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Operator
Ladies and gentlemen, thank you for standing by and welcome to the Thrive fourth quarter and full year 2020 earnings call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker for today, KJ Christopher from Thrive. Thank you. Please go ahead, Mr. Christopher.
KJ Christopher
Good morning, everyone, and welcome to this recorded management discussion of Thrive's fourth quarter 2020 results. By now, you should have received a copy of the company's fourth quarter 2020 earnings release and investor supplement, which is also posted on our website at investor.thrive.com. With me today are Joe Walsh, Chief Executive Officer and President, Paul Rouse, Chief Financial Officer and Treasurer, and John Allen, Chief Executive Officer of Census Holdings. Before we begin, I would like to remind you that some of the comments made on today's call and some of the responses to your questions may contain forward-looking statements. These statements are subject to the risks and uncertainties described in the company's earnings release and other filings with the SEC. Thrive has no obligation to update the information presented on this call. Also on today's call, our speakers will reference certain non-GAAP financial measures, which we believe will provide useful information for investors. Reconciliation of those measures to GAAP will be posted on the investor relations website at investor.thrive.com. With that introduction, I would like to turn the call over to Joe Walsh.
Joe Walsh
Thank you, KJ. Good morning and welcome to our fourth quarter 2020 earnings call. To begin, I'll talk about 2020 and then comment on recent development. Following that, our CFO, Paul Rouse, will provide insights on our Q4 numbers and an update to our 2021 guidance. And then we'll open it up for questions and answers. In 2020, we had a big year. We became a public company again on the NASDAQ. We refreshed our board of directors and brought in real SaaS and software talent and expertise to help us accelerate the growth of our SaaS business. We launched our own payment platform, ThrivePay. And most importantly, we returned our SaaS business to growth. We're really proud of these milestones in 2020, because let's face it, there were unprecedented challenges for small businesses this last year. And we were inspired and impressed by the way small businesses worked hard to stay in business and just were determined to persevere. And our team actually, I think, played a pretty big role in helping a lot of small businesses adapt and make it and figure out how to really alter their business model using the software to be able to do e-commerce or to be able to, you know, become a business that delivers or whatever and make it through those really difficult shutdown periods. We were really impressed by that. 2020 was really an exclamation point on this need for small businesses to modernize and transition to the cloud. We believe that the changes that the pandemic brought about are durable and will forever really accelerate the transformation of small businesses using cloud tools and digitizing their business. So we think there's a really strong foundation for our growth coming off of that. I'd like to talk a little bit about growth, churn, ARPU, some of the things happening in our business. Our SaaS platform grew a little over 8% in the fourth quarter. Our churn is down and has been steadily coming down. We're at a level now that I would describe as par. We probably aren't going to do a whole lot better because we are dealing with bottom-top small businesses and there is some ins and outs there. So it's very acceptable in our models. We can get really strong growth being kind of in this mid twos churn level. So we think that's around the right place to be. Our ARPU has been improving. Improving because we made a big shift in our strategy. We had experimented with going down market. We've moved back up market, selling to a little bit bigger businesses, selling a little bit more complete, robust solution, a little higher price point. We're getting really fully engaged customers. We've been disciplined about our ideal client profile, getting the right customers in. And consequently, you're seeing ARPU or spend for customer rising nicely. I would encourage you to take a look at those stats. And while our client growth is about flattish, we're, you know, looking to see that begin to accelerate as we go through this year, is that those smaller, less engaged customers, you know, roll off and we're bringing in the larger ones that are spending more, much, much more committed than we're truly using. So, you know, we're looking forward to having not just revenue growth, but also client growth as this year goes on. The big story for us of the last year or so is engagement. We've seen tremendous growth in engagement. And engagement, I would describe as, you know, people that we see active in the inbox using it. We see them adding contact cards to their CRM. We see their scheduler lighting up with people scheduling appointments with them. We see them sending out marketing automation campaigns, using our console for social media, and maybe most importantly, we see the payment volume, and we see them accepting more and more payments in DrivePay. So that really shows us what's happening in that business. We recently hit an all-time high of active users, with daily and weekly user growth up the most. It's up tremendously year over year, and we think we're going to continue to invest in education and engagement growth, we've been really building our client success team, actually investing in more and more people to just spend time with those customers teaching, showing. Remember, we're bringing the unclouded into the cloud here, so it requires a little hand-holding. Census, the opposition we made in Australia, you know, closed March 1st. It's over 100,000 small business clients. It's a marketing services business that really is a whole lot like the Thrive business here, just minus the software. That's a big zoo, 100,000 customers for us to hunt in now and really expand our SaaS business. Their performance in Australia has been arguably world's best. They have the advantage of the white pages, which their white pages business outperforms the elevators business with a slower revenue decline and higher margins. In fact, they've delivered margins north of 40 so johnny's team are really good at this high three cash flow generation this thing is throwing off a ton of cash you'll be impressed by just the amount of commonalities between the two now i've known john allen he's been in that job for over eight years i've known him for most of that time he's been business friends he's come here to the u.s multiple times to meet with me and our team and i've been to australia and met with he and his team our teams have talked and shared best practices and ideas. So there's a good warm feeling between the two companies. I really like John a lot, and I think you will too. I want to take this time and introduce you to John now and have him just have a word with you. John? Thank you, Joe. I thought I'd share a little bit of information about Census in terms of the company and the market we compete in and then how we intend to bring Thrive to Australia. The way to think about Census is very similar to Thrive in the U.S., We're a leading digital marketing services and print directory company here in Australia. We publish and distribute the Yellow Pages and the White Pages books right across the country, as well as manage the marketing services needs of over 100,000 businesses. The majority of these businesses are small to medium businesses employing less than 200 people. Our strategy of the past few years at Census has been to develop a range of digital marketing solutions whilst also transitioning our customers from print to digital, depending on the changing habits of Australians. Now, as a country, we are significant digital consumers, but our print directories serve an important service to older and more regionally based people. Whilst the Australian population is around 25 million people, the Australian Bureau of Statistics indicates there are over 2 million registered businesses here. The small to medium business population, which we primarily focus on, is over 800,000 of those businesses. These small to medium businesses have been estimated by the Reserve Bank of Australia to account for 70% of all employment and over 30% of GDP. So they're a really significant component of the Australian economy. The needs of Australian small to medium businesses are very similar to the US, and we see a lot of similarities between Thrive and Census. However, what makes me particularly excited about Thrive acquisition for Census is the Thrive software. Over the past year at Census, we started to develop our own software strategy, but really we're at a nascent level today. But launching Thrive into Australia will save us years of investment and help us fast track our approach to the local market, our existing customers as well as new ones. We think there's going to be a significant opportunity of solutions such as Thrive in Australia. Now, during COVID, we saw an uptick in small to medium businesses having an interest in software, making them more efficient, helping them manage their customers and improving their service. We also are in an environment here of low unemployment rates and high labour rates. So Australian small to medium businesses are becoming much more aware about the opportunities that software can really help them optimise and improve their business performance. Also, the Australian government can see value in digital efficiency, and during the middle of last year made it compulsory for single-touch payroll, forcing small to medium businesses to lodge tax payments to the Australian tax office in an automated fashion. This has meant SMBs had to go out and get accounting software, but for many industries we deal with, that's as far as their digital journey has taken them. During February 2021, prior to the acquisition by Thrive, we undertook an independent survey using Glow, asking Australian small to medium businesses about their attitudes and interest in software. We didn't specifically ask them about Thrive, but what the survey did show is 69% would be interested in software that could help them manage their customer interactions, their website, listing information across the web, appointments and the like. Many of these are features of Thrive. Businesses know they have to do more to digitize here and they're looking for support in that transition. Now at Census, we've had a really long history of helping businesses connect and manage their customers. It goes back to the very first fine book and more recently with digital marketing services. So I know my team are looking forward to helping customers with the transition to software. In terms of the Australian market and launching Thrive, we'll be working very closely with the Thrive team in the US to help localise Thrive for the Australian market. Our intention is to launch later this year, and we'll be focusing on the product, pricing and overall service offering being right for Australian conditions. Thrive in the US has built an enviable reputation within the SaaS community and with their customers, and my team will be ensuring we launch on the rightful here so to mirror their success. So thank you, Joe, for letting me talk about census. Let me pass back to you. Thank you, John. Well, we're awfully happy to have John Allen and his team on board. There's a really good feeling back and forth between these two teams. We're excited about the beachhead that, you know, bringing these iconic 100-plus-year-old brands, you know, into the family here, give us in Australia over 100,000 small businesses, and we think that we can very quickly become the category leader of for small business CRM kind of client experience platform in Australia. Remember, John and his team are phenomenal executors. They've executed superbly on the other business plan. They believe in this business plan, and we think that they will be phenomenal executors here with us. So welcome to John and his team. A couple of other quick things I wanted to comment on. You know, verticalization is a big part of our roadmap here. We are about to roll out Thrive Home, which is a really vertical play on home services space where we have so much penetration and so much success. There are a couple of vertical players out there nipping at us just a little. We don't have a ton of competition. Most of what we're doing is bringing the unclouded into the cloud. But there's a couple of other guys out there trying to do it. And I think us having verticalization like Thrive Home, followed by Thrive Legal, followed by Thrive Health, I think these are things that will really help us burrow more deeply into these verticals. and make sure we don't leave any white space for somebody to crawl in here with us. Fly Pay has been off to a great start. You know, it's just four or five months in now. It's still early days. But we're seeing sign-ups come through almost every day. We're seeing growth in revenue, you know, per active merchant. We're seeing the total payment volume trending up each month. So it's too early to, you know, plant the flag and call that a big win. But I'll tell you one thing. When you're getting paid, By your CRM, your likelihood of churning goes down. So with that, I'll now turn it over to Paul to discuss the fourth quarter financial results, and I'll be back to discuss our outlook at the end.
KJ
Thank you, Joe. Before we begin, I'd like to point out that while we will be talking about revenue during this call, due to the global pandemic, the company temporarily issued certain customer credits throughout 2020, which have
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