Thryv Holdings, Inc.THRY
Thryv Holdings, Inc. Income Taxes Disclosure
Income Taxes
The components of the Company's income (loss) before income tax (expense) benefit are as follows:
| Years Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| United States | $ | 2,830 | $ | (31,483) | $ | (278,741) | |||||||||||
| Foreign | 14,213 | (34,515) | 18,197 | ||||||||||||||
| Total income (loss) before income tax (expense) benefit | $ | 17,043 | $ | (65,998) | $ | (260,544) | |||||||||||
The components of the Company's income tax (expense) benefit are as follows:
| Years Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Current tax (expense): | |||||||||||||||||
| Federal | $ | (3,674) | $ | (5,316) | $ | (1,870) | |||||||||||
| State and local | (690) | (1,800) | (1,542) | ||||||||||||||
| Foreign | (1,747) | (6,498) | (8,238) | ||||||||||||||
| Total current tax (expense) | $ | (6,111) | $ | (13,614) | $ | (11,650) | |||||||||||
Deferred tax (expense) benefit: | |||||||||||||||||
| Federal | (3,815) | 5,748 | 7,789 | ||||||||||||||
| State and local | (2,602) | (1,677) | (826) | ||||||||||||||
| Foreign | (4,208) | 1,325 | 5,936 | ||||||||||||||
Total deferred tax (expense) benefit | $ | (10,625) | $ | 5,396 | $ | 12,899 | |||||||||||
| Total income tax (expense) benefit | $ | (16,736) | $ | (8,218) | $ | 1,249 | |||||||||||
The following table provides a reconciliation between the effective income tax rate and the federal statutory tax rate:
| Years Ended December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| (dollars in thousands) | Amount | % | Amount | % | Amount | % | |||||||||||||||||||||||||||||
| U.S. federal statutory tax rate | $ | 3,579 | 21.0 | % | $ | (13,860) | 21.0 | % | $ | (54,714) | 21.0 | % | |||||||||||||||||||||||
State and local income taxes, net of federal income tax effect (1) | 2,457 | 14.4 | % | 2,663 | (4.0) | % | 2,060 | (0.8) | % | ||||||||||||||||||||||||||
| Foreign tax effects | |||||||||||||||||||||||||||||||||||
| Australia | |||||||||||||||||||||||||||||||||||
| Statutory tax rate difference between Australia and United States | 1,176 | 6.9 | % | (3,219) | 4.9 | % | 431 | (0.2) | % | ||||||||||||||||||||||||||
Impairment expense | — | — | % | 15,989 | (24.2) | % | — | — | % | ||||||||||||||||||||||||||
Unrealized foreign exchange | 723 | 4.2 | % | (1,449) | 2.2 | % | 316 | (0.1) | % | ||||||||||||||||||||||||||
Withholding taxes | 610 | 3.6 | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
Other | 104 | 0.6 | % | 123 | (0.2) | % | (786) | 0.3 | % | ||||||||||||||||||||||||||
New Zealand | |||||||||||||||||||||||||||||||||||
Impairment expense | — | — | % | 1,443 | (2.2) | % | — | — | % | ||||||||||||||||||||||||||
Other | 150 | 0.9 | % | (111) | 0.2 | % | (41) | — | % | ||||||||||||||||||||||||||
| Other foreign jurisdictions | 41 | 0.2 | % | (354) | 0.5 | % | (1,439) | 0.6 | % | ||||||||||||||||||||||||||
| Effects of cross-border tax laws | |||||||||||||||||||||||||||||||||||
Base Erosion and Anti-Abuse Tax (BEAT) | 2,288 | 13.4 | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
Other | 78 | 0.5 | % | 354 | (0.5) | % | 1,471 | (0.6) | % | ||||||||||||||||||||||||||
| Tax credits | |||||||||||||||||||||||||||||||||||
Research and development tax credits | (2,280) | (13.4) | % | (1,958) | 3.0 | % | (1,444) | 0.6 | % | ||||||||||||||||||||||||||
Foreign tax credits | (410) | (2.4) | % | (1,592) | 2.4 | % | (1,586) | 0.6 | % | ||||||||||||||||||||||||||
| Changes in valuation allowance | 441 | 2.6 | % | 445 | (0.7) | % | (879) | 0.3 | % | ||||||||||||||||||||||||||
| Nontaxable or non-deductible items | |||||||||||||||||||||||||||||||||||
Impairment expense | — | — | % | 4,405 | (6.7) | % | 56,448 | (21.7) | % | ||||||||||||||||||||||||||
Non-deductible officer compensation | 3,343 | 19.6 | % | 2,427 | (3.7) | % | 2,386 | (0.9) | % | ||||||||||||||||||||||||||
Stock-based compensation | 2,050 | 12.0 | % | (184) | 0.3 | % | 128 | — | % | ||||||||||||||||||||||||||
Transaction costs | (607) | (3.6) | % | 1,176 | (1.8) | % | — | — | % | ||||||||||||||||||||||||||
Other | 153 | 0.9 | % | (511) | 0.8 | % | 2,764 | (1.1) | % | ||||||||||||||||||||||||||
| Change in unrecognized tax benefits | |||||||||||||||||||||||||||||||||||
Unrecognized tax benefit | 772 | 4.5 | % | 924 | (1.4) | % | (4,303) | 1.7 | % | ||||||||||||||||||||||||||
Interest and penalties | 2,247 | 13.2 | % | 2,348 | (3.6) | % | (2,754) | 1.1 | % | ||||||||||||||||||||||||||
| Other adjustments | |||||||||||||||||||||||||||||||||||
True-up of deferred tax assets/liabilities | (223) | (1.3) | % | (642) | 1.0 | % | 693 | (0.3) | % | ||||||||||||||||||||||||||
Other | 44 | 0.4 | % | (199) | 0.3 | % | — | — | % | ||||||||||||||||||||||||||
| Effective tax rate | $ | 16,736 | 98.2 | % | $ | 8,218 | (12.4) | % | $ | (1,249) | 0.5 | % | |||||||||||||||||||||||
(1) State taxes in California and Iowa in 2025, Florida, Michigan, and Virginia in 2024, and Iowa and New York in 2023 made up the majority (greater than 50%) of the tax effect in this category. This category includes the impact of state valuation allowances and state unrecognized tax benefits.
Income Taxes Paid
The components of the Company's income taxes paid (net of refunds) are as follows:
| Years Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Federal | $ | — | $ | 8,237 | $ | — | |||||||||||
| State | (378) | 659 | 122 | ||||||||||||||
| Foreign | 5,580 | 6,517 | 9,191 | ||||||||||||||
| Total | $ | 5,202 | $ | 15,413 | $ | 9,313 | |||||||||||
Income taxes paid (net of refunds) exceeded 5% of total income taxes paid (net of refunds) in the following jurisdictions:
| Years Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| State | |||||||||||||||||
New York | $ | (289) | * | * | |||||||||||||
| Texas | $ | (378) | * | $ | (1,597) | ||||||||||||
| Foreign | |||||||||||||||||
| Australia | $ | 4,309 | $ | 5,466 | $ | 8,726 | |||||||||||
| New Zealand | $ | 1,271 | $ | 913 | * | ||||||||||||
* Jurisdiction below the threshold for the period presented.
Deferred Taxes
Deferred taxes arise because of differences in the book and tax basis of certain assets and liabilities. A valuation allowance is recognized to reduce gross deferred tax assets to the amount that will more likely than not be realized.
The significant components of the Company's deferred income tax assets and liabilities are as follows:
| December 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Deferred tax assets | |||||||||||
| Allowance for doubtful accounts | $ | 4,031 | $ | 3,887 | |||||||
| Deferred and other compensation | 13,081 | 15,184 | |||||||||
| Interest expense limitation | 19,944 | 21,677 | |||||||||
| Fixed assets and capitalized software | 34,073 | 27,781 | |||||||||
| Pension and other post-employment benefits | 11,847 | 10,578 | |||||||||
Lease liabilities | 1,948 | 2,627 | |||||||||
| Reserve for facility exit costs | — | 4,719 | |||||||||
Net operating loss and credit carryforwards (1) | 35,550 | 35,325 | |||||||||
| Non-compete and other agreements | 19,739 | 24,375 | |||||||||
| Goodwill and other intangible assets | 11,931 | 13,319 | |||||||||
| Other, net | 14,843 | 13,436 | |||||||||
| Total deferred tax assets | $ | 166,987 | $ | 172,908 | |||||||
| Valuation allowance | (16,785) | (15,662) | |||||||||
| Net deferred tax assets | $ | 150,202 | $ | 157,246 | |||||||
| Deferred tax liabilities | |||||||||||
| Deferred costs | $ | (2,542) | $ | (1,754) | |||||||
| Investment in subsidiaries | (4,160) | (4,193) | |||||||||
Lease right-of-use assets | (1,468) | (5,323) | |||||||||
| Fixed assets and capitalized software | (6,287) | (2,889) | |||||||||
| Other, net | (2,762) | — | |||||||||
Total deferred tax liabilities | $ | (17,219) | $ | (14,159) | |||||||
| Net deferred tax asset | $ | 132,983 | $ | 143,087 | |||||||
(1) For the year ended December 31, 2025, the Company had gross federal net operating loss carryforwards of $84.2 million, with $30.9 million expiring in 2033 through 2037 and $53.3 million with an indefinite carryforward period. The Company's federal net operating losses are subject to limitations under Section 382 of the Internal Revenue Code of $0.8 million per year. The annual limitation may be increased or decreased by net unrealized built-in gains or losses during the five-year period beginning on the date of the Section 382 ownership change. The Company also had post-apportionment state net operating losses of $275.8 million and $249.4 million expiring in 2026 through 2045 and $26.4 million with an indefinite carryforward period. A valuation allowance has been recorded for net operating losses which are expected to expire unutilized.
The Company establishes a valuation allowance to reduce the deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. In evaluating the ability to realize deferred tax assets, the Company considers all available positive and negative evidence in determining whether, based on the weight of that evidence, a valuation allowance is needed for some or all of the Company's deferred tax assets. In determining the need for a valuation allowance on the Company's deferred tax assets, the Company places greater weight on recent and objectively verifiable current information. The Company has considered taxable income in prior carryback years, future reversals of existing taxable temporary differences, tax planning strategies, and future taxable income in assessing the need for the valuation allowance. If the Company was to determine that it would be able to realize the deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the valuation allowance, which would reduce the provision for income taxes.
As of December 31, 2025, management has determined that it is more likely than not that its deferred taxes will be realized, with the exception of certain indefinite lived deferred tax assets and certain state net operating loss carryforwards of $16.8 million. For the year ended December 31, 2025, the Company recorded a net valuation allowance increase of $1.1 million on the basis of management’s reassessment of the amount of its deferred tax assets that are more likely than not to be realized.
Valuation Allowance
The following table summarizes the changes in the Company’s valuation allowance:
| (in thousands) | 2025 | 2024 | |||||||||
| Balance at beginning of period | $ | 15,662 | $ | 18,810 | |||||||
| Net change in valuation allowance | 1,123 | (3,148) | |||||||||
| Balance at end of period | $ | 16,785 | $ | 15,662 | |||||||
Unrecognized Tax Benefits
The Company records unrecognized tax benefits for the estimated risk associated with tax positions taken on tax returns.
The Company is subject to taxation in the United States and various other state and foreign jurisdictions. The material jurisdictions in which the Company is subject to potential examination include the United States and Australia. Tax years 2022 through 2024 are subject to examination by the Internal Revenue Service. Australia tax returns are subject to examination by the Australian Taxation Office for tax years 2021 through 2024. State tax returns are open for examination for an average of three years; however, certain jurisdictions remain open to examination longer than three years due to the existence of net operating loss carryforwards. The Company received IRS FPAA notification letters dated August 29, 2018, for IRS adjustments related to the tax years 2012-2015, for which the Company has previously and adequately reserved. See Note 15, Contingent Liabilities. The Company is also currently under examination by the Illinois Department of Revenue for tax years 2022 and 2023 and by the Wisconsin Department of Revenue for tax years 2021 through 2023. The Company does not have any other significant state or local examinations in process.
The following table reflects changes to and balances of the Company's unrecognized tax benefits:
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Balance at beginning of period | $ | 18,064 | $ | 17,140 | $ | 21,443 | |||||||||||
| Gross additions for tax positions related to the current year | 772 | 774 | 624 | ||||||||||||||
| Gross additions for tax positions related to prior years | — | 150 | 201 | ||||||||||||||
| Gross reductions for tax positions related to prior years | — | — | (5,128) | ||||||||||||||
| Balance at end of period | $ | 18,836 | $ | 18,064 | $ | 17,140 | |||||||||||
The Company's unrecognized tax benefit increased by $0.8 million and $0.9 million for the years ended December 31, 2025 and 2024, respectively, and decreased by $4.3 million for the year ended December 31, 2023. The increase for the year ended December 31, 2025 was primarily attributable to the tax positions related to research and development credits claimed for tax year 2025. The increase for the year ended December 31, 2024 was primarily attributable to the tax positions related to research and development credits claimed for tax years 2023 and 2024. The decrease for the year ended December 31, 2023 was primarily attributable to favorable developments with ongoing U.S. federal tax examinations, partially offset by the increase attributable to tax positions related to research and development credits claimed for tax years 2022 and 2023.
For the years ended December 31, 2025, 2024 and 2023, the Company had $18.8 million, $18.1 million, and $17.1 million, respectively, of unrecognized tax benefits, excluding interest and penalties, that if recognized, would impact the effective tax rate. The Company recorded adjustments to interest and penalties related to unrecognized tax benefits as part of the expense/(benefit) for income taxes in the Consolidated Statements of Operations and Comprehensive Income (Loss) of $2.2 million, $2.3 million, and $(2.8) million for the years ended December 31, 2025, 2024 and 2023, respectively. Unrecognized tax benefits included $13.6 million, $11.3 million, and $9.0 million of accrued interest as of December 31, 2025, 2024, and 2023, respectively.
It is reasonably possible that the $18.8 million unrecognized tax benefit liability presented above for the year ended December 31, 2025, could decrease by $15.6 million within the next twelve months, due to an anticipated settlement with the tax authorities and the expiration of the statute of limitations in certain jurisdictions.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2020 | Mar 25, 2021 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.