Q4 2024 Earnings Summary
- Thryv anticipates that its SaaS business will become the majority of EBITDA by 2026, and expects to return to overall top-line revenue growth in 2027 as the SaaS segment outpaces the decline in marketing services. This indicates a successful transformation towards a high-growth, profitable SaaS model.
- The company is successfully cross-selling between Thryv and Keap customer bases, with an expectation of $5 million in cross-sell revenue in 2025. Additionally, the Keap acquisition adds a significant partner channel of 1,000 partners and enhances Thryv's international expansion, amplifying sales efforts and contributing to future growth. ,
- Thryv is focusing on ARPU growth in 2025, aiming to upsell its large installed base of 114,000 customers by providing additional SaaS products and services. This strategy is expected to drive significant revenue growth and increase customer lifetime value. ,
- Decline in net customer additions in the core SaaS business during Q4 compared to Q2 and Q3, suggesting a potential slowdown in growth momentum. Management attributes this to seasonality and slight concerns about tariffs and inflation, indicating external factors may be impacting growth.
- Integration risks with the Keap acquisition, as management remains cautious about its fiscal 2025 contribution despite Keap outperforming in Q4. They acknowledge that "integrating businesses are hard," implying potential challenges ahead in realizing expected synergies.
- Uncertainty in timing of when the SaaS business will surpass Marketing Services in EBITDA contribution. Management is unable to provide specific guidance beyond general expectations for 2026, which may reflect challenges in the transition to a fully SaaS-focused model.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | Approximately –21% (from ~$236.2M in Q4 2023 to ~$186.6M in Q4 2024) | The sharp decline in total revenue largely reflects the ongoing shift in the company’s revenue mix, where a weakening in traditional Marketing Services has not been fully offset by the growth in the SaaS segment. This represents a continuation of prior trends where changes in revenue timing and customer mix impacted overall values. |
Revenue Split (Marketing vs. SaaS) | Q4 2024 showed $82.3M from Marketing Services and $104.3M from SaaS revenue | The shift in revenue split underscores Thryv’s strategic move from lower-margin Marketing Services towards higher-margin, recurring SaaS revenues. This trend follows earlier period declines in Marketing Services, with enhanced SaaS performance partially offsetting the losses from traditional business lines. |
Geographic Performance | U.S. revenue contracted from ~$203.3M in Q4 2023 to ~$155.7M in Q4 2024; International revenue dropped modestly from ~$32.8M to ~$30.8M, with Thryv Australia reversing to –$71.63M | The U.S. segment’s significant contraction reflects underlying issues in Marketing Services as seen in previous periods, while the modest decline internationally—and the dramatic negative reversal in Thryv Australia—signals additional market-specific challenges such as currency headwinds or local demand drops, further emphasizing the impact of global market conditions. |
Operating Income (EBIT) | Improved dramatically from approximately –$242.1M in Q4 2023 to –$7.2M in Q4 2024 | A near-breakthrough in operational efficiency is evident as cost-cutting measures and improved cost management nearly eliminated the prior huge operating loss. The drastic improvement—narrowing the loss by about $235M—is indicative of successful initiatives to streamline operations that were under strain in earlier periods. |
Net Income and EPS | Turnaround from a net loss of –$257.5M and EPS of –$7.42 in Q4 2023 to net income of $7.9M and EPS of $0.28 in Q4 2024 | The conversion from substantial losses to profitability is mainly driven by the improved operating results as well as the revenue mix transformation favoring SaaS, along with disciplined cost reductions. These changes represent a stark improvement over previous periods and have reversed the negative earnings trend. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
SaaS Revenue | Q1 2025 | no prior guidance | $107.5 million to $110 million | no prior guidance |
SaaS Adjusted EBITDA | Q1 2025 | no prior guidance | $9 million to $9.5 million | no prior guidance |
SaaS Revenue | FY 2025 | no prior guidance | $464.5 million to $474 million (35%–38% growth) | no prior guidance |
SaaS Adjusted EBITDA | FY 2025 | no prior guidance | $69.5 million to $71 million (15% margin) | no prior guidance |
Marketing Services Revenue | FY 2025 | no prior guidance | $310 million to $314 million | no prior guidance |
Marketing Services Adjusted EBITDA | FY 2025 | no prior guidance | $77.5 million to $78.5 million | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
SaaS Revenue | Q4 2024 | $90 million to $92 million | $104.3 million | Beat |
Marketing Services Revenue | Q4 2024 | $81 million to $83 million | $82.3 million | Met |
SaaS Revenue | FY 2024 | $329.5 million to $331.5 million | $343.5 million (sum of 74.3+ 77.8+ 87.1+ 104.3) | Beat |
Marketing Services Revenue | FY 2024 | $479 million to $481 million | $480.7 million (sum of 159.3+ 146.3+ 92.8+ 82.3) | Met |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
SaaS Transformation & Growth | Consistently emphasized in Q1–Q3 with strong subscriber increases, revenue growth, margin improvements, and an aggressive transition from legacy services | Q4 reported 41% YoY SaaS revenue growth, improved adjusted gross margins at 76%, Rule of 40 achievement, and robust SaaS subscriber gains | Continued and accelerating focus with uniformly positive sentiment driving growth and profitability improvements. |
Decline of Legacy Marketing Services | Repeatedly noted in Q1 through Q3 as a deliberate transformation with declining revenue and billings coinciding with customer migration | Q4 highlighted a 40% YoY revenue decline, an established exit plan by 2028 and further cost streamlining initiatives | Consistent and managed decline designed to pave the way for a full SaaS transition. |
ARPU Performance and Pricing Strategy | Q1–Q3 discussions showed pressures from promotional pricing on ARPU with expectations of eventual recovery via upsell, despite temporary declines | Q4 noted a sequential uptick in ARPU and strong plans for 2025 upsell initiatives, with less focus on lower-priced offers | Shift from short-term pricing pressures toward a longer‑term targeted upsell strategy with improved ARPU outlook. |
Keap Acquisition Synergies and Integration Risks | Q1 and Q2 had no mention; Q3 introduced initial integration and cross‑sell benefits with cautious optimism about timing | Q4 provided detailed updates on realized EBITDA synergies, cross‑sell revenue, expanded partner channels, and smoother integration processes | Emerging as a mature theme with increased clarity on benefits and integration progress, marking a notable evolution from earlier periods. |
Profitability and Margin Expansion | All prior periods (Q1–Q3) discussed improvements in SaaS and consolidated margins, EBITDA growth, and progress toward Rule of 40, though margins were influenced by pricing strategies | Q4 reported significant margin gains – SaaS gross margins reached 76%, consolidated EBITDA improved, and Rule of 40 maintained for the second quarter | Steady, ongoing improvement with clear execution on profitability goals and sustained operational discipline. |
Debt Management and M&A Execution Challenges | Q1–Q3 detailed constraints from a high cash flow sweep and low valuation challenges that limited acquisition flexibility; refinancing in Q1 and Q2 eased these issues | Q4 emphasized proactive debt reduction, a lowered net debt position, healthy leverage (1.63x), and improved financial discipline without mention of hindrance on M&A | Consistent focus on deleveraging with improved financial flexibility now supporting growth initiatives. |
Product Innovation and Portfolio Expansion | Q1 provided general commentary on platform development; Q2 introduced robust AI initiatives and acknowledged early Command Center challenges; Q3 offered limited details | Q4 highlighted new AI enhancements in Business and Marketing Centers, a new Reporting Center rollout, and continued efforts to refine underperforming products like the Command Center | Increasing emphasis on innovation with a notable upturn in AI initiatives and new product rollouts, even as refinement of some offerings remains ongoing. |
External Economic Factors | Q1 mentioned seasonality and mild macroeconomic headwinds; Q2 noted customer caution in a challenging climate; Q3 had no specific commentary | Q4 discussed seasonal slowdowns during the holidays and broader macroeconomic uncertainties (post‑election sentiment, tariffs/inflation concerns) affecting customer activity | Recurrent but cyclical discussion with external factors resurfacing due to seasonal conditions and macroeconomic cues, while overall impact remains secondary to execution. |
-
EBITDA and Growth Outlook
Q: When will SaaS EBITDA surpass marketing services, leading to overall growth?
A: The majority of EBITDA is expected to come from the SaaS business in 2026, with overall top-line growth anticipated in 2027, even as marketing services continue to decline. By 2027, the larger SaaS business is projected to deliver growth for the company. -
Keap Acquisition Financial Impact
Q: How does the Keap acquisition affect fiscal '25 estimates?
A: While Keap outperformed expectations in Q4 by approximately $2 million , the company is cautious and maintains its fiscal '25 revenue estimate for Keap at $75 million to $78 million. Integrating businesses is challenging, so they are sticking with their original estimates. -
ARPU Trends and Focus
Q: Is the ARPU in core SaaS business approaching its trough?
A: ARPU can be noisy due to conversion activities, but the company expects strong progress on ARPU growth in 2025. The focus will be on engaging the installed base and upselling additional SaaS products, making ARPU growth a key theme for the year. -
Go-to-Market Strategy Adjustments
Q: Are there changes to the go-to-market strategy to achieve 2027 growth goals?
A: The Keap acquisition added a significant partner channel with 1,000 partners, enhancing sales channels to reach more sophisticated businesses and international markets. This is expected to contribute significantly to achieving overall business growth by 2027. -
Launch of Additional Products/Centers
Q: What is the plan for launching new products or centers?
A: The next center, Workforce Center, is set to launch this year. While not promising additional massive centers annually, the company will focus on making existing tools work better together and may introduce add-ons or other products that don't qualify as full centers. -
Cross-Selling Feedback Between Thryv and Keap
Q: What is the customer feedback on cross-selling between Thryv and Keap?
A: It's early days, but feedback is positive. Keap leads seeking business growth benefit from Thryv's Marketing Center, while Thryv customers are excited about adding Keap's automation. The sales organization anticipates about $5 million in cross-sell between customer bases this year. -
Sales Trends in Q4
Q: Were there any changes in sales trends or customer appetite in Q4?
A: Q4 is always a bit soft due to the holidays. There's slight caution in the macro environment, but it doesn't significantly impact results. Sales are not heavily influenced by small business or consumer sentiment.