10-Q: Thryv Holdings Reports Q2 2026 Results: Revenue Down, Net Loss Widens

Thryv Holdings, Inc. announced its financial results for the second quarter of 2026, reporting a substantial decrease in revenue and a widening net loss compared to the prior year period.

Summary

• Thryv Holdings reported a net loss of $16.7 million for the three months ended June 30, 2026, a significant increase from a net income of $13.9 million in the same period last year.
• Revenue for the quarter declined by 28.4% to $150.7 million, primarily driven by a sharp 62.0% drop in Marketing Services revenue.
• SaaS revenue saw a slight decrease of 0.5% to $114.5 million, while Marketing Services revenue fell to $36.2 million.
• Total clients decreased by 18% to 215,000 as of June 30, 2026, compared to 261,000 in the prior year.
• The company incurred $3.1 million in restructuring costs during the quarter and anticipates additional costs of $17.0 million to $22.0 million through 2027.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative sentiment due to significant revenue decline, increased net loss, and reduced client numbers, despite some positive trends in the SaaS segment.

Positives

• SaaS revenue saw a slight increase of 2.2% to $231.2 million for the six months ended June 30, 2026, driven by new sales, client expansion, and conversions from Digital marketing services.
• Monthly ARPU for SaaS increased by 12% to $394 for the three months ended June 30, 2026, compared to the prior year, attributed to upselling and price increases.
• The company remains compliant with its Term Loan and ABL Facility covenants.
• The company has $34.5 million remaining under its share repurchase program.

Negatives

• Net loss for the three months ended June 30, 2026, was $16.7 million, compared to a net income of $13.9 million in the prior year.
• Revenue for the three months ended June 30, 2026, decreased by 28.4% to $150.7 million.
• Marketing Services revenue saw a significant decline of 62.0% to $36.2 million for the three months ended June 30, 2026.
• Total clients decreased by 18% to 215,000 as of June 30, 2026.
• Seasoned Net Revenue Retention for SaaS decreased to 90% from 102% in the prior year.
• Gross margin decreased to 62.7% from 69.7% for the three months ended June 30, 2026.
• Adjusted EBITDA decreased by 59.4% to $20.8 million for the three months ended June 30, 2026.

Risks

• Significant competition for Marketing Services solutions 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 system interruptions, cybersecurity breaches, or data loss.
• Risks associated with the use of artificial intelligence, including potential reputational harm and legal liability.
• The company plans to exit its Marketing Services business by the end of 2028.
• The company is subject to a subpoena from the SEC's Division of Enforcement regarding its client conversion strategy.

Future Outlook

The company expects to be in compliance with its debt covenants for the next twelve months. The company anticipates incurring additional restructuring costs of $17.0 million to $22.0 million through 2027. Expected total capital expenditures for the remainder of 2026 are approximately $18.0 million.

Management Comments

• StockSavvy.ai notes that management's discussion focuses on the strategic shift towards SaaS and the planned exit of the Marketing Services business, highlighting the challenges and opportunities associated with this transition.
• Management emphasizes the growing demand for integrated technology solutions among SMBs and their strategy to expand SaaS offerings.
• The company is cooperating fully with the SEC subpoena regarding client conversion strategies.

Industry Context

StockSavvy.ai observes that Thryv's results reflect broader industry trends of declining print media and increasing competition in the digital and SaaS space, particularly from larger players like Google, Yelp, and Facebook. The company's strategic pivot towards SaaS is a common response to these market dynamics.

Comparison to Industry Standards

• The decline in Marketing Services revenue and ARPU is consistent with the secular decline in the print media industry.
• The increase in SaaS ARPU, despite overall SaaS revenue stagnation, suggests successful upselling and pricing strategies within the SaaS segment, which is a positive indicator in the competitive SaaS market.
• The decrease in Seasoned Net Revenue Retention for SaaS to 90% is a concern, as industry benchmarks for mature SaaS companies often aim for retention rates above 100% to demonstrate growth from existing customers.

Legal Proceedings

• The company is subject to various lawsuits and 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 to SaaS solutions.
• The company is engaged in discussions and negotiations with tax authorities regarding tax matters, including notices of tax due and intent to levy for tax years 2012-2015.

Related Party Transactions

• As of June 30, 2026, 40.0% of the Term Loan was held by a related party who was an equity holder of the Company.

Stakeholder Impact

• Shareholders may be negatively impacted by the widening net loss, declining revenue, and reduced client base.
• Employees may be affected by ongoing restructuring initiatives and workforce reductions.
• Creditors and lenders will monitor the company's ability to meet debt service requirements, although current covenant compliance is noted.

Next Steps

• Continue to develop and grow the profitable SaaS segment.
• Execute the strategic decision to terminate Marketing Services by the end of 2028.
• Continue to monitor capital requirements and ensure needs align with available resources.
• Complete ongoing restructuring initiatives through 2027.
• Address tax notices and pursue a payment plan with the IRS.

Key Dates

Recommendation

The significant decline in revenue, widening net loss, and reduction in client numbers, coupled with a decrease in key SaaS metrics like Seasoned NRR, suggest a deteriorating financial performance. While the company is transitioning to SaaS, the current results and outlook indicate substantial headwinds and a need for significant operational improvement before a positive investment thesis can be formed.

Keywords

SaaS, Marketing Services, SMB, Client Conversion, Revenue Decline, Net Loss, Thryv Platform, Financial Results