Thryv's Workforce Center: A Strategic Move to Monetize Small Business HR Pain Points

In the evolving landscape of small business technology, Thryv has positioned itself as a disruptor by transforming from a marketing services provider into a SaaS-centric platform. At the heart of this transformation is the Thryv Workforce Center, a payroll and HR solution launched in 2025 that embeds recurring revenue generation into the core of its business model. By addressing persistent HR pain points—such as compliance complexity, fragmented workflows, and administrative inefficiencies—Thryv is not only solving a critical problem for small and medium-sized businesses (SMBs) but also creating a durable, high-margin revenue stream.

The Pain Points of SMB Payroll and HR

Small businesses often treat HR and payroll as afterthoughts, despite their critical role in operations. A 2025 National Small Business Association survey revealed that 50% of SMBs spend over three hours monthly managing payroll taxes, a time-intensive task that diverts focus from growth. Compliance errors, manual data entry, and the need to juggle multiple platforms for payroll, tax filings, and employee records exacerbate the problem. For businesses in sectors like home services, healthcare, and legal, where labor costs are a significant expense, these inefficiencies translate into real financial drag.

Thryv's Workforce Center, powered by Gusto, tackles these issues head-on. By integrating payroll, tax calculations, and HR tools into a single platform, it eliminates the need for disjointed solutions. Automated tax filings, direct deposit via Plaid, and a centralized employee portal reduce administrative burdens while minimizing errors. Employers can now pay W-2 employees monthly and 1099 contractors only when active, with unlimited payroll runs and filings included. This simplicity aligns with the variable needs of SMBs, which often scale unpredictably.

The Recurring Revenue Engine

The Workforce Center's pricing model is a masterstroke of strategic monetization. Unlike one-time software licenses or high-fee payroll processors, Thryv charges businesses based on active employees and contractor payment months. This ensures that revenue scales with usage, creating a sticky, predictable income stream. For instance, a business with 10 employees pays a fixed monthly fee per employee, while a seasonal contractor-based business incurs costs only when needed.

The result? SaaS revenue now accounts for 61.3% of Thryv's total revenue, up 49.5% year-over-year to $111.1 million in Q1 2025. This growth was accelerated by the acquisition of Keap in October 2024, which expanded Thryv's SaaS subscriber base to over 100,000 businesses. The Workforce Center is a key driver of this trajectory, with its high gross margins (typical for SaaS) and low customer acquisition costs.

Strategic Positioning and Market Potential

Thryv's move into payroll and HR is not just about revenue—it's about locking in SMBs. By centralizing payroll within its broader platform (which already includes marketing automation, customer engagement, and AI-driven tools), Thryv reduces switching costs. For example, a business using Thryv for marketing can now manage payroll without leaving the ecosystem, fostering cross-selling opportunities. This flywheel effect strengthens customer retention and opens avenues for upselling advanced features like AI-driven workforce analytics.

The market potential is vast. The U.S. SMB payroll software market is projected to exceed $12 billion by 2030, driven by automation trends and regulatory complexity. Thryv's Workforce Center is well-positioned to capture a significant share, particularly as competitors like ADP and Intuit focus on larger enterprises.

Investment Considerations

Thryv's long-term financial goals—$1 billion in SaaS ARR by 2030 and $250–300 million in unlevered free cash flow by 2025–2030—are ambitious but achievable given its current trajectory. The Workforce Center's recurring revenue model, combined with its integration into Thryv's broader SaaS ecosystem, offers a compelling value proposition. However, investors should monitor customer acquisition costs, regulatory risks in payroll compliance, and competition from legacy players.

For now, Thryv's stock (THRY) remains volatile, but its strategic pivot to SaaS and the monetization of a universal SMB pain point suggest long-term upside. The Workforce Center is not just a product—it's a blueprint for how to turn operational friction into a sustainable revenue engine.

Conclusion

Thryv's Workforce Center exemplifies the power of embedding solutions into the daily workflows of SMBs. By addressing payroll and HR pain points with a recurring revenue model, Thryv is not only solving a problem but also building a moat around its SaaS platform. For investors, this represents a high-conviction opportunity in a market where efficiency and compliance are non-negotiable. As the SMB sector increasingly embraces automation, Thryv's strategic bets may prove to be both transformative and profitable.