Thryv Holdings, Inc.

Good morning. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to the Thrive Q4 and full year 2021 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you. Cameron Lessard, you may begin your conference.

Good morning, and thank you for joining us on today's call to discuss Thrive's fourth quarter and full year 2021 financial results. With me on today's call are Joe Walsh, Chairman and Chief Executive Officer, and Paul Rouse, Chief Financial Officer. Before we begin, I'd like to remind you that shortly before today's call, we issued a press release announcing our fourth quarter and full year 2021 financial results. We also published a Q4 earnings supplement on our website. I would like to remind listeners that some of the comments made on today's call and some of the responses to your questions may contain forward-looking statements about the operations and future results of the company. These statements are subject to the risks and uncertainties described in the company's earnings release and other filings with SEC. Thrive has no obligation to update the 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 our investor relations website at investor.thrive.com. With that introduction, I would like to turn the call over to Joe Walsh. Joe?

Thank you, Cameron, and thank you all for joining us on the call today. I'm pleased to report we finished the year on an exceptional note, with revenue and EBITDA feeding guidance. At the beginning of 21, I outlined a growth strategy for our SaaS business and additional areas of investment needed to scale the organization. Looking back, I'm really proud of the Thrive organization and the way we executed and implemented those investments into product, into engineering, and improving the product. And the impact can be seen in the results. Let's take a minute and just jump into the headlines. We grew total SaaS revenues for the fourth quarter by 36%. And for the full year, 32%. For context, we grew revenue in the SaaS segment 1% in 20. So from 1%, we jumped to 36%. So really strong performance there. SaaS ending clients for the year, 46,000. So we ended the year with 46,000 SaaS customers, up 5%. So there's been a lot of discussion about whether or not we can grow our subs because we made such huge progress on ARPU this last year. I think in the year ahead, you're really going to see balance between ARPU growth and subscriber growth. In fact, we expect that 5% subscriber growth to accelerate to double digits in the year ahead. In a minute here, Paul will walk you through the detailed numbers, but I would like to highlight some of the progress that we've made on some of our strategic priorities. Since the beginning, I've been talking about This was the decade of SMB SaaS. The last decade was enterprises moving to the cloud. And this decade would be the decade of mom and pop and small businesses running their business on mobile devices. By the end of this decade, that'll be just standard fare. And at the beginning of the decade, for the most part, none of them were doing it. So it would be a massive transition. And that move will actually be bigger than when enterprises went to the cloud because there are so many more small businesses. And we have positioned Thrive over the last seven years in pole position to lead that gigantic transition. So this is an unstoppable mega trend that you're playing by investing in Thrive. You know, just from a macro basis, what we're seeing now is we're seeing small businesses that have been experimenting with perhaps a point solution or two or three become frustrated with logging in and out of all these things. The fact that the data doesn't share, they don't talk to each other. They've got sticky notes everywhere. They have a hard time including their employees to use these tools. And they're looking to move upmarket to something that's a more complete end-to-end client experience, an end-to-end solution. And that's where Thrive sits, in that aspirational spot. So as people sort of try a few of these little point solutions, little freemium tools, little odds and ends, and they realize that this is the way to go, I want to modernize, They sort of find their way moving up marketing to a Thrive. Thrive is quite a bit more expensive than a lot of those little point solutions that are out there, but it does so much more. It's a more powerful tool. So increasingly, I'm talking to customers. In the last couple of days, I've been doing calls into Australia, speaking to customers in Melbourne and Sydney about their experience with Thrive so far. Yesterday, I spoke to a client who had been a pretty big MailChimp user, and she has upgraded now from MailChimp. to Thrive, and she's got so much more capability to do social posting, to set up automated messages to go out to her customers. She's responding to her customers through the chat feature, and she's just really pleased with the power of Thrive, and she knows it does even more things that she hasn't accessed yet, but she's excited about the completeness of the solution. She doesn't need to keep buying other software. She's had a pretty rigorous look to figure out what to use and concluded to go with Thrive. Hearing that story more and more in the weekly customer conversations that I have, hearing people really beginning to take two or three point solutions and ditch them and go to Thrive. And I end up saving money when they make the transition and they get a lot more power and a lot more capability. So Thrive is an aspirational brand. It's nowhere near as expensive as an enterprise tool like Salesforce. It's not even as expensive as a mid-enterprise tool like HubSpot. It's more of a small business tool. but it's a complete powerful tool and it's making a big difference for a lot of small businesses. So by investing with us, you're playing in that macro trend that small businesses are going to want to go with almost like a salesforce.com type of thing that a big company would do. They're going to want to do that more complete solution that they can share with their staff and they can all communicate on that one tool. They can have a centralized inbox where all their messages flow in and it simplifies and organizes their lives where they can do estimates, invoices, billing, payments. They can use ThrivePay, save on transaction fees. They can manage social media. They can even deal with ratings and reviews, and they can nurture their customers and keep in touch with them and remind them to come back, all in one very simple tool. So we've been recognized this year for a lot of innovation. You know, the Google My Business, helping SMBs get found online. We've got a very deep integration there. So even though it's software, it's not advertising, Because it's so SEO friendly, it works so well with Google My Business, it's actually helping our customers get more leads, get more customers, which is an unexpected benefit, not necessarily the way we position it. We've launched the verticalized platforms with enhanced CRM, so Thrive Home, Thrive Legal, Thrive Health. We're beginning to really customize product that once you come in and you tell us you're a roofer, you tell us you're a plumber, you tell us you're a lawyer, You know, we begin to configure everything very quickly around what you are. So it feels very bespoke for you. And that's really helped with client satisfaction. And you can see it in the engagement right through the numbers. It's amazing. We've launched a lot of free online tools to just help businesses with lots of simple things, creating invoices, different, just different, simple things. And that's been a theater pool driving new customers to our website, driving new leads in. of a free content marketing play that's very powerful we've really focused also on faster implementation and getting people to value very quickly that has been challenging but an amazing result that our team has done and that's just shortening up the time from when you realize you want to do this when you're getting value from the software and we're seeing that in higher engagement and lower churn right through we've had some external recognition this year g2 crowd Capterra and the appealing awards recognized the Thrive product as number one in a number of categories or placed very highly. Really external recognition about what a consumer grade, easy to adopt, easy to use tool this is. How fast time the value is, how good value for money is. And I would invite any of the listeners here to go to these review sites and read the reviews on Thrive. They're outstanding. And we've made such incredible progress here in this process. Thrive Pay did north of $60 million in payment volume and has now become the most popular choice of all the payment tools that are available. And we're sort of Switzerland. We operate with everybody. We interoperate with everybody. So you can bring whatever tool you're using when you come on to Thrive, but lots of people then switch to Thrive Pay along the way to save on fees, to do a lot of small business friendly elements to it that allow you to set up recurring payments and appointments and classes and lots of things that we've custom built for the clients that we actually serve. So interestingly, 70% of our clients coming in now are new to the company. And I know we talk a lot about hunting in the zoo, working with our standing base, and that's still producing about a third of all of our customers. But there's a subtle nuance here. And that's because we've made so much progress with client satisfaction, engagement, and usage, we're now getting loads of referrals from those clients. So they're actually ringing up their business advisor and saying, I want you to talk to my friend. He needs help like this. And so that's really driving that sort of referral, driving a lot of the growth that we're seeing. A third or so of our customers are coming from our new channels. You know, the actual inbound marketing and some of those other new areas that we've spoken some about. And as I mentioned earlier, we're seeing subscriber growth accelerate now as we sort of outrun the lower priced offerings we had a few years ago. Retention. You know, we're seeing right now season churn is 1.5%. 1.5% season churn. So if we're really proud of that, we think that's sort of world's best when you're dealing with very small businesses. Our season net dollar retention is now 94%, which is strongly better than the prior year, and we're continuing to see progress there. It's not a straight line because of different anomalies in the customer set, but we've been asked many times, do you think you can get to 100% net dollar retention? And we really do. We don't think it's a one-quarter or two-quarter journey. We think it'll take a little while because we are dealing with very small businesses, but we have lots of additional product offerings coming on our product roadmap that will continue to propel that net dollar retention and customer ARPU increases. So we are highly confident that this is a 100 cents on a dollar type return. I'd like to just talk about engagement for a minute. Time in the app, year on year is up. User frequency is up. Clients using multiple features is up. That CRM, inbox, schedule, or social post sales module are all up. App downloads and installs have doubled I'd like to turn now to an update on our census acquisition. We now call this Thrive Australia. The focus with census in this first half a year or so was to really focus on client engagement, getting customers bedded down, getting them using the product, getting them happy with the product. And we have hundreds and hundreds of customers that are dishing out referrals now and happy about the onboarding experience and the difference that we're making in their business. And I think it bodes well. It kind of gives us a broad, clean foundation to really accelerate growth. I think one of the things you'll see if you watch 22 is you'll see the census acquisition really come on stream as a source of subscriber ads and revenue growth. So really excited about that. Finally, I'd like to talk about a small acquisition that we made recently. We acquired a company called Vivial Holdings. Vivio is a marketing services company that publishes directories. It was sort of the last bit of the telephone company Yellow Pages ecosystem that we needed to fill in, that we needed to cover. And it brings us Hawaii, Alaska, Rochester, Cincinnati, some markets that the prior companies that we acquired did not cover. While we do have some customers in those areas, we didn't have much customer density there. So this brings us 25,000 digital clients that we can now penetrate with our SaaS offering. It sort of expands the zoo, if you will. We paid $21 million. We used available cash to fund the acquisition. We didn't borrow or go out and do anything big here. Very simple deal. And in terms of, you know, the discipline that we always talk about when we make this type of acquisition, we've said that we would be approximately two times EBITDA on a post-Synergy basis, and this one is true to that as well. As I mentioned, it just closed in January. So integration process is getting cranked up and underway. We're getting everything set up so that they can begin to offer the Thrive solution to their customer base. And that will actually begin to flatter our numbers as this year unfolds. So really excited about the progress that we're making in the business. This Vivio acquisition synergistically fits perfectly onto the Thrive platform here in the US. So I'm really, really pleased about that and I'm anxious to turn this over to Paul Rouse and then give you a run through the financials. So, Paul.