Thryv Holdings, Inc. (THRY) - Q2 2025 10-Q Summary
Business Context and Reporting Period
This summary covers the quarterly period ended June 30, 2025. Thryv Holdings, Inc. operates two primary segments: SaaS (software business management tools) and Marketing Services (print and digital solutions). The company is executing a strategic transition to convert Marketing Services clients to its SaaS platform, with a planned termination of Marketing Services by the end of 2028. The period includes the impact of the October 2024 acquisition of Keap, a CRM and marketing automation provider.
Key Financial Metrics
| Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 |
|---|---|---|---|---|
| Revenue | $210.5M | $224.1M | $391.8M | $457.7M |
| Gross Profit | $146.6M | $148.6M | $265.9M | $302.2M |
| Gross Margin | 69.7% | 66.3% | 67.9% | 66.0% |
| Operating Income | $29.5M | $31.3M | $26.5M | $62.5M |
| Net Income | $13.9M | $5.5M | $4.3M | $14.0M |
| Adjusted EBITDA | $51.2M | $59.3M | $72.1M | $113.4M |
| Cash from Operations (YTD) | $19.1M | $27.7M | $19.1M | $27.7M |
| Total Debt (Net) | $275.6M | $284.3M | $275.6M | $284.3M |
| Cash & Equivalents | $10.8M | $15.5M | $10.8M | $15.5M |
Material Changes vs. Prior Period
- Revenue Mix Shift: Total revenue declined 6.1% in Q2 and 14.4% YTD. This was driven by a 34.7% (Q2) and 45.8% (YTD) decline in Marketing Services revenue, partially offset by a 47.8% (Q2) and 48.7% (YTD) increase in SaaS revenue.
- Segment Performance:
- SaaS: Revenue growth was fueled by the Keap acquisition ($17.7M contribution in Q2) and the conversion of digital marketing clients to the SaaS platform.
- Marketing Services: Print revenue declined due to secular industry trends and publication cycle timing. Digital revenue dropped significantly due to the strategic conversion of clients to SaaS and increased competition.
- Profitability: Despite lower revenue, Net Income increased 151% in Q2 ($13.9M vs $5.5M) primarily due to a $6.6M loss on early extinguishment of debt in Q2 2024 that did not recur. Operating income decreased slightly in Q2 but dropped significantly YTD due to the revenue decline.
- Client Base: Total clients decreased 15% to 261,000. Marketing Services clients fell 46% to 199,000, while SaaS clients grew 25% to 106,000.
- Debt Reduction: The company reduced total debt by approximately $8.7M YTD through prepayments on the Term Loan.
Outlook, Risks, and Management Commentary
- Strategic Transition: Management continues to accelerate the conversion of Marketing Services clients to the Thryv Platform. While this reduces Marketing Services revenue, it is intended to drive long-term SaaS growth and profitability. The company plans to terminate Marketing Services by the end of 2028.
- Seasoned NRR: SaaS Seasoned Net Revenue Retention improved to 103% (up from 94% in Q2 2024), indicating strong retention and expansion among established SaaS clients.
- Liquidity: The company maintains compliance with debt covenants. As of June 30, 2025, approximately $14.0M was available under the ABL Facility. Management believes cash flows and available credit are sufficient for the next 12 months.
- Risks:
- Regulatory: The company is cooperating with an SEC investigation regarding the strategic conversion of clients from digital Marketing Services to SaaS.
- Tax: Significant uncertainty remains regarding tax positions, including a potential reduction of up to $15.6M in unrecognized tax benefits within the next 12 months. The company is also evaluating the impact of the "One Big Beautiful Bill Act" signed in July 2025.
- Churn: There is a risk that clients converted from Marketing Services to SaaS may churn at higher rates than organic SaaS clients, though current data suggests churn is in line with the broader SaaS base.
Key Investor Verification Points
- Conversion Churn Rates: Verify if the churn rate for clients converted from Marketing Services to SaaS remains stable or begins to exceed organic SaaS churn rates in future quarters.
- SEC Investigation Status: Monitor for updates on the SEC subpoena regarding client conversion practices and potential financial or reputational impacts.
- Tax Liability Resolution: Track the resolution of the IRS Section 199 and R&D tax credit disputes and the potential impact of the $15.6M reduction in unrecognized tax benefits on future effective tax rates.
- Marketing Services Termination: Assess the timeline and financial impact of the planned 2028 termination of the Marketing Services segment.
- Debt Covenant Compliance: Confirm continued compliance with the Total Net Leverage Ratio and SaaS Revenue minimums under the Term Loan, especially as Marketing Services revenue declines.