Business Overview
Thryv Holdings, Inc. (NASDAQ:THRY) is a leading provider of cloud-based software and digital marketing solutions catering to the needs of small-to-medium sized businesses (SMBs). The company has undergone a remarkable transformation, transitioning from a legacy print directory business to a rapidly growing SaaS platform that empowers SMBs to modernize their operations and drive growth.Thryv operates in two primary segments: Thryv Marketing Services and Thryv SaaS. The Thryv Marketing Services segment provides both print and digital solutions, including the iconic "The Real Yellow Pages" directories, as well as a suite of digital marketing services such as search engine marketing, online display advertising, and search engine optimization. The Thryv SaaS segment, on the other hand, offers the company's flagship all-in-one small business management platform, Thryv, which includes features like customer relationship management, appointment scheduling, invoicing, and integrated marketing tools.
The company's strategic shift towards its SaaS offerings has been a key driver of its recent success. In 2024, Thryv's SaaS revenue accounted for 40% of the company's total revenue, up from just 12% when the current management team took over. This transition has been fueled by the growing demand from SMBs for cloud-based solutions that can streamline their operations and enhance their customer engagement.
Financial Performance
For the full year 2024, Thryv reported annual revenue of $916.961 million, a decrease from the previous year's figure. However, the company's annual net income showed a loss of $259.295 million. Despite the decline in revenue, Thryv's annual operating cash flow remained strong at $148.226 million, and its annual free cash flow stood at $114.832 million.On a quarterly basis, Thryv's second quarter 2024 results showcased the company's continued progress. Total revenue for the quarter was $224.084 million, a 10.9% decrease compared to the same period in the prior year. This decline was primarily driven by a 22.6% drop in Thryv Marketing Services revenue, which was partially offset by a 24.6% increase in Thryv SaaS revenue.
Thryv's second quarter 2024 net income was $5.548 million, or $0.15 per diluted share, compared to $15.978 million, or $0.43 per diluted share, in the same quarter of 2023. The company's consolidated adjusted EBITDA for the quarter was $59.314 million, representing a margin of 26.5%.
Segment Performance
Thryv's two reporting segments, Thryv Marketing Services and Thryv SaaS, have demonstrated divergent trends in their performance.Thryv Marketing Services
: This segment, which includes the company's print and digital marketing solutions, experienced a 22.6% year-over-year decline in revenue during the second quarter of 2024, generating $146.290 million. The decrease was primarily attributable to the continued secular decline in the print media industry and increased competition in the digital media space. However, the company's strategic efforts to transition its Marketing Services clients to the Thryv SaaS platform have shown promising results, with the segment's adjusted EBITDA margin remaining strong at 33.6%.Thryv SaaS
: The company's SaaS segment delivered impressive growth, with revenue increasing by 24.6% year-over-year to $77.794 million in the second quarter of 2024. This performance was driven by a 52% increase in SaaS clients, which reached 85,000 at the end of the quarter. Additionally, the segment's seasoned net dollar retention rate improved by 500 basis points year-over-year to 94%, indicating strong customer loyalty and engagement. The Thryv SaaS segment's adjusted EBITDA margin for the quarter was 13.1%.Guidance and Outlook
For the third quarter of 2024, Thryv expects SaaS revenue to be in the range of $82 million to $84 million, and SaaS adjusted EBITDA to be between $9 million and $10 million. For the full year 2024, the company has raised its SaaS revenue guidance to $326 million to $329 million and its SaaS adjusted EBITDA guidance to $30 million to $32 million.In the Marketing Services segment, Thryv expects third quarter 2024 revenue to be between $94 million and $97 million, and full-year 2024 Marketing Services adjusted EBITDA to be in the range of $128 million to $131 million.
Liquidity and Capital Structure
As of June 30, 2024, Thryv had a net debt position of $341 million, with a leverage ratio of 1.9x net debt to EBITDA, well below the company's covenant of 3x. The company recently completed a debt refinancing, which extended the maturity of its term loan and asset-based revolving credit facility to 2029 and reduced the interest rate by 175 basis points. This refinancing provides Thryv with increased financial flexibility and the ability to strategically invest in the growth of its SaaS business.Risks and Challenges
Thryv faces several risks and challenges as it navigates its transformation. The continued decline in the print media industry and increasing competition in the digital marketing space pose threats to the company's legacy Marketing Services business. Additionally, the successful integration and adoption of the Thryv SaaS platform by SMBs will be crucial to the company's long-term success. Thryv must also continue to innovate and enhance its product offerings to stay ahead of the competition in the rapidly evolving small business software market.Conclusion
Thryv Holdings, Inc. is at a pivotal juncture in its evolution, transitioning from a traditional print directory business to a leading provider of cloud-based software and digital marketing solutions for SMBs. The company's strategic shift towards its high-growth SaaS segment has been a key driver of its recent performance, with SaaS revenue now accounting for 40% of the company's total revenue.While the legacy Marketing Services business continues to face headwinds, Thryv's focus on migrating its client base to the Thryv SaaS platform and the successful launch of new product offerings, such as the Thryv Marketing Center, have shown promising results. The company's recent debt refinancing has also provided it with the financial flexibility to invest in the growth of its SaaS business and explore strategic acquisition opportunities.
As Thryv continues to execute on its transformation, investors will be closely watching the company's ability to maintain its momentum in the SaaS segment, drive further adoption of its integrated platform, and navigate the challenges posed by the evolving small business software market. With a strong management team, a compelling product portfolio, and a clear strategic vision, Thryv appears well-positioned to capitalize on the growing demand for cloud-based solutions among SMBs.