Thryv Holdings, Inc.

Hello, my name is Chris, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Thrive Holdings Inc. Q1 2023 earnings 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'd like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, please press star one again. Thank you. Cameron Lessard, Head of Investor Relations. You may begin.

Thank you, Operator. Hello, and good day to everyone. Welcome to Thrive's first quarter 2023 earnings conference call. On the call today are Joe Walsh, Chairman and Chief Executive Officer, Paul Rouse, Chief Financial Officer, and Elise Falsili, our Chief Revenue Officer for Thrive Australia. A copy of our earnings press release and investor presentation can be found on our website at thrive.com or in the investor section at investor.thrive.com. Please acknowledge comments made on today's call and 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 this conference call. Finally, 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 website. With that introduction, I would now like to turn the call over to Joe Walsh. Thank you, Cameron, and thank you all for joining our call.

I'm pleased with our Q1 performance. Our continued focus on optimizing our predictable, scalable, and repeatable model to drive revenue growth while improving the bottom line is evident in our results. Every success metric is steady or increasing year over year and showing solid performance versus our expectations. This gives us strong predictability and durable smart growth. Our first quarter SAS revenue grew 24%, which was at the top of our guidance. SAS subscribers ended the quarter at 54,000, an increase of 15% year over year. This is attributable to our best-in-class software platform and continued strong sales velocity. We are seeing each month yielding better results than the prior month. Everything from qualified leads to demos to conversions, it's all up and to the right. Now, I've mentioned in the past that we expect a balance between ARPU growth and subscriber growth. And you'll have to forgive us, subscriber growth just sort of took off in this period. And, you know, it's just really going well, and we're having a lot of strong uptake. So, there won't always be a perfect balance between the two, but we expect, you know, a relative balance between subscriber growth and ARPU growth. We continue to set records in user engagement on our SAS platform. Engaged users at the end of the quarter was 45,000. an increase of 25% year over year and 10% quarter over quarter. On the bottom line, once again, SAS EBITDA came in better than our guidance. We've been getting more efficient each quarter, and let me explain how. First, there's a big tailwind at our back. More small businesses are adopting these type of SAS tools. We've mentioned before our business comes in kind of three chunks. The first is in making our regular rounds, talking to the approximately 400,000 small businesses in our customer base, our zoo, we sometimes call them. Well, more of those feel ready to modernize now and are moving forward and beginning to adopt these tools. So sales have been very strong into our base. Secondly is referrals. Those 54,000 subscribers are bringing their friends. They're telling their neighbor, the guy they're in the bowling league with on Tuesday night. And We're getting increasing referrals and that's a bigger and bigger piece of our pie. And that means that our cost of acquisition is low on those. We're not having to spend huge amounts of money to get a conversation with a new business. We're able to work with basically friends and family. And so that allows us to have a really efficient model. Now we do still have an inbound outbound machine like other software companies do, but we haven't had to rely really heavily on that. and that's part of where the great economics and the improved profitability are coming from. We're on a journey to be a Rule of 40 company, and we believe we can continue to have very strong growth and pair that with profitability. Turning to our marketing services, revenue came in better than expectations, and we continue to see very predictable performance in billings. You know, we've had success in the past of acquiring well-run, marketing services businesses at fair prices and introducing our Thrive software to those clients. This next one really fits that profile well. We're pleased to announce that we've acquired Yellow Holdings Limited, known as Yellow, New Zealand's leading marketing services company for over 50 years. Yellow has a similar history to our own in that it's basically come out of being the official telephone company, Yellow Pages. This is the old You know, New Zealand Telecom now Spark, the official telephone directory of that market. And they've built a pretty big, pretty significant digital marketing services business. In fact, they have over 10,000 digital clients there. And so we're confident that many of these local Kiwi businesses will benefit from modernizing and automating with our SaaS products. This is a relatively small tuck-in acquisition, and our CFO, Paul Rouse, can share more about Yellow's financial contributions and our updated guidance. Our international expansion is a key focus area for us. And given this announcement, I wanted to invite Elise Balsele, Thrive Australia's Chief Revenue Officer, onto the call today to highlight the successes we've had in the Australia market with the prior acquisition of Census Holdings. Similar to Yellow in New Zealand, Census Holdings, before rebranding to Thrive Australia, was a leading and highly profitable digital marketing and directory services company. We acquired Census at an attractive valuation and integrated the company in an effort to reshape the perspectives of SMBs in Australia by providing an easy to use solution to modernize their operations. Fast forward to today, Thrive Australia has been a success and one of our top producing regions for SaaS. Elise has been instrumental in leading the Thrive Australia business. So with that, I'd like to ask Elise to join and share more about our impressive progress in Australia. Elise?