Thryv Q4 2024 Earnings Report

Thryv EPS Results

• Actual EPS: $0.19
• Consensus EPS: -$0.07
• Beat/Miss: Beat by +$0.26
• One Year Ago EPS: N/A

Thryv Revenue Results

• Actual Revenue: $186.60 million
• Expected Revenue: $183.02 million
• Beat/Miss: Beat by +$3.58 million
• YoY Revenue Growth: N/A

Thryv Announcement Details

• Quarter: Q4 2024
• Date: 2/27/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, February 27, 2025
• Conference Call Time: 8:30AM ET

Thryv (NASDAQ:THRY) provides digital marketing solutions and cloud-based tools to the small-to-medium sized businesses in the United States. It operates through four segments: Thryv U.S. Marketing Services, Thryv U.S. SaaS, Thryv International Marketing Services, and Thryv International SaaS. The company provides print yellow pages, internet yellow pages, and search engine marketing; and other digital media solutions, such as online display and social advertising, online presence and video, and search engine optimization tools. It also offers command center that enables SMBs to centralize all their communication through a modular, expandable, and customizable platform; and business center, a SMB end-to-end customer experience platform, which offers customer relationship management, appointment scheduling, estimate and invoice creation, payments, document management, social media content, and online review management. In addition, the company provides marketing center, a marketing and advertising platform for AutoID, enhanced online presence, omni-channel paid campaigns, and marketing tools; Thryv Add-ons provides AI-assisted website development, SEO tools, google business profile optimization, and Hub by Thryv; and ThryvPay, a payment solution that allows users to get paid via credit card and ACH. The company was formerly known as Dex Media Holdings, Inc. Thryv Holdings, Inc. was incorporated in 2012 and is headquartered in DFW Airport, Texas.

Thryv Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Thank you for standing by. My name is Jeannie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Thrive Fourth Quarter and Full Year twenty twenty four Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

[Operator]

Thank you. I would now like to turn the call over to Cameron Lessard, Head of IR. Please go ahead.

[Cameron Lessard, Vice President, Corporate Development and Strategy at Thryv]

Good morning, and thank you for joining us for Thrive's fourth quarter earnings conference call. With me today are Joe Walsh, Chairman and Chief Executive Officer and Paul Rouse, Chief Financial Officer. During this call, we will make forward looking statements that are subject to various risks and uncertainties. Actual results may differ materially from these statements. A discussion of these risks and uncertainties are included in our earnings release and SEC filings.

[Cameron Lessard, Vice President, Corporate Development and Strategy at Thryv]

Today's presentation will also include non GAAP financial measures, which should be considered in addition to, but not as a substitute for, our GAAP results. Reconciliation of these measures can be found in our earnings release. This quarter marks our first time reporting SaaS results inclusive of Keeps Software following our acquisition on 10/31/2024. With only two months of Keeps revenue reflected, we are focused on executing our integration plan and realizing the synergies we outlined at Analyst Day. To note, for 2025, total SaaS revenue will reflect the combined performance of Thrive and Keep.

[Cameron Lessard, Vice President, Corporate Development and Strategy at Thryv]

We will only specify Thrive SaaS when isolating Thrive's performance. This reporting approach aligns with our long term vision of a unified SaaS platform and ensures investors have full visibility into our growth trajectory. For deeper insight into our future strategy, we encourage investors to review our December 3 Analyst Day materials. The presentation details our roadmap including the planned exit for marketing services in 2028, Keith's role in accelerating SaaS adoption, expected synergies with the acquisition, product innovation and our updated medium term outlook. With that, I'll turn the call over to Joe Walsh, Chairman and CEO.

[Cameron Lessard, Vice President, Corporate Development and Strategy at Thryv]

Joe?

[Joe Walsh, Chairman & CEO at Thryv]

Thank you, Cameron, and good morning, everyone. On today's call, I will highlight our fourth quarter results, key trends as well as progress in our SaaS transformation. I'll provide an update on our recent Keyap acquisition and then our CFO, Paul Rouse, will take you through some of the financial numbers. RISE finished the year with strong momentum beating the top and bottom line guidance for our SaaS business. For the quarter, total SaaS reported year over year revenue growth was 41% and normalizing for the effects of the Keap acquisition, Thrive SaaS revenue growth was 23%.

[Joe Walsh, Chairman & CEO at Thryv]

For the full year 2024 Thrive SaaS year over year revenue growth was 25%. Total SaaS revenue is now officially well over 50%, a milestone for our transformative business. Subscribers in our Thrive SaaS business grew 50% year over year to 99,000 including Keith in the subscriber base takes us to 114,000. SaaS adjusted gross margin increased to 76% for the fourth quarter. Our quarterly SaaS EBITDA of 17,000,000 beat guidance by over $5,000,000 continuing to demonstrate our focus on building a profitable, growing SaaS software company.

[Joe Walsh, Chairman & CEO at Thryv]

SaaS obtained Rule 40 milestones for the second quarter in a row. Net revenue retention was 98%. As we've said, our target is 100% and will be a couple of points plus or minus that. Sometimes it will be 101 or 102 and sometimes it will be 98 or 99. But we'll be right around 100% is what we expect going forward.

[Joe Walsh, Chairman & CEO at Thryv]

The number of clients using two or more paid SaaS products increased by over 4,000 year over year, now representing 16% of our client base. This is a key metric as it demonstrates growing engagement and the increasing value clients are deriving from our platform. Now we've broadened the definition beyond just paid centers, which is 12% to include all paid SaaS products. This is underscoring the expanding adoption of our full suite of solutions. I think it shows we've been innovating and coming up with some interesting additional SaaS add ons that fill in and around.

[Joe Walsh, Chairman & CEO at Thryv]

So, the overall base increased tremendously. So the percentage of centers looks like 12, but when we look at number of SaaS products overall, 16% or 4,000 gains. So pretty excited about what that shows in terms of the progress that we're making. One of our core strengths as a management team is integrating acquisitions with speed and efficiency. This Keap acquisition is our first SaaS platform and something we've been working on for a while and planning for a while.

[Joe Walsh, Chairman & CEO at Thryv]

So it won't come to you as a surprise that we've already crystallized $10,000,000 of EBITDA synergies. We've done this primarily by eliminating redundancies between the two businesses, vendor consolidations and some plans for cost reductions. From a cross sell perspective, the big long term opportunity is the revenue cross sell back and forth and we're working hard getting that set up now and we expect very strong revenue potential to be unlocked over the next couple of years as we cross sell between the two customer bases. We had some pretty exciting product updates in Q4 that I think strategically position us really well as we go into 2025. I'd like to highlight a couple of those for you now.

[Joe Walsh, Chairman & CEO at Thryv]

Reporting Center launched with a PLG motion. This positions us to unlock revenue expansion opportunities and it increases the client satisfaction particularly of our larger accounts. Some of our larger accounts will say to us, we want more powerful reporting. And so we're including reporting center on a kind of a PLG or a product led growth basis and we'll extract revenue down the road. But in the meantime, we've got an initiative to try to sell to a little bit bigger businesses to move ever so slightly up market with our VSP group and reporting center will really assist with that.

[Joe Walsh, Chairman & CEO at Thryv]

We also added AI review response to business center and marketing center. This feature has been really well received by clients and sales paving the way for future innovations leveraging AI. The addition of social media to marketing center added enhanced communication tools for our clients. That's been really well received also. Within the key products, we've had some improvements there as well.

[Joe Walsh, Chairman & CEO at Thryv]

Updated the automation builder which decreased the time to publish an automation by two thirds meaning it takes about a third of the time now to get one set up. And so that was an opportunity there and the Keap team has leveraged that. Also the visual sales pipelines have been streamlined for clients. And so there's a real product improvement there that I think customers within Keap will really appreciate. So with that, I'd like to turn it over to Paul Ralph, our CFO, to discuss our financial performance.

[Paul Rouse, CFO at Thryv]

Thanks, Joe. Let's begin with SaaS. Total SaaS reported revenue was $104,300,000 in the fourth quarter and above guidance, representing an increase of 41% year over year and up 20% sequentially. Full year SaaS reported revenue grew 30% year over year to 343,500,000 Excluding key, drive SaaS business grew 23% year over year in the fourth quarter and 25% year over year for the full year. Breaking this down, our Thrive SaaS revenue was $90,900,000 in the quarter, landing within our guidance range and growing 23% year over year.

[Paul Rouse, CFO at Thryv]

The Keap acquisition contributed $13,400,000 in revenue in November and December 2024, surpassing our guidance range of $11,000,000 to $12,000,000 For the full year, our total SaaS revenue grew 30% to reach $343,500,000 Excluding key, our Thrive SaaS business achieved 25% year over year growth.

[Paul Rouse, CFO at Thryv]

Our

[Paul Rouse, CFO at Thryv]

total SaaS adjusted gross margin has shown significant growth, increasing by six twenty basis points year over year and three seventy basis points sequentially, reaching 76%. Full year, total SaaS adjusted gross margin expanded to 72%, up from 67% last year, a five forty basis point improvement. Importantly, our total SaaS adjusted gross profits grew 53% year over year, outpacing our strong revenue growth. In the fourth quarter, total SaaS adjusted EBITDA increased to $17,300,000 significantly exceeding our guidance range and resulting in an adjusted EBITDA margin of 16.6%. As Joe mentioned earlier, this marks the second consecutive quarter in which our SaaS business has achieved rule of 40.

[Paul Rouse, CFO at Thryv]

In the fourth quarter, we delivered strong SaaS subscriber growth reaching 114,000 subscribers, excluding key subscribers of 15,000. This represents a 73% year over year increase. Total SaaS ARPU for the fourth quarter was $324 including Keep. Drive SaaS ARPU was $313 an increase from the previous quarter while Keeps' ARPU was $424 for November and December. Net revenue retention was 98% demonstrates strong performance and is a significant improvement compared to prior years, underscoring the effectiveness of our land and expand strategy.

[Paul Rouse, CFO at Thryv]

This result is very close to our long term goals of maintaining retention near 100%, which remains a key priority for the business. Additionally, centers per client grew 212% at the end of the quarter compared to 6% in the prior year, further highlighting the traction we're seeing with existing clients. Moving over to marketing services, fourth quarter revenue was $82,300,000 and within guidance. Full year marketing services revenue was $180,700,000 Fourth quarter marketing services adjusted EBITDA was $12,100,000 resulting in an adjusted EBITDA margin of 15% Full year marketing services adjusted EBITDA was $121,200,000 resulting in adjusted EBITDA margin of 25%. The variance in reporting marketing services adjusted EBITDA to guidance in the quarter was primarily due to legacy and operational costs, which the company plans to streamline in 2025, including system related expenses and support staff.

[Paul Rouse, CFO at Thryv]

As indicated at our twenty twenty four Analyst Day, we are committed to decommissioning legacy systems through 2025 and converting many legacy digital marketing services customers onto our SaaS platform. Despite this, our overall EBITDA for the quarter was at the high end of our range of guidance. Fourth quarter marketing services billings were $92,000,000 reflecting a 40% year over year decline. This trend more closely aligns with our strategic direction for marketing services as we continue to convert many of our legacy marketing services clients to our SaaS offering.

[Paul Rouse, CFO at Thryv]

The

[Paul Rouse, CFO at Thryv]

pace of this transition impacts the rate of decline in marketing services billings. As previously disclosed, we are exiting the marketing services business by 2028 with cash flows from the business extending into 02/1930. This will provide the company with ample liquidity to meet its obligations during the transition to a fully fast focused model. Fourth quarter consolidated adjusted gross margin was 69% and full year consolidated adjusted gross margin was 68%. Fourth quarter consolidated adjusted EBITDA was $29,400,000 representing an adjusted EBITDA margin of 16%.

[Paul Rouse, CFO at Thryv]

Full year consolidated adjusted EBITDA was $162,400,000 representing an adjusted EBITDA margin of 20%. Finally, our net debt position was $279,000,000 at the end of the fourth quarter, a decrease of $61,000,000 year over year. Our leverage ratio was 1.63 times net debt to EBITDA. As previously discussed, we made an additional prepayment of 26,000,000 on the new term loan during the fourth quarter, bringing our total amortization paid for 2024 under the new credit facility to $78,800,000 This eliminates the need for an additional payment until December 2025. This proactive debt repayment underscores our commitment to financial discipline and maintaining our healthy balance sheet.

[Paul Rouse, CFO at Thryv]

We intend to continue prepaying debt this year, reinforcing our focus on strengthening our financial position. Finally, on leverage, we remain committed to further deleveraging of the business by the end of twenty twenty five. However, as we have outlined at our December Analyst Day, net leverage will temporarily increase in the first two quarters of twenty twenty five due to the prepayment of key vendor contracts, decommissioning of legacy systems, corporate bonus payments and the timing of direct republications, which follow a twenty four month cycle as we position the marketing services for exit in late twenty twenty eight. Since leverage is calculated on a trailing twelve month basis, it will be impacted by this publishing schedule. As a result, we expect significant deleveraging in the third and fourth quarters of twenty twenty five and on a full year basis.

[Paul Rouse, CFO at Thryv]

Turning to our outlook for 2025. For the first quarter, we expect total SaaS revenue to be in a range of $107,500,000 to $110,000,000 For the full year, we expect total SaaS revenue in the range of $464,500,000 to $474,000,000 which implies drive SaaS revenue growth of 35% to 38%. We expect key to contribute between $75,000,000 to $78,000,000 for the full year consistent with what we announced at our recent Analyst Day. For the first quarter, we expect SaaS adjusted EBITDA in the range of $9,000,000 to $9,500,000 For the full year, we expect SaaS adjusted EBITDA to be in the range of 69,500,000 to $71,000,000 which implies SaaS adjusted EBITDA margin of 15%. For the full year, we expect marketing services revenue to be in the range of $310,000,000 to $314,000,000 dollars Quarterly guidance ranges for marketing services are available in our investor presentation, which can be found on our investor site.

[Paul Rouse, CFO at Thryv]

For the full year, we expect marketing services adjusted EBITDA to be in the range of $77,500,000 to $78,500,000 With that, I'll turn it back over to Joe.

[Joe Walsh, Chairman & CEO at Thryv]

Thank you, Paul. As we look ahead to 2025, I'm happy to share that including Keap, our SaaS business will be 60% of total revenues. That's a big milestone for us. At our Analyst Day recently, we outlined what some of the key inflection points coming up will be. One of

[Joe Walsh, Chairman & CEO at Thryv]

them is that in 2026,

[Joe Walsh, Chairman & CEO at Thryv]

the majority of our EBITDA will come from SaaS. So that really kind of helps focus us on the fact that we're building a profitable SaaS business. And then in 2027, we anticipate a return to overall top line revenue growth as we continue to build out our platform and gain more and more traction, deliver more and more value for clients. We are proud of the fact that we were recently given an important award as best software by G2. This is a third party kind of validation of the progress that we're making and it echoes what we hear from our customers all the time and that's that our software is easy to use, it's helping them run their business more efficiently, helping them streamline operations and importantly helping them grow.

[Joe Walsh, Chairman & CEO at Thryv]

And so we intend to continue to innovate and improve and expect to win more awards in the future, but that was really good external validation. So as we look now and sort of finish up 2024 and look back on what happened, we're maturing as a software business. Our platform is getting built not quite done yet, but it's getting built out, getting stronger and our ability to sell to a little bit larger businesses is coming. That's been one of our goals, a little larger ACV. We think there's a little lower churn there.

[Joe Walsh, Chairman & CEO at Thryv]

We've already got low churn, churn, but we think we can do even better as we sell to a little bit larger businesses. We think that that's worth the investment. And as our platform is being more fully built out, we're really focusing on leaning into the growth side of business, helping small businesses grow, being an industry leading marketing and sales platform, helping them to deepen their relationship with their customers. And so our dedicated team I think is delivering innovative technology and I'm confident that we can continue to drive sustainable profitable growth and maximize shareholder value. So we appreciate your ongoing support and we look forward to the many opportunities that lie ahead in 2025.

[Joe Walsh, Chairman & CEO at Thryv]

With that operator, we can open the line for questions.

[Operator]

And your first question comes from the line of Jason Kreyer with Craig Hallum. Please go ahead.

[Jason Kreyer, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Wonderful. Thank you, guys. So look, I know it's early days on the Keep side of things, but just wondering if you could give some early commentary on what the cross sell process looks like and in getting those customers into some of the Thrive centers?

[Joe Walsh, Chairman & CEO at Thryv]

Sure. The act we just said, you know, was just, at Halloween. So we just had a couple of months to work on it. So everything is not fully complete, but we do have, some cross sells beginning. The process is underway.

[Joe Walsh, Chairman & CEO at Thryv]

And, you know, it really goes two ways. It's it's some of the key customers that are coming in through their funnel, through their pipeline, that come in and learn about the automation, say to the, representatives that are working with them, you know, I really want some growth. I really wanna generate leads. I really wanna build my list. And that really is a natural conversation to talk to them about marketing center, our our our Thrive products and so that works well.

[Joe Walsh, Chairman & CEO at Thryv]

On the, on the Thrive side, we we have I'd say one of our biggest problems is we generate huge numbers of leads for our small business customers and some of them just sort of fall on the floor. They don't really get followed up on, as well as as they should or we'd like them to. And so putting in place a sales pipeline, a funnel, a an automated process that continues to follow-up with those customers, make sure none of them are lost or missed, I think will add tremendous value to, you know, our hundred thousand Thrive customers on that side of the house. So our sales organization is excited about that, and, you know, the the the the sort of the plumbing and wiring for all that is being put together and the groups are being trained and that will that will kick off and begin to happen as the year plays out. So, we've had a couple of early sales already just sort of with, demand was strong and we figured out how to do it.

[Joe Walsh, Chairman & CEO at Thryv]

But the broad process will be picking up very soon. And, we expect about 5,000,000 of cross sell back and forth between the customer bases this year. That would be a little bit back weighted just just because it takes a minute to get it all set up and going. But there's definitely in terms of the depth of demand, the, our business advisers are really excited to get their hands on it to take it to take the the the key part of nation into the big drive customer base.

[Jason Kreyer, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Okay. Thanks, Joe. Maybe similar topic. As you're targeting these larger businesses, just curious if there's anything different with that process, like if there's any changes in the selling cycles? And then do you have any tangible evidence yet of the ability to cross sell into that group?

[Jason Kreyer, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Or is that maybe is it too early to tell there?

[Joe Walsh, Chairman & CEO at Thryv]

Well, look, I want to be clear, about this. We're not talking about going to really big companies, like 200, five hundred employee companies. We're talking about going up from a three employee business to an eight employee business. So it's not that different. I would say the biggest difference that we hear when we get into a little bit larger you know, we have a lot of service based businesses in our customer base.

[Joe Walsh, Chairman & CEO at Thryv]

So the difference here is between a guy with one truck on the road and a guy with five trucks on the road. That that's sort of the the difference here. And what we find when we get into the kind of ten, fifteen employee businesses that we really target and really cover is they they're looking for more powerful reporting. You know, our our Thrive software is, you know, on the continuum between complicated and really powerful and simple and easy to use. We are closer to simple and easy to use.

[Joe Walsh, Chairman & CEO at Thryv]

And so one of the things up until now it has lacked is really powerful reporting. And I can say the same for Keap. Keap tools work really well but they don't have, as powerful reporting as a lot of their customers would like. So the reporting center which we rolled out recently is a big answer to that and and will meaningfully improve client satisfaction for the larger more complex businesses that are in our current customer base. And as we talk to customers in the future that have 15 or 18 employees, they're a little bit bigger, they have a manager, they have some management people that that don't that aren't just out there putting the roofs on or whatever.

[Joe Walsh, Chairman & CEO at Thryv]

They'll be able to look at reports and use reports to to to run their company, to run the software in a way that we think will will make us much more attractive to those little bit bigger businesses. That that was a, I guess, a shortcoming up until now when we got into bigger businesses. We they were they were giving us the feedback. Look, we we're really looking for more reporting than this. So that's part of the reason that we prioritize building reporting center and something that the key product development team are jumping up and down excited about, you know, getting reporting center, for for their offerings as well.

[Operator]

Your next question comes from the line of Scott Berg with Needham. Please go ahead.

[Scott Berg, Managing Director at Needham & Company]

Hi, everyone. Nice quarter here. I guess a couple of questions for me. Joe, let's talk, I guess, sales in the fourth quarter. You guys obviously had a lot going on with the acquisition and whatnot.

[Scott Berg, Managing Director at Needham & Company]

But your customer adds or I guess your net customer adds on the core SaaS business declined a little bit from what you saw in Q2 and Q3. And I know there's a little seasonality in the business there. But did you see anything different there around, I don't know, buying appetites from your customers or how you guys are going to market versus what was really a strong middle part of the year?

[Joe Walsh, Chairman & CEO at Thryv]

Look, Scott, the holidays are always a little soft for us. Our small businesses are they almost are on the continuum between enterprise and consumer. They're almost closer to consumer. So they literally go on vacation or have, you know, had things going on in their lives where it's hard to even pin down. So, Thanksgiving through kind of early January, it's just always a little harder for us to be as productive as we'd like with our Salesforce, to be honest with you.

[Joe Walsh, Chairman & CEO at Thryv]

So that's kind of that always happens. So, in terms of you trying to ask me kind of about the macro and get a read there, which is what I'm sort of hearing you have. I think immediately following the election, I think that there was a sense of a positive sense among small businesses that we were going to have a more business friendly administration and that the climate would be better going forward. And I think that that's still there, but there's a layer now of concern about tariffs and about potentially inflation and things that feel a little softer to people out there. And I think there's some concern just because there's so much going on.

[Joe Walsh, Chairman & CEO at Thryv]

It's not negativity really, just a little bit more of a caution than just a pure positive feeling that was there in the immediate two months after the election. So I would say overall, and I've said this to you before, I don't really feel like our results ride on small business sentiment or consumer sentiment at all. It's really down to our own execution. But you guys often ask me about what's the macro, what's the climate. And I would say it's met.

[Joe Walsh, Chairman & CEO at Thryv]

It's not bad, but there is just a little bit of extra concern now out there in the environment and it does not really impact on our results.

[Scott Berg, Managing Director at Needham & Company]

Understood. Certainly understand the seasonality in your fourth quarter, it's apparent in some of your historical metrics as well. From a follow-up, Paul, the Keap acquisition outperformed your expectations in Q4 by, I'll call it, dollars 2,000,000 round number roughly, yet you maintained the fiscal 'twenty five contribution from that business. I guess what drove the upside in the two months that you had it? And then is there any follow through on that?

[Scott Berg, Managing Director at Needham & Company]

And how we should think about maybe upside opportunity for that key segment here in fiscal 'twenty five?

[Paul Rouse, CFO at Thryv]

Yes. We were a bit conservative in estimate. We just got the business and we wanted to make sure we delivered. So it was conservatism that led to that over performance. I think we're going to stay with our because integrating businesses are hard and for caution, we're going to stick with our estimates that we gave in the Analyst Day between 75 to 78 for the year from the key business.

[Paul Rouse, CFO at Thryv]

We think that's the right number to go with right now.

[Scott Berg, Managing Director at Needham & Company]

Excellent. Thanks for taking my questions.

[Joe Walsh, Chairman & CEO at Thryv]

Thanks, Scott.

[Operator]

Your next question comes from the line of Arjun Bhatia with William Blair. Please go ahead.

[Linda Lee, Analyst at William Blair]

Hi. Thanks for taking the question. This is Alinda Lee here for Arjun. First question is, what are the feedbacks from customers who have experienced the cross sell between Thrive and KeyB? And what are you learning from those customer conversations so far?

[Joe Walsh, Chairman & CEO at Thryv]

So it's very early days. We are only really just getting that process started. I mentioned earlier some of the keep leads if you will, people coming in to Keap, you know, are trying to figure out how to grow their business. And Keap's offering is really kind of the second step in growth. You need to have a list.

[Joe Walsh, Chairman & CEO at Thryv]

You need to have customers that you can then nurture and put through Keap's automation process. Keap doesn't isn't really advertising or really won't kind of go generate that list or generate leads for you. And so Thrive's marketing center is actually designed to do that and is really helpful in doing that. So that's been really cool for them. They've been able to capture some leads which otherwise would have just been you know gone away before.

[Joe Walsh, Chairman & CEO at Thryv]

And so that we've had great feedback there. And I think as they get some success with winning new business and building up their list, they will naturally be able to add the automation to nurture and manage their sales pipeline. So it's kind of a hand in glove perfect scenario. On the Thrive side of the house, we're already bringing them leads. We're already building their list and all that.

[Joe Walsh, Chairman & CEO at Thryv]

And so we will soon begin to sell the automation to those customers. And another thing it's permitting us to do is customize and build some vertical automation so that we can have a very successful HVAC guy or a very successful roofer help us build automations for their industry that we can then go to thousands of other HVAC or roofing guides and really say, look, this is being used by one of the leaders in your industry and it's got all the automations designed just the way you would want them for your for your business. You can, of course, customize them. But this is turnkey and ready to go. And so that's a big piece of what we're doing going forward because, while we are a horizontal software, we've had a tremendous amount of success in in a lot of verticals and, you know, further customizing for those verticals is something that we really were excited about doing and Key permits that and lets us do that in a really big hurry.

[Joe Walsh, Chairman & CEO at Thryv]

So that's something that I could tell you our sales organization is really excited about getting those optimized automation to take to their to their clients and feel like there'll be a very strong appetite for them.

[Linda Lee, Analyst at William Blair]

Awesome. And kind of moving broadly, any changes to the go to market to achieve the goal of returning overall business growth by 2027?

[Joe Walsh, Chairman & CEO at Thryv]

Yes. I mean, the acquisition of Keap added a really significant partner channel. We have a thousand partners in that partner channel. And we had a small partner effort within Thryv, but we were honestly not that great at it. And buying a proven, you know, two decade old really well oiled, well running partner channel, is a meaningful adder for us to enhance our sales channel on to the more sophisticated kind of businesses that acquire their software through partners.

[Joe Walsh, Chairman & CEO at Thryv]

The other piece it does is it really amplifies our international efforts into markets that we don't currently have a footprint. And so yes, I do think that, that's a big amplifier of our sales efforts and will contribute mightily by 2027 to the overall top line growth that we anticipate getting back to.

[Linda Lee, Analyst at William Blair]

Awesome. Thanks, Phil.

[Joe Walsh, Chairman & CEO at Thryv]

Thank you.

[Operator]

Your next question comes from the line of Daniel Moore with CJS Securities. Please go ahead.

[Daniel Moore, Partner - Director of Research at CJS Securities]

Good morning. I appreciate the color and thanks for taking the questions again. I guess two quick ones. One, you reiterated it in the slide deck, great to see the lines, so to speak, cross on revenue and SaaS making up majority of revenue now. Just update us on your confidence that the lot and maybe any greater specificity in terms of when you expect the lines to cross on EBITDA.

[Daniel Moore, Partner - Director of Research at CJS Securities]

Just wondering whether you still feel like fiscal twenty twenty five will mark roughly the bottom for EBITDA and when we start to think about overall growth there?

[Joe Walsh, Chairman & CEO at Thryv]

Sure. In our investor deck, there's that I think great slide that shows the sort of inflection point. We're anticipating that majority of our EBITDA source of EBITDA in in '26 will be coming from the SaaS business. So it will actually be or could take the baton and it's not like marketing services still won't be making a whole lot of money. It will, but but SaaS will actually eclipse it.

[Joe Walsh, Chairman & CEO at Thryv]

And then the following year in 2027, we believe that the the now, you know, that much bigger SaaS business will be able to deliver overall top line growth in the business even as marketing services continues to decline rapidly. So that's sort of how we see it playing out. As far as trying to park it all the way down to like what quarter that happens or whatever, I think that would be a little too clever

[Joe Walsh, Chairman & CEO at Thryv]

for

[Joe Walsh, Chairman & CEO at Thryv]

us to try to do right now. You know, we do have models that we're looking at them and we think about it, but I'm not sure that would be appropriate for me to, you know, go there and be take it down tighter than that.

[Daniel Moore, Partner - Director of Research at CJS Securities]

Understood. And then maybe just speak to the cadence of the launch of additional centers over the next, say, one to two years or focus more on integrating and capturing revenue synergies from Keap? Thanks.

[Joe Walsh, Chairman & CEO at Thryv]

Yeah. We we have already, you know, sort of pre announced at our Analyst Day, what the next center is, it's workforce center. We've had a demand there for time tracking and paying of employees and contractors. And that's, you know, something that we've been building for a couple of years and, actually have it in in sort of alpha level now. And so it it we're confident that that will, come out this year.

[Joe Walsh, Chairman & CEO at Thryv]

You know, probably won't add any revenue this year, probably the revenue adds come the year after. As far as additional centers going into '26 and '27, we've stopped short of promising any any further centers. Now, it doesn't mean we won't add any. But what we what we are going to be really focused on is making it all really work well together, making sure the platform of tools that we have, is interoperable with other things in the market. And in the case of Keith coming in and it's, silky smooth working between everything, the UIs are integrated, everything, you know, just works well.

[Joe Walsh, Chairman & CEO at Thryv]

We're all looking we're all looking for Frankenstein here. We want a really easy to use platform. You know, one of the things if you're dealing with very small businesses, you have to make it kinda consumer grade. It's gotta be really simple and clear. You you you can't challenge people with hard to use tools.

[Joe Walsh, Chairman & CEO at Thryv]

So that's that's gonna be really important for us. And we, have not promised, you know, more centers each year after that. You know, some of our innovations may come in in in the form of, you know, add ons or or, you know, other other product offerings that maybe don't rise to the level being a whole separate center. We had an initial vision for the platform we were trying to build which workforce center, you know, puts the big lanes on. And now we've got a lot of fill ins to do.

[Joe Walsh, Chairman & CEO at Thryv]

So I would not guide you that you'll see, you know, another massive center coming out each of the next few years, just us continuing to innovate and make everything work better together.

[Daniel Moore, Partner - Director of Research at CJS Securities]

Understood. Appreciate it.

[Joe Walsh, Chairman & CEO at Thryv]

Thanks, Dan.

[Operator]

Your last question comes from the line of Zack Cummins with B. Riley Securities. Please go ahead.

[Zach Cummins, Senior Research Analyst at B. Riley Securities]

Hi, good morning. Thanks for taking my questions. Joe, I wanted to ask about the ARPU and just the core Thrive SaaS business. It was nice to see that sequential uptick from Q3 to Q4. Are we approaching the trough in terms of where you think ARPU will be for that business?

[Zach Cummins, Senior Research Analyst at B. Riley Securities]

I know it can fluctuate just given adding new marketing legacy marketing services customers versus layering in additional products. So just curious of how you're thinking about that progression of the ARPU for the core business.

[Joe Walsh, Chairman & CEO at Thryv]

You're right. The number can be noisy and bounce around a little bit based on the conversion activity working you know, with the marketing services folks. So it it that that has been a bit a bit noisy. But, I do feel like if I look at the at the whole of '25, that one of the stories when we look back at the end of it will will have been very strong progress on our food growth. I think, you know, we we spent the last couple of years really building a very big client base, 14,000 whatever clients we include Keap.

[Joe Walsh, Chairman & CEO at Thryv]

And I think what we want to do now and what we're what we're, you know, asking our sales organization and our marketing team to do is really spend time with that installed base and make sure that they are engaged with the product, bedded down, using it, and, that we're meeting more and more of their needs. So they don't have to go elsewhere. We we wanted to do it with us. And so not to be crap but upselling them, basically working with them to get more products in place. I think that one of the slides in the deck talks about, you know, the significant progress that we've made so far on, you know, adding additional SaaS products to existing customers.

[Joe Walsh, Chairman & CEO at Thryv]

I think this year, '25 will be a year where that's a beacon. That's like a big focus, within marketing and sales in the company. And so I do expect that'll be ARPU growth will be probably the big thing for 2025.

[Zach Cummins, Senior Research Analyst at B. Riley Securities]

Got it. Got it. And I think you're already partially addressing my one follow-up question. But can you speak to just some of the other paid SaaS products that you've crafted and are selling within the base now aside from just paying for additional centers and driving that percentage upward?

[Joe Walsh, Chairman & CEO at Thryv]

Yeah. We are trying to kind of fill out the offering with an eye toward helping a small business grow. You know, our background, our legacy since 1886 is linking buyers and sellers together and we still own and control some of the most the biggest and most powerful directory sites around the world and we have a very large network of directory partners for which we we we work and we we sort of monetize their traffic. And so we're trying to bring all of that to bear to, you know, make the phone ring, bring inbound inquiries to our customers. And, you know, what we find is that customers will stop and really have a conversation with you if you can help them grow, if you can make their phone ring, if you can bring jobs in, if you can help them get new customers.

[Joe Walsh, Chairman & CEO at Thryv]

And so we've been building products to help them do that and reaching back to some of our legacy capabilities, if you will, to do that. One of the things we added last year was a product we call, you know, growth packages. And these growth packages, you know, when when they they go with marketing center, so they're an add on marketing center, you know, just, you know, lights you up and help you help you bring in that inquiries in. And and they did it was really working very, very well, both from a from a result for our customer standpoint, but also from a sales standpoint. I mean, our Salesforce gets it and has been really great at selling that.

[Joe Walsh, Chairman & CEO at Thryv]

And so that's part of why we've broadened the definition. Instead of just additional centers, we we we made additional products because growth packages aren't a they aren't a full new center. They're more of a, you know, an add on new marketing center. But, they have made a big difference and, you know, I think are are helping us really stake out ownership of that growth category. You know, there's a lot of software out there to help you with CRM type stuff and back office type stuff, tracking your trucks when they drive around and all this kind of stuff.

[Joe Walsh, Chairman & CEO at Thryv]

And there's a lot of that out there. But, something that a soft that a small business can embrace that will actually help them grow and then help them really track how that growth is working. You know, there's the same as John Wanamaker quote from last century where he said, I know half of all my advertising is wasted. I just don't know which half. Marketing center addresses that.

[Joe Walsh, Chairman & CEO at Thryv]

It allows you to instrument and know absolutely everything that you're doing and how it's working. That yard sign that you put in front of, you know, a a house that you're you're putting siding on, is that actually working? Well, marketing center will tell you exactly how many calls are generated and then link that to your results whether you sold them or not. You could the the the phone number that's on the side of your truck, you can figure out if that's working. Everything that you're doing, you could track.

[Joe Walsh, Chairman & CEO at Thryv]

Are people bouncing out of your website? You can heat map your website and figure out what's working and what isn't. Really, every piece of your marketing. And so to have that kind of absolute transparency with marketing center and then have tools that actually that actually drive leads into it, you know, we we think is a really valuable place to to fit within the market, and customers are really responding well to it. And then the coup de grace is you come along behind it and you add the key product where you put a sales pipeline and automation to that funnel to make sure that none of those leads are spilled on the ground.

[Joe Walsh, Chairman & CEO at Thryv]

And you really are starting to cope with gas here. You got a really great growth oriented package. And then for the businesses that they succeed and they grow and they get a little bit bigger, you know, we obviously have a CRM, estimates, invoice, billing payments, we can help you manage social media. We now have got powerful reports that you can track, you know, how it's all working and and have a daily report you can run your business off almost like a a small business version of Domo, like something really simple that helps you run your business. And soon you'll be able to also pay your employees and keep track of contractors and hours and so on.

[Joe Walsh, Chairman & CEO at Thryv]

So we're really building almost like a, you know, a complete platform to run a small business on. And it's really and this is really important. This is where the market is now. If we look back five years, most small businesses were not in the cloud. And if they were, they were just using a little narrow point solution.

[Joe Walsh, Chairman & CEO at Thryv]

They were maybe, you know, bringing in a loyalty tool or some little thing to help with social media or maybe a payment tool. The question that's on their list now is rather than this piecemeal point solution thing, is there a more complete platform that I could sign up for that I can have one login? I could show my employees how to use it. I could set permissions within this one thing and I could have this more almost enterprise wide for my 12 employees. This is it, you know, tool that I haven't had access to on my mobile device.

[Joe Walsh, Chairman & CEO at Thryv]

When I'm at the kids soccer game, when I'm away for the weekend, I can track everything. I know what's going on. I get rid of some of the paper in my life, and I'm actually able to run my business. And the whole thing is, you know, less than $1,000 a month to run my business on. And that's the spot we've been aiming at.

[Joe Walsh, Chairman & CEO at Thryv]

And I'll admit, we might have been early. We were out there trying to sell a complete platform to people that were only ready for point solutions in the early stages of this. But now the small businesses are moving toward this wanting this more complete solution. And I think we have the right product for the right time. I think the second half of this decade will be a whoosh big wave of demand for what we offer.

[Joe Walsh, Chairman & CEO at Thryv]

And I think that we're really well positioned. We're working with great urgency to finish our platform, finish building it out and work out all the little kinks and burs and problems. So it's super, super easy to use and very interoperable with everybody else's tools. But we think we will capture an enormous amount of demand as it comes. And we're super excited about it.

[Zach Cummins, Senior Research Analyst at B. Riley Securities]

Got it. Appreciate all the color and congrats on the strong results.

[Joe Walsh, Chairman & CEO at Thryv]

Thank you.

[Operator]

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Participants

Executives

• Cameron Lessard, Vice President, Corporate Development and Strategy
• Joe Walsh, Chairman & CEO
• Paul Rouse, CFO

Analysts

• Jason Kreyer, Senior Research Analyst at Craig-Hallum Capital Group LLC
• Scott Berg, Managing Director at Needham & Company
• Linda Lee, Analyst at William Blair
• Daniel Moore, Partner - Director of Research at CJS Securities
• Zach Cummins, Senior Research Analyst at B. Riley Securities