Thryv’s Q1 Earnings: A SaaS Success Story Amid Transition Pains

Thryv Holdings (NASDAQ: THRY) delivered a starkly mixed set of results for Q1 2025: its SaaS business roared ahead, but legacy revenue declines and a net loss underscored the challenges of its strategic pivot. While total revenue fell 22% year-over-year, the company’s software-as-a-service (SaaS) segment grew by 50%, now accounting for over 60% of total revenue—a milestone signaling its evolution from a marketing services company to a SaaS leader. The question for investors is whether Thryv’s long-term vision outweighs its current financial struggles.

The Numbers: A Mixed Bag

Thryv reported consolidated revenue of $181.4 million, slightly beating consensus estimates of $173.8 million but marking a 22% year-over-year drop. The decline stemmed almost entirely from its Marketing Services segment, which plummeted 56% to $70.2 million as Thryv accelerates its exit from the business by 2028.

The real story lies in SaaS performance:
- Revenue hit $111.1 million, up 50% year-over-year. Excluding contributions from its recent Keap acquisition, organic growth was still strong at 24%.
- SaaS clients surged to 111,000, a 59% increase year-over-year, with 17.2% of clients now using multiple paid products—a key driver of 50% lower churn rates among these customers.
- Seasoned Net Revenue Retention (NRR) hit 103%, a record high and a 900-basis-point improvement year-over-year, reflecting Thryv’s success in upselling and cross-selling.

Ask Aime: What's next for Thryv Holdings after Q1 2025 results?

Yet the bottom line suffered:
- Thryv reported a net loss of $9.6 million, or $(0.22) per share, versus net income of $8.4 million ($0.22 per share) in Q1 2024. The miss vs. consensus estimates of $0.24 per share triggered a 6.39% pre-market drop in its stock price.

The SaaS Transformation Takes Center Stage

Thryv’s shift to SaaS isn’t just about revenue—it’s about building a recurring revenue engine. The company now generates $335 in average revenue per unit (ARPU), up from prior quarters, as clients adopt higher-priced bundles like Marketing Center and Growth Packages. CEO Joe Walsh called the 61% SaaS revenue mix a “big milestone,” noting that cross-selling and multi-product adoption are creating “resilient” customer relationships.

Ask Aime: What's behind Thryv's SaaS surge?

The integration of Keap—a SMB-focused SaaS platform acquired in late 2024—is also paying dividends. Keap’s 15,000 clients contributed to SaaS growth, while its partner network of over 100 global channels is opening new verticals. CFO Paul Rouse emphasized that SaaS margins are improving, with adjusted EBITDA hitting 9.7% in Q1—up from 5.3% a year earlier.

The Elephant in the Room: Marketing Services

The 56% drop in Marketing Services revenue isn’t a surprise—Thryv has long planned to wind down this segment by 2028. But the transition isn’t painless:
- Marketing Services still generates $10.1 million in Adjusted EBITDA (14.4% margin), providing liquidity as the company invests in SaaS.
- Cash flows from this segment are expected to extend into 2030, giving Thryv time to complete its pivot.

Ask Aime: Will Thryv's SaaS surge overshadow Q1 2025's mixed financial performance?

The bigger risk? Competing with SaaS rivals like QuickBooks and Shopify, which have deeper pockets and broader ecosystems. Thryv’s response? Double down on high-touch client relationships, with sales teams now incentivized to boost monthly recurring revenue (MRR) rather than chase new customers. This strategy has improved rep productivity and reduced churn, but execution remains critical.

Looking Ahead: A Path Forward, But Challenges Loom

Thryv’s guidance for 2025 is cautiously optimistic:
- SaaS revenue is projected to reach $460.5 million–$471 million, up 24–26% year-over-year.
- Adjusted EBITDA margins are expected to expand, with the full-year target set at $67 million–$71 million.

Yet risks abound:
- SEC scrutiny: Thryv confirmed it received a subpoena in late 2024, though details remain unclear.
- Integration hurdles: The Keap acquisition is still bedding in, and compatibility issues could disrupt sales.
- Economic sensitivity: SMBs may cut discretionary spending if a recession hits, though Thryv claims its “product-led growth” model is recession-resistant.

Conclusion: A SaaS Leader-in-Waiting

Thryv’s Q1 results are a microcosm of its broader journey: SaaS momentum is undeniable, but legacy headwinds and execution risks remain. The company is betting on cross-selling and product innovation to offset declining legacy revenue—and so far, the metrics are promising.

With SaaS NRR hitting 103%, client retention improving, and a 60%+ revenue mix in its core business, Thryv is positioning itself as a durable SaaS player. While the stock’s post-earnings dip reflects near-term profitability concerns, the long-term thesis hinges on two questions:
1. Can Thryv maintain NRR above 100% while scaling SaaS margins?
2. Will its SMB-focused SaaS model outperform in a crowded market?

Investors should also note Thryv’s $298 million net debt, which is manageable given its cash flow profile, and its 11% cash return on invested capital, a sign of operational efficiency.

For now, Thryv’s SaaS story is compelling—but the EPS stumble serves as a reminder that execution is everything. If the company can grow SaaS revenue while pruning legacy costs, it could emerge as a leader in SMB software. Until then, it’s a stock for investors with a long view—and a tolerance for turbulence.