What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-05 compared with 2025-08-07 · 70 added, 64 removed, 163 unchanged (45% of the section changed)

11 unchanged sentences

◦ Sustain growth or profitability, particularly in light of an uncertain U.S.

or worldwide economy, recent global conflicts, inflationary pressures, elevated interest rates, new or additional tariffs or other trade restrictions, and the prospect of a U.S.

or worldwide economy, recent global conflicts, inflationary pressures, elevated interest rates, new or additional tariffs or other trade restrictions, and the impacts of a U.S.

federal government shutdown, and the related impact on customer acquisition and retention rates, customer usage levels and credit and debit card payment declines;

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We believe these financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.

The following table sets forth certain key performance metrics for our operations for the three and six months ended June 30, 2025 and 2024 (in thousands, except for percentages and Average Revenue per Customer Account):

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

The following table sets forth certain key performance metrics for our operations for the three and nine months ended September 30, 2025 and 2024 (in thousands, except for percentages and Average Revenue per Customer Account):

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

2025 2024 2025 2024

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(1) Consensus customers are defined as paying Corporate and SoHo customer accounts.

In the current period, we eliminated dormant accounts not contributing to revenue from the number of SoHo customer accounts.

In the second quarter of 2025, we eliminated dormant accounts not contributing to revenue from the number of SoHo customer accounts.

The prior year period has been revised for consistency with the current year, and all metrics calculated based on the number of customer accounts (including ARPA and Monthly Churn %) are calculated based on the revised number.

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Our critical accounting policies are described in our 2024 Annual Report on Form 10-K filed with the SEC on February 20, 2025.

During the six months ended June 30, 2025, there were no significant changes in our critical accounting policies and estimates.

Results of Operations for the Three and Six Months Ended June 30, 2025 and 2024

During the nine months ended September 30, 2025, there were no significant changes in our critical accounting policies and estimates.

Results of Operations for the Three and Nine Months Ended September 30, 2025 and 2024

The main strategic focus of our Consensus offerings is to enable our customers to securely and cooperatively access, exchange and use information across organizational, regional and national boundaries.

1 unchanged sentence

We expect our business to primarily grow organically and inorganically through the use of capital for re-investment in the business and opportunistic acquisitions that expedite our product roadmap in the interoperability space should they arise.

(in thousands, except percentages) Three Months Ended June 30, Percentage Change Six Months Ended June 30, Percentage Change

(in thousands, except percentages) Three Months Ended September 30, Percentage Change Nine Months Ended September 30, Percentage Change

2025 2024 2025 2024

1 unchanged sentence

Our revenues primarily consist of revenues from “fixed” customer subscription revenues and “variable” revenues generated from actual usage of our services.

Revenues increased by $0.2 million for the three months ended June 30, 2025 over the prior year comparable period.

An increase of $3.6 million or 7% in our Corporate business was partially offset by a decline of $3.4 million or 9% in our SoHo business.

Revenues decreased by $0.8 million for the six months ended June 30, 2025 over the prior year comparable period.

Revenues were consistent with the prior year comparable period.

An increase of $3.2 million or 6% in our Corporate business was offset by a decline of $3.2 million or 9% in our SoHo business.

Revenues decreased by $0.8 million for the nine months ended September 30, 2025 over the prior year comparable period.

The decrease was due to a decline of $10.5 million or 10% in our SoHo business, partially offset by an increase of $9.7 million or 6% in our Corporate business.

Cost of Revenues

(in thousands, except percentages) Three Months Ended June 30, Percentage Change Six Months Ended June 30, Percentage Change

(in thousands, except percentages) Three Months Ended September 30, Percentage Change Nine Months Ended September 30, Percentage Change

2025 2024 2025 2024

2 unchanged sentences

Cost of revenues is primarily comprised of costs associated with personnel costs, data transmission, online processing fees, network operations as well as capitalized software amortization and equipment depreciation.

The increase in cost of revenues of $0.5 million for the three months ended June 30, 2025 over the prior year comparable period was primarily due to increases of $0.5 million in network operations costs and $0.3 million in personnel-related expenses, partially offset by a decrease of $0.2 million in depreciation associated with platform development costs.

The increase in cost of revenues of $1.5 million for the six months ended June 30, 2025 over the prior year comparable period was primarily due to increases of $1.3 million in network operations costs, $0.5 million in depreciation associated with platform development costs and $0.4 million in data transmission costs, partially offset by a decrease of $0.4 million in personnel-related expenses.

Cost of revenues for the three months ended September 30, 2025 were consistent with the prior year comparable period.

The increase in cost of revenues of $1.4 million for the nine months ended September 30, 2025 over the prior year comparable period was primarily due to an increase of $1.3 million in network operations costs.

Operating Expenses

Sales and Marketing

(in thousands, except percentages) Three Months Ended June 30, Percentage Change Six Months Ended June 30, Percentage Change

(in thousands, except percentages) Three Months Ended September 30, Percentage Change Nine Months Ended September 30, Percentage Change

2025 2024 2025 2024

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Our sales personnel consist of a combination of inside sales and outside sales professionals.

The increase in sales and marketing expenses of $0.7 million for the three months ended June 30, 2025 over the prior year comparable period was primarily due to increases of $0.4 million in third-party advertising spend and $0.2 million in personnel-related expenses.

The increase in sales and marketing expenses of $1.0 million for the six months ended June 30, 2025 over the prior year comparable period was primarily due to an increase of $1.0 million in third-party advertising spend.

The increase in sales and marketing expenses of $0.5 million for the three months ended September 30, 2025 over the prior year comparable period was primarily due to an increase of $0.6 million in personnel-related expenses, partially offset by a decrease of $0.2 million in third-party advertising spend.

The increase in sales and marketing expenses of $1.5 million for the nine months ended September 30, 2025 over the prior year comparable period was primarily due to increases of $0.7 million in third-party advertising spend, $0.4 million in personnel-related expenses and $0.2 million in computer and related equipment expenses.

Research, Development and Engineering

(in thousands, except percentages) Three Months Ended June 30, Percentage Change Six Months Ended June 30, Percentage Change

(in thousands, except percentages) Three Months Ended September 30, Percentage Change Nine Months Ended September 30, Percentage Change

2025 2024 2025 2024

2 unchanged sentences

Our research, development and engineering costs consist primarily of personnel-related expenses.

Research, development and engineering costs for the three and six months ended June 30, 2025 remained consistent with the prior year comparable periods.

Research, development and engineering costs for the three and nine months ended September 30, 2025 were consistent with the prior year comparable periods.

General and Administrative

(in thousands, except percentages) Three Months Ended June 30, Percentage Change Six Months Ended June 30, Percentage Change

(in thousands, except percentages) Three Months Ended September 30, Percentage Change Nine Months Ended September 30, Percentage Change

2025 2024 2025 2024

2 unchanged sentences

Our general and administrative costs consist primarily of personnel-related expenses (inclusive of share-based compensation), professional fees, depreciation and amortization and bad debt expense.

The decrease in general and administrative expenses of $0.3 million for the three months ended June 30, 2025 over the prior year comparable period was primarily due to decreases of $0.5 million in bad debt expense, $0.4 million in depreciation and amortization expense and $0.3 million in non-income related tax expenses, partially offset by increases of $0.5 million in personnel-related expenses and $0.2 million in computer and related equipment expenses.

The decrease in general and administrative expenses of $2.2 million for the six months ended June 30, 2025 over the prior year comparable period was primarily due to decreases of $0.9 million in non-income related tax expenses, $0.6 million in depreciation and amortization expense, $0.4 million in professional fees and $0.4 million in personnel-related expenses.

The increase in general and administrative expenses of $0.2 million for the three months ended September 30, 2025 over the prior year comparable period was primarily due to an increase of $0.6 million in personnel-related expenses, partially offset by decreases of $0.2 million in depreciation and amortization expense and $0.1 million in non-income related tax expenses.

The decrease in general and administrative expenses of $2.0 million for the nine months ended September 30, 2025 over the prior year comparable period was primarily due to decreases of $1.0 million in non-income related tax expenses and $0.8 million in depreciation and amortization expense.

Share-Based Compensation

The following table represents share-based compensation expense included in cost of revenues and operating expenses in the accompanying Condensed Consolidated Statements of Income for the three and six months ended June 30, 2025 and 2024 (in thousands):

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

The following table represents share-based compensation expense included in cost of revenues and operating expenses in the accompanying Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2025 and 2024 (in thousands):

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

2025 2024 2025 2024

8 unchanged sentences

Our interest expense is due to outstanding debt and is offset by any extinguishment gain or losses and capitalized interest.

Interest expense was $8.7 million for both the three months ended June 30, 2025 and 2024, and $17.6 million and $14.9 million for the six months ended June 30, 2025 and 2024, respectively.

During the six months ended June 30, 2025, interest expense increased by $2.8 million compared to the prior year comparable period.

Interest expense was $8.8 million and $9.8 million for the three months ended September 30, 2025 and 2024, respectively, and $26.5 million and $24.6 million for the nine months ended September 30, 2025 and 2024, respectively.

During the three months ended September 30, 2025, interest expense decreased due to debt repurchases that lowered our outstanding debt balance compared to the prior year comparable period.

During the nine months ended September 30, 2025, interest expense increased by $1.9 million compared to the prior year comparable period.

Interest expense increased due to a net loss on debt extinguishment of $0.1 million in the current period compared to a net gain on debt extinguishment of $6.7 million in the prior year comparable period.

2 unchanged sentences

Our interest income is generated from interest earned on cash and cash equivalents.

Interest income was $0.5 million and $0.6 million for the three months ended June 30, 2025 and 2024, respectively, and $0.9 million and $1.5 million for the six months ended June 30, 2025 and 2024, respectively.

Interest income for the three and six months ended June 30, 2025 decreased compared to the prior year comparable periods as we decreased our investment in money market funds, primarily, in order to repurchase common stock and long-term debt.

Other (expense) income, net .

Our other (expense) income, net is generated primarily from foreign currency and miscellaneous items.

Other (expense) income, net was $(2.3) million and $0.7 million for the three months ended June 30, 2025 and 2024, respectively, and $(3.4) million and $4.6 million for the six months ended June 30, 2025 and 2024, respectively.

Interest income was $0.8 million and $0.7 million for the three months ended September 30, 2025 and 2024, respectively, and $1.7 million and $2.2 million for the nine months ended September 30, 2025 and 2024, respectively.

Interest income for the three months ended September 30, 2025 was higher compared to the prior year comparable period due to a higher average investment in money market funds.

Interest income for the nine months ended September 30, 2025 decreased compared to the prior year comparable period as we decreased our average investment in money market funds, primarily, in order to repurchase common stock and long-term debt.

Other income (expense), net .

Our other income (expense), net is generated primarily from foreign currency and miscellaneous items.

Other income (expense), net was $0.1 million and $(2.1) million for the three months ended September 30, 2025 and 2024, respectively, and $(3.3) million and $2.5 million for the nine months ended September 30, 2025 and 2024, respectively.

The change between periods was primarily attributable to exchange rate fluctuations on intercompany balances between periods in foreign subsidiaries that were in functional currencies other than the U.S.

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When necessary, we establish valuation allowances to reduce our deferred tax assets to an amount that will more likely than not be realized.

The provision for income taxes was $7.8 million and $8.6 million for the three months ended June 30, 2025 and 2024, respectively, and $14.5 million and $18.5 million for the six months ended June 30, 2025 and 2024, respectively.

Our effective tax rate was 27.2% and 26.5% for the three months ended June 30, 2025 and 2024, respectively, and 25.7% and 26.9% for the six months ended June 30, 2025 and 2024, respectively.

The increase in our 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 our 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 provision for income taxes was $7.9 million and $6.1 million for the three months ended September 30, 2025 and 2024, respectively, and $22.4 million and $24.7 million for the nine months ended September 30, 2025 and 2024, respectively.

Our effective tax rate was 26.3% and 22.5% for the three months ended September 30, 2025 and 2024, respectively, and 25.9% and 25.7% for the nine months ended September 30, 2025 and 2024, respectively.

The increase in our effective income tax rate for the three months ended September 30, 2025 was primarily due to a change in the geographical mix of income, a decrease in uncertain tax positions and an increase in the officer’s compensation limitation.

Our effective income tax rate for the nine months ended September 30, 2025 was consistent with the prior year comparable period.

On July 4, 2025, the budget reconciliation bill H.R.

1 unchanged sentence

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.

We are still in the process of evaluating the OBBBA and an estimate of the financial impact cannot be made at this time.

The OBBBA did not have a significant impact on our effective tax rate for the quarter ended September 30, 2025 and we do not expect the OBBBA to have a significant impact on the effective tax rate for the year ended December 31, 2025.

Liquidity and Capital Resources

Cash and Cash Equivalents

As of June 30, 2025, we had cash and cash equivalents of $57.9 million compared to $33.5 million as of December 31, 2024.

The increase in cash and cash equivalents resulted primarily from cash provided by operations, partially offset by cash used for debt repurchases, capitalized expenditures, share repurchases and investments.

As of June 30, 2025, cash and cash equivalents held within domestic and foreign jurisdictions were $30.7 million and $27.2 million, respectively.

As of September 30, 2025, we had cash and cash equivalents of $97.6 million compared to $33.5 million as of December 31, 2024.

The increase in cash and cash equivalents resulted primarily from cash provided by operations, partially offset by cash used for capitalized expenditures, debt repurchases, share repurchases and investments.

As of September 30, 2025, cash and cash equivalents held within domestic and foreign jurisdictions were $73.2 million and $24.4 million, respectively.

2025 Credit Agreement

On March 4, 2022, the Company entered into a Credit Agreement with certain lenders party thereto (collectively, the “Lenders”) and MUFG Union Bank, N.A., as agent (the “Agent”).

Pursuant to the Credit Agreement, the Lenders have provided Consensus with a 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.

Subsequent to the period ended June 30, 2025, this Credit Facility was retired with no balance.

In July 2025, the Company entered into a new Credit Agreement (the “2025 Credit Agreement”) with certain lenders party thereto (the “Lenders”) and U.S.

Bank National Association, as agent (the “Agent”) to provide the Company with a senior secured revolving credit facility of $75.0 million and a senior secured delayed-draw term loan facility of $150.0 million (see Note 15 - Subsequent Events of the Notes to the Condensed Consolidated Financial Statements).

On July 9, 2025, the Company entered into a Credit Agreement (the “2025 Credit Agreement”) with certain lenders party thereto (collectively, 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 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.

The Revolving Credit Facility was entered into upon retirement of the previous revolving credit facility of $25.0 million with no balance (see Note 7 - Long-Term Debt of the Notes to the Condensed Consolidated Financial Statements).

The final maturity of the 2025 Credit Facility is scheduled to occur on July 10, 2028.

As of September 30, 2025, no amount had been drawn from the 2025 Credit Facility.

Subsequent to September 30, 2025, but prior to filing of these interim financial statements, on October 15, 2025 the Company borrowed $50.0 million from the Revolving Credit Facility and $150.0 million from the DDTL Facility in order to fund the redemption of a portion of our outstanding senior notes due in 2026 (see Note 15 - Subsequent Events of the Notes to the Condensed Consolidated Financial Statements).

On October 31, 2025, the Company issued a redemption notice with respect to the remaining $34.1 million in aggregate principal of its outstanding senior notes due in 2026.

The Company expects to fund the redemption by borrowing $20.0 million from its Revolving Credit Facility and using $14.1 million of cash on hand.

This additional funding from the Revolving Credit Facility and the associated redemption of the Company’s senior notes due in 2026 are expected to occur during the fourth quarter of 2025, but subsequent to the filing of these financial statements.

Material Cash Requirements

Our long-term contractual obligations generally include our debt and related interest payments, noncancellable operating leases as well as other commitments.

As of June 30, 2025, we had $582.4 million in aggregate principal amount of indebtedness outstanding (see Note 7 - Long-Term Debt of the Notes to the Condensed Consolidated Financial Statements) and total minimum lease payments of $15.6 million, which had a weighted average remaining lease term of 5.2 years.

As of June 30, 2025, our liability for uncertain tax positions was $14.1 million.

As of September 30, 2025, we had $582.4 million in aggregate principal amount of indebtedness outstanding (see Note 7 - Long-Term Debt of the Notes to the Condensed Consolidated Financial Statements) and total minimum lease payments of $15.2 million, which had a weighted average remaining lease term of 4.9 years.

As of September 30, 2025, our liability for uncertain tax positions was $14.4 million.

Due to uncertainties in the timing of the amounts and timing of cash settlement with the taxing authorities, we are unable to make a reasonably reliable estimate of the timing of payments.

We currently anticipate that our existing cash and cash equivalents and cash generated from operations and financing activities will be sufficient to fund our anticipated needs for working capital, capital expenditures, stock and debt repurchases, if any, for at least the next 12 months and the foreseeable future.

We currently anticipate that our existing cash and cash equivalents and cash generated from operations and financing activities will be sufficient to fund our anticipated needs for working capital, capital expenditures and stock and debt repurchases, if any, for at least the next 12 months and the foreseeable future.

Debt Repurchase Program

2 unchanged sentences

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

Any gains or losses on extinguishment of debt are recognized in interest expense on the

Condensed Consolidated Statements of Income.

As of June 30, 2025, the Company had retired an aggregate of $222.6 million in principal of its senior notes under this program.

Any gains or losses on extinguishment of debt are recognized in interest expense on the Condensed Consolidated Statements of Income.

As of September 30, 2025, the Company had retired an aggregate of $222.6 million in principal of its senior notes under this program.

Common Stock Repurchase Program

4 unchanged sentences

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).

During the three months ended September 30, 2025, the Company repurchased 115,652 shares under this program at an aggregate cost of $2.6 million.

There were no shares repurchased during the three months ended September 30, 2024.

During the nine months ended September 30, 2025 and 2024, the Company repurchased 668,996 and 42,962 shares, respectively, under this program at an aggregate cost of $15.2 million (inclusive of excise tax of $0.1 million) and $0.7 million, respectively.

Cumulatively as of September 30, 2025, 1,754,721 shares have been repurchased under this program at an aggregate cost of $47.5 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.

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.

Vested Restricted Stock

3 unchanged sentences

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.

During the three months ended September 30, 2025 and 2024, the Company withheld shares on its vested restricted stock units relating to its share-based compensation plans of 4,370 shares and 3,489 shares, respectively.

During the nine months ended September 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 55,415 shares and 40,396 shares, respectively.

Our primary sources of liquidity are cash flows generated from operations, together with cash and cash equivalents.

Net cash provided by operating activities was $ 69.2 million and $ 69.1 million for the six months ended June 30, 2025 and 2024, respectively.

Net cash provided by operating activities was $ 120.9 million and $ 110.6 million for the nine months ended September 30, 2025 and 2024, respectively.

Our operating cash flows resulted primarily from cash received from our customers offset by cash payments we made to third parties for their services and employee compensation.

Net cash provided by operating activities remained consistent with the prior year comparable period.

Net cash used in investing activities was $ 20.2 million and $ 17.5 million for the six months ended June 30, 2025 and 2024, respectively.

For the six months ended June 30, 2025, net cash used in investing activities consisted of capital expenditures, primarily capitalized software development costs, and cash paid for investments.

The increase in net cash provided by operating activities over the prior year comparable period was primarily attributable to increased income after excluding noncash items as well as an increase in cash outflows resulting from changes in our working capital accounts.

Net cash used in investing activities was $ 27.3 million and $ 25.5 million for the nine months ended September 30, 2025 and 2024, respectively.

For the nine months ended September 30, 2025, net cash used in investing activities consisted of capital expenditures, primarily capitalized software development costs, and cash paid for investments.

The increase in our net cash used in investing activities over the prior year comparable period was primarily attributable to the purchase of investments in the current period, partially offset by a decrease in capital expenditures during the current year period.

Net cash used in financing activities was $ 28.6 million and $ 86.1 million for the six months ended June 30, 2025 and 2024, respectively.

For the six months ended June 30, 2025 and 2024, net cash used in financing activities is primarily attributable to our repurchases of debt and common stock.

Net cash used in financing activities was $ 33.1 million and $ 116.8 million for the nine months ended September 30, 2025 and 2024, respectively.

For the nine months ended September 30, 2025 and 2024, net cash used in financing activities is

primarily attributable to our repurchases of debt and common stock.

The decrease in net cash used in financing activities over the prior year comparable period was primarily attributable to a decrease in cash outflows related to the repurchase of our debt in the current period, partially offset by an increase in repurchases of our common stock in the current year period.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis