Consensus Cloud Solutions, Inc. ((CCSI)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call of Consensus Cloud Solutions, Inc. presented a mixed sentiment. The company celebrated significant achievements, including record corporate revenue, strong free cash flow, and successful debt reduction. However, challenges persist, with declining SoHo revenue and customer base, as well as a decrease in corporate ARPA. Despite these hurdles, the company demonstrated resilience and strategic focus, though headwinds in certain areas remain.
Record Revenue in Corporate Channel
Consensus Cloud Solutions, Inc. reported a record corporate revenue of $56.3 million for Q3 2025, marking a 6.1% increase from $53.1 million in Q3 2024. This achievement underscores the company’s ability to drive growth in its corporate channel, reflecting its strategic initiatives and market positioning.
Strong Free Cash Flow
The company achieved a robust free cash flow of $44.4 million in Q3 2025, representing a 32% increase from $33.6 million in Q3 2024. This substantial growth in free cash flow highlights the company’s efficient cash management and operational effectiveness.
Reduction in Indebtedness
Consensus successfully reduced its total indebtedness from $805 million to $569 million through strategic credit facility draws and bond retirements. This significant debt reduction demonstrates the company’s commitment to strengthening its financial position and reducing financial liabilities.
Sustained Revenue Retention Rate
The corporate channel’s trailing 12-month revenue retention rate remained stable at 101.9%, up from 99.8% in Q3 2024. This stability indicates strong customer loyalty and the effectiveness of the company’s retention strategies.
VA Revenue Growth
The VA segment continued to achieve record revenue and usage, with expectations for further rollout and expansion in 2026. This growth trajectory highlights the segment’s potential as a key driver of future revenue.
Decline in SoHo Revenue
SoHo revenue experienced a 9.2% year-over-year decline to $31.5 million in Q3 2025. This decrease is part of a strategic focus on profitability, indicating a shift in the company’s approach to this segment.
Decreased Corporate ARPA
Corporate ARPA decreased to $293 in Q3 2025 from $310 in Q3 2024, attributed to a mix of smaller SMB customers. This decline reflects changes in the customer base composition and pricing strategies.
SoHo Customer Base Decline
The global SoHo account base declined from approximately 682,000 in the prior quarter to approximately 661,000 during Q3. This reduction aligns with the company’s strategic focus on profitability over volume.
Near-term Headwinds in SoHo
Changes in the search environment have created headwinds, contributing to a slight decline in organic sign-ups in Q3, with expectations for this trend to continue in Q4. This presents a challenge for the SoHo segment moving forward.
Forward-Looking Guidance
For Q4 2025, Consensus Cloud Solutions, Inc. expects revenue to range between $84.9 million and $88.9 million, with a midpoint of $86.9 million. Adjusted EBITDA is projected to be between $43.1 million and $46 million, targeting a midpoint of $44.5 million. Despite forecasting lower adjusted EBITDA margins due to new hires and year-end audit costs, the company remains confident in exceeding its free cash flow target of $95 million for the year. Strategic moves, such as the retirement of $200 million in 6% notes and anticipated further debt reduction, are expected to strengthen the company’s financial position.
In summary, the earnings call of Consensus Cloud Solutions, Inc. reflected a mixed sentiment, with notable achievements in corporate revenue and free cash flow, alongside challenges in the SoHo segment. The company’s strategic focus and resilience were evident, despite facing headwinds in certain areas. Looking ahead, Consensus remains optimistic about its financial targets and strategic initiatives, aiming to navigate the challenges and capitalize on growth opportunities.