Consensus Cloud Solutions (CCSI 4.22%), a company specializing in secure digital cloud fax and healthcare data interoperability, released its second quarter results for fiscal 2025 on August 7, 2025. GAAP revenue was $87.7 million, outpacing the analyst estimate of $86.53 million (GAAP). Adjusted earnings per diluted share (non-GAAP) were $1.46, ahead of the $1.34 non-GAAP estimate. The quarter marked a return to consolidated revenue growth, as GAAP revenue increased to $87.7 million from $87.5 million a year earlier, as strength in the Corporate segment offset planned declines in the SoHo business. Net income (GAAP) decreased from the prior year, but Free cash flow (non-GAAP) surged, and management increased its adjusted earnings per diluted share guidance for FY2025. Overall, the quarter reflected progress on core growth areas, but also highlighted areas for continued attention such as customer churn and margin pressure.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| Adjusted Earnings per Diluted Share (Non-GAAP) | $1.46 | $1.34 | $1.43 | 2.1% |
| Revenue | $87.7 million | $86.53 million | $87.5 million | 0.3% |
| Net Income | $20.8 million | $23.9 million | (13.0%) | |
| Adjusted EBITDA | $48.1 million | $49.1 million | (2.1%) | |
| Free Cash Flow | $20.3 million | $15.8 million | 28.5% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Strategic Focus
Consensus Cloud Solutions delivers cloud-based faxing and healthcare data interoperability tools to businesses around the world. Its core offering is cloud fax, allowing secure and compliant document transfer, and it has expanded into healthcare data exchange with products like Unite and Conductor. Customers use its services for secure transmissions in sectors where privacy and data compliance are essential, notably in healthcare, legal, and finance.
The company’s strategy centers on growth in healthcare interoperability, a strong recurring revenue model, product innovation, and a diverse customer base that includes both small offices and large enterprises. In recent quarters, its main areas of focus have been: driving new customer acquisition in the Corporate segment, expanding advanced solutions featuring artificial intelligence (such as Clarity for data extraction), and maintaining steady cash flow while managing costs in the SoHo (Small Office/Home Office) channel.
Performance and Developments During the Quarter
The quarter’s results were strongest in the Corporate segment, where revenue reached $55.3 million, rising 6.9% year over year. The segment added eight new paid accounts, double the number added in the same period last year. However, average revenue per account (ARPA) in this division declined to $301.29 from $310.18 compared to a year ago, indicating account growth among customers with lower spending. Churn also rose to 2.86% from 2.29% a year earlier, highlighting increased customer turnover. Growth in the Corporate segment was driven by stronger usage and new customer wins.
The SoHo segment continued to decline as planned, producing revenue of $32.414 million, compared to $32.849 million in the previous quarter and $36.754 million a year earlier. The number of SoHo customers fell to 682,000 from 760,000 a year earlier, though Churn in this segment also increased to 3.84%. Management has been redirecting marketing and investment away from SoHo to prioritize more profitable corporate customers. The intentional contraction reflects a shift in business mix toward customers who are more likely to adopt advanced services or migrate to Corporate offerings.
Profitability metrics were mixed. Net income fell 13.0% year over year, mainly due to changes in foreign exchange gains and losses rather than operations. Adjusted net income (excluding certain one-off costs) rose 3.2%, helped by lower interest expenses as the company reduced its debt load. Adjusted EBITDA, a measure of cash earnings before interest and non-cash expenses, was $48.1 million—a decrease of 2.1%—as rising sales and personnel costs offset revenue growth. Despite these pressures, Free cash flow (non-GAAP) increased by 28.7%, driven by more efficient working capital management. At quarter end, cash and equivalents stood at $57.9 million.
From a capital allocation standpoint, The company bought back both debt and equity, repurchasing $6.0 million in debt and $12.4 million in stock. In July, after the close of the quarter, it put in place a new $225 million credit facility to be used, in part, to retire the 6% senior notes due October 2026. Long-term debt was $578 million as of June 30, 2025.
Healthcare-related products remain central to future growth. The company referenced strong usage from the Department of Veterans Affairs. Complementing this strength, there was increasing adoption and broader usage of advanced solutions like Unite. Cloud fax products made up more than 90% of revenues in the previous quarter. Management described increased “adoption and broader usage” of these offerings but did not break out specific product-level sales figures for the quarter.
Though management noted ongoing modest investments in product innovation and minority investments in partner companies related to advanced product development, the company continued to shift marketing spend and hiring to prioritize higher-return activities.
Looking Ahead: Guidance and Investor Considerations
For the upcoming third quarter, management forecasted revenue between $85.9 million and $89.9 million for Q3 2025, and adjusted EBITDA of $44.4 million to $47.4 million (non-GAAP). Full-year FY2025 guidance for revenue ($343 million to $357 million) and adjusted EBITDA ($179 million to $190 million) was reaffirmed. However, management raised its outlook for adjusted earnings per diluted share to $5.25 to $5.65 for FY2025 (previous midpoint was about $5.23), citing improved execution in the first half of FY2025 and positive momentum in the Corporate segment.
No guidance was provided for a dividend. Investors should monitor the pace of account churn and ARPA trends, as both are key barometers of underlying business health. Other areas to watch include further progress in healthcare interoperability, any shifts in personnel cost or marketing spend, and the balance between growth investments and debt reduction. While management reported no current headwinds from tariffs or supply chain disruptions, competition and regulatory shifts in healthcare IT remain broader issues for the business.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
