10-Q: Thryv Holdings Q1 2026: Revenue Declines, SaaS Growth Offset by Marketing Services

Thryv Holdings reported a 7.5% year-over-year revenue decrease for Q1 2026, driven by a significant decline in its Marketing Services segment, though SaaS revenue saw a 5.0% increase.

Summary

• Thryv Holdings reported total revenue of $167.7 million for the first quarter of 2026, a decrease of 7.5% compared to $181.4 million in the same period of 2025.
• The decline was primarily due to a 27.5% drop in Marketing Services revenue, which fell to $50.9 million from $70.2 million.
• SaaS revenue increased by 5.0% to $116.7 million from $111.1 million, driven by new sales, client expansion, and the conversion of Digital marketing services clients to the SaaS platform.
• Gross profit decreased by 8.4% to $109.3 million, with a gross margin of 65.2% compared to 65.8% in the prior year.
• Operating expenses decreased by 13.2% to $105.2 million, largely due to reductions in sales and marketing expenses.
• The company reported a net income of $4.5 million, or $0.10 per diluted share, a significant improvement from a net loss of $9.6 million, or ($0.22) per diluted share, in Q1 2025.
• Adjusted EBITDA increased by 15.1% to $24.1 million from $20.9 million, driven by cost-saving initiatives in the Marketing Services segment.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this as a neutral to slightly positive result, with the shift to profitability and SaaS growth being positive, but the significant decline in Marketing Services revenue and reduced NRR presenting ongoing challenges.

Positives

• Achieved net income of $4.5 million in Q1 2026, a substantial improvement from a net loss of $9.6 million in Q1 2025.
• SaaS revenue grew by 5.0% to $116.7 million, indicating continued demand for the company's core platform.
• Adjusted EBITDA increased by 15.1% to $24.1 million, demonstrating improved operational efficiency and cost management.
• Operating expenses were reduced by 13.2% to $105.2 million, primarily through decreased sales and marketing spend.
• The company reported compliance with its Term Loan and ABL Facility covenants and expects to remain in compliance for the next twelve months.
• The company has $34.5 million remaining under its share repurchase program, indicating potential future returns to shareholders.

Negatives

• Total revenue decreased by 7.5% to $167.7 million, primarily due to a significant decline in the Marketing Services segment.
• Marketing Services revenue dropped by 27.5% to $50.9 million, reflecting the ongoing secular decline in print media and increased competition in digital.
• SaaS gross margin decreased to 64.8% from 70.9%, impacted by the conversion of lower-margin digital marketing services clients to the SaaS platform.
• Seasoned Net Revenue Retention (NRR) for SaaS decreased to 93% from 99%, indicating a potential challenge in retaining and expanding revenue from established clients.
• Total clients decreased by 22% to 220,000, driven by declines in both Marketing Services and SaaS client bases.

Risks

• Significant competition for Marketing Services and SaaS offerings.
• Ability to maintain profitability and manage growth effectively.
• Challenges in transitioning Marketing Services clients to the Thryv Platform and retaining them.
• Potential for internet search engines to alter or terminate agreements.
• Rapid technological changes and evolving industry standards.
• Client non-renewal or reduced spending.
• System interruptions, cybersecurity breaches, and data loss.
• Failure to identify and consummate suitable acquisitions.
• Loss or inability to attract highly skilled employees.
• Compatibility issues with third-party applications.
• Failure to comply with privacy and data laws.
• Potential failure to meet service level commitments or provide high-quality support.
• Risks associated with the use of artificial intelligence.
• Impact of future labor negotiations.
• Protection of intellectual property rights.
• Rising inflation and cost control challenges.
• General macroeconomic conditions, including recession or economic slowdown.
• Adverse tax laws or regulations.
• Regulatory investigations, including the subpoena from the SEC.
• Volatility and weakness in bank and capital markets.
• Costs associated with being a public company.

Future Outlook

The company expects to meet its liquidity requirements for the next 12 months through expected cash flows from operations, available cash, and funds under its ABL Facility. Projections for future earnings and cash flows are subject to substantial uncertainty. Future success and capital adequacy depend on achieving anticipated revenue and cash flow levels, addressing annual cash obligations, and reducing outstanding debt, all influenced by economic, financial, competitive, and other factors.

Management Comments

• "We are a software-led platform company focused on enabling small and medium-sized businesses (SMBs) to run and grow their businesses more efficiently."
• "Our strategy is centered on delivering a unified, extensible SaaS platform that supports customer acquisition, engagement, operations, and retention across the SMB lifecycle."
• "In 2026, SMB demand for integrated technology solutions continues to grow as SMBs adapt their business and service models to facilitate remote working and virtual interactions."
• "During the three months ended March 31, 2026, the churn of clients converted by Thryv from our Digital marketing services solutions to our Thryv Platform was in line with the churn from the other clients in our SaaS segment."
• "We believe that strategic acquisitions of SaaS and marketing services companies globally will expand our client base and provide additional opportunities to offer our SaaS solutions."
• "We believe that Thryv's conversion of products for these clients outside of the traditional sales process could result in these clients cancelling their services with us (known as churn) at a materially higher rate than the other clients in our SaaS segment."
• "We believe that Thryv's conversion of products for these clients outside of the traditional sales process could result in these clients cancelling their services with us (known as churn) at a materially higher rate than the other clients in our SaaS segment."
• "We believe that Thryv's conversion of products for these clients outside of the traditional sales process could result in these clients cancelling their services with us (known as churn) at a materially higher rate than the other clients in our SaaS segment."

Industry Context

StockSavvy.ai notes that Thryv Holdings' Q1 2026 results reflect ongoing industry trends of digital transformation and the shift from traditional marketing services to SaaS solutions. The decline in Marketing Services revenue is consistent with the broader industry's move away from print, while the growth in SaaS revenue aligns with the increasing demand for integrated business management platforms among SMBs.

Comparison to Industry Standards

• The SaaS segment's revenue growth of 5.0% is moderate compared to some high-growth SaaS companies, but aligns with a mature market segment focused on SMBs.
• The decrease in Seasoned Net Revenue Retention (NRR) to 93% from 99% is a concern, as industry benchmarks for healthy SaaS businesses often aim for NRR above 100% to indicate organic growth from existing customers.
• The decline in Marketing Services revenue is expected given the secular decline of the print media industry, a trend observed across many companies in the advertising and publishing sectors.
• The company's focus on integrating acquired businesses like Keap into its SaaS platform is a common strategy in the competitive SMB software market to offer a comprehensive suite of tools.

Legal Proceedings

• The company is subject to various lawsuits and other claims in the normal course of business.
• Received a subpoena from the SEC's Division of Enforcement requesting documents and information related to the strategic conversion of clients from Digital marketing services solutions to its SaaS solutions platform. The SEC noted this is a fact-finding inquiry and does not imply a violation of law.
• The company is engaged in discussions and negotiations with tax authorities regarding tax matters. Notices of tax due and/or intent to levy were received for tax years 2012-2015, and the company is requesting a Collection Due Process or Equivalent Hearing with the IRS. A 24-month payment plan is estimated to commence in July 2026.

Related Party Transactions

• As of March 31, 2026, 40.0% of the Term Loan was held by a related party who was an equity holder of the Company as of May 1, 2024. The company defines a related party as any shareholder owning more than 5% of the Company's voting securities.

Stakeholder Impact

• Shareholders: Improved net income and EPS from a loss, but concerns remain regarding declining NRR and the strategic wind-down of the Marketing Services segment.
• Employees: Potential impact from ongoing restructuring and integration expenses related to acquisitions and the shift from Marketing Services to SaaS.
• Customers: Continued transition to the SaaS platform, with efforts to ensure converted clients have a positive experience and do not churn at higher rates.
• Creditors: The company is in compliance with its debt covenants and expects to remain so, indicating stability for lenders.

Next Steps

• Continue to develop and grow the profitable SaaS segment.
• Improve SaaS solutions by analyzing user behavior, expanding features, enhancing usability, and improving onboarding and customer support.
• Leverage strategic acquisitions or initiatives to expand client base domestically and enter new international markets.
• Continue to monitor capital requirements and ensure needs align with available capital resources.
• Continue to cooperate with the SEC subpoena regarding the strategic conversion of clients.

Key Dates

Recommendation

The company has shown a positive shift to profitability and continued growth in its core SaaS segment. However, the significant decline in the legacy Marketing Services business, coupled with a decrease in Seasoned Net Revenue Retention (NRR) for SaaS, indicates ongoing challenges and uncertainties. While the strategic shift is necessary, the execution and its impact on future growth and profitability require further monitoring. Therefore, a 'hold' recommendation is appropriate pending clearer signs of sustained SaaS growth and improved client retention.

Keywords

Thryv Holdings, SEC Filing, 10-Q, Quarterly Report, SaaS, Marketing Services, Revenue, Net Income, Adjusted EBITDA, Small Business Solutions, Financial Results