Thryv Holdings Inc
For the period ended Jun 30, 2024. Filed Aug 1, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 1, 2024
THRY$1.18-1.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-02.
0001556739-24-000027
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-01.
0001556739-24-000038
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 139 previous paragraphs and 152 current paragraphs.
75 unchanged; 34 reworded; 31 added; 29 removed; 1 previous and 12 current paragraphs rearranged.
Tables are not compared: 8 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (31)
Current report
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.
Current report
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.
Current report
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 thethree months ended June 30, 2023. No settlement gain or remeasurement gain was recorded during the three months ended June 30, 2024.
Current report
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.
Current report
Income Tax (Expense) Benefit
Current report
Results of Operations
Current report
Consolidated Results of Operations
Current report
(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.
Current report
Comparison of the Six Months Ended June 30, 2024 to the Six Months Ended June 30, 2023
Current report
Revenue
Current report
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.
Current report
Thryv Marketing Services Revenue
Current report
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.
Current report
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.
Current report
Thryv SaaS Revenue
Current report
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.
Current report
Gross Profit
Current report
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.
Current report
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.
Current report
Interest Expense
Current report
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.
Current report
Other components of net periodic pension cost increasedby$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 thesix months ended June 30, 2024.
Current report
Other Expense
Current report
Other expense increasedby$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 thesix 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 thesix months ended June 30, 2023.
Current report
Adjusted EBITDA
Current report
(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.
Current report
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.
Current report
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.
Current report
Share Repurchase Program
Current report
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.
Current report
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.
Removed paragraphs (29)
Previous report
Cost of Services
Previous report
Operating Expenses
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Sales and Marketing
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General and Administrative
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Other Income (Expense)
Previous report
Thryv Marketing Services revenue decreased by $26.3 million, or 14.2%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.
Previous report
Cost of Services
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Operating Expenses
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Sales and Marketing
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General and Administrative
Previous report
General and administrative expense increased by $4.7 million, or 9.9%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. This increase was primarily attributable to an increase in bad debt expense of$2.1 million, an increase in employee-related costs and contract services expense of $1.8 million, and an increase in stock-based compensation expense of $1.5 million
Previous report
Other Income (Expense)
Previous report
Other components of net periodic pension cost increased by $1.5 million for the three months ended March 31, 2024. This increase was primarily due to higher interest cost of$1.3 million due to higher interest rates during thethree months ended March 31, 2024.
Previous report
Other (expense) increased by $2.0 million for the three months ended March 31, 2024. The Company recorded a $2.4 million foreign currency-related loss during the three months ended March 31, 2024, compared to a $0.9 million foreign currency-related gain during three months ended March 31, 2023.
Previous report
Net cash used in financing activities decreased by $15.5 million, or 90.9%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The decrease was primarily due to payments on the Term Loan of $9.4 million during the three months ended March 31, 2024, compared to payments made on the Term Loan of$35.0 million during the three months ended March 31, 2023. The decrease in Term Loan payments was partially offset by net proceeds from the ABL Facility of $6.9 million during the three months ended March 31, 2024, compared to net proceeds of$17.7 million during the three months ended March 31, 2023.
Previous report
On March 1, 2021, the Company entered into the Term Loan. The proceeds of the Term Loan were used to finance the Thryv Australia Acquisition, refinance in full the Company's existing Term Loan, and pay fees and expenses related to the Thryv Australia Acquisition and related financing.
Previous report
The Term Loan established the Term Loan Facility in an aggregate principal amount equal to $700.0 million, of which 38.4% was held by related parties who were equity holders of the Company as of March 1, 2021. The Term Loan Facility matures on March 1, 2026. Prior to June 30, 2023, borrowings under the Term Loan Facility bore interest at a fluctuating rate per annum equal to, at the Company’s option, LIBOR or a base rate, in each case, plus an applicable margin per annum equal to (i) 8.50% (for LIBOR loans) and (ii) 7.50% (for base rate loans). Effective June 30, 2023, borrowings under the Term Loan Facility bear interest at a fluctuating rate per annum equal to, at the Company’s option, a Secured Overnight Financing Rate (“SOFR”) or a base rate, in each case, plus an applicable margin per annum equal to (i) 8.50% (for SOFR loans) and (ii) 7.50% (for base rate loans). The Term Loan Facility requires mandatory amortization payments equal to $17.5 million per fiscal quarter. As of March 31, 2024 and December 31, 2023, no portion of the Term Loan was held by related parties who were equity holders of the Company on those dates.
Previous report
On March 1, 2021, the Company entered into an agreement to amend the June 30, 2017 ABL Facility. The ABL Amendment was entered into in order to permit the term loan refinancing, the Thryv Australia Acquisition and make certain other changes to the ABL credit agreement, including, among others:
Previous report
•revise the maximum revolver amount to $175.0 million;
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•reduce the interest rate per annum to (i) 3-month LIBOR plus 3.00% for LIBOR loans and (ii) base rate plus 2.00% for base rate loans;
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•reduce the commitment fee on undrawn amounts under the ABL Facility to 0.375%;
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•extend the maturity date of the ABL Facility to the earlier of March 1, 2026 and 91 days prior to the stated maturity
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date of the Term Loan Facility;
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•add the Australian subsidiaries acquired pursuant to the Thryv Australia Acquisition as borrowers and guarantors, and establish an Australian borrowing base; and
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•make certain other conforming changes consistent with the Term Loan Agreement.
Previous report
On June 1, 2023, the Company entered into an agreement to amend its existing ABL Facility (the “ABL Seventh Amendment”). The ABL Seventh Amendment replaced the 3-month LIBOR benchmark applicable to the facility with a SOFR based rate, defined as the Adjusted Daily Simple SOFR. Borrowings under the ABL Facility bear interest at a rate per annum equal to (i) Adjusted Daily Simple SOFR plus 3.00% for SOFR loans and (ii) base rate plus 2.00% for base rate loans.
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New Term Loan Agreement and ABL Credit Agreement
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Term Loan Agreement
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ABL Credit Agreement
Reworded paragraphs (34)
Previous wording
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 330,000 SMB clients globally through two business segments: Thryv Marketing Services and Thryv SaaS.
Current wording
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.
Previous wording
Our Thryv Marketing Services segment provides both print and digital solutions and generated$159.3 million and$185.6 million of consolidated revenue for the three months ended March 31, 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 90,000 and 18,000 SMBs, respectively, many of which we believe are ideal candidates for the Thryv platform.
Current wording
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.
Previous wording
Our Thryv SaaS segment generated$74.3 million and$59.9 million of consolidated revenue for the three months ended March 31, 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, ThryvPay SM, 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:
Current wording
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, ThryvPay SM, 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:
Previous wording
Marketing Services clients decreased by 53 thousand, or 15%, as of March 31, 2024 as compared to March 31, 2023. The decrease in Marketing Services clients was related to the secular decline in the print media industry and significant competition in the digital media space and from focusing on offering our SaaS solutions to our current Marketing Services clients. This was partially offset by acquisitions of companies with Marketing Services clients.
Current wording
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.
Previous wording
SaaS clients increased by 16 thousand, or 30%, as of March 31, 2024 as compared to March 31, 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.
Current wording
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.
Previous wording
Total clients decreased by 44 thousand, or 12%, as of March 31, 2024 as compared to March 31, 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 and acquisitions of companies with established clients.
Current wording
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.
Previous wording
Monthly ARPU for Marketing Services decreased by $22, or 13%, for the three months ended March 31, 2024 compared to the three months ended March 31, 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 less expensive digital media. This decrease in ARPU was further driven by a 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.
Current wording
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, anddecreased 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.
Previous wording
Monthly ARPU for SaaS decreased by $10, or 3%, during the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The decrease in SaaS ARPU during the three months ended March 31, 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 Marketing Center to our SaaS clients offset a portion of the SaaS decline.
Current wording
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, anddecreased 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.
Previous wording
Other income (expense) consists of interest expense, other components of net periodic pension cost, other income (expense), and foreign currency-related income and expense.
Current wording
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.
Previous wording
Revenue decreased by $11.9 million, or 4.9%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The decrease was driven by a decrease in Thryv Marketing Services revenue of $26.3 million, partially offset by an increase in Thryv SaaS revenue of $14.4 million.
Current wording
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.
Previous wording
Print revenue increased by $7.3 million, or 9.4%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. This increase 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. This increase was partially offset by the continued secular decline in U.S. and international industry demand for Print services.
Current wording
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.
Previous wording
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 March 31, 2024 compared to thethree months ended March 31, 2023. This increase in published directories was partially offset by the secular decline in industry demand for Print services, resulting in an overall 31% decline in revenue for the quarter when comparing on a publication-by-publication basis.
Current wording
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.
Previous wording
Digital revenue decreased by $33.6 million, or 31.0%, for the three months ended March 31, 2024 compared to the three months ended March 31, 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.
Current wording
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.
Previous wording
Thryv SaaS revenue increased by $14.4 million, or 24.0%, for the three months ended March 31, 2024 compared to the three months ended March 31, 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.
Current wording
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.
Previous wording
Cost of services decreased by $10.8 million, or 11.9%, for the three months ended March 31, 2024 compared to the three months ended March 31, 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 $4.8 million, contract services by $3.1 million and employee-related expenses by $1.1 million. Additionally, depreciation and amortization expense decreased by $1.2 million, driven by the accelerated amortization method used by the Company.
Current wording
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.
Previous wording
Gross profit decreased by $1.2 million, or 0.8%, for the three months ended March 31, 2024 compared to the three months ended March 31, 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 280 basis points to 65.8% for the three months ended March 31, 2024 compared to 63.0% for the three months ended March 31, 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.
Current wording
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.
Previous wording
Sales and marketing expense decreased by $6.3 million, or 8.2%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The decrease was primarily attributable to a decrease in employee-related costs and contract services expense of$2.8 million due to strategic cost-saving initiatives, a decrease in stock based compensation of$1.6 million, and a decrease in sales commissions of$1.1 million due to new sales commissions plans and revised targets.
Current wording
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.
Previous wording
Interest expense decreased by $3.1 million, or 19.0%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, driven primarily by the lower outstanding debt balances resulting from payments made on our Term Loan and ABL Facility.
Current wording
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.
Previous wording
The Company's effective tax rate (“ETR”) was 39.0% and 32.6% for the three months ended March 31, 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 interest accrual on uncertain tax positions.
Current wording
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.
Previous wording
Adjusted EBITDA decreased by $4.4 million, or 7.4%, for the three months ended March 31, 2024 compared to the three months ended March 31, 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.
Current wording
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.
Previous wording
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, 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.
Current wording
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.
Previous wording
(2)For the three months ended March 31, 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.
Current wording
(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.
Previous wording
(5)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.
Current wording
(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.
Previous wording
(6)Other primarily includes foreign exchange-related expense.
Current wording
(7)Other primarily includes foreign exchange-related expense (income).
Previous wording
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 Term Loan and funds available under the 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.
Current wording
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.
Previous wording
We believe that expected cash flows from operations, available cash and cash equivalents, and funds available under our 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.
Current wording
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.
Previous wording
Net cash provided by operating activities decreased by $26.9 million, or 83.2%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The decrease was primarily due to changes in working capital, particularly accounts payable and accounts receivable, which were primarily impacted by the timing of annual incentive bonus payments and the overall decline in our sales. Additionally, the Company made tax payments of $1.9 million for the three months ended March 31, 2024 compared to taxes received of $1.0 million for the three months ended March 31, 2023. This was offset by lower interest payments of $3.1 million compared to the three months ended March 31, 2023.
Current wording
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.
Previous wording
Net cash used in investing activities increased by $2.1 million, or 41.7%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase was due to a $2.1 million increase in capital expenditures related to the development of our SaaS solutions.
Current wording
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.
Previous wording
On May 1, 2024, the Company entered into a new Term Loan Credit Agreement (the “Term Loan Agreement”), the proceeds of which were used to refinance and pay off in full the Company’s previous term loan facility and to pay fees and expenses related to the refinancing.
Current wording
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.
Previous wording
The Term Loan Agreement established a senior secured term loan facility (the “New Term Loan Facility”) in an aggregate principal amount equal to $350.0 million. The New Term Loan Facility matures on May 1, 2029 and borrowings under the New Term Loan Facility will 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 Term Loan Agreement, and (ii) $35.0 million per year thereafter.
Current wording
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.
Previous wording
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. Proceeds of the New ABL Facility may be used by the Company for ongoing general corporate purposes and working capital.
Current wording
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.
Previous wording
The New ABL Facility matures on May 1, 2028 and borrowings under the New ABL Facility will 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%-2.75% (for SOFR loans) and (ii) 1.50%-1.75% (for base rate loans). The fee for undrawn commitments under the New ABL Facility is equal to 0.375% per annum.
Current wording
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.
Previous wording
As of March 31, 2024, the Company had borrowing base availability of$40.2 million. As a result of certain restrictions in the Company's debt agreements, as of March 31, 2024, approximately$27.9 million was available to be drawn upon under the ABL Facility.
Current wording
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.
Previous wording
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 Term Loan Facility, payments of the Term Loan balance are determined by the Company's Excess Cash Flow (as defined within the Term Loan Facility). We are in compliance with all covenants under the Term Loan and ABL Facility as of March 31, 2024. We had total recorded debt outstanding of $347.6 million (net of $8.2 million of unamortized original issue discount (“OID”) and debt issuance cost) at March 31, 2024, which was comprised of amounts outstanding under our Term Loan of $300.0 million and ABL Facility of $55.7 million.
Current wording
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.
Rearranged current paragraphs (12)
Current report — wording carried from elsewhere
The following table sets forth certain consolidated financial data for each of the periods indicated:
Current report — wording carried from elsewhere
(1)Consolidated results of operations includes Yellow's results of operations subsequent to the April 3, 2023 Acquisition date.
Current report — wording carried from elsewhere
(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.
Current report — wording carried from elsewhere
(4) See “Non-GAAP Financial Measures” for a definition of Adjusted Gross Margin.
Current report — wording carried from elsewhere
The following table summarizes Revenue by business segment for the periods indicated:
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
Other Components of Net Periodic Pension Cost
Current report — wording carried from elsewhere
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, andthe discrete impact of the debt refinancing discussed in Note 8, Debt Obligations.
Current report — wording carried from elsewhere
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.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
As of May 1, 2024, the Company had borrowing base availability of $55.0 million. Asa result of certain restrictions in the Company's debt agreements, as of May 1, 2024, approximately $44.4 million was available to be drawn upon under the New ABL Facility.