Thryv Holdings, Inc.

Conference ID number 7068595. At this time, I'd like to introduce the conference to KJ Christopher, Thrive's AVP of Investor Relations, Treasury and Tax.

Good morning, everyone, and welcome to this recorded management discussion of Thrive's first quarter 2021 results. By now, you should have received a copy of the company's first quarter 2021 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 Ryan Cantor, VP of Product and Marketing. Before we begin, I would like to remind you that some of our 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 FCC. Thrive has no obligations to update this information presented on the 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 thank you kj good morning and thanks to everyone for joining us on our first quarter 2021 earnings call over the past few quarters as a public company we've demonstrated thrive's category leadership and end-to-end cloud software for smb this quarter validates another point showcasing the massive opportunity for cloud adoption within the SMB space and the strength of our strategy and execution. We're off to a strong start to the year in our SaaS business, with growth in revenue and clients. Our revenue accelerated 17% year over year in the first quarter. This acceleration is fueled by a demand for small businesses to modernize and transition to the cloud. we feel that we're in pole position to seize this massive opportunity. We continue to penetrate our captive legacy client base, as well as activating new clients through our new channel. Even in our existing client base, there are more and more of those customers that see now is the time to move to the cloud. Customers we may have proposed this to a year or two ago, that are now realizing okay this cloud thing is real i need i need to you know modernize so that's working really well now and then we are methodically scaling our new channel our inbound channel each month we add more leads to the top of the funnel we build out more sdrs we do more demos and we close more each month it's becoming a very large part of our sales volume And then we're adding partners to our reseller channel. Each month, there's more and more partners. We've brought some new technology in to make the reseller channel run smoother. That's really going well and beginning to scale nicely. And then, of course, we sort of stumbled onto the multi-location franchise opportunity by having one chase us down and by. And that's now become a really big part of our plan. We're doing very well with franchises and multi-locations. So these new channels are growing very nicely. We feel very good about where we are. And as a result, we're updating our guidance accordingly. Paul will walk you through that a little bit later in the call. Some metrics I'd like to share with you. Our R2 has continued to grow, and it's a result of that move-up market. You'll see that in the data. Our churn is stable in the mid-2% range. And this is really good for SMB churn. We're revealing today net dollar retention. We hadn't revealed that in the past. It's a new metric for us. It's up 16% year over year. It's 89%. And I know you'll sometimes see enterprise churn that's, you know, over 100 and so on. We're still a very young software company. And, you know, 89% is very strong. We consider it a 16% growth momentum year over year as we've solidified our strategies. We expect that that's going to continue to grow moving out in time. We're pretty excited about the opportunity that that presents for us. The point I would just make to you as you compare us to enterprise-type software is that we're in a much earlier inning that small business is moving to the cloud, maybe top of the second inning. Enterprises are probably in the fifth or sixth inning. They're much deeper into that transition. I'd like to just talk to you about what this means in terms of clients. You know, one of our customers, Andy Roble, from Tree Masters. They're in Berlin, New Jersey. They have seven staff members, and they're in our app every single day in the mobile app. They've been a customer with us for a little over two years, and their usage is steadily growing. Looking at last month, they were up around 11 hours in the app. And I appreciate that seven employees are in and out of that app in a few seconds. when they need to consult something, but collectively over the course of the month, 11 hours. They signed up for Thrive Pay. They were one of the early people who signed up. They switched from Stripe. And we've seen steady volume coming out of them and steadily growing volume. They've had over 400 transactions so far with an average ticket of $612. So, you know, we're seeing that sort of engagement where whole teams are completely running their company within the app. And it's that sort of usage that's driving the ARPU, it's driving the NDR growth, it's driving the improvements that we're seeing. So engagement was the big priority for us the last couple years. We watch it like a hawk. It's on our crawler every day that goes across the screen in the morning, and we watch that. And we've seen really nice gains in daily, weekly active usage. You know, our goal was to be at least 20%, and we've just blown that away. Logins are up. Time in the app has more than doubled in the last year. You know, the number of clients using our core features, CRM, payments, communications, campaign management, our scheduling tools, we see more and more of them using more and more features. And so that's part of what gives us confidence as we look forward, part of why we feel good enough to actually upgrade our guidance. So we think it's a payoff of us improving our onboarding process, improving the software itself, and just looking at the results that our customers are getting. Next, I want to bring in our head of product, Ryan Cantor. He's going to share with you some product improvements and talk to you about what we're doing on the verticalization process. Before I do that, I want to touch on an announcement that we put out this morning in regards to ThrivePay. ThrivePay has, up until now, we sort of soft-launched it. It's only been available within the Thrive customer base. But as you now know, if we saw the announcement, we've now rolled it out as a standalone app. It's available at no monthly charge. We do make a little bit when customers use it. But we think this will be a terrific feeder pool, helping us identify thousands of new small businesses that are interested in modernizing and interested in more efficient payment methods and will be really able to help drive client acquisition going forward. We're finding that our existing customers that are using ThrivePay absolutely love it. And we're seeing volumes grow week over week, month over month. And there's no question that it's driving more engagement. And this and other add-ons are driving the ARPU up. So, look, it's still early days, but we're really excited about DrivePay. And I think with the DrivePay free app out there, it's only going to increase the footprint and increase our brand. So with that, I'd like to now bring Ryan Cantor on. Ryan? Thank you, Joe. The COVID-19 pandemic drove Thrive to adjust our product roadmap prioritizations around the most basic needs of the everyday small business owner. We focused on both improving existing functionality and adding new functionality to make it easier for small businesses to maintain a healthy and safe cash flow. We improved our estimating and invoice functionality. We improved how the system handled taxation and other back-end services. We added new features to manage and sell products. Packages where the ability to sell bulk services was created. And near the end of 2020, we launched ThrivePay. ThrivePay was developed to fill the void in supporting growing service-based small businesses. These businesses often need to process large payments with more affordable options while still providing convenience and safety to end consumers. ThrivePay has already processed more than $15 million in payments with an overall average transaction size greater than $400. Just yesterday, we announced the launch of a dedicated ThrivePay mobile app, available in the iOS and Android app stores now. Not only does this app add convenience to our existing Thrive and ThrivePay subscribers, but it is available at no monthly charge to all service-based small businesses. Our flat-rate credit card fees, cost-effective ACH payment options, scheduled payments, tips, Dispute assistance services and optional pass-through convenience fees are all included in our free app. We know that not every growing business is ready for the full Thrive solution yet, and so we are excited to offer the Thrive Pay app to these businesses, providing a safe and convenient way to get paid, while also providing frictionless upgrades to the full Thrive platform when the time is right. To further support the financial needs of our users, Thrive has also recently announced our completed integrations with QuickBooks Desktop and MyOB accounting software. These two additions to the Thrive app market make it easier for small business owners to run their day-to-day businesses while simplifying their accounting and tax processes. Earlier this year, after a full year of development, Thrive launched our enhanced CRM functionality. This product improvement provides an industry-specific CRM across 20-plus industries while adding support for important but complex relationships. This enables contractors to manage multiple jobs per customer, for lawyers who have multiple cases per client, and for animal services who have multiple pets per owner, each specifically tailored and pre-configured to make getting started with Thrive even easier. This effort is already showing dividends, with our data showing that over 85% of users of our enhanced CRM functionality are becoming daily active users within the platform. While some in the SMB SaaS space show verticalized marketing tactics, Thrive's unwavering commitment to delivering an exceptional customer experience propelled us to ensure the product was properly verticalized first, to not disappoint post-sales. Next, we have verticalized our demo experiences, and we will continue to move up the client experience journey into our website and online marketing activities in the coming period. Lastly, over the past 18 months, Thrive has been strengthening our integrations with all things Google to centralize and simplify. Recently, we announced our dedicated Google My Business section within Thrive, which makes it easy for small business owners to automatically claim their listing, optimize their information, accept online appointments via reserve with Google, monitor and manage their Google My Business posts, and quickly respond in-app to Google reviews. And with that, I will turn it back over to Joe. Thank you, Ryan. Next, I'd like to turn to our recent Census acquisition. Brought to a great start, it's just been a month and a half. And we're finding that the Census team loves Thrive. They love the software. They've had demonstrations. They've been through it. They've been in our company store buying Thrive gear, and they're all wearing Thrive outfits. They're pretty excited about the whole idea of this big pivot for them to become a category leader in Australia in the software business. And all the plumbing is being hooked up. The people are being trained. The process is rolling on. We've actually even onboarded a couple of customers as we're getting some guinea pig customers to test everything out, make sure our localization is right. We will begin selling in the second half of this year. And as I've explained to folks, we, in prior acquisitions, saw about 10% of the customer base come over pretty quickly, low-hanging fruit, and become SaaS customers. And we're really looking forward to that in 22 and 23. Our expectations are pretty limited for this year just because even as we get customers sold and onboarded, we're really only going to have a couple of months of revenue before the calendar year runs out. But we're off to a great start. We've been really impressed with that next layer of management that we've gotten to know beneath John Allen and even beneath the C-level people as we've been interacting functionally back and forth and having a lot of fun. We've created a company dictionary where we're sharing back and forth American and Australian terms. It's been a lot of fun and interesting to people, and there's a really high morale around this combination and international expansion. So feeling good about that. Can't wait to update you more on that in the future. Next, I'd like to bring Paul Rouse back to take us through the financial results. Paul? Thank you, Jeff.