Thryv Reports Strong Fourth Quarter and Fiscal Year 2021 Results, Exceeding All Guidance Targets

Mar 10, 2022 07:30 am

DALLAS --

Thryv Holdings, Inc. (NASDAQ:THRY) (“Thryv” or the “Company”), the end-to-end client experience platform for growing small businesses, announced audited financial results for the fourth quarter and fiscal year 2021. The Company has also provided guidance for first quarter and full year 2022.

“We are pleased to report a strong finish to 2021, with Q4 representing our largest SaaS revenue quarter on record,” said Joe Walsh, Chairman and CEO. “We beat all of our 2021 guidance targets. These outstanding results confirm that Thryv has become the leader in moving small to medium-sized businesses to cloud software to enable them to modernize and run their businesses.”

The Company also announced that it has acquired Vivial Media Holdings, Inc. (“Vivial”), a regional provider of small business digital and print marketing services, for $21 million. On a post synergy basis, the purchase price of Vivial corresponds to an enterprise value / adjusted EBITDA multiple of approximately 2x, consistent with Thryv’s disciplined acquisition strategy and prior marketing services acquisitions.

“Vivial has a strong presence in key US markets including Hawaii, Alaska, Cincinnati, Ohio, Rochester, New York, and Lincoln, Nebraska,” said Walsh. “These fit synergistically into Thryv’s national platform. We are confident that many of Vivial’s 25,000 digital customers will adopt Thryv’s CRM software.”

“With the highly-profitable Marketing Services business providing low-cost leads into the SaaS business, the Company will continue to generate strong EBITDA margins from a consolidated standpoint," said Paul Rouse, Chief Financial Officer. "We have a strong track record of optimizing profits and we believe this trajectory will continue throughout 2022.”

“Finally, we look forward to sharing more of the long-term vision at our upcoming in-person investor and analyst day in New York City on April 5th,” concluded Walsh.

Fourth Quarter 2021 Financial Highlights:

US SaaS revenue was $47.1 million, a 35.0% increase year-over-year
US Marketing Services revenue was $153.6 million
Thryv International revenue was $43.8 million
Consolidated total revenue was $244.4 million, a decrease of 1.0% year-over-year
Consolidated net income was $5.1 million
Consolidated adjusted EBITDA was $46.5 million, representing an adjusted EBITDA margin of 19.0%
Consolidated gross profit was $151.3 million, an increase of 7.2% year-over-year
Consolidated adjusted gross profit was $161.6 million

Full Year 2021 Financial Highlights:

US SaaS revenue was $170.5 million, a 31.3% increase year-over-year
US Marketing Services revenue was $797.5 million
Thryv International revenue was $145.4 million
Consolidated total revenue was $1,113.4 million, an increase of 0.4% year-over-year
Consolidated net income was $101.6 million
Consolidated adjusted EBITDA was $350.5 million, representing an adjusted EBITDA margin of 31.5%
Consolidated gross profit was $705.3 million, an increase of 5.3% year-over-year
Consolidated adjusted gross profit was $759.0 million

SaaS Highlights

SaaS Average Revenue per Unit (“ARPU”)¹ increased to $351 for the fourth quarter of 2021, compared to $293 in the fourth quarter of 2020
Total SaaS clients increased to 46 thousand for the fourth quarter of 2021
SaaS Monthly Churn² was 2.1% for the fourth quarter of 2021, compared to 2.4% for the fourth quarter of 2020
SaaS Monthly Seasoned Churn³ improved to 1.5% for the fourth quarter of 2021
Net Dollar Retention⁴ improved 5 percentage points to 88% at end of the fourth quarter of 2021, when compared to the fourth quarter of 2020
Seasoned Net Dollar Retention⁵ improved 4 percentage points to 94% at end of the fourth quarter of 2021, when compared to the fourth quarter of 2020
SaaS monthly active users⁶ increased 7.1% year-over-year to 30 thousand active users. Daily and Weekly users increased 12.3% year-over-year.

2021 Product Innovation and Accolades

Google My Business Optimization service launched to help small businesses get found online and chosen over their competition
Free Online Tools launched, including invoice generator, Google review link generator, Online Experience Scan, as well as several calculators and quizzes to improve business practices
Google My Business Dashboard launched, to centralize all-things Google for small businesses
Gmail Email Service integration with Thryv launched
Fully-integrated Verticalized Platform with enhanced CRM launched
G2: Leader in 14 categories
Capterra Highest-Rated Marketing Software to Help Your Business Succeed in 2022
Top 10 CIO Applications Customer Service Solution Providers
MyTechMag Top 10 CRM Solution Provider
Appealie Overall SaaS Award – Customer Service
Appealie SaaS Customer Success Award
GetApp Category Leaders: Social Media Marketing, Lead Management, Reputation Management, Real Estate CRM and Review Management
Software Advice Front Runners: Social Media Marketing, Lead Management, Account Management

Outlook

Based on information available as of March 10, 2022, Thryv is issuing guidance⁷ for the first quarter and full year 2022 as indicated below:

For the first quarter 2022, the Company expects:

Total SaaS revenue range of $47.5 to $47.7 million
Total SaaS EBITDA loss of $12 to $13 million
Total Marketing Services revenue range of $238 to $240 million

For the full year 2022, the Company currently expects:

Total SaaS revenue range of $206 to $208 million
Total SaaS EBITDA loss of $21 to $25 million
Total Marketing Services revenue range of $870 to $890 million
Total Marketing Services EBITDA of $305 to $312 million

Earnings Conference Call Information

Thryv will host a conference call on Thursday, March 10, 2022 at 8:30 a.m. (Eastern Time) to discuss the Company's fourth quarter and full year 2021 results. The conference call will be available via the Internet at investor.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) 770-2030 or (647) 362-9199 and enter “87769.”

_______________________

¹	Defined as total client billings by month divided by the number of revenue-generating units during the month.
²	Calculated as the percentage decrease in billable clients in the current month compared to the prior month.
³	SaaS Monthly Seasoned Churn is defined as monthly churn excluding clients acquired over the previous 12 months.
⁴	Defined as the percentage of revenue from clients with monthly billed revenue in the current month compared to the same month in prior year.
⁵	Seasoned Net Dollar Retention is defined as net dollar retention excluding clients acquired over the previous 12 months.
⁶	Defined as a client with one or more users who log into our SaaS solutions at least once during the calendar month.
⁷	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.

Final Results


Thryv Holdings, Inc. and Subsidiaries Consolidated Statements of Operations and Comprehensive Income

	Three Months Ended December 31,						Years Ended December 31,
	Three Months Ended December 31,						Years Ended December 31,
(in thousands, except share and per share data)	2021			2020			2021			2020
Revenue	$	244,439		$	246,928		$	1,113,382		$	1,109,435
Cost of services		93,109			105,717			408,043			439,742
Gross profit		151,330			141,211			705,339			669,693

Operating expenses:
Sales and marketing		99,536			73,492			357,813			315,195
General and administrative		46,540			44,816			153,902			177,574
Impairment charges		—			5,497			3,611			24,911
Total operating expenses		146,076			123,805			515,326			517,680

Operating income		5,254			17,406			190,013			152,013
Other income (expense):
Interest expense		(10,708	)		(11,889	)		(48,867	)		(51,537	)
Interest expense, related party		(4,278	)		(3,099	)		(17,507	)		(17,002	)
Other components of net periodic pension benefit (cost)		13,831			(10,924	)		14,829			(42,236	)
Other income (expense)		3			—			(4,154	)		—
Income (loss) before income tax benefit (expense)		4,102			(8,506	)		134,314			41,238
Income tax benefit (expense)		986			118,306			(32,737	)		107,983
Net income	$	5,088		$	109,800		$	101,577		$	149,221
Other comprehensive income (loss):
Foreign currency translation adjustment		498			—			(8,047	)		—
Comprehensive income	$	5,586		$	109,800		$	93,530		$	149,221

Net income per common share:
Basic	$	0.15		$	3.52		$	3.02		$	4.73
Diluted	$	0.13		$	3.31		$	2.78		$	4.42

Weighted-average shares used in computing basic and diluted net income per common share:
Basic		34,006,358			31,230,392			33,607,446			31,522,845
Diluted		37,983,847			33,212,192			36,495,746			33,795,594


Thryv Holdings, Inc. and Subsidiaries Consolidated Balance Sheets

(in thousands, except share data)	December 31, 2021			December 31, 2020
Assets
Current assets
Cash and cash equivalents	$	11,262		$	2,406
Accounts receivable, net of allowance of $17,387 in 2021 and $33,030 in 2020		279,053			296,570
Contract assets, net of allowance of $88 in 2021 and $338 in 2020		5,259			10,975
Taxes receivable		14,711			9,229
Prepaid expenses		22,418			13,411
Indemnification asset		24,346			24,346
Other current assets		13,596			12,761
Total current assets		370,645			369,698
Fixed assets and capitalized software, net		50,938			89,044
Goodwill		671,886			609,457
Intangible assets, net		82,577			31,777
Deferred tax assets		90,565			93,099
Other assets		33,891			21,902
Total assets	$	1,300,502		$	1,214,977
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	8,610		$	8,927
Accrued liabilities		131,813			139,613
Current portion of unrecognized tax benefits		29,771			30,022
Contract liabilities		51,726			18,942
Current portion of long-term debt		70,000			—
Other current liabilities		15,214			9,896
Total current liabilities		307,134			207,400
New Term Loan, net		309,672			—
New Term Loan, related party		142,875			—
Senior Term Loan, net		—			335,683
Senior Term Loan, related party		—			113,482
ABL Facility		39,929			79,238
Leaseback obligations		—			54,798
Pension obligations, net		140,167			190,827
Deferred tax liabilities		10,798			508
Other liabilities		35,212			36,266
Total long-term liabilities		678,653			810,802
Commitments and contingencies
Stockholders' equity
Common stock - $0.01 par value, 250,000,000 shares authorized; 60,830,853, shares issued and 34,145,311 shares outstanding at December 31, 2021; and 59,590,422 shares issued and 32,912,012 shares outstanding at December 31, 2020		608			596
Additional paid-in capital		1,084,288			1,059,624
Treasury stock - 26,685,542 shares at December 31, 2021 and 26,678,410 shares at December 31, 2020		(468,879	)		(468,613	)
Accumulated other comprehensive loss		(8,047	)		—
Accumulated deficit		(293,255	)		(394,832	)
Total stockholders' equity		314,715			196,775
Total liabilities and stockholders' equity	$	1,300,502		$	1,214,977


Thryv Holdings, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows

	Years Ended December 31,
(in thousands)	2021			2020
Cash Flows from Operating Activities
Net income	$	101,577		$	149,221
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		105,473			146,523
Amortization of debt issuance costs		4,919			1,068
Deferred income taxes		(20,438	)		(147,329	)
Provision for credit losses		8,031			32,077
Provision for service credits		11,363			32,550
Stock-based compensation expense (benefit)		8,094			(2,895	)
Other components of net periodic pension (benefit) cost		(14,829	)		42,236
Loss on termination of leaseback obligations		3,409			—
(Gain) loss on disposal/write-off of fixed assets and capitalized software		(5,536	)		3,544
Impairment charges		3,611			24,911
Non-cash (gain) loss from remeasurement of indemnification asset		(1	)		5,443
Other, net		304			—
Changes in working capital items, excluding acquisitions:
Accounts receivable		74,368			41,382
Contract assets		5,628			369
Prepaid expenses and other current assets		6,084			472
Accounts payable and accrued liabilities		(125,883	)		(86,161	)
Operating lease liability		(3,370	)		(4,006	)
Contract liabilities		7,767			(5,737	)
Settlement of stock option liability		—			(896	)
Net cash provided by operating activities		170,571			232,772

Cash Flows from Investing Activities
Additions to fixed assets and capitalized software		(26,849	)		(27,757	)
Proceeds from the sale of assets		6,836			1,546
Acquisition of a business, net of cash acquired		(175,370	)		—
Other		(1,192	)		—
Net cash (used in) investing activities		(196,575	)		(26,211	)

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		(110,215	)		—
Payments of New Term Loan, related party		(47,785	)		—
Payments of Senior Term Loan		(335,821	)		(113,747	)
Payments of Senior Term Loan, related party		(113,789	)		(46,643	)
Proceeds from ABL Facility		1,046,249			1,143,700
Payments of ABL Facility		(1,085,558	)		(1,169,446	)
Purchase of treasury stock		—			(30,626	)
Proceeds from exercise of stock options		7,047			11,241
Proceeds from exercise of stock warrants		13,920			—
Proceeds from private placement		—			445
Payments of lease obligations		(10,532	)		(411	)
Other		(3,428	)		(580	)
Net cash provided by (used in) financing activities		39,088			(206,067	)

Effect of exchange rate changes on cash and cash equivalents		(1,933	)		—
Increase in cash and cash equivalents and restricted cash		11,151			494
Cash and cash equivalents and restricted cash, beginning of period		2,406			1,912
Cash and cash equivalents and restricted cash, end of period	$	13,557		$	2,406

Supplemental Information
Cash paid for interest	$	66,737		$	72,931
Cash paid for income taxes, net	$	63,893		$	24,799

	Three Months Ended December 31,					Change
	2021			2020		Amount			%
(in thousands of $)
Revenue
Marketing Services	$	153,555		$	212,058	$	(58,503	)	(27.6	)%
SaaS		47,061			34,870		12,191		35.0	%
Thryv International ⁽¹⁾		43,823			—		43,823		NM
Consolidated Revenue	$	244,439		$	246,928	$	(2,489	)	(1.0	)%

Segment EBITDA
Marketing Services	$	40,684		$	69,381	$	(28,697	)	(41.4	)%
SaaS		(6,693	)		2,250		(8,943	)	(397.5	)%
Thryv International ⁽¹⁾		12,487			—		12,487		NM
Consolidated Adjusted EBITDA	$	46,478		$	71,631	$	(25,153	)	(35.1	)%

	Years Ended December 31,					Change
	2021			2020		Amount			%
(in thousands of $)
Revenue
Marketing Services	$	797,493		$	979,611	$	(182,118	)	(18.6	)%
SaaS		170,498			129,824		40,674		31.3	%
Thryv International⁽¹⁾		145,391			—		145,391		NM
Consolidated Revenue	$	1,113,382		$	1,109,435	$	3,947		0.4	%

Segment EBITDA
Marketing Services	$	318,230		$	358,804	$	(40,574	)	(11.3	)%
SaaS		(14,004	)		13,035		(27,039	)	(207.4	)%
Thryv International ⁽¹⁾		46,297			—		46,297		NM
Consolidated Adjusted EBITDA	$	350,523		$	371,839	$	(21,316	)	(5.7	)%

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

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 additional tools 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:

	Three Months Ended December 31,						Years Ended December 31,
(in thousands)	2021			2020			2021			2020
Reconciliation of Adjusted EBITDA
Net income	$	5,088		$	109,800		$	101,577		$	149,221
Interest expense		14,986			14,988			66,374			68,539
Income tax (benefit) expense		(986	)		(118,306	)		32,737			(107,983	)
Depreciation and amortization expense		24,798			35,640			105,473			146,523
Restructuring and integration expenses ⁽¹⁾		3,109			4,557			18,145			28,459
Transaction costs ⁽²⁾		5,086			6,320			25,059			20,999
Stock-based compensation expense (benefit) ⁽³⁾		1,862			1,300			8,094			(2,895	)
Other components of net periodic pension (benefit) cost ⁽⁴⁾		(13,831	)		10,924			(14,829	)		42,236
Non-cash loss (gain) from remeasurement of indemnification asset ⁽⁵⁾		1,247			1,565			(1	)		5,443
Impairment charges		—			5,497			3,611			24,911
Other ⁽⁶⁾		5,119			(654	)		4,283			(3,614	)
Adjusted EBITDA	$	46,478		$	71,631		$	350,523		$	371,839

(1)	For the year ended December 31, 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 our direct listing, Thryv Australia acquisition and other transaction costs.

(3)	We record 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 us 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 year ended December 31, 2021, other includes expenses related to the valuation of certain assets as a result of the acquisition of Thryv Australia and foreign exchange-related expense.

The following is a reconciliation of Adjusted Gross Profit, to its most directly comparable GAAP measure, Gross profit:

	Three Months Ended December 31,
(in thousands)	2021			2020
Reconciliation of Adjusted Gross Profit
Gross profit	$	151,330		$	141,211
Plus:
Depreciation and amortization expense		10,242			17,962
Stock-based compensation expense		60			104
Adjusted Gross Profit	$	161,632		$	159,277
Gross Margin		61.9	%		57.2	%
Adjusted Gross Margin		66.1	%		64.5	%

	Years Ended December 31,
(in thousands)	2021			2020
Reconciliation of Adjusted Gross Profit
Gross profit	$	705,339		$	669,693
Plus:
Depreciation and amortization expense		53,233			73,046
Stock-based compensation expense (benefit)		380			(72	)
Adjusted Gross Profit	$	758,952		$	742,667
Gross Margin		63.4	%		60.4	%
Adjusted Gross Margin		68.2	%		66.9	%

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. (NASDAQ: THRY) is a global software and marketing services company that empowers small- to medium-sized businesses (SMBs), franchises and agencies to grow and modernize their operations so they can compete and win in today's economy. Over 45,000 businesses use our award-winning SaaS platform, Thryv®, to manage their end-to-end customer experience, which has helped businesses across the U.S. and overseas grow their bottom line. Thryv also manages digital and print presence for over 400,000 businesses, connecting these SMBs to local consumers via proprietary local search portals and print directories. For more information about Thryv Holdings, Inc, visit thryv.com.

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Media Contact:
Morisa Young
Gregory FCA
347.428.4325
[email protected]

Investor Contact:
Cameron Lessard
Thryv, Inc.
214.773.7022
[email protected]

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Thryv Reports Strong Fourth Quarter and Fiscal Year 2021 Results, Exceeding All Guidance Targets