Q1 2025 Earnings Summary
- Strong Cross-Selling & Expansion: Company executives highlighted that customers are actively adding additional products—such as various centers and add-ons—to their core SaaS implementation, driving a net revenue retention of 103%, which suggests expanding revenue per customer and substantial margin upside.
- Resilient Customer Demand: Despite soft periods and economic headwinds, customers remain focused on growth. Executives noted that even during seasonal lulls, demand for growth-oriented products like Marketing Center add-ons persists, underlining a robust, non-discretionary customer base.
- Positive Integration & Channel Synergies: The successful integration of the Keep acquisition, combined with enthusiastic partner engagement at events like the Partnerkon, is strengthening the overall product offering and opening up significant cross-selling opportunities across a largely complementary customer base.
- Declining New Subscriber Growth: The company's SaaS customer additions were down 3,000 subscribers in the quarter, partly due to seasonal slowdowns and a shift in focus toward servicing its existing base. This decline could signal vulnerability if macroeconomic headwinds intensify.
- Cautious Revenue Guidance Amid Uncertainty: Management’s deliberate, conservative stance on revenue guidance—motivated by broader market uncertainty and cautious outlooks—suggests concerns that potential economic deterioration could dampen growth momentum.
- Reliance on Expansion Over New Acquisitions: The strategy to prioritize expansion within the current customer base may backfire if economic pressures affect small businesses’ ability to increase spending. A heavy reliance on cross-selling and add-on adoption, without robust new customer growth, could ultimately risk retention and profitability under tougher conditions.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | 22% decline (from $233.6M to $181.4M) | Total revenue fell sharply as the dramatic drop in Marketing Services revenue (nearly a 55% decline) overwhelmed the 33% surge in SaaS revenue. This reflects the company’s strategic shift from lower‐margin Marketing Services to higher-margin SaaS funds, though the conversion was not enough to fully offset the overall revenue loss vs.. |
Thryv SaaS Revenue | 33% increase (from $74.3M to $111.1M) | A strategic conversion of clients and heightened adoption of cloud-based solutions by SMBs drove the impressive 33% increase in SaaS revenue. The growth was supported by initiatives such as enhanced SaaS product offerings and the impact of key acquisitions, which boosted revenue substantially vs.. |
Thryv Marketing Services Rev. | 55% decline (from $159.3M to $70.2M) | Aggressive client conversion from Marketing Services to SaaS and a secular decline in demand – exacerbated by competitive pressures in digital and print – led to a steep 55% drop in Marketing Services revenue. This decline, part of a broader strategic pullback from a challenged business segment, was a key factor in overall revenue weakness vs.. |
U.S. Revenue | 26% decline (from $196.44M to $146.11M) | Domestic revenue suffered heavily due to the contraction in Marketing Services driven by both digital disruption and planned client conversion strategies. Although partially offset by SaaS growth, the U.S. market experienced a 26% decline, reflecting intensified competitive and market headwinds at home vs.. |
International Revenue | 5% decline (from $37.18M to $35.26M) | International revenue remained relatively stable, dropping only modestly by about 5% despite overall revenue pressures. The smaller change indicates that non-U.S. markets—such as Australia, which maintained its revenue share—were less affected by the dramatic shifts in Marketing Services and SaaS performance vs.. |
Net & Operating Income | Net Income: shift from $8.424M profit to -$9.618M loss; Operating Income: from $31.134M profit to -$3.034M loss | The reversal in profitability stems from the rapid decline in the high-revenue Marketing Services segment combined with rising cost pressures. Although SaaS revenue growth was robust, it was insufficient to counterbalance the loss in operating income caused by lower overall revenue and inherently higher fixed costs vs.. |
Basic EPS | Declined from $0.24 to -$0.22 | Basic EPS deteriorated sharply as the declining net income, increased losses, and share dilution negatively impacted earnings per share. This EPS contraction reflects the broader profitability challenges facing the company amid its revenue mix transformation vs.. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
SaaS Revenue | Q2 2025 | no prior guidance | $113 million to $115 million | no prior guidance |
SaaS Adjusted EBITDA | Q2 2025 | no prior guidance | $18.5 million to $19.5 million | no prior guidance |
SaaS Revenue | FY 2025 | $464.5 million to $474 million | $460.5 million to $471 million | lowered |
SaaS Adjusted EBITDA | FY 2025 | $69.5 million to $71 million | $67 million to $71 million | lowered |
Marketing Services Adjusted EBITDA | FY 2025 | $77.5 million to $78.5 million | $77.5 million to $78.5 million | no change |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
SaaS Revenue | Q1 2025 | $107.5M to $110M | $111.1M | Beat |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
SaaS Transformation & Margin Expansion | Q2–Q4 2024 discussions emphasized robust migration to SaaS, strong YoY revenue growth (e.g. 41%–50% growth in SaaS subscribers), and significant improvements in gross and EBITDA margins | Q1 2025 call highlighted that SaaS revenue now constitutes 61% of total revenue with a 50% YoY growth (24% normalized) and margin expansion (gross margin up to 73%, EBITDA margin at 10%) | Consistent focus with improved performance metrics and deeper margin expansion in the advanced stages of transformation. |
Cross-Selling and Expansion Strategy | Prior periods (Q2–Q4 2024) concentrated on building multiple centers, driving multicenter adoption (e.g. 12–16% using multiple centers), and initiating cross-sell opportunities including integration synergies with Keap | Q1 2025 emphasized reorienting the sales organization toward upgrading legacy customers to SaaS products; 17.2% of subscribers are using multiple products, supporting lower churn and higher lifetime value | Evolving from early-stage channel integration to a more refined and effective upsell strategy that deepens customer relationships. |
Acquisition Integration and Channel Synergies | Q2–Q4 2024 discussions (mainly around the Keap acquisition) underscored operational integration, a unified platform approach, partner channel expansion, and synergy realization (around $10 million identified) | Q1 2025 focused on the smooth operational and cultural integration of the Keep acquisition, with synergies realized in EBITDA and plans to leverage partner channels for further cross-selling | Steady focus though naming/target acquisition may have shifted; integration remains a key pillar with continued emphasis on channel synergies. |
Customer Acquisition and Subscriber Growth Dynamics | Across Q2–Q4 2024, Thryv stressed robust subscriber growth (up to 52% YoY increase), effective migration of marketing services clients, and strong conversion metrics, despite some seasonal softness | In Q1 2025, total SaaS subscribers reached 111,000 (including Keep) with strong YoY gains and an emphasis on cross-selling within the subscriber base | Consistent robust subscriber growth with a continued strategic shift toward leveraging and expanding existing customer relationships. |
ARPU Trends and Upsell Opportunities | Q2–Q4 2024 saw ARPU pressures due to promotional pricing (e.g. ARPU around $307–$333) and initiatives to introduce upsell paths through starter products and growth packages, with guidance for long‐term improvement | Q1 2025 reported an ARPU increase to $335, with continued focus on upsell through multiple-product adoption and a net revenue retention rate of 103%, driving further revenue per account | Recovering ARPU trends as initial discount effects wane and upsell opportunities mature, signaling a healthy shift toward higher average revenue per user. |
Economic Uncertainty and External Headwinds | Q2 2024 noted cautious customer behavior and a strategic shift to lower-priced options amid a challenging macro environment; Q4 2024 mentioned tariffs and inflation worries, while Q3 had no explicit mention | Q1 2025 acknowledged economic uncertainty with concerns over potential recession impacts, but underscored customer resilience in essential service sectors and a cautious upward guidance | Persistent external headwinds remain, though Q1 2025 reflects increased confidence in customer resilience despite continuing macroeconomic challenges. |
Marketing Services Decline and Cannibalization | Q2–Q4 2024 consistently discussed declining marketing services revenue (28%–40% YoY declines) driven by strategic migration to SaaS, with planned exit by 2028 and associated operational cost reallocation | Q1 2025 reported a 42% YoY decline in Marketing Services revenue due to successful conversion of legacy customers to SaaS, aligning with the long-term exit strategy from Marketing Services by 2028 | A deliberate and steady cannibalization of legacy services as part of a strategic transformation, reinforcing the shift toward a SaaS-centric business model. |
New Product Innovation and AI Integration | Q2 2024 and Q4 2024 detailed efforts around new product launches (e.g. Reporting Center, Workforce Center, growth packages) and AI integrations (e.g. AI review response, social media automation) | Q1 2025 did not specifically mention new product or AI initiatives; focus remained on scaling SaaS and integration of acquired entities | A notable reduction in explicit discussion, possibly indicating that product innovation has been integrated into broader SaaS growth narratives rather than spotlighted. |
Command Center Product Performance | Q2 2024 provided early insights into the Command Center as a V1 product with iterative improvements planned, aiming to serve as a future wedge product for customer acquisition | Q1 2025 did not reference the Command Center product, suggesting it is currently a lower priority or undergoing further development off-stage | The absence of discussion in Q1 2025 indicates that the Command Center remains in development, with its performance and role yet to be prioritized in earnings conversations. |
Financial Flexibility and Debt Obligations | Q2–Q4 2024 calls highlighted a focus on deleveraging, refinancing benefits, and managing net debt (with leverage ratios ranging from 1.63x to 1.66x), alongside strategic cash flow utilization for growth initiatives | Q1 2025 reiterated a solid net debt position (e.g. $298 million, 2.2x leverage), with continued plans for debt prepayment and deleveraging as part of the strategic transition to SaaS | A consistent emphasis on maintaining robust financial discipline with targeted deleveraging and improved debt metrics, supporting strategic investments. |
-
Revenue Guidance
Q: Why revise SaaS revenue expectations?
A: Management took a cautious stance amid economic uncertainty, modestly pulling back expectations while maintaining strong early-year performance. -
Net Retention
Q: What drives record 103% retention?
A: They are successfully cross-selling add-on centers and services, which has helped push net retention to 103%. -
Retention Goal
Q: Will you raise retention targets beyond 100%?
A: For now, the focus remains on sustaining near 100% retention, with any upward adjustment reserved for consistently strong results. -
Acquisition Integration
Q: How do Thryv and Keep customer performances differ?
A: The integration is proceeding well; Keep’s resilient, largely non-overlapping customer base complements Thryv’s offerings, supporting cross-sell opportunities. -
Leverage Outlook
Q: What are your target leverage improvements?
A: With a steady focus on debt reduction, management expects leverage to gradually improve over the next 2–3 years. -
Customer Additions
Q: Why were SaaS additions down by 3,000?
A: A seasonal slowdown during the holiday period and a shift toward expanding existing accounts contributed to this temporary dip. -
Partner Conference
Q: What were key takeaways from the partner event?
A: Partners commended Keep’s automation capabilities and showed strong enthusiasm for a complete product catalog, reinforcing future cross-selling efforts. -
Product Focus
Q: Which product suite will aid in a tougher macro?
A: The emphasis will be on growth-oriented products that drive lead generation and market engagement, tailored for a potentially slowing economy. -
Traffic Expense
Q: What is behind the increased traffic expense?
A: The uptick is due to add-on tools that enhance website visibility and drive additional search traffic, exceeding initial expectations. -
Customer Experience
Q: How will you ensure post-sale cross-sell success?
A: A robust, multi-channel customer engagement program is in place to foster add-on adoption and drive long-term value. -
GTM Adaptation
Q: Does current macro risk change your go-to-market approach?
A: The team is fine-tuning messaging to underscore ROI and growth benefits, effectively turning market caution into a selling point.
Research analysts covering Thryv Holdings.