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 ~~June 30, 2021~~March 31, 2022

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	The Nasdaq ~~Capital~~Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No 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 ~~August 9, 2021,~~May 3, 2022, there w ~~there wer~~e ~~33,865,449~~ ere 34,238,639 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 and Comprehensive Income for the Three a ~~nd S~~ix Months Ended ~~June~~March 3 01 , ~~2021~~202 2 and ~~2020~~202 1 (unaudited)	3
	~~Condensed~~ Consolidated ~~Statements~~Balance Sheets as of ~~Comprehensive Income~~ ~~for the Three~~ Marc ~~and Six~~ ~~Months Ended~~ ~~June~~h 3 01 , ~~2021~~202 2 (unaudited) and ~~2020 (unaudited)~~December 31, 2021	4
	~~Condensed~~ Consolidated ~~Balance Sheets as~~Statements of Changes in Stockholders' Equity for the Three ~~June~~Months Ended March 3 01 , ~~2021~~202 2 and ~~December 31, 2020~~202 1 (unaudited)	5
	~~Condensed~~ Consolidated Statements of ~~Changes in Stockholders' Equity~~Cash Flows for the ~~Three~~ ~~and Six~~ Three Months Ended ~~June~~March 3 01 , ~~2021~~202 2 and ~~2020~~20 21 (unaudited)	6
	~~Condensed Consolidated Statements of Cash Flows for the~~ ~~Six~~ ~~Months Ended~~ ~~June~~ 3 0 ~~, 2021 and 2020 (unaudited)~~	8
	Notes to ~~Condensed~~ Consolidated Financial Statements (unaudited)	107
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2923
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4735
Item 4.	Controls and Procedures	4736

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	4836
Item 1A.	Risk Factors	4836
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4836
Item 3.	Defaults Upon Senior Securities	4837
Item 4.	Mine Safety Disclosures	4837
Item 5.	Other Information	4837
Item 6.	Exhibits	4938
	Signatures	5039

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

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

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

•our ability to maintain profitability;

•our ability to manage our growth effectively;

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

•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 ~~“Risk Factors”~~Risk Factors in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 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 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)~~Comprehensive Income

(unaudited)


		Three Months Ended				Six Months Ended					Three Months Ended March 31,
		June 30,				June 30,
		2021		2020		2021		2020
(in thousands, except share and per share data)										(in thousands, except share and per share data)	2022		2021
Revenue	Revenue	$	291,047	$	303,612	$	571,653	$	622,182	Revenue	$	308,375	$	280,606
Cost of services	Cost of services	112,607		110,605		210,767		228,581		Cost of services	110,519		98,160
Gross profit	Gross profit	178,440		193,007		360,886		393,601		Gross profit	197,856		182,446

Operating expenses:	Operating expenses:									Operating expenses:
Sales and marketing	Sales and marketing	87,394		79,105		163,934		168,397		Sales and marketing	93,955		76,540
General and administrative	General and administrative	33,100		44,194		74,379		93,756		General and administrative	52,194		41,279
Impairment charges		3,611		18,132		3,611		18,230

Total operating expenses	Total operating expenses	124,105		141,431		241,924		280,383		Total operating expenses	146,149		117,819

Operating income	Operating income	54,335		51,576		118,962		113,218		Operating income	51,707		64,627
Other income (expense):	Other income (expense):									Other income (expense):
Interest expense	Interest expense	(14,502)		(13,426)		(26,109)		(28,206)		Interest expense	(13,108)		(11,607)
Interest expense, related party	Interest expense, related party	(4,668)		(4,586)		(8,733)		(9,736)		Interest expense, related party	(1,759)		(4,065)
Other components of net periodic pension benefit (cost)	Other components of net periodic pension benefit (cost)	272		(936)		725		(1,137)		Other components of net periodic pension benefit (cost)	70		453
Other expense		(2,966)		0		(4,059)		0
Income before (provision) for income taxes		32,471		32,628		80,786		74,139
(Provision) for income taxes		(8,112)		(21,164)		(19,921)		(34,573)
Other income (expense), net										Other income (expense), net	6,222		(1,093)
Income before income tax expense										Income before income tax expense	43,132		48,315
Income tax expense										Income tax expense	(9,621)		(11,809)
Net income	Net income	$	24,359	$	11,464	$	60,865	$	39,566	Net income	$	33,511	$	36,506
Other comprehensive income (loss):										Other comprehensive income (loss):
Foreign currency translation adjustment										Foreign currency translation adjustment	5,448		(2,967)
Comprehensive income										Comprehensive income	$	38,959	$	33,539

Net income per common share:	Net income per common share:									Net income per common share:
Basic	Basic	$	0.72	$	0.36	$	1.82	$	1.24	Basic	$	0.98	$	1.10
Diluted	Diluted	$	0.66	$	0.34	$	1.72	$	1.15	Diluted	$	0.88	$	1.07

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	33,622,666		31,435,941		33,367,734		32,007,114		Basic	34,159,979		33,108,422
Diluted	Diluted	36,687,030		33,803,465		35,352,445		34,414,996		Diluted	37,957,685		34,013,480

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)~~Balance Sheets

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


(in thousands, except share data)	March 31, 2022		December 31, 2021
Assets	(unaudited)
Current assets
Cash and cash equivalents	$	21,446	$	11,262
Accounts receivable, net of allowance of $17,702 in 2022 and $17,387 in 2021	305,729		279,053
Contract assets, net of allowance of $59 in 2022 and $88 in 2021	4,062		5,259
Taxes receivable	15,248		14,711
Prepaid expenses	43,112		22,418
Indemnification asset	24,746		24,346
Other current assets	14,572		13,596
Total current assets	428,915		370,645
Fixed assets and capitalized software, net	49,965		50,938
Goodwill	673,713		671,886
Intangible assets, net	77,457		82,577
Deferred tax assets	108,912		90,565
Other assets	30,753		33,891
Total assets	$	1,369,715	$	1,300,502

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	16,433	$	8,610
Accrued liabilities	146,350		131,813
Current portion of unrecognized tax benefits	30,171		29,771
Contract liabilities	61,471		51,726
Current portion of long-term debt	70,000		70,000
Other current liabilities	18,114		15,214
Total current liabilities	342,539		307,134
Term Loan, net	375,422		309,672
Term Loan, related party	60,902		142,875
ABL Facility	62,975		39,929
Pension obligations, net	132,456		140,167
Deferred tax liabilities	7,374		10,798
Other liabilities	31,606		35,212
Total long-term liabilities	670,735		678,653
Commitments and contingencies (see Note 13)	0		0
Stockholders' equity
Common stock - $0.01 par value, 250,000,000 shares authorized; 60,913,663 shares issued and 34,228,121 shares outstanding at March 31, 2022; and 60,830,853 shares issued and 34,145,311 shares outstanding at December 31, 2021	609		608
Additional paid-in capital	1,087,054		1,084,288
Treasury stock - 26,685,542 shares at March 31, 2022 and December 31, 2021	(468,879)		(468,879)
Accumulated other comprehensive income (loss)	(2,599)		(8,047)
Accumulated deficit	(259,744)		(293,255)
Total stockholders' equity	356,441		314,715
Total liabilities and stockholders' equity	$	1,369,715	$	1,300,502

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)~~

June 30, 2021 December 31, 2020
Assets
Current assets
Cash and cash equivalents $ 15,785 $ 2,406
Accounts receivable, net of allowance of $21,450 and $33,030 312,457 296,570
Contract assets, net of allowance of $157 and $338 8,415 10,975
Taxes receivable 1,890 9,229
Prepaid expenses and other current assets 36,370 26,172
Indemnification asset 25,190 24,346
Total current assets 400,107 369,698
Fixed assets and capitalized software, net 76,315 89,044
Goodwill 678,793 609,457
Intangible assets, net 123,907 31,777
Deferred tax assets 106,069 93,099
Other assets 26,944 21,902
Total assets $ 1,412,135 $ 1,214,977
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 30,024 $ 8,927
Accrued liabilities 168,602 139,613
Current portion of unrecognized tax benefits 30,615 30,022
Contract liabilities 32,233 18,942
New Term Loan, current 70,000 0
Other current liabilities 12,898 9,896
Total current liabilities 344,372 207,400
New Term Loan, net 365,189 —
New Term Loan, related party 154,697 —
Senior Term Loan, net — 335,683
Senior Term Loan, related party — 113,482
ABL Facility 58,022 79,238
Leaseback obligations 0 54,798
Pension obligations, net 174,217 190,827
Deferred tax liabilities 1,179 508
Other liabilities 44,756 36,266
Total long-term liabilities 798,060 810,802
Commitments and contingencies (see Note 13) 0 0
Stockholders' equity
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 1,076,124 1,059,624
Treasury stock - 26,678,410 shares at June 30, 2021 and December 31, 2020 (468,613) (468,613)
Accumulated other comprehensive income (loss) (4,445) 0
Accumulated deficit (333,967) (394,832)
Total stockholders' equity 269,703 196,775
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 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 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 23,731 — 2,024 — — — — 2,024
Exercise of stock warrants 561,789 6 13,675 — — — — 13,681
Stock compensation expense — — 1,921 — — — — 1,921
Cumulative translation adjustment — — — — — (1,478) — (1,478)
Net income — — — — — — 24,359 24,359
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 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 March 31, 2020 57,463,943 $ 574 $ 1,009,001 (25,805,102) $ (459,732) $ 0 $ (515,951) $ 33,892
Purchase of treasury stock — — — (829,696) (8,856) — — (8,856)
Net income — — — — — 11,464 11,464
Balance as of June 30, 2020 57,463,943 $ 574 $ 1,009,001 (26,634,798) $ (468,588) $ 0 $ (504,487) $ 36,500


Three Months Ended March 31, 2022
	Common Stock					Treasury Stock
(in thousands, except share amounts)	Shares	Amount		Additional Paid-in Capital		Shares	Amount		Accumulated Other Comprehensive Income (Loss)		Accumulated (Deficit)		Total Stockholders' Equity
Balance as of December 31, 2021	60,830,853	$	608	$	1,084,288	(26,685,542)	$	(468,879)	$	(8,047)	$	(293,255)	$	314,715
Exercise of stock options	82,810	1		838		—	—		—		—		839
Stock compensation expense	—	—		1,928		—	—		—		—		1,928
Cumulative translation adjustment	—	—		—		—	—		5,448		—		5,448
Net income	—	—		—		—	—		—		33,511		33,511
Balance as of March 31, 2022	60,913,663	$	609	$	1,087,054	(26,685,542)	$	(468,879)	$	(2,599)	$	(259,744)	$	356,441


Three Months Ended March 31, 2021
	Common Stock					Treasury Stock
(in thousands, except share amounts)	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)	$	—	$	(394,832)	$	196,775
Exercise of stock options	215,544	2		(3,096)		—	—		—		—		(3,094)
Exercise of stock warrants	111	—		5		—	—		—		—		5
Stock compensation expense	—	—		1,971		—	—		—		—		1,971
Cumulative translation adjustment	—	—		—		—	—		(2,967)		—		(2,967)
Net income	—	—		—		—	—		—		36,506		36,506
Balance as of March 31, 2021	59,806,077	$	598	$	1,058,504	(26,678,410)	$	(468,613)	$	(2,967)	$	(358,326)	$	229,196

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
Thryv Holdings, Inc. and Subsidiaries

Consolidated Statements of Cash Flows


	Three Months Ended March 31,
(in thousands)	2022		2021
Cash Flows from Operating Activities	(unaudited)		(unaudited)
Net income	$	33,511	$	36,506
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	21,969		19,718
Amortization of debt issuance costs	1,441		433
Deferred income taxes	(5,671)		(13,249)
Provision for credit losses and service credits	5,467		6,546
Stock-based compensation expense	1,928		1,971
Other components of net periodic pension (benefit)	(70)		(453)
Loss on foreign currency exchange rates	1,077		835
Bargain purchase gain	(7,297)		—
Other	1,440		320
Changes in working capital items, excluding acquisitions:
Accounts receivable	(12,361)		26,846
Contract assets	1,285		1,446
Prepaid expenses and other assets	(6,920)		(10,998)
Accounts payable and accrued liabilities	(9,775)		(57,861)
Other liabilities	3,303		2,144
Net cash provided by operating activities	29,327		14,204

Cash Flows from Investing Activities
Additions to fixed assets and capitalized software	(3,999)		(3,668)

Acquisition of a business, net of cash acquired	(22,003)		(174,190)

Net cash (used in) investing activities	(26,002)		(177,858)

Cash Flows from Financing Activities
Proceeds from Term Loan	—		418,070
Proceeds from Term Loan, related party	—		260,930
Payments of Term Loan	(15,444)		—
Payments of Term Loan, related party	(2,056)		—
Payments of Senior Term Loan	—		(335,821)
Payments of Senior Term Loan, related party	—		(113,789)
Proceeds from ABL Facility	302,374		249,936
Payments of ABL Facility	(279,327)		(285,492)
Proceeds from exercises of stock options and stock warrants	839		1,560
Other	—		(3,598)
Net cash provided by financing activities	6,386		191,796

Effect of exchange rate changes on cash and cash equivalents	541		(707)
Increase in cash and cash equivalents and restricted cash	10,252		27,435
Cash and cash equivalents and restricted cash, beginning of period	13,557		2,406
Cash and cash equivalents and restricted cash, end of period	$	23,809	$	29,841

Supplemental Information
Cash paid for interest	$	11,966	$	17,286
Cash paid for income taxes, net	$	15,421	$	15,753

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)~~

Six Months Ended June 30,
2021 2020
Cash Flows from Operating Activities
Net income $ 60,865 $ 39,566
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 49,626 75,429
Amortization of debt issuance costs 1,930 534
Deferred income taxes (51,439) (42,150)
Provision for credit losses 292 22,436
Provision for service credits 8,719 17,197
Stock-based compensation expense (benefit) 3,892 (5,484)
Other components of net periodic pension (benefit) cost (725) 1,137
Loss on termination of leaseback obligations 3,409 0
(Gain) loss on disposal/write-off of fixed assets and capitalized software (44) 3,491
Impairment charges 3,611 18,230
Non-cash (gain) loss from remeasurement of indemnification asset (844) 4,418
Loss on foreign currency exchange rates 640 0
Other, net (17) 0
Changes in working capital items, excluding acquisitions:
Accounts receivable 70,491 (28,791)
Contract assets 2,402 (2,050)
Prepaid expenses and other assets (7,567) 3,177
Accounts payable and accrued liabilities (51,133) (67,064)
Accrued income taxes, net 3,258 64,821
Operating lease liability (2,407) (3,482)
Contract liabilities (13,157) (3,544)
Net cash provided by operating activities 81,802 97,871
Cash Flows from Investing Activities
Additions to fixed assets and capitalized software (14,315) (12,975)
Proceeds from the sale of building and fixed assets 63 1,502
Acquisition of a business, net of cash acquired (174,190) 0
Net cash (used in) investing activities (188,442) (11,473)
Cash Flows from Financing Activities
Proceeds from New Term Loan 418,070 0
Proceeds from New Term Loan, related party 260,930 0
Payments of New Tern Loan (62,089) 0
Payments of New Term Loan, related party (25,911) 0
Payments of Senior Term Loan (335,821) (45,090)
Payments of Senior Term Loan, related party (113,789) (20,300)
Proceeds from ABL Facility 545,809 606,455
Payments of ABL Facility (567,025) (596,969)
Purchase of treasury stock 0 (30,626)
Other 3,305 (191)
Net cash provided by (used in) financing activities 123,479 (86,721)

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” or the “Company”) provides small-to-medium sized businesses (“SMBs”) with print and digital marketing services and Software as a Service (“SaaS”) business management tools. The Company owns and operates Print Yellow Pages (“PYP” or “Print”) and digital marketing services (“Digital”), which includes Internet Yellow Pages (“IYP”) ~~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 January, 21, 2022, the Company acquired Vivial Media Holdings, Inc. (“Vivial”), a marketing and advertising company with operations in the United States. Additionally, on March 1, 2021, the Company completed the acquisition of Sensis Holding Limited (“~~Sensis~~Thryv Australia”), a provider of marketing solutions serving SMBs in Australia.

The Company reports its results based on 3 reportable segments (see Note 15, Segment Information):

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

•SaaS, which includes the Company's flagship SMB end-to-end customer experience platform; and

•Thryv International, which is comprised of the Thryv Australia business, Australia's leading provider of marketing solutions serving SMBs, and SaaS business management tools for 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”). The ~~condensed~~ consolidated financial statements have been prepared pursuant to the rules and regulations of the ~~SEC~~Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, certain information and disclosures normally included in the complete financial statements prepared in accordance with U.S. GAAP have been ~~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 ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ have been prepared on the same basis as the audited annual financial statements. The ~~condensed~~ consolidated balance sheet as of December 31, ~~2020~~2021 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.~~2021.

~~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 June 30, 2021 and 2020. Additionally, the Company reclassified 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 June 30, 2020~~ ~~(in thousands)~~:

Three Months Ended June 30, 2020
As Reported Adjustments As Adjusted
Cost of services $ 91,974 $ 18,631 $ 110,605
Sales and marketing 65,811 13,294 79,105
General and administrative 38,513 5,681 44,194
Impairment charges 18,132 0 18,132
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.~~obligations. Significant estimates are also used in determining the recoverability and fair value of fixed assets and capitalized software, operating lease right-of-use assets, goodwill and intangible assets.

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~~adoption of ~~foreign currency to the Company’s significant accounting policies~~ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and ~~the change related to income taxes,~~Contract Liabilities from Contracts with Customers” (“ASU 2021-08”), 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 ~~June 30, 2021~~March 31, 2022 as compared to the significant accounting policies included in the Company's ~~2020~~Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2021 (“2021 Form 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~~amount shown in the Company's ~~condensed~~ consolidated statements of cash flows for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 and ~~2020 (in thousands~~):2021:

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.


(in thousands)	March 31, 2022		March 31, 2021		December 31, 2021
Cash and cash equivalents	$	21,446	$	29,841	$	11,262
Restricted cash, included in Other current assets	2,363		—		2,295
Total Cash and cash equivalents and restricted cash	$	23,809	$	29,841	$	13,557

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~~Other income (expense), ~~net”~~net in the Company's ~~condensed~~ consolidated statements of operations and comprehensive ~~income.~~income (loss).

~~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.~~Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In ~~December 2019,~~October 2021, the ~~Financial Accounting Standards Board (“~~FASB”) issued ~~Accounting Standards Update (“~~ASU~~”) 2019-12,~~ ~~Simplifying~~ 2021-08, which requires companies to recognize and measure contract assets and contract liabilities acquired in a business combination, in accordance with 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~~revenue recognition guidance, as if the ~~general principles~~acquirer had entered into the original contract at the same time, and on the same terms, as the acquiree. Generally, this will result in ~~Topic 740~~the acquirer recognizing contract assets 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.liabilities at the same amounts recorded by the acquiree as of the acquisition date. Under the current standard, an acquirer generally recognizes such items at fair value on the acquisition date. The Company adopted ASU ~~2019-12~~2021-08 on January 1, ~~2021. The adoption of ASU 2019-12 did not have a material impact on~~2022 and applied it to the ~~Company's condensed consolidated financial statements.~~contract assets and liabilities acquired from Vivial.

128

Note 2 Acquisitions

~~Sensis~~Vivial Acquisition

On January 21, 2022 (the “Vivial Acquisition Date”), the Company acquired Vivial, a marketing and advertising company, for $22.0 million in cash (net of $8.5 million of cash acquired), subject to certain adjustments (the “Vivial Acquisition”). The assets acquired as part of these transactions consisted primarily of $26.4 million in current assets and $9.8 million in fixed and intangible assets, consisting primarily of customer relationships and technology assets, $15.3 million in deferred tax assets, along with a $7.3 million bargain purchase gain. The acquisition is expected to result in a bargain purchase gain in part because the seller was motivated to divest its marketing services business that is in secular decline. The Company also assumed liabilities of $24.2 million, consisting primarily of accounts payable and accrued liabilities. The assessment of fair value of assets acquired and liabilities assumed is preliminary and is based on information that was available to management at the time these consolidated financial statements were prepared. The finalization of the Company’s acquisition accounting assessment could result in changes in the valuation of assets acquired and liabilities assumed, which could be material.

The Company accounted for the Vivial Acquisition using the acquisition method of accounting in accordance with Accounting Standards Codification 805, Business Combinations (“ASC 805”). This requires that the assets acquired and liabilities assumed are measured at fair value. With the assistance of a third-party valuation firm, the Company determined, using Level 3 inputs (see Note 4, Fair Value Measurements), the fair value of certain assets and liabilities, including fixed assets and intangible assets by applying the income approach and the cost approach. Specific to intangible assets, client relationships were valued using a combination of the income and excess earnings approach, whereas trade names were valued using a relief of royalty method and assumptions related to Vivial’s assets acquired and liabilities assumed. The preliminary purchase price allocation is expected to be finalized within 12 months after the Vivial Acquisition Date.

The fair values of fixed assets, intangible assets and other assets acquired and liabilities assumed have been prepared on a preliminary basis with information currently available and are subject to change. Management is still reviewing the characteristics and assumptions related to Vivial’s assets acquired and liabilities assumed.

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


(in thousands)
Current assets	$	26,388
Fixed and intangible assets	9,759
Deferred tax assets	15,314
Other assets	2,052
Current liabilities	(22,948)
Other liabilities	(1,264)
Bargain purchase gain	(7,297)
Fair value allocated to net assets acquired, net of bargain purchase gain	$	22,004

The deferred tax asset primarily relates to excess carryover tax basis over book basis in intangibles as a result of the assessment of the fair value of the assets and liabilities assumed using the acquisition method of accounting.

The Vivial Acquisition contributed $23.3 million in revenue and $0.8 million in net income since the Vivial Acquisition Date.

Thryv Australia Acquisition

On March 1, 2021 (the “Thryv AustraliaAcquisition Date”), Thryv Australia Holdings Pty ~~Ltd.~~Ltd (formerly Thryv Australia Pty Ltd) (“Buyer”), an Australian proprietary limited company and a direct wholly-owned subsidiary of Thryv International 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”),~~Thryv Australia, a private limited company incorporated under the laws of England and Wales, and its subsidiaries (collectively, the “~~Sensis~~Thryv Australia Acquisition”). The ~~Sensis~~Thryv Australia Acquisition expanded the Company's market share with a broader

geographical footprint. Additionally, the ~~Sensis~~Thryv Australia Acquisition provided the Company with a significant increase in clients. ~~Sensis~~Thryv Australia 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~~Thryv Australia Acquisition, the Company paid consideration of approximately ~~$215.0~~$216.2 million in cash, subject to customary closing adjustments, financed by ~~a New~~the Term Loan (as defined in Note 8)8, Debt Obligations) that was entered into on the Thryv Australia 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 and comprehensive income. Additionally, as part of the effort to fund the ~~Sensis~~Thryv Australia Acquisition, the Company incurred debt issuance costs of $4.2 million related to ~~a New~~the Term Loan, of which $2.5 million iswas capitalized and is being amortized using the effective interest method. See ~~“Note~~Note 8, Debt Obligations~~Debt Obligations.”~~.

The Company accounted for the ~~Sensis~~Thryv Australia Acquisition using the acquisition method of accounting in accordance with ~~Accounting Standards Codification 805,~~ ~~Business Combinations (~~“ASC ~~805~~”).805. This requires that the assets acquired and liabilities assumed beare measured at fair value. ~~The~~With the assistance of a third-party valuation firm, the Company determined, using Level 3 inputs (see Note 4, Fair Value Measurements), the fair value of certain assets and liabilities, including fixed assets, intangible assets, and ~~financing obligations and deferred revenue,~~contract liabilities, 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 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.

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 Thryv Australia Acquisition ~~Date (in thousands~~):Date:


(in thousands)
Total cash consideration	$	~~214,984~~216,164
Total purchase consideration, as allocated below:	$	~~214,984~~216,164

Cash and cash equivalents	$	40,794
Accounts receivable and other current assets	~~88,529~~72,404
Other assets	~~9,367~~34,962
Fixed assets and capitalized software	~~40,957~~18,856
Intangible assets:
Client relationships ~~(useful~~(estimated useful life of 3.5 years)	101,839
Trademarks ~~(useful~~(estimated useful life of 3.5 years)	24,877
Accounts payable	~~(31,163)~~(15,038)
Accrued liabilities	~~(40,713)~~(41,724)
Contract liabilities	(27,075)
Other current liabilities	(6,733)
Deferred tax liabilities	~~(42,121)~~(35,884)
Other liabilities	~~(15,505)~~(15,506)
Total identifiable net assets	$	~~143,053~~151,772
Goodwill	~~71,931~~64,392
Total net assets acquired	$	~~214,984~~216,164

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 ~~$71.9~~$64.4 million was primarily related to the benefits expected from the ~~Sensis~~Thryv Australia Acquisition and was allocated to the Thryv International segment. The goodwill recognized is not deductible for income tax purposes.

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

Pro Forma Results

The pro forma ~~condensed~~ combined financial information presented below was derived from the historical financial records of Thryv and ~~Sensis~~Thryv Australia and presents the operating results of the combined Company, as if the ~~Sensis~~Thryv Australia 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~~Thryv Australia 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~~):achieve:

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Revenue $ 321,162 $ 368,598 $ 639,914 $ 727,802
Net income 45,816 24,651 98,231 37,724


	Three Months Ended March 31,
(in thousands) (unaudited)	2021
Revenue	$	318,752
Net income	52,415

Note 3 Revenue Recognition

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

Disaggregation of Revenue

The Company presents disaggregated revenue based on the type of service within its segment footnote. During the three months ended March 31, 2022, the Company adjusted the disaggregated service revenue methodology it uses to manage the business. The three months ended March 31, 2022 and 2021 reflect the current methodology. See ~~“Note~~Note 15, Segment ~~Information.”~~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 ~~June 30,~~March 31, 2022, the Company recognized Revenue of $12.9 millionthat was recorded in Contract liabilities as of December 31, 2021. For the three months ended March 31, 2021, the Company recognized ~~revenue~~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 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 ~~June 30,~~March 31, 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 ~~$5.7~~$2.2 million~~and $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.~~operations and comprehensive income. During the three months ended March 31, 2022, the Company did not recognize any pandemic credits.

Note 4 Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to ~~transfer~~settle a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair ~~value.~~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~~Other than the value of the indemnification asset described below, during the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ there were no transfers between levels in the fair value hierarchy.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

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

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Indemnification Asset

On June 30, 2017, the Company completed the acquisition of YP Holdings, Inc. (the “YP Acquisition”). As further discussed in Note 13, Contingent Liabilities, as part of the YP Acquisition agreement, the Company is indemnified for an uncertain tax position for up to the fair value of ~~1.8 million~~1,804,715 shares held in escrow, subject to certain contract limitations (the “~~Indemnification~~indemnification asset”). Due to an increase in the Company’s common stock share ~~prices~~price as of ~~June 30, 2021~~,March 31, 2022, the number of shares expected to be returned byto seller is ~~0.7 million,~~880,032, 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 June 30, 2021 and 2020,~~ ~~(in thousands):~~

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

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the fair value of the Company's Level 1 indemnification asset was ~~$25.2~~$24.7 million and $24.3 million, respectively. A ~~$0.8~~gain of $0.4 million ~~gain related to~~from the change in fair value of the Company’s Level 1 indemnification asset during the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 was recorded in General and administrative expense on the Company's ~~condensed~~ consolidated statements of ~~operations.~~operations and comprehensive income.

~~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.~~Benefit Plan Assets

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.~~”Pensions.

At June 30, 2020, the fair value associated with the Company's liability classified stock-based compensation awards totaled $49.5 million, of which $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 June 30, 2020 was primarily associated with a decrease in the Company's share fair value.

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

~~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 June 30, 2021 and 2020~~ ~~(in thousands)~~:

2021 2020
Balance as of January 1 (1)
$ 0 $ 43,026
Exercise of stock options 0 (224)
Change in fair value 0 (9,087)
Amortization of grant date fair value 0 3,603
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.

Stock-based compensation expense of $1.9 million and $3.9 million recognized during the three and six months ended 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 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)8, Debt Obligations) and financing obligations to approximate their respective fair values due to their short-term nature and approximation of interest rates to market rates. These fair value measurements are considered Level 2. See ~~“Note~~Note 8, Debt Obligations~~Debt Obligations.”~~.

The ~~New Term Loan and the Senior~~ Term Loan (as defined in Note 8)8, Debt Obligations) ~~are~~is carried at amortized cost; however, the Company estimates the fair value of ~~each term loan~~the 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~~Note 8, Debt Obligations~~Debt Obligations.”~~.

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

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


	March 31, 2022				December 31, 2021
(in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Term Loan, net	$	506,324	$	513,919	$	522,547	$	533,651

Note 5 Goodwill and Intangible Assets

Goodwill

The following ~~table sets~~tables set forth the changes in the carrying amount of goodwill for the Company for ~~six~~three months ended ~~June 30,~~March 31, 2022 and the year ended December 31, 2021(~~in thousands)~~:


		Marketing Services		SaaS		Thryv International		Total
(in thousands)										(in thousands)	Marketing Services		SaaS		Thryv International		Total
Balance as of December 31, 2020	Balance as of December 31, 2020	$	390,573	$	218,884	$	0	$	609,457	Balance as of December 31, 2020	$	390,573	$	218,884	$	—	$	609,457
Sensis Acquisition		0		0		71,931		71,931
Thryv Australia Acquisition										Thryv Australia Acquisition	—		—		64,392		64,392
Effects of foreign currency translation	Effects of foreign currency translation	0		0		(2,595)		(2,595)		Effects of foreign currency translation	—		—		(1,963)		(1,963)
Balance as of June 30, 2021		$	390,573	$	218,884	$	69,336	$	678,793
Balance as of December 31, 2021										Balance as of December 31, 2021	$	390,573	$	218,884	$	62,429	$	671,886
Effects of foreign currency translation										Effects of foreign currency translation	—		—		1,827		1,827
Balance as of March 31, 2022										Balance as of March 31, 2022	$	390,573	$	218,884	$	64,256	$	673,713

Intangible Assets

The following tables set forth the details of the Company's intangible assets as of March 31, 2022~~June 30, 2021~~ and December 31, ~~2020(in thousands of $)~~2021:


		As of June 30, 2021										As of March 31, 2022
		Gross		Accumulated Amortization		Effects of Foreign Currency Translation		Net		Weighted Average Remaining Amortization Period in Years
(in thousands)											(in thousands)	Gross		Accumulated Amortization		Effects of Foreign Currency Translation		Net		Weighted Average Remaining Amortization Period in Years
Client relationships	Client relationships	$	803,641	$	720,886	$	3,126	$	79,629	3.3	Client relationships	$	805,095	$	(757,153)	$	1,259	$	49,201	2.5
Trademarks and domain names	Trademarks and domain names	225,177		181,050		785		43,342		2.4	Trademarks and domain names	225,377		(200,118)		403		25,662		1.7
Patented technologies	Patented technologies	19,600		19,600		0		0		0.0	Patented technologies	19,600		(19,600)		—		—		0.0
Covenants not to compete	Covenants not to compete	1,954		1,018		0		936		2.0	Covenants not to compete	4,436		(1,842)		—		2,594		2.3
Total intangible assets	Total intangible assets	$	1,050,372	$	922,554	$	3,911	$	123,907	3.0	Total intangible assets	$	1,054,508	$	(978,713)	$	1,662	$	77,457	2.2

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


	As of December 31, 2021
(in thousands)	Gross		Accumulated Amortization		Effects of Foreign Currency Translation		Net		Weighted Average Remaining Amortization Period in Years
Client relationships	$	803,642	$	(748,460)	$	(5,326)	$	49,856	2.7
Trademarks and domain names	225,177		(193,978)		(1,389)		29,810		1.9
Patented technologies	19,600		(19,600)		—		—		0.0
Covenants not to compete	4,373		(1,462)		—		2,911		2.6
Total intangible assets	$	1,052,792	$	(963,500)	$	(6,715)	$	82,577	2.4

Amortization expense for intangible assets for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 was ~~$21.0~~$13.1 million and ~~$30.9 million, respectively. Amortization expense for the and~~ ~~three and six months ended June 30, 2020~~ ~~was $28.9 million and $57.8~~$9.9 million, respectively.

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


Fiscal Year		Estimated Future Amortization Expense
2021		$	42,200
(in thousands)				(in thousands)	Estimated Future Amortization Expense
2022	2022	50,835		2022	$	40,097
2023	2023	21,926		2023	23,923
2024	2024	8,946		2024	12,714
2025				2025	723
Total	Total	$	123,907	Total	$	77,457

Note 6 Allowance for Credit Losses

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


		2021		2020
(in thousands)						(in thousands)	2022		2021
Balance as of January 1	Balance as of January 1	$	33,368	$	26,828	Balance as of January 1	$	17,475	$	33,368
Sensis Acquisition, balance as of March 1, 2021		2,733		—
Acquisitions						Acquisitions	—		2,733
Additions (1)	Additions (1)	292		22,436		Additions (1)	3,239		2,018
Deductions (2)	Deductions (2)	(14,787)		(12,635)		Deductions (2)	(2,953)		(3,318)
Balance as of June 30 (3)		$	21,606	$	36,629
Balance as of March 31 (3)						Balance as of March 31 (3)	$	17,761	$	34,801

(1) For the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, represents provision for bad debt expense of ~~$0.3~~$3.2 million and $2.0 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 ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and~~ ~~2020~~, represents amounts written off as uncollectible, net of recoveries.

(3) As of ~~June 30, 2021, $21.4~~March 31, 2022, $17.7 million of the allowance is attributable to Accounts receivable and ~~$0.2~~$0.1 million is attributable to Contract assets. As of ~~June 30, 2020, $36.2~~March 31, 2021, $34.6 million of the allowance is attributable to Accounts receivable and ~~$0.4~~$0.2 million is attributable to Contract assets.

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

Note 7 Accrued Liabilities

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

June 30, 2021 December 31, 2020
Accrued salaries and related expenses $ 50,779 $ 53,844
Accrued severance 872 2,280
Accrued taxes 48,571 26,209
Accrued expenses 63,398 51,284
Accrued service credits 4,982 5,996
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 June 30, 2020, severance expense included employee separation charges of $4.0 million recorded as a result of COVID-19. During the six months ended June 30, 2020, the severance expense includes employee termination charges of $5.0 million recorded as a result of COVID-19. As of June 30, 2020, this restructuring is complete.

~~The following tables set forth additional information related to severance payments made by the Company during the periods presented~~ ~~(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


(in thousands)	March 31, 2022		December 31, 2021
Accrued salaries and related expenses	$	63,231	$	58,440
Accrued severance	470		1,720
Accrued taxes	24,416		17,660
Accrued expenses	55,424		51,224
Accrued service credits	2,809		2,769
Accrued liabilities	$	146,350	$	131,813

Note 8 Debt Obligations

The following table sets forth the Company's outstanding debt obligations as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~ ~~(in thousands)~~:2021:

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


(in thousands)	Maturity	Interest Rate		March 31, 2022		December 31, 2021
Term Loan	March 1, 2026	LIBOR +	8.5%	$	524,500	$	542,000
ABL Facility (Fifth Amendment)	March 1, 2026	3-month LIBOR +	3.0%	62,975		39,929
Unamortized original issue discount and debt issuance costs				(18,176)		(19,453)
Total debt obligations				$	569,299	$	562,476
Current portion of Term Loan				(70,000)		(70,000)
Total long-term debt obligations				$	499,299	$	492,476

~~(1)~~ ~~Net of original issue discount costs of $19.6 million and debt issuance costs of $2.5 million, as of 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~~Term Loan credit agreement (the “~~New~~ Term Loan”). The proceeds of the ~~New~~ Term Loan were used to finance the ~~Sensis~~Thryv Australia Acquisition, refinance in full the Company's existing term loan facility (the “Senior Term Loan”), and pay fees and expenses related to the ~~Sensis~~Thryv Australia 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%~~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 Company defines a related party as any shareholder owning more than 5% of the Company's voting securities. As of March 31, 2022, 13.9% of the Term Loan was held by related parties who are equity holders of the Company.

The Term Loan Facility matures on March 1, 2026 and borrowings under the Term Loan Facility 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 existing lenders as a modification. The transaction with other lenders party to only the 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.~~operations and comprehensive income. 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~~were 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.~~operations and comprehensive income. 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 incurred by Thryv, Inc., the Company’s operating subsidiary, is secured by all the assets of Thryv, Inc., certain of its subsidiaries and the Company, and is guaranteed by the Company and certain of its subsidiaries.

In accordance with the ~~New~~ Term Loan and the Senior Term Loan, the Company recorded interest expense with related parties for the three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ of ~~$4.7~~$1.8 million and ~~$4.6 million, respectively, and for the six months ended June 30, 2021 and 2020 of $8.7 million and $9.7~~$4.1 million, respectively.

The Company has recorded accrued interest of ~~$3.4~~$4.9 million and ~~$8.5~~$3.4 million, as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. Accrued interest is included in Other current liabilities on the Company's ~~condensed~~ consolidated balance sheets.

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.

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 ended June 30, 2021).~~quarter. As of ~~June 30, 2021,~~March 31, 2022, 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 Facility”). The ABL Amendment was entered into in order to permit the ~~term loan~~Senior Term Loan refinancing, the ~~Sensis~~Thryv Australia 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~~Thryv Australia Acquisition as borrowers and guarantors, and establish an Australian borrowing base; and

•make certain other conforming changes consistent with the Term Loan ~~Agreement.~~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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company had debt issuance costs with a remaining balance of ~~$3.1~~$2.6 million and ~~$2.5~~$2.7 million, respectively. These debt issuance costs are included in Other assets on the Company's ~~condensed~~ consolidated balance sheets.

As of ~~June 30, 2021,~~March 31, 2022, the Company had borrowing capacity of ~~$77.7~~ $68.9 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, (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 ~~June 30, 2021~~,March 31, 2022, 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, 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 l~~oss 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 June 30, 2021 and December 31, 2020~~ ~~(in thousands):~~

June 30, 2021 December 31, 2020
Non-cash residual value of Tucker, Georgia lease $ 0 $ 54,676
Future maturities associated with the Tucker, Georgia failed
sale-leaseback liability 0 862
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)~~:plans:

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


	Three Months Ended March 31,
(in thousands)	2022		2021
Interest cost	$	3,418	$	2,616
Expected return on assets	(3,488)		(2,890)
Settlement (gain)	—		(15)
Remeasurement (gain)	—		(164)
Net periodic pension (benefit)	$	(70)	$	(453)

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

During the three ~~and six~~ months ended ~~June 30,~~March 31, 2022, the Company made cash contributions of $7.5 million to the qualified plans and contributions and associated payments of $0.1 millionto the non-qualified plans. During the three months ended March 31, 2021, the Company made cash contributions of ~~$10.0 million and $15.0~~$5.0 million to the qualified plans, and contributions and associated payments of ~~$0.2 million and~~ ~~$0.9 million~~ to the non-qualified plans. During the three and six months ended June 30, 2020, the Company made cash contributions of $12.2 million and $15.8 million to the qualified plans, and contributions and associated payments of $0.2 million and $0.7 million to the non-qualified plans.

For the fiscal year ~~2021,~~2022, the Company expects to contribute approximately $25.0 million to the qualified plans and approximately ~~$1.4~~$1.1 million to the non-qualified plans.

Note 10 Stock-Based Compensation and Stockholders' Equity

Stock Options

During the ~~six~~three months ended ~~June 30,~~March 31, 2022, the Company issued an aggregate of 82,810 shares of common stock to employees upon the exercise of options previously granted under the 2016 and 2020 Stock Incentive Plan(s) at exercise prices ranging from $3.68 to $13.82 per share.

During the three months ended March 31, 2021, the Company issued an aggregate of ~~239,275~~ 215,544 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.

Stock-based compensation expense ~~(benefit)~~ recognized for stock option awards was $1.6

million and ~~$3.2~~$1.7 million during thethree ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 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. ~~149,865~~NaN shares were issued through the ESPP during the three ~~and six~~ months ended ~~June 30, 2021~~. ~~The stock-based~~March 31, 2022 or 2021. Stock-based compensation expense recognized for the ESPP was $0.4 million and ~~$0.7~~$0.3 million during the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 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 during the three and six months ended June 30, 2020,~~ recognized by the Company in the following line items in the Company's ~~condensed~~ consolidated statements of operations and comprehensive income during the periods ~~presented~~ ~~(in thousands)~~:presented:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020
(in thousands)										(in thousands)	2022		2021
Cost of services	Cost of services	$	83	$	70	$	164	$	(246)	Cost of services	$	76	$	81
Sales and marketing	Sales and marketing	794		213		1,626		(319)		Sales and marketing	769		832
General and administrative	General and administrative	1,044		297		2,102		(4,919)		General and administrative	1,083		1,058
Stock-based compensation expense (benefit)		$	1,921	$	580	$	3,892	$	(5,484)
Stock-based compensation expense										Stock-based compensation expense	$	1,928	$	1,971

Stock Warrants

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company had ~~9.4 million and 10.5 million~~9,432,064 fully vested outstanding ~~warrants, respectively.~~warrants. As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the holders of such warrants are entitled to purchase, in the aggregate, up to ~~5.2 million and 5.8 million~~5,240,035 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 June 30, 2021,~~These warrants expire on August 15, 2023.

NaN ~~1,011,224 and 1,011,424 warrants, respectively, were exercised. NaN~~ warrants were exercised during the three ~~and six~~ months ended 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 for a total purchase price of $12.6 million. On~~ March ~~10, 2020, the Company repurchased approximately 0.8 million shares of its outstanding common stock, for a total purchase price of $9.2 million.~~31, 2022. 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 0 share repurchases during the three ~~and six~~ months ended ~~June 30, 2021.~~

March 31, 2021, 200 warrants were
exercised.

2418

On May 3, 2022, the Compensation Committee of the Company’s Board of Directors approved a form of award agreement (the “RSU Award Agreement”) for grants of restricted stock units (“RSUs”) and a form of award agreement (the “PSU Award Agreement”) for grants of performance-based restricted stock units (“PSUs”), each under the Company’s 2020 Incentive Award Plan (the “2020 Plan”). Pursuant to the RSU Award Agreement, each RSU will entitle the recipient to one share of the Company’s common stock, subject to time-based vesting conditions that will be set forth in individual agreements. Pursuant to the PSU Award Agreement, each PSU will entitle the recipient to one share of the Company’s common stock, subject to performance-based vesting conditions that will be set forth in individual agreements.

Note 11 Earnings per Share

The following table sets forth the calculation of basic and diluted earnings per share for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020~~ ~~(in thousands, except share and per share amounts~~):2021:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020
(in thousands, except share and per share amounts)										(in thousands, except share and per share amounts)	2022		2021
Basic net income per share:	Basic net income per share:									Basic net income per share:
Net income	Net income	$	24,359	$	11,464	$	60,865	$	39,566	Net income	$	33,511	$	36,506
Weighted-average common shares outstanding during the period	Weighted-average common shares outstanding during the period	33,622,666		31,435,941		33,367,734		32,007,114		Weighted-average common shares outstanding during the period	34,159,979		33,108,422
Basic net income per share	Basic net income per share	$	0.72	$	0.36	$	1.82	$	1.24	Basic net income per share	$	0.98	$	1.10


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020
(in thousands, except share and per share amounts)										(in thousands, except share and per share amounts)	2022		2021
Diluted net income per share:	Diluted net income per share:									Diluted net income per share:
Net income	Net income	$	24,359	$	11,464	$	60,865	$	39,566	Net income	$	33,511	$	36,506

Basic shares outstanding during the period	Basic shares outstanding during the period	33,622,666		31,435,941		33,367,734		32,007,114		Basic shares outstanding during the period	34,159,979		33,108,422
Plus: Common stock equivalents associated with stock option awards	Plus: Common stock equivalents associated with stock option awards	3,064,364		2,367,524		1,984,711		2,407,882		Plus: Common stock equivalents associated with stock option awards	3,797,706		905,058
Diluted shares outstanding	Diluted shares outstanding	36,687,030		33,803,465		35,352,445		34,414,996		Diluted shares outstanding	37,957,685		34,013,480
Diluted net income per share	Diluted net income per share	$	0.66	$	0.34	$	1.72	$	1.15	Diluted net income per share	$	0.88	$	1.07

The computation of diluted shares outstanding for the three months ended March 31, 2022 excluded 33,092 ESPP shares, as their effect would have been anti-dilutive. NaN outstanding stock options or stock warrants were excluded from 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 0.4 million outstanding stock options, less than 0.1 million of ESPP shares, and 10.5 million of outstanding stock warrants, as their effect would have been anti-dilutive. March 31, 2022.The computation of diluted shares outstanding for the ~~both the~~ three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2021 excluded ~~4.6 million~~388,892 shares under outstanding stock options, 36,940 ESPP shares, and ~~10.5 million of~~10,458,655 shares under stock warrants, as their effect would have been anti-dilutive.

Note 12 Income Taxes

The Company’s effective tax rate (“ETR”) was ~~25.0% and 24.7%~~22.3% for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022, and ~~64.9% and 46.6%~~24.4% for the ~~for the~~ three ~~and six~~ months ended ~~June 30, 2020.~~March 31, 2021. The Company's ETR differs from the 21.0% U.S. Federal statutory rate primarily due to our geographic mix of taxable income in various tax jurisdictions and permanent tax differences ~~and discrete items recorded in each~~attributable to the net impact of ~~the respective periods.~~non-U.S. taxing jurisdictions.

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the ~~amount~~Company had $20.7 million and $20.8 million, respectively, 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,~~that if recognized, would ~~affect~~impact the ~~Company's~~ effective tax ~~rate if realized.~~rate. As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company had ~~$9.2~~$10.0 million and ~~$8.4~~$9.6 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 ~~$21.6~~$20.2 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.

The Company establishes reserves for the estimated losses on specific contingent liabilities for regulatory and legal actions where the Company deems a loss to be probable and the amount of the loss can be reasonably estimated. In other instances, losses are considered probable, but the Company is not able to make a reasonable estimate of the liability because of the uncertainties related to the outcome or the amount or range of potential loss. For these matters, disclosure is made, 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 and comprehensive income, balance sheets or cash flows.

Section 199 and Research and Development Tax ~~Case:~~Case

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

The IRS has challenged the Company's positions. With respect to the tax years 2012 through June 2015 for the YP LLC partnership, the IRS sent 90-day notices to DexYP on August 29, 2018. In response, the Company filed three petitions (in the names of various related partners) in U.S. Tax Court, and the IRS filed answers to those petitions. The three cases were consolidated by the court and were referred back to IRS Administrative Appeals for settlement negotiations, during which time the litigation iswas suspended. The appeals conference for YP ~~will likely occur in the third quarter of 2021.~~is scheduled for May 9-10, 2022. In advance of the IRS Appeals conference, the parties ~~did reach~~reached an agreement regarding additional research and development tax credits for the tax years at issue whereby the IRS will allow more tax credits than were originally claimed on the tax returns. With respect to the tax year from July to December 2015 for the Print Media LLC partnership, the Company was recently unsuccessful in its attempt to negotiate a settlement with IRS Administrative Appeals, and the ~~government~~IRS issued a 90-day notice to the Company. The Company filed a petition in the U.S. Tax Court to challenge the IRS denial.

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company has reserved approximately ~~$32.7~~$32.3 million and $31.9 million, respectively, in connection with the 199 disallowance and less than $0.1 million ~~and $0.2 million, respectively,~~ related to the research and development tax credit disallowance. ~~The increase in the reserve balance is primarily attributable to additional interest accrued during the second quarter of 2021.~~ Pursuant to the YP Acquisition agreement, the Company is entitled to (i) a ~~dollar for dollar~~dollar-for-dollar indemnification for the research and development tax liability, and (ii) a ~~dollar for dollar~~dollar-for-dollar indemnification for the 199-tax liability after the Company pays the first $8.0 million in liability. The indemnification asset, 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~~liability. The balance of the ~~YP Acquisition. The value of that escrowed stock~~indemnification asset is ~~estimated to be approximately $25.2~~$24.7 million and $24.3 million at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, 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 reserve~~d ~~$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 June 30, 2021.~~

New York Sales, Excise, and Use Tax ~~Audit:~~ 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 ~~$2.8~~$3.3 million for the total combined exposure for the ~~respective~~ period, which is accrued on the Company's ~~condensed~~ consolidated balance sheet as of ~~June 30, 2021~~.March 31, 2022.

2620

Ohio Use Tax Audit

In November 2021, the Company received a notice from the Ohio Department of Taxation Audit Division requesting to schedule an audit of the Ohio use tax records for the period of October 1, 2015 through September 30, 2021. The Company has reserved $1.3 millionfor this period, which is accrued on the Company’s consolidated balance sheets as of March 31, 2022.

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 ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021:

~~Accumulated Foreign Currency Translation Adjustments~~

~~Beginning balance at January 1, 2021~~

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

~~(4,445)~~

~~Ending balance at June 30, 2021~~

~~(4,445)~~


	Accumulated Foreign Currency Translation Adjustment
(in thousands)	2022		2021
Beginning balance at January 1	$	(8,047)	$	—
Foreign currency translation adjustment, net of tax expense of $1.1 million and $1.0 million, respectively	5,448		(2,967)
Ending balance at March 31	$	(2,599)	$	(2,967)

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~~The Company 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~~ As of January 1, 2022, the ~~six months ended June 30, 2021,~~Company's Chief Executive Officer, who is also the ~~Company adjusted its methodology of classifying certain revenue between products of its SaaS segment. The three~~chief operating decision maker (“CODM”), began including gross profit by segment in the Company's reporting to assess segment performance and ~~six months ended June 30, 2021, and 2020 reflect~~allocate resources. As such, gross profit by segment has been added to the current ~~methodology.~~and comparative prior period.

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

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


		Three Months Ended June 30, 2021									Three Months Ended March 31, 2022
		Marketing Services		SaaS		Thryv International		Total
(in thousands)										(in thousands)	Marketing Services		SaaS		Thryv International		Total
Revenue	Revenue	$	202,795	$	41,386	$	46,866	$	291,047	Revenue	$	212,533	$	47,343	$	48,499	$	308,375
Segment EBITDA		82,684		(2,119)		16,188		96,753
Segment Gross profit										Segment Gross profit	136,510		29,409		31,937		197,856
Segment Adjusted EBITDA										Segment Adjusted EBITDA	66,395		(4,364)		21,686		83,717

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

Six Months Ended June 30, 2021
Marketing Services SaaS Thryv International Total
Revenue $ 430,728 $ 78,637 $ 62,288 $ 571,653
Segment EBITDA 181,315 (1,803) 22,174 201,686


		Six Months Ended June 30, 2020									Three Months Ended March 31, 2021
		Marketing Services		SaaS		Thryv International		Total
(in thousands)										(in thousands)	Marketing Services		SaaS		Thryv International		Total
Revenue	Revenue	$	559,049	$	63,133	$	0	$	622,182	Revenue	$	227,933	$	37,251	$	15,422	$	280,606
Segment EBITDA		222,690		8,224		0		230,914
Segment Gross profit										Segment Gross profit	156,161		23,167		3,118		182,446
Segment Adjusted EBITDA										Segment Adjusted EBITDA	98,631		316		5,986		104,933

2721

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

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


	Three Months Ended March 31,
(in thousands)	2022		2021
Income before income tax expense	$	43,132	$	48,315
Interest expense	14,867		15,672
Depreciation and amortization	21,969		19,718
Other components of net periodic pension (benefit)	(70)		(453)
Loss on early extinguishment of debt	—		299
Restructuring and integration expenses	5,827		9,234
Transaction costs (1)	1,720		10,546
Stock-based compensation expense	1,928		1,971
(Gain) from remeasurement of indemnification asset	(400)		—
Other	(5,256)		(369)
Total Segment Adjusted EBITDA	$	83,717	$	104,933

(1)During the three and six months ended 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. During the ~~three and six months ended June 30, 2020~~, the Company incurred a total of $4.0 million and $7.3 million of severance expense, respectively, of which $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~~Vivial Acquisition, Thryv Australia 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)~~:indicated:

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Marketing Services
PYP $ 93,753 $ 139,160 $ 206,664 $ 276,547
IYP 61,004 69,321 125,099 144,267
SEM 32,202 40,951 66,634 90,659
Other 15,836 22,895 32,331 47,576
Total Marketing Services 202,795 272,327 430,728 559,049
SaaS
Thryv Platform 26,798 24,263 52,698 49,531
Thryv Add-ons 14,588 7,022 25,939 13,602
Total SaaS 41,386 31,285 78,637 63,133
Thryv International
PYP 15,231 0 20,944 0
IYP 18,361 0 24,931 0
SEM 6,030 0 8,031 0
Other 7,235 0 8,373 0
Thryv Platform 6 0 6 0
Thryv Add-ons 3 0 3 0
Total Thryv International 46,866 0 62,288 0
Total Revenue $ 291,047 $ 303,612 $ 571,653 $ 622,182


	Three Months Ended March 31,
(in thousands)	2022		2021
Marketing Services
Print	$	97,906	$	112,911
Digital	114,627		115,022
Total Marketing Services	212,533		227,933
SaaS	47,343		37,251
Thryv International
Print	21,500		5,713
Digital	26,164		9,709
SaaS	835		—
Total Thryv International	48,499		15,422
Total Revenue	$	308,375	$	280,606

2822

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 ~~$202.8~~$212.5 million and ~~$272.3~~$227.9 million of consolidated ~~total~~ revenues for the three months ended ~~June 30,~~March 31, 2022 and 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” or “Print”), which carry the “The Real Yellow Pages” tagline, and other digital marketing services (“Digital”), which includes 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~~consisting of online display and social advertising, online presence, and video and search engine optimization (“SEO”) tools.

Our SaaS segment generated ~~$41.4~~$47.3 million and ~~$31.3~~$37.3 million of consolidated ~~total~~ revenues for the three months ended ~~June 30,~~March 31, 2022 and 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~~Thryv® Small Business Platform is a SaaS ~~offerings include~~offering comprised of a multi-product, cloud-based business solution that enables small businesses to deliver an exceptional end-to-end client experience, while running an efficient and well-organized business. The Thryv®~~, our flagship SMB end-to-end~~ Small Business Platform enables customers to achieve faster and more sustainable growth. SMB’s have the ability to customize the platform experience to match their individual business objectives and goals. At its core, the Thryv® SaaS solution is a robust and customizable customer ~~experience platform,~~relationship management (“CRM”) tool. Supporting the entire CRM is a suite of robust functions including scheduling, document organization, social media management, online reputation tools, online presence tools, estimating, invoicing and ~~Thryv Add-Ons. Thryv Add-Ons, include an automated lead generation service that fully~~payment solutions. Within the payment solution, Thryv® integrates with ~~our Thryv platform, website development, SEO tools, Google My~~a variety of other popular name-brand payment providers in addition to its proprietary processor – ThryvPaySM. ThryvPaySM is uniquely integrated within the Thryv® Small Business ~~optimization, and~~Platform. It also includes an optional multi-location utility, Hub by ThryvSM~~. An additional add-on, ThryvPay~~SM, ~~is our own branded payment solution that allows users~~which enables multi-location businesses and emerging franchises the ability to ~~get paid via credit card~~centrally command 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~~control many individual Thryv® Small Business Platform licenses from a ~~seamless user experience for our end-users and drive higher engagement within the Thryv Platform while also producing incremental revenue growth.~~single admin panel.

Our Thryv International segment is comprised of Thryv Australia Pty Ltd (formerly Sensis Pty ~~Ltd~~Ltd) (“~~Sensis~~Thryv Australia”), which the Company acquired on March 1, 2021 (the “~~Sensis~~Thryv Australia Acquisition”). ~~Sensis~~Thryv Australia is Australia’s leading provider of marketing solutions serving SMBs. The ~~Sensis~~Thryv Australia Acquisition brings under the Thryv banner more than 100,000 existing ~~Sensis~~Thryv Australia clients, many of which we believe are ideal candidates for the Thryv platform. Our Thryv International segment generated ~~$46.9~~$48.5 million and ~~$62.3~~$15.4 million of consolidated ~~total~~ revenues for the three ~~and four~~ months ended ~~June 30,~~March 31, 2022 and the one month ended March 31, 2021, respectively.

Our expertise in delivering solutions for our client base is rooted in our deep history of serving SMBs. In ~~2021,~~2022, 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.

On January 21, 2022 (the “Vivial Acquisition Date”), the Company acquired Vivial Media Holdings, Inc. (“Vivial”), a marketing and advertising company, for $22.0 million in cash, subject to certain adjustments.

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 on the business operations of certain ~~SMBs.~~SMBs, especially during 2020 and to a lesser extent during 2021. 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 ~~six~~three months ended ~~June 30,~~March 31, 2022 and 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. Marketing Services segment revenue decreased by $69.5 million, or 25.5%, during the three months ended June 30, 2021 as compared to the corresponding period in 2020, and $128.3 million, or~~ ~~23.0%~~, during the six months ended 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 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. 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.operate.

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 cases in Australia have remained relatively low since the initial outbreak and the impact to our clients has been minimal as most have continued to remain open for business 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 ~~$0.8 million and $3.0~~ $2.2 million reduction in revenue for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 ~~respectively,~~ ~~compared to a reduction in revenue of $5.7 million and $6.4 million for the three and six months ended June 30, 2020, respectively~~. R~~equests~~Requests for incentives continued to decline in ~~the first half of~~ 2021 ~~and the majority of~~as clients ~~who accepted incentives in 2020 have~~ resumed normal contractual terms and pricing. As of ~~June 30,~~April 1, 2021, we ~~have~~ virtually discontinued providing pandemic credits and accepting client requests to pause search campaigns due to the COVID-19 pandemic. ~~All~~Effective April 1, 2021, 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.~~During the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022, 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 June 30, 2020, we recognized severance expenses of $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 $2.0 million and $5.1 million recorded to allowance for credit losses for the three and six months ended June 30, 2020. No incremental impact was recorded for the ~~three and six months ended 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 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 June 30, 2021,~~ we have continued to see trends similar to those experienced during the year ended December 31, ~~2020,~~2021, including an increase in demand for our SaaS solutions and a continuing decline in our Marketing Services business. The challenges we will 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 has on our current and prospective clients, including their ability and willingness to purchase our solutions. To date, the COVID-19 pandemic has not had a material impact on our operational performance, financial performance, or 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 “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~~consolidated revenue since launch. 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,~~Thryv Australia, Australia’s leading provider of marketing solutions serving SMBs. On January 21, 2022, we completed the acquisition of Vivial. 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~~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.


	As of March 31,
(in thousands)	2022	2021
Clients (1)
Marketing Services (2)	419	447
SaaS (3)	47	44
Total (4)	439	464

(1) Clients include total clients from all three of our business segments: Marketing Services, ~~Clients~~SaaS and Thryv International.

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

(3)

~~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 June 30,
2021 2020
(in thousands)
Clients
Marketing Services 284 349
SaaS 45 44
Total (1)
302 365

~~(1)~~(4)Total clients is less than the sum of the Marketing Services and SaaS, since clients that purchase both Marketing Services and SaaS products are counted in each category, but only counted once in the Total. 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 6528 thousand ~~or 19%,~~ as of ~~June 30, 2021~~March 31, 2022 as compared to ~~June 30, 2020.~~March 31, 2021. The decrease in Marketing Services clients was related to a secular decline to matters that impact our performance 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,~~spaces, particularly from large, well-capitalized businesses such as Google, Yelp and Facebook.

SaaS clients increased by 13 thousand ~~or 2%,~~ as of ~~June 30, 2021~~March 31, 2022 as compared to ~~June 30, 2020.~~March 31, 2021. This was the result of an 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. ~~We expect SaaS client growth during the remainder of fiscal 2021 as well continuing the trend towards higher SaaS ARPU (as defined below).~~

Total clients decreased by 6325 thousand ~~or 17%,~~ as of ~~June 30, 2021~~March 31, 2022 as compared to ~~June 30, 2020.~~March 31, 2021. 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 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 June 30, Six Months Ended June 30,
2021 2020 2021 2020
ARPU (Monthly)
Marketing Services $ 213 $ 220 $ 213 $ 224
SaaS 323 232 314 236
Total (1)
$ 248 $ 239 $ 246 $ 243


	Three Months Ended March 31,
	2022		2021
ARPU (Monthly)
Marketing Services (1)	$	184	$	201
SaaS (1)	352		304

(1)~~During the three and six months ended 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 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~~includes our SaaS and 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.~~clients.

Monthly ARPU for the Marketing Services segment decreased by ~~$7,~~$17, or 3%8%, for the three months ended ~~June 30, 2021~~March 31, 2022 compared to the three months ended ~~June 30, 2020, and $11, or 5%, for the six months ended June 30, 2021 compared to the six months ended June 30, 2020.~~March 31, 2021. 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 ~~$91,~~$48, or ~~39%~~16%, during the three months ended ~~June 30, 2021~~March 31, 2022 compared to the three months ended ~~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.~~March 31, 2021. 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. In addition, the sale of add-on features to our Thryv platform such as Thryv Leads and Thryv Pay contributed to ARPU growth.

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~~Individuals who register for, and use, multiple accounts across computer and mobile devices ~~which~~may be counted more than once and, as a result, 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 June 30,
2021 2020
(in thousands)
Monthly Active Users - SaaS
30 27


	As of March 31,
(in thousands)	2022	2021
Monthly Active Users - SaaS	36	31

Monthly active users increased by 35 thousand, or ~~11%~~16%, during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 compared to the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. The number of monthly active users increased 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~~Print and ~~digital~~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, Cost of services includes personnel-related expenses such as salaries, benefits, and stock-based compensation for our operations team, information technology expenses, non-capitalizable software and hardware purchases, and allocated overhead costs which includes ~~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, sales commissions paid to our inside and outside sales force and other expenses incurred by personnel within the sales, marketing, sales training, and client care departments. Additionally, Sales and marketing expense includes advertising costs such as media, promotional material, branding, online advertising, information technology expenses and allocated overhead costs which includes ~~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 information technology, finance and accounting, legal, internal audit, human resources, billing and receivables, and management personnel. In addition, general and administrative expense includes bad debt expense, non-recurring charges, and other corporate expenses such as professional fees, operating taxes, and insurance. General and administrative expense also includes allocated overhead costs which includes ~~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 benefit (cost), ~~(loss)~~and other expense, which includes a loss on ~~termination~~early extinguishment of ~~leaseback obligations,~~debt, and ~~other~~foreign currency-related 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 June 30,											Three Months Ended March 31,
		2021					2020 (1)						2022 (1)					2021 (2)
		(in thousands of $) (unaudited)											(unaudited)
		Amount			% of Revenue		Amount			% of Revenue
(in thousands of $)												(in thousands of $)	Amount			% of Revenue		Amount			% of Revenue
Revenue	Revenue	$	291,047		100	%	$	303,612		100	%	Revenue	$	308,375		100	%	$	280,606		100	%
Cost of services	Cost of services	112,607			38.7	%	110,605			36.4	%	Cost of services	110,519			35.8	%	98,160			35.0	%
Gross profit	Gross profit	178,440			61.3	%	193,007			63.6	%	Gross profit	197,856			64.2	%	182,446			65.0	%

Operating expenses:	Operating expenses:											Operating expenses:
Sales and marketing	Sales and marketing	87,394			30.0	%	79,105			26.1	%	Sales and marketing	93,955			30.5	%	76,540			27.3	%
General and administrative	General and administrative	33,100			11.4	%	44,194			14.6	%	General and administrative	52,194			16.9	%	41,279			14.7	%
Impairment charges		3,611			1.2	%	18,132			6.0	%

Total operating expenses	Total operating expenses	124,105			42.6	%	141,431			46.6	%	Total operating expenses	146,149			47.4	%	117,819			42.0	%

Operating income	Operating income	54,335			18.7	%	51,576			17.0	%	Operating income	51,707			16.8	%	64,627			23.0	%

Other income (expense):	Other income (expense):											Other income (expense):
Interest expense	Interest expense	(19,170)			(6.6)	%	(18,012)			(5.9)	%	Interest expense	(14,867)			4.8	%	(15,672)			5.6	%
Other components of net periodic pension benefit (cost)		272			0.1	%	(936)			(0.3)	%
Other expense		(2,966)			(1.0)	%	—			—	%
Income before (provision) for income taxes		32,471			11.2	%	32,628			10.7	%
(Provision) for income taxes		(8,112)			(2.8)	%	(21,164)			(7.0)	%
Other components of net periodic pension benefit												Other components of net periodic pension benefit	70			—	%	453			0.2	%
Other income (expense)												Other income (expense)	6,222			2.0	%	(1,093)			0.4	%
Income before income tax expense												Income before income tax expense	43,132			14.0	%	48,315			17.2	%
Income tax expense												Income tax expense	(9,621)			3.1	%	(11,809)			4.2	%
Net income	Net income	$	24,359		8.4	%	$	11,464		3.8	%	Net income	$	33,511		10.9	%	$	36,506		13.0	%
Other financial data:	Other financial data:											Other financial data:
Adjusted EBITDA(3)	Adjusted EBITDA(3)	$	96,753		33.2	%	$	118,135		38.9	%	Adjusted EBITDA(3)	$	83,717		27.1	%	$	104,933		37.4	%
Adjusted Gross Profit(4)	Adjusted Gross Profit(4)	$	195,340				$	211,709				Adjusted Gross Profit(4)	$	207,748				$	193,771
Adjusted Gross Margin(5)	Adjusted Gross Margin(5)	67.1		%			69.7		%			Adjusted Gross Margin(5)	67.4		%			69.1		%

(1)~~The~~ Consolidated results of operations includes Vivial's results of operations subsequent to the January 21, 2022 acquisition date.

~~three months ended June 30, 2020~~(2) ~~has been updated~~Consolidated results of operations includes Thryv Australia's results of operations subsequent to ~~include~~the March 1, 2021 acquisition date.

(3) 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.

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

(5) See “Non-GAAP Financial Measures” for a definition of ~~depreciation and amortization from a single line item in the condensed consolidated statements of operations to a component of~~Adjusted Gross ~~profit, Sales and marketing expense, and General and administrative expense.~~ Margin.

~~See Note 1 to our condensed consolidated financial statements included in Part I, Item 1 in this Quarterly Report for more information.~~

3528

Comparison of the Three Months Ended ~~June 30, 2021~~March 31, 2022 to the Three Months Ended ~~June 30, 2020~~March 31, 2021

Revenue

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


		Three Months Ended June 30,				Change					Three Months Ended March 31,				Change
		2021		2020		Amount		%			2022 (1)		2021 (2)		Amount		%

		(in thousands of $) (unaudited)
(in thousands of $)										(in thousands of $)	(unaudited)
Marketing Services	Marketing Services	$	202,795	$	272,327	$	(69,532)	(25.5)	%	Marketing Services	$	212,533	$	227,933	$	(15,400)	(6.8)	%
SaaS	SaaS	41,386		31,285		10,101		32.3	%	SaaS	47,343		37,251		10,092		27.1	%
Thryv International (1)		46,866		—		46,866		NM
Thryv International										Thryv International	48,499		15,422		33,077		214.5	%
Total revenue	Total revenue	$	291,047	$	303,612	$	(12,565)	(4.1)	%	Total revenue	$	308,375	$	280,606	$	27,769	9.9	%

(1)Marketing Services includes Vivial revenue subsequent to the January 21, 2022 acquisition date.

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

Total revenue ~~decreased~~increased by ~~$12.6~~$27.8 million, or ~~4.1%~~9.9%, for the three months ended ~~June 30, 2021 as~~March 31, 2022 compared to the three months ended ~~June 30, 2020.~~March 31, 2021. The ~~decrease~~increase in total ~~revenues~~revenue was driven ~~by a decrease in Marketing Services revenue of $69.5 million, partially offset~~ by an increase in SaaS revenue of $10.1 million, and Thryv International revenue of ~~$46.9~~$33.1 million, partially offset by a decrease in Marketing Services revenue of $15.4 million.

Marketing Services Revenue

Marketing Services revenue decreased by ~~$69.5~~$15.4 million, or ~~25.5%~~6.8%, for the three months ended ~~June 30, 2021~~March 31, 2022 compared to the three months ended ~~June 30, 2020.~~March 31, 2021.

Print revenue decreased by ~~$45.4~~$15.0 million, or ~~32.6%~~13.3%, for the three months ended ~~June 30, 2021 as~~March 31, 2022 compared to the three months ended ~~June 30, 2020. Secular~~March 31, 2021. The decrease was primarily driven by the secular decline in industry demand for ~~print~~Print services that resulted in a ~~26%~~24% decline in revenue compared to the three months ended ~~June 30, 2020, with the remaining decline primarily driven~~March 31, 2021, partially offset by publication timing differences caused by our ~~print~~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~~with a typical lifecycle of 15 months. The titles published during the three months ended ~~June 30, 2021~~March 31, 2022 are therefore different than the titles published during the three months ended ~~June 30, 2020.~~March 31, 2021 and represented more revenue than the titles published during the three months ended March 31, 2021. This ~~lifecycle difference should be considered when comparing period-over-period.~~decrease was further offset by an increase in print revenue as a result of the Vivial Acquisition.

Digital ~~services~~ revenue decreased by ~~$24.1~~$0.4 million, or ~~18.1%~~0.3%, for the three months ended ~~June 30, 2021 as~~March 31, 2022 compared to the three months ended ~~June 30, 2020. IYP revenue decreased by $8.3 million, or 12.0%,~~March 31, 2021. This decrease was primarily driven by a continued trending decline in the Company’s Marketing Services client ~~base. SEM revenue decreased by $8.7 million, or 21.4%, due to~~base and significant competition in the consumer search and display space, particularly from large, well-capitalized businesses such as Google, Yelp and Facebook. ~~Other~~This decrease was partially offset by an increase in digital ~~media solutions~~ revenue ~~decreased by $7.1 million, or 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.~~result of the Vivial Acquisition.

SaaS Revenue

SaaS revenue increased by $10.1 million, or ~~32.3%~~27.1%, for the three months ended ~~June 30, 2021 as~~March 31, 2022 compared to the three months ended ~~June 30, 2020.~~March 31, 2021. The increase was driven by increased demand for our Thryv ~~platform~~SaaS product as SMBs ~~have increased~~accelerate their ~~contact-less customer interactions~~move away from manual processes and ~~remote working capabilities due~~towards cloud platforms to ~~the COVID-19 pandemic,~~more efficiently manage and grow their businesses, 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~~less-engaged legacy SaaS clients that tend to have a higher churn rate.

Thryv International Revenue

Thryv International revenue was ~~$46.9~~$48.5 million and $15.4 million for the three months ended ~~June 30, 2021. Given that~~March 31, 2022 and the ~~Sensis~~one month ended March 31, 2021, respectively. As the Thryv Australia Acquisition was completed on March 1, 2021, no revenue was recognized for Thryv International during the ~~three~~two months ended ~~June 30, 2020.~~February 28, 2021. Thryv International revenue included print revenue of ~~$15.2~~$21.5 million ~~IYP~~, digital revenue of ~~$18.4~~$26.2 million ~~SEM~~and SaaS revenue of ~~$6.0~~$0.8 million ~~and other digital media solutions revenue of $7.2 million.~~

for the three months ended March 31, 2022.

Cost of Services

Cost of services increased by ~~$2.0~~$12.4 million, or ~~1.8%~~12.6%, for the three months ended ~~June 30, 2021 as~~March 31, 2022 compared to the three months ended ~~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.~~March 31, 2021. The increase was primarily attributable to ~~$30.6~~$17.4 million of ~~Thryv International~~additional Cost of services that ~~was~~were included in the three months ended ~~June 30, 2021, while none was included in~~March 31, 2022 as a result of the ~~three months ended June 30, 2020. This~~acquisitions of Thryv Australia and Vivial. The increase was partially offset by ~~a $28.5 million decrease in Cost of services, primarily driven by declining revenue and~~ strategic ~~cost saving~~cost-saving initiatives. Specifically, we reduced employee-related costs by $2.0 million and printing, distribution and digital and fulfillment support costs by ~~$10.0~~$1.4 million non-capitalized software and hardware purchases by $3.1 million, and employee related costs by $2.1 million. Additionally, allocated depreciation and amortization expense decreased by $13.3 million for the ~~three months ended June 30, 2021 compared to the three months ended June 30, 2020, due to the accelerated amortization method used by the Company~~.

Gross Profit

Gross profit ~~decreased~~increased by ~~$14.6~~$15.4 million, or ~~7.5%~~8.4%, for the three months ended ~~June 30, 2021 as~~March 31, 2022 compared to the three months ended ~~June 30, 2020.~~March 31, 2021. The ~~decrease~~increase in ~~gross~~Gross profit was primarily due to the ~~decline~~results of Thryv Australia, which was acquired on March 1, 2021, decreases in ~~total revenue, partially offset by decreases in~~employee-related costs, printing, distribution, and digital and fulfillment support costs and ~~depreciation and amortization expense.~~

growth in our SaaS segment, partially offset by the decline in Marketing Services revenue. Our gross margin decreased by ~~2.3 percentage~~80 basis points to ~~61.3%~~64.2% for the three months ended ~~June 30, 2021 as~~March 31, 2022 compared to ~~63.6%~~65.0% for the three months ended June 30, 2020. The 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.March 31, 2021.

Operating Expenses

Sales and Marketing

Sales and marketing expense increased by ~~$8.3~~$17.4 million, or ~~10.5%~~22.8%, for the three months ended ~~June 30, 2021 as~~March 31, 2022 compared to the three months ended ~~June 30, 2020. Sales and marketing expense as a percentage of revenue increased to 30.0% for the three months ended June 30, 2021 from 26.1% for the three months ended June 30, 2020.~~ March 31, 2021. The increase was primarily attributable to ~~$14.3~~$16.0 million of ~~Thryv International~~additional Sales and marketing expenses that ~~was~~were included in the three months ended ~~June 30, 2021, while none was included in~~March 31, 2022 as a result of the ~~three months ended June 30, 2020. This increase was partially~~ ~~offset by~~ ~~a $11.3 million decrease in Sales~~acquisitions of Thryv Australia and ~~marketing expense, primarily driven by declining revenue~~Vivial and ~~strategic cost saving initiatives, offset by~~ an increase in advertising and sales promotion expense of ~~$4.6 million~~. ~~Specifically~~, ~~we reduced~~ ~~contract services by $1.7 million and incurred~~ ~~lower sales commissions of $1.0~~$3.8 million, primarily ~~due~~driven by costs incurred to ~~our reduction in workforce.~~ ~~Additionally, allocated depreciation and amortization expense decreased by $8.6 million for~~promote the ~~three months ended June 30, 2021 compared to the three months ended June 30, 2020, due to the accelerated amortization method used by the Company.~~Thryv platform.

General and Administrative

General and administrative expense ~~decreased~~ increased by ~~$11.1~~$10.9 million, or ~~25.1%~~26.4%, for the three months ended ~~June 30, 2021~~March 31, 2022 compared to the three months ended ~~June 30, 2020.~~March 31, 2021. This ~~decrease~~ increasewas primarily ~~driven by lower bad debt expense~~attributable to $13.5 million of ~~$11.9 million and lower~~ ~~non-recurring charges of $3.9 million. Additionally, allocated depreciation and amortization expense decreased by $4.4 million for the~~ three months ended June 30, 2021 compared to the three months ended June 30, 2020, due to the accelerated amortization method used by the Company. These decreases were partially offset by $5.4 million of ~~Thryv International~~additional General and administrative expenses that ~~was~~were included in ~~the~~ ~~three months ended June 30, 2021, while none was included in the~~ ~~three months ended June 30, 2020.Additionally, we incurred higher employee related costs o~~f ~~$1.9 million~~ ~~and higher stock-based compensation expense of $0.7 million.~~

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

~~Impairment Charges~~

~~Impairment charges decreased by $14.5 million for~~ the three months ended ~~June 30, 2021 compared~~March 31, 2022 as a result of the acquisitions of Thryv Australia and Vivial and an increase in employee-related costs of $6.4 million. This increase was partially offset by a $8.8 million decrease in transaction costs related to the ~~three months ended June 30, 2020. Impairment charges~~Thryv International Acquisition, which occurred in the first quarter of ~~$3.6 million were incurred during the three months ended June 30, 2021~~2021.~~, while $18.1 million of impairment charges were recognized during the~~ ~~three months ended June 30, 2020.~~

~~Other Income (Expense)~~

Interest Expense

Interest expense ~~increased~~decreased by ~~$1.2~~$0.8 million, or ~~6.4%~~5.1%, for the three months ended ~~June 30, 2021~~March 31, 2022 compared to the three months ended ~~June 30, 2020,~~March 31, 2021 driven primarily ~~due to overall higher levels of indebtedness, which was partially offset~~ by lower ~~weighted average interest rates. The Company incurred interest expense~~outstanding debt balances, resulting from ~~related parties of $4.7 million for the three months ended June 30, 2021 as compared to $4.6 million for the three months ended June 30, 2020.~~payments made on long-term debt.

Other Components of Net Periodic Pension ~~Cost~~Benefit (Cost)

Other components of net periodic pension ~~cost~~benefit decreased by ~~$1.2~~$0.4 million, from ~~an expense~~a benefit of ~~$0.9~~$0.5 million during the three months ended ~~June 30, 2020~~March 31, 2021, to a benefit of ~~$0.3~~$0.1 million during ~~for~~ the three months ended ~~June 30, 2021.~~March 31, 2022. This ~~change~~decrease was primarily due to ~~lower~~higher interest expense of ~~$1.6~~$0.8 million, and a remeasurement ~~loss~~gain of ~~$0.7~~$0.2 million recognized during the three months ended ~~June 30, 2020, which~~March 31, 2021, while no remeasurement gain was recognized during the three months ended March 31, 2022, partially offset by a ~~lower~~higher expected return on assets of ~~$1.1~~$0.6 million.

Other Expense

During the three months ended ~~June 30,~~March 31, 2022, the Company incurred other income, net of $6.2 million, which primarily represents the $7.3 million bargain purchase gain as a result of the Vivial Acquisition. During the three months ended March 31, 2021, the Company incurred other expense of ~~$3.0~~$1.1 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 ~~income~~expense of ~~$0.1~~$0.8 million and a loss on early extinguishment of debt of $0.3 million.

~~(Provision) for~~ Income ~~Taxes~~Tax Expense

~~(Provision) for income taxes~~Income tax expense decreased by ~~$13.1~~$2.2 million, or ~~61.7%~~18.5%, for the three months ended ~~June 30, 2021~~March 31, 2022 compared to the three months ended ~~June 30, 2020.~~March 31, 2021. The ~~effective income tax rate~~ETR was ~~25.0%~~22.3% and ~~64.9%~~24.4% for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. The ETR differs from the 21.0% U.S. Federal statutory rate primarily due to our geographic mix of taxable income in various tax jurisdictions and permanent tax differences ~~and discrete items recorded in each~~attributable to the net impact of ~~the respective periods.~~non-U.S. taxing jurisdictions.

Adjusted EBITDA

Adjusted EBITDA decreased ~~by $21.4~~by $21.2 million, or ~~18.1%~~20.2%, ~~for~~for the three months ended ~~June 30, 2021~~March 31, 2022 as compared to the three months ended ~~June 30, 2020~~March 31, 2021. The decrease in Adjusted EBITDA was primarily driven by the ~~decrease~~secular decline in ~~total revenue, which was partially offset by declining costs as we continue to focus on cost reductions.~~industry demand for Print services. See ~~“Non-GAAP~~“Non-GAAP Financial ~~Measures”~~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 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 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 they provide useful information to investors in gaining an overall understanding of our current financial performance and ~~provides~~provide consistency and comparability with past financial performance. Specifically, we believe Adjusted EBITDA provides useful information to management and investors by excluding certain non-operating items that we believe are not indicative of our core operating results. In addition, Adjusted EBITDA, Adjusted Gross Profit, and Adjusted Gross Margin are used by management for budgeting and forecasting as well as measuring the Company’s performance. We believe Adjusted EBITDA, Adjusted Gross Profit, and Adjusted Gross Margin provide investors with the financial measures that closely align with our internal processes.

We define Adjusted EBITDA (“Adjusted EBITDA”) as Net income plus Interest expense, ~~(Benefit) provision for income taxes,~~Income tax expense, Depreciation and amortization expense, Loss on early extinguishment of debt, Restructuring and integration 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~~Net income (loss) 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).~~expense.

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

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020
(in thousands)										(in thousands)	2022		2021
Reconciliation of Adjusted EBITDA	Reconciliation of Adjusted EBITDA									Reconciliation of Adjusted EBITDA
Net income	Net income	$	24,359	$	11,464	$	60,865	$	39,566	Net income	$	33,511	$	36,506
Interest expense	Interest expense	19,170		18,012		34,842		37,942		Interest expense	14,867		15,672
Provision for income taxes		8,112		21,164		19,921		34,573
Income tax expense										Income tax expense	9,621		11,809
Depreciation and amortization expense	Depreciation and amortization expense	29,908		37,606		49,626		75,429		Depreciation and amortization expense	21,969		19,718
Loss on termination of leaseback obligations		3,110		—		3,409		—
Loss on early extinguishment of debt										Loss on early extinguishment of debt	—		299
Restructuring and integration expenses (1)	Restructuring and integration expenses (1)	3,489		7,347		12,723		17,192		Restructuring and integration expenses (1)	5,827		9,234
Transaction costs (2)	Transaction costs (2)	5,440		3,232		15,986		9,766		Transaction costs (2)	1,720		10,546
Stock-based compensation expense (benefit) (3)		1,921		580		3,892		(5,484)
Stock-based compensation expense (3)										Stock-based compensation expense (3)	1,928		1,971
Other components of net periodic pension (benefit) cost (4)	Other components of net periodic pension (benefit) cost (4)	(272)		936		(725)		1,137		Other components of net periodic pension (benefit) cost (4)	(70)		(453)
Non-cash (gain) loss from remeasurement of indemnification asset (5)		(844)		617		(844)		4,418
Impairment charges		3,611		18,132		3,611		18,230
Non-cash (gain) from remeasurement of indemnification asset (5)										Non-cash (gain) from remeasurement of indemnification asset (5)	(400)		—
Other (6)	Other (6)	(1,251)		(955)		(1,620)		(1,855)		Other (6)	(5,256)		(369)
Adjusted EBITDA	Adjusted EBITDA	$	96,753	$	118,135	$	201,686	$	230,914	Adjusted EBITDA	$	83,717	$	104,933

(1)For the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020~~2021, 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~~Vivial Acquisition, Thryv Australia 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, prior to October 1, 2020.~~ See ~~“Note~~Note 4, Fair Value ~~Measurements”~~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 (benefit) cost relates to the mark-to-market pension remeasurement.

(5)In connection with the YP Acquisition, the seller indemnified the Company for future potential losses associated with certain federal and state tax positions taken in tax returns filed by the seller prior to the acquisition date.

(6)Other primarily includes expenses related to potential non-income based tax liabilities. Additionally, during the three ~~and six~~ months ended ~~June 30, 2021~~,March 31, 2022, Other includes the bargain purchase gain as a result of the Vivial Acquisition and foreign ~~exchange related~~exchange-related expense.

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


		Three Months Ended June 30,							Three Months Ended March 31, 2022
		2021			2020
(in thousands)								(in thousands)	Marketing Services			SaaS			International			Consolidated
Reconciliation of Adjusted Gross Profit	Reconciliation of Adjusted Gross Profit							Reconciliation of Adjusted Gross Profit
Gross profit	Gross profit	$	178,440		$	193,007		Gross profit	$	136,510		$	29,409		$	31,937		$	197,856
Plus:	Plus:							Plus:
Depreciation and amortization expense	Depreciation and amortization expense	16,817			18,632			Depreciation and amortization expense	4,395			979			4,442			9,816
Stock-based compensation expense	Stock-based compensation expense	83			70			Stock-based compensation expense	61			15			—			76
Adjusted gross profit		$	195,340		$	211,709
Gross margin		61.3		%	63.6		%
Adjusted gross margin		67.1		%	69.7		%
Adjusted Gross Profit								Adjusted Gross Profit	$	140,966		$	30,403		$	36,379		$	207,748
Gross Margin								Gross Margin	64.2		%	62.1		%	65.9		%	64.2		%
Adjusted Gross Margin								Adjusted Gross Margin	66.3		%	64.2		%	75.0		%	67.4		%

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 %


	Three Months Ended March 31, 2021
(in thousands)	Marketing Services			SaaS			International			Consolidated
Reconciliation of Adjusted Gross Profit
Gross profit	$	156,161		$	23,167		$	3,118		$	182,446
Plus:
Depreciation and amortization expense	4,619			755			5,870			11,244
Stock-based compensation expense	70			11			—			81
Adjusted Gross Profit	$	160,850		$	23,933		$	8,988		$	193,771
Gross Margin	68.5		%	62.2		%	20.2		%	65.0		%
Adjusted Gross Margin	70.6		%	64.2		%	58.3		%	69.1		%

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 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. 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 debt agreements and market conditions.

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

Sources and Uses of Cash

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

Six Months Ended June 30, $
2021 2020 Change
(unaudited)
Cash flows provided by (used in):
Operating activities $ 81,802 $ 97,871 $ (16,069)
Investing activities (188,442) (11,473) (176,969)
Financing activities 123,479 (86,721) 210,200

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


	Three Months Ended March 31,				$
	2022		2021		Change
(in thousands)	(unaudited)
Cash flows provided by (used in):
Operating activities	$	29,327	$	14,204	$	15,123
Investing activities	(26,002)		(177,858)		151,856
Financing activities	6,386		191,796		(185,410)
Effects of exchange rate changes on Cash and cash equivalents	541		(707)		1,248
Increase in Cash and cash equivalents	$	10,252	$	27,435	$	(17,183)

Cash Flows from Operating Activities

Net cash provided by operating activities ~~decreased~~increased by ~~$16.1~~$15.1 million, or ~~16.4%~~106.5%, for the ~~six~~three months ended ~~June 30, 2021 as~~March 31, 2022 compared to the ~~six~~three months ended ~~June 30, 2020.~~

March 31, 2021. The ~~decrease~~increase in net cash provided by operating activities of ~~$16.1~~$15.1 million was ~~primarily du~~e primary due to lower restructuring and integration and transaction cost payments of $9.6 million related 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 additionVivial Acquisition on January 1, 2022 compared to the ~~overall decline~~Thryv Australia Acquisition on March 1, 2021. Additionally, the increase in ~~revenue. The change in~~net cash ~~flows from~~provided by operating activities was ~~also affected~~driven by ~~higher income tax payments of $26.5 million and~~ lower interest payments of ~~$2.1 million.~~$5.3 million during the three months ended March 31, 2022 compared to the three months ended March 31, 2021, partially offset by changes in working capital.

Cash Flows from Investing Activities

Net cash used in investing activities ~~increased~~decreased by ~~$177.0~~$151.9 million, or ~~1,542.5%~~85.4%, for the ~~six~~three months ended ~~June 30, 2021 as~~March 31, 2022 compared to the ~~six~~three months ended ~~June 30, 2020.~~

March 31, 2021. The ~~increase~~decrease in net cash used in investing activities of ~~$177.0~~$151.9 million was primarily due to the difference in the cash paid of $174.2 million in connection with the ~~Sensis~~Thryv Australia Acquisition on March 1, ~~2021. The increase in net~~2021, compared to the cash ~~used was also driven by an increase~~paid of ~~$1.3~~$22.0 million in ~~capitalized expenditures. Additionally, during~~connection with the ~~six months ended June 30, 2020, the Company received~~ ~~proceeds from the sales of buildings and other fixed assets of $1.4 million, compared to proceeds of $0.1 million received during the~~ ~~six months ended June 30, 2021.~~Vivial Acquisition on January 21, 2022.

Cash Flows from Financing Activities

Net cash from financing activities ~~increased~~decreased by ~~$210.2~~$185.4 million, or ~~242.4%~~96.7%, for the ~~six~~three months ended ~~June 30, 2021 as~~March 31, 2022 compared to the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. The ~~increase in cash flow from financing activities was 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~~decrease in net cash from financing activities of ~~$210.2~~$185.4 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~~during the ~~New Term Loan of $88.0 million,~~three months ended March 31, 2021, compared to payments made on the ~~Senior~~ Term Loan of ~~$65.4~~$17.5 million during the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2022. The ~~increase~~decrease in net cash from financing activities was ~~further driven by lower payments of $29.9 million on the ABL Facility~~ ~~and~~ ~~$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~~an increase in proceeds from the ABL Facility of ~~$60.6 million.~~$52.4 million and lower payments of $6.2 million on the ABL Facility during the three months ended March 31, 2022.

Debt

Term Loan

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

2021. The Term Loan Facility matures on March 1, 2026 and borrowings under the Term Loan Facility 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.~~quarter.

As of ~~June 30, 2021, 29.6%~~March 31, 2022, 13.9% 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.~~Company.

ABL Facility

•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~~Thryv Australia 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 ~~June 30, 2021.~~March 31, 2022. We had total recorded debt outstanding of ~~$647.9~~$569.3 million (net of $18.2 million of unamortized original issue discount (“OID”) and debt issuance cost) at ~~June 30, 2021,~~March 31, 2022, which was comprised of amounts outstanding under our ~~New~~ Term Loan of ~~$589.9~~$524.5 million and ABL Facility of ~~$58.0~~$63.0 million.

As of March 31, 2022, we had borrowing capacity of $68.9 million under the ABL Facility.

~~Off-Balance Sheet Arrangements~~Critical Accounting Policies and Estimates

~~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~~Our critical accounting policies and estimates have not changed from those described in our ~~2020~~2021 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 ~~June 30, 2021,~~March 31, 2022, we had total ~~recorded~~ debt outstanding of ~~$647.9~~$569.3 million (net of $18.2 million of unamortized OID and debt issuance costs), which was comprised of amounts outstanding under our ~~New~~ Term Loan of ~~$589.9~~$524.5 million and ABL Facility of ~~$58.0~~$63.0 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 $6.5~~approximately $5.9 million annually, ~~based~~based on the debt outstanding at ~~June 30, 2021.~~March 31, 2022.

~~Inflation Risk~~

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

Item 4. Controls and Procedures

Acquisition

We are in the process of integrating ~~Sensis~~Vivial, a marketing and advertising company that we acquired on ~~March 1, 2021.~~January 21, 2022. Management’s assessment and conclusion on the effectiveness of the Company’s disclosure controls and procedures as of ~~June 30, 2021~~March 31, 2022 excludes an assessment of the internal control over financial reporting related to the ~~Sensis~~Vivial Acquisition. The ~~Sensis~~Vivial Acquisition represented ~~19%~~3% of our consolidated total assets at March 31, 2022, and ~~16%~~8% of our consolidated revenue included in our ~~condensed~~ consolidated financial statements ~~as of and~~ for the three months ended ~~June 30, 2021.~~March 31, 2022.

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 of 1934, as amended (the “Exchange Act”). Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of ~~June 30, 2021~~.March 31, 2022.

Changes in Internal Control over Financial Reporting

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~~three months ended ~~June 30, 2021~~March 31, 2022 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~~2021 Form ~~10-K, except as disclosed in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021.~~10-K.

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.~~Forms of Award Agreements

48On May 3, 2022, the Compensation Committee of the Company’s Board of Directors approved a form of award agreement (the “RSU Award Agreement”) for grants of restricted stock units (“RSUs”) and a form of award agreement (the “PSU Award Agreement”) for grants of performance-based restricted stock units (“PSUs”), each under the Company’s 2020 Incentive Award Plan (the “2020 Plan”). Pursuant to the RSU Award Agreement, each RSU will entitle the recipient to one share of the Company’s common stock, subject to time-based vesting conditions that will be set forth in individual agreements. Pursuant to the PSU Award Agreement, each PSU will entitle the recipient to one share of the Company’s common stock, subject to performance-based vesting conditions that will be set forth in individual agreements.

The foregoing descriptions of the RSU Award Agreement and the PSU Award Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of each agreement, copies of which are filed as Exhibit 10.1 and Exhibit 10.2, respectively, to this Quarterly Report on Form 10-Q and are incorporated herein by reference.

RSU and PSU Awards

Also on May 3, 2022, the Compensation Committee of the Company’s Board of Directors approved grants of RSU and PSU awards under the 2020 Plan to the Company’s named executive officers, as set forth in the table below.


Name and Principal Position	Number of RSU Awards	Number of PSU Awards
Joseph A. Walsh, Chairman & CEO	40,245	74,742
Paul D. Rouse, Chief Financial Officer, EVP & Treasurer	33,538	62,285
Gordon Henry, Chief Strategy Officer & EVP	23,476	43,600
James McCusker, Chief Revenue Officer & EVP	23,476	43,600
John Wholey, Chief Operations & Information Officer & EVP	23,476	43,600

The RSU and PSU awards were granted pursuant to award agreements that are materially consistent with the form of RSU Award Agreement and form of PSU Award Agreement, respectively. One-third of the RSUs will vest in January 2023 and, for the named executive officers other than the CEO, one-third will vest in January 2024 and the remaining one-third will vest in January 2025, subject to the recipient’s continued employment through such dates. The remaining two-thirds of the RSUs granted to the CEO will vest on a monthly basis following January 23, 2023, subject to his continued employment through each vesting date. The PSUs will vest, if at all, following the achievement of certain performance measures over a three year performance period.

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)
10.1+*						Form of Restricted Stock Unit Award Agreement under the Thryv Holdings, Inc. 2020 Incentive Award Plan
10.2+*						Form of Performance-Based Restricted Stock Unit Award Agreement under the Thryv Holdings, Inc. 2020 Incentive Award Plan
31.1*						Certification of Principal Executive Officer pursuant to Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*						Certification of Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**						Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**						Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*						Inline XBRL Taxonomy Extension Schema Document.
101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB*						Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF*						Inline XBRL Taxonomy Extension Definition Linkbase Document
104						The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~June 30, 2021,~~March 31, 2022, formatted in Inline XBRL (included in Exhibits 101).

*Filed herewith

** Furnished herewith

+ Management contract of compensatory plan or arrangement

SIGNATURES

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


THRYV HOLDINGS, INC.

~~August 11, 2021~~May 5, 2022	By:	/s/ Joseph A. Walsh
		Joseph A. Walsh Chairman of the Board and Chief Executive Officer ~~and President~~
		(Principal Executive Officer)


~~August 11, 2021~~May 5, 2022	By:	/s/ Paul D. Rouse
		Paul D. Rouse Chief Financial Officer, Executive Vice President and Treasurer
		(Principal Financial Officer)


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

Other assets	26,944		21,902
Total assets	$	1,412,135	$	1,214,977
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	30,024	$	8,927
Accrued liabilities	168,602		139,613
Current portion of unrecognized tax benefits	30,615		30,022
Contract liabilities	32,233		18,942
New Term Loan, current	70,000		0
Other current liabilities	12,898		9,896
Total current liabilities	344,372		207,400
New Term Loan, net	365,189		—
New Term Loan, related party	154,697		—
Senior Term Loan, net	—		335,683
Senior Term Loan, related party	—		113,482
ABL Facility	58,022		79,238
Leaseback obligations	0		54,798
Pension obligations, net	174,217		190,827
Deferred tax liabilities	1,179		508
Other liabilities	44,756		36,266
Total long-term liabilities	798,060		810,802
Commitments and contingencies (see Note 13)	0		0
Stockholders' equity
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	1,076,124		1,059,624
Treasury stock - 26,678,410 shares at June 30, 2021 and December 31, 2020	(468,613)		(468,613)
Accumulated other comprehensive income (loss)	(4,445)		0
Accumulated deficit	(333,967)		(394,832)
Total stockholders' equity	269,703		196,775
Total liabilities and stockholders' equity	$	1,412,135	$	1,214,977


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



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


	Three Months Ended June 30, 2020
	As Reported		Adjustments		As Adjusted
Cost of services	$	91,974	$	18,631	$	110,605
Sales and marketing	65,811		13,294		79,105
General and administrative	38,513		5,681		44,194
Impairment charges	18,132		0		18,132
Depreciation and amortization	37,606		(37,606)		—


	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


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


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


	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


	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


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


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


	As of June 30,
	2021	2020
	(in thousands)
Clients
Marketing Services	284	349
SaaS	45	44
Total (1)	302	365


	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		%