Q4 2023 Thryv Holdings Inc Earnings Call

Operator: www.hryv.com Good day, and welcome to the Thryv Holdings Inc. fourth quarter and full year 2023 earnings call. All lines have been placed on mute to prevent any background noise.

Good day and welcome to the thrive Holdings, Inc, fourth quarter and full year 2023 earnings call.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

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If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

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Operator: For operator assistance throughout the call, please press star zero, and, finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Cameron Lethardt, Head of IR, to begin the conference. Cameron, over to you. Thank you, Operator. Hello and good day to everyone.

Operator assistance throughout the call. Please press star Zero, and finally, I would like to advise all participants that this call is being recorded.

I'd now like to welcome Cameron left out head of IR to begin the conference Kamran.

Yeah.

Thank you operator, Hello, and good day to everyone. Welcome to thrive fourth quarter 2023 earnings conference call on the call today are Joe Walsh, Chairman and Chief Executive Officer, Paul Rouse, Chief Financial Officer, and Greg Friedman President.

Cameron Lethardt: Welcome to Thryv's fourth quarter 2023 earnings conference call. On the call today are Joe Walsh, Chairman and Chief Executive Officer, Paul Rouse, Chief Financial Officer, and Grant Freeman, President. A copy of our earnings press release and investor presentation can be found on our website at Thryv.com or in the investor section at investor.thryv.com. Please note comments made on today's call and responses to your questions may contain forward-looking statements about the operations and future results of the company. These statements are subject to risks and uncertainties described in the company's earnings release and other filings with the SEC. Thryv is under no obligation to update the information presented on the conference call.

A copy of our earnings press release, and Investor presentation can be found on our website at <unk> dot com or in the investors section at Investor Day, right Dot Com. Please acknowledge comments made on today's call and responses to your questions may contain forward looking statements about the operations and future results of the company. These states.

<unk> are subject to the risks and uncertainties described in the company's earnings release and other filings with the SEC thrive.

Thrive has no obligation to update the information presented on the conference call.

Cameron Lethardt: Finally, our speakers will reference certain non-GAAP financial measures, which we believe will provide useful information for investors. Reconciliation of those measures to GAP will be posted on our website. With that introduction, I would like to turn the call over to Chairman and CEO, Joe Walsh. Good morning, Cameron, and thank you all for joining us on the call today to discuss our fourth quarter and full year results. 2023 was a stellar year for Thryv, and we capped it off with an incredible fourth quarter that once again exceeded our expectations.

Finally.

Our speakers will reference certain non-GAAP financial measures, which we believe will provide useful information for investors reconciliation of those measures to GAAP will be posted on our website.

With that introduction I would like to turn the call over to chairman and CEO Joe Walsh.

Morning, Cameron and thank you all for joining us on the call today to discuss our fourth quarter and full year results.

2023 was a stellar year for thrive and recapped at all with an incredible fourth quarter that once again exceeded our expectations.

Joe Walsh: For the full year 2023, we delivered SAS revenue of 264 million, up 22% year over year, with SAS adjusted EBITDA of 12 million, which represents an adjusted EBITDA margin of 5%. Recall that when we started the year, we were projecting somewhere around breakeven for our SaaS business. We've more than delivered on that objective, and for the quarter, we're really happy to announce two notable improvements in our SAS metrics. Stats adjusted gross margins improved to 70% in the fourth quarter.

For the full year 2023, we delivered SaaS revenue of $264 million up 22% year over year with SaaS adjusted EBITDA of $12 million, which represents an adjusted EBITDA margin of 5%.

Recall, when we started the year, we were projecting somewhere around breakeven for our SaaS business, we've more than delivered on that objective.

For the quarter were really happy to announce two notable improvements in our SaaS metrics.

<unk> adjusted gross margin improved to 70% in the fourth quarter.

Joe Walsh: You know, our gross margins have been trending towards the 75% that we guided in our long-term guidance, and it's really a function of us having built out our platform. We've got more to go, but we're able to sell multiple centers out of existing customers, and so you end up with a lot better gross margin. So that's a trend that we think we'll see continuing.

Our gross margins have been trending towards the 75% that we guided in our long term guidance and it's really a function of us having built out our platform. We've got more to go but we're able to sell multiple centers out of existing customers and so you end up with a lot better gross margins. So that's a trend that we think we will see continuing.

Joe Walsh: The next stat I wanted to mention was net dollar retention. We came in at 96% for the fourth quarter, and again, that has to do with us selling additional centers to existing customers. Previously, we only had one center. There just wasn't a lot else to sell them.

The next data I wanted to mentioned with net dollar retention, we came in at 96% for the fourth quarter and again that has to do with our selling additional centers to existing customers. Previously we only had one center that just wasn't a lot else to sell them. We have some small add ons, but now that we're building out.

Joe Walsh: We had some small add-ons, but now that we're building out more centers, with another one coming later this year, we expect net dollar retention to continue trending toward that 100% that was given in our long-term guide. We generated $148 million of cash from operations and free cash flow of $115 million, which was very similar to the prior year, even after accounting for the print revenue recognition dynamic in the third quarter and our acquisition of Yellow New Zealand, which occurred in the second quarter. This allowed us to retire a significant amount of debt in 2023. Later in this call, Paul will delve into our impressive fourth quarter and four-year results. However, I wish to direct everyone's attention to the press release we issued alongside our earnings results this morning.

<unk> center with another one coming later this year.

We expect net dollar retention to continue trending toward that 100% that we've given our long term guidance.

We generated $148 million of cash from operations and free cash flow of $115 million, which was very similar to the prior year, even after accounting for the print revenue recognition dynamic in the third quarter and our acquisition of Yellow New Zealand, which occurred in the second quarter.

This allowed us to retire a significant amount of debt in 2023.

Later in this call Paul will delve into our impressive fourth quarter and full year results.

However, I wish to direct everyones attention to the press release, we issued alongside our earnings results. This morning.

Joe Walsh: For those familiar with our company on this call, you are well aware of our ongoing multi-year transformation. We're shifting from a massive marketing services entity, selling both digital and print products to small, medium-sized businesses, to a rapidly expanding and innovative SaaS powerhouse catering to the same client base. Our unparalleled advantage lies in the strategic selling of our SaaS products directly to the client base within our marketing services business. We refer to it as the zoo.

Those familiar with our company on this call.

You are well aware of our ongoing multiyear transformation, we're shifting from a massive marketing services entity selling both digital and print products to small and medium sized businesses.

Two a rapidly expanding and innovative SaaS powerhouse catering to the same client base.

Our unparalleled advantage lies in the strategic selling of our SaaS product <unk>.

Correctly into the client base within our marketing services business, we refer to it at the zoo with our recent product launches, notably marketing Center in command Center I'm excited to share today that we're seeing an acceleration of clients coming from Brazil into the SaaS platform.

Joe Walsh: With our recent product launches, notably Marketing Center and Command Center, I'm excited to share today that we're seeing an acceleration of clients coming from the zoo into the SaaS platform. As we journey along this digital transformation, we're excited to share an update on our ongoing initiative to transition marketing services clients to the Powerhouse Thryv platform. This isn't a sudden shift or anything new, but the next natural step in a decade-long commitment to equipping small businesses with the best tools for success. This will be a significant growth lever for the company in 2024, and I'm delighted to welcome our president, Brad Freeman, to provide a more in-depth commentary on the transformative process. Thanks, Joe. And good morning, everyone.

We journey along the digital transformation, we are excited to share an update on our ongoing initiatives to transition marketing services clients to the powerhouse drive platform.

This isn't a sudden shift or anything new but the next natural step in a decade long commitment to equipment small businesses with the best tools for success.

This will be a significant growth lever for the company in 2024, and I'm delighted to welcome our President Brian Freeman to provide a more in depth commentary on the transformative process.

Thanks, Joe and good morning, everyone.

Brad Freeman: As Joe mentioned earlier, we issued a press release this morning detailing our legacy client upgrade plans for 2024. Since you may not have had a chance to review it yet, I'll provide a brief overview and address any questions during the Q&A and a portion following. With our Thryv platform, including Business Center and the recent introduction of Marketing Center and Command Center, we are aligning with our vision for growth in the SaaS business. By strategically expanding our platform into areas that complement our existing services, we're capitalizing on product adjacency opportunities. Specifically, our new offerings seamlessly integrate with our legacy products into the SaaS platform, creating a natural progression for our clients. As a result, we anticipate a slight acceleration in the decline of billings for marketing services as clients naturally transition to the SaaS platform, attracted by the enhanced features and capabilities that it provides. You know, for eight years, we've been actively engaging with our marketing services clients to encourage them to modernize and adopt our award-winning Thryv platform as an upgrade to their existing service. We will continue to upgrade our clients to our platform as we execute our planned migration away from legacy digital products and services.

Joe mentioned earlier, we issued a press release this morning detailing our legacy client upgrade plans for 2024. Since you may not have had a chance to review it yet I'll provide a brief overview and address any questions during the Q&A portion to follow.

With our thrive platform, including business Center and the recent introduction of marketing Center and command Center, we are aligned with our vision for growth in the SaaS business Bye.

By strategically expanding our platform into areas that complement our existing services. We are capitalizing on product adjacency opportunities, specifically, our new offerings seamlessly integrate with our legacy products into the SaaS platform, creating a natural progression for our clients as a result, we anticipate a slight acceleration in the decline of buildings for Mark.

Getting services as clients naturally a transition to the SaaS platform attracted by the enhanced features and capabilities that it provides.

For eight years, we've been actively engaging with our marketing services clients to encourage them to modernize and adopt our award winning <unk> platform as an upgrade to their existing services.

Drive will continue to upgrade our clients to our platform as we execute our planned migration away from legacy digital products and services.

Brad Freeman: We've been converting many of our legacy customers to Business Center, a software product designed to help SMBs manage and organize their business, generate invoices, run social campaigns, manage listings, send estimates, and many, many more important elements of running their business. Many of our Business Center clients opt to keep the Marketing Services products because they consistently rely on them to generate low-cost, high-converting business leads, which they find extremely valuable. This underscores the positive interconnection between SaaS and marketing services usage among our clients. Our dedication to client success isn't limited to introducing new offerings like Marketing Center, Command Center, ThrivePay, etc. It's a move that unlocks NDR Expansion.

We've been converting many of our legacy customers to the business Center.

Software product designed to help smbs manage and organize the business generate invoices run social campaigns manage listening send estimates and many many more important elements of running their business.

Many of our business center clients opt to keep the marketing services products, because they consistently rely on them to generate low cost high converting business leads.

Which they find extremely valuable.

This underscores the positive interconnection between SaaS and marketing services usage among our clients.

Our dedication to client success isn't limited to introducing new offerings like marketing centered command center drive pay et cetera.

It's a move that unlocks MTR expansion.

Brad Freeman: These offerings are not cosmetic enhancements; they serve as catalysts for growth. By simplifying client upgrades and providing enhanced value propositions, we've established a virtuous cycle. Clients gain access to expanded solutions, fueling their success while also generating predictable recurring revenue streams for us. This mutual benefit isn't a one-time thing; it's a symbiotic relationship that lays the groundwork for sustained growth and partnership

<unk> offerings are not cosmetic enhancements they serve as catalysts for growth.

Simplifying client upgrades and providing enhanced value propositions, we've established a virtuous cycle climb.

Clients gain access to expanded solutions fueling their success, while also generating predictable recurring revenue streams for us.

This mutual benefit isn't a onetime thing its a symbiotic relationship that lays the groundwork for sustained growth and partnerships.

Brad Freeman: As small businesses thrive and grow, they naturally use more of our platform capabilities. Now, to support our growth, we will streamline operations, reduce complexity, and create efficiencies around our legacy digital systems. We've been upgrading our long-standing clients to our award-winning platform at no additional cost to them in some instances.

As small businesses driving grow they naturally use more of our platform capabilities.

Now to support our growth, we will streamline operations reduced complexity and create efficiencies around our legacy digital systems.

We've been upgrading our long standing clients to our award winning platform at no additional cost to them in some instances. We have also observed clients who have increased their spend in the platform. We're eager for them to explore to utilize and grow into various modules of the platform to empower their businesses.

Brad Freeman: We have also observed clients who have increased their spend on the platform. We're eager for them to explore, utilize, and grow into various modules of the platform to empower their business. While many of our legacy digital products deliver value, they simply aren't receiving investment or further development.

While many of our legacy digital products deliver value they simply arent receiving investment or further development. We are investing in our platform our existing centers and have plans for new Rollouts in 2024 and beyond.

Brad Freeman: We are investing in our platform, our existing centers, and have plans for new rollouts in 2024 and beyond. By upgrading clients to our Thryv platform, we provide the same value they currently receive, plus numerous additional features to help them solve more problems today, while also offering the opportunity to address future challenges through the addition of new centers. Our marketing services revenue is declining every year in the range of 20 percent.

By upgrading clients to our thrive platform, we provide the same value. They currently receive plus numerous additional features to help them solve more problems today, while also offering the opportunity to address future challenges through the addition of new centers.

Our marketing services revenue is declining every year in the range of 20% we are being proactive in retaining clients for the long term by offering them a viable product a software platform that prepares them for the future.

Brad Freeman: We are being proactive in retaining clients for the long term by offering them a viable product, a software platform that prepares them for the future. Upgrading them to our platform can address their current and future needs. Every client being upgraded also receives our unique command center, which helps them tackle the universal problem faced by SMBs, which is effective and efficient communication with customers, with prospects, and with their internal team members.

Reading them to our platform can address their current and future needs every client being upgraded also received our unique command center, which helps them tackle the universal problems faced by SMB, which is effective and efficient communication with customers with prospects and with their internal team members in some our client upgrade plans for <unk>.

Paul Rouse: In sum, our client upgrade plans for 2024 underscore our commitment to growth in the SaaS business. With the introduction of the Marketing Center and Command Center, we're not just evolving. We're revolutionizing our approach, seamlessly integrating new offerings to enhance client experiences and drive sustained success. In addition, we're excited about the role of Thryv Command Center as a freemium offering and what new opportunities it provides. By offering command centers to businesses and developing the usage of their free centers, we're building a blue ocean of freemium users who are benefiting from our platform. This allows the company to target those freemium users who begin to activate and become hand raisers, allowing the company to offer these users paid centers to solve additional problems on our Thryv platform. So with that, I'll now turn it over to our CFO, Paul Rouse, to discuss our fourth quarter and full year financial results.

124, underscore our commitment to growth in the SaaS business with the introduction of the marketing Center and command center, where not just evolving we're revolutionizing our approach seamlessly integrating new offerings to enhance client experiences and drive sustained success.

In addition, we're excited about the role of thrive Command center as a freemium offering and what new opportunity it provides by.

By offering command center businesses and developing their usage of their free center, we're building a blue Ocean of freemium users who are benefiting from our platform.

This allows the company to target those freemium users, who begin to activate and become hand raisers, allowing the company to offer these users paid centers to solve additional problems on our thrive platform.

So with that I'll now turn it over to our CFO, Paul routes to discuss our fourth quarter and full year financial results Paul.

Paul Rouse: Thanks, Graham. As a reminder to listeners, we are going to focus on two segments, SaaS and marketing services, which includes results for both domestic and international operations. Additional detail between domestic and international for each segment can be found in the appendix section of the investor presentation. Now, let's dive into our results, beginning with our SAS site. SAS revenue was $74 million in the fourth quarter, ahead of our expectations, representing an increase of 25% year-over-year and 10% sequential. Full-year SAS revenue increased by 22% to $263.7 million.

Thanks Grant as a reminder to listeners we are going to focus on two segments sales and marketing services, which includes results for both domestic and international operations.

Additional detail between domestic and international for each segment can be found in the appendix section of the.

Investor presentation.

Let's dive into our results beginning with our SaaS segment SaaS revenue was $74 million in the fourth quarter.

<unk> of our guidance, representing an increase of 25% year over year and 10% sequentially.

All year SaaS revenue grew 22% to $263 7 million.

Paul Rouse: Moving on to Profitability Improvements for the quarter, SAS suggested gross margin increased 690 basis points year-over-year and 310 basis points quarter over quarter, which is 69.7%. Full-year SAS Adjusted Gross Margin expanded to 66.6%, an increase of 300 basis points from the prior.

Moving onto profitability improvements for the quarter SaaS adjusted gross margin increased 690 basis points year over year, and 310 basis points quarter over quarter.

69, 7% full.

Full year SaaS adjusted gross margin expanded to 66, 6% an increase of 300 basis points.

The prior year a.

Paul Rouse: The year-over-year improvement in SAS Adjusted Gross Margin was driven primarily by two factors, a favorable mixed shift in revenue towards our higher-margin subscription-based centers and cost efficiencies delivered in the quarter related to fulfillment. We expect to see continued expansion in this metric moving forward. We reported a notable improvement in SAS-adjusted EBITDA in 2023, which significantly exceeded our guidance. For the fourth quarter, SAS adjusted EBITDA was $6.5 million, significantly exceeding our guidance range of 3.5 to 4 million and resulting in an adjusted EBITDA margin of 8.8%. Full year, SAS adjusted EBITDA was $12 million, resulting in a SAS-adjusted EBITDA margin of 4.6%. The EBITDA margin improvement was directly attributable to the aforementioned improvement in our adjusted gross margin, as well as continued reliance on low CAF conversions out of our marketing services install base, as previously discussed. We've undertaken a detailed analysis of our inbound acquisition, focusing on investment allocation and ideal client selection. This rigorous approach has yielded significant results.

The year over year improvement in SaaS adjusted gross margin was driven primarily by two factors.

Favorable mix shift in revenue towards our higher margin subscription based centers.

Cost efficiencies delivered in the quarter related to fulfillment.

We expect to see continued expansion in this metric moving forward, we reported notable improvement in SaaS adjusted EBITA.

2023, which significantly exceeded our guidance.

Those are a year.

Fourth quarter adjusted EBITDA was six 5 million.

Significantly exceeding our guidance range of three $5 million to $4 million.

Resulting in SAS adjusted EBITA margin of eight 8%.

Full year SaaS, adjusted EBITA was $12 million, whereas salting and in a SaaS adjusted EBITDA margin of four 6% EBITA margin improvement was directly attributable to the aforementioned improvement in our adjusted gross margin as well as continued reliance.

On low CAC conversions out of our marketing services installed base of customers.

As previously discussed.

We've undertaken a detailed analysis of our inbound acquisition channel focusing on investment allocation and ideal client selection. This rigorous approach has yielded significant outcomes not only enhancing efficiency, but also unlocking operating leverage through optimized sales.

Paul Rouse: Not only enhancing efficiency but also unlocking operating leverage through optimized sales, prioritizing high-value clients with strong minimizes upfront sales, and This laser focus drives sustainable growth by maximizing ROI and fostering enduring relationships with our ideal customers. This solid foundation unlocks future growth through tailored upselling and cross-selling, ensuring mutual success by aligning with evolving needs and maximizing overall. We're confident that our new command center, empowering clients with self-service and insights, will serve as a future acquisition driver, attracting new customers and strengthening existing ones. SAS subscribers were approximately 66,000 at the end of the fourth quarter, an increase of 27% year-over-year. The SAS R crew edged higher sequentially. $370, a decrease of 4% year over year.

Carl.

Prioritizing high value clients with strong potential.

Minimizes upfront sales investment.

This laser focus drive sustainable growth by maximizing ROI and fostering enduring relationships with our ideal customers.

This solid foundation unlocks future growth through tailored Upselling and cross selling ensuring mutual success by aligning with evolving needs and maximizing overall value.

We're confident that our new command center empowering clients with self service and insights will serve as a future acquisition driver, attracting new customers and strengthening existing ones.

SaaS subscribers were approximately 66000 at the end of the fourth quarter, an increase of 27% year over year, SaaS RP edged higher sequentially to $370 a decrease of 4% year over year as previously mentioned in the prior quarter our adoption.

Paul Rouse: As previously mentioned in the prior quarter, our adoption of a new multi-center PLG strategy has led to new FACT subscribers signing up for lower introductory packages compared to our current average R-group, thus contributing to the year-over-year. Fourth quarter season net dollar retention was 96%, an increase of 500 basis points year-over-year and 400 basis points sequentially. The enhancement in season net dollar retention directly correlates with our upselling and cross-selling initiatives. Historically, our company primarily focused on selling one business. However, with the introduction of additional centers and products, such as Marketing Center, Command Center, and FriPay, we are now witnessing the positive outcomes of diversifying our offerings, reflected in the expansion of our NDR. Our intensified efforts in upselling and cross-selling are yielding these significant results. Moving over to marketing services, fourth quarter revenue was $162.2 million, above the midpoint of our guide.

With new multi center <unk> strategy has led to new.

SaaS subscribers signing up for a lower introductory packages compared to our current average.

Thus contributing to the year over year decline.

Core season, net dollar retention was 96% and.

An increase of 500 basis points year over year, and 400 basis points sequentially.

Enhancement in season, net dollar retention directly correlates with our Upselling and cross selling initiatives.

Historically.

Paul Rouse: Full-year marketing services revenue was $653.2 million, also above the midpoint of our. Fourth quarter marketing services adjusted EBITDA was 45.8%, resulting in an adjusted EBITDA margin of 28%. Foyer Marketing Services adjusted EBITDA was $175.5 million, resulting in an adjusted EBITDA margin of 27%. Fourth Quarter Marketing Services Billing was $149.2 million, representing a decline of 23% year-over-year.

It was 175.5 million, resulting in an adjusted EBITDA margin of 27 per cent.

Fourth quarter marketing services billings was.

$149.2 million representing.

Representing a decline of 23 per cent euro per year.

Paul Rouse: While buildings exceeded internal models in recent quarters, this decline rate more aligns with our long-term vision. The introduction of Marketing Center aligns perfectly with our vision for sustained growth in the SaaS business, as there is a clear product-adjacent, and so we would expect marketing services billings to decrease given the natural upgrade to the SAS platform. While it represents a higher value proposition for legacy clients, leading to increased adoption and retention, it also delivers improved gross margins compared to traditional marketing services products. This win-win approach ensures long-term success for both clients and our SaaS business. The fourth quarter consolidated adjusted EBITDA margin was 70%. The full year consolidated adjusted gross margin was $0.67.

Billings exceeded internal models in recent quarters.

Climb rate more lines with our long term vision.

Introduction of marketing center lines perfectly with our vision for sustained growth in the.

Business, if there was a clear product adjacency Sir.

So we would expect marketing services billings declined to increase given the natural upgrade to the <unk> platform.

While it represents a higher value proposition for legacy clients, leading to increased adoption and retention. It also delivers improved gross margins compared to traditional marketing services products. This win win approach ensures long term success for both clients and our <unk> business.

Fourth quarter consolidated adjusted EBITDA margin was 70%.

Consolidated adjusted gross margin was 67%.

Paul Rouse: For the fourth quarter, consolidated adjusted EBITDA was $52.3 million, representing an adjusted even dollar margin of 22%. For the full year, our consolidated adjusted EBITDA was $187.5 billion, which represented an adjusted EBITDA margin of 20%. We recorded a non-cash impairment charge on Goodwill in the amount of $268.8 million, or $7.71 per diluted share.

Fourth quarter consolidated adjusted EBITDA was $52.3 million, representing an adjusted EBITDA margin of 22%.

For the full year or a consolidated adjusted EBITDA was $187.5 million, which represented an adjusted EBITDA margin of 20%.

Reporter a.

Non-cash impairment charge to goodwill.

And the amount of $268 $8 million for $7.71 per diluted share once again attributable to.

Paul Rouse: Once again, the Tryv Holdings to the structural decline in our marketing services business. Net loss was $257.5 million, or a loss of $7.39 per diluted share for the fourth quarter of 2023, and this compares to a net loss of $50.4 million, or a loss of $1.47 per diluted share for the fourth quarter of 2022. Finally, our net debt position was $340 million at the end of the fourth quarter, and our leverage ratio was 1.8 times net debt to EBITDA, which is well below our covenant of free debt. The company generated an additional $34 million in free cash flow for the fourth quarter and used $25 million to pay down its term loan.

To the structural decline in our marketing services business.

Net loss was $257.5 million or a loss of $7.39 per diluted share for the fourth quarter of 2023 and compares to a net loss of $50.4 million or a loss of one dollar and 47 cents per tour.

Related share with a fourth quarter of 2022.

Finally, our net debt position was $340 million at the end of the fourth quarter or leverage ratio was 1.8 times net debt to EBITDA, which is well below our covenant of three times the company generated an additional $34 million in free cash flow.

For the fourth quarter and use $25 million to pay down our turnout.

Paul Rouse: We made $120 million in term loan debt retirement in 2023, which was the head of, Now let's discuss guidance for the first quarter and full year of 2024. For the first quarter, we expect SAS revenue in the range of $73 to $74 million. For the full year, we expect SAS revenue in the range of 325 to 328, which implies revenue growth of 23 to 24%. For the first quarter, we expect SAS adjusted EBITDA in the range of 6 to 7 million. For the full year, we expect fast-adjusted EPSTAT in the range of 26 to 29, which implies a fast adjusted EBITDA margin of 8 to 9%. For the first quarter, we expect marketing services revenue in the range of $152 to $155 million. For the full year, we expect marketing services revenue in the range of $495 million to $500 million for the full year.

We made $120 million in term loan debt retirement in 2023.

Which was a head of plan.

Now, let's discuss guidance for the first quarter and full year of 2024.

For the first quarter, we expect SAS revenue in the range of $73 million to $74 million.

For the full year, we expect SaaS revenue in the range of 325.

328.

Five slash revenue growth of 23% to 24% for.

For the first quarter, we expect staff adjusted EBITDA, a range of $6 million to $7 million for the full year, we expect fast adjusted EBITDA in the range of 26th $29 million, which appliance SaaS adjusted EBITDA margin of 8% to 9% for the first quarter, we expect more.

Marketing services revenue in the range of 152, two $155 million for the full year, we expect marketing services revenue in the range of 495, two $505 million with a full year.

Joe Walsh: We expect marketing services adjusted EBITDA in the range of $132 to $135. I'll now turn the call back over to Paul. I'd like to comment on the net dollar retention number. There'll probably be a little bit of noise in that number as we move along because we've introduced this product-led growth motion. And that is, in some cases, introducing customers at a little bit lower price points who we believe will come up and certainly they'll improve our net dollar retention number over time. And also, some of the conversions or some of the customers coming from the marketing services base come over on promotional pricing, where that represents an opportunity for rates in the future, which will be great, but that's just introducing a little bit of noise into our ARFU number. Before anybody gets too worried about, you know, our ARFU number, I want to just highlight that we've studied seasoned ARFU, looking at people that have been with us for at least a year, and we're increasing seasoned ARFU in the mid-teens.

We expect marketing services adjusted EBITDA in the range of $132 million to $135 million.

Now turn the call back over to Joe.

<unk> I'd like to comment on the net dollar retention payments.

So probably be a little bit annoying isn't that number as we move along because we've introduced.

Product led growth motion and that is in some cases introducing customers.

Lower price points that we believe will come up instantly though.

<unk>, that's all our attention number overtime and also have some of the conversions are some of the customers coming from the marketing services space I've come over on promotional pricing where is that right.

[noise] presents an opportunity for right in the future, which would be great, but that since introducing a little bit annoying into our our number before anybody gets too worried about our phone number I wanted to just highlight that we've studied season dark room looking at people who've been with us at least a year and we're increasing season dark blue in the mid teens.

Joe Walsh: So once somebody is with us and settles down and gets going, we see strong ARPU growth, which of course is what's driving the net dollar retention improvement. So all I'm saying is just watch out for a little; there'll be maybe a little bit of bouncing around in ARPU as we bring in mass numbers of new customers, some of which at different prices. I'd like to comment on our, you know, legacy client upgrade. If you came to invest in a phone book business, you know, I have bad news for you. We are rapidly building the SaaS business. And now that we've got more business lead-generating tools, we're getting a lot better traction into that legacy zoo, that legacy base. And I am really excited to see how this thing is going.

So I would want somebody who's with us and settle down and get Goin', we see a strong are approved growth.

Which of course is what's driving the net dollar retention department. So.

All I'm, saying is just watch out for a milk there'll be may be a little bit of bouncing around and <unk> as we bring in mass numbers of new customers some of which are different price points.

I'd like to comment on our.

Legacy client upgrade.

Came to invest in the phone book business.

<unk> we.

We are.

Rapidly building this as business and now that we've got more business lead generating tools, we're getting a lot better traction into that legacy zoo that legacy face and.

And see how this thing is.

Is happening and marketing center has been.

Joe Walsh: And Marketing Center has been a real key in what's driving that. So I wanted to sort of, you know, wrap up today's call by just talking about EBITDA. This is a business that has had big EBITDA, but it's been declining EBITDA for a very long time.

The real key and what's driving them.

So I wanted to.

Wrap up.

Today's call by just talking about EBITDA.

This is a business that has had been EBITDA, but it's been declining EBITDA for a very long time, and we are finally, showing up at the place where we're reaching the navy or or the low point and that EBITDA and that's because the SaaS businesses now profitable in that status EBITDA is growing quite quickly and it's chunky.

Joe Walsh: And we are finally showing up at the place where we're reaching the nadir, or the low point, in that EBITDA. And that's because the SaaS business is now profitable. And that SaaS EBITDA is growing quite quickly, and it's soaring now. And so as we look at the total EBITDA that the company generates. We're reaching the point where, somewhere or somewhereabouts, we've stopped falling, and we'll be around the same place.

And so.

We look at the total EBIT auto the company generates we're reaching the point, where there or thereabouts, we've stopped falling and will be around the same as the transition of source of EBITDA goes from the legacy marketing services.

Joe Walsh: As the transition of the source of EBITDA goes from the legacy marketing services to now the SaaS business, we expect that the SaaS business will be approximately 40% of the company's revenue this year. And looking ahead to the next year, we're looking at reaching parity and coming out of that with the SaaS business actually being the larger chunk of our business. So it has good margins and has the potential to really carry the EBITDA load. I wanted to comment quickly on international business. International business is going really well for us. Australia and New Zealand; that area is doing great.

The fast isn't so we expect that the SaaS business will be approximately 40% of the company's revenues. This year and looking ahead to the next year, we're looking at reaching parity in coming out of that with the SaaS business actually being you know.

The the larger chunk of our business. So it has a good margin and has the potential to really carry the EBITDA load.

I wanted to comment quickly on international International is going really well for us.

Trillions of zeal in that area is going great R. Greenfield activity in Canada is making good progress.

Joe Walsh: Our greenfield activity in Canada is making good progress. Our international leader is looking at taking us into some more markets. For the last several years, EBITDA has been a bit of a drag on international business.

Or international leaders looking at taking us into some more markets.

The last several years EBITDA has been a bit of a drag out of international and.

Joe Walsh: And as Australia is now reaching profitability, as we look forward, international will stop being a drag and begin to contribute, certainly as we look into 25 and beyond. So when you think about EBITDA sources and minuses, that goes from having been a minus, being a neutral this year, to being positive in the future. So we're pretty excited about our international business and how that's going. So I'm going to wind up just by saying this has been quite a journey. I'm coming up on my 10th anniversary here at what used to be Dex and is now Thrive.

Australia is now reaching profitability as we look forward.

International will not will stop being a drag can begin to.

Contribute certainly as we look into 25 and beyond so when you think about EBITDA.

Sources and minuses that goes from having been a minus the neutral this year to being positive in the future. So.

Yeah, we're pretty excited about our international business and how that's goin'. So.

Gonna wind up despite saying this has been quite a journey.

Yeah.

Coming up on my 10th anniversary here.

At what used to be Jackson is now thrive.

Joe Walsh: And we set out a pretty ambitious thing to take this big legacy media business and transform it into a fast-growing SaaS business. And we're now just a few quarters away from it being the predominant source of revenue and being very profitable and driving forward. So we're pretty excited about that, and I think almost anybody can see that now. It was hard for people to see a couple of years ago, but it's pretty easy to see now.

We set out a pretty ambitious thing take.

This big legacy media business and transform it into a fast growing fast business and we are now just a few quarters away from lifting the predominant source of revenue.

And being very profitable and driving forward. So we're pretty excited about that and I think almost anybody can see that now it was hard for people to see a couple of years ago.

It's pretty easy to see it now and thank you for your support we really appreciate our investors have had the vision to hang with us.

Operator: And so, thank you for your support. We really appreciate our investors that had the vision to hang with us and didn't see this thing unfolding. And I think you're going to be rewarded. So, with that, I'm going to wrap it up and turn it back to the operator. Thank you. We are now opening the floor to questions. If you would like to ask a question, please press star followed by the number one on your telephone keypad to raise your hand and enter the queue.

See the thing I'm totally gonna think you've gotta be rewarded them.

So with that I'm going to wrap up and turn it back to the operator operator.

Thank you we are now opening the floor for questions. If you would like to ask a question. Please press star followed by the number one on your telephone keypad to raise your hand and enter the cute.

Operator: When you are selected, you will be introduced by name and company, and if you are using a loudspeaker, kindly switch to your handset to ensure your question is heard clearly. To accommodate as many participants as possible, we do request that you limit yourself to one question and one follow-up. If you have additional questions, please re-enter the queue, and we will address them, should time permit. Your first question comes from the line of Arjun Bhatia from William Blair. Your line is open.

When you want selected you will be introduced by name and company and if you are using a loudspeaker kindly switched your handset to ensure your question is headed clearly.

To accommodate as many participants as possible redo request that you limit yourself to one question and one follow up and if you have additional questions. Please re enter the queue and we will address them should time permits.

Your first question comes from the line of Arching Bhatia from William Black Your line is open.

Arjun Bhatia: Perfect. Thank you, guys. I appreciate all the color and nice job on Q4 here.

Perfect. Thank.

Thanks, you guys I appreciate all the car and.

Q for here, Joe if I can touch the the transaction and the upgrade plant that you've laid out a little bit.

Joe Walsh: Joe, I can touch on the transition and the upgrade plans that you've laid out a little bit. How should we think about maybe handicapping how many of the marketing services customers will migrate over or will upgrade versus some that may not? And what are you incorporating into the guidance for that? And maybe as a follow-on to that, when customers do move over, do you anticipate they're going to buy Business Center or Marketing Center, or is it going to be a little bit of all of the above? Those are two great questions. They really get at the core of it.

How are you how should we think about maybe handicapping.

Many of the marketing services customers will migrate over a rock.

Versus sign that that may or may not and what are your current incorporating it into.

To enter the guidance for that.

Maybe as a follow up to that.

When customers.

Do you anticipate they're gonna buy a business center marketing center or is it going to be a little bit of all of the above.

<unk>.

Oh those are two great questions I'm really good at the core.

Joe Walsh: You know, the way this is going to unfold over the next couple of years. I want to, if you'll permit me, just back the camera up a little bit and think about the bigger picture. You know, February of 2024, let's just go out to the latter part of the decade. Let's go out to, you know, 2930, like, you know, sort of, five, six years from now. Let's just go out in time a little late, all of those businesses if they're still in business. We'll be using cloud tools at that point. So, today, a lot of them are, you know, what I often affectionately refer to as the unclouded, where they're really still using spreadsheets and, you know, they got dry erase boards where the trucks are going, and they're still, they're still doing manual things. And a lot of them are, you know, kind of... blue collar businesses, a lot of them, and they don't have advanced education. They haven't been exposed to a lot of technology.

You know the way that unfold over the next couple of years.

I Wonder if you'll permit me.

It's back the camera up a little bit and think about bigger picture. So it's.

February of 2024, let's go out to the latter part of a decade, let's go out to 29 30.

Five six years from now so let's go out in time, a little ways.

All of those businesses, if they're still in business.

We'll be using cloud tools at that point.

So.

A day a lot of them are you know what I, often affectionately refer to as the unclouded, whether it really is still using spreadsheets and you know they got dry erase board sale or the trucks dibella and they're still they're still doing manual thing.

And a lot of them are you know kind of blue.

Blue collar.

There's a lot of them and they don't have advanced educations. They haven't been exposed to a lot of technology and so they require a little help but if we go forward say five or six years.

Joe Walsh: And so they require a little help. But if we go forward, say five or six years, virtually everyone that's still in business will be on the cloud. So then the question becomes, they've been with us for 15 years or more. When those businesses make the transition to the cloud, are they going to do it with us? Are they going to do it with their trusted business advisor and with a company that they have this relationship with that has category-leading software that's focused on making it easy to use? That has literally hundreds of people guiding, teaching, showing, helping them get there?

Everyone is still a business will be on the clouds. So then the question becomes they've been with us for 15 years or more.

Business is to make the transition to the cloud are they going to do it with us.

They got a good deal with their trusted.

Visor and with a company that they have this relationship with that has the category leading software that's focused on making it easy to use.

Literally hundreds of people guiding teaching selling helping them get there.

Joe Walsh: So, we think that we're very well positioned to literally get them all. To get all of our legacy customers over to the staff tool. And to get their friends and their neighbors, and as we've seen with our referrals in the last couple of years, it's our largest source. We think that they're going to bring their friends in droves. The guys they play golf with on Saturday morning, and the guys they bowl with on Tuesday night.

Do you think that we're very well positioned to literally hit the ball to get all of our legacy customer over on the staff and.

And to get their friends and their neighbor and we're seeing are hurled last coupla years at that our largest store.

We think that they're going to bring their friends and drove the guys. They play golf with on Saturday morning, The Guy.

Tuesday night.

Joe Walsh: They're going to say, look, I've been struggling with this too. I've just gone to thrive. It's working out really well. I think you should talk to my guy.

Gonna say look I've been struggling with too.

Drive it's worked out really well I think you should talk to my thigh.

Joe Walsh: And our email rings on Monday morning, so I do think that the entire base can eventually come over too fast. Now, I'm not suggesting that'll happen in the balance of 2024 or even in 2025. I think this is still unfolding, and it's a kind of mega trend that takes a little while to happen. Sometimes they form slowly, accelerate slowly, and then all of a sudden, there's a big whoosh, and it happens.

At R E mail rank on Monday morning, So I do think that the entire bay.

Can eventually come over to that now I'm, not suggesting that will happen.

And the balance of 2024, even in 2025 I think this is still unfolding and it's a kind of a mega trend that textbook allowed to happen.

They form slowly accelerate slowly and then all of a sudden whoosh happened did you seen that another.

Joe Walsh: You've seen that in other tech adoption phases. So that's my answer on, you know, how I think we'll do over time. The second question you asked was, what are they going to buy? Are they going to buy a business center? Are they going to buy a marketing center? What are they going to buy? And what we're finding is that the jump over to business center is a little bit longer jump than jumping over to marketing center because marketing center is effectively helping them get more business leads, helping them do that smarter, do it more efficiently, analyze it, know the source of their leads, know what's working, know what's not working, and generate some. And that is a pretty close kiss and cousin to what they were buying in the past.

<unk>.

So that's my answer on how I think we'll do overcome.

The second question you asked was what are they gonna buy are they gonna buy business Goodbye marketing set or what are they gonna buy.

And what we're finding is that the job over to business Center.

A little bit longer jump.

Jumping over to marketing center, because marketing center is.

Effectively helping them get more business days, helping them do.

That smarter do it more efficiently analyze it knows a sore throat no. What's working now it's not working and generate Sir and that is a pretty close kissing cousins of what they were buying in the past and in many cases, they're still buying the legacy marketing services bleed sources, and they're they're adding adding the.

Joe Walsh: And in many cases, they're still buying the legacy marketing services lead sources, and they're adding leads. You know, the marketing center element. So marketing center, it turns out, is kind of a blockbuster product for us, and its growth is really accelerating, you know, business centers have been around for a long time, and marketing centers are quickly catching up in terms of our numbers of customers on it and revenue and all that stuff. So those are those two answers to your question. Did I get what you wanted?

You know the the marketing center element, so marketing cetera turns out is kind of a blockbuster product for us and if growth is really accelerating business center has been around for a long time.

Marketing centers quickly catching it in terms of our.

Yeah, a number of our customers on it revenue and all that stuff. So those are those are two answers to your questions could I get what you wanted.

Arjun Bhatia: Yeah, that's super helpful. And actually, just kind of dovetailing off of that, because I think the transition certainly makes sense. It was kind of inevitable anyways, right?

Yeah, that's super helpful. I'm actually just kind of dovetailing off of that because I think the transition certainly makes sense of it was kind of inevitable anyway, it's right uhm, but when you're thinking of how to run the business through this process. How are you thinking about kind of internal resource allocation because uhm.

Joe Walsh: But when you're thinking of how to run the business through this process, how are you thinking about the kind of internal resource allocation? Because, I mean, one of the obviously potential and likely outcomes is that this drives a host of transitions to the SaaS business. And so onboarding these customers to get them ramped up on the product and start even the cross-sell motion at some point, right? Internally, like, do you have the resources set up for that?

Obviously potential outcomes.

Comes with that.

Drive a horse transition so the password so to onboard with these customers to get them wrapped up on the product and start even the cross sell motion at some point right.

And trying to worry about you have the resources set for that or is that something that.

Joe Walsh: Or is that something that, you know, maybe an incremental investment we should expect to keep growing the SaaS business? That's another excellent question. We've actually been doing what you just described, sort of, sort of transitioning to that, that, that footing really throughout the last year. If you remember, we kind of brought Marketing Center along slowly in Q1 and Q2 of last year, and then it really hit stride when we let it out for full release in the summer. Up until that time, we did not allow the sales force to just sell it to anybody, and we really had kind of a gated process because

Maybe an incremental investment which is a specter keep growing this last weakness.

That's another excellent question, we've been actually doing what you just described sort of sort.

Sort of transitioning to that that that's footing.

Really throughout the last year, if you remember we kind of.

Brought marketing center, along slowly and Q1 and Q2 of last year and then it really hits dried when we let it out for a full release in the summer.

Up until that time, we did not allow the sales force you to sell it to anybody and we really had kind of a gated process because.

Joe Walsh: As you know very well, churn is the thing that we just do not want. So we wanted to make sure we sort of brought it along slowly and were successful. So if you go back and you look at Q3 of last year, you saw a pretty strong acceleration in subscriber churn and that was us really getting onto that footing and us, you know, organizing around that. So it's past tense.

As you know very well apparently the thing that we just do not want so we wanted to make sure we sort of <unk>.

<unk> along slowly or successful. So if you go back and you look at two three of last tear yourself pretty strong acceleration.

And subscriber <expletive>.

That was really getting onto that correct.

And organizing.

Organizing around that so it's past tense, we've already done it so you've already seen it flow through our numbers.

Joe Walsh: We've already done it, so you've already seen it flow through our numbers. Okay, perfect. Appreciate it. Thank you guys. Thanks, Arjun. Your next question comes from the line of Zac Cummins from B Riley Securities. Your line is open. Hi, good morning.

Okay perfect Uhm I appreciate it thank you guys.

Thank God.

Your next question comes from the line of <unk> Cummins from be Riley Securities. Your line is open.

Yeah, Hi, Hi, good morning, Thanks for taking my questions and congrats on on the solid queue for results here Uhm I was hoping to maybe ask you a question towards grant and in terms of this transition process.

Zac Cummins: Thanks for taking my questions and congrats on the solid Q4 results here. I was hoping to maybe ask Grant a question in terms of this transition process within that legacy marketing services base. I mean, can you talk about whether there has been any sort of change in terms of incentives that are offered to some of these legacy customers or the approach to really accelerate that jump over to either the marketing center or the business center? Yeah, good morning, Zach.

That legacy marketing services base I mean can you talk about.

Has there been any sort of change in terms of incentives that are offered.

So some of these legacy customers or the approach to really accelerate that that jump over to either marketing Center business Center.

Yeah. Good morning back that's a great question actually so I think what we've been laser focused on during this this process is ensuring that we still provide a value that's commensurate with what they were receiving on the digital marketing services side, but then focus on giving them access to the additional tools that the more modern and up to <unk>.

Grant Freeman: It's a great question, actually. So, I think what we've been laser focused on during this process is ensuring that we still provide a value that's commensurate with what they were receiving on the digital marketing services side. But then focus on giving them access to the additional tools that the more modern and up to date and invested in platform can afford them. So, bringing them across while still generating them, whether it's leads, or the exposure that they had on the old side, still giving them that while still doing things like managing their listings, et cetera. But now, giving them more modern technology, as I mentioned before, at really, in many cases, no additional cost.

Hey, and invested in platform can afford them so.

Mm across while still generating them, whether it's lead or the exposure that they had on the old side, I'm still giving them that I'm still still doing things like managing the listings et cetera, but now giving them more modern technology as I mentioned before that really in many cases, no additional cost and that also increases.

Grant Freeman: And that also increases their level of engagement in the platform when you speak to, for example, people that are moving over from more passive value, digital marketing services, lead generation products, to the platform to the marketing center, where you will now see them understanding things like attribution, the return on investment that they're getting, where their customers are coming from, et cetera. So, again, it's really important to us, and we're laser focused on giving the value that they had on the digital marketing services side and delivering on that, but then adding more in many cases at no additional cost. So, it's been received very well, and we're turning people that were relatively passive yet happy clients into more active and engaged happier clients. So, I don't know. I hope that answers your question. Yeah, it was extremely helpful.

Their level of engagement and the platform. When you speak to for example people that are moving over from more passive valued digital marketing services lead generation products to the platform to marketing Center. For example, where you will now see them understanding things like attribution. The return on investment after getting where their customers are coming from et cetera. So.

Again, it's really important to us and we are laser focused on.

The value that they had on the digital marketing services side and delivering upon that but then adding more in many cases at no additional cost. So it has been received very well and we're we're turning people that were relatively passive yep happy clients into more active and engaged happier clients.

Hope that answers your question Black.

Yeah extremely helpful. Thanks for that grant and Joe just one question for me around just the number of staff subscribers and he had a big jump up in Q3, and it and it seems well strong growth year over year in queue for essentially pretty similar from 2324.

Zac Cummins: Thanks for that, Grant. And Joe, just one question for me about just the number of SAS subscribers. You had a big jump in Q3, and it seems, well, strong growth year over year in Q4, essentially pretty similar from Q3 to Q4. Can you talk about any moving parts around that metric and kind of what played out in Q4 for that SAS subscriber metric? Uh, yeah, I mean, it's actually a pretty natural process.

You talk about any moving parts around that metric and kind of what played out in queue for for for that staff subscriber Patrick.

Yeah.

It's actually a pretty natural process, our customers are seeing value.

Joe Walsh: Our customers are seeing value in, as Grant said it so beautifully there, adding these analytics and diagnostic tools, and we're basically allowing them to do it for little or no additional money. We're kind of moving them over, and that is going to set up the opportunity for us to probably get a little bit of a rate increase as the next couple of years go by because there's a little bit of an upgrade path, I think, that will be able to happen there. So I think you'll see that flowing through in net dollar retention and some of our growth numbers in the future. But it's allowing us to also reduce or really even eliminate some of the investments that we would have been making in some of those older platforms as people are moving over. So in terms of, I guess, what to expect, you know, if you keep going forward.

S been great grandson, so beautifully there and adding these analytics and diagnostic tools and weird basically allowing them to do it for little or no additional money, we're kind of moving them over and and that that is going to set up the opportunity for us and you'll probably get a little bit right at the next Coupla years go by.

There's a little bit of an upgrade path I think that'll be able to happen there.

I think you'll see that flowing through and that all of our attention and some of our girls numbers in the future, but it's allowing us to.

Also reduce or really even eliminate some of the investment that we would've been making and some of those older platform as people move it over so it.

I guess the.

What what to expect if you keep going forward.

Joe Walsh: We think there's a lot more. Our sales force really has this story down. They're comfortable telling the story now, the product is performing well, and um, we think there's going to be more. We think what you've been seeing will last for a while. Okay. Well, thanks for taking my questions and best of luck here in 2024. Thank you very much.

We think there is a lot more are salesforce really has the.

Story down her comfortable telling the story now the product is performing well.

And.

We think there's going to be more we think what you've been seeing you will see for awhile.

Understood well, thanks for taking my questions and best of luck here in 2024.

Thank you very much.

Rob Oliver: Your next question comes from the line of Rob Oliver from Baird. Your line is open. Hey, great. Thanks, guys. Good morning.

Your next question comes from the line of Rub Oliver from Bad Your line is open.

Okay, great. Thanks, guys. Good morning appreciate it.

Joe Walsh: I appreciate it. Joe, I appreciated the color that you gave around some of the, you know, ARPU trends and the fact that some newer customers are coming in at promotional pricing. Can you talk a little bit about how we should think about customer growth versus ARPU in 2024? You know, because while there is some pressure on those new customers, the seasonal ARPU number is actually really nice. So, just wanted to understand how you guys were thinking about that. And then I just had a quick follow-up. Yeah, you got your finger on it exactly right. The reason we broke out the seasoned RFU was to make sure you guys were comfortable. That the customers that we have in the base that have been with us for a while are spending more, and are growing, even if the ARPU number gets noisy because of some of the crosswinds that are coming through this. There are 2 big crosswinds.

Pretty sure that the color that you gave around some of the <unk>.

Trends and the fact that the newer customers are coming in a promotional pricing.

Can you talk a little bit about how we should think about customer growth versus.

2024.

While there is some pressure on those new customers the season or two numbers actually a really nice I just wanted to understand how you guys were thinking about that and then I just had a quick follow up.

Yeah, you've got your finger on exactly right. The reasonably broke out the season dark blue with to make sure you guys will comfortable.

At the customers that we have in the base has been with us a while are spending more are growing even if the <unk> number get noisy.

Because of some of the Crosswinds that are coming through there's two big crossword.

Joe Walsh: They're going to kind of shake up the ARPU number and make it bounce around a little bit. 1 is what we've been talking about, and customers coming over and us moving them in some cases for what they're currently spending on an old tool over the new 1, or maybe only a small step up, but not all the way to full rate.

They're going to kind of shake up the <unk> number and make it.

A little bit.

One is what we've been talking about and that customers coming over and us moving them in some cases for what they're currently spending.

On old tool over the new one or maybe only a small step up but but not all the way to full right. So that gives you a little bit of noise, there and that should be a good guy for growth going forward.

Joe Walsh: So that actually gives you a little bit of noise there, and that should be a good environment for growth going forward. And the second thing that is going to be introducing some noise as we go through 24 and into 25, is our product-led growth motion, where command center customers can literally discover the product on their own. Sign up and use it for free forever, and then if they want to add channels, or they want to add users, they want to upgrade it.

And then the second thing, it's going to be introducing some noise.

As we go through 24 and the 25.

Is our product led growth motion.

Where command center customers can literally discover the product on their own sign up and use it for free forever and.

And then if they want to add channels or they want to add users that they want to upgrade it they can upgrade on their own or <unk>.

Joe Walsh: They can upgrade on their own, or after a certain amount of usage, they'll kind of turn green on our dashboard. We're going to go talk to them, and they're going to upgrade, but in a lot of cases, they'll be coming in at smaller price points, and that's more of a land and expand motion.

After a certain amount of usage they'll kind of turn green on our dashboard, we're going to go talk to them and they're gonna upgrade.

But in a lot of cases there'll be coming in at smaller price point and that that's more of a land and expand motion.

Joe Walsh: It's to help us build a new zoo, a new blue ocean out there of customers to go work with and call on. So. I expect those numbers to be fairly small in the beginning, so I don't think that they'll have a massive impact on our group, but I think our numbers will just be a little bit noisy.

To help us build a new zoo, a new blue Ocean out their customers to go work with a collar. So uhm I expect those numbers to be fairly small in the beginning so I don't think that it will have a massive impact on <unk>, but I think our our blue number will just be a little bit noisy.

Joe Walsh: As we kind of work through those 2 trends, even though overall, if you go back to our investor day guide, we think that the kind of $4,000 a year we were getting at the time of Investor Day moved to $7,000 a year per customer as they buy additional centers, additional add-ons, additional features, and we grow with these successful businesses. I wanted to comment on that.

As we kind of work through those two trend even though overall if you go back to our Investor Day Guide.

We think that's the kind of 4000, a year, we were getting at the time, the Investor day moves to 7000, a year for a customer as a buyer additional center additional add an additional feature and we grow with these successful business if I wanted to comment.

Joe Walsh: A Thryve business within the community is doing better than the guy next door that's not on Thryve. He's delivering a much better experience for his customers, and he's getting paid digitally.

That's a thrive business within a community.

Doing better than the Guy next door dot on fraud, he's delivering a much better experience for his customer he's getting paid digitally getting next <unk>. He's.

Joe Walsh: He's getting next day funds. He's got a pretty slick business operation going. And if he goes to sell it, it'll be worth more than the business next door that's got a pile of paper.

He's got a pretty slick business operations and if it goes to sell it it'll be worth more than the business next door and it's got a pile of paper.

Joe Walsh: So Thryve customers are thriving, and we're growing with them. And a lot of them have gone from three or four employees to seven or eight or 10. And we're growing with them. We think we will be able to keep growing with them and adding centers, and adding functionality. And that's part of who we talk to every day in our high-priority group. And as we talk to customers in the field, and I continue to do my customer visits each week, we talk to customers who are doing well and talk about what would be next for them and what they would need. And that's been animating our roadmap and part of why we have another center coming out in a few months and another one coming out next year to help soak up some of those needs. So, final comment on ARPU.

The drive customers are thriving and we're growing with them and a lot of them have gone from three or four employees to seven or eight or 10 and were growing with it but we think we'll be able to keep rolling with them and adding centers, adding functionality and that's part of who we talk to everyday and our high fiber group.

As we talk to customers in the field and I continue to do my customer visits each week.

We talked to customers, who are doing well and talking.

Talking about what would be next for them and what they would need and that's been animating our roadmap and part of why we have another center coming out in a few months and another one coming out next year to help soak up some of those needs. So.

Final comment on <unk>.

Rob Oliver: We think ARPU gradually rises toward that 7,000-year number over the next three, four, or five years, but it might be a little noisy for a minute as some of these processes play out. Great. That's really helpful detail. Thanks, Joe. And then just one follow-up. I would love to hear your perspective.

We think our food gradually rises toward that 7000, a year number over the next three or four or five years, but it might be a little noisy for a minute as some of the.

Processes play out.

Great. That's really helpful detail, Thanks, Joe and then [noise].

Just one follow up I would love to hear your perspective, I mean, you mentioned tenure anniversary here. Obviously, you know looking back has been a tremendous amount of progress in the mood to kind of really transforming into SaaS company here and.

Joe Walsh: You mentioned your 10-year anniversary here. Obviously, looking back, there's been a tremendous amount of progress and the move to really transform into a SaaS company here. In that context, I wanted to just get your thoughts on M&A because, on the one hand, you guys have really proven that buying these zoo-like businesses globally is a core competency of yours and your ability to convert them, better than anyone out there, into SaaS customers. And you're hitting the nail on the curb on that right now.

Just in that context, I wanted to just get your thoughts on M&A because on one hand, you guys have really proven that you know.

Seeing these you like businesses globally core competency of yours, and and your ability to convert damage you know better than anyone out there <unk> customers and you should just started hitting the nail the curve on that right now on the other hand.

Joe Walsh: On the other hand, buying more of those companies would push out that transition point to becoming a SaaS company further. So I just would love to hear how you're thinking about that, particularly in light of the SaaS momentum you guys are currently experiencing. Thank you.

More of those companies would push out that transition point coming assassin company. Further so I just want to hear how you're thinking about that particularly in light of the momentum.

You guys are currently experiencing thank you.

Well.

It's a it's a really it's a really good question, it's kind of a complex question and I don't want to take too terribly much time. So I'll tell you that we've been really successful with these.

Joe Walsh: And I don't want to take up too much of your time, so I'll tell you that we've been really successful with these. You know, adding customers to the zoo and converting them, that's gone well. We're pretty much at the end of that or nearing the end of that. There's not, you know, not a lot of that left. We anxiously look forward to making SAS acquisitions, and you know, you're moving in that direction. It's really, for us, you know..., a financial question. We're currently valued in a place where it makes significant SAS acquisitions hard to do. And, you know, we think that will change in the near future, but for the moment, that's sort of where we are. So, we've had to be kind of cautious there.

Adding customers to the zoo and converting them that's on well we're pretty much at the end of that are nearing the end of that does not not a lot of that last.

We anxiously look forward to making staff acquisitions and.

You're moving in that direction.

It it's really for US you know.

A financial question.

Currently valued in a place where it makes significant data acquisition, it's hard to do.

And.

We think that will change.

In the near future [laughter], but for the moment that that's sort of where we are so we've had to be kind of cautious there. We also have a particularly lousy.

Joe Walsh: We also have a particularly lousy credit facility, which at some point we'll swap out, and that will give us a lot more flexibility and help us a lot, but you know that. And, you know, as far as postponing when the crossover point on staff revenue is and all that stuff, um, we're paying attention to that. That's something that we think about. But we've had some really incredible results with the acquisitions that we have made. And so, you know, we're not sorry that we made them, and I think they've improved.

Credit facility, which which at some point, we'll swap out and that will give us a lot more flexibility and help us a lot, but you know that and.

Postponing when the crossover point on fast revenue is and all that stuff.

We're paying attention to that that's something that we think about.

Well, we've had some really incredible economics with the acquisition that we have made and so you know we're not sorry that we made them.

And I think the improved.

Joe Walsh: Fraction we're getting into the zoo with the marketing center and some of the other new developments that we've made give us a lot of confidence that that crossover point is Nobody should worry about that, you know, whether it's six quarters away or seven or eight quarters away; it's not that far away. And if you're an investor and you're not thinking at least a few years out, we just assume we don't have you in our equity, to be honest with you. We're looking for people that want to invest in a growing business. So that's kind of how we think about it.

Fraction, we're getting it has to do with marketing center and some of the other new developments that we've.

<unk>.

Give us a lot of confidence that that crossover point is.

Nobody should worry about that you know whether it's.

Six quarters away or seven or eight quarters away, it's not that far away.

And if you're in an investor and you're not thinking at least a few years out we just as soon not have you in our equity to be honest with you you were looking for people that want.

I want to invest in a growing business.

So.

That's kind of how we think about it.

Operator: Okay, thank you very much. Thanks. And your final question today is from the line of Richard Francis from Infi. Your line is open. That brings our Q&A session to a close. Thank you to our speakers for today's presentation, and thank you all for joining us. This concludes today's conference call. Enjoy the rest of your day. You may now disconnect, www.thryvholdings.com

Okay. Thank you very much.

Thanks.

And your final question today is from the line of Richard Francis from <unk>. Your line is open.

Your line is open.

That brings down Q&A session to a close thank you to our speakers for today's presentation and thank you all for joining US. This concludes today's conference call enjoy the rest of your day you may now disconnect.

[noise] [music].

Mhm.