HARTE HANKS INC
For the period ended Jun 30, 2025. Filed Aug 8, 2025.
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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, 2025 · Filed Aug 8, 2025
HHS$3.96-1.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-15.
0000045919-25-000028
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-08.
0001628280-25-039311
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 70 previous paragraphs and 82 current paragraphs.
40 unchanged; 19 reworded; 21 added; 10 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 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 (21)
Current report
Revenue decreased $6.4 million, or 14.2%, to $38.6 million in the three months ended June 30, 2025, compared to the three months ended June 30, 2024 due to a reduction in revenue in all three segments. Those decreases were the result of fluctuations in timing of high volume periods associated with ongoing programs, and the conclusion of relationships with some customers.
Current report
Labor expense decreased $3.2 million, or 14.3%, to $19.4 million due to direct labor reductions associated with lower revenue, and cost controls related to overhead labor.
Current report
Production and Distribution expenses decreased $1.3 million, or 9.4%, primarily due to lower transportation cost associated with the lower logistics revenue.
Current report
Other expenses, net
Current report
Other expenses, net, for the three months ended June 30, 2025 were$0.4 million compared to$38.2 million, in the prior year quarter. The$37.8 million decrease in other expenses, net, was mainly due to the expenses from the pension termination during the second quarter of 2024.
Current report
Revenues
Current report
Revenue decreased $10.3 million, or 11.4%, to $80.2 million, in the six months ended June 30, 2025, compared to the six months ended June 30, 2024 due to decreased revenue in the Marketing Services and Fulfillment & Logistics Services segments. The reduction in revenues in the six month period relates to the conclusion of programs, and the ordinary turnover of customers at a higher rate than initiation of new programs and revenues from new customers.
Current report
Operating Expenses
Current report
Operating expenses were $80.2 million in the six months ended June 30, 2025, a decrease of $8.5 million, or 9.6%, compared to $88.7 million in the six months ended June 30, 2024. Cost controls to match revenues and Project Elevate led to the decline in operating expenses. Management expects further cost reductions in excess of new costs attributable to revenue growth.
Current report
Labor expense decreased $6.9 million, or 15.0%, primarily due to lower direct labor costs as workforce was adjusted with the reduction in revenue.
Current report
Production and Distribution expenses decreased $1.0 million, or 3.5%, primarily due to lower transportation costs associated with lower logistics services revenue as compared to the prior year.
Current report
Advertising, Selling, General and Administrative expenses decreased $0.4 million, or 3.5%, primarily due to lower sales and marketing expenses.
Current report
Other expenses, net
Current report
Other expenses, net, for thesix months ended June 30, 2025 were$1.0 million compared to$38.8 million, in the prior year period. The other expenses, net for thesix months ended June 30, 2024 included$37.8 million in charges resulting from the pension termination expenses.
Current report
Income Taxes
Current report
Marketing Services segment revenue decreased $3.5 million, or 28.7%, due to customer turnover and the decline of client spending in excess of new business. Operating income for thethree months ended June 30, 2025 decreased $0.3 million, or 21.1%from the prior year quarter. Labor and other costs were reduced as programs and projects ended with customers resulting in lower revenue .
Current report
Marketing Services segment revenue decreased $8.3 million, or 32.2%, due to customer turnover and the additional client spending reductions. This segment is our most economically sensitive segment with regard to changes in our clients' marketing strategy. Operating income for thesix months ended June 30, 2025 decreased $1.2 million , or 37.0% from the prior year quarter primarily due to the reduced revenue which was partially offset by the lower labor cost associated with lower revenue.
Current report
Customer Care segment revenue increased $21 thousand, or 0.1%, which can be impacted by one-time project-based engagements, temporary surges or declines in call volumes among retained customers due to specific programs and events. We also encounter fluctuations based on the geographic regions customers select for staff support. We are leveraging our Amazon Connect cloud-based platform to test and pilot new AI tools, and are exploring how we can augment growth by providing more technical support as clients migrate to more capable contact center platforms. Operating Income was $3.6 million for the six months ended June 30, 2025, compared to operating income of $4.7 million for the six months ended June 30, 2024. The decrease of $1.1 million in operating income was due to higher technology costs being slightly offset by lower labor costs.
Current report
Fulfillment & Logistics Services segment revenue decreased by $2.0 million, or 5.1%, due to lost customers and the lower volume from existing customers. Operating income decreased by $0.5 million, or 20.7% due to the lower revenue.
Current report
Net cash provided by financing activities was $0.7 million for the six months ended June 30, 2025, as compared to $0.2 million of net cash used in financing activities during the six months ended June 30, 2024. The $0.9 million increase in cash provided by financing activities was primarily related to the $1.1 million of cash we received for the recovery of short-swing profit from one shareholder in the six months ended June 30, 2025 .
Removed paragraphs (10)
Previous report
Three months ended March 31, 2025 vs. Three months ended March 31, 2024
Previous report
Revenues of $41.6 million decreased $3.9 million, or 8.6%, in the three months ended March 31, 2025, compared to the three months ended March 31, 2024. Revenue in our Marketing Services segment decreased $4.8 million, or 35.3%, to $8.8 million. Revenue in our Fulfillment & Logistics Services segment increased $0.4 million, or 1.8% , to $19.8 million, and revenue in our Customer Care segment increased $0.6 million, or 4.5%, to $13.0 million.
Previous report
Labor expense decreased $3.7 million, or 15.7%, primarily due to the reduction in workforce in our Marketing Services segment as well as reductions in our corporate support and management functions.
Previous report
Production and Distribution expenses increased $0.3 million, or 2.2%, primarily due to higher brokered or pass through costs.
Previous report
Restructuring expense was$0.8 million in the three months ended March 31, 2025, which is comparable to the prior year quarter of $0.9 million .
Previous report
Other expense, net
Previous report
Other expense, net, for the three months ended March 31, 2025 was$0.5 million compared to$0.6 million, in the prior year quarter . The$0.1 million decrease in other expense, net was mainly associated with changes in foreign currency gain and loss account.
Previous report
Marketing Services segment revenue decreased $4.8 million, or 35.3%, due to the loss of customers and reduced demand from existing customers. Operating income for thethree months ended March 31, 2025 decreased $0.9 million from the prior year quarter due to the reduced revenue.
Previous report
Net cash used in financing activities was $0.1 million for the three months ended March 31, 2025, which is comparable to $0.1 million of net cash used in the three months ended March 31, 2024.
Previous report
Credit Facility
Reworded paragraphs (19)
Previous wording
This report, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), contains “forward-looking statements” within the meaning of the federal securities laws. All such statements are qualified by this cautionary note, which is provided pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. Forward-looking statements will also be included from time to time in our other public filings, press releases, our website, and oral and written presentations by management. Statements other than historical facts are forward-looking and may be identified by words such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “seeks,” “could,” “intends,” or words of similar meaning. Examples include statements regarding (1) our strategies and initiatives, including actions designed to respond to market conditions and improve our performance, (2) our financial outlook for revenues, earnings (loss) per share, operating income (loss), expense related to equity-based compensation, capital resources and other financial items, if any, (3) expectations for our businesses and for the industries in which we operate, including the impact of economic conditions of the markets we serve on the marketing expenditures and activities of our clients and prospects, (4) competitive factors, (5) acquisition and development plans, (6) expectations regarding legal proceedings and other contingent liabilities, and (7) other statements regarding future events, conditions, or outcomes.
Current wording
This report, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), contains “forward-looking statements” within the meaning of the federal securities laws. All such statements are qualified by this cautionary note, which is provided pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. Forward-looking statements will also be included from time to time in our other public filings, press releases, our website, and oral and written presentations by management. Statements other than historical facts are forward-looking and may be identified by words such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “seeks,” “could,” “intends,” or words of similar meaning. Examples include statements regarding (1) our strategies and initiatives, including actions designed to respond to market conditions and improve our performance, (2) our financial outlook for revenues, earnings (loss) per share, operating income (loss), expense related to equity-based compensation, capital resources and other financial items, if any, (3) expectations for our businesses and for the industries in which we operate, including the impact of economic conditions of the markets we serve on the marketing expenditures and activities of our clients and prospects, (4) competitive factors, (5) acquisition and development plans, (6) expectations regarding legal proceedings and other contingent liabilities, (7) other statements regarding future events, conditions, or outcomes.
Previous wording
The following MD&A section is intended to help the reader understand the results of operations and financial condition of Harte Hanks, including any material changes in the Company’s financial condition and results of operations since December 31, 2024, and as compared with the three months ended March 31, 2024. This section is provided as a supplement to, and should be read in conjunction with, our Condensed Consolidated Financial Statements and the accompanying notes included herein as well as our 2024 10-K. Our 2024 10-K contains a discussion of other matters not included herein, such as disclosures regarding critical accounting policies and estimates, and contractual obligations. See Note A, Overview and Significant Accounting Policies, in the Notes to Condensed Consolidated Financial Statements for further information.
Current wording
The following MD&A section is intended to help the reader understand the results of operations and financial condition of Harte Hanks, Inc. including any material changes in the Company’s financial condition and results of operations since December 31, 2024, and as compared with the three and six months ended June 30, 2025. This section is provided as a supplement to, and should be read in conjunction with, our Condensed Consolidated Financial Statements and the accompanying notes included herein as well as our 2024 10-K. Our 2024 10-K contains a discussion of other matters not included herein, such as disclosures regarding critical accounting policies and estimates, and contractual obligations. See Note A, Overview and Significant Accounting Policies, in the Notes to Condensed Consolidated Financial Statements for further information.
Previous wording
Our management team continuously reviews and adjusts our cost structure and operating footprint to optimize our operations, and invest in improved technology. During the second half of 2023, we engaged a consulting firm to help review and analyze the structure and operations of the Company. This review included greater than 200 meetings with personnel at all levels of the firm and led to the initiation of our transformation program named "Project Elevate". The program involves the optimization and rationalization of our business resources as well as the partial reinvestment of savings into the Company's sales and marketing team, technology, and strategy. A business transformation office was established at the beginning of 2024 to manage and measure these initiatives. We estimate reorganization savings from Project Elevate executed from 2024 to 2026 will be approximately $16 million.
Current wording
Our management team continuously reviews and adjusts our cost structure and operating footprint to optimize our operations, and invest in improved technology. During the second half of 2023, we engaged a consulting firm to help review and analyze the structure and operations of the Company. This review included greater than 200 meetings with personnel at all levels of the firm and led to the initiation of our transformation program named “Project Elevate”. The program involves the optimization and rationalization of our business resources as well as the partial reinvestment of savings into the Company's sales and marketing team, technology, and strategy. A business transformation office was established at the beginning of 2024 to manage and measure these initiatives. We estimate reorganization savings from Project Elevate executed from 2024 to 2026 will be approximately $16.0 million.
Previous wording
For the three months ended March 31, 2025, we recorded restructuring charges of $0.8 million. For the year ended December 31, 2024, we incurred total restructuring charges of $2.4 million.
Current wording
For thethree and six months ended June 30, 2025, we recorded restructuring charges related to this business transformation effort of $0.1 million and$1.0 million, respectively. For the year ended December 31, 2024, we incurred total restructuring charges of $2.4 million.
Previous wording
Operating expenses were $41.6 million in the three months ended March 31, 2025, a decrease of $3.5 million, or 7.7%, compared to $45.1 million in the three months ended March 31, 2024.
Current wording
Operating expenses were $38.6 million in the three months ended June 30, 2025, a decrease of $5.1 million, or 11.6%, compared to $43.7 million in the three months ended June 30, 2024.
Previous wording
Advertising, Selling, General and Administrative expenses decreased$0.1 million, or 1.6%, primarily due to lower selling expenses.
Current wording
Advertising, Selling, General and Administrative expenses decreased $0.3 million, or 5.4%, primarily due to lower professional service expenses.
Previous wording
The largest components of our operating expenses are labor, transportation expenses and outsourced costs. Each of these costs is, at least in part, variable and tends to fluctuate in line with revenues and the demand for our services. Transportation rates have increased over the last few years due to demand and supply fluctuations within the transportation industry. Future changes in transportation expenses will continue to impact our total production costs and total operating expenses, and in turn our margins. Postage costs for mailings are borne by our clients and are not directly reflected in our revenues or expenses.
Current wording
The largest components of our operating expenses are labor, transportation expenses and outsourced costs. Each of these costs is, at least in part, variable and tends to fluctuate in line with revenues and the demand for our services. Postage costs for mailings are borne by our clients and are not directly reflected in our revenues or expenses.
Previous wording
The income tax benefit of$0.2 million in the first quarter of 2025 represents an increase in income tax benefit of$0.1 million when compared to the first quarter of 2024. Our effective tax rate was 35.4% for the first quarter of 2025, a increase of 6.1% from the effective tax rate of 29.3% for the first quarter of 2024. The effective tax rate differs from the federal statutory rate of 21.0%, primarily due to the U.S. state income taxes and income earned in foreign jurisdictions.
Current wording
The income tax benefit of $0.1 million in the second quarter of 2025 represents a decrease of income tax benefit of $8.9 million when compared to the second quarter of 2024. Our effective tax rate was 18.9% for the second quarter of 2025, a decrease of 5.5% from the effective tax rate of 24.4% for the second quarter of 2024, The effective income tax rates differ from the federal statutory rate of 21%, primarily due to the U.S. state income taxes and the impact of income earned in foreign jurisdictions.
Previous wording
The following is a discussion and analysis of the results of our reportable segments for the three months ended March 31, 2025 and 2024. There are three principal financial measures reported to our Interim COO (the chief operating decision maker) for use in assessing segment performance and allocating resources. Those measures are revenue, operating income and operating income plus depreciation and amortization (“EBITDA”). For additional information, see Note N, Segment Reporting, in the Notes to Condensed Consolidated Financial Statements.
Current wording
The following is a discussion and analysis of the results of our reportable segments for the three and six months ended June 30, 2025 and 2024. There are three principal financial measures reported to our President (the chief operating decision maker) for use in assessing segment performance and allocating resources. Those measures are revenue and operating income and operating income plus depreciation and amortization (“EBITDA”). For additional information, see Note O, Segment Reporting, in the Notes to Condensed Consolidated Financial Statements.
Previous wording
Customer Care segment revenue increased $0.6 million, or 4.5%, primarily dueto increased volume from new customers. Operating Income was $2.0 million for the three months ended March 31, 2025, compared to operating income of $2.4 million for the three months ended March 31, 2024. The $0.4 million decrease was due to the an increase in software license and technology fees.
Current wording
Customer Care segment revenue decreased $0.5 million, or 4.4%, primarily due tothe timing of fluctuations with specific programs. Operating income was $1.6 million for the three months ended June 30, 2025, compared to operating income of $2.3 million for the three months ended June 30, 2024. The $0.7 million decrease in operating income was due to higher technology costs being slightly offset by lower labor costs.
Previous wording
Fulfillment & Logistics Services segment revenue increased by $0.4 million, primarily due to the higher volume from existing customers. Operating income decreased by $0.1 million, primarily due to increased depreciation expenses associated with new equipment added since last year.
Current wording
Fulfillment & Logistics Services segment revenue decreased $2.4 million, or 11.6%, primarily due to the lower volume from the existing customers not being offset by growth in new programs and customers. Operating income decreased by $0.4 million primarily due to lower revenue.
Previous wording
Our cash and cash equivalent balances were $9.0 million and $9.9 million at March 31, 2025 and December 31, 2024, respectively. As of March 31, 2025, we had the ability to borrow an additional 24.0 million under our Credit Facility.
Current wording
Our cash and cash equivalent balances were $4.8 million and $9.9 million at June 30, 2025 and December 31, 2024, respectively. As of June 30, 2025, we had the ability to borrow $24.0 million under our Credit Facility in addition to the existing letters of credit.
Previous wording
Net cash used in operating activities for the three months ended March 31, 2025 was $0.8 million, compared to net cash used in operating activities of $5.7 million for the three months ended March 31, 2024. The $4.9 million year-over-year decrease in cash used in operating activities was primarily due to the $6.9 million changes in accounts payable and accrued expenses balances, and $1.7 million change in accounts receivable and contract assets balances.
Current wording
Net cash used in the operating activities for thesix months ended June 30, 2025 was $5.7 million, compared to net cash used in operating activities of $4.1 million for thesix months ended June 30, 2024. The $1.6 million year-over-year increase in cash used in the operating activities was primarily due to $4.9 million changes in other assets and current liabilities.
Previous wording
Net cash used in investing activities was $0.1 million for the three months ended March 31, 2025, compared to $0.5 million used in the same period in 2024. The decrease was primarily due to less cash used to purchase property, plant and equipment.
Current wording
Net cash used in investing activities was $0.3 million for the six months ended June 30, 2025, as compared to the $1.2 million used in investing activities during the same period in 2024. The $0.9 million decrease in cash used in investing activities was primarily driven by lower property, plant and equipment purchase in the six months ended June 30, 2025.
Previous wording
Consolidated foreign holdings of cash as of March 31, 2025 and December 31, 2024 were $2.2 million and $1.5 million, respectively.
Current wording
Consolidated foreign holdings of cash as of June 30, 2025 and December 31, 2024 were $1.4 million and $1.5 million, respectively.
Previous wording
On December 21, 2021, the Company entered into a three-year, $25.0 million asset-based revolving credit facility (the "Credit Facility") with Texas Capital Bank ("TCB"). The Company’s obligations under the Credit Facility are guaranteed on a joint and several basis by the Company’s material subsidiaries (the “Guarantors”). The Credit Facility is secured by substantially all of the assets of the Company and the Guarantors pursuant to a Pledge and Security Agreement, dated as of December 21, 2021, among the Company, TCB and the other Guarantors party thereto (the "Security Agreement"). On December 29, 2023, the Company extended the maturity date for the Credit Facility by a period of six (6) months, to June 30, 2025. The extension extended the Credit Facility under substantially similar terms and conditions as originally executed.
Current wording
On December 21, 2021, the Company entered into a three-year, $25.0 million asset-based revolving credit facility (the "Credit Facility") with Texas Capital Bank ("TCB"). The Company’s obligations under the Credit Facility are guaranteed on a joint and several basis by the Company’s material subsidiaries (the “Guarantors”). The Credit Facility is secured by substantially all of the assets of the Company and the Guarantors pursuant to a Pledge and Security Agreement, dated as of December 21, 2021, among the Company, TCB and the other Guarantors party thereto (the “Security Agreement"). On December 29, 2023, the Company extended the maturity date for the Credit Facility by a period of 6 months, to June 30, 2025. On June 24, 2025, the Company entered into a second amendment to the Credit Facility (the “Second Amendment”) with TCB which extended the maturity date for the Credit Facility by a period of three years to June 30, 2028. The Second Amendment also includes an accordion feature that allows the Company to seek up to a$10.0 million increase in commitments under the credit line, subject to TCB approval.
Previous wording
As of March 31, 2025 and December 31, 2024, we had no borrowings outstanding under the Credit Facility. At each of March 31, 2025 and December 31, 2024, we had letters of credit outstanding in the amount of $1.0 million and $1.0 million, respectively. No amounts were drawn against these letters of credit at March 31, 2025 and December 31, 2024. These letters of credit exist to support insurance programs relating to workers’ compensation and general liability as well as lease obligations. We had no other off-balance sheet financing activities at March 31, 2025 and December 31, 2024.
Current wording
As of June 30, 2025 and December 31, 2024, we had no borrowings outstanding under the Credit Facility. At each of June 30, 2025 and December 31, 2024, we had letters of credit outstanding in the amount of $1.0 million and $1.0 million, respectively. No amounts were drawn against these letters of credit at June 30, 2025 and December 31, 2024. These letters of credit exist to support insurance programs relating to workers’ compensation, medical insurance, and reducing cash security deposits on leased property. We had no other off-balance sheet financing activities at June 30, 2025 and December 31, 2024. After the letters of credit on June 30, 2025, we had the ability to borrow $24.0 million under the Credit Facility.
Previous wording
On May 2, 2023, the Board of Directors of Harte Hanks approved a share repurchase program to maximize shareholder value with authorization to repurchase $6.5 million of the Company’s Common Stock. We didn't repurchase any stock during the three months ended March 31, 2025 and 2024.
Current wording
On May 2, 2023, the Board of Directors of Harte Hanks approved a share repurchase program to maximize shareholder value with authorization to repurchase $6.5 million of the Company’s Common Stock. We didn't repur chase any stocks during thethree and six months ended June 30, 2025 and 2024.
Previous wording
We consider such factors as total cash and cash equivalents and restricted cash, current assets, current liabilities, total debt, revenues, operating income, cash flows from operations, investing activities, and financing activities when assessing our liquidity. Our management of cash is designed to optimize returns on cash balances and to ensure that it is readily available to meet our operating, investing, and financing requirements as they arise. We believe that there are no conditions or events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern for the twelve months following the issuance of the Consolidated Financial Statements.
Current wording
We consider such factors as total cash and cash equivalents and restricted cash, current assets, current liabilities, total debt, revenues, operating income, cash flows from operations, investing activities, and financing activities when assessing our liquidity. Our management of cash is designed to optimize returns on cash balances and to ensure that it is readily available to meet our operating, investing, and financing requirements as they arise. We believe that there are no conditions or events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern for the twelve months following the issuance of these Condensed Consolidated Financial Statements.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
The largest components of our operating expenses are labor, transportation expenses and outsourced costs. Each of these costs is, at least in part, variable and tends to fluctuate in line with revenues and the demand for our services. Postage costs for mailings are borne by our clients and are not directly reflected in our revenues or expenses.
Current report — wording carried from elsewhere
The income tax benefit of$0.3 million in thesix months ended June 30, 2025 represents a decrease in income tax benefit of$8.8 million when compared to the same period of 2024. Our effective tax rate was 28.7% for thesix months ended June 30, 2025, an increase of 4.2% from theeffective tax rate of 24.5% for the same period of 2024. The effective tax rate differs from the federal statutory rate of 21.0%, primarily due to the U.S. state income taxes and income earned in foreign jurisdictions.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
As of March 31, 2025, we had the ability to borrow $24.0 million under the Credit Facility.