Thryv Holdings, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• SaaS Performance: Strong revenue growth, with Q4 total SaaS revenue up 41% YOY. Subscribers grew 50% YOY. Net revenue retention at 98%. Adjusted gross margin and EBITDA improved.
• Keap Acquisition: Contributed $13.4 million in Q4 (surpassed guidance), with $10 million EBITDA synergies realized. Product updates in Keap: updated automation builder (time to publish reduced by 2/3), streamlined visual sales pipelines.
• Product Innovations: Reporting Center with PLG motion, AI review response in Business and Marketing Centers, social media added to Marketing Center. Workforce Center in development.
• Financials: Total SaaS adjusted gross margin 76% in Q4. Net debt $279 million, decreased $61 million YOY. Proactive debt repayment with $26 million prepayment in Q4 2024.

Segment Performance

• SaaS:
  • Fourth quarter total SaaS reported revenue was $104.3 million, up 41% YOY. Full year SaaS reported revenue grew 30% YOY to $343.5 million. Excluding Keap, Thryv SaaS grew 23% YOY in Q4 and 25% YOY for the full year. Thryv SaaS revenue in Q4 was $90.9 million, growing 23% YOY. Keap contributed $13.4 million in revenue in Nov-Dec 2024.
  • SaaS adjusted gross margin was 76% in Q4, up 620 basis points YOY. Full year total SaaS adjusted gross margin was 72%, up from 67% last year (540 basis point improvement).
  • Subscribers: Total SaaS subscribers reached 114,000, Thryv SaaS subscribers 99,000 (+50% YOY). Net revenue retention was 98%.
• Marketing Services:
  • Q4 revenue was $82.3 million. Full year: $480.7 million. Q4 adjusted EBITDA $12.1 million (15% margin). Full year: $121.2 million (25% margin). Q4 billings $92 million (-40% YOY).

Guidance

• 2025 Outlook:
  • Q1 total SaaS revenue: $107.5M - $110M. Full year total SaaS revenue: $464.5M - $474M (Thryv SaaS growth 35%-38%). Keap contribution: $75M - $78M.
  • Q1 SaaS adjusted EBITDA: $9M - $9.5M. Full year: $69.5M - $71M (15% margin).
  • Marketing Services revenue: $310M - $314M. Adjusted EBITDA: $77.5M - $78.5M.
  • Net leverage to temporarily increase in H1 2025 due to prepayments, legacy system decommissioning, etc., but expect deleveraging in H2 2025.

Risks

• Market and Execution: Macro concerns (tariffs, inflation) could impact small business sentiment. Integration of Keap and product execution challenges.
• Debt and Leverage: Temporary increase in net leverage in H1 2025 due to prepayments, legacy system decommissioning, etc.

Question and Answer

• Q: Early commentary on cross-sell process with Keap customers? A: Cross-sell process underway. Two-way: Keap customers learn about Thryv products for growth, Thryv customers get sales pipeline and automation from Keap. Expect $5M cross-sell in 2025.
• Q: Customer feedback on cross-sell between Thryv and Keap? A: Great feedback. Keap customers use Thryv for lead generation, Thryv customers get automation. Customized automations for verticals.
• Q: Go-to-market changes for 2027 growth? A: Keap acquisition adds partner channel and amplifies international efforts, enhancing sales to sophisticated businesses.
• Q: EBITDA inflection point? A: Majority of EBITDA from SaaS expected in 2026, leading to overall growth in 2027.
• Q: Launch of additional centers? A: Workforce Center in development, focus on interoperability and user-friendly platform, not promising specific centers annually.