Thryv 10Q 2024 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 001-35895

THRYV HOLDINGS, INC.

(Exact name of registrant as specified in its charter)


Delaware						13-2740040
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

2200 West Airfield Drive, P.O. Box 619810, D/FW Airport, TX						75261
(Address of principal executive offices)						(Zip Code)


(972)			453-7000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	THRY	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act of 1934.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).

Yes ☐ No x

As of July 30, 2024, there were 36,303,038 shares of the registrant's common stock outstanding.

THRYV HOLDINGS, INC.

TABLE OF CONTENTS


		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Operations and Comprehensive Income for the Three and Six Months Ended June 3 0 , 2024 and 2023 (unaudited)	3
	Consolidated Balance Sheets as of June 30, 2024 (unaudited) and December 31, 2023	4
	Consolidated Statements of Changes in Stockholders' Equity for the Three and Six Months Ended June 30, 2024 and 2023 (unaudited)	5
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023 (unaudited)	7
	Notes to Consolidated Financial Statements (unaudited)	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	43
Item 4.	Controls and Procedures	43

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	45
	Signatures	46

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Quarterly Report”) contains forward-looking statements that reflect our current views with respect to future events and financial performance. Such statements are provided under the “safe harbor” protection of the Private Securities Litigation Reform Act of 1995 and include, without limitation, statements concerning the conditions of our industry and our operations, performance, and financial condition, including, in particular, statements relating to our business, growth strategies, product development efforts, and future expenses. Forward-looking statements include all statements that do not relate solely to historical or current facts and generally can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “could,” “estimates,” “expects,” “likely,” “may,” and similar references to future periods, or by the inclusion of forecasts or projections. Examples of forward-looking statements include, but are not limited to, statements we make regarding the outlook for our future business and financial performance, such as those contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy, and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by the forward-looking statements. Accordingly, we caution you against relying on forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national, or global political, economic, business, competitive, market, and regulatory conditions and the following:

•significant competition for our Marketing Services solutions and SaaS offerings, including from companies that use components of our SaaS offerings provided by third parties;

•our ability to maintain profitability;

•our ability to manage our growth effectively;

•our ability to transition our Marketing Services clients to our Thryv platform, sell our platform into new markets or further penetrate existing markets;

•our ability to maintain our strategic relationships with third-party service providers;

•internet search engines and portals potentially terminating or materially altering their agreements with us;

•our ability to keep pace with rapid technological changes and evolving industry standards;

•our small to medium-sized businesses (“SMBs”) clients potentially opting not to renew their agreements with us or renewing at lower spend;

•potential system interruptions or failures, including cyber-security breaches, identity theft, data loss, unauthorized access to data or other disruptions that could compromise our information;

•our potential failure to identify suitable acquisition candidates and consummate such acquisitions;

•our ability to successfully integrate acquired businesses into our operations or recognize the benefits of acquisitions, including the failure of an acquired business to achieve its plans and objectives;

•the potential loss of one or more key employees or our inability to attract and to retain highly skilled employees;

•our ability to maintain the compatibility of our Thryv platform with third-party applications;

•our ability to successfully expand our operations and current offerings into new markets, including internationally, or further penetrate existing markets;

•our potential failure to provide new or enhanced functionality and features;

•our potential failure to comply with applicable privacy, security and data laws, regulations and standards;

•potential changes in regulations governing privacy concerns and laws or other domestic or foreign data protection regulations;

•our potential failure to meet service level commitments under our client contracts;

•our potential failure to offer high-quality or technical support services;

•our Thryv platform and add-ons potentially failing to perform properly;

•our use of artificial intelligence in our business, and challenges with properly managing its use, could result in reputational harm, competitive harm, and legal liability;

•the potential impact of future labor negotiations;

•our ability to protect our intellectual property rights, proprietary technology, information, processes, and know-how;

•rising inflation and our ability to control costs, including operating expenses;

•general macro-economic conditions, including a recession or an economic slowdown in the U.S. or internationally; and

•volatility and weakness in bank and capital markets.

For additional information regarding known material factors that could cause the Company’s actual results to differ from its projected results, see Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023 (“2023 Form 10-K”), as supplemented by the disclosure in Part II, Item 1A. Risk Factors in subsequent quarterly reports on Form 10-Q. Readers are cautioned not to place undue reliance on forward-looking statements contained in this report, which speak only as of the date of this report. Except as required by applicable law, the Company undertakes no obligation to update or revise any forward-looking statements publicly after the date they are made, whether as a result of new information, future events, or otherwise.

In this Quarterly Report on Form 10-Q, the terms “our Company,” “we,” “us,” “our,” “Company” and “Thryv” refer to Thryv Holdings, Inc. and its subsidiaries, unless the context indicates otherwise.

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

Thryv Holdings, Inc. and Subsidiaries

Consolidated Statements of Operations and Comprehensive Income

(unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands, except share and per share data)	2024		2023		2024		2023
Revenue	$	224,084	$	251,421	$	457,708	$	496,976
Cost of services	75,496		91,336		155,479		182,083
Gross profit	148,588		160,085		302,229		314,893

Operating expenses:
Sales and marketing	65,409		75,683		135,500		152,026
General and administrative	51,841		53,695		104,257		101,375

Total operating expenses	117,250		129,378		239,757		253,401

Operating income	31,338		30,707		62,472		61,492
Other income (expense):
Interest expense	(10,001)		(16,292)		(23,360)		(32,780)
Interest expense, related party	(2,174)		—		(2,174)		—
Other components of net periodic pension cost	(1,581)		(1,865)		(3,162)		(1,986)
Other expense	(5,416)		—		(7,789)		(366)
Income before income tax (expense) benefit	12,166		12,550		25,987		26,360
Income tax (expense) benefit	(6,618)		3,428		(12,015)		(1,068)
Net income	$	5,548	$	15,978	$	13,972	$	25,292
Other comprehensive income (loss):
Foreign currency translation adjustment, net of tax	67		(302)		(198)		(2,490)
Comprehensive income	$	5,615	$	15,676	$	13,774	$	22,802

Net income per common share:
Basic	$	0.15	$	0.46	$	0.39	$	0.73
Diluted	$	0.15	$	0.43	$	0.37	$	0.68

Weighted-average shares used in computing basic and diluted net income per common share:
Basic	36,004,324		34,575,338		35,818,549		34,625,561
Diluted	37,631,825		36,863,295		38,032,132		36,956,933

The accompanying notes are an integral part of the consolidated financial statements.

Thryv Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets


(in thousands, except share data)	June 30, 2024		December 31, 2023
Assets	(unaudited)
Current assets
Cash and cash equivalents	$	15,519	$	18,216
Accounts receivable, net of allowance of $18,042 in 2024 and $14,926 in 2023	193,725		205,503
Contract assets, net of allowance of $37 in 2024 and $35 in 2023	8,118		2,909
Taxes receivable	1,516		3,085
Prepaid expenses	23,124		17,771

Deferred costs	12,796		16,722
Other current assets	5,822		2,662
Total current assets	260,620		266,868
Fixed assets and capitalized software, net	37,805		38,599
Goodwill	300,995		302,400
Intangible assets, net	6,640		18,788
Deferred tax assets	152,171		128,051
Other assets	27,252		28,464
Total assets	$	785,483	$	783,170

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	8,661	$	10,348
Accrued liabilities	110,193		105,903
Current portion of unrecognized tax benefits	25,060		23,979
Contract liabilities	25,668		44,558
Current portion of Term Loan	35,783		70,000
Current portion of Term Loan, related party	16,717		—
Other current liabilities	6,022		8,402
Total current liabilities	228,104		263,190
Term Loan, net	183,772		230,052
Term Loan, net, related party	87,820		—
ABL Facility	18,000		48,845
Pension obligations, net	72,279		69,388
Other liabilities	12,448		18,995
Total long-term liabilities	374,319		367,280
Commitments and contingencies (see Note 13)
Stockholders' equity
Common stock - $0.01 par value, 250,000,000 shares authorized; 63,808,097 shares issued and 36,294,269 shares outstanding at June 30, 2024; and 62,660,783 shares issued and 35,302,746 shares outstanding at December 31, 2023	638		627
Additional paid-in capital	1,170,798		1,151,259
Treasury stock - 27,513,828 shares at June 30, 2024 and 27,358,037 shares at December 31, 2023	(488,757)		(485,793)
Accumulated other comprehensive loss	(15,389)		(15,191)
Accumulated deficit	(484,230)		(498,202)
Total stockholders' equity	183,060		152,700
Total liabilities and stockholders' equity	$	785,483	$	783,170

The accompanying notes are an integral part of the consolidated financial statements.

Thryv Holdings, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders' Equity

(unaudited)


Three Months Ended June 30, 2024
	Common Stock					Treasury Stock
(in thousands, except share amounts)	Shares	Amount		Additional Paid-in Capital		Shares	Amount		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
Balance as of March 31, 2024	63,306,246	$	633	$	1,159,754	(27,479,338)	$	(488,087)	$	(15,456)	$	(489,778)	$	167,066
Issuance of shares related to stock-based compensation	501,851	5		4,691		(7,995)	(171)		—		—		4,525
Stock-based compensation expense	—	—		6,353		—	—		—		—		6,353
Purchase of treasury stock	—	—		—		(26,495)	(499)		—		—		(499)
Foreign currency translation adjustment, net of tax	—	—		—		—	—		67		—		67
Net income	—	—		—		—	—		—		5,548		5,548
Balance as of June 30, 2024	63,808,097	$	638	$	1,170,798	(27,513,828)	$	(488,757)	$	(15,389)	$	(484,230)	$	183,060

Three Months Ended June 30, 2023
	Common Stock					Treasury Stock
(in thousands, except share amounts)	Shares	Amount		Additional Paid-in Capital		Shares	Amount		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
Balance as of March 31, 2023	61,557,811	$	616	$	1,112,420	(26,739,832)	$	(469,941)	$	(18,449)	$	(229,593)	$	395,053
Issuance of shares related to stock-based compensation	274,504	2		3,586		(1,243)	(29)		—		—		3,559
Stock-based compensation expense	—	—		5,798		—	—		—		—		5,798
Settlement of indemnification asset	—	—		—		(613,954)	(15,760)		—		—		(15,760)
Foreign currency translation adjustment, net of tax	—	—		—		—	—		(302)		—		(302)
Net income	—	—		—		—	—		—		15,978		15,978
Balance as of June 30, 2023	61,832,315	$	618	$	1,121,804	(27,355,029)	$	(485,730)	$	(18,751)	$	(213,615)	$	404,326

The accompanying notes are an integral part of the consolidated financial statements.

Thryv Holdings, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders' Equity

(unaudited)


Six Months Ended June 30, 2024
	Common Stock					Treasury Stock
(in thousands, except share amounts)	Shares	Amount		Additional Paid-in Capital		Shares	Amount		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
Balance as of December 31, 2023	62,660,783	$	627	$	1,151,259	(27,358,037)	$	(485,793)	$	(15,191)	$	(498,202)	$	152,700
Issuance of shares related to stock-based compensation	1,147,314	11		7,897		(129,296)	(2,465)		—		—		5,443
Stock-based compensation expense	—	—		11,642		—	—		—		—		11,642
Purchase of treasury stock	—	—		—		(26,495)	(499)		—		—		(499)
Foreign currency translation adjustment, net of tax	—	—		—		—	—		(198)		—		(198)
Net income	—	—		—		—	—		—		13,972		13,972
Balance as of June 30, 2024	63,808,097	$	638	$	1,170,798	(27,513,828)	$	(488,757)	$	(15,389)	$	(484,230)	$	183,060

Six Months Ended June 30, 2023
	Common Stock					Treasury Stock
(in thousands, except share amounts)	Shares	Amount		Additional Paid-in Capital		Shares	Amount		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
Balance as of December 31, 2022	61,279,379	$	613	$	1,105,701	(26,685,542)	$	(468,879)	$	(16,261)	$	(238,907)	$	382,267
Issuance of shares related to stock-based compensation	552,936	5		4,912		(55,533)	(1,091)		—		—		3,826
Stock-based compensation expense	—	—		11,191		—	—		—		—		11,191
Settlement of indemnification asset	—	—		—		(613,954)	(15,760)		—		—		(15,760)
Foreign currency translation adjustment, net of tax	—	—		—		—	—		(2,490)		—		(2,490)
Net income	—	—		—		—	—		—		25,292		25,292
Balance as of June 30, 2023	61,832,315	$	618	$	1,121,804	(27,355,029)	$	(485,730)	$	(18,751)	$	(213,615)	$	404,326

The accompanying notes are an integral part of the consolidated financial statements.

Thryv Holdings, Inc. and Subsidiaries

Consolidated Statements of Cash Flows


	Six Months Ended June 30,
(in thousands)	2024		2023
Cash Flows from Operating Activities	(unaudited)		(unaudited)
Net income	$	13,972	$	25,292
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	28,625		31,098
Amortization of deferred commissions	9,624		5,032
Amortization of debt issuance costs	2,255		2,721
Deferred income taxes	(24,060)		(9,135)
Provision for credit losses and service credits	12,179		11,580
Stock-based compensation expense	11,642		11,191
Other components of net periodic pension cost	3,162		1,986

Loss (gain) on foreign currency exchange rates	1,151		(881)
Non-cash loss from the remeasurement of the indemnification asset	—		10,734
Loss on early extinguishment of debt	6,638		—
Other	(3,170)		—
Changes in working capital items, excluding acquisitions:
Accounts receivable	923		25,075
Contract assets	(5,210)		837
Prepaid expenses and other assets	(10,614)		10,090
Accounts payable and accrued liabilities	2,428		(38,654)
Other liabilities	(21,885)		(29,230)
Net cash provided by operating activities	27,660		57,736

Cash Flows from Investing Activities
Additions to fixed assets and capitalized software	(16,230)		(14,016)

Acquisition of a business, net of cash acquired	—		(8,897)
Other	—		(217)
Net cash used in investing activities	(16,230)		(23,130)

Cash Flows from Financing Activities
Proceeds from Term Loan	234,256		—
Proceeds from Term Loan, related party	109,444		—
Payments of Term Loan	(318,654)		(52,500)
Payments of Term Loan, related party	(4,339)		—

Proceeds from ABL Facility	230,079		483,473
Payments of ABL Facility	(260,924)		(469,750)
Debt issuance costs	(5,319)		—
Purchase of treasury stock	(499)		—
Other	5,442		3,826
Net cash used in financing activities	(10,514)		(34,951)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(448)		(240)
Increase (decrease) in cash, cash equivalents and restricted cash	468		(585)
Cash, cash equivalents and restricted cash, beginning of period	20,530		18,180
Cash, cash equivalents and restricted cash, end of period	$	20,998	$	17,595
Supplemental Information
Cash paid for interest	$	24,378	$	29,592
Cash paid for income taxes, net	$	13,343	$	7,419

Non-cash investing and financing activities
Repurchase of Treasury stock as a result of the settlement of the indemnification asset	$	—	$	15,760

The accompanying notes are an integral part of the consolidated financial statements.

Thryv Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

Note 1 Description of Business and Summary of Significant Accounting Policies

General

Thryv Holdings, Inc. (“Thryv” or the “Company”) provides small-to-medium sized businesses (“SMBs”) with print and digital marketing services and Software as a Service (“SaaS”) business management tools. The Company owns and operates Print Yellow Pages (“PYP” or “Print”) and digital marketing services (“Digital”), which includes Internet Yellow Pages (“IYP”), search engine marketing (“SEM”), and other digital media services, including online display advertising, and search engine optimization (“SEO”) tools. In addition, through the Thryv® platform, the Company is a provider of SaaS business management, communication, and marketing tools designed for SMBs.

On April 3, 2023, Thryv New Zealand Limited, the Company’s wholly-owned subsidiary, acquired Yellow Holdings Limited (“Yellow”), a New Zealand marketing services company.

During the first quarter of 2024, the Company changed the internal reporting provided to the chief operating decision maker (“CODM”). As a result, the Company reevaluated its segment reporting and determined that Thryv U.S. Marketing Services and Thryv International Marketing Services should be reflected as a single reportable segment, and that Thryv U.S. SaaS and Thryv International SaaS should be reflected as a single reportable segment. As such, beginning on January 1, 2024, the results of our Marketing Services and SaaS businesses will be presented as two reportable segments. Comparative prior periods have been recast to reflect the current presentation.

The Company reports its results based on two reportable segments (see Note 15, Segment Information):

•Thryv Marketing Services, which includes the Company's Print and Digital solutions business; and

•Thryv SaaS, which includes the Company's SaaS flagship all-in-one small business management modular software platform.

Basis of Presentation

The Company prepares its financial statements in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, certain information and disclosures normally included in the complete financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to such rules and regulations. The consolidated financial statements include the financial statements of Thryv Holdings, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

In the opinion of management, the accompanying consolidated financial statements reflect all adjustments, consisting of only normal recurring items and accruals, necessary for the fair statement of the financial position, results of operations and cash flows of the Company for the periods presented. The consolidated financial statements as of and for the three and six months ended June 30, 2024 and 2023 have been prepared on the same basis as the audited annual financial statements. The consolidated balance sheet as of December 31, 2023 was derived from the audited annual financial statements. The consolidated results for interim periods are not necessarily indicative of results for the full year and should be read in conjunction with the Company’s audited financial statements and related footnotes for the year ended December 31, 2023.

Use of Estimates

The preparation of the Company’s consolidated financial statements requires management to make estimates and assumptions about future events that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable. The results of those estimates form the basis for making judgments about the carrying values of certain assets and liabilities.

Examples of reported amounts that rely on significant estimates include revenue recognition, allowance for credit losses, assets acquired and liabilities assumed in business combinations, capitalized costs to obtain a contract, certain amounts relating to the accounting for income taxes, including valuation allowance, indemnification asset, stock-based compensation expense, operating lease right-of-use assets and operating lease liabilities, accrued service credits, and pension obligations. Significant estimates are also used in determining the recoverability and fair value of fixed assets and capitalized software, operating lease right-of-use assets, goodwill and intangible assets.

Summary of Significant Accounting Policies

The Company describes its significant accounting policies in Note 1 to the financial statements in Part II, Item 8 of its Annual Report on Form 10-K for the fiscal year ended December 31, 2023. There have been no changes to the Company's significant accounting policies during the three and six months ended June 30, 2024.

Restricted Cash

The following table presents a reconciliation of cash, cash equivalents and restricted cash reported within the Company's consolidated balance sheets to the amount shown in the Company's consolidated statements of cash flows for the six months ended June 30, 2024 and 2023:


(in thousands)	June 30, 2024		June 30, 2023
Cash and cash equivalents	$	15,519	$	15,245
Restricted cash, included in Other current assets	5,479		2,350
Total cash, cash equivalents and restricted cash	$	20,998	$	17,595

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”). ASU 2023-07 requires additional disclosures, including more detailed information about segment expenses about a public entity’s reportable segments on an annual and interim basis. The new segment disclosures are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Management will review the extent of new disclosures necessary in the coming quarters, prior to implementation in the Company's 2024 Annual Report on Form 10-K. Other than additional disclosures, the Company does not expect the adoption of ASU 2023-07 to have a material impact on its consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 requires additional disclosures primarily related to the rate reconciliation and income taxes paid information. The new income tax disclosures are effective for fiscal years beginning after December 15, 2024. Management will review the extent of new disclosures necessary in the coming years, prior to implementation in the Company's 2025 Annual Report on Form 10-K. Other than additional disclosures, the Company does not expect the adoption of ASU 2023-09 to have a material impact on its consolidated financial statements.

Note 2 Acquisitions

Yellow New Zealand Acquisition

On April 3, 2023 (the “Yellow Acquisition Date”), Thryv New Zealand Limited, the Company’s wholly-owned subsidiary, acquired Yellow, a New Zealand marketing services company for $8.9 million in cash (net of $1.7 million of cash acquired), subject to certain adjustments (the “Yellow Acquisition”). The Yellow Acquisition expanded the Company's market share with a broader geographical footprint and provided the Company with an increase in our clients. Yellow is a provider of marketing solutions serving SMBs in New Zealand. Control was obtained by means of acquiring all the voting interests. The assets acquired consisted primarily of $2.4 million in current assets and $5.6 million in fixed and intangible assets, consisting primarily of customer relationships, trade name, and technology assets, along with $5.1 million in goodwill. The Company also assumed liabilities of $4.7 million, consisting primarily of accrued, contract, and deferred liabilities.

The Company accounted for the Yellow Acquisition using the acquisition method of accounting in accordance with Accounting Standards Codification 805, Business Combinations (“ASC 805”). This requires that the assets acquired and liabilities assumed are measured at fair value. With the assistance of a third-party valuation firm, the Company determined, using Level 3 inputs (see Note 4, Fair Value Measurements), the fair value of certain assets and liabilities, including fixed assets and intangible assets by applying the income approach and the cost approach. Specific to intangible assets, client relationships were valued using a combination of the income and excess earnings approach, whereas trade names were valued using a relief of royalty method and assumptions related to Yellow's assets acquired and liabilities assumed. The fair values of existing technologies were computed using a relief of royalty approach, similar to the trade name valuation.

The following table summarizes the assets acquired and liabilities assumed at the Yellow Acquisition Date:


(in thousands)
Current assets	$	2,438
Fixed and intangible assets	5,565

Other assets	457
Current liabilities	(3,533)
Other liabilities	(1,159)
Goodwill	5,129
Fair value allocated to net assets acquired	$	8,897

The excess of the purchase price over the fair value of the identifiable net assets acquired and the liabilities assumed was allocated to goodwill. The recognized goodwill of $5.1 million was primarily related to the benefits expected from the acquisition and was allocated to the Thryv Marketing Services segment. The goodwill recognized is not deductible for income tax purposes.

Note 3 Revenue Recognition

The Company has determined that each of its Print and Digital marketing services and SaaS business management tools services is distinct and represents a separate performance obligation. The client can benefit from each service on its own or together with other resources that are readily available to the client. Services are separately identifiable from other promises in the contract. Control over the Company’s Print services transfers to the client upon delivery of the published directories containing their advertisements to the intended market(s). Therefore, revenue associated with Print services is recognized at a point in time upon delivery to the intended market(s). The Company bills clients for Print advertising services monthly over the relative contract term. The difference between the timing of recognition of Print advertising revenue and monthly billing generates the Company’s unbilled receivables balance. The unbilled receivables balance is reclassified as billed accounts receivable through the passage of time as the clients are invoiced each month. SaaS and Digital marketing services are recognized using the series guidance. Under the series guidance, the Company's obligation to provide services is the same for each day under the contract, and therefore represents a single performance obligation. Revenue associated with SaaS and Digital marketing services is recognized over time using an output method to measure the progress toward satisfying a performance obligation.

Disaggregation of Revenue

The Company presents disaggregated revenue based on the type of service within its segment footnote. See Note 15, Segment Information.

Contract Assets and Liabilities

The timing of revenue recognition may differ from the timing of billing to the Company’s clients. These timing differences result in receivables, contract assets, or contract liabilities (deferred revenue) as disclosed on the Company's consolidated balance sheets. Contract assets represent the Company's right to consideration when revenue recognized exceeds the receivable from the client because the consideration allocated to fulfilled performance obligations exceeds the Company’s right to payment, and the right to payment is subject to more than the passage of time. Contract liabilities represent remaining performance obligations that consist of advance payments and revenue deferrals resulting from the allocation of the consideration to performance obligations. The Company recognizes revenue on all of its remaining performance obligations within the next twelve months. For the three and six months ended June 30, 2024, the Company recognized revenue of $8.3 million and $36.8 million, respectively, that was recorded in Contract liabilities as of December 31, 2023. For the three and six months ended June 30, 2023, the Company recognized revenue of $9.2 million and $39.0 million, respectively, that was recorded in Contract liabilities as of December 31, 2022.

Note 4 Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to settle a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.

Level 3 — Unobservable inputs that reflect the Company's own assumptions incorporated into valuation techniques.

These valuations require significant judgment.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. When there is more than one input at different levels within the hierarchy, the fair value is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Assessment of the significance of a particular input to the fair value measurement in its entirety requires substantial judgment and consideration of factors specific to the asset or liability. Level 3 inputs are inherently difficult to estimate. Changes to these inputs can have a significant impact on fair value measurements. Assets and liabilities measured at fair value using Level 3 inputs are based on one or more of the following valuation techniques: market approach, income approach or cost approach.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The Company’s non-financial assets such as goodwill, intangible assets, fixed assets, capitalized software and operating lease right-of-use assets are adjusted to fair value when the net book values of the assets exceed their respective fair values, resulting in an impairment charge. Such fair value measurements are predominantly based on Level 3 inputs.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Indemnification Asset

On June 30, 2017, the Company completed the acquisition of YP Holdings, Inc. (the “YP Acquisition”). As further discussed in Note 13, Contingent Liabilities, as part of the YP Acquisition agreement, the Company was indemnified for an uncertain tax position for up to the fair value of 1,804,715 shares held in escrow, subject to certain contract limitations (the “indemnification asset”).

On June 22, 2023, the Company entered into a settlement agreement with the sellers regarding the settlement of the indemnification asset. Pursuant to the settlement agreement, the Company and the sellers agreed (i) that the sellers would pay and indemnify the Company for $15.8 million of indemnified taxes (the “Indemnity Amount”) and (ii) that the Indemnity Amount would be deemed satisfied by the transfer of 613,954 outstanding shares of the Company’s common stock from the sellers back to the Company, which were returned to treasury and reduced the number of outstanding shares of the Company’s common stock. Furthermore, the sellers would be entitled to retain 1,190,761 currently outstanding shares of the Company’s common stock that previously secured the sellers' tax indemnity obligations under the YP Acquisition agreement.

As of June 30, 2024 and December 31, 2023, the Company no longer recorded a Level 1 indemnification asset because it was settled on June 22, 2023. A loss of $11.5 million and $10.7 million from the change in fair value of the Company’s Level 1 indemnification asset during the three and six months ended June 30, 2023 was recorded in General and administrative expense on the Company's consolidated statements of operations and comprehensive income. The $15.8 million Indemnity Amount, which was the fair value of the shares returned to treasury, was recorded in Treasury stock on the Company's consolidated balance sheets, along with the 613,954 shares that the Company received from the sellers, as of June 30, 2023.

Benefit Plan Assets

The fair value of benefit plan assets is measured and recorded on the Company's consolidated balance sheets using Level 2 inputs. See Note 9, Pensions.

Fair Value of Financial Instruments

The Company considers the carrying amounts of cash, trade receivables, and accounts payable to approximate fair value because of the relatively short period of time between the origination of these instruments and their expected realization or payment.

Additionally, the Company considers the carrying amounts of its New ABL Facility and Prior ABL Facility (each as defined in Note 8, Debt Obligations) and financing obligations to approximate their respective fair values due to their short-term nature and approximation of interest rates to market rates. These fair value measurements are considered Level 2. See Note 8, Debt Obligations.

The New Term Loan and Prior Term Loan (each as defined in Note 8, Debt Obligations) are carried at amortized cost; however, the Company estimates the fair value of the New Term Loan and Prior Term Loan for disclosure purposes. The fair values of the New Term Loan and Prior Term Loan are determined based on quoted prices that are observable in the marketplace and are classified as Level 2 measurements. See Note 8, Debt Obligations.

The following table sets forth the carrying amount and fair value of the New Term Loan and Prior Term Loan:


	June 30, 2024				December 31, 2023
(in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
New Term Loan, net	$	324,092	$	329,763	$	—	$	—
Prior Term Loan, net	—		—		300,052		300,052

Note 5 Goodwill and Intangible Assets

Goodwill

The following table sets forth the changes in the carrying amount of the Company's goodwill for the six months ended June 30, 2024 and the year ended December 31, 2023.


(in thousands)	Thryv Marketing Services		Thryv SaaS		Total
Balance as of December 31, 2022	$	347,120	$	218,884	$	566,004
Yellow Acquisition (1)	5,129		—		5,129
Impairments	(268,800)		—		(268,800)
Effects of foreign currency translation	67		—		67
Balance as of December 31, 2023	$	83,516	$	218,884	$	302,400



Effects of foreign currency translation	(1,405)		—		(1,405)
Balance as of June 30, 2024	$	82,111	$	218,884	$	300,995

(1) Yellow was included in the Thryv Marketing Services reporting unit.

In the first quarter of 2024, the Company changed its reporting structure from four to two reporting units. Accordingly, the Company assessed its goodwill for impairment under a four reporting unit structure prior to the assessment. Upon completion of this assessment, the Company determined that no impairment existed. Subsequent to this review and after allocating goodwill to the new reporting units based on relative fair value, the Company reassessed goodwill for impairment at the new reporting unit level (i.e., the Marketing Services and SaaS reporting units). Based upon each of these assessments, the Company determined no impairment existed for any of the Company's reporting units.

Intangible Assets

The following tables set forth the details of the Company's intangible assets as of June 30, 2024 and December 31, 2023:


	As of June 30, 2024
(in thousands)	Gross		Accumulated Amortization		Net		Weighted Average Remaining Amortization Period in Years
Client relationships	$	797,854	$	(792,836)	$	5,018	1.3
Trademarks and domain names	223,916		(222,487)		1,429		2.5
Covenants not to compete	4,921		(4,728)		193		1.0
Total intangible assets	$	1,026,691	$	(1,020,051)	$	6,640	1.5


	As of December 31, 2023
(in thousands)	Gross		Accumulated Amortization		Net		Weighted Average Remaining Amortization Period in Years
Client relationships	$	799,882	$	(787,736)	$	12,146	1.4
Trademarks and domain names	224,423		(220,886)		3,537		1.9
Covenants not to compete	10,446		(7,341)		3,105		0.8
Total intangible assets	$	1,034,751	$	(1,015,963)	$	18,788	1.4

Amortization expense for intangible assets for the three and six months ended June 30, 2024 was $5.1 million and $10.5 million, respectively. Amortization expense for intangible assets for the three and six months ended June 30, 2023 was $6.5 million and $12.7 million, respectively.

Estimated aggregate future amortization expense by fiscal year for the Company's intangible assets is as follows:


(in thousands)	Estimated Future Amortization Expense
2024 (remaining)	$	4,195
2025	1,867
2026	403
2027	134
2028	41
Total	$	6,640

Note 6 Allowance for Credit Losses

The following table sets forth the Company's allowance for credit losses as of June 30, 2024 and 2023:


(in thousands)	2024		2023
Balance as of January 1	$	14,961	$	14,799

Additions (1)	8,990		7,262
Deductions (2)	(5,872)		(7,634)
Balance as of June 30 (3)	$	18,079	$	14,427

(1) For the six months ended June 30, 2024 and 2023, the Company recorded a provision for credit losses of $9.0 million and $7.3 million, respectively, which is included in General and administrative expense in the Company's consolidated statements of operations and comprehensive income. For the three months ended June 30, 2024 and 2023, the Company recorded a provision for credit losses of $3.0 million and $3.4 million, respectively, which is included in General and administrative expense in the Company's consolidated statements of operations and comprehensive income.

(2) For the six months ended June 30, 2024 and 2023, the deductions represent amounts written off as uncollectible, net of recoveries.

(3) As of June 30, 2024, $18.0 million of the allowance is attributable to Accounts receivable and less than $0.1 million is attributable to Contract assets. As of June 30, 2023, $14.4 million of the allowance is attributable to Accounts receivable and less than $0.1 million is attributable to Contract assets.

The Company’s exposure to expected credit losses depends on the financial condition of its clients and other macroeconomic factors. The Company maintains an allowance for credit losses based upon its estimate of potential credit losses. This allowance is based upon historical and current client collection trends, any identified client-specific collection issues, and current as well as expected future economic conditions and market trends.

Note 7 Accrued Liabilities

The following table sets forth additional financial information related to the Company's accrued liabilities as of June 30, 2024 and December 31, 2023:


(in thousands)	June 30, 2024		December 31, 2023
Accrued salaries and related expenses	$	45,255	$	57,357
Accrued expenses	35,575		37,889
Accrued taxes	26,966		8,832
Accrued service credits	2,397		1,825

Accrued liabilities	$	110,193	$	105,903

Note 8 Debt Obligations

The following table sets forth the Company's outstanding debt obligations as of June 30, 2024 and December 31, 2023:


(in thousands)	Maturity	Interest Rate		June 30, 2024		December 31, 2023
New Term Loan	May 1, 2029	SOFR +	6.75%	$	336,375	$	—
Prior Term Loan	March 1, 2026	SOFR +	8.5%	—		309,368
New ABL Facility	May 1, 2028	SOFR +	2.50% - 2.75%	18,000		—
Prior ABL Facility	March 1, 2026	SOFR +	3.0%	—		48,845
Unamortized original issue discount and debt issuance costs				(12,283)		(9,316)
Total debt obligations				$	342,092	$	348,897
Current portion of New Term Loan/Prior Term Loan				(52,500)		(70,000)
Total long-term debt obligations				$	289,592	$	278,897

Term Loan

On May 1, 2024, the Company entered into a new Term Loan Credit Agreement (the “New Term Loan”), the proceeds of which were used to refinance and pay off in full the Company’s previous term loan facility (the “Prior Term Loan”) and to pay fees and expenses related to the refinancing.

The New Term Loan established a senior secured term loan facility (the “New Term Loan Facility”) in an aggregate principal amount equal to $350.0 million, of which 31.8% was held by a related party who was an equity holder of the Company as of May 1, 2024. The Company defines a related party as any shareholder owning more than 5% of the Company's voting securities. As of June 30, 2024, 31.8% of the New Term Loan was held by a related party who was an equity holder of the Company as of that date.

The New Term Loan Facility matures on May 1, 2029 and borrowings under the New Term Loan Facility bear interest at a fluctuating rate per annum equal to, at the Company’s option, SOFR or base rate, in each case, plus an applicable margin per annum equal to (i) 6.75% (for SOFR loans) and (ii) 5.75% (for base rate loans). The New Term Loan Facility requires mandatory amortization payments, paid quarterly commencing June 30, 2024, equal to (i) $52.5 million per year for the first two years following the closing date of the New Term Loan, and (ii) $35.0 million per year thereafter.

The New Term Loan, which was incurred by Thryv, Inc., the Company’s operating subsidiary, is secured by all the assets of Thryv, Inc., certain of its subsidiaries and the Company, and is guaranteed by the Company and certain of its subsidiaries.

The net proceeds from the New Term Loan of $337.6 million (net of original issue discount costs of $6.3 million and third-party fees of $6.1 million) were used to repay the remaining $300.0 million outstanding principal balance of the Prior Term Loan, accrued interest of $3.8 million, and third-party fees of $0.6 million. The Company accounted for this transaction as a modification for lenders that were party to both the Prior Term Loan and New Term Loan. The debt of the new lenders that were party to the New Term Loan are new issuances, while the other lenders that were party to only the Prior Term Loan were accounted for as an extinguishment.

Accordingly, total third-party fees paid were $6.1 million, of which $2.0 million was immediately charged to General and administrative expense on the Company's consolidated statement of operations and comprehensive income. The remaining third-party fees of $4.1 million were deferred as debt issuance costs and will be amortized to interest expense, over the term of the New Term Loan, using the effective interest method. Additionally, there were unamortized debt issuance costs which includes third-party fees and original issue discount costs of $7.8 million on the Prior Term Loan, of which $5.4 million was written off and recorded as a loss on early extinguishment of debt on the Company's consolidated statement of operations and comprehensive income. The remaining unamortized debt issuance costs of $2.4 million were deferred as debt issuance costs and will be amortized to interest expense, over the term of the New Term Loan, using the effective interest method.

The Company has recorded accrued interest of $0.2 million and $1.1 million as of June 30, 2024 and December 31, 2023, respectively. Accrued interest is included in Other current liabilities on the Company's consolidated balance sheets.

Term Loan Covenants

The New Term Loan Facility contains certain covenants that, subject to exceptions, limit or restrict the Company’s ability to, among others, incur additional indebtedness, guarantees and liens; make investments, loans and advances; dispose of assets and make sale-leaseback transactions; enter into swap agreements; make payments of dividends and other distributions; make payments in respect of certain indebtedness; enter into certain affiliate transactions and restrictive amendments to certain agreements; change its lines of business; amend certain material documents; consummate certain mergers, consolidations and liquidations; and use the proceeds of the term loans.

Additionally, the Company is required to maintain compliance with (a) a maximum “Total Net Leverage Ratio”, calculated as the ratio of “Consolidated Total Net Indebtedness” to “Consolidated EBITDA” (in each case, as defined in the New Term Loan, which shall not be 3.0 to 1.0 as of the last day of each fiscal quarter and (b) a minimum “SaaS Revenue” (as defined in the New Term Loan), which shall not be less than the quarterly thresholds set forth in the New Term Loan Agreement as of the last day of each fiscal quarter. As of June 30, 2024, the Company was in compliance with its New Term Loan covenants. The Company also expects to be in compliance with these covenants for the next twelve months.

ABL Facility

On May 1, 2024, the Company entered into a new Credit Agreement (the “ABL Credit Agreement”), which established a new $85.0 million asset-based revolving loan facility (the “New ABL Facility”). The New ABL Facility refinanced the Company’s previous asset-based revolving loan facility (the “Prior ABL Facility”). Proceeds of the New ABL Facility may be used by the Company for ongoing general corporate purposes and working capital.

The New ABL Facility matures on May 1, 2028 and borrowings under the New ABL Facility bear interest at a fluctuating rate per annum equal to, at the Company’s option, SOFR or base rate, in each case, plus an applicable margin per annum, depending on the average excess availability under the New ABL Facility, equal to (i) 2.50% to 2.75% (for SOFR loans) and (ii) 1.50% to 1.75% (for base rate loans). The fee for undrawn commitments under the New ABL Facility is equal to 0.375% per annum.

The Company accounted for this transaction as an extinguishment of the Prior ABL Facility. Total third-party fees and lender fees of $1.2 million associated with the New ABL Facility, were deferred as debt issuance costs and will be amortized as interest expense, over the term of the New ABL Facility. Additionally, the unamortized debt issuance costs associated with the Prior ABL Facility of $1.2 million, were written off and recorded as a loss on early extinguishment of debt on the Company's consolidated statement of operations and comprehensive income.

As of June 30, 2024 and December 31, 2023, the Company had debt issuance costs with a remaining balance of $1.2 million and $1.4 million, respectively. These debt issuance costs are included in Other assets on the Company's consolidated balance sheets.

As of June 30, 2024, the Company had borrowing base availability of $64.8 million. As a result of certain restrictions in the Company's debt agreements, as of June 30, 2024, approximately $54.2 million was available to be drawn upon under the New ABL Facility.

ABL Facility Covenants

The ABL Credit Agreement contains certain covenants that, subject to exceptions, limit or restrict the Company’s ability to, among others, incur additional indebtedness, guarantees and liens; make investments, loans and advances; dispose of assets and make sale-leaseback transactions; enter into swap agreements; make payments of dividends and other distributions; make payments in respect of certain indebtedness; enter into certain affiliate transactions and restrictive amendments to certain agreements; change its lines of business; amend certain material documents; consummate certain mergers, consolidations and liquidations; and use the proceeds of the revolving loans.

Additionally, the Company is required to maintain compliance with (a) a minimum “Fixed Charge Coverage Ratio”, calculated as the ratio of “Consolidated EBITDA” minus unfinanced capital expenditures to “Fixed Charges” (in each case, as defined in the ABL Credit Agreement), which shall not be less than 1.0 to 1.0 as of the last day of each fiscal quarter and

(b) a minimum “Excess Availability” (as defined in the ABL Credit Agreement) of at least $8.5 million at all times. As of June 30, 2024, the Company was in compliance with its ABL Credit Agreement covenants. The Company also expects to be in compliance with these covenants for the next twelve months.

Note 9 Pensions

The Company maintains pension obligations associated with non-contributory defined benefit pension plans that are currently frozen and incur no additional service costs.

The Company immediately recognizes actuarial gains and losses in its operating results in the period in which the gains and losses occur. The Company estimates the interest cost component of net periodic pension cost by utilizing a full yield curve approach and applying the specific spot rates along the yield curve used in the determination of the benefit obligations of the relevant projected cash flows. This method provides a more precise measurement of interest costs by improving the correlation between projected cash flows to the corresponding spot yield curve rates.

Net Periodic Pension Cost

The following table details the other components of net periodic pension cost for the Company's pension plans:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2024		2023		2024		2023
Interest cost	$	4,824	$	7,406	$	9,648	$	10,910
Expected return on assets	(3,243)		(3,778)		(6,486)		(7,161)
Settlement (gain)	—		(420)		—		(420)
Remeasurement (gain)	—		(1,343)		—		(1,343)
Net periodic pension cost	$	1,581	$	1,865	$	3,162	$	1,986

Since all pension plans are frozen and no employees accrue future pension benefits under any of the pension plans, the rate of compensation increase assumption is no longer needed. The Company determines the weighted-average discount rate by applying a yield curve comprised of the yields on several hundred high-quality, fixed income corporate bonds available on the measurement date to expected future benefit cash flows.

During the three and six months ended June 30, 2023, the Company recognized a settlement gain of $0.4 million, and as a result of an interim actuarial valuation due to the settlement of one of the Company's pension plans, the Company recognized a remeasurement gain of $1.3 million.

During the three and six months ended June 30, 2024, the Company made no contributions to the qualified plans and contributions and associated payments of $0.1 million and $0.3 million to the non-qualified plans. During the three and six months ended June 30, 2023, the Company made no cash contributions to the qualified plans, and contributions and associated payments of $0.1 million and $0.3 million to the non-qualified plans.

For the fiscal year 2024, the Company does not expect to make a contribution to the qualified plans and expects to contribute approximately $0.5 million to the non-qualified plans.

Note 10 Stock-Based Compensation and Stockholders' Equity

Stock-Based Compensation Expense

The following table sets forth stock-based compensation expense recognized by the Company in the following line items in the Company's consolidated statements of operations and comprehensive income during the periods presented:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2024		2023		2024		2023
Cost of services	$	174	$	173	$	347	$	322
Sales and marketing	2,313		2,954		3,340		5,612
General and administrative	3,866		2,671		7,955		5,257
Stock-based compensation expense	$	6,353	$	5,798	$	11,642	$	11,191

The following table sets forth stock-based compensation expense by award type during the periods presented:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2024		2023		2024		2023
RSUs	$	3,187	$	2,409	$	6,584	$	4,820
PSUs	2,609		2,352		4,105		4,615
Stock options	143		413		290		841
ESPP	414		624		663		915
Stock-based compensation expense	$	6,353	$	5,798	$	11,642	$	11,191

Restricted Stock Units

The following table sets forth the Company's restricted stock unit (“RSU”) activity during the six months ended June 30, 2024:


	Number of Restricted Stock Units	Weighted-Average Grant-Date Fair Value

Nonvested balance as of December 31, 2023	992,464	$	21.52
Granted	891,598	18.42
Vested	(430,520)	22.13
Forfeited	(222,999)	19.32
Nonvested balance as of June 30, 2024	1,230,543	$	19.46

The Company grants RSUs to the Company's employees and non-employee directors under the Company’s 2020 Incentive Award Plan (the “2020 Plan”). Pursuant to the RSU award agreements, each RSU entitles the recipient to one share of the Company’s common stock, subject to time-based vesting conditions set forth in individual agreements.

The fair value of each RSU grant is determined based upon the market closing price of the Company’s common stock on the date of grant. The RSUs vest over the requisite service period, which ranges between one year and three years from the date of grant, subject to the continued employment of the employees and services of the non-employee board members.

As of June 30, 2024, the unrecognized stock-based compensation expense related to the unvested portion of the Company's RSU awards was approximately $19.1 million and is expected to be recognized over a weighted-average period of 1.98 years.

During the six months ended June 30, 2024, the Company issued an aggregate of 430,520 shares of common stock to employees and non-employee directors upon the vesting of RSUs previously granted under the 2020 Plan.

Performance-Based Restricted Stock Units

The following table sets forth the Company's performance-based restricted stock unit (“PSU”) activity during the six months ended June 30, 2024:


	Number of Performance-Based Restricted Stock Units	Weighted-Average Grant-Date Fair Value

Nonvested balance as of December 31, 2023	1,130,779	$	23.68
Granted	693,936	18.89
Vested	(122,241)	26.33
Forfeited	(352,116)	22.31
Nonvested balance as of June 30, 2024	1,350,358	$	21.85

The Company also grants PSUs to employees under the Company’s 2020 Plan. Pursuant to the PSU Award Agreement, each PSU entitles the recipient to up to 1.5 shares of the Company’s common stock, subject to certain performance measures set forth in individual agreements.

The PSUs will vest, if at all, following the achievement of certain performance measures over a three year performance period, relative to certain performance and market conditions. The grant date fair value of PSUs that vest relative to a performance condition is measured based upon the market closing price of the Company’s common stock on the date of grant and expensed on a straight-line basis when it becomes probable that the performance conditions will be satisfied, net of forfeitures, over the service period of the awards, which is generally the vesting term of three years. The grant date fair value of PSUs that vest relative to a market condition is measured using a Monte Carlo simulation model and expensed on a straight-line basis, net of forfeitures, over the service period of the awards, which is generally the vesting term of three years. As of June 30, 2024, the nonvested balance of PSUs that vest based on performance and market conditions are 729,894 and 1,094,821 shares, respectively.

As of June 30, 2024, the unrecognized stock-based compensation expense related to the unvested portion of the Company's PSU awards was approximately $15.1 million and is expected to be recognized over a weighted-average period of 1.64 years.

Stock Options

As of June 30, 2024, the unrecognized stock-based compensation expense related to the unvested portion of the Company's stock options was approximately $0.2 million, and is expected to be recognized over a weighted average period of 0.29 years. As of June 30, 2024, there were 83,334 stock options expected to vest with a weighted-average grant-date fair value of $13.82.

During the six months ended June 30, 2024, the Company issued an aggregate of 566,811 shares of common stock to employees upon the exercise of options previously granted under the 2016 Stock Incentive Plan and 2020 Plan at exercise prices ranging from $3.68 to $13.82 per share.

During the six months ended June 30, 2023, the Company issued an aggregate of 156,592 shares of common stock to employees upon the exercise of options previously granted under the 2016 Stock Incentive Plan and 2020 Plan at exercise prices ranging from $3.68 to $13.82 per share.

Employee Stock Purchase Plan

During the six months ended June 30, 2024, the Company issued 149,983 shares through the Employee Stock Purchase Plan (“ESPP”). During the six months ended June 30, 2023, the Company issued 189,837 shares through the ESPP.

Share Repurchase Program

On April 30, 2024, the Board authorized a new share repurchase program (the “Share Repurchase Program”), under which the Company may repurchase up to $40 million in shares of common stock through April 30, 2029. The repurchase program will be subject to market conditions, the periodic capital needs of the Company’s operating activities, and the continued satisfaction of all covenants under the Company’s New Term Loan and ABL Credit Agreement. The Share

Repurchase Program does not obligate the Company to repurchase shares and may be suspended, terminated, or modified at any time.

On June 20, 2024, the Company repurchased approximately 26,495 shares of its outstanding common stock. The total purchase price of this transaction was approximately $0.5 million. The acquired shares were recorded as Treasury stock upon repurchase.

Note 11 Earnings per Share

The following table sets forth the calculation of the Company's basic and diluted earnings per share for the three and six months ended June 30, 2024 and 2023:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except share and per share amounts)	2024		2023		2024		2023
Basic net income per share:
Net income	$	5,548	$	15,978	$	13,972	$	25,292
Weighted-average common shares outstanding during the period	36,004,324		34,575,338		35,818,549		34,625,561
Basic net income per share	$	0.15	$	0.46	$	0.39	$	0.73


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except share and per share amounts)	2024		2023		2024		2023
Diluted net income per share:
Net income	$	5,548	$	15,978	$	13,972	$	25,292
Weighted-average basic shares outstanding during the period	36,004,324		34,575,338		35,818,549		34,625,561
Plus: Common stock equivalents associated with stock-based compensation	1,627,501		2,287,957		2,213,583		2,331,372
Weighted-average diluted shares outstanding	37,631,825		36,863,295		38,032,132		36,956,933
Diluted net income per share	$	0.15	$	0.43	$	0.37	$	0.68

The computation of weighted-average diluted shares outstanding excluded the following share amounts as their effect would have been anti-dilutive for the three and six months ended June 30, 2024 and 2023:


	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Outstanding RSUs	52,683	339,173	192,347	328,207
Outstanding PSUs	124,811	284,025	221,326	284,025
Outstanding ESPP shares	124,502	105,559	167,265	76,846
Outstanding Stock warrants	—	5,231,572	—	5,234,493

Note 12 Income Taxes

The Company’s effective tax rate (“ETR”) was 54.4% and 46.2% for the three and six months ended June 30, 2024, respectively, and (27.3%) and 4.1% for the three and six months ended June 30, 2023, respectively. The Company's ETR differs from the 21.0% U.S. Federal statutory rate primarily due to permanent differences, including state taxes, non-deductible executive compensation, non-U.S. taxing jurisdictions, tax credits, change in valuation allowance due to expiring net operating losses, and the discrete impact of the debt refinancing discussed in Note 8, Debt Obligations.

As of June 30, 2024 and December 31, 2023, the amount of unrecognized tax benefits was $18.1 million and $17.1 million, respectively, excluding interest and penalties, that if recognized, would impact the effective tax rate. As of June 30, 2024 and December 31, 2023, the Company had $10.1 million and $9.0 million, respectively, recorded for interest on the Company's consolidated balance sheets. The Company engages in continuous discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. The Company expects to complete resolution of certain tax years with various tax authorities within the next 12 months. The Company believes it is reasonably possible that its existing gross unrecognized tax benefits may be reduced by up to $15.6 million within the next 12 months, affecting the Company’s ETR if realized. See Note 13, Contingent Liabilities.

Risks Related to Taxes and Tariffs

The international tax environment remains highly uncertain and increasingly complex as evidenced by initiatives put forth by the Organization for Economic Co-operation and Development (“OECD”), which includes the introduction of a global minimum tax at a rate of 15% under the OECD’s Pillar Two rules. We continue to monitor these proposals closely and, if enacted by various countries in which we do business, they may increase our taxes in the applicable jurisdictions or cause us to change the way we operate our business and result in increased taxation of our international earnings. As of the six months ended June 30, 2024, Pillar Two legislation enacted by countries in which Thryv operates is not expected to materially impact the Company’s taxes in 2024.

Note 13 Contingent Liabilities

Litigation

The Company is subject to various lawsuits and other claims in the normal course of business. In addition, from time to time, the Company receives communications from government or regulatory agencies concerning investigations or allegations of noncompliance with laws or regulations in jurisdictions in which the Company operates.

The Company establishes reserves for the estimated losses on specific contingent liabilities for regulatory and legal actions where the Company deems a loss to be probable and the amount of the loss can be reasonably estimated. In other instances, losses are considered probable, but the Company is not able to make a reasonable estimate of the liability because of the uncertainties related to the outcome or the amount or range of potential loss. For these matters, disclosure is made when material, but no amount is reserved. The Company does not expect that the ultimate resolution of pending regulatory and legal matters in future periods will have a material adverse effect on the Company's consolidated statements of operations and comprehensive income, balance sheets or cash flows.

Section 199 and Research and Development Tax Case

Section 199 of the Internal Revenue Code of 1986, as amended (the “Tax Code”), provides for deductions for manufacturing performed in the U.S. The Internal Revenue Service (“IRS”) has taken the position that directory providers are not entitled to take advantage of the deductions because printing vendors are already taking deductions and only one taxpayer can claim the deduction. The Tax Code also grants tax credits related to research and development expenditures. The IRS also takes the position that the expenditures have not been sufficiently documented to be eligible for the tax credit. The Company disagrees with these positions.

The IRS has challenged the Company's positions. With respect to the tax years 2012 through June 2015 for the YP LLC partnership, the IRS sent 90-day notices to DexYP on August 29, 2018. In response, the Company filed three petitions (in the names of various related partners) in U.S. Tax Court, and the IRS filed answers to those petitions. The three cases were consolidated by the court and were referred back to IRS Administrative Appeals for settlement negotiations, during which time the litigation was suspended. Several appeals conferences for YP have been held. The Company and the IRS also reached an agreement regarding additional research and development tax credits for the tax years at issue whereby the IRS will allow more tax credits than were originally claimed on the tax returns. With respect to the tax year from July to December 2015 for the Print Media LLC partnership, the Company has been unsuccessful in its attempt to negotiate a settlement with IRS Appeals, and the IRS issued a 90-day notice to the Company. The Company filed a petition in the U.S. Tax Court to challenge the IRS denial.

As of June 30, 2024 and December 31, 2023, the Company has reserved $27.2 million and $26.1 million, respectively, in connection with the Section 199 disallowance and less than $0.1 million related to the research and development tax credit

disallowance. See Note 4, Fair Value Measurements, for a discussion of the Company's former indemnification asset related to these matters.

On May 22, 2023, the Company received a draft Appeals Settlement document (“Draft Settlement”) from the IRS relating to the IRC Section 199 tax case. Once finalized, the Draft Settlement will result in a decrease in the unrecognized tax benefit recorded for this tax position. During the year ended December 31, 2023, the Company recorded a measurement adjustment to the uncertain tax position liability to account for the new information received from the Draft Settlement. The Company is in continued discussion with the IRS regarding the finalization of this case and final tax impact that will result. As of June 30, 2024, the final settlement has not been issued by the IRS. Accordingly, the Company does not consider the matter effectively settled.

Note 14 Changes in Accumulated Other Comprehensive Loss

The following table summarizes the changes in accumulated other comprehensive loss, which is reported as a component of stockholders' equity, for the six months ended June 30, 2024 and 2023:


	Accumulated Other Comprehensive Loss
(in thousands)	2024		2023
Beginning balance at January 1,	$	(15,191)	$	(16,261)
Foreign currency translation adjustment, net of tax expense of $0.1 million and $1.1 million, respectively	(198)		(2,490)
Ending balance at June 30,	$	(15,389)	$	(18,751)

Note 15 Segment Information

During the first quarter of 2024, the Company changed the internal reporting provided to the CODM. As a result, the Company reevaluated its segment reporting, as discussed in Note 1, Description of Business and Summary of Significant Accounting Policies. The Company determined that the Company manages its operations using two operating segments, which are also its reportable segments: (1) Thryv Marketing Services and (2) Thryv SaaS. Comparative prior periods have been recast to reflect the current presentation.

The Company does not allocate assets to its segments and the CODM does not evaluate performance or allocate resources based on segment asset data, and therefore, such information is not presented.

The following tables summarize the operating results of the Company's reportable segments:


	Three Months Ended June 30, 2024
(in thousands)	Thryv Marketing Services		Thryv SaaS		Total
Revenue	$	146,290	$	77,794	$	224,084
Segment Gross Profit	96,299		52,289		148,588
Segment Adjusted EBITDA	49,149		10,165		59,314


	Three Months Ended June 30, 2023
(in thousands)	Thryv Marketing Services		Thryv SaaS		Total
Revenue	$	188,963	$	62,458	$	251,421
Segment Gross Profit	120,875		39,210		160,085
Segment Adjusted EBITDA	63,209		6,230		69,439


	Six Months Ended June 30, 2024
(in thousands)	Thryv Marketing Services		Thryv SaaS		Total
Revenue	$	305,592	$	152,116	$	457,708
Segment Gross Profit	200,845		101,384		302,229
Segment Adjusted EBITDA	99,828		13,600		113,428


	Six Months Ended June 30, 2023
(in thousands)	Thryv Marketing Services		Thryv SaaS		Total
Revenue	$	374,589	$	122,387	$	496,976
Segment Gross Profit	238,529		76,364		314,893
Segment Adjusted EBITDA	121,882		6,026		127,908

A reconciliation of the Company’s Income before income tax expense to total Segment Adjusted EBITDA is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2024		2023		2024		2023
Income before income tax expense	$	12,166	$	12,550	$	25,987	$	26,360
Interest expense	12,175		16,292		25,534		32,780
Depreciation and amortization expense	14,072		15,667		28,625		31,098
Stock-based compensation expense	6,353		5,798		11,642		11,191
Restructuring and integration expenses	7,553		3,921		12,818		9,261
Transaction costs (1)	—		—		—		373
Other components of net periodic pension cost	1,581		1,865		3,162		1,986
Loss on early extinguishment of debt	6,638		—		6,638		—
Non-cash loss from remeasurement of indemnification asset	—		11,490		—		10,734

Other	(1,224)		1,856		(978)		4,125
Total Segment Adjusted EBITDA	$	59,314	$	69,439	$	113,428	$	127,908

(1)Consists of expenses related to the Yellow Acquisition and other transaction costs.

The following table sets forth the Company's disaggregation of Revenue based on services for the periods indicated:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2024		2023		2024		2023
Thryv Marketing Services
Print	$	82,631	$	86,494	$	167,267	$	163,860
Digital	63,659		102,469		138,325		210,729
Total Thryv Marketing Services	146,290		188,963		305,592		374,589
Thryv SaaS	77,794		62,458		152,116		122,387
Revenue	$	224,084	$	251,421	$	457,708	$	496,976

Revenue by geography is based on the location of the customer. The following table sets forth the Company's disaggregation of Revenue based on geographic region for the periods indicated:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2024		2023		2024		2023
United States	$	178,129	$	197,834	$	374,569	$	403,261
International	45,955		53,587		83,139		93,715
Revenue	$	224,084	$	251,421	$	457,708	$	496,976

Thryv Australia's revenue attributed to the International region was approximately 16.9% and 18.9% of total revenue for the three months ended June 30, 2024 and 2023, respectively, and 15.9% and 17.6% for the six months ended June 30, 2024 and 2023, respectively. No other individual country from the International region contributed more than 10% of total revenue for the three and six months ended June 30, 2024 and 2023.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion and analysis of our financial condition and results of operations as of, and for, the periods presented and should be read in conjunction with our unaudited interim consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report. This discussion and analysis contains forward-looking statements, including statements regarding industry outlook, our expectations for the future of our business, and our liquidity and capital resources as well as other non-historical statements. These statements are based on current expectations and are subject to numerous risks and uncertainties, including but not limited to the risks and uncertainties described in “Risk Factors” in our 2023 Form 10-K, elsewhere in this Quarterly Report on Form 10-Q, particularly Part II, Item 1A. "Risk Factors," and “Cautionary Note Regarding Forward-Looking Statements.” Our actual results may differ materially from those contained in or implied by these forward-looking statements.

Overview

We are dedicated to supporting local, independent businesses and franchises by providing innovative marketing solutions and cloud-based tools to the entrepreneurs who run them. We are one of the largest providers of SaaS end-to-end customer experience tools and digital marketing solutions (“Digital”) to small-to-medium sized businesses (“SMBs”). Our solutions enable our SMB clients to generate new business leads, manage their customer relationships and run their day-to-day business operations. We serve approximately 310,000 SMB clients globally through two business segments: Thryv Marketing Services and Thryv SaaS.

Our Thryv Marketing Services segment provides both print and digital solutions and generated $146.3 million and $189.0 million of consolidated revenue for the three months ended June 30, 2024 and 2023, respectively, and $305.6 million and $374.6 million of consolidated revenue for the six months ended June 30, 2024 and 2023, respectively. Our Marketing Services offerings include our owned and operated Print Yellow Pages (“Print”), which carry the “The Real Yellow Pages” tagline, our proprietary Internet Yellow Pages, known by the Yellowpages.com, Superpages.com, and Dexknows.com URLs, search engine marketing solutions and other digital media solutions, which include online display advertising, online presence, and search engine optimization tools. Our Thryv Marketing Services segment includes Thryv Australia Pty Ltd (“Thryv Australia”), and Yellow Holdings Limited (“Yellow”), a New Zealand marketing services company, which we acquired on April 3, 2023 for $8.9 million in cash (the “Yellow Acquisition”), subject to certain adjustments. Thryv Australia and Yellow serve approximately 85,000 and 17,000 Marketing Services SMBs, respectively, many of which we believe are ideal candidates for the Thryv platform.

Our Thryv SaaS segment generated $77.8 million and $62.5 million of consolidated revenue for the three months ended June 30, 2024 and 2023, respectively and $152.1 million and $122.4 million of consolidated revenue for the six months ended June 30, 2024 and 2023, respectively. Our primary SaaS offerings are comprised of Thryv®, our flagship all-in-one small business management platform (“Thryv Platform”), which includes Command Center, Business Center, Marketing Center, ThryvPaySM, and Thryv Add-Ons. Thryv Command Center enables SMBs to centralize all their communications through a modular, easily expandable, and customizable platform. Command Center allows an SMB to do the following to provide a centralized inbox for all customer communication:

•Connect their pre-existing email, Facebook and Instagram accounts;

•Install Command Center’s WebChat client on their website; and

•Use Voice over Internet Protocol (“VoIP”) in-platform telephony services, Short Message Service (“SMS”) and video calls.

Thryv Business Center is designed to allow a SMB everything necessary to streamline day-to-day business, including customer relationship management, appointment scheduling, estimate and invoice creation, and online review management. Thryv Marketing Center is a fully integrated next generation marketing and advertising platform operated by the end user. Marketing Center contains everything a small business owner needs to market and grow their business effectively, including easy to understand, artificial intelligence (“AI”) driven analytics. ThryvPaySM, is our own branded payment solution that allows users to get paid via credit card and ACH and is tailored to service focused businesses that want to provide consumers safe, contactless, and fast-online payment options. Thryv Add-Ons include AI-assisted website development, SEO tools, Google Business Profile optimization, and Hub by ThryvSM. These optional platform subscription-based add-ons provide a seamless user experience for our end-users and drive higher engagement within the Thryv Platform while also producing incremental revenue growth.

Our expertise in delivering solutions for our client base is rooted in our deep history of serving SMBs. In 2024, SMB demand for integrated technology solutions continues to grow as SMBs adapt their business and service model to facilitate remote working and virtual interactions.

Factors Affecting Our Performance

Our operations can be impacted by, among other factors, general economic conditions and increased competition with the introduction of new technologies and market entrants. We believe that our performance and future success depend on several factors that present significant opportunities for us, but also pose risks and challenges, including those listed below and those discussed in the section titled “Cautionary Note Regarding Forward-Looking Statements.”

Ability to Attract and Retain Clients

Our revenue growth is driven by our ability to attract and retain SMB clients. To do so, we must deliver solutions that address the challenges currently faced by SMBs at a value-based price point that SMBs can afford.

Our strategy is to expand the use of our solutions by introducing our SaaS solutions to new SMB clients, as well as our current Thryv Marketing Services clients. This strategy includes capitalizing on the increased needs of SMBs for solutions that facilitate a remote working environment and virtual interactions. This strategy will require substantial sales and marketing capital.

Investment in Growth

We intend to continue to develop and grow a profitable SaaS segment to better help SMBs manage their businesses, while maintaining strong profitability within our Marketing Services segment, which serves as an efficient customer acquisition channel for our SaaS platform. As a result, SaaS has been able to achieve profitable growth. We will continue to improve our SaaS solutions by analyzing user behavior, expanding features, improving usability, enhancing our onboarding services and customer support and making version updates available to SMBs. We believe these initiatives will ultimately drive revenue growth; however, such improvements will also increase our operating expenses.

Ability to Grow Through Acquisition

Our growth prospects depend upon our ability to successfully develop new markets. We currently serve SMB markets in the United States, Australia, New Zealand and Canada and plan to leverage strategic acquisitions or initiatives to expand our client base domestically and enter new markets internationally. Identifying proper targets and executing strategic acquisitions may take substantial time and capital. On April 3, 2023, we completed the acquisition of Yellow, a New Zealand marketing services company. We believe that strategic acquisitions of marketing services companies globally will expand our client base and provide additional opportunities to offer our SaaS solutions.

Print Publication Cycle

We recognize revenue for print services at a point in time upon delivery of the published PYP directories containing customer advertisements to the intended market. Our PYP directories typically have 12-month publication cycles in Australia, 18-month publication cycles in New Zealand, and 15 to 18-month publication cycles in the U.S. As a result, we typically record revenue for each publication only once every 12 to 18 months, depending on the publication cycle of the directory. The amount of revenue we recognize each quarter from our PYP directories is therefore directly related to the number of PYP directories we deliver to the intended market each quarter, which can vary based on the timing of the publication cycles.

Key Business Metrics

We review several operating metrics, including the following key business metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. We believe these key metrics are useful to investors both because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making, and they may be used by investors to help analyze the health of our business.

Total Clients

We define total clients as the number of SMB accounts with one or more revenue-generating solutions in a particular period. For quarter- and year-ending periods, total clients from the last month in the period are reported. A single client may have separate revenue-generating accounts for multiple Marketing Services solutions or SaaS offerings, but we count these as one client when the accounts are managed by the same business entity or individual. Although infrequent, where a single organization has multiple subsidiaries, divisions, or segments, each business entity that is invoiced by us is treated as a separate client. We believe that the number of total clients is an indicator of our market penetration and potential future business opportunities. We view the mix between Marketing Services clients and SaaS clients as an indicator of potential future opportunities to offer our SaaS solutions to our Marketing Services clients.


	As of June 30,
(in thousands)	2024	2023
Clients (1)
Marketing Services (2)	271	348
SaaS (3)	85	56
Total (4)	307	375

(1) Clients include total clients from both of our business segments: Thryv Marketing Services and Thryv SaaS.

(2) Clients that purchase one or more of our Marketing Services solutions are included in this metric. These clients may or may not also purchase subscriptions to our SaaS offerings.

(3) Clients that purchase subscriptions to our SaaS offerings are included in this metric. These clients may or may not also purchase one or more of our Marketing Services solutions.

(4) Total clients is less than the sum of the Marketing Services and SaaS, since clients that purchase both Marketing Services and SaaS products are counted in each category, but only counted once in the Total.

Marketing Services clients decreased by 77 thousand, or 22%, as of June 30, 2024 as compared to June 30, 2023. The decrease in Marketing Services clients was related to the secular decline in the print media industry, significant competition in the digital media space, and from focusing on offering our SaaS solutions to our current Marketing Services clients.

SaaS clients increased by 29 thousand, or 52%, as of June 30, 2024 as compared to June 30, 2023. The increase in SaaS clients resulted from focusing on offering our SaaS solutions to our current Marketing Services clients, as well as continuing to focus on new SaaS client acquisition through improved identification of prospects, improved selling methods, introduction of new product features, and a small but growing international footprint.

Total clients decreased by 68 thousand, or 18%, as of June 30, 2024 as compared to June 30, 2023. The primary driver of the decrease in total clients was the secular decline in the print media business combined with increasing competition in the digital media space, partially offset by an increase in SaaS clients.

Monthly ARPU

We define monthly average revenue per unit (“ARPU”) as our total client billings for a particular month divided by the number of clients that have one or more revenue-generating solutions in that same month. For each reporting period, the weighted-average monthly ARPU from all the months in the period are reported. ARPU varies based on product mix, product volumes, and the amounts we charge for our services. We believe that ARPU is an important measure of client spend and growth in ARPU is an indicator of client satisfaction with our services.


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
ARPU (Monthly)
Marketing Services	$	139	$	160	$	142	$	164
SaaS	333		377		350		378

Monthly ARPU for Marketing Services decreased by $21, or 13%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, and decreased by $22, or 13%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The decrease in ARPU for these periods was related to reduced spend by clients on our print media offerings due to the secular decline of the industry, caused by the continuing shift of advertising spend to larger digital media audiences. This decrease in ARPU was further driven by an ongoing reduction of our resale of high-spend, low margin third-party local search and display services that were not hosted on our owned and operated platforms.

Monthly ARPU for SaaS decreased by $44, or 12%, during the three months ended June 30, 2024 compared to the three months ended June 30, 2023, and decreased by $28, or 7%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The decrease in SaaS ARPU during the three months ended June 30, 2024 resulted from our strategic decision to accelerate the conversion of clients from digital Marketing Services solutions to SaaS solutions at a price lower than some of our SaaS products. The sale of our newer Marketing Center product to our SaaS clients offset a portion of the SaaS decline.

Key Components of Our Results of Operations

Revenue

We generate revenue from our two business segments: Thryv Marketing Services and Thryv SaaS. Our primary sources of revenue in our Thryv Marketing Services segment are Print and Digital services. Our primary source of revenue in our Thryv SaaS segment are our SaaS solutions.

Cost of Services

Cost of services consists of expenses related to delivering our solutions, such as publishing, printing, and distribution of our Print directories and fulfillment of our Digital and SaaS offerings, including traffic acquisition, managed hosting, and other third-party service providers. Additionally, Cost of services includes personnel-related expenses such as salaries, benefits, and stock-based compensation for our operations team, information technology expenses, non-capitalizable software and hardware purchases, and allocated overhead costs, which includes depreciation of fixed assets, and amortization associated with capitalized software and intangible assets.

Operating Expenses

Sales and Marketing

Sales and marketing expense consists primarily of base salaries, stock-based compensation, sales commissions paid to our inside and outside sales force and other expenses incurred by personnel within the sales, marketing, sales training, and client care departments. Additionally, Sales and marketing expense includes advertising costs such as media, promotional material, branding, online advertising, information technology expenses and allocated overhead costs which includes depreciation of fixed assets, and amortization associated with capitalized software and intangible assets.

General and Administrative

General and administrative expense primarily consists of salaries, benefits and stock-based compensation incurred by corporate management and administrative functions such as information technology, finance and accounting, legal, internal audit, human resources, billing and receivables, and management personnel. In addition, General and administrative expense includes bad debt expense, non-recurring charges, and other corporate expenses such as professional fees, operating taxes, and insurance. General and administrative expense also includes allocated overhead costs which includes depreciation of fixed assets, and amortization associated with capitalized software and intangible assets.

Other Income (Expense)

Other income (expense) consists of interest expense, other components of net periodic pension cost, and other expense, which includes loss on early extinguishment of debt, and foreign currency-related income and expense.

Results of Operations

Consolidated Results of Operations

The following table sets forth certain consolidated financial data for each of the periods indicated:


	Three Months Ended June 30,
	2024					2023(1)
	(unaudited)
(in thousands of $)	Amount			% of Revenue		Amount			% of Revenue
Revenue	$	224,084		100	%	$	251,421		100	%
Cost of services	75,496			33.7	%	91,336			36.3	%
Gross profit	148,588			66.3	%	160,085			63.7	%

Operating expenses:
Sales and marketing	65,409			29.2	%	75,683			30.1	%
General and administrative	51,841			23.1	%	53,695			21.4	%

Total operating expenses	117,250			52.3	%	129,378			51.5	%

Operating income	31,338			14.0	%	30,707			12.2	%

Other income (expense):
Interest expense	(12,175)			5.4	%	(16,292)			6.5	%

Other components of net periodic pension cost	(1,581)			0.7	%	(1,865)			0.7	%
Other expense	(5,416)			2.4	%	—			—	%
Income before income tax (expense) benefit	12,166			5.4	%	12,550			5.0	%
Income tax (expense) benefit	(6,618)			3.0	%	3,428			1.4	%
Net income	$	5,548		2.5	%	$	15,978		6.4	%
Other financial data:
Adjusted EBITDA(2)	$	59,314		26.5	%	$	69,439		27.6	%
Adjusted Gross Profit(3)	$	154,628				$	167,882
Adjusted Gross Margin(4)	69.0		%			66.8		%

(1) Consolidated results of operations includes Yellow's results of operations subsequent to the April 3, 2023 acquisition date.

(2) See “Non-GAAP Financial Measures” for a definition of Adjusted EBITDA and a reconciliation to Net income, the most directly comparable measure presented in accordance with GAAP.

(3) See “Non-GAAP Financial Measures” for a definition of Adjusted Gross Profit and a reconciliation to Gross profit, the most directly comparable measure presented in accordance with GAAP.

(4) See “Non-GAAP Financial Measures” for a definition of Adjusted Gross Margin.

Comparison of the Three Months Ended June 30, 2024 to the Three Months Ended June 30, 2023

Revenue

The following table summarizes Revenue by business segment for the periods indicated:


	Three Months Ended June 30,				Change
	2024		2023		Amount		%
(in thousands of $)	(unaudited)
Thryv Marketing Services	$	146,290	$	188,963	$	(42,673)	(22.6)	%
Thryv SaaS	77,794		62,458		15,336		24.6	%
Revenue	$	224,084	$	251,421	$	(27,337)	(10.9)	%

Revenue decreased by $27.3 million, or 10.9%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The decrease was driven by a decrease in Thryv Marketing Services revenue of $42.7 million, partially offset by an increase in Thryv SaaS revenue of $15.3 million.

Thryv Marketing Services Revenue

Thryv Marketing Services revenue decreased by $42.7 million, or 22.6%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

Print revenue decreased by $3.9 million, or 4.5%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. This decrease in Print revenue was primarily driven by the impact of publication timing differences of our U.S directories, as a result of our Print agreements having greater than 12 month terms, as well as the continued secular decline in U.S. and international industry demand for Print services.

Print revenue is recognized upon delivery of the published directories. Individual published directories have different publication cycles, with a typical lifecycle of 18 months for U.S. directories. As a result of recognizing revenue upon delivery, we typically record revenue for each published U.S. directory only once every 18 months, depending on the publication cycle of the individual published directory, which does not make comparing quarterly revenue year-over-year fully representative of actual demand trends due to timing of publication cycles. The Company recognized revenue for more published directories during the three months ended June 30, 2024 compared to the three months ended June 30, 2023. This increase in published directories was more than offset by the secular decline in industry demand for Print services, resulting in an overall 33% decline in revenue for the quarter when comparing on a publication-by-publication basis.

Digital revenue decreased by $38.8 million, or 37.9%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The decrease was primarily driven by a continued trending decline in the Company’s Marketing Services client base and significant competition in the consumer search and display space, particularly from large, well-capitalized businesses such as Google, Yelp and Facebook. Digital revenue further decreased as a result of the Company’s strategic decision during the fourth quarter of 2023 to accelerate the upgrade of clients from its digital Marketing Services solutions to its SaaS solutions.

Thryv SaaS Revenue

Thryv SaaS revenue increased by $15.3 million, or 24.6%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The increase was driven by increased demand for our Thryv SaaS solutions as SMBs accelerate their move away from manual processes and towards cloud platforms to more efficiently manage and grow their businesses, and by our success in re-focusing our go-to-market and onboarding strategy to target higher value clients. SaaS revenue also increased as a result of the Company’s strategic decision during the fourth quarter of 2023 to accelerate the conversion of clients from its digital Marketing Services solutions to its SaaS solutions.

Cost of Services

Cost of services decreased by $15.8 million, or 17.3%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. This decrease was primarily driven by the corresponding decline in revenue and strategic cost saving initiatives. Specifically, we reduced printing, distribution, digital and fulfillment costs by $7.3 million, contract services by $3.4 million, software expense by $1.7 million, and employee-related expenses by $1.3 million. Additionally,

depreciation and amortization expense decreased by $1.8 million, driven by the accelerated amortization method used by the Company.

Gross Profit

Gross profit decreased by $11.5 million, or 7.2%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The decrease in Gross profit was primarily due to a decrease in Marketing Services revenue, partially offset by an increase in SaaS revenue and a decrease in cost of services as a result of the decline in revenue and strategic cost saving initiatives. Our gross margin increased by 260 basis points to 66.3% for the three months ended June 30, 2024 compared to 63.7% for the three months ended June 30, 2023. This increase was primarily due to an increase in sales of our higher margin SaaS solutions and the reduction of our resale of high-spend, low margin third-party local search and display services that were not hosted on our owned and operated platforms.

Operating Expenses

Sales and Marketing

Sales and marketing expense decreased by $10.3 million, or 13.6%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The decrease was primarily attributable to a decrease in employee-related costs and contract services expense of $4.7 million due to strategic cost-saving initiatives, a decrease in sales commissions of $3.4 million due to new sales commissions plans and revised targets and a decrease in advertising expenses of $0.9 million.

General and Administrative

General and administrative expense decreased by $1.9 million, or 3.5%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The decrease was primarily attributable to the absence of an $11.5 million loss on settlement of indemnification asset that was recorded during the three months ended June 30, 2023. The decrease was partially offset by an increase in employee-related costs of $2.8 million, an increase in third-party fees associated with our debt refinancing of $2.0 million, an increase in severance expense of $1.3 million, and an increase in stock-based compensation of $1.2 million.

Other Income (Expense)

Interest Expense

Interest expense decreased by $4.1 million, or 25.3%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, driven primarily by the lower outstanding debt balances resulting from the New Term Loan and New ABL Facility as well as lower interest rates on our New Term Loan and New ABL Facility.

Other Components of Net Periodic Pension Cost

Other components of net periodic pension cost decreased by $0.3 million for the three months ended June 30, 2024. This decrease was primarily due a decrease of $2.6 million in interest cost, due to lower interest rates, partially offset by a settlement gain of $0.4 million and a remeasurement gain of $1.3 million that was recorded during the three months ended June 30, 2023. No settlement gain or remeasurement gain was recorded during the three months ended June 30, 2024.

Other Expense

Other expense increased by $5.4 million for the three months ended June 30, 2024. This increase was primarily due to a loss on extinguishment of debt of $6.6 million recorded during the three months ended June 30, 2024, partially offset by an increase in foreign-currency related gain of $1.2 million.

Income Tax (Expense) Benefit

The Company's effective tax rate (“ETR”) was 54.4% and (27.3%) for the three months ended June 30, 2024 and 2023, respectively. The Company's ETR differs from the U.S. statutory rate of 21% primarily due to permanent differences including state taxes, non-deductible executive compensation, non-U.S. taxing jurisdictions, tax credits, change in valuation allowance due to expiring net operating losses, and the discrete impact of the debt refinancing discussed in Note 8, Debt Obligations.

Adjusted EBITDA

Adjusted EBITDA decreased by $10.1 million, or 14.6%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The decrease in Adjusted EBITDA was primarily driven by the secular decline in our Thryv Marketing Services segment. The decrease was partially offset by the growth in our Thryv SaaS segment. See “Non-GAAP Financial Measures” for a definition of Adjusted EBITDA and a reconciliation to Net income, the most directly comparable measure presented in accordance with GAAP.

Results of Operations

Consolidated Results of Operations

The following table sets forth certain consolidated financial data for each of the periods indicated:


	Six Months Ended June 30,
	2024 (1)					2023 (1)
	(unaudited)
(in thousands of $)	Amount			% of Revenue		Amount			% of Revenue
Revenue	$	457,708		100	%	$	496,976		100	%
Cost of services	155,479			34.0	%	182,083			36.6	%
Gross profit	302,229			66.0	%	314,893			63.4	%

Operating expenses:
Sales and marketing	135,500			29.6	%	152,026			30.6	%
General and administrative	104,257			22.8	%	101,375			20.4	%

Total operating expenses	239,757			52.4	%	253,401			51.0	%

Operating income	62,472			13.6	%	61,492			12.4	%

Other income (expense):
Interest expense	(25,534)			5.6	%	(32,780)			6.6	%

Other components of net periodic pension cost	(3,162)			0.7	%	(1,986)			0.4	%
Other expense	(7,789)			0.3	%	(366)			0.1	%
Income before income tax expense	25,987			5.7	%	26,360			5.3	%
Income tax expense	(12,015)			2.6	%	(1,068)			0.2	%
Net income	$	13,972		3.1	%	$	25,292		5.1	%
Other financial data:
Adjusted EBITDA(2)	$	113,428		24.8	%	$	127,908		25.7	%
Adjusted Gross Profit(3)	$	314,218				$	329,822
Adjusted Gross Margin(4)	68.7		%			66.4		%

(1) Consolidated results of operations includes Yellow's results of operations subsequent to the April 3, 2023 Acquisition date.

(2) See “Non-GAAP Financial Measures” for a definition of Adjusted EBITDA and a reconciliation to Net (loss) income, the most directly comparable measure presented in accordance with GAAP.

(3) See “Non-GAAP Financial Measures” for a definition of Adjusted Gross Profit and a reconciliation to Gross profit, the most directly comparable measure presented in accordance with GAAP.

(4) See “Non-GAAP Financial Measures” for a definition of Adjusted Gross Margin.

Comparison of the Six Months Ended June 30, 2024 to the Six Months Ended June 30, 2023

Revenue

The following table summarizes Revenue by business segment for the periods indicated:


	Six Months Ended June 30,				Change
	2024		2023		Amount		%
(in thousands of $)	(unaudited)
Thryv Marketing Services	$	305,592	$	374,589	$	(68,997)	(18.4)	%
Thryv SaaS	152,116		122,387		29,729		24.3	%
Revenue	$	457,708	$	496,976	$	(39,268)	(7.9)	%

Revenue decreased by $39.3 million, or 7.9%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The decrease was driven by a decrease in Thryv Marketing Services revenue of $69.0 million partially offset by an increase in Thryv U.S. SaaS revenue of $29.7 million.

Thryv Marketing Services Revenue

Thryv Marketing Services revenue decreased by $69.0 million, or 18.4%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Print revenue increased by $3.4 million, or 2.1%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. This increase in Print revenue was primarily driven by the impact of publication timing differences, as a result of our Print agreements having greater than 12 month terms, and the continued secular decline in industry demand for Print services, which is partially offset by increasing the terms of our new Print publications from 15 months to 18 months.

Print revenue is recognized upon delivery of the published directories. Individual published directories have different publication cycles, with a typical lifecycle of 18 months for U.S. directories. As a result of recognizing revenue upon delivery, we typically record revenue for each published U.S. directory only once every 18 months, depending on the publication cycle of the individual published directory, which does not make comparing revenue year-over-year fully representative of actual demand trends due to timing of publication cycles. The Company recognized revenue for more published directories during the six months ended June 30, 2024 compared to the six months ended June 30, 2023. This increase in published directories was partially offset the secular decline in industry demand for Print services, resulting in an overall 32% decline in revenue for the six months ended June 30, 2024 when comparing on a publication-by-publication basis.

Digital revenue decreased by $72.4 million, or 34.4%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The decrease was primarily driven by a continued trending decline in the Company’s Marketing Services client base and significant competition in the consumer search and display space, particularly from large, well-capitalized businesses such as Google, Yelp and Facebook. Digital revenue further decreased as a result of the Company’s strategic decision during the fourth quarter of 2023 to accelerate the upgrade of clients from its digital Marketing Services solutions to its SaaS solutions.

Thryv SaaS Revenue

Thryv SaaS revenue increased by $29.7 million, or 24.3%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase was driven by increased demand for our Thryv SaaS solutions as SMBs accelerate their move away from manual processes and towards cloud platforms to more efficiently manage and grow their businesses, and by our success in re-focusing our go-to-market and onboarding strategy to target higher value clients. SaaS revenue also increased as a result of the Company’s strategic decision during the fourth quarter of 2023 to accelerate the conversion of clients from its digital Marketing Services solutions to its SaaS solutions.

Cost of Services

Cost of services decreased by $26.6 million, or 14.6%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. This decrease was primarily driven by the corresponding decline in revenue and strategic cost

saving initiatives. Specifically, we reduced printing, distribution and digital fulfillment support costs by $12.1 million, contract services by $6.5 million, employee-related expenses by $2.4 million and software expense by $2.2 million. Additionally, depreciation and amortization expense decreased $3.0 million due to the accelerated amortization method used by the Company.

Gross Profit

Gross profit decreased by $12.7 million, or 4.0%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. Our gross margin increased by 260 basis points to 66.0% for the six months ended June 30, 2024 compared to 63.4% for the six months ended June 30, 2023. The decrease in Gross profit was primarily due to a decrease in Marketing Services revenue, partially offset by an increase in SaaS revenue and a decrease in cost of services as a result of decline in revenue and strategic cost saving initiatives.

Operating Expenses

Sales and Marketing

Sales and marketing expense decreased by $16.5 million, or 10.9%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The decrease was primarily attributable to a decrease in employee-related costs and contract services expense of $7.5 million due to strategic cost-saving initiatives, a decrease in sales commissions of $4.5 million due to new sales commissions plans and revised targets, a decrease in stock-based compensation of $2.3 million and a decrease in advertising expenses of $1.0 million.

General and Administrative

General and administrative expense increased by $2.9 million, or 2.8%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase was primarily attributable to an increase in employee-related costs of $3.4 million, an increase in severance expense of $3.2 million, an increase in stock-based compensation of $2.7 million, an increase in third-party fees associated with our debt refinancing of $2.0 million, and an increase in bad debt expense of $1.7 million. The increase was partially offset by the absence of a $10.7 million loss on settlement of indemnification asset that was recorded during the six months ended June 30, 2023.

Other Income (Expense)

Interest Expense

Interest expense decreased by $7.2 million, or 22.1%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, driven primarily by the lower outstanding debt balances resulting from our New Term Loan, Term Loan and New ABL Facility, as well as lower interest rates on our New Term Loan and New ABL Facility.

Other Components of Net Periodic Pension Cost

Other components of net periodic pension cost increased by $1.2 million for the six months ended June 30, 2024. This increase was primarily due to the absence of a settlement gain of $0.4 million and a remeasurement gain of $1.3 million that was recorded during the six months ended June 30, 2023. No settlement gain or remeasurement gain was recorded during the six months ended June 30, 2024.

Other Expense

Other expense increased by $7.4 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase was primarily due to a loss on extinguishment of debt of $6.6 million recorded during the six months ended June 30, 2024, as well as in increase in foreign-currency related loss of $0.8 million during the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Income Tax Expense

The Company's effective tax rate (“ETR”) was 46.2% and 4.1% for the six months ended June 30, 2024 and 2023, respectively. The Company's ETR differs from the U.S. statutory rate of 21% primarily due to permanent differences including state taxes, non-deductible executive compensation, non-U.S. taxing jurisdictions, tax credits, change in valuation allowance due to expiring net operating losses, and the discrete impact of the debt refinancing discussed in Note 8, Debt Obligations.

Adjusted EBITDA

Adjusted EBITDA decreased by $14.5 million, or 11.3%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The decrease in Adjusted EBITDA was primarily driven by the secular decline in our Thryv Marketing Services segment. The decrease was partially offset by the growth in our Thryv SaaS segment. See “Non-GAAP Financial Measures” for a definition of Adjusted EBITDA and a reconciliation to Net income, the most directly comparable measure presented in accordance with GAAP.

Non-GAAP Financial Measures

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States. We also present Adjusted EBITDA, Adjusted Gross Profit, and Adjusted Gross Margin, as defined below, as non-GAAP financial measures in this Quarterly Report.

We have included Adjusted EBITDA, Adjusted Gross Profit, and Adjusted Gross Margin in this report because management believes they provide useful information to investors in gaining an overall understanding of our current financial performance and provide consistency and comparability with past financial performance. Specifically, we believe Adjusted EBITDA provides useful information to management and investors by excluding certain non-operating items that we believe are not indicative of our core operating results. In addition, Adjusted EBITDA, Adjusted Gross Profit, and Adjusted Gross Margin are used by management for budgeting and forecasting as well as measuring the Company’s performance. We believe Adjusted EBITDA, Adjusted Gross Profit, and Adjusted Gross Margin provide investors with the financial measures that closely align with our internal processes.

We define Adjusted EBITDA (“Adjusted EBITDA”) as Net income plus Interest expense, Income tax expense, Depreciation and amortization expense, Restructuring and integration expenses, Transaction costs, Stock-based compensation expense, and non-operating expenses, such as, Other components of net periodic pension cost, Loss on early extinguishment of debt, Non-cash gain from remeasurement of indemnification asset, and certain unusual and non-recurring charges that might have been incurred. Adjusted EBITDA should not be considered as an alternative to Net income as a performance measure. We define Adjusted Gross Profit (“Adjusted Gross Profit”) and Adjusted Gross Margin (“Adjusted Gross Margin”) as Gross profit and Gross margin, respectively, adjusted to exclude the impact of Depreciation and amortization expense and Stock-based compensation expense.

Non-GAAP financial information has limitations as an analytical tool and is presented for supplemental informational purposes only. Such information should not be considered a substitute for financial information presented in accordance with U.S. GAAP and may be different from similarly-titled non-GAAP measures used by other companies.

The following is a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure, Net income:



	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2024		2023		2024		2023
Reconciliation of Adjusted EBITDA
Net income	$	5,548	$	15,978	$	13,972	$	25,292
Interest expense	12,175		16,292		25,534		32,780
Depreciation and amortization expense	14,072		15,667		28,625		31,098
Stock-based compensation expense (1)	6,353		5,798		11,642		11,191
Restructuring and integration expenses (2)	7,553		3,921		12,818		9,261
Income tax expense (benefit)	6,618		(3,428)		12,015		1,068
Transaction costs (3)	—		—		—		373
Other components of net periodic pension cost (4)	1,581		1,865		3,162		1,986
Loss on early extinguishment of debt (5)	6,638		—		6,638		—
Non-cash loss from remeasurement of indemnification asset (6)	—		11,490		—		10,734

Other (7)	(1,224)		1,856		(978)		4,125
Adjusted EBITDA	$	59,314	$	69,439	$	113,428	$	127,908

(1)The Company records Stock-based compensation expense related to the amortization of grant date fair value of the Company’s stock-based compensation awards. See Note 10, Stock-Based Compensation and Stockholders' Equity, to our consolidated financial statements included in Part I, Item 1 in this Quarterly Report for more information.

(2)For the three and six months ended June 30, 2024 and 2023, expenses related to periodic efforts to enhance efficiencies and reduce costs, and include severance benefits, and costs associated with abandoned facilities and system consolidation.

(3)Expenses related to the Yellow Acquisition and other transaction costs.

(4)Other components of net periodic pension cost is from our non-contributory defined benefit pension plans that are currently frozen and incur no additional service costs. The most significant component of Other components of net periodic pension cost relates to periodic mark-to-market pension remeasurement.

(5)In connection with the debt refinancing completed on May 1, 2024, the Company recorded a Loss on early extinguishment of debt related to the write-off of certain unamortized debt issuance costs on the Company's Prior Term Loan and Prior ABL Facility. See Note 8, Debt Obligations, to our consolidated financial statements included in Part I, Item 1 in this Quarterly Report for more information.

(6)In connection with the YP Acquisition, the seller indemnified the Company for future potential losses associated with certain federal and state tax positions taken in tax returns filed by the seller prior to the acquisition date. See Note 4, Fair Value Measurements, to our consolidated financial statements included in Part I, Item 1 in this Quarterly Report for more information.

(7)Other primarily includes foreign exchange-related expense (income).

The following tables set forth reconciliations of Adjusted Gross Profit and Adjusted Gross Margin, to their most directly comparable GAAP measures, Gross profit and Gross Margin:


	Three Months Ended June 30, 2024
(in thousands)	Marketing Services			SaaS			Total
Reconciliation of Adjusted Gross Profit
Gross profit	$	96,299		$	52,289		$	148,588
Plus:
Depreciation and amortization expense	3,989			1,877			5,866
Stock-based compensation expense	98			76			174
Adjusted Gross Profit	$	100,386		$	54,242		$	154,628
Gross Margin	65.8		%	67.2		%	66.3		%
Adjusted Gross Margin	68.6		%	69.7		%	69.0		%


	Three Months Ended June 30, 2023
(in thousands)	Marketing Services			SaaS			Total
Reconciliation of Adjusted Gross Profit
Gross profit	$	120,875		$	39,210		$	160,085
Plus:
Depreciation and amortization expense	6,208			1,416			7,624
Stock-based compensation expense	119			54			173
Adjusted Gross Profit	$	127,202		$	40,680		$	167,882
Gross Margin	64.0		%	62.8		%	63.7		%
Adjusted Gross Margin	67.3		%	65.1		%	66.8		%


	Six Months Ended June 30, 2024
(in thousands)	Marketing Services			SaaS			Total
Reconciliation of Adjusted Gross Profit
Gross profit	$	200,845		$	101,384		$	302,229
Plus:
Depreciation and amortization expense	8,061			3,581			11,642
Stock-based compensation expense	211			136			347
Adjusted Gross Profit	$	209,117		$	105,101		$	314,218
Gross Margin	65.7		%	66.6		%	66.0		%
Adjusted Gross Margin	68.4		%	69.1		%	68.7		%


	Six Months Ended June 30, 2023
(in thousands)	Marketing Services			SaaS			Total
Reconciliation of Adjusted Gross Profit
Gross profit	$	238,529		$	76,364		$	314,893
Plus:
Depreciation and amortization expense	11,905			2,702			14,607
Stock-based compensation expense	222			100			322
Adjusted Gross Profit	$	250,656		$	79,166		$	329,822
Gross Margin	63.7		%	62.4		%	63.4		%
Adjusted Gross Margin	66.9		%	64.7		%	66.4		%

Liquidity and Capital Resources

Thryv Holdings, Inc. is a holding company that does not conduct any business operations of its own. We derive cash flows from cash transfers and other distributions from our operating subsidiary, Thryv, Inc., who in turn generates cash flow from its own operations and operations of its subsidiaries, and has cash and cash equivalents on hand, funds provided under the New Term Loan and funds available under the New ABL Facility. The agreements governing our debt may restrict the ability of our subsidiaries to make loans or otherwise transfer assets to us. Further, our subsidiaries are permitted under the terms of our senior credit facilities and other indebtedness to incur additional indebtedness that may restrict or prohibit the making of distributions or the making of loans by such subsidiaries to us. Our and our subsidiaries’ ability to meet our debt service requirements is dependent on our ability to generate sufficient cash flows from operations.

We believe that expected cash flows from operations, available cash and cash equivalents, and funds available under our New ABL Facility will be sufficient to meet our liquidity requirements, such as working capital requirements for our operations, business development and investment activities, and debt payment obligations, for the following 12 months. Any projections of future earnings and cash flows are subject to substantial uncertainty. Our future success and capital adequacy will depend on, among other things, our ability to achieve anticipated levels of revenues and cash flows from operations and our ability to address our annual cash obligations and reduce our outstanding debt, all of which are subject to general economic, financial, competitive, and other factors beyond our control. We continue to monitor our capital requirements to ensure our needs are in line with available capital resources.

In addition, our Board of Directors authorizes us to undertake share repurchases from time to time. The amount and timing of any share repurchases that we make will depend on a variety of factors, including available liquidity, cash flows, our capacity to make repurchases under our debt agreements and market conditions.

For a discussion on contingent obligations, see Note 13, Contingent Liabilities, to our consolidated financial statements included in Part I, Item 1 in this Quarterly Report.

Sources and Uses of Cash

The following table sets forth a summary of our cash flows from operating, investing and financing activities for the periods indicated:


	Six Months Ended June 30,				$
	2024		2023		Change
(in thousands)	(unaudited)
Cash flows provided by (used in):
Operating activities	$	27,660	$	57,736	$	(30,076)
Investing activities	(16,230)		(23,130)		6,900
Financing activities	(10,514)		(34,951)		24,437
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(448)		(240)		(208)
Increase (decrease) in cash, cash equivalents and restricted cash	$	468	$	(585)	$	1,053

Cash Flows from Operating Activities

Net cash provided by operating activities decreased by $30.1 million, or 52.1%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The decrease was primarily due to changes in working capital, particularly accounts receivable, which was primarily impacted by the timing of payments and an overall decline in our sales. Additionally, the Company made tax payments of $13.3 million for the six months ended June 30, 2024 compared to taxes paid of $7.4 million for the six months ended June 30, 2023. This was offset by lower interest payments of $5.2 million compared to the six months ended June 30, 2023.

Cash Flows from Investing Activities

Net cash used in investing activities decreased by $6.9 million, or 29.8%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The decrease was primarily due to $8.9 million of cash paid related to the Yellow Acquisition during the six months ended June 30, 2023. This was partially offset by a $2.2 million increase in capital expenditures related to the development of our SaaS solutions.

Cash Flows from Financing Activities

Net cash used in financing activities decreased by $24.4 million, or 69.9%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. This decrease was primarily due to $20.7 million of net proceeds from the Company's Prior Term Loan and New Term Loan agreements during the six months ended June 30, 2024, compared to $52.5 million of net payments on the Company's Prior Term Loan during the six months ended June 30, 2023. The net proceeds during 2024 was due to the New Term Loan credit agreement entered into on May 1, 2024. This increase in proceeds was partially offset by $30.8 million of net payments on the Company's Prior ABL Facility and New ABL Facility during the six months ended June 30, 2024, compared to $13.7 million of net proceeds on the Company's Prior ABL Facility during the six months ended June 30, 2023. The Company also paid $5.3 million of debt issuance costs during the six months ended June 30, 2024 related to the New Term Loan.

Debt

Term Loan

ABL Facility

We maintain debt levels that we consider appropriate after evaluating a number of factors, including cash requirements for ongoing operations, investment and financing plans (including acquisitions and share repurchase activities), and overall cost of capital. Per the terms of the New Term Loan Facility, payments of the New Term Loan balance are determined by the Company's Excess Cash Flow (as defined in the New Term Loan Facility). We are in compliance with all covenants under the New Term Loan and New ABL Facility as of June 30, 2024. We had total recorded debt outstanding of $342.1 million (net of $12.3 million of unamortized original issue discount (“OID”) and debt issuance cost) at June 30, 2024, which was comprised of amounts outstanding under the New Term Loan of $336.4 million and New ABL Facility of $18.0 million.

Share Repurchase Program

On June 20, 2024, the Company repurchased approximately 26,495 shares of its outstanding common stock. The total purchase price of this transaction was approximately $0.5 million. The shares acquired were recorded as Treasury stock upon repurchase.

Critical Accounting Policies and Estimates

Our critical accounting policies and estimates have not changed from those described in our 2023 Form 10-K, under “Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates.”

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

As of June 30, 2024, we had total recorded debt outstanding of $342.1 million (net of $12.3 million of unamortized OID and debt issuance costs), which was comprised of amounts outstanding under our New Term Loan of $336.4 million and New ABL Facility of $18.0 million. Substantially all this debt bears interest at floating rates. Changes in interest rates affect the interest expense we pay on our floating rate debt. A hypothetical 100 basis point increase in interest rates would increase our interest expense by approximately $3.5 million annually, based on the debt outstanding at June 30, 2024.

Foreign Exchange Currency Risk

We have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the U.S. dollar, primarily the Australian dollar and New Zealand dollar. Since we translate foreign currencies into U.S. dollars for financial reporting purposes, currency fluctuations can have an impact on our financial results.

We have experienced and will continue to experience fluctuations in our Net income as a result of transaction gains or losses related to revaluing certain current asset and current liability balances that are denominated in currencies other than the functional currency of the entities in which they are recorded. We recognized immaterial amounts of foreign currency gains and losses in each of the periods presented. We have not hedged our foreign currency transactions to date. We are evaluating the costs and benefits of initiating a hedging program and may in the future hedge selected significant transactions denominated in currencies other than the U.S. dollar as we expand our international operations and our risk grows.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2024.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the quarter ended June 30, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Information in response to this item is provided in “Part I - Item 1. Note 13, Contingent Liabilities” and is incorporated by reference into Part II of this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors

There have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2023, as supplemented by the disclosure in Part II, Item 1A. in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table shows our common stock repurchase activity based on settlement date for the quarter ended June 30, 2024 (the “Second Quarter”).

Period

Total Number of Shares Purchased

Average Price Paid per Share

Total Number of Shares Purchased as Part of Publicly Announced Plan

Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan

June 1, 2024 - June 30, 2024

26,495

$18.83

26,495

$39.5 million

Total

26,495

On April 30, 2024, the Board authorized a share repurchase plan under which the Company may repurchase up to $40 million in shares of common stock through April 30, 2029. During the Second Quarter, we repurchased 26,495 shares of our common stock at a cost of approximately $0.5 million. As of June 30, 2024, we had approximately $39.5 million of repurchase authorizations remaining under the repurchase plan.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None of our officers or directors adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the three and six months ended June 30, 2024.

Item 6. Exhibits

The following documents are filed as an exhibit to this Quarterly Report on Form 10-Q:


Exhibit No.						Description
3.1						Fourth Amended and Restated Certificate of Incorporation of Thryv Holdings, Inc. (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-8 filed on September 24, 2020)
3.2						Second Amended and Restated Bylaws of Thryv Holdings, Inc. (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-8 filed on September 24, 2020)
10.1						Term Loan Credit Agreement by and among Thryv Holdings, Inc., Thryv, Inc., the lenders party thereto from time to time and and Citizens Bank, N.A., as the administrative agent, dated as of May 1, 2024 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 2, 2024).
10.2						Credit Agreement among Thryv Holdings, Inc., Thryv, Inc., the other borrowers from time to time party thereto, the lenders from time to time party thereto, and Citizens Bank, N.A., as administrative agent, dated as of May 1, 2024 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on May 2, 2024).
31.1*						Certification of Principal Executive Officer pursuant to Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*						Certification of Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**						Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**						Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*						Inline XBRL Taxonomy Extension Schema Document.
101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB*						Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF*						Inline XBRL Taxonomy Extension Definition Linkbase Document
104						The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, formatted in Inline XBRL (included in Exhibits 101).

*Filed herewith

** Furnished herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


THRYV HOLDINGS, INC.

August 1, 2024	By:	/s/ Joseph A. Walsh
		Joseph A. Walsh Chairman of the Board and Chief Executive Officer
		(Principal Executive Officer)


August 1, 2024	By:	/s/ Paul D. Rouse
		Paul D. Rouse Chief Financial Officer, Executive Vice President and Treasurer
		(Principal Financial Officer)

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Thryv (THRY) 10-Q2024 Q2 Quarterly report

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