- Total SaaS Revenue (Q4 2024): $104.3 million, a 41% year-over-year increase.
- Full Year SaaS Revenue (2024): $343.5 million, a 30% year-over-year increase.
- SaaS Adjusted Gross Margin (Q4 2024): 76%.
- SaaS Adjusted EBITDA (Q4 2024): $17.3 million, with a margin of 16.6%.
- Net Revenue Retention: 98%.
- Subscribers: 114,000, including 15,000 from Keap.
- Marketing Services Revenue (Q4 2024): $82.3 million.
- Full Year Marketing Services Revenue (2024): $480.7 million.
- Marketing Services Adjusted EBITDA (Q4 2024): $12.1 million, with a margin of 15%.
- Consolidated Adjusted EBITDA (Q4 2024): $29.4 million, with a margin of 16%.
- Net Debt Position (End of Q4 2024): $279 million, a decrease of $61 million year-over-year.
- Leverage Ratio: 1.63 times net debt to EBITDA.
- Warning! GuruFocus has detected 4 Warning Signs with THRY.
Release Date: February 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Thryv Holdings Inc (NASDAQ:THRY) reported a strong year-over-year revenue growth of 41% for its SaaS business in the fourth quarter.
- The company achieved a significant milestone with SaaS revenue now accounting for over 50% of total revenue.
- SaaS adjusted gross margin increased to 76% in the fourth quarter, demonstrating improved profitability.
- The acquisition of Keap contributed positively, with $13.4 million in revenue for November and December, surpassing expectations.
- Thryv Holdings Inc (NASDAQ:THRY) achieved the Rule of 40 milestone for the second consecutive quarter, indicating a healthy balance of growth and profitability.
Negative Points
- The company is facing challenges with the integration of Keap, which may impact short-term performance.
- Marketing services revenue declined by 40% year-over-year in the fourth quarter, reflecting the strategic shift away from this segment.
- There is a temporary increase in net leverage expected in the first two quarters of 2025 due to pre-payment of vendor contracts and other expenses.
- The transition to a fully SaaS-focused model involves decommissioning legacy systems, which could pose operational risks.
- Thryv Holdings Inc (NASDAQ:THRY) anticipates a decline in marketing services billings as it exits this business by 2028, impacting short-term revenue.
Q & A Highlights
Q: Can you provide some early commentary on the cross-sell process with Keap customers and Thryv centers? A: Joe Walsh, Chairman and CEO, explained that the cross-sell process is underway, although still in early stages since the acquisition was completed recently. They have begun some cross-sales, with Keap customers showing interest in Thryv's marketing center products. Thryv's existing customers are also being introduced to Keap's automation tools to enhance lead management. The company expects about $5 million in cross-sell revenue this year, with significant interest from both customer bases.
Q: As you target larger businesses, are there any changes in the selling cycles or evidence of cross-selling into that group? A: Joe Walsh noted that while they are targeting slightly larger businesses, the difference is not significant. The main change is the demand for more powerful reporting from these businesses. Thryv has addressed this with the launch of the Reporting Center, which enhances client satisfaction and makes the platform more attractive to larger businesses.
Q: What drove the upside in the Keap acquisition performance in Q4, and is there potential for further upside in fiscal '25? A: Paul Rouse, CFO, attributed the Q4 outperformance to conservative initial estimates. While they exceeded expectations, the company plans to maintain its fiscal '25 guidance for Keap's contribution, citing the challenges of integrating businesses and a cautious approach.
Q: What feedback have you received from customers experiencing the cross-sell between Thryv and Keap? A: Joe Walsh mentioned that feedback has been positive, particularly from Keap customers who benefit from Thryv's marketing center in generating leads. Thryv customers are also expected to benefit from Keap's automation tools. The integration allows for customized vertical automation, enhancing the value proposition for specific industries.
Q: Can you update us on when you expect SaaS to surpass marketing services in terms of EBITDA contribution? A: Joe Walsh reiterated that they anticipate SaaS to become the majority source of EBITDA in 2026. By 2027, they expect overall top-line growth driven by SaaS, even as marketing services continue to decline. The exact timing within those years is not specified, but the transition is a key focus.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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