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Consensus Cloud Solutions’ Revenue Share Calculations Under SEC Scrutiny
Latest SEC inquiries come weeks after the software maker misstated sales.
April 13, 2023
In March 2023 Consensus Cloud Solutions (CCSI), a maker of electronic fax and health records software, received a letter from the Securities and Exchange Commission (SEC) regarding how it calculates revenue sharing agreements and the composition of its deposits.
Notably, the SEC’s most recent questions about Consensus’ revenue calculations comes approximately one month after the company acknowledged misstating sales for the three and nine month periods ended September 30, 2022.
In the quarter ended September 30, 2022:
—Consensus overstated revenue $4.1 million, or 4.46%
—Consensus overstated income from continuing operations by $1.7 million, or 10.96%
—Consensus overstate EPS from continuing operations by $0.09, or 11.68%
The company revealed the latest SEC scrutiny in its belatedly filed annual report.
Separately, Consensus also revealed it recently initiated a Voluntary Disclosure Agreement (VDA) process to voluntarily report prior period sales tax liabilities. The company expects the process to take 6-12 months.
Consensus also warned its tax liability reserve may not be sufficient.
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