Thryv Holdings, Inc. (THRY) Q3 2025 Earnings Call Transcript
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Overview
Despite strong financial metrics and optimistic guidance, concerns about execution issues in the SaaS segment and unclear management responses temper enthusiasm. The company's strategic shift and ARPU growth are positive, but missed guidance and a lack of specific details on future initiatives create uncertainty. Without market cap data, the prediction remains neutral.
Key Financial Performance
SaaS reported revenue $115.9 million in the third quarter, representing an increase of 33% year-over-year. Keap contributed $16.8 million in the third quarter. Excluding Keap, Thryv SaaS business grew 14% year-over-year.
SaaS adjusted gross margin Increased 80 basis points year-over-year, reaching 73%.
SaaS adjusted EBITDA Increased to $19.6 million, exceeding guidance and resulting in an adjusted EBITDA margin of 17%.
SaaS subscribers 103,000 SaaS subscribers, including 13,000 from Keap, representing a 7% increase year-over-year.
SaaS ARPU Overall SaaS ARPU reached $365 with Thryv at $355, up sequentially, and Keap ARPU remaining strong at $437.
Seasoned NRR Declined to 94% this quarter, primarily reflecting noise introduced as we transition legacy digital marketing services clients onto our modern SaaS platform.
Clients with two or more SaaS products Grew to 17,000 or 20% of our base compared to 15,000 or 16% a year ago.
Marketing Services revenue Third quarter revenue was $85.7 million and above guidance.
Marketing Services adjusted EBITDA $21.2 million, resulting in an adjusted EBITDA margin of 25%.
Marketing Services billings Totaled $70.6 million, down 33% year-over-year, reflecting the intentional shift in strategy to upgrade legacy digital marketing services products to the SaaS platform.
Total company billings $184.2 million, down just 4% year-over-year, underscoring steady progress in transforming into a leading SaaS business.
Free cash flow Generated $14.6 million in the third quarter, bringing the year-to-date free cash flow to $18.8 million.
Net debt Down $9 million to $265 million, bringing the leverage ratio to 1.9x.
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Operating Highlights
Marketing Center: Fastest-selling product, provides tools for marketing, call tracking, and analytics. It is widely used even by customers of competitor CRMs.
AI Features: Introduced AI-driven tools like social captioning, review response, service descriptions, AI website builder, copywriting assistant, and call analysis. These tools enhance user experience and operational efficiency.
Vertical Applications: Launched vertical-specific solutions starting with HVAC, showing significant improvements in job bookings, revenue, and customer engagement.
Grow Conference: Focused on small business growth, attracting both existing and prospective customers. Highlighted the importance of marketing tools and strategies.
Upmarket Movement: Shift towards higher-value customers with $400+ monthly spend, focusing on larger businesses and improving retention metrics.
AI Integration: AI is being used across the company for software development, legal, accounting, and operational efficiencies.
SaaS Metrics: SaaS revenue grew 33% YoY to $115.9M, with adjusted EBITDA at $19.6M. SaaS ARPU reached $365, and multiproduct adoption increased to 20% of the base.
Business Transformation: Transitioning from legacy marketing services to a pure-play SaaS business by 2028, with a focus on software client base and higher-value customers.
AI Leadership: Appointment of a new Chief Technology Officer to enhance AI integration and software development.
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Risk or Challenges
Partner dissatisfaction and unmet expectations: Partners expressed dissatisfaction with the lack of investment and unmet deliverables from prior ownership, which could impact partner relationships and performance.
Transition challenges in SaaS metrics: Noise in SaaS metrics due to transitioning legacy digital marketing services clients to the modern SaaS platform, potentially impacting ARPU and NRR temporarily.
Decline in Marketing Services revenue: Intentional shift away from legacy digital marketing services is leading to a managed decline in revenue, which could affect overall financial performance during the transition.
Dependence on AI for operational efficiency: Heavy reliance on AI for internal operations, software development, and customer-facing tools could pose risks if AI systems fail or underperform.
Customer retention and ARPU fluctuations: Retention rates and ARPU are impacted by the transition of legacy clients and the onboarding of smaller accounts with lower spending potential.
Competition from vertical-specific CRMs: Competitors like ServiceTitan dominate specific verticals, which could limit Thryv's ability to penetrate certain markets.
Challenges in moving upmarket: Efforts to target higher-value customers may face challenges due to competition and the need for more sophisticated product offerings.
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Guidance & Outlook
SaaS Revenue Projections: For the fourth quarter of 2025, SaaS revenue is expected to range between $118 million and $121 million. For the full year, SaaS revenue guidance has been updated to a range of $460 million to $463 million.
SaaS Adjusted EBITDA Projections: For the fourth quarter of 2025, SaaS adjusted EBITDA is projected to range between $19.2 million and $21.2 million. Full-year SaaS adjusted EBITDA guidance has been raised to a range of $73 million to $75 million.
Marketing Services Revenue and EBITDA Projections: For the full year 2025, Marketing Services revenue is expected to range between $323 million and $325 million. Marketing Services adjusted EBITDA guidance has been updated to a range of $76 million to $78 million.
Business Transformation Goals: The company aims to exit marketing services by 2028, with cash flows lasting through 2030, as it transitions to a pure-play software business.
AI Integration and Development: AI is expected to be a significant tailwind for the company in 2026, with ongoing integration into software products, internal operations, and development processes to enhance efficiency and innovation.
Vertical Market Expansion: The company plans to expand its vertical initiatives, including a broader home services vertical and additional verticals in the pipeline, leveraging customized automation tools.
Upmarket Strategy: The company is focusing on moving upmarket, targeting higher-value customers with monthly spending of $400 and above, which exhibit strong retention and profitability metrics.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What caused the SaaS business to miss its guidance for the quarter?
A:The SaaS business missed its guidance due to execution issues, not external factors like the economy. The execution was slightly below expectations, but management is taking steps to improve going forward.
Q:How does management plan to improve the partner opportunity with the Keap ecosystem?
A:Management has been working to rebuild trust and morale with partners who felt neglected under previous leadership. They have prioritized partner needs, delivered necessary tools, and received positive feedback at the recent Grow Conference. Management expects reacceleration in 2026 based on these efforts and upcoming deliverables.
Q:What feedback did customers provide at the recent user conference regarding the current environment and purchasing decisions?
A:Customers indicated that the market is stable, and there are no significant changes in purchasing decisions. Thryv's customer base is less economically sensitive as they provide essential services. Management believes that great execution can drive results regardless of macroeconomic conditions.
Q:What is the expected impact of the vertical sales emphasis, particularly in HVAC, on business fundamentals?
A:The vertical sales emphasis is expected to gradually increase ARPU, reduce churn, and improve NRR. Early sales in verticals like HVAC are coming in at higher price points, targeting slightly larger businesses with more stability. This strategy aims to move ARPU from $4,000 to $8,000 per customer.
Q:What are the early strategies of the new CTO, Sean, to achieve operational efficiency, product acceleration, and AI innovation?
A:Sean is focused on AI innovation, accelerating the product roadmap, and improving interoperability with other software. His leadership is expected to enhance development speed and morale within the tech organization. His background in integrations is also seen as a key asset for moving upmarket.
Q:How is the company approaching product development for new verticals in home services?
A:The company is working with industry leaders to understand best practices and develop vertical-specific automations. Many home services verticals share similarities, allowing for faster development. The team is balancing the pace of vertical rollouts with the sales organization’s ability to absorb and train on them.
Q:What is Thryv doing to ensure customer visibility within answers-based engines?
A:Thryv is leveraging its authoritative online directories and expertise in Answer Engine Optimization (AEO) to ensure customer visibility. The company builds and hosts optimized websites and manages off-site listings to improve search results. The shift to answer engines is seen as a tailwind for Thryv.
Q:How is Thryv balancing ARPU expansion with customer base growth?
A:Thryv is currently focused on ARPU expansion by engaging and growing its existing customer base rather than aggressively pursuing new customer growth. Management believes they can achieve significant revenue growth by increasing ARPU within the current base before emphasizing customer base expansion.
Q:What trends are being observed within the quality SaaS client cohort?
A:The quality SaaS client cohort, defined as customers spending $400 or more, tends to have lower churn, higher engagement, and greater potential for upselling. These customers are typically larger businesses with multiple employees, making them more stable and valuable for long-term growth.
Q:How is Thryv introducing cutting-edge technology like AI to less tech-savvy SMBs?
A:Thryv simplifies its messaging by focusing on practical benefits like accurate listings, optimized websites, and measurable marketing results. Advanced technologies like AI are integrated into these offerings but not emphasized in initial conversations to avoid overwhelming customers.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on how the answer engines operate and the exact strategies Thryv uses to optimize for them. Additionally, while they mentioned upcoming deliverables and reacceleration in 2026, they did not provide concrete timelines or specifics on these initiatives.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI software
Conference
Corporate Development
Keap Thryv
Marketing Center
SaaS platform
Thryv Keap
Vice President
analysis
answer engine
beta
call
campaign
dentist
development
engine answer
legacy marketing
lift
listing
lot partner
noise
partner conference
personality
post
quality
response
review
search
service description
software client
sort
spend
thing
transcript
transformation
update kind
website AI
week
THRY Transcript
Thryv Holdings, Inc. (THRY) Q1 2026 Earnings Call Transcript
Positive4-30
The earnings call summary indicates positive developments: SaaS revenue and ARPU are growing, and the transition to a SaaS model is progressing well. The Q&A section reveals a positive sentiment towards AI integration and upmarket strategies, with no major concerns from analysts. Despite some margin compression due to strategic investments, the overall outlook is optimistic with a focus on high-value clients and innovative product offerings. The positive momentum in marketing services and AI product feedback further supports a positive stock price reaction over the next two weeks.
Thryv Holdings, Inc. (THRY) Q4 2025 Earnings Call Transcript
Positive2-26
The earnings call highlights strong SaaS growth, with increased ARPU and quality customer acquisition. Despite a decline in marketing services revenue due to strategic shifts, the company shows promising SaaS revenue and EBITDA projections. The Q&A reveals excitement about the new platform and AI integration, despite some churn and unclear long-term plans. Overall, the focus on high-value customers and AI-driven growth, along with improved financial health, suggests a positive outlook for stock price movement.
Thryv Holdings, Inc. (THRY) Q3 2025 Earnings Call Transcript
Unknown10-30
Despite strong financial metrics and optimistic guidance, concerns about execution issues in the SaaS segment and unclear management responses temper enthusiasm. The company's strategic shift and ARPU growth are positive, but missed guidance and a lack of specific details on future initiatives create uncertainty. Without market cap data, the prediction remains neutral.
Thryv Holdings, Inc. (THRY) Q2 2025 Earnings Call Transcript
Positive7-30
The earnings call highlights strong SaaS revenue growth, subscriber increase, and ARPU improvement, indicating a healthy business trajectory. Although there is a conservative guidance approach due to potential economic challenges, the company shows optimism in business momentum. The reduction in net debt and leverage ratio, alongside exceeding cost synergies from acquisitions, further support financial health. Despite some strategic shifts causing short-term subscriber declines, the focus on cross-selling and upselling is expected to balance growth. The positive sentiment from analysts and the strategic plans for future investments contribute to a positive outlook.
THRY Slides
THRY Report
Frequently Asked Questions
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