Thryv(THRY)2025-02-28 15:36Financial 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]