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) March 31, 2026 December 31, 2025 ASSETS Cash and cash equivalents $ 92,294 $ 74,685 Accounts receivable, net of allowances of $ 2,865 and $ 3,105 , respectively 24,406 23,686 Prepaid expenses and other current assets 13,530 18,788 Total current assets 130,230 117,159 Property and equipment, net 120,789 116,869 Operating lease right-of-use assets 4,724 5,098 Intangibles, net 38,209 38,761 Goodwill 351,297 352,939 Deferred income taxes 21,149 21,666 Other assets 12,341 11,323 TOTAL ASSETS $ 678,739 $ 663,815 LIABILITIES AND STOCKHOLDERS’ EQUITY Accounts payable and accrued expenses $ 40,485 $ 36,045 Income taxes payable, current 1,890 97 Deferred revenue, current 20,238 19,773 Operating lease liabilities, current 2,522 2,576 Current portion of long-term debt 7,046 7,047 Total current liabilities 72,181 65,538 Long-term debt, net of current portion 549,781 551,322 Deferred revenue, noncurrent 1,484 1,567 Operating lease liabilities, noncurrent 9,166 9,754 Liability for uncertain tax positions 14,876 14,484 Deferred income taxes 9,054 7,176 Other long-term liabilities 194 201 TOTAL LIABILITIES 656,736 650,042 Commitments and contingencies (Note 8) Common stock, $ 0.01 par value. Authorized 120,000,000 ; total issued is 21,097,257 and 21,057,258 shares and total outstanding is 18,397,950 and 18,958,448 shares as of March 31, 2026 and December 31, 2025, respectively 211 211 Treasury stock, at cost ( 2,699,307 and 2,098,810 shares as of March 31, 2026 and December 31, 2025, respectively) ( 72,646 ) ( 55,476 ) Additional paid-in capital 81,254 76,984 Retained earnings 25,534 849 Accumulated other comprehensive loss ( 12,350 ) ( 8,795 ) TOTAL STOCKHOLDERS’ EQUITY 22,003 13,773 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 678,739 $ 663,815 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 March 31, 2026 2025 Revenues $ 88,467 $ 87,138 Cost of revenues (1) 16,900 18,070 Gross profit 71,567 69,068 Operating expenses: Sales and marketing (1) 13,816 12,788 Research, development and engineering (1) 1,916 1,712 General and administrative (1) 18,093 17,071 Total operating expenses 33,825 31,571 Income from operations 37,742 37,497 Interest expense ( 7,763 ) ( 8,976 ) Interest income 661 451 Other income (expense), net 1,416 ( 1,097 ) Income before income taxes 32,056 27,875 Income tax expense 7,371 6,723 Net income $ 24,685 $ 21,152 Net income per common share: Basic $ 1.32 $ 1.08 Diluted $ 1.30 $ 1.07 Weighted average shares outstanding: Basic 18,705,051 19,530,579 Diluted 19,041,227 19,690,822 (1) Includes share-based compensation expense as follows: Cost of revenues $ 442 $ 476 Sales and marketing 751 714 Research, development and engineering 138 105 General and administrative 2,933 2,969 Total $ 4,264 $ 4,264 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 March 31, 2026 2025 Net income $ 24,685 $ 21,152 Other comprehensive (loss) income: Foreign currency translation adjustment ( 3,555 ) 4,368 Other comprehensive (loss) income ( 3,555 ) 4,368 Comprehensive income $ 21,130 $ 25,520 See Notes to Condensed Consolidated Financial Statements -5- CONSENSUS CLOUD SOLUTIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in thousands) Three Months Ended March 31, 2026 2025 Cash flows from operating activities: Net income $ 24,685 $ 21,152 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,898 5,178 Amortization of financing costs and discounts 380 420 Non-cash operating lease costs 374 394 Share-based compensation 4,264 4,264 Provision for doubtful accounts 1,337 1,417 Deferred income taxes, net 1,890 33 Loss on extinguishment of debt — 77 Changes in operating assets and liabilities: Decrease (increase) in: Accounts receivable ( 2,305 ) ( 3,148 ) Prepaid expenses and other current assets 5,253 4,710 Other assets ( 1,065 ) 105 Increase (decrease) in: Accounts payable and accrued expenses 3,712 3,276 Income taxes payable 2,237 2,215 Deferred revenue 425 829 Operating lease liabilities ( 642 ) ( 393 ) Liability for uncertain tax positions 392 418 Other liabilities ( 8 ) ( 4 ) Net cash provided by operating activities 45,827 40,943 Cash flows from investing activities: Purchases of property and equipment ( 7,372 ) ( 7,196 ) Purchase of investments — ( 5,000 ) Net cash used in investing activities ( 7,372 ) ( 12,196 ) Cash flows from financing activities: Repayment of term loan ( 1,875 ) — Repurchase of common stock ( 17,012 ) ( 34 ) Taxes paid related to net share settlement ( 734 ) ( 339 ) Repurchase of debt — ( 9,749 ) Net cash used in financing activities ( 19,621 ) ( 10,122 ) Effect of exchange rate changes on cash and cash equivalents ( 1,225 ) 1,229 Net change in cash and cash equivalents 17,609 19,854 Cash and cash equivalents at beginning of period 74,685 33,545 Cash and cash equivalents at end of period $ 92,294 $ 53,399 See Notes to Condensed Consolidated Financial Statements -6- CONSENSUS CLOUD SOLUTIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) (Unaudited, in thousands except share amounts) Common stock Additional paid-in Treasury stock Accumulated Accumulated other comprehensive Total deficit Shares Amount capital Shares Amount deficit loss Balance, January 1, 2025 20,609,725 $ 206 $ 59,373 ( 1,085,725 ) $ ( 32,313 ) $ ( 83,678 ) $ ( 23,051 ) $ ( 79,463 ) Net income — — — — — 21,152 — 21,152 Foreign currency translation adjustment — — — — — — 4,368 4,368 Vested restricted stock 31,885 — — — — — — — Shares withheld related to net share settlement ( 13,477 ) — ( 339 ) — — — — ( 339 ) Repurchase of common stock — — — ( 1,471 ) ( 34 ) — — ( 34 ) Share-based compensation — — 4,958 — — — — 4,958 Balance, March 31, 2025 20,628,133 $ 206 $ 63,992 ( 1,087,196 ) $ ( 32,347 ) $ ( 62,526 ) $ ( 18,683 ) $ ( 49,358 ) Common stock Additional paid-in Treasury stock Retained earnings Accumulated other comprehensive loss Total equity Shares Amount capital Shares Amount Balance, January 1, 2026 21,057,258 $ 211 $ 76,984 ( 2,098,810 ) $ ( 55,476 ) $ 849 $ ( 8,795 ) $ 13,773 Net income — — — — — 24,685 — 24,685 Foreign currency translation adjustment — — — — — — ( 3,555 ) ( 3,555 ) Vested restricted stock 64,758 — — — — — — — Shares withheld related to net share settlement ( 24,759 ) — ( 734 ) — — — — ( 734 ) Repurchase of common stock — — — ( 600,497 ) ( 17,170 ) — — ( 17,170 ) Share-based compensation — — 5,004 — — — — 5,004 Balance, March 31, 2026 21,097,257 $ 211 $ 81,254 ( 2,699,307 ) $ ( 72,646 ) $ 25,534 $ ( 12,350 ) $ 22,003 See Notes to Condensed Consolidated Financial Statements -7- 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, 2025, included in our Annual Report (Form 10-K) filed with the SEC on February 13, 2026. 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, income taxes and tax contingencies. 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, 2025. Segment Reporting FASB ASC Topic No. 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 -8- 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 (“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 July 2025, the FASB issued ASU No. 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). The amendments in this ASU provide a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets. The amendments in this ASU should be applied on a prospective basis. The amendments in this ASU are effective for annual periods beginning after December 15, 2025, and for interim periods within those annual periods. Early adoption is permitted. The Company adopted the provisions of ASU 2025-05 in the first quarter of 2026 and elected to apply the practical expedient. ASU 2025-05 did not materially impact our consolidated financial statements upon adoption. 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. Revenues from external customers classified by revenue source are as follows (in thousands): Three Months Ended March 31, 2026 2025 Revenues Corporate $ 58,722 $ 54,289 Small office home office (“SoHo”) 29,745 32,849 Total $ 88,467 $ 87,138 Timing of revenue recognition Point in time $ 427 $ 643 Over time 88,040 86,495 Total $ 88,467 $ 87,138 The Company has recorded $ 9.0 million and $ 9.5 million of revenue for the three months ended March 31, 2026 and 2025, respectively, that was previously included in the deferred revenue balance as of the beginning of each respective year. -9- 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. 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 -10- 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 $ 57.1 million and $ 65.1 million as of March 31, 2026 and December 31, 2025, 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. The fair value of fixed interest rate 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 March 31, 2026 and December 31, 2025, was $ 8.0 million and $ 8.0 million, respectively, and is included in other assets within the Company’s Condensed Consolidated Balance Sheets. The Company reviews these investments at each reporting period to determine if there are indicators of impairment. If the Company determines that an investment is impaired, the loss will be recorded in the period in which the impairment is identified. During the three months ended March 31, 2026 and 2025, the Company did not recognize any unrealized gains or losses and did not have any impairments during the respective periods. -11- 5. Property and Equipment Property and equipment, stated at cost, consisted of the following (in thousands): March 31, 2026 December 31, 2025 Internal-use software development costs $ 120,285 $ 99,961 Computers, software and equipment 19,466 19,504 Furniture and fixtures 890 892 Leasehold improvements 1,722 1,724 Internal-use software development costs in process 55,312 67,400 197,675 189,481 Less: Accumulated depreciation and amortization ( 76,886 ) ( 72,612 ) Total property and equipment, net $ 120,789 $ 116,869 Depreciation and amortization expense was $ 4.4 million and $ 4.5 million for the three months ended March 31, 2026 and 2025, respectively. No impairment was recorded in the three months ended March 31, 2026 and 2025. 6. Goodwill and Intangible Assets The changes in carrying amounts of goodwill for the three months ended March 31, 2026 are as follows (in thousands): Amount Balance as of January 1, 2026 $ 352,939 Foreign exchange translation ( 1,642 ) Balance as of March 31, 2026 $ 351,297 As of March 31, 2026 the Company’s goodwill had no accumulated impairment. Intangible Assets with Indefinite Lives: Intangible assets are summarized as follows (in thousands): March 31, 2026 December 31, 2025 Trade names $ 27,400 $ 27,422 Other 4,045 4,045 Total $ 31,445 $ 31,467 -12- Intangible Assets Subject to Amortization: As of March 31, 2026, intangible assets subject to amortization are summarized as follows (in thousands): Weighted-Average Remaining Amortization Period Historical Cost Accumulated Amortization Net Trade names 0.1 years $ 8,260 $ 8,141 $ 119 Patent and patent licenses 0.0 years 54,341 54,341 — Customer relationships (1) 1.5 years 109,173 103,585 5,588 Other purchased intangibles 1.0 year 11,913 10,856 1,057 Total $ 183,687 $ 176,923 $ 6,764 (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, 2025, intangible assets subject to amortization are summarized as follows (in thousands): Weighted-Average Remaining Amortization Period Historical Cost Accumulated Amortization Net Trade names 0.1 years $ 8,299 $ 8,148 $ 151 Patent and patent licenses 0.0 years 54,341 54,341 — Customer relationships (1) 1.6 years 109,663 103,616 6,047 Other purchased intangibles 1.0 year 11,917 10,821 1,096 Total $ 184,220 $ 176,926 $ 7,294 (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 March 31, 2026 are as follows (in thousands): Fiscal Year: Amount 2026 (remainder) $ 1,577 2027 1,405 2028 986 2029 803 2030 651 Thereafter 1,342 Total $ 6,764 Amortization expense was $ 0.5 million and $ 0.7 million for the three months ended March 31, 2026 and 2025, respectively. No impairment of intangible assets was recorded in the three months ended March 31, 2026 and 2025. -13- 7. Long-Term Debt Long-term debt consists of the following, terms defined below (in thousands): March 31, 2026 December 31, 2025 2028 Senior Notes $ 348,247 $ 348,247 DDTL Facility 148,125 150,000 Revolving Credit Facility 64,000 64,000 Total 560,372 562,247 Less: deferred issuance costs ( 3,545 ) ( 3,878 ) Total debt 556,827 558,369 Less: current portion, net of debt issuance costs ( 7,046 ) ( 7,047 ) Total long-term debt, less current portion $ 549,781 $ 551,322 As of March 31, 2026 and December 31, 2025, the estimated fair value of the 2028 Senior Notes (as defined below) was approximately $ 344.8 million and $ 349.1 million, respectively. The Company capitalized $ 1.1 million and $ 0.8 million of interest expense within property and equipment, net on the Company’s Condensed Consolidated Balance Sheets during the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, future contractual principal payments for debt were as follows (in thousands): Fiscal year: Total 2026 (remainder) $ 5,625 2027 7,500 2028 547,247 2029 — 2030 — Thereafter — Total $ 560,372 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 long-term debt, net of current portion, which is presented net of deferred issuance costs, on the Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025. 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 March 31, 2026. -14- 2025 Credit Agreement 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. The Company incurred debt issuance costs of $ 1.7 million associated with the 2025 Credit Agreement, of which $ 0.6 million and $ 1.1 million were allocated to the Revolving Credit Facility and the DDTL Facility, respectively. 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. Borrowings under the DDTL Facility 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). 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. Commencing with the first full fiscal quarter ending after the DDTL Facility was funded, the Company is required to make quarterly principal payments, each in an amount of 1.25 % of the initial aggregate principal amount borrowed on the DDTL Facility. The interest rates applicable to the loans made under the 2025 Credit Facility are, at the Company’s option, equal to either a base rate or the Secured Overnight Financing Rate (“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). Due to the variable nature of these interest rates, the Company has determined that the carrying value of any borrowings under the 2025 Credit Facility approximates fair value. As of March 31, 2026 and December 31, 2025, the Company had $ 148.1 million and $ 150.0 million outstanding under the DDTL Facility, respectively, and had $ 64.0 million outstanding under the Revolving Credit Facility, at both March 31, 2026 and December 31, 2025. The weighted-average interest rate on borrowings under the 2025 Credit Facility as of March 31, 2026 was 5.4 %. 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. Additionally, 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 Company is in compliance with its covenants as of March 31, 2026. 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 previously outstanding senior notes that were due in 2026 and the 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 months ended March 31, 2026, the Company made no repurchases under this program. During the three months ended March 31, 2025, the Company retired $ 9.7 million in principal of its senior notes under this program. As of March 31, 2026, the Company has retired an aggregate of $ 222.6 million in principal of its senior notes under this program. During the three months ended March 31, 2026, the Company recognized no debt extinguishment gain or loss related to the Debt Repurchase Program. For the three months ended March 31, 2025, a net loss on debt extinguishment of $ 0.1 million related to the Debt Repurchase Program is included in interest expense on the Condensed Consolidated Statements of Income. -15- 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 and local 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): March 31, 2026 December 31, 2025 Prepaid insurance $ 2,065 $ 2,830 Prepaid income taxes 4,036 5,484 Prepaid marketing expense 651 4,067 Prepaid software licenses 4,715 3,953 Other prepaid expenses 1,712 2,092 Other current assets 351 362 Total $ 13,530 $ 18,788 Accounts payable and accrued expenses Accounts payable and accrued expenses consisted of the following (in thousands): March 31, 2026 December 31, 2025 Accounts payable $ 10,506 $ 7,544 Accrued sales and other taxes 7,794 6,969 Accrued interest 12,705 7,349 Accrued compensation 5,629 9,614 Accrued advertising expenses 1,097 1,611 Other accrued expenses 2,754 2,958 Total $ 40,485 $ 36,045 -16- 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 March 31, 2026 and 2025 was 23.0 % and 24.1 %, respectively. The decrease in the Company’s effective income tax rate for the three months ended March 31, 2026 was primarily due to the impact of the One Big Beautiful Bill Act (“OBBBA”) changes on international taxes as well as research and development tax credits and a change in the geographical mix of income, partially offset by an increase in the officer’s compensation limitation. The Company’s effective tax rates for the three months ended March 31, 2026 and 2025 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 March 31, 2026 and December 31, 2025, the Company had $ 14.9 million and $ 14.5 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 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. In addition to the OBBBA rules adopted in 2025, the Company implemented the new provisions effective for 2026 in the quarter ended March 31, 2026. Income Tax Audits The Company files tax returns in the U.S., Ireland, Canada, Japan, Netherlands and Hong Kong. In February 2026, the Company received notification of a review by the Irish tax authorities relating to tax years 2023 and 2024. As of March 31, 2026, the Company is not under audit in any other jurisdictions that it operates within. The U.S. federal and most state tax returns filed for 2022 onwards, as well as certain state returns filed for 2021 onwards, are still open to examination by tax authorities. With respect to the Company’s international subsidiaries, tax returns filed for the years from 2020 onwards are still open to examination by tax authorities. 11. Stockholders’ Equity 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 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. Shares may be repurchased through open market purchases or privately negotiated transactions, including through Rule 10b5-1 trading plans. During the three months ended March 31, 2026, the Company repurchased 600,497 shares under this program at an aggregate cost of $ 17.2 million (inclusive of excise tax of $ 0.2 million). During the three months ended March 31, 2025, the Company repurchased 1,471 shares under this program for a minimal amount. Cumulatively as of March 31, 2026, 2,699,307 shares have been repurchased under this program at an aggregate cost of $ 72.6 million (inclusive of excise tax of $ 0.5 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 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 -17- 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 March 31, 2026 and 2025, the Company withheld shares on its vested restricted stock units relating to its share-based compensation plans of 24,759 shares and 13,477 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”). 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 March 31, 2026, 359,941 shares were available to be used under the 2021 Plan. During the three months ended March 31, 2026, the Company awarded 404,456 restricted stock units with market conditions and performance conditions to certain key employees pursuant to the 2021 Plan. The market-based awards have vesting conditions that are based on specified stock price targets of the Company’s common stock. For awards with market conditions, the 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 average stock price targets over a 20 consecutive trading day period, based on the award agreement. For awards with performance-based conditions, these vesting conditions generally relate to the achievement of specified internal financial and operational targets. The grant date fair value for the performance-based awards reflects the Company’s stock price on the date of grant. Restricted stock unit activity for the three months ended March 31, 2026 is set forth below: Number of Shares Weighted-Average Grant-Date Fair Value Outstanding at January 1, 2026 2,202,505 $ 30.10 Granted 732,514 22.55 Vested ( 64,758 ) 28.45 Canceled ( 196,885 ) 43.62 Outstanding at March 31, 2026 2,673,376 $ 27.08 The total fair value as of the respective vesting dates of restricted stock units that vested during the three months ended March 31, 2026 and 2025 was $ 1.9 million and $ 0.8 million, respectively. As of March 31, 2026, the Company had unrecognized share-based compensation cost related to its restricted stock units of $ 45.2 million, which is expected to be recognized over a weighted-average period of 2.4 years. The Company capitalized $ 0.7 million during both of the three months ended March 31, 2026 and 2025, within property and equipment, net on its Condensed Consolidated Balance Sheets. -18- 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 March 31, 2026 2025 Numerator for basic and diluted net income per common share: Net income available to common shareholders from operations $ 24,685 $ 21,152 Denominator: Weighted-average outstanding shares of common stock 18,705,051 19,530,579 Dilutive effect of: Equity incentive plans 330,364 155,786 Employee Stock Purchase Plan 5,812 4,457 Common stock and common stock equivalents 19,041,227 19,690,822 Net income per share from operations: Basic $ 1.32 $ 1.08 Diluted $ 1.30 $ 1.07 For the three months ended March 31, 2026 and 2025, there were 872,198 and 982,400 anti-dilutive shares, respectively, that were excluded from the earnings per share calculation. 14. Segment Information The following presents the segment information of Cloud Fax (in thousands): Three Months Ended March 31, 2026 2025 Revenues $ 88,467 $ 87,138 Less: Salary and benefits 20,802 19,951 Marketing 5,856 5,032 Phone operations 3,691 4,235 Outside services 3,657 3,836 Depreciation and amortization 4,898 5,178 Other segment items (1) 11,821 11,409 Segment operating profit 37,742 37,497 Interest expense ( 7,763 ) ( 8,976 ) Interest income 661 451 Other income (expense), net (2) 1,416 ( 1,097 ) Segment earnings before income taxes 32,056 27,875 Income tax expense 7,371 6,723 Segment net income $ 24,685 $ 21,152 (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. -19- 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 March 31, 2026 2025 Revenues: United States $ 69,643 $ 68,756 Canada 14,183 13,623 Ireland 2,642 2,702 All other countries 1,999 2,057 Foreign countries 18,824 18,382 Total $ 88,467 $ 87,138 As of March 31, 2026 and December 31, 2025, substantially all of the Company’s long-lived assets, which consist of property and equipment, net and operating lease right-of-use assets, were located in the United States . -20-