8-K: Thryv Outlines Strategic Priorities and Financial Outlook at Analyst Day, Targeting SaaS Dominance

Thryv's Analyst Day presentation detailed the company's strategic shift towards SaaS, highlighted by the Keap acquisition and the planned exit from marketing services.

Summary

• Thryv hosted an Analyst Day on December 3, 2024, outlining its strategic priorities and financial outlook.
• The company is focusing on its SaaS platform, aiming for SaaS revenue to be the majority of total revenue in 2025 and SaaS EBITDA to be the majority of consolidated EBITDA in 2026.
• Thryv is exiting its marketing services business by 2028, with the print business expected to generate $250-$300 million in unlevered free cash flow from 2025 to 2030.
• The recent acquisition of Keap is expected to provide cost savings, enhance competitive advantage, and accelerate innovation.
• Thryv is launching two new centers: the Thryv Reporting Center and the Thryv Workforce Center (slated for H2 2025).
• The company projects organic SaaS revenue growth of 18%-20% in 2025 and approximately 20% in the medium term.
• Keap revenue is projected to be $75m-$78m in 2025 and return to growth in 2026.
• SaaS adjusted gross margin is expected to be 74% in 2025 and approximately 80% in the medium term.
• SaaS EBITDA is projected to be in the mid-teens margin in 2025, including $10m of Keap synergies, and approximately 20% in the medium term.

Sentiment

Score: 8

Explanation: The document presents a positive outlook for Thryv, with a clear strategic direction towards SaaS, strong growth projections, and a focus on profitability. The acquisition of Keap and the planned exit from marketing services are viewed as positive steps. The company is also showing strong net revenue retention and progress towards the Rule of 40.

Positives

• The strategic shift towards SaaS is expected to drive long-term growth and profitability.
• The Keap acquisition provides a strong partner channel and complementary product suite.
• The launch of new centers enhances the platform's value proposition for small businesses.
• The planned exit from marketing services allows Thryv to focus on its core SaaS business.
• The company is generating significant free cash flow from its print business.
• Thryv is experiencing strong net revenue retention, indicating customer satisfaction and loyalty.
• The company is making progress towards achieving the Rule of 40, demonstrating a balance of growth and profitability.
• Thryv is seeing an increase in paid centers per client, showing the success of its land-and-expand strategy.

Negatives

• The marketing services business is declining, with a projected revenue decline of approximately 35% in 2025.
• The company is undergoing a significant transition, which may present challenges in the short term.
• The exit from marketing services will result in a loss of revenue, although this is planned and expected.
• The company is still in the process of integrating Keap, which may present some integration risks.

Risks

• The transition to a SaaS-focused business may not be as smooth as anticipated.
• The integration of Keap may present unforeseen challenges.
• The decline in marketing services revenue may be steeper than projected.
• The company's ability to achieve its financial targets is subject to market conditions and other factors.
• The company is exposed to risks associated with the small business market, including economic downturns and changing customer preferences.

Future Outlook

Thryv is focused on transitioning to a SaaS-dominant business, with significant growth expected in SaaS revenue and EBITDA. The company anticipates positive EPS in the second half of 2025 and continued cash flow through 2030.

Management Comments

• Joe Walsh, Thryv Chairman and CEO, stated that the company has continued to execute on its transformation strategy and improve its SaaS metrics.
• Joe Walsh highlighted that the Keap acquisition expands Thryv's integrated set of marketing and sales solutions and adds a strong global partner channel.
• Joe Walsh mentioned that the company is increasing paid centers per client, demonstrating the success of its land-and-expand strategy.
• Joe Walsh stated that the 2025 outlook and medium-term outlook validate the strength of Thryv's product portfolio, business model, and balance sheet.

Industry Context

Thryv's strategic shift towards SaaS aligns with the broader industry trend of small businesses adopting digital solutions. The company is positioning itself to capitalize on the increasing demand for integrated software platforms that help small businesses manage their operations and grow their brand. The acquisition of Keap is a move to strengthen its position in the marketing automation space.

Comparison to Industry Standards

• Thryv's total revenue growth of 29% compares favorably to EverCommerce (4%) and Bill.com (18%), but is slightly higher than ServiceTitan (24%) and HubSpot (20%).
• Thryv's non-GAAP gross margin of 72% is lower than HubSpot (87%) and Bill.com (86%), but higher than ServiceTitan (70%) and EverCommerce (66%).
• Thryv's non-GAAP profit margin of 12% is lower than HubSpot (19%), Bill.com (19%) and EverCommerce (25%), but higher than ServiceTitan (5%).
• Thryv's Rule of 40 score of 41% is comparable to HubSpot (39%), Bill.com (37%) and EverCommerce (30%), but higher than ServiceTitan (29%).
• Thryv's net revenue retention of 101% is comparable to HubSpot (102%) and ServiceTitan (110%), but higher than Bill.com (92%) and EverCommerce (96%).
• ServiceTitan's active customer growth of 18% is lower than Thryv's 45%.

Stakeholder Impact

• Shareholders are expected to benefit from the company's strategic shift towards SaaS and improved financial performance.
• Employees will be impacted by the company's transition, with potential changes in roles and responsibilities.
• Customers will benefit from the enhanced SaaS platform and new features.
• Suppliers may be impacted by the company's exit from marketing services.
• Creditors will be reassured by the company's strong cash flow and deleveraging plans.

Next Steps

• Thryv will continue to execute its strategic plan, focusing on growing its SaaS business.
• The company will integrate Keap into its platform and realize cost synergies.
• Thryv will launch the Thryv Workforce Center in H2 2025.
• The company will manage the exit from its marketing services business, migrating digital clients to SaaS.
• Thryv will continue to invest in product development and innovation.

Key Dates

Keywords

SaaS, Small Business Software, Keap, Marketing Automation, Digital Transformation, Software Platform, Financial Outlook, Revenue Growth, EBITDA, Rule of 40, Net Revenue Retention, Productivity, Marketing Services, Print Directories