What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-20 compared with 2024-02-28 · 245 added, 487 removed, 858 unchanged (46% of the section changed)

3 unchanged sentences

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheet of Consensus Cloud Solutions, Inc.

and subsidiaries (the “Company”) as of December 31, 2023, the related consolidated statements of income, comprehensive income, stockholders’ deficit, and cash flows for the year ended December 31, 2023, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the “financial statements”).

We have audited the accompanying consolidated balance sheets of Consensus Cloud Solutions, Inc.

and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, stockholders’ deficit, and cash flows for each of the two years in the period ended December 31, 2024, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the “financial statements”).

We also have audited the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework (2013) issued by COSO.

6 unchanged sentences

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audit of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

15 unchanged sentences

Costs related to preliminary internal-use software project activities and post implementation activities are expensed as incurred.

The determination of whether an internal-use software project’s development costs are capitalized or expensed require a higher degree of management judgment.

We identified management’s determination of capitalized internal-use software development costs, including those in process, as a critical audit matter because of the judgment exercised by management in determining whether costs incurred on internal-use software development projects meet the capitalization criteria.

The determination of costs to capitalize is subjective in nature requiring management judgment to determine if costs (1) related to an internal-use software project that entered the application development stage, (2) resulted in additional functionality, (3) the internal-use software project was probable of completion, and (4) the internal-use software would be used to perform the function intended.

The determination of whether an internal-use software project’s development costs are capitalized or expensed requires a higher degree of management judgment.

The determination of costs to capitalize is subjective in nature requiring management judgment to determine if costs are (1) related to an internal-use software project that entered the application development stage, (2) resulted in additional functionality, (3) the internal-use software project was probable of completion and (4) the internal-use software would be used to perform the function intended.

Our evaluation of management’s judgments and their determination of the project and related internal-use software development activities and related costs to be capitalized under the relevant accounting guidance required subjective and higher degree of auditor judgment and audit effort.

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We selected a sample of internal-use software projects and performed audit procedures to agree capitalized labor costs to time records and made certain inquiries of project members to further assess the reasonableness of time allocated to the selected internal-use software projects.

• We selected a sample of individual research and development costs incurred and evaluated whether such costs were properly capitalized as internal-use software or not based upon the nature and stage of work performed and whether the requisite capitalization criteria were met.

• We selected a sample of individual research and development costs, sales and marketing costs, and general and administrative costs incurred, and evaluated whether such costs were properly capitalized as internal-use software or not based upon the nature and stage of work performed and whether the requisite capitalization criteria were met.

• We conducted corroborative interviews with Company personnel involved in internal-use software development regarding the nature and functionality of costs incurred related to capitalized software projects.

8 unchanged sentences

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Consensus Cloud Solutions, Inc.

(the “Company”) as of December 31, 2022, the related consolidated statements of income, comprehensive income, stockholders’ deficit, and cash flows for each of the two years in the period ended December 31, 2022, and the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022 , in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated statements of income, comprehensive income, stockholders’ deficit, and cash flows of Consensus Cloud Solutions, Inc.

(the “Company”) for the year ended December 31, 2022, and the related notes and schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations and cash flows of the Company for the year ended December 31, 2022 , in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ BDO USA, LLP

25 unchanged sentences

Current portion of long-term debt 18,902 8,575

Due to Former Parent 76 156

Total current liabilities 79,311 71,384

39 unchanged sentences

Interest income 2,546 3,715 —

Other (expense) income, net ( 2,413 ) ( 1,582 ) 160

Other income (expense), net 4,278 ( 2,413 ) ( 1,582 )

Income before income taxes 122,245 103,164 98,913

Income tax expense 32,810 25,869 26,199

Income from continuing operations 77,295 72,714 121,174

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

— — ( 12,173 )

Net income $ 89,435 $ 77,295 $ 72,714

Net income per common share from continuing operations:

Basic $ 3.94 $ 3.65 $ 6.07

Diluted $ 3.94 $ 3.64 $ 6.04

Net loss per common share from discontinued operations:

Basic $ — $ — $ ( 0.61 )

Diluted $ — $ — $ ( 0.61 )

Net income per common share

9 unchanged sentences

General and administrative 11,254 14,705 17,447

Loss from discontinued operations, net of income tax

Total $ 16,764 $ 18,163 $ 20,055

7 unchanged sentences

Net income $ 89,435 $ 77,295 $ 72,714

Other comprehensive income (loss):

Other comprehensive (loss) income:

Foreign currency translation adjustment ( 9,874 ) 5,931 ( 2,251 )

Other comprehensive income (loss) 5,931 ( 2,251 ) ( 14,397 )

Other comprehensive (loss) income ( 9,874 ) 5,931 ( 2,251 )

Comprehensive income $ 79,561 $ 83,226 $ 70,463

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Gain on extinguishment of debt ( 6,557 ) ( 4,795 ) —

Loss on sale of businesses — — 21,797

Lease asset impairments and other charges — — 9,149

Changes in fair value of contingent consideration — — 642

Foreign currency remeasurement loss — — 181

Goodwill impairment on business — — 32,629

Decrease (increase) in:

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Acquisition of businesses, net of cash received — — ( 12,230 )

Proceeds from sale of businesses, net of cash divested — — 48,876

Purchases of investments — ( 4,000 ) —

3 unchanged sentences

Debt issuance cost — — ( 232 )

Payment of debt — — ( 593 )

Issuance of long-term debt — — 305,000

Proceeds from the issuance of common stock under employee stock purchase plan 1,334 1,386 1,284

2 unchanged sentences

Repurchase of debt ( 136,195 ) ( 57,672 ) —

Deferred payments for acquisitions — — ( 6,267 )

Contributions from Former Parent — — 21,238

Distribution to Former Parent - Separation — — ( 290,282 )

Distribution of non-fax cash to Former Parent

— — ( 266,539 )

Net cash used in financing activities ( 138,619 ) ( 81,657 ) ( 10,623 )

10 unchanged sentences

Common stock Additional

paid-in Treasury stock Accumulated Accumulated other comprehensive Net parent Total equity

paid-in Treasury stock Accumulated Accumulated other comprehensive Total

Shares Amount capital Shares Amount deficit

loss investment (deficit)

Balance, January 1, 2021 — $ — $ — — $ — $ — $ ( 55,966 ) $ 1,178,508 $ 1,122,542

Foreign currency translation adjustment prior to Separation — — — — — — ( 13,555 ) — ( 13,555 )

Net income prior to Separation — — — — — — — 102,510 102,510

Share-based compensation prior to Separation — — — — — — — 99 99

Parent contribution prior to Separation — — — — — — — 21,238 21,238

Recapitalization of J2 Cloud Services 19,902,924 199 1,302,156 — — — — ( 1,302,355 ) —

Transfer of 2028 Notes to Former Parent — — ( 500,000 ) — — — — — ( 500,000 )

Distribution to Former Parent — — ( 290,282 ) — — — — — ( 290,282 )

Transfer of non-fax business to Former Parent — — ( 837,251 ) — — — 53,506 — ( 783,745 )

Reclassification to accumulated deficit — — 325,377 — — ( 325,377 ) — — —

Issuance of shares under ESPP 10,421 — 519 — — — — — 519

Share-based compensation after Separation 65,235 1 2,359 — — — — — 2,360

Foreign currency translation adjustment after Separation — — — — — — ( 842 ) — ( 842 )

Net income after Separation — — — — — 6,491 — — 6,491

Balance, December 31, 2021 19,978,580 $ 200 $ 2,878 — $ — $ ( 318,886 ) $ ( 16,857 ) $ ( 332,665 )

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

Net income — — — — — 72,714 — 72,714

Other comprehensive loss — — — — — — ( 2,251 ) — ( 2,251 )

Foreign currency translation adjustment — — — — — — ( 2,251 ) ( 2,251 )

Vested restricted stock 166,378 2 ( 2 ) — — — — —

4 unchanged sentences

Adjustments related to the Separation — — — — — ( 4,236 ) — ( 4,236 )

Balance, December 31, 2022

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

Net income — — — — — 77,295 — 77,295

Foreign currency translation adjustment — — — — — — 5,931 5,931

Vested restricted stock 173,356 2 ( 2 ) — — — — —

Shares withheld related to net share settlement ( 61,878 ) ( 1 ) ( 1,887 ) — — — — ( 1,888 )

Repurchase of common stock — — — ( 839,548 ) ( 23,686 ) — — ( 23,686 )

Issuance of shares under ESPP 56,663 1 1,385 — — — — 1,386

Share-based compensation — — 20,101 — — — — 20,101

Balance, December 31, 2023 20,273,686 $ 203 $ 41,247 ( 1,028,662 ) $ ( 31,282 ) $ ( 173,113 ) $ ( 13,177 ) $ ( 176,122 )

Net income — — — — — 89,435 — 89,435

Other comprehensive income — — — — — — 5,931 — 5,931

Foreign currency translation adjustment — — — — — — ( 9,874 ) ( 9,874 )

Vested restricted stock 376,771 3 ( 3 ) — — — — —

16 unchanged sentences

On September 21, 2021, J2 Global, Inc., known since October 7, 2021 as Ziff Davis, Inc.

(“Ziff Davis” or the “Former Parent”) announced that its Board of Directors approved its separation of the Cloud Fax business (the “Separation” or the “Spin-Off”), into an independent publicly traded company, Consensus Cloud Solutions, Inc.

On October 7, 2021, the Separation was completed and the Former Parent transferred certain assets and liabilities associated with its Cloud Fax business to Consensus, including the equity interests in J2 Cloud Services, LLC (“J2 Cloud Services”), in exchange for approximately $ 259.1 million in cash, an asset related to $ 500.0 million in aggregate principal amount of the 6.5 % Senior Notes due in 2028, and the return of the assets and liabilities related to the non-fax business back to Ziff Davis.

(“Ziff Davis” or the “Former Parent”) announced that its board of directors approved the separation of its Cloud Fax business (the “Separation” or the “Spin-Off”), into an independent publicly traded company, Consensus Cloud Solutions, Inc.

On October 7, 2021, the Separation was completed and the Former Parent transferred certain assets and liabilities associated with its Cloud Fax business to Consensus, including the equity interests in Consensus Cloud Solutions, LLC, formerly known as J2 Cloud Services, LLC (“J2 Cloud Services”), in exchange for approximately $ 259.1 million in cash, an asset related to $ 500.0 million in aggregate principal amount of the 6.5 % Senior Notes due in 2028, and the return of the assets and liabilities related to the non-fax business back to Ziff Davis.

On October 8, 2021, Consensus began trading on the Nasdaq Stock Market LLC (“Nasdaq”) under the stock symbol “CCSI”.

Ziff Davis retained a 19.9 % interest in Consensus following the Separation.

Subsequently Ziff Davis has sold, or otherwise disposed of, a portion of its Consensus shares, reducing its beneficial ownership in the Company to under 10 % as of December 31, 2023 (see Note 21 - Related Party Transactions).

Subsequently, Ziff Davis has sold, or otherwise disposed of, its shares of Consensus capital stock, reducing its beneficial ownership in the Company to zero as of December 31, 2024.

Basis of Presentation and Summary of Significant Accounting Policies

(a) Principles of Consolidation

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The accompanying consolidated financial statements include the accounts of Consensus and its wholly-owned subsidiaries.

All intercompany accounts and transactions have been eliminated in consolidation.

(b) Basis of Presentation

The consolidated financial statements of Consensus for periods prior to the completion of the Separation are those of J2 Cloud Services, which were derived from the consolidated financial statements of Ziff Davis on a carve-out basis using the historical assets, liabilities, and results of operations attributable to the legal entities and business units which comprised historical J2 Cloud Services.

J2 Cloud Services was a wholly-owned subsidiary of Ziff Davis, and together with its subsidiaries, was a provider of internet services, including cloud-based subscription services to consumers and businesses including cloud fax, voice, cybersecurity, privacy and marketing technology.

For the period prior to the Separation, the Consensus consolidated financial statements included an allocation of certain corporate expenses related to services provided to J2 Cloud Services by Ziff Davis.

These expenses included the cost of executive management, information technology, legal, treasury, risk management, human resources, accounting and financial reporting, investor relations, public relations, and internal audit services provided by the Former Parent company personnel to J2 Cloud Services.

The cost of these services had been allocated to J2 Cloud Services based on specific identification when possible or, when the expenses were determined to be global in nature, based on the percentage of J2 Cloud Services’ relative revenue to total Ziff Davis revenue for the periods presented.

Management believes that these allocations were reasonable representations of the costs incurred for the services provided;

however, these allocations may not be indicative of the actual expenses that would have been incurred by J2 Cloud Services had it been operating as an independent company for the periods presented.

For periods prior to the Separation, interest expense relates to interest incurred on third-party debt issued by historical J2 Cloud Services.

No interest expense incurred by Ziff Davis was allocated to J2 Cloud Services as Ziff Davis’ third-party debt was not specifically related to historical operations of J2 Cloud Services.

As the Cloud Fax business was not historically held by a single legal entity, “net parent investment” in the Consolidated Statements of Stockholders’ Deficit is shown to represent Ziff Davis’ interest in the recorded net assets of historical J2 Cloud Services.

Other comprehensive income or loss attributable to J2 Cloud Services is presented as a separate component of equity.

In the period in which the Separation occurred, the net parent investment is recharacterized as share capital and additional paid-in-capital to reflect the capital structure of Consensus upon the legal formation of Consensus and the contribution of the Cloud Fax business with any excess of distributions over net parent investment shown within accumulated deficit.

The preparation of 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 net revenue and expenses during the reporting period.

(b) Use of Estimates

The preparation of 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 net revenue and expenses during the reporting period.

The Company believes that its most significant estimates are those related to revenue recognition, internal-use software development costs, share-based compensation expense and income taxes.

1 unchanged sentence

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 and elevated interest rates.

(d) Discontinued Operations

The accounting requirements for reporting the Company’s non-fax business as a discontinued operation were met when the Separation was completed.

Accordingly, the consolidated financial statements reflect the results of the non-fax business as a discontinued operation for the year ended December 31, 2021 (see Note 5 - Discontinued Operations and Disposition of Businesses).

(e) Allowances for Doubtful Accounts

The Company maintains an allowance for credit losses for accounts receivable, which is recorded as an offset to accounts receivable and changes in such are classified as general and administrative expenses in the Consolidated Statements of Income.

3 unchanged sentences

On an ongoing basis, management evaluates the appropriateness of these reserves.

(f) Revenue Recognition

(d) Revenue Recognition

The Company recognizes revenue when the Company satisfies its obligation by transferring control of the goods or services to its customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services (see Note 3 - Revenues).

5 unchanged sentences

606, Revenue from Contracts with Customers (“ASC 606”), for principal-agent considerations and assesses:

(i) if another party is

involved in providing goods or services to the customer and (ii) whether the Company controls the specified goods or services prior to transferring control to the customer.

(i) if another party is involved in providing goods or services to the customer and (ii) whether the Company controls the specified goods or services prior to transferring control to the customer.

The Company has made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are (i) both imposed on and concurrent with a specific revenue-producing transaction and (ii) collected by the Company from a customer.

(g) Fair Value Measurements

(e) Fair Value Measurements

Consensus complies with the provisions of FASB ASC Topic No.

3 unchanged sentences

With the exception of long-term debt, cost approximates fair value due to the short-term nature of such instruments.

The fair value of the Company’s outstanding debt was determined using the quoted market prices of debt instruments with similar terms and maturities when available.

(h) Investments

The fair value of the Company’s outstanding debt was determined using the quoted market prices of debt instruments with similar terms and maturities when available (see Note 8 - Long-Term Debt).

(f) Investments

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

2 unchanged sentences

Any unrealized gains or losses resulting from adjustments due to observable price changes, if applicable, are reported within earnings on the Consolidated Statement of Income.

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

As of December 31, 2024 and 2023, the carrying amount of the Company’s investments accounted for under the measurement alternative method in accordance with ASC 321 was $ 4.0 million and is included in other assets within the Company’s 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 year ended December 31, 2023, the Company did not recognize any unrealized gains or losses and did not have any impairments during the respective periods.

(i) Cash and Cash Equivalents

During the years ended December 31, 2024 and 2023, the Company did not recognize any unrealized gains or losses and did not have any impairments during the respective periods.

(g) Cash and Cash Equivalents

The Company considers cash equivalents to be only those investments that are highly liquid, readily convertible to cash and with maturities of three months or less at the purchase date.

(j) Debt Issuance Costs

(h) Debt Issuance Costs

The Company capitalizes costs incurred with borrowing and issuance of debt securities and records debt issuance costs as a reduction to the debt amount.

These costs are amortized and included in interest expense over the life of the related debt security using the effective interest method.

(k) Concentration of Credit Risk

(i) Concentration of Credit Risk

All of the Company’s cash and cash equivalents are invested at major financial institutions.

1 unchanged sentence

At December 31, 2024, the Company’s cash and cash equivalents were maintained in accounts in qualifying financial institutions that are insured up to the limit determined by the applicable governmental agency.

These institutions are primarily within

Luxembourg and the United States, however, the Company has accounts within several other countries including the United Kingdom, Australia, Japan, Canada, Ireland, Hong Kong, New Zealand and France.

(l) Foreign Currency

These institutions are primarily within the United States and Luxembourg, however, the Company has accounts within several other countries including the United Kingdom, Australia, Japan, Canada, Ireland, Hong Kong and New Zealand.

(j) Foreign Currency

Some of Consensus’ foreign subsidiaries use the local currency of their respective countries as their functional currency.

4 unchanged sentences

Gains and losses resulting from translation are recorded as a component of accumulated other comprehensive loss.

Net translation gain (loss) was $ 5.9 million, $( 2.3 ) million and $( 14.4 ) million for the years ended December 31, 2023, 2022 and 2021, respectively.

Foreign exchange (losses) gains from foreign currency transactions are recorded within other (expense) income, net on the Consolidated Statements of Income and amounted to $( 2.4 ) million, $( 1.6 ) million and $ 0.2 million for the years ended December 31, 2023, 2022 and 2021, respectively.

(m) Property and Equipment

Net translation (loss) gain was $( 9.9 ) million, $ 5.9 million and $( 2.3 ) million for the years ended December 31, 2024, 2023 and 2022, respectively.

Foreign exchange gain (loss) from foreign currency transactions is recorded within other income (expense), net on the Consolidated Statements of Income and amounted to $ 4.3 million, $( 2.4 ) million and $( 1.6 ) million for the years ended December 31, 2024, 2023 and 2022, respectively.

(k) Property and Equipment

Property and equipment are stated at cost.

2 unchanged sentences

The estimated useful lives of property and equipment range from 1 to 10 years.

Fixtures, which are comprised primarily of leasehold improvements and equipment under finance leases, are amortized on a straight-line basis over their estimated useful lives or for leasehold improvements, the related lease term, if less (see Note 7 - Property and Equipment).

(n) Internal-Use Software Development Costs

Leasehold improvements are amortized on a straight-line basis over their estimated useful lives or the related lease term, if less (see Note 6 - Property and Equipment).

(l) Internal-Use Software Development Costs

The Company capitalizes certain internal-use software and website development costs that are incurred during the application development stage, provided that management with the relevant authority authorizes and commits to the funding of the project, it is probable the project will be completed, and the software will be used to perform the function intended.

1 unchanged sentence

Costs related to preliminary project activities and post implementation activities are expensed as incurred.

Capitalized internal-use software development costs are included in property and equipment and are amortized on a straight-line basis over their estimated useful lives and is recorded in cost of revenues and general and administrative expenses on the Consolidated Statements of Income.

Capitalized internal-use software development costs are included in property and equipment and are amortized on a straight-line basis over their estimated useful lives, which is recorded in cost of revenues and general and administrative expenses on the Consolidated Statements of Income.

The estimated useful life of costs capitalized is evaluated for each specific project and ranges from 1 to 7 years (see Note 6 - Property and Equipment).

(o) Impairment or Disposal of Long-Lived and Intangible Assets

(m) Impairment or Disposal of Long-Lived Assets and Finite-Lived Intangible Assets

The Company accounts for long-lived assets, which include property and equipment, operating lease right-of-use assets and identifiable intangible assets with finite useful lives (subject to amortization), in accordance with the provisions of FASB ASC Topic No.

3 unchanged sentences

If it is determined that the asset may not be recoverable, and if the carrying amount of an asset exceeds its estimated fair value, an impairment charge is recognized to the extent of the difference.

The Company assesses the impairment of identifiable definite-lived intangibles and long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

The Company assesses the impairment of identifiable finite-lived intangibles and long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

Factors it considers important are those that could individually or in combination trigger an impairment review include the following:

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• The Company’s market capitalization relative to net book value.

If the Company determined that the carrying value of definite-lived intangibles and long-lived assets may not be recoverable based upon the existence of one or more of the above indicators of impairment, it would record an impairment equal to the excess of the carrying amount of the asset over its estimated fair value.

The Company assessed whether events or changes in circumstances have occurred that potentially indicate the carrying amount of definite-lived assets may not be recoverable.

There were no impairments recorded in 2023 and 2022.

In the year ended December 31, 2021, the Company recorded an impairment of $ 1.7 million in property and equipment (see Note 7 - Property and Equipment) and an impairment of $ 6.5 million in operating right-of-use assets (see Note 10 - Leases) in connection with the downtown Los Angeles lease.

Additionally, the Company recorded an impairment of $ 1.0 million in operating right-of-use assets included in discontinued operations in relation to exiting a lease in the year ended December 31, 2021.

(p) Business Combinations and Valuation of Goodwill and Intangible Assets

If the Company determined that the carrying value of finite-lived intangibles and long-lived assets may not be recoverable based upon the existence of one or more of the above indicators of impairment, it would record an impairment equal to the excess of the carrying amount of the asset over its estimated fair value.

The Company assessed whether events or changes in circumstances have occurred that potentially indicate the carrying amount of finite-lived assets may not be recoverable.

There were no impairments of long-lived assets or finite-lived intangible assets recorded in 2024, 2023 and 2022.

(n) Business Combinations and Valuation of Goodwill and Intangible Assets

The Company applies the acquisition method of accounting for business combinations in accordance with GAAP and uses estimates and judgments to allocate the purchase price paid for acquisitions to the fair value of the assets, including identifiable intangible assets and liabilities acquired.

18 unchanged sentences

If the carrying value of a reporting unit exceeds the reporting unit’s fair value, an impairment loss is recognized for the difference.

The Company has a single reporting unit.

The Company has a

single reporting unit.

In the fourth quarter of 2024, the Company performed the annual impairment test for goodwill for the year ended December 31, 2024 using a qualitative assessment, primarily taking into consideration macroeconomic, industry and market conditions, overall financial performance and any other relevant company-specific events.

There was no accumulated impairment of the Company’s goodwill as of December 31, 2024.

The Company performed the annual impairment test for intangible assets with indefinite lives for the year ended December 31, 2024 using a qualitative assessment primarily taking into consideration macroeconomic, industry and market conditions, overall financial performance and any other relevant company-specific events.

There is no accumulated impairment as of December 31, 2023.

(q) Income Taxes

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

There were no impairments of the Company’s indefinite-lived intangible assets recorded in 2024, 2023 and 2022.

(o) Income Taxes

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

and numerous foreign jurisdictions.

17 unchanged sentences

The Company recognizes accrued interest and penalties related to uncertain income tax positions in income tax expense on its Consolidated Statements of Income.

In addition, on March 27, 2020, the “Coronavirus Aid, Relief and Economic Security (“CARES”) Act” was enacted into law providing for changes to various tax laws that impact business.

The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, increased limitations on qualified charitable contributions and technical corrections to tax depreciation methods for qualified improvement property.

On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was enacted into law and is effective for taxable years beginning after December 31, 2022.

The IRA includes a new corporate alternative minimum tax of 15% on adjusted financial statement income of corporations with profits greater than $1 billion, a 1% excise tax on the fair market value of net share buy-backs, in addition to multiple incentives to the clean energy industry (see Note 14 - Stockholders' Equity).

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

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

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

(r) Share-Based Compensation

(p) Share-Based Compensation

The Company accounts for share-based awards to employees and non-employees in accordance with the provisions of FASB ASC Topic No.

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Accordingly, the Company measures share-based compensation expense at the grant date, based on the fair value of the award, and recognizes the expense over the employee’s requisite service period using the straight-line method.

The measurement of share-based compensation expense is based on several criteria, including but not limited to, the valuation model used and associated input factors, such as expected

term of the award, stock price volatility, risk free interest rate, dividend rate and forfeiture rate.

The measurement of share-based compensation expense is based on several criteria, including but not limited to, the valuation model used and associated input factors, such as the stock price on the date of grant, expected term of the award, stock price volatility, risk free interest rate, dividend rate and forfeiture rate.

These inputs are subjective and are determined using management’s judgment.

The Company estimates the expected term based upon the contractual term of the award (see Note 14 - Equity Incentive and Employee Stock Purchase Plan).

(s) Earnings Per Common Share (“EPS”)

(q) Earnings Per Common Share (“EPS”)

EPS is calculated pursuant to the two-class method as defined in FASB ASC Topic No.

260, Earnings per Share (“ASC 260”), which specifies that all outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends or dividend equivalents are considered participating securities and should be included in the computation of EPS pursuant to the two-class method.

260, Earnings per Share (“ASC 260”), which specifies that all outstanding unvested share-based payment awards that contain rights to nonforfeitable

dividends or dividend equivalents are considered participating securities and should be included in the computation of EPS pursuant to the two-class method.

Basic EPS is calculated by dividing net distributed and undistributed earnings allocated to common shareholders, excluding participating securities, by the weighted-average number of common shares outstanding.

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The dilutive effect of participating securities is calculated under the more dilutive of either the treasury method or the two-class method (see Note 16 - Earnings Per Share).

(t) Research, Development and Engineering

(r) Research, Development and Engineering

Research, development and engineering costs are expensed as incurred.

Development of internal-use software is capitalized and amortized as described in paragraph (n).

(u) Segment Reporting

Development of internal-use software is capitalized and amortized as described in paragraph (l).

(s) Segment Reporting

FASB ASC Topic No.

280, Segment Reporting (“ASC 280”), establishes standards for the way that public business enterprises report information about operating segments in their annual consolidated financial statements and requires that those enterprises report selected information about operating segments in interim financial reports.

280, Segment Reporting (“ASC 280”), establishes standards for the way that public business entities report information about reportable segments in their annual consolidated financial statements and requires that those entities report selected information about reportable segments in interim financial reports.

ASC 280 also establishes standards for related disclosures about products and services, geographic areas and major customers.

The Company’s business segment is based on the organization’s structure used by the chief operating decision maker, who is our chief executive officer (CEO), for making operating and investment decisions and for assessing performance.

The Company’s chief executive officer reviews financial information presented on a consolidated basis for purposes of assessing performance and making decisions on how to allocate resources.

The Company’s business segment is based on the organization’s structure used by the chief operating decision maker (“CODM”), who is our chief executive officer (“CEO”), for making operating and investment decisions and for assessing performance.

The Company’s CEO reviews financial information presented on a consolidated basis for purposes of assessing performance and making decisions on how to allocate resources.

The CEO uses consolidated profit or loss from operations before interest and income taxes to allocate resources predominantly in the annual budget and forecasting process.

The CEO considers budget-to-actual variances on a monthly basis when making decisions about allocating capital and personnel.

The CEO also uses consolidated profit or loss from operations before interest and income taxes and consolidated net income to assess performance.

Accordingly, the Company has determined that it operates one reportable segment known as Cloud Fax (see Note 17 - Segment Information).

(v) Advertising Costs

The consolidated financial statements and related disclosures reflect the segment operations of Cloud Fax.

(t) Advertising Costs

Advertising costs are expensed as incurred and are included in sales and marketing expenses on our Consolidated Statements of Income.

Advertising costs for the years ended December 31, 2024, 2023 and 2022 were $ 29.0 million, $ 51.7 million and $ 55.4 million, respectively.

(w) Recent Accounting Pronouncements

In March 2020, the FASB issued Accounting Standards Update (“ASU”) No.

2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

The amendments in this ASU provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met.

The amendments in this ASU apply only to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

In December 2022, the FASB issued ASU No.

2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848, that extends the period of time preparers can utilize the reference rate reform relief guidance.

To ensure the relief in Topic 848 covers the period of time during which a significant number of modifications may take place, the ASU defers the sunset date of Topic 848 from December 31, 2022, to December 31, 2024.

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

In September 2022, the FASB issued ASU 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50).

This ASU enhances the transparency of supplier finance programs.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on

rollforward information, which is effective for fiscal years beginning after December 15, 2023.

Early adoption is permitted.

This amendment should be applied retrospectively to each period in which a balance sheet is presented, except for the amendment on rollforward information, which should be applied prospectively.

The Company adopted ASU 2022-04 in the first quarter of 2023.

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

In October 2023, the FASB issued ASU No.

(u) Recent Accounting Pronouncements

In October 2023, the FASB issued Accounting Standards Update (“ASU”) No.

2023-06, Disclosure Improvements:

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Improvements to Reportable Segment Disclosures.

The amendments improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The amendments are intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment and contain other disclosure requirements.

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The amendments should be applied retrospectively to all prior periods presented in the financial statements.

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

The Company adopted ASU 2023-07 for the year ended December 31, 2024 (see Note 17 - Segment Information).

In December 2023, the FASB issued ASU No.

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

(x) Reclassifications

In November 2024, the FASB issued ASU No.

2024-03, Income Statement:

Expense Disaggregation Disclosures.

The amendments in this ASU require disclosure of more information about certain expenses and costs and should be applied on either a prospective or retrospective basis.

The amendments in this ASU are effective for fiscal periods beginning after December 15, 2026.

Early adoption is permitted.

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

(v) Reclassifications

Certain prior year amounts have been reclassified for consistency with the current year presentation.

These reclassifications had no effect on the reported results of operations.

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.

The Company defers the portions of monthly, quarterly, semi-annually and annually recurring subscription and usage-based fees collected in advance of the satisfaction of performance obligations and recognizes them in the period earned.

The Cloud Fax Services allow customers to access the Company’s software without taking possession.

The Company earns revenue from contracts with customers, primarily through the provision of cloud-based communication and digital signature solutions that allow customers to access the Company’s software without taking possession.

The contracts include both recurring subscription and usage-based fees, and the total transaction price is allocated to performance obligations in each contract as appropriate.

Revenue for cloud-based services is recognized over time in the period earned.

The contracts may be terminated early.

Fees collected in advance are non-refundable, and they are deferred and recognized in revenue when the related performance obligations are satisfied.

Standard Corporate contracts billed monthly include a termination charge equal to the minimum fees payable through the last day of the contract term .

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

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Total revenues $ 350,382 $ 362,562 $ 362,422

The Company has recorded $ 23.6 million and $ 22.9 million of revenue for the years ended December 31, 2023 and 2022, respectively, which was previously included in the deferred revenue balance as of the beginning of each respective year.

The Company has recorded $ 22.0 million and $ 23.6 million of revenue for the years ended December 31, 2024 and 2023, respectively, that was previously included in the deferred revenue balance as of the beginning of each respective year.

Performance Obligations

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Determining whether products and services are considered distinct performance obligations may require significant judgment.

When a cloud-based service includes both on-premises software licenses and cloud-based services, judgment is required to determine whether the software license is considered distinct and accounted for separately, or not distinct and accounted for together with the cloud-based service and recognized over time.

When a contract includes both on-premises software licenses and cloud-based services, judgment is required to determine whether the software license is considered distinct and accounted for separately, or not distinct and accounted for together with the cloud-based service and recognized over time.

Judgment is also required to determine the standalone selling price for each distinct performance obligation when there are multiple performance obligations.

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Performance Obligations Satisfied Over Time

The Company’s business consists primarily of performance obligations that are satisfied over time.

This has been determined based on the fact that the nature of services offered are subscription based where the customer simultaneously receives and consumes the benefit of the services provided regardless of whether the customer uses the services or not.

Depending on the individual contracts with the customer, revenue for these services is recognized over the contract period when faxing capabilities are provided.

The Company expects to recognize revenue for Corporate contracts in a range from month-to-month up to 36 months and recognize revenue for SoHo contracts in a range from month-to-month up to one year.

The Company’s business consists primarily of performance obligations that are satisfied over time based on the fact that the nature of the cloud-based services offered is subscription based where the customer simultaneously receives and consumes the benefit of the services provided regardless of whether the customer uses the services or not.

Depending on the individual contracts with the customer, revenue for these services is recognized over the contract period when services are provided.

The Company expects to recognize revenue for Corporate contracts typically in a range from month-to-month up to 36 months and recognize revenue for SoHo contracts in a range from month-to-month up to one year.

Revenue from usage-based fees is recognized in proportion to the amount for which the Company has the right to invoice for services performed, which corresponds with the utilization of the services by the customer.

The Company has concluded that the best measure of progress toward the complete satisfaction of the performance obligations over time is a time-based measure.

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In addition, the Company has determined that the payment terms the Company provides to its customers are structured primarily for reasons other than the provision of finance to the Company.

The Company typically charges a single upfront amount for services, as other payment terms would affect the nature of the risk assumed by the Company due to the costs of the customer acquisition and the highly competitive and commoditized nature of the business the Company operates.

The Company typically charges an upfront subscription amount for services, or an amount for usage in arrears, or a combination thereof, as other payment terms would affect the nature of the risk assumed by the Company due to the costs of the customer acquisition and the highly competitive and commoditized nature of the business the Company operates.

Costs to Fulfill a Contract

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

The Consolidated Statement of Income since the date of acquisition and the Consolidated Balance Sheet as of December 31, 2022, reflect the results of operations of this 2022 acquisition.

The Consolidated Statements of Income since the date of acquisition reflect the results of operations of this 2022 acquisition.

For the year ended December 31, 2022, this acquisition contributed $ 6.8 million to the Company’s revenues.

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

Total consideration for this transaction was $ 12.2 million, net of cash acquired, and was subject to certain post-closing adjustments through the measurement period.

The following table summarizes the allocation of the purchase consideration, net of cash acquired, as of the acquisition date (in thousands):

Assets and Liabilities Valuation

Accounts receivable $ 1,248

Prepaid expenses and other current assets 30

Property and equipment 9

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

Trademarks 800

Customer relationships 8,600

Goodwill 5,677

Other intangibles 1,000

Accounts payable and accrued expenses ( 295 )

Deferred revenue ( 4,839 )

Operating lease liabilities, non-current ( 413 )

The Company has finalized the accounting for the Summit acquisition.

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

Since the date of acquisition, the Company has recorded $ 1.3 million in additional deferred revenue with a corresponding increase in Goodwill as a measurement period adjustment.

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

All adjustments are reflected in the table above.

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

Goodwill recognized associated with this acquisition during the year ended December 31, 2022 was $ 5.7 million, of which $ 5.7 million is expected to be deductible for income tax purposes.

Discontinued Operations and Disposition of Businesses

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

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

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

The Consolidated Statements of Income report discontinued operations separate from continuing operations.

The Consolidated Statements of Comprehensive Income, Consolidated Statements of Cash Flows (including Note 19 - Supplemental Cash Flows Information) and Consolidated Statements of Stockholders’ Deficit combine continuing and discontinued operations.

The Consolidated Statements of Income, Consolidated Statements of Comprehensive Income, Consolidated Statements of Cash Flows and Consolidated Statements of Stockholders’ Deficit includes the non-fax business activity through October 7, 2021.

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

Year ended December 31, 2021

Cost of revenues 74,294

Gross profit 197,277

Operating expenses:

Sales and marketing 72,425

Research, development and engineering 16,756

General and administrative 84,213

Goodwill impairment on business 32,629

Total operating expenses 206,023

Loss from discontinued operations

Interest expense ( 235 )

Interest income 693

Loss on sale of businesses

Loss from discontinued operations before income taxes

Income tax benefit

Loss from discontinued operations, net of income taxes

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

Year ended December 31, 2021

Depreciation and amortization

Capital expenditure

Share-based compensation expense

Non-cash operating lease costs 2,814

Deferred taxes 554

Foreign currency remeasurement gain ( 9 )

Lease asset impairments and other charges 990

Loss on sale of businesses

Goodwill impairment on business 32,629

Prior to the Separation, the Company completed the following dispositions that did not meet the criteria for discontinued operations by themselves but were subsequently classified as discontinued operations as they are part of the non-fax business transferred back to the Former Parent.

Voice Asset Sales (Non-Consensus)

During the first quarter of 2021, the Company committed to a plan to sell certain Voice assets in the United Kingdom as they were determined to be non-core assets.

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

For the year ended December 31, 2021, the total gain recognized on the sale was $ 2.8 million, which was recorded in discontinued operations on the Consolidated Statement of Income.

B2B Back-up (Non-Consensus)

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

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

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

result, the Company recorded an impairment to goodwill of $ 32.6 million, which was recorded in the second quarter of 2021, and is included within discontinued operations on the Consolidated Statement of Income.

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

For the year ended December 31, 2021, the total loss recognized on the sale was $ 24.6 million, which is included within discontinued operations on the Consolidated Statement of Income.

Total consideration for this transaction was $ 12.2 million, net of cash acquired.

Fair Value Measurements

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

Cash and cash equivalents include money market funds of $ 72.1 million and zero as of December 31, 2023 and 2022, respectively, which are valued based on Level 1 inputs consisting of quoted prices in active markets.

Cash and cash equivalents include money market funds of $ 26.8 million and $ 72.1 million as of December 31, 2024 and 2023, 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.

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

During the year ended December 31, 2021, the Company recorded an increase in the fair value of the contingent consideration of $ 0.7 million, in connection with the acquisition of SRFax, using Level 3 inputs and reported such increase in general and administrative expenses.

The contingent consideration was fully paid during 2021.

Assets Measured on a Non-Recurring Basis

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However, if any of these types of assets become impaired, the carrying values of the assets are written down to fair value using Level 3 inputs.

During the year ended December 31, 2021, the Company recorded total non-cash impairment charges of $ 7.5 million related to its operating lease right-of-use assets, based on their fair value determined using Level 3 inputs (see Note 10 - Leases).

Property and Equipment

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Depreciation and amortization expense was $ 16.8 million, $ 13.1 million and $ 10.6 million for the years ended December 31, 2024, 2023 and 2022, respectively.

During the fourth quarter of 2021, the Company recorded a non-cash impairment charge of $ 1.7 million for property and equipment related to the impairment of the Downtown Los Angeles lease (see Note 10 - Leases for further details).

No impairment was recorded in 2023 or 2022.

Goodwill and Intangible Assets

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Balance as of January 1, 2023

Goodwill acquired (Note 4) 5,677

Foreign exchange translation

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Intangible Assets Subject to Amortization:

In addition to the intangible assets related to Summit (refer to Note 4 - Business Acquisitions), the Company acquired technology for jSign, a corporate solution that provides electronic signature and digital signature solutions to businesses, offering document markup and end-user signing services via mobile-aware web application and enterprise API during the year ended December 31, 2022.

The purchase price was $ 1.0 million and the asset is included in intangibles, net on the Consolidated Balance Sheets and other purchased intangibles in the table below.

As of December 31, 2024, intangible assets subject to amortization are summarized as follows (in thousands):

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Thereafter 1,993

Total expected amortization expense $ 13,578

Total $ 9,852

Amortization expense was $ 3.7 million, $ 4.3 million and $ 4.7 million for the years ended December 31, 2024, 2023 and 2022, respectively.

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( 5,135 ) ( 8,448 )

592,982 733,980

current portion, net of debt issuance costs

( 18,902 ) ( 8,575 )

Total long-term debt, less current portion

$ 574,080 $ 725,405

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

As of December 31, 2024 and 2023, the estimated fair value of the 2026 Senior Notes (as defined below) was approximately $ 246.2 million and $ 266.0 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.

As of December 31, 2024 and 2023, the estimated fair value of the 2028 Senior Notes (as defined below) was approximately $ 346.1 million and $ 422.5 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.

At December 31, 2024, future contractual principal payments for debt were as follows (in thousands):

(1) The Company has reclassified $ 0.9 million from the 2028 period into the 2025 period as debt repurchases were made subsequent to December 31, 2024, but prior to the filing of these financial statements (see Note 20 - Subsequent Events).

2026 Senior Notes

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

The 2026 Senior Notes are presented as current portion of long-term debt and long-term debt, net of current portion, net of deferred issuance costs, on the Consolidated Balance Sheet as of December 31, 2023 and 2022.

The 2026 Senior Notes are presented as current portion of long-term debt and long-term debt, net of current portion, which is presented net of deferred issuance costs, on the Consolidated Balance Sheets as of December 31, 2024 and 2023.

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.

The 2026 Senior Notes mature on October 15, 2026, and are senior unsecured obligations of the Company which are guaranteed, jointly and severally, on an unsecured basis by certain of the Company’s existing and future domestic direct and indirect wholly-owned subsidiaries (collectively, the “Guarantors”).

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.

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.

Before October 15, 2023, and following certain equity offerings, the Company also may redeem up to 40 % of the 2026 Senior Notes at a price equal to 106.0 % of the principal amount, plus accrued and unpaid interest, if any, to, but excluding the redemption date.

The Company may make such redemption only if, after such redemption, at least 50 % of the aggregate principal amount of the 2026 Senior Notes remains outstanding.

In addition, at any time prior to October 15, 2023, the Company may redeem some or all of the 2026 Senior Notes at a price equal to 100 % of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, plus an applicable “make-whole” premium.

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, up to, but excluding the redemption date.

The Indenture contains covenants that restrict the Company’s ability to (i) pay dividends or make distributions on the Company’s common stock;

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The Company is in compliance with its debt covenants as of December 31, 2024.

As of December 31, 2023 and 2022, the estimated fair value of the 2026 Senior Notes was approximately $ 266.0 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.

The following table provides additional information related to our 2026 Senior Notes as of December 31, 2024 and 2023 (in thousands):

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On October 7, 2021, Consensus issued $ 500.0 million of 6.5 % senior notes due in 2028 (the “2028 Senior Notes”), in a private placement offering exempt from the registration requirements of the Securities Act of 1933.

In exchange for the equity interest in the Company, Consensus issued the 2028 Senior Notes to Ziff Davis (see Note 21 - Related Party Transactions).

Ziff Davis then exchanged the 2028 Senior Notes with lenders under its credit agreement (or their affiliates) in exchange for extinguishment of a similar amount indebtedness under such credit agreement for a total amount of $ 483.8 million, after deducting the initial purchasers’ discounts, commissions and offering expenses.

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

In exchange for the equity interest in the Company, Consensus issued the 2028 Senior Notes to Ziff Davis.

The 2028 Senior Notes are presented as current portion of long-term debt and long-term debt, net of current portion, which are presented net of deferred issuance costs, on the Consolidated Balance Sheets as of December 31, 2024 and 2023.

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.

The 2028 Senior Notes mature on October 15, 2028, and are senior unsecured obligations of the Company that are guaranteed, jointly and severally, on an unsecured basis by certain of the Company’s existing and future domestic direct and indirect wholly-owned subsidiaries (collectively, the “Guarantors”).

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 2028 Senior Notes were issued (the “2028 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 2028 Senior Notes.

The Company may redeem some or all of the 2028 Senior Notes at any time on or after October 15, 2026 at specified redemption prices plus accrued and unpaid interest, if any, to, but excluding the redemption date.

The Company may redeem some or all of the 2028 Senior Notes at any time on or after October 15, 2026 at specified redemption prices plus accrued and unpaid interest, if any, up to, but excluding the redemption date.

The Indenture contains covenants that restrict the Company’s ability to (i) pay dividends or make distributions on the Company’s common stock;

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The Company is in compliance with its debt covenants as of December 31, 2024.

As of December 31, 2023 and 2022, the estimated fair value of the 2028 Senior Notes was approximately $ 422.5 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 following table provides additional information related to our 2028 Senior Notes as of December 31, 2024 and 2023 (in thousands):

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

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

As of December 31, 2024, no amount had 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.

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The Credit Facility is subject to a total net leverage ratio covenant and a minimum EBITDA requirement, in each case tested on a quarterly basis.

The Credit Agreement contains covenants that restrict the Company’s ability to (i) pay dividends or make distributions on the Company’s common stock;

The Credit Agreement contains covenants that restrict the Company’s ability to:

(i) pay dividends or make distributions on the Company’s common stock;

(ii) make certain restricted payments;

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Debt Repurchase Program

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 (“Debt Repurchase Program”).

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 and 2028 Senior Notes (“Debt Repurchase Program”).

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.

As of December 31, 2023 the Company has retired $ 62.6 million in principal of its senior notes under this program.

In connection with the Debt Repurchase Program the Company reclassified $ 8.6 million of long-term debt, net of current portion to the current portion of long-term debt as of December 31, 2023 as the Company has the intention and cash on hand to extinguish the $ 8.6 million of debt within the next reporting period.

For year ended December 31, 2023 a gain on debt extinguishment of $ 4.8 million related to the Debt Repurchase Program is included in interest expense on the Consolidated Statements of Income.

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

During the years ended December 31, 2024 and 2023 the Company retired $ 144.3 million and $ 62.6 million, respectively, in principal of its senior notes under this program.

Cumulatively as of December 31, 2024, $ 206.9 million in principal of the Company’s senior notes has been retired under this program.

Refer to Note 20 - Subsequent Events for debt repurchases made subsequent to December 31, 2024, but prior to the filing of these financial statements.

In connection with the Debt Repurchase Program, the Company reclassified $ 18.9 million and $ 8.6 million of long-term debt, net of current portion to the current portion of long-term debt as of December 31, 2024 and 2023, respectively, as the Company had the intention and cash on hand to extinguish the respective amounts of debt within twelve months of the end of the respective reporting periods.

For years ended December 31, 2024 and 2023, a gain on debt extinguishment of $ 6.6 million and $ 4.8 million, respectively, related to the Debt Repurchase Program is included in interest expense on the Consolidated Statements of Income.

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

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

The Company recorded total non-cash impairment charges of $ 7.5 million related to its operating lease right-of-use assets during the year ended December 31, 2021.

The $ 7.5 million in impairment charge during 2021 consists of $ 6.5 million recognized in continuing operations and $ 1.0 million recognized in discontinued operations.

For the impairment charge recognized in continuing operations, the Company decided to exit and seek subleases for certain leased facilities primarily due to a “partial remote” work model for a significant number of employees.

The Company recorded a non-cash impairment charge of $ 6.5 million related to operating lease right-of-use assets for the affected facility.

The impairment was determined by comparing the fair value of the impacted right-of-use asset to the carrying value of the asset as of the impairment measurement date, as required under ASC Topic 360, Property, Plant, and Equipment.

The fair value of the right-of-use asset was based on the estimated sublease income for the affected facilities, taking into consideration the time it will take to obtain a sublease tenant, the applicable discount rate and the sublease rate, which represent Level 3 unobservable inputs.

The carrying value of the asset was remeasured to exclude a five year optional lease term that was originally included in the initial assessment.

The impairment is presented in general and administrative expenses on the Consolidated Statements of Income .

No impairment was recorded in 2023 or 2022.

The components of lease expense, recorded in cost of revenues and general and administrative expenses on the Consolidated Statements of Income, are as follows (in thousands):

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Total lease cost $ 3,051 $ 5,391 $ 4,959

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

Lease-related assets and liabilities

December 31, 2023 December 31, 2022

Operating lease right-of-use assets $ 6,766 $ 7,875

Finance lease right-of-use assets (1)

Total right-of-use assets $ 7,144 $ 9,302

Operating lease liabilities, current $ 2,038 $ 2,793

Operating lease liabilities, noncurrent 13,212 13,877

Total operating lease liabilities $ 15,250 $ 16,670

(1) The full amount of the finance leases were prepaid.

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

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

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Operating cash flows from operating leases $ 3,281 $ 2,999 $ 2,784

Operating cash flows from finance leases $ — $ — $ 2,719

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

Operating leases $ 1,304 $ 542 $ 1,316

Finance leases $ — $ — $ 2,719

Other supplemental operating lease information consists of the following:

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The Company does not include option periods unless the Company determined it is reasonably certain of exercising the option at inception or when a triggering event occurs.

Facility Lease

On October 28, 2021, Ziff Davis (the “Assignor”) and Consensus (the “Assignee”) entered into the Assignment and First Amendment to Office Lease (the “Amendment”) with the NREA-TRC 700 LLC (the “Landlord”), in regard to the lease that was previously entered into on April 24, 2019 between the Assignor and the Landlord for certain office space located at 700 South Flower Street, Los Angeles, California (the “Lease”).

The lease has an expiration date of January 31, 2031.

The Amendment granted the Landlord’s consent to the assignment of the Lease by the Assignor to Assignee.

Commitments and Contingencies

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

For the periods 2017 through 2021, the Company believed it was probable that a sales tax liability existed for its corporate accounts;

In the year ended December 31, 2021, the Company developed a methodology to estimate the sales tax liability for the SoHo revenue stream.

The Company also believed it was probable that a sales tax liability existed for its Corporate accounts;

however, the sales tax liability for its Corporate customers was not estimable until the third quarter of 2022.

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In the third quarter of 2022, the Company completed an analysis of the pool of Corporate customers subject to sales tax in order to estimate the range of sales tax liability on its Corporate revenues.

As a result, the Company recorded an accrual of $ 8.0 million during the quarter ended September 30, 2022 within accounts payable and accrued expenses on the Company’s Consolidated Balance Sheets, as the exposure became both probable and estimable.

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

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

The Company has taken the same approach in estimating the SoHo liability through the year ended December 31, 2023.

Accordingly, the Company has recorded a sales tax expense of $ 2.0 million and $ 9.4 million for both SoHo and Corporate sales for the years ended December 31, 2023 and 2022, respectively.

The Company has recorded a sales tax expense of $ 8.6 million for the year ended December 31, 2021 for SoHo sales only.

Sales tax expense is recorded within general and administrative expenses in the Consolidated Statements of Income.

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 has been completed in the fourth 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.

As a result, the Company recorded an accrual

of $ 8.0 million during the quarter ended September 30, 2022.

Additionally, the Company started sales tax collection on corporate sales in applicable states in August 2022 and on SoHo sales during 2024.

In the third quarter of 2022, the Company initiated a Voluntary Disclosure Agreement (“VDA”) process to voluntarily report its sales tax liability related to prior periods where the Company had previously not been able to estimate its exposure.

The Company recorded an accrual as the exposure became probable and estimable.

The VDA process was completed in the fourth 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.

The Company has recorded a sales tax expense within general and administrative expenses in the Consolidated Statements of Income of $ 1.0 million, $ 2.0 million and $ 9.4 million for the years ended December 31, 2024, 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.

As such, the Company has a $ 7.3 million and $ 13.1 million sales tax liability within accounts payable and accrued expenses on the Company’s Consolidated Balance Sheets as of December 31, 2023 and 2022, respectively.

In conjunction with the state voluntary disclosure agreement process the Company is remitting sales tax for SoHo and Corporate sales for current and prior periods.

The sales tax liability within accounts payable and accrued expenses on the Company’s Consolidated Balance Sheets was $ 5.9 million and $ 7.3 million as of December 31, 2024 and 2023, respectively.

Other Balance Sheet Account Details

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Prepaid income taxes 2,065 3,698

Prepaid marketing expense

Prepaid software licenses 4,346 3,232

Other prepaid expenses 3,389 1,799

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Total $ 36,477 $ 36,506

Income from continuing operations before income taxes for the years ended December 31, 2023, 2022 and 2021 was as follows (in thousands):

Income from operations before income taxes for the years ended December 31, 2024, 2023 and 2022 was as follows (in thousands):

Years Ended December 31,

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Income before income taxes $ 122,245 $ 103,164 $ 98,913

Income tax expense (benefit) related to continuing operations consisted of the following (in thousands):

Income tax expense consists of the following (in thousands):

Years Ended December 31,

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Foreign 7,261 1,945 12,669

Total current 23,333 27,937 33,309

Total current tax expense

30,331 23,333 27,937

Federal ( 3,733 ) ( 852 ) ( 5,851 )

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Foreign 3,848 4,272 5,472

Total deferred 2,536 ( 1,738 ) 6,601

Total deferred tax expense (benefit)

2,479 2,536 ( 1,738 )

Income tax expense

$ 32,810 $ 25,869 $ 26,199

A reconciliation of the statutory federal income tax rate with Consensus’ effective income tax rate is as follows:

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Reserve for uncertain tax positions 2.9 3.1 2.1

Valuation allowance 0.8 — —

Impact on deferred taxes of enacted tax law and rate changes 0.3 ( 0.1 ) 0.1

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Effective tax rates 26.8 % 25.1 % 26.5 %

The effective tax rate for the years ended December 31, 2023 and 2022 differs from the federal statutory rate primarily due to the Global Intangible Low-Taxes Income inclusion, an increase in the net reserve for uncertain tax positions during 2023 and 2022, impact of jurisdictional mix of earnings, various tax credits and certain expenses not deductible for tax purposes.

The effective tax rate for the year ended December 31, 2021 differs from the federal statutory rate primarily due to impacts of the Global Intangible Low-Taxed Income inclusion, an increase in the reserve for uncertain tax positions during 2021 and various tax credits.

The effective tax rate for the years ended December 31, 2024, 2023, and 2022 differs from the federal statutory rate primarily due to the foreign income inclusion, an increase in the net reserve for uncertain tax positions, impact of jurisdictional mix of earnings, various tax credits and certain expenses not deductible for tax purposes.

The primary foreign tax jurisdictions that the Company operates in are:

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$ 29,630 $ 33,771

The Company had approximately $ 33.8 million and $ 35.3 million in net deferred tax assets as of December 31, 2023 and 2022, respectively, related primarily to basis differences in tangible and intangible assets.

The Company had approximately $ 29.6 million and $ 33.8 million in net deferred tax assets as of December 31, 2024 and 2023, respectively, related primarily to basis difference in intangibles and developed software and the Section 163(j) interest limitation.

Based on the weight of available evidence, the Company assesses whether it is more likely than not that some portion or all of a deferred tax asset will not be realized.

If necessary, the Company records a valuation allowance sufficient to reduce the deferred tax asset to the amount that is more likely than not to be realized.

As of December 31, 2023 and 2022, the Company has a minimal amount of valuation allowance against its deferred tax assets of foreign net operating losses.

As of December 31, 2023 and 2022, the Company has interest expense limitation carryovers of $ 30.4 million and $ 23.4 million, respectively, which carries forward indefinitely.

As of December 31, 2024, the Company had a valuation allowance of $ 1.1 million against its foreign tax credit.

As of December 31, 2023, the Company had a minimal amount of valuation allowance against its deferred tax assets of foreign net operating losses.

As of December 31, 2024 and 2023, the Company had interest expense limitation carryforward of $ 32.9 million and $ 30.4 million, respectively, which carries forward indefinitely.

As of December 31, 2024 and 2023, the Company had $ 1.7 million and $ 1.3 million foreign tax credit carryforward, respectively.

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The Company has determined that no significant limitation would be placed on the utilization of its tax credit carryforwards due to ownership changes.

The Company has approximately $ 376.6 million of undistributed earnings from foreign subsidiaries as of December 31, 2023.

The Company considers the earnings of $ 31.2 million of certain non-U.S.

The Company had approximately $ 273.0 million of undistributed earnings from foreign subsidiaries as of December 31, 2024.

The Company considers earnings of $ 31.7 million of certain non-U.S.

subsidiaries to be indefinitely invested outside the United States on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs and our specific plans for reinvestment of those subsidiary earnings.

If the Company decides to repatriate these foreign earnings, the Company would need to adjust the income tax provision in the period in which it is determined that the earnings will no longer be indefinitely invested outside the United States.

Certain tax payments are prepaid during the year and included within prepaid expenses and other current assets on the Consolidated Balance Sheets.

The Company’s prepaid tax payments were $ 3.7 million and $ 8.0 million at December 31, 2023 and 2022, respectively.

Certain tax payments are prepaid during the year and are included within prepaid expenses and other current assets on the Consolidated Balance Sheets.

The Company’s prepaid tax payments were $ 2.1 million and $ 3.7 million at December 31, 2024 and 2023, respectively (see Note 11 - Other Balance Sheet Account Details).

Uncertain Income Tax Positions

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The Company classifies gross interest and penalties and unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year as non-current liabilities in the Consolidated Balance Sheets.

As of December 31, 2023, the total amount of unrecognized tax benefits, excluding interest and penalties, was $ 8.5 million, of which $ 8.5 million, if recognized, would affect the Company’s effective tax rate.

As of December 31, 2022, the total amount of unrecognized tax benefits, excluding interest and penalties, was $ 5.7 million, of which $ 5.7 million, if recognized, would affect the Company’s effective tax rate.

As of December 31, 2021, the total amount of unrecognized tax benefits, excluding interest and penalties, was $ 3.7 million, of which $ 3.7 million, if recognized would affect the Company’s effective tax rate.

The aggregated changes in the balance of unrecognized tax benefits, which excludes interest and penalties, for 2024, 2023 and 2022, is as follows (in thousands):

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Ending balance $ 11,283 $ 8,487 $ 5,742

As of December 31, 2024, the total amount of unrecognized tax benefits, excluding interest and penalties, was $ 11.3 million, which, if recognized, would affect the Company’s effective tax rate.

As of December 31, 2023, the total amount of unrecognized tax benefits, excluding interest and penalties, was $ 8.5 million, which, if recognized, would affect the Company’s effective tax rate.

As of December 31, 2022, the total amount of unrecognized tax benefits, excluding interest and penalties, was $ 5.7 million, which, if recognized, would affect the Company’s effective tax rate.

The Company includes interest and penalties related to unrecognized tax benefits within the provision for income taxes.

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At this point, it is not possible to provide an estimate of the amount, if any, of significant changes in reserves for uncertain income tax positions as a result of the completion of income tax audits that are reasonably possible to occur in the next 12 months.

In addition, the Company cannot currently estimate the amount of, if any, uncertain income tax positions which will be released in the next 12 months as a result of expiration of statutes of limitations.

In addition, the Company cannot currently

estimate the amount of, if any, uncertain income tax positions which will be released in the next 12 months as a result of expiration of statutes of limitations.

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

As of December 31, 2024, the Company is not under audit in any jurisdiction that it operates within.

The Company has filed its post-spin tax returns for the tax years 2021 and 2022 including some international subsidiaries who have previously filed in their local jurisdictions.

In respect to these international subsidiaries, tax returns filed for the years from 2017 onwards are still open to examination by tax authorities.

With respect to these international subsidiaries, tax returns filed for the years from 2018 onwards are still open to examination by tax authorities.

Stockholders’ Deficit

Recapitalization

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

In connection with the Separation, 19,902,924 shares of common stock were issued to the Former Parent and the historical net parent investment was recharacterized as share capital and additional-paid-in-capital to reflect the new corporate structure of Consensus.

Additional-paid-in-capital (APIC) was further adjusted to reflect (i) the distribution of cash to the Former Parent in the amount of $ 290.3 million ($ 259.1 million base amount plus additional net cash sweeps of $ 31.2 million), (ii) the transfer to the parent of the $ 500.0 million aggregate principal amount of the 6.5 % Senior Notes due in 2028, and (iii) the transfer of the net assets of the non-fax business in the amount of $ 837.3 million back to Ziff Davis.

At the time of the separation, the excess of the distributions to the Former Parent over the remaining net parent investment (i.e., the negative APIC balance) was reclassified to accumulated deficit.

The Separation was achieved when Ziff Davis’ distributed 80.1 % of the shares of Consensus common stock to holders of Ziff Davis common stock as of the close of business on October 1, 2021, the record date for the distribution.

Ziff Davis’ stockholders of record received one share of Consensus common stock for every three shares of Ziff Davis’ common stock held.

Ziff Davis retained a 19.9 % investment 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, 2023 (see Note 21 - Related Party Transactions).

The Company currently does not issue dividends to Consensus shareholders.

Future dividends are subject to Board approval.

Our current debt agreements could trigger restrictions on dividend payments under certain circumstances (see Note 9 - Long-Term Debt).

Common Stock Repurchase Program

On March 1, 2022, the Company’s Board of Directors approved a share buyback program.

Under this program, the Company may purchase, in the public market, or in off-market transactions, up to $ 100.0 million of the Company’s common stock through February 2025.

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 years ended December 31, 2023 and 2022, the Company repurchased 839,548 and 189,114 shares, respectively, at an aggregate cost of $ 23.7 million (inclusive of excise tax of $ 0.2 million) and $ 7.6 million, respectively, under this program.

Under this program, the Company may purchase, in the public market, or in off-market transactions, up to $ 100.0 million of the Company’s common stock through February 2025, which was subsequently extended through February 2028 (see Note 20 - Subsequent Events).

The timing and amounts of purchases are 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 years ended December 31, 2024 and 2023, the Company repurchased 57,063 and 839,548 shares, respectively, at an aggregate cost of $ 1.0 million and $ 23.7 million (inclusive of excise tax of $ 0.2 million), respectively, under this program.

Cumulatively as of December 31, 2024, 1,085,725 shares have been repurchased at an aggregate cost of $ 32.3 million (inclusive of excise tax of $ 0.2 million).

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

During the years ended December 31, 2023, 2022 and 2021 the Company withheld shares on its vested restricted stock units and restricted stock awards relating to its share-based compensation plans of 61,878 , 71,509 and zero shares, respectively.

During the years ended December 31, 2024, 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 122,406 , 61,878 and 71,509 shares, respectively.

Refer to Note 14 - Equity Incentive and Employee Stock Purchase Plan, for shares of common stock issued in relation to the Company’s equity incentive plan.

The Company currently does not issue dividends to Consensus shareholders.

Future dividends are subject to the approval of the Company’s Board of Directors.

Our current debt agreements could trigger restrictions on dividend payments under certain circumstances (see Note 8 - Long-Term Debt).

Equity Incentive and Employee Stock Purchase Plan

Prior to the Separation from Ziff Davis, the Company recorded share-based compensation expense for share-based awards granted to its employees and non-employees for services provided based on expense that was allocated from the Former Parent to the Company for each relevant employee on a monthly basis.

The Former Parent’s plans included its 2015 Stock Plan and the 2001 Employee Stock Purchase Plan.

In connection with the Separation, the Former Parent terminated awards that were held by Consensus employees.

Each award held by a Consensus employee under the Former Parent’s compensation plans was converted into 2.21 Consensus awards under the 2021 Equity Incentive Plan, which resulted in 86,460 Ziff Davis awards converted into 191,076 Consensus awards.

This modification resulted in no incremental compensation cost.

Consensus Equity Incentive Plans

(a) The 2021 Equity Incentive Plan

In December 2021, Consensus’ Board of Directors adopted the Consensus Cloud Solutions, Inc.

2021 Equity Incentive Plan (the “2021 Plan”).

The 2021 Plan provides for the grant of incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and share units, and other share-based awards.

The Company’s share-based compensation plans include the 2021 Equity Incentive Plan (the “2021 Plan”) and the Consensus Cloud Solutions, Inc.

2021 Employee Stock Purchase Plan (the “Purchase Plan”).

The 2021 Equity Incentive Plan

In December 2021, Consensus’ Board of Directors adopted the 2021 Plan, which provides for the grant of incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and share units, and other share-based awards.

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

As of December 31, 2023, 2,147,484 shares were available to be used under the 2021 Plan.

As of December 31, 2024, 1,357,360 shares were available to be issued under the 2021 Plan.

Restricted Stock and Restricted Stock Units

The Company has awarded restricted stock and restricted stock units to its Board of Directors and certain employees pursuant to the 2021 Plan.

Compensation expense resulting from restricted stock and restricted unit grants is measured at fair value on the date of grant and is recognized as share-based compensation expense over the applicable vesting period.

Vesting periods are typically 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 issued zero , 884 and 59,175 shares of restricted stock during the years ended December 31, 2023, 2022 and 2021, respectively.

The Company granted 567,218 , 216,959 and 510,128 restricted stock units, which includes 91,203 shares exchanged in the Separation in 2021, during the years ended December 31, 2023, 2022 and 2021, respectively.

Compensation expense resulting from restricted stock and restricted stock unit grants is measured at fair value on the date of grant and is recognized as share-based compensation expense over the applicable vesting period.

Vesting periods are generally 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 809,439 , 567,218 and 216,959 restricted stock units during the years ended December 31, 2024, 2023 and 2022, respectively.

Restricted Stock and Restricted Stock Units with Market Conditions

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The market-based awards have vesting conditions that are based on specified stock price targets of the Company’s common stock.

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 will be recognized over the requisite service period using the graded-vesting method unless the market condition has been met and the 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 year ended

December 31, 2021, the Company issued 6,060 shares of market-based restricted stock, all of which were exchanged in the Separation.

The Company granted 503,144 market-based restricted stock units, which includes 34,638 shares exchanged in the Separation, during the year ended December 31, 2021.

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 the 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 years ended December 31, 2024, 2023 and 2022, the Company granted 190,749 , 122,150 and 42,586 shares, respectively, of market-based restricted stock units.

The per share weighted-average grant-date fair values of the market-based awards granted during the years ended December 31, 2023, 2022 and 2021 was $ 23.69 , $ 55.47 and $ 46.07 , respectively, as determined by the Monte Carlo valuation.

The per share weighted-average grant-date fair values of the market-based awards granted during the years ended December 31, 2024, 2023 and 2022 were $ 24.34 , $ 23.69 and $ 55.47 , respectively, as determined by the Monte Carlo valuation.

Notwithstanding the valuation, for the underlying stock price assumption, all market-based stock awards utilize the market value at the close of business on the date the grant is awarded.

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Nonvested at January 1, 2022

65,235 $ 38.46

Granted 884 37.67

Vested ( 30,703 ) 38.50

Nonvested at December 31, 2022

Granted 884 37.67

Vested ( 19,737 ) 37.77

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Vested ( 9,225 ) 37.95

Canceled ( 6,454 ) 41.07

Nonvested at December 31, 2024

15,679 $ 39.24

As of December 31, 2023, the Company had unrecognized share-based compensation cost related to its restricted stock awards of $ 0.1 million, which is expected to be recognized over a weighted-average period of 0.2 years.

As of December 31, 2024, the Company had no unrecognized share-based compensation cost related to its restricted stock awards, as they have been fully expensed as of the end of the period.

Restricted stock unit activity for the years ended December 31, 2024, 2023 and 2022 is set forth below:

Shares Weighted-Average

Weighted-Average

Life (in Years) Aggregate

Outstanding at January 1, 2022

Exchanged in Separation 125,841 47.15

1,013,097 $ 50.71

Granted 259,545 57.61

Vested ( 165,494 ) 54.72

Canceled ( 24,697 ) 56.20

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Outstanding at December 31, 2024 2,096,316 $ 33.24

Vested and expected to vest at December 31, 2023 1,160,759 $ 40.44 2.8 $ 30,423,506

As of December 31, 2024, the Company had unrecognized share-based compensation cost related to its restricted stock units of $ 39.4 million, which is expected to be recognized over a weighted-average period of 2.7 years.

The Company recognized $ 0.9 million, $ 1.3 million and $ 0.2 million, respectively, of tax benefits related to the share-based compensation costs for the years ended December 31, 2023, 2022 and 2021 related to the 2021 Plan.

(b) Employee Stock Purchase Plan (“ESPP”)

In October of 2021, Consensus established the Consensus Cloud Solutions, Inc.

2021 Employee Stock Purchase Plan (the “Purchase Plan”), which provides the issuance of a maximum of 1,000,000 shares of common stock.

Under the Purchase Plan, eligible employees can have up to 15 % of their earnings withheld, up to certain maximums, to be used to purchase shares of Consensus’ common stock at certain plan-defined dates.

The purchase price for each offering period is 85 % of the lesser of the fair market value of a share of common stock of the Company (a “Share”) on the first or last day of the offering period, with each offering period being six months.

The Company recognized $ 1.9 million, $ 0.9 million and $ 1.3 million of tax benefits related to the share-based compensation costs for the years ended December 31, 2024, 2023 and 2022, respectively, related to the 2021 Plan.

Employee Stock Purchase Plan (“ESPP”)

In October of 2021, Consensus established the Purchase Plan, which provides the issuance of a maximum of 1,000,000 shares of common stock.

Under the Purchase Plan, eligible employees can have up to 15 % of their earnings withheld, up to certain maximums, to be used to purchase shares of Consensus’ common stock on certain plan-defined dates.

The purchase price for each offering period is 85 % of the lesser of the fair market value of a share of common stock of the Company on the first or last day of the offering period, with each offering period being six months.

The plan includes a provision which allows for the more favorable of two exercise prices, commonly referred to as a “look-back” feature.

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The compensation expense related to the Purchase Plan has been estimated utilizing the following assumptions:

December 31, 2023 December 31, 2022

December 31, 2024 December 31, 2023 December 31, 2022

Risk-free interest rate 4.44 % 5.38 % 4.54 %

3 unchanged sentences

Weighted average volatility 49.53 % 53.57 % 48.19 %

Historical Cloud Services

(a) The 2015 Stock Option Plan

In May 2015, the Former Parent’s Board of Directors adopted the Ziff Davis 2015 Stock Option Plan (the “2015 Plan”).

The 2015 Plan provided for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance share units and other share-based awards.

Options under the 2015 Plan may be granted at exercise prices determined by the Former Parent’s Board of Directors, provided that the exercise prices shall not be less than the higher of the par value or 100 % of the fair market value of Ziff Davis’ common stock subject to the option on the date the option is granted.

At December 31, 2021, options to purchase were zero of common stock that were exercisable under and outside of the 2015 Plan, at weighted average exercise price of zero .

Stock options generally expire after 10 years and vest over a 5-year period.

All stock option grants were approved by “outside directors” within the meaning of Internal Revenue Code Section

Stock Options

The stock option activity attributable to Consensus employees for the year ended December, 2021 is summarized as follows:

Number of Shares

Weighted-Average Exercise Price

Weighted-Average Remaining Contractual Life (In Years)

Intrinsic Value

Options outstanding at January 1, 2021

( 250 ) 29.53

Adjustment due to Separation

Options outstanding at December 31, 2021

Exercisable at December 31, 2021

Vested and expected to vest at December 31, 2021

For the year ended December 31, 2021 the Former Parent granted no options to Consensus employees to purchase shares of common stock pursuant to the 2015 Plan.

Stock options granted under the 2015 plan vested 20 % per year and expired 10 years from the date of grant.

The total intrinsic values of options exercised attributable to Consensus employees during the year ended December 31, 2021 was zero .

The total fair value of options vested during the period prior the Separation attributable to Consensus employees was zero for the year ended December 31, 2021.

Cash received by the Former Parent from options exercised under all share-based payment arrangements for the year ended December 31, 2021 was zero .

The actual tax benefit realized for the tax deductions from option exercises under the share-based payment arrangements was zero for the year ended December 31, 2021.

As of December 31, 2021, there was no unrecognized compensation expense related to nonvested share-based compensation options granted under the 2015 Plan.

Fair Value Disclosure

The Former Parent used the Black-Scholes option pricing model to calculate the fair value of each option grant.

The expected volatility was based on historical volatility of the Former Parent’s common stock.

The Former Parent estimated the expected term based upon the historical exercise behavior of its employees.

The risk-free interest rate was based on U.S.

Treasury zero-coupon issues with a term equal to the expected term of the option assumed at the date of grant.

The Former Parent used an annualized dividend yield based upon the per share dividends declared by the Former Parent’s Board of Directors.

Estimated forfeiture rates were 12.4 % as of December 31, 2021.

Restricted Stock and Restricted Stock Units

The Former Parent has awarded restricted stock and restricted stock units to the Former Parent’s Board of Directors and senior staff pursuant to the 2015 Plan.

Vesting periods are approximately one year for awards to members of the Former Parent’s Board of Directors, five years for senior staff (excluding market-based awards discussed below) and eight years for the Chief Executive Officer.

The Former Parent granted 2,207 shares of restricted stock and restricted units the year ended December 31, 2021.

Restricted Stock Awards with Market Conditions

The Former Parent awarded certain key employees market-based restricted stock awards pursuant to the 2015 Plan.

The market-based awards had vesting conditions that were based on specified stock price targets of the Former Parent’s common stock.

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 Former Parent achieving the specified stock price targets with a 20-day and 30-day lookback (trading days).

Stock-based compensation expense related awards with a market condition were recognized over the requisite service period using the graded-vesting method, regardless of whether the market condition was satisfied, provided that the requisite service period had been completed.

During the nine months ended September 30, 2021 the Former Parent awarded 73,094 market-based restricted stock awards.

The per share weighted average grant-date fair value of the market-based restricted stock awards granted during the year ended December 31, 2021 was $ 113.27 .

The Monte Carlo valuation model used by the Former Parent to estimate the fair value of market-based restricted stock awards granted utilized the following weighted-average assumptions:

Underlying stock price at valuation

Expected volatility

Risk-free interest rate

Contractual term

The restricted stock award activity for the year ended December 31, 2021 is set forth below:

Weighted-Average Grant-Date Fair Value

Nonvested at January 1, 2021

26,869 $ 57.21

( 6,189 ) 74.52

( 6,850 ) 83.14

Adjustment due to Separation

( 13,830 ) 53.72

Nonvested at December 31, 2021

The restricted stock unit activity attributable to Consensus employees for the year ended December 31, 2021 is set forth below:

Number of Shares

Weighted-Average Remaining Contractual Life (in Years)

Aggregate Intrinsic Value

Outstanding at January 1, 2021

Adjustment due to Separation

Outstanding at December 31, 2021

Vested and expected to vest at December 31, 2021

The total fair value of restricted stock and restricted stock units vested during the year ended December 31, 2021 was $ 1.3 million.

The actual tax benefit realized for the tax deductions from the vesting of restricted stock awards and units totaled zero for the year ended December 31, 2021.

Defined Contribution 401(k) Savings Plan

9 unchanged sentences

Numerator for basic and diluted net income per common share:

Net income from continuing operations attributable to common shareholders $ 77,295 $ 72,714 $ 121,174

Net income attributable to common shareholders

$ 89,435 $ 77,295 $ 72,714

Net income available to participating securities (1)

( 9 ) ( 59 ) ( 143 )

Net income available to common shareholders from continuing operations $ 77,236 $ 72,571 $ 120,815

Net income available to common shareholders from operations

$ 89,426 $ 77,236 $ 72,571

Weighted-average outstanding shares of common stock 19,286,579 19,582,460 19,863,286

3 unchanged sentences

Common stock and common stock equivalents 19,383,849 19,600,952 19,953,785

Net income per share from continuing operations:

Net income per share from operations:

Basic $ 4.64 $ 3.94 $ 3.65

3 unchanged sentences

Segment Information

The Company’s businesses are based on the organizational structure used by the chief operating decision maker (“CODM”) for making operating and investment decisions and for assessing performance.

The CODM views the Company as one segment:

The Company’s Cloud Fax business is driven primarily by subscription revenues.

The Company evaluates performance based on revenue, gross margin and profit or loss from operations before income taxes, not including nonrecurring gains and losses and foreign exchange gains and losses.

The following presents the segment information of Cloud Fax (in thousands):

Years Ended December 31,

2024 2023 2022

Revenues $ 350,382 $ 362,562 $ 362,422

Salary and benefits 83,361 80,503 73,859

Marketing 20,544 34,825 39,330

Phone operations 16,003 17,989 18,695

Outside services 15,801 20,166 18,262

Depreciation and amortization 20,516 17,421 15,302

Other segment items (1)

44,757 44,429 45,056

Segment operating profit 149,400 147,229 151,918

Interest expense ( 33,979 ) ( 45,367 ) ( 51,423 )

Interest income 2,546 3,715 —

Other income (expense), net (2)

4,278 ( 2,413 ) ( 1,582 )

Segment earnings before income taxes $ 122,245 $ 103,164 $ 98,913

Income tax expense 32,810 25,869 26,199

Segment net income $ 89,435 $ 77,295 $ 72,714

(1) Other segment items includes:

database hosting expenses, computer and related expenses, processing fees, bad debt expense, taxes and insurance expenses, office expenses, travel and entertainment expenses, other administrative expenses and miscellaneous expenses.

(2) Other income (expense), net includes:

gain/loss on foreign currency exchange and miscellaneous income/expense

The Company maintains operations in the U.S., Canada, Ireland and other countries.

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Supplemental Cash Flows Information

Cash paid for interest on outstanding debt during the years ended December 31, 2023, 2022 and 2021 was $ 51.4 million, $ 51.9 million and zero , respectively.

The Company capitalized $ 2.6 million and $ 1.4 million of interest expense within property and equipment, net on the Company’s Consolidated Balance Sheets during the years ended December 31, 2023 and 2022, respectively.

Zero interest expense was capitalized during the year ended December 31, 2021.

The Company capitalized $ 1.9 million and $ 1.5 million of share-based compensation cost within property and equipment, net on the Company’s Consolidated Balance Sheets during the years ended December 31, 2023 and 2022, respectively.

Zero share-based compensation cost was capitalized during the year ended December 31, 2021.

Cash paid for interest on outstanding debt during the years ended December 31, 2024, 2023 and 2022 was $ 43.5 million, $ 51.4 million and $ 51.9 million, respectively.

The Company capitalized $ 2.9 million, $ 2.6 million and $ 1.4 million of interest expense within property and equipment, net on the Company’s Consolidated Balance Sheets during the years ended December 31, 2024, 2023 and 2022, respectively.

The Company capitalized $ 2.8 million, $ 1.9 million and $ 1.5 million of share-based compensation cost within property and equipment, net on the Company’s Consolidated Balance Sheets during the years ended December 31, 2024, 2023 and 2022, respectively.

Cash paid for income taxes net of refunds received was $ 26.4 million, $ 16.6 million and $ 36.5 million during the years ended December 31, 2024, 2023 and 2022, respectively.

During the year ended December 31, 2021, in a non-cash transaction, an asset related to the $ 500.0 million aggregate principal amount of the 6.5 % Senior Notes due in 2028 (see Note 9 - Long-Term Debt) and $ 837.3 million of non-fax business net assets were transferred to Ziff Davis with a corresponding reduction in additional-paid-in-capital.

Accumulated Other Comprehensive Income (Loss)

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 years ended December 31, 2024, 2023 and 2022 (in thousands):

2 unchanged sentences

Other comprehensive loss before reclassifications ( 2,251 )

Transfer of non-fax business to Former Parent 53,506

Net current period other comprehensive income

Balance as of December 31, 2021

Other comprehensive loss before reclassifications

Net current period other comprehensive loss

3 unchanged sentences

Balance as of December 31, 2023

Other comprehensive loss before reclassifications

Net current period other comprehensive loss

Balance as of December 31, 2024

There were no reclassifications out of accumulated other comprehensive loss for the years ended December 31, 2024, 2023 and 2022.

Related Party Transactions

In preparation for and in executing the Separation, the Company incurred approximately $ 11.5 million (excluding costs associated with the deferred issuance costs) of transaction-related costs, before reimbursement by Ziff Davis during the year ended December 31, 2021.

These transaction costs primarily relate to professional fees associated with preparation of regulatory filings and transaction execution and separation activities within finance, tax and legal functions.

During the year ended December 31, 2021, Consensus paid approximately $ 16.1 million to Ziff Davis.

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

The Company also reimbursed Ziff Davis for certain costs associated with the issuance of the 2026 and 2028 Senior Notes, totaling $ 7.9 million, which was recorded as deferred issuance costs.

In addition, the Company paid Ziff Davis approximately $ 8.9 million subsequent to the Separation due to excess cash held at the Separation date net of other related items pursuant to the Separation and Distribution Agreement.

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.

The TSA terminated on October 7, 2023.

Further, as noted in Note 10, Ziff Davis assigned its lease of office space in Los Angeles, California to Consensus.

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

During the year ended December 31, 2023 and 2022, the Company paid approximately $ 1.0 million and $ 20.8 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 $ 0.6 million in costs related to the registration of shares for sale held by Ziff Davis for the year ended December 31, 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 Consolidated Statement of Income.

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

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

Subsequent Events

In connection with the Company’s Debt Repurchase Program (see Note 9 - Long-Term Debt), the Company paid $ 28.6 million to repurchase $ 30.4 million in principal of its senior notes subsequent to year-end.

In connection with the Company’s Debt Repurchase Program (see Note 8 - Long-Term Debt), the Company paid $ 0.9 million, which includes accrued interest, to repurchase $ 0.9 million in principal of its senior notes subsequent to year-end.

On February 19, 2025, the Company’s Board of Directors authorized and approved a three year extension of the ongoing share repurchase program for up to $ 100.0 million of the currently outstanding shares of the Company’s common stock originally approved by the Board of Directors on March 1, 2022 and set to expire in February 2025.

Subject to any future extension in the discretion of the Company’s Board of Directors, the repurchase program is now scheduled to expire on the earlier of:

i) in February 2028;

ii) when a maximum of $ 100.0 million of the Company’s common stock has been repurchased or;

iii) when such program is discontinued by the Company’s Board of Directors (see Note 13 - Stockholders' Deficit).

Changes In And Disagreements With Accountants On Accounting And Financial Disclosure

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-K

Item 8. Financial Statements and Supplementary Data