8-K: Thryv Holdings Reports Strong Q2 2025 SaaS Growth, Exceeding Guidance

Thryv Holdings, Inc. announced robust second-quarter 2025 results, driven by significant SaaS revenue growth and improved profitability, surpassing prior guidance.

Summary

• SaaS revenue increased by 48% year-over-year to $115.0 million in Q2 2025.
• SaaS revenue excluding Keap grew by 25% year-over-year to $97.3 million.
• Consolidated total revenue for Q2 2025 was $210.5 million, a 6% decrease year-over-year, primarily due to a 35% decline in Marketing Services revenue to $95.5 million.
• Consolidated net income for Q2 2025 was $13.9 million, or $0.31 per diluted share, compared to $5.5 million, or $0.15 per diluted share, in Q2 2024.
• Consolidated Adjusted EBITDA was $51.2 million, with a margin of 24.3%.
• SaaS Adjusted EBITDA reached $23.4 million, representing a record margin of 20.3%.
• SaaS clients increased by 25% year-over-year to 106 thousand, with SaaS clients excluding Keap growing 8% to 92 thousand.
• Seasoned Net Revenue Retention (excluding Keap) was 103% for Q2 2025, an increase of 900 basis points year-over-year.
• SaaS monthly Average Revenue per Unit (ARPU) was $352.
• ThryvPay total payment volume increased by 13% year-over-year to $90 million.
• The company reduced its Term Debt by $26 million, lowering required amortization.

Sentiment

Score: 8

Explanation: The company reported strong SaaS revenue growth and improved SaaS profitability, exceeding prior guidance. Debt reduction and positive free cash flow outlook contribute to a positive sentiment, despite the expected decline in the legacy Marketing Services segment.

Positives

• SaaS revenue grew significantly by 48% year-over-year to $115.0 million, demonstrating strong performance in the core growth segment.
• SaaS Adjusted EBITDA increased by 130.1% year-over-year to $23.4 million, achieving a record margin of 20.3%.
• Consolidated net income more than doubled to $13.9 million from $5.5 million in the prior year quarter.
• The company exceeded its prior guidance for the second quarter.
• SaaS client base expanded by 25% year-over-year to 106 thousand, indicating successful customer acquisition.
• Seasoned Net Revenue Retention (excluding Keap) improved by 900 basis points year-over-year to 103%, reflecting strong customer retention and expansion.
• Term Debt was reduced by $26 million, improving the balance sheet and financial flexibility.
• Management stated that the 'pinch point' of the SaaS transformation has been successfully navigated ahead of plan, with free cash flow expected to ramp in the second half of 2025.

Negatives

• Consolidated total revenue decreased by 6% year-over-year to $210.5 million, primarily due to the ongoing decline in the Marketing Services segment.
• Marketing Services revenue decreased by 35% year-over-year to $95.5 million, reflecting the planned transition away from this legacy business.
• Consolidated Adjusted EBITDA decreased by 13.6% year-over-year to $51.2 million, impacted by the decline in the higher-margin Marketing Services segment.

Risks

• Significant competition exists for Marketing Services solutions and SaaS offerings, including from companies using third-party SaaS components.
• Ability to maintain profitability and effectively manage growth is crucial.
• Challenges in transitioning Marketing Services clients to the Thryv platform, retaining them, and upselling additional products.
• Potential inability to sell the platform into new markets or further penetrate existing ones.
• Reliance on maintaining strategic relationships with third-party service providers.
• Internet search engines and portals may terminate or materially alter agreements with the company.
• Difficulty in keeping pace with rapid technological changes and evolving industry standards.
• Small and medium-sized business (SMB) clients may opt not to renew agreements or renew at lower spend levels.
• Risk of system interruptions or failures, including cybersecurity breaches, identity theft, data loss, or unauthorized data access.
• Potential failure to identify suitable acquisition candidates, consummate acquisitions, or successfully integrate acquired businesses like Keap.
• Risk of losing key employees or inability to attract and retain highly skilled personnel.
• Challenges in maintaining compatibility of the Thryv platform with third-party applications.
• Potential failure to successfully expand operations and offerings into new markets, including internationally.
• Risk of failing to provide new or enhanced functionality and features.
• Potential non-compliance with applicable privacy, security, and data laws, regulations, and standards.
• Changes in regulations governing privacy concerns and data protection could negatively impact operations.
• Potential failure to meet service level commitments under client contracts or offer high-quality technical support services.
• The Thryv platform and add-ons may fail to perform properly.
• The use of artificial intelligence (AI) in the business, and challenges with properly managing its use, could result in reputational harm, competitive harm, and legal liability.
• Potential impact of future labor negotiations.
• Challenges in protecting intellectual property rights, proprietary technology, information, processes, and know-how.
• Rising inflation and the company's ability to control costs, including operating expenses.
• General macro-economic conditions, including a 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 a subpoena from the Division of Enforcement of the Securities and Exchange Commission (SEC).
• Volatility and weakness in bank and capital markets.
• Costs, obligations, and liabilities incurred as a public company.

Future Outlook

For the third quarter of 2025, Thryv expects SaaS revenue between $116.0 million and $117.0 million, and SaaS Adjusted EBITDA between $18.5 million and $19.5 million. Marketing Services revenue is projected to be $84.0 million to $85.0 million, with Marketing Services Adjusted EBITDA between $22.0 million and $23.0 million. For the full year 2025, the company anticipates SaaS revenue of $460.0 million to $465.0 million, representing a 34% to 35% increase, and SaaS Adjusted EBITDA of $70.5 million to $73.5 million, with margins in the mid-teens. Full year Marketing Services revenue is expected to be $323.0 million to $325.0 million, a decline of approximately 32% to 33%, with Adjusted EBITDA margins in the mid-twenties.

Management Comments

• "We delivered a solid second quarter exceeding our prior guidance and achieving strong top-line SaaS growth coupled with our highest SaaS Adjusted EBITDA margin to date."
• "Equally important, we've now successfully navigated the pinch point of the Company's SaaS transformation ahead of plan."
• "The temporary increase in anticipated leverage, driven by revenue recognition timing in the Marketing Services business, is now behind us."
• "With free cash flow expected to ramp in the second half of the year, leverage is positioned to decline, supporting greater financial flexibility and a stronger balance sheet."

Industry Context

Thryv's strong SaaS revenue growth and increasing client base align with the broader industry trend of small and medium-sized businesses (SMBs) adopting digital tools for marketing, sales, and operations. The company's strategic shift from traditional Marketing Services to a SaaS-centric model positions it within the expanding cloud-based business software market. While the legacy Marketing Services segment faces expected declines, the robust performance of the SaaS platform indicates successful adaptation to the evolving digital landscape for SMBs, a highly competitive but growing sector.

Comparison to Industry Standards

• No specific comparable companies, projects, or results were mentioned in the filing for direct comparison to industry standards.

Stakeholder Impact

• Shareholders: The strong SaaS growth, improved profitability, and exceeding of guidance are positive indicators for shareholder value. Debt reduction and expected free cash flow ramp enhance financial stability.
• Customers: The increase in SaaS clients and Average Revenue per Unit (ARPU) suggests successful adoption and value delivery of the Thryv platform to small businesses. The growth in ThryvPay volume indicates increased engagement with payment solutions.
• Employees: The company continues its business transformation, which may involve ongoing restructuring efforts (as indicated by restructuring and integration expenses in prior periods), but the focus on SaaS growth could lead to new opportunities.
• Creditors: The reduction in term debt and the expectation of declining leverage and ramping free cash flow in the second half of the year are positive for creditors, indicating improved financial health and ability to service debt.

Next Steps

• A conference call will be held on July 30, 2025, to discuss the second quarter 2025 results.
• Free cash flow is expected to ramp in the second half of 2025.

Key Dates

Recommendation

Thryv's strong performance in its strategic SaaS segment, marked by significant revenue growth and improved profitability, indicates a successful business transformation. Exceeding guidance and reducing debt further strengthens the financial position, making it an attractive investment despite the planned decline in the legacy Marketing Services business.

Keywords

Thryv, SaaS, Small Business Software, Marketing Services, Financial Results, Earnings, Q2 2025, Keap, ThryvPay, SMB, Adjusted EBITDA, Revenue Retention, Debt Reduction