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01/10 16:41
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
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.
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.
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.
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.
The selected topic was not discussed during the call.
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.
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.
The earnings call highlights strong SaaS revenue growth, significant subscriber increase, and improved EBITDA margins. Despite concerns about transitioning from Marketing Services and temporary cost headwinds, the optimistic guidance and successful Keap acquisition synergies support a positive outlook. The Q&A session reveals confidence in product offerings and customer retention, though management's vague responses on customer additions could temper enthusiasm. Overall, the financial performance and strategic direction suggest a positive stock price movement, especially in the absence of a market cap to gauge volatility.
The earnings call highlights strong financial performance with a 41% increase in SaaS revenue, exceeding guidance. The Keap acquisition contributes positively, and debt management is proactive. Despite competitive pressures and economic risks, the strategic focus on SaaS and shareholder return plans are promising. The Q&A reveals positive cross-sell feedback and plans for growth, though some guidance is vague. Overall, the combination of strong results and strategic initiatives suggests a positive stock price movement.
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