Thryv(US:THRY)2024-05-04 21:11Financial Data and Key Metrics Changes - The company reported SaaS revenue of $74.3 million for Q1, a 24% year-over-year increase and slightly up sequentially [47] - Adjusted gross margin for SaaS increased by 420 basis points year-over-year but decreased by 130 basis points quarter-over-quarter to 68.4% [47] - First quarter SaaS adjusted EBITDA was $3.4 million, resulting in a margin of 4.6% [51] - Consolidated adjusted EBITDA was $54.1 million, representing a margin of 23% [54] - The net debt position was $341 million at the end of Q1, with a leverage ratio of 1.9 times net debt to EBITDA [55] Business Line Data and Key Metrics Changes - SaaS subscribers increased to approximately 70,000, a 30% year-over-year increase and 6% sequentially [53] - Marketing Services revenue for Q1 was $159.3 million, above guidance, with adjusted EBITDA of $50.7 million and a margin of 32% [54] - Marketing Services billings declined by 24% year-over-year to $136.8 million [54] Market Data and Key Metrics Changes - The company is transitioning from a legacy Marketing Services business to a SaaS-focused model, with significant traction in selling additional centers to existing customers [16][24] - The company is experiencing strong demand from small businesses moving to cloud solutions, which is driving growth [61] Company Strategy and Development Direction - The company aims to become predominantly a SaaS business, with expectations to exceed 50% SaaS revenue next year [38] - The strategy includes incentivizing multi-center sales to enhance customer engagement and revenue per user [19][20] - The company is actively looking for SaaS acquisition opportunities to enhance its growth strategy [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the SaaS business's growth potential, citing strong subscriber growth and increased customer engagement [30][61] - The refinancing of debt is expected to provide more flexibility for capital allocation, including potential acquisitions and share buybacks [46][56] - Management acknowledged macroeconomic pressures but emphasized the resilience of their customer base [75] Other Important Information - The company has a new Chief Product Officer, Rees Johnson, who is expected to enhance the software platform [23] - The company is seeing a trend of customers purchasing multiple centers, indicating strong product adoption [70][72] Q&A Session Summary Question: How is the transition from Marketing Services to SaaS being received by legacy customers? - Management noted strong traction in selling the Marketing Center to legacy customers, facilitating easier transitions to SaaS solutions [30] Question: What is the impact of the debt refinance on capital allocation? - The refinance provides flexibility for acquisitions, share buybacks, and debt reduction, enhancing shareholder value [31][46] Question: Are there patterns in customer adoption of multiple centers? - Management observed that customers are increasingly purchasing multiple centers, with some opting for both the Business and Marketing Centers simultaneously [70][72] Question: What are the expectations for the Marketing Services business moving forward? - Management expects continued declines in Marketing Services revenue as the focus shifts to SaaS, but emphasized the importance of overall EBITDA growth [84]