Thryv(THRY) - 2024 Q2 - Quarterly Report

Revenue and Profit Performance - Revenue for Q2 2024 was $224.1 million, a decrease of 10.9% compared to $251.4 million in Q2 2023[8] - Net income for Q2 2024 was $5.5 million, a significant decline from $16.0 million in Q2 2023[8] - Gross profit for Q2 2024 was $148.6 million, down 7.2% from $160.1 million in Q2 2023[8] - Operating income for Q2 2024 was $31.3 million, slightly up from $30.7 million in Q2 2023[8] - Basic net income per share for Q2 2024 was $0.15, down from $0.46 in Q2 2023[8] - Net income for the six months ended June 30, 2024, was $13.97 million, a decrease from $25.29 million in the same period in 2023[15] - Net income for the six months ended June 30, 2024, was $13.972 million, compared to $25.292 million for the same period in 2023[82] - The company's basic net income per share for the six months ended June 30, 2024, was $0.39, down from $0.73 in the same period in 2023[82] - The company's diluted net income per share for the six months ended June 30, 2024, was $0.37, compared to $0.68 in the same period in 2023[84] - 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[135] - 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[136] - 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[135] - 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[136] - Thryv Marketing Services revenue decreased by $69.0 million (18.4%) for the six months, while Thryv SaaS revenue increased by $29.7 million (24.3%)[154] - Gross profit decreased by $12.7 million (4.0%) for the six months ended June 30, 2024, compared to the same period in 2023, primarily due to a decline in Marketing Services revenue, partially offset by SaaS revenue growth and cost-saving initiatives[161] - Gross margin increased by 260 basis points to 66.0% for the six months ended June 30, 2024, compared to 63.4% in 2023[161] - Adjusted Gross Profit for the six months ended June 30, 2024, was $314.2 million, with an Adjusted Gross Margin of 68.7%, compared to $329.8 million and 66.4% in 2023[179][180] Segment Performance - Thryv Marketing Services segment revenue for Q2 2024 was $146.3 million, a decrease from $189.0 million in Q2 2023[107] - Thryv SaaS segment revenue for Q2 2024 was $77.8 million, an increase from $62.5 million in Q2 2023[108] - Total revenue for Q2 2024 was $224.1 million, down from $251.4 million in Q2 2023[101] - Thryv Australia contributed 16.9% of total revenue in Q2 2024, down from 18.9% in Q2 2023[103] - Segment Adjusted EBITDA for Q2 2024 was $59.3 million, compared to $69.4 million in Q2 2023[100] - Thryv Marketing Services segment gross profit for Q2 2024 was $96.3 million, down from $120.9 million in Q2 2023[97] - Thryv SaaS segment gross profit for Q2 2024 was $52.3 million, up from $39.2 million in Q2 2023[97] - Digital revenue within Thryv Marketing Services was $63.7 million in Q2 2024, down from $102.5 million in Q2 2023[101] - International revenue for Q2 2024 was $46.0 million, down from $53.6 million in Q2 2023[103] - The company serves approximately 310,000 SMB clients globally through its two business segments[106] - SaaS clients increased by 29 thousand, or 52%, as of June 30, 2024 compared to June 30, 2023[121] - Marketing Services clients decreased by 77 thousand, or 22%, as of June 30, 2024 compared to June 30, 2023[121] - Total clients decreased by 68 thousand, or 18%, as of June 30, 2024 compared to June 30, 2023[122] - 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[124] - 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[125] - Print revenue declined by 33% for the quarter due to secular decline in industry demand, despite an increase in published directories[137] - Digital revenue decreased by $38.8 million (37.9%) for the quarter, driven by declining Marketing Services client base and competition from Google, Yelp, and Facebook[138] - Thryv SaaS revenue increased by $15.3 million (24.6%) for the quarter, driven by higher demand for SaaS solutions and strategic client conversion from Marketing Services[139] - Digital revenue decreased by $72.4 million (34.4%) for the six months, driven by client base decline and competition, as well as strategic client upgrades to SaaS solutions[157] Financial Position and Assets - Total current assets as of June 30, 2024 were $260.6 million, down from $266.9 million at the end of 2023[10] - Total liabilities as of June 30, 2024 were $602.4 million, compared to $630.5 million at the end of 2023[10] - Cash and cash equivalents decreased to $15.5 million as of June 30, 2024 from $18.2 million at the end of 2023[10] - Accounts receivable decreased to $193.7 million as of June 30, 2024 from $205.5 million at the end of 2023[10] - Total stockholders' equity increased to $183.1 million as of June 30, 2024 from $152.7 million at the end of 2023[10] - Total Stockholders' Equity increased from $167,066 thousand as of March 31, 2024 to $183,060 thousand as of June 30, 2024, reflecting a growth of $15,994 thousand[12] - Net income for the three months ended June 30, 2024 was $5,548 thousand, contributing to the increase in Total Stockholders' Equity[12] - Additional Paid-in Capital grew from $1,159,754 thousand to $1,170,798 thousand during the three months ended June 30, 2024, an increase of $11,044 thousand[12] - Treasury Stock decreased by $670 thousand, from $(488,087) thousand to $(488,757) thousand, due to the purchase of treasury stock[12] - Accumulated Deficit improved from $(489,778) thousand to $(484,230) thousand, a reduction of $5,548 thousand, primarily due to net income[12] - For the six months ended June 30, 2024, Net income was $13,972 thousand, significantly contributing to the increase in Total Stockholders' Equity from $152,700 thousand to $183,060 thousand[13] - The company's cash, cash equivalents, and restricted cash totaled $20.998 million as of June 30, 2024, up from $17.595 million in 2023[23] - The company's fixed assets and capitalized software additions were $16.23 million for the six months ended June 30, 2024, compared to $14.02 million in 2023[15] - The company's deferred income taxes for the six months ended June 30, 2024, were $(24.06) million, compared to $(9.135) million in 2023[15] - The company's unrecognized tax benefits as of June 30, 2024, were $18.1 million, up from $17.1 million as of December 31, 2023[88] - The company's unrecognized stock-based compensation expense related to unvested RSUs as of June 30, 2024, was approximately $19.1 million[74] - The company's unrecognized stock-based compensation expense related to unvested PSUs as of June 30, 2024, was approximately $15.1 million[77] - The company's unrecognized stock-based compensation expense related to unvested stock options as of June 30, 2024, was approximately $0.2 million[78] - The company repurchased approximately 26,495 shares of its outstanding common stock on June 20, 2024, for a total purchase price of approximately $0.5 million[83] - The company's share repurchase program, authorized on April 30, 2024, allows for the repurchase of up to $40 million in shares of common stock through April 30, 2029[80] - The company had $39.5 million remaining under its share repurchase authorization as of June 30, 2024[204] Debt and Financing - Total debt obligations as of June 30, 2024, were $342.1 million, compared to $348.9 million as of December 31, 2023[52] - The New Term Loan Facility has an aggregate principal amount of $350.0 million, with 31.8% held by a related party as of June 30, 2024[53] - The New Term Loan Facility requires mandatory amortization payments of $52.5 million per year for the first two years and $35.0 million per year thereafter[54] - Net proceeds from the New Term Loan were $337.6 million, used to repay the $300.0 million outstanding principal balance of the Prior Term Loan[55] - The New ABL Facility has a borrowing base availability of $64.8 million, with $54.2 million available to be drawn as of June 30, 2024[63] - The Company recorded accrued interest of $0.2 million as of June 30, 2024, compared to $1.1 million as of December 31, 2023[58] - The Company was in compliance with its New Term Loan and ABL Facility covenants as of June 30, 2024, and expects to remain compliant for the next twelve months[60][66] - The company entered into a New Term Loan Facility of $350.0 million on May 1, 2024, with 31.8% held by a related party, and it matures on May 1, 2029[189][190] - The company entered into a New ABL Facility of $85.0 million on May 1, 2024, which matures on May 1, 2028, with $54.2 million available to be drawn as of June 30, 2024[191][192] - Total recorded debt outstanding as of June 30, 2024, was $342.1 million, comprising $336.4 million under the New Term Loan and $18.0 million under the New ABL Facility[193] - A hypothetical 100 basis point increase in interest rates would increase the company's annual interest expense by approximately $3.5 million based on debt outstanding as of June 30, 2024[196] Expenses and Costs - Cost of services decreased by $15.8 million (17.3%) for the quarter, primarily due to strategic cost-saving initiatives and reduced printing, distribution, and digital fulfillment costs[140] - Sales and marketing expenses decreased by $10.3 million (13.6%) for the quarter, driven by reduced employee-related costs, sales commissions, and advertising expenses[143] - Interest expense decreased by $4.1 million (25.3%) for the quarter, due to lower outstanding debt balances and reduced interest rates[145] - Adjusted EBITDA decreased by $10.1 million (14.6%) for the quarter, primarily due to the decline in Marketing Services, partially offset by SaaS growth[150] - Sales and marketing expenses decreased by $16.5 million (10.9%) for the six months ended June 30, 2024, driven by reduced employee-related costs, sales commissions, and advertising expenses[162] - General and administrative expenses increased by $2.9 million (2.8%) for the six months ended June 30, 2024, primarily due to higher employee-related costs, severance expenses, and stock-based compensation[163] - Interest expense decreased by $7.2 million (22.1%) for the six months ended June 30, 2024, due to lower outstanding debt balances and reduced interest rates[164] - Adjusted EBITDA decreased by $14.5 million (11.3%) for the six months ended June 30, 2024, driven by a decline in the Thryv Marketing Services segment, partially offset by growth in the Thryv SaaS segment[168] - The company's effective tax rate (ETR) was 46.2% for the six months ended June 30, 2024, compared to 4.1% in 2023, influenced by state taxes, non-deductible executive compensation, and debt refinancing impacts[167] - Loss on early extinguishment of debt was $6.6 million for the six months ended June 30, 2024, related to debt refinancing[173] - Other components of net periodic pension cost increased by $1.2 million for the six months ended June 30, 2024, due to the absence of prior-year settlement and remeasurement gains[165] - Stock-based compensation expense for the six months ended June 30, 2024, was $11.642 thousand, reflecting the company's investment in employee incentives[13] - Stock-based compensation expense for the six months ended June 30, 2024, was $11.64 million, up from $11.19 million in 2023[15] - Stock-based compensation expense for the six months ended June 30, 2024, was $11.6 million, compared to $11.2 million for the same period in 2023[71] - The Company's net periodic pension cost for the six months ended June 30, 2024, was $3.2 million, compared to $1.9 million for the same period in 2023[68] - The Company expects to contribute approximately $0.5 million to non-qualified pension plans for fiscal year 2024[69] Cash Flow and Investments - Net cash provided by operating activities for the six months ended June 30, 2024, was $27.66 million, compared to $57.74 million in 2023[15] - The company acquired Yellow, a New Zealand marketing services company, for $8.9 million in cash on April 3, 2023, expanding its market share and client base[27] - Goodwill recognized from the Yellow acquisition was $5.1 million, allocated to the Thryv Marketing Services segment and not deductible for income tax purposes[29] - 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 same period in 2023, primarily due to changes in working capital and higher tax payments of $13.3 million[186] - Net cash used in investing activities decreased by $6.9 million, or 29.8%, for the six months ended June 30, 2024, primarily due to $8.9 million of cash paid related to the Yellow Acquisition in 2023[187] - Net cash used in financing activities decreased by $24.4 million, or 69.9%, for the six months ended June 30, 2024, primarily due to $20.7 million of net proceeds from the New Term Loan[188] - The company repurchased 26,495 shares of common stock at an average price of $18.83 per share during the quarter ended June 30, 2024, under a $40 million share repurchase program[204] Intangible Assets and Goodwill - Goodwill balance decreased from $302.4 million as of December 31, 2023 to $301.0 million as of June 30, 2024, primarily due to foreign currency translation effects[43] - Amortization expense for intangible assets for the three and six months ended June 30, 2024 was $5.1 million and $10.5 million, respectively, compared to $6.5 million and $12.7 million for the same periods in 2023[45] - The company's total intangible assets decreased from $18.8 million as of December 31, 2023 to $6.6 million as of June 30, 2024, with a weighted average remaining amortization period of 1.5 years[46][47] - Estimated future amortization expense for intangible assets is $4.2 million for the remainder of 2024 and $1.9 million for 2025[48] Credit and Liabilities - The allowance for credit losses increased from $14.4 million as of June 30, 2023 to $18.1 million as of June 30, 2024, with $18.0 million attributable to accounts receivable[49][50] - Accrued liabilities increased from $105.9 million as of December 31, 2023 to $110.2 million as of June 30, 2024, primarily due to an increase in accrued taxes[51] - The fair value of the New Term Loan and