10-Q: Thryv Holdings Q3 2025: SaaS Drives Profitability Amidst Marketing Services Decline

Thryv Holdings reports a significant increase in Q3 2025 net income and SaaS revenue, despite an overall revenue decline for the nine months, as it continues its strategic shift away from traditional marketing services.

Summary

• Net income for the three months ended September 30, 2025, was $5.654 million, a substantial improvement from a net loss of $96.071 million in the prior year period.
• Net income for the nine months ended September 30, 2025, was $9.967 million, compared to a net loss of $82.099 million for the same period in 2024.
• Total revenue for Q3 2025 increased by 12.1% to $201.555 million, driven by a 33.1% increase in SaaS revenue to $115.903 million.
• Total revenue for the nine months ended September 30, 2025, decreased by 6.9% to $593.396 million, primarily due to a 36.9% decline in Marketing Services revenue.
• SaaS revenue for the nine months increased by 43.0% to $342.037 million, with the Keap acquisition contributing $53.4 million.
• Marketing Services revenue for Q3 2025 decreased by 7.7% to $85.652 million, and for the nine months decreased by 36.9% to $251.359 million.
• Adjusted EBITDA for Q3 2025 more than doubled to $40.833 million, up 108.1% from $19.623 million in Q3 2024.
• Adjusted EBITDA for the nine months ended September 30, 2025, decreased by 15.1% to $112.966 million from $133.051 million in the prior year.
• Total clients decreased by 16% to 249,000 as of September 30, 2025, compared to 295,000 in the prior year, mainly due to the decline in Marketing Services.
• SaaS clients increased by 7% to 103,000, benefiting from the Keap acquisition (15,000 clients) and conversions from Digital marketing services.
• Seasoned Net Revenue Retention (NRR) for SaaS decreased to 94% as of September 30, 2025, from 101% in the prior year, indicating higher cancellations outpacing expansion.
• The company repurchased 378,000 shares of common stock for approximately $5.0 million during Q3 2025, with $34.5 million remaining under the program.
• The company is undergoing a strategic transition to terminate Marketing Services solutions by the end of 2028, accelerating client conversions to its Thryv Platform.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive. While the company achieved a significant turnaround to net income profitability and strong SaaS growth, the overall revenue decline for the nine-month period, the decrease in total clients, and the drop in SaaS NRR present ongoing challenges. The strategic transition is progressing, but the execution risks and competitive pressures remain.

Positives

• Net income significantly improved, moving from a substantial loss in Q3 2024 ($96.071 million) to a profit of $5.654 million in Q3 2025.
• SaaS revenue demonstrated strong growth, increasing by 33.1% in Q3 2025 and 43.0% for the nine months, driven by the Keap acquisition, new sales, client expansion, and price increases.
• Adjusted EBITDA more than doubled in Q3 2025, reaching $40.833 million, indicating improved operational efficiency and profitability in the core SaaS segment.
• Gross margin increased to 67.7% in Q3 2025 (from 62.3% in Q3 2024) and to 67.8% for the nine months (from 65.0% in 9M 2024), reflecting strategic cost savings and the shift to higher-margin SaaS solutions.
• Interest expense decreased by 25.4% in Q3 2025 and 28.2% for the nine months, primarily due to lower outstanding debt balances following debt refinancing.
• The company successfully refinanced its Term Loan and ABL Facility in May 2024, improving its debt structure.
• The Keap acquisition in October 2024 contributed significantly to SaaS revenue growth ($16.8 million in Q3 2025 and $53.4 million in 9M 2025).
• The company is in compliance with all covenants under its Term Loan and ABL Facility as of September 30, 2025.

Negatives

• Total revenue for the nine months ended September 30, 2025, decreased by $44.2 million, or 6.9%, compared to the prior year, primarily due to the decline in Marketing Services.
• Marketing Services revenue experienced a significant decline of 7.7% in Q3 2025 and 36.9% for the nine months, attributed to secular decline in print media and strategic conversion of digital services to SaaS.
• Total clients decreased by 16% (46,000 clients) year-over-year, mainly due to the decline in the Marketing Services segment.
• Seasoned Net Revenue Retention (NRR) for SaaS decreased by 700 basis points to 94% as of September 30, 2025, indicating a higher rate of cancellations among established SaaS clients.
• Adjusted EBITDA for the nine months ended September 30, 2025, decreased by $20.1 million, or 15.1%, primarily due to the secular decline in the Marketing Services segment.
• Cash flows from operating activities decreased by $22.3 million for the nine months ended September 30, 2025, primarily due to changes in working capital and an overall decline in sales.

Risks

• Significant competition for Marketing Services and SaaS offerings, including from companies using third-party SaaS components.
• Ability to maintain profitability in the long term.
• Challenges in managing growth effectively, particularly with the rapid expansion of the SaaS segment.
• Risk that Marketing Services clients may not fully embrace the transition to the Thryv Platform or may churn at higher rates.
• Dependence on strategic relationships with third-party service providers.
• Potential termination or material alteration of agreements with internet search engines and portals.
• Inability to keep pace with rapid technological changes and evolving industry standards.
• SMB clients opting not to renew agreements or renewing at lower spend.
• Potential system interruptions or failures, including cybersecurity breaches, identity theft, data loss, or unauthorized access.
• Failure to identify suitable acquisition candidates, consummate acquisitions, or successfully integrate acquired businesses (e.g., Keap).
• Potential loss of key employees or inability to attract and retain highly skilled employees.
• Ability to maintain compatibility of the Thryv Platform with third-party applications.
• Challenges in successfully expanding operations and offerings into new markets, including internationally.
• Failure to provide new or enhanced functionality and features for the Thryv Platform.
• Failure to comply with applicable privacy, security, and data laws, regulations, and standards.
• Potential changes in regulations governing privacy concerns and data protection.
• Failure to meet service level commitments under client contracts or offer high-quality technical support.
• Thryv Platform and add-ons potentially failing to perform properly.
• Reputational harm, competitive harm, and legal liability from the use of artificial intelligence in the business.
• Potential impact of future labor negotiations.
• Ability to protect intellectual property rights, proprietary technology, information, processes, and know-how.
• Rising inflation and the ability to control costs, including operating expenses.
• General macro-economic conditions, including recession or economic slowdown in the U.S. or internationally.
• Adverse tax laws or regulations or potential changes to existing tax laws or regulations.
• Costs, liabilities, and reputational harm resulting from regulatory investigations, including the subpoena from the SEC's Division of Enforcement.
• Volatility and weakness in bank and capital markets.
• Costs, obligations, and liabilities incurred as a result of being a public company.

Future Outlook

The company intends to continue developing and growing its profitable SaaS segment, which is expected to serve as the primary business driver. It plans to improve SaaS solutions by analyzing user behavior, expanding features, enhancing usability, and improving customer support. The Marketing Services segment is expected to continue serving as an efficient customer acquisition channel for the SaaS platform until its planned termination by the end of 2028. The company also plans to leverage strategic acquisitions and initiatives to expand its client base domestically and enter new international markets. Management expects to be in compliance with debt covenants for the next twelve months and anticipates contributing $3.0 million to $5.0 million to qualified pension plans and approximately $0.5 million to non-qualified plans for fiscal year 2025. The company is assessing the impact of the One Big Beautiful Bill Act (OBBBA) but does not expect a material impact to its financial statements.

Management Comments

• Our strategy is to expand the use of our SaaS solutions by introducing them to new SMB clients, converting current Marketing Services clients to our Thryv Platform, and offering additional SaaS solutions to our existing SaaS client base.
• We believe the conversions initiated for clients by Thryv provide valuable upgrades from Digital marketing services to our Thryv Platform and that converted clients will be more likely to subscribe for additional features in the future.
• We intend to continue to develop and grow a profitable SaaS segment to better help SMBs manage their businesses, while maintaining strong profitability within our Marketing Services segment, which we expect to continue to serve as an efficient customer acquisition channel for our SaaS platform until its termination in 2028.
• Our future success and capital adequacy will depend on, among other things, our ability to achieve anticipated levels of revenues and cash flows from operations and our ability to address our annual cash obligations and reduce our outstanding debt.

Industry Context

The company operates within an industry experiencing growing SMB demand for integrated technology solutions, driven by the need for remote working and virtual interactions. Concurrently, the traditional print media industry continues its secular decline, with advertising spend shifting towards larger digital media audiences. The digital media and SaaS space is highly competitive, with significant competition from large, well-capitalized businesses such as Google, Yelp, and Facebook. Thryv's strategic shift to SaaS and planned termination of Marketing Services aligns with these broader industry trends, aiming to capitalize on the growth in cloud-based business management tools while phasing out declining legacy services.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or results to global benchmarks for a detailed assessment. However, the strategic shift towards SaaS and away from traditional print/digital marketing services is a common trend among legacy media companies adapting to digital transformation.
• The decline in Marketing Services revenue and client base reflects the broader industry trend of decreasing demand for print directories and increasing competition in the digital advertising space from major players like Google and Facebook.
• The growth in SaaS revenue and client base, along with increased SaaS ARPU, indicates a positive alignment with the growing market for small business management software and customer experience tools, a segment where companies like HubSpot, Salesforce (for SMBs), and other CRM/marketing automation providers compete.

Legal Proceedings

• The company received a subpoena from the SEC's Division of Enforcement in October 2024, requesting documents and information related to the strategic conversion of clients from Digital marketing services to SaaS solutions. The company is cooperating fully.
• The company settled its Section 199 deduction claim on favorable terms and reached an agreement regarding additional research and development tax credits with the IRS for the YP LLC partnership, with a final court decision entered on October 22, 2024.
• A Proposed Stipulated Decision was filed on March 10, 2025, for the Print Media LLC partnership regarding the Section 199 tax case, applying the terms of the IRS settlement from the YP LLC partnership dispute.

Related Party Transactions

• As of September 30, 2025, 40.0% of the Term Loan Facility was held by a related party who was an equity holder of the company.

Stakeholder Impact

• Shareholders: Potential positive impact from improved profitability, share repurchase program, and growth in the SaaS segment, but also risks from overall revenue decline and SEC investigation.
• SMB Clients: Benefit from enhanced SaaS offerings and the Thryv Platform, but Marketing Services clients face a transition period with the planned termination of legacy services.
• Employees: Workforce adjustments and severance charges related to the shift from Marketing Services activities and post-acquisition integration (Keap Acquisition).
• Creditors: Debt refinancing and compliance with covenants provide stability, but overall revenue decline and NRR drop could impact future cash flow generation for debt service.
• Regulatory Authorities: Ongoing cooperation with the SEC regarding the subpoena and resolution of tax cases with the IRS.

Next Steps

• Continue to develop and improve SaaS solutions by analyzing user behavior, expanding features, improving usability, enhancing onboarding services and customer support, and making version updates.
• Further expand operations and current offerings into new markets, including internationally, through strategic acquisitions or initiatives.
• Manage the ongoing strategic termination of Marketing Services solutions by the end of 2028, focusing on converting clients to the Thryv Platform.
• Monitor and manage compliance with debt covenants under the Term Loan and ABL Facility.
• Continue to assess the provisions and potential impact of the One Big Beautiful Bill Act (OBBBA) on federal tax law.
• Execute the share repurchase program, subject to market conditions and capital needs.

Key Dates

Recommendation

Thryv Holdings is in a significant transitional phase, successfully growing its higher-margin SaaS segment and returning to net income profitability in Q3 2025. This strategic pivot is positive for long-term value creation. However, the overall revenue decline for the nine-month period, the decrease in total clients, and the drop in SaaS Seasoned NRR indicate ongoing challenges in managing the decline of the Marketing Services segment and retaining existing SaaS customers. The SEC subpoena also introduces regulatory uncertainty. Given these mixed signals—strong SaaS growth and profitability offset by legacy business decline and NRR concerns—a 'hold' recommendation is appropriate. Investors should monitor the company's ability to sustain SaaS growth, improve NRR, and manage the Marketing Services wind-down effectively, while also keeping an eye on the outcome of the SEC investigation.

Keywords

Thryv, SaaS, Marketing Services, SMB, Keap, SEC filing, Q3 2025, financial results, digital marketing, small business software, revenue growth, profitability, debt refinancing, share repurchase