8-K: Thryv Holdings Reports Strong SaaS Growth, Raises Full-Year Guidance

Thryv Holdings announced a 25% year-over-year increase in SaaS revenue for the second quarter of 2024 and raised its full-year SaaS Adjusted EBITDA guidance.

Summary

• Thryv Holdings reported a 25% year-over-year increase in SaaS revenue, reaching $77.8 million in the second quarter of 2024.
• The company's SaaS subscriber base grew by 52% year-over-year, totaling 85,000 clients.
• Thryv's SaaS Adjusted EBITDA exceeded the guidance range by $2 million in Q2 2024.
• Consolidated total revenue decreased by 11% year-over-year to $224.1 million.
• Consolidated net income was $5.5 million, or $0.15 per diluted share, compared to $16.0 million, or $0.43 per diluted share, in the second quarter of 2023.
• The company's Seasoned Net Dollar Retention for SaaS was 94%, a 500 bps increase year-over-year.
• SaaS monthly Average Revenue per Unit (ARPU) was $333 for the second quarter of 2024.
• ThryvPay total payment volume increased by 34% year-over-year to $80 million.
• The company has raised its full-year 2024 SaaS Adjusted EBITDA guidance to $30-$32 million.
• Marketing Services revenue decreased by 23% year-over-year to $146.3 million.

Sentiment

Score: 7

Explanation: The document shows strong positive momentum in the SaaS segment, with significant revenue and subscriber growth, and increased guidance. However, the decline in Marketing Services revenue and overall net income tempers the positive sentiment.

Positives

• The company experienced strong growth in its SaaS business, with a 25% increase in revenue and a 52% increase in subscribers.
• SaaS Adjusted EBITDA exceeded expectations, indicating improved profitability in this segment.
• The company's Seasoned Net Dollar Retention improved significantly, showing strong customer loyalty and expansion.
• ThryvPay payment volume saw substantial growth, demonstrating increased adoption of the platform's payment solutions.
• The company raised its full-year SaaS Adjusted EBITDA guidance, reflecting confidence in future performance.
• SaaS Adjusted Gross Profit Margin improved to 69.7%, indicating efficient operations.
• The multi-center strategy is gaining traction with more clients using multiple paid centers.

Negatives

• Consolidated total revenue decreased by 11% year-over-year, primarily due to a 23% decline in Marketing Services revenue.
• Consolidated net income decreased significantly from $16.0 million to $5.5 million year-over-year.
• Marketing Services revenue declined by 23% year-over-year, indicating challenges in this segment.
• Consolidated Adjusted EBITDA decreased by 14.6% year-over-year.

Risks

• The company faces risks related to its ability to maintain adequate liquidity to fund operations.
• There are risks associated with the company's ability to successfully integrate acquired businesses.
• The company's performance is subject to general economic or business conditions affecting the markets it serves.
• The declining use of print yellow page directories poses a risk to the Marketing Services segment.
• The company faces credit risk associated with its reliance on small and medium-sized businesses as clients.
• Increased competition in the market could impact the company's ability to retain and attract new business.
• The company's ability to obtain future financing is subject to changes in lending markets or its financial position.
• Reduced advertising spending and increased contract cancellations by clients could reduce revenue.

Future Outlook

Thryv is issuing guidance for the third quarter and full year 2024, expecting SaaS revenue between $82-$84 million in Q3 and $326-$329 million for the full year, and SaaS Adjusted EBITDA between $9-$10 million in Q3 and $30-$32 million for the full year. The company expects lower print revenue in the second half of 2024 and Marketing Services EBITDA margins in the mid-teens due to a compressed print cycle.

Management Comments

• Joe Walsh, Thryv Chairman and CEO, stated that the company had a strong second quarter driven by 52% subscriber growth year-over-year.
• Joe Walsh also noted the successful upgrading of marketing service clients to the SaaS platform and the traction of the center strategy.
• Paul Rouse, Chief Financial Officer, stated that the company reported solid second quarter results and is raising its full year Adjusted EBITDA guidance for SaaS.

Industry Context

The results reflect a broader industry trend of businesses shifting towards SaaS solutions, with Thryv capitalizing on this trend through its platform. The decline in Marketing Services revenue highlights the ongoing challenges faced by traditional print advertising businesses.

Comparison to Industry Standards

• Thryv's 25% SaaS revenue growth is strong compared to some established SaaS companies, but it is important to compare it to similar companies targeting small businesses.
• Companies like Shopify and Intuit have shown strong growth in the small business SaaS space, and Thryv's growth rate is competitive.
• The 52% subscriber growth is a positive indicator of market adoption, but it needs to be sustained to compete with larger players.
• The 94% Seasoned Net Dollar Retention is a good indicator of customer satisfaction and long-term revenue potential, comparable to industry benchmarks for successful SaaS companies.
• The decline in Marketing Services revenue is consistent with the industry-wide decline in print advertising, and Thryv's focus on SaaS is a strategic move to adapt to this trend.

Stakeholder Impact

• Shareholders will likely react positively to the strong SaaS growth and increased guidance, but may be concerned about the decline in overall revenue and net income.
• Employees in the SaaS division may experience increased opportunities due to the growth of that segment.
• Customers using the SaaS platform will benefit from the company's continued investment in product development and AI capabilities.
• Suppliers to the Marketing Services division may face reduced demand due to the decline in that segment.

Next Steps

• The company will host a conference call on August 1, 2024, to discuss the second quarter 2024 results.
• The company will continue to focus on growing its SaaS business and upgrading marketing service clients to the SaaS platform.
• The company will continue to enhance its AI capabilities to improve client efficiency.

Key Dates

Keywords

SaaS, Software, Small Business, Revenue Growth, Adjusted EBITDA, Marketing Services, Subscribers, ThryvPay, ARPU, Net Dollar Retention