Thryv Holdings Announces Strategic Acquisition of Keap

Rhea-AI Summary

Thryv Holdings (NASDAQ: THRY) has signed a definitive agreement to acquire Keap for $80 million in cash. Keap, a provider of CRM and marketing automation solutions for SMBs, generated approximately $85 million in revenue during the trailing twelve months through June 2024. The acquisition will establish Thryv as a market leader with total SaaS revenue exceeding $400 million in recurring revenue. The combined entity will have over 100k SaaS subscriptions, expanding Thryv's presence in North America, Europe, and Australia. The transaction is expected to close in Q4 2024, funded through equity financing and existing credit facility.

Positive

• Combined SaaS revenue to exceed $400 million in recurring high-margin revenue
• Acquisition adds over 100k SaaS subscriptions to customer base
• Geographic expansion into Europe and Australia markets
• Keap's $85 million revenue contribution from trailing twelve months
• Enhanced product offering through integration of AI-powered marketing tools
• Additional revenue streams through Keap's Partner Channel

Negative

• $80 million cash payment required for acquisition
• Potential shareholder dilution from planned equity financing
• Additional debt through credit facility borrowings

Insights

Financial Analyst

This strategic acquisition marks a significant transformation for Thryv, substantially expanding its SaaS footprint. The $80 million cash deal for Keap, which generates $85 million in trailing twelve-month revenue, appears reasonably priced at approximately 0.94x revenue multiple. The combined entity will create a formidable player in the SMB SaaS space with over 100,000 subscriptions and total SaaS revenue exceeding $400 million.

The deal's structure, leveraging equity financing and existing credit facilities, suggests careful financial planning. The high-margin recurring revenue model from Keap should positively impact Thryv's profitability profile. Key value drivers include operational synergies, expanded market reach through Keap's partner channels and enhanced cross-sell opportunities. The international expansion into Europe and Australia also diversifies geographic revenue streams.

Tech Expert

The integration of Keap's AI-powered marketing automation and CRM capabilities into Thryv's platform represents a significant technological advancement. This combination creates a comprehensive tech stack for SMBs, addressing important needs in customer relationship management, marketing automation and sales optimization. The merger of these technologies should accelerate product innovation and provide SMBs with more sophisticated tools typically reserved for larger enterprises.

The emphasis on AI-powered marketing tools positions the combined entity at the forefront of automation trends in SMB software. The complementary nature of the platforms suggests minimal integration challenges while offering substantial opportunities for feature enhancement and product development acceleration.

Acquisition Expected to Establish Industry Leadership with Total SaaS Revenue to Exceed $400 Million of Recurring High Margin Revenue

DALLAS--(BUSINESS WIRE)-- Thryv Holdings, Inc. (“Thryv” or the “Company”) (NASDAQ: THRY), a leading provider of SaaS solutions for small and medium-sized businesses (“SMBs”), announced today that the Company has signed a definitive agreement to acquire Infusion Software, Inc. (“Keap”), a prominent player in customer relationship management and marketing automation for SMBs.

ACQUISITION OVERVIEW AND STRATEGIC RATIONALE

Keap is a leading provider of solutions for customer relationship management, marketing automation, and sales optimization, primarily serving SMBs in North America, Australia, and Europe. The majority of Keap’s revenue is driven by its subscription-based recurring revenue model and extensive partnerships with various distribution channels.

Keap is directly aligned with Thryv’s SaaS strategy:

• Creates a market leader in SMB SaaS: The addition of Keap solidifies Thryv’s position as a leader in the SMB SaaS space, with a combined base of over 100k SaaS subscriptions. The expanded scale strengthens Thryv’s competitive edge relative to other major players in the market, offering a comprehensive suite of solutions for SMBs, including CRM, marketing automation and productivity tools.
• Diversification of Go-To-Market Motion and Geographic Expansion: Keap’s established Partner Channel is complementary and additive to Thryv’s existing direct go-to-market channels. The acquisition also expands Thryv's North American presence and drives growth in key international markets such as Europe and Australia.
• Enhances Thryv’s Software Roadmap: Keap’s marketing automation and CRM platform complements Thryv’s existing portfolio, enhancing the scale and cross-sell/upsell opportunities across Thryv’s subscriber base. Keap's AI-powered marketing tools will accelerate Thryv’s innovation roadmap, positioning the combined company as a leader in SMB software solutions.
• Presents Significant Synergies with Full Integration Planned: Keap is strongly aligned with Thryv’s software platform and delivers an improved high-margin revenue mix and multiple avenues for accelerating top-line growth.

MANAGEMENT COMMENTARY

"The agreement to acquire Keap is a transformative moment for Thryv," said Joe Walsh, CEO of Thryv Holdings. "This acquisition significantly enhances our SaaS business in recurring revenue and profitability profile by increasing our scale, subscriber count, all while strengthening our market presence in North America and beyond. Keap’s high-quality SMB sales and marketing automations will integrate seamlessly with Thryv’s platform offerings, creating powerful cross-sell and upsell opportunities while extending our go-to-market reach through strong channel partnerships."

Clate Mask, Keap’s CEO, added, "Thryv’s strong suite of solutions for SMBs aligns perfectly with our vision for helping businesses grow through automation and CRM tools. The business combination allows us to deliver more value to our customers, accelerate innovation, and enhance our offerings through Thryv’s extensive resources and expertise."

OVERVIEW OF ACQUISITION & FINANCING TERMS

• Total transaction value of $80 million, paid in cash, subject to customary adjustments.
• The transaction is expected to close in the fourth quarter of 2024, subject to satisfaction or waiver of closing conditions.
• Keap generated approximately $85 million of revenue during the trailing twelve months through June 30, 2024.
• The acquisition is expected to be funded by anticipated proceeds from an equity financing and borrowings under the Company’s existing credit facility.

ADVISORS

RBC Capital Markets, LLC acted as exclusive financial advisor and Akin Gump served as legal counsel to Thryv Holdings with respect to the Keap acquisition. AXOM Partners LLC served as exclusive financial advisor and Snell & Wilmer LLP served as legal counsel to Keap.

ABOUT THRYV HOLDINGS

Thryv is the provider of the leading do-it-all small business software platform that empowers small businesses to modernize how they work. It offers small business owners everything they need to communicate effectively, manage their day-to-day operations, and grow — all in one place — giving up to 20 hours back in their week. Thryv’s customizable platform features three centers: Thryv Command Center, a freemium central communications hub, Business Center™ and Marketing Center™. Approximately 300,000 businesses globally use Thryv to connect with local customers and take care of everything they do, start to finish. For more information, visit www.thryv.com.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements regarding the Company’s expectations relating to the proposed Keap acquisition, the timing and financing thereof, meeting the closing conditions for the proposed acquisition and the financial and operational benefits of the proposed acquisition. These forward-looking statements are provided under the “safe harbor” protection of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as we, Thryv or management “expects,” “anticipates,” “believes,” “estimates,” “intends,” “plans to,” “ought,” “could,” “will,” “should,” “likely,” “appears” or other similar words or phrases. These and other forward-looking statements are based on management’s current views and assumptions and involve risks and uncertainties that could significantly affect expected results. Although we believe that our expectations are reasonable, we can give no assurance that these expectations will prove to be correct, and actual results may vary materially. Results may be materially affected by factors such as: risks associated with acquisitions generally, potential volatility in the capital markets and their impact on the ability to complete the proposed financing necessary to pay the purchase price; failure to retain key management and employees; issues or delays in the successful integration of Keap with the Company, including incurring or experiencing unanticipated costs and/or delays or difficulties; future levels of revenues being lower than expected and costs being higher than expected; failure or inability to implement growth strategies in a timely manner; unfavorable reaction to the proposed acquisition by customers, competitors, suppliers and employees; conditions affecting the industry generally; and conditions in the securities market that are less favorable than expected. Except as required by law, the Company undertakes no obligation to update, amend or clarify any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, new information or circumstances or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241029754902/en/

Media Contact:

Julie Murphy

Thryv, Inc.

617-967-5426

Julie.murphy@thryv.com

Investor Contact:

Cameron Lessard

Vice President of Treasury, Corporate Development and Investor Relations

(214) 773-7022

cameron.lessard@thryv.com

Source: Thryv

FAQ

How much is Thryv (THRY) paying to acquire Keap?

Thryv Holdings is acquiring Keap for $80 million in cash, subject to customary adjustments.

When will Thryv's (THRY) acquisition of Keap close?

The acquisition is expected to close in the fourth quarter of 2024, subject to satisfaction of closing conditions.

What is Keap's revenue contribution to Thryv (THRY)?

Keap generated approximately $85 million in revenue during the trailing twelve months through June 30, 2024.

How will Thryv (THRY) finance the Keap acquisition?

The acquisition will be funded through a combination of equity financing and borrowings under the company's existing credit facility.