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 more than one million customers of all sizes, from
enterprises to individuals, across over 50 countries and multiple industry verticals including healthcare, 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 previously announced separation of the cloud fax business (the Separation), 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 9.8% as of June 30, 2022 (see Note 17 - 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 consolidated financial statements of Consensus for periods prior to the completion of the Separation are those of J2 Cloud Services, which
were derived from the interim condensed consolidated financial statements of Ziff Davis on a carve-out basis using the historical assets, liabilities, and results of operations attributable to the legal
entities and business units which comprised historical J2 Cloud Services.
J2 Cloud Services was a wholly-owned subsidiary of Ziff Davis,
and together with its subsidiaries, was a provider of internet services, including cloud-based subscription services to consumers and businesses including cloud fax, voice, cybersecurity, privacy and marketing technology.
For periods prior to the Separation, the interim condensed consolidated financial statements of Consensus included an allocation of certain
corporate expenses related to services provided to J2 Cloud Services by Ziff Davis. These expenses included the cost of executive management, information technology, legal, treasury, risk management, human resources, accounting and financial
reporting, investor relations, public relations, and internal audit services provided by the Former Parent company personnel to J2 Cloud Services. The cost of these services had been allocated to J2 Cloud Services based on specific identification
when possible or, when the expenses were determined to be global in nature, based on the percentage of J2 Cloud Services relative revenue to total Ziff Davis revenue for the periods presented. Management believes that these allocations were
reasonable representations of the costs incurred for the services provided; however, these allocations may not be indicative of the actual expenses that would have been incurred by J2 Cloud Services had it been operating as an independent company
for the periods presented.
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