Thryv Holdings Shines in Earnings Call with Strong SaaS Growth

Thryv Holdings, Inc. ((THRY)) has held its Q2 earnings call. Read on for the main highlights of the call.

Thryv Holdings, Inc. recently held its earnings call, where the sentiment was largely positive, reflecting robust revenue growth and enhanced financial flexibility. The company showcased significant achievements in SaaS revenue, profitability, and ARPU growth, alongside strategic product launches and debt reduction. However, challenges persist in the Keep segment and marketing services, impacting overall guidance and customer count.

Successful Navigation of Financial Pinch Point

Thryv Holdings successfully navigated a challenging financial pinch point, improving its leverage ratio and completing high amortization payments ahead of schedule. This strategic maneuver has provided the company with increased financial flexibility, setting a solid foundation for future growth.

Strong SaaS Revenue Growth

The company reported SaaS revenue of $115 million, marking a 48% year-over-year increase. Excluding the Keep segment, Thryv’s SaaS business grew 25% year-over-year, underscoring the strength of its core offerings.

Record Adjusted EBITDA Margin

Thryv achieved a record adjusted EBITDA margin of 20%, with SaaS adjusted EBITDA increasing to $23.4 million. This exceeded guidance and highlighted the company’s profitability and scalability.

Increase in Average Revenue Per User (ARPU)

The average revenue per user (ARPU) is on the rise, currently at about $4,200 annually. There are expectations for ARPU to grow from $4,000 to $8,000 in the coming years, reflecting the company’s focus on enhancing customer value.

Expansion of Multi-Product Adoption

Clients purchasing multiple SaaS products increased to 19%, indicating strong cross-sell opportunities and enhanced customer engagement, which is a positive indicator for future growth.

Launch of Thryv for HVAC

Thryv launched a new product tailored for HVAC businesses, showing early signs of success. This product is expected to drive deeper engagement and higher ARPU, contributing to the company’s growth strategy.

SaaS Subscriber Growth

The company ended the second quarter with 106,000 SaaS subscribers, a 25% year-over-year increase, including 14,000 from the Keep segment, demonstrating robust subscriber growth.

Debt Reduction and Enhanced Financial Flexibility

Net debt was reduced by $24 million to $274 million, with a leverage ratio of 2.2x, ahead of expectations. This reduction provides greater flexibility within the capital structure, allowing for strategic investments.

Challenges in Keep Business

The Keep segment faced challenges, particularly in demand generation, with revenues falling below the expected $75 million trough. This has impacted the overall SaaS guidance, highlighting areas needing strategic attention.

Marketing Services Revenue Decline

Second quarter marketing services billings were $78.4 million, down 38% year-over-year. This decline reflects an intentional strategy shift away from legacy digital marketing services, focusing on more profitable ventures.

SaaS Customer Count Fluctuations

The customer count contracted by 4,000 quarter-over-quarter as the company focused on upselling and cross-selling rather than acquiring new customers, a strategic decision to enhance customer value.

Forward-Looking Guidance

Looking ahead, Thryv Holdings raised its full-year SaaS revenue guidance to $460-$465 million and SaaS adjusted EBITDA guidance to $70.5-$73.5 million. This indicates a continued strategic focus on scaling its software business and optimizing financial flexibility, with expectations of sustained growth.

In summary, Thryv Holdings, Inc. has demonstrated strong performance in its latest earnings call, with significant achievements in SaaS revenue growth and financial flexibility. While challenges remain in certain segments, the company’s strategic initiatives and forward-looking guidance suggest a positive trajectory for future growth.