Thryv Holdings, Inc.

ladies and gentlemen good morning my name is abby and i will be your conference operator today at this time i would like to welcome everyone to the thrive holdings incorporated fourth quarter and full year 2022 earnings conference call today's conference is being recorded and 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 the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, you must hit star one once again. Thank you, and I will now turn the conference over to Cameron Lazard, Head of Investor Relations. You may begin.

Thank you, Operator. Hello, and good day to everyone. Welcome to Thrive's fourth quarter 2022 earnings conference call. On the call today are Joe Walsh, Chairman and Chief Executive Officer, Paul Rouse, Chief Financial Officer, and Ryan Cantor, Chief Product Officer. A copy of our earnings press release and investor presentation can be found on our website at thrive.com in the investor section. 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 the 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 IR website. With that introduction, I would like to turn the call over to Joe Walsh.

Good morning, Cameron, and thank you all for joining us on our call today to discuss our fourth quarter results. 2022 was a year of tremendous accomplishment and thrive. We finished the year with strong financial results, improved efficiency and continued product innovation with the release of Marketing Center. Fourth quarter SAS revenue grew 25% year over year and 26% for the full year. SAS subscribers ended the year at just over 52,000, an increase of 13% year over year. SAS monthly ARPU grew 10% in the quarter. Our average customer now spends around $4,400 a year compared to $4,000 one year ago and $3,000 in 2020. So we're making really good progress on ARPU with customers using the product more, and buying more and buying higher end versions of the product. One year ago on our earnings call, I highlighted our goal of targeting more balanced growth in SaaS subscribers and ARPU going forward, which we've achieved for three consecutive quarters. Engagement has increased 37% year over year, which we feel is a very strong indicator for durable growth. Our clients are using the Thrive platform to run and grow their businesses. to find customers, to stay organized, communicate, and get paid. Season's monthly churn has remained flat in the mid-1% range, which we consider to be world class. On the bottom line, once again, SAS EBITDA came in better than our expectations. This is significant as we cut our SAS EBITDA loss by almost half since we issued guidance a year ago. We've been focused on driving cost-efficient growth, not growth at all costs. The U.S. has been profitable for three quarters in a row as we continue to scale and move past our investment stage. SaaS EBITDA loss is a result of our expansion internationally with Australia and Canada. I'm pleased to report that Australia is on a path to turning a profit after selling SaaS for only six quarters It's been one of our top producing regions. So we feel our playbook really works. And these are not big losses, only single-digit millions. Once we stand up a new country, it takes a couple of years to cash flow, and then it goes from there. So that will be our model as we move forward. On marketing services, we continue to see very predictable performance in billings, which allows us to generate solid cash flow and pay down debt. Next up, I'd like to introduce Ryan Cantor, our Chief Product Officer. Ryan? Thank you, Joe. As we previously covered, in both 2021 and 2022, Thrive continued to responsibly expand our engineering and product capabilities. We've invested in a robust UI UX team to ensure the Thrive platform remains both powerful and easy to use. We've invested in in-app experience to fuel our product-led growth initiatives. We've invested in product and engineering to conduct better client research and to accelerate our roadmap to deliver better value to our current and our future clients. Small businesses run better on Thrive. We know this and hear it every day from our clients. Thrive is a growing all-in-one small business platform. The needs of these small businesses continue to grow at an accelerated pace, and Thrive is in pole position to deliver increased functionality to meet this growing demand. In early 2022, we unveiled an exciting new product strategy to move to a multiple center platform. This would allow us to solve these additional problems for our existing clients and attract a wider array of new clients into our platform in the coming periods. After a year of development and numerous rounds of live client testing, we were excited to launch Marketing Center in Q4. This exciting new center presents a bridge between our past and our future. Marketing Center was built from the ground up and focused on the modern needs small businesses have with growing their business, while leveraging our decades of experience offering marketing services and tools to the market. To date, Marketing Center results have been strong, and client reception has been incredibly positive. We plan to share additional metrics and insights about our newest center throughout the year. Sitting right underneath our centers are a growing number of modular apps that enable our users to customize the Thrive platform to meet the specific needs and pains they have. For those looking for a more cost-efficient payment option built specifically for service-based businesses, we've built Thrive Pay to be a modular app and then recently improved Thrive Pay again by launching mobile card readers throughout the U.S. Additionally, for small business owners who have modern iOS or Android devices, ThrivePay also just recently released Tap to Pay, using near-field communication technology to turn a small business owner's mobile device into hardware to accept lower-fee card-present payments. Logged in October 2020, ThrivePay now enables businesses to accept credit cards or bank drafts. They can accept in-person payments via mobile devices or device lists with Tap to Pay. They can accept online payments via QR codes, SMS text messaging, or email, and it makes it easy to pay with Apple Pay or Google Wallet. It enables small business owners to offer consumer financing to their clients for larger ticket items. Lastly, ThrivePay enables customizable automated surcharges or convenience fees to help offset the cost of payment processing. While lower average ticket sales put some pressure on overall payment volumes in Q4, Overall ThrivePay volume nearly doubled year over year. In 2022, the second full year of ThrivePay, overall payment volume grew to over $140 million, a 114% year over year improvement. Another app we've recently launched is our new Signatures app. Signatures enables our users to upload a document to send to their contacts for an e-signature fully built into the Thrive platform. This eliminates the need for users to take multiple manual steps to get their contracts, agreements, or proposals signed and then uploaded to their centralized CRM. With Signatures, it is now a fully automated process end-to-end. The Signatures app enables all users to try it for free with up to five free signatures per month. People who need more and have been able to try it before they buy it can upgrade in-app to $49 a month for up to 100 signatures with a small overage fee for additional. This release is on the heels of our Team Chat app that we launched in early Q4. 10% of our active users are already adopting Team Chat, which is extraordinary, quite frankly, especially given the holiday season backdrop. Team Chat enables all of the internal collaboration and coordination within a small business to take place in an organized and secure way. These releases are in addition to a multitude of enhancements we released to improve our core Thrive product. We recently launched both native two-way real-time Google Calendar and native Outlook integrations to better meet SMDs where they are before they adopt Thrive and to easily see their Thrive appointments and events inside both Google and Outlook and vice versa. We launched a robust and configurable end-to-end deposit workflow that enables service-based businesses to be paid a portion of their estimate at the time of approval, while capturing a digital signature all in just a few clicks for the end consumer. In addition to the deposit improvements, we have also released all new customizable templates for both estimates and invoices, enabling SMBs to pick a style and a color that aligns to their brand. Additionally, this month we launched the ability to better configure both estimates and invoices with customizable sections and headers with easy to use drag and drop capabilities. Both of these improvements have been top five requests from our users, and we were delighted to deliver it for them. In 2022, a combined 1 million estimates and invoices were created and sent inside the platform. That represents a 20% improvement year over year. We launched an improved rich text editor for our heavily used centralized inbox, enabling better control and customization for longer form conversations. And this release has been a hit. Inbox conversations in 2022 increased nicely with Thrive now powering 7 million conversations between small businesses and their prospects and customers. Every month, small business frustration from over adoption of independent point solutions continues to grow. with more and more businesses seeking out a true all-in-one platform that can grow with them. That's what Thrive is. It's simple, it's powerful, and it's tailored to the needs of these growing small businesses. And with that, I will now turn it over to our CFO, Paul Rouse, to discuss fourth quarter financial results.