Thryv's Q3 2025 Earnings Call: Contradictions Emerge on Partner Performance, Strategic Shifts, ARPU Focus, and Revenue Guidance

Date of Call: None provided

Financials Results

• Revenue: SaaS revenue $115.9M in Q3, up 33% YOY; Keap contributed $16.8M; Marketing Services revenue $85.7M; total company billings $184.2M, down 4% YOY; Q3 free cash flow $14.6M (YTD $18.8M).
• Gross Margin: SaaS adjusted gross margin 73%, up 80 basis points YOY.
• Operating Margin: SaaS adjusted EBITDA margin 17%; Marketing Services adjusted EBITDA margin 25%.

Guidance:

• Q4 SaaS revenue expected $118M–$121M; FY SaaS revenue $460M–$463M.
• Q4 SaaS adjusted EBITDA $19.2M–$21.2M; FY SaaS adjusted EBITDA raised to $73M–$75M.
• FY Marketing Services revenue $323M–$325M; FY Marketing Services adjusted EBITDA $76M–$78M.
• Continue to transition off Marketing Services with target exit by 2028 and cash runway through 2030.

Business Commentary:

* SaaS Revenue Growth and Partner Engagement: - Thryv reported SaaS reported revenue of $115.9 million for Q3 2025, representing a 33% year over year increase. - The company noted that Keap contributed $16.8 million, and excluding Keap, Thryv's SaaS business grew 14% year over year. - The growth was driven by investments in product innovation and improvements in partner relationships, with a focus on delivering value to partners through better communication and addressing their needs.

• Vertical Sales Initiative and ARPU Expansion:
• Thryv's HVAC vertical sales resulted in a 10% increase in jobs booked and a 25% increase in total revenue for a pilot customer.
• The company aims to move from $4,000 annual customer spend to $8,000 through larger sales and vertical-specific marketing solutions.

• The vertical strategy is designed to target larger business segments, which are typically more stable and have higher retention rates, contributing to ARPU growth.

• AI Integration and Product Enhancement:

• Thryv emphasized the integration of AI across its software, with features such as social captioning, review response automation, and call analysis.
• The new Chief Technology Officer Sean Wachter is focused on operational efficiency and accelerating product development using AI tools.

• The company believes AI will be a significant tailwind for growth as it enhances productivity and development speed.

• Customer Engagement and Quality Metrics:

• Thryv noted that customers with two or more SaaS products grew to 17,000, or 20% of the base, indicating increased product adoption.
• The company is focused on improving the quality of its customer base by driving adoption among high-value clients and larger businesses.
• Efforts to engage existing customers and move up market have led to a steady improvement in ARPU and lower churn rates.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted 33% YOY SaaS growth, SaaS adjusted EBITDA beat (Q3 $19.6M) and a 17% SaaS EBITDA margin, raised full-year SaaS adjusted EBITDA to $73–$75M, emphasized AI as “a big tailwind,” and reported net debt down to $265M (leverage 1.9x).

Q&A:

• Question from Scott Berg (Needham and Company): Help us understand why SaaS missed guidance slightly—was it new sales or expansion—and how do you plan to improve partner outcomes with the Keap ecosystem?
  Response: The shortfall was a minor execution miss (not macro); partner engagement had lagged but recent delivered product/partner updates have improved sentiment and management expects re-acceleration in 2026.

• Question from Jason Kreyer (Craig Hallum): Any takeaways from the user conference on customer sentiment/purchasing, and how will verticals like HVAC affect NRR, churn, and ARPU over the next several quarters?
  Response: Customer tone is stable; verticals drive larger, higher-quality sales (moving ARPU toward $6k–$8k), lower churn and gradual NRR improvement as the company moves upmarket.

• Question from Arjun Bhatia (William Blair): With CTO Sean Wachter onboard, what early strategies are in place for operational efficiency, product acceleration and AI innovation, and will vertical product development follow the HVAC pilot approach?
  Response: The CTO is accelerating AI-first development and integrations to speed the roadmap; verticals are built via partner-informed automations and will be rolled out rapidly using that repeatable model.

• Question from Zach Cummins (B. Riley Securities): How does Thryv ensure customers remain visible in answer engines, and when will customer count stabilize versus ARPU expansion—when to expect a balanced contribution?
  Response: Answer engines are a tailwind—Thryv leverages directory assets, hosted sites and AEO to boost visibility and leads; near-term growth will be driven by ARPU expansion from the existing base rather than aggressive new-customer pushes.

• Question from Matt Swanson (RBC): What trends are you seeing in the higher-quality $400+ cohort versus the overall base, and how do you go to market with AI/answer-engine features for less tech-savvy SMBs?
  Response: The $400+ cohort shows stronger retention, multi-product adoption and lower churn; go-to-market focuses on simple outcome-oriented messaging (listings, websites, call tracking) rather than technical AI jargon.

Contradiction Point 1

Partner Performance and Strategic Focus

It highlights a shift in strategy towards partner performance and the introduction of new verticals, which could impact revenue and growth expectations.

Can you explain the reasons for the slight SaaS revenue guidance miss and the mixed partner results? - Scott Berg (Needham and Company)

2025Q3: Partner performance was weaker than expected due to previous underinvestment. The acquisition of Keap presented initial challenges, but recent engagement and deliverables are improving partner morale and expectations for 2026. - Joe Walsh(CEO)

Can you explain the vertical strategy, particularly for the HVAC product, including whether it involves an upcharge and its impact on the business? What is the roadmap for future verticalization, and which verticals are potential targets? - Arjun Rohit Bhatia (William Blair & Company L.L.C., Research Division)

2025Q2: The HVAC product is an upcharge for an automation package, including business processes and IP. It flattens ARPU by encouraging existing accounts to invest more, improves client engagement, and plays defense by adding verticalized solutions. - Joseph A. Walsh(CEO)

Contradiction Point 2

Focus on Customer Acquisition and Expansion

It involves changes in strategic focus between customer acquisition and expansion, which could impact revenue and growth expectations.

How is Thryv ensuring customer visibility in answer-based engines, and how does it balance ARPU growth with customer expansion? - Zach Cummins (B. Riley Securities)

2025Q3: ARPU expansion is the current focus, with strong growth possible without adding new customers due to existing untapped opportunities. Growing the current customer base is a secondary focus. - Joe Walsh(CEO)

Is the Thryv Prime customer count contraction a one-quarter issue or a longer-term trend? - Scott Randolph Berg (Needham & Company, LLC, Research Division)

2025Q2: This year is focused on existing customer expansion and upselling. The customer count will remain flat with an increase in ARPU. New customer acquisition will resume in 2026. - Joseph A. Walsh(CEO)

Contradiction Point 3

Partner Performance and Expectations

It highlights differences in the company's assessment of partner performance and expectations, which are crucial for growth and revenue forecasts.

Can you explain the reasons for the SaaS revenue guidance miss and the underwhelming partner results? - Scott Berg (Needham and Company)

2025Q3: Partner performance was weaker than expected due to previous underinvestment. - Joe Walsh(CEO)

What were the key takeaways from the Keap partner conference on the Thryv and Keap platform combination? - Scott Berg (Needham)

2025Q1: Partners are thrilled with Thryv's ability to help build lists and add new customers, complementing Keap's automation and conversion capabilities. - Joe Walsh(CEO)

Contradiction Point 4

ARPU Growth and Focus

It involves changes in strategic focus and expectations regarding ARPU growth, which are critical for understanding Thryv's revenue growth strategy and investor expectations.

How is Thryv ensuring customer visibility in answer-based engines and balancing ARPU growth with customer acquisition? - Zach Cummins (B. Riley Securities)

2025Q3: ARPU expansion is the current focus, with strong growth possible without adding new customers due to existing untapped opportunities. Growing the current customer base is a secondary focus. - Joe Walsh(CEO)

Is the core Thryv SaaS business nearing its ARPU trough? - Zach Cummins (B. Riley Securities)

2024Q4: ARPU growth is expected in 2025, focusing on engagement and upselling to existing customers. New products are being developed to drive growth, and the focus is on building a complete platform to run small businesses. - Joe Walsh(CEO)

Contradiction Point 5

SaaS Revenue Guidance and Market Conditions

It involves changes in financial forecasts and market assessments, which are critical for investor expectations and strategic decision-making.

Can you explain the slight shortfall in SaaS revenue guidance and the moderate performance of partner results? - Scott Berg (Needham and Company)

2025Q3: The execution was not flawless this quarter, contributing to the minor miss in SaaS revenue guidance. - Joe Walsh(CEO)

Can you explain the rationale behind the conservative SaaS revenue guidance for this year? - Jason Kreyer (Craig Hallum)

2025Q1: The conservative guidance is due to market uncertainties and headlines about potential economic slowdowns. - Joe Walsh(CEO)