Thryv(US:THRY)2025-10-30 13:30Financial 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]