What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-14 compared with 2022-08-09 · 180 added, 154 removed, 737 unchanged (31% of the section changed)

4 unchanged sentences

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Cash and cash equivalents $ 103,683 $ 66,778

27 unchanged sentences

Authorized 120,000,000 ;

total issued is 20,015,838 and 19,978,580 shares and total outstanding is 19,826,724 and 19,978,580 shares at June 30, 2022 and December 31, 2021, respectively.

Treasury stock, at cost ( 189,114 and zero shares at June 30, 2022 and December 31, 2021, respectively).

total issued is 20,016,950 and 19,978,580 shares and total outstanding is 19,827,836 and 19,978,580 shares at September 30, 2022 and December 31, 2021, respectively

Treasury stock, at cost ( 189,114 and zero shares at September 30, 2022 and December 31, 2021, respectively)

Additional paid-in capital 16,419 2,878

8 unchanged sentences

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

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

13 unchanged sentences

Interest expense ( 13,941 ) ( 131 ) ( 39,573 ) ( 611 )

Other income (expense), net 1,577 ( 97 ) 1,750 281

Other income, net 2,992 1,552 4,742 1,833

Income before income taxes 24,078 52,644 80,035 155,826

1 unchanged sentence

Income from continuing operations 17,141 41,132 58,120 119,220

Income from discontinued operations, net of income tax (1)

Loss from discontinued operations, net of income tax (1)

— ( 13,908 ) — ( 17,118 )

3 unchanged sentences

Diluted $ 0.86 $ 2.07 $ 2.91 $ 5.99

Net income per common share from discontinued operations:

Net loss per common share from discontinued operations:

Basic $ — $ ( 0.70 ) $ — $ ( 0.86 )

11 unchanged sentences

General and administrative 3,736 123 12,052 399

Income from discontinued operations, net of income taxes — 1,048 — 2,156

Loss from discontinued operations, net of income taxes — 1,099 — 3,254

Total $ 4,614 $ 1,451 $ 14,608 $ 4,370

4 unchanged sentences

(Unaudited, in thousands)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Net income $ 17,141 $ 27,224 $ 58,120 $ 102,102

Other comprehensive (loss) income:

Other comprehensive loss:

Foreign currency translation adjustment ( 11,411 ) ( 8,248 ) ( 17,872 ) ( 13,555 )

Other comprehensive (loss) income ( 4,344 ) 2,401 ( 6,461 ) ( 5,307 )

Other comprehensive loss ( 11,411 ) ( 8,248 ) ( 17,872 ) ( 13,555 )

Comprehensive income $ 5,730 $ 18,976 $ 40,248 $ 88,547

4 unchanged sentences

(Unaudited, in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

7 unchanged sentences

Deferred income taxes, net ( 2,435 ) 10,722

Gain on sale of businesses — ( 2,802 )

Loss on sale of businesses — 21,798

Goodwill impairment on business — 32,629

1 unchanged sentence

Changes in operating assets and liabilities:

Decrease (increase) in:

Accounts receivable ( 10,162 ) 3,546

1 unchanged sentence

Other assets ( 1,097 ) ( 1,119 )

Increase (decrease) in:

Accounts payable and accrued expenses 19,991 ( 13,921 )

30 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

Three and Six Months Ended June 30, 2022 and 2021

(Unaudited, in thousands except share amounts)

2 unchanged sentences

Shares Amount capital Shares Amount Deficit loss investment Equity

Balance, April 1, 2021 — $ — $ — — $ — $ — $ ( 63,674 ) $ 1,239,667 $ 1,175,993

Balance, July 1, 2021 — $ — $ — — $ — $ — $ ( 61,273 ) $ 1,295,005 $ 1,233,732

Net income — — — — — — — 27,224 27,224

Other comprehensive income, net of tax — — — — — 2,401 — 2,401

Other comprehensive loss — — — — — — ( 8,248 ) — ( 8,248 )

Share-based compensation — — — — — — — 1,451 1,451

Parent contribution — — — — — — — ( 17,462 ) ( 17,462 )

Balance, June 30, 2021 — $ — $ — — $ — $ — $ ( 61,273 ) $ 1,295,005 $ 1,233,732

Balance, September 30, 2021 — $ — $ — — $ — $ — $ ( 69,521 ) $ 1,306,218 $ 1,236,697

Common stock Additional

1 unchanged sentence

Shares Amount capital Shares Amount Deficit loss Equity

Balance, April 1, 2022 20,015,450 $ 200 $ 6,918 ( 19,922 ) — ( 302,068 ) ( 18,974 ) ( 313,924 )

Treasury stock ( 19,922 ) — — 19,922 — — — —

Balance, July 1, 2022 20,015,838 $ 200 $ 11,913 ( 189,114 ) $ ( 7,596 ) $ ( 280,416 ) $ ( 23,318 ) $ ( 299,217 )

Net income — — — — — 17,141 — 17,141

Other comprehensive loss, net of tax — — — — — — ( 4,344 ) ( 4,344 )

Other comprehensive loss — — — — — — ( 11,411 ) ( 11,411 )

Vested restricted stock 3,018 — — — — — — —

Shares withheld related to net share settlement ( 1,906 ) — ( 108 ) — — — — ( 108 )

Repurchase of common stock — — — ( 189,114 ) ( 7,596 ) — — ( 7,596 )

Share-based compensation — — 4,614 — — — — 4,614

Issuance of shares under ESPP 15,806 — 631 — — — — 631

Reclassifications related to the Separation (Note 1)

— — — — — ( 679 ) — ( 679 )

Balance, June 30, 2022 20,015,838 $ 200 $ 11,913 ( 189,114 ) ( 7,596 ) ( 280,416 ) ( 23,318 ) ( 299,217 )

Balance, September 30, 2022 20,016,950 $ 200 $ 16,419 ( 189,114 ) $ ( 7,596 ) $ ( 263,954 ) $ ( 34,729 ) $ ( 289,660 )

Common stock Additional

3 unchanged sentences

Net income — — — — — — — 102,102 102,102

Other comprehensive loss, net of tax — $ — $ — — $ — ( 5,307 ) — $ ( 5,307 )

Other comprehensive loss — — — — — — ( 13,555 ) — ( 13,555 )

Share-based compensation — — — — — — — 4,370 4,370

Parent contribution — — — — — — — 21,238 21,238

Balance, June 30, 2021 — $ — $ — — $ — $ — $ ( 61,273 ) $ 1,295,005 $ 1,233,732

Balance, September 30, 2021 — $ — $ — — $ — $ — $ ( 69,521 ) $ 1,306,218 $ 1,236,697

Common stock Additional

3 unchanged sentences

Net income — — — — — 58,120 — 58,120

Other comprehensive loss, net of tax — — — — — — ( 6,461 ) ( 6,461 )

Other comprehensive loss — — — — — — ( 17,872 ) ( 17,872 )

Vested restricted stock 52,289 — — — — — — —

5 unchanged sentences

— — — — — ( 3,188 ) — ( 3,188 )

Balance, June 30, 2022 20,015,838 $ 200 $ 11,913 ( 189,114 ) $ ( 7,596 ) $ ( 280,416 ) $ ( 23,318 ) $ ( 299,217 )

Balance, September 30, 2022 20,016,950 $ 200 $ 16,419 ( 189,114 ) $ ( 7,596 ) $ ( 263,954 ) $ ( 34,729 ) $ ( 289,660 )

See Notes to Condensed Consolidated Financial Statements

13 unchanged sentences

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).

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 September 30, 2022 (see Note 17 - Related Party Transactions).

Principles of Consolidation

57 unchanged sentences

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 in the second quarter of 2022.

In the second quarter of 2021, the Company recorded impairment of certain operating right-of-use assets related to the non-fax business (refer to Note 5 - Discontinued Operations and Disposition of Businesses).

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.

No impairment was recorded in the third quarter of 2022.

In the third quarter of 2021, the Company recorded impairment of certain operating right-of-use assets related to the non-fax business (refer to Note 5 - Discontinued Operations and Disposition of Businesses).

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.

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.

18 unchanged sentences

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 in the second quarter of 2022 and 2021.

No impairment was recorded in the third quarter of 2022 and 2021.

Historically, J2 Cloud Services was included in the federal consolidated and state combined income tax returns with the Former Parent and its other subsidiaries.

26 unchanged sentences

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.

The Company does not believe these provisions have a significant impact to our current and deferred income tax balances.

The Company will benefit from the technical correction to tax depreciation related to qualified improvement property and has elected to defer income tax payments and employer side social security payments where eligible.

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.

Share-Based Compensation

14 unchanged sentences

The dilutive effect of participating securities is calculated under the more dilutive of either the treasury method or the two-class method.

In periods prior to the Separation, EPS is calculated using the number of shares issued to the Former Parent upon the legal formation of Consensus and the contribution of the Cloud Fax business.

For periods prior to the Separation, EPS is calculated using the number of shares issued to the Former Parent upon the legal formation of Consensus and the contribution of the Cloud Fax business.

The dilutive effect of Consensus stock-based compensation awards that were exchanged for the Former Parent stock-based compensation awards is included in the denominator of diluted EPS on a prospective basis.

5 unchanged sentences

The chief operating decision maker views the Company as one reportable segment known as Cloud Fax (see Note 15 - Segment Information).

Reclassifications to prior period

Adjustment related to the Spin-off

During 2022, the Company identified certain improper classifications related to executive bonuses and other corporate charges incurred prior to the Separation that were incorrectly treated as equity contributions at the time of the Spin-off rather than liabilities.

The Company recorded a reclassification of $ 0.6 million and $ 2.5 million for the three and six months ended June 30, 2022 from equity to accrued expenses and due to Former Parent to correct the prior period classification on the balance sheet.

The Company recorded a reclassification of $( 0.5 ) million for the three and $ 0.6 million for the nine months ended September 30, 2022 from equity to accrued expenses to correct the prior period classification on the balance sheet.

The Company determined that the impact of this reclassification was not material to the current or prior period financial statements.

Additionally, on September 27, 2022, the Company reached a settlement agreement with the Former Parent and agreed to pay $ 2.6 million to close out transaction fees related to the Spin-Off.

This adjustment to the amount paid to the Former Parent as part of the Spin-off was recorded as an adjustment to equity during the nine months ended September 30, 2022.

Recent Accounting Pronouncements

13 unchanged sentences

The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023.

This amendment may be adopted using either a modified or fully retrospective method of transition.

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

1 unchanged sentence

2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.

The amendments in this ASU improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to recognition of an acquired contract liability, and payment terms and their effect on subsequent revenue recognized by the acquirer.

The amendments in this ASU improve the accounting for acquired revenue contracts with customers

in a business combination by addressing diversity in practice and inconsistency related to recognition of an acquired contract liability, and payment terms and their effect on subsequent revenue recognized by the acquirer.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, including the interim periods within those fiscal years.

adoption is permitted.

Early adoption is permitted.

The Company early adopted ASU 2021-08 in the second quarter of 2022 and applied it to the Summit acquisition as disclosed within Note 4 - Business Acquisitions.

3 unchanged sentences

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 or equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820.

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

The Company’s revenues substantially consist of monthly recurring subscription and usage-based fees, the majority of which are paid in advance by credit card.

1 unchanged sentence

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

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

7 unchanged sentences

Total $ 95,912 $ 89,198 $ 280,000 $ 263,660

The Company has recorded $ 4.3 million of revenue for both the three months ended June 30, 2022 and 2021 and $ 15.2 million and $ 16.6 million of revenue for the six months ended June 30, 2022 and 2021, respectively, that was previously included in the deferred revenue balance as of the beginning of each respective year.

As of June 30, 2022 and December 31, 2021, the Company acquired $ 5.1 million and zero , respectively, of Deferred revenue in connection with the Company’s business acquisitions (see Note 4 - Business Acquisitions), which are subject to purchase accounting adjustments.

The Company has recorded $ 4.0 million and $ 4.1 million of revenue for the three months ended September 30, 2022 and 2021, respectively, and $ 19.2 million and $ 20.7 million of revenue for the nine months ended September 30, 2022 and 2021, respectively, that was previously included in the deferred revenue balance as of the beginning of each respective year.

As of September 30, 2022 and December 31, 2021, the Company acquired $ 5.0 million and zero , respectively, of Deferred revenue in connection with the Company’s business acquisitions (see Note 4 - Business Acquisitions), which are subject to purchase accounting adjustments.

Performance Obligations

29 unchanged sentences

Business Acquisitions

On February 4, 2022, in a cash transaction, the Company acquired certain assets of Summit Healthcare Services, Inc., a Massachusetts based provider of secure interoperability solutions within the healthcare industry.

The Condensed Consolidated Statement of Income since the date of acquisition and balance sheet as of June 30, 2022, reflect the results of operations of this 2022 acquisition.

For the six months ended June 30, 2022, this acquisition contributed $ 3.4 million to the Company’s revenues.

On February 4, 2022, in a cash transaction, the Company acquired certain assets of Summit Healthcare Services, Inc.

(“Summit”), a Massachusetts based provider of secure interoperability solutions within the healthcare industry.

The Condensed Consolidated Statement of Income since the date of acquisition and balance sheet as of September 30, 2022, reflect the results of operations of this 2022 acquisition.

For the nine months ended September 30, 2022, this acquisition contributed $ 5.3 million to the Company’s revenues.

Net income contributed by this acquisition was not separately identifiable due to the Company’s integration activities and is not material.

5 unchanged sentences

Property and equipment 9

Operating lease right-of-use assets, noncurrent 413

Operating lease right-of-use assets, non-current 413

Trademarks 1,000

4 unchanged sentences

Deferred revenue ( 4,951 )

Operating lease liabilities, noncurrent ( 413 )

Operating lease liabilities, non-current ( 413 )

Total $ 12,230

1 unchanged sentence

The Company expects to finalize the accounting for the Summit acquisition within twelve months of the acquisition date.

The Company recorded $ 1.6 million in additional Deferred revenue with a corresponding increase in Goodwill related to the Summit acquisition as a measurement period adjustment during the quarter ended June 30, 2022.

During the third quarter of 2022, the Company recorded a working capital adjustment of $ 2.1 million, which reduced the purchase price of the acquisition by the same amount.

Since the date of acquisition, the Company has recorded $ 1.4 million in additional deferred revenue with a corresponding increase in Goodwill as a measurement period adjustment.

Additionally, as a result of the early adoption of ASU 2021-08 in the second quarter of 2022, the Company recognized $ 0.9 million in Deferred revenue with a corresponding increase in Goodwill.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and represents intangible assets that do not qualify for separate recognition.

Goodwill recognized associated with this acquisition during the six months ended June 30, 2022 is $ 8.0 million, of which $ 8.0 million is expected to be deductible for income tax purposes.

Goodwill recognized associated with this acquisition during the nine months ended September 30, 2022 is $ 6.8 million, of which $ 6.8 million is expected to be deductible for income tax purposes.

Discontinued Operations and Disposition of Businesses

On October 7, 2021, the Former Parent transferred certain assets and liabilities associated with its Cloud Fax business to Consensus, including the equity interests in J2 Cloud Services, in exchange for approximately $ 259.1 million in cash, an asset related to the $ 500 million aggregate principal amount of the 6.5 % Senior Notes due in 2028, and the return of the assets and liabilities related to the non-fax business back to Ziff Davis.

The transfer to the Former Parent of the non-fax business met the accounting requirements to be presented as a discontinued operation once the Separation was completed as the disposition of the non-fax business constitutes a strategic shift that will have a major effect on the Company’s operations relative to the historical operations of J2 Cloud Services.

The transfer to the Former Parent of the non-fax business met the accounting requirements to be presented as a discontinued operation once the Separation was completed as the disposition of the non-fax business constituted a strategic shift that had a major effect on the Company’s operations relative to the historical operations of J2 Cloud Services.

Accordingly, the condensed consolidated financial statements reflect the results of the non-fax business as a discontinued operation for all periods presented.

3 unchanged sentences

The key components of income from discontinued operations that were included in the Company’s Condensed Consolidated Statement of Income are as follows (in thousands):

Three Months Ended

June 30, 2021 Six Months Ended

June 30, 2021

Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021

$ 92,904 $ 265,230

10 unchanged sentences

Total operating expense 60,563 204,113

Income from discontinued operations ( 24,777 ) ( 17,853 )

Income (loss) from discontinued operations 6,239 ( 11,614 )

Interest expense ( 51 ) ( 229 )

Interest income 181 680

Gain on sale of businesses 823 2,802

Income from discontinued operations before income taxes

Loss on sale of businesses ( 24,599 ) ( 21,797 )

Other expense, net

( 675 ) ( 426 )

Income tax expense

Loss from discontinued operations before income taxes

( 18,905 ) ( 33,386 )

Income from discontinued operations, net of income taxes

Income tax benefit

( 4,997 ) ( 16,268 )

Loss from discontinued operations, net of income taxes

$ ( 13,908 ) $ ( 17,118 )

The key components of cash flows from discontinued operations are as follows (in thousands):

Six Months Ended

June 30, 2021

Nine Months Ended September 30, 2021

Depreciation and amortization

4 unchanged sentences

Lease asset impairments and other charges 2,707

Gain on sale of businesses 2,802

Loss on sale of businesses 21,798

Goodwill impairment on business 32,629

3 unchanged sentences

On February 9, 2021, in a cash transaction, the Company sold the Voice assets.

For the three and six months ended June 30, 2021, the Company recognized a gain associated with the sale of the Voice assets of $ 0.8 million and $ 2.8 million, respectively, which was recorded in discontinued operations on the Condensed Consolidated Statement of Income.

B2B Back-up Held-for-Sale (Non-Consensus)

For the nine months ended September 30, 2021, the total gain recognized on the sale was $ 2.8 million which was recorded in discontinued operations on the Condensed Consolidated Statement of Income.

B2B Back-up Sale (Non-Consensus)

During the first quarter of 2021, the Company committed to a plan to sell its B2B Backup business as it was determined to be a non-core business.

The B2B Backup business met the held for sale criteria, and accordingly, the assets and liabilities were presented as held for sale on the Consolidated Balance Sheets at March 31, 2021 and June 30, 2021.

second quarter of 2021, the Company received an offer to purchase the business.

Management has determined that the fair value of the business less cost to sell is lower than its carrying amount.

As a result, the Company recorded an impairment to goodwill of $ 32.6 million which was recorded in discontinued operations on the Condensed Consolidated Statement of Income.

During the second quarter of 2021, the Company received an offer to purchase the business.

Management determined that the fair value of the business less cost to sell was lower than its carrying amount.

As a result, the Company recorded an impairment to goodwill of $ 32.6 million which was recorded in the second quarter of 2021.

and is included within discontinued operations on the Condensed Consolidated Statement of Income.

On September 17, 2021, in a cash transaction, the Company sold the B2B Backup business.

For the three and nine months ended September 30, 2021, the total loss recognized on the sale was $ 24.6 million and is included within discontinued operations on the Condensed Consolidated Statement of Income.

Fair Value Measurements

16 unchanged sentences

Identifiable intangible assets are amortized over the period of estimated economic benefit, which ranges from 1 year to 20 years.

In the six months ended June 30, 2022, the Company acquired technology for jSign, a corporate solution that provides electronic signature and digital signature solutions to businesses, offering document markup and end-user signing services via mobile-aware web application and enterprise API.

In the nine months ended September 30, 2022, the Company acquired technology for jSign, a corporate solution that provides electronic signature and digital signature solutions to businesses, offering document markup and end-user signing services via mobile-aware web application and enterprise API.

The purchase price was $ 1.0 million and the asset is included in Intangibles, net on the Condensed Consolidated Balance Sheet.

The changes in carrying amounts of goodwill for the six months ended June 30, 2022 are as follows (in thousands):

The changes in carrying amounts of goodwill for the nine months ended September 30, 2022 are as follows (in thousands):

Balance as of January 1, 2022 $ 339,209

1 unchanged sentence

Foreign exchange translation ( 3,893 )

Balance as of June 30, 2022 $ 347,855

Balance as of September 30, 2022 $ 342,104

Intangible Assets with Indefinite Lives:

Intangible assets are summarized as follows (in thousands):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Trade names $ 27,262 $ 27,388

2 unchanged sentences

Intangible Assets Subject to Amortization:

As of June 30, 2022, intangible assets subject to amortization relate primarily to the following (in thousands):

As of September 30, 2022, intangible assets subject to amortization relate primarily to the following (in thousands):

Weighted-Average

26 unchanged sentences

Total $ 18,770

Amortization expense was $ 1.1 million and $ 1.5 million for the three months ended June 30, 2022 and 2021, respectively.

Amortization expense was $ 2.6 million and $ 3.2 million for the six months end June 30, 2022 and 2021, respectively.

Amortization expense was $ 1.1 million and $ 1.2 million for the three months ended September 30, 2022 and 2021, respectively.

Amortization expense was $ 3.7 million and $ 4.4 million for the nine months end September 30, 2022 and 2021, respectively.

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

2026 Senior Notes $ 305,000 $ 305,000

6 unchanged sentences

Consensus received proceeds of $ 301.2 million, after deducting the initial purchasers’ discounts, commissions and offering expenses.

The 2026 6.0 % Senior Notes are presented as long-term debt, net of deferred issuance costs, on the Condensed Consolidated Balance Sheet as of June 30, 2022.

The 2026 6.0 % Senior Notes are presented as long-term debt, net of deferred issuance costs, on the Condensed Consolidated Balance Sheet as of September 30, 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, commencing on April 15, 2022.

1 unchanged sentence

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.

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.

12 unchanged sentences

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, 2022.

As of June 30, 2022 and December 31, 2021, the estimated fair value of the 2026 Senior Notes was approximately $ 261.5 million and $ 316.1 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.

The Company is in compliance with its debt covenants as of September 30, 2022.

As of September 30, 2022 and December 31, 2021, the estimated fair value of the 2026 Senior Notes was approximately $ 266.9 million and $ 316.1 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

2 unchanged sentences

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 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 Sheet as of June 30, 2022.

The 2028 Senior Notes were presented as long-term debt, net of deferred issuance costs, on the Condensed Consolidated Balance Sheet as of September 30, 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, commencing on April 15, 2022.

13 unchanged sentences

The Company is in compliance with its debt covenants as of June 30, 2022.

As of June 30, 2022 and December 31, 2021, the estimated fair value of the 2028 Senior Notes was approximately $ 407.5 million and $ 521.2 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.

The Company is in compliance with its debt covenants as of September 30, 2022.

As of September 30, 2022 and December 31, 2021, the estimated fair value of the 2028 Senior Notes was approximately $ 425.0 million and $ 521.2 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 MUFG has provided Consensus with a senior secured 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.

Pursuant to the Credit Agreement, the Lenders have provided Consensus with a senior secured 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, 2022, no amount has been drawn down on the Credit Facility.

As of September 30, 2022, 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.

9 unchanged sentences

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, 2022.

The Company is in compliance with its covenants as of September 30, 2022.

The Company leases certain facilities and equipment under non-cancelable operating and finance leases which expire at various dates through 2031.

1 unchanged sentence

In certain agreements in which the Company leases office space where the Company is the tenant, it subleases the site to various other companies through a sublease agreement.

The components of lease expense were as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

The components of lease expense are as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

4 unchanged sentences

Total lease cost $ 1,285 $ 927 $ 3,923 $ 3,129

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

June 30, 2022 December 31, 2021

Operating leases

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

September 30, 2022 December 31, 2021

Lease-related assets and liabilities

Operating lease right-of-use assets $ 7,419 $ 7,233

Finance lease right-of-use assets (1)

Total operating lease right-of-use assets $ 9,792 $ 9,881

Total right-of-use assets $ 9,147 $ 9,881

Operating lease liabilities, current $ 2,458 $ 2,421

3 unchanged sentences

Therefore, there is no corresponding lease liability associated with the finance right-of-use assets.

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

Six Months Ended June 30,

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

Nine Months Ended September 30,

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases $ 2,085 $ 925

Operating cash flows from finance leases — 2,719

Right-of-use assets obtained in exchange for lease obligations:

Operating leases $ 1,316 $ —

Finance leases — 2,719

Other supplemental operating lease information consists of the following:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Operating leases:

1 unchanged sentence

Weighted average discount rate 4.8 % 4.8 %

Maturities of operating lease liabilities as of June 30, 2022 were as follows (in thousands):

Maturities of operating lease liabilities as of September 30, 2022 are as follows (in thousands):

Operating Leases

11 unchanged sentences

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 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.

6 unchanged sentences

Non-Income Related Taxes

The Company has not historically collected sales tax in states where it was not able to quantify the appropriate sales tax to be collected.

The Company believes it is probable that sales tax liability exists for its corporate accounts for the periods 2017 through 2021.

However, the Company is currently unable to determine which of these customers are either exempt organizations or resellers and are thus exempt from sales tax.

Therefore it cannot estimate the sales tax liability for these corporate customers.

The Company is currently analyzing the pool of corporate customers subject to sales tax in order to estimate the liability and will record an accrual when the exposure is probable and estimable.

The Company currently cannot estimate the range of sales tax liability for corporate customers.

In the year ended December 31, 2021, the Company determined that a sales tax liability is probable and it developed a methodology to estimate the sales tax liability for the SoHo revenue stream during the affected periods 2017 through 2021.

The Company has taken the same approach in estimating the liability for the six months ended June 30, 2022.

Accordingly, the Company has recorded a sales tax expense in the six months ended June 30, 2022 and 2021 of $ 1.1 million and zero , respectively.

Historically, we were included in the federal consolidated and state combined income tax returns with the Former Parent and its other subsidiaries.

The Company historically did not collect sales tax in states where it was not able to quantify the appropriate sales tax to be collected.

The Company believes it is probable that a sales tax liability exists for its corporate accounts for periods from 2017 through 2021;

however, the Company could not estimate the sales tax liability for its corporate customers.

Prior to the third quarter of 2022, the Company was unable to determine which of these customers are either exempt organizations or resellers and are 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 of $ 8.0 million during the three and nine months ended September 30, 2022 within accounts payable and accrued expenses on the Company’s Condensed Consolidated Balance Sheets, as the exposure became probable and estimable.

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 taken the same approach in estimating the liability for the nine months ended September 30, 2022.

Accordingly, the Company has recorded a sales tax expense within general and administrative expenses in the Condensed Consolidated Statements of Income of $ 8.4 million and $ 9.5 million for the three and nine months ended September 30, 2022, respectively, and zero for the three and nine months ended September 30, 2021.

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 within 6-12 months.

While the Company believes that it has sufficiently reserved for historical sales tax liabilities under ASC 450, 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 our business.

The Company will continue to review and monitor the impact of sales tax rules in order to mitigate any associated risks on its business.

As such, the Company has recorded a $ 17.8 million sales tax reserve recorded in accounts payable and accrued expenses on the Company’s Condensed Consolidated Balance Sheets as of September 30, 2022.

Historically, the Company was included in the federal consolidated and state combined income tax returns with the Former Parent and its other subsidiaries.

For purposes of the prior period condensed consolidated financial statements, the Company’s taxes were determined using the separate return method as if the Company had filed separate tax returns as a C-Corporation.

4 unchanged sentences

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, 2022 and 2021 was 26.3 % and 24.3 %, respectively.

The Company’s effective tax rate for the six months ended June 30, 2022 and 2021 was 26.8 % and 24.3 %, respectively.

The Company’s increased rate during the three and six months ended June 30, 2022 is primarily due to certain expenses not being deductible for tax.

Income before income taxes included income from domestic operations of $ 4.5 million and $ 57.4 million for the six months ended June 30, 2022 and 2021, respectively, and income from foreign operations of $ 51.5 million and $ 45.8 million for the six months ended June 30, 2022 and 2021, respectively.

As of June 30, 2022 and December 31, 2021, the Company had $ 6.3 million and $ 4.8 million, respectively, in liabilities for uncertain income tax positions.

The Company’s effective tax rate for the three months ended September 30, 2022 and 2021 was 28.8 % and 21.9 %, respectively.

The Company’s effective tax rate for the nine months ended September 30, 2022 and 2021 was 27.4 % and 23.5 %, respectively.

The Company’s increased rate during the three and nine months ended September 30, 2022 is primarily due to certain expenses not being deductible for tax.

Income before income taxes included income from domestic operations of $ 0.8 million and $ 97.8 million for the nine months ended September 30, 2022 and 2021, respectively, and income from foreign operations of $ 79.2 million and $ 58.0 million for the nine months ended September 30, 2022 and 2021, respectively.

As of September 30, 2022 and December 31, 2021, the Company had $ 7.0 million and $ 4.8 million, respectively, in liabilities for uncertain income tax positions.

Accrued interest and penalties related to unrecognized tax benefits are recognized in income tax expense on the Company’s Condensed Consolidated Statements of Income.

1 unchanged sentence

The Company files tax returns in the US, Ireland, Netherlands, France, Canada, Japan and Hong Kong.

As of June 30, 2022, the Company is not under audit in any jurisdiction that it operates within.

The Company has not filed any tax returns for the post spin periods, however it does have some international subsidiaries who have previously filed tax returns in their local jurisdictions.

In respect to these international subsidiaries, tax returns filed for the years from 2015 onwards are still open to examination by tax authorities

As of September 30, 2022, the Company is not under audit in any jurisdiction that it operates within.

The Company has recently 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 2015 onwards are still open to examination by tax authorities.

Stockholders’ Equity

3 unchanged sentences

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, 2022, the Company repurchased 189,114 shares under this program.

Cumulatively as of June 30, 2022, 189,114 shares were repurchased at an aggregate cost of $ 7.6 million.

The Company entered into Rule 10b-18 and Rule 10b5-1 trading plans and during the three and nine months ended September 30, 2022, the Company repurchased zero and 189,114 shares, respectively, under this program.

Cumulatively as of September 30, 2022, 189,114 shares have been repurchased at an aggregate cost of $ 7.6 million.

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.

2 unchanged sentences

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, 2022 the Company withheld shares on its vested restricted stock units relating to its share-based compensation plans of 7,897 and 27,819 shares, respectively

During the three and nine months ended September 30, 2022 the Company withheld shares on its vested restricted stock units relating to its share-based compensation plans of 1,906 and 29,725 shares, respectively

The Company currently does not issue dividends to Consensus shareholders.

9 unchanged sentences

Compensation expense resulting from restricted stock and restricted 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 staff and five years for the Chief Executive Officer and Chief Operating Officer (excluding market-based awards discussed below).

The Company granted 23,632 shares and 50,244 shares of restricted stock and restricted stock units (excluding awards with market conditions below) during the three and six months ended June 30, 2022, respectively.

Vesting periods are typically one year for awards to members of the Company’s Board of Directors, four years for staff and five years for the Chief Executive Officer and Chief Operating Officer (excluding market-based awards discussed below).

The Company granted 16,523 shares and 66,767 shares of restricted stock and restricted stock units (excluding awards with market conditions below) during the three and nine months ended September 30, 2022, respectively.

Restricted Stock and Restricted Stock Units with Market Conditions

3 unchanged sentences

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 period.

During the three and six months ended June 30, 2022, the Company awarded zero and 5,091 market-based restricted stock awards, respectively.

The per share weighted average grant-date fair value of the market-based restricted stock awards granted during the six months ended June 30, 2022 was $ 47.54 , as determined by the valuation.

During the three and nine months ended September 30, 2022, the Company awarded zero and 5,091 market-based restricted stock awards, respectively.

The per share weighted average grant-date fair value of the market-based restricted stock awards granted during the nine months ended September 30, 2022 was $ 47.54 , as determined by the valuation.

Notwithstanding the valuation, all market-based stock awards are issued at the market value at the close of business on the date the grant is awarded.

The weighted-average fair values of market-based restricted stock awards granted have been estimated utilizing the following assumptions:

June 30, 2022

September 30, 2022

Underlying stock price at valuation date $ 57.15

1 unchanged sentence

Risk-free interest rate 1.3 %

Restricted stock activity for the six months ended June 30, 2022 is set forth below:

Restricted stock activity for the nine months ended September 30, 2022 is set forth below:

Shares Weighted-Average

Nonvested at January 1, 2022 65,235 $ 57.77

Granted 884 57.77

Vested ( 30,703 ) 63.69

Nonvested at June 30, 2022

Nonvested at September 30, 2022

35,416 $ 52.79

Restricted stock unit activity for the six months ended June 30, 2022 is set forth below:

Restricted stock unit activity for the nine months ended September 30, 2022 is set forth below:

Shares Weighted-Average

4 unchanged sentences

Canceled ( 21,291 )

Outstanding at June 30, 2022

Outstanding at September 30, 2022

1,011,375 3.8 $ 47,838,038

Vested and expected to vest at June 30, 2022

Vested and expected to vest at September 30, 2022

648,013 3.0 $ 30,651,008

As of June 30, 2022, the Company had unrecognized share-based compensation cost of $ 39.9 million associated with these awards.

As of September 30, 2022, the Company had unrecognized share-based compensation cost of $ 35.5 million associated with these awards.

This cost of $ 0.7 million for awards and $ 34.8 million for units is expected to be recognized over a weighted-average period of 1.2 years for awards and 4.7 years for units.

1 unchanged sentence

In October 2021, Consensus established the Purchase Plan, which provides 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 at certain plan-defined dates.

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 on the beginning or the end of the offering period, with each offering period being six months.

7 unchanged sentences

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 1.94 % as of June 30, 2022.

For the three and six months ended June 30, 2022, 15,806 shares were purchased under the Purchase Plan.

Cash received upon the issuance of Consensus common stock under the Purchase Plan was $ 0.6 million for the three and six months ended June 30, 2022.

As of June 30, 2022, 973,773 shares were available under the Purchase Plan for future issuance.

Estimated forfeiture rates were 1.94 % as of September 30, 2022.

For the three and nine months ended September 30, 2022, zero and 15,806 shares, respectively, were purchased under the Purchase Plan.

Cash received upon the issuance of Consensus common stock under the Purchase Plan during the three and nine months ended September 30, 2022 was zero and $ 0.6 million, respectively.

As of September 30, 2022, 973,773 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, 2022

September 30, 2022

Risk-free interest rate 1.54 %

5 unchanged sentences

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,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 (1)

15 unchanged sentences

The Former Parent distributed 19,902,924 shares of Consensus common stock to holders of J2 Global common stock as of the close of business on October 1, 2021, the record date for the distribution.

This share amount was utilized for the computation of basic and diluted earnings per share for the three and six months ended June 30, 2021 because the number of shares issued simply reflect a recharacterization of the capital account previously held by the Former Parent.

This share amount was utilized for the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2021 because the number of shares issued simply reflect a recharacterization of the capital account previously held by the Former Parent.

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

For the three and six months ended June 30, 2022, there were 495,010 anti-dilutive shares that were excluded from the earnings per share calculation.

For the three and nine months ended September 30, 2022, there were 495,010 anti-dilutive shares that were excluded from the earnings per share calculation.

Segment Information

8 unchanged sentences

Such information attributes revenues based on markets where revenues are reported (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

5 unchanged sentences

$ 95,912 $ 89,198 $ 280,000 $ 263,660

2022 December 31,

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

September 30, 2022 December 31, 2021

Long-lived assets:

6 unchanged sentences

Accumulated Other Comprehensive Loss

The following table summarizes the changes in accumulated balances of other comprehensive loss, which solely comprises of foreign currency translation adjustments, for the three months ended June 30, 2022 (in thousands):

Foreign Currency Translation

Balance as of April 1, 2022 $ ( 18,974 )

Balance as of July 1, 2022 $ ( 23,318 )

Other comprehensive loss ( 11,411 )

Net increase in other comprehensive loss ( 11,411 )

Balance as of June 30, 2022 $ ( 23,318 )

The following table summarizes the changes in accumulated balances of other comprehensive loss, which solely comprises of foreign currency translation adjustments, for the six months ended June 30, 2022 (in thousands):

Balance as of September 30, 2022 $ ( 34,729 )

The following table summarizes the changes in accumulated balances of other comprehensive loss, which solely comprises of foreign currency translation adjustments, for the nine months ended September 30, 2022 (in thousands):

Foreign Currency Translation

2 unchanged sentences

Net increase in other comprehensive loss ( 17,872 )

Balance as of June 30, 2022 $ ( 23,318 )

There were zero reclassifications out of accumulated other comprehensive loss for the three and six months ended June 30, 2022.

Balance as of September 30, 2022 $ ( 34,729 )

There were zero reclassifications out of accumulated other comprehensive loss for the three and nine months ended September 30, 2022.

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, a tax matters agreement, an employee matters agreement, an intellectual property license agreement, and a stockholder and registration rights agreement (the “Agreements”).

The transition services agreement governs services including certain information technology services, finance and accounting services and human resource and employee benefit services.

The agreed-upon charges for such services are generally intended to allow the providing company to recover all costs and expenses of providing such services and are expected to terminate no later than twelve months following the Separation.

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 September 30, 2022, 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 24 months following the Separation.

Further, as noted in Note 9, Ziff Davis assigned its lease of office space in Los Angeles, California to Consensus.

Ziff Davis and Consensus will have joint liability under the lease through October 7, 2022, after which time the Company will be the sole lessee under the lease.

During the second quarter of 2022, the Company paid approximately $ 11.5 million 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.

During the three and nine months ended September 30, 2022, the Company paid approximately $ 7.2 million and $ 18.7 million to Ziff Davis, respectively, to settle co-mingled cash accounts, costs associated with the transition services agreement and Separation.

Additionally, the Company incurred approximately $ 0.1 million and $ 0.6 million, respectively, in costs related to the registration of shares for sale held by Ziff Davis for the three and nine months ended September 30, 2022.

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 9.8 %, as of June 30, 2022.

Amounts due to Ziff Davis as of June 30, 2022 and December 31, 2021 were $ 4.4 million and $ 5.7 million, respectively, related to these items, as well as reimbursement related to certain transaction related costs.

Subsequent to the disposition of the shares, Ziff Davis’ beneficial ownership in the Company was under 10 %, as of September 30, 2022.

Amounts due to Ziff Davis as of September 30, 2022 and December 31, 2021 were $ 0.9 million and $ 5.7 million, respectively, related to these items, as well as reimbursement related to certain transaction related costs.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements