Thryv Holdings, Inc. (THRY) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
SaaS Revenue $116.7 million in Q1 2026, representing an increase of 5% year-over-year. The growth exceeded guidance and was driven by the strategic upgrade of low-margin large digital agency customers to SaaS.
SaaS Adjusted Gross Margin 67% in Q1 2026. The margin was diluted due to the strategic upgrade of low-margin customers to SaaS, which is expected to drive improved economics over time.
SaaS Adjusted EBITDA $10.8 million in Q1 2026, resulting in an adjusted EBITDA margin of 9%. The margin compression was due to the deliberate investment in upgrading low-margin customers.
SaaS ARPU (Average Revenue Per User) $378 per month in Q1 2026, an increase of 13% year-over-year. This growth was attributed to serving higher-caliber clients with more complex needs and higher spending capacity.
SaaS Subscribers 96,000 in Q1 2026. Seasoned NRR (Net Revenue Retention) was 93%, reflecting natural attrition of smaller clients, while churn among high-value clients trended favorably.
Marketing Services Revenue $50.9 million in Q1 2026, above guidance. The performance reflects the natural cadence of the print publication schedule.
Marketing Services Adjusted EBITDA $13.2 million in Q1 2026, resulting in an adjusted EBITDA margin of 26%. This was influenced by the timing of the print publication schedule.
Marketing Services Billings $54.5 million in Q1 2026, down 33% year-over-year. The decline reflects the intentional shift in strategy to upgrade legacy digital marketing services products to the SaaS platform.
Net Debt $258 million at the end of Q1 2026, bringing the leverage ratio to 1.7x.
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Operating Highlights
Marketing Center: Grew around 30% year-over-year in Q1, helping small businesses get found online, drive high-quality leads, and convert those leads into lasting customer relationships.
AI-powered capabilities: Rolled out a suite of AI-powered features including AI image generation, AI lead scoring, AI guided dashboard, AI review responses, AI website builder, and AI caption. These features are live and seeing strong early adoption.
Upmarket motion: Attracting and winning larger small businesses with more complexity and higher spending capacity. ARPU grew to $378 a month, up 13% year-over-year, with annualized client spend surpassing $4,500.
SaaS revenue: Reported $116.7 million in Q1, a 5% year-over-year increase, exceeding guidance. SaaS adjusted gross margin was 67%, and adjusted EBITDA was $10.8 million.
Marketing Services revenue: Reported $50.9 million in Q1, above guidance. Adjusted EBITDA margin was 26%. Transitioning legacy digital marketing services clients to SaaS platform.
Multiproduct adoption: Clients with 2 or more SaaS products grew to 26,000 (30% of the base) compared to 24,000 (25%) a year ago.
Shift to SaaS: SaaS now represents 70% of revenue, up from 62% a year ago. Transitioning from a marketing services business to a pure-play software business by 2028.
AI integration: Embedding AI capabilities into daily workflows to enhance client engagement and stickiness.
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Risk or Challenges
Gross Margin Compression: The strategic upgrade of low-margin large digital agency customers from marketing services to SaaS resulted in gross margin compression, which was the primary factor for adjusted EBITDA coming in below guidance for the quarter.
Decline in Marketing Services Revenue: Marketing Services billings declined by 33% year-over-year due to the intentional shift in strategy to upgrade legacy digital marketing services products to the SaaS platform. This decline is expected to persist, albeit at a managed pace, until the exit from marketing services by 2028.
Natural Attrition of Smaller Clients: Seasoned NRR of 93% reflects the natural attrition of smaller, lower-spend clients within the SaaS base, which could impact overall revenue growth.
Timing Variation in Print Revenue Recognition: The lighter print publication schedule in Q2 creates timing variation in EBITDA due to the cadence of revenue recognition, although it does not impact billings or free cash flow.
Debt Levels: The company ended the quarter with net debt of $258 million and a leverage ratio of 1.7x, which could pose financial risks if not managed effectively.
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Guidance & Outlook
Second Quarter SaaS Revenue: Expected to be in the range of $114 million to $115 million.
Full Year SaaS Revenue: Raised to a range of $463 million to $471 million.
Second Quarter SaaS Adjusted EBITDA: Expected to be in the range of $12 million to $13 million.
Full Year SaaS Adjusted EBITDA: Maintained at a range of $70 million to $75 million.
Full Year Marketing Services Revenue: Raised to a range of $157 million to $163 million.
Full Year Marketing Services Adjusted EBITDA: Maintained at a range of $30 million to $35 million.
Marketing Services Exit Timeline: Expected to exit marketing services by 2028, with cash flows lasting through 2030.
Overall Top Line Growth: Expected to return to overall top line growth by 2027.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you provide details on the move upmarket in the SaaS segment, including ARPU growth and customer module adoption?
A:The company is moving upmarket with a goal to increase ARPU from $4,000 to $8,000, achieving 13% ARPU growth recently. They are targeting larger businesses with sophisticated sales automation, focusing on businesses with $1 million in revenue and 12 employees. Quality customers and ARPU are steadily growing, and there is success in selling multiple products to larger businesses.
Q:How do you plan to monetize AI functionalities, and will they be embedded into core products or priced separately?
A:Currently, AI functionalities are being embedded into core products to enhance usability, retention, and pricing power. While there are significant monetization opportunities in the future, the focus now is on improving the product experience rather than discrete pricing.
Q:What is the early customer feedback on new AI products, and how are prospective customers responding?
A:Early feedback on AI products like image generation and review response has been positive, with tools making social posts easier and improving lead conversion. Customers appreciate the efficiency and background functionality of the software, which reduces the need for active engagement.
Q:Can you provide an update on the Market, Sell, and Grow initiative and its integration with Keap automation?
A:The Market, Sell, and Grow initiative integrates Keap automation with Marketing Center, creating a unified platform built from the ground up with AI. This platform helps small businesses with lead response, customer nurturing, and efficient growth, aligning with their needs.
Q:How is the growth in Marketing Center impacting overall growth rates, and is there any cannibalization?
A:Marketing Center is growing at 30%, becoming the company's main focus. While there is some cannibalization as the company shifts focus, the new unified platform with integrated Keap functionality is driving growth and replacing older offerings.
Q:What does the $400 threshold in the quality SaaS client bar chart represent in terms of product offerings?
A:The $400 threshold represents customers purchasing add-ons and extensions, leveraging the company's directory sites and non-Google traffic sources. These packages help small businesses acquire leads efficiently and are gaining traction, especially with AI answer engines.
Q:How does the sales motion differ between upmarket clients and smaller clients, and how is the sales team positioned for upsell opportunities?
A:The sales team focuses on larger businesses with $1 million+ revenue, targeting ideal clients with tailored marketing and sales efforts. Smaller, subscale customers are being transitioned off legacy platforms, while the focus remains on acquiring and retaining larger, stickier clients.
Q:What is the trajectory for customer count and dollar retention figures?
A:Customer count is expected to remain flat as larger customers replace subscale ones. Seasoned NRR will also stay flat, with quality customers (70% of revenue) showing excellent retention. Overall churn is improving, and metrics are expected to trend positively over time.
Q:Review of Unclear Management Responses
A:Management avoided providing specific numerical details on the monetization timeline for AI functionalities, instead focusing on general product enhancements and future opportunities. Additionally, while discussing customer count and retention, they did not provide precise figures or timelines for improvement.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI capability
AI caption
AI dashboard
AI image
AI lead
AI result
AI review
AI rollout
AI workflow
Development addition
Investor Assistant
Market Sell
NRR attrition
Officer today
Quality client
Relations section
SEC discussion
SaaS change
SaaS trajectory
SaaS year
Sell momentum
Services Quality
Thryv sum
Today equation
addition today
adoption rollout
agency marketing
attrition client
automation opportunity
base SaaS
base value
behavior signal
billing cash
factor
measure press
motion
press release
relationship
suite
upmarket
value client
website
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
Where does this earnings call transcript come from?
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
