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spk00: Thank you for standing by. My name is Luella, and I will be your conference operator today. At this time, I would like to welcome everyone to Thrive's second quarter 2024 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 would like to ask a question during this time, simply press star 1 followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the conference over to Cameron Lessard, head of IR. You may begin.
spk07: Thank you, operator. Hello, and good day to everyone. Welcome to Thrive's second quarter 2020 earnings conference call. On the call today are Joe Walsh, chairman and chief executive officer, and Paul Rouse, chief financial officer. 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. With that introduction, I will now turn the call over to Chairman and CEO Joe Walsh.
spk04: Good morning, Cameron, and thank you all for joining us on the call today to discuss our second quarter results. DAS revenue grew by 25% year-over-year to $77.8 million and within our guidance range. DAS adjusted gross margin increased 460 basis points year-over-year to 69.7%. SAS EBITDA outperformed significantly, growing over 60% year-over-year to 10 million and ending the quarter with a 13.1% adjusted EBITDA margin. That's the highest point we've reached as a public company. I'll let Paul get more into the numbers. For now, I want to dive into some exciting metrics and updates about the business. Once again, we delivered excellent subscriber growth. We were up 52%, ending at 85,000 clients as we continued to be successful in upgrading our marketing services clients to our SaaS platform. This milestone is driven by our strategic transition of legacy marketing services clients to our innovative SaaS platform. A key factor in this success is our recently launched marketing center. which empowers businesses to efficiently manage advertising campaigns, enhance their online presence, and make insightful, data-driven decisions. This tool is not just a product. It's a game changer that positions our clients for sustained success in a digital first world. Our center strategy is continuing to gain traction with more than 10% of our current clients having two or more paid centers. This is up 200 basis points sequentially in a significant increase of 800 basis points from this time last year. This means more clients are experiencing the tangible benefits of our marketing center in growing their business. Our local sales channel and consistent referrals are effectively demonstrating the value we deliver. Turning to our product initiatives, we remain focused on enhancing our Thrive AI capabilities. to further empower small businesses, building on the efficiency and time savings already realized by our clients. Our AI-enabled customer support, now accessible across all centers, is designed to assist users by answering their questions and guiding them through our software's functionality. In addition, our social media feature in Business Center generates engaging social post captions complete with relevant hashtags and emojis. This not only makes the post more relatable and engaging, but also boosts their marketing signal by increasing visibility and fostering a deeper emotional connection with potential customers. We are actively developing and testing several new AI enhancements and are enthusiastic about their potential. So more on that at a later date. With that, I'm going to turn it over to our CFO, Paul Rouse, to discuss this quarter's numbers.
spk09: Thanks, Joe. All right. Let's dive into our results beginning with SAS. SAS revenue was $77.8 million in the second quarter and within our guidance range, representing an increase of 25% year-over-year and up 5% sequentially. SAS adjusted gross margin increased 460 basis points year-over-year and 130 basis points quarter over quarter to 69.7%. We're pleased with the positive impact from the sale of our higher margin SAS products. This progress further strengthens our expectation of exiting the year with SAS adjusted gross margin exceeding 70%. First quarter SAS adjusted EBITDA was 10.2 million above our guidance and resulting in a SAS adjusted EBITDA margin of 13.1%. Our SAS adjusted EBITDA was favorable primarily due to the restructuring of our company-wide commission plan that we spoke of previously this year. We streamlined our sales process to prioritize and incentivize the sale of high margin products while also enhancing efforts to boost spending from our existing customer base. SaaS subscribers grew to approximately 85,000 at the end of the second quarter compared to 70,000 at the end of the first quarter. This was an increase of 21% sequentially and 52% year over year. as a result of the continued migration of marketing services clients to our SaaS platform. SaaS ARPU decreased to $333 due to promotional pricing discounts and the timing of billing for many customers who were onboarded in the last month of the quarter. As a result, we received only a prorated portion of their billing, which negatively impacted ARPU for the quarter. However, We expect ARPUF to recover in the second half of the year as these customers are billed for the full period, and we continue to upsell additional centers to existing clients and expiration of promotional pricing. Second quarter season net dollar retention was 94%, an increase of 500 basis points year over year. Moving over to marketing services, second quarter revenue was 146.3 million and above guidance, primarily due to the strength of digital revenue above expectations. Second quarter marketing services adjusted EBITDA was 49.1 million, resulting in an adjusted EBITDA margin of 34%. Second quarter marketing services billings was 125.5 million, representing a decline of 28% year over year. Our marketing services billings were impacted by the ongoing success in transitioning our marketing services clients to our SaaS platform. Second quarter consolidated adjusted gross margin was 69%, an increase of 220 basis points year over year. Second quarter consolidated adjusted EBITDA was 59.3 million. representing an adjusted EBITDA margin of 26%. Finally, our net debt position was $339 million at the end of the second quarter. Our leverage ratio was 1.96 times net debt to EBITDA, which is well below our covenant of three times. Now let's discuss guidance for the third quarter. For the third quarter, we expect SAS revenue in the range of $82 million to $84 million. We are reiterating our full year guidance range of $326 million to $329 million. For the third quarter, we expect SAS adjusted EBITDA in the range of $9 million to $10 million. And we are increasing our full year guidance range to $30 million to $32 million. For the third quarter, we expect marketing services revenue in the range of $94 million to $97 million. And for the full year, the range is adjusted to $485 million to $492 million. For the full year, we expect marketing services adjusted EBITDA to be in the range of $128 million to $131 million. As a helpful guide, you can model EBITDA margins to be in the mid-teens in the second half of the year. I'll now turn the call back over to Joe.
spk04: Thanks, Paul. You will have noticed that our ARPU was down a little bit this quarter. I want to just mention that that's a part of the choppy metrics we see as we're transitioning this business from one business to another. Some things happen in clumps, so you can't always draw a perfect straight line on these things. We have a defined process for growing these customers, where they're getting tech touch, they're getting automated follow-ups, they're getting sales contacts. And we are, in fact, seeing our seasoned customers grow in the mid-teens. And that's happening because they're using the product. And with usage comes more seats, buying more signature packs, more add-ons, upgrading to higher levels of software so they can access more of the AI elements. So we are seeing a steady conveyor belt of growth once our customers get in and vetted down. And we have a defined kind of automated process that's working, and it's not happening by chance. So please don't worry about ARPU. ARPU, we've guided, was going to go from about 4,000 a year to about 7,000 a year. All that's still in place. We're still tracking with that sort of result, even as the number bounces around a little bit. And I think even this year, you'll see it begin to trend back up, so. Also, part of the reason that we're able to upsell customers is that we have more products to sell them. We've been building and improving the products, adding more packs. And you can expect, as we finish this year, going into next year, we're adding more products. So, there'll be even more product to sell as we move forward. Another question we're often asked is, you know, might we do any M&A? And frankly, with our prior you know, debt structure, we were really constrained. The new one does begin to breathe some flexibility into our world as time goes by. And we believe that M&A is at least now doable. And, you know, we've been able to begin to look at some things. So, that could add some interest going forward. So, just to wind up here, we had a really strong start to the year. And we are on track for our staff revenue to account for over 40% of our consolidated revenues in 2024. And as I've said previously, as we look forward to 25, it will be more than 50%. And so during 25, we'll actually, our SaaS business will be bigger than our marketing services business. So we're pretty excited about getting to that milestone. With that, I'll turn it over to the operator for questions.
spk00: Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening by a loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. We do request for today's session that you please limit to one question and one follow-up. Thank you. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Arjun Bhatia with William Blair. Please go ahead.
spk05: Perfect.
spk08: Thank you, and very nice to see the accelerated transition from marketing services. One thing to start out with, Joe, I think usually when I look at your SAS performance in any given quarter, did you come in above the midpoint of your guidance range? And I think we were slightly below this quarter. Was there anything outside of the ARPU dynamics and the transition that surprised you this quarter in terms of the SAS performance?
spk04: Well, look, I mean, these metrics are always a little noisy as we work our way through. You know, you've asked me and others have asked me, you know, what's the environment like? And, you know, we've said we broadly sell to a different customer. You know, our customers are the folks in the world that do the nasty things in life, the guys that fix broken things and not a lot of optional things. But they are certainly feeling the challenging environment, and we're seeing – good, strong sales volume because we're riding this unstoppable wave of small business adoption. But when presented with a choice of good, better, best, you know, they're opting for the lower priced options, which, you know, as far as I'm concerned, we're getting them on our platform. We're adding subs. We're moving forward. And we have a system to grow those customers, sort of a defined process that they go through and For seasoned customers, we see double-digit ARPU growth from those guys. We see them really moving forward. So I think you've asked me, others have asked me, what's the climate? It's not fantastic out there. But we also, I want to hasten to add, we're not selling to the new startups, the new businesses. We don't sell them. Honestly, we don't want them. We're looking for businesses that are more established, either from our base or referrals out of our base that have been around for a while. So anyway, I think Arjun, it's not a frothy environment where people are just going, yeah, give me the big one. You know, they're kind of moving a little bit more cautiously. But as you can see, we're still making steady progress adding new subscribers, and this trend is still playing out.
spk08: All right, yep, certainly makes sense. Appreciate that. And then, you know, as these customers do migrate over and you see this kind of acceleration in the number of SaaS clients that you have, I assume a lot of them are coming into marketing centers, as you've pointed out. But when you think about, you know, when they get to that one-year mark and they're growing 15%, when you're – targeting the expansion? Do you want them to grow their usage of Marketing Center and expand within a particular product? Do you want them to cross-sell into Business Center? What are your expansion priorities as you grow this big influx of customers that you're seeing on the SaaS side?
spk04: Yeah, I think the Mac Daddy home run best thing that can happen is they add another center because that comes with a lot of margin and a lot of additional engagement with the company. So adding another center is the home run. But there's lots of little singles before the home run where maybe they begin to use our signatures and maybe they begin to use our team chat. They start getting involved with other things. A center is the big one, and as I think we pointed out in the information here, we're seeing really strong month-over-month-over-month-over-month uptake of additional centers. I know you understand this really well, but the cost of acquiring that customer for the first time and getting them set up, you guys call it CAC, right? There's a big CAC to get them set up. As time goes by and you add additional centers, there's real operating leverage that comes from that. And that's the page that we're now getting on. We've got another center coming later this year. And as we look at next year, customers, not just on a single center, but on two, on three in some cases, that's where things really start to ramp for us. And I know you've followed other companies in the space that are platform strategies that have added other centers or other hubs or whatever. and seeing the way each of those cohorts lights off another sort of lift of growth and lift of margin.
spk05: Yep, perfect. All right, very helpful. Thank you. Thank you, Arjun.
spk00: Your next question comes from the line of Scott Berg from Needham & Company. Please go ahead.
spk02: Hi, everyone. Nice quarter. Thanks for taking my questions here. I guess I got a couple, starting on the customer acquisitions or the SaaS additions in the quarter. Obviously, it was a really large jump quarter over quarter. I think we probably all assume, and I think, Joe, you commented on, most of them are coming aboard as marketing center customers. But did you see customers come aboard maybe more in any of the other centers as well, or is it really all just kind of marketing center driven?
spk04: Marketing centers has eclipsed business center as our fastest growing product. It's not the biggest product because business center has been around for a long time, but sales coming in day over day, week over week, we're seeing marketing center just roll. And I think I've described this in the past, but it's a much smaller leap from buying marketing and advertising services from the legacy company over the last century to buying a grow your business tool, a marketing services tool, a marketing center tool, that jump is pretty small. We're asking them to actually incorporate a big change to their business and go on to a CRM and begin to embrace all the functions that were in business center. We've kiddingly internally said that's like kind of asking them to eat their broccoli. It's good for them. It'll make their business better. But marketing center is French fries, baby. It makes the phone ring. It gets you more business. And so there's just been a lot of enthusiasm and energy around marketing centers. So it's really the hot one at the moment.
spk02: Fair enough. Good thing I like my broccoli, I guess. I'm cool with that. Nobody's fitter than you. That is certainly not the case, but excellent. I guess in the, you know, to kind of follow up on the SaaS additions in the quarter on your, you know, Joe, you gave a lot of, you know, kind of color around the monthly ARPU number is, and in this environment, you can certainly understand promotional pricing to get customers on board. How do we think about that trending? Is that a 90 day price? Is that a 60 day, maybe 180 day price? How do you, expect that pricing to trend for those customers over the year? And then do you expect to run similar promotional opportunities through the end of the year?
spk04: I want to be clear. I think the biggest impact was when they came in. Because the way our billing works is it's sort of a prorated credit thing. And some of them made the move over. very late in the quarter, even late in the month in the final quarter. So we only picked up partial billing. So I think you're going to see it correct right away. It's really a bit of anomalous there. It isn't like we threw in some gigantic discount. We are stepping customers over to make it easy for them. And honestly, that's going to give us scope for rate later. We will migrate them to the full rack rate over time. And that'll give us a little bit of a rate lift when we look ahead to the year ahead. But yes, to answer your question, as far as the go forward, we have other specific playbooks that we're running against the marketing services base where we're taking people that aren't exactly at the rate of the unit they're going over to and offering them to make the move over without a big bucket of cold water in the safe price up initially to get them on, get them in the new platform, get them enjoying the benefits, and then we begin to grow them from there. So yes, there'll be more of it. To answer your question, your pointed question, I'll induct that. There'll be more of this type of thing as we keep going. We've got a very big kind of zoo base that we're hunting in, and we're finding all of a sudden with marketing center, much, much higher level of interest to make the migration over. And I also want to point out, and please don't lose sight of this, that this decade of small business SaaS is another year or two further along. And it's much more obvious to people that they should be making this move now than it was even two or three years ago.
spk05: Very helpful.
spk02: Thanks for taking my questions.
spk05: Thanks, Scott.
spk00: Your next question comes from the line of Daniel Moore from CJS Securities. Please go ahead.
spk03: Thank you. Morning, Joe. Morning, Paul. Joe, you touched on a few of these in the prepared remarks, but can you elaborate on some of the examples of AI that you've implemented and maybe some of those you're developing? And are those tools more critical as a selling tool or retention tool from your perspective?
spk04: Oh, those are great questions. So what we've done is we are trying to make it – look, our base are – sort of the dirty fingernails people. We're out there doing roofing, plumbing, electrical work. We're doing body work on your car. We do have dentists and chiropractors. Hopefully their fingers are clean. But we have a lot of service-based businesses, and they're busy doing that stuff. And a lot of times when they're presented with a blank page to figure out how to write content about their services or about their products, they just get stumped. They're unable to really move forward. And so one of the simplest things that we're doing is using AI to help them develop content for their landing pages and for their promotional offers and for their product descriptions and, importantly, for their social posts, which in today's day and age is almost table stakes if you're running a small business. You've got to be actively posting. And so we've got our pro editor and some other services that we'll really guide them and aid them in that. They're not looking at a blank page. They're looking at something that's sort of pre-built and formatted, and they can go through and edit and improve it. But that's just a lot easier thing to do. So that's been kind of a killer app. And we're finding that people get excited about that at the time of sale. So it is a sales aid. But furthermore, customers that bought long ago when we didn't have that, as we introduced it to them, their level of kind of NPS score satisfaction with us has risen and their engagement on the platform has improved. And I think they're getting more benefit from it, even though they might have bought two years before we put that in. So what we like to say is your Thrive just got better. And so that's been a really good thing for us.
spk03: Helpful. Just a quick housekeeping. I assume the tweaking guide, slightly higher profitability in SaaS, slightly lower marketing services, is that simply a function of your concerted push to convert more customers, or is there anything else going on there? I think that's a big piece of it.
spk04: I think the margin lift is largely coming from what I described earlier. When you sell a new customer, you have all this CAC that comes with it. But when you just add an additional center to a standing account, it just has great leverage. And you're seeing that. We're seeing, I mean, month over month over month, really brisk uptake now. I think the story you guys are going to be writing about a lot in 25 is, you know, this platform strategy is really playing out here. And it's giving them real gross margin lift, real profitability lift. And, you know, I've said all along, we're driving hard to be a rule of 40 company. And I think we can get it strongly from the EBITDA line. We can get a lot there. I think we can run this thing really profitably. It's already fully scaled. It's a pretty big company, our SaaS business. And it's been profitable for many, many quarters. And that's really beginning to lift now as we add new centers. We've got another center coming out before the end of the year. So there'll be even more product to sell going into next year.
spk03: Stole my last question, which is just update on timing of potential rollout of the next new center and whether there's likely to be a freemium option for that, at least early on as well. Thanks again for the color.
spk04: Yeah, I don't have details to reveal today as far as the exact timing. What we've guided is that we'd get it out before the end of the year, and I can confirm that that's definitely going to happen. And to your second question, you know, we're slowly learning. about this freemium thing and how to do it. We are planning to allow customers to benefit a bit from this new offering on a sort of free included, you know, get some benefit from it basis, try before you buy, all that kind of stuff. So there is a plan to do that where it won't just be you have to buy to get some benefit from it. And we're learning that when you deliver value to a customer, before they have to give you any money. It just starts things off on a nice foot. So we're kind of excited about the way that will unfold.
spk05: All right. Thanks again. Thank you.
spk00: Your next question comes from the line of Rob Oliver from Baird. Please go ahead.
spk06: Great. Thanks. Good morning. Joe, yeah, the center strategy appears to be playing out nicely for you guys. I was wondering if we can get an update on... command center, and also as you think about sort of the cadence of center rollouts over the next couple of years, how should we think about that? I mean, I know you spend a lot of time with customers. You're pretty in tune with the opportunity. There must be certain things within the platform that are percolating up that have your folks excited. So how should we think about the cadence of incremental center rollouts? And then I had a follow-up to work Paul into the conversation here.
spk04: Yeah. So I think... The biggest thing I would add is that we do have some really strong demands from the market, from our customers, to do more stuff. Now, some of that they can achieve in our app store, in our marketplace, and connect up with other things. But we have designs on filling some more of their needs. And we've been working for a couple of years in the back office on those. And as I mentioned, one is done and about to be revealed, and another is really far along and about to come. We're still pretty comfortable with that center a year guidance that we've given. The one thing I want to hasten to add is that these opportunities or these problems that we're solving are not all the same size. So every one of them isn't going to have the exact same pricing as business center did or whatever. I mean, they're going to be bigger ones and smaller ones. There's going to be some that are really kind of game changing and some that are smaller as we go along. It's just as we keep building out the platform, we can't make them all exactly bricks that are the same size. So I would underscore that. You asked about Command Center, which was the center that we got out late last year. And I would describe that first one that we got out as V1. And we're working like crazy iterating that into the V2, V3 and improving it. We've had good interest in it, but like a lot of brand new software products, especially cutting edge things, and it's very cutting edge what we've tried to do there. There were a couple of sharp edges that we've run into that we're working our way through. And so it's developing. We've got lots of signups, lots of people using it, but It's not currently as good as I want it to be, or we're developing as fast as I want it to. And, you know, our product team are working really hard, engineering team are working really hard on some refinements and some perfection. Now that we've been in the market with it for a little while, customers have really given us direct feedback about it. So, you know, I expect that, you know, and If you go back and you look at Marketing Center, it didn't take off like a rocket when we first rolled it out either. It's now our number one selling product. It took us a minute to kind of get it dialed in, the product itself, and to get our way of marketing and selling it dialed in. We're sort of in the same phase right now with Command Center. But I just want to remind you that what Command Center will do as it's perfected in V2 and V3 and we look ahead to 25 and 26, it will be out in front as kind of a wedge product, collecting new customers. It'll be building a new zoo. It goes out into the world and it offers you an experience with Thrive that lets you not pay anything, try it, play with it, work with it, and have Thrive in your life, Thrive brand, Thrive product. And after you see the benefits you can get from it, I think there's a conversation that we can have. So I'm sometimes asked, well, what happens when your zoo runs out? You guys are going to someday run out of your zoo. If I project out how fast you're going through it, in 20, 31, you'll run out of zoo animals to go bring in. Well, we're building that new zoo through command center. So it is a long-term plan. It's not something that has to happen this quarter. We're looking more in the fullness of time. And if you look around the industry at other PLG plays, a lot of them did take a couple years to dial before they just took off. And we're in that mode here. And as was asked in an earlier question, we're thinking more about sort of PLG elements, even as we develop new centers going forward. So being thoughtful about using product as a marketing tool, I guess, to bring us product-qualified leads as we move along. Does that answer your question?
spk06: It does. Yeah, that's a great color. Thanks, Joe. I appreciate that. Paul, a question for you, just to go back to the ARPU topic. I know Joe told us not to worry about it, but I guess our job in part is to worry a little bit. So you did mention that you expected ARPU would be better in the second half. It's been down four quarters in a row, and it kind of accelerated down this quarter. You do have, I think, some easier comps coming, but just wanted to get a sense for what gives you the confidence that we should see the ARPU start to head back up. Thank you.
spk09: Yeah, there's a number of things, like Joe mentioned. A lot of the drive, we were working to move these customers over. We made a change in our commission plan to drive the number of center sales, and you're seeing the effect here with the number of ads we've had. And, you know, like it always, everything comes in the last month of the quarter for bonuses, so there was a big push to bring those clients in, and a large majority of them came in partially in the year in June and so on. So just naturally, as you get a full month of billing coming out in July, August, September, as you make the ads, ARPU is going to naturally rise. So we are confident that this is a temporary thing. When we start heading north on ARPU, as you move out into the second half of the year. So yeah, I wouldn't be concerned about that. That's going to be coming back up.
spk06: Great. Thanks, guys. I appreciate it. Thank you.
spk00: Your last question comes from the line of Zach Cummins from B Reilly Securities. Please go ahead.
spk01: Hi, good morning, Joe and Paula. Thanks for taking my questions. Joe, I just really had a question around the potential leverage we could see in the SAS segment. I mean, nice to see the adjusted EBITDA guidance raised there for this year, but How are you thinking about that potential leverage as you exit this year and going into 2025? It seems like we're potentially getting to an inflection point where adjusted EBITDA on a consolidated basis could be maybe remaining steady or potentially moving up from these 2024 levels.
spk04: Oh, that's such a good question because, I mean, look, you're a student of the industry and so am I. If you look at some of these other companies that have platform strategies, where they've added that second product, third product, fourth product, you really start to see an overall margin lift that comes through. And we're seeing that now come through in our SaaS business. And as we look at our own internal models, we look at the fast growth of EBITDA out of SaaS, replacing the melting iceberg EBITDA that's coming out of marketing services. And so... I don't think I'm allowed to give really finite guidance right now. I don't think that's what you were asking for. You just wanted to kind of talk about it for a minute, I think, at a high level. But yes, the way we're thinking about it is that the growth of EBITDA coming out of the SaaS business will form a replacement for the gradual decline of the melting iceberg part coming out of marketing services. So we're sort of reaching that nadir in the process now. And, you know, again, I don't think I'm authorized to step in front of Paul and give EBITDA guidance specifically, but directionally, you got it exactly right. We're at that moment now. The other moment that we're at is the, you know, as we just another, I mean, number of weeks here, you know, we finished this year at 40%. And as we go into next year, We'll cross over and the SaaS business at the revenue line will be our largest source of revenue. It'll be our majority business. We're looking forward to hopefully being bumped up against the metrics of other excellent SaaS companies out there and joining the SaaS league tables. We think we show up with some pretty kick-ass metrics. We've mentioned before We believe our net dollar retention, which is in the mid-90s now, will rise to 100. And we think that's not that far away at the rate we're selling additional centers now. We think that's coming now in the medium term. And so that sort of hole in the boat from a metric standpoint will be gone. Our gross margins are strong and rising now. So that sort of nick is sort of gone. So I think we're a really strong Rule of 40-type company. And when we eventually do join those SaaS league tables, I think we'll stand in pretty good stead. We're looking forward to standing on that stage and posing.
spk01: Got it. That's very helpful. And then my one final question, maybe geared towards Paul, is how should we be thinking about pre-cash flow generation with new debt facility and just given the accelerated conversion activity that we're seeing within marketing services?
spk09: Yeah, I guess the overall thing I just want to say is if there's any concern about us meeting our amortization, don't be concerned. We're going to do that. So and that's what we're focused on. You know, we took down the mandatory amortization pretty significantly from where it was previously. So we feel very confident in free cash flow to manage that amortization. But as Joe mentioned earlier, you know, With the additional flexibility, we might be able to do other things with the cash flow above that. But I just want to allay any fears about the amortization. We're going to meet that and it's going to be no issue. And we're still trying to figure out if there's a better place we can put our money in the future with the free cash flow. So I guess I'll leave it there.
spk01: Understood. That's helpful. Well, thanks again for taking my questions. And best of luck with the rest of the quarter.
spk04: Thank you very much. Yeah, I guess just to wrap up, you know, we were talking there just a minute ago about cash. And the company has always thrown off a lot of cash. All of that cash kind of went to debt repayment in the past. And now with the new credit facility we have, over time we will begin to develop some flexibility. We no longer have 100% cash sweep. We have some flexibility built in and we're enthused about what we'll be able to do with that. Our first priority is always obviously product and engineering, making sure we have the best software, making sure it's developing quickly, making sure it's interoperable where it works well with other software in the market to make it easy for our customers to adopt. And we've got always really specific conversations going with our engaged customers about what they'd like next, where they might have any sharp edges or pain points within the product that we're improving. So that's always first priority. We obviously have a super low share price. So buying shares is another opportunity. We're beginning to see the bid ask out in the marketplace for some of these SaaS companies that we might tuck in. They're beginning to modulate a little bit, so there's some opportunities there. So I think the fact that we've come this far really with one hand tied behind our back, virtually no cash flexibility, and we will have some going forward, you guys should think about that because I think it does give us an added kick going forwards. And we feel like we're really well positioned on this unstoppable trend, unstoppable mega trend, really, of small businesses moving to the cloud. And 25% SaaS growth and 50% subs growth are numbers that we're really proud of. And we think there's more good numbers ahead. So with the crossover point coming up, we think it's time for people to take a look at Thrive. Thanks, everyone.
spk00: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
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