What changed in this filing

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Item 1. Financial Statements

2023-08-09 compared with 2023-05-10 · 172 added, 104 removed, 684 unchanged (29% of the section changed)

4 unchanged sentences

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Cash and cash equivalents $ 111,977 $ 94,164

27 unchanged sentences

Authorized 120,000,000 ;

total issued is 20,118,967 and 20,105,545 shares and total outstanding is 19,659,661 and 19,916,431 shares at March 31, 2023 and December 31, 2022, respectively

Treasury stock, at cost ( 459,306 and 189,114 shares at March 31, 2023 and December 31, 2022, respectively)

total issued is 20,176,291 and 20,105,545 shares and total outstanding is 19,648,623 and 19,916,431 shares at June 30, 2023 and December 31, 2022, respectively

Treasury stock, at cost ( 527,668 and 189,114 shares at June 30, 2023 and December 31, 2022, respectively)

( 18,937 ) ( 7,596 )

9 unchanged sentences

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

Three Months Ended March 31,

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

2023 2022 2023 2022

Revenues $ 92,792 $ 91,115 $ 184,246 $ 180,413

6 unchanged sentences

Research, development and engineering (1)

1,765 2,741 3,669 5,077

General and administrative (1)

3 unchanged sentences

Interest expense ( 12,817 ) ( 12,359 ) ( 25,383 ) ( 25,632 )

Interest income 661 — 665 —

Other (expense) income, net 568 1,577 ( 280 ) 1,750

19 unchanged sentences

(Unaudited, in thousands)

Three Months Ended March 31,

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

2023 2022 2023 2022

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

8 unchanged sentences

(Unaudited, in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

28 unchanged sentences

Debt issuance costs — ( 232 )

Proceeds from the issuance of common stock under employee stock purchase plan 871 631

Repurchase of common stock ( 11,244 ) ( 7,596 )

Shares withheld related to net share settlement ( 451 ) ( 1,173 )

Taxes paid related to net share settlement ( 1,175 ) ( 1,590 )

Net cash used in financing activities ( 11,548 ) ( 8,787 )

10 unchanged sentences

paid-in Treasury stock Accumulated Accumulated other comprehensive Total

Shares Amount capital Shares Amount Deficit loss Equity

Shares Amount capital Shares Amount Deficit loss Deficit

Balance, April 1, 2022 19,995,528 $ 200 $ 7,108 — $ — $ ( 303,037 ) $ ( 18,974 ) $ ( 314,703 )

Net income — — — — — 21,921 — 21,921

Other comprehensive loss — — — — — — ( 4,344 ) ( 4,344 )

Vested restricted stock 12,401 — — — — — — —

Shares withheld related to net share settlement ( 7,897 ) — ( 417 ) — — — — ( 417 )

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

Share-based compensation — — 4,923 — — — — 4,923

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

Reclassifications related to the Separation

— — — — — ( 622 ) — ( 622 )

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

Common stock Additional

paid-in Treasury stock Accumulated Accumulated other comprehensive Total

Shares Amount capital Shares Amount Deficit loss Deficit

Balance, April 1, 2023 20,118,967 $ 201 $ 26,859 ( 459,306 ) $ ( 16,791 ) $ ( 234,950 ) $ ( 16,030 ) $ ( 240,711 )

Net income — — — — — 21,058 — 21,058

Other comprehensive loss — — — — — — ( 971 ) ( 971 )

Vested restricted stock 49,280 1 ( 1 ) — — — — —

Shares withheld related to net share settlement ( 21,538 ) — ( 724 ) — — — — ( 724 )

Repurchase of common stock — — — ( 68,362 ) ( 2,146 ) — — ( 2,146 )

Share-based compensation — — 5,177 — — — — 5,177

Issuance of shares under ESPP 29,582 — 871 — — — — 871

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

CONSENSUS CLOUD SOLUTIONS, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Unaudited, in thousands except share amounts)

Common stock Additional

paid-in Treasury stock Accumulated Accumulated other comprehensive Total

Shares Amount capital Shares Amount Deficit loss Deficit

Balance, January 1, 2022 19,978,580 $ 200 $ 2,878 — $ — $ ( 318,886 ) $ ( 16,857 ) $ ( 332,665 )

3 unchanged sentences

Shares withheld related to net share settlement ( 27,819 ) — ( 1,590 ) — — — — ( 1,590 )

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

Share-based compensation — — 10,326 — — — — 10,326

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

Reclassifications related to the Separation

— — — — — ( 3,293 ) — ( 3,293 )

Balance, March 31, 2022 19,995,528 $ 200 $ 7,108 — $ — $ ( 303,037 ) $ ( 18,974 ) $ ( 314,703 )

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

Common stock Additional

paid-in Treasury stock Accumulated Accumulated other comprehensive Total

Shares Amount capital Shares Amount Deficit loss Equity

Shares Amount capital Shares Amount Deficit loss Deficit

Balance, January 1, 2023 20,105,545 $ 201 $ 21,650 ( 189,114 ) $ ( 7,596 ) $ ( 250,408 ) $ ( 19,108 ) $ ( 255,261 )

5 unchanged sentences

Share-based compensation — — 10,837 — — — — 10,837

Balance, March 31, 2023 20,118,967 $ 201 $ 26,859 ( 459,306 ) $ ( 16,791 ) $ ( 234,950 ) $ ( 16,030 ) $ ( 240,711 )

Issuance of shares under ESPP 29,582 — 871 — — — — 871

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

See Notes to Condensed Consolidated Financial Statements

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 under 10 % as of December 31, 2022 (see Note 15 - 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 June 30, 2023 and December 31, 2022 (see Note 15 - Related Party Transactions).

Principles of Consolidation

3 unchanged sentences

The accompanying interim condensed consolidated financial statements are unaudited and have been prepared in accordance with instructions for Form 10-Q and Article 10 of Regulation S-X issued by the Securities and Exchange Commission (“SEC”).

Accordingly, they do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements, the Company believes that the disclosures made are adequate to make that information not misleading.

The Company believes that the disclosures made are adequate to make that information not misleading.

In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for the fair statement of these interim financial statements have been reflected.

3 unchanged sentences

Use of Estimates

The preparation of condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, including judgments about the reported amounts of revenue and expenses during the reporting period.

The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, including judgments about the reported amounts of revenue and expenses during the reporting period.

The Company believes that its most significant estimates are those related to revenue recognition, share-based compensation expense, impairment or disposal of long-lived and intangible asset impairment, income taxes, contingencies and allowances for doubtful accounts.

On an ongoing basis, management evaluates its estimates based on historical experience and on various other factors that the Company believes to be reasonable under the circumstances.

Actual results could materially differ from those estimates due to risks and uncertainties, including uncertainty in the current economic environment due to the novel coronavirus pandemic (“COVID-19”).

Actual results could materially differ from those estimates due to risks and uncertainties, including uncertainty in the current economic environment due to factors such as inflationary pressures, elevated interest rates and the novel coronavirus pandemic (“COVID-19”).

Allowances for Doubtful Accounts

28 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 first quarter of 2023 and 2022.

No impairment was recorded during the six months ended June 30, 2023 and 2022.

The Company classifies its long-lived assets to be sold as held for sale in the period if (i) it has approved and committed to a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition, (iii) an active program to locate a buyer and other actions required to sell the asset have been initiated, (iv) the sale of the asset is probable, (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value, and (vi) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

16 unchanged sentences

The Company evaluates its goodwill and indefinite-lived intangible assets for impairment pursuant to FASB ASC Topic No.

350, Intangibles - Goodwill and Other (“ASC 350”), which provides that goodwill and other intangible assets with indefinite lives are not amortized, but tested annually for impairment or more frequently if the Company believes indicators of

impairment exist.

350, Intangibles - Goodwill and Other (“ASC 350”), which provides that goodwill and other intangible assets with

indefinite lives are not amortized, but tested annually for impairment or more frequently if the Company believes indicators of impairment exist.

In connection with the annual impairment test for goodwill, the Company has the option to perform a qualitative assessment in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

3 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 first quarter of 2023 or 2022.

The Company accounts for investments in equity securities in accordance with FASB ASC Topic 321, Investments - Equity Securities (“ASC 321”), which requires the accounting for equity investments, other than those accounted for under the equity method of accounting, generally be measured at fair value for equity securities with readily determinable fair values.

No impairment was recorded during the six months ended June 30, 2023 or 2022.

The Company accounts for investments in equity securities in accordance with FASB ASC Topic No.

321, Investments - Equity Securities (“ASC 321”), which requires the accounting for equity investments, other than those accounted for under the equity method of accounting, generally be measured at fair value for equity securities with readily determinable fair values.

Equity securities without a readily determinable fair value, which are not accounted for under the equity method of accounting, are measured at their cost, less impairment, if any, and adjusted for observable price changes arising from orderly transactions in the same or similar investment from the same issuer.

Any unrealized gains or losses are reported within earnings on the Condensed Consolidated Statement of Income.

As of March 31, 2023 the carrying amount of the Company’s investments accounted for using the measurement alternative method in accordance with ASC 321 was $ 4.0 million and is included in other assets within the Company’s Condensed Consolidated Balance Sheets.

As of June 30, 2023 the carrying amount of the Company’s investments accounted for using the measurement alternative method in accordance with ASC 321 was $ 4.0 million and is included in other assets within the Company’s Condensed Consolidated Balance Sheets.

If the Company becomes aware of a significant decline in value that is other-than-temporary, the Company assesses whether an other-than-temporary impairment loss on an investment has occurred due to declines in fair value or other market conditions.

The loss will be recorded in the period in which the Company identifies the decline.

No impairment has been recorded.

During the three months ended March 31, 2023, the Company recognized zero investment gain (loss).

During the three and six months ended June 30, 2023, the Company did not recognize any investment gain or loss and did not have any impairments during the respective periods.

The Company’s income is subject to taxation in both the U.S.

21 unchanged sentences

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.

1 unchanged sentence

The Company remitted the deferred employer side social security payments during the year ended December 31, 2022.

The Company will continue to evaluate the impact of these provisions on its financial statements.

The Company will continue to monitor the impact of these provisions on its financial statements.

Share-Based Compensation

55 unchanged sentences

Early adoption is permitted for both interim and annual financial statement that have not yet been made available.

If an entity adopts the amendments in an interim period, it must must adopt them as of the beginning of the fiscal year that includes the interim period.

If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes the interim period.

The amendments applicable to the Company (Issue 2) are required to be applied using the option of one of the following adoption methods:

15 unchanged sentences

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

Three Months Ended March 31,

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

2023 2022 2023 2022

Corporate $ 50,361 $ 48,867 $ 99,768 $ 95,386

Small office home office (“SoHo”) 42,429 42,228 84,459 85,007

Other 2 20 19 20

Total revenues $ 92,792 $ 91,115 $ 184,246 $ 180,413

3 unchanged sentences

Total $ 92,792 $ 91,115 $ 184,246 $ 180,413

The Company has recorded $ 11.5 million and $ 10.9 million of revenue for the three months ended March 31, 2023 and 2022, respectively, that was previously included in the deferred revenue balance as of the beginning of each respective year.

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

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

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

on February 4, 2022.

33 unchanged sentences

As a practical expedient, for amortization periods that are determined to be one year or less, the Company expenses any incremental costs of obtaining the contract with a customer when incurred.

For those customer contracts greater than one year, the Company capitalizes and amortizes the expenses over the period of benefit.

For those customer contracts greater than one year, the Company capitalizes and amortizes the expenses, when appropriate, over the period of benefit.

Revenues Invoiced

10 unchanged sentences

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

The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents.

Cash and cash equivalents are comprised of money market funds and foreign and domestic bank accounts.

These cash and cash equivalents are valued based on Level 1 inputs which consist of quoted prices in active markets.

The carrying value of the Company’s cash and cash equivalents approximates fair value.

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

The carrying value of long-term debt is reflected in the financial statements at cost.

Assets Measured on a Non-Recurring Basis

4 unchanged sentences

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination.

Intangible assets resulting from the acquisitions of entities accounted for using the acquisition method of accounting are recorded at the estimated fair value of the assets acquired.

Intangible assets resulting from the acquisitions of entities accounted for using the

acquisition method of accounting are recorded at the estimated fair value of the assets acquired.

Identifiable intangible assets are comprised of purchased customer relationships, trademarks and trade names, developed technologies and other intangible assets.

1 unchanged sentence

These determinations are primarily based upon the Company’s historical experience and expected benefit of each intangible asset.

If it is determined that such

assumptions are not accurate, then the resulting change will impact the fair value of the intangible asset.

If it is determined that such assumptions have changed in future periods, then the resulting change will impact the fair value of the intangible asset.

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

The changes in carrying amounts of goodwill for the three months ended March 31, 2023 are as follows (in thousands):

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

Balance as of January 1, 2023 $ 346,585

Foreign exchange translation 1,270

Balance as of March 31, 2023 $ 347,752

Balance as of June 30, 2023 $ 347,855

Intangible Assets with Indefinite Lives:

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

March 31, 2023 December 31, 2022

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

June 30, 2023 December 31, 2022

Trade names $ 27,354 $ 27,337

2 unchanged sentences

Intangible Assets Subject to Amortization:

As of March 31, 2023, intangible assets subject to amortization are summarized as follows (in thousands):

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

Weighted-Average Remaining

8 unchanged sentences

(1) Historically, the Company has amortized its customer relationship assets in a pattern that best reflects the pace in which the assets’ benefits are consumed.

This pattern results in a substantial majority of the amortization expense being recognized in the first four to five years , despite the overall life of the asset.

This pattern results in a substantial majority of the amortization expense being recognized in the first four to five years , which may not correlate to the overall life of the asset.

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

9 unchanged sentences

(1) Historically, the Company has amortized its customer relationship assets in a pattern that best reflects the pace in which the assets’ benefits are consumed.

This pattern results in a substantial majority of the amortization expense being recognized in the first four to five years , despite the overall life of the asset.

Expected amortization expenses for intangible assets subject to amortization at March 31, 2023 are as follows (in thousands):

This pattern results in a substantial majority of the amortization expense being recognized in the first four to five years , which may not correlate to the overall life of the asset.

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

2023 (remainder) $ 2,118

1 unchanged sentence

Total $ 15,692

Amortization expense was $ 1.1 million and $ 1.5 million for the three months ended March 31, 2023 and 2022, respectively.

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

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

2026 Senior Notes $ 305,000 $ 305,000

3 unchanged sentences

Total long-term debt $ 794,830 $ 793,865

At March 31, 2023, future principal payments for debt were as follows (in thousands):

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

2023 (remainder) $ —

1 unchanged sentence

Total $ 805,000

The Company capitalized $ 0.5 million and zero of interest expense within property and equipment, net on the Company’s Condensed Consolidated Balance Sheets during the three months ended March 31, 2023 and 2022, respectively

2026 Senior Notes

1 unchanged sentence

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 Sheets as of March 31, 2023 and December 31, 2022.

The 2026 Senior Notes are presented as long-term debt, net of deferred issuance costs, on the Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022.

The 2026 Senior Notes bear interest at a rate of 6.0 % per annum, payable semi-annually in arrears on April 15 and October 15 of each year, which commenced on April 15, 2022.

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 March 31, 2023.

As of March 31, 2023 and December 31, 2022, the estimated fair value of the 2026 Senior Notes was approximately $ 265.4 million and $ 282.8 million, respectively, and was based on quoted market prices or dealer quotes for the 2026 Senior Notes which are Level 1 inputs in the fair value hierarchy.

The Company is in compliance with its debt covenants as of June 30, 2023.

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

2028 Senior Notes

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 of indebtedness under such credit agreement for a total amount of $ 483.8 million, after deducting the initial purchasers’ discounts, commissions and offering expenses.

The 2028 Senior Notes were presented as long-term debt, net of deferred issuance costs, on the Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022.

The 2028 Senior Notes were presented as long-term debt, net of deferred issuance costs, on the Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022.

The 2028 Senior Notes bear interest at a rate of 6.5 % per annum, payable semi-annually in arrears on April 15 and October 15 of each year, which commenced on April 15, 2022.

13 unchanged sentences

The Company is in compliance with its debt covenants as of March 31, 2023.

As of March 31, 2023 and December 31, 2022, the estimated fair value of the 2028 Senior Notes was approximately $ 411.9 million and $ 459.4 million, respectively, and was based on quoted market prices or dealer quotes for the 2028 Senior Notes which are Level 1 inputs in the fair value hierarchy.

The Company is in compliance with its debt covenants as of June 30, 2023.

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

Credit Agreement

2 unchanged sentences

The final maturity of the Credit Facility will occur on March 4, 2027.

As of March 31, 2023, no amount has been drawn down on the Credit Facility.

As of June 30, 2023, no amount has been drawn down on the Credit Facility.

The Credit Facility is guaranteed by each wholly-owned material domestic subsidiary of Consensus, and secured by substantially all assets of Consensus and the guarantors.

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 March 31, 2023.

The Company is in compliance with its covenants as of June 30, 2023.

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

18 unchanged sentences

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

Three Months Ended March 31,

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

2023 2022 2023 2022

Operating lease cost $ 718 $ 607 $ 1,387 $ 1,236

4 unchanged sentences

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Lease-related assets and liabilities

8 unchanged sentences

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

Three Months Ended March 31,

Six Months Ended June 30,

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

3 unchanged sentences

Other supplemental operating lease information consists of the following:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Operating leases:

1 unchanged sentence

Weighted average discount rate 4.8 % 4.6 %

Maturities of operating lease liabilities as of March 31, 2023 are as follows (in thousands):

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

Operating Leases

6 unchanged sentences

Discount Rate

The majority of the Company’s leases are discounted using the Company’s incremental borrowing rate as the rate implicit in the lease is not readily determinable.

The majority of the Company’s leases are discounted using the Company’s collateralized incremental borrowing rate as the rate implicit in the lease is not readily determinable.

Rates are obtained from various large banks to determine the appropriate incremental borrowing rate each quarter for collateralized loans with a maturity similar to the lease term.

9 unchanged sentences

The outcomes of such matters are subject to inherent uncertainties, carrying the potential for unfavorable rulings that could include monetary damages and injunctive relief.

The Company does not believe, based on current knowledge, that any legal proceedings or claims currently exist which, after giving effect to existing accrued liabilities, are likely to have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows.

consolidated financial position, results of operations, or cash flows.

It is the Company’s policy to expense legal fees related to any litigation as incurred.

10 unchanged sentences

The Company has initiated a Voluntary Disclosure Agreement (“VDA”) process in the third quarter of 2022, to voluntarily report the prior period sales tax liability.

The process is expected to be completed in the second quarter of 2023.

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 its business.

The process is expected to be completed in the third quarter of 2023.

While the Company believes that it has sufficiently reserved for historical sales tax liabilities under FASB ASC Topic No.

450, Contingencies, some state taxing authorities may still challenge the Company’s sales tax position, the methodology used to calculate the sales tax liability, and may also impose other taxes on its business.

Taxing authorities may successfully assert that the Company should have collected, or in the future should collect sales and use, telecommunications or similar taxes, and could be subject to liability with respect to past or future tax, which could adversely affect the Company’s operating results.

During the three months ended March 31, 2023, the Company did not record any sales tax expense pertaining to the prior periods.

The Company recorded a sales tax expense within general and administrative expenses in the Condensed Consolidated Statements of Income of $ 0.6 million and $ 1.0 million for the three months ended March 31, 2023 and 2022, respectively.

During the three months ended June 30, 2023, the Company reassessed its sales tax exposure based on the states with a completed VDA process.

The Company believes that it did not need to record any additional sales tax expense pertaining to the prior periods.

The Company recorded a sales tax expense within general and administrative expenses in the Condensed Consolidated Statements of Income of $ 0.5 million and $ 0.1 million for the three months ended June 30, 2023 and 2022, respectively.

The Company recorded a sales tax expense within general and administrative expenses in the Condensed Consolidated Statements of Income of $ 1.1 million and $ 1.1 million for the six months ended June 30, 2023 and 2022, respectively.

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

Sales tax liability within accounts payable and accrued expenses on the Company’s Condensed Consolidated Balance Sheets was $ 10.1 million and $ 13.1 million as of March 31, 2023 and December 31, 2022, respectively.

The sales tax liability within accounts payable and accrued expenses on the Company’s Condensed Consolidated Balance Sheets was $ 6.9 million and $ 13.1 million as of June 30, 2023 and December 31, 2022, respectively.

The Company’s tax provision for interim periods is determined using an estimate of the Company’s annual effective tax rate adjusted for discrete interim period tax impacts.

1 unchanged sentence

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 March 31, 2023 and 2022 was 24.9 % and 27.5 %, respectively.

The Company’s decreased rate during the three months ended March 31, 2023 is primarily due to a reduction in nondeductible expenses for tax purposes and the change in the geographical mix of income.

Income before income taxes included (loss) income from domestic operations of $( 1.6 ) million and $ 0.7 million for the three months ended March 31, 2023 and 2022, respectively, and income from foreign operations of $ 22.2 million and $ 24.9 million for the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023 and December 31, 2022, the Company had $ 7.4 million and $ 6.7 million, respectively, in liabilities for uncertain income tax positions.

The Company’s effective tax rate for the three months ended June 30, 2023 and 2022 was 22.7 % and 26.4 %, respectively.

The Company’s decreased rate during the three months ended June 30, 2023 is primarily due to a reduction in nondeductible expenses for tax purposes and the change in the geographical mix of income.

The Company’s effective tax rate for the six months ended June 30, 2023 and 2022 was 23.7 % and 26.9 %, respectively.

The Company’s decreased rate during the six months ended June 30, 2023 is primarily due to a reduction in nondeductible expenses for tax purposes and the change in the geographical mix of income.

The Company’s effective tax rates for the three and six months ended June 30, 2023 and 2022 differed from the U.S.

federal statutory rates of 21% primarily as a result of state income taxes, nondeductible expenses for tax purposes, foreign rate differential, research and development credits and uncertain tax positions.

As of June 30, 2023 and December 31, 2022, the Company had $ 8.2 million and $ 6.7 million, respectively, in liabilities for uncertain income tax positions, including interest and penalties.

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

1 unchanged sentence

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

As of March 31, 2023, the Company is not under audit in any jurisdiction that it operates within.

As of June 30, 2023, the Company is not under audit in any jurisdiction that it operates within.

The Company has filed its first set of post-spin tax returns including some international subsidiaries who have previously filed in their local jurisdictions.

Depending on the jurisdictions in which the Company is filing, tax returns for the years from 2016 onwards are still open to examination by tax authorities.

Stockholders’ Equity

Stockholders’ Deficit

Common Stock Repurchase Program

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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 March 31, 2023 and 2022, the Company repurchased 270,192 and zero shares, respectively, under this program.

Cumulatively as of March 31, 2023, 459,306 shares have been repurchased at an aggregate cost of $ 16.8 million.

The Company entered into Rule 10b-18 and Rule 10b5-1 trading plans and during the three months ended June 30, 2023 and 2022, the Company repurchased 68,362 and 189,114 shares, respectively, under this program.

During the six months ended June 30, 2023 and 2022, the Company repurchased 338,554 and 189,114 shares, respectively, under this program.

Cumulatively as of June 30, 2023, 527,668 shares have been repurchased at an aggregate cost of $ 18.9 million (inclusive of excise tax of $ 0.1 million).

The excise tax is assessed at 1 % of the fair market value of net stock repurchases after December 31, 2022.

Vested Restricted Stock

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These shares do not count against the authorized capacity under the Company’s share repurchase program described above.

During the three months ended March 31, 2023 and 2022 the Company withheld shares on its vested restricted stock units and restricted stock awards relating to its share-based compensation plans of 11,418 and 19,922 shares, respectively.

During the three and six months ended June 30, 2023 the Company withheld shares on its vested restricted stock units and restricted stock awards relating to its share-based compensation plans of 21,538 and 32,956 shares, respectively.

During the three and six months ended June 30, 2022 the Company withheld shares on its vested restricted stock units and restricted stock awards relating to its share-based compensation plans of 7,897 and 27,819 shares, respectively.

The Company currently does not issue dividends to Consensus shareholders.

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4,000,000 shares of common stock are authorized to be used for 2021 Plan purposes.

As of March 31, 2023, 2,735,286 shares were available to be used under the 2021 Plan.

As of June 30, 2023, 2,724,739 shares were available to be used under the 2021 Plan.

Restricted Stock and Restricted Stock Units

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Vesting periods are approximately one year for awards to members of the Company’s Board of Directors, four years for employees and five years for the Chief Executive Officer and Chief Operating Officer.

The Company granted 41,754 shares of restricted stock units during the three months ended March 31, 2023.

The Company granted 57,652 shares of restricted stock units during the six months ended June 30, 2023.

Restricted Stock and Restricted Stock Units with Market Conditions

2 unchanged sentences

Market conditions were factored into the grant date fair value using a Monte Carlo valuation model, which utilized multiple input variables to determine the probability of the Company achieving the specified stock price targets for 20 out of 30 trading days or 20 out of 25 trading days (look-back period).

Stock-based compensation expense related to an award with a market condition is recognized over the requisite service period using the graded-vesting method unless the market condition has been met and requisite service period has been completed, then the expense will be accelerated and recognized in the period that the marketing condition and service period requirement have been met.

During the three months ended March 31, 2023, the Company awarded zero market-based restricted stock awards and restricted stock units.

Restricted stock activity for the three months ended March 31, 2023 is set forth below:

Stock-based compensation expense related to an award with a market condition is recognized over the requisite service period using the graded-vesting method unless the market condition has been met and requisite service period has been completed, then the expense will be accelerated and recognized in the period that the market condition and service period requirement have been met.

During the six months ended June 30, 2023, the Company awarded zero market-based restricted stock awards and restricted stock units.

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

Shares Weighted-Average

1 unchanged sentence

Vested ( 19,737 ) 37.77

Nonvested at March 31, 2023

Nonvested at June 30, 2023

15,679 $ 39.24

As of March 31, 2023, the Company had unrecognized share-based compensation cost related to its restricted stock

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

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

Restricted stock unit activity for the three months ended March 31, 2023 is set forth below:

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

Shares Weighted-Average

5 unchanged sentences

Canceled ( 12,367 ) 57.32

Outstanding at March 31, 2023

Outstanding at June 30, 2023

1,053,616 $ 51.54 3.5 $ 32,662,096

Vested and expected to vest at March 31, 2023

Vested and expected to vest as of June 30, 2023

711,412 $ 52.62 3.0 $ 22,053,764

As of March 31, 2023, the Company had unrecognized share-based compensation cost related to its restricted stock units of $ 36.1 million, which is expected to be recognized over a weighted-average period of 2.7 years.

The Company capitalized $ 0.5 million and zero , respectively, of share-based compensation cost within property and equipment, net on our Condensed Consolidated Balance Sheets during the three months ended March 31, 2023 and 2022.

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

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

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

(b) Employee Stock Purchase Plan

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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 6.73 % as of March 31, 2023.

For the three months ended March 31, 2023, zero shares were purchased under the Purchase Plan.

Cash received upon the issuance of Consensus common stock under the Purchase Plan during the three months ended March 31, 2023 was zero .

As of March 31, 2023, 957,483 shares were available under the Purchase Plan for future issuance.

Estimated forfeiture rates were 5.61 % as of June 30, 2023.

For the three and six months ended June 30, 2023, 29,582 shares were purchased under the Purchase Plan.

Cash received upon the issuance of Consensus common stock under the Purchase Plan during the three and six months ended June 30, 2023 was $ 0.9 million.

As of June 30, 2023, 927,901 shares were available under the Purchase Plan for future issuance.

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

March 31, 2023

June 30, 2023

Risk-free interest rate 5.26 %

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 March 31,

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

2023 2022 2023 2022

Numerator for basic and diluted net income per common share:

12 unchanged sentences

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

For the three months ended March 31, 2023 and 2022, there were 597,542 and 500,585 anti-dilutive shares, respectively, that were excluded from the earnings per share calculation.

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

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

Segment Information

7 unchanged sentences

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

Three Months Ended March 31,

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

2023 2022 2023 2022

United States $ 73,569 $ 71,901 $ 145,882 $ 141,494

5 unchanged sentences

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Long-lived assets:

6 unchanged sentences

Accumulated Other Comprehensive Loss

The following table summarizes the changes in accumulated other comprehensive loss, which solely comprises of foreign currency translation adjustments, for the three months ended March 31, 2023 (in thousands):

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

Foreign Currency Translation

Balance as of April 1, 2023 $ ( 16,030 )

Other comprehensive loss ( 971 )

Net increase in other comprehensive loss ( 971 )

Balance as of June 30, 2023 $ ( 17,001 )

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

Foreign Currency Translation

Balance as of January 1, 2023 $ ( 19,108 )

1 unchanged sentence

Net increase in other comprehensive income 2,107

Balance as of March 31, 2023 $ ( 16,030 )

There were zero reclassifications out of accumulated other comprehensive loss for the three months ended March 31, 2023.

Balance as of June 30, 2023 $ ( 17,001 )

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

Related Party Transactions

2 unchanged sentences

The agreed-upon charges, if any, for such services are intended to cover any costs and expenses incurred in providing such services.

As of March 31, 2023, a majority of the services provided under TSA were completed or terminated, with a select few services still winding down and set to terminate no later than 24 months following the Separation.

During the three months ended March 31, 2023 and 2022, the Company paid approximately $ 0.2 million and zero , respectively, to Ziff Davis to settle co-mingled cash accounts, costs associated with the transition services agreement and Separation.

As of June 30, 2023, a majority of the services provided under TSA were completed or terminated, with a select few services still winding down and set to terminate no later than October 7, 2023.

During the three months ended June 30, 2023 and 2022, the Company paid approximately $ 0.4 million and $ 11.5 million, respectively, and during the six months ended June 30, 2023 and 2022 the Company paid approximately $ 0.6 million and $ 11.5 million, respectively, to Ziff Davis to settle co-mingled cash accounts, costs associated with the transition services agreement and Separation.

Additionally, the Company incurred approximately $ 0.4 million in costs related to the registration of shares for sale held by Ziff Davis for the three and six months ended June 30, 2022.

No costs were incurred in 2023 related to the registration of shares for sale held by Ziff Davis.

These costs were recorded in general and administrative expenses within the Condensed Consolidated Statement of Income.

Subsequent to the disposition of the shares, Ziff Davis’ beneficial ownership in the Company was under 10 %, as of March 31, 2023 and December 31, 2022.

Amounts due to Ziff Davis as of March 31, 2023 and December 31, 2022 were $ 0.2 million and $ 0.2 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 June 30, 2023 and December 31, 2022 (see Note 1 - Basis of Presentation).

Amounts due to Ziff Davis as of June 30, 2023 and December 31, 2022 were zero and $ 0.2 million, respectively, related to these items, as well as reimbursement related to certain transaction related costs.

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