Operator: Ladies and gentlemen, thank you for joining us, and welcome to the Thryv First Quarter 2026 Earnings Call. [Operator Instructions] I will now hand the conference over to Cameron Lessard, Senior Vice President, Corporate Development and Strategy. Cameron, please go ahead.

Cameron Lessard: Good morning, and thank you for joining us for Thryv Holdings First Quarter 2026 Earnings Conference Call. With me today are Joe Walsh, Chairman and Chief Executive Officer; and Paul Rouse, Chief Financial Officer. Before we begin, I’d like to remind you that today’s call may contain forward-looking statements, including statements about our business outlook and strategy, future financial results, growth prospects and any other matters that are not historical facts. These statements are subject to risks and uncertainties, and our actual results may differ materially. Please refer to our most recent filings with the SEC for a discussion of factors that could cause our results to differ materially from these forward-looking statements.

We do not undertake any obligation to update these statements. In addition, today’s discussion will include references to non-GAAP financial measures. Please refer to the press release we issued this morning for a reconciliation of our non-GAAP measures to the most comparable GAAP measures. The press release and accompanying investor presentation are available in the Investor Relations section of our website at investor.thryv.com. With that, I’ll turn the call over to Joe Walsh.

Joe Walsh: Thank you, Cameron, and good morning, everyone. I will highlight our first quarter results and key trends and hand it over to Paul Rouse to walk you through the numbers, and then Cameron will take you through some of our forward guidance. We had a strong quarter. SaaS revenue of $117 million came in ahead of expectations, and Marketing Services outperformed as well, resulting in total company adjusted EBITDA that beat our guidance. Quality customers now represent 70% of revenue and annualized client spend has eclipsed $4,500. We are now a 70% SaaS revenue company. A few years ago, we were a marketing services business with software on the side. Today, that equation has fully flipped, and it happened because small businesses are telling us through their buying behavior that they need what we offer.

The clearest signal of that is Marketing Center, which grew around 30% year-over-year in Q1. Small businesses want to get found online, drive high-quality leads and convert those leads into lasting customer relationships. That’s exactly what Marketing Center does, and the growth reflects that fit. It is the centerpiece of our Market, Sell, Grow strategy, and its continued momentum validates that strategy is working. We’re also seeing strong results in our upmarket motion, attracting and winning larger small businesses than we’ve historically served. These are clients with more complexity, more needs and more to spend, and that’s showing up directly in our numbers. ARPU grew to $378 a month, up 13% year-over-year with annualized client spend eclipsing $4,500, a direct result of serving higher-caliber clients.

And because larger businesses engage more deeply and expand their spend over time and stay longer, the lifetime value of these clients is fundamentally better. You’ll remember, we’ve talked about moving from 4,000 to 8,000 over the next kind of 4 or 5 years. We feel strongly that, that upmarket move is gaining traction at this point. Quality customer count grew 6% year-over-year and now represents 70% of SaaS revenue, up from 62% a year ago. That trajectory tells you the mix shift is working, and it’s a dynamic we’re leaning into deliberately. I also want to touch on AI because the early results are genuinely encouraging. On prior earnings calls, we shared that we were rolling out a suite of AI-powered capabilities across the platform, and it’s validating to come back this quarter and report that the engagement numbers are really strong.

AI image generation, AI lead scoring and our AI guided dashboard are all seeing strong early adoption since rollout. AI review responses, our AI website builder and AI caption round out the suite and are performing well, too. These are not features that we are still testing. They’re live now. They’re being used by clients who are engaging with them. That matters because AI embedded in the daily workflow is what makes Thryv stickier and more valuable over time. We said we were building it, it’s built and it’s working. In sum, the business is on solid footing. Our core product is growing. Our client base is consistently upgrading toward higher-value relationships and our AI rollout is exceeding early expectations. That’s the story of Q1. Now, I’d like to hand it over to Paul Rouse and Cameron to walk you through the numbers and update you on our guidance.

Paul Rouse: Thanks, Joe. Let’s dive into the numbers. SaaS reported revenue was $116.7 million in the first quarter, representing an increase of 5% year-over-year and exceeding guidance. SaaS adjusted gross margin was 67% and SaaS adjusted EBITDA was $10.8 million in the first quarter, resulting in an adjusted EBITDA margin of 9%. Adjusted gross margin in the first quarter was diluted by the strategic upgrade of our low-margin large digital agency customers from our marketing services base of customers on to SaaS with no change in pricing. Historically, we lacked an upgrade path for these clients with Business Center, but market so grow now provides the motion. With key marketing automations representing a significant upsell opportunity that will drive improved economics over time.

This gross margin compression was the primary factor of adjusted EBITDA coming in below guidance for the quarter. We view it as a deliberate near-term investment in a previously underleveraged segment of our customer base. In the first quarter, SaaS ARPU reached $378, an increase of 13% year-over-year. We ended the quarter with 96,000 SaaS subscribers. Seasoned NRR of 93% represents the natural attrition of smaller, lower spend clients, within our base. Importantly, churn among our high-value clients has been trending favorably, underscoring the effectiveness of our client experience initiatives and our confidence in long-term health of the business. Multiproduct adoption continues to accelerate in the first quarter. Clients with 2 or more SaaS products grew to 26,000 or 30% of our base compared to 24,000 or 25% a year ago.

Moving over to Marketing Services. First quarter revenue was $50.9 million and above guidance. First quarter Marketing Services adjusted EBITDA was $13.2 million, resulting in an adjusted EBITDA margin of 26%. As anticipated, this performance reflects the natural cadence of our print publication schedule, which is weighed towards the second half of the year from a revenue recognition standpoint. Importantly, this time dynamic has no impact on billings or free cash flow generation as our book-over-book decline patterns have remained consistent and predictable over time. First quarter marketing services billings totaled $54.5 million, down 33% year-over-year, reflecting the intentional shift in our strategy, as we continue to initiate upgrades of legacy digital marketing services products for clients to our SaaS platform.

The decline will persist, but at a managed pace. We remain on track to exit marketing services by 2028 with cash flows lasting through 2030, ensuring strong liquidity as we fully transform to a pure-play software business. We ended the first quarter with net debt of $258 million, bringing our leverage ratio to 1.7x. Now, I’ll turn the call over to Cameron to walk through the guidance.

Cameron Lessard: Thanks, Paul. Let’s dive into guidance. For the second quarter, we expect SaaS revenue in the range of $114 million to $115 million. For the full year, we are raising the low end of our SaaS revenue to a range of $463 million to $471 million. For the second quarter, we expect SaaS adjusted EBITDA in a range of $12 million to $13 million. For the full year, we are maintaining SaaS adjusted EBITDA guidance to a range of $70 million to $75 million. For the full year, we are raising our marketing services revenue to be in the range of $157 million to $163 million. For the full year, we are maintaining Marketing Services adjusted EBITDA guidance to a range of $30 million to $35 million. One thing worth keeping in mind as you model the year, Q2 carries a lighter print publication schedule relative to other quarters, which will create some timing variation in EBITDA due to the cadence of revenue recognition.

This has no impact on billings or free cash flow and as print volume ramps in the back half of the year, Marketing Services EBITDA will reflect that accordingly. The quarterly phasing is outlined in the investor presentation and the full year range is unchanged. Before we close, I just want to step back for a second. This transformation is working. SaaS is now 70% of our revenue, something that felt like a distant goal not long ago. And as we look towards 2027, we expect to return to overall top line growth. For those of you who have been watching the story and waiting for the other side, we’re nearly there. The business is at a genuine inflection point. We’re no longer managing around decline. We’re leaning into growth, advancing our AI initiatives and building something we’re really proud of.

We appreciate your continued support and your belief in what we’re building. We look forward to updating you next quarter. Thank you. Operator, let’s move to questions.

Operator: [Operator Instructions] Your first question comes from the line of Scott Berg with Needham & Company.

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Scott Berg: Joe, I guess first question is, you’re talking about your move upmarket that you seem on the SaaS side, at least that you seem to be continually more positive on. Any anecdotal evidence on how many more modules those customers are taking or how much larger the ARPU of your larger kind of customer segment is? I think that would be helpful if you have any details there.

Joe Walsh: Sure. Thanks, Scott, for the question. We are moving upmarket. Our overarching plan here is to move our ARPU from $4,000 to $8,000 and we’re making steady progress, 13% ARPU growth in the most recent period. As with everything with us, our metrics don’t move in a perfect straight line because there’s a lot of noise as we continue to transition the old business away. But we’re having a lot of success moving upmarket and we’re doing it in a few ways. Firstly, and maybe most importantly, we put very sophisticated sales automation in place over the last few years, and we’re targeting all of our sales efforts at larger businesses. We literally have a list of who we want you to go and talk to. And what that means is that rather than selling the solopreneur who maybe has $300,000 or $400,000 of annual revenue, we’re selling a midsized business that has $1 million of revenue and 12 employees or something.

And it makes a big difference for us in terms of retention, their willingness and ability to pay and their ability to buy more from us over time. So, that is actually the big story here is if you look at quality customers, and I know that there’s noise in our gross number of customers. And that’s because we’re transitioning legacy customers and legacy systems as we wind down this gigantic marketing services business, it’s bringing over some subscale customers. And sometimes we’re able to get those customers moving and engage with software and buying more and heading in the right direction. And sometimes they churn out. And so those — that process is a little bit noisy, which is why gross numbers haven’t been a perfect measure. But if you look at quality customers, it’s steadily growing.

And ARPU is pretty steadily growing. Again, it bounces around a little bit, but the overall direction is up. So, as far as your question about modules, we’re increasingly having more and more success with people buying multiple products from us and becoming stickier. You see that number moving up. And these bigger businesses, a lot of times are coming in bigger to begin with. So, if you look at our new sales velocity, they tend to be bigger. So, you got your finger on the story. It’s us moving away from solopreneurs, moving to bigger businesses and all the noise that, that creates, Scott.

Scott Berg: Understood. And then Joe, you talked about the engagement story and some of your AI functionalities improving. I think we’re all looking for evidence amongst different enterprise software vendors and how customers are leveraging these technologies through these vendors out there today. As you have more experience or your customers have more experience with this functionality, how should we think about the monetization efforts of these going forward? Are you able to monetize any of this functionality separately? Or do you think this is really something that you embed into the core product and we realize some of those financial benefits through just the core pricing maybe improvements over time?

Joe Walsh: It’s a terrific question. So, that first — excuse me, the way you finished is, I think, the way we start. And that’s that we are massively enhancing the product by putting AI features, by clustering agents around what we’re doing so that we can deliver better results, we can dial in people’s campaigns. And there’s definitely a data moat that builds over time because you get smarter and smarter with their data, with their campaigns and there’s a switching cost if someone were to ever leave that. So, I think it helps — really helps our retention, helps us deliver a better experience with the customer, things — some things that were harder to do or that they needed to spend time on the software to do can just happen without them even logging in as you move along here.

So, I think all of these make the software more attractive, easier to use, will improve retention and improve our ability to get price without having discrete pricing. Now having said that, when I look at our road map of what we’re building and what we’re doing, I do think that there will be significant monetization opportunities down the road, but we are not going for that at the moment. We’re just going for making the product easier to use and more powerful, so that we have stronger retention.

Operator: Your next question comes from the line of Arjun Bhatia with William Blair.

Alinda Li: This is Alinda Li on for Arjun. Joe, what are the early customer feedbacks from customers on the new AI products? And how are you seeing that in early conversations with prospective customers as well?

Joe Walsh: So, I mentioned some of them on the call, things like image generation and review response. Those have been in for a while, and it’s just steadily building. People are discovering that when they go to do their social posts, it’s just easier to use these tools and so on. So, that’s been a steady melt up now for a while and going very well. I think some of the stuff that we’re coming out with now is really exciting. We’re taking a lot of the key functionality, melding everything together. And we’re able now to take a lead, give you a transcript of the lead, grade the lead 1 through 5 based initially on a set of assumptions we make based on the words in the lead, but over time on your own data, dial that in for you. And those people that are using these tools are experiencing quite a bit stronger conversion of leads.

No leads are falling through the cracks. So, we’ve got particularly some of our partners have been taking the lead on that as we’ve been initially rolling this stuff out in beta and now it’s out now, kind of teaching us what’s possible with it. So, we’re pretty excited about this. We think it’s going to be — make our software easier to use. The dream scenario is that this software helps you efficiently grow a local business without having to log in all the time that gets working in the background for you. And that’s the big deal. It’s always hard to get the roof or off the roof to get the chiropractor to let go with the patient and go in there and mess with the software. And so, when the tools do it for them, it makes a big, big difference.

So that’s really — it’s moving it closer to them and making it easier for them to get value.

Alinda Li: That’s helpful. And last quarter, you talked about the initiative of Market, Sell and Grow. And can you just give us a little bit more update of how that initiative and strategy has been going? I know there’s a lot of integration in terms of the Keap automation inside of the Market, Sell and Grow initiative. Can you just give a little bit more color from last quarter?

Joe Walsh: Yes. We also, in the last quarter, mentioned the new platform that we’re developing. So, at the moment, we have Keap and Marketing Center. We have a method that we’re able to deliver the value of both. It’s sort of — I hesitate to say bundle, but it’s sort of almost like a bundle where we’re using them together. And that’s sort of that Market, Sell, Grow footprint of things that we’re doing. But the new platform just puts it all together. It’s not a bundle, it’s not separate. Everything is together and unified. And it’s all AI from — written from the ground up. We basically have rewritten the whole thing. It’s been a lot of work to do, but it’s incredible. And it’s in the hands of some customers right now, and we’re dialing, dialing in everything.

So — but Market, Sell, Grow really is — it’s our — markets are super fast-growing main thrust, which is Marketing Center, which is about efficient growth for local kind of bigger small businesses. And then with Keap, you have what are essentially automations or agentic assistants that help them through the process of responding to leads, if they’re busy and they don’t follow up right away, it continues to nurture them. And then after a sale is made, it continues to keep that customer warm and stay in touch and create a connection so that the next time they have a need, you get them back. And these are the kinds of things that really genuinely help the small business. These are the tools that they’re looking for and that’s what Market, Sell, Grow is all about.

Operator: Your next question comes from the line of Matt Swanson with RBC.

Matthew Swanson: Yes. fantastic. Maybe following up on the question that was just asked, Marketing Center being up 30% is awesome and it clearly shows the success you guys are having with this new go-to-market. Last quarter, I think, Joe, you had mentioned there was some potential for cannibalization just kind of as you shift the focus. Can you just give kind of an update on that, I guess? And just how that 30% growth in Marketing Center will kind of increasingly be reflected in your overall growth rates as maybe some of these other headwinds get offset?

Joe Walsh: Yes. I mean I think over time, that is the company is, we’re replacing the current Marketing Center platform with a new one very soon. And the new one has Keap fully integrated and is written from the ground up with Agentic tools everywhere and an NCP layer on it. So, I mean, it’s very, very cool. But yes, our sales organization and our customer base see the power and results of Marketing Center, and that’s the center of gravity for the company. Everything is moving in that direction. And so, the sales reps are not as much running around out there trying to sell stand-alone Keap or stand-alone business center. Everything is driving towards this Market, Sell, Grow platform. Everything is driving toward Marketing Center, particularly the new one.

So, your read on it is right. And everything is driving up market. So, if you think about our business, if I were to look at it from the outside, I would look at the quality customer progress and the way that’s moving up, and I would look at Marketing Center as really the company and look at those, and I’d put my projections in my ruler on the progress there. We’re not going to be building Keap out in the future as a separate thing. We’re bringing the powerful unbelievably good functionality it has inside of the main try offering. And similarly, we really are not adding a lot of new business centers. The sales rep when presented with the choice of selling a business center or Marketing Center, all the rapid development, a lot of the heat and light are on Marketing Center.

So, that’s really what they’re selling. So, I think you got to — I’m reading in the way you asked the question that you haven’t figured out.

Matthew Swanson: All right. That’s good to hear. Another — the quality SaaS client bar chart in the deck, I think it’s also telling a pretty compelling story. Could you just give us some context from like a product standpoint of what that $400 threshold looks like, if that makes sense? Just kind of like what is the customer spending $400? What does that mean from a product standpoint?

Joe Walsh: Yes. We’ve got a bunch of extensions or add-ons that are beginning to sell really well. You will know we control a pretty big part of the kind of marketing universe and there’s a — for small businesses, there’s a battle for them out there. When they look at getting customers, there are 2 giant trolls standing between them and their customer, Google and Facebook. And those leads are super expensive. I mean they’re very, very efficient at monetizing those leads. And so, when you talk with particularly service type businesses, they’re like, is there some way I can get leads around Google or around Facebook, like not have to go to them. And so, think about all the directories we control around the world in Australia and New Zealand and the U.S., we control these big directory sites.

And then we’ve built a network of other directory type sites, whether it’s Nextdoor and Yelp and Citi Search and all these other site and we have that all network together. So, we have a pretty significant amount of non-Google traffic that we are able to source. And we’ve packaged these really cool kind of growth packages together that we’re able to sell to customers. And in an age of AI answer engines, they’re having renewed buoyancy because the AI answer engine doesn’t look it up in Google and then give it to you. It goes out and searches the stuff itself directly. And so when you look at a yp.com fence contractor in Tupelo, Mississippi, that’s been on our site for 17 years, they look at that as solid authoritative content that answers the query that you put in, and it delivers that answer.

And so, it’s pretty cool. So, anyway, back to your question, we’ve got add-ons where we’re drawing from who we’ve been in the past and pulling all that together. And that’s working great because not only are we helping you measure your marketing, but we’re helping you do some of it, too.

Operator: Your next question comes from the line of Jason Kreyer with Craig-Hallum Capital Group.

Jason Kreyer: Joe, can you just maybe step back and talk about the sales motion and the difference between the upmarket clients and those at the low end? And then how do you position the sales team to be in the right place to capitalize on the upsell opportunity?

Joe Walsh: Yes. Great question. So, look, we — job one for us is to wind down the old Directory business. So, every morning we get up, that’s the first thing we got to do because we’ve got this big business, and it’s got some legacy technology and legacy processes and systems, and we’re winding that business down. And in so doing, we’re variabilizing and collapsing that legacy cost structure down. And we’re good at this. We’re doing it every day. But to do it, a lot of times, we’ve got customers that are sitting out there on legacy platforms or legacy tools that we need to move off of those in order to shut them down and turn them off. And the upgrade over to our modern stack is phenomenal for them. But there’s communication involved.

There’s a lot we have to do. So, that eats up some of our time. And it does bring over some subscale customers. There are some customers over there that are just solopreneurs or very small businesses that may not be our perfect ICP. That’s why you see noise in the gross client number because we brought over some unnatural SaaS customers. And some of them we were able to talk to them and get them moving and they buy more stuff and they say, “Hey, this stuff is really cool, and they become a good source. Others are like, no, it really is not for me. I was just trying to buy listings in a phone book or something. So, that takes some of our time. When we go outside and start prospecting, we, both through our marketing and through our excellent sales force, we’re deploying them against a targeted list of our ideal clients.

And so, to think about it this way, the HVAC company that has 4 or 5 trucks on the road would be our target versus the guy who works — his wife runs the office and he does it and his brother-in-law helps him in the summer. That had — the total company has got like $400,000 of revenue. That’s not our target. We’re not really going and looking for that guy. We’re putting our sales energy against selling the bigger ones that maybe have $1 million of revenue, or $1.2 million or $1.3 million of revenue because they tend to be much stickier and they tend to have a willingness to pay and an ability to buy more stuff over time. And I would say, Jason, if I’m really honest, in this journey. If you could go back and maybe change things or whatever, when we first started our software business, we pretty much would sell anybody who would talk to us.

And that gave us a lot of experience because when we studied our customer base, we found that the very, very smallest ones were churnier and the bigger ones were steadier. And that’s just a better way to build our business. And now we’ve spent a lot of time developing Marketing Center for those larger guys, for those bigger businesses. And we brought in Sean Wechter from Boomi, and we’ve become really good at integrating with other software tools. And so, if you’re on ServiceTitan or you’re on, I don’t know, some other big CRM tool and you need your marketing cared for, we are interconnecting and working well with those tools. So, that was maybe more than you wanted, but gives you some sense of where we’re spending our time and how we’re focusing.

Jason Kreyer: Yes. No, that’s good. I do have a follow-up. Maybe this is for Paul, but just trying to get a sense of the trajectory on both the customer count and the dollar retention figures. Just if you have any insights into, are we stabilizing now when those things can start to peak up in the next few quarters?

Joe Walsh: I’ll tell you what, I’m going to share this answer with Cameron. Cameron is my data expert. So, I’m going to get him involved here. Look, we sort of guided you guys directionally that we would probably be about flattish to maybe down slightly for the year as some of the conversions that we made over the last year or so stick and some didn’t. And now the sales that we’re making, each sale that we’re replacing them with are much larger. So, in some cases, 2 leave and then 1 new coming in is as big as the 2 that left. So, there’s a little bit of just qualitation going on, if you will. But let me let Cameron assist with the answer a little bit. Cam?

Cameron Lessard: That’s right, Joe. So, Jason, what you’re seeing in the overall customer count is that effect. You’re adding larger customers and losing the subscale customers. So, I think we expect that to stay flat starting from the beginning of the year to the end of the year. On the seasoned NRR metric, that will probably stay around the same range as well. You are losing some subscale customers, and that will weigh on that. But I think if you step back and look at what we’ve done over the past 12 months, our overall churn has trended in the right direction on the overall customer base, and that will be reflected in the season base overtime. And our quality customers, roughly 70% of the revenue, they have excellent retention as of right now.

So, that will start to trend NRR in the right direction as you move out. And so, we want to make sure that we keep those quality customers having the best client experience and making sure that retention stays strong. So overall, I think you won’t see a lot of big changes in those metrics throughout the year. So, I would just forecast relative flatness.

Operator: There are no further questions at this time. This concludes today’s call. Thank you for attending. You may now disconnect.

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