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What changed in Consensus Cloud Solutions, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Consensus Cloud Solutions, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+215 added−257 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-28)

Top changes in Consensus Cloud Solutions, Inc.'s 2024 10-K

215 paragraphs added · 257 removed · 189 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeUnite : Unite is a single platform that allows the user to choose between several protocols to send and receive healthcare information in an environment that can integrate into an existing electronic health record (“EHR”) system or stand-alone if no EHR is present. jSign® : jSign® provides electronic signature and digital signature solutions to businesses, offering document markup and end-user signing services via mobile-aware web application and enterprise API. -4- Conductor: Conductor is a r obust interface engine and complete interoperability platform that provides seamless integration technology supporting all the latest standards for connectivity and data formats (API/FHIR, HL7, Direct Secure Messaging, web services, message queues, etc.), addressing a wide range of interoperability challenges from the simple to the extremely complex.
Biggest changeUnite : Unite is a single platform that allows the user to choose between several protocols to send and receive healthcare information in an environment that can integrate into an existing electronic health record (“EHR”) system or stand-alone if no EHR is present. jSign® : jSign® provides electronic signature and digital signature solutions to businesses, offering document markup and end-user signing services via mobile-aware web application and enterprise API.
The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding our filings we file electronically with the SEC at www.sec.gov . Our Board has adopted a Code of Business Conduct and Ethics that applies to all of our directors and employees.
The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding our filings we file electronically with the SEC at www.sec.gov . Our Board of Directors has adopted a Code of Business Conduct and Ethics that applies to all of our directors and employees.
Our experienced management team has a highly successful track record with regard to both business performance among its industry peer group, growing new business lines, and identifying and integrating strategic acquisitions. -5- Our Strategy Our strategy focuses on generating attractive organic growth, achieving solid margins and free cash flow generation, pursuing value-accretive acquisitions and delivering high value to our shareholders.
Our experienced management team has a highly successful track record with regard to both business performance among its industry peer group, growing new business lines and identifying and integrating strategic acquisitions. Our Strategy Our strategy focuses on generating attractive organic growth, achieving solid margins and free cash flow generation, pursuing value-accretive acquisitions and delivering high value to our shareholders.
For information about the regulations to which we are subject and the risks we face with respect to governmental regulation, please see Item 1A of this Annual Report on Form 10-K entitled Risk Factors. -6- Seasonality General economic conditions have an impact on our business and financial results.
For information about the regulations to which we are subject and the risks we face with respect to governmental regulation, please see Item 1A of this Annual Report on Form 10-K entitled Risk Factors. Seasonality General economic conditions have an impact on our business and financial results.
Healthcare Interoperability In the healthcare industry, interoperability is defined as the ability of different information systems, devices and applications (systems) to access, exchange, integrate and cooperatively use data in a coordinated manner, within and across organizational, regional and national boundaries, to provide timely and seamless portability of information and optimize the health of individuals and populations globally.
Healthcare Interoperability In the healthcare industry, interoperability is defined as the ability of different information systems, devices and applications (“systems”) to access, exchange, integrate and cooperatively use data in a coordinated manner, within and across organizational, regional and national boundaries, to provide timely and seamless portability of information and optimize the health of individuals and populations globally.
The Code is posted on the corporate governance page of Consensus’ website, and can be accessed at http://investor.consensus.com . Any changes to or waiver of our Code of Business Conduct and Ethics for senior financial officers, executive officers or directors will be posted on that website, to the extent required under Nasdaq or SEC rules. -9-
The Code is posted on the corporate governance page of Consensus’ website and can be accessed at http://investor.consensus.com . Any changes to or waiver of our Code of Business Conduct and Ethics for senior financial officers, executive officers or directors will be posted on that website, to the extent required under Nasdaq or SEC rules. -8-
ECFax: ECFax is comparable to eFax Corporate in its features and use cases, but specifically developed for use by public sector customers with extremely high security demands. ECFax is operated and only accessible in a FedRAMP government cloud environment to meet those standards.
ECFax: ECFax is comparable to eFax Corporate in its features and use cases but is specifically developed for use by public sector customers with extremely high security demands. As such, ECFax is operated and only accessible in a FedRAMP government cloud environment to meet those standards.
Key drivers to cloud adoption include: • Digitization : Key industry verticals such as healthcare, government, financial services and law have been heavily investing in digitization of information and the online fax industry has significantly benefited from the trend. • Data security and data privacy awareness: Digital cloud fax technology is demonstrably more secure than traditional email and traditional fax machines, which are vulnerable to physical security threats and retrieval problems. • Regulatory tailwinds: Because of its security, eFax® meets regulatory requirements for data security and remains ubiquitous in highly regulated industries, such as healthcare and sectors where large volumes of sensitive information is exchanged. • Cost efficiency : Cloud-based solutions often have minimal installation costs and are highly efficient to scale as the needs of the organization fluctuate. • Green initiatives: Cloud-based solutions appeal to customers engaging in “green” initiatives to reduce their impact on the environment because they rely less on paper for printing documents.
Key drivers to cloud adoption include: • Digitization : Key industry verticals such as healthcare, government, financial services and law have been heavily investing in digitization of information and the online fax industry has significantly benefited from the trend. • Data security and data privacy awareness: Digital cloud fax technology is demonstrably more secure than traditional email and traditional fax machines, which are vulnerable to physical security threats and retrieval problems. -3- • Regulatory tailwinds: eFax® meets or exceeds the requirements of various regulations for data security and remains ubiquitous in highly regulated industries, such as healthcare and other sectors where large volumes of sensitive or regulated information is exchanged. • Cost efficiency : Cloud-based solutions have minimal installation costs and are highly efficient to scale as the needs of the organization fluctuate. • Green initiatives: Cloud-based solutions appeal to customers engaging in “green” initiatives to reduce their impact on the environment because they rely less on paper for printing documents.
Our mission is to democratize secure information interchange across technologies and industries and solve the healthcare interoperability challenge. Substantially all of Consensus’ revenue is recurring in nature and is generated either via fixed subscription plans or usage-based contracts. Over the past decade, Consensus has progressively shifted focus towards larger commercial customers (“Corporate”).
Our mission is to democratize secure information interchange across technologies and industries and provide healthcare interoperability solutions. Substantially all of Consensus’ revenue is recurring in nature and is generated either via fixed subscription plans or usage-based contracts. Over the past decade, Consensus has progressively shifted focus towards larger commercial customers (“Corporate”).
We continue to evolve our programs to meet our colleagues’ health (physical, mental and financial) and wellness needs, which we believe are essential to attract and retain employees of the highest caliber, and we offer a competitive benefits package focused on fostering work/life integration.
We continue to evolve our programs to meet our colleagues’ health and wellness needs, which we believe are essential to attract and retain employees of the highest caliber, and we offer a competitive benefits package focused on fostering work/life integration.
Our revenues consist of monthly recurring subscription and usage-based fees, with monthly recurring subscription revenue representing approximately 72% of our total subscription revenue for 2023. Our cancellation rates have remained relatively steady over time, and we expect this trend to continue into the future given that many of the services we provide are critical to our customers’ business operations.
Our revenues consist of monthly recurring subscription and usage-based fees, with monthly recurring subscription revenue representing approximately 69% of our total subscription revenue for 2024. Our cancellation rates have remained relatively steady over time, and we expect this trend to continue into the future given that many of the services we provide are critical to our customers’ business operations.
Our strategy includes: • Continuing to grow in Corporate secure information exchange; • Solving healthcare interoperability challenges; • Optimizing eCommerce (SoHo) revenue streams; • Leveraging our technology to enter new markets (e.g., government); • Positioning the business for sustained growth through continued focus on profitability and cash flow generation; • Focused investments in our products and capabilities; and • Complementing organic growth investments with targeted acquisitions.
Our strategy includes: • Continuing to grow in Corporate secure information exchange; • Providing healthcare interoperability solutions; • Optimizing eCommerce (SoHo) revenue streams; • Leveraging our technology to enter new markets (e.g., government); • Positioning the business for sustained growth through continued focus on profitability and cash flow generation; • Focused investments in our products and capabilities; and -5- • Complementing organic growth investments with targeted acquisitions.
Clarity: Using Natural Language Processing and Artificial Intelligence (NLP/AI), the Clarity platform can transform unstructured documents into structured actionable data. Clarity’s intelligent data extraction allows data to be sent to the right person, at the right place, at the right time - to accelerate patient treatment across the continuum of care.
Clarity: Using Natural Language Processing and Artificial Intelligence (“NLP/AI”), the Clarity platform can transform unstructured documents into structured actionable data. Clarity’s intelligent data extraction allows data to be sent to the right person, at the right place, at the right time - to accelerate patient treatment across the continuum of care.
We currently serve approximately 831 thousand small office/home office (“SoHo”) online fax customers, generally consumers and SoHo users, but also single corporate users who acquire a pre-defined subscription through an e-commerce website without direct interaction with a sales person. Approximately 70% of our SoHo base have been customers for more than two years.
We currently serve approximately 747 thousand small office/home office (“SoHo”) online fax customers, generally consumers and SoHo users, but also single corporate users who acquire a pre-defined subscription through an e-commerce website without direct interaction with a salesperson. Approximately 74% of our SoHo base have been customers for more than two years.
Those benefits include comprehensive health insurance -7- coverage and covering 85% of health insurance premiums for covered U.S. employees and their families, an employee stock purchase program, share based compensation, flexible time off, sick time, up to 16 weeks of paid parental leave for birth parents, up to 10 weeks of paid parental leave for secondary caregivers and 24 hours annually of fully paid volunteer time off.
Our benefits include comprehensive health insurance coverage covering 85% of health insurance premiums for covered U.S. employees and their families, an employee stock purchase program, share based compensation, flexible time off, sick time off, up to 6 weeks of paid pregnancy leave, up to 10 weeks of paid parental leave and 24 hours annually of fully paid volunteer time off.
Consensus serves approximately 900 thousand customers of all sizes, from enterprises to individuals, across approximately 47 countries and multiple industry verticals including healthcare, government, financial services, law and education. Our top 10 customers represent approximately $25 million or 7% of total revenues.
Consensus serves approximately 800 thousand customers of all sizes, from enterprises to individuals, across approximately 46 countries and multiple industry verticals including healthcare, government, financial services, law and education. Our top 10 customers represent approximately $28 million or 8% of total revenues.
Fax remains one of the most ubiquitous technologies to transmit documents securely. The use of fax is particularly high in industries subject to data protection laws such as the Health Insurance Portability and Accountability Act (“HIPAA”), as fax offers safety of transmission and nearly universal legal acceptance.
The use of fax is particularly high in industries subject to data protection laws such as the Health Insurance Portability and Accountability Act (“HIPAA”), as fax offers safety of transmission and nearly universal legal acceptance.
For more information regarding the technological risks that we face, please refer to the section entitled Risk Factors contained in Item 1A of this Annual Report on Form 10-K. None of our employees are represented by collective bargaining.
For more information regarding the technological risks that we face, please refer to the section entitled Risk Factors contained in Item 1A of this Annual Report on Form 10-K.
Our SoHo brands include eFax®, jSign®, MyFax®, Sfax®, Metrofax®, and SRfax®. Healthcare represents Consensus’ largest industry vertical and has information, secure communication, management and interoperability needs. In addition to the offerings discussed above, Consensus has several product offerings that are specific to the healthcare industry.
Healthcare represents Consensus’ largest industry vertical and has information, secure communication, management and interoperability needs. In addition to the offerings discussed above, Consensus has several product offerings that are specific to the healthcare industry.
Our mission is to be the trusted global source for the transformation, enhancement and secure exchange of digital information. Our vision is to deliver life’s essential data when, where and how you need it. Diversity, Equity & Inclusion Our cloud fax users and employees are diverse – gender, race, ethnicity, age, orientation, geography, education, background, interests, and more.
Our mission is to be the trusted global source for the transformation, enhancement and secure exchange of digital information. Our vision is to deliver life’s essential data when, where and how you need it. Our cloud fax users and employees are diverse.
As enterprise data communication shifted toward digitization and cloud-based solutions, Consensus entered industry verticals such as healthcare, government, financial services, law and education. Our Corporate business has grown from $192 million of revenue in 2022 to approximately $200 million of revenue in 2023, representing a 3.9% annual growth rate.
As enterprise data communication shifted toward digitization and cloud-based solutions, Consensus entered industry verticals such as healthcare, government, financial services, law and education. Our Corporate business has grown from $149 million of revenue in 2020 to approximately $209 million of revenue in 2024, representing a 7.0% five-year compound annual growth rate.
Human Capital Resources As of December 31, 2023, we had 559 employees, with slightly more than one-quarter of the employees located outside of the United States. Our ability to continue to attract, retain and motivate our highly qualified workforce is very important to our continued success.
None of our employees are represented by collective bargaining. -6- Human Capital Resources As of December 31, 2024, we had 518 employees, with just less than one-quarter of the employees located outside of the United States. Our ability to continue to attract, retain and motivate our highly qualified workforce is very important to our continued success.
We believe that the primary competitive factors determining our success in the market for our services include financial strength and stability; pricing; reputation for reliability and security of service; breadth and depth of product functionality; intellectual property ownership; effectiveness of customer support; sign-up, service and software ease-of-use; service scalability; customer messaging and branding; geographic coverage; scope of services; currency and payment method acceptance; and local language sales, messaging and support.
We believe that the primary competitive factors determining our success in the market for our services include: financial strength and stability; pricing; reputation for reliability and security of service; breadth and depth of product functionality; intellectual property ownership; effectiveness of customer support; sign-up, service and software ease-of-use; service scalability; customer messaging and branding; geographic coverage; scope of services; currency and payment method acceptance; and local language sales, messaging and support. -7- For more information regarding the competition that we face, see “Risk Factors—Risks Related to Our Business—The markets in which we operate are highly competitive, and our competitors may have greater resources to commit to growth, superior technologies, cheaper pricing or more effective marketing strategies.
We refer to the transactions that resulted in the separation of Consensus and Ziff Davis into two separate publicly traded companies as the “Spin-Off” or “separation and distribution.”). -8- Available Information We file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) with the Securities and Exchange Commission (the “SEC”).
Available Information We file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) with the Securities and Exchange Commission (the “SEC”).
We believe our leadership in digital cloud fax, intelligent data extraction, HL7, FHIR and our deep domain knowledge and experience in the healthcare industry positions Consensus well to help healthcare providers accomplish their broader digitization and interoperability objectives. -3- Our Industry Secure Information Communication Our products and services are a component of the secure information transmission market, which is part of the broader public cloud services market, for which demand for cloud services is expected to accelerate in the future.
We believe our leadership in digital cloud fax, intelligent data extraction, HL7, FHIR and our deep domain knowledge and experience in the healthcare industry positions Consensus well to help healthcare providers accomplish their broader digitization and interoperability objectives.
SoHo Fax Solutions eFax® : eFax® is a global online faxing service with customers worldwide. In addition to eFax®, we offer a variety of brands for subscription. Customers We have a diverse set of customers globally, using cloud fax, electronic signature and interoperability products.
In addition to eFax®, we offer a variety of brands for subscription, including but not limited to MyFax®, Sfax®, Metrofax®, and SRfax®. -4- Customers We have a diverse set of customers globally, using cloud fax, electronic signature and interoperability products.
We currently serve approximately 54 thousand Corporate customers, generally small/medium businesses or large enterprises, to whom sales are made through e-commerce, but primarily still direct interaction with a sales person and involve specific pricing, multiple line subscriptions, API connections and/or commercial grade security.
We currently serve approximately 59 thousand Corporate customers, ranging from small/medium businesses to large enterprises and government agencies. Our sales are primarily made through direct interaction with a salesperson and involve specific pricing and customer features such as but not limited to multiple line subscriptions, API connections and enhanced security features.
In 2023, we launched pre-packaged applications of Clarity – Clarity Clinical Documentation™ and Clarity Prior Authorization™ – to tackle specific data extraction challenges in the healthcare industry.
Additionally, our pre-packaged applications of Clarity – Clarity Clinical Documentation™ and Clarity Prior Authorization™ – tackle specific data extraction challenges in the healthcare industry. SoHo Fax Solutions eFax® is a global online faxing service with customers worldwide.
Hiring We reinforce our culture and our values by seeking out candidates, that align well with our organizational priorities, values, mission and vision. Employee Compensation & Benefits Compensation is an important consideration for all of our employees and we strive to pay competitive compensation packages that reflect the success of the business and the individual contributions of each colleague.
Employee Compensation & Benefits Compensation is an important consideration for all of our employees and we strive to pay competitive compensation packages that reflect the success of the business and the individual contributions of each colleague. We are committed to fair pay practices and roles are periodically benchmarked to help inform where adjustments may be needed.
We are committed to fair pay practices; roles are periodically benchmarked to help inform where adjustments may be needed. We provide our employees with benefits we believe are effective at attracting and retaining the talent critical for our success and, more importantly, promoting their day to day well-being.
We provide our employees with benefits we believe will optimize the talent critical for our success and promote day to day well-being.
The aim of the DEI Council is to foster respectful awareness of diversity, equity, and inclusion in our workplace environment and create a community where each employee feels they belong and can contribute to the overall success of the Company.
To this effect, we promote and implement trainings and events to foster a respectful, collaborative, and professional workplace environment where each employee feels they can contribute to the overall success of the Company. We reinforce our culture and our values by seeking out qualified candidates who align well with our organizational priorities and values.
Cloud adoption has grown quickly in secure transmission, taking share from on-premises solutions over the past decade.
According to market research “Global Fax Services Market – Focused Insights 2024-2029” conducted by Arizton Advisory & Intelligence, industry analysts expect the global fax services market to grow at a compound annual growth rate of 11.06% from 2023 to 2029. Additionally, cloud adoption has grown quickly in secure transmission, taking share from on-premises solutions over the past decade.
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Our Consensus Unite healthcare interoperability platform, a comprehensive workflow collaboration and data exchange solutions suite, now services thousands of healthcare organizations ranging from single-provider offices to care settings with hundreds of beds in use.
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Our Industry Secure Information Communication Our products and services are a component of the secure information transmission market, which is part of the broader public cloud services market, for which demand for cloud services is expected to accelerate in the future. Fax remains one of the most ubiquitous technologies to transmit documents securely.
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Our Conductor platform delivers a flexible and performant solution to healthcare organizations’ pervasive interoperability challenges, delivering support for digital Health Level Seven (“HL7”), Fast Healthcare Interoperability Resources (“FHIR”), and Direct Secure Messaging (“DSM”) technology that has been fully integrated with our enterprise cloud services offerings.
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Conductor: Conductor is a r obust interface engine and complete interoperability platform that provides seamless integration technology supporting all the latest standards for connectivity and data formats (API/FHIR, HL7, Direct Secure Messaging, web services, message queues, etc.), addressing a wide range of interoperability challenges from the simple to the extremely complex.
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The sector continues to undergo a large-scale digitization effort, with the objective to streamline workflows, increase efficiency for operators, and increase transparency for patients.
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Also, we face significant competition for users, developers and distributors”. Consensus Cloud Solutions, Inc. Spin-Off On October 7, 2021, J2 Global, Inc.
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In 2022, Consensus launched Clarity, an intelligent data extraction technology which uses artificial intelligence and machine learning to extract and, combined with other Consensus offerings, transform unstructured information in documents such as faxes into structured data such as HL7, FHIR, and DSM formats.
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We refer to the transactions that resulted in the separation of Consensus and Ziff Davis into two separate publicly traded companies as the “Spin-Off” or “separation and distribution”. Ziff Davis has sold, or otherwise disposed of, its shares of Consensus capital stock, reducing its beneficial ownership in the Company to zero as of December 31, 2024.
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To this effect, we have employees throughout the organization who form our Diversity, Equity and Inclusion (“DEI”) Council to promote thoughtful discussion, implement product and onboarding training to create community and events.
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Health and Wellness Creating a culture where all colleagues feel supported and valued is paramount to our corporate mission.
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For more information regarding the competition that we face, see “Risk Factors—Risks Related to Our Business—The markets in which we operate are highly competitive and our competitors may have greater resources to commit to growth, superior technologies, cheaper pricing or more effective marketing strategies”. Consensus Cloud Solutions, Inc. Spin-Off On October 7, 2021, J2 Global, Inc.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related to the Separation • If the distribution, together with certain related transactions, does not qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, Ziff Davis, Consensus and Ziff Davis stockholders could be subject to significant tax liabilities, and, in certain circumstances, Consensus could be required to indemnify Ziff Davis for material taxes and other related amounts pursuant to indemnification obligations under the tax matters agreement. • We may not be able to engage in desirable strategic or capital-raising transactions following the separation. • We have a limited history of operating as an independent company and we have incurred and expect to continue to incur increased administrative and other costs following the separation by virtue of our status as an independent public company.
Biggest changeRisks Related to the Separation • If the distribution, together with certain related transactions, does not qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, Ziff Davis, Consensus and Ziff Davis stockholders could be subject to significant tax liabilities, and, in certain circumstances, Consensus could be required to indemnify Ziff Davis for material taxes and other related amounts pursuant to indemnification obligations under the tax matters agreement. • Our debt obligations could adversely affect our business and our ability to meet our obligations and pay dividends. • We and Ziff Davis continue to have some obligations under transaction agreements that were executed as part of the separation.
These provisions will, among other things: • permit our Board of Directors to issue one or more series of preferred stock with such powers, rights and preferences as the Board of Directors shall determine; • subject to a five-year sunset from the date of the distribution, provide for a classified Board of Directors, with each class serving a staggered three-year term, which could have the effect of making the replacement of incumbent directors more time consuming and difficult; • provide that, as long as our Board of Directors is classified, our directors can be removed for cause only; • prohibit stockholder action by written consent; • limit the ability of stockholders to call a special meeting of stockholders; • provide that vacancies on the Board of Directors could be filled only by a majority vote of directors then in office, even if less than a quorum, or by a sole remaining director; and • establish advance notice requirements for stockholder proposals and nominations of candidates for election as directors.
These provisions will, among other things: • permit our Board of Directors to issue one or more series of preferred stock with such powers, rights and preferences as the Board of Directors shall determine; -25- • subject to a five-year sunset from the date of the distribution, provide for a classified Board of Directors, with each class serving a staggered three-year term, which could have the effect of making the replacement of incumbent directors more time consuming and difficult; • provide that, as long as our Board of Directors is classified, our directors can be removed for cause only; • prohibit stockholder action by written consent; • limit the ability of stockholders to call a special meeting of stockholders; • provide that vacancies on the Board of Directors could be filled only by a majority vote of directors then in office, even if less than a quorum, or by a sole remaining director; and • establish advance notice requirements for stockholder proposals and nominations of candidates for election as directors.
This significant amount of debt could have important adverse consequences to us and our investors, including: • requiring a substantial portion of our cash flow from operations to make principal and interest payments; • making it more difficult to satisfy other obligations; • increasing the risk of a future credit ratings downgrade of our debt, which could increase future debt costs and limit the future availability of debt financing; • increasing our vulnerability to general adverse economic, competitive and industry conditions; • reducing the cash flows available to fund capital expenditures and other corporate purposes and to grow our business; • limiting our flexibility in planning for, or reacting to, changes in our business and industry; • placing us at a competitive disadvantage compared with our less-leveraged competitors; • increasing our cost of borrowing; and • limiting our ability to borrow additional funds as needed or take advantage of business opportunities as they arise, pay cash dividends or repurchase our common stock.
This significant amount of debt could have important adverse consequences to us and our investors, including: • requiring a substantial portion of our cash flow from operations to make principal and interest payments; • making it more difficult to satisfy other obligations; • increasing the risk of a future credit ratings downgrade of our debt, which could increase future debt costs and limit the future availability of debt financing; • increasing our vulnerability to general adverse economic, competitive and industry conditions; • reducing the cash flows available to fund capital expenditures and other corporate purposes and to grow our business; • limiting our flexibility in planning for, or reacting to, changes in our business and industry; • placing us at a competitive disadvantage compared with our less-leveraged competitors; • increasing our cost of borrowing; and • limiting our ability to borrow additional funds as needed, refinance our debt or take advantage of business opportunities as they arise, pay cash dividends or repurchase our common stock.
Risks Related To Our Common Stock • We cannot be certain that an active trading market for our common stock will continue and stock price has in the past and may in the future fluctuate significantly. • Shares of our common stock generally will be eligible for resale, which may cause our stock price to decline. • We do not intend to pay dividends on our common stock. • We previously identified material weaknesses in internal control over financial reporting and if we fail to design and maintain effective internal control over financial reporting it could adversely affect our business, reputation, results of operations and stock price.
Risks Related To Our Common Stock • We cannot be certain that an active trading market for our common stock will continue to be available and our stock price has in the past and may in the future fluctuate significantly. • Shares of our common stock generally will be eligible for resale, which may cause our stock price to decline. • We do not intend to pay dividends on our common stock. • We previously identified material weaknesses in internal control over financial reporting and if we fail to design and maintain effective internal control over financial reporting it could adversely affect our business, reputation, results of operations and stock price.
In addition, the IRS private letter ruling does not address all of the issues that are relevant to determining whether the distribution, together with certain related transactions, qualifies as a transaction that is generally tax-free for U.S. federal income tax purposes, and an opinion of outside counsel or other external -28- tax advisor represents the judgment of such counsel or advisor which is not binding on the IRS or any court.
In addition, the IRS private letter ruling does not address all of the issues that are relevant to determining whether the distribution, together with certain related transactions, qualifies as a transaction that is generally tax-free for U.S. federal income tax purposes, and an opinion of outside counsel or other external tax advisor represents the judgment of such counsel or advisor which is not binding on the IRS or any court.
Several states have enacted additional, more restrictive and punitive laws regulating commercial email. Foreign legislation exists as well, including Canada’s Anti-Spam Legislation and the European laws that have been enacted pursuant to the GDPR and European Union Directive 2002/58/EC and its amendments. We use email as a significant means of communicating with our existing and potential users.
Several states have enacted additional, more -22- restrictive and punitive laws regulating commercial email. Foreign legislation exists as well, including Canada’s Anti-Spam Legislation and the European laws that have been enacted pursuant to the GDPR and European Union Directive 2002/58/EC and its amendments. We use email as a significant means of communicating with our existing and potential users.
In particular, the recruitment and retention of top technical, marketing, sales and subject matter experts - particularly those with specialized knowledge, will -20- be critical to our success. Competition for such people is intense, substantial and continuous, and we may not be able to attract, integrate or retain highly qualified technical, sales or managerial personnel in the future.
In particular, the recruitment and retention of top technical, marketing, sales and subject matter experts - particularly those with specialized knowledge, will be critical to our success. Competition for such people is intense, substantial and continuous, and we may not be able to attract, integrate or retain highly qualified technical, sales or managerial personnel in the future.
Failure to comply with the requirements of HIPAA or HITECH or any of the applicable federal and state laws regarding patient privacy, identity theft prevention and detection, breach notification and data security may subject us to penalties, including civil monetary penalties and, in some circumstances, criminal penalties or contractual liability under -21- agreements with our customers and clients.
Failure to comply with the requirements of HIPAA or HITECH or any of the applicable federal and state laws regarding patient privacy, identity theft prevention and detection, breach notification and data security may subject us to penalties, including civil monetary penalties and, in some circumstances, criminal penalties or contractual liability under agreements with our customers and clients.
Many of our competitors have access to considerable financial and technical resources with which to compete aggressively, including by funding future growth and expansion and investing in acquisitions, technologies, and research and development. Further, emerging start-ups may be able to innovate and provide new products and services faster than we can.
Many of our competitors have access to considerable financial and technical resources with which to compete aggressively, including by funding future growth and expansion and investing in acquisitions, technologies, and research and development. Further, emerging start-ups may be able to innovate and provide new products and -16- services faster than we can.
This wide variety of definitions has the potential to create a risk of confusion in the market, or allow competitors to reframe the problem to their advantage in a competitive situation, potentially allowing less robust solutions to hold themselves out as healthcare interoperability solutions. We expect to encounter significant competition for customers as the healthcare interoperability market develops.
This wide variety of definitions has the potential to create a risk of confusion in the market, or allow competitors to reframe the problem to their advantage in a competitive situation, potentially -11- allowing less robust solutions to hold themselves out as healthcare interoperability solutions. We expect to encounter significant competition for customers as the healthcare interoperability market develops.
Customers or vendors could use any of these four components to define their particular “interoperability solution.” Separately, the Center for Medicare and Medicaid Services further defined a fifth component of interoperability that includes patients, which is not included in the -12- HIMSS definition.
Customers or vendors could use any of these four components to define their particular “interoperability solution.” Separately, the Center for Medicare and Medicaid Services further defined a fifth component of interoperability that includes patients, which is not included in the HIMSS definition.
Changes in these or any other laws and regulations or the interpretation of them could increase our future compliance costs, limit the amount and type of data we can collect, transfer, share, or sell, make our products and services less attractive to our users, or cause us to change or limit our business practices.
Changes in these or any other laws and regulations or the -23- interpretation of them could increase our future compliance costs, limit the amount and type of data we can collect, transfer, share, or sell, make our products and services less attractive to our users, or cause us to change or limit our business practices.
If the market does not develop further, develops more slowly, or in a way that we do not expect, our business will be adversely affected. • There are particular challenges in addressing the market for healthcare interoperability solutions. • Our industry is undergoing rapid technological changes and we may not be able to keep up. • We have made and expect to continue to make acquisitions that could disrupt our operations and harm our operating results. • Current or future pandemics or global health crises, and related governmental responses could negatively affect our business, operations and financial performance. • Our business could suffer if providers of broadband Internet access services block, impair or degrade our services. • Our business is dependent on a small number of telecommunications carriers in each region and our inability to maintain agreements at attractive rates with such carriers may negatively impact our business. • The successful operation of our business depends on the supply of critical business elements from other companies, including data center services. • Our sales cycle with enterprise and commercial customers can be long and unpredictable, and our sales efforts require considerable time and expense. • We face risks associated with system failures, cybersecurity breaches and other technological issues. • The markets in which we operate are highly competitive, and we may not be successful in growing our brands or revenue. • We may be found to infringe the intellectual property rights of others, and we may be unable to adequately protect of our own intellectual property rights. • We may be subject to risks from international operations, including risks associated with currency fluctuations and foreign exchange controls and adverse changes in global financial markets. • We may be engaged in legal proceedings that could cause us to incur unforeseen expenses and could divert significant operational resources and our management’s time and attention. • Our business is highly dependent on our billing systems functioning properly, and we face risks associated with card declines and merchant standards imposed by card companies. • Changes in our tax rates, changes in tax treatment of companies engaged in e-commerce, the adoption of new U.S. or international tax legislation, or exposure to additional tax liabilities may adversely impact our financial results. • We face risks associated with political instability and volatility in the economy. -10- Risks Related To Regulation, Including Taxation • Changes in regulations relating to health information communication protocols could affect our business. • Our services may become subject to burdensome regulation, which could increase our costs or restrict our service offerings. • Changes in our tax rates, changes in tax treatment of companies engaged in e-commerce, the adoption of new U.S. or international tax legislation, or exposure to additional tax liabilities may adversely impact our financial results. • Taxing authorities may successfully assert that we should have collected, or in the future should collect sales and use, telecommunications or similar taxes, and we could be subject to liability with respect to past or future tax, which could adversely affect our operating results. • We are subject to a variety of new and existing laws and regulations which could subject us to claims, judgments, monetary liabilities, and other remedies, and to limitations on our business practices.
If the market does not develop further, develops more slowly, or in a way that we do not expect, our business will be adversely affected. • There are particular challenges in addressing the market for healthcare interoperability solutions. • Our industry is undergoing rapid technological changes, including with the introduction of artificial intelligence (“AI”), and we may not be able to keep up. • We have made and expect to continue to make acquisitions that could disrupt our operations and harm our operating results. • Current or future pandemics or global health crises, and related governmental responses could negatively affect our business, operations and financial performance. • Our business could suffer if providers of broadband Internet access services block, impair or degrade our services. • Our business is dependent on a small number of telecommunications carriers in each region and our inability to maintain agreements at attractive rates with such carriers may negatively impact our business. • The successful operation of our business depends on the supply of critical business elements from other companies, including data center services. • Our sales cycle with enterprise and commercial customers can be long and unpredictable, and our sales efforts require considerable time and expense. • We face risks associated with system failures, cybersecurity breaches and other technological issues. • The markets in which we operate are highly competitive, and we may not be successful in growing our brands or revenue. • We may be found to infringe the intellectual property rights of others, and we may be unable to adequately protect of our own intellectual property rights. • We may be subject to risks from international operations, including risks associated with currency fluctuations and foreign exchange controls and adverse changes in global financial markets. • We may be engaged in legal proceedings that could cause us to incur unforeseen expenses and could divert significant operational resources and our management’s time and attention. • Our business is highly dependent on our billing systems functioning properly, and we face risks associated with card declines and merchant standards imposed by card companies. • Changes in our tax rates, changes in tax treatment of companies engaged in e-commerce, the adoption of new U.S. or international tax legislation, or exposure to additional tax liabilities may adversely impact our financial results. • We face risks associated with political instability and volatility in the economy. -9- Risks Related To Regulation, Including Taxation • Changes in regulations relating to health information communication protocols could affect our business. • Our services may become subject to burdensome regulation, which could increase our costs or restrict our service offerings. • Changes in our tax rates, changes in tax treatment of companies engaged in e-commerce, the adoption of new U.S. or international tax legislation, or exposure to additional tax liabilities may adversely impact our financial results. • Taxing authorities may successfully assert that we should have collected, or in the future should collect sales and use, telecommunications or similar taxes, and we could be subject to liability with respect to past or future tax, which could adversely affect our operating results. • We are subject to a variety of new and existing laws and regulations which could subject us to claims, judgments, monetary liabilities, and other remedies, and to limitations on our business practices.
Some of our existing competitors and possible entrants may have greater brand recognition for certain products and services, more expertise in a particular segment of the market, and greater operational, strategic, technological, financial, -17- personnel, or other resources than we do.
Some of our existing competitors and possible entrants may have greater brand recognition for certain products and services, more expertise in a particular segment of the market, and greater operational, strategic, technological, financial, personnel, or other resources than we do.
From time to time, we may be subject to litigation or claims or become involved in other legal disputes or regulatory inquiries, including in the areas of patent infringement and anti-trust that could negatively affect our business operations and financial condition.
From time to time, we may be subject to litigation or claims or become involved in other legal disputes or regulatory inquiries, including in the areas of patent infringement and anti-trust that could negatively affect our business operations and -18- financial condition.
Any system failure or security breach that causes interruptions or data loss in our operations, our partners, vendors, or other third parties, or in the -16- computer systems of our customers or leads to the misappropriation of our or our customers’ confidential information could result in a significant liability to us (including in the form of judicial decisions and/or settlements, regulatory findings and/or forfeitures, and other means), cause considerable harm to us and our reputation (including requiring notification to customers, regulators, and/or the media), cause a loss of confidence in our products and services, and deter current and potential customers from using our services.
Any system failure or security breach that causes interruptions or data loss in our operations, our partners, vendors, or other third parties, or in the computer systems of our customers or leads to the misappropriation of our or our customers’ confidential information could result in a significant liability to us (including in the form of judicial decisions and/or settlements, regulatory findings and/or forfeitures, and other means), cause considerable harm to us and our reputation (including requiring notification to customers, regulators, and/or the -15- media), cause a loss of confidence in our products and services, and deter current and potential customers from using our services.
As a result, our future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or changes in tax laws or their interpretation.
As a result, our -21- future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or changes in tax laws or their interpretation.
Our ability to procure and distribute numbers depends on factors such as applicable regulations, the practices of telecommunications carriers that provide numbers, the cost of these numbers and the level of demand for new numbers.
Our ability to procure and distribute numbers depends on factors such as -13- applicable regulations, the practices of telecommunications carriers that provide numbers, the cost of these numbers and the level of demand for new numbers.
See the risk factor titled “Changes in regulations relating to health information communications protocols could affect our business” under the heading “Risks Related to Regulation Including Taxation.” The healthcare industry has changed significantly in recent years, and we expect that significant changes to the healthcare industry will continue to occur.
See the risk factor titled “Changes in regulations relating to health information communication protocols could affect our business” under the heading “Risks Related to Regulation Including Taxation.” The healthcare industry has changed significantly in recent years, and we expect that significant changes to the healthcare industry will continue to occur.
If future adoption of digital signature products results in a reduction for our fax services without a -11- corresponding adoption of our digital signature or other products, it could have a material adverse effect on our business, prospects, financial condition, operating results and cash flows. Developments in the healthcare industry could adversely affect our business.
If future adoption of digital signature products results in a reduction for our fax services without a corresponding adoption of our digital signature or other products, it could have a material adverse effect on our business, prospects, financial condition, operating results and cash flows. -10- Developments in the healthcare industry could adversely affect our business.
There are ongoing efforts by governmental and nongovernmental entities to create a universally accepted method for electronically signing documents. Widespread adoption of so-called “digital signatures” could, in the future, reduce demand for our fax services where the fax service is primarily being used to evidence a wet signature.
There are ongoing efforts by governmental and nongovernmental entities to create a universally accepted method for electronically signing documents. Widespread adoption of so-called “digital signatures” have reduced, and could continue to in the future reduce demand for our fax services where the fax service is primarily being used to evidence a wet signature.
Our amended and restated certificate of incorporation and amended and restated bylaws contain, and Delaware law contains, provisions that are intended to deter coercive takeover practices and inadequate takeover bids and to encourage prospective acquirers to negotiate with our board of directors rather than to attempt a hostile takeover.
Our amended and restated certificate of incorporation and amended and restated bylaws contain, and Delaware law contains, provisions that are intended to deter coercive takeover practices and inadequate takeover bids and to encourage prospective acquirers to negotiate with our board of directors (the “Board of Directors”) rather than to attempt a hostile takeover.
These companies may be able to develop and expand their network infrastructures and capabilities more quickly, adapt more swiftly to new or emerging technologies and changes in customer requirements, take advantage of acquisition and other opportunities more readily and devote greater resources to the marketing and sale of their products and services than we can.
These companies may be able to develop and expand their network infrastructures and capabilities more quickly, adapt more swiftly to new or emerging technologies, such as artificial intelligence, and changes in customer requirements, take advantage of acquisition and other opportunities more readily and devote greater resources to the marketing and sale of their products and services than we can.
To the extent we expand our business operations in countries outside the U.S., our future results could be materially adversely affected by a variety of uncontrollable and changing factors including, among others, foreign currency exchange rates; political or social unrest, economic instability, geopolitical tensions or war in a specific country or region (including the invasion of Ukraine by Russia and the conflict in the Middle East); trade protection measures and other regulatory requirements which may affect our ability to provide our services; difficulties in staffing and managing international operations; and adverse tax consequences, including imposition of withholding or other taxes on payments by subsidiaries and affiliates and transfer pricing implications.
To the extent we expand our business operations in countries outside the U.S., our future results could be materially adversely affected by a variety of uncontrollable and changing factors including, among others: foreign currency exchange rates; political or social unrest, economic instability, geopolitical tensions or war in a specific country or region (including the invasion of Ukraine by Russia and the conflict in the Middle East); trade protection measures and other regulatory requirements, such as U.S. imposed tariffs along with retaliatory measures taken by other nations in response to these tariffs, which may affect our ability to provide our services; difficulties in staffing and managing international operations; and adverse tax consequences, including imposition of withholding or other taxes on payments by subsidiaries and affiliates and transfer pricing implications.
Acquisitions may also cause us to: • use a substantial portion of our cash resources or incur debt; • significantly increase our interest expense, leverage and debt service requirements if we incur additional debt to pay for an acquisition; • assume liabilities; • issue common stock that would dilute our current stockholders’ percentage ownership; • record goodwill and intangible assets that are subject to impairment testing on a regular basis and potential periodic impairment charges; -13- • incur amortization expenses related to certain intangible assets; and • become subject to intellectual property or other litigation.
Acquisitions may also cause us to: • use a substantial portion of our cash resources or incur debt; • significantly increase our interest expense, leverage and debt service requirements if we incur additional debt to pay for an acquisition; • assume liabilities; • issue common stock that would dilute our current stockholders’ percentage ownership; • record goodwill and intangible assets that are subject to impairment testing on a regular basis and potential periodic impairment charges; • incur amortization expenses related to certain intangible assets; and • become subject to intellectual property or other litigation. -12- Mergers and acquisitions are inherently risky and subject to many factors outside of our control.
Risks Related To Our Stock The trading market for our common stock has existed for only a short period following the distribution. Our stock price may fluctuate significantly. Prior to the distribution, there was no public market for our common stock. An active trading market for our common stock commenced only recently following the distribution and may not be sustainable.
Risks Related To Our Stock The trading market for our common stock has existed for a relatively short time since the distribution. Our stock price may fluctuate significantly. Prior to the distribution, there was no public market for our common stock. An active trading market for our common stock commenced only following the distribution and may not be sustainable.
Cloud Fax revenue constitutes substantially all of our revenues and our operating income. The success of our business is therefore dependent upon the continued use of cloud fax as a messaging medium and our ability to expand usage of our other current and future products and services in the secure data exchange area.
The success of our business is therefore dependent upon the continued use of cloud fax as a messaging medium and our ability to expand usage of our other current and future products and services in the secure data exchange area.
The FCC adopted wide-ranging reforms to the system under which regulated providers of telecommunications services compensate each other for the exchange of various kinds of traffic. While we are not a provider of regulated telecommunications services, we rely on such providers to offer our services to our customers.
The FCC may continue to reform the system under which regulated providers of telecommunications services compensate each other for the exchange of various kinds of traffic. While we are not a provider of regulated telecommunications services, we rely on such providers to offer our services to our customers.
We are a U.S.-based multinational company subject to taxes in the U.S. and foreign jurisdictions. Our provision for income taxes is based on a jurisdictional mix of earnings, statutory tax rates and enacted tax rules, including transfer pricing. Due to economic and political conditions, tax rates in various jurisdictions may be subject to significant change.
Our provision for income taxes is based on a jurisdictional mix of earnings, statutory tax rates and enacted tax rules, including transfer pricing. Due to economic and political conditions, tax rates in various jurisdictions may be subject to significant change.
The market price of our common stock has in the past, and may continue to, fluctuate significantly due to a number of factors, some of which may be beyond our control, including: • actual or anticipated fluctuations in our operating results; • changes in earnings estimated by securities analysts or our ability to meet those estimates; -25- • the operating and stock price performance of comparable companies; • changes to the regulatory and legal environment in which we operate; and • domestic and worldwide economic conditions.
The market price of our common stock has in the past, and may continue to, fluctuate significantly due to a number of factors, some of which may be beyond our control, including: • actual or anticipated fluctuations in our operating results; • changes in earnings estimated by securities analysts or our ability to meet those estimates; • the operating and stock price performance of comparable companies; • changes to the regulatory and legal environment in which we operate; and • domestic and worldwide economic conditions. -24- Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company.
Similar laws have been passed in several other states, and have been proposed in additional states and at the federal level. -24- Failure or perceived failure by us to comply with our policies, applicable requirements, or industry self-regulatory principles related to the collection, use, sharing or security of personal information, or other privacy, data-retention or data-protection matters could result in a loss of user confidence in us, damage to our brands, and ultimately in a loss of users and advertising partners, which could adversely affect our business.
Failure or perceived failure by us to comply with our policies, applicable requirements, or industry self-regulatory principles related to the collection, use, sharing or security of personal information, or other privacy, data-retention or data-protection matters could result in a loss of user confidence in us, damage to our brands, and ultimately in a loss of users and advertising partners, which could adversely affect our business.
Any failure or perception of failure of our products or services to meet HIPAA, HITECH and related regulatory requirements could expose us to risks of investigation, notification, litigation, penalty or enforcement, adversely affect demand for our products and services and force us to expend significant capital and other resources to modify our products or services to address the privacy and security requirements of our clients and HIPAA and HITECH.
Any failure or perception of failure of our products or services to meet HIPAA, HITECH and related regulatory requirements could expose us to risks of investigation, notification, litigation, penalty or enforcement, adversely affect demand for our products and services and force us to expend significant capital and other resources to modify our products or services to address the privacy and security requirements of our clients and HIPAA and HITECH. -20- Our services may become subject to burdensome regulation, which could increase our costs or restrict our service offerings.
Advances in computer capabilities, new discoveries in the field of cryptography or other developments may result in a material compromise or breach of the technology used by us, our partners, vendors, or other third parties, to protect transaction and other confidential data.
Advances in computer capabilities, new discoveries in the field of cryptography or other developments, including the use of increasingly sophisticated and evolving artificial intelligence and machine learning tools, may result in a material compromise or breach of the technology used by us, our partners, vendors, or other third parties, to protect transaction and other confidential data.
It is possible that a court could find these exclusive forum provisions inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, and we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and board of directors.
It is possible that a court could find these exclusive forum provisions inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, and we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and Board of Directors. -26- If securities or industry analysts do not publish research or publish misleading or unfavorable research about our business, our stock price and trading volume could decline.
The impact of pandemics and global health crises, such as the COVID-19 pandemic, has in the past had, and may in the future have, a negative effect on the global economy, disrupting the financial markets and creating increasing volatility and overall uncertainty.
Pandemics or global health crises, and related governmental responses could negatively affect our business, operations and financial performance. The impact of pandemics and global health crises, such as the COVID-19 pandemic, has in the past had, and may in the future have, a negative effect on the global economy, disrupting the financial markets and creating increasing volatility and overall uncertainty.
We currently have six research analysts covering Consensus’ common stock. If one or more of the analysts downgrades our stock or publishes misleading or unfavorable research about our business, our stock price would likely decline.
If one or more of the analysts downgrades our stock or publishes misleading or unfavorable research about our business, our stock price would likely decline.
Any such indemnity obligations could be material. In addition, Ziff Davis, Consensus and their respective subsidiaries may incur certain tax costs in connection with the separation, including non-U.S. tax costs resulting from separations in multiple non-U.S. jurisdictions that do not legally provide for tax-free separations, which may be material.
In addition, Ziff Davis, Consensus and their respective subsidiaries may incur certain tax costs in connection with the separation, including non-U.S. tax costs resulting from separations in multiple non-U.S. jurisdictions that do not legally provide for tax-free separations, which may be material. -27- Our debt obligations could adversely affect our business and our ability to meet our obligations and pay dividends.
Privacy Shield, rendering it invalid. We cannot predict how or if these issues will be resolved nor can we evaluate any potential liability at this time.
Privacy Shield, rendering it invalid. We cannot predict how or if these issues will be resolved nor can we evaluate any potential liability at this time. While the EU policymakers approved a new EU-U.S.
As a result, any or all of our current carriers could discontinue providing us with service at rates acceptable to us, or at all, and we may not be able to obtain adequate replacements, which could materially and adversely affect our business, prospects, financial condition, operating results and cash flows. -14- Our business could suffer if we cannot obtain or retain numbers, are prohibited from obtaining local numbers or are limited to distributing local numbers to only certain customers.
As a result, any or all of our current carriers could discontinue providing us with service at rates acceptable to us, or at all, and we may not be able to obtain adequate replacements, which could materially and adversely affect our business, prospects, financial condition, operating results and cash flows.
Further, the impact on the global economy as a result of unforeseen global crises such as war (including the ongoing conflict in the Middle East, invasion of Ukraine by Russia and any related political or economic responses and counter-responses or otherwise by various global actors), strife, strikes, global health pandemics, earthquakes or major weather events or other uncontrollable events could negatively impact our revenue and operating results. -19- We may be engaged in legal proceedings that could cause us to incur unforeseen expenses and could divert significant operational resources and our management’s time and attention.
Further, the impact on the global economy as a result of unforeseen global crises such as war (including the ongoing conflict in the Middle East, invasion of Ukraine by Russia and any related political or economic responses and counter-responses or otherwise by various global actors), strife, strikes, global health pandemics, earthquakes or major weather events or other uncontrollable events could negatively impact our revenue and operating results.
Under the tax matters agreement, we would be required to indemnify Ziff Davis for the resulting tax, and this indemnity obligation might discourage, delay or prevent a change of control that you may consider favorable. -27- Our amended and restated bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, and the United States federal district courts as the exclusive forum for claims under the Securities Act, which could limit our stockholders’ ability to obtain what such stockholders believe to be a favorable judicial forum for disputes with us or our directors, officers or employees.
Our amended and restated bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, and the United States federal district courts as the exclusive forum for claims under the Securities Act, which could limit our stockholders’ ability to obtain what such stockholders believe to be a favorable judicial forum for disputes with us or our directors, officers or employees.
In connection with the separation and distribution, Ziff Davis undertook several corporate reorganization transactions involving its subsidiaries which, along with the separation and distribution, may be subject to federal and state fraudulent conveyance and transfer laws.
Potential liabilities may arise due to fraudulent transfer considerations, which would adversely affect our financial condition and results of operations. In connection with the separation and distribution, Ziff Davis undertook several corporate reorganization transactions involving its subsidiaries which, along with the separation and distribution, may be subject to federal and state fraudulent conveyance and transfer laws.
As a result, we may not be able to effectively prevent competitors in these -18- regions from utilizing our intellectual property, which could reduce our competitive advantage and ability to compete in those regions and negatively impact our business.
As a result, we may not be able to effectively prevent competitors in these regions from utilizing our intellectual property, which could reduce our competitive advantage and ability to compete in those regions and negatively impact our business. -17- We also strive to protect our intellectual property rights by relying on federal, state and common law rights, as well as contractual restrictions.
Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations could also adversely affect the trading price of our common stock. We do not intend to pay dividends on our common stock. We have no present intention to pay cash dividends on our common stock.
These broad market fluctuations could also adversely affect the trading price of our common stock. We do not intend to pay dividends on our common stock. We have no present intention to pay cash dividends on our common stock.
If we cannot make payments on our debt obligations, we will be in default and all outstanding principal and interest on our debt may be declared due and payable and we could be forced into bankruptcy or liquidation.
If we cannot make payments on our debt obligations, we will be in default and all outstanding principal and interest on our debt may be declared due and payable and we could be forced into bankruptcy or liquidation. -28- In addition, any event of default or declaration of acceleration under one debt instrument could result in an event of default under one or more of our other debt instruments.
As an independent, publicly traded company, we may not enjoy the same benefits that were available to us as a business unit of Ziff Davis.
As an independent, publicly traded company, we may not enjoy the same benefits that were available to us as a business unit of Ziff Davis. As an independent, publicly traded company, we may become more susceptible to market fluctuations and other adverse events, as compared to when we were still a part of Ziff Davis.
These restrictions will also not prevent us from incurring obligations that do not constitute “indebtedness.” If new indebtedness is added to our current debt levels, the related risks that we now face could intensify. -30- We may not be able to generate sufficient cash to service all of our indebtedness, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
These restrictions will also not prevent us from incurring obligations that do not constitute “indebtedness.” If new indebtedness is added to our current debt levels, the related risks that we now face could intensify.
If securities or industry analysts do not publish research or publish misleading or unfavorable research about our business, our stock price and trading volume could decline. The trading market for Consensus’ common stock depends in part on the research and reports that securities or industry analysts publish about us or our business.
The trading market for Consensus’ common stock depends in part on the research and reports that securities or industry analysts publish about us or our business. We currently have multiple research analysts covering Consensus’ common stock.
While we believe we are in compliance with the relevant laws and regulations, we could be subject to enforcement actions, fines, forfeitures and other adverse actions.
In certain instances, we may be subject to enhanced privacy obligations based on the type of information we store and process. While we believe we are in compliance with the relevant laws and regulations, we could be subject to enforcement actions, fines, forfeitures and other adverse actions.
If this were to occur and we were to be held liable for someone’s use of our service for unauthorized calling or text messaging mobile users, the financial penalties could cause a material adverse effect on our operations and harm our business reputation. -22- Changes in our tax rates, changes in tax treatment of companies engaged in e-commerce, the adoption of new U.S. or international tax legislation, or exposure to additional tax liabilities may adversely impact our financial results.
If this were to occur and we were to be held liable for someone’s use of our service for unauthorized calling or text messaging mobile users, the financial penalties could cause a material adverse effect on our operations and harm our business reputation.
Mergers and acquisitions are inherently risky and subject to many factors outside of our control. We cannot give assurance that our previous or future acquisitions will be successful and will not materially adversely affect our business, operating results or financial condition. Failure to manage and successfully integrate acquisitions could materially harm our business and operating results.
We cannot give assurance that our previous or future acquisitions will be successful and will not materially adversely affect our business, operating results or financial condition. Failure to manage and successfully integrate acquisitions could materially harm our business and operating results. In addition, our effective tax rate for future periods is uncertain and could be impacted by mergers and acquisitions.
We may incur substantial liabilities for expenses necessary to comply with these laws and regulations, as well as potential substantial penalties for any failure to comply.
We may incur substantial liabilities for expenses necessary to comply with these laws and regulations, as well as potential substantial penalties for any failure to comply. Compliance with these laws and regulations may also cause us to change or limit our business practices in a manner adverse to our business.
In our effort to attract and retain key personnel, we may experience increased compensation costs that are not offset by either improved productivity or higher prices for our products or services We have observed an increasingly competitive labor market.
In our effort to attract and retain key personnel, we may experience increased compensation costs that are not offset by either improved productivity or higher prices for our products or services. -19- Changes in the labor market, employee turnover, changes in the availability of our employees and labor shortages more generally could result in, increased costs, and could adversely impact the efficiency of our operations.
As an independent, publicly traded company, we may become more susceptible to market fluctuations and other adverse events than we would have been were we still a part of Ziff Davis. As part of Ziff Davis, we were able to enjoy certain benefits from Ziff Davis’s operating diversity and available capital for investments and other uses.
As part of Ziff Davis, we were able to enjoy certain benefits from Ziff Davis’s operating diversity and available capital for investments and other uses.
Increased cost of email transmissions could have a material adverse effect on our business. We rely on email for the delivery of certain cloud fax services.
Increased prices could, in turn, cause us to lose customers, or, if we do not pass on such higher costs to our customers, our profit margins may decrease. -14- Increased cost of email transmissions could have a material adverse effect on our business. We rely on email for the delivery of certain cloud fax services.
As a result of the FCC’s reforms, regulated providers of telecommunications services are determining how the rates they charge customers like us will -15- change in order to comply with the new rules. It is possible that some or all of our underlying carriers will increase the rates we pay for certain telecommunications services.
As a result of any such reforms, it is possible that some or all of our underlying carriers will increase the rates we pay for certain telecommunications services. Should this occur, the costs we incur to provide phone number-based cloud services may increase which may require us to increase the retail price of our products services.
Our debt obligations could adversely affect our business and our ability to meet our obligations and pay dividends. As of December 31, 2023, Consensus has total outstanding indebtedness of approximately $742 million. We may also incur additional indebtedness in the future.
As of December 31, 2024, Consensus has total outstanding indebtedness of approximately $598 million, of which $249 million will mature on October 15, 2026 and the remainder with mature on October 15, 2028. We may also incur additional indebtedness in the future.
In addition, any event of default or declaration of acceleration under one debt instrument could result in an event of default under one or more of our other debt instruments. We or Ziff Davis may fail to perform under transaction agreements that were executed as part of the separation.
We and Ziff Davis continue to have some obligations under transaction agreements that were executed as part of the separation.
Removed
Our historical financial information is not necessarily representative of the results that we would have achieved as a separate, publicly traded company and may not be a reliable indicator of our future results. Risks Related To Our Business Our fax services constitute substantially all of our revenue and operating income.
Added
Risks Related To Our Business Our fax services constitute substantially all of our revenue and operating income. Cloud fax revenue constitutes substantially all of our revenues and our operating income.
Removed
In addition, our effective tax rate for future periods is uncertain and could be impacted by mergers and acquisitions. Pandemics or global health crises, and related governmental responses could negatively affect our business, operations and financial performance.
Added
Our business could suffer if we cannot obtain or retain numbers, are prohibited from obtaining local numbers or are limited to distributing local numbers to only certain customers.
Removed
Should this occur, the costs we incur to provide phone number-based cloud services may increase which may require us to increase the retail price of our products services. Increased prices could, in turn, cause us to lose customers, or, if we do not pass on such higher costs to our customers, our profit margins may decrease.
Added
We may be engaged in legal proceedings that could cause us to incur unforeseen expenses and could divert significant operational resources and our management’s time and attention.
Removed
We also strive to protect our intellectual property rights by relying on federal, state and common law rights, as well as contractual restrictions.
Added
Changes in our tax rates, changes in tax treatment of companies engaged in e-commerce, the adoption of new U.S. or international tax legislation, or exposure to additional tax liabilities may adversely impact our financial results. We are a U.S.-based multinational company subject to taxes in the U.S. and foreign jurisdictions.
Removed
Increased employee turnover, changes in the availability of our employees and labor shortages more generally have resulted in, and could continue to result in, increased costs, and could adversely impact the efficiency of our operations.
Added
Data Privacy Framework in 2023, the validity of data transfer mechanisms and additional safeguards remains subject to legal, regulatory, and political review and developments in both Europe and the U.S.
Removed
Our services may become subject to burdensome regulation, which could increase our costs or restrict our service offerings.
Added
Similar laws have been passed in several other states and have been proposed in additional states and at the federal level.
Removed
Compliance with these laws and regulations may also cause us to change or limit our business practices in a manner adverse to our business. -23- In certain instances, we may be subject to enhanced privacy obligations based on the type of information we store and process.
Added
Under the tax matters agreement, we would be required to indemnify Ziff Davis for the resulting tax, and this indemnity obligation might discourage, delay or prevent a change of control that you may consider favorable.
Removed
Future sales by Ziff Davis or others of our common stock, or the perception that such sales may occur, could depress our common stock price. Ziff Davis has informed us that as of December 31, 2023, Ziff Davis owned 5% of the economic interest and voting power of our outstanding common stock.
Added
Our ability to incur additional indebtedness and/or refinance our existing indebtedness will depend on the debt and/or capital markets and our financial condition at the relevant time. We may not be able to incur additional debt or refinance our existing debt on desirable terms or at all.
Removed
Future sales of these shares in the public market will be subject to the volume and other restrictions of Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), for so long as Ziff Davis is deemed to be our affiliate, unless the shares to be sold are registered with the Securities and Exchange Commission, or SEC.
Added
We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
Removed
We are a party to a Stockholder and Registration Rights Agreement with Ziff Davis, pursuant to which we agreed, upon request of Ziff Davis, we will use our reasonable best efforts to effect the registration under applicable federal and state securities laws of any shares of our common stock that it retains.
Added
While the term of many of the obligations under these agreements has passed, some obligations still remain. For example, we continue to have indemnification obligations to Ziff Davis for matters including liabilities primarily associated with the Consensus business and we continue to be severally liable for certain Ziff Davis tax obligations.
Removed
In June 2022, the registration statement on Form S-1 we filed with respect to -26- the shares of our common stock held by Ziff Davis became effective, and Ziff Davis has informed us that it reduced its position in our common stock from 19.9% to approximately 5% over the course of 2022.
Added
Ziff Davis is also required to indemnify us for certain liabilities. If Ziff Davis were to make an indemnification claim, or if Ziff Davis is unable to pay the taxes for which we may be severally liable, we could incur significant liabilities.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeItem 1C. Cybersecurity We have implemented a cybersecurity program to assess, identify, and manage risks from cybersecurity threats that may result in material adverse effects on the confidentiality, integrity, and availability of our information systems.
Biggest changeCybersecurity We have implemented a cybersecurity program to assess, identify, and manage risks from cybersecurity threats that may result in material adverse effects on the confidentiality, integrity, and availability of our information systems. -29- Information Security Team and Governance Board of Directors Our Board of Directors, in coordination with the Audit Committee of the Board of Directors (the “Audit Committee”), oversees the Company’s enterprise risk management process, including the management of risks arising from cybersecurity threats.
Material Cybersecurity Risks, Threats & Incidents While we have not experienced any risks from cybersecurity threats, including those resulting from previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition, there can be no guarantee that we will not be the subject of future successful attacks, threats or incidents.
Material Cybersecurity Risks, Threats & Incidents While we have not experienced any risks from cybersecurity threats, including those resulting from previous cybersecurity incidents, that, to our knowledge, have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition, there can be no guarantee that we will not be the subject of future successful attacks, threats or incidents.
The Policy applies to all employees, consultants, contractors, and other such persons (“Personnel”) with access to the aforementioned processes, equipment, hardware, and software. The Policy requires that Personnel agree to and are trained annually on all components of the Policy as a condition of employment, partnership, or temporary affiliation with the Company.
The Policy applies to all employees, consultants, contractors, and other such persons (“Personnel”) with access to the aforementioned processes, equipment, hardware, and software. The Policy requires that Personnel agree to and are -30- trained annually on all components of the Policy as a condition of employment, partnership, or temporary affiliation with the Company.
Despite ongoing efforts to continue improvement of our and our vendors’ ability to protect against cyber incidents, we may not be able to protect all information systems, and such incidents may lead to reputational harm, revenue and client loss, legal actions, statutory -34- penalties, among other consequences.
Despite ongoing efforts to continue improvement of our and our vendors’ ability to protect against cyber incidents, we may not be able to protect all information systems, and such incidents may lead to reputational harm, revenue and client loss, legal actions, statutory penalties, among other consequences.
Then, the Audit Committee and such members of our management team report to the Board on a quarterly basis, with an in-depth review at least annually, on data protection and cybersecurity matters.
Then, the Audit Committee and such members of our management team report to the Board of Directors on a quarterly basis, with an in-depth review at least annually, on data protection and cybersecurity matters.
Additionally, the Company has protocols for cybersecurity incidents that meet established reporting thresholds for escalation within the Company including, where appropriate, reporting to the Board and Audit Committee, with required updates for ongoing matters until any such incident has been addressed and resolved.
Additionally, the Company has protocols for cybersecurity incidents that meet established reporting thresholds for escalation within the Company including, where appropriate, reporting to the Board of Directors and Audit Committee, with required updates for ongoing matters until any such incident has been addressed and resolved.
In addition, our developers must complete Secure Code / Secure Application Development Training based on OWASP top 10 standards. Incident Response Our Company has adopted an Information Security Incident Response Plan that applies in the event of a cybersecurity threat or incident (the “IRP”) to provide a standardized framework for responding to security incidents.
In addition, our developers must complete Secure Code / Secure Application Development Training based on Open Web Application Security Project top 10 standards. Incident Response Our Company has adopted an Information Security Incident Response Plan that applies in the event of a cybersecurity threat or incident (the “IRP”) to provide a standardized framework for responding to security incidents.
As part of such reviews, the Audit Committee receives presentations at least quarterly from members of our team responsible for overseeing the Company’s cybersecurity risk management, including the Chief Information Security Officer (CISO), Chief Technology Officer (CTO), Chief Legal Officer (CLO), and Head of Internal Audit, which address topics including recent developments, evolving standards, vulnerability assessments, third-party and independent reviews, the threat environment, technological trends and information security considerations arising with respect to the Company’s peers and third parties.
As part of such reviews, the Audit Committee receives presentations at least quarterly from members of our team responsible for overseeing the Company’s cybersecurity risk management, including the Chief Information Security Officer (“CISO”), Chief Technology Officer (“CTO”), Chief Legal Officer (“CLO”), and Head of Internal Audit, which address topics including recent developments, evolving standards, vulnerability assessments, third-party and independent reviews, the threat environment, technological trends and information security considerations arising with respect to the Company’s peers and third parties.
Employee Trainings All Company employees must complete trainings at least annually on various security threats and best practices including, but not limited to, trainings on the following topics: the Company’s Information Security Policy; Information Security Incident Response Plan; HIPAA, PCI Compliance; GDPR and CCPA; Security Awareness and Incident Response Training covering Social Engineering Phishing (identification and common red flags), Social Media safety best practices, Internet Security best practices, and Incident response training for end-users; and Phishing.
Employee Trainings All Company employees must complete trainings at least annually on various security threats and best practices including, but not limited to, trainings on the following topics: the Company’s Information Security Policy; Information Security Incident Response Plan; HIPAA, PCI Compliance; General Data Protection Regulation (“GDPR”) and CCPA; Security Awareness and Incident Response Training covering Social Engineering Phishing (identification and common red flags), Social Media safety best practices, Internet Security best practices, and Incident response training for end-users; and Phishing.
We are also engaged with a third party Data Protection Officer to oversee compliance with the General Data Protection Regulation (GDPR).
We are also engaged with a third-party Data Protection Officer to oversee compliance with the GDPR.
At the management level, our Cybersecurity and Governance Council, composed of the CISO, CTO, CLO, Chief Revenue Officer and EVP of Operations, and Head of Internal Audit has broad oversight of the Company’s risk management processes.
At the management level, our Cybersecurity and Governance Council, composed of the CISO, CTO, CLO, Chief Revenue Officer and Executive Vice President of Operations, and Head of Internal Audit has broad oversight of the Company’s risk management processes.
Our CISO and the team work closely with Legal and Internal Audit to oversee compliance with legal, regulatory, and contractual security requirements. -33- Risk Management and Strategy The Company employs systems and processes designed to oversee, identify, and reduce the potential impact of a security incident at a third-party vendor, service provider or customer or otherwise implicating the third-party technology and systems we use.
Risk Management and Strategy The Company employs systems and processes designed to oversee, identify, and reduce the potential impact of a security incident at a third-party vendor, service provider or customer or otherwise implicating the third-party technology and systems we use.
The Audit Committee regularly reviews the measures implemented by the Company to identify and mitigate data protection and cybersecurity risks.
Our Board of Directors has delegated the primary responsibility to oversee cybersecurity matters to the Audit Committee. The Audit Committee regularly reviews the measures implemented by the Company to identify and mitigate data protection and cybersecurity risks.
The IRP sets out a coordinated approach to investigating, containing, documenting and mitigating incidents, including reporting findings and keeping senior management and other key stakeholders informed and involved as appropriate. In general, our incident response process follows the NIST framework and focuses on four phases: preparation; detection and analysis; containment, eradication and recovery; and post-incident remediation.
The IRP sets out a coordinated approach to investigating, containing, documenting and mitigating incidents, including reporting findings and keeping senior management and other key stakeholders informed and involved as appropriate.
Information Security Policy and Requirements The Company’s Information Security Policy (“Policy”) is based upon the ISO 27001, HITRUST CSF, SOC 2 Type 2, and PCI DSS frameworks and standards and provides specific and detailed direction and support for appropriately maintaining the overall security, confidentiality, integrity, and availability of information within the Company.
Information Security Policy and Requirements The Company’s Information Security Policy (“Policy”) is based upon the International Organization for Standardization (“ISO”) 27001, Health Information Trust Alliance (“HITRUST”) Common Security Framework (“CSF”), System and Organization Controls 2 Type 2 (“SOC 2 Type 2”), and Payment Card Industry Data Security Standard (“PCI DSS”) frameworks and standards and provides specific and detailed direction and support for appropriately maintaining the overall security, confidentiality, integrity, and availability of information within the Company.
Removed
Information Security Team and Governance Board of Directors Our Board, in coordination with the Audit Committee, oversees the Company’s enterprise risk management process, including the management of risks arising from cybersecurity threats. Our Board has delegated the primary responsibility to oversee cybersecurity matters to the Audit Committee.
Added
Our CISO and the team work closely with Legal and Internal Audit to oversee compliance with legal, regulatory, and contractual security requirements.
Added
In general, our incident response process follows the National Institute of Standards and Technology (“NIST”) framework and focuses on four phases: preparation; detection and analysis; containment, eradication and recovery; and post-incident remediation.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−1 removed1 unchanged
Biggest changeLegal Proceedings See Note 11 - Commitments and Contingencies to our accompanying consolidated financial statements for a description of our legal proceedings. Item 4. Mine Safety Disclosures Not applicable. -35- PART II
Biggest changeWe believe that our existing facilities are adequate to meet our current requirements. -31- Item 3. Legal Proceedings See Note 10 - Commitments and Contingencies to our accompanying consolidated financial statements for a description of our legal proceedings. Item 4. Mine Safety Disclosures Not applicable. -32- PART II
Removed
In 2021, the Company recorded an impairment of this location primarily due to a “partial remote” work model for a significant number of employees, see Note 10 - Leases in Item 8, Notes to Consolidated Financial Statements. We believe that our existing facilities are adequate to meet our current requirements. Item 3.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+0 added−1 removed3 unchanged
Biggest changeThe following table summarizes the share repurchase activity for the three months ended December 31, 2023: Total Number of Shares Purchased Average Price Paid Per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Program (in thousands) October 1 - 31, 2023 348,595 $ 24.35 348,595 $ 68,917 November 1 - 30, 2023 — — — 68,917 December 1 - 31, 2023 — — — 68,917 348,595 348,595 68,917 (1) Average price paid per share includes costs associated with the repurchases, but excludes the 1% excise tax accrued on our share repurchases as a result of the Inflation Reduction Act of 2022.
Biggest changeThe following table summarizes the share repurchase activity for the three months ended December 31, 2024: Total Number of Shares Purchased Average Price Paid Per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Program (in thousands) October 1 - 31, 2024 400 $ 20.02 400 $ 68,202 November 1 - 30, 2024 — — — 68,202 December 1 - 31, 2024 13,701 23.02 13,701 67,887 14,101 14,101 67,887 (1) Average price paid per share includes costs associated with the repurchases, but excludes the 1% excise tax accrued on our share repurchases as a result of the Inflation Reduction Act of 2022. -33- Performance Graph This performance graph shall not be deemed “filed” for purposes of Section 18 of the Exchange Act of 1934, or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of Consensus under the Securities Act of 1933, as amended, or the Exchange Act.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the Nasdaq Global Select Market under the symbol “CCSI ”. Holders We have 164 registered stockholders as of February 23, 2024.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the Nasdaq Global Select Market under the symbol “CCSI ”. Holders We have 161 registered stockholders as of February 14, 2025.
The stock price performance on the following graph is not necessarily indicative of future stock price performance. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] -37- Item 6. [Reserved]
The graph assumes that $100 was invested on October 8, 2021 in Consensus’ common stock and in each of the indices. The stock price performance on the following graph is not necessarily indicative of future stock price performance. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] -34- Item 6. [Reserved]
Consensus’ peer group index consists of Box, Inc. CommonVault Systems, Inc., Computer Programs and Systems, Inc., Ebix, Inc., Evolent Health, Inc., HealthStream, Inc., Omnicell, Inc., OneSpan, Inc., Phreesia, Inc., Progress Software Corp., R1 Rcm Holdco, Inc., SecureWorks Corp., Verint Systems, Inc., Veradigm, Inc. and Yext, Inc.
(formerly Computer Programs and Systems, Inc.), Evolent Health, Inc., HealthStream, Inc., Omnicell, Inc., OneSpan, Inc., Phreesia, Inc., Progress Software Corp., SecureWorks Corp., Verint Systems, Inc. and Yext, Inc. Ebix, Inc., Veradigm, Inc. and R1 Rcm Holdco, Inc. were removed because they were acquired or went private during 2024.
For further information on our share repurchases refer to Note 14 - Stockholders' Equity of the Notes to the Consolidated Financial Statements (Part II, Item 8).
The timing and amounts of purchases are determined by the Company, depending on market conditions and other factors it deems relevant. For further information on our share repurchases refer to Note 13 - Stockholders' Deficit of the Notes to the Consolidated Financial Statements (Part II, Item 8).
Measurement points for the performance graph are October 8, 2021 and the last trading day of each quarter from October 2021 to December 2023. The graph assumes that $100 was invested on October 8, 2021 in Consensus’ common stock and in each of the indices.
Consensus common stock has been listed on the Nasdaq under the symbol “CCSI” since October 8, 2021. Prior to that time, there was no public market for our common stock. Measurement points for the performance graph are October 8, 2021 and the last trading day of each quarter from October 2021 to December 2024.
Performance Graph This performance graph shall not be deemed “filed” for purposes of Section 18 of the Exchange Act of 1934, or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of Consensus under the Securities Act of 1933, as amended, or the Exchange Act. -36- The following graph compares the cumulative total stockholder return for Consensus, the Nasdaq Composite and an index of companies that Consensus has selected as its peer group in the cloud services for business space.
The following graph compares the cumulative total stockholder return for Consensus, the Nasdaq Composite and an index of companies that Consensus has selected as its peer group in the cloud services for business space. Consensus’ peer group index consists of Box, Inc. CommonVault Systems, Inc., TruBridge, Inc.
Under this program, the Company may purchase in the public market or in off-market transactions up to $100.0 million worth of the Company’s common stock through February 2025. The timing and amounts of purchases will be determined by the Company, depending on market conditions and other factors it deems relevant.
Under this program, the Company may purchase in the public market or in off-market transactions up to $100.0 million worth of the Company’s common stock through February 2025 which was subsequently extended through February 2028 (see Note 20 - Subsequent Events of the Notes to the Consolidated Financial Statements (Part II, Item 8).
Removed
Both NextGen Healthcare, Inc. and Tabula Rasa HealthCare, Inc. were removed because they went private during 2023. Consensus common stock has been listed on the Nasdaq under the symbol “CCSI” since October 8, 2021. Prior to that time, there was no public market for our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

68 edited+9 added−12 removed39 unchanged
Biggest changeThe increase in general and administrative expense for the year ended December 31, 2022 over the prior comparable period was primarily due to increased expenses related to operating as a standalone public company, included increases of $26.6 million in salary and benefits (inclusive of $15.7 million of share-based compensation) and $6.3 million in professional fees, partially offset by a $4.8 million reduction in bad debt expense and the absence of $11.5 million in non-recurring expenses related to the spin-off from Ziff Davis in 2021. -44- Share-Based Compensation The following table represents share-based compensation expense included in cost of revenues and operating expenses in the accompanying Consolidated Statements of Income for the years ended December 31, 2023, 2022 and 2021 (in thousands): Years ended December 31, 2023 2022 2021 Cost of revenues $ 1,400 $ 874 $ 72 Operating expenses: Sales and marketing 1,679 988 92 Research, development and engineering 379 746 (19) General and administrative 14,705 17,447 1,711 Continuing operations 18,163 20,055 1,856 Loss from discontinued operations, net of income tax — — 602 Total $ 18,163 $ 20,055 $ 2,458 Non-Operating Income and Expenses Interest expense .
Biggest changeShare-Based Compensation The following table represents share-based compensation expense included in cost of revenues and operating expenses in the accompanying Consolidated Statements of Income for the years ended December 31, 2024, 2023 and 2022 (in thousands): Years Ended December 31, 2024 2023 2022 Cost of revenues $ 2,138 $ 1,400 $ 874 Operating expenses: Sales and marketing 2,750 1,679 988 Research, development and engineering 622 379 746 General and administrative 11,254 14,705 17,447 Total $ 16,764 $ 18,163 $ 20,055 Non-Operating Income and Expenses Interest expense .
We believe ARPA provides investors an understanding of the average monthly revenues we recognize per account associated within the Consensus’ customer base.
We believe ARPA provides investors an understanding of the average monthly revenues we recognize per account associated within Consensus’ customer base.
See Note 2 - Basis of Presentation and Summary of Significant Accounting Policies of the notes to consolidated financial statements in Part II, Item 8 of this Form 10-K, which describes the significant accounting policies and methods used in the preparation of our consolidated financial statements.
See Note 2 - Basis of Presentation and Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K, which describes the significant accounting policies and methods used in the preparation of our consolidated financial statements.
See Note 3 - Revenues of the notes to consolidated financial statements in Part II, Item 8 of this Form 10-K.
See Note 3 - Revenues of the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
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”).
Debt Repurchase Program On November 9, 2023, the Board of Directors approved a debt repurchase program, pursuant to which Consensus may reduce, through redemptions, open market purchases, tender offers, privately negotiated purchases or other retirements, a combination of the outstanding principal balance of the 2026 and 2028 Senior Notes (“Debt Repurchase Program”).
The increase in cost of revenues for the year ended December 31, 2023 over the prior comparable period was primarily due to increases of $4.1 million in personnel-related expenses and $1.8 million in depreciation associated with platform development costs compared to the prior comparable period.
The increase in cost of revenues for the year ended December 31, 2023 over the prior comparable period was primarily due to increases of $4.1 million in personnel-related expenses and $1.8 million in depreciation associated with platform development costs.
The decrease in our annual effective income tax rate from 2022 to 2023 was primarily attributable to a decrease in tax expense relating to the lower amount of certain non-deductible expenses incurred in the year, such as stock based compensation, officer’s compensation, a decrease in the foreign income currently taxed in the U.S. and the impact of the change in the geographical mix of the income, partially offset by an increase in the reserves for uncertain tax positions.
The decrease in our annual effective income tax rate from 2022 to 2023 was primarily attributable to a decrease in tax expense relating to the lower amount of certain non-deductible expenses incurred in the year, such as share-based compensation, officer’s compensation, a decrease in the foreign income currently taxed in the U.S. and the impact of the change in the geographical mix of the income, partially offset by an increase in the reserves for uncertain tax positions.
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.
As a result, the number of -43- shares issued upon vesting for these awards is net of the statutory withholding requirements that the Company pays on behalf of its employees.
In assessing this valuation allowance, we review historical and future expected operating results and other factors to determine whether it is more likely than not that deferred tax assets are realizable. See Note 13 - Income Taxes of the notes to consolidated financial statements in Part II, Item 8 of this Form 10-K.
In assessing this valuation allowance, we review historical and future expected operating results and other factors to determine whether it is more likely than not that deferred tax assets are realizable. See Note 12 - Income Taxes of the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
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. Any gains or losses on extinguishment of debt are recognized in interest expense on the Consolidated Statements of Income.
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 are 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 Consolidated Statements of Income.
The following table sets forth information derived from our Statements of Income as a percentage of revenues for the years ended December 31, 2023, 2022 and 2021. This information should be read in conjunction with the accompanying financial statements and the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
The following table sets forth information derived from our Consolidated Statements of Income as a percentage of revenues for the years ended December 31, 2024, 2023 and 2022. This information should be read in conjunction with the accompanying financial statements and the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
We currently anticipate that our existing cash and cash equivalents and cash generated from operations will be sufficient to fund our anticipated needs for working capital, capital expenditures and stock repurchases, if any, for at least the next 12 months from the issuance of this Annual Report on Form 10-K 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 repurchases, if any, for at least the next 12 months from the issuance of this Annual Report on Form 10-K and the foreseeable future.
We continue to actively monitor the situation and will continue to adapt our business operations as necessary. -38- Key Performance Metrics We use the following metrics to generally assess the operational and financial performance of our business, including the growth of our business, the value provided by customers to our business and our customer retention that provide insights that contribute to certain of our business planning decisions.
We continue to actively monitor the situation and will continue to adapt our business operations as necessary. -35- Key Performance Metrics We use the following metrics to generally assess the operational and financial performance of our business, including the growth of our business, the value provided by customers to our business and our customer retention that provide insights that contribute to certain of our business planning decisions.
A significant change in the time spent on each project could have a material impact on the amount capitalized and related amortization expense in subsequent periods. See Note 7 - Property and Equipment of the notes to consolidated financial statements in Part II, Item 8 of this Form 10-K.
A significant change in the time spent on each project could have a material impact on the amount capitalized and related amortization expense in subsequent periods. See Note 6 - Property and Equipment of the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
Consensus received proceeds of $301.2 million, after deducting the initial purchasers’ discounts, commissions and offering expenses. The 2026 Senior Notes are presented as current portion of long-term debt and long-term debt, net of current portion, both of which are net -46- of deferred issuance costs, on the Consolidated Balance Sheets as of December 31, 2023 and 2022.
Consensus received proceeds of $301.2 million, after deducting the initial purchasers’ discounts, commissions and offering expenses. The 2026 Senior Notes are presented as current portion of long-term debt and long-term debt, net of current portion, both of which are net of deferred issuance costs, on the Consolidated Balance Sheets as of December 31, 2024 and 2023.
The 2028 Senior Notes are presented as current portion of long-term debt and long-term debt, net of current portion, both of which are net of deferred issuance costs, on the Consolidated Balance Sheets as of December 31, 2023 and 2022.
The 2028 Senior Notes are presented as current portion of long-term debt and long-term debt, net of current portion, both of which are net of deferred issuance costs, on the Consolidated Balance Sheets as of December 31, 2024 and 2023.
Recent Accounting Pronouncements See Note 2 - Basis of Presentation and Summary of Significant Accounting Policies, to our accompanying consolidated financial statements for a description of recent accounting pronouncements and our expectations of their impact on our consolidated financial position and results of operations. -41- Results of Operations Years Ended December 31, 2023, 2022 and 2021 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.
Recent Accounting Pronouncements See Note 2 - Basis of Presentation and Summary of Significant Accounting Policies, to our accompanying consolidated financial statements for a description of recent accounting pronouncements and our expectations of their impact on our consolidated financial position and results of operations. -38- Results of Operations Years Ended December 31, 2024, 2023 and 2022 The main strategic focus of our offerings is to enable our customers to securely and cooperatively access, exchange and use information across organizational, regional and national boundaries.
Net cash provided by operating activities was $114.1 million, $83.1 million and $233.7 million for the years ended December 31, 2023, 2022 and 2021, 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, employee compensation and lease payments for our offices.
Net cash provided by operating activities was $121.7 million, $114.1 million and $83.1 million for the years ended December 31, 2024, 2023 and 2022, 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, employee compensation and lease payments for our offices.
(2) Represents a monthly ARPA for the year calculated as follows. Monthly ARPA on an annual basis is calculated by dividing revenue for the year by the average customer base for the applicable four quarters and dividing that amount by 12 months.
(2) Represents a monthly ARPA for the year calculated as follows: monthly ARPA on an annual basis is calculated by dividing revenue for the year by the average customer base for the applicable period and dividing that amount by 12 months.
The decrease in research, development and engineering costs for the year ended December 31, 2023 over the prior comparable period was primarily attributable to increased capitalization of personnel-related expenses due to our continued focus on internally developing our platform, products and solutions as well as a reduction in external development costs.
Research, development and engineering costs for the year ended December 31, 2024 remained consistent with the prior year. -40- The decrease in research, development and engineering costs for the year ended December 31, 2023 over the prior comparable period was primarily attributable to increased capitalization of personnel-related expenses due to our continued focus on internally developing our platform, products and solutions as well as a reduction in external development costs.
The Company has no federal net operating loss or capital loss limitation carryforwards as of December 31, 2023 or 2022.
The Company has no federal net operating loss or capital loss limitation carryforwards as of December 31, 2024 or 2023.
As of December 31, 2023, no amount has been drawn down on the Credit Facility. 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 December 31, 2024, no amount had been drawn down on the Credit Facility. Material Cash Requirements Our long-term contractual obligations generally include our debt and related interest payments, noncancellable operating leases as well as other commitments.
Our effective tax rate is based on pre-tax income, statutory tax rates, tax regulations (including those related to transfer pricing) and different tax rates in the various jurisdictions in which we operate. The tax bases of our assets and liabilities reflect our best estimate of the tax benefits and costs we expect to realize.
Our effective tax rate is based on pre-tax income, statutory tax rates, tax regulations and different tax rates in the various jurisdictions in which we operate. The tax bases of our assets and liabilities reflect our best estimate of the tax benefits and costs we expect to realize.
On October 7, 2021, Consensus issued $500 million of 6.5% senior notes due in 2028 (the “2028 Senior Notes”), in a private placement offering exempt from the registration requirements of the Securities Act of 1933. In exchange for the equity interest in J2 Cloud Services, LLC, Consensus issued the 2028 Senior Notes to Ziff Davis.
On October 7, 2021, Consensus issued $500 million of 6.5% senior notes due in 2028 (the “2028 Senior Notes”), in a private placement offering exempt from the registration requirements of the Securities Act of 1933. In exchange for the equity -42- interest in the Company, Consensus issued the 2028 Senior Notes to Ziff Davis.
As of December 31, 2023, cash and cash equivalents held within domestic and foreign jurisdictions were $14.5 million and $74.2 million, respectively. On October 7, 2021, the Company issued $305 million of 6.0% senior notes due in 2026 (the “2026 Senior Notes”), in a private placement offering exempt from the registration requirements of the Securities Act of 1933.
As of December 31, 2024, cash and cash equivalents held within domestic and foreign jurisdictions were $27.6 million and $6.0 million, respectively. On October 7, 2021, the Company issued $305 million of 6.0% senior notes due in 2026 (the “2026 Senior Notes”), in a private placement offering exempt from the registration requirements of the Securities Act of 1933.
Net cash used in financing activities was $81.7 million, $10.6 million and $247.8 million for the years ended December 31, 2023, 2022 and 2021, respectively. Net cash used in financing activities in 2023 primarily relates to the repurchases of debt and common stock.
Net cash used in financing activities was $138.6 million, $81.7 million and $10.6 million for the years ended December 31, 2024, 2023 and 2022, respectively. Net cash used in financing activities in 2024 primarily relates to the repurchases of debt. Net cash used in financing activities in 2023 primarily relates to the repurchases of debt and common stock.
When necessary, we establish valuation allowances to reduce our deferred tax assets to an amount that will more likely than not be realized. As of December 31, 2023 and 2022, the Company has interest expense limitation carryovers of $30.4 million and $23.4 million, respectively, which last indefinitely.
When necessary, we establish valuation allowances to reduce our deferred tax assets to an amount that will more likely than not be realized. As of December 31, 2024 and 2023, the Company has interest expense limitation carryforwards of $32.9 million and $30.4 million, respectively, which last indefinitely.
The Company entered into Rule 10b-18 and Rule 10b5-1 trading plans and during the years ended December 31, 2023 and 2022, the Company repurchased 839,548 and 189,114 shares, respectively, at an aggregate cost of $23.7 million (inclusive of excise tax of $0.2 million) and $7.6 million, respectively, under this program.
The Company entered into Rule 10b-18 and Rule 10b5-1 trading plans and during the years ended December 31, 2024 and 2023, the Company repurchased 57,063 and 839,548 shares, respectively, at an aggregate cost of $1.0 million and $23.7 million (inclusive of excise tax of $0.2 million), respectively, under this program.
Operating Expenses Sales and Marketing (in thousands, except percentages) 2023 2022 2021 Percentage Change 2023 versus 2022 Percentage Change 2022 versus 2021 Sales and marketing $ 65,084 $ 64,413 $ 53,648 1% 20% As a percent of revenues 18% 18% 15% Our sales and marketing costs consist primarily of internet-based advertising, personnel costs and other business development-related expenses.
Operating Expenses Sales and Marketing (in thousands, except percentages) 2024 2023 2022 Percentage Change 2024 versus 2023 Percentage Change 2023 versus 2022 Sales and marketing $ 51,065 $ 65,084 $ 64,413 (22)% 1% As a percent of revenues 15 % 18 % 18 % Our sales and marketing costs consist primarily of personnel costs, internet-based advertising and other business development-related expenses.
General and Administrative (in thousands, except percentages) 2023 2022 2021 Percentage Change 2023 versus 2022 Percentage Change 2022 versus 2021 General and administrative $ 74,203 $ 74,122 $ 58,228 —% 27% As a percent of revenues 20% 20% 17% Our general and administrative costs consist primarily of personnel-related expenses (inclusive of share-based compensation), professional fees, depreciation and amortization, bad debt expense and non-income related tax expenses.
General and Administrative (in thousands, except percentages) 2024 2023 2022 Percentage Change 2024 versus 2023 Percentage Change 2023 versus 2022 General and administrative $ 72,546 $ 74,203 $ 74,122 (2)% —% As a percent of revenues 21 % 20 % 20 % Our general and administrative costs consist primarily of personnel-related expenses (inclusive of share-based compensation), professional fees, depreciation and amortization, bad debt expense and non-income related tax expenses.
As of December 31, 2023, we had outstanding $742.4 million in aggregate principal amount of indebtedness, total minimum lease payments of $18.9 million and a liability for uncertain tax positions of $9.7 million (see Note 9 - Long-Term Debt, Note 10 - Leases and Note 13 - Income Taxes of the notes to the consolidated financial statements in Part II, Item 8 of this Form 10-K, respectively).
As of December 31, 2024, we had outstanding $598.1 million in aggregate principal amount of indebtedness, total minimum lease payments of $17.0 million and a liability for uncertain tax positions of $13.2 million (see Note 8 - Long-Term Debt, Note 9 - Leases and Note 12 - Income Taxes of the Notes to the Consolidated financial statements in Part II, Item 8 of this Form 10-K, respectively).
The measurement of share-based compensation expense is based on several criteria including, but not limited to, the valuation model used and associated input factors, such as expected term of the award, stock price volatility, risk free interest rate, dividend rate and forfeiture rate. These inputs are subjective and are determined using management’s judgment.
The measurement of share-based compensation expense is based on several criteria including, but not limited to, the valuation model used and associated input factors, such as the stock price on the date of grant, expected term of the award, stock price volatility, risk free interest rate, dividend rate and forfeiture rate.
This measure is calculated monthly and expressed as an average over the applicable period. -39- Critical Accounting Policies and Estimates We prepare our consolidated financial statements and related disclosures in accordance with U.S. generally accepted accounting principles (“GAAP”) and our discussion and analysis of our financial condition and operating results requires us to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes.
The period measured is annual and expressed as a monthly churn rate over the annual period. -36- Critical Accounting Policies and Estimates We prepare our consolidated financial statements and related disclosures in accordance with U.S. generally accepted accounting principles (“GAAP”) and our discussion and analysis of our financial condition and operating results requires us to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes.
Net cash used in investing activities in 2023 included capital expenditures associated with the purchase of property and equipment (including capitalized software development costs) and cash paid for investments. Net cash used in investing activities in 2022 was primarily comprised of capital expenditures associated with the purchase of property and equipment (including capitalized software development costs) and business acquisitions.
Net cash used in investing activities in 2023 included capital expenditures, primarily capitalized software development costs, and cash paid for investments. Net cash used in investing activities in 2022 was primarily comprised of capital expenditures, primarily capitalized software development costs and business acquisitions.
We believe that our most critical accounting policies are those related to revenue recognition, internal-use software development costs, share-based compensation expense, income taxes, tax contingencies and impairment or disposal of long-lived and intangible assets.
We believe that our most critical accounting policies are those related to revenue recognition, internal-use software development costs, share-based compensation expense, income taxes and tax contingencies.
Significant judgment is required in evaluating our tax positions and determining our provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. We establish reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due.
During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. We establish reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due.
The decrease in 2023 from 2022 is primarily due to the partial extinguishment of debt, resulting in a gain of $4.8 million, as well as an increase in capitalized interest of $1.2 million.
The decrease in 2023 from 2022 is primarily due to the partial extinguishment of debt in 2023, resulting in a gain of $4.8 million, as well as an increase in capitalized interest of $1.2 million. Interest income . Our interest income is generated from interest earned on cash and cash equivalents.
Years ended December 31, 2023 2022 2021 Revenues 100% 100% 100% Cost of revenues 19 17 16 Gross profit 81 83 84 Operating expenses: Sales and marketing 18 18 15 Research, development and engineering 2 3 2 General and administrative 20 20 17 Total operating expenses 40 41 34 Income from operations 41 42 50 Interest expense (13) (14) (4) Interest income 1 — — Other (expense) income, net (1) — — Income before income taxes 28 28 46 Income tax expense 7 7 11 Income from continuing operations 21 21 35 Loss from discontinued operations, net of income tax — — (3) Net income 21% 21% 32% Revenues (in thousands, except percentages) 2023 2022 2021 Percentage Change 2023 versus 2022 Percentage Change 2022 versus 2021 Revenues $ 362,562 $ 362,422 $ 352,664 —% 3% Consensus revenues primarily consist of revenues from “fixed” customer subscription revenues and “variable” revenues generated from actual usage of our services.
Years Ended December 31, 2024 2023 2022 Revenues 100% 100% 100% Cost of revenues 20 19 17 Gross profit 80 81 83 Operating expenses: Sales and marketing 15 18 18 Research, development and engineering 2 2 3 General and administrative 21 20 20 Total operating expenses 38 40 41 Income from operations 42 41 42 Interest expense (10) (13) (14) Interest income 1 1 — Other income (expense), net 1 (1) — Income before income taxes 34 28 28 Income tax expense 9 7 7 Net income 25% 21% 21% Revenues (in thousands, except percentages) 2024 2023 2022 Percentage Change 2024 versus 2023 Percentage Change 2023 versus 2022 Revenues $ 350,382 $ 362,562 $ 362,422 (3)% —% Consensus revenues primarily consist of revenues from “fixed” customer subscription revenues and “variable” revenues generated from actual usage of our services.
Our other (expense) income, net is generated primarily from foreign currency and miscellaneous items. Other (expense) income, net was $(2.4) million, $(1.6) million and $0.2 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Interest income was not material for the year ended December 31, 2022. -41- Other income (expense), net . Our other income (expense), net is generated primarily from foreign currency and miscellaneous items. Other income (expense), net was $4.3 million, $(2.4) million and $(1.6) million for the years ended December 31, 2024, 2023 and 2022, respectively.
The increase in our net cash provided by operating activities in 2023 compared to 2022 was primarily attributable to increased income after excluding noncash items, partially offset by a net decrease in our working capital accounts.
The increase in our net cash provided by operating activities in 2024 compared to 2023 was primarily attributable to increased income after excluding noncash items, partially offset by an increase in cash outflows resulting from changes in our working capital accounts.
The excise tax is assessed at 1% of the fair market value of net stock repurchases after December 31, 2022. -47- 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.
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.
The $0.1 million increase is primarily due to increases in the following: $4.5 million in bad debt expense, $1.7 million in professional fees and $1.3 million in computer related equipment costs, partially offset by a decrease in non-income related tax expenses of $7.4 million.
General and administrative expense remained consistent for the year ended December 31, 2023 over the prior comparable period. The increase is primarily due to increases in the following: $4.5 million in bad debt expense, $1.7 million in professional fees and $1.3 million in computer-related equipment costs, partially offset by a decrease in non-income related tax expenses of $7.4 million.
The following table sets forth certain key performance metrics for our continuing operations for the years ended December 31, 2023, 2022 and 2021 (in thousands, except for percentages): Years ended December 31, 2023 2022 2021 Revenue ($ in thousands) Corporate $ 199,621 $ 192,195 $ 169,732 SoHo 162,916 170,199 182,390 Total 362,537 362,394 352,122 Other revenues 25 28 542 Consolidated $ 362,562 $ 362,422 $ 352,664 Average Revenue per Customer Account (“ARPA”) (1)(2) Corporate $ 315.51 $ 331.77 $ 308.42 SoHo $ 15.31 $ 14.32 $ 14.40 Consolidated $ 32.16 $ 29.07 $ 26.65 Customer Accounts (in thousands) (1) Corporate 54 52 45 SoHo 831 942 1,039 Consolidated 885 994 1,084 Paid Adds (in thousands) (3) Corporate 12 15 13 SoHo 274 364 411 Consolidated 286 379 424 Monthly Churn % (4) Corporate 1.49 % 1.78 % 2.68 % SoHo 3.54 % 3.70 % 3.37 % Consolidated 3.43 % 3.61 % 3.34 % (1) Consensus customers are defined as paying Corporate and SoHo customer accounts.
The following table sets forth certain key performance metrics for our operations for the years ended December 31, 2024, 2023 and 2022 (in thousands, except for percentages and Average Revenue per Customer Account): Years Ended December 31, 2024 2023 2022 Revenue Corporate $ 209,112 $ 199,621 $ 192,195 SoHo 141,258 162,916 170,199 Total 350,370 362,537 362,394 Other revenues 12 25 28 Consolidated $ 350,382 $ 362,562 $ 362,422 Average Revenue per Customer Account (“ARPA”) (1)(2) Corporate $ 310.67 $ 315.51 $ 331.77 SoHo $ 14.92 $ 15.31 $ 14.32 Consolidated $ 34.56 $ 32.16 $ 29.07 Customer Accounts (1) Corporate 59 54 52 SoHo 747 831 942 Consolidated 806 885 994 Paid Adds (3) Corporate 18 12 15 SoHo 247 274 364 Consolidated 265 286 379 Monthly Churn % (4) Corporate 2.36 % 1.49 % 1.78 % SoHo 3.40 % 3.54 % 3.70 % Consolidated 3.33 % 3.43 % 3.61 % (1) Consensus customers are defined as paying Corporate and SoHo customer accounts.
Our interest expense is due to outstanding debt and is reduced by any capitalized interest. Interest expense was $45.4 million, $51.4 million and $14.3 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Our interest expense is due to outstanding debt and is offset by any extinguishment gain or losses and capitalized interest. Interest expense was $34.0 million, $45.4 million and $51.4 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Net cash used in financing activities in 2022 included the repurchase of common stock and shares withheld to cover employee income taxes. Net cash used in financing activities in 2021 included distributions to the Former Parent, partially offset cash inflows related to the issuance of debt in 2021.
Net cash used in financing activities in 2022 included the repurchase of common stock and shares withheld to cover employee income taxes.
As of December 31, 2023 and 2022, the Company has $1.3 million and $0.5 million, respectively, of foreign tax credit carryforwards that begin to expire in 2031, and $1.8 million and $1.0 million, respectively, of state research and development tax credits carryforwards that can be carried over indefinitely. -45- Income tax expense amounted to $25.9 million, $26.2 million and $39.9 million for the years ended December 31, 2023, 2022 and 2021, respectively.
As of December 31, 2024 and 2023, the Company has $1.7 million and $1.3 million, respectively, of foreign tax credit carryforwards that begin to expire in 2031, and $1.7 million and $1.8 million, respectively, of state research and development tax credits carryforwards that can be carried over indefinitely.
(“Summit”), partially offset by a $12.2 million decline in SoHo and $0.4 million in other revenue. -42- Cost of Revenues (in thousands, except percentages) 2023 2022 2021 Percentage Change 2023 versus 2022 Percentage Change 2022 versus 2021 Cost of revenues $ 68,319 $ 61,951 $ 58,000 10% 7% As a percent of revenues 19% 17% 16% 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.
Total revenues increased $0.1 million as a result of an increase in Corporate revenues of $7.4 million due to organic growth in customer usage and new customer acquisitions, partially offset by a $7.3 million decline in SoHo revenues. -39- Cost of Revenues (in thousands, except percentages) 2024 2023 2022 Percentage Change 2024 versus 2023 Percentage Change 2023 versus 2022 Cost of revenues $ 69,688 $ 68,319 $ 61,951 2% 10% As a percent of revenues 20 % 19 % 17 % 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.
During the years ended December 31, 2023, 2022 and 2021 the Company withheld shares on its vested restricted stock units and restricted stock awards relating to its share-based compensation plans of 61,878, 71,509 and zero shares, respectively.
During the years ended December 31, 2024, 2023 and 2022 the Company withheld shares on its vested restricted stock units and restricted stock awards relating to its share-based compensation plans of 122,406, 61,878 and 71,509 shares, respectively. Cash Flows Our primary sources of liquidity are cash flows generated from operations, together with cash and cash equivalents.
The Company estimates the expected term based upon the contractual term of the award. -40- See Note 15 - Equity Incentive and Employee Stock Purchase Plan of the notes to consolidated financial statements in Part II, Item 8 of this Form 10-K. Income Taxes Our income is subject to taxation in both the U.S. and numerous foreign jurisdictions.
See Note 14 - Equity Incentive and Employee Stock Purchase Plan of the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K. Income Taxes Our income is subject to taxation in the U.S. and numerous foreign jurisdictions. Significant judgment is required in evaluating our tax positions and determining our provision for income taxes.
Our effective tax rates for the year ended December 31, 2023, 2022 and 2021 were 25.1%, 26.5% and 24.8%, respectively.
Income tax expense amounted to $32.8 million, $25.9 million and $26.2 million for the years ended December 31, 2024, 2023 and 2022, respectively. Our effective tax rates for the year ended December 31, 2024, 2023 and 2022 were 26.8%, 25.1% and 26.5%, respectively.
Revenues remained consistent for the year ended December 31, 2023 over the prior comparable period. Total revenues increased by $0.1 million as a result of an increase in corporate revenues of $7.4 million due to organic growth in customer usage and new customer acquisitions, partially offset by a $7.3 million decline in SoHo.
Revenues decreased by $12.2 million for the year ended December 31, 2024 compared to the prior comparable period. The reduction is the result of a $21.7 million decline in SoHo revenues, partially offset by an increase in Corporate revenues of $9.5 million due to organic growth in customer usage and new customer acquisitions.
General and administrative expense remained consistent for the year ended December 31, 2023 over the prior comparable period.
Revenues remained consistent for the year ended December 31, 2023 compared to the prior comparable period.
If differences arise between the assumptions used in determining share-based compensation expense and the actual factors, which become known over time, we may change the input factors used in determining future share-based compensation expense. Any such changes could materially impact our results of operations in the period in which the changes are made and in periods thereafter.
These inputs are subjective and are determined using management’s judgment. If differences arise between the assumptions used in determining share-based compensation expense and the actual factors, which become known over time, we may change the input factors -37- used in determining future share-based compensation expense.
Cumulatively as of December 31, 2023, 1,028,662 shares have been repurchased at an aggregate cost of $31.3 million (inclusive of excise tax of $0.2 million).
Cumulatively as of December 31, 2024, 1,085,725 shares have been repurchased at an aggregate cost of $32.3 million (inclusive of excise tax of $0.2 million). The excise tax is assessed at 1% of the fair market value of net stock repurchases after December 31, 2022.
The global economy continues to be impacted by macroeconomic uncertainty and volatility resulting from recent global conflicts, inflationary pressures, supply chain disruptions and challenges as well as labor market pressures. During fiscal 2022 and through 2023, we have observed an increasingly competitive labor market.
The global economy continues to be impacted by macroeconomic uncertainty and volatility resulting from recent global conflicts, inflationary pressures, higher interest rates, supply chain disruptions and challenges as well as labor market pressures, all of which could adversely impact the efficiency of our operations.
Consensus is well positioned to capitalize on advancements in how people and businesses share private documents and information. Its mission is to democratize secure information interchange across technologies and industries, and solve the healthcare interoperability challenge. Consensus’s communication and interoperability solutions enable its customers to securely and cooperatively access, exchange and use information across organizational, regional and national boundaries.
Beginning as an online fax company over two decades ago, Consensus has evolved into a leading global provider of enterprise secure communication solutions. Consensus is well positioned to capitalize on advancements in how people and businesses share private documents and information. Its mission is to democratize secure information interchange across technologies and industries and solve the healthcare interoperability challenge.
As of December 31, 2023 the Company has retired $62.6 million in principal of its senior notes under this program. Common Stock Repurchase Program On March 1, 2022, the Company’s Board of Directors approved a share buyback program.
Common Stock Repurchase Program On March 1, 2022, the Company’s Board of Directors approved a share buyback program.
Our prepaid tax payments were $3.7 million and $8.0 million at December 31, 2023 and 2022, respectively. Net cash used in investing activities was $40.5 million, $43.3 million and $42.5 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Net cash used in investing activities was $33.4 million, $40.5 million and $43.3 million for the years ended December 31, 2024, 2023 and 2022, respectively. Net cash used in investing activities in 2024 included capital expenditures, primarily capitalized software development costs.
The decrease in cash and cash equivalents resulted primarily from cash used to repurchase our debt, an increase in repurchases of our common stock in 2023, as well as continued investment in our internally developed software, partially offset by an increase in cash provided by operations.
Liquidity and Capital Resources Cash and Cash Equivalents At December 31, 2024, we had cash and cash equivalents of $33.5 million compared to $88.7 million at December 31, 2023. The decrease in cash and cash equivalents resulted primarily from cash used to repurchase our debt, capitalized expenditures and common stock repurchases, partially offset by cash provided by operations.
The decrease in our net cash provided by operating activities in 2022 compared to 2021 was primarily attributable to decreased income after excluding noncash items, a decrease in other long-term liabilities in 2022 compared to an increase in 2021, and an increase in accounts receivable.
The increase in our net cash provided by operating activities in 2023 compared to 2022 was primarily attributable to increased income after excluding noncash items, partially offset by a net decrease in our working capital accounts. Our prepaid tax payments were $2.1 million and $3.7 million at December 31, 2024 and 2023, respectively.
The increase in sales and marketing expenses of $10.8 million for the year ended December 31, 2022 over the prior comparable period was primarily due to an increase in third party advertising of $4.7 million, primarily in SoHo, as well as an increase of $5.0 million in personnel expenses due to continued investment in the corporate sales team. -43- Research, Development and Engineering (in thousands, except percentages) 2023 2022 2021 Percentage Change 2023 versus 2022 Percentage Change 2022 versus 2021 Research, development and engineering $ 7,727 $ 10,018 $ 7,652 (23)% 31% As a percent of revenues 2% 3% 2% Our research, development and engineering costs consist primarily of personnel-related expenses.
Research, Development and Engineering (in thousands, except percentages) 2024 2023 2022 Percentage Change 2024 versus 2023 Percentage Change 2023 versus 2022 Research, development and engineering $ 7,683 $ 7,727 $ 10,018 (1)% (23)% As a percent of revenues 2 % 2 % 3 % Our research, development and engineering costs consist primarily of personnel-related expenses.
(4) Monthly churn is defined as Consensus paying customer accounts that cancelled its services during the period divided by the average number of customers over the period.
(4) Monthly churn represents paid monthly SoHo and Corporate customer accounts that were cancelled during each month of the annual period divided by the average number of customers during each month of the same annual period, including the paid adds.
Under this program, the Company may purchase, in the public market, or in off-market transactions, up to $100.0 million of the Company’s common stock through February 2025. The timing and amounts of purchases will be determined by the Company, depending on market conditions and other factors it deems relevant.
The timing and amounts of purchases are determined by the Company, depending on market conditions and other factors it deems relevant.
We defer the portions of monthly, quarterly, semi-annually and annually recurring subscription and usage-based fees collected in advance of the satisfaction of performance obligations and recognize them in the period earned. Along with our numerous proprietary solutions, we also generate revenues by reselling various third-party solutions.
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. Along with our numerous proprietary solutions, we also generate revenues by reselling various third-party solutions.
Senior management has reviewed these critical accounting policies and related disclosures with the Audit Committee of the Company’s Board of Directors. Revenue Recognition Our revenues substantially consist of monthly recurring subscription and usage-based fees, a significant portion of which are paid in advance by credit card.
Senior management has reviewed these critical accounting policies and related disclosures with the Audit Committee of the Company’s Board of Directors. Revenue Recognition We earn revenue from contracts with customers, primarily through the provision of cloud-based communication and digital signature solutions that allow customers to access our software without taking possession.
Consensus serves approximately 900 thousand customers of all sizes, from enterprises to individuals, across approximately 47 countries and multiple industry verticals including healthcare, government, financial services, law and education. Beginning as an online fax company over two decades ago, Consensus has evolved into a leading global provider of enterprise secure communication solutions.
Consensus serves approximately 800 thousand customers of all sizes, from enterprises to individuals, across approximately 46 countries and multiple industry verticals including healthcare, government, financial services, law and education. Our top 10 customers represent approximately 8% of total revenues and approximately 74% of our Small office home office (“SoHo”) customer accounts are older than 2 years.
Interest income was $3.7 million for the year ended December 31, 2023. Interest income was not material for the years ended December 31, 2022 and 2021. Interest income was higher compared to the prior comparable periods due to investments in money market funds starting in 2023. Other (expense) income, net .
Interest income was $2.5 million and $3.7 million for the years ended December 31, 2024 and 2023, respectively. The decrease in 2024 from 2023 was primarily attributable to a lower average cash and cash equivalents balance primarily due to the repurchase of our debt, which resulted in lower money market investments throughout 2024.
The increase in our annual effective income tax rate from 2021 to 2022 was primarily attributable to an increase in tax expense relating to certain non-deductible expenses incurred in the year, such as stock based compensation, officer’s compensation, an increase in the reserves for uncertain tax positions and foreign income currently taxed in the U.S., partially offset by increased tax credits and change in the geographical mix of the income.
The increase in our annual effective income tax rate from 2023 to 2024 was primarily attributable to an increase in tax expense relating to higher state taxes due to intercompany dividends received from controlled foreign subsidiaries during the year, lower research and development credits, a higher valuation allowance on foreign tax credits and the impact of the change in the geographical mix of the income.
Removed
Increased employee turnover, changes in the availability of our employees and labor shortages generally have resulted in, and could continue to result in, increased costs, and could adversely impact the efficiency of our operations.
Added
Consensus’s communication and interoperability solutions enable its customers to securely and cooperatively access, exchange and use information across organizational, regional and national boundaries.
Removed
Revenues increased $9.8 million for the year ended December 31, 2022 over the prior comparable period. Total revenues increased primarily due to organic growth in customer usage and new customer acquisitions in corporate revenues of $15.6 million, as well as acquired revenue of $6.8 million from our acquisition of Summit Healthcare Services, Inc.
Added
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.
Removed
The increase in cost of revenues for the year ended December 31, 2022 over the prior comparable period was primarily due to an increase in revenues, compensation for additional acquisition and organic headcount and higher software licensing and infrastructure / database hosting costs as a result of moving our data storage from physical storage into the cloud.
Added
Any such changes could materially impact our results of operations in the period in which the changes are made and in periods thereafter. The Company estimates the expected term based upon the contractual term of the award.
Removed
The increase in research, development and engineering costs for the year ended December 31, 2022 over the prior comparable period was primarily attributable to our continued focus on developing our platform, products and solutions to primarily support corporate revenue growth as well as additional personnel from our Summit acquisition.
Added
The increase in cost of revenues for the year ended December 31, 2024 over the prior comparable period was primarily due to an increase of $3.1 million in depreciation associated with platform development costs, partially offset by decreases of $0.7 million in online processing fees, $0.4 million in data transmission costs and $0.2 million in personnel-related expenses.
Removed
Interest expense for the year ended December 31, 2022 compared to 2021 increased primarily due to twelve months of interest associated with the 2026 and 2028 Senior Notes compared to three months in 2021. Interest income . Our interest income is generated from interest earned on cash and cash equivalents.
Added
The decrease in sales and marketing expenses of $14.0 million for the year ended December 31, 2024 over the prior comparable period was primarily due to a reduction in third-party advertising spend of $14.3 million, predominantly in SoHo.
Removed
Quarterly Results of Operations (Unaudited) The following tables contain selected unaudited Statements of Operation information for each quarter of 2022 (in thousands, except share and per share data). The Company believes that the following information reflects all normal recurring adjustments necessary for a fair presentation of the information for the period presented.
Added
The decrease in general and administrative expense of $1.7 million for the year ended December 31, 2024 over the prior comparable period was primarily due to decreases of $2.5 million in professional fees and $0.8 million in bad debt expense, partially offset by an increase of $1.7 million in computer-related equipment costs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOur return on these investments is subject to interest rate fluctuations. -48- As of December 31, 2023 and 2022, we had cash and cash equivalent investments, primarily in money market funds and cash held in foreign and domestic bank accounts, of $88.7 million and $94.2 million, respectively.
Biggest changeAs of December 31, 2024 and 2023, we had cash and cash equivalent investments, primarily in money market funds and cash held in foreign and domestic bank accounts, of $33.5 million and $88.7 million, respectively. We do not have interest rate risk on our outstanding long-term debt as these arrangements have fixed interest rates.
To date, we have not entered into interest rate hedging transactions to control or minimize certain of these risks. Foreign Currency Risk We conduct business in certain foreign markets, primarily in Canada, Australia, the European Union and Japan.
To date, we have not entered into interest rate hedging transactions to control or minimize certain of these risks. -44- Foreign Currency Risk We conduct business in certain foreign markets, primarily in Canada, Australia, the European Union and Japan.
Readers should carefully review the risk factors described in this document as well as in other documents we file from time to time with the SEC, including the Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K filed or to be filed by us in 2024.
Readers should carefully review the risk factors described in this document as well as in other documents we file from time to time with the SEC, including the Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K filed or to be filed by us in 2025.
For the years ended December 31, 2023, 2022 and 2021, foreign exchange (losses) gains amounted to $(2.4) million, $(1.6) million and $0.2 million, respectively. The change in foreign exchange in all comparable periods was primarily attributable to the translation of certain intra-entity balances in foreign currencies.
For the years ended December 31, 2024, 2023 and 2022, foreign exchange gain (loss) amounted to $4.3 million, $(2.4) million and $(1.6) million, respectively. The change in foreign exchange gain (loss) in all comparable periods was primarily attributable to the translation of certain intra-entity balances in foreign currencies.
Interest Rate Risk Our cash and cash equivalents are not subject to significant interest rate risk due to the short maturities of these instruments. As of December 31, 2023, the carrying value of our cash and cash equivalents approximated fair value.
Interest Rate Risk Our cash and cash equivalents are not subject to significant interest rate risk due to the short maturities of these instruments. As of December 31, 2024, the carrying value of our cash and cash equivalents approximated fair value. Our return on these investments is subject to interest rate fluctuations.
We do not have interest rate risk on our outstanding long-term debt as these arrangements have fixed interest rates. We cannot ensure that future interest rate movements will not have a material adverse effect on our future business, prospects, financial condition, operating results and cash flows.
We cannot ensure that future interest rate movements will not have a material adverse effect on our future business, prospects, financial condition, operating results and cash flows.
Cumulative translation gains (losses) included in other comprehensive income for the years ended December 31, 2023, 2022 and 2021, were $5.9 million, $(2.3) million and $(14.4) million, respectively. -49-
Cumulative translation (loss) gain included in other comprehensive income for the years ended December 31, 2024, 2023 and 2022 was $(9.9) million, $5.9 million and $(2.3) million, respectively. -45-

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