10-Q: Thryv Holdings Reports Q1 2025 Results: SaaS Growth Partially Offsets Decline in Marketing Services

Thryv Holdings' Q1 2025 results show a decrease in overall revenue, with growth in the SaaS segment partially offsetting a significant decline in the Marketing Services segment.

Summary

• Thryv Holdings reported a net loss of $9.6 million for Q1 2025, compared to a net income of $8.4 million in Q1 2024.
• Total revenue decreased by 22.4% to $181.4 million, driven by a decline in Marketing Services revenue.
• Thryv SaaS revenue increased by 49.5% to $111.1 million, attributed to the conversion of clients from digital Marketing Services and the acquisition of Keap.
• Thryv Marketing Services revenue decreased by 55.9% to $70.2 million due to the secular decline in print media and the strategic shift to SaaS offerings.
• Adjusted EBITDA decreased by 61.4% to $20.9 million.
• The company converted approximately 44,000 clients from digital Marketing Services to the Thryv Platform, generating an $11.3 million increase in SaaS revenue.
• Seasoned Net Revenue Retention for SaaS increased to 103% from 94% in the prior year.
• The company repurchased approximately $0.5 million of its common stock under the share repurchase program, with $39.5 million remaining available for repurchases.

Sentiment

Score: 5

Explanation: The document presents mixed signals. While SaaS revenue is growing, the overall financial performance is down due to the decline in Marketing Services. The company is strategically shifting towards SaaS, but the transition is impacting current results.

Positives

• Thryv SaaS revenue increased by 49.5%, indicating successful growth in the SaaS segment.
• The conversion of digital Marketing Services clients to the Thryv Platform contributed to a $11.3 million increase in SaaS revenue.
• Seasoned Net Revenue Retention for SaaS increased to 103%, showing improved client retention and revenue expansion.
• The company is in compliance with its Term Loan and ABL Facility covenants.
• The company continues to innovate and improve its SaaS solutions by analyzing user behavior, expanding features, improving usability, enhancing onboarding services and customer support and making version updates available to SMBs.

Negatives

• The company reported a net loss of $9.6 million, compared to a net income of $8.4 million in the same period last year.
• Total revenue decreased by 22.4%, primarily due to the decline in the Marketing Services segment.
• Thryv Marketing Services revenue decreased significantly by 55.9%.
• Adjusted EBITDA decreased by 61.4%.
• Monthly ARPU for Marketing Services decreased by 23% to $111.
• Monthly ARPU for SaaS decreased by 9% to $335.

Risks

• The company faces risks related to general economic conditions and increased competition.
• The transition of Marketing Services clients to SaaS offerings may not be fully embraced, leading to higher churn rates.
• Macroeconomic factors such as tariffs, trade wars, recession, and inflation could negatively impact SMB customers and reduce demand.
• The company's growth prospects depend on successfully developing new markets and executing strategic acquisitions.
• The company is subject to various lawsuits and other claims in the normal course of business.
• The company is subject to a regulatory matter involving a subpoena from the SEC.

Future Outlook

The company expects its Marketing Services segment to continue to serve as an efficient customer acquisition channel for its SaaS platform until its termination in 2028. The company believes that expected cash flows from operations, available cash and cash equivalents, and funds available under its ABL Facility will be sufficient to meet its liquidity requirements for the following 12 months.

Management Comments

• The company is dedicated to supporting local, independent businesses and franchises by providing innovative marketing solutions and cloud-based tools to the entrepreneurs who run them.
• SMB demand for integrated technology solutions continues to grow as SMBs adapt their business and service model to facilitate remote working and virtual interactions.
• The company made a strategic decision to terminate our Marketing Services solutions by the end of 2028.

Industry Context

The decline in Thryv's Marketing Services segment reflects the broader industry trend of declining print media and increasing competition in the digital marketing space. The company's focus on SaaS solutions aligns with the growing demand for integrated technology solutions among SMBs.

Comparison to Industry Standards

• Comparing Thryv's SaaS growth to companies like HubSpot and Salesforce, which also target SMBs, shows a competitive landscape where integrated platforms are gaining traction.
• The decline in print revenue is consistent with trends seen at other legacy directory publishers such as Gannett and Tronc, which have also struggled to offset print declines with digital growth.
• Thryv's seasoned net revenue retention rate of 103% is comparable to other SaaS companies in the SMB space, such as Bill.com and Intuit Quickbooks, which also focus on retaining and expanding revenue from existing customers.

Legal Proceedings

• The Company is subject to various lawsuits and other claims in the normal course of business.
• In October 2024, 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

• As of March 31, 2025, 40.0% of the Term Loan was held by a related party who was an equity holder of the Company as of that date.

Stakeholder Impact

• Shareholders may be concerned about the net loss and decline in revenue, but encouraged by the growth in the SaaS segment.
• Employees in the Marketing Services segment may face uncertainty due to the strategic decision to terminate those solutions by 2028.
• Customers may benefit from the transition to SaaS offerings, but some may be negatively impacted by the decline in Marketing Services.

Next Steps

• The company intends to continue to develop and grow a profitable SaaS segment.
• The company plans to leverage strategic acquisitions or initiatives to expand its client base domestically and enter new markets internationally.
• The company expects to complete resolution of certain tax years with various tax authorities within the next 12 months.

Key Dates

Keywords

Thryv, SaaS, Marketing Services, Revenue, EBITDA, Net Loss, Client Conversion, ARPU, Share Repurchase, Keap, Digital Marketing, Print Yellow Pages