Earnings call transcript: Thryv Holdings Q2 2025 beats earnings expectations

Thryv Holdings (THRY) reported a robust Q2 2025, significantly surpassing EPS with $0.31 (vs. $0.264 forecast) and revenue at $210.47 million (vs. $203.86 million forecast), driven by 48% year-over-year SaaS revenue growth and a reduction in net debt to $274 million. The positive results initially propelled the stock up 8.4% pre-market, reflecting strong analyst sentiment and an 'undervalued' assessment by InvestingPro. Management emphasized a strategic pivot to fully exit the Marketing Services segment by 2028, focusing on high-margin SaaS expansion, increasing average revenue per user (ARPU) through multi-product adoption, and leveraging newfound financial flexibility post a critical 'pinch point' to fuel growth initiatives and potentially share buybacks.

Analysis

Thryv Holdings (THRY) delivered a strong Q2 2025, beating consensus on both revenue and earnings per share, with an EPS of $0.31 surpassing forecasts by 17.42%. The primary driver was the SaaS segment, which saw revenue accelerate by 48% year-over-year to $115 million, coupled with a 430 basis point expansion in adjusted gross margin to 74%. This performance underscores the successful execution of the company's strategic pivot towards a pure-play SaaS model, a transition set to complete with the planned exit from the legacy Marketing Services segment by 2028. Critically, management has declared it is "past the pinch point," a period of financial constraint, having reduced net debt to $274 million and prepaid amortization obligations through 2026. This creates significant financial flexibility for the first time in years. While full-year SaaS revenue guidance was modestly adjusted to $460-$465 million due to a deliberate reduction in less-profitable sales activities within the acquired Keap business, the company raised its full-year SaaS adjusted EBITDA guidance, signaling a disciplined focus on profitable growth. The go-forward strategy is centered on expanding average revenue per user (ARPU) through cross-selling, supported by a strong 103% net revenue retention rate and new products like the verticalized HVAC solution and the broader Workforce Center.

Key Decisions for Investors

• Given the strong SaaS momentum and improved financial flexibility, investors should evaluate Thryv as a de-risked transition story, focusing on the execution of its pure-play software strategy and its path toward higher-margin recurring revenue.
• Monitor management's capital allocation decisions closely, as the newfound free cash flow and commentary on a 'mispriced' stock suggest a share buyback program could be initiated, providing a potential near-term catalyst.
• Key performance indicators to track are the growth in multi-product adoption from the current 19% and ARPU expansion, as these are the primary levers for achieving the company's long-term growth targets.
• Consider the potential for a valuation re-rating should the company succeed in its GICS reclassification from Communication Services to Software, which would align it with a more appropriate peer group and increase visibility among tech-focused investors.