Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Management performs its annual goodwill impairment test on October 1 or more frequently if events or changes in circumstances indicate that the goodwill may be impaired.

The goodwill impairment test requires measurement of the fair value of the Company's reporting units, which is compared to the carrying value of the reporting units, including goodwill. Each reporting unit is valued using a discounted cash flow model which requires estimating future cash flows expected to be generated from the reporting unit, discounted to their present value using a risk-adjusted discount rate. Terminal values are also estimated and discounted to their present value. Assessing the recoverability of goodwill requires estimates and assumptions about revenue, operating margins, growth rates and discount rates based on budgets, business plans, economic projections, anticipated future cash flows and marketplace data. There are inherent uncertainties related to these factors and management’s judgment in applying these factors.

Based on the initial success of client conversions from digital Marketing Services solutions to SaaS solutions, the Company made a strategic decision during the third quarter of 2024 to terminate its Marketing Services solutions by the end of 2028. This strategic decision resulted in an additional accelerated decline in estimated future cash flows, partially offset by operating cost savings from terminating our Marketing Services solutions, and the Company concluded a triggering event had occurred in the Thryv Marketing Services reporting unit during the third quarter of 2024. As a result, the Company recorded a non-cash impairment charge of $83.1 million during the third quarter 2024, reducing the goodwill in its Thryv Marketing Services reporting unit to zero. No goodwill impairment charge was recorded on the Company's other reporting unit during the three and nine months ended September 30, 2024 and 2023.

The Company engaged a third-party valuation firm to assist it in the development of the assumptions and the Company’s determination of the fair value of its reporting units for this interim impairment test. The estimated fair value of the Company’s Marketing Services reporting unit was below its carrying value, including goodwill. The historical secular decline in industry demand for Print services, the historical trending decline in the Company’s Marketing Services client base, continued competition in the consumer search and display space and the projected decline in cash flows from an estimated conversion of certain clients from digital Marketing Services solutions to SaaS solutions impacted the assumptions used to estimate the discounted future cash flows of the Company’s Marketing Services reporting unit for purposes of performing the goodwill impairment test.

The fair value of the Company's SaaS reporting unit substantially exceeded its carrying value.

The following table sets forth the changes in the carrying amount of the Company's goodwill for the nine months ended September 30, 2024 and the year ended December 31, 2023.


(in thousands)	Thryv Marketing Services		Thryv SaaS		Total
Balance as of December 31, 2022	$	347,120	$	218,884	$	566,004
Yellow Acquisition (1)	5,129		—		5,129
Impairments	(268,800)		—		(268,800)
Effects of foreign currency translation	67		—		67
Balance as of December 31, 2023	$	83,516	$	218,884	$	302,400

Impairments	(83,094)		—		(83,094)

Effects of foreign currency translation	(422)		—		(422)
Balance as of September 30, 2024	$	—	$	218,884	$	218,884

(1) Yellow was included in the Thryv Marketing Services reporting unit.

In the first quarter of 2024, the Company changed its reporting structure from four to two reporting units. Accordingly, the Company assessed its goodwill for impairment under a four reporting unit structure prior to the assessment. Upon completion of this assessment, the Company determined that no impairment existed. Subsequent to this review and after allocating goodwill to the new reporting units based on relative fair value, the Company reassessed goodwill for impairment at the new reporting unit level (i.e., the Marketing Services and SaaS reporting units). Based upon each of these assessments, the Company determined no impairment existed for either of the Company's reporting units.

Intangible Assets

The following tables set forth the details of the Company's intangible assets as of September 30, 2024 and December 31, 2023:


	As of September 30, 2024
(in thousands)	Gross		Accumulated Amortization		Net		Weighted Average Remaining Amortization Period in Years
Client relationships	$	801,263	$	(798,682)	$	2,581	1.6
Trademarks and domain names	224,748		(223,986)		762		4.0
Covenants not to compete	4,921		(4,811)		110		1.1
Total intangible assets	$	1,030,932	$	(1,027,479)	$	3,453	2.1


	As of December 31, 2023
(in thousands)	Gross		Accumulated Amortization		Net		Weighted Average Remaining Amortization Period in Years
Client relationships	$	799,882	$	(787,736)	$	12,146	1.4
Trademarks and domain names	224,423		(220,886)		3,537		1.9
Covenants not to compete	10,446		(7,341)		3,105		0.8
Total intangible assets	$	1,034,751	$	(1,015,963)	$	18,788	1.4

Amortization expense for intangible assets for the three and nine months ended September 30, 2024 was $3.3 million and $13.7 million, respectively. Amortization expense for intangible assets for the three and nine months ended September 30, 2023 was $6.4 million and $19.1 million, respectively.

Estimated aggregate future amortization expense by fiscal year for the Company's intangible assets is as follows:


(in thousands)	Estimated Future Amortization Expense
2024 (remaining)	$	937
2025	1,912
2026	420
2027	140
2028	44
Total	$	3,453

As a result of the goodwill impairment noted above, the Company performed impairment tests during the third quarter of 2024 on its intangible assets and other long-lived assets within the Marketing Services reporting unit. Based on the Company’s analysis, the carrying values of the Company’s definite-lived intangible assets and other long-lived assets were determined to be recoverable, and no impairment was recognized. Accordingly, no impairment charges were recorded during the three and nine months ended September 30, 2023 and 2024.