Executive Summary / Key Takeaways

• Strategic Transformation Accelerating: Thryv has successfully transitioned from a declining directory publisher to a majority SaaS business, with SaaS revenue now exceeding 60% of total revenue. This pivot is driven by leveraging its vast SMB customer base and strategic acquisitions.
• "Pinch Point" Overcome, Financial Flexibility Gained: The company has navigated a critical financial period, achieving significant debt prepayments that reduce future amortization and unlock substantial free cash flow for strategic investments and potential share repurchases.
• SaaS Profitability and Growth: Thryv's SaaS segment demonstrates strong momentum, achieving Rule of 40 performance with record Adjusted EBITDA margins of 20.3% in Q2 2025, driven by multi-product adoption and a reoriented sales strategy focused on existing customer expansion.
• Technological Edge and Verticalization: Core to Thryv's thesis is its integrated, user-friendly SaaS platform, enhanced by AI and strategic acquisitions like Keap, enabling deep vertical solutions (e.g., Thryv for HVAC) that drive higher ARPU and significantly reduce customer churn.
• Clear Future Trajectory: Management anticipates SaaS to be the majority source of EBITDA by 2026 and a return to overall top-line revenue growth by 2027, with long-term ARPU targets doubling to $8,000 per customer.

The Phoenix Rises: Thryv's Transformation Story

Thryv Holdings, Inc. (NASDAQ:THRY) is undergoing a profound transformation, shedding its skin as a legacy directory publisher to emerge as a leading Software as a Service (SaaS) provider for small-to-medium sized businesses (SMBs). This journey began around 2014 when a new management team was tasked with revitalizing Dex Media, a rapidly declining regional directory business. Their vision was clear: to pivot to a market-leading global software company.

The core of this strategy, often termed "hunting in the zoo," involved converting existing print and digital marketing services customers to a modern SaaS platform. Initially, this focused on "run your business" tools like Customer Relationship Management (CRM). However, the recent success of "grow your business" functionalities, designed to help SMBs generate leads and enhance their online presence, has significantly accelerated this strategic shift.

The SMB market is experiencing a "woosh, big wave of demand" for integrated technology solutions. In 2025, SMB demand for integrated technology solutions continues to grow as businesses adapt to remote work and virtual interactions. A recent Thryv survey highlights a dramatic shift in AI adoption, with usage among small businesses surging 41% from 39% in 2024 to 55% in 2025. This indicates AI is rapidly becoming a cornerstone of SMB strategy, helping owners save time, reduce costs, and compete more effectively. Thryv is strategically positioned to capitalize on this trend, offering a comprehensive platform that addresses these evolving needs.

Technological Moats and Strategic Innovation

Thryv's foundational strength lies in its all-in-one, modular Thryv Platform, designed for simplicity and ease of use, crucial for its SMB clientele. This platform comprises several key components: the Marketing Center, Business Center, Command Center, ThryvPay, and various Thryv Add-Ons. The Marketing Center, for instance, offers AI-driven analytics and lead attribution, directly addressing the age-old advertising dilemma of knowing "which half of all my advertising is wasted." This instrumentation provides tangible, data-driven insights for SMBs.

Recent innovations further bolster Thryv's technological moat. The company has integrated AI review response into its Business and Marketing Centers, leveraging artificial intelligence to streamline client interactions. A pivotal enhancement came with the acquisition of Keap, whose powerful automation tools have been integrated into the platform. Keap's automation builder, for example, has decreased the time to publish an automation by two-thirds, offering a quantifiable efficiency gain for users. The newly launched Reporting Center provides more robust reporting capabilities, a critical feature for slightly larger SMBs (e.g., 15-20 employee businesses) seeking deeper operational insights. Furthermore, the recently introduced Workforce Center aims to simplify payroll and tax compliance for SMBs, integrating directly into the Thryv platform. This expansion of the platform is designed to create more "locked-in customers" and reduce churn, as customers adopting a second paid product see their churn rate drop significantly, by as much as half.

Thryv's strategic verticalization, exemplified by the July 2025 launch of Thryv for HVAC, leverages Keap's automation tools to create tailored solutions. This product, developed in collaboration with HVAC professionals, focuses on the "marketing side, the outside, managing the funnel of how you get work, how you get repeat work, how you get followed up." This approach allows Thryv to partner with existing back-office solutions like ServiceTitan, rather than competing directly, creating a "heck of a story to tell" for new customer acquisition and playing defense for existing accounts. These vertical-specific offerings are an "upcharge" that flatter ARPU and enhance client satisfaction by providing highly relevant business processes and intellectual property.

Competitive Landscape and Positioning

Thryv operates in a dynamic SMB digital tools market, competing with a mix of direct and indirect players. Direct competitors include HubSpot (HUBS), Salesforce (CRM), Intuit (INTU), and GoDaddy (GDDY), all vying for a share of the SMB wallet.

Compared to HubSpot, Thryv's integrated platform offers a more bundled and user-friendly experience, potentially easier for non-tech-savvy SMBs to implement. However, HubSpot generally leads in technological sophistication, with more advanced AI tools offering greater efficiency in areas like lead scoring. Financially, HubSpot's Q2 2025 revenue grew 18% year-over-year with 86% gross margins, outpacing Thryv's 15% SaaS growth and 74% SaaS adjusted gross margins, indicating HubSpot's greater efficiency in cost structures.

Against Salesforce, Thryv's solutions are streamlined for SMBs, offering qualitatively easier setup compared to Salesforce's more feature-rich, enterprise-grade CRM tools that often require higher upfront investment. While Salesforce reported 10% YoY revenue growth in Q2 2025 with 76% gross margins, Thryv's strategy emphasizes affordability and integrated local marketing tools. Thryv's unique value proposition includes its payment integrations (ThryvPay), which differentiate it from broader CRM players.

Intuit, with its strong presence in SMB financial software (QuickBooks) and marketing tools (Mailchimp), offers robust data analytics. Thryv's growth (15% YoY SaaS) edges out Intuit's 12% Q2 2025 revenue growth, but Thryv's margins are comparatively weaker. GoDaddy, focused on website and digital presence, competes with Thryv's digital marketing services. While GoDaddy may offer lower hosting costs, Thryv's strength lies in its comprehensive, all-in-one platform.

Indirect competitors like Google (GOOGL) and Meta (META) provide free or low-cost marketing tools, posing a threat by potentially eroding market share through lower customer acquisition costs. Emerging AI platforms also present a challenge by offering cheaper and easier-to-implement alternatives.

Thryv's strategic response to this competitive environment involves leveraging its legacy relationships (average customer tenure of 15 years) and its reoriented sales force to drive deeper engagement and multi-product adoption within its existing 106,000 SaaS subscriber base. The acquisition of Keap significantly enhances Thryv's competitive standing by adding a sophisticated partner channel and bolstering its product and engineering team by approximately 50%. This allows Thryv to expand its distribution, particularly in international markets where Keap has a strong presence, and to offer more advanced automation capabilities, preventing larger SMBs from "graduating" to more expensive, enterprise-focused solutions like HubSpot or Salesforce.

Financial Performance and Outlook

Thryv's financial performance in Q2 2025 underscores the success of its SaaS transformation. SaaS revenue surged to $115.0 million, a 47.8% increase year-over-year, and $226.1 million for the six months ended June 30, 2025, up 48.7% from the prior year. This growth was significantly bolstered by the Keap acquisition, which contributed $17.7 million in Q2 2025 revenue, and the strategic conversion of digital Marketing Services clients to SaaS offerings, adding $4.6 million in Q2 2025 alone. Excluding Keap, Thryv's core SaaS business still grew a robust 25% year-over-year in Q2 2025.

Profitability in the SaaS segment reached new heights, with a record Adjusted EBITDA margin of 20.3% in Q2 2025, and 15.1% for the six-month period. The SaaS adjusted gross margin expanded to 74.0% in Q2 2025, reflecting the high-margin nature of the software business. This strong performance allowed Thryv's SaaS business to achieve the "Rule of 40" for the second consecutive quarter.

The legacy Marketing Services segment continues its managed decline, with revenue at $95.5 million in Q2 2025, down 34.7% year-over-year. This decline is intentional, driven by the company's strategic decision to exit this business by the end of 2028, with cash flows expected to extend through 2030. The accelerated conversion of these clients to SaaS is viewed as a positive, as it transitions them to a modern platform with higher growth potential.

Operationally, Thryv's focus on existing customer expansion is yielding results. SaaS Monthly ARPU reached $352 in Q2 2025, with Thryv's core ARPU at $340 and Keap's at $431. Seasoned Net Revenue Retention (NRR) hit 103% in Q2 2025, a significant improvement, demonstrating the effectiveness of the "land and expand" strategy. The number of clients using two or more SaaS products increased to 17,000 in Q2 2025, up from 13,000 in the prior year, further validating this approach.

Financially, Thryv has successfully navigated a critical "pinch point" in Q2 2025, characterized by accounting pressures from changing print publication cycles and high amortization payments. The company made two additional quarters of required amortization payments on its new term loan, effectively eliminating two years of required amortization until Q2 2026. This achievement "significantly increases the flexibility within our capital structure," allowing for lower future amortization payments of $35 million per year.

Net debt decreased by $24 million to $274 million in Q2 2025, bringing the leverage ratio to 2.2x, ahead of expectations. The company maintains a $40 million share repurchase program, with $39.5 million remaining available.

For Q3 2025, Thryv expects SaaS revenue in the range of $116 million to $117 million and SaaS adjusted EBITDA between $18.5 million and $19.5 million. For the full year 2025, SaaS revenue guidance is updated to $460 million to $465 million. While this reflects a modest adjustment due to a strategic decision to de-emphasize less profitable demand generation sales within the Keap business, the full-year SaaS adjusted EBITDA guidance has been raised to $70.5 million to $73.5 million, underscoring the company's commitment to profitable growth. Marketing Services revenue for FY 2025 is projected at $323 million to $325 million, with adjusted EBITDA of $78.5 million to $80.5 million.

Conclusion

Thryv's journey from a legacy publisher to a SaaS-centric powerhouse is a compelling investment narrative, marked by strategic foresight and disciplined execution. The company has successfully navigated its "pinch point," emerging with enhanced financial flexibility and a clear path to sustained profitability. Its integrated, AI-enhanced platform, coupled with strategic acquisitions like Keap, provides a robust technological foundation that drives multi-product adoption, higher ARPU, and reduced churn within its resilient SMB customer base.

The strategic pivot to verticalized solutions and a reoriented sales focus on existing customer expansion positions Thryv for efficient, high-quality growth. With SaaS expected to drive the majority of EBITDA by 2026 and overall top-line revenue growth anticipated by 2027, Thryv is poised to capitalize on the increasing SMB demand for comprehensive cloud-based solutions. While macroeconomic uncertainties persist and competitive pressures from larger tech giants remain, Thryv's focused strategy, strong operational execution, and commitment to financial discipline make it a compelling consideration for investors seeking exposure to the evolving SMB software market.