Thryv Holdings, Inc. — FY2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020. Although the request identifies 2020 Q4, this filing reports full-year results; it does not provide a complete standalone fourth-quarter income statement. Amounts below are in U.S. dollars.
Business context
Thryv serves small and medium-sized businesses through two segments: Marketing Services, including print and digital advertising, and SaaS, including its Thryv business-management platform and related products. It reported approximately 334,000 total clients at year-end. The company completed a direct listing on Nasdaq on October 1, 2020.
Key financial metrics
| Metric | FY2020 | FY2019 |
|---|---|---|
| Revenue | $1,109.4 million | $1,421.4 million |
| Operating income | $152.0 million; 13.7% margin | $206.1 million; 14.5% margin |
| Net income | $149.2 million | $35.5 million |
| Adjusted EBITDA | $371.8 million | $481.6 million |
| Cash from operating activities | $232.8 million | $270.6 million |
| Cash and cash equivalents at year-end | $2.4 million | $1.9 million |
| Debt at year-end | $528.4 million | $714.4 million |
FY2020 revenue comprised $979.6 million from Marketing Services and $129.8 million from SaaS. Operating expenses were $957.4 million. The income-tax benefit was $108.0 million, compared with an $18.1 million provision in 2019; the benefit largely reflected a $105.6 million net valuation-allowance release and favorable tax-position developments. Consequently, net income should be considered alongside pretax income of $41.2 million and the unusually large tax benefit.
Operating cash flow declined 14.0%. Investing activities used $26.2 million and financing activities used $206.1 million. The filing states that year-end ABL borrowing capacity was $57.6 million; management said cash, operating cash flows, and available ABL funds were expected to meet liquidity needs for the next 12 months.
Material changes versus FY2019
- Revenue declined $311.9 million, or 21.9%. Marketing Services fell 24.2%, while SaaS revenue increased 1.0%.
- Print revenue fell 26.8%; digital Marketing Services revenue fell 21.9%, reflecting secular print decline, competition, and changes in offerings. SaaS growth was modest despite stronger demand for integrated tools.
- Operating income declined 26.2%, and Adjusted EBITDA fell 22.8%, as cost reductions did not fully offset lower revenue.
- Marketing Services clients fell 18% to 318,000; SaaS clients fell 6% to 44,000. SaaS monthly ARPU rose 17% to $256, while Marketing Services ARPU fell 6% to $222. SaaS monthly active users increased 22% to 28,000.
- Debt declined by approximately $186.0 million, including $160.4 million of term-loan repayments and net ABL repayments. Interest expense also declined with lower debt and LIBOR rates.
Outlook, risks and unusual items
- Outlook: No specific numerical revenue or earnings guidance is provided. Management expected ongoing SaaS demand growth alongside continued Marketing Services decline, and anticipated providing some COVID-related client assistance into spring 2021. These expectations are subject to economic, client-renewal, competition, and pandemic uncertainty.
- COVID-19 and restructuring: Pandemic credits reduced FY2020 revenue by $17.5 million; paused online advertising programs reduced it by a further $7.5 million. Severance expense was $11.7 million, including $5.0 million attributed to COVID-19. Closing offices as part of the “Remote First” strategy resulted in $24.9 million of impairment charges.
- Debt and subsequent financing: Year-end debt was predominantly floating-rate; the filing estimated that a 100-basis-point rate increase would raise annual interest expense by about $5.3 million. On March 1, 2021, after year-end, the company completed the Sensis acquisition for approximately $198.3 million in cash, with customary adjustments, and entered a $700 million term-loan facility at LIBOR plus 8.50% or base rate plus 7.50%, maturing in 2026. The ABL facility was also amended and extended.
- Acquisition: Sensis added more than 100,000 Australian clients. Purchase accounting was incomplete when the 10-K was filed, so acquired asset, liability, goodwill, and intangible-asset values were not yet available.
- Pensions and contingencies: Frozen defined-benefit plans were underfunded by $192.3 million at year-end; expected 2021 contributions were $26.4 million. Tax disputes included a New York matter with $3.5 million accrued and paid in January 2021, and ongoing federal tax matters. The company said it did not expect pending legal matters to have a material adverse effect, but outcomes remain uncertain.
- Other risks: The filing emphasizes continued print-market contraction, competition and client churn, reliance on search and technology partners, cybersecurity and privacy compliance, substantial debt and restrictive covenants, and volatility in the newly listed shares. Mudrick Capital controlled approximately 55.7% of voting power at year-end. No cash dividends were planned for the foreseeable future.
Most important facts for investors to verify
- Whether SaaS growth and higher ARPU can offset ongoing declines in Marketing Services revenue and clients.
- The sustainability of operating cash flow and liquidity given low year-end cash, debt service, and the post-year-end acquisition financing.
- The Sensis acquisition’s final purchase accounting, integration costs, client retention, and contribution to earnings and cash flow.
- The assumptions supporting the $105.6 million valuation-allowance release and the resulting tax benefit in reported net income.
- Future pension funding requirements, tax dispute outcomes, and compliance with debt covenants and refinancing terms.