Thryv Sees Acceleration in Marketing Services Upgrades to SaaS Platform
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Insights
The announcement from Thryv Holdings regarding the accelerated adoption of its SaaS platform by legacy Marketing Services customers is a significant indicator of the company's strategic pivot towards a more scalable and high-margin business model. The shift from a traditional marketing service provider to a SaaS-based platform is a common trend in the tech industry, as it offers more predictable revenue streams and higher scalability. Thryv's focus on converting existing customers to its SaaS platform is a smart move, as it leverages established relationships and potentially reduces customer acquisition costs.
The expectation that SaaS revenues will account for nearly 40% of total revenue by year-end 2024 suggests a substantial transformation of the company's revenue composition. This could lead to a re-rating of the company's stock as investors often assign higher multiples to SaaS revenues due to their recurring nature and generally higher gross margins. The report of a 690 basis point increase in SaaS adjusted gross margins and a 500 basis point improvement in Net Dollar Retention (NDR) year-over-year further underlines the financial health and customer satisfaction with the platform.
Analyzing the financial implications of Thryv Holdings' transition towards a SaaS-centric business model, we observe potential for enhanced shareholder value. The transition is already yielding financial benefits, with a notable increase in SaaS adjusted gross margins and Net Dollar Retention. These metrics are critical as they reflect not only the profitability of the SaaS segment but also customer loyalty and the potential for upselling. The company's strategy to introduce additional 'centers' could further diversify its offerings and drive up the average revenue per user (ARPU), a key metric for SaaS companies.
Investors should note the company's investment in product and engineering to develop the center-based design, indicating a commitment to innovation and customer experience. The freemium model introduced with Thryv Command Center could serve as a customer acquisition strategy, potentially leading to upselling opportunities as businesses become more reliant on the platform's advanced features. The strategic focus on driving higher gross margins through the sale of multi-center platforms aligns with investor interests for sustainable and growing profit margins.
The center-based SaaS platform approach adopted by Thryv Holdings reflects a growing trend in the technology sector where businesses seek to consolidate various operational tools into a single, integrated solution. This not only enhances user experience by reducing complexity but also increases the stickiness of the platform, as customers become reliant on a suite of inter-operable services. Thryv's strategy to integrate functionalities such as customer relationship management, appointment scheduling and online review management into its Business Center is indicative of this trend.
The introduction of a 'forever-free' Thryv Command Center is particularly noteworthy. It serves as a unique market entry point that can disrupt conventional customer acquisition models by providing immediate value with no upfront cost. Such a model can lead to rapid user base expansion, which is crucial for a SaaS business. Moreover, the freemium model can be a double-edged sword, as it requires careful balancing to ensure that enough value is provided to entice upgrades without cannibalizing potential paid subscriptions.
- SaaS Subscriber Base Poised for Significant Expansion in Full Year 2024
- Upgrades from Marketing Services to account for
- SaaS Revenues to Account for Nearly
“We are pleased to announce our Marketing Services customers are increasingly moving to our SaaS platform,” said Thryv Chairman and CEO Joe Walsh. “This marks an important milestone for Thryv as we scale operations, establish new centers, and drive profitable SaaS growth.
“It symbolizes our commitment to delivering an unparalleled customer experience to small businesses and sets the stage for Thryv’s continued success in the SaaS landscape.”
Throughout Thryv’s evolution, the SaaS business has been acquiring customers through three distinct channels – upgrades offered to its Marketing Services client base by its sales organization; referrals from existing SaaS customers; and new SaaS sales made by its premise and inbound sales units. Today’s announcement underscores the growing importance of legacy customers upgrading from Marketing Services to SaaS. Many of Thryv’s Marketing Services customers are adopting the company’s new Marketing Center, which provides them the ability to run ads, generate leads, and analyze marketing performance.
The SaaS platform offers inter-operable centers that enable small businesses to automate and modernize a range of critical day-to-day functions.
“The center-based approach is the game-changer that helps us accelerate SaaS subscriber acquisition, enhance the value we provide to our customers, and streamline our overall business by eliminating legacy systems in our Marketing Services business,” Walsh said. “We encourage SaaS adoption by our small business customers because it enables them to become more competitive long-term. Importantly, by year-end 2024 we expect our high-margin SaaS business to account for approximately
Business Model Evolution
Thryv has been prioritizing product and engineering investments to develop the center-based design. The SaaS platform eliminates the hassle for small businesses (SMBs) who become frustrated using various point solutions that do not speak to each other. Customers upgrading to Thryv’s SaaS platform find they can more easily automate their business operations because functionality is integrated and day to day tasks can all be operated from a single screen with a single login.
Thryv’s SaaS platform currently features three centers that offer small businesses everything they need to communicate, grow, and manage their business: Marketing Center℠; Business Center℠; and the forever-free Thryv Command Center. The centers allow clients to explore different modules that help them to operate a modern business and communicate with their customers across their preferred channels. The company intends to offer additional future centers that will help SMBs automate additional parts of their operations, saving time and money and making them easier to do business with.
“We have worked with our clients for decades, building trusted relationships and a strong understanding of the challenges small businesses face,” said Grant Freeman, President of Thryv Holdings. “As we’ve seen for the last several quarters, the accelerated uptake of our centers presents an exciting opportunity for customers to modernize their business. It is our mission to continue making the upgrade easy and to help capitalize on the high-value proposition of our platform.”
Thryv’s Center-based SaaS Platform
- Business Center. The company’s flagship do-it-all small business platform, Thryv Business Center is designed to provide clients with everything necessary to streamline day-to-day business, including customer relationship management, appointment scheduling, estimate and invoice creation, and online review management.
- Thryv Command Center. This freemium offering serves as a communications hub, offering: a centralized inbox for email, social and text messages; a business line (voice calls and text); and a chat component for direct messages and group chats. It allows clients to combine customer conversations from 12+ channels into a single, easy-to-follow discussion thread, an industry first.
- Marketing Center. This integrated marketing and advertising platform provides the tools small businesses need to market and grow their business. It simplifies the process of running ads, boosting online presence, understanding customer audiences and making data-driven decisions.
As part of the Company's strategic evolution aimed at driving higher gross margins through its multi-center platform, the focus is on prioritizing the sale of such centers; including future centers slated for introduction in 2024 and beyond. This decision builds upon the Company’s financial success already achieved through its multi-center strategy, as evidenced by a 690 basis point year-over-year increase in SaaS adjusted gross margins and a 500 basis point year-over-year improvement in Net Dollar Retention (NDR) reported in the fourth quarter of 2023. By prioritizing center sales, Thryv seeks to amplify these results and unlock further value creation for investors and drive higher lifetime value for clients.
About Thryv Holdings, Inc.
Thryv Holdings, Inc. (NASDAQ:THRY) is a global software and marketing services company that empowers small- to medium-sized businesses (SMBs) to grow and modernize their operations so they can compete and win in today’s economy. Over 65,000 businesses use our award-winning SaaS platform, Thryv®, to manage their end-to-end operations, which has helped these organizations across the
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View source version on businesswire.com: https://www.businesswire.com/news/home/20240222255934/en/
Media Contact:
Julie Murphy
Thryv, Inc.
617.967.5426
Julie.murphy@thryv.com
Investor Contact:
Cameron Lessard
Thryv, Inc.
214.773.7022
Cameron.lessard@thryv.com
Source: Thryv
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