10-K: Thryv Holdings Reports Full Year 2024 Results; Announces Strategic Shift to SaaS

Thryv Holdings, Inc. announces its full year 2024 results, highlighting a strategic decision to exit the Marketing Services business by 2028 and focus on its SaaS platform.

Summary

• Thryv Holdings, Inc. reported its full year 2024 financial results.
• A strategic decision was made to terminate Marketing Services solutions by the end of 2028, transitioning to a SaaS-driven business model.
• The company serves approximately 300,000 SMB clients through its Thryv SaaS and Thryv Marketing Services segments.
• On October 31, 2024, Thryv acquired Keap, a SaaS email marketing and sales platform for small businesses, for $76.9 million in cash.
• Thryv Marketing Services revenue was $480.7 million for the year ended December 31, 2024.
• Thryv SaaS revenue was $343.5 million for the year ended December 31, 2024.
• The company recognized total non-cash impairment charges of $83.1 million in the third quarter of 2024 related to its Thryv Marketing Services segment.
• As of December 31, 2024, the company had $253.3 million of goodwill, all of which related to the Thryv SaaS segment.
• The company reported a net loss of $74.2 million for the year ended December 31, 2024.
• The company's strategy includes transitioning digital Marketing Services clients to the Thryv Platform and cross-selling SaaS products to existing clients.

Sentiment

Score: 5

Explanation: The document presents a mixed sentiment. While the strategic shift to SaaS and the acquisition of Keap are positive developments, the reported net loss and declining Marketing Services revenue temper the overall outlook. The sentiment is neutral as the company is making strategic changes to improve future results.

Positives

• The company is strategically transitioning to a higher-growth SaaS business model.
• The acquisition of Keap expands the company's SaaS capabilities and market reach.
• SaaS revenue increased by $79.8 million, or 30.2%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
• Approximately 46,000 clients were converted from digital Marketing Services to the Thryv Platform in 2024, contributing to SaaS revenue growth.
• Seasoned Net Revenue Retention for SaaS increased to 98% for the year ended December 31, 2024.

Negatives

• The company experienced a net loss of $74.2 million for the year ended December 31, 2024.
• Marketing Services revenue decreased by $172.6 million, or 26.4%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
• The company recognized total non-cash impairment charges of $83.1 million in the third quarter of 2024 related to its Thryv Marketing Services segment.
• Total clients decreased by 50 thousand, or 14%, as of December 31, 2024 as compared to December 31, 2023.
• SaaS monthly ARPU decreased by $42, or 11%, during the year ended December 31, 2024 compared to the year ended December 31, 2023.

Risks

• The company faces significant competition in both Marketing Services and SaaS.
• The company's ability to transition Marketing Services clients to the Thryv Platform is crucial for offsetting declining Marketing Services revenue.
• The company's growth strategy relies on expanding its SaaS segment, which may strain management and infrastructure.
• The company is dependent on client renewals and the addition of new clients for its Thryv Platform.
• The company's reliance on third-party service providers poses risks to its business operations.
• Adverse economic conditions and public health epidemics could negatively impact the company's clients and their spending on the company's solutions.
• The company's use of AI presents emerging ethical issues, and if its use of AI becomes controversial, it may experience brand or reputational harm, competitive harm, or legal liability.
• The company is subject to litigation and regulatory investigations, including a subpoena from the SEC.

Future Outlook

The company plans to fully transition into a SaaS-driven business model by the end of 2028 and continues to expand into international markets.

Management Comments

• The company is committed to advancing the Thryv Platform as a catalyst for transformative growth.
• The company will continue to reduce debt and pursue acquisitions to create value for its stockholders.

Industry Context

The document indicates a shift away from traditional marketing services, like print directories, towards cloud-based SaaS solutions, reflecting a broader industry trend driven by the increasing importance of online and mobile presence for SMBs.

Comparison to Industry Standards

• The document does not provide specific comparisons to industry standards.
• However, it mentions competition from point solution providers, vertical solutions, and all-in-one competitors in the SaaS space.
• Companies like HubSpot, Salesforce, and Zoho offer competing CRM and marketing automation solutions.
• In the marketing services space, companies like Yelp, Google, and Facebook compete for SMB advertising spend.

Legal Proceedings

• The company received a subpoena from the Division of Enforcement of the SEC requesting documents and information related to the company's previously publicly announced strategic conversion of its clients from its digital marketing services solutions platform to its SaaS solutions platform.

Related Party Transactions

• 40.0% of the New Term Loan was held by a related party who was an equity holder of the Company as of May 1, 2024.

Stakeholder Impact

• Shareholders may experience short-term volatility due to the strategic shift and reported net loss.
• Employees in the Marketing Services segment may face uncertainty due to the planned termination of that business.
• Clients may benefit from the company's focus on SaaS solutions and the integration of Keap's capabilities.

Next Steps

• The company will continue to transition clients from Marketing Services to the Thryv Platform.
• The company will focus on expanding its SaaS offerings and penetrating international markets.
• The company will manage its Marketing Services offerings to maximize profitability until their termination in 2028.
• The company will continue to reduce debt and pursue acquisitions to create value for its stockholders.

Key Dates