What Consensus Cloud Solutions (CCSI) Said on Its Q3 Earnings Call

Key Points

• Q3 revenue rose 3.7% to $91 million, marking the sixth straight quarter of year-over-year growth; adjusted EPS increased 8.7% to $1.50. Corporate revenue grew 9.1% to a record $61.4 million, offsetting a 6% decline in SoHo revenue.
• Corporate momentum was supported by a 7.9% increase in customer accounts and net revenue retention of 104.5%. The VA rollout is nearing completion, with Consensus expecting more than $9 million in VA revenue in 2026; revenue from its broader healthcare initiative is expected to begin in 2028.
• Consensus raised full-year adjusted EPS guidance to $6–$6.10 and narrowed its revenue outlook to $360–$364 million. It repurchased $20.7 million of shares in Q3 and aims to reduce gross debt to EBITDA to around or below 2.5 times, from 2.92 times.

Consensus Cloud Solutions NASDAQ: CCSI reported third-quarter 2026 revenue growth of 3.7% as corporate fax demand and usage at the Department of Veterans Affairs helped offset a decline in its small office and home office business.

Revenue rose to $91 million from $87.8 million a year earlier, marking the company’s sixth consecutive quarter of year-over-year consolidated growth. Adjusted earnings per share increased 8.7% to $1.50, while adjusted EBITDA rose 2.7% to $47.6 million.

CEO Scott Turicchi said corporate fax solutions benefited from strong usage, improved revenue retention and new customers. The company raised its full-year adjusted EPS guidance and narrowed its revenue and adjusted EBITDA ranges.

Corporate growth offsets SoHo decline

Corporate revenue reached a record $61.4 million, up 9.1% from a year earlier and approximately $1 million from the prior quarter. It was the second consecutive quarter in which the segment grew more than 9% year over year.

The corporate customer base rose 7.9% to approximately 69,000 accounts. Trailing 12-month net revenue retention climbed to 104.5%, compared with 103.1% in the previous quarter and 101.9% a year earlier. Corporate average revenue per account increased approximately 0.4% year over year to $301.

Chief Revenue Officer and Executive Vice President of Operations Johnny Hecker said customers were taking longer to decide on larger projects and bring technology into production. He said the company had built its sales pipeline and benefited from retaining and expanding existing accounts.

Revenue in the small office and home office, or SoHo, channel fell 6% to $29.6 million, in line with expectations. Management said it continues to operate the business as a cash generator to fund corporate expansion.

Turicchi said he expects the SoHo decline to slow in 2027, though the segment would probably still contract. The company is not yet ready to provide a 2027 growth rate for either channel, he said, adding that bringing SoHo revenue to a roughly flat level would be a victory.

Healthcare and government investments

Hecker said the company is in the final stages of its rollout at the Department of Veterans Affairs and is on track to generate more than $9 million in revenue from the account in 2026. He said the rollout accelerated after the VA mandated use of ECFax.

Consensus is also developing its eFax Harmony offering to turn unstructured documents into clinical workflow tasks, including prior authorizations and referral follow-ups. Hecker said one early adopter reduced patient triage time from as much as 40 days to an average of two days.

Turicchi said the healthcare solutions team had hired fewer employees during the quarter than planned, resulting in lower compensation expense. He reiterated that the company expects revenue from the initiative to begin in 2028.

Guidance and capital allocation

For the fourth quarter, Consensus forecast revenue of $88.9 million to $92.9 million, adjusted EBITDA of $44.7 million to $47.7 million and adjusted EPS of $1.48 to $1.58.

For full-year 2026, the company projected revenue of $360 million to $364 million, adjusted EBITDA of $188 million to $192 million and adjusted EPS of $6 to $6.10. CFO Adam Varon said the fourth-quarter estimated tax rate of 11% to 13% reflects the expected release of an uncertain tax position reserve as a statute of limitations expires.

Third-quarter free cash flow declined 13.2% to $38.6 million, primarily because of the timing of interest and tax payments. The company continues to expect full-year free cash flow of approximately $106 million, in line with 2025.

Consensus repurchased approximately 551,000 shares for $20.7 million during the quarter, leaving approximately $97 million available under its $200 million repurchase plan. It ended the quarter with approximately $107 million in cash and $552 million in debt.

The company plans to use a $300 million delayed-draw term loan to help retire its 6.5% notes on or about Oct. 15, 2027, when they become callable at par. Turicchi said the company will monitor interest rates and continue looking to purchase the notes in the open market.

Turicchi said retiring the notes would generally free the company from a requirement to maintain cash balances in excess of approximately $75 million. Over the next several years, he said, Consensus wants to reduce gross debt to EBITDA to around or below 2.5 times, compared with 2.92 times at the end of the third quarter.

About Consensus Cloud Solutions (NASDAQ:CCSI)

Consensus Cloud Solutions, Inc provides secure cloud-based information delivery and communication solutions, with a primary focus on the healthcare industry. Its services are designed to help healthcare organizations, businesses and government entities exchange sensitive documents and data while supporting regulatory, privacy and security requirements.

The company's offerings include cloud faxing, secure messaging, electronic document delivery and interoperability tools that connect healthcare providers, hospitals, laboratories, pharmacies and other organizations.

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