Thryv Holdings, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - August 11, 2021

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Exhibit 99.1


Thryv Raises SaaS Revenue Guidance and Reports Second Quarter 2021 Financial Results

SaaS Revenue Grows 32% Year-Over-Year
 
DALLAS, August 11, 2021 – Thryv Holdings, Inc. (NASDAQ:THRY) (“Thryv” or the “Company”), the provider of Thryv® software, the end-to-end client experience platform for growing small businesses, announced financial results for the second quarter 2021. The Company has also raised its 2021 outlook for its SaaS segment.
 
“During Q2, we saw strong and continued growth in our SaaS business,” said Joe Walsh, CEO and president of Thryv. “Small businesses are moving to the cloud and we are providing them the tools they need to automate and modernize their businesses. As a result of our efforts, we are seeing accelerated growth and we are raising our SaaS revenue guidance for 2021.”
 
“We see clients putting their faith in us as they take that leap to manage and grow their business using modern small business software. Small businesses need an end-to-end solution, not several different point solutions.  Multiple solutions are expensive and are difficult to manage. Thryv provides the frictionless and simplified experience small businesses need.”
 
Second Quarter 2021 Financial Highlights:
 

 •
U.S. SaaS revenue was $41.4 million, a 32.3% increase year-over-year

•
U.S. Marketing Services revenue was $202.8 million

•
Thryv International Marketing Services revenue was $46.9 million, net of a $27.8 million deferred revenue purchase price accounting adjustment

•
Consolidated total revenue was $291.0 million

•
Consolidated net income was $24.4 million

•
Consolidated adjusted EBITDA was $96.8 million, representing an adjusted EBITDA margin of 33.2%

•
Consolidated gross profit was $178.4 million

•
Consolidated adjusted gross profit was $195.3 million
 
Additional US Business Highlights
 

 •
SaaS ARPU increased to $323 for the second quarter of 2021, compared to $232 in the second quarter of 2020

•
Total SaaS clients increased sequentially to 45 thousand for the second quarter of 2021

•
SaaS monthly churn was 2.1% for the second quarter of 2021, compared to 3.0% for the second quarter of 2020

•
Net Dollar Retention improved 18 percentage points to 92% at end of the second quarter of 2021, when compared to the second quarter of 2020



•
SaaS active users and usage frequency reached new all-time high as daily and weekly active users increased 27% year-over-year

•
Thryv added to Russell 2000 Index

Outlook:
 
The Company is updating guidance for fiscal year 2021 as indicated below.
 

 •
U.S. SaaS year over year revenue guidance is raised to 21 to 23%, from the prior increase in the mid to upper teens.

◦
In dollars, the guidance was raised to $157 – $160 million, up from the previously announced $151 - $158 million

•
U.S Marketing Services revenue range raised to $750 - $770 million, up from the previously announced $740 - $760 million

•
Thryv International, which reflects the acquisition of Sensis Holdings, is maintaining guidance for the remainder of the year.(1)

(1) Thryv International includes Sensis Pty Ltd (“Sensis”) results subsequent to the March 1, 2021 acquisition date.
 
These statements are forward-looking and actual results may materially differ. Refer to the “Forward-Looking Statements” section below for information on the factors that could cause our actual results to materially differ from these forward-looking statements.

Earnings Conference Call Information
Thryv will host a conference call on Wednesday, August 11, 2021 at 8:30 a.m. (Eastern Time) to discuss the Company's second quarter 2021 results. The conference call will be available via the Internet at www.thryv.com. There will be several slides accompanying the webcast. Please go to the website at least 15 minutes prior to the call to register, download and install any necessary software. The recorded webcast will also be available on the Company's website.

If you are unable to participate in the conference call, a replay will be available. To access the replay, please dial (800) 585-8367 or (416) 621-4642 and enter “5092525.”


Final Results

Thryv Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)

 

   
Three Months Ended
June 30,
      
Six Months Ended
June 30,
   
   
2021
    
2020
    
2021
    
2020
  
Revenue
  
$
291,047
    
$
303,612
    
$
571,653
    
$
622,182
  
Cost of services
    
112,607
      
110,605
      
210,767
      
228,581
  
Gross profit
    
178,440
      
193,007
      
360,886
      
393,601
  
                                 
Operating expenses:
                                
Sales and marketing
    
87,394
      
79,105
      
163,934
      
168,397
  
General and administrative
    
33,100
      
44,194
      
74,379
      
93,756
  
Impairment charges
    
3,611
      
18,132
      
3,611
      
18,230
  
Total operating expenses
    
124,105
      
141,431
      
241,924
      
280,383
  
                                 
Operating income
    
54,335
      
51,576
      
118,962
      
113,218
  
Other income (expense):
                                
Interest expense
    
(14,502
)
    
(13,426
)
    
(26,109
)
    
(28,206
)
Interest expense, related party
    
(4,668
)
    
(4,586
)
    
(8,733
)
    
(9,736
)
Other components of net periodic pension benefit (cost)
    
272
      
(936
)
    
725
      
(1,137
)
Other expense
    
(2,966
)
    
—
      
(4,059
)
    
—
  
Income before (provision) for income taxes
    
32,471
      
32,628
      
80,786
      
74,139
  
(Provision) for income taxes
    
(8,112
)
    
(21,164
)
    
(19,921
)
    
(34,573
)
Net income
  
$
24,359
    
$
11,464
    
$
60,865
    
$
39,566
  
                                 
Net income per common share:
                                
Basic
  
$
0.72
    
$
0.36
    
$
1.82
    
$
1.24
  
Diluted
  
$
0.66
    
$
0.34
    
$
1.72
    
$
1.15
  
                                 
Weighted-average shares used in computing basic and diluted net income per common share:
                                
Basic
    
33,622,666
      
31,435,941
      
33,367,734
      
32,007,114
  
Diluted
    
36,687,030
      
33,803,465
      
35,352,445
      
34,414,996
  
 

Thryv Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share data)
(unaudited)

   
June 30, 2021
    
December 31, 2020
  
Assets
            
Current assets
            
Cash and cash equivalents
  
$
15,785
    
$
2,406
  
Accounts receivable, net of allowance of $21,450 and $33,030
    
312,457
      
296,570
  
Contract assets, net of allowance of $157 and $338
    
8,415
      
10,975
  
Taxes receivable
    
1,890
      
9,229
  
Prepaid expenses and other current assets
    
36,370
      
26,172
  
Indemnification asset
    
25,190
      
24,346
  
Total current assets
    
400,107
      
369,698
  
Fixed assets and capitalized software, net
    
76,315
      
89,044
  
Goodwill
    
678,793
      
609,457
  
Intangible assets, net
    
123,907
      
31,777
  
Deferred tax assets
    
106,069
      
93,099
  
Other assets
    
26,944
      
21,902
  
Total assets
  
$
1,412,135
    
$
1,214,977
  
Liabilities and Stockholders' Equity
                
Current liabilities
                
Accounts payable
  
$
30,024
    
$
8,927
  
Accrued liabilities
    
168,602
      
139,613
  
Current portion of unrecognized tax benefits
    
30,615
      
30,022
  
Contract liabilities
    
32,233
      
18,942
  
New Term Loan, current
    
70,000
      
—
  
Other current liabilities
    
12,898
      
9,896
  
Total current liabilities
    
344,372
      
207,400
  
New Term Loan, net
    
365,189
      
—
  
New Term Loan, related party
    
154,697
      
—
  
Senior Term Loan, net
    
—
      
335,683
  
Senior Term Loan, related party
    
—
      
113,482
  
ABL Facility
    
58,022
      
79,238
  
Leaseback obligations
    
—
      
54,798
  
Pension obligations, net
    
174,217
      
190,827
  
Deferred tax liabilities
    
1,179
      
508
  
Other liabilities
    
44,756
      
36,266
  
Total long-term liabilities
    
798,060
      
810,802
  
Commitments and contingencies
                
Stockholders' equity
                
Common stock - $0.01 par value, 250,000,000 shares authorized; 60,391,597, shares issued and 33,713,187 shares outstanding at June 30, 2021; and 59,590,422 shares issued and 32,912,012 shares outstanding at December 31, 2020
    
604
      
596
  
Additional paid-in capital
    
1,076,124
      
1,059,624
  
Treasury stock - 26,678,410 shares at June 30, 2021 and December 31, 2020
    
(468,613
)
    
(468,613
)
Accumulated other comprehensive income (loss)
    
(4,445
)
    
—
  
Accumulated deficit
    
(333,967
)
    
(394,832
)
Total stockholders' equity
    
269,703
      
196,775
  
Total liabilities and stockholders' equity
  
$
1,412,135
    
$
1,214,977
  
 

Thryv Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
   
Six Months Ended June 30,
  
   
2021
    
2020
  
Cash Flows from Operating Activities
            
Net income
  
$
60,865
    
$
39,566
  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation and amortization
    
49,626
      
75,429
  
Amortization of debt issuance costs
    
1,930
      
534
  
Deferred income taxes
    
(51,439
)
    
(42,150
)
Provision for credit losses
    
292
      
22,436
  
Provision for service credits
    
8,719
      
17,197
  
Stock-based compensation expense (benefit)
    
3,892
      
(5,484
)
Other components of net periodic pension (benefit) cost
    
(725
)
    
1,137
  
Loss on termination of leaseback obligations
    
3,409
      
—
  
(Gain) loss on disposal/write-off of fixed assets and capitalized software
    
(44
)
    
3,491
  
Impairment charges
    
3,611
      
18,230
  
Non-cash (gain) loss from remeasurement of indemnification asset
    
(844
)
    
4,418
  
Loss on foreign currency exchange rates
    
640
      
—
  
Other, net
    
(17
)
    
—
  
Changes in working capital items, excluding acquisitions:
                
Accounts receivable
    
70,491
      
(28,791
)
Contract assets
    
2,402
      
(2,050
)
Prepaid expenses and other assets
    
(7,567
)
    
3,177
  
Accounts payable and accrued liabilities
    
(51,133
)
    
(67,064
)
Accrued income taxes, net
    
3,258
      
64,821
  
Operating lease liability
    
(2,407
)
    
(3,482
)
Contract liabilities
    
(13,157
)
    
(3,544
)
Net cash provided by operating activities
    
81,802
      
97,871
  
                 
Cash Flows from Investing Activities
                
Additions to fixed assets and capitalized software
    
(14,315
)
    
(12,975
)
Proceeds from the sale of building and fixed assets
    
63
      
1,502
  
Acquisition of a business, net of cash acquired
    
(174,190
)
    
—
  
Net cash (used in) investing activities
    
(188,442
)
    
(11,473
)
                 
Cash Flows from Financing Activities
                
Proceeds from New Term Loan
    
418,070
      
—
  
Proceeds from New Term Loan, related party
    
260,930
      
—
  
Payments of New Tern Loan
    
(62,089
)
    
—
  
Payments of New Term Loan, related party
    
(25,911
)
    
—
  
Payments of Senior Term Loan
    
(335,821
)
    
(45,090
)
Payments of Senior Term Loan, related party
    
(113,789
)
    
(20,300
)
Proceeds from ABL Facility
    
545,809
      
606,455
  
Payments of ABL Facility
    
(567,025
)
    
(596,969
)
Purchase of treasury stock
    
—
      
(30,626
)
Other
    
3,305
      
(191
)
Net cash provided by (used in) financing activities
    
123,479
      
(86,721
)
                 
Effect of exchange rate changes on cash and cash equivalents
    
(819
)
    
—
  
Increase (decrease) in cash and cash equivalents and restricted cash
    
16,020
      
(323
)
Cash and cash equivalents and restricted cash, beginning of period
    
2,406
      
1,912
  
Cash and cash equivalents and restricted cash, end of period
  
$
18,426
    
$
1,589
  
                 
Supplemental Information
                
Cash paid for interest
  
$
37,608
    
$
39,671
  
Cash paid for income taxes, net
  
$
38,411
    
$
11,902
  
 
 
   
Three Months Ended June 30, 2021
  
   
Marketing
Services
    
SaaS
    
Thryv
International
    
Total
  
Revenue
  
$
202,795
    
$
41,386
    
$
46,866
    
$
291,047
  
Segment EBITDA
    
82,684
      
(2,119
)
    
16,188
      
96,753
  

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

Non-GAAP Measures
 
Our results included in this press release include Adjusted EBITDA and Adjusted Gross Profit, which are not presented in accordance with U.S. generally accepted accounting principles (“GAAP”). These non-GAAP measures are presented for supplemental informational purposes only and are not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Please refer to the supplemental information presented in the tables below for a reconciliation of Adjusted EBITDA to Net income, and Adjusted Gross Profit to gross profit. Both Net income and Gross profit are the most comparable GAAP financial measure to Adjusted EBITDA and Adjusted Gross Profit, respectively.

We believe that these non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects and allow for greater transparency with respect to important metrics used by our management for financial and operational decision-making. We believe that these measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry. However, it is important to note that the particular items we exclude from, or include in, our non-GAAP financial measures may differ from the items excluded from, or included in, similar non-GAAP financial measures used by other companies in the same industry.

 
The following is a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure, Net income (in thousands):
 
   
Three Months Ended June 30,
    
Six Months Ended June 30,
  
   
2021
    
2020
    
2021
    
2020
  
Reconciliation of Adjusted EBITDA
                        
Net income
  
$
24,359
    
$
11,464
    
$
60,865
    
$
39,566
  
Interest expense
    
19,170
      
18,012
      
34,842
      
37,942
  
Provision for income taxes
    
8,112
      
21,164
      
19,921
      
34,573
  
Depreciation and amortization expense
    
29,908
      
37,606
      
49,626
      
75,429
  
Loss on termination of leaseback obligations
    
3,110
      
—
      
3,409
      
—
  
Restructuring and integration expenses (1)
    
3,489
      
7,347
      
12,723
      
17,192
  
Transaction costs (2)
    
5,440
      
3,232
      
15,986
      
9,766
  
Stock-based compensation expense (benefit) (3)
    
1,921
      
580
      
3,892
      
(5,484
)
Other components of net periodic pension (benefit) cost (4)
    
(272
)
    
936
      
(725
)
    
1,137
  
Non-cash (gain) loss from remeasurement of indemnification asset (5)
    
(844
)
    
617
      
(844
)
    
4,418
  
Impairment charges
    
3,611
      
18,132
      
3,611
      
18,230
  
Other (6)
    
(1,251
)
    
(955
)
    
(1,620
)
    
(1,855
)
Adjusted EBITDA
  
$
96,753
    
$
118,135
    
$
201,686
    
$
230,914
  
 
(1)
For the three and six months ended June 30, 2021 and 2020, expenses relate to periodic efforts to enhance efficiencies and reduce costs, and include severance benefits, loss on disposal of fixed assets and capitalized software, and costs associated with abandoned facilities and system consolidation.
 
(2)
Expenses related to the Company's direct listing, Sensis acquisition and other transaction costs.
 
(3)
Company records stock-based compensation expense related to the amortization of grant date fair value of the Company’s stock-based compensation awards. Additionally, stock-based compensation expense includes the remeasurement of these awards at each period end, prior to October 1, 2020.
 
(4)
Other components of net periodic pension cost is from our non-contributory defined benefit pension plans that are currently frozen and incur no additional service costs. The most significant component of other components of net periodic pension cost relates to the mark to market pension remeasurement.

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


(6)
Other primarily includes expenses related to potential non income-based tax liabilities. Additionally, during the three and six months ended June 30, 2021, other includes foreign exchange related expense.
 
The following is a reconciliation of Adjusted Gross Profit, to its most directly comparable GAAP measure, Gross profit (in thousands):
 
   
Three Months Ended June 30,
  
   
2021
    
2020
  
Reconciliation of Adjusted Gross Profit
            
Gross profit
  
$
178,440
    
$
193,007
  
Plus:
                
Depreciation and amortization expense
    
16,817
      
18,632
  
Stock-based compensation expense
    
83
      
70
  
Adjusted gross profit
  
$
195,340
    
$
211,709
  
Gross margin
    
61.3
%
    
63.6
%
Adjusted gross margin
    
67.1
%
    
69.7
%
 
   
Six Months Ended June 30,
  
   
2021
    
2020
  
Reconciliation of Adjusted Gross Profit
            
Gross profit
  
$
360,886
    
$
393,601
  
Plus:
                
Depreciation and amortization expense
    
28,061
      
36,987
  
Stock-based compensation expense (benefit)
    
164
      
(246
)
Adjusted gross profit
  
$
389,111
    
$
430,342
  
Gross margin
    
63.1
%
    
63.3
%
Adjusted gross margin
    
68.1
%
    
69.2
%


Forward-Looking Statements
Some statements included in this release constitute forward-looking statements. Statements that include the words “may”, “will”, “could”, “should”, “would”, “believe”, “anticipate”, “forecast”, “estimate”, “expect”, “preliminary”, “intend”, “plan”, “project”, “outlook”, “future”, “forward”, “guidance” and similar statements of a future or forward-looking nature identify forward-looking statements. These statements are not guarantees of future performance. Forward-looking statements provide current expectations with respect to our financial performance and future events with respect to our business and industry in general. Forward-looking statements are based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to, the risks related to the following: risks related to the ongoing COVID-19 pandemic, the Company’s ability to maintain adequate liquidity to fund operations; the Company’s future operating and financial performance; the Company’s ability to consummate acquisitions, or, if consummated, to successfully integrate acquired businesses into the Company’s operations, the Company’s ability to recognize the benefits of acquisitions, or the failure of an acquired company to achieve its plans and objectives; limitations on our operating and strategic flexibility and the ability to operate our business, finance our capital needs or expand business strategies under the terms of our credit facilities; our ability to retain existing business and obtain and retain new business; general economic or business conditions affecting the markets we serve; declining use of print yellow page directories by consumers; our ability to collect trade receivables from clients to whom we extend credit; credit risk associated with our reliance on small and medium sized businesses as clients; our ability to attract and retain key managers; increased competition in our markets; our ability to obtain future financing due to changes in the lending markets or our financial position; our ability to maintain agreements with major Internet search and local media companies; reduced advertising spending and increased contract cancellations by our clients, which causes reduced revenue; and our ability to anticipate or respond effectively to changes in technology and consumer preferences. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by such cautionary statements.

If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. For these reasons, we caution you against relying on forward-looking statements. All forward-looking statements included in this press release are expressly qualified in their entirety by the foregoing cautionary statements. These forward-looking statements speak only as of the date hereof and, other than as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

About Thryv Holdings, Inc.

Thryv Holdings, Inc. owns the easy-to-use Thryv® end-to-end customer experience software built for growing small to medium sized businesses (SMBs) that helps over 40,000 SaaS clients with the daily demands of running a business. With Thryv®, SMBs can get the job, manage the job and get credit. Thryv’s award-winning platform provides modernized business functions, allowing SMBs to reach more customers, stay organized, get paid faster and generate reviews. These functions include building a digital customer database, automated marketing through email and text, updating business listings across the internet, scheduling online appointments, sending notifications and reminders, managing ratings and reviews, generating estimates and invoices, and processing payments.
 
Thryv supports franchise operators and multi-location business owners with Hub by Thryv™, a software console that enables businesses managers to oversee their operations using the Thryv® software.
 
Thryv also connects local businesses to consumer services through our search, display and social media management products, our print directories featuring The Real Yellow Pages® tagline, and our local search portals, which operate under the DexKnows.com®, Superpages.com® and Yellowpages.com URLs and reach some 35 million monthly visitors. For more information about the company, visit thryv.com.


Thryv delivers business services to more than 400,000 SMBs worldwide that enable these SMBs to compete and win in today’s economy.

On March 1, 2021, Thryv announced it closed the acquisition of Sensis, Australia’s leading digital, marketing and directory services provider, which helps Australians connect and engage through its leading platforms, digital consumer businesses (Yellow, White Pages, True Local and Whereis), search engine marketing and optimization services, website products, social, data and mapping solutions, and through its digital agency Found. Sensis is also Australia’s largest print directory publisher including the Yellow and White Pages.
 
Headquartered in Melbourne, Sensis has a sales presence in all states and territories across Australia. 
 
Media Contact:
Paige Blankenship
Thryv, Inc.
972.453.3012
paige.blankenship@thryv.com

Investor Contacts: 
Cameron Lessard
Thryv, Inc.
214.773.7022
cameron.lessard@thryv.com 

KJ Christopher
Thryv, Inc.
972.453.7068
kj.christopher@thryv.com

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Thryv Holdings, Inc. Reports