Pronouncements

In March 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this ASU provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, that extends the period of time preparers can utilize the reference rate reform relief guidance. To ensure the relief in Topic 848 covers the period of time during which a significant number of modifications may take place, the ASU defers the sunset date of Topic 848 from December 31, 2022, to December 31, 2024. The Company does not expect the adoption of this standard to have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. This ASU clarifies the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security and introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. The amendments in this ASU are effective for fiscal years beginning after December 15, 2024, including the interim periods within those fiscal years. Early adoption is permitted. This amendment should be applied prospectively with any adjustments from the adoption of the amendments recognized in earnings and disclosed on the date of adoption. The Company does not expect the adoption of this standard to have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

In September 2022, the FASB issued ASU 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50). This ASU enhances the transparency of supplier finance programs. The amendments in this ASU are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. This amendment should be applied retrospectively to each period in which a balance sheet is presented, except for the amendment on rollforward information, which should be applied prospectively. The Company adopted ASU 2022-04 in the first quarter of 2023. The adoption of this standard did not have an impact on the Company’s condensed consolidated financial statements and related disclosures.

In March 2023, the FASB issued ASU 2023-01, Leases (Topic 842): Common Control Arrangement, which addresses the accounting by private companies and certain not-for-profit entities (NFPs) for common control leases and amends the accounting for leasehold improvements in common-control arrangements for all entities. This ASU offers: 1) private companies, as well as not-for-profit entities that are not conduit bond obligors, a practical expedient that gives them the option of using the written terms and conditions of a common-control arrangement when determining whether a lease exists and the subsequent accounting for the lease, including the lease’s classification (Issue 1) and 2) amends the accounting for leasehold improvements in common-control arrangements for all entities (Issue 2). The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statement that have not yet been made available. If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes the interim period. The amendments applicable to the Company (Issue 2) are required to be applied using the option of one of the following adoption methods:

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1.Prospective application to all new leasehold improvements recognized on or after the date that the entity first applies the amendments in this ASU;

2.Prospective application to all new and existing leasehold improvements recognized on or after the date that the entity first applies the amendments in this ASU, with any remaining balance of leasehold improvements amortized over their remaining useful life to the common-control group determined as of that date; or

3.Retrospective application to the beginning of the period in which an entity first applied Topic 842, with any leasehold improvements that otherwise would not have been amortized or impaired recognized through a cumulative-effect adjustment to opening retained earnings at the beginning of the earliest period presented in accordance with Topic 842.

The Company does not expect the adoption of this standard to have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

In March 2023, the FASB issued ASU 2023-02, Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. ASU 2023-02 allows reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted in any interim period. If an entity adopts the amendments in an interim period, it shall adopt them as of the beginning of the fiscal year that includes that interim period. The amendment should be applied on either a modified retrospective or a retrospective basis. The Company does not expect the adoption of this standard to have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

3.Revenues

The Company’s revenues substantially consist of monthly recurring subscription and usage-based fees from customers accessing the Company’s cloud-based subscription (the “Cloud Fax Services”), a significant portion of which are paid in advance by credit card. The Company defers the portions of monthly, quarterly, semi-annually and annually recurring subscription and usage-based fees collected in advance of the satisfaction of performance obligations and recognizes them in the period earned. The Cloud Fax Services allow customers to access the Company’s software without taking possession.

Revenues from external customers classified by revenue source are as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Corporate	$	50,361	$	48,867	$	99,768	$	95,386
Small office home office (“SoHo”)	42,429		42,228		84,459		85,007
Other	2		20		19		20
Total revenues	$	92,792	$	91,115	$	184,246	$	180,413

Timing of revenue recognition
Point in time	$	145	$	306	$	298	$	437
Over time	92,647		90,809		183,948		179,976
Total	$	92,792	$	91,115	$	184,246	$	180,413

The Company has recorded $4.5 million and $4.3 million of revenue for the three months ended June 30, 2023 and 2022, respectively, and $16.0 million and $15.2 million of revenue for the six months ended June 30, 2023 and 2022, respectively, that was previously included in the deferred revenue balance as of the beginning of each respective year.

As of June 30, 2023 and December 31, 2022, the Company acquired zero and $4.8 million, respectively, of deferred revenue in connection with the Company’s acquisition of Summit Healthcare Services, Inc. on February 4, 2022.

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Performance Obligations

Generally, the Company’s contracts with customers include one performance obligation, however, certain contracts may include multiple performance obligations. For such arrangements, revenues are allocated to each performance obligation based on their relative standalone selling price. The Company accounts for these arrangements as a single performance obligation as the performance obligations related to a specific arrangement are all consumed simultaneously.

The Company satisfies its performance obligations upon delivery of services to its customers. Payment terms vary by

type and location of the Company’s customers and the services offered. The time between invoicing and when payment is due

is not significant. Due to the nature of the services provided, there are no obligations for returns.

Significant Judgments

Determining whether products and services are considered distinct performance obligations may require significant judgment. When a cloud-based service includes both on-premises software licenses and cloud-based services, judgment is required to determine whether the software license is considered distinct and accounted for separately, or not distinct and accounted for together with the cloud-based service and recognized over time. The Cloud Fax Services and related licenses depend on a significant level of integration between the desktop applications and cloud-based services and are accounted for together as one performance obligation.

Judgment is also required to determine the standalone selling price for each distinct performance obligation when there are multiple performance obligations. In certain cases, the Company is able to establish the standalone selling price based on observable prices of products or services sold or priced separately in comparable circumstances to similar customers. The Company uses a range of amounts to estimate the standalone selling price when each of the products and services is sold separately to determine whether there is a discount to be allocated based on the relative standalone selling price of the various products and services.

Performance Obligations Satisfied Over Time

The Company’s business consists primarily of performance obligations that are satisfied over time. This has been determined based on the fact that the nature of services offered are subscription based where the customer simultaneously receives and consumes the benefit of the services provided regardless of whether the customer uses the services or not. Depending on the individual contracts with the customer, revenue for these services is recognized over the contract period when faxing capabilities are provided. The Company expects to recognize revenue for Corporate contracts in a range from month-to-month up to 36 months and recognize revenue for SoHo contracts in a range from month-to-month up to one year.

The Company has concluded that the best measure of progress toward the complete satisfaction of the performance obligations over time is a time-based measure. The Company recognizes revenue on a straight-line basis throughout the subscription period and believes that the method used is a faithful depiction of the transfer of goods and services.

Practical Expedients

Existence of a Significant Financing Component in a Contract

As a practical expedient, the Company has not assessed whether a contract has a significant financing component because the Company expects at contract inception that the period between payment by the customer and the transfer of promised goods or services by the Company to the customer will be one year or less. In addition, the Company has determined that the payment terms the Company provides to its customers are structured primarily for reasons other than the provision of finance to the Company. The Company typically charges a single upfront amount for services, as other payment terms would affect the nature of the risk assumed by the Company due to the costs of the customer acquisition and the highly competitive and commoditized nature of the business the Company operates.

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Costs to Fulfill a Contract

The Company’s revenues are primarily generated from customer contracts that are for one year or less. Costs primarily consist of incentive compensation paid based on the achievements of sales targets in a given period for related revenue streams and are recognized in the month when the revenue is earned. Incentive compensation is paid upon the issuance or renewal of the customer contract. As a practical expedient, for amortization periods that are determined to be one year or less, the Company expenses any incremental costs of obtaining the contract with a customer when incurred. For those customer contracts greater than one year, the Company capitalizes and amortizes the expenses, when appropriate, over the period of benefit.

Revenues Invoiced

The Company has applied the practical expedient for certain revenue streams to exclude the value of remaining performance obligations for (i) contracts with an original expected term of one year or less or (ii) contracts for which the Company recognizes revenue in proportion to the amount it has the right to invoice for services performed.

4. Fair Value Measurements

The Company complies with the provisions of FASB ASC Topic No. 820, Fair Value Measurement, (“ASC 820”), which defines fair value, provides a framework for measuring fair value and expands the disclosures required for fair value measurements of financial and non-financial assets and liabilities. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:


			§			Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

			§			Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

			§			Level 3 – Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. Cash and cash equivalents are comprised of money market funds and foreign and domestic bank accounts. These cash and cash equivalents are valued based on Level 1 inputs which consist of quoted prices in active markets. The carrying value of the Company’s cash and cash equivalents approximates fair value.

The fair value of long-term debt is determined using recent quoted market prices or dealer quotes for each of the Company’s instruments, which are Level 1 inputs (see Note 6 - Debt). The carrying value of long-term debt is reflected in the financial statements at cost.

Assets Measured on a Non-Recurring Basis

The Company’s non-financial assets, which primarily consist of goodwill, other intangible assets and fixed assets, are reported at carrying value, or at fair value as of their acquisition dates, and are not required to be measured at fair value on a recurring basis. However, on a periodic basis (at least annually for goodwill and indefinite-lived intangibles or whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable), non-financial assets are assessed for impairment. If impaired, the carrying values of the assets are written down to fair value using Level 3 inputs.

5. Goodwill and Intangible Assets

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acquisition method of accounting are recorded at the estimated fair value of the assets acquired. Identifiable intangible assets are comprised of purchased customer relationships, trademarks and trade names, developed technologies and other intangible assets. The fair values of these identified intangible assets are based upon expected future cash flows or income, which take into consideration certain assumptions such as customer turnover, trade names and patent lives. These determinations are primarily based upon the Company’s historical experience and expected benefit of each intangible asset. If it is determined that such assumptions have changed in future periods, then the resulting change will impact the fair value of the intangible asset. Identifiable intangible assets are amortized over the period of estimated economic benefit, which ranges from 1 year to 20 years.

The changes in carrying amounts of goodwill for the six months ended June 30, 2023 are as follows (in thousands):


	Amount
Balance as of January 1, 2023	$	346,585




Foreign exchange translation	1,270
Balance as of June 30, 2023	$	347,855

Intangible Assets with Indefinite Lives:

Intangible assets are summarized as of June 30, 2023 and December 31, 2022 as follows (in thousands):


	June 30, 2023		December 31, 2022
Trade names	$	27,354	$	27,337
Other	4,045		4,045
Total	$	31,399	$	31,382

Intangible Assets Subject to Amortization:

As of June 30, 2023, intangible assets subject to amortization are summarized as follows (in thousands):


	Weighted-Average Remaining Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	0.4 years	$	8,176	$	7,701	$	475
Patent and patent licenses	0.0 years	54,341		54,341		—
Customer relationships (1)	2.9 years	108,128		95,286		12,842
Other purchased intangibles	1.9 years	11,986		9,611		2,375
Total		$	182,631	$	166,939	$	15,692

(1) Historically, the Company has amortized its customer relationship assets in a pattern that best reflects the pace in which the assets’ benefits are consumed. This pattern results in a substantial majority of the amortization expense being recognized in the first four to five years, which may not correlate to the overall life of the asset.

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As of December 31, 2022, intangible assets subject to amortization are summarized as follows (in thousands):


	Weighted-Average Remaining Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	0.5 years	$	8,151	$	7,605	$	546
Patent and patent licenses	0.0 years	54,341		54,341		—
Customer relationships (1)	3.1 years	107,175		92,573		14,602
Other purchased intangibles	2.0 years	11,937		9,311		2,626
Total		$	181,604	$	163,830	$	17,774

Expected amortization expenses for intangible assets subject to amortization at June 30, 2023 are as follows (in thousands):


Fiscal Year:	Amount
2023 (remainder)	$	2,118
2024	3,532
2025	2,640
2026	2,130
2027	1,427
Thereafter	3,845
Total	$	15,692

Amortization expense was $1.1 million and $1.1 million for the three months ended June 30, 2023 and 2022, respectively, and $2.2 million and $2.6 million for the six months ended June 30, 2023 and 2022, respectively.

6. Debt

Long-term debt consists of the following (in thousands):


	June 30, 2023		December 31, 2022
2026 Senior Notes	$	305,000	$	305,000
2028 Senior Notes	500,000		500,000

Total Notes	805,000		805,000
Less: Deferred issuance costs	(10,170)		(11,135)
Total long-term debt	$	794,830	$	793,865

At June 30, 2023, future principal payments for debt were as follows (in thousands):


Fiscal year:	Total
2023 (remainder)	$	—
2024	—
2025	—
2026	305,000
2027	—
Thereafter	500,000
Total	$	805,000

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The Company capitalized $0.5 million and zero of interest expense within property and equipment, net on the Company’s Condensed Consolidated Balance Sheets during the three months ended June 30, 2023 and 2022, respectively, and $1.0 million and zero during the six months ended June 30, 2023 and 2022, respectively.

2026 Senior Notes

On October 7, 2021, Consensus issued $305.0 million of senior notes due in 2026 (the “2026 Senior Notes”), in a private placement offering exempt from the registration requirements of the Securities Act of 1933. Consensus received proceeds of $301.2 million, after deducting the initial purchasers’ discounts, commissions and offering expenses. The 2026 Senior Notes are presented as long-term debt, net of deferred issuance costs, on the Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022. The 2026 Senior Notes bear interest at a rate of 6.0% per annum, payable semi-annually in arrears on April 15 and October 15 of each year, which commenced on April 15, 2022.

The 2026 Senior Notes mature on October 15, 2026, and are senior unsecured obligations of the Company which are guaranteed, jointly and severally, on an unsecured basis by certain of the Company’s existing and future domestic direct and indirect wholly-owned subsidiaries (collectively, the “Guarantors”). If Consensus Cloud Solutions, Inc. or any of its restricted subsidiaries acquires or creates a domestic restricted subsidiary, other than an Insignificant Subsidiary (as defined in the indenture pursuant to which the 2026 Senior Notes were issued (the “2026 Indenture”)), after the issue date, or any Insignificant Subsidiary ceases to fit within the definition of Insignificant Subsidiary, such restricted subsidiary is required to unconditionally guarantee, jointly and severally, on an unsecured basis, the Company’s obligations under the 2026 Senior Notes.

The Company may redeem some or all of the 2026 Senior Notes at any time on or after October 15, 2023 at specified redemption prices plus accrued and unpaid interest, if any, to, but excluding the redemption date. Before October 15, 2023, and following certain equity offerings, the Company also may redeem up to 40% of the 2026 Senior Notes at a price equal to 106.0% of the principal amount, plus accrued and unpaid interest, if any, to, but excluding the redemption date. The Company may make such redemption only if, after such redemption, at least 50% of the aggregate principal amount of the 2026 Senior Notes remains outstanding. In addition, at any time prior to October 15, 2023, the Company may redeem some or all of the 2026 Senior Notes at a price equal to 100% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, plus an applicable “make-whole” premium.

The Indenture contains covenants that restrict the Company’s ability to (i) pay dividends or make distributions on the Company’s common stock; (ii) make certain restricted payments; (iii) create liens or enter into sale and leaseback transactions; (iv) enter into transactions with affiliates; (v) merge or consolidate with another company; and (vi) transfer and sell assets. These covenants contain certain exceptions. Restricted payments are applicable only if Consensus Cloud Solutions, Inc. and subsidiaries designated as restricted subsidiaries has a net leverage ratio of greater than 3.0 to 1.0. In addition, if such net leverage ratio is in excess of 3.0 to 1.0, the restriction on restricted payments is subject to various exceptions, including the total aggregate amount not to exceed the greater of (A) $100.0 million and (B) 50.0% of EBITDA for the most recently ended four fiscal quarter period ended immediately prior to such date for which internal financial statements are available. The Company is in compliance with its debt covenants as of June 30, 2023.

As of June 30, 2023 and December 31, 2022, the estimated fair value of the 2026 Senior Notes was approximately $276.8 million and $282.8 million, respectively, and was based on quoted market prices or dealer quotes for the 2026 Senior Notes which are Level 1 inputs in the fair value hierarchy.

2028 Senior Notes

On October 7, 2021, Consensus issued $500.0 million of 6.5% senior notes due in 2028 (the “2028 Senior Notes”), in a private placement offering exempt from the registration requirements of the Securities Act of 1933. In exchange for the equity interest in the Company, Consensus issued the 2028 Senior Notes to Ziff Davis (see Note 15 - Related Party Transactions). Ziff Davis then exchanged the 2028 Senior Notes with lenders under its credit agreement (or their affiliates) in exchange for extinguishment of a similar amount of indebtedness under such credit agreement for a total amount of $483.8 million, after deducting the initial purchasers’ discounts, commissions and offering expenses. The 2028 Senior Notes were presented as long-term debt, net of deferred issuance costs, on the Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022. The 2028 Senior Notes bear interest at a rate of 6.5% per annum, payable semi-annually in arrears on April 15 and October 15 of each year, which commenced on April 15, 2022.

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The 2028 Senior Notes mature on October 15, 2028, and are senior unsecured obligations of the Company that are guaranteed, jointly and severally, on an unsecured basis by certain of the Company’s existing and future domestic direct and indirect wholly-owned subsidiaries (collectively, the “Guarantors”). If Consensus Cloud Solutions, Inc. or any of its restricted subsidiaries acquires or creates a domestic restricted subsidiary, other than an Insignificant Subsidiary (as defined in the indenture pursuant to which the 2028 Senior Notes were issued (the “2028 Indenture”)), after the issue date, or any Insignificant Subsidiary ceases to fit within the definition of Insignificant Subsidiary, such restricted subsidiary is required to unconditionally guarantee, jointly and severally, on an unsecured basis, the Company’s obligations under the 2028 Senior Notes.

The Company may redeem some or all of the 2028 Senior Notes at any time on or after October 15, 2026 at specified redemption prices plus accrued and unpaid interest, if any, to, but excluding the redemption date.

As of June 30, 2023 and December 31, 2022, the estimated fair value of the 2028 Senior Notes was approximately $427.5 million and $459.4 million, respectively, and was based on quoted market prices or dealer quotes for the 2028 Senior Notes which are Level 1 inputs in the fair value hierarchy.

Credit Agreement

On March 4, 2022, the Company entered into a Credit Agreement (the “Credit Agreement”) with certain lenders party thereto (the “Lenders”) and MUFG Union Bank, N.A., as agent (the “Agent”). Pursuant to the Credit Agreement, the Lenders have provided Consensus with a revolving credit facility of $25.0 million (the “Credit Facility”) with an option held by the Company to obtain an additional commitment of up to a maximum of $25.0 million. The final maturity of the Credit Facility will occur on March 4, 2027. As of June 30, 2023, no amount has been drawn down on the Credit Facility. The Credit Facility is guaranteed by each wholly-owned material domestic subsidiary of Consensus, and secured by substantially all assets of Consensus and the guarantors. The loans made under the Credit Facility are subject to a Secured Overnight Financing Rate (“SOFR”) base interest rate plus a SOFR margin between 1.75% - 2.50%, with stepdowns subject to the total net leverage ratio.

The Credit Facility is subject to a total net leverage ratio covenant and a minimum EBITDA requirement, in each case tested on a quarterly basis. The Credit Agreement contains covenants that restrict the Company’s ability to (i) pay dividends or make distributions on the Company’s common stock; (ii) make certain restricted payments; (iii) create liens or enter into sale and leaseback transactions; (iv) enter into transactions with affiliates; (v) merge or consolidate with another company; and (vi) transfer and sell assets. These covenants contain certain exceptions. Unsecured indebtedness may be incurred, assets may be disposed of, restricted payments may be made and investments may be made, in each case subject to compliance with the Company’s financial covenants. The Company is in compliance with its covenants as of June 30, 2023.

7. Leases

The Company leases certain facilities and equipment under non-cancelable operating and finance leases which expire at various dates through 2031. Office and equipment leases are typically for terms of three to ten years and generally provide renewal options for terms up to an additional five years. The Company determines if an arrangement is a lease at inception. Short-term leases are defined as leases that have a term of 12 months or less and do not include an option to purchase the underlying asset or include an option to purchase the underlying asset that the Company is not reasonably certain to exercise.

The Company accounts for short-term leases by recognizing the lease payments in general and administrative expenses in the Condensed Consolidated Statements of Income. Short-term lease expense is recognized on a straight-line basis over the term of the lease and associated variable lease payments are recognized in the period in which the obligation for the payments is incurred.

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Operating lease assets represent the right to use an underlying asset for the lease term, and operating lease liabilities represent the obligation to make lease payments arising from the lease. These assets and liabilities are recognized based on the present value of future payments over the lease term at the commencement date. The Company uses a collateralized incremental borrowing rate based on the information available at the commencement date to determine the present value of future payments. Operating leases typically require payment of certain non-lease costs, such as real estate taxes, common area maintenance and insurance. These components comprise the majority of the Company’s variable lease costs and are excluded from the present value of lease liabilities unless an event occurs that results in the payments becoming fixed for the remaining term. The remaining lease and non-lease components are accounted for together as a single lease component for all underlying classes of assets. Operating lease assets are adjusted for lease incentives, initial direct costs, impairments and exit or disposal costs.

The Company accounts for operating leases greater than one year by recognizing the lease payments in general and administrative expenses in the Condensed Consolidated Statements of Income. Operating lease costs are recognized on a straight-line basis from the commencement date to the end of the lease term. Amortization on finance lease right-of-use assets are included in general and administrative expenses in the Condensed Consolidated Statements of Income. Interest on finance lease right-of-use assets, if any, is included in interest expense in the Condensed Consolidated Statements of Income. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The components of lease expense, recorded in cost of revenues and general and administrative expenses on the

Condensed Consolidated Statements of Income, were as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Operating lease cost	$	718	$	607	$	1,387	$	1,236
Short-term lease cost	427		362		821		802
Finance lease cost:
Amortization of right-of-use assets	302		297		603		599

Total lease cost	$	1,447	$	1,266	$	2,811	$	2,637

Supplemental balance sheet information related to leases is as follows (in thousands):


	June 30, 2023		December 31, 2022
Lease-related assets and liabilities
Operating lease right-of-use assets	$	7,252	$	7,875
Finance lease right-of-use assets (1)	831		1,427
Total right-of-use assets	$	8,083	$	9,302

Operating lease liabilities, current	$	2,893	$	2,793

Operating lease liabilities, noncurrent	13,026		13,877

Total operating lease liabilities	$	15,919	$	16,670

(1) The full amount of the finance leases were prepaid. Therefore, there is no corresponding lease liability associated with the finance right-of-use assets.

Supplemental cash flow information related to leases is as follows (in thousands):


	Six Months Ended June 30,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,511	$	1,359

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	254	$	1,316

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Other supplemental operating lease information consists of the following:


	June 30, 2023		December 31, 2022
Operating leases:
Weighted average remaining lease term	7.2 years		7.6 years
Weighted average discount rate	4.8	%	4.6	%

Maturities of operating lease liabilities as of June 30, 2023 are as follows (in thousands):


Fiscal Year:	Operating Leases
2023 (remainder)	$	1,487
2024	2,898
2025	2,460
2026	2,527
2027	2,534

Thereafter	8,167
Total lease payments	$	20,073
Less: Imputed interest	(4,154)
Present value of operating lease liabilities	$	15,919

Significant Judgments

Discount Rate

The majority of the Company’s leases are discounted using the Company’s collateralized incremental borrowing rate as the rate implicit in the lease is not readily determinable. Rates are obtained from various large banks to determine the appropriate incremental borrowing rate each quarter for collateralized loans with a maturity similar to the lease term.

Options

The lease term is generally the minimum noncancelable period of the lease. The Company does not include option periods unless the Company determined it is reasonably certain of exercising the option at inception or when a triggering event occurs.

Facility lease

On October 28, 2021, Ziff Davis (the “Assignor”) and Consensus (the “Assignee”) entered into the Assignment and First Amendment to Office Lease (the “Amendment”) with the NREA-TRC 700 LLC (the “Landlord”), in regard to the lease which was previously entered into on April 24, 2019 between the Assignor and the Landlord for certain office space located at 700 South Flower Street, Los Angeles, California (the “Lease”). The lease has an expiration date of January 31, 2031. The Amendment granted the Landlord’s consent to the assignment of the Lease by the Assignor to Assignee.

8. Commitments and Contingencies

Litigation

From time to time, the Company and its affiliates are involved in litigation and other legal disputes or regulatory inquiries that arise in the ordinary course of business. Any claims or regulatory actions against the Company and its affiliates, whether meritorious or not, could be time consuming and costly, and could divert significant operational resources. The outcomes of such matters are subject to inherent uncertainties, carrying the potential for unfavorable rulings that could include monetary damages and injunctive relief.

The Company does not believe, based on current knowledge, that any legal proceedings or claims currently exist which, after giving effect to existing accrued liabilities, are likely to have a material adverse effect on the Company’s

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consolidated financial position, results of operations, or cash flows. It is the Company’s policy to expense legal fees related to any litigation as incurred.

Non-Income Related Taxes

The Company historically did not collect sales tax in states where it was not able to quantify the appropriate sales tax to be collected. For the periods from 2017 through 2021, the Company believed it was probable that a sales tax liability existed for its corporate and SoHo accounts.

In the year ended December 31, 2021, the Company determined that a sales tax liability was probable and it developed a methodology to estimate the sales tax liability for the SoHo revenue stream during the affected periods from 2017 through 2021. The Company has been remitting SoHo sales tax in applicable states since August 2022.

However, the sales tax liability for its corporate customers was not estimable until the third quarter of 2022. Prior to the third quarter of 2022, the Company was unable to determine which of these customers were either exempt organizations or resellers and were thus exempt from sales tax. In the third quarter of 2022, the Company completed an analysis of the pool of corporate customers subject to sales tax in order to estimate the range of sales tax liability on its corporate revenues. As a result, the Company recorded an accrual as the exposure became probable and estimable. Additionally, the Company started sales tax collection and remittance on corporate sales in applicable states in August 2022.

The Company has initiated a Voluntary Disclosure Agreement (“VDA”) process in the third quarter of 2022, to voluntarily report the prior period sales tax liability. The process is expected to be completed in the third quarter of 2023. While the Company believes that it has sufficiently reserved for historical sales tax liabilities under FASB ASC Topic No. 450, Contingencies, some state taxing authorities may still challenge the Company’s sales tax position, the methodology used to calculate the sales tax liability, and may also impose other taxes on its business. Taxing authorities may successfully assert that the Company should have collected, or in the future should collect sales and use, telecommunications or similar taxes, and could be subject to liability with respect to past or future tax, which could adversely affect the Company’s operating results.

During the three months ended June 30, 2023, the Company reassessed its sales tax exposure based on the states with a completed VDA process. The Company believes that it did not need to record any additional sales tax expense pertaining to the prior periods. The Company recorded a sales tax expense within general and administrative expenses in the Condensed Consolidated Statements of Income of $0.5 million and $0.1 million for the three months ended June 30, 2023 and 2022, respectively. The Company recorded a sales tax expense within general and administrative expenses in the Condensed Consolidated Statements of Income of $1.1 million and $1.1 million for the six months ended June 30, 2023 and 2022, respectively.

The Company will continue to review and monitor the impact of sales tax rules in order to mitigate any associated risks on its business. The sales tax liability within accounts payable and accrued expenses on the Company’s Condensed Consolidated Balance Sheets was $6.9 million and $13.1 million as of June 30, 2023 and December 31, 2022, respectively.

9. Income Taxes

The Company’s tax provision for interim periods is determined using an estimate of the Company’s annual effective tax rate adjusted for discrete interim period tax impacts. Each quarter the Company updates its estimated annual effective tax rate and, if the estimate changes, makes a cumulative adjustment. Changes in the geographical mix, permanent differences or the estimated level of annual pre-tax income can affect the effective tax rate. The Company’s effective tax rate for the three months ended June 30, 2023 and 2022 was 22.7% and 26.4%, respectively. The Company’s decreased rate during the three months ended June 30, 2023 is primarily due to a reduction in nondeductible expenses for tax purposes and the change in the geographical mix of income. The Company’s effective tax rate for the six months ended June 30, 2023 and 2022 was 23.7% and 26.9%, respectively. The Company’s decreased rate during the six months ended June 30, 2023 is primarily due to a reduction in nondeductible expenses for tax purposes and the change in the geographical mix of income.

The Company’s effective tax rates for the three and six months ended June 30, 2023 and 2022 differed from the U.S. federal statutory rates of 21% primarily as a result of state income taxes, nondeductible expenses for tax purposes, foreign rate differential, research and development credits and uncertain tax positions.

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As of June 30, 2023 and December 31, 2022, the Company had $8.2 million and $6.7 million, respectively, in liabilities for uncertain income tax positions, including interest and penalties. Accrued interest and penalties related to unrecognized tax benefits are recognized in income tax expense on the Company’s Condensed Consolidated Statements of Income.

Income Tax Audits

The Company files tax returns in the US, Ireland, Netherlands, France, Canada, Japan and Hong Kong. As of June 30, 2023, the Company is not under audit in any jurisdiction that it operates within. The Company has filed its first set of post-spin tax returns including some international subsidiaries who have previously filed in their local jurisdictions. Depending on the jurisdictions in which the Company is filing, tax returns for the years from 2016 onwards are still open to examination by tax authorities.

10. Stockholders’ Deficit

Common Stock Repurchase Program

On March 1, 2022, the Company’s Board of Directors approved a share buyback program. Under this program, the Company may purchase, in the public market or in off-market transactions, up to $100.0 million of the Company’s common stock through February 2025. The timing and amounts of purchases will be determined by the Company, depending on market conditions and other factors it deems relevant. The Company entered into Rule 10b-18 and Rule 10b5-1 trading plans and during the three months ended June 30, 2023 and 2022, the Company repurchased 68,362 and 189,114 shares, respectively, under this program. During the six months ended June 30, 2023 and 2022, the Company repurchased 338,554 and 189,114 shares, respectively, under this program. Cumulatively as of June 30, 2023, 527,668 shares have been repurchased at an aggregate cost of $18.9 million (inclusive of excise tax of $0.1 million). The excise tax is assessed at 1% of the fair market value of net stock repurchases after December 31, 2022.

Vested Restricted Stock

At the time of certain vesting events related to restricted stock units or restricted stock awards that are held by participants in Consensus’ Equity Incentive Plan, a portion of the awards subject to vesting are withheld by the Company to satisfy the employees’ tax withholding obligations that arise upon the vesting of restricted stock. As a result, the number of shares issued upon vesting for these awards is net of the statutory withholding requirements that the Company pays on behalf of its employees. Although shares withheld are not issued, they are treated as common share repurchases in the Company’s condensed consolidated financial statements, as they reduce the number of shares that would have been issued upon vesting. These shares do not count against the authorized capacity under the Company’s share repurchase program described above. During the three and six months ended June 30, 2023 the Company withheld shares on its vested restricted stock units and restricted stock awards relating to its share-based compensation plans of 21,538 and 32,956 shares, respectively. During the three and six months ended June 30, 2022 the Company withheld shares on its vested restricted stock units and restricted stock awards relating to its share-based compensation plans of 7,897 and 27,819 shares, respectively.

Dividends

The Company currently does not issue dividends to Consensus shareholders. Future dividends are subject to Board approval. Our current debt agreements could trigger restrictions on dividend payments under certain circumstances (see Note 6 - Debt).

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11. Equity Incentive and Employee Stock Purchase Plan

The Company’s share-based compensation plans include the 2021 Equity Incentive Plan (the “2021 Plan”) and the 2021 Employee Stock Purchase Plan (the “Purchase Plan”). Each plan is described below.

(a) 2021 Equity Incentive Plan

In December 2021, Consensus’ Board of Directors adopted the 2021 Plan, which provides for the grant of incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and share units and other share-based awards. 4,000,000 shares of common stock are authorized to be used for 2021 Plan purposes. As of June 30, 2023, 2,724,739 shares were available to be used under the 2021 Plan.

Restricted Stock and Restricted Stock Units

The Company has awarded restricted stock and restricted stock units to its Board of Directors and certain employees pursuant to the 2021 Plan. Compensation expense resulting from restricted stock and restricted stock unit grants is measured at fair value on the date of grant and is recognized as share-based compensation expense over the applicable vesting period. Vesting periods are approximately one year for awards to members of the Company’s Board of Directors, four years for employees and five years for the Chief Executive Officer and Chief Operating Officer. The Company granted 57,652 shares of restricted stock units during the six months ended June 30, 2023.

Restricted Stock and Restricted Stock Units with Market Conditions

The Company has awarded certain key employees market-based restricted stock and restricted stock units pursuant to the 2021 Plan. The market-based awards have vesting conditions that are based on specified stock price targets of the Company’s common stock. Market conditions were factored into the grant date fair value using a Monte Carlo valuation model, which utilized multiple input variables to determine the probability of the Company achieving the specified stock price targets for 20 out of 30 trading days or 20 out of 25 trading days (look-back period). Stock-based compensation expense related to an award with a market condition is recognized over the requisite service period using the graded-vesting method unless the market condition has been met and requisite service period has been completed, then the expense will be accelerated and recognized in the period that the market condition and service period requirement have been met. During the six months ended June 30, 2023, the Company awarded zero market-based restricted stock awards and restricted stock units.

Restricted stock activity for the six months ended June 30, 2023 is set forth below:


	Shares	Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2023	35,416	$	38.42
Granted	—	—
Vested	(19,737)	37.77
Canceled	—	—
Nonvested at June 30, 2023	15,679	$	39.24

As of June 30, 2023, the Company had unrecognized share-based compensation cost related to its restricted stock

awards of $0.2 million, which is expected to be recognized over a weighted-average period of 0.7 years.

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Restricted stock unit activity for the six months ended June 30, 2023 is set forth below:


	Number of Shares	Weighted-Average Grant-Date Fair Value		Weighted-Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value
Outstanding at January 1, 2023	1,082,451	$	51.63
Granted	57,652	53.06
Vested	(74,120)	53.09
Canceled	(12,367)	57.32
Outstanding at June 30, 2023	1,053,616	$	51.54	3.5	$	32,662,096
Vested and expected to vest as of June 30, 2023	711,412	$	52.62	3.0	$	22,053,764

As of June 30, 2023, the Company had unrecognized share-based compensation cost related to its restricted stock units of $31.1 million, which is expected to be recognized over a weighted-average period of 2.6 years.

The Company capitalized $0.5 million and zero, respectively, of share-based compensation cost within property and equipment, net on its Condensed Consolidated Balance Sheets during the three months ended June 30, 2023 and 2022. During the six months ended June 30, 2023 and 2022, the Company capitalized $1.0 million and zero, respectively, of share-based compensation cost within property and equipment, net on its Condensed Consolidated Balance Sheets.

(b) Employee Stock Purchase Plan

In October 2021, Consensus established the Purchase Plan, which provides for the issuance of a maximum of 1,000,000 shares of common stock. Under the Purchase Plan, eligible employees can have up to 15% of their earnings withheld, up to certain maximums, to be used to purchase shares of Consensus’ common stock on certain plan-defined dates. The purchase price for each offering period is 85% of the lesser of the fair market value of a share of common stock of the Company (a “Share”) on the first or last day of the offering period, with each offering period being six months.

The plan includes a provision that allows for the more favorable of two exercise prices, commonly referred to as a “look-back” feature, to be used in the purchase price calculation. The purchase price discount and the look-back feature cause the Purchase Plan to be compensatory and the Company to recognize compensation expense. The compensation cost is recognized on a straight-line basis over the requisite service period, which is the same as the offering period of the Purchase Plan. The Company used the Black-Scholes option pricing model to calculate the estimated fair value of the purchase right issued under the Purchase Plan. The expected volatility is based on historical volatility of the Company’s common stock. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a term equal to the expected term of the option assumed at the date of grant. The Company uses an annualized dividend yield based upon the per share dividends declared by the Company’s Board of Directors. Estimated forfeiture rates were 5.61% as of June 30, 2023.

For the three and six months ended June 30, 2023, 29,582 shares were purchased under the Purchase Plan. Cash received upon the issuance of Consensus common stock under the Purchase Plan during the three and six months ended June 30, 2023 was $0.9 million. As of June 30, 2023, 927,901 shares were available under the Purchase Plan for future issuance.

The compensation expense related to the current offering period of the Purchase Plan has been estimated utilizing the following assumptions:


			June 30, 2023
Risk-free interest rate			5.26%
Expected term (in years)			0.5
Dividend yield			0.00%
Expected volatility			56.95%
Weighted average volatility			56.95%

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12. Earnings Per Share

The components of basic and diluted earnings per share are as follows (in thousands, except share and per share data):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Numerator for basic and diluted net income per common share:
Net income from continuing operations attributable to common shareholders	$	21,058	$	21,921	$	36,516	$	40,441
Net income available to participating securities (1)	(15)		(43)		(38)		(97)
Net income available to common shareholders from operations	$	21,043	$	21,878	$	36,478	$	40,344
Denominator:
Weighted-average outstanding shares of common stock	19,654,922		19,928,316		19,750,570		19,924,864
Dilutive effect of:
Equity incentive plans	6,929		24,262		17,292		63,532
Employee Stock Purchase Plan	350		15,762		5,036		13,707
Common stock and common stock equivalents	19,662,201		19,968,340		19,772,898		20,002,103
Net income per share from operations:
Basic	$	1.07	$	1.10	$	1.85	$	2.02
Diluted	$	1.07	$	1.10	$	1.85	$	2.02

(1) Represents unvested share-based payment awards that contain certain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid).

For the three months ended June 30, 2023 and 2022, there were 747,416 and 507,282 anti-dilutive shares, respectively, that were excluded from the earnings per share calculation. For the six months ended June 30, 2023 and 2022, there were 655,495 and 499,956 anti-dilutive shares, respectively, that were excluded from the earnings per share calculation.

13. Segment Information

The Company’s businesses are based on the organizational structure used by the chief operating decision maker (“CODM”) for making operating and investment decisions and for assessing performance. The CODM views the Company as one business, Cloud Fax.

The Company’s Cloud Fax business is driven primarily by subscription revenues that have relatively higher margins, are stable and predictable from quarter to quarter with minor seasonal weakness in the fourth quarter.

The Company evaluates performance based on revenue, gross margin and profit or loss from operations before income taxes, not including nonrecurring gains and losses and foreign exchange gains and losses.

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The Company maintains operations in the U.S., Canada, Ireland and other countries. Geographic information about the U.S. and all other countries for the reporting periods is presented below. Such information attributes revenues based on markets where revenues are reported (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenues:
United States	$	73,569	$	71,901	$	145,882	$	141,494
Canada	13,118		12,230		25,952		24,335
Ireland	3,818		4,567		7,760		9,477
All other countries	2,287		2,417		4,652		5,107
Foreign countries	19,223		19,214		38,364		38,919
	$	92,792	$	91,115	$	184,246	$	180,413

The following presents the Company’s long-lived assets, excluding finite-lived intangible assets (in thousands):


	June 30, 2023		December 31, 2022
Long-lived assets:
United States	$	74,603	$	61,858
Canada	360		531
Ireland	278		167
All other countries	221		277
Foreign countries	859		975
Total	$	75,462	$	62,833

14. Accumulated Other Comprehensive Loss

The following table summarizes the changes in accumulated other comprehensive loss, which solely comprises foreign currency translation adjustments, for the three months ended June 30, 2023 (in thousands):


	Foreign Currency Translation
Balance as of April 1, 2023	$	(16,030)
Other comprehensive loss	(971)
Net increase in other comprehensive loss	(971)
Balance as of June 30, 2023	$	(17,001)

The following table summarizes the changes in accumulated other comprehensive loss, which solely comprises foreign currency translation adjustments, for the six months ended June 30, 2023 (in thousands):


	Foreign Currency Translation
Balance as of January 1, 2023	$	(19,108)
Other comprehensive income	2,107
Net increase in other comprehensive income	2,107
Balance as of June 30, 2023	$	(17,001)

There were zero reclassifications out of accumulated other comprehensive loss for the three and six months ended June 30, 2023.

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15. Related Party Transactions

In connection with the Separation, Consensus and Ziff Davis entered into several agreements that govern the relationship of the parties following the Separation, including a separation and distribution agreement, a transition services agreement (“TSA”), a tax matters agreement, an employee matters agreement, an intellectual property license agreement and a stockholder and registration rights agreement (the “Agreements”). The TSA governs services including certain information technology services, finance and accounting services and human resource and employee benefit services. The agreed-upon charges, if any, for such services are intended to cover any costs and expenses incurred in providing such services. As of June 30, 2023, a majority of the services provided under TSA were completed or terminated, with a select few services still winding down and set to terminate no later than October 7, 2023.

During the three months ended June 30, 2023 and 2022, the Company paid approximately $0.4 million and $11.5 million, respectively, and during the six months ended June 30, 2023 and 2022 the Company paid approximately $0.6 million and $11.5 million, respectively, to Ziff Davis to settle co-mingled cash accounts, costs associated with the transition services agreement and Separation. Additionally, the Company incurred approximately $0.4 million in costs related to the registration of shares for sale held by Ziff Davis for the three and six months ended June 30, 2022. No costs were incurred in 2023 related to the registration of shares for sale held by Ziff Davis. These costs were recorded in general and administrative expenses within the Condensed Consolidated Statement of Income. Subsequent to the disposition of the shares, Ziff Davis’ beneficial ownership in the Company was under 10%, as of June 30, 2023 and December 31, 2022 (see Note 1 - Basis of Presentation). Amounts due to Ziff Davis as of June 30, 2023 and December 31, 2022 were zero and $0.2 million, respectively, related to these items, as well as reimbursement related to certain transaction related costs.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Information

In addition to historical information, we have also made forward-looking statements in this report. These statements are based on our estimates and assumptions and are subject to risks and uncertainties. Forward-looking statements include the information concerning our possible or assumed future results of operations. Forward-looking statements also include those preceded or followed by the words “expects,” “may,” “anticipates,” “believes,” “estimates,” “will,” “hopes” or similar expressions. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those discussed below, the risk factors discussed in Part II, Item 1A - “Risk Factors” of this Quarterly Report on Form 10-Q (if any) and in Part I, Item 1A - “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 (together, the “Risk Factors”), and the factors discussed in the section in this Quarterly Report on Form 10-Q entitled “Quantitative and Qualitative Disclosures About Market Risk.” Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date hereof. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements. Readers should carefully review the Risk Factors and the risk factors set forth in other documents we file from time to time with the SEC.

Some factors that could cause actual results to differ materially from those anticipated in these forward-looking statements include, but are not limited to, our ability and intention to:

◦Sustain growth or profitability, particularly in light of an uncertain U.S. or worldwide economy, inflationary pressures and elevated interest rates, and the related impact on customer acquisition and retention rates, customer usage levels and credit and debit card payment declines;

◦Maintain and increase our customer base and average revenue per user;

◦Generate sufficient cash flow to make interest and debt payments, reinvest in our business and pursue desired activities and business plans while satisfying restrictive covenants relating to debt obligations;

◦Acquire businesses on acceptable terms and successfully integrate and realize anticipated synergies from such acquisitions;

◦Continue to expand our Cloud Fax businesses and operations internationally in the wake of numerous risks, including adverse currency fluctuations, difficulty in staffing and managing international operations, higher operating costs as a percentage of revenues or the implementation of adverse regulations;

◦Maintain our financial position, operating results and cash flows in the event that we incur new or unanticipated costs or tax liabilities, including those relating to federal and state income tax and indirect taxes, such as sales, value-added and telecommunication taxes;

◦Accurately estimate the assumptions underlying our effective worldwide tax rate;

◦Manage risks from our international operations, including risks associated with currency fluctuations and foreign exchange controls and adverse changes in global financial markets;

◦Manage certain risks inherent to our business, such as costs associated with fraudulent activity, system failure or network security breach; effectively maintaining and managing our billing systems; allocating time and resources required to manage our legal proceedings; liability for legal and other claims; or adhering to our internal controls and procedures;

◦Compete with other similar providers with regard to price, service and functionality;

◦Cost-effectively procure, retain and deploy large quantities of fax numbers in desired locations in the United States and abroad;

◦Achieve business and financial objectives in light of burdensome domestic and international telecommunications, internet or other regulations including data privacy, access, security and retention;

◦Successfully manage our growth, including but not limited to, our operational and personnel-related resources, and integration of newly acquired businesses;

◦Successfully adapt to technological changes and diversify services and related revenues at acceptable levels of financial return;

◦Successfully develop and protect our intellectual property, both domestically and internationally, including our brands, patents, trademarks and domain names, and avoid infringing upon the proprietary rights of others;

◦Recruit and retain key personnel; and

◦Maintain favorable relationships with critical third-party vendors whose financial condition will not negatively impact the services they provide;

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In addition, other factors that could cause actual results to differ materially from those anticipated in these forward-looking statements or materially impact our financial results include the risks associated with new accounting pronouncements, as well as those associated with natural disasters, public health crises and other catastrophic events outside of our control.

Overview

Consensus is a leading provider of secure information delivery services with a scalable Software-as-a-Service (“SaaS”) platform. Consensus serves approximately one million customers of all sizes, from enterprises to individuals, approximately 50 countries and multiple industry verticals including healthcare, government, financial services, law and education. Beginning as an online fax company over two decades ago, Consensus has evolved into a leading global provider of enterprise secure communication solutions. Consensus is well positioned to capitalize on advancements in how people and businesses share private documents and information. Its mission is to democratize secure information interchange across technologies and industries and solve the healthcare interoperability challenge. Consensus’ communication and interoperability solutions enable its customers to securely and cooperatively access, exchange and use information across organizational, regional and national boundaries.

The global economy continues to be impacted by macroeconomic uncertainty and volatility resulting from the COVID-19 pandemic, Russia’s invasion of Ukraine, inflationary pressures, supply chain disruptions and challenges and labor market pressures. During fiscal year 2022 and through the second quarter of 2023, we have observed an increasingly competitive labor market. Increased employee turnover, changes in the availability of our employees, including as a result of COVID-19-related absences, and labor shortages generally have resulted in, and could continue to result in, increased costs, and could adversely impact the efficiency of our operations. We continue to actively monitor the situation and will continue to adapt our business operations as necessary.

For purposes of this management’s discussion and analysis of the results of operations and financial condition of Consensus (“MD&A”) section, we use the terms “the Company,” “we,” “us” and “our” to refer to Consensus. References in this MD&A section to “Former Parent” or “Former Parent Company” refers to Ziff Davis, Inc., collectively with its consolidated subsidiaries.

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Key Performance Metrics

We use the following metrics to evaluate our business, including the growth of our business, the value provided by customers to our business and our customer retention.

The following table sets forth certain key operating metrics for our operations for the three and six months ended June 30, 2023 and 2022 (in thousands, except for percentages):


	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Revenue ($ in thousands)
Corporate	$	50,361		$	48,867		$	99,768		$	95,386
Small office home office (“SoHo”)	42,429			42,228			84,459			85,007
	92,790			91,095			184,227			180,393
Other revenues	2			20			19			20
Consolidated	$	92,792		$	91,115		$	184,246		$	180,413
Average Revenue per Customer Account (“ARPA”) (1)(2)
Corporate	$	316.55		$	354.99		$	316.15		$	347.47
SoHo	$	15.69		$	13.87		$	15.39		$	13.88
Consolidated	$	32.41		$	28.64		$	31.75		$	28.19

Customer Accounts (in thousands) (1)
Corporate	54			46			54			46
SoHo	889			1,002			889			1,002
Consolidated	943			1,048			943			1,048

Paid Adds (in thousands) (3)
Corporate	3			4			6			7
SoHo	74			96			153			196
Consolidated	77			100			159			203

Monthly Churn % (4)
Corporate	1.26		%	1.88		%	1.32		%	1.96		%
SoHo	3.57		%	3.87		%	3.66		%	3.68		%
Consolidated	3.44		%	3.79		%	3.54		%	3.61		%

(1)Consensus customers are defined as paying Corporate and SoHo customer accounts.

(2)Represents a monthly ARPA for the quarter or year calculated as follows. Monthly ARPA on a quarterly basis is calculated using our standard convention of dividing revenue for the quarter by the average of the quarter’s beginning and ending customer base and dividing that amount by 3 months. Monthly ARPA on an annual basis is calculated by dividing revenue for the year by the average customer base for the applicable four quarters and dividing that amount by 12 months. We believe ARPA provides investors an understanding of the average monthly revenues we recognize per account associated within Consensus’ customer base. As ARPA varies based on fixed subscription fee and variable usage components, we believe it can serve as a measure by which investors can evaluate trends in the types of services, levels of services and the usage levels of those services across Consensus’ customers.

(3)Paid Adds represents paying new Consensus customer accounts added during the annual period.

(4)Monthly churn is defined as Consensus paying customer accounts that cancelled its services during the period divided by the average number of customers over the period. This measure is calculated monthly and expressed as an average over the applicable period.

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Critical Accounting Estimates

In the ordinary course of business, we have made a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of our financial statements. Actual results could differ significantly from those estimates under different assumptions and conditions. Our critical accounting policies are described in our 2022 Annual Report on Form 10-K filed with the SEC on March 31, 2023. During the six months ended June 30, 2023, there were no significant changes in our critical accounting policies and estimates.

Results of Operations for the Three and Six Months Ended June 30, 2023 and 2022

The main strategic focus of our Consensus offerings is to enable our customers to securely and cooperatively access, exchange and use information across organizational, regional and national boundaries. As a result, we expect to continue to take steps to enhance our existing offerings and offer new services to continue to satisfy the evolving needs of our customers.

We expect our business to primarily grow organically and inorganically through the use of capital for re-investment in the business and opportunistic acquisitions that expedite our product roadmap in the interoperability space should they arise.

Revenues


(in thousands, except percentages)	Three Months Ended June 30,				Percentage Change	Six Months Ended June 30,				Percentage Change
	2023		2022			2023		2022
Revenues	$	92,792	$	91,115	2%	$	184,246	$	180,413	2%

Our revenues primarily consist of revenues from “fixed” customer subscription revenues and “variable” revenues generated from actual usage of our services.

Revenues increased by $1.7 million or 2% over the prior comparable three month period. Our growth was primarily due to an increase of $1.5 million or 3% in our corporate business and an increase of $0.2 million or 1% in our SoHo business.

Revenues increased by $3.8 million or 2% over the prior comparable six month period. Our growth was primarily due to an increase of $4.4 million or 5% in our corporate business; partially offset by an anticipated decline of $0.6 million or 1% in our SoHo business.

Cost of Revenues


(in thousands, except percentages)	Three Months Ended June 30,		Percentage Change	Six Months Ended June 30,		Percentage Change
	2023	2022		2023	2022
Cost of revenues	$17,246	$15,587	11%	$34,754	$30,692	13%
As a percent of revenue	19%	17%		19%	17%

Cost of revenues is primarily comprised of costs associated with data transmission, network operations, customer service, software licenses for resale, online processing fees and equipment depreciation.

The increase in cost of revenues for the three months ended June 30, 2023 was primarily due to an increase of $1.1 million in personnel-related expenses and $0.4 million in depreciation associated with platform development costs compared to the prior comparable three month period.

The increase in cost of revenues for the six months ended June 30, 2023 was primarily due to an increase of $2.3 million in personnel-related expenses and $1.4 million in depreciation associated with platform development costs compared to the prior comparable six month period.

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Operating Expenses

Sales and Marketing


(in thousands, except percentages)	Three Months Ended June 30,		Percentage Change	Six Months Ended June 30,		Percentage Change
	2023	2022		2023	2022
Sales and marketing	$17,507	$16,394	7%	$34,400	$32,224	7%
As a percent of revenue	19%	18%		19%	18%

Our sales and marketing costs consist primarily of internet-based advertising, personnel costs and other business development-related expenses. Our internet-based advertising relationships consist primarily of fixed cost and performance-based (cost-per-impression, cost-per-click and cost-per-acquisition) advertising relationships with an array of online service providers. Our sales personnel consist of a combination of inside sales and outside sales professionals.

Sales and marketing costs for the three months ended June 30, 2023 were $17.5 million (primarily consisting of $10.0 million of third-party advertising costs and $7.0 million of personnel costs) compared to the prior period of $16.4 million (primarily consisting of $10.3 million of third-party advertising costs and $5.9 million of personnel costs). The increase in sales and marketing expenses for the three months ended June 30, 2023 versus the prior comparable period was primarily due to increased personnel-related expenses, partially offset by a reduction of third-party advertising spend.

Sales and marketing costs for the six months ended June 30, 2023 were $34.4 million (primarily consisting of $19.1 million of third-party advertising costs and $14.2 million of personnel costs) compared to the prior period of $32.2 million (primarily consisting of $20.4 million of third-party advertising costs and $11.5 million of personnel costs). The increase in sales and marketing expenses for the six months ended June 30, 2023 versus the prior comparable period was primarily due to increased personnel-related expenses, partially offset by a reduction of third-party advertising spend.

Research, Development and Engineering


(in thousands, except percentages)	Three Months Ended June 30,		Percentage Change	Six Months Ended June 30,		Percentage Change
	2023	2022		2023	2022
Research, development and engineering	$1,765	$2,741	(36)%	$3,669	$5,077	(28)%
As a percent of revenue	2%	3%		2%	3%

Our research, development and engineering costs consist primarily of personnel-related expenses.

The decrease in research, development and engineering costs for the three and six months ended June 30, 2023 versus the prior comparable period was primarily attributable to increased capitalization of personnel-related expenses due to our continued focus on internally developing our platform, products and solutions as well as a reduction in external development costs partially offset by an increase in personnel-related expenses.

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General and Administrative


(in thousands, except percentages)	Three Months Ended June 30,		Percentage Change	Six Months Ended June 30,		Percentage Change
	2023	2022		2023	2022
General and administrative	$17,432	$15,816	10%	$38,584	$33,185	16%
As a percent of revenue	19%	17%		21%	18%

Our general and administrative costs consist primarily of personnel-related expenses, depreciation and amortization,

share-based compensation expense, bad debt expense, professional fees and insurance costs.

The increase in general and administrative expenses for the three months ended June 30, 2023 versus prior comparable period was primarily due to increased expenses of $1.8 million in bad debt expense, $0.5 million in computer equipment costs and $0.5 million in personnel-related expenses; partially offset by a $1.3 million reduction in professional fees and the absence of expenses of $0.4 million related to the registration of shares for sale held by Ziff Davis that were incurred in the second quarter of 2022.

The increase in general and administrative expenses for the six months ended June 30, 2023 versus prior comparable period was primarily due to increased expenses of $3.2 million in bad debt expense, $1.2 million in personnel-related expenses and $0.9 million in professional fees primarily in connection with the year-end audit; partially offset by the absence of expenses of $0.4 million related to the registration of shares for sale held by Ziff Davis that were incurred in the second quarter of 2022.

Share-Based Compensation

The following table represents share-based compensation expense included in cost of revenues and operating expenses in the accompanying Condensed Consolidated Statements of Income for the three and six months ended June 30, 2023 and 2022 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Cost of revenues	$	334	$	216	$	630	$	439
Operating expenses:
Sales and marketing	387		270		759		543
Research, development and engineering	52		340		92		696
General and administrative	3,890		4,097		8,322		8,648


Total	$	4,663	$	4,923	$	9,803	$	10,326

Non-Operating Income and Expenses

Interest expense. Our interest expense is due to outstanding debt and is reduced by any capitalized interest. Interest expense for the three months ended June 30, 2023 and 2022 was $12.8 million and $12.4 million, respectively. Interest expense for the six months ended June 30, 2023 and 2022 was $25.4 million and $25.6 million, respectively. Interest expense for both periods included interest expense on $805.0 million of debt associated with the 2026 and 2028 senior notes. Interest expense for the three and six months ended June 30, 2023 was reduced by $0.5 million and $1.0 million of capitalized interest, respectively, that did not occur during 2022.

Interest income. Our interest income is generated from interest earned on cash and cash equivalents. Interest income was $0.7 million and zero for the three months ended June 30, 2023 and 2022, respectively. Interest income was $0.7 million and zero for the six months ended June 30, 2023 and 2022, respectively. Interest income was higher compared to the prior comparable periods due to investments in money market funds starting in 2023.

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Other (expense) income, net. Our other (expense) income, net is generated primarily from miscellaneous items and gains or losses on currency exchange. Other (expense) income, net for the three months ended June 30, 2023 and 2022 was $0.6 million and $1.6 million, respectively. Other (expense) income, net for the six months ended June 30, 2023 and 2022 was $(0.3) million and $1.8 million, respectively. Changes in other (expense) income, net in three month period was driven by lower foreign exchange gains when compared to the prior comparable period. Changes in other (expense) income, net in six month period was driven by higher foreign exchange losses when compared to the prior comparable period.

Income Taxes

Our effective tax rate is based on pre-tax income, statutory tax rates, tax regulations (including those related to transfer pricing) and different tax rates in the various jurisdictions in which we operate. The tax bases of our assets and liabilities reflect our best estimate of the tax benefits and costs we expect to realize. When necessary, we establish valuation allowances to reduce our deferred tax assets to an amount that will more likely than not be realized.

Provision for income taxes for the three months ended June 30, 2023 and 2022 was $6.2 million and $7.9 million, respectively. Provision for income taxes for the six months ended June 30, 2023 and 2022 was $11.3 million and $14.9 million, respectively.

The Company’s effective tax rate for the three months ended June 30, 2023 and 2022 was 22.7% and 26.4%, respectively. The Company’s effective tax rate for the six months ended June 30, 2023 and 2022 was 23.7% and 26.9%, respectively. The decrease in our effective income tax rate for the three and six months ended June 30, 2023 was primarily attributable to a reduction in nondeductible expenses, primarily consisting of sales tax penalties and the change in the geographical mix of income.

Significant judgment is required in determining our provision for income taxes and in evaluating our tax positions on a worldwide basis. We believe our tax positions, including intercompany transfer pricing policies, are consistent with the tax laws in the jurisdictions in which we conduct our business. Certain of these tax positions have, in the past been challenged, and this may have a significant impact on our effective tax rate if our tax reserves are insufficient.

Liquidity and Capital Resources

Cash and Cash Equivalents

At June 30, 2023, we had cash and cash equivalents of $112.0 million compared to $94.2 million at December 31, 2022. The increase in cash and cash equivalents resulted primarily from cash provided by operations; partially offset by cash used in the repurchase of commons stock, purchases of property and equipment (including capitalized labor) and the purchase of investments. As of June 30, 2023, cash and cash equivalents held within domestic and foreign jurisdictions were $35.2 million and $76.8 million, respectively.

Credit Agreement

On March 4, 2022, the Company entered into a Credit Agreement with certain lenders party thereto (collectively, the “Lenders”) and MUFG Union Bank, N.A., as agent (the “Agent”). Pursuant to the Credit Agreement, the Lenders have provided Consensus with a revolving credit facility of $25.0 million (the “Credit Facility”) with an option held by the Company to obtain an additional commitment of up to a maximum of $25.0 million. The final maturity of the Credit Facility will occur on March 4, 2027. As of June 30, 2023, no amount has been drawn down on the Credit Facility.

Material Cash Requirements

Our long-term contractual obligations generally include our debt and related interest payments, noncancellable operating leases as well as other commitments. As of June 30, 2023, we had outstanding $805.0 million in aggregate principal amount of indebtedness (see Note 6 - Debt of the Notes to the Condensed Consolidated Financial Statements). As of June 30, 2023, our total minimum lease payments are $20.1 million (see Note 7 - Leases of the Notes to the Condensed Consolidated Financial Statements). As of June 30, 2023, our liability for uncertain tax positions was $8.2 million. Due to uncertainties in the timing of the amounts and timing of cash settlement with the taxing authorities we are unable to make a reasonably reliable estimate of the timing of payments.

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We currently anticipate that our existing cash and cash equivalents and cash generated from operations will be sufficient to meet our anticipated needs for working capital, capital expenditures and stock repurchases, if any, for at least the next 12 months and the foreseeable future.

Common Stock Repurchase Program

On March 1, 2022, the Company’s Board of Directors approved a share buyback program. Under this program, the Company may purchase in the public market or in off-market transactions up to $100.0 million worth of the Company’s common stock through February 2025. The timing and amounts of purchases will be determined by the Company, depending on market conditions and other factors it deems relevant. The Company entered into Rule 10b-18 and Rule 10b5-1 trading plans and during the three months ended June 30, 2023 and 2022, the Company repurchased 68,362 and 189,114, respectively, shares under this program. During the six months ended June 30, 2023 and 2022, the Company repurchased 338,554 and 189,114 shares, respectively, under this program. Cumulatively as of June 30, 2023, 527,668 shares have been repurchased at an aggregate cost of $18.9 million (inclusive of excise tax of $0.1 million). The excise tax is assessed at 1% of the fair market value of net stock repurchases after December 31, 2022.

Cash Flows

Our primary sources of liquidity are cash flows generated from operations, together with cash and cash equivalents. Net cash provided by operating activities was $52.1 million and $52.2 million for the six months ended June 30, 2023 and 2022, respectively. Our operating cash flows resulted primarily from cash received from our customers offset by cash payments we made to third parties for their services and employee compensation. Net cash provided by operating activities was consistent period over period, however the net cash provided by operating activities in 2023 included a larger decrease in accounts payable and accrued expenses and a larger increase in accounts receivable in 2023, as well as a decrease in deferred revenue in 2023 compared to an increase in deferred revenue in 2022. Largely offsetting these items were increases in the provision for doubtful accounts and deferred income taxes, net in 2023.

Net cash used in investing activities was $22.7 million and $29.1 million for the six months ended June 30, 2023 and 2022, respectively. For the six months ended June 30, 2023, net cash used in investing activities was primarily attributed to capital expenditures associated with the purchase of property and equipment (including capitalized labor) and the purchase of investments. For the six months ended June 30, 2022, net cash used in investing activities was primarily due to business and asset acquisitions and capital expenditures associated with the purchase of property and equipment (including capitalized labor). The decrease in our net cash used in investing activities in 2023 compared to 2022 was due to a lower cash outlay related to the purchase of investments in 2023, compared to a higher cash outlay associated with a business acquisition in 2022, partially offset by an increase in capital expenditures associated with the purchase of property and equipment (including capitalized labor) in 2023.

Net cash used in financing activities was $11.5 million and $8.8 million for the six months ended June 30, 2023 and 2022, respectively. For the six months ended June 30, 2023 and 2022, net cash used in financing activities was primarily due to the repurchase of common stock and the payment of employee income tax obligations related to the net settlement of equity awards. The change in net cash used in financing activities in 2023 compared to 2022 was primarily attributable to an increase in cash outflows related to the repurchase of common stock in 2023 compared to 2022.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

The following discussion of the market risks we face contains forward-looking statements. Forward-looking statements are subject to risks and uncertainties. Actual results could differ materially from those discussed in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date hereof. Consensus undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Readers should carefully review the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2022, as well as in other documents we file from time to time with the SEC, including the Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K filed or to be filed by us in 2023.

Interest Rate Risk

Our cash and cash equivalents are not subject to significant interest rate risk due to the short maturities of these instruments. As of June 30, 2023, the carrying value of our cash and cash equivalents approximated fair value. Our return on these investments is subject to interest rate fluctuations. As of June 30, 2023 and December 31, 2022, we had cash and cash equivalent investments, primarily in money market funds and cash held in foreign and domestic bank accounts, of $112.0 million and $94.2 million, respectively. We do not have interest rate risk on our outstanding long-term debt as these arrangements have fixed interest rates.

We cannot ensure that future interest rate movements will not have a material adverse effect on our future business, prospects, financial condition, operating results and cash flows. To date, we have not entered into interest rate hedging transactions to control or minimize certain of these risks.

Foreign Currency Risk

Our principal exposure to foreign currency risk relates to investment and inter-company debt in foreign subsidiaries that transact business in functional currencies other than the U.S. Dollar, primarily the Euro and the Japanese Yen. If we are unable to settle our short-term intercompany debts in a timely manner, we remain exposed to foreign currency fluctuations.

As we expand our international presence, we become further exposed to foreign currency risk by entering new markets with additional foreign currencies. The economic impact of currency exchange rate movements is often linked to variability in real growth, inflation, interest rates, governmental actions and other factors. These changes, if material, could cause us to adjust our financing and operating strategies.

As currency exchange rates change, translation of the income statements of the international businesses into U.S. Dollars affects year-over-year comparability of operating results, the impact of which is immaterial to the comparisons set forth in this Form 10-Q.

Historically, we have not hedged translation risks because cash flows from international operations were generally reinvested locally; however, we may do so in the future. Our objective in managing foreign exchange risk is to minimize the potential exposure to changes that exchange rates might have on earnings, cash flows and financial position. We currently do not have derivative financial instruments for hedging, speculative or trading purposes and therefore are not subject to such hedging risk. However, we may in the future engage in hedging transactions to manage our exposure to fluctuations in foreign currency exchange rates.

Foreign exchange gain (loss) for the three and six months ended June 30, 2023 was $0.6 million and $(0.3) million, respectively. Foreign exchange gain for the three and six months ended June 30, 2022 was $1.6 million and $1.8 million, respectively. The change in foreign exchange gain (loss) was primarily attributable to the translation of certain intra-entity balances in foreign currencies.

Cumulative translation adjustment loss, included in other comprehensive income for the three months ended June 30, 2023 and 2022 was $1.0 million and $4.3 million, respectively. Cumulative translation adjustment gain (loss), included in other comprehensive income for the six months ended June 30, 2023 and 2022 was $2.1 million and $(6.5) million, respectively.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

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The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the principal executive officer and the principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the quarterly period ended June 30, 2023, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report due to material weaknesses in internal control over financial reporting, described below.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, where a reasonable possibility exists that a material misstatement of our annual or interim financial statements may not be prevented or detected on a timely basis.

Previously Reported Material Weaknesses

As previously described in the Company’s Annual Report on Form 10-K dated March 31, 2023, for the year ended December 31, 2022, the Company has identified the following material weaknesses in our internal control over financial reporting:

Control Environment and Monitoring

Material weaknesses existed in the design of our entity-level controls impacting the control environment and the effective monitoring of controls to prevent or detect material misstatements to the consolidated financial statements. These deficiencies were primarily caused by a lack of sufficient accounting resources and technical expertise during the first half of 2022, which contributed to (i) ineffective structure and accountability over the performance of controls and (ii) ineffective evaluation and determination as to whether the components of internal controls were present and functioning.

These material weaknesses contributed to the following additional material weaknesses:

Control Activities and Information and Communication

•Management did not design and maintain effective internal controls that addressed (i) appropriate revenue recognition accounting policies, (ii) the review of reports used to support manual revenue recognition entries for completeness and accuracy and (iii) precision and documentation of management review controls over transactions and analysis that support revenue recognition and the allowance for bad debt.

•Management did not design and maintain effective internal controls to ensure the complete assessment and timeliness in preparing and reviewing technical accounting documentation relating to significant unusual transactions.

•Management did not design and maintain effective internal controls to ensure the timeliness of balance sheet account reconciliations, including account balances related to the spin-off transaction.

•Management did not design and maintain effective internal controls in the areas of (i) user access and segregation of duties related to systems that track employee related costs, and (ii) the documentation of the review of completeness and accuracy of underlying data used in the operation of certain internal controls that support employee related costs and internally developed software.

Remediation Measures

We have identified and begun to implement several steps, as further described below, designed to remediate the foregoing material weaknesses and to enhance our overall control environment. To remediate these material weaknesses, we began the year ending December 31, 2023 with the appropriate level of resources and technical expertise in finance, accounting, financial reporting and tax departments compared to the first half of the year ended December 31, 2022. During the fourth quarter of 2022, we implemented Blackline’s Modern Accounting Playbook software to bolster our internal controls over balance sheet account reconciliations in 2023. As part of the 2022 year end close, we performed enhanced revenue reconciliation procedures in response to the errors identified and disclosed in our the Current Report on Form 8-K that the Company filed with the SEC on February 22, 2023, and will continue these practices throughout fiscal year 2023. During the

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first and second quarters of fiscal year 2023, we implemented new internal controls to address the segregation of duties related to select system access findings previously identified. We expanded the use of our financial reporting team’s SEC experts to ensure technical accounting memos and related documentation were prepared and reviewed timely with regard to significant unusual transactions. We continue to address and implement new accounting policies and management review controls over analysis, schedules and reports that support revenue recognition, bad debt reserve and financial reporting processes to minimize the risk of reporting errors. Lastly, we engaged our employees in training programs and workshops to bolster awareness and education of internal control documentation requirements.

While the foregoing measures are intended to effectively remediate the material weaknesses described in this Item 4, it is possible that additional remediation steps will be necessary. As such, as we continue to evaluate and implement our plan to remediate the material weaknesses, our management may decide to take additional measures to address the material weaknesses or modify the remediation steps described above. The material weaknesses cannot be fully remediated until the applicable remedial controls operate for a sufficient period and management has concluded, through testing, that these controls are operating effectively. As planned and anticipated, we are on schedule to execute our testing plans during the third and fourth quarters of 2023.

(b) Changes in Internal Controls

Other than the actions taken to remediate the material weakness described above, there have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) which occurred during the second quarter ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II - Other Information

Item 1. Legal Proceedings

See Note 8 - Commitments and Contingencies of the Notes to the Condensed Consolidated Financial Statements (Part I, Item 1) for information regarding certain legal proceedings in which we are involved.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part 1, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, as well as in other documents we file from time to time. There have been no material changes to the risk factors from those described in our Annual Report on Form 10-K for the year ended December 31, 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Unregistered Sales of Equity Securities

None.

(b) Issuer Purchases of Equity Securities

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The following table summarizes the share repurchase activity for the three months ended June 30, 2023:


	Total Number of Shares Purchased	Average Price Paid Per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Program	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Program
					(in thousands)
April 1 - 30, 2023	—	$	—	—	$	83,206
May 1 - 31, 2023	—	—		—	83,206
June 1 - 30, 2023	68,362	29.98		68,362	81,157
	68,362			68,362	$	81,157

(1) Average price paid per share includes costs associated with the repurchases, but excludes the 1% excise tax accrued on our share repurchases as a result of the Inflation Reduction Act of 2022.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits


Exhibit Number			Description

3.1			Amended and Restated Certificate of Incorporation of Consensus Cloud Solutions, Inc.(incorporated by reference to Ex. 3.1 to Consensus’ Current Report on Form 8-K filed with the Commission on October 8, 2021, File No. 001-40750).
3.2			Amended and Restated Bylaws of Consensus Cloud Solutions, Inc.(incorporated by reference to Ex. 3.2 to Consensus’ Current Report on Form 8-K filed with the Commission on October 8, 2021, File No. 001-40750).











31.1*			Rule 13a-14(a) Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*			Rule 13a-14(a) Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**			Section 1350 Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101			The following financial information from Consensus Cloud Solutions, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022, (ii) Condensed Consolidated Statements of Income for the three and six months ended June 30, 2023 and 2022, (iii) Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2023 and 2022, (iv) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022, (v) Condensed Consolidated Statements of Stockholders’ Deficit for the three and six months ended June 30, 2023 and 2022, and (vi) the Notes to Condensed Consolidated Financial Statements.
104*			Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith ** Furnished herewith

-43-

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		Consensus Cloud Solutions, Inc.



Date:	August 9, 2023	By:	/s/ R. SCOTT TURICCHI
			R. Scott Turicchi
			Chief Executive Officer and Director
			(Principal Executive Officer)

Date:	August 9, 2023	By:	/s/ JAMES C. MALONE
			James C. Malone
			Chief Financial Officer
			(Principal Financial and Accounting Officer)

-44-

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, R. Scott Turicchi, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Consensus Cloud Solutions, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Dated:	August 9, 2023	/s/ R. SCOTT TURICCHI
		R. Scott Turicchi
		Chief Executive Officer and Director
		(Principal Executive Officer)

A signed original of this written statement required by Section 302 of the Sarbanes-Oxley Act has been provided to Consensus Cloud Solutions, Inc. and will be retained by Consensus Cloud Solutions, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James C. Malone, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Consensus Cloud Solutions, Inc.;

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


		/s/ JAMES C. MALONE
		James C. Malone
Dated:	August 9, 2023	Chief Financial Officer (Principal Financial and Accounting Officer)

EXHIBIT 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND

PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Consensus Cloud Solutions, Inc. (the “Company”) for the period ended June 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), R. Scott Turicchi, as Chief Executive Officer (Principal Executive Officer) of the Company, and James C. Malone, as Chief Financial Officer (Principal Financial Officer and Accounting Officer) of the Company, each hereby certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, to the best of his knowledge, respectively, that:

1.The accompanying quarterly report on Form 10-Q for the quarter ended June 30, 2023 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities and Exchange Act of 1934, as amended; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Consensus Cloud Solutions, Inc.


		/s/ R. SCOTT TURICCHI
		R. Scott Turicchi
Dated:	August 9, 2023	Chief Executive Officer and Director (Principal Executive Officer)


Dated:	August 9, 2023	/s/ JAMES C. MALONE
		James C. Malone
		Chief Financial Officer (Principal Financial and Accounting Officer)

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act has been provided to Consensus Cloud Solutions, Inc. and will be retained by Consensus Cloud Solutions, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

Cover Page - shares	6 Months Ended
Cover Page - shares	Jun. 30, 2023	Aug. 04, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	001-40750
Entity Registrant Name	Consensus Cloud Solutions, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	87-1139414
Entity Address, Address Line One	700 S. Flower Street
Entity Address, Address Line Two	15th Floor
Entity Address, City or Town	Los Angeles
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90017
City Area Code	323
Local Phone Number	860-9200
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	CCSI
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		19,648,265
Entity Central Index Key	0001866633
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
ASSETS
Cash and cash equivalents	$ 111,977	$ 94,164
Accounts receivable, net of allowances of $5,359 and $4,681, respectively	30,814	28,029
Prepaid expenses and other current assets	13,043	14,335
Total current assets	155,834	136,528
Property and equipment, net	68,210	54,958
Operating lease right-of-use assets	7,252	7,875
Intangibles, net	47,091	49,156
Goodwill	347,855	346,585
Deferred income taxes	34,804	35,981
Other assets	6,037	2,816
TOTAL ASSETS	667,083	633,899
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Accounts payable and accrued expenses	35,532	41,246
Income taxes payable, current	3,175	2,548
Deferred revenue, current	23,334	24,579
Operating lease liabilities, current	2,893	2,793
Total current liabilities	64,970	71,322
Long-term debt	794,830	793,865
Deferred revenue, noncurrent	2,301	2,319
Operating lease liabilities, noncurrent	13,026	13,877
Liability for uncertain tax positions	8,153	6,725
Deferred income taxes	951	728
Other long-term liabilities	298	324
TOTAL LIABILITIES	884,529	889,160
Commitments and contingencies (Note 8)
Common stock, $0.01 par value. Authorized 120,000,000; total issued is 20,176,291 and 20,105,545 shares and total outstanding is 19,648,623 and 19,916,431 shares at June 30, 2023 and December 31, 2022, respectively	202	201
Treasury stock, at cost (527,668 and 189,114 shares at June 30, 2023 and December 31, 2022, respectively)	(18,937)	(7,596)
Additional paid-in capital	32,182	21,650
Accumulated deficit	(213,892)	(250,408)
Accumulated other comprehensive loss	(17,001)	(19,108)
TOTAL STOCKHOLDERS’ DEFICIT	(217,446)	(255,261)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	667,083	633,899
Related Party
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Due to Former Parent	$ 36	$ 156

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 5,359	$ 4,681
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	120,000,000	120,000,000
Common stock, shares issued (in shares)	20,176,291	20,105,545
Common stock outstanding (in shares)	19,648,623	19,916,431
Treasury stock (in shares)	527,668	189,114

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($)
$ in Thousands

3 Months Ended

6 Months Ended

Jun. 30, 2023

Jun. 30, 2022

Jun. 30, 2023

Jun. 30, 2022

Income Statement [Abstract]

Revenues

$ 92,792

$ 91,115

$ 184,246

$ 180,413

Cost of revenues

^[1]

17,246

15,587

34,754

30,692

Gross profit

75,546

75,528

149,492

149,721

Operating expenses:

Sales and marketing

^[1]

17,507

16,394

34,400

32,224

Research, development and engineering

^[1]

1,765

2,741

3,669

5,077

General and administrative

^[1]

17,432

15,816

38,584

33,185

Total operating expenses

36,704

34,951

76,653

70,486

Income from operations

38,842

40,577

72,839

79,235

Interest expense

(12,817)

(12,359)

(25,383)

(25,632)

Interest income

661

665

Other (expense) income, net

568

1,577

(280)

1,750

Income before income taxes

27,254

29,795

47,841

55,353

Income tax expense

6,196

7,874

11,325

14,912

Net income

$ 21,058

$ 21,921

$ 36,516

$ 40,441

Net income per common share:

Basic (in dollars per share)

$ 1.07

$ 1.10

$ 1.85

$ 2.02

Diluted (in dollars per share)

$ 1.07

$ 1.10

$ 1.85

$ 2.02

Weighted average shares outstanding:

Basic (in shares)

19,654,922

19,928,316

19,750,570

19,924,864

Diluted (in shares)

19,662,201

19,968,340

19,772,898

20,002,103

[1]


(1) Includes share-based compensation expense as follows:
Cost of revenues	$	334	$	216	$	630	$	439
Sales and marketing	387		270		759		543
Research, development and engineering	52		340		92		696
General and administrative	3,890		4,097		8,322		8,648

Total	$	4,663	$	4,923	$	9,803	$	10,326

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Share-based compensation expense	$ 4,663	$ 4,923	$ 9,803	$ 10,326
Cost of revenues
Share-based compensation expense	334	216	630	439
Sales and marketing
Share-based compensation expense	387	270	759	543
Research, development and engineering
Share-based compensation expense	52	340	92	696
General and administrative
Share-based compensation expense	$ 3,890	$ 4,097	$ 8,322	$ 8,648

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Comprehensive Income [Abstract]
Net income	$ 21,058	$ 21,921	$ 36,516	$ 40,441
Other comprehensive income (loss):
Foreign currency translation adjustment	(971)	(4,344)	2,107	(6,461)
Other comprehensive income (loss)	(971)	(4,344)	2,107	(6,461)
Comprehensive income	$ 20,087	$ 17,577	$ 38,623	$ 33,980

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash flows from operating activities:
Net income	$ 36,516	$ 40,441
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	8,689	7,564
Amortization of financing costs and discounts	1,004	901
Non-cash operating lease costs	874	787
Share-based compensation	9,803	10,326
Provision for doubtful accounts	3,080	191
Deferred income taxes, net	2,036	(2,435)
Decrease (increase) in:
Accounts receivable	(5,852)	(4,280)
Prepaid expenses and other current assets	1,237	(37)
Other assets	780	(279)
Increase (decrease) in:
Accounts payable and accrued expenses	(5,829)	(1,857)
Income taxes payable	651	(6)
Deferred revenue	(1,173)	1,681
Operating lease liabilities	(1,121)	(939)
Liability for uncertain tax positions	1,428	1,458
Other liabilities	(31)	(1,310)
Net cash provided by operating activities	52,092	52,206
Cash flows from investing activities:
Purchases of property and equipment	(18,675)	(13,744)
Acquisition of businesses, net of cash received	0	(14,355)
Purchase of investments	(4,000)	0
Purchases of intangible assets	0	(1,000)
Net cash used in investing activities	(22,675)	(29,099)
Cash flows from financing activities:
Debt issuance costs	0	(232)
Proceeds from the issuance of common stock under employee stock purchase plan	871	631
Repurchase of common stock	(11,244)	(7,596)
Taxes paid related to net share settlement	(1,175)	(1,590)
Net cash used in financing activities	(11,548)	(8,787)
Effect of exchange rate changes on cash and cash equivalents	(56)	(4,806)
Net change in cash and cash equivalents	17,813	9,514
Cash and cash equivalents at beginning of period	94,164	66,778
Cash and cash equivalents at end of period	$ 111,977	$ 76,292

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT - USD ($)	Total	Common stock	Additional paid-in	Treasury stock	Accumulated deficit	Accumulated other comprehensive loss
Common stock, beginning balance (in shares) at Dec. 31, 2021		19,978,580
Beginning balance at Dec. 31, 2021	$ (332,665,000)	$ 200,000	$ 2,878,000	$ 0	$ (318,886,000)	$ (16,857,000)
Treasury stock, beginning balance (in shares) at Dec. 31, 2021				0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	40,441,000
Other comprehensive income (loss)	(6,461,000)					(6,461,000)
Other comprehensive income (loss), foreign currency transaction and translation adjustment, net of tax, portion attributable to parent	(6,461,000)
Vested restricted stock (in shares)		49,271
Share-based payment arrangement, shares withheld for tax withholding obligation (in shares)		(27,819)
Shares withheld related to net share settlement	$ (1,590,000)		(1,590,000)
Repurchase of common stock (in shares)	(189,114)			(189,114)
Repurchase of common stock	$ (7,596,000)			$ (7,596,000)
Share-based compensation	10,326,000		10,326,000
Issuance of shares under ESPP	631,000		631,000
Issuance of shares under employee stock purchase plan (in shares)		15,806
Reclassifications related to bonuses and other corporate accruals prior to the Separation	(3,293,000)				(3,293,000)
Common stock, ending balance (in shares) at Jun. 30, 2022		20,015,838
Ending balance at Jun. 30, 2022	(300,207,000)	$ 200,000	12,245,000	$ (7,596,000)	(281,738,000)	(23,318,000)
Treasury stock, ending balance (in shares) at Jun. 30, 2022				(189,114)
Common stock, beginning balance (in shares) at Mar. 31, 2022		19,995,528
Beginning balance at Mar. 31, 2022	(314,703,000)	$ 200,000	7,108,000	$ 0	(303,037,000)	(18,974,000)
Treasury stock, beginning balance (in shares) at Mar. 31, 2022				0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	21,921,000				21,921,000
Other comprehensive income (loss)	(4,344,000)					(4,344,000)
Other comprehensive income (loss), foreign currency transaction and translation adjustment, net of tax, portion attributable to parent	(4,344,000)
Vested restricted stock (in shares)		12,401
Share-based payment arrangement, shares withheld for tax withholding obligation (in shares)		(7,897)
Shares withheld related to net share settlement	(417,000)		(417,000)
Repurchase of common stock (in shares)				(189,114)
Repurchase of common stock	(7,596,000)			$ (7,596,000)
Share-based compensation	4,923,000		4,923,000
Issuance of shares under ESPP	631,000		631,000
Issuance of shares under employee stock purchase plan (in shares)		15,806
Reclassifications related to the separation	(622,000)				(622,000)
Common stock, ending balance (in shares) at Jun. 30, 2022		20,015,838
Ending balance at Jun. 30, 2022	$ (300,207,000)	$ 200,000	12,245,000	$ (7,596,000)	(281,738,000)	(23,318,000)
Treasury stock, ending balance (in shares) at Jun. 30, 2022				(189,114)
Common stock, beginning balance (in shares) at Dec. 31, 2022	19,916,431	20,105,545
Beginning balance at Dec. 31, 2022	$ (255,261,000)	$ 201,000	21,650,000	$ (7,596,000)	(250,408,000)	(19,108,000)
Treasury stock, beginning balance (in shares) at Dec. 31, 2022	(189,114)			(189,114)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	$ 36,516,000				36,516,000
Other comprehensive income (loss)	2,107,000					2,107,000
Other comprehensive income (loss), foreign currency transaction and translation adjustment, net of tax, portion attributable to parent	2,107,000
Vested restricted stock (in shares)		74,120
Vested restricted stock	0	$ 1,000	(1,000)
Share-based payment arrangement, shares withheld for tax withholding obligation (in shares)		(32,956)
Shares withheld related to net share settlement	$ (1,175,000)		(1,175,000)
Repurchase of common stock (in shares)	(338,554)			(338,554)
Repurchase of common stock	$ (11,341,000)			$ (11,341,000)
Share-based compensation	10,837,000		10,837,000
Issuance of shares under ESPP	$ 871,000		871,000
Issuance of shares under employee stock purchase plan (in shares)		29,582
Common stock, ending balance (in shares) at Jun. 30, 2023	19,648,623	20,176,291
Ending balance at Jun. 30, 2023	$ (217,446,000)	$ 202,000	32,182,000	$ (18,937,000)	(213,892,000)	(17,001,000)
Treasury stock, ending balance (in shares) at Jun. 30, 2023	(527,668)			(527,668)
Common stock, beginning balance (in shares) at Mar. 31, 2023		20,118,967
Beginning balance at Mar. 31, 2023	$ (240,711,000)	$ 201,000	26,859,000	$ (16,791,000)	(234,950,000)	(16,030,000)
Treasury stock, beginning balance (in shares) at Mar. 31, 2023				(459,306)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	21,058,000				21,058,000
Other comprehensive income (loss)	(971,000)					(971,000)
Other comprehensive income (loss), foreign currency transaction and translation adjustment, net of tax, portion attributable to parent	(971,000)
Vested restricted stock (in shares)		49,280
Vested restricted stock	0	$ 1,000	(1,000)
Share-based payment arrangement, shares withheld for tax withholding obligation (in shares)		(21,538)
Shares withheld related to net share settlement	$ (724,000)		(724,000)
Repurchase of common stock (in shares)	(68,362)			(68,362)
Repurchase of common stock	$ (2,146,000)			$ (2,146,000)
Share-based compensation	5,177,000		5,177,000
Issuance of shares under ESPP	$ 871,000		871,000
Issuance of shares under employee stock purchase plan (in shares)		29,582
Common stock, ending balance (in shares) at Jun. 30, 2023	19,648,623	20,176,291
Ending balance at Jun. 30, 2023	$ (217,446,000)	$ 202,000	$ 32,182,000	$ (18,937,000)	$ (213,892,000)	$ (17,001,000)
Treasury stock, ending balance (in shares) at Jun. 30, 2023	(527,668)			(527,668)

Basis of Presentation	6 Months Ended
Basis of Presentation	Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	Basis of Presentation The Company Consensus Cloud Solutions, Inc., together with its subsidiaries (“Consensus Cloud Solutions”, “Consensus”, the “Company”, “our”, “us” or “we”), is a provider of secure information delivery services with a scalable Software-as-a-Service (“SaaS”) platform. Consensus serves approximately 1 million customers of all sizes, from enterprises to individuals, across approximately 50 countries and multiple industry verticals including healthcare, government, financial services, law and education. Beginning as an online fax company over two decades ago, Consensus has evolved into a global provider of enterprise secure communication solutions. Our communication and digital signature solutions enable our customers to securely and cooperatively access, exchange and use information across organizational, regional and national boundaries. Consensus Cloud Solutions, Inc. Spin-Off On September 21, 2021, J2 Global, Inc., known since October 7, 2021 as Ziff Davis, Inc. (“Ziff Davis” or the “Former Parent”) announced that its Board of Directors approved its separation of the Cloud Fax business (the “Separation” or the “Spin-Off”), into an independent publicly traded company, Consensus Cloud Solutions, Inc. On October 7, 2021, the Separation was completed and the Former Parent transferred certain assets and liabilities associated with its Cloud Fax business to Consensus, including the equity interests in J2 Cloud Services, LLC (“J2 Cloud Services”), in exchange for approximately $259.1 million in cash, an asset related to $500.0 million in aggregate principal amount of the 6.5% Senior Notes due 2028, and the return of the assets and liabilities related to the non-fax business back to Ziff Davis. On October 8, 2021, Consensus began trading on the Nasdaq Stock Market LLC (“Nasdaq”) under the stock symbol “CCSI”. Ziff Davis retained a 19.9% interest in Consensus following the Separation. Subsequently Ziff Davis has sold, or otherwise disposed of, a portion of its Consensus shares, reducing its beneficial ownership in the Company to under 10% as of June 30, 2023 and December 31, 2022 (see Note 15 - Related Party Transactions). Principles of Consolidation The accompanying interim condensed consolidated financial statements include the accounts of Consensus and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Basis of Presentation The accompanying interim condensed consolidated financial statements are unaudited and have been prepared in accordance with instructions for Form 10-Q and Article 10 of Regulation S-X issued by the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. The Company believes that the disclosures made are adequate to make that information not misleading. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for the fair statement of these interim financial statements have been reflected. It is suggested that these financial statements be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2022, included in our Annual Report (Form 10-K) filed with the SEC on March 31, 2023. Accordingly, significant accounting policies and other disclosures normally provided have been omitted since such items are disclosed therein. The results of operations for this interim period are not necessarily indicative of the operating results for the full year or for any future period. Use of Estimates The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, including judgments about the reported amounts of revenue and expenses during the reporting period. The Company believes that its most significant estimates are those related to revenue recognition, share-based compensation expense, impairment or disposal of long-lived and intangible asset impairment, income taxes, contingencies and allowances for doubtful accounts. On an ongoing basis, management evaluates its estimates based on historical experience and on various other factors that the Company believes to be reasonable under the circumstances. Actual results could materially differ from those estimates due to risks and uncertainties, including uncertainty in the current economic environment due to factors such as inflationary pressures, elevated interest rates and the novel coronavirus pandemic (“COVID-19”). Allowances for Doubtful Accounts The Company maintains an allowance for credit losses for accounts receivable, which is recorded as an offset to accounts receivable and changes in such are classified as general and administrative expenses in the Condensed Consolidated Statements of Income. The Company assesses collectability by reviewing accounts receivable on a collective basis where similar characteristics exist and on an individual basis when it identifies specific customers with known disputes or collectability issues. In determining the amount of the allowance for credit losses, the Company considers historical collectability based on past due status. It also considers customer-specific information, current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data. On an ongoing basis, management evaluates the appropriateness of these reserves. Revenue Recognition The Company recognizes revenue when the Company satisfies its obligation by transferring control of the goods or services to its customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services (see Note 3 - Revenues). Principal vs. Agent The Company determines whether revenue should be reported on a gross or net basis by assessing whether the Company is acting as the principal or an agent in the transaction. If the Company is acting as the principal in a transaction, the Company reports revenue on a gross basis. If the Company is acting as an agent in a transaction, the Company reports revenue on a net basis. In determining whether the Company acts as the principal or an agent, the Company follows the accounting guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), for principal-agent considerations and assesses: (i) if another party is involved in providing goods or services to the customer and (ii) whether the Company controls the specified goods or services prior to transferring control to the customer. Sales Taxes The Company has made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are (i) both imposed on and concurrent with a specific revenue-producing transaction and (ii) collected by the Company from a customer. Impairment or Disposal of Long-Lived Assets The Company accounts for long-lived assets, which include property and equipment, operating lease right-of-use assets and identifiable intangible assets with finite useful lives (subject to amortization), in accordance with the provisions of FASB ASC Topic No. 360, Property, Plant, and Equipment (“ASC 360”). ASC 360 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount of an asset to the expected undiscounted future net cash flows generated by the asset. If it is determined that the asset may not be recoverable, and if the carrying amount of an asset exceeds its estimated fair value, an impairment charge is recognized to the extent of the difference. The Company assesses the impairment of identifiable definite-lived intangibles and long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors it considers important which could individually or in combination trigger an impairment review include the following: •Significant underperformance relative to expected historical or projected future operating results; •Significant changes in the manner of the Company’s use of the acquired assets or the strategy for Consensus’ overall business; •Significant negative industry or economic trends; •Significant decline in the Company’s stock price for a sustained period; and •The Company’s market capitalization relative to net book value. If the Company determines that the carrying value of definite-lived intangibles and long-lived assets may not be recoverable based upon the existence of one or more of the above indicators of impairment, it would record an impairment equal to the excess of the carrying amount of the asset over its estimated fair value. The Company assessed whether events or changes in circumstances have occurred that potentially indicate the carrying amount of long-lived assets may not be recoverable. No impairment was recorded during the six months ended June 30, 2023 and 2022. The Company classifies its long-lived assets to be sold as held for sale in the period if (i) it has approved and committed to a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition, (iii) an active program to locate a buyer and other actions required to sell the asset have been initiated, (iv) the sale of the asset is probable, (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value, and (vi) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The Company initially measures a long-lived asset that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset until the date of sale. Upon designation as an asset held for sale, the Company stops recording depreciation expense on the asset. The Company assesses the fair value of a long-lived asset less any costs to sell at each reporting period and until the asset is no longer classified as held for sale. Business Combinations and Valuation of Goodwill and Intangible Assets The Company applies the acquisition method of accounting for business combinations in accordance with GAAP and uses estimates and judgments to allocate the purchase price paid for acquisitions to the fair value of the assets, including identifiable intangible assets, and liabilities acquired. Such estimates may be based on significant unobservable inputs and assumptions such as, but not limited to, future revenue growth rates, gross and operating margins, customer attrition rates, royalty rates, discount rates and terminal growth rate assumptions. The Company uses established valuation techniques and may engage reputable valuation specialists to assist with the valuations. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Fair values are subject to refinement for up to one year after the closing date of an acquisition as information relative to closing date fair values becomes available. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Intangible assets resulting from the acquisitions of entities accounted for using the acquisition method of accounting are recorded at the estimated fair value of the assets acquired. Identifiable intangible assets are comprised of purchased customer relationships, trademarks and trade names, developed technologies and other intangible assets. Intangible assets subject to amortization are amortized over the period of estimated economic benefit ranging from 1 to 20 years and the amortization expense is included in general and administrative expenses on the Condensed Consolidated Statements of Income. The Company evaluates its goodwill and indefinite-lived intangible assets for impairment pursuant to FASB ASC Topic No. 350, Intangibles - Goodwill and Other (“ASC 350”), which provides that goodwill and other intangible assets with indefinite lives are not amortized, but tested annually for impairment or more frequently if the Company believes indicators of impairment exist. In connection with the annual impairment test for goodwill, the Company has the option to perform a qualitative assessment in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company determines that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, then it performs the impairment test on goodwill. The impairment test involves comparing the fair values of the applicable reporting units with their aggregate carrying values, including goodwill. The Company generally determines the fair value of its reporting units using the income approach methodology of valuation. If the carrying value of a reporting unit exceeds the reporting unit’s fair value, an impairment loss is recognized for the difference. No impairment was recorded during the six months ended June 30, 2023 or 2022. Investments The Company accounts for investments in equity securities in accordance with FASB ASC Topic No. 321, Investments - Equity Securities (“ASC 321”), which requires the accounting for equity investments, other than those accounted for under the equity method of accounting, generally be measured at fair value for equity securities with readily determinable fair values. Equity securities without a readily determinable fair value, which are not accounted for under the equity method of accounting, are measured at their cost, less impairment, if any, and adjusted for observable price changes arising from orderly transactions in the same or similar investment from the same issuer. Any unrealized gains or losses are reported within earnings on the Condensed Consolidated Statement of Income. As of June 30, 2023 the carrying amount of the Company’s investments accounted for using the measurement alternative method in accordance with ASC 321 was $4.0 million and is included in other assets within the Company’s Condensed Consolidated Balance Sheets. If the Company becomes aware of a significant decline in value that is other-than-temporary, the Company assesses whether an other-than-temporary impairment loss on an investment has occurred due to declines in fair value or other market conditions. The loss will be recorded in the period in which the Company identifies the decline. During the three and six months ended June 30, 2023, the Company did not recognize any investment gain or loss and did not have any impairments during the respective periods. Income Taxes The Company’s income is subject to taxation in both the U.S. and numerous foreign jurisdictions. Significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. The Company establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves for tax contingencies are established when the Company believes that certain positions might be challenged despite the Company’s belief that its tax return positions are fully supportable. The Company adjusts these reserves in light of changing facts and circumstances, such as the outcome of a tax audit or lapse of a statute of limitations. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate (see Note 9 - Income Taxes). The Company accounts for income taxes in accordance with FASB ASC Topic No. 740, Income Taxes (“ASC 740”), which requires that deferred tax assets and liabilities are recognized using enacted tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities. ASC 740 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the net deferred tax assets will not be realized. The valuation allowance is reviewed quarterly based upon the facts and circumstances known at the time. In assessing this valuation allowance, the Company reviews historical and future expected operating results and other factors, including its recent cumulative earnings experience, expectations of future taxable income by taxing jurisdiction and the carryforward periods available for tax reporting purposes, to determine whether it is more likely than not that deferred tax assets are realizable. ASC 740 provides guidance on the minimum threshold that an uncertain income tax benefit is required to meet before it can be recognized in the financial statements and applies to all income tax positions taken by a company. ASC 740 contains a two-step approach to recognizing and measuring uncertain income tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. If it is not more likely than not that the benefit will be sustained on its technical merits, no benefit will be recorded. Uncertain income tax positions that relate only to timing of when an item is included on a tax return are considered to have met the recognition threshold. The Company recognized accrued interest and penalties related to uncertain income tax positions in income tax expense on its Condensed Consolidated Statements of Income. In addition, on March 27, 2020, the “Coronavirus Aid, Relief and Economic Security (“CARES”) Act” was enacted into law providing for changes to various tax laws that impact business. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, increased limitations on qualified charitable contributions and technical corrections to tax depreciation methods for qualified improvement property. On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was enacted into law and is effective for taxable years beginning after December 31, 2022. The IRA includes a new corporate alternative minimum tax of 15% on adjusted financial statement income of corporations with profits greater than $1 billion, a 1% excise tax on the fair market value of net share buy-backs, in addition to multiple incentives to the clean energy industry (see Note 10 - Stockholders' Equity). The Company does not believe these provisions have a significant impact to our current and deferred income tax balances. The Company benefited from the technical correction to tax depreciation related to qualified improvement property and has elected to defer the employer side social security payments where eligible. The Company remitted the deferred employer side social security payments during the year ended December 31, 2022. The Company will continue to monitor the impact of these provisions on its financial statements. Share-Based Compensation The Company accounts for share-based awards to employees and non-employees in accordance with the provisions of FASB ASC Topic No. 718, Compensation - Stock Compensation (“ASC 718”). Accordingly, the Company measures share-based compensation expense at the grant date, based on the fair value of the award, and recognizes the expense over the employee’s requisite service period using the straight-line method. The measurement of share-based compensation expense is based on several criteria, including but not limited to, the valuation model used and associated input factors, such as expected term of the award, stock price volatility, risk free interest rate, dividend rate and award cancellation rate. These inputs are subjective and are determined using management’s judgment. If differences arise between the assumptions used in determining share-based compensation expense and the actual factors, which become known over time, the Company may change the input factors used in determining future share-based compensation expense. Any such changes could materially impact the Company’s results of operations in the period in which the changes are made and in periods thereafter. The Company estimates the expected term based upon the contractual term of the award (see Note 11 - Equity Incentive and Employee Stock Purchase Plan). Earnings Per Common Share (“EPS”) EPS is calculated pursuant to the two-class method as defined in FASB ASC Topic No. 260, Earnings per Share (“ASC 260”), which specifies that all outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends or dividend equivalents are considered participating securities and should be included in the computation of EPS pursuant to the two-class method. Basic EPS is calculated by dividing net distributed and undistributed earnings allocated to common shareholders, excluding participating securities, by the weighted-average number of common shares outstanding. The Company’s participating securities consist of its unvested share-based payment awards that contain rights to nonforfeitable dividends or dividend equivalents. Diluted EPS includes the determinants of basic EPS and, in addition, reflects the impact of other potentially dilutive shares outstanding during the period. The dilutive effect of participating securities is calculated under the more dilutive of either the treasury method or the two-class method. Segment Reporting FASB ASC Topic No. 280, Segment Reporting (“ASC 280”), establishes standards for the way that public business enterprises report information about operating segments in their annual consolidated financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. ASC 280 also establishes standards for related disclosures about products and services, geographic areas and major customers. The Company’s business segment is based on the organization’s structure used by the chief operating decision maker for making operating and investment decisions and for assessing performance. The chief operating decision maker views the Company as one reportable segment known as Cloud Fax (see Note 13 - Segment Information). Reclassifications Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

Recent Accounting Pronouncements	6 Months Ended
Recent Accounting Pronouncements	Jun. 30, 2023
Accounting Standards Update and Change in Accounting Principle [Abstract]
Recent Accounting Pronouncements	Recent Accounting Pronouncements In March 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this ASU provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, that extends the period of time preparers can utilize the reference rate reform relief guidance. To ensure the relief in Topic 848 covers the period of time during which a significant number of modifications may take place, the ASU defers the sunset date of Topic 848 from December 31, 2022, to December 31, 2024. The Company does not expect the adoption of this standard to have a material impact on the Company’s condensed consolidated financial statements and related disclosures. In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. This ASU clarifies the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security and introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. The amendments in this ASU are effective for fiscal years beginning after December 15, 2024, including the interim periods within those fiscal years. Early adoption is permitted. This amendment should be applied prospectively with any adjustments from the adoption of the amendments recognized in earnings and disclosed on the date of adoption. The Company does not expect the adoption of this standard to have a material impact on the Company’s condensed consolidated financial statements and related disclosures. In September 2022, the FASB issued ASU 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50). This ASU enhances the transparency of supplier finance programs. The amendments in this ASU are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. This amendment should be applied retrospectively to each period in which a balance sheet is presented, except for the amendment on rollforward information, which should be applied prospectively. The Company adopted ASU 2022-04 in the first quarter of 2023. The adoption of this standard did not have an impact on the Company’s condensed consolidated financial statements and related disclosures. In March 2023, the FASB issued ASU 2023-01, Leases (Topic 842): Common Control Arrangement, which addresses the accounting by private companies and certain not-for-profit entities (NFPs) for common control leases and amends the accounting for leasehold improvements in common-control arrangements for all entities. This ASU offers: 1) private companies, as well as not-for-profit entities that are not conduit bond obligors, a practical expedient that gives them the option of using the written terms and conditions of a common-control arrangement when determining whether a lease exists and the subsequent accounting for the lease, including the lease’s classification (Issue 1) and 2) amends the accounting for leasehold improvements in common-control arrangements for all entities (Issue 2). The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statement that have not yet been made available. If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes the interim period. The amendments applicable to the Company (Issue 2) are required to be applied using the option of one of the following adoption methods: 1.Prospective application to all new leasehold improvements recognized on or after the date that the entity first applies the amendments in this ASU; 2.Prospective application to all new and existing leasehold improvements recognized on or after the date that the entity first applies the amendments in this ASU, with any remaining balance of leasehold improvements amortized over their remaining useful life to the common-control group determined as of that date; or 3.Retrospective application to the beginning of the period in which an entity first applied Topic 842, with any leasehold improvements that otherwise would not have been amortized or impaired recognized through a cumulative-effect adjustment to opening retained earnings at the beginning of the earliest period presented in accordance with Topic 842. The Company does not expect the adoption of this standard to have a material impact on the Company’s condensed consolidated financial statements and related disclosures. In March 2023, the FASB issued ASU 2023-02, Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. ASU 2023-02 allows reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted in any interim period. If an entity adopts the amendments in an interim period, it shall adopt them as of the beginning of the fiscal year that includes that interim period. The amendment should be applied on either a modified retrospective or a retrospective basis. The Company does not expect the adoption of this standard to have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

Revenues

6 Months Ended

Jun. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenues

Revenues from external customers classified by revenue source are as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Corporate	$	50,361	$	48,867	$	99,768	$	95,386
Small office home office (“SoHo”)	42,429		42,228		84,459		85,007
Other	2		20		19		20
Total revenues	$	92,792	$	91,115	$	184,246	$	180,413

Timing of revenue recognition
Point in time	$	145	$	306	$	298	$	437
Over time	92,647		90,809		183,948		179,976
Total	$	92,792	$	91,115	$	184,246	$	180,413

Performance Obligations

The Company satisfies its performance obligations upon delivery of services to its customers. Payment terms vary by

type and location of the Company’s customers and the services offered. The time between invoicing and when payment is due

is not significant. Due to the nature of the services provided, there are no obligations for returns.

Significant Judgments

Performance Obligations Satisfied Over Time

Practical Expedients

Existence of a Significant Financing Component in a Contract

Costs to Fulfill a Contract

Revenues Invoiced

Fair Value Measurements

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements


			§			Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

			§			Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

			§			Level 3 – Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Assets Measured on a Non-Recurring Basis

Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible AssetsGoodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Intangible assets resulting from the acquisitions of entities accounted for using the

The changes in carrying amounts of goodwill for the six months ended June 30, 2023 are as follows (in thousands):


	Amount
Balance as of January 1, 2023	$	346,585




Foreign exchange translation	1,270
Balance as of June 30, 2023	$	347,855

Intangible Assets with Indefinite Lives:

Intangible assets are summarized as of June 30, 2023 and December 31, 2022 as follows (in thousands):


	June 30, 2023		December 31, 2022
Trade names	$	27,354	$	27,337
Other	4,045		4,045
Total	$	31,399	$	31,382

Intangible Assets Subject to Amortization:

As of June 30, 2023, intangible assets subject to amortization are summarized as follows (in thousands):


	Weighted-Average Remaining Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	0.4 years	$	8,176	$	7,701	$	475
Patent and patent licenses	0.0 years	54,341		54,341		—
Customer relationships (1)	2.9 years	108,128		95,286		12,842
Other purchased intangibles	1.9 years	11,986		9,611		2,375
Total		$	182,631	$	166,939	$	15,692

As of December 31, 2022, intangible assets subject to amortization are summarized as follows (in thousands):


	Weighted-Average Remaining Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	0.5 years	$	8,151	$	7,605	$	546
Patent and patent licenses	0.0 years	54,341		54,341		—
Customer relationships (1)	3.1 years	107,175		92,573		14,602
Other purchased intangibles	2.0 years	11,937		9,311		2,626
Total		$	181,604	$	163,830	$	17,774

Expected amortization expenses for intangible assets subject to amortization at June 30, 2023 are as follows (in thousands):


Fiscal Year:	Amount
2023 (remainder)	$	2,118
2024	3,532
2025	2,640
2026	2,130
2027	1,427
Thereafter	3,845
Total	$	15,692

Debt

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Debt

Long-term debt consists of the following (in thousands):


	June 30, 2023		December 31, 2022
2026 Senior Notes	$	305,000	$	305,000
2028 Senior Notes	500,000		500,000

Total Notes	805,000		805,000
Less: Deferred issuance costs	(10,170)		(11,135)
Total long-term debt	$	794,830	$	793,865

At June 30, 2023, future principal payments for debt were as follows (in thousands):


Fiscal year:	Total
2023 (remainder)	$	—
2024	—
2025	—
2026	305,000
2027	—
Thereafter	500,000
Total	$	805,000

2026 Senior Notes

2028 Senior Notes

Credit Agreement

Leases

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Leases

The components of lease expense, recorded in cost of revenues and general and administrative expenses on the

Condensed Consolidated Statements of Income, were as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Operating lease cost	$	718	$	607	$	1,387	$	1,236
Short-term lease cost	427		362		821		802
Finance lease cost:
Amortization of right-of-use assets	302		297		603		599

Total lease cost	$	1,447	$	1,266	$	2,811	$	2,637

Supplemental balance sheet information related to leases is as follows (in thousands):


	June 30, 2023		December 31, 2022
Lease-related assets and liabilities
Operating lease right-of-use assets	$	7,252	$	7,875
Finance lease right-of-use assets (1)	831		1,427
Total right-of-use assets	$	8,083	$	9,302

Operating lease liabilities, current	$	2,893	$	2,793

Operating lease liabilities, noncurrent	13,026		13,877

Total operating lease liabilities	$	15,919	$	16,670

(1) The full amount of the finance leases were prepaid. Therefore, there is no corresponding lease liability associated with the finance right-of-use assets.

Supplemental cash flow information related to leases is as follows (in thousands):


	Six Months Ended June 30,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,511	$	1,359

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	254	$	1,316

Other supplemental operating lease information consists of the following:


	June 30, 2023		December 31, 2022
Operating leases:
Weighted average remaining lease term	7.2 years		7.6 years
Weighted average discount rate	4.8	%	4.6	%

Maturities of operating lease liabilities as of June 30, 2023 are as follows (in thousands):


Fiscal Year:	Operating Leases
2023 (remainder)	$	1,487
2024	2,898
2025	2,460
2026	2,527
2027	2,534

Thereafter	8,167
Total lease payments	$	20,073
Less: Imputed interest	(4,154)
Present value of operating lease liabilities	$	15,919

Significant Judgments

Discount Rate

Options

Facility lease

Leases

The components of lease expense, recorded in cost of revenues and general and administrative expenses on the

Condensed Consolidated Statements of Income, were as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Operating lease cost	$	718	$	607	$	1,387	$	1,236
Short-term lease cost	427		362		821		802
Finance lease cost:
Amortization of right-of-use assets	302		297		603		599

Total lease cost	$	1,447	$	1,266	$	2,811	$	2,637

Supplemental balance sheet information related to leases is as follows (in thousands):


	June 30, 2023		December 31, 2022
Lease-related assets and liabilities
Operating lease right-of-use assets	$	7,252	$	7,875
Finance lease right-of-use assets (1)	831		1,427
Total right-of-use assets	$	8,083	$	9,302

Operating lease liabilities, current	$	2,893	$	2,793

Operating lease liabilities, noncurrent	13,026		13,877

Total operating lease liabilities	$	15,919	$	16,670

(1) The full amount of the finance leases were prepaid. Therefore, there is no corresponding lease liability associated with the finance right-of-use assets.

Supplemental cash flow information related to leases is as follows (in thousands):


	Six Months Ended June 30,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,511	$	1,359

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	254	$	1,316

Other supplemental operating lease information consists of the following:


	June 30, 2023		December 31, 2022
Operating leases:
Weighted average remaining lease term	7.2 years		7.6 years
Weighted average discount rate	4.8	%	4.6	%

Maturities of operating lease liabilities as of June 30, 2023 are as follows (in thousands):


Fiscal Year:	Operating Leases
2023 (remainder)	$	1,487
2024	2,898
2025	2,460
2026	2,527
2027	2,534

Thereafter	8,167
Total lease payments	$	20,073
Less: Imputed interest	(4,154)
Present value of operating lease liabilities	$	15,919

Significant Judgments

Discount Rate

Options

Facility lease

Commitments and Contingencies	6 Months Ended
Commitments and Contingencies	Jun. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Litigation From time to time, the Company and its affiliates are involved in litigation and other legal disputes or regulatory inquiries that arise in the ordinary course of business. Any claims or regulatory actions against the Company and its affiliates, whether meritorious or not, could be time consuming and costly, and could divert significant operational resources. The outcomes of such matters are subject to inherent uncertainties, carrying the potential for unfavorable rulings that could include monetary damages and injunctive relief. The Company does not believe, based on current knowledge, that any legal proceedings or claims currently exist which, after giving effect to existing accrued liabilities, are likely to have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows. It is the Company’s policy to expense legal fees related to any litigation as incurred. Non-Income Related Taxes The Company historically did not collect sales tax in states where it was not able to quantify the appropriate sales tax to be collected. For the periods from 2017 through 2021, the Company believed it was probable that a sales tax liability existed for its corporate and SoHo accounts. In the year ended December 31, 2021, the Company determined that a sales tax liability was probable and it developed a methodology to estimate the sales tax liability for the SoHo revenue stream during the affected periods from 2017 through 2021. The Company has been remitting SoHo sales tax in applicable states since August 2022. However, the sales tax liability for its corporate customers was not estimable until the third quarter of 2022. Prior to the third quarter of 2022, the Company was unable to determine which of these customers were either exempt organizations or resellers and were thus exempt from sales tax. In the third quarter of 2022, the Company completed an analysis of the pool of corporate customers subject to sales tax in order to estimate the range of sales tax liability on its corporate revenues. As a result, the Company recorded an accrual as the exposure became probable and estimable. Additionally, the Company started sales tax collection and remittance on corporate sales in applicable states in August 2022. The Company has initiated a Voluntary Disclosure Agreement (“VDA”) process in the third quarter of 2022, to voluntarily report the prior period sales tax liability. The process is expected to be completed in the third quarter of 2023. While the Company believes that it has sufficiently reserved for historical sales tax liabilities under FASB ASC Topic No. 450, Contingencies, some state taxing authorities may still challenge the Company’s sales tax position, the methodology used to calculate the sales tax liability, and may also impose other taxes on its business. Taxing authorities may successfully assert that the Company should have collected, or in the future should collect sales and use, telecommunications or similar taxes, and could be subject to liability with respect to past or future tax, which could adversely affect the Company’s operating results. During the three months ended June 30, 2023, the Company reassessed its sales tax exposure based on the states with a completed VDA process. The Company believes that it did not need to record any additional sales tax expense pertaining to the prior periods. The Company recorded a sales tax expense within general and administrative expenses in the Condensed Consolidated Statements of Income of $0.5 million and $0.1 million for the three months ended June 30, 2023 and 2022, respectively. The Company recorded a sales tax expense within general and administrative expenses in the Condensed Consolidated Statements of Income of $1.1 million and $1.1 million for the six months ended June 30, 2023 and 2022, respectively. The Company will continue to review and monitor the impact of sales tax rules in order to mitigate any associated risks on its business. The sales tax liability within accounts payable and accrued expenses on the Company’s Condensed Consolidated Balance Sheets was $6.9 million and $13.1 million as of June 30, 2023 and December 31, 2022, respectively.

Income Taxes	6 Months Ended
Income Taxes	Jun. 30, 2023
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes The Company’s tax provision for interim periods is determined using an estimate of the Company’s annual effective tax rate adjusted for discrete interim period tax impacts. Each quarter the Company updates its estimated annual effective tax rate and, if the estimate changes, makes a cumulative adjustment. Changes in the geographical mix, permanent differences or the estimated level of annual pre-tax income can affect the effective tax rate. The Company’s effective tax rate for the three months ended June 30, 2023 and 2022 was 22.7% and 26.4%, respectively. The Company’s decreased rate during the three months ended June 30, 2023 is primarily due to a reduction in nondeductible expenses for tax purposes and the change in the geographical mix of income. The Company’s effective tax rate for the six months ended June 30, 2023 and 2022 was 23.7% and 26.9%, respectively. The Company’s decreased rate during the six months ended June 30, 2023 is primarily due to a reduction in nondeductible expenses for tax purposes and the change in the geographical mix of income. The Company’s effective tax rates for the three and six months ended June 30, 2023 and 2022 differed from the U.S. federal statutory rates of 21% primarily as a result of state income taxes, nondeductible expenses for tax purposes, foreign rate differential, research and development credits and uncertain tax positions. As of June 30, 2023 and December 31, 2022, the Company had $8.2 million and $6.7 million, respectively, in liabilities for uncertain income tax positions, including interest and penalties. Accrued interest and penalties related to unrecognized tax benefits are recognized in income tax expense on the Company’s Condensed Consolidated Statements of Income. Income Tax Audits The Company files tax returns in the US, Ireland, Netherlands, France, Canada, Japan and Hong Kong. As of June 30, 2023, the Company is not under audit in any jurisdiction that it operates within. The Company has filed its first set of post-spin tax returns including some international subsidiaries who have previously filed in their local jurisdictions. Depending on the jurisdictions in which the Company is filing, tax returns for the years from 2016 onwards are still open to examination by tax authorities.

Stockholders' Deficit	6 Months Ended
Stockholders' Deficit	Jun. 30, 2023
Equity [Abstract]
Stockholders' Deficit	Stockholders’ Deficit Common Stock Repurchase Program On March 1, 2022, the Company’s Board of Directors approved a share buyback program. Under this program, the Company may purchase, in the public market or in off-market transactions, up to $100.0 million of the Company’s common stock through February 2025. The timing and amounts of purchases will be determined by the Company, depending on market conditions and other factors it deems relevant. The Company entered into Rule 10b-18 and Rule 10b5-1 trading plans and during the three months ended June 30, 2023 and 2022, the Company repurchased 68,362 and 189,114 shares, respectively, under this program. During the six months ended June 30, 2023 and 2022, the Company repurchased 338,554 and 189,114 shares, respectively, under this program. Cumulatively as of June 30, 2023, 527,668 shares have been repurchased at an aggregate cost of $18.9 million (inclusive of excise tax of $0.1 million). The excise tax is assessed at 1% of the fair market value of net stock repurchases after December 31, 2022. Vested Restricted Stock At the time of certain vesting events related to restricted stock units or restricted stock awards that are held by participants in Consensus’ Equity Incentive Plan, a portion of the awards subject to vesting are withheld by the Company to satisfy the employees’ tax withholding obligations that arise upon the vesting of restricted stock. As a result, the number of shares issued upon vesting for these awards is net of the statutory withholding requirements that the Company pays on behalf of its employees. Although shares withheld are not issued, they are treated as common share repurchases in the Company’s condensed consolidated financial statements, as they reduce the number of shares that would have been issued upon vesting. These shares do not count against the authorized capacity under the Company’s share repurchase program described above. During the three and six months ended June 30, 2023 the Company withheld shares on its vested restricted stock units and restricted stock awards relating to its share-based compensation plans of 21,538 and 32,956 shares, respectively. During the three and six months ended June 30, 2022 the Company withheld shares on its vested restricted stock units and restricted stock awards relating to its share-based compensation plans of 7,897 and 27,819 shares, respectively. Dividends The Company currently does not issue dividends to Consensus shareholders. Future dividends are subject to Board approval. Our current debt agreements could trigger restrictions on dividend payments under certain circumstances (see Note 6 - Debt).

Equity Incentive and Employee Stock Purchase Plan

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Equity Incentive and Employee Stock Purchase Plan

(a) 2021 Equity Incentive Plan

Restricted Stock and Restricted Stock Units

Restricted Stock and Restricted Stock Units with Market Conditions

Restricted stock activity for the six months ended June 30, 2023 is set forth below:


	Shares	Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2023	35,416	$	38.42
Granted	—	—
Vested	(19,737)	37.77
Canceled	—	—
Nonvested at June 30, 2023	15,679	$	39.24

As of June 30, 2023, the Company had unrecognized share-based compensation cost related to its restricted stock

awards of $0.2 million, which is expected to be recognized over a weighted-average period of 0.7 years.

Restricted stock unit activity for the six months ended June 30, 2023 is set forth below:


	Number of Shares	Weighted-Average Grant-Date Fair Value		Weighted-Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value
Outstanding at January 1, 2023	1,082,451	$	51.63
Granted	57,652	53.06
Vested	(74,120)	53.09
Canceled	(12,367)	57.32
Outstanding at June 30, 2023	1,053,616	$	51.54	3.5	$	32,662,096
Vested and expected to vest as of June 30, 2023	711,412	$	52.62	3.0	$	22,053,764

(b) Employee Stock Purchase Plan

The compensation expense related to the current offering period of the Purchase Plan has been estimated utilizing the following assumptions:


			June 30, 2023
Risk-free interest rate			5.26%
Expected term (in years)			0.5
Dividend yield			0.00%
Expected volatility			56.95%
Weighted average volatility			56.95%

Earnings Per Share

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Earnings Per Share

The components of basic and diluted earnings per share are as follows (in thousands, except share and per share data):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Numerator for basic and diluted net income per common share:
Net income from continuing operations attributable to common shareholders	$	21,058	$	21,921	$	36,516	$	40,441
Net income available to participating securities (1)	(15)		(43)		(38)		(97)
Net income available to common shareholders from operations	$	21,043	$	21,878	$	36,478	$	40,344
Denominator:
Weighted-average outstanding shares of common stock	19,654,922		19,928,316		19,750,570		19,924,864
Dilutive effect of:
Equity incentive plans	6,929		24,262		17,292		63,532
Employee Stock Purchase Plan	350		15,762		5,036		13,707
Common stock and common stock equivalents	19,662,201		19,968,340		19,772,898		20,002,103
Net income per share from operations:
Basic	$	1.07	$	1.10	$	1.85	$	2.02
Diluted	$	1.07	$	1.10	$	1.85	$	2.02

(1) Represents unvested share-based payment awards that contain certain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid).

Segment Information

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Segment Information


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenues:
United States	$	73,569	$	71,901	$	145,882	$	141,494
Canada	13,118		12,230		25,952		24,335
Ireland	3,818		4,567		7,760		9,477
All other countries	2,287		2,417		4,652		5,107
Foreign countries	19,223		19,214		38,364		38,919
	$	92,792	$	91,115	$	184,246	$	180,413

The following presents the Company’s long-lived assets, excluding finite-lived intangible assets (in thousands):


	June 30, 2023		December 31, 2022
Long-lived assets:
United States	$	74,603	$	61,858
Canada	360		531
Ireland	278		167
All other countries	221		277
Foreign countries	859		975
Total	$	75,462	$	62,833

Accumulated Other Comprehensive Loss

6 Months Ended

Jun. 30, 2023

Stockholders' Equity Note [Abstract]

Accumulated Other Comprehensive Loss


	Foreign Currency Translation
Balance as of April 1, 2023	$	(16,030)
Other comprehensive loss	(971)
Net increase in other comprehensive loss	(971)
Balance as of June 30, 2023	$	(17,001)


	Foreign Currency Translation
Balance as of January 1, 2023	$	(19,108)
Other comprehensive income	2,107
Net increase in other comprehensive income	2,107
Balance as of June 30, 2023	$	(17,001)

There were zero reclassifications out of accumulated other comprehensive loss for the three and six months ended June 30, 2023.

Related Party Transactions	6 Months Ended
Related Party Transactions	Jun. 30, 2023
Related Party Transactions [Abstract]
Related Party Transactions	Related Party Transactions In connection with the Separation, Consensus and Ziff Davis entered into several agreements that govern the relationship of the parties following the Separation, including a separation and distribution agreement, a transition services agreement (“TSA”), a tax matters agreement, an employee matters agreement, an intellectual property license agreement and a stockholder and registration rights agreement (the “Agreements”). The TSA governs services including certain information technology services, finance and accounting services and human resource and employee benefit services. The agreed-upon charges, if any, for such services are intended to cover any costs and expenses incurred in providing such services. As of June 30, 2023, a majority of the services provided under TSA were completed or terminated, with a select few services still winding down and set to terminate no later than October 7, 2023. During the three months ended June 30, 2023 and 2022, the Company paid approximately $0.4 million and $11.5 million, respectively, and during the six months ended June 30, 2023 and 2022 the Company paid approximately $0.6 million and $11.5 million, respectively, to Ziff Davis to settle co-mingled cash accounts, costs associated with the transition services agreement and Separation. Additionally, the Company incurred approximately $0.4 million in costs related to the registration of shares for sale held by Ziff Davis for the three and six months ended June 30, 2022. No costs were incurred in 2023 related to the registration of shares for sale held by Ziff Davis. These costs were recorded in general and administrative expenses within the Condensed Consolidated Statement of Income. Subsequent to the disposition of the shares, Ziff Davis’ beneficial ownership in the Company was under 10%, as of June 30, 2023 and December 31, 2022 (see Note 1 - Basis of Presentation). Amounts due to Ziff Davis as of June 30, 2023 and December 31, 2022 were zero and $0.2 million, respectively, related to these items, as well as reimbursement related to certain transaction related costs.

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Pay vs Performance Disclosure
Net income	$ 21,058	$ 21,921	$ 36,516	$ 40,441

Insider Trading Arrangements	6 Months Ended
Insider Trading Arrangements	Jun. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Principles of Consolidation

Basis of Presentation

The results of operations for this interim period are not necessarily indicative of the operating results for the full year or for any future period.

Use of Estimates

Allowances for Doubtful Accounts

Revenue Recognition

Principal vs. Agent

Sales Taxes

Performance Obligations

The Company satisfies its performance obligations upon delivery of services to its customers. Payment terms vary by

type and location of the Company’s customers and the services offered. The time between invoicing and when payment is due

is not significant. Due to the nature of the services provided, there are no obligations for returns.

Significant Judgments

Performance Obligations Satisfied Over Time

Practical Expedients

Existence of a Significant Financing Component in a Contract

Costs to Fulfill a Contract

Revenues Invoiced

Impairment or Disposal of Long-Lived Assets

•Significant underperformance relative to expected historical or projected future operating results;

•Significant changes in the manner of the Company’s use of the acquired assets or the strategy for Consensus’ overall business;

•Significant negative industry or economic trends;

•Significant decline in the Company’s stock price for a sustained period; and

•The Company’s market capitalization relative to net book value.

Business Combinations

Business Combinations and Valuation of Goodwill and Intangible Assets

Valuation of Goodwill and Intangible Assets

Business Combinations and Valuation of Goodwill and Intangible Assets

Investments

Income Taxes

recognized accrued interest and penalties related to uncertain income tax positions in income tax expense on its Condensed Consolidated Statements of Income.

Share-Based Compensation

Earnings Per Common Share (“EPS”)

Segment Reporting

Reclassifications

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

Recent Accounting Pronouncements

1.Prospective application to all new leasehold improvements recognized on or after the date that the entity first applies the amendments in this ASU;

The Company does not expect the adoption of this standard to have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

Fair Value Measurements


			§			Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

			§			Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

			§			Level 3 – Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Assets Measured on a Non-Recurring Basis

Revenues (Tables)

6 Months Ended

Jun. 30, 2023

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

Revenues from external customers classified by revenue source are as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Corporate	$	50,361	$	48,867	$	99,768	$	95,386
Small office home office (“SoHo”)	42,429		42,228		84,459		85,007
Other	2		20		19		20
Total revenues	$	92,792	$	91,115	$	184,246	$	180,413

Timing of revenue recognition
Point in time	$	145	$	306	$	298	$	437
Over time	92,647		90,809		183,948		179,976
Total	$	92,792	$	91,115	$	184,246	$	180,413

Goodwill and Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in Carrying Amounts of Goodwill

The changes in carrying amounts of goodwill for the six months ended June 30, 2023 are as follows (in thousands):


	Amount
Balance as of January 1, 2023	$	346,585




Foreign exchange translation	1,270
Balance as of June 30, 2023	$	347,855

Intangible Assets with Indefinite Lives

Intangible assets are summarized as of June 30, 2023 and December 31, 2022 as follows (in thousands):


	June 30, 2023		December 31, 2022
Trade names	$	27,354	$	27,337
Other	4,045		4,045
Total	$	31,399	$	31,382

Intangible Assets Subject to Amortization

As of June 30, 2023, intangible assets subject to amortization are summarized as follows (in thousands):


	Weighted-Average Remaining Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	0.4 years	$	8,176	$	7,701	$	475
Patent and patent licenses	0.0 years	54,341		54,341		—
Customer relationships (1)	2.9 years	108,128		95,286		12,842
Other purchased intangibles	1.9 years	11,986		9,611		2,375
Total		$	182,631	$	166,939	$	15,692

As of December 31, 2022, intangible assets subject to amortization are summarized as follows (in thousands):


	Weighted-Average Remaining Amortization Period	Historical Cost		Accumulated Amortization		Net
Trade names	0.5 years	$	8,151	$	7,605	$	546
Patent and patent licenses	0.0 years	54,341		54,341		—
Customer relationships (1)	3.1 years	107,175		92,573		14,602
Other purchased intangibles	2.0 years	11,937		9,311		2,626
Total		$	181,604	$	163,830	$	17,774

Estimated Intangible Assets Amortization Expense

Expected amortization expenses for intangible assets subject to amortization at June 30, 2023 are as follows (in thousands):


Fiscal Year:	Amount
2023 (remainder)	$	2,118
2024	3,532
2025	2,640
2026	2,130
2027	1,427
Thereafter	3,845
Total	$	15,692

Debt (Tables)

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Summary of Long-term Debt

Long-term debt consists of the following (in thousands):


	June 30, 2023		December 31, 2022
2026 Senior Notes	$	305,000	$	305,000
2028 Senior Notes	500,000		500,000

Total Notes	805,000		805,000
Less: Deferred issuance costs	(10,170)		(11,135)
Total long-term debt	$	794,830	$	793,865

Future Principal Payments for Debt

At June 30, 2023, future principal payments for debt were as follows (in thousands):


Fiscal year:	Total
2023 (remainder)	$	—
2024	—
2025	—
2026	305,000
2027	—
Thereafter	500,000
Total	$	805,000

Leases (Tables)

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Components of Lease Expense and Supplemental Cash Flow Information

The components of lease expense, recorded in cost of revenues and general and administrative expenses on the

Condensed Consolidated Statements of Income, were as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Operating lease cost	$	718	$	607	$	1,387	$	1,236
Short-term lease cost	427		362		821		802
Finance lease cost:
Amortization of right-of-use assets	302		297		603		599

Total lease cost	$	1,447	$	1,266	$	2,811	$	2,637

Supplemental cash flow information related to leases is as follows (in thousands):


	Six Months Ended June 30,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,511	$	1,359

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	254	$	1,316

Other supplemental operating lease information consists of the following:


	June 30, 2023		December 31, 2022
Operating leases:
Weighted average remaining lease term	7.2 years		7.6 years
Weighted average discount rate	4.8	%	4.6	%

Balance Sheet and Other Supplemental Operating Lease Information

Supplemental balance sheet information related to leases is as follows (in thousands):


	June 30, 2023		December 31, 2022
Lease-related assets and liabilities
Operating lease right-of-use assets	$	7,252	$	7,875
Finance lease right-of-use assets (1)	831		1,427
Total right-of-use assets	$	8,083	$	9,302

Operating lease liabilities, current	$	2,893	$	2,793

Operating lease liabilities, noncurrent	13,026		13,877

Total operating lease liabilities	$	15,919	$	16,670

(1) The full amount of the finance leases were prepaid. Therefore, there is no corresponding lease liability associated with the finance right-of-use assets.

Maturities of Operating Lease Liabilities

Maturities of operating lease liabilities as of June 30, 2023 are as follows (in thousands):


Fiscal Year:	Operating Leases
2023 (remainder)	$	1,487
2024	2,898
2025	2,460
2026	2,527
2027	2,534

Thereafter	8,167
Total lease payments	$	20,073
Less: Imputed interest	(4,154)
Present value of operating lease liabilities	$	15,919

Equity Incentive and Employee Stock Purchase Plan (Tables)

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Restricted Stock Award Activity

Restricted stock activity for the six months ended June 30, 2023 is set forth below:


	Shares	Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2023	35,416	$	38.42
Granted	—	—
Vested	(19,737)	37.77
Canceled	—	—
Nonvested at June 30, 2023	15,679	$	39.24

Restricted Stock Unit Award Activity

Restricted stock unit activity for the six months ended June 30, 2023 is set forth below:


	Number of Shares	Weighted-Average Grant-Date Fair Value		Weighted-Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value
Outstanding at January 1, 2023	1,082,451	$	51.63
Granted	57,652	53.06
Vested	(74,120)	53.09
Canceled	(12,367)	57.32
Outstanding at June 30, 2023	1,053,616	$	51.54	3.5	$	32,662,096
Vested and expected to vest as of June 30, 2023	711,412	$	52.62	3.0	$	22,053,764

Employee Stock Purchase Plan, Valuation Assumptions

The compensation expense related to the current offering period of the Purchase Plan has been estimated utilizing the following assumptions:


			June 30, 2023
Risk-free interest rate			5.26%
Expected term (in years)			0.5
Dividend yield			0.00%
Expected volatility			56.95%
Weighted average volatility			56.95%

Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Components of Basic and Diluted Earnings Per Share

The components of basic and diluted earnings per share are as follows (in thousands, except share and per share data):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Numerator for basic and diluted net income per common share:
Net income from continuing operations attributable to common shareholders	$	21,058	$	21,921	$	36,516	$	40,441
Net income available to participating securities (1)	(15)		(43)		(38)		(97)
Net income available to common shareholders from operations	$	21,043	$	21,878	$	36,478	$	40,344
Denominator:
Weighted-average outstanding shares of common stock	19,654,922		19,928,316		19,750,570		19,924,864
Dilutive effect of:
Equity incentive plans	6,929		24,262		17,292		63,532
Employee Stock Purchase Plan	350		15,762		5,036		13,707
Common stock and common stock equivalents	19,662,201		19,968,340		19,772,898		20,002,103
Net income per share from operations:
Basic	$	1.07	$	1.10	$	1.85	$	2.02
Diluted	$	1.07	$	1.10	$	1.85	$	2.02

(1) Represents unvested share-based payment awards that contain certain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid).

Segment Information (Tables)

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Revenues and Long-lived Assets by Geographic Information

Geographic information about the U.S. and all other countries for the reporting periods is presented below. Such information attributes revenues based on markets where revenues are reported (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenues:
United States	$	73,569	$	71,901	$	145,882	$	141,494
Canada	13,118		12,230		25,952		24,335
Ireland	3,818		4,567		7,760		9,477
All other countries	2,287		2,417		4,652		5,107
Foreign countries	19,223		19,214		38,364		38,919
	$	92,792	$	91,115	$	184,246	$	180,413

The following presents the Company’s long-lived assets, excluding finite-lived intangible assets (in thousands):


	June 30, 2023		December 31, 2022
Long-lived assets:
United States	$	74,603	$	61,858
Canada	360		531
Ireland	278		167
All other countries	221		277
Foreign countries	859		975
Total	$	75,462	$	62,833

Accumulated Other Comprehensive Loss (Tables)

6 Months Ended

Jun. 30, 2023

Stockholders' Equity Note [Abstract]

Summary of Changes in Accumulated Balances in Other Comprehensive Loss


	Foreign Currency Translation
Balance as of April 1, 2023	$	(16,030)
Other comprehensive loss	(971)
Net increase in other comprehensive loss	(971)
Balance as of June 30, 2023	$	(17,001)


	Foreign Currency Translation
Balance as of January 1, 2023	$	(19,108)
Other comprehensive income	2,107
Net increase in other comprehensive income	2,107
Balance as of June 30, 2023	$	(17,001)

Basis of Presentation (Details) customer in Millions		3 Months Ended		6 Months Ended
Basis of Presentation (Details) customer in Millions	Oct. 07, 2021 USD ($)	Jun. 30, 2023 USD ($) country	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) segment country customer	Jun. 30, 2022 USD ($)	Dec. 31, 2022	Oct. 08, 2021
Finite-Lived Intangible Assets [Line Items]
Number of customers served (more than) \| customer				1
Number of countries served (over) \| country		50		50
Impairment of goodwill and intangible assets		$ 0	$ 0
Carrying amount of investments accounted for using alternative method		4,000,000		$ 4,000,000
Loss on investments, net		0		0
Impairment of Investments		$ 0		$ 0
Number of reportable segments \| segment				1
Long-lived asset impairment				$ 0	$ 0
Minimum
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Remaining Amortization Period		1 year		1 year
Maximum
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Remaining Amortization Period		20 years		20 years
Consensus Cloud Solutions Inc \| Ziff Davis, Inc.
Finite-Lived Intangible Assets [Line Items]
Ownership interest		10.00%		10.00%		10.00%	19.90%
Consensus Cloud Solutions Inc \| Ziff Davis, Inc. \| Maximum
Finite-Lived Intangible Assets [Line Items]
Ownership interest		10.00%		10.00%		10.00%
2028 Notes \| Senior Notes
Finite-Lived Intangible Assets [Line Items]
Debt instrument, face amount	$ 500,000,000
Stated interest rate	6.50%
Ziff Davis, Inc.
Finite-Lived Intangible Assets [Line Items]
Cash consideration paid for equity interest	$ 259,100,000

Revenues (Disaggregation of Revenue) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Disaggregation of Revenue [Line Items]
Revenues	$ 92,792	$ 91,115	$ 184,246	$ 180,413
Point in time
Disaggregation of Revenue [Line Items]
Revenues	145	306	298	437
Over time
Disaggregation of Revenue [Line Items]
Revenues	92,647	90,809	183,948	179,976
Corporate
Disaggregation of Revenue [Line Items]
Revenues	50,361	48,867	99,768	95,386
Small office home office (“SoHo”)
Disaggregation of Revenue [Line Items]
Revenues	42,429	42,228	84,459	85,007
Other
Disaggregation of Revenue [Line Items]
Revenues	$ 2	$ 20	$ 19	$ 20

Revenues (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
Revenues (Narrative) (Details) - USD ($) $ in Millions	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Revenue from Contract with Customer [Abstract]
Contract liability, revenue recognized	$ 4.5	$ 4.3	$ 16.0	$ 15.2
Deferred revenue acquired	$ 0.0		$ 0.0		$ 4.8

Goodwill and Intangible Assets (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Finite-Lived Intangible Assets [Line Items]
Amortization expense	$ 1.1	$ 1.1	$ 2.2	$ 2.6
Minimum
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Remaining Amortization Period	1 year		1 year
Maximum
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Remaining Amortization Period	20 years		20 years

Goodwill and Intangible Assets (Changes in Carrying Amounts of Goodwill) (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($)
Goodwill [Roll Forward]
Beginning balance	$ 346,585
Foreign exchange translation	1,270
Ending balance	$ 347,855

Goodwill and Intangible Assets (Intangible Assets with Indefinite Lives) (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Indefinite-lived Intangible Assets [Line Items]
Intangible assets	$ 31,399	$ 31,382
Trade names
Indefinite-lived Intangible Assets [Line Items]
Intangible assets	27,354	27,337
Other
Indefinite-lived Intangible Assets [Line Items]
Intangible assets	$ 4,045	$ 4,045

Goodwill and Intangible Assets (Intangible Assets Subject to Amortization) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Historical Cost	$ 182,631	$ 181,604
Accumulated Amortization	166,939	163,830
Net	$ 15,692	$ 17,774
Minimum
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Remaining Amortization Period	1 year
Maximum
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Remaining Amortization Period	20 years
Trade names
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Remaining Amortization Period	4 months 24 days	6 months
Historical Cost	$ 8,176	$ 8,151
Accumulated Amortization	7,701	7,605
Net	$ 475	$ 546
Patent and patent licenses
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Remaining Amortization Period	0 years	0 years
Historical Cost	$ 54,341	$ 54,341
Accumulated Amortization	54,341	54,341
Net	$ 0	$ 0
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Remaining Amortization Period	2 years 10 months 24 days	3 years 1 month 6 days
Historical Cost	$ 108,128	$ 107,175
Accumulated Amortization	95,286	92,573
Net	$ 12,842	$ 14,602
Customer relationships \| Minimum
Finite-Lived Intangible Assets [Line Items]
Substantial amortization period, majority of amortization expense	4 years
Customer relationships \| Maximum
Finite-Lived Intangible Assets [Line Items]
Substantial amortization period, majority of amortization expense	5 years
Other purchased intangibles
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Remaining Amortization Period	1 year 10 months 24 days	2 years
Historical Cost	$ 11,986	$ 11,937
Accumulated Amortization	9,611	9,311
Net	$ 2,375	$ 2,626

Goodwill and Intangible Assets (Estimated Intangible Assets Amortization Expense) (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Fiscal Year:
2023 (remainder)	$ 2,118
2024	3,532
2025	2,640
2026	2,130
2027	1,427
Thereafter	3,845
Total	$ 15,692	$ 17,774

Debt (Summary of Long-term Debt) (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Gross long-term debt	$ 805,000
Less: Deferred issuance costs	(10,170)	$ (11,135)
Total long-term debt	794,830	793,865
Senior Notes
Debt Instrument [Line Items]
Gross long-term debt	805,000	805,000
2026 Senior Notes \| Senior Notes
Debt Instrument [Line Items]
Gross long-term debt	305,000	305,000
2028 Senior Notes \| Senior Notes
Debt Instrument [Line Items]
Gross long-term debt	$ 500,000	$ 500,000

Debt - Future Principal Payments for Debt (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Debt Disclosure [Abstract]
Long-Term Debt, Maturity, Remainder of Fiscal Year	$ 0
2022	0
2023	0
2024	305,000
2025	0
Long-Term Debt, Maturity, After Year Four	500,000
Gross long-term debt	$ 805,000

Debt (Narrative) (Details) - USD ($)			3 Months Ended		6 Months Ended
Debt (Narrative) (Details) - USD ($)	Mar. 04, 2022	Oct. 07, 2021	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Debt Instrument [Line Items]
Interest expense			$ 500,000	$ 0	$ 1,000,000	$ 0
Senior Notes \| 2026 Notes
Debt Instrument [Line Items]
Debt instrument, face amount		$ 305,000,000
Proceeds from issuance of senior long-term debt		$ 301,200,000
Stated interest rate		6.00%
Covenant, leverage ratio, minimum		3.0
Covenant, leverage ratio, maximum		3.0
Covenant, restriction on payments, aggregate amount, maximum		$ 100,000,000
Covenant, earnings before interest, taxes, depreciation, and amortization, maximum		50.00%
Notes payable, fair value			276,800,000		276,800,000		$ 282,800,000
Senior Notes \| 2026 Notes \| Debt Instrument, Redemption, Period One
Debt Instrument [Line Items]
Percentage of principal amount redeemed		40.00%
Redemption price, percentage		106.00%
Redemption , threshold percentage principal amount remaining		50.00%
Senior Notes \| 2026 Notes \| Debt Instrument, Redemption, Period Two
Debt Instrument [Line Items]
Redemption price, percentage		100.00%
Senior Notes \| 2028 Notes
Debt Instrument [Line Items]
Debt instrument, face amount		$ 500,000,000
Proceeds from issuance of senior long-term debt		$ 483,800,000
Stated interest rate		6.50%
Covenant, leverage ratio, minimum		3.0
Covenant, leverage ratio, maximum		3.0
Covenant, restriction on payments, aggregate amount, maximum		$ 100,000,000
Covenant, earnings before interest, taxes, depreciation, and amortization, maximum		50.00%
Notes payable, fair value			427,500,000		427,500,000		$ 459,400,000
Line of Credit \| Revolving Credit Facility
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	$ 25,000,000
Line of credit facility, accordion feature, increase limit	$ 25,000,000
Long-term line of credit			$ 0		$ 0
Line of Credit \| Revolving Credit Facility \| Minimum \| Secured Overnight Financing Rate (SOFR)
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate	1.75%
Line of Credit \| Revolving Credit Facility \| Maximum \| Secured Overnight Financing Rate (SOFR)
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate	2.50%

Leases (Narrative) (Details)	Jun. 30, 2023
Lessee, Lease, Description [Line Items]
Operating lease renewal term	5 years
Minimum
Lessee, Lease, Description [Line Items]
Operating lease terms	3 years
Maximum
Lessee, Lease, Description [Line Items]
Operating lease terms	10 years

Leases (Components of Lease Expense) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Leases [Abstract]
Operating lease cost	$ 718	$ 607	$ 1,387	$ 1,236
Short-term lease cost	427	362	821	802
Finance lease cost:
Amortization of right-of-use assets	302	297	603	599
Total lease cost	$ 1,447	$ 1,266	$ 2,811	$ 2,637

Leases (Supplemental Balance Sheet Operating Lease Information) (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Leases [Abstract]
Operating lease right-of-use assets	$ 7,252	$ 7,875
Finance lease right-of-use assets	$ 831	$ 1,427
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Prepaid expenses and other current assets	Prepaid expenses and other current assets
Total right-of-use assets	$ 8,083	$ 9,302
Operating lease liabilities, current	2,893	2,793
Operating lease liabilities, noncurrent	13,026	13,877
Total operating lease liabilities	$ 15,919	$ 16,670

Leases (Supplemental Cash Flow Information) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ 1,511	$ 1,359
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$ 254	$ 1,316
Operating leases:
Weighted average remaining lease term	7 years 2 months 12 days		7 years 7 months 6 days
Weighted average discount rate	4.80%		4.60%

Leases (Maturities of Operating Lease Liabilities) (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Lessee, Operating Lease, Liability, to be Paid, Fiscal Year Maturity [Abstract]
2023 (remainder)	$ 1,487
2024	2,898
2025	2,460
2026	2,527
2027	2,534
Thereafter	8,167
Total lease payments	20,073
Less: Imputed interest	(4,154)
Present value of operating lease liabilities	$ 15,919	$ 16,670

Commitments and Contingencies (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Commitments and Contingencies Disclosure [Abstract]
Sales tax expense	$ 0.5	$ 0.1	$ 1.1	$ 1.1
Sales and excise tax payable	$ 6.9		$ 6.9		$ 13.1

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Income Tax Disclosure [Abstract]
Effective income tax rate	22.70%	26.40%	23.70%	26.90%
Liability for uncertain tax positions	$ 8,153		$ 8,153		$ 6,725

Stockholders' Deficit (Details)	3 Months Ended		6 Months Ended		16 Months Ended
Stockholders' Deficit (Details)	Jun. 30, 2023 shares	Jun. 30, 2022 shares	Jun. 30, 2023 shares	Jun. 30, 2022 shares	Jun. 30, 2023 USD ($) shares	Mar. 01, 2022 USD ($)
Stockholder's Equity [Line Items]
Stock repurchase program, authorized amount						$ 100,000,000
Stock repurchased during period, shares (in shares) \| shares	68,362		338,554	189,114	527,668
Aggregate cost for repurchase of common stock					$ 18,900,000
Sales and excise tax payable					$ 100,000
Excise tax rate			0.01
Common stock
Stockholder's Equity [Line Items]
Share-based payment arrangement, shares withheld for tax withholding obligation (in shares) \| shares	21,538	7,897	32,956	27,819

Equity Incentive and Employee Stock Purchase Plan (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions	1 Months Ended	3 Months Ended		6 Months Ended
	Oct. 31, 2021	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based payment arrangement, amount capitalized		$ 0.5	$ 0.0	$ 1.0	$ 0.0
Estimated forfeiture rates		5.61%		5.61%
Minimum \| Look-Back Period One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Lookback period				20 days
Minimum \| Look-Back Period Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Lookback period				20 days
Maximum \| Look-Back Period One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Lookback period				30 days
Maximum \| Look-Back Period Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Lookback period				25 days
Market-based Restricted Stock Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)		0		0
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)				0
Granted (in dollars per share)				$ 0
Unrecognized compensation cost related to non-vested awards granted		$ 0.2		$ 0.2
Weighted-average period to recognize compensation cost				8 months 12 days
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)				57,652
Granted (in dollars per share)				$ 53.06
Unrecognized compensation cost related to non-vested awards granted		$ 31.1		$ 31.1
Weighted-average period to recognize compensation cost				2 years 7 months 6 days
Equity Incentive Plan 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum issuance of common stock (in shares)		2,724,739		2,724,739		4,000,000
Equity Incentive Plan 2021 \| Restricted Stock and Restricted Stock Units (RSU)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)		57,652		57,652
Equity Incentive Plan 2021 \| Restricted Stock and Restricted Stock Units (RSU) \| Board of Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting periods				1 year
Equity Incentive Plan 2021 \| Restricted Stock and Restricted Stock Units (RSU) \| Staff
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting periods				4 years
Equity Incentive Plan 2021 \| Restricted Stock and Restricted Stock Units (RSU) \| Chief Executive Officer and Chief Operating Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting periods				5 years
Employee Stock Purchase Plan 2021 \| Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum issuance of common stock (in shares)	1,000,000
Maximum earnings withheld by the employees	15.00%
Purchase price of common stock, percent	85.00%
Issuance of shares under employee stock purchase plan (in shares)		29,582		29,582
Cash received upon the issuance of common stock		$ 0.9		$ 0.9
Number of shares available for issuance (in shares)		927,901		927,901

Equity Incentive and Employee Stock Purchase Plan (Restricted Stock and Restricted Stock Unit Award Activity) (Details) - USD ($)	6 Months Ended
	Jun. 30, 2023
Weighted-Average Grant-Date Fair Value
Vested and expected to vest at end of period (in usd per share)	$ 52.62
Restricted Stock
Number of Shares
Beginning of period (in shares)	35,416
Granted (in shares)	0
Vested (in shares)	(19,737)
Canceled (in shares)	0
End of period (in shares)	15,679
Weighted-Average Grant-Date Fair Value
Nonvested at beginning of period (in dollars per share)	$ 38.42
Granted (in dollars per share)	0
Vested (in dollars per share)	37.77
Canceled (in dollars per share)	0
Nonvested at end of period (in dollars per share)	$ 39.24
Restricted Stock Units
Number of Shares
Beginning of period (in shares)	1,082,451
Granted (in shares)	57,652
Vested (in shares)	(74,120)
Canceled (in shares)	(12,367)
End of period (in shares)	1,053,616
Vested and expected to vest at end of period (in shares)	711,412
Weighted-Average Grant-Date Fair Value
Nonvested at beginning of period (in dollars per share)	$ 51.63
Granted (in dollars per share)	53.06
Vested (in dollars per share)	53.09
Canceled (in dollars per share)	57.32
Nonvested at end of period (in dollars per share)	$ 51.54
Weighted-Average Remaining Contractual Life (in years)
Outstanding at end of period	3 years 6 months
Vested and expected to vest at end of period	3 years
Aggregate Intrinsic Value
Outstanding at end of period	$ 32,662,096
Vested and expected to vest at end of period	$ 22,053,764

Equity Incentive and Employee Stock Purchase Plan (Employee Stock Purchase Plan, Valuation Assumptions) (Details) - Employee Stock Purchase Plan	6 Months Ended
	Jun. 30, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	5.26%
Expected term (in years)	6 months
Dividend yield	0.00%
Expected volatility	56.95%
Weighted average volatility	56.95%

Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Numerator for basic and diluted net income per common share:
Net income from continuing operations attributable to common shareholders	$ 21,058	$ 21,921	$ 36,516	$ 40,441
Net income available to participating securities, basic	(15)	(43)	(38)	(97)
Net income available to participating securities, diluted	(15)	(43)	(38)	(97)
Net income available to common shareholders from operations	21,043	21,878	36,478	40,344
Net income available to common shareholders from operations	$ 21,043	$ 21,878	$ 36,478	$ 40,344
Denominator:
Weighted-average outstanding shares of common stock (in shares)	19,654,922	19,928,316	19,750,570	19,924,864
Dilutive effect of:
Common stock and common stock equivalents (in shares)	19,662,201	19,968,340	19,772,898	20,002,103
Net income per share from operations:
Basic (in dollars per share)	$ 1.07	$ 1.10	$ 1.85	$ 2.02
Diluted (in dollars per share)	$ 1.07	$ 1.10	$ 1.85	$ 2.02
Anti-dilutive shares were excluded from earnings per share calculation (in shares)	747,416	507,282	655,495	499,956
Equity incentive plans
Dilutive effect of:
Equity incentive plans (in shares)	6,929	24,262	17,292	63,532
Employee Stock Purchase Plan
Dilutive effect of:
Equity incentive plans (in shares)	350	15,762	5,036	13,707

Segment Information (Narrative) (Details)	6 Months Ended
Segment Information (Narrative) (Details)	Jun. 30, 2023 segment
Segment Reporting [Abstract]
Number of reportable segments	1

Segment Information (Revenues and Long-lived Assets by Geographic Information) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 92,792	$ 91,115	$ 184,246	$ 180,413
Long-lived assets	75,462		75,462		$ 62,833
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	73,569	71,901	145,882	141,494
Long-lived assets	74,603		74,603		61,858
Canada
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	13,118	12,230	25,952	24,335
Long-lived assets	360		360		531
Ireland
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	3,818	4,567	7,760	9,477
Long-lived assets	278		278		167
All other countries
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	2,287	2,417	4,652	5,107
Long-lived assets	221		221		277
Foreign countries
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	19,223	$ 19,214	38,364	$ 38,919
Long-lived assets	$ 859		$ 859		$ 975

Accumulated Other Comprehensive Loss (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	$ (240,711,000)	$ (314,703,000)	$ (255,261,000)	$ (332,665,000)
Net increase in other comprehensive income	(971,000)	(4,344,000)	2,107,000	(6,461,000)
Ending balance	(217,446,000)	$ (300,207,000)	(217,446,000)	$ (300,207,000)
Reclassification from accumulated other comprehensive loss	0		0
Foreign Currency Translation
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(16,030,000)		(19,108,000)
Other comprehensive income	(971,000)		2,107,000
Net increase in other comprehensive income	(971,000)		2,107,000
Ending balance	$ (17,001,000)		$ (17,001,000)

Related Party Transactions (Details) - USD ($)	3 Months Ended	6 Months Ended
Related Party Transactions (Details) - USD ($)	Jun. 30, 2023	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Oct. 08, 2021
Ziff Davis, Inc. \| Consensus Cloud Solutions Inc
Related Party Transaction [Line Items]
Ownership interest	10.00%	10.00%		10.00%	19.90%
Affiliated Entity
Related Party Transaction [Line Items]
Cash consideration paid In connection with the separation	$ 400,000	$ 600,000	$ 11,500,000
Registration expense		0	$ 400,000
Ziff Davis, Inc.
Related Party Transaction [Line Items]
Amount due	$ 0	$ 0		$ 200,000