THRY — Thryv Holdings, Inc.

Summary of THRY Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• SaaS Revenue: Reported at $116.7 million, a 5% increase year-over-year, exceeding guidance.
• Adjusted EBITDA: Total company adjusted EBITDA was below guidance due to strategic upgrades impacting gross margins, with SaaS adjusted EBITDA at $10.8 million (9% margin).
• ARPU: Increased to $378 per month, a 13% year-over-year growth.
• Customer Metrics:
  • Quality customers (70% of revenue) grew 6% year-over-year.
  • Total SaaS subscribers reached 96,000.
  • Seasoned Net Revenue Retention (NRR) at 93%, indicating natural attrition among lower-spend clients.
• Marketing Services Revenue: $50.9 million, above guidance, with adjusted EBITDA margin of 26%. Billings down 33% year-over-year due to strategic shifts.

2. Strategic Updates and Business Highlights

• Shift to SaaS: The company is now 70% SaaS revenue, a significant transformation from a marketing services focus.
• Marketing Center Growth: Grew approximately 30% year-over-year, indicating strong demand from small businesses for online visibility and lead conversion.
• AI Integration: Early adoption of AI features (e.g., image generation, lead scoring) is enhancing product stickiness and client engagement.
• Upmarket Strategy: Successfully targeting larger small businesses, resulting in higher ARPU and improved client retention.
• Market, Sell, Grow Initiative: Focused on integrating Keap automation with Marketing Center, enhancing overall service offerings.

3. Forward Guidance and Outlook

• Q2 SaaS Revenue Guidance: Expected in the range of $114 million to $115 million.
• Full Year SaaS Revenue: Raised guidance to $463 million to $471 million.
• Marketing Services Revenue: Full year guidance raised to $157 million to $163 million.
• SaaS Adjusted EBITDA Guidance: Maintained at $70 million to $75 million for the full year.
• Long-term Outlook: The company anticipates returning to overall top-line growth by 2027, with a focus on advancing AI initiatives.

4. Bad News, Challenges, or Points of Concern

• Gross Margin Compression: Resulting from the strategic upgrade of low-margin clients to SaaS, impacting adjusted EBITDA.
• Churn Among Smaller Clients: While high-value client churn is favorable, the overall customer count is affected by the loss of lower-spend clients.
• Transition Noise: The shift from legacy marketing services to SaaS is causing fluctuations in customer metrics, leading to potential short-term instability.
• Market Services Decline: Billings are expected to continue declining as the company transitions away from legacy services.

5. Notable Q&A Insights

• Upmarket Client Engagement: The focus is on larger businesses with higher revenue potential, which are showing increased willingness to spend and engage more deeply with the platform.
• AI Monetization: While current AI features are enhancing the core product, future monetization opportunities are anticipated but not prioritized at this stage.
• Customer Feedback on AI: Positive early feedback on AI functionalities, with improvements in lead conversion and user experience noted.
• Sales Strategy: The sales team is now targeting ideal clients more effectively, focusing on larger businesses rather than smaller solopreneurs, which is expected to drive better retention and revenue growth.

This summary encapsulates the key financial metrics, strategic initiatives, forward guidance, and challenges faced by Thryv in Q1 2026, providing a comprehensive overview of the company's current position and future outlook.