Reaffirms 2022 Guidance
Consensus Cloud Solutions, Inc. (NASDAQ: CCSI) today reported
preliminary financial results for the first quarter 2022.
“I am pleased with our team’s performance in delivering record
revenue of approximately $91 million while achieving better than
forecasted Adjusted EBITDA margins. The revenue growth was led by
our corporate business which grew 13% in the quarter. In addition,
we launched Consensus Clarity in March and have made great progress
in the development of the ECFax solution. Finally, we added to our
cash balances during the quarter increasing our liquidity and
remaining financially well positioned in the current economic
environment,” said Scott Turicchi, CEO of Consensus.
FIRST QUARTER 2022
HIGHLIGHTS
Q1 2022 GAAP quarterly revenues increased 5.0% to $90.9 million
compared to $86.6 million for Q1 2021. Revenues increased by $4.3
million or 5% over the prior comparable three month period, $5.0
million or 5.8% on a Fx neutral basis. Our growth was primarily due
to $5.4 million or 13% in our corporate business (inclusive of $0.8
million due to the Summit acquisition); partially offset by a
decline of $1.0 million or 2.1% in our small office home office
(“SoHo”) business, $0.5 million or 1.1% on a Fx neutral basis over
the prior comparable period.
GAAP net income decreased to $18.7 million in Q1 2022 compared
to $47.4 million for Q1 2021. Income from continuing operations
decreased to $18.7 million in Q1 2022 compared to $39.2 million for
Q1 2021. The decrease in income from continuing operations over the
prior period is primarily related to the interest expense
associated with the 2026 and 2028 notes, additional costs as a
standalone publicly traded company and increased headcount;
partially offset by higher revenues.
GAAP earnings per diluted share from continuing operations (1)
decreased to $0.93 in Q1 2022 compared to $1.97 for Q1 2021. The
decrease in income from continuing operations over the prior period
is primarily related to the interest expense associated with the
2026 and 2028 notes, additional costs as a standalone publicly
traded company, increased headcount and a higher share count in the
current period; partially offset by higher revenues.
Adjusted EBITDA (3) for Q1 2022 decreased to $48.6 million
compared to Q1 2021 pro forma adjusted EBITDA (5) of $50.5 million.
The decrease of $1.9 million is primarily related to planned
additional compensation costs for new hires, outside services and
additional marketing. Adjusted non-GAAP earnings per diluted share
(2)(3) for the quarter decreased to $1.33 compared to pro forma
Adjusted non-GAAP earnings per diluted share (2)(3) of $1.40 for Q1
2021 due to the aforementioned planned spending and a higher share
count.
Consensus ended the quarter with $93.9 million in cash and cash
equivalents due to strong operating cash flows generated during the
period.
Key financial results from continuing operations for Q1 2022
versus Q1 2021 are set forth in the following table.
Reconciliations of Adjusted non-GAAP net income, earnings per
diluted share, Adjusted EBITDA and Pro Forma results from
operations are to their nearest comparable GAAP financial measures
accompany this press release.
(Unaudited, in thousands except per share
amounts)
Continuing Operations
Pro Forma (4)
Q1 2022
Q1 2021
Q1 2021
% Change
Revenues
$
90,925
$
86,620
$
86,620
5.0
%
GAAP net income
$
18,706
$
39,235
GAAP net income per diluted share
(1)
$
0.93
$
1.97
Adjusted Non-GAAP net income
(2)
$
26,631
$
42,214
$
27,893
(4.5
) %
Adjusted Non-GAAP income per diluted
share (2)(3)
$
1.33
$
2.12
$
1.40
(5.0
) %
Adjusted EBITDA (3)
$
48,562
$
55,379
$
50,545
(3.9
) %
Adjusted EBITDA margin (3)
53.4
%
63.9
%
58.4
%
Non-Consensus assets are classified as discontinued operations
in our financial statements for the prior period. Results in this
press release represent continuing operations, and where
appropriate, results from discontinued operations have been
disclosed.
REAFFIRMS 2022 GUIDANCE
For 2022 full year guidance, the Company estimates revenues
between $375 million and $385 million, Adjusted EBITDA between $201
million and $207 million and Adjusted non-GAAP earnings per diluted
share of between $5.36 and $5.50, excluding share-based
compensation, amortization of acquired intangibles and the impact
of unanticipated items, in each case net of tax. The non-GAAP
effective tax rate for 2022 is expected to be between 19.5% and
21.5%. Full year guidance is provided on a non-GAAP basis only
because certain information necessary to calculate the most
comparable GAAP measures are unavailable due to the uncertainty and
inherent difficulty of predicting the occurrence and the future
financial statement impact of certain items. Therefore, as a result
of the uncertainty and variability of the nature and amount of
future adjustments, which could be significant, we are unable to
provide a reconciliation of these measures without unreasonable
effort.
Notes:
(1)
The estimated GAAP effective tax rates
were approximately 27.4% for Q1 2022 and 24.3% for Q1 2021. The
estimated pro forma Adjusted non-GAAP effective tax rate was
approximately 24.0% for Q1 2021.
(2)
Adjusted non-GAAP net income and Adjusted
non-GAAP earnings per diluted share excludes certain non-GAAP
items, as defined in the accompanying reconciliation of GAAP to
Adjusted non-GAAP Financial Measures, for the three months ended
March 31, 2022 and 2021. Such exclusions totaled $0.40 and $0.15
per diluted share, respectively. Pro forma Adjusted non-GAAP
earnings per diluted share excludes certain pro forma items, as
defined in footnote (4) below. Such exclusions totaled $0.57 per
diluted share for three months ended March 31, 2021. Adjusted
non-GAAP net income and Adjusted non-GAAP earnings per diluted
share are not meant as a substitute for GAAP, but are presented
solely for informational purposes.
(3)
Adjusted EBITDA is defined as earnings
before interest; other income, net; income tax expense;
depreciation and amortization; and other items used to reconcile
EPS to Adjusted non-GAAP EPS, as defined in the Reconciliation of
GAAP to Adjusted non-GAAP Financial Measures. Adjusted EBITDA
amounts are not meant as a substitute for GAAP, but is presented
solely for informational purposes.
(4)
The % change is a comparison of Q1 2022
actual results versus Q1 2021 pro forma. Q1 2021 pro forma
adjustments represent incremental costs incurred as a standalone
public company, incremental interest expense related to the debt of
$805 million and the effects of pro forma adjustments at the
applicable statutory tax rates.
(5)
See Net Income to Adjusted EBITDA
Reconciliation for the components of pro forma adjusted EBITDA.
About Consensus Cloud Solutions
Consensus Cloud Solutions, Inc. (NASDAQ: CCSI) started as a
secure digital document transmission solution 25 years ago and has
grown to be a global leader of digital cloud fax technology. The
company leverages its technology heritage to securely transform,
enhance, and exchange digital information. The company’s suite of
interoperability solutions offers a unified digital environment
that optimizes workflows; provides real-time event notifications;
on-demand patient query and direct secure messaging. Consensus
offers eFax, Consensus Unite, Consensus Signal, jSign and has
Consensus Clarity and Harmony in development. For more information
about Consensus, please visit www.consensus.com.
“Safe Harbor” Statement Under the Private Securities
Litigation Reform Act of 1995: Certain statements in this press
release are “forward-looking statements” within the meaning of The
Private Securities Litigation Reform Act of 1995, including those
contained in Scott Turicchi’s quote and the “Business Outlook”
portion regarding the Company’s expected fiscal 2022 financial
performance and statements regarding the Company’s share buyback
program. These forward-looking statements are based on management’s
current expectations or beliefs and are subject to numerous
assumptions, risks and uncertainties that could cause actual
results to differ materially from those described in the
forward-looking statements. These factors and uncertainties
include, among other items: the Company’s ability to grow fax
revenues, profitability and cash flows; the Company’s ability to
identify, close and successfully transition acquisitions;
subscriber growth and retention; variability of the Company’s
revenue based on changing conditions in particular industries and
the economy generally; protection of the Company’s proprietary
technology or infringement by the Company of intellectual property
of others; the risk of adverse changes in the U.S. or international
regulatory environments, including but not limited to the
imposition or increase of taxes or regulatory-related fees; general
economic and political conditions, including political tensions and
war (such as the ongoing conflict in Ukraine);and the numerous
other factors set forth in Consensus’ filings with the Securities
and Exchange Commission (“SEC”). For a more detailed description of
the risk factors and uncertainties affecting Consensus, refer to
the 2021 Annual Report on Form 10-K filed by Consensus on April 15,
2022 and the other reports filed by Consensus from time-to-time
with the SEC, each of which is available at www.sec.gov. The
forward-looking statements provided in this press release,
including those contained in Scott Turicchi’s quote and in the
“Business Outlook” portion regarding the Company’s expected fiscal
2022 financial performance are based on limited information
available to the Company at this time, which is subject to change.
Although management’s expectations may change after the date of
this press release, the Company undertakes no obligation to revise
or update these statements.
About non-GAAP Financial Measures
To supplement our consolidated financial statements, which are
prepared and presented in accordance with GAAP, we use the
following Adjusted non-GAAP financial measures: Adjusted non-GAAP
net income, Adjusted non-GAAP earnings per diluted share, Adjusted
EBITDA and free cash flow. The presentation of this financial
information is not intended to be considered in isolation or as a
substitute for, or superior to, the financial information prepared
and presented in accordance with GAAP.
We use these Adjusted non-GAAP financial measures for financial
and operational decision-making and as a means to evaluate
period-to-period comparisons. Our management believes that these
Adjusted non-GAAP financial measures provide meaningful
supplemental information regarding our performance and liquidity by
excluding certain expenses and expenditures that may not be
indicative of our recurring core business operating results. We
believe that both management and investors benefit from referring
to these Adjusted non-GAAP financial measures in assessing our
performance and when planning, forecasting, and analyzing future
periods. These Adjusted non-GAAP financial measures also facilitate
management’s internal comparisons to our historical performance and
liquidity. We believe these Adjusted non-GAAP financial measures
are useful to investors both because (1) they allow for greater
transparency with respect to key metrics used by management in its
financial and operational decision-making and (2) they are used by
our institutional investors and the analyst community to help them
analyze the health of our business.
For more information on these Adjusted non-GAAP financial
measures, please see the appropriate GAAP to Adjusted non-GAAP
reconciliation tables included within the attached Exhibit to this
Release.
CONSENSUS CLOUD SOLUTIONS,
INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(UNAUDITED, IN
THOUSANDS)
March 31, 2022
December 31,
2021
ASSETS
Cash and cash equivalents
$
93,864
$
66,778
Accounts receivable, net of allowances of
$3,988 and $4,743, respectively
28,813
24,829
Prepaid expenses and other current
assets
5,397
4,650
Total current assets
128,074
96,257
Property and equipment, net
38,353
33,849
Operating lease right-of-use assets
8,102
7,233
Intangibles, net
53,003
43,549
Goodwill
344,025
339,209
Deferred income taxes
42,484
41,842
Other assets
1,305
873
TOTAL ASSETS
$
615,346
$
562,812
LIABILITIES AND STOCKHOLDERS’
DEFICIT
Accounts payable and accrued expenses
$
56,616
$
40,206
Income taxes payable, current
10,217
5,227
Deferred revenue, current
28,800
24,370
Operating lease liabilities, current
2,821
2,421
Due to Former Parent
11,653
5,739
Total current liabilities
110,107
77,963
Long-term debt
792,495
792,040
Deferred revenue, non-current
162
184
Operating lease liabilities,
non-current
14,523
14,108
Liability for uncertain tax positions
4,795
4,795
Deferred income taxes
6,077
6,027
Other long-term liabilities
1,111
360
TOTAL LIABILITIES
929,270
895,477
Commitments and contingencies
Common stock, $0.01 par value. Authorized
120,000,000 at March 31, 2022; total issued and outstanding
19,995,528 and 19,978,580 shares at March 31, 2022 and December 31,
2021, respectively.
200
200
Additional paid-in capital
6,918
2,878
Treasury stock, at cost (19,922 and zero
shares at March 31, 2022 and December 31, 2021, respectively).
—
—
Accumulated deficit
(302,068
)
(318,886
)
Accumulated other comprehensive loss
(18,974
)
(16,857
)
TOTAL STOCKHOLDERS’ DEFICIT
(313,924
)
(332,665
)
TOTAL LIABILITIES AND STOCKHOLDERS’
DEFICIT
$
615,346
$
562,812
CONSENSUS CLOUD SOLUTIONS,
INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME
FOR THE THREE MONTHS ENDED
MARCH 31, 2022 AND 2021
(UNAUDITED, IN
THOUSANDS)
Three Months Ended March
31,
2022
2021
Revenues
$
90,925
$
86,620
Cost of revenues
15,104
13,970
Gross profit
75,821
72,650
Operating expenses:
Sales and marketing
15,830
13,235
Research, development and engineering
2,336
1,676
General and administrative
18,806
6,048
Total operating expenses
36,972
20,959
Income from operations
38,849
51,691
Interest expense
(13,274
)
(236
)
Interest income
—
9
Other income, net
174
379
Income before income taxes
25,749
51,843
Income tax expense
7,043
12,608
Income from continuing operations
18,706
39,235
Income from discontinued operations
—
8,127
Net income
$
18,706
$
47,362
Net income per common share from
continuing operations:
Basic
$
0.94
$
1.97
Diluted
$
0.93
$
1.97
Net income per common share from
discontinued operations:
Basic
$
—
$
0.41
Diluted
$
—
$
0.41
Net income per common share
Basic
$
0.94
$
2.38
Diluted
$
0.93
$
2.38
Weighted average shares outstanding:
Basic
19,921,375
19,902,924
Diluted
20,005,307
19,902,924
CONSENSUS CLOUD SOLUTIONS,
INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
FOR THE THREE MONTHS ENDED
MARCH 31, 2022 AND 2021
(UNAUDITED, IN
THOUSANDS)
Three Months Ended March
31,
2022
2021 (1)
Cash flows from operating activities:
Net income
$
18,706
$
47,362
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
3,706
17,046
Amortization of financing costs and
discounts
461
—
Non-cash operating lease costs
447
1,955
Share-based compensation
5,213
1,491
Provision for doubtful accounts
2,045
1,607
Deferred income taxes
(1,310
)
190
Lease asset impairments and other
charges
—
561
Changes in fair value of contingent
consideration
—
648
(Gain) loss on sale of businesses
—
(1,979
)
Decrease (increase) in:
Accounts receivable
(4,585
)
(5,446
)
Prepaid expenses and other current
assets
(494
)
(2,266
)
Other assets
(433
)
1,280
Increase (decrease) in:
Accounts payable and accrued expenses
14,799
(3,722
)
Income taxes payable
4,781
(184
)
Deferred revenue
1,886
2,828
Operating lease liabilities
(459
)
(1,869
)
Liability for uncertain tax positions
—
1,147
Other long-term liabilities
5,145
(723
)
Net cash provided by operating
activities
49,908
59,926
Cash flows from investing activities:
Purchases of property and equipment
(6,915
)
(7,472
)
Acquisition of businesses, net of cash
received
(12,855
)
—
Proceeds from sale of businesses, net of
cash divested
—
5,999
Purchases of intangible assets
(1,000
)
—
Net cash used in investing activities
(20,770
)
(1,473
)
Cash flows from financing activities:
Debt issuance costs
(232
)
—
Contribution from (distributions to)
Parent
—
12,306
Acquired restricted stock
(1,173
)
—
Deferred payments for acquisitions
—
(1,583
)
Other
—
(142
)
Net cash (used in) provided by financing
activities
(1,405
)
10,581
Effect of exchange rate changes on cash
and cash equivalents
(647
)
(562
)
Net change in cash and cash
equivalents
27,086
68,472
Cash and cash equivalents at beginning of
year
66,778
128,189
Cash and cash equivalents at end of
year
$
93,864
$
196,661
Less cash and cash equivalents at end of
year, discontinued operations
—
46,986
Cash and cash equivalents at end of year,
continuing operations
$
93,864
$
149,675
(1) The prior period includes cash flows from discontinued
operations of the non-Consensus business, accordingly does not lend
itself to a quarter-over-quarter analysis.
CONSENSUS CLOUD SOLUTIONS,
INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO
ADJUSTED NON-GAAP FINANCIAL MEASURES
THREE MONTHS ENDED MARCH 31,
2022 AND 2021
(UNAUDITED, IN THOUSANDS,
EXCEPT SHARE AND PER SHARE AMOUNTS)
The following tables sets forth
reconciliations regarding certain non-GAAP measures for the three
months ended March 31, 2022 and 2021 to the most closely comparable
GAAP measure.
Three Months Ended March
31,
2022
Per Diluted Share *
2021
Per Diluted Share *
Net income
$
18,706
$
0.93
$
39,235
$
1.97
Plus:
Share-based compensation (1)
4,738
0.24
300
0.02
Amortization (2)
1,150
0.06
887
0.04
Spin-off related costs (3)
270
0.01
—
—
Non-income related sales tax (4)
262
0.01
—
—
Acquisition related integration costs
(5)
102
0.01
388
0.02
Accounting fees for tax provision (6)
43
—
—
—
Intra-entity transfer (7)
1,360
0.07
1,257
0.06
Gain on sale of assets (8)
—
—
147
0.01
Adjusted non-GAAP net income
$
26,631
$
1.33
$
42,214
$
2.12
* The reconciliation of net income per share from GAAP to
Adjusted non-GAAP may not foot since each is calculated
independently.
CONSENSUS CLOUD SOLUTIONS,
INC. AND SUBSIDIARIES
RECONCILIATION TO ADJUSTED
NON-GAAP FINANCIAL MEASURES
THREE MONTHS ENDED MARCH 31,
2022 AND 2021
(UNAUDITED, IN THOUSANDS,
EXCEPT SHARE AND PER SHARE AMOUNTS)
Three Months Ended March
31,
2022
2021
Cost of revenues
$
15,104
$
13,970
Plus:
Share-based compensation (1)
(223
)
(50
)
Amortization (2)
—
(3
)
Adjusted non-GAAP cost of
revenues
$
14,881
$
13,917
Sales and marketing
$
15,830
$
13,235
Plus:
Share-based compensation (1)
(273
)
(95
)
Adjusted non-GAAP sales and
marketing
$
15,557
$
13,140
Research, development and
engineering
$
2,336
$
1,676
Plus:
Share-based compensation (1)
(356
)
(102
)
Adjusted non-GAAP research, development
and engineering
$
1,980
$
1,574
General and administrative
$
18,806
$
6,048
Plus:
Share-based compensation (1)
(4,361
)
(136
)
Amortization (2)
(1,532
)
(1,208
)
Spin-off related costs (3)
(360
)
—
Non-income related sales tax (4)
(241
)
—
Acquisition related integration costs
(5)
(136
)
(482
)
Accounting fees for tax provision (6)
(57
)
—
Adjusted non-GAAP general and
administrative
$
12,119
$
4,222
Interest expense, net
$
(13,274
)
$
(236
)
Plus:
Non-income related sales tax (4)
108
—
Adjusted non-GAAP interest expense,
net
$
(13,166
)
$
(236
)
Other income, net
$
174
$
379
Plus:
Gain on sale of assets (8)
—
200
Adjusted non-GAAP other income,
net
$
174
$
579
Income tax expense
$
7,043
$
12,608
Plus:
Share-based compensation (1)
475
83
Amortization (2)
382
324
Spin-off related costs (3)
90
—
Non-income related sales tax (4)
87
—
Acquisition related costs (5)
34
94
Accounting fees for tax provision (6)
14
—
Intra-entity Transfer of IP (7)
(1,360
)
(1,257
)
Gain on Sale of assets (8)
—
53
Adjusted non-GAAP income tax
expense
$
6,765
$
11,905
Total adjustments
$
(7,925
)
$
(2,979
)
GAAP earnings per diluted share
$
0.93
$
1.97
Adjustments *
$
0.40
$
0.15
Adjusted non-GAAP earnings per diluted
share
$
1.33
$
2.12
* The reconciliation of net income per share from GAAP to
Adjusted non-GAAP may not foot since each is calculated
independently.
The Company discloses Adjusted non-GAAP Earnings Per Share
(“EPS”) and adjusted non-GAAP net income as supplemental Non-GAAP
financial performance measures, as it believes they are useful
metrics by which to compare the performance of its business from
period to period. The Company also understands that these Adjusted
non-GAAP measure is broadly used by analysts, rating agencies and
investors in assessing the Company’s performance. Accordingly, the
Company believes that the presentation of this Adjusted non-GAAP
financial measure provides useful information to investors.
Adjusted non-GAAP EPS and Adjusted non-GAAP net income are not
in accordance with, or an alternative to, net income per share or
net income and may be different from Non-GAAP measures with similar
or even identical names used by other companies. In addition, these
Adjusted non-GAAP measures are not based on any comprehensive set
of accounting rules or principles. These Adjusted non-GAAP measures
have limitations in that they do not reflect all of the amounts
associated with the Company’s results of operations determined in
accordance with GAAP.
Non-GAAP Financial Measures
To supplement its unaudited condensed consolidated financial
statements and pro forma condensed consolidated financial
statements, each of which are prepared and presented in accordance
with US GAAP, the Company uses the following Non-GAAP financial
measures: Adjusted EBITDA, Adjusted non-GAAP Net Income and
Adjusted non-GAAP Diluted EPS (collectively the “Non-GAAP financial
measures”). The presentation of this financial information is not
intended to be considered in isolation or as a substitute for, or
superior to, the financial information prepared and presented in
accordance with U.S. GAAP. The Company uses these Non-GAAP
financial measures for financial and operational decision making
and as a means to evaluate period-to-period comparisons. The
Company believes that they provide useful information about core
operating results, enhance the overall understanding of past
financial performance and future prospects, and allow for greater
transparency with respect to key metrics used by management in its
financial and operational decision making.
(1) Share-based compensation. The Company excludes stock-based
compensation because it is non-cash in nature and because the
Company believes that the Non-GAAP financial measures excluding
this item provides meaningful supplemental information regarding
the operational performance of the business. The Company further
believes this measure is useful to investors in that it allows for
greater transparency to certain line items in its financial
statements. In addition, excluding this item from the Non-GAAP
measures facilitates comparisons to historical operating results
and comparisons to peers, many of which similarly exclude this
item.
(2) Amortization. The Company excludes amortization of patents
and acquired intangible assets because it is non-cash in nature and
because the Company believes that the Non-GAAP financial measures
excluding this item provides meaningful supplemental information
regarding the operational performance of the business. In addition,
excluding this item from the Non-GAAP measures facilitates
comparisons to historical operating results and comparisons to
peers, many of which similarly exclude this item.
(3) Spin-off related costs. The Company excludes certain
expenses associated with the spin-off from Ziff Davis, Inc. The
Company believes that the Non-GAAP financial measures excluding
this item provides meaningful supplemental information regarding
the operational performance of the business. In addition, excluding
this item from the Non-GAAP measures facilitates comparisons to
historical operating results and comparisons to peers.
(4) Non-income related tax. The Company has excluded certain
non-income related taxes in connection with the recent spin-off
from Ziff Davis, Inc. The Company believes that the Non-GAAP
financial measures excluding this item provides meaningful
supplemental information regarding the operational performance of
the business.
(5) Acquisition related integration costs. The Company excludes
certain acquisition and related integration costs such as
adjustments to contingent consideration, severance, lease
terminations, retention bonuses and other acquisition-specific
items. The Company believes that the Non-GAAP financial measures
excluding this item provide meaningful supplemental information
regarding operational performance. In addition, excluding this item
from the Non-GAAP measures facilitates comparisons to historical
operating results and comparisons to peers, many of which similarly
exclude this item.
(6) Accounting fees for tax provision. The Company excludes
certain costs associated with the preparation for the tax provision
because these costs are expected to be nonrecurring. The Company
believes that the Non-GAAP financial measures excluding this item
provides meaningful supplemental information regarding the
operational performance of the business.
(7) Intra-entity transfers. The Company excludes certain effects
of intra-entity transfers to the extent the related tax asset or
liability in the financial statement is not recovered or settled,
respectively during the year. During December 2019, the Company
entered into an intra-entity asset transfer that resulted in the
recording of a tax benefit and related tax asset representing tax
deductible amounts to be realized in future years which is expected
to be recovered over a period of up to 20 years and related foreign
currency fluctuations. The Company believes that the Non-GAAP
financial measures excluding the cumulative future unrealized
benefit of the assets transferred and including the tax benefit in
the year of realization provides meaningful supplemental
information regarding operational performance. In addition,
excluding this item from the Non-GAAP measures facilitates
comparisons to historical operating results.
(8) Gain on sale of assets. The Company excludes the gain on
sale of certain of its assets. The Company believes that the
Non-GAAP financial measures excluding this item provide meaningful
supplemental information regarding operational performance. In
addition, excluding this item from the Non-GAAP measures
facilitates comparisons to historical operating results.
The Company presents Adjusted non-GAAP Cost of Revenues,
Adjusted non-GAAP Research, Development and Engineering, Adjusted
non-GAAP Sales and Marketing, Adjusted non-GAAP General and
Administrative, Adjusted non-GAAP Interest Expense, net, Adjusted
non-GAAP Other Income, net, Adjusted non-GAAP Income Tax Expense,
and Adjusted non-GAAP Net Income because the Company believes that
these provide useful information about our operating results and
enhance the overall understanding of past financial performance and
future prospects.
CONSENSUS CLOUD SOLUTIONS,
INC. AND SUBSIDIARIES
NET INCOME TO ADJUSTED EBITDA
RECONCILIATION
THREE MONTHS ENDED MARCH 31,
2022 AND 2021
(UNAUDITED, IN
THOUSANDS)
The following table sets forth a
reconciliation of Adjusted EBITDA to net income, the most directly
comparable GAAP financial measure.
Three Months Ended March
31,
2022
2021
Pro Forma 2021
Net income
$
18,706
$
39,235
$
27,893
Plus:
Interest expense, net
13,274
236
12,810
Other income, net
(174
)
(388
)
(579
)
Income tax expense
7,043
12,608
8,808
Depreciation and amortization
3,707
2,823
1,613
EBITDA:
Plus:
Share-based compensation
5,213
383
—
Spin-off related costs
359
—
—
Non-income related sales tax
241
—
—
Acquisition related costs
136
482
—
Accounting fees for tax provision
57
—
—
Adjusted EBITDA
$
48,562
$
55,379
$
50,545
Adjusted EBITDA as calculated above represents earnings before
interest, depreciation and amortization and the items used to
reconcile GAAP to Adjusted non-GAAP financial measures, including
(1) share-based compensation; (2) spin-off related costs; (3)
non-income related sales tax; (4) acquisition related costs; and
(5) accounting fees for tax provision. We disclose Adjusted EBITDA
as a supplemental Non-GAAP financial performance measure as we
believe it is a useful metric by which to compare the performance
of our business from period to period. We understand that measures
similar to Adjusted EBITDA are broadly used by analysts, rating
agencies and investors in assessing our performance. Accordingly,
we believe that the presentation of Adjusted EBITDA provides useful
information to investors.
Adjusted EBITDA is not in accordance with, or an alternative to,
net income, and may be different from Non-GAAP measures used by
other companies. In addition, Adjusted EBITDA is not based on any
comprehensive set of accounting rules or principles. This Adjusted
non-GAAP measure has limitations in that it does not reflect all of
the amounts associated with the Company’s results of operations
determined in accordance with GAAP.
CONSENSUS CLOUD SOLUTIONS,
INC. AND SUBSIDIARIES
NON-GAAP FINANCIAL
MEASURES
(UNAUDITED, IN
THOUSANDS)
Q1
Q2
Q3
Q4
YTD
2022
Net cash provided by operating
activities
$
49,908
$
—
$
—
$
—
$
49,908
Less: Purchases of property and
equipment
(6,915
)
—
—
—
(6,915
)
Free cash flows
$
42,993
$
—
$
—
$
—
$
42,993
The Company discloses free cash flows as supplemental Non-GAAP
financial performance measure, as it believes it is a useful metric
by which to compare the performance of its business from period to
period. The Company also understands that this Non-GAAP measure is
broadly used by analysts, rating agencies and investors in
assessing the Company’s performance. Accordingly, the Company
believes that the presentation of this Non-GAAP financial measure
provides useful information to investors.
Free cash flows is not in accordance with, or an alternative to,
Cash Flows from Operating Activities, and may be different from
Non-GAAP measures with similar or even identical names used by
other companies. In addition, the Non-GAAP measure is not based on
any comprehensive set of accounting rules or principles. This
Non-GAAP measure has limitations in that it does not reflect all of
the amounts associated with the Company’s results of operations
determined in accordance with GAAP.
Certain Other Pro Forma Financial Information
(Unaudited)
CONSENSUS CLOUD SOLUTIONS,
INC
PRO FORMA CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
MARCH 31, 2021
(UNAUDITED, IN
THOUSANDS)
Consensus
Pro Forma Adjustments
(1)
Consensus Pro Forma
Revenues
$
86,620
$
—
$
86,620
Cost of revenues
13,970
92
14,062
Gross profit
72,650
(92
)
72,558
Operating expenses:
Sales and marketing
13,235
(95
)
13,140
Research, development and engineering
1,676
(102
)
1,574
General and administrative
6,048
2,864
8,912
Total operating expenses
20,959
2,667
23,626
Income from operations
51,691
(2,759
)
48,932
Interest expense
(236
)
(12,574
)
(12,810
)
Interest income
9
(9
)
—
Other expense, net
379
200
579
Income before income taxes
51,843
(15,142
)
36,701
Income tax expense
12,608
(3,800
)
8,808
Net income
$
39,235
$
(11,342
)
$
27,893
Net income per common share from
continuing operations:
Basic
$
1.97
$
(0.57
)
$
1.40
Diluted
$
1.97
$
(0.57
)
$
1.40
Weighted average shares outstanding:
Basic
19,902,924
Diluted
19,902,924
(1) Pro forma adjustments represents the following:
- Represents incremental costs to be incurred as a standalone
public entity and overhead currently shared from Ziff Davis such as
legal, accounting, finance, human resource and payroll, net of
tax.
- Reflects the interest expense related to debt of $805 million
principal amount issued by Consensus Cloud Solutions, Inc., on
October 7, 2021, in connection with the separation capitalization
plan with an interest rate of 6.3% per annum.
- Reflects the effects of the pro forma adjustments at the
applicable statutory income tax rates.
The following table sets forth certain pro
forma financial and operating information for Consensus for the
three months ended March 31, 2022 and 2021 (in millions).
Three Months Ended March
31,
2022
2021
Corporate revenue
$
46,519
$
41,154
Corporate customer accounts
46
47
Corporate ARPA (1)
$
339.94
$
289.37
Corporate paid adds (2)
4
3
Corporate monthly account churn (3)
2.05
%
1.87
%
SoHo revenue
$
44,406
$
45,374
SoHo customer accounts
1,027
1,068
SoHo ARPA (1)
$
14.41
$
14.16
SoHo paid adds (2)
100
113
SoHo monthly account churn (3)
3.50
%
3.51
%
(1) Represents a monthly ARPA calculated for the quarter
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. Consensus
believes 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, Consensus believes
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.
(2) Paid Adds represents paying new Consensus customer accounts
added during the annual period.
(3) Monthly churn is defined as a Consensus paying customer
accounts that cancelled its services during the period divided by
the average number customers over the period. This measure is
calculated monthly and expressed as an average over the applicable
period.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220516005916/en/
Laura Hinson Consensus Cloud Solutions, Inc 844-211-1711
investor@consensus.com
Concensus Cloud Solutions (NASDAQ:CCSI)
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