Consensus Cloud Solutions, Inc. (NASDAQ:CCSI) Q1 2024 Earnings Call Transcript

Scott Turicchi: And yes, maybe to add to that, Scott, right here I think a few quarters back, I presented to continue the customer continuum, right? And it shows very clearly on the on the lower spectrum of that of that customer continuing with the smaller customers. We have a very fast and a ramp time and customers basically, Bill almost immediately no later than the end of the month after we book or close that deal on other customers that can take up to six, eight, sometimes a year, 12 months until they start contributing substantial revenue. And so that’s why we were not that was more of a confusing number that was really helpful, which is why we’ve taken it out on the pipeline where we’re doing. We’re doing well. We’re we continue to build pipeline.

We continue to close deals that I mentioned in the call. We don’t see a lot of change in behavior in the market, and we’re still confronted with slow decision-making in large accounts and but we are confident that we will continue to close, but don’t see a lot of change in the pace of that. And you can see that in Johnny’s presentation, the driver for the new adds in the corporate channel were primarily from the upgrades from the sole channel, which was good, but they come at obviously in this continuum, a lower RPU and also the relatively good effect to protect.

Operator: [Operator Instructions]. The next question is coming from Anne Samue from JPMorgan and your line is live.

Anne Samue: Great. And congrats on the quarter guys. And I was hoping you could provide a little bit more color on the partnership that you mentioned with the revenue cycle management vendor and what that entails?

Johnny Hecker: Yes. So that is a large provider of a solution, healthcare IT provider in that space. And we jointly go to market to market our product on to their existing customer base and closely connected and then delivering documents into their systems. So and those are many, many thousands of customers that they that they currently serve, and we’re going to do joint campaigns and their teams are going to reach out to their existing customers so that this is really an exciting opportunity for us to work with them.

Anne Samue: And that sounds great. And maybe just one follow-up on last quarter. You had noted that the VA partnership had started to contribute to revenue. I was just hoping you could provide an update on the rollout there and contribution in the quarter?

Johnny Hecker: So yes, so it’s not that the rollout is continuing at a day. Government pays, let’s call it that right. So and it’s contributing at the rate that where we were expecting and there’s there’s ups and downs in that rollout, but it’s growing now at a at a steady and continued.

Scott Turicchi: Yes. I mean, we’re up to a few hundred facilities in terms of the rollout, but doesn’t mean that all the facilities are fully contributory. In fact, they are not, but that’s a fairly substantial increase versus where we were two or three quarters ago, which I think was in the neighborhood of 100. And of course, metal facilities in the VA are of equal relevance, prominent size or contribution. And I would say that there’s we’re still at the at most, I’d say, in the lower quartile to may be slightly above the mid in terms of the size, the big behemoth ones have not come online and so there continues to be a lot of opportunity in terms of how it rolls out, but then also deeper penetration within those for which the wallet has already occurred.

And some of this has to do with we’ve talked about on prior calls, there’s many different flavors of how the faxing is done within a given facility. So you have servers, you have in some cases, physical devices, think of multifunction printers. You have embedded applications within software and combinations thereof. And so what would you have inbound and outbound and the inbound is relevant because that requires reporting of telephone numbers. Outbound is not so in order to really capture all of the traffic of a given facility, you need to capture all five of those elements. And I would say most of the facilities, we don’t have all five today, and there’s various reasons for that. Sometimes porting of numbers of slow. Sometimes there’s contracts that haven’t expired yet.

So it’s not in that facility to that region’s interest to yet disconnect from a multifunction device. So all of these things will over time roll off and accrue to our benefit as well as continue to roll out. As to your specific question, no, we’re not going to give the V a specific contribution.

Operator: Thank you. The next question is coming from Fatima Boolani from Citigroup. Fatima, your line is live.

Mark Zhang: This is Mark Zhang for Fatima. You guys in smartphone for 15, but thanks for taking our questions. Maybe just wanted to touch on the SOHO to corporate conversion momentum on seems like there’s no upgrade reached 1,500 accounts this quarter, which were essentially higher than your usual cadence of call it around a 1,200 mark on business number one ahead of your internal expectations for this quarter and your any sort of changes you’re seeing in momentum there with a more favorable customer, seeing better budget to actually do these upgrades or just seeing recognizing the value of the corporate products? Thanks.

Johnny Hecker: Yes. So on like, like I mentioned, I think we’re super excited about the success of this program and being even above the 1,500 mark in Q1. Key success really is here operational excellence. I think we’ve really learned over time to optimize and identifying the most promising customers in that sell whole base and serve them up to the team that does this upsell program. And it’s a question of routine as well. I think it’s taken it takes the time it takes reps to ramp and to really get in a rhythm there. And we’ve been able to accomplish that over the course of about three almost four quarters now. So I think those have been the key drivers, but we are really picking the right accounts to upsell into. And we see we can what patterns there are within our SOHO base of customers that are most interested in this product, it, which is which is why we’re now we’ve learned a lot and we’re confident in maintaining this program, which is why we can can make the changes during Q2 that we plan to make.

Mark Zhang: Got it. And that’s all very helpful. And then maybe if I could sneak in a quick follow-up too on any sort of just presentation to the free cash flow performance this quarter from fairly no on strong. And then any update to the full year outlook for free cash flow specifically, I know last update was I’ll call it low 80s for the year on the network update post the third quarter performance.