Thryv Holdings Inc.
11/09/2026 | Press release | Distributed by Public on 11/09/2026 15:08
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following is a discussion and analysis of our financial condition and results of operations as of, and for, the periods presented and should be read in conjunction with our unaudited interim consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report. This discussion and analysis contains forward-looking statements, including statements regarding industry outlook, our expectations for the future of our business, and our liquidity and capital resources as well as other non-historical statements. These statements are based on current expectations and are subject to numerous risks and uncertainties, including but not limited to the risks and uncertainties described in "Risk Factors" in our 2025 Form 10-K, elsewhere in this Quarterly Report on Form 10-Q, particularly Part II, Item 1A. "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 a software-led platform company focused on enabling small and medium-sized businesses ("SMBs") to run and grow their businesses more efficiently. Our strategy is centered on delivering a unified, extensible SaaS platform that supports customer acquisition, engagement, operations, and retention across the SMB lifecycle.
Our expertise in delivering solutions for our client base is rooted in our deep history of serving SMBs. In 2026, SMB demand for integrated technology solutions continues to grow as SMBs adapt their business and service models to facilitate remote working and virtual interactions.
We serve approximately 110,000 SMB clients globally through two business segments: SaaS and Marketing Services.
Print Divestiture
During the year ended December 31, 2023, the Company made the strategic decision to exit its Marketing Services business by the end of 2028 as part of its plan to fully transition into a SaaS-driven business model. In connection with this strategy, on September 12, 2026, Thryv, Inc., a wholly-owned subsidiary of the Company, entered into an Asset Purchase Agreement (the "Purchase Agreement") with Coldwater YP, LLC (the "Purchaser"), an affiliate of Carolwood, L.P., pursuant to which the Company has agreed to sell the assets of its print Yellow Pages and print White Pages directories in the United States, Australia and New Zealand, the digital editions of those print directories, and Australia White Pages online (collectively, the "Print Business") for a cash purchase price of $142.0 million, subject to customary purchase price adjustments (the "Print Transaction"). The Company's Internet Yellow Pages and other online properties were not included in the Print Transaction. The Print Transaction is expected to close in the fourth quarter of 2026, subject to certain closing conditions. The Company expects to use the net proceeds of the sale (i) to repay and terminate its ABL Facility, (ii) to pay $34.3 million in accrued tax liabilities and (iii) repay a portion of its Term Loan. Additionally, the Print Transaction enables the Company to continue to implement the previously announced operational restructuring activities aimed at improving efficiency and decreasing costs.
The Print Business' financial position and results of operations are presented as discontinued operations herein and comparable prior periods have been recast to reflect this change. Unless otherwise noted, all activities and amounts reported in this Quarterly Report relate to the Company's continuing operations and exclude activities and amounts related to the Print Business. See Note 2, Discontinued Operations to our consolidated financial statements included in Part I, Item 1 in this Quarterly Report for additional information.
Restructuring
During the three months ended June 30, 2026, the Company initiated an operational restructuring program designed to align its cost structure and operating model with its transition to a SaaS-focused business following the anticipated completion of the Print Transaction. The program is intended to improve organizational efficiency, simplify the Company's operating and technology infrastructure, and reduce ongoing operating costs. The program's primary actions include i) rightsizing the Company's workforce as the Company aligns its resources with its go-forward SaaS operations and product strategy, and ii) consolidating or terminating certain technology, service provider, and other contractual arrangements as the Company simplifies its technology footprint and operating infrastructure.
The Company expects the operational restructuring program to be substantially completed in 2027. Once fully implemented, these actions are expected to generate approximately $50.0 million to $55.0 million of gross annualized cost savings. The Company expects to realize the full annualized benefit of these actions beginning in 2028.
As of September 30, 2026, the Company has implemented a portion of the actions contemplated under the program, primarily related to workforce reductions. During the three and nine months ended September 30, 2026, the Company incurred approximately $2.1 million and $5.2 million, respectively, of restructuring charges, which were recorded within General and administrative expense within the Consolidated Statements of Operations and Comprehensive (Loss) Income. The charges incurred through September 30, 2026 primarily consisted of employee severance and related benefit costs to be settled in cash.
The Company estimates that it will incur an additional $15.0 million to $20.0 million of restructuring costs through the expected completion of the program in 2027. The remaining costs are expected to primarily consist of employee severance and related benefit costs and costs associated with the termination or abandonment of contractual arrangements prior to the end of their contractual terms. The Company expects the majority of the remaining costs to result in cash expenditures through 2027. The timing and amount of the remaining charges may vary depending on the timing and execution of the planned restructuring actions.
The Print Transaction and operational restructuring activities are components of the Company's broader strategic transformation as we continue to simplify our business and focus our resources on our SaaS offerings and digital marketing solutions. We are continuing to evaluate our organizational structure, technology investments and cost base to better align our operations with this strategy.
SaaS
Our SaaS segment generated $112.0 million and $115.9 million of consolidated revenue for the three months ended September 30, 2026 and 2025, respectively, and $343.2 million and $342.0 million of consolidated revenue for the nine months ended September 30, 2026 and 2025, respectively.
Core Platform Offerings. The core offerings of our Thryv platform include Thryv Marketing Center and Keap®. Thryv Marketing Center contains everything an SMB owner needs to effectively market and grow their business, including easy to understand, artificial intelligence ("AI") driven analytics and lead attribution that help them understand which marketing efforts are delivering results. Keap® is our customer relationship management ("CRM") and automation engine that helps SMBs efficiently grow by automating repetitive tasks, campaigns, and processes, using automation tools and AI.
Extensions. The Thryv platform supports extensions and integrations that allow customers to tailor the platform to their specific business needs. Our extension offerings include Thryv Leads®, growth packages, SEO tools, and website creation and management tools. These optional platform 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.
Payment Solutions. ThryvPay® and KeapPay are our own branded payment solutions that allow users to get paid via credit card and ACH and are tailored to service-based businesses that want to provide consumers with safe, contactless, and fast online payment options.
Supporting Software Solutions. We offer supporting software solutions, including Thryv Business Center, that seamlessly integrate with our core platform offerings, providing customers with enhanced functionality and additional features.
Professional Services. We offer implementation, training, and consulting services to help customers maximize value from our platform, including onboarding and implementation, a year-one Customer Success Manager, and Thryv Success Services, which includes listing refresh services, strategic content creation, and ongoing strategic consulting.
Marketing Services
Our Marketing Services segment consists of our digital marketing solutions described below and generated $6.9 million and $21.5 million of consolidated revenue for the three months ended September 30, 2026 and 2025, respectively, and $33.0 million and $79.2 million of consolidated revenue for the nine months ended September 30, 2026 and 2025, respectively.
Our Marketing Services offerings include our proprietary Internet Yellow Pages, known by the Yellowpages.com, Superpages.com, and Dexknows.com URLs. Our Search Engine Marketing solutions deliver business leads through increased traffic to clients' websites from major engines and directories by increasing visibility and search engine results pages through paid advertising. Additionally, we offer other digital media solutions including online display and social advertising and search engine optimization tools.
The Print Business was historically reported within the Company's Marketing Services reportable segment. As a result of the classification of the Print Business as discontinued operations for all periods presented, the segment results have been recast to remove activity related to the Print Business.
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 certain Marketing Services products for customers to the Thryv platform by initiating upgrades for clients outside of the sales process at no additional base cost to these clients at the time of upgrade. The cost of bringing these clients into SaaS products is generally lower than the cost of acquiring a new SaaS customer or selling a SaaS product to an existing Marketing Services customer because the Company does not pay commissions to sales personnel for upgrades that Thryv initiates for customers outside of the sales process.
During the 12 months ended September 30, 2026, we converted approximately 16,000 clients with Digital marketing services products to our Thryv platform who were not already SaaS clients at the time of conversion. As of September 30, 2026, approximately 14,000 of these clients remained as SaaS clients. The conversion of these Marketing Services clients increased SaaS revenue by $5.5 million and $11.7 million during the three and nine months ended September 30, 2026, respectively.
Additionally, during the 12 months ended September 30, 2026, we converted Digital marketing services products to our Thryv platform for approximately 6,000 clients who already had at least one SaaS product in our Thryv platform at the time of conversion. The conversion of these Marketing Services clients increased SaaS revenue by $1.9 million and $4.7 million during the three and nine months ended September 30, 2026, respectively.
The conversion of Marketing Services products for clients who were not already SaaS clients at the time of conversion decreases the number of clients in the Marketing Services segment and increases the number of clients in the SaaS segment. The conversion of products for Marketing Services clients (whether or not those clients had SaaS solutions prior to the conversion) decreases the revenue of the Marketing Services segment and increases the revenue of the SaaS segment. While we believe the conversions initiated for clients by Thryv provide valuable upgrades from Digital marketing services to our Thryv platform and that converted clients are likely to subscribe to additional features of the Thryv platform in the future, Thryv's conversion of products for these clients outside of the traditional 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 the nine months ended September 30, 2026, the churn of clients converted by Thryv from our Digital marketing services solutions to our Thryv platform was in line with the churn from the other clients in our SaaS segment.
Factors Affecting Our Performance
Our operations can be impacted by, among other factors, general economic conditions and increased competition with the introduction of new technologies and market entrants. We believe that our performance and future success depend on several factors that present significant opportunities for us, but also pose risks and challenges, including those listed below and those discussed in the section titled "Cautionary Note Regarding Forward-Looking Statements."
Ability to Attract and Retain Clients
Our revenue growth is driven by our ability to attract, 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 and our current Marketing Services clients as well as by offering additional SaaS solutions to our existing SaaS client base. This strategy includes capitalizing on the growing demand among SMBs for solutions that support a remote working environment and virtual interactions. This strategy will require substantial sales and marketing capital, and 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 exhibit 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. 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.
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. The amounts presented below have been recast to remove clients that will convey to the Purchaser upon close of the Print Transaction, to the extent those clients do not purchase other Marketing Services solutions or SaaS offerings that will be retained by the Company.
| As of September 30, | |||||||||||
| (in thousands) | 2026 | 2025 | |||||||||
| Clients | |||||||||||
|
SaaS (1)
|
98 | 103 | |||||||||
|
Marketing Services (2)
|
17 | 40 | |||||||||
|
Total (3)
|
110 | 136 | |||||||||
(1) Clients that purchase subscriptions to our SaaS offerings are included in this metric, as well as clients 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.
(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) 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.
SaaS clients decreased by 5 thousand, or 5%, as of September 30, 2026 as compared to September 30, 2025, due in part to a shift in the Company's sales strategy to place greater emphasis on deepening relationships with existing clients and increasing client spend through the adoption of additional products and services, rather than primarily focusing on new client acquisition. The decrease was partially offset by the conversion of our Digital marketing services products to our Thryv platform for clients.
Marketing Services clients decreased by 23 thousand, or 58%, as of September 30, 2026 as compared to September 30, 2025. This decrease was primarily attributable to significant competition in the digital media space and our focus on offering SaaS solutions to our current Marketing Services clients, including initiating conversions of our Digital marketing services solutions to our Thryv platform for clients.
Total clients decreased by 26 thousand, or 19%, as of September 30, 2026 as compared to September 30, 2025. The primary driver of this decrease was the increasing competition in the digital media and SaaS space and the recent focus on increasing the spend of existing SaaS clients and a reduced focus on new client acquisition.
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 growth in ARPU is an indicator of client satisfaction with our services.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| ARPU (Monthly) | |||||||||||||||||||||||
| SaaS | $ | 373 | $ | 365 | $ | 378 | $ | 350 | |||||||||||||||
| Marketing Services | $ | 82 | $ | 114 | $ | 87 | $ | 119 | |||||||||||||||
Monthly ARPU for SaaS increased by $8, or 2%, during the three months ended September 30, 2026 compared to the three months ended September 30, 2025, and increased by $28, or 8% during the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The increase in ARPU for these periods was driven by the sale of additional SaaS offerings to existing SaaS clients, the growth of the average spend of new SaaS clients, and price increases implemented in the second quarter of 2026. This was partially offset by the conversion of clients from lower ARPU Digital marketing services solutions to our SaaS offerings at no additional cost to the client at the time of upgrade.
Monthly ARPU for Marketing Services decreased by $32, or 28%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, and decreased by $32, or 27%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The decrease in ARPU for these periods was primarily attributable to 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.
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. Seasoned NRR is calculated by dividing the revenue of all clients that have had one or more SaaS offerings for at least two years by the same clients' revenue one year ago. For each reporting quarter, the weighted-average monthly NRR from all the months in the quarter are reported. The Seasoned NRR calculation excludes clients acquired in the acquisition of Keap.
| Three Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Seasoned NRR | 89 | % | 94 | % | |||||||
Seasoned NRR decreased from 94% for the three months ended September 30, 2025 to 89% for the three months ended September 30, 2026. The decrease was primarily attributable to higher revenue attrition from downgrades and cancellations among clients that had maintained a SaaS product for at least two years, which exceeded revenue growth from up-selling and cross-selling activities within this seasoned client base. In the third quarter of 2026, the Company refocused its product strategy on marketing-related offerings, including Marketing Center, the Thryv Growth Platform, and related add-on products, and reduced its emphasis on its broader end-to-end software offerings. Clients cancelled or downgraded certain products that are no longer being emphasized, which contributed to the decline in Seasoned NRR.
These impacts were partially offset by the conversion of marketing services products to the Thryv platform for clients that already had a SaaS product for at least two years. We continue to focus our sales efforts on deepening relationships with existing clients by increasing product adoption and client spend; however, during the three months ended September 30, 2026, these expansion activities were not sufficient to offset revenue lost from downgrades and cancellations within the seasoned client base.
Key Components of Our Results of Operations
Revenue
We generate revenue from our two business segments: SaaS and Marketing Services. Our primary source of revenue in our SaaS segment is our SaaS solutions. Our primary source of revenue in our Marketing Services segment is our Digital services.
Cost of Services
Cost of services consists of expenses related to delivering our solutions, such as 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.
Research and Development
Research and development expense consists primarily of base salaries, stock-based compensation, and other expenses incurred by personnel within the product development and product management departments. Additionally, Research and development expense includes third-party contractor expenses and allocated overhead costs which includes depreciation of fixed assets and amortization associated with 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, net periodic pension (cost) benefit, and other income, which includes foreign currency-related income and expense.
Results of Operations
Consolidated Results of Operations
The following table presents certain consolidated financial data for each of the periods indicated:
| Three Months Ended September 30, | |||||||||||||||||||||||
|
2026
|
2025
|
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| (unaudited) | (unaudited) | ||||||||||||||||||||||
| (dollars in thousands) | Amount | % of Revenue | Amount | % of Revenue | |||||||||||||||||||
| Revenue | $ | 118,937 | 100 | % | $ | 137,427 | 100 | % | |||||||||||||||
| Cost of services | 45,245 | 38.0 | % | 51,714 | 37.6 | % | |||||||||||||||||
| Gross profit | 73,692 | 62.0 | % | 85,713 | 62.4 | % | |||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Sales and marketing | 44,942 | 37.8 | % | 55,870 | 40.7 | % | |||||||||||||||||
| Research and development | 8,432 | 7.1 | % | 10,765 | 7.8 | % | |||||||||||||||||
| General and administrative | 35,775 | 30.1 | % | 44,242 | 32.2 | % | |||||||||||||||||
| Impairment charges | 94,800 | 79.7 | % | - | - | % | |||||||||||||||||
| Total operating expenses | 183,949 | 154.7 | % | 110,877 | 80.7 | % | |||||||||||||||||
| Operating loss | (110,257) | 92.7 | % | (25,164) | 18.3 | % | |||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Interest expense | (6,839) | 5.8 | % | (7,592) | 5.5 | % | |||||||||||||||||
| Net periodic pension cost | (328) | 0.3 | % | (665) | 0.5 | % | |||||||||||||||||
| Other income | 734 | 0.6 | % | 682 | 0.5 | % | |||||||||||||||||
| Loss from continuing operations before income tax benefit | (116,690) | 98.1 | % | (32,739) | 23.8 | % | |||||||||||||||||
| Income tax benefit on continuing operations | 710 | 0.6 | % | 7,847 | 5.7 | % | |||||||||||||||||
| Loss from continuing operations | $ | (115,980) | 97.5 | % | $ | (24,892) | 18.1 | % | |||||||||||||||
| Other financial data: | |||||||||||||||||||||||
|
Adjusted EBITDA (1)
|
$ | 4,205 | 3.5 | % | $ | (4,592) | 3.3 | % | |||||||||||||||
|
Adjusted Gross Profit (2)
|
$ | 78,376 | $ | 89,483 | |||||||||||||||||||
|
Adjusted Gross Margin (3)
|
65.9 | % | 65.1 | % | |||||||||||||||||||
(1) See "Non-GAAP Financial Measures" for a definition of Adjusted EBITDA and a reconciliation to Loss from continuing operations, the most directly comparable measure presented in accordance with GAAP.
(2) 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.
(3) See "Non-GAAP Financial Measures" for a definition of Adjusted Gross Margin.
Comparison of the Three Months Ended September 30, 2026 to the Three Months Ended September 30, 2025
Revenue
The following table summarizes Revenue by business segment for the periods indicated:
| Three Months Ended September 30, | Change | ||||||||||||||||||||||
|
2026
|
2025
|
Amount | % | ||||||||||||||||||||
| (dollars in thousands) | (unaudited) | ||||||||||||||||||||||
| SaaS | $ | 112,024 | $ | 115,903 | $ | (3,879) | (3.3) | % | |||||||||||||||
| Marketing Services | 6,913 | 21,524 | (14,611) | (67.9) | % | ||||||||||||||||||
| Revenue | $ | 118,937 | $ | 137,427 | $ | (18,490) | (13.5) | % | |||||||||||||||
SaaS Revenue
SaaS revenue decreased by $3.9 million, or 3.3%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The decrease was primarily attributable to clients downgrading or cancelling their SaaS solutions, partially offset by new sales, client expansion, and the Company's conversion of Digital marketing services solutions for clients to its SaaS offerings. SaaS revenue decreased $22.7 million due to net revenue changes associated with products sold or converted prior to January 1, 2026. The Company's conversion of Digital marketing services solutions for clients to SaaS offerings during the first nine months of 2026 increased SaaS revenue by $5.9 million, and new sales and client expansion during the first nine months of 2026 increased SaaS revenue by $12.9 million.
Marketing Services Revenue
Marketing Services revenue decreased by $14.6 million, or 67.9%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The decrease was driven in large part by the Company's strategic decision during the fourth quarter of 2023 to accelerate the conversion of Digital marketing services products for clients to SaaS offerings. For the three months ended September 30, 2026, Thryv's conversion of Digital marketing services products for clients to SaaS offerings prior to January 1, 2026 reduced Marketing Services revenue by $1.5 million, and Thryv's conversion of Digital marketing services products to SaaS products since January 1, 2026 reduced Marketing Services revenues by an additional $5.9 million. 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 three months ended September 30, 2026, the continued trending decline and significant competition resulted in a $7.2 million decrease in Digital revenue.
Cost of Services
Cost of services decreased by $6.5 million, or 12.5%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. This decrease was primarily driven by a corresponding decline in revenue and strategic cost saving initiatives. Specifically, we reduced contract services expense by $4.0 million and traffic and fulfillment costs by $3.3 million. These decreases were partially offset by increased depreciation and amortization expense of $1.0 million due to increased capitalized software placed in service during the period.
Gross Profit
Gross profit decreased by $12.0 million, or 14.0%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The decrease in Gross profit was primarily due to decreases in both Marketing Services revenue and SaaS revenue, partially offset by a decrease in Cost of services as a result of a decline in total revenue and strategic cost saving initiatives.
Our gross margin decreased to 62.0% for the three months ended September 30, 2026 compared to 62.4% for the three months ended September 30, 2025. Gross margin from our SaaS segment decreased to 65.4% for the three months ended September 30, 2026, compared to 69.8% for the three months ended September 30, 2025. Gross margin from our Marketing Services segment decreased to 7.0% for the three months ended September 30, 2026, compared to 22.1% for the three months ended September 30, 2025. The decrease in SaaS gross margin was primarily due to the conversion of Digital marketing services solutions to our Thryv platform throughout 2025 and 2026 that carry lower margins than our existing SaaS products and were converted by Thryv at no additional base cost at the time of conversion. The decrease in Marketing Services gross margin is the result of decreasing revenue as a result of conversions to SaaS solutions outpacing cost reductions.
Operating Expenses
Sales and Marketing
Sales and marketing expense decreased by $10.9 million, or 19.6%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The decrease was primarily due to a decrease in employee-related expenses, including commissions expenses, of $8.6 million, a decrease in contract services expenses of $1.1 million, and a decrease in stock-based compensation expense of $0.8 million.
Research and Development
Research and development expense decreased by $2.3 million, or 21.7%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The decrease was primarily due to a decrease in employee-related expenses of $1.4 million and a decrease in contract services expenses of $0.7 million.
General and Administrative
General and administrative expense decreased by $8.5 million, or 19.1%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The decrease was primarily attributable to a decrease in employee-related expenses of $4.2 million, a decrease in stock-based compensation expense of $1.0 million, a decrease in contract services expenses of $3.3 million, and a decrease in restructuring and integration expenses of $1.2 million.
Impairment Charges
Non-cash impairment charges of $94.8 million were recognized as a result of a goodwill impairment in our SaaS reporting unit during the three months ended September 30, 2026. No impairment charges were recorded during the three months ended September 30, 2025. See Note 5, Goodwill and Intangible Assets, to our consolidated financial statements included in Part I, Item 1 in this Quarterly Report for additional information.
Other Income (Expense)
Interest Expense
Interest expense decreased by $0.8 million, or 9.9%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, driven primarily by lower outstanding debt balances.
Net Periodic Pension Cost
Net periodic pension cost decreased by $0.3 million for the three months ended September 30, 2026. This decrease was primarily due to a decrease in interest cost of $1.0 million, partially offset by a decrease in expected return on plan assets of $0.6 million.
Other Income
Other income increased by less than $0.1 million for the three months ended September 30, 2026 due to an increase in foreign-currency related gain.
Income Tax Benefit
The Company's effective tax rate ("ETR") was 0.6% and 23.9% for the three months ended September 30, 2026 and 2025, respectively. The Company's ETR differs from the U.S. Federal statutory rate of 21% primarily due to permanent differences, including state taxes, non-deductible executive compensation, non-U.S. taxing jurisdictions, tax credits, minimum taxes, changes in valuation allowance due to expiring net operating losses, and the discrete impact of interest accrual on uncertain tax positions.
Adjusted EBITDA
Loss from continuing operations was $116.0 million for the three months ended September 30, 2026 compared to $24.9 million for the three months ended September 30, 2025. Adjusted EBITDA was $4.2 million for the three months ended September 30, 2026 compared to an Adjusted EBITDA loss of $4.6 million the three months ended September 30, 2025. The $8.8 million net increase in Adjusted EBITDA was primarily attributable to a decrease in costs outpacing the decreases in revenue. The decreased costs were primarily the result of costs savings initiatives. See "Non-GAAP Financial Measures" for a definition of Adjusted EBITDA and a reconciliation to Loss from continuing operations, the most directly comparable measure presented in accordance with GAAP.
Results of Operations
Consolidated Results of Operations
The following table presents certain consolidated financial data for each of the periods indicated:
| Nine Months Ended September 30, | |||||||||||||||||||||||
|
2026
|
2025
|
||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||
| (dollars in thousands) | Amount | % of Revenue | Amount | % of Revenue | |||||||||||||||||||
| Revenue | $ | 376,274 | 100 | % | $ | 421,240 | 100 | % | |||||||||||||||
| Cost of services | 144,911 | 38.5 | % | 153,494 | 36.4 | % | |||||||||||||||||
| Gross profit | 231,363 | 61.5 | % | 267,746 | 63.6 | % | |||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Sales and marketing | 136,874 | 36.4 | % | 168,182 | 39.9 | % | |||||||||||||||||
| Research and development | 27,372 | 7.3 | % | 29,627 | 7.0 | % | |||||||||||||||||
| General and administrative | 115,866 | 30.8 | % | 142,487 | 33.8 | % | |||||||||||||||||
| Impairment charges | 94,800 | 25.2 | % | - | - | % | |||||||||||||||||
| Total operating expenses | 374,912 | 99.6 | % | 340,296 | 80.8 | % | |||||||||||||||||
| Operating loss | (143,549) | 38.2 | % | (72,550) | 17.2 | % | |||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Interest expense | (19,629) | 5.2 | % | (23,921) | 5.7 | % | |||||||||||||||||
| Net periodic pension cost | (1,030) | 0.3 | % | (2,211) | 0.5 | % | |||||||||||||||||
| Other income | 1,721 | 0.5 | % | 3,631 | 0.9 | % | |||||||||||||||||
| Loss from continuing operations before income tax benefit | (162,487) | 43.2 | % | (95,051) | 22.6 | % | |||||||||||||||||
| Income tax benefit on continuing operations | 9,024 | 2.4 | % | 20,505 | 4.9 | % | |||||||||||||||||
| Loss from continuing operations | $ | (153,463) | 40.8 | % | $ | (74,546) | 17.7 | % | |||||||||||||||
| Other financial data: | |||||||||||||||||||||||
|
Adjusted EBITDA (1)
|
$ | 11,934 | 3.2 | % | $ | (6,997) | 1.7 | % | |||||||||||||||
|
Adjusted Gross Profit (2)
|
$ | 244,246 | $ | 279,741 | |||||||||||||||||||
|
Adjusted Gross Margin (3)
|
64.9 | % | 66.4 | % | |||||||||||||||||||
(1) See "Non-GAAP Financial Measures" for a definition of Adjusted EBITDA and a reconciliation to Loss from continuing operations, the most directly comparable measure presented in accordance with GAAP.
(2) 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.
(3) See "Non-GAAP Financial Measures" for a definition of Adjusted Gross Margin.
Comparison of the Nine Months Ended September 30, 2026 to the Nine Months Ended September 30, 2025
Revenue
The following table summarizes Revenue by business segment for the periods indicated:
| Nine Months Ended September 30, | Change | ||||||||||||||||||||||
|
2026
|
2025
|
Amount | % | ||||||||||||||||||||
| (dollars in thousands) | (unaudited) | ||||||||||||||||||||||
| SaaS | $ | 343,242 | $ | 342,037 | $ | 1,205 | 0.4 | % | |||||||||||||||
| Marketing Services | 33,032 | 79,203 | (46,171) | (58.3) | % | ||||||||||||||||||
| Revenue | $ | 376,274 | $ | 421,240 | $ | (44,966) | (10.7) | % | |||||||||||||||
SaaS Revenue
SaaS revenue increased by $1.2 million, or 0.4%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The increase was primarily attributable to new sales, client expansion, and the Company's conversion of Digital marketing services solutions for clients to its SaaS offerings. Of the $1.2 million SaaS revenue increase, the Company's conversion of Digital marketing services solutions for clients to SaaS offerings during the first nine months of 2026 contributed $10.4 million, and new sales and client expansion during the first nine months of 2026 contributed $24.2 million. These increases were partially offset by decreases of $33.4 million due to net revenue changes associated with products sold or converted prior to January 1, 2026.
Marketing Services Revenue
Marketing Services revenue decreased by $46.2 million, or 58.3%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The decrease was driven in large part by the Company's strategic decision during the fourth quarter of 2023 to accelerate the conversion of Digital marketing services products for its clients to SaaS offerings. For the nine months ended September 30, 2026, Thryv's conversion of Digital marketing services products for clients to SaaS offerings prior to January 1, 2026 reduced Marketing Services revenue by $6.0 million, and Thryv's conversion of Digital marketing services products for clients to SaaS products since January 1, 2026 reduced Marketing Services revenue by an additional $10.4 million. 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 nine months ended September 30, 2026, the continued trending decline and significant competition resulted in a $29.8 million decrease in digital revenue.
Cost of Services
Cost of services decreased by $8.6 million, or 5.6%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. This decrease was primarily driven by the corresponding decline in revenue and by strategic cost saving initiatives. Specifically, we reduced contract services expenses by $11.6 million. This decrease was partially offset by increases in traffic and fulfillment costs of $2.8 million and an increase in depreciation and amortization expense of $1.2 million due to increased capitalized software placed in service during the period.
Gross Profit
Gross profit decreased by $36.4 million, or 13.6%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. 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 a decline in total revenue and strategic cost saving initiatives.
Gross margin decreased by 210 basis points to 61.5% for the nine months ended September 30, 2026 compared to 63.6% for the nine months ended September 30, 2025. Gross margin from our SaaS segment decreased to 64.0% for the nine months ended September 30, 2026 compared to 70.0% for the nine months ended September 30, 2025. Gross margin from our Marketing Services segment increased to 35.9% for the nine months ended September 30, 2026 compared to 35.6% for the nine months ended September 30, 2025. The decrease in SaaS gross margin was primarily due to the conversion of Digital marketing services solutions to our Thryv platform throughout 2025 and 2026 that carry lower margins than our existing SaaS products and were converted by Thryv at no additional base cost to the customer at the time of conversion. Marketing Services gross margin increased as a result of the conversions to SaaS resulting in increased margins as a result of the product mix.
Operating Expenses
Sales and Marketing
Sales and marketing expense decreased by $31.3 million, or 18.6%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The decrease was primarily due to a decrease in employee-related expenses, including sales commissions, of $23.6 million, a decrease in advertising and marketing expenses of $0.9 million, a decrease in contract services expenses of $1.5 million, a decrease in software expenses of $1.4 million, and a decrease in stock-based compensation expenses of $3.0 million.
Research and Development
Research and development expense decreased by $2.3 million, or 7.6%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily due to decreases in employee-related expenses of $2.4 million.
General and Administrative
General and administrative expense decreased by $26.6 million, or 18.7%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The decrease was primarily due to a decrease in employee-related expenses of $9.3 million, a decrease in contract services expenses of $9.5 million, a decrease in bad debt expense of $2.5 million, a decrease in stock-based compensation expenses of $5.2 million, and a decrease in software expense of $1.9 million. These decreases were partially offset by an increase in restructuring and integration expense of $2.3 million primarily due to increases in severance costs as a result of the restructuring activities implemented by the Company.
Impairment Charges
Non-cash impairment charges of $94.8 million were recognized as a result of a goodwill impairment in our SaaS reporting unit during the nine months ended September 30, 2026. No impairment charges were recorded during the nine months ended September 30, 2025. See Note 5, Goodwill and Intangible Assets, to our consolidated financial statements included in Part I, Item 1 in this Quarterly Report for additional information.
Other Income (Expense)
Interest Expense
Interest expense decreased by $4.3 million, or 17.9%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, driven primarily by lower outstanding debt balances.
Net Periodic Pension Cost
Net periodic pension cost decreased by $1.2 million for the nine months ended September 30, 2026. This decrease was primarily due to lower interest costs of $3.0 million, partially offset by a decrease in expected return on plan assets of $1.7 million.
Other Income
Other income decreased $1.9 million for the nine months ended September 30, 2026 due to a decrease in foreign-currency related gain.
Income Tax Benefit
The Company's ETR was 5.6% and 21.5% for the nine months ended September 30, 2026 and 2025, respectively. The Company's ETR differs from the U.S. Federal statutory rate of 21% primarily due to permanent differences including state taxes, non-deductible executive compensation, non-U.S. taxing jurisdictions, tax credits, minimum taxes, change in valuation allowance due to expiring net operating losses, and the discrete impact of interest accrual on uncertain tax positions.
Adjusted EBITDA
Loss from continuing operations was $153.5 million for the nine months ended September 30, 2026 compared to $74.5 million for the nine months ended September 30, 2025. Adjusted EBITDA was $11.9 million for the nine months ended September 30, 2026 compared to an Adjusted EBITDA loss of $7.0 million for the nine months ended September 30, 2025. The net increase of $18.9 million in Adjusted EBITDA was primarily attributable to a decrease in costs outpacing the decreases in revenue. The decreased costs were primarily the result of costs savings initiatives. See "Non-GAAP Financial Measures" for a definition of Adjusted EBITDA and a reconciliation to Loss from continuing operations, the most directly comparable measure presented in accordance with GAAP.
Non-GAAP Financial Measures
We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States ("GAAP"). We also present Adjusted EBITDA, Adjusted Gross Profit, and Adjusted Gross Margin, as defined below, as non-GAAP financial measures in this Quarterly Report.
We have included Adjusted EBITDA, Adjusted Gross Profit, and Adjusted Gross Margin in this report because management believes they provide useful information to investors in gaining an overall understanding of our current financial performance and 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 Loss from continuing operations plus Interest expense, Income tax expense (benefit), Depreciation and amortization expense, Restructuring and integration expenses, Stock-based compensation expense, and non-operating expenses, such as Net periodic pension cost, impairment charges and certain unusual and non-recurring charges that might have been incurred. Adjusted EBITDA should not be considered as an alternative to Loss from continuing operations 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, Loss from continuing operations:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Reconciliation of Adjusted EBITDA | |||||||||||||||||||||||
| Loss from continuing operations | $ | (115,980) | $ | (24,892) | $ | (153,463) | $ | (74,546) | |||||||||||||||
| Interest expense | 6,839 | 7,592 | 19,629 | 23,921 | |||||||||||||||||||
| Depreciation and amortization expense | 11,531 | 9,515 | 31,576 | 30,814 | |||||||||||||||||||
| Stock-based compensation expense | 3,980 | 5,685 | 11,292 | 19,192 | |||||||||||||||||||
|
Restructuring and integration expenses (1)
|
4,150 | 5,371 | 17,815 | 15,546 | |||||||||||||||||||
| Income tax benefit | (710) | (7,847) | (9,024) | (20,505) | |||||||||||||||||||
|
Net periodic pension cost (2)
|
328 | 665 | 1,030 | 2,211 | |||||||||||||||||||
| Impairment charges | 94,800 | - | 94,800 | - | |||||||||||||||||||
|
Other (3)
|
(733) | (681) | (1,721) | (3,630) | |||||||||||||||||||
| Adjusted EBITDA | $ | 4,205 | $ | (4,592) | $ | 11,934 | $ | (6,997) | |||||||||||||||
(1)See the table below for detail of Restructuring and integration expenses for the three and nine months ended September 30, 2026 and 2025.
(2)Net periodic pension cost is from our non-contributory defined benefit pension plans that are currently frozen and incur no additional service costs.
(3)Other primarily includes foreign exchange-related (income) expense.
The following is a reconciliation of Restructuring and integration expenses that are included in the Adjusted EBITDA to Loss from continuing operations reconciliation above:
| (in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
| Reconciliation of Restructuring and integration expenses | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
|
Abandoned facility costs (a)
|
$ | 316 | $ | 1,182 | $ | 1,077 | $ | 3,446 | |||||||||||||||
|
Severance charges (b)
|
2,120 | 2,078 | 8,859 | 5,413 | |||||||||||||||||||
|
Post-acquisition and integration expenses (c)
|
1,708 | 1,045 | 5,458 | 3,539 | |||||||||||||||||||
|
Tax, accounting, and legal fees (d)
|
6 | 1,066 | 2,421 | 3,148 | |||||||||||||||||||
| Total Restructuring and integration expenses | $ | 4,150 | $ | 5,371 | $ | 17,815 | $ | 15,546 | |||||||||||||||
(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 agreements during the periods presented were for our prior corporate headquarters, which ended on December 31, 2025 and was not renewed, and the Keap headquarters, which 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 which are designed to streamline the Company's operations and drive lower operating expenses. The severance charges incurred during the three and nine months ended September 30, 2026 and 2025 were related to our legacy Marketing Services employees as a result of our shift from Marketing Services activities, as well as activities to right-size our workforce following the acquisition of Keap. Additionally, the three and nine months ended September 30, 2026 includes severance related to our restructuring initiative as described in Note 12, Restructuring, to our consolidated financial statements included in Part I, Item 1 in this Quarterly Report.
(c)We incur professional services, system integration costs, and other fees related to each of our acquisitions and other potential transactions. Such costs vary in nature and amount due to factors specific to each transaction and may create a lack of comparability between periods.
(d)These costs consist of legal expenses related to legal cases inherited from acquisitions or resulting from integration efforts, as well as accounting and tax fees related to acquisitions and other potential transactions.
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:
| Three Months Ended September 30, 2026 | |||||||||||||||||
| (in thousands) | SaaS | Marketing Services | Total | ||||||||||||||
|
Reconciliation of Adjusted Gross Profit
|
|||||||||||||||||
| Gross profit | $ | 73,210 | $ | 482 | $ | 73,692 | |||||||||||
| Plus: | |||||||||||||||||
| Depreciation and amortization expense | 4,397 | 271 | 4,668 | ||||||||||||||
| Stock-based compensation expense | 15 | 1 | 16 | ||||||||||||||
|
Adjusted Gross Profit
|
$ | 77,622 | $ | 754 | $ | 78,376 | |||||||||||
|
Gross margin
|
65.4 | % | 7.0 | % | 62.0 | % | |||||||||||
|
Adjusted Gross Margin
|
69.3 | % | 10.9 | % | 65.9 | % | |||||||||||
| Three Months Ended September 30, 2025 | |||||||||||||||||
| (in thousands) | SaaS | Marketing Services | Total | ||||||||||||||
|
Reconciliation of Adjusted Gross Profit
|
|||||||||||||||||
| Gross profit | $ | 80,956 | $ | 4,757 | $ | 85,713 | |||||||||||
| Plus: | |||||||||||||||||
| Depreciation and amortization expense | 3,084 | 573 | 3,657 | ||||||||||||||
| Stock-based compensation expense | 98 | 15 | 113 | ||||||||||||||
|
Adjusted Gross Profit
|
$ | 84,138 | $ | 5,345 | $ | 89,483 | |||||||||||
|
Gross margin
|
69.8 | % | 22.1 | % | 62.4 | % | |||||||||||
|
Adjusted Gross Margin
|
72.6 | % | 24.8 | % | 65.1 | % | |||||||||||
| Nine Months Ended September 30, 2026 | |||||||||||||||||
| (in thousands) | SaaS | Marketing Services | Total | ||||||||||||||
|
Reconciliation of Adjusted Gross Profit
|
|||||||||||||||||
| Gross profit | $ | 219,505 | $ | 11,858 | $ | 231,363 | |||||||||||
| Plus: | |||||||||||||||||
| Depreciation and amortization expense | 11,721 | 1,073 | 12,794 | ||||||||||||||
| Stock-based compensation expense | 81 | 8 | 89 | ||||||||||||||
|
Adjusted Gross Profit
|
$ | 231,307 | $ | 12,939 | $ | 244,246 | |||||||||||
|
Gross margin
|
64.0 | % | 35.9 | % | 61.5 | % | |||||||||||
|
Adjusted Gross Margin
|
67.4 | % | 39.2 | % | 64.9 | % | |||||||||||
| Nine Months Ended September 30, 2025 | |||||||||||||||||
| (in thousands) | SaaS | Marketing Services | Total | ||||||||||||||
|
Reconciliation of Adjusted Gross Profit
|
|||||||||||||||||
| Gross profit | $ | 239,556 | $ | 28,190 | $ | 267,746 | |||||||||||
| Plus: | |||||||||||||||||
| Depreciation and amortization expense | 9,431 | 2,199 | 11,630 | ||||||||||||||
| Stock-based compensation expense | 301 | 64 | 365 | ||||||||||||||
|
Adjusted Gross Profit
|
$ | 249,288 | $ | 30,453 | $ | 279,741 | |||||||||||
|
Gross margin
|
70.0 | % | 35.6 | % | 63.6 | % | |||||||||||
|
Adjusted Gross Margin
|
72.9 | % | 38.4 | % | 66.4 | % | |||||||||||
Liquidity and Capital Resources
Thryv Holdings, Inc. is a holding company that does not conduct any business operations of its own. We derive cash flows from cash transfers and other distributions from our operating subsidiary, Thryv, Inc., who in turn generates cash flows from its own operations and operations of its subsidiaries, and has cash and cash equivalents on hand, funds provided under the Term Loan (as defined below) and funds available under the 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.
As discussed in Note 1, Description of Business and Summary of Significant Accounting Policies, following the completion of the Print Transaction, absent a waiver or amendment, the Company forecasts that it will not be in compliance with its "Total Net Leverage Ratio" financial covenant under its Term Loan, which is tested as of the last day of each fiscal quarter, see Note 8, Debt Obligations. The forecasted non-compliance is a result of the Company's Consolidated EBITDA, as defined under the Term Loan, being recast to exclude the historical results of the Print Business, as well as limitations on the amount of restructuring costs that may be added back in calculating Consolidated EBITDA. The Company expects that it would be in non-compliance as of its December 31, 2026 assessment.
Failure to comply with this covenant, absent a waiver or amendment, would constitute an event of default and would permit the lenders to declare the amounts outstanding under the Term Loan becoming immediately due and payable. While the Company believes it has sufficient cash, cash flow from operations, and available operational expense savings to fund its operations over the next 12 months, the Company does not currently forecast that it would have sufficient liquidity to repay its Term Loan in full if it became immediately due and payable during that period under the circumstances described above. This potential non-compliance with the financial covenant raises substantial doubt about the Company's ability to continue as a going concern for the next 12 months from the date of issuance of these condensed consolidated financial statements.
While the Company is currently engaged in discussions with its lenders regarding such a waiver or amendment of this financial covenant, there can be no assurance that the Company's lenders will agree to waive, modify and/or amend the Term Loan with respect to the financial covenant. The Company's ability to obtain such waiver requires approval from a majority of the debt holders, of which 40.0% is held by a related party. Because as of the date these condensed consolidated financial statements were issued the Company had not yet obtained the necessary waiver or amendment, management cannot conclude that it is probable that the plan will be effectively implemented and, therefore, management's plans do not alleviate the substantial doubt regarding the Company's ability to continue as a going concern.
Assuming the Company obtains the necessary waiver or amendment under the Term Loan and the amounts outstanding under the Term Loan do not become immediately due and payable as a result of the potential covenant non-compliance, we believe that expected cash flows from operations, available cash and cash equivalents, funds available under our ABL Facility prior to its expected termination, net proceeds from the Print Transaction, and available operational expense savings will be sufficient to operate our business for the next 12 months. In addition, the Company is also seeking to enter a new revolving credit facility to provide additional liquidity following the termination of the ABL Facility upon the closing of the Print Transaction.
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.
For a discussion on contingent obligations, see Note 14, Contingent Liabilities, to our consolidated financial statements included in Part I, Item 1 in this Quarterly Report.
Material Cash Requirements
We have various payment obligations as part of our ordinary course of business. Our material cash requirements include: (1) lease obligations; (2) debt repayments (see Note 8, Debt Obligations); (3) employee wages, benefits, and incentives; (4) cash severance payments (see Note 12, Restructuring); and (5) taxes due to governmental authorities (see Note 13, Income Taxes). The expected timing of payments is estimated based on current information. In addition, we may be subject to additional material cash requirements that are contingent upon the occurrence of certain events, e.g., legal contingencies, pensions (see Note 9, Pensions) and other matters.
For the remainder of the year ending December 31, 2026, we expect total capital expenditures to be approximately $2.8 million. Our capital expenditure budget is an estimate and is subject to change.
Sources and Uses of Cash
The following table summarizes our cash flows from operating, investing and financing activities for the periods indicated:
| Nine Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||
| (in thousands) | (unaudited) | ||||||||||||||||
| Cash flows provided by (used in): | |||||||||||||||||
| Operating activities, continuing operations | $ | (37,867) | $ | (40,105) | $ | 2,238 | |||||||||||
| Operating activities, discontinued operations | 77,453 | 81,426 | (3,973) | ||||||||||||||
| Investing activities, continuing operations | (23,306) | (22,634) | (672) | ||||||||||||||
| Financing activities, continuing operations | (18,467) | (23,930) | 5,463 | ||||||||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 113 | 591 | (478) | ||||||||||||||
| Decrease in cash, cash equivalents and restricted cash | $ | (2,074) | $ | (4,652) | $ | 2,578 | |||||||||||
Cash Flows from Operating Activities
Net cash from operating activities decreased by $1.7 million for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The decrease was primarily due to a decrease in cash from discontinued operations as a result of the timing of accounts receivable collections. Net cash used in continuing operations decreased as a result of a decrease in use of working capital. Additionally, the Company incurred lower interest payments of $3.9 million as a result of lower debt balances and an income tax refund of $6.0 million during the nine months ended September 30, 2026, compared to an income tax payment of $4.4 million during the nine months ended September 30, 2025.
Cash Flows from Investing Activities
Net cash used in investing activities increased by $0.7 million for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily as a result of more additions to fixed assets and capitalized software.
Cash Flows from Financing Activities
Net cash used in financing activities decreased by $5.5 million for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. This decrease was primarily due a reduction in the payments made on the Company's Term Loan, as payments of $8.8 million were made during the nine months ended September 30, 2026 compared to payments of $35.0 million during the nine months ended September 30, 2025. This decrease was partially offset by activity on the Company's ABL Facility. The Company made net payments of $7.5 million on the ABL Facility during the nine months ended September 30, 2026, compared to net proceeds of $16.6 million during the nine months ended September 30,
2025.
Debt
Term Loan
On May 1, 2024, the Company entered into a new Term Loan Credit Agreement (the "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 Term Loan established a senior secured term loan facility (the "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 September 30, 2026, 40.0% of the Term Loan was held by a related party who was an equity holder of the Company as of that date.
The Term Loan Facility matures on May 1, 2029 and borrowings under the Term Loan Facility bear interest at a fluctuating rate per annum equal to, at the Company's option, the secured overnight financing rate ("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 Term Loan Facility requires mandatory amortization payments, paid quarterly, equal to (i) $52.5 million per year for the first two years following the closing date of the Term Loan, and (ii) $35.0 million per year thereafter. As of September 30, 2026, the Company's mandatory amortization payments for the next 12 months total $35.0 million.
ABL Facility
On May 1, 2024, the Company entered into a new Credit Agreement (the "ABL Credit Agreement"), which established a new asset-based revolving loan facility (the "ABL Facility"). The ABL Facility refinanced the Company's previous asset-based revolving loan facility (the "Prior ABL Facility"). Proceeds of the ABL Facility may be used by the Company for ongoing general corporate purposes and working capital.
The ABL Facility matures on May 1, 2028 and borrowings under the 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 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 ABL Facility is equal to 0.375% per annum.
Upon the closing of the Print Transaction (see Note 1, Description of Business and Summary of Significant Accounting Policies), the Company will be required to repay the outstanding balance of the ABL Facility, and the ABL Facility will be terminated. As a result, the Company has classified the outstanding balance of the ABL Facility as a current liability on the Consolidated Balance Sheets as of September 30, 2026.
The amount of borrowings permitted at any time under the ABL Facility is limited to a periodic borrowing base valuation of, among other things, our accounts receivables. In addition, we are required to maintain a minimum "Excess Availability" (as defined in the ABL Credit Agreement) of at least $8.5 million at all times. As of September 30, 2026, the Company had Excess Availability under its borrowing base of $19.5 million. After the minimum Excess Availability requirement, the Company had available borrowing capacity of approximately $11.0 million.
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 in the Term Loan Facility). We are in compliance with all covenants under the Term Loan and ABL Facility as of September 30, 2026.
We had total recorded debt outstanding of $239.2 million (net of $5.9 million of unamortized original issue discount ("OID") and debt issuance costs) at September 30, 2026, which was comprised of amounts outstanding under the Term Loan of $227.5 million and ABL Facility of $17.6 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 $40.0 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 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.
As of September 30, 2026, the Company had repurchased approximately $5.5 million, or 404,495 shares, of the Company's outstanding common stock under the Share Repurchase Program and $34.5 million remains available for share repurchases. The Company's ability to repurchase shares in the future is limited by certain conditions set forth in the ABL Credit Agreement.
Critical Accounting Policies and Estimates
Our critical accounting policies and estimates have not changed from those described in our 2025 Form 10-K, under "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates."
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