Thryv Holdings, Inc. (THRY)

Item 7.     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 audited consolidated financial statements and the related notes thereto included elsewhere in this Annual 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 providers of SaaS end-to-end customer experience tools and digital marketing solutions to small-to-medium sized businesses. Our solutions enable our SMB clients to generate new business leads, manage their customer relationships and run their day-to-day business operations.

Our expertise in delivering solutions for our client base is rooted in our deep history of serving SMBs. In 2024, 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 serve approximately 300,000 SMB clients globally through two business segments: Thryv SaaS and Thryv Marketing Services.

Thryv Marketing Services. Our Thryv Marketing Services segment provides both print and digital solutions and generated $480.7 million, $653.2 million, and $986.0 million of consolidated revenues for the years ended December 31, 2024, 2023, and 2022, respectively. Our Marketing Services offerings include our owned and operated Print Yellow Pages, which carry the “The Real Yellow Pages” tagline, our proprietary Internet Yellow Pages, known by the Yellowpages.com, Superpages.com, and Dexknows.com URLs, search engine marketing solutions and other digital media solutions, which include online display and social advertising, online presence, and video and search engine optimization tools. Our Thryv Marketing Services segment includes Thryv Australia Pty Ltd (“Thryv Australia”), and Yellow Holdings Limited (“Yellow”), a New Zealand marketing services company, which we acquired on April 3, 2023 for $8.9 million in cash (the “Yellow Acquisition”). Thryv Australia and Yellow serve approximately 80,000 and 15,000 SMBs, respectively, many of which we believe are ideal candidates for the Thryv Platform. On January 21, 2022, we acquired Vivial Media Holdings, Inc. (“Vivial”), a marketing and advertising company, for $22.8 million in cash, subject to certain adjustments. Vivial results are included in the Thryv Marketing Services segment. During the third quarter of 2024, we made a strategic decision to terminate our Marketing Services solutions by the end of 2028.

Thryv SaaS. Our Thryv SaaS segment generated $343.5 million, $263.7 million, and $216.3 million of consolidated revenues for the years ended December 31, 2024, 2023, and 2022, respectively. Our primary SaaS offerings are comprised of Thryv®, our flagship all-in-one small business management platform, which includes Command Center, Business Center, Marketing Center, ThryvPaySM, Thryv Add-Ons, and Keap Automations. Thryv Command Center enables SMBs to centralize all their internal and external communications through a modular, easily expandable, and customizable platform. Command Center allows an SMB to perform the following tasks to provide a centralized inbox for all customer communication:

•connect their pre-existing email, Facebook and Instagram accounts;

•install Command Center’s WebChat client on their website; and

•use Voice over Internet Protocol in-platform telephony services, Short Message Service and video calls.

Thryv Business Center is designed to allow an SMB everything necessary to streamline day-to-day business operations, including customer relationship management, appointment scheduling, estimate and invoice creation, and online review management. Thryv Marketing Center is a fully integrated next generation marketing and advertising platform operated by the end user. Marketing Center contains everything a small business owner needs to market and grow their business effectively, including easy to understand, AI driven analytics and lead attribution, helping them understand what marketing is working for them. ThryvPaySM, is our own branded payment solution that allows users to get paid via credit card and ACH and is tailored to service focused businesses that want to provide consumers safe, contactless, and fast-online payment options. Thryv Add-Ons include AI-assisted website development, SEO tools, Google Business Profile optimization, Hub by

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ThryvSM, and Thryv Leads. These optional platform subscription-based add-ons provide a seamless user experience for our end-users and drive higher engagement within the Thryv Platform while also producing incremental revenue growth. Keap Automations is Thryv's sales and marketing automation engine that helps SMBs efficiently grow, allowing automation of repetitive tasks, campaigns, processes, and tools.

Keap Acquisition. On October 31, 2024, we acquired all of the outstanding capital stock of Keap for $76.9 million in cash (net of $7.6 million of cash acquired), subject to adjustment. Keap was founded in 2001 and operates a SaaS e-mail marketing and sales platform for small businesses, including products to manage customers, customer relationship management, marketing and e-commerce. As of December 31, 2024, Keap's customer base consisted of approximately 15,000 subscribers. Keap results are included in the Thryv SaaS segment.

To finance the purchase price, we closed an underwritten public offering of 5,715,000 shares of common stock, generating proceeds of $76.8 million (after deducting underwriting discounts and commissions) and borrowed $5.5 million under our New ABL Facility. Additionally, on November 12, 2024, the underwriter of the offering exercised its option to purchase an additional 857,250 shares of common stock, generating additional proceeds of $11.5 million (after deducting underwriting discounts and commissions).

Transition of Digital Marketing Services Clients to the Thryv Platform. During the fourth quarter of 2023, we made a strategic decision to accelerate the transition of clients with digital Marketing Services solutions to our Thryv Platform by converting clients with certain Marketing Services products to the Thryv Platform outside of the sales process at no additional base cost to these clients at the time of upgrade. During 2024, we converted approximately 46,000 clients from our digital Marketing Services to our Thryv Platform, generating a $37.1 million increase in SaaS revenue during 2024. As of December 31, 2024, approximately 38,000 of these clients remained as active SaaS clients.

The conversion of these clients decreases the number of clients in and the revenue of the Thryv Marketing Services segment and increases the number of clients in and the revenue of the Thryv SaaS segment. While we believe these clients are receiving a valuable upgrade to our Thryv Platform and will be more likely to subscribe for additional features of the Thryv Platform in the future, the conversion of these clients outside of the sales process could result in these clients cancelling their services with us (known as “churn”) at a materially higher rate than the other clients in our SaaS segment. During 2024, the churn of clients converted from our digital Marketing Services solutions was in line with the churn from the other clients in our SaaS segment. The conversion of clients to our Thryv Platform at no additional base cost resulted in a decrease to our SaaS monthly ARPU.

Impairment Charges

Our impairment tests resulted in non-cash impairments of our goodwill of $83.1 million, $268.8 million and $102.2 million during the years ended December 31, 2024, 2023 and 2022, respectively, to reduce goodwill in our Thryv Marketing Services reporting unit. The impairment charge during the year ended December 31, 2024 was primarily driven by the Company’s strategic decision during the third quarter of 2024 to terminate its Marketing Services solutions by the end of 2028. This strategic decision resulted in an additional accelerated decline in estimated future cash flows, partially offset by operating cost savings from terminating our Marketing Services solutions.

While we believe we have made reasonable estimates and utilized reasonable assumptions to calculate the fair values of our reporting units, it is possible a material change could occur to the estimated fair value of these assets. If our actual results are not consistent with our estimates, we could be exposed to future impairment losses that could be material to our results of operations.

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Factors Affecting Our Performance

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

Ability to Attract and Retain Clients

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

Our strategy is to expand the use of our SaaS solutions by introducing our SaaS solutions to new SMB clients, as well as our current Thryv Marketing Services clients and our existing SaaS client base, offering them additional SaaS solutions. 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. This strategy poses a risk if our Marketing Services clients do not fully embrace the transition to SaaS offerings by purchasing additional SaaS offerings or if they have higher churn rates.

Investment in Growth

We intend to continue to develop and grow a profitable SaaS segment to better help SMBs manage their businesses, while maintaining strong profitability within our Marketing Services segment, which we expect to continue to serve as an efficient customer acquisition channel for our SaaS platform until its termination in 2028. As a result, SaaS has been able to achieve profitable growth. 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 Expansion and Acquisition

Our growth prospects depend upon our ability to successfully develop new markets. We currently primarily serve the United States, Australia, New Zealand, Canada, and Europe SMB markets and plan to leverage strategic acquisitions or initiatives 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 July 2022, we began operations in Canada through our own sales force and a re-seller agreement. On April 3, 2023, we completed the acquisition of Yellow, a New Zealand marketing services company. Additionally, on October 31, 2024, we completed the acquisition of Keap, a prominent player in customer relationship management and marketing automation for SMBs. Keap primarily serves SMBs in North America, Australia, New Zealand and Europe. We believe that strategic acquisitions of SaaS and marketing services companies globally will expand our client base and provide additional opportunities to offer our SaaS solutions.

Print Publication Cycle

We recognize revenue for print services at a point in time upon delivery of the published PYP directories containing customer advertisements to the intended market. Our PYP directories typically have 12-month publication cycles in Australia, 18-month publication cycles in New Zealand, and 18 to 24-month publication cycles in the U.S. As a result, we typically record revenue for each publication only once every 12 to 24 months, depending on the publication cycle of the directory. The amount of revenue we recognize each quarter from our PYP directories is therefore directly related to the number of PYP directories we deliver to the intended market each quarter, which can vary based on the timing of the publication cycles.

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Key Business Metrics

We review several operating metrics, including the following key business metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. We believe these key metrics are useful to investors both because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making, and they may be used by investors to help analyze the health of our business.

Total Clients

We define total clients as the number of SMB accounts with one or more revenue-generating solutions in a particular period. For quarter- and year-ending periods, total clients from the last month in the period are reported. A single client may have separate revenue-generating accounts for multiple Marketing Services solutions or SaaS offerings, but we count these as one client when the accounts are managed by the same business entity or individual. Although infrequent, where a single organization has multiple subsidiaries, divisions, or segments, each business entity that is invoiced by us is treated as a separate client. We believe that the number of total clients is an indicator of our market penetration and potential future business opportunities. We view the mix between Marketing Services clients and SaaS clients as an indicator of potential future opportunities to offer our SaaS solutions to our Marketing Services clients.

(1)     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.

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

(3)     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.

Marketing Services clients decreased by 81 thousand, or 26%, as of December 31, 2024 as compared to December 31, 2023. Marketing Services clients decreased by 48 thousand, or 13%, as of December 31, 2023 as compared to December 31, 2022. These decreases were related to the secular decline in the print media industry and significant competition in the digital media space, from focusing on offering our SaaS solutions to our current Marketing Services clients, and from our strategic decision to accelerate the conversion of clients from digital Marketing Services solutions to SaaS offerings.

SaaS clients increased by 48 thousand, or 73%, as of December 31, 2024 as compared to December 31, 2023, primarily due to the conversion of clients from digital Marketing Services solutions to the Thryv Platform during 2024. In addition, during the fourth quarter of 2024, we added 15 thousand clients from the Keap Acquisition. SaaS clients increased by 14 thousand, or 27%, as of December 31, 2023 as compared to December 31, 2022 due to our continuing focus on new SaaS client acquisition through improved identification of prospects, improved selling methods, introduction of new product features, a growing international footprint, and the transition of clients from digital Marketing Services solutions to SaaS offerings.

Total clients decreased by 50 thousand, or 14%, as of December 31, 2024 as compared to December 31, 2023. Total clients decreased by 41 thousand, or 11%, as of December 31, 2023 as compared to December 31, 2022. The primary driver of these decreases was the secular decline in the print media business combined with increasing competition in the digital media and SaaS space, partially offset by an increase in SaaS clients.

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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 clients that have one or more revenue-generating solutions in that same month. For each reporting period, the weighted-average monthly ARPU from all the months in the period are reported. ARPU varies based on product mix, product volumes, and the amounts we charge for our services. We believe that ARPU is an important measure of client spend and that growth in ARPU is an indicator of client satisfaction with our services.

Monthly ARPU for Marketing Services decreased by $25, or 16%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, and $20, or 11%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease in ARPU for these periods was related to reduced spend by clients on our print media offerings due to the secular decline of the industry, caused by the continuing shift of advertising spend to larger digital media audiences, and our strategic decision to accelerate the conversion of clients from digital Marketing Services solutions to SaaS offerings.

Monthly ARPU for SaaS decreased by $42, or 11%, during the year ended December 31, 2024 compared to the year ended December 31, 2023, and increased by $3, or 1%, during the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease in SaaS ARPU during the year ended December 31, 2024 primarily resulted from our strategic decision to accelerate the conversion of clients from digital Marketing Services solutions to our SaaS offerings at no additional base cost at the time of upgrade. The sale of our newer Marketing Center product to our SaaS clients offset a portion of the SaaS decline. The increase in SaaS ARPU during the year ended December 31, 2023 was attributable to upsell of higher value solutions to existing customers and price increases, partially offset by the strategic decision to accelerate the conversion of clients from digital Marketing Services solutions to SaaS offerings at no additional base cost at the time of upgrade. In addition, the sale of add-on features to our Thryv Platform, such as Thryv Leads and Thryv Pay contributed to Monthly SaaS ARPU growth.

Seasoned Net Revenue Retention for SaaS

We believe that Seasoned Net Revenue Retention (“Seasoned NRR”) is an indicator of our ability to retain and expand revenue for established clients that have had one or more SaaS offerings for at least a year. Seasoned NRR is calculated by dividing the recurring revenue of all SaaS clients as of the last month of the year or quarter, as applicable, (net of expansions, downsell, and churns) by the same client's recurring revenue one year ago, removing clients acquired over the last 12 months, including clients acquired in the Keap Acquisition.

Seasoned NRR increased by 2% for the year ended December 31, 2024 compared to the year ended December 31, 2023, and increased by 5% during the year ended December 31, 2023 compared to the year ended December 31, 2022. The increase in Seasoned NRR during the year ended December 31, 2024 resulted from selling other SaaS products to existing SaaS clients, a price increase for SaaS clients in the third quarter of 2024, and our strategic decision to accelerate the conversion of clients from digital Marketing Services solutions to our SaaS offerings that included instances where Marketing Services clients already had at least one of our SaaS solutions and SaaS revenue increased for those clients. The increase in Seasoned NRR during the year ended December 31, 2023 resulted from selling other SaaS products to existing SaaS clients, a price increase for SaaS clients in the third quarter of 2023, and our strategic decision to accelerate the conversion of clients from digital Marketing Services solutions to our SaaS offerings that included instances where Marketing Services clients already had at least one of our SaaS solutions and SaaS revenue increased for those clients.

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Key Components of Our Results of Operations

Revenue

We generate revenue from our two business segments: Thryv Marketing Services and Thryv SaaS. Our primary sources of revenue in our Thryv Marketing Services segment are Print and Digital services. Our primary source of revenue in our Thryv SaaS segment is our SaaS solutions.

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 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 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 depreciation of fixed assets, and amortization associated with capitalized software and intangible assets.

Other Income (Expense)

Other income (expense) consists of interest expense, other components of net periodic pension (cost) benefit, and other income (expense), which includes a loss on early extinguishment of debt during the year ended December 31, 2024, a bargain purchase gain as a result of the Vivial Acquisition during the year ended December 31, 2022, and foreign currency-related income and 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:

(1)Consolidated results of operations includes Keap's results of operations subsequent to the October 31, 2024 acquisition date.

(2)Consolidated results of operations includes Yellow's results of operations subsequent to the April 3, 2023 acquisition date.

(3)See “Non-GAAP Financial Measures” for a definition of Adjusted EBITDA and a reconciliation to Net (loss) income, the most directly comparable measure presented in accordance with GAAP.

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

(5)See “Non-GAAP Financial Measures” for a definition of Adjusted Gross Margin.

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Comparison of the Year Ended December 31, 2024 to the Year Ended December 31, 2023

Revenue

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

Total Revenue decreased by $92.8 million, or 10.1%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The decrease in total Revenue was driven primarily by a decrease in Thryv Marketing Services Revenue of $172.6 million, partially offset by an increase in Thryv SaaS Revenue of $79.8 million.

Thryv Marketing Services Revenue

Thryv Marketing Services revenue decreased by $172.6 million, or 26.4%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.

Print revenue decreased by $10.8 million, or 4.1%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. This decrease in Print revenue was primarily driven by the continued secular decline in industry demand for Print services, which was partially offset by the impact of publication timing differences, as a result of our Print agreements having greater than 12 month terms, and increasing the terms of our new Print publications from 18 months to 24 months in the fourth quarter.

Print revenue is recognized upon delivery of the published directories. Individual published directories have different publication cycles, with a typical lifecycle of 18 months for U.S. directories in 2024. During the fourth quarter of 2024, we began to transition to 24 month publication cycles for U.S. directories. As a result of recognizing revenue upon delivery, we typically record revenue for each published U.S. directory only once every 18 to 24 months, which does not make comparing revenue year-over-year fully representative of actual demand trends due to timing of publication cycles.

During the year ended December 31, 2024 the Company recognized more revenue on certain U.S. publications as a result of the increased publication cycles compared to the year ended December 31, 2023. Additionally, due to publication timing differences, the Company recognized revenue for more published directories during the year ended December 31, 2024 compared to the year ended December 31, 2023. However, as a result of the secular decline in industry demand for Print services, the overall impact on revenue on a publication-by-publication basis was a 32% decline for the year ended December 31, 2024.

Digital revenue decreased by $161.7 million, or 41.6%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The decrease was primarily driven by the Company’s strategic decision during the fourth quarter of 2023 to accelerate the conversion of clients from its digital Marketing Services solutions to its SaaS offerings. For the year ended December 31, 2024, clients converted to SaaS offerings reduced Marketing Services revenue by $37.1 million. However, this resulted in the growth of SaaS revenue as highlighted below in the Thryv SaaS Revenue section. Digital revenue has further decreased due to a continued trending decline in the Company’s Marketing Services client base and significant competition in the consumer search and display space, particularly from large, well-capitalized businesses such as Google, Yelp and Facebook. For the year ended December 31, 2024, the continued trending decline and significant competition resulted in a $124.6 million decrease in digital revenue.

Thryv SaaS Revenue

Thryv SaaS revenue increased by $79.8 million, or 30.2%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The increase was primarily attributable to the Company’s strategic decision during the fourth quarter of 2023 to accelerate the conversion of clients from its digital Marketing Services solutions to its SaaS offerings. Clients converted from digital Marketing Services solutions resulted in a $37.1 million increase in SaaS revenue for the year ended December 31, 2024. SaaS revenue also increased $29.3 million as a result of increased demand for our Thryv SaaS

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solutions as SMBs accelerate their move away from manual processes and towards cloud platforms to more efficiently manage and grow their businesses, and by our success in re-focusing our go-to-market and onboarding strategy to target higher value clients. Finally, Keap contributed $13.4 million of SaaS revenue since the acquisition closed on October 31, 2024.

Cost of Services

Cost of services decreased by $51.8 million, or 15.3%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. This decrease was primarily driven by the corresponding decline in revenue and strategic cost saving initiatives. Specifically, we reduced printing, distribution and digital fulfillment support costs by $25.2 million, contract services by $11.7 million, and employee-related expenses by $6.8 million. Additionally, depreciation and amortization expense decreased $6.0 million due to the accelerated amortization method used by the Company.

Gross Profit

Gross profit decreased by $41.0 million, or 7.1%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The decrease in Gross profit was primarily due to a decrease in Marketing Services revenue, partially offset by an increase in SaaS revenue and a decrease in cost of services as a result of decline in revenue and strategic cost saving initiatives. Our gross margin increased by 210 basis points, to 65.2%, for the year ended December 31, 2024 compared to 63.1% for the year ended December 31, 2023. This increase was primarily due to an increase in sales of our higher margin SaaS solutions and the reduction of our resale of high-spend, low margin third-party local search and display services that were not hosted on our owned and operated platforms.

Operating Expenses

Sales and Marketing

Sales and marketing expense decreased by $30.4 million, or 10.1%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The decrease was primarily attributable to a decrease in employee-related costs and contract services expense of $12.3 million due to strategic cost-saving initiatives, a decrease in sales commissions of $7.8 million due to new sales commissions plans and revised targets, a decrease in stock-based compensation expense of $3.7 million, and a decrease in advertising expenses of $4.2 million. Additionally, depreciation and amortization expense decreased $3.3 million due to the accelerated amortization method used by the Company.

General and Administrative

General and administrative expense increased by $8.4 million, or 4.0%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The increase was primarily attributable to an increase in stock-based compensation expense of $5.6 million, an increase in third-party fees associated with our debt refinancing of $2.0 million, an increase in transaction and integration costs of $6.6 million related to the Keap Acquisition, and an increase in accelerated lease amortization of $4.2 million due to the Company's plans to vacate the acquired Keap office buildings. The increase was partially offset by the absence of a $10.7 million loss on settlement of indemnification asset that was recorded during the year ended December 31, 2023.

Impairment Charges

Impairment charges decreased by $185.8 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. Impairment charges of $83.1 million were recognized as a result of a goodwill impairment in our Thryv Marketing Services reporting unit as a result of our strategic decision during the year ended December 31, 2024 to terminate our Marketing Services solutions by the end of 2028, while $268.8 million of impairment charges were recognized in our Thryv Marketing Services reporting unit during the year ended December 31, 2023 as a result of the continued secular decline in the Thryv Marketing Services reporting unit and the strategic decision to accelerate the conversion of additional clients and services from our digital Marketing Services solutions to our SaaS offerings.

Other Income (Expense)

Interest Expense

Interest expense decreased by $15.0 million, or 24.2%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, driven primarily by lower outstanding debt balances, as well as lower interest rates.

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Other Components of Net Periodic Pension Benefit

Other components of net periodic pension benefit increased by $22.1 million for the year ended December 31, 2024. This increase was primarily due to remeasurement gain of $31.1 million recorded for the year ended December 31, 2024, compared to a remeasurement gain of $9.9 million that was recorded during the year ended December 31, 2023. The increase in the remeasurement gain was a result of increasing discount rates due to changes in corporate bond markets, actuarial assumption updates to reflect recent plan experience and current market conditions, plan experience different than expected, and actual asset performance exceeding expectations. These increases were partially offset by $2.1 million of lower interest cost due to lower interest rates.

Other Expense

Other expense increased by $9.2 million for the year ended December 31, 2024, compared to the year ended December 31, 2023. The increase was primarily due to a loss on extinguishment of debt of $6.6 million recorded during the year ended December 31, 2024 and an increase in foreign-currency related loss of $2.6 million.

Income Tax (Expense) Benefit

Income tax expense increased by $9.5 million, or 758.0%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The effective tax rate was (12.4%) and 0.5% for the year ended December 31, 2024 and 2023, respectively. The effective tax rate differs from the 21.0% U.S. Federal statutory rate in the current year primarily due to the impact of the goodwill impairment allocated to non-deductible goodwill.

Adjusted EBITDA

Adjusted EBITDA decreased by $25.1 million, or 13.4%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The decrease in Adjusted EBITDA was primarily driven by the secular decline in our Thryv Marketing Services segment. The decrease was partially offset by the growth in our Thryv SaaS segment. See “Non-GAAP Financial Measures” for a definition of Adjusted EBITDA and a reconciliation to Net income (loss), the most directly comparable measure presented in accordance with GAAP.

Years Ended December 31, 2023 and 2022

For a discussion of the year ended December 31, 2023 compared to the year ended December 31, 2022, refer to Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K year ended December 31, 2023.

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Non-GAAP Financial Measures

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”). We also present Adjusted EBITDA, Adjusted Gross Profit, and Adjusted Gross Margin, as defined below, as non-GAAP financial measures in this Annual 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 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 (loss) income plus Interest expense, Income tax expense (benefit), Depreciation and amortization expense, Restructuring and integration expenses, Loss on early extinguishment of debt, Transaction costs, Stock-based compensation expense, Impairment charges and non-operating expenses, such as, Other components of net periodic pension cost (benefit), Non-cash loss (gain) from remeasurement of indemnification asset, and certain unusual and non-recurring charges that might have been incurred. Adjusted EBITDA should not be considered as an alternative to Net (loss) income as a performance measure. We define Adjusted Gross Profit (“Adjusted Gross Profit”) and Adjusted Gross Margin (“Adjusted Gross Margin”) as Gross profit and Gross margin, respectively, adjusted to exclude the impact of depreciation and amortization expense and stock-based compensation expense.

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 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 (loss) income:

(1)The Company records Stock-based compensation expense related to the amortization of grant date fair value of the Company’s stock-based compensation awards. See Note 12, Stock-Based Compensation and Stockholders' Equity, to our consolidated financial statements included in Part II, Item 8 in this Annual Report for more information.

(2)See the table below for detail of Restructuring and integration expenses for the years ended December 31, 2024, 2023, and 2022.

(3)In connection with the debt refinancing completed on May 1, 2024, the Company recorded a Loss on early extinguishment of debt related to the write-off of certain unamortized debt issuance costs on the Company's Prior Term Loan and Prior ABL Facility. See Note 10, Debt Obligations, to our consolidated financial statements included in Part II, Item 8 in this Annual Report for more information.

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(4)In connection with the YP Acquisition, the seller indemnified the Company for future potential losses associated with certain federal and state tax positions taken in tax returns filed by the seller prior to the acquisition date. See Note 4, Fair Value Measurements, to our consolidated financial statements included in Part II, Item 8 in this Annual Report for more information.

(5)Expenses related to the Keap Acquisition, Yellow Acquisition, Vivial Acquisition and other transaction costs.

(6)Other components of net periodic pension benefit 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 relates to the mark-to-market pension remeasurement.

(7)During the year ended December 31, 2024, Other primarily includes foreign exchange-related expense. During the year ended December 31, 2023, Other includes expenses related to the valuation of certain assets as a result of the acquisition of Thryv Australia and foreign exchange related expense. During the year ended December 31, 2022, Other primarily represents the bargain purchase gain as a result of the Vivial Acquisition, partially offset by foreign exchange-related expense.

The following is a reconciliation of Restructuring and integration expenses that are included in the Adjusted EBITDA to Net (loss) income reconciliation above:

(a)Represents expenses related to maintenance, utilities, and general upkeep at the Company’s leased buildings. During the COVID-19 pandemic, the Company decided to operate in a Remote First working environment. Because we did not terminate existing lease agreements at any of our facilities, we continue to incur these costs until the lease agreements end. The most significant lease agreement is for our Corporate headquarters, which ends on December 31, 2025 and will not be renewed. Costs for the year ended December 31, 2024 also includes $4.2 million of accelerated amortization expense for the Keap headquarters. The Keap headquarters lease agreement ends on December 31, 2026 and will not be renewed.

(b)We incur severance charges related to certain reduction in force actions taken by our management. These reduction in force actions are designed to streamline the Company’s operations and drive lower operating expenses as we continue to shift from our Marketing Services activities and drive continued focus on our SaaS business. Specifically, we incurred severance charges of $10.9 million, $5.4 million and $2.3 million in the years ended December 31, 2024, 2023, and 2022, respectively, primarily related to our legacy Marketing Services employees and our shift from Marketing Services activities. Additionally, certain severance charges resulted from strategic integration activities to right-size our workforce following an acquisition. Specifically, we incurred severance charges of $1.8 million, $0.4 million and $1.2 million in the years ended December 31, 2024, 2023, and 2022, respectively, resulting from the acquisitions of Keap in 2024, Yellow New Zealand in 2023, and Vivial in 2022.

(c)We incur professional services, system integration costs and other fees related to each of our acquisitions. Such costs vary in nature and amount due to factors specific to each acquisition and create a lack of comparability between periods.

(d)These costs consist of legal expenses related to legal cases inherited from acquisitions and accounting fees related to acquisitions.

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

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., which 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 (as defined below) and funds available under the New ABL Facility (as defined below). 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

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New ABL Facility will be sufficient to meet our liquidity requirements, such as working capital requirements for our operations, business development and investment activities, and debt payment obligations, for the following 12 months. Any projections of future earnings and cash flows are subject to substantial uncertainty. Our future success and capital adequacy will depend on, among other things, our ability to achieve anticipated levels of revenues and cash flows from operations and our ability to address our annual cash obligations and reduce our outstanding debt, all of which are subject to general economic, financial, competitive, and other factors beyond our control. We continue to monitor our capital requirements to ensure our needs are in line with available capital resources.

In addition, our Board 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 15, Contingent Liabilities, to our audited consolidated financial statements included in Part II, Item 8 in this Annual 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:

Cash Flows from Operating Activities

Net cash provided by operating activities decreased by $58.4 million, or 39.4%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The decrease was primarily due to changes in working capital, particularly accounts receivable, which was primarily impacted by the timing of payments and an overall decline in our sales. Additionally, the Company made income tax payments of $15.4 million for the year ended December 31, 2024 compared to income taxes paid of $9.3 million for the year ended December 31, 2023 and pension funding payments of $6.5 million for the year ended December 31, 2024 compared to funding payments of $0.8 million for the year ended December 31, 2023. This was offset by lower interest payments of $13.0 million compared to the year ended December 31, 2023.

Cash Flows from Investing Activities

Net cash used in investing activities increased by $67.9 million, or 159.7%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The increase was primarily due to $76.9 million of cash paid related to the Keap Acquisition during the year ended December 31, 2024, compared to $8.9 million of cash paid related to the Yellow Acquisition during the year ended December 31, 2023.

Cash Flows from Financing Activities

Net cash from financing activities was $19.2 million for the year ended December 31, 2024 compared to net cash used in financing activities of $103.5 million the year ended December 31, 2023. This was primarily due to $87.4 million of net proceeds from our common stock offering during the year ended December 31, 2024. Additionally, $44.4 million of net payments on the Company's Prior Term Loan and New Term Loan agreements during the year ended December 31, 2024, compared to $120.0 million of net payments on the Company's Prior Term Loan during the year ended December 31, 2023. The decrease in payments on the Prior Term Loan and New Term Loan was partially offset by $25.0 million of net payments on the Company's Prior ABL Facility and New ABL Facility during the year ended December 31, 2024, compared to $5.7 million of net payments on the Company's Prior ABL Facility during the year ended December 31, 2023. Additionally,

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the decrease in payments on the Prior Term Loan and New Term Loan was partially offset by $15.9 million of cash received as a result of the exercise of stock warrants during the year ended December 31, 2023. The Company also paid $5.5 million of debt issuance costs during the year ended December 31, 2024 related to the New Term Loan.

Debt

New Term Loan

On May 1, 2024, the Company entered into a new Term Loan Credit Agreement (the “New Term Loan”), the proceeds of which were used to refinance and pay off in full the Company’s previous term loan facility (the “Prior Term Loan”) and to pay fees and expenses related to the refinancing.

The New Term Loan established a senior secured term loan facility (the “New Term Loan Facility”) in an aggregate principal amount equal to $350.0 million, of which 40.0% was held by a related party who was an equity holder of the Company as of May 1, 2024. The Company defines a related party as any shareholder owning more than 5% of the Company's voting securities. As of December 31, 2024, 40.0% of the New Term Loan was held by a related party who was an equity holder of the Company as of that date.

The New Term Loan Facility matures on May 1, 2029 and borrowings under the New Term Loan Facility bear interest at a fluctuating rate per annum equal to, at the Company’s option, SOFR or base rate, in each case, plus an applicable margin per annum equal to (i) 6.75% (for SOFR loans) and (ii) 5.75% (for base rate loans). The New Term Loan Facility requires mandatory amortization payments, paid quarterly commencing June 30, 2024, equal to (i) $52.5 million per year for the first two years following the closing date of the New Term Loan, and (ii) $35.0 million per year thereafter.

New ABL Facility

On May 1, 2024, the Company entered into a new Credit Agreement (the “ABL Credit Agreement”), which established a new $85.0 million asset-based revolving loan facility (the “New ABL Facility”). The New ABL Facility refinanced the Company’s previous asset-based revolving loan facility (the “Prior ABL Facility”). Proceeds of the New ABL Facility may be used by the Company for ongoing general corporate purposes and working capital.

The New ABL Facility matures on May 1, 2028 and borrowings under the New ABL Facility bear interest at a fluctuating rate per annum equal to, at the Company’s option, SOFR or base rate, in each case, plus an applicable margin per annum, depending on the average excess availability under the New ABL Facility, equal to (i) 2.50% to 2.75% (for SOFR loans) and (ii) 1.50% to 1.75% (for base rate loans). The fee for undrawn commitments under the New ABL Facility is equal to 0.375% per annum.

As of December 31, 2024, the Company had borrowing base availability of $56.9 million. As a result of certain restrictions in the Company's debt agreements, as of December 31, 2024, approximately $46.5 million was available to be drawn upon under the New ABL Facility.

We maintain debt levels that we consider appropriate after evaluating a number of factors, including cash requirements for ongoing operations, investment and financing plans (including acquisitions and share repurchase activities), and overall cost of capital. Per the terms of the New Term Loan Facility, payments of the New Term Loan balance are determined by the Company's Excess Cash Flow (as defined in the New Term Loan Facility). We are in compliance with all covenants under the New Term Loan and New ABL Facility as of December 31, 2024. We had total recorded debt outstanding of $284.3 million (net of $10.8 million of unamortized original issue discount and debt issuance cost) at December 31, 2024, which was comprised of amounts outstanding under the New Term Loan of $271.3 million and New ABL Facility of $23.9 million.

Share Repurchase Program

On April 30, 2024, the Board authorized a new share repurchase program (the “Share Repurchase Program”), under which the Company may repurchase up to $40 million in shares of common stock through April 30, 2029. The repurchase program is subject to market conditions, the periodic capital needs of the Company’s operating activities, and the continued satisfaction of all covenants under the Company’s New Term Loan and ABL Credit Agreement. The Share Repurchase Program does not obligate the Company to repurchase shares and may be suspended, terminated, or modified at any time.

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On June 20, 2024, the Company repurchased approximately 26,495 shares of its outstanding common stock. The total purchase price of this transaction was approximately $0.5 million. The shares acquired were recorded as Treasury stock upon repurchase.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our audited consolidated financial statements, which have been prepared in accordance with U.S. GAAP. In preparing our financial statements, we make estimates, assumptions, and judgments that can have a significant impact on our reported revenues, results of operations and net income or loss, as well as on the value of certain assets and liabilities on our balance sheet during and as of the reporting periods. These estimates, assumptions, and judgments are necessary because future events and their effects on our results and the value of our assets cannot be determined with certainty and are made based on our historical experience and other assumptions that we believe to be reasonable under the circumstances. These estimates may change as new events occur or additional information is obtained, and we may periodically be faced with uncertainties, the outcomes of which are not within our control and may not be known for a prolonged period of time. Because the use of estimates is inherent in the financial reporting process, actual results could differ from those estimates.

We believe that the assumptions and estimates associated with revenue recognition, business combinations, goodwill, pension obligations, and income taxes have the greatest potential impact on our audited consolidated financial statements. Therefore, we consider these to be our critical accounting estimates. See Note 1, Description of Business and Summary of Significant Accounting Policies, to our audited consolidated financial statements included in Part II, Item 8 in this Annual Report for further information on these and our other significant accounting policies and estimates as well as our disclosures on recent accounting pronouncements. Our most critical accounting estimates are summarized below.

Revenue Recognition

We recognize revenue based on the revenue recognition standard, Revenue from Contracts with Customers (Topic 606), (“ASC 606”). The Company determines the amount of revenue to be recognized through application of the five-step model as described in Note 1, Description of Business and Summary of Significant Accounting Policies, to our audited consolidated financial statements included in Part II, Item 8 in this Annual Report.

We derive revenue from our two business segments: Thryv Marketing Services and Thryv SaaS. The Company has determined that each of its services is distinct and represents a separate performance obligation because the SMB can benefit from each service on its own or together with other resources that are readily available to the SMB, and services are separately identifiable from other promises in the contract. Revenue for all services is recognized when control transfers to the SMB. For print solutions, control transfers upon delivery of the published directories. Control over SaaS and digital services transfers to the SMB evenly over the service period.

The transaction price of a contract primarily consists of fixed consideration components pursuant to the applicable contractual terms and may involve the use of estimates. These judgments involve consideration of historical and expected experience with the customer and other similar customers. The Company’s contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates the transaction price to each performance obligation based on its relative standalone selling price. Standalone selling price is the price at which the Company would sell a promised service separately to a client. Judgment is required to determine the standalone selling price for each distinct performance obligation. Often, the Company does not have sufficient standalone sales information, as contracts with customers generally include multiple performance obligations. When standalone sales information is not available, the Company estimates the standalone selling price using information that may include market conditions, entity-specific factors such as pricing and discounting strategies, and other inputs.

Business Combinations

We have completed several acquisitions of other businesses in the past, including the Keap Acquisition on October 31, 2024, the Yellow Acquisition on April 3, 2023 and the Vivial Acquisition on January 21, 2022. In an acquisition, we first review if substantially all the fair value of the assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If such concentration exists, the transaction is considered an asset acquisition rather than a business combination.

The results of businesses acquired in a business combination are included in our audited consolidated financial statements from the date of acquisition. We allocate the purchase price, which is the sum of the consideration paid and may

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consist of cash, equity, or a combination of the two, to the identifiable assets and liabilities of the acquired business at their acquisition date fair values. The excess of the purchase price over the amount allocated to the identifiable assets and liabilities, if any, is recorded as goodwill. Determining the fair value of assets acquired and assumed liabilities requires management to use significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenue and cash flows, and discount rates.

We use all available information to estimate fair values. We typically engage outside appraisal firms to assist in determining the fair value of tangible and identifiable intangible assets such as client relationships, trademarks, and any other significant assets or liabilities. During the measurement period, of up to one year after the acquisition date, we may adjust the values attributed to the assets acquired and assumed liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date.

Our purchase price allocation methodology contains uncertainties because it requires assumptions and management’s judgment to estimate the fair value of assets acquired and assumed liabilities at the acquisition date. Key judgments used to estimate the fair value of intangible assets include projected revenue growth and operating margins, discount rates, client attrition rates, as well as the estimated economic life of intangible assets. Management estimates the fair value of assets and liabilities based upon quoted market prices, the carrying value of the acquired assets, and widely accepted valuation techniques, including discounted cash flows. Our estimates are inherently uncertain and subject to refinement. Unanticipated events or circumstances may occur which could affect the accuracy of our fair value estimates, including assumptions regarding industry economic factors and business strategies.

Goodwill

Goodwill represents the excess of the purchase price of an acquired business over the fair value of the net tangible and identifiable intangible assets acquired. Goodwill is tested annually for impairment as of October 1st and at any time upon the occurrence of certain triggering events or changes in circumstances. The Company performs its goodwill impairment test at the reporting unit level. In assessing goodwill for impairment, an entity has the option to assess qualitative factors to determine whether events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Performing a qualitative impairment assessment requires an examination of relevant events and circumstances that could have a negative impact on the carrying value of our Company, such as macroeconomic conditions, industry and market conditions, earnings and cash flows, overall financial performance, and other relevant entity-specific events. If the Company concludes an impairment is more likely than not through its qualitative assessment, then it is required to perform a quantitative assessment for impairment. The quantitative estimates of the fair value of the Company’s reporting units are primarily determined using an income approach based on discounted cash flows. The discounted cash flow methodology requires significant judgment, including estimation of future cash flows, which is dependent on internal forecasts, current and anticipated economic conditions and trends, the estimation of the long-term growth rate of the Company’s business, and the determination of the Company’s weighted average cost of capital. Changes in the estimates and assumptions incorporated in our impairment assessment could materially affect the determination of fair value and the associated impairment charge.

During the third quarter of 2024, the Company made a strategic decision to terminate its Marketing Services solutions by the end of 2028. This strategic decision resulted in an additional accelerated decline in estimated future cash flows from the Thryv Marketing Services reporting unit, partially offset by operating cost savings from terminating our Marketing Services solutions, and the Company concluded that a triggering event had occurred in the Thryv Marketing Services reporting unit during the third quarter of 2024. As a result, the Company recorded a non-cash impairment charge of $83.1 million during the third quarter of 2024, reducing the goodwill in its Thryv Marketing Services reporting unit to zero.

On October 1, 2024, we performed a qualitative impairment assessment in accordance with ASC 350-30-35, Intangibles-Goodwill and Other and determined that it was not more likely than not that the fair value of the SaaS reporting unit was less than its carrying value and that no impairment existed. Additionally, the Company concluded that an impairment triggering event did not occur during the three months ended December 31, 2024. During the year ended December 31, 2023, the Company recognized a non-cash impairment charge of $268.8 million to reduce goodwill in its Thryv Marketing Services reporting unit. During the year ended December 31, 2022, the Company recorded a goodwill impairment charge of $102.0 million in its Thryv Marketing Services reporting unit.

As of December 31, 2024, goodwill was $253.3 million. For additional information related to goodwill, see Note 5, Goodwill and Intangible Assets to our consolidated financial statements included in Part II, Item 8 in this Annual Report.

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Pension Obligations

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

Although the plans are frozen, the Company continues to incur interest cost as well as gains or losses associated with changes in fair value of plan assets, all of which are referred to as net periodic pension cost. In determining the pension obligations at each reporting period, management makes certain actuarial assumptions, including discount rates and mortality rates. For these assumptions, management consults with actuaries, monitors plan provisions and demographics, and reviews public market data and general economic information. Changes in these assumptions can have a significant impact on the projected pension obligations, funding requirement, and net periodic pension cost. The Company immediately recognizes actuarial gains and losses in its operating results in the year in which the gains and losses occur.

Income Taxes

Valuation allowances are established when necessary to reduce deferred tax assets to the amounts that are more likely than not expected to be realized based on the weight of positive and negative evidence. Future realization of deferred tax assets ultimately depends on the existence of sufficient taxable income of the appropriate character, for example, ordinary income or capital gain within the carryback or carryforward periods available under the applicable tax law. We regularly review the deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences, and tax planning strategies. Should there be a change in the ability to recover deferred tax assets, our income tax provision would increase or decrease in the period in which the assessment is changed.

The Company’s policy is to recognize interest and penalties related to unrecognized tax benefits in income tax expense. The amount of income taxes we pay is subject to ongoing audits by federal and state tax authorities, which often result in proposed assessments. Significant judgment is required in determining income tax provisions and evaluating tax positions. We establish reserves for open tax years for uncertain tax positions that may be subject to challenge by various tax authorities. The consolidated tax provision and related accruals include the impact of such reasonably estimable losses and related interest and penalties as deemed appropriate. Tax benefits recognized in the financial statements from uncertain tax positions are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.

Recent Accounting Pronouncements

See Note 1, Description of Business and Summary of Significant Accounting Policies, to our audited consolidated financial statements as of and for the years ended December 31, 2024, 2023, and 2022, included in Part II, Item 8 in this Annual Report, for a discussion of recent accounting pronouncements.

Item 7.     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 audited consolidated financial statements and the related notes thereto included elsewhere in this Annual 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 providers of SaaS end-to-end customer experience tools and digital marketing solutions to small-to-medium sized businesses. Our solutions enable our SMB clients to generate new business leads, manage their customer relationships and run their day-to-day business operations. We serve approximately 350,000 SMB clients globally through four business segments: Thryv U.S. Marketing Services, Thryv U.S. SaaS, Thryv International Marketing Services, and Thryv International SaaS.

Our Thryv U.S. Marketing Services segment provides both print and digital solutions and generated $510.5 million, $820.0 million, and $797.5 million of consolidated revenues for the years ended December 31, 2023, 2022, and 2021, respectively. Our Marketing Services offerings include our owned and operated Print Yellow Pages, which carry the “The Real Yellow Pages” tagline, our proprietary Internet Yellow Pages, known by the Yellowpages.com, Superpages.com, and Dexknows.com URLs, search engine marketing solutions and other digital media solutions, which include online display and social advertising, online presence, and video and search engine optimization tools.

On January, 21, 2022, we acquired Vivial Media Holdings, Inc. (“Vivial”), a marketing and advertising company, for $22.8 million in cash, subject to certain adjustments. Vivial results are included in the Thryv U.S. Marketing Services segment.

Our Thryv U.S. SaaS segment generated $253.6 million, $211.8 million, and $170.5 million of consolidated revenues for the years ended December 31, 2023, 2022, and 2021, respectively. Our primary SaaS offerings are comprised of Thryv®, our flagship all-in-one small business management platform (“Thryv Platform”), which includes Command Center, Business Center, Marketing Center, ThryvPaySM, and Thryv Add-Ons. Thryv Command Center enables SMBs to centralize all their communication through a modular, easily expandable, and customizable platform. Command Center allows an SMB to connect their pre-existing email accounts, Facebook and Instagram accounts along with installing Command Center’s WebChat client on their website, and using Voice over Internet Protocol (“VoIP”) in-platform telephony services along with Short Message Service (“SMS”) and video calls to provide a centralized inbox for all customer communication. Thryv Business Center is designed to allow a small business owner everything necessary to streamline day-to-day business, including customer relationship management, appointment scheduling, estimate and invoice creation, and online review management. Thryv Marketing Center is a fully integrated next generation marketing and advertising platform operated by the end user. Marketing Center contains everything a small business owner needs to market and grow their business effectively, including easy to understand, artificial intelligence (“AI”) driven analytics. ThryvPaySM, is our own branded payment solution that allows users to get paid via credit card and ACH and is tailored to service focused businesses that want to provide consumers safe, contactless, and fast-online payment options. Thryv Add-Ons include AI-assisted website development, SEO tools, Google Business Profile optimization, and Hub by ThryvSM. These optional platform subscription-based add-ons provide a seamless user experience for our end-users and drive higher engagement within the Thryv Platform while also producing incremental revenue growth.

Our Thryv International Marketing Services segment is comprised of Thryv Australia Pty Ltd, which we acquired on March 1, 2021, and Yellow Holdings Limited (“Yellow”), a New Zealand marketing services company, which we acquired on April 3, 2023 for $8.9 million in cash (the “Yellow Acquisition”), subject to certain adjustments. Our Thryv International Marketing Services segment provides both print and digital solutions and generated $142.7 million and $166.0 million of consolidated revenues for the years ended December 31, 2023 and 2022, respectively, and $144.8 million for the ten months ended December 31, 2021. Thryv Australia and Yellow serve approximately 100,000 and 20,000 SMBs, respectively, many of which we believe are ideal candidates for the Thryv platform.

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Our Thryv International SaaS segment is comprised of Thryv Business Center, Command Center, Marketing Center, ThryvPay, and Thryv Add-Ons and generated $10.1 million and $4.5 million of consolidated revenues for the years ended December 31, 2023 and 2022, respectively, and $0.6 million for the ten months ended December 31, 2021.

Our expertise in delivering solutions for our client base is rooted in our deep history of serving SMBs. In 2023, SMB demand for integrated technology solutions continues to grow as SMBs adapt their business and service model to facilitate remote working and virtual interactions.

Impairment Charges

Our annual impairment tests resulted in non-cash impairments of our goodwill of $268.8 million and $102.0 million during the years ended December 31, 2023 and 2022, respectively, to reduce goodwill in our Thryv U.S. Marketing Services reporting unit, as a result of the historical secular decline in industry demand for print services, along with the historical trending decline in our Marketing Services client base, and competition in the consumer search and display space. The impairment during the year ended December 31, 2023 was primarily driven by the Company’s strategic decision during the fourth quarter of 2023 to accelerate the conversion of clients from its digital Marketing Services solutions to its SaaS solutions.

While we believe we have made reasonable estimates and utilized reasonable assumptions to calculate the fair values of our reporting units, it is possible a material change could occur to the estimated fair value of these assets. If our actual results are not consistent with our estimates, we could be exposed to future impairment losses that could be material to our results of operations.

Factors Affecting Our Performance

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

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 SMBs 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 Thryv U.S. Marketing Services and Thryv International Marketing Services 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 develop and grow a profitable SaaS segment to better help SMBs manage their businesses, while maintaining strong profitability within our Marketing Services segment, which serves as an efficient customer acquisition channel for our SaaS platform. As a result, SaaS has been able to achieve profitable growth. 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 Expansion and Acquisition

Our growth prospects depend upon our ability to successfully develop new markets. We currently serve the United States, Australian, New Zealand and Canadian SMB markets and plan to leverage strategic acquisitions or initiatives to expand our client base domestically and enter new markets internationally. Identifying proper targets and executing strategic acquisitions may take substantial time and capital. On March 1, 2021, we completed the acquisition of Thryv Australia, Australia’s leading provider of marketing solutions serving SMBs. In July 2022, we began operations in Canada through our own sales force and a re-seller agreement. Additionally, on April 3, 2023, we completed the acquisition of Yellow, a New Zealand marketing services company. We believe that strategic acquisitions of marketing services companies globally will expand our client base and provide additional opportunities to offer our SaaS solutions.

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Print Publication Cycle

We recognize revenue for print services at a point in time upon delivery of the published PYP directories containing customer advertisements to the intended market. Our PYP directories typically have 12-month publication cycles in Australia and New Zealand and 15 to 18-month publication cycles in the U.S. As a result, we typically record revenue for each publication only once every 12 to 18 months, depending on the publication cycle of the directory. The amount of revenue we recognize each quarter from our PYP directories is therefore directly related to the number of PYP directories we deliver to the intended market each quarter, which can vary based on the timing of the publication cycles.

Key Business Metrics

We review several operating metrics, including the following key business metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. We believe these key metrics are useful to investors both because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making, and they may be used by investors to help analyze the health of our business.

Total Clients

We define total clients as the number of SMB accounts with one or more revenue-generating solutions in a particular period. For quarter- and year-ending periods, total clients from the last month in the period are reported. A single client may have separate revenue-generating accounts for multiple Marketing Services solutions or SaaS offerings, but we count these as one client when the accounts are managed by the same business entity or individual. Although infrequent, where a single organization has multiple subsidiaries, divisions, or segments, each business entity that is invoiced by us is treated as a separate client. We believe that the number of total clients is an indicator of our market penetration and potential future business opportunities. We view the mix between Marketing Services clients and SaaS clients as an indicator of potential future opportunities to offer our SaaS solutions to our Marketing Services clients.

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

(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)     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.

(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.

Marketing Services clients decreased by 48 thousand, or 13%, as of December 31, 2023 as compared to December 31, 2022. Marketing Services clients decreased by 28 thousand, or 7%, as of December 31, 2022 as compared to December 31, 2021. These decreases were related to the secular decline in the print media industry and significant competition in the digital media space and from focusing on offering our SaaS solutions to our current Marketing Services clients. This was partially offset by acquisitions of companies with Marketing Services clients.

SaaS clients increased by 14 thousand, or 27%, as of December 31, 2023 as compared to December 31, 2022. SaaS clients increased by 6 thousand, or 13%, as of December 31, 2022 as compared to December 31, 2021. These increases resulted from focusing on offering our SaaS solutions to our current Marketing Services clients, as well as continuing to focus on new SaaS client acquisition through improved identification of prospects, improved selling methods, introduction of new product features, and a small but growing international footprint.

Total clients decreased by 41 thousand, or 11%, as of December 31, 2023 as compared to December 31, 2022. Total clients decreased by 22 thousand, or 5%, as of December 31, 2022 as compared to December 31, 2021. The primary driver of

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these decreases was the secular decline in the print media business combined with increasing competition in the digital media space, partially offset by an increase in SaaS clients and acquisitions of companies with established clients.

Monthly ARPU

We define monthly average revenue per unit (“ARPU”) as our total client billings for a particular month divided by the number of clients that have one or more revenue-generating solutions in that same month. For each reporting period, the weighted-average monthly ARPU from all the months in the period are reported. ARPU varies based on product mix, product volumes, and the amounts we charge for our services. We believe that ARPU is an important measure of client spend and that growth in ARPU is an indicator of client satisfaction with our services.

(1)Monthly ARPU includes results from all four of our business segments: Thryv U.S. Marketing Services, Thryv U.S. SaaS, Thryv International Marketing Services and Thryv International SaaS.

Monthly ARPU for Marketing Services decreased by $20, or 11%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, and $35, or 16%, for the year ended December 31, 2022 compared to the year ended December 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 SaaS increased by $3, or 1%, during the year ended December 31, 2023 compared to the year ended December 31, 2022, and increased by $38, or 11%, during the year ended December 31, 2022 compared to the year ended December 31, 2021. The increase in ARPU for these periods was attributable to upsell of higher value solutions to existing customers and price increases, offset by the strategic decision to accelerate the conversion of clients from digital Marketing Services solutions to SaaS solutions, that initially come in at lower introductory pricing. In addition, the sale of add-on features to our Thryv Platform, such as Thryv Leads and Thryv Pay contributed to Monthly SaaS 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. Individuals who register for, and use, multiple accounts across computer and mobile devices 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.

Monthly active users decreased by 1 thousand, or 2%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. Monthly active users increased by 11 thousand, or 37%, for the year ended December 31, 2022 compared to the year ended December 31, 2021. The number of monthly active users decreased for the year ended December 31, 2023 compared to the year ended December 31, 2022 as our service model has adapted to changes in client expectations and allows clients to realize value without the need to login as often. The number of monthly active users increased for the year ended December 31, 2022 compared to the year ended December 31, 2021 resulting from our efforts to increase engagement among our SaaS clients, such as enhancing the initial sales process, the client onboarding experience, and lifecycle management. The increase was also driven by our focus on obtaining higher retention, higher spend clients as these clients are more engaged with our platform.

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Key Components of Our Results of Operations

Revenue

We generate revenue from our four business segments: Thryv U.S. Marketing Services, Thryv U.S. SaaS, Thryv International Marketing Services and Thryv International SaaS. Our primary sources of revenue in our Thryv U.S. Marketing Services and Thryv International Marketing Services segments are Print and Digital services. Our primary source of revenue in our Thryv U.S. SaaS and Thryv International SaaS segments are our SaaS solutions.

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 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 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 depreciation of fixed assets, and amortization associated with capitalized software and intangible assets.

Other Income (Expense)

Other income (expense) consists of interest expense, other components of net periodic pension (cost) benefit, and other income (expense), which includes a bargain purchase gain as a result of the Vivial Acquisition during the year ended December 31, 2022, and foreign currency-related income and 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:

(1)Consolidated results of operations includes Yellow's results of operations subsequent to the April 3, 2023 acquisition date.

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

(3)See “Non-GAAP Financial Measures” for a definition of Adjusted EBITDA and a reconciliation to Net (loss) income, the most directly comparable measure presented in accordance with GAAP.

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

(5)See “Non-GAAP Financial Measures” for a definition of Adjusted Gross Margin.

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Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022

Revenue

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

(1)    Thryv International Marketing Services includes Yellow revenue subsequent to the Yellow Acquisition.

(2)    Thryv U.S. Marketing Services includes Vivial revenue subsequent to the Vivial Acquisition.

Total Revenue decreased by $285.4 million, or 23.7%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease in total Revenue was driven primarily by a decrease in Thryv U.S. Marketing Services Revenue of $309.5 million, a decrease Thryv International Marketing Services Revenue of $23.3 million, partially offset by an increase in Thryv U.S. SaaS Revenue of $41.8 million, and an increase in Thryv International SaaS Revenue of $5.6 million.

Thryv U.S. Revenue

Marketing Services Revenue

Thryv U.S. Marketing Services revenue decreased by $309.5 million, or 37.7%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.

Print revenue decreased by $185.2 million, or 47.9%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. This decrease in Print revenue was primarily driven by the impact of publication timing differences, as a result of our Print agreements having greater than 12 month terms, and the continued secular decline in industry demand for Print services, which was partially offset by increasing the terms of our new Print publications from 15 months to 18 months.

Print revenue is recognized upon delivery of the published directories. Individual published directories have different publication cycles, with a typical lifecycle of 15 to 18 months for directories published during the year ended December 31, 2022, as compared to 18 months during the year ended December 31, 2023. As a result of recognizing revenue upon delivery, we typically record revenue for each published directory only once every 15 to 18 months, depending on the publication cycle of the individual published directory, which does not make comparing revenue year-over-year fully representative of actual demand trends due to timing of publication cycles. The greater contract value for individual published directories during the year ended December 31, 2023 increased Print revenue per published directory because the revenue was based on an 18 month contract value for publications with new terms. This increase in per published directory revenue partially offset the secular decline in industry demand for Print services, resulting in an overall 22% decline in revenue for the year ended December 31, 2023 when comparing on a publication-by-publication basis.

Digital revenue decreased by $124.3 million, or 28.7%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease was primarily driven by a continued trending decline in the Company’s Marketing Services client base and significant competition in the consumer search and display space, particularly from large, well-capitalized businesses such as Google, Yelp and Facebook.

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SaaS Revenue

Thryv U.S. SaaS revenue increased by $41.8 million, or 19.7%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The increase was driven by increased demand for our Thryv SaaS solution as SMBs accelerate their move away from manual processes and towards cloud platforms to more efficiently manage and grow their businesses, and by our success in re-focusing our go-to-market and onboarding strategy to target higher value clients.

Thryv International Revenue

Marketing Services Revenue

Thryv International Marketing Services revenue decreased by $23.3 million, or 14.0%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease in revenue was driven by lower Print and digital revenue primarily resulting from the secular decline in industry demand for Print services in Australia and negative impact from changes in foreign currency rates. This decrease was partially offset by $12.3 million of Print and digital revenue recognized as a result of the Yellow Acquisition.

SaaS Revenue

Thryv International SaaS revenue increased $5.6 million, or 123.1%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The increase was driven by increased demand for our SaaS solution as we continue to increase sales to SMBs in Australia.

Cost of Services

Cost of services decreased by $83.3 million, or 19.7%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease was primarily driven by the corresponding decline in revenue and strategic cost saving initiatives. Specifically, we reduced printing, distribution, digital and fulfillment support costs by $66.7 million and contract services costs by $6.0 million. Additionally, depreciation and amortization expense decreased $11.4 million, driven by the accelerated amortization method used by the Company.

Gross Profit

Gross profit decreased by $202.1 million, or 25.9%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. Our gross margin decreased by 180 basis points, to 63.1%, for the year ended December 31, 2023 compared to 64.9% for the year ended December 31, 2022. The decrease was primarily due to a decrease in Marketing Services revenue, partially offset by an increase in SaaS revenue and a decrease in cost of services as a result of the decline in revenue and strategic cost saving initiatives.

Operating Expenses

Sales and Marketing

Sales and marketing expense decreased by $61.9 million, or 17.1%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease was attributable to a decrease in sales commissions of $23.3 million, due to new sales commissions plans and revised targets, and a decrease in sales promotion expenses of $14.0 million, primarily driven by improvements in the client acquisition funnel. Additionally, there were decreases in employee-related costs of $13.5 million, travel expenses of $2.3 million, and contract services expenses of $2.0 million, due to strategic cost-saving initiatives. Depreciation and amortization expense also decreased by $9.7 million due to the accelerated amortization method used by the Company. These decreases were partially offset by an increase in stock-based compensation expense of $4.5 million, as a result of additional grants during the year ended December 31, 2023.

General and Administrative

General and administrative expense decreased by $7.5 million, or 3.5%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. This decrease was primarily due to a decrease in contractor costs of $4.5 million, a decrease in employee-related costs of $3.9 million and a decrease in facilities costs of $3.5 million, driven primarily by cost savings initiatives. Additionally, there was a decrease in depreciation and amortization expense of $4.1 million, due to the accelerated amortization method used by the Company. These decreases were partially offset by a loss on the settlement of an

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indemnification asset of $10.7 million during the year ended December 31, 2023 compared to a gain of $2.1 million during the year ended December 31, 2022.

Impairment Charges

Impairment charges increased by $166.6 million for the year ended December 31, 2023 compared to the year ended December 31, 2022. Impairment charges of $268.8 million were recognized as a result of a goodwill impairment in our Thryv U.S. Marketing Services reporting unit during the year ended December 31, 2023, while $102.2 million of impairment charges were recognized in our Thryv U.S. Marketing Services reporting unit during the year ended December 31, 2022.

Other Income (Expense)

Interest Expense

Interest expense increased by $1.3 million, or 2.2%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, driven primarily by the impact of higher interest rates during the year, partially offset by lower outstanding debt balances resulting from payments made on our Term Loan.

Other Components of Net Periodic Pension Benefit

Other components of net periodic pension benefit decreased by $41.9 million for the year ended December 31, 2023. The change was primarily due to a remeasurement gain of $9.9 million recognized during the year ended December 31, 2023, compared to a remeasurement gain of $43.6 million recognized during the year ended December 31, 2022. Additionally, interest cost increased by $7.4 million, due to rising interest rates, during the year ended December 31, 2023.

Other (Expense) Income

During the year ended December 31, 2023, the Company incurred other expenses of $1.5 million, which primarily represented foreign currency-related losses. During the year ended December 31, 2022, the Company recognized other income of $15.4 million, which primarily represented a $10.9 million bargain purchase gain as a result of the Vivial Acquisition and foreign currency-related gains.

Income Tax Benefit (Expense)

Income tax expense decreased by $45.9 million, or 102.8%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The effective tax rate was 0.5% and 45.1% for the year ended December 31, 2023 and 2022, respectively. The effective tax rate differs from the 21.0% U.S. Federal statutory rate in the current year primarily due to our geographic mix of taxable income in various tax jurisdictions, and tax permanent differences primarily attributable to the impact of the goodwill impairment allocated to non-deductible goodwill and unrecognized tax benefits.

Adjusted EBITDA

Adjusted EBITDA decreased by $145.8 million, or 43.7%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease was primarily driven by the secular decline in both our Thryv U.S. and International Marketing Services segments. The decrease was partially offset by the result of increasing the terms of our Print publications from 15 months to 18 months in our Thryv U.S. Marketing Services segment and growth in our Thryv U.S. and International SaaS segments. See “Non-GAAP Financial Measures” for a definition of Adjusted EBITDA and a reconciliation to Net (loss) income, the most directly comparable measure presented in accordance with GAAP.

Years Ended December 31, 2022 and 2021

For a discussion of the year ended December 31, 2022 compared to the year ended December 31, 2021, refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K year ended December 31, 2022.

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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 Annual 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 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 (loss) income plus Interest expense, Income tax expense (benefit), Depreciation and amortization expense, 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 (loss) income as a performance measure. We define Adjusted Gross Profit (“Adjusted Gross Profit”) and Adjusted Gross Margin (“Adjusted Gross Margin”) as Gross profit and Gross margin, respectively, adjusted to exclude the impact of depreciation and amortization expense and stock-based compensation expense (benefit).

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

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

(1)The Company records Stock-based compensation expense related to the amortization of grant date fair value of the Company’s stock-based compensation awards. See Note 12, Stock-Based Compensation and Stockholders' Equity, to our consolidated financial statements included in Part II, Item 8 in this Annual Report for more information.

(2)For the years ended December 31, 2023, 2022 and 2021, expenses related to periodic efforts to enhance efficiencies and reduce costs, and include severance benefits, and costs associated with abandoned facilities and system consolidation. For further detail on severance benefits, see Note 8, Accrued Liabilities, to our consolidated financial statements included in Part II, Item 8 in this Annual Report.

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(3)In connection with the YP Acquisition, the seller indemnified the Company for future potential losses associated with certain federal and state tax positions taken in tax returns filed by the seller prior to the acquisition date. See Note 4, Fair Value Measurements, to our consolidated financial statements included in Part II, Item 8 in this Annual Report for more information.

(4)Expenses related to the Yellow Acquisition, the Vivial Acquisition, the Thryv Australia Acquisition and other transaction costs.

(5)Other components of net periodic pension benefit 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 relates to the mark-to-market pension remeasurement.

(6)During the year ended December 31, 2023, Other includes expenses related to the valuation of certain assets as a result of the acquisition of Thryv Australia and foreign exchange related expense. During the year ended December 31, 2022, Other primarily represents the bargain purchase gain as a result of the Vivial Acquisition, partially offset by foreign exchange-related expense. During the year ended December 31, 2021, Other primarily includes expenses related to potential non-income based tax liabilities and foreign exchange-related expense.

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

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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., which in turn generates cash flow from its own operations and operations of its subsidiaries, and has cash and cash equivalents on hand, funds provided under the Term Loan and funds available under the ABL Facility. The agreements governing our debt may restrict the ability of our subsidiaries to make loans or otherwise transfer assets to us. Further, our subsidiaries are permitted under the terms of our senior credit facilities and other indebtedness to incur additional indebtedness that may restrict or prohibit the making of distributions or the making of loans by such subsidiaries to us. Our and our subsidiaries’ ability to meet our debt service requirements is dependent on our ability to generate sufficient cash flows from operations.

We believe that expected cash flows from operations, available cash and cash equivalents, and funds available under our ABL Facility will be sufficient to meet our liquidity requirements, such as working capital requirements for our operations, business development and investment activities, and debt payment obligations, for the following 12 months. Any projections of future earnings and cash flows are subject to substantial uncertainty. Our future success and capital adequacy will depend on, among other things, our ability to achieve anticipated levels of revenues and cash flows from operations and our ability to address our annual cash obligations and reduce our outstanding debt, all of which are subject to general economic, financial, competitive, and other factors beyond our control. We continue to monitor our capital requirements to ensure our needs are in line with available capital resources.

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 15, Contingent Liabilities, to our audited consolidated financial statements included in Part II, Item 8 in this Annual 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:

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Cash Flows from Operating Activities

Net cash provided by operating activities decreased by $0.3 million, or 0.2%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. This decrease was primarily due to the impact of changes in working capital, primarily driven by the timing of accounts payables disbursements and cash expenditures, in addition to the overall decline of our Marketing Services revenue. This decrease was partially offset by the timing of accounts receivable collections and lower income tax payments of $48.9 million.

Cash Flows from Investing Activities

Net cash used in investing activities decreased by $9.5 million, or 18.3%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. This decrease was primarily due to the difference in the cash paid of $22.8 million in connection with the Vivial Acquisition on January 1, 2022, compared to the cash paid of $8.9 million in connection with the Yellow Acquisition on April 3, 2023. This decrease was partially offset by $4.2 million increase in capital expenditures.

Cash Flows from Financing Activities

Net cash used in financing activities increased by $12.4 million, or 13.6%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. This increase was primarily driven by a $7.5 million increase in payments made on the Term Loan and a decrease in net proceeds from the ABL Facility of $20.3 million. These changes were partially offset by a $15.8 million increase in proceeds from the exercises of stock warrants and a $0.4 million increase in other proceeds, primarily from the exercise of stock options.

Debt

Term Loan

On March 1, 2021, the Company entered into the Term Loan. The proceeds of the Term Loan were used to finance the Thryv Australia Acquisition, refinance in full the Company's Senior Term Loan and pay fees and expenses related to the Thryv Australia Acquisition and related financing.

The Term Loan established the Term Loan Facility in an aggregate principal amount equal to $700.0 million, of which 38.4% was held by related parties who were equity holders of the Company, as of March 1, 2021. The Term Loan Facility matures on March 1, 2026. Prior to June 30, 2023, borrowings under the Term Loan Facility bore interest at a fluctuating rate per annum equal to, at the Company’s option, LIBOR or a base rate, in each case, plus an applicable margin per annum equal to (i) 8.50% (for LIBOR loans) and (ii) 7.50% (for base rate loans). Effective June 30, 2023, borrowings under the Term Loan Facility bear interest at a fluctuating rate per annum equal to, at the Company’s option, a Secured Overnight Financing Rate (“SOFR”) or a base rate, in each case, plus an applicable margin per annum equal to (i) 8.50% (for SOFR loans) and (ii) 7.50% (for base rate loans). The Term Loan Facility requires mandatory amortization payments equal to $17.5 million per fiscal quarter. As of December 31, 2023 and 2022, no portion of the Term Loan was held by related parties who were equity holders of the Company on that date.

ABL Facility

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

•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 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.

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As of December 31, 2023, the Company had borrowing base availability of $50.1 million. As a result of certain restrictions in the Company's debt agreements, as of December 31, 2023, approximately $37.5 million was available to be drawn upon under the ABL Facility.

We maintain debt levels that we consider appropriate after evaluating a number of factors, including cash requirements for ongoing operations, investment and financing plans (including acquisitions and share repurchase activities), and overall cost of capital. Per the terms of the Term Loan Facility, payments of the Term Loan balance are determined by the Company's Excess Cash Flow (as defined within the Term Loan Facility). We are in compliance with all covenants under the Term Loan and ABL Facility as of December 31, 2023. We had total recorded debt outstanding of $348.9 million (net of $9.3 million of unamortized original issue discount (“OID”) and debt issuance cost) at December 31, 2023, which was comprised of amounts outstanding under our Term Loan of $309.4 million and ABL Facility of $48.8 million.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our audited consolidated financial statements, which have been prepared in accordance with U.S. GAAP. In preparing our financial statements, we make estimates, assumptions, and judgments that can have a significant impact on our reported revenues, results of operations and net income or loss, as well as on the value of certain assets and liabilities on our balance sheet during and as of the reporting periods. These estimates, assumptions, and judgments are necessary because future events and their effects on our results and the value of our assets cannot be determined with certainty and are made based on our historical experience and other assumptions that we believe to be reasonable under the circumstances. These estimates may change as new events occur or additional information is obtained, and we may periodically be faced with uncertainties, the outcomes of which are not within our control and may not be known for a prolonged period of time. Because the use of estimates is inherent in the financial reporting process, actual results could differ from those estimates.

We believe that the assumptions and estimates associated with revenue recognition, business combinations, goodwill, pension obligations, and income taxes have the greatest potential impact on our audited consolidated financial statements. Therefore, we consider these to be our critical accounting estimates. See Note 1, Description of Business and Summary of Significant Accounting Policies, to our audited consolidated financial statements included in Part II, Item 8 in this Annual Report for further information on these and our other significant accounting policies and estimates as well as our disclosures on recent accounting pronouncements. Our most critical accounting estimates are summarized below.

Revenue Recognition

We recognize revenue based on the revenue recognition standard, Revenue from Contracts with Customers (Topic 606), (“ASC 606”). The Company determines the amount of revenue to be recognized through application of the five-step model as described in Note 1, Description of Business and Summary of Significant Accounting Policies, to our audited consolidated financial statements included in Part II, Item 8 in this Annual Report.

We derive revenue from our four business segments: Thryv U.S. Marketing Services, Thryv U.S. SaaS, Thryv International Marketing Services and Thryv International SaaS. The Company has determined that each of its services is distinct and represents a separate performance obligation because the SMB can benefit from each service on its own or together with other resources that are readily available to the SMB, and services are separately identifiable from other promises in the contract. Revenue for all services is recognized when control transfers to the SMB. For print solutions, control transfers upon delivery of the published directories. Control over SaaS and digital services transfers to the SMB evenly over the service period.

The transaction price of a contract primarily consists of fixed consideration components pursuant to the applicable contractual terms and may involve the use of estimates. These judgments involve consideration of historical and expected experience with the customer and other similar customers. The Company’s contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates the transaction price to each performance obligation based on its relative standalone selling price. Standalone selling price is the price at which the Company would sell a promised service separately to a client. Judgment is required to determine the standalone selling price for each distinct performance obligation. Often, the Company does not have sufficient standalone sales information, as contracts with customers generally include multiple performance obligations. When standalone sales information is not available, the Company estimates the standalone selling price using information that may include market conditions, entity-specific factors such as pricing and discounting strategies, and other inputs.

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Business Combinations

We have completed several acquisitions of other businesses in the past, including the Yellow Acquisition on April 3, 2023, the Vivial Acquisition on January 21, 2022, the Thryv Australia Acquisition on March 1, 2021 and the YP Acquisition on June 30, 2017, and we may acquire additional businesses in the future. In an acquisition, we first review if substantially all the fair value of the assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If such concentration exists, the transaction is considered an asset acquisition rather than a business combination.

The results of businesses acquired in a business combination are included in our audited consolidated financial statements from the date of acquisition. We allocate the purchase price, which is the sum of the consideration paid and may consist of cash, equity, or a combination of the two, to the identifiable assets and liabilities of the acquired business at their acquisition date fair values. The excess of the purchase price over the amount allocated to the identifiable assets and liabilities, if any, is recorded as goodwill. Determining the fair value of assets acquired and assumed liabilities requires management to use significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenue and cash flows, and discount rates.

We use all available information to estimate fair values. We typically engage outside appraisal firms to assist in determining the fair value of tangible and identifiable intangible assets such as client relationships, trademarks, and any other significant assets or liabilities. During the measurement period, of up to one year after the acquisition date, we may adjust the values attributed to the assets acquired and assumed liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date.

Our purchase price allocation methodology contains uncertainties because it requires assumptions and management’s judgment to estimate the fair value of assets acquired and assumed liabilities at the acquisition date. Key judgments used to estimate the fair value of intangible assets include projected revenue growth and operating margins, discount rates, client attrition rates, as well as the estimated economic life of intangible assets. Management estimates the fair value of assets and liabilities based upon quoted market prices, the carrying value of the acquired assets, and widely accepted valuation techniques, including discounted cash flows. Our estimates are inherently uncertain and subject to refinement. Unanticipated events or circumstances may occur which could affect the accuracy of our fair value estimates, including assumptions regarding industry economic factors and business strategies.

Goodwill

Goodwill represents the excess of the purchase price of an acquired business over the fair value of the net tangible and identifiable intangible assets acquired. Goodwill is tested annually for impairment as of October 1st and at any time upon the occurrence of certain triggering events or changes in circumstances. The Company performs its goodwill impairment test at the reporting unit level. In assessing goodwill for impairment, an entity has the option to assess qualitative factors to determine whether events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Performing a qualitative impairment assessment requires an examination of relevant events and circumstances that could have a negative impact on the carrying value of our Company, such as macroeconomic conditions, industry and market conditions, earnings and cash flows, overall financial performance, and other relevant entity-specific events. If the Company concludes an impairment is more likely than not through its qualitative assessment, then it is required to perform a quantitative assessment for impairment. The quantitative estimates of the fair value of the Company’s reporting units are primarily determined using an income approach based on discounted cash flows. The discounted cash flow methodology requires significant judgment, including estimation of future cash flows, which is dependent on internal forecasts, current and anticipated economic conditions and trends, the estimation of the long-term growth rate of the Company’s business, and the determination of the Company’s weighted average cost of capital. Changes in the estimates and assumptions incorporated in our impairment assessment could materially affect the determination of fair value and the associated impairment charge.

On October 1, 2023 and December 31, 2023, we performed our annual impairment test in accordance with ASC 350-30-35, Intangibles-Goodwill and Other. As a result, the Company recognized a non-cash impairment charge of $268.8 million in the fourth quarter of 2023 to reduce goodwill in its Thryv U.S. Marketing Services reporting unit. Additionally, the Company recognized a non-cash impairment charge of $102.0 million during the year ended December 31, 2022 to reduce goodwill in its Thryv U.S. Marketing Services reporting unit. No goodwill impairment charges were recorded in the Company’s consolidated statements of operations and comprehensive (loss) income for the year ended December 31, 2021.

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As of December 31, 2023, goodwill was $302.4 million. For additional information related to goodwill, see Note 5, Goodwill and Intangible Assets to our consolidated financial statements included in Part II, Item 8 in this Annual Report.

Pension Obligations

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

Although the plans are frozen, the Company continues to incur interest cost as well as gains or losses associated with changes in fair value of plan assets, all of which are referred to as net periodic pension cost. In determining the pension obligations at each reporting period, management makes certain actuarial assumptions, including discount rates and mortality rates. For these assumptions, management consults with actuaries, monitors plan provisions and demographics, and reviews public market data and general economic information. Changes in these assumptions can have a significant impact on the projected pension obligations, funding requirement, and net periodic pension cost. The Company immediately recognizes actuarial gains and losses in its operating results in the year in which the gains and losses occur.

Income Taxes

Valuation allowances are established when necessary to reduce deferred tax assets to the amounts that are more likely than not expected to be realized based on the weight of positive and negative evidence. Future realization of deferred tax assets ultimately depends on the existence of sufficient taxable income of the appropriate character, for example, ordinary income or capital gain within the carryback or carryforward periods available under the applicable tax law. We regularly review the deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences, and tax planning strategies. Should there be a change in the ability to recover deferred tax assets, our income tax provision would increase or decrease in the period in which the assessment is changed.

The Company’s policy is to recognize interest and penalties related to unrecognized tax benefits in income tax expense. The amount of income taxes we pay is subject to ongoing audits by federal and state tax authorities, which often result in proposed assessments. Significant judgment is required in determining income tax provisions and evaluating tax positions. We establish reserves for open tax years for uncertain tax positions that may be subject to challenge by various tax authorities. The consolidated tax provision and related accruals include the impact of such reasonably estimable losses and related interest and penalties as deemed appropriate. Tax benefits recognized in the financial statements from uncertain tax positions are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.

Recent Accounting Pronouncements

See Note 1, Description of Business and Summary of Significant Accounting Policies, to our audited consolidated financial statements as of and for the years ended December 31, 2023, 2022, and 2021, included in Part II, Item 8 in this Annual Report, for a discussion of recent accounting pronouncements.

Item 7. 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 audited consolidated financial statements and the related notes thereto included elsewhere in this Annual 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. Our solutions enable our SMB clients to generate new business leads, manage their customer relationships and run their day-to-day business operations. We serve approximately 390,000 SMB clients globally through four business segments: Thryv U.S. Marketing Services, Thryv U.S. SaaS, Thryv International Marketing Services, and Thryv International SaaS.

Our Thryv U.S. Marketing Services segment provides both print and digital solutions and generated $820.0 million, $797.5 million, and $979.6 million of consolidated revenues for the years ended December 31, 2022, 2021, and 2020, respectively. Our Marketing Services offerings include our owned and operated Print Yellow Pages, which carry the “The Real Yellow Pages” tagline, our proprietary Internet Yellow Pages, known by the Yellowpages.com, Superpages.com, and Dexknows.com URLs, search engine marketing solutions and other digital media solutions, which include online display and social advertising, online presence, and video and search engine optimization tools.

On January, 21, 2022, we acquired Vivial Media Holdings, Inc. (“Vivial”), a marketing and advertising company, for $22.8 million in cash, subject to certain adjustments. Vivial results are included in the Thryv U.S. Marketing Services segment.

Our Thyrv U.S. SaaS segment generated $211.8 million, $170.5 million, and $129.8 million of consolidated revenues for the years ended December 31, 2022, 2021, and 2020, respectively. Our primary SaaS offerings include Thryv®, our flagship SMB end-to-end customer experience platform, Marketing Center, ThryvPaySM, and Thryv Add-Ons. Marketing Center is a fully integrated next generation marketing and advertising platform operated by the end user. Marketing Center contains everything a small business owner needs to market and grow their business effectively. ThryvPaySM, is our own branded payment solution that allows users to get paid via credit card and ACH and is tailored to service focused businesses that want to provide consumers safe, contactless, and fast-online payment options. Thryv Add-Ons include an automated lead generation service that fully integrates with our Thryv platform, website development, SEO tools, Google My Business optimization, and Hub by ThryvSM. These optional platform subscription-based add-ons provide a seamless user experience for our end-users and drive higher engagement within the Thryv Platform while also producing incremental revenue growth.

Our Thryv International Marketing Services segment is comprised of Thryv Australia Pty Ltd, which we acquired on March 1, 2021. Our Thryv International Marketing Services segment provides both print and digital solutions and generated $166.0 million of consolidated revenues for the year ended December 31, 2022, and $144.8 million of consolidated revenues for the ten months ended December 31, 2021. Thryv Australia is Australia’s leading provider of marketing solutions serving SMBs. The Thryv Australia Acquisition brings under the Thryv banner more than 100,000 existing Thryv Australia clients, many of which we believe are ideal candidates for the Thryv platform.

Our Thryv International SaaS segment is comprised of Thryv, Hub By Thryv, Thryv Add-ons and Thryv Pay, and generated $4.5 million of consolidated revenues for the year ended December 31, 2022 and $0.6 million of consolidated revenues for the ten months ended December 31, 2021.

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

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Impact of 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, significantly disrupted the global economy, resulting in an adverse effect on the business operations of certain 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 years ended December 31, 2022, 2021 and 2020 was somewhat mitigated as many of our clients continued to operate.

In March 2020, we began offering certain pandemic credit incentives to select clients. These pandemic credit incentives resulted in a $3.2 million and $17.5 million reduction in revenue for the years ended December 31, 2021 and 2020, respectively. Requests for incentives continued to decline in 2021 as clients resumed normal contractual terms and pricing. As of April 1, 2021, we virtually discontinued providing pandemic credits and accepting client requests to pause search campaigns due to the COVID-19 pandemic. Effective April 1, 2021, all client requests for adjustments are now handled as part of normal business operations consistent with historical practices.

During the years ended December 31, 2022, 2021 and 2020, we incurred total severance expense of $3.5 million, $4.7 million and $11.7 million, respectively. During the years ended December 31, 2022 and 2021, none of the severance expense recorded was related to employee terminations as a result of COVID-19. During the year ended December 31, 2020, $5.0 million of the severance expense recorded was related to employee terminations as a result of COVID-19. The economic downturn caused by COVID-19 resulted in an incremental $2.1 million recorded to allowance for credit losses for the year ended December 31, 2020. No incremental impact was recorded for the years ended December 31, 2022 and 2021. In addition, we remain committed to our variable cost structure and to limiting our capital expenditures, not including acquisitions, which will allow us to continue operating with relatively low working capital needs.

During the year ended December 31, 2022, we have continued to see trends similar to those experienced during the year ended December 31, 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 operating 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.

Impairment Charges

Our annual impairment tests resulted in a non-cash impairment of our goodwill of $102.0 million during the year ended December 31, 2022, to reduce goodwill for our Thryv U.S. Marketing Services reporting unit, as a result of the historical secular decline in industry demand for print services, along with the historical trending decline in our Marketing Services client base, and competition in the consumer search and display space.

While we believe we have made reasonable estimates and utilized reasonable assumptions to calculate the fair values of our reporting units, it is possible a material change could occur to the estimated fair value of these assets. If our actual results are not consistent with our estimates, we could be exposed to future impairment losses that could be material to our results of operations.

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Factors Affecting Our Performance

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

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 SMBs 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 Thryv U.S. Marketing Services and Thryv International Marketing Services 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 U.S. and international SaaS segments. We have selectively utilized a portion of the cash generated from our Thryv U.S. Marketing Services and Thryv International Marketing Services segments to support initiatives in our evolving U.S. and international SaaS segments, which has represented an increasing percentage of 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 Expansion and Acquisition

Our growth prospects depend upon our ability to successfully develop new markets. We currently serve the United States, Australian, and Canadian SMB markets and plan to leverage strategic acquisitions or initiatives to expand our client base domestically and enter new markets internationally. Identifying proper targets and executing strategic acquisitions may take substantial time and capital. On March 1, 2021, we completed the acquisition of Thryv Australia, Australia’s leading provider of marketing solutions serving SMBs. In July 2022, we began operations in Canada through our own sales force and a re-seller agreement. We believe that strategic acquisitions of marketing services companies globally will expand our client base and provide additional opportunities to offer our SaaS solutions.

Print Publication Cycle

We recognize revenue for print services at a point in time upon delivery of the published PYP directories containing customer advertisements to the intended market. Our PYP directories typically have 12-month publication cycles in Australia and 15 to 18-month publication cycles in the U.S. As a result, we typically record revenue for each publication only once every 12 to 18 months, depending on the publication cycle of the directory. The amount of revenue we recognize each quarter from our PYP directories is therefore directly related to the number of PYP directories we deliver to the intended market each quarter, which can vary based on the timing of the publication cycles.

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.

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Total Clients

We define total clients as the number of SMB accounts with one or more revenue-generating solutions in a particular period. For quarter- and year-ending periods, total clients from the last month in the period are reported. A single client may have separate revenue-generating accounts for multiple Marketing Services solutions or SaaS offerings, but we count these as one client when the accounts are managed by the same business entity or individual. Although infrequent, where a single organization has multiple subsidiaries, divisions, or segments, each business entity that is invoiced by us is treated as a separate client. We believe that the number of total clients is an indicator of our market penetration and potential future business opportunities. We view the mix between Marketing Services clients and SaaS clients as an indicator of potential future opportunities to offer our SaaS solutions to our Marketing Services clients.

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

(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)     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.

(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.

Marketing Services clients decreased by 28 thousand, or 7%, as of December 31, 2022 as compared to December 31, 2021. Marketing Services clients increased by 72 thousand, or 23%, as of December 31, 2021 as compared to December 31, 2020. The decrease in Marketing Services clients as of December 31, 2022 was related to the secular decline in the print media industry and significant competition in the digital media space. The increase in Marketing Services clients as of December 31, 2021 was related to the acquisition of Thryv Australia, partially offset by the secular decline in the print media business combined with increasing competition in the digital media space.

SaaS clients increased by 6 thousand, or 13%, as of December 31, 2022 as compared to December 31, 2021. SaaS clients increased by 2 thousand, or 5%, as of December 31, 2021 as compared to December 31, 2020. These increases resulted from our continuing focus on new SaaS client acquisition through improved identification of prospects, improved selling methods, introduction of new product features, and a small but growing international footprint.

Total clients decreased by 22 thousand, or 5%, as of December 31, 2022 as compared to December 31, 2021. Total clients increased by 75 thousand, or 22%, as of December 31, 2021 as compared to December 31, 2020. The primary driver of the decrease in total clients as of December 31, 2022 was the secular decline in the print media business combined with increasing competition in the digital media space, partially offset by an increase in SaaS clients. The primary driver of the increase in total clients as of December 31, 2021 was related to the acquisition of Thryv Australia, partially offset by 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 clients that have one or more revenue-generating solutions in that same month. For each reporting period, the weighted-average monthly ARPU from all the months in the period are reported. 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.

(1)Marketing Services and SaaS ARPU include combined results from both our U.S. and Thryv International Marketing Services and SaaS businesses, respectively.

Monthly ARPU for Marketing Services decreased by $35, or 16%, for the year ended December 31, 2022 compared to the year ended December 31, 2021, and $9, or 4%, for the year ended December 31, 2021 compared to the year ended December 31, 2020. The decrease in ARPU for these periods was related to reduced spend by clients on our print media offerings due to the secular decline of the industry, caused by the continuing shift of advertising spend to less expensive digital media. This decrease in ARPU was further driven by a reduction of our resale of high-spend, low margin third-party local search and display services that were not hosted on our owned and operated platforms.

Monthly ARPU for SaaS increased by $38, or 11%, during the year ended December 31, 2022 compared to the year ended December 31, 2021, and increased by $75, or 29%, during the year ended December 31, 2021 compared to the year ended December 31, 2020. The increase in ARPU for these periods was 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 Monthly SaaS 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. Individuals who register for, and use, multiple accounts across computer and mobile devices 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.

Monthly active users increased by 11 thousand, or 37%, for the year ended December 31, 2022 compared to the year ended December 31, 2021. Monthly active users increased by 2 thousand, or 7%, for the year ended December 31, 2021 compared to the year ended December 31, 2020. The number of monthly active users increased period-over-period as we continued efforts to increase engagement among our SaaS clients, such as enhancing the initial sales process, the client onboarding experience, and lifecycle management. The increase was also driven by our focus 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.

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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:

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

(2)Consolidated results of operations includes Thryv Australia's results of operations subsequent to 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, the most directly comparable measure presented in accordance with GAAP.

(5)See “Non-GAAP Financial Measures” for a definition of Adjusted Gross Margin.

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Comparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2021

Revenue

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

(1)    Thryv U.S. Marketing Services includes Vivial revenue subsequent to the Vivial Acquisition.

(2)    Thryv International includes Thryv Australia revenue subsequent to the Thryv Australia Acquisition.

Total Revenue increased by $89.0 million, or 8.0%, for the year ended December 31, 2022 compared to the year ended December 31, 2021. The increase in total Revenue was driven primarily by an increase in Thryv U.S. SaaS Revenue of $41.3 million, Thryv U.S Marketing Services Revenue of $22.5 million and Thryv International Marketing Services Revenue of $21.2 million.

Thryv U.S. Revenue

Marketing Services Revenue

Thryv U.S. Marketing Services revenue increased by $22.5 million, or 2.8%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.

Print revenue increased by $20.5 million, or 5.6%, for the year ended December 31, 2022 compared to the year ended December 31, 2021. This increase was primarily driven by the Vivial Acquisition and the result of increasing the terms of our new Print publications from 15 months to 18 months. As a result, the revenue recognized upon delivery was based on a 18 month contract value for publications with new terms. The increase was partially offset by the secular decline in industry demand for Print services that resulted in a 14% decline in revenue compared to the year ended December 31, 2021, net of the impact of 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, with a typical lifecycle of 15 months for books published during the year ended December 31, 2021. Starting in the three months ended June 30, 2022, the typical life cycle was extended to 18 months for new directories. The titles published during the year ended December 31, 2022 are therefore different, and have longer terms, than the titles published during the year ended December 31, 2021 and represented more revenue than the titles published during the year ended December 31, 2021.

Digital revenue increased by $2.0 million, or 0.5%, for the year ended December 31, 2022 compared to the year ended December 31, 2021. This increase was primarily driven by Digital revenue as a result of the Vivial Acquisition. This increase was partially offset by a continued trending decline in the Company’s Marketing Services client base and significant competition in the consumer search and display space, particularly from large, well-capitalized businesses such as Google, Yelp and Facebook.

SaaS Revenue

Thryv U.S. SaaS revenue increased by $41.3 million, or 24.2%, for the year ended December 31, 2022 compared to the year ended December 31, 2021. The increase was driven by increased demand for our Thryv SaaS product as SMBs

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accelerate their move away from manual processes and towards cloud platforms to more efficiently manage and grow their businesses, and by our success in re-focusing our go-to-market and onboarding strategy to target higher value clients.

Thryv International Revenue

Marketing Services Revenue

Thryv International Marketing Services revenue increased by $21.2 million, or 14.6%, for the year ended December 31, 2022 compared to the ten months ended December 31, 2021. As the Thryv Australia Acquisition was completed on March 1, 2021, no revenue was recognized for Thryv International during the two months ended February 28, 2021. In addition, upon the Thryv Australia Acquisition, the deferred revenue balance assumed was reduced due to the purchase price allocation, which negatively impacted revenue recognized in the ten months ended December 31, 2021 by $37.9 million. These increases in revenue were partially offset by lower Print revenue resulting from the secular decline in industry demand for Print services in Australia.

SaaS Revenue

Thryv International SaaS revenue increased $4.0 million for the year ended December 31, 2022 compared the ten months ended December 31, 2021. The increase was driven by increased demand for our Thryv platform as we continue to increase sales to SMBs in Australia.

Cost of Services

Cost of services increased by $14.0 million, or 3.4%, for the year ended December 31, 2022 compared to the year ended December 31, 2021. The increase was primarily attributable to $25.4 million of printing, distribution and digital and fulfillment support costs, primarily related to the Vivial Acquisition. Contract services also increased $17.8 million, primarily related to the Vivial Acquisition and continued investments in the Thryv platform. The increase was partially offset by a $14.9 million decrease in depreciation and amortization expense, driven by the accelerated amortization method used by the Company. The Company uses the income forecast method, which is an accelerated amortization method that assumes the remaining value of the intangible asset is greater in the earlier years and then steadily declines over time based on expected future cash flows.

Gross Profit

Gross profit increased by $75.0 million, or 10.6%, for the year ended December 31, 2022 compared to the year ended December 31, 2021. Our gross margin increased by 150 basis points, to 64.9%, for the year ended December 31, 2022 compared to 63.4% for the year ended December 31, 2021. These increases were primarily due to higher revenue from Thryv International marketing services and growth in our SaaS segments.

Operating Expenses

Sales and Marketing

Sales and marketing expense increased by $4.6 million, or 1.3%, for the year ended December 31, 2022 compared to the year ended December 31, 2021. The increase was primarily attributable to $12.8 million of additional employee-related costs primarily related to the acquisitions of Thryv Australia and Vivial, and an increase in commission expenses of $13.3 million as a result of the Vivial Acquisition and higher Thryv platform sales. The increase was partially offset by a $6.8 million decrease in contract services, due to strategic cost-saving initiatives, and a $11.8 million decrease in advertising and sales promotion expenses.

General and Administrative

General and administrative expense increased by $62.5 million, or 40.6%, for the year ended December 31, 2022 compared to the year ended December 31, 2021. This increase was primarily attributable to an increase in employee-related costs, driven by the acquisitions of Thryv Australia and Vivial of $25.5 million, bad debt expense of $8.5 million, a $5.7 million gain on the sale of assets recognized in 2021, contract services of $4.3 million and share-based compensation expense of $3.4 million. General and administrative expenses also increased $18.4 million, as a result of higher software costs and other expenses related to the Vivial Acquisition, and $5.9 million as a result of depreciation and amortization expense, driven by the accelerated amortization method used by the Company. The Company uses the income forecast method, which is an accelerated amortization method that assumes the remaining value of the intangible asset is greater in the

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earlier years and then steadily declines over time based on expected future cash flows. These increases were partially offset by a $12.4 million decrease in transaction costs related to the Thryv Australia Acquisition, which occurred in the first quarter of 2021.

Impairment Charges

Impairment charges increased by $98.6 million for the year ended December 31, 2022 compared to the year ended December 31, 2021. Impairment charges of $102.2 million were incurred primarily as a result of a goodwill impairment in our U.S. Marketing Services segment during the year ended December 31, 2022, while $3.6 million of impairment charges were recognized during the year ended December 31, 2021.

Other Income (Expense)

Interest Expense

Interest expense decreased by $6.0 million, or 9.0%, for the year ended December 31, 2022 compared to the year ended December 31, 2021, driven primarily by lower outstanding debt balances resulting from payments of $112.5 million made on our Term Loan, partially offset by the impact of higher interest rates during the year ended December 31, 2022, compared to the year ended December 31, 2021,

Other Components of Net Periodic Pension Benefit (Cost)

Other components of net periodic pension benefit (cost) increased by $29.8 million for the year ended December 31, 2022. This change was primarily due to a remeasurement gain of $43.6 million recognized during the year ended December 31, 2022, compared to a remeasurement gain of $13.4 million recognized during the year ended December 31, 2021. The net actuarial gain in the benefit obligations of $45.1 million for the year ended December 31, 2022 was a result of gains attributable to increasing discount rates due to changes in the corporate bond markets and economic and demographic assumption updates, partially offset by losses attributable to actual asset performance falling short of expectations and plan experience different than expected.

Other Income (Expense)

During the year ended December 31, 2022, the Company recognized other income of $15.4 million, which primarily represents the $10.9 million bargain purchase gain as a result of the Vivial Acquisition and foreign currency-related gains. During the year ended December 31, 2021, the Company incurred other expense of $4.2 million, which included a loss of $3.1 million primarily resulting from the termination of leaseback obligations associated with land and a building in Tucker, Georgia, and foreign currency-related expenses.

Income Tax (Expense) Benefit

Income tax (expense) increased by $11.9 million, or 36.3%, for the year ended December 31, 2022 compared to the year ended December 31, 2021. The effective tax rate was 45.1% and 24.4% for the year ended December 31, 2022 and 2021, respectively. The effective tax rate differs from the 21.0% U.S. Federal statutory rate primarily due to our geographic mix of taxable income in various tax jurisdictions, and tax permanent differences primarily attributable to the impact of the goodwill impairment allocated to non-deductible goodwill and non-deductible executive compensation.

Adjusted EBITDA

Adjusted EBITDA decreased by $17.2 million, or 4.9%, for the year ended December 31, 2022 compared to the year ended December 31, 2021. The decrease in Adjusted EBITDA was primarily driven by the secular decline in both our Thryv U.S. and International Marketing Services segments. These decreases were partially offset by increased revenue in the Thryv International Marketing Services segment due to an adjustment recognized upon the Thryv Australia Acquisition to reduce the deferred revenue balance assumed, which negatively impacted revenue recognized in the year ended December 31, 2021. These decreases were further offset by the impact of the results in our U.S. SaaS segment, the Vivial Acquisition and the result of increasing the terms of our print publications from 15 months to 18 months in our Thryv U.S. Marketing Services segment. See “Non-GAAP Financial Measures” for a definition of Adjusted EBITDA and a reconciliation to Net income, the most directly comparable measure presented in accordance with GAAP.

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Years Ended December 31, 2021 and 2020

For a discussion of the year ended December 31, 2021 compared to the year ended December 31, 2020, refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K year ended December 31, 2021.

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 Annual 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 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, Income tax expense (benefit), Depreciation and amortization expense, 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 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).

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:

(1)    For the years ended December 31, 2022 and 2021, expenses related to periodic efforts to enhance efficiencies and reduce costs, and included severance benefits, loss on disposal of fixed assets and capitalized software, and costs associated with abandoned facilities and system consolidation. For the year ended December 31, 2020, a portion of the severance benefits, amounting to $5.0 million resulted from COVID-19. For further detail on severance benefits, see Note 8, Accrued Liabilities, to our audited consolidated

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financial statements included in Part II, Item 8 in this Annual Report. For the year ended December 31, 2020, restructuring and integration charges included severance benefits, facility exit costs, system consolidation and integration costs, and professional consulting and advisory services costs related to the YP Acquisition.

(2)    The Company records stock-based compensation expense related to the amortization of the grant date fair value of the Company’s stock-based compensation awards. Additionally, stock-based compensation expense included the remeasurement of these awards at each period end prior to October 1, 2020. See Note 4, Fair Value Measurements, to our audited consolidated financial statements included in Part II, Item 8 in this Annual Report for more information.

(3)     Expenses related to the Company's direct listing on Nasdaq, the Thryv Australia Acquisition, the Vivial acquisition and other transaction costs.

(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)    During the year ended December 31, 2022, Other primarily represents the bargain purchase gain as a result of the Vivial Acquisition, partially offset by foreign exchange-related expense. During the years ended December 31, 2021 and 2020, Other primarily includes expenses related to potential non-income based tax liabilities and foreign exchange-related expense.

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

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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., which in turn generates cash flow from its own operations and operations of its subsidiaries, and has cash and cash equivalents on hand, funds provided under the Term Loan and funds available under the ABL Facility. The agreements governing our debt may restrict the ability of our subsidiaries to make loans or otherwise transfer assets to us. Further, our subsidiaries are permitted under the terms of our senior credit facilities and other indebtedness to incur additional indebtedness that may restrict or prohibit the making of distributions or the making of loans by such subsidiaries to us. Our and our subsidiaries’ ability to meet our debt service requirements is dependent on our ability to generate sufficient cash flows from operations.

We believe that expected cash flows from operations, available cash and cash equivalents, and funds available under our ABL Facility will be sufficient to meet our liquidity requirements, such as working capital requirements for our operations, business development and investment activities, and debt payment obligations, for the following 12 months. Any projections of future earnings and cash flows are subject to substantial uncertainty. Our future success and capital adequacy will depend on, among other things, our ability to achieve anticipated levels of revenues and cash flows from operations and our ability to address our annual cash obligations and reduce our outstanding debt, all of which are subject to general economic, financial, competitive, and other factors beyond our control. We continue to monitor our capital requirements to ensure our needs are in line with available capital resources.

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 15, Contingent Liabilities, to our audited consolidated financial statements included in Part II, Item 8 in this Annual 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: