Thryv Holdings, Inc. Q1 FY2025 earnings call

• Thryv started 2025 strong, delivering top and bottom-line guidance beat. SaaS revenue grew 50% Y/Y (24% normalized).
• SaaS EBITDA margin was 10%, and SaaS revenue was 61% of total revenue. ARPU increased to $335, with net revenue retention at 103%. Subscriber growth was 37%, totaling 96,000 Thryv subscribers and 111,000 including Keap.
• Focus on existing customer base to drive expansion; 17.2% of SaaS subscribers use multiple paid products, with churn rate dropping significantly when customers adopt multiple products.
• Keap acquisition is going well, with a strong partner channel; Partnerkon Conference was a success, with partners excited about selling the full Thryv product catalog.
• Marketing Services revenue was $70.2 million, with adjusted EBITDA margin of 14%, and transition from Marketing Services to SaaS is ongoing, with plan to exit Marketing Services by 2028.

SaaS reported revenue was $111.1 million in the first quarter, with a 50% year-over-year revenue growth (24% normalized excluding Keap acquisition). SaaS EBITDA margin expanded to 10%, and SaaS revenue was 61% of total revenue. Keap contributed $18.9 million in the first quarter. Marketing Services revenue was $70.2 million in the first quarter, with first quarter Marketing Services adjusted EBITDA of $10.1 million and an adjusted EBITDA margin of 14%.

• For the second quarter, SaaS revenue is expected to be in the range of $113 million to $115 million. For the full year, SaaS revenue is expected to be in the range of $460.5 million to $471 million.
• Second quarter SaaS adjusted EBITDA is expected to be in the range of $18.5 million to $19.5 million. For the full year, SaaS adjusted EBITDA is expected to be in the range of $67 million to $71 million (implies 15% margin).
• Full year Marketing Services adjusted EBITDA guidance is confirmed to be $77.5 million to $78.5 million.

• Macroeconomic uncertainties and potential impacts on customer spending.
• Risks related to the transition from Marketing Services to SaaS, including potential impacts on cash flows and leverage during the transition.

Q: Can you elaborate on the net retention rate of 103% and what customers are buying in addition to core Thryv SaaS implementations?

A: We've invested in go-to-market motion and sales force automation. Customers are adding additional centers and simple add-ons to boost their presence. Sales reps are using tools to have effective conversations.

Q: What's the reason for SaaS customer additions being down 3,000 in the quarter?

A: The holiday season is soft; small businesses are busy with their own lives, taking vacations, and it's a soft period for sales conversations. Also, emphasis on running plays into the base has eaten up some sales time.

Q: With the migration to a fully SaaS-based business, what's the target leverage range over the next two to three years?

A: Plan to continue paying down debt, so leverage is expected to improve consistently over time.

Q: How are you ensuring continued success post implementation and compounding value of the combined platform?

A: We prioritize customer experience with a CX team using tactics like calling, Zooms, in-app messages, and in-person visits. We work to ensure customers see the value of the platform.

Q: Does the 'Goldilocks moment' change the go-to-market motion, emphasizing ROI more?

A: Different periods have different focuses. Currently, there's more trepidation about order books, so customers are more focused on marketing to ensure work going forward. The growth aspects are like piping hot French fries, and run-your-business aspects are like steamed broccoli; currently, growth is more in demand.