Investments

3 Months Ended

Mar. 31, 2023

Investments, Debt and Equity Securities [Abstract]

Investments consist primarily of equity and debt securities.

Investment in equity securities

On October 7, 2021, the Company completed the separation of its cloud fax business (the “Separation”) into an independent publicly traded company, Consensus Cloud Solutions, Inc. (“Consensus”). Following the Separation, the Company retained shares of Consensus common stock and as of March 31, 2023 and December 31, 2022, the Company held approximately 1.0 million and 1.1 million shares, respectively, of the common stock of Consensus. As of March 31, 2023 and December 31, 2022, the carrying value of the investment in Consensus was $35.3 million and $58.4 million, respectively, and was included in ‘Short-term investments’ in the Condensed Consolidated Balance Sheets. The Company accounts for its investment in Consensus at fair value under the fair value option, and the related fair value gains and losses are recognized in earnings. During the three months ended March 31, 2023, the Company sold 52,393 shares of common stock of Consensus in the open market.

Gains (losses) on equity securities were recorded in ‘Unrealized (loss) gain on short-term investments held at the reporting date, net’ in the Condensed Consolidated Statements of Operations’ consisted of the following (in thousands):


	Three months ended March 31,
	2023		2022
Net (losses) gains during the period	$	(19,988)	$	8,951
Less: gains on securities sold during the period	357		—
Unrealized (losses) gains recognized during the period on short-term investments held at the reporting date, net	$	(20,345)	$	8,951

Investment in corporate debt security

On April 12, 2022, the Company entered into an agreement with an entity to acquire 4% convertible notes with an aggregate value of $15.0 million. This investment is included in ‘Long-term investments, net’ in the Condensed Consolidated Balance Sheets and is classified as available-for-sale. The investment was initially measured at its transaction price and subsequently remeasured at fair value, with unrealized gains and losses reported as a component of other comprehensive income.

As of March 31, 2023, both the carrying value and the maximum exposure of the Company’s investment in corporate debt securities was approximately $16.0 million, with a contractual maturity date that is more than one year but less than five years. As of December 31, 2022, both of the carrying value and the maximum exposure of the Company’s equity method investment in corporate debt securities was approximately $15.6 million. Cumulative gross unrealized gains of investment in corporate debt securities as of March 31, 2023 and December 31, 2022 was approximately $1.0 million and $0.6 million, respectively.

There were no investments in an unrealized loss position as of March 31, 2023 and December 31, 2022.

As of March 31, 2023 and December 31, 2022, the Company did not recognize any other-than-temporary impairment losses on its debt securities.

Equity method investment

On September 25, 2017, the Company entered into a commitment to invest in an investment fund (the “OCV Fund”). The primary purpose of the OCV Fund is to provide a limited number of select investors with the opportunity to realize long-

term appreciation from public and private companies, with a particular focus on the technology and life science industries. The general activities of the OCV Fund is to buy, sell, hold, and otherwise invest in securities of every kind and nature and rights and options with respect thereto, including, without limitation, stock, notes, bonds, debentures, and evidence of indebtedness; to exercise all rights, powers, privileges, and other incidents of ownership or possession with respect to securities held or owned by the OCV Fund; to enter into, make, and perform all contracts and other undertakings; and to engage in all activities and transactions as may be necessary, advisable, or desirable to carry out the foregoing.

During both the three months ended March 31, 2023 and 2022, the Company received no distributions from OCV.

The Company recognizes its equity in the net earnings or losses relating to the investment in OCV on a one-quarter lag (including management fees) due to the timing and availability of financial information from OCV. If the Company becomes aware of a significant decline in value that is other-than-temporary, the loss will be recorded in the period in which the Company identifies the decline.

During the three months ended March 31, 2023 and 2022, the Company recognized a loss from equity method investment of $9.2 million and $0.8 million, net of tax benefit, respectively. The loss during the three months ended March 31, 2023 was primarily the result of losses in the underlying investments and the loss during the three months ended March 31, 2022 was related to management fee expense. During the three months ended March 31, 2023 and 2022, the Company recognized expense for management fees of zero and $0.8 million, respectively, net of tax benefit.

As of March 31, 2023, both of the carrying value and the maximum exposure of the Company’s equity method investment was $100.0 million. As of December 31, 2022, both of the carrying value and the maximum exposure of the Company’s equity method investment was $112.3 million. These equity securities are included within ‘Long-term investments’ in the Condensed Consolidated Balance Sheets.

As a limited partner, the Company’s maximum exposure to loss is limited to its proportional ownership in the partnership. In addition, the Company is not required to contribute any future capital and any expected losses will not be in excess of the capital account. Finally, there are no call or put options, or other types of arrangements, which limit the Company’s ability to participate in losses and returns of the Fund.