Executive Summary / Key Takeaways

• SaaS Transformation Accelerates: Thryv Holdings, Inc. is rapidly transitioning from a legacy marketing services provider to a pure-play SaaS company, with SaaS revenue now comprising 61% of total revenue in Q1 2025 and projected to be 60% for the full year 2025, including Keap. The company anticipates SaaS will generate the majority of its EBITDA by 2026 and drive overall top-line revenue growth by 2027.
• Strategic ARPU Expansion and Multi-Product Adoption: The core growth strategy for 2025 focuses on increasing Average Revenue Per User (ARPU) within the existing SaaS client base by driving multi-product adoption. Clients utilizing two or more SaaS products exhibit significantly lower churn, with their churn rate dropping by as much as half.
• AI and Verticalization as Key Differentiators: Thryv is heavily investing in AI integration across its platform, offering features like AI-assisted review responses, social captioning, and website building, alongside advanced call analysis with lead scoring. The company is also successfully deploying vertical-specific solutions, such as "Thryv for HVAC," which has demonstrated a 10% lift in jobs booked and a 25% increase in total revenue for pilot customers.
• Improved Financial Flexibility and Deleveraging: Having navigated a "pinch point" of high leverage and amortization payments in early 2025, Thryv has proactively prepaid debt and expects significant deleveraging in the latter half of 2025, with required amortization payments reduced to $35 million per year and payments covered through Q2 2026.
• Conservative Outlook Amidst Macro Uncertainty: Management has adopted a conservative stance for its 2025 guidance, citing general market uncertainty and a deliberate choice to prioritize profitable sales within the Keap business. Despite this, full-year SaaS adjusted EBITDA guidance has been raised, underscoring a commitment to profitable growth.

The Evolution of Thryv: From Print Legacy to SaaS Powerhouse

Thryv Holdings, Inc. (NASDAQ:THRY) is undergoing a profound transformation, evolving from a venerable marketing and advertising legacy dating back to 1886 to a modern Software as a Service (SaaS) provider for small-to-medium sized businesses (SMBs). This strategic pivot is not merely an adaptation but a redefinition of its core identity, aiming to capture the burgeoning demand for integrated technology solutions among SMBs. The company's journey has been marked by a deliberate shift away from its traditional Print Yellow Pages and Digital marketing services towards a comprehensive, cloud-based software platform.

This strategic evolution is critical in an industry witnessing rapid digital adoption and the emergence of "Answer Engines" that are reshaping how SMBs connect with customers. Thryv's deep history of serving SMBs provides a foundational understanding of their needs, allowing the company to tailor solutions that resonate with a resilient customer base often focused on "break-fix" services, less susceptible to discretionary spending fluctuations. The company's overarching strategy centers on providing an all-in-one platform that simplifies operations, enhances customer relationships, and, crucially, drives growth for its SMB clients.

The competitive landscape for Thryv is dynamic, encompassing a range of players from broad CRM and marketing automation giants to specialized digital advertising platforms. Direct competitors include HubSpot , Salesforce , Google , and Adobe , all vying for a share of the SMB market. HubSpot and Salesforce offer comprehensive CRM and marketing automation, often with greater scalability and advanced analytics, but at potentially higher costs and complexity for smaller SMBs. Google dominates digital advertising and search, leveraging its vast data and reach, while Adobe excels in creative and digital experience management. Thryv differentiates itself by offering an integrated, cost-effective, and user-friendly platform specifically designed for the operational realities of SMBs, including payment solutions like ThryvPay and KeapPay. While larger rivals may boast faster innovation cycles and superior financial metrics like revenue growth and operating margins, Thryv's strength lies in its ability to consolidate essential business functions into a single, accessible platform, fostering strong customer loyalty in its niche. The company also benefits from its legacy ownership of authoritative directory sites, which are now being leveraged by Answer Engines, providing a unique tailwind against traditional search dominance.

Technological Edge: AI, Automation, and Vertical Specialization

Thryv's core technological differentiation lies in its integrated Thryv Platform, a modular suite of SaaS tools designed to be an all-in-one solution for SMBs. This platform includes the Thryv Marketing Center, Thryv Business Center, Thryv Workforce Center, Thryv Reporting Center, and the recently acquired Keap automation engine. The company's strategic investment in artificial intelligence (AI) is a significant differentiator, with AI being integrated across various functionalities to deliver tangible, quantifiable benefits for SMBs.

For instance, the Thryv Marketing Center, described as the company's "fastest-selling product" and "tip of the spear," is not only search engine optimized but also "answer engine optimized." This means Thryv is actively building knowledge graphs on its sites and continually tweaking them to ensure high visibility in emerging answer engine results, a critical advantage as Google's "hammerlock on all things search is broken." The platform incorporates AI for social captioning, suggesting personalized social media posts, and for review responses, automatically generating suitable replies to customer feedback. An upcoming AI website builder will allow SMBs to quickly create professional websites, and a copywriting assistant aids in generating content for landing pages and email campaigns.

A particularly impactful AI feature is call analysis with lead scoring, which transcribes inbound calls and scores leads, providing SMBs with critical insights into their marketing effectiveness. This directly addresses the long-standing challenge of knowing "which half" of advertising is wasted, offering absolute transparency and data-driven decision-making. Internally, AI is amplifying productivity across fulfillment, legal, accounting, and software development teams, accelerating the product roadmap and improving quality assurance. Sean Wechter, the new Chief Technology Officer, is spearheading this AI-first approach, aiming to "up-level even further our integration of AI, and our pace of throughput through our engineering team." His background in integrations also emphasizes making Thryv's software interoperable with other tools, a crucial factor for moving upmarket.

Thryv's R&D initiatives extend to vertical-specific solutions, leveraging Keap's powerful automation tools. The "Thryv for HVAC" offering, developed in collaboration with industry leaders, has yielded impressive results for pilot customers, including a 10% lift in jobs booked, a 25% increase in total revenue, and a 12% increase in repeat business due to automated reminders. These automations also led to a 45% boost in social engagement for one pilot customer. The company is now rolling out a broader home services vertical and plans to add more vertical applications rapidly, customizing automations based on best practices from successful businesses in each sector. The recently launched Thryv Workforce Center, a payroll and tax compliance solution, further expands the platform's capabilities, aiming to reduce churn by increasing multi-product adoption. These technological advancements and strategic product developments are central to Thryv's competitive moat, driving higher ARPU, improving customer retention, and solidifying its market positioning as an indispensable partner for SMB growth.

Financial Performance and Operational Momentum

Thryv's financial performance in the most recent periods reflects its ongoing transformation, with strong SaaS growth partially offsetting the planned decline in Marketing Services. For the three months ended September 30, 2025, total revenue increased by 12.10% year-over-year to $201.55 million, driven by a robust 33.10% increase in SaaS revenue to $115.90 million. This marks a significant milestone, with SaaS revenue now representing 61% of total revenue in Q1 2025. Excluding the Keap acquisition, Thryv's core SaaS business still grew 14% year-over-year in Q3 2025.

Profitability metrics underscore the success of the SaaS pivot. SaaS adjusted gross margin expanded to 73% in Q3 2025, an 80 basis point improvement year-over-year, while SaaS adjusted EBITDA reached $19.59 million, resulting in a healthy 17% adjusted EBITDA margin. This performance contributed to a substantial 108.10% increase in total Adjusted EBITDA for the three months ended September 30, 2025, reaching $40.83 million, primarily driven by higher-margin SaaS solutions.

Operational metrics further illustrate the strategic shift. The company ended Q3 2025 with 103,000 SaaS subscribers, including 13,000 from Keap, representing a 7% year-over-year increase. Average Revenue Per User (ARPU) for SaaS reached $365 in Q3 2025, with Thryv's core ARPU at $355 and Keap's at $437. While Seasoned Net Revenue Retention (NRR) saw a temporary decline to 94% in Q3 2025, management attributes this to "noise introduced as we transition legacy digital marketing services clients" at lower price points, emphasizing that the underlying fundamentals of higher-quality software clients remain strong. Crucially, multi-product adoption is accelerating, with clients using two or more SaaS products growing to 20% of the base in Q3 2025, up from 16% a year ago. This is a key driver for long-term retention, as customers with multiple products exhibit significantly lower churn.

The Marketing Services segment, while still contributing to overall profitability, is in a managed decline. Revenue for this segment decreased by 7.70% year-over-year to $85.65 million in Q3 2025, primarily due to a 52.60% drop in Digital revenue as clients convert to SaaS, and the secular decline in print. However, Print revenue saw a temporary 41.80% increase in Q3 2025 due to publication timing differences as U.S. directories transition to a 24-month cycle. Marketing Services adjusted EBITDA was $21.24 million, with a 25% margin in Q3 2025. The company remains on track to exit Marketing Services by 2028, with cash flows extending through 2030.

From a liquidity perspective, Thryv has successfully navigated a "pinch point" in early 2025, characterized by rising leverage and high amortization payments. Proactive debt repayments, including an additional $26 million in Q4 2024, have positioned the company ahead on its required amortization payments through Q2 2026, with annual mandatory payments now reduced to $35 million. This has significantly increased financial flexibility.

The company generated $14.6 million in free cash flow in Q3 2025, bringing year-to-date free cash flow to $18.8 million, and reduced net debt by $9 million to $265 million, achieving a leverage ratio of 1.9x. Management has expressed confidence in its ability to meet liquidity requirements for the next 12 months and is committed to further deleveraging.

Strategic Trajectory and Future Outlook

Thryv's strategic trajectory is firmly set on accelerating its SaaS growth, deepening customer engagement, and expanding its market reach through targeted initiatives. The company's acquisition of Keap in October 2024 was a pivotal move, immediately yielding $10 million in EBITDA synergies through operational efficiencies. The long-term opportunity lies in cross-selling between the Thryv and Keap customer bases, with an expected $5 million in cross-sell revenue in 2025, albeit back-weighted. Keap's established partner channel, comprising 1,000 partners, is also a significant asset, amplifying Thryv's sales efforts and international expansion into new markets.

The company is actively moving upmarket, targeting slightly larger SMBs (e.g., 8-15 employees) that tend to have lower churn and a greater propensity to adopt multiple software solutions. The U.S. field sales force is already achieving run-rate sales in the $6,000 range, indicating success in this strategy. New sales channels, including a free trial motion, franchise, and agency channels, are being developed for 2026 and beyond, aiming to diversify growth beyond the direct channel.

For 2025, Thryv has provided specific guidance:

• SaaS Revenue: $460 million to $463 million (full year), with Q4 2025 expected in the range of $118 million to $121 million.
• SaaS Adjusted EBITDA: $73 million to $75 million (full year), with Q4 2025 expected in the range of $19.2 million to $21.2 million.
• Marketing Services Revenue: $323 million to $325 million (full year).
• Marketing Services Adjusted EBITDA: $76 million to $78 million (full year).

Management has adopted a "very conservative view" for its 2025 guidance, acknowledging general market uncertainty but emphasizing that current performance is strong and not significantly impacted by macro factors. The focus for 2025 is primarily on ARPU expansion rather than aggressive subscriber growth, with the long-term goal of increasing ARPU from approximately $4,000 to $8,000 per customer over the next few years. This strategy is supported by the observation that multi-product adoption significantly reduces churn.

Looking further ahead, Thryv anticipates that SaaS will become the majority source of its EBITDA in 2026, and the company expects to return to overall top-line revenue growth by 2027. This long-term vision is underpinned by the continued build-out of its platform, including the Workforce Center, and a relentless focus on AI integration and interoperability.

Risks and Competitive Dynamics

While Thryv's transformation is compelling, investors should consider several risks and competitive dynamics. The company faces "significant competition" in both its Marketing Services and SaaS offerings, including from well-capitalized players like Google (GOOGL), Yelp (YELP), and Facebook (META) in the digital space, and established CRM/marketing automation providers like HubSpot (HUBS), Salesforce (CRM), and Adobe (ADBE). Thryv's legacy in print media and its reliance on converting these clients to SaaS present a unique challenge, with a risk of higher churn rates for converted clients, though current data suggests churn is in line with other SaaS clients.

Macroeconomic conditions, such as rising inflation, potential recession, and trade tariffs, could negatively impact SMB customers' demand for Thryv's offerings, despite the resilience of its "break-fix" customer base. The company is also subject to regulatory scrutiny, as evidenced by an SEC subpoena received in October 2024 related to its client conversion strategy. Furthermore, the current GICS classification of Thryv under "advertising under media and entertainment" rather than software may hinder its visibility to investors screening for SaaS companies.

Thryv's competitive advantages lie in its integrated, SMB-centric platform, its deep historical understanding of small businesses, and its growing AI capabilities. Its Marketing Center, with Answer Engine Optimization and lead generation tools, directly competes with broader digital advertising platforms by offering measurable ROI. The verticalization strategy, exemplified by Thryv for HVAC, allows the company to penetrate specific niches with highly tailored solutions, often complementing rather than directly replacing specialized back-office CRMs like ServiceTitan. However, Thryv's innovation speed and financial scale may lag behind larger, more diversified competitors, potentially impacting its ability to capture market share in rapidly evolving digital segments.

Conclusion

Thryv Holdings, Inc. is executing a strategic transformation from a legacy marketing services business to a high-growth, profitable SaaS enterprise. The company's focus on ARPU expansion through multi-product adoption, coupled with significant investments in AI and vertical-specific solutions, positions it to unlock substantial value from its extensive SMB customer base. While the transition involves managing the decline of its legacy segment and navigating competitive pressures, Thryv's improved financial flexibility, proactive debt management, and conservative outlook provide a solid foundation.

The integration of Keap and the leadership of its new CTO underscore a commitment to technological differentiation and accelerated product development, particularly in AI and interoperability. As Thryv moves upmarket and diversifies its sales channels, the long-term vision of SaaS driving the majority of EBITDA by 2026 and overall revenue growth by 2027 appears increasingly attainable. Investors should monitor the continued success of ARPU expansion, the impact of new vertical offerings, and the effective integration of AI as key indicators of Thryv's ongoing ascent in the SMB software market.