Consensus Cloud Solutions, Inc. 10-Q

Item 1. Financial Statements. CONSENSUS CLOUD SOLUTIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands except share and per share data) June 30, 2025 December 31, 2024 ASSETS Cash and cash equivalents $ 57,894 $ 33,545 Accounts receivable, net of allowances of $ 4,837 and $ 5,774 , respectively 24,829 24,921 Prepaid expenses and other current assets 9,701 16,059 Total current assets 92,424 74,525 Property and equipment, net 108,111 100,076 Operating lease right-of-use assets 5,736 6,515 Intangibles, net 40,021 41,213 Goodwill 352,743 345,036 Deferred income taxes 32,832 30,521 Other assets 9,651 4,315 TOTAL ASSETS $ 641,518 $ 602,201 LIABILITIES AND STOCKHOLDERS’ DEFICIT Accounts payable and accrued expenses $ 31,602 $ 36,477 Income taxes payable, current 6,653 1,068 Deferred revenue, current 21,399 20,714 Operating lease liabilities, current 2,282 2,150 Current portion of long-term debt — 18,902 Total current liabilities 61,936 79,311 Long-term debt, net of current portion 578,155 574,080 Deferred revenue, noncurrent 1,738 1,913 Operating lease liabilities, noncurrent 10,913 12,018 Liability for uncertain tax positions 14,050 13,218 Deferred income taxes 985 891 Other long-term liabilities 220 233 TOTAL LIABILITIES 667,997 681,664 Commitments and contingencies (Note 8) Common stock, $ 0.01 par value. Authorized 120,000,000 ; total issued is 20,731,103 and 20,609,725 shares and total outstanding is 19,092,034 and 19,524,000 shares as of June 30, 2025 and December 31, 2024, respectively 207 206 Treasury stock, at cost ( 1,639,069 and 1,085,725 shares as of June 30, 2025 and December 31, 2024, respectively) ( 44,887 ) ( 32,313 ) Additional paid-in capital 68,770 59,373 Accumulated deficit ( 41,745 ) ( 83,678 ) Accumulated other comprehensive loss ( 8,824 ) ( 23,051 ) TOTAL STOCKHOLDERS’ DEFICIT ( 26,479 ) ( 79,463 ) TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT $ 641,518 $ 602,201 See Notes to Condensed Consolidated Financial Statements -3- CONSENSUS CLOUD SOLUTIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited, in thousands except share and per share data) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Revenues $ 87,721 $ 87,500 $ 174,859 $ 175,646 Cost of revenues (1) 17,624 17,122 35,694 34,170 Gross profit 70,097 70,378 139,165 141,476 Operating expenses: Sales and marketing (1) 12,452 11,718 25,240 24,276 Research, development and engineering (1) 1,744 1,643 3,456 3,548 General and administrative (1) 16,852 17,136 33,923 36,104 Total operating expenses 31,048 30,497 62,619 63,928 Income from operations 39,049 39,881 76,546 77,548 Interest expense ( 8,673 ) ( 8,657 ) ( 17,649 ) ( 14,856 ) Interest income 484 593 935 1,516 Other (expense) income, net ( 2,316 ) 663 ( 3,413 ) 4,565 Income before income taxes 28,544 32,480 56,419 68,773 Income tax expense 7,763 8,606 14,486 18,529 Net income $ 20,781 $ 23,874 $ 41,933 $ 50,244 Net income per common share: Basic $ 1.07 $ 1.24 $ 2.15 $ 2.61 Diluted $ 1.07 $ 1.24 $ 2.14 $ 2.61 Weighted average shares outstanding: Basic 19,437,315 19,249,116 19,483,689 19,234,728 Diluted 19,497,090 19,287,479 19,593,699 19,260,608 (1) Includes share-based compensation expense as follows: Cost of revenues $ 511 $ 481 $ 987 $ 984 Sales and marketing 702 585 1,416 1,264 Research, development and engineering 107 70 212 165 General and administrative 2,887 2,602 5,856 5,775 Total $ 4,207 $ 3,738 $ 8,471 $ 8,188 See Notes to Condensed Consolidated Financial Statements -4- CONSENSUS CLOUD SOLUTIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited, in thousands) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net income $ 20,781 $ 23,874 $ 41,933 $ 50,244 Other comprehensive gain (loss): Foreign currency translation adjustment 9,859 ( 1,337 ) 14,227 ( 7,651 ) Other comprehensive gain (loss) 9,859 ( 1,337 ) 14,227 ( 7,651 ) Comprehensive income $ 30,640 $ 22,537 $ 56,160 $ 42,593 See Notes to Condensed Consolidated Financial Statements -5- CONSENSUS CLOUD SOLUTIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in thousands) Six Months Ended June 30, 2025 2024 Cash flows from operating activities: Net income $ 41,933 $ 50,244 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 9,749 9,930 Amortization of financing costs and discounts 828 937 Non-cash operating lease costs 793 741 Share-based compensation 8,471 8,188 Provision for doubtful accounts 2,275 2,196 Deferred income taxes, net 556 1,233 Loss (gain) on extinguishment of debt 123 ( 6,555 ) Changes in operating assets and liabilities: Decrease (increase) in: Accounts receivable ( 2,019 ) ( 2,057 ) Prepaid expenses and other current assets 6,420 1,536 Other assets 158 753 Increase (decrease) in: Accounts payable and accrued expenses ( 5,703 ) ( 1,329 ) Income taxes payable 5,512 2,345 Deferred revenue 316 598 Operating lease liabilities ( 986 ) ( 1,133 ) Liability for uncertain tax positions 832 1,439 Other liabilities ( 16 ) ( 12 ) Net cash provided by operating activities 69,242 69,054 Cash flows from investing activities: Purchases of property and equipment ( 15,150 ) ( 17,479 ) Purchase of investments ( 5,000 ) — Net cash used in investing activities ( 20,150 ) ( 17,479 ) Cash flows from financing activities: Proceeds from the issuance of common stock under employee stock purchase plan 694 747 Repurchase of common stock ( 12,344 ) ( 708 ) Taxes paid related to net share settlement ( 1,174 ) ( 615 ) Repurchase of debt ( 15,764 ) ( 85,525 ) Net cash used in financing activities ( 28,588 ) ( 86,101 ) Effect of exchange rate changes on cash and cash equivalents 3,845 ( 4,988 ) Net change in cash and cash equivalents 24,349 ( 39,514 ) Cash and cash equivalents at beginning of period 33,545 88,715 Cash and cash equivalents at end of period $ 57,894 $ 49,201 See Notes to Condensed Consolidated Financial Statements -6- CONSENSUS CLOUD SOLUTIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT (Unaudited, in thousands except share amounts) Common stock Additional paid-in Treasury stock Accumulated Accumulated other comprehensive Total Shares Amount capital Shares Amount deficit loss deficit Balance, April 1, 2024 20,291,793 $ 203 $ 46,201 ( 1,071,624 ) $ ( 31,994 ) $ ( 146,743 ) $ ( 19,491 ) $ ( 151,824 ) Net income — — — — — 23,874 — 23,874 Foreign currency translation adjustment — — — — — — ( 1,337 ) ( 1,337 ) Vested restricted stock 52,548 1 ( 1 ) — — — — — Shares withheld related to net share settlement ( 21,567 ) — ( 382 ) — — — — ( 382 ) Repurchase of common stock — — — — 4 — — 4 Share-based compensation — — 4,478 — — — — 4,478 Issuance of shares under ESPP 45,420 — 747 — — — — 747 Balance, June 30, 2024 20,368,194 $ 204 $ 51,043 ( 1,071,624 ) $ ( 31,990 ) $ ( 122,869 ) $ ( 20,828 ) $ ( 124,440 ) Common stock Additional paid-in Treasury stock Accumulated Accumulated other comprehensive Total Shares Amount capital Shares Amount deficit loss deficit Balance, April 1, 2025 20,628,133 $ 206 $ 63,992 ( 1,087,196 ) $ ( 32,347 ) $ ( 62,526 ) $ ( 18,683 ) $ ( 49,358 ) Net income — — — — — 20,781 — 20,781 Foreign currency translation adjustment — — — — — — 9,859 9,859 Vested restricted stock 105,581 1 ( 1 ) — — — — — Shares withheld related to net share settlement ( 37,568 ) — ( 835 ) — — — — ( 835 ) Repurchase of common stock — — — ( 551,873 ) ( 12,540 ) — — ( 12,540 ) Share-based compensation — — 4,920 — — — — 4,920 Issuance of shares under ESPP 34,957 — 694 — — — — 694 Balance, June 30, 2025 20,731,103 $ 207 $ 68,770 ( 1,639,069 ) $ ( 44,887 ) $ ( 41,745 ) $ ( 8,824 ) $ ( 26,479 ) -7- CONSENSUS CLOUD SOLUTIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT (Unaudited, in thousands except share amounts) Common stock Additional paid-in Treasury stock Accumulated Accumulated other comprehensive Total Shares Amount capital Shares Amount deficit loss deficit Balance, January 1, 2024 20,273,686 $ 203 $ 41,247 ( 1,028,662 ) $ ( 31,282 ) $ ( 173,113 ) $ ( 13,177 ) $ ( 176,122 ) Net income — — — — — 50,244 — 50,244 Foreign currency translation adjustment — — — — — — ( 7,651 ) ( 7,651 ) Vested restricted stock 85,995 1 ( 1 ) — — — — — Shares withheld related to net share settlement ( 36,907 ) — ( 615 ) — — — — ( 615 ) Repurchase of common stock — — — ( 42,962 ) ( 708 ) — — ( 708 ) Share-based compensation — — 9,665 — — — — 9,665 Issuance of shares under ESPP 45,420 — 747 — — — — 747 Balance, June 30, 2024 20,368,194 $ 204 $ 51,043 ( 1,071,624 ) $ ( 31,990 ) $ ( 122,869 ) $ ( 20,828 ) $ ( 124,440 ) Common stock Additional paid-in Treasury stock Accumulated Accumulated other comprehensive Total Shares Amount capital Shares Amount deficit loss deficit Balance, January 1, 2025 20,609,725 $ 206 $ 59,373 ( 1,085,725 ) $ ( 32,313 ) $ ( 83,678 ) $ ( 23,051 ) $ ( 79,463 ) Net income — — — — — 41,933 — 41,933 Foreign currency translation adjustment — — — — — — 14,227 14,227 Vested restricted stock 137,466 1 ( 1 ) — — — — — Shares withheld related to net share settlement ( 51,045 ) — ( 1,174 ) — — — — ( 1,174 ) Repurchase of common stock — — — ( 553,344 ) ( 12,574 ) — — ( 12,574 ) Share-based compensation — — 9,878 — — — — 9,878 Issuance of shares under ESPP 34,957 — 694 — — — — 694 Balance, June 30, 2025 20,731,103 $ 207 $ 68,770 ( 1,639,069 ) $ ( 44,887 ) $ ( 41,745 ) $ ( 8,824 ) $ ( 26,479 ) See Notes to Condensed Consolidated Financial Statements -8- CONSENSUS CLOUD SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Basis of Presentation The Company Consensus Cloud Solutions, Inc., together with its subsidiaries (“Consensus Cloud Solutions”, “Consensus”, the “Company”, “our”, “us” or “we”), is a provider of secure information delivery services with a scalable Software-as-a-Service (“SaaS”) platform. Consensus serves customers of all sizes, from enterprises to individuals, across the globe and multiple industry verticals including, but not limited to, healthcare, government, financial services, law and education. Beginning as an online fax company over two decades ago, Consensus has evolved into a global provider of enterprise secure communication solutions. Our communication, extraction and digital signature solutions enable our customers to securely and cooperatively access, exchange and use information across organizational, regional and national boundaries. Principles of Consolidation The accompanying interim condensed consolidated financial statements include the accounts of Consensus and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Basis of Presentation The accompanying interim condensed consolidated financial statements are unaudited and have been prepared in accordance with instructions for Form 10-Q and Article 10 of Regulation S-X issued by the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. The Company believes that the disclosures made are adequate to make that information not misleading. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for the fair statement of these interim financial statements have been reflected. It is suggested that these financial statements be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2024, included in our Annual Report (Form 10-K) filed with the SEC on February 20, 2025. Accordingly, significant accounting policies and other disclosures normally provided have been omitted since such items are disclosed therein. The results of operations for this interim period are not necessarily indicative of the operating results for the full year or for any future period. Use of Estimates The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, including judgments about the reported amounts of revenue and expenses during the reporting period. The Company believes that its most significant estimates are those related to revenue recognition, internal-use software development costs, share-based compensation expense and income taxes. On an ongoing basis, management evaluates its estimates based on historical experience and on various other factors that the Company believes to be reasonable under the circumstances. Actual results could materially differ from those estimates due to risks and uncertainties, including uncertainty in the current economic environment due to factors such as inflationary pressures and elevated interest rates. Significant Accounting Policies There have been no material changes to our significant accounting policies from our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Segment Reporting FASB ASC Topic No. 280, Segment Reporting (“ASC 280”), establishes standards for the way that public business enterprises 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 -9- 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 (“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 14 - Segment Information). The condensed consolidated financial statements and related disclosures reflect the segment operations of Cloud Fax. 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. 2. Recent Accounting Pronouncements In October 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, which amends the disclosure or presentation requirements of a variety of topics in the accounting standards codification in order to conform with certain SEC amendments in Release No. 33-10532, Disclosure Update and Simplification. The effective date for each amendment will be the date on which the SEC removes that related disclosure from its rules. However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective. The Company is evaluating the potential impact of this guidance on its consolidated financial statements. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments are intended to improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. The amendments in this ASU should be applied on either a prospective or retrospective basis. The amendments in this ASU are effective for annual periods beginning after December 15, 2024. Early adoption is permitted. ASU 2023-09 is expected to impact the Company's income tax disclosures beginning with the consolidated financial statements included in the annual report on Form 10-K for the fiscal year ending December 31, 2025, but will have no impact on the Company's results of operations, cash flows, or financial condition. 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. 3. Revenues 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. -10- Revenues from external customers classified by revenue source are as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Revenues Corporate $ 55,302 $ 51,720 $ 109,591 $ 103,110 Small office home office (“SoHo”) 32,414 35,779 65,263 72,533 Other 5 1 5 3 Total $ 87,721 $ 87,500 $ 174,859 $ 175,646 Timing of revenue recognition Point in time $ 572 $ 238 $ 1,215 $ 448 Over time 87,149 87,262 173,644 175,198 Total $ 87,721 $ 87,500 $ 174,859 $ 175,646 The Company has recorded $ 4.1 million and $ 4.4 million of revenue for the three months ended June 30, 2025 and 2024, respectively, and $ 13.7 million and $ 14.5 million of revenue for the six months ended June 30, 2025 and 2024, respectively, that was previously included in the deferred revenue balance as of the beginning of each respective year. Performance Obligations Generally, the Company’s contracts with customers include one performance obligation, however, certain contracts may include multiple performance obligations. For such arrangements, revenues are allocated to each performance obligation based on their relative standalone selling price. The Company satisfies its performance obligations upon delivery of products or services to its customers. Payment terms vary by type and location of the Company’s customers and the products and services offered. The time between invoicing and when payment is due is not significant. Due to the nature of the services provided, there are no obligations for returns. Significant Judgments Determining whether products and services are considered distinct performance obligations may require significant judgment. 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. In certain cases, the Company is able to establish the standalone selling price based on observable prices of products or services sold or priced separately in comparable circumstances to similar customers. The Company uses a range of amounts to estimate the standalone selling price when each of the products and services is sold separately to determine whether there is a discount to be allocated based on the relative standalone selling price of the various products and services. Performance Obligations Satisfied Over Time 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. -11- 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. The Company recognizes revenue on a straight-line basis throughout the subscription period and believes that the method used is a faithful depiction of the transfer of goods and services. Practical Expedients Existence of a Significant Financing Component in a Contract As a practical expedient, the Company has not assessed whether a contract has a significant financing component because the Company expects at contract inception that the period between payment by the customer and the transfer of promised goods or services by the Company to the customer will be one year or less. 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 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 Obtain a Contract The Company’s revenues are primarily generated from customer contracts that are for one year or less. Costs primarily consist of incentive compensation paid based on the achievements of sales targets in a given period for related revenue streams and are recognized in the month when the revenue is earned. Incentive compensation is paid upon the issuance or renewal of the customer contract. As a practical expedient, for amortization periods that are determined to be one year or less, the Company expenses any incremental costs of obtaining the contract with a customer when incurred. For those customer contracts greater than one year, the Company capitalizes and amortizes the expenses, when appropriate, over the period of benefit. Revenues Invoiced The Company has applied the practical expedient for certain revenue streams to exclude the value of remaining performance obligations for (i) contracts with an original expected term of one year or less or (ii) contracts for which the Company recognizes revenue in proportion to the amount it has the right to invoice for services performed. 4. Fair Value Measurements The Company complies with the provisions of FASB ASC Topic No. 820, Fair Value Measurement, (“ASC 820”), which defines fair value, provides a framework for measuring fair value and expands the disclosures required for fair value measurements of financial and non-financial assets and liabilities. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: § Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. § Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. § Level 3 – Unobservable inputs which are supported by little or no market activity. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. Cash and cash equivalents include money market funds of $ 50.6 million and $ 26.8 million as of June 30, 2025 and December 31, 2024, 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. -12- The fair value of long-term debt is determined using recent quoted market prices or dealer quotes for each of the Company’s instruments, which are Level 1 inputs (see Note 7 - Long-Term Debt). The carrying value of long-term debt is reflected in the financial statements at cost. Assets Measured on a Non-Recurring Basis The Company’s non-financial assets, which primarily consist of goodwill, indefinite-lived intangible assets, long-lived assets and equity securities without a readily determinable fair value are reported at carrying value, or at fair value as of their acquisition dates, and are not required to be measured at fair value on a recurring basis. However, 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. The carrying amount of the Company’s investments accounted for using the measurement alternative method in accordance with FASB ASC Topic No. 321, Investments - Equity Securities (“ASC 321”) as of June 30, 2025 and December 31, 2024, was $ 8.0 million and $ 4.0 million, respectively, and is included in other assets within the Company’s Condensed Consolidated Balance Sheets. If the Company becomes aware of a significant decline in value that is other-than-temporary, the Company assesses whether an other-than-temporary impairment loss on an investment has occurred due to declines in fair value or other market conditions. The loss will be recorded in the period in which the Company identifies the decline. During the three and six months ended June 30, 2025 and 2024, the Company did not recognize any unrealized gains or losses and did not have any impairments during the respective periods. 5. Property and Equipment Property and equipment, stated at cost, as of June 30, 2025 and December 31, 2024 consisted of the following (in thousands): June 30, 2025 December 31, 2024 Internal-use software development costs $ 91,047 $ 88,244 Computers, software and equipment 19,091 18,616 Furniture and fixtures 891 882 Leasehold improvements 1,724 1,715 Internal-use software development costs in process 60,296 46,676 173,049 156,133 Less: Accumulated depreciation and amortization ( 64,938 ) ( 56,057 ) Total property and equipment, net $ 108,111 $ 100,076 Depreciation and amortization expense was $ 3.9 million and $ 4.2 million for the three months ended June 30, 2025 and 2024, respectively, and $ 8.4 million and $ 8.1 million for the six months ended June 30, 2025 and 2024, respectively. No impairment was recorded in the three and six months ended June 30, 2025 and 2024. 6. Goodwill and Intangible Assets The changes in carrying amounts of goodwill for the six months ended June 30, 2025 are as follows (in thousands): Amount Balance as of January 1, 2025 $ 345,036 Foreign exchange translation 7,707 Balance as of June 30, 2025 $ 352,743 As of June 30, 2025 the Company’s goodwill had no accumulated impairment. -13- Intangible Assets with Indefinite Lives: Intangible assets are summarized as of June 30, 2025 and December 31, 2024 as follows (in thousands): June 30, 2025 December 31, 2024 Trade names $ 27,420 $ 27,316 Other 4,045 4,045 Total $ 31,465 $ 31,361 Intangible Assets Subject to Amortization: As of June 30, 2025, intangible assets subject to amortization are summarized as follows (in thousands): Weighted-Average Remaining Amortization Period Historical Cost Accumulated Amortization Net Trade names 0.2 years $ 8,295 $ 8,079 $ 216 Patent and patent licenses 0.0 years 54,341 54,341 — Customer relationships (1) 1.8 years 109,606 102,440 7,166 Other purchased intangibles 1.1 years 11,926 10,752 1,174 Total $ 184,168 $ 175,612 $ 8,556 (1) The Company amortizes its customer relationship assets in a pattern that best reflects the pace in which the assets’ benefits are consumed. This pattern results in a substantial majority of the amortization expense being recognized in the first four to five years , which may not correlate to the overall life of the asset. As of December 31, 2024, intangible assets subject to amortization are summarized as follows (in thousands): Weighted-Average Remaining Amortization Period Historical Cost Accumulated Amortization Net Trade names 0.2 years $ 8,107 $ 7,826 $ 281 Patent and patent licenses 0.0 years 54,341 54,341 — Customer relationships (1) 2.1 years 107,287 99,054 8,233 Other purchased intangibles 1.2 years 11,914 10,576 1,338 Total $ 181,649 $ 171,797 $ 9,852 (1) The Company amortizes its customer relationship assets in a pattern that best reflects the pace in which the assets’ benefits are consumed. This pattern results in a substantial majority of the amortization expense being recognized in the first four to five years , which may not correlate to the overall life of the asset. Expected amortization expenses for intangible assets subject to amortization at June 30, 2025 are as follows (in thousands): Fiscal Year: Amount 2025 (remainder) $ 1,263 2026 2,104 2027 1,407 2028 986 2029 803 Thereafter 1,993 Total $ 8,556 -14- Amortization expense was $ 0.6 million and $ 0.9 million for the three months ended June 30, 2025 and 2024, respectively, and $ 1.3 million and $ 1.8 million for the six months ended June 30, 2025 and 2024, respectively. No impairment of intangible assets was recorded in the three and six months ended June 30, 2025 and 2024. 7. Long-Term Debt Long-term debt as of June 30, 2025 and December 31, 2024 consists of the following (in thousands): June 30, 2025 December 31, 2024 2026 Senior Notes $ 234,139 $ 248,980 2028 Senior Notes 348,247 349,137 Total 582,386 598,117 Less: deferred issuance costs ( 4,231 ) ( 5,135 ) Total debt 578,155 592,982 Less: current portion, net of debt issuance costs — ( 18,902 ) Total long-term debt, less current portion $ 578,155 $ 574,080 As of June 30, 2025 and December 31, 2024, the estimated fair value of the 2026 Senior Notes (as defined below) was approximately $ 233.0 million and $ 246.2 million, respectively. As of June 30, 2025 and December 31, 2024, the estimated fair value of the 2028 Senior Notes (as defined below) was approximately $ 346.5 million and $ 346.1 million, respectively. At June 30, 2025, future contractual principal payments for debt were as follows (in thousands): Fiscal year: Total 2025 (remainder) $ — 2026 234,139 2027 — 2028 348,247 2029 — Thereafter — Total $ 582,386 The Company capitalized $ 1.0 million and $ 0.7 million of interest expense within property and equipment, net on the Company’s Condensed Consolidated Balance Sheets during the three months ended June 30, 2025 and 2024, respectively, and $ 1.8 million and $ 1.4 million of interest expense within property and equipment, net on the Company’s Condensed Consolidated Balance Sheets during the six months ended June 30, 2025 and 2024, respectively. 2026 Senior Notes On October 7, 2021, Consensus issued $ 305.0 million of senior notes due in 2026 (the “2026 Senior Notes”), receiving net 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, which is presented net of deferred issuance costs, on the Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024. The 2026 Senior Notes bear interest at a rate of 6.0 % per annum and mature on October 15, 2026. 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 pursuant to which the 2026 Senior Notes were issued 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; (iii) create liens or enter into sale and leaseback transactions; (iv) enter into transactions with affiliates; (v) merge or consolidate with another company; and (vi) transfer and sell assets. These covenants contain certain exceptions. Restricted payments are applicable only if Consensus Cloud Solutions, Inc. and subsidiaries designated as restricted subsidiaries has a net leverage ratio -15- of greater than 3.0 to 1.0. In addition, if such net leverage ratio is in excess of 3.0 to 1.0, the restriction on restricted payments is subject to various exceptions, including the total aggregate amount not to exceed the greater of (A) $ 100.0 million and (B) 50.0 % of EBITDA for the most recently ended four fiscal quarter period ended immediately prior to such date for which internal financial statements are available. The Company is in compliance with its debt covenants as of June 30, 2025. 2028 Senior Notes On October 7, 2021, Consensus issued $ 500.0 million of 6.5 % senior notes due in 2028 (the “2028 Senior Notes”) to Ziff Davis, Inc. (“Ziff Davis” or the “Former Parent”) in exchange for the equity interest in the Company. Ziff Davis then exchanged the 2028 Senior Notes with lenders under its credit agreement (or their affiliates) in exchange for extinguishment of a similar amount of indebtedness under such credit agreement. The 2028 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 Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024. The 2028 Senior Notes bear interest at a rate of 6.5 % per annum and mature on October 15, 2028. 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 pursuant to which the 2028 Senior Notes were issued 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; (iii) create liens or enter into sale and leaseback transactions; (iv) enter into transactions with affiliates; (v) merge or consolidate with another company; and (vi) transfer and sell assets. These covenants contain certain exceptions. Restricted payments are applicable only if Consensus Cloud Solutions, Inc. and subsidiaries designated as restricted subsidiaries has a net leverage ratio of greater than 3.0 to 1.0. In addition, if such net leverage ratio is in excess of 3.0 to 1.0, the restriction on restricted payments is subject to various exceptions, including the total aggregate amount not to exceed the greater of (A) $ 100.0 million and (B) 50.0 % of EBITDA for the most recently ended four fiscal quarter period ended immediately prior to such date for which internal financial statements are available. The Company is in compliance with its debt covenants as of June 30, 2025. Credit Agreement On March 4, 2022, the Company entered into a Credit Agreement (the “Credit Agreement”) with certain lenders party thereto (the “Lenders”) and MUFG Union Bank, N.A., as agent (the “Agent”). Pursuant to the Credit Agreement, the Lenders have provided Consensus with a senior secured revolving credit facility of $ 25.0 million (the “Credit Facility”) with an option held by the Company to obtain an additional commitment of up to a maximum of $ 25.0 million. The final maturity of the Credit Facility was scheduled to occur on March 4, 2027. As of June 30, 2025, 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. The loans made under the Credit Facility are subject to a Secured Overnight Financing Rate (“SOFR”) base interest rate plus a SOFR margin between 1.75 % - 2.50 %, with stepdowns subject to the total net leverage ratio. 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; (ii) make certain restricted payments; (iii) create liens or enter into sale and leaseback transactions; (iv) enter into transactions with affiliates; (v) merge or consolidate with another company; and (vi) transfer and sell assets. These covenants contain certain exceptions. Unsecured indebtedness may be incurred, assets may be disposed of, restricted payments may be made and investments may be made, in each case subject to compliance with the Company’s financial covenants. The Company is in compliance with its covenants as of June 30, 2025. Subsequent to the period ended June 30, 2025 this Credit Facility was retired with no balance (see Note 15 - Subsequent Events). 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”). 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. During the three and six months ended June 30, 2025, the Company retired $ 6.0 million and $ 15.7 million, respectively, in principal of its senior notes. During the three and six months ended June 30, 2024, the Company retired -16- $ 29.7 million and $ 93.1 million, respectively, in principal of its senior notes. As of June 30, 2025, the Company had retired an aggregate of $ 222.6 million in principal of its senior notes under this program. In connection with the Debt Repurchase Program, the Company reclassified zero and $ 18.9 million of long-term debt, net of current portion to the current portion of long-term debt as of June 30, 2025 and December 31, 2024, 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 reporting periods. For the three and six months ended June 30, 2025, a net loss on debt extinguishment of zero and $ 0.1 million, respectively, related to the Debt Repurchase Program is included in interest expense on the Condensed Consolidated Statements of Income. For the three and six months ended June 30, 2024, a net gain on debt extinguishment of $ 1.7 million and $ 6.6 million, respectively, related to the Debt Repurchase Program is included in interest expense on the Condensed Consolidated Statements of Income. 8. Commitments and Contingencies Litigation From time to time, the Company and its affiliates are involved in litigation and other legal disputes or regulatory inquiries that arise in the ordinary course of business. Any claims or regulatory actions against the Company and its affiliates, whether meritorious or not, could be time consuming and costly, and could divert significant operational resources. The outcomes of such matters are subject to inherent uncertainties, carrying the potential for unfavorable rulings that could include monetary damages and injunctive relief. The Company does not believe, based on current knowledge, that any legal proceedings or claims currently exist which, after giving effect to existing accrued liabilities, are likely to have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows. It is the Company’s policy to expense legal fees related to any litigation as incurred. Non-Income Related Taxes The Company believes that it has sufficiently reserved for historical sales tax liabilities under FASB ASC Topic No. 450, Contingencies, although some state taxing authorities may 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 will continue to review and monitor the impact of sales tax rules in order to mitigate any associated risks on its business. 9. Other Balance Sheet Account Details Prepaid expenses and other current assets Prepaid expenses and other current assets consisted of the following (in thousands): June 30, 2025 December 31, 2024 Prepaid insurance $ 1,204 $ 2,601 Prepaid income taxes 1,360 2,065 Prepaid marketing expense — 3,365 Prepaid software licenses 3,657 4,346 Other prepaid expenses 3,266 3,389 Other current assets 214 293 Total $ 9,701 $ 16,059 -17- Accounts payable and accrued expenses Accounts payable and accrued expenses consisted of the following (in thousands): June 30, 2025 December 31, 2024 Accounts payable $ 5,991 $ 7,383 Accrued sales and other taxes 7,042 6,796 Accrued interest 7,638 7,939 Accrued compensation 6,102 10,425 Accrued advertising expenses 1,643 2,719 Other accrued expenses 3,186 1,215 Total $ 31,602 $ 36,477 10. Income Taxes The Company’s tax provision for interim periods is determined using an estimate of the Company’s annual effective tax rate adjusted for discrete interim period tax impacts. Each quarter the Company updates its estimated annual effective tax rate and, if the estimate changes, makes a cumulative adjustment. Changes in the geographical mix, permanent differences or the estimated level of annual pre-tax income can affect the effective tax rate. The Company’s effective tax rate for the three months ended June 30, 2025 and 2024 was 27.2 % and 26.5 %, respectively. The Company’s effective tax rate for the six months ended June 30, 2025 and 2024 was 25.7 % and 26.9 %, respectively. The increase in the Company’s effective income tax rate for the three months ended June 30, 2025 was primarily due to a change in the geographical mix of income, a decreased impact of the valuation allowance on the quarter, a decrease in uncertain tax positions and an increase in the officer’s compensation limitation. The decrease in the Company’s effective income tax rate for the six months ended June 30, 2025 was primarily due to a decreased impact of the valuation allowance and a decrease in uncertain tax positions. The Company’s effective tax rates for the three and six months ended June 30, 2025 and 2024 differed from the U.S. federal statutory rates of 21% primarily as a result of state income taxes, certain expenses not deductible for tax purposes, foreign rate differential, foreign income inclusion, various tax credits and uncertain tax positions. As of June 30, 2025 and December 31, 2024, the Company had $ 14.1 million and $ 13.2 million, respectively, in liabilities for uncertain income tax positions, including interest and penalties. Accrued interest and penalties related to unrecognized tax benefits are recognized in income tax expense on the Company’s Condensed Consolidated Statements of Income. On July 4, 2025, the budget reconciliation bill H.R. 1, referred to as the One Big Beautiful Bill Act (“OBBBA”), was signed into law. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions, including modifications to capitalization of research and development expenses, limitations on deductions for interest expense and accelerated fixed asset depreciation. The Company is still in the process of evaluating the OBBBA and an estimate of the financial impact cannot be made at this time. Income Tax Audits The Company is required to file tax returns in the United States, Ireland, Canada, Japan, Netherlands and Hong Kong. As of June 30, 2025, the Company was not under audit in any jurisdiction that it operates within. In respect to these international subsidiaries, tax returns for the years from 2018 onwards are still open to examination by tax authorities. 11. Stockholders’ Deficit Common Stock Repurchase Program In March 2022, the Company’s Board of Directors approved a share buyback program. Under this program, the Company was authorized to purchase in the public market or in off-market transactions up to $ 100.0 million of the Company’s common stock through February 2025. In February 2025, the Company’s Board of Directors authorized and approved a three-year extension of the share repurchase program through February 2028. The program may end before this date if the maximum -18- amount of repurchases has been reached or at the discretion of the Company’s Board of Directors. 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 under this program. During the three months ended June 30, 2025, the Company repurchased 551,873 shares under this program at an aggregate cost of $ 12.5 million (inclusive of excise tax of $ 0.1 million). There were no shares repurchased during the three months ended June 30, 2024. During the six months ended June 30, 2025 and 2024, the Company repurchased 553,344 and 42,962 shares, respectively, under this program at an aggregate cost of $ 12.6 million (inclusive of excise tax of $ 0.1 million) and $ 0.7 million, respectively. Cumulatively as of June 30, 2025, 1,639,069 shares have been repurchased under this program at an aggregate cost of $ 44.9 million (inclusive of excise tax of $ 0.3 million). The excise tax is assessed at 1 % of the fair market value of net stock repurchases after December 31, 2022. Vested Restricted Stock At the time of certain vesting events related to restricted stock units or restricted stock awards that are held by participants in Consensus’ Equity Incentive Plan, a portion of the awards subject to vesting are withheld by the Company to satisfy the employees’ tax withholding obligations that arise upon the vesting of restricted stock. As a result, the number of shares issued upon vesting for these awards is net of the statutory withholding requirements that the Company pays on behalf of its employees. Although shares withheld are not issued, they are treated as common share repurchases in the Company’s condensed consolidated financial statements, as they reduce the number of shares that would have been issued upon vesting. These shares do not count against the authorized capacity under the Company’s share repurchase program described above. During the three months ended June 30, 2025 and 2024, the Company withheld shares on its vested restricted stock units and restricted stock awards relating to its share-based compensation plans of 37,568 shares and 21,567 shares, respectively. During the six months ended June 30, 2025 and 2024, the Company withheld shares on its vested restricted stock units and restricted stock awards relating to its share-based compensation plans of 51,045 shares and 36,907 shares, respectively. Dividends 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 7 - Long-Term Debt). 12. Equity Incentive Plan The Company’s share-based compensation plans include the 2021 Equity Incentive Plan (the “2021 Plan”). 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. Under the 2021 Plan, 4,000,000 shares of common stock are authorized to be granted. As of June 30, 2025, 1,397,224 shares were available to be used under the 2021 Plan. Restricted stock unit activity for the six months ended June 30, 2025 is set forth below: Number of Shares Weighted-Average Grant-Date Fair Value Outstanding at January 1, 2025 2,096,316 $ 33.24 Granted 46,601 24.24 Vested ( 137,466 ) 41.24 Canceled ( 35,420 ) 27.95 Outstanding at June 30, 2025 1,970,031 $ 32.57 As of June 30, 2025, the Company had unrecognized share-based compensation cost related to its restricted stock units of $ 29.6 million, which is expected to be recognized over a weighted-average period of 2.4 years. -19- The Company capitalized $ 0.7 million and $ 0.7 million of share-based compensation cost during the three months ended June 30, 2025 and 2024, respectively, and $ 1.4 million and $ 1.5 million during the six months ended June 30, 2025 and 2024, respectively, within property and equipment, net on its Condensed Consolidated Balance Sheets. 13. Earnings Per Share The components of basic and diluted earnings per share are as follows (in thousands, except share and per share data): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Numerator for basic and diluted net income per common share: Net income attributable to common shareholders $ 20,781 $ 23,874 $ 41,933 $ 50,244 Net income available to participating securities (1) — — — ( 10 ) Net income available to common shareholders from operations $ 20,781 $ 23,874 $ 41,933 $ 50,234 Denominator: Weighted-average outstanding shares of common stock 19,437,315 19,249,116 19,483,689 19,234,728 Dilutive effect of: Equity incentive plans 59,775 38,363 107,781 21,473 Employee Stock Purchase Plan — — 2,229 4,407 Common stock and common stock equivalents 19,497,090 19,287,479 19,593,699 19,260,608 Net income per share from operations: Basic $ 1.07 $ 1.24 $ 2.15 $ 2.61 Diluted $ 1.07 $ 1.24 $ 2.14 $ 2.61 (1) Represents unvested share-based payment awards that contain certain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid). For the three months ended June 30, 2025 and 2024, there were 1,017,505 and 1,405,780 anti-dilutive shares, respectively, that were excluded from the earnings per share calculation. For the six months ended June 30, 2025 and 2024, there were 994,209 and 1,397,512 anti-dilutive shares, respectively, that were excluded from the earnings per share calculation. -20- 14. Segment Information The following presents the segment information of Cloud Fax (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Revenues $ 87,721 $ 87,500 $ 174,859 $ 175,646 Less: Salary and benefits 20,630 19,237 40,581 40,952 Marketing 4,896 4,517 9,928 8,977 Phone operations 4,190 3,939 8,425 7,983 Outside services 3,327 3,169 7,163 7,510 Depreciation and amortization 4,571 5,163 9,749 9,930 Other segment items (1) 11,058 11,594 22,467 22,746 Segment operating profit 39,049 39,881 76,546 77,548 Interest expense ( 8,673 ) ( 8,657 ) ( 17,649 ) ( 14,856 ) Interest income 484 593 935 1,516 Other (expense) income, net (2) ( 2,316 ) 663 ( 3,413 ) 4,565 Segment earnings before income taxes 28,544 32,480 56,419 68,773 Income tax expense 7,763 8,606 14,486 18,529 Segment net income $ 20,781 $ 23,874 $ 41,933 $ 50,244 (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 (expense) income, 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. Geographic information about the U.S. and all other countries for the reporting periods is presented below. Such information attributes revenues based on markets where revenues are reported (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Revenues: United States $ 68,620 $ 69,199 $ 137,376 $ 138,911 Canada 14,113 13,254 27,736 26,373 Ireland 2,775 3,037 5,477 6,211 All other countries 2,213 2,010 4,270 4,151 Foreign countries 19,101 18,301 37,483 36,735 Total $ 87,721 $ 87,500 $ 174,859 $ 175,646 -21- The following presents the Company’s long-lived assets by geographic region, which consist of property and equipment, net and operating lease right-of-use assets (in thousands): June 30, 2025 December 31, 2024 Long-lived assets: United States $ 113,560 $ 106,244 Canada 148 191 Ireland 136 155 All other countries 3 1 Foreign countries 287 347 Total $ 113,847 $ 106,591 15. Subsequent Events In connection with the Company’s share buyback program (see Note 11 - Stockholders’ Deficit) the Company repurchased 115,652 shares under this program for $ 2.6 million subsequent to the period ended June 30, 2025. On July 9, 2025, the Company entered into a Credit Agreement (the “2025 Credit Agreement”) with certain lenders party thereto (the “Lenders”) and U.S. Bank National Association, as agent (the “Agent”). Pursuant to the 2025 Credit Agreement, the Lenders have provided the Company with a senior secured revolving credit facility of $ 75.0 million (the “Revolving Credit Facility”) and a senior secured delayed-draw term loan facility of $ 150.0 million (the “DDTL Facility” and together with the Revolving Credit Facility, the “2025 Credit Facility”). The final maturity of the 2025 Credit Facility will occur on July 10, 2028, subject to limited customary accelerators. Subject to the terms and conditions of the 2025 Credit Agreement, the Company may borrow, repay and reborrow revolving loans at any time during the term of the facility. The Company may borrow under the DDTL Facility until October 15, 2026, but amounts that are prepaid or repaid may not be reborrowed. Voluntary prepayments of loans and voluntary reductions of unused commitments under the 2025 Credit Agreement are permissible without penalty (other than customary interest breakage charges). As of the date these condensed consolidated financial statements were issued, no amount has been drawn down on the 2025 Credit Facility. The 2025 Credit Facility is guaranteed by each wholly-owned material domestic subsidiary of the Company, and secured by substantially all assets of the Company and the guarantors, subject to other customary exceptions. The interest rate applicable to the loans made under the 2025 Credit Facility are, at the Company’s option, equal to either a base rate or the SOFR plus an applicable margin based on the total net leverage ratio ( 0.50 % - 1.25 % in the case of base rate loans and 1.50 % - 2.25 % in the case of SOFR loans). In connection with entering into the 2025 Credit Facility, the Company’s existing senior secured revolving credit facility agented by U.S. Bank National Association (as successor-in-interest to MUFG Bank, N.A.) was retired with no balance (see Note 7 - Long-Term Debt). The 2025 Credit Facility is subject to a maximum total net leverage ratio covenant and a minimum fixed charges coverage ratio covenant, in each case tested on a quarterly basis. The 2025 Credit Agreement contains covenants that, subject to certain exceptions, restrict the Company’s ability to: (i) pay dividends or make distributions on the Company’s common stock; (ii) make certain restricted payments (including certain voluntary payments in respect of the Company’s 2028 Senior Notes); (iii) create liens or enter into sale and leaseback transactions; (iv) enter into transactions with affiliates; (v) merge or consolidate with another company; (vi) incur indebtedness, (vii) make acquisitions and other investments and (viii) transfer and sell assets. -22-