8-K: Thryv Holdings Reports Strong Q4 2024 Results, Driven by SaaS Revenue Growth

Thryv Holdings saw a 41% year-over-year increase in total SaaS revenue in Q4 2024, exceeding guidance and highlighting its transformation into a leading software company.

Summary

• Thryv Holdings reported a 41% year-over-year increase in total SaaS revenue for the fourth quarter of 2024, reaching $104.3 million.
• Excluding Keap's revenue, Thryv SaaS revenue grew by 23% year-over-year to $90.9 million.
• Total Marketing Services revenue decreased by 49% year-over-year to $82.3 million due to the timing of print publication cycles.
• Consolidated total revenue was $186.6 million, a 21% decrease year-over-year.
• Consolidated net income was $7.9 million, or $0.19 per diluted share, compared to a net loss of $257.5 million in the same quarter of the previous year.
• Consolidated Adjusted EBITDA was $29.4 million, with a margin of 15.7%.
• Total SaaS Adjusted EBITDA was $17.3 million, representing a 16.6% margin.
• For the full year 2024, total SaaS revenue increased by 30% year-over-year to $343.5 million.
• The company's total SaaS clients increased 73% year-over-year to 114,000.
• Seasoned Net Revenue Retention was 98% for Q4 2024, excluding Keap.
• SaaS monthly Average Revenue per Unit (ARPU) was $324 for Q4 2024.
• ThryvPay total payment volume was $79 million, a 33% increase year-over-year.
• The company is issuing guidance for Q1 2025 and full year 2025, projecting SaaS revenue between $464.5 million and $474.0 million for the year, with Keap expected to contribute $75 to $78 million.
• Marketing Services revenue is expected to be between $310.0 million and $314.0 million for the full year 2025.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong SaaS growth and improved profitability, although some challenges remain in the Marketing Services segment. The acquisition of Keap is expected to further boost SaaS revenue in 2025.

Positives

• Significant growth in SaaS revenue, both including and excluding the Keap acquisition.
• Substantial increase in total SaaS subscribers.
• Strong Seasoned Net Revenue Retention rate.
• Improved SaaS Adjusted EBITDA margin.
• Growth in ThryvPay total payment volume.
• Positive net income compared to a significant net loss in the previous year.
• Decrease in pension obligations from $69.4 million to $38.0 million year-over-year.

Negatives

• Decrease in Total Marketing Services revenue due to print publication cycles.
• Decline in consolidated total revenue year-over-year.
• Decrease in operating cash flow from $148.2 million to $89.8 million year-over-year.
• Decrease in free cash flow from $114.8 million to $56.2 million year-over-year.

Risks

• Significant competition in the marketing services and SaaS sectors.
• The ability to manage growth effectively.
• The ability to transition marketing services clients to the Thryv platform.
• Potential system interruptions or failures, including cybersecurity breaches.
• The potential loss of key employees.
• Rising inflation and the ability to control costs.
• General macro-economic conditions, including a recession or an economic slowdown.

Future Outlook

Thryv expects SaaS revenue between $464.5 million and $474.0 million for the full year 2025, with Keap contributing $75 to $78 million. Marketing Services revenue is expected to be between $310.0 million and $314.0 million for the full year 2025.

Management Comments

• 'We delivered a strong fourth quarter with a robust increase in revenue and record SaaS margins, reaching a pivotal inflection point as SaaS now drives the majority of our revenue, reinforcing our transformation into a leading software company,' said Joe Walsh, Thryv Chairman and CEO.
• Paul Rouse, Chief Financial Officer, stated, 'We are demonstrating the increasing profitability of each incremental dollar of revenue as we continued to effectively scale our platform and delivered record SaaS gross margins.'

Industry Context

The announcement reflects the ongoing shift in the small business software market towards SaaS solutions, with Thryv positioning itself to capitalize on this trend through acquisitions like Keap and a focus on platform scalability and profitability.

Comparison to Industry Standards

• Comparing Thryv's SaaS growth to industry peers like HubSpot and Shopify, which have also seen significant growth in recent years, Thryv's 41% SaaS revenue increase in Q4 2024 is competitive.
• However, it's important to note that these companies operate at different scales and target different segments of the SMB market.
• Thryv's Seasoned Net Revenue Retention of 98% is a strong indicator of customer loyalty and platform stickiness, aligning with industry benchmarks for successful SaaS companies.
• Companies like Salesforce and ZoomInfo also prioritize NRR as a key performance indicator.
• ThryvPay's 33% increase in total payment volume demonstrates the growing adoption of integrated payment solutions within the Thryv platform, similar to trends seen with Square and other payment processors catering to SMBs.

Stakeholder Impact

• Shareholders will likely react positively to the strong SaaS growth and improved profitability.
• Employees may benefit from the company's growth and success.
• Customers will have access to a broader range of solutions through the integration of Keap.
• Suppliers may see increased demand as the company continues to grow.
• Creditors may view the company as a lower risk due to its improved financial performance.

Next Steps

• The company will host a conference call on February 27, 2025, to discuss the Q4 2024 results.
• The company will focus on integrating Keap and driving further growth in its SaaS business.
• The company will work to manage the decline in Marketing Services revenue and improve profitability in that segment.

Key Dates