Thryv Holdings, Inc. Q2 FY2025 earnings call

Pinch Point Overcome: Overcame challenges like accounting pressure, legacy system decommissioning, Keep integration, and high amortization; past the pinch point with improved leverage and expected free cash flow. ### Results: SaaS revenue met guidance, Rule of 40 maintained (20% EBITDA margin, >20% growth). ARPU rising (from $4,000 to $8,000 over years), net revenue retention 103%, clients buying multiple products 19%. ### HVAC Vertical: Launched Thryv for HVAC, leveraging Keep's automation tools, seeing success, planning more verticals. ### New Product: Workforce Center launched to help small businesses with payroll, integrates with Thryv platform. ### GICS Classification: Misclassified under advertising; aiming for rectification.

SaaS reported revenue was $115 million in the second quarter, up 48% year-over-year. Excluding Keep, Thryv's SaaS business grew 25% year-over-year. SaaS adjusted gross margin increased 430 basis points year-over-year to 74%. SaaS adjusted EBITDA was $23.4 million, a record 20% margin. Keep contributed $17.7 million in the second quarter. Marketing Services revenue was $95.5 million, above guidance, with adjusted EBITDA of $27.8 million and a 29% margin. Billings in Marketing Services were down 38% year-over-year due to transitioning legacy products to SaaS.

SaaS: Q3 SaaS revenue expected $116M-$117M. Full-year SaaS revenue $460M-$465M. Q3 SaaS adjusted EBITDA $18.5M-$19.5M. Full-year SaaS adjusted EBITDA $70.5M-$73.5M (raised). ### Marketing Services: Full-year revenue $323M-$325M (raised). Full-year adjusted EBITDA $78.5M-$80.5M (raised).

Marketing Services Transition: Decline in billings due to transitioning legacy products, but managed pace. ### Keep Business Challenges: Former revenue decline, unprofitable sales in direct channel initially, but progress with Thryv sales force and partner channel.

Q: Impact of HVAC vertical on business?

A: Increases ARPU, retains customers, attracts new, plans more verticals.

Q: SaaS guidance slowdown?

A: Conservative, focusing on cross-sell, ARPU growth, new channels.

Q: Financial flexibility post-pinch point?

A: Options include share buyback, investing in sales, marketing, debt repayment.

Q: SaaS EBITDA margin outperformance?

A: Strong print quarter led to allocation shift, margins may vary.

Q: Multiproduct strategy?

A: Modernized go-to-market, data-driven sales, account-based marketing to increase clients with multiple products.