Thryv Holdings, Inc. (THRY) Bundle
Understanding Thryv Holdings, Inc. (THRY) Revenue Streams
Understanding Thryv Holdings, Inc.’s Revenue Streams
The revenue streams of Thryv Holdings, Inc. are primarily divided into two segments: Thryv Marketing Services and Thryv SaaS. Below is a detailed breakdown of these revenue sources and their performance.
Breakdown of Primary Revenue Sources
| Segment | Q3 2024 Revenue (in $ thousands) | Q3 2023 Revenue (in $ thousands) | Change ($ thousands) | Change (%) |
|---|---|---|---|---|
| Thryv Marketing Services | 92,797 | 116,462 | (23,665) | (20.3) |
| Thryv SaaS | 87,055 | 67,360 | 19,695 | 29.2 |
| Total Revenue | 179,852 | 183,822 | (3,970) | (2.2) |
For the nine months ended September 30, 2024, the revenue breakdown is as follows:
| Segment | 9M 2024 Revenue (in $ thousands) | 9M 2023 Revenue (in $ thousands) | Change ($ thousands) | Change (%) |
|---|---|---|---|---|
| Thryv Marketing Services | 398,389 | 491,051 | (92,662) | (18.9) |
| Thryv SaaS | 239,171 | 189,747 | 49,424 | 26.0 |
| Total Revenue | 637,560 | 680,798 | (43,238) | (6.4) |
Year-over-Year Revenue Growth Rate
In Q3 2024, total revenue decreased by 2.2% compared to Q3 2023. This decline was driven by a significant decrease in Marketing Services revenue, down by 20.3%, which was partially offset by a 29.2% increase in SaaS revenue.
For the nine-month period ending September 30, 2024, total revenue decreased by 6.4% year-over-year, attributed to an 18.9% decline in Marketing Services revenue, despite a 26.0% increase in SaaS revenue.
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 30, 2024, Thryv Marketing Services contributed 62.4% of total revenue, while Thryv SaaS accounted for 37.6%. This marks a shift in revenue dynamics, reflecting a growing reliance on SaaS solutions.
Analysis of Significant Changes in Revenue Streams
The decline in Marketing Services revenue is primarily due to the ongoing secular decline in print and digital media services, with digital revenue decreasing by 48.4% in Q3 2024 compared to Q3 2023. Conversely, SaaS revenue has shown robust growth, increasing as small and medium-sized businesses (SMBs) transition to cloud-based solutions, with a total increase of $49.4 million for the nine months ended September 30, 2024.
In summary, the strategic shift toward SaaS offerings and away from traditional marketing services is evident, reflecting broader market trends and the company’s operational adjustments.
A Deep Dive into Thryv Holdings, Inc. (THRY) Profitability
Profitability Metrics
Gross Profit
For the nine months ended September 30, 2024, the gross profit was $414.2 million, representing a gross margin of 65.0%. This is a decrease from the $418.5 million gross profit for the same period in 2023, which had a gross margin of 61.5%. For the three months ended September 30, 2024, gross profit increased to $112.0 million, with a gross margin of 62.3%, up from $103.6 million and 56.4% respectively in the previous year.
Operating Profit and Loss
Operating loss for the nine months ended September 30, 2024 was ($26.1 million), compared to an operating income of $42.1 million in 2023. For the three months ended September 30, 2024, the operating loss was ($88.6 million), compared to ($19.4 million) in the same period of 2023.
Net Profit
The net loss for the nine months ended September 30, 2024 was ($82.1 million), compared to a net loss of ($1.8 million) for the same period in 2023. The net loss for the three months ended September 30, 2024 was ($96.1 million), compared to ($27.0 million) in 2023.
Trends in Profitability Over Time
The following table summarizes the profitability trends over the past two years:
| Metric | 2024 (Nine Months) | 2023 (Nine Months) | 2024 (Three Months) | 2023 (Three Months) |
|---|---|---|---|---|
| Gross Profit | $414.2 million | $418.5 million | $111.9 million | $103.6 million |
| Gross Margin | 65.0% | 61.5% | 62.3% | 56.4% |
| Operating Income (Loss) | ($26.1 million) | $42.1 million | ($88.6 million) | ($19.4 million) |
| Net Income (Loss) | ($82.1 million) | ($1.8 million) | ($96.1 million) | ($27.0 million) |
Comparison of Profitability Ratios with Industry Averages
The industry average gross margin for similar companies is approximately 60%, making the company's gross margin of 65.0% favorable. However, the operating margin of (4.1%) is below the industry average of approximately 10%. The net margin is also significantly lower than the industry average of 5%.
Analysis of Operational Efficiency
The company has implemented various cost management initiatives leading to a 14.8% reduction in the cost of services, amounting to $223.4 million for the nine months ended September 30, 2024, compared to $262.3 million in 2023. This has contributed to an increase in gross margin by 350 basis points.
The following table outlines the key costs and efficiency metrics:
| Cost Category | 2024 (Nine Months) | 2023 (Nine Months) | Change (%) |
|---|---|---|---|
| Cost of Services | $223.4 million | $262.3 million | (14.8%) |
| Sales and Marketing Expenses | $201.98 million | $226.78 million | (10.9%) |
| General and Administrative Expenses | $155.2 million | $149.6 million | 3.7% |
Debt vs. Equity: How Thryv Holdings, Inc. (THRY) Finances Its Growth
Debt vs. Equity: How Thryv Holdings, Inc. Finances Its Growth
Debt Levels
As of September 30, 2024, the company reported total debt obligations of $307.8 million, which includes:
- New Term Loan: $297.5 million (maturing on May 1, 2029)
- New ABL Facility: $21.9 million (maturing on May 1, 2028)
The previous term loan (Prior Term Loan) was fully refinanced, and as of the same date, the company had no outstanding balance of the Prior Term Loan, which had been $309.4 million as of December 31, 2023.
Debt-to-Equity Ratio
The debt-to-equity ratio as of September 30, 2024, is calculated as follows:
Debt-to-Equity Ratio = Total Debt / Total Stockholders' Equity
Total stockholders' equity stood at $94.5 million as of September 30, 2024. Therefore, the debt-to-equity ratio is:
Debt-to-Equity Ratio = $307.8 million / $94.5 million = 3.26
This ratio is significantly higher than the industry average, which typically ranges from 1.0 to 1.5, indicating a higher reliance on debt financing compared to equity.
Recent Debt Issuances
On May 1, 2024, the company entered into a new Term Loan Credit Agreement for $350 million, primarily to refinance the previous term loan and cover associated fees. Of this amount, 31.8% was held by a related party.
Credit Ratings
The company does not publicly disclose specific credit ratings; however, the terms of the New Term Loan indicate a relatively high interest rate, with SOFR plus 6.75% for SOFR loans and 5.75% for base rate loans, suggesting a higher risk profile.
Balancing Debt Financing and Equity Funding
To finance its operations and growth, the company has utilized both debt and equity funding. Recent equity offerings include:
- Underwritten public offering of 5,715,000 shares, generating proceeds of $76 million prior to expenses.
This strategic approach indicates a balance between leveraging debt for immediate capital needs while also raising equity to maintain financial flexibility and support long-term growth initiatives.
| Debt Type | Amount (in millions) | Maturity Date | Interest Rate |
|---|---|---|---|
| New Term Loan | $297.5 | May 1, 2029 | SOFR + 6.75% |
| New ABL Facility | $21.9 | May 1, 2028 | SOFR + 2.50% - 2.75% |
As of September 30, 2024, the company’s financial strategy reflects a significant reliance on debt, with a debt-to-equity ratio of 3.26, indicating a higher risk profile compared to industry peers.
Assessing Thryv Holdings, Inc. (THRY) Liquidity
Assessing Thryv Holdings, Inc.'s Liquidity
Current and Quick Ratios
The current ratio for Thryv Holdings, Inc. as of September 30, 2024, is 1.04, calculated by dividing total current assets of $230.9 million by total current liabilities of $221.9 million. The quick ratio, which excludes inventories, is approximately 1.04, indicating a stable liquidity position.
Analysis of Working Capital Trends
The working capital, which is the difference between current assets and current liabilities, stands at approximately $8.99 million as of September 30, 2024. This reflects a decrease from the previous period, where the working capital was $5.68 million as of December 31, 2023, indicating a trend of tightening liquidity.
Cash Flow Statements Overview
The cash flow from operating activities decreased significantly to $63.6 million for the nine months ended September 30, 2024, down from $103.6 million in the same period of 2023. This represents a decrease of 38.6%, primarily due to a decline in sales and changes in working capital.
Cash flows used in investing activities for the same period were ($24.7 million), a decrease from ($32.0 million) in 2023, while cash flows used in financing activities were ($45.4 million), down from ($72.1 million) in 2023.
| Cash Flow Activity | 2024 (in thousands) | 2023 (in thousands) | Change (in thousands) |
|---|---|---|---|
| Operating Activities | $63,640 | $103,648 | ($40,008) |
| Investing Activities | ($24,730) | ($32,032) | $7,302 |
| Financing Activities | ($45,446) | ($72,138) | $26,692 |
| Net Change in Cash | ($6,656) | ($1,229) | ($5,427) |
Potential Liquidity Concerns or Strengths
The decrease in cash flow from operating activities signals potential liquidity concerns, particularly given the decline in revenues and increased tax payments. However, the current and quick ratios suggest that the company maintains a sufficient liquidity position to cover its short-term obligations. As of September 30, 2024, cash and cash equivalents totaled $12.5 million, down from $18.2 million at the end of 2023.
Is Thryv Holdings, Inc. (THRY) Overvalued or Undervalued?
Valuation Analysis
When assessing the valuation of Thryv Holdings, Inc., key financial metrics such as the price-to-earnings (P/E) ratio, price-to-book (P/B) ratio, and enterprise value-to-EBITDA (EV/EBITDA) ratio are critical for investors.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at −2.65, indicating that the company is currently not profitable, as the net loss per share is $2.65.
Price-to-Book (P/B) Ratio
The price-to-book ratio is calculated at approximately 6.99, based on the book value of equity, which is $94.532 million.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value is reported at $726.8 million with an EBITDA of $133.051 million, resulting in an EV/EBITDA ratio of approximately 5.46.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated significantly, reaching a high of $15.50 and a low of $8.00. As of the last closing, the stock price is at $10.25.
Dividend Yield and Payout Ratios
Thryv Holdings does not currently pay a dividend, hence the dividend yield is 0%. Consequently, the payout ratio is also 0%.
Analyst Consensus on Stock Valuation
Current analyst consensus indicates a 'Hold' rating, with a target price of $12.00, reflecting moderate expectations for the stock's performance in the near term.
| Metric | Value |
|---|---|
| P/E Ratio | −2.65 |
| P/B Ratio | 6.99 |
| EV/EBITDA Ratio | 5.46 |
| 12-Month High | $15.50 |
| 12-Month Low | $8.00 |
| Current Stock Price | $10.25 |
| Dividend Yield | 0% |
| Payout Ratio | 0% |
| Analyst Consensus | Hold |
| Target Price | $12.00 |
Key Risks Facing Thryv Holdings, Inc. (THRY)
Key Risks Facing Thryv Holdings, Inc.
Thryv Holdings, Inc. faces several internal and external risks that could impact its financial health in 2024. These risks include industry competition, regulatory changes, and market conditions.
Industry Competition
The company operates in a highly competitive environment, particularly within its Marketing Services and SaaS segments. For the nine months ended September 30, 2024, revenue from Thryv Marketing Services decreased by $92.7 million, or 18.9%, compared to the same period in 2023. This decline was primarily due to increased competition from larger businesses such as Google and Facebook, which have significant resources and market presence.
Regulatory Changes
Changes in regulations affecting digital marketing and data privacy laws can pose significant risks. Compliance costs could increase, and failure to adhere to new regulations may lead to penalties that could impact financial performance.
Market Conditions
Market conditions have shown volatility, affecting demand for both print and digital marketing services. For instance, digital revenue decreased by $118 million, or 38.7%, for the nine months ended September 30, 2024, compared to the same period in 2023. This decline was attributed to strategic shifts and declining client base.
Operational Risks
Operational risks include challenges in integrating new acquisitions and managing costs effectively. The acquisition of Keap for $80 million could introduce integration complexities.
Financial Risks
Financially, the company reported a net loss of $96.1 million for the three months ended September 30, 2024, compared to a net loss of $27.0 million for the same period in 2023. Additionally, the company's effective tax rate was (8.8%) for the nine months ended September 30, 2024.
Strategic Risks
Strategically, the shift towards a SaaS model may present challenges in customer retention and acquisition. The company reported an increase in SaaS revenue of $49.4 million, or 26.0%, for the nine months ended September 30, 2024, indicating a positive trend, but ongoing competition remains a concern.
Mitigation Strategies
To mitigate these risks, the company has implemented cost-saving initiatives, reducing costs by $38.9 million, or 14.8%, for the nine months ended September 30, 2024. This includes strategic reductions in printing and distribution costs, as well as employee-related expenses. Moreover, Thryv continues to focus on enhancing its SaaS offerings to capture a larger market share in the SMB sector.
| Risk Factor | Description | Recent Impact |
|---|---|---|
| Industry Competition | Increased competition from larger firms | Marketing Services revenue decreased by $92.7 million (18.9%) |
| Regulatory Changes | Potential compliance costs and penalties | Uncertain impact on operational costs |
| Market Conditions | Volatility affecting demand for services | Digital revenue decreased by $118 million (38.7%) |
| Operational Risks | Challenges in integrating acquisitions | Acquisition of Keap for $80 million |
| Financial Risks | Increased net losses impacting cash flow | Net loss of $96.1 million in Q3 2024 |
| Strategic Risks | Transition towards SaaS model | SaaS revenue increased by $49.4 million (26.0%) |
Future Growth Prospects for Thryv Holdings, Inc. (THRY)
Future Growth Prospects for Thryv Holdings, Inc.
Analysis of Key Growth Drivers
The company is focusing on several key growth drivers to enhance its market position:
- Product Innovations: The introduction of new features in its SaaS offerings, such as enhanced customer relationship management tools and AI-driven analytics, aims to attract more small and medium-sized businesses (SMBs).
- Market Expansions: The company is expanding its footprint by targeting new geographical markets and increasing its presence in existing ones, particularly within the SMB sector.
- Acquisitions: The recent acquisition of Infusion Software, Inc. (Keap) for $80 million is expected to bolster its capabilities in customer relationship management and email marketing solutions.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth is projected based on the following estimates:
- For the nine months ended September 30, 2024, total revenue was $637.6 million, down from $680.8 million in 2023, reflecting a decrease of 6.4%.
- Thryv SaaS revenue increased by 26.0% to $239.2 million for the nine months ended September 30, 2024, compared to $189.7 million in 2023.
- For the three months ended September 30, 2024, SaaS revenue increased by 29.2% to $87.1 million from $67.4 million in the same period of 2023.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company is leveraging strategic initiatives to drive growth:
- Partnerships: Collaborations with technology partners to enhance product offerings and improve client onboarding processes.
- Marketing Strategies: Implementing targeted marketing strategies aimed at higher-value clients, which have shown promising results in client acquisition.
Competitive Advantages That Position the Company for Growth
The company enjoys several competitive advantages that could support its growth trajectory:
- Strong Brand Recognition: A well-established brand in the SMB segment helps in customer retention and acquisition.
- Integrated Solutions: Offering a comprehensive suite of SaaS solutions that cater to various business needs, which enhances customer loyalty.
- Cost Management: Successful cost-saving initiatives have reduced operating expenses by 10.9% year-over-year, which improves overall profitability.
Financial Data Overview
| Metric | 2024 (YTD) | 2023 (YTD) | Change (%) |
|---|---|---|---|
| Total Revenue | $637.6 million | $680.8 million | -6.4% |
| Thryv SaaS Revenue | $239.2 million | $189.7 million | +26.0% |
| Operating Loss | $26.1 million | $42.1 million | -38.1% |
| Adjusted EBITDA | $133.1 million | $135.2 million | -1.6% |
| Net Loss | $82.1 million | $1.8 million | +4500.0% |
With these strategies and financial metrics, the company is poised to capitalize on growth opportunities in the evolving market landscape.
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Resources:
- Thryv Holdings, Inc. (THRY) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Thryv Holdings, Inc. (THRY)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Thryv Holdings, Inc. (THRY)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.