Q1 2024 Thryv Holdings Inc Earnings Call

Operator: Good morning. My name is Dee, and I will be your conference operator today. At this time, I would like to welcome everyone to the Thryv Holdings first quarter 2024 earnings call. All lines have been placed on mute to prevent any background noise.

Good morning, My name is Dean and I will be a conference operator today at this time I would like to welcome everyone to the tribe Holdings first quarter 2024 earnings call. All lines have been placed on mute to prevent any background a nice update the speaker's remarks, there will be a question and answer session. If you would like to ask a question.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I would now like to turn the call over to Cameron Lessard. Please go ahead.

Dean: During this time simply press Star then the number one on your telephone keypad. If you would like to withdraw your question press. The pound key. Thank you I would now like to turn the call over at the camera and research. Please go ahead.

Cameron Lessard: Thank you, operator. Hello, and good day to everyone.

Cameron: Thank you operator, Hello, and good day to everyone.

Cameron Lessard: Welcome to Thryv's first quarter 2024 earnings conference call. On the call today are Joe Walsh, Chairman and Chief Executive Officer, and Paul Rouse, Chief Financial Officer. 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 the 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 today.

Speaker Change: To thrive as first quarter 2024 earnings conference call on the call today are Joe Walsh, Chairman and Chief Executive Officer, and Paul <unk>, Chief Financial Officer.

Speaker Change: A copy of our earnings press release, and Investor presentation can be found on our website at thrive dot com.

Speaker Change: Or in the investors section at Investor thrive Dot com.

Speaker Change: Please acknowledged 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.

Speaker Change: These statements are subject to the risks and uncertainties described in the company's earnings release and other filings with the SEC.

Speaker Change: Thrive has no obligation to update the information presented on the conference call today.

Cameron Lessard: Before we get started, I wanted to provide an update on segment reporting. Historically, we've provided additional detail for the U.S. and international markets within each of our reporting segments. We're now transitioning to a two-segment reporting structure, SaaS and marketing services, encompassing our global operations. However, it's important to note that this change only impacts how we report adjusted gross margin and adjusted EBITDA for historical segments. It will not impact how we report revenue under the disaggregation of revenue section in our quarterly filing.

Speaker Change: Before we get started I wanted to provide an update on segment reporting.

Speaker Change: Historically, we provided additional detail for the U S and international markets within each of our reporting segments.

Speaker Change: Now transitioning to a two segment reporting structure SaaS and marketing services encompassing our global operations. It is important to note that this change only impacts how we report adjusted gross margin and adjusted EBITDA for historical segments. It will not impact how we report revenue under the.

Speaker Change: <unk> of revenue section in our quarterly filings.

Cameron Lessard: We are streamlining our approach to offer a unified perspective, which we believe will better reflect our business model and enhance clarity in understanding our business and facilitate more efficient modeling. I will now turn the call over to Chairman and CEO, Joe Walsh.

Speaker Change: We are streamlining our approach to offer a unified perspective, which we believe will better reflect our business model at enhanced clarity and understanding our business and facilitate more efficient modeling.

Speaker Change: I will now turn the call over to chairman and CEO Joe Walsh.

Joseph A. Walsh: Good morning, Cameron, and thank you all for joining us on the call today to discuss our first quarter results. For the first quarter, we delivered strong subscriber growth, ending the quarter with 70,000 clients. The year got off to a good start.

Joseph A. Walsh: Good morning, Cameron and thank you all for joining us on the call today to discuss our first quarter results.

Joseph A. Walsh: For the first quarter, we delivered strong subscriber growth ending the quarter with 70000 clients.

Joseph A. Walsh: Year got off to a good start we've got strong momentum across our SaaS business it will be raising guidance for the year.

Joseph A. Walsh: We've got strong momentum across our SaaS business, and we'll be raising guidance for the year. I'm excited to share some great news about our center strategy. We're seeing significant traction. For example, over 8% of our clients now have two or more paid centers, up from practically zero this time last year.

Joseph A. Walsh: I am excited to share some great news about our center strategy.

Joseph A. Walsh: We're seeing significant traction.

Joseph A. Walsh: 8% of our clients now have two or more paid centers up from practically zero. This time last year. So we're really making some good progress there and selling additional centers to our customers take it's a really good indicator of the value proposition, we are delivering and how sticky. These.

Joseph A. Walsh: So we're really making some good progress there in selling additional centers to our customers. I think it's a really good indicator of the value proposition we're delivering and how sticky these products are. Another interesting stat that we've been looking at is our seasoned ARPU.

Joseph A. Walsh: Products are.

Joseph A. Walsh: Another interesting stat that we've been looking at is our seasoned arco. This.

Joseph A. Walsh: These customers have been with us for over a year. We're seeing really strong growth for them year over year in the mid-teens. And again, I think this shows loyalty and the fact that people are engaging with and using the platform. I'd like to talk a little bit about our recent.

Joseph A. Walsh: Customers have been with us for over a year, we're seeing really strong growth for them year over year in the mid teens and again I think this shows loyalty and the fact that people are engaging with and using the platform.

Joseph A. Walsh: I'd like to talk a little bit about our refinancing.

Joseph A. Walsh: We recently completed a refinancing which is going to make a big difference for us. It redoes our term loan and our ABL. It significantly extends our debt maturity, providing us with financial flexibility and the runway we need to invest in growth in this business. Second, it offers us flexibility. This flexibility allows us to strategically invest in our growing and profitable SaaS business, which is really the engine that's driving our success.

Joseph A. Walsh: We recently completed a refinancing which is going to make a big difference for us it's redoing our term loan and our ABL. It's significantly extend our debt maturity. This provides us with financial flexibility and the runway we need to invest in growth in this business.

Joseph A. Walsh: Second it offers us flexibility this flexibility allows us to strategically invest in our growing and profitable SaaS business, which is really the engine that's driving our success importantly, the financing is underwritten with a strong focus on the strength of our SaaS operations as opposed to being so much.

Joseph A. Walsh: Importantly, the financing is underwritten with a strong focus on the strength of our SaaS operation, as opposed to being so much focused on marketing services. This is really a testament to the confidence lenders have in Thryv's future.

Joseph A. Walsh: Focus on marketing services.

Joseph A. Walsh: This is really a testament to the confidence lenders had and drives future.

Paul D. Rouse: Equally important, this new structure moves away from a legacy 100% cash flow sweep, and it frees up capital that we can invest in future revenue growth. Finally, this financing allows us to pursue shareholder initiatives. As evidenced, we announced a share repurchase authorization earlier today alongside our earnings release. While debt reduction remains our core priority, this share repurchase program provides an additional tool to enhance shareholder value alongside our ongoing debt repayment effort. With that, I'm going to turn the call over to our CFO, Paul Rouse, to take you through the numbers. Paul?

Joseph A. Walsh: Equally important this new structure moves away from a legacy 100% cash flow sweep and it frees up capital that we can invest in future revenue growth.

Joseph A. Walsh: Finally, this financing allows us to pursue shareholder initiatives as evidenced we announced a share repurchase authorization earlier today alongside our earnings release.

Joseph A. Walsh: While debt reduction remains our core priority. This share repurchase program provides an additional tool to enhance shareholder value.

Joseph A. Walsh: Alongside our ongoing debt repayment efforts.

Joseph A. Walsh: With that I'm going to turn the call over to our CFO, Paul Ross to take you through the numbers Paul.

Paul D. Rouse: Thanks, Joe. All right, let's dive into our results, beginning with Zach. SASS revenue was $74.3 million in the first quarter and within our guidance range, representing an increase of 24% year-over-year and slightly up sequentially. Adjusted gross margin increased 420 basis points year-over-year but decreased 130 basis points quarter-over-quarter to 68.4%. Adjusted gross margin declined sequentially, primarily due to the introductory product offerings featuring promotional pricing strategies surrounding Marketing Center at the beginning of the year.

Paul Ross: Thanks, Joe Alright lets dive into our results beginning with SaaS SaaS.

Paul D. Rouse: This seasonal trend is typical, as the business experiences fluctuations between December and January due to the holiday effect. It's important to emphasize that the decline in margin is not indicative of a permanent strategy to lower prices. It's a tool to attract customers during the seasonally slow periods of the year.

Paul Ross: SaaS revenue was $74 3 million in the first quarter and within our guidance range, representing an increase of 24% year over year and slightly up sequentially.

Paul Ross: Adjusted gross margin increased 420 basis points year over year, but decreased 130 basis points quarter over quarter to 68, 4%.

Paul Ross: Adjusted gross margin declined sequentially, primarily due to the introductory product offerings featuring promotional pricing strategies surrounding marketing center at the beginning of the year.

Paul Ross: This seasonal trend is typical as the business experiences fluctuations between December and January due to the holiday effects.

Paul Ross: It is important to emphasize that the decline in margin is not indicative of a permanent strategy to lower prices.

Paul Ross: As a tool to attract customers during a seasonally slow periods of the year in fact, adjusted gross margin rebounded significantly in March to Q4 levels.

Paul D. Rouse: In fact, adjusted gross margin rebounded significantly in March to Q4 levels. Looking ahead, we anticipate exiting the year with an adjusted gross margin exceeding 70 percent, driven by our focus on growing our client base with new centers and increasing spending with our existing customers. Furthermore, and as Joe mentioned, our company has a proven track record of driving more spend with existing customers after one year, which reinforces our confidence in achieving our margin target.

Paul Ross: Looking ahead, we anticipate exiting the year with an adjusted gross margin exceeding 70% driven by our focus on growing our client base with new centers and increasing spending with our existing customers.

Paul Ross: Furthermore, and as Joe mentioned, our company has a proven track record of driving more spend.

Paul Ross: With existing customers after one year, which reinforces our confidence in achieving our margin targets.

Paul D. Rouse: First quarter SAS adjusted EBITDA was $3.4 million, resulting in a SAS adjusted EBITDA margin of 4.6%. Right now, I'm going to unpack the shortfall in EBITDA. At the onset of the year, we initiated plans to trim expenses and enhance productivity across the various fronts. We're delighted to report that we've uncovered more savings than initially anticipated, leading to an upward revision in our SAS EBSDOT guidance for the full year. Let me explain the timing impact on the first quarter in more detail.

Paul Ross: First quarter SaaS adjusted EBITDA was $3 4 million, resulting in a SaaS adjusted EBITDA margin of four 6%.

Speaker Change: Right now, we're going to unpack the shortfall in EBITDA.

Speaker Change: At the onset of the year, we initiated plans to trim expenses and enhanced productivity across the various fronts.

Speaker Change: We are delighted to report that we've uncovered more savings than initially anticipated leading to an upward revision in our SaaS EBITDA guidance for the full year.

Speaker Change: Let me explain the timing impact on first quarter in more detail.

Paul D. Rouse: The restructuring of our company-wide sales commission plan aimed at incentivizing multi-center sales, crucial to our profitable growth, accelerated the recognition of commissions that would have otherwise been deferred under the previous system. Consequently, SAS expenses saw a rise of over $2 million in commissions in the first quarter. Again, this was a timing factor that will normalize and benefit us in the future.

Speaker Change: The restructuring of our companywide sales Commission plan aimed at incentivizing multicenter sales peripheral to our profitable growth accelerated the recognition of commissions would have otherwise been deferred under the previous plan constant.

Speaker Change: Consequently, SaaS expenses saw a rise of over $2 million in commissions in the first quarter again. This was a timing factor that will normalize and benefit us in the future.

Paul D. Rouse: Secondly, elevated G&A costs weighed on SAS EBITDA margins, amounting to just under $1 million. These costs related to deferring cost reductions from Q1 to Q2 onward as we finalize our plans, which will ultimately yield greater savings than initially anticipated for the rest of the year. Once again, we firmly believe that these timing events are now behind us, which is why we are raising both SAS revenue and EBITDA guidance for the full year. SAS subscribers were approximately 70,000 at the end of the first quarter compared to 66,000 at the end of the fourth quarter, an increase of 30% year-over-year and 6% sequentially. SAS's ARPU was relatively flat at $369.

Speaker Change: Secondly, elevated G&A costs weighed on SaaS EBITDA margins amounting to just under $1 million. These costs related to deferring cost reductions from Q1 to Q2 onward, as we finalize our plans, which will ultimately yield greater savings than initially anticipated for the rest.

Speaker Change: Of the year.

Speaker Change: Once again, we firmly believe that these timing events are now behind US, which is why we are raising both the SaaS revenue and EBITDA guidance for the full year.

Speaker Change: SaaS subscribers were approximately 70000 at the end of the first quarter compared to 66000 at the end of the fourth quarter, an increase of 30% year over year, and 6% sequentially SaaS <unk> was relatively flat at $369 <unk>.

Paul D. Rouse: First quarter season net dollar retention was 94%, an increase of 300 basis points year over year. Moving over to marketing services, first quarter revenue was $159.3 million, and above guidance. First Quarter Marketing Services Adjusted EBITDA was $50.7 million, resulting in an adjusted EBITDA margin of 32%. First Quarter Marketing Services Billings was $136.8 million, representing a decline of 24% year over year.

Speaker Change: First quarter seasoned net dollar retention was 94% an increase of 300 basis points year over year.

Speaker Change: Moving over to marketing services first quarter revenue was $159 3 million and above guidance first quarter marketing services adjusted EBITDA was $57 million, resulting in an adjusted EBITDA margin of 32%.

Speaker Change: First quarter marketing services billings was $136 8 million, representing a decline of 24% year over year.

Paul D. Rouse: First Quarter Consolidated Adjusted Gross Margin was 68%. First Quarter Consolidated Adjusted EBITDA was $54.1 million, representing an adjusted EBITDA margin of 23%. Finally, our net debt position was $341 million at the end of the first quarter. Our leverage ratio was 1.9 times net debt to EBITDA, which is well below our covenant of free time.

Speaker Change: First quarter consolidated adjusted gross margin was 68%.

Speaker Change: First quarter consolidated adjusted EBITDA was $54 1 million, representing an adjusted EBITDA margin of 23%.

Speaker Change: Finally, our net debt position was $341 million at the end of the first quarter. Our leverage ratio was one nine times net debt to EBITDA, which is well below our covenant of three times.

Paul D. Rouse: As Joe mentioned earlier, we are pleased to have successfully completed the refinancing of our outstanding term loan, resulting in a reduction of the interest rate by 175 basis points. With the proceeds, we refinanced both our Authentic Term Loan and ABL facility, both of which were maturing in 2026. Additionally, we capitalized on the opportunity to swap out our ABL facility, or add flexibility at a lower interest rate. The new debt arrangement extends the maturity to 2029 and incorporates amortization that steps down. Furthermore, it features a smaller excess cash flow suite, bolstering the company's liquidity.

Speaker Change: As Joe mentioned earlier, we are pleased to have successfully completed the refinancing of our outstanding term loan resulting in a reduction.

Speaker Change: The interest rate by 175 basis points.

Speaker Change: With the proceeds we refinanced both our outstanding term loan and ABL facility, both of which were maturing in 2026 <unk>.

Speaker Change: Additionally, we capitalized on the opportunity to swap out our ABL facility.

Speaker Change: For added flexibility at a lower interest rate.

Speaker Change: The new debt arrangement extends the maturity to 2029 and incorporates amortization that steps down. Furthermore, it features a smaller excess cash flow sweep bolstering the company's liquidity.

Paul D. Rouse: The new credit agreement provides the company with essential flexibility to continue investing in and growing our business, as well as to strategically allocate capital to maximize long-term value for shareholders. Now, let's discuss guidance for the second quarter. For the second quarter, we expect SAS revenue in the range of $77.5 million to $79.5 million. And we are increasing our full year guidance range to $326 million to $329 million. For the second quarter, we expect SAS-adjusted EBITDA in the range of $6.5 million to nine percent.

Speaker Change: The new credit agreement.

Speaker Change: <unk> the company with a central flexibility to continue investing in and growing our businesses as well as to strategically allocate capital to maximize long term value for shareholders.

Speaker Change: Now, let's discuss guidance for the second quarter.

Speaker Change: For the second quarter, we expect SaaS revenue in the range of 77 5 million to $79 $5 million and we are increasing our full year guidance range to 326 million to $329 million.

Speaker Change: For the second quarter, we expect SaaS adjusted EBITDA in the range of $6 5 million to $7 5 million and we are increasing our full year guidance range to 28 million to $30 million, which implies SaaS adjusted EBITDA margin of 9%.

Paul D. Rouse: For the second quarter, we expect marketing services revenue in the range of $141 million to $144 million, and for the full year, the range is adjusted to $487 million to $494 million. For the full year, we expect marketing services adjusted EBITDA to be in the range of $130 million to 133 million. Please keep in mind that the print schedule and the published dates for the print directories can adjust and impact marketing services revenue. As a helpful guide, you can model EBITDA margins around 30% in the first half of the year and mid-teens in the second half of the year.

Speaker Change: For the second quarter, we expect marketing services revenue in the range of 141 million to $144 million and for the full year. The range is adjusted to 487 million to $494 million.

Speaker Change: So the full year, we expect marketing services adjusted EBITDA to be in the range of $130 million to $133 million.

Speaker Change: Please keep in mind that the print schedule and print directories published dates can adjust and impact marketing services reported revenue and EBITDA.

Speaker Change: As a helpful Guide you can model EBITDA margins around 30% in the first half of the year and mid teens in the second half of the year.

Joseph A. Walsh: I'll now turn the call back over to Joe.

Speaker Change: I'll now turn the call back over to Joe.

Joseph A. Walsh: Thank you Paul.

Operator: When you think about Thryv, Thryv is a category leader in a big megatrend. Small businesses are following big ones into the cloud. They're doing it to save time, they're doing it to save money, they're doing it to deliver a better experience for their customers. And for us, it's delivering strong, sustained growth as that mega trend unfolds. And we're really excited about what we're seeing and the demand picking up the way it is.

Joseph A. Walsh: When you think about thrive drive as a category leader and a big Mega trends.

Speaker Change: Small businesses are following big ones into the cloud.

Joseph A. Walsh: They are doing it to save time, they're doing it to save money by doing it to deliver a better experience for their customers and for us it's delivering strong sustained growth as that mega trend unfolds and we're really excited.

Joseph A. Walsh: Cited about what we're seeing in demand picking up the way it is.

Operator: I think it's also interesting to think about what's happening with our platform strategy, more and more centers being bought by customers. And that trend, we believe, will really drive our future as we build out our platform. We're very excited about our new chief product officer, Reese Johnson, joining our company. Reese has a very strong background in SaaS, having worked for some big, well-known companies, and he's the type of talent that can help us take our platform to a whole new level.

Joseph A. Walsh: I think it is also.

Joseph A. Walsh: Interesting to think about what's happening with our platform strategy.

Joseph A. Walsh: More and more centers being bought by customers and that trend, we believe will really drive our future as we build out our platform.

Joseph A. Walsh: We're very excited about our new Chief product Officer, <unk> Johnson, joining our company <unk> has a very strong background in SaaS, having work for some.

Joseph A. Walsh: The big well known companies and he is the type of talent that can help us take our platform to a whole another level. So welcome race and we're really excited about what that means in terms of us continue to develop our software platform.

Operator: So welcome, Reese, and we're really excited about what that means in terms of us continuing to develop our software platform. When you think about what's happening in our company. There is a legacy, gigantic, really, legacy melting iceberg of a marketing services business. And increasingly, as we build our products like Marketing Center, we're finding more and more traction penetrating that base, and we're accelerating that penetration into that base. We think this is really good news for the development of our SaaS business and look forward to really what's gonna unfold in the year ahead. So with that, operator, I'd like to open the line up for questions.

Joseph A. Walsh: When you think about what's happening in our company.

Joseph A. Walsh: There is a legacy gigantic really legacy melting iceberg, our marketing services business and increasingly as we build our products like marketing center, we're finding more and more traction penetrating that base and we're accelerating that penetration into that base. We think this is really good news or the development of our.

Joseph A. Walsh: SaaS business and looking forward to really what's going to unfold in the year ahead.

Speaker Change: So with that operator, I'd like to open the lineup for questions.

Operator: and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. We do request for today's session that you please limit your question to one and one follow-up. Again, press star 1 to join the queue, and your first question comes from the line of Arjun Bhatia from William Blair. Please go ahead.

Speaker Change: Thank you.

Speaker Change: I'll now begin the question and answer session.

Speaker Change: You have dialed in I would like to ask a question. Please press star one again, California keypad to raise your hand in China Q. If you would like to withdraw your question simply press Star. One again, if you are called upon to ask your question or listening via loud speaker in your device. Please speak up a handset and ensure that your point is nothing yet when asking your question.

Speaker Change: The request for today's session that you. Please limit to one question and one follow up again press star one to trying to keep you and Jeff first question comes from the line of Arjun Bhatia from William Blair. Please go ahead.

Arjun Rohit Bhatia: Perfect. Thank you, guys. And congratulations on the nice results here. Joe, maybe to just continue on that last point, I know last quarter you had announced that there was a kind of accelerated shift from marketing services to SaaS. Can you maybe just give us a sense of how the marketing services customers, the legacy customers, are receiving that? I know it's relatively early still, but give us a sense of what kind of traction you're getting there, and is that something that is driving the accelerated growth that we're seeing in SaaS clients? I know that number was really strong today, but I would love to hear some more color on that.

Speaker Change: Perfect.

Arjun Rohit Bhatia: You guys.

Arjun Rohit Bhatia: Congrats on the nice results here.

Speaker Change: Joe maybe.

Arjun Rohit Bhatia: Just continuing on that last point I know last quarter, you had announced this kind of accelerated.

Arjun Rohit Bhatia: Chip romp marketing services to SaaS.

Joseph A. Walsh: Can you, maybe just give us a sense of how.

Arjun Rohit Bhatia: The marketing services the legacy customers are receiving that.

Thanks.

Arjun Rohit Bhatia: Relatively it's relatively early still but give us a sense of what kind of traction you're getting there and.

Arjun Rohit Bhatia: Is that something that is driving the accelerated growth that we're seeing in SaaS clients around my number was really strong today.

Arjun Rohit Bhatia: Love to hear some more color on that thank you.

Joseph A. Walsh: Thank you, Arjun. Yes, 30% sub growth, you know, we think is pretty strong. And yes, it certainly was aided by you know, going deeper into the zoo. I mentioned on previous calls that With Marketing Center, it's a much closer leap to the reason that people bought our various marketing services products in the past, to get more leads, to make their phone ring, to get more inquiries coming in. And so, you know, that is not as big a jump as, you know, transforming your business operations and putting a CRM in and really changing the way you run.

Joe: Thank you origin, yes, 30% sub growth, we think it's pretty strong.

Joseph A. Walsh: And yes, it certainly was aided by.

Joseph A. Walsh: Going deeper into the zoo.

Joseph A. Walsh: Mentioned on previous calls.

Joseph A. Walsh: With marketing center, it's a much closer leap to the reason that people bought our various marketing services products in the past to get more leads to make their phone rang to get more inquiries coming in and so that is not as big a jump as.

Joseph A. Walsh: So, in many ways, it's a shorter leap and an easier sale. It's closer to what they were looking for. And so we're continuing to have really strong success selling into that base. And as I mentioned, we're also seeing really strong two-center uptake that's picking up. People are really buying into the concept of buying the platform and not just, you know, one of the solutions but buying the broader platform. So we expect that to continue, Arjun, as part of our bullishness on the overall results of the year.

Joseph A. Walsh: Transforming your business operations, and putting a CRM and really changing the way you run so.

Joseph A. Walsh: In many ways.

Joseph A. Walsh: The shorter leap and an easier sale.

Joseph A. Walsh: It's closer to what they were looking for.

Joseph A. Walsh: So we're continuing to have really strong success selling into that base and as I mentioned, we're also seeing really strong tooth pattern uptake that's picking up people are really buying into the concept of buying the platform and not just one of the solutions, but buying the broader platform.

Joseph A. Walsh: We expect that to continue origin.

Joseph A. Walsh: Yes.

Joseph A. Walsh: Out of our bullishness on the overall results for the year.

Arjun Rohit Bhatia: Okay, understood. And then, you know, I know that obviously the debt refinance is an important step here. When you think broadly about your capital allocation strategy, how does this impact it? I know you announced the buyback, but maybe what are your thoughts on M&A going forward if you have a little bit more capital flexibility? And where, you know, where might you think about increasing investment even in a fast business?

Joseph A. Walsh: Okay.

Arjun Rohit Bhatia: And then.

Arjun Rohit Bhatia: I know.

Arjun Rohit Bhatia: Obviously the debt refinanced.

Arjun Rohit Bhatia: As an important step here.

Arjun Rohit Bhatia: When you think broadly about your capital allocation strategy. How does this impact that I know you announced the buyback, but maybe what are your thoughts on M&A going forward. If you have a little bit more capital flexibility.

Arjun Rohit Bhatia: Where where might you think about.

Arjun Rohit Bhatia: Increasing investment even in the.

Arjun Rohit Bhatia: In the SaaS business.

Joseph A. Walsh: Well, as we've discussed before, we have an active corporate development effort looking at and talking to SaaS entrepreneurs about how they might fit in with the thrive picture. And the challenge in the past has been twofold. One is our own very, very low valuation makes acquiring a SaaS business of any size dilutive. So it sort of makes us think about having to do smaller ones because they're typically valued as SaaS businesses, and we're not. We're valued like a phone book, so that makes it challenging.

Arjun Rohit Bhatia: Well as we've discussed before we have an active corporate dev effort looking at and talking to.

Joseph A. Walsh: SaaS entrepreneur about how they might fit into the picture and the talent in the past has been twofold. One is our our own very very low valuation makes acquiring SaaS business of any size dilutive. So it sort of may.

Joseph A. Walsh: It makes us think about having to do smaller ones because they're typically valued as SaaS businesses and we're not we're valued like a phone book business.

Joseph A. Walsh: And so that makes it challenging it doesn't mean, we can't do it.

Joseph A. Walsh: But that doesn't mean we can't do it. We're pretty skillful acquirers. We're good at integrating, and we have a big sales force and a lot of ability to magnify somebody else's results. We're very much out there looking at that. The second constraint, as you touched on, with our prior credit facility was essentially sweeping all of our cash. So we were operating almost in a straitjacket. We really didn't have any meaningful flexibility.

Joseph A. Walsh: We're pretty skilful acquirers were good at integrating.

Joseph A. Walsh: And we have a big sales force and a lot of ability to magnify somebody else's results. So we're very much out there looking at that working on that.

Joseph A. Walsh: The second constraint as you touched on.

Joseph A. Walsh: Our prior credit facility with essentially sweeping all of our cash so we were operating.

Joseph A. Walsh: And the straight jacket, we really didn't have any any meaningful flexibility and I know that you are aware this business throws off I think the technical alternatives.

Joseph A. Walsh: And I know that you're aware, this business throws off, I think the technical term is a metric shit ton of cash. It generates a ton of cash. And we now have some flexibility in using that cash. And so whether we use that cash to acquire SAS businesses, to build out verticals and accelerate our growth, whether we use a little bit of buyback shares, you know, or whether we do what we've been doing, which is pounding down the debt.

Joseph A. Walsh: A metric <expletive> ton of cash.

Joseph A. Walsh: It generates a ton of cash.

Joseph A. Walsh: And we now have some flexibility in using that cash and so whether we use that cash.

Joseph A. Walsh: Two acquired SaaS businesses.

Joseph A. Walsh: Build out verticals and accelerate our growth whether we use alone.

Joseph A. Walsh: Buy back shares.

Joseph A. Walsh: <unk>.

Joseph A. Walsh: Or whether we do what we've been doing which is pound down the debt.

Joseph A. Walsh: I know you've watched carefully over the last couple of years as we've dramatically reduced the debt by paying it down aggressively. So any one of those things, I think, is really good for shareholders. And we're looking at all of them, and to wind up on where you started, there are definitely some interesting SAS targets, and I think you might see more of that type of activity in the future now that we've got a little bit more flexibility, Arjun.

Joseph A. Walsh: No you've watched carefully over the last couple of years as we've dramatically reduced the debt by paying it down aggressively so any one of those I think is really good for shareholders.

Joseph A. Walsh: And we're looking at all of them.

Joseph A. Walsh: Wind up on where you started there are definitely some interesting that target and I think you might see more of that type of activity in the future now that we've got a little bit more flexibility origin.

Arjun Rohit Bhatia: Perfect. Very helpful. Thank you.

Speaker Change: Perfect very helpful. Thank you.

Scott Randolph Berg: Our next question comes from the line of Scott Berg from Needham. Please go ahead.

Arjun Rohit Bhatia: Our next question comes from the line of Scott Berg from Needham. Please go ahead.

Scott Randolph Berg: Hi everyone. Congratulations on the next quarter's results here. Joe, following up on the, you know, 8% of your SAS customers with, you know, multiple centers today, are you seeing any sort of patterns emerge in terms of, I don't know, customers buying a specific center first and then, you know, adopting a specific second one, or maybe it's changing how you land a little bit? Just didn't know if you had any color on exactly what those 8% are kind of buying today.

Scott Randolph Berg: Hi, everyone. Congrats on the nice quarter results here.

Scott Randolph Berg: Joe following up on the.

Scott Randolph Berg: 8% of your SaaS customers with multiple centers today are you seeing any sort of patterns emerge in terms of.

Scott Randolph Berg: Customers buying specific centers first and then.

Scott Randolph Berg: <unk> a specific second one or maybe it's changing in how you land a little bit just didn't give any color on exactly kind of what those 8% are kind of buying today.

Scott Randolph Berg: Okay.

Joseph A. Walsh: It's definitely evolving. You know, it was obviously the business center first, and then you'd go back, and you'd try to add the marketing center. Now we're seeing that one of the most interesting patterns emerging is customers buying the whole thing right away, buying both centers. And It's not huge numbers yet, but the sales force is excited about it because They've had, you know, more than a handful, a large number of these kind of double sales, and that bodes really well, I think, for the future.

Speaker Change: It is definitely evolving.

Joseph A. Walsh: It was obviously business Center first and then you would go back and you try to add marketing stack.

Joseph A. Walsh: And now we're seeing.

Joseph A. Walsh: One of the most interesting patterns emerging customers buying the whole thing right away.

Joseph A. Walsh: Both centers and it's not huge numbers, yet, but the salesforce is excited about it because.

Joseph A. Walsh: They've had.

Joseph A. Walsh: More than a handful of big number of these.

Joseph A. Walsh: And a double sale.

Joseph A. Walsh: And that bodes really well I.

Joseph A. Walsh: I think for the future. The other thing we're seeing is where they buy marketing center first.

Joseph A. Walsh: The other thing we're seeing is where they buy marketing center first and get up and onboard with that, and then want to continue on the journey and want to buy Business Center. And that's particularly heartening to see.

Joseph A. Walsh: And get up and onboard onto that and then want to continue on the journey and want to buy business Center, and that's particularly heartening to see business Center is a bigger onboarding.

Scott Randolph Berg: Business Center is a bigger onboarding. There's more acquired knowledge of you as a business in Business Center. You've got to engage more. You have to do more. You have to actually change the way you roll.

Scott Randolph Berg: Sure.

Scott Randolph Berg: Theres more acquired a view as a.

Scott Randolph Berg: As a business and business center, you've got to engage more you have to do more you have to actually change the way you all.

Scott Randolph Berg: Whereas marketing center delivers a lot of passive value once you set up on it.

Joseph A. Walsh: Whereas Marketing Center delivers a lot of passive value. Once you're set up on it, you don't necessarily have to log in all the time. So those are some of the patterns we're seeing. It's, you know, it's relatively early days, but I'm really excited about, you know, thinking where we'll be, let's say, a year from now. We've gone in one year from a negligible percent of customers buying two centers to, you know, 8% at the end of this quarter, and it's surging upward.

Joseph A. Walsh: You have to log in all the time in order for it to be helping you.

Joseph A. Walsh: So.

Joseph A. Walsh: Those are some of the patterns, we're seeing it relatively early days, but really excited about thinking where it will be let's say a year from now.

Joseph A. Walsh: We've gone in one year from here.

Joseph A. Walsh: Negligible percentage of the customers buying two centers.

Joseph A. Walsh: And we think that that does a lot to help with our long-range journey, which we said we could go from, you know, kind of $4,000 a year for customers to $7,000 per year for customers. We could, you know, fill more of their needs and do more for them. We believe that this supports that. We also have said that we felt like our net dollar retention would be able to reach 100% over time.

Joseph A. Walsh: Yes, 8% at the end of this quarter and it's surging upward and we think that that does a lot to help with our long range journey, which we said we thought we could go from.

Joseph A. Walsh: 4000, a year for customer.

Joseph A. Walsh: 7000 per year per customer, we could sell more of their needs to do more for them.

Joseph A. Walsh: We believe that the support that we also said that we felt like our net dollar retention would be able to reach a 100% overtime and we think the ability to sell multiple centers into these customers.

Joseph A. Walsh: And we think the ability to sell multiple centers to these customers will really support that and really drive that. And when we look at our cost of acquisition relative to our lifetime value, As these customers are growing and prospering and doing well with the software and buying more centers, it has a really favorable influence on our lifetime value, and it makes the whole mass of our whole business work better. So, it's a pretty exciting thing. It's kind of a not a little trend. It's a big deal.

Joseph A. Walsh: Well really support that and really drive that and when we look at our cost of acquisition relative to a lifetime value.

Joseph A. Walsh: As these customers are growing and prospering and doing well with the software and buying more centers. It hasnt really favorable influence on our lifetime value and to make the math of our whole business work better. So it's pretty exciting things, it's kind of a not a little trend that's a big deal.

Scott Randolph Berg: Good, very helpful. Thanks for the additional color there.

Speaker Change: That's very helpful. Thanks for the additional color there.

Scott Randolph Berg: And then how should we think about the decay in the, pardon me, marketing services business going forward? Obviously, you just answered the question that we all know you're pressing into that base a little bit to hopefully purchase and migrate over to some of the SaaS solutions, but I did see you reduce the full-year revenue amount of that segment. Wanted to help unpack, is that really more a function of how you're pressing on these customers to try to move to your SaaS solutions, or is there another macro element right now that might be giving some weakness to that business? Because we are seeing some SMB pressures out there. That's a great question.

Scott Randolph Berg: And then how should we think about the decay in the.

Scott Randolph Berg: Pardon me in the marketing services business going forward.

Scott Randolph Berg: Obviously, you just answered the question that we all know youre pressing into that base a little bit too.

Scott Randolph Berg: Hopefully purchase and migrate over to some of the SaaS solution, but it did see reduced the full year revenue amounts of that segment wanted to help unpack is that really more a function of how you are pressing on these customers to try to move to your SaaS solutions or is there another macro element right now that might be given some weakness in that business because we are.

Scott Randolph Berg: We're seeing some.

Scott Randolph Berg: F&B pressures out there today.

Joseph A. Walsh: That's a great question. You know, we certainly read the same headlines you do, and we do hear some, you know, whining out there in the market about, you know, slow real estate transactions or, you know, whatever that's sort of affecting. But our small businesses are, they're sort of... I think I've told you before, they kind of do nasty things. They do everything; when stuff is broken, you call that; if you crack your tooth, you call the dentist. You're getting divorced from your wife, you call your lawyer.

Scott Randolph Berg: That's a great question.

Joseph A. Walsh: We certainly read the same headlines you do in.

Joseph A. Walsh: We do hear some.

Joseph A. Walsh: No whining out there in the market about.

Joseph A. Walsh: Slow real estate transactions, whatever that sort of shifted affecting but our small businesses are there sort of.

Joseph A. Walsh: I think I've told you before they kind of do the nasty thing.

Joseph A. Walsh: They do all when stuff is broken your call that you crack utility call that desert.

Joseph A. Walsh: We are getting divorced from your wife you call your lawyer.

Joseph A. Walsh: Your car won't start; you call your mechanic. These are our guys. These are our customers, you know. The air conditioning doesn't work, and your family's hot, so you call the AC guy.

Joseph A. Walsh: Your car won't start to call. Your mechanic. These are these are our guy.

Joseph A. Walsh: Our customer Chanel.

Joseph A. Walsh: Thing doesn't work in your family's hot the call the AC Guy.

Joseph A. Walsh: That's those are our customers, and they tend to be very resilient and just chug on through. And they tend to be the more mature businesses in the market. We have not been big sellers of the New Start business. The price point for our software products cuts in at $200 a month and goes quickly up from there.

Joseph A. Walsh: Those are our customers and they tend to be very resilient in just chug on growth and they tend to be the more mature businesses in the market we have not.

Joseph A. Walsh: Ben.

Joseph A. Walsh: Big sellers of the new start business.

Joseph A. Walsh: We.

Joseph A. Walsh: The price point and our software products.

Joseph A. Walsh: Cut in at 200, a month and go quickly up from there and there are plenty of three and really achieve tools available online benefit.

Joseph A. Walsh: And there are plenty of free and really cheap tools available online that if you have a tiny, tiny startup, you should go use those and graduate to something like Thryv later. We're more of a premium brand in the market that people look to grow up to eventually come to Thryv. So anyway, in terms of terms of macro, you know, our guys are doing fine. They're chugging along. They always complain, but as you can see, they're spending, they're buying. Back to your question now about, you know, what do I see in terms of the The melting iceberg. Make no mistake about it.

Joseph A. Walsh: If you have a tiny tiny startup you should go use those congratulate to something like five later, we're more of a.

Joseph A. Walsh: Premium brand in the market.

Joseph A. Walsh: That people look to grow up to eventually to come to abroad.

Joseph A. Walsh: So anyway in terms of in terms of macro.

Joseph A. Walsh: Our guys are doing fine.

Joseph A. Walsh: They are chugging, along they always complain.

Joseph A. Walsh: But as you can see they are spending their buying back to your question now about.

Joseph A. Walsh: What do I, what do I see in terms of the.

Joseph A. Walsh: We're definitely going and sort of... purposefully speeding up the transition. In an ideal world, you know, we want to be a SaaS business, and we don't see the marketing services business forever in our future. We see us, you know, winding that down. So we're working it hard and out calling on customers, offering them, you know, interesting propositions to come into the SaaS world. And they're listening, and we're having good traction with that. I think I've mentioned that before.

Joseph A. Walsh: The melting iceberg.

Joseph A. Walsh: Make no mistake about it we're definitely.

Joseph A. Walsh: Boeing and sort of.

Joseph A. Walsh: Purposely speeding up.

Joseph A. Walsh: The transition in an ideal world.

Joseph A. Walsh: We want to be a SaaS visit and we don't see the marketing services business forever in our future, we see us winding that down, but we're working it hard.

Joseph A. Walsh: And our calling on customers offering them.

Joseph A. Walsh: Interesting propositions to come into the SaaS World and they are listening and we're having we're having good traction with that so.

Joseph A. Walsh: I think I've mentioned before that.

Joseph A. Walsh: Scott, I think when you started covering us, we were like 12% SaaS revenue. We'll be 40% this year. We're nearly there now. And we'll, we'll pass 50% next year. We'll be a majority SaaS revenue business next. So part of that is just the success we're having. Hunting in the Zoo.

Joseph A. Walsh: Scott I think when you started covering US we were like 12% SaaS revenue.

Joseph A. Walsh: 40% this year, we're nearly there now.

Joseph A. Walsh: And well past, 50% next year it will be a majority of SaaS revenue business next year.

Joseph A. Walsh: So part of that is just the success, we're having hunter.

Joseph A. Walsh: Hunting and the Zip.

Scott Randolph Berg: It's been a good business transition, no doubt. Looking forward to seeing it hit 50% next year. Congratulations.

Joseph A. Walsh: It's been a good business transition no doubt looking forward to seeing it at 50% next year.

Speaker Change: Thank you very much.

Operator: Our next question comes from the line of Zach Cummins from B. O'Reilly Securities. Please go ahead.

Scott Randolph Berg: Our next question comes from the line of Zach Cummins from B Riley Securities. Please go ahead.

Zachary Cummins: Hi, good morning. Thanks for taking my questions. Joe, I really wanted to lean into the multicenter adoption side of it. With the changes that you've made to your sales commission structure, can you talk about how just the overall go-to-market strategy has evolved, and can we see potential acceleration in that multi-center strategy adoption as we progress throughout this year?

Zachary Cummins: Hi, Good morning, Thanks for taking my questions, Joe I really wanted to lean into the multicenter adoption side of it.

Zachary Cummins: With the changes that you've made to your sales commission structure.

Zachary Cummins: Can you talk about how just the overall go to market strategy has evolved and can we see potential acceleration and that multicenter strategy adoption as we progress throughout this year.

Joseph A. Walsh: Yeah, it's a great question because, really, you know, that's kind of the rudder that drives the ship in some ways. And we have gradually increased the incentive to sell software and gradually decreased the part of your compensation that comes from selling the legacy products each year. Obviously, it's been a gradual transition.

Joe: Yes, it's a great question because it really that's.

Joseph A. Walsh: The router that drives the shift in some ways.

Joseph A. Walsh: And we have gradually increased the incentive to sell software and gradually.

Joseph A. Walsh: The decrease the part of your comp that comes from selling the legacy products.

Joseph A. Walsh: We couldn't just flick a switch because it would have left the sales force sort of, you know, up in the air. We love our sales force. We take good care of our sales force. They're like the most important guys here.

Joseph A. Walsh: Obviously, it's been a gradual transition we couldnt just flick a switch because it would've left.

Joseph A. Walsh: The sales force sort of.

Joseph A. Walsh: Up in the air and we love our Salesforce, we take good care of our Salesforce there like the most important guys here. So we really.

Joseph A. Walsh: Kind of run our company through the sales reps windshield.

Joseph A. Walsh: So we really kind of run our company through the sales rep's windshield. So, yes, this year, as we rounded the bend, you know, going into 2024, we felt it was time for the next logical step in moving that rudder of compensation. And we moved it quite a bit, but we put a lot of focus on selling multi-centers, and it's just been now, three months or so since we did that, but the results have been dramatic. They are doing it. They were ready to do it anyway. They were wanting to do it anyway.

Joseph A. Walsh: So yes this year as we as we round has been.

Joseph A. Walsh: Going into 2024, we felt it was time for the next logical step in moving that rider.

Joseph A. Walsh: Compensation, and we moved it quite a bit and we've put a lot of focus on selling multi centers and.

Joseph A. Walsh: It's just been now three.

Joseph A. Walsh: Three months or so since we've done that but the results have been dramatic.

Joseph A. Walsh: They are doing it they were ready to do it anyway. They were wanting to do it anyway and now the pay really lines up for that and so they are very focused on it and having a lot of success and so.

Joseph A. Walsh: And now the pay really lines up for that, and so they're very focused on it and having a lot of success. And so, you know, when I model the business, when I think about how this plays out the rest of this year and going into next year, you know, I think that. This time last year, it was less than one percent had more than one center. At the end of this last quarter, it was 8%.

Joseph A. Walsh: What I model the business when I think about what how this plays out the rest of this year and going into next year.

Joseph A. Walsh: I think that that.

Joseph A. Walsh: This time last year, it was less than 1% had more.

Joseph A. Walsh: I see that growing by leaps and bounds each quarter moving forward, with the attendant benefit of ARPU and NDR and all the other bits that come with it. And, as you're aware, our strategy is to try to build and roll out a new century each year until we get our full platform built out. [inaudible] You know, we're on track to do that. We now have Reese Johnson, who's amazing, you know, and to kind of lay his golden hands on it and help take it to even another level.

Joseph A. Walsh: More than one center at the end of this last quarter. It was 8% I see that jumping in leaps and bounds.

Joseph A. Walsh: Each quarter moving forward.

Joseph A. Walsh: With the attendant benefit on <unk>, and <unk> and all the other bits that come with it.

Joseph A. Walsh: And as Youre aware, our strategy is to try to to build and rollout of our new center each year until we get our full platform built out.

Joseph A. Walsh: <unk>.

Joseph A. Walsh: We're on track to do that we know we now have reached Jonathan is amazing.

Joseph A. Walsh: Les is golden the hands on it and help ticket.

Joseph A. Walsh: So I think a big part of the first leg of this journey was us getting that 70,000 subscribers, getting a bunch of happy, engaged customers using the software. That's really hard to do. I just can't tell you how hard it is to do that.

Joseph A. Walsh: Another level so.

Joseph A. Walsh: I think a big part of the first leg of this journey.

Joseph A. Walsh: Getting that 70000 subs getting a bunch of happy engaged customers using software.

Joseph A. Walsh: Really hard to do I, just can't tell you how hard it is to do that.

Joseph A. Walsh: With that base now, though, we've got a happy group of growing customers. And, you know, obviously, we're adding more to it. We'll keep adding more to it. But we can now sell into that base two centers, three centers, four centers, and really be their software provider and build that out. That will provide a tremendous amount of growth. And while we will keep adding new subs.

Joseph A. Walsh: With that base now, though we've got a happy group of growing customers.

Joseph A. Walsh: Obviously, we are adding more to it we'll keep adding more to it but we can now sell into that base two centers three centers for centers and really be their software provider and build that out that will provide a tremendous amount of growth and while we will keep adding new sub.

Joseph A. Walsh: It won't be just relying on adding felt like it was when we had a single center.

Joseph A. Walsh: You know, it won't be just relying on adding stuff like it was when we had a single center. So, yeah, multi-centers are at the core of this, and, you know, I, For an analog, I think you can look at HubSpot and what they've done. You know, HubSpot is growing at a certain rate. When they had one hub, they were going a little faster when they had two hubs. But as they built out the full platform and started to get synergy between all the hubs, you saw the growth accelerate.

Joseph A. Walsh: So multi centers is at the core of this.

Joseph A. Walsh: For an analog I think you can look at hotspot and what they've done hotspot.

Joseph A. Walsh: Growing at a certain rate.

Joseph A. Walsh: When they had one hub.

Joseph A. Walsh: A little faster when they had two hubs, but as they build out the full platform and started to get synergy between all the hub.

Joseph A. Walsh: All of the growth accelerate there are obviously worked with above us in the market, where a hotspot customer.

Joseph A. Walsh: They're obviously working above us in the market. We're a HubSpot customer. Their ICP is about 2,000 employees, but we're, you know, we're sitting beneath them doing a very similar thing, and we admire what they've done.

Joseph A. Walsh: Our ICP is about 2000 employees.

Joseph A. Walsh: But where we are.

Joseph A. Walsh: Sure.

Joseph A. Walsh: We're sitting beneath them doing a very similar thing we admire what they've done.

Zachary Cummins: Okay. Thanks for that. And Joe, you kind of touched on it a little bit, but can you speak to the new technology leadership? I mean, with Reese Johnson coming on board, any meaningful changes to how you're thinking about your center strategy or any tweaks to the potential rollout plans with new leadership in place?

Speaker Change: Understood. Thanks for that and Joe you kind of touched on it a little bit but can.

Zachary Cummins: Can you speak to the new.

Zachary Cummins: Technology leadership.

Zachary Cummins: Reese, Jonathan coming on board any meaningful changes to how you're thinking about your center strategy or any tweaks to the potential rollout plans with new leadership in place.

Joseph A. Walsh: I don't have anything to report on now. Obviously, we brought in a world-class executive. He's come out of McAfee, Symantec, Forcepoint, some of these really incredible big brands, you know, he's really quite an accomplished guy. I'm really proud of the fact that someone of his level would want to join somebody like us here at Thryve. We probably couldn't attract, or have attracted, somebody like this, you know, two or three or four years ago.

Joe: I don't have anything to report on now obviously, we brought in a world class executive it.

Joseph A. Walsh: Come out of.

Joseph A. Walsh: Mcafee Symantec for some of these really incredible big brands and he is really quite an accomplished guy I'm real proud of the fact that someone of his level would want a joy.

Joseph A. Walsh: Like us here at <unk>, we probably couldnt attract have attracted somebody like this.

Joseph A. Walsh: Two or three or four years ago, but he sees the scale that we're at how big and how successful the company.

Joseph A. Walsh: But, you know, he sees the scale that we're at, how big and how successful the company is, and, candidly, how undervalued it is. He looks at it, and he says, "Wow, I want to be a part of that." So, he's looking at that, and he's looking at our software. He's been under the hood, kicking around. And he has come back and said he's impressed with what we've got. Like any new guy coming in, he's got new ideas, better ideas, ways he's going to take it to another level. And it's early days. I don't have anything to report on that right now.

Joseph A. Walsh: And candidly, how undervalued and it is obviously looked at it and he said.

Joseph A. Walsh: I want to be part of that so he's looking at that and you looked at our software. He has been under the hood kick in or out.

Joseph A. Walsh: Yes, it's come back and said he's impressed with what we've got.

Joseph A. Walsh: Like any new Guy and he's got new ideas better ideas ways, it's going to take it to another level and it's early days I don't have anything to report on that right at the moment, but directionally. The idea of building out. This big platform is still very much what we're doing and.

Zachary Cummins: But directionally, the idea of building out this big platform is still very much what we're doing, and we're having a lot of success, so we're not going to just change it right away. You know, we're going to want to keep building on that momentum.

Zachary Cummins: We're having a lot of success, so we're not going to.

Zachary Cummins: Change it right away or do you want to keep building on that momentum.

Zachary Cummins: Okay. Well, thanks for taking my questions and best of luck with the rest of the quarter.

Speaker Change: Understood well, thanks for taking my questions and best of luck with the rest of the quarter.

Speaker Change: Thank you.

Operator: Our next question comes from the line of Danielle Moore from CJS Securities. Please go ahead.

Zachary Cummins: Our next question comes from the line of Daniel Moore from CJS Securities. Please go ahead.

Danielle Moore: Thank you. Good morning, Joe. Good morning, Paul.

Danielle Moore: Thank you good morning, Joe Good morning, Paul.

Danielle Moore: I just wanted to go back to the well defined strategy of accelerating conversions from from marketing services marketing Center.

Danielle Moore: As we look at billings in Q1 for marketing services down 24% is that a good proxy for continued declines would you expect that to accelerate and just talk about your ability to maintain the line on margins does that does.

Danielle Moore: I just wanted to go back to the well-defined strategy of accelerating conversions from marketing services to marketing centers. If we look at billings in Q1 for marketing services down 24 percent, is that a good proxy for continued declines? Would you expect that to accelerate? And just talk about your ability to maintain the line on margins as that happens.

Danielle Moore: Good question.

Danielle Moore: We will continue to really guide you guys, because we know that.

Joseph A. Walsh: Good question. We will continue to really guide you guys because we know that the way revenue needs to be recognized at the time of publication, unless you study our pub schedule and know which books are big and which books are small and all that, you have no way to follow it. So, we will keep, you know, really giving you really prescriptive guidance so that you don't get caught offside by how this is moving.

Danielle Moore: The way revenue needs to be recognized at the time of publication unless you study our pub schedule and know, which books are big and which books are small and all of that you would have no way to follow it. So we will keep really giving you really a prescriptive guidance, though.

Joseph A. Walsh: You don't get caught offside on how this is moving.

Joseph A. Walsh: And as I mentioned earlier, we brought down the guidance a little bit for the year because we're having so much success, you know, working into that. Paul, I don't know if you want to, you know, jump in and offer any thoughts on how they should think about it longer term or how they should think about March.

Joseph A. Walsh: And then.

Paul: Mentioned earlier, we've brought down the guidance a little bit for the year, because we're having so much success working into that.

Joseph A. Walsh: Paul I don't know if you want to jump in and offer any any thoughts on.

Paul: How they should think about it longer term or how.

Paul: How they should think about margin.

Paul: Yes, I think it really.

Paul D. Rouse: Yeah, I think there really needs to be a paradigm shift in how we think about this. I think we should move away from thinking of margins and marketing services and look at margins, cash flow, and EBITDA from the full business. Because, you know, there are very high margins on the SAS side, so you're going to see, as we raised our guidance for EBITDA on the SAS side, you're going to see that go on continually. So you're gonna see continued declines in marketing services and growth in the SaaS EBITDA growth and margins. And Consolidate is gonna be pretty healthy.

Speaker Change: We need that needs to be a paradigm shift in how we think about this I think we should move away from thinking of margins in marketing services and margins and cash flow and EBITDA from the <unk> business.

Paul D. Rouse: Yes.

Paul D. Rouse: Theyre very high margins on the SaaS science, so youre going to see.

Paul D. Rouse: Raised our guidance on EBITDA on the SaaS side Youre going to see that go on continually.

Paul D. Rouse: So.

Paul D. Rouse: Youre going to see.

Paul D. Rouse: Continued declines in marketing services and growth on the SaaS EBITDA growth and margins and consolidate is going to be pretty healthy to just focus on marketing services I think loses the plot.

Paul D. Rouse: To just focus on marketing services, I think, loses the plot. So I think it's more important to look at the overall EBITDA from the entire company because we are aggressively moving it there. And does anybody really care where the EBITDA comes from? It's probably more important that it comes from the growth part of the business. So I think that's how I'm thinking about it. And I would encourage that, probably the approach that most should take. Thanks.

Paul D. Rouse: So I think it's more important to look at the overall EBITDA from the entire.

Paul D. Rouse: Our company because we are aggressively moving it there and does anybody really care, where the EBITDA comes from probably more important that it come from the growth part of the business. So I think that's how I'm thinking about it and I would encourage that probably the approach that most should take.

Danielle Moore: Makes perfect sense, Paul. I wouldn't, I couldn't agree more.

Speaker Change: Makes perfect sense, Paul I, Wouldnt I Couldnt agree more and it leads to my second question, which is.

Speaker Change: Talk about your confidence that we are approaching the trough for consolidated EBITDA in terms of the lines crossing.

Danielle Moore: When you think about the updated guide for fiscal 'twenty four.

Speaker Change: You think you can hold that line or start to grow in 'twenty five and beyond are there.

Speaker Change: And the publication schedule that could impact that again in 'twenty five just just and I'm not looking for.

Paul D. Rouse: And that leads to my second question, which is, you know, talking about your confidence that we're approaching the trough for consolidated EBITDA in terms of the lines crossing. When you think about the updated guide for fiscal 24, do you think you can hold that line or start to grow in 25 and beyond? Or are there, you know, shifts in the publication schedule that could impact that again in 25? I know I'm not looking for outward guidance but just trying to understand where we are in relation to those lines crossing and the overall growth.

Paul D. Rouse: Outward guidance, but just trying to understand where we are in relation to those lines crossing in the overall starting to grow thanks again.

Danielle Moore: Thanks again.

Speaker Change: Oh, you will take that.

Paul D. Rouse: Yeah, obviously that's what we're trying to do. You put your finger on a good point. We really have to look at the pub schedule, what's happening there, because while cash flow would remain strong, there could be blips in how EBITDA is recorded because of the publication schedule. But we're getting closer, and each year we get closer and closer to that, and we are focused like a laser beam on getting back to growth. I think I'll just answer it that way because we haven't really mapped out where 25, 26 are in real detail yet. A spike in the ground doesn't tell you what we expect quite yet.

Danielle Moore: Yes.

Paul D. Rouse: Obviously, that's what we're trying to do what.

Paul D. Rouse: You put your finger on a good point, we really have to look at the pop schedule, what's happening there because well cash flow would remain strong.

Paul D. Rouse: Could be blips and how EBITDA is recorded because the publication schedule, but we're getting closer and each year, we get closer and closer to that and we are focused like a laser beam in getting back to growth I think I'll just answer it that way because we haven't really mapped out $25 26 in real detail.

Paul D. Rouse: Two.

Speaker Change: This is <unk>.

Paul D. Rouse: A spike in the ground and just tell you what we expect quite yet.

Joseph A. Walsh: Yeah, Paul, I was with Gumbel on the... Oops, sorry. I would just add a little bit to the answer there. I mean, One of the things that I realize is challenging sometimes for people observing Thryve or investing or thinking of investing is that our metrics are not always perfectly smooth. Like they don't always go perfectly up and to the right. Part of that's because we're transforming this giant business into what we're creating, and it sometimes is lumpy and chunky and bounces around a little bit.

Paul D. Rouse: Yes.

Joseph A. Walsh: On the.

Speaker Change: Sorry, I would just add a little bit to the answer there.

Joseph A. Walsh: One of the things.

Joseph A. Walsh: That I realize it's challenging sometimes for people observing thrive or investing or thinking of investing is our metrics are not always perfectly smooth like they don't always go perfectly up into the right.

Joseph A. Walsh: That's because we're transforming.

Joseph A. Walsh: <unk> business into what we're creating and.

Joseph A. Walsh: Sometimes its lumpy and chunky it bounces around a little bit and if you back up and look at the overall trend over a period of years, you've got a rapid transition.

Joseph A. Walsh: And if you back up and look at the overall trend over a period of years, you've got a rapid transition. But within that, sometimes, you know, the metrics have bounced around a little bit, you know, whether it was one individual point or another. And I would just sort of ask people to take one step back and look at the grander picture.

Joseph A. Walsh: But within that sometimes.

Joseph A. Walsh: The metrics have bounced around a little bit whether it was one individual point or another and I would just sort of ask people to.

Joseph A. Walsh: Take one step back and look at the Grand or picture.

Joseph A. Walsh: You've got small businesses moving into the cloud, but they weren't before. Now they're going in. They're going in fast now. And that trend is really accelerating, and we're the category leader in that trend. And the transformation is happening, and it's happening very quickly. And, you know, our do-it-all small business software is very popular in the market, and that's what folks are investing in the future cash generation capabilities of the company are strong. So I don't know if you had a follow-up appointment there.

Joseph A. Walsh: Small business is moving into the cloud they weren't before now they're going into going into SaaS now that trend is really accelerating and where.

Joseph A. Walsh: The category leader in that trend playing it.

Joseph A. Walsh: And the transformation is happening and.

Joseph A. Walsh: It's happening very quickly.

Joseph A. Walsh: Our do it all small business software is very popular in the market.

Joseph A. Walsh: I think that.

Joseph A. Walsh: What folks are investing in the future cash generation capabilities of the company.

Joseph A. Walsh: Our strong so if.

Speaker Change: If you had a follow up there.

Danielle Moore: No, that was it. Clearly, the transition is accelerating and in the right direction. Just try to set the expectations more appropriately. Thank you again for the call.

Joseph A. Walsh: And.

Danielle Moore: That was that was it and clearly the transition is accelerating and in the right direction just trying to set the expectations are appropriately. Thank you again for the color.

Speaker Change: Alright, Thank you I think that wraps up for us.

Operator: All right, thank you. I think that wraps it up.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining us. You may now disconnect.

Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.

Speaker Change: Please wait the conference will begin shortly.

Operator: [music].

Operator: Okay.

Operator: Yes.

Operator: Yes.

Speaker Change: Thank you.

Operator: Okay.

Operator: Sure.

Operator: [music].

Operator: Yes.

Operator: Yes.

Operator: Okay.

Operator: Yes.

Operator: Sure.

Operator: [music].

Operator: Thanks.

Operator: [music].