The following is a summary of the Thryv Holdings, Inc (THRY) Q3 2024 Earnings Call Transcript:

Financial Performance:

• Thryv Holdings reported SaaS revenue of $87.1 million for Q3 2024, a 29% year-over-year increase.

• SaaS adjusted gross margin increased significantly to 72.2%, largely driven by high-margin SaaS offerings.

• Net debt was reduced to $307 million with a leverage ratio of 1.66x, and free cash flow was $27.5 million.

• Marketing Services revenue was $92.8 million, with a decline attributed to successful transition of clients to the SaaS platform.

• A noncash impairment charge of $83.1 million was recognized due to the structural decline in the marketing services business.

Business Progress:

• Thryv continues to transition clients from traditional marketing services to its SaaS platform, focusing on multi-product adoption with approximately 12% of customers now using multiple centers.

• The acquisition of Keap added over 15,000 quality customers and is expected to contribute $11-$12 million in revenue for Q4.

• Thryv is enhancing its product offerings and anticipates revenue lift from integrating Keap's automations into its services, aiming to target larger small businesses with more sophisticated needs.

Opportunities:

• The acquisition of Keap opens up opportunities for Thryv to move upmarket, appealing to larger SMBs that require more sophisticated automations. The partnership and reseller network that Keap possesses will facilitate Thryv's expansion into international markets.

• Thryv aims to leverage Keap's strong partner ecosystem for growth and to increase the adoption of multi-center subscriptions, which should improve net dollar retention and overall customer satisfaction.

Risks:

• The rate of customer conversion from marketing services to the SaaS platform poses a potential risk in terms of temporary pressure on ARPU, linked primarily to strategic pricing adjustments aimed at accelerating the transition.

• There could be potential integration challenges with the Keap acquisition, including aligning product offerings and unifying the platforms to create a seamless customer experience.

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