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What changed in HARTE HANKS INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of HARTE HANKS INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+187 added−173 removedSource: 10-K (2025-03-17) vs 10-K (2024-04-01)

Top changes in HARTE HANKS INC's 2024 10-K

187 paragraphs added · 173 removed · 143 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

38 edited+10 added−11 removed34 unchanged
Biggest changeOur global, omnichannel delivery model is focused on providing our clients three key services: • Customer Service Outsourcing - Our accomplished customer care associates interact and resolve consumer queries and complaints across hardware and software platforms, healthcare benefit plans, recalls or a myriad of other customer service issues. by leveraging technology to help reduce customer effort while providing a human touch to increase customer satisfaction. • Customer Care Technology and AI Transformation – Our solution services teams configure different CRM solutions (e.g., Salesforce, Zendesk) and channel /AI technology including Amazon Connect to create meaningful customer interactions by connecting content between agent, AI-driven interfaces and web-based self-help tools and community forums. • Self-Service Technology - Providing and maintaining self service solutions through Interactive Voice Response ("IVR"), Help Centers, online, via apps and via channel technology.
Biggest changeWe leverage technology to help reduce customer effort while providing a human touch to increase customer satisfaction. • Customer Care Technology and AI Transformation – Our solution services teams configure various CRM solutions (e.g., Salesforce, Zendesk) and channel /AI technology including Amazon Connect to create meaningful customer interactions by connecting content between agent, AI-driven interfaces and web-based self-help tools and community forums. • Self-Service Technology - We providing and maintain self service solutions through Interactive Voice Response ("IVR"), Help Centers, online, and via apps and channel technology.
The challenges we solve include: • Grappling with data, AI and technology in the cookie-less world • Growing awareness, demand and sales for products • Storing, fulfilling and delivering samples, kits, materials and products direct to the door of consumers, influencers or businesses • Delivering better customer experience and support across multiple channels • Delivering effectively with tighter budgets and talent shortages Our clients need help enabling their journey to growth, to transformation, to customer centricity, to product success and to AI powered approaches and solutions to marketing, sales, fulfillment and customer care.
The challenges we solve include: • Grappling with data, AI and technology in the cookie-less world; • Growing awareness, demand and sales for products; • Storing, fulfilling and delivering samples, kits, materials and products direct to the door of consumers, influencers or businesses; • Delivering better customer experience and support across multiple channels; and • Delivering effectively with tighter budgets and talent shortages Our clients need help enabling their journey to growth, to transformation, to customer centricity, to product success and to AI powered approaches and solutions to marketing, sales, fulfillment and customer care.
We also offer a unique intent data solution called Audience Finder for detecting in-market prospects. • Research - Primary and secondary research to help our clients understand their customers, category, competitors and capabilities, either as a standalone deliverable or to inform the development of strategies for campaigns and programs • Strategy – Provide strategic guidance to help clients efficiently and effectively plan and execute omnichannel marketing, demand generation and customer experience programs that deliver business results.
We also offer a unique intent data solution called Audience Finder for detecting in-market prospects. • Research & Intelligence - Primary and secondary research to help our clients understand their customers, category, competitors and capabilities, either as a standalone deliverable or to inform the development of strategies for campaigns and programs. • Strategy – Provide strategic guidance to help clients efficiently and effectively plan and execute omnichannel marketing, demand generation and customer experience programs that deliver business results.
We are laser focused on helping our clients better understand, engage, acquire, deliver to, service, support and retain these audiences. We start by understanding and architecting the journey in focus, and then enable, deliver and manage some or all aspects along this journey.
We are focused on helping our clients better understand, engage, acquire, deliver to, service, support and retain these audiences. We start by understanding and architecting the journey in focus, and then enable, deliver and manage some or all aspects along this journey.
Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (“CAN-SPAM”), Canada’s Anti-Spam Legislation (“CASL”) and similar e-Privacy laws in Europe (in support of Directive 2002/58/EC). 8 Table of Contents • Federal and state laws governing the use of telephones for unsolicited marketing purposes, including the Federal Trade Commission’s Telemarketing Sales Rule (“TSR”), the Federal Communications Commission’s Telephone Consumer Protection Act (“TCPA”), various U.S. state do-not-call laws, Canada’s National Do Not Call laws and rules (“Telecommunications Act”) and similar e-Privacy laws in Europe (in support of Directive 2002/58/EC). • Federal and state laws governing the collection and use of personal data online and via mobile devices, including but not limited to the Federal Trade Commission Act and the Children’s Online Privacy Protection Act, which seek to address consumer privacy and protection. • Federal and state laws in the U.S., Canada, and Europe specific to data security and breach notification, which include required standards for data security and generally require timely notifications to affected persons in the event of data security breaches or other unauthorized access to certain types of protected personal data.
Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (“CAN-SPAM”), Canada’s Anti-Spam Legislation (“CASL”) and similar e-Privacy laws in Europe (in support of Directive 2002/58/EC). • Federal and state laws governing the use of telephones for unsolicited marketing purposes, including the Federal Trade Commission’s Telemarketing Sales Rule (“TSR”), the Federal Communications Commission’s Telephone Consumer Protection Act (“TCPA”), various U.S. state do-not-call laws, Canada’s National Do Not Call laws and rules (“Telecommunications Act”) and similar e-Privacy laws in Europe (in support of Directive 2002/58/EC). • Federal and state laws governing the collection and use of personal data online and via mobile devices, including but not limited to the Federal Trade Commission Act and the Children’s Online Privacy Protection Act, which seek to address consumer privacy and protection. • Federal and state laws in the U.S., Canada, and Europe specific to data security and breach notification, which include required standards for data security and generally require timely notifications to affected persons in the event of data security breaches or other unauthorized access to certain types of protected personal data.
We offer a uniquely diverse range of services and solutions in and across our service categories to businesses in the following industries: • B2B Technology & Services including cloud, SaaS, hardware, software, semiconductors, health technology, fintech, electronics, distributors and telecommunications • Healthcare, Pharmaceuticals & Health Insurance • Consumer Products including health, well-being and beauty; consumer tech/electronics; domestic appliances • Travel, Hospitality, Streaming & Entertainment • QSRs (Quick Service Restaurants) • Financial Services and Fintech • Automotive • Retail We partner with our clients to provide them with: data-driven analytics and actionable insights from research; robust customer-experience ("CX"), marketing or sales strategies; and the data, content & technology to enable delivery.
We offer a uniquely diverse range of services and solutions in and across our service categories to businesses in the following industries: • B2B Technology & Services including cloud, SaaS, hardware, software, semiconductors, health technology, fintech, electronics, distributors and telecommunications • Healthcare, Pharmaceuticals & Health Insurance • Consumer Products including health, well-being and beauty; consumer tech/electronics; domestic appliances • Travel, Hospitality, Streaming & Entertainment • QSRs (Quick Service Restaurants) • Financial Services and Fintech • Automotive • Retail We work in partnership with our clients to provide them with: data-driven analytics and actionable insights from research; robust customer-experience ("CX"), marketing or sales strategies; and the data, content & technology to enable delivery.
The most material of these laws and regulations that may be applied to, or affect, our business or the businesses of our clients include the following: • The Federal Trade Commission’s positions regarding the processing of personal information and consumer protection as expressed through its Protecting Consumer Privacy in an Era of Rapid Change, Data Brokers, Big Data and Cross-Device Tracking reports (each of which seek to address consumer privacy, data protection, and technological advancements related to the collection or use of personal information for marketing purposes). • Data protection laws in the United States (“U.S.”) (which are generally state specific) and in the European Union (“EU”), including the General Data Protection Regulation (“EU Regulation 679/2016”), each of which imposes a number of obligations with respect to the processing of personal data, and with respect to EU Regulation 679/2016 also imposes prohibitions related to the transfer of personal information from the EU to other countries, including the United States, that do not provide data subjects with an “adequate” level of privacy or security, and applies to all of our products in the EU. • The Financial Services Modernization Act of 1999, also known as the Gramm-Leach-Bliley Act (“GLB”), which, among other things, regulates the use for marketing purposes of non-public personal financial information of consumers held by financial institutions.
The most significant aspect of these laws and regulations that may be applied to, or affect, our business or the businesses of our clients include the following: • The Federal Trade Commission’s positions regarding the processing of personal information and consumer protection as expressed through its Protecting Consumer Privacy in an Era of Rapid Change, Data Brokers, Big Data and Cross-Device Tracking reports (each of which seek to address consumer privacy, data protection, and technological advancements related to the collection or use of personal information for marketing purposes). 8 Table of Contents • Data protection laws in the United States (“U.S.”) (which are generally state specific) and in the European Union (“EU”), including the General Data Protection Regulation (“EU Regulation 679/2016”), each of which imposes a number of obligations with respect to the processing of personal data, and with respect to EU Regulation 679/2016 also imposes prohibitions related to the transfer of personal information from the EU to other countries, including the United States, that do not provide data subjects with an “adequate” level of privacy or security, and applies to all of our products in the EU. • The Financial Services Modernization Act of 1999, also known as the Gramm-Leach-Bliley Act (“GLB”), which, among other things, regulates the use for marketing purposes of non-public personal financial information of consumers held by financial institutions.
Harte Hanks is proud of its diverse workforce and cross-cultural competency and, as of December 31, 2023, employed individuals from 6 different countries. As of December 31, 2023, 58% of Harte Hanks’ workforce was female. Harte Hanks is committed to recruiting and employing qualified candidates regardless of their gender or cultural background.
Harte Hanks is proud of its diverse workforce and cross-cultural competency and, as of December 31, 2024, employed individuals from 6 different countries. As of December 31, 2024, 58% of Harte Hanks’ workforce was female. Harte Hanks is committed to recruiting and employing qualified candidates regardless of their gender or cultural background.
The principal competitive factors in our industry are the breadth, depth and quality of service offerings, technical and strategic expertise, the perceived value of the services provided, reputation, pricing, and brand recognition. We also compete against social, mobile, web-based, email, print, broadcast, and other 7 Table of Contents forms of advertising for marketing and advertising dollars in general.
The principal competitive factors in our industry are the breadth, depth and quality of service offerings, technical and strategic expertise, the perceived value of the services provided, reputation, pricing, and brand recognition. We also compete against social, mobile, web-based, email, print, broadcast, and other forms of advertising for marketing and advertising dollars in general.
Operationally, starting in 2024, our services are organized into four business units that span the end to end customer and product lifecycles: • Data, marketing, demand generation and managed marketing services • Sales Services • Fulfillment & Logistics • Customer Care Data, Marketing, Demand Generation and Managed Marketing Services Harte Hanks helps our clients determine, detect and activate their audiences through traditional, digital, and emerging channels.
Operationally, starting in 2024, our services are organized into three business units that span the end to end customer and product lifecycles: • Data, marketing, demand generation and managed marketing services • Customer Care • Fulfillment & Logistics Data, Marketing, Demand Generation and Managed Marketing Services Harte Hanks helps our clients determine, detect and activate their audiences through traditional, digital, and emerging channels.
Additionally, we have adopted a code of ethics that applies to our chief executive officer, chief financial officer and general counsel which is posted on our website. Our website also includes our corporate governance guidelines and the charters for each of our audit, compensation, and nominating and corporate governance committees.
Additionally, we have adopted a code of ethics that applies to our interim chief operating officer, chief financial officer and general counsel which is posted on our website. Our website also includes our corporate governance guidelines and the charters for each of our audit, compensation, and nominating and corporate governance committees.
We had 14 em ployees in our corporate sales and marketing function as of December 31, 2023. Competition Our competition comes from local, national, and international marketing, advertising, customer care, print fulfillment, smaller 3PL, logistics companies, and internal client resources, against whom we compete for individual projects, entire client relationships, and marketing expenditures.
We had 16 em ployees in our corporate sales and marketing function as of December 31, 2024. Competition Our competition comes from local, national, and international marketing, advertising, customer care, print fulfillment, smaller 3PL, logistics companies, and internal client resources, against whom we compete for individual projects, entire client relationships, and marketing expenditures.
We do not expect to need to make material capital expenditures to maintain compliance with government regulations. We are also subject to, or affected by, numerous local, national, and international laws, regulations, and industry standards that regulate direct marketing activities, including those that address privacy, data security, and unsolicited marketing communications.
We do not anticipate making material capital expenditures to maintain compliance with government regulations. We are also subject to, or affected by, numerous local, national, and international laws, regulations, and industry standards that regulate direct marketing activities, including those that address privacy, data security, and unsolicited marketing communications.
We provide cross-service client management along with continuous business reviews to ensure our clients get value from our partnerships. 6 Table of Contents Use of subcontractors Certain segments of our business rely on subcontractors and other third parties to provide a portion of our overall services in certain engagements.
We provide cross-service client management along with continuous business reviews to ensure our clients receive value from our partnerships. Use of Subcontractors Certain Segments of our business rely on subcontractors and other third parties to provide a portion of our overall services in certain engagements.
HUMAN CAPITAL RESOURCES As of December 31, 2023, Harte Hanks employed 1,709 full-time employees and 253 part-time employees, of which approximately 980 a re based outside of the U.S., primarily in the Philippines. A portion of our workforce is provided to us through staffing companies. None of our workforce is represented by labor unions.
HUMAN CAPITAL RESOURCES As of December 31, 2024, Harte Hanks employed 1,715 full-time employees and 288 part-time employees, of which approximately 1,141 a re based outside of the U.S., primarily in the Philippines. A portion of our workforce is provided to us through staffing companies. None of our workforce is represented by labor unions.
We leverage data and insights to enhance our clients’ understanding of their consumers, competitors and category dynamics, then apply those insights to develop the strategies for programs designed to drive activities like customer acquisition, engagement, purchase behavior, loyalty and advocacy.
We leverage data and insights to enhance our clients’ understanding of their consumers, competitors and category dynamics, then apply those insights to develop the strategies to fuel activities such as customer acquisition, engagement, purchase behavior, loyalty and advocacy.
Types of strategies include: targeting, Go-To-Market, commercial, product launch, customer experience, campaign, content, ABM and demand strategy. • Creative & Content - Full-service creative and content design, development and execution spanning traditional and digital channels, including creative concepts, messaging and content assets for print, broadcast, direct mail, website, app, display, social, mobile, search engine marketing, and voice. • Marketing Technology – Website and app development, e-commerce development and enablement, database building and management, platform architecture creation, and marketing automation to serve as the foundation for digital and multi-channel marketing execution. • Digital and Multi-channel Marketing Execution - Orchestration and execution of programs and campaigns across multiple channels, territories and audiences, using data, strategies, content and Marketing technology or MarTech provided either by Harte Hanks or by our clients. • Demand Generation and ABM (Account Based Marketing) - Providing intelligence-based B2B solutions that understand audiences and their behaviors, and then inspire and drive action to deliver results.
Our expertise spans the range of strategies including targeting, Go-To-Market, commercial, product launch, customer experience, campaign, content, ABM and demand strategy. • Creative & Content - Full-service creative and content design, development and execution spanning traditional and digital channels, including creative concepts, messaging and content assets for print, broadcast, direct mail, website, app, display, social, mobile, search engine marketing, and voice. • Marketing Technology – Website and app development, e-commerce development and enablement, database building and management, platform architecture creation, and marketing automation to serve as the foundation for digital and multi-channel marketing execution. • Digital and Multi-channel Marketing Execution & Advertising - Orchestration and execution of programs and campaigns across multiple channels, territories and audiences, using data, strategies, content and Marketing technology or MarTech provided either by Harte Hanks or by our clients.
Harte Hanks pays the cost of basic life insurance, accidental death and dismemberment insurance, and short-term and long-term disability for its employees. Additionally, employees may purchase supplemental life and dependent life insurance. We also sponsored a 401(k) retirement plan in which we matched a portion of employees’ voluntary before-tax contributions prior to 2018.
Harte Hanks pays the cost of basic life insurance, accidental death and dismemberment insurance, and short-term and long-term disability for its employees. Additionally, employees may purchase supplemental life and dependent life insurance. We also sponsored a 401(k) retirement plan in which we match a portion of employees’ voluntary before-tax contributions. Under this plan, both employee and matching contributions vest immediately.
Client Relationships We are known for helping clients build deep customer relationships, create connected customer experiences, and optimize each and every customer touch point in order to deliver desired business outcomes.
Client Relationships We are known for helping clients build deep customer relationships, create connected customer experiences, and optimize each and every customer touch point in order to deliver desired business outcomes. Realizing our clients’ success is the only valid measure of our own success.
Customer Care Our customer care services are tailored to serve our partners’ customer bases, helping them to win new buyers and turn existing patrons into loyal brand advocates.
Customer Care Our customer care services are customized to meet the needs of our partners’ customer, helping them attract new buyers and turn existing patrons into loyal brand advocates.
A flexible outsourcing marketing operations solution, that works as a highly integrated extension of a client’s own marketing function by blending the best of agency and business outsourcing processes and capabilities. Marketing as a service operationalizes, manages and delivers some or all of: data operations, marketing technology, analytics, demand generation, and staff augmentation.
A flexible outsourcing marketing operations solution, that works as a highly integrated extension of a client’s own marketing function by blending the best of agency and business outsourcing processes and capabilities.
Our global team provides this through three key service capabilities: • Inside Sales Outsourcing - combining best-in-class analytics, accomplished sales professionals and full-cycle experimentation we provide B2B enterprises, and Small to Midsized Businesses with a fully outsourced sales service, that can work alongside or in lieu of an internal inside sales function. • Lead Generation – combining data, lead generation resources and technology we provide turnkey lead generation and development that converts interested or good fit prospects into leads for sales to qualify, nurture and sell to. • Sales Play Development - design of sales plays and cadences to enable sales teams to find, plan, engage, nurture and convert prospects into sales opportunities. 5 Table of Contents Fulfillment & Logistics Services Harte Hanks fulfillment unlocks critical sales enablement, value-added product fulfillment, and eCommerce channels for our clients.
Marketing as a service operationalizes, manages and delivers some or all of: data operations, marketing technology, analytics, demand generation, and staff augmentation. • Inside Sales Outsourcing - Combining best-in-class analytics, accomplished sales professionals and full-cycle experimentation we provide B2B enterprises, and Small to Midsized Businesses with a fully outsourced sales service, that can work alongside or in lieu of an internal sales function. • Lead Generation – Combining data, lead generation resources and technology, we provide turnkey lead generation and development that converts interested or good fit prospects into leads for sales to qualify, nurture and sell to. • Sales Play Development - Designing sales plays and cadences to enable sales teams to find, plan, engage, nurture and convert prospects into sales opportunities.
This increased revenue is a result of overall increased activity prior to the holiday season in the retail vertical, and due to the open enrollment period in the healthcare vertical.
Seasonality Some of our revenue streams tend to be higher in the fourth quarter than in other quarters during a given year. This increased revenue is a result of overall increased activity prior to the holiday season in the retail vertical, and due to the open enrollment period in the healthcare vertical.
We serve our clients to support their end customers’ urgent needs, navigate an increasingly-complex technology landscape, and enable artificial intelligence technology and automation — with a fierce devotion to reducing customer effort, for the benefit of both business and buyer. This approach to “effortless customer experience” drives better service results and lowers operational costs.
We support our clients by addressing their end customers’ urgent needs, navigating an increasingly-complex technology landscape, and integrating artificial intelligence technology and automation — while maintaining a fierce devotion to reducing customer effort, for the benefit of both the business and the buyer.
Realizing our clients’ success is the only valid measure of our own success, we ensure all our efforts are aligned with our clients’ business objectives and measured against defined performance metrics. It is this commitment to our clients and their businesses that allows us to build deep and meaningful relationships with them.
We ensure all our efforts are aligned with our clients’ business objectives and measured against defined performance metrics. It is this commitment to our clients and their businesses that allows us to build meaningful relationships with them. Our client engagements may consist of one or a few of our service offerings – with a goal toward continuously expanding our relationships.
Our human capital strategy focuses on: Training and Talent Development : Harte Hanks is committed to the education of its employees and has committed to provide its employees with a variety of learning opportunities, including, but not limited to, technical skill development, soft skills development, workplace conduct guidance, and IT security training. 9 Table of Contents Diversity, Equity and Inclusion : Harte Hanks recognizes the value of diversity, equity and inclusion within its organization and strives to ensure that its workplace reflects the diverse communities in which it operates in order to promote collaboration, innovation, creativity and belonging.
Our human capital strategy focuses on: Training and Talent Development : Harte Hanks is committed to the education of its employees and has committed to providing its employees with a variety of learning opportunities, including, but not limited to, technical skill development, soft skills development, workplace conduct guidance, and IT security training.
Reorganization cost reductions from Project Elevate during 2024 through 2026 are estimated to be $16.0 million. In connection with our cost-saving and restructuring initiatives in 2023, we incurred total restructuring charges of $5.7 million including $4.6 million of operational efficiency consulting, $0.9 million in real estate consolidation, and $0.2 million of other related costs.
Reorganization cost reductions from Project Elevate during 2024 through 2026 are estimated to be $16.0 million. In connection with our cost-saving and restructuring initiatives, we incurred total restructuring charges of $2.4 million and $5.7 million in 2024 and 2023, respectively. Customers Our clients include large multinational enterprises, small and medium-sized businesses and government organizations.
INTELLECTUAL PROPERTY RIGHTS Our intellectual property assets include trademarks and service marks that identify our Company and our services, know-how, software, and other technology that we develop for our internal use and for license to clients and data and intellectual property licensed from third parties, such as commercial software and data providers.
Continued public interest in individual privacy rights and data security may result in the adoption of further voluntary industry guidelines that could impact our direct marketing activities and business practices. 9 Table of Contents INTELLECTUAL PROPERTY RIGHTS Our intellectual property assets include trademarks and service marks that identify our Company and our services, know-how, software, and other technology that we develop for our internal use and for license to clients and data and intellectual property licensed from third parties, such as commercial software and data providers.
We provide full service multi-channel marketing from strategy to campaign execution. 4 Table of Contents Data, Marketing, Demand Generation and Managed Marketing Services (continued) Our key offerings include: • Data & Analytics – In-depth data and analytics including audience identification, profiling, segmentation and prioritization, predictive modeling and data strategy.
We leverage data, insights, technology, and award-winning creative solutions to meet and exceed our clients’ business objectives and optimize our clients’ return on investment. 4 Table of Contents Data, Marketing, Demand Generation and Managed Marketing Services (continued) Our key offerings include: • Data & Analytics – In-depth data and analytics including audience identification, profiling, segmentation and prioritization, predictive modeling and data strategy.
Sales and Marketing Harte Hanks operates a modern sales and marketing growth engine to generate awareness, create demand and convert this demand into new business, as well as support existing client growth and retention.
In general, our contracts with our customers are terminable on short notice with little or no penalty payable on termination. 7 Table of Contents Sales and Marketing Harte Hanks operates a modern sales and marketing growth engine to generate awareness, create demand and convert this demand into new business, as well as support existing client growth and retention.
On December 1, 2021, our stock was uplisted to be traded on the Nasdaq Global Market® (“Nasdaq”), where it continues to trade today. All reports filed with the Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are publicly available.
On December 1, 2021, our stock was uplisted to be traded on the Nasdaq Global Market® (“Nasdaq”), where it continues to trade today. All reports we file with the U.S.
Most of our contracts do not require our customers to purchase a minimum amount of services from us. In general, our contracts with our customers are terminable on short notice with little or no penalty payable on termination.
Most of our contracts do not require our customers to purchase a minimum amount of services from us.
In addition, our business, in general, and the way we do business in particular, may be affected by the impact of these restrictions on our clients and their marketing activities. These additional regulations could increase compliance requirements and restrict or prevent the collection, management, aggregation, transfer, use, or dissemination of information or data that is currently legally available.
These additional regulations could increase compliance cost and requirements, as well as restrict or prevent the collection, management, aggregation, transfer, use, or dissemination of information or data that is currently legally available.
Duri ng 2023, we continued to see an increase in the in sourcing of capabilities among our clients, which resulted in a decrease in revenues from these customers. Furthermore, competition may begin to emerge as a result of the availability of in-house information technology solutions that can replicate some of our services.
Furthermore, competition may begin to emerge as a result of the availability of in-house information technology solutions that can replicate some of our services. We expect our clients to continue to improve their information technology systems and offerings and, in some circumstances, move the services we provide in-house.
Sales Services Harte Hanks supports our customers' sales teams in their continued pursuit of excellence, delivering specialized outsourcing, optimization, lead nurturing and messaging development services to global and national partners, since our acquisition and integration of InsideOut Solutions, LLC in late 2022.
We provide full service multi-channel marketing from strategy to campaign execution. This includes the support of our customers’ sales teams in their continued pursuit of excellence, delivering specialized outsourcing, optimization, lead nurturing and messaging development services to global and national partners.
These documents may be accessed free of charge on our website at http://www.hartehanks.com. These documents are provided as soon as practical after they are filed with the SEC and may also be found at the SEC’s website at www.sec.gov.
These documents are provided as soon as practical after they are filed with the SEC and may also be found at the SEC. The SEC also maintains a website (http://www.sec.gov) that contains periodic reports, proxy and information statements and other information regarding irruers, including Harte Hanks, that file electronically with the SEC.
Customers Our clients include large multinational enterprises, small and medium-sized businesses and government organizations. Our largest client in terms of revenue generated 11.2% of total revenues in 2023 . Our largest 25 clients in terms of revenue generated 71.7% of total revenue in 2023 .
Our largest client in terms of revenue generated 9.4% of total revenues in 2024 . Our largest 25 clients in terms of revenue generated 72.1% of total revenue in 2024 .
Harte Hanks logistics supports the supply chain needs of our clients in everything from time-sensitive deliveries to full scale supply chain management. • Product, Print-On-Demand, and Mail Fulfillment: Our varied product and mail fulfillment solutions include printing on demand, managing product recalls, and distributing literature and promotional products to support B2B trade, drive marketing campaigns, and improve customer experience.
Harte Hanks logistics supports the supply chain needs of our clients in everything from time-sensitive deliveries to full scale supply chain management. By leveraging our modern infrastructure, advanced technology, and industry expertise, we help our clients streamline their operations, enhance customer experience, and optimize cost efficiencies. We support enterprise-level supply chain management, execute precise time-sensitive deliveries, and enable eCommerce scalability.
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We leverage data, insights, technology, and award-winning creative solutions to meet and exceed our clients’ business objectives and optimize our client’s return on investment.
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Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments thereto are publicly available. These documents may be accessed free of charge on our website (http://www.hartehanks.com).
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Leveraging our unique initiatives, we help organizations drive their sales operations toward uplifted conversion rates, superior team performance and heightened win rates. Our designed approach delivers revenue predictability, control and confidence for partners.
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Setup and management of digital advertising programs and campaigns across the latest advertising channels (e.g. Google, Meta, LinkedIn, TikTok) and platforms (DSPs, ABM advertising, industry networks). • Demand Generation and ABM (Account Based Marketing) - Providing intelligence-based B2B solutions that understand audiences and their behaviors, and then inspire and drive action to deliver results.
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Equipped with our proprietary insights and performance metrics, clients can achieve a more purposeful view of their operational rhythm, enabling them to recognize, meet and improve benchmarks quarter over quarter. This offering is often sold in combination with our Marketing Services capabilities, specifically with Demand Generation and Data Services.
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This approach to “effortless customer experience” not only drives better service results but also lowers our clients’ operational costs. 5 Table of Contents Our global, omnichannel delivery model is focused on providing our clients three key services: • Customer Service Outsourcing - Our accomplished customer care associates interact and resolve consumer queries and complaints across hardware and software platforms, healthcare benefit plans, product recalls and/or a myriad of other customer service issues.
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Our event, curated kitting, and influencer programs provide custom solutions to engage audiences, target customers, support conferences, and appreciate employees. Spanning the United States, our fulfillment locations are temperature-controlled, FDA-registered, and geographically convenient, thereby allowing us to optimize print and product fulfillment to maximize customer shipping efficiency while minimizing transportation costs.
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Fulfillment & Logistics Services Our fulfillment and logistics services are designed to meet the diverse and dynamic needs of businesses across industries, ensuring that products, promotional materials, and essential items are delivered efficiently, accurately, and on time. Harte Hanks fulfillment unlocks critical sales enablement, value-added product fulfillment, and eCommerce channels for our clients.
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Our Kansas City location is fully licensed for nutritional supplements, medical foods, baby formula and junior food products, chocolates, coffee and tea, edible nuts and seeds, snack foods, pet foods, pet treats, and pet nutritional supplements.
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End to end Product, Print-On-Demand, and Mail Fulfillment Services Our extensive fulfillment capabilities include: • Print-On-Demand & Literature Distribution – We facilitate the seamless production and distribution of marketing materials, sales collateral, and product literature, ensuring businesses can effectively engage with customers, prospects, and partners. • Promotional & Branded Product Distribution – We manage and distribute promotional products, trade show materials, and corporate gifts to enhance brand awareness and customer engagement. • Custom Kitting & Event Fulfillment – Our curated kitting solutions support corporate events, influencer marketing programs, employee appreciation campaigns, and conference giveaways, ensuring that clients can create impactful brand experiences. • Product Recall Management – We assist in efficient product recalls, ensuring regulatory compliance, customer safety, and brand reputation protection. • Temperature-Controlled & FDA-Registered Fulfillment Centers – We have strategically located fulfillment centers across the United States, that provide temperature-controlled storage and are FDA-registered to handle sensitive products such as: ◦ Nutritional supplements, medical foods, and baby formulas ◦ Chocolates, coffee, tea, snack foods, nuts, and seeds ◦ Pet food, treats, and nutritional supplements • Scalable Global Fulfillment – Our fulfillment network spans the U.S., with capabilities in Europe and additional support from regional logistics partners that ensure efficient international product distribution.
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We leverage our proprietary order management platform to facilitate customer orders, and we work with a variety of data sources and users to initiate the fulfillment order process. Furthermore, our global fulfillment capabilities extend to Europe and are augmented by a network of regional partners. • Logistics: We provide third-party logistics and freight optimization services across the United States.
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Through our upgraded order management platform, we can now streamline order processing, facilitate seamless integration with various data sources and eCommerce platforms, and ensure real-time visibility into inventory and shipment status. 6 Table of Contents Third-Party Logistics & Freight Optimization Harte Hanks logistics services help businesses achieve supply chain excellence by ensuring efficient transportation, freight optimization, and timely product delivery.
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We ship millions of time-sensitive materials annually through our access to a certified fleet of over 15,000 trucks and a proprietary rate-shopping logistical system called Allink ® 360 designed to ensure customer products are delivered on-time and on-budget.
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Our logistics expertise enables businesses to reduce costs, improve delivery speed, and optimize their supply chain operations—whether managing individual shipments or full-scale supply chain management.
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Our client engagements may consist of one or a few of our service offerings – with a goal toward continuously expanding our client relationships.
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Our comprehensive logistics solutions include: • Nationwide & Regional Shipping – We facilitate the shipping of millions of time-sensitive materials annually, leveraging our nationwide logistics network. • Certified Fleet & Expedited Shipping – With access to a fleet of over 15,000 trucks, we provide clients with scalable third-party logistics (3PL) services tailored to their needs. • Allink®360: Proprietary Logistics Technology – Our proprietary rate-shopping system, Allink®360, optimizes freight costs and delivery timelines, ensuring shipments arrive on time and within budget. • Flexible & Scalable Logistics Solutions – We offer customized logistics solutions designed to accommodate businesses of all sizes, from startups to Fortune 500 enterprises.
Removed
We expect our clients to continue to improve their information technology systems and offerings and, in some circumstances, move the services we provide in-house. Seasonality Some of our revenues tend to be higher in the fourth quarter than in other quarters during a given year.
Added
In addition, our business, in general, and the way we do business in particular, may be affected by the impact of these restrictions on our clients and their marketing activities.
Removed
Continued public interest in individual privacy rights and data security may result in the adoption of further voluntary industry guidelines that could impact our direct marketing activities and business practices.
Added
Diversity, Equity and Inclusion : Harte Hanks recognizes the value of diversity, equity and inclusion within its organization and strives to ensure that its workplace reflects the diverse communities in which it operates in order to promote collaboration, innovation, creativity and belonging.
Removed
Under this plan, both employee and matching contributions vest immediately. We stopped this 401(k) match program in 2018 and resumed it in 2023.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

44 edited+4 added−5 removed100 unchanged
Biggest changeWe utilize new and emerging technologies, including AI, in our solutions and services. As with many innovations, AI presents risks and challenges that could significantly disrupt our business model. If we do not execute on AI effectively, this could result in loss of revenue and reduced margins.
Biggest changeUncertainty around, and disruption from, new and emerging technologies, including the adoption and utilization of artificial intelligence, may result in risks and challenges that could impact our business. We utilize new and emerging technologies, including AI, in our solutions and services. As with many innovations, AI presents risks and challenges that could significantly disrupt our business model.
Competitive pricing pressures tend to increase in difficult or uncertain economic environments, due to reduced marketing expenditures of many of our clients and prospects, and in turn negatively impact the competitive business environment for marketing service providers such as our company.
Competitive pricing pressures tend to increase in difficult or uncertain economic environments, due to the reduced marketing expenditures of many of our clients and prospects, and in turn negatively impact the competitive business environment for marketing service providers such as our company.
Provisions contained in our certificate of incorporation and bylaws, in conjunction with provisions of the Delaware General Corporation Law, could delay or prevent a third party from entering a strategic transaction with us, even if such a transaction would benefit our stockholders.
Provisions contained in our certificate of incorporation and bylaws, in conjunction with the provisions of the Delaware General Corporation Law, could delay or prevent a third party from entering a strategic transaction with us, even if such a transaction would benefit our stockholders.
Accordingly, our future operating results could be negatively affected by a variety of factors, some of which are beyond our control, including: • changes in local, national, and international legal requirements or policies resulting in burdensome government controls, tariffs, restrictions, embargoes, or export license requirements; • higher rates of inflation; • the potential for nationalization of enterprises; • less favorable labor laws that may increase employment costs and decrease workforce flexibility; • potentially adverse tax treatment; • less favorable foreign intellectual property laws that would make it more difficult to protect our intellectual property from misappropriation; • more onerous or differing data privacy and security requirements or other marketing regulations; 13 Table of Contents • longer payment cycles; • social, economic, and political instability; • regional armed conflicts, as well as any additional economic sanctions adopted in response to such actions; • the differing costs and difficulties of managing international operations; • modifications to international trade policy or the imposition of increased or new tariffs, quotas or trade barriers on key commodities; and • geopolitical risk and adverse market conditions caused by changes in national or regional economic or political conditions (which may impact relative interest rates and the availability, cost, and terms of mortgage funds).
Accordingly, our future operating results could be negatively affected by a variety of factors, some of which are beyond our control, including: • changes in local, national, and international legal requirements or policies resulting in burdensome government controls, tariffs, restrictions, embargoes, or export license requirements; • higher rates of inflation; • the potential for nationalization of enterprises; • less favorable labor laws that may increase employment costs and decrease workforce flexibility; • potentially adverse tax treatment; • less favorable foreign intellectual property laws that would make it more difficult to protect our intellectual property from misappropriation; • more onerous or differing data privacy and security requirements or other marketing regulations; • longer payment cycles; • social, economic, and political instability; • regional armed conflicts, as well as any additional economic sanctions adopted in response to such actions; • the differing costs and difficulties of managing international operations; • modifications to international trade policy or the imposition of increased or new tariffs, quotas or trade barriers on key commodities; and • geopolitical risk and adverse market conditions caused by changes in national or regional economic or political conditions (which may impact relative interest rates and the availability, cost, and terms of mortgage funds).
These costs and distractions could cause our business to suffer. In addition, if any party asserts an infringement claim, we may need to obtain licenses to the disputed intellectual property. We cannot provide assurance, however, that we will be able to obtain these licenses on commercially reasonable terms or that we will be able to obtain any licenses at all.
These costs and distractions could cause our business to suffer. In addition, if any party asserts an infringement claim, we may need to obtain licenses to disputed intellectual property. We cannot provide assurance, however, that we will be able to obtain these licenses on commercially reasonable terms or that we will be able to obtain any licenses at all.
The marketing services we offer, in particular for contact center services, are generally terminable upon short notice by our clients, even if the term of the agreement (and the expected duration of services) is several or many years.
The services we offer, in particular for contact center services, are generally terminable upon short notice by our clients, even if the term of the agreement (and the expected duration of services) is several or many years.
We compete for business with a variety of companies, as well as in-house operations of existing and potential clients. If our clients place more focus on in-house marketing or utilize new or emerging technologies to internalize these operations, the size of the market for third-party service providers like us could reduce significantly.
We compete for business with a variety of companies, as well as in-house operations of existing and potential clients. If our clients place more focus on in-house marketing or utilize new or emerging technologies to internalize these operations, the size of the market for third-party service providers like us could decrease significantly.
Over the past few years, we have replaced many of our leaders (including our Chief Executive Officer, and Chief Financial Officer), some a number of times.
Over the past few years, we have replaced many of our leaders (including our Chief Executive Officer, Chief Financial Officer, and Chief Operating Officer), some a number of times.
Similarly, if competitors offer their services at lower prices to gain market share or provide services that gain greater market acceptance than the services we offer or develop, the demand for our services may decrease. Specialized providers or new entrants can enter our markets by developing new systems or services that could impact our business.
Similarly, if competitors offer their services at lower prices to gain market share or provide services that gain greater market acceptance than the services we offer or develop, the demand for our services may decline. Specialized providers or new entrants can enter our markets by developing new systems or services that could impact our business.
Other relevant compliance considerations in support of these mandates include establishing solutions in support of broad privacy and data protection rights, including those designed to offer notice to individuals, capture prior consent, grant access to personal information, offer choices regarding the decision to share one’s personal information and how such information can be used, as well as related controls to honor choices expressed related to if and how personal information can be processed or licensed for marketing purposes.
Other relevant compliance considerations in support of these mandates include establishing solutions in support of broad privacy and data protection rights, including those designed to offer notice to individuals, capture prior consent, grant access to personal information, 15 Table of Contents offer choices regarding the decision to share one’s personal information and how such information can be used, as well as related controls to honor choices expressed related to if and how personal information can be processed or licensed for marketing purposes.
However, no assurance can be given that we won't discover material weaknesses in the future. We have incurred and we expect to continue to incur substantial accounting and auditing expenses and expend significant management time in complying with the requirements of Section 404.
However, no assurance can be given that we won't discover material weaknesses in the future. We have incurred and we expect to continue to incur substantial accounting and auditing expenses and spend significant management time in complying with the requirements of Section 404.
Additionally, 12 Table of Contents privacy and security concerns may limit consumers’ willingness to voluntarily provide data to our clients or marketing companies. Some of our services depend on voluntarily provided data. For instance, we believe that one of the most attractive offerings of our Marketing Services segment is the provision of data-analytics to our clients.
Additionally, privacy and security concerns may limit consumers’ willingness to voluntarily provide data to our clients or marketing companies. Some of our services depend on voluntarily provided data. For instance, we believe that one of the most attractive offerings of our Marketing Services segment is the provision of data-analytics to our clients.
In addition, our contractual arrangements with our clients and other customers may not provide us with sufficient protections against claims for lost profits or other claims for damages.
In addition, our contractual arrangements with our clients and other customers may not provide us with sufficient protection against claims for lost profits or other claims for damages.
We have grouped these risk factors into three categories: • Risks related to our business and how we operate; • Risks related to cybersecurity and technology; • Risks related to our capital structure and common stock. Risks Related to our Business and How we Operate Most of our client engagements are cancellable on short notice.
We have grouped these risk factors into three categories: • Risks related to our business and how we operate; • Risks related to cybersecurity and technology; • Risks related to our capital structure and common stock. 10 Table of Contents Risks Related to our Business and How we Operate Most of our client engagements are cancellable on short notice.
Litigation involving patents and other intellectual property rights has become far more common and expensive in recent years, and we face the risk of additional litigation relating to our use or future use of intellectual property rights of third parties.
Litigation involving patents and other intellectual property rights has 17 Table of Contents become far more common and expensive in recent years, and we face the risk of additional litigation relating to our use or future use of intellectual property rights of third parties.
In addition, as we acquire new capabilities and deploy new technologies to execute our strategy, we may be exposed to additional regulation.
In addition, as we acquire new capabilities and deploy new technologies to execute our strategy, we may be exposed to additional regulations.
We may be unable to successfully identify, develop, and 11 Table of Contents bring new and enhanced services and products to market in a timely and cost-effective manner, such services and products may not be commercially successful, and services, products, and technologies developed by others may render our services and products noncompetitive or obsolete.
We may be unable to successfully identify, develop, and bring new and enhanced services and products to market in a timely and cost-effective manner, such services and products may not be commercially successful, and services, products, and technologies developed by others may render our services and products noncompetitive or obsolete.
Customers may also be slow to restore their marketing budgets to prior levels during an economic recovery and may respond similarly to adverse economic conditions in the future. Our revenues are dependent on national, regional, and international economies and business conditions.
Customers may also be slow to restore their marketing budgets to prior levels during an economic recovery and 12 Table of Contents may respond similarly to adverse economic conditions in the future. Our revenues are dependent on national, regional, and international economies and business conditions.
The program named Project Elevate created and changed processes in each of our business segments to transform the operational cost structure of the company and change the culture to be more agile, optimize the structure, and cost justify all activities of the organization.
In 2023, t he program named Project Elevate was created and changed processes in each of our business segments to transform the operational cost structure of the company and change the culture to be more agile, optimize the structure, and cost justify all activities of the organization.
A large portion of our revenue is generated from a limited number of clients. The loss of a client or significant work from one or more of our clients could adversely affect our business. Our largest client (measured in revenue) generated 11.2% of total revenues in 2023 and represented 11.2% of total accounts receivable as of December 31, 2023.
A large portion of our revenue is generated from a limited number of clients. The loss of a client or significant work from one or more of our clients could adversely affect our business. Our largest client (measured in revenue) generated 9.4% of total revenues in 2024 and represented 11.9% of total accounts receivable as of December 31, 2024 .
There could be a material adverse impact on our 17 Table of Contents business if owners of the data we use were to curtail access to the data or materially restrict the authorized uses of their data.
There could be a material adverse impact on our business if owners of the data we use were to curtail access to the data or materially restrict the authorized use of their data.
The opportunity for new entrants in our industry may expand as digital engagement and offerings increase in importance. New competitors, new strategies by existing competitors or clients, and consolidation among clients or competitors could result in significant market share gain by our competitors, which could have an adverse effect on our revenue.
The opportunity for new entrants in our industry may expand as digital engagement and offerings increase in importance, and barriers to entry remain low. New competitors, new strategies by existing competitors or clients, and consolidation among clients or competitors could result in significant market share gains by our competitors, which could have an adverse effect on our revenue.
Risks related to our pension benefit plans may adversely impact our results of operations and cash flows. Pension benefits represent significant financial obligations. As of December 31, 2023, we had approximately $37.7 million of unfunded pension liabilities.
Risks related to our pension benefit plans may adversely impact our results of operations and cash flows. Pension benefits represent significant financial obligations. As of December 31, 2024, we had approximately $24.4 million of unfunded pension liabilities.
Our common stock price may continue to be volatile due to several factors including the following (some of which are beyond our control): • variations in our operating results from period to period and variations between our actual operating results and the expectations of securities analysts, investors, and the financial community; • the development and sustainability of an active trading market for our common stock; • unanticipated developments with client engagements or client demand, such as variations in the size, budget, or progress of engagements, variability in the market demand for our services, client consolidations, and the unanticipated termination of several major client engagements; • announcements of developments affecting our businesses; • competition and the operating results of our competitors; • the overall strength of the economies of the markets we serve and general market volatility; and • other factors discussed elsewhere in this Item 1A, “Risk Factors.” Because of these and other factors, investors in our common stock may not be able to resell their shares at or above their original purchase price.
Our common stock price may continue to be volatile due to several factors including the following (some of which are beyond our control): • variations in our operating results from period to period and variations between our actual operating results and the expectations of securities analysts, investors, and the financial community; • the development and sustainability of an active trading market for our common stock; • unanticipated developments with client engagements or client demand, such as variations in the size, budget, or progress of engagements, variability in the market demand for our services, client consolidations, and the unanticipated termination of several major client engagements; • announcements of developments affecting our businesses; • competition and the operating results of our competitors; • the overall strength of the economies of the markets we serve and general market volatility; and • other factors discussed elsewhere in this Item 1A, “Risk Factors.” Because of these and other factors, investors in our common stock may not be able to resell their shares at or above their original purchase price. 19 Table of Contents Our certificate of incorporation and bylaws contain anti-takeover protections that may discourage or prevent strategic transactions, including a takeover of our company, even if such a transaction would be beneficial to our stockholders.
While we typically have multiple projects with our largest customers which would not all terminate at the same time, the loss of one or more of our larger clients or even a single project or contract with one of our largest clients could adversely affect our business, results of operations, and financial condition if the lost revenues are not replaced with profitable revenues from that client or other clients. 10 Table of Contents Our industry is subject to intense competition and dynamic changes in business model, which in turn could cause our operations to suffer.
While we typically have multiple projects with our largest customers which would not all terminate at the same time, the loss of one or more of our larger clients or even a single project or contract with one of our largest clients could adversely affect our business, results of operations, and financial condition if the lost revenues are not replaced with profitable revenues from that client or other clients.
Our Credit Facility bears interest based upon the Secured Overnight Financing Rate. Our results of operations, cash flows, and financial position could be materially or adversely affected by significant increases in interest rates.
Interest rate fluctuations in Europe and the United States may affect the amount of interest we earn on cash equivalents. Our Credit Facility bears interest based upon the Secured Overnight Financing Rate. Our results of operations, cash flows, and financial position could be materially or adversely affected by significant increases in interest rates.
Some of our competitors have significantly greater financial, technical, marketing, and other resources than we do in one or all of our market segments.
The size of our competitors varies widely across vertical markets and service lines. Some of our competitors have significantly greater financial, technical, marketing, and other resources than we do in one or all of our market segments.
We could suffer a material adverse impact on our business due to the enactment or enforcement of legislation or industry regulations affecting us and/or our clients, the issuance of judicial or governmental interpretations, changed enforcement priorities of governmental agencies, or a change in behavior arising from public concern over privacy, data protection, and information security issues. 15 Table of Contents Uncertainty around, and disruption from, new and emerging technologies, including the adoption and utilization of artificial intelligence, may result in risks and challenges that could impact our business.
We could suffer a material adverse impact on our business due to the enactment or enforcement of legislation or industry regulations affecting us and/or our clients, the issuance of judicial or governmental interpretations, changed enforcement priorities of governmental agencies, or a change in behavior arising from public concern over privacy, data protection, and information security issues.
The Credit Facility includes covenants currently restricting or potentially restricting the Company’s and its subsidiaries’ ability to create, incur, assume or become liable for indebtedness; make certain investments; pay dividends or repurchase the Company's stock; create, incur or assume liens, consummate mergers or acquisitions, liquidate, dissolve, suspend or cease operations, or modify accounting or tax reporting methods (other than as required by the generally accepted accounting principles in the United States of America).
The Credit Facility includes covenants currently restricting or potentially restricting the Company’s and its subsidiaries’ ability to create, incur, assume or become liable for indebtedness; make certain investments; pay dividends or repurchase the Company's stock; create, incur or assume liens, consummate mergers or acquisitions, liquidate, dissolve, suspend or cease operations, or modify accounting or tax reporting methods (other than as required by the generally accepted accounting principles in the United States of America). 18 Table of Contents Covenant and ratio requirements may limit the manner in which we can conduct our business, and we may be unable to engage in favorable business activities or finance future operations and capital needs.
The loss or prolonged absence of the services of these individuals could have a material adverse effect on our business, financial position, or operating results . Interest rate increases could affect our results of operations, cash flows and financial position. Interest rate fluctuations in Europe and the United States may affect the amount of interest we earn on cash equivalents.
The loss or prolonged absence of the services of these individuals could have a material adverse effect on our business, financial position, or operating results . 13 Table of Contents Interest rate increases could affect our results of operations, cash flows and financial position.
We are subject to and affected by numerous laws, regulations, and industry standards that regulate direct marketing activities, including those that address privacy, data protection, processing personal information, information security, and marketing communications. 14 Table of Contents As a result of increasing awareness and interest in privacy rights, data protection, the fair use of personal information, consumer protection, information security, and similar matters, national and local governments and industry organizations regularly consider and adopt new laws, rules, regulations, and guidelines that impact, restrict, and regulate our business products and services.
As a result of increasing awareness and interest in privacy rights, data protection, the fair use of personal information, consumer protection, information security, and similar matters, national and local governments and industry organizations regularly consider and adopt new laws, rules, regulations, and guidelines that impact, restrict, and regulate our business products and services.
Our inability to renew our leases, or a renewal of our leases with a rental rate higher than the prevailing rate under the applicable lease prior to expiration, may cause an increase in operating costs, or may cause additional cost due to relocation. 18 Table of Contents Fluctuation in our revenue and operating results and other factors may impact the volatility of our stock price.
Our inability to renew our leases, or a renewal of our leases with a rental rate higher than the prevailing rate under the applicable lease prior to expiration, may cause an increase in operating costs, or may cause additional costs due to relocation.
During 2023, approximately 9.6% o f our revenues were derived from operations outside the United States, primarily in Europe and Asia. We may expand our international operations in the future as part of our growth strategy.
We are subject to risks associated with operations outside the United States Harte Hanks conducts business outside of the United States. During 2024, approximately 9.4% o f our revenues were derived from operations outside the United States, primarily in Europe and Asia. We may expand our international operations in the future as part of our growth strategy.
Approximately 71.7% o f our revenue for 2023 was generated by our 25 largest clients.
Approximately 72.1% o f our revenue for 2024 was generated by our 25 largest clients.
The price at which our common stock has traded in recent years has fluctuated greatly and has declined significantly.
Fluctuations in our revenue and operating results and other factors may impact the volatility of our stock price. The price at which our common stock has traded in recent years has fluctuated greatly and has declined significantly.
The regulatory landscape surrounding AI and generative AI technologies is also evolving, and the ways in which these technologies will be regulated by governmental authorities, self-regulatory institutions, or other regulatory authorities remains uncertain. Such regulations may result in significant operational costs or constrain our ability to develop, deploy, or maintain these technologies.
The regulatory landscape surrounding AI and generative AI technologies is also evolving, and the ways in which these technologies will be regulated by governmental authorities, self-regulatory institutions, or other regulatory authorities remain uncertain.
Our success depends, in part, on our ability to continue to acquire, develop, and implement solutions that meet the evolving needs of our clients.
If we do not execute on AI effectively, this could result in loss of revenue and reduced margins. Our success depends, in part, on our ability to continue to acquire, develop, and implement solutions that meet the evolving needs of our clients.
The various risks that are inherent in doing business in the United States are also generally applicable to doing business anywhere else and may be exacerbated by the difficulty of doing business in numerous sovereign jurisdictions due to differences in culture, laws, and regulations.
The various risks that are inherent in doing business in the United States are also generally applicable to doing business anywhere else and may be exacerbated by the difficulty of doing business in numerous sovereign jurisdictions due to differences in culture, laws, and regulations. 14 Table of Contents If we fail to establish and maintain proper and effective internal control over financial reporting, our operating results and our ability to operate our business could be harmed.
Our business plan and expectations for the future require that we effectively manage our cost structure, including our operating expenses and capital expenditures across our operations. In 2023, our management team formed a project team focused on cost-saving initiatives and other restructuring efforts.
Our business plan and expectations for the future require that we effectively manage our cost structure, including our operating expenses and capital expenditure across our operations.
The Company expects that the sophistication and techniques of cyber-threats will continue to evolve with the rapid development and increased adoption of AI and machine-learning technologies. 16 Table of Contents Our reputation and business results may be adversely impacted if we, or subcontractors upon whom we rely, do not effectively protect sensitive personal information of our clients and our clients’ customers.
Our reputation and business results may be adversely impacted if we, or subcontractors upon whom we rely, do not effectively protect sensitive personal information of our clients and our clients’ customers.
Significant system disruptions, loss of data center capacity or interruption of telecommunication links could adversely affect our business and results of operations.
Such regulations may result in significant operational costs or constrain our ability to develop, deploy, or maintain these technologies. 16 Table of Contents Significant system disruptions, loss of data center capacity or interruption of telecommunication links could adversely affect our business and results of operations.
Certain of our solutions may require lengthy and complex implementations that can be subject to changing client preferences and continuing changes in technology, which can increase costs or adversely affect our business.
Certain of our solutions may require lengthy and complex implementations that can be subject to changing client preferences and continuing changes in technology, which can increase costs or adversely affect our business. 11 Table of Contents Current and future competitors may have significantly greater financial and other resources than we do, and they may sell competing services at lower prices or at lower profit margins, resulting in pressures on our prices and margins.
In addition, there has been an increase in cyber-attacks conducted or sponsored by capable and well-funded “nation state” operators.
In addition, there has been an increase in cyber-attacks conducted or sponsored by capable and well-funded “nation state” operators. The Company expects that the sophistication and techniques of cyber-threats will continue to evolve with the rapid development and increased adoption of AI and machine-learning technologies.
The B2B services industry is highly competitive, highly fragmented, and subject to rapid change.
Our industry is subject to intense competition and dynamic changes in business model, which in turn could cause our operations to suffer. The B2B services industry is highly competitive, highly fragmented, and subject to rapid change.
Removed
Current and future competitors may have significantly greater financial and other resources than we do, and they may sell competing services at lower prices or at lower profit margins, resulting in pressures on our prices and margins. The size of our competitors varies widely across vertical markets and service lines.
Added
Inflation could adversely affect our financial condition and results of operations. Inflation could have a negative impact on our financial condition and results of operations. Significant increases in inflation, particularly in wages and, to a lesser extent, goods and services, can affect our business and profitability. Rising labor costs may compress our margins as we face challenges in maintaining profitability.
Removed
Pricing pressure has led to some wage inflation which could adversely affect our margins and profitability if it persisted for a long time or wage pressure increased. We are subject to risks associated with operations outside the United States Harte Hanks conducts business outside of the United States.
Added
Additionally, as we rely on third-party providers for some of our offerings, we have already experienced margin compression due to higher service charges. While inflation appears to be stabilizing, we are actively taking steps to preserve our margins. However, these efforts may not be sufficient, and inflation could continue to adversely impact our profitability.
Removed
If we fail to establish and maintain proper and effective internal control over financial reporting, our operating results and our ability to operate our business could be harmed.
Added
The widespread increase in the cost of goods and services due to inflation, supply chain disruptions, and rising interest rates has negatively impacted, and may continue to affect the discretionary spending of our customers. This, in turn, may adversely impact our results of operations. We cannot predict the extent or duration of these negative effects on our business.
Removed
Covenant and ratio requirements may limit the manner in which we can conduct our business, and we may be unable to engage in favorable business activities or finance future operations and capital needs.
Added
We are subject to and affected by numerous laws, regulations, and industry standards that regulate direct marketing activities, including those that address privacy, data protection, processing personal information, information security, and marketing communications.
Removed
Our certificate of incorporation and bylaws contain anti-takeover protections that may discourage or prevent strategic transactions, including a takeover of our company, even if such a transaction would be beneficial to our stockholders.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

9 edited+0 added−1 removed9 unchanged
Biggest changeThe RSC, along with our CSO, develops and implements cybersecurity risk mitigation strategies and activities throughout the year, including the management of comprehensive incident response plans, oversees the cybersecurity risks posed by third-party vendors, and receives regular updates on cybersecurity-related matters.
Biggest changeThe RSC, along with our CSO, develops and implements cybersecurity risk mitigation strategies and activities throughout the year, including the management of comprehensive incident response plans, oversees the cybersecurity risks posed by third-party vendors, and receives regular updates on cybersecurity-related matters. 20 Table of Contents We have adopted the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework to continually evaluate and enhance our cybersecurity procedures.
The RSC (in conjunction with the CSO), oversees activities related to the monitoring, prevention, detection, mitigation and remediation of cybersecurity risks.
The RSC (in conjunction with the CSO), oversees activities related to monitoring, prevention, detection, mitigation and remediation of cybersecurity risks.
We expect that sophistication of cyber-threats will continue to evolve as threat actors increase their use of AI and machine-learning technologies. We have implemented robust processes to assess, identify, and manage cybersecurity risks, including potentially material risks, related to our internal information systems and our products.
We expect that the sophistication of cyber-threats will continue to evolve as threat actors increase their use of AI and machine-learning technologies. We have implemented robust processes to assess, identify, and manage cybersecurity risks, including potentially material risks, related to our internal information systems and our products.
As noted above, our RSC also has effected comprehensive incident response plans that outline the appropriate communication flow and response for certain categories of potential cybersecurity incidents. The RSC escalates events, including to the Chief Executive Officer and Board of Directors, as relevant, according to pre-defined criteria.
As noted above, our RSC also has effected comprehensive incident response plans that outline the appropriate communication flow and response for certain categories of potential cybersecurity incidents. The RSC escalates events, including the Interim Chief Operating Officer and Board of Directors, as relevant, according to pre-defined criteria.
The CSO and RSC reviews the results of the enterprise risk assessment in detail with management on a regular basis and reports its findings, as needed, to the Board of Directors.
The CSO and RSC review the results of the enterprise risk assessment in detail with management on a regular basis and reports its findings, as needed, to the Board of Directors.
The Board of Directors receives the full results of the annual enterprise risk assessment, including an evaluation of cybersecurity risks presented, a detailed description of the actions we have taken to mitigate these risks, and an analysis of cybersecurity threats and incidents 19 Table of Contents across the industry.
The Board of Directors receives the full results of the annual enterprise risk assessment, including an evaluation of cybersecurity risks presented, a detailed description of the actions we have taken to mitigate these risks, and an analysis of cybersecurity threats and incidents across the industry.
Our CSO, reporting to our Chief Technology Officer, and in conjunction with our IT Department, has principal responsibility for assessing and managing cybersecurity risks and threats, implementing the systems necessary to address such risks and threats and preparing updates for the Board of Directors.
Our CSO, reporting to our Interim Chief Operations Officer, and in conjunction with our IT Department, has principal responsibility for assessing and managing cybersecurity risks and threats, implementing the systems necessary to address such risks and threats and preparing updates for the Board of Directors.
Our CSO has 3 decades of information technology and cybersecurity experience with the last 6 years leading the cybersecurity activities at Harte Hanks, as well as participating in numerous cyber readiness exercises with US Government agencies, and has specialized training in cybersecurity risk management, cloud security and holds a CISSP certification offered by ISC2.
Our CSO has 3 decades of information technology and cybersecurity experience with the last 7 years leading the cybersecurity activities at Harte Hanks, as well as participating in numerous cyber readiness exercises with U.S. Government agencies, and has specialized training in cybersecurity risk management, cloud security and holds a CISSP certification offered by ISC2.
This committee is comprised of our Chief Technology Officer, our General Counsel / Privacy Officer, our Head of Human Resources, each Director of Operations of each of our business units, our Chief Financial Officer and our Chief Executive Officer, as well as other key leaders.
This committee is comprised of our Chief Security Officer, our Interim Chief Operations Officer, our General Counsel / Privacy Officer, our Head of Human Resources, each Director of Operations of each of our business units, and our Chief Financial Officer, as well as other key leaders.
Removed
We have adopted the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework to continually evaluate and enhance our cybersecurity procedures.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed0 unchanged
Biggest changePetersburg, Florida Iasi, Romania Kansas City, Kansas Deerfield Beach, Florida Manila, Philippines Lenexa, Kansas Uxbridge, United Kingdom Hasselt, Belgium As of December 31, 2023, our operational facilities were for the following use and square footage by segment: Description of Use United States International Total Office space 24,313 60,650 84,963 Fulfillment facilities 736,845 35,725 772,570 Total 761,158 96,375 857,533 20 Table of Contents Segment Leased Sq Ft Customer Care 54,964 Fulfillment & Logistics 772,570 Marketing Services 23,748 851,282 Corporate office 6,251 Total 857,533 We believe our facilities to be adequate for our business and operations as currently administered.
Biggest changePetersburg, Florida Iasi, Romania Kansas City, Kansas Plano, Texas Manila, Philippines Lenexa, Kansas Uxbridge, United Kingdom Hasselt, Belgium As of December 31, 2024, our operational facilities were for the following use and square footage by segment: Description of Use United States International Total Office space 14,458 37,458 51,916 Fulfillment facilities 736,845 18,901 755,746 Total 751,303 56,359 807,662 Segment Leased Sq Ft Customer Care 44,220 Fulfillment & Logistics 755,746 Marketing Services 1,445 801,411 Corporate office 6,251 Total 807,662 We believe our facilities to be adequate for our business and operations as currently administered.
ITEM 2. PROPERTIES Our headquarters is located in Chelmsford, MA. We lease office and fulfillment facilities around the world, primarily in the United States, Europe and Asia. As of December 31, 2023, we operated the following types of facilities in the following locations: Domestic Offices International Offices Operational Warehouses Chelmsford, Massachusetts Hasselt, Belgium East Bridgewater, Massachusetts St.
ITEM 2. PROPERTIES Our headquarters is located in Chelmsford, MA. We lease office and fulfillment facilities around the world, primarily in the United States, Europe and Asia. As of December 31, 2024, we operated the following types of facilities in the following locations: Domestic Offices International Offices Operational Warehouses Chelmsford, Massachusetts Hasselt, Belgium East Bridgewater, Massachusetts St.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+1 added−2 removed0 unchanged
Biggest changeIssuer Purchases of Equity Securities The following table contains information about our purchases of equity securities during the fourth quarter of 2023: Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of a publicly announced plan Maximum dollar amount that may yet be purchased under the program (1) (in thousands) October 1 - 31, 2023 — $ — — $ 4,131 November 1 - 30, 2023 — $ — — $ 4,131 December 1 - 31, 2023 — $ — — $ 4,131 Total — $ — — (1) During the fourth quarter of 2023, we did not purchase any shares of our common stock through our stock repurchase program that was publicly announced on May 2, 2023.
Biggest changeIssuer Purchases of Equity Securities The following table contains information about our purchases of equity securities during the fourth quarter of 2024: Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of a publicly announced plan Maximum dollar amount that may yet be purchased under the program (1) (in thousands) October 1 - 31, 2024 — $ — — $ 4,131 November 1 - 30, 2024 — $ — — $ 4,131 December 1 - 31, 2024 — $ — — $ 4,131 Total — $ — — (1) During the fourth quarter of 2024, we did not purchase any shares of our common stock through our stock repurchase program that was publicly announced on May 2, 2023.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Our common stock is listed for trading on the NASDAQ under the symbol "HHS". As of January 31, 2024, there were approximately 743 c ommon stockholders of record.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Our common stock is listed for trading on the NASDAQ under the symbol "HHS". As of January 31, 2025, there were approximately 668 c ommon stockholders of record.
Under this program, our Board had authorized us to spend up to $6.5 million to repurchase shares of our outstanding common stock. After giving effect to these repurchases, we have remaining authority of $4.1 million to repurchase shares remaining under the program. ITEM 6. SELECTED FINANCIAL DATA Not applicable. 22 Table of Contents
Under this program, our Board has authorized us to spend up to $6.5 million to repurchase shares of our outstanding common stock. After giving effect to these repurchases, we have remaining authority of $4.1 million to repurchase shares remaining under the program. ITEM 6. SELECTED FINANCIAL DATA Not applicable.
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The following tables set forth for the periods indicated, the high and low sale prices per share of the common stock as quoted by the NASDAQ.
Added
Dividend Policy The Company currently does not pay any dividends and any future dividend payment is at the discretion of the Board of Directors.
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Year Ended December 31, 2023 High Low 1st Quarter $14.24 $8.70 2nd Quarter $9.50 $5.00 3rd Quarter $6.70 $5.01 4th Quarter $7.72 $5.39 Year Ended December 31, 2022 High Low 1st Quarter 8.19 6.34 2nd Quarter 12.89 7.15 3rd Quarter 17.88 10.02 4th Quarter 12.84 9.81 Dividend Policy The Company currently does not pay any dividends and any future payment is at the discretion of the Board of Directors.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOperating Income for the year ended December 31, 2023 was $9.4 million, a decrease of $1.9 million when compared to the prior year due to lower revenue which was partially offset by lower operating expense driven by improved operational efficiency. 25 Table of Contents Fulfillment & Logistics: Year Ended December 31, In thousands 2023 % Change 2022 Operating revenues $ 84,961 -1.3% $ 86,098 EBITDA 8,857 -16.4% 10,593 Operating Income 7,714 -21.0% 9,769 Operating Income % of Revenue 9.1 % -20.0% 11.3 % Fulfillment & Logistics Services segment revenue declined $1.1 million, or 1.3%, primarily due to the lower revenue from the existing customers.
Biggest changeFulfillment & Logistics: Year Ended December 31, In thousands 2024 % Change 2023 Operating revenues $ 81,992 -3.5% $ 84,962 EBITDA 5,761 -34.9% 8,856 Operating Income 4,505 -41.6% 7,714 Operating Income % of Revenue 5.5 % -39.5% 9.1 % Fulfillment & Logistics segment revenue declined $3.0 million, or 3.5%, primarily due to the lower revenue from existing customers not being offset by growth in new programs and customers.
On December 31, 2023, the Company extended the maturity date for the Credit Facility by a period of six (6) months, up to June 30, 2025. The extension extended the Credit Facility under substantially similar terms and conditions as originally executed.
On December 31, 2023, the Company extended the maturity date for the Credit Facility by a period of six (6) months, to June 30, 2025. The extension extended the Credit Facility under substantially similar terms and conditions as originally executed.
Dividends We did not pay any dividends in either 2023 or 2022. Any future dividend declaration can be made only upon, and subject to, approval of our Board of Directors, based on its business judgment.
Dividends We did not pay any dividends in either 2024 or 2023. Any future dividend declaration can be made only upon, and subject to, approval of our Board of Directors, based on its business judgment.
Our revenues are also affected by the economic fundamentals of each industry that we serve, various market factors, including the demand for services by our clients, the financial condition of and budgets available to our clients, and regulatory factors, among other factors.
Our revenues are also affected by the economic fundamentals of each industry that we serve, the expansion of alternative channels, various market factors, including the demand for services by our clients, the financial condition of and budgets available to our clients, and regulatory factors, among other factors.
There are three principal financial measures reported to our CEO (the chief operating decision maker) for use in assessing segment performance and allocating resources . Those measures are revenues, operating income and operating income plus depreciation and amortization (“EBITDA”).
There are three principal financial measures reported to our Interim COO (the chief operating decision maker) for use in assessing segment performance and allocating resources . Those measures are revenues, operating income and operating income plus depreciation and amortization (“EBITDA”).
GAAP). As of December 31, 2023 and 2022, the Company had no borrowings outstanding under the Credit Facility. At each of December 31, 2023, and 2022, the Company had letters of credit in the amount of $0.8 million outstanding. No amounts were drawn against these letters of credit as of December 31, 2023, and 2022.
GAAP). As of December 31, 2024 and 2023, the Company had no borrowings outstanding under the Credit Facility. At each of December 31, 2024, and 2023, the Company had letters of credit in the amount of $1.0 million and $0.8 million outstanding, respectively. No amounts were drawn against these letters of credit as of December 31, 2024, and 2023.
Investing Activities Net cash used in investing activities was $2.3 million for the year ended December 31, 2023, compared to cash used in investing activities of $11.5 million for the year ended December 31, 2022.
Investing Activities Net cash used in investing activities was $3.7 million for the year ended December 31, 2024, compared to cash used in investing activities of $2.3 million for the year ended December 31, 2023.
Operating Expenses Operating expenses of $188.1 million for the year ended December 31, 2023 decreased $3.0 million, or 1.6%, when compared to $191.2 million for the year ended December 31, 2022.
Operating Expenses Operating expenses of $183.1 million for the year ended December 31, 2024 decreased $5.0 million, or 2.6%, when compared to $188.1 million for the year ended December 31, 2023.
These letters of credit exist to support insurance programs relating to workers’ compensation, and general liability. We had no other off-balance sheet financing arrangements as of December 31, 2023, and 2022. As of December 31, 2023, we had the ability to borrow an additional $24.2 million under the Credit Facility.
These letters of credit exist to support insurance programs relating to workers’ compensation, and general liability as well as lease obligations. We had no other off-balance sheet financing arrangements as of December 31, 2024, and 2023. As of December 31, 2024, we had the ability to borrow approximately $24.0 million under the Credit Facility.
The Credit Facility provides for loans up to the lesser of (a) $25.0 million, and (b) the amount available under a “borrowing base” calculated primarily by reference to the Company's cash and cash equivalents and accounts receivables. The Credit Facility allows the Company to use up to $3.0 million of its borrowing capacity to issue letters of credit.
The Credit Facility provides for loans up to the lesser of (a) $25.0 million, and (b) the amount available under a “borrowing base” calculated primarily by reference to the Company's cash and cash equivalents and accounts receivables.
Financing Activities Net cash used in financing activities was $3.2 million for the year ended December 31, 2023, compared to $15.8 million net cash used in financing activities for the year ended December 31, 2022.
Financing Activities Net cash used in financing activities was $0.4 million for the year ended December 31, 2024, compared to $3.2 million net cash used in financing activities for the year ended December 31, 2023.
Operating Activities Net cash provided by operating activities was $10.5 million for the year ended December 31, 2023, when compared to cash provided by operating activities of $28.8 million for the year ended December 31, 2022.
Operating Activities Net cash used in operating activities was $3.0 million for the year ended December 31, 2024, when compared to cash provided by operating activities of $10.5 million for the year ended December 31, 2023.
Revenue in our Marketing Services declined $9.8 million, or 18.4%, to $43.2 million, revenue in our Customer Care segment declined $3.9 million, or 5.8%, to $63.3 million and revenue in our Fulfillment & Logistics Services declined $1.1 million, or 1.3%, to $85.0 million.
Revenue in Fulfillment & Logistics Services declined $3.0 million, or 3.5%, to $82.0 million; our Marketing Services segment revenue declined $2.6 million, or 4.9%, to $50.3 million; revenue in our Customer Care segment declined $0.7 million, or 1.3%, to $52.9 million.
Harte Hanks, Inc. is a leading global customer experience company operating in three business segments: Marketing Services, Customer Care, and Fulfillment & Logistics Services. Our mission is to partner with clients to provide them with a robust customer-experience, or CX strategy, data-driven analytics, and actionable insights combined with seamless program execution to better understand, attract, and engage their customers.
Our mission is to partner with clients to provide them with robust customer-experience, or CX strategy, data-driven analytics, and actionable insights combined with seamless program execution to better understand, attract, and engage their customers.
Year Ended December 31, 2022 Consolidated Results Revenues Revenues of $191.5 million for the year ended December 31, 2023 decreased $14.8 million, or 7.2%, when compared to $206.3 million for the year ended December 31, 2022.
Year Ended December 31, 2023 Consolidated Results Revenues Revenues of $185.2 million for the year ended December 31, 2024 a decrease of $6.3 million, or 3.3%, when compared to $191.5 million for the year ended December 31, 2023.
In December 2023, the FASB issued ASU 2023-09, which requires enhanced income tax disclosures, including disaggregation of information in the rate reconciliation table and disaggregated information related to income taxes paid. The amendments in ASU 2023-09 are effective for the fiscal year ending after November 30, 2026.
The Company updated its disclosure included in its consolidated financial statements disclosure for this fiscal year. In December 2023, FASB issued ASU 2023-09, which requires enhanced income tax disclosures, including disaggregation of information in the rate reconciliation table and disaggregated information related to income taxes paid.
Labor costs decreased by $6.7 million, or 6.4%, when compared to the year ended December 31, 2022, primarily due to the reduction in workforce in our Customer Care and Marketing Service segment as a result of the lower revenue which was partially offset by higher severance expenses.
Labor costs decreased by $4.2 million, or 4.3%, when compared to the year ended December 31, 2023, primarily due to the reduction in workforce in our Customer Care and Marketing Service segments as a result of Project Elevate.
The Company may repay and reborrow all or any portion of the loans advanced under the Credit Facility at any time, without premium or penalty.
The outstanding amounts advanced under the Credit Facility are due and payable in full on June 30, 2025. The Company may repay and borrow all or any portion of the loans advanced under the Credit Facility at any time, without premium or penalty.
The $12.6 million decrease in cash used in financing activities was primarily due to the $10.0 million used for the repurchase of preferred stock and the $5.0 million repayment of the borrowings under our Credit Facility in the year ended December 31, 2022, as compared to the $2.4 million used for the repurchase of common stock in the year ended December 31, 2023. 26 Table of Contents Foreign Holdings of Cash Consolidated foreign holdings of cash as of December 31, 2023, and 2022 were $5.4 million and $3.4 million, respectively.
The $2.8 million decrease in cash used in financing activities was primarily related to the $2.4 million used to repurchase our common stock in the year ended December 31, 2023 . Foreign Holdings of Cash Consolidated foreign holdings of cash as of December 31, 2024, and 2023 were $1.5 million and $5.4 million, respectively.
During 2023, we repurcha sed 0.4 million shares of common stock for a total combined purchase price of $2.4 million . 27 Table of Contents Outlook We consider such factors as total cash and cash equivalents and restricted cash, current assets, current liabilities, total debt, revenues, operating income, cash flows from operations, investing activities, and financing activities when assessing our liquidity.
Outlook We consider such factors as total cash and cash equivalents and restricted cash, current assets, current liabilities, total debt, revenues, operating income, cash flows from operations, investing activities, and financing activities when assessing our liquidity.
Income Taxes We are subject to income taxes in the United States and numerous other jurisdictions. Significant judgment is required in determining our provision for income taxes and income tax assets and liabilities, including evaluating uncertainties in the application of accounting principles and complex tax laws.
Significant judgment is required in determining our provision for income taxes and income tax assets and liabilities, including evaluating uncertainties in the application of accounting principles and complex tax laws. We record a provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method.
The $9.2 million decrease was mainly due to the $6.3 million of cash used and returned from escrow from acquisition activities and $3.0 million less cash used to purchase property, plant and equipment in the year ended December 31, 2023, when compared to the year ended December 31, 2022.
The $1.4 million increase was mainly due to the $0.5 million of cash used and returned from escrow from acquisition activities and $0.9 million more cash used in technology improvement projects and routine equipment replacement in the year ended December 31, 2024, when compared to the year ended December 31, 2023.
Reorganization savings from Project Elevate executed from 2024 to 2026 are estimated to be $16 million. 23 Table of Contents Results of Operations Operating results from operations were as follows: Year Ended December 31, In thousands, except per share amounts 2023 % Change 2022 Operating revenue $ 191,492 -7.2% $ 206,278 Operating expenses 188,133 -1.6% 191,171 Operating income $ 3,359 -77.8% $ 15,107 Operating margin 1.8 % -76.0% 7.3 % Other expense (income), net 5,278 -225.5% (4,206) Income tax benefit (349) -98.0% (17,463) Net (loss) income $ (1,570) -104.3% $ 36,776 Diluted EPS from operations $ (0.21) -104.5% $ 4.75 Year Ended December 31, 2023 vs.
Results of Operations Operating results from operations were as follows: Year Ended December 31, In thousands, except per share amounts 2024 % Change 2023 Operating revenue $ 185,242 -3.3% $ 191,492 Operating expenses 183,149 -2.6% 188,133 Operating income $ 2,093 -37.7% $ 3,359 Operating margin 1.1% -35.6% 1.8% Other expenses, net 40,027 658.4% 5,278 Income tax benefit (7,637) 2088.3% (349) Net loss $ (30,297) 1829.7% $ (1,570) Diluted EPS from operations $ (4.15) 1834.2% $ (0.21) 23 Table of Contents Year Ended December 31, 2024 vs.
The Company records a liability when it is probable that a loss has been incurred and the amount is reasonably estimable, the determination of which requires significant judgement.
The Company records a liability when it is probable that a loss has been incurred and the amount is reasonably estimable, the determination of which requires significant judgement. Resolution of legal matters in a manner inconsistent with management's expectations could have a material impact on the Company's financial condition and operating results.
Overview The following MD&A section is intended to help the reader understand the results of operations and financial condition of Harte Hanks. This section is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and the accompanying notes included herein.
Overview The following MD&A section is intended to help the reader understand the results of operations and the financial condition of Harte Hanks.
The decrease in benefit of $17.1 million was primarily related to the removal of the majority of the U.S. valuation allowance for the year ended December 31, 2022. Segment Results The following is a discussion and analysis of the results of our reporting segments for the years ended December 31, 2023 and 2022.
The increase in tax benefit of $7.3 million was primarily related to the $37.5 million pension termination charge booked in the year ended December 31, 2024. 24 Table of Contents Segment Results The following is a discussion and analysis of the results of our reporting segments for the years ended December 31, 2024 and 2023.
This standard became effective for the Company in fiscal year 2022 and did not have a material impact on the consolidated financial statements. In November 2023, the FASB issued ASU 2023-07, which enhances the disclosures required for reportable segments in annual and interim consolidated financial statements.
Recent Accounting Pronouncements In November 2023, FASB issued ASU 2023-07, which enhances the disclosures required for reportable segments in annual and interim consolidated financial statements. ASU 2023-07 is effective for the Company for annual reporting periods beginning with the fiscal year ending December 15, 2024 and for interim reporting periods beginning in fiscal year 2025.
The Company is currently evaluating the impact that this update will have on its disclosures in the consolidated financial statements. No other new accounting pronouncements recently adopted or issued had or are expected to have a material impact on the consolidated financial statements. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not applicable.
This ASU will likely result in the required additional disclosures being included in our consolidated financial statements, once adopted. We are currently evaluating the provisions of this ASU. No other new accounting pronouncements recently adopted or issued had or are expected to have a material impact on the consolidated financial statements.
Marketing Services: Year Ended December 31, In thousands 2023 % Change 2022 Operating revenues $ 43,204 -18.4% $ 52,975 EBITDA 5,425 -26.1% 7,344 Operating Income 5,113 -26.8% 6,982 Operating Income % of Revenue 11.8 % -10.2% 13.2 % Marketing Services segment revenue declined $9.8 million, or 18.4%, due to the decline of marketing spend and the loss of a customer.
Marketing Services: Year Ended December 31, In thousands 2024 % Change 2023 Operating revenues $ 50,332 -4.9% $ 52,910 EBITDA 5,182 -21.9% 6,637 Operating Income 3,723 -32.8% 5,544 Operating Income % of Revenue 7.4 % -29.4% 10.5 % Marketing Services segment revenue declined $2.6 million, or 4.9%, due to customer turnover and additional client spending reductions.
The program involves the optimization and rationalization of our business resources as well as the partial reinvestment of savings into the company's sales and marketing team, technology, and strategy. A business transformation office was established at the beginning of 2024 to manage and measure these initiatives.
This review included greater than 200 meetings with personnel at all levels of the firm and led to the initiation of our transformation program named "Project Elevate". The program involves the optimization and rationalization of our business resources as well as the partial reinvestment of savings into the Company's sales and marketing team, technology, and strategy.
The provision for income taxes includes the effects of any reserves that we believe are appropriate, as well as the related net interest and penalties. Legal and Other Contingencies The Company is subject to various legal proceeding and claims that arise in the ordinary course of business, the outcomes of which are inherently uncertain.
The remaining balance of intangible assets as of December 31, 2024 was $0.6 million. Legal and Other Contingencies The Company is subject to various legal proceeding and claims that arise in the ordinary course of business, the outcomes of which are inherently uncertain.
Advertising, Selling and General and Administrative expenses decreased $1.2 million or 5.6%, when compared to the year ended December 31, 2022 primarily due to the reduced professional service expense. Depreciation expense increased $1.5 million , or 55.3%, when compared to the year ended December 31, 2022 , primarily du e to the addition of our new ERP system.
Advertising, Selling, and General and Administrative expenses increased $2.1 million or 10.2%, when compared to the year ended December 31, 2023 primarily due to the expansion of the sales and marketing activities. Restructuring expenses decreased $3.3 million to $2.4 million for the year ended December 31, 2024.
While inflation has not had a material impact on our business, it is possible a material increase in inflation could have an impact on our clients, and in turn, on our business. Recent Developments Project Elevate Our management team continuously reviews and adjusts our cost structure and operating footprint to optimize our operations, and invest in improved technology.
Management is closely monitoring inflation and wage pressure in the market, and the potential impact on our business. While inflation has not had a material impact on our business, it is possible a material increase in inflation could have an impact on our clients, and in turn, on our business.
We do not expect the sale of IP addresses, in the future, if any, to generate a significant amount of other income. Income Tax Benefit Our 2023 income tax benefit was $0.3 million for the year ended December 31, 2023, when compared to tax benefit of $17.5 million for the year ended December 31, 2022.
Income Tax Benefit Our 2024 income tax benefit was $7.6 million for the year ended December 31, 2024, when compared to tax benefit of $0.3 million for the year ended December 31, 2023.
The loans under the Credit Facility accrue interest at a varying rate equal to the Secured Overnight Financing Rate (SOFR) plus a margin of 2.25% per annum. The outstanding amounts advanced under the Credit Facility are due and payable in full on June 30, 2025.
The Credit Facility allows the Company to use up to $3.0 million of its borrowing capacity to issue letters of credit. 26 Table of Contents The loans under the Credit Facility accrue interest at a varying rate equal to the Secured Overnight Financing Rate (SOFR) plus a margin of 2.25% per annum.
Due to the recent increases in inflation and interest rates throughout the globe, and other geopolitical uncertainties, including but not limited to the ongoing armed conflicts in multiple regions, there is continued uncertainty and significant volatility and disruption in the global economy and financial markets.
Due to the recent increases in inflation and interest rates throughout the globe, as well as the ongoing armed conflicts in multiple regions, there is continued uncertainty and volatility in the global economy. We remain committed to executing our multichannel strategy while also continuing to adjust our cost structure to appropriately reflect our operations and outlook.
ASU 2023-07 is effective for the Company for annual reporting periods beginning with the fiscal year ending November 30, 2025 and for interim reporting periods beginning in fiscal year 2026. Early adoption is permitted. The Company is currently evaluating the impact that this update will have on its consolidated financial statements disclosure.
The amendments in ASU 2023-09 are effective for the fiscal year ending after December 15, 2025. The Company is currently evaluating the impact that this update will have on its disclosures in the consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40).
Liquidity and Capital Resources Sources and Uses of Cash Our cash and cash equivalent balances were $18.4 million and $10.4 million as of December 31, 2023, and 2022, respectively. As of December 31, 2023, we had the ability to borrow an additional $24.2 million under our Credit Facility.
The decrease in operating income was primarily the result of lower revenue. 25 Table of Contents Liquidity and Capital Resources Sources and Uses of Cash Our cash and cash equivalent balances were $9.9 million and $18.4 million as of December 31, 2024, and 2023, respectively.
Pr oduction and Distribution expenses decreased $2.4 million, or 3.8%, when compared to the year ended December 31, 2022, primarily driven by lower brokered cost, or outsourced costs due to the lower brokered revenue.
This benefit was partially offset by the expansion of the sales and marketing team and higher labor production activities in the Fulfillment and Logistics segment. Pr oduction and Distribution expenses decreased $2.9 million, or 4.9%, when compared to the year ended December 31, 2023, primarily driven by lower transportation costs in our logistics business.
Restructuring expenses were $5.7 million for the year ended December 31, 2023. The restructuring expenses included $4.6 million of consulting expenses, $0.8 million in lease impairment expense, $0.2 million of severance charges, and $0.1 million of facility related and other expenses. The largest components of our operating expenses are labor, transportation expenses and outsourced costs.
The restructuring expenses included $0.8 million of consulting expenses, $1.1 million of severance charges, and $0.5 million of facility related and other expenses. Impairment charges of $1.6 million and $1.5 million for goodwill and intangible assets decreased operating income in 2024. These noncash charges related to the previous acquisition of the InsideOut in December of 2022.
Each of these costs is, at least in part, variable and tends to fluctuate in line with revenues and the demand for our services. Transportation rates have increased over the last few years due to demand and supply fluctuations within the transportation industry.
Depreciation expense increased $0.1 million , or 3.5%, when compared to the year ended December 31, 2023. The largest components of our operating expenses are labor, transportation expenses and outsourced costs. Each of these costs is, at least in part, variable and tends to fluctuate in line with revenues and the demand for our services.
During the second half of 2023, we engaged a consulting firm to help review and analyze the structure and operations of the Company. This review included greater than 200 meetings with personnel at all levels of the firm and led to the initiation of our transformation program named "Project Elevate".
Recent Developments Project Elevate Our management team continuously reviews and adjusts our cost structure and operating footprint to optimize our operations, and invest in improved technology. During the second half of 2023, we engaged a consulting firm to help review and analyze the structure and operations of the Company.
Future changes in transportation expenses will continue to impact our total production costs and total operating expenses and in turn our margins, which may have an impact on future demand for our supply chain management services.
Transportation rates have decreased over the last year due to changes in demand and supply within the transportation industry. Future changes in transportation expenses will continue to impact our total production costs and total operating expenses and in turn our margins. Postage costs of mailings are borne by our clients and are not directly reflected in our revenues or expenses.
Customer Care: Year Ended December 31, In thousands 2023 % Change 2022 Operating revenues $ 63,327 -5.8% $ 67,205 EBITDA 10,702 -12.0% 12,167 Operating Income 9,422 -16.5% 11,283 Operating Income % of Revenue 14.9 % -11.4% 16.8 % Customer Care segment revenue declined $3.9 million, or 5.8%, primarily due to the decrease in both non-recurring pandemic-related projects and a large non-recurring recall project in 2022 which was partially offset by $9.7 million revenue from InsideOut.
Customer Care: Year Ended December 31, In thousands 2024 % Change 2023 Operating revenues $ 52,918 -1.3% $ 53,620 EBITDA 10,128 6.7% 9,488 Operating Income 9,921 10.4% 8,988 Operating Income % of Revenue 18.7 % 11.8% 16.8 % Customer Care segment revenue declined $0.7 million, or 1.3% when compare to the prior year, which was impacted by one-time project-based engagements, temporary surges or declines in call volumes among retained customers due to specific programs and events.
The $18.3 million year-over-year decrease in cash provided by operating activities was primarily due to the $38.3 million lower net income which was partially offset by absorption of deferred taxes of $18.4 million in the year ended December 31, 2023 , and smaller year over year changes in current assets and liabilities.
The $13.5 million year-over-year decrease in cash from operating activities was primarily due to the $6.7 million payment to terminate the Qualified Pension Plan I during the year ended December 31, 2024, as well as the $3.6 million net decrease in other assets and liabilities.
We received $2.5 million in tax refund in 2022 and received an additional tax refund of $5.3 million in March 2023, as a result of the change to the tax NOL carryback provisions included in the CARES Act. Our principal sources of liquidity are cash on hand, cash provided by operating activities, and borrowings available under our Credit Facility.
As of December 31, 2024, we had the ability to borrow approximately $24.0 million under our Credit Facility. Our principal sources of liquidity are cash on hand, cash provided by operating activities, and borrowings available under our Credit Facility. Our cash is primarily used for general corporate purposes, working capital requirements, and capital expenditure.
For the year ended December 31, 2023 operating income was $7.7 million, a decrease of $2.1 million when compared to the prior year primarily due to the change in revenue mix and higher transportation costs.
For the year ended December 31, 2024, operating income was $4.5 million, a decrease of $3.2 million or 41.6%.
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We remain committed to making the investments necessary to execute our multichannel strategy while also continuing to adjust our cost structure to appropriately reflect our operations and outlook. Management is closely monitoring inflation and wage pressure in the market, and the potential impact on our business.
Added
This section is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and the accompanying notes included herein. 22 Table of Contents Harte Hanks, Inc. is a leading global customer experience company operating in three business segments: Marketing Services, Customer Care, and Fulfillment & Logistics Services.
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Postage costs of mailings are borne by our clients and are not directly reflected in our revenues or expenses. 24 Table of Contents Other Expense (Income), net Interest income, net, for the year ended December 31, 2023 was $135 thousand as compared to the interest expense, net of $438 thousand for the year ended December 31, 2022.
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A business transformation office was established at the beginning of 2024 to manage and measure these initiatives. Reorganization savings from Project Elevate executed from 2024 to 2026 are estimated to be $16 million.
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The $573 thousand improvement was primarily contributed by the interest income we received from our tax refund claims during the first quarter of 2023. Total other expense, net was $5.4 million for the year ended December 31, 2023, when compared to other income, net of $4.6 million for the year ended December 31, 2022.
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Other Expenses, net The total other expenses, net were $40.0 million for the year ended December 31, 2024, when compared to other expense, net of $5.3 million for the year ended December 31, 2023. This $34.7 million increase in other expenses included $37.5 million in pension termination charges offset by a year over year decrease in other expenses.
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This $10.0 million increase in other expense was primarily attributable to a $8.9 million change in foreign currency revaluation gain as well as $2.5 million gain from the sale of unused IP addresses which were no longer useful to the Company in 2022.
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This segment is our most economically sensitive segment with regard to changes in our clients' marketing strategies. Operating income for the year ended December 31, 2024 decreased $1.8 million reducing operating income by 32.8% when compared to the prior year.
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Operating income for the year ended December 31, 2023 decreased $1.9 million due to the reduction in contribution margin from the revenue decrease, which was partially offset by reductions in operating expense associated with lower revenue.
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The segment results were impacted by the noncash items, $1.6 million of goodwill impairment and $1.5 million of intangible asset impairment, in the fourth quarter associated with the write-down of the InsideOut acquisition.
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The money deposited in an escrow account to satisfy the contingent payment obligations for the acquisition of InsideOut is not included in our cash and cash equivalent balances as of December 31, 2023.
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We also encounter fluctuations based on the geographic regions customers select for staff support. We are leveraging our Amazon Connect cloud-based platform to test and pilot new AI tools, and are exploring how we can augment growth by providing more technical support as clients migrate to more capable contact center platforms.
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Our cash is primarily used for general corporate purposes, working capital requirements, and capital expenditures.
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Operating Income for the year ended December 31, 2024 increased by $0.9 million to $9.9 million, a 10.4% improvement in profits when compared to the prior year, despite a slight decrease in revenues. The improved operational efficiency is the result of diligent work to control costs while managing service delivery to meet customer expectations.
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On an ongoing basis, management reviews its estimates and assumptions based on currently available information. See Note B of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for a summary of significant accounting policies and the effect on our financial statements.
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During 2023, 391,785 shares of common stock were repurchased for a total combined purchase price of $2.4 million and in 2024, no shares of common stock were repurchased.
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We record a provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method.
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On an ongoing basis, management reviews its estimates and assumptions based on currently available information.
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Resolution of legal matters in a manner inconsistent with management's expectations could have a material impact on the Company's financial condition and operating results. 28 Table of Contents Recent Accounting Pronouncements In October 2021, the Financial Accounting Standards Board (FASB) issued accounting standards update ("ASU") 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Liabilities from Contracts with Customers.” This ASU requires an acquiring entity to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606.
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Management believes that the following are critical accounting estimates: 27 Table of Contents Revenue Recognition We recognize revenue upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to be entitled to receive in exchange for those products or services based on the relevant contract.
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The Company adopted this standard on January 1, 2023, on a prospective basis and did not have a material impact on the Company's financial statements. In December 2019, the Financial Accounting Standards Board (the “FASB”) issued new guidance that simplified the accounting for income taxes.
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Certain client programs provide for adjustments to billings based upon whether we achieve certain performance criteria. In these circumstances, revenue is recognized when the foregoing conditions are met. We record revenue net of any taxes collected from customers and subsequently remitted to governmental authorities.
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Any payments received in advance of the performance of services or delivery of the product are recorded as deferred revenue until such time as the services are performed or the product is delivered.
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Costs incurred for search engine marketing solutions payable to the engine host and postage costs of mailings are billed to our clients and are not directly reflected in our revenue. Revenue from agency and digital services, direct mail, logistics, fulfillment and contact center is recognized as the work is performed.
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Fees for these services are determined by the terms set forth in each contract. These fees are typically a set fixed price or rate by transaction occurrence, service provided, time spent, or product delivered. For arrangements requiring the design and build out of a database, revenue is not recognized until client acceptance occurs.
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Up-front fees billed during the setup phase for these arrangements are deferred and direct build costs are capitalized. Pricing for these types of arrangements is typically based on a fixed price determined in the contract. Revenue from other database marketing solutions is recognized ratably over the contractual service period.
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Pricing for these services is typically based on a fixed price per month or per contract. Income Taxes We are subject to income taxes in the United States and numerous other jurisdictions.
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The provision for income taxes includes the effects of any reserves that we believe are appropriate, as well as the related net interest and penalties. Goodwill and other Intangibles Goodwill is the amount by which the cost of the acquired net assets in a business combination exceeds the fair value of the identifiable net assets on the date of purchase.
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Goodwill is not amortized. Goodwill is reviewed for impairment at least annually during the fourth quarter, or more frequently if events occur indicating the potential for impairment.
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During the goodwill impairment review, the Company may assess qualitative factors to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount, including goodwill. The qualitative factors include, but are not limited to, macroeconomic conditions, industry and market considerations, and the overall financial performance of the Company.
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If, after assessing the totality of these qualitative factors, the Company determines that it is not more likely than not that the fair value of its reporting unit is less than its carrying amount, then no additional assessment is deemed necessary. Otherwise, the Company performs a quantitative goodwill impairment test.
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The Company may also elect to bypass the qualitative assessment in a period and elect to proceed to perform the quantitative 28 Table of Contents goodwill impairment test. We booked an impairment charge of $1.6 million for goodwill in the year ended December 31, 2024, leaving a balance of $0.3 million.
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Intangible assets consist of finite-lived intangible assets acquired through the Company’s business combinations. Such amounts are initially recorded at fair value and subsequently amortized over their useful lives using the straight-line method, which reflects the pattern of benefit, and assumes no residual value.

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