Thryv(THRY) - 2023 Q4 - Annual Results

Executive Summary This section provides an overview of Thryv Holdings, Inc., highlighting key financial and operational achievements for Q4 and full-year 2023 Company Overview Thryv Holdings, Inc. is a global software and marketing services company that provides the Thryv® SaaS platform to over 65,000 small-to-medium-sized businesses (SMBs) and offers digital and print presence products to approximately 350,000 business customers - Thryv Holdings, Inc. is a global software and marketing services company empowering SMBs[33] - Over 65,000 businesses use the Thryv® SaaS platform[33] - Approximately 350,000 business customers utilize digital and print presence products[33] Fourth Quarter 2023 Highlights Thryv reported robust Q4 2023 results, with SaaS revenue growing 25% year-over-year and SaaS Adjusted EBITDA surpassing guidance. The company also saw a sequential increase in Net Dollar Retention and generated strong operating cash flow - SaaS revenue growth of 25% year-over-year in the fourth quarter of 2023[1] - SaaS Adjusted EBITDA exceeded the mid-point of guidance by over $2.75 million[4] - Net Dollar Retention (NDR) increased 400 bps sequentially to 96%[4] Full-Year 2023 Highlights For the full year 2023, Thryv exceeded its SaaS revenue growth guidance, achieving a 21.9% increase. The company generated strong free cash flow, enabling a significant paydown of its term loan - Surpassed guidance on SaaS revenue growth and SaaS Adjusted EBITDA for the full year[2] - Generated strong FY operating cash flow of $148.2 million[4] - Strong free cash flow in 2023 enabled paying down $120 million towards the term loan[3] Detailed Financial Results This section presents a comprehensive analysis of Thryv's financial performance for Q4 and full-year 2023, including key SaaS metrics Fourth Quarter 2023 Financial Performance In Q4 2023, Thryv's total SaaS revenue grew 25% year-over-year to $74.0 million, while Marketing Services revenue decreased 26%. Consolidated total revenue declined 15% to $236.2 million, resulting in a net loss of $257.5 million, primarily due to a goodwill impairment charge. SaaS Adjusted Gross Profit Margin reached a record 70% Q4 2023 Key Financials (YoY Change) | Metric | Q4 2023 (Millions) | Q4 2022 (Millions) | YoY Change | | :----------------------------- | :----------------- | :----------------- | :--------- | | Total SaaS Revenue | $74.0 | $59.3 | +25% | | Total Marketing Services Revenue | $162.2 | $220.1 | -26% | | Consolidated Total Revenue | $236.2 | $279.4 | -15% | | Consolidated Net Loss | $(257.5) | $(50.4) | -411% | | Consolidated Adjusted EBITDA | $52.3 | $68.2 | -23.3% | | SaaS Adjusted Gross Profit Margin | 70% | 62.7% | +7.3 pp | - Consolidated net loss includes a non-cash charge of $268.8 million related to goodwill impairment[8] Full-Year 2023 Financial Performance For the full year 2023, total SaaS revenue increased 21.9% to $263.7 million, while Marketing Services revenue declined 33.8%. Consolidated total revenue decreased 24% to $917.0 million, leading to a net loss of $259.3 million, largely due to a goodwill impairment charge. Operating cash flow remained strong at $148.2 million FY 2023 Key Financials (YoY Change) | Metric | FY 2023 (Millions) | FY 2022 (Millions) | YoY Change | | :----------------------------- | :----------------- | :----------------- | :--------- | | Total SaaS Revenue | $263.7 | $216.3 | +21.9% | | Total Marketing Services Revenue | $653.2 | $986.0 | -33.8% | | Consolidated Total Revenue | $917.0 | $1,202.4 | -24% | | Consolidated Net Loss | $(259.3) | $54.3 | NM | | Consolidated Adjusted EBITDA | $187.5 | $333.3 | -43.7% | | Operating Cash Flow | $148.2 | $148.6 | -0.3% | - Consolidated net loss includes a non-cash charge of $268.8 million related to goodwill impairment, compared to net income of $54.3 million for the prior year[8] SaaS Key Metrics Thryv's SaaS client base grew significantly in Q4 2023, with total SaaS clients increasing 27% year-over-year to 66 thousand. Seasoned Net Dollar Retention improved sequentially to 96%, while SaaS monthly Average Revenue per Unit (ARPU) saw a slight decrease. ThryvPay total payment volume surged by 54% - Total SaaS clients increased 27% year-over-year to 66 thousand for the fourth quarter of 2023[14] - Seasoned Net Dollar Retention was 96% for Q4 2023, an increase of 400 bps sequentially[14] - SaaS monthly Average Revenue per Unit ('ARPU') decreased to $370 for Q4 2023, compared to $387 in Q4 2022[14] - ThryvPay total payment volume was $60 million, an increase of 54% year-over-year[14] Financial Statements This section details Thryv's consolidated financial statements, including statements of operations, balance sheets, and cash flows Consolidated Statements of Operations and Comprehensive (Loss) Income The consolidated statement of operations shows a significant net loss for both Q4 and FY 2023, primarily driven by substantial impairment charges. Revenue declined across both periods, while operating expenses increased due to these charges Consolidated Statements of Operations (Selected Data) | Metric (Thousands) | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :-------------------- | :------ | :------ | :------ | :------ | | Revenue | $236,163 | $279,368 | $916,961 | $1,202,388 | | Gross profit | $159,710 | $178,905 | $578,247 | $780,382 | | Operating (loss) income | $(242,131) | $(66,760) | $(200,017) | $99,322 | | Net (loss) income | $(257,541) | $(50,445) | $(259,295) | $54,348 | | Diluted EPS | $(7.39) | $(1.47) | $(7.47) | $1.49 | - Impairment charges were $268,846 thousand in Q4 2023 and for the full year 2023, significantly impacting operating and net income[15] Consolidated Balance Sheets As of December 31, 2023, total assets decreased significantly to $783.17 million from $1,177.88 million in 2022, largely due to a reduction in goodwill. Total liabilities also decreased, and stockholders' equity saw a substantial reduction Consolidated Balance Sheet (Selected Data) | Metric (Thousands) | Dec 31, 2023 | Dec 31, 2022 | Change | | :-------------------- | :----------- | :----------- | :----- | | Total assets | $783,170 | $1,177,877 | $(394,707) | | Goodwill | $302,400 | $566,004 | $(263,604) | | Total current assets | $266,868 | $378,316 | $(111,448) | | Total liabilities | $630,470 | $795,610 | $(165,140) | | Total stockholders' equity | $152,700 | $382,267 | $(229,567) | - The decrease in total assets is primarily driven by a reduction in goodwill from $566.0 million to $302.4 million[16] Consolidated Statements of Cash Flows Thryv maintained strong net cash provided by operating activities in 2023 at $148.2 million, comparable to the prior year. The company used cash for investing activities, including additions to fixed assets and acquisitions, and for financing activities, notably paying down $120 million of its Term Loan Consolidated Cash Flow (Selected Data) | Metric (Thousands) | FY 2023 | FY 2022 | | :-------------------- | :------ | :------ | | Net cash provided by operating activities | $148,226 | $148,573 | | Net cash used in investing activities | $(42,516) | $(52,026) | | Net cash used in financing activities | $(103,493) | $(91,097) | | Payments of Term Loan | $(120,000) | $(104,165) | - The company paid down $120 million of its Term Loan in 2023[3][17] Segment Operating Results This section analyzes Thryv's financial performance by segment, distinguishing between U.S. and International Marketing Services and SaaS operations Fourth Quarter 2023 Segment Performance In Q4 2023, Thryv's SaaS segment showed strong growth, with U.S. SaaS revenue increasing 21.9% and International SaaS revenue surging 140.4%. Conversely, Marketing Services revenue declined in both U.S. and International segments. SaaS Adjusted EBITDA significantly improved, especially in the U.S. segment Q4 2023 Segment Revenue (YoY Change) | Segment (Thousands) | Q4 2023 Revenue | Q4 2022 Revenue | YoY Change | | :--------------------- | :-------------- | :-------------- | :--------- | | Thryv U.S. Marketing Services | $132,665 | $187,755 | (29.3)% | | Thryv U.S. SaaS | $70,652 | $57,938 | 21.9% | | Thryv International Marketing Services | $29,528 | $32,295 | (8.6)% | | Thryv International SaaS | $3,318 | $1,380 | 140.4% | Q4 2023 Segment Adjusted EBITDA (YoY Change) | Segment (Thousands) | Q4 2023 Adjusted EBITDA | Q4 2022 Adjusted EBITDA | YoY Change | | :--------------------- | :---------------------- | :---------------------- | :--------- | | Thryv U.S. Marketing Services | $38,383 | $59,758 | (35.8)% | | Thryv U.S. SaaS | $8,345 | $83 | NM | | Thryv International Marketing Services | $7,390 | $10,657 | (30.7)% | | Thryv International SaaS | $(1,842) | $(2,305) | 20.1% | Full-Year 2023 Segment Performance For the full year 2023, U.S. SaaS revenue grew 19.7% and International SaaS revenue increased 123.1%. Marketing Services revenue continued its decline in both regions. U.S. SaaS Adjusted EBITDA turned positive, showing significant improvement from a loss in the prior year FY 2023 Segment Revenue (YoY Change) | Segment (Thousands) | FY 2023 Revenue | FY 2022 Revenue | YoY Change | | :--------------------- | :-------------- | :-------------- | :--------- | | Thryv U.S. Marketing Services | $510,533 | $820,032 | (37.7)% | | Thryv U.S. SaaS | $253,579 | $211,801 | 19.7% | | Thryv International Marketing Services | $142,711 | $166,010 | (14.0)% | | Thryv International SaaS | $10,138 | $4,545 | 123.1% | FY 2023 Segment Adjusted EBITDA (YoY Change) | Segment (Thousands) | FY 2023 Adjusted EBITDA | FY 2022 Adjusted EBITDA | YoY Change | | :--------------------- | :---------------------- | :---------------------- | :--------- | | Thryv U.S. Marketing Services | $123,249 | $271,629 | (54.6)% | | Thryv U.S. SaaS | $18,576 | $(3,686) | NM | | Thryv International Marketing Services | $52,241 | $75,106 | (30.4)% | | Thryv International SaaS | $(6,551) | $(9,707) | 32.5% | Non-GAAP Financial Measures This section provides reconciliations for non-GAAP financial measures, including Adjusted EBITDA and Adjusted Gross Profit, along with supplemental segment data Adjusted EBITDA Reconciliation Adjusted EBITDA for Q4 2023 was $52.3 million, down from $68.2 million in Q4 2022. For the full year 2023, Adjusted EBITDA was $187.5 million, a decrease from $333.3 million in 2022. The reconciliation highlights significant adjustments for impairment charges, depreciation, amortization, and stock-based compensation Adjusted EBITDA Reconciliation (Selected Data) | Metric (Thousands) | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :-------------------- | :------ | :------ | :------ | :------ | | Net (loss) income | $(257,541) | $(50,445) | $(259,295) | $54,348 | | Impairment charges | $268,846 | $102,000 | $268,846 | $102,222 | | Depreciation and amortization expense | $16,311 | $22,438 | $63,251 | $88,392 | | Stock-based compensation expense | $5,548 | $4,488 | $22,201 | $14,628 | | Adjusted EBITDA | $52,276 | $68,193 | $187,515 | $333,342 | Adjusted Gross Profit Reconciliation Adjusted Gross Profit for Q4 2023 was $165.4 million with an Adjusted Gross Margin of 70.0%, an improvement from 67.5% in Q4 2022. For the full year 2023, Adjusted Gross Profit was $605.8 million with an Adjusted Gross Margin of 66.1%, slightly lower than 68.1% in 2022 Adjusted Gross Profit and Margin (Selected Data) | Metric (Thousands) | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :-------------------- | :------ | :------ | :------ | :------ | | Gross profit | $159,710 | $178,905 | $578,247 | $780,382 | | Adjusted Gross Profit | $165,423 | $188,592 | $605,849 | $819,150 | | Adjusted Gross Margin | 70.0% | 67.5% | 66.1% | 68.1% | Supplemental Segment Adjusted EBITDA This section provides a detailed breakdown of Adjusted EBITDA and Adjusted EBITDA Margin by Marketing Services and SaaS segments, both U.S. and International. It shows the significant positive shift in SaaS Adjusted EBITDA margins, particularly in the U.S. segment, while Marketing Services margins generally declined Q4 2023 Segment Adjusted EBITDA & Margin | Segment (Thousands) | Revenue | Adjusted EBITDA | Adjusted EBITDA Margin | | :--------------------- | :------ | :-------------- | :--------------------- | | Marketing Services Total | $162,193 | $45,773 | 28.2% | | SaaS Total | $73,970 | $6,503 | 8.8% | | U.S. SaaS | $70,652 | $8,345 | 11.8% | | International SaaS | $3,318 | $(1,842) | (55.5)% | FY 2023 Segment Adjusted EBITDA & Margin | Segment (Thousands) | Revenue | Adjusted EBITDA | Adjusted EBITDA Margin | | :--------------------- | :------ | :-------------- | :--------------------- | | Marketing Services Total | $653,244 | $175,490 | 26.9% | | SaaS Total | $263,717 | $12,025 | 4.6% | | U.S. SaaS | $253,579 | $18,576 | 7.3% | | International SaaS | $10,138 | $(6,551) | (64.6)% | Financial Outlook This section outlines Thryv's financial guidance for Q1 and full year 2024, projecting future revenue and Adjusted EBITDA for its segments Q1 and Full Year 2024 Guidance Thryv provided guidance for Q1 and full year 2024, projecting continued SaaS revenue growth and positive SaaS Adjusted EBITDA. Marketing Services revenue is expected to continue its decline Q1 and Full Year 2024 Guidance (Millions) | Metric | 1st Quarter 2024 | Full Year 2024 | | :------------------------ | :--------------- | :------------- | | SaaS Revenue | $73 - $74 | $325 - $328 | | SaaS Adjusted EBITDA | $6 - $7 | $26 - $29 | | Marketing Services Revenue | $152 - $155 | $495 - $505 | | Marketing Services Adjusted EBITDA | N/A | $132 - $135 | - Plans to accelerate SaaS revenue growth and drive margin expansion by empowering legacy digital clients to seamlessly transition to the Thryv SaaS platform[2] Corporate Information This section provides corporate details, including earnings call information, forward-looking statements, company overview, and contact information Earnings Conference Call Information Thryv hosted a conference call on February 22, 2024, to discuss its Q4 2023 results, with details provided for registration, webcast access, and replay options - Thryv hosted a conference call on Thursday, February 22, 2024, at 8:30 a.m. (Eastern Time) to discuss Q4 2023 results[11] - Details for analyst registration, webcast link, and replay access were provided[12][13] Forward-Looking Statements The report includes a standard disclaimer regarding forward-looking statements, highlighting various risks and uncertainties that could cause actual results to differ materially from projections, and advises against undue reliance on these statements - Forward-looking statements are identified by words such as 'may', 'will', 'believe', 'anticipate', 'expect', 'guidance', and similar future-oriented terms[30] - Actual results may differ materially due to factors including liquidity, acquisition integration, client retention, economic conditions, competition, and technological changes[30][31] - The company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law[32] About Thryv Holdings, Inc. Thryv Holdings, Inc. is a global software and marketing services company focused on empowering SMBs with its Thryv® SaaS platform and traditional digital/print presence products - Thryv Holdings, Inc. is a global software and marketing services company[33] - Empowers small- to medium-sized businesses (SMBs) to grow and modernize operations[33] - Offers the Thryv® SaaS platform and digital/print presence products[33] Media and Investor Contacts Contact information for media and investor relations is provided for inquiries - Media Contact: Julie Murphy, Thryv, Inc., 617.967.5426, julie.murphy@thryv.com[34] - Investor Contact: Cameron Lessard, Thryv, Inc., 214.773.7022, cameron.lessard@thryv.com[34]