Yahoo Finance Thryv Holdings Inc (THRY) (Q1 2024) Earnings Call Transcript Highlights: Robust Growth and ...
SaaS Revenue: $74.3 million in Q1, up 24% year-over-year.
Adjusted Gross Margin (SaaS): 68.4%, increased 420 basis points year-over-year, decreased 130 basis points quarter-over-quarter.
SaaS Adjusted EBITDA: $3.4 million, with a margin of 4.6%.
SaaS Subscribers: 70,000 at end of Q1, up 30% year-over-year.
SaaS ARPU: Relatively flat at $369.
Seasoned Net Dollar Retention (SaaS): 94%, up 300 basis points year-over-year.
Marketing Services Revenue: $159.3 million in Q1, above guidance.
Marketing Services Adjusted EBITDA: $50.7 million, with a margin of 32%.
Marketing Services Billings: $136.8 million, down 24% year-over-year.
Consolidated Adjusted Gross Margin: 68%.
Consolidated Adjusted EBITDA: $54.1 million, with a margin of 23%.
Net Debt Position: $341 million at end of Q1.
Leverage Ratio: 1.9 times net debt to EBITDA.
Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Thryv Holdings Inc (NASDAQ:THRY) reported strong subscriber growth, ending the quarter with 70,000 clients, indicating a robust start to the year.
The company successfully completed a refinancing, which significantly extends debt maturity, providing financial flexibility and the ability to invest in growth.
Thryv Holdings Inc (NASDAQ:THRY) announced a share repurchase authorization, demonstrating confidence in the company's future and a commitment to enhancing shareholder value.
SaaS revenue increased by 24% year-over-year to $74.3 million, within the guidance range, showing strong performance in this segment.
The company is seeing significant traction with over 8% of clients now having two or more centers, up from nearly zero last year, reflecting the effectiveness of their center strategy.
Negative Points
First quarter SaaS adjusted EBITDA was only $3.4 million, resulting in a SaaS adjusted EBITDA margin of 4.6%, indicating potential challenges in profitability.
Marketing services billings declined by 24% year-over-year to $136.8 million, suggesting a decrease in this segment's performance.
The adjusted gross margin for SaaS decreased 130 basis points quarter over quarter due to promotional pricing strategies, although it rebounded in March.
There were elevated G&A costs in the first quarter, which negatively impacted SaaS EBITDA margins by just under $1 million.
The company is undergoing a transition from marketing services to SaaS, which involves managing declines in the marketing services segment while trying to grow the SaaS segment.
Q & A Highlights
Q: Can you discuss the traction you're seeing with marketing services legacy customers transitioning to SaaS, and how it's impacting SaaS client growth? A: Joe Walsh, Chairman & CEO of Thryv Holdings, highlighted that the transition is aided by the similarity of the Marketing Center to previous marketing services, making it an easier sale. The company is seeing strong success in selling into the existing base, with a notable increase in clients buying the broader platform, which is driving accelerated growth in SaaS clients.
Q: With the new debt refinancing, how does this affect your capital allocation strategy, especially regarding M&A and investment in the SaaS business? A: Joe Walsh explained that the new flexibility from debt refinancing allows for potential M&A activities to expand SaaS offerings. The company is actively looking at SaaS entrepreneurs and considering acquisitions that could fit into Thryv's business model, despite previous constraints from a low valuation and cash sweep requirements.
Q: What trends are you observing in the adoption of multiple centers by SaaS customers? A: Joe Walsh noted a significant shift with 8% of SaaS customers now using multiple centers, up from nearly zero the previous year. This trend is expected to continue growing, positively impacting the company's revenue per user and net dollar retention, aligning with Thryv's strategy to increase customer lifetime value by expanding the number of services used by each client.
Q: How is the recent change to the sales commission structure expected to influence the adoption of multicenter strategies? A: Joe Walsh discussed that the updated commission structure, which now heavily incentivizes multicenter sales, has already resulted in a noticeable increase in such sales. This strategic shift is crucial for Thryv's growth and is expected to significantly impact future revenue and customer engagement positively.
Q: Can you provide insights into the financial performance and expectations for the marketing services segment, particularly in light of the accelerated transition to SaaS? A: Paul Rouse, CFO, indicated that while marketing services are expected to decline, the focus should be on the overall EBITDA from the entire company, which is seeing healthy growth due to the strong performance of the SaaS segment. The company is managing the transition actively, ensuring financial stability and growth in shareholder value.
Q: With the new technology leadership, are there any anticipated changes or enhancements to Thryv's center strategy or product rollout plans? A: Joe Walsh welcomed Rick Johnson as the new Chief Product Officer, noting his impressive background and potential to enhance Thryv's product offerings. While it's too early for specific changes, the strategic direction remains focused on expanding and enhancing the SaaS platform to meet the evolving needs of small businesses.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
