Thryv's SaaS Growth and Margin Resilience Amid Mixed Q3 Results: A Deep Dive into Long-Term Value Creation

In a market where SaaS companies often face margin pressures and shifting customer priorities, Thryv Holdings (NASDAQ: THRY) has demonstrated a compelling mix of growth and operational discipline in Q3 2025. While its Marketing Services segment underperformed, the company's SaaS business delivered a 33% year-over-year revenue increase to $115.9 million, alongside a 16.9% adjusted EBITDA margin, signaling strong execution in a competitive landscape, according to a Business Wire release. This performance raises critical questions about Thryv's ability to balance near-term challenges with long-term value creation.

SaaS Momentum: A Product of Pricing Power and Customer Retention

Thryv's SaaS success stems from two key drivers: rising Average Revenue Per Unit (ARPU) and disciplined client acquisition. SaaS monthly ARPU surged 19% year-over-year to $365, outpacing the 7% growth in its client base to 103,000, according to a StockTitan article. This suggests the company is effectively monetizing its platform through value-based pricing, a strategy that mitigates commoditization risks in the small business services sector.

The resilience of Thryv's SaaS margins-16.9% adjusted EBITDA-also highlights operational efficiency. While many SaaS firms trade off margin expansion for growth, Thryv managed to exceed its Q3 guidance, generating $19.6 million in SaaS Adjusted EBITDA, a figure the Business Wire release reported. This is particularly notable given the broader economic headwinds, including rising interest rates and small business spending constraints.

Strategic Execution: AI and Customer-Centric Innovation

Thryv's long-term value proposition hinges on its ability to leverage AI to enhance small business growth. The company has prioritized deepening relationships with existing clients by integrating AI-driven tools for marketing automation and customer analytics. This approach not only boosts ARPU but also strengthens customer retention, a critical metric for SaaS scalability.

Additionally, Thryv's focus on free cash flow generation-$22 million in Q3-demonstrates a commitment to deleveraging its balance sheet, the Business Wire release noted. That release also highlighted a net income of $5.7 million in Q3, compared to a $96.1 million loss in the same period in 2024, indicating the company is transitioning from a capital-intensive growth model to a more sustainable, cash-generative framework. This shift could attract investors seeking both revenue growth and financial prudence.

Navigating Mixed Results: The Marketing Services Challenge

The Q3 report was not without caveats. Marketing Services revenue declined 8% year-over-year to $85.7 million, reflecting the sector's vulnerability to macroeconomic pressures and shifting advertiser budgets, according to the Business Wire release. However, Thryv's management has acknowledged this as a transitional phase, redirecting resources toward its higher-margin SaaS offerings. This strategic pivot aligns with industry trends, where SaaS platforms increasingly dominate small business technology spending.

Outlook: Guidance and Market Positioning

Thryv's Q4 2025 guidance-$118.0–$121.0 million in SaaS revenue-suggests confidence in sustaining its growth trajectory, according to the Business Wire release. For the full year, the company aims to deliver $460.0–$463.0 million in SaaS revenue, a 28% increase from 2024. While these targets are ambitious, the 19% ARPU growth and expanding client base provide a solid foundation.

Investors should also monitor Thryv's ability to maintain its 16.9% SaaS EBITDA margin amid rising R&D investments in AI. If the company can scale its platform without sacrificing profitability, it could emerge as a standout in the small business SaaS space.

Conclusion

Thryv's Q3 results underscore its dual strengths: a high-growth SaaS business and a management team focused on margin resilience. While the Marketing Services segment remains a drag, the company's strategic emphasis on AI, customer retention, and deleveraging positions it well for long-term value creation. For investors, the key question is whether Thryv can sustain its SaaS momentum while navigating macroeconomic uncertainties-a challenge it appears well-equipped to address.