Thryv (THRY) Q2 SaaS Revenue Jumps 48%

Key Points

• - Thryv beat both revenue and earnings expectations, reporting GAAP revenue of $210.5 million and GAAP EPS of $0.31 in Q2 2025.

• - SaaS revenue surged 47.8% year over year in Q2 2025, making up approximately 54.6% of total revenue. Marketing Services revenue dropped 34.7% year over year.

• - The company raised its full-year 2025 Adjusted EBITDA outlook on strong SaaS growth, but legacy segment contraction continues to weigh on consolidated results.

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Thryv (NASDAQ:THRY), a digital marketing and business management software provider focused on small and medium-sized businesses, released its second quarter 2025 earnings results on July 30, 2025. The most notable news was stronger-than-expected GAAP revenue and earnings. The company reported GAAP revenue of $210.5 million, above the $205.4 million consensus estimate, and diluted earnings per share (GAAP) of $0.31 versus the projected $0.29. While SaaS adoption continued to expand, Thryv’s legacy Marketing Services segment saw an accelerating decline in revenue and profit. Overall, the quarter showed solid operational execution, outperformance versus analyst expectations on a GAAP basis, and evidence of a successful pivot toward recurring revenue software.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Understanding Thryv’s Business and Recent Focus

Thryv provides cloud-based business management solutions for small and medium-sized businesses (SMBs). Its core platform helps SMBs handle marketing, payments, scheduling, customer communication, and business operations all in one place. Traditionally, Thryv offered printed and digital marketing services, but it is now transitioning to a Subscription-based SaaS model. This shift aims to create stable, recurring revenue and focus on digital transformation as SMBs move more business tasks online.

The company’s recent business strategy has centered on accelerating the SaaS transition, reducing dependency on its declining legacy Marketing Services, leveraging an extensive sales force, and integrating acquisitions. Management considers the SaaS pivot, growth of its sales force effectiveness, successful onboarding of acquired businesses like Keap (a SaaS marketing automation platform), and international expansion to be its key success drivers.

Second Quarter Highlights: SaaS Gains and Legacy Headwinds

The standout trend was the continued surge in SaaS subscription business. SaaS revenue rose almost 48% year over year to $115.0 million, helped by contributions from the Keap acquisition. Excluding Keap, SaaS organic revenue grew 25%. SaaS made up approximately 54.6% of total company revenue. SaaS accounted for about 54.6% of total company revenue, up from approximately 34.7% in Q2 2024. The total SaaS client base reached 106,000, including 92,000 clients excluding Keap, reflecting ongoing subscriber growth and expansion within the existing customer pool.

SaaS profitability metrics reached new highs. Adjusted EBITDA in the segment was $23.4 million, with a margin of 20.3%, up from 13.1% the previous year. Gross margin expanded to 72.1%. Average monthly revenue per SaaS customer (ARPU) was $352, supported by product bundling and cross-sell efforts. Clients who used multiple software modules showed higher retention and lower churn, with seasoned net revenue retention hitting a company-record 103%—an important measure meaning revenue from existing clients generally held steady or increased over the year, after accounting for any losses or downgrades.

The integration of Keap continued to progress smoothly, adding $17.7 million to SaaS revenue and expanding newly acquired international reach. Management highlighted operational, sales, and product integration milestones within the Keap business, such as cross-leveraging partner channels and enhancing automation tool offerings. The SaaS transition plan also included refocusing the sales force toward gaining more revenue from current clients, rather than purely acquiring new business.

In contrast to growing SaaS performance, the Marketing Services segment accelerated its decline. Marketing Services revenue dropped 35% year over year to $95.5 million, and adjusted EBITDA (non-GAAP) fell over 43% to $27.8 million, reflecting the deliberate phase-out of this legacy business. Cost controls helped keep the adjusted EBITDA margin in that segment above 29%, but Thryv expects to completely exit Marketing Services by the end of 2028 as it completes converting those clients to its software platform.

On a consolidated basis, total company revenue (GAAP) declined 6.1% year over year, but this masked the underlying SaaS growth as the drag from legacy business overwhelmed the headline numbers. Despite the fall in total revenue, net income (GAAP) more than doubled to $13.9 million, translating to the higher $0.31 GAAP EPS result. Adjusted EBITDA for the entire company was $51.2 million, with a margin of 24.3%.

The company reported $19.1 million in net cash from operations (GAAP) for the first half of 2025. Term debt was reduced by $26 million, improving the company’s leverage profile. Cash and cash equivalents stood at $10.8 million as of June 30, 2025.

Operational initiatives around multi-product adoption led to better customer stickiness and lifetime value. ThryvPay payment volume grew 13% to $90 million. There were no new dividends declared, as Thryv does not currently pay a dividend.

Looking Ahead: Guidance and Trends to Watch

Thryv raised its Adjusted EBITDA guidance for full-year 2025, targeting SaaS Adjusted EBITDA (non-GAAP) of $70.5 million to $73.5 million for the full year, up from $34.2 million in the first half. The company also guided for SaaS revenue of $460.0 million to $465.0 million for the year, a notable expected increase from $226.1 million earned in the first half. For Q3 2025, SaaS revenue is forecast at $116.0 million to $117.0 million, and Marketing Services revenue is expected to fall further, to between $84.0 million and $85.0 million.

Leadership highlighted that free cash flow is expected to ramp up in the second half as the SaaS business grows as a share of total revenue. Thryv expects leverage ratios to improve and reiterated its intention to wind down the legacy Marketing Services business by 2028, focusing entirely on SaaS. The company acknowledged market competition and some pricing pressure in the industry, but as of this reporting period, management did not point to any major macroeconomic headwinds. Areas for investors to monitor in the coming quarters include the pace of net new SaaS customer growth, efficiency from cross-selling expansion, the sustainability of improving margins, and continued integration of acquisitions like Keap.

THRY does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool recommends Thryv. The Motley Fool has a disclosure policy.