UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

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

For the quarterly period ended ~~March 31,~~ June 30, 2021

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

For the transition period from __________ to __________

Commission File Number: 001-35895

THRYV HOLDINGS, INC.

(Exact name of registrant as specified in its charter)


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

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


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

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


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

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

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

Yes x No o

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


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

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

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

Yes o No x

As of ~~May 12,~~August 9, 2021, there ~~were~~were ~~33,685,958~~33,865,449 shares of the registrant's common stock outstanding.

THRYV HOLDINGS, INC.

TABLE OF CONTENTS


		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Statements of Operations for the Three a nd S ix Months Ended ~~Marc~~hJune 3 10 , ~~202~~1 2021 and 20 20 2020 (unaudited)	3
	Condensed Consolidated Statements of Comprehensive In ~~come (Loss)~~Income for the Three and Six Months Ended ~~March 31,~~June 3 0 , 2021 and 2020 (unaudited)	4
	Condensed Consolidated Balance Sheets as of ~~March 31,~~June 3 0 , 2021 and December 31, 2020 (unaudited)	5
	Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three and Six Months Ended ~~March~~June 3 10 , ~~202~~1 2021 and 20 20 2020 (unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the ~~Thr~~Six ee Months Ended ~~Marc~~hJune 3 10 , 20 21 2021 and 20 20 2020 (unaudited)	78
	Notes to Condensed Consolidated Financial Statements (unaudited)	910
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2629
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3947
Item 4.	Controls and Procedures	4047

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	4048
Item 1A.	Risk Factors	4048
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4248
Item 3.	Defaults Upon Senior Securities	4248
Item 4.	Mine Safety Disclosures	4248
Item 5.	Other Information	4248
Item 6.	Exhibits	4349
	Signatures	4450

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements, including, without limitation, statements concerning the conditions of our industry and our operations, performance, and financial condition, including, in particular, statements relating to our business, growth strategies, product development efforts, and future expenses. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” and similar references to future periods, or by the inclusion of forecasts or projections. Examples of forward-looking statements include, but are not limited to, statements we make regarding the outlook for our future business and financial performance, such as those contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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

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

•our ability to maintain profitability;

•our ability to manage our growth effectively;

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

•the effect of the coronavirus commonly referred to as COVID-19 (“COVID-19”) on our business, including the measures to reduce its spread, and the impact on the economy and demand for our services, which may precipitate or exacerbate other risks and uncertainties;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

•the potential impact of future labor negotiations;

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

•volatility and weakness in bank and capital markets; and

•costs, obligations and liabilities incurred as a result of and in connection with being a public company.

For additional information regarding known material factors that could cause the Company’s actual results to differ from its projected results, see ~~“Part II. Item 1A. Risk~~“Risk Factors” in ~~this report.~~our Annual Report on Form 10-K for the year ended December 31, 2020 as well as our subsequent Quarterly Reports on Form 10-Q. Readers are cautioned not to place undue reliance on forward-looking statements contained in this ~~document,~~report, which speak only as of the date of this report. Except as required by applicable law, the Company undertakes no obligation to update or revise any forward-looking statements publicly after the date they are made, whether as a result of new information, future events, or otherwise.

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

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

Thryv Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)


									Three Months Ended				Six Months Ended
		Three Months Ended March 31,			June 30,						June 30,
			2021			2020			2021		2020		2021		2020
Revenue	Revenue		$	280,606		$	318,570	Revenue	$	291,047	$	303,612	$	571,653	$	622,182
Cost of services	Cost of services		98,160			117,976		Cost of services	112,607		110,605		210,767		228,581
Gross profit	Gross profit		182,446			200,594		Gross profit	178,440		193,007		360,886		393,601

Operating expenses:	Operating expenses:							Operating expenses:
Sales and marketing	Sales and marketing		76,540			89,292		Sales and marketing	87,394		79,105		163,934		168,397
General and administrative	General and administrative		41,279			49,562		General and administrative	33,100		44,194		74,379		93,756
Impairment charges	Impairment charges		0			98		Impairment charges	3,611		18,132		3,611		18,230
Total operating expenses	Total operating expenses		117,819			138,952		Total operating expenses	124,105		141,431		241,924		280,383

Operating income	Operating income		64,627			61,642		Operating income	54,335		51,576		118,962		113,218
Other income (expense):	Other income (expense):							Other income (expense):
Interest expense	Interest expense		(11,607)			(14,780)		Interest expense	(14,502)		(13,426)		(26,109)		(28,206)
Interest expense, related party	Interest expense, related party		(4,065)			(5,150)		Interest expense, related party	(4,668)		(4,586)		(8,733)		(9,736)
Other components of net periodic pension cost			453			(201)
Other components of net periodic pension benefit (cost)								Other components of net periodic pension benefit (cost)	272		(936)		725		(1,137)
Other expense	Other expense		(1,093)			0		Other expense	(2,966)		0		(4,059)		0
Income before (provision) for income taxes	Income before (provision) for income taxes		48,315			41,511		Income before (provision) for income taxes	32,471		32,628		80,786		74,139
(Provision) for income taxes	(Provision) for income taxes		(11,809)			(13,409)		(Provision) for income taxes	(8,112)		(21,164)		(19,921)		(34,573)
Net income	Net income		$	36,506		$	28,102	Net income	$	24,359	$	11,464	$	60,865	$	39,566

Net income per common share:	Net income per common share:							Net income per common share:
Basic	Basic		$	1.10		$	0.86	Basic	$	0.72	$	0.36	$	1.82	$	1.24
Diluted	Diluted		$	1.07		$	0.80	Diluted	$	0.66	$	0.34	$	1.72	$	1.15

Weighted-average shares used in computing basic and diluted net income per common share:	Weighted-average shares used in computing basic and diluted net income per common share:							Weighted-average shares used in computing basic and diluted net income per common share:
Basic	Basic		33,108,422			32,578,286		Basic	33,622,666		31,435,941		33,367,734		32,007,114
Diluted	Diluted		34,013,480			35,026,526		Diluted	36,687,030		33,803,465		35,352,445		34,414,996

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

Thryv Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)


		Three Months Ended March 31,			Three Months Ended June 30,						Six Months Ended June 30,
			2021			2020			2021		2020		2021		2020
Net income	Net income		$	36,506		$	28,102	Net income	$	24,359	$	11,464	$	60,865	$	39,566
Other comprehensive income (loss):	Other comprehensive income (loss):							Other comprehensive income (loss):
Foreign currency translation adjustment	Foreign currency translation adjustment		(2,967)			0		Foreign currency translation adjustment	(1,478)		0		(4,445)		0
Comprehensive income	Comprehensive income		$	33,539		$	28,102	Comprehensive income	$	22,881	$	11,464	$	56,420	$	39,566

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

Thryv Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share data)

(unaudited)


		March 31, 2021		December 31, 2020			June 30, 2021		December 31, 2020
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	29,841	$	2,406	Cash and cash equivalents	$	15,785	$	2,406
Accounts receivable, net of allowance of $34,557 and $33,030		354,737		296,570
Contract assets, net of allowance of $244 and $338		9,285		10,975
Accounts receivable, net of allowance of $21,450 and $33,030						Accounts receivable, net of allowance of $21,450 and $33,030	312,457		296,570
Contract assets, net of allowance of $157 and $338						Contract assets, net of allowance of $157 and $338	8,415		10,975
Taxes receivable	Taxes receivable	9,154		9,229		Taxes receivable	1,890		9,229
Prepaid expenses and other current assets	Prepaid expenses and other current assets	36,277		26,172		Prepaid expenses and other current assets	36,370		26,172
Indemnification asset	Indemnification asset	24,346		24,346		Indemnification asset	25,190		24,346
Total current assets	Total current assets	463,640		369,698		Total current assets	400,107		369,698
Fixed assets and capitalized software, net	Fixed assets and capitalized software, net	123,281		89,044		Fixed assets and capitalized software, net	76,315		89,044
Goodwill	Goodwill	679,559		609,457		Goodwill	678,793		609,457
Intangible assets, net	Intangible assets, net	145,647		31,777		Intangible assets, net	123,907		31,777
Deferred tax assets	Deferred tax assets	97,941		93,099		Deferred tax assets	106,069		93,099

Other assets	Other assets	34,410		21,902		Other assets	26,944		21,902
Total assets	Total assets	$	1,544,478	$	1,214,977	Total assets	$	1,412,135	$	1,214,977
Liabilities and Stockholders' Equity	Liabilities and Stockholders' Equity					Liabilities and Stockholders' Equity
Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	19,981	$	8,927	Accounts payable	$	30,024	$	8,927
Accrued liabilities	Accrued liabilities	157,537		139,613		Accrued liabilities	168,602		139,613
Current portion of unrecognized tax benefits	Current portion of unrecognized tax benefits	30,417		30,022		Current portion of unrecognized tax benefits	30,615		30,022
Contract liabilities	Contract liabilities	47,909		18,942		Contract liabilities	32,233		18,942
New Term Loan, current	New Term Loan, current	70,000		0		New Term Loan, current	70,000		0
Other current liabilities	Other current liabilities	20,324		9,896		Other current liabilities	12,898		9,896
Total current liabilities	Total current liabilities	346,168		207,400		Total current liabilities	344,372		207,400
New Term Loan, net	New Term Loan, net	372,454		—		New Term Loan, net	365,189		—
New Term Loan, related party	New Term Loan, related party	234,098		—		New Term Loan, related party	154,697		—
Senior Term Loan, net	Senior Term Loan, net	—		335,683		Senior Term Loan, net	—		335,683
Senior Term Loan, related party	Senior Term Loan, related party	—		113,482		Senior Term Loan, related party	—		113,482
ABL Facility	ABL Facility	43,682		79,238		ABL Facility	58,022		79,238
Leaseback obligations	Leaseback obligations	54,585		54,798		Leaseback obligations	0		54,798
Pension obligations, net	Pension obligations, net	184,642		190,827		Pension obligations, net	174,217		190,827
Deferred tax liabilities	Deferred tax liabilities	30,706		508		Deferred tax liabilities	1,179		508
Other liabilities	Other liabilities	48,947		36,266		Other liabilities	44,756		36,266
Total long-term liabilities	Total long-term liabilities	969,114		810,802		Total long-term liabilities	798,060		810,802
Commitments and contingencies (see Note 13)	Commitments and contingencies (see Note 13)	0		0		Commitments and contingencies (see Note 13)	0		0
Stockholders' equity	Stockholders' equity					Stockholders' equity
Common stock - $0.01 par value, 250,000,000 shares authorized; 59,806,077, shares issued and 33,127,667 shares outstanding at March 31, 2021; and 59,590,422 shares issued and 32,912,012 shares outstanding at December 31, 2020		598		596
Common stock - $0.01 par value, 250,000,000 shares authorized; 60,391,597, shares issued and 33,713,187 shares outstanding at June 30, 2021; and 59,590,422 shares issued and 32,912,012 shares outstanding at December 31, 2020						Common stock - $0.01 par value, 250,000,000 shares authorized; 60,391,597, shares issued and 33,713,187 shares outstanding at June 30, 2021; and 59,590,422 shares issued and 32,912,012 shares outstanding at December 31, 2020	604		596
Additional paid-in capital	Additional paid-in capital	1,058,504		1,059,624		Additional paid-in capital	1,076,124		1,059,624
Treasury stock - 26,678,410 shares at March 31, 2021 and December 31, 2020		(468,613)		(468,613)
Treasury stock - 26,678,410 shares at June 30, 2021 and December 31, 2020						Treasury stock - 26,678,410 shares at June 30, 2021 and December 31, 2020	(468,613)		(468,613)
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(2,967)		0		Accumulated other comprehensive income (loss)	(4,445)		0
Accumulated deficit	Accumulated deficit	(358,326)		(394,832)		Accumulated deficit	(333,967)		(394,832)
Total stockholders' equity	Total stockholders' equity	229,196		196,775		Total stockholders' equity	269,703		196,775
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	1,544,478	$	1,214,977	Total liabilities and stockholders' equity	$	1,412,135	$	1,214,977

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

Thryv Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders' Equity

(in thousands, except share amounts)

(unaudited)


Three Months Ended March 31, 2021
Three Months Ended June 30, 2021																Three Months Ended June 30, 2021
		Common Stock					Treasury Stock										Common Stock					Treasury Stock
		Shares	Amount		Additional Paid-in Capital		Shares	Amount		Accumulated Other Comprehensive Income (Loss)		Accumulated (Deficit)		Total Stockholders' Equity			Shares	Amount		Additional Paid-in Capital		Shares	Amount		Accumulated Other Comprehensive Income (Loss)		Accumulated (Deficit)		Total Stockholders' Equity
Balance as of December 31, 2020		59,590,422	$	596	$	1,059,624	(26,678,410)	$	(468,613)	$	0	$	(394,832)	$	196,775
Balance as of March 31, 2021																Balance as of March 31, 2021	59,806,077	$	598	$	1,058,504	(26,678,410)	$	(468,613)	$	(2,967)	$	(358,326)	$	229,196
Exercise of stock options	Exercise of stock options	215,544	2		(3,096)		—	—		—		—		(3,094)		Exercise of stock options	23,731	—		2,024		—	—		—		—		2,024
Exercise of stock warrants	Exercise of stock warrants	111	—		5		—	—		—		—		5		Exercise of stock warrants	561,789	6		13,675		—	—		—		—		13,681
Stock compensation expense	Stock compensation expense	—	—		1,971		—	—		—		—		1,971		Stock compensation expense	—	—		1,921		—	—		—		—		1,921
Cumulative translation adjustment	Cumulative translation adjustment	—	—		—		—	—		(2,967)		—		(2,967)		Cumulative translation adjustment	—	—		—		—	—		(1,478)		—		(1,478)
Net income	Net income	—	—		—		—	—		—		36,506		36,506		Net income	—	—		—		—	—		—		24,359		24,359
Balance as of March 31, 2021		59,806,077	$	598	$	1,058,504	(26,678,410)	$	(468,613)	$	(2,967)	$	(358,326)	$	229,196
Balance as of June 30, 2021																Balance as of June 30, 2021	60,391,597	$	604	$	1,076,124	(26,678,410)	$	(468,613)	$	(4,445)	$	(333,967)	$	269,703

Three Months Ended March 31, 2020
Three Months Ended June 30, 2020																Three Months Ended June 30, 2020
		Common Stock					Treasury Stock										Common Stock					Treasury Stock
		Shares	Amount		Additional Paid-in Capital		Shares	Amount		Accumulated Other Comprehensive Income (Loss)		Accumulated (Deficit)		Total Stockholders' Equity			Shares	Amount		Additional Paid-in Capital		Shares	Amount		Accumulated Other Comprehensive Income (Loss)		Accumulated (Deficit)		Total Stockholders' Equity
Balance as of December 31, 2019		57,443,282	$	574	$	1,008,701	(23,952,756)	$	(437,962)	$	0	$	(544,053)	$	27,260
Balance as of March 31, 2020																Balance as of March 31, 2020	57,463,943	$	574	$	1,009,001	(25,805,102)	$	(459,732)	$	0	$	(515,951)	$	33,892
Purchase of treasury stock	Purchase of treasury stock	—	—		—		(1,852,346)	(21,770)		—		—		(21,770)		Purchase of treasury stock	—	—		—		(829,696)	(8,856)		—		—		(8,856)
Exercise of stock options		20,661	—		300		—	—		—		—		300
Net income	Net income	—	—		—		—	—				28,102		28,102		Net income	—	—		—		—	—				11,464		11,464
Balance as of March 31, 2020		57,463,943	$	574	$	1,009,001	(25,805,102)	$	(459,732)	$	0	$	(515,951)	$	33,892
Balance as of June 30, 2020																Balance as of June 30, 2020	57,463,943	$	574	$	1,009,001	(26,634,798)	$	(468,588)	$	0	$	(504,487)	$	36,500

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


Six Months Ended June 30, 2021
	Common Stock					Treasury Stock
	Shares	Amount		Additional Paid-in Capital		Shares	Amount		Accumulated Other Comprehensive Income (Loss)		Accumulated (Deficit)		Total Stockholders' Equity
Balance as of December 31, 2020	59,590,422	$	596	$	1,059,624	(26,678,410)	$	(468,613)	$	0	$	(394,832)	$	196,775
Exercise of stock options	239,275	2		(1,072)		—	—		—		—		(1,070)
Exercise of stock warrants	561,900	6		13,680		—	—		—		—		13,686
Stock compensation expense	—	—		3,892		—	—		—		—		3,892
Cumulative translation adjustment	—	—		—		—	—		(4,445)		—		(4,445)
Net income	—	—		—		—	—		—		60,865		60,865
Balance as of June 30, 2021	60,391,597	$	604	$	1,076,124	(26,678,410)	$	(468,613)	$	(4,445)	$	(333,967)	$	269,703


Six Months Ended June 30, 2020
	Common Stock					Treasury Stock
	Shares	Amount		Additional Paid-in Capital		Shares	Amount		Accumulated Other Comprehensive Income (Loss)		Accumulated (Deficit)		Total Stockholders' Equity
Balance as of December 31, 2019	57,443,282	$	574	$	1,008,701	(23,952,756)	$	(437,962)	$	0	$	(544,053)	$	27,260
Purchase of treasury stock	—	—		—		(2,682,042)	(30,626)		—		—		(30,626)
Exercise of stock options	20,661	—		300		—	—		—		—		300
Net income	—	—		—		—	—				39,566		39,566
Balance as of June 30, 2020	57,463,943	$	574	$	1,009,001	(26,634,798)	$	(468,588)	$	0	$	(504,487)	$	36,500

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

Thryv Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


		Three Months Ended March 31,					Six Months Ended June 30,
		2021		2020			2021		2020
Cash Flows from Operating Activities	Cash Flows from Operating Activities					Cash Flows from Operating Activities
Net income	Net income	$	36,506	$	28,102	Net income	$	60,865	$	39,566
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	19,718		37,823		Depreciation and amortization	49,626		75,429
Amortization of debt issuance costs	Amortization of debt issuance costs	433		267		Amortization of debt issuance costs	1,930		534
Deferred income taxes	Deferred income taxes	(13,249)		(15,911)		Deferred income taxes	(51,439)		(42,150)
Provision for credit losses	Provision for credit losses	2,018		10,588		Provision for credit losses	292		22,436
Provision for service credits	Provision for service credits	4,528		6,736		Provision for service credits	8,719		17,197
Stock-based compensation expense (benefit)	Stock-based compensation expense (benefit)	1,971		(6,064)		Stock-based compensation expense (benefit)	3,892		(5,484)
Other components of net periodic pension cost		(453)		201
Loss on early extinguishment of debt		299		0
Loss on disposal/write-off of fixed assets and capitalized software		15		2,962
Other components of net periodic pension (benefit) cost						Other components of net periodic pension (benefit) cost	(725)		1,137
Loss on termination of leaseback obligations						Loss on termination of leaseback obligations	3,409		0
(Gain) loss on disposal/write-off of fixed assets and capitalized software						(Gain) loss on disposal/write-off of fixed assets and capitalized software	(44)		3,491
Impairment charges	Impairment charges	0		98		Impairment charges	3,611		18,230
Non-cash loss from remeasurement of indemnification asset		0		3,801
Gain (loss) on foreign currency exchange rates		835		0
Non-cash (gain) loss from remeasurement of indemnification asset						Non-cash (gain) loss from remeasurement of indemnification asset	(844)		4,418
Loss on foreign currency exchange rates						Loss on foreign currency exchange rates	640		0
Other, net	Other, net	6		0		Other, net	(17)		0
Changes in working capital items, excluding acquisitions:	Changes in working capital items, excluding acquisitions:					Changes in working capital items, excluding acquisitions:
Accounts receivable	Accounts receivable	26,846		(8,921)		Accounts receivable	70,491		(28,791)
Contract assets	Contract assets	1,446		(522)		Contract assets	2,402		(2,050)
Prepaid expenses and other assets	Prepaid expenses and other assets	(10,998)		(4,583)		Prepaid expenses and other assets	(7,567)		3,177
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	(67,458)		(33,981)		Accounts payable and accrued liabilities	(51,133)		(67,064)
Accrued income taxes, net	Accrued income taxes, net	9,597		30,351		Accrued income taxes, net	3,258		64,821
Operating lease liability	Operating lease liability	(403)		(2,620)		Operating lease liability	(2,407)		(3,482)
Contract liabilities	Contract liabilities	2,547		(2,685)		Contract liabilities	(13,157)		(3,544)
Net cash provided by operating activities	Net cash provided by operating activities	14,204		45,642		Net cash provided by operating activities	81,802		97,871

Cash Flows from Investing Activities	Cash Flows from Investing Activities					Cash Flows from Investing Activities
Additions to fixed assets and capitalized software	Additions to fixed assets and capitalized software	(3,668)		(9,122)		Additions to fixed assets and capitalized software	(14,315)		(12,975)
Proceeds from the sale of building and fixed assets	Proceeds from the sale of building and fixed assets	0		1,502		Proceeds from the sale of building and fixed assets	63		1,502
Acquisition of a business, net of cash acquired	Acquisition of a business, net of cash acquired	(174,190)		0		Acquisition of a business, net of cash acquired	(174,190)		0
Net cash (used in) investing activities	Net cash (used in) investing activities	(177,858)		(7,620)		Net cash (used in) investing activities	(188,442)		(11,473)

Cash Flows from Financing Activities	Cash Flows from Financing Activities					Cash Flows from Financing Activities
Proceeds from New Term Loan	Proceeds from New Term Loan	418,070		0		Proceeds from New Term Loan	418,070		0
Proceeds from New Term Loan, related party	Proceeds from New Term Loan, related party	260,930		0		Proceeds from New Term Loan, related party	260,930		0
Payments of New Tern Loan						Payments of New Tern Loan	(62,089)		0
Payments of New Term Loan, related party						Payments of New Term Loan, related party	(25,911)		0
Payments of Senior Term Loan	Payments of Senior Term Loan	(335,821)		(23,445)		Payments of Senior Term Loan	(335,821)		(45,090)
Payments of Senior Term Loan, related party	Payments of Senior Term Loan, related party	(113,789)		(10,555)		Payments of Senior Term Loan, related party	(113,789)		(20,300)
Proceeds from ABL Facility	Proceeds from ABL Facility	249,936		329,719		Proceeds from ABL Facility	545,809		606,455
Payments of ABL Facility	Payments of ABL Facility	(285,492)		(312,624)		Payments of ABL Facility	(567,025)		(596,969)
Purchase of treasury stock	Purchase of treasury stock	0		(21,770)		Purchase of treasury stock	0		(30,626)
Other	Other	(2,038)		(56)		Other	3,305		(191)
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	191,796		(38,731)		Net cash provided by (used in) financing activities	123,479		(86,721)

Effect of exchange rate changes on cash and cash equivalents		(707)		0
Increase (decrease) in cash and cash equivalents		27,435		(709)

Cash and cash equivalents, beginning of period 2,406 1,912
Cash and cash equivalents, end of period $ 29,841 $ 1,203
Supplemental Information
Cash paid for interest $ 17,286 $ 20,802
Cash paid (received) for income taxes, net $ 15,753 $ (1,031)



Effect of exchange rate changes on cash and cash equivalents	(819)		0
Increase (decrease) in cash and cash equivalents and restricted cash	16,020		(323)
Cash and cash equivalents and restricted cash, beginning of period	2,406		1,912
Cash and cash equivalents and restricted cash, end of period	$	18,426	$	1,589

Supplemental Information
Cash paid for interest	$	37,608	$	39,671
Cash paid for income taxes, net	$	38,411	$	11,902

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

Thryv Holdings, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1 Description of Business and Summary of Significant Accounting Policies

General

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

On March 1, 2021, the Company completed the acquisition of Sensis Holding Limited (“Sensis”), a provider of marketing solutions serving SMBs in Australia.

Basis of Presentation

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

In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments, consisting of only normal recurring items and accruals, necessary for the fair statement of the financial position, results of operations and cash flows of the Company for the periods presented. The condensed consolidated financial statements as of and for the three and six months ended ~~March 31,~~June 30, 2021 and 2020 have been prepared on the same basis as the audited annual financial statements. ~~Certain reclassifications have been made to the March 31, 2020 condensed consolidated financial statements and accompanying notes to conform to the March 31, 2021 presentation.~~ The condensed consolidated balance sheet as of December 31, 2020 was derived from the audited annual financial statements. The condensed consolidated results for interim periods are not necessarily indicative of results for the full year and should be read in conjunction with the Company’s audited financial statements and related footnotes for the year ended December 31, 2020.

Gross Profit Change

The Company has revised the format of its condensed consolidated statements of operations, since the issuance of its Annual Report on Form 10-K for the year ended December 31, 2020 (our “2020 Form 10-K”), in order to provide better insight into its results of operations and to align its presentation to certain industry competitors. As a result, a Gross profit subtotal line item was added within the Company’s condensed consolidated statements of operations for the three and six months ended ~~March 31,~~June 30, 2021 and 2020. Additionally, the Company reclassified ~~depreciation~~Depreciation and amortization from a single line in its condensed consolidated statements of operations to be reflected as a component of Gross profit, Sales and marketing expense, and General and administrative expense.

The following summarizes the changes made to the Company's condensed consolidated statements of operations for three and six months ended ~~March 31,~~June 30, 2020 (in thousands):


		Three Months Ended March 31, 2020							Three Months Ended June 30, 2020
		As Reported		Adjustments		As Adjusted			As Reported		Adjustments		As Adjusted
Cost of services	Cost of services	$	99,620	$	18,356	$	117,976	Cost of services	$	91,974	$	18,631	$	110,605
Sales and marketing	Sales and marketing	75,353		13,939		89,292		Sales and marketing	65,811		13,294		79,105
General and administrative	General and administrative	44,132		5,430		49,562		General and administrative	38,513		5,681		44,194
Impairment charges	Impairment charges	0		98		98		Impairment charges	18,132		0		18,132
Depreciation and amortization	Depreciation and amortization	37,823		(37,823)		—		Depreciation and amortization	37,606		(37,606)		—


	Six Months Ended June 30, 2020
	As Reported		Adjustments		As Adjusted
Cost of services	$	191,594	$	36,987	$	228,581
Sales and marketing	141,164		27,233		168,397
General and administrative	82,547		11,209		93,756
Impairment charges	18,230		0		18,230
Depreciation and amortization	75,429		(75,429)		—

Reverse Stock Split

The Company’s condensed consolidated financial statements reflect a 1-for-1.8 reverse stock split of the Company’s common stock, which became effective on August 26, 2020. All share and per share data for all periods presented in the accompanying condensed consolidated financial statements and notes thereto have been adjusted retrospectively, where applicable, to reflect the reverse stock split.

Use of Estimates

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

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

Due to the novel strain of coronavirus, commonly referred to as COVID-19 (“COVID-19”) and the uncertainty of the extent of the impacts related thereto, certain estimates and assumptions may require increased judgment. As events continue to evolve and additional information becomes available, these estimates may change in future periods. It is difficult to predict what the ongoing impact of the pandemic will be on future periods.

Summary of Significant Accounting Policies

Except for the addition of foreign currency to the Company’s significant accounting policies and the change related to income taxes, as described below, there have been no changes to the Company’s significant accounting policies as of and for the three and six months ended ~~March 31,~~June 30, 2021 as compared to the significant accounting policies included in the Company's ~~Annual Report on~~2020 Form ~~10-K~~10-K.

Restricted Cash

The following table presents a reconciliation of Cash and cash equivalents, and restricted cash reported within the Company's condensed consolidated balance sheets that sum to the total of the same such amounts shown in the Company's condensed consolidated statements of cash flows for the ~~year~~six months ended ~~December 31, 2020.~~June 30, 2021 and 2020 (in thousands):


	June 30, 2021		June 30, 2020		December 31, 2020
Cash and cash equivalents	$	15,785	$	1,589	$	2,406
Restricted cash, included in Prepaid expenses and other current assets	2,641		0		0
Total Cash and cash equivalents, and restricted cash	$	18,426	$	1,589	$	2,406

Impairment Charges

During the three and six months ended June 30, 2021, the Company recorded operating lease right-of-use assets impairment charges of $3.6 million due to the Company's decision to operate in a “Remote First” working environment. These impairment charges were recorded in the Thryv International segment.

In June 2020, the Company announced its plans to become a “Remote First” company, meaning that the majority of the workforce will continue to operate in a remote working environment indefinitely. As a result, the Company closed certain office buildings, including most of the space at the corporate headquarters in Dallas. The Company kept certain office buildings open to house essential employees who cannot perform their duties remotely, such as employees who work in the data centers in Dallas and Virginia. During the three and six months ended June 30, 2020, the Company recorded operating lease right-of-use assets impairment charges of $15.2 million and $15.3 million, respectively, and a fixed assets impairment charge of $2.9 million due to the Company's decision to operate in a “Remote First” working environment and consolidate operations at certain locations. Approximately $16.4 million and $1.8 million of the impairment charges related to becoming a “Remote First” company were recorded in the Marketing Services and SaaS segments, respectively.

These operating lease right-of-use assets were remeasured at fair value based upon the discounted cash flows of estimated sublease income using market participant assumptions. These fair value measurements are considered Level 3.

Foreign Currency

The functional currency of the Company’s foreign operating subsidiaries is the local currency. Assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange rates in effect at the balance sheet dates, with the resulting translation adjustments directly recorded to a separate component of accumulated other comprehensive income. Income and expense accounts are translated at the weighted-average exchange rates during the period.

Transaction gains or losses in currencies other than the functional currency are included as a component of “Other income (expense), net” in the Company's condensed consolidated statements of comprehensive income.

Income Taxes

The Company will report the tax impact of global intangible low-taxed income (“GILTI”) as a period cost when incurred. Accordingly, the Company is not providing deferred taxes for basis differences expected to reverse as GILTI.

Recently Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes (Topic 740), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 will be effective for interim and annual periods beginning after December 15, 2020. Early adoption is permitted. The Company adopted ASU 2019-12 on January 1, 2021. The adoption of ASU 2019-12 did not have a material impact on the Company's condensed consolidated financial statements.

Note 2 Acquisitions

Sensis Acquisition

On March 1, 2021 (the “Acquisition Date”), Thryv Australia Pty Ltd. (“Buyer”), an Australian proprietary limited company and a direct wholly-owned subsidiary of Thryv International ~~Holdings~~Holding LLC, a direct and wholly owned subsidiary of the Company, acquired all of the issued and outstanding equity interests of (i) Sunshine NewCo Pty Ltd, an Australian proprietary limited company, and its subsidiaries, and (ii) Sensis Holding Limited (“Sensis”), a private limited company incorporated under the laws of England and Wales, and its subsidiaries (collectively, the “Sensis Acquisition”). The Sensis Acquisition expanded the Company's market share with a broader geographical footprint. Additionally, the ~~acquisition~~Sensis Acquisition provided the Company with a significant increase in clients. Sensis is a provider of marketing solutions serving SMBs in Australia. Control was obtained by means of acquiring all the voting interests.

In connection with the Sensis Acquisition, the Company paid consideration of approximately $215.0 million in cash, subject to customary closing adjustments, financed by a New Term Loan ~~(defined below)~~(as defined in Note 8) that was entered into on the Acquisition Date. All acquisition-related costs, amounting to $8.7 million, were expensed as incurred by the Company and no portion of these costs are included in consideration transferred. These costs were presented within General and administrative expense in the Company's condensed consolidated statement of operations. Additionally, as part of the effort to fund the Sensis Acquisition, the Company incurred debt issuance costs of $4.2 million related to a New Term Loan, of which $2.5 million is capitalized and amortized using the effective interest method. See “Note 8, Debt Obligations.”

The Company accounted for the Sensis Acquisition using the acquisition method of accounting in accordance with ~~ASC~~Accounting Standards Codification 805, Business Combinations (“ASC 805”). This requires that the assets acquired and liabilities assumed be measured at fair value. The Company determined, using Level 3 inputs, the fair value of certain assets and liabilities, including fixed assets, intangible assets, and financing obligations and deferred revenue, by applying a combination of the income approach and the cost approach. Specific to intangible assets, client relationships were valued using a combination of the income and excess earnings approach, whereas trade names were valued using a relief of royalty method. The fair values of property, plant and equipment and intangible and other assets acquired and liabilities assumed, have been prepared on a preliminary basis with information currently ~~available.~~available and are subject to change. Management is still reviewing the characteristics and assumptions related to Sensis’s assets acquired and liabilities assumed. The preliminary purchase price allocation is expected to be finalized within 12 months after the Acquisition Date.

1113

The following table summarizes the consideration transferred and the preliminary purchase price allocation of the fair values of the assets acquired and liabilities assumed at the Acquisition Date (in thousands):


Total cash consideration	$	214,984
Total purchase consideration, as allocated below:	$	214,984

Cash and cash equivalents	$	40,794
Accounts receivable and other current assets	88,529
Other assets	~~11,801~~9,367
Fixed assets and capitalized software	40,957
Intangible assets:
Client relationships (useful life 3.5 years)	101,839
Trademarks (useful life 3.5 years)	24,877
Accounts payable	(31,163)
Accrued liabilities	~~(39,654)~~(40,713)
Contract liabilities	(27,075)
Other current liabilities	~~(11,641)~~(6,733)
Deferred tax liabilities	~~(40,497)~~(42,121)
Other liabilities	(15,505)
Total identifiable net assets	$	~~143,262~~143,053
Goodwill	~~71,722~~71,931
Total net assets acquired	$	214,984

The excess of the purchase price over the fair value of the identifiable net assets acquired and the liabilities assumed was allocated to goodwill. The recognized goodwill of $~~71.7~~71.9 million was primarily related to the benefits expected from the ~~acquisition as is~~Sensis Acquisition and was allocated to the Thryv International segment. The goodwill recognized is not deductible for income tax purposes.

The Sensis Acquisition contributed ~~$15.4~~$62.3 million in revenue and ~~$(4.0)~~$(20.3) million i inn net (loss) since the Acquisition Date.

Pro Forma Results

The pro forma condensed combined financial information presented below was derived from historical financial records of Thryv and Sensis and presents the operating results of the combined Company, ~~with results prior to the Acquisition Date adjusted~~ as if the Sensis Acquisition had occurred on January 1, 2020. The pro forma data gives effect to historical operating results with adjustments to interest expense, amortization and depreciation expense and related tax effects.

The pro forma financial information is not necessarily indicative of the consolidated results of operations that would have been realized had the Sensis Acquisition been completed as of January 1, 2020, nor is it meant to be indicative of future results of operations that the combined entity will experience (in thousands):


		Three Months Ended March 31,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020			2021		2020		2021		2020
Revenue	Revenue	$	318,752	$	359,204	Revenue	$	321,162	$	368,598	$	639,914	$	727,802
Net income	Net income	52,415		13,073		Net income	45,816		24,651		98,231		37,724

1214

Note 3 Revenue Recognition

The Company has determined that each of its services is distinct and represents a separate performance obligation. The client can benefit from each service on its own or together with other resources that are readily available to the client. Services are separately identifiable from other promises in the contract. Control over the Company’s print services transfers to the client upon delivery of the published directories containing their advertisements to the intended market. Therefore, revenue associated with print services is recognized at a point in time upon delivery to the intended market. SaaS and digital services are recognized using the series guidance. Under the series guidance, the Company's obligation to provide services is the same for each day under the contract, and therefore represents a single performance obligation. Revenue associated with SaaS and digital services is recognized over time using an output method to measure the progress toward satisfying a performance obligation.

Disaggregation of Revenue

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

Contract Assets and Liabilities

The timing of revenue recognition may differ from the timing of billing to the Company’s clients. These timing differences result in receivables, contract assets, or contract liabilities (deferred revenue) as disclosed on the Company's condensed consolidated balance sheets. Contract assets represent the Company's right to consideration when revenue recognized exceeds the receivable from the client because the consideration allocated to fulfilled performance obligations exceeds the Company’s right to payment, and the right to payment is subject to more than the passage of time. Contract liabilities consist of advance payments and revenue deferrals resulting from the allocation of the consideration to performance obligations. For the three and six months ended ~~March 31,~~June 30, 2021, the Company recognized revenue of $4.7 million and $9.5 million that was recorded in Contract liabilities as of December 31, 2020. For the three and six months ended ~~March 31,~~June 30, 2020, the Company recognized revenue of $6.2 million and $12.3 million that was recorded in Contract liabilities as of December 31, 2019.

Pandemic Credits

During the three and six months ended ~~March 31,~~June 30, 2021, the Company recognized pandemic credits of $0.8 million and $3.0 million, respectively, provided to customers most impacted by COVID-19. During the three and six months ended June 30, 2020, the Company recognized pandemic credits ~~of $2.2~~of $5.7 million and ~~$0.7~~$6.4 million, respectively, provided to customers most impacted by COVID-19. The Company has reflected these price concessions as reduction to revenue in the condensed consolidated statements of operations.

Note 4 Fair Value Measurements

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

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

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

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

These valuations require significant judgment.

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

The Company’s policy is to recognize transfers into and transfers out of fair value hierarchy levels at the end of each reporting period. During the three and six months ended ~~March 31,~~June 30, 2021 and 2020, there were no transfers between levels in the fair value hierarchy.

1315

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The Company’s non-financial assets such as goodwill, intangible assets, fixed assets, capitalized software and operating lease right-of-use assets are adjusted to fair value when an impairment charge is recognized. Such fair value measurements are predominantly based ~~predominantly~~ on Level 2 and Level 3 inputs.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

On June 30, 2017, the Company completed the acquisition of YP Holdings, Inc. (the “YP Acquisition”). As further discussed in Note 13, Contingent Liabilities, as part of the YP Acquisition agreement, the Company is indemnified for an uncertain tax position for up to the fair value of 1.8 million shares held in escrow, subject to certain contract limitations (the “Indemnification asset”). Due to an increase in the Company’s share prices as of June 30, 2021, the number of shares expected to be returned by seller is 0.7 million, which represents the number of shares required to satisfy the uncertain tax position less $8.0 million.

Prior to September 30, 2020, the fair value of the Company's indemnification asset was measured and recorded in the condensed consolidated balance sheets using Level 3 inputs because it was valued based on unobservable inputs and other estimation techniques due to the absence of quoted market prices. On September 30, 2020, the fair value of the Company’s indemnification asset was based on the THRY Nasdaq per share price. Accordingly, the indemnification asset was transferred from Level 3 to Level 1 within the fair value hierarchy. The Company values its indemnification asset utilizing the fair value of its common stock.

The following table presents a reconciliation of the Company’s Level 3 indemnification asset measured and recorded at fair value on a recurring basis as of ~~March 31,~~June 30, 2021 and 2020, (in thousands):


		2021		2020			2021		2020
Balance as of January 1,	Balance as of January 1,	$	0	$	29,789	Balance as of January 1,	$	0	$	29,789
Change in fair value	Change in fair value	0		(3,801)		Change in fair value	0		(4,418)
Balance as of March 31		$	0	$	25,988
Balance as of June 30						Balance as of June 30	$	0	$	25,371

OnAs of June 30, ~~2017, the Company completed the acquisition of YP Holdings, Inc. (the~~ “~~YP Acquisition”).~~ As further discussed in Note 13, Contingent Liabilities, as part of the YP Acquisition agreement, the Company is indemnified up to the fair value of 1.8 million shares held in escrow, subject to certain contract limitations. Due to an increase in the Company’s share prices as of ~~March 31, 2021, the number of shares expected to be returned by the seller is 1.0 million, which represents the number of shares required to satisfy the uncertain tax position less $8.0 million.~~

~~Therefore, as of March 31,~~ 2021 and December 31, 2020, the fair value of the Company's Level 1 indemnification asset was $25.2 million and $24.3 ~~million.~~

~~The loss of $3.8~~ million, onrespectively. A $0.8 million gain related to the Company’s Level 31 indemnification asset during the three and six months ended ~~March 31, 2020~~ June 30, 2021was recorded in General and administrative expense on the Company's condensed consolidated statements of operations.

The loss of $0.6 million and $4.4 million on the Company’s Level 3 indemnification asset during the three and six months ended June 30, 2020, respectively, was recorded in General and administrative expense on the Company's condensed consolidated statements of operations.

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

At ~~March 31,~~June 30, 2020, the fair value associated with the Company's liability classified stock-based compensation awards totaled ~~$49.1~~$49.5 million, of which ~~$36.7~~$37.3 million was vested. The fair value of each stock option award and its subsequent period over period remeasurement, in the case of liability classified stock-based compensation awards, is estimated using the Black-Scholes option pricing model using Level 3 inputs. The decrease in value of the vested portion of the liability classified stock-based compensation awards at ~~March 31,~~June 30, 2020 iswas primarily associated with a decrease in the Company's ~~per~~ share fair ~~value.~~value.

The Company did not have liability classified stock-based compensation as of ~~March 31, 2021~~.June 30, 2021.

1416

The following table presents a reconciliation of the Company’s stock option liability measured and recorded at fair value on a recurring basis as of ~~March 31,~~June 30, 2021 and 2020 (in thousands):


		2021		2020			2021		2020
Balance as of January 1 (1)	Balance as of January 1 (1)	$	0	$	43,026	Balance as of January 1 (1)	$	0	$	43,026
Exercise of stock options	Exercise of stock options	0		(224)		Exercise of stock options	0		(224)
Change in fair value	Change in fair value	0		(7,884)		Change in fair value	0		(9,087)
Amortization of grant date fair value	Amortization of grant date fair value	0		1,820		Amortization of grant date fair value	0		3,603
Balance as of March 31		$	0	$	36,738
Balance as of June 30						Balance as of June 30	$	0	$	37,318

(1) As of October 1, 2020, based on the Company’s intention and ability to equity settle upon exercise, these stock options were classified as equity awards, and the liability associated with stock-based compensation award was reclassified to Additional paid-in capital.

~~The stock~~Stock-based compensation expense of ~~$2.0~~$1.9 million and ~~benefit of $6.1~~$3.9 million recognized during the three and six months ended ~~March 31,~~June 30, 2021, respectively, was recorded in Cost of services, Sales and marketing, and General and administrative expense in the Company's condensed consolidated statements of operations.

Stock-based compensation expense of $0.6 million and (benefit) of $(5.5) million recognized during the three and six months ended June 30, 2020, respectively, was recorded ~~as stock compensation expense (benefit)~~ in Cost of services, Sales and marketing, and General and administrative expense in the Company's condensed consolidated statements of operations.

Fair Value of Financial Instruments

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

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

The New Term Loan ~~(as defined below)~~ and the Senior Term Loan (as defined ~~below)~~in Note 8) are carried at amortized cost; however, the Company estimates the fair value of each term loan for disclosure purposes. The fair value of the New Term Loan and the Senior Term Loan is determined based on quoted prices that are observable in the market place and are classified as Level 2 measurements. See “Note 8, Debt Obligations.”

The following table sets forth the carrying amount and fair value of the New Term Loan and Senior Term Loan (in thousands):


		March 31, 2021				December 31, 2020					June 30, 2021				December 31, 2020
		Carrying Amount		Fair Value		Carrying Amount		Fair Value			Carrying Amount		Fair Value		Carrying Amount		Fair Value
New Term Loan, net	New Term Loan, net	$	676,552	$	658,793	$	—	$	—	New Term Loan, net	$	589,886	$	588,411	$	—	$	—
Senior Term Loan, net	Senior Term Loan, net	—		—		449,165		441,742		Senior Term Loan, net	—		—		449,165		441,742

Note 5 Goodwill and Intangible Assets

Goodwill

The following table sets forth the changes in the carrying amount of goodwill for the Company for ~~three~~six months ended ~~March 31,~~June 30, 2021 (in ~~thousands~~)thousands):

Marketing
Services SaaS Thryv International Total
Balance as of December 31, 2020 $ 390,573 $ 218,884 $ 0 $ 609,457
Sensis acquisition 0 0 71,722 71,722
Effects of foreign currency translation 0 0 (1,620) (1,620)
Balance as of March 31, 2021 $ 390,573 $ 218,884 $ 70,102 $ 679,559


	Marketing Services		SaaS		Thryv International		Total
Balance as of December 31, 2020	$	390,573	$	218,884	$	0	$	609,457
Sensis Acquisition	0		0		71,931		71,931
Effects of foreign currency translation	0		0		(2,595)		(2,595)
Balance as of June 30, 2021	$	390,573	$	218,884	$	69,336	$	678,793

Intangible Assets

The following tables set forth the details of the Company's intangible assets as of ~~March 31,~~June 30, 2021 and December 31, 2020 (in ~~thousands)~~thousands of $):


		As of March 31, 2021										As of June 30, 2021
		Gross		Accumulated Amortization		Effects of Foreign Currency Translation		Net		Weighted Average Remaining Amortization Period in Years		Gross		Accumulated Amortization		Effects of Foreign Currency Translation		Net		Weighted Average Remaining Amortization Period in Years
Client relationships	Client relationships	$	803,641	$	706,388	$	2,211	$	95,042	3.5	Client relationships	$	803,641	$	720,886	$	3,126	$	79,629	3.3
Trademarks and domain names	Trademarks and domain names	225,177		174,457		768		49,953		2.6	Trademarks and domain names	225,177		181,050		785		43,342		2.4
Patented technologies	Patented technologies	19,600		19,600		0		0		0.0	Patented technologies	19,600		19,600		0		0		0.0
Covenants not to compete	Covenants not to compete	1,521		869		0		652		1.7	Covenants not to compete	1,954		1,018		0		936		2.0
Total intangible assets	Total intangible assets	$	1,049,939	$	901,314	$	2,979	$	145,647	3.2	Total intangible assets	$	1,050,372	$	922,554	$	3,911	$	123,907	3.0


	As of December 31, 2020
	Gross		Accumulated Amortization		Net		Weighted Average Remaining Amortization Period in Years
Client relationships	$	701,802	$	701,518	$	284	1.4
Trademarks and domain names	200,300		169,545		30,755		2.0
Patented technologies	19,600		19,600		0		0.0
Covenants not to compete	1,497		759		738		1.8
Total intangible assets	$	923,199	$	891,422	$	31,777	2.0

Amortization expense for intangible assets for the three and six months ended ~~March 31,~~June 30, 2021 was $21.0 million and $30.9 million, respectively. Amortization expense for the and three and six months ended June 30, 2020 was ~~approximately $9.9~~$28.9 million and ~~$28.9~~$57.8 million, respectively.

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


Fiscal Year	Fiscal Year	Estimated Future Amortization Expense		Fiscal Year	Estimated Future Amortization Expense
2021	2021	$	63,648	2021	$	42,200
2022	2022	51,014		2022	50,835
2023	2023	21,979		2023	21,926
2024	2024	9,006		2024	8,946
Total	Total	$	145,647	Total	$	123,907

Note 6 Allowance for Credit Losses

The following table sets forth the Company's allowance for credit losses (in thousands):


		2021		2020			2021		2020
Balance as of January 1	Balance as of January 1	$	33,368	$	26,828	Balance as of January 1	$	33,368	$	26,828
Sensis acquisition, balance as of March 1, 2021		2,733		—
Sensis Acquisition, balance as of March 1, 2021						Sensis Acquisition, balance as of March 1, 2021	2,733		—
Additions (1)	Additions (1)	2,018		10,588		Additions (1)	292		22,436
Deductions (2)	Deductions (2)	(3,318)		(3,630)		Deductions (2)	(14,787)		(12,635)
Balance as of March 31 (3)		$	34,801	$	33,786
Balance as of June 30 (3)						Balance as of June 30 (3)	$	21,606	$	36,629

(1) For the ~~three~~six months ended ~~March 31,~~June 30, 2021, ~~and 2020,~~ represents provision for bad debt expense of ~~$2.0~~$0.3 million ~~and $10.6 million, respectively,~~ which is included in General and administrative expense. For the three months ended June 30, 2021, the Company recorded a benefit for bad debt expense of $(1.7) million. For the six months ended June 30, 2020, the Company recorded a provision for bad debt expense of $22.4 million. For the

three months ended June 30, 2020

, the provision for bad debt expense was $11.8 million.

(2) For the ~~three~~six months ended ~~March 31,~~June 30, 2021 and 2020, represents amounts written off as uncollectible, net of recoveries.

(3) As of ~~March 31,~~June 30, 2021, ~~$34.6~~$21.4 million of the allowance is attributable to Accounts receivable and $0.2 million is attributable to Contract assets. As of ~~March 31,~~June 30, 2020, ~~$33.5~~$36.2 million of the allowance is attributable to ~~accounts~~Accounts receivable and ~~$0.3~~$0.4 million is attributable to ~~contract~~Contract assets.

The Company’s exposure to expected credit losses depends on the financial condition of its clients and other macroeconomic factors. The Company maintains an allowance for credit losses based upon its estimate of potential credit losses. This allowance is based upon historical and current client collection trends, any identified client-specific collection issues, and current as well as expected future economic conditions and market trends. The economic downturn caused by COVID-19 resulted in an incremental amount of ~~$3.1~~$2.0 million and $5.1 million recorded to allowance for credit losses for the three and six months ended ~~March 31, 2020.~~June 30, 2020, respectively. NaN incremental impact was recorded for the three and six months ended ~~March 31, 2021.~~June 30, 2021.

Note 7 Accrued Liabilities

The following table sets forth additional financial information related to the Company's accrued liabilities (in thousands):


		March 31, 2021		December 31, 2020			June 30, 2021		December 31, 2020
Accrued salaries and related expenses	Accrued salaries and related expenses	$	49,708	$	53,844	Accrued salaries and related expenses	$	50,779	$	53,844
Accrued severance ~~(1)~~	Accrued severance ~~(1)~~	1,293		2,280		Accrued severance ~~(1)~~	872		2,280
Accrued taxes	Accrued taxes	36,385		26,209		Accrued taxes	48,571		26,209
Accrued expenses	Accrued expenses	64,940		51,284		Accrued expenses	63,398		51,284
Accrued service credits	Accrued service credits	5,211		5,996		Accrued service credits	4,982		5,996
Accrued liabilities	Accrued liabilities	$	157,537	$	139,613	Accrued liabilities	$	168,602	$	139,613

The following tables set forth additional information related to severance expense incurred by the Company and recorded to General and administrative expense during the periods presented (in thousands):


	Three Months Ended June 30, 2021								Six Months Ended June 30, 2021
	Marketing Services		SaaS		Thryv International		Total		Marketing Services		SaaS		Thryv International		Total
Severance expense (1)	$	420	$	85	$	61	$	566	$	934	$	170	$	66	$	1,170

(1) During the three and six months ended June 30, 2021, none of the severance expense recorded was related to employee terminations as a result of COVID-19.


	Three Months Ended June 30, 2020						Six Months Ended June 30, 2020
	Marketing Services		SaaS		Total		Marketing Services		SaaS		Total
Severance expense (1)	$	3,593	$	412	$	4,005	$	6,603	$	746	$	7,349

(1) During the three months ended March 31, 2021, the Company incurred a total of $0.6 million in severance expense, which was recorded in General and administrative expense. During the three months ended March 31, 2021, severance expense of $0.5 million and $0.1 million was recorded in the Marketing Services and SaaS segments, respectively.

~~During the three months ended March 31,~~June 30, 2020, ~~the Company incurred a total of $3.3 million in severance expense, which was recorded in General and administrative expense. The~~ severance expense included employee separation charges of ~~$1.0~~$4.0 million recorded as a result of COVID-19. ~~Severance expense of $3.0 million and $0.3 million was recorded in the Marketing Services and SaaS segments, respectively.~~

During the ~~three~~six months ended ~~March 31, 2021,~~June 30, 2020, the ~~Company paid~~severance expense includes employee termination charges of $5.0 million recorded as a ~~total~~result of ~~$1.4 million~~COVID-19. As of June 30, 2020, this restructuring is complete.

The following tables set forth additional information related to severance ~~consisting of $0.1 million due to COVID-19 employee separations and $1.3 million of other severance costs.~~

~~During the~~ ~~three months ended March 31, 2020~~,payments made by the Company paid a total of $2.7 million related to severance, inclusive of $1.8 million and $0.9 million related to severance incurred as part of the post-merger integration of YP and ongoing severance expense, respectively. No payments were made related to COVID-19 employee separations during the periods presented ~~three months ended March 31, 2020~~(in thousands).:


	Three Months Ended June 30, 2021								Six Months Ended June 30, 2021
	COVID-19 Related		YP Integration Related		Other		Total		COVID-19 Related		YP Integration Related		Other		Total
Severance payments	$	51	$	0	$	862	$	913	$	119	$	0	$	2,195	$	2,314


	Three Months Ended June 30, 2020								Six Months Ended June 30, 2020
	COVID-19 Related		YP Integration Related		Other		Total		COVID-19 Related		YP Integration Related		Other		Total
Severance payments	$	2,227	$	1,110	$	830	$	4,167	$	2,227	$	2,898	$	1,429	$	6,554

Note 8 Debt Obligations

The following table sets forth the Company's outstanding debt obligations as of ~~March 31,~~June 30, 2021 and December 31, 2020 (in thousands):


		Maturity	Interest	Rate		March 31, 2021		December 31, 2020			Maturity	Interest	Rate		June 30, 2021		December 31, 2020
New Term Loan, net (1)	New Term Loan, net (1)	March 1, 2026	LIBOR +	8.5	%	$	676,552	$	0	New Term Loan, net (1)	March 1, 2026	LIBOR +	8.5	%	$	589,886	$	0
Senior Term Loan, net (2)	Senior Term Loan, net (2)	December 31, 2023	LIBOR +	9.0	%	0		449,165		Senior Term Loan, net (2)	December 31, 2023	LIBOR +	9.0	%	0		449,165
ABL Facility (Fifth Amendment)	ABL Facility (Fifth Amendment)	March 1, 2026	3-month LIBOR +	3.0	%	43,682		0		ABL Facility (Fifth Amendment)	March 1, 2026	3-month LIBOR +	3.0	%	58,022		0
ABL Facility (Fourth Amendment)(3)	ABL Facility (Fourth Amendment)(3)	September 30, 2023	3-month LIBOR +	4.0	%	0		79,238		ABL Facility (Fourth Amendment)(3)	September 30, 2023	3-month LIBOR +	4.0	%	0		79,238
Total debt obligations	Total debt obligations					$	720,234	$	528,403	Total debt obligations					$	647,908	$	528,403
Less: Current portion of New Term Loan	Less: Current portion of New Term Loan					70,000		0		Less: Current portion of New Term Loan					70,000		0
Total debt obligations, long-term	Total debt obligations, long-term					$	650,234	$	528,403	Total debt obligations, long-term					$	577,908	$	528,403

(1) Net of original issue discount costs of ~~$20.8~~$19.6 million and debt issuance costs of ~~$2.6~~$2.5 million, as of ~~March 31,~~June 30, 2021.

(2) Net of debt issuance costs of $0.4 million, as of December 31, 2020.

(3) The Fourth Amendment to the ABL Facility was replaced by the Fifth Amendment to the ABL Facility on March 1, 2021.

Term Loan

On March 1, 2021, the Company entered into a new term loan credit agreement (the “New Term Loan”). The proceeds of the New Term Loan were used to finance the Sensis Acquisition, refinance in full the Company's existing term loan facility (the “Senior Term Loan”), and pay fees and expenses related to the Sensis Acquisition and related financing.

The New Term Loan established a senior secured term loan facility (the “Term Loan Facility”) in an aggregate principal amount equal to $700.0 million, of which 38.4% was held by related parties who are equity holders of the Company, including GoldenTree Asset Management LP, Paulson & Co. Inc., and Mudrick Capital Management, LP, who held 25.0%, 7.1%, and 6.3% of the debt, respectively, as of March 1, 2021. The Term Loan Facility matures on March 1, 2026 and borrowings under the Term Loan Facility ~~will~~ bear 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). The Term Loan Facility requires mandatory amortization payments equal to $17.5 million per fiscal quarter commencing June 30, 2021.

The net proceeds from the New Term Loan of $674.9 million (net of original issue discount costs of $21.0 million and third-party fees of $4.1 million) were used to repay the remaining $449.6 million outstanding principal balance of the Senior Term Loan, accrued interest of $0.4 million, and third-party fees of $0.1 million. The Company accounted for this transaction with ~~GoldenTree Asset Management, Silver Point Capital, and Mudrick Capital Management~~existing lenders as a modification. The transaction with other lenders party to only the ~~Existing~~Senior Term Loan was accounted for as an extinguishment.

Accordingly, total third-party fees paid were $4.2 million, of which $1.7 million was immediately charged to General and administrative expense on the Company's condensed consolidated statement of operations. The remaining third-party fees of $2.5 million were deferred as debt issuance costs and will be amortized to interest expense, over the term of the loan, using the effective interest method. Additionally, there was unamortized debt issuance costs of $0.4 million on the existing Senior Term Loan, of which $0.3 million was written off and recorded as a loss on early extinguishment of debt on the Company's condensed consolidated statement of operations. The remaining unamortized debt issuance costs of $0.1 million will be deferred as debt issuance costs and amortized to interest expense, over the term of the New Term Loan, using the effective interest method. The New Term Loan, which was ~~initiated~~incurred by Thryv, Inc., the Company’s operating subsidiary, is secured by all the ~~property~~assets of Thryv, Inc., certain of its subsidiaries and the Company, and is guaranteed by the Company and certain of its subsidiaries.

In accordance with the New Term Loan and the Senior Term Loan, ~~for the three months ended March 31, 2021 and 2020,~~ the Company recorded interest expense with related parties for the three months ended June 30, 2021 and 2020 of ~~$4.1~~$4.7 million and ~~$5.2~~$4.6 million,, respectively, and for the six months ended June 30, 2021 and 2020 of $8.7 million and $9.7 million, respectively.

The Company has recorded accrued interest of ~~$6.5~~$3.4 million and $8.5 million, as of ~~March 31,~~June 30, 2021 and December 31, 2020, respectively. Accrued interest is included in Other current liabilities on the Company's condensed consolidated balance sheets.

As of ~~March 31,~~June 30, 2021, ~~38.4%~~29.6% of the New Term Loan was held by related parties who are equity holders of the Company, including GoldenTree Asset Management LP, Paulson & Co. Inc., and Mudrick Capital Management, LP, who held ~~25.0%~~17.9%, ~~7.1%~~7.6%, and ~~6.3%~~4.1% of the debt, respectively.

Term Loan Covenants

The New Term Loan contains certain covenants that, subject to exceptions, limit or restrict the borrower's incurrence of additional indebtedness, liens, investments, loans, advances, guarantees, acquisitions, sales of assets, sale-leaseback transactions, swap agreements, payments of dividends or distributions, payments in respect of certain indebtedness, certain affiliate transactions, restrictive amendments to agreements, changes in business, amendments of certain material documents, capital expenditures, mergers, consolidations and liquidations, and use of the proceeds. Additionally, the Company is required to maintain compliance with a Total Net Leverage Ratio, calculated as Net Debt to Consolidated EBITDA, which shall not be greater than 3.0 to 1.0 as of the last day of each fiscal quarter (commencing with the fiscal quarter ~~ending~~ended June 30, 2021). As of ~~March 31,~~June 30, 2021, the Company was in compliance with its New Term Loan covenants. The Company also expects to be in compliance with these covenants for the next twelve months.

ABL Facility

On March 1, 2021, the Company entered into an agreement to amend (the “ABL Amendment”) the June 30, 2017 ABL Facility (“(the “ABL ~~Amendment~~Facility”). The ABL Amendment was entered into in order to permit the term loan refinancing, the Sensis Acquisition and make certain other changes to the ABL credit agreement, including, among others:

•revise the maximum revolver amount to $175.0 million;

•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;

•reduce the commitment fee on undrawn amounts under the ABL Facility to 0.375%;

•extend the maturity date of the ABL Facility to the earlier of March 1, 2026 and 91 days prior to the stated maturity

date of the Term Loan Facility;

•add the Australian subsidiaries acquired pursuant to the Sensis Acquisition as borrowers and guarantors, and establish an Australian borrowing base; and

•make certain other conforming changes consistent with the Term Loan Agreement.

The Company accounted for this transaction as a modification of the ABL Facility. Accordingly, the existing unamortized debt issuance costs of $2.4 million, as well as additional third-party fees and lender fees of $0.9 million associated with the latest ABL Amendment, will be deferred and will be amortized over the new term of the ABL Facility.

As of ~~March 31,~~June 30, 2021 and December 31, 2020, the Company had debt issuance costs with a remaining balance of ~~$3.2~~$3.1 million and $2.5 million, respectively. These debt issuance costs are included in Other assets on the Company's condensed consolidated balance sheets.

As of ~~March 31,~~June 30, 2021, the Company had borrowing capacity of ~~$113.1~~$77.7 million under the ABL Facility.

ABL Facility Covenants

The ABL Facility contains certain covenants that, subject to exceptions, limit or restrict the borrower's incurrence of additional indebtedness liens, investments, loans, advances, guarantees, acquisitions, disposals of assets, payments of certain indebtedness, certain affiliate transactions, changes in fiscal year or accounting methods, issuance or sale of equity instruments, mergers, liquidations and consolidations, use of proceeds, maintenance of certain deposit accounts, compliance

with certain ERISA requirements and compliance with certain Australian tax requirements. The Company is required to maintain compliance with a fixed charge coverage ratio that must exceed a ratio of 1.00. The fixed charge coverage ratio is defined as, with respect to any fiscal period determined on a consolidated basis in accordance with GAAP, the ratio of (a) Consolidated EBITDA as defined in the ABL credit agreement for such period minus capital expenditures incurred during such period, to (b) fixed charges. Fixed charges is defined as, with respect to any fiscal period determined on a consolidated basis in accordance with GAAP, the sum, without duplication, of (a) consolidated interest expense accrued (other than amortization of debt issuance costs, and other non-cash interest expense) during such period, (b) scheduled principal

payments in respect of indebtedness paid during such period, ~~and~~ (c) all federal, state, and local income taxes accrued during such period, (d) all management, consulting, monitoring, and advisory fees paid to certain individuals or their affiliates during such period, and (e) all restricted payments paid during such period (whether in cash or other property, other than common equity interest). The Company is also required to maintain excess availability of at least $14.0 million, and U.S. excess availability of $10.0 million, in each case, at all times. As of ~~March 31,~~June 30, 2021, the Company was in compliance with its ABL Facility covenants. The Company also expects to be in compliance with these covenants for the next twelve months.

Leaseback Obligations

As part of the YP Acquisition on June 30, 2017, the Company assumed certain obligations including a failed sale-leaseback liability associated with land and a building in Tucker, Georgia. In conjunction with this financing liability, the fair value of the land and building was included as a part of the total tangible assets acquired in the acquisition. A certain amount of this liability consists of a non-cash residual value at termination of the lease, ~~in August 2022,~~ which on this date will be written off against the remaining carrying value of the land and building, with any amount remaining recorded as a gain on termination of the lease contract. In June 2021, the Company made a $10.2 million cash payment to terminate the lease, which is recorded in Other in Cash flows from financing activities on the Company's condensed consolidated statement of cash flows. As of June 30, 2021, the lease termination resulted in the write-off of $48.1 million in net carrying value of assets under leaseback obligation and $55.2 million in leaseback obligations. During the three and six months ended June 30, 2021, a $3.1 million loss on the termination of leaseback obligations was recorded in Other expense on the Company's condensed consolidated statements of operations.

The following table sets forth the components of the Company's total leaseback obligations as of ~~March 31,~~June 30, 2021 and December 31, 2020 (in thousands):


		March 31, 2021		December 31, 2020			June 30, 2021		December 31, 2020
Non-cash residual value of Tucker, Georgia lease	Non-cash residual value of Tucker, Georgia lease	$	54,676	$	54,676	Non-cash residual value of Tucker, Georgia lease	$	0	$	54,676
Future maturities associated with the Tucker, Georgia failed sale-leaseback liability	Future maturities associated with the Tucker, Georgia failed sale-leaseback liability	691		862		Future maturities associated with the Tucker, Georgia failed sale-leaseback liability	0		862
Total leaseback obligations	Total leaseback obligations	$	55,367	$	55,538	Total leaseback obligations	$	0	$	55,538

Note 9 Pensions

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

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

Net Periodic Pension Cost

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


		Three Months Ended March 31,			Three Months Ended June 30,						Six Months Ended June 30,
			2021			2020			2021		2020		2021		2020
Interest cost	Interest cost		$	2,616		$	4,234	Interest cost	$	2,618	$	4,199	$	5,234	$	8,433
Expected return on assets	Expected return on assets		(2,890)			(4,033)		Expected return on assets	(2,890)		(4,026)		(5,780)		(8,059)
Settlement (gain)			(15)			0
Remeasurement (gain)			(164)			0
Settlement (gain)/loss								Settlement (gain)/loss	0		24		(15)		24
Remeasurement (gain)/loss								Remeasurement (gain)/loss	0		739		(164)		739
Net periodic pension (benefit) cost	Net periodic pension (benefit) cost		$	(453)		$	201	Net periodic pension (benefit) cost	$	(272)	$	936	$	(725)	$	1,137

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

During the three and six months ended ~~March 31, 2021, the Company recognized a pension settlement gain of less than $0.1 million.~~ ~~During the three months ended March 31, 2020, 0 pension settlement gains or losses were recognized.~~

~~During the three months ended March 31,~~June 30, 2021, the Company made cash contributions of ~~$5.0~~$10.0 million and $15.0 million to the qualified plans and contributions and associated payments of $0.2 million and ~~$0.7~~$0.9 million to the non-qualified plans. During the three and six months ended ~~March 31,~~June 30, 2020, the Company made cash contributions of ~~$3.6~~$12.2 million and $15.8 million to the qualified plans, and contributions and associated payments of ~~$0.5~~$0.2 million and $0.7 million to the non-qualified plans.

For the fiscal year 2021, the Company expects to contribute approximately $25.0 million to the qualified plans and approximately $1.4 million to the non-qualified plans.

Note 10 Stock-Based Compensation and Stockholders' Equity

~~Stock-Based Compensation Expense~~

Stock Options

During the ~~three~~six months ended ~~March 31,~~June 30, 2021, the Company issued an aggregate of ~~215,544~~ 239,275 shares of common stock to employees upon the exercise of options previously granted under the 2016 Stock Incentive Plan at exercise prices ranging from $3.68 to $13.82 per share. ~~The stock-based~~Stock-based compensation expense (benefit) recognized for stock option awards was ~~$1.7~~ $1.6

million and ~~$(6.1)~~$3.2 million during the three and six months ended ~~March 31,~~June 30, 2021, respectively, compared to $0.6 million and $(5.5) million recognized during the three and six months ended June 30, 2020, respectively.

Employee Stock Purchase Plan

The 2021 Employee Stock Purchase Plan (“ESPP”) was approved by the Company's board of directors on September 10, 2020 and became effective on September 23, 2020. Under the ESPP, eligible employees may purchase a limited number of shares of our common stock at the lesser of 85% of the market value at the beginning of the offering period or 85% of the market value at the end of the offering period. The ESPP is intended to enable eligible employees to use payroll deductions to purchase shares of stock in offerings under the plan, and thereby acquire an interest in the Company. The maximum aggregate number of shares of stock available for purchase under the plan by eligible employees is 2,000,000 shares. ~~NaN~~149,865 shares were issued through the ESPP during the three and six months ended ~~March 31, 2021.~~June 30, 2021. The stock-based compensation expense recognized for the ESPP was ~~$0.3~~$0.4 million and $0.7 million during the three and six months ended ~~March 31, 2021.~~June 30, 2021, respectively.

Stock-Based Compensation Expense

The following table sets forth stock-based compensation expense (benefit), including the effects of gains and losses from changes in fair value ~~for~~during the three and six months ended ~~March 31,~~June 30, 2020,, recognized by the Company in the following line items in the Company's condensed consolidated statements of operations during the periods presented (in thousands):


		Three Months Ended March 31,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020			2021		2020		2021		2020
Cost of services	Cost of services	$	81	$	(316)	Cost of services	$	83	$	70	$	164	$	(246)
Sales and marketing	Sales and marketing	832		(532)		Sales and marketing	794		213		1,626		(319)
General and administrative	General and administrative	1,058		(5,216)		General and administrative	1,044		297		2,102		(4,919)
Stock-based compensation expense (benefit)	Stock-based compensation expense (benefit)	$	1,971	$	(6,064)	Stock-based compensation expense (benefit)	$	1,921	$	580	$	3,892	$	(5,484)

Stock Warrants

As of ~~March 31,~~June 30, 2021 and December 31, 2020, the Company had 9.4 million and 10.5 million fully vested outstanding ~~warrants. The~~warrants, respectively. As of June 30, 2021 and December 31, 2020, the holders of such warrants are entitled to purchase, in the aggregate, up to 5.2 million and 5.8 million shares, respectively, of common stock. Warrants can be exercised at a strike price of $24.39 per common share. The warrants were issued in 2016 upon the Company's emergence from its pre-packaged bankruptcy. During the three and six months ended ~~March 31,~~June 30, 2021, ~~200~~1,011,224 and 1,011,424 warrants, respectively, were exercised. NaN warrants were exercised during the three and six months ended ~~March 31,~~June 30, 2020. These warrants expire on August 15, 2023. The $13.7 million proceeds received on the exercise of the warrants is recorded in Other in Cash flows from financing activities on the Company's condensed consolidated statement of cash flows.

Share Repurchases

On January 28, 2020, the Company repurchased approximately 1.0 million shares of its outstanding common stock from a single ~~stockholder. The~~stockholder for a total purchase price of ~~this transaction was approximately~~ $12.6 million. On March 10, 2020, the Company repurchased approximately 0.8 million shares of its outstanding common ~~stock. The~~stock, for a total purchase price of ~~this~~

~~transaction was~~ $9.2 million. During June 2020, the Company repurchased approximately 0.8 million of shares of its outstanding common stock for a total purchase price of $8.8 million. The shares acquired in each of these transactions were recorded as Treasury stock upon repurchase. There were no0 share repurchases during the three and six months ended ~~March 31,~~June 30, 2021.

Note 11 Earnings per Share

The following table sets forth the calculation of basic ~~earnings per share~~ and diluted earnings per share for the three and six months ended ~~March 31,~~June 30, 2021 and 2020 (in thousands, except share and per share amounts):


		Three Months Ended March 31,			Three Months Ended June 30,						Six Months Ended June 30,
			2021			2020			2021		2020		2021		2020
Basic net income per share:	Basic net income per share:							Basic net income per share:
Net income	Net income		$	36,506		$	28,102	Net income	$	24,359	$	11,464	$	60,865	$	39,566
Weighted-average common shares outstanding during the period	Weighted-average common shares outstanding during the period		33,108,422			32,578,286		Weighted-average common shares outstanding during the period	33,622,666		31,435,941		33,367,734		32,007,114
Basic net income per share	Basic net income per share		$	1.10		$	0.86	Basic net income per share	$	0.72	$	0.36	$	1.82	$	1.24


		Three Months Ended March 31,			Three Months Ended June 30,						Six Months Ended June 30,
			2021			2020			2021		2020		2021		2020
Diluted net income per share:	Diluted net income per share:							Diluted net income per share:
Net income	Net income		$	36,506		$	28,102	Net income	$	24,359	$	11,464	$	60,865	$	39,566

Basic shares outstanding during the period	Basic shares outstanding during the period		33,108,422			32,578,286		Basic shares outstanding during the period	33,622,666		31,435,941		33,367,734		32,007,114
Plus: Common stock equivalents associated with stock option awards	Plus: Common stock equivalents associated with stock option awards		905,058			2,448,240		Plus: Common stock equivalents associated with stock option awards	3,064,364		2,367,524		1,984,711		2,407,882
Diluted shares outstanding	Diluted shares outstanding		34,013,480			35,026,526		Diluted shares outstanding	36,687,030		33,803,465		35,352,445		34,414,996
Diluted net income per share	Diluted net income per share		$	1.07		$	0.80	Diluted net income per share	$	0.66	$	0.34	$	1.72	$	1.15

The computation of diluted shares outstanding for the three months ended June 30, 2021 did 0t exclude any shares whose effect would have been anti-dilutive, while the computation of diluted shares outstanding for the six months ended June 30, 2021 excluded ~~approximately~~ 0.4 million of outstanding stock options, ~~and~~less than 0.1 million of ESPP shares, ~~for the three months ended March 31, 2021, 4.6 million of outstanding stock options for the three months ended March 31, 2020,~~ and 10.5 million of outstanding stock warrants, ~~for the three months ended March 31, 2021 and 2020,~~ as their effect would have been anti-dilutive.The computation of diluted shares outstanding for the both the three and six months ended June 30, 2020 excluded 4.6 million outstanding stock options and 10.5 million of stock warrants, as their effect would have been anti-dilutive.

Note 12 Income Taxes

The Company’s effective tax rate (“ETR”) was ~~24.4% f~~or25.0% and 24.7% for the three and six months ended ~~March 31,~~June 30, 2021 and ~~32.3%~~64.9% and 46.6% for the three and six months ended ~~March 31,~~June 30, 2020. The ETR differs from the 21.0% U.S. Federal statutory rate primarily due to tax permanent differences and discrete items recorded in each of the respective periods.

As of ~~March 31,~~June 30, 2021 and December 31, 2020, the amount of unrecognized tax benefits was $23.5 million and $23.7 million excluding interest and penalties, respectively, of which up to $23.5 million and $23.7 million, respectively, would affect the Company's effective tax rate if realized. As of ~~March 31,~~June 30, 2021 and December 31, 2020, the Company had ~~$8.8~~$9.2 million and $8.4 million, respectively, recorded for interest in the condensed consolidated balance sheets. The Company engages in continuous discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. The Company expects to complete resolution of certain tax years with various tax authorities within the next 12 months. The Company believes it is reasonably possible that its existing gross unrecognized tax benefits may be reduced by up to ~~$21.8~~$21.6 million within the next 12 months, affecting the Company’s effective tax rate if realized.

Note 13 Contingent Liabilities

Litigation

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

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

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

The ~~government~~IRS has challenged the Company's positions. With respect to the tax years 2012 through June 2015 for the YP LLC partnership, the ~~government~~IRS sent 90-day notices to DexYP on August 29, 2018. In response, the Company filed three petitions (in the names of various related partners) in U.S. Tax Court, and the IRS filed answers to those petitions. The three cases were consolidated by the court and were referred back to IRS Administrative Appeals for settlement negotiations, during which time the litigation is suspended. The appeals conference for YP will likely occur in the ~~second~~third quarter of 2021. In advance of the IRS Appeals conference, the parties did reach an agreement regarding additional research and development tax credits for the tax years at issue whereby the IRS will allow more tax credits than were originally claimed on the tax returns. With respect to the tax year from July to December 2015 for the Print Media LLC partnership, the Company was recently unsuccessful in its attempt to negotiate a settlement with IRS Appeals, and the government issued a 90-day notice to the Company. The Company filed a petition in the U.S. Tax Court to challenge the ~~government’s~~IRS denial.

As of ~~March 31,~~June 30, 2021 and December 31, 2020, the Company has reserved approximately ~~$32.3~~$32.7 million and $31.9 million, respectively, in connection with the 199 disallowance and ~~$0.2~~less than $0.1 million and $0.2 million, respectively, related to the research and development tax credit ~~disallowance, respectively.~~disallowance. The ~~decrease~~increase in the reserve balance is primarily attributable to ~~a partial release~~additional interest accrued during the second quarter of ~~uncertain tax positions due to favorable developments with ongoing U.S. federal tax examinations.~~2021. Pursuant to the ~~acquisition transaction whereby the Company acquired certain entities from the~~ YP Acquisition agreement, the Company is entitled to (i) a dollar for dollar indemnification for the research and development tax liability, and (ii) a dollar for dollar indemnification for the 199-tax liability after the Company pays the first $8.0 million in liability. The indemnification, however, is subject to a provision in the YP Acquisition agreement that limits the seller’s liability to certain stock that was escrowed in connection with the YP Acquisition. The value of that escrowed stock is estimated to be approximately $25.2 million and $24.3 million at ~~both March 31,~~June 30, 2021 and December 31, ~~2020.~~2020, respectively.

Other

Texas Sales, Excise, and Use Tax Audit: We conduct operations in many tax jurisdictions. In many of these jurisdictions, non-income-based taxes, such as sales and use tax and other indirect taxes, are assessed on our operations. Although we are diligent in collecting and remitting such taxes, there is uncertainty as to how each taxing jurisdiction will ultimately classify the Company's digital products and services for sales and use tax purposes. On June 24, 2020, the Texas Comptroller of Public Accounts issued a notice to the Company assigning a routine audit of the Company's sales, excise, and use tax account for the audit period covering March 1, 2017 through July 31, 2020. The Company has reserved $2.6 million for the total combined exposure for the periods open to audit examination, which is accrued on the Company's condensed consolidated balance sheet as of ~~March 31,~~June 30, 2021.

New York Sales, Excise, and Use Tax Audit: On August 19, 2020, the New York State Department of Taxation and Finance issued a notice to the Company assigning a routine audit of the Company's sales, excise, and use tax account for the audit period covering March 1, 2017 through May 31, 2020. The Company has reserved ~~$2.9~~$2.8 million for the total combined exposure for the respective period, which is accrued on the Company's condensed consolidated balance sheet as of ~~March 31,~~June 30, 2021.

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Note 14 Changes in Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in accumulated other comprehensive income (loss), which is reported as a component of stockholders' equity, for the ~~three~~six months ended ~~March 31,~~June 30, 2021:

Accumulated Foreign Currency Translation Adjustments

Beginning balance at January 1, 2021

Foreign currency translation adjustment, net of tax expense of ~~$1.0~~ $1.5 million

~~(2,967)~~(4,445)

Ending balance at ~~March 31,~~June 30, 2021

~~(2,967)~~(4,445)

Note 15 Segment Information

As a result of the Sensis Acquisition, we reviewed our segment reporting based on the information used by the Chief Executive Officer, who is also the chief operating decision maker (“CODM”), to assess performance and allocate resources subsequent to the Sensis Acquisition. As a result of this review, we determined that the Company manages operations using 3 operating segments which are also its reportable segments: (1) Marketing Services, (2) SaaS, and (3) Thryv International.

During the ~~three~~six months ended ~~March 31,~~June 30, 2021, the Company adjusted its methodology of classifying certain revenue between products of its SaaS segment. The ~~current~~three and ~~prior three~~six months ended ~~March 31~~June 30, 2021, and 2020 reflect the current methodology.

The following tables summarize the operating results of our reportable segments (in thousands):


		Three Months Ended March 31, 2021									Three Months Ended June 30, 2021
		Marketing Services		SaaS		Thryv International		Total			Marketing Services		SaaS		Thryv International		Total
Revenue	Revenue	$	227,933	$	37,251	$	15,422	$	280,606	Revenue	$	202,795	$	41,386	$	46,866	$	291,047
Segment EBITDA	Segment EBITDA	98,631		316		5,986		104,933		Segment EBITDA	82,684		(2,119)		16,188		96,753


	Three Months Ended June 30, 2020
	Marketing Services		SaaS		Thryv International		Total
Revenue	$	272,327	$	31,285	$	0	$	303,612
Segment EBITDA	112,612		5,523		0		118,135


		Three Months Ended March 31, 2020									Six Months Ended June 30, 2021
		Marketing Services		SaaS		Thryv International		Total			Marketing Services		SaaS		Thryv International		Total
Revenue	Revenue	$	286,722	$	31,848	$	0	$	318,570	Revenue	$	430,728	$	78,637	$	62,288	$	571,653
Segment EBITDA	Segment EBITDA	110,078		2,701		0		112,779		Segment EBITDA	181,315		(1,803)		22,174		201,686


	Six Months Ended June 30, 2020
	Marketing Services		SaaS		Thryv International		Total
Revenue	$	559,049	$	63,133	$	0	$	622,182
Segment EBITDA	222,690		8,224		0		230,914

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A reconciliation of total Segment EBITDA to the Company’s Income before benefit (provision) for income taxes is as follows (in thousands):


		Three Months Ended March 31,			Three Months Ended June 30,						Six Months Ended June 30,
			2021			2020			2021		2020		2021		2020
Total Segment EBITDA	Total Segment EBITDA		$	104,933		$	112,779	Total Segment EBITDA	$	96,753	$	118,135	$	201,686	$	230,914
Interest expense	Interest expense		(15,672)			(19,930)		Interest expense	(19,170)		(18,012)		(34,842)		(37,942)
Depreciation and amortization	Depreciation and amortization		(19,718)			(37,823)		Depreciation and amortization	(29,908)		(37,606)		(49,626)		(75,429)
Other components of net periodic pension benefit (cost)	Other components of net periodic pension benefit (cost)		453			(201)		Other components of net periodic pension benefit (cost)	272		(936)		725		(1,137)
(Loss) on early extinguishment of debt			(299)			0
(Loss) on termination of leaseback obligations								(Loss) on termination of leaseback obligations	(3,110)		0		(3,409)		0
Impairment charges	Impairment charges		0			(98)		Impairment charges	(3,611)		(18,132)		(3,611)		(18,230)
Restructuring and integration expenses (1)	Restructuring and integration expenses (1)		(9,234)			(9,845)		Restructuring and integration expenses (1)	(3,489)		(7,347)		(12,723)		(17,192)
Transaction costs (2)	Transaction costs (2)		(10,546)			(6,534)		Transaction costs (2)	(5,440)		(3,232)		(15,986)		(9,766)
Stock-based compensation (expense) benefit	Stock-based compensation (expense) benefit		(1,971)			6,064		Stock-based compensation (expense) benefit	(1,921)		(580)		(3,892)		5,484
(Loss) from remeasurement of indemnification asset			0			(3,801)
Gain (loss) from remeasurement of indemnification asset								Gain (loss) from remeasurement of indemnification asset	844		(617)		844		(4,418)
Other	Other		369			900		Other	1,251		955		1,620		1,855
Income before (provision) for income taxes	Income before (provision) for income taxes		$	48,315		$	41,511	Income before (provision) for income taxes	$	32,471	$	32,628	$	80,786	$	74,139

(1)~~For~~During the three and six months ended ~~March 31,~~June 30, 2021, the Company incurred $0.6 million and $1.2 million of severance expense, respectively, of which NaN was a result of the COVID-19 pandemic. ~~For~~During the three and six months ended ~~March 31,~~June 30, 2020, the Company incurred ~~$3.3~~a total of $4.0 million and $7.3 million of severance expense, respectively, of which ~~$1.0~~$4.0 million and $5.0 million, respectively, was a result of the COVID-19 pandemic. In addition, the Company incurred losses on disposal of fixed assets and capitalized software and costs associated with abandoned facilities and system consolidation.

(2)Consists of direct listing, Sensis Acquisition and other transaction costs.

The following table sets forth the Company's disaggregation of revenue based on services for the periods indicated (in thousands):


		Three Months Ended March 31,			Three Months Ended June 30,						Six Months Ended June 30,
			2021			2020			2021		2020		2021		2020
Marketing Services	Marketing Services							Marketing Services
PYP	PYP		$	112,911		$	137,387	PYP	$	93,753	$	139,160	$	206,664	$	276,547
IYP	IYP		64,095			74,946		IYP	61,004		69,321		125,099		144,267
SEM	SEM		34,432			49,708		SEM	32,202		40,951		66,634		90,659
Other	Other		16,495			24,681		Other	15,836		22,895		32,331		47,576
Total Marketing Services	Total Marketing Services		227,933			286,722		Total Marketing Services	202,795		272,327		430,728		559,049
SaaS	SaaS							SaaS
Thryv Platform	Thryv Platform		25,900			25,268		Thryv Platform	26,798		24,263		52,698		49,531
Thryv Add-ons	Thryv Add-ons		11,351			6,580		Thryv Add-ons	14,588		7,022		25,939		13,602
Total SaaS	Total SaaS		37,251			31,848		Total SaaS	41,386		31,285		78,637		63,133
Thryv International	Thryv International							Thryv International
PYP	PYP		5,713			0		PYP	15,231		0		20,944		0
IYP	IYP		6,570			0		IYP	18,361		0		24,931		0
SEM	SEM		2,001			0		SEM	6,030		0		8,031		0
Other	Other		1,138			0		Other	7,235		0		8,373		0
Thryv Platform								Thryv Platform	6		0		6		0
Thryv Add-ons								Thryv Add-ons	3		0		3		0
Total Thryv International	Total Thryv International		15,422			0		Total Thryv International	46,866		0		62,288		0
Total Revenue	Total Revenue		$	280,606		$	318,570	Total Revenue	$	291,047	$	303,612	$	571,653	$	622,182

~~Note 16 Subsequent Events~~

On April 30, 2021, 1.0 million warrants were exercised to purchase approximately 0.6 million common shares at a strike price of $24.39 per common share, bringing our total outstanding shares to 33.7 million.

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

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

Overview

We are dedicated to supporting local, independent businesses and franchises by providing innovative marketing solutions and cloud-based tools to the entrepreneurs who run them.

We are one of the largest domestic providers of SaaS end-to-end customer experience tools and digital marketing solutions 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 more than 400,000 SMB clients globally through three business segments: Marketing Services, SaaS, and Thryv International.

Our Marketing Services segment provides both print and digital solutions and generated ~~$227.9~~$202.8 million and ~~$286.7~~$272.3 million of consolidated total revenues for the three months ended ~~March 31,~~June 30, 2021 and 2020, respectively, and $430.7 million and $559.0 million of consolidated total revenues for the six months ended June 30, 2021 and 2020, respectively. Our Marketing Services offerings include our owned and operated Print Yellow Pages (“PYP”), which carry the “The Real Yellow Pages” tagline, our proprietary Internet Yellow Pages (“IYP”), known by the Yellowpages.com, Superpages.com, and Dexknows.com URLs, search engine marketing (“SEM”) solutions and other digital media solutions, which include online display and social advertising, online presence, and video and search engine optimization (“SEO”) tools.

Our SaaS segment generated ~~$37.3~~$41.4 million and ~~$31.8~~$31.3 million of consolidated total revenues for the three months ended ~~March 31,~~June 30, 2021 and 2020, respectively, and $78.6 million and $63.1 million of consolidated total revenues for the six months ended June 30, 2021 and 2020, respectively. Our primary SaaS offerings include Thryv®, our flagship SMB end-to-end customer experience platform, and Thryv ~~Add-ons, including~~Add-Ons. Thryv Add-Ons, include an automated lead generation service that fully integrates with our Thryv platform, website development, SEO tools, Google My Business optimization, and Hub by ~~Thryv. Additionally, we recently launched~~ThryvSM. An additional add-on, ThryvPaySM, is our own branded payment solution that allows users to get paid via credit card and ACH and is tailored to service focused businesses that want to provide consumers safe, contactless, and fast online payment options. These optional platform subscription-based add-ons provide a seamless user experience for our end-users and drive higher engagement within the Thryv Platform while also producing incremental revenue growth.

Our Thryv International segment is comprised of Sensis Pty Ltd (“Sensis”), which the Company acquired on March 1, 2021 (the “Sensis Acquisition”). Sensis is Australia’s leading provider of marketing solutions serving SMBs. The Sensis Acquisition brings under the Thryv banner more than 100,000 existing Sensis clients, many of which we believe are ideal candidates for the Thryv platform. Our Thryv International segment generated ~~$15.4~~$46.9 million and $62.3 million of consolidated total revenues for the ~~one month~~three and four months ended ~~March 31, 2021.~~June 30, 2021, respectively.

Our expertise in delivering solutions for our client base is rooted in our deep history of serving SMBs. In 2021, SMB demand for integrated technology solutions continues to grow as SMBs adapt their business and service model to facilitate remote working and virtual interactions. We have seen this trend accelerate following the outbreak of the COVID-19 pandemic.

~~Change in Controlled Company Status~~

Prior to April 30, 2021, the Company met the definition of a “controlled company” as defined by Nasdaq as a company of which more than 50 percent of the voting power for the election of directors is held by an individual, group or another company. Though controlled companies are exempt from certain Nasdaq requirements relating to the composition of the board of directors, the Company has not availed itself of such exemptions. On April 30, 2021, the ownership of Mudrick Capital Management L.P. and associated funds, the Company’s largest shareholder, fell below 50 percent, which resulted in the Company no longer meeting the definition of a “controlled company”. The Company continues to be in compliance with the listing standards applicable to non-controlled companies.

Recent Developments - COVID-19

In March 2020, the World Health Organization categorized COVID-19 as a pandemic. The outbreak of COVID-19 and public and private sector measures to reduce its transmission, such as the imposition of social distancing and orders to work-from-home, stay-at-home and shelter-in-place, have significantly disrupted the global economy, resulting in an adverse effect toon the business operations of certain SMBs. However, many of our SMB clients operate service-based businesses that can easily operate remotely, or that have been designated as “essential” by state and local authorities administering shelter-in-place

orders, and have continued to operate without significant interruption during the COVID-19 pandemic. Therefore, the impact of COVID-19 and the related regulatory and private sector response on our financial and operating results in the ~~three~~six months ended ~~March 31,~~June 30, 2021 was somewhat mitigated as many of our clients continue to operate during this pandemic.

In our Marketing Services segment, in March 2020, we began offering certain pandemic credit incentives to select clients, including free advertising or headings, and payment extensions of up to three months. ~~Additionally,~~ M~~some clients elected to pause their online advertising programs which resulted in a~~ ~~$0.6~~ ~~million reduction in revenue for the three months ended March 31, 2021 compared to~~ ~~$0.5~~ ~~million reduction in revenue for the three months ended March 31, 2020. Marketing~~arketing Services segment revenue decreased by ~~$58.8~~$69.5 million, or ~~20.5%~~25.5%, during the three months ended ~~March 31,~~June 30, 2021 as compared to the ~~three~~corresponding period in 2020, and $128.3 million, or 23.0%, during the six months ended ~~March 31,~~June 30, 2021 as compared to the corresponding period in 2020, primarily due to the continued decline in demand for print and digital services and increased competition in all areas of Marketing Services. This declining revenue trend in Marketing Services predated the COVID-19 pandemic. While the ongoing impact of the COVID-19 pandemic on our revenue depends upon the rate of continued spread of the virus as well as regulatory and private sector response, we expect Marketing Services revenue will continue to be impacted primarily by trends predating the COVID-19 pandemic.

In our SaaS segment, we have continued to experience an increase in demand as SMBs seek cloud-based solutions to facilitate virtual interactions with their customers instead of ~~in person~~in-person interactions. We have seen continued strength in demand during this period from many of our key categories such as home services and other professional services. Offsetting this growth is a decline in our legacy SaaS client base as we shift from lower-spend, less engaged clients that tend to have a higher churn rate, to higher spend, higher engaged ~~clients~~.clients. Additionally, in March 2020, we began offering certain pandemic credit incentives to select clients, including free digital and SaaS services for two to four months, and payment extensions of up to three months.

In our Thryv International segment, we continue to experience a limited negative impact to Australia in 2021 as a result of the COVID-19 pandemic. During the three months ended June 30, 2021, there were a number of Australian cities that have experienced a slight increase in cases and subsequent restrictions, however the number of COVID-19 ~~case numbers~~cases in Australia have remained relatively low ~~in Australia~~ since the initial outbreak and ~~governmental authorities have adopted less severe lockdown requirements. This has resulted in~~the impact to our clients ~~remaining~~has been minimal as most have continued to remain open for business ~~during~~throughout the COVID-19 pandemic.

We have taken steps to mitigate the overall potential impact of the COVID-19 pandemic on our operating results by enhancing the capabilities of our inside and outside sales force while also actively managing costs. We minimized business disruptions by quickly and proactively transitioning our sales and client support teams into a remote working environment and providing increased training, technical capabilities and resources to enable virtual interactions with our clients. Additionally, in March 2020, we began offering certain pandemic credit incentives to select clients. These pandemic credit incentives resulted in a ~~$2.2~~$0.8 million and $3.0 million reduction in revenue for the three and six months ended ~~March 31,~~June 30, 2021, respectively, compared to a reduction in revenue of ~~$0.7~~$5.7 million and $6.4 million for the three and six months ended ~~March 31,~~June 30, 2020, respectively. Requests for incentives continued to decline in the first ~~quarter~~half of 2021, and the majority of clients who accepted incentives in 2020 have resumed contractual terms and pricing. ~~However, due to a spike in COVID-19 cases during the three months ended December 31, 2020, we continued to offer pandemic credit incentives through the first quarter of 2021.~~ As of ~~April 1,~~June 30, 2021, we have virtually discontinued providing pandemic credits and accepting client requests to pause search campaigns due to the COVID-19 pandemic. All client requests for adjustments effective April 1, 2021 are now being handled as part of normal business operations consistent with historical practices.

Depending upon future development and spread of the virus, including existing and new variants, we generally expect the business environment to improve as more people are vaccinated.~~With respect to managing our costs, steps we have taken include reductions in force and cuts in non-essential spending.We believe the majority of these cost-saving measures to be temporary.~~ During the three and six months ended ~~March 31,~~June 30, 2021, we incurred total severance expense of $0.6 million and $1.2 million, respectively, none of which was recorded as a result of the COVID-19 pandemic. During the three and six months ended ~~March 31,~~June 30, 2020, we recognized severance ~~expense~~expenses of ~~$1.0~~$4.0 million and $5.0 million, respectively, related to employee separations as a result of the COVID-19 pandemic. The economic downturn caused by COVID-19 resulted in an incremental amount of ~~$3.1~~$2.0 million and $5.1 million recorded to allowance for credit losses for the three and six months ended ~~March 31,~~June 30, 2020. No incremental impact was recorded for the three and six months ended ~~March 31, 2021.~~June 30, 2021. In addition, we remain committed to our variable cost structure and to limiting our capital expenditures, which will allow the Company to continue operating with relatively low working capital needs.

While the effects of the COVID-19 pandemic have impacted our financial results for the three and six months ended ~~March 31,~~June 30, 2021, the overall impact was somewhat mitigated by the nature of our client base (SMBs offering services related to home, health and wellness, automotive, etc. and certain SMBs designated as “essential” by state and local authorities), the terms of our print agreements (typically 14 to 15 months), and the gradual increase in demand for our Thryv platform. The increase in demand for our Thryv platform and our decision to target higher spend and higher retention clients have also somewhat mitigated the impact of a reduction in the size of our salesforce on the Company’s ability to generate revenues.

During the three and six months ended ~~March 31,~~June 30, 2021, we have continued to see trends similar to those experienced during the year ended December 31, 2020, including an increase in demand for our SaaS solutions and a continuing ~~trend of~~ decline in our Marketing Services business. The challenges we face in the future related to COVID-19 will depend largely, we believe, on the impact that the continuing spread of the virus, including existing and new variants,and regulatory and private sector response ~~have~~has on our current and prospective clients, including their ability and willingness to purchase our ~~solutions, the timing of their purchasing decisions and the willingness of existing clients to renew subscriptions for our~~ solutions. ~~Although, to~~To date, the COVID-19 pandemic has not had a material impact on our operational performance, financial performance, or ~~liquidity,~~liquidity. Looking ahead, we do not expect any material financial impact related to COVID-19 without a significant increase in cases resulting in another shut down of local businesses. However, it is difficult to predict what the ongoing impact of the pandemic will be on the economy, our clients and our business.

Factors Affecting Our Performance

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

Ability to Attract and Retain Clients

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

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

Investment in Growth

We intend to continue to invest in the growth of our SaaS segment. We have selectively utilized a portion of the cash generated from our Marketing Services and Thryv International segments to support initiatives in our evolving SaaS segment, which has represented an increasing percentage of total revenue since launch. ~~The SaaS segment became profitable during 2019.~~ We will continue to improve our SaaS solutions by analyzing user behavior, expanding features, improving usability, enhancing our onboarding services and customer support and making version updates available to SMBs. We believe these initiatives will ultimately drive revenue growth; however, such improvements will also increase our operating expenses.

Ability to Grow Through Acquisition

Our growth prospects depend upon our ability to successfully develop new markets. We currently serve the United States and Australian SMB markets and plan to leverage strategic acquisitions to expand our client base domestically and enter new markets internationally. Identifying proper targets and executing strategic acquisitions may take substantial time and capital. In August 2020, we launched our first international SaaS reseller pilot, a joint initiative with the leading yellow pages player in the Caribbean, and we also signed a SaaS multi-location franchise client, a home services company with operations in the U.S. and Canada. On March 1, 2021, we completed the acquisition of Sensis, Australia’s leading provider of marketing solutions serving SMBs. We believe that acquisitions of marketing services companies will expand our client base and provide additional opportunities to offer our SaaS solutions. Our success largely depends on our ability to identify and execute acquisition opportunities and our ability to establish relationships with new SMBs.

Key Business Metrics

We review several operating metrics, including the following key business metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. We believe these key metrics are useful to investors both because they allow for greater transparency with respect to key metrics used by

management in its financial and operational decision-making, and they may be used by investors to help analyze the health of our business.

Total Clients

We define total clients as the number of SMB accounts with one or more revenue-generating solutions in a particular period. For quarter- and year-ending periods, total clients from the last month in the period are reported. A single client may have separate revenue-generating accounts for multiple Marketing Services solutions or SaaS offerings, but we count these as

one client when the accounts are managed by the same business entity or individual. Although infrequent, where a single organization has multiple subsidiaries, divisions, or segments, each business entity that is invoiced by us is treated as a separate client. We believe that the number of total clients is an indicator of our market penetration and potential future business opportunities. We view the mix between Marketing Services clients and SaaS clients as an indicator of potential future opportunities to offer our SaaS solutions to our Marketing Services clients. Total clients does not include Thryv International clients, as we are still in the process of recalculating the Sensis data using our calculation methodology. We plan to include the total clients of Thryv International in our future filings.

Marketing Services Clients

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

SaaS Clients

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


		As of March 31,
		2021	2020		As of June 30,
					2021	2020
		(in thousands)			(in thousands)
Clients	Clients			Clients
Marketing Services	Marketing Services	300	370	Marketing Services	284	349
SaaS	SaaS	44	45	SaaS	45	44
Total (1)	Total (1)	317	385	Total (1)	302	365

(1)Total clients is less than the sum of the Marketing Services and SaaS, since clients that purchase both Marketing Services and SaaS products are counted in each category, but only counted once in the Total. ~~Thryv International clients are exclusive to that category.~~ Total clients does not include Thryv International clients, as we are still in the process of recalculating the Sensis data using our calculation methodology. We plan to include the total clients of Thryv International in our future filings.

Marketing Services clients decreased by 7065 thousand, or 19%, as of ~~March 31,~~June 30, 2021 as compared to ~~March 31,~~June 30, 2020. The decrease in Marketing Services clients was related to a secular decline in the print media industry. The decline in the digital portion of our Marketing Services business was due to significant competition in the consumer search and display space, particularly from large, well-capitalized businesses such as Google, Yelp and Facebook.

SaaS ~~client decreased~~clients increased by 1 thousand, or 2%, as of ~~March 31,~~June 30, 2021 as compared to ~~March 31,~~June 30, 2020. This was the result of an ~~intentional strategic move by us~~increase in new clients and decreasing churn, and is consistent with our continuing strategy to target higher spend, higher retention clients in lieu of lower-spend, higher churn clients. ~~As part of this strategy, we discontinued sale of lower-priced tiers of our Thryv platform, which led to higher monthly average revenue per unit (“ARPU”) for the three months ended March 31, 2021. In making this strategic shift, our SaaS client count has decreased while SaaS ARPU has increased.~~ We expect ~~a return to~~ SaaS client growth induring the remainder of fiscal 2021 as well ~~as a continued~~continuing the trend towards higher SaaS ~~ARPU.~~ARPU (as defined below).

Total clients decreased by 6863 thousand, or ~~18%~~17%, as of ~~March 31,~~June 30, 2021 as compared to ~~March 31,~~June 30, 2020. 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.

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Monthly ARPU

We define monthly average revenue per unit (“ARPU as”) as our total client billings for a particular month divided by the number of revenue-generating units during the same month. For each reporting period, the weighted-average monthly ARPU from all the months in the period are reported. We define units as SMB accounts with one or more revenue-generating solutions in a particular month. Units are synonymous with clients. As monthly ARPU varies based on the amounts we charge for our services, we believe it can serve as a measure by which investors can evaluate trends in the types and levels of services across our client base. Our measurement of ARPU helps us understand the rate at which we are monetizing our client base.


		Three Months Ended March 31,			Three Months Ended June 30,						Six Months Ended June 30,
			2021			2020			2021		2020		2021		2020
ARPU (Monthly)	ARPU (Monthly)							ARPU (Monthly)
Marketing Services	Marketing Services		$	212		$	227	Marketing Services	$	213	$	220	$	213	$	224
SaaS	SaaS		304			240		SaaS	323		232		314		236
Total (1)	Total (1)		$	243		$	246	Total (1)	$	248	$	239	$	246	$	243

(1)During the three and six months ended ~~March 31,~~June 30, 2020, the total monthly ARPU is higher than the individual monthly ARPUs for Marketing Services and SaaS due to clients that purchase both Marketing Services and SaaS solutions. During the three and six months ended ~~March 31,~~June 30, 2021, SaaS ARPU is higher than the Total monthly ARPU as we shift to selling to more higher spend SaaS-only clients. The Total monthly ARPU does not include Thryv International, as we are still in the process of recalculating the Sensis data using our calculation methodology. We plan to include the monthly ARPU of Thryv International in our future filings.

Monthly ARPU for the Marketing Services segment decreased by ~~$15~~$7, or 7%3%, for the three months ended ~~March 31,~~June 30, 2021 compared to the three months ended ~~March 31,~~June 30, 2020, and $11, or 5%, for the six months ended June 30, 2021 compared to the six months ended June 30, 2020. 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.

Monthly ARPU for the SaaS segment increased by ~~$64~~$91, or ~~27%~~39%, during the three months ended ~~March 31,~~June 30, 2021 compared to the three months ended ~~March 31,~~June 30, 2020, and increased by $78, or 33%, during the six months ended June 30, 2021 compared to the six months ended June 30, 2020. The increase in ARPU for these periods was largely driven by our strategic shift to selling to higher spend clients and, at the same time, discontinuing our sale of the lower-priced tiers of our Thryv platform.

Monthly Active Users - SaaS

We define a monthly active user for SaaS offerings as a client with one or more users who log into our SaaS solutions at least once during the calendar month. It should be noted that the inherent challenge is that one individual may register for, and use, multiple accounts across computer and mobile devices which may overstate the number of unique users who actively use our Thryv platform within a month. Additionally, some of our original SaaS clients exclusively use the website features of their Thryv platform which does not require a login and those users are not included in our active users count. For each reporting period, active users from the last month in the period are reported. We believe that monthly active users best reflects our ability to engage, retain, and monetize our users, and thereby drive increases in revenue. We view monthly active users as a key measure of user engagement for our Thryv platform.

As of March 31,
2021 2020
(in thousands)
Monthly Active Users - SaaS
31 26


	As of June 30,
	2021	2020

	(in thousands)
Monthly Active Users - SaaS	30	27

Monthly active users increased by 53 thousand, or ~~19%~~11%, during the ~~three~~six months ended ~~March 31,~~June 30, 2021 compared to the ~~three~~six months ended ~~March 31,~~June 30, 2020. The number of monthly active users increased ~~period over period despite no change in the total number of SaaS clients~~period-over-period as we undertook efforts such as enhancing the sales process, the client onboarding experience, and lifecycle management in order to increase engagement among our SaaS clients. The increase was also driven by the focus

by our sales team on obtaining higher retention, higher spend clients as these clients are more engaged with our platform. Additionally, we experienced an increase in engagement

from existing clients as SMBs increased virtual interactions with their customers in lieu of in-person interactions as a result of the COVID-19 pandemic.

Key Components of Our Results of Operations

Revenue

We generate revenue from our three business segments, Marketing Services, SaaS and Thryv International. Our primary sources of revenue in our Marketing Services and Thryv International segments are print and digital services. Our primary source of revenue in our SaaS segment is our Thryv platform.

Cost of Services

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

Operating Expenses

Sales and Marketing

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

General and Administrative

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

Other Income (Expense)

Other income (expense) consists of interest expense, other components of net periodic pension ~~cost,~~benefit (cost), (loss) on ~~early extinguishment~~termination of ~~debt,~~leaseback obligations, and other expense.

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Results of Operations

Consolidated Results of Operations

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


		Three Months Ended March 31,											Three Months Ended June 30,
		2021					2020 (ii)						2021					2020 (1)
		(in thousands) (unaudited)											(in thousands of $) (unaudited)
		Amount			% of Revenue		Amount			% of Revenue			Amount			% of Revenue		Amount			% of Revenue
Revenue	Revenue	$	280,606		100	%	$	318,570		100	%	Revenue	$	291,047		100	%	$	303,612		100	%
Cost of services	Cost of services	98,160			35.0	%	117,976			37.0	%	Cost of services	112,607			38.7	%	110,605			36.4	%
Gross profit	Gross profit	182,446			65.0	%	200,594			63.0	%	Gross profit	178,440			61.3	%	193,007			63.6	%

Operating expenses:	Operating expenses:											Operating expenses:
Sales and marketing	Sales and marketing	76,540			27.3	%	89,292			28.0	%	Sales and marketing	87,394			30.0	%	79,105			26.1	%
General and administrative	General and administrative	41,279			14.7	%	49,562			15.6	%	General and administrative	33,100			11.4	%	44,194			14.6	%
Impairment charges ~~(i)~~	Impairment charges ~~(i)~~	—			—	%	98			—	%	Impairment charges ~~(i)~~	3,611			1.2	%	18,132			6.0	%
Total operating expenses	Total operating expenses	117,819			42.0	%	138,952			43.6	%	Total operating expenses	124,105			42.6	%	141,431			46.6	%

Operating income	Operating income	64,627			23.0	%	61,642			19.3	%	Operating income	54,335			18.7	%	51,576			17.0	%

Other income (expense):	Other income (expense):											Other income (expense):
Interest expense	Interest expense	(15,672)			(5.6)	%	(19,930)			(6.3)	%	Interest expense	(19,170)			(6.6)	%	(18,012)			(5.9)	%
Other components of net periodic pension cost		453			0.2	%	(201)			(0.1)	%
Other components of net periodic pension benefit (cost)												Other components of net periodic pension benefit (cost)	272			0.1	%	(936)			(0.3)	%
Other expense	Other expense	(1,093)			(0.4)	%	—			—	%	Other expense	(2,966)			(1.0)	%	—			—	%
Income before (provision) for income taxes	Income before (provision) for income taxes	48,315			17.2	%	41,511			13.0	%	Income before (provision) for income taxes	32,471			11.2	%	32,628			10.7	%
(Provision) for income taxes	(Provision) for income taxes	(11,809)			(4.2)	%	(13,409)			(4.2)	%	(Provision) for income taxes	(8,112)			(2.8)	%	(21,164)			(7.0)	%
Net income	Net income	$	36,506		13.0	%	$	28,102		8.8	%	Net income	$	24,359		8.4	%	$	11,464		3.8	%
Other financial data:	Other financial data:											Other financial data:
Adjusted EBITDA	Adjusted EBITDA	$	104,933		37.4	%	$	112,779		35.4	%	Adjusted EBITDA	$	96,753		33.2	%	$	118,135		38.9	%
Adjusted gross profit		$	193,771				$	218,633
Adjusted gross margin		69.1		%			68.6		%
Adjusted Gross Profit												Adjusted Gross Profit	$	195,340				$	211,709
Adjusted Gross Margin												Adjusted Gross Margin	67.1		%			69.7		%

~~(i)~~(1)~~Impairment charges, which was previously included as part of General and administrative expense, is presented as a separate line item for the~~The three months ended ~~March 31, 2021~~June 30, 2020 ~~and 2020.~~

~~(ii)The three months ended March 31, 2021~~ has been updated to include a Gross profit subtotal line item and the reclassification of depreciation and amortization from a single line item in ~~its~~the condensed consolidated statements of operations to ~~be reflected as~~ a component of Gross profit, Sales and marketing expense, and General and administrative expense. See Note 1 to our condensed consolidated financial statements included in Part I, Item 1 in this Quarterly Report for more information.

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Comparison of the Three Months Ended ~~March 31,~~June 30, 2021 to the Three Months Ended ~~March 31,~~June 30, 2020

Revenue

The following table summarizes ~~revenues~~revenue by business segment for the periods indicated:


		Three Months Ended March 31,				Change					Three Months Ended June 30,				Change
		2021		2020		Amount		%			2021		2020		Amount		%

		(in thousands) (unaudited)									(in thousands of $) (unaudited)
Marketing Services	Marketing Services	$	227,933	$	286,722	$	(58,789)	(20.5)	%	Marketing Services	$	202,795	$	272,327	$	(69,532)	(25.5)	%
SaaS	SaaS	37,251		31,848		5,403		17.0	%	SaaS	41,386		31,285		10,101		32.3	%
Thryv International(1)	Thryv International(1)	15,422		—		15,422		NM		Thryv International(1)	46,866		—		46,866		NM
Total revenues		$	280,606	$	318,570	$	(37,964)	(11.9)	%
Total revenue										Total revenue	$	291,047	$	303,612	$	(12,565)	(4.1)	%

(1) Thryv International includes Sensis revenue subsequent to the March 1, 2021 acquisition date.

Total ~~revenues~~revenue decreased by ~~$38.0~~$12.6 million, or ~~11.9%~~4.1%, for the three months ended ~~March 31,~~June 30, 2021 as compared to the three months ended ~~March 31,~~June 30, 2020. The decrease in total revenues was driven by a decrease in Marketing Services revenue of ~~$58.8~~$69.5 million, partially offset by an increase in SaaS revenue of ~~$5.4~~$10.1 million, and Thryv International revenue of ~~$15.4 million recognized subsequent to the completion of the Sensis Acquisition.~~$46.9 million.

Marketing Services Revenue

Marketing Services revenue decreased by ~~$58.8~~$69.5 million, or ~~20.5%~~25.5%, for the three months ended ~~March 31,~~June 30, 2021 compared to the three months ended ~~March 31,~~June 30, 2020.

Print revenue decreased by ~~$24.5~~$45.4 million, or ~~17.8%~~32.6%, for the three months ended ~~March 31,~~June 30, 2021 as compared to the three months ended ~~March 31,~~June 30, 2020. Secular decline in industry demand for print services resulted in a ~~17%~~26% decline in revenue compared to the three months ended ~~March 31,~~June 30, 2020, with the remaining decline primarily driven by publication timing differences caused by our print agreements having greater than 12 month terms. Print revenue is recognized upon delivery of the published directories. Individual directory titles have different lifecycles, which typically range from 14 to 15 months. The titles published during the three months ended ~~March 31,~~June 30, 2021 are therefore different than the titles published during the three months ended ~~March 31,~~June 30, 2020. This lifecycle difference should be considered when comparing ~~period over period.~~period-over-period.

Digital services revenue decreased by ~~$34.3~~$24.1 million, or ~~23.0%~~18.1%, for the three months ended ~~March 31,~~June 30, 2021 as compared to the three months ended ~~March 31,~~June 30, 2020. IYP revenue decreased by ~~$10.9~~$8.3 million, or ~~14.5%~~12.0%, driven by a continued trending decline in the Company’s Marketing Services client base. SEM revenue decreased by ~~$15.3~~$8.7 million, or ~~30.7% which was consistent with expectations~~21.4%, due to significant competition in the consumer search and display space, particularly from large, well-capitalized businesses such as Google, Yelp and Facebook. Other digital media solutions revenue decreased by ~~$8.2~~$7.1 million, or ~~33.2%~~30.8%, as we shifted from selling these services on a standalone basis to only offering them as inclusions or add-ons to our Thryv platform for new clients.

SaaS Revenue

SaaS revenue increased by ~~$5.4~~$10.1 million, or ~~17.0%~~32.3%, for the three months ended ~~March 31,~~June 30, 2021 as compared to the three months ended ~~March 31,~~June 30, 2020. The increase was driven by increased demand for our Thryv platform as SMBs have increased their contact-less customer interactions and remote working capabilities due to the COVID-19 pandemic, and by our success in re-focusing our go-to-market and onboarding strategy to target higher spend and higher engaged clients. This isincrease was partially offset by a decline in our lower-spend and less engaged legacy SaaS clients that tend to have a higher churn ~~rate and an increase in the provision for service credits due to COVID-19.~~rate.

Thryv International Revenue

Thryv International revenue was ~~$15.4~~$46.9 million for the ~~one month~~three months ended ~~March 31,~~June 30, 2021. Given that the Sensis ~~acquisition~~Acquisition was completed on March 1, 2021, no revenue was recognized for Thryv International during the three months ended ~~March 31,~~June 30, 2020. Thryv International revenue included print revenue of ~~$5.7~~$15.2 million, IYP revenue of ~~$6.6~~$18.4 million, SEM revenue of ~~$2.0~~$6.0 million, and other digital media solutions revenue of ~~$1.1 million recognized subsequent to the completion of the Sensis Acquisition.~~$7.2 million.

3336

Cost of Services

Cost of services ~~decreased~~increased by ~~$19.8~~$2.0 million, or ~~16.8%~~1.8%, for the three months ended ~~March 31,~~June 30, 2021 as compared to the three months ended ~~March 31,~~June 30, 2020. Cost of services as a percentage of revenue increased to 38.7% for the three months ended June 30, 2021 from 36.4% for the three months ended June 30, 2020. The increase was primarily attributable to $30.6 million of Thryv International Cost of services that was included in the three months ended June 30, 2021, while none was included in the three months ended June 30, 2020. This increase was partially offset by a $28.5 million decrease in ~~cost~~Cost of services, ~~was~~ primarily driven by declining revenue and strategic cost ~~savings~~saving initiatives. Cost of services as a percentage of revenue decreased to 35.0% for the three months ended March 31, 2021 from 37.0% for the three months ended March 31, 2020. This decline was largely the result of the Company’s continued efforts to reduce costs in order to maintain profitability, and ~~reduced workforce due to the impacts of COVID-19.~~ Specifically, we reduced printing, distribution and digital and fulfillment support costs by ~~$10.3~~$10.0 million, ~~employee related costs by $4.7 million~~ ~~and~~ non-capitalized software and hardware purchases by ~~$3.5~~$3.1 million, and employee related costs by $2.1 million. Additionally, allocated depreciation and amortization expense decreased by ~~$13.0~~$13.3 million for the three months ended ~~March 31,~~June 30, 2021 compared to the three months ended ~~March 31,~~June 30, 2020, due to the accelerated amortization method used by the Company. ~~Depreciation and amortization expense for the~~ ~~three months ended March 31, 2020.~~ ~~These decreases in expenses were partially offset by $12.3 million of Thryv International Cost of services recognized subsequent to the completion of the Sensis Acquisition.~~

Gross Profit

Gross profit decreased by ~~$18.1~~$14.6 million, or ~~9.0%~~7.5%, for the three months ended ~~March 31,~~June 30, 2021 as compared to the three months ended ~~March 31,~~June 30, 2020. The decrease in gross profit was primarily due to the decline in total revenue, partially offset by decreases in printing, distribution, and digital and fulfillment support costs, and depreciation and amortization expense.

Our gross margin ~~increased~~decreased by ~~2.0~~2.3 percentage points, to ~~65.0%~~61.3% for the three months ended ~~March 31,~~June 30, 2021 as compared to ~~63.0%~~63.6% for the three months ended ~~March 31,~~June 30, 2020. The ~~increase~~decrease in gross margin was primarily driven by ~~a decrease~~the decline in total revenue, partially offset by corresponding decreases in printing, distribution, and digital and fulfillment support costs, and depreciation and amortization ~~expense, partially offset by a corresponding decrease in revenue.~~

expense.

Operating Expenses

Sales and Marketing

Sales and marketing expense ~~decreased~~increased by ~~$12.8~~$8.3 million, or ~~14.3%~~10.5%, for the three months ended ~~March 31,~~June 30, 2021 as compared to the three months ended ~~March 31,~~June 30, 2020. Sales and marketing expense as a percentage of revenue ~~decreased~~increased to ~~27.3%~~30.0% for the three months ended ~~March 31,~~June 30, 2021 from ~~28.0%~~26.1% for the three months ended ~~March 31,~~June 30, 2020. The increase was primarily attributable to $14.3 million of Thryv International Sales and marketing expenses that was included in the three months ended June 30, 2021, while none was included in the three months ended June 30, 2020. This increase was partially offset by a $11.3 million decrease in Sales and marketing expense, ~~was~~ primarily ~~due to the decline in total~~driven by declining revenue and strategic cost ~~savings~~saving initiatives, ~~that were undertaken to mitigate the overall impact~~offset by an increase in advertising and sales promotion expense of ~~the COVID-19 pandemic on our results of operations.~~ $4.6 million. Specifically ~~the decrease in Sales~~, we reduced contract services by $1.7 million and ~~marketing expense was due to lower employee related costs of $5.5 million,~~ incurred lower sales commissions of ~~$2.4~~$1.0 million, primarily due to our reduction in ~~workforce, and lower~~workforce. ~~contract services of $2.4 million.~~ Additionally, allocated depreciation and amortization expense decreased by ~~$9.5~~$8.6 million for the three months ended ~~March 31,~~June 30, 2021 compared to the three months ended ~~March 31,~~June 30, 2020, due to the accelerated amortization method used by the Company.~~These decreases in expenses were partially offset by $5.1 million of Thryv International Sales and marketing expenses recognized subsequent to the completion of the Sensis Acquisition~~. ~~Additionally, advertising and sales promotion expense increased by $3.1 million during the~~ ~~three months ended March 31, 2021 compared to the three months ended March 31, 2020.~~

General and Administrative

General and administrative expense decreased by ~~$8.3~~$11.1 million, or ~~16.7%~~25.1%, for the three months ended ~~March 31,~~June 30, 2021 compared to the three months ended ~~March 31,~~June 30, 2020. This decrease was primarily driven by lower bad debt expense of ~~$9.5 million, lower employee related costs of $2.7 million,~~ ~~a decrease in the loss on the remeasurement of our indemnification asset of $3.8~~$11.9 million and ~~a decrease in the loss on the sale~~lower non-recurring charges of ~~property of $3.0 million.~~$3.9 million. Additionally, allocated depreciation and amortization expense decreased by ~~$4.2~~$4.4 million for the three months ended ~~March 31,~~June 30, 2021 compared to the three months ended ~~March 31,~~June 30, 2020, due to the accelerated amortization method used by the Company. These decreases ~~in expenses~~ were partially offset by ~~$3.5~~$5.4 million of Thryv International General and administrative expenses ~~recognized subsequent to~~that was included in the ~~completion of~~three months ended June 30, 2021, while none was included in the ~~Sensis Acquisition,~~three months ended June 30, 2020.Additionally, we incurred higher employee related costs of $1.9 million and ~~increases in~~higher stock-based compensation expense of ~~$6.3 million andnon-recurring transaction costs primarily related to the Sensis Acquisition of $4.0~~$0.7 million.

General and administrative expense as a percentage of revenue decreased to ~~14.7%~~11.4% for the three months ended ~~March 31,~~June 30, 2021 from ~~15.6%~~14.6% for the three months ended ~~March 31, 2020.~~June 30, 2020. This decrease was primarily attributable to ~~the decline in total revenue and lower expenses, including~~ lower bad debt expense and employee related ~~costs.~~costs, partially offset by the decline in total revenue.

3437

Impairment Charges

Impairment charges decreased by ~~$0.1~~$14.5 million for the three months ended ~~March 31,~~June 30, 2021 compared to the three months ended ~~March 31,~~June 30, 2020. ~~No impairment~~Impairment charges of $3.6 million were incurred during the three months ended ~~March 31,~~June 30, 2021, while ~~$0.1~~$18.1 million of impairment charges were recognized during the three months ended ~~March 31,~~June 30, 2020.

Other Income (Expense)

Interest Expense

Interest expense ~~decreased~~increased by ~~$4.3~~$1.2 million, or ~~21.4%~~6.4%, for the three months ended ~~March 31,~~June 30, 2021 compared to the three months ended ~~March 31,~~June 30, 2020, primarily due to overall higher levels of indebtedness, which was partially offset by lower ~~indebtedness.~~weighted average interest rates. The Company incurred interest expense from related parties of ~~$4.1~~$4.7 million for the three months ended ~~March 31,~~June 30, 2021 as compared to ~~$5.2~~$4.6 million for the three months ended ~~March 31,~~June 30, 2020.

Other Components of Net Periodic Pension Cost

Other components of net periodic pension cost decreased by ~~$0.7~~$1.2 million from an expense of ~~$0.2~~$0.9 million during the three months ended ~~March 31,~~June 30, 2020 to a benefit of ~~$(0.5)~~$0.3 million during for the three months ended ~~March 31,~~June 30, 2021. This change was primarily due to lower interest expense of $1.6 million, and a remeasurement ~~gain~~loss of ~~$0.2~~$0.7 million recognized during the three months ended ~~March 31, 2021,~~June 30, 2020, which was partially offset by a lower expected return on assets of $1.1 million.

Other Expense

During the three months ended ~~March 31,~~June 30, 2021, the Company incurred other expense of ~~$1.1~~$3.0 million, which included a loss of $3.1 million on the termination of leaseback obligations associated with land and a building in Tucker, Georgia, and foreign currency related ~~expense~~income of ~~$0.8 million and a loss on early extinguishment of debt of $0.3~~$0.1 million.

(Provision) for Income Taxes

(Provision) for income taxes decreased by ~~$1.6~~$13.1 million, or ~~11.9%~~61.7%, for the three months ended ~~March 31,~~June 30, 2021 compared to the three months ended ~~March 31,~~June 30, 2020. The effective income tax rate was ~~24.4%~~25.0% and ~~32.3%~~64.9% for the three months ended ~~March 31,~~June 30, 2021 and 2020, respectively. The ETR differs from the 21.0% U.S. Federal statutory rate primarily due to tax permanent differences and discrete items recorded in each of the respective periods.

Adjusted EBITDA

Adjusted EBITDA decreased by ~~$7.8~~$21.4 million, or ~~7.0%~~18.1%, for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020. The decrease in Adjusted EBITDA was primarily driven by the decrease in total revenue, which was partially offset by declining costs as we continue to focus on cost reductions. See “Non-GAAP Financial Measures” for a definition of Adjusted EBITDA and a reconciliation to Net income, the most directly comparable measure presented in accordance with GAAP.

Results of Operations

Consolidated Results of Operations

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


	Six Months Ended June 30,
	2021 (1)					2020 (2)
	(in thousands of $) (unaudited)
	Amount			% of Revenue		Amount			% of Revenue
Revenue	$	571,653		100	%	$	622,182		100	%
Cost of services	210,767			36.9	%	228,581			36.7	%
Gross profit	360,886			63.1	%	393,601			63.3	%

Operating expenses:
Sales and marketing	163,934			28.7	%	168,397			27.1	%
General and administrative	74,379			13.0	%	93,756			15.1	%
Impairment charges	3,611			0.6	%	18,230			2.9	%
Total operating expenses	241,924			42.3	%	280,383			45.1	%

Operating income	118,962			20.8	%	113,218			18.2	%

Other income (expense):
Interest expense	(34,842)			(6.1)	%	(37,942)			(6.1)	%
Other components of net periodic pension benefit (cost)	725			0.1	%	(1,137)			(0.2)	%
Other expense	(4,059)			(0.7)	%	—			—	%
Income before (provision) for income taxes	80,786			14.1	%	74,139			11.9	%
(Provision) for income taxes	(19,921)			(3.5)	%	(34,573)			(5.6)	%
Net income	$	60,865		10.6	%	$	39,566		6.4	%
Other financial data:
Adjusted EBITDA	$	201,686		35.3	%	$	230,914		37.1	%
Adjusted Gross Profit	$	389,111				$	430,342
Adjusted Gross Margin	68.1		%			69.2		%

(1) Consolidated results of operations includes Sensis' results of operations subsequent to the March 1, 2021 acquisition date.

(2)The six months ended June 30, 2020 has been updated to include a Gross profit subtotal line item and the reclassification of depreciation and amortization from a single line item in the condensed consolidated statements of operations to a component of Gross profit, Sales and marketing expense, and General and administrative expense. See Note 1 to our condensed consolidated financial statements included in Part I, Item 1 in this Quarterly Report for more information.

Comparison of the Six Months Ended March 31, 2021 to the Six Months Ended March 31, 2020

Revenue

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


	Six Months Ended June 30,				Change
	2021		2020		Amount		%

	(in thousands of $) (unaudited)
Marketing Services	$	430,728	$	559,049	$	(128,321)	(23.0)	%
SaaS	78,637		63,133		15,504		24.6	%
Thryv International(1)	62,288		—		62,288		NM
Total revenue	$	571,653	$	622,182	$	(50,529)	(8.1)	%

(1) Thryv International includes Sensis revenue subsequent to the March 1, 2021 acquisition date.

Total revenue decreased by $50.5 million, or 8.1%, for the six months ended June 30, 2021 as compared to the ~~three~~six months ended June 30, 2020. The decrease in total revenue was driven by a decrease in Marketing Services revenue of $128.3 million, partially offset by an increase in SaaS revenue of $15.5 million, and Thryv International revenue of $62.3 million.

Marketing Services Revenue

Marketing Services revenue decreased by $128.3 million, or 23.0%, for the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

Print revenue decreased by $69.9 million, or 25.3%, for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020. Secular decline in industry demand for print services resulted in a 25% decline in revenue compared to the six months ended June 30, 2020, with the remaining decline primarily driven by publication timing differences caused by our print agreements having greater than 12 month terms. Print revenue is recognized upon delivery of the published directories. Individual directory titles have different lifecycles, which typically range from 14 to 15 months. The titles published during the six months ended June 30, 2021 are therefore different than the titles published during the six months ended June 30, 2020. This lifecycle difference should be considered when comparing period-over-period.

Digital services revenue decreased by $58.4 million, or 20.7%, for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020. IYP revenue decreased by $19.2 million, or 13.3%, driven by a continued trending decline in the Company’s Marketing Services client base. SEM revenue decreased by $24.0 million, or 26.5%, which was consistent with expectations due to significant competition in the consumer search and display space, particularly from large, well-capitalized businesses such as Google, Yelp and Facebook. Other digital media solutions revenue decreased by $15.2 million, or 32.0%, as we shifted from selling these services on a standalone basis to only offering them as inclusions or add-ons to our Thryv platform for new clients.

SaaS Revenue

SaaS revenue increased by $15.5 million, or 24.6%, for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020. The increase was driven by increased demand for our Thryv platform as SMBs have increased their contact-less customer interactions and remote working capabilities due to the COVID-19 pandemic, and by our success in re-focusing our go-to-market and onboarding strategy to target higher spend and higher engaged clients. This increase was partially offset by a decline in our lower-spend and less engaged legacy SaaS clients that tend to have a higher churn rate.

Thryv International Revenue

Thryv International revenue was $62.3 million for the four months ended June 30, 2021. Given that the Sensis Acquisition was completed on March ~~31,~~1, 2021, no revenue was recognized for Thryv International during the two months ended February 28, 2021 or the six months ended June 30, 2020. Thryv International revenue included print revenue of $21.0 million, IYP revenue of $24.9 million, SEM revenue of $8.0 million, and other digital media solutions revenue of $8.4 million recognized subsequent to the completion of the Sensis Acquisition.

Cost of Services

Cost of services decreased by $17.8 million, or 7.8%, for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020. The decrease was primarily driven by declining revenue and strategic cost saving initiatives. Specifically, we reduced expenses by $60.1 million. The decrease was due to lower printing, distribution and digital and fulfillment support costs of $20.4 million, employee related costs of $6.8 million, and non-capitalized software and hardware purchases of $6.6 million. Additionally, allocated depreciation and amortization expense decreased by $26.3 million for the six months ended June 30, 2021 compared to the six months ended June 30, 2020, due to the accelerated amortization method used by the Company. These decreases were partially offset by $42.9 million of Thryv International Cost of services that was included in the four months ended June 30, 2021,while none was included in the six months ended June 30, 2020.

Cost of services as a percentage of revenue increased to 36.9% for the six months ended June 30, 2021 from 36.7% for the six months ended June 30, 2020. This slight increase was primarily driven by declining revenue, partially offset by decreases in printing, distribution, and digital and fulfillment support costs, and depreciation and amortization expense.

Gross Profit

Gross profit decreased by $32.7 million, or 8.3%, for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020. The decrease in gross profit was primarily due to the decline in total revenue, partially offset by decreases in printing, distribution, and digital and fulfillment support costs, and depreciation and amortization expense.

Our gross margin decreased by 0.2 percentage points, to 63.1% for the six months ended June 30, 2021 as compared to 63.3% for the six months ended June 30, 2020. This slight decrease in gross margin was primarily driven by the decline in total revenue, partially offset by corresponding decreases in printing, distribution, and digital and fulfillment support costs, and depreciation and amortization expense.

Operating Expenses

Sales and Marketing

Sales and marketing expense decreased by $4.5 million, or 2.7%, for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020. The decrease was primarily driven by declining revenue and strategic cost saving initiatives, offset by an increase in advertising and sales promotion expense of $7.6 million. Specifically, we reduced expenses by $30.9 million. The decrease was due to lower employee related costs of $5.3 million, lower contract services of $4.1 million, and lower sales commissions of $3.4 million. Additionally, allocated depreciation and amortization expense decreased by $18.1 million for the six months ended June 30, 2021 compared to the six months ended June 30, 2020, due to the accelerated amortization method used by the Company. The increase was partially attributable to $19.4 million of Thryv International Sales and marketing expenses included in the four months ended June 30, 2021,while none was included in the six months ended June 30, 2020

Sales and marketing expense as a percentage of revenue increased to 28.7% for the six months ended June 30, 2021 from 27.1% for the six months ended June 30, 2020. This increase was primarily due to declining revenue, offset by decreases in employee related costs, contract services and depreciation and amortization expense.

General and Administrative

General and administrative expense decreased by $19.4 million, or 20.7%, for the six months ended June 30, 2021 compared to the six months ended June 30, 2020. This decrease was primarily driven by lower bad debt expense of $21.4 million, a decrease in the loss on the remeasurement of our indemnification asset of $5.2 million, a decrease in the loss on the sale of property of $3.3 million, and lower employee related costs of $0.8 million. Additionally, allocated depreciation and amortization expense decreased by $8.5 million for the six months ended June 30, 2021 compared to the six months ended June 30, 2020, due to the accelerated amortization method used by the Company. These decreases in expenses were partially offset by $8.9 million of Thryv International General and administrative expenses that was included in the four months ended June 30, 2021, while none was included in the six months ended June 30, 2020. Additionally, we incurred higher stock-based compensation expense of $7.0 million.

General and administrative expense as a percentage of revenue decreased to 13.0% for the six months ended June 30, 2021 from 15.1% for the six months ended June 30, 2020. This decrease was primarily attributable to lower bad debt expense and a decrease in depreciation and amortization expense, partially offset by declining revenue.

Impairment Charges

Impairment charges decreased by $14.6 million for the six months ended June 30, 2021 compared to the six months ended June 30, 2020. Impairment charges of $3.6 million were incurred during the six months ended June 30, 2021, while $18.2 million of impairment charges were recognized during the six months ended June 30, 2020.

Other Income (Expense)

Interest Expense

Interest expense decreased by $3.1 million, or 8.2%, for the six months ended June 30, 2021 compared to the six months ended June 30, 2020 due to lower weighted average interest rates. The Company incurred interest expense from related parties of $8.7 million for the six months ended June 30, 2021 as compared to $9.7 million for the six months ended June 30, 2020.

Other Components of Net Periodic Pension Cost

Other components of net periodic pension cost decreased by $1.9 million, from an expense of $1.1 million during the six months ended June 30, 2020 to a benefit of $(0.7) million during for the six months ended June 30, 2021. This change was primarily due to lower interest expense of $3.2 million, and a remeasurement gain of $(0.2) million recognized during the six months ended June 30, 2021 compared to a remeasurement loss of $0.7 million recognized during the six months ended June 30, 2020. These favorable decreases were partially offset by a lower expected return on assets of $2.3 million.

Other Expense

During the six months ended June 30, 2021, the Company incurred other expense of $4.1 million, which included a loss of $3.4 million primarily resulting from the termination of leaseback obligations associated with land and a building in Tucker, Georgia, and foreign currency related expense of $0.7 million.

(Provision) for Income Taxes

(Provision) for income taxes decreased by $14.7 million, or 42.4%, for the six months ended June 30, 2021 compared to the six months ended June 30, 2020. The effective income tax rate was 24.7% and 46.6% for the six months ended June 30, 2021 and 2020, respectively. The ETR differs from the 21.0% U.S. Federal statutory rate primarily due to tax permanent differences and discrete items recorded in each of the respective periods.

Adjusted EBITDA

Adjusted EBITDA decreased by $29.2 million, or 12.7%, for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020. The decrease in Adjusted EBITDA was primarily driven by the decrease in total revenue, which was partially offset by declining costs as we continue to focus on cost reductions. See “Non-GAAP Financial Measures” for a definition of Adjusted EBITDA and a reconciliation to Net income, the most directly comparable measure presented in accordance with GAAP.

Non-GAAP Financial Measures

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

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

We define Adjusted EBITDA (“Adjusted EBITDA”) as Net income ~~(loss)~~ plus Interest expense, (Benefit) provision for income taxes, Depreciation and amortization expense, Loss on early extinguishment of debt, Restructuring and integration ~~charges,~~expenses, Transaction costs, Stock-based compensation expense (benefit), Impairment charges and non-operating expenses, such as, Other components of net periodic pension (benefit) cost, Non-cash (gain) loss 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 (benefit).

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

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


		Three Months Ended March 31,			Three Months Ended June 30,						Six Months Ended June 30,
			2021			2020			2021		2020		2021		2020
Reconciliation of Adjusted EBITDA	Reconciliation of Adjusted EBITDA							Reconciliation of Adjusted EBITDA
Net income	Net income		$	36,506		$	28,102	Net income	$	24,359	$	11,464	$	60,865	$	39,566
Interest expense	Interest expense		15,672			19,930		Interest expense	19,170		18,012		34,842		37,942
Provision for income taxes	Provision for income taxes		11,809			13,409		Provision for income taxes	8,112		21,164		19,921		34,573
Depreciation and amortization expense	Depreciation and amortization expense		19,718			37,823		Depreciation and amortization expense	29,908		37,606		49,626		75,429
Loss on early extinguishment of debt			299			—
Loss on termination of leaseback obligations								Loss on termination of leaseback obligations	3,110		—		3,409		—
Restructuring and integration expenses (1)	Restructuring and integration expenses (1)		9,234			9,845		Restructuring and integration expenses (1)	3,489		7,347		12,723		17,192
Transaction costs (2)	Transaction costs (2)		10,546			6,534		Transaction costs (2)	5,440		3,232		15,986		9,766
Stock-based compensation expense (benefit) (3)	Stock-based compensation expense (benefit) (3)		1,971			(6,064)		Stock-based compensation expense (benefit) (3)	1,921		580		3,892		(5,484)
Other components of net periodic pension (benefit) cost (4)	Other components of net periodic pension (benefit) cost (4)		(453)			201		Other components of net periodic pension (benefit) cost (4)	(272)		936		(725)		1,137
Non-cash loss from remeasurement of indemnification asset (5)			—			3,801
Non-cash (gain) loss from remeasurement of indemnification asset (5)								Non-cash (gain) loss from remeasurement of indemnification asset (5)	(844)		617		(844)		4,418
Impairment charges	Impairment charges		—			98		Impairment charges	3,611		18,132		3,611		18,230
Other (6)	Other (6)		(369)			(900)		Other (6)	(1,251)		(955)		(1,620)		(1,855)
Adjusted EBITDA	Adjusted EBITDA		$	104,933		$	112,779	Adjusted EBITDA	$	96,753	$	118,135	$	201,686	$	230,914

(1)For the three and six months ended ~~March 31,~~June 30, 2021 and 2020, expenses relate to periodic efforts to enhance efficiencies and reduce costs, and include severance benefits, loss on disposal of fixed assets and capitalized software, and costs associated with abandoned facilities and system consolidation.

(2)Expenses related to the Company's direct listing, Sensis Acquisition and other transaction costs.

(3)The Company records stock-based compensation expense related to the amortization of grant date fair value of the Company’s stock-based compensation awards. Additionally, stock-based compensation expense includes the remeasurement of these awards at each period ~~end.~~end, prior to October 1, 2020. See “Note 4, Fair Value Measurements”, to our condensed consolidated financial statements included in Part I, Item 1 in this Quarterly Report for more information.

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

(5)In connection with the YP Acquisition, the seller ~~provided~~indemnified the Company ~~indemnity~~ 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.~~acquisition date.

(6)Other primarily includes expenses related to potential non-income based tax liabilities. Additionally, during the three and six months ended ~~March 31,~~June 30, 2021 ~~other~~, Other includes foreign exchange related ~~expense of $0.8 million~~expense.

The following is a reconciliation of Adjusted Gross Profit and Adjusted Gross Margin, to their most directly comparable GAAP measures, Gross profit and Gross margin (in thousands):


		Three Months Ended March 31,							Three Months Ended June 30,
		2021			2020				2021			2020
Reconciliation of Adjusted Gross Profit	Reconciliation of Adjusted Gross Profit							Reconciliation of Adjusted Gross Profit
Gross profit	Gross profit	$	182,446		$	200,594		Gross profit	$	178,440		$	193,007
Plus:	Plus:							Plus:
Depreciation and amortization expense	Depreciation and amortization expense	11,244			18,355			Depreciation and amortization expense	16,817			18,632
Stock-based compensation expense (benefit)		81			(316)
Stock-based compensation expense								Stock-based compensation expense	83			70
Adjusted gross profit	Adjusted gross profit	$	193,771		$	218,633		Adjusted gross profit	$	195,340		$	211,709
Gross margin	Gross margin	65.0		%	63.0		%	Gross margin	61.3		%	63.6		%
Adjusted gross margin	Adjusted gross margin	69.1		%	68.6		%	Adjusted gross margin	67.1		%	69.7		%


	Six Months Ended June 30,
	2021			2020
Reconciliation of Adjusted Gross Profit
Gross profit	$	360,886		$	393,601
Plus:
Depreciation and amortization expense	28,061			36,987
Stock-based compensation expense (benefit)	164			(246)
Adjusted gross profit	$	389,111		$	430,342
Gross margin	63.1		%	63.3		%
Adjusted gross margin	68.1		%	69.2		%

Liquidity and Capital Resources

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

We believe that expected cash flows from operations, available cash and cash equivalents, and funds available under our

ABL Facility will be sufficient to meet our liquidity requirements, such as working capital requirements for our operations, business development and investment activities, and payments for our debt 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. As a result of COVID-19, many SMBs may continue to experience a reduction in revenues and cash flows and may not have the ability to pay amounts owed to us. ~~We are also assessing~~While COVID-19 has not had a material impact on our liquidity to date, we continue to assess our business operations and the impact that COVID-19 may have on our financial results and liquidity. We continue to monitor our capital requirements to ensure our needs are in line with available capital resources.

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

Sources and Uses of Cash

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


		Three Months Ended March 31,				$			Six Months Ended June 30,				$
		2021		2020		Change			2021		2020		Change

		(unaudited)							(unaudited)
Cash flows provided by (used in):	Cash flows provided by (used in):							Cash flows provided by (used in):
Operating activities	Operating activities	$	14,204	$	45,642	$	(31,438)	Operating activities	$	81,802	$	97,871	$	(16,069)
Investing activities	Investing activities	(177,858)		(7,620)		(170,238)		Investing activities	(188,442)		(11,473)		(176,969)
Financing activities	Financing activities	191,796		(38,731)		230,527		Financing activities	123,479		(86,721)		210,200

Comparison of the ~~Three~~Six Months Ended ~~March 31,~~June 30, 2021 to the ~~Three~~Six Months Ended ~~March 31,~~June 30, 2020

Cash Flows from Operating Activities

Net cash provided by operating activities decreased by ~~$31.4~~$16.1 million, or ~~68.9%~~16.4%, for the ~~three~~six months ended ~~March 31,~~June 30, 2021 as compared to the ~~three~~six months ended ~~March 31,~~June 30, 2020.

The decrease in net cash provided by operating activities of ~~$31.4~~$16.1 million wasis primarily due to the timing of accounts receivable collections, the timing of billing of unbilled receivables in accordance with the terms of our print agreements, and the timing of payments against accounts payable and taxes payable, in addition to the overall decline ~~of our sales.~~in revenue. The change in cash flows from operating activities was also affected by higher income tax payments of ~~$16.8~~$26.5 million and lower interest payments of ~~$3.5~~$2.1 million.

Cash Flows from Investing Activities

Net cash used in investing activities increased by ~~$170.2~~$177.0 million, or ~~2,234.1%~~1,542.5%, for the ~~three~~six months ended ~~March 31,~~June 30, 2021 as compared to the ~~three~~six months ended ~~March 31,~~June 30, 2020.

The increase in net cash used in investing activities of ~~$170.2~~$177.0 million was primarily due to cash paid of ~~approximately~~ $174.2 million in connection with the Sensis Acquisition on March 1, 2021. ~~This~~The increase in net cash used was ~~partially offset~~also driven by ~~a decrease~~an increase of ~~$5.5~~$1.3 million in capitalized expenditures. Additionally, during the ~~three~~six months ended ~~March 31,~~June 30, 2020, the Company received proceeds from the sales of buildings and other fixed assets of ~~$1.5~~$1.4 million, ~~while no~~compared to proceeds ~~were~~of $0.1 million received during the ~~three~~six months ended ~~March 31,~~June 30, 2021.

Cash Flows from Financing Activities

Net cash from financing activities increased by ~~$230.5~~$210.2 million, or ~~595.2%~~242.4%, for the ~~three~~six months ended ~~March 31,~~June 30, 2021 as compared to the ~~three~~six months ended ~~March 31,~~June 30, 2020. The increase in cash flow from financing activities iswas primarily related to the proceeds received from the New Term Loan that the Company entered into on March 1, 2021 and the timing of proceeds

and payments on the Senior Term Loan and ABL Facility.

The increase in net cash from financing activities of ~~$230.5~~$210.2 million was primarily driven by net proceeds received from the New Term Loan of $679.0 million, partially offset by cash used to repay the remaining outstanding principal balance of the Senior Term Loan of $449.6 million, and payments made on the New Term Loan of $88.0 million, compared to payments made on the Senior Term Loan of ~~$34.0~~$65.4 million during the ~~three~~six months ended ~~March 31,~~June 30, 2020. The increase in net cash from financing activities was further driven by lower payments of ~~$27.1~~$29.9 million on the ABL Facility and $~~21.8~~30.6 million for the repurchase of shares of our outstanding common stock. These increases in net cash from financing activities were partially offset by lower proceeds from the ABL Facility of ~~$79.8~~$60.6 million.

Debt

Term Loan

On March 1, 2021, the Company entered into a new term loan credit agreement (the “New Term Loan”). The proceeds of the New Term Loan were used to finance the Sensis Acquisition, refinance in full the Company's existing term loan facility (the “Senior Term Loan”) and pay fees and expenses related to the Sensis Acquisition and related financing.

The New Term Loan established a senior secured term loan facility (the “Term Loan Facility”) in an aggregate principal amount equal to $700.0 million, of which 38.4% was held by related parties who are equity holders of the Company, including GoldenTree Asset Management LP, Paulson & Co. Inc., and Mudrick Capital Management, LP, who held 25.0%, 7.1%, and 6.3% of the debt, respectively. The Term Loan Facility matures on March 1, 2026 and borrowings under the Term Loan Facility ~~will~~ bear 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). The Term Loan Facility requires mandatory amortization payments equal to $17.5 million per fiscal quarter commencing June 30, 2021.

As of June 30, 2021, 29.6% of the New Term Loan was held by related parties who are equity holders of the Company, including GoldenTree Asset Management LP, Paulson & Co. Inc., and Mudrick Capital Management, LP, who held 17.9%, 7.6%, and 4.1% of the debt, respectively.

ABL Facility

On March 1, 2021, the Company entered into an agreement to amend (the “ABL Amendment”) the June 30, 2017 ABL ~~Amendment.~~Facility (the “ABL Facility”). The ABL Amendment was entered into in order to permit the term loan refinancing, the Sensis Acquisition and make certain other changes to the ABL credit agreement, including, among others:

•revise the maximum revolver amount to $175.0 million;

•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;

•reduce the commitment fee on undrawn amounts under the ABL Facility to 0.375%;

•extend the maturity date of the ABL Facility to the earlier of March 1, 2026 and 91 days prior to the stated maturity

date of the Term Loan Facility;

•add the Australian subsidiaries acquired pursuant to the Sensis Acquisition as borrowers and guarantors, and establish an Australian borrowing base; and

•make certain other conforming changes consistent with the Term Loan Agreement.

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 New 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 New Term Loan and ABL Facility as of ~~March 31,~~June 30, 2021. We had total recorded debt outstanding of ~~$720.2~~$647.9 million at ~~March 31,~~June 30, 2021, which was comprised of amounts outstanding under our New Term Loan of ~~$676.6~~$589.9 million and ABL Facility of ~~$43.7~~$58.0 million.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that are material to our results of operations, financial condition or liquidity.

Critical Accounting Policies

Foreign Currency

The functional currency of the Company’s foreign operating subsidiaries is the local currency. Assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange rates in effect at the balance sheet dates, with the resulting translation adjustments directly recorded to a separate component of accumulated other comprehensive loss. Income and expense accounts are translated at the weighted-average exchange rates during the period. Foreign currency transaction gains and losses are recorded in other expense.

Other than the foreign currency accounting policy referenced above, our critical accounting policies and estimates have not changed from those described in our 2020 Form 10-K, under “Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates.”

Recent Accounting Pronouncements

For a description of accounting pronouncements recently adopted and issued, see “Part I, Item 1. Note 1, Description of Business and Summary of Significant Accounting Policies.”

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

As of ~~March 31,~~June 30, 2021, we had total recorded debt outstanding of ~~$720.2~~$647.9 million, which was comprised of amounts outstanding under our New Term Loan of ~~$676.6~~$589.9 million and ABL Facility of ~~$43.7~~$58.0 million. Substantially all this debt bears interest at floating rates. Changes in interest rates affect the interest expense we pay on our floating rate debt. A hypothetical 100 basis point increase in interest rates would increase our interest expense by approximately ~~$7.2~~$6.5 million annually, based on the debt outstanding at ~~March 31,~~June 30, 2021.

Inflation Risk

We currently operate in the United States ~~of America,~~ and internationally in Australia. We do not believe that inflation has had a material effect on our business, results of operations, or financial condition. Nonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs. Our inability or failure to do so could harm our business, results of operations, or financial condition.

Foreign Exchange Currency Risk

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

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

Item 4. Controls and Procedures

Acquisition

We are in the process of integrating Sensis that we acquired on March 1, 2021. Management’s assessment and conclusion on the effectiveness of the Company’s disclosure controls and procedures as of June 30, 2021 excludes an assessment of the internal control over financial reporting related to the Sensis Acquisition. The Sensis Acquisition represented 19% of our consolidated total assets and 16% of our consolidated revenue included in our condensed consolidated financial statements as of and for the three months ended June 30, 2021.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange ~~Act)~~Act of 1934, as amended (the “Exchange Act”). Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of ~~March 31, 2021.~~June 30, 2021.

Changes in Internal Control over Financial Reporting

~~There~~We have completed one acquisition in the past 12 months. As part of our ongoing integration activities, we continue to implement our controls and procedures over the business we acquired and to augment our company-wide controls to reflect the risks inherent in our acquisition. Throughout the integration process, we monitor these efforts and take corrective action as needed to reinforce the application of our controls and procedures. Other than the foregoing, there were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the quarter ended ~~March 31,~~June 30, 2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 1A. Risk Factors

There have been no material changes to our risk factors disclosed in our 2020 Form 10-K, except as ~~set forth below.~~

~~We may experience difficulties~~disclosed in ~~integrating the operations, personnel and assets of Sensis which we acquired in March 2021~~.

~~We recently acquired Sensis. We may be unable to manage Sensis’s business or successfully integrate the business with~~ our historic operations without substantial costs, delays or other operational or financial problems. In addition, we may not be able to maintain and grow the revenues and operating margins of the Sensis business, realize cost synergies with Sensis’s services and operations, retain all of Sensis existing customers and employees, and Sensis may not be able to effectively market our Thryv product to Australian customers. If we are unable to successfully manage the new business, we will not be able to generate sufficient revenue to offset the acquisition costs that we have incurred which could have a material adverse effectQuarterly Report on ~~our financial position and results of operations.~~

~~Recent or potential future acquisitions may subject us to significant risks, any of which could harm our business.~~

Our long-term strategy has included in the past, and may continue to include in the future, identifying and acquiring suitable candidates on acceptable terms. In particular, over time, we may acquire providers of product offerings that complement our business.

~~Acquisitions include a number of risks and present financial, managerial and operational challenges, including but not limited to:~~

~~• diversion of management attention from running our existing business;~~

~~• increased expenses, including, but not limited to, legal, administrative and compensation expenses;~~

~~• retaining key personnel of an acquired company;~~

~~• increased costs to integrate the technology, personnel, customer base and business practices of the acquired business;~~

~~• our ability to integrate the businesses successfully and efficiently and to obtain the expected benefits of the transactions;~~

~~• our ability to obtain financing~~Form 10-Q for the ~~acquisition;~~

~~• assuming the legal obligations of the acquired company, including potential exposure to material liabilities not discovered in the due diligence; and~~

~~• ineffective or inadequate control, procedures and policies at the acquired company may negatively impact our results of operations.~~

Any acquired business could significantly under-perform relative to our expectations and may not achieve the benefits we expect on a timely basis or at all. Given that our resources are limited, our decision to pursue a transaction has opportunity costs; accordingly, if we pursue a particular transaction, we may need to forgo the prospect of entering into other transactions that could help us achieve our strategic objectives.

Expansion of our operations to, and offering our services in, markets outside of the U.S. subjects us to political, economic, legal, operational and other risks that could have a material adverse effect on our business, results of operations, financial condition, cash flows and reputation.

We are continuing to expand our operations by offering our products and services in Australia, and may expand to additional markets outside of the U.S. in the future, which increases our exposure to the inherent risks of doing business in international markets. Depending on the market, these risks include those relating to:

~~• changes in local economic environment;~~

~~• political instability;~~

~~• trade regulations;~~

~~• intellectual property legal protections;~~

~~• procedures and actions affecting pricing, reimbursement and marketing of our products and services;~~

~~• fluctuations in foreign currency rates;~~

~~• additional U.S. and foreign taxes;~~

~~• changes in local laws or regulations, or interpretation or enforcement thereof;~~

~~• potentially longer ramp-up times for offering our services; and~~

~~• data and privacy regulations.~~

~~Issues relating to the failure to comply with applicable non-U.S. laws, requirements or restrictions may also impact our domestic business and/or raise scrutiny on our domestic practices.~~

Additionally, some factors that will be critical to the success of our international business and operations will be different than those affecting our domestic business and operations. For example, conducting international operations requires us to devote significant management resources to implement our controls and systems in new markets, to comply with local laws and regulations, including to fulfill financial reporting requirements, and to overcome the numerous new challenges inherent in managing international operations.

Any expansion of our international operations through acquisitions or through organic growth could increase these risks. Additionally, while we may invest material amounts of capital and incur significant costs in connection with the growth and development of our international operations, including to start up or acquire new businesses, we may not be able to operate them profitably on the anticipated timeline, or at all.

~~These risks could have a material adverse effect on our business, results of operations, financial condition, cash flows and could materially harm our reputation.~~quarter ended March 31, 2021.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

4248

Item 6. Exhibits

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


Exhibit No.						Description
2.1						Share Purchase Agreement (incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K, filed with the Securities and Exchange Commission on March 2, 2021)
3.1						Fourth Amended and Restated Certificate of Incorporation of Thryv Holdings, Inc. (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-8 filed on September 24, 2020)
3.2						Second Amended and Restated Bylaws of Thryv Holdings, Inc. (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-8 filed on September 24, 2020)
~~10.22~~						Term Loan Credit Agreement by and among Thryv Holdings, Inc., Thryv, Inc., the Lenders party thereto from time to time and Wells Fargo Bank, National Association, as Administrative Agent, dated as of March 1, 2021 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed, with the SEC on March 2, 2021).
~~10.23~~						Fifth Amendment to Amended and Restated Credit Agreement, First Amendment to Guaranty and Security Agreement and Joinder, among Thryv Holdings, Inc., Thryv, Inc. and the other borrowers from time to time party thereto, the Lenders from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent, dated as of March 1, 2021 (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed, with the SEC on March 2, 2021).
31.1*						Certification of Principal Executive Officer pursuant to Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*						Certification of Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**						Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**						Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*						Inline XBRL Taxonomy Extension Schema Document.
101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB*						Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF*						Inline XBRL Taxonomy Extension Definition Linkbase Document
104						The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~March 31,~~June 30, 2021, formatted in Inline XBRL (included in Exhibits 101).

*Filed herewith ~~as an Exhibit~~

** Furnished herewith

4349

SIGNATURES

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


THRYV HOLDINGS, INC.

~~May 13,~~August 11, 2021	By:	/s/ Joseph A. Walsh
		Joseph A. Walsh Chief Executive Officer and President
		(Principal Executive Officer)


~~May 13,~~August 11, 2021	By:	/s/ Paul D. Rouse
		Paul D. Rouse Chief Financial Officer, Executive Vice President and Treasurer
		(Principal Financial Officer)

4450