What changed in this filing

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Item 1. Financial Statements

2023-11-09 compared with 2023-08-09 · 138 added, 123 removed, 733 unchanged (26% of the section changed)

4 unchanged sentences

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Cash and cash equivalents $ 155,682 $ 94,164

15 unchanged sentences

Operating lease liabilities, current 2,870 2,793

Due to Former Parent 36 156

Total current liabilities 85,063 71,322

9 unchanged sentences

Authorized 120,000,000 ;

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

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

total issued is 20,182,262 and 20,105,545 shares and total outstanding is 19,502,195 and 19,916,431 shares as of September 30, 2023 and December 31, 2022, respectively

Treasury stock, at cost ( 680,067 and 189,114 shares as of September 30, 2023 and December 31, 2022, respectively)

( 22,728 ) ( 7,596 )

9 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,

2023 2022 2023 2022

14 unchanged sentences

Interest income 1,519 — 2,184 —

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

Other income, net 3,725 2,992 3,445 4,742

Income before income taxes 31,544 21,708 79,385 77,061

18 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,

2023 2022 2023 2022

Net income $ 24,007 $ 15,370 $ 60,523 $ 55,811

Other comprehensive income (loss):

Other comprehensive loss:

Foreign currency translation adjustment ( 6,238 ) ( 11,411 ) ( 4,131 ) ( 17,872 )

Other comprehensive income (loss) ( 971 ) ( 4,344 ) 2,107 ( 6,461 )

Other comprehensive loss

( 6,238 ) ( 11,411 ) ( 4,131 ) ( 17,872 )

Comprehensive income $ 17,769 $ 3,959 $ 56,392 $ 37,939

4 unchanged sentences

(Unaudited, in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

43 unchanged sentences

paid-in Treasury stock Accumulated Accumulated other comprehensive Total

Shares Amount capital Shares Amount Deficit loss Deficit

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

Shares Amount capital Shares Amount deficit

Balance, July 1, 2022 20,015,838 $ 200 $ 12,245 ( 189,114 ) $ ( 7,596 ) $ ( 281,738 ) $ ( 23,318 ) $ ( 300,207 )

Net income — — — — — 15,370 — 15,370

2 unchanged sentences

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

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

Share-based compensation — — 4,756 — — — — 4,756

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

Reclassifications related to the Separation

— — — — — ( 679 ) — ( 679 )

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

Balance, September 30, 2022 20,016,950 $ 200 $ 16,893 ( 189,114 ) $ ( 7,596 ) $ ( 267,047 ) $ ( 34,729 ) $ ( 292,279 )

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 )

Shares Amount capital Shares Amount deficit

Balance, July 1, 2023 20,176,291 $ 202 $ 32,182 ( 527,668 ) $ ( 18,937 ) $ ( 213,892 ) $ ( 17,001 ) $ ( 217,446 )

Net income — — — — — 24,007 — 24,007

4 unchanged sentences

Share-based compensation — — 4,250 — — — — 4,250

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 )

Balance, September 30, 2023 20,182,262 $ 202 $ 36,362 ( 680,067 ) $ ( 22,728 ) $ ( 189,885 ) $ ( 23,239 ) $ ( 199,288 )

CONSENSUS CLOUD SOLUTIONS, INC.

4 unchanged sentences

paid-in Treasury stock Accumulated Accumulated other comprehensive Total

Shares Amount capital Shares Amount Deficit loss Deficit

Shares Amount capital Shares Amount deficit

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

8 unchanged sentences

— — — — — ( 3,972 ) — ( 3,972 )

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

Balance, September 30, 2022 20,016,950 $ 200 $ 16,893 ( 189,114 ) $ ( 7,596 ) $ ( 267,047 ) $ ( 34,729 ) $ ( 292,279 )

Common stock Additional

paid-in Treasury stock Accumulated Accumulated other comprehensive Total

Shares Amount capital Shares Amount Deficit loss Deficit

Shares Amount capital Shares Amount deficit

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

6 unchanged sentences

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 )

Balance, September 30, 2023 20,182,262 $ 202 $ 36,362 ( 680,067 ) $ ( 22,728 ) $ ( 189,885 ) $ ( 23,239 ) $ ( 199,288 )

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 June 30, 2023 and 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 September 30, 2023 and December 31, 2022 (see Note 16 - Related Party Transactions).

Principles of Consolidation

13 unchanged sentences

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

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

Allowances for Doubtful Accounts

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 during the six months ended June 30, 2023 and 2022.

No impairment was recorded during the nine months ended September 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.

23 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 during the six months ended June 30, 2023 or 2022.

No impairment was recorded during the nine months ended September 30, 2023 or 2022.

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

2 unchanged sentences

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

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

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

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

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

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

During the three and nine months ended September 30, 2023, the Company did not recognize any unrealized gains or losses and did not have any impairments during the respective periods.

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

97 unchanged sentences

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

In October 2023, the FASB issued ASU No.

2023-06, Disclosure Improvements:

Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, which amends the disclosure or presentation requirements of a variety of topics in the accounting standards codification in order to conform with certain SEC amendments in Release No.

33-10532, Disclosure Update and Simplification.

The effective date for each amendment will be the date on which the SEC removes that related disclosure from its rules.

However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective.

The Company is evaluating the potential impact of this guidance on its condensed consolidated financial statements.

The Company’s revenues substantially consist of monthly recurring subscription and usage-based fees from customers accessing the Company’s cloud-based subscription (the “Cloud Fax Services”), a significant portion of which are paid in advance by credit card.

2 unchanged sentences

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,

2023 2022 2023 2022

7 unchanged sentences

Total $ 90,562 $ 91,777 $ 274,808 $ 272,190

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.

The Company has recorded $ 4.2 million and $ 4.0 million of revenue for the three months ended September 30, 2023 and 2022, respectively, and $ 20.2 million and $ 19.2 million of revenue for the nine months ended September 30, 2023 and 2022, respectively, that was previously included in the deferred revenue balance as of the beginning of each respective year.

Performance Obligations

47 unchanged sentences

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 Company had $ 144.9 million and zero of money market funds as of September 30, 2023 and December 31, 2022, respectively, which are valued based on Level 1 inputs consisting of quoted prices in active markets.

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

2 unchanged sentences

Assets Measured on a Non-Recurring Basis

The Company’s non-financial assets, which primarily consist of goodwill, other intangible assets and fixed assets, are reported at carrying value, or at fair value as of their acquisition dates, and are not required to be measured at fair value on a recurring basis.

The Company’s non-financial assets, which primarily consist of goodwill, other intangible assets, fixed assets, and equity securities without a readily determinable fair value are reported at carrying value, or at fair value as of their acquisition dates, and are not required to be measured at fair value on a recurring basis.

However, on a periodic basis (at least annually for goodwill and indefinite-lived intangibles or whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable), non-financial assets are assessed for impairment.

2 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.

3 unchanged sentences

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

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

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

Balance as of January 1, 2023 $ 346,585

Foreign exchange translation ( 525 )

Balance as of June 30, 2023 $ 347,855

Balance as of September 30, 2023 $ 346,060

Intangible Assets with Indefinite Lives:

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

June 30, 2023 December 31, 2022

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

September 30, 2023 December 31, 2022

Trade names $ 27,330 $ 27,337

2 unchanged sentences

Intangible Assets Subject to Amortization:

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

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

Weighted-Average Remaining

7 unchanged sentences

$ 182,048 $ 167,429 $ 14,619

(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.

(1) The Company amortizes its customer relationship assets in a pattern that best reflects the pace in which the assets’ benefits are consumed.

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

9 unchanged sentences

Total $ 181,604 $ 163,830 $ 17,774

(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.

(1) The Company amortizes its customer relationship assets in a pattern that best reflects the pace in which the assets’ benefits are consumed.

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

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

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

2023 (remainder) $ 1,057

1 unchanged sentence

Total $ 14,619

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.

Amortization expense was $ 1.0 million and $ 1.2 million for the three months ended September 30, 2023 and 2022, respectively, and $ 3.2 million and $ 3.8 million for the nine months ended September 30, 2023 and 2022, respectively.

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

2026 Senior Notes $ 305,000 $ 305,000

3 unchanged sentences

Total long-term debt $ 795,333 $ 793,865

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

At September 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 June 30, 2023 and 2022, respectively, and $ 1.0 million and zero during the six months ended June 30, 2023 and 2022, respectively.

The Company capitalized $ 0.7 million and zero of interest expense within property and equipment, net on the Company’s Condensed Consolidated Balance Sheets during the three months ended September 30, 2023 and 2022, respectively, and $ 1.8 million and zero during the nine months ended September 30, 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 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 are presented as long-term debt, net of deferred issuance costs, on the Condensed Consolidated Balance Sheets as of September 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.

16 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, 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.

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

As of September 30, 2023 and December 31, 2022, the estimated fair value of the 2026 Senior Notes was approximately $ 281.0 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 June 30, 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 September 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 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.

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

As of September 30, 2023 and December 31, 2022, the estimated fair value of the 2028 Senior Notes was approximately $ 426.9 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.

Credit Agreement

2 unchanged sentences

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

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

As of September 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 June 30, 2023.

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

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

13 unchanged sentences

Operating lease costs are recognized on a straight-line basis from the commencement date to the end of the lease term.

Amortization on finance lease right-of-use assets are included in general and administrative expenses in the Condensed Consolidated Statements of Income.

Interest on finance lease right-of-use assets, if any, is included in interest expense in the Condensed Consolidated Statements of Income.

Amortization of finance lease right-of-use assets is included in general and administrative expenses in the Condensed Consolidated Statements of Income.

Interest related to finance lease right-of-use assets, if any, is included in interest expense in the Condensed Consolidated Statements of Income.

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

1 unchanged sentence

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

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

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

2023 2022 2023 2022

5 unchanged sentences

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

June 30, 2023 December 31, 2022

September 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):

Six Months Ended June 30,

Nine Months Ended September 30,

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

3 unchanged sentences

Other supplemental operating lease information consists of the following:

June 30, 2023 December 31, 2022

September 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 June 30, 2023 are as follows (in thousands):

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

Operating Leases

31 unchanged sentences

Additionally, the Company started sales tax collection and remittance on corporate sales in applicable states in August 2022.

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

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

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

The process was substantially 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.

1 unchanged sentence

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

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

During the three months ended September 30, 2023, the Company reassessed its sales tax exposure.

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 recorded a sales tax expense within general and administrative expenses in the Condensed Consolidated Statements of Income of $ 0.8 million and $ 8.4 million for the three months ended September 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 $ 2.0 million and $ 9.5 million for the nine months ended September 30, 2023 and 2022, respectively.

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

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

The sales tax liability within accounts payable and accrued expenses on the Company’s Condensed Consolidated Balance Sheets was $ 7.4 million and $ 13.1 million as of September 30, 2023 and December 31, 2022, respectively.

Other Balance Sheet Account Details

Accounts payable and accrued expenses

Accounts payable and accrued expenses consisted of the following (in thousands):

September 30, 2023 December 31, 2022

Accounts payable $ 7,012 $ 6,288

Accrued sales and other taxes 8,908 13,865

Accrued interest 23,382 10,717

Accrued compensation 5,928 2,755

Accrued advertising expenses 2,608 3,545

Other accrued expenses 5,016 4,232

Total $ 52,854 $ 41,402

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 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.

The Company’s effective tax rate for the three months ended September 30, 2023 and 2022 was 23.9 % and 29.2 %, respectively.

The Company’s decreased rate during the three months ended September 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 nine months ended September 30, 2023 and 2022 was 23.8 % and 27.6 %, respectively.

The Company’s decreased rate during the nine months ended September 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 nine months ended September 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.

As of September 30, 2023 and December 31, 2022, the Company had $ 9.0 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 June 30, 2023, the Company is not under audit in any jurisdiction that it operates within.

As of September 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.

5 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, 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 Company entered into Rule 10b-18 and Rule 10b5-1 trading plans and during the three months ended September 30, 2023 and 2022, the Company repurchased 152,399 and zero shares, respectively, at an aggregate cost of $ 3.8 million and zero , respectively, under this program.

During the nine months ended September 30, 2023 and 2022, the Company repurchased 490,953 and 189,114 shares, respectively, at an aggregate cost of $ 15.1 million (inclusive of excise tax of $ 0.1 million) and $ 7.6 million, respectively, under this program.

Cumulatively as of September 30, 2023, 680,067 shares have been repurchased under this program at an aggregate cost of $ 22.7 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.

4 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, 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.

During the three and nine months ended September 30, 2023 the Company withheld shares on its vested restricted stock units and restricted stock awards relating to its share-based compensation plans of 2,412 and 35,368 shares, respectively.

During the three and nine months ended September 30, 2022 the Company withheld shares on its vested restricted stock units and restricted stock awards 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.

7 unchanged sentences

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

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

As of September 30, 2023, 2,727,438 shares were available to be used under the 2021 Plan.

Restricted Stock and Restricted Stock Units

2 unchanged sentences

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

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

Restricted Stock and Restricted Stock Units with Market Conditions

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 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:

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

Restricted stock activity for the nine months ended September 30, 2023 is set forth below:

Shares Weighted-Average

1 unchanged sentence

Vested ( 19,737 ) 37.77

Nonvested at June 30, 2023

Nonvested at September 30, 2023

15,679 $ 39.24

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

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

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

As of September 30, 2023, the Company had unrecognized share-based compensation expense related to its restricted stock awards of $ 0.2 million, which is expected to be recognized over a weighted-average period of 0.4 years.

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

Shares Weighted-Average

5 unchanged sentences

Canceled ( 22,477 ) 57.37

Outstanding at June 30, 2023

Outstanding at September 30, 2023

1,044,946 $ 51.27 3.3 $ 26,311,740

Vested and expected to vest as of June 30, 2023

Vested and expected to vest as of September 30, 2023

711,335 $ 52.37 2.8 $ 17,911,410

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.

As of September 30, 2023, the Company had unrecognized share-based compensation expense related to its restricted stock units of $ 26.4 million, which is expected to be recognized over a weighted-average period of 2.5 years.

The Company capitalized $ 0.5 million and zero of share-based compensation expense during the three months ended September 30, 2023 and 2022, respectively, and $ 1.5 million and zero of share-based compensation expense during the nine months ended September 30, 2023 and 2022, respectively, within property and equipment, net on its Condensed Consolidated Balance Sheets.

(b) Employee Stock Purchase Plan

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The purchase price discount and the look-back feature cause the Purchase Plan to be compensatory and the Company to recognize compensation expense.

The compensation cost is recognized on a straight-line basis over the requisite service period, which is the same as the offering period of the Purchase Plan.

The compensation expense is recognized on a straight-line basis over the requisite service period, which is the same as the offering period of the Purchase Plan.

The Company used the Black-Scholes option pricing model to calculate the estimated fair value of the purchase right issued under the Purchase Plan.

3 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 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.

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

For the three and nine months ended September 30, 2023, zero and 29,582 shares were purchased under the Purchase Plan, respectively.

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

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

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

June 30, 2023

September 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 June 30, Six Months Ended June 30,

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

2023 2022 2023 2022

13 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 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.

For the three months ended September 30, 2023 and 2022, there were 836,655 and 499,584 anti-dilutive shares, respectively, that were excluded from the earnings per share calculation.

For the nine months ended September 30, 2023 and 2022, there were 704,837 and 499,476 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 June 30, Six Months Ended June 30,

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

2023 2022 2023 2022

5 unchanged sentences

$ 90,562 $ 91,777 $ 274,808 $ 272,190

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

June 30, 2023 December 31, 2022

The following presents the Company’s long-lived assets by geographic region, which consist of property and equipment, net and operating lease right-of-use assets (in thousands):

September 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 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 )

Balance as of July 1, 2023 $ ( 17,001 )

Other comprehensive loss ( 6,238 )

Net increase in other comprehensive loss ( 6,238 )

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):

Balance as of September 30, 2023 $ ( 23,239 )

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

Foreign Currency Translation

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

Other comprehensive income 2,107

Net increase in other comprehensive income 2,107

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

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

Other comprehensive loss ( 4,131 )

Net increase in other comprehensive loss ( 4,131 )

Balance as of September 30, 2023 $ ( 23,239 )

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

Related Party Transactions

In connection with the Separation, Consensus and Ziff Davis entered into several agreements that govern the relationship of the parties following the Separation, including a separation and distribution agreement, a transition services agreement (“TSA”), a tax matters agreement, an employee matters agreement, an intellectual property license agreement and a stockholder and registration rights agreement (the “Agreements”).

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

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

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

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

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

In connection with the Separation, Consensus and Ziff Davis entered into several agreements that governed 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 governed 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 were intended to cover any costs and expenses incurred in providing such services.

As of September 30, 2023, a majority of the services provided under the TSA were completed or terminated.

The TSA terminated on October 7, 2023.

The Company paid approximately $ 0.1 million and $ 7.2 million during the three months ended September 30, 2023 and 2022, respectively, and approximately $ 0.6 million and $ 18.7 million, during the nine months ended September 30, 2023 and 2022, respectively, to Ziff Davis to settle co-mingled cash accounts, costs associated with the transition services agreement and Separation.

Additionally, the Company incurred approximately $ 0.1 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.

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

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

Subsequent to the disposition of the shares, Ziff Davis’ beneficial ownership in the Company was under 10 %, as of June 30, 2023 and December 31, 2022 (see Note 1 - Basis of Presentation).

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

Subsequent to the disposition of the shares, Ziff Davis’ beneficial ownership in the Company was under 10 %, as of September 30, 2023 and December 31, 2022 (see Note 1 - Basis of Presentation).

Amounts due to Ziff Davis as of September 30, 2023 and December 31, 2022 were $ 0.1 million and $ 0.2 million, respectively.

These amounts are recorded within accounts payable and accrued expenses on the Condensed Consolidated Balance Sheets.

Subsequent Event

On November 9, 2023, the Board of Directors approved a debt repurchase program, pursuant to which Consensus may reduce, through redemptions, open market purchases, tender offers, privately negotiated purchases or other retirements, a combination of the outstanding principal balance of the 2026 Senior Notes and 2028 Senior Notes.

The authorization permits an aggregate principal amount reduction of up to $ 300 million and expires on November 9, 2026.

The timing and amounts of purchases will be determined by the Company, depending on market conditions and other factors it deems relevant.

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