Thryv Holdings, Inc. ((THRY)) has held its Q4 earnings call. Read on for the main highlights of the call.
Thryv Holdings, Inc. recently held its earnings call, revealing a generally optimistic sentiment despite some challenges. The company showcased strong performance in its SaaS segment, marked by significant revenue and subscriber growth, improved margins, and successful integration of the Keap acquisition. However, the decline in marketing services and an anticipated temporary increase in leverage were noted as ongoing challenges. Overall, the positive momentum in the SaaS business and strategic focus on growth suggest a promising outlook.
SaaS Revenue Growth
Thryv reported a remarkable 41% year-over-year revenue growth in its SaaS segment for the quarter. When adjusted for the Keap acquisition, Thryv’s SaaS revenue growth stood at 23%, highlighting the robust expansion of its core business.
Subscriber Growth
The company experienced a substantial 50% increase in SaaS subscribers year-over-year, reaching a total of 99,000. With the inclusion of Keap, the subscriber base has expanded to 114,000, underscoring the success of its acquisition strategy.
Adjusted Gross Margin Improvement
Thryv’s SaaS adjusted gross margin improved significantly, reaching 76% for the fourth quarter. This marks a notable increase from the previous year, reflecting enhanced operational efficiency.
SaaS EBITDA Performance
The quarterly SaaS EBITDA was reported at $17 million, surpassing guidance by over $5 million. This performance underscores the company’s ability to exceed financial expectations.
Keap Acquisition Synergies
Following the acquisition of Keap, Thryv realized $10 million in EBITDA synergies, demonstrating the effective integration of the acquired business.
Net Debt Reduction
Thryv successfully reduced its net debt position by $61 million year-over-year, achieving a leverage ratio of 1.63 times net debt to EBITDA, indicating improved financial health.
Rule of 40 Achievement
For the second consecutive quarter, Thryv’s SaaS business achieved the Rule of 40, a key metric indicating balanced growth and profitability.
G2 Award
Thryv received recognition for its software, winning an award from G2 for best software, which validates the quality and user-friendliness of its offerings.
Marketing Services Revenue Decline
The fourth quarter saw a 40% year-over-year decline in marketing services billings, amounting to $92 million. This decline aligns with Thryv’s strategic direction to exit marketing services by 2028.
Legacy and Operational Costs
Variances in reporting Marketing Services adjusted EBITDA to guidance were primarily attributed to legacy and operational costs, highlighting areas for potential cost optimization.
Temporary Increase in Leverage
Thryv anticipates a temporary increase in net leverage in the first two quarters of 2025 due to prepayment of vendor contracts and other operational costs.
Forward-Looking Guidance
Looking ahead to 2025, Thryv projects total SaaS revenue to range between $464.5 million and $474 million, with Thryv SaaS revenue growth expected at 35% to 38%. The Keap acquisition is anticipated to contribute significantly to the full year’s revenue. SaaS adjusted EBITDA is projected to be between $69.5 million and $71 million. For Marketing Services, revenue is expected to be between $310 million and $314 million, with adjusted EBITDA ranging from $77.5 million to $78.5 million. The company plans to decommission legacy systems through 2025, aiming to exit the marketing services business by 2028, thereby enhancing liquidity and focusing on a fully SaaS-based model.
In summary, Thryv Holdings, Inc.’s earnings call reflected a strong performance in its SaaS segment, with notable revenue and subscriber growth, improved margins, and successful acquisition integration. Despite challenges in the marketing services sector and anticipated leverage increases, the company’s strategic focus on SaaS growth and financial discipline suggests a positive future outlook.