Summary of Thryv (THRY) FY Conference Call - June 03, 2025 Company Overview - Thryv is transitioning from its legacy Yellow Pages business, established in 1886, to a small business SaaS (Software as a Service) model, leveraging its existing customer base and relationships [5][6] - The company currently has approximately 100,000 customers on its software platform, indicating strong engagement and growth [5] Core Business Insights - Thryv's software offerings focus on helping small businesses with marketing, sales, and customer relationship management [7] - The acquisition of Keep, a company with a history of $175 million in investment, has provided Thryv with a robust engineering team and valuable automation tools [8][9] - The product roadmap includes several enhancements, such as the Business Center, Marketing Center, and upcoming Workforce Center, which are designed to improve customer engagement and sales [11] Financial Performance - Thryv reported a 50% growth rate, with 59% subscription growth, largely attributed to the acquisition of Keep [19] - The average revenue per user (ARPU) is currently $4,000, with a target to increase it to $8,000 by the end of the decade [19] - Gross margin stands at 73%, and net revenue retention has improved to 103, up from the low 90s a year ago [19] Market Dynamics - The target market consists primarily of established service-based businesses, such as HVAC and plumbing, which have been long-time Yellow Pages customers [21][22] - Newer businesses, particularly those run by younger generations, are beginning to adopt cloud solutions, indicating a shift in market dynamics [25][28] Customer Acquisition and Sales Strategy - Thryv is focusing on referrals from existing customers as a low-cost acquisition strategy, with a significant number of new leads coming from this channel [60] - The company is not investing in marketing for 2025, aiming instead for efficient customer acquisition and upselling to existing customers [62][64] - Changes in the sales force compensation structure are designed to incentivize selling to larger businesses, which is expected to improve average order value [65][66] Legacy Business and Cash Flow - The legacy Yellow Pages business is projected to generate between $250 million and $300 million in cash flow through the end of the decade, which will help service the company's net debt of approximately $290 million [17][78] - The company has a predictable cash flow model due to 24-month contracts with customers, providing visibility into revenue collections [73] Future Outlook - Thryv anticipates that by 2026, more than half of its EBITDA will come from SaaS, with a goal of becoming a billion-dollar SaaS business [13][17] - The company is exploring options for capital allocation, including potential share buybacks and increased marketing investments as cash flow improves [80][82] Key Takeaways - Thryv is in a significant transition phase, moving from a traditional print business to a modern SaaS model, with strong growth potential in the small business sector [5][6] - The acquisition of Keep is seen as transformative, providing new capabilities and a partner ecosystem that enhances Thryv's market reach [10][45] - The company is strategically focusing on customer retention and upselling, while managing its legacy business to ensure cash flow stability [74][78]

Company Performance - Thryv Holdings, Inc. reported a quarterly loss of $0.22 per share, compared to the Zacks Consensus Estimate of $0.24, marking an earnings surprise of -191.67% [1] - The company posted revenues of $181.37 million for the quarter ended March 2025, exceeding the Zacks Consensus Estimate by 4.50%, but down from $233.62 million year-over-year [2] - Over the last four quarters, Thryv has surpassed consensus EPS estimates only once, while it has topped consensus revenue estimates three times [2] Stock Outlook - Thryv shares have declined approximately 7.4% since the beginning of the year, underperforming the S&P 500, which has seen a decline of -5.3% [3] - The current consensus EPS estimate for the upcoming quarter is $0.69 on revenues of $204.11 million, and for the current fiscal year, it is $2.20 on revenues of $776.08 million [7] Industry Context - The Internet - Software industry, to which Thryv belongs, is currently ranked in the bottom 43% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Thryv's stock performance [5]

Financial Data and Key Metrics Changes - The company reported a 50% year-over-year revenue growth for Q1 2025, with a normalized growth of 24% excluding the Keep acquisition [6][19] - SaaS revenue reached $111.1 million, exceeding guidance, with an adjusted EBITDA margin of 10% [19][20] - The overall SaaS ARPU increased to $335, with Thrive's ARPU at $320 and Keep's ARPU at $428 [22][23] - The net debt position was $298 million, with a leverage ratio of 2.2 times net debt to EBITDA [27][28] Business Line Data and Key Metrics Changes - SaaS revenue now constitutes 61% of total revenue, marking a significant shift from marketing services to SaaS [7] - Marketing services revenue for Q1 was $70.2 million, reflecting a 42% year-over-year decline as the company transitions clients to SaaS offerings [25][26] - Subscriber growth for SaaS reached 37%, totaling 111,000 subscribers, including 15,000 from Keep [9][21] Market Data and Key Metrics Changes - The company is focusing on expanding its existing customer base, with 17.2% of SaaS subscribers using multiple paid products, up from previous periods [12][22] - Seasoned net revenue retention reached a record high of 103%, indicating strong customer satisfaction and loyalty [23] Company Strategy and Development Direction - The company is transitioning to a fully SaaS-focused model, planning to exit the marketing services business by 2028 [26][28] - The strategy emphasizes deepening relationships with existing customers to drive revenue growth through cross-selling and upselling [12][15] - The company is investing in product development and enhancing its partner channel to support growth [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of their customer base, which primarily addresses non-discretionary needs [30][32] - The company is taking a conservative approach to guidance amid economic uncertainty, despite strong performance indicators [34][75] - Management noted that small businesses are currently prioritizing marketing tools to ensure a full order book [33][40] Other Important Information - The company is experiencing increased traffic expenses due to heightened demand for its marketing center and related add-ons [43][44] - The integration of Keep is progressing well, with positive feedback from partners regarding the combined product offerings [52][54] Q&A Session Summary Question: Can you elaborate on the record high net retention rate and what customers are buying? - Management highlighted that customers are increasingly adopting additional products, contributing to the high net retention rate [37][38] Question: What are the reasons for the decrease in SaaS customer additions this quarter? - Management attributed the decrease to seasonal factors and a strategic focus on existing customer expansion rather than new customer acquisition [57][59] Question: How is the integration of Keep progressing? - Management reported strong integration progress, with partners excited about the combined capabilities of Thrive and Keep [50][52] Question: What is the outlook for the SaaS business in a challenging macro environment? - Management indicated that the current environment is prompting customers to prioritize marketing and sales tools, which could benefit the SaaS business [68][70] Question: Are there any differences in retention between Thrive and Keep customers? - Management noted that both customer bases are resilient, with no significant differences in churn rates observed [80][90]

Thryv (THRY) Q1 2025 Earnings Call May 01, 2025 08:30 AM ET Company Participants Cameron Lessard - Vice President, Corporate Development and StrategyJoe Walsh - Chairman & CEOGrant Freeman - PresidentPaul Rouse - CFOArjun Bhatia - Co-Group Head - Technology, Media & CommunicationsScott Berg - Managing DirectorMatthew Swanson - Director - Equity Research Conference Call Participants Jason Kreyer - Senior Research AnalystZach Cummins - Senior Research AnalystNone - Analyst Operator Thank you for standing by. ...

Financial Data and Key Metrics Changes - The company reported a 50% year-over-year revenue growth for Q1 2025, with normalized growth of 24% excluding the Keep acquisition [5][18] - SaaS revenue reached $111.1 million, exceeding guidance, with a sequential increase of 7% [18] - The adjusted EBITDA margin for SaaS improved to 10%, with total adjusted EBITDA of $20.9 million for the quarter [19][25] - The net debt position was $298 million, with a leverage ratio of 2.2 times net debt to EBITDA [26] Business Line Data and Key Metrics Changes - SaaS revenue now constitutes 61% of total revenue, marking a significant transition from marketing services to SaaS [6] - Subscriber growth for Thrive was 37%, totaling 96,000, and including Keep subscribers, the total reached 111,000 [8][20] - Marketing services revenue was $70.2 million, reflecting a 42% year-over-year decline as the company transitions clients to SaaS offerings [24] Market Data and Key Metrics Changes - The company noted a 103% seasoned net revenue retention rate, indicating strong customer loyalty and satisfaction [22] - The average revenue per user (ARPU) for SaaS reached $335, with Thrive's ARPU at $320 and Keep's at $428 [21][22] Company Strategy and Development Direction - The company is focused on expanding its SaaS offerings and deepening relationships with existing customers to drive revenue growth [12][14] - A strategic shift has been made to prioritize monthly recurring revenue (MRR) over new account acquisition, enhancing productivity and efficiency [13][14] - The company plans to exit the marketing services business by 2028, with cash flows extending into 2030 to support the transition [24][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of their customer base, which primarily addresses non-discretionary needs [30][31] - The company has adopted a conservative outlook for the year, reflecting broader economic uncertainties while maintaining confidence in current performance [33][75] - Management highlighted the importance of referrals in driving new customer acquisition, which remains strong despite seasonal fluctuations [64] Other Important Information - The company is actively working on integrating Keep's automation capabilities and expanding its product offerings to partners [52][54] - The first PartnerCon conference was well-received, indicating strong partner engagement and excitement about the combined product offerings [56] Q&A Session Summary Question: Can you elaborate on the net retention rate and what customers are buying? - Management noted that the net retention rate of 103% reflects successful cross-selling and expansion efforts, with customers increasingly adopting additional products [36][38] Question: What is driving the increased traffic expense? - The increased traffic expense is attributed to higher demand for the marketing center and additional tools that help optimize customer visibility online [43][44] Question: What were the takeaways from the Keap Partner Conference? - Partners expressed excitement about the integration of Thrive's capabilities with Keep's automation tools, enhancing their service offerings [50][52] Question: Why was there a decline in SaaS customer additions this quarter? - The decline was attributed to seasonal factors, particularly during the holiday period, which affects small business engagement [57][60] Question: How is the company managing the transition from marketing services to SaaS? - Management confirmed that the transition is on track, with a focus on maintaining customer satisfaction and reducing churn rates among migrated clients [80][82]

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Financial Performance - Revenue for Q1 2025 was $181.371 million, a decrease of 22.3% compared to $233.624 million in Q1 2024[11] - Gross profit for Q1 2025 was $119.288 million, down from $153.641 million in Q1 2024, reflecting a decline of 22.3%[11] - Operating loss for Q1 2025 was $(3.034) million, compared to an operating income of $31.134 million in Q1 2024[11] - Net loss for Q1 2025 was $(9.618) million, contrasting with a net income of $8.424 million in Q1 2024[11] - For the three months ended March 31, 2025, the net loss was $9,618,000 compared to a net income of $8,424,000 for the same period in 2024, representing a significant decline[17] - Total Segment Adjusted EBITDA for Q1 2025 was $20.901 million, a decline of 61.4% compared to $54.114 million in Q1 2024[111] - The company reported a loss before income tax benefit of $12.483 million for Q1 2025, compared to an income of $13.821 million in Q1 2024[111] Assets and Liabilities - Total current assets decreased to $202.687 million as of March 31, 2025, from $210.720 million at the end of 2024[13] - Total assets decreased to $703.734 million as of March 31, 2025, down from $712.165 million at the end of 2024[13] - Total liabilities increased to $510.503 million as of March 31, 2025, compared to $509.245 million at the end of 2024[13] - Cash and cash equivalents decreased to $10.993 million as of March 31, 2025, from $16.311 million at the end of 2024[13] - Total debt obligations as of March 31, 2025, were $298,987 thousand, an increase from $284,337 thousand as of December 31, 2024[60] Cash Flow and Expenses - Operating cash flow for the three months ended March 31, 2025, was a net cash used of $10,481,000, compared to a net cash provided of $5,438,000 in the same period of 2024[17] - Cash paid for interest in the three months ended March 31, 2025, was $8,256,000, compared to $11,911,000 in the same period of 2024, indicating a reduction in interest expenses[17] - The net periodic pension cost for the three months ended March 31, 2025, was $768 thousand, a decrease from $1,581 thousand in the same period of 2024[79] Stock and Equity - The company reported a basic net loss per share of $(0.22) for Q1 2025, compared to a basic net income per share of $0.24 in Q1 2024[11] - The company’s total stockholders' equity as of March 31, 2025, was $193,231,000, a slight decrease from $167,066,000 as of March 31, 2024[15] - Stock-based compensation expense for the three months ended March 31, 2025, was $7.737 million, an increase of 46.3% from $5.289 million in the same period of 2024[82] - The Company had repurchased approximately $0.5 million, or 26,495 shares, of its outstanding common stock under the Share Repurchase Program, with $39.5 million remaining available for repurchases[94] Acquisitions and Investments - The company completed the acquisition of Infusion Software, Inc. (Keap) on October 31, 2024, enhancing its SaaS offerings for small businesses[21] - Thryv, Inc. acquired Keap for $77.0 million in cash, with the acquisition including $3.0 million in current assets and $34.9 million in goodwill[34][38] - The goodwill recognized from the Keap acquisition was primarily due to expected synergies within the SaaS segment[37] - The preliminary purchase price allocation for the Keap acquisition included $27.3 million in client relationships and $5.7 million in trademarks and domain names[38] Segment Performance - Thryv SaaS segment revenue increased to $111.129 million in Q1 2025, up 49.5% from $74.322 million in Q1 2024[110] - Thryv Marketing Services segment revenue decreased to $70.242 million in Q1 2025, down 56.0% from $159.302 million in Q1 2024[110] Tax and Compliance - The Company's effective tax rate for the three months ended March 31, 2025, was 23.0%, down from 39.0% in the same period of 2024[96] - As of March 31, 2025, the amount of unrecognized tax benefits was $18.8 million, which could impact the effective tax rate if recognized[97] - The Company expects to remain in compliance with its Term Loan and ABL Facility covenants for the next twelve months[70][76] Other Financial Metrics - The company recognized $30.3 million in revenue from contract liabilities during the three months ended March 31, 2025, compared to $28.5 million for the same period in 2024[45] - The allowance for credit losses as of March 31, 2025, was $13,177 thousand, down from $17,868 thousand as of March 31, 2024[57] - The Company recorded a provision for credit losses of $3.8 million for the three months ended March 31, 2025, compared to $6.0 million for the same period in 2024[57]

Revenue Performance - SaaS revenue increased by 50% year-over-year to $111.1 million in Q1 2025, with SaaS revenue excluding Keap growing by 24% to $92.2 million[2][9] - SaaS revenue accounted for over 60% of total revenue in Q1 2025, highlighting the company's strategic transformation[3][4] - Consolidated total revenue decreased by 22% year-over-year to $181.4 million, with a consolidated net loss of $9.6 million compared to a net income of $8.4 million in Q1 2024[9][13] - Total Marketing Services revenue was $70.2 million, reflecting a 56% decrease year-over-year[9] - SaaS revenue for Q1 2025 was $111,129,000, a 49.5% increase from $74,322,000 in Q1 2024[16] - Marketing Services revenue decreased by 55.9%, from $159,302,000 in Q1 2024 to $70,242,000 in Q1 2025[16] - Total revenue for Q1 2025 was $181,371,000, down 22.4% from $233,624,000 in Q1 2024[16] Client Growth and Retention - Seasoned Net Revenue Retention (NRR) reached a record 103% in Q1 2025, an increase of 900 basis points year-over-year[4][9] - SaaS clients increased by 59% year-over-year to 111,000, while SaaS clients excluding Keap grew by 37% to 96,000[9] Profitability Metrics - SaaS Adjusted EBITDA was $10.8 million, representing an Adjusted EBITDA margin of 9.7%[9] - Adjusted EBITDA for Q1 2025 was $20,901,000, a 61.4% decrease from $54,114,000 in Q1 2024[16] - Adjusted EBITDA margin for SaaS was 9.7% in Q1 2025, compared to 4.6% in Q1 2024[26] - Adjusted Gross Profit for SaaS in Q1 2025 was $81,452,000, up from $50,859,000 in Q1 2024[22] - Adjusted Gross Margin for SaaS improved to 73.3% in Q1 2025 from 68.4% in Q1 2024[22] Future Guidance - The company expects Q2 2025 SaaS revenue guidance of $113.0 - $115.0 million and full-year 2025 guidance of $460.5 - $471.0 million[7] Operational Focus - The company aims to enhance efficiencies and reduce costs through restructuring and integration efforts[23] - The company is focused on expanding its operations and offerings into new markets, including internationally[28] Payment Volume - ThryvPay total payment volume increased by 13% year-over-year to $71 million[9]

Core Insights - Thryv Holdings (NASDAQ: THRY) has shown strong business performance with an organic growth rate of 20% and improving margins in its SaaS business [1] Company Performance - The company is experiencing solid fundamentals and a positive outlook for its business [1] Investment Perspective - The analysis highlights the potential for asymmetric investment opportunities in undercovered companies, particularly in technology, software, electronics, and energy transition sectors [1]

Financial Data and Key Metrics Changes - For Q4 2024, total SaaS reported revenue was $104.3 million, reflecting a year-over-year growth of 41% and a sequential increase of 20% [24] - Full year SaaS reported revenue grew 30% year-over-year to $343.5 million [26] - SaaS adjusted gross margin increased to 76% for Q4, up 620 basis points year-over-year [27] - Total SaaS adjusted EBITDA for Q4 was $17.3 million, resulting in an adjusted EBITDA margin of 16.6% [28] - Net revenue retention was 98%, close to the long-term target of 100% [12][29] Business Line Data and Key Metrics Changes - Thryv SaaS revenue for Q4 was $90.9 million, growing 23% year-over-year [25] - The number of subscribers in Thryv SaaS grew 50% year-over-year to 99,000, reaching 114,000 when including Keap [10] - Marketing Services revenue for Q4 was $82.3 million, with a full year total of $480.7 million [31] - Marketing Services adjusted EBITDA for Q4 was $12.1 million, resulting in a margin of 15% [31] Market Data and Key Metrics Changes - Fourth quarter marketing services billings were $92 million, reflecting a 40% year-over-year decline [33] - The company is transitioning many legacy marketing services clients to its SaaS offering, impacting the rate of decline in marketing services billings [33] Company Strategy and Development Direction - The company plans to exit the marketing services business by 2028, with cash flows extending into 2030 [34] - The acquisition of Keap is expected to enhance SaaS adoption and create synergies, with $10 million of EBITDA synergies already identified [16] - The company aims to focus on building a profitable SaaS business, with expectations that the majority of EBITDA will come from SaaS by 2026 [41][92] Management's Comments on Operating Environment and Future Outlook - Management noted a cautious sentiment among small businesses due to concerns about tariffs and inflation, but emphasized that execution remains key to results [65][66] - For 2025, total SaaS revenue is expected to be in the range of $464.5 million to $474 million, implying growth of 35% to 38% [38] - The company anticipates significant deleveraging in the latter half of 2025 [37] Other Important Information - The company achieved a milestone where total SaaS revenue now constitutes over 50% of total revenues [10] - The company is focused on integrating Keap and enhancing its product offerings, including the launch of new features like Reporting Center and AI review response [19][21] Q&A Session Summary Question: Early commentary on the cross-sell process with Keap customers - Management indicated that the cross-sell process is underway, with early sales already occurring and expectations of about $5 million in cross-sell revenue this year [53] Question: Changes in selling cycles for larger businesses - Management clarified that they are targeting slightly larger businesses, focusing on providing more powerful reporting tools to meet their needs [56][58] Question: Customer adds in the core SaaS business - Management acknowledged seasonality in Q4, noting that small businesses often slow down during the holidays, impacting customer adds [64] Question: Performance of the Keap acquisition - Management stated that the Keap acquisition outperformed expectations in Q4 due to conservative estimates, but they will maintain their fiscal 2025 contribution estimates [71] Question: Feedback from customers on cross-sell experiences - Management reported positive feedback from customers who have experienced cross-sell opportunities, highlighting the synergy between Thryv and Keap offerings [78] Question: Changes to the go-to-market strategy for overall business growth - Management emphasized that the acquisition of Keap significantly enhances their partner channel, which will contribute to sales efforts and international expansion [85] Question: Confidence in EBITDA growth and timing - Management anticipates that the majority of EBITDA will come from SaaS by 2026, with marketing services continuing to generate revenue but declining [92][93] Question: Launch cadence of additional centers - Management indicated that while they have plans for the Workforce Center, they will focus on integration and ensuring the platform works well together before promising additional centers [98] Question: ARPU progression for the core Thryv SaaS business - Management expects strong progress in ARPU growth for 2025, focusing on upselling existing customers and enhancing engagement with the product [106][108]