Thryv Holdings Inc (NASDAQ:THRY) is a leading provider of small business marketing and sales software solutions, revolutionizing the way entrepreneurs manage and grow their enterprises. With a rich history dating back to 1886, the company has evolved from a traditional print directory business to a cutting-edge technology firm, delivering a comprehensive suite of cloud-based tools designed to empower SMBs.
Business Overview
Thryv's journey began in 1886 as one of the largest providers of print yellow pages directories in the United States. Over the years, the company expanded its offerings to include digital marketing solutions such as internet yellow pages, search engine marketing, and other digital media services. In the early 2000s, Thryv faced challenges as the use of print directories began declining, primarily due to the increased use of internet search providers and the proliferation of large retail stores. The company worked to manage the secular decline in its print business through strategic cost-saving initiatives and the extension of contract terms with its print directories.
In 2015, Thryv launched its SaaS business, introducing its flagship all-in-one small business management platform, Thryv. This platform was designed to provide SMBs with the tools and resources they needed to communicate with customers, manage day-to-day operations, and grow their businesses. The company leveraged its deep expertise in serving SMBs to drive adoption of its SaaS offerings.
Thryv has completed several strategic acquisitions over the years to expand its capabilities and client base. In 2022, the company acquired Vivial, a marketing and advertising company with operations in the United States. This acquisition allowed Thryv to further strengthen its marketing services offerings. In 2023, Thryv acquired Yellow Holdings Limited, a New Zealand marketing services company, expanding the company's international footprint.
Through these acquisitions and the continued development of its SaaS platform, Thryv has transformed itself from a traditional print directory publisher to a leading provider of cloud-based software and marketing solutions for small and medium-sized businesses. The company has navigated challenging industry trends and positioned itself as a trusted partner for SMBs looking to streamline their operations and grow their customer base.
Financial Performance
Thryv's financial performance has been marked by a successful transition towards a SaaS-centric business model. In the fiscal year 2024, the company reported total revenue of $824.16 million, with the SaaS segment accounting for $343.5 million, or 41.7% of total revenue. This represents a 30% year-over-year increase in SaaS revenue, demonstrating the strong demand for Thryv's cloud-based solutions.
The company's focus on profitability is also evident, with the SaaS segment reporting an adjusted gross margin of 72% and an adjusted EBITDA margin of 16.6% in the fourth quarter of 2024. This aligns with Thryv's strategic objective of achieving the "Rule of 40" – a metric that combines revenue growth and profitability, a key indicator of a healthy SaaS business.
Thryv's SaaS segment growth has been driven by several factors, including the successful transition of 46,000 clients from Thryv's digital marketing services to the SaaS platform, which contributed $37.1 million in additional revenue. The company also saw strong organic growth, adding 48,000 net new SaaS clients in 2024. Additionally, the Keap acquisition in 2024 contributed $13.4 million in SaaS revenue.
Despite the positive momentum in the SaaS segment, Thryv's overall financial performance in 2024 was impacted by the ongoing decline in its Marketing Services segment. The company reported a net loss of $74.22 million for the fiscal year 2024, reflecting the challenges of managing the transition from its legacy business to the high-growth SaaS model.
Segment Performance
Thryv operates in two reportable segments: Thryv Marketing Services and Thryv SaaS.
The Thryv Marketing Services segment provides both print and digital marketing solutions. In 2024, this segment generated $480.68 million in revenue, down 26.4% from 2023. The decline was primarily due to the secular shift away from print directories and the strategic transition of digital marketing clients to the SaaS platform. Print Yellow Pages (PYP) revenue was $254 million, a 4.1% decline year-over-year, while digital marketing services revenue was $226.68 million, a 41.6% decline compared to the prior year.
The Thryv SaaS segment, which includes the company's flagship all-in-one small business management platform, generated $343.48 million in revenue in 2024, up 30.2% compared to the prior year. This growth was driven by the successful transition of clients from digital marketing services to the SaaS platform, strong organic growth, and the Keap acquisition.
Liquidity
Despite the challenges posed by the COVID-19 pandemic, Thryv has demonstrated its resilience, reporting positive operating cash flow of $89.78 million and free cash flow of $56.25 million in fiscal year 2024. This financial strength has enabled the company to continue investing in product innovation, strategic acquisitions, and debt reduction, positioning it for long-term sustainable growth.
As of December 31, 2024, Thryv had $16.31 million in cash on hand and an $85 million asset-based revolving credit facility, of which $46.5 million was available. The company's debt-to-equity ratio stood at 0.067, while its current ratio and quick ratio were both 1.074, indicating a stable short-term liquidity position.
Competitive Landscape and Growth Strategies
Thryv operates in a highly competitive small business software market, facing off against a diverse array of players, from niche cloud-based tools to enterprise-level SaaS providers. However, the company's comprehensive platform, coupled with its deep understanding of the SMB segment, has allowed it to carve out a unique and differentiated position in the market.
Key to Thryv's growth strategy is its focus on expanding its SaaS offerings, both organically and through strategic acquisitions. The integration of Keap, for example, has not only broadened Thryv's product suite but has also provided access to a substantial partner network, enabling the company to reach new customer segments and drive cross-selling opportunities.
Moreover, Thryv is leveraging its extensive experience in the SMB space to continuously enhance its platform, introducing innovative features and functionalities that address the evolving needs of its clients. This includes the recent launch of Thryv Reporting Center, which provides small businesses with data-driven insights to optimize their operations and drive growth.
Risks and Challenges
As with any technology company, Thryv faces a range of risks and challenges that could impact its future performance. These include intense competition, the ability to successfully integrate and capitalize on acquired businesses, the pace of technological change, and regulatory compliance in the rapidly evolving landscape of data privacy and security.
Additionally, the company's decision to exit its legacy Marketing Services business by 2028 presents both opportunities and risks. While this strategic shift will allow Thryv to focus more on its higher-margin SaaS offerings, the transition may result in near-term revenue volatility and the need to carefully manage the runoff of the Marketing Services segment.
In October 2024, Thryv received a subpoena from the SEC requesting documents and information related to the company's strategic conversion of clients from its digital marketing services platform to its SaaS platform. The company is cooperating fully with the SEC's inquiry, but this regulatory scrutiny adds an element of uncertainty to Thryv's operational environment.
Geographic Presence and Human Capital
Thryv operates primarily in the United States, Australia, Europe, and New Zealand. In 2024, approximately 16.7% of total revenue was generated internationally, with Australia being the top international market, contributing around 14.4% of total revenue.
As of December 31, 2024, Thryv had 3,022 employees, the majority of which were in sales, operations, client care, and other customer-facing roles. The company has implemented various programs to attract, develop, and retain a diverse workforce, including training programs, recognition initiatives, and employee engagement efforts.
Outlook and Conclusion
Thryv's transformation from a traditional print directory business to a leading small business software provider has been nothing short of remarkable. The company's relentless focus on innovation, coupled with its strategic acquisitions and disciplined execution, has positioned it for continued success in the rapidly evolving SMB software market.
As Thryv looks ahead, the company's guidance for fiscal year 2025 points to continued momentum. For Q1 2025, Thryv expects total SaaS revenue to be between $107.5 million and $110 million, with SaaS adjusted EBITDA between $9 million and $9.5 million. For the full year 2025, the company projects total SaaS revenue between $464.5 million and $474 million, implying Thryv SaaS revenue growth of 35% to 38%. Keap is expected to contribute between $75 million and $78 million in revenue. SaaS adjusted EBITDA is forecasted to be between $69.5 million and $71 million, implying a SaaS adjusted EBITDA margin of 15%.
The Marketing Services segment is expected to continue its managed decline, with 2025 revenue projected between $310 million and $314 million, and adjusted EBITDA between $77.5 million and $78.5 million.
In conclusion, Thryv Holdings Inc (NASDAQ:THRY) is a compelling investment opportunity, leveraging its deep industry expertise, innovative product offerings, and strategic vision to transform the way small businesses operate and grow. As the company continues to execute on its growth strategies and navigate the challenges of its business transformation, investors will undoubtedly keep a close eye on Thryv's ability to deliver sustainable, profitable growth and solidify its position as a leading provider of small business software solutions.