Thryv Q2 2025 Earnings Report

Thryv EPS Results

• Actual EPS: $0.31
• Consensus EPS: $0.41
• Beat/Miss: Missed by -$0.10
• One Year Ago EPS: $0.15

Thryv Revenue Results

• Actual Revenue: $210.47 million
• Expected Revenue: $203.87 million
• Beat/Miss: Beat by +$6.60 million
• YoY Revenue Growth: -6.10%

Thryv Announcement Details

• Quarter: Q2 2025
• Date: 7/30/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, July 30, 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 Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: We’ve cleared the financial pinch point, cutting two years of amortization payments in 13 months, reducing net debt by $24 M to a 2.2x leverage ratio, and setting up free cash flow generation.
• Positive Sentiment: SaaS delivered $115 M in Q2 revenue (+48% YoY), 74% adjusted gross margin, a record 20% adjusted EBITDA margin, 106 K subscribers (+25%), $352 ARPU and 103% net revenue retention.
• Negative Sentiment: Marketing Services billings fell 38% YoY to $78.4 M as legacy offerings are decommissioned; the segment will wind down by 2028 despite Q2 revenue of $95.5 M and 29% EBITDA margin.
• Positive Sentiment: Full-year guidance was raised, with SaaS revenue now expected at $460–465 M and adjusted EBITDA of $70.5–73.5 M, plus higher Marketing Services revenue ($323–325 M) and EBITDA ($78.5–80.5 M).
• Positive Sentiment: New offerings like Thrive for HVAC and the Workforce Center payroll tool are live, aiming to upsell existing clients, boost ARPU and reduce churn.

Presentation

[Operator]

Good morning. Thank you for attending today's Thrive Holdings Second Quarter twenty twenty five Earnings Conference Call. My name is Megan, and I'll be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to turn the call over to Cameron Lessard with Thrive Holdings. Please go ahead.

[Cameron Lessard, SVP - Corporate Development, Strategy, Treasury, & IR at Thryv]

Good morning, and thank you for joining us for Thrive Holdings second quarter twenty twenty five 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 is included in our earnings release and SEC filings.

[Cameron Lessard, SVP - Corporate Development, Strategy, Treasury, & IR at Thryv]

Today's presentation will also include non GAAP financial measures, which should be considered in addition to, but not a substitute for, our GAAP results. Reconciliations of these measures can be found in our earnings release. As a reminder, on this call, SaaS revenue reflects the combined performance of Thrive and Keep. We will only specify Keep's performance when discussing its revenue contribution for the quarter and fiscal year. With that, I'll turn the call over to Joe Walsh, Chairman and CEO. Joe?

[Joe Walsh, Chairman & CEO at Thryv]

Thank you, Cameron, and good morning, everyone. I will highlight a few items, and Paul will take you through the numbers. We did it. We made it through the pinch point.

[Joe Walsh, Chairman & CEO at Thryv]

At our Investor Day in December, we laid out a pinch point that was approaching for us, and investors were understandably concerned to see our leverage ratio rising. It was a challenging setup. You had accounting related pressure due to our publication schedule with the move from eighteen to twenty four months, leaving a few less directories publishing in the early part of the year. And you had our decommissioning of legacy systems tied to marketing services, which added cost in the short run, but simplified our business for the long run. You had us digesting Keap and the challenges there.

[Joe Walsh, Chairman & CEO at Thryv]

And you had the last of our high amortization payments that needed to be made. So there was a reason to focus on it. But we've achieved that. We're out the other side of it now. We've made those amortization payments.

[Joe Walsh, Chairman & CEO at Thryv]

And from this point forward, our business begins to the ratio begins to improve in Q3 and Q4 moving out. We have lower amortization payments ahead of us now and we're well ahead on those payments. So we now will have a real opportunity to have some free cash flow left in the business. With each passing week, with each passing month, we're going to begin to actually develop a little bit of leftover free cash flow in the business and be able to make decisions for the first time about how to allocate that. So mark it down in your calendar there.

[Joe Walsh, Chairman & CEO at Thryv]

We're past the pinch point. That's behind us now. In terms of our results, this transition is continuing to go really well. Our Rule of 40 ways are continuing. We delivered in this most recent period around 20% EBITDA margins and over 20% growth, so continuing to be a rule of 40 type business.

[Joe Walsh, Chairman & CEO at Thryv]

As expected, our ARPU for our customers is rising. Currently, it's at about 4,200 on an annual basis. And as we said, we see that going from $4,000 to 8,000 over the next few years. Some evidence that we see progress here, our seasoned clients are spending $5,400 a year. And clients from our largest sales channel, which is our U.

[Joe Walsh, Chairman & CEO at Thryv]

S. Direct channel, are spending about $6,000 a year. So we're definitely on course with more products now within the platform and customers buying more and more products. We're seeing really good progress there. We've spoken about net revenue retention that we expect it to hang out right around 100%.

[Joe Walsh, Chairman & CEO at Thryv]

It was again this period a little over 100% at 103%. And the clients buying multiple products increased to 19%. So really good progress there on on working with the existing clients and adding more. So with that, let me turn it over to Paul and let him take you through the numbers. Paul?

[Paul Rouse, CFO, Executive VP & Treasurer at Thryv]

Thanks, Joe. SaaS reported revenue was 115,000,000 in the second quarter and met the top end of our guidance range, representing an increase of 48% year over year. Keep contributed $17,700,000 in the second quarter. Excluding Keep, Thrive's SaaS business grew 25% year over year. SaaS adjusted gross margin increased four thirty basis points year over year, reaching 74%.

[Paul Rouse, CFO, Executive VP & Treasurer at Thryv]

In the second quarter, SaaS adjusted EBITDA increased to $23,400,000 exceeding guidance and resulting in a record adjusted EBITDA margin of 20%. This performance underscores the progress we are making in scaling a profitable and durable software business. As we stated last quarter, the return of a strong print quarter helped reverse the temporary cost allocation headwind with more shared expenses now shifting back to the marketing services segment. This will continue to normalize over time, particularly as we transition more print publications to a twenty four month cycle, bringing greater consistency and visibility across the business. We ended the second quarter with 106,000 SaaS subscribers, including 14,000 from Keep, representing a 25% increase year over year.

[Paul Rouse, CFO, Executive VP & Treasurer at Thryv]

With a large and established customer base now in place, our focus is on increasing spend per customer by driving adoption of more products and solutions, especially among our high value clients and larger businesses. This approach meaningfully expands SaaS lifetime value and is a more efficient driver of profitability. In the second quarter, our overall SaaS ARPU reached $352 with Thrive at $340, up sequentially, and keep ARPU holding strong at $431 We see continued opportunity for ARPU expansion through the second half of the year, supported by our broad platform and our redesigned compensation plan that incentivizes increased monthly recurring revenue. We continue to be over 100% NRR, achieving 103% this quarter. Additionally, clients with two or more Thrive SaaS products increased to 17,000 at the end of the second quarter compared to 13,000 in the prior year.

[Paul Rouse, CFO, Executive VP & Treasurer at Thryv]

Thrive centers per client also grew to 15% at the end of the second quarter compared to 10% in the prior year, further highlighting the traction we are seeing with existing clients. This kind of expansion, more products, more centers, more value is core to our growth strategy and is a key driver of SaaS lifetime value. Moving over to Marketing Services. Second quarter revenue was $95,500,000 and above guidance. Second quarter Marketing Services adjusted EBITDA was $27,800,000 resulting in an adjusted EBITDA margin of 29% and just above guidance.

[Paul Rouse, CFO, Executive VP & Treasurer at Thryv]

As anticipated, this quarterly performance is subject to the dynamics of the print schedule, which performed better than expected and returned to normalized levels starting in the second quarter. Second quarter marketing services billings totaled $78,400,000 down 38% year over year, reflecting the intentional shift in our strategy as we continue to initiate upgrades of legacy digital marketing services products for clients to our SaaS platform. The decline will persist, but at a managed pace. We remain on track to exit marketing services by 2028 with cash flow lasting through 02/1930, ensuring strong liquidity as we fully transition to a pure play software business. We ended the second quarter with net debt down $24,000,000 to $274,000,000 bringing our leverage ratio to 2.2 times, ahead of expectations.

[Paul Rouse, CFO, Executive VP & Treasurer at Thryv]

Importantly, during this period, we made two additional quarters of required amortization payments, effectively eliminating two years of required amortization under our new term loan facility in just thirteen months. So we are paid through until the 2026. This achievement enables us to step down to a lower required amortization of $35,000,000 per year going forward, significantly increasing the flexibility within our capital structure. With strong print quarters expected ahead, we anticipate leverage to step down significantly as revenue recognition ramps and cash flow improves. Turning to our outlook for 2025.

[Paul Rouse, CFO, Executive VP & Treasurer at Thryv]

For the third quarter, we expect SaaS revenue in the range of $116,000,000 to $117,000,000 For the full year, we are updating our SaaS revenue to a range of $460,000,000 to $465,000,000 For the third quarter, we expect SaaS adjusted EBITDA in the range of 18,500,000 to 19,500,000.0 For the full year, we are raising SaaS adjusted EBITDA guidance to a range of $70,500,000 to $73,500,000 For the full year, we are raising our marketing services revenue guidance to a range of $323,000,000 to $325,000,000 For the full year, we are raising our marketing services adjusted EBITDA guidance to a range of $78,500,000 to $80,500,000 With that, I'll turn it back over to Joe.

[Joe Walsh, Chairman & CEO at Thryv]

Thanks, Paul. Before we wrap, I want to reiterate our conviction that we are on a good path. The business is progressing nicely. The modest adjustment in SaaS guidance has isolated the softness in the Keep business, specifically within the demand generation side of the Keep business. We didn't love the economics that were there.

[Joe Walsh, Chairman & CEO at Thryv]

And as we were facing the pinch point, we took the opportunity to kind of cut costs there and didn't really invest in those sales because they weren't as profitable on a lifetime value to cost of acquisition basis. But the Keith business is helping us tremendously across the SaaS business, and I want to take you through that in just a minute. Before that, I also want to comment that please note that we increased our SaaS EBITDA target. So we are delivering really where it counts. I want to talk about the Thrive for HVAC.

[Joe Walsh, Chairman & CEO at Thryv]

We recently announced Thrive for HVAC, and this is a product that we worked very closely with a very successful large HVAC business and design automations by HVAC for HVAC using Keep's powerful automation tools. You know, one of them, I guess, sort of knocks against Thrive might be the well, Thrive is horizontal. They have horizontal software. That's how they got to over a 100,000 subscribers so fast because they're working horizontally. What we're doing now is working to deepen our engagement by going deeply vertical in our most powerful verticals where we've had the most success.

[Joe Walsh, Chairman & CEO at Thryv]

And HVAC is a real big winner for us. And so, you know, we've rolled this out. We already have an impressive number of sales so far coming in from that HVAC vertical, and we'll be following with more verticals, working with a successful leadership company in each vertical, sort of mapping processes, and then rolling that out to more broadly. And I wanna be clear. This is not the back office.

[Joe Walsh, Chairman & CEO at Thryv]

So we're not doing the, you know, the the the filters and the wing nuts and tracking the trucks. This is a focus on the the marketing side, the outside, you know, managing the the the funnel of how you get work, how you get repeat work, how you get followed up. So, actually, in in some of these larger accounts, we're working with ServiceTitan or with some of the other back office tools. We're working closely with them and there's a connection between the two. So we've had a lot of success with this and we're excited about strengthening our vertical positioning going forward.

[Joe Walsh, Chairman & CEO at Thryv]

We've been asked about growth after the What happens when you get done with the zoo? And I just want to comment briefly on this. We are working on a variety of initiatives for 2026 and beyond, starting with a free trial motion for one of our products, which will be kind of a product led growth motion. We've been leaning into the new partner channel that we acquired from Keep investing in that. We believe that that will bear a lot of fruit in the future.

[Joe Walsh, Chairman & CEO at Thryv]

We're excited about the feedback we're getting from the partners and the partner channel. We have a franchise channel that we're leaning into investment there, and we believe that there will be a lot of application. And the key tools have added a lot there in terms of being able to provide interesting offers for those franchises. We have an agency channel. We own an agency called DNI.

[Joe Walsh, Chairman & CEO at Thryv]

We work with some large national brands. And we've had some success and expect a lot more success going forward working with those agency clients and beginning to automate some of their processes with the new tools that we have. So we believe that there's many vectors to our growth in the future, and we actually see a smaller percentage of our sales and our growth in the future coming from our direct channel and more broadening out into other channels as well. We also rolled out a new product we just recently announced, and that's Workforce Center. Workforce Center is designed to help a small business pay their employees and contractors in an easy way, stay up on all their tax compliance and all the rules that they need to follow.

[Joe Walsh, Chairman & CEO at Thryv]

And it's a it's a scalable solution that whether you're hiring your first employee or you have a whole bunch of employees, you're able to offer. And what most small businesses find is that there's plenty of payroll operators out there, but they really want people to have lots of employees. It's kind of hard if you just have a couple. And with Thrive's workforce center, it's ideally suited for our small business customer. It integrates right into your Thrive platform.

[Joe Walsh, Chairman & CEO at Thryv]

So you can just work right within the platform, and you don't have to log in or out. And we've already had a number of sales in the product and we've got small businesses paying their employees on the product. So we're excited about this and we feel like there's going to be a lot of potential success here. And furthermore, I think the broader we make the platform, more sort of locked in customers get and the less churn there is over time. And when you're dealing with small businesses, there's always going be a little more churn.

[Joe Walsh, Chairman & CEO at Thryv]

So that's an important item for us. Last comment I'd like to make is on our global industry classification standard, the GICS, where we're positioned as a company. Currently, Thrive is classified incorrectly. We are classified as a, under advertising, under media and entertainment within the communication services. So we're not in software at all.

[Joe Walsh, Chairman & CEO at Thryv]

So when people screen and look for Thrive, they don't see Thrive. They they they they we don't even show up anywhere in the league tables of software. And that's just a mistake that's being made by the JIX group, and, you know, we expect that that will be rectified at some point in the future. It is something that I think is important, and I wanted to just mention it here. And that's it. Let's open it up for questions, operator.

[Operator]

Absolutely. Our first question will go to the line of Arjun Bhatia with William Blair. Arjun, your line is open.

[Arjun Bhatia, Co-Group Head - Technology, Media & Communications at William Blair]

All right. Thank you and congrats on a great Q2 here, especially nice to see the profitability ramp. Joe, you talked a little bit about the vertical strategy just now. The HVAC product is out. What like, help us understand what how you think that's gonna impact the business.

[Arjun Bhatia, Co-Group Head - Technology, Media & Communications at William Blair]

You know, is it gonna help you kind of get new customers in the HVAC segment? Is there an upcharge for the for the vertical capabilities? How do you think that kind of plays out into the Thrive growth story? And then I'd be curious to hear, you know, how you're thinking about the road map for future verticalization, which verticals might you target? And what kind of timeline should we think about there? Thank you.

[Joe Walsh, Chairman & CEO at Thryv]

Thanks, Arjun. So within HVAC, we we have mapped these automations, and it is an upcharge. You need you need to buy this automations package. And you've got one of the leading HVAC companies in the country who, you know, sort of opened up their processes and shared. And so a lot of aspiring HVAC guys kinda get a glimpse into how the big guys do it and do it really well, sort of the road map of where they may wanna go, for the future is laid out for them and and pre built in these automations.

[Joe Walsh, Chairman & CEO at Thryv]

So you're you're buying automation, you're also buying IP, you're buying, you know, business processes. So, yes, there there's a there's a fee for it. And in terms of how it'll shape, you know, our business, I think it will continue to flatter ARPU because, you know, you you've got people that are standing accounts adding a chunky additional investment. I think it will it will impact engagement and client satisfaction because, it will it will really, you know, help them advance to another level with their business. I think it will play defense for the thousands and thousands of HVAC accounts that we currently have, you know, rather than just having a horizontal piece of software, they'll have something that's that's deeply verticalized.

[Joe Walsh, Chairman & CEO at Thryv]

And, to the extent that, you know, they're maybe being called on by, you know, other players, it'll it'll it'll it'll play defense. On the offense side, it gives us a heck of a story to tell when we wanna go try to win new business in HVAC. And, you know, you you've got something really relevant to talk to them about. We've got a lot of wonderful content out there online now, you know, tutorial videos, you know, how to be a great HVAC company and so on, marketing. And we're getting a lot of a lot of clicks and hits and views and all that stuff on that, and it's generating leads already.

[Joe Walsh, Chairman & CEO at Thryv]

We've actually been at this for a minute. It's going and that's going really well. So I think we will be able to attract more HVAC companies. I think we'll be able to retain the ones that we have. I think there'll be nice upsell in terms of the ARPU per account.

[Joe Walsh, Chairman & CEO at Thryv]

And so I think it'll it'll it'll flatter the whole category that way. I also wanna stop and say that we have every intention of working closely with some of the back office folks who've spent an enormous amount of time mapping the back office processes and figuring out, you know, when the truck truck 22 comes in, you know, you load it with Freon and you put this many filters and wing nuts on it and all that. You know, we haven't done that. That's not where we operate. We don't operate in the deep back office.

[Joe Walsh, Chairman & CEO at Thryv]

We're more out in front helping you get customers. And so we will be working with, a number of these different players that that work in the back office and, you know, anxious to do that. And I think it's there's white space in the market where we are, and I think we have an opportunity to to serve there. As far as additional verticals, where that team that did the HVAC vertical is flat out working on on other verticals. And the way we approach those is we looked at our own success.

[Joe Walsh, Chairman & CEO at Thryv]

We we peered into our 100,000 plus customer base and said, where do we have the deepest penetration? Where are we having the most success? Let's start right there. And so we're we're really, you know, really working at our our deepest penetrated, most successful classifications and delivering to them real value add and and doing it pretty quickly. And so I think you'll see us adding more of these vertical applications pretty quickly.

[Joe Walsh, Chairman & CEO at Thryv]

We have several others underway as we speak and we will be adding them pretty quickly. So if we look forward, say a year from now, our our our top band of customers will have these vertical offerings, and we'll be heading further further down deeper into the customer base.

[Arjun Bhatia, Co-Group Head - Technology, Media & Communications at William Blair]

Perfect. That's, super helpful color. Appreciate that. And then maybe, you know, I wanna touch on the guidance, for for a sec. I I know you mentioned, the revision on the SaaS guidance is mostly due to the segment of the key business.

[Arjun Bhatia, Co-Group Head - Technology, Media & Communications at William Blair]

But when we look at kind of what's implied in the back half on an organic basis, it does imply a bit of a slowdown. Meanwhile, when I look at the q two results, both from a organic growth and profitability perspective, you know, clearly, there's good momentum in the business. Now you have verticals rolling out. You have workforce center. You're just getting going on a lot of the cross sell initiatives that you launched this year.

[Arjun Bhatia, Co-Group Head - Technology, Media & Communications at William Blair]

So how realistic maybe is the back half deceleration on an organic basis that's incorporated into the guidance? And maybe are you being conservative there? Or what would have to happen in the business and the demand environment for those for that back half outlook to come to fruition?

[Joe Walsh, Chairman & CEO at Thryv]

Yeah. Arjun Paul still works here. So there's always a tremendous amount of confusion in everything that we put out. So, you know, he's assuming we catch a cold, get the sniffles, fall down, sprain an ankle, like, everything between now and the end of the year. So that that's a you know, we we we wanna be conservative.

[Joe Walsh, Chairman & CEO at Thryv]

We wanna view the numbers that we give you guys like we're writing a check so that so that you can kinda count on them and build on them. So, we're excited about a lot of the momentum we have going on in the business. We really are. So, I I I don't I can't point to anything that we're worried about, to be honest with you.

[Arjun Bhatia, Co-Group Head - Technology, Media & Communications at William Blair]

Okay. That's good to hear. Perfect. Well, thank you for the time. Appreciate it.

[Joe Walsh, Chairman & CEO at Thryv]

Thank you, Arjun.

[Operator]

Thank you. Our next question goes from the line of Scott Berg with Needham and Company. Scott, your line is open.

[Scott Berg, MD & Senior Research Analyst at Needham & Company]

Hi, Joe and Paul, nice quarter. Thanks for taking my questions here. I wanted to focus both of my questions on the SaaS business, I guess, in general. John, just wanted to see if you could explain upon your kind of commentary around what you're seeing in the key business around those customers that you're something that maybe not reviewing or trying to get away from some of the thoughtful contracts. And how do we think about where you are in that cycle?

[Scott Berg, MD & Senior Research Analyst at Needham & Company]

I guess, is Q2, there's a trough. Do you expect to see those, I guess, infections continue for a quarter or two? Because if I annualize the Q2 keep revenues, I gave up $71,000,000 versus what I believe you all expected would be a $75,000,000 trough when you acquired the business last fall.

[Joe Walsh, Chairman & CEO at Thryv]

Yeah. Look. The the the keep software is amazing. The the Keap people that we acquired are amazing. Their go to market motion had some challenges.

[Joe Walsh, Chairman & CEO at Thryv]

I mean, they they had been in a revenue decline for more than more than just one year prior to when we bought them. And, you know, even toward the end, they were they were selling at a fairly low lifetime value to CAC ratio in their direct channel in order to keep revenue up where it was. And you're very well aware, of our pinch point that we just passed through and that, you know, that so the tightness of our plan. And we just looked skeptically at those unprofitable sales and said, you know, do we really want to invest in those right now? When our overall number is rocking, the Thrive side of the house is rocking, we really wanna go over here and and, you know, sort of buy more of these sales?

[Joe Walsh, Chairman & CEO at Thryv]

And we just made the decision not to. We could have we we could have put a few million bucks into the demand gen business and, you know, equal that number, But it would have been not a good ROI on that cash in the short term. Where we're finding a tremendous amount of interest and success and traction with Keep Software is through the Thrive Salesforce into the Thrive customer base. Using these, you know, slick automations in the solutions launchpad and so on, customizing those for particular verticals is an absolute hit. And it's just early days now.

[Joe Walsh, Chairman & CEO at Thryv]

We're just getting going. But it's gaining lots of traction in our sales organization and with our customers. The ARPU is tasty. It's a good size one. It's margin rich.

[Joe Walsh, Chairman & CEO at Thryv]

So we're really, really pleased about that. You know, one of the things that we were super excited about in buying Keap was their very successful partner channel, and, it's still a good partner channel. It's still a successful partner channel. But when we showed up day one and said, we're here, they were mad at us. Like, the day they met us, they were mad at us.

[Joe Walsh, Chairman & CEO at Thryv]

They said, you know, we we haven't been we haven't been getting love. We haven't been getting innovation. We haven't been getting investment. We haven't been getting and you owe us and you owe us right now. And so we're working feverishly to deliver on, you know, a lot of the API hooks and and and different other technical things that they're looking for and some other ease of doing business with partner channel things that, that they've been waiting for a while for.

[Joe Walsh, Chairman & CEO at Thryv]

And, so we are emerging slowly from the partner doghouse as we deliver on those. And I have a lot of enthusiasm for what happens in '26 and '27 with the partner channel. Just not happening quite as quick here in in in in '25 because they're sort of taking a a little bit of wait and see in terms of really leaning in. So, we're really pleased about Keep. I buy it again, you know, every day of the week and twice on Saturday.

[Joe Walsh, Chairman & CEO at Thryv]

It was a great transaction. Keeps own revenue producing model had been challenged, and we haven't chosen to just pour money in to fill in that hole. But I am very confident of what Keep will do in the fullness of time in terms of adding revenue to our business. And one of the other promises that we made, Scott, for Keep was that we could deliver 10,000,000 in cost synergies that would balance our EBITDA up this year. And we went by $10,000,000 like it was tied to a pole.

[Joe Walsh, Chairman & CEO at Thryv]

I guess that's in the rearview mirror and we're going further than that. So, the cost synergies were captured right away and the revenue synergies are coming, they're just delayed by a little bit. And that was really a business decision that I made just out of abundance of caution to make sure we preserved every dollar, for debt repayment. And as Paul shared in his segment earlier, we're actually now ahead of debt repayment. So we sort of pushed that off the table as an issue now.

[Joe Walsh, Chairman & CEO at Thryv]

Not only does our amort drop substantially, but we're actually paid way into next year already. So, you know, that you can take that and pigtail that off your issues for Thrive list over and out.

[Scott Berg, MD & Senior Research Analyst at Needham & Company]

Got it. Helpful, Joe. And then if I look at the organic Thrive business in the quarter and on the SaaS side, my numbers are correct. It looks like your customer churn actually contracted about 4,000 quarter over quarter. I know this is your where you're focusing on cross sell, upsell, and existing customer expansion.

[Scott Berg, MD & Senior Research Analyst at Needham & Company]

I guess it is what we're seeing there in the business is is kind of a point quarter item as you focus on those existing customer expansions or you see something else in the business that's maybe not offsetting some of your natural churn with that, you know, with new customers coming in.

[Joe Walsh, Chairman & CEO at Thryv]

Yeah. Well, you you have the theme right. This is the year 2025 will be the year where our client base will remain about flat and where the the big gain will come, with an ARPU bounce with us going in and adding multiple SaaS products into existing customers, upselling, taking people deeper into tools like these automations we've been talking about, adding things like Workforce Center. So this you know, we we guided in the in the fullness of time or over the over the balance of the decade that we would go from sort of $4,000 a year to $8,000 a year. And then we immediately then that year, you know, or or last year, ARPU went back slightly because we just added so many subs and a lot of those, you know, were were coming over out of marketing services with special pricing arrangements.

[Joe Walsh, Chairman & CEO at Thryv]

So what's happening now is we're meeting with these clients, working with them, getting getting them squared away with often new packages and new programs and updating and changing, and and that's resulting in strong upsell. Candidly, we did not have the money to do both this year. We we couldn't really staff going out and servicing all those people who came over. I mean, we we we made, what, 40 plus thousand jump in subs last year. We've got a lot of people to see, a lot of people to talk to.

[Joe Walsh, Chairman & CEO at Thryv]

And so this will just be a year where we're flattish. And it'll bounce around quarter to quarter through the year, but I would expect we'll end the year right around where we started, but with a big jump in ARPU so that revenue will make a big jump. And then as you look forward to '26, and we'll get into guidance for next year or later, but I would expect us to get back on the horse and begin to invest in expanding our channels. As I mentioned earlier, we've got some new channels that are gaining traction. And I would see us get back on a path of balancing adding subscribers and adding ARPU. I hope that answers the question.

[Scott Berg, MD & Senior Research Analyst at Needham & Company]

It does. Thank you for taking my questions.

[Joe Walsh, Chairman & CEO at Thryv]

Thanks, Scott.

[Operator]

Thank you. Our next question goes from the line of Jason Kreyer with Craig Hallum. Jason, your line is open.

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

So Joe, you made it through this financial pinch point. You've talked about the financial flexibility. Just hoping you can unpack that and just talk about the opportunity just given better profitability, lower amortization liabilities. And so I think all of that will equate to better free cash flow. But what kind of financial flexibility opportunities do you have with that better free cash flow generation? Thanks.

[Joe Walsh, Chairman & CEO at Thryv]

I'm gonna share this answer with Paul. I'll start, and then I'll let him talk about how he thinks about it. Yeah. We you know, most corporations have some capital allocation decisions that they make. You know, they sit around the room and they say, you know, should we allocate the money into share buybacks?

[Joe Walsh, Chairman & CEO at Thryv]

Should we put it into debt repayment? You know, should we invest more in marketing or whatever? We've only made two decisions, and they just left them stuck there for the last few years, and that's invest handover fist in our product and cut everything else and pay down debt. That's that's pretty much what the last several years have been. And so, yeah, we're excited about now that we're past the pinch point, we actually begin to make some new decisions.

[Joe Walsh, Chairman & CEO at Thryv]

We can invest in adding salespeople. We can put more demand generation into the market. We can we can tell our story more to our customers. We can do more marketing. And obviously, with such a mispriced share price, we can buy back stock.

[Joe Walsh, Chairman & CEO at Thryv]

And I can you have to figure that's very much on the table. We have a share buyback authorization. We've not really had any cash to action that. But we now have the ability, we have the authorization and we have the money to do it. So, those are some of the options.

[Joe Walsh, Chairman & CEO at Thryv]

I don't want to get too deeply into exactly how we'll play all that right now. But with the share price where it is, that's certainly something that we'll be thinking very hard about. I'll let Paul comment to any thoughts he has on it. Paul?

[Paul Rouse, CFO, Executive VP & Treasurer at Thryv]

Yes. I'll stay in my lane here. Those strategic decisions are really Joe's. But I just want to let you and the market know we're still focused like a laser beam and we we repaying debt and delevering. So you'll you'll see that as we move out too. We'll be focused on that.

[Joe Walsh, Chairman & CEO at Thryv]

That answer your question, Jason?

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

Helpful. Thank you. That answers my question very well. I appreciate that. Just a quick follow-up for me on on on marketing center.

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

If you can just talk about the growing, client appetite there and maybe you know, you're you're seeing success with new products in market. So curious if you can maybe shine a light on what those new products are, how you're finding ways to engage with customers that have that greater appetite.

[Joe Walsh, Chairman & CEO at Thryv]

Yeah. We we you know, it's funny. We we've been in business since 1886, linking buyers and sellers together through the yellow pages. Right? And that's that's the background here.

[Joe Walsh, Chairman & CEO at Thryv]

And then that that went on to be online yellow pages and then all manner of digital marketing. And, you know, our company is peopled with experts and everything to do with search engine marketing and SEO and all these different things. And we have a network, a massive network of directories for which we monetize their traffic. And, you know, we hadn't fully been leveraging all of that, and we sort of were almost running away from it focusing on helping people to operate their businesses, you know, with our CRM software and and, you know, estimates, invoices, billing, payments, all that kind of stuff. And I think we've recently woken back up to the fact that helping small businesses grow is a big deal.

[Joe Walsh, Chairman & CEO at Thryv]

And it's an area that's our birthright. We're really, really good at it. And so our marketing center answers the famous question that John Wanamaker asked, you know, I know that half of all my advertising is wasted, I just don't know which half. It answers that. It lets you know precisely which things that you're doing are working online, offline, There's no mystery.

[Joe Walsh, Chairman & CEO at Thryv]

And for successful businesses and smart people that want data to know how they're doing, it delivers that. What we've now done is coupled that with some of our other things that help you build your list, helps you drive your leads, helps you meet new, you know, new prospective people that are interested in what you do. And we've struck oil. I mean, you know, we're screwing around here drilling holes and all of a sudden, oil just came up everywhere. We hit it, and we have a hit on our hands.

[Joe Walsh, Chairman & CEO at Thryv]

And our focus has really been marketing center and some very powerful add ons that leverage the other assets that we have as a business. So I really like where we are and I think we fit nicely in the market with some of those people that have spent a lot of time working in the vertical, you know, realm, digging in on all the deep back office operations of a pest control company or whatever. You know, we can actually partner and sit right alongside of them where we're handling all the front end, helping to keep the order book full and, keep your existing customers activated and all that. We are superb at all that. And if you wanna keep track of when we applied the chemicals, that's great.

[Joe Walsh, Chairman & CEO at Thryv]

Yeah. We fit in there perfectly. So we really like what we've learned. We like where we are there.

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

Wonderful. Thank you. Appreciate it, guys.

[Joe Walsh, Chairman & CEO at Thryv]

Thanks, Jason.

[Operator]

Thank you. Our next question comes from the line of Zach Cummins with B. Riley Securities. Zach, your line is open.

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

Hi, good morning. Congrats on the strong quarter. This might be a question pointed towards Paul, but can you speak to just the outperformance that we saw on the SaaS adjusted EBITDA margin side? Is there any sort of onetime benefit in this quarter? Just wondering in terms of second half versus the guidance that you put out there and maybe potential upside on the margin realization front.

[Paul Rouse, CFO, Executive VP & Treasurer at Thryv]

Yes. Thanks, Zach. Good question. It really was. We had a really strong print quarter.

[Paul Rouse, CFO, Executive VP & Treasurer at Thryv]

So as you know, how our allocations work is based on revenue. So if you have a strong print quarter, it's going to allocation is going to be stronger towards marketing services. That type of listen, I would love if we had 20% each quarter going out, but quarters are going to be lighter in print for the third and fourth. So the allocations will shift back weighing on SaaS. There'll still be strong quarters, but I wouldn't write down the 20% going forward straight for SaaS margins.

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

Understood. That's helpful. And Joe, just with the press release this morning around Workforce Center, I mean, can you delve a little bit into maybe some of the early feedback you've been getting from from some of the early users of the product? And and how should we think about the ideal customer fit and and who's going to be really interested in in this product within your customer base?

[Joe Walsh, Chairman & CEO at Thryv]

So there there's a whole world of kind of PEO people out there working with, you know, businesses and even small businesses on payroll, but they become less and less interested when you don't have very many employees. When you're below 25 employees, you it's just not a lot of there there. And our customer base is largely these five, eight, ten, twelve, 15 employee businesses that are that kind of sit below that radar. And their dream scenario would be to have one platform they could use for everything and we're delivering on that. So, you know, that's kind of the market that we see.

[Joe Walsh, Chairman & CEO at Thryv]

We we don't think it's gonna be a massive, you know, revenue. It's not gonna rival marketing center and revenue or something like that. It's more of a convenience that we were able to adopt, create a cool UI and plug into what we're to what we're doing to make life life easy for our customers. And we've seen and the evidence is overwhelming that the more of our SaaS products they buy from us, the churn falls. So if they add, you know, workforce center, you know, their propensity to churn just drops through the floor.

[Joe Walsh, Chairman & CEO at Thryv]

And so, you know, that that's sort of how we thought about it. It's a little bit like ThrivePay. It's a it's convenient for customers. Workforce center is the same. So that that's kind of how we think about it.

[Joe Walsh, Chairman & CEO at Thryv]

We we we don't have a ton, of revenue modeled in for this. We we do have many customers already on it. We've actually been doing it for a while. We we brought it out in alpha earlier this year and then had a beta, and it's out live, we're out selling it. And we have customers on it and paying their contractors, paying their employees, happy with it, already giving us feedback about, you know, additional things they'd love to see and all the things that customers always do.

[Joe Walsh, Chairman & CEO at Thryv]

But we're off to a really nice start with it, and I would I would put it down as a you know, if I if I were modeling, if I were in your shoes, I I would put it down as a as a as a minor positive. You know, we we may going into '26. We may, you know, we may even think about guiding you a little bit on it. We'll see. But we don't we don't have a ton in for this year.

[Joe Walsh, Chairman & CEO at Thryv]

This is really if you think back to the promises we were making last year, we said we'd get another center out this year, and we sort of directed you to think that would probably be in q four, probably late q four. And the team just had it ready. The alpha went well. The beta went well. So we went ahead and took the took the wrapper off and rolled it out.

[Joe Walsh, Chairman & CEO at Thryv]

So in in our big model, there's really not much revenue in it. So anything we get will be a good guy.

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

Understood. Well, thanks for taking my questions and best of luck with the rest of the quarter.

[Joe Walsh, Chairman & CEO at Thryv]

Thank you very much.

[Operator]

Thank you. Our last question will go to the line of Matthew Swanson with RBC. Matthew, your line is open.

[Matthew Swanson, Director - Equity Research at RBC Capital Markets]

Yes. Thank you so much for taking my questions. And congratulations as well on getting past the pinch point. Maybe on that, when you think about kind of what you've learned in this period of efficiency, how do you think that impacts the areas you wanna focus on investment in 2026 when you get more flexibility? Basically, are some of these areas that you've been able to, you know, gain additional leverage? And then where are the areas that you really wanna, you know, double down pouring into?

[Joe Walsh, Chairman & CEO at Thryv]

Yeah. Look. The one the one place we never skimped is on the product. We continue to invest hand over fist in product engineering, product improvement, making it more interoperable with other products in the market, all the connective tissue that makes it easy for small businesses because we felt like that's something that we couldn't slow down on. So we were flat out on that.

[Joe Walsh, Chairman & CEO at Thryv]

But in terms of the development of some of our sales channels, we did skimp there. We did hold off there. We did we pulled back on international. We pulled back the amount of energy we're putting against our back in the day, the old Thrive partner channel before we bought Keap, similarly on our franchise channel. So there are a number of initiatives that we're honestly super excited about.

[Joe Walsh, Chairman & CEO at Thryv]

We have incredible leaders focused on and, you know, a nice right to win that we haven't peopled or invested in just based on deference to this pinch point. We needed to get past it. So, you know, we will be able to begin to feed some investment into those channels. You know, our our marketing team is like the Maytag repair people, like, sitting there sitting there waiting for us to give them some money. So we you we're gonna begin to be able to do that, to begin to market the product.

[Joe Walsh, Chairman & CEO at Thryv]

I doubt you're watching, you know, the final four and seeing ads on TV for Thrive. I mean, we really haven't been doing much at all terms of marketing. We've been just relying on having been in business for a hundred and forty years as as the way to to to meet people and so on. So honestly, there's just a lot of opportunities. I I I could go on for probably ten more minutes about all the places that we could could use a little bit of nourishment that we could put in that would be offensive and begin to put us on our front foot.

[Joe Walsh, Chairman & CEO at Thryv]

The best way I can describe the last several years for us as a company is we've been on the back foot. We've been in a cost cutting, you know, get through this get through this get through this kind of mode with Paul Rouse, who's mean, running around, you know you know, cutting everything in sight and and just cranking us down. And he's done a wonderful job and delivered a buttload of cash and has us. He overshot, you know, but that's I'd rather have him overshoot than undershoot. And so it it is very exciting for us to to to kind of get off the back foot and onto the front foot.

[Joe Walsh, Chairman & CEO at Thryv]

And we've been doing some reasonably good growth, obviously, as a business. But a lot of that has come from hunting in our zoo, moving our zoo over and all that. So getting going outside of that is something that we're super excited about in the year ahead.

[Matthew Swanson, Director - Equity Research at RBC Capital Markets]

Yes. I appreciate that. And then I guess, like, between SaaS adjusted EBITDA margins, the ARPU, the net retention, we're starting to get a glimpse of kind of like the power of the transition platform. But I want to focus specifically on multiproducts. I know retention gets a lot better when you get to that.

[Matthew Swanson, Director - Equity Research at RBC Capital Markets]

What are kind of the key strategy, I guess, in improving that 19%? Is it about do you think it's about the product fit in terms of getting more centers out, or do you think is this more so kinda on that same line we're just on about investing more in the go to market and more about making sure your customers and the right customers know about the products.

[Joe Walsh, Chairman & CEO at Thryv]

Yeah. One of the things we we we did invest in, I must must have hinted from Paul. He didn't know about it, I guess, over the last couple of years is really modernizing our go to market efforts. And we we have we've invested in the the data scientists to do it, the the sales technology to put in the hands of our sales reps to aim them. I mean, just it was just a few years ago, we'd say to the reps, good luck, guys.

[Joe Walsh, Chairman & CEO at Thryv]

Go get them. And that was about the end of it. Now, I mean, when they wake up in the morning, they open up their laptop, it says, okay. Welcome to the your morning. Let's go call on ABC Glass and Mirror company, and this is what you're gonna talk to them about.

[Joe Walsh, Chairman & CEO at Thryv]

And that's just next level from where we were even really even two years ago. And so we are now with the the the go to market team, the data scientists doing that, and our marketing team all working very carefully together. We're now directing our sales force out running in very specific plays against very specific types of businesses with a with a very specific offer. And I would say that we're in the first inning of that. We're really just getting going, but we're seeing tremendous sell through on that, tremendous success.

[Joe Walsh, Chairman & CEO at Thryv]

And our marketing team are beginning to do account based marketing ahead of those sales plays so that the kind of the beachhead is softened, and they actually have already been alerted that there's workforce center available or that there's this other add on product available. So, we're honestly just starting, and I would expect that percentage of customers that have more than one SaaS product to just just move up almost like a metronome moving north. It should just go up and up and up and up and up. And with it, you know, our our our net revenue retention will be stronger. Our, you know, you know, our our churn will will continue to reduce.

[Joe Walsh, Chairman & CEO at Thryv]

I I just I think that's the play here. And it was awful hard to go get a 100,000 customers, guys. They don't just fall out of the sky. It was very hard. Our job now is to leverage that.

[Joe Walsh, Chairman & CEO at Thryv]

And we said that we can go from 4,000 to 8,000. We're currently at about 4,200. But if you look at what's being sold by our direct sales channel, it's more like $6. And so that's a little peek into where this goes. And, I mean, we intend to add customers over the next few years.

[Joe Walsh, Chairman & CEO at Thryv]

But if you just took the 100,000 we have now and we then grew them from 4,200 to 8,000, you all but doubled the the SaaS business over that, you know, over that planning period. And and and as I said, I do think it's a growing and expanding market. I think we can capture more share, not not not donate share. So, you know, we are super bullish on on those opportunities.

[Operator]

Thank you. Still there? You. With that being our last question, we'll conclude the question and answer session as well as today's conference call. Thank you for your participation.

[Operator]

I hope you have a great rest of your day.

Participants

Executives

• Cameron Lessard, SVP - Corporate Development, Strategy, Treasury, & IR
• Joe Walsh, Chairman & CEO
• Paul Rouse, CFO, Executive VP & Treasurer

Analysts

• Arjun Bhatia, Co-Group Head - Technology, Media & Communications at William Blair
• Scott Berg, MD & Senior Research Analyst at Needham & Company
• Jason Kreyer, Senior Research Analyst at Craig-Hallum Capital Group LLC
• Zach Cummins, Senior Research Analyst at B. Riley Securities
• Matthew Swanson, Director - Equity Research at RBC Capital Markets