Group 1 - The analyst remains bullish on Thryv Holdings, Inc. (THRY) stock, recognizing improving fundamentals in the business post-Q2 earnings [1] - The analyst focuses on undercovered companies, maintaining a watchlist of up to 100 companies across technology, software, electronics, and energy transition sectors [1] - The analyst has over 7 years of personal investment experience and emphasizes the importance of identifying asymmetric investment opportunities for achieving market-beating returns [1] Group 2 - The analyst holds a beneficial long position in THRY shares through stock ownership, options, or other derivatives [2] - The article expresses the analyst's own opinions without receiving compensation from any company mentioned [2]

Group 1 - The analyst remains bullish on Thryv Holdings, Inc. (THRY) stock, recognizing improving fundamentals in the business post-Q2 earnings [1] - The analyst focuses on undercovered companies, maintaining a watchlist of up to 100 companies across technology, software, electronics, and energy transition sectors [1] - The analyst has over 7 years of personal investment experience and aims to identify asymmetric investment opportunities for market-beating returns [1] Group 2 - The analyst holds a beneficial long position in THRY shares through stock ownership, options, or other derivatives [2] - The article expresses the analyst's own opinions without compensation from any company mentioned [2]

Group 1 - William Blair analyst Arjun Bhatia downgraded Thryv Holdings (THRY) to Market Perform from Outperform without a price target [1] - The downgrade is attributed to "challenging growth dynamics" in the company's software-as-a-service business that emerged last quarter [1] - Thryv is entering a transition period for the next several quarters as it builds its self-serve customer acquisition motion [1] Group 2 - Limited near-term visibility into the company's growth dynamics is now observed by the analyst [1]

Core Insights - The article emphasizes the importance of enabling Javascript and cookies in browsers to prevent access issues [1] Group 1 - The article suggests that users may face blocks if ad-blockers are enabled, indicating a need for users to disable them for better access [1]

Core Insights - Thryv Holdings, Inc. reported quarterly earnings of $0.23 per share, missing the Zacks Consensus Estimate of $0.43 per share, but showing improvement from a loss of $2.65 per share a year ago, resulting in an earnings surprise of -46.51% [1] - The company achieved revenues of $201.56 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.41% and increasing from $179.85 million year-over-year [2] - Thryv shares have declined approximately 21% year-to-date, contrasting with the S&P 500's gain of 17.2% [3] Earnings Outlook - The future performance of Thryv's stock will largely depend on management's commentary during the earnings call and the revisions of earnings estimates [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.37 on revenues of $192.33 million, and for the current fiscal year, it is $1.38 on revenues of $784.94 million [7] Industry Context - The Internet - Software industry, to which Thryv belongs, is currently ranked in the top 30% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked using tools like the Zacks Rank [5][6]

Financial Data and Key Metrics Changes - SaaS reported revenue was $115.9 million in Q3 2025, representing a 33% year-over-year increase [41] - SaaS adjusted gross margin increased by 80 basis points year-over-year, reaching 73% [41] - SaaS adjusted EBITDA increased to $19.6 million, resulting in an adjusted EBITDA margin of 17% [41] - Free cash flow for Q3 was $14.6 million, bringing year-to-date free cash flow to $18.8 million [44] - Net debt decreased by $9 million to $265 million, with a leverage ratio of 1.9 times [45] Business Line Data and Key Metrics Changes - SaaS business excluding Keap grew 14% year-over-year, with Keap contributing $16.8 million in Q3 [41] - Marketing Services revenue was $85.7 million, above guidance, with adjusted EBITDA of $21.2 million and a margin of 25% [43] - Marketing Services billings totaled $70.6 million, down 33% year-over-year due to a strategic shift towards SaaS [44] Market Data and Key Metrics Changes - Seasoned Net Revenue Retention (NRR) declined to 94%, primarily due to the transition of legacy clients to the new SaaS platform [42] - Clients with two or more SaaS products grew to 17,000, or 20% of the base, compared to 15,000, or 16%, a year ago [41] Company Strategy and Development Direction - The company is focused on increasing spend per customer by driving adoption of more products, especially among high-value clients [41] - A vertical initiative has been launched, starting with HVAC, showing promising results such as a 10% lift in jobs booked and a 25% increase in total revenue for pilot customers [46][48] - The company aims to exit Marketing Services by 2028, ensuring strong liquidity through 2030 [44] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that execution was slightly below expectations but emphasized that external macroeconomic factors were not to blame [60] - The market remains stable, with customers in essential services less affected by economic fluctuations [71] - The company expects SaaS revenue for Q4 2025 to be in the range of $118 million to $121 million, with full-year guidance updated to $460 million to $463 million [45] Other Important Information - The company is integrating AI across its software offerings, enhancing productivity and customer engagement [34][85] - The new Chief Technology Officer is expected to accelerate product development and AI integration [85][88] Q&A Session Summary Question: SaaS business growth and guidance - Management noted that execution was slightly shy of expectations but emphasized that the market conditions were stable and not a factor in the results [60] Question: Partner performance and Keap ecosystem - Management acknowledged past neglect of partners and highlighted efforts to improve relationships and deliver on partner needs, expecting a re-acceleration in 2026 [64][65] Question: Customer purchasing decisions and market tone - Management indicated that customers are generally stable, with essential services less sensitive to economic changes [71] Question: Vertical sales emphasis and its impact - Management expects gradual improvements in NRR and ARPU as the vertical strategy targets larger, more stable businesses [77][81] Question: AI integration and operational efficiency - The new CTO is focused on enhancing AI capabilities and ensuring software interoperability, which is crucial for larger clients [85][88] Question: Visibility in answer-based engines - Management expressed confidence in the company's ability to optimize customer visibility in answer engines, leveraging historical strengths in online directories [101][102] Question: Balancing ARPU expansion with customer growth - Management indicated a focus on increasing ARPU in the short term while engaging existing customers, with plans for future customer growth [110][112]

Q3 2025 Financial Performance - SaaS revenue increased to $115.903 million, a 33.1% year-over-year increase compared to $87.055 million in 2024[35] - Marketing Services revenue decreased to $85.652 million, a 7.7% year-over-year decrease compared to $92.797 million in 2024[35] - Consolidated revenue increased to $201.555 million, a 12.1% year-over-year increase compared to $179.852 million in 2024[35] - Net income was $5.654 million, compared to a net loss of $96.071 million in 2024[35] Profitability Metrics - SaaS Adjusted EBITDA was $19.591 million with a margin of 16.9%[35] - Marketing Services Adjusted EBITDA was $21.242 million with a margin of 24.8%[35] - Consolidated Adjusted EBITDA was $40.833 million with a margin of 20.3%[35] Billings - Total Company billings were $184.2 million, a 4% year-over-year decrease[59] - SaaS billings were $113.6 million, a 32% year-over-year increase[59] - Marketing Services billings were $70.6 million, a 33% year-over-year decrease[59] FY 2025 Outlook - The company expects SaaS revenue between $460.0 million and $463.0 million, representing a 34% to 35% increase[63] - The company expects Marketing Services revenue between $323.0 million and $325.0 million, representing a ~32% to ~33% decline[63] - The company expects total revenue between $783.0 million and $788.0 million, representing a ~4% to ~5% decline[63]

Core Insights - Laughing Water Capital reported a decline of approximately -1% in Q3 2025, resulting in year-to-date returns of approximately -2.7%, while the SP500TR and R2000 indices returned 12.4% and 8.1% respectively for the quarter [1] - The fund highlighted Thryv Holdings, Inc. (NASDAQ:THRY) as a key stock, which has experienced a one-month return of -1.02% and a 52-week loss of 18.64%, closing at $11.70 per share with a market capitalization of $514.055 million [2] Company Analysis - Thryv Holdings, Inc. is positioned as a software provider for small and medium businesses, with a thesis suggesting that its declining business has been overshadowing growth in its software segment [3] - The company operates in a market with millions of small businesses in the U.S. that are transitioning from traditional methods to software solutions, driven by a new generation of business owners [3] - Thryv's SaaS business demonstrates strong metrics, including 25% organic year-over-year revenue growth and a 20% adjusted EBITDA margin, with a net revenue retention rate of approximately 100% [3] - The company has been actively paying down debt, allowing for greater flexibility in capital allocation moving forward [3] - Insider buying activity indicates confidence in the company's future, with four insiders purchasing shares in the open market this year, alongside a recent guidance raise [3]

Financial Performance - Revenue for the three months ended September 30, 2025, was $201,555,000, an increase from $179,852,000 in the same period of 2024, representing a growth of approximately 12.3%[12] - Gross profit for the three months ended September 30, 2025, was $136,465,000, compared to $111,981,000 in 2024, indicating a year-over-year increase of about 22%[12] - Operating income for the three months ended September 30, 2025, was $20,039,000, a significant improvement from an operating loss of $88,569,000 in the same quarter of 2024[12] - Net income for the three months ended September 30, 2025, was $5,654,000, compared to a net loss of $96,071,000 in the prior year, marking a turnaround in profitability[12] - The company reported a basic net income per share of $0.13 for the three months ended September 30, 2025, compared to a loss of $2.65 per share in the same period of 2024[12] - For the nine months ended September 30, 2025, the company reported a net income of $9.967 million, a significant improvement compared to a net loss of $82.099 million in the same period of 2024[22] Assets and Liabilities - Total current assets decreased to $193,924,000 as of September 30, 2025, down from $210,720,000 at the end of 2024[14] - Total assets as of September 30, 2025, were $701,799,000, a slight decrease from $712,165,000 at the end of 2024[14] - Total liabilities decreased to $480,723,000 as of September 30, 2025, compared to $515,245,000 at the end of 2024, reflecting improved financial health[14] - As of September 30, 2025, total stockholders' equity increased to $221,076, up from $214,884 as of June 30, 2025, reflecting a growth of approximately 2.8%[16] - The accumulated deficit as of September 30, 2025, was $(562,451), an increase from $(580,301) as of September 30, 2024, indicating a reduction in the deficit[18] - The company's total debt obligations as of September 30, 2025, were $268,181,000, down from $284,337,000 as of December 31, 2024, indicating a decrease of about 5.7%[71] Cash Flow and Operating Activities - Net cash provided by operating activities for the nine months ended September 30, 2025, was $41.321 million, down from $63.640 million in 2024, reflecting a decrease of approximately 35%[22] - The company’s total cash, cash equivalents, and restricted cash at the end of the period was $13.108 million, a decrease from $13.874 million at the end of September 2024[32] - Cash paid for interest decreased to $24.152 million in the nine months ended September 30, 2025, compared to $35.299 million in the same period of 2024, reflecting a reduction of approximately 31.5%[22] Acquisitions and Market Strategy - The company completed the acquisition of Infusion Software, Inc. d/b/a Keap for $77.0 million in cash, enhancing its SaaS offerings and customer relationships[42] - Thryv acquired Keap to enhance its market share in the SaaS industry, financing the acquisition through a public offering of 5,715,000 shares, generating net proceeds of $76.8 million and borrowing $5.5 million[43] - The company is focused on transitioning Marketing Services clients to the Thryv Platform and expanding its market presence, which is critical for future growth[10] - The company faces significant competition in its Marketing Services and SaaS offerings, which could impact its ability to maintain profitability and manage growth effectively[10] Stock and Compensation - The total number of common shares outstanding increased to 71,731,803 as of September 30, 2025, from 63,840,032 as of September 30, 2024, representing an increase of approximately 12.4%[18] - The additional paid-in capital rose to $1,296,216 as of September 30, 2025, compared to $1,177,078 as of September 30, 2024, marking an increase of about 10.1%[18] - Stock-based compensation expense for the three months ended September 30, 2025, was $5,807, compared to $6,011 for the same period in 2024, showing a decrease of approximately 3.4%[18] - The nonvested balance of Performance-Based Restricted Stock Units (PSUs) was 1,541,369, with a weighted-average grant-date fair value of $17.92[98] Segment Performance - SaaS segment revenue for the nine months ended September 30, 2025, was $342,037 thousand, up 43.1% from $239,171 thousand in the same period of 2024[124] - Marketing Services segment revenue decreased to $251,359 thousand for the nine months ended September 30, 2025, down 37.0% from $398,389 thousand in the same period of 2024[124] - Total segment adjusted EBITDA for the three months ended September 30, 2025, was $40,833 thousand, compared to $19,623 thousand for the same period in 2024, representing a 107.5% increase[125] Foreign Currency and Tax - The company recognized foreign currency translation adjustments resulting in an accumulated other comprehensive loss of $(15,472) thousand as of September 30, 2025, compared to $(14,059) thousand in 2024[120] - The effective tax rate for the three months ended September 30, 2025, was 50.7%, compared to 5.3% for the same period in 2024[109]

Revenue Growth - SaaS revenue increased by 33% year-over-year to $115.9 million in Q3 2025[6] - Consolidated total revenue rose by 12% year-over-year to $201.6 million[6] - Total revenue for the three months ended September 30, 2025, was $201.555 million, an increase from $179.852 million in the same period of 2024, representing a growth of 12.1%[28] - SaaS revenue for the nine months ended September 30, 2025, was $342,037, a 43.0% increase from $239,171 in 2024[15] - Marketing Services revenue for the nine months ended September 30, 2025, was $251,359, a decrease of 36.9% from $398,389 in 2024[15] - For the nine months ended September 30, 2025, total revenue reached $593.396 million, compared to $637.560 million for the same period in 2024, reflecting a decrease of 6.9%[29] Profitability - Consolidated net income was $5.7 million, compared to a net loss of $96.1 million in Q3 2024[6] - Net income for the nine months ended September 30, 2025, was $9,967, compared to a net loss of $82,099 for the same period in 2024[14] - Net income for the three months ended September 30, 2025, was $5.654 million, a recovery from a net loss of $96.071 million in the same period of 2024[28] - The company reported a net income margin of 1.7% for the nine months ended September 30, 2025, compared to a net loss margin of 12.9% for the same period in 2024[29] Cash Flow and Expenses - Cash flows from operating activities for the nine months ended September 30, 2025, were $41,321, down from $63,640 in 2024[14] - The company incurred $24,152 in cash paid for interest during the nine months ended September 30, 2025, compared to $35,299 in 2024[14] - Free Cash Flow for the three months ended September 30, 2025, was $14.610 million, compared to $27.480 million in the same period of 2024, showing a decrease of 46.8%[25] - Cash, cash equivalents, and restricted cash at the end of the period were $13,108, down from $13,874 at the end of the same period in 2024[14] Adjusted Metrics - Consolidated Adjusted EBITDA for Q3 2025 was $40.8 million, representing a margin of 20.3%[6] - Adjusted EBITDA for the three months ended September 30, 2025, was $40,833, up 108.1% from $19,623 in 2024[21] - Adjusted Gross Profit for the three months ended September 30, 2025, was $140.301 million, compared to $116.839 million for the same period in 2024, reflecting a year-over-year increase of 19.9%[24] - Adjusted Gross Margin for the three months ended September 30, 2025, was 69.6%, an improvement from 65.0% in the same period of 2024[24] Client and Market Expansion - SaaS clients increased by 7% year-over-year to 103,000[6] - Seasoned Net Revenue Retention stood at 94% as of September 30, 2025[6] - The company aims to expand its operations and current offerings into new markets, including internationally, and further penetrate existing markets[31] - The company is focused on maintaining strategic relationships with third-party service providers and enhancing its Thryv platform to improve client retention and service offerings[30] Guidance - Guidance for Q4 2025 SaaS revenue is projected between $118.0 million and $121.0 million[8] - Guidance for full year 2025 SaaS revenue is projected between $460.0 million and $463.0 million[8]